THE FINANCIAL STATEMENT.

HC Deb 23 April 1868 vol 191 cc1149-94

WAYS AND MEANS considered in Committee.

(In the Committee.)

THE CHANCELLOR OF THE EXCHEQUER

Sir, the interest with which the Financial Statement is generally received—so far, at least, as regards the retrospect of the past year—is, on this occasion, somewhat lessened by the fact that a partial review of the financial position of the country was given to the House in November last. From the statement then made the Committee will, I think, be prepared to hear that the elasticity of the Revenue during the past year has not equalled that which we had the good fortune to hear of in connection with the years immediately preceding. But, considering all the circumstances of the case—considering we have been suffering from two bad harvests—considering that we have not yet recovered the financial depression of 1866 and the beginning of 1867—I think we have reason on the whole to congratulate ourselves on the financial condition of the country.

I propose, Sir, in the first place, to compare the Revenue, as estimated by my right hon. Friend (Mr. Disraeli) at the commencement of last year, with the actual receipts; and then, in the next place, to compare the Revenue of the year 1867–8 with that of the year 1866–7. The original Estimate of Revenue given by my right hon. Friend on the 4th of April, 1867, was £69,130,000. When the supplementary Financial Statement was made in November last there was added to that original Estimate, on account of additional Income Tax, a sum of £840,000; which makes a total of £69,970,000. Of that Estimate there has been realized in round numbers £69,600,000 only, or £370,000 less than the amount estimated. Now, I have no doubt it will be interesting to the Committee to be informed under what sources of Revenue there was a failure, and on what an excess, of the Estimate. Those sources of Revenue which exceeded the Estimate in fruitfulness are Customs by £650,000; Stamps by £201,000; Taxes by £9,000; and Crown Lands by £5,000. Those heads which have yielded something short of the Estimate are Excise by £538,000; Income Tax by £663,000; Post Office by £20,000; Miscellaneous by £14,000. Thus those sources of Revenue which have exceeded the Estimate have done so to the extent of £865,000, and the deficits of those which have fallen short of the Estimate make a total of £1,235,000. Deducting the total of increases from the total of decreases we have £370,000 as the sum by which our actual receipts have fallen short of the Estimate. I will now compare the total Revenue of 1867–8 with that of the previous year. In 1866–7 the total Revenue was £69,434,568; in 1867–8 it was £69,600,219; showing an increase of £165,651. But with reference to this it must be remembered that in 1866–7 some extraordinary sources of Revenue came to the aid of the Exchequer—the China indemnity gave us £250,000, and the New Zealand Bonds £500,000, making £750,000 of extraordinary Revenue, which, of course, was not repeated in the past year; so that to make a just comparison between the two years we must deduct this £750,000 from the Revenue of 1866–7, and having by this means brought the total down to £68,684,568, we may compare it with £69,600,219, the Revenue of 1867–8, and show that the real difference in the yield of the two years amounts to £915,651 in favour of 1867–8. Then it will, no doubt, be said that during the past year we had an additional Income Tax imposed. In the month of November it was my duty to propose an additional tax of 1d. on the year, or, as it was put by the right hon. Member for South Lancashire, of 2d. on the last half of the year. The House agreed to the proposal, and it was estimated that the additional tax would yield £840,000. This, however, was the first time that an addition to the Income Tax had been made at that period of the year, and the novelty of the proceeding prevented the whole circumstances of the case affecting the difficulty of collecting that addition within the financial year being taken into consideration. The result has been that we have failed; to get into the Exchequer within the] half-year half the amount we anticipated. The additional 1d. has brought us as yet only £377,000. It must also be remembered that last year a reduction of the marine insurance duty took effect, Which caused a loss to the Revenue of £270,000; therefore, setting off the loss from the reduction of the marine insurance duty against the gain by the additional Income Tax, we have only as yet a real gain to the Revenue of £107,000. And if we deduct this £107,000 from the £915,651, which represents the increase in the yield of 1867–8 over 1866–7, we get £808,651 as the real expansion of the Revenue during the year 1867–8. I therefore think that, under all the circumstances, we may congratulate ourselves on the result. Notwithstanding the adverse circumstances to which I have alluded, we find that, although the Revenue has not expanded to the amount we have been accustomed to of late years, it has not altogether lost its elasticity, but shows a substantial advance.

Now, Sir, I have already stated the total amount of Revenue for 1867–8; but perhaps the Committee would like to know the amounts derived from each source, and the increase or decrease of each in 1867–8 as compared with 1866–7. The Customs, then, produced £22,650,000, an increase of £347,000 on the previous year; the Excise, £20,162,000, a decrease of £508,000, Stamps, £9,541,000, an increase of £121,000; Taxes, £3,509,000, an increase of £41,000; Property and Income Tax; £6,177,000, an increase of £477,000; the Post Office, £4,630,000, an increase of £160,000; Crown Lands, £345,000, an increase of £15,000; Miscellaneous, £2,586,219, an increase of £262,835; and there was the absence of anything to correspond with the China indemnity and New Zealand Bonds. It may be interesting to the Committee to have some further details regarding these sources of Revenue. Taking the Customs, I find that corn showed an increase of £71,000; dried fruits of £4,000; spirits, £126,000; tea, £168,000; tobacco and snuff, £87,000; and wine, £78,000. There were decreases in coffee to the amount of £7,000, and in sugar and molasses of £65,000. The totals showed an increase of £462,000 on the Customs receipts. But this does not appear on the sheet, because this sum is decreased partly by a reduction of casual receipts and partly by outstanding balances to £347,000. As regards Excise, I may mention an increase on licences of £371,000; on railways of £18,000; and on sugar used by brewers of £32,000; a decrease on malt of £538,000, on spirits of £240,000, on stage and hackney carriages of £40,000, and on chicory of £3,000. But it is remarkable that while spirits showed a total decrease of £240,000, there is in Ireland an actual increase of £150,000. I think this should be a subject of congratulation. [Laughter.] An hon. Member seems to treat that observation with ridicule; but an increase of revenue from Excise has always been deemed matter of congratulation, because, being an evidence of the consuming power of the country, it shows prosperity among the lower orders; and the figures I have stated may by that rule reasonably be taken as evidence of Ireland's material prosperity during the past year, notwithstanding Parliament has been obliged to pass special measures for the safety of the country. Therefore the total decrease for the year under the head of Excise is £400,000; and that has been increased to £508,000, in consequence of the whole of the current charges for the cost of collection of the Inland Revenue being now paid for the first time out of the Excise. It has been transferred to that Department for the purpose of simplifying the accounts; but that fact has the effect of interfering with the comparison, unless the matter is explained. With regard to the Stamps, the principal variations have been as follows: — There has been an increase in legacy and succession duties of £285,000, in the common law court stumps of £90,000, in the receipt stamps of £10,000, and in the fire insurance stamps of £33,000. On the other hand, there is the decrease I have mentioned in marine insurances of £270,000, a decrease on bills of exchange of £15,000, on probate duty of £20,000, and on deeds of £30,000. Then, with regard to the Taxes, the Committee will recollect that there was an alteration made last year with regard to the dog duty, which was then transferred from the Taxes to the Excise; the assessed tax duty for the last year of collection having been reduced from 12s. to 7s. But, notwithstanding this reduction, the Taxes show an actual increase, which is attributable to the increase in the house duty, of £4 1,000, and of an increase in the Income Tax of, £477,000, which latter is partly owing to the extra duty imposed last autumn under that head.

Perhaps the Committee will now allow me to advert to the somewhat striking discrepancy between the Estimate of the Revenue taken by my right hon. Friend at the commencement of last year and the actual receipts as regards the different sources of Revenue from which the National income has been derived. Now, if we compare the Customs with the Excise revenue we shall find the following to have been the result. There is an excess over the Estimate in Customs of £650,000, while there has been a decrease in the Excise of £538,000 — the excess of the Customs over the deficit of the Excise being something over £100,000. It has often been observed that, in those years when there has been a deficiency in the harvest of this country, the Excise revenue suffers while the Customs revenue increases. On those occasions we are obliged to have recourse to foreign markets for the supply of those articles which under unfavourable skies are not produced in the usual abundance in this country, and a portion of the usual revenue conies into the Exchequer through the medium of the Customs instead of through the medium of the Excise duties. Therefore, when we fail to find the amount we expect under the head of Excise, we naturally turn to the Customs duties to see if we can see anything there which will account for that deficit. And in this year, although not to the extent which might have been expected under other circumstances, we find that the Customs duties do, to a certain extent, afford some explanation of the deficit in the Excise duties. I have already stated that the Customs duties upon foreign spirits show an increase in the past year of £126,000. There has been, I believe, a falling off in the duty upon rum and brandy, but there has also been a considerable increase under the head of Geneva and other spirits. I am told that there is a spirit that comes into this country under the denomination of German spirit, which is largely used for fortifying, on account of its possessing but little flavour of its own, and it is the increased importation of this spirit which accounts for the increase under the head of Geneva and other spirits. This increase, however, must be attributed partly to the deficiency in our harvests and to our having recourse to foreign markets for spirits which we fail to get at a sufficiently low price in this country. Therefore this sum of £126,000 increase in the Customs I think may fairly be considered to have replaced an equal amount of revenue in the Excise. There is also an increase this year in the duty upon the sugar used by brewers. The excess of Excise duties upon this article amounts to £32,000, and as all sugar used by brewers, excepting the small quantity made in this country, pays Customs duty, besides paying Excise duty, it follows that part of the increase in the Customs Revenue must be attributed to the importation of sugar for brewing purposes. Now if we take roughly the proportion of duty payable under the head of Customs and of Excise upon this article, I find that the Customs duty is about three times the amount of the Excise duty. Thus we have a sum of about £100,000 of Customs revenue derived from the sugar duty, which no doubt must have replaced an equal amount of malt duty, which under other circumstances would have come under the head of Excise. These two sums taken together—the in- crease under the head of Geneva and other spirits, and that under the head of duty upon sugar—account for two-filths of the difference between the estimated and the actual receipts of Excise up to last April. In addition to this, the fact I before mentioned, that the payments into the Exchequer on account of Excise revenues have been diminished by more than £100,000, must, of course, be taken into account, and that also reduces the payments under the head of Excise revenue into the Exchequer by that amount. After taking this into consideration, there is a deficit remaining of about £200,000, which must be attributed to a less amount of consumption having taken place than was anticipated at the commencement of the last financial year. Then, as regards the excess of the receipts of Customs over that which was estimated, I have already mentioned the sum of £226,000 as having found its way into the Customs which would in ordinary years have found its way into the Excise, and to that we must add £70,000 for the corn duty, also attributable to the bad harvests of the last two years. These three sums together account for nearly one-half of the excess of Customs revenue over the Estimate. The remaining increase upon the Customs receipts over the Estimate must be attributed to the increased power of consumption of the country of Customable articles, unless we assume—which I fear is too sanguine a supposition—that the increase due to the receipts of tea duties is the result of a change in the habits of the people, and that the beverage "which cheers but not inebriates" has taken the place of those ardent liquors which so often are more profitable to the Exchequer than beneficial to the individuals who consume them.

There has been a deficit, in the Income Tax received, compared with the Estimate, of nearly £663,000, which is attributed by that Department to an actual loss of revenue of £200,000, and to arrears amounting to £463,000, which sum is expected to fall in during the current year. The deficit upon the Post Office arises solely from the change we have made by determining to omit from the Estimates Votes for the Postages for the public Departments. We came to the conclusion that it was useless to ask Parliament to vote money which had afterwards to be paid into the Exchequer as Revenue, and therefore we determined not to submit to the House Estimates for such postages. Had this determination not been arrived at, it would have been necessary to have submitted to this House a Supplementary Estimate for Postages for public Departments, which would have brought up the revenue of the Post Office to the sum which it was estimated to produce. The deficiency upon the Miscellaneous Receipts is only in round numbers £14,000 short of the Estimate; but in the statement made by my right hon. Friend (Mr. Disraeli) last April he took into account a certain amount he expected to receive from the operations of the Fees and Fines (Ireland) Bill; but the House showed such a reluctance to pass that measure and sanction that transfer that the Government did not press it, and the consequence has been a certain loss to the Revenue under the head of Miscellaneous Receipts. The result of all that I have stated is a deficit of £370,000 upon the Estimates, which would have been more than counterbalanced had it not been for the delay in the collection of the Income Tax at the close of last year.

The Committee will no doubt wish to be informed of the effect of the small alterations which took place in our system of taxation last year. The alteration in the marine insurance duty was estimated to cause a loss of £210,000, but the actual loss was £270,000. I am, however, informed that this loss is more apparent than real, because there were certain old stocks of stamped papers in the hands of persons concerned in that business which have been exchanged for new ones; and this accounts for some of the loss. Then there is another matter which, although it was not dealt with as part of the Budget, must be considered as forming a part of the financial arrangements of the year—namely, the alteration in the dog duty. When the Bill upon that subject was introduced last year, this tax was estimated to produce £300,000; but the produce of the Excise duty upon dogs last year amounts to £366,000. The Committee will remember that during the year of the alteration the Excise duty was taken for merely nine months. The new duty commenced at the beginning of the last financial year. Of the £366,000 a sum of £207,000 was collected during the nine months ending 31st December, 1867, and the remaining £159,000 during the first three months of the natural year 1868. The Committee may like to have a comparison between the number of dogs brought into charge under the old system and that under the new. The number of dogs charged under the assessed taxes up to April, 1867, was 445,645. The number of dogs brought into charge under the Excise licences between April and December, 1867, was 828,341; and the number of dogs for which licences had been taken out this year up to March was 637,000. I think the Committee will be of opinion that the change which was made has been a success; and this result gives rise to the consideration whether, at some future time, it may not be desirable to make a like change as regards some others, if not all, of the assessed taxes. The advantage of turning assessed taxes into Excise duties is this—that you pay for the year in which the articles are kept. Under the assessed tax system no one is called for a return of the articles kept till the year has expired; and it frequently happens that the most conscientious persons, anxious to make a most correct return, are not able to do so, not remembering exactly the date of the changes made in their establishment. Besides, in making such charges it seems more reasonable that the tax should be on the number of articles kept on the year for which the charge is made, rather than on the number kept in a previous year. Moreover, a great loss often falls on the Exchequer, because people keeping articles this year may become bankrupt or insolvent, or may disappear from the country, or from the world altogether; and consequently there is a great difficulty in collecting assessed taxes to the full amount they ought to be collected. Therefore I say it will be well to consider whether at some future time it may not be well to follow the initiative taken with regard to dogs in respect of the other assessed taxes.

I now come to the Estimate of the expenditure compared with the result:—and in taking the Estimate of expenditure I am taking the Estimate of the interest of Debt and of the ordinary charges on the Consolidated Fund, as stated by my right hon. Friend at the commencement of the last year; but the Supply Services I am taking as they were voted, because, some alterations were made in them — some diminutions and some increases. I am afraid there was more increase than diminution after these Estimates were originally presented, and therefore I am taking them as they were voted. With regard to the interest of Debt, the actual payment was £26,571,750, being £178,000 less than the Estimate. The other ordinary charges on the Consolidated Fund were £1,893,898, being £6,000 less than the Estimate. The Army expenditure amounted to £15,418,582, being £118,000 more than the Estimate. The Navy charges amounted to £11,168,949, being an excess of £102,000 over the Estimate. The Miscellaneous Civil Services amounted to £8,491,342, being £83,000 more than the Estimate. The Revenue Departments took £4,883,203, being £170,000 less than the Estimate. The Post Office Packet Service was £808,518. With regard to the Extraordinary Expenditure for the Service of the Abyssinian Expedition, the Estimate was not exceeded. The whole shows a total expenditure of £71 236,242, as against an Estimate of £71,287,000; so that the expenditure was less than the Estimate by £51,000.

I now proceed to compare the expenditure for 1867–8 with that for 1866–7. In the interest of the Debt there was an increase of £489,972; on the other ordinary charges on Consolidated Fund an increase of £29,567; on the Army there was an increase of £743,042; on the Navy of £492,848; on Miscellaneous Civil Services of £678,648; on the Revenue Departments £59,245. Then there was an extraordinary item of £2,000,000 for the Abyssinian Expedition: thus making the total expenditure for 1867–8 a sum of £71,236,242, as against an expenditure of £66,780,396 for the year 1866–7, showing a total increase for the past year of £4,493,322. Of course, the Abyssinian Expedition accounts for nearly half that—namely, £2,000,000.

I come now to state the Revenue and expenditure of the previous year, as compared with each other. I have already stated the expenditure of 1867–8 at £71,236,242; while the Revenue was, in round numbers, only £69,600,000, showing a deficit on the year of £1,636,000; but I think it would be right to call attention to the fact that some part of this expenditure was not due to the year just past, but to the previous year; because there were Excess Votes taken to the amount of £228,000 for sums paid in respect of money spent in 1866–7, though they come into the account of 1867–8. The deficiency I have stated was £1,636,000; and it will be remembered that when the Supplementary Financial Statement was made to the Committee of Ways and Means in November last we estimated for a defi- ciency. We estimated for taking out of the balances a sum of £960,000, to which the Committee assented. The Committee would, no doubt, wish to hear how the difference between those two sums is to be accounted for. At that time we estimated a surplus of £200,000, which has not been realized. On the contrary, the Supplementary Estimates and Excess Votes have swelled the expenditure by £362,000. The expected saving of £100,000 on expenditure has not been realized in the way we then anticipated. This shows how the difference between the deficit which we estimated in November and the deficit which appeared when the accounts were actually made up is accounted for. This deficit has however been met out of the balances in the Exchequer. There was besides an excess of expenditure over income on the Revenue and expenditure of the year, also an excess of payments over receipts in the Exchequer accounts other than the Revenue and expenditure to a considerable amount, which further reduced the balances by £876,000. That is principally—indeed, I may say entirely—due to payments on the Sinking Fund account. The result is that the balances which on the 31st of March, 1867, stood at £7,294,000, were on the 31st of March, 1868, reduced to £4,782,000, showing a diminution of £2,512,000, between the two periods. I do not think that the balances stand as high as they should do; but, at the same time, we found at the commencement of this quarter sufficient to carry us through without having recourse to the Bank for advances. We have been able in this quarter to pay the interest of the Debt, the charges on the Consolidated Fund, and all other demands on the Exchequer, and to leave a sum remaining without having recourse to the assistance of the Bank. Therefore, though the balances are lower than I think they ought to be, I cannot say that, up to the present time, that has caused us any practical inconvenience.

The Committee may wish to have some account of the alterations which have been made in the Public Debt during the year that has passed. In addition to the conversion of the Bank Debt to the amount of £24,000,000 there was further a conversion into Terminable Annuities to the amount of £2,500,000 under the Acts of last Session. Besides this, we cancelled stock to the amount of £888,766 under ordinary powers. Then, Exchequer Bills have been cancelled under the permanent Acts to the amount of £45,700, while stock has been cancelled by conversion into life and other annuities under old Acts to the amount of £804,102. Then, in accordance with what I stated to the Committee in November last, Sinking Fund money to the amount of £901,638 has been applied in repayment of Bank advances, which would, if our Exchequer had been in a more flourishing state, have been applied to the extinction of the permanent Debt. The power given to the Government to renew Exchequer Bonds to the amount of £1,700,000 has been exercised, and the Bonds have been renewed; but they have been renewed on more favourable terms than before—namely, at the rate of 3¼ per cent interest, instead of 3¾ per cent and 4 per cent.

And now I come to the present financial year, 1868–9, and I think I shall best consult the convenience of the Committee if I first of all deal with the estimated ordinary expenditure and income, putting aside the Abyssinian Expedition for the present. We can afterwards see what must be added to each side of the account in consequence of that Expedition. The interest of the Debt I take at £26,700,000; other charges on the Consolidated Fund, £1,865,000. Then, as regards Supply Services, the estimated expenditure will be as follows:—For the Army, £15,456,000; for the Navy, £11,177,000; for the Civil Services, £9,173,000; for the Revenue Departments. £4,968,000; and for the Post Office Packet Service, £1,089,000. The total of these amounts is £70,428,000. It may now, perhaps, be convenient to the Committee to hear what alterations have been made in the charge for the interest of Debt in consequence of the operations of the previous year. There is an increase in respect of Terminable Annuities expiring in the year 1885 of £801,134, and on account of interest on life and tontine annuities there is an increase of £47,253, making a total of £848,387. Against this, however, savings on other accounts must be set. In the first place, a deduction of £292,870 must be made in respect of "the dead-weight annuities" which have expired. Then there is a diminution of interest on the permanent Debt, to the extent of £438,569; and on annuities for terms of years to the extent of £2,297; saving, in consequence of lowering the rate of interest on Exchequer Bonds, £11,000; a similar saving on the interest on Exchequer Bills to the amount of £26,169, and a small saving of £387 in the management of the Debt. The total amount saved by these means is £771,292, leaving only £77,095 as the net increase of the charge for Debt.

And now, I should like, if the Committee will allow me, to say a few words about the increase in the Estimates for the present year; and I think it is the more necessary that I should do so in consequence of the remarks which the hon. and gallant Gentleman the Member for Aberdeen (Colonel Sykes) began to make the other evening when, by the ruling of the Chairman, he was prevented from concluding them. These remarks had reference to the great increase of the Civil Service and Revenue Department Estimates for the present year. Now, the greater part of that apparent increase is entirely due to a different mode having been adopted in making out the accounts. It was formerly the practice in the case of regular Voles to apply the extra moneys received by a Department to the reduction of the amount it required, and only to ask the House of Commons to vote the balance; but in the early part of this Session, an Act of Parliament was passed which provided that the Treasury might require that all such extra receipts should be paid into the Exchequer, the object being that the House might have a greater control over the expenditure of the various Departments. The new system was followed in making out the Estimates for the present year, the consequence being that the Votes have been greatly increased in nominal amount. The desirability of making that change was carefully considered by the Government, and it was thought expedient to make it for this reason—because a Department might, by estimating its extra receipts under the amount it was likely to receive, really get more money to expend than the House of Commons intended it to have. Indeed, during the last few years, some glaring instances of this have occurred, and the Government, therefore, recommended the House to pass a Bill on the subject. There existed considerable difference of opinion, I am aware, as to the expediency of the change; but we were in favour of it because we were greatly impressed with the desirability of bringing under the notice of the House the whole of the expenditure of each Department, and we, therefore, introduced the Bill. To those, however, who have not carefully studied the Estimates, or the abstracts of them, the change will be exceedingly misleading, and I regret that the hon. and gallant Gentleman should have been led to think that the Government had been indulging in very extravagant notions and propositions. The fact, I believe, is that on the Navy Estimates there is really an increase of £10,000 only. In the Army Estimates, it is true, there is an increase of £200,000; but the cause of that has been already explained to the House by my right hon. Friend the Secretary of State for War. There is an increase on the Civil Service Estimates of something over £400,000. A great part of that increase—I think about £170,000 or £180,000—is attributable to the intention on the part of the Government to extend education; and the exact amount will be found under the head of "Education in England and Ireland," and "Science and Art." About £198,000 is under Class 1, for Buildings. Now, I believe that, with the exception of about £34,000, these sums are taken for the purpose of continuing works which have already received the sanction of this House, and which must therefore be of necessity followed up. I do not, of course, say it necessarily followed that the additional sums should be asked for this year; but, at all events, it was desirable to complete without delay the buildings which had been commenced. Some other items in excess this year are owing to the legislation of last year. The House has recently shown increased anxiety to prevent the food of the people from being adulterated, and also to protect the people in their employments; and in accordance with these beneficent views, Acts of Parliament were passed last year which required a great deal of inspection of people in their employments under the Home Office, and of the articles of consumption to be made use of by people at sea, under the administration of the Board of Trade. This circumstance also accounts for a considerable increase in the Civil Service Estimates. In addition to this, the Bill passed last year in regard to the Irish constabulary made a considerable increase in the Estimates; and there is also a proposition to be made this year for an increase of the Metropolitan Police, to which it is proposed that the Government should contribute in the same proportion as they have hitherto done. I believe I have now indicated the principal sources of increase in the Civil Service Estimates for the present year, and having said this much, I will pass on to the rest of my statement.

I have stated that the total estimated ordinary expenditure of the year is £70,428,000, and I now come to the estimated Revenue, in order to see what we have to meet this expenditure. The Committee is, of course, aware that the tea duty expires in the course of the year, and that the Income Tax has already expired; and if I were strictly accurate, I might treat these duties as being entirely out of the question, and thereby show a very considerable deficit. But I think it will be more convenient that I should assume that the tea duty will be continued at the same rate as at present, and the Income Tax at the rate of 4d., at which it stood in the beginning of last year. I will proceed, then, upon this assumption. I estimate the Revenue from the Customs at £22,800,000; the Excise £20,330,000; Stamps, £9,650,000; Taxes, £3,540,000; Property and Income Tax at 4d., including estimated arrears, £6,900,000—those arrears amounting to £1,070,000; Post Office, £4,650,000; Crown Lands, £350,000; Miscellaneous, £3,130,000. The last item, which is very considerable, is swollen by the extraordinary receipts to which I have already alluded; and there is also a sum which we propose should be paid over to the Exchequer on the winding up of the the Irish Court of Chancery Fee and Fine Fund, but that will in reality be a repayment of moneys paid out in previous years. It is only the part payment of a debt; and no Member of the Committee representing Ireland, however much impressed with the notion that Chancellors of the Exchequer are anxious to filch money from their country, could raise an objection to that proposition, as was done in the case of the Irish Fines and Fees Fund. The total Revenue derived from these sources we estimate at £71,350,000. Therefore, we have as the Revenue of the year on the estimate I have made £71,350,000, as against an expenditure of £70,428,000, leaving a surplus of £922,000. Now, it is right the Committee should fully understand that the whole of that surplus, and something over, is due to the arrears in the collection of the Income Tax of the previous year. Considering the state in which the balances had been left, I think the greater part of that sum ought really to be maintained as a surplus in order to strengthen the balances.

I now come to the extraordinary expenditure of the year—namely, that for the Abyssinian Expedition. It will be in the recollection of the Committee that, in moving a Vote of Credit for that Expedition, my right hon. Friend stated that a sum of £2,000,000 would be required to place the Expedition on the shores of Abyssinia, fully equipped. We have no reason to suppose that that Estimate has been exceeded. It was contemplated at the time that Sir Robert Napier would land with the whole of his force by the 1st of January, 1868, and it was stated to the Committee that, as the expense to be incurred over and above the £2,000,000 during the financial year 1867–8 would be defrayed in the first instance by the Indian Government, there would be no chance of our being called to account for that expenditure within the financial year. My right hon. Friend stated that the expenditure for the Expedition alone up to the end of April was then expected to amount to £3,500,000, or possibly £4,000,000. Considering all the circumstances of the case—considering the unknown character of the country to which we were sending our troops, and the disadvantage we were under in regard to obtaining information, owing to the distance from this county—I think the officers of the Indian Government, on whom we principally relied for our data, deserve very great credit for the Estimate which they made. But since that statement was made we have heard that the supplies to be obtained from the country itself were much less than it was anticipated they would be. The consequence is that supplies have had to be conveyed from a distance, and the estimate of transport expenditure has been considerably exceeded. Taking it that £2,000,000 will pay the expense of the Expedition up to the end of the year 1867; on the information that we have now before us, we estimate that it will require from the commencement of the natural year, from the 1st of January, 1868, £600,000 per month to defray the cost of the Expedition. Considering that the £2,000,000 cleats off the account up to the end of the year 1867, we start the natural year 1868 with an expenditure of £600,000 per month. I propose to lay on the table the Estimates that have been prepared at the India Office; but I will state to the Committee the heads under which the expenditure falls. The ordinary pay of the troops is excluded, that being defrayed by the In- dian Government. Sea transport will cost £400,000 per month; provisions for troops, £28,000; provision for baggage animals, £90,000; extra allowance to troops over and above their ordinary pay, £10,000; coals, £26,250; and miscellaneous items, £35,000; making a total of £589,250 per month, or in round numbers £600,000. We expect that the Expedition will last until the end of May, and that five months will have to be paid for at the rate named. ["Oh!"] The information my right hon. friend has received from Sir Robert Napier is that he anticipates, if all goes well—and the accounts lately received lead us to suppose that all things are going on well — he shall be on his way homeward, with his back upon Theodore and his army, by the 20th of April. If there be any further charge we believe it will be very small in amount, and it will probably be met by the supplies taken back by the Indian Government. Therefore we have no reason to suppose there will be any additional charge of more than an insignificant amount; assuming, of course, that the Expedition closes by the end of May. I am told that I used an expression of a somewhat ambiguous nature with regard to a British commander turning his back on his enemy — of course I meant after the enemy had been defeated, and not before. According to information at our disposal we estimate the total expenditure for the Abyssinian Expedition, supposing that it is successful, and supposing, as we have reason to hope, that it leaves the country by the end of May, at £5,000,000. Of that £2,000,000 has been already provided for, and £3,000,000 has now to be provided. The Committee will be desirous of knowing how the Government propose to meet this expenditure. If there were reason to suppose that that expenditure would be of anything more than of a temporary nature—as we have every reason to suppose it will not be—if there were reason to suppose that it was likely to last for any considerable time, we should certainly have felt it to be our duty to propose to the Committee the imposition of extraordinary taxation upon articles of consumption. But we consider that the expense of this Expedition will cease within a very short time; and, under these circumstances, it appears to us very objectionable to cause great disturbance of trade by alterations of the Customs tariff. The imposition of extraordinary duties upon articles of general consumption would cause two disturbances—one when the duties were put on, and another when they were taken off. Our experience has been that when such changes are made the general public usually gets the worst of it, and a large profit goes into the hands of those few people who are highly intelligent in the pursuit of their trade. I gather from the expression of opinion around me that the view of the Government in that respect is approved by the Committee. Then there comes the resource which the most obtuse Chancellor of the Exchequer would naturally think of, and that is the Income Tax. In estimating the ordinary Revenue of the year, I have supposed that the Income Tax would be continued at 4d. If it were taken at 6d. for the present year the additional 2d. would give us this result: we should get, according to the estimate of the Department, by an addition of 2d. to the Income Tax for the year, £2,900,000, or very nearly the sum we estimate will be required for the cost of the Expedition. [Mr. GLADSTONE: But not all within the year.] The right hon. Gentleman (Mr. Gladstone) says "Not all within the year." But the right hon. Gentleman has shown us the way of doing so: for I think it was part of one of his financial schemes to impose extra Income Tax, and throw it all upon the first half year; and that is a mode of raising the money within the year. There is this inherent fault in the Income Tax, that, if imposed upon the whole of the year, in the ordinary way, the greater part of it does not come in within the year. The right hon. Gentleman has before now got over that difficulty by imposing the extra Income Tax on one half of the year. If that course can be avoided, it is one that I think ought not to be followed. Suppose the Committee assent to my proposition, and fix the Income Tax at 6d. this year, and we were to collect the extra 2d. in the first halfyear, it would be virtually laying an 8d. tax upon the income of that half of the year. That, I think, would be a course more oppressive than there is any necessity to adopt under present circumstances. And, in addition to its being oppressive, there is a certain amount of inequality in it; because, when property changes hands, it is difficult to adjust the burdens falling upon it unless they fall equally throughout the year. Therefore, I think it is desirable that that course should, if possible, be avoided. Now, what I propose is to impose a 6d. Income Tax in the ordinary way, and spread it over the whole of the year. Then the necessities of the Exchequer will be such that if we merely take the extra 2d. in the ordinary way we shall not obtain the money we want. According to our Estimate we should obtain by an extra 2d. of Income Tax in the present year £1,800,000, and in the year to come £1,100,000. NOW, what I have to propose to the Committee is this—that we should take power to issue Exchequer Bonds for one year to the amount of £1,000,000, to anticipate the receipt of the extra 2d. of Income Tax, which will fall into the Exchequer next year. We ask the Committee to assent to that course on the full understanding that, if it be adopted, this £1,000,000 of Exchequer Bonds is to be paid off next year. At the time we are asking for power to issue these Bonds we are actually providing by taxation within the year for the means of paying them off, and, therefore it cannot be said that we are trusting to the future. We ask for this power, but it does not at all follow that we need exercise the power. Though we have estimated the expenditure of the Expedition now unpaid at £3,000,000, it does not follow that that sum will be called for within the present financial year. The expenditure is defrayed in the first instance by the Indian Government, and the experience of past arrangements between the Imperial and Indian Governments leads us to suppose that it is quite possible that the accounts will not be adjusted by the end of the financial year, and in that case the whole of the money will not be called for within that period. I believe that in the case of the last China War the accounts are still open between the Indian and the Home Governments. Then, again, there is another reason why it is possible that, if we are intrusted with this power, we may not be called upon to exercise it. The past year has been a year of depression. It has been exceedingly difficult to estimate the Revenue for the present year, and we have I thought it prudent under existing circumstances to make a careful and a low Estimate. Under these circumstances it is possible that if commercial prosperity returns, and the elasticity of the Revenue will return with it, that the proceeds of the year may suffice without our having recourse to any such power as that we now ask for. Of course we cannot calculate upon that. We must estimate the Revenue according to the best of our judgment, and we must endeavour to provide this money in case the expenditure should all fall within the year; and the estimate of Revenue we propose should not be exceeded.

Well, Sir, suppose the Committee accept our proposition, this will be the result—We have the surplus of £922,000 on the figures I have already mentioned. Then we should receive by the additional Income Tax, £1,800,000; and if we were to issue Bonds for the amount proposed, we should receive £1,000,000. Thus there would be available £3,722,000, leaving a surplus of £722,000 to strengthen the Exchequer balances. On the other hand, if no Exchequer Bonds were issued, we should only have £1,800,000 in addition to our surplus, or £2,722,000 available to meet the expenditure, and there would consequently be a deficit of £278,000.

I think, perhaps, it would be advisable to see whether the proposition I have made is one which ought to be supported on general grounds. Now, taking the total cost of the war at £5,000,000, let us see how far we have met it out of taxation. We raised by taxation on the income of 1867–8, though it was not all collected within the year 1867–8, the sum of £1,450,000. We now propose to provide by taxation on the income of this year £2,900,000. Thus, we have provided by taxation within two years £4,350,000 out of the total of £5,000,000, throwing upon the balances in the Exchequer—that is, the accumulations of general Revenue—the difference—namely, £650,000. Well, I think it cannot be said that we are throwing upon the future the burden of this expedition. Questions, of course, may be raised, and probably will be raised, as to the desirability of meeting the whole of this expenditure out of direct taxation; but I think the arguments I have used appear to recommend themselves to the Committee—that it is not expedient, when the expenditure to be provided for is of so temporary a character, to disturb trade by increasing taxation on articles of consumption. These, Sir, are the propositions I have to make, and ask the assent of the House to.

There is a passage in one of the minor poets of antiquity in which he laments over his unhappy fate in having been born in such late times that the whole poetic harvest had been gathered in by the great masters of song, and that there were few flowers left for him to cull. I do not think the time has come yet for a Chancellor of the Exchequer to take up that strain. I do not think he need say there is nothing in our financial system that requires further reform. "Much has been done, but more remains to do." If there are not many flowers to cull, there are many noxious weeds in our fiscal system still to be rooted up; there are blots in that system which have often attracted the attention of the House, and which have been much urged upon successive Chancellors of the Exchequer; and there are other blots in our system which have not, in my opinion, yet received sufficient attention. Holding these views I hope I shall receive some sympathy at the hands of the Committee if, on this occasion, the exigencies of fate have obliged me to propose a most unambitious Budget. I felt that the circumstances of the time were such that it would be out of place to propose extensive changes in our fiscal system, and, therefore, it has been my lot to propose a very matter-of-fact Budget. I think the Committee will, at all events, agree that it is a very simple and intelligible proposition; and I feel that I can recommend it to the Committee as being financially sound, and I think I am justified in saying that we propose to provide for the extraordinary expenses entailed upon us in a manner which will not be unduly oppressive to the people of this country. The right hon. Gentleman concluded by proposing the usual formal Resolution.

Motion made, and Question proposed, That, towards raising the Supply granted to Her Majesty, the Duty of Customs now charged on Tea shall continue to be levied and charged on and after the 1st day of August 1868 until the 1st day of August 1869, on the importation thereof into Great Britain and Ireland: viz.

		s.	d.
Tea	the lb.	0	6."

MR. GLADSTONE

I congratulate the right hon. Gentleman upon this—that if he has been in some respects, as I think, unfortunate in the circumstances under which he has acceded to the duties of an arduous office, he has laid before us, with great pains and ability, a very full statement of all information which, as he thought, would tend to improve our means of judgment upon the important question he has submitted to the Committee. I need not say that I do not propose to enter at large upon the matter contained in the right hon. Gentleman's speech; but the occasion is one of importance, and one on which, taking such a view as I am able to take of public affairs, it is right there should be a special meaning attached to the assent which I, for one, shall be quite prepared to give to the Resolution of the right hon. Gentleman with reference to our freedom of future action upon the state of affairs he has made known to us. I quite agree with the right hon. Gentleman that the retrospect of the Revenue of the country, all things considered, is not unsatisfactory. I think that the augmentation which he has stated to have taken place in the Revenue, under the circumstances of the year, is quite as much as, or more than, we were entitled to expect. I am also glad to find that the right hon. Gentleman is well satisfied with the result of the transfer of the Dog Tax from the head of assessed taxes to that of Excise; and no doubt there is very considerable force in the argument he has urged in favour of other similar transfers, though, perhaps, some points may likewise be urged on the other side of the account. I must also make this admission to the right hon. Gentleman—that I think, if we are to assume the charge of the country to remain as he has stated it, the manner in which he proposes to meet that charge as he has described it is simple and sound. I have nothing to object to it. Viewing the exigency with which he has to contend, I think he is eminently right in not attempting to disturb the trade of the country by any change in indirect taxation. I think, likewise, that the amount of the provision he proposes with reference to the account between ourselves and what we call posterity is a fair division of the charge. That which weighs upon my mind is a point of a different character. It is one which the right hon. Gentleman has by no means kept out of view, for nothing, I think, could be more fair and ingenuous than his statement. But it is a point, at the same time, of the greatest importance, and one which, I doubt, whether the House or the country have at present taken into view. [Mr. WHITE: Hear, hear!] The impression which prevails out-of-doors, and which, I think, prevails extensively among Members of this House, and certainly prevails among persons generally well informed, is that we were to-day to be called on to make an addition to the taxation of the country in consequence of the Abyssinian War. Now, Sir, that impression is an erroneous one. We are, indeed, called on to make an addition to the taxation of the country; but not in consequence of the Abyssinian War. It is in consequence of the additions made, and proposed to be made, to the permanent expenditure of the country; and that is the very grave fact which induces me to rise for the purpose of at least stating it. I will give the House the few particulars which are necessary to make my statement intelligible, reserving to myself what I may call the freedom—but the freedom to perform a duty—of considering the position of the accounts; because, although no grave question may arise on the nature of the provision proposed by the right hon. Gentleman if that provision be really necessary, the really grave question which arises is this—Whether we are embarked on a safe and prudent course as respects the general expenditure of the country? As I have said, it is not the war in Abyssinia which requires the augmentation of the Income Tax that is now proposed. With regard to the augmentation of the Income Tax made in November last, it was certainly due to that war; because, whatever might have been in the spring of last year the amount of our available surplus, the war in Abyssinia was not then contemplated; it was a sudden and unforeseen necessity, arising when the financial year was already far advanced; and it was not possible — at least, it would not have been equitable—to expect that the Government should have been in possession of resources to enable them to meet the charges for the Abyssinian Expedition. But I wish now to point out — taking the figures of the right hon. Gentleman—what I think is necessary in order to support the statement that I have made. I am bound to observe that it sounds to me as if the right hon. Gentleman had not been over liberal, to say the very least, in the provision that he proposes to make for the war in Abyssinia. I must own that I think him sanguine in that respect. He has taken the charge for five months from the 1st of January last, and beyond those five months he has taken nothing whatever. He assumes that on the 31st of May his troops will have been re-landed in India, his transports dismissed, his establishments reduced, and that he will have a clear stage for what follows that date; or, if I understood him aright, as far as any qualifications were to be made to that statement, a sufficient set-off would be found in the credits for supplies to be returned in the hands of the East Indian Government. Sir, the Government are so superior to us in their means of forming a judgment that I now go no further than to say I own that, in the statement of the right hon. Gentleman, I am afraid he has not made a very liberal provision for the remaining expenses of the Expedition. But I take his figures as he has given them; and the state of the case is this—that the right hon. Gentleman shows us a deficit to be provided for of £2,078,000 on the expenditure of the year 1868–9. Now, my proposition, which is a very simple one, is this, that if our permanent expenditure—that is to say, our expenditure on the ordinary heads of charge—had been less than it is by £2,078,000, the right hon. Gentleman would not have been required to make any call on the country for any new tax whatever. And although I entirely approve the nature of the call which the right hon. Gentleman has made, if the necessity for it be established, yet I think we must carefully distinguish between an appropriate mode of finding the Ways and Means and the propriety of the charge itself, which the Ways and Means are intended to meet. Now, how do we stand? As I have said, there are £2,078,000 to be provided. This, Sir, is the very simple comparison that I propose to make. I propose to compare the Estimates as they are now on the table with the Estimates which were on the table two years ago. That comparison is one which, at least, is fair to Her Majesty's Government, because, undoubtedly, they have been unfortunate in the number of Supplemental Estimates which it has been either their fault or their misfortune—I do not say it has been their fault—to submit; and they have been still more unfortunate in the Excesses—which appear to have become almost normal—of expenditure over and above the sums voted with which they have had to come before the House of Commons. Therefore, the comparison I am about to make, if it be unfair, is not unfair to Her Majesty's Government. I will not trouble the Committee with any question as to the Debt and permanent charge of the country; but will confine myself to what may be called the variable or optional charges—namely, such as are voted in Supply; and I take the original Estimates of the years 1866–7, 1867–8, and 1868–9. The Estimates of 1866–7 amounted to £38,165,000; those for 1867–8 to £39,733,000; and those for 1868–9 are £41,863,000. Primâ facie, there is an increase of £3,700,000; but the right hon. Gentleman has observed with perfect propriety that there are deductions to be made from that increase, because some considerable amounts now appear on both sides of the account which formerly appeared on neither side. Sir, I have endeavoured, and with the assistance of my hon. Friend (Mr. Childers), to ascertain, as well as we can, what are the items that fall within that class, so as to learn how much of this formidable amount of £3,700,000 is merely a nominal and not a real increase of charge. As far as we are able to arrive at a conclusion—and I am very confident that we are not very far wrong in it, though I by no means submit it as a conclusion positively and minutely exact—the reduced and corrected Estimates of this year, making allowance for those charges, may be said to stand for comparison with the Estimates of two years ago, not at £41,863,000, but at about £41,000,000 in round numbers.

THE CHANCELLOR OF THE EXCHEQUER

How much have you taken off?

MR. GLADSTONE

£860,000,

THE CHANCELLOR OF THE EXCHEQUER

The deductions should be more than that.

MR. GLADSTONE

Very well, there are some points which might be made matter of detailed argument; but the margin of dispute between us is not very large, and even if I accept the data of the right hon. Gentleman it will not in the least interfere with my proposition. Therefore, I have to compare £41,000,000 with the sum of £38,165,000, at which the Estimates stood in 1866–7; and I show an addition to the permanent charge of the country, within what has not yet been the full financial year, of £2,840,000. Well as the whole of this Abyssinian deficit amounts to £2,078,000, the appearance of the matter is this—that had we continued at the point of expenditure where we were two years ago—and I, for one, have never concealed my opinion that that was a very high point—instead of the right hon. Gentleman being now obliged to condole with himself, and my being obliged to condole with him on the nature of the appeal that he makes to us, he would have appeared before us, notwithstanding the financial crisis, notwithstanding the bad harvest and the comparatively unfavourable state of the Revenue, with a clear surplus of £800,000. That is a matter which, on the simple statement of it, I own I think requires grave reflection. The state of things for the last two years has been somewhat peculiar. During the Session of 1866 it would have been most invidious and offensive if even Independent Members of the House—still more if the Members of an out-going Government—had cavilled too sharply at such an augmentation as was then made to the Estimates of the year. During the Session of 1867 it was very natural that the absorbing impatience and anxiety of the House to close the subject of Parliamentary Reform, at least as far as regards the most populous of the three kingdoms and the most difficult portions of the question, placed in abeyance almost entirely the function of an Opposition with respect to criticism on financial proposals. The case having been so, I do not at this moment, and without further examination, mean to enter into the question whether what was done in former years in this respect is matter of blame or not; but I do mean to reserve to myself the power of considering whether, as I have said, the course in which we have embarked is a safe and prudent one. An augmentation not far short of £3,000,000 sterling to the permanent charge of the country, when it was already high, brings that permanent charge I think I may say to a higher point than in time of peace it ever has attained. I do not think that, under the anxieties of the years 1859, 1860, and 1861—if we strike off the distinct war charges of that period—our permanent, normal, and regular expenditure was nearly as high as that which the right hon. Gentleman calls upon us to sanction in the arrangements of the present year. These arrangements are still to a great extent in our power. And I must say, without presuming to give a confident opinion—for it would be most presumptuous in me, as an individual, to do so—that I do hope the House will examine for themselves the statement that I have made—namely, that this augmentation of Income Tax which is now demanded from the people is not a demand made for the purpose of meeting the Abyssinian war ["Oh!"]; but is a demand made for the purpose of meeting an augmentation of the permanent charge upon the country. And if this allegation is not shaken—if the augmentation is, as I should put it, £2,840,000, or, as the right hon. Gentleman would put it, £2,700,000—for I will not quarrel with him as to the difference—that is more than enough to make good my allegation that it is the increase of permanent charge which requires us to make good this new demand upon the country. And if that be so, I will not go further than to say that it will be our duty very carefully to consider whether this augmentation of permanent charge is really necessary; whether we can justify it in the face of the country; or whether it may not be our duty to make some effort for bringing the expenditure of the country—I mean the permanent and ordinary expenditure—within more moderate bounds. I raise no objection, Sir, to the Motion of the right hon. Gentleman.

COLONEL SYKES

said, that as the right hon. Gentleman had referred to his remarks the other night, he wished to say now, that if the Chairman of the Committee had not ruled him to be out of order, he was prepared to prove the statement he had made, that the Civil Service Estimates had been steadily and rapidly increasing. In the matter of salaries alone there was a net increase of £48,000. Other items were in proportion, and the result was, that the net increase in all the Departments amounted to £1,207,476. His right hon. Friend appeared to think that he had not deducted those sums which now appeared on both sides of the Estimates for the first time; but he begged to say that he was not in the habit of dealing so loosely with figures; and he found that the actual increase of permanent charge, after those deductions, amounted to £431,000. The contrast between the military and naval expenditure of the present and former financial years was not less striking. The Navy Estimates, as compared with those of two years ago, showed a net increase of £201,037, and those for the Army of £203,200. In the French Navy budget for 1868–9 there was an increase of £607,451; nevertheless, the total charge was only £6,529,510; while the charge for the British Navy was £11,177,290. The charge for the French Army was increased this year by £1,342,532; but the whole cost for 1,200,000 men, including reserves, was £15,267,782; and the British charge was £15,455,400 for 136,650 men and officers, exclusive of militia, reserves, &c. The same contrast is exhibited in the total expenditure of France for the year, which is £65,111,367; and that of England £69,600,218, besides £2,166,023 for the Abyssinian Expedition; in all £71,766,241. This increase in expenditure was going on, and he believed it would continue to go on, unless the House felt that it was dangerous to their popularity in the country, and Members attended to the duty which he was sorry to say so many of them now neglected, to guard the public purse. Year by year the taxation was increasing, and the rate of pauperism was keeping pace with it. The right hon. Gentleman the Chancellor of the Exchequer estimated that the Abyssinian Expedition would be over and the troops recalled before May. He was afraid the right hon. Gentleman had not taken into account the fact that the south-western monsoon blew up the Red Sea from the month of May until September. Including steamers, there were now employed as transports 261 vessels. Did the right hon. Gentleman suppose that these could re-embark not only the soldiers of the Expedition but all the stores by the end of May? It had taken the troops three months to reach the district into which they had now advanced, and he expected that it would take them two months to march back again. Then there was the accumulated transport agency, including 8,000 mules and forty-five elephants carrying the guns. It was much more likely that the last of the Expedition would leave in August than in May; and he could not bring himself to believe that the "if" of the right hon. Gentleman rested upon any very substantial basis. The cost of transport alone, independent of coals, was £414,000 a month; and supposing that the Expedition lasted a twelvemonth the expense in this direction would be £4,968,000, an expense which the right hon. Gentleman might regard as almost certain; for he could scarcely expect that the duties of this service would be completed by that time. He thought, under the circumstances, that it was impossible for the Civil Service of the year to be performed for the Estimates laid down by the Chancellor of the Exchequer.

MR. T. BARING

I hope the House will indulge me for a few minutes, in order to express my opinion on this question; and I think it the more my duty to do so, for unfortunately my opinions are in opposition to those who have already addressed the House, and certainly they are not in accordance with what is represented to be the general and popular feeling. The proposition of the right hon. Gentleman is, that the whole charge for the Abyssinian War shall be placed upon income and properly. Now, the right hon. Gentleman has truly said that it requires no ingenuity, that the most obtuse Chancellor of the Exchequer would find it easy to come down to this House, and by the imposition of another penny or twopence meet every exigency that may arise. But, Sir, is that just to the country, and is it likely to contribute to the permanent prosperity of the country? The right hon. Gentleman says that he wishes to avoid any disturbance of trade. Well, Sir, but this argument will apply at any time; at any moment, in any event, we may be told that it would be unwise to disturb trade, and that, therefore, an addition to the Income Tax must be imposed. We see the practice growing; for the precedent is seductive to a Government that is guided by popular feeling, but from it I augur the greatest misfortunes to this country. The precedent will not be neglected in after times. The right hon. Gentleman the Member for South Lancashire thinks that the war will not come to an end so soon as the Chancellor of the Exchequer supposes. But if it is continued, shall we not have more expenditure, another want of money, another increase of direct taxation, under the plea that we must not disturb the trade and commerce of the country? Let me say that I doubt whether, if we were to impose indirect taxation, the disturbance to the trade of the country would be so great as the right hon. Gentleman assumes. If you were to propose an additional 5 per cent on the Customs duties, it would raise the sum of £1,500,000, and it would not involve that injury to trade which he imagines. There would be great complaints, no doubt; but if, on the other hand, you are to adopt systematically the proposals of the right hon. Gentleman; if the Income Tax is to meet every want which a popular Government may devise, you will soon be landed in an expenditure to which the present amount is a trifle. It would, indeed, be the greatest disgrace to the present generation, if they were to propose to meet the wants and necessities of this war, which, in my opinion, has been created by previous diplomatic errors, by throwing the burden upon posterity. Having got into the scrape, it would be dishonest in us to throw the taxation for it upon future generations. But what is the right hon. Gentleman about to do? He says, "I do not, however, merely propose to issue £1,000,000 of Exchequer Bonds which we shall pay off at the end of the year." But has not the right hon. Gentleman heard of former Exchequer Bonds borrowed with the same intention, but which have never been met, and which are renewed from year to year? And will the right hon. Gentleman, who is now no doubt sincere in his belief, give us any guarantee that he will not renew these Bonds next year? The whole thing comes to this—Is the Chancellor of the Exchequer to have his task made easy for him by being allowed another turn at the Income Tax screw whenever he is in difficulties; or is every class in the country to be made to pay their share in this expensive war?

MR. AYTOUN

said, he wished to call the attention of the right hon. Gentleman to one particular point. The right hon. Gentleman was about to meet a portion of the expenditure by the issue of Exchequer Bonds, which, whenever it might be paid, was still to be borrowed in the same way as the permanent Debt. Now, the right hon. Gentleman was aware that last year a charge was made upon the Consolidated Fund, which, however it might be acquired, was simply the addition of an annuity towards the extinction of the National Debt. He alluded to the Act known as the Terminable Annuities Act, by which the debt due to the Savings Banks was supposed to be wiped off; but the only result of it was that au annuity was charged upon the Consolidated Fund, out of the proceeds of which there was paid every year the sums necessary to meet the demands of the Savings Banks, and the remainder went to extinguish Consols. Now, when the right hon. Gentleman asked for power to issue Exchequer Bonds while this annuity was to be met, this was really to proceed upon the plan condemned by every financier—the paying off debt with borrowed money. He hoped, therefore, the right hon. Gentleman would tell him whether, in his opinion, it was a sound principle to go on paying off debt when they had to borrow money for an expensive war; or, whether he did not think the necessities of the State did not require them for the present to suspend the operation of the Terminable Annuities Act?

SIR WILLIAM STIRLING-MAXWELL

said, he wished to complain of a grievance which arose from an Act passed during last Session; but, before doing so, desired to congratulate the right hon. Gentleman on the manner in which he had performed a duty which had devolved upon him under circumstances in some degree depressing. The grievance to which he alluded arose under the tax imposed upon sheepdogs, a tax which bore very, heavily upon some of the poorer inhabitants of the county he represented (Perthshire). Several petitions had been presented against this tax, which, although a small matter to the House, was no inconsiderable matter to the persons who had to pay it. Two of these dogs were required by every shepherd, and, as they were of little use to him until they were eighteen months old, it would be seen that the tax was not a light one. It had been imposed for the first time at a period when the business in which these men were engaged was in a most depressed state. He had been a warm supporter of the tax on general grounds, and it had proved very successful; but in that success he saw a good reason why the slight remission he asked for should not be made. He suggested that shepherds might be relieved from the dog tax on producing, in each case, a certificate under the hand of a justice of the peace. To use the metaphor of the Chancellor of the Exchequer, he hoped the right hon. Gentleman would pull up this fiscal weed, especially as it was one of his own planting.

MR. HUBBARD

said, he believed the criticisms to which the Chancellor of the Exchequer's statement had been subjected were founded on erroneous views of the case. His right hon. Friend the Member for South Lancashire had spoken of the demand made for additional taxation as being occasioned not by the Abyssinian War, but by an exceptional and unnecessary increase of ordinary expenditure; but before the Government was condemned on account of this, it was necessary to inquire whether that increase of ordinary expenditure could have been avoided. Now, he had heard from all sides, without contradiction, that the late Government had left the defences of the country at an improperly low ebb, so that the present Government was under the necessity of raising the expenditure to correct the error of their predecessors. And if we had spent less during the past two years on the Army and Navy than we had by £3,000,000, should we have been in possession of that sum as a surplus? He apprehended not. A reduction in our expenditure would have entailed a reduction in our taxation. The Abyssinian demand would, in that case, have come upon the Committee in the shape of an unexpected and additional charge of £4,000,000 or £5,000,000, and extraordinary means would have been resorted to to meet it. His hon. Friend the Member for Huntingdon (Mr. Baring) had advocated an addition of 5 per cent to the Customs duties on all articles, large or small, as a means of raising Revenue; but he entirely disapproved of such a suggestion. It would be an inconvenience to everybody, it would disturb our arrangements with every country with which we were at present engaged in trade, and it would go a great way towards disturbing that simplification of our Customs duties which it was so desirable to retain. With regard to the method of raising the Revenue which had been adopted by the Chancellor of the Exchequer, he regretted that the Income Tax was still left in a condition so discreditable to the sagacity of the governors of the country, and so ill-fitted for becoming a permanent means of Revenue. It was not yet a permanent means of Revenue—it had to be levied from year to year; but he hoped at no distant date attention would be directed to the subject, and that it would be fitted to become a permanent source of Revenue. He noticed that neither the Chancellor of the Exchequer nor the right hon. Member for South Lancashire had alluded to the operation of the Terminable Annuities scheme, which was at present absorbing an extra £1,000,000 of taxation; probably the reflections it gave rise to were not altogether palatable to them, for if they had followed the old-fashioned course of raising sufficient Revenue for the year and applying the surplus as it rose to the reduction of the National Debt, this extra £1,000,000 would have been available to meet the Abyssinian Expedition; the Chancellor of the Exchequer's £900,000 surplus would in that case have been £1,900,000, and have diminished to that extent the strain upon the Income Tax. Upon the whole, however, he was bound to say that, considering the circumstances of the times and the difficulties under which the Government took office, with the Abyssinian Expedition before them—not the result of their own management, be it remembered—the Chancellor of the Exchequer deserved the thanks of the Committee for the very satisfactory proposals he had made.

MR. WHITE

said, it would seem, from what fell from the hon. Member for Huntingdon (Mr. T. Baring), that the poorer classes of this country did not pay their due share of taxation. But if he should, have the honour to be returned to a Reformed Parliament, he hoped to have the opportunity of showing, by the appointment of a Select Committee on the Incidence of Taxation—hitherto refused him—that the amount paid by the poorer classes was larger in proportion than that paid by the rich. The shadow of a house-holder Parliament was already upon them, and any attempt to increase indirect taxation would have to meet with no ordinary opposition in that House. A very intelligent constituent, who was largely engaged in trade, had given him some figures showing how much the poor man paid the Government out of every 1s. he disbursed in articles of ordinary domestic consumption. If 1s. were laid out in tea, the average cost of which was 2s. 9d. per lb., 1¾d. went to the Government as duty. Of coffee at 1s. 6d. a lb. the Government got 1¼d. out of every 1s.; and taking sugar at 4½d. per lb., 3¼d. in every 1s. accrued to the Government. On every 1s. spent on currants 3d., and on raisins 1¾d. were exacted by the Government in Customs duties; and to summarize the figures, they proved that of the money expended by the humbler classes in sugar, 27½ per cent was paid to the Government in taxes; 15 per cent upon tea, 10 per cent upon coffee, 25 per cent upon currants, and 15 per cent upon raisins. In addition to this, the duties paid upon spirits and tobacco were absolutely enormous; but for obvious reasons no one objected to those articles being largely taxed. It must not be forgotten, further, that the retailer charged his profit upon the duties paid, which would make an additional 10 per cent exacted from the consumer. He regretted that the hon. Member for Buckingham (Mr. Hubbard) had objected to the statement of the right hon. Gentleman the Member for South Lancashire, that the increase of Income Tax was due, not to to the Abyssinian war, but to an increase in the expenditure, because it was clear to his mind, as he told the House last November, that had the expenditure of the country not been unduly augmented, the necessity of any increase in the direct taxation would not have arisen. The duty of the Opposition in regard to this matter was clear. Though he had not spoken on this subject since the November sitting, he had conveyed to the right hon. Gentleman the Member for South Lancashire his opi- nion of the duty of Opposition Leaders—namely, not to abdicate their functions, but to strive to curtail the present excessive public expenditure. The right hon. Gentleman the First Lord of the Treasury had not succeeded with all his teaching to educate his party in economy, although when in Opposition he spoke strongly against the "swollen and bloated armaments" of the country; and, therefore, if his right hon. Friend the Member for South Lancashire had concluded with a Motion of Want of Confidence in the Government on the ground of excessive expenditure during the last two years, he should have felt bound to support such a Motion. During the last two years the whole tone of society had been in the direction of economy; but the Government, in contemptuous disregard of the condition of the country and of public opinion, had gone on unnecessarily increasing the public expenditure.

MR. GREENE

said, he was of opinion that a very considerable saving might be effected in the national expenditure; but he did not believe that would be accomplished until political strife was laid aside and the financial affairs of the nation were considered in a calm and deliberate manner. He had never heard the question fairly brought before the House during the long period the Liberal party were in power. In fact, during their tenure of office, particularly during the time of Lord Palmerston's Government, the expenditure had increased several millions a year. Speaking as a man of business, he could see many ways of collecting the taxes at a less cost, and also how taxation might be increased and yet be less burdensome than now. A large saving might be effected on the cost of collecting the national Revenues. But so long as they were engaged in party conflicts they could never settle down to the far more important business of taxation. Under all the circumstances he thought that the mode in which the Chancellor of the Exchequer had brought the Budget before them was highly satisfactory. The country had had two bad harvests—last year and the year preceding. There was at present a prospect of a good harvest; and if that should turn out to be the case, the price of corn would fall, and there would again be an increase in the consumption of articles of Excise.

MR. CHILDERS

said, that the statement of the right hon. Gentleman the Chancellor of the Exchequer was so clear and conclusive, in what he did say, that he only rose to give a few figures as to one part of the subject which he had passed over. For the first time for many years there was a deficit last year, which was succeeded by another and a heavier one this year. Last year, omitting the Abyssinian expenditure and the proceeds of the taxes raised to defray it, the Revenue was £69,223,000, and the Expenditure £69,236,000, leaving a deficit of £13,000, and this year, making the same omissions, the Revenue was estimated at £70,280,000, and the Expenditure at £70,428,000, the result being a deficit of £148,000. Besides these the right hon. Gentleman the Chancellor of the Exchequer estimated the Expenses of the Expedition to Abyssinia at £5,000,000, and calculated that the 1d. additional Income Tax last year, and the 2d. this, would yield £4,350,000. The position of their finances, therefore, was that out of the balances in the Exchequer they were to pay £650,000 for Abyssinia, besides deficits on ordinary expenditure for the last two years of £13,000 and £148,500. During each of the three previous years there had been a considerable surplus. In the year 1864–5 the surplus was £3,851,000; in 1865–6 it was £1,897,000; and in 1866–7, £2,654,000. These were the last three years of the financial administration of the late Government, and they gave an average surplus of £2,800,000 a year. The two years of the administration of the present Government gave deficits of £13,000 and £148,500. His right hon. Friend the Member for South Lancashire had pointed out that these deficits were due to the enormous increase of the expenditure of the country. The policy of the late Government had been, to the best of their information, to estimate what would be necessary for the requirements of the year, and then to keep down the expenditure within the limits which had thus been fixed. The result of that policy was, that in 1864–5 the Estimate of expenditure upon which his right hon. Friend's Budget was based was £38,560,000 for Supply Services. The actual issues were £38,190,000; so that the issues were less than the original Estimate by £370,000. In the following year, in which there was a large Supplementary Estimate, the original Estimate was £37,899,000, and the issues were £37,797,000; showing that under the most difficult circumstances the Government expended during the year £92,000 less than the original Estimate. But what had been the state of affairs during the last two years in which the present Government had administered the finances of the country? In 1866–7 the original Estimate of expenditure was £38,165,000, and the issues of the year were £38,834,000; so that the issues exceeded the original Estimate by £669,000. The original Estimate for the year 1867–8, including the Vote for Abyssinia, was £42,234,000, and the issues were £42,771,000; the issues being £537,000 in excess of the original Estimate. What did these figures show? They showed that the policy of the late Government, of which, as deficient in economy, many complaints had been made, was to keep well within the original Estimate; while the practice of the present Government had been to spend very much more than their original Estimate. He desired to add that he was able from a careful analysis of figures strongly to corroborate the statement of his right hon. Friend the Member for South Lancashire, that, after making every possible reduction, the permanent expenditure of the country was £2,700,000 more than it was two years ago. Upon the fortification question he had ventured to interrupt his right hon. Friend opposite, who, he was sorry, had not before him the figures bearing upon that subject; for he believed it had been the universal practice of Chancellors of the Exchequer during many years past, after stating the surplus or deficiency, not taking into account the fortification expenditure, afterwards to state the matter over again, including the fortification expenditure. The right hon. Gentleman the Member for South Lancashire had adopted this course during the last three years successively, and he had been able nevertheless to shew a large surplus each year. And if his right hon. Friend opposite had that evening followed a similar course, and had repeated the figures, including the fortification expenses, the results which would then have become apparent would have made the House very sensible of the great change which had come over our finances. He hoped that the House, having now for many years left the discussion of the Estimates to small Committees of Supply, consisting of twenty, thirty, or forty Members, now that they were landed in an annual deficit of £100,000 or £200,000, instead of having a surplus of £2,800,000, would give some assistance to those who were anxious to keep down the expenditure.

SIR STAFFORD NORTHCOTE

From some observations which have been made in the course of this debate, it would appear that the statement of my right hon. Friend the Chancellor of the Exchequer with regard to the Abyssinian Expedition has been a little misunderstood. My right hon. Friend gave his calculation as to the probable amount of expenditure, supposing the expedition were to terminate by the end of May. He said he took that expenditure at the rate of £600,000 a month for five months, beginning with January and ending with May; and he mentioned among the items of which this was made up, one of £400,000 for transport. Upon this my hon. and gallant Friend the Member for Aberdeen (Colonel Sykes) assuming that the expedition would not terminate in May, says, "You will have this item of £400,000 a month for transport running on," and he calculated what that would come to in a year. But it should be understood that the mode in which the Estimate had been made was this—we had received information from Bombay upon which that statement was founded; and at that particular time we had a very large fleet of transports plying between Bombay and the Red Sea, and which vessels were required at that moment. The cost of that transport was, as well as we could reckon it, £400,000 a month; but it never was believed that the cost of transport would be permanent at £400,000 a month. It happened that the vessels which had been taken up were now to a large extent discharged; and if we had to employ means to fetch away the men and what remained of the supplies, we could do it at a much smaller expenditure than £400,000 a month. But in order to make the matter more safe, we thought it desirable that the cost of transport should be estimated at the same for the five months; and we fully believed that the expenditure would be covered by the Vote which we proposed to take. The quantity of stores sent to Abyssinia has been extremely large, owing to the great uncertainty in which we stood as to the probable duration of the Expedition, and also as to what would be necessary with the prospect of the rainy season in view. But there is now in the country a supply that would suffice for the whole force till the month of November, so that no more supplies will be required. When the time comes for the return of the troops, we hope that means may be found for dis- posing of a considerable portion both of these supplies and of the baggage animals, specially the mules, upon favourable terms—among others, to the planters in the Mauritius, perhaps; so that it will not be necessary to employ anything like the amount of transport that was required, to place the Expedition in the country. I believe we may say that the Estimate which has been taken is a very safe Estimate; and supposing, what we all hope, that the Expedition has terminated successfully in the early days of the present month, there is reason to believe with some confidence that the sum which has been taken will be found amply sufficient to cover the whole cost of the Expedition. I am very sorry that, in consequence of the interruption which has taken place in the Malta and Alexandria Cable, no later information has been received within the last few days. As far as our information extends, we have reason to hope that the whole object of the Expedition has before this time been attained.

MR. LIDDELL

said, he did not dispute the success which had attended the operation of the new dog tax, but that it had been attained partly at the expense of a very deserving body of men. The tax fell heavy upon shepherds' dogs, a result which was in direct antagonism to the principles which had always guided the House in legislating for the rural population, that of exempting animals employed in operations of husbandry. Cart-horses were exempted from taxation upon that principle; and could anybody say that a shepherd's dog was not equally indispensable in the performance of daily avocations upon the large grazing farms in the North of England? He thought that the tax upon shepherds' dogs was an improper tax; and on the proper occasion he should do his best to induce the Government to deal with the matter.

MR. FAWCETT

said, he thought a good case had been made out against taxing shepherds' dogs. He could not help thinking that the Financial Statement which they had heard was much more serious than they might at first suppose it to be. Put it as they liked, the fact was that the Chancellor of the Exchequer was going to borrow £1,000,000. He, indeed, said that it was to be a temporary loan; but were the finances in such a condition that they could see that next year they would be in a better position than they now were to pay off this temporary loan? The whole hope of the Budget was that the Abyssinian Expedition would terminate by the end of May; but nine out of ten of the best informed men believed that this would not be so. If the Expedition should not be at an end by the time supposed, then the finances would be in a worse position next year than they were now, because there would then be an expenditure for which they had made no provision. Under these circumstances he thought that they were not justified in making the loan. The £1,000,000 would virtually be spent as a sinking fund. He objected to this principle when temporary annuities were proposed for the purpose of reducing the National Debt, because the system had the vice of the old sinking fund, that when the finances were in an unsatisfactory state they would have to borrow or increase taxation in order to reduce the Debt. He was as strongly as any man in favour of reducing the National Debt; but there was only one way of doing it, and that was the straight-forward plan of getting a surplus by economy, and applying it immediately to cancel a certain amount of debt, or by granting terminable annuities instead of permanent annuities. He feared that the effect of the speech of the right hon. Member for South Lancashire would be a little marred by the vice of over statement. The proposition which the right hon. Gentleman sought to prove was this, that the 1d. addition to the Income Tax was not caused by the Abyssinian Expedition, but by the increase of the ordinary expenditure; and this was not an absolutely correct statement. He would have greatly strengthened his proposition if he had said that the addition to the Income Tax was caused just as much by increased expenditure as by the Abyssinian Expedition. Increased expenditure was caused in two ways. The increase was due either to policy or to detail. No man was so much responsible for the policy of extravagant position as the late Lord Palmerston, who frightened England by the bugbear of foreign invasion. He deluded the country and induced it to enter upon a career of rivalry with foreign Towers, which were now ruining themselves by bloated and extravagant armaments, Europe was now so frightfully overarmed that her industry could not bear the burden, and the countries were being rapidly led to bankruptcy. The expenditure of our own country could be controlled by looking after details; and he thought that the most serious charge against the Government was that they had not been sufficiently careful as to the details of their expenditure. He did not say this in a spirit of party animosity, for those on his side of the House were not guiltless in the matter. Did Independent Members, when discussing Estimates, ever receive any assistance from the front Opposition Bench? Sometimes it was said that our large expenditure was not now of much consequence, because we had got rid of our worst taxes; but he did not admit this to be so. We had still some of the worst possible taxes, such as the taxes upon locomotion and the 1s. duty upon corn. He complained that they had been hurried into the Expedition to Abyssinia without the representatives of the country being consulted, involving them in pecuniary difficulties with India, and risk about which they knew nothing. He was bound to say that the speech of the noble Lord the Foreign Secretary at the end of last Session with respect to this question had completely misled him. He had considered that there was no risk of their being involved in a war without the House of Commons having an opportunity to express an opinion respecting the policy of that war. The expense and risk were great, without a prospect of glory, and it would be still more expensive, only they had unjustly and ungenerously cast a portion of the expense of the Expedition upon the people of India, who had no more to do with it than the people of Canada or Australia. He would far sooner that this country should bear an additional burden than that the people of India should be called upon to pay £300,000 or £400,000 for such an object; or that this country should incur a suspicion, of putting on a dependency a charge which they knew they dare not cast upon the people of any of their colonies. He hoped the right hon. Member for South Lancashire would change the policy with regard to their rivalling European Powers, and join the Independent Members in protesting against every item of expense that could be looked upon as unnecessary.

MR. M'LAREN

submitted that the tax on shepherds' dogs was levied from the wrong person. The shepherd must, keep two dogs—one to scatter the sheep and send them to the hill; the other to bring them back. The shepherd paid a tax of 5s. a year for each of these dogs, and that was very nearly equal to the house tax, where a man with a rental of £20 a year paid 15s. a year tax. The poor shepherd lived in a poor cottage, with a small income, and the tax should not be laid upon him who was the mere herd of the farmer to do a certain work, but upon the farmer himself; and the shepherd should receive the wages formerly paid to him without a deduction of 10s. for this tax.

MR. DARBY GRIFFITH

said, that a considerable portion of the deficit now to be provided for might be as fairly ascribed to the operations of the right hon. Member for South Lancashire in converting permanent into terminable annuities as to the Other causes which had been assigned for it. The Budget of last year was a contemptible exhibition of the Chancellor of the Exchequer of that day; and as we had it on the authority of an ancient writer that imitators were a very servile race, the Chancellor of that day only said ditto to the right hon. Gentleman the Member for South Lancashire, and who he must still call the late Chancellor of the Exchequer. With regard to the proposed increase of the Income Tax, that particular species of taxation, though it might not press heavily on the richer classes, fell with peculiar severity upon small annuitants and clerks who had to keep up a respectable appearance upon less than £200 a year, while the well-paid mechanic escaped its incidence. The Chancellor of the Exchequer had naturally adopted the rough and ready mode which came first to his hand for raising the money he required; but, for his own part, he must reserve to himself the liberty of renewing the proposal he had made last year for the relief of incomes under £200 per annum from an impost extremely onerous to their possessors.

MR. ALDERMAN SALOMONS

hoped that nothing should be done to disturb the arrangements of the financial scheme of last year for creating annuities that were to terminate in 1885. When they compared the price of our national funds with that of other parts of the world, they might feel well satisfied not to disturb existing arrangements for the reduction of the Debt, and which tended to place the credit of the country in that proud position. This year, besides the arrangements made for the payment of the annuities, they had laid out about £900,000 in the reduction of the National Debt; and he would suggest that when it was necessary to issue the Exchequer Bonds, for which, credit would be taken in the Budget, it should be enacted that these Bonds should be paid off in preference to any other reduction of the Debt. Perhaps the Chancellor of the Exchequer would see fit to introduce a clause into his Bill for the purpose of carrying out such an arrangement.

MR. GLADSTONE

I wish, Sir, to ask upon what day the Government propose to proceed with their financial measures? The business of the House next week will be of a rather absorbing character, as there will be the three Resolutions on the subject of the Irish Church to consider. I am of opinion that it will not be convenient to run the risk of interrupting the discussion on them. And perhaps the Government will be kind enough to tell us, whether Monday week or some similar day, will suit them for proceeding with their proposal relating to the Income Tax?

THE CHANCELLOR OF THE EXCHEQUER,

in reply, said: Sir, I do not know whether any other Member of the Committee desires to offer any observations upon the Financial Statement; but with regard to the Question just asked by the right hon. Gentleman opposite, I may at once say that, we desire to put the Resolutions, which are necessary to carry out the proposals of the Government, for Monday week. I cannot, Sir, but feel gratified by the manner in which the proposals which I have had the honour to submit to the Committee have been generally received. My hon. Friend the Member for Huntingdon (Mr. Baring) has taken objection to our proposal to meet from the Income Tax the whole expenditure for the Abyssinian Expedition, and he said that that was a precedent which could be easily and frequently followed. He omitted, however to observe that I stated that we proposed to limit that charge to the Income Tax; on the ground that this was merely a temporary addition to our expenditure, and that, had we contemplated that this extraordinary expenditure would continue, we should have felt it our duty to propose an increase of duty on some article of general consumption. Therefore, the views which I put before the Committee certainly did not lead to the inference which my hon. Friend drew from them. Several hon. Members who have spoken have objected to the proposition to issue Exchequer Bonds, saying it is the creation of debt. I hold that the transaction is a perfectly legitimate one; because at the time we are issuing these Bonds we are actually providing, by the taxation of the year, the means of paying them off. The transaction appears to me much like that of a trader who, having goods in his possession the value of which he is not yet able to realize by sale, gives a bill for the amount in anticipation of it. An appeal has been made to me by the hon. Member for Perthshire with respect to the taxation of shepherds' dogs. I do not think that that is a matter between the Chancellor of the Exchequer and the shepherds, but one between the shepherds and their employers. I admit that it is hard upon the shepherd to have to pay 5s. for his dog; but I do not admit that it is hard for the shepherd's employer to have to do so. When we reduced the tax upon dogs to 5s. we thought no exemption was necessary. If you admit the principle of exemption it will lead to evasion, and, in this case, the tax would be evaded by nearly every dog being described as a shepherd's dog. Employers will lose nothing in the long run by paying the tax upon their shepherds' dogs, seeing that their complaint has hitherto been of the number of stray dogs which worried their flocks and destroyed their lambs; and I am sure that if the tax is continued, and the sheep farmers pay the tax for as many dogs as are needed, they will find their account in their relief from the predatory cases of which they have complained. In reply to a question from the hon. Member for Brighton, I have to state that the amount of the duty upon foreign corn imported into this country during the past year was £869,324, which at 1s. per quarter would give 17,986,000 quarters—a very serious amount to import from abroad in one year. I omitted to mention in my statement that on the 18th of March 1869, £600,000 of Exchequer Bonds will fall due, which I propose to take power to renew. In answer to the question of the hon. Member for Pontefract with regard to fortifications, I have to state that the sum raised for fortifications during the past year was £480,000, as against £500,000 during the previous year, and £530,000 has been expended during the past year. The hon. Member for Pontefract took occasion to felicitate himself and the Government of which he was a Member upon the large surplus which they were enabled to present to the House at the end of the three years of their administration, and he proceeded to contrast that surplus with the deficit which it is the unfortunate fate of the existing Government to have to present to the House on this occasion. I do not know whether the hon. Member thinks that the different positions of the two Governments in this respect is entirely owing to the prescience, sagacity, and good administration of those who preceded us in Office; but I think that those who are not inclined to be as partial as he is, will think that the rains and the sunshine of Heaven have had almost as much to do with the prosperity of which he boasts as the Government whose lines happily fell in such pleasant places. Impartial persons will also be willing to admit that it is no fault of the present Government that has occasioned the extraordinary monetary disarrangement that has lately caused such contraction of trade and of enterprizes of almost every kind, and which consequently places the finances of the country in a less favourable position than they previously were. The right hon. Gentleman the Member for South Lancashire—whose absence from his place at the present moment I regret—made a very severe attack upon the present Administration on account of the extravagance of their Estimates over those of previous years. That attack must have been directed against the Estimates of last year, for the Estimates of the present year are only slightly in excess of those of last year. I believe the observations of the right hon. Gentleman were pointed principally against the Military and Naval Estimates. I must observe, in reply to these observations, that the Estimates of last year were assented to by the House, and were assented to by the right hon. Gentleman himself. If the right hon. Gentleman held so strong an opinion as to the extravagance of those Estimates and as to the policy which led us to recommend those Estimates to the House, he, as a Member of this House, and as the Leader of a party which professes to have a majority in this House, was bound, in discharge of his duty, to have urged the House not to assent to them, instead of permitting a year to pass before he brings forward his objections to them. As the right hon. Gentleman did not think fit to make any objection to those Estimates at the time they were brought forward, I regard him as being as much responsible for the expenditure which he now denounces as extravagant as any Member of the Government, I can assure the right hon. Gentleman that, as long as he confines himself to making war upon profligate and unnecessary extravagances, he may always rely upon my support; but when he denounces what he characterizes as an unnecessary, a profligate, and an extravagant expenditure, I would remind him that there is an unwise parsimony as well as an unwise extravagance, and should the right hon. Gentleman think fit to renew his attack upon the Government upon this point, the question will arise, whither the Government of which he was so eminent a Member is not as much, if not more, responsible for this large expenditure as those who are now in Office? It is unfortunate that the right hon. Gentleman should have made these observations in the absence of the Secretary for War and the First Lord of the Admiralty; because, in all probability, they would have put questions to him which he would have found it very difficult to answer, and would have shown the Committee that the expenditure of which the right hon. Gentleman now complains was fully justified. I have said that there is an unwise parsimony as well as an unwise extravagance; and if, by an unwise parsimony, charges which ought to be borne in one year which are thrown on another or succeeding years, the result is that the tax payer of the future is saddled with a burden which ought to be undertaken by those of the present generation. When the present Government came into office did they find our troops armed with the best description of weapons? What was the first act of the Government of Lord Derby which led to an increase in the expenditure? Was it not to replace the rifles of the Army by Snider breech-loaders? Was not the last Government responsible for not incurring that expenditure before? But I will go further, and ask the right hon. Gentleman whether he was not a party to the construction of enormous fortifications for which not a single gun was provided? As the Minister chiefly responsible for the expenditure during Lord Palmerston's administration, he assented to the construction of these extensive fortifications, and now can he now object to the present Government providing guns for them? The administration of the Navy of course does not come within my province; but I can say that when we came into office the Navy was in such a state that we had the greatest difficulty to find reliefs for our ships. Who was responsible for that state of things, the Gov- ernment of the right hon. Gentleman or the present Government? Either the whole system of our Navy administration was wrong, or else those who were in power had neglected to provide for that service that which it was their bounden duty to provide for it. I have not that detailed knowledge of this subject which would enable me to go further into it than I have already done; but if the right hon. Gentleman chooses to renew his attack upon the Administration of Lord Derby and upon the present Government on this point, it will be his duty to show that the Government of which he was a Member handed down the Navy to those who succeeded them in a fit state to protect the country, and left the Army, as regards ordnance and small weapons, in a state of efficiency. I propose to-night to move that the Chairman report Progress, and that on Monday week we take the Resolution I have laid before the House into consideration. If no objection is raised to my doing so I will move now that the Resolution to continue the duty of 6d. in the pound upon tea be considered now. Resolved, That, towards raising the Supply grained to Her Majesty, the Duty of Customs now charged on Tea shall continue to be levied and charged on and after the 1st day of August 1868 until the 1st day of August 1869, on the importation thereof into Great Britain and Ireland:viz.

		s.	d.
Tea	the lb.	0	6.

House resumed.

Resolution to be reported To-morrow;

Committee to sit again To-morrow.