HC Deb 05 May 1879 vol 245 cc1729-50

Order for Committee read.

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


I desire. Sir, to revert to the proposition in which the defence of the present financial plan of the Government was left when the House lately voted a substantiation of that plan. It is not my intention to again travel over any portion of the ground taken up in the discussion when the House was last in Committee on this question; but, in the defence which the right hon. Gentleman the Chancellor of the Exchequer then made, there was embodied, not as a casual but as a principal element, a reference to the policy pursued in the year 1860. It was referred to partly for the purpose of precedent and partly for the purpose of apology. The doctrine was laid down in 1860, and was quoted during the present year, that in a case where a considerable war expenditure arises, it is not unfair to make the provision for that expenditure partly from taxes and partly by means of loan or other temporary resources, not included within the regular Revenue of the year. It is quite true that I am responsible for having laid down that doctrine, and it appears to me to be a very reasonable one. It was acted upon in July, 1860, when we had a large demand, exceeding £3,000,000, at the close of the Session—a demand which came upon us for funds to carry on the war in China. A portion of it was proposed to be provided for by taxes, and the other and the smaller portion was proposed to be provided for out of balances—a measure which would have been exactly the same in principle as if the case had been one of Exchequer Bonds or Bills. That doctrine, however, is quoted in support of a plan of finance in which there is no distinction whatever in taxation—that is to say, between new taxation and borrowing. Of the whole of the sum that is wanted for the purposes of the year, not one farthing—except £2,000 upon cigars, which I do not think will be quoted—is proposed to be taken by new taxes. The doctrine of 1860 was applied at a time when we proposed to lay on new taxes to a considerable amount upon spirits imported from abroad and manufactured at home, and consequently there is no analogy whatever between the case of that year, when there was a real division in the mode of supply between taxes and other resources, and the present case, when no recourse is had to taxation whatever. I come to a point on which a statement was made by the Chancellor of the Exchequer on which it may be necessary for me to trouble the House at some length—a statement which, I will venture to say, even if it had been well founded in fact, would not have served to justify the finance which is now before us. The statement of the right hon. Gentleman, in brief, was this—That in 1860 the Government of that day imposed, and the House agreed to impose, certain taxes, and the House likewise agreed to repeal certain taxes, and that the taxes repealed exceeded the taxes imposed by £2,600,000. The Chancellor of the Exchequer added, that while we were repealing taxes to that extent over and above the taxes imposed in that same year, having a certain amount to charge for the erection of fortifications, we did not meet it from the Votes, but by resorting to borrowing and to the creation of annuities. That is an extreme case of argumentum ad hominem, if it can be sustained as a matter of fact; but can it be so sustained? The state of the case is really this—the charge, as it ultimately came out, for fortifications in 1860–1, was very small, about £150,000, but the original Estimate laid before the Government was much above that sum. According to that statement, the Estimate for the first year was to have been £2,000,000; and the question which I had to consider, as Chancellor of the Exchequer, was whe- ther I had to place those £2,000,000 upon the Votes? My justification for not doing so was not at all that we were making a permanent addition to the defences of the country; but that I had already pressed Parliament and the people up to the extreme of what they could be induced or reasonably be expected to bear in the matter of taxation. The statement of the Chancellor of the Exchequer and my own are in violent contradiction; and if the former is correct I will willingly submit my back to the smiter. But let us see how the case stands. I have a little book before me, accessible to all hon. Members, from which I find that in 1860 the amount of taxes repealed was £3,080,000, and that the amount of taxes imposed was £3,030,000. Therefore, the first fact which a reference to that little book shows is to reduce—to get rid of—the £2,600,000 of supposed balance or remission which the Chancellor of the Exchequer advances as the main apology for the finance which he has given us this year. That is the first step in my examination of the case; but only the first step, and a small part of the ground over which I wish to travel. These are statements setting forth the financial proceedings of each year; but it is impossible to give, in the few figures there given, any decidedly accurate account of any complicated financial statement which may result from the affairs of this country. It so happens that in the year 1860 these proceedings were exceedingly complicated. There was a mass of taxation repealed under Treaty, and a mass of taxation repealed not under Treaty, and there was a vast amount of taxation imposed, very varying in its character. Again, after the first Budget of the 10th of February there was a second one growing out of the Chinese War, which still further complicates matters. But the first correction I make is a correction perfectly obvious. The taxes repealed as they are put down in this statement are put down according to the amount of relief given to the consumer. But the merits of the Chancellor of the Exchequer in the repeal of taxation are not to be judged by the relief to the consumer. The test as regards it is the amount of loss to the Exchequer. Anyone who will refer to my Financial Statement will find that the amount of relief given to consumers was, no doubt, substantially as it is put down in this present book; but he will also find that I there and then stated that, as the whole of these taxes were differential duties, there would be a large recovery on these taxes, which I then estimated at £671,000, which was to come back into the Treasury. I must, therefore, deduct that from the supposed loss of the year, and bringing it down to £2,415,000, and deducting that from the amount of the taxation imposed, according to this book, there is a balance of taxes imposed over taxes relieved of £616,000. That is the next peg I have to drive into the statement of the right hon. Gentleman, but I have not nearly done with him. Let me say, however, in the first instance, that, as a general rule in any discussion between that side and this on matters of figures, I think the Chancellor of the Exchequer and the Secretary to the Treasury ought to be held a great deal more tightly to their figures than Gentlemen on this side of the House, because their means of examination and verification are far superior to any of those that we enjoy. At the same time, I do not charge upon my right hon. Friend anything but innocent and involuntary error. I consider my right hon. Friend as accurate in the use of figures as anybody I know; and as I mean to impeach his statement right and left, wholesale and retail, I am bound to make that statement. My right hon. Friend has forgotten that March 31, 1860, was a very great epoch in our finance. He has forgotten two things of the most vital consequence; and when I speak of his errors in this respect, the errors which I have already pointed out are small compared with those which I am going to point out. The first of these errors is this. During the Crimean War extra taxation was laid on tea and sugar, and its term was fixed for March 31, 1860. This £2,100,000 which we realized as extra taxation on tea and sugar was to lapse with the Budget of 1860. But we induced Parliament to renew that taxation, and that was, in the strictest sense, the imposition of fresh taxation. Therefore, that £2,100,000 ought to be added to the £616,000 as the balance according to this Blue Blook of taxes imposed over taxes repealed. That is not all. I do not think my right hon. Friend can be aware of the state in which the law was with regard to the Income Tax in 1860. He is evidently under the impression that we then had a 9d. tax. [The CHANCELLOR of the EXCHQUER: No, no.] If that is not so, I am very sorry; for only in that way have I been able to account for the extraordinary statement which he has laid before the House. There was no 9d. tax in that year at all. I must refer to what had occurred in 1859 in order to make the matter clear. There was then a deficit winch was not altogether unexpected; for I have observed that it is becoming almost a normal practice for a Conservative Government when it goes out of Office to hand over a very large deficit to a Liberal Government. That is, perhaps, a controversial remark; but it is the only one I shall make. In June, 1859, then, the Conservative or Tory Government went out of Office; but it presented its Estimates in February, 1859, and from the 1st of April the whole Expenditure was going on upon a scale enormously increased. The 18th of July was the earliest date when the Government of Lord Palmerston was able to bring the finance of the country under the consideration of the House; and, therefore, nearly four months of the financial year had gone, and nearly four months of this augmented Expenditure had been passed over. The Expenditure was certainly approved and required by the country; but our unfortunate predicament was that when four months were gone we acceded to Office, and had to meet a deficiency of £5,000,000, with one-third of the year gone. Well, Sir, we met that deficiency, and we met it without borrowing, while we maintained that we must make adequate and effective provision for the wants of the year. I also maintained that it was a period when the attention of the Committee should be rigidly confined to the wants of the year. That was an express and explicit pledge that we asked for money to defray the charge of the country for the year, but did not pledge them to anything beyond it. I asked Parliament to give me 4d. in the pound upon the Income Tax, not by raising the 5d. tax to 9d., but to give me a payment of 4d. in one lump, not upon the year but upon the first half of the year, and Parliament agreed to that proposal. By that means we raised the whole amount required, and only in that way could it be done. The House ought to be aware that the Income Tax was not receivable then as it is now within the year, but only one-half was received within the year, and the other half was received after it was expired. The consequence was, that in 1859–60 we had an Income Tax of 5d. in the pound expiring in March, 1860; and in respect of the first half of the year we had a tax of 4d. on that half in a lump sum, which, if extended to the whole year, would have been equal to a tax of 8d. in the pound, while in the last half the rate was 5d. in the pound; but that was not all that was done. Besides the tax voted in this way, besides the war duties on tea and sugar of £2,100,000, we asked Parliament to raise the 5d. Income Tax to 10d. Moreover, besides raising the Income Tax to 10d., we had likewise provided that instead of raising half the tax in the year that we should raise three-quarters in the year. So that the effect was exactly the same as if, with the old method of collection, we had asked Parliament to put 7½d. additional upon the Income Tax. That is what my right hon. Friend quotes against me as a year when I was giving away taxes at the rate of £2,600,000. I will now give the House my figures, and I think they will rather surprise my right hon. Friend. I am bound to say that I cannot stick to them for £10,000 or £20,000, as after this lapse of time it is impossible to make sure of small sums, and so obtain a result of precise accuracy; but to the substance of these figures I will stand, and as we shall have various other opportunities of referring to this matter, this will probably not be my last reference to the matter. The state of the case to which I refer was a very remarkable one. There had been an immense increase in the armaments of Europe, and a great stir here. I found, on entering Office, that the Accounts as first presented to me showed on balance a deficit of £9,400,000. That was assuming the Income Tax to lapse, and assuming the tea and sugar duties to continue at their peace rate. That was, perhaps, an excessive assumption. But assuming the Income Tax to continue, and to bring in £2,840,000, continuing it at 5d., that deficit was £6,560,000. Yet, in face of that deficit I managed, according to my right hon. Friend, to give £2,600,600 in taxes away. If I did that, I was a great deal cleverer fellow than I take myself to be. Now, let us see how this comes about. We have £2,430,000 falling in from the lapse of Long Annuities, and to meet this £9,400,000, or I may call it, in round figures, £10,000,000, we had nearly £3,000,000 of resources. We took up the malt and hop credits, which found us £1,400,000, and we also took up the balances, I think about £1,300,000, or a total of about £2,700,000 or upwards. And now, what does the House think was the amount of taxes which we imposed, and I think I can challenge anyone as to the correctness of the statement? It was £8,775,000. We induced Parliament to raise the Income Tax to 10d. in the pound, and that produced us £2,824,000. We likewise brought in a third quarter of the Income Tax, so as to have three quarters instead of two quarters, and that gave us £2,821,000. We also induced Parliament to re-enact the war tea and sugar duties, giving us £2,301,000, and we imposed a number of other duties, the particulars of which may be seen set out in The Statistical Abstract, and which amounted to £2,030,000, without including the Income Tax. Taking those four items altogether, the total is £8,775,000, while the loss by remission was £2,415,000, leaving a balance of taxes imposed of £6,360,000, against the sum of about £2,700,000, which we got from resources other than taxation; and, consequently, we raised by taxation somewhere about two-thirds or three-quarters of the whole sum required for the services of the war—aye, and that by extra taxation, over and after reckoning every farthing of the taxes which we had remitted. Well, Sir, it appears to me to be not too much to say that these are statements which anyone can verify who will take the trouble to examine the rather complicated Returns of the Revenue; and I say that they are, in round numbers, strictly and accurately correct. We did lay down the doctrine that when there was a very heavy expenditure, something in the nature of a war expenditure suddenly arising, you might fall back on temporary resources, and we fell back on resources other than taxation to the extent of about one quarter, or somewhat more than a quarter of the whole charge. About three-quarters, or nearly so, was raised by taxation. That was a case in which, if we had asked Parlia- ment to take £2,000,000 more for the work of improving the coast and the fortifications, Parliament would have refused. We had made such enormous demands, that I do not think it would have been reasonable to have demanded more. Then, if we had done so, we should have had to go a great deal further, and it was a time to act, not on rigid, mathematical rules, but by a fair method of balancing the circumstances of the case. I affirm that the year 1860, instead of being a year of relaxed finance, was a year of rigid finance; and when I look back on it now, what really astonishes me is the facility with which Parliament was induced to make so heavy an addition as £6,363,000 to the burdens of the people. We did remit some amount of taxation. If we had not done so, we should not have maintained the Public Services; but they were induced to do what they did by the anticipations of the immense advantages which were anticipated from the French Treaty, and which, I am glad to say, were realized. If I put aside the question of direct taxation, and look at that of indirect taxation alone, there is not much difference. What we did with indirect taxation was this. We raised £2,000,000 or £2,500,000 by indirect taxation, making £4,130,000 of taxation imposed. We remitted at least £3,000,000 of indirect taxation, but lost by our remittance £2,180,000 in indirect taxation, so that we gained by our operation £2,028,000 on indirect taxation, considered apart from direct taxation. With regard to the year 1860, that year was a very unfortunate year, in which the Revenue failed to a large extent. That, of course, could not be foreseen, nor could the large surpluses which afterwards flowed in. It only shows that the Revenue of the country is a subject of far more comprehensive interest than could be included in a mere argumentative speech such as that in which I have dealt with it. The Revenue of the country has within the last few years assumed a solidity which must have astonished those who had to contemplate it in its former state. About 15 or 20 years ago the mere event of a bad harvest was sufficient to make a bad Revenue, and to throw the Chancellor of the Exchequer into difficulties. Now it has grown to such an extent that it requires great prolongation of distress as well as a bad harvest, even seriously, or at all heavily, to affect the Revenue of the country. But that is not the question. The question is not whether the Estimate of 1860 was verified or not. The question is, what is the finance which was submitted to Parliament, and sanctioned by Parliament? and my affirmation is that instead of remitting, as my right hon. Friend supposes, a very large amount of taxation over and above what we imposed, we imposed a very large amount over and above what we remitted; and in proof of this I refer to the statement which I hold in my hand, which shows, imperfect though it be, that the amount of taxes—where the money lost by remission is clearly seen—the amount over and above that, I say, is about £6,000,000.


said, he was sorry that some remarks he made the other night had caused his right hon. Friend to take the trouble of preparing the speech to which the House had just listened; but, at the same time, he could not regret, on the whole, that they had heard from his right hon. Friend a speech on the financial policy of the year 1860, with which he was most familiar. He wished, at the outset, to have it clearly understood that in what he said a few days back he did not intend to impute any blame to his right hon. Friend for the financial policy of the year to which he was referring for the purposes of argument. All that he endeavoured to show was, that the finance which he recommended to the House, and which was severely criticized by the right hon. Gentleman, might find, at all events, some palliation, if not justification, by reference to the finance of the years to which he (the Chancellor of the Exchequer) alluded. The point of his argument was, that the finance of that period was so arranged that large remissions of taxation took place, and, at the same time, money was borrowed and charges were made upon posterity which he thought might have Been avoided, and would have been avoided, if the same strict rules had been enforced that were attempted to be imposed upon him. He could not help pointing out that he was at the present time paying the expense of charges which were then incurred, and which had been thrown upon the future in the form of Terminable Annuities. He, however, confessed that he sincerely regretted having been in error in regard to one important point to which his right hon. Friend had referred. A statement had been drawn up for him by a gentleman conversant with these matters—a gentleman in whom he believed the right hon. Gentleman himself trusted—[Mr. GLADSTONE: Hear, hear!] but the mistake he fell into was his own. The document was drawn up in order to show how much charge the right hon. Gentleman was throwing upon his successors in the office of Chancellor of the Exchequer, at the same time that he was remitting taxation for those for whom he was himself at that time administering the finances. He had statements given him year by year showing what the amounts were for fortifications, and what, at the same time, was the amount taken off taxation; and he found that in the first years of the Returns given to him the Government borrowed for fortifications £970,000, and they took off taxation in excess of those imposed to the amount of £2,609,000, and having in his own mind that it was in I860 the fortification loan was instituted, he had applied those figures to the year 1860 instead of to the yearfoliowing—namely, 1861–2; that was an error into which he fell. It appeared that in 1860 a very small loan was raised on behalf of fortifications. As a matter of fact, sums were borrowed year by year for fortifications, and he believed that there were remissions of taxation. [Mr. CHILDERS dissented.] Well, he should have the figures verified; he was explaining the error into which he fell, and which he had just discovered. Although that might be taken to be very material as to the particular statement he had made, it did not affect, as it seemed to him, the general argument which he was founding on the finance of that year and the dealings of the then Government in the matter of these particular loans. With regard to that year, he did not think it at all necessary to go into that marvellous calculation which his right hon. Friend entranced the House with at the time, when he horrified them by piling deficit upon deficit until he had raised it to the enormous sum of £9,400,000, which he then proceeded to deal with. That was considered at the time a great work of art, and they had seen to-day how it still appeared. What did occur at that time was that his right hon. Friend having to deal with a state of finance which threw a considerable burden upon the Exchequer, nevertheless did come forward, and did propose to make large remissions of taxation in connection with the French Treaty, and far beyond those demands. Those were very considerable reductions, made for the benefit of the country; but, at the same time, to enable him to make those reductions, the right hon. Gentleman would hardly deny he thought himself justified in having recourse to transactions in the nature of borrowing. [Mr. GLADSTONE: No.] It was all very well to say "No;" but he must insist upon the fact that it was not only in July of that year, but in February of that year, in the arrangements which the right hon. Gentleman made, that he did introduce other arrangements besides those of merely meeting the deficit by taxation. The right hon. Gentleman said—"Very well; but this was a matter of Exchequer Bonds." Exchequer Bonds were treated with great contempt now; but that was what he was seriously accused of now. He proposed to defer to another year certain Exchequer Bonds which fell due to be paid this year. The right hon. Gentleman did exactly the same thing in 1860; and it seemed that what was a very wrong thing in 1879 was to be treated as right when done by the right hon. Gentleman in 1860. He was not comparing the circumstances in one year with the circumstances in the other. They differed almost in every respect. That was a point made by the right hon. Gentleman just now—that in these cases you must not go by rigid rules, but exercise a discretion; and as the right hon. Gentleman claimed, and fairly claimed, and was allowed by the general assent of a large portion of the House and the country, to exercise his discretion, he thought that the Government ought not to be tied and bound by rigid rules from exercising discretion now. The circumstances in which they were placed were these:—They had incurred a considerable expenditure—not an enormous expenditure—within the past two or three years for warlike purposes. The Government thought that they were justified in spreading that over a period of a few years—three years were first spoken of; but in consequence of the increased amount four years were pro- posed. He was ready to maintain and justify the assertion that this was a better arrangement for the country, that it was more for the convenience and advantage of the country that expenditure of this kind should be so met, than that it should be met by putting on additional taxation for this year, and taking it off again next year. He was entirely opposed to the idea, which had been advanced from the other side of the House, that the Government should apply the Income Tax in the same way as rates were used in municipal bodies—that the Expenditure of any one year being ascertained, they ought to make the Income Tax higher or lower, according to that Expenditure. That was a corollary he could not approve drawing; but it was a corollary which might reasonably be drawn from the doctrines laid down. He must protest against the principle. The right hon. Gentleman and others had done him the honour to refer to the doctrines which he had formerly stated in financial policy, and he was accused of falling away from, his opinions in order to meet the convenience of the present moment. He utterly denied it; and he said if anyone did him the honour to refer to the book which related to the war expenditure to be met in 1854, it would be seen that the views which he there laid down were very much in harmony with the course he proposed to take now. The House should bear in mind the great difference that existed between our financial situation at that time and that which existed now. They had now a very small number of sources of taxation; and it was impossible to deal with them in a way in which formerly they were able to deal with their fiscal system, when they had an enormous number of articles subject to duty which they were able, at convenient opportunities, to relieve of duty, very much to the advantage of the Revenue. In 1860, when his right hon. Friend made his great Budget, there were about 500 articles subject to Customs duty, and he struck off 450 from the list, very much, no doubt, to the advantage of the country, as well as to the consumer. When he was asked, "Why don't you do the same thing?" he replied that they had only now some 20 or 30 articles on the list, and they could not repeat the operation, for the thing was done. How, then, were they to deal with the question of raising taxation in any particular year? He must remind hon. Gentlemen of the disadvantage there was to the country in adding merely for a year—or, may be, for two years—to the taxation of various articles from which they now derived a great part of the Revenue. Hon. Members must see that that operation ought not to be undertaken for a more temporary purpose, unless there was an absolute necessity. What did the Government do? Two years ago, as he reminded the House the other night, they brought their taxation up to what was considered to be a fair level to meet ordinary Expenditure. Last year, when they had a war expenditure, or a quasi- war expenditure, to deal with, he proposed to the House—and the House agreed to it—to add to the Income Tax and the tobacco duties, and thus make provision for the extra expenditure; and they were carrying that increased taxation on now. The right hon. Gentleman said he (the Chancellor of the Exchequer) was not adding to the taxation of the year; but if he adopted the method of calculation adopted by the right hon. Gentleman in 1860, he might claim that he was putting on taxation by renewing those imposed last year. In fact, he was asking the House to maintain, for such time as might be necessary, the higher war duties on the Income Tax, in order to cover the expenditure for warlike purposes. That was exactly what was done in 1860; and he could, therefore, quote that as a precedent for the step he had taken. He need not trouble the House any further. He was prepared to maintain that the course the Government were now recommending was one for the advantage of the country; that it was the proper one; and that it was perfectly consistent with the strictest principles of financial morality.


said, he should not have presumed for a moment to intervene between the two great masters of finance in the House, or to enter into the details of the Budget of 1860; but there was an authority so pertinent to the subject they were discussing—namely, the general principle which ought to govern war expenditure—that he would ask the leave of the House to call attention to it. The Chancellor of the Exchequer had referred, not only to the precedent of 1860, but to the precedent of the Crimean War in 1854. Would the House allow him to call attention to a passage which described what was then the policy of the Liberal Party, and what was then the policy of the Conservative Opposition? It was a passage in which he so entirely concurred, that it seemed to be all he had to say. It was as follows:— The next Party conflict in the House of Commons will be upon finance. Gladstone wants to pay for the war out of current Revenue so long as he does not require more than £10,000,000 above the ordinary Expenditure, and to increase the taxes for that purpose. The Opposition are for borrowing—that is, increasing the Debt, and do not wish to impose in the meantime any further burdens on themselves. The former course is manly, statesmanlike, and honest; the latter is convenient, cowardly, perhaps popular. Nous verrons." That was dated Windsor Castle, 18th of April, 1854, and the author of those sentiments was the late Prince Consort. That showed that the policy now proposed was not a new policy. It was the old policy of the Conservative Party—the policy of not meeting their liabilities. The manly policy was that which was pursued by the right hon. Gentleman (Mr. Gladstone) in 1854, up to which time he believed the Chancellor of the Exchequer was a disciple of the right hon. Gentleman; and it was not until a later time that he became the official Representative of the opinions expressed in that passage about the Conservatives. That was the real issue before the country and between the two Parties. It was the fact that it was the policy of the Conservative Party to incur liabilities and not to meet them. He might be accused of using strong language; but it was language which was to be found in the work placed before the country for its instruction on many points: and he thought there was contained in that passage the soundest possible doctrine on the question of finance.


said, that he had not troubled the House with any observations on this question before, because he did not wish to mix up what he had to say with any matter relating to the general policy of the Government; but as he had had the honour of holding the office of Chancellor of the Exchequer, he felt bound to express his sincere convictions on the subject, not dealing in any way with any Party whatever. He would state the objections he took to the proceedings of the Chancellor of the Exchequer. First of all, the Chancellor of the Exchequer began by a proceeding which he could not too much deprecate, and that was the division of the Budget into two parts—ordinary and extraordinary. The Chancellor of the Exchequer commenced by setting aside a certain portion of money to be applied for the ordinary part, and he left, he believed, some £1,900,000 to be dealt with in the extraordinary part. Mere words would do no harm; but the effect of the division was that, whilst the Chancellor of the Exchequer felt himself bound to discharge the obligations—he (Mr. Lowe) had no doubt to give them the best estimate he could of the expenses which were to be incurred for the ordinary part—he gave them no account whatever of the expenditure for the extraordinary part. The doctrine he (Mr. Lowe) had always maintained was, that though it was difficult, almost impossible, to estimate to any nicety the amount that might be incurred, it did not in any degree exempt the Chancellor of the Exchequer from making an attempt—going as nearly as he could—to provide for the Expenditure. He held that the only security they had for anything like economy in this matter was by putting the greatest possible load of responsibility on the Chancellor of the Exchequer. He took the liberty of addressing the House on this subject a little time ago, and he would not repeat what he then said; but if they allowed a Chancellor of the Exchequer to play fast and loose with the finances, and allowed him to make divisions and subdivisions in the Estimates, and say—"For one I estimate, for the other I cannot," they would lose the only hold they had over the finances, and they would leave it to the Government of the day to rush into any expense they thought proper. He might say that, so far as his own affairs were concerned, he had never attempted anything of the kind. "When he was in office he always made an Estimate which, he believed, proved in every instance to be adequate, and he was asking his successor to do that which he had felt it his bounden duty to do. They would see that a sum of £2,000,000, in round numbers, had been set apart for extraordinary Expenditure, and out of that they were to pay for the Zulu and the Afghan Wars. It was assumed by the Government that if they cost more than that they could not help it; but there had been no Estimate, and he asked why the sum of £2,000,000 was set down more than any other sum? If right hon. Gentlemen were allowed to manage their finances in this way, the necessary result must be that every man must be blamable to his Party who did not make it a point to have an extraordinary Budget when he was going out of office. It was not merely that the Chancellor of the Exchequer might spend any amount of money he pleased, but he left to his successors the unpopularity of providing for the money; and thus, unless the Chancellor of the Exchequer spoke precisely as to the Estimate he was about to spend, they had no security whatever over their finances, and all this talk was mere beating the air. Another thing he had to complain of, and that was that the Chancellor of the Exchequer was about to lend India £2,000,000 sterling; but he did not find such an item either in the ordinary or extraordinary account. The fact was, the Chancellor of the Exchequer had not the £2,000,000 he was going to lend, and it was not a strange inference, therefore, that he was going to borrow the amount.


I beg pardon. I did state that we made provision for the interest, and this would naturally lead to the impression that we were going to borrow the amount.


said, the right hon. Gentleman had made provision for the interest, but they had to borrow the principal. He wanted to know where the principal came from? To provide for the interest was not a part of their Expenditure, and it ought to go to swell up their deficiency. Then, again, if the money was to be repaid by India, who was to pay the interest? Why, the Government at home. He would like to know whether India was solvent or insolvent; because if she were solvent why did she not pay the interest, and if she were insolvent why did not the Government place the case fairly before them? These were all very ingenious transactions; and what he deprecated, above all things, was ingenious finance, whose object was not to enable the country to discharge its debts, but to mislead the House and to prevent the country from understanding it. The Chancellor of the Exchequer had said there were three courses open to him: to raise the money by taxation, to borrow it—making it part of the permanent debt of the country—or to spread it. That seemed to him a curious way of making three courses, and he should have thought there were only two courses—to raise the money by taxes, or to borrow it. But the Chancellor of the Exchequer appeared to have split it into three, in order to show that he had taken the via media. Having made this wonderful division, he rode off upon the glorious statement that he had taken a moderate course. He had no complaint to make of the way in which the right hon. Gentleman treated the whole subject. He had laid down a number of rules for guidance on this subject—that care must be taken that the country's finances did not fluctuate; that trade must not be disturbed by the imposition of new taxes; and that nothing was more objectionable than to be always putting taxes on and taking them off. Then the Chancellor of the Exchequer spoke, with a certain degree of scorn, of what he need not have been in the least touchy about, for he was above the feeling of putting taxes on one year in order to make a grand remission the next. He would notice, in passing, the sneers the right hon. Gentleman had directed at himself with regard to the calling up of the Income Tax, which he (Mr. Lowe) effected during his period of office. He could only say that if the right hon. Gentleman could have effected that operation he would have found it a very beneficial one, because he would have had no question then about the middle course. That operation cost the country nothing, and it was a permanent relief of £3,000,000, which the country had been enjoying ever since. What the right hon. Gentleman said was true in one sense. It was right and proper to avoid fluctuations in our Revenue; but the fault he found with the Chancellor of the Exchequer was that he applied his doctrines, which were perfectly true in themselves, in the wrong places. If the Government did not want a fluctuating Revenue, and did not want to be borrowing money, they must follow a steady policy. When they had got the Expenditure larger than the Income, this doctrine of the Chancellor of the Exchequer was utterly inapplicable. The Government could not, he contended, be too careful as to entering upon any transactions which must necessarily inflict a heavy burden on the people; but that was not the question at issue on the present occasion. Whether money had been expended wisely or unwisely, there should be steady fixed rules with regard to its payment, from which nothing should induce a Chancellor of the Exchequer to depart. The first rule the Chancellor of the Exchequer ought to observe was that every year should bear its own expenses as long as it was possible to do so. It would have been perfectly possible for the country, with a slight increase of taxation, to have borne its Expenditure this year without going into debt; but it was extremely convenient and popular, no doubt, that certain payments should be postponed until proceedings in which every constituent, and every Representative of a constituent, were much interested had passed over. But that was not a patriotic course; it was not a wise course; but it was a course that might become, if allowed to pass without reprobation, an established course, so that every Government would feel it its duty, when it found its later days drawing on, to leave to its Successors a legacy which, at any rate, would prevent them from acquiring any laurels by a remission of taxation.


considered that the Government had done very wisely in declining to increase the burden of taxation, seeing the state of trade in the country. Looking at the large sum now paid towards the reduction of the National Debt, they should remember that the country was every year thereby becoming sounder in its financial condition. The right hon. Gentleman opposite (Mr. Childers) had compared the amounts by which the late and the present Governments had respectively reduced the Debt, and had claimed for the late Government a much larger reduction than that effected by the present Government; but on looking at The Statistical Abstract it would be seen that the late Government effected a reduction of £26,200,000, of which £6,000,000 was extinguished by the balances of the Courts of Bankruptcy and Chancery, leaving a net reduction by the late Government of a little more than £20,000,000, as against £19,200,000 of reduction by the present Government—a balance in favour of the late Government of only £800,000. But, said the right hon. Gentleman, in addition to having paid off so much of the Debt, the late Government paid large sums for extraordinary charges. They paid £8,300,000 for war charges and, for the Alabama Claims; but the present Government had paid £8,375,000—almost an exactly similar sum for similar purposes—for war purposes and for preventing war. The late Government, it was true, paid £10,000,000 for the Telegraphs; but the present Government had also paid £1,000,000 for the same object, and they had provided, in excess of that provided by their Predecessors, £8,167,000 in aid of local taxation, while £6,000,000 more had been spent on education. He took the figures from a Return obtained by the right hon. Gentleman the Member for Pontefract (Mr. Childers). The net result was, that one Government proved, on examination, to have reduced the Debt by £800,000 more than the other; but, taking extraordinary charges into account, to have provided £1,167,000 less, on the whole. The right hon. Gentleman had said that the late Government had reduced taxation by the amount of £13,500,000; he believed that £12,500,000 was the more correct figure; but, at any rate, the right hon. Gentleman the Member for the University of London (Mr. Lowe) would probably admit that £4,500,000 was gained by taking five quarters in one year; so that, deducting that amount, the real reduction would be no more than £8,000,000. In short, the whole charge as to the Debt and extraordinary Expenditure came, on examination, to this—that while the late Government were able, in consequence of the prosperous state of the times, to reduce taxation by £8,000,000, the present Government had had to impose £1,000,000 additional taxation; but, taking the Debt and extraordinary charges together, they had provided £1,167,000 more than their Predecessors.


said, he most reluctantly went again over ground so well trodden in the former debate; but as the hon. Member for the Tower Hamlets (Mr. Ritchie) had thought it necessary again to refer to remarks he had made at Knottingley, in November last, he could only repeat that the figures he used were those of the printed Returns; that his comparison between the incidence of the tea duty and of local rates referred to additional boons demanded by the landed interest; and as to the Debt, that the late Government made a greater impression on it than the present by £3,500,000 a-year, according to the most favourable comparison for the latter. He had said that, in this comparison, he put aside altogether the charges of the Abyssinian War, the Ashantee War, and the Alabama Claims; but if they included them the difference would be still greater, as these were met without either additional taxes or increase of Debt. Going to another matter, which had been raised in the present debate, it would be ungenerous, after the admission of mistake on the part of the Chancellor of the Exchequer, to refute again his account of the Budgets of 1860. But one simple comparison disposed of the presumed analogy between the present financial proposals and those of that day. For 1878–9 the Revenue was taken at £64,000,000, and for 1860–1 at £72,250,000. Yet, with this sudden increase, necessitated by augmented military charges, the revised Budgets of 1859 and 1860 contemplated no increase of Debt. The entire deficiency of 1860–1 was to be met out of the surplus of 1859. No doubt, the result was disappointing; but that did not affect the principle of the two Budgets.


said, that in the early part of the Sitting he had given Notice of an Instruction to the Committee in reference to the Property and Income Tax, but he understood that it would be irregular to move it. His object was to ensure the adoption in this country of a system similar to that of America and other countries, by which taxes were levied upon property according to the necessities of each year, and so adjusted as to distinguish between property and income. He had paid a good deal of attention to the subject; and, having lately made a tour in the United States of America, had found that there was a great dissimilarity between their side of the Atlantic and the other. In England property was put out of the account altogether, and the tax was put solely upon income. In America they took no account of income, but put the tax on property alone. He did not advocate such extremes; but thought that a mean might be found between them. He desired to see a tax adopted as the national rate, which should be laid separately upon property as such and income as such, instead of being lumped together as at present; this tax to be so adjusted as to meet the expenditure from year to year, and to fall fairly upon all classes not otherwise sufficiently taxed. This would enable all indirect taxation, except such as was levied upon vicious and detrimental luxuries, to be removed. He classed all alcoholic liquors as detrimental. With regard to tobacco, it was a somewhat debatable ground; but, upon the whole, he thought that it did not do much good, and he considered it might fairly be classed among the detrimental luxuries. No doubt a great deal of our taxation was raised upon what he had called vicious and detrimental luxuries. They raised £33,000,000 upon alcoholic drinks and £8,000,000 upon tobacco, making altogether £41,000,000 upon these two products. In regard to tea and coffee, upon which they raised £4,500,000, there might be some question. Some people thought tippling on tea bad; but, on the whole, these might be classed as harmless. There was only one more subject of indirect taxation regarding which he thought there could be no matter of doubt, and that was the tax upon currants and raisins, which brought in a return of £700,000. It seemed to him that that was a luxury of the poor which ought not to be taxed. Sweeping away, then, the tax on innocent luxuries, he would make up the balance of last year by a property and income tax. The system of taxation which he advocated would be fair and equitable, and would oblige rich possessors of personal property to contribute their due share to the Revenue, which was not now the case. He concurred in the opinion of those who held that the Expenditure of the year should be met by the taxation of the year; and he thought that, with the Income Tax at the moderate rate of 5d. in the pound, we had at our command the means of raising the money we required for that purpose by a fair adjustment of the burdens on income and property, without imposing an excessive rate.

Motion, "That Mr. Speaker do now leave the Chair," agreed to.

WAYS AND NEANS—considered in Committee.

(In the Committee.)

Resolved, That it is expedient to amend the Laws relating to the Customs and the Inland Revenue.

Resolution to be reported To-morrow, at Two of the clock;

Committee to sit again upon Wednesday.


asked when the Government were likely to take the second reading of the Customs and Inland Revenue Bill, which stood on the Paper for Thursday?


said, it was proposed to proceed with the Army Discipline and Regulation Bill on Thursday, if his right hon. and gallant Friend (Colonel Stanley) were able to attend on that evening; but he could not now positively fix the time when the second reading of the Customs and Inland Revenue Bill would be taken.