WAYS AND MEANS.—COMMITTEE.

HC Deb 17 November 1884 vol 293 cc1855-912

WAYS AND MEANS—considered in Committee.

(In the Committee.)

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)

, in rising to move a Resolution increasing the Income Tax, said: Sir Arthur Otway, the figures in the Budget Estimate which I brought before the House in the month of April last were as follow:—We estimated that the Revenue, after deducting a small remission on account of the Carriage Duty, would amount to £85,533,000, and that the Expenditure—and here I include a small Supplementary Estimate for Civil Services, but I do not include the Vote of Credit for Egypt of £300,000—would amount to £85,427,000, leaving a surplus of £106,000. I have no remark to make, at the present time, as to the Expenditure. I think that it is proceeding pretty nearly on the lines of the Appropriation Act; and, so far as any further Supplementary Estimates for Civil Services are concerned, which may have to be proposed to Parliament in the early part of next Session, I think that they may be, as they have been generally of late years, expected to be met by the savings under other heads. As far as the Revenue is concerned, we have reason to anticipate a small increase upon the Estimate as I laid it before the Committee, though I should be sorry at the present time to give any precise figure for that increase. Well, that being the state of things as to the Budget and the Civil Service Supplementary Estimates of last Session, I will now proceed to the Supplimentary Estimates for the Army and Navy. During the last Session the House adopted as a Vote of Credit in connection with General Gordon, an appropriation of £300,000; and last week the Committee of Supply passed Resolutions voting, in connection with the Soudan, £1,000,000 for Army Service and £324,000 for Navy Service, making £1,324,000 in all; and in connection with the operations in Bechuanaland £675,000 for the Army and £50,000 for the Navy, or £725,000; and these three heads—namely, the Vote of Credit last Session, the Vote for the Soudan Expedition, and the Vote for the Bechuanaland Expedition, amount altogether to £2,349,000. I repeat, then, that on the corrected Budget Estimates of last Session there will be a surplus of £106,000; that in the Revenue we might expect some improvement; and, further, that any Supplementary Estimates to be proposed next Session will probaly be met by savings; so I think we should be safe, under the circumstances, in taking the present fiscal position as one which, if we do not add to the Revenue, will leave us a deficit on account of the year of about £2,000,000. Well, Sir, it has been my duty to consider from what sources of Revenue it would be proper, in the month of November, to propose to the Committee to make good that sum, and having carefully considered all the sources of taxation to which it has been reasonable to look, I am able to say that I could not recommend any change in our fiscal system with respect to indirect taxation for so temporary a purpose as the improvement of the Revenue in the remaining months of the year. Any such change would have a very disturbing effect upon our trade on whatever article the duty might be increased; and, besides, it would, if it only extended to the next four months, produce a small and unsatisfactory amount of Revenue, unless the increased rate of duty were very great indeed. Under these circumstances, then, I see no alternative but to propose to the House a small addition to the Income Tax. Now, Sir, it has more than once happened that such an addition to the Income Tax has been proposed, either early or late in the Autumn of the year; for instance, the last addition was in 1882, when the House voted an addition of 1½d. to the Income Tax for the operations in Egypt; and there is a case which resembles in some respects—but only in some respects—the present, and that was when the House voted an addition of 1d. to the Income Tax of 1867 on account of the Abyssinian War. The late Mr. Ward Hunt, who moved that Vote, proposed it in Parliament on the 28th of November, a little later in the year than I am proposing an addition now. That Vote was at that time adopted without practically any question in Parliament, and the Income Tax was raised from 4d. to 5d. in the pound. I propose to adopt a similar measure now, and to ask the Committee to approve an addition of 1d. to the Income Tax, raising it from 5d. to 6d. in the pound for this financial year. I will state to the House, as precisely as I can estimate it, the financial effect of that increase. If hon. Members will refer back to the statement I made in opening the Budget, or will refer to the weekly Returns of Revenue and Expenditure, in which there is a column stating the anticipated amount received from Income Tax, under the head of Revenue, they will see that a 5d. Income Tax is estimated to produce—and this year it will receive no assistance from a larger rate than in the previous year—£2,010,000 for each 1d., or, in all, £10,050,000. If the rate is increased to 6d. in the pound, the amount for each penny will not be quite so large. We anticipate that it will be at the rate of £1,995,000 per 1d., or that 6d. will pro-duce £11,970,000. That gives an increase in the receipts from the 6d. Income Tax over the 5d. Income Tax of £1,920,000. Now, all this £1,920,000 it will not be possible to receive before April 1. We cannot estimate that we should receive during the financial year closing at the end of March next more than £1,200,000. So that £720,000 will be received on and after the 1st of April next, and that is a somewhat better proportion than that which Mr. Ward Hunt expected to get, and still better than what he actu ally got. It is quite unnecessary, on the present occasion, to go into details as to the system of collecting Income Tax, and how it will now be possible to receive a somewhat larger portion of the addition of 1d. than Mr. Ward Hunt received in 1867–8. But these are the figures we have arrived at after very careful consultation with the Revenue officers, showing that £1,200,000 is what we hope will be received during the present financial year, and that £720,000 will be received after the end of the financial year. Upon that the only remark I have to make is, that the balances, as we expect them to stand at the end of the financial year, will be quite sufficient to bear that charge of £720,000; these balances being recouped during the early part of the next financial year, as the remainder of the proceeds of the additional 1d. comes in. Sir Arthur Otway, that is the simple proposal I have to make to the Committee. As I said before, I do not think that, at this time of the financial year, we can have recourse to any tax other than the Income Tax. I, therefore, trust that the Committee will adopt the proposal to raise that tax for the present year from 5d. to 6d. I shall be happy, as I can address the Committee more than once, and as my hon. Friend the Secretary to the Treasury (Mr. Courtney) will also be able to do so, to give the Committee any information on questions of detail arising out of questions asked us in debate. But, at present, all that it is necessary for me to do is to move the formal Resolution, which I now put into your hands.

Motion made, and Question proposed, That, towards raising the Supply granted to Her Majesty, in addition to the Duties of Income Tax granted by 'the Customs and Inland Revenue Act, 1884,' there shall be charged, collected, and paid for the year which commenced on the sixth day of April, one thousand eight hundred and eighty-four, in respect of all Property, Profits, and Gains mentioned or described as chargeable in the Act of the sixteenth and seventeenth years of Her Majesty's reign, chapter thirty-four, the following Duties of Income Tax (that is to say): For every Twenty Shillings of the annual value or amount of Property, Profits, and Gains chargeable under Schedules (A), (C), (D), or (E) of the said Act, the Duty of One Penny; And for every Twenty Shillings of the annual value of the occupation of Lands, Tenements, Hereditaments, and Heri tages chargeable under Schedule (B) of the said Act, the Duty of One Halfpenny; Provided always, That, with the view of securing the additional Duties and affording the proper rights of deduction in respect thereof in the case of Dividends, Interest, or other annual sums due or payable half-yearly or quarterly in the course of the said year, where one of the half-yearly payments or two of the quarterly payments shall have been made, the other half-yearly payment or quarterly payments shall be charged with the additional Duty of Two Pence for every Twenty Shillings of the amount thereof; and where three of the quarterly payments shall have been made, the other quarterly payment shall be charged with the additional Duty of Four Pence for every Twenty Shillings of the amount thereof. Provided also, That the charge under this Resolution shall be deemed to be satisfied by an addition of one-fifth of the amount of the Duties assessed under 'The Customs and Inland Revenue Act, 1884,' to such amount, and payment of such addition therewith."—(Mr. Chancellor of the Exchequer.)

LORD GEORGE HAMILTON

The statement made by the right hon. Gentleman the Chancellor of the Exchequer is very short; but it is of so startling a nature that I think it requires instant comment, because, taking the most favourable view of his own Estimates, we see here a Liberal Chancellor of the Exchequer, pledged to peace, economy, and retrenchment, coming down to the House, and admitting a deficiency of nearly £800,000. When the original Estimates of Revenue were before the Committee, in connection with the Budget of the present year, there was a unanimous opinion expressed on this side of the House, in which I certainly joined, that Her Majesty's Government had not made sufficient allowance for contingencies which were more or less certain to arise. It was a matter of almost absolute certainty that an Expedition of some kind or other would have to be sent to Egypt; but the Government made no provision for such an Expedition. We have the high authority of the Prime Minister for believing that nothing is more inconvenient to trade and commerce than to bring in a second Budget in the middle of the financial year; but now, when trade is most depressed, down comes the right hon. Gentleman the Chancellor of the Exchequer, just when the trading communities have made their arrangements to meet the financial burdens of the year, with an addition of 2d. to the Income Tax for the last half-year. But, unsatisfactory as this is, it is not all. Meagre as the statement of the right hon. Gentleman is, and unsatisfactory as the main outlines of it are, I very much fear that a much more unsatisfactory statement will have to be made a few months hence. There is not a single man in the House who believes that the Estimates, large as they are, which have been presented by the Government, will in any way be sufficient. I cannot understand how any Government, with a knowledge of the magnitude of the Expedition they are sending out up the Nile, could present Estimates of so small a character as £1,000,000. It is perfectly clear that the object has been not to cover the actual expense, but to give the Government a plausible excuse for increasing the Income Tax by 1d. only during the present year. The one maxim which the Prime Minister is always insisting upon is, that on every occasion we ought to square our accounts for the year, and that there is no greater act of immorality in reference to finance than for a Government, deliberately, with their eyes open, to present a Budget with a deficiency. That was the one solitary remnant left of the financial policy laid down by the Prime Minister in Mid Lothian; and even that has now gone. I think, before we assent to this proposal, we ought to have a clear Estimate of what our liabilities for this year will probably be, and what our Expenditure will amount to. It is perfectly clear that, under the most favourable Estimates, there will be a deficiency of something like £1,000,000 for the present year. The Government are about to propose large additional Estimates for the Navy. Where is the money to come from? Then there is to be an addition to the fortifications used for the protection of our coaling stations. Where is the money to come from? On Tuesday next the House is to have a statement from the Prime Minister as to what charges are to be put on the English taxpayers for the finances of Egypt—a burden imposed upon the trade of this country in order to support the policy of Her Majesty's Ministers in Egypt, which has practically brought that country to a state of bankruptcy. Under those circumstances, I say that when the Chancellor of the Exchequer comes down to the House, and asks for power to impose additional taxation, he ought to give us some idea of the liabilities we have al ready incurred. We have heard a great deal of the extravagance of the late Government. Let me place before the Committee a statement of the Expenditure of the present Government. They commenced with an initial Expenditure of £85,500,000. To that we must add the extra receipts of the previous improvements in the Revenue, bringing it up to £86,300,000. A further addition must be made of the amount paid by India for Home Establishments, included in the Revenue of the previous year, which brings the total Expenditure of the present Government to £87,300,000. That is exclusive of the Supplementary Estimates. The Committee has sanctioned Votes to the amount of £2,300,000 more, so that the Expenditure of Her Majesty's Government, pledged as they are to peace, retrenchment, and economy, amounts this year to the enormous figure of £89,600,000. Now, Sir, these are startling figures; and if this were an exceptional year, one might pass them by without comment; but I have here a Statistical Abstract, published this year, showing the Expenditure during the past five years, and I find that this is not an abnormal year, but that every year Her Majesty's Government have been in Office the Expenditure of the country has increased at an unparalleled rate. If the Committee will allow me, I would ask their attention for a moment or two while I place before them the enormous dimensions which the Expenditure during the past five years has attained. I cannot estimate what the actual Expenditure of this year will be; but I assume that if the right hon. Gentleman the Chancellor of the Exchequer realizes the income which he has estimated that he will obtain, and adding the sums previously paid for extra receipts on behalf of the Army and Navy, and £1,000,000 paid for the Home Establishments in connection with India, the Estimate for this year's Revenue will amount to upwards of £89,000,000. In the preceding year, making the same calculations, and including the extra receipts, the Expenditure was £87,300,000; about £87,000,000 in the year before; about £85,000,000 in the year before that; and £82,000,000 in the year preceding. Adding the Expenditure in those five years together, I find that, since the present Government have been in Office, should the Esti mates of the present year be confirmed, the Expenditure of the country has amounted to the enormous sum of nearly £436,000,000. Now, Sir, the late Government were turned out of Office chiefly because the nation was told by the Prime Minister that they had adopted a policy so expensive that it was beyond the capacity of the nation to bear. Well, I will take the income of the last five years the Conservatives were in power, and I find that it only amounted to £399,000,000, showing a balance against the present Government of £37,000,000. But there are two deductions to be made from that. I give the Government credit, at the present moment, for having more than paid their way. I make an allowance on that account of £1,500,000. I deduct that sum from their Expenditure, and I also admit that we failed by £6,500,000 to cover our Expenditure, and that will increase the actual income we received by £6,500,000, which represents a failure of income during the five years the Conservative Party were in power. Allowing, therefore, £1,500,000 for the Liberal surplus and £6,500,000 for Conservative deficiencies, it will still be found that the income which the Government have received during the last five years is £29,000,000 over and above that received by their Predecessors in their five years of Office. Their Expenditure, taking the most moderate estimate, has been more than £29,000,000 above that of the Conservative Party. It has been asserted on Liberal platforms, and by the Prime Minister in Mid Lothian, that the increased Expenditure has been owing to the Government having to pay the debts of their Predecessors.

MR. GLADSTONE

I spoke of the engagements inherited from our Predecessors.

LORD GEORGE HAMILTON

It is quite possible for the late Government to assert that if the different and proper arrangements they had made in Afghanistan and in connection with Eastern affairs had been completely carried out by their Successors, things might possibly not have been placed in so unfavourable a position when they came into Office. Therefore, I think they can afford to leave out of the present discussion the engagements which they inherited from their Predecessors; but the present Government have spent, during five years of Office, £29,000,000 more than was spent by the late Government during their five years' tenure of Office. It is asserted that this is due, to a very large extent, to their paying off the debts of their Predecessors, and that the increase arises from the annual increase of the charges in reference to the reduction of the National Debt. Now, my hon. Friend the Member for the University of London (Sir John Lubbock) has for some time past promulgated that theory; but he has moved for a Return which annihilates it. If he will take the trouble to look at that Return, which shows all the payments made on behalf of the National Debt during the last 10 years, he will find that we paid £135,000,000, and that Her Majesty's present Government have paid £140,000,000, making a difference of £5,000,000 only. Well, I give the Government the full credit and benefit of that difference of £5,000,000, and also of the £3,750,000 paid to India on account of the Afghan War, and, deducting those sums from the £29,000,000 I have alluded to as their excessive Expenditure, there still remains upwards of £20,000,000 to be accounted for; and I assert, and I challenge contradiction, that the whole of that £20,000,000 is entirely due to increased Expenditure connected with the Army, Navy, and Civil Services, or, in other words, that Her Majesty's Government, who came in power to practice economy and to reverse the extravagant measures of their Predecessors, in five years have expended an average of £4,000,000 per annum more than the late Ministry did. These are startling facts, and, unfortunately, there are symptoms which indicate at the present moment that the Revenue has lost much of its elasticity; and for the first time in the history of the Income Tax it is showing signs of going back, or, at any rate, of being deprived of that progress which has distinguished it in past years. Under these circumstances, it may be asked, What are we to do? I suppose we have no alternative but to assent to the proposal of Her Majesty's Government. When the Prime Minister was in Mid Lothian, he set up a defence on behalf of the Expenditure of his Government. I read that defence, which was a very ingenious one, with the care and attention which everything that falls from the right hon. Gentleman deserves to receive; but it most unquestionably involves heretical principles in regard to finance, and absolutely immoral arithmetic. Allow me to explain what I mean. The right hon. Gentleman, for the purpose of defending the Expenditure of Her Majesty's Government, laid down certain doctrines, which I contend that both sides of the House ought at once emphatically to repudiate. He deducted from his Expenditure the amount by which the National Debt has been reduced during the time the present Government have been in Office. He deducted that from the Expenditure, and because the amount by which the National Debt had been reduced was greater during his term of Office than during the term of the late Government, the right hon. Gentleman went on to argue, before his audience, that his Expenditure had been less than that of the late Government. I maintain that that is a most dangerous and immoral doctrine, because nearly the whole, if not the whole, of that reduction of Debt, took place under the automatic operation of the system of Terminable Annuities. When filling the Office of Chancellor of the Exchequer, my right hon. Friend beside me (Sir Stafford Northcote) pointed out more than once the effect of the operation, and showed that, while reducing the Debt, they began, at the same time, to incur fresh liabilities. The Prime Minister has set up his argument on a doctrine which I never heard advanced before by a Chancellor of the Exchequer—namely, that he got no benefit from the Terminable Annuities set up by his Predecessors.

MR. GLADSTONE

What is the noble Lord quoting from?

LORD GEORGE HAMILTON

I am speaking only from my memory, and I want to ask the right hon. Gentleman the Chancellor of the Exchequer whether he endorses the doctrine set up by the Prime Minister, because the right hon. Gentleman has resuscitated the system of setting up Terminable Annuities, and the sole object of setting up Terminable Annuities is for the purpose of reducing Debt. The amount set apart for the purpose of the Debt, in order that an annual reduction may take place, is, no doubt, independent of the Expenditure in connection with the Army, Navy, and Civil Service; and no Chancellor of the Exchequer, or any Member of the Government, has, I believe, attempted to justify any excessive Expenditure by the plea that, under the automatic process of Terminable Annuities, there was an increase in the amount of Debt paid off. If that principle is allowed to prevail, we should derive no advantage from the extinction of Terminable Annuities, because the Expenditure on the Army, Navy, and Civil Service would be increased to an equivalent amount. The Return which the hon. Member for the University of London obtained puts that point in the clearest possible manner. Take two periods—say, 1874 and 1884. The annual charge for the total service of the Debt in the first year was £26,100,000; but the amount which, under the automatic process of Terminable Annuities, was paid off yearly, was £3,100,000. Ten years later, in 1884, the total charge for the Debt, including the Sinking Fund, was £28,100,000, or an increase of £2,000,000; but, by the automatic process of Terminable Annuities, no less than £6,700,000 will be paid off, and the Prime Minister, in Mid Lothian, credited himself with the difference in charge, and with the increased amount of Terminable Annuities paid off, because they were approaching termination. What I contend is that he had no right whatever to do that, or to set up the doctrine that because, under the process of Terminable Annuities, they are still reducing Debt, that, therefore, they are entitled to the same amount to increase the National Expenditure on the Army, Navy, and Civil Service. [Mr. GLADSTONE dissented.] The right hon. Gentleman shakes his head. I see that he does not like the practical application of his own theory.

MR. GLADSTONE

I only want the noble Lord to be a little more accurate in the statement he makes. I distinctly declined to say that I was satisfied with the state of the Expenditure. So far from setting up any theory of the kind imputed to me, I never said anything of the sort.

LORD GEORGE HAMILTON

That has nothing to do with my point, or my argument. I do not suppose that the Prime Minister is alone in his dissatisfaction at the state of the Expenditure. I venture to say that there is not a single person in the country who does not agree with him. I have his speech here. He began by warning those be addressed to be on their guard against the Tories, and he concluded by saying that he had laid the figures before his audience, and that he challenged any man to shake them or deny their correctness. All I am doing now is to submit the figures of the right hon. Gentleman to a fair criticism. The argument the right hon. Gentleman used was that, deducting from the Expenditure the amount of Debt paid off during the time he has been in Office—because the Debt was less than during the time the late Ministry were in Office—he was entitled to contend that therefore his Expenditure was less. But the reason why he paid off more was because certain Terminable Annuities were approaching their termination, and they were handed over to him at the time the present Government came into Office. It did not involve any fresh charge; but the operation of those Annuities undoubtedly did diminish annually, to an increased amount, the principal of the National Debt. Then, I say, that if the Prime Minister is justified in setting up his theory, he might deduct from his annual Expenditure the amount by which, under Terminable Annuities, the Debt is annually reduced; and, in that case, there ought to be an end to the system of Terminable Annuities altogether, so as not to allow the Chancellor of the Exchequer or the Prime Minister to set up a doctrine so dangerous and detrimental to economy as that which the Prime Minister was pleased to present to his Mid Lothian constituents. I will deal with only one other point. The right hon. Gentleman deducted from the comparative Expenditure of the present and the late Governments the cost of collecting the Revenue. Why should he deduct the cost of collecting the Revenue? We keep up such large establishments of the Army and Navy, for the purpose of protecting the Revenue, and we maintain another establishment—the Civil Service—for the purpose of collecting it. If we deduct one, why should we not deduct the other? The cost of collection and of protection are both dead charge upon the Revenue; and the reason why the right hon. Gentleman deducted the cost of collecting the Revenue was because the cost was greater under the present Government than under the late Government, and if he had included it the figures would not have come out as he wished them. There was one sentiment which the Prime Minister gave utterance to in Mid Lothian which was a very admirable one—namely, that it was the policy of the Government that regulated the Expenditure. What I want to know is, what the policy of the Government has been in regulating this Expenditure, which is the largest Expenditure we have ever known? We are now asked to sanction the means of sending out two Expeditions, one to South Africa and the other to the North of Africa. I do not propose to trench upon the discussion which unquestionably will arise, both as regards the Expedition to South Africa, as well as that to the Soudan, and in regard to the arrangement of affairs by Her Majesty's Government. But I recollect that, two years ago, when Lord Derby was asked to put an end to certain outrages which had taken place in Bechuanaland, the noble Lord gave a characteristic reply. He said—"What will it cost? It will cost more than the fee simple of the whole country is worth." Has the fee simple of land in Bechuanaland increased so largely that Her Majesty's Government are now justified in sending out an Expedition? Again, they are sending out another Expedition to Egypt to bring home three distinguished officers of Her Majesty's Government at Khartoum, two of whom, have, unfortunately, been murdered since the Expedition was decided upon. I cannot help recollecting that not more than two years ago, when General Hicks asked for assistance, a mocking reply was sent out to our Representative to this effect—"Report quickly the opinion of Her Majesty's Government, but take care to give no advice." Now, however, the Khedive is threatened with a plethora of advice, and one of the most important of Her Majesty's Ministers has been sent out in order that he may advise his Colleagues as to the best course to be followed. I think it would have been a better and a more simple process for Her Majesty's Government to have given their directions straight to their Representatives in Egypt. There was a remarkable statement published, not long ago, by those who were specially appointed by Her Majesty's Government to inquire into the condition of Egyptian finance, and I think the Government will do well to bear it mind. The statement was that there is a law in Egypt by which every Egyptian subject sent to the Soudan is entitled, if wounded, to a pension; and if killed, his family are entitled to remuneration. This report states that in consequence of the operations in the Soudan there are no less than 40,000 persons or families entitled to pensions from the Egyptian Government. I do not say that all these 40,000 persons lost their lives, or were wounded through the negligence of Her Majesty's Government; but, unquestionably, most of them have, and the result is, that not only has a serious amount of life been sacrificed, but that an enormous tax has been inflicted upon the Egyptian Government, which it is altogether unable to bear, and it will have to be, in some shape or other, transferred to the shoulders of the English taxpayers. [Cries of "No!"] Well, we shall see. My impression is that some such proposal will have to be made to Parliament. I have stated the reason why I rose to take part in this discussion; and I hope we shall have, on the part of the Prime Minister, if not a repudiation of the words he is reported to have used in Mid Lothian, at any rate an emphatic repudiation of the doctrine which they conveyed.

MR. GLADSTONE

My point was, that the sums paid for the reduction of Debt might be deducted from the ultimate Expenditure.

LORD GEORGE HAMILTON

That is not exactly the point. What I maintain is, that if you set up Terminable Annuities, annually increasing in amount, you have no right to deduct the principal so reduced from your annual Expenditure. I say that if you do deduct it—and I understand the Prime Minister to say it may be deducted from the Expenditure—any Minister, by adopting such a process, could make his figures less than another Minister who had been in Office under less favourable circumstances. That is what the Prime Minister stated at Mid Lothian, and I am convinced that on no other occasion except upon the hustings would the Prime Minister have repeated that doctrine. Although I sympathize very much with the unfortunate taxpayers who will have to pay this extra 2d. in the pound Income Tax in one sense, I trust that this extra imposition of taxation will bear good fruit. It will bring home to everyone what is the post and the price of a policy of perpetual vacillation. Her Majesty's Government have had great advantages. They have had the largest majority ever known; they are led by the ablest Parliamentary tactician it is possible for the House to possess. Yet what have they done? They have succeeded, by their foreign and Colonial policy, in lowering the reputation and in endangering the interests of the country in every direction. [Cries of "No!"] I say "Yes;" and, in accomplishing this unlucky result, they have succeeded in wasting more money and in sacrificing more lives than the most aggressive of their Predecessors. I hope the sharpness and unpleasantness of the lesson will not be forgotten by the country, and that it will bring home to the country this fact—that, in the administration of an Empire like that of England, there is no policy so ruinous and expensive as that which is dictated not by natural exigencies, but by the internal discords of the political Party which happens for the time being to be Office.

MR. RYLANDS

said, that when he had the honour of bringing under the notice of the House a Resolution in favour of a reduction of National Expenditure, he was anxious to avoid, as far as he could, any comparison between Conservative and Liberal finance; and he had urged then, as he ventured to urge now, that what the Committee had to consider in regard to the Expenditure of the country was, not how it could promote Party interests or throw responsibility on one Party or the other, but whether the position in which the country was placed was such as to be advantageous to the public or satisfactory to the taxpayer. He did not propose to follow the noble Lord opposite (Lord George Hamilton) into the remarks he had made, and especially into those in which, in adverting to the statement of the right hon. Gentleman the Chancellor of the Exchequer, the noble Lord had attempted to show that the present Government had been much more extravagant than their Predecessors; nor would he venture to enter into the wider field the noble Lord had opened up, as to the conduct of the Government in reference to high matters of policy in Egypt and South Africa. He (Mr. Rylands) took it for granted that all those matters would come before the House in a legitimate manner, when they could be discussed, as no doubt they ought to be discussed, in reference to all their bearings on the administration of the country, and in the interests of the taxpayers at large. He had not been surprised at the nature of the proposal made to the Committee that evening by his right hon. Friend the Chancellor of the Exchequer. No hon. Member could feel surprised, after having seen the Government following so closely in the footsteps of their Predecessors, that now, in the month of November, in utter disregard of the doctrine that there should only be one Budget in the course of the year, the House of Commons should be called upon to make provision for two Budgets. They were to have fresh taxation. What was it for? He fully admitted, with his right hon. Friend the Chancellor of the Exchequer, that if they were to have fresh taxation, it would be intolerable to impose it in the way of indirect taxation. He believed the Committee would fully concur in that view; but was it not a fact, and was it not felt throughout the country to be a fact, that the owners of precarious incomes were unjustly treated by the imposition of the Income Tax? Could anybody contend that real property was fairly treated in regard to taxation? [Cries of "Yes!"] How about the probate duty? Was it not a fact that millions of taxation were imposed upon the earnings of the industrious portions of the community in taxes, while the most stable property of the community escaped? Had not the Prime Minister admitted, in Mid Lothian, the injustice—and they all believed it to be an injustice—inflicted upon those who had a precarious income by the imposition of the Income Tax, and yet things were allowed to drift on, and no effort was made to remedy that injustice. And now, at a time of grievous commercial depression—at a time when capital was receiving a very miserable return—often no return at all; when every trade and every industry was suffering, the Government proposed to make the burden still heavier. [An hon. MEMBER: Free Trade.] He declined to be any party to the raising of that question. But he must say that at such a time as this, for the Government to come down to give another turn of the screw, at a period of great depression, and at a time when the injustice in the mode of levying taxation was left without a remedy, would, he was satisfied, be productive of great irritation and annoyance to the country. He would only remind the House that, at a period when, on every ground, people of this country ought to be dealt with leniently on the score of taxation and expenditure, it was proposed to increase their burdens. Hon. Gentlemen opposite talked about local burdens; and, no doubt, they were quite right in asserting that, at the present moment, the people of this country were bearing an enormous burden in the shape of local expenditure, not only for what they wanted for themselves at the present moment, but for the deficiencies of their Predecessors. [Cries of "No!"] That was certainly the fact. Were not the present generation improving the sewerage and sanitary arrangements of the towns, and building schools, and carrying out other local improvements which their ancestors had neglected. These works were being done now, and the people were taking the burden of making permanent improvements upon their own shoulders for the benefit of posterity. Hon. Gentlemen opposite knew perfectly well that the localities were not only discharging duties which belonged to their Predecessors, but that they were bearing burdens for the relief of their Successors. And what was the time when this additional burden was proposed? It was imposed at a moment when no relief of taxation was attempted by reducing indirect taxation, and when no attempt was made, by diminution of taxation, to give a stimulus to the industry of the country. It was at such a moment that Her Majesty's Government brought in measures for paying off the National Debt; and this very year, when we were paying £7,000,000 towards the reduction of the National Debt, Her Majesty's Government came down and proposed to place upon the shoulders of the taxpayers an additional burden to be raised by this most objectionable system of taxation. Of course, he protested against it. He believed the Expenditure of Her Majesty's Government was altogether unjustifiable. The fact that he sat on that side of the House would never induce him to support Her Majesty's Government in an Expenditure which he be lieved to be unwarrantable. No doubt, some persons said it was a matter of policy, and that a great deal of the Expenditure of the country absolutely depended on such policy. What was it, however, that his right hon. Friend the Chancellor of the Exchequer said to him (Mr. Rylands) in regard to the Motion for a reduction of Expenditure which he had brought forward last Session? His right hon. Friend told him that the Treasury were most carefully investigating various branches of Expenditure with a view to secure economy. He (Mr. Rylands) had seen no evidence of the result of any such investigation. On the contrary, the Expenditure had gone on increasing, and he had seen great branches of Expenditure, in which he believed there was enormous waste of money, continued without any attempt being made, permanently, to grapple with the evil. They were about to have in their hands a most important Report from a Departmental Committee in regard to the Dockyards. He had no doubt that very considerable economy might be effected in the administration of the Dockyards, notwithstanding the fact that they wanted more ships and greater naval power. It was admitted, even by those who were interested in the matter, that the Dockyard system was a most extravagant and inefficient system. In point of fact, he had been told by a Member of the Committee on the other side of the House—a man of the highest position, character, judgment, and experience—that, in his opinion, at least 20 per cent might be saved in the cost of administering the Dockyards. The result, if the Expenditure was 20 per cent higher than it ought to be—and he had no doubt that it was, from his own personal knowledge of manufacturing operations—there was a waste of at least £ 1,000,000, or even £2,000,000 a-year, in connection with the Dockyards; and as this waste had been going on for many years, the exercise of greater economy would have provided the country with a considerable number of good iron-clads. But the extravagant expenditure of money still went on. What were the Government doing in order to stop it? Nothing whatever. But although they failed to do anything to reduce the expenditure in those branches of the De partment where it was now excessive, or to prevent the waste of £1,000,000 or £2,000,000 per annum, they came down now, and asked the Committee for 1d. additional Income Tax. No doubt, the Committee would grant it. Committees of Supply and Ways and Means always granted this kind of taxation, and never took into consideration how the people were suffering. He was sorry to see that that was a point which his right hon. Friend the Chancellor of the Exchequer never realized. The Prime Minister and his right hon. Friend constantly boasted of their surpluses, and took pride to themselves and to the Government for the fact that there was a surplus. They were constantly informing the House that they always had a surplus; that they had done this and that out of the surplus; and that they had paid certain sums out of the surplus. But where did the surplus come from? The Government did not manufacture it. If the right hon. Gentleman the Chancellor of the Exchequer, by some administrative legerdemain, could manage to produce a large surplus without going to the pockets of the people of the country he would be the most admirable and charming Chancellor of the Exchequer who had ever sat on the Treasury Bench. Unfortunately, the right hon. Gentleman did not profess to get a surplus in any other way than by taking it out of the pockets of the taxpayers of the country. What did that money represent? There were millions of men in this country who, whenever they wanted additional capital in order to carry on their industrial enterprizes, had to pay 6, 8, or 10 per cent for it; and, nevertheless, the Government took out of the pockets of these poor men a certain proportion of that capital which they were not going to use for the service of the nation, but which would remain as a surplus to clear off their debts. In reality they were clearing off the obligations of the country by money taken from the pockets of people to whom it was worth from 5 to 10 per cent, when they were quite able to clear off their obligations by money raised at 3 per cent. What on earth could be the justification of such a policy? He must say that he entertained an earnest hope that the Franchise Question would soon be out of the way; because, so long as it stood in the way, neither the House of Commons nor the country would devote their attention to any other question. He maintained that there were many other matters to which the attention of the House and of the country ought to be turned, and one of the most urgent was that which concerned the Expenditure of the country, the obligations of the country, and the imposition of burdens upon the people in the shape of taxation. He had constantly spoken in that House against the extravagant Expenditure of the Government. He knew the feeling of a great body of the ratepayers, and he was perfectly satisfied that sooner or later, whichever Party was extravagant and imposed undue burdens upon the country, would be called to account by the taxpayers, and no mere comparison between Conservative and Liberal finance would be a sufficient answer to the complaint of the people. On the contrary, the people would express their opinions in unanswerable language, and they would show by their votes that their complaint was against the undue and unnecessary burden of taxation. He was glad to hear from the Leader of the Opposition, from right hon. Gentlemen who had acted as his Colleagues, particularly from the noble Lord the Member for Middlesex (Lord George Hamilton), and from other leading Members of the Conservative Party, that they were in favour of economizing the National Expenditure. They appeared anxious to show that in regard to the Public Expenditure they were not as bad as they were thought to be, nor as bad as other people. He (Mr. Rylands) had always been struck, however, by the fact that their performances were very different from their promises; and that, although they professed economy in reference to the Expenditure of the country, they failed to show it in their acts. It had been said that "Hypocrisy was the homage which vice paid to virtue;" and they had at least the satisfaction of seeing, from what might be called the financial hypocrisy of the Front Benches, that whilst maintaining excessive expenditure, leading Members on both sides of the House still recognized the demands of public opinion in favour of national economy. He had no intention of opposing the proposal of the right hon. Gentleman the Chancellor of the Exchequer; but he could not help re gretting that the Government had not endeavoured to solve the present difficulty in some other way. He regretted extremely that, at that time of the year, the Government had not seen their way to throw this additional tax upon property, rather than upon industrial incomes. He should, however, have felt still more gratified to find that the Government, by economical administration, had not been driven, at that late period of the year, to ask the House of Commons to sanction a further increase of taxation.

MR. GORST

said, he wished to ask a question, because he thought the right hon. Gentleman the Chancellor of the Exchequer had been purposely vague in one part of his statement, and that the right hon. Gentleman had not put before the Committee the exact financial result of this operation. If he rightly understood the Chancellor of the Exchequer, his previous Budget, above any provision made for any new source of expenditure, left him with a surplus of £106,000, including certain Supplementary Estimates, passed in the previous year. Apart from the new War Expenditure they were now called upon to incur, there was a small surplus of £106,000. He understood the right hon. Gentleman to say that, although there might be a small increase of income above the Estimate before them, the whole of that increase would be swallowed up by some Civil Service Supplementary Estimates in the coming Session.

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)

No. What I said was that the Civil Service Supplementary Estimates to be proposed in February would probably be met by savings on other Votes.

MR. GORST

asked if he was to understand the right hon. Gentleman to say that there would be a small estimated increase of income available for meeting the present War Expenditure? If that were the case, would the right hon. Gentleman tell the Committee what the amount of that increase would be, because otherwise there would be no means of dealing with it? So far as the right hon. Gentleman had condescended to actual figures, he had not met, by a good deal, the increased expenditure the House had voted. The House had voted increased expenditure to the amount of £2,349,000, and the right hon. Gentle man only proposed an increased taxation that would yield £1,930,000, leaving a deficit of £419,000. If from that was deducted the surplus of £106,000, which existed upon the former Estimates, the net result of the proposals of the right hon. Gentleman would be a deficit of £313,000. The question he wished to ask was, whether the net result of the various Budget proposals was that the country was left, at the end of the financial year, with a deficit of £313,000. If that were not so, he thought the right hon. Gentleman ought to tell the House from what other source he expected to make up the deficiency, and what the amount of such increased income would be upon which he estimated an increase of ordinary taxation equivalent to £313,000. The Committee ought to receive that information, or otherwise the Estimates of the right hon. Gentleman would remain in a hazy form, even if they did not result in a positive deficit. What he wished to have an explanation upon was, whether it was possible, under the proposals of the Chancellor of the Exchequer as they stood, to meet the Expenditure of the year out of the income of the year?

MR. H. H. FOWLER

said, he sympathized a great deal with the hon. Member for Burnley (Mr. Rylands) in reference to the reduction of the Expenditure of the country, and also as to the desirability of the economical question being, as far as possible, removed from the disputed arena of Party politics. But, unfortunately, the noble Lord the Member for Middlesex (Lord George Hamilton), who opened the discussion, had made a purely Party speech. The noble Lord had made a Party attack upon the Government; and, not content with that, he had supplemented an attack on the finance of the Government with another attack upon their foreign and Egyptian policy. He (Mr. H. H. Fowler) found no fault with the noble Lord for doing that; but he proposed, for a moment or two, to answer what he might call the fighting portion of the noble Lord's speech, totally irrespective of the question raised by the hon. and learned Member for Chatham (Mr. Gorst). The noble Lord credited Her Majesty's Government and their followers with the total increase of the National Expenditure, and had tried, with great effect, to trace the large increase in the total Expenditure of the country, which had taken place during the present Administration, to the results of their foreign policy. But he (Mr. H. H. Fowler) had observed in the speech of the noble Lord, what he had often noticed in the speeches of Conservative orators, a singular silence with regard to a comparison of the Expenditure of the last Conservative Government and of the Liberal Administration which preceded it. The figures which prevailed between 1870 and 1874 were many millions less than the figures which prevailed between 1874 and 1879; and he thought the noble Lord would find that one of the charges against Conservative finance which was made in 1880, was that the effect of that finance had been steadily, and he was afraid permanently, to raise the general Expenditure of the country. The late Government, when they acceded to Office, found a low rate of Expenditure, which they steadily increased, partly by their financial policy and partly by their foreign policy. The present Government, when they succeeded the Conservative Government, found a very high rate of Expenditure. The noble Lord tried to convince the Committee that that Expenditure had been very largely increased by the present Administration. In dealing with the increase, he (Mr. H. H. Fowler) submitted that there was nothing more delusive and nothing more absurd than to say that the Expenditure of this country was the total sum which appeared in the Financial Abstract, whether it was £89,000,000, £87,000,000, or £82,000,000, as the case might be. The Government of this country, in addition to the ordinary Expenditure required for the Army, Navy, and Civil Services, carried on a large trading concern; it acted as a banking concern, and it also performed certain services for the public for which it received fees. The more trade it did the larger the Expenditure; the more banking it did the larger the Expenditure; the more service it rendered to the country in respect to the item for which the fees were received, the larger the gross Expenditure. Nothing could be more misleading than an Abstract annually presented to show the Expenditure of the country, which, as a matter of fact, might be twisted to any purpose whatever. The right hon. Gen tleman the Member for the City of London (Mr. J. G. Hubbard) had for some years past—since 1867—annually moved for Returns in which the Income and Expenditure of the nation were analyzed. That Return gave, for instance, the gross expenditure of the Post Office on the one side, and the cost of working the Post Office on the other, and then credited the income of the country with the net balance; and, in the same way, all the other branches of the Public Service were dealt with. The figures taken from that sheet were signed by the Secretary to the Treasury in the last and the present Administrations, and might be taken to be strictly accurate. Indeed, he (Mr. H. H. Fowler) knew they were accurate from having checked them with the Financial Account of the Public Income and Expenditure, from which the noble Lord opposite (Lord George Hamilton) had taken his figures. The noble Lord took the Expenditure of the late Government for four years and the Expenditure of the present Administration during the last four years. [Lord GEORGE HAMILTON: No; for five years.] He proposed to take the Expenditure for four years. He found that the Expenditure of the late Administration was £288,000,000 during the four years; while the net Expenditure of the present Administration during the last four years had been £299,000,000. He was not going to argue that that did not, on the face of it, show that the Expenditure had been increased under the present Administration during the past four years by £11,000,000. How had that increase arisen? The noble Lord gave them some figures showing a very large increase in reference to the sums paid by the two Governments for the reduction of the Public Debt; but the gross entries as to the cost of the Public Debt were again misleading. The net amount paid during the last four years of the last Administration for Debt charge was £109,600,000. The present Government had had to pay, and it had paid, £113,401,000, or an increase of more than £4,000,000. Of course, the explanation of that was self-evident. The permanent Debt charge of the country for the five years which had lapsed since the present Government came into power had increased. The last act of the right hon. Baronet the Member for North Devon (Sir Stafford Northcote) was to add Terminable Annuities for five years, in order to repay the deficit of the Administration. That sum had, therefore, to be found by the present Government, and the increased charge paid by them for interest and repayment of Debt during the time they had been in Office had been upwards of £4,000,000. Then there were £2,500,000 for the Afghan War. He did not pretend to say whether that contribution was wrong or not; but, as a matter of fact, the present Government had paid £2,500,000 in aid of the Indian Revenue in respect of the charge for the Afghan War. In addition, they had had a very large extra Expenditure occasioned by the state of things in Ireland. Further, there had been a considerable increase of Expenditure in consequence of the principle established in 1874—that most vicious and disastrous principle of subventions in aid of local taxation, which, if not speedily dealt with, would land the country in most serious difficulties. That item was steadily increasing. Then there had been a large increase, and it was one in which he rejoiced—a large increase on account of education. He took it for granted that, although there had been a good many things predicted as to what the coming Democracy would do when the Franchise Bill was passed, there was one thing it would not do—it would not economize the Education Act; and, whatever Votes might be cut down, there would be no attempt to effect economy in that Department of the Public Expenditure. Then, in addition, they had had the Egyptian Expenditure, which already amounted to something like £4,000,000, and would probably amount to a good many millions more. But hon. Members opposite should be the last persons to cry out against the Egyptian Expenditure; for they had—and certainly nobody more eloquently than the noble Lord the Member for Middlesex—all along called upon the Government to put down its foot firmly, and proceed to decisive measures. [Cheers from the Opposition.] He had anticipated those cheers. And if the Government were to proceed to measures of annexation, protection, or something more, the present Expenditure would be a mere bagatelle compared with what the country would be involved in when these disastrous steps were undertaken. Under these circumstances, he thought the explanation of the increase in the present Expenditure was clear. The causes could be traced, and if the House chose to arrest the cause it knew exactly the springs it ought to touch. He was not disposed to argue with his hon. Friend the Member for Burnley (Mr. Rylands) as to the best mode of meeting the Expenditure. He did not know what else the Government could do, except to put the additional Expenditure upon the Income Tax. After all, he rather agreed with the noble Lord the Member for Middlesex that those who called for and advocated a policy of warlike expeditions should pay the piper. As a Representative of a large constituency, who had to earn its daily bread by its daily toil, he should have felt strongly inclined to oppose any attempt to increase the duty on tea, or on any other article of daily consumption. The House of Commons and the country had sanctioned this Expenditure in Egypt on behalf of General Gordon, and would have held any Ministry to blame who had refused to send out an Expedition, however much they might differ as to the policy of sending General Gordon out in the first instance. When the great question as to economy came before the House again, he should only be too happy to do what little there was in his power to support the noble Lord the Member for Middlesex, or hon. Gentlemen who sat around him, in proposing a reduction of the National Expenditure. He was sorry to see that the right hon. Gentleman the Member for North Devon (Sir Stafford Northcote), in one of the addresses he had made during the Recess, had indulged in some somewhat satirical remarks at the expense of the hon. Member for Burnley (Mr. Rylands) and himself (Mr. H. H. Fowler), accusing them of being ready to run away whenever any proposition was made for a real Committee to inquire into this question of the National Expenditure. He (Mr. H. H. Fowler) could assure the right hon. Baronet that he was labouring entirely under a mistake. He was deeply disappointed that the Government had not appointed a Committee. He had understood that a Committee was promised by the Prime Minister 12 months ago; and if nothing was done in that direction at the commencement of next Session, he should endeavour to take the sense of the House upon the question. He held that they would never get any effective system of control ever the National Expenditure until they adopted the principle of devolution. He believed that if three Standing Committees were appointed—one to deal with the Army Estimates, another with the Navy Estimates, and a third with the Civil Service Estimates—and that if those Committees had the Estimates before them at the commencement of the Session in the same way that Bills were now referred to Grand Committees, the House would be saved a great waste of time in Committee of Supply, and a considerable amount of labour which, as a rule, produced very trifling and unsatisfactory results.

MR. W. H. SMITH

I have listened, as the Committee always does, with great interest to the speech of the hon. Member for Wolverhampton (Mr. H. H. Fowler); and he may be certain that this side of the House would receive, in a cordial spirit, any proposals he may make that would tend to the simplification of the Business of the House, or the promotion of economy in the Public Service. I own that, for my own part, I am most anxious that there should be a most careful investigation into the Expenditure of the country; but, on the other hand, I should deprecate, in the strongest manner, any devolution of the responsibility of the Treasury, with whom it rests, to propose to Parliament economical Estimates, for which the Government alone are responsible. If the House were to take into its own hands the supervision of the Estimates of every Public Department, there might be a tendency on the part of the Department to go behind the Treasury to the Committee, and to set the Treasury, in some respects, at defiance in regard to its proposals and recommendations, throwing on the Committee, with the comparatively insufficient information in its possession, the responsibility of deciding what the Expenditure shall be. Therefore, while I concur with the hon. Gentleman that something should be done on the responsibility of the Government, with a view of checking the vast growth of Expenditure which has taken place during the past few years, still I trust the House will take no steps whatever to relieve the Treasury of its proper and Consti tutional responsibility. My hon. and learned Friend the Member for Chatham (Mr. Gorst) drew attention to the fact that the right hon. Gentleman the Chancellor of the Exchequer stated his surplus this year at £106,000; and he then went on to show that there had been Supplementary Estimates for the Expeditions to the Soudan and Bechuanaland amounting to £2,349,000, leaving an apparent deficit of £2,243,000, which requires to be provided for. The Chancellor of the Exchequer says that he anticipates that there will be some growth of the Public Revenue to meet a portion of this Expenditure; but the right hon. Gentleman did not indicate how much. Assuming it to be £250,000, I am sure we shall be extremely glad to get a growth of public income to the extent of £250,000. But he then provides, by imposing an additional Income Tax of 1d. in the pound, for a gross receipt of £1,920,000; but from that tax of 1d. only £1,200,000 will be received during the financial year. The result, in the face of the account, will be a deficiency of £1,000,000, unless there is that growth of income which the Chancellor of the Exchequer expects. But, even if there is that growth of £250,000, there will still remain a sum of £750,000 which will have to be paid out of the balances, and which will not be contributed by the 1d. of Income Tax received during the present year; and £750,000 will go to the help of next year's Revenue, and not towards this year's Expenditure or this year's Debts. The result will be that the £750,000, or £1,000,000—whichever you may please to call it—will be expended out of the sum which would otherwise go towards the reduction of the National Debt. Therefore, the Chancellor of the Exchequer departs from the understanding entered into by the Prime Minister, to pay the Expenditure of the year out of the taxation of the year, and he reduces the amount which would otherwise be applied to the reduction of the National Debt by £750,000. I think I am correct in my assumption that he suggests the amount will be made good from the surplus of the Income Tax which will come into next year's account. The right hon. Gentleman knows very well that every year is dealt with by itself, and it can hardly be expected that he will estimate for a surplus of £750,000 to pay off the National Debt which may be accumulated in the course of the present year. There is one other point to which I wish to refer. There is an expectation that some proposals may be made to Parliament in regard to the condition of the Navy, and no provision is made in this Estimate for those proposals. I am not one of those who desire that a large or a panic Expenditure should be made in respect of any part of the Public Service; but I think it necessary, in the interests of the country, that some expenditure upon the Navy should be provided for now, and that such provision should not be postponed until next year, the provision including the acceleration of the construction of ships, the supply of torpedo vessels, and other important matters. I have no desire to anticipate the discussion which we are promised next Monday; but I wish to point out that we are not making financial provision for all the deficiencies which are in sight during the Session, but that we are ignoring a subject upon which I feel convinced the country feels very warmly and very deeply, and for which there is an absolute necessity to make some provision. I honestly feel that, as completely as there is a necessity for making a provision for fire-engines or fire-escapes, there is this necessity for further provision at this moment; and I think it would be most insane on the part of any Government to postpone making that provision for another three or four months, in the hope that the danger which may be apprehended may be put off for an equal period of which we have no knowledge and no forecast. I hope the right hon. Gentleman will make it quite clear whether I am right or wrong in the assumption that there is a deficiency of £750,000 on the face of the account, which will have to be paid out of the balances.

MR. GLADSTONE

I only propose to detain the Committee for a few minutes. I have no intention of interfering with the functions of my right hon. Friend the Chancellor of the Exchequer upon this occasion; but I left the House just now, and on my return I found the noble Lord opposite (Lord George Hamilton) engaged, as is his manner, in a lively and vigorous attack upon myself. As upon this occasion it is not desirable to enter into these ques tions at any length; and as I wish to take upon myself the whole responsibility of some doctrines which the noble Lord has charged upon me, and which he considers formidable, but which I regard in the contrary light, I feel bound to make a few observations in reply to his speech. There is a slight difference between us—a difference which I am afraid is not likely to be reconciled. Still, there is one point with regard to which I should like to make a modification, which I will explain in a few moments. I am not quite sure whether the noble Lord intends to say that whenever an Act of Parliament has been passed which provides that certain sums shall be paid out of the Consolidated Fund for the year for the reduction of the National Debt, the payment of that money for the purpose for which it is required by law ought to be set down to the credit of those who passed the Act requiring it to be made. [Lord GEORGE HAMILTON: No.] Very good, lam quite right in that. In my opinion it is those who find the money for paying the National Debt who ought to have the credit of paying it, and not those who merely write upon paper, in an Act of Parliament, an enactment stating that such things shall be done. But then the noble Lord contended that I had committed an error in taking credit for the entire reduction of the capital of the Debt in the four years of the present Government, because he said that of the sum which was paid on account of Terminable Annuities, a small amount went to interest in the four years of the late Government, and a larger amount to the capital of the Debt. Upon that subject I differ in principle from the noble Lord; and I hold, and I am prepared to argue at length, if it should become necessary for me to do so, that every Government is entitled to take credit for the amount of the reduction of the capital of the Debt which is effected during the time of their tenure of Office. I hold that to be quite indisputable. I believe that I should gain by the adoption of the opposite doctrine, for this reason—that the proportion of capital Debt paid off under the form of Terminable Annuities is smallest at the commencement of the operation. Now, Sir, I have myself been a great founder of Terminable Annuities; and that being so, if I were to adopt the rule of the noble Lord, and to go back to all the time when I have been most directly responsible for the finance of the country, and to bring the account down to the present time, I should profit considerably by the adoption of it. But I do not admit that rule. I hold that the operations of a Government on the reduction of Debt are not to be measured by the amount it pays for interest, which merely satisfies the claim of the stockholder, but are to be measured exclusively by the reduction effected upon the capital. There is another question upon which the noble Lord touched. The noble Lord appeared to think that I was quite wrong to proceed as I did—that is, having, first of all, set up the gross Expenditure of the country, then to proceed to deduct the cost of collection. I will tell the noble Lord what I think upon that matter. Had I been dealing with the Budget in the House of Commons, when it would either have been expedient, proper, or practicable to enter into a great multitude of minute details, I should not have denied that by looking to the cost of collection you may trace, to a certain extent, the result of economical or lax administration, and, therefore, to some limited extent, I am prepared to admit that that observation of the noble Lord is just. It may be said that one Government would have saved £200,000 in cost of collection which the other Government had not saved. That is a very small matter, and a thing which is quite right to be set out in a minute and careful exposition, such as may be made in this House when the question at large is under discussion; but it is absurd to introduce such matters, and perfectly impossible to make them intelligible in a statement which must be given summarily and in a few figures to an audience in the country. It is quite true the noble Lord may say that you would have realized a larger profit from the Post Office if no great changes had been introduced into the administration of that Department under the present Government. I think that is true, and some small sums might be put down to the credit of the Government, when I come to a comparison of Expenditure; but then I am bound to say that, if I am to do that, I must look to many other matters for which I have not taken credit. I must look at the automatic growth of these Votes, and especially those charged upon us by our Predecessors; and I have not the slightest hesitation in saying that if I give the late Government credit for not having spent that money, I must also say that they would not have given the public that accommodation which they now enjoy—such as the Parcel Post, and divers other changes which the present Government have effected. If I should give the late Government credit for £200,000 on that account, and then take to ourselves credit for the automatic growth of certain Votes, all of which we owe to the late Government, we should be very considerably the gainers by the transaction. I think it is quite clear that, in point of principle, for purposes of just comparison of Expenditure, the cost of collection ought to be deducted. Speaking generally, we divide the cost of collection in this way. The Customs Department and the Inland Revenue Department incur a certain amount of the cost of collection, which does not vary very greatly; and I believe that both of those Departments—particularly the Inland Revenue—have been conducted with special regard to economy. The cost, however, does not vary very largely from year to year. But when you look at the combined business of the Post Office, the Telegraph, and the Parcel Post, that is a vast undertaking, the business of which is constantly augmenting, and in which the working Expenditure forms a very large proportion of the whole cost; and to leave all that out in calculating the gross Expenditure of the Department, and then to make your comparison, would be nothing less than absolutely ridiculous. What I have said elsewhere upon this subject is perfectly just, and I am prepared to abide by the consequences of it. I am prepared to abide by what I said, which was this—I admitted that, at first sight, on the gross Expenditure, there was an apparent balance of, I believe, £13,000,000 against us on the four years; and I ended by showing that, upon the real Expenditure, there was a balance to our credit of between £4,000,000 and £5,000,000. But I did not stop at that point—I stopped there for a moment because I had said all that was matter of fact. But then I went on to say that, with regard to our Expenditure, we must take into view questions in which we had had to meet charges entailed upon us, as we conceived, by the policy of our Predeces Sors. First, I took the payment of £4,750,000 which we had made on account of the Afghan War; and that, added to the other £4,750,000 already brought up, will make £9,500,000. But I went a great deal beyond that, and I did not scruple to go a great deal beyond that; and in every place, here and elsewhere, as long as I have the faculty of speech, and the duty of speech, I shall contend that the whole of our War Charges are due entirely to the policy of the late Government. The whole of the War Charges connected with the Transvaal, and the whole of the War Charges connected with Egypt, are due to our Predecessors. [Laughter.] The hon. Member for Guildford (Mr. Onslow) is a profound student of these matters. I do not dispute his right to laugh in my face at the most serious conclusion I pronounce. That method of argument he is perfectly welcome to continue, as far as I am concerned; but, at the same time, do not let him think it too great a presumption on my part if I place my opinion against his; or if, honestly, I tell him, as I think I may, that on the whole, if not quite, I am nearly as capable of forming an opinion upon this subject as he is. I am aware that the hon. Gentleman has explained what his opinion was; but still I cannot withdraw altogether the opinion which I expressed last year, and which I express now. I was glad to hear the speech of the hon. Member for Wolverhampton (Mr. H. H. Fowler), which I thought was a perfectly consistent speech. One point he referred to was of a practical nature—that which concerned the appointment of Financial Committees—respecting which I believe he said he intended to make a Motion, which I admit he will be quite right in making. He will understand that the pledge we gave was a prospective pledge, relating to the commencement of next Session. My hon. Friend the Member for Burnley (Mr. Rylands) laid down certain doctrines; in the first place, about the National Debt. Does he consider the scope of those doctrines? They are utterly opposed to any paying off of the National Debt whatever. What he says is, that we are paying 3 per cent for our money, and that many men who are engaged in commercial transactions are paying 10 per cent. Does my hon. Friend consider how far this doctrine goes? If it is cruel to take money to pay off the Debt, because we take the money from men who are paying 10 per cent, and are only relieving the State of 3 per cent. he ought to go farther still. If there is anything in the argument of my hon. Friend, it is an argument to show that the making of the National Debt is the most economical arrangement possible. Does he mean that the Debt ought to be increased, or does he mean that it ought to remain stationary? If he means that it ought to remain stationary, how does he stop the application of his own argument? How does he answer those who think that it ought to be increased? If, instead of voting £10,000,000 for the Navy, we borrowed it, we should raise it at 3 per cent; whereas, if we raised it by taxation, we should be taking the money from men who are paying for it 10 per cent. Well, then, my hon. Friend argued strongly for economy, and said that he felt he had no part of the responsibility for these increased charges. I thought he used a phrase which is not altogether gracious when he spoke of "financial hypocrisy." God forbid that I should apply it to anybody. If applied at all, it should be applied to people whose language and actions are in contradiction, and I am not sure that my hon. Friend was quite clear on that point. My right hon. Friend the Chancellor of the Exchequer has had a very heavy charge to meet for Egypt and the Soudan, which will come near to £7,000,000. I think I remember a speech of the hon. Member for Burnley, which, instead of being conceived in the spirit of the hon. Baronet the Member for Carlisle (Sir Wilfrid Lawson)—who I perfectly admit has a right to come down upon us, and to say what he thinks on this matter—recommended and advised a war policy. My hon. Friend must really take his choice; he cannot have the luxury of making speeches of that class, and at the same time the luxury of protesting against the increased Expenditure.

MR. RYLANDS

Allow me to remind the right hon. Gentleman that from this place in the House I denounced as strongly as possible the bombardment of Alexandria; but I subsequently stated that, the Government having committed themselves to that act, I thought it necessary that they should take such a decided policy as would allow everyone to understand what that policy was.

MR. GLADSTONE

I am perfectly ready to argue with my hon. Friend with reference to the bombardment of Alexandria, and to ask him what he would have done at that time; but that does not help my hon. Friend to the slightest extent, because it is since then that he said that a decided policy should be adopted; and, if so, why does he now make objection to the cost of it? He says now, I confess, that a decided policy ought to be adopted; but we all know what is the effect of language like that. Surely he cannot, with consistency, complain of an addition to the Income Tax, for the cost which is the necessary result of that policy. Well, Sir, my hon. Friend is strongly in favour of economy in the Dockyards. I hope he will be able to effect it. We entirely agree with him. My hon. Friend, however, slipped in a very awkward phrase, from his point of view, when he said we wanted more ships. Will my hon. Friend undertake to build us more ships out of the economies which he is to effect in the Dockyards? If he will undertake to say that, then he is perfectly right in protesting against this increased Income Tax, in casting blame upon the Government, and even in talking of financial hypocrisy. Well, Sir, the noble Lord (Lord George Hamilton) also finds fault with the increased Expenditure, and yet he and his Party on every occasion when increase of Expenditure is in question urge on that increase of Expenditure. There has been no increase of Establishments which has taken place that has not been strongly supported by those who sit about the noble Lord, and which I expect will be further strongly supported before a week or a fortnight is over. Now the noble Lord asks, "What is the policy which entails this vast Expenditure?" I will tell the noble Lord. It consists mainly of two propositions. One of them is, that of creating no new cause of quarrel except in deference to some imperative claim of interest or honour. That proposition, Sir, is the rule upon which we have acted without deviation from the time of our assuming the reins of Government, and we have created no new cause of quarrel whatever with any Power or person. We have not had the grand conception with which those who preceded us were either blessed or plagued. We have been content to be as abstinent and as quiet as we could, and we have constantly been censured by opponents for having adopted a policy of non-interference, and for having caused the influence of this country no longer to be felt in war, and for disclaiming all the grand and high-sounding sentences as to ascendancy in the Councils of Europe. The other principle on which we have acted is this, to keep the strictest faith in the execution of obligations from the policy of which obligations we entirely dissent. That is the history of our proceedings in South Africa and in Egypt. Those are the two countries in which the great and most unhappy military charges of the present Government have been incurred. But everything that we have had to lay out with regard to Zululand, Bechuanalaud, and the Transvaal grew unhappily out of that ill-omened and most dishonourable annexation of the Transvaal by the late Government—an annexation effected in spite of the protest of more, I think, than nine-tenths of the people, when the pledge had been given that the country should not be annexed, except in conformity with their view. What are we doing in Bechuanaland now? We gave certain pledges to certain Chiefs, and how came those pledges to be given? Simply, in connection with the hostile relations established in the Transvaal. Of course, it is competent to hon. Gentlemen oppposite to say—"It is not our proceedings, it is your mismanagement." [Laughter.] I do not complain of that language, and I say it is a matter of opinion between us, and our contention is not to be met by scornful laughter, a weapon which, I must say, is too much growing into use, and with respect to which those who are specially responsible set the worst example. Sir, on this question, I should speak for myself, for probably no man's conscience can be lighter on the Question of Egypt than my own, because I told hon. Gentlemen opposite in 1876—eight years ago—what would come of their first intervention, of the first attempt to bring the Government into the management of Egyptian affairs. They listened for two years, and they soon afterwards went out of Office. Then came the double engagement to keep the Khedive on the Throne, and to work in exclusive connection with France. Then began an inextricable entanglement of events, one linked with the other by chains which cannot be broken. There is not a step that we have taken which has not been the necessary consequence of that—I do not say guilty, for I believe it was well-intended—but that most unhappy and unfortunate proceeding. Although I have heard plenty of objection taken to the policy of the Government, no hon. Gentleman opposite has shown us an alternative policy. How were we to escape from the position in which we were bound to support, so long as he did not misbehave himself, a particular person on a Foreign Throne, and to support that person in conjunction with, another country, and to do nothing without the assent of that country? That was the condition which we inherited, and out of which every item of Expenditure one by one arose; and we are told now, forsooth, that we are responsible for the tens of thousands of lives which have been lost; that we are responsible for the war in the Soudan! Why, when you had control, did you not settle the question of the Soudan? ["It was not alive."] Not alive! Why, the Soudan had been in revolt almost continuously; it had only been kept down by foreign arms from the time of the first and most unhappy effort to occupy it. Well, Sir, the noble Lord, who thinks he makes a strong point of it, says—"You are responsible for the 40,000 or 50,000 lives lost." Why, it would be far more rational if I were to tell him that his Government were responsible for the hundreds of thousands of lives lost in the Russo-Turkish War. [Laughter.] The noble Lord laughs now. I did not laugh when the noble Lord made the statement I have just referred to. I received it with an amount of respect which I think was far greater than it deserved. I never attempted to make the late Government responsible for the hundreds of thousands of lives which were lost in the Russo-Turkish. War. But I say, without the slightest hesitation, that, in my opinion, a rational policy—and I have pointed to that policy long ago—would have prevented the loss of every one of those lives. That, Sir, is the state of the case as regards the Russo-Turkish War. We have had terrible engagements entailed upon us. We shall leave behind us, if we retire from Office, sad engagements. We have had frightful difficulties to contend with, from which in several quarters we have extricated the country. We found, in the Treaty of Berlin, alive and burning, two questions relating to Greece and Montenegro, either of which might have involved Europe in another mighty conflagration. Both those questions were settled without the shedding of one drop of blood. We found 50,000 or 70,000 men necessary in Afghanistan to oppose a gallant people, although imperfectly civilized, trodden down by the iron heel of military power. That war was perhaps as remarkable for guilt and folly as is recorded in any part of history. Afghanistan became free. Afghanistan is again friendly, so far as the memory of recent wrongs can be effaced by efforts to do right; and the 40,000 men whom India had to find for the performance of that odious task have returned from that country to the North-West Frontier. I admit that from South Africa we have not been able to extricate ourselves. South Africa, in my recollection, has always been a standing difficulty. I am sorry that I have been obliged to make this statement. The noble Lord has compelled me to do so; I could not sit here and receive his charge with respect to the 50,000 lives, for which he said, in his mild and moderate language, we are responsible in consequence of our perpetual vacillation, by which these lives have been sacrificed and our honour lowered. ["Hear, hear!"] Yes; our honour has been lowered since you annexed the Transvaal against its will. Our honour is lowered since you drove the friendly Ruler of Afghanistan into the grave, and went into that country without cause and without justification, and inflicted upon the country all those miseries of war of which we read the harrowing details. Why, if you had been treated with that severity with which you treated us, what would you have said? We never took the dreadful case of the murder of Cavagnari in that spirit; I am not aware that any Gentleman in this House charged that upon the late Government. What would have been said to us, if such a treacherous thing had happened in our time? No, Sir, we have endeavoured to struggle with the difficulties with which we were confronted. I am now going to make an observation that will, I think, be admit ted, so far as it goes, to be true on both sides of the House. My observation is, that during the last 10 years the foreign policy of this country has presented a much more disturbed aspect than the policy of the 10 years that preceded it. It is quite true that if we were to quit Office we should hand over difficult and complex questions of policy to our Successors; but I trust that we should receive a just and equitable consideration from them. But it is also true, in our judgment, that we had handed over to us a set of such questions as was never handed over by one Government to another. We may pass over to our Successors a painful inheritance. We received a painful inheritance. But has it always been the case that every outgoing Administration has given to its Successors a legacy of difficulty and despair, as now seems to be the case? No, Sir. In 1874, when the late Government came into Office, the Foreign Secretary of that Government declared that in every portion of the world the foreign relations of this country were thoroughly satisfactory. Not a single difficulty of any kind had been passed over by us to those who were our Successors. The present occasion only admits of broad and general statements in answer to the broad and general statements which have been made against the Government. I am ready to fortify and defend those statements at every point and on every fair occasion, and I am perfectly convinced that the nation will do justice to us under the difficulties with which we have had to contend and the efforts we have made to overcome them.

SIR STAFFORD NORTHCOTE

Sir, we have been, I must say, rather surprised with a considerable portion of the speech of the right hon. Gentleman the Prime Minister. I do not deny that he is quite within his right in following up some observations of my noble Friend (Lord George Hamilton), and upon them hanging a general discussion on the whole foreign policy of the present Government and its Predecessors. But I am bound to say that I think the Committee has rather been led away from the immediate questions submitted to us, and from the points of my noble Friend's speech. At the same time, it is impossible for me entirely to pass over some observations of the right hon. Gentleman in the concluding portion of his speech. He has again, and in a very marked manner, repeated the charge which he has so often brought against his Predecessors, and the excuse that all that has gone wrong is to be attributed to some action on the part of the late Government. Now, it is a very remarkable thing that we have never had the benefit of that kind of argument applied to ourselves. I was reminded by my noble Friend near me of a possible parallel in the case of the Abyssinian Expedition. There is nothing on which the right hon. Gentleman is so fond of twitting the late Lord Derby's Administration with as the Abyssinian Expedition. It is all put down to us; and yet, according to the method of the right hon. Gentleman, every shilling expended in that Expedition—I was going to say every life that was lost, but there was no life lost—every shilling was due entirely, not to our action but to that of Lord John Russell, who never answered the letter of the King of Abyssinia, and thereby made the Expedition necessary. That is exactly as good an answer and as good a case as many of those which the right hon. Gentleman is so fond of putting forward. But there is something rather remarkable in the way in which the right hon. Gentleman deals with these questions, and goes back to the root of the evil. If he would go back to the very beginning of all things in every case, there would be something in it; but in this, as in all cases, he selects a convenient point from which to start. I entirely deny the propriety of his charging us with all the consequences of our relations with Egypt, and all the war and all the misery that has been occasioned within the last few years. Let us for a moment grant his method of argument. He says all the difficulty arose from our opening certain relations with Egypt; but he does not take his start from the beginning of our relations with Egypt, when he says he warned us as to the result of the connection which subsisted between us and some of the financial arrangements in that country. No; because Lord Derby was then in Office—but he chooses the period at which Lord Derby left Office, and takes an act when Lord Salisbury was at the Foreign Office, and founds upon it his accusations against us. I object to his taking these things in this way, and assuming that the whole of the conduct of the Government flows from the acts of their Predecessors. The acts of their Predecessors do not flow from the earlier acts which were those of Lord Derby, but come from the original sin and mischief of Lord Salisbury, and from that has come all the sins of Lord Beaconsfield's later years and all the misery and mismanagement af the present Government. That, I think, is one of the most extraordinary assumptions to make upon the credulity of the House of Commons that it is possible to conceive. He turns upon us, and he says—"You took a certain line with regard to the Dual Control, and in consequence of that it became necessary for us to go step by step into the bombardment of the Alexandrian forts, into the battle of Tel-el-Kebir, into all the putting down of Arabi and his men, and into the further proceedings we have had to take with regard to the troubles in the Soudan and so forth; all these things came from your misconduct in having signed a Paper in which there was a certain provision for what is called the Dual Control." Why really, Sir, that is mocking the common sense of the House. You ask what we would have done on this point or on that. There are many points on which we should have taken a line which would, as we believe, have entirely prevented and stopped all this mischief and trouble. I take the familiar case of the Soudan, and I think if you had taken a reasonable and common-sense line when Hicks Pasha was going into the Soudon, if you had then said you would either support or prohibit that Expedition, none of these difficulties with which we are now beset would have occurred. "But" says the right hon. Gentleman, "that has nothing to do with it; it was Lord Salisbury having agreed to the Dual Control that was the cause of Hicks Pasha being killed, and the cause of Gordon going out, and the cause of this Expedition up the Nile."

MR. GLADSTONE

I never said it was the cause of Hicks Pasha being killed, or in any way made the late Government responsible for that disaster.

SIR STAFFORD NORTHCOTE

I thought that was part of the right hon. Gentleman's speech—that it was intended to be immediately relevant to the question before us, which is the supply of funds for the Expedition up the Nile, and which is directly connected with the operations in the Soudan. But I do not desire to go at full length into all these questions; all I say is that, if we are to discuss them as questions of the foreign policy of the Government, the right hon. Gentleman will find that he cannot maintain, and that no one will support him in maintaining, the doctrine he so constantly endeavours to establish—that everything is due to the actions of his Predecessors. Now, with regard to the Transvaal. We may have been right, or we may not have been right, in the action we took in respect to the annexation of the Transvaal; but, certainly, many hon. Gentlemen on that side of the House, who are great authorities on this subject, found no fault with what was done by us, but, on the contrary, they approved of what was done by us. [An hon. MEMBER: Lord Kimberley!] Yes; Lord Kimberley and others, Colleagues of the right hon. Gentleman (Mr. Gladstone). But whether that was so or not, I maintain that the Government, when they had to deal with the question, had before them two courses, either of which they might have taken; they might have maintained the act of their Predecessors, or they might have reversed it. They did neither the one, nor the other. If they had at once reversed it, if they had said—"This thing is so shocking, so bad, that our consciences will not tolerate it," they could, without the slightest sullying of the British honour, have retired from the Transvaal; they could have made whatever terms they pleased with the Transvaal Government and have retired, with the conviction that they had done nothing to lower the honour and prestige of England. They might, on the other hand, have maintained the position; that they could have done—and they themselves have often told us—they could have put down the resistance of the Boers, by sending a very small amount of force. But they did neither the one, nor the other. They did not give back the Transvaal; they endeavoured to enforce the annexation; they brought about fighting and bloodshed, and then they gave way in a manner which lowered fatally our position in the country, and when we were obliged by the commonest feelings of honour to make stipulations for the protection of certain of the Native races and of our Native allies, the effect of those stipulations was destroyed by the manner in which the Government had previously acted. You have no right to come down here and say all this is due to our action. It was not to our action, but it was to your action it was due. [An hon. MEMBER: Inaction.] Well, action or inaction, whichever you please; it was due to a bit of both. It was due to action, not deliberately, or carefully, or well-prepared, but action which was taken up as it were from hand-to-mouth, and which turns out much more expensive and wretched in the end. That is a point to be borne in mind in reference to the matter for which we are now providing the funds. Are we really assured that sufficient provision has been made? Are we satisfied that the expenditure which we are called upon to incur, and much of which, I believe, might have been avoided even later in the proceedings by a more distinct military policy—that is a point I will not now go into—but are we assured that we are taking enough for this Expedition, or shall we not find that we have again and again to come to Parliament for fresh supplies in this matter? Sir, I have ventured to make these few remarks upon a point to which the right hon. Gentleman leads us in the course of his very eloquent but rather discursive speech. There are several other matters upon which I am tempted to say a few words, and I trust I may be allowed to say them, though they are of a less general character—they have reference to what fell from the right hon. Gentleman in answer to the observations of my noble Friend the Member for Middlesex (Lord George Hamilton), and I do not think the right hon. Gentleman understood the point which my noble Friend, as I comprehended him, was making. What my noble Friend said was this—"If you are to compare the Expenditure of one Government with the Expenditure of another Government, if you are to say this Government has spent more or less than its Predecessor, you must consider what method or course you ought to adopt in order to bring about a fair comparison." And my noble Friend added that the comparison which the Prime Minister drew, in a speech he made recently in Edinburgh, upon this subject was an unfair comparison, because in the course of that comparison he deducted what he had no right to deduct. The question is, that one Government had spent so much upon the Army, Navy, Civil Services, and other sources of Expenditure, and the other Government had spent so much more. "Then," says the right hon. Gentleman, "you must deduct from the Expenditure on the part of my Government what has gone in the way of reduction of Debt; you must not deduct what we have paid in the reduction of Debt, but you must debit the amount of Debt we have got rid of," very much as you might say, when you are comparing the Navy Estimates, you must not ask how many millions one Government spent on the Navy, and how many millions the other Government spent upon the same Service, but you may deduct from the Expenditure of one Government the greater value of the ships you have obtained than the other Government obtained. It may be very proper, if you are comparing the best method of paying off Debt, to say you will have it paid off by Terminable Annunities or by redeeming so much from year to year. That is a fair question to argue, and you may be in a position to say you make out a case for better finance by adopting one or the other system. But if you are to compare Expenditure, you may set aside what you have paid for expenditure upon the Debt, and you may very fairly compare the amounts which are applied to the redemption of Debt; but if you apply those amounts to one system it will answer your purpose for your comparison, but if you apply them to another system it will not. If you apply £2,000,000, let us say, in setting up Terminable Annuities and in reducing Debt, the interest in the first years becoming less and less, and the principal in the first years becoming more and more—if you apply £2,000,000 a-year in that way, that is an expenditure of £2,000,000 a-year. You produce a certain result by it. Suppose, on the other hand, we take the system of applying £2,000,000 out of the Exchequer, without setting up Terminable Annuities, for the redemption of Debt to the amount of £2,000,000 a-year, you expend precisely the same in each year upon the Debt. It may be a question whether the one system is better than the other; but you have no right to deduct from your Expenditure that which is not the money you have spent in paying Debt, but the money you have gained by paying Debt. This may be a very academical discussion; but my noble Friend points his moral in a very important and significant way—and here I invite the attention of the hon. Gentleman the Member for Wolverhampton (Mr. H. H. Fowler). My noble Friend says that if it has to be placed to the credit of a Government that it has redeemed a certain quantity of Debt, and that that is to be an excuse and a reason for its increased Expenditure, then it will follow that a Government which spends more and more upon the Army, Navy, Civil Services, or anything else, may get off without any blame on that account, because, at the same time, it has been redeeming a large amount of Debt. Is it to be argued that a Government's Expenditure is not to be reckoned as large as it really is because this fictitious sum by which it has reduced Debt is to be deducted by it? The right hon. Gentleman has, to a certain extent, explained or more fully stated what he intended upon another question which I will advert to. I only wish he had done so in Mid Lothian, to the people whom he was addressing, because they, no doubt, went away impressed with the rough statement he made. He says it was not possible for him to go into detail.

MR. GLADSTONE

I beg the right hon. Gentleman's pardon. With regard to the Debt, I might have added some explanation on the question of the collection of Revenue. I did not enter into that; but if I had, I should have put down some items to our credit on the other side.

SIR STAFFORD NORTHCOTE

With regard to the collection of Revenue, the right hon. Gentleman is perfectly at liberty to put down any items that he pleases, and to claim credit for them in a general view of his finance; but when he compares Expenditure with Expenditure, he ought to compare Expenditure with Expenditure; and we complain that that is not what he did do. There is no doubt it is monstrously unfair and unjust to shut out altogether the collection of the Revenue as an expenditure not belonging to the Expenditure of the Government. It may be that the expenses of collection are small sums when compared with the millions we are talking of; but there is no man knows better, or has preached more warmly, than the right hon. Gentleman himself that the small sums are the important ones to look to in the general administration of finance. It is exactly upon such matters as the collection of Revenue that you have an opportunity of making small economies, and of taking care that what you spend is spent properly and as economically as possible. The right hon. Gentleman knows quite well that, in many of these cases, it is not merely the expenditure on the Parcel Post or anything of that sort, but it is the expenditure on the Services—the salaries of those employed, for instance—which come into consideration. Let him remember that there is one charge for the collection which does vary according to the amount of Revenue, and that is the charge for the collection of the Income Tax. If you have a high Income Tax, your expenditure on collection will be large, because the higher the amount to be collected the larger the percentage amounts to. But, then, all that brings you back to the question how far that is due to the policy of the Government? How came you to have this large charge in Income Tax? How came you to bring about this larger charge for collection? These are all matters which cannot be satisfactorily dealt with in the rough; and if we are really to go into a comparison of these matters, I say we ought to have that Committee of which we are continually hearing, but which we are never encouraged to see. I think this matter could be very fairly considered by a Committee. Certainly, I should be quite prepared to go into the Committee, with a vew of arguing fairly the question of these different kinds of expenditure, and of arguing the question to which the hon. Gentleman the Member for Wolverhampton refers—namely, the system of advances to meet local charges. I do not remember whether there was anything else in my noble Friend's speech upon which I need comment. I had intended to rise to make the observations I have made upon these two points—the collection of the Revenue, and the method of dealing with the Debt; but I was led further a field by the latter part of the speech of the right hon. Gentleman. I must say that that speech did not impress me with the conviction that the right hon. Gentleman was satisfied with the whole course of the policy of his Government in these matters. I thought there was a good deal more of the French proverb, "That a man who excuses himself, accuses himself," than was altogether comfortable to the right hon. Gentleman. There was no occasion to have gone so fully into the matter, and I do not wish now to raise any question with regard to the actual expenditure which is now proposed. It was a matter of necessity for the honour of the country that steps should be taken to rescue General Gordon. How General Gordon has got into the position in which he now finds himself, and how the Government have contracted obligations to him, are matters which will have to be very seriously answered by the Government. No matter what the answer is, it leaves the duty of the country as regards the provision that is to be made for General Gordon's rescue absolutely untouched. Therefore, I have no difficulty to raise in voting the funds which may be necessary, though I do feel the very great disadvantage of being asked to make a Vote of the character that is now asked for by the Chancellor of the Exchequer (Mr. Childers)—breaking in through all the arrangements of the year at this inconvenient time, and at a time when I am afraid there is a great deal of distress in the country—breaking in with an irregular Budget, and making this demand upon the income of the country.

SIR JOHN LUBBOCK

said, that, as the noble Lord the Member for Middlesex (Lord George Hamilton) had specially referred to him, he should just like to say that he adhered to his previous statements, though it was unnecessary for him to defend them at length, because the hon. Member for Wolverhampton (Mr. H. H. Fowler) had so ably done it. He (Sir John Lubbock) regretted, as much as he possibly could, the large increases which had taken place in our National Expenditure; but he would like to remind the Committee when those increases began. For several years, up to 1874—the year of the accession to Office of the Conservative Government—there were but very small increases in our National Expenditure. They could hardly expect that there should be no increase; because, of course, there were certain automatic in creases like that on Education, which he was sure none of them regretted. But the great and remarkable increases in our National Expenditure began in 1874, and rose in the five years, from 1875 to 1880, by no less than £10,000,000. The nominal increase of Expenditure had in the gross in the last four years been £13,000,000. But, during the latter period, £5,000,000 more had been appropriated towards the repayment of Debt, and £3,000,000 or £4,000,000 had been increased expenditure on the Post Office, with reference to which he should say a word or two by-and-bye. There had also been a very considerable Grant in Aid, amounting in the four years to more than £3,000,000, for National Education. The present Government had paid £7,000,000 for the War Expenditure of their Predecessors. As far as he could make out, the right hon. Gentleman opposite (Sir Stafford Northcote) and his supporters incurred a War Expenditure of £12,000,000, of which they only paid £4,000,000; while the present Government had incurred a War Expenditure of £6,000,000, but they had paid off £13,000,000 of War Expenditure. That, also, had to be taken into consideration, when they were comparing the Expenditure of the two Governments. The right hon. Baronet who had just sat down referred at some length to the items for the collection of Revenue. But the main increase which had taken place there had been on the head of the Post Office. If they compared the year 1880 with last year, the increase was from £3,800,000 to £4,500,000, which was an increase of £700,000. But, then, what had been the difference in the receipts? The receipts, which were, in 1880, £6,300,000, had increased to £7,700,000, and, therefore, although there had been an increase of expenditure on the part of the Post Office of £700,000, there had been an increase of revenue under the same head of very nearly double that amount. If they compared the cost of collection of the Customs and Inland Revenue, they found there had been a very slight increase, and, in some years, even a decrease, under that head. As so much had turned this evening upon the question of economy, perhaps it would be well to take the last year of the Conservative Government, and contrast it with the year 1884. They would find that, in 1884, the real Expenditure of the country had been almost exactly what it was in the last year of the Conservative Administration; but when they came to look into the different items, there was a very considerable difference. In 1880, the cost of collection was £2,700,000; but, so far from there being, in 1884, the increase which the right hon. Gentleman seemed to imagine, the cost had actually diminished to £2,679,000, so that there had been a certain economy. Well, then, under the head of Education the expenditure in 1880 was £3,400,000, and in 1884, £4,000,000. That was an increase of £600,000; but it was an increase which neither side of the House would complain of. Furthermore, the Grants in Aid were, in 1880, £4,980,000, and in 1884, £5,600,000, showing, under that head, an increase, which he deplored as much as the hon. Member for Wolverhampton did, and for which hon. Members opposite were mainly responsible, of upwards of £600,000. But, of course, whether they regretted it or not, that was not really an addition to the Expenditure of the country, but an amount provided for in one way instead of in another. The cost of the ordinary Civil Services had increased from £5,700,000 to £6,100,000; but when the Committee remembered how much additional expense was thrown on the country under the head of Civil Services in connection with the government of Ireland, he thought they could not wonder there had been that slight increase. The charge on account of Debt was £27,350,000 in 1880, and £28,190,000 in 1884; but that, of course, they all knew was not really part of the Expenditure of the country, but a diminution of the indebtedness of the country. And, then, lastly, the net amount for the Army and Navy was £28,500,000 in 1880, and £26,800,000 in 1884, showing, the Committee would see, a very considerable decrease in 1884 over 1880. He (Sir John Lubbock) thought the noble Lord the Member for Middlesex (Lord George Hamilton) would have done well if, instead of dealing with vague generalities, he had taken, for instance, the last year of the Conservative Administration and 1884, and shown the Committee where the present Government had been extravagant. He (Sir John Lubbock) had endeavoured to give to the Committee the figures for those two years, and, as far as he was able to judge, he thought the Expenditure of the present Government, looked at from that point of view—and he maintained it was a right one—would contrast favourably with the Expenditure of their Predecessors, though he must confess he was disappointed that more had not been done in this respect. But, after all, this was very much a question of policy. There were two distinct questions before them that evening—one, whether the Government had been economical in their Expenditure; and, the other, whether their policy had led to unnecessary Expenditure. He, for his part, regretted, as much as any hon. Member who had spoken, the great increase of Expenditure. How had it arisen? The origin of the Egyptian policy of the Government dated from the great meeting at Willis's Rooms, attended by the Leaders of the Opposition, and having reference to the Egyptian policy of Her Majesty's Government. The Expedition to the Soudan, which he always regretted, was almost forced on Her Majesty's Government by hon. Gentlemen opposite; and it was well known that all through the Recess Members of the Opposition had been urging upon the Government to interfere actively in Bechuanaland. Deeply as he deplored the great increase of our National Expenditure, he thought that, when the country came to consider the matter, they would arrive at the conclusion that right hon. and hon. Gentlemen opposite were mainly responsible for the increase.

MR. ONSLOW

said, he had not intended taking part in the debate, and should not have done so had it not been for some remarks which had been made with reference to him by the right hon. Gentleman opposite (Mr. Gladstone). He desired to make a personal explanation. Somehow or other, whenever anyone opposite the Treasury Bench smiled at the Prime Minister's observations, the right hon. Gentleman always came down with a fell swoop of his oratory upon his (Mr. Onslow's) unfortunate head. In spite of that, he should always smile—as he had done that night—whenever the Prime Minister said something utterly ridiculous and monstrous. With all due deference to the Chairman, he (Mr. Onslow) had never interrupted the Prime Minister. He certainly laughed; but did not think he had interrupted the right hon. Gentleman in any way.

MR. GLADSTONE

If the hon. Gentleman says that when he laughed he did not intend to interrupt me, I am quite willing to withdraw any reference I may have made to him. I certainly thought, however, that I had the best evidence of interruption on his part.

THE CHAIRMAN

Since the hon. Gentleman has referred to a ruling of mine, I must say that he made a most disorderly interruption by calling out the name "Harcourt!" across the House. He did so in such an audible manner that I was obliged to call attention to the interruption.

MR. ONSLOW

said, that an hon. Gentleman behind him had called out "Harcourt! Harcourt!" and he (Mr. Onslow) had merely repeated it. He, however, was pitched upon—as was always the case—as if he was the only one smiling. He should continue, if he thought proper, to laugh at the assertions of the Prime Minister, especially when he contended that the failure of the foreign policy of Her Majesty's Government, and the Expenditure it entailed, was wholly owing to the Conservative Government, which preceded him in Office. The right hon. Gentleman stated that it was partly owing to the policy of his Predecessors in regard to Afghanistan that £4,500,000 was given to India; but the policy pursued by the right hon. Gentleman in handing over that money was entirely deprecated by the Conservative Party. The policy of Her Majesty's Government had nothing to do with the Afghan War at all. The Opposition said India did not require to be paid that money, and India never asked for it; but it was the policy of the Government to give it. The policy they pursued was diametrically opposed to that recommended by the Opposition. The right hon. Gentleman the Chancellor of the Exchequer had only come down on them for £1,000,000 for the present financial year; but he ought to let them know before the next financial year—before the next Budget, which would probably be in March—whether the Estimate would be exceeded or not. It appeared to him (Mr. Onslow) that the present financial proposal was not for the purpose of defraying this specific Expenditure of £1,000,000; but that a 2d. Income Tax might yield a certain amount, and the Estimate of the cost of the Expedition had been framed accordingly. He believed that a great deal more than £1,000,000 had already been spent, exclusive of the £300,000 voted last August; and he therefore thought the Committee and the country had a right to know the total amount which was likely to be spent on the Nile Expedition. It might be that the money asked for the Bechuanaland Expedition had not yet been spent; but some information ought to be given as to how much would be spent by next March on this Expedition to relieve General Gordon. The noble Marquess the Secretary of State for War (the Marquess of Hartington) had told them that the Expedition was not only to relieve General Gordon, but to establish a settled form of Government at Khartoum; and, that being so, it was obvious that it would entail a vast amount of expenditure upon this country, irrespective of the cost of the Expedition itself. The cost of keeping our troops in the Soudan whilst a settled form of Government was established would be very great. The hon. Member for Burnley (Mr. Rylands) was always preaching economy in Committee; but, whenever it came to a vote with the Speaker in the Chair, his vote was diametrically opposed to the opinions he had previously expressed. Though the hon. Gentleman was a great economist, and went in for economy all round, not even his capacity would be able to reduce the Expenditure which was going on at the present time. In his (Mr. Onslow's) opinion, the Expenditure of the country must go on increasing, whether it was in respect of Education, the Army, or the Navy. They would never get a reduction of Expenditure, no matter how many Committees were appointed to investigate the matter. With regard to Revenue, they never knew one year what was likely to happen the next, as a great deal depended upon the weather and the seasons. It was impossible to reckon upon the Revenue being elastic or expanding; but Expenditure must always go on increasing. He deprecated entirely the imposition of this £2,000,000 upon one class of taxpayers. It was a very easy thing for the right hon. Gentleman the Chancellor of the Exchequer to raise the sum on the Income Tax; he could do it with one stroke of his pen; and it was to be hoped that when the right hon. Gentleman, or whoever might succeed him in the meantime, came forward with his Budget next March, the extra expenditure caused by what was going on now would not be put entirely upon the shoulders of one class of taxpayers in the country.

MR. WADDY

said, he rose chiefly for the purpose of quoting a passage from a speech of the right hon. Baronet the Member for North Devon (Sir Stafford Northcote.) Both he and the noble Lord the Member for Middlesex (Lord George Hamilton) had stated that the principle adopted by the Prime Minister, in a speech he delivered in Edinburgh, in deducting the charges for the collection of Revenue, was "monstrously unfair." What he (Mr. Waddy) wished to do was to make a comparison between the views of the right hon. Baronet in Office, and those entertained by him out of Office. On the 20th of December, 1879, it so happened that the right hon. Baronet had to defend his own finance against an attack made upon it by the right hon. Gentleman the Prime Minister, then in Opposition. The right hon. Baronet quoted what bad been said about himself, and these were his words—and he (Mr. Waddy) was anxious that the Committee should compare the statement that night about "monstrous unfairness" with what he would proceed to read. The right hon. Baronet said— Mr. Gladstone takes the Expenditure of the last year of his own Government and compares it with that of the published accounts of the complete year 1878–9 under the Conservative Government, and he does it in a very fair way, because he deducts on either side the cost of the charges of collecting the Revenue, and he gives a comparison of the net receipts only; and, so far, I have not a word to say against him. That was, word for word, exactly what was said by the right hon. Baronet, on the 20th of December, 1879, at Leeds, where he was endeavouring, as far as he could, to answer the terrible onslaught that had been shortly before made on him by the right hon. Gentleman (Mr. Gladstone). He (Mr. Waddy) did not propose, after what had been said that night, to enter into the general question. He would not allow himself to be tempted to do so by what was said by the hon. Gentleman who last spoke (Mr. Onslow) with reference to India. He would not go into the cause of the expenditure—the shameful breach of honour by the late Government, in first imposing a large taxation on the people of India, and pledging the honour of the country that the amount raised by that taxation should be spent in famine insurance, and then taking every penny of it, and spending it in gunpowder. He would remind the Committee of this, however—that the real mischief was not accounted for by the operation of Terminable Annuities. The real mischief was caused by the piling up by the late Government, during their term of Office, of the Unfunded Debt. If anyone would take the trouble to look into the matter, that would be found to account for everything. Reference to only four or five sets of figures would show exactly what he meant. When the late Government went into Office, in 1874, they found an Unfunded Debt of £4,500,000, and a balance in the Exchequer of £7,500,000. When they left Office that Unfunded Debt, which they found at £4,500,000, had risen to £27,000,000; and the balance in the Exchequer, which they found at £7,500,000, they had reduced to £3,000,000. It was, in reality, £2,273,000, because £1,000,000 they had borrowed, to put a better look on the matter, from the Bank of England. But, giving them the benefit of their own calculation, £3,000,000 was nearly the amount they left. Now, on the other hand, whilst the late Government had increased the Unfunded Debt from £4,500,000 to £27,000,000, the present Government had reduced it from £27,000,000 to £14,000,000, and had raised the balance in the Exchequer from £3,000,000 to £5,500,000. Whilst the late Government had been paying off Terminable Annuities on the one hand, they had been piling up the Unfunded Debt to a more than proportionate extent. [Mr. GORST: No, no!] Yes. It was impossible here, at that time, to go in detail through all the figures; but if the hon. and learned Gentleman opposite (Mr. Gorst) would examine into the matter, he would find that the increase in the Unfunded Debt was the mischief wrought by the late Government. He (Mr. Waddy) knew very well that the Terminable Annuities were paying off Debt; but if the hon. and learned Gen tleman would compare the amount automatically paid off by one Government with that paid off by the other, and then look at the amount the Unfunded Debt had been increased by each, he would find the difference accounted for. [An hon. MEMBER: The local loans!] He was reminded of the local loans. The difference there—in the interest, because the capital did not come into the account, being accounted for in another way—was about £800,000 in favour of the present Government. As to the other question raised—the question of the Post Office and the Telegraphs—he would not add one single remark to what had been already said, except to give the figures for the four years not mentioned by the noble Lord opposite (Lord George Hamilton). The Post Office and Telegraph receipts from 1877 to 1880 were £30,000,000, while for the years from 1881 to 1884 they were £35,000,000. It was true there had been an additional expenditure of £3,750,000, or nearly; but in that there had been £500,000 extra expenditure, or something of that kind, in respect of the Parcel Post, and the profit had been £1,570,000 odd. That was extremely good business; and, therefore, it was right to deduct it in the way that was so satisfactory to the right hon. Baronet in 1879, but which now he had discovered, in some way or other, to be "monstrously unfair."

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)

I think, Sir, the time has now come when I ought to answer one or two questions put to me by the various hon. Members who have spoken, and the challenge rather pointedly addressed to me. I will do so in as few words as I possibly can. The right hon. Baronet the Member for North Devon (Sir Stafford Northcote) asked me pointedly—and his question was repeated by the hon. Member for Guildford (Mr. Onslow)—Are we asking enough provision in this Estimate? For an answer to that I would refer the Committee to the statement made by my noble Friend the Secretary of State for War (the Marquess of Hartington) the other day, on the Votes for Bechuanaland and the Soudan. He then stated that he believed it might possibly be found that, as to the Soudan, we might want something more; but that, as to Bechuana land, it was a full Estimate; and, taking the two together, he believed we had asked enough. The hon. and learned Gentleman the Member for Chatham (Mr. Gorst) made a calculation by which he arrived at £300,000 as the sum by which, according to me, the original Estimate of Revenue will be exceeded—and asked me whether I hope that the Revenue will be increased by that amount. Another hon. Member made it £250,000. Well, I decline to give an exact figure. I think there will be a moderate increase in the receipts; and if it is one-quarter per cent on the whole amount, it will be not far from the sum that the hon. Gentleman names. The noble Lord opposite (Lord George Hamilton) drew the attention of the Committee to certain figures for the purpose of comparing the Expenditure of the present Government during the past four years with the Expenditure of the late Government during the previous four years. In reply to the noble Lord, I will refer the Committee to the annual Return of the net Expenditure of the country charged on the taxes, which has been frequently declared by the Treasuries of both political Parties to afford the sound basis of comparison between different years. For this year it is No. 273 of last Session. On pages 2, 3, 4, and 5 the Return shows that the whole charge on the taxpayer between April, 1880, and March, 1884, amounted to £283,000,000; while the whole charge on the taxpayer in the four years 1876–80 amounted to £275,000,000. There was thus an increase of £8,000,000 in the years 1880–4; but that increase is explained in the following way:—We have spent £2,000,000 more on Education, £3,400,000 more in Votes in aid of Local Taxation, and £4,500,000 as a contribution to India. What we have paid off of Debt in hard money amounts to £14,000,000 more than what was paid off in the four years preceding our accession to Office. These sums come together to £23,900,000—that is to say, nearly £16,000,000 more than the increase of charge. Further, I would remind the House that, although it is true that we have had to raise more taxation in those four years, we have had to do so in order to meet not only our own Expenditure, but the deficits of the three previous years, amounting to £7,300,000. I hope that hon. Gentle men who really care to obtain accurate figures as to recent expenditure will observe that we spent upon the Army and Navy, in the four years ending March, 1884, £101,800,000, while the net charge in the preceding four years was £101,500,000. The net cost of the Civil Services in 1880–4 was £24,500,000, and in 1876–80, £23,000,000. Anyone who takes the pains may verify these figures from the Return I have named.

Question put, and agreed to.

Resolved, That, towards raising the Supply granted to Her Majesty, in addition to the Duties of Income Tax granted by "The Customs and Inland Revenue Act, 1884," there shall be charged, collected, and paid for the year which commenced on the sixth day of April, one thousand eight hundred and eighty-four, in respect of all Property, Profits, and Gains mentioned or described as chargeable in the Act of the sixteenth and seventeenth years of Her Majesty's reign, chapter thirty-four, the following Duties of Income Tax (that is to say): For every Twenty Shillings of the annual value or amount of Property, Profits, and Gains chargeable under Schedules (A), (C), (D), or (E) of the said Act, the Duty of One Penny; And for every Twenty Shillings of the annual value of the occupation of Lands, Tenements, Hereditaments, and Heritages chargeable under Schedule (B) of the said Act, the Duty of One Halfpenny; Provided always, That, with the view of securing the additional Duties and affording the proper rights of deduction in respect thereof in the case of Dividends, Interest, or other annual sums due or payable half-yearly or quarterly in the course of the said year, where one of the half-yearly payments or two of the quarterly payments shall have been made, the other half-yearly payment or quarterly payments shall be charged with the additional Duty of Two Pence for every Twenty Shillings of the amount thereof; and where three of the quarterly payments shall have been made, the other quarterly payment shall be charged with the additional Duty of Four Pence for every Twenty Shillings of the amount thereof. Provided also, That the charge under this Resolution shall be deemed to be satisfied by an addition of one-fifth of the amount of the Duties assessed under "The Customs and Inland Revenue Act, 1884," to such amount, and payment of such addition therewith.

Resolution to be reported upon Wednesday.

Committee to sit again upon Wednesday.

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1. ADJOURNMENT. 17 words