SECOND READING.

HL Deb 07 June 1861 vol 163 cc696-757

Order of the Day for the Second Reading read.

EARL GRANVILLE

My Lords, I rise, according to notice, to move the second reading of this important Bill. I had last year the honour of proposing for your Lordships assent a portion of this measure, but under circumstances of a different character. Notice was then given by a noble Lord, whose former connection with office as Chancellor of the Exchequer, and his present connection with the Treasury gave weight to his opinions on a subject of this kind, for the rejection of the Bill. On that occasion your Lordships' House was crowded and great excitement prevailed. I, therefore, thought it necessary, even at the risk of being very tedious to your Lordships, to go at great length into all the details of the Bill, to endeavour to anticipate all the objections which I thought might possibly be urged against the proposals of the Government, and to make every appeal, as urgently as I properly could to your Lordships, to take the course which seemed to me expedient and prudent with regard to so important a measure. And I cannot help believing that the arguments I then used have had some effect, for we find ourselves this year met to discuss the same Bill upon a somewhat different footing. My Lords, it was not until this morning that notice was given of any Motion adverse to the Bill; indeed, from statements made in "another place," if I may advert to them, I drew the conclusion that it was not likely any opposition would be raised to it in this House; and if I am not mistaken the noble Earl the leader of the party opposite, stated at a City entertainment that it was not his intention, should the Bill pass the Commons, to offer to it in this House any further opposition. For these reasons I do not now certainly anticipate the rejection of the Bill. A noble Duke (the Duke of Rutland) has, it is true, given notice of a Motion for its rejection; but I can hardly believe him to be serious in so suddenly adopting what your Lordships must feel would be a most serious step for this House to take, by thus placing itself in opposition to the other House of Parliament, and on grounds which, until I hear them again stated and heightened, I can hardly believe to be tenable. The notice of the noble Duke has, I believe, already excited great alarm among the mercantile community. But I cannot believe that alarm to be well founded—I am rather inclined to assume that the noble Duke put his notice on the paper merely with the intention of infusing spirit into the debate, or possibly with a view of showing that his confidence was not quite unbounded in the noble Earl who is generally regarded as the leader of his party. The noble Duke, perhaps, wishes to show that he can take his own course with respect to a great question; but I can hardly imagine that he means to press his Amendment to a division. With this conviction I shall confine myself to a very simple statement of the substance of the Sill, and of the principal reasons which have induced the Government to recommend it to the adoption of this and of the other House of Parliament; reserving to myself the right of replying at greater length should any argument be put forth in the debate requiring in my judgment more detailed observation and remark. I beg to say, however, that I do not take this course with any view of deprecating discussion. On the contrary, I think it most desirable that the measure should be most fully debated; but I think that, in the first instance, the course I have indicated will be the most convenient to the House. It is not my intention to go over the financial plans of Her Majesty's Government in detail; I will merely recall a few circumstances connected with the Budget of last year. I will merely state that the results were not altogether satisfactory; that there was a deficiency, as compared with the anticipated revenue, of £850,000; and adding to that the extreme sum of £800,000, as saved by the non-repeal of the paper duties, there would have been a total deficiency, as compared with the calculations of the Chancellor of the Exchequer, of above £1,600,000. To explain this deficiency we have only to look to one fact, and it is one of extreme importance. It was Mr. Huskisson who, speaking of a deficiency in a year following a bad harvest, stated, without meeting contradiction, that the average diminution of revenue likely to be produced by a bad harvest in this country amounted to 7 per cent upon a revenue of £60,000,000. Upon that calculation last year, instead of a defi- ciency of £1,600,000, the sum ought to be, with so bad a harvest as we unfortunately had, something like £7,000,000. I think, in addition to the estimate of Mr. Huskisson as to the effects of a bad harvest, it is hardly necessary to appeal to the fact that more than 20,000,000 quarters of corn have been imported into this country within the year, nor to appeal to the personal experience of any noble Lord who is connected either directly or indirectly with agriculture, that there was a great deficiency last year in the production of food for man and beast. Therefore, while on the one hand I think it is a satisfactory proof how recent commercial legislation, by enabling us to obtain a sufficient supply of food, has tended to the advantage of the revenue and the comfort of the country, I may also say that to my mind it also shows that if the last harvest had been, not a good one, but an average one—that sort of harvest upon which calculations are always based—the Chancellor of the Exchequer would have exposed himself to the charge, not of over-estimating, but of under-estimating, the produce of the revenue. As to the provisions of this Bill, I may say that the calculations of the Chancellor of the Exchequer have been made, not in any fanciful manner, but in the mode in which all past Chancellors of the Exchequer have made their calculations, and the same which, probably, all future occupants of that office will continue to adopt—namely, careful comparison of the opinions of the heads of all those departments which are especially conversant with the facts:—and this appears to me the most sensible mode of approaching the question. From those calculations of the Chancellor of the Exchequer it appears that there will be a surplus in round numbers of about £2,000,000. Although some doubts have been thrown upon that surplus, yet I think I may say that the time is now past for calling in question the existence of a surplus. It is quite clear that, if there are doubts upon such a point, those who entertain them are justified in seeking to turn out the Government or that particular Minister whose calculations they believe to be mistaken; but as a general rule, so long as the Executive Government are permitted to retain office their calculations are accepted as correct; nor, indeed, could they be held accountable to legislative control unless their statements be accepted as the basis on which their propositions are to be founded. And it seems that in "another place" all the hon. Gentlemen formerly connected with office who took a prominent part in the discussion frankly admitted that they considered the calculations of the Chancellor of the Exchequer were correct, and that was still more proved by the fact that a large and important section of the other assembly proposed to reduce the surplus by an amount greater than was proposed by the plan of the Government. Having, then, this surplus to dispose of, we come to the question as to the manner in which the Government propose to deal with it, and which is embodied in the Bill which is now before me. In the first place it is proposed to reduce the income tax from 10d. to 9d. in the pound. I am very glad to have to propose such a reduction, and I am sure that satisfaction is shared by all of your Lordships, and I am also sure that we should all be very glad if a still further reduction could conveniently be made. The feeling, however, is so general upon this subject that I have heard no practicable mode suggested on either side for the further reduction of this tax. Then comes the question of tea and sugar. Upon these articles the Bill proposes to continue the same duties as were levied last year. It would have been agreeable to Her Majesty's Government—as it would beyond doubt have been agreeable to many out of Parliament—if they could have proposed a reduction of duties upon articles which tend so much to the comfort of all classes of the community. Some attempts have been made to prove that the tea and sugar duties press more heavily upon the poorer classes than upon the richer. ["Hear."] A noble Earl cheers the observation; but my answer to it is that four years ago the then Chancellor of the Exchequer, Sir George Lewis, made a statement to the other House, founded upon very careful calculations, showing that in round figures about 60 per cent of the duties upon those articles was paid by the richer classes, leaving about 40 per cent to be paid by the poorer classes. That statement was adopted by the present leader of the Opposition in the other House, who has himself filled the office of Chancellor of the Exchequer. The reasons which have induced the Government not to propose any reduction in the tea and sugar duties are these. In the first place, all experience has shown that a small reduction of duty does not produce to the consumer that proportionate decrease in the price of the article that a larger reduction would do, and it is quite clear that a small reduction in the amount of these duties is all that the revenue at present could afford. In the second place, by diminishing the amount of these duties we should not in the slightest degree diminish the cost of collecting the duties; and also, although it is certainly most desirable to reduce these duties whenever an opportunity shall occur, yet the increasing revenue derived from these articles of consumption proves that there is not that urgency for a reduction which would otherwise exist. Her Majesty's Government, therefore, did not think that there was any urgency for such a reduction in the duties on tea, as we could possibly have proposed: and with regard to sugar, I do not think any proposal with reference to that article was made in any quarter. There is another smaller item in this Bill which it is not necessary to dilate upon. The only reason for raising the Excise and Customs' duties upon chicory is to protect the revenue and to prevent adulterations of coffee by means of that article. I now come to the question of the abolition of the Excise duty upon paper. Last year I detained your Lordships for nearly an hour, pointing out what I considered to the the imperfections and impolicy of that tax. However feebly I may have urged those opinions, they must have had, I think, some effect, as, with the exception of one or two casual remarks, no answer was attempted to be given to the statements that this was a tax which impeded the manufacture of paper; which affected all who had the sale of that article in this country; that it was a tax which pressed in a slight degree upon every article that was sold, an export duty upon all articles sent abroad which were necessarily wrapped up in paper. I showed, too, how injurious it was to commerce, and how it operated to check the diffusion of cheap literature. I showed, most conclusively, I believe, that it operated most injuriously upon the diffusion of cheap literature, and that the tax operated a hundredfold more to the injury of cheap publications intended to spread political and educational knowledge than it did upon that deleterious literature which has too wide a circulation among the people. I do not intend to go over that ground again: the arguments for and against the repeal have been long before the public. I will merely state the position in which the Government found themselves when they attempted to deal with this tax. They were aware of the amount of authority in favour of its repeal During an agitation of thirty years what has happened? A Commission which was presided over by one of the most able financiers upon this question condemned the tax in strong language. An abstract Resolution, recommending its abolition, passed the House of Commons. The speeches of private persons—of almost all the leading men of both parties, including the noble Earl opposite; the present leader of the Opposition in the other House; Lord Stanley, Sir Bulwer Lytton—who, notwithstanding political associations, has recently shown how strong an opinion he entertains upon the subject—all have condemned the tax. That condemnation has been conveyed in words such as these, "morally and physically wrong, "bad in theory and in practice." Upon this tax the Government, upon its responsibility, proposed to legislate. The House of Commons passed the Bill after many discussions and divisions. It then came up to this House, and your Lordships rejected it; but on what ground? Nobody, as far as I can recollect, spoke in favour of the tax, or expressed any abstract dislike of its repeal. The language held was that the state of things either at the time of its first being proposed or subsequently made the repeal improvident; that there was no surplus to deal with in the way of remissions; and that, therefore, as a measure of prudence, and with a view of keeping sufficient money in the Exchequer, it would be wise to retain the tax for the present, and give the House of Commons another opportunity of considering the subject. Surely, then, the Government would not now be warranted, believing that they have more money at command than they had last year, when they proposed to repeal this tax, if, other circumstances remaining unchanged, they did not renew their proposal to abolish it. Had they refrained from doing so, I scarcely know how they could have met the remarks which your Lordships might have made upon their inconsistency. It might have been said that the rejection of the repeal of the paper duty having taken place, not upon the merits of the tax, but upon other grounds, and those other grounds no longer existing; and as, moreover, they were in justice to the people going to propose the remission of taxation, it would be unfair that the only bone of contention between the two Houses, and which might at any moment bring about a difference of feeling between them, should not at the earliest opportunity be removed. There is only one other point to which I will refer before I sit down. I have spoken as to the substance of this Bill. Let me now say a few words as to its form. The principal parts of the financial scheme of the year are on this occasion included in one measure. I think hardly anybody here will suggest that such a course is not perfectly constitutional and consonant with precedent. In 1787 Mr. Pitt—certainly no enemy to the established institutions of this country—introduced a comprehensive financial scheme founded on no less than 3,500 distinct Resolutions, and containing a schedule of sixty pages. Objection was raised in this House to the measure, on account of the multiplicity of the provisions which it combined; the question was fully debated, and on a division your Lordships adopted the Bill in the shape in which it stood. On another occasion Mr. Pitt took the same course. In fact, in 1808, 1809, 1810, and every subsequent year up to 1822, similar precedents were established; so that as to the strictly constitutional and regular character of the present Bill there can no possible doubt. Tour Lordships, as I have said, threw out the Paper Duty Repeal Bill last year. I will not now argue whether that proceeding was constitutional or wise; but all will, I think, acknowledge that whether the reasons for it were sufficient or insufficient, it was at least unusual. Some excitement was, doubtless, created in the other House of Parliament by that result; but I must say that the conduct of the House of Commons—both last year and this, singularly moderate as it was—was, I believe, owing, in a great measure, to the calm, sagacious, and temperate manner in which the Government proposed that the matter should be dealt with. A Select Committee of the other House sat on the subject, of which Mr. Walpole, formerly Home Secretary in the Ministry of the noble Earl opposite, was the Chairman, and that Gentleman himself proposed a Resolution declaring that the House of Commons had lost much of its power by the recent habit of enacting taxes for an unlimited time, and that that power might be recovered by the House if the different parts of the financial scheme of the year were combined in one measure. [The EARL of DERBY: That Resolution was moved, but not carried in the Committee.] But a Resolution in strict analogy with the passage contained in the draught report was moved in the House of Commons by the Prime Minister, and unanimously agreed to. Her Majesty's Government thought it the only course respectful at once to the House of Commons and to your Lordships to act in accordance with the recommendations of the Committee, concurred in as those recommendations were by the leaders of all parties in the other House. This Bill was accordingly introduced, and while it places the House of Commons in the position which it ought to maintain in respect to the taxation of the country, it certainly offers no sort of affront or insult to your Lordships. On the contrary, it was thought more respectful to your Lordships, instead of bringing in again separately the measure which you before rejected, to bring it in coupled with the other portions of the Budget, inasmuch as it was more likely to be agreeable to you to consider and adopt it in that form than to deal with it in a manner having anything like the appearance of the retraction of a previous decision. I think, my Lords, we are all agreed that whether or not you were justified, in circumstances of supposed emergency, in arresting the alleged rash financial measures of the other House of Parliament, it is not for this House to be constantly interfering with the details of public finance. And if that be so, it must be more convenient to your Lordships to have the whole fiscal scheme before you in one view and to discuss it in its entirety, instead of piecemeal. It seems to me that that course leaves the rights of both branches of the Legislature, whatever they are, very much as they were before; your Lordships retaining intact the power of rejecting, if you cannot alter, Money Bills. I will now only express my earnest hope that the noble Duke opposite (the Duke of Rutland) will withdraw the Amendment of which he has given notice, or that, if unfortunately he persists in it, he will not be assisted by the majority of your Lordships. I believe that by adopting this Bill we shall undoubtedly attain three great objects. In the first place we shall complete that commercial legislation which has been so universally useful in developing the industry and unshackling the enterprise of this country, thereby increasing to an almost incredible degree that revenue from direct, and still more from indirect taxation which has enabled us to meet our present large expenditure. In the second place, we take away the only irritating question which I firmly believe now remains between the two Houses of Parliament, and which is likely to engender a bad feeling between them; and, thirdly, you will record a practical protest, by passing a measure partly for a reduction of the income tax, and partly for the repeal of the paper duties, that it is not the intention of the Legislature to sanction a project which I hold would be injurious to this country—namely, the adoption of a system of direct taxation alone as the only means of supplying the wants of the national Exchequer. For these reasons, my Lords, I beg to move the second reading of this Bill.

Moved, that the Bill be now read 2^a.

THE DUKE OF RUTLAND

My Lords, in rising to move the Amendment of which I have given notice I feel I must throw myself on the indulgence of your Lordships for that kindness and consideration which you have ever evinced towards me. I can assure your Lordships that in putting myself forward on the present occasion I am solely influenced by the fact of seeing no notice on the paper to undertake the task of moving the rejection of this Bill, which I believe to involve a very great injury to the Constitution. When the noble Earl taunts me with having put my notice upon the paper only yesterday, I must be allowed to remind your Lordships that the second reading of the Bill was only announced on the notice paper of the previous day. I should have thought that for a Bill of this vast importance the noble Earl would have given your Lordships a much longer notice. Under the circumstances I have not been enabled to discuss the question with that complete information I would otherwise have obtained. I think, my. Lords, that this is a question, both politically, financially, and constitutionally, of the very greatest importance. My principal objections to this Bill are threefold:—In the first place, I object to it because I venture to doubt whether you have any real or substantial surplus. In the second place, I object to the Bill, because, even if you have a surplus I am prepared to maintain, with the concurrence of the majority of your Lordships, of the majority of the House of Commons, I believe of the majority of Her Majesty's Ministers themselves, and certainly of the majority of the public out of doors, that a greater amount of benefit would be conferred in the reduction of the taxes on tea and sugar than by the abolition of the tax which this measure proposes. I have a third objection to the measure. I consider that it comes before us in such a shape as paralyses your Lord-ships' action and prevents your giving that consideration to the subject which a proposition of this magnitude demands. In reference to my first objection, I must say I think it is much strengthened by the doubtful and hesitating way in which the noble Earl who moved the second reading alluded to the existence of a surplus. In addition to this, since the Customs' Bill has been introduced, there is already £175,000 to be deducted from any surplus that may be said to exist—namely, £150,000 for the Stade Dues, and £25,000 for the increased interest during the next six months on Exchequer Bonds. And when the noble Earl referred to the deficiency of the late harvest, as not having entered into the calculations of the Chancellor of the Exchequer in his last Budget, I ask your Lordships whether you are more secure this year against the occurrence of such a calamity than you were the last? I hope and trust that the harvest may be a good one; but who can be so bold as to say that he can prognosticate with certainty that our harvest this year, will be more abundant than the last? Now, my Lords, with regard to the second objection—what duties should be taken off, supposing you have a real and bonâ fide surplus. I will put it to your Lordships whether any person who considers this subject in a fair and impartial spirit must not at once admit that the labouring classes consume more tea and sugar than they do paper, and whether, therefore, they would not benefit more by the reduction of the duty on tea than by the repeal of the Excise on paper? I think the right hon. Gentleman the Chancellor of the Exchequer will himself agree with me on this point, because I remember that last year when introducing his Budget he felt the difficulty of his position, and distinctly admitted that directly the labouring classes would benefit more by the reduction of the tea and sugar duties than by the abolition of the paper duty; but, then, he added, they would benefit indirectly, because it must be remembered that every pound of tea and sugar must be wrapped in paper. Now, however, with that boldness for which he is so remarkable, with that subtlety which is so startling, with that ingenuity in which no one surpasses him, he comes forward with a different plea, and recommends your Lordships to repeal the paper duty, not because their repeal would directly benefit the consumer—for he has now discovered what we on this side of the House have been telling him for the last twenty years that the consumer does not benefit in anything like the proportion the revenue loses by a repeal of the duties of Customs and Excise; in fact, the right hon. Gentleman admits that one-fourth only of the reduction of duty went into the pockets of the consumer—therefore, he now urges the advantage that will arise to trade, and the expansion of commerce which will be the consequence of the repeal of the paper duties. As to the benefit to commerce, I should be glad to know how or in what manner the repeal of the paper duty will assist commerce more than a reduction of the duties upon tea and sugar? The noble Earl, in alluding to the tea duties, said that 40 per cent of tea was consumed by the lower classes, and 60 per cent by the upper classes. I will not venture to contradict the noble Earl, but I maintain, that if the duty upon tea were lowered so as to bring the article more within the reach of the consumption of the labouring class, that more people would be enabled to consume that beverage, and that they would receive more benefit from the reduction of the duty than from the repeal of the whole Excise on paper. But what is the time at which we are called upon to take off the paper duty? Is it a time when all around appears tranquil and secure? Are there no indications of approaching difficulty? Are we quite certain we shall not require this tax we are now called upon to abandon? If we look abroad, across the Atlantic, what did we see? A nation plunging into civil war. The cannon has already sounded, and is reverberating on our own shores. We know not whether we may not be drawn into that contest; we know not what demands will be made upon us; yet this is the time when we are called upon to give up, without any benefit, some million and a half of revenue. Again, if we looked at Italy—that country which had but lately emerged from a revolution—what do we behold? Monarchy destroyed, with hardly any settled Government; authority overthrown, a generous and excitable people given up alternately as the prey to a victorious army, a disbanded soldiery, and a desperate brigandism. Only yesterday we heard, with the deepest regret, however much some of us may differ from his political views, that the great mind that has hitherto kept together the elements of that divided and unhappy country has passed away; and who can tell what the future of that country will be? Then if we look nearer home—if we look to the two countries which stand so close to each other—divided, or, as Mr. Cobden happily expressed it, united by a few miles of sea—what do we there find? While each with one hand signs a treaty of commerce, with the other both nations are convulsively grasping the hilt of their swords, each doubtful of the other's intentions. Mr. Cobden, who is looked up to as a great authority on all occasions, has lately come from Paris, and your Lordships will, therefore, look to his testimony with the greatest, possible interest. And what does Mr. Cobden say? In his speech yesterday, on the occasion of his receiving the freedom of the City, the hon. Gentleman stated that he viewed with the greatest alarm the naval preparations that are going on in France and England. His speech is so remarkable that if I were not afraid of wearying your Lordships I should very much like to read a short passage from it. Mr. Cobden said— Even now there is much that is doing by the Governments of the two countries which is calculated to fill us with disappointment, if not with dismay. Probably at no time in our history—and I say it advisedly—had France and England so large a warlike preparation in the only means of war by which they can be brought into collision as at this moment in a time of peace. It was not too much to say that at no period of history were ever Franco and England so prepared by formidable naval forces for hostile operations against each other as at present; and this is going on—if we may believe what we read and hear—at the present moment simultaneously with this commercial treaty which is intended to facilitate the intercourse between the two nations. There is something saddening and inconsistent in this fact. The speech goes on in the same strain; and at the close Mr. Cobden says that even if Trance were preparing for war we should prepare for peace, and we should have it. These are Mr. Cobden's sentiments; but, my Lords, I am sure that while France is the initiator of these great naval preparations—while she is building these leviathans of war—there is not one of your Lordships who will not concur with, me in the opinion that if this great commercial country has any regard for the maintenance of her position and the security of her colonies she must be, at all events, equally prepared to defend herself as that great and powerful Empire of France. I trust I may be allowed to express my admiration, in common with all patriotic loyal Englishmen, at the spirited address which the Prime Minister of this country made to the House of Commons the other night on the occasion of the discussion upon the Navy Estimates. The noble sentiments expressed by the noble Viscount thrilled every patriotic breast in England. My Lords, I come now to the third objection I have made, and I approach it with the strongest possible desire to say nothing that can in any way provoke any spirit of rivalry or hostility in the remotest degree between the two Houses of Parliament. I come now, I say, to the constitutional part of the question—to the position in which your Lordships have now been placed by the manner in which the Bill has been sent up to your Lordships' House. A proposition for repealing a tax and also for the imposition of taxes has been sent up in one Bill. My Lords, when I see so. many noble and learned Lords around me so much more capable by their learning, their ability, and their experience, to guide and instruct your Lordships on so delicate and difficult a subject, I will not venture to dive into the depths of this part of the question; I will not venture to do more than to draw your Lordships' attention to this subject, in order that we may be favoured with their opinion of the position in which we now stand, in consequence of the step that has been taken—I will not say by the House of Commons, and I will not say by Her Majesty's Government—but I will say by that overruling and powerful mind which seems to guide both the one and the other. Now, the noble Earl (Earl Granville) said we are now placed in a very different position to what we were last year. Then the Bill was sent up to repeal the duty, which Bill your Lordships decided not to assent to, not in consequence of its merits, but in consequence of there then being no surplus: but the noble Earl says we are now in a different position, that we cannot now reject the proposal to repeal the paper duty on the ground and for the reason we rejected it last year, because the Chancellor of the Exchequer has now shown that there will be a surplus at the close of the current financial year; and he, therefore, hoped your Lordships would not divide upon the matter. But, my Lords, if this is the case, I want to know why the present proposal has not been sent up from the other House in such a shape as would have enabled your Lordships to consider and pass a deliberate judgment upon the repeal of the paper duty apart from the other details of the Budget? I apprehend, notwithstanding all the noble Earl has said about the certainty of a surplus, that it was a suspicion that your Lordships would again throw out any proposition for the repeal of the paper duty that has induced the Government to adopt the underhand course of "tacking" their proposition with respect to the paper duty to a Bill containing other provisions, and so sending it up to this House in a shape which should prevent your Lordships from resisting it, without at the same time interfering with the other financial arrangements for the year. Almost every constitutional authority—and amongst them Lord Macaulay—had concurred in condemning the practice of "tacking" Bills. Lord Macaulay in his History, vol. 5, p. 274, gave the following striking condemnation of the practice:— Not only—such were the just complaints of the Peers—not only are we to be deprived of that coordinate legislative power to which we are, by the constitution of the realm, entitled. We are not to be allowed even a suspensive veto. We are not to dare to remonstrate, to suggest an amendment, to offer a reason, to ask for an explanation. Whenever the other House has passed a Bill to which it is known that we have strong objections, that Bill is to be tacked to a Bill of Supply. It we alter it we are told that we are attacking the most sacred privilege of the representatives of the people, and that we must either take the whole or reject the whole. If we reject the whole public credit is shaken; the Royal Exchange is in confusion; the Bank stops payment; the army is disbanded; the fleet is in mutiny; the island is left without one regiment, without one frigate at the mercy of every enemy. The danger of throwing out a Bill of Supply is, doubtless, great. Yet it may on the whole be better that we face that danger, once for all, than that we should consent to be, what we are fast becoming, a body of no more importance than the Convocation. Now, my Lords, I will call your attention for one moment to the position which the noble Earl (Earl Granville) asks us to occupy. And I will ask what is the use of a debate which is to have no practical end? If the whole thing is already settled, because the House of Commons have Bent up the whole financial arrangement for the year in one Bill, which your Lordships cannot alter or amend, I ask what is the use of my wasting my breath and your Lordships' time in addressing you? We are even placed, by the course which has been pursued, in a worse position than any other class in the country. We are told that we are not competent to have an opinion, and if any one of us ventures to give expression to our views, as the noble Earl below me (the Earl of Derby) did at the Mansion House, we are told that we should wait till the Bill is before us before offering even an opinion in reference to it. I would briefly call attention to the views entertained by the people of France in regard to retrospective debates. I perceive from the correspondence of The Times that in an article in the Revue des deux Mondes they condemn the practice of debating questions in the French Chambers after they have been practically decided, and remark on the happier condition of this country, where all-important questions are decided by the Legislature. Yet this is the very position your Lordships are now invited to occupy. I have now, briefly, my Lords, and I fear, very inefficiently, laid my reasons before you for the course I have pursued, and I hope your Lordships will consider this measure is one which ought not to become an Act of Parliament. I have only taken the part I have done because I could not find that any other noble Lord proposed to move an Amendment, and, therefore, I ventured to move one, as I think this Bill is so adverse to the interests of your Lordships, and to those of the country at large, that I venture, at all events, to enter my protest against its passing your Lordships' House.

THE EARL OF DERBY

My Lords, no one who has the pleasure and the honour of the personal acquaintance of my noble Friend who has just sat down can, for a moment, doubt that any step he takes in this House, as elsewhere, is dictated by the most conscientious motives; and no one who has listened to the manner in which he has brought forward his Motion this evening can fail to perceive that he is capable to deal with the great questions that come before us with an ability, good judgment, and moderation, which make me regret that he does not more frequently take an active part in our proceedings and join in our debates. I must, my Lords, preface the few observations I am about to offer by saying, in the first instance, that notwithstanding the high respect which I entertain, and which I believe your Lordships all entertain, for the opinion and character of my noble Friend, and notwithstanding the clear and able manner in which he has submitted his views upon this question to our notice, he has not induced me to come to the practical conclusion to which he has arrived. But I must at the same time express my concurrence in a great part of the objections which he has urged against the measure now under your Lordships' consideration—if, indeed, on such a question it is permitted to us to have any deliberative consideration at all;—I concur with the noble Duke in thinking that the Bill is objectionable in point of substance as well as in form—in point of substance, because, if that surplus does exist which the Chancellor of the Exchequer anticipates with so much confidence, but of which serious doubts are entertained by a very large proportion of the Members of the other House of Parliament, and in which doubts I confess I share—even, I say, if that surplus does exist, in my judgment, and, I believe, in the judgment of many others, and in the deliberate judgment of the House of Commons, and I am not sure I am incorrect in saying in the deliberate judgment of Her Majesty's Government—there are other taxes which have a greater claim for remission than the paper duty. There are other taxes which press far more injuriously on the springs of industry, which press with far greater hardship upon the comforts of the great mass of the community—there are taxes which have been imposed for special and temporary purposes, to meet a temporary exigency, and which have, consequently, a far preferable claim over the paper duty to be taken off, or, at all events, reduced, so soon as the temporary exigency for which they were imposed has ceased to exist. I think the Bill objectionable in point of form, on the grounds stated by my noble Friend—because it is sent to your Lordships, and sent deliberately, with the view and intention of precluding your Lordships from exercising upon it that deliberate judgment which I think it is for the benefit and advantage of the Constitution as it is for the honour of your Lordships' House that you should be able to exercise on all matters submitted to you. The noble Earl who moved the second reading of the Bill stated that last year we stood in a very different position from that in which we do now; inasmuch that last year it might be a question open to doubt whether we had or had not a surplus; whereas, on the present occasion, that fact is universally admitted. I will not here stop, my Lords, to take exception to the assumption of my noble Friend that the existence of a surplus is universally admitted. The fact is that it is agreed in the House of Commons that in these matters it is to be assumed that the Chancellor of the Exchequer is the best authority as to the facts, and that upon his statement we must be prepared to rely in our legislative capacity—whatever personal and private opinions may be as to the soundness of the reasoning or the validity of the conclusions to which he has arrived. My Lords, I accept this principle; but as the noble Earl took great pains to show that if it had not been for the very bad harvest last year the anticipations of the Chancellor of the Exchequer with regard to the revenue would have been entirely realized, I may be permitted to point out that the noble Earl did not take into account the £800,000 additional and unexpected Customs' revenue which the Chancellor of the Exchequer received, and which we may regard as some set-off against the falling off of his receipts from that cause. Moreover, although in ordinary cases it is perfectly fair for the Chancellor of the Exchequer to reckon, not on circumstances of an unparalleled prosperity, but upon a fair average revenue, yet I find at the period when the Chancellor of the Exchequer brought forward his first Budget—which I presume is the one to which we are directed—about the period when we were discussing the measure relative to the paper duty, and before the Chancellor of the Exchequer brought forward his second or supplemental Budget—it was perfectly clear that we could expect nothing but a very bad harvest. Perhaps the noble Earl will permit me to remind him also that, at the period when the Budget was under consideration, Her Majesty's Government were in doubt—a doubt in which no other person shared—as to whether or not there would be a war with China, and the provision taken in the Budget for the China war last year only reached the very modest amount of £500,000. Subsequently the Chancellor of the Exchequer found out that that had taken place which every one had foreseen, but to which he had wilfully shut his eyes; and consequently he found himself under the necessity of coming down to the House of Commons and asking for a Supplementary Vote of £3,800,000. That appeal, however, had not been made when we discussed the question; but I hope your Lordships will do me the honour to recollect that I found it to be my duty to fatigue your Lordships with a very lengthy analysis of the estimates of the revenue and the expenditure of the country, in which I assumed, for the purpose of argument, that the whole of the calculations of the Chancellor of the Exchequer were perfectly correct, that he was not wrong in any of his figures, that no unexpected circumstances would occur to derange his calculations. And I took the liberty of showing—on the faith of that statement—to your Lordships, and, as I believe, proved to your Lordships, that if circumstances remained precisely the same, the provisions of the Budget were so contrived as to secure, not for the year 1860–1, but for the year 1861–2, a deficiency to the amount of £2,800,000. In short, I rested my support to the Motion brought forward by my noble Friend the Comptroller of the Exchequer, not upon any supposed error in the calculations of the Chancellor of the Exchequer, but upon the fact that the statement of the Chancellor of the Exchequer, assuming the correctness of all his figures, involved us in a certain deficiency of £2,800,000, at the very least, for the year 1861–2. Under those circumstances your Lordships were induced—and I think very advantageously for the country, and I believe that the country generally now feel that it was to their advantage, and that your Lordships acted very wisely—to exercise your indubitable right to refuse to assent to this lavish and imprudent sacrifice of the permanent revenue of the country. My Lords—I do not quite know about Her Majesty's Government—but I am afraid the Chancellor of the Exchequer has not shown himself sufficiently grateful to us, because we certainly contributed very largely to reduce or diminish the enormous deficiency there would have been upon the revenue, not of 1860–1, but of 1861–2, by the present we made to him of a million and a quarter of money by continuing the paper duty. The right hon. Gentleman made no difficulty about accepting this present; but he took advantage of the amount, eloquently protesting that there never was a Government, there never was a people, so ill-used and so grossly affronted as that Government, the House of Commons, and the country had been by your Lordships' House. But, my Lords, with a meekness worthy of all praise, the right hon. the Chancellor of the Exchequer proceeded to frame his new Budget to meet the altered circumstances of the year, and he at once took credit for the million and a quarter secured to him by "the unparalleled conduct of the House of Lords." How was the remainder made up? The remainder of the deficiency—by a course of proceeding which, certainly, is of an exceptional character, but justified by the circumstances of the time—was made up by withdrawing the sum of one million and a half from the balances in the Exchequer—that is by diminishing the assets prepared to meet the liabilities of the country. That was the mode—in addition to what he got by the relief afforded him by the retention of the paper duties—in which the Chancellor of the Exchequer contrived to make ends meet for the service of last year. The revenue, in short, of last year, was made up of waifs and strays, odds and ends, pickings here, anticipations from another quarter, and throwing into the service of one year that which belonged to another—a combination of casualties which might occur that year but could never occur again, and anticipations which, unless circumstances changed favourably, would leave the revenue of another year in a deficiency to the amount of two or three millions. But when we come to this year, and when every one is thinking how the Chancellor of the Exchequer will make up the deficiency in his revenue, the right hon. Gentleman comes down to the House and deals with the Budget of the present year with the same courage and dexterity as he exhibited in dealing with the Budget of last year. Last year he astounded the House by announcing that they had to provide for a deficiency of £9,400,000, and, nevertheless, the right hon. Gentleman proposed a remission of taxes that would increase the deficiency to £12,400,000. He provided for that deficiency by the anticipation of revenue from a variety of sources, partly on the faith of £250,000 to be received from Spain, and partly from other windfalls, but principally by the addition of a penny to the income tax—or rather by the imposition of an income tax of 10d. in the pound—and of this income tax the right hon. Gentleman contrived not only to get four quarters in the year, but he arranged so that five quarters should be paid within the year. That, of course, was an operation that could not be repeated, and their Lordships and the public were anxiously asking, "What will the Chancellor of the Exchequer do with his deficiency of £5,500,000?" Many resources were wanting which last year he possessed—the prospect before him, in short, seemed as black as possible—when the right hon. Gentleman comes down to an admiring and wondering House of Commons and declares that there was no deficiency at all, but a surplus of £1,900,000. And it is just as simple as the case of Columbus and his egg. The deficiency last year was £9,400,000, assuming that the income tax was to expire, and that the tea and sugar duties would be reduced to their ordinary amount. This was the right hon. Gentleman's demonstration of last year. This year he proceeds upon a different assumption, that all these duties are to continue, and not only to continue, but that they are to continue with the additional penny income tax imposed last year, and distinctly imposed for one year only. If you assume, in the first instance, that the taxes have expired which produced between £10,000,000 and £11,000,000, and, thereby show a deficiency of £9,400,000 in the one year, it is not very difficult to come to the conclusion that if those taxes are to be continued in their full amount, as they produced a surplus for last year, they will also provide a surplus for the year to come. And then the House of Commons lifts up its hands and its eyes in admiration, and says, "What a wonderful man this Chancellor of the Exchequer is!" I say that also; but I likewise say, what a wonderful body is that House of Commons to be cajoled and juggled by this transparent fallacy of creating a deficiency last year, and having a surplus this year. I must be permitted to say, in passing, that this solution gives a very easy explanation of an extraordinary discrepancy which appears between a statement I made and one made by the Comptroller of the Exchequer, in which I anticipated a deficiency of between £2,000,000 and £3,000,000, and my noble Friend a deficiency of between £10,000,000 and £11,000,000. The difference consists in this: I said, if these taxes are continued there will be a deficiency of £2,000,000 or £3,000,000; and my noble Friend said, "There will be a deficiency of between £10,000,000 and £11,000,000 unless you break faith with the country and continue those obnoxious tea and sugar duties, and also the income tax at its present high rate." Our statements, therefore, precisely tally, and our estimates would have been perfectly correct, as a general rule, if it had not occurred in the meantime that the China war came to an end, and consequently it was in the power of the Government and of the Chancellor of the Exchequer to make some reduction of the expenditure, the effect of which was to give a small apparent surplus. As I said before, I shall assume that the calculations of the Chancellor of the Exchequer are all correct, and I shall not dispute the fact, whether £750,000, which he calculates to receive from China, is likely to come into the Exchequer or not, or whether he has not made a most extraordinary miscalculation with regard to the military and naval expenditure of the country. I take the facts as I am told them; and then the question arises how this surplus shall be disposed of most advantageously for the country? I will not say whether it is for your Lordships to-night to decide, but it is a question for Parliament to decide. I will assume the version of those who say that the Chancellor of the Exchequer has dealt most fairly and impartially in dividing the relief between direct and indirect taxation. If, on the one hand, it is said, he takes off the paper duty, on the other hand he takes off an equivalent amount from income tax. That is true; but the relief given in respect of direct taxation consists in taking off the individual penny he put on the year before, and the relief in respect of indirect taxation consists in depriving the country permanently [The Duke of ARGYLL: Hear, hear!]—I am glad to hear that my observation is gratifying to the noble Duke—you are taking off a tax which, from the nature of things, when once taken off cannot be reimposed. I am not going to discuss the merits of the paper duty. I always admitted, and I am quite ready now to admit, that it is an objectionable tax, and one which, with an overflowing Exchequer, it might be desirable to relieve the country from the pressure of; but I do not believe that its repeal will have those marvellous effects that have been predicated, or will give any-extraordinary relief to commerce or to any portion of the community. With regard to cheap literature, and to the various applications of paper, and the immense spread of knowledge which are to follow from the repeal of this duty, these arguments may do very well for Parliament, but I have not the least faith in them. My noble Friend, I hope, will not repeat these stale arguments about cheap litera- ture, which have been all controverted long ago. [Earl GRANVILLE: Where?] Why, in every house, in every conversation, in Parliament, and in every society where the question has been argued. Look at the most important publishers. Look at the authority of Mr. Bohn, who ought to have some knowledge upon the subject. Look to the assertions made in every society and every place where the question is discussed. I know one class to whom the relief will be considerable, and that is the class of proprietors of penny newspapers. I do not know that they will get all the benefit they expect, but they will get the raw material of their business cheaper, and certainly they will not make the least reduction in the price to their consumers. Neither do I see that so great a benefit will be given by the remission of the paper duty to those tradesmen who sell groceries, tea, sugar, and other articles on account of the paper in which these articles are wrapped—or to use my noble Friend's peculiar phraseology "wropped." I believe that the main argument for taking off the paper duty consists of an argument introduced for the first time this year, and which may call "the great bandbox argument." Next to the proprietors of penny papers the makers of bandboxes will derive the greatest benefit from the remission of the duty; but as to all the other classes of the community, I believe its benefits will be found to be nearly nil. I will say utterly nil as compared with a proportionate reduction of the income tax or a proportionate reduction of the tea and sugar duties. My noble Friend will surely not deny that these reductions would be more beneficial to the working classes than the repeal of the paper duty; and when he says that the tea and sugar duties are paid in higher proportion by the higher and middle classes than by the lower, surely, that circumstance constitutes a strong reason for reducing those duties and so cheapening the articles to the lower classes. I only wish to enter my protest against being supposed to concur in the great benefit to be derived to the community at large from taking off the duty on paper. It is, however, a financial question upon which the House of Commons has a second time expressed an opinion to the effect that it is desirable that that duty should be taken off. I will not stop to examine what may be the various motives that induced the House of Commons to come to the conclusion at which they have arrived. It will be sufficient for mo to say that to my certain knowledge that conclusion was not simply guided by the merits of the tax itself, or the degree of relief to be afforded to the community. It was carried, undoubtedly, by a somewhat larger majority than carried the third reading last year—a majority of fifteen; but it is perfectly notorious that that majority, small as it is, was obtained by the votes of a certain number of Gentlemen sincerely opposed to the removal of the paper duly, but more opposed to running the risk—not a great risk, I think—of disturbing Her Majesty's Government, or compelling them to resign or to dissolve Parliament. I am not in the secrets of the Government; and I am not averse to having something strong in hand to meet an emergency; but looking to the complacent manner in which they took the check by the House of Lords last year, I confess to entertaining a very strong opinion that the only resignation Her Majesty's Government would have shown would have been that calm and placid resignation with which they submitted to the benefit we conferred upon them last year; and as to the dissolution of Parliament, I have too high an opinion of the prudence, sagacity, and wisdom of the noble Viscount at the head of that Government to think that he would appeal to the country on any such question as whether paper was to be preferred to tea. But, whatever the motive, a majority of the House of Commons has decided in favour of the repeal of the paper duty, and I am perfectly ready to admit that, upon a question of the repeal of a duty and the financial arrangements generally, it is not expedient that your Lordships, except in very exceptional cases, should interfere with the discretion of the House of Commons in that matter. Suppose, therefore, there is a surplus, and that the House of Commons, on full and deliberate consideration of all the circumstances, have come to the decision that it is expedient that this paper duty should be repealed, I certainly should not wish to take on myself the responsibility of advising your Lordships, whatever might be your opinions as to the merits of the case, to set yourselves upon such a point in opposition to the deliberate judgment of the House of Commons. Last year the question was widely different. The question then was whether, upon the showing of the Chancellor of the Exchequer himself, that there would be no surplus in the following year, you would not give to the House of Commons a further opportunity of considering the policy' of sacrificing that which was in point of form at least a permanent tax? But the question arises now; not so much with regard to the merits of the case as with regard to the amount of interference which might be justifiable or desirable on the part of your Lordships' House. And here is a point on which I feel myself compelled to differ in some degree, though not altogether, with my noble Friend (the Duke of Rutland) as to the discretion to be exercised on this occasion. With regard to the right of the House of Lords to deal with questions of taxation, and with regard to the privileges of the two Houses generally, I think it is extremely desirable that there should be no mistake as to their respective limits. While there is undoubtedly debateable ground between the two Houses there is certainly one point which admits of no debate and no discussion whatever. With regard to those other matters, they must be settled as they arise, by the prudence and discretion of each House individually. But there is nothing more clearly laid down and recognized than that to the House of Commons belongs the initiation of every Money Bill; and on the other hand nothing is more in disputable—and that is the vindication of your Lordship's conduct last year—than that the House of Lords have the power of accepting or rejecting any Money Bill. The debateable point is whether the House of Lords has power to alter a Money Bill submitted to them by the House of Commons? What is the meaning of having power? The privileges of the two Houses depend upon the mutual recognition of their respective powers, and on the power of enforcing that recognition. The House of Commons would not look at a Money Bill originated by the Lords; and their remedy is obvious—they would refuse to deal with it. The Lords, on the other hand, reject a Money Bill coming up from the Commons that they do not approve of; and the result is clearly the same—the Bill falls to the ground, and there is an end of it. But the question is as to the right of the House of Lords to alter a Money Bill which the Commons have originated. Let us see upon what the claim of the House of Commons to refuse to entertain a Money Bill so altered is founded. It rests upon a Resolution of 1671, passed by the House of Commons, as to the privileges and rights of that House, and incidentally as to the limitation of the rights and privileges of the other House. With regard to the privileges of the House of Commons, their Resolution may be perfectly sufficient to bind them; but as to what is the privilege of your Lordships' House a simple Resolution of the House of Commons, with all due respect to that high authority, except so far as they can themselves act upon it, is a piece of waste paper. The rights of your Lordships' House cannot be restricted by a Resolution of the House of Commons; and, however prudence may have induced your Lordships' House to refrain from altering Money Bills, you have never at any time repudiated, rejected, or resigned the right of making Amendments in those Bills, although you have tempered the exercise of that right by discretion, and by the knowledge that if you do make such Amendment it is equivalent to the rejection of the Bill. Every constitutional authority concurs in giving to the House of Lords this right of amending Money Bills if they choose to exercise it. Mr. Hallam and Lord Macaulay have so laid it down; but I will only trouble your Lordships with a short extract from a work recently published by my noble Friend (Earl Stanhope), the Life of William Pitt, in which I find the opinion of Mr. Fox thus stated— Pitt proposed a measure to regulate our commercial intercourse with America. The views of Pitt upon this question were of the largest kind. The Bill was complicated and extensive. It was several times committed and re-committed with a variety of Amendments, and at last, under the next Administration, was further altered by the Lords. It was, no doubt, a Money Bill. ['Hear.'] 'But I am of opinion (said Fox) that the Order of the House respecting Money Bills is often too strictly construed. It would be very absurd, indeed, to send a Loan Bill to the Lords for their concurrence, and, at the same time, deprive them of the right of deliberation.' This is the judgment of Mr. Fox—a great constitutional authority—upon the Resolution of the House of Commons in 1671. This privilege depends upon the power of enforcing it; and if you send down a Money Bill to the Commons altered the Commons reject it, and it falls to the ground. In former times—I do not know whether the practice is still continued—it was usual for the House of Commons to kick such a Bill out of the House, or to throw it under the table—which does not appear to me to be a very dignified mode of proceeding, more especially when it was frequently followed by the introduction of another Bill embodying the Amendments of the Lords. No doubt the House of Commons, if you choose to act on your constitutional right, may refuse to entertain the Bill so amended by your Lordships, in which case it falls to the ground; or they may introduce another Bill or Bills carrying out the same object, and send them to the Lords in a form that they believe to be more acceptable. These, my Lords, are the real limitations of the rights and privileges of the two Houses of Parliament—namely, the manner in which these rights can be enforced, by either the one or the other, by the rejection of the measure in one form or the other, the result of which is that the proposed legislation falls to the ground. In Bills, however, which are for the special purposes of taxation, not Bills in which money clauses may be introduced incidentally, this is a matter of the highest consequence, because whenever either House insists on the maintenance of its strict privileges, in that case, according to the circumstances of the case, the matter would be judged of by the supreme judge of all in this country—public opinion; and that House of the two which pushes its assumed privileges to the utmost, and which shows an unreasonable and unconciliatory spirit towards the other House, will be the one, in the case of a great national calamity, such as the stopping the Supply of the means of carrying on the Government, which will be visited by great public indignation; and that is the real control and the real means by which the apparently conflicting privileges of the two Houses are presented from bringing the working of the Constitution to a dead lock. That is the position in which we find ourselves at present. There is one point more to which I must advert—the mode in which the Commons have dealt with this question and with regard to "tack Bills." In former times it was the habit of the Commons to introduce the most conflicting and incompatible things into the same Bill and send it up to the House of Lords. According to the interpretation of their privileges by the Commons, that Bill, if it contained some money provision, could not be amended by the House of Lords, but the whole measure must be swallowed by this House or rejected altogether. It is apparent that such a practice excludes the House of Lords from the exercise of their deliberative and legislative func- tions. There never has been any doubt to the inadmissibility of "tacks;" in the strict sense of the word—that is the introduction into a Money Bill of matter wholly different from and unconnected with the main object of the measure. But a more difficult question comes when you have to deal with a large financial scheme, in which nothing is introduced that has not reference to finance but in which various matters of finance are introduced and submitted to your Lordships' consideration. I do not hesitate to admit to my noble Friend opposite that there are repeated precedents for the introduction of whole fiscal schemes into one measure, and of that measure being sent up by the House of Commons and acceded to by the House of Lords. On the other hand, there are repeated cases of financial measures being amended by the House of Lords, and the Amendments being accepted by the House of Commons. Supposing one Bill had been sent up last year for imposing 1d. income tax and repealing the paper duty, no one could complain of excess of authority on the part of the Commons; and, likewise, nobody could complain that the House of Lords had not the opportunity to exercise their judgment by accepting the whole or rejecting it, and the thing could be fairly counterpoised by the action of the House of Commons. But the case is totally different where, by the action of the House of Commons, it is proposed to take away a permanent tax and to substitute for it a purely temporary one. This point has been urged in the House of Commons by a right hon. Baronet, a Member of great weight and experience, and was referred to by my noble Friend opposite, as having been laid down in a draft Report which was not accepted by the Committee, and which Report was drawn by a right hon. Friend for whom I have the highest esteem and regard (Mr. Walpole), but both these Gentlemen, I think, have come to an opinion on this question which is most fallacious in its origin and dangerous in its conclusions. The argument is this—that if, after the House of Commons has declared against it, you allow a large portion of the Revenue to be raised by permanent taxation that cannot be taken off without the consent of the House of Lords—and it is admitted that it cannot be taken off without their consent—you weaken the power of the House of Commons—that power, it is allowed, has been weakened—and it is argued that it would be expedient, and good policy, to recover that power even at the expense of the permanent revenue of the country. I say that this is a gross fallacy in argument—I say so with the greatest respect for the right hon. Gentleman—it is a perfect fallacy in argument to say that dealing with a portion of the permanent taxation of the country can affect the control of the House of Commons over the revenue from whatever source derived. It might, no doubt, have been necessary in the early days of our history, at a time when the necessities of the Crown alone compelled it to call Parliament together, and when measures were always attempted to enable the Crown to dispense with the Parliament and to enable it to carry on the Government without summoning Parliament at all, to take precautions that Supplies should only be voted in such a way as not to make the Sovereign independent of Parliament. But all apprehensions of that kind have long ago fallen to the ground, and ceased to have any practical effect. "What is the control which the House of Commons now exercises? The army, the navy, all the great services of the country, are voted from year to year; and without the sanction of the House of Commons to the application of the Ways and Means, the payment of these services at once falls to the ground. The Army Estimates, the Navy Estimates, the Miscellaneous Estimates, are all provided for by annual Votes; and this enormous proportion—amounting in fact to almost the whole—of the Ways and Means of the country are entirely and absolutely under the direct control of the House of Commons. And even after these Estimates have been provided for, the House of Commons has complete and absolute control not only over the levying of the taxes but over their application. Not a single shilling of the taxes—not even of the permanent taxation of the country—can be applied to the purposes for which they are required without an Appropriation Act, which, as your Lordships know, must originate in the House of Commons, while it must receive the sanction of your Lordships' House. The control, therefore, of the House of Commons over the finances of the country consists, first, in the absolute control it has over the Estimates for the support of all the great services of the country; and, next, in the fact, that after these Estimates are voted not a step in regard to the payment of those services can be taken without the introduction of all the items of that expenditure into an Act which must originate in the House of Commons. Let us look, my Lords, at what the consequence would be of acting on the opposite principles. Let us suppose the principles that have been put forward in the House of Commons carried out to the uttermost, and that you do away with the whole permanent taxation of the country—and, observe, that if this precedent is to be followed up, the Supply for the year may be purchased by the abolition of some permanent duty, then permanent taxation will be gradually reduced to a minimum; and if permanent taxation be reduced to a minimum—if all the great permanent services of the country are to be provided for by the annual Votes of Parliament—and, moreover, I say, if all the taxes that affect trade and commerce financially are to be made dependent on the annual Votes of Parliament; if, above all, the payments for the National Debt are to be made wholly dependent on the annual Votes of Parliament—then, I say, the most serious and even ruinous consequences may result from the substitution of the system of annual for the system of permanent taxation. Therefore, while I do not say I am disposed to object to the present exercise of the discretion of the House of Commons, I do say it is a very serious question, not only for your Lordships' consideration, but for those of the House of Commons—and they are, I believe, the great majority—who value the institutions of the country, to beware of the danger and temptation that lurk in the policy of substituting annual for permanent taxation—of the danger of unsettling the great institutions of the country, shake the stability of our engagements, rendering uncertain all matters that affect the course of trade and commerce, and producing in all these matters an uncertainty that must be most prejudicial to the highest and best interests of the country. Why, my Lords, within my own recollection, there was one great tax—that of the sugar duties—which was voted annually; but such was the paralysis caused to trade by the uncertainty of these duties, whether they might be diminished or increased from one year to another, that it was found absolutely necessary to make those duties permanent. It was this, I suppose, that the right hon. Baronet to whom I have referred complained of as an infraction of the privileges of the House of Commons. But it is unnecessary for me to say that on that occasion the House of Commons acted not in deference to the privileges of House of Lords, but from regard to the necessities of the commercial interests of the country. Therefore, I hope that this question of substituting annual for permanent taxation will be deliberately and carefully weighed both by this and the other House of Parliament, before we proceed on it to an extent that may be dangerous to the best interests of the country. From what I have said your Lordships will infer that it is not my wish or intention to recommend your Lordships to interfere with the exercise of the discretion of the House of Commons in determining to abolish the paper duty. I think that Resolution an imprudent and improvident one, especially in the face of the future difficulties which menace us. But it is proposed purely as a financial measure; as a financial matter it is within the province of the House of Commons; and I should be sorry to see your Lordships set your authority and opinion on ordinary occasions at variance with the opinion of the House of Commons in a matter that is strictly within their province. But the question remains as to the power of the House of Lords—not putting itself in opposition to the vote of the House of Commons, but taking the step which, in a constitutional point of view, we have an undoubted right to take—of dividing this Bill into two and sending the two Bills, both of them agreed to, down to the House of Commons for them to accept or reject as they please. That is a course which has much to recommend it in point of principle. But, in point of prudence, I doubt whether it would be desirable. The noble Earl (Earl Granville) has repeated to-night, what has been said elsewhere, that in sending this Bill to your Lordships' House, the Commons intended it as a measure of a conciliatory character, as one intended to remove from the way a subject of controversy between the two Houses. It is certainly an odd way of conciliation for a man, when we have refused to accept his proposition, to turn back and tell us, "You may adopt or reject it as you please; but if you don't accept it you will expose the country to the most serious inconvenience; you may do as you please, but I take care to send it up to you in such a form as practically to prevent you from the free exercise of your judgment." I repeat I cannot see how this proposition is to be regarded in a conciliatory point of view. Moreover, I am inclined to the opinion that if the majority of the Government thought and desired this to be regarded as a conciliatory proposition, I doubt if that was the view of the right hon. Gentleman who proposed the measure. I cannot but believe that the right hon. Gentleman, unfortunately for his own reputation, has allowed himself to be influenced by feelings of mortification at the rejection of his measure last year by the House of Lords, and that he has indulged in what I consider the wounded spirit of mortification in a manner which is not consonant with the right hon. Gentleman's high eminence or reputation. But the question is this—the House of Commons has sent up this measure, and in a form which, I must own, is fairly within their competence. And without placing ourselves prominently in opposition to the House of Commons we have it in our power to divide the Bill which has been sent up to us by that House; and, so divided, we have it in our power to adopt it, and to send it back to the Commons for acceptance or rejection. By that course we always have a remedy in our hands by which we can vindicate our privileges when we so please; and should circumstances ever arise so extreme as to justify us in taking that course, I hope your Lordships would not be slow to vindicate your rights. But I think it would be an act of power that would undoubtedly be extreme on the present occasion. "We should, I think, only be imitating an example that we deprecate and blame, and should take a course likely to excite angry feelings and animosity in the House of Commons. We should lay ourselves open to the charge of having it said, "You have no objection to these propositions, and yet you send them down to the House of Commons in such a manner that it is a challenge and defiance to the House of Commons," and I think the merits of our case would thus be brought forward at the greatest disadvantage. Therefore, while I protest against the policy of this measure—while I think you are making a sacrifice of the resources—and again I say of the permanent resources of the country, because they are secured by permanent Acts of Parliament, and that at a time when you require to husband all the available resources of the country—at a time when, as my noble Friend (the Duke of Rutland) has said, the state of affair? abroad is too critical to allow us to tam- per with the finances of the country, or to place them in such a position where they are not at once available, but where for the ordinary expenses of the country you must rely on extraordinary efforts—while I think that this policy is unwise and improvident, and the form of the Bill, notwithstanding all the noble Earl has said of its conciliatory character, objectionable—still, I cannot advise your Lordships to separate the Bill, and to send it back in such a form as will render it necessary to reintroduce the whole question, to re-discuss every part of the measure, and to induce a feeling of irritation in the House of Commons which I should be the last to excite, but which I would rather endeavour to allay. It is very far from our desire, my Lords, to curtail the privileges of that House. While I uphold the privileges of our own House, I yield to no man in my desire to maintain those of the House of Commons, which are as essential to the right balance of the Constitution as the privileges of the House of Lords. I hope, therefore, my noble Friend will not call on us to divide on his Motion; and I hope that no proposition will be made at a subsequent stage of the nature which I have indicated, and which, however consistent with your Lordships' privileges, would place the country in difficulties and expose your House to merited censure. I concur with my noble Friend in many of the objections he has made; but I hope your Lordships will allow this Bill to pass as it has been introduced, and leave to the Government the responsibility—and I think it is a heavy one—of dealing in the manner they have done with the finances of the country, entailing on the country a great sacrifice and depriving her, for apparently the most insignificant objects, of resources which may be required in the hour—and God knows how soon that hour may come—when we are threatened with foreign dangers or internal difficulties.

THE DUKE OF ARGYLL

said, he could by no means agree with the noble Duke who moved the Amendment, that debates in that House were of no use unless a division took place. He thought the feeling of the House must be one of gratification that they had now reached the close of the controversy upon the paper duties, and that in the speech of the noble Earl (the Earl of Derby) they had heard the last accents of a party contest which had been one of the keenest and strangest that had happened for many years. He said the "strangest," for what were they debating about? Her Majesty's Government, having an estimated surplus of two millions, propose to divide it between the reduction of the income tax and the removal of the Excise duty on paper:—and on this proposal they were met by an opposition which was most violent and almost fanatical. He must admit to the noble Earl that there was some show of justification last year for the opposition to the proposal for the repeal of this taxation which did not now exist; but he must say he had never heard anything more erroneous than the observations that had fallen from the noble Earl respecting the deficit of last year. The noble Earl, for instance, said that the debate in that House upon the paper duty took place at a time when it was quite manifest from long continuance of bad weather that we must have a bad harvest. The fact was that the debate in their Lordship's House took place at the end of May, when there was the most magnificent weather that could be desired. It was not for a week or ten days afterward that the bad weather began. Then the noble Earl said that the deficit was overcome by the Chancellor of the Exchequer taking into account five quarters of a 10d. income tax within the year.

THE EARL of DERBY

I admit that was an error. I meant to have said that he imposed an income tax of 10d. and provided that three quarters of that income tax should come into the service of the year instead of two quarters, making five quarters of the whole income tax, instead of four quarters. It is quite true that in the early part of the year there was a 5d. income tax. I never meant that he had taken five quarters of 10d. income tax.

THE DUKE OF ARGYLL

said, he could only deal with the statement as it was made, and it did appear that the noble Earl attributed to the Chancellor of the Exchequer the including of five quarters of 10d. tax within the year. The truth was Mr. Gladstone took credit for two quarters of the 5d. income tax due in arrear from the previous year, and he made a new arrangement for the future, whereby he collected three quarters in the remainder of the year. Another error of the noble Earl was one that had been repeatedly refuted last year—that Mr. Gladstone had estimated £500,000 as the whole cost of the China war. The sum really provided by Mr. Gladstone for the China war at the time of the paper duty debate was two millions and a half. There were £850,000 charged for the service of the previous year, a sum between £1,100,000 and £1,200,000 in the Army and Navy Estimates for the China war, and the half million which the noble Earl had assumed to be the only provision that was made. In point of fact, the Chancellor of the Exchequer had in his Supplementary Estimate of July overestimated the expense of the China war by £800,000. There had been a saving upon the Chinese war in reference to the Estimates, and this went to the reduction of the deficit. This was an accumulation of mis-statements which was extraordinary, even upon financial questions, from the noble Earl. Another objection which had been raised by the noble Earl against Mr. Gladstone's calculations was that that right hon. Gentleman had shifted his ground, and had adopted a different basis of calculation this year to that which he took last year. But it was quite legititimate for Mr. Gladstone to take one basis one year and a different basis the next, provided that he clearly stated to the House of Commons in each case what basis it was on which his calculations were founded. The noble Earl himself had attempted to bamboozle the House as to the principle upon which the revenue for the year was calculated, and said that the difference between the deficit predicted by one noble Lord and that predicted by another noble Lord arose from their calculating upon a different basis. The predicted deficit of this year was last year stated at £10,000,000 or £12,000,000, on the basis of not taking into account the falling taxes. If it had been intended to include in this the falling taxes, then the deficit might just as well have been put down at £22,000,000. This explanation, therefore, must be abandoned. He thought it would be of advantage if noble Lords and hon. Members who indulged in predictions could be compelled to come forward at the beginning of each Session and state how far their prophecies of the preceding year had been verified or falsified. The noble Earl himself predicted last Session a deficit for this year of £2,800,000. As there was an actual estimated surplus of nearly two millions the noble Earl was in error by nearly five millions. But, deducting the taxes which were imposed in July to meet the cost of the China war, the noble Earl was in error to the extent of two millions, or £1,400,000 at least, a sum equal to the whole amount of the paper duties, which was the subject of this long-continued controversy. The noble, Earl had assumed that the expenditure of this year would be fully equal to that of last, and hence his error.

THE EARL OF DERBY

What I stated was that if the expenditure of the next year was equal to that, we should have a deficit of £2,000,000.

THE DUKE OF ARGYLL

But surely the Government had a right to calculate as much on the termination of the China war as the noble Earl had upon its continuance. The calculation of the noble Earl, therefore, had proceeded upon a basis which might be erroneous, and which subsequently had proved to be erroneous;—he wished, however, to point out that it was in a great degree upon the strength of that calculation that their Lordships were invited last year to reject the Bill for the repeal of the paper duty since, however, a deficiency could not be predicted of this year, the great objection to the repeal of that duty was the place which it occupied in the general system of taxation, especially as opposed to the repeal of the tea duty, the repeal of which was now advocated as a preferable measure. A few words might be said with regard to the latter duty. The Chancellor of the Exchequer had stated in Parliament that if last year the House of Commons had expressed a preference by its vote for the reduction of the tea duty, the Government would have been ready to accede to that proposal. To that statement he might have added that the Government came to the consideration of the choice between the tea and paper duty with a perfectly impartial mind and with a sincere desire to choose that for remission, the abolition of which would conduce most to the public good. There were, of course, circumstances affecting this decision last year which no longer existed now. The existence of war with China last year made it more doubtful than it otherwise might have been, whether the advantage of any reduction of the tea duty would reach the consumer. But there were other considerations more powerfully than any other had influenced the Government, and which were exactly the converse of those to which their conduct had been attributed. It had, for instance, been perseveringly represented that it was the object of the Chancellor of the Exchequer, and the tendency of the po- licy of the Government, to remove the permanent sources of our indirect taxation, and to throw an undue burden upon the shoulders of those who bore the direct taxation of the country. Such was not the case. Now, in regard to the tea duties, he would direct attention to the scale of duties on that article for the last few years, since this bore materially on the choice between tea and paper. The power of a nickname was always very great, and he had noticed during those debates that the tea duty had been constantly referred to as a war duty. The facts, however, would point to another conclusion. In 1852–3, before the Russian war, the tea duty stood at 2s. 2½d. per lb.—that is in a time of profound peace. In 1853 the present Chancellor of the Exchequer, who was then in office, proposed that a descending scale should be adopted, to terminate in 1860 by a duty of 1s. per lb. The Russian war then broke out, but so far from the arrangement having been stopped by that event the two first remissions were allowed to take place; in 1853–4, the duty fell to 1s. 10d. per lb., in 1854–5 to 1s. 6d. per lb., and it was not till 1855 that any addition was made. In that year Sir George Lewis, who was Chancellor of the Exchequer, raised it to 1s. 9d. But at the conclusion of the war, in 1857, it was placed at 1s. 5d. per lb. and at that figure it had remained ever since. What he wished to point out, therefore, was that the figure of 1s. 5d. in the pound had no reference whatever to the expenditure of the Russian war or any other war. It was a duty lower by 9½d. per lb. than had existed in times of profound peace previous to the Russian war. It had reference no doubt to increased expenditure, but not to increased expenditure due to any particular war. When, therefore, they had to consider the question of the tea duties last year, they had to bear in mind the fact that the expenditure of the country for military and naval purposes, although we had had several years of peace, so far from being less than in 1857, was very considerably higher—higher, in fact, by several millions. The question, therefore, really came to this—whether they were under any obligation to reduce the tea duties still farther at a time when they had been obliged to augment still farther naval and military expenditure? Certainly one consideration which weighed with the Government was this—that with such large military establishments to provide for it was reasonable and just that the whole consuming mass of the country should contribute to their maintenance and that the entire burden should not be laid upon the income tax or any other direct impost. That reason prevailed at the present moment. The military and naval expenditure was still six millions above the figure at which it stood in 1857. There was, therefore, no reason why the Government should advance farther in a reduced scale of duty which had been fixed in contemplation of a very different condition of affairs. The noble Earl had several times stated that he objected to the repeal of the paper duty because it involved the sacrifice of an important part of the permanent revenue of the country. He listened with some surprise to that statement of the noble Earl. Surely there ought to be some relation and consistency between the language of men when in office, and that which they held when out of office. True the noble Earl's Government in 1858 was in circumstances of considerable difficulty; he was I weak as to his Parliamentary condition, and it was necessary for him at times to act upon the principle of "anything for a quiet life." But then they must also remember that the abstract Resolution respecting the paper duty proposed by Mr. Milner Gibson was not simply adopted as he proposed it, but was to a certain extent modified to meet the views of the Government of the noble Earl, so that with that modification, and in the terms finally adopted, the Resolution must be taken as expressing the opinion of an unanimous House of Commons. They were— That this House is of opinion that the maintenance of the Excise on paper as a permanent source of revenue would be impolitic. Now, he maintained that the noble Earl who was at the head of the Government which acceded to that Resolution was hardly entitled to argue that the paper duty could be retained as a permanent source of revenue. But supposing the noble Earl had reluctantly agreed to that Resolution, he (the Duke of Argyll) was at least entitled to draw his inference from the language of the noble Earl's Chancellor of the Exchequer, Mr. Disraeli. The words of that right hon. Gentleman were these— The Government, on the subject of this particular tax, does not wish to conceal its general opinion that it is a tax that ought not to form a permanent source of revenue. He thought that, after such an admission from Mr. Disraeli, together with his own conduct, the noble Earl was not entitled to assume that the paper duty could be maintained as a permanent source of revenue. He would not go into the details of the paper duty, of which he believed they were all heartily tired; but in determining between paper and tea there was another very important consideration, namely, that the paper duty had been declared by the practical officers of the Inland Revenue to have become untenable, not that it could not be collected; but their statement was that the system of partial exemption which had been forced upon the revenue authorities in the course of years, and which favoured one class of dealers while it pressed heavily on another, had rendered the impost so unjust as between the different classes of traders, that the tax had become morally untenable. What was the real cause of the opposition to this Bill? He could not help thinking there were reasons for that opposition which had not been stated, and he drew that inference very much not only from the speech of the noble Earl that evening, but also from a speech of a noble Friend of his whom he was sorry not to see in his place, the late Lord Lieutenant for Ireland (the Earl of Eglinton). In a recent speech that noble Earl stated that, even if it were true that a most flagitious bargain had been made in respect to the Galway contract with a certain party in Parliament, that would not have been so bad as the throwing away of a great source of revenue by the repeal of the paper duty. How was it possible to argue with men whose minds were so intensely prejudiced as that assertion indicated? Was it not true that for the last thirty years the repeal of the paper duty had been the subject of a scientific, rather than a popular, agitation? He believed that the opposition to the repeal of that duty arose in a great measure from a dislike on the part of the noble Earl and his followers to the cheap press. It had been said that the whole of the duty would go into the pockets of the editors and proprietors of the penny papers. He believed that such an opinion was directly contrary to the known principles of political economy, and that, although for a period the proprietors of the penny papers might receive some benefit, the public would ultimately reap the advantage, if not in a lowering of the price, in the superiority of the article supplied to them. They would have a better article and more of it for their money, and in one form or another would receive the full benefit of the repeal of the tax. He believed that when such taxes were repealed, although the benefit might in the first instance go to some particular class, sooner or later the public were the gainers; and both political economy and experience taught that their repeal gave a stimulus to trade and industry. With regard to the incidence of the paper duty upon cheap publications, he had recently been supplied with some interesting statistics by Mr. Robert Chambers, the head of a great publishing establishment in Scotland, whose firm had done so much for the last thirty years for the education of the people and the extension of cheap literature. That gentleman had informed him that of the whole expense connected with the popular journals, including literary talent and printing, the item for paper was by far the largest, and that the tax upon that article was 25 per cent. He further informed him that his paper maker had announced to him that in the month of October next Mr. Chambers would receive the entire and full benefit of the remission of duty in the price of paper. That showed, he thought, that the benefit arising from the repeal of the tax would not be retained by any one class, but would be distributed over the community at large. With regard to the form in which the Bill had come up to their Lordship's House, he did not know that there was any remark of the noble Earl which was open to very great exception. The form of the Bill was said to be unusual. So it was; but then the circumstances were unusual. Even the noble Earl himself must admit that the course taken by their Lordships last year was at least unusual, even although it might not be held to be unconstitutional. He fully admitted that the Government had last year considerable difficulty in making out a technical objection to the course taken by the noble Earl. No doubt many Bills of Supply had been rejected by the House of Lords. But the course pursued by the noble Earl and by their Lordships was not so much a technical violation of the privileges of the House of Commons as a substantial violation of the established usages between the two Houses of Parliament. The real objection to that course was, not that the Lords had rejected a Money Bill, but that they had rejected a Bill for the supply of the year which was connected with the financial proposals of the Government, and that that rejection took place entirely in reference to financial grounds. He believed that on every previous occasion when the House of Lords had rejected a Money Bill, it was in connection, not with questions of finance, but questions of general policy, which were incidental to the tax, and that in almost every instance it was distinctly stated by the Lords that the ground of their rejection of the Bill was their disapprobation of some general policy connected with it. He could not help thinking that if the offence to the House of Commons was what he had incated, the course pursued by the Commons, though unusual, was perfectly legitimate. He was glad that the noble Earl had thrown over the argument of the noble Duke (the Duke of Rutland) that this Bill was in the nature of a "tack"—it was beyond controversy that in no respect whatever it was so. The whole propositions were strictly and purely financial; there was no question of general policy not connected with finance included in the Bill, and the only question was whether the Government project, being brought in as a whole, might not fairly and legitimately be sent up to their Lordships in one Bill? With regard to the general question of making large sources of the taxation temporary instead of permanent, he confessed that, to a very great extent, he agreed with the noble Earl. He thought that that would be a very dangerous course; the interests of the country generally were such that, practically, a very large portion of the revenue must continue to be raised by permanent taxation. But it was quite possible that, in consequence of the steps taken by that House last year, the House of Commons might think it due to itself and to its own constitutional power over the finance of the country, that in future, as until a very few years ago, some one great annual source of revenue should he kept in their hands, so that they might be able to send up the financial proposal of Government coupled with the renewal of some annual tax. That was quite possible, and he did not see any objection to it in point of constitutional practice. It was a course which would naturally follow from the unusual course taken by their Lorships, and besides being strictly Constitutional it had the great argument of expediency to re- commend it. It would be a most dangerous practice if the Government, in making their financial proposals, had to risk a serious conflict in both Houses of Parliament. At present every Government had to consider the position of parties in the Commons when they proposed either to remit or to impose a tax; but surely it would be a serious derangement of constitutional practice, and would place the House of Lords for the future in a somewhat invidious position, if the Government had to consider, not merely the tax which would pass or the remission which should be proposed to the Commons, but the taxes and remission which were most likely to receive the separate and independent sanction of a majority of the House of Lords. If such a precedent were established, it would probably tell very seriously upon the action of Government. At present the Government were sometimes compelled to propose financial measures which were not particularly palatable among the great masses of the population; but if the House of Lords were to take advantage of popular feeling, as an attempt had been made in this case to set up Tea versus Paper, the decisions of the Government would be very seriously biassed. It could scarcely be considered a Conservative doctrine that a Government must always be swayed by the feeling uppermost among the great masses of the people. In his opinion the Government ought to have due regard to such feeling, but there were times when they ought to take higher ground. Before sitting down he could not help alluding to that part of the speech of the noble Earl in which he had attributed personal motives to the Chancellor of the Exchequer in respect to the form which had been adopted by the Government in sending up this Bill to their Lordships' House. Now, he could not help thinking that when personal motives were attributed to a Minister the imputation should be made in that House where the Minister was present and had the power to reply. But was it reasonable for the noble Earl to attribute to personal motives on the part of his right hon. Friend a course of conduct and policy which had been recommended by one of the noble Earl's own most distinguished colleagues, and which had received the assent of an almost unanimous House of Commons? He must add that if it were true that the just authority of the Lords were assailed, that House had a right to expect succour from the Conservative party in the House of Commons. Had any such succour been afforded. He happened personally to be present in a place which should be nameless, when a member of that Assembly—one of the Conservative party—proposed a Motion which would, if adopted, have saved the House of Lords from the assumed affront. But what was the conduct of the Conservative party? There was such a rush out of the House that he believed some of the Members were almost in danger of receiving personal damage. He believed only thirty Members of the Conservative party voted with the honest and independent Member who tried to save the House of Lords from the insult which was about to be offered to them. The inference, therefore, was that if the vast majority of the Conservatives—if that distinguished Member of the noble Earl's Government (Mr. Disraeli)—refused to interfere to save their Lordships, it ought not to be attributed to any member of the present Government that he had personal motives in sending the Bill up in its present form. He had only one more observation to make before sitting down. The noble Earl closed his speech by a few solemn words of warning to the Government, that they were responsible, and not he, for the result of the course they were pursuing. On the part of the Government he was ready to accept that responsibility. He was happy to say that the financial operations of that year closed a very long series of operations which, begun in the time of Mr. Huskisson, were carried on by Sir Robert Peel, and had now been carried to completion by his right hon. Friend the Chancellor of the Exchequer. Surely they had no reason to be ashamed of the results at which they had at length arrived. Last year they had raised, and they were to raise again this year, no less a sum than £69,000,000, and that with a facility greater than that with which any other nation in the world could raise a tenth part of that enormous sum. That revenue was raised without having recourse to one single tax which was protective, or in other words, without one single tax which was unjust to the consumer, in order to serve the interest of any particular producer; they raised that revenue without one single tax which bore upon particular trades to the injury and disadvantage of others. And last, though not least, they raised that enormous sum with an entire exemption of all the necessaries, and not a few of the luxuries, of life. That was surely a triumphant result; and in spite of the solemn adjurations of the noble Earl, he must be allowed to tell him that all the ability and eloquence he had displayed in attacking the measures of the Government were only another instance of the eloquence and ability which could be displayed in attacking the most salutary reforms, and in defending a bad, but he rejoiced to think, in that case at least, a losing cause.

EARL GREY

My Lords, though I can hardly doubt that the noble Duke (the Duke of Rutland) who has moved an Amendment to the Motion before the House will follow the advice so wisely given him by the noble Earl opposite, and will not put your Lordships to the trouble of a division, I shall take the liberty of making some observations upon the financial policy of the Government as embodied in the Bill now under discussion. But, in the first place, allow me to congratulate your Lordships upon the conclusive testimony which this Bill bears to the propriety and wisdom of the course which you adopted last year in the rejection of the Bill for the repeal of the paper duties. We all remember how the vote of this House was condemned, not only out of doors, but within the walls of Parliament itself. It was argued that for the House of Lords to throw out a Bill for the repeal of a tax which the House of Commons had passed was in effect to impose a tax upon our sole authority. It was argued that our passing a Bill sent up to us by the Commons for reducing or abolishing a tax was a matter of form, and that we were not entitled to exercise a discretion on the subject. So far was this carried out of doors that from that time to this a paper of considerable circulation has headed its daily impression with a statement of the proportion of taxation which is daily levied upon the sole authority of the House of Lords. The present Bill puts an end to that kind of argument, because the House of Commons have admitted that the paper duties are legally and properly enforced—nay, more, that they ought not to be repealed until October next. I think it is of great importance that this principle has been established; because if it were once admitted that our passing a Bill for repealing a tax was a matter of form, and that the House of Commons was the only judge of what burdens should be imposed upon the people, the same doctrine must be applied not only to Bills for taking off taxes, but also to Bills for taking off permanent appropriations. Yet, it has always hitherto been held to be a doctrine of the Constitution that there are certain great expenses which ought not to be left to the mercy or caprice of a popular assembly; that the Civil List, which provides for the dignity of the Crown, the fund necessary for defraying the salaries of the Judges and maintaining their independence, and the sums required to pay the public creditors, should be settled by permanent appropriations; and, therefore, a great distinction has heretofore been drawn, not only by writers on the Constitution, but also by Parliament, and, indeed, all parties in the country, between those permanent taxes which it requires the consent of the whole Legislature to repeal and the sums which are annually voted by the House of Commons. If the doctrine put forward last year had been acquiesced in, this great principle of our Constitution would have been at an end; but, fortunately, it is no longer in danger, because it is now freely admitted that this House is entitled to exercise its judgment upon all Bills that are brought before it, whether they refer to matters of taxation, appropriation, or anything else. At the same time, I quite concur with the noble Earl opposite, that the right is one which ought to be exercised with discretion and judgment. No man could be more convinced than myself that, except in extreme cases, we ought not to interfere with the financial arrangements which have been made by the Commons; and, therefore, though I cannot say that I see in the form in which the present Bill comes before us that desire to conciliate to which reference has been made, but, on the contrary, discover in it traces of a mortified feeling, a sense of being in the wrong, and yet of inability to get out of it, a desire at all hazards to annoy the other party—I concur with the noble Duke who spoke last that the House of Commons had an undoubted right to pass the Bill in its present shape. I am not sure, indeed, that in those extreme cases in which alone our interference is desirable, their passing the financial arrangements of the year in this form would at all interfere with the exercise of our discretion; because if they proposed any arrangement so clearly wrong that public opinion—which is the ultimate arbiter of all these questions between the Houses—would not support them, we might send it back for reconsideration, with the perfect certainty that they must bow to that supreme tribunal. I even see some incidental advantages in this form of Bill, and I am quite sure that if the Government had brought forward the financial proposals of last year in the same shape there never would have been any occasion for our exercising our power; because all those who remember what took place in the House of Commons with respect to the financial arrangements for the year will agree with me that if the whole of those arrangements had been included in one Bill—the addition to the income tax, the reduction of the duty upon foreign wines, and the repeal of the paper duty—the final majority in the Commons in favour of the repeal of the paper duty, which was only nine, would have been converted into a minority. The noble Duke who spoke last says the noble Earl opposite (the Earl of Derby) was entirely incorrect in his statement as to the calculations upon which your Lordships were persuaded to reject the Bill for the repeal of the paper duties last year, and he tells us that if it had not been for the bad harvest, which reduced the revenue, the original Estimates of the Government would have been borne out by facts. Let us consider for a moment how far that is true. I rest the decision of this House, in the matter of the paper duties last year, upon an entirely different ground. I say it was justifiable quite irrespective of the harvest and the ultimate result to the revenue. The information at that time before us clearly proved, upon the calculations of the Government themselves, that if the paper duties were repealed there would not be the means of balancing the account at the end of the year. We rejected the Bill on the 21st of May. Less than two months after—on the 16th of July—the Chancellor of the Exchequer brought a supplemental Budget before the House of Commons. In that Budget he was obliged to inform the House that he wanted £3,300,000 more than was provided in the original Estimates. He did not say that this necessity arose from any deficiency in the revenue; he said nothing about the harvest—quite the contrary; he told the House that up to the end of June the revenue was in every respect satisfactory, coming up to or rather exceeding the ex- pectations of the Government. The sum of £3,300,000 was wanted for the expenses of the China war. It is quite true, as the noble Duke has stated, that the Chancellor of the Exchequer had made some inadequate provision for the expenses of that war in February; but upon the authority of Parliamentary Returns I deny that he had made as large a provision as information in the possession of the Government at the time warranted. A Return was moved for at the end of last Session by Sir John Pakington of the dates of the orders for sending out the whole force to China. Those orders, as far as the troops are concerned, range from October until the end of 1859; and, as far as the stores are concerned, they begin in September and goon until March, 1860, the great bulk of them being dated before the close of 1859. Therefore, the chief expenses of the expedition had been at that time incurred. Moreover, there is a despatch from Lord Elgin, dated the 11th of July, stating that two days before the whole force to be employed in the war had been collected—I think at Shanghai—and would be ready for action early in the year. Tour Lordships may remember that before we entered into a discussion upon the paper duties, I asked my noble Friend the President of the Council whether the India troops serving in China would be allowed increased pay and allowances, and, if so, whether the Government had made any provision for this additional cost? My noble Friend answered that those troops would be allowed such increased pay and allowances; but that the Government had not then made any provision for this extra cost. In the month of February of last year, when the Budget was laid before the House of Commons, a sum of £500,000 was asked for to defray the expenses of the Chinese war, and Her Majesty's Government had the means of knowing, if they chose to avail themselves of them, that that amount was ludicrously inadequate for the purpose which it was intended to meet. The point was still more clear when, we came to discuss the question of the paper duty in this House, and to assent to the repeal of that tax under such circumstances would have been to deprive the country of a sum absolutely necessary for the expenses which we were about to incur. It is, however, contended—and no doubt it is true—that the calculations embodied in the Budget of last year were seriously affected by the badness of the harvest; but it should be borne in mind that the prospects of that harvest were from an early period of the year extremely doubtful; that the sowing-time was most unfavourable, and that throughout the year the growing crops never looked well. It is also true that if a larger amount was lost to the Government owing to the state of the harvest, they obtained as a set-off £800,000 more in the shape of Customs than the Chancellor of the Exchequer had anticipated. I may add that when the right hon. Gentleman introduced his supplementary Budget on the 16th of July he not only availed himself of the entire sum which had been saved to him by the action of this House, but found himself compelled to raise by means of an increased duty on spirits an additional sum of £1,000,000 sterling. Despite, however, of this additional million, and the maintenance of the paper duty, the Government were obliged to admit a deficiency on the expenditure of last year of £2,500,000. It appears, then, that our financial situation at the close of last year was £3,500,000 worse than it was supposed to be at the beginning of the year. Now, it appears to me that the right and wise course, under these circumstances, to adopt would have been to take, in framing the financial scheme for the present year, the most unfavourable view of the revenue as well as of the expenditure, and thus to make sure that we should have, even in the worst state of things, a surplus in the coming year. It has hitherto been the wise practice of Governments and of Parliament so to arrange their financial schemes that if, owing to unfavourable circumstances in one year, there should be a deficiency, there might be in a subsequent year a balance on the other side, so that in the course of a series of years the debt of the country might rather be decreased than augmented. That, it appears to me, was the only honest course to pursue. But I would ask you whether, on the showing of Her Majesty's Government themselves, that is the character of the present Budget? For my own part, I am of the contrary opinion. I believe it to be a Budget which is eminently speculative. If, indeed, your expenditure should happen to be cut down as much as you anticipate; should your harvest be a good one; and none of those threatening circumstances which we now observe affect the revenue, then undoubtedly you may find yourselves in the possession of a surplus, and the cal- culations of the Chancellor of the Exchequer prove to be correct. Reflect, however, for a moment to the contingencies to which we are exposed. What is likely to be the result of a short supply of cotton, or a great augmentation in its price? If I am not misinformed its price will be increased, even though the production of the raw material should not be interfered with by that lamentable civil war, the occurrence of which on the other side of the Atlantic we all so much deplore. I am told that in Liverpool the rate of freight of cotton has been raised from ¾d. to 2½d. per lb.; and, if there be this augmentation in the cost of the raw material, is it not certain that you will have a slack trade during a portion of the year, and accompanying a slack trade, as a necessary consequence, a deficient revenue? Then, as to the prospects of the harvest, we know that the autumn was in many parts of the country very unfavourable to the sowing of the corn crops, which are not, I am afraid, very promising in many districts throughout the country. These are facts, my Lords, which the Chancellor of the Exchequer seems not to have taken into account. "We have, I think, an augmentation already of the interest of our unfunded debt. We have, I am told, a very considerable sum to pay in connection with the Stade Dues. Great doubt prevails with respect to the receipt of the indemnity from China, on which so much stress has been laid. Indeed, I am afraid that even if we should receive that indemnity we shall find that we have not made due calculations as to the cost at which it is to be obtained, because we know that it is contingent on our keeping up a force at certain ports. Then comes a most serious question, with respect to which I find no allowance made in the estimate of the Chancellor of the Exchequer—I allude to the probable cost of the war which is now raging in New Zealand. I am afraid that that expenditure, like the expense of the Chinese war, is kept studiously out of sight. These are considerations which, I confess, prevent me from placing confidence in the financial policy of the Government. Looking back at it for several years, I cannot help saying that it is one which appears to rest on no principle deliberately considered and steadily adhered to. Recollecting the speeches of the Chancellor of the Exchequer for some years past, I am struck with the contradictory principles they exhibit within a brief space of time; and which principles were thrown overboard as soon as they had served the purpose. A few years ago the present Chancellor of the Exchequer invented, as a novel principle, the plan of raising money by Exchequer bonds, stating that they constituted no loan, but merely an advance, and that, the faith of Parliament being pledged, there was not the slightest doubt that at the proper time the bonds would be paid off. I doubted that that would be the case, and predicted that the bonds would turn out a permanent addition to the debt. "Well, experience has proved that I was correct. In the last year and in the present year the Chancellor of the Exchequer turns round and says that the bonds could be renewed, and that there is not the slightest occasion to pay them off until convenient. Well, if that were so—if it was intended that these bonds should be renewed from time to time—why depart from the old system of Exchequer bills? Again, a few years ago, we were told by the right hon. Gentleman that it was inexpedient that our taxation should rest to too great an extent on annual taxation. That doctrine was also altogether thrown aside last year, before the question of privilege arose, and a very large and dangerous amount of revenue was made to depend on annual taxation. The same high authority, the Chancellor of the Exchequer, denounced the income tax in most unmeasured terms, declaring that it was a tax that ought to be reserved for war, and war only, and urged the claims of the poor for a reduction of the duties on tea and sugar. This want of steadiness and consistency in the views taken by the Government, and especially by a Member of the Government responsible for the finances of the country, leads to very serious evils—to a changing backwards and forwards of taxation which greatly adds to its burden. The inequality and injustice of the income tax are the more felt when the tax is imposed for short periods; but when the income tax varies backwards and forwards, being now high and now low, it presses with extreme severity on certain classes of income. What has been the consequence of the want of steadiness in the views of the Chancellor of the Exchequer? In 1855, with his entire and cordial support, the income tax was reduced to 5d. in the pound. It has since been 10d., and is now to be 9d., and in one half year it was practically 13d. in the pound. Parliament and the country have a right to expect from the Government greater stability in the measures they submit to Parliament, and in their policy with respect to the taxation of the country. None of your Lordships can have forgotten that in the course of the year 1854, when the Russian war was breaking out, the Chancellor of the Exchequer made most eloquent speeches enforcing the duty of providing for the expenses of that great European war, not by loans, but by taxation. What, however, did the Chancellor of the Exchequer do last year? The expenses of the comparatively small Chinese war were taken in great measure from the balances of the Exchequer and other sources, which proceeding was equivalent to a loan; and the Chancellor of the Exchequer himself submitted to Parliament a proposition for embarking in a great scheme of national defence on borrowed money. Shakspeare says that "borrowing dulls the edge of husbandry," and that is true in respect to States as well as to private individuals; and it is important, when it is proposed to embark in a system of fortifications which will only lead to an absolute waste of enormous sums, that the Chancellor of the Exchequer should call on the House of Commons to provide the money by taxation, and not by borrowing. I find that it is the opinion of officers both of the army and the navy that the expenditure will be fruitless, that the fortifications when completed will be useless owing to the improvements in gunnery; and I believe that this extravagance would not have been sanctioned by the Commons if they had not been enabled to shift a great portion of the burden from their own shoulders to the shoulders of those who are to come after them. There is another important matter, the unanimity of the Government. For the last two or three years it has been said in common conversation that there are portions of the measures proposed by Her Majesty's Government to which certain Members of the Government are entirely opposed. It was rumoured last year that these national defences were opposed by the Chancellor of the Exchequer and other Members of the Government. On the other hand, a rumour was equally current that there were other Members of the Government who rejoiced exceedingly over the decision to which this House came last year on the paper duty. I have no means of knowing any of the secrets of the Cabinet. I hope such reports were not true, but they were cur- rent in men's mouths, and they derived much confirmation from the language held by various members of the Government. It is impossible not to be struck by the discrepancy in the tone of various Members of the Government, when the necessity of this expenditure is in question. It reminds one of a humorous passage in Sir Walter Scott's novel of The Antiquary, in which Sir Walter talks of the two partners of the bank. When he was in good circumstances the civil partner was brought to him, who was everything that was smooth, and who asked him only to say what he wanted and the thing should be done. When, on the contrary, difficulties accumulated, the smooth speaker retired, and the other partner came forward, who held very different language, and told him he should be outlawed unless he produced an impossible sum by a given day. The Government resemble, in fact, one of those Dutch clocks in which one figure or another comes out according to the state of the weather. Now, we have one Member of the Government coming forward to recommend a reduction of taxes and dilate on the enormity of the expenditure; and then, when it is argued that a good state of defence ought to be maintained, we have language of a totally different character from other Members of the Government. I should like to see more steadiness in the conduct of the Government, and less want of harmony in their measures. I wish to see a judicious economy and a thrifty provision for our expenditure; but I see a reduction of taxation made that would only be prudent and justifiable in the event of a determination on the part of the Government to make a great reduction of the expenditure; while at the same moment they are proposing measures which tend to keep up this large expenditure. I should like to see a more judicious economy enforced. When I see what is going on abroad and the immense preparation that is going on in various ports of France, I do not think that any reduction can safely be made in our means of defence. But the Government have not taken a statesmanlike view in regard to what ought to be done. Two years the Speech from the Throne recommended an increased grant of money for the navy. I then observed that it was most impolitic, in the then state of naval science, to go on increasing the large ships of war. I was not listened to. The present Government were not then in office, and they are not, therefore, responsible for what was then done. The body really responsible is the House of Commons, which takes up these matters so lightly, and urges the Government into measures which, have not sufficiently been considered. What has been the result of the expenditure of 1859? The result is that before these large ships are completed there is not an officer who does not agree that they have become perfectly useless for the purposes for which they were designed. The other day I went on board one of our splendid line-of-battle ships—the Duke of Wellington, at Portsmouth. I was told what an admirable ship she is; how well she sails and steams, and that if she had new engines she would be the finest ship of the class. But how did the officer who told me this conclude? He said, "It makes me melancholy to think that the day for these three-deckers is gone by." What with iron-plated ships, gunboats, large shells, and molten iron, it is impossible to risk these huge three-deckers in action. I believe it is under consideration whether these great ships cannot be cut down with advantage and plated with iron. The Government are doing precisely the same thing with respect to the fortifications that they have done with these ships. The whole art of gunnery and the science of fortification are in a state of revolution. They are spending enormous sums of money, the repayment of which is to be spread over thirty years, and, long before these fortifications are finished, they will be pronounced useless. The public have a right to complain, and to ask the Government on the one hand to keep down the expenditure as low as they can, and that, on the other hand, some settled views shall be deliberately adopted and steadily adhered to by which the expenditure thus increased shall be provided.

LORD MONTEAGLE

said, he would not long detain their Lordships, but as he was responsible for the Motion made last year to resist the repeal of the paper duty, and as his arguments on that occasion had been impugned in the present debate, he desired to vindicate the accuracy of the calculations he had made on the probable amount of the deficiency which he apprehended would be found to exist in the Estimates for the late year. He knew that this calculation had been attacked "elsewhere," and a similar charge had been made, and with equal error against his noble Friend Lord Derby. The only error they had either of them committed was that of having adopted, as the basis of their reasoning, the hypothesis of Mr. Gladstone's respecting the expiration of the property and war duties. The Chancellor of the Exchequer had admitted that there would be an enormous deficiency if things remained exactly as they were last year and the expiring taxes had not been renewed. This he called, as would be remembered, his great chasm. He (Lord Monteagle) had based his calculations on the same ground; adopting for the sake of argument, Mr. Gladstone's statement of facts, and he had further assumed that good faith would be kept with the public, and that the income tax, and the tea and sugar war duties would be reduced. It was, of course, very easy to say that a calculation was erroneous when the person who made it had not the power of giving an answer, and when the objector claimed and exercised a power of comparing two calculations made upon different bases, as if they rested on the same principles. The fact was that the difference between himself and the right hon. Gentleman arose from the difference of the meaning of the terms which they employed; the right hon. Gentleman used words in one sense at one time, and in a different sense at another, surplus, deficiency, little chasm and great chasm with him had their peculiar meanings; and the consequence was that there was confusion and alternate identity and difference which did not in reality exist. At any rate those who live in glass-houses should not throw stones; and if ever anybody did live in a glass-house it was the right hon. the Chancellor of the Exchequer himself; for seldom was there a case presenting a greater contrast between the predictions of the financier and the results of his measures, than was to be found in relation to the financial propositions of the last few years. According to the Chancellor of the Exchequer's last balance sheet on the 31st of March last the expenditure was no less than £2,558,000 in excess of the income; and he should like to know by what ingenuity it could be shown that this sum could be reconciled with the estimated surplus of £464,000 promised to Parliament, on the 10th February, 1860, or the more modest admission of a deficiency of £1,286,000 acknowledged on the 15th July, 1860. Was there ever witnessed "a greater crash and ruin of unfulfilled prophecies?" How could the deficiency of £2,558,000 have been provided for out of the small balance of £464,000 surplus that was calculated on for that year? But it was provided for in part out of very different sources. Financially, the Government had been living by anticipating the Revenue. The income tax, collected in the ordinary manner, would have produced £8,900,000, but by the mode of collection adopted by the Chancellor of the Exchequer it was made to produce £10,900,000; the malt duty, which in the ordinary course of receipt would have produced £5,700,000, actually realized £6,274,000. This could not be considered as a natural increase of revenue, it was a mere discount of Government bills before they were due. The hop duty had proved a disappointment; but by anticipating the two former duties the Chancellor of the Exchequer had added £3,000,000 to the receipts, though not to the Revenue of the year. Thus last year the Government were living, not on increased income, but by anticipated receipts; they were now repeating the same ingenious process, and on a large scale. But it could not be continued, and, unless the expenditure should be largely reduced, or new sources of income discovered, the deficiency must continue, or, perhaps, increase. He feared, therefore, that the financial statement of this year would prove fallacious like the last. This year, as well as the last year, there were financial charges kept back. Last year, although the Budget was not stated until after the Defence Commissioners had completed and even presented their Report, and the Government, therefore, well knew the recommendations it contained, they carefully kept out of sight that a large sum of money would be required for fortifications. They maintained an obstinate silence, refusing all information, and withheld a Report which, though dated 7th February, 1860, was not delivered to Parliament till the 13th June. They then obtained a loan of £2,000,000 to be raised on terminable annuities for the expenditure of the last year. The total estimate was no less than £9,000,000; yet the Government had not informed Parliament how much would be required for these defences in the course of the present year. Nor had they told them how the means were to be provided for to defray the increased interest on the unfunded debt. What would be the full and ultimate demand on the public purse was still left a matter o mystery and concealment Nor was this all; further services were now named, though not included in the Budget; there was a proposal to settle the question of the Stade Dues by money compensation; but how much was to be paid, and when had not been as yet officially stated. The inconvenience of such a mode of dealing with the finances piecemeal had been shown last year when the Chancellor of the Exchequer was compelled to go down to the House and propose a supplementary Budget. How will they reconcile this course with that which they now propose as for their new but not very constitutional decision? The course they propose to adopt was not more rational than extraordinary. It was avowed that the combination of all the financial proposals in one Bill was intended to restrain the free action of the House of Lords, and to this course as a friend to the Constitution of England he (Lord Monteagle) was strongly opposed. He did not think that House in consequence of its successful vote of the last Session was fairly open to the charge of disregarding the rights of the Commons. The new mode of coercion recommended by the Government had been censured by one of the most faithful friends of popular rights. Mr. Fox, in 1787, in allusion to a proceeding similar to that now proposed by the present Government warned the House of Commons against a step that he described as being "Not only a bad precedent for the Commons, but one which would as absolutely preclude the House of Lords from the rights of free debate, as if they followed the example of Oliver Cromwell and silenced that necessary and constitutional branch of the Legislature." [Hansard's Parliamentary History, vol. 28, p. 508.] On a subsequent day Mr. Fox repeated his argument pointing out "the difficulty in which the House of Lords would be placed by the blending together of two objects in one Bill," concluding by the advice that "instead of giving the Lords reason to complain of the Commons for having narrowed their grounds both of debate and voting, they ought studiously to avoid giving cause for such complaint." [March 21, 1787. Hansard's Parliamentary History, vol. 26, p. 757.] He (Lord Monteagle) did not ask their Lordships to reject the Bill for a repeal of the paper duties now sent to them by the Commons a second time, but he called upon them to act with caution, lest in acquiescing in the objectionable union of two differing and contradictory financial enactments they might be held to adopt a principle capable of unlimited application, and practically restricting the rights of that House, and its legislative freedom of action. In the present instance could the House of Lords believe that the blending together of these two Sills was at all necessary to prevent any interference with the rights of the Commons? The deliberate decisions of the other House were always received with respect by their Lordships, and the decision of the Lords as pronounced last Session by a majority of eighty-nine votes was no assertion of usurped privileges, but the exercise of an unquestionable right. This had now ceased to be a matter of controversy. Yet that decision had last Session led to an almost unexampled amount of vituperation coming from certain quarters not, perhaps, wholly disinterested. That vituperation had been overcome mainly by the good sense and feeling of the people at largo. Their Lordships would recollect the opening of an office in Parliament Street to organize a resistance to what was most untruly designated as the aggression of the Lords. It proved a miserable failure. The proposition to substitute annual for permanent taxation was another mode which was recommended for coercing the House of Lords; but he begged again to warn the Government of the serious nature of the course they seemed but too ready to untie in adopting. Let them consider the consequences that would flow from converting our permanent taxation into taxes annually voted. This would be fatal to Mr. Pitt's greatest measure—the establishment of the Consolidated Fund—and would disturb the security of all charges placed upon that fund from the Civil List of the Sovereign to the deposit of the peasant in savings banks. To deprive the fund holders of the security they at present possessed was a proceeding of too much danger to be compensated even by the magnificent idea countenanced by high authorities of coercing the House of Lords. He feared that the abandonment of the paper duty had been resolved on, not for any public purpose but to afford some consolation to certain parties for the check they had received last year from the wise and he would add the popular proceeding of that House in the last Session. Another important question deserved a more serious consideration. A contingency which now seemed imminent, had in 1842 been foreseen and announced by the sagacity of Sir Robert Peel. It seemed to be approaching rapidly. In considering the financial state of England you are told by official authority that you are bound to take into account the financial position of India. Mr. Laing, the financial representative of the Government of India, had recently included in his Budget an announcement of incalculable importance. His words were as follows:— I have only allowed for a small decrease in the Home Charges proportionate to what we know of the actual numbers in Report—namely, from £2,772,610 in 1860–1, to £2,500,000 in 1861–2; but I hope and believe the reduction will be much larger. It is perfectly manifest that the officers and men belonging to Indian regiments in depôt are as much a reserve for England as for India. In case of any sudden and serious danger threatening England there is no doubt that these troops would be available there, and it is not fair that India should pay the full cost of the reserve establishments in India under such circumstances. The day is past when England can consider India as a sort of milch-cow on which to draw for a little here and a little there in order to ease an English Estimate or resuscitate an English Budget. Strict and impartial justice must be the rule in all money matters between England and India if England wishes to get a return for her capital, which will soon amount to £100,000,000 invested in Indian securities and railways, and wishes to see India the best source of supply for her raw material and the best market in the world for her staple manufactures. I know that arrangements are pending at home by which we hope to commute all charges for depot or, otherwise, for a fixed sum for every soldier in India."—Bombay Times, May 11. This is frank, and these statements held out very clearly a prospect that at least some portion of the military expenditure in India must hereafter be provided for in the English Estimates. From the observations he had already felt it his duty to make he (Lord Monteagle) believed that there would be a difficulty in meeting expenditure so increased, and in such case next year we might be driven to impose new taxes. We shall then regret the unwise step we take in repealing the paper duties. They were now about to repeal an indirect tax on paper, and to diminish a direct tax—the penny in the pound imposed on property. But this apparent equality in the apportionment of relief was but delusive, the country must remember that the penny of the income tax might, and probably would, be reimposed hereafter to meet any deficiency; while, if they now gave up the paper duties, it was perfectly impossible ever to revive them. He must not, however, be misunderstood. He was no admirer of the paper duties, or indeed of any other tax. All taxes were necessary evils. He would be glad to repeal a tax if it could be done without risk; but it behoved Parliament to select well the taxes chosen for repeal, and above all things to be cautious in dealing with a source of revenue which, once given up, could never be restored. The taxes which had the first claim to be remitted or repealed were, in his judgment, those imposed to provide for the exigencies of war. Introduced to meet the pressure of an emergency, Parliament was logically and even morally bound to reduce or abolish them after that emergency had ceased. To this the faith of Parliament was pledged. He was surprised to hear it asserted that the increased tea and sugar duties were not to be considered as war taxes. Why, that was the very appellation which bad been applied to those taxes by the Ministers themselves. The noble Lord concluded by disclaiming any asperity of feeling towards the Government in the remarks which he had made. He had risen before the noble Lord to his left (the Lord President) to give him the advantage of a reply, and he did not apprehend in his case, as unfortunately had been shown in the case of his colleague the noble Duke (the Duke of Argyll) who had preceded him, that Doris amara suam intermisceat undam.

THE DUKE OF RUTLAND

said, that as he had gained his object by eliciting an expression of the opinion of the House, he would accede to the suggestion of his noble Friend (the Earl of Derby) and would not press his Amendment.

EARL GRANVILLE

said, that since the noble Duke (the Duke of Rutland) had acceded to the appeal made from both sides of the House and had withdrawn his Amendment, he would not trespass on their Lordships' time by offering any lengthened reply to the observations made in the course of the debate. His embarrassment in rising to address their Lordships on a question of such vast importance was increased by finding himself so liable to offend the critical ears of his noble Friend opposite (the Earl of Derby). His noble Friend had objected to his peculiar phraseology in pronouncing the word "wropped," which he presumed the noble Earl pronounced "wrapped." This, however, was a question of personal pronunciation, and he must assert the right of every Englishman to pronounce certain words in the way which pleased him best; and before he could bow to the noble Earl's cor- rection he must know whether it was wrong to pronounce the name of the capital of the central county in England "Derby" instead of "Darby." He must say he felt much gratified with the course the debate had taken. It was most satisfactory to him to know that, after that very short discussion, the Bill would receive the assent of their Lordships' House without further opposition. They had now heard all that could be said against the present Budget. ["No!"] He had a great opinion of the mercy of the noble Lords who had spoken against the measure, but he must presume that they had urged all the objections which they could find against it. The points upon which the noble Duke chiefly relied in opposing the proposals of the Government were the absence of any surplus, the superior claims of the tea and sugar duties over the paper duties for repeal, and the mode in which the Bill had been introduced into their Lordships' House. He had already stated the reason why the Government were entitled to assume that their estimated surplus was correct. The noble Earl had laid down a rule with which he could not agree. It was incumbent on the Chancellor of the Chancellor of the Exchequer to give a straightforward account of his anticipation as to the revenue, founded on the calculations laid before him by the different Departments. The noble Earl said it was his duty to place his estimate of the expenditure at the highest possible point, and to place the income at the lowest amount which he expected to receive. The noble Earl employed the word "honest" repeatedly in his speech; yet the course he suggested would not be, he would not say honest, but either expedient or wise. The Minister was bound to explain distinctly to Parliament the exact financial position of the country, and if he anticipated a large surplus it was not competent for him, especially in times when Governments were not omnipotent, to represent that surplus at a fancifully reduced amount, instead of proposing to apply it to the remission of taxes which, in his deliberate judgment, ought to be, and safely could be, remitted. By following the noble Earl's recommendation he might gain his object the first year; but, when the House of Commons and the country came to know that the Minister was in the habit of extracting from the pockets of the people more taxation than was required to defray the pub- lic expenditure, there would be an immediate reaction, and the proceeding would be defeated. He would not enlarge on the inconsistency of denying the surplus and yet advocating a reduction of the tea duty, involving a greater sacrifice of revenue than that proposed by the Government. As to the tea duty being a war tax, its present rate was imposed after the war had been entirely closed. The present Chancellor of the Exchequer strongly objected to that measure at the time, and in a manner, as he thought, more violent than the occasion required, even if he had been right in his opinion. But only three months afterwards, when the expenditure—although at a period of peace—came to bear more of the character of a war expenditure, his right hon. Friend came forward and cordially approved the course taken by the then Chancellor of the Exchequer. With respect to the form in which the present Bill was introduced, he owned that the debate entirely satisfied him. The noble Duke opposite (the Duke of Rutland) was the only person who thought the measure offensive to their Lordships and unconstitutional. Most of the other speakers had admitted that it was quite constitutional, and perfectly within the powers of the other House. A noble Earl near him (Earl Grey) had gone even further, for he said the House of Commons were justified in the course they had taken. The noble Lord the Comptroller of the Exchequer (Lord Monteagle) had said that to frame the Bill in its present shape was wholly unnecessary. It was all very well to state that, but, if last year, before the rejection of the repeal of the paper duty, he had suggested in the Cabinet that the second reading of the Bill would be thrown out by their Lordships, the idea would have been treated as incredible. The noble Baron had directed his remarks principally against the Chancellor of the Exchequer; but, as the right hon. Gentleman was not there to answer them, he thought it would have been better and more dignified if some of those remarks had been avoided. A great part of the noble Baron's argument was levelled, not against that Bill, but against the proceedings of the Chancellor of the Exchequer last year, and even against the propositions of the present Chancellor of the Exchequer when he was previously in office. Noble Lords opposite seemed exceedingly anxious to defend themselves. The noble Baron said they discussed the repeal of the paper duty in August last with the knowledge of a bad harvest. A simple reference to Hansard would show that it was in May that they debated and rejected it. Another noble Earl (Earl Grey) said they had a knowledge of the bad harvest in May.

EARL GREY

explained that he had said there was then a suspicion as to the harvest, but that the rejection of the Bill was not justified on that ground, but on the fact that in a subsequent statement the Chancellor of the Exchequer said there was a necessity for additional taxation.

EARL GRANVILLE

It was certainly stated that there was a great deal of doubt as to the harvest. The noble Earl went further; he said that in July the Chancellor of the Exchequer did not admit that the chances of the harvest were bad, but that up to that moment the revenue was very good. The noble Earl complained that troops and stores were ordered out to China in the autumn. That was perfectly true, and it was for the purpose of sending them that increased Estimates were taken, an additional sum of £500,000 being asked for in the military and naval departments. The whole depended on when that war broke out and how long it lasted. The noble Baron, who was formerly Chancellor of the Exchequer (Lord Monteagle), laughed at the idea of the weather being regarded as an element in the deficiency. He must say he was not a little surprised at this. That very autumn on malt and hops alone there was a deficiency of £1,000,000, attributable, of course, to the weather; and something like another £900,000 on spirits, from the state of the barley crop. A good deal of irrelevant matter had been introduced into the debate to which he would not refer. He should not enter into the financial statement of Mr. Gladstone, and it would be even more out of place to go into the question mooted by the noble Earl (Earl Grey) with regard to the Government having borrowed money last year for fortifications. Again, with regard to the construction of a certain class of ships now building, to which the noble Earl had objected, he thought that a very fair subject for debate, but certainly not upon the present occasion. He did not think it necessary to go into the financial statement of Mr. Laing, an extract from which had been read by the noble Baron, whether directly bearing on this country or on India; but this he might say, that the in- ference which the noble Baron drew from it was altogether unfounded. The noble (Earl Grey) had spoken of rumours of disunion in the Cabinet. Considering the noble Earl's connections and intimate relations with them all, he could not help observing that if such a thing as disunion existed and was known to the noble Earl, it could have become known to him only by the confidence of private communication, and then his high sense of honour would have made it impossible for him to introduce the matter as an element of discussion; but if it was unknown to him, and he had based his observations merely from flying rumours, there was no justification for the noble Earl having made it an argument in debate. But he did not think that his noble Friend was quite the person to talk about disunion in Cabinets. With regard to what took place in Lord John Russell's Cabinet, his (Earl Granville's) lips were of course sealed; but, earlier than that, when he was very young in political life, he remembered hearing a story which was current at the clubs at the time of Lord Melbourne's Government. His noble Friend the noble Earl objected to all the measures of his colleagues; at length Lord Melbourne requested him to sit down and write his objections. Rumour said that the noble Earl declined to do so; whereon Lord Melbourne, rubbing his hands, said, "When you have no one to object to but yourself you cannot get on." He congratulated their Lordships on the general tone of the debate, and still more on the practical termination of it. Prophecies were not safe things to indulge in; but this measure had been, well considered. It was right in principle, and likely to lead to the same happy results that all similar measures for the removal of restrictions on commerce had succeeded in accomplishing.

Motion agreed to; Bill read 2^a accordingly; and Committed to a Committee of the Whole House on Monday next.

House adjourned at Ten o'clock, to Monday next, Eleven o'clock.