necessary for the military and naval actual expenditure was £70,837,000, beservice of the year. Nor would he dis- ing a miscalculation of £962,000. It was cuss the question how the finances were plain from these figures, that in those dispensed, so to speak, although he was two years at least the Chancellor of the very far from saying that there was not Exchequer underrated the amount of great room for criticism on that point. his expenditure and overrated the amount He believed that there was a great and of his income; and it was worth attenextraordinary waste in many of the public tion that the points to which these misdepartments of this country. He would, calculations were traceable were, as had however, not now go into those questions; been predicted, the Chinese indemnity on what he wished to do was to draw atten- the one hand, and the collection of the Extion to the treatment of our financial re- cise on the other. Now, he could undersources by the Government. Now, the first stand a Chancellor of the Exchequer, when and indispensable condition of sound finance he had a surplus, being animated by a love was accuracy of calculation on the part of of peace, and a detestation of war, carrythe financier, and moral certainty on the ing his aversion to war to the reduction of part of those to whom the financial ar- military and naval armaments; but he could rangements applied. Accuracy of calcu- not understand a Chancellor of the Exchelation begot confidence; confidence begot quer closing his eyes to the risks and nepublic credit, and public credit begot cessities of war, and permitting that love of everything that was great and honour- peace to cover his miscalculations as reable in a nation. Now, could it be garded war. When, in 1854, this country said that the financial operations of the sent out 25,000 troops to defend the Government were so characterized? With Turkish empire, he believed that the Gothe highest possible opinion of the ability vernment merely made provision for sendof the right hon. Gentleman the Chan- ing them out to Malta, on the supposicellor of the Exchequer, it was impossible tion that they would be brought back to assign to his calculations a character of again. That was only one of the long accuracy. He generally commenced the series of miscalculations which, he feared, year with an eloquent speech and a plau- had marked the finance of his right hon. sible surplus; and he generally concluded Friend; but it was a type of the whole. the year with a practical deficit, and often In 1860 the same Chancellor of the Exa supplemental budget. Out of the last chequer had the fortune to have to preten years the right hon. Gentleman had side over another military operation. We been for five or six years Chancellor of the sent out the expedition to China; and Exchequer; and, with the exception of what were the words of the Chancellor 1853-in which he admitted that the an- of the Exchequer at that time? ticipations of the budget had been realized told the House of Commons that this in a satisfactory manner-there was no expedition went out as the bearer of a single year which was not marked with peaceful remonstrance to China, and in miscalculation as to the relative position accordance with that opinion he asked of income and expenditure. Such had been for the modest Vote of £500,000. the character of the right hon. Gentleman's at the close of that Session Mr. Gladadministration of the finances of the coun- stone had to come to the House and ask try. Take the year 1860-1:-The Chan- it to extend the Vote by £3,000,000. eellor of the Exchequer estimated the in- This was a matter of expenditure; but come at £72,308,000; the actual income let them now turn the pages of the was £70,283,000, showing a miscalcula- national ledger, looking still under the tion of £2,025,000. The estimated ex- head of China, and see if the right hon. penditure was £70,100,000, the actual Gentleman had been more successful in expenditure was £72,842,000, showing a his calculation of income. Last year he miscalculation of £2,724,000, the income estimated the amount of the Chinese inbeing less than the actual expenditure by demnity at £750,000; in his financial £2,560,000, and only £180,000 above speech of this year he had to reduce it the estimate expenditure. Take the next to £434,000, as the total available reyear, 1861-2. The estimated income was ceipts; and he went on to say, that where£70,283,000. The actual income was as he had anticipated the realization of £69,674,000, being a miscalculation of the indemnity within four or five years, £609,000. On the other hand, the esti- he could not now hope that it would be mated expenditure was £69,875,000; the realized in less than seven or eight years, But In prudence, the reserve, and the self-re- "unless," Mr. Gladstone said in a manner characteristic of his whole policy, "some arrrangement might be made to anticipate the payments.' The fact was, that each year's budget was a budget, not of facts and ascertained figures, but of imagination. It was perfectly clear that the result of such miscalculation must be to destroy that confidence in the budgets of the Finance Minister which it was of the utmost importance that the public should possess. For the last two or three years the budget had become a mere exhibition of rhetorical subtlety and skill-a tickling of the ears by calculations, which on examination were found not really worth the paper on which they were written. This not only engendered mistrust, but set up a spirit of speculation and gambling, and, in fact, went to the roots of public morality. With every respect for his right hon. Friend, he believed that this proceeded from two causes, one moral and one financial. The moral deficiency proceded from an overanguine but most dangerous temperament, which made the intellectual belief the creature of the moral wish, and which led the right hon. Gentleman to over-propriate it against his inclination to the rate income and underrate expenditure. Starting with self-deception, he ended in deceiving others, and turned finance from a matter of hard, dry calculation into a question of sentiment and conjecture. He believed this proceeded from a great error -the error of the never estimating for a surplus; he did not say of realizing a surplus, for except in 1853 the present Chancellor of the Exchequer had never had a single shilling surplus; but he never estimated for a surplus-he drew his calculation so fine as to leave no margin, or, as in the present year, one of £150,000. And did it not follow, if he so equalized his expenditure and his income, that the slightest unfavourable turn of events in the year must disturb his whole calculation? No landowner or private gentleman would go upon that insane principle of living up to the utmost farthing of his income, without taking into account the chances of a bad harvest, failure of rents, losses by fire, or other vicissitudes that might arise. He might venture to say that Mr. Gladstone He now came to a most important point had uniformly been a Minister of small-the present balance of the national acsurpluses. In 1853 he estimated for a count. How did it stand? They might large surplus of £870,000; and those who take it two ways, either for three years remembered the budget speech of that year-1859-60, 1860-1, and 1861-2-or they could not fail to be struck with the greater might take the two last years, during which remission of taxation; and he added, "The only security of the Chancellor of the Exchequer lies in his utter destitution." Were these the expressions of a statesman, and He man, and were they to be expected from the pupil and friend of Sir Robert Peel? When a Minister came down to the House of Commons and told them he could not do that which he considered rightthat he dared not keep a surplus, because if he did the House would compel him to appropriate it against his own sense of public policy to the remission of taxation-that was language hardly worthy of the right hon. Gentleman or of the assembly he was addressing. There had only been one parallel to this; that was the right hon. Gentleman's conduct when he went down to a commercial town, and, addressing the people there, exhorted them to put a pressure on himself to reduce taxation which he, as a Minister of the Crown, on his own responsibility and his own authority, had recommended the House of Commons to adopt. Mr. Gladstone had been wholly and solely | putting the charge for fortifications-wheresponsible for national finances. He would ther it were £2,000,000 or £10,000,000 take it both ways. In 1859-60 Mr. Glad to the public debt of the country; but stone inherited the financial arrangements if they viewed it, as any man of sense of his predecessor, and no great alteration must do, in reference to the improvements was made; and the result was that that in mechanism, to the changes in the art year he had a surplus of £1,587,000. In of attack and defence that were taking the following year 1860-1, there was a place every day-the appliances of war deficiency of about £2,558,000,-a defi- that were constantly changing-he would ciency which would have been greater had be a sanguine Minister indeed who would not their Lordships stepped in and pre- venture to calculate that the two or vented it by refusing to agree to the re- three millions, whichever it might be, peal of the paper duty. In 1861-2, as would be the first and last expenditure. it was, they had, mainly through the re- To this total, therefore, they ought to add peal of the paper duty, a deficiency of this £970,000, which would bring the £1,164,000, to which must be added deficit up to £8,470,000. Had the Go£278,000, excess of expenditure since vernment paid off the debt it engaged to ascertained, which brought up the de- pay in November, 1860-that debt of ficiency to about £1,400,000. Review- £2,000,000 bonds to which the right hon. ing thus the three years they had a total Gentleman, above all others, was pledged deficit of £4,000,000; but it was fair-they would have this moment-but they to deduct the surplus of 1859-60. De- had charged it on a future year instead ducting, therefore, £1,587,000 from the an excess of expenditure over income of £4,000,000, there was left a net deficiency £10,670,000. But how had they been able of £2,413,000. But this was not all. to tide over these things? First, by allowThe right hon. Gentleman had anticipated ing the Chancellor of the Exchequer to dip the national resources; the malt credit to his hand into the Exchequer and draw the amount of £1,972,000 was called in, out £2,684,000 from the Exchequer baan additional income tax of £2,000,000 lances. The noble Earl (Earl Granville) was imposed, and five quarters' tax was said those balances were not much less crowded into four quarters of the year. than they had been for the last thirty Then, £500,000 of the Spanish debt was years; but the noble Earl forgot that the received, and that, too, which properly was income and expenditure of the country capital, was applied in the most singular had changed very considerably during that way to current expenditure. If, then, period, and they were, therefore, not to those anticipated resources, amounting to look to what was the case thirty years ago £4,472,000, were added to the deficit of to guide them as to the balances to be £2,413,000 which he had before men- retained in the Exchequer under existing tioned, there would be a total excess of ex- circumstances. But the loss of three milpenditure over revenue for those three years lions of balance took away from the Goof £6,885,000. If, on the other hand, they vernment a useful reserve, which they might took the last two years, during which Mr. fall back upon in any crisis arising. As it Gladstone had been wholly and solely re- was, the Government was dependent on sponsible for the finances of the country, the Bank, and in the event of a monetary excluding the benefit of the surplus left crisis the State would be placed in a posihim by the preceding Government, there tion of a great embarrassment. The next was a deficit of £4,000,000. They had means adopted to meet the difficulties in anticipated resources besides to the ex- which the Government found themselves tent of £3,500,000; so that, instead of involved, was the appropriation of £881,000 £6,800,000, the total excess of expendi- repayments. What were the repayments? ture over income was £7,500,000. But Money which had been advanced by the he would point out to their Lordships that State for public purposes. But the State there should have been charged to the ex- had borrowed the money in order to penditure £970,000 for fortifications. It make the advances, and therefore, when was very well for the Government to treat the repayments were appropriated to get that as a separate charge, and to justify it rid of the difficulties of the year, to defray as a mere addition to the permanent debt. current expenditure, they were actually If, indeed, the construction of the forts living on borrowed money, and taking that could be regarded as an outlay made once which ought to have been applied to the for all, there would be some reason for extinction of the debt of the country. Sim He did not think the noble Lord would of his noble Friend the Earl of Derby, question that view of the case, as it was by which £2,000,000 Exchequer bonds the policy which had been recognised had been paid off. He could not thereby successive Chancellors of the Ex- fore allow the Chancellor of the Exchechequer. When Sir Charles Wood was quer to take credit for that reduction. Chancellor of the Exchequer he distinctly Well, then, it came to this-that the relaid down that these repayments should duction effected by Her Majesty's Gogo to the extinction of the debt. Lastly, vernment amounted only to £1,151,000 on Mr. Gladstone's own showing, a new -a sum very different from £3,500,000 debt to the amount of £461,000 was or £4,000,000. And what was the procreated in 1860; and that, together with cess by which this modified and greatly the items before mentioned, made a attenuated reduction was effected? total of £4,026,000, which was exactly ply by the conversion of stock into anequal to the £4,000,000 deficit which nuities. For that surely Mr. Gladstone had accrued during the last three years. deserved no particular commendation. It The answer contained in those figures was a common banking operation. It was to the question how so large a deficit merely the acceptance of an increased could have arisen, involved, he thought, burden for a time, in order to put an end a very severe condemnation of the policy to the obligation at a future time. He of the Government. For it came to had, therefore, to a certain extent disposed this, that they had created a deficiency, of the alleged reduction of debt effected and they had met it by what he would within the last three years. But if the calnot call a misappropriation, but by mis- culation was taken on the two last years, duapplication; by borrowing; by anticipat-ring which Mr. Gladstone was wholly and ing resources; by postponing the payment of the debt; by creating debt; by living on borrowed money, and by converting capital to the purposes of ordinary expenditure. And when, lastly, were all these improvident shifts and spendthrift expedients had recourse to? At a time when, of all others, there was the smallest justification at a time when the taxes on tea, on sugar, and on income were at a high rate; when £2,000,000 of Exchequer Bonds were to be redeemed, and no one was more pledged than Mr. Gladstone to redeem them, and with the falling-in of the Long Annuities that pledge might have been redeemed. He would now reply to two points which the noble Earl (Earl Granville) urged. The noble Earl brought forward arguments purely financial. He said, in the first place, they had effected a reduction of debt, and in the next, that they were effecting a reduction of expenditure. He would first deal with the alleged reduction of debt. How did the fact stand? In 1859 the total public debt was £805,078,000; in 1862 it was £800,757,000-showing a supposed reduction of £4,321,000; but from that, by the arguments of Her Majesty's Government, they had to deduct for fortifications £1,170,000-making a total reduction of debt of £3,151,000. But there was a further deduction which he made from this reduction. Their Lordships would not have forgotten the financial arrangements of the Government solely responsible, the result would be even less favourable. On the 31st of March, 1860, the total debt was £802,190,000. On the 31st of March, 1862, it was £800,757,000, so that there was an apparent reduction of £1,433,000. Against this, however, was to be set £1,170,000 for fortifications, and £461,000 increase of debt, bringing up the whole amount to £1,631,000, and therefore showing an increase of £300,000 instead of any diminution in the public debt. But, again, the amount of the debt might be measured not merely by its amount, but by its annual charge. The charge of the debt in March, 1859, was £28,179,000, from which the Long Annuities were to be deducted - £2,147,000, leaving the real charge at £26,032,000. The charge, however, in March, 1862, was £26,043,000, leaving an increase of £11,000 against Mr. Gladstone, instead of a reduction. If their Lordships took the second argument of the noble Earl, they would find that he compared the estimated expenditure of the present year with the actual expenditure of last year. But was this a fair method of dealing with the question? If the noble Earl compared the estimated expenditure of one year, let it be with the estimated expenditure of another. But the noble Earl was following in Mr. Gladstone's mode of reasoning. Mr. Gladstone compared the estimated expenditure of 1862-3 with the actual expenditure of 1861-2. It was quite true that the actual expenditure of 1861-pressive and unjust in its character. It 62 was £70,838,000, and the estimated was unjust, not only from the money that expenditure of 1862-3 was put down it extracted from the pockets of the rateat £69,120,000, being a decrease of payers, but because this "gigantic engine £1,718,000. But if their Lordships com- for great national purposes "-as the inpared the estimated expenditure of 1861- come tax had been described by the Chan62, £69,875,000, with the estimated ex- cellor of the Exchequer-must be either penditure of 1862-3, £69,120,000, they large and exceptional in its character, or would find the decrease only £755,000 permanent in its duration and moderate in -a very different sum from a sup. its amount. But in the financial policy of posed decrease of £1,718,000. But even the right hon. Gentleman the income tax granting a decrease of £2,000,000 in combined both disadvantages; for while it expenditure had been effected by the was becoming larger and larger in its Government during the last two years, amount, it was becoming more and more against that must be put the deficit of permanent in its duration. Every mistake upwards of £8,000,000, to which he had of policy brought with it its own retribualready referred. Their Lordships had tion, but the penalty was never greater this consolation with other Chancellors of than upon a mistake of fiscal policy. He the Exchequer, that however tortuous their believed that in every age fiscal revolutions policy might be, the Legislature usually were the precursors of social and political knew the object they had in view. But revolutions; while, on the other hand, a the only thing certain about the policy of well-ordered finance was the fountain of the right hon. Gentleman was, that it was every blessing that a country could enjoy, exactly the inverse and the contradictory of and that upon this public life and morality the language be had used in former years. depended. He was a great admirer of Who had been so strong an opponent as the character and abilities of his right the present Chancellor of the Exchequer hon. Friend, but he could not be blind to of the war duties on tea and sugar? Who the terrible evils of his financial policy. had so strongly condemned loans in time He would, in conclusion, most earnestly of peace as the Minister who had post-implore their Lordships, as one branch poned the payment of the debt to another of the Legislature, to review the preyear, and had appropriated the Exchequer sent state of our finance with sensitive balances? Who had so bitterly denounced the income tax as a permanent source of revenue as the Minister who had increased it successively from 5d. to 9d., 10d. and 13d.? In these conflicting principles he confessed he could not see one spot on which the country could rest with security. In these troubled waters there was only one landmark in view, and that was the income tax, THE DUKE OF NEWCASTLE: My to which, as the only resource for the na- Lords, the noble Earl has delivered a tional credit of the country in any national speech of remarkable ability and great emergency, the country was rapidly drift- clearness and lucidity of expression; but ing. It was like that fabled mountain, to so far as this Bill is concerned, it was which we were gradually being brought so modified by qualifications and reservanearer, until the moment was approaching tions, that very little need be said in anwhen every bolt and bar was coming out, swer, if the noble Earl had not entered and when the ship must inevitably collapse into that elaborate and personal attack and fall to pieces. The fiscal policy of the upon the Chancellor of the Exchequer present Government seemed to him the which characterized the greater portion of more dangerous, because, whereas formerly his speech. Perhaps, as a much older there existed many sources of taxation, col- man than the noble Earl, I may venture lected from many quarters, and affecting to suggest to him, that when he applies numerous classes, yet crushing none, and the powers which he possesses to the expanding with the growth and prosperity examination of financial questions, he of the country, there was now substituted should avoid any attempt at ambitious for this system one iron and despotic rule, oratory, and should rather give a most which in the very nature of things must careful consideration to the truth and acbe unequal, and which was generally op-curacy of those figures on which alone we scrupulousness, and, as it |