dinary expense was one that ought not to have taken us by surprise, and we ought to have been prepared to meet such a charge without incurring fresh debt, by financial arrangements which would have left a sufficient margin for so probable a contingency. My Lords, there is another point to which I wish to call your attention. You have had a deficit for two years. Some persons say that arises from the enormity of our expenditure. I do not altogether concur in that view, yet I am bound to say that I think this expenditure is higher than it need be. I should be the last to recommend any diminution in our means of self-defence. In the actual state of the world it is absolutely necessary that our army and navy should be kept up in an efficient state, and that preparations should be made by which we should be able to protect ourselves in the event of war. Yet I still believe that with proper economy this might be done at much less than the present expenditure. After the lamentable failures which marked the commencement of the Russian war, and the deplorable exhibitions which then occurred through the want of foresight with which that war was undertaken and conducted, there has, I think, arisen a tendency to excess on the other side, and there is now a disposition in the management both of the army and navy to run to greater expenses than are absolutely necessary, in the endeavour to have everything of the most perfect character. I think that with proper judgment the enormous expenditure under these heads may be reduced. I am not satisfied that all has been done that can be done in relieving the country from charges for foreign garrisons, and other expenditure beyond our own shores. In our civil expenditure, likewise, I think there is no inconsiderable room for the exercise of a wise economy. But on this subject I wish to remark that for the public expenditure, whatever it may be, the Government are responsible. They frame the Estimates. If they sub-pay taxes? mit them to Parliament, and if they, looking to the whole situation of the country, say that our armaments do not admit of a safe reduction, they are bound to propose some means of raising the necessary revenue, so as to prevent our incurring

I protest against the practice of the Government proposing a large expenditure and endeavouring to reconcile the country to the dangerous course of failing, in time of peace, fairly to meet its expenditure, by pretending that we are placed in

what they call exceptional circumstances, and by dwelling upon the great benefits derived from the repeal of taxation. The repeal of taxes, I do not deny, is often a great relief to the country; but I entirely deny that, because the relief from taxes is a benefit, that is a reason which justifies the Government in throwing upon the future the burden of the expenditure incurred for the present time. I also observe a disposition on the part of the Government to throw on the Parliament and the nation the responsibility of keeping up a large expenditure. I could not help being struck, in a report of a speech made by the Chancellor of the Exchequer at Manchester, with an observation which he addressed to the inhabitants of that great city. He told them that, no doubt, the great excess of expenditure was partly caused by real necessity. "Partly caused by real necessity!" Does that mean that the Chancellor of the Exchequer calls upon Parliament to sanction an expenditure which he believes is only "partly necessary"? The right hon. Gentleman went on to say, that if the nation chose to have a large expenditure and pressed it on Parliament, and if Parliament pressed it on the Government, the Chancellor of the Exchequer had no power to resist it. Now, I admit that the Government are a good deal pressed by Parliament, and I admit also, that whatever may be their duty, it is not always possible for them to resist that pressure. But if it be really true that we are now spending annually more than we ought to spend, and that that excessive expenditure is in part due to the disposition of the nation and of Parliament to press expenditure upon the Government, what, I ask, ought to be their policy? Should it not be to make the nation feel, that if it will have expenditure, it must provide the means by which that expenditure can be honestly met; that if it will spend money, it must Has not the financial policy of the last three years been the reverse of this? Have we not been spending upon the largest scale, and, at the same time, as my noble Friend (Lord Overstone) has just shown you in a manner the most conclusive, meeting that large expenditure by every spendthrift device? You have been anticipating resources by every means in your power; you have been calling up credits, diminishing balances, increasing debt, postponing to a future period the pressure which a large expenditure must

margin which had to be met out of extra resources. But we must consider what influence accidental causes have exerted in creating the deficits. Now, to show how largely these accidental causes have interfered with the Estimates, I will refer for a moment to the deficit of last year. That deficit has arisen mainly from two causes

necessarily create, and which must come larly correct, there was in others a large some time or other, and with greater severity the longer it is deferred. Against that system I join with my noble Friend in protesting. I think it is most dangerous to the future welfare and the future credit of the country, and I cannot help thinking that the present state of our finances is such as to create the greatest alarm. My noble Friend the Lord Pre--the failure of certain branches of comsident said, that it was a serious state of things, but that no real occasion for alarm existed, as the resources of the country were untouched. Now, I should, perhaps, agree with my noble Friend that there is no occasion for alarm, were it not for the spirit in which these matters are dealt with; and I am persuaded, that if we continue to deal with them in such a spirit, recklessly incurring expenditure without providing sufficiently to meet it, we shall end by exposing this country to extreme distress and difficulty.

merce, and the preparations which unfortunately became necessary in view of a possible American war. Surely noble Lords do not suppose that Mr. Gladstone could foresee the act of Captain Wilkes, or the outbreak of the war which has so seriously affected the trade of this country. My noble Friend (Lord Overstone) appears to be of opinion that the Estimates should provide for such a surplus as would always secure us against a deficit. But no Government can ever be sure of making such a provision in the face of unforeseen events THE DUKE OF ARGYLL: My Lords, be- like those to which I have referred. My fore answering one or two points raised by noble Friend (the Earl of Carnarvon) has my noble Friends who have just addressed spoken of the spendthrift policy of the the House, I wish to express the pleasure Government, and prominent among the with which I listened to the speech of the resources which the Government are denoble Earl opposite (the Earl of Carnar- scribed as having had recourse to are the von), because, partial and erroneous as I Exchequer bonds. Now, it is clear that believe some of the alleged facts and in- my noble Friend, who appears to have ferences contained in it to be, it was, con- paid such close attention to the speeches sidered as a party speech, one of eminent of Mr. Gladstone, has not paid equal atability, and was well calculated to raise tention to the speeches of Mr. Disraeli. the reputation of this House. I think, He said, that Lord Derby's Government however, that too large a portion of that had made arrangements to pay off the Exspeech was taken up by purely personal chequer bonds which fell due during their allusions to the present Chancellor of the tenure of office; and these bonds were Exchequer; and, indeed, I may say that always referred to as if they were debts the two speeches last addressed to your which ought to be paid off, and as to which Lordships had rather too narrow a scope. some hardship was inflicted upon indiviBut I wish to set aside merely personal duals unless they were paid off." ["No!"] allusions, and to consider now the three Then, if that was not their argument, Í principal charges which the Government must say that the language of my noble have to answer. There is no question as Friend was utterly inappropriate, for the to the Bill now before the House, or as to noble Lord on the cross-benches spoke of the policy to be pursued this year. The paying off these bonds like honest men. question we are considering appears to be Lord OVERSTONE: I never used that expurely a retrospective one, and is, in point pression.] Then the language of the noble of fact, a resuscitation of the debates which Lord is unintelligible. Now, Exchequer we have had for the last three years. The bonds are securities, as to which it was three principal charges against the Govern- contemplated, from the first, that any and ment are these-first, that the Estimates every Government might renew them achave not been correct; secondly, that cording to the exigencies of the time. So temporary resources have been used as far as the Chancellor of the Exchequer income; and thirdly, that the remission could possibly foresee the financial exigenof taxation has been improvident and dan-cies of the next three years, he intended gerous. Now, on the first of these points, to pay them off at the end of that term; I am perfectly willing to admit, that while but it was optional with the Government some of the Estimates have proved singu- either to do so or to renew them at their

convenience, and no financial principle | raising money by "deficiency bills," and whatever is involved in the question. Now, the interest it pays on the deficiency bills it did so happen that in 1858, under the is the measure of the extent to which Government of the noble Earl opposite (the those reserves have been drawn on. At Earl of Derby) £2,000,000 of these Ex- present, I believe, the reserves in the chequer bonds fell due; and what course Bank of England are amply sufficient for did the right hon. Gentleman who was the purposes of the Government; and at then Chancellor of the Exchequer take any time a very trifling sum has been respecting them? He came down to the raised upon deficiency bills. I now come House of Commons on the 19th April, to the noble Earl's third point-that the and stated that he had to face a deficit of remission of taxation has been erroneous £3,900,000, arising mainly from the war and in the wrong direction. The Governsinking fund established by the previous ment of the noble Earl opposite allowed Government, which, as he very fairly the income tax to fall from 7d. to 5d. But argued, it was not necessary to maintain, then their Chancellor of the Exchequer and from these £2,000,000 of Exchequer proceeded to propose Estimates by which bonds. But, instead of paying them off the House of Commons was bound to pro06 like an honest man,' or like one who was vide for a deficit of between £5,000,000 maintaining the faith of the country," and £6,000,000. The noble Earl went the right hon. Gentleman made it one of out of office in 1859; and when Her Mathe main features of his financial scheme to jesty's present Government came in, taking get over the difficulty of a deficit by post- up as far as possible the Estimates of poning the payment of the £2,000,000 of their predecessors involving this deficit, Exchequer bonds. No doubt he did not in- we found that instead of allowing the intend to postpone payment for a period of come tax to remain at 5d. we were obliged three years; but if it was for six months to raise it to 9d., and were obliged to colonly, the same principle would be involved; lect two quarters of the increased tax in for if one Government may postpone pay- one quarter of the year. Hence, allowing ment for six months to suit its conveni- the income tax to fall to 5d. was an unence, another Government may do so for doubted mistake. This was the position six years, if in its judgment the exigencies in which we found ourselves in July, 1859. of the country require such a course. I There were "bloated armaments," and need not quote the words used by the right preparations made by the previous Governhon. Gentleman on this occasion, but it is ments with no funds provided to meet that clear that the Government of the noble expenditure, and the whole charge of proEarl did not think that it was an illegiti-viding the additional taxation was thrown mate resource, under a temporary pressure, to postpone the payment of Exchequer bonds. Great apprehension has been expressed this evening as to the proposal by any Government of a budget showing a very small estimated surplus. But the Government of the noble Earl provided on this occasion for only a small surplus, which was made up by a trifling addition of taxes, and by the renewal of these obligations; and they looked forward to the probability of a future deficit of no less than £3,000,000. I think a member of the Government which proposed a Budget with a prospective deficit of £3,000,000, has no right to blame us for proposing one which, under the present extraordinary circumstances, still leaves a surplus of £180,000. The noble Lord (Lord Overstone) has referred to another use of temporary resources-the use of the reserved balances in the Bank of England. I believe that when the Government draws boyond its balances, it has the power of

upon my right hon. Friend. I do not
complain, because the Government to a
great extent adopted those armaments, but
I wish for explanation on another point.
It is perfectly true, that in 1858 Mr.
Disraeli postponed payment of the Exche
quer bonds which then became due; it is
true that in the subsequent part of his
administration he made some arrange
ments by which these £2,000,000, in
part or in whole, should be paid off. I
ask, how could this payment have taken
place when Estimates had been prepared
with an acknowledged deficit of between
£3,000,000 and £4,000,000 sterling? It
is clear that these bonds are a matter of
account, and not a part of the revenue, be
cause there was not a farthing of surplus.
Considering these facts, it is too much for
the noble Earl to say, that the only suc-
cessful financial year we had was the one
in which we succeeded to the policy of the
late Government. I now come to the point
whether the remissions of taxation made

by Mr. Gladstone since 1859 have, or have would have been the first to repeal it. not, been judicious. I join issue with the ["Oh, oh!"] But there is this important noble Lord on the cross-bench (Lord Over- consideration-the leader of the House of stone) on his assertion that the use we Commons is the leader of the Government; made of the £2,000,000 of terminable and speeches made in the House of Comannuities that fell in in 1860 was the root mons, pledges given, and promises made, of all the evils in which we have been in the House of Commons, are not to be since involved. I will show what was the broken. ["Hear, hear!"] The noble Earl intention of Mr. Gladstone with regard probably meant that the Estimates were to the falling-in of these annuities. No mistaken. [The Earl of DERBY: No, no; doubt, with a large number of unpopular I do not.] I repeat, that promises made taxes to deal with, he would have taken in the House of Commons cannot be the opportunity of remitting some of them broken; and after the Resolution of that with these annuities; but this was no House, it is impossible that the paper duty after-thought of the Government; what could ever have been retained among the they did was done with a distinct and de- permanent sources of revenue. I have no liberate intention, announced in 1859-doubt of the courage of the noble Lords ; that very year, when, in consequence of what the late Government had begun, and the present had continued, the income tax had been raised to 9d. Mr. Gladstone said"We have the advantage of a falling-off in the Long Annuities, and it will be the duty of Parliament to consider whether they will endeavour to signalize the year of escape from so serious a burden as the constant and permanent payment of £2,000,000 by something done for the benefit of the people, or whether they will simply allow those £2,000,000 to be dragged unnoticed into the general vortex of expenditure." [3 Hansard, cliv., 1394.]

That was the sentence in which Mr. Gladstone foreshadowed the financial policy of the coming year. The noble Lord says, that though these £2,000,000 were to fall in, it was absurd to suppose we had them in our pockets to spend. That would be true had there not been on the statutebook taxes that repressed the industry and interfered with the commercial relations between England and other countries. I contend it was a wise policy to apply those £2,000,000 to the remission of this taxation. It would have been the height of folly to have allowed that amount to be absorbed "in the general vortex of expenditure." It was the duty of the Government to apply it in the manner most conducive to the prosperity of the commerce and manufactures of the country; and it was applied to the removal from the tariff of a number of small and unremunerative dutics, and to the repeal of the paper duty. I will not enter into that subject, as your Lordships, I believe, are sick of it; although there are some noble Lords opposite who, I think, will go into mourning for the rest of their days for the loss of their beloved paper duty. There is this comfort only-that if the Government of the noble Earl (the Earl of Derby) had had 10s. to gain of political capital, they

but if there be a man who holds an opinion against the clear light of evidence, it is he who is willing to maintain that the remission of duties effected by Mr. Gladstone have not fully answered every promise ever held out, and every expectation ever raised, in the House of Commons. I will not repeat the statements of my noble Friend the President of the Council as to the enormous effect of the remission of duties connected with the French Treaty on the trade of this country during the past year. I believe it is no more than the truth, that in the manufacturing portion of the country it has given a stimulus to trade, and in some particular districts has not only been a very important, but almost the sole substitute for the entire loss of American traffic which has been caused by the unfortunate contest between the States. I will not stop to argue with my noble Friend (Earl Grey) whether the form of the treaty was or was not expedient. The form was not the essence. The essence of the transaction was that Parliament abolished and diminished certain duties, which for our own purposes and for our own reasons were judged inexpedient, and Parliament added a reason for remission at the moment that it would secure additional commerce and communication with the French people. That is the footing upon which it must be put. We must judge of it not as a treaty, but as a strictly financial operation. I say that, viewed in that light, it has signally succeeded, and I defy any one to show where it has failed. I heard in the measured sentences of my noble Friend on the cross bench (Earl Grey) a very solemn denunciation of the extravagant manner in which we are dealing with the resources of the country, and I heard him