had exceeded the ordinary revenue of the country in those two years by 7,500,000l., although he sustained the revenue during that time by war-duties. Even this was not the full extent of his prodigality, for this was done at a period when the national debt had been diminished by 2,000,000l., the amount of the Terminable Annuities. How was this deficit supplied? By reckless draughts upon the balances in the Exchequer to the amount of 2,684,000l., and by other expedients, which carried the total sum up to 4,026,000l. All the rhetorical arts of the Chancellor of the Exchequer could not disguise the critical position of our finances. And how did he propose to extenuate this result? By alleging that the two years were exceptional years. He (Mr. Disraeli) denied that they were exceptional. Then it was said that the national debt had been reduced by 4,000,000l.; there was an apparent diminution, but no real reduction; on the contrary, he insisted that there had been an increase of the public debt. But there was another source of consolation in the announcement that the epoch of retrenchment had commenced. How retrenchment was to be effected Mr. Gladstone had not pointed out. He had now placed before the House (Mr. Disraeli said) our financial condition and prospects, and had shown that the excuses offered to calm the public mind were utterly fallacious.

Mr. Bass asked for some explanations as to the new scheme of brewing-licences. He disapproved of this part of the Budget, and suggested, in lieu of it, an augmentation of the malt duty.

The Chancellor of the Exchequer, after explaining the modifications proposed of the scheme of brewing-licences, and the mode in which licences for private brewing were to be obtained, replied to what he termed the historical review of Mr. Disraeli, who did not, he remarked ironically, resort to rhetorical artifices. He had said things that were true, and things that were new; but, unfortunately, the things that were true were not new, and those that were new were not true. There ran through his whole speech a fallacy which vitiated the arguments of those who had no faith in our late commercial policy, as to the effect which the remission as well as the reduction of duties had upon the revenue. Mr. Disraeli had given the financial results of three years, absolving him (Mr. Gladstone) from all responsibility for the first year. But it so happened that that year was one of a considerable surplus, and he proceeded to quote assertions of his (Mr. Gladstone's), made with reference to the three years, as if he had made them in relation to the two years. Mr. Gladstone re-asserted that the two years were exceptional years, or he did not know, he said, what was an exceptional year. He pointed out errors which, he insisted, Mr. Disraeli had committed in charging him with exhausting by anticipation the ordinary revenues, and with respect to the failure of the China receipts he met him he said, with a positive contradiction.

He denied that he had given any personal guarantee of the amount; he had founded his estimate upon the safest authorities, and had stated

the grounds of it. In the only two cases in which Mr. Disraeli had prepared estimates, not for China, but for England-the tax on checks and the duty on Irish spirits he had egregiously erred; they had not realized one-third of the sums he had reckoned upon receiving. Then the proposal to repeal the paper duty was said to be improvident. Mr. Disraeli seemed to be incapable of appreciating the effect which such remissions of duty had upon the general revenue by their reproductive energy. But Mr. Disraeli said it was improvident to part with 600,000l. or 700,000l. What, however, did he and his party propose? To part with 950,000l. by a reduction of the tea duty. If there had been any blame in the financial policy of the Government, he was ready, as the Financial Minister, to bear it. He should be content, he said, if the result of this discussion should convince the House that the condition of the country with reference to its finances was deserving of grave attention; that its temporary resources were nearly exhausted, and that it was the duty of the House to consider what should be the future scale of our taxation.

The discussion was continued at much length, involving a com. plete survey of the various parts of the financial scheme, Mr. Bentinck, Sir H. Willoughby, Mr. Ayrton, Mr. Lindsay, Mr. Ball, and Lord R. Cecil taking part in the debate.

Sir S. Northcote, in the course of an elaborate criticism of the Budget, urged upon the House that during the last eight years, since 1854, there had been large deficiencies of revenue; in six of

these years the deficiency had been 6,144,000l., and in two years there was a surplus of 2,400,000l., leaving a net deficiency of 3,744,0001. The question was, he observed, whether this exceptional state of things was going to end, and whether we should not retain any resources we had in hand. Unless the House made prudent provision for the year, either by an increase of the revenue or a reduction of the expenditure, it would not, he thought, do its duty to the country.

The House then went into a Committee of Ways and Means, when certain resolutions, embodying the principal alterations introduced by the Budget, were agreed to.

The proposition of imposing a licence duty on brewers, which was intended by Mr. Gladstone to afford a substitute for the loss of the hop-duty, underwent a good deal of adverse criticism. Mr. Bass, on behalf of the trade, objected to this as exceptional legislation, directed against a particular class. He thought that if brewers were required to pay for a licence, other manufacturers ought to be subjected to the same obligation. Brewers already paid a duty on hops, and should not be required to pay again in the shape of a licence tax. Mr. Locke, Sir John Trollope, and other members, expressed likewise strong objections to the proposed licence. The Chancellor of the Exchequer replied to these objections, denying the alleged ground for some of them, and proposing to obviate others by provisions which he intended to introduce. The proposed licence duty upon private brewing he consented, in

deference to the general opinion of the House, to abandon. Upon the motion for the second reading of the Customs and Inland Revenue Bill, embodying several of the provisions of the Budget, Sir Stafford Northcote availed himself of the occasion to enter again upon the financial situation of the country, adverting particularly to a speech delivered by the Chancellor of the Exchequer during the Easter recess at a public meeting at Manchester. On that occasion Mr. Gladstone had admitted that he did not consider the finances to be in a healthy state, because the public expenditure was too large; but he had said that it would not be difficult to restore our affairs to a sound condition by a reduction of expenditure, if that step should be urged upon Parliament by a pressure from without. Sir S. Northcote considered that this doctrine of Mr. Gladstone's called for remark, and he thought it was the duty of the House to look into and consider it. He entirely agreed with Mr. Gladstone that the finances of the country were not in a healthy state; that the deficits of revenue during the last two years had been large, and that there had been a considerable expenditure of capital by forestalling revenue. The real amount of last year's deficiency of revenue was 2,400,000l., more than double the estimate of the Chancellor of the Exchequer. He recalled to the recollection of the House the condition of our finances twenty years ago, when the late Sir Robert Peel had charge of them, when there had been large deficiencies one year after another, and when he had to deal in 1842 with a defi

ciency of 2,400,000l., but without the aid of an income tax, and when our commercial system was hampered with restrictions. He (Sir Stafford) felt some apprehension from the peculiar nature of certain financial doctrines now propagated; one was a new theory of Ministerial responsibility, especially as regarded expenditure. It was to be inferred, from what Mr. Gladstone had stated, that he washed his hands of responsibility for the expenditure which he and his colleagues recommended to the House. This was a new theory of constitutional and Parliamentary government. The Ministers knew what the House could know but imperfectly, the real state of the finances, and the responsibility rested with them, not with that House or the country; and they (and especially the Chancellor of the Exchequer) could not be allowed to withdraw from it. Another doctrine propounded by Mr. Gladstone (as he understood it) was, that a deficiency of revenue did not signify, if produced by taking off taxes that weighed to a considerable extent upon the industry of the people. He (Sir Stafford) disputed this doctrine, which was at variance with the declared opinion and the principles of action of Sir R. Peel, who maintained that we should always have a surplus revenue, and, having provided a good surplus, then take off taxes that pressed upon the national industry, and restrictions that crippled commerce. were not the principles upon which the present Government acted. Without rashly dealing with the expenditure, he thought

These

Mr. Gladstone should endeavour to come to some conclusion as to what he meant by the exceptional character of the present times. Was it meant that the year 186263 was an exceptional year? This was so in regard to the prosperity of the revenue; but was it intended that, considering the condition of the country in relation to its expenditure, civil, military, and naval, the year was exceptional? If so, why? He thought that the income tax ought not to be kept at its present rate in ordinary times. Having laid down this principle, the ordinary revenue and expenditure, in his opinion, ought to be so settled as to bring them pretty much to a balance. Insisting that our foreign relations were not such as to require, this year, recourse to exceptional expenditure, in conclusion, he urged the expediency of considering the state of our public expenditure with a view to its reduction, and the difficulties and dangers attending unwise financial legislation.

The Chancellor of the Exchequer denied that he had asserted at Manchester the doctrines imputed to him. He wholly repudiated the constructions which Sir S. Northcote had put upon his words. He understood the charges against him to be three; -first, that he had disclaimed responsibility for the estimates laid before Parliament; secondly, that he had not provided a proper surplus of revenue; and, thirdly, that he had taken away supplies by which a surplus would have been provided. With respect to the first, he disputed the view taken by Sir S. Northcote of the duties of a Chancellor of the Exchequer, which he explained,

declaring that he admitted and asserted his responsibility. With regard to the reduction of expenditure, that of 1862-63 was. less by 735,000l. than the expenditure of 1861-62. This year was, nevertheless, a year of exceptional circumstances; the distress in certain districts, military demands, and the state of North America must act upon our expenditure; yet the Government had reduced its amount, and would continue the same course, year by year. Sir S. Northcote must have been taken in, he said, by some vendor of scandalous stories. As to the second charge, he observed that Sir Stafford had misunderstood the doctrine of annual surplus. He had appealed to the example of Sir R. Peel in 1842; but Sir R. Peel, having repealed in that year taxes to the amount of 1,600,0007., at the end of it had a deficit of 2,400,000l. The doctrine of surplus of revenue was subject to modification by circumstances, and the theory of Sir S. Northcote, who had not had the experience of a Financial Minister, was unsound. With reference to the third charge, that he had intercepted funds) that would have provided a surplus - by the repeal of the paper duty he did not believe that the House, if the Government had a surplus of revenue, would have allowed them to retain it, and in his opinion they ought not. But the repeal of the paper duty, as proposed last year, could not be treated as a merely isolated act. The first blow the paper duty received was struck by the Government to which Sir S. Northcote belonged, when it was branded by a stigma not attached to the tea duty or

the sugar duties. The duty was part of a system, and it was impossible to say how its repeal might operate upon the general revenue. Meanwhile, the expenditure had been decreasing at the rate of from 800,000l. to 1,000,000l. a-year.

Mr. Disraeli, after a general criticism of the speech of Mr. Gladstone and his management of the finances, said he had laid before the House upon former occasions what he considered to be the real condition of the country, and not a single statement of his had been contradicted by the Chancellor of the Exchequer. Our expenditure was very large, but it depended upon our foreign policy, and if the House supported the Government policy it was not in its power to interfere and check an expenditure caused by it. The question, then, was, what was the policy which the Government was pursuing, the expenditure caused by which must fall mainly upon the landed interest? The object of that policy was to maintain our influence in the Councils of Europe. But the Councils of Europe consisted of those of England and France, and, in his opinion, there could not be a better opportunity than the present to reduce our armaments, nor a time when a moderate rate of expenditure could be more practicable. England and France had the same objects, though they might contemplate them in a different light; but this was a reason why their co-operation should be wiser and more salutary; yet the greatest distrust existed between the two Governments, leading to an immense expenditure and to augmented taxation. Mr. Disraeli then entered at much

length into the questions of Italy, of Rome, and of the Pope, with especial reference to our relations with France. The result, he said, was, that instead of acting in cordial alliance with France, we had been trying to govern by a new system of what was termed moral power, which meant bloated armaments in time of peace, and produced misconceptions, broils, and distrust, while taxation had found its limit and was sapping the strength of England. It was for the House to encourage, and, he thought, to enforce, a policy of conciliation, which, by culti vating a friendly feeling with the only Power prepared heartily to cooperate with us, could alone afford a substantial and permanent relief to the taxpayers of this country.

Lord Palmerston observed that, as Mr. Disraeli objected to the use of military power, naval power, and moral power, it was difficult to say what sort of power we were to exert in order to maintain our position among the nations of the earth. When Mr. Disraeli said that the Government of this country was in a state of perpetual hostility with that of France, with which we professed to be in amicable alliance, he utterly denied his statements. Mr. Disraeli thought we ought so to co-operate with France that we should have no opinion of our own, and then we might dispense with all our armaments. Take the case of America; if there was any transaction in which two Governments had pursued an identity of policy and uniformity of action, the course taken by England and France with regard to America furnished an example of such concord. He justified our Italian policy, and