Skip to main content

Second Reading

Volume 229: debated on Monday 15 May 1876

The text on this page has been created from Hansard archive content, it may contain typographical errors.

Order for Second Reading read.

Motion made, and Question proposed, "That the Bill be now read a second time."—( Mr. Chancellor of the Exchequer.)

in moving, as an Amendment—

"That this House regrets that the progressive increase of expenditure recommended by Her Majesty's Government should have led to a proposal by Her Majesty's Government to add to the Income Tax in the present year,"
said: The terms of the Resolution which I have the honour to propose are of so moderate a character that I venture to appeal in its favour to hon. Gentlemen on the other side of the House. I am disposed to think that there must be some Conservative Members who look with dissatisfaction upon the present high rate of national expenditure, and who may be willing to support the Resolution as a means of protesting against the course taken by the Government. It appears to me that this is a very fitting occasion for them to depart from the almost uniform docility which marks the course of the supporters of the Government, but, should they decline to give me any support, and my proposal isin consequence rejected, I think I may safely assert that the majority in this House will not represent the opinion of the majority out-of-doors. I believe many of the constituents of hon. Gentlemen opposite are extremely dissatisfied with the financial policy of the Government, and reasonably complain, that in the matter of the Income Tax they have been deceived by their Party. I hope that on this side of the House I shall not need to use many arguments to induce a general support of my Resolution. I am quite aware that some of my hon. Friends have questioned the policy of bringing forward the Motion at all. And their reason is this—they say that the Government are cutting their own throats so quickly that the Liberal Party ought not to interfere, but should stand by as amused and interested spectators, until the "happy despatch" is completed. I do not deny that there is some force in that argument. I cannot pretend that, so far as I am concerned, it is at all disagreeable to witness the rapid manner in which the Conservative Party are losing the confidence of the country. If it were simply a question in which the Government were alone concerned, I should be quite willing to adopt the policy of my hon. Friends; but, unfortunately, the public interests are involved, and I think that we, as the Liberal Party, are bound to protest against the mischievous policy of the Government, and against an extravagant and needless expenditure, which is imposing additional burdens of taxation upon the people. In opposing the Budget measures of the right hon. Gentleman the Chancellor of the Exchequer, I do not raise any complaint against the right hon. Gentleman him- self. I wish to bear testimony to the ability and clearness of his speech on the Budget, and to the candour and moderation with which he placed his views before the House. The blame rests with the spending Departments of the Crown, represented by responsible Ministers in Parliament; and if we are to have the expenditure, we must be prepared to pay the penalty in the form of additional taxation. I quite agree with the Chancellor of the Exchequer that the present taxes would not be sufficient to meet the enlarged expenditure for the coming year. The right hon. Gentleman's estimates of the Revenue for 1876–7 were considered to be moderate, but I fear that moderate as they were they will not be reached. The diminution in the Excise in the last quarter of the financial year gave the Chancellor of the Exchequer some warning of the diminished receipts, but it must be remembered that the pressure upon the Revenue is only just commencing, and that diminished consumption accompanying depression of trade always strikes the Excise first, to be followed very speedily by reduced receipts from Customs and taxes. The commercial prospects of the country are certainly most disheartening. If the Government were to ask "the man in the street, "they would be told that every branch of industry is looking gloomy. I can speak from practical experience of two of the staple trades of the Kingdom, in which I am largely interested—I allude to the iron and coal trades. Many works are stopped—others are working short time, the profits upon capital have disappeared, and the wages of labour are being reduced. In the cotton districts stocks of goods are increasing to an alarming extent, and unless there is some speedy relief by the springing up of a demand, there must be a very general cessation of employment. The reports of the woollen and worsted trades are equally bad. And there is another important branch of national industry which, I am informed, has recently suffered considerable losses—I mean the agricultural interest. Hon. Gentlemen are much better able to speak of this than I am, but some of my friends who are landowners have assured me that the last two seasons have been disastrous to farmers in certain parts of the country. One of my friends tells me that for the first time in his ex- perience his tenants were unable to pay their rents at Christmas, and he had not yet received them. All this points to a serious diminution of the national income. Less money will be earned in wages and spent amongst the shop keeping and trading classes, all incomes derived from the employment of capital will be reduced, and when the depression of trade is felt in its full effect upon railways, banks, and other means of investment, the pinch will reach large classes who are not otherwise directly concerned in trade. No doubt this diminished prosperity furnishes a very good reason for the Chancellor of the Exchequer forming a moderate estimate of the Revenue, but it furnishes a much stronger reason why there should not be any additional taxation at the present time. Diminished receipts at the Exchequer not only mean diminished luxuries to the higher ranks, and diminished comforts to the middle and trading classes, but they mean absolute distress and privation to the working population. I think, under these circumstances, all classes have reason to complain of the expenditure sanctioned by the Government, which has led to the proposal of increased taxation. But farmers have especial reason to complain. Conservative candidates at the General Election issued in the form of their addresses many promissory notes, by which they undertook to pay at a future period certain considerations in the form of public boons to various classes in return for their support. In country districts these promissory notes were freely circulated and credulously received, and now that the time has come to redeem them they have been dishonoured. They prove to have been what we call in the City "accommodation bills,"and the farmers having been the most credulous of the supporters of Conservative candidates, are most disgusted that there are "no effects." I observed a few days since in The Times an interesting report of a dinner given as a well-deserved compliment to my hon. Friend the Member for South Norfolk (Mr. Clare Read). At that dinner a number of leading agriculturalists were present, and the Chairman—himself a Conservative—made a remarkable speech, in which he dwelt at some length upon the short-comings of the Government, and upon the way in which the farmers had been disappointed of their expectations from the advent of the Conservatives to power. He spoke of the indifference of the Government to the interests of farmers, and of the delusive promise in the Queen's Speech with respect to the relations of landlord and tenant, followed by the Agricultural Holdings Act, and said—
"They had taken fright at their own Act, and through the Chancellor of the Duchy of Lancaster, had contracted themselves out of the Act to the universal surprise and dissatisfaction of all who looked to the Government to support their own production."
The farmers have not only been deceived, but they are distressed; and in the midst of their distress, instead of getting relief from the "farmers' friends," they are pressed down by increased taxation. They may well say to their allies on the Treasury bench—
"It is all very well to dissemble your love,
But why do you kick us down stairs?"
I hope the farmers bearing in mind what is taking place will revert back to the course taken by agriculturists in former years. In former generations the farmers were the backbone of the Whig Party in favour of "peace, retrenchment, and reform," and now being naturally dissatisfied at the manner in which the Conservative Party have broken their promises, I am not without hope that finding on which side their interests are really bound up, they will return to their allegiance to the Party which had in the long run best served their interests. I need not dwell further upon the case of these victims of a misplaced confidence, but I cannot pass over the single means by which the Chancellor of the Exchequer seeks to relieve the pressure of the new burden of taxation, and to gild the pill of the additional 1d. Income Tax. He extends the system of exemption, and he does so in a manner which I think is fairly open to animadversion. But he does at the same time recognize a principle which I am not disposed to quarrel with. By means of exemptions he really establishes a sliding scale of the rate of tax according to the amount of income. People with £180 a-year are now to pay at the rate of 1d. in the pound, £250 per annum at the rate of 1½d., £350 at the rate of 2d., and all incomes above £400 at the rate of 3d. in the pound. But why stop there? The principle may very well be carried much further. A gentleman possessing £100,000 a-year could pay 2s. in the pound, as easily as the possessor of £10,000 a-year could pay 1s., and the possessor of £1,000 a-year could pay 6d. in the pound as easily as the persons of £400 a-year can pay 3d. I do not dispute this principle of taxation at all, and I am quite satisfied if hon. Gentlemen opposite are prepared to support it. But the main point I wish to impress upon the House is this—that yon cannot increase the burden of taxation without affecting all classes of the community. You may exercise great ingenuity in fitting the burden upon the back of an animal so as to avoid unnecessary galling, but the beast has still to carry the weight. Every stroke of the Exchequer force-pump that carries £1,000,000 into the Revenue, reaches by the power of suction to the very depths of the population, and notwithstanding your exemptions the £1,000,000 now to be levied will be drawn from funds that would otherwise employ labour or circulate in trade; and while you may only circumscribe the comforts of people of small incomes, you will add to the bitter cup of privation and distress which is likely to be the portion of the poorest classes during the next autumn and winter. But where are we to stop in this march of reckless expenditure? What guarantee have we that these Estimates, swollen to £78,000,000, may not go higher? So far from having any guarantee, I think the probability is the other way. The practice of Conservative Governments is always to exceed their Estimates. In 1867–8 Lord Derby's Government exceeded their Estimates by £1,100,000, exclusive of the cost of the Abyssinian War. In 1874–5 there was an excess of expenditure over Estimates of £370,000, and last year, as the Chancellor of the Exchequer told us, there was an excess of £900,000. I think it was a humiliating confession on the part of the right hon. Gentleman when he said that the Supplementary Estimates were very considerably in excess of anything he had anticipated when he brought in his Budget last year. Because, if there was such slackness in the control of expenditure in the Departments, or such a want of ability to determine the amount of money which would actually be required, what confidence can be placed in the Estimates of the right hon. Gentleman, at the present time? His only apology and excuse was that unforseen outlays may arise under any Government. No doubt, that is the case. But as regards unforseen outlays of an ordinary character, they ought to be met by savings. That was done in former years by the Liberal Government. In several instances the savings considerably more than balanced the unforseen outlays. But with the present Government we are never safe from being plunged into expenditure of an extraordinary and unlooked-for character. The right hon. Gentleman at the head of the Government appears to have the peculiar faculty of creating unexpected outlays to carry out some magnificent policy, which in the end lands the country in a financial muddle. The right hon. Gentleman's schemes are like displays of fireworks, which for the time are very brilliant, but they are very evanescent, very costly, and very useless. And there have always been the same characteristics marking the great undertakings of the Prime Minister. They have been hastily entered into without due consideration—they have been carried out in an unbusiness-like manner and with reckless expenditure—they have been based upon great miscalculations of the ultimate cost, and they have ended in imposing great burdens upon the nation. In 1867 the Abyssinian War fulfilled all these conditions—it was entered into precipitately whilst Parliament was not sitting, and it was carried out with a reckless waste in expenditure which entailed a total cost of nearly £9,000,000, despite the solemn assurances of the right hon. Gentleman the Prime Minister that the expenditure, which he at first estimated at only £2,000,000, would at the very outside not exceed £3,500,000. When the right hon. Gentleman went out of office—as I suppose he will do some day again—he left to his successors the duty of providing no less than £6,300,000 to pay the outstanding debts created by his Abyssinian policy. Exactly the same kind of thing occurred in 1868. Then it was the purchase of the telegraphs, a dazzling scheme, painted by the Government in glowing colours. They said the cost would only be £4,000,000, and that there would be a surplus income of £280,000 a-year. The principal and interest were to be paid off in 29 years, when the country would enjoy the full financial blessings of the scheme. This was the prediction uttered by the prophet of the Government, the then Chancellor of the Exchequer (Mr. Hunt). And what have been the financial results of this promising scheme? The money expended up to the present time has amounted to £10,000,000, and now forms a serious burden upon the Exchequer. Up to last year there has been a deficiency upon the working expenses. Not a penny of the principal has been paid, and not a penny even of interest upon outlay has been paid until last year, when there was a credit of £40,000 over the expenses. Then there was the blundering and unbusiness-like way in which the transaction was carried out. As usual, with right hon. Gentlemen opposite the bargain was hastily and inconsiderately made. It was a bad bargain. They paid a price which was very much too high, and not only so, they paid for what they did not get. They supposed that they had bought the way-leaves on the railway lines in perpetuity, whereas they had only bought some short leases, and the country has already had to pay in compensation to railway companies several hundred thousands of pounds, and are likely to have to pay nearly a million altogether, because of this blunder in their bargain, which very appropriately bears the date of April 1st, 1868. And now we have very much the counterpart of the policy which the right hon. Gentleman (Mr. Disraeli) carried out in 1867 and 1868, in the purchase of the Suez Canal shares. I am not going to raise any question as to whether it was a wise policy or not, all that I have to consider is the financial effect of the proceeding. And I say that this canal purchase has been marked by a repetition of the kind of blunders committed in connection with the Abyssinian War and the purchase of the telegraphs. It has been a hasty policy, adopted without due consideration, and carried out in an unbusiness-like manner, without any regard to financial considerations. It has been a bad bargain in a money point of view, because you have given a great deal more for these shares than they were worth in the market, and a great deal more than anybody else would have given for them. I believe the Government were deceived in supposing that some people in Paris were preparing to buy the shares. The holders of the Egyptian floating debt deceived the Government then for their own interests, and they have, I think, managed to use the British Government since, to promote their stock-jobbing schemes. I challenge the Government to prove that anybody wanted the shares, or that anybody else would have paid so large a sum for them. I have reason to believe that the Canal shares were being hawked about in Paris for £3,800,000, with a guaranteed interest of 10 to 12 per cent, making the actual value at 5 per cent less than £2,000,000, or one-half of what the Government have given for them, and it is quite evident from the Correspondence laid upon the Table that the Khedive thought it a perfect Godsend that John Bull had so much money, and was ready to part with it so easily, in paying for his whistle. I hope the purchase may not involve us in any further loss or responsibility. Some great stroke of policy may be inaugurated at any moment by the Prime Minister. We may have a Commissioner carrying to Egypt some sort of guarantee on the part of this country in order to save the£200,000 a-year, and thus involve us in some great muddle of Egyptian finance. I am perfectly alarmed when I consider how the Government have been imposed upon by the French holders of Egyptian Treasury bills. If the House could by a Committee trace what had been going on between France and this country—if they could show how the strings had been pulled by a gang of financial swindlers in Paris and answered from the Treasury Bench—if they could trace the loss and suffering occasioned in thin country by fluctuations of Egyptian stock produced by inconsiderate utterances of right hon. Gentlemen opposite, they would be perfectly shocked and regret that they had ever been mixed up in Egyptian finance. Well, I am afraid we have not got to the end of our loss in this Egyptian matter, and the probability is that when the Liberal Party come again into office—as come they will, notwithstanding the despondent expressions in the East Retford speech of the right hon. Gentleman the Member for the University for London (Mr. Lowe)—my right hon. Friend the Member for Pontefract (Mr. Childers), or whoever else is the Chancellor of the Exchequer under a Liberal Government, will find his difficulties increased by the financial burdens left to him by the present Government. But, leaving out of consideration the possibility of extraordinary occasions of expenditure which may be sprung upon us at any moment by the right hon. Gentleman the Prime Minister, the ordinary expenditure recommended by Her Majesty's Government is sufficiently alarming. The ordinary expenditure is progressing at the rate of £1,500,000 a-year, and already the newspapers are speculating upon its reaching £80,000,000 next year. You will then have to choose between adding another penny to the Income Tax or giving up your plan of reducing the National Debt. Indeed, you may be driven to that alternative by the failure of estimated receipts at the Exchequer during the present year. And then I think I can venture to predict what will occur. The sinking fund of the Chancellor of the Exchequer will disappear. I think we had some premonition of this when the right hon. Gentleman spoke about the sinking fund not being like the laws of the Medes and the Persians. So soon as you are obliged to lay on additional taxes you cannot maintain the sinking fund. It had no doubt a great struggle for existence when the Chancellor of the Exchequer had to consider the necessity of putting on an additional penny to the Income Tax this year; but it would have been too absurd to have given up the sinking fund the very first year of its existence, and so it was saved, but it will not stand the pressure of another year. There is, in fact and in reason, a great objection to laying on taxes to pay off the National Debt. What we want is thrift and economy in the national finances. The expenditure ought to be kept within the Estimates. The experience of the late Government proved how much could be done to redeem the National Debt without the pretentious arrangement of a sinking fund. During the five years of the Administration of the right hon. Gentleman the Member for Greenwich (Mr. Gladstone), notwithstanding net remissions of taxation amounting to £12,500,000 there was a reduction of the Debt of £26,000,000 over and above the Stock and Terminable Annuities created for the purchase of the telegraphs, and on account of fortifications and Army localization. The contrast between the late Government and the present in these respects is perfectly amazing. They are borrowing with one hand, whilst they profess to be paying off the Debt with the other, and at the same time they are increasing their expenditure, whilst the Revenue is declining. The late Government remitted taxes and reduced the Debt; the present Government have increased the Debt, and are laying on fresh taxes. All this is only a repetition of an old tale. In 1866 the right hon. Gentleman the, Member for Buckinghamshire came into office with a surplus of about £2,000,000, and an expenditure of £66,000,000;he left office at the end of 1868 with an expenditure of nearly £72,000,000, and a deficit of over£2,000,000. Again, he came into office in 1874 with a splendid surplus of nearly £6,000,000, and an expenditure of £71,000,000. He has got rid of everything like a surplus, and has carried his expenditure up to the unprecedented amount in time of peace of £78,000,000. If hon. Gentlemen opposite think this is a true Conservative policy, I venture to differ with them. It is a very different policy from that which was pursued by the Conservative Party in former years. I recollect the time when at the head of that Party was a distinguished statesman who kept down all unnecessary expenditure, and who exerted his great abilities and influence in promoting measures for the welfare of the people at large. I, of course, allude to the late Sir Robert Peel, who in one of his last speeches at the close of his distinguished career in 1850 gave this House some important advice. He said—
"I believe that in time of peace we must by our retrenchment consent to incur some risk. I venture to say that if you choose to have all the garrisons of all your colonial possessions in a complete state, and to have all your fortifications secure against attack, no amount of annual expenditure will be sufficient to accomplish your object."—[3 Hansard, cix. 766.]
The principle which Sir Robert Peel laid down in 1850 applies equally to the great military and naval preparations of the present day, and he would equally have condemned the present enormous expenditure. It is a misfortune to this country that the high place in Her Majesty's councils which was in former years occupied by that illustrious statesman is now filled by a Prime Minister of so different a character and who supports so opposite a policy. I look upon it as a dangerous policy. It is sapping away the founda- tions upon which the progress and prosperity of this country depend. It may do in a period of fair weather, but it will not stand the pressure of adversity. The interests of all classes of society are bound up in the wise and economical administration of the national finances. The burden of taxation may help to lose the commercial superiority of this nation, exposed as it is to the increasing fierceness of competition of foreign countries, and in a period of public distress owing to loss of employment, the spectacle of over-grown national establishments, and of large sums of money lavished upon a multitude of unnecessary servants of the Crown, upon pensions and superannuations, and upon "bloated armaments, "will add bitterness to privation, and will alienate the affections of the people from the institutions of the country. The hon. Gentleman concluded by moving the Amendment.

Amendment proposed,

To leave out from the word "That" to the end of the Question, in order to add the word "this House regrets that the progressive increase of expenditure recommended by Her Majesty's Government should have led to a proposal by Her Majesty's Government to add to the Income Tax in the present year,"—(Mr. Rylands,)

—instead thereof.

Question proposed, "That the words proposed to be left out stand part of the Question."

Mr. Speaker, it is somewhat unfortunate that the debate, which my hon. Friend the Member for Burnley (Mr. Rylands) has brought on to-day, did not take place when the Budget Resolutions were discussed some weeks ago. On that occasion my hon. Friend was anticipated by the right hon. Gentleman the Member for London (Mr. Hubbard), whose Amendment, not affecting this Budget particularly, but dealing with the whole structure and incidence of the Income Tax, occupied our attention. However, the postponement of the debate is perhaps not to be regretted; for my hon. Friend's speech to-night not only was able and convincing, but stated the case with a minuteness of detail which would hardly have been expected on the first night of a Budget debate. But before I deal with the special question of the increase in the public expenditure to which my hon. Friend's Amendment refers, I should like to say a few words on the additional taxation recommended to us by the right hon. Gentleman the Chancellor of the Exchequer. Assuming for the moment that further taxation is necessary, and deferring the consideration of the exact amount, which will be better discussed in Committee, the first question is whether the deficit should be made good by an increase of the Income Tax. The Chancellor of the Exchequer has told us that the only alternative would be to raise the spirit duty; and in that I am disposed to agree with him. But if the spirit duty were to be increased, I doubt whether any one conversant with our financial arrangements would propose that that increase should be less than one-eighth of the existing rate, or 1s. 3d. per gallon. At the present rate of consumption, such an increase would give additional revenue to the extent of about £2,700,000, or, after allowing for some diminution of consumption, at least £2,000,000. In my opinion, it would be altogether impolitic to make this serious alteration in our well-adjusted scale of indirect taxes, for the sake of the comparatively small deficit which the Chancellor of the Exchequer anticipates; and I therefore am compelled to agree with him that we can only have recourse to the Income Tax. I must, however, express my extreme astonishment that this proposal should have come from a Government the head of which is the right hon. Gentleman the Member for Buckinghamshire. It is only five years since the last increase of the Income Tax was proposed; and, in 1871, the right hon. Gentleman addressed to this House no less than five set speeches on the subject, denouncing in the strongest terms a proposition the exact parallel of that which the Government now make. Among a number of objections which he then forcibly and repeatedly stated, there were three upon which the right hon. Gentleman especially insisted. The first was, that increase of taxation was objectionable, if direct taxation alone was dealt with; the second, that no increase of direct taxation should take place in ordinary times; and the third, that no increase of such taxation should be made to meet a small deficit. Let me read to the House one or two short extracts from the right hon. Gentleman's speeches. He said, on May 18, that the House of Commons—

"Wholly disapproves the course taken by the Government in meeting a deficiency by direct taxation, and especially by this form of direct taxation—namely, the Income Tax."—[3 Hansard, ccvi. 980.]
He urged on May 4 that it was not right that the Ways and Means should be entirely supplied by direct taxation.
"I, therefore, will never give my consent," he said, "to raising the Ways and Means of the year" (that is to say, the additional Ways and Means) "entirely by direct taxation."—[Ibid., 242.]
He has, however, consented, on the very first occasion of an increase of taxation. On May 4 he also said—
"We should, in fact, encounter hereafter a Nemesis, if we gave in our adhesion to a precedent so perilous and fatal as that of levying the whole of the Ways and Means of the year—and those considerable Ways and Means—by direct taxation."—[Ibid., 237.]
The Nemesis has been of his own creation. And in another debate, on May 1, he said that—
"When a Minister comes forward….and proposes a Budget which consists solely of Income Tax, there should be some opposition not on this side only, but on all sides of the House."—[3 Hansard, ccv. 2026.]
So much for his first objection. As to the second, after explaining that he would not pledge himself to the entire obliteration of the Income Tax from our ordinary finance, he said on May 18—
"The Income Tax is unequal and unjust in its incidence; and, what is more, there is no financial genius in the world" (I presume this includes the present Chancellor of the Exchequer) "that can remove that inequality and that injustice…..This is a tax, therefore, that one can resort to on a great emergency. When the country is in danger, when its fame and honour and its dearest interests are concerned, the great body of the population does not trouble itself about the exact incidence of the tax…..But a tax so unequal and unjust as that should, I think, be resorted to only in cases of emergency; it should not be an habitual part of our financial system."—[3 Hansard, ccvi. 970–71.]
And in enforcing the third objection, he said on April 24—
"I think it is unfortunate that the Income Tax should be used as a matter of course on slight occasions, and that whenever £1,000,000 or £1,500,000 is wanted" (the present deficit, the House will notice, is much less), "a disturbance should be caused throughout the coun- try by an increase of the Income Tax."—[3 Hansard, ccv. 1654.]
Again, on May 1—
"The Income Tax ought not to be proposed to obtain a casual or a common result."—[Ibid., 2025.]
And on May 4—
"A Chancellor of the Exchequer must be no very great hand at his profession" (I am afraid this is rather severe upon my right hon. Friend) "if he cannot manage, somehow or other, to put his hand on £500,000 or £600,000,"—[3 Hansard, ccvi. 237.]
without increasing taxation. I must say, considering these solemn denunciations, that I should have liked to see the face of the Prime Minister when the Chancellor of the Exchequer brought his present proposal before the Cabinet. If, however, in spite of the deliberate judgment of the right hon. Gentleman, in 1871, we must now add to the Income Tax, let us consider what will be the effect of the peculiar manner in which the Government propose to effect this addition. The Chancellor of the Exchequer proposes to raise the minimum income to be taxed from £100 to £150; to increase from £80 to £120 the deduction from incomes above £150; and from £300 to £400 the minimum income subject to deduction. Now it is quite true that alterations have been from time to time made in the scale of exemptions, whether whole or partial, from Income Tax. I doubt, however, whether any increase in the exemptions has ever been proposed except on the occasion of a reduction in the tax—that is to say, when the effect of the increased exemption would be only to make the relief to each taxpayer greater or less. But the peculiarity of the present proposal is that, in a year in which an increased amount of taxation is demanded from the public, out of seven persons paying Income Tax five will be told that they are to pay less than they did last year, and the other two will have to make good, not only the additional requirements for the public expenditure, but also the burdens from which the five are relieved. The proof of this is easy. By the Chancellor of the Exchequer's scheme all incomes of less than £200 a-year will gain in spite of the increased rate of tax; incomes between £200 and £300 will lose; those between £300, and £360 will gain; and those exceeding £360 will lose. Now, according to a Return printed in 1873, and which gives minute details as to the payments under Schedules D and E, I find that there are about 440,000 incomes on which tax was paid of under £200 a-year and between £300 and £360, and only 170,000 of between £200 and £300 or above £360; and I believe that the other Schedules are estimated to give a similar result. If that be so, the proposal of the Government appears to me to be open to the gravest objection, and to form a most dangerous precedent. The periodical from which we receive so much witty advice has called it a bait; but I would rather call it a bribe. It deliberately takes from the taxpayer all interest in public economy. Let us suppose that in some future year a Chancellor of the Exchequer, perhaps belonging to a very different political Party from that of my right hon. Friend, wishes to make lavish expenditure popular. He has only to increase the Income Tax, on the model of 1876. The method would be simple enough. He might raise the minimum for £150 to £180 or £200 (and it would be easy to argue that 10s. or 12s. a-day was the fair wage limit); increase the deduction from £120 to £160, and the maximum from £400 to £500. I know of no particular virtue attaching to £400 a-year; and by carrying the maximum to £500 you would satisfy many of those civil and military officers, clergymen, and widows, to whom my right hon. Friend referred. Well, the result would be almost the same as the proposal in the present Budget. The majority of Income Tax payers would again pay less instead of more, and the dangerous hustings cry might be evoked "More expenditure and less taxation!"I hope, therefore, that the House will pause before they adopt without modification the proposed exemptions. I will now turn to the especial subject of my hon. Friend's Motion. It points to the progressive increase of expenditure recommended by the present Government as the cause of the additional taxation now rendered necessary, and it invites us to re-consider the Estimates. Now, I make no doubt that he will be met in limine by the reply that it is too late to discuss the Estimates; that the House has virtually settled the expenditure of the year, and that it would be against all precedent to review what has already been decided. I might perhaps dispute the literal accuracy of such a reply, for we have not voted the increases in the Navy Estimates, nor in a great part of the Civil Estimates. But even if we had done so, I must refer again to those speeches of the First Minister from which I have already quoted, as conclusive upon this point. I will quote only from one.
"When I remind the House" said he in 1871, "that the Ways and Means (that is the additional Ways and Means), before us consist of a single tax, the levying of which is viewed with the greatest jealousy and anxiety by the people of this country—encouraged in their conviction by the frequent and recent declarations of the Ministry themselves—is it wonderful that when such propositions as these are placed before us we should ask ourselves, in duty to our constituents what is the necessity for a proposal so monstrous, which they themselves have proscribed, and how can we possibly arrive at any conclusion unless we refer to the expenditure which they have called upon us to incur?"—[3 Hansard, ccvi. 234.]
That argument was addressed to Parliament in the month of May, when the Army and Navy Estimates at any rate, had been voted to as great an extent as in this year. And the reasoning of the right hon. Gentleman was, in my opinion, unanswerable. What, in fact, is the real position of the House in dealing with the Estimates of expenditure? They are laid upon the Table early in February; and perhaps in passing I may congratulate the hon. Gentleman the Secretary to the Treasury on his promptitude this year, not only in placing the Civil Service Estimates before us, but in obtaining their discussion early in the Session. The Budget Statement, on the other hand, is rarely made until early in the month of April, so that, in point of form, the expenditure is voted before the Ways and Means are known; but as I think I shall show conclusively, the presumption in ordinary years is that the proposed expenditure involves no increase of taxation. The proof is simple. Since the imposition of the Income Tax 34 years ago, there has been no instance of an increase of taxation being authorized by Parliament, except for the purposes of war, or of impending war, or under the circumstances of a great Continental war. Since 1842, the only years in which taxation has been increased were 1854 and 1855, when additional burdens to the extent of £11,000,000 a-year were imposed for the Crimean War; 1859, when we were supposed to be on the verge of a war with France, and new taxes were raised amounting to above £4,000,000 a-year; 1867–68, when additional taxes to the extent of £2,500,000 per annum were imposed for the Abyssinian War; and in 1871, when the Germans were in occupation of Northern France, and the Income Tax was raised from 4d. to 6d. Except on those four occasions, at no time since the Income Tax was imposed by Sir Robert Peel, has Parliament sanctioned an increase of taxation. Can there, then, be any doubt that when, at the beginning of the Session, in a year of profound peace, we are asked to vote the Estimates, we are entitled to assume that we are spending money which we have got? But let us look at this question from another point of view. What do the Estimates comprise? No doubt the greater part of what the Government annually asks the House to vote is expenditure which, in the opinion of Her Majesty's Advisers, is essentially necessary for the well-being of the State. But some of the expenditure proposed in the Estimates is of a different character. I may describe it as "optional" rather than "necessary." It may be beneficial, and even remunerative; but should the Ways and Means be insufficient to defray it, we are clearly entitled to ask whether it cannot be postponed to another year. It is in this position that we find ourselves now, and it is, I conceive, our duty to review the proposed expenditure, and, while voting as much as is necessary for the public safety, to call upon the Government to withdraw what is only optional. Let me also remind the House of a rule of public finance which nobody has impressed on Parliament more clearly than did the Chancellor of the Exchequer in 1874. It is that, when increases of expenditure are proposed, Government and the Departments are bound to seek for corresponding economies elsewhere. In some directions you will always have to increase the public charge. In ordinary years you may with almost equal certainty make other reductions. But, so far as I can judge from the Estimates of the present year, this most important rule has been entirely neglected. What, then, is the increase of expenditure to which the Motion of my hon. Friend points? I will take first the common method of comparing the expenditure of successive years. So far as I could follow the figures given the other evening by my right hon. Friend, and we have as yet no corrected report of his speech, the expenditure of 1876–7 is estimated at £78,044,000. This may be compared either with the Budget Estimates or with the actual expenditure of previous years. I find that the Budget Estimate of the last year (1873–4) of the late Government was £71,871,000; of the year before (1872–3) £71,313,000; of 1871–2 swollen by the Franco-German War, £72,308,000; of 1870–1 besides the Vote of Credit, £67,113,000; and of 1869–70, £68,223,000; and the actual expenditure of the same years, including that under the Vote of Credit on account of the Franco-German War, but not that for the Abyssinian or Ashantee Expeditions or the Alabama Indemnity, was in 1873–4, £72,466,000; in 1872–3, £70,714,000; in 1871–2, £71,490,000; in 1870–1, including that under the Vote of Credit, £69,548,000; and in 1869–70, £67,564,000. Thus the increase in the present year's Estimates is about £6,200,000 over the Estimates of the year 1873–4, and about £7,700,000 over the average ordinary expenditure of those five years. But I do not think that this is a fair method of comparison. I objected to it in 1873 when similar comparisons were made here, and I submitted on that occasion a calculation which was generally approved by the House, and is now, I believe, accepted by the Treasnry as the fair and scientific method of comparison. According to that method you should deduct from the aggregate expenditure of the year all the revenue which is not levied by taxation, the difference, which will be of course the actual charge on the taxpayer, affording, on a comparison of year and year, the proper criterion, as I said, of the energy and success of Governments in dealing with the public expenditure. If we apply this method to the expenditure of 1873–4 and previous years, and to the Estimates of the current year, what is the result? For this year the Revenue, not in the nature of taxes, is estimated at £12,370,000, assuming£600,000as the receipt for stamps in lieu of fees. If we deduct £12,370,000 from £77,580,000, the total expenditure of the year, exclusive of that required for the extinction of Army Purchase, the net ordinary charge on the taxpayer will be £65,210,000. Now, according to the Return laid before Parliament last year, the net ordinary charge in 1873–4 was £59,773,000, and the average charge of the five years, from 1869–70 to 1873–4, was £59,650,000. The increase, therefore, in the proposed charge on the taxpayer during the current year is about £5,500,000 over that in 1873–4. Analyzing this figure of £5,500,000,I find the following result. The increased net charge for the Army and Navy will be about £2,300,000; for the Civil Service about £2,400,000; for other services about £250,000; and for the Debt a little over £500,000. At first sight, the latter figure may appear too small, for the gross increase in the charge for the Debt is much greater. It must be remembered, however, that from the gross increase must be deducted the interest on loans made by the Government, which, since 1874, forms part of the ordinary revenue. The extra receipts include £500,000 of interest on the old loans for public works, a considerable sum on account of new local loans, and the interest on the Suez Canal purchase paid by the Khedive of Egypt. The net increase in the charge of the Debt is thus only about the amount of the New Sinking Fund created last year. I will take next the Army and Navy increase. As to the Army, I have not much to say. The whole of the increase, about £1,000,000, is accounted for in the additional Vote for the Commissariat; and most of this, I conceive, is referable to the reduction of the soldiers' stoppage. The other Army Votes show, some of them, an increase and others a decrease, fairly balancing each other. But in the Navy expenditure I find that, with one exception, every Vote has been increased since 1873–4. Whether it be for pay, or supplies, or ship-building, or on whatever account, the expenditure all round has been allowed largely to increase. The one exception is the expenditure for works of a permanent character, and there a decrease of about £150,000 has been enforced. Stated generally, the increase in naval expenditure is £1,500,000 a-year, less this £150,000, on account of docks and other great works. I will now refer to the Civil Service expenditure, which exceeds that of 1873–4 by about £2,400,000. I think we on this side of the House have some reason to complain of the taunt which the Chancellor of the Exchequer addressed to us in his Budget Speech. He told us that we had been constantly charging the present Board of Treasury with insufficient control over the Civil Service expenditure, and he gave us some figures in refutation of this supposed charge. Now, I must say that this is a little ungrateful. I myself, and some hon. Friends of mine, went out of our way last Session to praise the Secretary to the Treasury for his exertions in keeping down the Civil expenditure; and perhaps the Chancellor of the Exchequer's present taunt is a fair punishment for our political error in speaking well of an opponent. What he has said, however, has led me to scrutinize the Civil Service Estimates rather more narrowly, and I am bound to say that they show a very different result from what I had imagined. The Chancellor of the Exchequer gave us two comparisons. In the first instance, he said that the increase in the Civil Estimates of 1876–7 over those of 1873–4 was £2,242,000, and that the Education Vote and the Votes in aid of Local Taxation accounted for an increase of £2,310,000. He forgot, in giving the former figure, that his Budget Statement included an addition to the printed Civil Estimates of £100,000 for a building at Manchester. But this is a small matter. When, however, I analyzed the Votes, I was struck by the peculiarity to which I have already referred in connection with the Navy—namely, that the charge for permanent works, under Class I., is greatly reduced—I may say starved—in order to provide a large increase in the Votes for Establishments. The fact is that, while the late Government were strongly pressed by Parliament to undertake, and did undertake, very large public works, hardly any new building has been taken in hand during the last two years, while many of the former have disappeared from the Votes. In this way Class I. has been kept down, while the Establishment Votes have been increased by about £200,000 a-year. But there is a far more serious matter behind. The late Government kept within their Civil Estimates; their Civil Service expenditure, I mean, never, or if ever only to a trifling amount, exceeded that given in the Budget. But the Civil expenditure under the present Board of Treasury has in each year largely exceeded the Budget Estimate. In 1874–5 the Civil expenditure, excluding the subventions in aid of Local Taxation, was estimated at £11,287,000. It actually reached £11,462,000, showing an excess of nearly £200,000. In 1875–6 the Civil Service expenditure was estimated in the Budget at £12,656,000. It reached £13,119,000, showing an excess of about £450,000. If these figures are correct, the claim of credit for economy in the Civil expenditure of the Government entirely breaks down. The Chancellor of the Exchequer also gave us the actual expenditure for all Civil purposes in 1857–8 and 1873–4, as compared with the past year. He stated the first (1857–8) to have been £8,167,000, the second (1873–4) £10,304,000, and the charge for the past year £13,095,000. I had some difficulty in verifying the former figures; but at last I found them in the Return moved for by myself last year, to which I have already referred; and they appear to be the sum of Columns 3 and 4 in the Appendix. But the figures of the past year show a considerable increase. The fact, Sir, really is, that, while we may admit the good service of the Secretary to the Treasury, yet, in consequence of the pressure put upon him by the responsible heads of Departments—a pressure which beyond a certain point he, of course, is unable to resist—the Civil expenditure of the last two years has increased, and is increasing, I fear by rapid strides. But I will now refer to the Budgets of those years and the present Budget in a little detail. The suggestion which has been made, both by the Chancellor of the Exchequer and by others, is that, while in their first two years the Government had the good fortune to find a steadily increasing receipt at the Exchequer, this year my right hon. Friend is met by a great contraction of trade, and consequent inelasticity of Revenue; so that although in 1874 and 1875 he has been able to keep his expenditure well within his income, this inelasticity now prevents him from doing so. I shall be able, I think, to show that this is an entire delusion, not unlike that which prevailed last year with regard to the foundation of the Revenue Estimates as stated in the Budget. The truth is that there is a remarkable agreement between the increases of Revenue which the Chancellor of the Exchequer anticipated in his three Budget Speeches. I decline, Sir, to treat the Budgets of Chancellors of the Exchequer in the fashion in which, during the last year or two, they have been dealt with by certain critics. What we have to look at from year to year is the Statement which the Chancellor of the Exchequer makes in April, and to compare it with the corresponding Statement of the previous April. Now in 1874 the Chancellor of the Exchequer took the normal increase of the three great items of revenue—Customs, Excise, and Stamps—at £1,648,000 over the past year's receipt. In 1875 he took the normal increase of the whole revenue over his Budget Estimate of 1874 at £1,650,000. And in this year he has taken the normal increase of his whole revenue over the Budget Estimate of 1875 at £1,645,000. He has thus calculated upon almost an even advance of revenue in each year; and both in 1874–5 and in 1875–6, his expenditure, though greatly increased, kept within his Ways and Means. But the peculiarity of the present Budget is that, while the increase of Revenue over the Estimate of 1875–6 is the same as the corresponding increase last year over the Estimate of 1874–5, the increase of expenditure is nearly double that of last year's. It amounts to no less than £2,656,000;and it is from this enormous increase, not from an estimated failure of Revenue, that the deficit arises. But assuming the deficit to be such as was stated by the Chancellor of the Exchequer, does it necessarily involve an increase of taxation? I must again appeal to my right hon. Friend to correct me if I do not state the figures accurately; but from his speech, and from the Papers on the Table, I collect that he looks forward to an expenditure—omitting for the moment the sum to be applied to the purchase of Consols in the market, and the estimate for a building at Manchester, which is not yet on the Table—of £77,364,300. His revenue will be £77,270,000, the deficit, according to this calculation, being only £94,000. I must remind the House that this expenditure includes about £3,500,000 applied to reduce the Debt through the process of Terminable Annuities. Now, what I think the House is entitled to ask the Chancellor of the Exchequer is—Are we to increase taxation on account of this petty deficit of £94,000 or £194,000, or is it for the purpose of buying £600,000 Consols in the market? It cannot be decently urged on the former account; it is not inconsistent with all the pledges which have been given by him and others, that fresh taxation should be imposed, to pay off Debt? To my mind, the only solution to the problem is, that the Chancellor of the Exchequer, knowing from bitter experience that his Colleagues will exceed their Estimates, that there are Supplementary Votes behind, and even then excesses to be voted next year, is now proposing to us an increase of taxation in order that the deficit thus occasioned may be provided for. I do not blame the Chancellor of the Exchequer for these anticipations. Just as last year he had in his breast an expectation of more Revenue than was set down in his Budget, so this year he cannot help feeling that more expenditure should be provided for. His first object of course is a surplus, and the pressure on the Treasury, about which he knows so much, the hopes held out at the last Election, and the knowledge that these promises have not yet been fulfilled, are a quite sufficient warning. I do not therefore blame my right hon. Friend in this respect; I would rather strengthen his hands in resisting pressure. For what are the facts about the Supplementary Estimates proposed by the present Government? Last year, not including the £500,000 required to settle accounts between the War Office and India Departments, they amounted to £1,000,000. I have already mentioned the excesses of the Civil Service expenditure over the Estimate; but what have been the excesses on the aggregate Estimates? In 1874–5 the total Budget Estimate of expenditure, excluding the Local Taxation subventions, was £72,948,000. The actual expenditure, also excluding these subventions, was £73,816,000; showing an excess of above £850,000. In 1875–6 the Budget Estimate of Expenditure was £75,522,000; the actual expenditure was £75,922,000, showing an excess of £400,000. It is just the same as it was in 1867 and 1868. Then, as now, the constant tendency of the Government and of the right hon. Gentleman the First Minister, was to pile up Supplementary Estimates, to exceed the Votes, and to close the year with a deficit. And this, Sir, brings me to what I think the House may not be unwilling to consider—namely, what lesson the experience of the last 10 years should give us, as to the comparative economy and extravagance of the present Government and of their Predecessors, who now sit on this side of the House. Sir, I think I shall be able to show that the history of Conservative finance, both before and since 1869, is the same. Of course I do not refer to the times of Sir Robert Peel, when economy was as much in favour with the Leaders of the Conservative Party as with the Party to which I belong; but since the right hon. Gentleman the Member for Buckinghamshire has been the leader of the Party opposite, there has been in operation that inbred sin, that phronema sarkos of extravagance, which has given the country neither surplus, nor reduction of taxation, nor reasonable reduction of Debt. The present financial year will close a decennial period, during one-half of which the finances of the country will have been administered by the Party now in power, and during the other half by those at present in Opposition. For the finance of 1867–8, 1868–9, 1874–5, 1875–6, and 1876–7, you on the other side will have been responsible; for that of the other five years we on this side of the House. You took over both in 1866 and in 1874 a most flourishing finance. The Budget of 1866–7 was that of my right hon. Friend the Member for Greenwich; and, in spite of the terrible commercial panic of May 1866, the result of the year's public account was a surplus of £2,654,000. In 1874, also, you took over a surplus, omitting the Alabama and the Ashantee expenditure, of £4,870,000. But what did you do with these magnificent inheritances? The year 1867–8 closed with a deficit of £1,636,000; 1868–9 with a deficit of £2,380,000. In 1874–5 you had, it is true, a surplus of £593,000, and in 1875–6 of £710,000. This year you anticipate a surplus of £368,000 with the aid of the additional Income Tax. Your five years, therefore, show an aggregate deficit of £2,345,000. The five years of Liberal finance, on the other hand, show an aggregate surplus of £16,947,000. I may be told, however, that this is hardly a fair statement, and that you ought not to be charged with the deficit arising from the Abyssinian Expedition. I will correct both sides of the account accordingly. I will give you credit for the excess of Abyssinian expenditure over the Income Tax raised to defray it, and I will diminish the surplus of the late Government, in the same way, by the excess of the Abyssinian Income Tax over Abyssinian expenditure; but, on the other hand, I will increase it by the amount of the special Alabama and Ashantee Credits in 1873–4. Correcting, then, the figures in this way, I think I shall have now put the matter upon a strictly fair basis. Your five years' finance gives a surplus of £1,278,000, say £250,000 a-year; and ours of £19,247,000, say £3,800,000 a-year. But, again, what have been the remissions of taxation in this decennial period? You do not, I imagine, take credit for those effected out of the £5,000,000 left you in 1874. Your remissions, then, amount to £210,000 on account of marine insurance in 1867, and £60,000 on account of brewers' licences in 1875;but, on the other hand, you are now increasing the Income Tax by a penny. You, therefore, on the balance of the account, have increased, not remitted, taxation. We, on the other hand, excluding the reduction, in 1869 and 1870, of 2d. in the Income Tax which you had imposed for the Abyssinian War, are to be credited with a net amount of £13,450,000 taken off the taxes in five years, an average of £2,700,000 in each year. And what has been done about Debt. The reduction we effected is palpable enough. According to the Return No. 185 of last Session, the Debt stood on April 1, 1869, at £805,500,000, and on April 1, 1874, at £779,300,000. The net reduction in those five years was, therefore, £26,200,000; and this after raising £12,000,000 for the purchase of the telegraphs, and for fortifications. From the total, £38,200,000 must, however, be deducted £8,000,000 of cancelled Stock, formerly belonging to the Chancery and Bankruptcy Courts. There remain, after this allowance, above £30,000,000, the impression on the Debt made by our economies in five years, through the operation of the Sinking Fund and Terminable Annuities. But how stands the case with you? On April 1, 1867, the Debt stood at £805,700,000; and on April 1, 1869, as I have already said, at £805,500,000. You did, therefore, nothing at that time. As far as I can estimate it will stand at above £775,000,000 on April 1 next; and, if so, your entire net reduction will not have much exceeded £4,500,000. But allowing for what you have had to raise on account of the Suez Canal and local loans, you may, I think, be credited with £12,500,000 as against our £30,000,000. Let me recapitulate. Our five years' surplus will be, in round numbers, £19,000,000; yours £1,250,000. Our remission of taxation, £13,500,000 a-year; yours nothing. Our reduction of Debt £30,000,000; yours £12,500,000. Sir, these figures are startling, but they are true. They cannot be met by pleas such as we have heard during the last two years—that a few iron-clads want boilers, and that there is a deficiency of unarmoured gun-vessels. They point to much more palpable causes; and, in one sense, and in one sense only, they justify the prudence of the Chancellor of the Exchequer in asking us for more Ways and Means. As I have said before, I cannot help feeling that across the page of my right hon. Friend's Budget passed the shadow of coming demands; and that to this, and this alone, is due the increase of taxation which we are now invited to approve. If this be the case, the Resolution of my hon. Friend can only strengthen the Chancellor of the Exchequer. He has described himself as jealous of increases of expenditure, and as doing his best to resist them. I have shown how easily he can make both ends meet. He has only to impress upon his Colleagues that they must now employ the language of thrift, instead of concession. Let me once more quote the words, formerly used with such effect in this House, Magnum vectigal est parsimonia—"Economy is the best Ways and Means." And if the House requires it, I think I can give them, from our recent financial history, a precedent for insisting on this rule, which may not be inappropriate. I told the House, some minutes ago, that, since 1842, Parliament had never increased taxation except for purposes of war. That was literally true; but, so far as the annual Budget is concerned, there was one notable exception. In one year, a Government as strong as the present, and under circumstances not unlike those of 1876, did recommend to Parliament an increase of the Income Tax. The year was 1848, and the Government was that of Lord Russell. The Budget showed an estimated expenditure of £54,500,000 with a revenue of £51,250,000 only; and it was proposed to make good the deficiency by an increase of the Income Tax to the extent of £3,500,000. The reasons for that proposal were very similar to those adduced by my right hon. Friend. There had been a large increase of expenditure, in all about £2,000,000, during the two preceding years. Much of that was due to grants in aid of Local Taxation. Trade was bad; the exports of the year fell off by above 10 per cent; the state of Europe was perilous; and the Duke of Wellington's warnings as to the defenses of the country were ringing in men's ears. So necessary did this strong Government, with a majority of 100, consider an increase of Revenue, that the Budget was brought forward not by the Chancellor of the Exchequer, but by the First Minister, with the full force of his authority. And yet what happened? Economy possibly was a little more in favour than it is now. Anyhow, it was to economy that men's minds were first turned. No one denounced the Budget with greater vigour than the right hon. Gentleman the Member for Buckinghamshire, and after many and long discussions it was withdrawn. In the last month of the Session it was brought forward again—£200,000 had been taken off the Navy Estimates, £150,000 off the Army, £480,000 off the other Services. The Revenue was more hopefully looked at, and the Chancellor of the Exchequer was able to withdraw altogether the proposed increase of the Income Tax. What was the result? In the following Session he came down to Parliament with a statement that, without incurring any addition to the Debt, the expenditure had been kept within the Revenue, and that he had a small surplus. In that year, 1848, the cry of the right hon. Gentleman the Member for Buckinghamshire and his Friends was—"Take back your Budget." I venture to repeat that advice to the present Chancellor of the Exchequer. I would say to my right hon. Friend,—Tell your Colleagues that the House of Commons is unwilling to let the year 1876 be the first exception to the rule that, in time of peace, the expenditure must be kept within the existing income. If, through weakness or apathy, you break into this rule now, it will not be the last time; but when still further demands are made, they may not be received with the same indifference or indulgence as now. Sir, my warning may not be heeded; but I feel sure that the time will come when it will be remembered by the country.

said, he rejoiced that the right hon. Gentleman opposite (Mr. Childers) had made an elaborate speech upon the financial proposals of the Government, because now they knew what charges they had to meet. As the hon. Member for Burnley (Mr. Rylands) had referred to the financial administration of former Conservative Governments, it might be expected that some defence of that policy should be offered. The hon. Member, however, had adopted the plan pursued in Trench Courts of Justice, and not only charged the Government with their present offences, but went through the whole of their past career and had brought forward everything that could be raked up against them with reference to their financial administration. The only objection that he (Mr. Hunt) intended to raise to that course of proceeding on the part of the hon. Member was founded on the shortness of notice which had been given to Her Majesty's Government, who were consequently not prepared to answer the charges relating to the past in detail. He was fully prepared to rebut any charges which related to the present financial administration of the Government; but he was taken by surprise when he was called upon to answer charges founded on the conduct of Ministers in 1867 and 1868. As, however, the charges had been made, he would do his best to meet them as well as he could. The hon. Member had complained that the estimate for the Abyssinian Expedition had been largely exceeded. In reply to that allegation he had to state that the Abyssinian Expedition was conducted under very novel conditions by the Government of India, and that it was not directly under the control of the Home Government, and under such circumstances it was not to be wondered at that the original estimate had been exceeded. And further he asked the hon. Member whether he could point to any war carried out by this country under any conditions in which the original estimate had not been exceeded? It must be remembered that the Expedition lasted longer than was anticipated; and if he remembered accurately, he had informed the House at the same time that the Expedition would not cost a particular sum, but so much per month—and of course if the duration of the Expedition were prolonged beyond the period at first calculated, the cost of it would necessarily be correspondingly increased beyond the original estimate. It was, however, impossible for him at so short a notice to go back through the whole details relating to the expenditure on the Abyssinian Expedition. Then the hon. Member made a charge against the present Government with regard to the purchase of the telegraphs. He (Mr. Hunt) declined to take upon himself the responsibility for the conditions of that purchase, seeing that the purchase was completed, not by the Government of which he was a Member, but by that which succeeded it, and seeing that the latter had entirely altered the conditions on which the purchase was made by insisting on a Government monopoly of the telegraphs which was not contemplated by their Predecessors. The noble Lord who was now the Leader of the Opposition, but who was then Postmaster General, had informed the House in 1869 that the profits of the companies had so largely increased during the then past years, that had the arrangement for the purchase of the lines to be made then it could not have been done upon such favourable terms. Under these circumstances, he did not think that much blame could attach to the present Government for the part they had taken in this matter in 1868. Passing to the other great point in issue, he had been anxious to hear the hon. Member go into the question of the increased expenditure by the present Government, but the hon. Member had contented himself with the general statement that they had increased the expenditure by £1,500,000 without descending to particulars. The hon. Member appeared to assume that the increase in the Estimates was altogether due to an increase in the expenditure, but that was not his (Mr. Hunt's) view of the present state of things, for in his opinion it was due almost entirely to a transfer of burden. The hardships pressing upon the local ratepayers had for a long time been urged upon that House, and the present Government had consented to lighten that burden by transferring a portion of it from the ratepayers to the Imperial Exchequer at a cost to the latter of £1,400,000. The hon. Member treated that as an increase of expenditure; but it was not so. A sum of almost similar amount was devoted by the Chancellor of the Exchequer towards the reduction of Debt, including also the cost of the scheme for Terminable Annuities created in 1874. Then there came the very large item of expenditure necessary for carrying out the scheme which had met with universal sanction for the improvement in the education of the people, amounting to £830,000. Therefore, £3,500,000 of the so-called increase in the expenditure was absorbed by those three heads. The hon. Member further charged the Government with having added to the distress of the farmers, and he said that those remissions, given on our part as the farmers' friends were extinguished by the addition of 1d. to the Income Tax. He (Mr. Hunt)might retort that that addition was merely replacing that which was taken off last year, but he would rather tell the farmers that if they had made an addition to the Income Tax they had greatly relieved them as to the burden of their local rates. He was proud to number himself amongst those whom hon. Gentlemen opposite derisively called the farmers' friends, and he believed, whatever hon. Gentlemen opposite might sneeringly say, they were sufficiently intelligent to appreciate what had been done for them by the present Government, and how long and hopelessly they would have had to look for a similar relief from the right hon. Gentleman and his Friends. He believed also that to the observations of the hon. Member they would turn a deaf ear. In speaking of the Estimates for 1874–5, the right hon. Gentleman the Member for Pontefract had failed to observe that the £500,000 required this year to adjust the accounts between the War Office and the Government of India, was a sum which had been accumulating between five and six years, and it had only recently come to the knowledge of his right hon. Friend at the head of the War Department that there was any such outstanding debt at all. As the right hon. Gentleman compared the financial administration of the present Government with that of the late Government, he should call on the late Government to explain how it was that those arrears were accumulating against the War Office as due to the Indian Government. The right hon. Gentleman talked about the excess of the Navy Estimates for 1874–5, but he did not call attention to the excess of the previous year; if he had, he would find that the excesses of those two years were almost identical. He (Mr. Hunt) admitted that such excess was a great fault of administration, and he was not going to de fend it. The excess of 1874–5 was not of his making, and having ascertained that such an excess was possible without coming to the knowledge of the head of the Admiralty, it had struck him as being so monstrous that he took the first opportunity of altering the arrangements under which it occurred. The right hon. Gentleman the Member for Pontefract told the House at the commencement of his speech that he approved of the proposition of the Chancellor of the Exchequer for meeting the deficiency that would otherwise arise, but that he could not understand how it could have been entertained by the Prime Minister, on account of certain observations which that right hon. Gentleman made in that House in 1871 on the subject of the increase of Income Tax. But in 1871 the Income Tax stood at 4d., and a proposition was made to increase it to 6d. In the present year the Income Tax was 2d., and it was proposed to increase it to 3d. The difference of the circumstances under which the two propositions were made he (Mr. Hunt) thought justified the different view taken by the Prime Minister, and there was no inconsistency in the course taken then and now by the right hon. Gentleman. The right hon. Gentleman the Member for Pontefract having pointed out how excessively dangerous the exemptions were, went on to state that he intended to support the plan. The right hon. Gentleman thought—

I did not say so. I said that if it was necessary to have additional taxation, I agreed that it should be by way of the Income Tax, but I criticized the exemptions.

said, he understood the result of the criticisms of the right hon. Gentleman to be that if the expenditure must be increased, he would support the plan of the Chancellor of the Exchequer. And he went on to say that there was no mention of an addition to the Income Tax being imposed except in the case of war.

I used most carefully these words, "war, impending war, or the circumstances of war."

In 1871 an European war was waging; but when the increase was imposed, there was no prospect of our being engaged in war. The increased Estimates of 1871 were required to make up the normal deficiencies of the provision made for the great Services at the commencement of the year, and if proper provision had been made at the commencement of the year the additional Estimates in view of the war then waging would not have been required. The right hon. Gentleman had compared the expenditure proposed and incurred in 1873–4 for the great Services and that proposed for this year. He had always observed that in making comparisons in that House the figures taken were those most favourable to either Party, and the right hon. Gentleman had not departed from it on that occasion. The difference in the Estimates and expenditure for 1873–4 was £250,000, which was a considerable sum to be added to the Estimates to be put before Parliament. But he preferred to compare the actual expenditure with the Estimate of the year. The right hon. Gentleman went on to say that he thought the increased Estimates for the Army were perfectly justifiable, but that he could not say the same thing with regard to the Votes proposed for the Navy. He said that every Vote for the Navy was in excess of what was taken in 1873–4, with the exception of Vote 11, the Vote for Works. He (Mr. Hunt) believed the right hon. Gentleman was nearly technically accurate in what he said, but there was a large reduction in Vote 11, and under Section 1 of Vote 10. There was also a small reduction under Vote 13, and there was a small reduction under Section 2 of Vote 16. This part of the subject was one which came under his (Mr. Hunt's) administration, and he felt bound to go into some particulars. The question of the Civil Service Estimates no doubt would be fully dealt with by the Chancellor of the Exchequer or by the Secretary to the Treasury. In the year 1873–4, after deducting the expenditure for the Abyssinian War and the Ashantee Expedition, the actual expenditure was £10,245,000. The Votes for 1876–7 were £11,091,000, or £846,000 more than the expenditure in 1873–4. Of that sum of £846,000, £96,000 was what had been called "automatic" expenditure, over which the head of the Admiralty had no control whatever—namely, half-pay, retired pay, and pensions; so that, whatever Government was in power, the expenditure must be the same. A great deal of that expenditure was owing to the policy of the right hon. Gentleman respecting his Orders in Council for retirement, into which he would not now enter. There was also the sum of £86,000 for the transport of troops, over which the Admiralty had no control, making a sum of £150,000 to be deducted from the apparent excess of £767,000, over the expenditure of 1873–4, and without going into the minutiæ of the several Votes, he (Mr. Hunt) thought he might state generally that the excess was owing to the policy which he had adopted with the sanction of his Colleagues of increasing the provision for shipbuilding. The addition to the 1st Vote was mainly owing to the improved pay of warrant officers and to one or two other matters in which he would not enter. The increase of Vote 4 was one on which he thought they must congratulate themselves, for it represented a very large increase of the Royal Naval Reserve. He was anxious that when the expenditure of the Government was challenged, the House and the country should know that they got the worth of their money. In the two years during which he had been at the Admiralty—he did not say "Post hoc, ergo propter hoc," because the change made by his Predecessor in office no doubt might have largely contributed to that addition, but the fact remained that in those two years our Naval Reserves were increased from 13,758 to 17,958, or by 4,200 men. So largely, indeed, had that Force been recruited that he had thought himself justified in providing in the current year for 20,000 men, seeing the increased numbers that had been coming in within the last few months. That had considerably swollen Vote 4, and also correspondingly aug- mented the Victualling Vote No. 2, because they required a larger supply of provisions for the men when under training, and also of clothing, which came under the Victualling Vote. Moreover, in consequence of the rise in wages he had found it necessary to increase the inducements held out to boys by granting them a free kit. In that way Vote No. 2 had been increased by £15,000. These were all small sums; but the principal increase was in the shipbuilding Votes, the Votes for the Dockyards, the Vote for building by contract, and also for machinery. He thought it right to show, as he had done on introducing the Navy Estimates, that the increase was not only justifiable but absolutely necessary. If he were asked who was responsible for that increase, he should say to the right hon. Gentleman the Member for Pontefract, "Thou art the man," because what they had been suffering from in the Navy for the last few years was what he must call the unwise reductions made during that right hon. Gentleman's administration. The right hon. Gentleman had contrasted the remissions of taxation made during five years of Liberal Administration and during five years of Conservative Administration. The comparison looked very flattering to the Liberal Administration, as stated by the right hon. Gentleman, but certain circumstances must be taken into account before they pronounced his comparison altogether just. The right hon. Gentleman referring to the short period, a little over two years, when the Conservatives were last in office, said they had only relieved a certain portion of the community from the payment of stamps on re-insurance and made some other trifling remissions. But did he tell the House that they succeeded to office just after a great financial crash? [Mr. CHILDERS: I said so distinctly.] He was not aware of it; but no Government whatever, coming into office after such a great financial crisis, with a languishing trade, and a Revenue flowing in in a less copious stream than it had done before, could have been expected to make a large remission of taxation. It was, on the other hand, their Predecessors' good fortune to be in office at a time when trade was flourishing, and the Revenue increasing by "leaps and bounds." Again, since the present Government had been in office, it was a fact, for which they were not responsible, that from the vicissitudes of trade they had not found the Revenue showing that elasticity which might allow them to make large reductions of taxation. But, he asked, were all those large remissions made by the Liberal Government legitimate remissions? Was all the money at their disposal properly laid out on those remissions? Had they left the Navy in a proper state to their successors? He had heard of the steward of some great man who for some years handed over to his employer's bankers a much larger income than he had ever enjoyed before, and the employer thought he had got hold of the best manager he ever engaged. But after a certain number of years he found that the buildings on his property had become dilapidated, and instead of following the wholesome old proverb—"A stitch in time saves nine," things had been getting from bad to worse, and a large part of his income was swallowed up in repairing his decayed barns and houses. Could the right hon. Member (Mr. Childers) say that something of that sort had not happened in the case of that Administration in whose large remissions of taxation he took such pride? He (Mr. Hunt) had a Paper before him the other day which he promised to present to the House, showing that the value of the naval stores of the present day was £2,000,000 less than in 1866. He believed that those stores were now adequate for their present purpose. He was not finding fault with those who reduced them, though he might criticize certain points of detail; but, at all events, the fact that the stores were in such excess that they could be reduced by the value of £2,000,000 enabled the Liberal Government of the day to go on making large remissions of taxation. Then, with regard to the state of our ships—and it was on that ground that he had urged upon his Colleagues and the House the necessity of taking steps to improve the condition of the Navy—the hon. Member for Burnley talked about the progressive expenditure of the Government, and he admitted that in naval matters, since he had had the conduct of them, their expenditure had been progressive, and he looked on that fact as a testimony to the thrift he had displayed in his Department. He had been unwilling, until he saw it was absolutely indispensable, to ask the House for a shilling of increased expenditure. In 1874 he endeavoured to give the House a faithful account of the state of our iron-clad Fleet, and he was then told that he was not justified in asking for so small an addition to the Dockyard strength on the Estimates. He had hoped that what he then asked for might have been sufficient in the course of two or three years to provide for the necessary repair of those ships which were then unfit for service. Subsequent experience, however, showed him that his estimate was too low, and that it was absolutely necessary to ask the House for a larger number of men, and also to increase the Vote for Stores. That was a progressive increase, but it was forced upon him by his conviction that the increase he had originally proposed was insufficient. What happened the other day when the Navy Estimates were introduced? The hon. Member for Pembroke (Mr. Reed), who was thought no mean authority on those matters, challenged his Estimates, and declared that he did not think our Navy sufficiently strong in comparison with the fleets of other Powers? And yet what was the difference at the time that challenge was made between the condition of our Fleet and its readiness for war and the condition in which he found it when he entered on his present office? When they were accused of extravagance and progressive expenditure he felt bound to repeat what he had said for the most part on a former occasion. The statement he made in 1874—and he had never departed from his assertion on that occasion, and all his subsequent experience had confirmed it—was that there were at that time only 14 iron-clad ships fit for general purposes in a generally effective state, in the proper sense of the word. He put aside on that occasion special ships—ships for coast-defence, special rams, and he also put aside the Devastation, of whose seagoing qualities they had not then the experience which they had now; and he then stated that they had only 14 ships thoroughly effective in the proper sense of the word. At the present time, putting aside all those special ships, there were 20 effective iron-clads, and in the course of a few months there would be 21, notwithstanding the loss of the Vanguard. But that was not all. The right hon. Gentleman the Member for the City of London (Mr. Goschen) asked him the other day if he (Mr. Hunt) was going to send round the ships that had been repaired, in order to induce people to submit to another 1d. Income Tax. The fact was that the whole of the increase on the Navy Votes would not absorb a 1d. Income Tax, or anything like it. But what was the difference between the progress of iron-clads under construction when the right hon. Gentleman resigned office and the present progress? He found that there were then six iron-clads in course of construction; now there were 10. On the 28th of March, 1874, the amount of tonnage of iron-clad ships in course of construction was 10,505 tons. At the present time the tonnage of iron-clad ships in course of construction amounted to 33,236 tons, there being thus a difference of 22,731 tons, representing respectively in iron-clad strength 3½ ships of the Alexandra type, 4 Téméraires, 3 Inflexibles, 6 Shannons, and 5 Nelsons. That was the addition to their iron-clad strength which resulted from the increased Estimates which he had induced the House to sanction. It was only justice to the right hon. Gentleman, however, to say that he had intended himself to propose an addition of 800 men to the Dockyards, and, so far as he had induced his Colleagues to consent to it, he was, of course, entitled to a share of whatever merit there might be in the figures just stated. But it was after that great increase in our naval strength that the hon. Member for Pembroke challenged him to say whether we were strong enough. Now, as he told the House the other day, he had experienced a great want of unarmoured ships. The establishment on foreign stations was considerably below that which was sanctioned by the right hon. Gentleman the Member for Pontefract (Mr. Childers) when at the head of the Admiralty, after consultation with Foreign and Colonial Ministers. But the present Government had not been able to keep up the establishment he laid down. It had been a struggle with them ever since they came into office to keep up foreign reliefs, and he (Mr. Hunt) had been obliged to continue a practice which he strongly disapproved—namely, that of commissioning ships on foreign stations for long periods without their undergoing a thorough overhaul. As he had already told the House, if war broke out immediately, he should not have a single unarmoured ship at his disposal that was not already in commission, all available ships of that kind, in fact, being required for ordinary peace purposes. Under these circumstances was it not, as he had said, his bounden duty to come forward and propose an increase? As he had already told the House also in regard to unarmoured cruisers, we were entirely without those river-service gunboats which had been found so useful in Chinese wars, for they had all perished, and he had felt it his duty to supply that want. It was under those circumstances he had come forward and asked the House to allow him an increase of nearly £500,000 in the Vote for shipbuilding by contract, and he felt that if he had asked anything less than that he should not have discharged his duty. It was a disagreeable task for a Minister to ask for an increase of expenditure. As regarded its terms, he certainly concurred in the Motion so far as to regret that a progressive increase in the expenditure should have led to a proposal for adding to the Income Tax, and he regretted that progressive increase was necessary, but, it being necessary, it seemed to him the duty of the Government to propose it and the duty of the House to vote it. And if the hon. Member who moved the Resolution thought, as he said, that whatever might be the opinion of the House there was an opinion out-of-doors which would condemn the proposal of the Government, he (Mr. Hunt) ventured to tell him there was no issue on which he would more willingly appeal to the country than that of making provision for our naval power, and maintaining that naval supremacy of which we were all so proud.

in answer to the challenge of the right hon. Gentleman the First Lord of the Admiralty as to whether any war had ever been brought to within its originally estimated cost, would refer the right hon. Gentleman to the instance of the Ashantee War, which had cost even less than the estimate. What he (Mr. O'Reilly) complained of was the constant excess of expenditure of a Conservative Government over the Estimates, and, in his opinion, the naval expenditure under the present First Lord of the Admiralty had been the most signal instance ever brought under the notice of the House. The Government, however, were challenged, not on a point of detail, but on their general financial policy. The question raised by the Resolution was this—What was the proper function of the Government and the heads of the great spending Departments with regard to the country in financial matters? His idea of the duty of a Minister was that he should well consider the position of his Department, looking to the future as well as the past, and that he should state his views on the whole probable future expenditure in connection with it. The Chancellor of the Exchequer ought also, in his opinion, to give in the same way a general view of the finances of the country, not restricted to 12 months only, and he should not rashly throw away money one year which might be needed in the next. There were only two circumstances which would justify an addition to the taxation of the country—a falling Revenue and unforeseen events. Had the Revenue fallen in one single year below the estimate of the Chancellor of the Exchequer? On the contrary, the increase had been steady and progressive. Had there been any unforeseen circumstances? It was to be assumed that both the First Lord of the Admiralty and the Secretary of State for War had warned the Chancellor of the Exchequer of the increased expenditure which they had this year demanded. The Miscellaneous Estimates had been swollen by the addition to the Education Vote and the subvention in aid of Local Taxation. The former must have been foreseen, and with regard to the latter the Chancellor of the Exchequer ought to have stated that he intended to allot about £1,500,000 for this purpose, and that this meant the retention or imposition of 1d. in the Income Tax. As he had said, in common with other Conservative Governments, it had been steadily the practice of the present Government to exceed their Estimates. The increase of Expenditure on the Army and Navy had been £2,250,000, and on the Civil Service Estimates it had been £2,240,000. The increase of £900,000 on the Education Vote was necessary, but might have been foreseen, and as to the £1,400,000 voted in aid of Local Taxation, it might not have been foreseen, and further, was not necessary. Every one knew that the expenditure was rising year by year. If the Ministry knew it, they ought not to have given away Revenue, and if they did not know it, they had simply drifted into a deficit. The Opposition were therefore justified in challenging the expenditure as a whole, and were not called upon in such a Motion as this to criticize individual items. He contended that looking at that expenditure as a whole the increase was both unnecessary and impolitic, and there was nothing in the state of Europe which could justify it. The strength of the country lay in its great financial reserves, and if they went on swelling their annual expenditure and increasing taxation they would sap the foundation of their strength as a nation. He altogether disapproved the manner in which the Chancellor of the Exchequer proposed to meet the expenditure of the year, regarding it as bad in principle and injurious in its effects. He looked upon it as a bribe to certain classes in the country to acquiesce in an increase of taxation, because they were themselves exempted from it. It formed a dangerous precedent, in diminishing responsibility where it ought to exist, and in affording a specious argument in favour of the popular fallacy which prevailed so much on the Continent, but, he hoped, never would be adopted in this country—namely, progressive taxation. Of late years political power had been given to the lower classes; but the sense of responsibility which ought to attend the bestowal of political privileges was taken away by the increased exemptions proposed by the right hon. Gentleman, while in another view the loss entailed on the country by the exemption in question would, in the case of Income Tax at 1d. in the pound, amount to no less than £360,000. Whatever the vote on the Resolution of his hon. Friend the Member for Burnley might be, he believed the people of the country would regret the progressive increase of expenditure recommended by Her Majesty's Government.

thought the present was not an appropriate occasion on which to discuss the general question of the manner in which the Income Tax was assessed or the exemptions that ought to be made with regard to it. As the Motion of the hon. Member for Burnley (Mr, Rylands) was framed, it was one which the House, and Conservative Members generally, might agree to without very much compromising themselves. It said that the House regretted the progressive increase of expenditure. Of course, they all regretted an increased expenditure; but he did not see how an increase could be otherwise than progressive. He had never heard of a retrograde increase. If the hon. Gentleman, instead of using the word "progressive," had used the word "unnecessary," there would be a definite issue before the House, and it was upon that issue that he would argue the question. The hon. Gentleman who had last addressed the House (Mr. O'Reilly) said he would not go into details, but take the expenditure as a whole; but he apparently forgot that the whole was made up of items, and what the House had to consider was whether those items were necessary or otherwise. As far as the increase and cost of the Army and Navy was concerned, he (Sir John Scourfield) had no hesitation in ascribing it to the inventive genius of the age, both as applied to ships and weapons of war. If people were only a little more stupid we should have a less expenditure; but no sooner had we adopted one description of weapon, or one system of shipbuilding, than some one improved on it, and we were obliged, unless we were content to lag behind, to adopt the new system. The Prussians had beaten the Austrians to a great extent by means of the needle gun, which was then considered the best weapon of its kind; but it had since to give way in favour of a superior gun, which in its turn was superseded by one still better. The same thing applied to our Navy, and it was the duty of the Government not to allow other nations to surpass us either in our vessels of war or our naval armaments. Two years, ago he had taken the Chancellor of the Exchequer to task for reducing the Income Tax, observing that he did not consider when there was a large Debt there was a real surplus. He now modified that statement, and said that as long as there was a large National Debt there was no embarrassing surplus. Reference had been made to the relief afforded to local taxation. But he thought that was perfectly justified by the circumstances; for there was no doubt that local expenditure had been considerably increased by the increased cost of the maintenance of lunatics, and the cost of the main- tenance of the police, the superannuation fund of which was in a very unsatisfactory condition. The cost of the Civil Service, too, must continually increase owing to the advance in the price of labour. It was that which led to the constant demands which were being made upon the Government for increased salaries in all Departments of the public service. With respect to the Income Tax, he believed that any reduction would have been perfectly impossible, for there was no means of filling up the gap that would have been occasioned by such reduction. He therefore thought that blame for a deficiency in the Revenue did not come with good grace from hon. Members opposite, seeing that the right hon. Gentleman the Member for Greenwich had offered to abolish the Income Tax altogether, and thus sweep away £6,000,000 of Revenue. In his opinion, there had been a rash reduction of Revenue during recent years, and he was afraid that the time would come when we should repent this destruction of all our sources of income. The reductions of taxation effected by Sir Robert Peel had produced striking and immediate benefit to the community, but those of the late Administration had done no good to anybody, while they involved a lamentable sacrifice of Revenue. He could not understand what the hon, Member wanted the House to do. If he asked for his sympathy on account of the increased expenditure of the country he would give it him, but he hardly thought that would afford him any consolation. He complained of the enormous increase of our armaments; and the only thing he(Sir John Scourfield) could suggest as a remedy was, that that eminent gentleman, Sir Joseph Whitworth, should be induced to construct a gun that would destroy the whole human race in half-an-hour, and then there would be nothing left to complain about, for there would be nobody left to complain.

Sir, I concur with my hon. Friend the Member for Burnley (Mr. Rylands) in lamenting the constant and enormous increase of the national expenditure; and yet I know of few things more idle and unprofitable than to indulge in such lamentations in this House. We are sometimes called the guardians of the public purse, but that must be surely on the principle of lucusa non lucendo, because we do not guard, or attempt to guard, the public purse. My experience is this—that no amount of money can be proposed by any Government that will not be eagerly voted in this House, not only by the immediate adherents of the Government making the proposal, but by an overwhelming majority of hon. Members on all sides. And looking at that amiable facility of temper on the part of the House, perhaps we ought to regard the demands made by the Government as characterized by remarkable modesty. Lord Clive, when, in the latter years of his life, he was charged with rapacity, on account of the large sums he had taken from Meer Jaffier, and remembering the immense treasures which had been exposed before him, with perfect liberty to help himself to any extent, exclaimed—"At this moment I stand astonished at my own moderation." And so, seeing how readily the House responds to their requirements, the right hon. Gentlemen the Secretary for War and the First Lord of the Admiralty may be induced to use the same exclamation. I am not going to indulge in any Party criminations on the subject, for all parties seem to me, to a large extent, to be tarred with the same brush. There is, however, this difference, that the Liberal Party do profess to make economy and retrenchment one of the most important articles of their political faith, though they too frequently forget their professions when in office. But the Conservative Party frankly avow that it is their duty and delight to dip their fingers into the public purse as deeply as they can without provoking disaffection towards themselves in the country. They openly brand economy with opprobrious epithets. It is cheese-paring, parsimony, meanness. They tell us that the Adminstration of a great country like England should be conducted in a liberal and generous spirit. Well, liberality and generosity are, no doubt, fine qualities, provided they are exercised at one's own expense; but when they are exercised at another man's expense, it is a very different matter. I believe that the tendency to increased expenditure, which we witness under every Government, proceeds from the same source, and that is, want of courage to resist the clamorous importunities of the Services. The Services are like the daughter of the horse-leech, whose cry is continually "Give, give," and the misery is,that however much you give them, they have nothing to show for it. To pour money into the hands of the Services is like pouring water into a sieve. According to my calculations, we have during the last 20 years, from 1856 to 1875, spent £550,000,000 on our defences, and yet at the end of that time we are constantly told that we are absolutely defenceless. It is, indeed, most remarkable how every branch of the Service is denounced as utterly unsatisfactory by someone or other who claims to be an authority on the subject. The noble Lord the Member for Haddingtonshire (Lord Elcho) has published some able speeches to prove that the Army is, if I may so speak, in a state of liquefaction. The infantry, he says, consists of only "skeleton battalions, not clothed with flesh and blood." My hon. and gallant Friend the Member for Sunderland (Sir Henry Havelock) told us last year that the cavalry was in a deplorable condition, and the other day he added the consoling assurance that the Indian Army is rotten from head to foot. The hon Member for Hackney (Mr. J. Holms) declares that he is not the only one who has made that declaration, that our Militia is a sham Army. The leading Conservative journal stated a few weeks ago that our Militia and Army Reserve is "a costly sham." One of the military journals which fell lately into my hands says of the Volunteers, that "indiscipline and want of respect for authority have made them ridiculous in the eyes of the general public and worthless in the estimation of the War Office," and adds that "they deserve a better fate than to be made the laughing stock of the country." And as for the Fortifications, many persons whose judgment on such questions is entitled to respect, maintain that they are totally untrustworthy for the very objects for which they were built. The hon. and gallant Member for Stamford (Sir John Hay) once said in this House that the sea forts at Spithead were entirely useless, or rather that they proved admirable marks to guide an enemy into the harbour, and my hon. Friend the Member for Pembroke (Mr. E. J. Reed) in an interesting little book he has recently published, Letters from Russia, says that many naval officers are of the same opinion. But if we have no Army, or Volunteers, or Militia, or Fortifications to speak of, surely we have an effective Navy? Not at all. When the Naval Estimates were brought in, my hon. Friend the Member for Pembroke demolished our armoured fleet, or, at least, reduced it to very small dimensions. According to him, we have 49 finished, and seven unfinished, iron-clads, and, judging by his standard, we may consider seven of these 49 vessels effective. Then the right hon. Gentleman the First Lord of the Admiralty followed him, and, after expressing his great satisfaction at the speech of the hon. Gentleman, straightway proceeded to demolish our unarmoured fleet, for he gave us a long list of frigates and corvettes, and sloops, and gunboats, amounting to about 135, and then told us that by far the greatest number are condemned, out of repair, or unserviceable; so that it comes to this—that after spending £550,000,000 in 20 years on the Services, according to the testimony of those who ought to be authorities, we have nothing to show for it—no Infantry, no Cavalry, no Militia, no Volunteers, no Reserve, no Fortifications, no armoured Navy, no unarmoured Navy—nothing, in short, on which any reliance can be placed as a means of defence. Do not let the House imagine that I adopt these charges as to the inefficiency of the various branches of the Services. On the contrary, I have such confidence in the gallantry of our brave defenders that I should feel perfectly safe, and sleep quite comfortably in my bed, if there were only half the number. I know the usual defence of this expenditure on our armaments. We are told that the money paid for them is in the nature of an insurance—like insurance against fire. But surely the most timid of housekeepers would feel that he was paying rather dearly for his fears if he had expended, as we are doing, one-third of his income in insurances, especially if he were told by those to whom he had paid the money that, after all, he was not insured. But I want to know what reason or justification is offered for this vast addition to our military expenditure—amounting to £2,300,000—since the present Government came into power. The right hon. Gentleman the First Lord of the Admiralty has boasted to-night of the ironclads he has built or is building; of the number of tons he has added to the Navy. But what is it all for? The foreign policy of the Government has been, on the whole, a sober and sensible policy. Before hon. Gentlemen opposite came into power there was a great deal of talk about the necessity of a more spirited foreign policy. But, so far as I know, the only illustrations we have had of their spirited foreign policy have been afforded by three measures. First they annexed Fiji, and immediately afterwards one-third of the unfortunate Natives perished by the infectious diseases we introduced among them. Then they went into the market, and bought some shares in a canal; and, finally, they frightened, or tried to frighten, the Russians in Central Asia, by giving the Queen the title of Empress. Otherwise their foreign policy has been quiet, peaceful enough. Assuredly I do not blame them for that. I have no love for what is called a spirited foreign policy. That means generally a policy of meddling and bluster, as inconsistent with the true honour and dignity of the country as with its safety and peace. But I want to know why the Government, with a peace policy, should give us a war expenditure. And at what a time are you making this enormous addition to your expenditure! At a time when the country is less able to bear additional taxation than it has been for many years. Some of the most important branches of the national industry are smitten with complete paralysis. The iron and coal trades are in a most depressed and deplorable condition. Will the Housebear with me while I state some facts relating to the state of things in my own constituency. Everybody knows that Merthyr and Aberdare have had large ironworks giving employment to many thousands of men. They are nearly all at a dead stop. I have here some figures which will show the extent of the disaster. The Cyfarthfa Works were among the most extensive ironworks in South Wales. The Aberdare, Plymouth, and Penydarren Works, also were, taken together, of very large extent, probably larger even than Cyfarthfa. Well, all these are idle, every furnace blown out, and the men who were employed upon them for the most part dismissed. Now, the stoppage of these works alone in the borough I represent has thrown out of employment about 5,000 men, earning at a low-estimated average £5,000 weekly. In addition to these, the Aberaman ironworks are stopped, having two blast furnaces, and corresponding forges and mills for finishing iron. Two out of three blast furnaces are stopped at Gadley's ironworks. The Hirwain ironworks are stopped also; in fact, out of eight works, many of them very large, the Dowlais ironworks and one furnace at Gadley's are the only ironworks now going; in addition to which there are six colleries stopped in the Aberdare Valley. "I am afraid," says a friend who sent me these facts, "this will be enough to enable you to draw a very dark picture of the condition of your constituency. You might add that the owners who are carrying on their works are doing so at a considerable loss, and do not want new burdens, in the shape of additional Income Tax, to be thrown upon them, for we shall have to pay now on the average profit of the last five years." I need not say that when the staple industries of a district are in the condition I have described, the sinister consequences extend to every class of the population, and fall with especial heaviness on the working classes. The House, therefore, will not be surprised when I tell them that about a fortnight ago I presented a Petition to this House from my constituents; a Petition nearly three yards long, signed by bankers, merchants, tradesmen, shopkeepers, working men, and, indeed, by all classes of the community, praying not only that no addition should be made to the Income Tax, but that it should be totally repealed. And yet it is in these circumstances that the Government come forward to put additional burdens upon the people. I will therefore vote for the Motion as an emphatic protest against the extravagant expenditure of the Government, especially at a moment when the country is so ill-prepared to bear any more pressing taxation.

We are all indebted to the hon. Member for Burnley (Mr. Rylands) who has done good service in giving us an opportunity, even although it comes probably late, of considering the financial position of the country, and taking a more close view than we have done for a considerable time past, both of the sources of our income and of the scale of our expenditure. The country, as we all know, for the last few years has enjoyed a period of prosperity unexampled in the history of any nation under the sun, and the Revenue has been flowing in at such a rate that Chancellors of the Exchequer have been able to take off many taxes and to make things pleasant all round. I do not believe that in the history of the country there ever was a period when the general body of the people—all classes of the community, were better fed, better off, or more contented than they have been for the last few years, and the consequence, I am sorry to say, has been that those of us—and I confess to being one of them—who have all along said our expenditure was on far too great a scale, have had only an unsympathizing audience. We found it almost impossible to interest any body of our fellowmen whom we happened to be addressing on the question of the reduction of expenditure. The fact is, that the shoe pinched no one, and in those circumstances all who talked about economizing our finances were regarded everywhere as a sort of enthusiasts. "Well, it was not to be wondered at, such being the case, that many of the economies of the last Government were far from popular, and it was found impossible to resist the increases that have been proposed. My object in taking part in this debate is not to join in a Party attack against the present Administration, although I entirely disapprove of the scale both of their Naval and Military Estimates. That question has been dealt with in the most exhaustive speech of my right hon. Friend the Member for Pontefract. I listened with great attention to the First Lord of the Admiralty, but I do not think that he at all made out that the present Government had not in this respect fallen very far short of their Predecessors. But my object on the present occasion is to endeavour to call the attention of the country to the vast amount which our expenditure has reached, and I hope in some way to strengthen the position of the Chancellor of the Exchequer: I entirely sympathize with much that has fallen from the hon. Members for county Longford (Mr. O'Reilly) and Merthyr Tydvil (Mr. Richard). I fail to see that any good reason has been given to us in the past few years for this vast warlike expenditure in a time of profound peace, when no danger threatens our shores. On the 6th of March last, the hon. Baronet the Member for Carlisle (Sir Wilfred Lawson) moved a Resolution declaring that the interests of the nation did not demand any increased expenditure on the land forces. I had not the slightest hesitation in voting for the Resolution, and I earnestly wish that hon. Members on both sides would pay as much attention to the wisdom of the views of the hon. Baronet in reference to this question of armaments as they do to his ready wit. For a long time past, in my opinion, there has been no real danger threatening this country, and I hold it to be bad policy, unwise and unstatesman like, in times of profound peace like this to spend as if you were on the brink of a great war. I am not ashamed to confess that all the time I was a humble Member of the Administration of Mr. Gladstone I had a sort of uncomfortable feeling that even the reduced Estimates of those days could not be logically defended when we considered the present condition of England and the great change that has taken place in our policy. I remember when I had the honour of holding the office of Secretary to the Treasury, the Member for Oxford placed a Notice on the Paper—which made me feel very uncomfortable, for I entirely agreed with him—that the expenditure ought at that time to be still further reduced. Had he pressed his Motion to a division on that occasion, I should certainly have been placed in an awkward position. Those being my sentiments, I have not the slightest difficulty in supporting the very mild Resolution moved to-night by my hon. Friend—one so mild that he could not have drawn it himself. Probably it may be liable to the accusation that it may be interpreted by various Gentlemen in various ways, and I agree in that respect with what has fallen from the hon. Member opposite (Sir John Scourfield); but taking the Resolution in its most natural sense—namely, as an invitation to Her Majesty's Ministers to take back their Estimates, to bring in lower Estimates, and so to save us from the necessity of any further taxation at all, I shall vote for it with the greatest possible pleasure. That is really reverting to the old constitutional plan, and I can only say that with most perfect sincerity that no matter what party of Gentlemen may be in power, whether Whigs or Tories, I do not regret that the House of Commons has not more often adopted that plan of checking the expenditure of the country. There is nothing more to be deplored in the Parliamentary history of late years than the action taken in this House upon financial matters. The House appears to have entirely abrogated its old constitutional function of carefully revising and keeping down the public expenditure of the country. The very reverse seems now to be the case; for instead of the House of Commons checking the expenditure, I am not wrong in saying—without in the least justifying the conduct of successive Governments—that in very many instances a great increase in the Estimates has been forced on those Governments by rash and thoughtless votes of the House of Commons. Well, my hope for the future is this, that the period of depression on which we have now entered will recall the nation to the danger of this profusion, and enable us who object, not to a few items in the Estimates, but to the whole policy on which they are based, to let our voices be more potentially heard. I am afraid the piping times of very high profits and full stomachs are over, and probably both masters and workmen will be more ready a year or two hence than they have been for a year or two past, to listen to the warning notes of unfortunate economists. I thought I detected even in the extremely clear and lucid Budget Speech of the Chancellor of the Exchequer an uncomfortable feeling. There was something in his tone and manner that struck me in that light. I do not think he is at all happy in regard to the finances of the country at the present moment, and I am sure there is no one in this House who more strongly regrets the vast sum which our expenditure has reached. Now both last year and the year before I was urged by several Friends, and on various occasions having paid some little attention to financial matters, to criticize the calculations of the right hon. Gentleman, but I declined to do so, and for this reason, that I thought both last year and the year before that the expectations of the Chancellor of the Exchequer would be justified—I wish I could say the same now. I have a very strong feeling that he will find himself mistaken in regard to the year ending March 31st, 1877. One thing I beg the House to consider. It is not at the beginning of bad trade and lower wages that the shoe pinches. Experience has taught us that it is a good while after the tide has turned for the worse that the Revenue begins to fall off, and it is the last years of bad trade and commercial disaster that the Chancellor of the Exchequer most feels. We have entered upon that period now, and I for one am very much afraid that with these Estimates to my mind most injudiciously increased, we shall end this year with a very serious deficiency. Now as to the remedy. Everyone in this House knows well that no real economy can be effected by criticizing the Estimates in detail. There is a great delusion in that respect out-of-doors, and the sooner it is removed the better. There are only two ways of effecting real economy; the first is the Government doing it themselves; and the second, which appears now almost obsolete, is by the Representatives of the people telling the Government they are not prepared to spend more than a certain sum upon special Services. I am not quite certain that the time has not nearly arrived when we must adopt the latter expedient. In respect to the Civil Service Estimates, I have gone through them this year with great care, and they show the most careful revision on the part of the Secretary of the Treasury with a view to economy. After all, there still remain items of increase in the Civil Service expenditure. Of course there is the expenditure on education, which nobody will object to, and which is the best spent money to be found in the Estimates. Then come the grants in aid of Local Taxation, which will very likely before long seriously embarrass the Chancellor of the Exchequer. In regard to this Local Taxation business there has been a great deal of absurd and wild agitation in the country. I have read some speeches by which it would appear that Gentlemen expected money to come from the moon. They appear to think that because taxation is taken off local rates and put on to the Imperial Exchequer, therefore the ratepayers are to be relieved altogether. I never sympathized with that cry, because there is a great deal of delusion about it, and I should not be surprised if the Chancellor of the Exchequer is obliged to ask the House to retrace its stops. After all, if we wish for real important retrenchment we must look to the expenditure on armaments. Without advocating anything like a peace-at-any-price policy, or the absolute abstention of this country from the affairs of other nations, there are good and substantial reasons why, with the good feeling that everywhere prevails, we might now reduce this vast military expenditure which we are increasing every year as a sort of preparation for war. Our policy in regard to the colonies has been entirely changed. We have withdrawn our troops from all the colonies that are self-governing, and we were told that in consequence of that we should be able to reduce the Army. When the Volunteer Force was established we were told the same thing. I do not know how often I have heard that, but all those expectations have proved delusive: so now, when I ask hon. Gentlemen behind me when the expenditure is to be really reduced, they tell me, as a sort of grim joke, that it is to be done when Viscount Cardwell's scheme has been fully developed. For a period of years after the Napoleonic wars, many nations came and hung on the skirts of this country. They looked on us as a sort of natural protector, and in every petty dispute in Europe we were expected to interfere. That has entirely disappeared. We have not lost our legitimate influence—I believe we have increased it—but we do not meddle, advise, and interfere, and threaten as we used to do. That is a good reason of itself why we should reduce our Forces. I cannot make out of whom we are afraid at this moment. I believe there is not a nation in the world which has the slightest hostile intention towards us. What has been the principal cause of alarm during the last 10 or 20 years? We have been told there was danger of a French invasion, and we were told so not only by those interested in increasing our military expenditure, but by statesmen who ought to have known better. That bubble has burst, and burst in a manner which ought to make this country ashamed of itself, for it now turns out that that very French fleet which men were so unwise as to tell us was superior to the fleet of England, when the German War commenced, was in such a state that it had to return within a short period several times to France to take in fuel, provisions, and am- munition. I was told by a gallant Admiral of high authority, that had a small squadron of German vessels come out, they might have gained a naval victory as decided as that of Trafalgar, and forced a capitulation as complete as that of Sedan. In a time of profound peace like this, therefore, we are pursuing a wrong policy altogether in spending these enormous sums on increase of the Army, as if we were going to war. Our true policy in times like this is to husband the resources of the country. This country is the workshop of the world, and if there is at any time any danger, we could increase our fleets and armaments more rapidly than any other nation. In conclusion, I can only say that the Administration which would adopt the policy I have sketched out, would deserve well of the country.

said, he had listened with great attention to the remarks of the hon. Member for Burnley (Mr. Rylands), but was unable to endorse the views he had expressed. The hon. Gentleman had entirely failed to substantiate the ground on which he made his Motion. While saying that he (Mr. Hubbard) could cordially acquiesce in the Resolution so far as it expressed regret at the imposition of an additional Income Tax. As, however, it was to be so carried out, he thought it would be expedient to apply the estimated surplus revenue arising from the increased Income Tax to lowering for Imperial taxation the assessable values and rents of all real property from their gross or nominal to their net or real amount, rather than in extending absolute exemption from Income Tax to incomes of £150, and in the partial exemption of all incomes under £400. He thought a great mistake would be made if hon. Members founded Motions such as that now before the House upon the Finance Accounts, prepared in their present form, without examining them carefully. It was contended, for example, that £78,000,000 was a monstrous expenditure for the country to bear in time of peace. But if hon. Members would look to the other side of the account they would find that large deductions had to be made from that sum. For instance, out of the expenditure of £5,000,000 last year on account of the Post Office, Steampacket Service, and Telegraphic system a sum of £2,300,000 was to be carried to the re- venue side of the account. The same thing would be found in reference to other heads of expenditure. The fact was that the national accounts were not presented by the Government in the form that a merchant would observe who desired to present a clear view of the state of his affairs, for as now prepared they were complex statements, that did not give the true financial position as a detailed debtor and creditor account. He would therefore suggest to the Chancellor, of the Exchequer the desirability of having those Papers made up in a form less open to question, and less likely to mislead. If that were done, he believed that, taking into consideration the profit derived from the Post Office, the Crown Lands, and the Bank of England, the interest received for loans, the £4,500,000 applied to the redemption of the National Debt, &c., the amount of real expenditure to be provided for by taxation would be found to be only £65,253,000. As for the difference between the Budgets of the present and the late Ministry, he would only remark that it was very easy by under-estimating your receipts and over-estimating your expenditure, to find yourself with a surplus of £2,000,000 or £3,000,000 at the end of the year. That might be a very ingenious, but it was not a truthful way of doing business. A Finance Minister's duty, to his mind, was to make his Estimates as close as he could. Hon. Gentlemen, too, must not forget, when they looked at the enormous sum of £78,000,000 for the service of the public, that of that amount above £4,000,000 was applied to the redemption of the National Debt, and they could not call that expenditure. It was a saving in the present and a considerable saving in the future. He must remark that the application of these funds was a matter of considerable interest. In the present state of the accounts the Chancellor of the Exchequer provided absolutely for a reduction of the National Debt to a considerable extent year by year; but, under the old system, a certain amount of Debt was redeemed only in the event of there being a surplus. There were £4,000,000 so applied last year, and this year nearly £5,000,000 would be applied. The redemption now was a secured fact, and, in the face of that, why did they want a surplus. All they wanted was that the accounts should be so accurately stated that the House and the country would not be deceived when they came to be compared with the original Budget. It was quite clear there were only four points which were at all vulnerable in the increased expenditure—the Army, the Navy, Education, and the grants in aid of Local Taxation. As to the two former, the Vote was a large one, amounting as it did to £24,000,000; but he took it that the increase was completely unavoidable. It had been forced upon this country by what was going on in Europe. How could we, indeed, remain in the rear when other countries, inferior in importance and wealth, were making such enormous strides in perfecting the art of war? Only the other day the House heard that a ship-of-war—the Duilio—had been launched by the Italian Government which was in some respects superior to the best iron-clad in the English Navy. We must go to a proportionate expenditure in the Army, because our big guns, provided by the Ordnance, were bound to keep themselves on an equality with the iron plates of the men-of-war. He would say that he looked upon our present expenditure as a war expenditure, because our outlay in providing the best means of defence was the best preservative against actual war, and our true wisdom was to be prepared. He must join issue with the hon. Member for Merthyr Tydvil (Mr. Richard) on his fractions. The hon. Member said that we were spending one-third of our income in what was called an insurance against war, and he asked what would be thought of a man who spent a third of the value of his property in an insurance against fire. Our national Revenue was £72,000,000, but what was the amount of the national wealth and property which the Army and Navy were maintained to protect? Our Income Tax assessment fell far short of the entire value of the national property; but its value, as shown by this one tax, was £480,000,000; so that the fraction was not one-third, but one-twentieth. That was, he thought, a conclusive answer to the hon. Gentleman's argument. With regard to the item of Education, no one would say a word against it, and the contributions towards Local Taxation were not expenditure at all in the sense that it was money to be dissipated. It was merely a different disposition of the national Revenue, by which the Government, through a wise adjustment of local taxation, remitted a certain amount back to the different localities. Our expenditure was, in fact, nothing more than was required by the condition of the country, and certainly nothing more than it could very well afford. The Motion and speeches of hon. Members opposite asserted the doctrine that the whole principle of finance resided in economy. He must, however, raise his voice against such a pusillanimous and pitiable doctrine. In this wonderfully rich and powerful country the grand principle was order and safety; and he was satisfied that what the English people wanted was not a grinding, shifting, and screwing policy, but a liberal and generous one, only requiring that they should get their money's worth for their money. It was not the wish of the Government to incur a larger expenditure than that sanctioned by the House of Commons; but the fact was that the House was equally responsible with the Government for every farthing which it was asked to vote in the present Estimates.

said, that as he was unable to vote for the Motion of the hon. Member for Burnley (Mr. Rylands), which would probably be supported by a number of hon. Members sitting on those (the Opposition) benches, he wished to address a few words to the House. When he first read the Resolution, the only objection to which it seemed to be open was that it was a mere truism. It simply expressed the regret of the House that the increase of expenditure should have rendered it necessary to impose additional taxation. Well, no doubt, they all regretted it, and he supposed no one regretted it more than did the Chancellor of the Exchequer; but it was childish for the House of Commons to pass a Resolution of that sort. They might just as well pass a Resolution regretting that they were now in the middle of May with almost the atmosphere of winter. However, the able speech of the right hon. Gentleman the Member for Pontefract had put before the House so clearly what was meant by the Resolution that it left those who dissented from his views no alternative but to express their objections. The question was, could the House reduce the expenditure? and his opinion was that it could not. It seemed to him that the Motion was intended to enforce upon the Government and the country the great principle, Magnum vectigal est parsimonia, which, being liberally translated, might be rendered that "the mighty dollar ruled all creation." It also seemed to assert that the function of the House of Commons was not to object to expenditure when it was brought forward and proposed, but that after the Estimates were brought forward some arbitrary limit of expenditure should be laid down, and that the House should say that all the exigencies of the public service should be adapted to some Procrustean bed of outlay. Having had some experience in what economy really consisted—for it was once his duty to cut down the financial Estimates in India by £6,000,000 in a single year—he would confidently assert that parsimony and cheeseparing were the greatest enemies of economy. A penny-wise and pound-foolish policy was most detrimental to real economy. It was like the bad shilling that always came back to you, but returned, moreover, with a vast accumulation of expenditure engendered by the parsimony that inspired it. The House had been told that the Estimates of the year 1848 were sent back to the Government to be cut down, and that they were reduced by £800,000 accordingly, rather than impose fresh taxation. Now, before he admitted that that was a wise thing to do, he should like to know how far the financial reductions of 1848 were responsible for the state of affairs during the Crimean War. No doctrine was, in his opinion, more objectionable than that which said that when increased expenditure in one direction was inevitable, they must at once set to work, irrespective of the exigencies of the case, to cut down expenditure elsewhere with a view to make up the deficiency. Were they to cut down that which was absolutely necessary for the Army, because they had to expend a large sum in building additional ironclads? Because last year they transferred a certain amount of local taxation to the Imperial Exchequer, was that any argument why, if an increase in Army expenditure were urgently needed, it was not to be incurred? Things were to be judged and regarded on their own merits, and according to the necessities of the case. Sir Robert Peel, in 1842, justified a low national expenditure, on the ground that it was better to run a little risk than to overburden the country with taxation. There were many countries where the people suffered under a load of oppressive taxation, where it would be right and reasonable to run a little risk in order to lessen the load, rather than, so to say, to fully insure; but, on the other hand, where the burden was light, it would be folly to go uninsured, and to run palpable risk. Now, what was the case with England? They heard a great deal as to the present extravagant amount of national expenditure, and on this subject he should like to recall the words of old Dr. Johnson—"In the first place, clear your mind of cant." There was a great deal of cant heard on the subject of national expenditure. National expenditure was small or great in reference to the condition of the country as compared with that of others. Measured in that way, he contended that the expenditure of the country was by no means excessive. If it could be shown that they could secure efficiency at less cost, then, by all means, let them cut down expenditure; but he asserted fearlessly that on the whole—whether it was popular or unpopular to assert it he cared not—this country was one of the slightest taxed countries in the world. They were in a position when the national policy as to defence ought to be judged on its own merits. As the right hon. Gentleman the Member for Pontefract had shown, the real expenditure of the country was about £65,000,000 per annum. The residue balanced one side the other—such as the expenditure on the Post Office, on telegraphs, and so on. But £28,000,000 went to pay the interest on the National Debt and to form a sinking fund, and thus the expenditure was reduced to £37,000,000; so that, looking at the amount of administrative expenditure independent altogether of the Army and the Navy, he said that, as compared with France, the United States, Russia, Austria, or Italy, the annual expenditure of this country was not at all extravagant or excessive. He had heard a good deal as to the country groaning under taxation, and of another turn of the screw by the increase of the Income Tax. But they should remember that for a long series of years it stood at 7d., and when it was reduced from 7d. to 6d., 4d., and last year to 2d., many hon. Gentlemen who had given great consideration to the question of finance, including himself, had protested against the reduction. It was, however, carried out mainly in deference to the opinion of the right hon. Gentleman the Member for Greenwich, who had since offered the country a total repeal of the tax. But by going back to 3d. they did not reach even the half of the old rate, and they had a right to look at the causes of increased expenditure and see whether they were really justified by the circumstances in which the country found itself placed. He did not think it was altogether fair to bring forward an abstract Resolution like the present after the Estimates had been virtually passed. If the Army or the Navy Estimates were regarded as involving unjustifiable expenditure, it was the duty of the Leaders of the Opposition to have come forward and challenged the opinion of the House and the country on the subject. The same observation applied also to local taxation; but the fact was that the Army and Navy expenditure called forth very little criticism, and that little was directed towards increase rather than diminution. "You cannot eat your cake and have it," and in this case they had eaten their cake and had now to pay for it. Then, as regarded the reduction of the National Debt, while he believed that the measure had gone rather far, still it was adopted last year and almost unanimously by the House, and he believed that the great majority even on that side of the House would fight against retracing their steps. Then, as regarded the Army and Navy, the increased expenditure was not to be met by vague declamation as to increased armaments. Circumstances had materially changed, and although in some respects the circumstances were favourable to this country, yet increased expenditure must necessarily be incurred under those heads. One of such favourable circumstances, in his opinion, was the formation of the great German Empire; but was there any Englishman who desired to be dependent upon the goodwill of a great military Power? The methods of naval warfare, the ships of war, and armaments and implements generally had so greatly changed, and were so materially changing every day, that no one knew what would have to be used in time of hostilities between the country and a foreign Power. Therefore, without feeling anything like a panic or misgiving as to what would be the result of a war if we were engaged in one, the country entertained very proper feeling that we ought to have our Army in such a position that we could not be in extreme peril even if warfare were for a time to lay our coasts open to invasion. We stood in a very different position from that we occupied at the time of Sir John Burgoyne's Memorandum and the Duke of Wellington's remonstrances. We had a sufficient Army on paper to prepare us for any event. If we could place 80,000 or 100,000 Regular soldiers and 120,000 Militia to stand in the line of battle, and a large force of Volunteers in reserve, we should be in a position of substantial security, and it would be idle to impose further taxation for what we wanted. It must be admitted, however, that a great amount of the Force he had described existed only on paper at the present time. We had been trying the system of short service, but it was not yet carried out in its entirety, or its full effect was not yet felt. There had been complaints that we were not getting a sufficient number of recruits owing to the rise in the labour market, and it was stated that if they wanted to have a sufficient number of recruits of the proper physical capacity to bring the Army up to the standard at which it existed on paper, it was necessary to go into the labour market and offer higher terms. He understood that the new proposal in the Navy Estimates was directed to that point, and the expense was one which he believed the country would, on the whole, approve of. He would much rather see an addition of 1d. in the pound put on the Income Tax than that we should run the risk of having a skeleton Army existing only on paper, and without that sort of security which he should feel if the measures which had been already passed were properly carried out to their legitimate conclusion. So much for the grounds of expenditure. The only question he would now touch upon was how it should be met. There were only two ways that he knew of—one was to take excessively sanguine estimates of the expenditure and income, and the other was to raise the Income Tax. He thought the right hon. Gen- tleman the Chancellor of the Exchequer was right in not taking an excessively sanguine estimate in the present state of the country. The credit of England was at stake, and of such importance that they ought never to run it too fine. No one would think that it would seriously incommode commerce to put on a tax for what they thought would be a temporary emergency, for the emergency was not going to last for ever. When the times improved, they would not want the tax, which would not have been so efficacious if it had been levied on sugar, tea, or spirits. The Income Tax was a very rational tax to impose at this time, and in proposing it the Government was only returning to that which was the state of things three years ago. With regard to exemption, he considered that point would be better discussed in Committee, and that it would only confuse the question to go into it now. Under existing circumstances the addition of 1d. in the pound on the Income Tax was right, and he felt called upon by a strong sense of duty to state this opinion from that (the Opposition) side of the House, and to enter a protest against the doctrine that they had to look at an arbitrary figure of pounds, shillings, and pence as the standard by which they were to measure all the expenditure of this great nation. He would conclude by quoting from a Radical writer of the day—Mr. Frederick Harrison—who, in The Fortnightly Review, recently gave as one of the most prominent causes of the downfall of the Liberal party that—

"A great nation did not like to be told that it saved £100,000 by doing something that was inconsistent with its self-respect."

said, the present Government had never promised great remissions of taxation. A great deal of time had been taken up in talking about economy, but what did it all come to? Within the last 20 years the Imperial taxation had fallen exactly 1s. per head—from £2 8s. to £2 7s. In the same period local taxation had increased from 10s. 3d. to 16s. 8d. per head, and there was no Chancellor of the Exchequer here to answer for that expenditure, and no hon. Member for Burnley to complain of the increase. The amount by which the Imperial taxation had increased was exactly the same in gross with the amount of the increment in the local taxes, but in the one case the in- crease represented a growth of less than 10 per cent, while in the other—that of local taxes—there was a growth of quite 100 per cent in this period. It was also worthy of remark that much of increase of Imperial revenue arose from taxation voluntarily incurred by the consumption of certain articles, for of the £10,000,000 that had been added to the Imperial taxes no less than £6,000,000 were derived from the increased consumption of spirits. With regard to the financial policy of the Government generally, there had been no strong attack made on the Budget; and although a great deal had been said about expenditure, no one had ventured to say that it was not needed. Our present financial condition was owing not to any fault on the part of the Ministry, but to the inevitable reaction which was following on the great wave of success that the country had experienced, added to the effects of two disastrous seasons. There was no doubt that the commercial industry of the country was suffering from depression, and the right hon. Gentleman the Chancellor of the Exchequer must expect to have his Revenue seriously affected by the reduced purchasing power of the people in the country.

said, he agreed with the last speaker that it was most unfair to blame the Chancellor of the Exchequer for the present state of trade; one might as well as well accuse him for the bad harvest of last year. His complaint against the right hon. Gentleman was that he was about to cut off many of the sources of our income. He would admit that if a large Revenue was to be raised, and it was necessary to raise the expenditure of the country, recourse should be had to the Income Tax. It was not a Party but a national question, and the point which struck him as most important in the matter was where the system of exemptions was to end. It was said that taxation and representation ought to go together, and in his opinion it was unwise to create a class which should be exempt from taxation, and which should yet possess the franchise. He would remind the House that a considerable portion of our taxing powers had been done away with, and that in the event of future wars we must inevitably rely upon the Income Tax. Under these circumstances he thought the Chancellor of the Exchequer had laid down a most dangerous principle in making so many exemptions; and looking at the state of trade, and the little prospect of its improvement within a reasonable time, it would have been much wiser for the right hon. Gentleman to have kept the exemption money in his pocket. In his opinion it was also unwise to have got rid altogether of the sugar duty, and in abolishing these sources of Revenue we should remember that it was much easier to give a hungry dog a bone than to take it away from him again. A great deal had been said on the subject of local taxation. Now, he thought that the best way of keeping that down was to entrust its administration to men who understood, the subject and knew all about it. He was prepared to sacrifice everything to efficiency, but he contended that the Government had failed to acquire it. On the contrary, there had been a steady increase of expenditure in Departments, and especially in the Army, in which it was not really required, and the public service was not advanced in any respect. He contended that our Army was over-officered, and that too little attention was devoted to the rank and file. From a statement which the right hon. Gentleman the Secretary of State for War had laid on the Table it appeared that the number of colonels and lieutenant colonels in full pay on the 1st of January, 1853, were 467; 1857, 655; 1860, 721; 1870, 1,350; 1876, 1,557; he should be glad to hear some explanation of that great increase, and for what purposes so many were employed, but more particularly the increase from 1857 to 1870, as those years were exclusive of the Crimean War and the abolition of Purchase. Again, in regard to the Civil Service, there was a steady increase in the number of clerks employed in it. The Trade Marks Bill would create another host of officials, and so would the Bill for the registration of partnerships, should it become law, and these two institutions would between them saddle the country with an annual cost of from £30,000 to £40,000. He did not say that this was the doing of the Government, but the doing of Parliament; but still that was no reason why they should not cut down all expenditure which was not absolutely required. Again, with regard to the Navy, stores were bought which were not required, there being plenty in store; for, as there was no stock-taking, they could not really tell what they had on hand. All these things required amendment, and, in conclusion, he would say that he considered if careful attention was devoted to the various Departments of the State there was plenty of room for carrying out a wise and rational system of economy, and the adoption of a practice in regard to national affairs which any rational man would carry into effect in the conduct of his private business.

said, that as several allusions had been made to the Department over which he had the honour to preside, he was anxious to say a few words on the subject. He could not but remark that in the course of the debate no hon. Member had thought proper to put his finger on any particular part of the Army Estimates to which it was desirable that attention should be called. So much was that the fact that the right hon. Gentleman the Member for Pontefract passed over the Army Estimates by saying that the increase seemed to arise from causes of necessary expenditure, and that, therefore, he would not dwell upon them. He (Mr. Hardy) did not mean to say that the right hon. Gentleman expressed any approval of the Army Estimates, but he certainly expressed no condemnation. The right hon. Gentleman expressed the opinion, as he (Mr. Hardy) understood him, that the expenditure of every Department had exceeded its estimate, and that for almost all the Departments Supplementary Estimates were required. With respect to the Army, however, during his (Mr. Hardy's) tenure of office, no Supplementary Estimate had been taken. Though the Estimates which were left at the War Office by his Predecessor put him under considerable pressure, he was not obliged to ask the House for any addition to them. At the same time he could not be held wholly responsible for the increase in the amount asked for in his Department. The position which the Secretary for War held was that he did not lay down a system, but that he inherited a system. The hon. Member for Birmingham (Mr. Muntz) spoke with regard to the number of officers. That also was a matter of inheritance. He might observe, on that subject, that since 1853 there had been two great wars—the Crimean War and the Indian Mutiny, which accounted, to a certain extent, for the number of officers in the field officers' rank, and his noble Friend who preceded him (Viscount Cardwell) created more field officers of Artillery than ever existed before. With regard to expenditure, the House of Commons or Parliament had chosen to institute certain systems. It chose, many years ago, to adopt a system of fortifications. Those fortifications were now coming to completion. So far they had been dealt with by loans, and therefore there was no trace of them in the Army Estimates. But these fortifications would have to be armed, unless the House stultified itself, and said they were not to be armed. They were made for 12-ton guns, but 38-ton guns would have to fill the places intended for 12-ton guns. It was of no use to arm these fortifications, unless you armed them with weapons equal to those which could be brought against them. These enormous implements of warfare could not be moved without an expense which was almost incredible—for instance, he did not believe that the 81-ton gun which it was intended to take to Shoeburyness could be taken to that place at a less cost than from £5,000 to £6,000 in mere carriage; and at Gibraltar these immense guns would have to be dragged by locomotives into their places, and in some places they would have to be slung up the rocks to avoid danger. He mentioned this to show that a considerable amount of expenditure was forced upon him by Parliament, and that he had to construct things of a most expensive character in order to carry out the policy of his Predecessors. The gun-carriages for the Navy, which were borne on the Army Estimates, too, were also becoming of the most expensive character. When they got 81-ton guns for their ships, they might have thought they could have rested for a time; but what happened? The Italian Government had already ordered four 100-ton guns from Armstrong's, which would be of greater calibre than ours, and against which ours, of course, would be of comparatively inferior use. Hence the House would see that they had to be always advancing, always incurring additional expenditure, if they did their duty towards the country. The hon. Member for Merthyr Tydvil (Mr. Richard) said he could sleep comfortably in his bed if they had only half the Army they now had; but he (Mr. Hardy) appealed to the rest of the House whether the whole of the present Army was too much. When he went to the War Office the new system of short service was in operation, which entailed the necessity of a very much larger number of recruits than were ever required before, besides which they had to find a sufficient Reserve. The demand for labour and its price had greatly increased, and it was found that inducements were held out to men in the Army having the best character to take private employment, which led to their discharge by purchase, not on the part of their friends, but on the part of those who desired to employ them. Then there was an amount of desertion which, though it had been exaggerated, was yet to be deplored. Again, there was the deficiency of recruits, and he was constantly urged by hon. Members on both sides of the House to take steps to compete with the labour market. There was also the case of the non-commissioned officers, the increase of whose pay had been recommended by great economists themselves, and the House had adopted his proposal on that subject. Then the deferred pay was one of the lightest burdens that could have been imposed on the country, and it would only come into play by degrees. These were all experiments calculated to be of advantage to the public, and if they were to be condemned, the condemnation must fall upon Parliament, and not merely on the Government, because they had some of them been thrust upon the Government by Parliament, and all adopted by it. What he complained of was that economy was recommended to him in general terms, but no one told him how or where it was to be carried out. The right hon. Gentleman the Member for Pontefract took credit to the Liberal Administration for being able to have surpluses of about £28,000,000 in its five years of office. But where did those surpluses come from? They were not created by the right hon. Member for the University of London, but were taken unnecessarily from the pockets of the people. A Government which had no such surplus might just as much save the money of the people, or even more so, than one which had. Again, paying off Debt by under-estimating the Revenue and over-estimating the expenditure was only an indirect method of taking money out of the pockets of the people for that purpose. He did not disagree in any way with economy, where it was practicable. In his first year at the War Office he accepted the Estimates prepared by his Predecessor, and next year he did not ask for an increase in the Vote, until he had carefully considered all the circumstances, and it was only on the eve of the great changes initiated by that Predecessor taking effect that he was obliged to make provision for contingencies. He trusted that there was no probability of another war, but still complications were arising, and it was well to be prepared. These things came upon nations suddenly, and when they did come they could not be met by an improvised Army and Navy as suggested by the right hon. Member for Montrose (Mr. Baxter). As it was they could almost hear the tramp of armed men in various parts of Europe. He thought he caught the words "Belgian Treaty" from the lips of the right hon. Member for Greenwich when the increase of the Estimates in 1871 was referred to; and had they not Treaties which compelled them to be ready on any emergency? Who could have thought, in 1869, that Prance was so soon to be trampled upon by a foreign nation, and to have the invader in each one of her cities? It would not do for a great country like this to be unprepared if we intended to uphold our position amongst the nations of the world. The gallantry of our sons would no doubt defend our country, but there must be a nucleus of defence, and that nucleus must be paid for. In order to do that they ought to have cadres of sufficient strength to admit of expansion on urgent occasions, and that was to a certain extent war expenditure. If we wished to keep our place in the world we must not put off our insurance to the last moment. We were always in contact in every quarter of the globe with civilized or savage nations. When the Army Estimates were brought forward there was an apprehension of war with China, and very lately there was an outbreak at Perak, which might have turned out more serious than it did, if we had not been ready and able to send troops from India. He hoped our troops would not have again to be exposed to a pestilential climate like that of Ashantee; but we might at any moment be brought, in spite of ourselves, into collision with some barbarous tribe or other. He simply mentioned these circumstances to show the House that the country must be prepared, and that consequently the Estimates had to be framed on broader grounds than they otherwise would be. He had brought them forward, so far as his Department was concerned, in the interest of peace and in consonance with the honour and dignity of the nation, and he could not, in fact, do with less money. Even supposing that the Navy was adequate to the purpose for which, it was intended, the Army we now possessed—Regulars, Reserves, Militia, and Volunteers—was by no means excessive and by no means too expensive for the country whose honour and dignity it had to uphold.

said, that no one could have listened to the speech of the right hon. Gentleman the Secretary of State for War without seeing that it gave a new importance to the debate. If there were one conclusion more certain than another to be drawn from that speech it was this, that the right hon. Gentleman believed that every shilling of our present war expenditure was necessary and inevitable, and that, so far from our being able to look forward to a reduction of that expenditure, every event happening in Europe showed that still further expenditure would be necessary. Into a military discussion, however, he would not enter. This was a purely financial question, and every event that was passing around them pointed to the necessity for considerable reduction. The hon. Gentleman the Member for Wick (Mr. Laing) had laid down the principle that any additional expenditure must be entirely met by the Income Tax, but he (Mr. Fawcett) felt bound to object most strongly to the principle which the Government had adopted of throwing the burden of additional expenditure on a limited class—namely, the Income Tax payers. Passing to the details of the Government scheme, he could not but take exception to the principle of exemption which was proposed. If the Government had adopted the simple method of deducting £100 from all incomes, they would have hadnone of those awkward jumps and breaks which their present scheme involved. Then, not only had the Government committed the mistake of meeting additional expenditure by an increase of the Income Tax, but they had materially limited the class of persons on whom the burden fell, and thus introduced a grave financial danger—that of lessening inducements to economy on the part of the country at large. The hon. Member for Wick had charged the Liberal Party with parsimony and cheeseparing. He boasted, however, that he himself had, by wise and judicious economy, saved more than £6,000,000 in the expenditure of India. What right had he to suppose that, following the same principle, the Liberal Party would not be able to effect a saving of a considerable amount in the finances of this country? He was not going to make a financial comparison between the expenditure and the Revenue of past years and those of the present, except to observe that it was his conviction that the speech made by his right hon. Friend the Member for Pontefract (Mr. Childers) would produce a deep impression throughout the country, because no one who read that speech could possibly come to any other conclusion than that the expenditure of this country had greatly increased under the Government now in power. The time would come when that increase of expenditure would have to be explained and justified. If the Revenue of the country were prosperous, additional expenditure might be, comparatively speaking, of little consequence, for it might simply mean that the surplus was somewhat diminished; but in the present state of the country and her finances, extravagance was a far more serious matter, for increased expenditure would lead to additional taxation, which would fall heavily on many an industry which was now crippled and paralyzed, on a falling wage, and upon impoverished homes already suffering from the fall in the value of securities. Hon. Gentlemen opposite called themselves the farmers' friends. During the last few days, knowing this debate was coming on, he had taken the trouble to spend a short time in one of the greatest agricultural districts of this country. ["Name!"] Well, he had been in Wiltshire, and the farmers in that important district had assured him that scarcely ever within the recollection of the oldest of them had agriculture been in a more depressed condition than it was at the present time. They did appreciate the imposition of the additional taxation upon them in the hour of their severest distress, and that appreciation would show itself sooner or later in a very practical way on the first opportunity. What had hon. Gentlemen opposite done for the farmers? They had only deluded and deceived them by pretending to come to their aid. What had the Conservative Party done by the cry they got up about local taxation? By those subventions from the Imperial funds in aid of local taxation a halfpenny was put into the farmers' pocket; but that halfpenny would ultimately go to lessen the charges upon the landlords, and what price would the farmer have to pay for it? Why, for every halfpenny given to the farmer, a penny would be taken from him. ["Oh, oh!"] He could understand the meaning of those cries of "oh;" but the Conservative Party were not going to have a monopoly of enthusiasm in the cause of local taxation. Some of those who now occupied the Opposition benches were determined, both in that House and out of it—and he was not afraid to meet any hon. Members opposite at a farmers' club meeting—some of them were determined to let the British farmer and other people know that for every halfpenny they obtained by the reduction of rates through those subventions they were asked by the Government to pay twice as much in the form of Income Tax. The Government were responsible for our increased public expenditure. It was a notorious fact that they came into office by one thing more than another, and that was by what was calculated to bring a vast amount of evil on this country—by using all their influence and organization to bring contempt and ridicule on the cause of economy. ["No, no!"] Why, the purchase of the Suez Canal Shares was an illustration of his argument. We knew how the great Conservative reaction was manufactured. It was by proclaiming far and wide that when the Party came into power the days of golden rule would come with them, and there was not a postman, Civil servant, or officer in the Army who was not deluded into the belief that he was living under a new régime to his profit. The Conservative Party got all the homage and popularity which for a time followed the spendthrift. There was nothing so popular and so easy as the reckless expenditure of money; the spendthrift had always for a time been a popular hero; but, happily, the Conservative Party would not escape a day of reckoning. People were beginning to feel the price which they paid for all the glittering promises which they obtained from the Party now in power; the price they were paying in increased taxation, and one-half of the promises had not yet been fulfilled by which that Party obtained their present position. The right hon. Gentleman the Secretary of State for War the other day said the conduct of the Government was being attacked on technical grounds, and not on any substantial basis. But that was not so. The interpretation which the supporters of the Motion before the House put upon it was, that they considered the Government had not managed the affairs of this country with due care and with due thrift; they considered that extravagance, always mischievous, became ten times more mischievous when the country was on the eve of a financial and industrial crisis, and therefore they intended by the Motion to express their deliberate opinion that the present administration of the affairs of this country was extravagant. They condemned that extravagance, and objected to additional taxation, because they believed it would prove burdensome to the industry and vexatious to the people of this country, and because they believed it to be unnecessary.

said, he had listened to the speeches of the right hon. Gentleman the First Lord of the Admiralty and of the Secretary for War with regret, because they seemed to be directed not so much to defend the policy of the Government as to prepare the House and the country for additional and indefinite expenditure. He did not take so gloomy a view of the prospects of the country as his hon. Friend who had introduced the Motion (Mr. Rylands). In times of prosperity they were too apt to think that they would be lasting, and when adversity came they were apt to be a little too depressed. But, while he could not concur in all that had been said as to the condition and prospects of the country, he could not deny that some of its most important interests were suffering from great depression, and he thought, there- fore, they ought to be careful in placing any additional burdens on the backs of the people. Looting at the expenditure, on the other hand, it could not be denied that it was on the increase, and showed a tendency to go forward in the same direction. Indeed, it might be said to be increasing by "leaps and bounds." A great part of this increase had arisen in connection with the Army and Navy, and he, for one, saw no sufficient reason to justify such increase. He thought there were special reasons at the present moment why we were less liable to any sudden attack than formerly. We were ready to resist any combination if we had time. When our armaments were much less extensive than they now were, the present Prime Minister called them "bloated armaments"; he should like to know how the right hon. Gentleman would describe them now. It was said to be necessary to maintain extensive armaments in order to be prepared for sudden attack, but there never was a time when we were less likely to be involved in a war with either France or Germany, and no sudden attack could be apprehended from any other quarter. If there was any necessity for increased expenditure at all in connection with the Army and Navy of the country, he saw no further reason why it should stop at the point that had now been reached, or why it should not go on indefinitely. An enormous military expenditure was the great misfortune of Europe at the present moment, and he hoped this country would refrain from setting a bad example in this respect. He had no doubt that the Government desired to place the country in a position to resist foreign invasion, but they were in danger of forgetting that an important means of attaining this end was by husbanding the resources of the nation in times of peace.

said, he had waited for a moment, thinking it possible that some right hon. Gentleman on the opposite bench might have felt disposed to offer some remarks before he rose to reply; but no one having done so, he supposed he might assume that the right hon. Gentleman the Member for Pontefract and the right hon. Gentleman the Member for the Montrose Burghs had exhausted all that was to be said on the present occasion on behalf of hon. Gentlemen occupying the Front Opposition Bench. He of course remembered that the Bill would have to pass through other stages, on each of which it would be possible for opinions to be expressed on points of detail. The House had now to deal only with the particular aspect of the question that had been opened by the Motion of the hon. Member for Burnley. No one could regret that the question had been raised in that form, or that an opportunity had been afforded for considering it; and no one more than the Chancellor of the Exchequer himself could feel the great advantage that must result from the whole subject of the financial administration of Her Majesty's Government being fully and thoroughly discussed, and from the right hon. Gentleman the Secretary for War and the right hon. Gentleman the First Lord of the Admiralty having had an opportunity of making statements as to the reasons which had led to the Estimates for the year which had been laid before the House. It was also well that an opportunity had been afforded the right hon. Gentleman the Member for Pontefract to bring forward the case of the supposed extravagance of the Government, because for some time past statements of a loose and inaccurate character had been made on that question, even on high authority—statements which were mischievous not only to the character of the present Administration, but which had tended to induce the people of this country to believe that they were much more heavily taxed than was really the case. Thanks were due to the right hon. Gentleman the Member for Pontefract for the clearness with which he had shown that the sum of £78,000,000 did not really represent the amount taken from the taxpayers of the country; that, in fact, a very large proportion of that sum was not to be considered a charge upon the people at all, but was simply one side of the account, which was balanced by entries on the other; and that, in truth, the real charge on the taxpayers might be taken at about £65,000,000. It was important that that should go out to the people of this country not in the interest of the present Government alone, but of all Governments, in order that the public might not believe there had been a larger addition to the charges and expenditure than had really been the case. Taking into consideration the altered mode of keeping the accounts, and comparing the expenditure at the present time with what it was 20 years ago, it would be seen that they had not so greatly increased their expenditure as had been supposed. As he had said, statements had been made within a few weeks of the most wild and extravagant character by gentlemen of the highest authority, and the right hon. Gentleman the Member for the University of London, addressing a meeting in the country a short time ago, and speaking with the authority of one who had for several years held the office of Chancellor of the Exchequer, had stated that since the last year of his administration the expenditure under the present Government had increased from£70,500,000 to £77,500,000 or £78,000,000. The accounts, however, showed that the expenditure during the last year that the right hon. Gentleman had held office was £72,500,000, and not £70,500,000, thus diminishing the crime of the Government from an increased expenditure of £7,500,000 to one of £5,500,000. He admitted that this increase was on its face a large one, and required explanation. £1,300,000 of that increase was for the increased charge upon the Debt, £1,026,000 was for the increased charge for the Army, £1,010,000 was for the increased charge for the Navy, and £2,180,000 was for the increased charge for the Civil Service. He asked the House candidly to consider what those additions meant. Taking the first item in the list, he would not now discuss whether or not it was politic to make exertions to pay off the Debt in time of peace, but he believed that the feeling of the House was in favour of that course being adopted, and all he could say was, that whether that policy was right or wrong, the application of money for that purpose could not be termed profligate expenditure. Then there was an increase of £2,180,000 in the Civil Service; that was occasioned, first, by the allocation of £1,413,000 in relief of local taxation—and there was no one who could say that that payment made to relieve the ratepayer was a wasteful expenditure; and, secondly, there was an increase of £838,000 in the Education Vote. It could not be said that that outlay, imposed upon them by the wise policy of the late Government, was not a proper way of spending the money. But for that increase the present Government was not responsible; the increase went on of itself in consequence of the policy which the House adopted at the instigation, the wise instigation, of a right hon. Gentleman opposite. The Civil Service Estimates, therefore, were increased not only by the increased expenditure on Education, but also by the placing upon the National Exchequer of charges which formerly fell upon rates. The House had deliberately adopted that policy, and the expenditure, therefore, could not be called a profligate expenditure. He admitted that it would be a very fair subject of discussion whether that policy ought to be carried any further. Having disposed of £3,500,000 out of the £5,500,000 of increase of expenditure, there remained only the £2,000,000 that had been added to the expense of our Army and our Navy. The House had heard explanations from his two right hon. Friends as to the increase of expenditure under those heads. A great part of that increase was owing to the policy pursued by the late Government. Any candid man considering how many points were open to attack, and how impossible it was to put ourselves in a state of defence at a moment's notice, would feel it was quite possible that the Government might, after all, in spite of apparent extravagance, have been pursuing a wise and economical policy in putting our Army upon a proper footing. He did not feel himself capable at a short notice to go minutely into the elaborate calculations which he had only imperfectly caught, of the right hon. Gentlemen the Member for Pontefract. At the same time he could catch one or two of the statements of the right hon. Gentleman, with which he should not be prepared to agree. The right hon. Gentleman, he believed, stated that the late Government never exceeded its Estimates. He (the Chancellor of the Exchequer) found that in 1873–4 there were excesses on the Navy and the Post Office Telegraphs, and there was the Indian Suspense Account; those items amounted altogether to £500,000. The right hon. Gentleman said that the late Government paid off Debt to the amount of £26,000,000 in a certain number of years, and he (the Chancellor of the Exchequer) understood him to say that the present Government had not paid off any Debt at all during their present tenure of office. But that was not the case. With regard to the £26,000,000, it must be borne in mind that £6,000,000 of that was only paid off by running a pen through the figures £6,000,000, because it was said it was not to be expected that we should be called upon to pay it; but, nevertheless, after all we might be called upon to make it good. He referred, of course, to the Chancery Fund Account in which debt had been, not paid, but simply written off. As regarded the paying off of Debt he might remind the House that it was his right hon. Friend the Prime Minister who first started the system of Terminable Annuities in 1867, and if the calculation of the Debt were gone into, he believed it would be found that the present Government had paid off as much in proportion as their predecessors had done. But they were told it was always the rule that when a Liberal Government came in the expenditure went down, and that when a Conservative Government succeeded to office it rose. Well, it was a little remarkable that in that matter there was a law of another kind—namely, that when a Conservative Government came in they always found Establishments reduced to a state in which it was not safe to leave them, and during the time they remained in office, which was generally very short, they had the pleasure of setting things to rights. In that way Conservative Governments had to incur certainly some extra expenditure, and had at the same time to bear a good deal of blame which was not their due, although at first sight it might appear to apply to them. For instance, they were told last year that no confidence could be placed in them because the expenditure had exceeded what was expected of them by no less a sum than £900,000. Half of that sum, however, was a matter with which they had nothing to do, for it arose from a suspense account which had been opened in the time of their Predecessors between the Army and the Indian Office, and which had led to the accumulation of a charge of £500,000. Now, while that charge was accumulating the Army Estimates were of course less than they ought to have been. When the present Government looked into the matter they saw it was necessary to set it right, and they accordingly settled that account of £500,000. Then when right hon. Gentlemen opposite charged them with adding to the burdens of the country, they forgot that they themselves, if they had not added to the burdens of the Exchequer, had added considerably to local burdens by measures such as the Education Act, the Sanitary Act, and others—excellent measures no doubt—which they themselves had passed. Therefore, it was not at all reasonable that they should hold themselves up as patterns of economy and the Conservatives as monsters of extravagance After all, as regarded the Civil Service expenditure, taking the prinicple of the right hon. Gentleman the Member for Pontefract as correct, and setting aside Education and grants in aid of Local Taxation this expenditure was not more, but less than that of their Predecessors, by the sum of £150,000, and every exertion had been made by his hon. Friend (Mr. W. H. Smith) to keep down that expenditure. As to permanent works, which they were accused of "starving," the Government had not starved any works which had actually been undertaken, though they had no doubt kept back certain new works which it might have been desirable to undertake, but for economical reasons. He had been a little surprised to find that they were taken to task for this by the right hon. Gentleman opposite. He had expected a word of commendation; but it seemed that the right hon. Gentleman had his weak point like the rest of them. They were all, without exception, in favour of economy, but none of them were in favour of economy without exceptions, and the right hon. Gentleman's exception was in favour of permanent works. But in the contest on the part of every Service to get as much as it legitimately could, he claimed to put in a word on behalf of the Exchequer, because he wished to take care that there should be no damage done to the national credit, and no risk incurred of any deficiency. He had to bear that in mind when first one Colleague and then another wished the expenditure for this or that object to be allowed. While listening with sympathy to their pleas, he put in his own plea in favour of making provision for the reduction of the Debt. He was told by some that he was taking a very gloomy view of the Revenue, and might, by a little more courage, have dispensed with any appeal to the House for additional taxation. Certainly it was not the interest of the Government to come forward and propose any additional taxation if they could, with consistency and with satisfaction to their own consciences, have avoided it, and he did not think his two previous Budgets showed that it was in his nature to pessimise or to take desponding views. It had rather been his tendency to look hopefully on the progress of the Revenue and the prospects of each financial year. But, after making allowance for a considerable increase in the Estimates of Revenue for the present year, he still found himself in the presence of a deficit of no less than £800,000, with no allowance for any Supplementary Estimates, though he did not anticipate any serious ones, with no allowance for any failure of the Revenue, and without any surplus at all. And he asked whether he should be doing his duty to the country if he had said they should take their chance and see if they could scrape through. That would have been contrary to the principles of sound finance. It was their duty to see that the system of finance was sound, and that it would lead to no impeachment of the public credit, and that it would interfere as little as possible with the operations of trade. They knew that they were not likely to make themselves popular by an increase of the Income Tax, but they had, he thought, sufficiently justified their proposal. They had in that way avoided all violent oscillations in every way, and kept their financial system as steady as possible. They were told by some of their Friends that where they had erred in their financial career was in taking the third penny off the Income Tax two years ago, and he was not prepared to say that there was not now some apparent justice in that remark, although they could not have known beforehand that the Revenue would turn out less favourably than they expected. Then it was said they had from their Predecessors the legacy of a magnificent surplus, which they had contrived to dissipate. The question, however, arose what the Government were to do with it. They could not hold it over, so that the House should find a tremendous surplus every year. The first duty of the Government was to apply it for the re- mission of taxation, and this it was thought they had done very fairly, and by no means for the exclusive benefit of those with whom they usually acted. By reducing the sugar duties and by other remissions the Government made a liberal disposal of the surplus left by their Predecessors. But they had had left them something else besides this surplus. The Government found a state of things which, if it had been known or foreseen, would have made the surplus appear to be not of so much value as it seemed to be. When the Government came to consider the state of affairs at the Admiralty and the War Office, and when it became their duty to carry into effect the policy initiated by their Predecessors, they found that they had run a little too near the wind, and that the available surplus was not really quite so large as it had appeared to be. The next question was, why the Government had met this deficiency by imposing another penny on the Income Tax. Seeing that the increase of £2,000,000 in the expenditure was on account of the military services, and that this sum was pretty fairly represented by a penny on the Income Tax, it seemed to the Government quite reasonable to take the Income Tax at the sum which it had been left by their Predecessors, and to put on again the penny which the present Government had taken off. He believed that a calm consideration of the position of the country and of the conduct of the Government would justify them in the eyes of the public. They could, however, join heartily in the natural meaning of the words of the Motion, and regret the necessity there was for an increase of the Income Tax. The words of the hon. Member's Amendment—if they did not understand the meaning attached to them—would command the assent of all. They all regretted that there was a necessity for increased expenditure; they all regretted that that necessity had involved the further necessity of making an addition to the Income Tax; but they could not deny the necessity, nor could they deny that when it was imposed on them the Income Tax was the financial weapon to which it was right they should have recourse for dealing with it. Considering that the words of the hon. Member's Resolution, were not merely intended to express a truism, but amounted in effect to a Motion that the Government should take back its Budget, they must of course resist it, and ask the House to support them in doing so. He had abstained from entering into a discussion of the particular form in which the Income Tax exemptions were to be carried out, and he had done so deliberately, believing that it was a question which would be more properly discussed in Committee. He acknowledged the generally temperate character of the remarks that had been made, and that the debate would be a useful contribution to their financial education, and he must now ask the House to read the Bill a second time.

Question put.

The House divided:—Ayes 263; Noes 175: Majority 88.

Main Question put, and agreed to.

Bill read a second time, and committed for Thursday.