The Northern Daily Times.
Liverpool, Merseyside, England, 1856-01-28 00:00:00

A REVIEW OP BRITISH FINANCES IN 1855

The finances of a country even during' a time of peace must
always form one of the highest considerations of the executive
Government: and when war enters into the elements of national
expenditure, the highest efforts of financial skill are as essen-
tial to the 6tiecess and stability.of Government, as the genius
and courage of the General entrusted to direct the movements
of the forces at his command. The warrior and the financier
are in such cases beset with difficulties on every side that are
continually changing their character. At one time they must
be prepared to meet them with boldness and courage, without
fearing the dreadful cost at which success can only be purchased :
while at another, discretion and sound judgment are far more
valuable than either. The history of the last war immortalised
the name and career of William Pitt : and though modern
statesmen have attempted to show that his financial system for
carrying on a costly and protracted war was based upon false
principles, they :have failed to show how victory would have
been obtained without it. Nothing is easier for a mere theo-
rist than to question the policy of a public man when time has
swept away the difficulties that encompassed his position, and
hence the errors that were promulgated at the commencement
of the present war as to the principle upon which the means
should be raised for conducting it properly. It was here that
Mr. Gladstone committed a grave mistake when lie permitted
himself to be influenced by the delusive charm of paying for
the war as he went on, by raising the amount
by taxation within the year. But although this plan was vin-
dicated, and set forth, with remarkable plausibility, in the
columns of a semi-official organ of the government until the
delusion was dispelled by dire necessity, we never for a single
moment allowed it to be countenanced in our
columns, and what we wrote in January, 1855, we have no
need to retract in January, 1856. • On the 13th of January
last year we made the following remarks on the revenue
returns :--

"At a time when we are carrying on a costly war, the termi-
nation of which cannot be calculated ; when we are told that
" we must pay as we go on," these returns demand• the most
serious attention of the nation. On the total income of the
country, the inerease only amounts to £2,291,356 for the past
year.

" It is not for us to decide whether we arc to carry on war

upon credit or for cash

we may trace in the finance

department the main secret of the false economy which has been
practised, and the intimate cause of our numerous failures in
the prosecution of it. We have repeatedly stated, that suc-
cessful war and sound commerce and finance are insep-
arable. We have nothing to do with the political bearing of
the subject in question ; but we believe that the financial re-
sources of this great empire have been managed with as much
indiscretion and want of judgment as the military and naval
departments of the State. We have bound ourselves with
preconceived theories in war, commerce, and finance, instead
of launching out boldly to meet the altered circumstances in
which we are placed, and the changes of the times in which we
live. In vain do our heroes go forth to do battle for their
country, if we confine our plans and our actions to a paltry
economy. It is the economy of life, and not of money that
England requites."

Within a few months after writing this the Government was
compelled to give up Mr. Gladstone's long cherished theory of
paying for the war by an annual amount of taxation, by con-
tracting for a loan. But it is impossible to calculate the amount
of difficulties which were entailed upon it by his rigid adhe.
rence to a principle which bore upon the face of it an impossi-
bility in practice.

We shall now give a brief outline of the financial state of the
country during the year that has just terminated, in which we
shall set forth the principal facts which have transpired in the
fiscal and financial arrangements of the Government. The
Finance Minister of this country is so far a free agent that he is
subject to no defined principles of action, but has, in a great
degree, the right of making his selection as to the taxes he
wishes to impose or remit, subject, of course, to the considera-
tion of his colleagues in the Cabinet ; so that a change in this
department of the Administration may lead to opinions of the
most opposite character ; this has been clearly seen in the
financial statements of Mr. Disraeli and Mr. Gladstone. What
views the present Chancellor of the Exchequer entertains
upon the principles of taxation have yet to he known, so far
as the past year is concerned we cannot consider him in any
way responsible for the means adopted to meet the heavy
expenditure entailed upon the Treasury by the war : for being
installed into office on a sudden emergency, there was no
course left open to him but to follow in the steps of his pre-
decessor, and make the best of the means placed at his
command. The finances of 18:55 are therefore the result of
Mr. Gladstone's legislation rather than that of Sir George
Cornewall Lewis.

The exact amount of the national revenue at the beginnin7
of 1853 stood at £56,822,510 against £54,531,154, being an
increase of £2,291,356. This was the result of Mr. Gladstone's
means for providing for the war, at the close of the first year
after its commencement, from the ordinary sources of revenue.
The results for each quarter compared with those of the cones-
Pending quarters i❑ 1853 being as follows :-
Ist quarter
.. £ 363,040 increase.

2nd do
3rd do

369,587 decrease.
857,336 increase.
1,440,007 Increase.

The total expenditure during the same period compared with
1854, was as follows :

Total Expenditure
in 1854.

Total Expenditure
in 1855.

Ist quarter

£10,076,287

£20,834,896

3rd ditto
4th ditto

7,775,779
20,906,995
18,653,940

27,886,908
27,253,258
24,268,520

Increase

57,413,001
£42,830,581

100,243,532

The above statement shows the extent to which the wir had
increased the expenditure of the country at the end of twenty-
one months after the declaration of hostilities, The effect of
this upon the finances of the treasury, after taking into consi-
deration the funds raised upon exchequer-bonds, exchequer -
bills, and the loan of £16,000,000, has been to create the
following deficits upon each quarter of 1855 :

let quarter

Deficits in 1855.
.. £3,495,615
~. 3,306,463
853,442
.. 3,879,750

2nd do
3rd do
4th do

The year 1855 opened upon the Finance Minister with the
prospect of an annual expenditure amounting to 90 or 100
millions sterling, wnich was nearly double the amount of the
ordinary revenue in time of peace ; this was sufficient to dispel
all the illusions which Mr. Gladstone and the school of econo-
mists to which he belonged, indulged as to the possibility of
paying for the war simply by an increase of taxation. He had,
however, the honour of propounding an increase in this direc-
tion, which, it was intended, should produce £6,880,000 per
annum from the following articles in May, 1854 :

Income tax
Spirit duties
Sugar duties,
Malt duty..

£3,280,000
450,000
700,000
2,450,000

Total .
Mr. Gladstone's estimate of the duty to be yielded by the
increased malt tax was made upon a consumption of 40,000,000
bushels, the quantity consumed in 1853 having been 41,992,178
bushels; but in 1854 the consumption diminished to
36,812,727 bushels, which was sufficient alone to reduce Mr.
Gladstone's estimate by £1.035,000 ; a faLtt which proved the
uncertainty of increasing the revenue by indirect taxes.
The present Chancellor of the Exchequer commenced his
official career under circumstances of no ordinary difficulty.
Ho bad to appear before the country with a balance sheet
showing a deficit of 3 millions (13,495,615). The ordinary
revenue for the year ended March 31, 1853, was £58,764,576
against £52,076,526 in 1854, being an increase of
£6,688,050. This fact carried sufficient weight with it to
show the impossibility of meeting the expenses of the war,
without appealing to the money market for a loan.
On the 12th of April, 1855, a letter from the Chancellor of
the Exchequer was addressed to the Governor and Deputy_
Governor of the Bank of England, to intimate that Govern-
uncut would be ready to see parties desirous of contracting fur
a loan on the 16th of April, when the particulars were made
known for the sum of £16,000,000 ; the contractors for every
£lOO snbscribed were to receive £lOO Three per Cent Canso
lidated Annuities, and a terminable annuity for 30 years, in
which the h tidings were to be made. The interest on the
consolidated annuities to commence on the sth of January,
1855, and that on the terminable annuity from the sth of
April, 1855. The payments to be made in nine instalments,
including the deposit, in accordance with the terms set forth in
the Bankers' Circular of the 21st of April last.
The budget of Sir George Cornewall Lewis, in April, 1855
comprised a demand for £86,339,000, towards which provision
}rid only been made for £63,339,000, leaving a deficiency of
£23,000,000 to be supplied from other sources. This sum
was to be met by

A Loan 0f..,
Extra Taxes
Exchequer Bills

£16,000,000
4,000,000
3,000,000

£23,000,000

The articles on which the extra taxes were to be levied were
Sugar, Coffee, Tea, Spirits, Bankers' Cheques, and an addition
of 1 per cent, to the previous rate of income tax.

The state of the revenue and expenditure to the 31st of
March, 1855, which terminated the financial period of Mr.
Gladstone, was as follows :

Revenue from Taxes
Exchequer-bonds
Excbequer-bills ... .

£59,496,154

5,375,513
1,750,000

Total Revenue ,
Actual Expenditure

• 66,621,667
• 65,692,962

Surplus
The above balance is exclusive of £5,020,000 in taxes due
to March 31st and not collected . Mr. Gladstone estimated
the expenditure of the year to March 31st, 1855, at
51,198,000; but the actual sum was 65,692,962, being
an increase of X 14,494,962.
The Chancellor of the Exchequer estimated the expenditure