The Sun.
London, England, 1863-04-17 00:00:00

TI-lh SUN, LONDON, FRIDAY EVENING, APRIL

to incomes liable to the income tax. (Hear, hear.) At a
later period, under the pressure of war, the limit was car-
ried down to £l5O. When Si* R. Peel revived the tax in
1.84.24 he IreVived it at that amount, but he did so entertain-
ing the hope of its early extinction, (Hear, hear.) When in
1853 the tax was renewed for seven years, and again with
a hope of its extinction which proved to be fallacious—
(hear)—the limit of the tax was taken downwards, and

fixed at £lOO instead oft 160. The ground upon which that
was done, and I think justly done by Parliament was this--
it was shown that no class of the community had benefited

more by the general extension of trade and the increase of
profits resulting from the imposition of the income tax, and
the diminution of protective and other indirect duties, than
that class whose incomes ranged between £lOO and £l5O a
year. It was, I may say, due in justice to those who had
incomes somewhat above £l5O per annum that those whose
incomes were immediately under chat sum should not be
allowed to escape untaxed. I think we are about right in
saying that the application of the duty might commence
with incomes of £lOO. Ido at the same time most confi-
Cently state, having now held my present office for a
considerable term of years, and 1 know I shall be sup-
ported in the view which I take by all the authorities con-
cerned in the working of the tax when I say it—that
the real sore place in the working of the tax is to be found
in the weight with which it presses on incomes ranging be-
tween £lOO and £2OO per annum. lam myself, I may say.
the confidential recipient of the sorrows and grievances of
the taxpayers of the country. There is scarcely a morning
which does not bring me complaints of the pressure of the
income tax, and I believe I am stating the case moderately

whee I inform the committee that 19 out of 20 of those com-
plaints come from persons having incomes between £lOO and
£2OO a year. One thing which makes the tax especially gall-
ing to that class is this, that there is no portion of the in-
comes of the country—and this is my fix'd opinion—on
which the tax is more .accurately and fully levied than it is
upon the lower class of incomes. The concerns of those
who possess only these smaller incomes are more transpa-
rent than those of their richer fellow-countrymen; every
neighbour can see through them ; they live in glass houses,
and deception, if they were disposed to deceive, is for them
almost entirely impossible. They pay the tax fully and
rigidly, while they say a good many above them do not in
that respect follow their example. (Hear.) Then comes
another difficulty in the case. There is a very large portion
of the labouring classes—and until the distress in Lanca-
shire there was a much larger portion—in whose case the
aggregate income of a single family amounts to more than
£lOO per annum, but in whose case we could not touch the
family with the tax because the income of the father at the
head of it did not amount to £lOO. It was felt quite impos-
sible to institute an inquisitorial investigation into the little
earnings of the rest of the family. That, too, is a reason for
dealing gently with incomes between £lOO and £l5O per
annum. What we find to be the two pinching points in the
operation of the tax are where it falls upon incomes of £lOO
a year and a little over, and £l5O a year and a little over that
amount also. The proposal of the Government is thie,—
and it will in my opinion go far to meet what we think to
be, I do say the strict and rigid justice of the case,
because mathematical justice is hardly applicable to this
subject, and in principle there is no injustice in calling upon
any man who is able to pay income- tax to do so, but that
kind of equitable justice which it is the desire of Parlia-
ment to administer with a due regard to public prudence
and policy, and that degree of pressure which is practically
brought to bear on flesh on blood in matters of taxation.
We say,retain incomes of £lOO a year as the point at which a
man will become taxable ; fix upon incomes of £2OO as the
point at which he may be brought under the full sweeep of
the tax; remove the distinction at £l5O altogether, abolish
the double rate, have only one rate, but allow every taxable
person whose income ranges between £lOO and £2OO a year
to make a deduction of £6O from his taxable income. The
effect of that will be to get rid almost entirely of those sore
points in the operation of the tax to which I have alluded.
In order to illustrate the change which is proposed, I will
state what would be the effect of it on various incomes,
taking the tax at its present rates of 9d. and 6d. On
an income of £lOO the tax is now £2 10s, under the new sys-
tem it would £1 10s. On an income of £125 it would be £2
Bs. 9d, instead of £3 2s. 6d, as at present ; on an income of
£l5O, £3 7s. 6d, instead £5 128. 6d ; and on an income of
£175, £4 6s. 3d, instead of £6 Ils. 3d. (Hear, hear.) Those
who entertain very strong objections to the income-tax may,
perhaps, think it would be better to retain all its inequali-
ties. I have, however, always felt, and I continue to feel,
the force of these objections ; but at the same time I think
it is our duty to remove, wherever it is practicable, those
inequalities which produce great public discontent. I speak
the opinion of all who are practically conversant with the
working of this branch of the revenue when I say that the
adoption of this proposal will be a great, I may almost say
an immeasurable boon to those classes whom it concerns.
(Hear, hear.) Now, sir, we have got the pickaxe into the
fabric of the surplus, and having dialoged one or two bricks,
we shall find it very easy to bring the whole of it to the
ground. The subject which I have now to bring under the
consideration of the committee is that which I had better call
the tea or sugar rather than the tea and sugar duties.
It is very clear, in the first place, that the ques-
tion of what we loosely but intelligently call the war
duties on tea and sugar occupies a front place among
those questions which have at the present time to be dealt
with by Parliament. (Hear, hear,) In the second place, it
is, I believe, the view of Parliament, as it is also of Govern-
ment, that in a case where we are happily able to offer a
reduction of taxation, regard should be had both to the de-
scriptions of direct and indirect taxation. Now, it is quite
impossible for us to make an effectual change with respect
to the tea and sugar duties. The cost would be too great of
reducing the tea duty to ls., and the sugar duties to the
point at which they stood before the Russian war. It ap-
pears to us perfectly clear that, whatever we do, we ought
not to divide the remission into two or more parts, but
rather to choose one of two subjects. (Hear, hear.) It will
be much better, as it seems to us, to make such an altera-
tion as will give a sensible stimulus to trade, consumption,
and revenue, than to dole out and divide into minute pro-
portions the relief which it is in our power to bestow.
(Hear.) Therefore it comes to be a question between tea
and sugar, and it is, I suppose, the first time in the history
of mankind that these two articles have been placed in hoe

tile competition with each other, (A. laugh.) Nature
seems to have ordained an intimate allianee between them,
which has been satisfactory to the experience of us all, and
I am very sorry it falls to my lot to propose a severance
even in appearance. It is obvious, however, that if you
confer a boon on the one it immediately overflows on the
other, because the old combination in their use makes it per-
fectly certain that if you reduce the duty on sugar you will
produce an increased consumption of tea, and if you reduce
the duty on tea you will have a larger demand for sugar.
(Hear.) There is no difficulty in either case in regard to
the stocks, because we have an abundance of both. Sugar
is for the moment the cheaper of the two, but its cheapness
depends on the continuance of a great calamity to mankind—
the war in America. The arguments in favour of a reduction
of the duty on sugar appear to me to be these—first, that
the duty nine years ago was actually lower than it is now,
while the tea duty never has been in point of fact lower
than at present ; and second, that the trade in sugar is larger
and more important than that in tea. The arguments for
tea will readily suggest themselves to the minds of hon.
members, There are some secondary considerations, but
these cannot decide the case. Our pecuniary relations with
China, our military establishments there, oar interest in
developing the commerce of that country, are, no doubt, im-
portant national considerations, but can hardly be allowed
to turn the scale in a question like this. There is, however,
a negative argument for tea which is of some importance,
and which is derived from the state of certain proceedings
with regard to sugar. The subject of sugar is one of great
complexity in its practical application, more especially in
regard to the drawbacks allowed on refined sugar when ex-
ported from the country where it has undergone manufac-
ture. On the proposition of the French Government, most
of the countries which cossess an important sugar refining
trade have agreed to send representatives to Paris to con-
sider the detailed regulations now in force on the subject.
Hitherto each country has been accustomed to allege
against the others that what are called drawbacks are really
bounties. It is of great importance to the European trade
in this cardinal article that a common understanding should
be arrived at. Nothing will be done in the course of the in-
quiries in Paris to bind the judgment of the Executive Go-
vernment, much less of the House of Commons ; but if
legislation on ,sugar were postponed we should approach the
consideration of the details with advantage when we have
before us the results of this comprehensive and minute in-
quiry. (Hear, hear.) Perhaps the most important argu-
ment for tea as bearing immediately on the case is that the
present duty on tea is much higher than the corresponding
duty on sugar. (Hear, hear.) I will take not the prices
of tea or sugar at this moment, but the ordinary averages.
The duty on tea is more than 100 per cent., while the duty
on sugar is only equal to about a half of the value of the
article. In a question of relative justice in the distribution
of relief this consideration has appeared to the Government
to be of the greatest importance. (Hear, hear.) By a
reduction of duty we can much more considerably lower
the price of tea than of sugar. The price of a hundred
weight of sugar, duty paid is, on an average, about 355.
If we take off 3s. to reduce the duty to a minimum, it
brings the price to 325., which is a reduction of about
8 per cent. On the other hand, the price of a pound
of tea is 35., and if we take off 5d., that reduces it to
2s. 7d„ or about 14 per cent. It will, therefore, be obvious
to the committee that we have reason to anticipate a more
considerable and buoyant effect from the reduction of the
duty on tea than on sugar. (Hear, hear.) Hence, it is the
intention of the Government to propose to the committee
to reduce the duty on tea to is. per lb. (Cheers) We also
propose that the reduction shall take effect immediately
after the resolution has been adopted by the house. In
point of form there is no necessity for a resolution, but one
will be submitted, because that is the simplest mode of ob-
taining the judgment of the house. We intend to take the
resolution on Thursday week, and to report it on Friday.
We are of opinion that the tea duties should be granted
olloin
only until the Ist of August, 1864. I must not presume to
saythe
year that thef duty on sugar can be reduced next year, or in
following,
eorquatesatinoyn pofarticulartimoe,r
nn
but, being
al duty,
beingin
hopes that it will be considered together
permanent
with the duty on
tea,
in
regard w
to
it is most convenient to renew the tea duty
only until the
period I have named. The committee w,ll understand that

if the proposal to reduce the duty on tea to ls. is adopted, it
will be a thud measure as tar as we can presume to look for-
ward into the future. The financial result of the change will
belas follows:—In 1862-3 we consumed 77,500,0001 b. of tea,

which paid £5,497,000; in 1863-4 if we went on without any
change in the law we should estimate for a consumption of
79,6'36,0001b., which would yield £5,640,000. The loss of

sd. per lb. on that amount would be £1,659,000. We think,
however, we may venture to reckon upon an increased con-
eneeeption in the first year of 6,000,0301 b., producing
£300,000, and in that case the loss would be only £1,359,000.
We, therefore, reckon on a net loss on the Budget Estimate
of £1,300,000. This is not a case in which ocular demon-
stration is at all necessary, but my hon. friend the mem-
ber for Lancaster, mistrusting, I suppose, the intelligence
of the committee, has been goof enough, at the close of his
long campaign as a leader of the movement for the reduc-
tion of the tea duty, to forward to me two small parcels, one
labelled " a pennyworth of tea at 15.," and the other " a
pennyworth of tea at Is. 5d." (A laugh.) The matter is
one of considerable importance, because it sometimes
happene, when duties of this kind are reduced, that a por-
tion of the profits goes into the pockets of the dealer ; but
my hon. friend, a man of the highest character and honour,
possessing the confidence of the whole mercantile world,
especially of the East India and China trade, has pledged
himself to me personally that in every case the man who
buys a pennyworth of tea under the new duty shall have
the same increase over what he would have bought under
the old duty, as is represented by the large packet which I
hold in my right hand, compared with the small packet
which I hold in my left hand. (Hear, and laughter) It will
be recollected that the estimate of receipts from the income
tax for 1863-4, taking the tax at 9d. in the pound, was that
the tax would produce in the course, of the financial year
£10,500,000. A reduction of the tax to 7d. would cause a
diminution in the year's receipts of £2,350,000, or £1,175,000
for each penny of the 9d. That would be the loss uton the
tax for the whole year, but the whole of the loss would not
be felt in the present year. A careful estimate made by the
Board of Inland Revenue shows that the loss in the present
year would be £1,600,000, and that a further sum of £750,000
would stand over till 1864-5. Then there is also the plan
which I recently submitted to the committee for the relief
of minor incomes. For an entire year the loss from that
source would be £400,000 ; for the actual financial e ear we
take it at £300,000. It therefore follows that you may re-
duce the income tax 2d. in the pound for the whole com-
munity, and you may likewise adopt a further plan of relief
for minor incomes, at a cost to the revenue in the present
year of £1,900,000, with a further prospective charge of
£850,000, Here, in passing, I cannot refrein from calling
the attention of the committee to a subject of considerable
interest, and reiterating an opinion which I ventured to ex-
press in a former seseion, but which wee received with
some not unnatural scepticism—the opinion, namely, that
the change by which we take up three-quarters of the
income tax in the year in lieu of only one-half as be-
fore, is a change of the greatest and most beneficial im-
portance. When we took only one-half in the year the
effect was this—we legislated under the pressure of great
necessity and only got half of what we wanted, while, on
the other hand, when we repealed the tax or remitted a
portion of it one-half of the whole remission went, not into
the year for which we were making provision, but into the
year beyond, as to the peculiar necessities of which we were
entirely ignorant. We have now by means of the change
just mentioned got the income tax much more in hand, but
I suppose it is necessary that we should always be one full
quarter in arrear. It is necessary, I mean, in England.
Our Scotch friends ate in a more happy position, because
they collect the whole of the tax within the 'year. We
cannot do so in England, but we have devised means for
levying three quarters, which enables us to make our finan-
cial arrangements with more certainty and success, and
with more immediate reference to the necessities of the
State, than before. (Hear.) As the system of collection
now stands, £1,900,000 out of:a total loss of £2,750,000 will
come upon the present year, but only £1,483,000 out of the
whole effect of the changes we are proposing would have
come upon the present year if the plan had been continued
of levying two instead of three quarters of the tax within
the year. (Hear.) I shall now, with the permission of the
committee, put together the various remissions, so as to
bring them under one view. The relief upon the small
charges— that is, the loss for the year—will be £143,000.
The relief to minor incomes will be £300,000. The re-
lief to the consumers of tea will be £1,666,000, but the loss
to the revenue for the year will be only £1,300,000. The
loss for the year from a reduction of 2d. in the general rate
of the income tax will be £1,600,000. The total loss for
the year will be £3,343,000. But I wish to call particular
attention to the fact that a further loss of £898,000, nearly
the whole of it due to the income tax, but some of it to the
small charges, will fall upon the financial year 1864-5. We
incur a loss for the present year of £3,343,000; but we ask
the house to give its legislative sanction to changes which
between the present year and the next will bring about a
loss of £4,241,000. When I add to that total loss to the
State the further relief which the consumer will derive
from a part of the duty on tea being made up by increase
consumption, it appears that the whole amount
of remission of taxation which you are to-night
asked to take into consideration is £4,601,000. (Hear.)
The several branches of revenue which I stated to the come
mittee in giving an estimate of income for the present year
must be corrected as follows ;—For the Customs, instead of
£54,180,000, it will be necessary to take £22,737,000; for the
income-tax, instead of £10,500,000, it will be necessary to
take £8,625,000; and there is an addition to other branches
of inland revenue amounting to £58,000. The surplus before
the deductions, but including the various minor changes by
which we propose to raise additional sums of money, was
£3,874,000, and hence, theloss by remission being £3,343,000,
there is a remaining surplus of £531,000. With that surplus
we do not propose to part—(hear)—and we trust, for many
reasons, the Committee will give us its support in resisting
any efforts, however well meant, to diminish it. (Hear.)
Looking to the state of the country, the scale of our expen-
diture, and the condilion of the world, her Majesty's Go-
vernment feel it would be inconsistent with their duty to
propose to the Committee the retention of a less surplus
than this, and they confidently and earnestly appeal to the
Committee for the support which I have asked against any
attempt to wrench it out of their hands. With respect to
our plan as a whole, it is not, at any rate, one which pre-
tends to originality. The public had anticipated in themain
the proposals we were about to make. That has not been
owing to premature disclosures, but to the state of the facts.
The state of the facts, the bearing of the public interests,
and what had taken place in former years, distinctly indi-
cated within certain limits what should be the course of
Government, if it sought to do justice to the country, or to
obtain the favour of the House of Commons. With regard
to the tea duty, for example, in addition to other reasons
which weighed with us, one was the position which had been
given to the question in a previous discussion in this house.
In 1860 it was the claim of the tea duty which her Majesty's
Government thought themselves bound to weigh carefully
against the claim of the duty on paper, and it was the claim
of the tea duty which in 1861 hon. gentlemen sitting op-
posite deemed it their duty, as the strongest claim which
could be made, to offer in opposition to the claim of
the duty on paper. If there is to be a claim of owner-
ship in tt e principal parts of this proposal, it belongs,
perhaps, to those who first published them to the world,
and I am not aware to whom it could be given with
greater credit—for the Government are not disposed to
contest the point of honour—than to my right hen, friend
the member for Cambridge, who last year proposed a
motion which certainly came to an untimely or even a vio-
lent death at the moment, but which has reappeared, I
trust, under happier circumstances, and which has formed
the basis of a plan of the Government. Sir, it is no motive
of dissuasion to us with respect to any financial proposals
that they should have already found favour in other quar-
ters. If we felt bound in regard to any former plan to fight
resolutely for our own proposals, and against those of others,
it has been from a sense of public duty. But if the time
arrives when we are enabled, compatibly with and in obee
dience to our public duty, to submit to the house plans which
have been already declared to be the favourite plans of others,
we, so far from being deterred on that account from making
those proposals, are the better pleased to think that it is in
our power, as we hope it may be, to unite the general senti-
ment of the house, and to secure its approbation, without
distinction of section or party, to measures for the relief of
the country. (Hear.) This is the state of the case with re-
spect to these plans. But before sitting down I will refer,
if the house will permit me, to what 1 said in a former part
of my speech, and also venture to submit a few facts which
appear to me to be full of interest. Sir, in commencing my
statement I had to make, and I frankly made, the admission
that the state of tension to which our finances had been
placed for the last four years had been raised to a somewhat
higher degree in consequence of the remission of duties
which we proposed in 1860. Now,
as we are passing out, I
trust, of that exceptional period, I wish to state exactly to
to the house two things—first of all, what has been the
general state of our account during the last four years, con-
sidered as one account ; and, secondly, I wish respectfully
to present to the house the facts which I think—without in
the slightest degree desiring to impugn the opinions or con-
duct of others—demonstrate that we were justified, notwith-
standing the amount of the expenditure and the calls upon
the public purse, in asking the house on a former occasion
not to desist from the prosecution of the great work of
commercial reform. First, as regards the account of the
country for the last four years, I will place it in a form
which I trust will be intelligible to every one, and will be
comprised in but a few words.
fetahrse lwasetrefouir2y, I take the revenue and ex-
penditure on this
of the public debt.
account everything in the nature of special resource, and I
Principle—first of all, I charge against the
also cred t it with special repayments made towards the re-
duction Taking the income and expen-
dituredeficit amounting to £1,031,000.
4e:2r:oo:ether, there is a balance of
The expense of fortifica-
tionsthose ey
in the same period has been £2,070,000. The malt
credits and other a ums taken up which did not belong to
But the sums paid away
during those years to meet charges belonging to former
years, particularly the drawbacks on duties abolished, which
wore repayments of revenue received in former years, and
the charges for former wars, have been £1,292,000. So that
the balance of special receipts during those four years is
£1,180,000. The repayments of advances during the four
years, in excess over the advances made, have been
£2,375,000; and the net decrease of the balance has been
£526,000. And so the total sum which we have used up

during the four years, in order to meet the public expendie
tare, has been £7,212,000. And having referred to the state
Of the balances; I May here say that it Is my Intention to
submit to the house resolutions for paying off the million of
Exchequer Bonds which will fall due in May ; and that not
in the least degree upon the supposition that there is any
special obligation tonneeted with that particular descrip•
tion of debt, but simply because 1 think it will be a con •
Venient (Tomtit:in. It is also my intention, lam bouffd to
say, viewing the state of the countrYi and especially of
Lancashire, to ask the house for power to re-borrow that
money in case of need during the year, but without any
serious expectation at preset of being called upon to exer-
cise it. Well, £7,212,000 is the sum that was tired up in
the course of those four years for extraordinary expeUcli-

ture. On the other side we have redeemed out of the
balances an amount of debt equal to 41,883,000, and out

of expenditure in the form of terminable Rtnaities the
amount redeemed, or rather paid towards redemption, has
been £5,501,000. The total amount of money, therefore,

taken out of the income of those four rears for the redemp-
tion of debt has been £7,384,000, against the sum Which the

same four years have had applied to their own uses, though
not derived from the tesation of the country—namely,

£7,212,000 ; or, in point of fact, the two sides of the account
are as nearly as possible balanced. During those four yeats,
It is fair to bear in mind, we had t, defray extraordinary
charges from the resources of the year, arising from two
principal causes. We bad meet £8 000,000 of direct war
expenditure, chiefly for China—an account which, as far as
I am aware, has never before in ~ur financial history been
borne out of the resources of the year. We likewise had to
meet heavy expenses for the reconstruction or transforma-
tion of our naval and military departments; and, according
to the best computation we can frame, we have had on that
account to spend £8,000,000 mere, making a total sum of
£16,000,000 during the four years paid away for those pur-
poses. But, sir, the house will, I think, expect that I should
make a statement to them—after the varied experience of
that period—upon the condition of one or two branches of
our trade. And certainly a portion at least of the facts to
which I have to call their attention appears to nee to de-
serve all the attention that can be given to them. The re-
peal of the paper duty is a measure of which it is very diffi-
cult to trace the effects witn prec!sion. In point of fact, it is
only by a very slow process that the consequence of repeal-
ing an Excise duty is usually developed. In the case of
glass, soap, and other articles, it has been so, and I have no
reason to suppose it will be otherwise in regard to paper.
But it is remarkable that although the diminution of the
export trade in cotton had necessarily led to a great decrease
in the consumption of paper connected with that trade, which
is extremely large, yet we have the evidence of a very large
increase in the consumption of paper in this country. There
is enough, I think, entirely to justify the faith with which
those who urged the repeal of that duty have looked for-
ward to its probable results. I for one am surprised, I con-
fess, at the amount of foreign paper imported into this
kingdom. Our imports of foreign paper of all descriptions
in 1856 were 15,767 cwt. In 1862 they were 193,639 cwt.
Those imports form very nearly 20 per cent. of what the
manufacture was in the days of the Excise duty. But what
is most satisfactory is, that together will this vast increase
in the imports of foreign paper there certainly has been a
considerable increase in the manufacture of British paper.
We have no power, as the Lime is well aware, of following
minutely the amount of paper that is made ; but
we are able to do two things. We can first of all follow
carefully the amount of British paper which is exported,
and next we can register and record the amount of the
materials brought into the country for the manufacture of
paper. The amount of British paper of all kinds that was
exported in 1858 was 115,491 cwt. In 1862, the first year
of the repeal of the duty, the amount exported was 149,326
cwt., showing an increase of 34,C00 cwt. A word as to the
import of rags—and 1 trust the committee will not grudge
a moment for this point—(hear, hear)—because it is really
tragical, it is almost funereal, to revert to the dark anticipa-
tions once entertained as to the total banishment almost of
that valuable article from the markets of this country. In
1856 the import of rags for making paper into this country
was 10,287 tons, In 1860 it had risen largely—viz ,to
16,154 tons. lam bound to say that that increase in 1860
was due in a very great degree to the anticipations enter-
tained till the month of June that the duty would be con-
tinued. However, in 1862, the first year of the repeal of the
paper duty, the import of rags rose again to 23,943 tons.
(Hear, hear.) What has taken place during the past year
with respect to the paper trade It is no discredit at all to
the British papermakers, but it is a very marked and in-
structive sign of the operation of excise duties in a manu-
facture of this kind, into which science is introduced, that
we should compare the the fate of the British papermaker
in his own country, in the late International Exhibition,
with the fate of his foreign rival. The British papermaker
at that Exhibition was on his own ground ; the foreigner
had to come here; and it is natural to suppose that the
British manufacture was more fully represented than the
foreign, At any rate, what was the state of facts in regard
to the medals and honourable mentions, delivered, I pre-
sume, by a competent and impartial jury ? Eight medals, I
believe, were awarded to British papermakers, 16 to French
papermakers, and 15 to Prussians. That appears to me
to be a significant and important fact with respect to the
operation of excise duties and restrictions en a manufac-
ture giving scope for the application of science. As re-
spects the article of wine, there has been a small increase
of £30,009, satisfactory as far as regards revenue, and
in quantity of 109,000 gallons. French wine hassomewhat
diminished, which was quite to be expected after the very
large increase that took place in former years. Portuguese
wine has also diminished. The great increase during the
last year has been in Spanish wines, amounting to 290,000
gallons. (Hear, hear.) One word with regard to what will
be viewed with painful interest, our trade with the United
States, because of its importance to the country, and the
effect produced on it by the secondary action of those cala-
mities from which the continent of North America suffers so
frightfully; and also with regard to our trade with France,
because this is the first time when it could be said that it has
been a whole year at work. The export of British goods to
the United States in 1859 was £22,553,000 ; in 1862 it was
£14,398,000, showing a decrease of £8,154,000. The export
of foreign and colonial goods to the United States had in
the meantime increased. They were in 1859 £1,864,000, in
1862 they were £4,052,000, an increase of £2,188,000, but
nearly the whole of that increase was represented by the
article of cotton wool, taken from this country to the United
States, which was no less than £1,721,000. The case of our
trade with France is very different. In 1859, the last year
before the treaty, the export of British commodities to
France was £4,754,000 ; in 1860, when the treaty was in
very pr rtial operation indeed, the exports were £5,250,000;
in 1861, when the treaty took effect, towards the close of
the year, they rose to £7,145,000, without including the
article of corn, which made a further increase ; but as it was
entirely due to the casualty of a bad harvest in France,
whereas it was a great supply from foreign markets to this
country, iti would disturb the calculation if I took that into
account. The exports rose to £7,145,000, showing an in-
crease of £2,391,000, and in 1862, with the treaty in opera-
tion all the year, again rose to £9,210,000, showing an in-
crease of £4,456,000; in point of fact, doubling their amount
before the treaty. That does not set forth the whole of the
advantage, because in foreign and colonial produce the
augmentation was yet more remarkable; for I need not
remind the committee that the foreign and colonial pro-
duce that we send to France we have ourselves obtained by
exchange for British produce, so that increase in the
export of foreign and colonial produce is effectively an
increase in the export of British manufactures.
Tne foreign and colonial produce sent to France in 1859 was
£4,800,000, and 1862, £12,614,000. The total amount of
exports to France, which in 1859 was £9,561,000, had in
1862 gone up to £21,824,000: (Hear, hear.) In fact, while
we had a decrease in the total trade to the United States of
£6,618,000, that decrease was a great deal more than made
up by the increase in the trade to France, for the augmenta-
tion was £12,265,000. The effects of the cotton famine on
our general trade of course it is impossible for us to miti-
gate, so far as I know, by legislation ; and I took the oppor-
tunity in 1861 of showing the immense stimulus that had
even then been produced to the total trade of the country
by the reduction of customs duties in the former year, and
now in 1863 I am able to point to results operated by the
arrangements made by France, under the able management
of my hon. friend the member for Rochdale—(cheers)—and
I confidently put it to the committee to justify her Majesty's
Government in the opinion they entertain that it was a
matter of vital consequence that we should endeavour to ap-
ply to the trade and industry of the country that stimulus
which we believed and knew would be given through the
medium of judicious reduction and abolition. It is quite
true that in 1860 we were obliged to have an additional ld.
of income tax because of these reductions, but I think it
was worth having that additional ld. when we consider that
the effect of that legislation has been that in this period of
severe trial to the industry of the country, not millions only,
but tens of millions of that industry, have in all probabi-
lity been put in motion, and kept in motion owing to the
legislation then adopted. (Hear, hear.) If the house will
bear with me one moment longer—(hear)—l will draw
their attention to a statement that will, I think, at once in-
terest and surprise them. The income tax has now been in
operation for 19 years. It was imposed partly with a view
to supply a deficiency, but in a great degree with a view to
developing the trade and industry of the country, and
thereby bringing about an increase in the wealth and com-
fort of all classes of the community. After 19 years, and a
succession of different assessments, we aro now in a condi-
tion to form some judgment as to the additions that have
been made to the means and resources of the country. I
have made it my study to examine the subject with as much
precision and rigour as I could. The statement I will
submit may be capable of being further sifted in such a
manner as to modify in a greater or less degree its results.
I don't pretend it is infallible ; I am sure it is remarkable ;
I believe it is correct,—at least no pains have been spared to
make it so. In order to be as accurate as possible I don't
compare the entire income-tax of 1862 with that of 1843, but
I compare the income-tax minus that portion of it which
only represents public taxation, because it is quite plain if
we have several millions added to the income in England
from public establishments that does not represent additions
to the real wealth of the country. Therefore, I take ache •
dule A as representing property, railways, mines, &c. ; B
as representing farming profits; D as representing com-
merce and professions ; and so much of E as belongs to
private establishments that is the basis or area of taxation.

I exclude altogetliei hedaiise Ireland Was 310 i taxata
in 1842, and would, therefore, distuth the eomptitation.

also exclude incomes below £l5O for the same reason. The
income tax, at 7d. in the pound in 1842, attaching to Great
britain only, and only to incomes above £l5O , was assessed

upon ail amount of indOme teaching £156,000,000. Upon
the very same area, with the same limitations, in 1861 the
amount of assessed income was 221,000,000, and lam not
aware that there has been any change in the machinery of

the tax, or any improvement in the powers of levying the
tax, as compared with the powers of escaping it, that will in
any way account for the difference. The difference amounts
to no less than £65.000,000 of annual income, or two-
sevenths of the whole annual taxable income of the country
in the area described. That is a most remarkable result, but
there is a feature of that result which, when carefully ex-
amined, is yet Moto remarkable, and that is the accelerated
rate of increase in the last }'eat. I again invite the attention
cf the commit tee for two minutes. t compare the two periods
before 1.853 and since 1553, when the basis was altered. In ten
years from 1842 to 1852 Inclusive, the taxable income of the
count' y, as nearly as we can' make out, increased by 6 per
Csiat ; but in 8 years, from 1853 to 1861, the income of the
country again increased from the basis taken by 20 per cent.
That is a fact so strange he to be almost incredible. [Sir S.
Northcote.—lt is Australia.] Australia I Oh, no; the
right hon. gentleman is lost in the depths of heresy on that
point. If I may presume to suggest a cause, I would sug-
gest two—first cf all the enormous, constant, rapid develop-
ment of mechanical power, saving htnnen labour, and the
extension of machinery ; but that has been in operation for
the last 100 years, extending on all hands the economy of
labour ; the real and new cause that has been in operation
has been the legislation of Parliament setting free the in-
dustry and intelligence of the British people. (Hear.) That
is the state of the case as regards the wealth of this country.
I must say for one, I should look almost with apprehension
and with pain upon this intoxicating augmentation of wealth
and power if it were my belief that it was confined to the

classes who are in easy circumstances. This takes no cog-
nizance at all of the condition of the labouring population.
The augmentation I have described, and which is founded,
I think, upon accurate returns, is an augmentation entirely
confined to the classes possessed of property, Now, the
augmentation of capital is of indirect benefit to the labourer,
because it cheapens the commodity which in the business of
production comes into direct competition with labour.
(Hear.) But we have this profound, and, I must say, ire-
estimab'e consolation, that while the rich have been growing
richer the poor have been growing l•-ss poor. Whether the
extremes of poverty are less extreme then they were I do not
presume to say, but the average condition of the British la-
bourer, we have the happiness to know, has improved during
the last 20 years in a degree which we know to be extraordi-
nary, and which we may almost pronounce to be unexampled
in the history of any country and of any age. (Cheers.) That
is a result upon which we are entitled to look with the greatest
satisfaction and with the greatest happiness, because, after
all, let us recollect that when we speak of the expenditure
of Governments we speak of that which is taken out of
the earnings of the people, and there is hardly any country
and hardly any period in which these earnings have ex-
tended to give to the labouring community a sufficiency,
much less a general abundance, even of the prime necessa•
ries of food, of clothing, and of fuel. And if we have been
(Ambled by proceedings of ours, taking within these walls, to
raise the standard of comfort, and to diminish the fearful
gap which existed half a century ago between the absolute
necessities of the labouring man and his means of supplying
them, we have accomplished a work for which the name of
the Parliaments of this time will be blessed through all ages.
(Cheers.) Many years ago, Sir Robert Peel referred with
the greatest authority to the devouring character of the naval
and military establishments maintained by the Governments
throughout Europe. I am afraid that since the time in which
he spoke the evil has grown much more intense than it was,
for in no quarter have those establishments diminished, but
in almost every quarter they have increased, and financial
deficits have become almost the rule in every country.
(Hear, hear.) Great efforts have been made in France to
retrieve them; but, although we know that great energy
and talent have been used with that object, it remains yet to
be seen to what extent those efforts will be successful. Italy,
with her fortunes and her destinies yet hanging in the
balance, is, unhappily accumulating debt from year to year
at the present moment with a rapidity which must make her
best and fastest friends tremble. (Hear, hear.) That is what
we see going on abroad. I observe that M. Fould, in a recent
address to the Senate, speaks in terms of deprecation of
what he calls expenditure of emulation, and he expresses a
hope that such an expenditure is likely to be diminished.
(Hear.) I am sure it is easy for every right-minded man
most fervently to re-echo that prayer. (Hear.) It is impos-
sible to deny the relation which exists between the general
expenditure and between the defensive and military expen-
diture of the different countries of Europe. Of course it
has been the duty of her Majesty's Government, in forming
their estimates of expenditure, to consider first the honour,
the interests, and the security of the country, and along ,
with that honour, with those interests, and with that secu-
rity, the deliberate judgment given by the House of Com-
mons in the course of the last Session of Parliament. But
subject to those considerations 1 trust I may alto say on my
own part and on that of my colleagues, after reading the
eloquent denunciations of the Finance Minister of France,
that we have additional satisfaction in submitting a plan
which contemplates not an inconsiderable diminution in
the burdens of the people if we may hope that that diminu-
tion will be accepted in other lands, and be construed there
as a friendly acceptance of a friendly challenge—(loud
cheers)—if we may hope that what we propose, and what
Parliament shall accept, will become an innocent but power-
ful provocative to similar proceedings and similar tenden-
cies in other countries. (Cheers.) it will be an additional
satisfaction to us over and above the benefit which, as we
trust, the British people will derive from an alleviation of
their burdens, if we may hope that we are contributing to
strengthen tendencies which may exist elsewhere on behalf
of peace, of order, and of civilisation, and that we are assist-
ing, in however humble a degree, to allay unhappy jealou-
sies and to produce a better and more solid harmony among
the great civilised nations of the world. (The right hon.
gentleman concluded, amid loud cheers, by proposing the
first resolution for the increase of the duty on chicory.)
Mr. WHITE expressed the strongest satisfaction with
the admirable budget announced by the right hon. gentle•
man. It was satisfactory to feel that they had one states-
man, at all events, in power who consistently carried into
effect when in office the proposals which he advocated when
in opposition. He thought the income tax a very good one,
but people would never be made to understand that there
was not inequality in the mode in which it was levied, He
believed that the working classes still paid an undue pro-
portion of the public burdens. In conclusion the hon. gen-
tleman thanked the Chancellor of the Exchequer for the
wise and beneficent policy he had adopted.
Lord R. MONTAGU complained that the whole scope
of the Chancellor of the Exchequer's policy was to lighten
the taxes on the rich, and not to touch those which pressed
upon the poor.
Mr. CRAWFORD on the other hand declared, speaking
ing in behalf of a great mercantile community, that he was
prepared to express perfect concurrence in the financial ar-
rangements of the right hon. gentleman. Ho approved of
the distinction which had been drawn between tea and sugar,
the more especially as any increase in the consumption of
tea led to a still larger increase in the consumption of sugar
and also of the abolition of the petty charges in commerce.
Mr. VANCE urged that the tax on spirits was retained
at so high a point, that illicit distillation was the conse-
quence. He hoped that the Chancellor of the Exchequer
would take the subject into consideration.
Mr. SCULLY complained that, instead of diminishing,
the right hon. gentleman proposed to increase the taxation
of Ireland. Such a thing had never before occurred in any
country as that which had taken place in Ireland, namely,
to have upwards of two millions of her people cut off since
1847. He was frequently asked in Ireland why the Go-
vernment did not encourage some remunerative system of
emigration, so as to remove the unfortunate people of that
country where they could obtain some return for their la-
bour. There were three ways by which assistance could
be given to Ireland, namely, by arterial drainage, by a
judicious system of emigration, and by giving encourage-
ment to public works, especially railways. If these enor-
mous taxes were to be levied on the country, he wished to
have the working classes benefited by them.:
Mr. POWEL le regretted one omission in the speech of
the Chancellor of the Exchequer, namely, no announce-
ment of an intention to reduce the duty en fire insurance.
He wished also to know whether his scheme of taxing cha •
rities applied to endowed schools and grammar schools. If
so, he trusted that when the masters' salaries were paid out
of the balances they would not be called upon to lay in-
come tax twice over.
Col. BARTELOTT hoped another year would not be
allowed to pass over without the right hou. gentleman
dealing with the malt tax with a view to its reduction.
Sir F. CROSSLEY concurred generally with the scheme
which had been proposed, and expressed a hope that dur-
ing peace an attempt would be made to reduce the national
debt by paying off interminable annuities.
Mr. P. A. TAYLOR gave his hearty thanks to the
Chancellor of the Exchequer for the alteration of the tea
duties. He regretted, however, that he had not adopted
the same policy with regard to sugar. With respect to the
income tax, he thought the country had a right that it
should be either abolished or made permanent and equit-
able.

Sir H. WILLOUGHBY had heard with great pleasure
that there was a bona fide surplus of £3,874,000. He did
not in any way quarrel with the mode in which the right
hon. gentleman proposed to dispose of that surplus, as to
which it was much to be regretted that the house had no
further information than that which they had heard from
the Chancellor of the Exchequer himself. He cordially
joined in the wonderment excited by the right hon. gentle-
man's statement of the increase in the expenditure during
the last four years; but had the right hon. gentleman gone
further back, and instituted a comparison between the ex-
penditure of 20 years ago and the expenditure of the present
day, the wonderment would have been infinitely greater.
(Hear.) It was as clear as the sun at noonday that the ex-
penditure had been carried to an extent utterly unjustifiable
in the present condition of the country. However, it was too
late as regarded the present year to effect any reduction,
but in another year they must begin earlier, and let the de-
mand for reduced expenditure anticipate the den and for
reduced taxation. In conclusion, the lion. baronet expressed