III
Finance
In finance the country looked for wonders. Ministers were called the cabinet of financiers. The cabinet did, in fact, contain as many as five men who were at one time or another chancellors of the exchequer, and its chief was recognised through Europe as the most successful financier of the age. No trailing cloud of glory, as in 1853 or 1860, attended the great ministry, but sound and substantial results were achieved, testifying to a thrifty and skilful management, such as might have satisfied the ambition of a generation of chancellors. The head of the new government promised retrenchment as soon as the government was formed. He told his constituents at Greenwich (Dec. 21, 1868) that he was himself responsible for having taken the earliest opportunity of directing the public mind to the subject of expenditure at an opening stage of the late election; for “although there may be times when the public mind may become comparatively relaxed in regard to the general principles of economy and thrift, it is the special duty of public men to watch the very beginnings of evil in that department. It is a very easy thing to notice these mischiefs when they have grown to a gigantic size; but it commonly happens that when financial error has arisen to those dimensions, the case has become too aggravated for a remedy.” He reminded them of the addition that had been made to the standing charges of the country in the ordinary and steadily recurring annual estimates presented to parliament. He said that he knew no reason why three millions should have been added during the two years of tory government to the cost of our establishments:—
It is one thing, I am very well aware, to put on three millions; it is another thing to take them off. When you put three millions on to the public expenditure, you create a number of new relations, a number of new offices, a number of new claims, a number of new [pg 372] expectations. And you can't, and what is more, you ought not to, destroy all these in a moment. And, therefore, the work of retrenchment must be a well-considered and a gradual work. But I ask you to look at the names of the men who have been, placed in charge of the great spending departments of the country. The study, the idea that has governed the formation of the present administration has been to place able and upright men in charge of the public purse—men of administrative experience, men of proved ability, men, lastly, holding their seats in the House of Commons, and, therefore, immediately responsible to the representatives of the people. It would not become me to promise what we can do; but this I can tell you, that my friends connected with the various departments most concerned in the public expenditure have, even before the early moment at which I speak, directed their very first attention to this subject, and that I, for one, shall be as deeply disappointed as you can be, if in the estimates which it will be our duty to present in February you do not already perceive some results of their opening labours.
One of Mr. Gladstone's first letters to a colleague was addressed to Mr. Lowe, containing such hints and instructions upon treasury administration as a veteran pilot might give about lights, buoys, channels, currents, to a new captain. “No man wants so much sympathy,” he said, “as the chancellor of the exchequer, no man gets so little. Nor is there any position so lamentable for him as to be defeated in proposing some new charge on the public conceived or adopted by himself. He is like an ancient soldier wounded in the back. Whereas even defeat in resisting the raids of the House of Commons on the public purse is honourable, and always turns out well in the end.” He sent Mr. Lowe a list of the subjects that he had tried in parliament without success, and of those that he had in his head but was not able to take in hand. They make a fine example of an active and reforming mind.[243] “What commonly happened, in cases of this kind, in my time, was as follows: The opposition waited for a development of discontent and resistance among some small fraction of liberal members. [pg 373] When this was compact in itself, or was at all stimulated by constituencies, they sent out habitually strong party whips, and either beat me, or forced me to withdraw in order to avoid beating, or exposing our men to local disadvantage. This game, I hope, will not be quite so easy now.”
Match Tax
The first two of Mr. Lowe's budgets were on the lines thus traced beforehand. The shilling duty on a quarter of corn was abolished—“an exceeding strong case,” as Mr. Gladstone called it—taxes on conveyances were adjusted, and the duty on fire insurance was removed. The only notable contribution to the standing problem of widening the base of taxation was the proposal to put a tax on matches.[244] This was a notion borrowed from the United States, and much approved by Mr. Wells, the eminent free-trade financier of that country. In England it was greeted with violent disfavour. It was denounced as reactionary, as violating the first principles of fiscal administration, and as the very worst tax that had been proposed within recent memory, for is not a match a necessary of life, and to tax a necessary of life is to go against Adam Smith and the books. The money, it was said, ought to have been got either by raising the taxes on tea and sugar, or else by putting the shilling duty back on corn again, though for that matter, tea, sugar, and corn are quite as much necessaries of life as, say, two-thirds of the matches used.[245] No care, however, was given to serious argument; in fact, the tax was hardly argued at all. Some hundreds of poor women employed at a large match factory in the east end of London trooped to protest at Westminster, and the tax was quickly dropped. It was perhaps unlucky that the proposal happened to be associated with Mr. Lowe, for his uncomplimentary criticisms on the working class four or five years before were neither forgotten nor forgiven. A Latin pun that he meant to print on the proposed halfpenny match stamp, ex luce lucellum, “a little gain out of a little [pg 374] light,” was good enough to divert a college common room, but it seemed flippant to people who expected to see the bread taken out of their mouths.
On the other side of the national account Mr. Gladstone was more successful. He fought with all his strength for a reduction of the public burdens, and in at least one of these persistent battles with colleagues of a less economising mind than himself, he came near to a breach within the walls of his cabinet. In this thankless region he was not always zealously seconded. On Dec. 14, 1871, he enters in his diary: “Cabinet, 3-7. For two and a half hours we discussed army estimates, mainly on reduction, and the chancellor of exchequer did not speak one word.” The result is worth recording. When Mr. Gladstone was at the exchequer the charge on naval, military, and civil expenditure had been reduced between 1860 and 1865 from thirty-eight millions to thirty-one. Under the Derby-Disraeli government the figure rose in two or three years to thirty-four millions and three-quarters. By 1873 it had been brought down again to little more than thirty-two millions and a quarter.[246] That these great reductions were effected without any sacrifice of the necessary strength and efficiency of the forces, may be inferred from the fact that for ten years under successive administrations the charge on navy and army underwent no substantial augmentation. The process had been made easier, or made possible, by the necessity under which the German war laid France, then our only rival in naval force, to reduce her expenditure upon new ships. The number of seamen was maintained, but a reduction was effected in the inefficient vessels in the foreign squadrons; two costly and almost useless dockyards were suppressed (much to the disadvantage of Mr. Gladstone's own constituents), and great abuses were remedied in the dockyards that were left. In the army reduction was made possible without lessening the requisite strength, by the withdrawal of troops from Canada, New Zealand, and the Cape. This was due to the wise policy of Lord Granville and Mr. Gladstone. In spite of the increased cost of education, of army purchase, of the [pg 375] rise of prices, and all the other causes that swell estimates, the country was still spending no more in 1873 than when Mr. Gladstone took office in 1868.[247] To this story we have to add that nearly thirty millions of debt were paid off in the five years. Well might men point to such a record, as the best proof that the promises of economy made at the hustings had been seriously kept.[248]
Lowe As Chancellor Of The Exchequer
When the time came for him to take stock of his own performances, Mr. Lowe, who was apt to be cleverer than he was wise, made a speech at Sheffield, in September 1873, that almost recalls the self-laudation of Cicero over the immortal glories of his consulate. He disclaimed any share of the admirable genius for finance that had been seen in Pitt, Peel, or Gladstone, but he had read in the Latin grammar that economy was a great revenue, and he thought that he could at least discharge the humble task of hindering extravagance. “The first thing I did as chancellor of the exchequer,” he said, “was to issue an order that no new expenditure whatever would be allowed without my opinion first being taken upon it.... In an evil hour for my own peace and quietness I took upon myself—I believe it was never taken upon himself by any chancellor of the exchequer before—the duty of protecting the revenue, instead of leaving it to be done by an inferior official.” After reciting his figures, he wound up with a resounding pæan: “So far as I am aware, up to the present time there is no one who can challenge comparison with what has been done during these years. Sir R. Peel and Mr. Gladstone routed out protection in your trade, a measure that conferred immortal honour on them, but so far as relieving you from taxation is concerned, I believe you would seek in vain in British history for anything like what has been done during these last four years.” This strange vein was more than a little distasteful to the prime minister, as a letter to Lord Granville upon it shows (Sept. 9, 1873):—
Lowe's speech at Sheffield is really too bad, and free as it is [pg 376] from all evil intention, it illustrates the invariable solecisms of his extraordinary mind.... He says no chancellor of the exchequer before did treasury business, but left it to a subordinate official.... Some have done more, some less. No one, probably, as much as Lowe, but some almost as much. I did less, perhaps much less. But I hold that the first duties of the chancellor of the exchequer are outside the treasury. One of them is to look after and control the great expenditures and estimates. In this duty I am sorry to say he was wretchedly deficient; yet he coolly takes to himself the credit of army and navy reductions, which is due to Cardwell and Childers (who, in his admirable speech, did not say a word, I think, for himself), and with which every member of the cabinet had almost as much to do as he had. I can speak from experience, for I know what it has been to have had cast upon my shoulders the most important and most offensive duty of the financial minister.... He has ample merit to stand on, in a great amount of labour done, and generally well done, and with good results for the public. Much of the unpopularity is unjust; a little patience would set all right.