IV
One of the few failures of this active and fruitful period was the proposal (1863) that charities should pay income-tax upon the returns from their endowments. What is their exemption but the equivalent of a gift to them from the general taxpayer? He has to make good the sum that ought in reason and equity to have been paid by them, as by other people, to the government that protects them. Why should this burden be compulsorily laid upon him? What is the quality of an endowment for a charitable purpose that constitutes a valid claim for such a boon? Into this case Mr. Gladstone threw himself with full force. The opposition to him was as heated and as vigorous as he ever provoked, and the violence of the resistance roused an answering vehemence in him. He speaks in his diary of his “deadly encounter with the so-called charities.” “I was endeavouring,” he says, “to uphold the reality of truth and justice against their superficial and flimsy appearances.” “Spoke from 5.10 to 8.20, with all my might, such as it was.” This speech, with its fierce cogency and trenchant reasoning, was counted by good judges who heard it, to be among the [pg 066] two or three most powerful that he ever made, and even to-day it may be read with the same sort of interest as we give to Turgot's famous disquisition on Foundations. It turns a rude searchlight upon illusions about charity that are all the more painful to dispel, because they often spring from pity and from sympathy, not the commonest of human elements. It affects the jurist, the economist, the moralist, the politician. The House was profoundly impressed by both the argument and the performance, but the clamour was too loud, all the idols of market-place and tribe were marched out in high parade, and the proposal at last was dropped.
Budget Of 1863
Though the idea of putting a tax on the income of charitable endowments was rejected, the budget of 1863 was the record of a triumph that was complete. The American civil war by arresting the supply of cotton had half ruined Lancashire. The same cause had diminished the export trade to America by six millions sterling. Three bad seasons spoiled the crops. There was distress in Ireland. Yet the chancellor had a revenue in excess of expenditure by the noble figure of three millions and three quarters. Mr. Gladstone naturally took the opportunity of surveying the effects of four years of his financial policy. He admitted that they had been four years of tension, and this tension had been enhanced by his large remissions of duty, and by taking in hand the completion of the great work of commercial legislation. The end of it all was a growth of wealth, as he called it, almost intoxicating. The value of British goods sent to France had risen from four millions and three quarters to nearly nine millions and one quarter, in other words had about doubled under the operations of the treaty of commerce.[45] If to this were added foreign and colonial produce sent through us, and acquired by us in exchange for our own produce, the value had risen from nine and a half in 1859 to twenty-one and three quarters in 1862. In Mr. Gladstone's own description later, the export trade of 1860, in spite of a bad harvest, was so stimulated by the liberating customs act, that it [pg 067] rose at once from a hundred and thirty millions to a hundred and thirty-five. The next year it fell to a hundred and twenty-five, and in 1862 it fell by another million owing to the withdrawal, by reason of the American war, of the material of our greatest manufacture. In 1866 it rose to a hundred and eighty-eight millions.[46] Then under the head of income-tax, and comparing 1842 with 1862, over the same area, and with the same limitations, the aggregate amount of assessed income had risen from one hundred and fifty-six millions to two hundred and twenty-one. Other tests and figures need not detain us.
April 16, 1863.—My statement lasted three hours, and this with a good deal of compression. It wound up, I hope, a chapter in finance and in my life. Thanks to God. 17.—The usual sense of relaxation after an effort. I am oppressed too with a feeling of deep unworthiness, inability to answer my vocation, and the desire of rest. 18.—To Windsor, had an audience of the Queen; so warm about Sir G. Lewis, and she warned me not to overwork.
Lewis had died five days before (April 13), and this is Mr. Gladstone's entry:—
April 14.—Reached C.H.T. at 11-1/4, and was met by the sad news of the death of Sir George Lewis. I am pained to think of my differences with him at one time on finance; however, he took benefit by them rather than otherwise. A most able, most learned, most unselfish, and most genial man.
To Sir Gilbert Lewis, he wrote (April 18):—
Like several eminent public men of our time, he had many qualities for which the outer world did not perhaps, though it may not have denied them, ever give him full positive credit. For example, his singular courtesy and careful attention to others in all transactions great and small; his thoroughly warm and most forthcoming and genial disposition; his almost unconsciousness of the vast stores of his mind, and of the great facility and marvellous precision with which he used them; and, if I may so say, the noble and antique simplicity of character which he united with such knowledge of men and of affairs.
The final budget of this most remarkable series was that of 1866, when he swept away the last of the old vexatious duties on timber. It contained another element as to which, as I have said, some thought he had not been keen enough. In the budget of 1866 he first started the scheme of a sinking fund, which, when amplified, and particularly when simplified by his successors, did so much to reduce the dead weight of debt.[47] The complication of his scheme was due to his desire to make sure of its stability, and undoubtedly he would have carried it if he had remained in office through the session. He is, however, entitled to credit for laying the foundation of an effective sinking fund.
One word more may be added on Mr. Gladstone as financier. He was far too comprehensive in his outlook to suppose that the great outburst of material prosperity during the years in which he controlled the exchequer and guided parliament in affairs of money, was wholly and without qualification due to budgets alone. To insist on ascribing complex results to single causes is the well-known vice of narrow and untrained minds. He was quite alive to the effects of “the enormous, constant, rapid, and diversified development of mechanical power, and the consequent saving of labour by the extension of machinery.” He was well aware of the share of new means of locomotion in the growth of industrial enterprise. But the special cause of what was most peculiar to England in the experience of this period he considered to be the wise legislation of parliament, in seeking every opportunity for abolishing restrictions upon the application of capital and the exercise of industry and skill. In this wise legislation his own energetic and beneficent genius played the master part.