The financial proceedings of this year included a proposal for the redemption of South Sea stock and an attempted operation on the national debt, by the creation of new stocks bearing a lower rate of interest, two options of conversion being given to the holders of old stock. The idea of the creation of a two-and-half-per-cent. stock, said Mr. Gladstone in later years, though in those days novel, was very favourably received.[293]
I produced my plan. Disraeli offered it a malignant opposition. He made a demand for time; the one demand that ought not to have been made. In proposals of this kind, it is allowed to be altogether improper. In 1844 Mr. Goulburn was permitted, I think, to carry through with great expedition his plan for a large reduction of interest. When Mr. Goschen produced his still larger and much more important measure, we, the opposition, did our best to expedite the decision. There are no complications requiring time on such an occasion. It is a matter of aye or no. But when time is allowed the chapter of accidents allows an opponent to hope that a situation known to be unusually happy will deteriorate. Of this contingency Disraeli took his chance. Time as it happened was in his favour. It was no question of the substance of the plan, but a moderate change in the political barometer, which reduced to two or three millions a subscription which at the right moment would probably have been twenty or thirty.[294]
In a letter to W. R. Farquhar (March 8, 1861) he makes further remarks, which are introspective and autobiographic:—
Looking back now upon those of my proceedings in 1853 which related to interest upon exchequer bills and to the reduction of interest on the public debt, I think that there was nothing in the proposals themselves which might not have taken full and quick effect, if they had been made at a time which I may best describe as the time that precedes high-water with respect to abundance of money and security of the market. As respects exchequer bills, I am decidedly of opinion that the rates of premium current for some years before '53 were wholly incompatible with a sound state of things: and the fluctuations then were even greater than since. Still I think that I committed an error from want of sufficient quickness in discerning the signs of the times, for we were upon the very eve of an altered state of things, and any alteration of a kind at all serious was enough to make the period unfit for those grave operations. It is far from being the first or only time when I have had reason to lament my own deficiency in the faculty of rapid and comprehensive observation. I failed to see that high-water was just past; and that although the tide had not perceptibly fallen, yet it was going to fall. The truth likewise is this (to go a step further in my confessions) that almost all my experience in money affairs had been of a most difficult and trying kind, under circumstances which admitted of no choice but obliged me to sail always very near the wind, and this induced a habit of more daring navigation than I could now altogether approve. Nor will I excuse myself by saying that others were deceived like me, for none of them were in a condition to have precisely my responsibility.
Another note contributes a further point of explanation: 'I have always imagined that this fault was due to my experience in the affairs of the Hawarden and Oak Farm estates, where it was an incessant course of sailing near the wind, and there was really no other hope.'
INCOME-TAX
Seven years later Mr. Gladstone, once more chancellor of the exchequer, again produced a budget. Semi-ironic cheers met his semi-ironic expression of an expectation that he would be asked the question: what had become of the calculations of 1853? The succession duty proved a woeful disappointment, and instead of producing two million pounds, produced only six hundred thousand. A similar but greater disappointment, we must recollect, owing mainly to a singular miscalculation as to the income-tax, had marked Peel's memorable budget of 1842, which landed him in a deficiency of nearly two and a quarter millions, instead of a surplus of half a million.[295] Of the disappointment in his own case, Mr. Gladstone when the time came propounded an explanation, only moderately conclusive. I need not discuss it, for as everybody knows, the effective reason why the income-tax could not be removed was the heavy charge created by the Crimean war. What is more to the point in estimating the finance of 1853, is its effect in enabling us to meet the strain of the war. It was this finance that, continuing the work begun by Peel, made the country in 1859 richer by more than sixteen per cent, than it had been in 1853. It was this finance, that by clinching the open questions that enveloped the income-tax, and setting it upon a defensible foundation while it lasted, bore us through the struggle. Unluckily, in demonstrating the perils of meddling with the structure of the tax, in showing its power and simplicity, the chancellor was at the same time providing the easiest means, if not also the most direct incentive, to that policy of expenditure—it rose from fifty to seventy millions between 1853 and 1859—which was one of the most fatal obstacles to the foremost aims of his political life. It was twenty years from now, as my readers will see, before the effort, now foreshadowed, to exclude the income-tax from the ordinary sources of national revenue, reached its dramatic close.
FOOTNOTES:
[284] A curious parliamentary incident occurred. The original proposal was to reduce the duty from eighteen-pence to sixpence. A motion to repeal it altogether was rejected by ten. Then a motion was made to substitute zero for sixpence in the clause. The Speaker ruled that this reversal of the previous vote was not out of order, and it was carried by nine.
[285] Some may place first the Act of 1833 making real estate liable for simple contract debts.