Both Cobden and I, says Mr. Gladstone, were keenly in favour of such a treaty (I myself certainly), without intending thereby [pg 021] to signify the smallest disposition to the promotion of tariff treaties in general. I had been an active party to the various attempts under Sir Robert Peel's government to conclude such treaties, and was as far as possible removed from any disposition to the renewal of labour which was in itself so profitless, and which was dangerously near to a practical assertion of a false principle, namely that the reductions of indirect taxation, permitted by fiscal considerations, are in themselves injurious to the country that makes them, and are only to be entertained when a compensation can be had for them.[15] ... The correspondence which would in the ordinary course have been exchanged between the foreign offices of the two countries, was carried through in a series of personal letters between Mr. Cobden and myself. I remember indeed that the Emperor or his government were desirous to conceal from their own foreign minister (Walewski) the fact that such a measure was in contemplation. On our side, the method pursued was only recommended by practical considerations. I contemplated including the conditions of the French treaty in a new and sweeping revision of the tariff, the particulars of which it was of course important to keep from the public eye until they were ready to be submitted to parliament.
At the end of 1859 the question of the treaty was brought into the cabinet, and there met with no general opposition, though some objection was taken by Lewis and Wood, based on the ground that they ought not to commit themselves by treaty engagements to a sacrifice of revenue, until they had before them the income and the charges of the year. Writing to his wife about some invitation to a country house, Mr. Gladstone says (Jan. 11, 1860):—
I cannot go without a clear sacrifice of public duty. For the measure is of immense importance and of no less nicety, and here [pg 022] it all depends on me. Lord John backs me most cordially and well, but it is no small thing to get a cabinet to give up one and a half or two millions of revenue at a time when all the public passion is for enormous expenditure, and in a case beset with great difficulties. In fact, a majority of the cabinet is indifferent or averse, but they have behaved very well. I almost always agree with Lewis on other matters, but in trade and finance I do not find his opinions satisfactory. Till it is through, this vital question will need my closest and most anxious attention. [Two days later he writes:] The cabinet has been again on the French treaty. There are four or five zealous, perhaps as many who would rather be without it. It has required pressure, but we have got sufficient power now, if the French will do what is reasonable. Lord John has been excellent, Palmerston rather neutral. It is really a great European operation. [A fortnight later (Jan. 28):] A word to say I have opened the fundamental parts of my budget in the cabinet, and that I could not have hoped a better reception. Nothing decided, for I did not ask it, and indeed the case was not complete, but there was no general [resistance], no decided objection; the tone of questioning was favourable, Granville and Argyll delighted, Newcastle, I think, ditto. Thank God.
To Cobden, Jan. 28.—Criticism is busy; but the only thing really formidable is the unavowed but strong conflict with that passionate expectation of war, which no more bears disappointment than if it were hope or love. Feb. 6.—Cobbett once compared an insignificant public man in an important situation to the linch-pin in the carriage, and my position recalls his very apt figure to my mind.
Of course in his zeal for the treaty and its connection with tariff reform, Mr. Gladstone believed that the operation would open a great volume of trade and largely enrich the country. But in one sense this was the least of it:—
I had a reason of a higher order. The French Emperor had launched his project as to Savoy and Nice. It should have been plain to all those who desired an united Italy, that such an Italy ought not to draw Savoy in its wake; a country severed from it by the mountains, by language, by climate, and I suppose by pursuits. But it does not follow that Savoy should have been tacked on to France, while for the annexation of Nice it was [pg 023] difficult to find a word of apology. But it could scarcely be said to concern our interests, while there was not the shadow of a case of honour. The susceptibilities of England were, however, violently aroused. Even Lord Russell used imprudent language in parliament about looking for other allies. A French panic prevailed as strong as any of the other panics that have done so much discredit to this country. For this panic, the treaty of commerce with France was the only sedative. It was in fact a counter-irritant; and it aroused the sense of commercial interest to counteract the war passion. It was and is my opinion, that the choice lay between the Cobden treaty and not the certainty, but the high probability, of a war with France. (Undated memo.)
II
Out of the commercial treaty grew the whole of the great financial scheme of 1860. By his first budget Mr. Gladstone had marked out this year for a notable epoch in finance. Happily it found him at the exchequer. The expiry of certain annuities payable to the public creditor removed a charge of some two millions, and Mr. Gladstone was vehemently resolved that this amount should not “pass into the great gulf of expenditure there to be swallowed up.” If the year, in such circumstances, is to pass, he said to Cobden, “without anything done for trade and the masses, it will be a great discredit and a great calamity.” The alterations of duty required for the French treaty were made possible by the lapse of the annuities, and laid the foundation of a plan that averted the discredit and calamity of doing nothing for trade, and nothing for the masses of the population. France engaged to reduce duties and remove prohibitions on a long list of articles of British production and export, iron the most important,—“the daily bread of all industries,” as Cobden called it. England engaged immediately to abolish all duties upon all manufactured articles at her ports, and to reduce the duties on wine and brandy. The English reductions and abolitions extended beyond France to the commodities of all countries alike. Mr. Gladstone called 1860 the last of the cardinal and organic years of emancipatory fiscal legislation; it ended [pg 024] a series of which the four earlier terms had been reached in 1842, in 1845, in 1846, and 1853. With the French treaty, he used to say, the movement in favour of free trade reached its zenith.
Outline Of The Scheme
The financial fabric that rose from the treaty was one of the boldest of all his achievements, and the reader who seeks to take the measure of Mr. Gladstone as financier, in comparison with any of his contemporaries in the western world, will find in this fabric ample material.[16] Various circumstances had led to an immense increase in national expenditure. The structure of warships was revolutionised by the use of iron in place of wood. It was a remarkable era in artillery, and guns were urgently demanded of new type. In the far East a quarrel had broken out with the Chinese. The threats of French officers after the plot of Orsini had bred a sense of insecurity in our own borders. Thus more money than ever was required; more than ever economy was both unpopular and difficult. The annual estimates stood at seventy millions; when Mr. Gladstone framed his famous budget seven years before, that charge stood at fifty-two millions. If the sole object of a chancellor of the exchequer be to balance his account, Mr. Gladstone might have contented himself with keeping the income-tax and duties on tea and sugar as they were, meeting the remissions needed by the French treaty out of the sum released by the expiry of the long annuities. Or he might have reduced tea and sugar to a peace rate, and raised the income-tax from ninepence to a shilling. Instead of taking this easy course, Mr. Gladstone after having relinquished upwards of a million for the sake of the French treaty, now further relinquished nearly a million more for the sake of releasing 371 articles from duties of customs, and a third million in order to abolish the vexatious excise duty upon the manufacture of paper. Nearly one million of all this loss he recouped by the imposition of certain small charges and minor [pg 025] taxes, and by one or two ingenious expedients of collection and account, and the other two millions he made good out of the lapsed annuities. Tea and sugar he left as they were, and the income-tax he raised from ninepence to tenpence. Severe economists, not quite unjustly, called these small charges a blot on his escutcheon. Time soon wiped it off, for in fact they were a failure.