Mr. Gladstone said that the total reduction of duties would be over £1,000,000, requiring a slight extension of taxation; that by this means nearly £1,000,000 would be returned to the general revenue; that the loss to the revenue by the French Treaty, which was based upon free trade principles, and the reduction of duties, would be half made up by the imposts specified; that the abolition of the paper duty would produce the happiest results from the spread of cheap literature. The reductions proposed would give a total relief to the consumer of nearly £4,000,000, and cause a net loss of the revenue of over £2,000,000, a sum about equivalent to the amount coming in from the cessation of government annuities that year. The total revenue was £70,564,000, and as the total expenses of government was £70,000,000, there remained an estimated surplus of £464,000.

Mr. Gladstone concluded; "There were times, now long by, when sovereigns made progress through the land, and when at the proclamation of their heralds, they caused to be scattered whole showers of coin among the people who thronged upon their steps.... Our Sovereign is enabled, through the wisdom of her great council, assembled in Parliament around her, again to scatter blessings among her subjects by means of wise and prudent laws; of laws which do not sap in any respect the foundations of duty or of manhood, but which strike away the shackles from the arm of industry."

"It was one of the peculiarities of Mr. Gladstone's budget addresses that they roused curiosity in the outset, and, being delivered in a musical, sonorous, and perfectly modulated voice, kept the listeners interested to the very close. This financial statement of 1860 was admirably arranged for the purpose of awakening and keeping attention, piquing and teasing curiosity, and sustaining desire to hear from the first sentence to the last. It was not a speech, it was an oration, in the form of a great State paper, made eloquent, in which there was a proper restraint over the crowding ideas, the most exact accuracy in the sentences, and even in the very words chosen; the most perfect balancing of parts, and, more than all, there were no errors or omissions; nothing was put wrongly and nothing was overlooked. With a House crowded in every corner, with the strain upon his own mental faculties, and the great physical tax implied in the management of his voice, and the necessity for remaining upon his feet during this long period, 'the observed of all observers,' Mr. Gladstone took all as quietly, we are told, as if he had just risen to address a few observations to Mr. Speaker. Indeed, it was laughingly said that he could address a House for a whole week, and on the Friday evening have taken a new departure, beginning with the observation, 'After these preliminary remarks, I will now proceed to deal with the subject matter of my financial plan.'"

The ministry was supported by large majorities, and carried their measures, but when the bill for the repeal of the duty on paper at home, as well as coming into the country, came before the House of Lords, it was rejected. Mr. Gladstone appeared to be confronted by the greatest constitutional crisis of his life. He gave vent to his indignation, and declared that the action of the Lords was a gigantic innovation, and that the House of Commons had the undoubted right of selecting the manner in which the people should be taxed. This speech was pronounced by Lord John Russell "magnificently mad," and Lord Granville said that "it was a toss-up whether Gladstone resigned or not, and that if he did it would break up the Liberal party." Quiet was finally restored, and the following year Mr. Gladstone adroitly brought the same feature before the Lords in a way that compelled acceptance.

The budget of 1861 showed a surplus of £2,000,000 over the estimated surplus, and proposed to remit the penny on the income tax, and to repeal the paper duty. Instead of being divided into several bills as in the previous year, the budget was presented as a whole—all included in one. By this device the Lords were forced to acquiesce in the repeal of the paper duty, or take the responsibility of rejecting the whole bill. The Peers grumbled, and some of them were enraged. Lord Robert Cecil, now Marquis of Salisbury, rudely declared that Mr. Gladstone's conduct was only worthy of an attorney. He begged to apologize to the attorneys. They were honorable men and would have scorned the course pursued by the ministers. Another member of the House of Lords protested that the budget gave a mortal stab to the Constitution. Mr. Gladstone retorted: "I want to know, to what Constitution does it give a mortal stab? In my opinion it gives no mortal stab, and no stab at all, to any Constitution that we are bound to care for. But, on the contrary, so far as it alters anything in the most recent course of practice, it alters in the direction of restoring that good old Constitution which took its root in Saxon times, which grew from the Plantagenets, which endured the iron repression of the Tudors, which resisted the aggressions of the Stuarts, and which has come to its full maturity under the House of Brunswick. I think that is the Constitution, if I may presume to say so, which it is our duty to guard, and which—if, indeed, the proceedings of this year can be said to affect it at all—will be all the better for the operation. But the Constitution which my right honorable friend worships is a very different affair."

In 1860, Mr. Gladstone was elected Lord Rector of Edinburgh University, and the degree of LL.D. was conferred upon him.

Mr. Gladstone, in 1861, introduced one of his most beneficial measures—a bill creating the Post Office Savings Bank. The success of the scheme has gone beyond all expectation. At the close of 1891, the amount deposited was £71,608,002, and growing at the average rate of over £4,000,000 annually.

Mr. Gladstone's financial measures for 1862, while not involving such momentous issues as those of the preceding year, nevertheless encountered considerable opposition. The budget was a stationary one, with no surplus, no new taxes, no remission of taxes, no heavier burdens.

In October, 1862, Mr. and Mrs. Gladstone made a journey down the Tyne, which is thus described: "It was not possible to show to royal visitors more demonstrations of honor than were showered on the illustrious Commoner and his wife.... At every point, at every bank and hill and factory, in every opening where people could stand or climb, expectant crowds awaited Mr. Gladstone's arrival. Women and children, in all costumes and of all conditions, lined the shores ... as Mr. and Mrs. Gladstone passed. Cannon boomed from every point;... such a succession of cannonading never before greeted a triumphant conqueror on the march."

It was during this journey that Mr. Gladstone made the memorable speech, at New Castle, upon the American Civil War, which had broken out the same year. There had been much speculation as to whether the English government would recognize the Confederacy as a separate and independent power, and the utterance of a member of the Cabinet under the circumstances was regarded as entirely unwarranted. Mr. Gladstone himself frankly acknowledged his error in 1867: "I must confess that I was wrong; that I took too much upon myself in expressing such an opinion. Yet the motive was not bad. My sympathies were then—where they had long before been, where they are now—with the whole American people."