The main facts of Mr Gladstone’s financial statement are briefly as follows. Warned by the strong expression of opinion on the part of the House in favour of a reduction of expenditure, the Government resolved to anticipate farther opposition by curtailing the estimates which the House had so reluctantly voted, and last year spent about £800,000 less than they had taken power to do. In respect to the Revenue, Mr Gladstone’s estimates were singularly at fault. As on previous occasions, his estimate of the Excise greatly exceeded the actual return, which this year has fallen short of his estimate by more than a million sterling. But the Income-tax yielded nearly half a million more than he calculated, and so have the Customs; and the total produce of the national taxes has been so favourable as to leave a surplus of about £400,000 above the estimate, and an excess of £1,300,000 above the expenditure. The revenue of the past year amounted to £70,603,000, the expenditure was £69,302,000: surplus £1,301,000. If the taxes were to remain on the same footing this year, they would yield (according to Mr Gladstone) £71,490,000; and he proposes some trifling new taxes amounting to £133,000: together equal to £71,623,000. And as the estimated expenditure for the ensuing year is only £67,749,000 (£1,553,000 less than last year’s), the surplus at the end of the ensuing year, if the taxes were kept at their present rate, would be £3,874,000. But the proposed reductions of taxation, chiefly on the Income-tax and Tea-duties, will cause a loss of revenue in the ensuing year to the extent of £3,343,000; so that the actual surplus, as estimated by Mr Gladstone, will be £531,000. The Budget stands thus:
| REVENUE. | |
|---|---|
| Customs, | £22,737,000 |
| Excise, | 17,658,000 |
| Stamps, | 9,000,000 |
| Taxes, | 3,160,000 |
| Income-tax, | 8,675,000 |
| Post Office, | 3,800,000 |
| Crown Lands, | 300,000 |
| Miscellaneous, | 2,950,000 |
| £68,280,000 | |
| EXPENDITURE. | |
| Debt, | £26,333,000 |
| Consolidated Fund, | 1,940,000 |
| Army, | 15,060,000 |
| Navy, | 10,730,000 |
| Collection, | 4,721,000 |
| Miscellaneous, | 8,965,000 |
| £67,749,000 | |
| Surplus, | £531,000. |
The surplus which Mr Gladstone thus reckons upon this year is far below the amount which our best financiers consider requisite for the maintenance of a sound system of finance. It is true, and we attach great weight to the consideration, that the present depressed state of an important branch of national industry renders it desirable that the taxation of the country should be reduced as low as possible. But this argument, unhappily, cuts two ways. For the same depression of trade, which calls for a minimum of taxation this year, to at least a similar extent places in jeopardy the surplus which the Chancellor of the Exchequer reckons upon. In his estimate of the produce of the excise, especially, we believe that he commits his usual mistake of being too sanguine. But the really hazardous feature of his Budget consists in this: That only a part of the proposed reductions of taxation will take effect during the ensuing year; and, therefore, the estimates which suffice for the financial year, upon which we have entered, will be inadequate for the year following. The reductions of taxation which will take place before April next will, as we have said, amount to £3,343,000; but the total yearly loss of revenue consequent upon the reductions proposed by the Chancellor of the Exchequer, is £4,242,000; so that if they took entire effect during the present year, instead of a surplus of £531,000, there would be a deficit of £368,000. But of the loss on the Income-tax, £850,000 will only fall on the following year (1864–5), and £49,000 of loss from the abolition of some petty taxes will likewise be passed on to next year. Thus we obtain a surplus of £531,000 for the present financial year only by passing on to next year a loss of £900,000. If the finances had been in a thoroughly good condition, and if the state of the country promised to be prosperous, and our relations with other Powers peaceful, the heavy legacy of loss for the year 1864–5 might be contemplated with less alarm; for the experience of late years shows that, in ordinary times, the productiveness of the revenue tends to augment at the rate of £700,000 a-year. But this is not the case. And, moreover, as Mr Gladstone’s estimate of the miscellaneous receipts for the present year embrace half a million sterling of the China indemnity money—a payment which will not take place again—the deficit which we are preparing for the year 1864–5, is an exceedingly formidable one = £1,400,000.
This is the weak point of Mr Gladstone’s Budget. Suppose his expectations are fully realised—suppose he have a surplus at the end of this year of half a million, and that the productiveness of the taxes increase next year to the extent of £700,000 (which is not likely),—there would nevertheless be a deficit in the year 1864–5 of £200,000. Such a result, the most favourable that can be expected, cannot be regarded with indifference. But this is not all. Is it not a fact that the balances in the Exchequer in March last year were £2,684,000 less than they were in 1860, when Mr Gladstone began his present financial administration? And as he does not take any account of that deficit in his new Budget, the deficit remains unprovided for, and of course renders his present financial programme doubly hazardous. It was only by the help of the two and a half millions abstracted from the Exchequer balances, and also by creating new Debt to the extent of £461,000, that he escaped bankruptcy during the two first years of his financial administration: and if he had been a Minister of ordinary prudence, he would have felt bound to replace those sums before he proceeded to make further reductions of taxation. But he is determined to produce popular Budgets, however dear a price the country may have to pay for them in the long run. He justifies anew the censure which Mr M’Culloch has passed upon such a system of finance. He makes the show of a surplus for the ensuing year, only by ignoring nearly three millions of deficit which he has accumulated in past years, and by preparing a new deficit for the year 1864–5.
Every proposal to reduce taxation is sure to be popular,—we are equally sure that the present reductions are exceedingly dangerous. It is one thing to cut down expenditure—and this, we conceive, was what the Conservatives last year urged upon the Government: it is quite another thing to dispense with a real surplus, to resign ourselves to a past deficit, and prepare for ourselves a new one. The errors of Mr Gladstone’s previous Budgets now begin to weigh heavy upon the national fortunes. The abandonment of the paper-duties has rendered our present financial position one of no ordinary embarrassment. Had these duties still been in operation, the present reductions of taxation, so desirable in themselves, and so repeatedly called for by the Conservative party, could have been effected without any risk. As it is, we think the financial position of the country eminently unsatisfactory and unsafe. Not only must we experience a deficit in the year 1864–5, but we are totally unprepared for any untoward contingencies in the present year. The peace of Europe (if peace it may be called) is obviously insecure; hostilities seem impending between this country and Japan; and our relations with the Federal States of North America are such as, unhappily, and from no fault of ours, to render the occurrence of war between the two countries a contingency which cannot entirely be overlooked. But if any exceptional expenditure be forced upon us, how are we to meet it? Under Mr Gladstone’s management, the taxation of the country has been so concentrated upon a few articles of universal consumption, and the duty upon some of those commodities (such as spirits) has been so obviously carried to the highest possible point, that to increase the revenue from its present sources would be extremely difficult and unpopular. We cannot reimpose the old duties on wines, silks, gloves, and other articles embraced in the French treaty, for in respect to these we have sold our freedom of taxation to a foreign power. The paper duties are irretrievably abandoned; for, however impolitic may have been the abolition of those duties in times like the present, their reimposition would be a great hardship and injustice to the manufacturers who have made new arrangements in accordance with the abolition. A few months hence the same will be the case with the Tea-duties. A large increase of the Income-tax, and an issue of Exchequer bonds, are the only means by which we can hope to make head against an emergency. The surplus is merely nominal—the balances in the Exchequer cannot be further reduced,—and even the issue of Exchequer bonds can be resorted to only to a small extent, in consequence of Mr Gladstone’s repeated postponement of paying off, as they fell due, the amounts already in circulation. Over the term of Mr Gladstone’s present financial administration, as over his previous one, the country will yet have to write the words, so damnatory of the reputation of a statesman, Improvidus futuri. In the present aspect of affairs, we begin to think anew of his Budgets before the Crimean War; and we can only hope that the year 1864 will not be like 1854, and that the country will not find itself again in straits and embarrassments like those which proved wellnigh overwhelming ten years ago.
Printed by William Blackwood & Sons, Edinburgh.
[1]. ‘Prehistoric Man; Researches into the Origin of Civilisation in the Old and the New World.’ By Daniel Wilson, LL. D., Professor of History and English Literature in University College, Toronto; Author of the ‘Archæology and Prehistoric Annals of Scotland,’ &c. Macmillan & Co., Cambridge.
[2]. There is one instance of a fragment of human bone found in company with these flints, but we have heard doubts thrown on the nature of this fragment.
[3]. ‘The Life of General Sir Howard Douglas, Bart, G.C.B., G.C.M.G., F.R.S., D.C.L. From his Notes, Conversations, and Correspondence.’ By S. W. Fullom. John Murray, London.