I prefer to say these things to you alone than to talk of them before Salisbury. Our diplomacy is no doubt very weak, but this does not entirely explain our powerlessness in Europe....

Yours very sincerely,
W. H. Smith.

All through the month of November the annual conflict between the Treasury and the spending departments was maintained with unusual vigour and with varying fortune. On the 3rd a Treasury Minute accelerated the preparation of the estimates:—

Treasury Chambers, Whitehall, S.W.:
November 3, 1886.

In view of the probability of the meeting of Parliament being fixed for the middle of January, the First Lord of the Treasury and I are of opinion that the Army and Navy Estimates should be considered by the Cabinet before Christmas. Will you therefore kindly direct that the estimates decided upon by the War Office should be ready by the first days of December? We shall then be well ahead of our work.

‘Do you observe,’ wrote Smith on the 7th, ‘that under pressure our people in Egypt see their way now to a great reduction of military expenditure? Only a fortnight ago they were the other way minded.’ And again on the 20th, when some Treasury probing had touched a tender spot:—

‘This departmental extravagance is not mine, but my predecessor’s, and full private notice has been given repeatedly since August. I hope I may yet save something, but the cake was eaten before I got here. We will talk about it when we next meet.’

Other departments had to face a not less searching examination, and the Navy and Colonial Office estimates were the subject of prolonged and animated correspondence. There was, of course, nothing unhealthy, or even unusual, in all this. It is the business of the Treasury to canvass all proposals which involve expenditure and to compel those who bring them forward to show, not merely that they are necessary and desirable, but that they are more necessary and more desirable than other necessary and desirable projects. Without such severe controversial examination of estimates, the finances of the wealthiest country would soon be in disorder and the money of the taxpayer squandered irretrievably. But it may well be believed that, with all the good-will in the world, the month of November is a stormy period for the Chancellor of the Exchequer and brings him daily into acute antagonism with his colleagues. In such circumstances only the closest sympathy and support from the Prime Minister can sustain him. He is one against many, and must otherwise submit or resign. But on this occasion, when there should have been the most intimate alliance, there opened vast and comprehensive differences; and the Chancellor of the Exchequer became continually more isolated and from that very cause more combative. The money clauses of the Local Government Bill—affecting as they did so many settled interests, interwoven as they were with the whole finance of the year—led to vexatious and protracted discussions. Behind all loomed the vague yet formidable shadow of the Budget itself. By the end of the month it was evident that a crisis was approaching.

‘Salisbury,’ wrote Lord George Hamilton on the 25th, ‘is getting to the position where he will be pressed no more. If a rupture takes place, it will damage us almost irretrievably; for he would carry with him a large portion of the party, and your position would be very much, as you yourself said, like to that of Sir Robert Peel, who, though he carried Free Trade, was without a party afterwards. Gladstone cannot live for long and if we only hold together we shall utterly foil him.

‘I write feelingly, for if we break up, my vocation of peacemaker between the different sections of the party is gone and I should take up some other line of work than politics. Things are, I fear, worse than we thought two days back; however, you will see for yourself and act accordingly.’