II

'Some days before the day appointed for my statement,' says Mr.

Gladstone, 'I recited the leading particulars to my able and intelligent friend Cardwell, not in the cabinet but then holding office as president of the board of trade. He was so bewildered and astounded at the bigness of the scheme, that I began to ask myself, Have I a right to ask my colleagues to follow me amidst all these rocks and shoals? In consequence I performed a drastic operation upon the plan, and next day I carried to Lord Aberdeen a reduced and mutilated scheme which might be deemed by some politicians to be weaker but safer. I put to Lord Aberdeen the question I had put to myself, and stated my readiness, if he should think it called for, to make this sacrifice to the probable inclinations of my colleagues. But he boldly and wisely said, "I take it upon myself to ask you to bring your original and whole plan before the cabinet." I thought this an ample warrant.'

THE BUDGET IN CABINET

At last, after Mr. Gladstone had spent an hour at the palace in explaining his scheme to the Prince Consort, the budget was opened to the cabinet (April 9) in a speech of three hours--an achievement, I should suppose, unparalleled in that line, for a cabinet consists of men each with pretty absorbing pre-occupations of his own. The exposition was 'as ingenious,' Lord Aberdeen told Prince Albert, 'as clear, and for the most part as convincing, as anything I have ever heard.'

'Gladstone,' said Lord Aberdeen later (1856) 'does not weigh well against one another different arguments, each of which has a real foundation. But he is unrivalled in his power of proving that a specious argument has no real foundation. On the Succession bill the whole cabinet was against him. He delivered to us much the same speech as he made in the House of Commons. At its close we were all convinced.'[286]

Differences that might easily become serious speedily arose upon details in the minds of two or three of them, and for some days the prime minister regarded the undertaking as not only difficult but perilous.

Sir Charles Wood, in cabinet (April 11), strongly disapproved of the extension of income-tax to Ireland, and to the lowering of the exemption line. On Ireland the plan would lay more than half a million of new taxation, whereas much of the relief, such as soap and a.s.sessed taxes, would not touch her.[287] Palmerston thought it a great plan, perfectly just, and admirably put together, only it opened too many points of attack, and it could never be carried: Disraeli was on the watch, the Irish would join him, so would the radicals, while the succession duty, to which Palmerston individually had great objection, would estrange many conservatives. Lord John Russell perceived difficulties, but he did not see an alternative. Graham then fell in, disliked the twofold extension of the income-tax, and thought they should only take away half the soap-tax. Lord Lansdowne (a great Irish landlord) agreed with him.

Mr. Gladstone told them that he was willing to propose whatever the cabinet might decide on, except one thing, namely, the breaking up of the basis of the income-tax: that he could not be a party to; he should regard it as a high political offence. With this reservation he should follow their judgment, but he strongly adhered to his whole plan. Lord Aberdeen said, 'You must take care your proposals are not unpopular ones.' Mr. Gladstone replied that it was after applying the test of popularity, that he was convinced the budget would be damaged beforehand by some of the small changes that had been suggested.

At the end of a long and interesting discussion, there stood for the whole budget Lord John, Newcastle, Clarendon, Molesworth, Gladstone, with Argyll and Aberdeen more or less favourable; for dropping the two extensions of income-tax and keeping half the soap duty, Lansdowne, Graham, Wood; more or less leaning towards them, Palmerston and Granville. They agreed to meet again the next day (April 12), when they got into the open sea. Wood stuck to his text. Lansdowne suggested that an increased spirit duty and an income-tax for Ireland together would be something like a breach of faith. Palmerston thought they would be beaten, but he would accept the budget provided they were not to be bound to dissolve or resign upon such a point as to the two extensions of the income-tax. Lord John said that if they were beaten on differentiating the tax, they would have to dissolve. Palmerston expressed his individual opinion in favour of a distinction for precarious incomes, and would act in that sense if he were out of the government; as it was, he a.s.sented. Argyll created a diversion by suggesting the abandonment of the Irish spirit duty. Mr. Gladstone admitted that he thought the spirit duty the weakest point of the plan, though warrantable and tenable on the whole. At last, after further patient and searching discussion, the cabinet finding that the suggested amendments cut against one another, were for adopting the entire budget, the dissentients being Lansdowne, Graham, Wood, and Herbert. Graham was full of ill auguries, but said he would a.s.sent and a.s.sist. Wood looked grave, and murmured that he must take time.

CABINET MISGIVINGS

In the course of these preliminaries Lord John Russell had gone to Graham, very uneasy about the income-tax. Graham, though habitually desponding, bade him be of good cheer. Their opponents, he said, were in numbers strong; but the budget would be excellent to dissolve upon, and Lord John admitted that they would gain forty seats.

They agreed, however, in Graham's language, that it would never do to play their trump card until the state of the game actually required it.

Lord John confessed that he was no judge of figures,--somewhat of a weakness in a critic of a budget,--and Graham comforted him by the reply that he was at any rate the best judge living of House of Commons tactics.

The position of the government in the House of Commons was notoriously weak. The majority that had brought them into existence was excessively narrow. It had been well known from the first that if any of the accidents of a session should happen to draw the tories, the Irish, and the radicals into one lobby, ministers would find themselves in a minority. Small defeats occurred. The budget was only four days off. Mr.

Gladstone enters in his diary: 'Spoke against Gibson; beaten by 200-169.

Our third time this week. Very stiff work this. Ellice said dissolution would be the end of it; we agreed in the House to a cabinet to-morrow.

Herbert and Cardwell, to whom I spoke, inclined to dissolve.' Next day (April 15), the cabinet met in a flutter, for the same tactics might well be repeated, whenever Mr. Disraeli should think the chances good.

Lord John adverted to the hostility of the radicals as exhibited in the tone of the debate, and hinted the opinion that they must take in a reef or two. Mr. Gladstone doubted whether the budget could live in that House, whatever form it might a.s.sume; but even with such perils he should look upon the whole budget as less unsafe than a partial contraction. Graham took the same view of the disposition of parliament: keen opposition; lukewarm support; the necessity of a greater party sympathy and connection to enable them to surmount the difficulties of a most unusual and hazardous operation. But he did not appear to lean to dissolution, and the older members of the cabinet generally declared themselves against it. 'In the end we went back to the position that we must have a budget on Monday, but Clarendon, Herbert, and Palmerston joined the chorus of those who said the measure was too sharp upon Ireland. The idea was then started whether we should go the length of the entire remission of the consolidated annuities[288] and impose the income-tax at sevenpence, with the augmented spirit duty. This view found favour generally; and I felt that some excess in the mere sacrifice of money was no great matter compared with the advantage of so great an approximation to equal taxation.' Then, 'speaking with great deference,' Gladstone repeated his belief once more that the entire budget was safer than a contracted one, both for the House and the country, and his conviction that if they proposed it, the name and fame of the government at any rate would stand well. 'Wood seemed still to hang back, but the rest of the cabinet now appeared well satisfied, and we parted, each resolved and certainly more likely to stand or fall by the budget as a whole than we seemed to be on Wednesday.'

III

The decisive cabinet was on Sat.u.r.day, April 16. It was finally settled that the budget should be proposed as it stood, with its essential features unaltered. On Sunday, the chancellor of the exchequer went as usual twice to church, and read the _Paradiso_; 'but I was obliged,' he says, with an accent of contrition, 'to give several hours to my figures.' Monday brought the critical moment. 'April 18. Wrote minutes.

Read Shakespeare at night. This day was devoted to working up my papers and figures for the evening. Then drove and walked with C. [Mrs.

Gladstone]. Went at 4 to the House. Spoke 4 hours in detailing the financial measures, and my strength stood out well, thank G.o.d. Many kind congratulations afterwards. Herberts and Wortleys came home with us and had soup and negus.'

LAID BEFORE PARLIAMENT

The proceeding that figures here so simply was, in fact, one of the great parliamentary performances of the century. Lord Aberdeen wrote to Prince Albert that 'the display of power was wonderful; it was agreed in all quarters that there had been nothing like the speech for many years, and that under the impression of his commanding eloquence the reception of the budget had been most favourable.' Lord John told the Queen the speech was one of the ablest ever made in the House of Commons. 'Mr.

Pitt, in the days of his glory, might have been more imposing, but he could not have been more persuasive.' Lord Aberdeen heard from Windsor the next day: 'The Queen must write a line to Lord Aberdeen to say how delighted she is at the great success of Mr. Gladstone's speech last night.... We have every reason to be sanguine now, which is a great relief to the Queen.' Prince Albert used the same language to Mr.

Gladstone: 'I cannot resist writing you a line in order to congratulate you on the success of your speech of yesterday. I have just completed a close and careful perusal of it and should certainly have cheered had I a seat in the House. I hear from all sides that the budget has been well received. Trusting that your Christian humility will not allow you to be dangerously elated, I cannot help sending for your perusal the report which Lord John Russell sent to the Queen, feeling sure that it will give you pleasure, such approbation being the best reward a public man can have.'

On the cardinal question of the fortunes of the ministry its effect was decisive. The prime minister wrote to Mr. Gladstone himself (April 19): 'While everybody is congratulating _me_ on the wonderful impression produced in the House of Commons last night, it seems only reasonable that I should have a word of congratulation for _you_. You will believe how much more sincerely I rejoice on your account than on my own, although most a.s.suredly, if the existence of my government shall be prolonged, it will be your work.' To Madame de Lieven Aberdeen said that Gladstone had given a strength and l.u.s.tre to the administration which it could not have derived from anything else. No testimony was more agreeable to Mr. Gladstone than a letter from Lady Peel. 'I know the recollections,' he replied, 'with which you must have written, and therefore I will not scruple to say that as I was inspired by the thought of treading, however unequally, in the steps of my great teacher and master in public affairs, so it was one of my keenest anxieties not to do dishonour to his memory, or injustice to the patriotic policy with which his name is forever a.s.sociated.'[289]

POWER OF THE PERFORMANCE

Greville makes a true point when he says that the budget speech 'has raised Gladstone to a great political elevation, and what is of far greater consequence than the measure itself, has given the country a.s.surance of a _man_ equal to great political necessities and fit to lead parties and direct governments.'[290] Mr. Gladstone had made many speeches that were in a high degree interesting, ingenious, attractive, forcible. He now showed that besides and apart from all this, he was the possessor of qualities without which no amount of rhetorician's glitter commands the House of Commons for a single hour after the fireworks have ceased to blaze. He showed that he had precise perception, positive and constructive purpose, and a powerful will. In 1851, he had on two occasions exhibited the highest competency as a critic of the budget of Sir Charles Wood. On the memorable night in the previous December, when he had torn Mr. Disraeli's budget to pieces, he had proved how terrifying he could be in exposure and a.s.sault. He now triumphantly met the test that he had triumphantly applied to his predecessor, and presented a command of even more imposing resources in the task of responsible construction than he had displayed in irresponsible criticism. The speech was saturated with fact; the horizons were large; and the opening of each in the long series of topics, from Mr. Pitt and the great war, down to the unsuspected connection between the repeal of the soap-tax and the extinction of the slave trade in Africa, was exalted and s.p.a.cious. The arguments throughout were close, persuasive, exhaustive; the moral appeal was in the only tone worthy of a great minister addressing a governing a.s.sembly--a masculine invocation of their intellectual and political courage. This is the intrepid way in which a strong parliament and a strong nation like to see public difficulties handled, and they now welcomed the appearance of a new minister, who rejected what he called narrow and flimsy expedients, of which so much had been seen in the last half dozen years; who was not afraid to make a stand against heedless men with hearts apparently set on drying up one source of revenue after another; who did not shrink from sconcing the powerful landed phalanx like other people; and who at the same time boldly used and manfully defended the most unpopular of all the public imposts. In politics the spectacle of sheer courage is often quite as good in its influence and effect as the best of logic. It was so here. While proposing that the income-tax should come to an end in seven years, he yet produced the most comprehensive a.n.a.lysis and the boldest vindication of the structure of the tax as it stood. His manner was plain, often almost conversational, but his elaborate examination of the principles of an income-tax remains to this day a master example of accurate reasoning thrown into delightful form. He admitted all the objections to it: the inquisition that it entailed, the frauds to which it led, the sense in the public mind of its injustice in laying the same rate upon the holder of idle and secured public funds, upon the industrious trader, upon the precarious earnings of the professional man. It was these disadvantages that made him plan the extinction of the tax at the end of a definite period, when the salutary remissions of other burdens now proposed would have had time to bring forth their fruits. As was said by a later chancellor of the exchequer, this speech not only won 'universal applause from his audience at the time, but changed the convictions of a large part of the nation, and turned, at least for several years, a current of popular opinion which had seemed too powerful for any minister to resist.'[291]

The succession duty brought Mr. Gladstone into the first conflict of his life with the House of Lords. That land should be made to pay like other forms of property Was a proposition denounced as essentially impracticable, oppressive, unjust, cowardly, and absurd. It was called _ex post facto_ legislation. It was one of the most obnoxious, detestable, and odious measures ever proposed. Its author was a vulture soaring over society, waiting for the rich harvest that death would pour into his treasury. Lord Derby invoked him as a phoenix chancellor, in whom Mr. Pitt rose from his ashes with double l.u.s.tre, for Mr. Gladstone had ventured where Pitt had failed. He admitted that nothing short of the chancellor's extraordinary skill and dexterity could have carried proposals so evil through the House of Commons.[292] Meanwhile the public counted up their gains: a remission on tea, good for twenty shillings a year in an ordinary household; a fall in the washing bill; a boon of a couple of pounds for the man who insured his life for five hundred; an easy saving of ten pounds a year in the a.s.sessed taxes, and so forth,--the whole performance ending with 'a dissolving view of the decline and fall' of the hated income-tax.

SUCCESSION DUTY AND REDEMPTION

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 circ.u.mstances 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 subst.i.tute 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.

[286] Mrs. Simpson's _Many Memories_, p. 237.

[287] For paper on Irish income-tax, see Appendix.

[288] Loans made to Ireland for various purposes.

[289] Cavour, as Costi's letters show, took an eager interest in Mr.

Gladstone's budget speech.

[290] Greville, Third Series, i. p. 59.

[291] Northcote, _Twenty Years of Financial Policy_, p. 185.

[292] Mr. Gladstone received valuable aid from Beth.e.l.l, the solicitor-general. On leaving, office in 1855 he wrote to Beth.e.l.l: 'After having had to try your patience more than once in circ.u.mstances of real difficulty, I have found your kindness inexhaustible, and your aid invaluable, so that I really can ill tell on which of the two I look back with the greater pleasure. The memory of the Succession Duty bill is to me something like what Inkermann may be to a private of the Guards: you were the sergeant from whom I got my drill and whose hand and voice carried me through.'

[293] The city articles of the time justify this statement.

[294] Gladstone Memo., 1897. See also Appendix.

[295] It may be said, however, that Peel was right about the yield of the income-tax, and only overlooked the fact that it would not all be collected, within the year.

CHAPTER III