would be imperceptible to ordinary minds. But the House of Lords had been apparently well canvassed. As was afterwards the case in the Church Rate Bill, the majority in favour of the repeal of the paper duty had dwindled in the House of Commons. A considerable number of the members of the Upper House went down to have their fling at the chancellor of the exchequer and the free-traders. When the Paper Duties Bill was brought up it was rejected on the second reading by a majority of eighty-nine, and the Lords had assumed a right, which it was afterwards averred they had been distinctly prohibited from claiming by repeated decisions entered upon parliamentary records, to the effect that the whole provision for supply and for the taxation, or the remission of the taxation of the country, rested with the Commons alone. To say the least of it, this action of the Lords was a very serious challenge to the Lower House, and a direct claim of power to annul its financial plans. It was expected that a collision between the two houses must follow, and there was some surprise, if not actual disappointment, when it was found that Lord Palmerston was quite unlikely to accept the decision against the paper duties as a reason for a ministerial crisis. Probably he cared almost as little about the remission of the duties, or the free importation of foreign paper, as the majority of the opponents of the measure; but he cared a great deal about not being exposed to the necessity for resignation or for the dissolution of parliament, or even for raising a whirlwind of defiance of the Lords. He was growing old; he was in power, and was likely to remain so for some time longer. He had no desire to initiate or to champion further political reforms, and the free-trade movement had gone rather beyond the tether which he had regarded as the extent of its operations. His policy was to quiet both houses, if possible to induce the Lords to recede by making the way to back out easy for them, and to avoid the break up of the government, which might follow the persistent rejection of the scheme of the chancellor of the exchequer, on whose financial achievements he afterwards had to rely in order to support

the claims of the ministry against an attack upon its general policy. Instead of assailing the House of Lords, the prime minister gave notice that he should move for a select committee to examine the journals of the House of Lords for precedents for the course which had been adopted in that house with regard to the bill for the repeal of the paper duties, and disclaimed any intention on the part of the government of taking steps which might bring the two houses into collision. The committee was appointed. It was little more than a formality; but it served to delay agitation, and delay to popular agitation usually means its prevention. As a matter of fact, however, though there was a good deal of apparent excitement, which was kept up by the popular cheap newspapers and by those who felt in its full force the antagonism of the Lords, the public took the matter almost as coolly as Lord Palmerston did. Not because they were altogether indifferent to the question in its relation to free-trade, nor because they did not understand the danger of the precedent which the House of Lords sought to establish; but for the reason that they refused to believe in the probability of the House of Commons ultimately giving way. On this occasion, as on many others, Palmerston had pretty accurately noted the temper of the country. He thought he saw a possible way out of the ditculty by giving time for the antagonists of the Paper Duties Bill to reflect. The committee took two months to consider what they should say. What the majority agreed to say was in effect, that they could hardly decide that the privileges of the House of Commons made it actually unconstitutional for the House of Lords to reject a bill imposing a particular tax. Mr. Bright, who was on the committee, was in the minority, and drew up a statement contending, and giving weighty reasons for the contention, that the power to refuse the repeal of a tax, when that repeal had been voted by the House of Commons, was equiva lent to depriving the latter of its absolute control over the taxation of the country. There can be little doubt that this view was sound, or the principle of taxation and representation going together would have to be

abandoned. However, when the discussion came on (on the 5th of July), numbers of petitions were presented, praying the house to maintain its right of dealing with all measures for taxation.

It may be assumed that there were special reasons for Lord Palmerston's reluctance to injure the susceptibility of the Lords, or to provoke the opposition by violently resenting the rejection of the Paper Duties Bill. It is possible that he may have recognized among the leaders of the Conservative party an inclination to give his government a general support on certain conditions. That this inclination existed soon afterwards we learn from a passage in The Life of the Prince Consort, which mentions that on the return of the court to Windsor on the 12th of January, 1861, among the visitors was Lord Palmerston, with whom arrangements were then made for the dowry and annuity to be asked for from parliament upon the marriage of the Princess Alice, who was betrothed to Prince Louis of Hesse.

"One of the visitors who followed Lord Palmerston was Mr. Disraeli, from whom the prince gathered the general views of the Conservative opposition as to their policy in the approaching session. Their strength was considerable, composed, as they were, of a compact body of three hundred members; but they had no wish for the return of their leaders to office, and, indeed, were anxious to strengthen the hands of the government in a bold national policy. A movement for a reduction of the expenses of our armaments, which had been initiated by Mr. Cobden and his friends, and had taken the shape of a letter to Lord Palmerston, signed by about sixty members of parliament, calling for such a reduction, had shown the existence of a considerable division in the ranks of the usual ministerial supporters. Many of the latter had, however, declined to sanction this appeal, believing, to use the expression of one of their number, General de Lacy Evans, 'that it was neither safe nor expedient to disarm the country.' But the working majority of the government was not so large as to make the defection, on questions of finance, of so large a section of

29

their party otherwise than embarrassing. The Conservative party, Mr. Disraeli said, were in no way inclined to take advantage of this state of things. On the contrary, they were prepared to support the government; all they required from them in return being that they should state explicitly the principles of their policy, and not enter into a line of what he termed 'democratic finance.' These remarks were made without reserve, and in communicating their tenor to Lord Palmerston (24th January) the prince added:-Mr. Disraeli said no minister since Mr. Pitt had been so powerful as you might be. The Conservative party was ready not only to give general support to a steady and patriotic policy, but even to help the minister out of scrapes if he got into any.""

The increased armaments had, in fact, been suggested by Prince Albert himself after he had noticed the Cherbourg defences and the augmentation of the French navy; but Lord Palmerston showed himself willing to take up the scheme of providing for the "national defences" with remarkable celerity. Mr. Gladstone, on the other hand, was opposed to the expenditure, for such a purpose, of the revenues which had been secured by the operation of "democratic finance" so far as it had gone, and he was committed not only to a free-trade budget, but to upholding that portion of it which was included in the Paper Duties Bill against the interference of the House of Lords, which he designated "the most gigantic and dangerous invasion of the rights of the Commons which has occurred in modern times."

But to return to the meeting of parliament on the 5th of July, 1860. Lord Palmerston's pacific attitude towards the House of Lords was then made manifest. The house was crowded: the gravity of the situation had produced considerable excitement. Notices had been given of strongly expressed resolutions on the question of privilege. They gave way to Lord Palmerston's intimation that he had resolutions to bring before the house. Those resolutions were:

1. "That the right of granting aids and supplies to the Crown is in the Commons

alone, as an essential part of their constitution; and the limitation of all such grants, as to matter, manner, measure, and time, is only in them.

2. "That although the Lords have exercised the power of rejecting bills of several descriptions relating to taxation by negativing the whole, yet the exercise of that power by them has not been frequent, and is justly regarded by this house with peculiar jealousy as affecting the rights of the Commons to grant the supplies, and to provide the ways and means for the service of the year.

3. "That to guard for the future against an undue exercise of that power by the Lords, and to secure to the Commons their rightful control over taxation and supply, this house has in its own hands the power so to impose and remit taxes and to frame bills of supply that the right of the Commons as to the matter, manner, measure, and time may be maintained inviolate."

These resolutions were carried, but they were not received with any great satisfaction. It was felt by the Liberals that they evaded that vindication of the rights of the House of Commons which might have been demanded, and that the House of Lords was treated with a studied forbearance which was too much like deference. Palmerston himself felt that this was the conclusion which might be drawn from his resolutions, and commended them to parliament with the rather dubious explanation that as the House of Lords had been encouraged by the diminished majority in the Lower House on the third reading of the proposed bill, it would be better to be satisfied with a mere declaration of constitutional privileges.

Milner Gibson nor Gladstone were likely to regard them with complacency; and though the latter said that they had done all that language could do, to defend the honour of the house, he was prepared to go further and to reserve to himself the right of acting. The precedents quoted, he said, had not touched in the slightest degree the case under consideration. There was a great difference between the House of Lords advising an alteration in a money-bill and rejecting the repeal of a tax. The House of Commons had declared that they could spare from the revenue of the country £1,125,000 of the taxation, and having an option between the tea and the paper duties as to which they should remit, they chose that which they believed would prove more beneficial to the country, though, perhaps, not the most popular. The result had been that the House of Lords had chosen to assume to themselves the power of dictating to the House of Commons, and of saying that the country could not spare such a remission of taxation. Mr. Gladstone maintained that the house had the undoubted right to select the manner in which the people should be taxed, and they were bound to preserve intact that precious deposit. He reserved to himself the privilege of submitting such practical measures as would give effect to the resolutions.

Those practical measures were that the remission of the paper duties was brought forward again in a house where five hundred members, including the speaker, were present, a very unusual number in a house near the end of the session, but they come in response to urgent appeals. Mr. Gladstone represented that the question involved great commercial principles and obligations of honour and policy in relation to a contract with France. For the sake of the paper-makers themselves it would be desirable at once to settle the question. In the opinion of the law officers of the crown the obligation of the treaty was undoubted, and the legal authorities of France concurred in this opinion. The question was also one of policy, and this last article which claimed protection was the touchstone to be applied to old and to new friends of free-trade.

His proposition was to remove so much of the customs duty on foreign paper as exceeded the amount of the excise duty on that at home, and it was carried by a majority of thirtythree. The announcement was received with a burst of cheering from the Liberal benches which lasted for some minutes, even after the chancellor of the exchequer rose to propose that the remission of the paper duties should be extended to other countries beside France, which was also agreed to.

The question of total abolition of the duties was deferred till the following session, and during the interval was widely discussed throughout the country. What will the

Lords do? and what will Gladstone do? were the two questions that were asked when the house met in 1861 and everybody was anxiously awaiting the statements of the budget. If the budget of 1860 had aroused intense interest in the country, that of 1861 was still more exciting. Every avenue to the house was crowded by persons hoping for a chance to gain admission, while within the walls every seat was appropriated. The winter of 1860 had been terribly severe, and there was much suffering in many parts of the country, especially in Lancashire. There had been a deficient harvest, and in some respects the revenue had been overestimated. would he provide for a probable deficiency? Would "the financial freaks of the chancellor of the exchequer," as Lord Derby at the beginning of the session called the financial policy of the government, avail to enable him to maintain his position in remitting the paper duty?

How

The

He was able to do that and more. audience which sat almost breathless to listen to the masterly scheme which he propounded were once more constrained to admire the clear explanations, the telling emphasis, the complete acquaintance with every detail, displayed in a speech which added the charm of a clear musical voice of sustained power and tone to an unhesitating delivery, and was eminently successful in enforcing comprehensive statements of facts and figures by the appeals and the illustrations that belong to oratory. “In the beautiful tragedy of Schiller," he said,

31

"Mary Queen of Scots is made to say of herself, 'I have been much hated, but I have also been much beloved,' and I think I may say with equal truth that the financial legislation of last year, while I do not mean to contend that it was not unacceptable to many, met, as a whole, with signal support from a great body of public opinion in this country." The past year, he reminded his hearers, had been signalized by the commercial treaty with France, by the removal of great national burdens, and by the abolition of the last protective duty from our system, but it was a year of the largest expenditure that had occurred in time of peace, and it was characterized by an unparalleled severity of the seasons. Apart from the consideration of two millions voted for the fortifications at the close of the year the estimated expenditure had been £73,664,000, while the actual expenditure was only £72,842,000, leaving a balance of £822,000. But while the revenue in 1859 had been £71,089,000, it was only £70,283,000 in 1860, making a decrease of £800,000, so that while in 1859 there was a favourable balance of £1,200,000 there was in 1860 an apparent deficiency of £2,559,000, which, with certain deductions, would actually stand at £221,000, the difference being partly accounted for by the fact that the preceding year was leap-year, and that Good Friday and the day following had been reckoned in the one year and not in the other. The revenue from customs had somewhat exceeded the estimate, and that from excise had fallen rather below it, according to the rule that in a bad year what was lost by excise would be gained by customs. The loss on articles on which duties had been reduced fell below the estimate, that on wine being only £493,000 instead of £830,000, which was the amount calculated. There had been a considerable increase in the importation of French wines, but it was necessary for the public taste to undergo some change before the full effect of the reduction of duty would be experienced.

The deficiency in the excise arose on three articles, hops, malt, and spirits. With regard to the question of trade as affected by the French treaty: had there been a want of em

ployment among the people of this country, or had other circumstances been such as to diminish the revenue below an adequate amount, the provisions made by the previous year's provident legislation would have been seen to have had a still more marked effect in preventing what would have been a very unsatisfactory condition of affairs.

He emphatically told the house that looking at the whole course of proceedings, from first to last, no one could conceive a more loyal, thorough, intelligent, unflinching determination than had been exhibited by the ministers of France, under the animating spirit and guidance of the emperor, to give full effect alike to the terms and to the principles and spirit of the treaty, not for the sake of British interests, nor with any mere wish of conciliating England, but for the sake of the interests of France. With regard to the effect of the measures of 1860, the export trade of the previous year was £136,000,000 of declared value (as against £130,000,000 in 1859), and this was the largest ever known. There had been an increase in several imported articles: butter, cheese, eggs, and rice gave an increase of £7,000,000 in 1860, as compared with £4,000,000 in 1859; and these were articles on which small customs duties had been abolished. The importation of corn had risen from some £17,000,000 in 1859 to £38,154,000 in 1860, a fearful proof of the failure of production in this country, but an equally cogent proof of the value of that legislation which had removed all obstruction to the importation of that article of necessity. Articles of import on which the duties still remained had been about the same. The articles on which there had been a reduction of duty in the previous year were in value, in 1859, £11,346,000, and in 1860 £13,323,000, while those on which the duty had been abolished in the previous year were in 1859, in value, £15,735,000, and in 1860 £22,630,000, an increase of nearly six millions and a half.

The estimated expenditure for the coming year was £69,900,000, and the estimated revenue £71,823,000. It was therefore proposed to remit the additional penny which had been imposed on the income-tax in 1860,

which would cause a loss to the current financial year of £850,000, and to repeal the duty on paper on the first of the following October, by which the revenue would lose about £665,000. It had been pressed upon the government that there should be a remission of the duties on tea and sugar; but these it had been decided to continue in favour of the greater benefits to be derived from taking the penny from the income-tax and abolishing the paper duties.

In considering the financial condition of the country, it had been necessary to advert to the growing expenditure. In 1858 the sum voted was under £64,000,000, while in 1861 it was nearly £74,000,000—an increase of £10,000,000 in three years; £9,000,000 of taxes being imposed to meet those requirements, while of temporary resources only £2,700,000 had been called in aid for that purpose. The balances in the exchequer in March, 1861, were £6,522,000. As regarded the national debt, £1,000,000 of exchequer bonds had been paid off, but replaced by a new set to the same amount. The addition to the debt, exclusive of money for fortifications, was £460,000. As compared with 1853 there had been large remissions of taxation and unfavourable seasons; but although 1860 was far worse in this latter respect, it would be found that the immediate and palpable effect of remissions of taxation presented a remarkable contrast. In 1853 there were remitted £1,500,000 of customs duties, which loss was made up, and more, by the end of that year. The gain on the year in excise duties was £900,000. In 1860 the excise ought to have produced a gain of £1,945,000, but it had only produced a gain of £265,000. But the expenditure of 1854 was, of imperial expend'ture, £56,000,000; and local expenditure, £16,000,000: total, £72,000,000. In 1860 the imperial expenditure was £73,000,000, the local charge £18,000,000: total, £91,000,000, or an increase of nearly £20,000,000 in seven years.

In reference to this enormous augmentation of expenditure Mr. Gladstone concluded his financial statement by saying:

"We have seen this country during the last