average annual expenses of war and of war and government, from 1806 to 1815, together with the charge upon the debt contracted before 1793, were 65,794,000l.; but you had your Income-tax in its full force, with your whole financial system invigorated by its effects, and the revenue of the country now amounted to 63,790,0007.; while the deficiency in actual hard money, which during the war represented something like double the amount in debt, owing to the rate at which you borrowed, instead of being 15,404,000l. a-year, as it was in the first period, or 13,689,000l. a-year, as it was in the second period, was only 2,004,000l. a-year, from 1806 to 1815.

Such was the power of the Income-tax. I have said there was a deficiency annually of 2,004,000l., but it is fair for you to recollect, and it is necessary, in order fully to present to you the fact I want to place in clear view, that out of the 65,794,000l. of charge which I have mentioned, about 9,500,000l. were due for charge of debt contracted before 1793; so that, if you compare the actual expense of government, including the whole expense of war from 1806 to 1815, with your revenue when you had the Income-tax, it stands thus before you -that you actually raised 7,000,000l. a-year during that period, more than the charge of government, and the charge of a gigantic war to boot. That, I must say, is to my mind a most remarkable fact. It affords to me the proof, that if you do not destroy the efficacy of this engine-I do not raise now the question whether it is to be temporary or permanent, which I hold to be quite a different question, and I will enter upon it by and by-it affords you the means, should unhappily hostilities again break out, of at once raising your army to 300,000 men, and your fleet to 100,000, with all your establishments in proportion. And, much as may

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be said of the importance-in which I concur-of an army reserve and a navy reserve, and of having your armouries and your arsenals well stored, I say this fiscal reserve is not one whit less important; for, if it be used aright, it is an engine to which you may again resort; and with this engine, judiciously employed, if unhappily this necessity should arise-which may God in His mercy avert—with it, judiciously employed, you may again, if need be, defy the world.

This, then, is the purpose which the Income-tax has served; that, in a time of mortal struggle, it enabled you to raise the income of the country above its expenditure (at the time) of war and civil government; and that service, so performed, was performed at a season when men do not minutely inquire into the incidence of taxation, they cannot then indulge themselves in the adjustment of details, but they are afraid lest they should lose the mass and the substance of the aim they have in view. But times, when the hand of violence is let loose, and when whole plains are besmeared with carnage, are the very times when it is desirable that you should have the power of renewed and free resort to this mighty engine, to make it again available for the defence and the salvation of the country.

Well, Sir, the Income-tax dropped, along with the purpose of the Income-tax, in 1816: but it was destined to be revived. Sir R. Peel, in 1842, called forth from repose this giant, who had once shielded us in war, to come and assist our industrious toils in peace; and, if the first Income-tax produced enduring and memorable results, so I am free to say, at less expenditure by far in money, and without those painful accompaniments of havoc, war, and bloodshed, so has the second Incometax. The second Income-tax has been the instrument by which you have introduced, and by which I hope

ere long you may perfect, the reform, the effective reform, of your commercial and fiscal system; and I, for one, am bold enough to hope, nay to expect and believe, that, in reforming your own fiscal and commercial system, you have laid the foundations of similar reforms-slow, perhaps, but certain in their progressthrough every country of the civilized world. I say, therefore, Sir, that if we rightly use the Income-tax, we shall be entitled, when we part with it, to look back upon it with some satisfaction, and to console ourselves for the annoyances it may have entailed by the recollection, that it has been the means of achieving a great good immediately to England, and ultimately to mankind.

Let me now attempt to present to the Committee a closer analysis of this impost. I shall assume that it is your view, as it is the view of the Government, that we cannot, at the present moment, with a due regard to the public interest, dispense with the Income-tax; let us next look a little into its composition. Let us attempt to investigate the charges which are alleged against it. I am not one of those, who make light of such charges. In my own individual opinion it is perfectly plain, from the mode in which the Incometax was put an end to at the termination of the great war, that it is not well adapted for a permanent portion of your ordinary financial system. Whether it is so or not, a matter on which there is a great difference of opinion, yet I think this is on all hands agreed, that it is not adapted for a permanent portion of your fiscal system, unless you can by reconstruction remove what are called its inequalities. Even, however, if you could remove its inequalities, a question into which we will patiently examine, there would still remain in my mind at least objections to it of the gravest character.

The reconstruction of the Income-tax would, I think, under any circumstances, be found to open up social questions of the most serious import; and the machinery of the Income-tax, involving, as it necessarily does, to so large an extent, the objectionable principle of self1) assessment, can never, in my opinion, be satisfactory to the country. First, because self-assessment leads to grievous frauds upon the revenue, and renders the real inequality of the tax far greater than any of those among its inequalities which immediately strike the public eye and feelings; and, secondly, because of the tendency to immorality, which is, I fear, essentially inherent in the nature of the operation.

But now let us examine the composition of the Income-tax. First, let me observe, that we are too much in the habit of speaking of this impost as merely a simple tax; it is rather a code, or system of taxation. In mere bulk it is a volume; it has been elaborated by many successive strokes in successive years; it has accumulated a large mass of precedents for its application, and, in short, it is a vast and complicated system of taxation, by which we succeed in raising, in round numbers, 5,600,000l. a-year. One-28th part of this şum is 200,000%.

Now, if you investigate the composition of Schedule A, you will find that land and houses-which I take together, because their position is in many points substantially analogous-including the incomes. charged upon them in respect to mortgages and settlements, pay no less than 12-28ths of the tax, or about 2,400,000l.

Next, let us look at the other great element of this tax-namely, the payment that proceeds from trades. In order to get at this payment accurately, we must descend a little deeper than the mere classification of

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the schedules. There are in Schedule A some considerable classes of property which pay duty along with land and houses, to the extent, I think, of about 270,0007. a-year, yet which are essentially trading concerns. These I exclude. For the purpose which I have in view I must likewise take out of Schedule B the sum paid for the occupation of land, and place it along with trades, with which it is essentially analogous in character. This gives me 330,000l. more, and then I come to what may call trades proper-namely, those which appear in Schedule D, and which pay a sum of something like 1,200,000l. These three branches of trades in Schedules A, B, and D, contribute an amount of no less than 1,800,000l., or 9-28ths of the whole tax ;-and the two together-that is to say, land and houses and trades, pay 4,200,000l., or 21-28ths of the whole tax. There remain the Funds in Schedule C, which pay 750,000, or 1-7th of the whole tax; and salaries in Schedule E, which pay about 1-17th of the tax. Professions in Schedule D, after striking out those which partake rather of the character of trades, pay 250,000l., or about 1-22nd of the tax. Thus we see, the funds, salaries, and professions make up the remaining fourth of the tax; three-fourths being paid either by land and houses, or by trades.

Now, it is said that gross inequality is the characteristic of the tax, and that it ought not to be levied, that it is unjust to levy it, upon precarious and realized income alike. What income is precarious, and what income is realized? Income derived from trade would, I presume, be called precarious; and, without wishing to anticipate the judgment of the Committee, I may probably assume that this is their opinion. Now, I beg the Committee to observe that, after all, the main question is between land and trade. Everything else, in