the consumption of treasure and of human life, and rapidly tending to a state of indebtedness surpassing that of the most lavish and heavily taxed of European monarchies. In the midst of these examples of embarrassed and debt-contracting states, the financial circumstances of England, holding a surplus revenue in hand to be applied to a further alleviation of public burthens, presented a gratifying and instructive contrast: instructive because she had taken the lead in that policy, which, while it appears to sacrifice revenue, is really sowing the seeds of its more abundant increase, and is in fact adding both to the sum total of the whole world's wealth, and to the wealth of the particular nation with which that policy had originated. Nor should another cause be forgotten, to which this country had of late years been indebted for the happy equilibrium of revenue with expenditure, -the preservation of external peace. Among all nations war has been, and is, the cause of ruinous expenditure and fiscal distress. It is by their enormous armaments that the great Powers of the Continent have been led to exceed the limits of their revenues and to subsist on loans. In this country the policy of non-interference, of abstinence from aggressive wars and ambitious conquests, has of late acquired a more confirmed hold on the public mind. The experienced benefits of peaceful intercourse and unimpeded commerce, the increased correspondence through the new mechanical agencies recently introduced with the remote parts of the globe, and we may add, the improved moral tone, and higher feelings of humanity which advanced civilization has induced, have operated to imbue the English people with that love of peace which, though some would represent it as the mark of a sordid and ignoble spirit, is by no means indicative, as we believe, of national degeneracy. It was this year well known to the public before the Chancellor of the Exchequer's statement was made, that the national accounts would show a very considerable surplus, and much interest was felt as to the mode in which the balance would be appropriated. When Mr. Gladstone appeared in the House of Commons on the day announced for the Budget, the 7th of April, it was densely filled in every part, a great number of Peers, foreign Ministers, and distinguished strangers crowding the benches assigned to them.

The Chancellor of the Exchequer commenced his speech by noticing, first, the particular circumstances which had affected the financial condition of the country, observing that on the whole, looking at advantages and drawbacks, the circumstances of the present did not differ materially from those of an average financial year. He next stated the results of the expenditure of the past year. Its aggregate amount, including an augmentation on account. of the war in New Zealand, and other charges, was 68,283,0007.; the actual expenditure was only 67,056,000l. The Estimates for the Army amounted to 15,469,0007.; the actual expenditure was only 14,638,000. The Navy Estimates were 10,736,0007.; the

actual expenditure was 10,821,0007. The Miscellaneous Estimates were 7,805,000.; the actual expenditure was 7,702,000. After comparing the expenditure of last year with that of preceding years, he proceeded to state the results of the revenue in the past year, the estimated amount of which was 68,171,0007.; the actual produce had been 70,208,0007.; showing a surplus of 2,037,0007. He then examined the particular items of the revenue, and contrasted the Estimates with the actual result in each. Comparing the revenue of the past year with the revenues of former years, we had, he observed, a pretty sure test of the growth and strength of our resources, the elasticity of which had replaced the loss occasioned by the reduction of taxation. Going back to 1858-59, the annual increment of revenue had been upwards of 1,200,000%. It was a sure calculation that the revenue was increasing, from its inherent vigour, at a rate exceeding a million a year. He then stated the amount of the balances in the Exchequer, 7,352,000, the extent of the liquidation of the public debt within the year, 3,366,0007., and the total capital of the debt, amounting now to 791,574,000, the decrease of charge since 1815 being 6,435,000%. Mr. Gladstone proceeded to give a most encouraging picture of the general state of the trade and industry of the country, the vigour of which, he remarked, notwithstanding considerable drawbacks, had been surprising. He stated the details of this progress, the movement in our trade, including imports and exports, being shown by the following figures:-The aggregate amount in 1861 was 377,000,0007.; in 1862, 391,000,0007.; and in 1863, 444,000,000%.

Mr. Gladstone proceeded to descant upon the social and moral significance of these enormous figures. That astonishing sum I will only illustrate by these two statements: in the first place, it may be taken to be about three times the trade of the country as it stood at a period comparatively recent-namely, in the year 1842, when Parliament first began deliberately and advisedly to set itself to the task of reforming our commercial legislation; and, in the second place, the sum may be taken to represent as nearly as possible 1,500,0007. sterling for every working day in the year-a magnitude of industry and of operations connected with industry so vast that if it did not stand upon incontrovertible figures, it hardly could receive belief. But, in my judgment, not only are these figures remarkable when we consider them as the produce of the energy of Englishmen and of the strength of the country, which is dear to all our hearts; they mean much more than thisthough that, too, of itself, were much-they mean that England is becoming more and more deeply pledged from year to year to be the champion of peace and justice throughout the world; and to take part, with no view to narrow or selfish interests, but only with a view to the great object of the welfare of humanity at large, in every question that may arise in every quarter of the globe. Now, I stated that it was since 1842-since the commencement of the great work of Parliament with respect

to commercial legislation, that these great results have taken place. I don't overlook the fact that other elements have been at work-elements of immense power and of immense advantage; and there are some who think that the same effects would have been produced, even if your commercial legislation had remained substantially as it was. I hear a solitary cheer from an hon. member opposite. Well, sir, it is a matter of great national and public interest-a matter of interest, let me add, to other countries as well as our own, that we should satisfy ourselves in some degree, and by approximate evidence, of the truth on this question. I don't at all deny that other countries which have made changes comparatively slight in their commercial laws have likewise made great progress in trade and industry. I don't undervalue the great advantage of the vast powers of locomotion which have been set a-going, and of many other causes which have co-operated to produce the astonishing development of modern industry; but then I find that if I select several years in which Parliament has with firm and unsparing hand addressed itself to the business of liberating commerce, these operations have been immediately followed by striking augmentations in the trade and industry of the country. Whatever has been due to improvements in locomotion, the telegraph, and the progress of machinery has been on the whole equable from year to year. Allowance must, of course, be made for good and bad harvests; but still, if I find this feature meeting me on the examination of the case-that the legislation of Parliament is immediately followed by striking and great resultsI think we may conclude that we have not been feeding ourselves with an empty dream when we laboured to give freedom to the energy, capital, and skill of Englishmen. I will only instance three years in which changes of that kind have taken place. In 1853 important changes of that description were made. The exports of British produce in 1852 had been 78,076,000l. Now, recollect that 1852 was a year of great prosperity-a year of an excellent harvest and the cheapest capital ever known in this country. 1853 was a year of a bad harvest, but it was a year of legislation in behalf of freedom of trade; and while the exports of 1852 were 78,076,0007., the British exports of 1853 were 98,933,0007. In 1860 we had something of the same kind. The exports of 1859 were 155,692,0007. Here I include exports of foreign and colonial produce; I could not include them in 1853, because at that date there was no official standard of valuation for them. In 1859, as I have said, the British exports of all kinds were 155,692,000l. 1859 was a prosperous year, and a year of a rich and abundant harvest. 1860 was a year of the worst harvest known for half a century, and our exports increased from 155,692,000l. to 164,521,000. In 1863, again, it was in the power of Parliament to grant considerable measures of relief, and the exports which in 1862 were 166,168,0007. rose in 1863 to 195,974,0007. Of course, I don't desire to lay down any such rule or dogma as to say that these

figures, and no others, represent the precise influence of your legislation. What they show is this, that there has been an essential and vital connexion between the growth of the industry of the country and the legislative processes pursued within those years." The right hon. Gentleman next reviewed the effects of recent fiscal legislation upon particular articles, including paper, spirits, wine, tobacco, and tea, and the results of the treaty with France. Proceeding then to consider the financial prospects for 1864-65, he estimated the total amount of the expenditure at 66,890,000., and that of the revenue at 69,460,0007., leaving a surplus of 2,570,000l. In considering the disposal of this surplus he enumerated a variety of minor changes and modifications he proposed to make in the duty upon corn and grain, the tax upon licences to tea-dealers and hawkers, and various stamp duties, which would cause a total loss of revenue of 10,000l., reducing the surplus to 2,560,0007. In considering the claims made for the application of this surplus in the reduction of taxation, the strongest, he thought, was preferred on behalf of sugar, an article which was next in importance, in an economical point of view, to corn, and the Government proposed to make a considerable reduction in those duties. The question whether there should be a uniform or a classified duty was a very difficult one. At present we had a classified scale of duties, approved by many, and a scandal and offence to others. He was not prepared to say that a classified duty was condemned by experience; it was not condemned by authority. A committee of that House had reported in favour of a system of classified duties. The intricacy of the question had become enormous. On the one hand, a system of classified duties was stigmatized as "protection;" on the other, a uniform duty had been branded with that name. Various plans had been suggested as substitutes for the existing system, which Mr. Gladstone examined, pointing out the objections to which they were severally open, observing that the form of the duty should be that which least interfered with the natural course of trade, and did not offer a premium for doing something which would not be done if there were no duty at all. The present duties consisted of four classes, and the Government proposed to adhere to the dividing points as now established, reducing the rates of duty to 128. 10d., 118. 8d., 108. 6d., and 9s. 4d., with a new class for inferior sugars, chargeable with 88. 2d. The loss of revenue from these reductions, taking credit for increased consumption, he took at 1,330,0007., which would bring down the surplus to 1,240,000l. Mr. Gladstone next entered upon the question of the Malt Tax, the repeal or reduction of which had been recently taken up by some members of the Conservative party as a subject of agitation in the agricultural districts, and had been made a rallying cry at some recent elections. With reference to this duty he did not believe that the loss by its reduction would, as some contended, be repaired by increased consumption, which had not followed the taking off the Beer Duty, which was practically

a reduction of the Malt Tax. When comparative claims were looked to, comparative grievances should be regarded; and he insisted that the grower of barley had no ground of complaint. Parliament was, moreover, bound to see how the reduction of the Malt Duty would bear upon the interests of Scotland and Ireland as well as England, and he showed that the giving up of the Malt Duty would be a boon almost exclusively to England. He recommended this fact to the consideration of Mr. Morritt. The Government, therefore, had come to the conclusion that they would betray their duty to the country if they applied any part of the surplus to the reduction of the Malt Tax.

Lastly, Mr. Gladstone came to the consideration of one of the most important of the existing elements of our financial system, the Income Tax. He said it was beyond dispute that the country ought to be dealt with fairly and plainly on the subject of the Income Tax. The country ought to consider, and Parliament ought to decide what course it will take. Will it maintain the Income Tax at its present level? will it abolish it altogether? or will it reduce it in amount? Will it regard the Income Tax as an instrument of ordinary finance; or will it decline to employ it in time of peace, and in the absence of great national emergencies, except for the purpose of effecting further reforms in general financial policy? These questions had never been definitely decided by Parliament. In 1842 the tax was proposed with a view to commercial reforms. In 1845 it was renewed with a view to further commercial reforms. In 1848 it was renewed, on the proposition of Sir Charles Wood, now the Secretary of State for India, in a time of considerable public apprehension, though not perhaps of danger, after he had consented to make reductions from the amount which he originally proposed. In 1851 Parliament refused to renew it except on the appointment of a Parliamentary Committee. In 1853 it was renewed for the longest period that Parliament had ever granted the tax, upon a statement of figures, and upon calculations which at the time appeared to afford a reasonable promise of its extinction. In 1860 it was renewed, and even raised, for the purpose of meeting the necessities of the country in connexion with its establishments for defence, but likewise with a view of carrying greatly further the work of commercial reform. Since 1860 Parliament had taken no definite resolution on any question of policy connected with the Income Tax; but it was well contented on the proposition of the Government to reduce the rate to the amount at which it was originally imposed-namely, to 7d. in the pound. "That being so, we find ourselves, in fact, at the point at which we stood in 1842 in reference to this matter. These, however, are questions on which Parliament ought to have an opinion. It is not desirable that they should be disposed of in an indirect manner, or that the Income Tax should be continually dealt with simply by renewals from twelvemonth to twelvemonth, founded on, and perhaps