I

As we survey the panorama of a great man's life, conspicuous peaks of time and act stand out to fix the eye, and in our statesman's long career the budget of 1860 with its spurs of appendant circumstance, is one of these commanding points. In the letter to Acton already quoted (p. 1), Mr. Gladstone says:—

The financial arrangements of 1859 were avowedly provisional and temporary, and need not detain us. The only feature was a rise in the income tax from fivepence to ninepence—its highest figure so far in a time of peace. “My budget,” he wrote to Mrs. Gladstone (July 16), “is just through the cabinet, very kindly and well received, no one making objection but Lewis, who preached low doctrine. It confirms me in the belief I have long had, that he was fitter for most other offices than for that I now hold.” “July 21 or rather 22, one A.M.—Just come back from a long night and stiff contention at the House of Commons.... It has been rather nice and close fighting. Disraeli made a popular motion to trip me up, but had to withdraw it, at any rate for the time. This I can say, it was not so that I used him. I am afraid that the truce between us is over, and that we shall have to pitch in as before.”

The only important speech was one on Italy (August 8),13 of which Disraeli said that though they were always charmed by the speaker's eloquence, this was a burst of even unusual brilliance, and it gave pleasure in all quarters. “Spoke for an oretta [short hour],” says the orator, “on Italian affairs; my best offhand speech.” “The fish dinner,” Mr. Gladstone writes, “went off very well, and I think my proposing Lord Palmerston's health (without speech) was decidedly approved. I have had a warm message from Lord Lansdowne about my speech; and Lord P. told me that on Tuesday night as he went upstairs on getting home he heard Lady P. spouting as she read by candle-light; it turned out to be the same effusion.”

Another incident briefly related to Mrs. Gladstone brings us on to more serious ground: “Hawarden, Sept. 12.—Cobden [pg 020] came early. Nothing could be better than the luncheon, but I am afraid the dinner will be rather strong with local clergy. I have had a walk and long talk with Cobden who, I think, pleases and is pleased.” This was the garden walk of which we have just heard, where Cobden, the ardent hopeful sower, scattered the good seed into rich ground. The idea of a commercial treaty with France was in the air. Bright had opened it, Chevalier had followed it up, Persigny agreed, Cobden made an opportunity, Gladstone seized it. Cobden's first suggestion had been that as he was about to spend a part of the winter in Paris, he might perhaps be of use to Mr. Gladstone in the way of inquiry. Conversation expanded this into something more definite and more energetic. Why should he not, with the informal sanction of the British government, put himself into communication with the Emperor and his ministers, and work out with them the scheme of a treaty that should at once open the way to a great fiscal reform in both countries, and in both countries produce a solid and sterling pacification of feeling? Cobden saw Palmerston and tried to see Lord John Russell, and though he hardly received encouragement, at least he was not forbidden to proceed upon his volunteered mission.14 “Gladstone,” wrote Cobden to Mr. Bright, “is really almost the only cabinet minister of five years' standing who is not afraid to let his heart guide his head a little at times.” The Emperor had played with the idea of a more open trade for five or six years, and Cobden, with his union of economic, moral, and social elements, and his incomparable gifts of argumentative persuasion, was the very man to strike Napoleon's impressionable mind. Although, having alienated the clericals by his Italian policy, the ruler of France might well have hesitated before proceeding to alienate the protectionists also, he became a convert and did not shrink.

At the end of 1859 the question of the treaty was brought into the cabinet, and there met with no general opposition, though some objection was taken by Lewis and Wood, based on the ground that they ought not to commit themselves by treaty engagements to a sacrifice of revenue, until they had before them the income and the charges of the year. Writing to his wife about some invitation to a country house, Mr. Gladstone says (Jan. 11, 1860):—

Of course in his zeal for the treaty and its connection with tariff reform, Mr. Gladstone believed that the operation would open a great volume of trade and largely enrich the country. But in one sense this was the least of it:—

II

Out of the commercial treaty grew the whole of the great financial scheme of 1860. By his first budget Mr. Gladstone had marked out this year for a notable epoch in finance. Happily it found him at the exchequer. The expiry of certain annuities payable to the public creditor removed a charge of some two millions, and Mr. Gladstone was vehemently resolved that this amount should not “pass into the great gulf of expenditure there to be swallowed up.” If the year, in such circumstances, is to pass, he said to Cobden, “without anything done for trade and the masses, it will be a great discredit and a great calamity.” The alterations of duty required for the French treaty were made possible by the lapse of the annuities, and laid the foundation of a plan that averted the discredit and calamity of doing nothing for trade, and nothing for the masses of the population. France engaged to reduce duties and remove prohibitions on a long list of articles of British production and export, iron the most important,—“the daily bread of all industries,” as Cobden called it. England engaged immediately to abolish all duties upon all manufactured articles at her ports, and to reduce the duties on wine and brandy. The English reductions and abolitions extended beyond France to the commodities of all countries alike. Mr. Gladstone called 1860 the last of the cardinal and organic years of emancipatory fiscal legislation; it ended [pg 024] a series of which the four earlier terms had been reached in 1842, in 1845, in 1846, and 1853. With the French treaty, he used to say, the movement in favour of free trade reached its zenith.

Outline Of The Scheme

The financial fabric that rose from the treaty was one of the boldest of all his achievements, and the reader who seeks to take the measure of Mr. Gladstone as financier, in comparison with any of his contemporaries in the western world, will find in this fabric ample material.16 Various circumstances had led to an immense increase in national expenditure. The structure of warships was revolutionised by the use of iron in place of wood. It was a remarkable era in artillery, and guns were urgently demanded of new type. In the far East a quarrel had broken out with the Chinese. The threats of French officers after the plot of Orsini had bred a sense of insecurity in our own borders. Thus more money than ever was required; more than ever economy was both unpopular and difficult. The annual estimates stood at seventy millions; when Mr. Gladstone framed his famous budget seven years before, that charge stood at fifty-two millions. If the sole object of a chancellor of the exchequer be to balance his account, Mr. Gladstone might have contented himself with keeping the income-tax and duties on tea and sugar as they were, meeting the remissions needed by the French treaty out of the sum released by the expiry of the long annuities. Or he might have reduced tea and sugar to a peace rate, and raised the income-tax from ninepence to a shilling. Instead of taking this easy course, Mr. Gladstone after having relinquished upwards of a million for the sake of the French treaty, now further relinquished nearly a million more for the sake of releasing 371 articles from duties of customs, and a third million in order to abolish the vexatious excise duty upon the manufacture of paper. Nearly one million of all this loss he recouped by the imposition of certain small charges and minor [pg 025] taxes, and by one or two ingenious expedients of collection and account, and the other two millions he made good out of the lapsed annuities. Tea and sugar he left as they were, and the income-tax he raised from ninepence to tenpence. Severe economists, not quite unjustly, called these small charges a blot on his escutcheon. Time soon wiped it off, for in fact they were a failure.

The removal of the excise duty upon paper proved to be the chief stumbling-block, and ultimately it raised more excitement than any other portion of the scheme. The fiscal project became by and by associated with a constitutional struggle between Lords and Commons. In the Commons the majority in favour of abolishing the duty sank from fifty-three to nine; troubles with China caused a demand for new expenditure; the yield from the paper duty was wanted; and the Lords finding in all this a plausible starting-point for a stroke of party business, or for the assertion of the principle that to reject a repealing money bill was not the same thing as to meddle with a bill putting on a tax, threw it out. Then when the Lords had rejected the bill, many who had been entirely cool about taking off the 'taxes upon knowledge'—for this unfavourable name was given to the paper duty by its foes—rose to exasperation at the thought of the peers meddling with votes of money. All this we shall see as we proceed.

This was the broad outline of an operation that completed the great process of reducing articles liable to customs duties from 1052, as they stood in 1842 when Peel opened the attack upon them; from 466 as Mr. Gladstone found them in 1853; and from 419 as he found them now, down to 48, at which he now left them.17 Simplification had little further to go. “Why did you not wait,” he was asked, “till the surplus came, which notwithstanding all drawbacks you got in [pg 026] 1863, and then operate in a quiet way, without disturbing anybody?”18 His answer was that the surplus would not have come at all, because it was created by his legislation. “The principle adopted,” he said, “was this. We are now (1860) on a high table-land of expenditure. This being so, it is not as if we were merely meeting an occasional and momentary charge. We must consider how best to keep ourselves going during a period of high charge. In order to do that, we will aggravate a momentary deficiency that we may thereby make a great and permanent addition to productive power.” This was his ceaseless refrain—the steadfast pursuit of the durable enlargement of productive power as the commanding aim of high finance.

III

At the beginning of the year the public expectation was fixed upon Lord John Russell as the protagonist in the approaching battle of parliamentary reform, and the eager partizans at the Carlton Club were confident that on reform they would pull down the ministry. The partizans of another sort assure us that “the whole character of the session was changed by Mr. Gladstone's invincible resolution to come forward in spite of his friends, and in defiance of his foes, for his own aristeia or innings.” The explanation is not good-natured, and we know that it is not true; but what is true is that when February opened, the interest of the country had become centred at its highest pitch in the budget and the commercial treaty. As the day for lifting the veil was close at hand, Mr. Gladstone fell ill, and here again political benevolence surmised that his disorder was diplomatic. An entry or two from Phillimore's journal will bring him before us as he was:—

Mr. Gladstone's own entries are these:—

Of the speech in which the budget was presented everybody agreed that it was one of the most extraordinary triumphs ever witnessed in the House of Commons. The [pg 028] casual delay of a week had raised expectation still higher; hints dropped by friends in the secret had added to the general excitement; and as was truly said by contemporaries, suspense that would have been fatal to mediocrity actually served Mr. Gladstone. Even the censorious critics of the leading journal found in the largeness and variety of the scheme its greatest recommendation, as suggesting an accord between the occasion, the man, and the measure, so marvellous that it would be a waste of all three not to accept them. Among other hearers was Lord Brougham, who for the first time since he had quitted the scene of his triumphs a generation before, came to the House of Commons, and for four hours listened intently to the orator who had now acquired the supremacy that was once his own. “The speech,” said Bulwer, “will remain among the monuments of English eloquence as long as the language lasts.” Napoleon begged Lord Cowley to convey his thanks to Mr. Gladstone for the copy of his budget speech he had sent him, which he said he would preserve “as a precious souvenir of a man who has my thorough esteem, and whose eloquence is of a lofty character commensurate with the grandeur of his views.” Prince Albert wrote to Stockmar (March 17), “Gladstone is now the real leader of the House, and works with an energy and vigour almost incredible.”20

Almost every section of the trading and political community looked with favour upon the budget as a whole, though it was true that each section touched by it found fault with its own part. Mr. Gladstone said that they were without exception free traders, but not free traders without exception. The magnitude and comprehensiveness of the enterprise seized the imagination of the country. At the same time it multiplied sullen or uneasy interests. The scheme was no sooner launched, than the chancellor of the exchequer was overwhelmed by deputations. Within a couple of days he was besieged by delegates from the paper makers; distillers came down upon him; merchants interested in the bonding system, wholesale stationers, linen manufacturers, maltsters, licensed victuallers, all in turn [pg 029] thronged his ante-room. He was now, says Greville (Feb. 15), “the great man of the day!” The reduction of duties on currants created lively excitement in Greece, and Mr. Gladstone was told that if he were to appear there he could divide honours with Bacchus and Triptolemus, the latest benefactors of that neighbourhood.

Budget Introduced

Political onlookers with whom the wish was not alien to their thought, soon perceived that in spite of admiration for splendid eloquence and incomparable dexterity, it would not be all sunshine and plain sailing. At a very early moment the great editor of the Times went about saying that Gladstone would find it hard work to get his budget through; if Peel with a majority of ninety needed it all to carry his budget, what would happen to a government that could but command a majority of nine?21 Both the commercial treaty and the finance speedily proved to have many enemies. Before the end of March Phillimore met a parliamentary friend who like everybody else talked of Gladstone, and confirmed the apprehension that the whigs obeyed and trembled and were frightened to death. “We don't know where he is leading us,” said Hayter, who had been whipper-in. On the last day of the month Phillimore enters: “March 30.—Gladstone has taken his name off the Carlton, which I regret. It is a marked and significant act of entire separation from the whole party and will strengthen Disraeli's hands. The whigs hate Gladstone. The moderate conservatives and the radicals incline to him. The old tories hate him.” For reasons not easy to trace, a general atmosphere of doubt and unpopularity seemed suddenly to surround his name.

The fortunes of the budget have been succinctly described by its author:—

When Lord John had asked the cabinet to stop the budget in order to fix a day for his second reading, Mr. Gladstone enters in an autobiographic memorandum of his latest years23:—

On May 5 the diary reports: “Cabinet. Lord Palmerston spoke 3/4 hour against Paper Duties bill! I had to reply. Cabinet against him, except a few, Wood and Cardwell in particular. Three wild schemes of foreign alliance are afloat! Our old men (2) are unhappily our youngest.” Palmerston not only spoke against the bill, as he had a right in cabinet to do, but actually wrote to the Queen that he was bound in duty to say that if the Lords threw out the bill—the bill of his own cabinet—“they would perform a good public service.”24

Phillimore's notes show that the intense strain was telling on his hero's physical condition, though it only worked his resolution to a more undaunted pitch:—

IV

The rejection of the bill affecting the paper duty by the Lords was followed by proceedings set out by Mr. Gladstone in one of his political memoranda, dated May 26, 1860:—

As we know, even the fighting party in the cabinet was forced to content itself for the moment with three protesting resolutions. Lord Palmerston and his chancellor of the exchequer both spoke in parliament. “The tone of the two remonstrances,” says Mr. Gladstone euphemistically, “could not be in exact accord; but by careful steering on my part, and I presume on his, all occasion of scandal was avoided.” Not altogether, perhaps. Phillimore says:—

The struggle still went on:—

July 20.—H. of C. Lost my Savings Bank Monies bill; my first defeat in a measure of finance in the H. of C. This ought to be very good for me; and I earnestly wish to make it so.

Aug. 6.—H. of C. Spoke 1-½ hour on the Paper duty; a favourable House. Voted in 266-233. A most kind and indeed notable reception afterwards.

Aug. 7.—This was a day of congratulations from many kind M.P.'s.

The occasion of the notable reception was the moving of his resolutions reducing the customs duty on imported paper to the level of the excise duty. This proceeding was made necessary by the treaty, and was taken to be, as Mr. Gladstone intended that it should be, a clear indication of further determination to abolish customs duty and excise duty alike. The first resolution was carried by 33, and when he rose to move the second the cheering from the liberal benches kept him standing for four or five minutes—cheering intended to be heard the whole length of the corridor that led to another place.25

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Revival Of Popularity

The great result, as Greville says in a sentence that always amused the chief person concerned, is “to give some life to half-dead, broken-down, and tempest-tossed Gladstone.” In this rather tame fashion the battle ended for the session, but the blaze in the bosom of the chancellor of the exchequer was inextinguishable, as the Lords in good time found out. Their rejection of the Paper Duties bill must have had no inconsiderable share in propelling him along the paths of liberalism. The same proceeding helped to make him more than ever the centre of popular hopes. He had taken the unpopular side in resisting the inquiry into the miscarriages of the Crimea, in pressing peace with Russia, in opposing the panic on papal aggression, on the bill for divorce, and on the bill against church rates; and he represented with fidelity the constituency that was least of all in England in accord with the prepossessions of democracy. Yet this made no difference when the time came to seek a leader. “There is not,” Mr. Bright said, in the course of this quarrel with the Lords, “a man who labours and sweats for his daily bread, there is not a woman living in a cottage who strives to make her home happy for husband and children, to whom the words of the chancellor of the exchequer have not brought hope, and to whom his measures, which have been defended with an eloquence few can equal and with a logic none can contest, have not administered consolation.”

At the end of the session Phillimore reports:—

V

In a contemporary memorandum (May 30, 1860) on the opinions of the cabinet at this date Mr. Gladstone sets out the principal trains of business with which he and his colleagues were called upon to deal. It is a lively picture of the vast and diverse interests of a minister disposed to take his cabinet duties seriously. It is, too, a curious chart of the currents and cross-currents of the time. Here are the seven heads as he sets them down:—

(1) The Italian question—Austrian or anti-Austrian; (2) Foreign policy in general—leaning towards calm and peace, or brusqueness and war; (3) Defences and expenditure—alarm and money charges on the one side, modest and timid retrenchment with confidence in our position on the other; (4) Finance, as adapted to the one or the other of these groups of ideas and feelings respectively; (5) Reform—ultra-conservative on the one side, on the other, no fear of the working class and the belief that something real though limited, should be done towards their enfranchisement; (6) Church matters may perhaps be also mentioned, though there has been no collision in regard to them, whatever difference there may be—they have indeed held a very secondary place amidst the rude and constant shocks of the last twelve months; (7) Lastly, the coup d'état on the paper duties draws a new line of division.

Cabinet Currents

“In the many passages of argument and opinion,” Mr. Gladstone adds, “the only person from whom I have never to my recollection differed on a serious matter during this anxious twelvemonth is Milner Gibson.” The reader will find elsewhere the enumeration of the various parts in this complex dramatic piece.26 Some of the most Italian members of the cabinet were also the most combative in foreign policy, the most martial in respect [pg 037] of defence, the most stationary in finance. In the matter of reform, some who were liberal as to the franchise were conservative as to redistribution. In matters ecclesiastical, those who like Mr. Gladstone were most liberal elsewhere, were (with sympathy from Argyll) “most conservative and church-like.”

Before he had been a year and a half in office, Mr. Gladstone wrote to Graham (Nov. 27, '60): “We live in anti-reforming times. All improvements have to be urged in apologetic, almost in supplicatory tones. I sometimes reflect how much less liberal as to domestic policy in any true sense of the word, is this government than was Sir Robert Peel's; and how much the tone of ultra-toryism prevails among a large portion of the liberal party.” “I speak a literal truth,” he wrote to Cobden, “when I say that in these days it is more difficult to save a shilling than to spend a million.” “The men,” he said, “who ought to have been breasting and stemming the tide have become captains general of the alarmists,” and he deplored Cobden's refusal [pg 038] of office when the Palmerston government was formed. All this only provoked him to more relentless energy. Well might Prince Albert call it incredible.

VI

After the “gigantic innovation” perpetrated by the Lords, Mr. Gladstone read to the cabinet (June 30, 1860) an elaborate memorandum on the paper duty and the taxing powers of the two Houses. He dealt fully alike with the fiscal and the constitutional aspects of a situation from which he was “certain that nothing could extricate them with credit, except the united, determined, and even authoritative action of the government.” He wound up with a broad declaration that, to any who knew his tenacity of purpose when once roused, made it certain that he would never acquiesce in the pretensions of the other House. The fiscal consideration, he concluded, “is nothing compared with the vital importance of maintaining the exclusive rights of the House of Commons in matter of supply. There is hardly any conceivable interference of the Lords hereafter, except sending down a tax imposed by themselves, which would not be covered by this precedent. It may be said they are wise and will not do it. Assuming that they will be wise, yet I for one am not willing that the House of Commons should hold on sufferance in the nineteenth century what it won in the seventeenth and confirmed and enlarged in the eighteenth.”

The intervening months did not relax this valiant and patriotic resolution. He wrote down a short version of the story in the last year of his life:—

Of the “internal fighting” we have a glimpse in the diary:—

The abiding feature of constitutional interest in the budget of 1861 was this inclusion of the various financial proposals in a single bill, so that the Lords must either accept the whole of them, or try the impossible performance of rejecting the whole of them. This was the affirmation in practical shape of the resolution of the House of Commons in the previous year, that it possessed in its own hands the power to remit and impose taxes, and that the right to frame bills of supply in its own measure, manner, time, and matter, is a right to be kept inviolable. Until now the practice had been to make the different taxes the subject of as many different bills, thus placing it in the power of the Lords to reject a given tax bill without throwing the financial machinery wholly out of gear. By including all the taxes in a single finance bill the power of the Lords to override the other House was effectually arrested.

Defeat Of The Lords

In language of that time, he had carried every stitch of free-trade canvas in the teeth of a tempest that might have made the boldest financial pilot shorten sail. Many even of his friends were sorry that he did not reduce the war duty on tea and sugar, instead of releasing paper from its duty of excise. Neither friends nor foes daunted him. He possessed his soul in patience until the hour struck, and then came forth in full panoply. Enthusiastic journalists with the gift [pg 041] of a poetic pen told their millions of readers how, after weeks of malign prophecy, that the great trickster in Downing Street would be proved to have beggared the exchequer, that years of gloom and insolvency awaited us, suddenly, the moment the magician chose to draw aside the veil, the darkness rolled away; he had fluttered out of sight the whole race of sombre Volscians; and where the gazers dreaded to see a gulf they beheld a golden monument of glorious finance; like the traveller in the Arabian fable who was pursued in the Valley of Shadows by unearthly imprecations, he never glanced to right or left until he could disperse the shadows by a single stroke. “He is,” says another onlooker, “in his ministerial capacity, probably the best abused and the best hated man in the House; nevertheless the House is honestly proud of him, and even the country party feels a glow of pride in exhibiting to the diplomatic gallery such a transcendent mouthpiece of a nation of shopkeepers. The audacious shrewdness of Lancashire married to the polished grace of Oxford is a felicitous union of the strength and culture of liberal and conservative England; and no party in the House, whatever may be its likings or antipathies, can sit under the spell of Mr. Gladstone's rounded and shining eloquence without a conviction that the man who can talk ‘shop’ like a tenth Muse is, after all, a true representative man of the market of the world.”

In describing the result of the repeal of the paper duty a little after this,28 he used glowing words. “Never was there a measure so conservative as that which called into vivid, energetic, permanent, and successful action the cheap press of this country.” It was also a common radical opinion of that hour that if the most numerous classes acquired the franchise as well as cheap newspapers, the reign of peace would thenceforth be unbroken. In a people of bold and martial temper such as are the people of our island, this proved to be a miscalculation. Meanwhile there is little doubt that Mr. Gladstone's share in thus fostering the growth of the cheap press was one of the secrets of his rapid rise in popularity.