Crisis on the Sugar Duties, 1844
Page 267
In 1841 the whig government raised the question of the sugar duties, and proposed to substitute a protective duty of 12/ per cwt. for the actual or virtual prohibition of foreign sugars which had up to that time subsisted. They were strongly opposed, and decisively beaten. The argument used against them was, I think, twofold. There was the protection plea on behalf of the West Indians whose estates were now worked only by free labour—and there was the great and popular contention that the measure not only admitted sugar the product of slave labour, which we would not allow our own colonies to employ, but that our new supplies would be derived from Brazil, and above all from Cuba and Puerto Rico, where the slave trade was rampant, and was prosecuted on an enormous scale. The government of Sir R. Peel largely modified our system. Its general professions were the abolition of prohibition, and the reduction of protective duties to a moderate rate. In 1844 it was determined to deal with the sugar duties, and to admit sugar at, I think, a rate of 10/ per cwt. beyond the rate for British-grown. But we had to bear in mind the arguments of 1841, and it was determined that the sugars so to be admitted were to be the product of free labour only. There was some uncertainty from whence they were to come. Java produced sugar largely, under a system involving certain restraints, but as we contended essentially free. The whole argument, however, was difficult and perplexed, and a parliamentary combination was formed against the government. The opposition, with perfect consistency, mustered in full force. The West Indian interest, which, though much reduced in wealth, still subsisted as a parliamentary entity, was keenly arrayed on the same side. There were some votes attracted by dislike, perhaps, to the argument on our side, which appeared to be complex and over-refined. A meeting of the party was held in order to confront the crisis. Sir Robert Peel stated his case in a speech which was thought to be haughty and unconciliatory. I do not recollect whether there was hostile discussion, or whether silence and the sulks prevailed. But I remember that when the meeting of the party broke up, Sir Robert Peel said on quitting the room that it was the worst meeting he had ever attended. It left disagreeable anticipations as to the division which was in immediate prospect.... The opposition in general had done what they could to strengthen their momentary association with the West Indian conservatives. Their hopes of a majority depended entirely upon conservative votes. Of course, therefore, it was vital to confine the attack to the merits of the question immediately before the House, as an attack upon the policy of the government generally could only strengthen it by awakening the susceptibilities of party and so reclaiming the stray voters to the administration. Lord Howick, entering into the debate as the hours of enhanced interest began, made a speech which attacked the conservative policy at large, and gave the opening for an effective reply. Lord Stanley perceived his opportunity and turned it to account with great force and adroitness. In a strictly retaliatory speech, he wound up conservative sentiment on behalf of ministers, and restored the tone of the House. The clouds of the earlier evening hours dispersed, and the government was victorious. Two speeches, one negatively and the other positively, reversed the prevailing current, and saved the administration. I have never known a parallel case. The whole honour of the fray, in the ministerial sense, redounded to Lord Stanley. I doubt whether in the twenty-six years of his after life he ever struck such a stroke as this.
COLONIAL POLICY
Page 362
You have reversed, within the last seventy years, every one of these salutary principles. Your policy has been this; you have retained at home the management of and property in colonial lands. You have magnificent sums figuring in your estimates for the ordinary expenses of their governments, instead of allowing them to bear their own expenses. Instead of suffering them to judge what are the measures best adapted to secure their peaceful relations with the aboriginal tribes, and endeavouring to secure their good conduct—instead of telling them that they must not look for help from you unless they maintain the principles of justice, you tell them, ‘You must not meddle with the relations between yourselves and the natives; that is a matter for parliament’; a minister sitting in Downing Street must determine how the local relations between the inhabitants of the colony and the aboriginal tribes are to be settled, in every point down to the minutest detail. Nay, even their strictly internal police your soldiery is often called upon to maintain. Then, again, the idea of their electing their own officers is, of course, revolutionary in the extreme—if not invading the royal supremacy, it is something almost as bad, dismembering the empire; and as to making their own laws upon their local affairs without interference or control from us, that is really an innovation so opposed to all ideas of imperial policy, that I think my honourable friend the member for Southwark (Sir William Molesworth) has been the first man in the House bold enough to propose it. Thus, in fact, the principles on which our colonial administration was once conducted have been precisely reversed. Our colonies have come to be looked upon as being, not municipalities endowed with internal freedom, but petty states. If you had only kept to the fundamental idea of your forefathers, that these were municipal bodies founded within the shadow and cincture of your imperial powers—that it was your business to impose on them such positive restraints as you thought necessary, and having done so, to leave them free in everything else—all those principles, instead of being reversed, would have survived in full vigour—you would have saved millions, I was going to say countless millions, to your exchequer; but you would have done something far more important by planting societies more worthy by far of the source from which they spring; for no man can read the history of the great American Revolution without seeing that a hundred years ago your colonies, such as they then were, with the institutions they then possessed, and the political relations in which they then stood to the mother-country, bred and reared men of mental stature and power such as far surpassed anything that colonial life is now commonly considered to be capable of producing.—Speech on second reading of the New Zealand Constitution bill, May 21, 1852.
FINANCIAL ARRANGEMENTS OF 1853 AS AFFECTING IRELAND
Page 465
When the report of the Irish Financial Relations Commission of 1894 was named to him, Mr. Gladstone made the following observations:—
The changes adopted in that year were explained in my budget speech, and will be found in my volume of Financial Statements, pp. 53, 60, and 69. They affected the Spirit Duties and the Income-Tax.
1. The Spirit Duties.—We laid 8d. per gallon upon Irish spirits, imposed at the same time 1s. per gallon in Scotland, and laid it down that the equalisation of the duty in the three countries would require a reduction of the duty of 8s. chargeable in England. Sir Robert Peel had imposed 1s. per gallon on Irish spirits in 1842, but was defeated by the smuggler, and repealed the duty in consequence of the failure. In 1842 the duty was levied by a separate revenue police. I abolished this separate police, and handed the duty to the constabulary force, which raised it, and without difficulty.
2. The Income-Tax was also in that year extended to Ireland. I pointed out that Sir Robert Peel, in imposing the burden on Great Britain, proposed to give a compensation for it by progressive reductions of duty on consumable commodities, and that Ireland had for twelve years enjoyed her full share of the compensation without undergoing any part of the burden; but I also laid it down as a fundamental principle that the peace income-tax was to be temporary, and I computed that it might cease in 1860. This computation was defeated, first by the Crimean war, second by a change of ideas as to expenditure and establishments which I did everything in my power to check, but which began to creep in with, and after, that war. We were enabled to hold it in check during the government of 1859-66. It has since that time, and especially in these last years, broken all bounds. But although the computation of 1853 was defeated, the principle that the income-tax should be temporary was never forgotten, at least by me, and in the year 1874 I redeemed my pledge by proposing, as mentioned, to repeal it—a course which would have saved the country a sum which it is difficult to reckon, but very large. This fact which was in the public mind in 1853 when the income-tax was temporary, is the key to the whole position. From this point of view we must combine it with the remission of the consolidated annuities. I have not now the means of making the calculation exactly, but it will be found that a descending income-tax on Ireland for seven years at 7d., then 6d., then 5d., is largely, though not completely, balanced by that remission. It will thus be seen that the finance of 1853 is not responsible either for a permanent peace income-tax upon Ireland, or for the present equalisation of the spirit duties. At the same time, I do not mean to condemn those measures. I condemn utterly the extravagance of the civil expenditure in Ireland, which, if Ireland has been unjustly taxed, cannot for a moment be pleaded as a compensation. I reserve my judgment whether political equality can be made compatible with privilege in point of taxation. I admit, for my own part, that in 1853 I never went back to the union whence the difficulty springs, but only to the union of the exchequers in or about 1817. It is impossible to resist the authority which has now affirmed that we owe a pecuniary, as well as a political debt to Ireland.
FINANCIAL PROPOSAL OF 1853
Page 473
Mr. Gladstone to Sir Stafford Northcote
Aug. 6, 1862.—I have three main observations to make upon the conversion scheme, two of which are confessions, and one a maxim for an opposition to remember.
1. In the then doubtful state of foreign politics, had I been capable of fully appreciating it at the time, I ought not to have made the proposal.
2. Such a proposal when made by a government ought either to be resisted outright, or allowed to pass, I do not say without protest, but without delay. For that can do nothing but mischief to a proposal depending on public impression. The same course should be taken as is taken in the case of loans.
3. I am sorry to say I made a more serious error, as regards the South Sea Stocks, than the original proposal. In the summer, I think, of 1853, and a good while before harvest the company proposed to me to take Mr. Goulburn’s 3 per cents. to an equal amount in lieu of their own. They were at the time more valuable and I refused; but it would have been wise to accept, not because the event proved it so, but because the state of things at the time was so far doubtful as to have made this kind of insurance prudent.
For the benefit of the expert, I give Mr. Gladstone’s further observations on this highly technical matter:—
I have other remarks to offer. I write, however, from memory. Three millions of the £8,000,000 were paid in exchequer bills. The difference between £100 and the price of consols at the time may, in argument at least, fairly be considered as public loss. You say it was 90 or 91. We could not, however, if the operation had not taken place, have applied our surplus revenue with advantage to the reduction of debt. The balances would have been richer by £5,000,000, but we had to raise seven millions for the services of the year 1854-5. Now, as I am making myself liable for the loss of half a million of money in repaying the South Sea Company, and thereby starving the balances, I am entitled to say on the other hand that the real loss is to be measured by the amount of necessity created for replenishing them, and the charge entailed in effecting it. This I think was done by the exchequer bonds: and beyond all doubt a large saving was effected to the public by raising money upon those bonds, instead of borrowing in consols at 84 or thereabouts, which I think would have been the price for which we should in that year have borrowed—say, at 84. The redemption price, i.e. the price at which on the average consols have been in recent times redeemed, can hardly I think be less than 95, and may be higher. There was in 1854 a strong combination in the City to compel a ‘loan’ by bearing the funds; and when it was defeated by the vote of the House of Commons, a rapid reaction took place, several millions, as I understand, were lost by the ‘bear,’ and the attempt was not renewed in 1855, when the loan was, I believe, made on fair terms, relatively to the state of the market.