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THE BRITISH FINANCES.
Abandonment of the Sinking Fund-Repeal of Taxes on Consumption— The Reform Deficit.
THE subject of taxation is one which now must soon force itself on the consideration of the most thought less in the country. The time is gone by when the difficulty could be contemplated only at a distance, and men could console themselves with the idea that they would leave to their posterity the burden of providing for the liquidation of the public debt. The growing deficiency of the revenue, for many years past, joined to the improvident haste with which taxes which oppressed no one have been repealed, have at length brought matters to a crisis; the Sinking Fund is now abandoned; the revenue is L.698,000 less than the expenditure; and the nation must be content to sit down under the burden of an annual charge of L.28,000,000, which there is no prospect, under the present system, of either diminishing or avoiding.
It cannot be either an useless or an unprofitable task to examine the causes of this alarming state of the finances, with a view to determine whether it is an unavoidable evil which must be submitted to with patience and resignation, or a transient storm, which, by firmness and judgment, may be weathered. We confidently expect to prove that it is the latter; but we as confidently believe that the condition of the nation is wholly desperate, and a national bankruptcy unavoidable, unless a very different system from the temporizing and vacillating finance policy of the last fifteen years is pursued by succeeding governments.
"If I wished," said Frederick the Great, "to reduce a flourishing province from the highest state of prosperity to the lowest stage of misery, I would desire no more effectual course than to put it for ten years under the government of philosophers."-" If an empire," said Napoleon," were made of adamant, it would be soon ground to powder by the political economists.'
the observations of these great men, is to be found the remote cause of the present disastrous state of our finances. We shall shortly examine in detail the causes which have in so powerful a manner ground down the prosperity of the British empire; but, in the outset, the desperate improvidence, the incredible recklessness, the unparalleled ignorance of the first principles of finance, by our present rulers, forces itself on the mind. The result of their measures is highly instructive as to the general system which has been pursued for a course of years; it affords a reductio ad absurdum, from which the erroneous principles on which they proceeded, may with certainty be inferred.
Ministers, in February, 1831, brought forward the celebrated Whig Budget, which, fortunately for them, the exertions of their opponents brought so rapidly to an end. We say, fortunately for them, for if the proposed reductions had taken place simultaneously with the Reform Bill, the nation would now have been landed in a state of desperate and hopeless insolvency.
When the Duke of Wellington quitted the helm, it appears from the Finance Reports, recently published under the authority of Mr Spring Rice, that he had by great economy brought the finances into a comparatively flourishing condition. He left his successors a clear sinking fund of L.2,900,000, and an income exceeding the expenditure by L.1,800,000. In the preceding year of his administration, the clear excess of the income above the expenditure, was L.1,000,000. This is admitted by all parties, however much they may have been at variance as to the existence of any surplus at all, during the preceding years of Lord Liverpool's and Mr Canning's administration.
The present Ministers, shortly af ter their accession to office, in Fe
bruary, 1881, brought forward their celebrated budget, in which they proposed to repeal
The tobacco tax,
whose joint produce the Chancel lor of the Exchequer estimated at L.4,000,000 a-year; and in lieu of part of them, to lay on duties on
Transfers of funded pro
pared with 1830, converted the Duke of Wellington's clear surplus of L.1,800,000 into a deficit of L.698,000, and totally annihilated the sinking L.2,400,000 fund! * 700,000 We doubt if there is to be found 400,000 in the whole annals of legislation 500,000 any thing comparable to this. So utterly ignorant were our rulers of the elements of political science; so thoroughly were they infatuated by the absurd principles of Political Economy which have perverted that noble science since the time of Adam Smith; so completely were they borne away by the fatal torrent of innovation, that they actually carried into effect a reduction of taxation to the amount of a million and a half, when on the eve of an agitating measure which was to reduce it four millions. This indicates not an ignoL.3,800,000 rance of the details of office, or an over-sanguineness of disposition for which we make every allowance, but a total ignorance of the first principles of government, for which we can find no apology; and which is as unpardonable for a Minister of a financial country, as it would be for its Monarch to be ignorant of reading or writing.
The new taxes were so extremely unpopular and injudicious, and the outcry against them so universal, that they were one and all abandoned by the Government, who also gave up the proposed repeal of the tobacco tax, and adhered only to the reduction of the taxes on coals, candles, and calicoes, estimated as pro ducing altogether L.1,600,000. They held out hopes, that by adhering to a rigid economy, they would be able to relinquish these taxes, and still maintain the Sinking Fund at its wonted amount.
But what did Ministers do next? Having thus abandoned taxes to the amount of L.1,600,000 a-year, and given up all idea of imposing other taxes in their stead, they brought in the Reform Bill, the necessary effect of which, whether it succeeded or not, every man of sense foresaw, must be to lower the revenue several millions more. And, accordingly, what has been the result? Why, they have occasioned a deficit of four mil lions on the income of 1831, as com
* The total gross revenue of 1830 was, That of 1831,
Is it nota principle familiar not only to every student, but to every schoolboy; not to every one merely who has studied the Wealth of Nations, but every one who has read Sallust or Livy, that the produce of taxation depends in every country, but especially a commercial one, upon industry, and that industry hangs for its existence on public security? Is it not universally known by history, has it not been demonstrated again and again, both from principle and experience, that any thing which shakes public credit, suspends private expenditure, or curtails individual enjoyment, must necessarily and immediately affect the revenue of the state? Do our rulers imagine that the public revenue is to rise while every man's private revenue is falling? That the
so that, after deducting the beer tax, and the taxes reduced by Ministers, the deficit solely owing to reform is nearly £4,000,000.
dread of an approaching revolution, and no suffering be experienced by the poor, or no decline become apparent in the public revenue ? ⠀⠀
customs are to increase when suspended credit has shaken the springs of industry; or the excise augment, when diminished wages have contracted the comforts of the poor? Do they suppose that public income is like pearls, to be thrown up by the storms of the political ocean? And were they ever so complete ly deluded as to imagine that a new constitution could be given to the State, and no shock experienced in its hundreds of thousands of chan nels of industry; or the expenditure of all the rich be lessened from the
The extraordinary deficit which has taken place in every branch of the public revenue since the fatal Reform Bill was agitated in the country, is so singularly instructive as to the unavoidable effect of the insane conduct pursued by Ministers, that though we transcribed it in January last, we make no apology for again laying it before our readers.
GREY Administration. 4752 call it 4 HE BIRO Decrease.
Year ending April 5, 1890, L.864,000 Year ending April 5, 1831, L1,134,000
Now this table demonstrates three things. 1. That the revenue from the reduction of the beer-duty of L.3,000,000, and other causes which shall immediately be noticed, was in a state of progressive decline when the Whigs came into office; and, 2. That this decline was augmented from L.640,000, being the falling off in the last year of the Duke's administration, to L.3,984,000, being the deficit at the end of the first year of the Grey administration. 3. That
1,656,000 713,072,000 3,984,000
this deficit of four millions took place on a reduction of taxation by the Whigs of L.1,600,000 only; whereas the Duke's deficit of L.640,000 arose from repealing the beer-tax of L.8,000,000. It is evident, therefore, that the last immense deficiency is owing to the Reform agitation, and the Reform agitation alone.
This is still more evident if the items of which this enormous deficiency is composed are considered. The following are the details:
WELLINGTON Administration. GREY Administration. Dod
trade which are devoted to the furnishing of luxuries, as books, haberdashery, wine, furniture, silks, gloves, &c. it is quite appalling. The silk trade, which, in 1825, brought to the Spitalfields weavers 16s. a-week, now barely yields them 2s. 9d.; and the glove-makers in Coventry are liter ally starving. Such are the blessings of reform, agitation, and free trade. With truth did Napoleon say, that if an empire were made of adamant, it would be ground to powder by the political economists.
The partisans of Ministers allege, that these disastrous consequences have followed, not from reform, but the obstinate resistance it has experienced; and that, if it had not been for the desperate phalanx of the Conservative party, the nation would have been now advancing prosperously before the gales of democratic applause, with a popular government and an overflowing treasury. This fallacy has been repeatedly refuted, but we will give its refutation again. If a proposition is completely true, and has been clearly demonstrated, it is not till it has been repeated at least an hundred times that it begins to make any impression on those of an opposite political persuasion.
What is it that now has so deeply affected the revenue? It is clearly a diminution in the springs of industry, a decreased demand for the produce of labour, and a decline in the wages which constitute its payment. What has occasioned this decline? Nothing but the diminished expenditure of the opulent classes, and the shock to the credit which sustains manufacturing and commercial industry. What has given this shock, and occasioned this marked contraction of expenditure? Evidently the terror so generally inspired among the holders of property, by the revolutionary measures which are either in progress or apprehended. Now, is this terror likely to be diminished, this shock lessened, or this contracted expenditure increased, by the success of the very measures which are so much the subject of alarm? It is utterly extravagant; it is contrary to every principle of reason, to every lesson of experi
VOL. XXXI. NO. CXCIII.
ence, to suppose that any of these effects are to take place. When the revolutionary surge, after having broken down the barrier of political power which at present sustains the whole weight of the tempest, and preserves in calm waters the varied fabrics of national industry, begins to beat against the bulwarks of property; when interest after interest are successively sacrificed at the shrine of popular extravagance, and the suffering they have brought on themselves is made a reason, as in all democratic convulsions, for fresh demands and more extravagant revolutionary proposals by the people, is it to be expected that credit or industry are to flourish? It is as clear as any proposition of geometry, that the reverse must be the case; that credit must be suspended, industry blighted, and expenditure diminished, and the national income progressively decline with every victory gained by democratic violence, and every consequent addition made to popular suffering.
Here again the conclusions of common sense, and the experience of our own times, are perfectly in unison with the lessons of history. In many other countries besides Great Britain, the system of agitation and popular concussion has been tried, but in none was it ever found to produce any other effect than a vast and progressive decline of the revenue; and the more unchecked the march of innovation, the greater has been the defalcation of the revenue. In France, for example, we have the authority of the able republican historian Mignet for saying, that the revenue, which at the opening of the StatesGeneral was L.24,000,000 sterling, fell down, the very next year, to L.16,000,000, and continued so to decline during the years 1790 and 1791; that Government were driven, by overbearing necessity, to confiscate the property of the church, and issue the assignats, bearing a forced circulation, which soon fell to a tenth part of the value at which they were forced on the public. Yet that revolution was all accomplished by the mere force of legislative enactments: no courageous Peers stemmed the