The

151,000l. more, but of this addition 37,000l. was due to the taking over of some territory from Uganda which would cost so much less, and part of the rest of it was attributable to the provision for meeting an anticipated deficiency on the working expenses of the Uganda Railway and for the purchase of steamers for Lake Victoria. An additional annuity of 46,0447. became chargeable under this class in payment for further loans ander the Uganda Railway Acts. In Somaliland, 25,000l. was asked in consequence of the military operations there. Colonial Service Estimate included a proposed grant of 1,800,000l. in aid of the revenues of the Transvaal and Orange Colonies. A sum of 120,000l. would be required in 1902-3 in aid of Pacific cable expenses, but thirteen-eighteenths of that sum would be recoverable from the Colonies concerned. Also under this class came the provision of 40,000l., as the British share of a loan to the Cretan Government, conjointly with France, Italy and Russia.

Class VII. (Miscellaneous) included a special vote of 100,000l. for expenses in connection with the Coronation of King Edward.

The large increase of 722,2621. was shown in the Revenue Departments Estimate, the total figures for 1902-3 being 17,791,250l. as compared with 17,068,9887., the adjusted total for 1901-2, which included a supplementary grant of 40,000l. for the Customs. This was mainly due to the additional staff rendered necessary by the imposition of new duties on coal and sugar, and the same source chiefly accounted for a further increase of 14,2007. on the Customs Estimate of 1902-3. Changes of taxation were also in part accountable for the increase of 95,0577. in the Estimate for the Inland Revenue Department. For the Post Office, Packet Service, and Telegraphs the total net provision asked for 1902-3 was 14,751,9801. an increase of 613,0051. on the total for the preceding year, which was 14,138,9751.

The figures for the Revenue Departments may be tabulated thus:

It was not unnatural that, having regard to the communications which were known to be passing between the Boer leaders in South Africa and his Majesty's Government, with a view to a possible peace, there should be a feeling in some quarters that the exposition of the financial and fiscal arrangements of the year might be deferred, pending the definite issue of negotiations by which, as it appeared, they might, and almost must, be essentially affected. On April 14, the day announced for the Budget statement, Sir H. Campbell-Bannerman put a question in this sense in the Commons, but Sir M. Hicks-Beach answered that he could not accede to the suggestion of the Opposition leader for reasons which he would explain.

The House having resolved itself into Committee of Ways and Means, the Chancellor of the Exchequer, who was loudly cheered on rising, after describing the general financial situation as one that justified fair hopes in regard to the revenue for the current year, gave the House the details of the revenue and expenditure for the year that had just ended. There had, he said, been a considerable falling off in the receipts from tobacco, spirits and beer, but as regarded tobacco and spirits the decrease was largely due to the forestalments of duty in 1900-1; and though, as Chancellor of the Exchequer, he was bound to regret the decrease on beer, there was a countervailing advantage in the increased consumption of tea and cocoa. In the last two years the receipts of the revenue had exceeded his anticipations, and in this he was more fortunate than some of his predecessors. Last year his estimate of revenue was 142,455,000l., and the Exchequer receipts exceeded this amount by 543,000l. The expenditure provided for in the Budget was 184,212,000l. There were Supplementary Estimates amounting to 12,631,000l., and an unexpected increase in the Consolidated Fund charges of 73,000l. On the other hand, there were savings on various heads amounting to 1,394,000l. Therefore the total issues from the Exchequer were 195,522,000l. The Exchequer receipts were 142,998,000l., which left a deficit of 52,524,000l. This had been provided for out of the Consols Loan, which produced 56,553,000l., so that there remained a balance of over 4,000,000l. a much better result, Sir M. Hicks-Beach observed, than was anticipated by high authorities on the Opposition side of the House. Out of the total expenditure of the year, he

went on to say, 73,197,000l. was for war charges in South Africa and China. Deducting, as a continuing charge, 3,367,000l. interest on the war debt, the special war charges of the year were-military, 63,230,000l., and civil, 6,600,000l., or a total of 69,830,000l. towards which there had been provided out of revenue 17,306,000l., including the revenue which, but for the suspension of the Sinking Fund, would have gone to repay old debt. Including the amounts paid into the Local Taxation Account and expenditure on military and naval works, the Uganda Railway, the Pacific cable, and for other purposes, the total expenditure provided by the State in the year 1901-2 was 212,783,000l.

Coming to the revenue side of the account, the Chancellor of the Exchequer stated that the receipts under the head of Customs were 30,993,000l., or 993,000l. more than his estimate. Sugar produced 6,390,000l., instead of only 5,100,000l. as anticipated. The duty had been most successful, and the doleful prophecies indulged in last year as to its effect had been falsified. The export coal duty had yielded 1,314,000l., a little more than his estimate, and the exports for the year were higher than those for any previous year with the exception of the "record' year, 1900-1. Nothing had occurred to justify the prophecies of ruin to the trade which were indulged in last year. Turning to the item of wine, he said that the duty last year produced less than in the year before, and that it would be quite impossible to obtain an increase of revenue by raising the duty. The receipts from tea had exceeded his estimate by 490,000. The Excise duty on beer produced 200,000l. less than in 1900-1, and the revenue from home spirits had also largely decreased. The death duties brought 18,398,000l. to the revenue, but 4,198,000l. of this went to the Local Taxation Account. The yield to the Exchequer was 200,000l. more than the estimate. The income tax produced 34,800,000l., or 1,000,000l. more than the estimate, and Sir M. Hicks-Beach expressed his gratitude to the payers of the tax for their prompt response to the demands which he had made upon them. The Exchequer balance on March 31 stood at 8,567,0001. His account of the

National Debt was not very satisfactory. At the end of the financial year it stood at 768,408,000l. He then stated that the total cost of the wars in Africa and China during the last three years had been 165,034,000l. This expenditure had been met by loans amounting to 119,614,000l. and by payments out of revenue amounting to 45,420,000l. He hoped that some of this expenditure would be recouped when the war was over. Our share of the Chinese indemnity was 6,000,000l., and this, when realised, ought, he held, to be devoted to the reduction of the Debt.

Passing to the finances of the current year, the Chancellor of the Exchequer estimated the expenditure and revenue as follows:

In order to show the entire expenditure for which the State was responsible in 1901-2, there have to be added (1) the expenditure to which the public revenue paid into the local taxation accounts is applied, and (2) the expenditure chargeable to capital account. These additions are made in the following statement :

I. Expenditure chargeable against Exchequer Revenue, as in

* Exclusive of £110,000 paid under the Tithe Rent-charge (Rates) Act, 1899.

The total estimated expenditure and revenue, on the basis of existing taxation, being respectively 174,609,000l. and 147,785,0007., Sir M. Hicks-Beach, therefore, had a deficit to provide for of 26,824,000l. But to this deficit he had still a material addition to make. It was his duty, he said, as Chancellor of the Exchequer, not to take a rosy view of affairs in South Africa, and to prepare for the worst rather than for the best. Conferences, they knew, were proceeding at the present moment, and he had hopes that they would lead to happy results, but he could not allow himself to be influenced by them. Nothing was more likely, he declared, to conduce to peace at the present crisis than a further proof by the House and the country that they were determined to carry the war through at any cost. Sir M. HicksBeach therefore asked the committee to provide for an addition to the deficit of between 16,000,000l. and 17,000,000l. for the purposes of the war.

There were also, he pointed out, charges which would have to be met for the South African Constabulary, and it would be necessary to grant some assistance to our sugar-growing Colonies in the West Indies, pending the abolition of bounties, and to provide for the interest on the further debt which would have to be incurred this year. Altogether, therefore, he asked for an additional 18,500,000l., which brought the deficit up to 45,500,000l. He asked the committee to bear in mind that if peace should come gratuities and bounties would have to be provided for our soldiers, and that considerable sums would be required for transporting Reservists home and for maintaining a considerable force in Africa. Means would also have to be provided for the resettlement of the two Colonies which had been so terribly devastated by war-for rebuilding and restocking the farms, not only of our friends, but also of those who had been our enemies, and whom we hoped to make our friends in future. This declaration of policy was received with loud cheers. If peace, he continued, was made on terms satisfactory, enduring and safe, the country would be generous in these matters. he did not believe that any great charge need be imposed upon the taxpayers, for he was still of opinion that it would be quite possible for the new Colonies to repay any advances that might be made to them.

Yet

The Chancellor of the Exchequer then came to his proposals for meeting the deficit. He announced that he proposed to suspend the Sinking Fund once more, by which means he would obtain 4,500,000l. He also proposed to have recourse to the income tax, which he described as our great financial engine in time of war. The tax would be increased by 1d. When the war was over and circumstances permitted, the payers of the tax would have the first claim to a reduction. This increase of the tax would yield 2,000,000l. this year. He also proposed another kind of direct taxation-namely, an additional stamp duty of 1d. on cheques-which was ex