1854-55 was insufficient to meet the expenditure, and, in spite of the high argument with which the year had opened, the Debt was substantially increased. The revenue was £62,969,669 and the expenditure £69,124,807. In 1855-6 the process went still further. The expenditure was £93,065,888, and the revenue, even with additional taxation, was only £70,344,140. In 1856-57 the revenue was £72,893,312 and the expenditure £76,147,201. Military and naval expenses, which had averaged £15,591,819 during the three years preceding the war, increased to £30,121,706, £51,661,187, and £34,270,255 in 1854, 1855, and 1856 respectively.. The additional amount involved by the war reached, therefore, a total of £69,277,694, £29,562,486 of this total being defrayed out of revenue, and £39,715,208 representing the balance raised by creation of debt. The net result, so far as the National Debt was concerned, was that it stood at £837,144,597 on March 31st, 1857, an increase of £35,367,292 in three years. According to a recent opinion, we put this money on the wrong horse; certainly the results have not been anything very much to boast about.

Let us now consider the financial situation of to-day. We shall find some very remarkable differences from 1854. The Debt stood last April at £627,562,585, a reduction since 1857 of £209,582,012, and since 1854 of £174,214,720, the amount per head of the population being now £15 14s. Since 1854 a gross total of £328,498,329 has been paid off, but against this has to be set the raising of £154,283,609 in additional debt. It is certainly a remarkable thing that whereas the net reduction in the National Debt since January, 1817, is £258,345,557, and since the beginning of the Queen's reign £218,611,589, the last forty-two years have seen £209,582,012 paid off, or an annual average of £4,990,048. The bulk of this amount has been paid since 1876, when the fixed annual charge, including a Sinking Fund for redeeming capital, was started. In these twenty-four years a net amount of £141,383,172 has been paid off, or an annual average of £5,890,965, which represents an increase of 259 per cent. on the annual average between 1817 and 1854. If we took a still more recent period the contrast would be even more striking, for in the twelve years ending March 31, 1899, the annual average was over nine millions; but even if we do our best for 1854, and compare the annual average for the thirty-seven years preceding it with the thirty-seven years preceding 1899, we get an increase in the latter period of 231 per cent., the figures being £2,273,806 and £5,245,511 respectively. The total Debt, instead of being as large as all the other National Debts of the world put together, is now only half as large as that of France, and smaller than that of Russia. The annual charge (£23,000,000 as against

over £32,000,000 which France has to pay) requires only 21 per cent. of the revenue, as against 47 per cent. in 1853, and works out at only 11s. 6d. per head instead of £1. And as a field for investment our Debt has been diminished to an even greater degree. In 1854 there was about £760,000,000 of Government stock open to the investor; now, owing to the large portion held by the Government itself (and the Government being a buyer and not a seller), there is only £392,000,000 even nominally available for the public; and this is in reality very much reduced by the large blocks of Consols held, practically in permanence, by banks, public institutions, trustees, &c., besides the continuing process of redemption by means of the Sinking Fund.

In the latter respect we have an entirely new state of things, so far as the conditions for raising new Debt, either permanent or temporary, are concerned. The system of a fixed charge, which was not in existence in 1854, provides us with an annual margin for repayment of capital, by means of which huge War Loans can be financed without the addition of a penny to taxation. And this Fund is an annually increasing amount, owing partly to the falling-in of annuities, and partly to the approaching reduction in the interest on Consols. The national income has largely increased. We had in 1898-9 a gross revenue of £108,336,193 as against £59,096,667 in 1853. From taxation we derived £89,450,000 as against £55,030,212these figures representing per head of the population £2 4s. 8d. and £1 19s. 3d., so that we are now being taxed altogether more heavily. Whereas in the earlier year the proportions of indirect and direct taxation were 70 and 30 per cent., they are now 56 and 44 per cent., indirect taxes producing £50,050,000 and direct taxes £39,400,000. The Income Tax, which at 7d. produced £5,731,776 in 1853, yielded in 1898-9, at 8d., no less than £18,000,000, while the separate items of death duties (£11,400,000) and stamps (£7,630,000) in the later year show how much more is paid by property now compared with the £7,148,787 collected under the sole heading of stamps in 1853. Per head of the population the indirect taxes represented £1 78. 10d. in 1853, £1 5s. now; and the direct taxes 11s. 5d. in 1853, and 198. 8d. now. Moreover the whole character of the indirect taxation has altered, since it is now confined to a very few articles of consumption. Instead of taxing several hundred different commodities, we confine our operations to under twenty. Out of the net receipts for Customs of £21,845,435 no less than £20,775,651 is obtained from spirits, wine, tobacco, and tea; while out of the net receipts from Excise of £34,415,481, beer and spirits are responsible for £30,052,964.

With one more comparison I can leave this enumeration of details. In 1853-4, the year before the Crimean War, our tax revenue was

£55,030,212; our estimated tax revenue for 1899-1900 was £90,700,000. In the last year of peace before the Crimea, we spent £16,325,674 on military and naval services; in our latest estimates on a peace scale we were prepared to devote £48,209,949 to the same objects. While the tax revenue therefore shows an increase of £35,669,788, of which two-thirds is provided by increased direct taxation, the peace expenditure on Army and Navy had grown by £31,884,275.

The leading features of the new situation are thus brought out in a manner which must be plain to everybody. They are, firstly, an enormous reduction in the Debt, both absolutely and relatively to other countries, until it is not only not a particularly heavy burden, but as the reform of the Sinking Fund last year showed-has dwindled so much that Consols are actually scarce; secondly, a great increase in direct taxation, and in the proportion it bears to the tax revenue; thirdly, a concentration of the indirect taxes upon a very few commodities; and fourthly, an enormous increase in our military and naval expenditure on a peace footing. I must add, from a political point of view, that there has been a wide extension of the franchise, and that the bulk of political power now rests, in our representative system, with the wage-earning classes, who do not pay the direct taxes, and practically contribute nothing to the revenue except for the alcohol they choose to drink and the tobacco they smoke.

Compared with 1854, the conditions of our problem are therefore completely reversed. It is impossible for a Chancellor of the Exchequer to come forward now and say that not only must any extra taxation come from property, but the duties on commodities must be still further reduced, even when additional revenue has to be raised. It is equally impossible for him to speak of our “sad pre-eminence" in the "immense and crushing weight" of our standing Debt.

As was shown by an interesting series of articles in the Times last year, there is grave need of a readjustment, even on a peace basis, of our system of taxation, which bears much too heavily now on property, and, in respect of the duties on commodities, is restricted in a ridiculous manner to a very few great sources of revenue. The reaction against Protectionism has gone to extravagant lengths, and public opinion has undoubtedly responded of late years to the common-sense arguments of those who have protested against the fetish we have made of a Cobdenism which Mr. Cobden himself would probably have been the first to repudiate if he had been alive. But new taxes on certain commodities, for the sake of revenue, could not be reasonably attacked even by fanatical Free Traders.

As regards the Debt, so far from our being liable to any lectures on its scandalous magnitude, the taxpayers of these years are really

being made to pay it off to a much larger extent than can properly be considered their share.

Not merely have the political and economical reasons disappeared which justified Mr. Gladstone in proposing to pay for the Crimean War out of direct taxation rather than by a loan, and only in the last resort out of indirect taxation, but an exactly opposite policy is suggested by the remarkable change which has come over our financial system in the interval. We are more heavily taxed; our Debt is no longer a burden, and its continued reduction (a very doubtful blessing, and one attended, at all events, by considerable embarrassment to the Savings Banks and the investors in gilt-edged securities) is assured by the present Sinking Fund arrangements. The immediate and legitimate inference to be drawn is that, for war purposes, there is a primâfacie case for obtaining the money by loan; but that if additional taxation is necessary, it should be obtained by revising our list of taxable commodities, rather than by increasing the Income Tax or other direct taxes. If this primâ-facie case is to be upset, some very strong reasons will have to be advanced.

There is one special distinction, moreover, to be drawn between the Crimean War and the Boer War, which has an important bearing on these general considerations. It cost us sixty-nine millions of money to gain a very doubtful advantage over Russia; but in the case of the Transvaal, now that war has been forced upon us, its incorporation in the Empire is an object materially worth striving for, and one to which we are entitled to look forward to provide us with a real quid pro quo. Sir Michael Hicks-Beach spoke last October of the prospect of obtaining an indemnity from the Transvaal, with all its wealth of gold, which would cover the expense to which we were being put. The difficulty of conquering the Boer Republics has proved greater since then than any of us expected, but the idea of saddling the Transvaal, under British administration, with a Debt covering a war indemnity must not yet be abandoned. It supplies, meanwhile, an additional argument for not paying for the war out of an increase in taxation. The people who will benefit from this war will be the owners of Transvaal gold-mines, and incidentally all the inhabitants of the Transvaal, for whom the State will be more economically and more beneficially administered. The "industry of future generations," or of a single generation, in the Transvaal, may justly be "mortgaged" for this object. It is expected that under a reformed Government a saving of £2,000,000 a year could be made, on the existing basis of taxation, which was not oppressive. That saving would cover interest and sinking fund for a debt of fifty millions. It is obvious that if this is the result aimed at, our business is simply to raise the money by a temporary loan, which can be converted into Transvaal Consols, secured on the mining royalties,

and guaranteed by Great Britain, when the time for that final readjustment arrives.

On the other hand, we have to find money not only for the war, but also for improving our military organisation. It seems to me that in making this new effort we are essentially acting in the permanent interests of the Empire, and strengthening it for the benefit of posterity. The enormously increased burden for naval and military services which the taxpayers now cheerfully endure is quite as much as we can justly be expected to provide for out of current revenue, when all the circumstances of the financial situation are duly weighed; and when we look at what other countries are doing we see none of our rivals, whose competition puts us to the necessity of this huge expenditure on defence, attempting to decrease their Debt, but, on the contrary, resorting to loans to pay for their increased armaments. I do not believe that we are using our credit and our capital to the best advantage by paying for everything out of taxation and making disproportionate reductions in a Debt which is no longer a serious burden. On the contrary, at a time of great trade prosperity, the State should make a more practical use of its credit and allow as much as possible of the national wealth to fructify in the pockets of the taxpayer. Mr. Wyndham, speaking in the Debate on the Address, warned the electorate that they might have to forego their autumn holiday, and keep their children from school, to provide money for the war. How can it be considered good policy and true economy to bring about such results when the nation can so easily avoid making any disturbance in the health and education of its citizens?