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I have always thought and said that the issuing of such a warrant was within the undoubted power of the Crown, though to do so without having sufficient assurance that Parliament would provide the necessary compensation for the officers who would otherwise suffer by such an exercise of royal power would not be just, and therefore, would not be consistent with the spirit of the Constitution, which vests all such powers in the Crown, in the confidence and for the purpose that right, not wrong, shall be done. I should have been glad if it had been generally and clearly understood from the beginning that, subject to the sense of Parliament being ascertained with reference to the point of compensation, the form of procedure would be that which was eventually adopted, because it is certainly an evil that the adoption of one constitutional mode of procedure rather than another should appear to arise from an adverse vote of the House of Lords. But I consider that the votes of the House of Commons had practically settled the question of compensation, as it was impossible that the Lords should exercise their power merely to prevent justice being done to the officers of the Army; and this being so, as the permanent continuance of the purchase system had evidently become impossible, and as any unnecessary delay in putting an end to it must have been most injurious to the organisation of the Army, and most unjust to those officers who might want to sell out during the period of transition, it did and does still appear to me that the course which the Government took (after what I must always consider the ill-advised resolution of the House of Lords) was (as you express it) the least objectionable course which could be taken under the whole circumstances of the case.

Undoubtedly, the conflict between the Executive Government and the House of Lords was much to be regretted; but unless Mr. Gladstone had possessed the gift of prophecy, he could not have anticipated such a conflict. Until late in the session nobody dreamed that the House of Lords would seriously resist a reform upon which the country was determined, and which the House of Commons had in the most emphatic manner adopted. When the Peers came to their illadvised and most unfortunate resolution it was too late to recede. The arrangements for the new system

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of Army promotion were far advanced, and the highest military authorities declared that another year's suspense would inflict incalculable injury upon the officers, and most seriously affect the discipline of the forces. The Royal Warrant afforded the only legal means of avoiding a disastrous confusion in military affairs, and, what was more serious, an exasperating conflict between the Lords on the one side and the Commons and the country on the other.

CHAPTER IV.

EXPENDITURE AND FINANCE.

DURING the first two years of Mr. Gladstone's adminis tration the taxation of the country was reduced by a sum exceeding eight millions per annum. In the present year the process of reduction has not been continued, but, on the contrary, a new tax amounting to three millions has been imposed. The principal object of the present chapter is to examine the nature and causes of this retrogression.

It will in the first place be desirable to present the facts in a concise and intelligible form. The following summary account shows on the one side the taxes repealed or reduced by Mr. Gladstone's government, and on the other side the taxes imposed or increased in the several years mentioned :

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Total 1,113,114

Net reduction in the year 1869, £3,735,556.

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Nil

Total 4,644,681

Net reduction in the year 1870, £4,497,343.

Total 147,338

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The figures for 1871 make a very unfavourable contrast when compared with those of the two previous years. In the two years 1869 and 1870 there was a reduction to the amount of more than eight millions, but in the next year a new taxation to the amount of three millions. We have to inquire why the process of diminishing the national burden was suddenly arrested. Why did the Chancellor of the Exchequer announce in 1871 that he was short of money to the extent of three millions, and must inpose new taxes to that amount to make up the deficiency? The cause for the new demands upon the resources of the country was the augmentation of military expenditure.

The augmentation is concisely stated in the following extract from Mr. Lowe's financial statement on April 20, 1871

The Army, including the abolition of purchase, is estimated to cost us during the present year 16,452,0007. The total grant for the past year for the Army was 12,965,000l.; so that there is an increase of estimates for this year over the total grant of last year of 3,487,000l. The Navy for the present year is estimated at 9,756,0007.; the actual grant last year was 9,370,000l.; showing an increase this year of 386,000l.

Here was an increase of not much less than four millions sterling for the two services. The Chancellor of the Exchequer did not however require the whole of this sum to be made good by new taxation. Owing to the growth of some branches of the revenue and other causes, he was able to limit his demand to a sum less than three millions sterling. The result of his calcu

lation for the year 1871–2 was

Estimated expenditure
Estimated revenue

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£ 72,308,000

69,595,000

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In the first instance Mr. Lowe proposed to meet the deficiency by a tax upon lucifer matches, and an increase of legacy and probate duties. But these proposals met with so much opposition both within the House and out of doors, that they were withdrawn, and an increase of the income tax was ultimately substituted. The rate was raised from 4d. to 6d. in the pound; that is, to the amount which the last Conservative Government had raised it.1

With respect to the increased Army Estimates, the Government insisted that they were of an essentially transitional and exceptional character. Upon the outbreak of the Continental war in 1870 a very general demand was made for an augmentation of our own forces, and in the month of July of that year, the House of Commons passed for the purpose a vote of credit for two millions sterling. The House and the country strongly supported this additional expenditure, which may be almost said to have been forced upon the Government. The increase then sanctioned had an effect on the estimates of 1871, but the principal cause of the increase of these latter estimates has been the changes in the organisation of the Army. Mr. Gladstone and Mr. Cardwell repeatedly explained that the extra sums voted in 1871 were not of a recurring nature, that they were to be given once for all as means of effecting a permanent economy. Thus, in debate upon a motion proposed by Mr. White on April 24, condemning the additional expenditure, Mr. Gladstone said:

We have now got, I am sorry to say, large estimates; and when, in July last, in consequence of the events occurring

1 In comparing the military estimates of different Governments, it must be recollected that Earl Russell and Mr. Gladstone resigned office in June, 1866, and were succeeded by a Conservative Government, which continued to the latter part of the year 1868.

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