the condition of the shadowy kine. When Mr Gladstone appealed to the country in 1874, our prosperity had been "advancing by leaps and bounds," and performing athletic feats which it has ever since declined to repeat. A Liberal Administration was not the cause of the good times, though, when the Conservatives came in, working men were heard to observe, "Now for bad times." The arrival of bad times was an affair of coincidence, not of causation; just as the lack of rain in South Africa was not due to the church-bell, the beard, nor the bag of salt of Dr Moffat the missionary, though these theories were broached by intelligent Basuto economists. What makes good times? what makes hard times? are questions which philosophers are unable to answer; but popular Liberal speakers and writers argued as if Mr Gladstone were a financial Mascotte, as if winged fortune were unwinged for his sake, and abode with him, Túxn άTTEрos. On the other hand, the years after his return in 1880 have been years lean and plagued, yet rural patriarchs have already been known to observe, "When old Beaconsfield was gaffer, there were none of them bad times." However, Sir Stafford came into office with a noble surplus bequeathed by Mr Gladstone, a surplus reckoned at more than five millions. Ever since, ever since 1877, his opponents have been asking, Ubi est ille surplus? and their answer, as in the famous case of ille sicarius, has been Non est inventus. "Where is our magnificent surplus?" they have cried, as if a surplus were usually put away in an old stocking; and Sir Stafford kept telling them

1874.] MR CHAMBERLAIN ON MR GLADSTONE.

55

where it was, and what he had done with it, but they marked him not.

"Don't talk to me," says your lecturer, "of Conservative finance. The Tories came into office with a surplus of six millions, bequeathed by Mr Gladstone, and they not only spent it all in their six years of office, but left a deficiency of six millions in its place."1

Sir Stafford remarks that "it is too much to expect that any one, who is not obliged to do it, should hunt up old Budget speeches." The task is irksome indeed, especially to "any poor child of Nature," as Mr Matthew Arnold described himself; but a little research in old Budget speeches will show where the magnificent surplus went, and how little the Chancellor of the Exchequer was responsible for the "melancholy minus quantity."

Mr Gladstone not only left a surplus in 1874: he had also proposed to get rid of the income-tax, if but the electors would restore him to power. Mr Chamberlain, according to Mr Clayden, was not far from the mark when he described Mr Gladstone's address, containing these proposals, as "the meanest public document which has ever, in like circumstances, proceeded from a statesman of the first rank." Without adopting this rather rude estimate of Mr Gladstone's purposes, one may admit that it is not easy to see how he meant to do all that he intended to do. Sir Stafford, in his first Budget speech, wished to

1 66 Figures, Facts, and Fallacies." In 'National Review,' July 1883. 2 England under Lord Beaconsfield, p. 17.

"Call up him who left half told

The story of Cambuscan bold,"

and make him reveal his mystery. But the secret will never be revealed, at least in practice. In his letters to Mr Disraeli we find Sir Stafford much perplexed by his bequest. How was he to employ his surplus of over five millions? Deputations came all day suggesting this or that method of giving themselves a slice. Even before the elections, even before he knew that the cutting of the cake would fall to himself, he wrote:

"Take Gladstone's surplus, however, at five millions, and see what he has to do with it. He has, first, to relieve rateable property from a substantial amount of taxation; secondly, to take off the income-tax; and thirdly, I suppose, to remit the remainder of the sugar duties. The three operations together can hardly cost him less than seven millions, probably more; so there must be at least two millions to be provided by fresh taxation. How is this to be got? Not, I presume, by another match-tax. It must be by some kind of tax on realised property, and perhaps by licences on trades. You will remember what he said on this subject in 1853, when he pointed to the possibility of replacing the income-tax by a conjunction of three measures: one a tax upon land, houses, and visible property, of perhaps sixpence in the pound; another, a system of licences on trade, made universal, and averaging something like seven pounds; and the third, a change in the system of legacy duties. He then

1874.]

LETTER TO MR DISRAELI.

57

said that such a system would be, on the whole, more unequal and annoying than the income-tax, and that it would raise the difficult question of the taxation of the public funds in the most inconvenient form. I cannot help suspecting that if he were now to give us the details of his plan on the eve, instead of on the morrow, of a general election, he would find that a good many constituencies would say with poor Lord Derby, 'We prefer the gout.' What a funny view it is, after all, that Gladstone takes of the income-tax! It is, according to him, properly a temporary tax-a war-tax, admitted, however, into our financial system in time of peace for certain purposes of commercial legislation-requiring a temporary impost for their attainment, just as a war does. The purposes having been attained, one would expect him to say that the tax might be taken off, as it would have been at the end of a war. But no! It is manifest that we ought not to aid the rates and remove the income-tax without giving to the general consumer, and giving him simultaneously, some marked relief in the class of articles of popular consumption.' In other words, you find that the duties on articles of consumption are exceedingly high, and you believe that by reducing them largely, you can benefit the consumer without ultimately injuring the revenue, and if to cover the operation you lay a temporary tax upon property or income while the revenue is recovering itself, and if it ultimately does recover itself so that the temporary tax is no longer needed, still 'it is manifest' that you must not take off the temporary tax without still

further reducing or quite abolishing the duty on the article of consumption. What logic! Logical or not, I am afraid that it is true that the view is one which will so commend itself to the masses as to make it impossible to extinguish the income-tax without at the same time dealing with some tax on articles. of consumption. The truth is, that the income-tax has lost its temporary character, and has become a fixed element in our financial system, which now includes a much larger proportion of direct taxation than it did in 1842. So, then, whenever we reduce the incometax, we seem to be disturbing the balance between direct and indirect taxation, and disturbing it in favour of the wealthier classes, unless we reduce indirect taxes at the same time. To this, perhaps, we might resign ourselves; but in the present case there seems an additional absurdity, because it is not proposed simply to abolish the incometax, but to substitute for a portion of it some other impost on property, while at the same time it is acknowledged that the kinds of visible property which now bear local taxation ought to be relieved of a portion of their burden. In short, direct taxation is to be readjusted in order to cure its inequalities, and to render it fairer. This is a difficult task in itself, and why we should go out of our way to make it more difficult by imposing on ourselves the voluntary obligation to reduce some taxes on consumption at the same time, I cannot (except with reference to electioneering necessities) conceive. Upon the whole, I think we have a strong case for warning the country not to be misled or dazzled by the vague promises