£
Surplus of last year 1,700,000
Additional from general improvement 400,000
Additional malt by reducing beer duties 500,000
Increased duty on spirits 500,000
Reducing Four per Cents 750,000
Savings 1,400,000
Ireland, soap, &c. 450,000
Stamps 200,000
---------
5,900,000
4,500,000
---------
1,400,000
There may have been more; but he spoke, and I write from memory.
I told him I thought that with a diminished duty on beer and an increased
duty on spirits he could not expect an increase of 500,000£ on spirits. He
admitted that was the weak point. He said he was sure we could not carry an
income tax while we had a million surplus. If we have a good harvest, I
have no doubt the increase on malt will be great; but I apprehend there
must be a repayment of beer duties, and if there should be, the loss will
be enormous.
_March 8._
Sent Mr. Elphinstone a letter giving an account of the travels to the North
of the Paropamisan range into Cabul.
The Duke said we really must look out for a new Governor-General. I
suggested Hardinge. He said Hardinge had not as yet station enough in the
opinion of the public, in the army, or in Parliament. He wished him to be
Secretary in Ireland. It would have been much better if he had gone there
instead of Lord F. Gower, and Lord P. to the War Office. To be sure, then
we should not have had the reductions Hardinge had effected. He had, as I
knew, always wished Hardinge to go to Ireland.
I observed that Hardinge was rising every day in public estimation, which
the Duke acknowledged, and I added that I was sure none would do the duty
better, for he had firmness and habits of business. The Duke seems to think
of Elphinstone. He said he was a very clever man. I told him I had been an
hour and a half with Elphinstone last night. I told the Duke all my notions
respecting individual responsibility, members of Council, &c., and that I
had begged Elphinstone to think of them. The Duke seemed generally to
approve of them. It seems Lord Wellesley never would go to Council. I do
not wonder at it; but the Duke used to tell him he was Governor-General _in
Council_--that he ought always to go there.
_March 10._
Dined with the Duke. Cabinet dinner. Only the Peers there. The others
detained by Lord Palmerston's motion on Portugal, on which there was a
majority of two to one, 150 odd to 70 something. Huskisson made a very bad
dull speech. We talked about a successor to the Speaker. They seem to think
he will not resign now, as he would not get a good pension in the present
temper of the House.
The candidates are Sir J. Beckett, Littleton, G. Bankes, Wynn of course. I
mentioned Frankland Lewis as a good man, which he would be. I dare say the
Chairs will think he should be elected unanimously.
It seems there must be a Bill of Indemnity for not taking the declaration,
two Bishops, Chester and Oxford, not having taken it. The Duke finds he has
at Dover, as Lord Warden.
We had some little conversation about the income tax, which the Duke is
very hostile to, and I am glad we shall not have it.
_March 11._
The Russians have at last sent their reply to our expostulatory note. I
have not had time to read it. Lord Heytesbury calculates that the last war
cost them 12,000,000£, but they endeavour to conceal the amount.
Peel told me the House was quite excited against the Bombay judges, and
that the division fairly represented its real opinion.
_March 12._
There was but one black ball in the election of Lord Clare, and the Chairs
think that was put in by mistake; no one objected.
_March 13._
Read Sir H. Parnell's pamphlet on taxation.
Cabinet room at two. I had only got half through the Russian answer when
the Cabinet met for the subject of taxation.
I rather expected to find that the Duke had had communications with
Goulburn, and that the idea of a property tax was given up. However, that
seemed not to be the case. It was determined the whole beer duty should be
given up in any case.
£
The expected revenue is 50,250,000
The expected expenditure 47,930,000
----------
Surplus 2,320,000
Add by reduction of Four per Cents 777,000
By 1_s_. 6_d_. on British,
and 2_d_. on Irish and Scotch Spirits 400,000
By stamps in Ireland 220,000
3,717,000
Deduct beer tax, £3,200,000, but the loss to
the revenue from the probable increase of malt,
calculated at 2,500,000
----------
1,217,000
Probable increase of revenue 450,000
----------
Sinking fund 1,667,000
The conversion of stock into annuities is proceeding at the rate of
1,000,000 pounds a month, and the increased annual charge already is
250,000 pounds. Certainly to this extent the estimated three millions of
surplus might be fairly reduced; but to reduce the surplus to 1,200,000
pounds or 1,600,000 pounds would be an entire abandonment of the system
adopted by the Finance Committee and the Government.
It seemed to me that the members of the House of Commons were all in favour
of the income tax; all the Peers against it. The Duke was strongly against
it. He apprehended the reduction of establishments, and particularly the
pressure of the tax on men of 1,200 pounds a year, and under.
If I imposed the income tax, I would make it the means of a thorough
reconciliation between the higher and lower classes. In this manner only
would it be effectual and make a strong Government.
I object greatly to Goulburn's deductions from the old income tax. He
excepts _occupiers_; that is, as regards land occupiers, quite right; but
he excepts manufacturing capital and capital engaged in commerce. Now, why
should the man who has 100,000 pounds in a manufactory, and makes 10 per
cent, on that sum, pay nothing, while the man who invests his 100,000
pounds in the funds gets only 3 1/2 per cent, and pays 5 per cent, out of
that reduced profit? The man who has a manufacturing or _commercial
capital_ is a _saving man_. He can afford to pay something to the State,
and why should he not? So the lawyer who may be making 10,000 pounds a
year is to pay nothing. If he takes 5,500£. a year and becomes a judge, he
pays 137 pounds 10 shillings. Yet his interest is still for life.
In all this there seems to me unfairness.
If the tax be imposed as it is proposed, it will be very difficult to
include afterwards the classes now exempted. It will be impossible to take
off the tax, and whenever a tax is unpopular, those upon whom it presses
will say, 'Take it off. It is only adding 1/4 or 1/2 per cent. to the
income tax.'
A real property tax is the fairest of all taxes--but an income tax is the
most unfair even when it affects all income; but when it affects the income
of some who have a life interest, and not the income of others in the same
situation, it is most unfair indeed.
It is quite erroneous to suppose that those who pay an income tax are the
only persons who suffer from it. The reduction of establishments, the
diminished consumption, the increased economy in every article of
expenditure on the part of those affected by it have necessarily the effect
of reducing the wages of labour. The labourer may buy some things cheaper,
but he has less wherewith to buy.
_Sunday, March 14._
Saw Hardinge at two. Told him how we stood as to the question of taxation.
He said he thought the income tax would be popular, but agreed with me in
thinking it should be established on strictly just principles.
Cabinet at three. Goulburn read a new statement showing the surplus this
year, if we reduced beer and leather, and next year too. The surplus this
year is about 2 millions. Next year about 1,500,000£.
The income tax reaches the funds, and the Irish, and the parsimonious, and
the rich--so far it is good, but it likewise reaches the man of 100£ a
year. It tends to diminution of establishments, to diminished demand for
labour. To create an alteration in demand generally.
It was proposed to exempt professions and trades. This was unjust, and it
would have led to an entire separation and hostility between the landed
proprietors and the united body of labourers and manufacturers.
These last would have joined on all occasions in urging a further and still
a further increase of income tax, and would never have consented to a tax
on consumption. The income tax would finally absorb all other taxes.
Another great objection to the income tax now is that it would have the
effect of perilling the reduction of the 3 per cents.
The Duke, Rosslyn, and I were decidedly against income tax. Lord Bathurst
and Lord Melville, as well as the Chancellor, less decidedly so, but still
in favour of abiding by the reduction of the beer and leather tax. Aberdeen
said nothing, neither did Sir G. Murray, so they were understood to go with
the majority.
Goulburn acknowledged the discussion had to a great extent changed his
opinion, and that he was not then prepared to propose the tax.
Herries seemed much in its favour; but more, as it seemed to me, because he
wished to maintain a large surplus according to the decision of the Finance
Committee than for any good reason. Peel was decidedly for a property tax.
He wished to reach such men as Baring, his father, Rothschild, and others,
as well as absentees and Ireland. He thought too it was expedient to
reconcile the lower with the higher classes, and to diminish the burthen of
taxation on the poor man. I accede to the principle; but I doubt whether
taxes on consumption do really press more heavily on the poor man than an
income tax. What he has to look to is not the actual price of the article
he wants, but the proportion which his wages bear to that price. It matters
little to him what the price of candles may be, if he has not money
wherewith to purchase them. That system of taxation is best for the poor
man which most tends to increase the funds for the employment of labour;
and every disturbance in the system, every alteration of demand, does
intrinsic mischief.
After this matter was decided, Peel behaving most fairly, and declaring he
would support the decision of the Cabinet whatever it might be, and that in
this case the decision of the Treasury was to be principally looked to, we
talked of Queen Donna Maria, in whose name Don Pedro has established a
Regency in Terceira.
I read Leopold's letter to Lord Aberdeen, in which he refers to his letter
of February 11, for the statement of his views in taking the Greek coronet,
saying that he only acceded from courtesy, and as a matter of form, to the
protocol, and further urging some alteration in the frontier. He has made
an application for a joint guarantee by the three Powers of a loan of
60,000,000 paras, or 2,400,000£. Now we only agreed to guarantee 50,000£ a
year, and that for troops. Nothing will be said upon this point till he has
withdrawn his letter. He seems to be Aberdeen's pet. I do not think, had
the Greeks searched Europe, they could have found a man whose character was
more congenial to their own.
_March 17._
Leopold has withdrawn his obnoxious letter.
_March 18._
House at five. Debate on the Duke of Richmond's motion for a select
Committee on the state of the labouring classes, and the effect of taxation
upon the productive powers of industry.
A most dull debate, till Lord Holland spoke. I answered him. Lord Lansdowne
next, then the Duke. I spoke, showing the impracticability of the
Committee. I however showed up Committees rather too much. This Lord
Lansdowne took hold of, not very fairly, but he did it well.
We had in the House 69; they 39.
With proxies we had 140 to 61. My uncle voted in the minority, and so did
Coplestone. Dudley, Lord Malmesbury, Lord Gower, voted with us.
The Whigs, Brunswickers, and Canningites were in the minority. The Duke of
Cumberland was there.
I find we have some recruits--in proxies Lord Lauderdale, Duke of Bedford,
Downshire, Lord Wilton; and Lord Jersey sits behind us. He has now Lord
Lauderdale's proxy. All this is consequent upon Lord Rosslyn's accession.
Lord Grey has now no one left. No one expressed a wish to turn out the
Ministers.
_March 19._
It seems that in the House of Commons Huskisson made a friendly speech,
finding he can do no harm, and Lord Althorp a very friendly one. In short,
everybody seems to be of opinion that the worst thing that could be done
would be to turn out the Government.
Peel says, and so does Herries, that the House is in favour of an income
tax. That what we have determined upon is the best for this year, but that
next year there must be an income tax.
Cabinet. Leopold wants more money. It was agreed he should have 70,000
pounds a year loan guaranteed to him for seven years, instead of 50,000
pounds.
The holders of 4 per cents. are to have the option of 100 pounds stock 3
1/2, or 70 pounds stock 5 per cents. Trustees may only convert into the 3
1/2 per cents.
_March 20._
Chairs at 11. They have made some alterations in the letter to the Indian
Government respecting their conduct, and have praised Lord William for his
_perseverance_, &c. This is contrary to the Duke's view and to mine. I
shall see whether I can allow their amendments.