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Northcote was eventually carried out by Lord Mayo. He also desired a more systematic employment of natives in the public service (, Life, vol. i. ch. ix.;, Life of Lord Lawrence, vol. ii. ch. x.; Speech on the Government of India Amendment Bill—ultimately withdrawn—23 April 1868; and on the Indian Budget 12 Aug. 1868). Northcote advocated the Abyssinian expedition (speech of 27 Nov. 1867), even when some of his colleagues wavered; but his argument addressed to Lawrence, that India ought to pay for her contingent, was not convincing. On the capture of Magdala, he was warmly praised by Mr. Gladstone for his conduct of affairs (2 July 1868). Later on, however, he was challenged (8 June 1869) for the excess of the costs over the original estimate, some 3,300,000l.; but Mr. Candlish's select committee, though containing a majority hostile to Northcote, negatived the conclusions of its chairman without a division. Before leaving office (December 1868), Northcote, though by no means rich, gave 1,000l. to hospitals and other institutions in India.

Meanwhile Northcote, having resigned his seat at Stamford, had been returned at a by-election for North Devon (9 May 1866). Again successful at the general election of 1868 (21 Nov.), he was returned unopposed on 5 Feb. 1874, and 5 April 1880 with Sir Thomas Dyke Acland, a liberal colleague. In 1869 he went on a yachting cruise with Sir George Stucley, and was present at the opening of the Suez Canal (17 Nov.) Elected chairman of the Hudson's Bay Company in January 1869, he was its governor from March 1869 to March 1874. On 24 March 1869 he persuaded the company to accept 300,000l. in return for the transfer of Prince Rupert's Land to the Canadian government. As difficulties existed between the home government, Canada, and the company, Northcote undertook to collect information, and left England on 6 April 1870. He started home again on 28 May, having visited New York, and ' gained a clear idea of American hostility, Fenian intentions, and the general medley of the situation' (Life, i. 338). His private opinions were that the British government had behaved shabbily in the matter of compensation for the half-breeds' raids, and supinely in not sending a lieutenant-governor to occupy the Red River district, and so averting the necessity of Colonel (now Viscount) Wolseley's expedition. In June 1871 he delivered an important speech to the company on the reorganisation of the fur trade.

On 13 Feb. 1871 Northcote joined the high commission which had been despatched to arrange various matters of dispute between Great Britain and the United States. His colleagues were Earl de Grey (the present Marquis of Ripon), Lord Tenterden, our ambassador (Sir E. Thornton), Montague Bernard [q. v.], and the Canadian commissioner, Sir John Alexander Macdonald [q. v.] The questions at issue were the Alabama and other claims arising from the American war, the Canadian fisheries, the San Juan boundary, and other international complications. Northcote's separate action cannot be traced in the official protocols (Parl. Papers, 1872, vol. xliii.), but it may be gathered that he wished to break up the conference on the San Juan dispute (Life, ii. 15). The treaty of Washington was signed, however, on 8 May 1871, and Northcote wrote to Disraeli that the settlement was `a fair and just one, giving no triumph to either party, containing nothing dishonourable to either, and having the merit of laying down principles which may be useful in the future.' He afterwards maintained, both in a speech at Exeter, 19 May, and in a letter to Lord Derby, 5 June 1872, that the American commissioners promised to abandon the indirect claims, and the language of protocol xxxvi fairly bears out his interpretation. On 6 Feb. 1873 he warmly defended the British commissioners from the charge of having thrown over the Canadians. On his return to England Northcote was gazetted (14 Jan. 1871) president of the commission appointed to inquire into the working of the friendly societies. According to his domestic letters, they discovered `lots of jobs,' and showed 'the rascality of a lot of scamps,' and the reports bear out the assertions (Parl. Papers, 1871 vol. xx., 1872 vol. xxvi., 1873 vol. xxii., and 1874 (with index) vol. xxiii.)

In Disraeli's ministry of 1874 Northcote, on 18 Feb., was appointed chancellor of the exchequer. His Friendly Societies Bill, introduced on 8 June, was withdrawn on 22 July, having passed its second reading. Brought in again, the second reading was carried without a division (25 Feb. 1875), and the measure became law on 11 Aug. It was criticised for its permissive character and the absence of compulsory supervision, but Northcote replied that government control was inexpedient in such cases (speech at Manchester, 8 Dec. 1875). His first budget was introduced on 16 April 1874, and in discussing the financial situation with Disraeli he pointed out that, contrary to Mr. Gladstone's view, the income-tax had lost its temporary character, and had become a fixed part of the fiscal system. In his speech Northcote acknowledged a surplus of 5,500,000l., and this he was accused of having frittered away. As a matter of fact he abolished the