Page:Encyclopædia Britannica, Ninth Edition, v. 9.djvu/199

 FINANCE 189 which was the abandonment of the excise on beer in 1830, and that on printed cottons in 1831. It is an apt illustra tion of the effect induced by such duties as this, that within a very short time the price of cottons fell below the amount (3id. a yard) which was levied under the old excise. But, on the whole, little was done for a systematic financial reform during the period which elapsed between the death of Mr Huskisson and the defeat of the Melbourne administration. One change of great importance was made in the adoption of Mr Rowland Hill s plan of the penny postage. This scheme involved the immediate sacrifice of revenue to the amount of a million and a quarter, but it gave a considerable impetus to trade, and rendered the discussion of those further fiscal reforms which were effected by Sir Robert Peel easy, perhaps possible. Sir Robert Peel s ministry was formed in September 1841, and had before it a task of no common magnitude. For five years the average deficiency of the revenue, according to Sir Stafford Nortbcote s statement, had averaged a million and a half, the year in which Sir Robert Peel took office having been characterized by the largest deficiency. The cause of this was that the revenue had fallen short of the estimates ; in other words, the financial system of the country was fundamentally vicious. The reforms which Sir Robert Peel immediately determined to bring about were greatly assisted by the information obtained from Mr Joseph Hume s report of 1840, which stated &quot;that the tariff contained 1150 different rates of duty chargeable on imported articles, besides others imposed on all unenu- merated articles ; that there was no principle in the finance of the country, some duties being levied for the sake of revenue, some for that of protection ; that serious detriment to the home consumer ensued from the differential duties in favour of the colonies ; and that of 8G2 articles chargeable with duty 147 paid no duty at all, while 17 articles sup plied 94 per cent, of the revenue, 29 others 4 per cent, more, so that 816 articles yielded no more than 2 per cent, of the revenue, though the imposition of the customs duties was a serious hindrance to trade and manufactures.&quot; In drawing up his budget of 1842, Peel had three ex pedients before him. One was to adjust the corn laws, so as to make thenupress less heavily on the consuming and manufacturing classes ; the second, to reform the tariff ; the third, to obviate the constant deficit in the revenue. The first was undoubtedly the most pressing. The depres sion of trade and manufactures in 1842 was so serious, and the remedy in a repeal or great reduction of the taxes on food was so obvious to all rational persons, that the measure was in the highest degree expedient. But Peel could not as yet venture upon it ; the mere proposal to levy a foreign fixed duty on corn had more than anything else contributed to the downfall of the Whigs in 1841, and the measure was postponed till it was yielded to famine and agitation by an angry and disappointed faction. Sir Stafford Northcote, in discussing the fact why the Whigs were the freetraders and the Tories the protectionists in 1842-46, says he sees no particular reason why this phenomenon should have been exhibited, judging from the antecedents of the two historical parties, and he inclines to believe that the Whigs were discredited in the eyes of their opponents by their associations with the Radical party. But the solution of the question is not far to seek. The reforms of Mr Huskisson applied solely to commerce and manufactures, to colonial interests, and to some local industries. Most of those who represented such interests were alive to the fact that protection was no longer neces sary for them, or that it was inexpedient that the consumers of colonial produce should be exceptionally taxed in order to give a subvention to colonial planters and their agents. The majority which supported Peel would have been on the whole indifferent to such financial reforms as simply affected manufactures and foreign trade. As consumers, they were benefited by the cheapening of such produce ; as producers themselves, they had wit enough to discern that the general prosperity of the country improved the market of the agri culturist. But when it came to be a question whether the artificial prices which the sliding scale was supposed to bestow on farmers and landowners should be abandoned, they were convinced that their interests were being sacrificed ; and though they constantly tried to alarm the public with the bugbear of dependence on foreign supply, they frequently admitted that the struggle on their part was to maintain the existing level of their rents. In the 18th century, especially in its earlier half, the country gentlemen would have had no difficulty in accepting free trade, provided they could escape the land tax, for the produce of the country was on an average in excess of ita wants; in the first half of the 19th century, they were firmly convinced that all their interests were bound up in the sliding scale, and it must be admitted that the Ricardian theory of rent, now become popular, gave them certain grave scientific reasons for the belief which they entertained. The estimates which Sir Robert Peel formed suggested that, if the House would accept his new system of finance, he should be in the possession of a surplus of ,1,800,000. The greater part of this sum he proposed to devote to the remission of taxation, the particulars of which may be found in the works of Sir Stafford Northcote, of Mr Tooke, and Mr M Culloch. The estimates, partly from some singular oversights of Sir Robert Peel, partly from the fact that the distress of the country was too serious to be cured by trifling remedies, were a failure, for the receipts of the exchequer, notwithstanding the new taxes which Peel imposed, were two millions less than he anticipated. The process by which the minister sought to put the finances of the country on a sound basis, and to provide a siirplus in future years, was the income tax, an impost which had been decisively rejected in 1816, but was now reimposed for five years at 7d. in the pound. The character of this tax of 1842 varied a little from the old tax of 1803, 1805, and 1808. The limit of exemption was fixed at .150 a year, the old schedules were retained, but the farming classes were specially favoured. The rate previously levied on these persons had been three-fourths of the tax imposed on those who are comprised in the other schedules. In 1842 it was made one-half. The income tax was not extended to Ireland, but a higher tax was put on Irish spirits, and on the whole the Irish and English stamp duties were equalized. The question has been raised, whethsr, in case the corn laws had been at once repealed, it would have been necessary to impose the income tax. It is probable that the answer should be in the negative. But apart from the difficulties in the way of a measure which would certainly at this time, as it did four years afterwards, have roused the most angry feelings, it may be safely stated that Peel s proper business was to establish a surplus, and to effect this in the surest way possible. He could not have suc ceeded in imposing a just property tax, for such a tax would have been nearly as unpopular among his supporters as a repeal of the corn laws. He therefore imposed an income tax, and though the scheme was criticized adversely, both in the Commons and the Lords, it was carried by over whelming majorities in both Houses, the arguments against the tax being summed up with great precision in the pro tests of Lords Radnor and Western. The income tax has since always figured in the budget, and it cannot be denied that, whatever objections may be alleged against its equity, it secured the end which Peel had before him, and has