Mr. S. HERBERT then moved the Supplemental
Estimates for the Army, prefacing the motion
by a statement of various details and arrangements
connected with the additional force proposed to
be raised, including a more uniform regimental
system. The number to be now voted was 14,799 of
all ranks, which would raise the number of the land
forces to 40,493 above that voted last year, or, 142,000
men. It was difficult, he observed, to calculate the
expense of this augmentation, for we had never raised
more than 40,000 men in a single year. The estimate
for the force now to be voted was £300,000, which made
the total increased charge, in addition to the army
estimates of last year, £1,132,470.—The votes were agreed
to, after some discussion with reference to the militia, and
to the projected reorganisation of the army.

Mr. MONSELL next moved the Supplemental
Ordnance Estimates involved in the votes already agreed
to, explaining the nature of the different items,
amounting in the whole to £742,132.—The votes were
agreed to with very little discussion.

On Monday, May 8, in a committee of ways and
means, the CHANCELLOR of the EXCHEQUER moved the
Financial Resolutions of which he had given notice.
He reminded the committee that towards the end of
February the government had proposed, and the house
sanctioned, such an augmentation of our expenditure as
entailed an addition to the taxation, which was made in
the form of doubling the half-yearly payment of the
income-tax. At that period, however, war had not been
declared, and it was impossible to estimate what might
be the expenditure upon the footing of war. The
demand he had then made, therefore, was not adequate
to such a state of things, and he had stated at the time
that, in the event of the calamity of war, it would be
necessary for him again to appeal to the house for an
increase of our resources. That office he had now to
discharge; but, before he addressed himself to this duty,
he was bound, he said, to advert to an accusation made
within these walls and elsewhere, that not only was the
government liable to great discredit for the manner in
which they had dealt with the finances of the country,
but that he (Mr. Gladstone) was unfit to be intrusted
with the duties of that department. It had been stated
that there had been a gross mismanagement of the
unfunded debt; that, in the spring of last year, the interest
of exchequer bills had been rashly lowered, causing a
violent reaction, and that the rate of interest was now
unusually low, the result having been a loss to the
country. This charge, he observed, was a serious one,
since the unfunded debt was a great resource in time of
war. The operation was not hastily or thoughtlessly
made, but deliberately; it was founded upon two
principles—first, that the public were entitled to borrow
money on the best terms; second, that in order that the
unfunded debt might be carried to the full height of its
power in difficult times, it ought to be got within narrow
limits in easy times. Mr. Gladstone then entered into
copious details, in order to show the soundness of the
principles upon which the operation upon the interest
of the unfunded debt had been made, and that a gain,
not a loss had been the result. He next noticed a second
series of accusations brought against him, with reference
to the abortive scheme for discharging or converting a
portion of the funded debt—namely, that, in spite of
adverse times and the warnings of the wise, a scheme
had been attempted by the government resulting in a
loss, which was not to be attributed to changes of
circumstances, the approach of war, or the state of the
harvest, but to the folly and precipitancy of the measure.
He regretted, he confessed, that the scheme had been
brought forward, but not because the result had been a
pecuniary loss, for that had not been the result; and he
proceeded to argue, from the amount of bullion in the
Bank and the state of the circumstances, that the
measure, tested by those circumstances, was expedient
and wise. The only real objection to the scheme, he
observed, was the alleged inconvenience of withdrawing
from the Exchequer a large amount of money—namely,
£8,000,000, to liquidate the demands of the holders of
paid-off stock. Around this point, he continued, a
mass of misapprehension had gathered. The public had
been led to believe that a large amount of money had
been demanded by the government from the Bank of
England; that these demands had been made in violation
of the spirit of an agreement between the government
and the Bank in 1844; that they had been made
without due notice given to the Bank; and that the
advances by the Bank had been made with great detriment
to trade, and at a very low rate of interest. He
examined successively and repelled each of these charges,
showing that the maximum advances by the Bank to the
19th of April amounted to only £1,350,000, out of which
£830,000 was due to the rapid growth of the charges
connected with the expedition to the East; that the
average debt of the government to the Bank had been
£900,000, and that the debt was now extinct. In the
course of his examination he adverted to the subject of
deficiency bills, which he thought had been the chief
source of these delusions. Mr. Gladstone then
developed the views of the government respecting the
existing state of the finances. The statement he had
made on the 6th of March showed that, with the
additional half-year's income-tax, the total revenue
would be £56,650,000, and the expenditure £56,189,000
leaving a surplus of £467,000. Since then new estimates
had been framed for the navy, the army, the ordnance,
and the militia, which left an amount to be provided for
of £6,000,000. Some provision must be made besides
for unknown charges; he put down for this a sum of
£850,000 (in addition to £1,250,000 already estimated
under this head), for which sum he should ask a vote of
credit, applicable to services which might arise in the
course of war. The result was, that the amount for
which he asked the committee to provide, in addition to
the sums already granted, was £6,850,000; and the
conviction of the government was, that this amount
ought to be provided by an addition to the taxation of
the country. They proposed to execute the intention
they had formed in case of a further demand, namely,
to repeat the income-tax operation already made, and to
double the tax, asking the committee to grant this
augmentation for the period of the war. The produce
of this tax would provide for two-thirds of the
expenditure, and then came a grave question—how the
remainder was to be provided for. Although aware of
the value of the income-tax for the purpose of war, the
government were not inclined to push it at once to
an extreme point, nor was there any other direct tax to
which they were disposed to have recourse. With
respect to indirect taxes, they did not intend to alter the
rate of postage, to re-impose repealed duties, or to
meddle with the duties on tea or tobacco; and, in
resorting to articles of consumption, they selected those
in which the taxes would least interfere with trade or
innocent enjoyment, and would make the smallest
deductions from the comforts of the people. First, they
proposed to augment the duty on spirits in Scotland 1s.
per gallon, and on spirits in Ireland 8d. per gallon; the
estimated gain was £450,000. In the next place, they
proposed to classify and readjust the sugar duties,
which would involve no present increase of duty, but
would add to the duties that would be otherwise payable
after the 5th of July from 1s. to 1s. 6d. per cwt. The
gain upon this modification of the sugar duties would be
£700,000. These three sums amounted to £4,400,000,
leaving still £2,450,000 to be provided for to meet the
additional charge of £6,850,000. There was therefore
yet another step to be made, and the government
proposed to make that step by the augmentation of the
duty on malt, being convinced that, in combination
with the increase of the spirit duties, and the modification
of the sugar duties, it was the fairest mode
of giving effect to the principle upon which they had
determined to act—namely, that, this war having been
undertaken not for the benefit of any particular
class, but with a view to national interests and honour,
the charge ought to be fairly distributed among the
different classes of the community. In increasing the
malt duty from 2s. 9d. to 4s., the rate would be still
lower than before 1801, much lower than in 1802, and
less than half of what it was during the war from 1804
to 1810. The net receipt from this additional duty
(deducting 5 per cent. for diminution of consumption)
would be £2,450,000, and, adding this to £4,400,000,
the total would be the sum he asked the committee