insensible to argument and experience. Bright was a sublime master of the English language: Cobden had figures at his fingers' ends and supported them with compelling logic. Both were careful to eschew the argument that the manufacturers desired cheap bread as a means to cheap labour. They concentrated on landlords' monopoly, on the disturbance which the laws caused to the natural course of commerce and on the hardships which they imposed upon the poor. Down to the summer of 1845 Peel showed no signs of surrender. His policy was to associate the reduction of protection to agriculture with general tariff revision and to press for an uncontroversial solution through a gradual approach to free trade. Convinced of the intrinsic strength of English agriculture, he tried to make his friends see that they had other sources of revenue than wheat and that improved communications by road and railway were extending their markets. The low price which they had to fear, he contended, was the low price which comes from inability to purchase. But in October 1845 the failure of the Irish potato crop compelled Peel to open the Irish ports to wheat and to purchase American maize for the famine-stricken population of Ireland. In the state of public feeling the remission of duties for Ireland meant their remission for England; and once remitted, Peel was convinced they could not be reimposed. Therefore, in November 1845 he asked his Cabinet to consider repeal. Failing to carry the Cabinet with him he resigned, but Lord John Russell, who had declared for free trade in corn on November 22, 1845,1 was unable to form a government; and (December 20) Peel came back to carry repeal, supported by the leading members of his former Cabinet with the exception of Lord Stanley. The bill was introduced forthwith, and in the face of a running fire from Disraeli and Lord Bentinck, the leaders of the Tory revolt, it reached the Statute Book on June 26, 1846. The Act specified that from the date of its passing to February 1, 1849, small duties varying with the home price should be paid on imported grains and that on and after February 1, 1849, there should be a uniform registration duty of Is. per quarter. The registration duty lasted till 1869.

Repeal having been carried, the League dissolved in a chorus of self-congratulation. But Peel had to pay the penalty. In Ireland famine was followed by disorder, which called for a Coercion Bill. On this he was defeated by a combination of Irish, Whigs and Protectionist Tories-' some for the love of Ireland, more for hatred of Peel.' From 1846 to 1850 he was in

1. Edinburgh Letter to the Electors of the City of London' (Sir Robert Peel's Memoirs, II. 175-179).

opposition, supported by some of his former colleagues and lending a friendly support to the free trade measures carried by his successor Lord John Russell. On June 29, 1850, he was killed by a fall from his horse on Constitution Hill.

2

All parties, including those who supported repeal, while regretting the occasion of it ('Rotten potatoes,' said the Duke of Wellington, 'have done it all: they put Peel in his d-d fright '), were agreed that Peel alone could have carried it.1 In the opinion of Charles Villiers' half the commercial men in the City would have been against it had it been attempted by Lord John or anyone else.' Thus once again the strong Tory saved his country. By and by, as I believe,' wrote Carlyle from Chelsea, all England will say what already many a one begins to feel, that whatever were the spoken unveracities in Parliament-and they are many on all hands, lamentable to gods and men-here has a great veracity been done in Parliament, considerably our greatest for many years past, a strenuous, courageous and manful thing, to which all of us that so see it are bound to give our loyal recognition, and such furtherance as we can.' 3

Repeal did not bring to British agriculture the disaster that was anticipated by many. For in the fifties and sixties the Crimean War and the American Civil War obstructed foreign supply. The Franco-Prussian War of 1870 stimulated a trade boom in which all British industry, including agriculture, shared. But in the late seventies the deluge descended. The bogey of 1815 was a Polish bogey which never materialised. The bogey of the seventies was a real bogey from across the ocean. Its feet were ships of British steel, its arms railroads stretching across the prairies, and in its belly was Chicago wheat. Other countries of Europe protected their farmers against the American invasion by tariff walls, but Great Britain remained faithful to free trade and for this there were three reasons. (1) She had free trade in all other things. (2) She depended on foreign food more than any other country. (3) She had no peasant proprietary. The people considered that wealthy landlords and substantial farmers had backs broad enough to bear the shock.

Section 5. The Multiplicity of Economic Problems in the Forties

The tariff and the Corn Laws supplied the fighting part of Peel's great ministry, but it was not of these only that he was

1 C. C. F. Greville, The Greville Memoirs, 2nd Part, II. 351.

2 C. S. Parker, Sir Robert Peel, III. 352.

3 Ibid. III. 378. Carlyle to Peel, June 19, 1846.

thinking when he welcomed his escape from the intolerable burden of office.'

In the forties Great Britain was engrossed in the promotion and building of railways; and the procedure which Parliament adopted to authorise and control this economic novelty was such as to consume an inordinate share of the time of responsible ministers. Peel spent endless hours on railway committees. We cannot say that he left any distinctive mark on railway policy; but just as he improved the Penny Post in 1843 up to the point of one free delivery daily throughout the country, so also he was behind the legislation of 1844 which compelled the railway companies to run one 'parliamentary' train per day with third-class coaches at a charge of one penny a mile. Cheap postage, cheap travel, cheap food-thus Peel pursued the policy of social plenty.

In the forties the factory reformers were pressing for a tenhour day as energetically, if not with such elaborate unity, as the Anti-Corn Law League pressed for repeal. Factory legislation fell to Graham as Home Secretary, but Peel had once been Home Secretary and was he not the son of the man who had introduced the Factory Act of 1819? Deputations from the Short-time Committees waited on him and Graham. By reason chiefly of the conflict between Churchmen and Nonconformists over the educational clauses, Graham's Act of 1844 (7 & 8 Vict. c. 15) achieved little. The Ten Hours Act was not passed till 1847. Factory reform involved a call on Peel's time altogether disproportionate to the results achieved, while he was in office.

In 1844 the Bank Charter Act was passed separating the Note-issuing Department of the Bank of England from the Banking Department and compelling the Bank to hold gold against notes, pound for pound. Having watched the currency with expert eye since 1819, Peel was convinced that the convertibility of the note issue must be placed beyond doubt. He therefore favoured the 'currency' school, of which S. J. Lloyd, later Baron Overstone, was leader, in opposition to the banking school, which held that freedom of competition and immediate convertibility into coin at the will of the holder would prevent the notes of banks from being issued in excess. A modern writer 1 with protectionist leanings sees in this a surrender to high finance, part Jew, part Nonconformist, to whose interest (he argues) it was that the currency should be contracted and the price of money high. But Peel must be allowed to answer for himself. In a Cabinet Memorandum of 1844 he set out the three possible courses: (1) to maintain the status quo, as the banking 1 Bernard Holland, The Fall of Protection, ch. v.

school urged; (2) to abolish note issue by the Bank of England and other banks, leaving the Government to supply notes, as the most advanced advocates of the currency school urged; (3) to leave the note issue in the hands of the banks but under legal restriction. The third course was adopted in the Act of 1844; and Peel favoured it as being midway between the other two. A crisis, he saw, might still occur; and if it does and if it be necessary to assume a grave responsibility for the purpose of meeting it, I dare say men will be found willing to assume such a responsibility.'1 A crisis occurred in 1847, but having suspended the Corn Laws which were his party's heritage, he was no longer in office to suspend the Bank Act of which he was the sponsor.

CHAPTER IV

GLADSTONE, 1809-1898

Section 1. Gladstone and his Generation. Section 2. Completion of Free Trade. Section 3. Direct Taxation and the Income Tax. Section 4. His Method of Indirect Taxation. Section 5. Conclusion.

WILLIAM EWART GLADSTONE, 1809-1898, was the son of the Liverpool merchant, Sir John Gladstone. Elected to Parliament as a Tory in 1832, he served his cabinet apprenticeship under Peel, as President of the Board of Trade (1843-5) and Colonial Secretary (1845-6). He had two passions in life, finance and the Church of England. When Peel raised the Government grant to the Roman Catholic College of Maynooth in Ireland, Gladstone resigned because, although he approved of the step, it conflicted with views which he had expressed in print. Therefore for the greater part of 1845 Peel was without his ablest lieutenant. But in the crisis of 1845-6 he was again at Peel's side, going out with him in 1846, and after eight years of uneasy exile he returned to office in 1852 in a coalition Government of Whigs and Peelites under the Earl of Aberdeen. Thenceforward he was the leader of Liberalism, first its financial and then its political leader. He was four times Chancellor of the Exchequer and four times Prime Minister, Chancellor for the first time 1852-5, Prime Minister for the last time 1892-4. As a politician he had an opponent of equal calibre in Disraeli; as a financier he dominated his generation. Outside Gladstone only three men left any mark on the national

1 C. S. Parker, Sir Robert Peel, III. 140. Peel to the Governor of the Bank, June 4, 1844.

finances in this generation: Stafford Northcote, Disraeli's Chancellor, 1874-80; G. J. Goschen, Lord Salisbury's Chancellor, 1886-92; and Vernon Harcourt, Gladstone's own Chancellor, 1892-95; and the combined achievements of the three were far less than his alone. But curiously enough they succeeded in fields where he did nothing or made his few mistakes.

Gladstone, though chiefly responsible for the fact that the Crimean War made no permanent addition to the National Debt, did comparatively little to reduce the debt which he inherited from the past. In 1875 Northcote introduced the New Sinking Fund. The interest on the debt then amounted to £27,200,000. Northcote proposed a debt vote, rising by two stages to £28,000,000 and then remaining constant, so as to afford a surplus of £800,000 for debt redemption the year the fund came into operation and an increasing surplus each subsequent year as stock was bought up and cancelled. The merit of the scheme was that by giving a more regular action to the process of annual debt redemption it caused taxation to be maintained at a higher level than it otherwise would have been. But of course it was not war-proof, and before the end of his term expenditure on a Zulu campaign caused him to raid his own fund.

In 1853 Gladstone launched a conversion scheme which, owing to the outbreak of the Crimean War, was an embarrassing failure. In 1888 Goschen reduced the interest on three per cent. Consols which were then standing above par. Holders received 23% down to 1903 and 21% thereafter, but they had to decide between repayment at par and a lower rate of interest in 1888 when the scheme as a whole was presented to them. They could not exercise that option in 1903 when the second step came into operation and Consols were under par.

In 1853 Gladstone extended the succession duty on real property, but in 1860 found himself short by a million of the yield estimated in 1853. For, as had been discovered by the later date, real property passed in the direct line in a much greater number of cases than personal property; and therefore' while the revenue from this source attains its maximum more slowly than we anticipated, that maximum itself will also be lower.' 1

In 1894 Harcourt consolidated the death duties with success, grouping the various complicated duties and abolishing the privileged status of real property. The result was two duties: the main estate duty, which is calculated on the value of the estate as a whole and in which large estates pay proportionally more than small; and the legacy and succession duty, which varies with the degree of kinship. The death duties are imperial taxes,

1 Speeches, ed. A. T. Bassett, p. 262.