Gladstone: A Biography (29 page)

This left him, as the incoming Chancellor, with a heavy obligation to coherence, as well as an heir’s desire to revive the Peel tradition of probity and courage. His need was not so much a
budget for a year as a system of finance for the third quarter of the century. This he was held to have produced, and his achievement in this respect, made the greater by his having to get his
proposals through a disparate Cabinet made up of men unused to working together and a House of Commons in which the government had no secure majority, laid the foundation of much of his subsequent
reputation. And rightly so, it may be said, for the 1853 budget (and its two 1854 successors) enabled the country to go through the Crimean War, which subverted the public finances of France and
Russia, in such a way that when he returned to the Exchequer in 1859 he found a platform of sound fiscal strength and a national wealth which had increased by nearly a fifth since his first impact
on the Treasury.

Alternatively it could be argued that the 1853 budget was a triumph more of personality than of prescience, that Gladstone got at least as many things wrong as Disraeli had done, and that the
centre-piece of his presentation was just as much of a rabbit out of a hat as anything which Disraeli had produced. What Gladstone indisputably did, however, was to set his proposals in a schematic
framework, and to argue for them from first principles, as well as with a wealth of historical and comparative fiscal analogy. The result was that he gave the impression of having brought a large
ship into a constricted harbour with unusual deftness controlling latent power.

The speech in which these qualities were displayed fully matched the importance of the ship which it steered. It took four and three-quarter hours, from approximately five o’clock to just
before ten on the evening of Monday, 18 April. The speech occupied seventy-two columns of Hansard and was the longest (although not by a very wide margin) that he ever made in the House of Commons
or anywhere else. Yet the sums of money with which it dealt were by modern standards derisory. The total size of the budget was £52 million. Even making a full allowance for the change in the
value of money and applying a factor of fifty, this would be the equivalent of a modern budget of just over £2½ billion, about 2 per cent of today’s actual total. The income tax,
the treatment of which was the central issue of suspense and controversy in Gladstone’s
budget, brought in £5½ million, the equivalent, after the application
of the fifty factor, of £275 million today, an amount shifted by the most minor modern adjustment of allowances.

None of this prevented the budget of 1853 sending out large political ripples, and maybe a few economic ones too. Gladstone had difficulty in getting it through the Cabinet. In this respect, as
well as in its length and in the near nullity of one of his principal measures, it was a worthy forerunner of the famous budget of 1909. Among those who were most querulous were Wood, the
unsuccessful Chancellor of the Russell administration, and Graham, close Peelite colleague though he was, who might himself have become Chancellor, but did not, when Aberdeen formed his government.
Palmerston also was strongly opposed to the succession duty on landed property which Gladstone introduced, and so indeed, in their hearts at least, were nearly the whole of the Cabinet.

On Saturday, 9 April, there began the nine-day climax of Gladstone’s several months of budgetary preparation. Fortified by a visit on the previous day to see the plans and site for
Panizzi’s Round Reading Room at the British Museum, he expounded his proposals to Prince Albert from 1.00 to 2.00 p.m. (unlike the more recent practice a pre-budget visit to the Sovereign
herself did not then seem to be necessary) and almost immediately afterwards gave the Cabinet a three-hour exposé. This left his colleagues sufficiently stunned (the Duke of Argyll, who was
to sit in Cabinets with Gladstone for another twenty-eight years, wrote that he ‘never heard a speech which so riveted my attention’) that there was practically no discussion at that
stage. But in the following week there were four argumentative Cabinets between the Monday and the Saturday. Morley summed up the position after the first of these with almost the blandness of a
Cabinet Secretary (which official was not to exist for another sixty-three years): ‘At the end of a long and interesting discussion, there stood for the whole budget Lord John [Russell],
Newcastle, Clarendon, Molesworth, Gladstone, with Argyll and Aberdeen more or less favourable: for dropping the two extensions of income tax and keeping half the soap duty, Lansdowne, Graham, Wood;
more or less leaning towards them, Palmerston and Granville.’
¹²

Gladstone seems to have dealt with this unpromising situation with exemplary patience. He did not fulminate and he did not for once threaten resignation, except on one point which he described
as ‘the breaking up of the basis of the Income Tax’. He relied on his mastery of the detail and on the solidity and consistency of his scheme, which he rightly opined would lead to the
waves of opposition breaking in
contrary directions and leaving his steadily steered ship to sail down the middle. It took fifteen and a half hours of Cabinet discussion to get
the budget approved, but it eventually emerged unscathed: ‘Thus the whole Cabinet after finding that the suggested amendments cut against one another ended by adopting the entire Budget
– the only dissentients being Ld. Lansdowne, Graham, Wood, S. Herbert. Graham was full of ill auguries but said he would assent and assist. Wood looked grave and said he must take
time.’
¹³

It was permission to move to the next and public stage, but it was hardly a confidence-giving endorsement for a young and first-time Chancellor. Clearly the other putative Chancellors, Wood and
Graham, sat glowering like the two ugly sisters. Lansdowne was a very senior Whig, seventy-three at the time, who had himself been Chancellor nearly fifty years before. And Gladstone’s
beloved Sidney Herbert, it might be thought, behaved with less than the loyalty of a close friend, particularly as he had just taken the Gladstones to the Herbert family house at Wilton for a
four-day Easter week break, the Chancellor’s only interlude in the long run-up to the budget.
³⁸
Nor was the solidarity of the Peelite front wholly
restored at this stage by the Prime Minister. Aberdeen’s salient comment, ‘You must take care your proposals are not unpopular ones,’ was no more notably constructive than it was
supportive.

Gladstone was undismayed. On the Sunday after the last of the five Cabinets he went to church twice, wrote a small ration of letters, saw Herbert and Newcastle and read Dante’s
Paradiso
, but ‘was obliged to give several hours to my figures’. On the Monday he ‘devoted [himself] to working on [his] papers and figures for this evening’, but
drove and walked with his wife before going to the House at 4.30 and starting his marathon oration a quarter of an hour later: ‘my strength stood out well thank God’. At eleven
o’clock, about an hour and a quarter after sitting down, ‘the Herberts and Wortley’s came home with us and had soup and Negus [hot sweetened wine and water]’.
³⁹
By that time he knew that the presentation of the budget had been a triumph, but recorded it
modestly, merely writing ‘Many kind
congratulations afterwards.’ By the next day, however, he had graduated to: ‘I received today immeasurable marks of kindness, enough to make me ashamed. . . . But my life is wholly
unworthy of these consolations.’
¹⁴

How was the triumph secured, and what made a budget which had received such a battering in the Cabinet so acclaimed in the House of Commons, and hence, when the crunch was over, the subject of
so much enthusiastic congratulation by his hitherto querulous colleagues? Primarily, it was the sense of command over both circumstances and his material which he conveyed, and in particular the
t
our de force
, at once masterly and impudently bold, with which he dealt with the vexing and central subject of the income tax. Gladstone’s essential dilemma was that nearly everybody,
including himself, had pronounced themselves against this unpopular tax, but that there was no way in which he could attain his main objectives of prudent finance and a further simplification and
reduction of indirect taxes (in the conviction that such reduction would in the medium term increase both national prosperity and the tax yields) without relying on the income tax for at any rate
some years to come.

The history of this tax was that it had been first introduced by Pitt in 1799 after six years of improvident financing of the French War, was allowed to lapse in 1802 with the Peace of Amiens,
but was reintroduced in 1806 in a stronger form and was retained until after the victory of 1815. When in operation it transformed the basis of war finance and enabled most of the cost to be
covered by current revenue. Nevertheless the overhang of debt from previous borrowing in the years of poor trade and unrigorous finance between Waterloo and Peel’s coming to power in 1841 was
formidable in relation to the small resources available to successive Chancellors. In the quinquennium from 1836 to 1840 debt charges accounted for 58 per cent of central public expenditure,
leaving 25 per cent for defence and only 10 per cent for the whole business of civil government.
⁴⁰

Peel in 1842, when he wished both to replace Whig deficits with Conservative rigour and to lead an attack on the labyrinth of indirect taxes, reintroduced Pitt’s income tax, and did so at
the same rate of sevenpence in the pound (or 3 per cent) which had applied from 1806 to 1816. He did it upon a three-year basis, which meant that, with two reluctant renewals, it survived until
1851. Then Stanley brought the
Tories strongly out against the tax, and Russell’s dying Whig government succeeded in getting it extended, for one year not three, only by
accepting a select committee to improve the methods by which it was assessed and collected. Gladstone wisely refused to serve on that committee, which searched for a method of differentiating
between realized and precarious incomes, or unearned and earned ones as they would be called today, but ended by finding this as impracticable as it was desirable. Disraeli, however, first
jettisoned the declaration of Stanley (by then both Derby and Prime Minister) by renewing the tax for another year in his 1852 spring budget, and then attempted differentiation (which implied
permanence) in his ill-fated December one. An attack on the illogicality which flowed from this ill-thought-out attempt was one of the principal arguments on which Gladstone had led the Peelites
and the Whigs into the lobby to defeat that budget.

This was the unpromising background against which Gladstone had to square the circle of justifying his dependence on an excoriated tax and, if he was to transcend the short-term improvisations
of both Whig and Disraelian finance, escape from the constriction of a year-to-year renewal. He did so with a strategic daring worthy of Alexander the Great and a thundering eloquence worthy of
Demosthenes. By admitting its disadvantages he touched the base that most of those who had to provide his majority were committed against the tax:

At the same time he built the tax up as a most formidable instrument of public policy, giving it the same brooding strength which Stonehenge had imprinted on his mind eighteen days before
– ‘an engine of gigantic power for great national purposes’ were his exact words. He reviewed the history of the tax in terms which, while inevitably tendentious, were at once
sonorous and relevant. We can almost feel him holding the House in the hollow of his hand as he describes how this tax changed the financing of the Napoleonic Wars from a debauch to a model of
probity. The words and the terms he employs capture a sense of what may be called historic actuality which is alien to the House of Commons
today: ‘Now the scene shifts.
In 1798 Mr Pitt first initiates the income tax, and immediately a change begins.’ Then he moves on to its revival by Peel, but hardly in the flat prose of normal bureaucratic fiscalese:

This was a classical passage, illustrating nearly all the facets of Gladstone’s middle-phase oratory. There was the initial grandiloquence, almost but not quite over the hill. There were
the archaisms, as they appear today and were even then on the edge, of ‘ere long’ and ‘nay’, there were the platitudes of ‘I, for one, am bold enough to hope’,
there was the profusion of subordinate clauses, there was the argumentative use of the second person plural, ‘you have introduced’, ‘you may perfect’, and there was the
utopian international optimism of mid-century England, the hope of freedom seeping down from the centre to the lesser limbs. There was, above all, the compulsive persuasiveness, the almost
anaesthetizing quality of the eloquence.