London. Feb. 20, 1857.

Financial theatricals have suffered a severe shock at the hands
of Sir George Lewis, the present Chancellor of the Exchequer.
With Sir Robert Peel, the delivery of the financial statement had
become a sort of religious act, to be performed with all the
solemnities of State etiquette, magnified by great efforts of
rhetorical plausibility, and never to be done. under five hours’
time. Mr. Disraeli imitated, and Mr. Gladstone almost exaggerated, Sir Robert’s ceremonious behavior toward the national purse.

Sir George Lewis dared not infringe upon the tradition. So he
made a four hours’ speech; crawling, drawling, bobbing around,
till he was all at once interrupted by peals of laughter, caused by
scores of honorables seizing their hats and rushing out of the
House.

“I am sorry,” exclaimed the dismal actor, “to continue my speech to an
audience of reduced numbers; but I must state to those who remain, what would
be the effect of the proposed alterations.” ?

When still one of The Edinburgh Review sages, Sir George Lewis
was renowned for ponderousness of argumentation rather than
for solidity of argument or sprightliness of diction. His personal
shortcomings account certainly, to a great extent, for his Parliamentary failure. Yet there were other circumstances, altogether

beyond his control, which might have discomfited even a regular
Parliamentary prize-fighter. According to Sir William Clay’s
indiscreet statement before his Hull constituents, Lord Palmerston

No. 22604, February 14, 1857.— Ed.

had originally made up his mind for a continuance of war-taxation
during a time of peace, when the threatening income-tax motion
which, at the meeting of the Commons, was announced by
Mr. Disraeli and seconded by Mr. Gladstone, compelled him at
once to beat a retreat, and to change his financial tactics all of a
sudden. At shortest notice, therefore, poor Sir George Lewis had
to alter all his estimates, all his figures, his whole scheme, while his
speech, prepared for a war budget, had to be served up for a
quasi peace budget—a quid pro quo* that might have been
entertaining if it had not been drowsy. But this is not all. The
budgets of Sir Robert Peel, during his administration from 1841 to
1846, derived an extraordinary interest from the fierce struggle
then raging between Free Traders** and Protectionists,” profit
and rent, land and town. The budget of Mr. Disraeli was looked |
for as a curiosity, involving as it did the revival or final abdication
of Protectionism, and Mr. Gladstone’s budget was unduly exaggerated as the financial settlement, for a septennial period at least, of

triumphant Free Trade. The social conflicts reflected in those
budgets endowed them with a positive interest, while the budget
of Sir George Lewis could at the outset only claim the negative
interest of forming the common point of assaults for the enemies
of the Cabinet. |

The Budget of Sir G. Lewis, so far as his original ways and
means are concerned, may be resumed in very few words. He
strikes off the nine additional pence of the income-tax imposed
for the war; reducing it thus from Is. 4d. in the pound to 7d., at
which rate it is to continue till 1860. On the other hand, the whole
war-tax on spirits, and part of the war-tax on sugar and tea, are to
be retained. This is all.

The income-tax of the present financial year, including the
additional 9d. of the war-taxation, produces a revenue of more
than £16,000,000, raised from the different classes of society in
about the following manner:

Schedule A—Real Property ............c:eeeeeeeseeeeeeeeees 8,000,000
Schedule B— Farmers ..........:cccscsssccesscseresesersoneees 1,000,000
Schedule C— Public Funds ..............cccceceeceesecceeeees 2,000,000
Schedule D— Trades and Professions ................+5 4,000,000
Schedule E—Salaries .............ccccccceeceeeendeetseceseecaeees 1,000,000

VOtali ei cci cc asnadetives ta anstiiaen east 16,000,000

4 A substitute.— Ed.
proprietor” .— Ed.

From this tabular statement it is evident that the income-tax
weighs exclusively upon the upper and middle classes; indeed,
‘more than two-thirds of it is made up from the incomes of the
aristocracy and the higher ranks of the middle class. But, what
with the other war-taxes—what with the high prices of provisions
and the rising rate of discount, the lower layers of the English
middle class have been severely pinched by the income-tax, and
are therefore most impatient to throw it off. Nevertheless, the
cries they raised would hardly have been re-echoed in the press,
and certainly not in the House of Commons, if the aristocracy and
upper middle class had not taken the lead of the agitation, eagerly
seizing the opportunity to hide their narrow-minded selfishness
under the broad mask of philanthropy, and getting rid of an
impost, the burden of which they are unable to shift on the
shoulders of the multitude. While in France, during the time of
the République honnéte et modérée, the establishment of an incometax was warded off by branding it as surreptitious socialism, in

England the abolition of the same tax is now attempted by
pleading sympathy with popular sufferings. The game has been
played very cleverly. On the return of peace,” the spokesmen of
the petty middle class turned their attack not upon the income-tax
itself, but only on its war-surplus and its unequal distribution. The
upper classes feigned to embrace the popular grievance, only to
sophisticate its original meaning, and to convert a cry for
diminished taxation of small incomes, into a cry for the exemption
from taxation of large ones. In the heat of combat, and the
impatience of immediate alleviation, the lower middle class were
neither aware of the shuffle played upon them, nor did they care
about terms which secured the support of powerful allies. As to
the working-classes, without organs in the press, and without votes
in the electoral bodies, their claims were quite out of the question.

Sir Robert Peel’s Free-Trade measures rested notoriously on the
income-tax as their basis. It will be easily understood that direct
taxation is the financial expression of Free Trade. If Free Trade
means anything, it means the removal of customs, excise duties,
and all imposts directly interfering with production and exchange.

Now, if taxes are not to be raised by customs and excise duties,
they must be directly derived from property and income. With a
certain amount of taxes, no abatement can take place in the one
mode of assessment without a corresponding increase of the other.
They must rise and fall in inverse ratio. If, then, the English
public want to do away with the greater part of direct taxation,
they must be prepared to lay heavier duties on commodities and

materials of manufactures—in one word, to renounce the
Free-Trade system. Thus, indeed, the present movement has been
interpreted on the Continent of Europe. A Belgian paper says that

“at a meeting held at Ghent to discuss the policy of Free Trade or Protection,

one of the speakers urged the new opposition in England to the income-tax as
proof of a change of the national opinion in favor of protection.”

Thus, in one of their recent addresses, the Financial Reformers
of Liverpool utter their apprehension lest Great Britain should
return to the principles of restriction.

“We can,” they say, “scarcely believe in the possibility of such an exhibition of

national infatuation; yet every reflecting man of ordinary intellect must see that it
is to this end, and to nothing else, that the present efforts tend.” #

As Free Trade, and consequently direct taxation, are in Great
Britain offensive weapons in the hands of the industrial capitalist
against the landed aristocrat, their common crusade against the
income-tax bears witness of the same fact economically which was
politically demonstrated by the Coalition Cabinet ?*’—the lassitude
of the British middle classes, and their longing for compromises
with the oligarchs, in order to escape concessions to the
proletarians. a!

Sir G. Lewis, in striking sail before the Anti-Income-Tax
League, exhibited at once the reverse of the medal. No remission
of the paper duty, no, forsaking of the fire-insurance tax, no
abatement of the wine duty; but, on the contrary, increase of the
import duties on tea and sugar. According to the settlement. of
Mr. Gladstone,° the duty on tea was to be reduced‘ from 1/6 per
pound, first to 1/3, and then to 1/; and the sugar duty from £1
per cwt., first to 15/, and then to 13/4.° This refers to refined
sugar only. White sugar was to be reduced from 17/6 successively
to 13/2 and 11/8; yellow sugar from 15/ to 11/8 and 10/6; brown
sugar from 13/9 to 10/7 and 9/6; molasses from 5/4 to 3/9. The
war arrested this settlement; but according to the law passed in
1855, it was now to be realized successively in 1857 and 1858. Sir
G. Lewis, who, on the 19th April, 1855, had raised the tea duty”
from 1/6 to 1/9 per pound, proposes to throw its reduction over
four years—diminishing it to,.1/7 for 1857-58, to 1/5 for 1858-59,

4 The Address of the President and Council of the Liverpool Financial Reform
Association to the Middle, Commercial, Manufacturing and Industrial Classes of
the United Kingdom, The Times, No. 22561, December 26, 1856.— Ed.

© Here the manuscript reads: “in 1857”.— Ed.

204 Karl ‘Marx

to 1/3 for 1859-60, and finally to 1/. With the sugar duty, he
proposes dealing in a similar way. It is known that the supply of
sugar has fallen below its demand, and that its stocks are reduced
in the markets of the world—there being in London, for instance,
at present only 43,700 tuns, against 73,400 two years ago. Thus
the prices of sugar are, of course, rising. As to tea, Palmerston’s ©
Chinese expedition*”’' has succeeded in creating an artificial
limitation of supply, and a consequent rise of prices. Now, there is
no economist who will not tell you that, in a period of dearth and
rising prices, any reduction of duty, to benefit not only the
. importer but the general consumer also, must be sudden and
striking. Sir G. Lewis asserts, on the contrary, that, with rising
prices, reductions of duty are the surer to accrue to the benefit of
the consumer the less they are perceptible. This assertion stands
on a level only with his strange doctrine that Post-Office charges
are a direct tax, and that complication constitutes the redeeming
feature of taxation.

Decrease in the income-tax to be counterbalanced by the
increase in the duties on tea and sugar—the latter being common
necessaries with the British people—means evidently diminishing
the taxes on the rich by augmenting the taxes on the poor. Such a
consideration, however, would not have interfered with the vote in
the House of Commons. But there are the tea-dealers, who have
entered into large contracts and arrangements on the express
faith, as they say, in the statement made on the 19th of April,
1856, by Sir George Lewis in the House of Commons—a
statement again repeated to them by the Board of Customs on the
l1ith November, 1856—to the effect that “the duty on tea would
be reduced to 1s. 3d. on the 6th of April, 1857.”* There they are,
standing upon their bond and upon budget morality. And there is
Mr. Gladstone, glad to revenge himself upon Palmerston, who
quite treacherously ousted the Peelites, after having used them to
overthrow, first the Derby administration, then Russell, and lastly
their own patriarch, old Aberdeen.”” Besides, as the author of the
financial settlement of 1853, Mr. Gladstone must of course defend
his own standard budget from Sir G. Lewis’s irreverent violations.
Accordingly, he gave notice” that he should move the following
resolution:

1356.— Ed.

6 The manuscript has here: “on Thursday, 19 February, that on Friday, on the
motion for going into Committee of ways and means, he should move...”.— Ed.

“That this House will not agree to any addition to the rates chargeable by the
Custom-duties Acts of 1855, upon the articles of tea and sugar.”

I have so far touched upon one side of the budget only—its
ways and means. Let me now look at the other side of the
balance-sheet—the proposed expenditure. If the proposed ways
and means are characteristic of the present state of official English
society, the intended expenditure is still more so of its actual
government. Palmerston wants money, and much money, not only
to plant firmly his dictatorship, but also to indulge his taste for
Canton bombardments, Persian wars, Naples expeditions,?” &c.
Accordingly he proposes a peace establishment costing about
£8,000,000 in excess of the highest expenditure since the peace of
1815. He wants £65,474,000, while Mr. Disraeli contented himself
with £55,613,379, and Mr. Gladstone with £56,683,000. That the
views of the Oriental war-glory should, in due course of time,
dissolve in heavy tax-gatherers’ bills, was an event of course to be
anticipated by John Bull.

But the annual surplus taxation accruing from the war cannot
be estimated at more than £3,600,000, viz.: £2,000,000 for
Exchequer bonds falling due in May, 1857; £1,200,000 for the
interest of £26,000,000 of new funded debt, and £8,000,000 of
unfunded debt; lastly, about £400,000 fer the new sinking fund,
corresponding to the new debts. .The war balances do not, then,
account, in fact, for half of the surplus expenditure claimed by
Lord Palmerston. But his military estimates do. The whole Army
and Navy estimates from 1830 to 1840 did not average
£13,000,000, but they amount in the Lewis budget to £20,699,000.
If we compare them with the total military estimates of the last
five years preceding the war, we find that the latter reached in
1849 to £15,823,537; in 1850, to £15,320,944; in 1851, to
£15,555,171; in 1852, to £15,771,893; in 1853-54, to £17,802,000,
the estimates of 1853-54 having themselves been fixed with the
prospect of an imminent war.

Clinging to the orthodox Whig doctrine that the sap of the tree
is destined to afford food for the vermin, Sir G. Lewis pleads the
increased national wealth as shown by the export and import
tables of 1856, as, a reason for the increased Government
expenditure. If the conclusion were true, the premise would,
nevertheless, remain false. It suffices to point at the many
thousands of destitute workmen now roaming through the streets

Times, No. 22610, February 21, 1857.— Ed.

of London and applying at work-houses*™ for relief; at the broad
fact resulting from the official revenue returns that, during the
year 1856, the British consumption of tea, sugar and coffee has
considerably declined, simultaneously with a slight increase in the
consumption of spirits; at the trade circulars of the past year,
which, as acknowledged by Mr. Wilson himself, the present
Secretary of the Treasury, plainly prove that the profits of the
British trade of 1856 bear a contrary proportion to its enlarge- —
ment. It would seem that the natural tactics of an opposition
leader would be to direct his main batteries against this
extravagant expenditure. But in so doing Mr. Disraeli would risk
being stabbed in the back by his own retainers, should he directly
front this aristocratic lavishness.* He is, therefore, driven to the
over-refined maneuver” of resting his motion against the Palmerston Budget, not on its extravagant expenditure for 1857 and

1858, but on its prospective deficiency of revenue in 1858-’59, and
in 1859-’60. |

At all events, the House of Commons debates on the Budget will
be highly interesting, not only that the fate of the present
Administration hungs upon them, and that they will exhibit the
curious spectacle of a Disraeli-Gladstone-Russell coalition against
Palmerston; but the very dialectics of a financial opposition which
insists upon the abolition of the income-tax, forbids the increase of
the sugar and tea duties, and dares not openly strike at
extravagance in expenditure, must prove quite a novelty.