MR. DISRAELI’S BUDGET

London, April 20, 1858

Mr. Disraeli’s speech on the Budget in the Commons, on April
19,? fills about ten columns of The London Times, but, at all events,
it is pleasant to read, perhaps rather more so than the Young Duke
of the same author. As to lucidity of analysis, simplicity of
composition, skillful arrangement and easy handling of details, it
stands in happy contrast with the cumbersome and circumlocutory
lucubrations of his Palmerstonian predecessor.” Neither does it
contain or pretend to any striking novelty. Mr. Disraeli found
himself in the happy position of a Minister of Finance who has to
deal with a deficit not of his own making, but bequeathed by a
rival. His part was that of the doctor, not of the patient. On the
one hand, then, he had to meet a deficit; on the other, all serious
restriction of expenditure was put out of the question by the
ventures England had embarked in under the auspices of Lord
Palmerston. Mr. Disraeli roundly told the House that, if they
wanted a policy of invasion and aggression, they must pay for it,
‘and that their loud cry for economy was a mere mockery, blended,
as it was, with an unscrupulous readiness for expenditure.
According to his statement, the charges devolving upon the
financial year 1858-59 would be:

Charge on the funded debt. 000.0... eee cee £28,400,000
Permanent charge on the consolidated fund ....... 1,900,000
HP YINY: CSUITIALCS oes crys Seeder sures aayoeanedyo ad epetesaas 11,750,000
Charge for the navy, including packet service ..... 9,860,000
GIVI-SORVICE (228 shite aaceiscss teddies Aiseics Che easaa tae 7,000,000

5 G. C. Lewis.— Ed.

Mr. Disraeli’s Budget 511

Revenue department osc seccccccvesesscseead verssanctaseasnces 4,700,000

Exchequer bonds to be liquidated in May, ’58...... 2,000,000
War sinking futid .3:i:.20.c.cntaniamaicecetisiaee 1,500,000
Total charge oo. ,  £67,110,000

The revenue of the year 1858-59 was estimated as follows:

Customs awit euleeacadaae Sandie treat £23,400,000
EM CIS 28s eceapece Souris vend tencotudubeasseccien caaewneeseeeny 18,000,000
DEAMIP SUD oes ccecncracde seats ateutase tenets ences hectaun iene 7,550,000
Land & assessed taxes .....cscescsesssssssssesecsesesesseeeseaes 3,200,000
POS ORICE soreet rates ettrtatentiannthanet meipa et weet 3,200,000
Property and income tax ........e eee ee seeeeeeeeeeeeenees 6,100,000
CROWN PANGS ice ei. dest thacavaceriuuiss edn nedaceuedads 270,000
Miscellaneous: oifeescecnecc se ttea vel ayadandebavegeniasacchpeseidavatas 1,300,000

Total revenue ............cccccceeeceescceeeeees £63,020,000

A comparison between the estimated expenditure and _ the
estimated income shows, despite the rather sanguine views taken
by Mr. Disraeli of the eventual produce of the customs, the excise
and the post-office, a clear deficit of £4,000,000. How was it to be
met? The Palmerstonians had chuckled at the mere idea that
Mr. Disraeli would be forced to suspend the decline in the next
year of the income tax from 7d. to 5d. in the pound, a proposition
which, when made by Sir Cornewall Lewis, he and Mr. Gladstone
had distinguished themselves by opposing. Then the cry of
factious opposition would have been raised, and the unpopularity
of the tax turned to good account. In one word, the income tax
was the rock which it was confidently predicted the Derby state
ship must split upon. Mr. Disraeli, however, was too old a fox to
be ensnared in such a trap. He told the House, on the contrary,
that John Bull, during the last five years, had “behaved” like a
good boy in financial matters; had borne the public burdens with
great spirit, and should, therefore, under his present distressed
circumstances, not be grieved by a tax he had always felt a
peculiar aversion to, especially since, by the arrangement of the
year 1853,°°° resolved upon by an immense majority of the House,
the good boy had been promised the progressive diminution of
the tax, and its final extinction at the end of a certain number of
years. Mr. Disraeli’s own prescriptions for meeting the deficit, and
securing even a small margin of surplus income, amount to this:
Postpone the liquidation of two millions of Exchequer bonds to a
later period; do not pay the £1,300,000 for the war sinking fund
until there is a bona fide surplus to be sunk in it; equalize the

English and Irish duties on spirits, by raising the latter from 6s.
10d. to 8s. per gallon, which equalization would give an increase
of £500,000 to the Exchequer; and, lastly, put a penny stamp on
bankers’ checks, which would produce to the revenue a surplus of
£300,000.

Now as to the trifling new taxes imposed by Mr. Disraeli, no
serious objection can be raised against them. Though the
representatives of Paddy felt it, of course, their duty to protest,
any check put upon the spirit consumption in Ireland must be
considered a curative measure. In proposing it, the Chancellor of
the Exchequer could not withstand the temptation of poking some
fun at his Irish friends. “In the most cordial spirit” he asked “the
high-spirited Irishmen” to concur in the proposition for taxing
“Trish spirit,” and mingle their “spirits” with those of Englishmen
and Scotchmen, &c. The penny stamp on bankers’ checks was
fiercely attacked by Mr. Glyn,* the representative of the London
banking and stock-jobbing interest. That unfortunate penny, he
felt sure, would prevent the monetary circulation of the country
from performing its duties; but, whatever terror Mr. Glyn might
feel or feign to feel at the audacity of imposing a trifling duty on
bankers and stock-jobbers, his feelings are not likely to find an
echo among the mass of the British people. |

The serious feature of Mr. Disraeli’s budget is the stopping of
the operation of the artificial sinking fund, that great financial
sham reintroduced by Sir Cornewall Lewis, on occasion of the
debts contracted during the Russian war.” The genuine British
sinking fund is one of those monster delusions which obscure the
mental faculties of a whole generation, and the gist of which the
following one is hardly able to understand. It was first in the year
1771, that Dr. Richard Price, in his observations on réversionary
payments, revealed to the world the mysteries of compound
interest and the sinking fund.

“Money,” he said, “bearing compound interest, increases at first slowly; but, the
rate of increase being continually accelerated, it becomes in some time so rapid as
to mock all the powers of imagination. One penny, put out at our Savior’s birth at
five per cent interest, would, before this time, have increased to a greater sum than
would be contained in 150 millions of earths, all solid gold. But, if put out at
simple interest, it would in the same time have amounted to no more than 7s.
41/9d. Our Government has hitherto chosen to improve money in the last rather

4 G. G. Glyn’s speech in the House of Commons on April 19, 1858, The Times,
No. 22972, April 20, 1858.— Ed.
6 The Crimean war of 1853-56.— Ed.

Mr. Disraeli’s Budget 513

than the first of these ways.” A State need never be under any difficulties; for, with
the smallest savings, it may, in as little time as its interest can require, pay off the
largest debts. On this plan, it is of little importance what interest the State is obliged
to give for money; for the higher the interest the sooner will such a fund pay off
the principal.” >

Consequently he proposed,

“an annual saving, to be applied invariably, together with the interest of all the
sums redeemed by it, to the purpose of discharging the public debt; or, in other
words, the establishment of a sinking fund.” ¢

This fantastic scheme, rather less ingenious than the financial
plan of the fool in one of Cervantes’ novels,* who proposed to the
whole Spanish people to abstain for only two weeks from eating
and drinking, in order to get the means of discharging the public
debt, nevertheless caught the imagination of Pitt. It was avowedly
on this basis that he built up his sinking fund in 1786, allotting a
fixed sum of 5,000,000 sterling, to be paid every year “without
fail,” for this purpose. The system was not abandoned until 1825,
when the Commons passed a resolution that only the bona fide
surplus revenue of the country was to be applied in payment of
the national debt. The whole system of public credit had been
thrown into confusion by this curious sort of sinking fund.
Between what was borrowed from necessity, and what was
borrowed from amusement; between loans that were to increase
the debt, and loans that were to pay it off, there arose a
tumultuous medley. Interest and compound interest, debt and
redemption, danced before men’s eyes in such perpetual succession; there was such a phantasmagoria of consols and bonds, of
debentures and exchequer bills, of capital without interest and
interest without capital, that the strongest understanding became
bewildered. Dr. Price’s principle was that the State should borrow
money at simple interest in order to improve it at compound
interest. In fact, the United Kingdom contracted a debt of 1,000
millions sterling, for which it nominally received about 600
millions, 390 millions of this sum being, however, destined not for
the payment of the debt, but to keep up the sinking fund. This
glorious institution, which marks the golden era of stock-jobbers
and speculators, the Palmerstonian Chancellor of the Exchequer

aR. Price, An Appeal to the Public on the Subject of the National Debt, pp. 18 and
19.— Ed.

© Ibid., p. 139.— Ed.

514 Kar] Marx

had attempted to saddle again on the shoulders of John Bull.
Mr. Disraeli has given it the coup de grace.