Chapter III

. Battle For Economy. (1860-1862)

The session of 1860, with its complement in the principal part of 1861, was, I think, the most trying part of my whole political life.—GLADSTONE (1897).

In reading history, we are almost tempted to believe that the chief end of government in promoting internal quiet has been to accumulate greater resources for foreign hostilities.—CHANNING.

I

All this time the battle for thrifty husbandry went on, and the bark of the watch-dog at the exchequer sounded a hoarse refrain. “We need not maunder in ante-chambers,” as Mr. Disraeli put it, “to discover differences in the cabinet, when we have a patriotic prime minister appealing to the spirit of the country; and when at the same time we find his chancellor of the exchequer, whose duty it is to supply the ways and means by which those exertions are to be supported, proposing votes with innuendo, and recommending expenditure in a whispered invective.”

(M13) Severer than any battle in parliament is a long struggle inside a cabinet. Opponents contend at closer quarters, the weapons are shorter, it is easier to make mischief. Mr. Gladstone was the least quarrelsome of the human race; he was no wrestler intent only on being a winner in Olympic games; nor was he one of those who need an adversary to bring out all their strength. But in a cause that he had at heart he was untiring, unfaltering, and indomitable. Parallel with his contention about budget and treaty in 1860 was persistent contention for economy. The financial crisis went on with the fortifications crisis. The battle was incessant. He had not been many months in office before those deep differences came prominently forward in temperament, tradition, views of national policy, that continued to make themselves felt between himself and Lord Palmerston so long as the government endured. Perhaps I should put it more widely, and say between himself and that vast body of excited opinion in the country, of which Lord Palmerston was the cheerful mouthpiece. The struggle soon began.

Sidney Herbert, then at the war office, after circulating a memorandum, wrote privately to Mr. Gladstone (Nov. 23, 1859), that he was convinced that a great calamity was impending in the shape of a war provoked by France. Officers who had visited that country told him that all thinking men in France were against war with England, all noisy men for it, the army for it, and above all, the government for it. Inspired pamphlets were scattered broadcast. Everything was determined except time and occasion. The general expectation was for next summer. French tradesmen at St. Malo were sending in their bills to the English, thinking war coming. “We have to do with a godless people who look on war as a game open to all without responsibility or sin; and there is a man at the head of them who combines the qualities of a gambler and a fatalist.”

Mr. Gladstone replied in two letters, one of them (Nov. 27) of the stamp usual from a chancellor of the exchequer criticising a swollen estimate, with controversial doubts, pungent interrogatories, caustic asides, hints for saving here and paring there. On the following day he fired what he called his second barrel, in the shape of a letter, which states with admirable force and fulness the sceptic’s case against the scare. This time it was no ordinary exchequer wrestle. He combats the inference of an English from an Italian war, by the historic reminder that a struggle between France and Austria for supremacy or influence in Italy had been going on for four whole centuries, so that its renewal was nothing strange. If France, now unable to secure our co-operation, still thought the Italian danger grave enough to warrant single-handed intervention, how does that support the inference that she must certainly be ready to invade England next? He ridicules the conclusion that the invasion was at our doors, from such contested allegations as that the Châlons farmers refused the loan of horses from the government, because they would soon be wanted back again for the approaching war with England. What extraordinary farmers to refuse the loan of horses for their ploughing and seed time, because they might be reclaimed for purposes of war before winter! Then why could we not see a single copy of the incendiary and anti-English pamphlets, said to be disseminated broadcast among the troops? What was the value of all this contested and unsifted statement? Why, if he were bent on a rupture, did the Emperor not stir at the moment of the great Mutiny, when every available man we had was sent to India, and when he had what might have passed for a plausible excuse in the Orsini conspiracy, and in the deliberate and pointed refusal of parliament to deal with it? With emphasis, he insists that we have no adequate idea of the predisposing power which an immense series of measures of preparation for war on our own part, have in actually begetting war. They familiarise ideas which when familiar lose their horror, and they light an inward flame of excitement of which, when it is habitually fed, we lose the consciousness.

This application of cool and reasoned common sense to actual probabilities seldom avails against imaginations excited by random possibilities; and he made little way. Lord Palmerston advanced into the field, in high anxiety that the cabinet should promptly adopt Herbert’s proposal.(29) They soon came to a smart encounter, and Mr. Gladstone writes to the prime minister (Feb. 7, 1860): “There are, I fear, the most serious differences among us with respect to a loan for fortifications.... My mind is made up, and to propose any loan for fortifications would be, on my part, with the views I entertain, a betrayal of my public duty.” A vigorous correspondence between Mr. Gladstone and Herbert upon military charges followed, and the tension seemed likely to snap the cord.

(M14) If I may judge from the minutes of the members of the cabinet on the papers circulated, most of them stood with their chief, and not one of them, not even Milner Gibson nor Villiers, was ready to proceed onward from a sort of general leaning towards Mr. Gladstone’s view to the further stage of making a strong stand-up fight for it. The controversy between him and his colleagues still raged at red heat over the whole ground of military estimates, the handling of the militia, and the construction of fortifications. He wrote memorandum upon memorandum with untiring energy, pressing the cabinet with the enormous rate in the increase of charge; with the slight grounds on which increase of charge was now ordinarily proposed and entertained; and, most of all, with the absence of all attempt to compensate for new and necessary expenditure by retrenchment in quarters where the scale of outlay had either always been, or had become unnecessary. He was too sound a master of the conditions of public business to pretend to take away from the ministers at the head of the great departments of expenditure their duty of devising plans of reduction, but he boldly urged the reconsideration of such large general items of charge as the military expenditure in the colonies, then standing at an annual burden of over two millions on the taxpayers of this country. He was keen from the lessons of experience, to expose the ever indestructible fallacy that mighty armaments make for peace.

Still the cabinet was not moved, and in Palmerston he found a will and purpose as tenacious as his own. “The interview with Lord Palmerston came off to-day,” he writes to the Duke of Argyll (June 6, 1860). “Nothing could be more kind and frank than his manner. The _matter_ was first to warn me of the evils and hazards attending, for me, the operation of resigning. Secondly, to express his own strong sense of the obligation to persevere. Both of these I told him I could fully understand. He said he had had two great objects always before him in life—one the suppression of the slave trade, the other to put England in a state of defence. In short, it appears that he now sees, as he considers, the opportunity of attaining a long cherished object; and it is not unnatural that he should repel any proposal which should defraud him of a glory, in and by absolving him from a duty.... I am now sure that Lord Palmerston entertained this purpose when he formed the government; but had I been in the slightest degree aware of it, I should certainly, but very reluctantly, have abstained from joining it, and helped, as I could, from another bench its Italian purposes. Still, I am far indeed from regretting to have joined it, which is quite another matter.”

Now labouring hard in Paris month after month at the tariff, Cobden plied Mr. Gladstone with exhortations to challenge the alarmists on the facts; to compare the outlay by France for a dozen years past on docks, fortifications, arsenals, with the corresponding outlay by England; to show that our steam navy, building and afloat, to say nothing of our vast mercantile marine, was at least double the strength of France; and above all, to make his colleagues consider whether the French Emperor had not, as a matter of self-interest, made the friendship of England, from the first, the hinge of his whole policy. Cobden, as always, knew thoroughly and in detail what he was talking about, for he had sat for three successive sessions on a select committee upon army, navy, and ordnance expenditure. In another letter he turned personally to Mr. Gladstone himself: “Unconsciously,” he says, “you have administered to the support of a system which has no better foundation than a gigantic delusion” (June 11, 1860). “You say unconsciously,” Mr. Gladstone replies (June 13), “I am afraid that in one respect this is too favourable a description. I have consciously, as a member of parliament and as a member of the government, concurred in measures that provide for an expenditure beyond what were it in my power I would fix.... But I suppose that the duty of choosing the lesser evil binds me; _the difficulty is to determine what the lesser evil is_.”

(M15) My story grows long, and it ends as such stories in our politics usually end. A compromise was arranged on the initiative of the Duke of Somerset, keeping clear, as Mr. Gladstone supposed, of the fortification scheme as a whole, and not pledging future years.(30) “Never at any time in my life,” Mr. Gladstone told Graham, “have I had such a sense of mental and moral exhaustion.” The strain was not ended by the compromise, for in moving the resolution for a vote of two millions for fortifications (July 23), Lord Palmerston not only declared that he held it to be absolutely necessary to carry the whole scheme into effect—the very proposition which the compromise put aside—but defended it by a series of stringent criticisms particularly fitted to offend and irritate France. Mr. Gladstone was not present,(31) but he felt strongly that he had good grounds of complaint, and that faith had not been strictly kept. “Much dismayed,” he wrote in his diary (July 24), “at the terms of Lord Palmerston’s resolution.” It was now, however, too late to draw back.(32) Mr. Bright made a weighty and masterly attack (Aug. 2), hinting plainly that the thing was “a compromise to enable the government to avoid the rock, or get over the quick-sand, which this question has interjected into their midst,” and quoting with excellent effect a pregnant passage from Peel: “If you adopt the opinion of military men, naturally anxious for the complete security of every available point; naturally anxious to throw upon you the whole responsibility for the loss in the event of war suddenly breaking out of some of our valuable possessions,—you would overwhelm this country with taxes in time of peace.” But this was a Palmerstonian parliament. The year before, a remarkable debate (July 21, 1859) had promised better things. Disraeli had opened it with emphatic declarations: “There is no country,” he said, “that can go on raising seventy millions in time of peace with impunity. England cannot, and if England cannot, no country can.” Bright followed with the assurance that Cobden and he might now consider Mr. Disraeli a convert to their views. Lord John Russell came next, agreeing with Bright; and even Palmerston himself was constrained to make a peace speech.

II

In May 1861 Mr. Gladstone notes “a day of over fourteen hours: thank God for the strength.” The atmosphere around him would have depressed a weaker man. “At Brooks’s,” says Phillimore, “they hate Gladstone worse than at the Carlton.” In the summer the strife upon expenditure was renewed. Eventually Mr. Gladstone was able to write to Graham from the cabinet room (July 20, 1861) that Castor and Pollux appeared aloft at the right moment, and the clouds had disappeared. In a letter to his close friend, Sir Walter James, in 1871 Mr. Gladstone says: “The storm of criticism and rebuke does not surprise nor discourage me. Doubtless much must be just; and what is not, is what we call in logic an ‘inseparable accident’ of politics. Time and reflection will, please God, enable us to distinguish between them. For my own part I _never_ was so abused as in 1860; but it was one of the most useful or least useless years of my life.” The battle was as severe in 1861 as it had been the year before. In the middle of the session (May 9) Phillimore reports: “Found Gladstone in good spirits; he spoke with real greatness of mind of the attacks made on him.”

(M16) The next year Lord Palmerston wrote to express his concern at something that he came upon in a railway journey. “I read with much interest,” he wrote to his chancellor of the exchequer (April 29, 1862), “your able and eloquent speeches at Manchester, but I wish to submit to you some observations upon the financial part of the second speech.” He did not agree with Mr. Gladstone that the nation had forced the cabinet and parliament into high expenditure, but if it were so, he regarded it not as matter of reproach, but as a proof of the nation’s superior sagacity. Panic there had been none; governors and governed had for a long time been blind and apathetic; then they awoke. There was on the other side of the channel a people who, say what they may, hate us and would make any sacrifice to humiliate us, and they had now at their head an able, active, wary, council-keeping, but ever-planning sovereign [Napoleon III.]. “Have the parliament and the nation been wrong, and have Bright and Cobden and yourself been right?” All this being so, he could not but regret that Mr. Gladstone should by speeches in and out of parliament invite agitation to force the government of which he was a member, to retrace its steps taken deliberately and with full sense of responsibility.(33) To Palmerston’s eight quarto pages, written in one of the finest hands of the time, Mr. Gladstone replied in twelve.

In all good humour, he said, I prefer not being classed with Mr. Bright, or even Mr. Cobden; first, because I do not know their opinions with any precision; and secondly, because as far as I do know or can grasp them, they seem to contemplate fundamental changes in taxation which I disapprove in principle, and believe also to be unattainable in practice, and reductions of establishment and expenditure for which I am not prepared to be responsible.... I think it a mean and guilty course to hold out vague and indefinite promises of vast retrenchment, but I think it will be a healthful day, both for the country and for the party over which you so ably preside, when the word retrenchment, of course with a due regard to altered circumstances, shall again take its place among their battle cries.

A spirited correspondence followed, for Lord Palmerston knew his business, and had abundant faculty of application; while Mr. Gladstone, for his part, was too much in earnest to forego rejoinder and even surrejoinder. “No claptrap reductions,” cried the prime minister. “You are feeding not only expenditure,” rejoined the chancellor of the exchequer, “but what is worse, the spirit of expenditure.” “You disclaim political community of opinion with Bright and Cobden, and justly,” said Lord Palmerston, “but you cannot but be aware that owing to various accidental circumstances many people at home and abroad connect you unjustly with them, and this false impression is certainly not advantageous.”

“My dear Gladstone,” he wrote good-humouredly on another occasion, “You may not have seen how your name is taken in vain by people with whom I conceive you do not sympathise,—Yours sincerely,

PALMERSTON.”

Enclosed was a placard with many large capital letters, notes of exclamation, italics, and all the rest of the paraphernalia of political emphasis:—

TAX PAYERS! Read Mr. Cobden’s new pamphlet, the “THREE PANICS,” and judge for yourselves. How long will you suffer Yourselves to be Humbugged by PALMERSTONIANISM, and Robbed by the “Services,” and others interested in a War Expenditure, even in times of Peace? ... THE CHANCELLOR OF THE EXCHEQUER APPEALS TO YOU TO HELP HIM. You have the power in your own hands if you will only exert it. Reform the House of Commons, AND DO IT THOROUGHLY THIS TIME.

Of the continuance of the struggle in 1862, a few items from the diary give an adequate picture:—

_Jan. 30, 1862._—A heavy blow in the announcement of increased military estimates from Sir George Lewis gave me a disturbed evening. 31.—Worked on the formidable subject of the estimates, and made known to the cabinet my difficulties. _Feb. 1._—Cabinet 3-½—6. It went well; the tenth penny [on the income-tax] proved to be a strong physic; £750,000 of reductions ordered. 12.—Wrote mem. on possible reductions, etc., to dispense with income-tax. The whole question, I think, is, can we be satisfied (I think we ought and will) with 21 millions for army and navy instead of 27? _March 1._—Cabinet 3-3/4—6-1/4, very stiff, on the Belgian negotiations I had to go to the ultima ratio. 31.—H. of C. The fortifications got their first blow.

By midsummer public feeling veered a little: “The tide has turned. Lord Palmerston is now ‘the strong swimmer in his agony.’ ”(34)

A candid and friendly observer has told us the situation: “When I was private secretary to Lord Palmerston,” he says, “and Mr. Gladstone was his chancellor of the exchequer, it was a constant source of sorrow to me, and a perpetual cause of mystery, to note how they misunderstood one another, and how evidently each mistrusted the other, though perfectly cordial and most friendly in their mutual intercourse.... If the proposal was adhered to, Mr. Gladstone gave way. This seemed to Lord Palmerston a case of gratuitous difficulties put in his way, and attempts to thwart without the courage to resist.”(35)

In closing this chapter, let us note that in spite of Lord Palmerston, he won no inconsiderable success. When 1866 came, and his financial administration ended, he had managed, with the aid of the reduction of debt charge after the lapse of the long annuities, to carry expenditure back to the level of 1857. Naval expenditure rose until 1861, and then began to fall; army expenditure rose until 1863, and then began to fall. In 1859, when he went to the exchequer, the total under these two heads was nearly twenty-six millions; when he quitted office in 1866 the total was twenty-four millions. In the middle years it had swelled to twenty-eight. After half a dozen years of panic and extravagance, all sedulously fostered by a strong prime minister, that he should still have left the cost of government little higher than he found it was no defeat, but an extremely satisfactory performance. “We must follow the nature of our affairs,” Burke says, “and conform ourselves to our situation. Why should we resolve to do nothing because what I propose to you may not be the exact demand of the petition? If we cry, like children, for the moon, like children we must cry on.”(36)

III

(M17) Ruminating in the late evening of life over his legislative work, Mr. Gladstone wrote: “Selecting the larger measures and looking only to achieved results, I should take the following heads: 1. The Tariffs, 1842-60. 2. Oxford University Act. 3. Post Office Savings Banks. 4. Irish Church Disestablishment. 5. Irish Land Acts. 6. Franchise Act. Although this excludes the last of all the efforts, viz., the Irish Government bill.” The third item in the list belongs to the period (1861) at which we have now arrived.

The points to be noted are three. 1. The whole of my action in 1859-65 was viewed with the utmost jealousy by a large minority and a section of the very limited majority. It was an object to me to get this bill passed _sub silentio_, a full statement of my expectations from it would have been absolutely fatal. I admit they have been more than realised. 2. The Trustee Savings Banks were doubly defective, nay trebly, for they sometimes broke. (1) Their principle was left in doubt—were the general funds in trust, or cash at a banker’s? This was vital. (2) They never got or could get within the doors of the masses, for they smelt of class. It was necessary to provide for the savings of the people with (_a_) safety, (_b_) cheapness, (_c_) convenience. The banks _cost_ money to the State. The Post Office Savings Banks bring in a revenue. 3. Behind all this I had an object of first-rate importance, which has been attained: to provide the minister of finance with a strong financial arm, and to secure his independence of the City by giving him a large and certain command of money.

A sequel to this salutary measure was a bill three years later with the apparently unheroic but really beneficent object of facilitating the acquisition of small annuities, without the risk of fraud or bankruptcy.(37) An eyewitness tells how (March 7, 1864) “Mr. Gladstone held the house for two hours enchained by his defence of a measure which avowedly will not benefit the class from which members are selected; which involves not only a ‘wilderness of figures,’ but calculations of a kind as intelligible to most men as equations to London cabdrivers; and which, though it might and would interest the nation, would never in the nature of things be made a hustings cry. The riveted attention of the House was in itself a triumph; the deep impression received by the nation on the following day was a greater one. It was felt that here was a man who really could lead, instead of merely reflecting the conclusions of the popular mind.” The measure encountered a pretty stiff opposition. The insurance companies were vexed that they had neglected their proper business, others feared that it might undermine the poor law, others again took the pessimist’s favourite line that it would be inoperative. But the case was good, Mr. Gladstone’s hand was firm, and in due time the bill became law amid a loud chorus of approval.

(M18) Thus he encouraged, stimulated, and facilitated private and personal thrift, at the same time and in the same spirit in which he laboured his fervid exhortations to national economy. He was deeply convinced, he said and kept saying, “that all excess in the public expenditure beyond the legitimate wants of the country is not only a pecuniary waste, but a great political, and above all, a great moral evil. It is a characteristic of the mischiefs that arise from financial prodigality that they creep onwards with a noiseless and a stealthy step; that they commonly remain unseen and unfelt, until they have reached a magnitude absolutely overwhelming.” He referred to the case of Austria, where these mischiefs seemed to threaten the very foundations of empire.

##