Parliament. Vote of November 26th. Disraeli's Budget

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London, Friday, December 10, 1852

My predictions on the eventful results of the renewed party struggle in Parliament have been realized. At the opening of the sessionthe opposition commanded a negative majority against ministers; but the several conflicting fractions which composed that majority have, since then, mutually paralyzed each other. The House of Commons, on the 26th of November, when it adopted, instead of the "radical" free trade resolution of Mr. Villiers, the equivocal amendment of Lord Palmerston, offered the spectacle of universal and mutual cheating, of the general dissolution and dislocation of all the old parliamentary parties. The resolution of Mr. Villiers, which designed the act of 1846 as "wise and just," was drawn up without the knowledge of Cobden and Bright, the free traders par excellence. The Whigs had resolved to act for the interests of the free traders, without conceding to them either the initiative or any share in the Government, after the presumed victory. Russell, the original author of the words "wise and just," so offensive to the ministry, gave his consent to the Graham amendment; the Peelites, joined by the Ministerialists, tendered a proposition which recognizes the expediency of free trade for the future, and denies it in the past, leaving the Tories at liberty to compensate for the losses sustained by the act of Sir Robert Peel; the same Peelites rejected the amendment of Disraeli, and reassuming their own proposition, prepared to support the original free trade resolution; the Whigs, on the very eve of triumph, routed by the appearance of Palmerston, who took up the amendment of Graham, and thus, with the assistance of the Peelites, secured the victory to the Ministerialists; finally, the victory itself, won by a protectionist ministry, consisted in the recognition of free trade, and was opposed by none but the fifty-three most decided adherents of their own party. Such an imbroglio of false positions, party intrigues, Parliamentary maneuvers, mutual treasons, &c., is the résumé of the debate on the 26th, in which the policy of free trade was officially acknowledged, but interpreted by Protectionists, represented by Protectionists, and to be carried out by Protectionists.

In a former letter, written before the commencement of the session, I indicated already that Disraeli, after dropping himself, in his electioneering speeches, the restoration of the Corn Laws, intended to compensate the landlords in the shape of a tax reform, which would enable the farmers to continue to pay their old Protectionist rents. By taking off the farmer's shoulders part of the present weight of taxation, and imposing it on the backs of the mass of the people, Disraeli flatters himself to have discovered a panacea for the suffering landlords far more available than the old precarious system of protection which speculated directly on the stomachs of the multitude. To speculate on their pockets—such is the ingenious plan of Mr. Disraeli, now revealed in his budget, which, on the 3d inst., he laid before the House of Commons, and the fate of which will probably be decided in this night's debate.

It is customary with German Governments and German philanthropists to talk of "measures for the elevation of the laboring classes." (Massregeln zur Hebung der arbeitenden Klassen). Now, Mr. Disraeli's budget might not improperly be called a series of "measures for the elevation of the idle classes." However, as in the case of our German Governments and philanthropists, such measures have regularly turned out mere shams, so also the plan at present contemplated by the English Chancellor of the Exchequer for the benefit of the idle classes is a plain humbug, intended to induce the farmers the more readily to pay their actual high rents, by holding out to them an apparent reduction of their burdens, a delusion which he can only practise upon them by some evident real defraudation of the town population.

Disraeli had, for a long time, mysteriously announced his budget; he had promised the world with no less than an eighth miracle. His budget was to

"put a term to the strife of interests; to end the internecine war between classes;" to "give satisfaction to all, without damaging any of them;" to "melt the different interests in one flourishing community;" to "create for the first time a harmony between our commercial and financial systems, by the establishment of new principles," looming in the future.

Let us now examine his revelations which no longer loom in the future, but have already since a week been communicated to the English Parliament and the world at large. As it behoves such revelations of mysteries, Disraeli introduced them with the fitting ceremonial and important-looking behavior. Peel, in his financial statement of 1842, had spoken for two hours; Disraeli takes no less than full five hours. One hour he dilated in showing that the "suffering" interests do not suffer; another one in what he did not mean to do for them, on which occasion he contradicted Walpole's, Packington's, Malmesbury's and his own former declarations; and the remainder of the five hours in the exposé of the budget, and sundry episodes on the condition of Ireland, the defense of the country, prospective reforms in the Administration, and other entertaining topics.

The principal features of the budget are as follows:

1. The Shipping Interest. A portion of the light dues is relaxed, amounting to about £100,000 per annum. This is a relief of less than sixpence per tun per annum, and cannot reach the shipping interest before the middle of the ensuing year. The charge for passing tolls is entirely to cease. Some of the powers of the Admiralty, which have given offense to the merchant navy, shall be done away with, viz.: the officers of the navy, if they enlist seamen of foreign stations, are not to require immediate payment of their wages—they are to furnish gratuitous assistance to vessels in distress and in harbor they are not to drive peaceable craft out of the most eligible anchorage. Finally, a Committee of the House of Commons is to be appointed on the subject of pilotage and ballasting. So much for the shipping interest. Lest the free traders should boast of any positive concession made to them by these provisions, the remnant of the timber duties remains as it was.

2. Colonial Interest. Leave is granted to refine sugar in bond, so that henceforth duty will be payable upon the quantity of saleable refined sugar produced, instead of upon the raw produce itself. Besides this, the Chinese immigration to the West Indies is to be encouraged to supply the planters with a sufficient number of cheap labor. The differential duties on sugar shall not be abolished.

3. Malt-Tax and Hop-Duties. The malt-tax is to be reduced by one-half, which, according to Mr. Disraeli's statement, would engender a loss of revenue amounting to £2,500,000. The hop-duties are likewise to be reduced to one-half, which would create another loss of about £300,000. These reductions are to take place on and from the 10th of October, 1853. Instead of the existing prohibition of foreign malt, and the actual duty on foreign hop, foreign hop and malt will be admitted at a duty corresponding to the excise-duty charged there.

4. Tea. The present duty shall be reduced from 2s.2½ d. to 1s. per lb. upon all qualities, but this reduction shall be effected gradually within six years, so that in 1853 there will be a reduction of 41/2 d. and every following year of 2d. till the expiration of 1858. The reduction for the year 1853 would thereby amount to L400,000.

5. Property-and Income-Tax. This tax, which has only been voted until August 5, 1853, is to be renewed for three years, the amount remaining the same, but the distribution to be altered. There shall be a distinction between the charges on realized property and those on industrial income. Real properties and the funds continue to be charged at 7 pence the pound; while on industrial incomes (farmers, trades, professions, and salaries) an abatement on the charge from 3 per cent. upon 2 per cent. is projected. The latter are henceforth only to pay 5¼ d. in the pound. On the other hand the standard of exemption shall be lowered from £150 to £100 per annum, and upon property and funds to £50 a year. To prevent all losses to farmers by this projected change, they are to be charged at the rate of one-third of the rent, in place of one-half at present, so that the alteration will exempt all farmers renting less than £300 a year. As a boon to the Church, all parsons with an income of £100 a year shall remain exempt from the tax. Finally, the income-tax is for the first time to be extended to Ireland, not by any means, to the landlords, but only as far as regards funds and salaries.

6. House-Tax.—This is to be extended to all occupiers of houses rented at £10 per annum, instead, as formerly, only to those occupiers of houses valued at £20 per annum. Besides, the rate of the house-tax shall be doubled, i.e., from sixpence in the pound on shops, and ninepence in the pound on dwelling-houses, to one shilling and one shilling sixpence respectively.

The résumé of this budget would be—

On one side: Extension of the income-tax in England to such classes of the town population as have hitherto been exempted from it, and introduction of the same into Ireland for fund-holders and public functionaries; extension of the house-tax to such classes of the town population as were hitherto exempted from it, and doubling of the rate of the tax. On the other side: Diminution of the agricultural malt-tax and hop-duty by £2,800,000; relief of the shipping interest by £100,000; reduction of the tea-duties by £400,000.

The town population is to receive an increase of taxation in the shape of a new income-tax, an extension of the house-tax, and a double rate of the same, in order to relieve the rural population of a tax-amount of £2,800,000. The small shopkeeper, the better-paid mechanic and the commercial clerk would thus find them-selves contributors to the house-tax, and become for the first time subject to the income-tax. The land accordingly would have to pay sevenpence in the pound, while dwelling-houses would pay two shillings one penny. The reduction in the tea-duties does not affect this proportion, its amount being comparatively very small with regard to the increased direct taxation, and its advantages being alike accessible to the country and to the towns.

The exemption of Irish landlords from all income-tax, of English farmers and clergymen from the extended income-tax, is manifestly a favor bestowed on the country at the cost of the towns. But who is the gainer by the reduction of the malt-tax—the landlord, the farmer, or the consumer? A reduction of taxes is a reduction of the risks of production. According to the laws of political economy, a reduction in the costs of production would involve a reduction of prices, and consequently benefit neither the landlord nor the farmer, but only the consumer.

There are, however, two circumstances to be considered in this case. In the first place, the soil on which first-rate barley can be grown is monopoly land in England, and restricted to Nottinghamshire, Norfolk, etc., while the foreign supply of malt is limited by the nature of the commodity itself, neither barley nor malt being able to support long sea-voyages. Secondly, the large English brewers virtually possess a monopoly, chiefly supported by the present license system, so that even the abolition of the Corn Laws has effected no fall in the prices of porter and ale.

Thus, then, the gain on the reduction of the malt-tax would neither be in favor of the farmer nor the consumer, but only become divided between the landlords and the great brewers. And as the odious interference of the excise with agriculture is to be maintained, the collecting of half the sum of the former taxes would continue to absorb the same amount of administrative costs as that of the whole did before. At present, the costs of collecting £14,400,000 of excise duties amount to £5 6s per cent. After the reduction of the tax by three millions, the rate would amount from £6 to £6 4s. Briefly, there would be so much less profit, and so much mischievous expense more.

The budget of Disraeli thus resumes itself into a compensation to landlords; "a compensation with a revenge."

But this budget has yet another no less interesting feature.

If you want to carry your commercial system of free trade, you have first of all to change your financial system. "You have to return from indirect taxation to direct taxation," says Disraeli, and Disraeli is right.

Direct taxation, as the most simple, is also the most ancient and first mode of taxation, contemporaneously with a state of society based on landed property. The towns afterward introduced the system of indirect taxation, but in the course of time, with the modern division of labor, the system of Great Industry, and the direct dependence of the home trade upon the foreign trade and the market of the world, the system of indirect taxation comes into a twofold conflict with the social wants. On the frontiers it becomes identical with protective duties, and disturbs or prevents the free intercourse with other countries. In the interior it is identical with fiscal interference in production unsettles the relative value of commodities, and disturbs free competition and exchange. From both these reasons its abolition becomes a necessity. The system of direct taxation must be returned to. But direct taxation admits of no delusions, and every class perceives exactly what share it has in the contribution towards the public expenses. Nothing is therefore less popular in England than direct taxation, income-tax, property-tax, house-tax, etc. Now the question is, how the industrial classes of England, forced by free trade to adopt the system of direct taxation will be able to introduce it without either incurring popular indignation or increasing their own burdens.

Only by three ways.

By attacking the public debt; but that would be a violation of public credit, confiscation, a revolutionary measure.

By chiefly taxing the rent of land; but that also would be an attack upon property, confiscation, a revolutionary measure.

By re-vindicating the Church estates; but that again is a further attack upon property, confiscation, revolutionary measure.

"By no means", says Cobden; "let us reduce the public expenses and we shall be able to reduce also our present taxation!"

This is Utopian. Firstly the international relations of England with the Continent require a perpetual increase of the national expenses; secondly, a victory of the industrial class, represented by Cobden, would have the same consequences, for the war between capital and labor would become only the more intense and the means of repression require to be increased in other words, the budget admits of no reduction. Let me resume.

Free Trade drives towards the system of direct taxation; the system of direct taxation involves revolutionary measures against the Church, Landlords and Fund-holders; these revolutionary measures necessitate an alliance with the working classes; and this alliance deprives the English bourgeoisie of the principal results it expected from Free Trade, viz.: the illimited domination of capital over labor.