Gladstone as Chancellor

1
Gladstone as Chancellor

• www.educationforum.co.uk

2
2 Periods as Chancellor

• Gladstone was Chancellor for 2 periods
• 1852-55 in Aberdeens First Ministry
  (Whig-Peelite coalition)
• 1859-65 in Palmerstons Second Ministry (a Whig
  -Peelite coalition)

3
Who was WE Gladstone

• Originally elected as a Tory in 1833, he was the
  son of a Tory MP
• Not however a traditional landed aristocratic
  background his father was a wealthy corn
  merchant and ship-owner.
• WE Gladstone was educated at Eton and Oxford
  gaining a double first in classics and
  mathematics
• During Peels second Ministry Gladstone was
  President of the Board of Trade and was a strong
  supporter of Peels free trade reforms.
• On the resignation and death of Peel, Gladstone
  became one of the recognised leaders of the
  Peelite faction in parliament, and was later to
  be one of the leading figures in the emergence of
  the Liberal Party around 1859 with the merging of
  the Whigs and the Peelites.

4
Chancellor 1852-55

• Gladstones handling of public finance was
  arguably the main success of Aberdeens
  government.
• Gladstone continued in Peels tradition of
  pressing ever closer to completely free trade. In
  his budget of 1853 nearly all duties on
  foodstuffs were abolished and duties on all
  manufactured goods halved.
• He also outlined plans for the complete abolition
  of income tax and started to reduce it.
• Gladstone also believed that government spending
  should be kept to an absolute minimum and that
  all government departments should be scrupulously
  honest and financially accountable

5
Fall of the Coalition

• The outbreak of the Crimean War put pay to
  firstly Gladstones plan to abolish income tax,
  (instead it rose from 7d to 1s 2d in the pound to
  fund the war), but also to the Coalition
  government.
• Reports of appalling conditions in the Crimea did
  nothing for the governments popularity and when
  a committee of enquiry into the conduct of the
  war was proposed Aberdeen quickly resigned.
• The Queen was now forced to call on Palmerston,
  (whom she personally disliked) to form a
  government Gladstone left the government
  refusing to work with Palmerston only to return
  in 1859 when Palmerston invited him back to be
  Chancellor again.

6
Gladstones Second period as Chancellor 1859-65

• By 1859 the Whigs had essentially merged with the
  Peelites forming a new force in politics called
  the Liberal Party
• This has been by some as Gladstones most
  successful period in politics - left alone by
  Palmerston (who was much more interested in
  foreign affairs), Gladstone introduced a number
  of successful budgets and successful reforms.

7
Budgets

• Gladstones first priority was to bear down on
  income tax again reducing the numbers who had the
  pay it (only those who earned more than 200
  pounds a year so no working men were liable).
• By 1865 he had managed to reduce the rate of
  income tax down to 6d in the pound.
• Gladstones aim was to abolish it completely
  however with Britains military expenditure this
  was not possible the next best thing therefore
  was to make it fair and with the burden of tax
  on those best able to pay.
• Gladstone frequently found himself in conflict
  with Palmerston over tax as Palmerston wanted
  more and more money for defence for his
  adventurous foreign policy.

8
The Cobden Treaty 1860

• Palmerston again started to demand more money for
  battleships in 1860 following widespread public
  fears of the threat from France who were now
  ruled by Emperor Napoleon III
• France under Napoleon III had expanded into Nice
  and Savoy and fears of new Napoleonic wars were
  widespread.
• With Palmerston clamouring for more ships and new
  defences to the Royal Dockyards, Gladstone
  cleverly allied himself with free trader MP
  Richard Cobden and sent him to Paris to negotiate
  The Cobden treaty a free trade agreement
  between the 2 countries which both eased
  international tension and improved trade.
• The Treaty reduced French duties on most British
  manufactured goods to levels not above 30 and
  reduced British duties on French wines and
  brandy. In consequence the value of British
  exports to France more than doubled in the 1860s
  and the importation of French wines into Britain
  also doubled. More importantly for Gladstone, the
  steam was taken out of the French scare even
  though Palmerston did get his way and get more
  funds for defences and ships in 1861.

9
Further tariff/duty reduction

• By 1865 only 16 duties on imported goods remained
  the main two being on tea and sugar (Gladstone
  drastically reduced these too).
• By 1865 Britain was essentially a free trade
  state with an extraordinarily low rate of income
  tax (6d)
• Perhaps most significant was in 1861 Gladstones
  abolition of duty on paper which many saw as a
  tax on knowledge here gain he went directly
  against the wished of the PM Palmerston who was
  worried that abolition of paper duty would lead
  to the spread of a cheap revolutionary press and
  the spread of radical ideas.

10
Reform of the Civil Service

• Gladstone used his position as Chancellor to
  insist on rigid economy throughout the whole
  civil service.
• He introduced competitive examinations for posts
  in the Civil Service to ensure the best
  candidates achieved the best positions and made
  each department accountable for its budget and
  expenditure.
• The Civil Service emerged from these reforms far
  leaner and more efficient than it had been before.

11
Limited Liability

• By two acts of Parliament 1856 and 1862 Gladstone
  introduced the idea of company limited
  liability the effect of which was to make
  investment in business and industry much less
  risky and much more attractive.
• A limited liability company means that if a
  company fails the investors are only liable to
  cover the costs of their initial investment

12
Evaluation

• Gladstone as Chancellor developed a reputation as
  liberator of British trade and for the
  establishing the principles of cheap and
  efficient government.
• Does he deserve this reputation?