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simply how the House could best discharge one of its most important functions; and if he had done no more for the present than direct the attention of some honourable members to the subject his object would have been gained.

The Chancellor of the Exchequer, while agreeing in many respects with Mr. Childers' speech, pointed in extenuation of the increased cost of the Civil Service to the many new duties which had been imposed on it. It was necessary to take into account the march of luxury and refinement, which led both to increase of salaries, and increase in the numbers of persons employed. Another cause was the lukewarm support the Treasury got from the House in its endeavours to control the other departments, and he concurred entirely with Mr. Childers that competitive examination in the lower grades occasionally brought in men who were above their work. As to the system of classification, Mr. Hunt feared that with due regard to vested interests it could not be carried out for a generation. By that time some new idea might have sprung up, and perhaps, on the whole, it would be best to let well alone, rather than to embark on any new scheme. The motion was withdrawn.

The last financial work of the Session in which Parliament was concerned, was the statement of the Secretary of State for India on the finances of that part of the empire. As usual, this exposition was deferred till the last week of the Session, and it excited this year, if possible, even less interest, and was listened to by a smaller knot of members than is usual on the same occasion. About thirty members of the House of Commons constituted the audience before which, on the 27th July, Sir Stafford Northcote exhibited his account of the financial and commercial condition of that vast province of the British Crown, whose affairs are now administered under the direct control of the Imperial Legislature. The right honourable baronet commenced with a statement of the actual figures of the year 1866-67, the expenditure for which was 44,530,0001., against a revenue of 42,012,0001., showing a difference of 2,517,0001., and this he contrasted with the estimates of that year, which only contemplated a difference of 2,352,0001. He next contrasted the Budget estimate for 1867-68 with the actual estimate, made up from eight months' actual experience and four months' averages. In the first the revenue was put at 46,783,0001., and the expenditure, including extraordinary public works, at 48,610,0001., showing a deficit of 1,827,0007. But the actual figures were-revenue, 48,258,8001.; charges, 49,364,0001. ; thus reducing the actual deficit to 1,106,0001. Passing to the items, Sir S. Northcote mentioned that the licence-tax had increased by 158,0001., the Customs by 188,0001., and the opium revenue by 1,100,0001., and on the other items there were decreases and increases which pretty nearly balanced each other. In the expenditure there had been an excess on almost every item except public works; the general charges (including the army) had risen by 265,0001., the charges in England by 580,0001., and the railway interest 660,0001.- in all, an excess of about a million and a half. On the other hand, about three-quarters of a million less had been spent on public works than was estimated; and though he admitted it to be unsatisfactory that the only saving should be on this item, he pointed out that, in every other Budget but the Indian, the cost of extraordinary public works would be placed to capital and not to revenue, and if this were done the deficit would be converted into a surplus. The same remark applied to the estimate for the year 1868-69-in which the revenue was put at 48,586,0001., and the charges at 49,613,0001., giving a deficit of 1,026,0001. But if the charge for extraordinary public works, 3,092,0001., were transferred to capital, there would be a considerable surplus. There had been a very nice discussion on this point in India, and he had recently laid down a rule that only irrigation and special fund works should be considered extraordinary public works, and that all but remunerative works should be provided out of revenue. Examining the details, Sir S. Northcote said there was practically little or no change in next year's estimates, and, under all the circumstances, he approved Mr. Massey's decision not to make any changes in the taxation. Looking, however, to the precarious nature of the opium revenue, which now stood at the unprecedentedly high figure of 8,000,0001., he had directed that in future estimates it should be taken at a fixed average, and that endeavours should be made to show in the accounts the returns which were actually obtained from the reproductive works. After showing in detail, under the three heads of land revenue, consumers' taxes, and mercantile taxes, how largely the Indian revenue had grown since 1856, the right honourable baronet concluded by explaining changes recently made in the home accounts, which he proposed for the future should be referred to the Public Accounts Committee. He concluded by moving the formal resolusions, declaring the revenue and expenditure of India for the year ending March 31st, 1868.

A discussion of rather a desultory nature took place. Mr. Laing argued that the statement which had just been made showed him to have been in the right in his controversy with Lord Halifax, the gist of which was that in 1862 the Indian revenue had regained its equilibrium after the Mutiny. From this Mr. Laing diverged into some general remarks on Indian finance, with the view of correcting the rather gloomy view taken of the subject in this country. The opium revenue, he contended, was no more precarious than the revenue from spirits here, and he went at length into the figures to show that the whole revenue was elastic, that the material progress of India was eminently satisfactory, and that the population had received unmixed benefit from our rule. The general result which he drew was that public works ought not to be starved from a reluctance to borrow money, and he recommended a Public Works Loan of 20,000,0001., spread over six years, on conditions which he explained. Particularly with a view to political

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emergencies, he pressed for the completion of lines to Peshawur and along the valley of the Indus.

Colonel Sykes, Mr. Bayley, and Mr. A. Kinnaird dwelt on the importance of irrigation works and economical administration, and Mr. Grant Duff offered some observations on the financial situation.

CHAPTER VI.

FOREIGN AND COLONIAL POLICY AND AFFAIRS— Differences with the United States of

America on the “ Alabama” Claims-Sketch of the proceedings in this controversyDebates in Parliament on the subject-Motion by Mr. G. Shaw-Lefevre-Discreet and conciliatory Speech of Lord Stanley–Salutary effects of this discussion-Speech of Earl Russell on the same question in the House of Lords—Opinions expressed by Lord Westbury and the Lord Chancellor-Motion of Mr. W. E. Forster on the subject of the indefeasible allegiance of British subjects--Observations of Lord Stanley and Sir R. Palmer- The Cretan InsurrectionThe attitude of our Government in respect to the relations of Greece and the Porte is commented upon in the House of Lords-Earl Russell, in answer to Lord Stratheden, expresses strong approval of the policy of the British Government-Lord Stanley likewise vindicates his own proceedings in the House of Commons- British Rule in India—Lord William Hay makes an interesting speech in the House of Commons in reference to recent official communications to the Government of India--Discussion on the effect of our administration on the native population-Remarks of Sir Stafford NorthcoteThe British American Colonies Confederation Act of 1867— Objections and remonstrances of the people of Nova Scotia against the Union- Agitation against the Act in that province, and Addresses to the Queen-Mr. Bright moves for a Commission of Inquiry-The motion is opposed by Mr. Adderley and Mr. Cardwell, and is rejected by a large majority—The same question is raised by Lord Stratheden in the House of Lords—The Confederation Act is vindicated by the Duke of Buckingham and the Earl of CaruarvonThe Abyssinian Expedition-Glorious and satisfactory results of the campaign in the capture of Magdala and death of King Theodore – Great public rejoicing at these events—The Thanks of both Houses of Parliament to the General commanding, his officers and men, are voted nem. con.-Speeches of the leaders of parties in the two Houses on these events—Sir Robert Napier is created a Peer, and an annuity of 20001. a year for two lives is voted to him on a recommendation from the Crown-Attempted Assassination of the Duke of Edinburgh at Sydney-Great public indignation and anxiety excited by this occurrence -Addresses of sympathy to the Crown are moved and carried by the Lords and Commons-O'Farrel, the assailant of the Prince, is tried and executed at SydneyWarm manifestations of loyalty in that settlement - Favourable progress of his Royal Highness towards recovery-His Address at a banquet before leaving the

colony-The Prince returns to England, and is reported convalescent. One of the most delicate and anxious questions pending this year between Great Britain and a foreign power was that which arose out of the civil war in the United States in respect of the claims for compensation for losses inflicted upon the commercial marine of the Northern States by the Confederate cruiser “Alabama.” The circumstances which gave rise to this controversy may be briefly recapitulated.

In July, 1862, a vessel evidently intended for war purposes, and, if not completely ready for warlike operations, capable of being quickly converted into a cruiser of the highest efficiency, left Liverpool. The Government of the United States alleged that the English Government received ample warning of the character and design of this vessel ; that it was a matter of international obligation to detain her; and that her departure was due to neglect of an international duty on the part either of the Executive Government or of their subordinate officers. The vessel sailed, and having met at the Azores another vessel carrying men and munitions, was armed and equipped as a ship of war, and thereupon hoisted the Southern ensign and became the “ Alabama.” The American Government claimed to be repaid the damages inflicted by her on American commerce.

When the claim was first made, Lord Russell, the then Foreign Secretary, refused to entertain it, and when a proposal was submitted to refer the claim to arbitration Lord Russell declined to accede to it. Lord Stanley came into office in 1866, and at the close of the year offered, through Sir Frederick Bruce, to adopt the principle of arbitration, which Mr. Seward accepted on condition that the whole controversy between the two Governments should be referred. The meaning of this condition is not very clear, but it was probably intended to include a complaint, made by Mr. Seward in August, 1866, that the recognition of the Confederacy by the British Government as a belligerent had been premature and injurious. Lord Stanley inferred that this was Mr. Seward's meaning, and replied that her Majesty's Government could not consent to an unlimited reference involving a point they had from the first refused to submit to arbitration. Mr. Seward's reply was, unfortunately, again not free from ambiguity, but he declared that the United States' Government would deem itself at liberty to insist before the arbiter that the actual proceedings of the British Government .... in relation to the rebellion ... are among the matters which are connected with the vessels whose depredations are complained of,” and as Lord Stanley again refused to refer to arbitration the policy of recognition, the negotiations broke off.

The controversy was at this stage when the subject was brought before the House of Commons on the 6th of March by Mr. G. Shaw-Lefevre, and underwent a full and, we may truly add, a dispassionate discussion in that assembly. The manner in which the debate was introduced and conducted was worthy of the subject. A spirit of cautious moderation and courtesy actuated the speakers on both sides, and the language used by the Foreign Secretary in particular was remarkable for its conciliatory and temperate tone. The maintenance of friendly relations between the two nations was acknowledged on all sides to be an object of paramount importance, compared to which any sacrifice not involving the national honour was of secondary account. Impressed with this feeling, even those members who differed in their impressions of law or fact, were actuated by a manifest unity of sentiment and aim.

Mr. Shaw-Lefevre in calling the attention of the House to the

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failure of the negotiations, disclaimed all desire to complicate future negotiations with the United States. He narrated at some length the history of the "Alabama” and the other Southern cruisers, which between them had destroyed more than 200 American vessels, and dwelt on the bitter feelings which had been caused on the other side of the Atlantic by these operations, although he owned that a large portion of the loss had fallen on English insurers. Though there was no fear that war would ever arise between the two countries out of this question, it must inevitably complicate all future disputes, and it was therefore of the greatest importance that there should be a speedy settlement. He traced next, with much fulness of detail, the diplomatic negotiations, beginning with Mr. Adams' first complaint of the precipitate recognition of the belligerent rights of the South, and of the remissness of the British Government in permitting the escape of the “Alabama," and Lord Russell's repudiation of the American claim on both points, down to the acceptance by Lord Stanley (whom, with his party, he sarcastically congratulated on the change of mind which office had caused) of arbitration on the “Alabama” claims, though coupled with an exclusion of the recognition question. He found fault with Lord Stanley for having made this exception, though he confessed a strong conviction that no arbitrator could decide against us on the question of recognition, and that it would be held to be entirely irrelevant to the " Alabama” claims. But there were many people in the United States who held that we were wrong on both points, and as the advantage of arbitration would be to remove all subjects of difference, he regretted that Lord Stanley had unnecessarily insisted on excluding this point. Having combated the argument that it was contrary to our dignity to refer such a question, and shown that no one could have a greater interest in a speedy settlement than ourselves, he concluded by insisting strongly on the duty of this country to be the first to carry out the Declaration of Paris.

Lord Stanley, in replying first to Mr. Shaw-Lefevre's sarcasm, reminded the House that neither he nor Mr. Disraeli had said a word during the war to prejudge its issue. Never professing to be a Northern partisan, he had held throughout that it was our duty not to interfere in a purely internal quarrel, and to treat both sides alike. No man had a stronger sense of the importance to both countries of a settlement of this and all other differences between them. But a tendency always to think ourselves in the wrong and to accuse ourselves of faults which we had never committed, and a readiness to make indiscriminate concessions whenever they were asked, were much to be deprecated. Our duty was to find out what was just, and to do it to the best of our power, not treating our adversaries as children requiring to be humoured and incapable of appreciating arguments which bore against them. Premising that it was not his province to defend Lord Russell, he passed at once to the present aspect of the case, remarking

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