Editing William Ewart Gladstone (section)

==Chancellor of the Exchequer (1859–1866)==
[[File:William Ewart Gladstone CDV 1861 for infobox.jpg|thumb|right|Gladstone in 1861, photographed by [[John Jabez Edwin Mayall|John Mayall]]]]
In 1859, Lord Palmerston formed a new mixed government with Radicals included, and Gladstone again joined the government (with most of the other remaining Peelites) as Chancellor of the Exchequer, to become part of the new [[Liberal Party (UK)|Liberal Party]].

Gladstone inherited a deficit of nearly £5,000,000, with income tax now set at 5d (fivepence). Like Peel, Gladstone dismissed the idea of borrowing to cover the deficit. Gladstone argued that "In time of peace nothing but dire necessity should induce us to borrow".<ref>Buxton, p. 185.</ref> Most of the money needed was acquired through raising the income tax to 9d. Usually, not more than two-thirds of a tax imposed could be collected in a financial year so Gladstone therefore imposed the extra four pence at a rate of 8d. during the first half of the year so that he could obtain the additional revenue in one year. Gladstone's dividing line set up in 1853 had been abolished in 1858 but Gladstone revived it, with lower incomes to pay 6½d. instead of 9d. For the first half of the year, the lower incomes paid 8d. and the higher incomes paid 13d. in income tax.<ref>Buxton, p. 187.</ref>

On 12 September 1859 the Radical MP [[Richard Cobden]] visited Gladstone, who recorded it in his diary: "... further conv. with Mr. Cobden on Tariffs & relations with France. We are closely & warmly agreed".<ref>{{cite book |author-link=Richard Shannon (historian) |first=Richard |last=Shannon |title=Gladstone. 1809–1865 |location=London |publisher=Hamish Hamilton |date=1982 |page=395}}</ref> Cobden was sent as Britain's representative to the negotiations with France's [[Michel Chevalier]] for a free trade treaty between the two countries. Gladstone wrote to Cobden: 
<blockquote>... the great aim&nbsp;– the moral and political significance of the act, and its probable and desired fruit in binding the two countries together by interest and affection. Neither you nor I attach for the moment any superlative value to this Treaty for the sake of the extension of British trade. ... What I look to is the social good, the benefit to the relations of the two countries, and the effect on the peace of Europe.<ref>Matthew, ''Gladstone. 1809–1874'', p. 113.</ref></blockquote>

Gladstone's budget of 1860 was introduced on 10 February along with the [[Cobden–Chevalier Treaty]] between Britain and France that would reduce tariffs between the two countries.<ref>{{cite journal |first=Asaana A. |last=Iliasu |title=The Cobden-Chevalier commercial treaty of 1860 |journal=Historical Journal |volume=14 |issue=1 |date=1971 |pages=67–98 |doi=10.1017/S0018246X00007408 |jstor=2637902 |url=https://www.jstor.org/stable/2637902 |archive-url=https://web.archive.org/web/20210309021508/https://www.jstor.org/stable/2637902 |archive-date=9 March 2021}}</ref>  This budget "marked the final adoption of the Free Trade principle, that taxation should be levied for Revenue purposes alone, and that every protective, differential, or discriminating duty ... should be dislodged".<ref>Buxton, p. 195.</ref> At the beginning of 1859, there were 419 duties in existence. The 1860 budget reduced the number of duties to 48, with 15 duties constituting the majority of the revenue. To finance these reductions in indirect taxation, the income tax, instead of being abolished, was raised to 10d. for incomes above £150 and at 7d. for incomes above £100.<ref>Reid, p. 421.</ref>

In 1860 Gladstone intended to abolish the duty on paper&nbsp;– a controversial policy&nbsp;– because the duty traditionally inflated the cost of publishing and hindered the dissemination of radical working-class ideas. Although Palmerston supported the continuation of the duty, using it and income tax revenue to buy arms, a majority of his Cabinet supported Gladstone. The Bill to abolish duties on paper narrowly passed the Commons but was rejected by the House of Lords. No [[money bill]] had been rejected by the Lords for over 200 years, and a furore arose over this vote. The next year, Gladstone included the abolition of paper duty in a consolidated [[Finance Bill]] (the first ever) to force the Lords to accept it and accept it they did. The proposal in the Commons of one bill only per session for the national finances was a precedent uniformly followed from that date until 1910, and it has been ever since the rule.<ref>McKechnie, ''The reform of the House of Lords''</ref>

Gladstone steadily reduced Income tax over the course of his tenure as Chancellor. In 1861 the tax was reduced to ninepence (£0–0s–9d), in 1863 to sevenpence, in 1864 to fivepence and in 1865 to fourpence.<ref>{{cite book |first=L. C. B. |last=Seaman |title=Victorian England: Aspects of English and Imperial History, 1837–1901 |publisher=Routledge |date=1973 |pages=183–184}}</ref> Gladstone believed that government was extravagant and wasteful with taxpayers' money and so sought to let money "fructify in the pockets of the people" by keeping taxation levels down through "peace and retrenchment". In 1859 he wrote to his brother, who was a member of the Financial Reform Association at Liverpool: "Economy is the first and great article (economy such as I understand it) in my financial creed. The controversy between direct and indirect taxation holds a minor, though important place".<ref>{{cite book |first=F. W. |last=Hirst |title=Gladstone as Financier and Economist |location=London |publisher=Ernest Benn Limited |date=1931 |pages=241}}</ref> He wrote to his wife on 14 January 1860: "I am ''certain'', from experience, of the immense advantage of strict account-keeping in early life. It is just like learning the grammar then, which when once learned need not be referred to afterwards".<ref>Hirst, pp. 242–243.</ref>{{incomplete short citation|date=March 2020}}
{{efn| The Austrian economist [[Joseph Schumpeter]] described Gladstonian finance in his ''History of Economic Analysis'': <blockquote>... there was one man who not only united high ability with unparalleled opportunity but also knew how to turn budgets into political triumphs and who stands in history as the greatest English financier of economic liberalism, Gladstone. ... The greatest feature of Gladstonian finance ... was that it expressed with ideal adequacy both the whole civilisation and the needs of the time, ''ex visu'' of the conditions of the country to which it was to apply; or, to put it slightly differently, that it translated a social, political, and economic vision, which was comprehensive as well as historically correct, into the clauses of a set of co-ordinated fiscal measures. ... Gladstonian finance was the finance of the system of 'natural liberty,' laissez-faire, and free trade ... the most important thing was to remove fiscal obstructions to private activity. And for this, in turn, it was necessary to keep public expenditure low. Retrenchment was the victorious slogan of the day ... it means the reduction of the functions of the state to a minimum ... retrenchment means rationalisation of the remaining functions of the state, which among other things implies as small a military establishment as possible. The resulting economic development would in addition, so it was believed, make social expenditures largely superfluous. ... Equally important was it ... to raise the revenue that would still have to be raised in such a way as to deflect economic behaviour as little as possible from what it would have been in the absence of all taxation ('taxation for revenue only'). And since the profit motive and the propensity to save were considered of paramount importance for the economic progress of ''all'' classes, this meant in particular that taxation should as little as possible interfere with the net earnings of a business. ... As regards indirect taxes, the principle of least interference was interpreted by Gladstone to mean that taxation should be concentrated on a few important articles, leaving the rest free. ... Last, but not least, we have the principle of the balanced budget.<ref>{{cite book |last= Schumpeter |first= Joseph A. |author-link = Joseph Schumpeter |title= History of Economic Analysis |place= New York |publisher= Oxford University Press |year= 1954 |url=https://archive.org/details/historyofeconomi0000unse_t1a8/page/n5/mode/2up?view=theater |url-access= registration |pages= [https://archive.org/details/historyofeconomi0000unse_t1a8/page/402/mode/2up?view=theater 402]-405 |editor= [[Elizabeth Boody Schumpeter]]  |via= [[Internet Archive]]}}</ref></blockquote>}}

Because of his actions as Chancellor, Gladstone earned the reputation as the liberator of British trade and the working man's breakfast table, the man responsible for the emancipation of the popular press from "taxes upon knowledge" and for placing a duty on the succession of the estates of the rich.<ref>{{cite book |first=Eugenio |last=Biagini |chapter=Popular Liberals, Gladstonian finance and the debate on taxation, 1860–1874 |editor-first1=Eugenio |editor-last1=Biagini |editor-first2=Alastair |editor-last2=Reid |title=Currents of Radicalism. Popular Radicalism, Organised Labour and Party Politics in Britain, 1850–1914 |publisher=Cambridge University Press |date=1991 |page=139}}</ref> Gladstone's popularity rested on his taxation policies which meant to his supporters balance, social equity and political justice.<ref>Biagini, ''Popular Liberals, Gladstonian finance and the debate on taxation, 1860–1874'', pp. 140–141.</ref> The most significant expression of working-class opinion was at Northumberland in 1862 when Gladstone visited. [[George Holyoake]] recalled in 1865:
<blockquote>When Mr Gladstone visited the North, you well remember when word passed from the newspaper to the workman that it circulated through mines and mills, factories and workshops, and they came out to greet the only British minister who ever gave the English people a right because it was just they should have it ... and when he went down the Tyne, all the country heard how twenty miles of banks were lined with people who came to greet him. Men stood in the blaze of chimneys; the roofs of factories were crowded; colliers came up from the mines; women held up their children on the banks that it might be said in after life that they had seen the Chancellor of the People go by. The river was covered like the land. Every man who could ply an oar pulled up to give Mr Gladstone a cheer. When Lord Palmerston went to Bradford the streets were still, and working men imposed silence upon themselves. When Mr Gladstone appeared on the Tyne he heard cheer no other English minister ever heard ... the people were grateful to him, and rough pitmen who never approached a public man before, pressed round his carriage by thousands ... and thousands of arms were stretched out at once, to shake hands with Mr Gladstone as one of themselves.<ref>Biagini, ''Popular Liberals, Gladstonian finance and the debate on taxation, 1860–1874'', p. 142.</ref></blockquote>

When Gladstone first joined Palmerston's government in 1859, he had opposed further electoral reform, but he changed his position during Palmerston's last premiership, and by 1865 he was firmly in favour of enfranchising the working classes in towns. The policy caused friction with Palmerston, who strongly opposed enfranchisement. At the beginning of each [[Parliamentary session|session]], Gladstone would passionately urge the Cabinet to adopt new policies, while Palmerston would fixedly stare at a paper before him. At a lull in Gladstone's speech, Palmerston would smile, rap the table with his knuckles, and interject pointedly, "Now, my Lords and gentlemen, let us go to business".<ref>{{cite book |first=Jasper |last=Ridley |title=Lord Palmerston |publisher=Constable |date=1970 |page=563}}</ref> Although he personally was not a Nonconformist, and rather disliked them in person, he formed a coalition with the Nonconformists that gave the Liberals a powerful base of support.<ref>{{cite journal |first=G. I. T. |last=Machin |title=Gladstone and Nonconformity in the 1860s: The Formation of an Alliance |journal=Historical Journal |volume=17 |issue=2 |date=1974 |pages=347–364 |doi=10.1017/S0018246X00007780 |jstor=2638302 |url=https://www.jstor.org/stable/2638302 |archive-url=https://web.archive.org/web/20200809013014/https://www.jstor.org/stable/2638302 |archive-date=9 August 2020}}</ref>

===American Civil War===
Palmerston's government adopted a position of British neutrality throughout the war while declining to recognise the independence of the [[Confederate States of America|Confederacy]]. In October 1862 Gladstone made a speech in [[Newcastle upon Tyne|Newcastle]] in which he said that [[Jefferson Davis]] and the other Confederate leaders had "made a nation", and that the Confederacy seemed certain to succeed in asserting its independence from the North, and that the time might come when it would be the duty of the European powers to "offer friendly aid in compromising the quarrel."<ref>''The Observer'' (12 October 1862), p. 3.</ref> The speech caused consternation on both sides of the Atlantic and led to speculation that Britain might be about to recognise the Confederacy.<ref name=":0">''The Times'' (20 October 1862), p. 7.</ref><ref>''The New York Times'' (25 October 1862), p. 4.</ref> Gladstone was accused of sympathising with the South, a charge he rejected.<ref>Quinault, p. 376.</ref><ref name=":5"/> Gladstone was forced to clarify in the press that his comments in Newcastle had not been intended to signal a change in government policy, but to express his belief that the North's efforts to defeat the South would fail, due to the strength of Southern resistance.<ref name=":0"/><ref>''The Times'' (24 October 1862), p. 7.</ref>

===Electoral reform===
In May 1864 Gladstone said that he saw no reason in principle why all mentally able men could not be enfranchised, but admitted that this would only come about once the working classes themselves showed more interest in the subject. Queen Victoria was not pleased with this statement, and an outraged Palmerston considered it a seditious incitement to agitation.<ref>{{cite book |first=W. D. |last=Handcock |title=English Historical Documents |page=168}}</ref>

Gladstone's support for electoral reform and disestablishment of the (Anglican) [[Church of Ireland]] won support from Nonconformists but alienated him from constituents in his Oxford University seat, and he lost it in the [[1865 United Kingdom general election|1865 general election]]. A month later he stood as a candidate in [[South Lancashire (UK Parliament constituency)|South Lancashire]], where he was elected third MP (South Lancashire at this time elected three MPs). Palmerston campaigned for Gladstone in Oxford because he believed that his constituents would keep him "partially muzzled"; many Oxford graduates were Anglican clergymen at that time. A victorious Gladstone told his new constituency, "At last, my friends, I am come among you; and I am come&nbsp;– to use an expression which has become very famous and is not likely to be forgotten&nbsp;– I am come 'unmuzzled'."<ref>{{cite book |first=Llewellyn |last=Woodward |title=The Age of Reform, 1815–1870 |date=1962 |page=182}}</ref>

On Palmerston's death in October, Earl Russell formed his second ministry.<ref>{{cite journal |first=J. M. |last=Prest |title=Gladstone and Russell |journal=Transactions of the Royal Historical Society |volume=16 |date=1966 |pages=43–63|doi=10.2307/3678794 |jstor=3678794 }}</ref>  Russell and Gladstone (now the senior Liberal in the House of Commons) attempted to pass a reform bill, which was defeated in the Commons because the "[[Adullamite]]" Whigs, led by [[Robert Lowe]], refused to support it. The Conservatives then formed a ministry, in which after a long parliamentary debate Disraeli passed the [[Reform Act 1867]]; Gladstone's proposed bill had been totally outmanoeuvred; he stormed into the chamber, but too late to see his arch-enemy pass the bill. Gladstone was furious; his animus commenced a long rivalry that would only end on Disraeli's death and Gladstone's encomium in the Commons in 1881.<ref>{{cite journal |first=James |last=Winter |title=The Cave of Adullam and parliamentary reform |journal=English Historical Review |volume=81 |issue=318 |date=1966 |pages=38–55|doi=10.1093/ehr/LXXXI.CCCXVIII.38 }}</ref>

===Leader of the Liberal Party, from 1867===
Lord Russell retired in 1867 and Gladstone became leader of the Liberal Party.<ref name=EB1911/><ref>{{cite book |first=William Evan |last=Williams |title=The rise of Gladstone to the leadership of the Liberal Party, 1859–1868 |publisher=Cambridge Unhiversity Press |date=1973}}</ref> In 1868 the Irish Church Resolutions were proposed as a measure to reunite the Liberal Party in government (on the issue of disestablishment of the [[Church of Ireland]]&nbsp;– this would be done during Gladstone's First Government in 1869 and meant that Irish Roman Catholics did not need to pay their [[tithe]]s to the Anglican Church of Ireland).<ref>{{cite journal |first=John D. |last=Fair |title=The Irish disestablishment conference of 1869 |journal=Journal of Ecclesiastical History |volume=26 |issue=4 |date=1975 |pages=379–394|doi=10.1017/S0022046900047734 }}</ref> When it was passed, Disraeli took the hint and called [[1868 United Kingdom general election|a General Election]].