Chancellor of the Exchequer
In
1852, following the ascendancy of
Lord Aberdeen, as premier, head of a coalition of
Whigs and
Peelites, Gladstone became
Chancellor of the Exchequer and unsuccessfully tried to abolish the
income tax. Instead he ended up raising it because of the
Crimean War. He served until 1855.
Lord Stanley became Prime Minister in 1858, but Gladstone declined a position in his government, opting not to work with
Benjamin Disraeli, then Chancellor of the Exchequer and
Leader of the House of Commons. In 1859, Lord Palmerston formed a new mixed government with Radicals included, and Gladstone again joined the government as Chancellor of the Exchequer (with most of the other remaining Peelites) to become part of the new
Liberal Party.
During consideration of his Budget for 1860, it was generally assumed that Gladstone would use the budget's surplus of £5 million to abolish the income tax, as in 1853 he had promised to do this before the decade was out. Instead, Gladstone proposed to increase it and use the additional revenue to abolish
duties on paper, a controversial policy because the duties had traditionally inflated the costs of publishing and disseminating radical working-class ideas. Although Palmerston supported continuation of the duties, using them and income tax revenues to make armament purchases, a majority of his Cabinet supported Gladstone. The Bill to abolish duties on paper narrowly passed Commons but was rejected by the House of Lords. As no
money bill had been rejected by Lords for over two hundred years, a furore arose over this vote. The next year, Gladstone included the abolition of paper duties in a
Finance Bill in order to force the Lords to accept it, and accept it they did.
Significantly, Gladstone succeeded in steadily reducing the income tax over the course of his tenure as Chancellor. In 1861 the tax was reduced to ninepence; in 1863 to sevenpence; in 1864 to fivepence; and in 1865 to fourpence. 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".
When Gladstone first joined Palmerston's government in 1859, he opposed further electoral reform, but he moved toward the Left during Palmerston's last premiership, and by 1865 he was firmly in favour of enfranchising the working classes in towns. This latter policy created friction with Palmerston, who strongly opposed enfranchisement. At the beginning of each
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".
As Chancellor, Gladstone made a speech at
Newcastle on
7 October 1862 in which he supported the independence of the
Confederate States of America in the
American Civil War, claiming that
Jefferson Davis had "made a nation". Great Britain was officially neutral at the time, and Gladstone later regretted the Newcastle speech. 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
seditious incitement to agitation.
Gladstone's support for electoral reform and disestablishment of the
Anglican Church in Ireland had alienated him from his constituents in his
Oxford University seat, and he lost it in the
1865 general election. A month later, however, he stood as a candidate in
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". A victorious Gladstone told his new constituency, "At last, my friends, I am come among you; and I am come--to use an expression which has become very famous and is not likely to be forgotten--I am come 'unmuzzled'."
In 1858 Gladstone took up the hobby of tree felling, mostly of
oak trees, an exercise he continued with enthusiasm until he was 81 in 1891. Eventually, he became notorious for this activity, prompting
Lord Randolph Churchill to snicker, "The forest laments in order that Mr. Gladstone may perspire." Less noticed at the time was his practice of replacing the trees he'd felled with newly-planted saplings. Possibly related to this hobby is the fact that Gladstone was a lifelong
bibliophile.