The surplus which Mr Gladstone thus reckons upon this year is far below the amount which our best financiers consider requisite for the maintenance of a sound system of finance. It is true, and we attach great weight to the consideration, that the present depressed state of an important branch of national industry renders it desirable that the taxation of the country should be reduced as low as possible. But this argument, unhappily, cuts two ways. For the same depression of trade, which calls for a minimum of taxation this year, to at least a similar extent places in jeopardy the surplus which the Chancellor of the Exchequer reckons upon. In his estimate of the produce of the excise, especially, we believe that he commits his usual mistake of being too sanguine. But the really hazardous feature of his Budget consists in this: That only a part of the proposed reductions of taxation will take effect during the ensuing year; and, therefore, the estimates which suffice for the financial year, upon which we have entered, will be inadequate for the year following. The reductions of taxation which will take place before April next will, as we have said, amount to £3,343,000; but the total yearly loss of revenue consequent upon the reductions proposed by the Chancellor of the Exchequer, is £4,242,000; so that if they took entire effect during the present year, instead of a surplus of £531,000, there would be a deficit of £368,000. But of the loss on the Income-tax, £850,000 will only fall on the following year (1864–5), and £49,000 of loss from the abolition of some petty taxes will likewise be passed on to next year. Thus we obtain a surplus of £531,000 for the present financial year only by passing on to next year a loss of £900,000. If the finances had been in a thoroughly good condition, and if the state of the country promised to be prosperous, and our relations with other Powers peaceful, the heavy legacy of loss for the year 1864–5 might be contemplated with less alarm; for the experience of late years shows that, in ordinary times, the productiveness of the revenue tends to augment at the rate of £700,000 a-year. But this is not the case. And, moreover, as Mr Gladstone’s estimate of the miscellaneous receipts for the present year embrace half a million sterling of the China indemnity money—a payment which will not take place again—the deficit which we are preparing for the year 1864–5, is an exceedingly formidable one = £1,400,000.