Though the colony of Victoria was still vexed by the conflict between the two orders of its Legislature, and India was suffering from a famine in one of its Provinces, the dependencies of England in 1867 enjoyed profound tranquillity. One of them, indeed, took a new departure in colonial history. On the 26th of February Lord Carnarvon, carrying out the policy of his predecessor, passed a Bill through the House of Lords, incorporating the scattered provinces of Canada into a Federal Dominion. The financial history of the year, too, was uneventful. Mr. Disraeli introduced his Budget on the 4th of April, just before the Easter recess. In the previous year Mr. Gladstone had determined to use the balance of his surplus for the creation of terminable annuities in order to extinguish debt. The distracted state of affairs abroad, and the difficulties of the Government at home had, however, frustrated the scheme. But it was adopted by Mr. Disraeli in 1867. “He converted £6,000,000 of stock,” says Mr. A. J. Wilson, “costing £180,000 per annum in interest, into an annuity of £440,000, expiring in April, 1885. Of the gross estimated surplus of £1,200,000 he proposed to keep £250,000 against contingencies; and the resolution was wise, for, owing to the Abyssinian War, and to the increase in the general costliness of the public services, the year ended with a considerable deficit. Mr. Disraeli estimated his revenue at £69,340,000, and the actual income was £69,600,000. But the expenditure, instead of being only £68,134,000, as estimated, reached £71,759,000. Deducting £2,000,000 charged that year to the war, the ordinary expenditure still exceeded the estimate by fully a million and a half, about £700,000 of which was due to the increased cost of civil administration.”[261] Hence the [Illustration: LAST MOMENTS OF THE EMPEROR MAXIMILIAN. (_After the Picture by Jean-Paul Laurens._)] people said that the old ill-luck of the Tories in finance followed them still. The days of plump surpluses had vanished, and those of growing expenditure and dismal deficits had begun. The only remission of taxation which Mr. Disraeli proposed was the reduction of the Marine Insurance Duties. The Budget, in fact was a tribute to those who, like Mr. Mill and Mr. Stanley Jevons, had impressed the public mind that the time had come when sacrifices must be made not to reduce taxes, but to pay off National Debt. [Illustration: LORD NAAS (AFTERWARDS EARL OF MAYO).]