HC Deb 23 April 1846 vol 85 cc958-67
VISCOUNT SANDON

then moved for copies of all memorials addressed to the First Lord of the Treasury and the President of the Board of Trade, praying for a reduction of the duty on tea. It was most desirable that the attention of the House and of Her Majesty's Government should be called to the enormous duty upon tea: unless they were prepared to make a considerable reduction of duty upon that important article, it was impossible to reap from the open intercourse with China the advantages we hoped to derive from it. He admitted that the consumption of tea had increased; but not in proportion to the increase of the population, nor in proportion to the increase in the consumption of coffee. Dividing the aggregate consumption of tea for the last ten years into periods of five years, he found that the average consumption of the first five years was 38,118,000lb. per year, and for the last five years 39,914,000lb., notwithstanding the increase of the population. In the same period the consumption of coffee had increased from 25,000,000lb. to 34,000,000lb. The operation of this heavy duty was to deprive the people of this country of an innocent beverage, whilst it tended to starve our trade with China, from the impossibility of finding returns for our manufactures. The result of the correspondence he had had respecting this subject was, that it was impossible to carry on trade with China in cash; that it was a trade of barter, and we must take the produce of China in return for our exports. Hitherto there had been only two articles we could import, silk and tea, and the duty upon the latter article placed a limit to the exportation of our manufactures to China. It stood to reason that a duty of from 200 to 250 per cent on the main production of China must produce a strong feeling against, and very prejudicial notions of the commercial spirit of this country. They would the more readily arrive at such conclusion from a comparison of the conduct of England with that of other countries; for we were the only one in the world that imposed any high duty on tea. Into America tea was imported duty free; into Holland with a duty of 1½d., and of 4d. per lb. on the highest qualities. Into Australia, to go to our own Colonies, it was imported at a duty of 10 per cent. Into Newfoundland, at a duty of 3d. per pound; and in Guernsey there was no duty at all upon tea, and what was the result? In Australia it was consumed at the rate of 11 pounds, 11¼d. per head, while in England it was at 1l., or 1¾d. per head; and in Guernsey the consumption was 4l. per head. He was not of that sanguine school which looked for a compensation to the revenue by the reduction of a duty in the instantaneous increase of consumption; but he certainly thought that if there was any one article more than others upon which such an experiment might safely be tried, that article was tea. And then it should be remembered that, in the case of tea, a reduction of duty would be followed by an increased consumption of, and therefore increased revenue from sugar; for every pound of tea there were five pounds of sugar consumed; and this fact might therefore induce the Chancellor of the Exchequer to look upon tea with some favour. It would not be denied that an extension of our commercial relations with China was most desirable; and that result could not be attained otherwise than by a reduction of the duty on tea. It was well known in this country that the markets of China could absorb any extent of manufactures; but a trade on that great scale would never be accomplished unless we consented to deal with the Chinese people on a footing of something like reciprocity.

MR. MOFFATT

seconded the Motion. The importance of the subject would, he hoped, be accepted as his apology for occupying the attention of the House at that late hour. This was no mere fiscal question, no mere question of the amount of revenue to be derived from a particular article, but a question affecting the permanent welfare of our all-important Indian commerce; for, let it be kept in mind, the commerce of England, India, and China, were so closely interwoven, that, unless the China commerce with England and India was flourishing, the English commerce with India was nearly affected. What was the state of our commercial intercourse with China? That we exported to China five millions of goods annnally, and only took from China three millions of its commodities in return, receiving the balance in bullion. The exports of Great Britain and India together to China, in 1844, amounted to merchandise, 4,016,264l.; opium, 4,855,338l.; total, 8,871,602l. While the imports from China were, merchandise, 4,379,346l., leaving to be paid in bullion the sum of 3,403,209l. This drainage on our part of bullion from China, which had been going on for the last twenty years had been and continued to be a cause of great and bitter complaint against us in China: the late war, in truth, owed its origin not to the opium question, but to the drainage of Sycee silver from China, instead of taking her commodities in exchange for the opium. The drain of bullion had been gradually increasing, from the year 1831, when 900,000l. was exported from China, to the last year on record, when 3,700,000l. was taken and abstracted from that country; and in this fact had originated the hostile feelings of the Chinese towards the English. The right hon. the Chancellor of the Exchequer would recollect that this exhaustion of the precious metals had always dissatisfied the Chinese. In fact, all their proclamations showed that as distinctly as any documents could do. He need hardly call the attention of the right hon. the Chancellor of the Exchequer to this fact; for it would be admitted by all that this had been the source of the ill feeling entertained by China against the English. At the shipment of the last silver, a crowd had gathered, and the strongest feeling had been expressed against the abstraction of the silver—not because it was paid in the shape of ransom money, but from the belief that its exportation was the cause of national distress. Year after year the Chinese Government had been remonstrating against this state of things. In 1834, it had declared—"The barbarian merchants have clandestinely sold opium for money; thus money has been going out of the country, and none comes in." In 1836 the same complaint was made. It said—"The money thus lost is entirely the fine silver of the inner land." In 1838—"The price of silver daily increases: this does not arise from any scarcity, but the fact is occasioned by the silver flowing to the outside foreigners. Now the whole empire knows that the leak in the cup is occasioned by opium." It could not be denied that the opium trade had been productive of very considerable imports from China; it would be admitted on all hands that both exports and imports had considerably increased; but the question was whether our exports to China had not been increased to a very much larger extent than our imports from that country. It was true our imports of tea had largely increased. Our consumption had risen from thirty-two to forty-five million pounds; but that was chiefly referable to the recent reductions. The Chancellor of the Exchequer, on a former occasion, had declared, when the duty was fixed at 2s. 2¼d., that all he required was three millions and a half of revenue, and with that he would be per- fectly satisfied; but, owing to the increase that had taken place in the consumption, the revenue from that article was now 4,826,390l. Amidst all the great fiscal changes that were taking place, it appeared to be fixed and settled that tea was to be the last article to derive any benefit from the alleviative course now going on. It was quite obvious that no apprehensions of a deficiency of revenue need be entertained from the reduction in the duty on tea. In the case of every other article of large general consumption, in which reductions of duty had been made, it had been found that the reduction had quickly compensated the revenue by increased consumption. It was scarcely necessary to call the attention of the Chancellor of the Exchequer to the numerous instances in which this principle had been exemplified. He might refer to sugar; but he would rather quote an article, in reference to which the facts were less generally known. In 1823, the duty on cocoa was one shilling per lb.; the consumption was then 286,657 pounds. In 1831, the duty was reduced, 50 per cent, to sixpence, and the consumption doubled, being in that year 502,506 lbs. In 1832, the duty was again reduced from 6d. to 2d.; the consumption then increased to 1,150,193 lbs. In 1844 it was still further reduced to a penny; and the consumption was again doubled, being then 2,590,528 lbs. The article of coffee exhibited a still more extraordinary increase of consumption, in proportion as the duty had been reduced. In 1807, the duty on colonial coffee was 1s. 8d. per lb., and the consumption then amounted to 1,170,164 lbs. Successive reductions were made; and in 1809, when the duty was 7d., the consumption was 9,251,847 lbs. In 1819, the duty was raised again to 1s., and this was immediately followed by a decline in the consumption to 7,993,040 lbs. In 1831, the duty was reduced to 6d., and the consumption increased threefold, being then 22,740,327 lbs. In 1845, the duty on colonial coffee had been reduced to 4d. per lb., and the consumption had risen to 34,318,000 lbs., thus producing a larger amount of revenue than had been derived from the higher duty. Those who had watched the operation of price upon consumption, would agree with him that the effect had been, in almost every case, an increase of consumption in an equal ratio to the reduction of cost to the consumer. In tea also there had been a continuous depreciation in price, with a steady advance of consumption; and he could not help thinking, that if the Chancellor of the Exchequer rightly estimated these facts, he would, for the sake of increasing the revenue from tea, reduce the duty on that article. The present consumption of tea was 44,127,000 pounds; and it might fairly be assumed, that a reduction of one shilling per lb. in the amount of duty, would cause an increase of 50 per cent in the consumption. The present amount of revenue was 4,826,390l.; deducting 2,206,350l., for the reduction of one shilling per lb. in the duty, and adding 1,310,020l. for the duty on the increased quantity consumed, there would still remain a loss to the revenue of about 900,000l. But it should be borne in mind that this increased consumption of tea would of necessity cause a large increase in the consumption of sugar; and though he was not so sanguine on this subject as the noble Lord (Lord Sandon) who had moved the Resolution, and who assumed that for every additional pound of tea there would be consumed five additional pounds of sugar, yet from the result of a careful calculation, formed on an average from returns obtained of the respective quantities of sugar consumed to each pound of tea, by different classes of society, he was convinced that the proportionate increase in the consumption of sugar would be at least 3¾ pounds to one pound of tea. This would be equivalent to an increased consumption of 738,821 cwts. of sugar, which, at the reduced duty of 19s. 10d. per cwt., as proposed on free labour sugar, would yield an additional revenue of 732,665l.; thus reducing the loss to the revenue at first, by the reduction of the duty on tea, to 167,000l. But as the consumption would go on increasing, there was no doubt that this trifling deficiency would soon be made up, and that a surplus revenue would be the result. Such being the facts, he thought the experiment of a reduction of duty might safely be made, and made at an early period. Our commercial relations with China demanded this concession; the Chinese admitted our manufactures at very low duties, and had nothing to give in return but tea. During the present year the loss to the tea importers was equivalent to 600,000l. It was about twenty per cent on the whole value of the tea imported into this country. On many teas it was more than thirty per cent; on some it was less than twenty. The Chancellor of the Exchequer shook his head, and seemed to think he had nothing to do with that. He (Mr. Moffatt) thought the Government had much to do with fiscal obstructions to any branch of commerce. It was not equitable when, by the Treaty with China, English manufactures were admitted at low rates of duty, the principal article of Chinese export should be subject to such enormous charges as 200 or 300 per cent. Contrast our conduct to China with that pursued towards other countries. The goods of Russia were admitted into this country at very low rates; while it levied high duties on some, and excluded many of the manufactures of this country. The duties with France had been reduced; and to this moment our woollen and cotton goods were prohibited there. In China the duties on English goods were from five to ten per cent; and in England they were from 100 to 300 per cent. He could scarcely believe that the distinguished officer who had made that Treaty thought it was to be thus carried out. How long would that Treaty last? It was hardly to be expected that the Chinese should continue to admit our goods at low duties, while theirs were subject to almost prohibitory rates here. The noble Lord (Lord Sandon) had stated that he scarcely hoped that any present reduction would be made in the tea duties; but the hope was very strongly held by the merchants and manufacturers that the Government would recognise the importance of the subject, and would take the case into its early consideration. In asking that, he did not think that the merchants and manufacturers asked too much; and he hoped that the Government would give it their full and prompt consideration.

The CHANCELLOR OF THE EXCHEQUER

was understood to say that he had no objection to the production of the memorials moved for by his noble Friend. If they were laid before the House, no doubt important information would be furnished by persons most conversant in the trade. The hon. Gentleman opposite seemed to think that he (the Chancellor of the Exchequer) should be prepared to state whether the Government meant to propose a reduction in the duty on tea. Now he did not think that it was consistent with his public duty at present to say what were the intentions of the Government. His noble Friend had taken a very correct view of what would probably be the financial state of the present Session. It should be recollected that the revenue on tea was very little short of five millions, and that the general revenue of the country was not in a state to allow of such a loss of revenue as would result from a large reduction in the duty on tea. A small reduction of the duty on that article would not give the benefit of it to the consumer, but to another class. His noble Friend and the hon. Gentleman had drawn a parallel between the duty on tea and that on other articles; but he did not think that it stood exactly on the same footing. The hon. Gentleman alluded to the reduction of the duties on articles the production of European countries, and he said that, therefore, they should make a similar reduction on the produce of China. He did not dispute, as a general principle, that they should impose the lowest possible duty that was consistent with the interest of the revenue. The honourable Gentleman had alluded to the application of this principle with respect to other articles; but with regard to several of them, they gave great advantage to colonial produce, as compared with the produce of other countries. His noble Friend, in recommending a reduction in the duty on tea, said that the effect would be a large increase in the amount of the sugar duties. Now, the House would remember that last year, when he recommended a large reduction in the duty on sugar, he said that in doing so he looked to an increase in the consumption of tea in consequence of it, and that this would go some way to make up for the loss of revenue in sugar. In 1844 he had received a deputation on this subject, which had assured him that unless there was immediately a very large reduction in the duty on tea, it was impossible that the amount of the exports to China could be kept up. At that time our exports to China amounted to 1,500,000l., but the year after they had increased to 2,800,000l. Therefore, though he did not dispute the general principle laid down by the noble Lord, that a reduction of duty would increase our trade, his case was not to be regarded as quite so strong as at first sight appeared, especially when they found that the persons most conversant with the subject were mistaken on this point. He was not prepared to hold out any expectations as to the course which Government would pursue, though he had no objection to produce the memorial moved for—a document which would be entitled to the fullest consideration, considering it to be the production of persons well acquainted with all the details of the question before the House.

MR. J. A. SMITH

expressed the satisfaction he felt that this most important question had been brought under the notice not only of the House but of Her Majesty's Government, and he sincerely hoped, notwithstanding what had fallen from the right hon. Gentleman the Chancellor of the Exchequer, that before this discussion closed the right hon. Baronet at the head of the Government would give some expression to his sentiments upon a question which involved far greater and even more important interests than those of the mere consumers of the article of tea. While he admitted that the question of revenue must be paramount in the consideration of the Government, yet he in his conscience believed that by a reduction of the duties on that article of import, one of the most important openings to commercial enterprise that ever occurred would be secured, if an intelligent and wise use was made of the opportunity. Something ought to be done to meet the liberal tariff of the Chinese Government. Confirming, as he was able to do, in the strongest possible manner, the statements which had been made as to the condition, during the last eighteen months, of the tea-trade by his hon. Friend the Member for Dartmouth (Mr. Moffatt), he could assure the Government that unless a great change was made in the tea duties, and that the limits which were put upon the trade with China were removed, the commerce between this country and China would undergo a most serious and rapid decrease. Although he did not expect that the Government would be prepared to give any pledge on the subject, yet he hoped some evidence would be given to-night which would satisfy the House and the public that this important question occupied the attention of the Government, and that the interests neither of the consumers nor of those trading to China would be lost sight of.

MR. ENTWISLE

supported the Motion, and said the duties upon tea offered a fair subject for the application of those principles of free trade which had occupied so much attention on both sides of the House. He reminded the House that the people of China would trade with those countries with which they could do so on the most equitable terms; and their good feeling towards this country depended upon the liberality with which they were treated. He conceived that an opportunity like this of largely extending their trade with that country should not be neglected, but should, on the contrary, be taken the advantage of; and he was of opinion that the greatest security they could enjoy against foreign competion would be such increased demand for their manufactures.

MR. WYSE

said, there had been a considerable improvement in the consumption of tea in Ireland, particularly in the towns, and that consumption was likely to be still further increased if a reduction of duty should take place. Considering the evidence before them, with respect to the increased consumption of coffee resulting from the diminution of the duty on that article, they should expect that the same result would follow from the reduction of the duty on tea. It should be recollected, that the establishment of the principle of temperance had tended to supersede the use of spirituous liquors and other drinks of that description, and that fact alone should afford an additional inducement to the Chancellor of the Exchequer to reduce the duty on tea.

Motion agreed to.

House adjourned at a quarter before One o'clock.