§ MR. CHISHOLM ANSTEY
rose to move for a Select Committee to inquire into the cause of the decline in the Revenue derived from the Import Duties on Wines. The terms of his Motion demanded some explanation. He was willing to admit that, if the Revenue of the present year were only to be compared with that of one or two years immediately preceding, if would not be correct to say that there had been a decline. What he meant was 396 to present a comparison between the present revenue and that derived from the wine duties at any former period, when the rates were lower in amount. If the Committee were granted, he should endeavour to satisfy them that a very great additional revenue could be obtained by the equalisation and reduction of these duties. He would show them, by a reference to former times, that when the duties were high, the amount of the revenue derived from them was low, and vice versâ; and that under the present rate of those duties, consumption had declined, frauds had increased, and revenue, instead of progressing with the population, had dwindled. He would first call the attention of the House to the years 1788–90, as compared with the present period. The Wine trade was then comparatively free, the genius of Mr. Pitt having freed it from many restrictions which the prejudices of former times had imposed upon it. Mr. Pitt, on laying before the House on the 6th May, 1786, his proposal to reduce the duties on wine from 9s. 2d. to 4s. 6d. on French, and 3s. on Peninsular wines, and to give effect to the French treaty of 1786, said, that the reduction of the duties would increase the consumption of wine, and would add largely to our exports of manufactured goods, and to the amount of the revenue, and would greatly diminish those frauds by which not less than 280,000l. was then annually lost to the country on a revenue of 848,509l. The prediction was fulfilled. Such was the effect of the reduction, that whereas the consumption of wine in the two years previous to the reduction, had been only 3,350,130 imperial gallons, it rose in 1788–90 to 5,742,660 gallons, and the increase in the consumption was accompanied by an increase of 88,556l. to the revenue. The population of the United Kingdom was then less than 14,500,000, but although it had in 1851 increased to nearly 30,000,000, the consumption of wine, which was 7,851,707 gallons in 1791, had in 1849, the last period to which the official returns extended, fallen off to 6,437,222 gallons; the population having more than doubled itself in the same time; and property, which even in 1812, produced only 21,500,000l. chargeable with income tax, yielding, according to the returns in 1849, no less than 57,000,000l. so chargeable. To go back to a still earlier period: the duties in the reigns of Charles II. and James II. were 4d. and 8d. a gallon. Now the population 397 at that time, exclusive of Ireland, was about 5,000,000, and there was actually then a consumption of 9,000,000 gallons, of which not less than 4,000,000 gallons was French wine, a larger amount than had ever been consumed since 1703, the period known as that of the Mcthucn Treaty. The duties on French wines had been increased about that time to punish the French king for the encouragement he had given to the Stuarts, and the treaty further stipulated that they should always be 33½ per cent more than the duties on Peninsular wines. Mr. Pitt reduced all the duties, and the result was a rapid increase in the consumption. In 1788, the duties were further reduced, and so they remained until the revolutionary war; when they were again raised. He would not follow up the subsequent changes, but the fact was, that from 1786 the duties had been altered no less than twenty-two times. At one period there was a minimum duty on French wines of 4s. 10d.; at another a maximum of 19s. 8d.; and the rates had similarly varied with respect to Peninsular wines, from 3s. 1d. to 9s. 1d. per gallon. In 1825 Mr. Robinson reduced the duty on French wines from 13s. 9d. to 9s. 1¼d. per gallon, and on Peninsular wines from 7s. 2½d. to 4s. 9¾d. The result was that the consumption suddenly increased from 5,030,091 gallons to 8,009,542 gallons; and the revenue, which under the high duties had been 2,153,112l., even in the year after the change, reached to the sum of 1,955,790l. In 1831, all other wine duties were equalised; but, contrary to the original intention of the Legislature, a retrograde step was taken by the imposition of a differential duty in favour of Capo and Colonial wines—the duties then imposed being on all foreign wines 4s. 6d. per gallon; on Cape and Colonial wines 2s. 9d. The effect of this was seen in the fact that whereas up to 1831 the imports had been hardly 1,000,000 gallons annually in excess of the wine entered for home consumption, they rose subsequently to an annual excess of 2,000,000 or even 3,000,000 gallons on an import of 9,000,000 gallons. And it was asserted that since 1831 a new fraud had made its appearance in the trade, which was clearly traceable to the differential duty in favour of the low-priced and inferior wines of the Capo. It appeared that these low wines, having been imported at the low duty, were mixed with other wines and exported to obtain, in fraud of the revenue, the high drawback of 5s. 6d. 398 receivable in respect of those wines. These wines were also used for the adulteration of the foreign wine consumed in this country, which now went on to such an extent that he believed the people of this country consumed double or treble the quantity which appeared to be imported; the balance being made up of the stuff employed in adulteration by the vintner or licensed victualler. In 1840 a most impolitic enhancement took place, and these duties were again increased to 5s. 9d. 6-20ths. per gallon on foreign, and 2s. 10d. on colonial; and at these rates they had ever since continued. Now, a duty of 5s. 6d. per gallon amounted to 33l. per pipe, and when they considered that if the monopoly of the Oporto Wine Company were removed, the cost of a pipe of Portuguese wine would not exceed 10l., and that even so long as that company (which defrauded our revenue of 350,000l. annually) remained in existence, the cost of that high-priced wine should not exceed 20l., he thought they would be of opinion that a rate of duty was imposed which was justly objectionable on all sound principles of commercial policy. If this was the case with respect to the costliest wine, how much stronger was the objection to such a duty as applied to the low-priced wines of France and Germany. Even the rate of duty upon these wines, which he should propose to the Committee, would amount to not less than 50 or 60 per cent upon the price of many foreign wines; while, since 1846, that House had laid down the principle that in no case should the duty upon articles imported exceed 10 per cent upon its natural value. He had already mentioned that the duty had been increased in 1840 from 5s. 6d. to 5s. 9d. 6-20ths., and he found that that increase was again attended with a reduction both in consumption and in the revenue; for while in 1839 there was a consumption of 7,000,486 gallons, with a revenue of 1,849,698l., there was in 1840 a consumption of only 6,553,922 gallons, with a revenue of 1,791,636l. A summary of the returns from 1787 to the present time, taking five years as representing five different periods and rates of duties, gave the following results: In 1787, prior to the reductions of Mr. Pitt coming into force, the revenue was 848,509l. The effect of those reductions was to increase it in 1792 to 1,148,755l.; the reduction in 1825 made it 1,955,709l., being a diminution of only 197,000l., as compared with the previous year, although the duties had 399 been diminished one-half; and, after the reductions and equalisation of duties by the Act of 1831, the revenue amounted, in 1839, the year previous to the new increase of the duty, to 1,849,698l.; whilst, in 1850, it had fallen again, under the enhanced rate of duty, to 1,679,980l. So that the revenue was now, in 1850, about 210,000l. less with a duty of 5s. 9d. than in 1839 with a duty of 5s. 6d. But what he proposed was not merely to go back to the policy of 1831 and the eight following years, any more than to that of any of the periods to which he had referred, but to advance much further. He thought that it was impossible to impose an ad valorem duty on wine. He believed, to settle this question satisfactorily, they must adhere to the great principle laid down, first of all in 1825, arid afterwards in 1831, for the equal assessment; but to make that a just assessment they must assess the duty at the lowest price, and not to take the highest duty for their standard. The plan which he intended to submit to the Committee, if his Motion should be agreed to, was, that there should be a duty of 1s. per gallon imposed upon French wines, answering as nearly as possible to the octroi duty of I franc per gallon, which was at present imposed upon the wines which entered Paris. He believed that, if this plan were adopted, the consumption, not of what is called wine, but what was really wine, would be very much increased; that it would put an end to the present system of adulteration, and largely benefit the revenue. According to the latest return, the proportion of wine at present consumed in this country was 1 l–5th bottle per head. That was supposing no wine was drunk but what paid the duty; whereas in Hamburgh, where a moderate duty was long established, the proportion was 29 bottles per head, and in Paris no less than 216 bottles per head. Now, assuming that the amount of genuine wine imported into and consumed in the United Kingdom would increase under the reduced duty which he proposed, to the extent of only twelve bottles per head, we should have a revenue of nearly 3,000,000l., where we at present raised with difficulty 1,500,000l. But if, as was most reasonable to suppose, the increase should amount to eighteen bottles per head, or little more than one-half of the consumption at Hamburgh, the revenue would be increased to upwards of 4,000,000l. This would enable them to 400 dispense with the House Tax of last year, and many other taxes which still oppressed the lower classes, and prevented them from acquiring those habits of cleanliness which were indispensable to their health and comfort. Or, if they wished to gratify the British farmer, it would enable them to reduce, if not to look forward to the abolition of the malt tax. Such was the nature of his plan, and his object was to have a Committee to consider it; but he begged to say that hon. Members were pledged to nothing in agreeing to this Motion. There was one other point upon which he wished to say a word before concluding; and that was with reference to the Oporto Wine Company. The hon. Member then stated some facts to show that the Company's monopoly (established in 1754, in defiance of the Methuen Treaty of 1703), and revived in 1843, in defiance of that of 1842, had had the effect, in the first place, of gradually driving out of the market the cheaper wines, which, up to the middle of the last century, used to be imported into this country under the Methuen Treaty; and, in the next place, of materially debasing the quality and enhancing the price of port wines consumed in this country. If, however, we reduced our duties on other foreign wines, as he proposed, the effect would be to let in the whole world into competition with the Portuguese Government, who would then, in self-defence, be obliged to abandon the monopoly, and to take off their export duties in proportion as we took off our duties on imports. He believed that the House would entertain the proposition in a proper spirit. He did not fear to be met with a repetition of the exploded prejudices of other days, in which, however, the existing system of high duties had its origin. It was too late in the day for Parliament to return to the narrow-minded policy which, in 1703, dictated a Methuen Treaty, or in 1688 an "Act for prohibiting all trade and commerce with France." The country would laugh to be told now in the language of the preamble of the Act of the 1 W. & M. c. 34, that—It hath been found by long experience that the importing of French wines, vinegar, brandy, and other the commodities of the growth, produce, or manufacture of France, or of the territories or dominions of the French King, hath much exhausted the treasure of this nation, lessened the value of the native commodities and manufactures thereof, and greatly impoverished the English artificers and handicrafts, and caused great detriment to this kingdom in general.401 It would be vain to enact, as then it was enacted, that—None of the commodities aforesaid, or any any other whatsoever of French growth, product, or manufacture, shall be brought in or imported, and that all and every importation and importations, vending and selling, or uttering or retailing of any French wines, vinegar, brandy, or other commodities, shall be adjudged to be a common nuisance.A proposition which, within less than two years afterwards, even the Parliament that made it was obliged to confess (by the 2 W. & M. sess. 2, c. 14) to have lamentably failed, for that such commodities "were still imported." Trusting that a reduction of the import duty on wines would tend to promote commercial intercourse between this country and France, he proposed this Motion. The adoption of it would contribute more than any legislative measures which could be devised to the preservation of peace with all countries; an extended wine trade would become the best guarantee of amity with Europe, as our cotton trade was of amity with America; and it might go far to render unnecessary those gigantic schemes of national defence which were now agitating the minds of our statesmen.
§ THE CHANCELLOR OF THE EXCHEQUER
Sir, the hon. and learned Gentleman who has brought forward this question has entered into a long and, as far as I could collect, an accurate narrative of the history of the wine trade, sketched from the period of the Methuen Treaty to 1787, and even going much further back. I assure the hon. and learned Gentleman that I entirely sympathise with the policy that was pursued by Mr. Pitt—a policy founded upon the true commercial principles on which a country should he governed. I rejoice at the great advantages to both countries from what took place; but I must remind the hon. and learned Gentleman that the principle adopted by Mr. Pitt was a principle of reciprocity; and though we have at several periods reduced the duty on French wine, I do not find on the part of the French Government that reciprocal inclination that Mr. Pitt was more fortunate in meeting with. The hon. and learned Gentleman has also entered into some general principles of taxation on which I am inclined to agree with him in opinion. He has said that the reduction of taxation will lead to an increased consumption; but at the same time you are bound to take into consideration to what danger that decreased taxation will lead. I cannot but 402 remember that there was a considerable reduction of the duty on wine in 1831, and that it was not until 1844 the loss sustained by the revenue in consequence of that alteration was regained. It is therefore necessary in dealing with those questions to look to the revenue of the country with considerable caution. The Motion of the hon. and learned Gentleman is, in my mind, incorrect in expression. It is a Motion for a Select Committee to inquire into the causes of the decline in the revenue derived from the import duties on wine. Now it is not correct to state that there has been any decline in the revenue received from the import duties on wine. I shall put before the House a return I have just received of the state of the wine trade for the last four years, and in forming an opinion of the state of the revenue derived from the import duty on any branch of commerce, the more practical mode is to look to the times we live in, and not to the time of the Methuen Treaty, or the French treaty of 1787. Here is a return of the quantities of wine retained for home consumption in the United Kingdom, in the year ending the 5th of January, 1849, 1850, 1851, and 1852, with the amount of duty received thereon. I shall first refer to the amount of duty received, because it is to the decline in the revenue the hon. and learned Gentleman particularly calls attention. The amount of duty received on wine taken out for home consumption in the year l849, was 1,732,282l.; in the year 1850, 1,767,516l.; in 1851, it rose to 1,821,123l.; and in 1852, there was a slight decline to 1,777,259l. The House will observe that there is a slight decline in 1852, but that is entirely attributable to the large quantities that were taken out of bond by the vintners and licensed victuallers, in anticipation of a great consumption of wine at the congress of strangers in the metropolis during the Great Exhibition. It is a curious circumstance, however, that all the arrangements then made by the trade appear to have been very ill-judged, and the wine trade consequently has met with very great disappointment. Not only our own countrymen who congregated in the metropolis, but more especially the foreigners, instead of drinking wine drank beer, and particularly porter, in enormous quantities. It has been represented to me officially that the foreigners drank nothing but London porter. The consequence is, that the large increase of wine taken out for home con- 403 sumption was not used, and that having occurred, there appears a diminution on the return with which I have just concluded. But in the year 1851 there was not a general decrease in the revenue derived from wine, the diminution was only in one article. The trade, specially anticipating a consumption by foreigners, took, with very little foresight, out of bond, port wine, and it is only on port wine there is in 1852 a diminution of revenue. In comparison with the year 1849, there is in 1852 an increase, and the decrease appears on a comparison with the revenue received in 1850 and 1851. With regard to French wines, the amount taken out of bond in 1851 was 341,748 gallons, and in 1852, 447,559, showing an increase of 105,811 gallons. There is also an increase in Spanish wine. The amount taken out of bond in 1851 was 2,469,000, and in 1852, 2,533,000, so that there is an increase in the year just ended of 64,000 gallons. The great diminution has been in the wines of Portugal. In the year 1849, the amount taken out of bond for home consumption was 2,446,813 gallons; in 1850,2,648,242 gallons; in 1851,2,814,979; in 1852 there was a diminution to 2,524,720 gallons. But if we compare the year 1852 with the year 1849 there is an increase, and it is only in comparison with the years 1850 and 1851 that a diminution appears to have taken place in consequence of the amount taken out for home consumption in 1851. Comparing the revenue of 1852 with the revenue of 1849, there is no diminution; but, on the contrary, an increase of the revenue derived from port wine. The hon. and learned Gentleman, then, must see that the terms of his Motion are not correct, and to say there is a decline of a revenue that is not declining, is hardly what the House will sanction. I will trouble the House with a return of the entire quantity of wine on which revenue has been raised during the last four years, and which even includes Cape. In 1849, the quantity was 6,136,547 gallons; in 1850, 6,251,862; in 1851, 6,437,222— that was the great year; and in 1852, the year just finished, 6,280,587; exceeding not only the amount of 1849, but the aggregate amount of 1850, and nearly equalling the great year of 1851. The hon. and learned Gentleman will therefore see that it is quite erroneous to say that there has been any decline in the revenue derived from wine. Now if the hon. and learned Gentleman really wished for a 404 Committee to inquire into the revenue derived from wines—knowing very well that the hon. and learned Gentleman will with that assiduity and intelligence that distinguish him, no doubt bring out a great deal of information for the House—I certainly will not oppose it; but it appears to me, having followed with great attention the hon. and learned Gentleman, that he is perfectly master already of all the facts of the case. And I may also say, with the greatest respect, that those facts are also known to many Gentlemen in this House. With regard to the principle of political economy he would apply to those facts, this also is very well understood. And if a Committee were appointed, the hon. and learned Gentleman could scarcely give us results more accurate than those he has already conveyed to us; and hon. Gentlemen on both side of the House will be able from those facts to draw their own inferences respecting the taxation and revenue of the country. If the hon. and learned Gentleman really wishes for the Committee, with a slight but necessary alteration of his Motion, I will consent to it; but I hope he will recollect that the Members of the House are very much taxed at present by their attendance on Committees. A representation was made to me the other day that it is difficult to get Members to attend on the most necessary Committees; and perhaps the hon. and learned Gentleman will, on second thoughts, be satisfied with having laid an accurate and able statement before the House, and with having called the attention of the House to a subject that necessarily engages the attention of all concerned in the taxes of the country; he will consider that he need not trouble the House further with the question, because it must appear to him that the subject of the wine duties must necessarily engage the attention of any one who is responsible for the collection of the revenue of the country. But at the same time there are many other duties which I myself certainly feel have a very superior claim to the consideration of the Chancellor of the Exchequer. There is no question but it is very possible that we might alter the duties on wine, and might diminish those duties, and not permanently injure the revenue; but that is always a hazardous project, and must be done with very great caution. Not to mislead the House or the hon. and learned Gentleman, it is certainly my opinion that if import duties are to be diminished, there are many arti- 405 cles that have superior claims to that of the different wines imported into this country.
§ VISCOUNT PALMERSTON
Sir, perhaps the right hon. Gentleman (Mr. Henley) may not now be able to answer a question in connexion with the statement that has been made by the hon. and learned Member for Youghal, (Mr. C. Anstey) which I wish to put to him, but he may be able, on another day, to inform the House how the matter stands to which my question refers. The hon. and learned Gentleman has adverted to the great abuses practised by the Oporto Wine Company, in regard to the trade in wine between Portugal and this country. Her Majesty's late Government had many representations made to them that the regulations established by the Portuguese Government in regard to the Oporto Company, and the practice of the Oporto Company itself, were inconsistent with the stipulations of the treaty of 1842. It was the opinion of Her Majesty's late Government that those representations were well founded, and that impediments and restrictions were imposed upon the exportation of wine from Portugal, and its importation into this country, which were at variance with the stipulations of the fourth article of that treaty. We made a strong representation to the Portuguese Government on the subject; and when I ceased to hold the office of Secretary of State for Foreign Affairs, an understanding had been established between the two Governments, that after the general election, which was then about to take place in Portugal, the Portuguese Government would remedy the abuse of which we complained, and that either by an alteration of the Executive Government, or by some new law that was to be proposed to the Cortes, the practice of the Oporto Company should be placed in harmony with the stipulations of the treaty. I am bound to say, however, that the Portuguese Government did not admit our argument that the regulation was at variance with the stipulations of the treaty, notwithstanding our case was completely established; but the Portuguese Government, without admitting the force of our argument, engaged to remedy the evils of which we complained. I wish to know therefore from Her Majesty's Government, either now or at some future day, what is the state of the communications between the two Governments on that point, and whether the Portuguese Government have taken any steps to redeem the pledge I 406 consider it has given to us to set right the; matter to which our complaint relates?
§ MR. HENLEY
The question to which the noble Lord has referred, is one he has correctly stated so far as I am able to judge. He has correctly stated that communications were going on at the time he ceased to be connected with the Foreign Office with regard to this question. Those communications have been carried on to I the time at which the late Government left office. They are at the present moment going on, and the present Government will not lose sight of the subject. They feel its importance, and it will not be through want of attention on their part if it shall not be brought to a satisfactory conclusion.
§ MR. CHISHOLM ANSTEY
begged to thank the right hon. Gentleman the Chancellor of the Exchequer for his courtesy, and would take the Committee in the way he had pointed out, omitting in his Motion the words "causes of the decline."
Select Committee appointed "to inquire into the Revenue derived from the Import Duties on Wines."