[BILL 21.] SECOND READING. (Hansard, 23 February 1863)

§ THE CHANCELLOR OF THE EXCHEQUER
, in moving the second reading of the Tobacco Duties Bill, said, that the hon. Member for the Tower Hamlets (Mr. Ayrton) having given notice of a Motion for referring the subject to a Select Committee—which Motion it would be his duty to oppose—he did not intend to make a speech on the merits on the present occasion. He would therefore simply advert to one or two Amendments which it would be his duty hereafter to move in Committee. Since he moved the Resolution on which the introduction of the Bill was founded, he had had an opportunity of communicating with the various parties interested; and the result was that he had been convinced of the general soundness of its provisions and the correctness of rates of duty imposed. One Amendment was of a verbal character, and another was in the nature of an adjustment of duty with regard to one particular class of commodity introduced under this Bill. The first Amendment, of a verbal character, related to the importation of Cavendish tobacco. The intention of the Government was that, so far as the material employed for the manufacture of Cavendish tobacco, the holders of British and foreign tobacco were to be placed on the same footing. The question was, whether the powers of the Bill as it stood at the present moment enabled the Government to enforce as to foreign Cavendish the same restrictions as in the case of British Cavendish. The Government believed they had this power; but there ought to be no doubt on so important a point, and he should propose in Committee to apply the same restraint as to the manufacture of foreign Cavendish which 707 was applied in the present Bill in respect to British Cavendish—namely, to prevent the importation of foreign Cavendish tobacco containing the leaves of plants other than the tobacco plant. That Amendment would in the third clause. The other alteration related to that portion of the trade carried on in the sister island. It had been shown to be requisite to introduce some small adjustment in the rate of duty in regard to the manufacture of Irish snuff. The rate proposed for snuff was 3s. 9d. per lb., and that was an ample rate of duty to counteract the direct and indirect consequences of the Customs law, not only as affected snuff of British manufacture, but snuff in general. But with regard to the snuff manufactured in Ireland it was a peculiar and technical preparation, being what was called "high-dried" or "high-toasted snuff," and its manufacture required a larger portion of duty-paid material. A change would be proposed in Committee, although not an important one, with regard to this article. He mentioned these points because the proposed Amendment tended to raise a discussion which he wished to anticipate. He should content himself with moving that the Bill be now read a second time, and reserve his remarks on the Bill until after the speech of the hon. Member for the Tower Hamlets.

§ SIR STAFFORD NORTHCOTE
—What will be amount of the change in Irish snuff?

§ THE CHANCELLOR OF THE EXCHEQUER
—I will lay the particulars on the table to-morrow.

§ MR. AYRTON
said, it was rather late (a quarter past one o'clock) to begin a discussion of this kind. He thought that the Bill had been introduced under a great misapprehension of the facts connected with the question. The subject was by no means a new one. The duty on tobacco was, indeed, one of the oldest levied, inasmuch as it had formed the subject of fiscal legislation ever since the reign of Charles II., and from that time to the present every sort of change had been made in the tobacco laws, and investigations had been conducted by Committees and Commissions of Excise and Customs. When the law was settled on its present basis, some discontent was felt by the trade. A Select Committee was 708 obtained by Mr. Hume. A Resolution was proposed in that Committee, by Dr. Bowring, to the effect, that in order to prevent smuggling and adulteration, and to guard the public revenue, it was desirable that a considerable reduction should be made from the then existing high rate of duty; but the Government of the day (the late Sir Robert Peel's), which was represented in the Committee by the then Chancellor of the Exchequer) opposed the Motion, and carried an Amendment which stated that no such reduction could be effected without causing so large a loss to revenue as to involve the most serious financial consequences. The result was that the tobacco duties were left in the position in which they then stood, and under that system the trade had continued to work up to the present time. But, before he proceeded further, he was anxious to point out some of the peculiarities by which the trader in that commodity was surrounded. It was a manufacture which, at its very outset, was met by the most extraordinary restrictions, the growth of tobacco having been prohibited from the time of Charles II. most rigorously in this country. The law which enforced that prohibition had at one time been relaxed in favour of Ireland, and the growth of tobacco had begun to extend in that country considerably, when it was stopped by the law being placed on the same footing as in England. No one, he might add, was at liberty to deal with tobacco, when imported, except under particular regulations. The manufacturer was allowed to mix nothing with it but water, which he might use for the purpose of moistening it; nor, having once imported it, was he allowed to export it, except on certain conditions. There was, besides, an infinite variety of other restrictions, to the breach of every one of which a severe penalty was attached, so that the dealer in tobacco required to be constantly on his guard. Now, it was said that the duty on it was originally imposed for the purpose of protecting the English manufacturer, and that the object of the Bill before the House was to modify the present system. Those who took that view, however, laboured, he thought, under a misapprehension; for it so happened, that at the period when protection was looked upon as a useful system, there was no differential duty at all between manufactured and unmanufactured tobacco, it being only in modern times that 709 it had been found necessary to make a distinction between the two, and it was quite clear that the imposition of the differential duty was entirely for the sake of revenue. A great misapprehension, he might also observe, prevailed with respect to the duty on cigars; the only cigars, he believed, ever imported under the existing law, with some trifling exceptions, being of two kinds, the Havannah and the Manilla, of which the former was quite an exotic commodity, of very limited growth, while the latter was a Royal monopoly of a limited character, selling at a factitious price. The Havannah cigars, he might add, varied in value from 10s. to 30s. per pound, the average being 13s., and the duty was 9s. per pound, while the Manilla paid the same duty, the average value being 7s. per pound. That could scarcely be regarded as an oppressive rate by the rich, when it was taken into account that the poorer classes paid a duty of 3s. 2d. on tobacco, the average price of which was 8d. per pound. Since the present rates of duty were established, a very large manufacture of cigars had sprung up in this country, furnishing employment for some 4,000 workmen, besides a considerable number of masters. He might also observe that the number of real Havannahs was exceedingly small, the great mass of cigars consumed in this country being really manufactured here. While the demand for Havannahs was far greater than the number which could be manufactured for consumption, a Royal monopoly raised the price of the Manilla; so that no change of duty could materially influence the sale of these two classes. But it was not only against the operation of the revenue laws that the English manufacturer had to contend; the difficulties of his trade were increased by the caprices of those who bought cigars, who valued them by their size and not by their weight, and required that the outer leaf should be without blemish; that they should possess a delicate flavour, and that they should burn to a white ash. The manufacturer must buy a large bale of tobacco, which he must take at a venture, for he does not know until he works it what it will make, and to find leaves without blemish is difficult. Then the stalk and other hard parts which are not suited for the manufacture of cigars must be left out, and yet duty had been paid on all those; while the amount to which he was able to indemnify himself by selling 710 the waste to the manufacturers of snuff was growing less and less, because the demand for snuff was diminishing day by day. Under those circumstances, the House would understand how keen the competition was under which the trade carried on their business. In point of fact, so small were the profits and so difficult of realization that he had heard of persons who, misled by statements which they had seen in the papers, had engaged in the manufacture and had been obliged to give it up. It was quite clear that the manufacture was carried on as economically as possible. The question which the House had to consider was whether this complicated system of Excise and Customs had attained the object for which it was devised. Had it repressed adulteration and smuggling? All the reports of late years, both of Excise and Customs, showed most conclusively that the manufacture in this country was in a sound and healthy state, and that there was no adulteration in cigars. The revenue officers were in the habit of going into shops and examining the cigars, and they had an infallible test of the genuineness of the cigar, and their evidence, when they said it was unadulterated, was surely worth something. He was speaking now of what was manufactured by licensed traders. Again, the Customhouse was equally satisfied that smuggling had been repressed. Of course it could not be entirely put down, because sailors were accustomed to bring in a pound or a half pound of tobacco, which could be easily twisted into any shape, but they meddled very little with cigars. But the Custom-house authorities warned them against precipitating any change with respect to the laws affecting this trade, for in their last Report they mentioned that when, upon the late remission of the Customs duties, they were disposed to concede to the merchants of this country the liberty of importing boxes and packages, they found boxes of cigars were introduced as boxes of toys. There was another point well worthy of consideration, which was that the revenue had steadily increased for the last thirty years: for the import of tobacco for consumption had increased from 1831 to 1841 360,000 lbs. yearly, from 1841 to 1851, 490,000 lbs. yearly, and from 1851 to 1861, 650,000 lbs. yearly. Up to this time, when there was no competition with the foreign, manufacturer of cigars, it 711 was the interest of the English trader to keep up the weight of his commodity, because diminution of weight was so much dead loss to him when once he had paid the duty. But the effect of this change would he, to make it the interest of foreign manufacturers to make their cigars as light as possible, so that they might get in the largest number at the lowest duty. Such was the extraordinary nature of the tobacco-leaf that it was capable of being increased or diminished in weight 100 per cent—it was just like a sponge—and therefore the manufacturers on the Continent were able to make the cigar extremely light. Before we arrived at the present law there was free trade in manufacturing tobacco. The Chancellor of the Exchequer of that day allowed every one to do what he liked with it. This went on for two years, but at the end of that time every one was so disgusted with the article as manufactured that they begged of his successor to put an end to the system. On the Continent, where they act on principles the reverse of ours, they have a process by which they can take the commonest and cheapest tobacco, steep it in water, and subject it to other treatment so that the coarse parts are extracted, and a tobacco is produced which is mild to smoke and which yields a white ash, and these cigars would be imported at a duty much below that charged on the tobacco necessarily used in cigars made in England. He maintained that this was a subject which should be well examined before so important an amount of revenue as was raised from tobacco was touched. The foreign manufacturers had many advantages over the English; for the former worked the most worthless commodity as compared with the most valuable. In Germany it scarcely mattered to what class of persons the operation of fabricating was intrusted, and a great proportion of the cigars there were of prison manufacture; but in this country the costly commodity, enhanced in value by revenue charges, must be committed to careful hands, or a loss instead of a profit would result to the manufacturer. The effect of the present system was that smuggling and adulteration were put down in this country, because the manufacturers of tobacco were responsible for the genuineness of the article, and for its not being smuggled. When the people were starving, an agitation would arise, and the cry would be, "The rich man has reduced the 712 duty on tobacco to 9s. on what has cost 13s., but the poor man pays 3s. 2d. on what costs 10d." No one would propose to put on a duty, and the Liverpool Reform Association would have a new argument for resistance to the duty on the raw material. The House would do well to inquire into the consequences of this change, to satisfy themselves that no inconvenience and no injury would ensue. It was proposed to allow she manufacture in bond of Cavendish tobacco. Cavendish tobacco was made by steeping it in a little rum, sugar, and water, and every one could make his own Cavendish tobacco if he chose to steep it and press it. There was no necessity for the change. But, as a commercial operation, the Bill was of such a character as was best described by one of the most earnest advocates for the privilege to manufacture Cavendish tobacco in bond, who said the provisions of the Bill for that purpose were the production of a madman. He would not go into the question of snuff, because it excited the people of Ireland, but he had shown how intimately the question of tobacco was mixed up with the manufacture of snuff. After every possible change, the present system, both as to duty and regulations, was found to be the only practical system to protect the revenue against smuggling and the public against adulteration; on both those points the present system was eminently successful. The state of the manufacture had not been properly considered. The only effect would be to give up a number of English workmen and honest people for the benefit of a few persons—princes who kept their prisoners for nothing in manufacturing tobacco, Royal monopolists who prohibited the export of the raw material, and Cuban slave-holders and slave-dealers, who would put in their pocket any difference in price which the diminished duty would yield. If there were those who had absolute faith in the Chancellor of the Exchequer, it must have been rudely shaken by the financial operations of the last three years. The whole philosophy on which the change in the wine duties had been made was entirely erroneous. Instead of very light wines being introduced into this country, the right hon. Gentleman had introduced wine up to 43 and 44 per cent of proof spirit, whereas before they had nothing higher than 33 per cent. They had, therefore, the right to assume the possibility of error on the 713 present occasion; and when the whole body of manufacturers were declaring that there was error, the wise and prudent course was to examine into the whole question. He therefore moved the Amendment of which he had given notice.

§ MR. MARSH
said, he was glad to hear the argument that the Bill would benefit the rich and not the poor, because it showed, that although that argument might be carried to the verge of cant, the poor, if unrepresented, were well considered in that House. But he was of opinion that the Bill would benefit the poor, because he had been in colonies where manufactured tobacco was permitted, and it was found more economical, as it could be easier carried, and did not waste so much. As to the English agriculturists not being allowed to grow tobacco, the answer was, that although they could grow tobacco in England, just as they could grow pumpkins and grapes, it was not suited to the soil; no landlord would allow it to be raised, because it was an exhausting crop, and it would never be grown except for the purpose of cheating the Excise. The best cigars were those which were imported, and the reason was that the aroma was preserved by their being manufactured before the leaf was dry. Another argument in favour of the manufacture taking place in the country where the plant was grown was the absence of the temptation by the abundance of the plant to introduce foreign and deleterious substances.

§ MR. COX
moved that the debate be adjourned.

§ THE CHANCELLOR OF THE EXCHEQUER
hoped the House would not accede to that Motion. There was nothing so sacred or peculiar in the character of tobacco that it should be exempted from the ordinary rules of business in that 714 House. The practice was to sit in Committee of Supply until, one o'clock. It was now a quarter past twelve, and there was no reason why the discussion should be checked.

COLONEL DUNNE
stated that a deputation had just come over from the tobacco trade in Ireland to ask for inquiry, or at least an opportunity of stating their case in regard to this measure. This was one of the few manufactures which Ireland possessed, and had a right to claim the consideration of the House. He would therefore move the adjournment of the House.

§ MR. MAGUIRE
, in seconding the Motion, observed, that 20,000 persons in Ireland were interested in this trade, and that one-third of the revenue which the Crown derived from this source of taxation came from that country. To expose the Irish manufacture to wholesale foreign competition would be to ruin it. He urged the right hon. Gentleman not to swamp a native industry when there was no real advantage to be secured in return.

§ THE CHANCELLOR OF THE EXCHEQUER
said, he was willing to consent to a Motion for the adjournment of the debate, but he could not agree to refer the subject to a Select Committee, which was, in fact, merely a mode of delaying the Bill and making legislation impossible for the present Session. The deputation from the Irish trade which he had seen had certainly not taken the same course as their representatives in this House. They had argued the details of the subject in a sensible and business-like manner with him, but not a word had they said of referring it to a Select Committee.

§ MR. AYRTON
repudiated any wish to prevent legislation for this Session. There was ample time for inquiry.