THE CHARITY COMMISSION—EXEMPTION OF ENDOWED CHARITIES FROM INCOME TAX.

§ MR. A. JOHNSTON
, in calling attention to the fact that the expressed desire of the House to have the Charity Commission made self-supporting had not been carried out, and to move a Resolution, said, he need not take up much of the time of the House by pointing out the reason why the Charity Commission and the Inclosure Commission ought to pay their own expenses, while other commissions were properly charged on the Consolidated Fund. It was broadly because both those Commissions were pecuniarly beneficial to the classes of property with which they dealt, and saved them large expense. With regard to the Inclosure Commission, a system of making it self-supporting had already been set on foot, and if it was not yet quite perfect that was an administrative defect which the Government were pledged to set right. With the Charity Commission the case was different, and it would be necessary to state briefly the history of the question. Nineteen years ago clauses were inserted into a Charitable Trusts Bill, introduced by the Government of the day, providing that the expenses of the Charity Commission should be paid by an income tax of 2d. in the pound on all endowed charities. That Bill did not pass; and in the following year those clauses were not inserted in the Bill which passed into law. Then came the memorable debate of 1863, on the proposal of the right hon. 1506 Gentleman (Mr. Gladstone) to extend the income tax to charities, to which he would presently refer. In 1866, in answer to the right hon. Gentleman now Chief Commissioner of Works, the Government promised their attention to the matter. In the following year, 1867, the hon. Member for Chippenham (Mr. Goldney), whose services in reference to that subject could not be too warmly acknowledged, called attention to it in the House, but without any result; but in 1868, when his hon. Friend having moved an Amendment on Committee of Supply— That, in the opinion of this House the expenses of the Copyhold, Inclosure, and Tithe Commission, Inclosure and Drainage Acts, and Charity Commission, ought not to be borne by the public, carried it against the Government by a majority of 1. But what had been the result? In 1869 his hon. Friend returned to the charge, and questioned the Government. The Chancellor of the Exchequer admitted in his answer that nothing but an income tax on the endowed charities would meet the case; and yet in the Charitable Trusts Act passed in that year the Government—who appear to have been still hankering after the exploded notion of a scale of fees—introduced a section (sec. 16) directing such a scale to be prepared. Of course nothing had come of it. The idea was rotten from the beginning. It would amount to taxing heavily those charities which desired reform, while letting off scot free those which preferred to fester on in sloth and corruption, or rather would have the effect of causing all charities, good and bad, to avoid the offices of the Commissioners as they would poison. He now came to last year, when he briefly stated the case in Committee on the Civil Service Estimates, and was gratified to find that the Government had abandoned the idea of a "scale of fees," and "considered the financial proposals of the Commissioners totally inadequate to the necessities of the case." He assumed that there were very few hon. Members who did not know something of the character of the "charities" with which the Commission had to deal. The well-known words of Lord Eldon continue to be strictly true, and their truth after 40 years of reform and progress was a far greater disgrace to us than in his time— 1507 The charity estates all over the kingdom are dealt with in a manner most grossly improvident, and of a direct breach of trust. But that was not all. There was a view of the case which probably hardly occurred to Lord Eldon, but was almost universally accepted by thoughtful men in these days—namely, that a vast number of these endowed charities, even where managed with the most scrupulous honesty and care, did almost unmixed harm to the community by pauperizing the recipients. In fact, it might Be argued that less harm to the community was done by the trustees who eat, drank, or pocketed the funds than by those who scrupulously applied them in accordance with what were miscalled "founders' intentions." He proposed briefly to mention to the House a few cases that had come under his notice, and hon. Gentlemen would easily decide for themselves to which of the two categories each belonged. He would first refer to the Canterbury case, full particulars of which were given by the Commissioners in their last Report; but he would add that a list of the recipients of the Canterbury charities was made some years ago at the instance of the Commissioners, and found to include, among other "deserving objects," 132 mechanics, labourers, and tradesmen; 55 persons in good employment; 109 paupers and occasional paupers; 46 drunkards and bad characters; and 6 women who were keepers of brothels. That was not the only abuse which flourished like a green bay tree under the shadow of Canterbury Cathedral. Two hospitals founded, one for the sick and the other for lepers, were, or were recently found to be, turned into superannuation asylums for the servants and dependents of the trustees and their friends. A somewhat similar case was that of a charity called "The Mill and Meadow Money," at Bewdley, of which the Inspector said— The application of it furnishes, perhaps, the grossest instance on record of indiscriminate expenditure. When the municipal trustees have resolved upon the sum to be distributed (in 1857 it amounted to £90) the money is handed over to Benjamin Jefferies, the beadle of the town, who issues the following notice:—When the names are given in Mr. Jefferies makes out a scale varying with the sum at his disposal. No person who applies in time is refused. Many tradesmen receive it; some paying £100 a-year rent have it. No recommendation or testimonial is required. 1508 Bad characters would not be refused. The distribution is altogether indiscriminate. The hall is crowded on the occasion. He (Mr. A. Johnston) resided at one time in the parish of Walton-on-Thames, and had abundant evidence of the directly pauperizing effect of the endowed charities; but one of those in the neighbouring parish of West Moulsey quite eclipsed anything they could boast of, and was so astounding that he would venture to quote again from the Inspector's Report— Loaves and a barrel of beer are distributed yearly on November 13. The distribution takes place at daybreak. The baker's cart drives across a field within the manor and the loaves are thrown out and picked up, in fact scrambled for by 70 or 80 people, usually persons going to Kingston fair …… The beer is not given quite so in discriminately, about 30 or 40 persons connected with the place form a string, and as they pass by the barrel hand the drinking horn from one to the other till the cask is empty. At Chester— Owen Jones's charity has an income of £2,150 per annum, and 24 trade companies, totally unconnected, so far as I can learn, with the trades whose names they bear, are kept up for the sole purpose of dividing this income among themselves. He would trouble the House with one more instance—the case of Lord Crewe's Trust. In 1863 when the inquiry took place the income of that charity was £9,600 per annum. On the estate was Bamburgh Castle, which the Inspector describes as "a splendid pile of buildings." When approached from the Belford Road, it presents an appearance of almost royal magnificence. The keep is reserved for the trustees and their families. Fourteen beds are made up in it, including six for servants. It contains several good reception rooms; £100 per annum is spent on the library, which is of no use to the middle and lower classes. Adjacent to the keep are spacious stables and coach houses. The trustees during the summer and early autumn take it by turns to reside at the castle. They bring their families and receive their friends. No specific duties are prescribed for the resident trustees, and no diary is kept of their proceedings. The following servants are kept at the castle throughout the year:—Gardener, groom, castleman, cook, and housemaid. The trustees have a farm (for which, however, they pay rent), and The farm horses run well in double harness and are used to draw a carriage kept at the castle for the use of the trustees. They are driven by the castle groom or porter, whose livery is paid for out of the trust funds. It made one's mouth water!— 1509 A flag is hoisted to give notice when there is a trustee in residence. The cost of these flags in 10 years amounted to £126. The solicitors' bills for 10 years average £340 per annum. The observations of the Inspector commence—"The management has been neither judicious nor economical." And they conclude by giving details of the expenses of beating the bounds of the Blanchard Estate in 1839, which include "flagbearers," "musicians," "ponies," and "tavern bills," and amount to the almost incredible sum of £305 17s. 6d. One word as to the charities of the City of London, to which, as some of his hon. Friends knew, he devoted special attention during last Session. In fact, he introduced a Bill embodying a scheme of reform, which was carefully prepared in concert with those who best understood the subject. That Bill failed on the Standing Orders, and without presuming to question the wisdom of those rules, it might be asked whether they were intended to apply to Bills brought in from purely public motives, and in which the promoters had no personal interest whatever. It might be objected that the trustees of these charities had power to reform themselves. But who was to do it? The population, rich and poor, was gone. Many of those parishes covered a space of from three to six acres each, and he found that the income of the charities in 24 of them was £37,000 per annum in 1865, and had increased to £51,000 per annum in 1870. But the very cause of this enormous increase also resulted in a rapid diminution of population. He regretted that the results of the late Census were not yet available, but he could give the House the figures in one parish, not picked out for the purpose, but mentioned to him casually last year by the rector, who had taken a private Census on his own account, and found that in the nine years which had elapsed since the Census of 1861 the resident population of his parish had decreased from 1,300 to 200. What in the world then became of the money? Well, he had spent a good deal of time over the accounts—it went in dinners, in relief of rates (in other words, into the pockets of the rich merchants), and in an elaborate system of pauperizing. Of course in many of those parishes there were absolutely no poor. How could there be at the rents which were charged? 1510 Hon. Members thought they paid high, ground rents in Grosvenor Place and Park Lane. Let them ask his hon. Friend the Member for Shaftesbury (Mr. Glyn) what ground rents were in the parish of St. Edmund the King and Martyr. Now, he had some difficulty last year in investigating the accounts of this parish, as they had rendered none for four years; but he was bound to say when he did get them they were very creditably made out. The income was very nearly £1,500, and rather more than half was given to the "poor," who, as he had said, did not exist. He was told that the way it was got rid of was this—The beadle, or the bellman, or some such official, took a cab and went down into the suburbs hunting up the descendants of those who were once the poor of the parish. One person received £92 per annum, another £59, another £58, and so on. He did not blame anyone for all this—he did not attack anyone—but he did presume to blame our system of granting £50,000 per annum of public money in aid of the monstrous waste he had endeavoured to describe—for excusing income tax was a grant of public money. It would be said that these were not fair samples, that a vast majority of the endowed charities were doing a great deal of good. Granted. But why not discriminate? He was opposed to State grants without State control; but if they persisted in making a State grant, why give it to good and bad alike? Then, besides the remission of income tax, they escaped legacy or succession duty, which other property paid from five to six times in each century; and besides those two large grants in the form of exemptions, the State kept up the Charity Commission for them at an expense nominally of £18,000 per annum; but if they reckoned superannuation allowances and interest on the £500,000 spent on inquiries of from £40,000 to £50,000 per annum. He could well anticipate the answer of Her Majesty's Government. His right hon. Friend would probably remind him of what took place eight years ago, and would say that he was not specially partial to hornets' nests. But he fearlessly asserted that since that time there had been a great change in public opinion. On that occasion no less than 19 hon. Members opposed his right hon. Friend's proposal, while the single sup- 1511 porter of it was one of his Colleagues, now Secretary of State for War. He (Mr. A. Johnston) took part in the agitation out-of-doors. He confessed it with shame himself, but it was through ignorance. Since that he had looked into the subject and altered his opinion; but he took part in it in the interest of one of those noble charities which were the pride and blessing of the country, and as he said, they might discriminate between these and those which were mere festering heaps of abuse. He would ask the Government to consider, as a proof of a change in public opinion, the carrying of the Motion of his hon. Friend (Mr. Goldney) in 1868, and the fact that even the opponents of that Motion did not contest the principle of it; and he would ask them not to play with this question any longer, but to give their support to the Amendment which he had the honour of moving.

§ SIR FRANCIS GOLDSMID
said, the logical conclusion of the exposure of abuses to which they had listened was that there ought to be investigation with a view to redressing them, and there did not seem to be any legitimate connection between the interesting particulars adduced and the Motion of the hon. Member for South Essex (Mr. A. Johnston) to tax all charities at the rate of 4d. or 5d. in the pound. As it was admitted that 2d. on their income would suffice to pay the expense of the Charity Commission, the proposal should be confined to that amount. He believed the charges made did not apply to many hospitals and other charities that were doing a great deal of good.

§ THE CHANCELLOR OF THE EXCHEQUER
said, the hon. Member for South Essex was in some degree liable to the criticism of the hon. Baronet (Sir Francis Goldsmid), because he had undertaken to prove what he was, perhaps, not 1512 obliged to prove. The hon. Member had undertaken a work of supererogation; because the question was not under what circumstances ought taxes to be paid, but under what circumstances ought the country to be called upon to make certain contributions. In order to demand a tax from a man, it was not necessary to impugn his character, or to say that he should violate any of the Ten Commandments or any moral duty. He said to his fellow-subject—"You get the advantages of settled government, and you are bound to contribute your share to its support." The taxes, like rain, fell on the just and on the unjust. Apply this to charities, of which some were exempt from taxation, which meant that poor working men, small tradesmen, and hard working professional men were made contributors of the amount from the payment of which the charities were exempted. Be it observed that these charitable corporations were more indebted to the law than any other part of the community. The law protected the lives and property of others; it did not create us or call us into being; but the law made these charities; these corporations were creatures of the law; they existed only by its creation; therefore they owed a double debt to the law, which not only protected them in the enjoyment of their funds, but which called them into existence, and gave them, contrary to the ordinary laws of nature, perpetual succession, while freeing them from income tax and probate and legacy duty. Was it not unfair that these creatures of the law should be exempted from contributing towards the maintenance of the law and of the institutions of the country? Not only had these institutions their income tax paid for them at the expense of the community, but they derived special benefits without paying anything for them, because £18,000 a-year was placed in the Estimates to maintain an establishment specially instituted to enable them to obtain law and justice more easily, and on cheaper terms than others; who, if they had wrongs to get redressed, were compelled to go into the Chancery Court. The hon. Member had completely made out his case, even without going into particular instances of misconduct, which showed that this class of property was not deserving of special favour. And it was natural it must be 1513 so, because it was nobody's interest to prevent abuse, as it was in a private establishment. Under these circumstances, he had no difficulty in assenting to the substance of the Motion; but instead of saying that discontinuance from exemption to the income tax was the "only mode" of carrying out the decision of the House, which was not strictly true, because these institutions might be made to pay probate, legacy, and succession duties, he would suggest the substitution of "most suitable" or the best mode of carrying out the decision of the House.

§ SIR FRANCIS GOLDSMID
repeated his suggestion that the only object should be the payment of the expenses of the Charity Commission.

MR. GLADSTONE
said, it would not be a less suitable mode of meeting the the expenses of the Charity Commission, because, besides that, the money did something more which, was also appropriate.

§ MR. BAILLIE COCHRANE
, who had given Notice of his intention to move, as an Amendment to the Motion for going into Committee of Supply, the appointment of a Select Committee to inquire into the working of the Colonial Governors' Pensions Act, rose to address the House.

§ MR. SPEAKER
said, the agreeing to the Amendment superseded the Motion that he should leave the Chair.

§ MR. BAILLIE COCHRANE
rose to Order, and, appealing to the Speaker, 1514 remarked, that he thought that decision had been overruled, and that he could move the adjournment of the House if necessary. He urged the hardship upon private Members at this period of the Session of the adoption of an Amendment on the Order to go into Supply, if that were to prevent the discussion of other Resolutions put down as Amendments to that Motion. He also appealed to the head of the Government, to say whether it was not possible and desirable to obviate this inconvenience, proceeding from an amicable arrangement made between the Treasury Bench and an hon. Member?

MR. GLADSTONE
pointed out that, after a single question, brought forward by way of Amendment to the Motion that the Speaker leave the Chair, had been carried, those hon. Gentlemen who had Notices on the Paper were precluded from bringing forward their Motions. His hon. Friend, however, wished to be again put in a position to put his Motion. If his hon. Friend only desired to discuss the subject, and not to divide the House, he should offer no objection; though he could not admit, as a matter of principle, that he had a right to bring forward his Motion.

§ MR. BAILLIE COCHRANE
said, he had no intention of dividing the House.

MR. GLADSTONE
thereupon moved that the House should immediately resolve itself into Committee of Supply.

THE CHARITY COMMISSION—EXEMPTION OF ENDOWED CHARITIES FROM INCOME TAX.—RESOLUTION.