§ MR. W. CARTWRIGHT, in moving that a Select Committee be appointed "to inquire into the present system of levying the Customs Duties on Wines" said, the subject was an important one in connection with the Revenue of the country, because it was alleged by some high authorities that to alter the present system, by which a duty of 1s. per gallon was taken on wines under 26 degrees of alcoholic strength, and of 2s. 6d. on wines above that degree of strength, must necessarily imperil the integrity of the Revenue derived from the spirit duties. It was the opinion of those, however, who were best acquainted with the subject that the present system of levying duties upon the wines imported into this country ought to be placed upon a clear, a simple, and a fair basis. He had the conviction that a change was possible without interfering with the integrity of the Revenue, and he wished to see such a system adopted as would realize the mode suggested by the right hon. Gentleman the Member for Greenwich when he was Chancellor of the Exchequer—a system which would combine the greatest simplicity of operation with the greatest security to the Exchequer. Various Papers presented to Parliament in 1869 showed how the controversy on this question had been carried on among the three Departments of the Customs, Inland Revenue, and Board of Trade on the occasion of negotiations with Portugal. In 1866 the Government asked the opinion of the Board of Trade with regard to the lowering of the 2s. 6d. duty and other alterations 1570 which were then mooted; and the Board of Trade, after a close examination of the question, arrived at the conclusion that a reduction from 2s. 6d. to 1s. 6d. per gallon of duties on wines between 26 and 40 degrees strength would be feasible. The proposals were next submitted to the Departments of the Customs and Inland Revenue. The Customs never grappled with the arguments which had been advanced on the subject, contenting themselves with saying that to admit wines at lower rates would unsettle a system arranged after very mature consideration. The Inland Revenue maintained that the effect of reducing the duties on strong wines, as proposed by the Board of Trade, would be to hold out a great temptation to the introduction of factitious wines, which it said were, in fact, merely spirit-mixtures, such as so-called Hamburg sherries. By that admission, in his opinion, the Inland Revenue conceded everything he contended for. If these Hamburg sherries were merely spirit-mixtures, he saw no reason why they should be introduced as wines; and if it was possible for the machinery of the Customs to stop sweetened brandies, as had happened of late repeatedly, it would, in his opinion, be equally easy for the same machinery, perhaps with some slight alteration in it, to put a stop to the introduction as wines of spirit-mixtures generally, and consequently of Hamburg sherries. The Board of Inland Revenue referred to the difficulty of preventing frauds, which they feared might arise if certain modifications were made. But he wanted to know whether fraud was prevented under the present system? He had been told that among traders of lax principles the practice was not unknown of mixing wines made at 1s. with wines of 42 degrees strength at 2s. 6d. a gallon, so that liquor which had paid really but 1s. 9d. duty per gallon was sold at rates as if it had paid on entry 2s. 6d. duty. The Government at that time, notwithstanding the views of the Customs and Inland Revenue decided that the standard at which the duty had been previously fixed was not one essential and vital to maintain for the security of the Revenue. In presence of adverse opinions by those Boards, the Government of the day had come to the conclusion to propose a certain reduction in the duties, and thereby admitted that 1571 the existing rates were not essential for the integrity of our fiscal systems. The reduction offered was not considered to have been sufficient, whereupon further inquiry was then instituted, particularly by the Board of Trade, whether a greater reduction might not be made. The matter was subsequently dropped, and he thought it one which a Special Committee might well investigate. The question turned practically on the point whether compound or factitious wines, spirit-mixtures, or Hamburg sherries could be introduced into this country at a price which would render illicit distillation formidable. The Board of Trade distinctly maintained the contrary with much detail of calculation. In reply, the Inland Revenue had pointed to results from experiments made on genuine Portuguese wines at £23 a butt; but such results were necessarily fallacious, and could not invalidate those arrived at by experiments on the only material that could be used for illicit purposes—factitious wines and spirit-mixtures like Hamburg sherries. The Board of Trade came to the conclusion that if the duties were reduced to 1s. 6d. all round on wine up to 40 degrees strength the maximum loss to the Revenue would be only £120,000 in excess of the loss which the Government was prepared for in its previous offer of reduction, and this calculation was never seriously challenged by the Inland Revenue. That brought the history of the question down to October, 1866. Considerable controversy existed with reference to many ancillary points. It was known that semi-musts and wines in an incomplete state of fermentation had not developed their full strength, yet the official inquiries instituted by Mr. Bernard on Portuguese wines had been made mainly on semi-musts, which could not be taken as fair samples of the strength of fully-developed wines. From that fact alone the House could draw its conclusions with regard to the practical value of the tests in use on the ground of such experiments. Lately, 200 samples of perfectly natural wines from Melbourne on being tested by the Customs officials yielded the following results:—Out of the 200, 121 were found to be from 27 to 32 degrees of alcoholic strength, and four more from 32 to 34 degrees. There could not be a more opportune moment than the present for 1572 the appointment of a Committee, which would be able to inquire into the condition on which the wine duties could be properly levied, and to conduct this inquiry with the advantage of all the knowledge accumulated on the subject during the last 15 years. He begged to move for the appointment of the Committee.
§ MR. SAMPSON LLOYD, in seconding the Motion, observed, that it was now 24 years since the last inquiry was instituted on the subject, and since then a great deal of valuable experience had been gained, which it was desirable should be placed at the disposal of those who were interested in the subject. Until within a few days ago the question might have been argued on the ground of the preferential duties; but he understood that the Portuguese Government had at that short distance of time given up the excess of preferential duty. It was all very well to introduce alcoholic tests; but as long as they charged a duty of 2s. 6d. a gallon on countries producing strong wines, and 1s. a gallon on those which produced light wines, the former would look upon the lighter duties as being in nature and in fact preferential. The great question was whether the equalization of the wine duties would seriously endanger our Revenue, especially at a time when such large demands were made on it; but there was reason to believe that such would not be the case. Before the reduction of the duty we consumed, in round numbers, 7,000,000 gallons, the revenue from which was £1,900,000; but the consumption now was 17,300,000 gallons, and the revenue from it £1,712,000, or within £188,000 of the revenue before the reduction. It was objected that the increased consumption of the stronger wines would diminish the consumption of spirits, and thus the Revenue would be injured; but experience had shown that wine and spirits were drunk by different classes of persons, and even if there was a large reduction in the quantity of spirits drunk it would not be without its advantages. Then it was said that the effect would be to benefit the Cape Colonies; but it should be gratifying to us that the trade of the Cape should be benefited as well as that of a foreign country. The equalization of the duties would also enable us to abolish bonding, and in that way a great saving 1573 might be effected in the pay of our Custom House officers. For these and other reasons he hoped a Committee would be granted, and that the Government would show a disposition to meet in a fair spirit those countries which thought themselves unfairly treated.
§ Motion made, and Question proposed,
§ "That a Select Committee be appointed to inquire into the present system of levying the Customs Duties on Wine."—(Mr. William Cartwright.)
§ MR. JOHN BRIGHTsaid, he did not know what course the Chancellor of the Exchequer was about to take; but he was very much disposed to join his hon. Friend the Member for Oxfordshire and the hon. Gentleman opposite in urging upon the right hon. Gentleman the wisdom of consenting to the inquiry now sought. The proposition which it was hoped the Committee would agree to, and that the evidence would lead them to was, on the whole, rather a simple one—namely, that the point at which a higher duty than 1s. was levied on foreign wines should not be fixed, as at present, at 26 degrees of alcoholic strength, but should be fixed at some higher degree, or should range from 36 to 40 degrees. Both sides of the House would admit, and the Chancellor of the Exchequer also would admit, that if such a change could be made, it would have the effect of extending our trade with other countries—in some degree with France, but notably with Spain, and probably to some extent with Portugal. The objection to such a proposal was one rather of fear than of fact. It was said that if they had a higher degree—that was, if they admitted stronger wines at the low duty of 1s., those wines would be made use of in this country for the purpose of making spirit, and that people could make a profit by doing that, and that the result would be that a fraud would be committed on the Revenue, and the Revenue would suffer. Now, if that were true, the objection was formidable, and one which the House could not, without great mischief, overlook. But it had been disputed; and he thought the evidence of opinion, on the whole, so far as he had been able to gather it, was stronger against that view than the contrary. His hon. Friend had quoted the opinions of the Revenue Department, 1574 the Customs Department, and the Board of Trade. Those opinions were conflicting, and giving each of them equal weight they were still left in the dark. He had been for some short time at the Board of Trade, and he recollected that this question was at that time very fully considered, and especially by one officer whose opinion was very valuable—he referred to Sir Louis Malet. The opinion of the Board of Trade was distinctly that it was perfectly safe to make the change proposed, and that it would be greatly advantageous to the country if that change were made. He took the trouble at that time to make some inquiry on his own account, and he had an interview with eminent authorities connected with the other Departments, and his conclusion was this:—that their opinion was not based upon facts clearly ascertained, but was based rather upon tradition and a kind of apprehension—a fear of allowing anything to be done that would in any way endanger the income which the Chancellor of the Exchequer received from those duties. He was not at all satisfied, from the conversation he had with those authorities, that the view they took was sound, or sustained by facts in such a manner as to justify the Government in adhering to the higher rate of duty. If those authorities were at variance, who should decide? The Chancellor of the Exchequer asked some one connected with the Inland Revenue, and he received one opinion; he made a similar inquiry of the Board of Customs, and he received a different opinion; he therefore made further inquiry at the Board of Trade, and he could only say if the officers of the Board of Trade were now what they were when he was there, they were persons on whom the greatest reliance might be placed. But if the Chancellor of the Exchequer was still in the dark, he would be left in the dark and be obliged to form his own opinion, or come to some other tribunal. But what tribunal was there so good as a Committee of that House for ascertaining the facts and opinions of all kinds of persons with respect to such questions? He did not say that men might not sit upon a Commission who had strong opinions in respect to the matter that came before them; but still he said a Committee of that House was an admirable tribunal for obtaining facts and evidence 1575 upon which Government and Parliament might form an opinion on a question of this nature. He asked the House, was not the question one of some importance? They had an enormous trade with other countries, almost all over the world. The great harriers to our trade over half the world were barriers of tariffs. There was scarcely any country in which trade was more restrictive, in which monopolies were more universal than in Spain. He recollected about six or seven years ago, just before he was withdrawn from the House for three or four years, he had a long conversation with the then Spanish Minister, who told him he felt certain that, if the English Government would make a change in the wine duties, and treat Spain as they treated France practically, so that their wines might be admitted at a low duty, he had no doubt whatever it would be possible to negotiate a Commercial Treaty with Spain, as they had already done with France, that would be highly advantageous to both countries. That, he thought, was a matter of great consequence. No doubt, of late years there had been a great demand for labour, wages had been high, and money had been plentiful; but that state of things did not last, and we were constantly interfered with by competition with other countries, and by the tariffs that existed in them. If they could, by Commercial Treaties or by making any concessions, introduce themselves to new customers, and bring their people into some closer communication with some other people, that was a great advantage—so great that it was not wise that an opinion founded on traditions, and on the fears of any of the Revenue Departments of the country, should be interposed against an inquiry of this nature, and against a great advantage which the country would gain, provided the view of his hon. Friend the Member for Oxfordshire was correct. He believed it was correct, and therefore it would be greatly to the advantage of our export trade, and our trade generally, if the change to which his hon. Friend pointed could be made; and with that opinion he would urge the Chancellor of the Exchequer to consent to this Committee. There was no doubt great force in what had been said by the hon. Gentleman opposite (Mr. S. Lloyd), that there had been no Commission of Inquiry into these duties for 20 or 25 1576 years. Circumstances had greatly changed in that time. They appointed many Committees every Session, some of them for objects in which not much could be done. But here was a distinct proposition of great importance. If the views entertained by himself and by the hon. Gentleman opposite were correct, the country would suffer if the inquiry was not made, and the change which they hoped to be brought about might not be made. The Chancellor of the Exchequer knew that in making these observations he had not the slightest wish to take any course of opposition to the Government, or to act in connection with any Party difference. The right hon. Gentleman was a free trader as much as he (Mr. Bright) was, and made a great speech the other day in a great hall dedicated to free trade. He was glad that, having withdrawn himself from that platform oratory, the right hon. Gentleman succeeded to it, and talked the doctrine he (Mr. Bright) had talked there 30 years ago. He hoped the right hon. Gentleman would deal liberally in this matter, and allow this Committee to be appointed; and he believed that great good might and would result from it.
MR. M. T. BASSobserved, that it had been asserted that we had differential duties on wine. Now, he disputed that point. The duties on wine were uniform, and the additional duty was on the spirits that were added to the wine; and if strong wines were admitted into this country at 1s. per gallon it would be impossible to maintain a duty of 10s. per gallon on British spirits. He did not consider it necessary to refer the subject to a Committee, and he had it on the highest authority that 99 men out of 100 engaged in the wine trade were opposed to the proposed change in the wine duties. It had been said there was no prospect of illicit distillation. A great deal was said about Hamburg sherry. That was a very queer compound. It was distilled originally from potatoes, mangel wurzel, and other vegetables of that character. He should like to know what his hon. Friend the Member for Oxfordshire had to complain of? He (Mr. Bass) did not think that Spain or Portugal had any reason to complain of the consumption of their wines in this country. In 1859, before the wine duties were altered, the consumption of Spanish wines in Great Britain was 2,780,000 gallons, 1577 while last year it reached 6,770,000 gallons. The consumption of Portuguese wines had been in the former year 2,200,000 gallons, and in the last year 3,887,000 gallons. He was not surprised that Portuguese wine did not increase at the same rate, for port was almost extinct. ["No, no!"] He could only say he was in the habit of entertaining his friends occasionally, and he only knew one friend who drank port wine. The wine, no doubt, bore a high character; but it was virtually extinct. During the last year the importation of Spanish and Portuguese wine was 10,657,000 gallons, while from all the rest of the world, including France, from which the importation had very greatly increased since the reduction of the duty, we had only imported 6,685,000 gallons. The brands that were most distinguished when he was in the wine trade, and which still remained so, had increased nearly 50 per cent in price; and if we reduced the duties on those highly-brandied wines again, the Spanish and Portuguese would put the money into their pockets, and the English consumer would not be benefited. At the Vienna International Exhibition there were 284 samples of natural Spanish wine and 381 samples of Portuguese wine; one of the former, fortified, contained 57 per cent of spirit. He was persuaded that a man might drink two bottles of one of those natural wines with far less injury to his constitution than if he drank a pint of those brandied wines. Now, if wines with 57 per cent of spirit were allowed to be imported into this country at a duty of only 1s. a gallon, how would it be possible to maintain the 10s. duty on British spirits? As an illustration of the manner in which Spain and Portugal treated this country with regard to import duty, he might mention that on the article of bitter ale a duty of no less than 125 per cent was levied by Portugal. Our wine duties now yielded £ 1,700,000 per annum; whereas the duties on foreign and domestic spirits produced more than £20,000,000. They ought not, therefore, to allow that large revenue to be interfered with by the introduction of bad brandy in the form of wine at 1s. per gallon while the spirit duties were still kept at 10s. per gallon. The appointment of a Committee would, he thought, do a great deal of mischief and excite expectations which never could be realized.
§ THE CHANCELLOR OF THE EXCHEQUERsaid, he thought that they had had a very interesting discussion, and also that they were indebted to the hon. Member (Mr. Cartwright) for the manner in which he had brought that question forward. He hoped the hon. Member would not consider him wanting in respect if he did not follow him into all the points which he had raised. He approached the subject with no feeling of prejudice against the cause advocated by the hon. Member. He appreciated highly the importance of cultivating good relations with Spain and Portugal, and developing, as far as possible, our trade with those countries. In 1866, as President of the Board of Trade, he had joined in fighting the battle to which the hon. Gentleman had referred, against what he then thought, and was still inclined to think, were the exaggerated fears of the Revenue Departments. He might also inform his hon. Friend who spoke last that he was very fond of a glass of the excellent wine he had described. But the question immediately before them was, not so much what was the proper scale of wine duties, as whether it was expedient to appoint a Select Committee to inquire into that subject, and he would confine himself to that point. A few days ago the hon. Member for Oxfordshire and some gentlemen connected with the London wine trade waited on him at Downing Street on that subject, and a leading member of the deputation said he hoped if the Committee were granted the Government would lose no time in acting on its recommendations; because nothing could be so mischievous to the trade as keeping it for a long time in suspense, expecting that alterations would be made, and then not to make those alterations. That was a statement so perfectly obvious that it was echoed by another gentleman, who, though inclined to favour the proposal of a Committee, yet intimated that if its Report was not to be acted upon he would prefer that it should not be appointed, because he did not wish the trade to be disturbed by a discussion which would render it impossible for them to carry on their business satisfactorily. Well, he could not but feel that there was very great justice in that; because the importers imported their wine a considerable time before it was brought into consumption, and had to 1579 consider what would be the price for which they would be able to sell it. It was very inconvenient for them to have large stocks in hand, which might not be entirely run out before any great alteration was made in the duty. He had been struck with a curious suggestion of the hon. Member for Plymouth (Mr. S. Lloyd) in regard to the drawback. That hon. Gentleman said that, taking into account what the quantity of wine imported in the year was and what the consumption was, they had nothing to do but to put off the reduction of the duty if they decided on it, and run out all the stock of wine in hand, and then there would be no trouble about the drawback. That might be a very pleasant doctrine for the hon. Member to enunciate; but it was not at all pleasant for the Chancellor of the Exchequer, because it would lead to their having no wine imported, and no wine revenue for a whole year. If the merchants were to hold back from importing because they expected some material change in the duty, the inconvenience to the trade would be great, and the loss to the Revenue very considerable. Well, what was the position of the question? They were told that they ought to have an inquiry into it now, because they had not had a Parliamentary Committee sitting upon it for some 25 years. The Committee, however, which sat in 1852 was a most influential one, and elicited a considerable amount of most valuable evidence. Since that time that evidence had received equally valuable additions from departmental inquiries, Commissions, and the various means which were always at the command of the Government of the day. But what was it that the advocates for this Committee were aiming at? He understood the hon. Member for Plymouth to say that what they were going for was an uniform duty on all kinds of wine. But the right hon. Member for Birmingham (Mr. John Bright) did not ask for a uniform duty at all; he said that we ought to raise the duty on the higher scale with which we had to deal, and that instead of 26 we ought to take 32, or something of that kind. Those were two very different proposals. If a Committee was appointed there would be all sorts of opinions among the Members; evidence would be given this way or that way as suited the different views of its Members; and 1580 there would be such a diversity of opinions that the conclusions arrived at would be of little value. After all, the responsibility must rest with the Government of the day, which had to consider not only these points, but fiscal questions generally, the condition of the Revenue, and the proper time for making proposals for alterations of taxation; and he could not but think that a Committee would be rather a hindrance than an assistance. To the depuation he had the honour of receiving the other day he pointed out that these were difficult questions, and asked how they could be solved before a Committee. The reply he received was that a Committee, largely acquainted with the subject, would be sure to arrive at valuable conclusions. The right hon. Gentleman the Member for Birmingham seemed also to think a Committee was a good instrument for arriving at the truth on questions like this; but he (the Chancellor of the Exchequer) had great doubts whether a Committee would be composed exclusively of Gentlemen acquainted with the subject. The House knew that in striking Committees a great many considerations came into play. It was necessary, for example, to strike a balance between one side of the House and the other, and to introduce Gentlemen connected with different parts of the United Kingdom. But the Committee would hardly be dealing with wine duties alone; for dealing with them affected, more or less, directly or indirectly, all kinds of alcoholic liquors, and this fact alone would lead to great conflict of opinion amongst the Members of which the Committee was composed. He was bound to say that, although he recognized the importance of the question, and agreed in the propriety of the hon. Member for Oxfordshire bringing it forward, and found no fault with the spirit in which it had been discussed, he felt that the disadvantages, which were inevitable, must far outweigh any good that might be derived from the appointment of a Committee. As the House would see, it would be very unfortunate if the Committee made recommendations which the Government, for fiscal reasons, could not carry out, or which might lead to embarrassment in our dealings with foreign countries. A good deal had been said of our Commercial Treaties with Spain and Portugal; but it should 1581 be recollected that any changes in them might affect our trading relations with France. With regard to foreign tariffs, he desired to see the system of free trade maintained and carried further; but he felt that we were approaching a critical point—the termination of our present Commercial Treaties. It was therefore important and necessary that every step we took should be guarded with great care. He hoped the success which had attended the liberal commercial policy emanating from this country, and which the right hon. Member for Birmingham had so large a share in initiating, would have its effect on foreign countries, which now felt its advantages without fully appreciating the principles from which those advantages were derived. For himself, he should like to see a large and comprehensive understanding come to by the Powers of Europe as to some common bases for tariffs. Some such international bases would be of inestimable advantage; but it was inconvenient just now to discuss large questions like these. As to the immediate question under discussion, he did not think the cause they all had at heart would be promoted by the appointment of the Committee, and, therefore, he hoped the Motion would not be agreed to.
§ SIR JOSEPH M'KENNAsaid, he was as much in favour of the principle of free trade as the right hon. Member for Birmingham or the Chancellor of the Exchequer, but he was opposed to the Motion for the reasons he would shortly offer. In the first place, he would point out that while the spirit duties amounted to about £20,400,000, the wine duties did not in the aggregate reach £2,000,000. Yet enormous concessions had been made to the trade of those countries which were wine producers, and revenue was sacrificed in their favour, concurrently with an enormous increase in the duties levied upon home manufactured spirits. He would not say the only, but he might fairly say almost the only, home manufacture which remained to Ireland was that of spirits. The duty within the last 20 years on the spirits manufactured in Ireland and consumed there had been raisedfrom£964,000, to about£3,460,000, although the consumption had not increased one gallon. England had practically the power of regulating the principles of free trade to the prejudice of 1582 Ireland and Scotland. It was impossible that those countries could take any measures to protect themselves, and therefore their duties had been raised to the highest point capable of endurance. He objected to granting any relief whatever to wine producers or wine consumers, whilst such an enormous amount of spirit duties was placed upon Ireland. As he believed the attention of the Committee was solely to be directed towards effecting a reduction of the duty on wine, and not on spirits, he should oppose the Motion.
§ Question put, and negatived.