WINE DUTIES.—RESOLUTION.

HC Deb 18 March 1879 vol 244 cc1162-85

MR. W. CARTWRIGHT

, in rising to call attention to the Report from Her Majesty's Representatives Abroad respecting the various modes and rates under which Duties are paid on Wines introduced into Foreign Countries, as also to the Correspondence respecting commercial relations between Great Britain and Spain; and to move— That, in the opinion of this House, it is desirable that a Select Committee be appointed to inquire into the system under which Customs Duties are now levied in this country on Wine, and into its results, fiscal and commercial, said, he had already twice called the attention of the House to the subject, and he had framed the Resolution with which he would conclude so as to meet some of the objections which h ad formerly been urged against it. When he first presented his Motion to the House, which he might say was an indictment of the system under which the Wine Duties were levied in this country, his object was that a Committee be appointed to investigate the mode of levying Duties. He then was obliged to go into many matters to make himself intelligible—matters which were technical details; but he was glad to be able to say that he should not now have to trouble the House with them. The question now had made some progress, in proof of which he could quote official testimony. When last he had the honour of submitting the question to the opinion of the House, they had the Despatch of Lord Derby in 1876 in relation to the Wine Duties as the last word of the Government on the subject. The Correspondence that had been going on for some time with the Portuguese Government terminated in this Despatch, which closed the door upon any further consideration of the question. In that Despatch, Lord Derby took up firmly his position upon the old lines of the official tradition, for he said he could not admit that any arguments that were drawn from the tariff system prevalent in other countries with reference to Wine Duties could have bearing on the system in force in this country. He said that the system of other countries bore no relation to the system of this country; and he did more than that—he referred especially to the data furnished by experts in 1861, which he affirmed had subsequently been confirmed by other investigations, and which he declared to give sufficient warrant for saying that this country could not entertain the objections raised against the present system as being well-founded. That position, he was happy to say, the Government had now receded from. Since the last occasion when he (Mr. Cartwright) addressed the House on this subject, a Blue Book had been published, containing the Correspondence between this country and Spain as to existing commercial relations, and there was a closing Despatch in it, written by Lord Salisbury, which, although it ended the Correspondence, did not close the door upon inquiry and investigation, inasmuch as Lord Salisbury, though maintaining the principle of the alcoholic test, did not disavow a willingness for inquiry and investigation on the first opportunity with a view to a revision of the Wine Duties in detail. That was a new point of departure, which implied that the Government were prepared, on the first opportunity, to entertain the question of a revision of the Wine Duties. This Motion, accordingly, offered the Government the opportunity of which Lord Salishury held out the hope that they might avail themselves when it occurred. There were Reports on the duties on wine in other States from our Representatives in foreign countries presented since last Session, and they showed the great and striking anomaly of the system adopted by this country. In six of the 15 States named in the Reports, there existed no alcoholic test whatever, and the Duty was levied at a uniform rate. Five of the six—namely, Italy, Greece, Austria, (including Hungary), Germany, and Switzerland, were wine-producing countries, which might be supposed to have an interest in protecting themselves against the importation of foreign wines; yet in these countries there was no alcoholic test. The duties on wine were lower than here, while there were high Excise Duties upon spirits. Again, not one of the countries that had an alcoholic test had fixed the standard so low as 26 degrees. Five of them admitted wine as a merchantable article up to a strength of 37 degrees, and one of them as high as 42 degrees. This last was the United States, which might be considered to some extent a wine-producing country, and which certainly was not distinguished for a liberal tariff. That was not the only anomaly. England was singular in the amount of Duty levied. No other country levied as much as 2s. 6d. a-gallon. The highest Duty in any other country was in Russia, where it was four-fifths of ours—that was 2s., while the Excise Duty on spirits amounted to as much as 12s. 4d. All countries, except England, had a uniform Duty, and the difference between our Duty and the lowest Duty abroad on wine was the enormous difference between 2s. 6d. and 1⅓d. per gallon. Such facts, at all events, afforded strong primâ facie grounds for his Motion in favour of inquiry. From the facts, the inference was deducible that our system differed from the system of any other country, and, therefore, might be regarded as an anomalous one. He was bound to touch upon some other points which he thought were essential. The present system dated from 1860, the time of the Anglo-French Commercial Treaty, and was framed with one particular object—to facilitate the introduction, at a low rate and to the greatest possible extent, of wines which were considered to be "natural" wines—that was, wines defined as containing only that admixture of brandy which was necessary to make them a merchantable article. The intention of the framers of the system was practically frustrated, through errors arising out of the want of knowledge in this country as to the nature of the article "wine," which the right hon. Gentleman the Member for Greenwich (Mr. Gladstone) referred to in his speech on the occasion, and which he ascribed as due to the peculiar condition of the wine trade in this country under the system as it existed before 1860. So great was the ignorance regarding wine that the negotiators of the Treaty, when discussing the provisions concerning this article, used terms which bore different constructions in the two countries, so that, when the instrument they had sanctioned was put in force, it was found to be understood in a different sense by each party. The standard used by the French was not the same as used by us, so that the strength of wine which the French believed themselves entitled to introduce at the lower rate was in excess of the strength the Customs would pass. Accordingly, a Supplemental Convention was agreed to, in which 26 degrees of alcohol was fixed upon as the standard, not upon any scientific principle, but as a half-way figure between the divergent standards of the original arrangement. That settlement, however, had given rise to a great deal of remonstrance, and a controversy arose in which the Inland Revenue and the Customs and the Board of Trade fully discussed the matter. The evidence was to be found in the Parliamentary Papers. In the first place, it was alleged by the Excise, or Board of Inland Revenue, that by admitting wines of a higher alcoholic strength than 26 degrees, they would be acting in a manner highly prejudicial to the Revenue, as it held out an inducement to illicit distillation. In fact, illicit distillation was the head and front of the objection which the Excise urged against any change in the arrangement. The Customs, on the other hand, maintained that if the Duty was not put upon the wines in the present manner, they would be unable, at the ports of entry, to determine which were fictitious and which were natural wines. These views, however, had been utterly demolished by the result of the experiments made by the Board of Trade, which proved to demonstration that the protection of the Revenue from spirit was not in any way dependent on the present system, and that it was desirable to modify the existing method. The proof that the balance of argument was deemed by the Government of the day to lie with the Board of Trade was that a proposal was made for a modification of the Duty. He was perfectly aware that that offer had not been accepted; but he contended that the fact of its having been made afforded absolute demonstration that, on review of the subject, the system arrived at under this hap-hazard arrangement was not one which the Government deemed essential for safeguarding the Revenue. There was only one other fact to which he wished to refer in respect to this point, and that was that, although there were plenty of materials at hand from which it was possible to obtain illicit spirits with greater case than from wines of high alcoholic strength, yet they were not employed to the prejudice of the Revenue; and here he could refer to the experience of Prance, where the Customs Duty on wines was only 3d. per gallon, and on spirits 6s. 8d. per gallon; yet he was informed, on the best authority, that illicit distillation in Prance practically did not exist, notwithstanding the apparent temptation offered by the difference in Duty. He had no wish whatever to examine at length the official Reports on the nature of wines presented to the Government by its staff of experts, as they were of a purely technical character; but he would repeat what he had said on a former occasion, that he did not attach very much value to them, for, as as had been once remarked by the right hon. Gentleman the Member for Greenwich, there was in this country a remarkable absence of knowledge in respect to the nature of wines, and the fact was beyond doubt that these gentlemen operated in many cases on wines not yet fully fermented. In 1869 a certain quantity of Portuguese wine was imported into this country, and was judged by the Customs to be just under 26 degrees of strength; but after being some time in bond, it was examined and found to be of 30 degrees of strength by the same authorities. One great evil of the present system was that it was practically prejudicial to the production of wines with a low alcoholic strength. This charge of 2s. 6d. per gallon upon all wines over 26 degrees gave no incentive to the wine grower to develop the manufacture and improvement of his highly-bodied wines; because, whatever expense and trouble he might be at to bring his wines down in strength, he would still have to pay the same duty as if they had been fortified up to 42 degrees. The manufacture of such strongly fortified wines was coarser, and was attended with less trouble and risk, and the large addition of spirits insured conservation; so that the present system held out no inducement for wine growers to make efforts for the production of a less fortified wine. The subject of the Wine Duties had an intimate bearing upon our commercial relations with Spain. He was not about to defend the fiscal system of Spain, and would allude only to facts which were well established. The facts to which he referred were recorded in the Blue Book, and showed that British goods entering Spain were subject to differential duties, in comparison with similar goods of other countries, amounting to from 13 to 58 per cent against British goods. He did not exaggerate when he said that, because of that fact, several branches of industry in this country were very materially affected. Hon. Members would find the reasons for and against the placing of our trade at that disadvantage stated in the Blue Book by the Spanish Minister and also by the British Agent, the reason stated in support of it being that Spanish wine exported to this country was so heavily handicapped that the trade could not be developed. Spain had frequently knocked at our doors in the hope of having this state of things altered, but was always met with a stern "Non possumus." He hoped, however, that that line of policy would for the future be abandoned, and that the country and the House would be told by the Chancellor of the Exchequer that the promise contained in Lord Salisbury's despatch would be speedily carried out, with a view that the Spanish Government might be moved to relieve our trade with Spain from the disadvantages under which it now laboured. The Resolution he was about to submit to the House would give Her Majesty's Government an opportunity of saying that the promise or declaration contained in the despatch of Lord Salisbury would be acted upon, and that on the first favourable opportunity that offered they did take into consideration the Duties at present assessed, with a view to their revision. Unless the matter were taken in hand in that spirit, they were not likely soon to arrive at a satisfactory revision of the Duties complained of. Meantime, he trusted that the Chancellor of the Exchequer would not reply as he did last time, when he objected, not that the matter was unworthy of inquiry, but that inquiry would be inconvenient and have a disturbing effect. To the deputation which waited on him the other day about our commercial relations with Spain, the Chancellor of the Exchequer said, with reference to the present Motion, that personally he was not disposed to grant an inquiry; but that he should be glad to hear from the Mover whether there was any special reason for it. Now, he (Mr. Cartwright) held that the case was precisely one which did demand inquiry; and in saying that, he did not ask for a one-sided inquiry, but for a full investigation of the subject, with a view especially to its bearing upon the general fiscal system of this country. There were many grounds for investigation, and the system at present existing was a hap-hazard and illogical one. To refuse the appointment of a Committee would be hardly to act up to the declaration made in Lord Salisbury's despatch. He asked whether it would not be right and fair to submit the question, which largely affected our trading relations with other countries, to an investigation which should not be a Departmental investigation? If the question were submitted, it should not be inquired into by men who, however competent, however conversant with what the public interest demanded, yet were still necessarily biassed with what he might call official superstition, but should be submitted to the fair and sifting inquiry of a Committee of the House of Commons. The hon. Member concluded by moving the Resolution of which he had given Notice.

MR. COBBOLD

, in seconding the Resolution, admitted that the greatest divergence of opinion had existed in the various Departments of the State, yet the question ought not to be neglected because different views were held by the Foreign Office, the Customs, the Board of Trade, and the Treasury. The Motion embodied a request which had been asked for not by those whose views might naturally be thought to be interested, but by foreign countries with whom it must be our object, and, he trusted, our desire, to be on the most friendly footing in all commercial matters. In The Times of Saturday there had appeared a leading article on the subject before the House, which the severest critic would allow was written very properly and carefully. He should be sorry if the House were led to believe that in the "battle of the tariffs" we were at the outset to be met by an unfriendly spirit on the part of other countries. No greater proof that this would not be the case could be given than by a speech delivered 10 days ago in the Chamber of Deputies at Lisbon by a supporter of the Government, and which was to the effect that they should not suspect the good intentions of England in respect of their African Colonies, but should co-operate with her in extending civilization. Parliament had not, but ought, to make some inquiry into this subject. All that the Motion really asked was that the experience gained since the passing of the French Treaty, 20 years ago, might be brought to bear, with a view to a settlement of the points complained of. The inhabitants of the Peninsula certainly cherished the belief that by that Treaty they had been left out in the cold. It should not be forgotten that as iron ore, coal, and lead, formed the staple of the products of this country, so was the vine the staple property of the Peninsula and the Southern countries of Europe. In conclusion, he hoped he had adduced sufficient reasons to induce the House to assent to the Motion. The appointment of a Committee could not fail to have an important influence on our commercial relations with other lands. A war of tariffs was impending in Europe. That being admitted, it would be a mistake for this country to enter into negotiations with any other country which had even a semblance of a grievance against us.

Motion made, and Question proposed, That, in the opinion of this House, it is desirable that a Select Committee be appointed to inquire into the system under which Customs Duties are now levied in this Country on Wine, and into its results, fiscal and commercial."—(Mr. Cartwright.)

MR. BOURKE

thought it would be convenient if he stated at that early stage of the debate what was the opinion of the Government on the Motion submitted to the House by the hon. Member for Oxfordshire (Mr. Cartwright). The question, though interesting, was not a very novel one, and had received the attention of various Governments and Parliaments; but he was willing to admit that there were circumstances connected with foreign tariffs existing at the present time which rendered the subject Well worthy of renewed consideration. The question of the Wine Duties was, no doubt, a complicated, and, at the same time, in some aspects a technical, one, and before giving an opinion upon it, one should have a clear idea of the principles upon which the duties were at present imposed. It should be, in the first place, recollected that an Excise Duty of 10s. per gallon was levied upon spirits, and that a similar Import Duty was also levied. The revenue derived from these Duties amounted to £20,000,000, so that our fiscal system depended in a great measure upon their maintenance. When dealing with the Wine Duties, it ought to be borne in mind that, in justice to the home distiller, it would be both unfair and unjust to impose a much less duty on spirit when mixed in wine than when mixed with water. Moreover, it was to be remembered that the existing system could not very well be tampered with without disturbing the whole of that system. The hon. Member for Oxfordshire had not indicated any substitute for that system. To his (Mr. Bourke's) mind, there were only three ways in which Wine Duties could be levied. The first was by a specific duty; the second was by an ad valorem duty; and the third was by an alcoholic scale. Of the first, nothing need be said, as a high duty would be unfair upon cheap wine, and a low duty would inflict a great loss on the revenue, and be unfair to the Spirit Duties. Respecting ad valorem duties, he was aware that many commercial authorities, both within that House and out-of-doors, were enamoured of their attractions; but they had not been found to answer in the particular case under discussion. No doubt, in many branches of trade, where there was no difficulty in ascertaining the precise value of the goods on which a duty was to be raised, those duties worked excellently; but that was not the case in others, where the value of goods was governed by the fluctuations in trade, in the cost of production of the raw material, of labour, by supply and demand, by fashion, and by taste. In the latter cases, to attempt to impose ad valorem duties would lead to great inconvenience and injustice. It had been found, in fact, that ad valorem duties, as applied to wine, were unjust as well as inconvenient to the trade. Consequently, as far as this country was concerned, such duties had been practically abandoned. This difficulty of applying an ad valorem duty to wine chiefly arose from the difficulties of classification. The qualities were so various as to raise great trouble, and the distinct valuation was often not easy to be obtained. In many cases, no information could be obtained likely to lead to the real value of the wine imported. Whatever might be the opinion expressed by one tester, his judgment might be overthrown by another. Thus the price of claret ranged from £6 to £65, of port from £20 to £90, and of sherry from £14 to £180 per hogshead. In these circumstances, whatever value might be fixed upon a particular kind of wine by the Government officer, it would probably be immediately challenged by the trade. The right hon. Gentleman the Member for Greenwich (Mr. Gladstone), before bringing in his Bill dealing with Wines and Spirits, in 1860, had been in favour of applying the principle of ad valorem duties to the former; but he found, from the evidence which was taken by the Committee which had sat to consider the subject, that it would be impracticable to apply it to them. But, apart from that, in looking at the subject, it must not be forgotten that these duties were to be imposed for Revenue purposes only; that one thing was certain—namely, that goods of the same kind, whether coming from the Colonies or from foreign nations, were to be subject to the same duties; that where an Excise Tax was levied at home, it was permitted by common consent to levy a corresponding duty upon similar goods coming from abroad; and it was further to be borne in mind that for many years we had adhered to the principle of taxing the necessaries of life on a low scale. It was in accordance with those principles that the right hon. Member for Greenwich had laid a high tax upon spirits, and had adopted a low one, measured by an alcoholic scale, with regard to wines, for the double purpose of maintaining the Revenue and of giving encouragement to the introduction of cheap wines. He (Mr. Bourke) could not concur with the hon. Member for Oxfordshire that the right hon. Member for Greenwich had acted without proper advice, or that he had adopted the principle of an alcoholic scale on the result of hap-hazard experiments, because experiments had been most carefully made at the Custom House in London, according to the same system of measurement, and, therefore, there was no reason to believe that they were untrustworthy. He was quite prepared to admit that the system based on four degrees of scale, fixed by the right hon. Gentleman, was altered two years afterwards to one based on two degrees of scale, which was found to be more convenient, although the experiments fixing it were made by the most trustworthy and skilful persons obtainable. From those experiments, which were conducted all over Europe, it had been ascertained that in the great majority of cases 26 degrees represented the natural alcoholic strength of the wine. Some 488 samples of wine were tested in all in 1874. Of these, 282 were found to have an alcoholic strength of under 24 degrees, while that of the remaining 206 fortified wines was over 22 degrees; and of 500 samples of Catalonian wines, it was found that the majority could be introduced into this country with an alcoholic strength of 26 degrees. It was upon that scale that the Wine Duties had been fixed. The hon. Member for Oxfordshire had asserted—and laid great stress upon the point—that other countries had not followed our example in this matter; but he did not proceed to show that the principle they adopted was the right one, or that they were wiser. Even if foreign countries were correct in the principle they had adopted, he (Mr. Bourke) contended that no analogy could be drawn between the principle that should govern the Wine Duties in this country, and that which governed those duties in other countries. The hon. Gentleman had mentioned certain countries where the alcoholic scale was totally disregarded; but he could not quite understand what deduction he drew from this. There could be no doubt that if they compared the Wine Duties of foreign countries relatively to the Spirit Duties of foreign countries, they would find that the Wine Duties in foreign countries were much higher than the Duties in this country. For instance, in Denmark the duty per gallon upon wine was 1s., and upon spirits 1s. 6d.; whereas our highest duty upon wine was 2s. 6d., and our duty upon spirit was 10s. The country which, in this respect, most nearly nearly resembled our own was the United States, and there the duty upon wine was 1s. 8d., and upon spirit 9s. 6d. But in France the duty upon wine was 5d., and upon spirits 6s. 8d. This showed a very great difference as compared with England. He doubted the statement that the consumption would be increased by lowering the tariff. With regard to the low-priced wines this was no doubt true, for experience showed that since the right hon. Gentleman the Member for Greenwich had altered the scale, low-priced wines had come into this country in great quantities, and there had also been a great increase in the consumption of natural wines from Spain. But it was not clear that an alteration in the Duty of the highly-alcoholized wines would have the same effect, for these strong wines were not drunk as a beverage. He believed that even if the Duty were very much lowered, their consumption would not be greatly increased. Spain had put forward her case on many occasions with very great persistency; but she had been told again and again that it was wrong of her to say that we laid any differential duty on her wines as compared with other wines, and especially with those of France. What we said to her was this—"If you choose to send your natural wines into England, they are received exactly on the same scale as French wines." But if she chose to mix her wine with spirit, no reason he had ever seen would persuade him that he ought to tax the natural wine on the same scale as a mixture of wine and spirit. The import into this country of the natural wines of Spain had been increased very much within the last two months, and the increased quantity imported for the year had been 36,994 gallons under the degree of 26. This gave us ground to believe that if Spain made an effort to introduce natural wines into this country their consumption would largely increase. It was, no doubt, true that the export of certain commodities from England to Spain had fallen off; but it must be borne in mind that the exports to all foreign countries from this country had fallen off very much. There was no proof whatever that in the case of Spain the falling-off was altogether due to the unfair treatment we had received in the matter of the tariffs. Our exports to France had fallen off this year about £2,000,000; our exports to Germany about £500,000; to Italy about £1,000,000; and to Spain about £800,000. If we considered the condition of Spain in regard to the Wine Duties, we could not say that she had fared badly under the alteration made in 1860. Since that date, the amount of wine imported from Spain had been increased more than 80 per cent; and instead of paying £2,000,000 of Import Duty to this country, as she did in 1859, she now only paid about £800,000, for the amount of imports into this country. Besides, if any alteration in the Wine Duties were to be made the basis for future Commercial Treaties, it ought to be clearly understood that other countries as well as Spain had to be considered. France had claims upon this country, and those persons who would reduce the Duty upon French wines from 1s. a-gallon to 6d., should bear in mind what Spain would say to that. He did not think that those gentleman who would reduce the Duty on French wines would say that Spanish wines should be introduced at the same rate; and, therefore, what Spain called the differential rate would have to remain the same. Although we should lose a large amount of Revenue, he thought certain modifications in the Wine Duties might be made which would prove advantageous to British commerce; but it ought to be well understood that these should lead not only to a modification of foreign tariffs, but also to the removal of many other impediments to British commerce, such as delays and defective administration, which existed in foreign countries. Of these impediments they were hearing every day. If we looked favourably upon any change with respect to our Wine Duties, he thought we had a right to demand of Spain or other countries a great deal more than to be put upon the "most-favoured-nation" footing, for we had a claim to that already. We must remind them, at any rate, that our Revenue had to be considered, and that it would be very much endangered by any disturbance in the spirit trade. The House would naturally desire to know what the Government proposed to do with regard to the Resolution which was before it. He regretted that the hon. Gentleman had not told them what was the opinion of the trade upon this subject. But they had reason to believe that the granting of a Committee to consider the whole subject would have a good effect upon foreign Governments, as showing the general opinion of the House. In these circumstances, the Government were disposed to grant the Committee proposed by the hon. Member for Oxfordshire. With regard to the Motion, it would be more convenient if the hon. Member would withdraw it, and confer with his right hon. Friend the Chancellor of the Exchequer, in order to settle what the Order of Reference should be.

MR. BAXTER

expressed his gratification that the Government had consented to grant the Committee asked for by the Motion, seeing that last year the opinion of the House had shown itself to be entirely in favour of an investigation of the subject. The evidence offered on behalf of his proposal by the hon. Gentleman the Member for Oxfordshire (Mr. Cartwright) was, in fact, simply overwhelming. If it were worth while, there were some points in the speech of the hon. Gentleman opposite (Mr. Bourke) on which he (Mr. Baxter) should like to touch; but as the Government had granted the Committee, he would not do so now, and would merely say that the hon. Gentleman would find some of his arguments would be very easily refuted by the evidence given before the Committee.

MR. B. SAMUELSON

said that, by the act of the French Government, in denouncing the Treaty of Commerce, we had for the first time since 19 years been placed in a position to deal with the Wine Duties in any mode that our financial and commercial policy might lead us to adopt. This was not the time nor the place for entering into a full discussion of that policy; but the Committee which the Government had decided on granting would be at liberty to consider whether an alteration of the scale might not be effected as well by levelling up as by levelling down. He hoped such a course as the former might not be necessary; but it should be borne in mind that the quantities of our exports of textile fabrics to France had within the last five years fallen off from 10 per cent in some cases to 25 per cent in others; and that the diminution was even greater, if values and not quantities were compared. In iron and manufactures of iron our exports, with the exception of pig-iron, were absolutely insignificant. They amounted to less than 8,000 tons per annum, as against 38,000 in the year before the Treaty of 1860. This was not surprising, inasmuch as the Duty, instead of the 15 per cent which was understood to be the basis of the French Treaty tariff, amounted to from 25 to over 60 per cent on the average prices of iron of the last four or five years; and now we were threatened with an increase of the imposts on our manufactures of all descriptions. Whether the Wine Duties were admitted or not to be differential duties, it could not be denied that the new wine tariff was introduced for the first time as part of the arrangements of the French Treaty, and that they had the same effect on the wine trade with Spain as if they had been specially intended to act as differential duties. It was not surprising, then, that the people of Spain should regard them in the light of differential duties. If irritation had arisen on this account, it was no doubt greatly aggravated by our allowing the Rock of Gibraltar to be used as a basis of smuggling operations into the Spanish Mediterranean ports. That grievance it was our duty, as a neighbouring and friendly people, to remove without delay. Nor did it lie with us to allege that Spain, by her fiscal system, held out a temptation to smuggling. In conclusion, he hoped that the words of the September Despatch of Lord Salisbury to our Minister at Madrid would not be allowed to remain mere empty words; but that, whatever might be the result of the proposed Committee, an effort would really be made, by a joint English and Spanish Commission, or in some other way, to remove the difficulties which at present stood in the way of mutually advantageous commercial relations between this country and Spain.

MR. RITCHIE

commended the Government for assenting to the Motion, as the question was one that had for a long time demanded a settlement. The appointment of a Committee would be beneficial, though he was not sure that it was the simplest or most practical arrangement that might be arrived at. The hon. Gentleman the Under Secretary of State for Foreign Affairs had said that it was not necessary for Spain to export her natural wine at 26 per cent of spirit; but that was the very point the Spaniards denied, and they said distinctly that they could not export any large quantity below that strength. If further facilities were given for the export of the natural wines of Spain, he did not believe that their own distillers would be prejudiced. It was not necessary to make any arrangement by which wines of great alcoholic strength should come in at the low duty. There might be a slid- ing scale, so that wine might come in at a Duty somewhere between 1s. and 2s. 6d., according to its strength. The hon. Gentleman had said that Spain had no cause of complaint, because she received the same treatment as other countries; but, as a matter of fact, if she could not send her natural wines at a strength below 26 per cent, while other countries could do so, she was nominally on an equality but actually at a disadvantage. The hon. Gentleman who had introduced the Motion had argued that Spain, in putting on English goods a differential duty, had done an unjustifiable thing; but, for his own part, he thought that the course taken by the Spanish Government might be defended on many grounds. Spain saw that she was placed at a great disadvantage as compared with other wine-growing countries, and she therefore felt justified in imposing heavier duties on English commodities. He trusted the inquiry would result in placing the importation of Spanish wines on a more satisfactory footing than it was at present, and he hoped the Government would take a leaf out of Spain's book; and if they modified the Duties on Spanish wines, that they would insist upon Spain, as an equivalent, taking off the differential Duties she had placed upon English goods. If Spain would not do that, then he hoped that England would double the Duties upon the wines coming here from Spain, rather than take anything off.

SIR JOSEPH M'KENNA

suggested that the Reference to the Committee should be made sufficiently wide to enable them to take into consideration the whole question of the relative Duties upon all alcoholic beverages whether manufactured at home or coming from other countries. He thought that the Chancellor of the Exchequer was fully alive to the great importance of this question. It was not so much a question between one wine-producing country and another, as a question between the producers of alcoholic beverages in this country and the producers of other countries.

MR. MAC IVER

thought that, as regarded the Reference to the Committee, one of two courses should be adopted. The inquiry should either be of the narrowest description, limited to the Wine Duties, and to that alone, or else it ought to be some such inquiry as he (Mr. Mac Iver) had already indicated in the Notice of Motion standing in his name. He felt very strongly that, if the Committee travelled at all beyond technical matters affecting the wine trade, the inquiry should take a wide scope, and embrace the whole of the questions affecting our commercial interests generally, our trade system with foreign nations, as well as the fiscal relations between the Mother Country and other portions of the Empire. The Reference should either be restrained to the narrowest possible limits, or else it should be a complete inquiry into the causes and the remedies for the existing commercial depression. There could be no more delightful reductio ad absurdum in regard to what some people called Free Trade principles than the debate which was now taking place. Here was poor, Spain—poor benighted Spain, as the free-trading gentlemen would call her—and a country certainly where the manifest abuses of a protective system existed in their worst form—a country whose fiscal policy he (Mr. Mac Iver) would not for a moment defend—and yet, Spain, with all her faults, was likely to get what she wanted, while we could not. What could be more contemptible in regard to the results of the fiscal system in which some of our British political economists delighted, than that we should really require to take "a leaf out of the book of Spain," not because Spain was right, but because we were further wrong even than she. The abuses of our system of Free Trade, without reciprocity, had landed us in disasters worse than Protection could ever have done. Our present commercial relations with France were costing us £20,000,000 annually—for in our free-trading innocence Mr. Cobden had been allowed to make a Treaty, under which the French were able to sent us goods of the value of £45,000,000 annually, while they would only take our goods to the extent of £25,000,000 in return. Worse than that, they sent us, duty free, about £25,000,000 worth of things that we could equally well make for ourselves; and, owing to their restrictive tariffs, £8,000,000, or thereabouts, was all we could send them in return. They had also put on a surtaxe d'entrepôt specially against British shipping, and what had been the result? The vessels now required to go to France direct, which was precisely what our French friends intended. They had thus improved the valuable foreign trade of their great ports, like Havre and Marseilles, which was all to our disadvantage; and had, as nearly as possible, killed the former trade in raw materials from Great Britain to France. The French encouraged manufactures in their own country, and introduced direct those raw materials of which they stood in need. He had heard with great satisfaction the speech of the Under Secretary of State for Foreign Affairs (Mr. Bourke). It seemed to him to show that they were about to reverse the policy of the last 33 years; and that, in negotiating future Commercial Treaties, we would again come back to the business-like view of "What can we get? What shall we give?"

MR. W. E. FORSTER

was very glad that the Committee was about to be granted, but could not regard the concession as meaning a reversal of the commercial policy which we had of late years pursued. As to the terms of Reference, he hoped they would be sufficiently wide to include all questions which could be fairly raised in connection with the Wine Duties; but they ought not, in his opinion, to embrace any other subject, for he could not suppose that the Government would listen to the suggestion of turning this into a Committee to inquire into the general question of the commercial arrangements of the country. Such an inquiry he looked upon as being entirely consistent with Free Trade measures, and not at all in accordance with those principles which were in some quarters advocated under the name of reciprocity. The claim of the Spanish Government practically was that we had set up a differential duty as against them, and it would be for the Committee to examine into the grounds on which that statement was made. For his own part, although he did not mean to enter into the question on the present occasion, there was, he thought, much ground for it; and if we established a differential duty against Spain, or any other country, we adopted that course in opposition to our avowed policy. The hon. Gentleman opposite (Mr. Mac Iver) had said that nothing would have been done if Spain had not levied these heavy duties on English goods. He (Mr. W. E. Forster) was very sorry that was the opinion of the hon. Gentleman of the action of his own Government. He thought the Government, if convinced of the wrong done, would have granted the inquiry in just the same way, even though these duties were not exacted; although, no doubt, the inconvenience the country had suffered had had its effect in forcing forward this question. With regard to the remarks about France, he certainly most ardently wished that she would lower her tariffs; but he did not believe that the same charge would be made against France that Spain made against England—and that England made, with perfect justice, against Spain—that she levied a differential duty.

MR. MAC IVER

said, there was a differential duty at present levied by France against England, for the surtaxe d'entrepôt was practically a tax of 24s. per ton against everything landed from shipping that had touched at an English port.

MR. W. E. FORSTER

said, no doubt, if the hon. Gentleman could show that that was so, and would bring a Notice on the subject before the House, hon. Members on both sides, and the Government, would give the matter their fullest consideration. He was not surprised that the Government would not pledge themselves to the exact terms of the Reference; but when they came to look at the terms of the Motion, he thought the Government would not be able to improve upon that moved by his hon. Friend the Member for Oxfordshire (Mr. Cartwright). He was very anxious that the last few words especially should be included, and that a Select Committee should not only inquire into the system under which Customs Duties were now levied in this country on wine, but into its results, fiscal and commercial, so that the point raised by his hon. Friend the Member for Youghal (Sir Joseph M'Kenna) might be covered, and they might ascertain the effect of any changes on the spirit revenue and the spirit trade, and also ascertain their effects on our commercial relations with Spain and other countries.

MR. WHITWELL

submitted that the rates levied upon Spanish wines were of a most anomalous character, as they were not uniform in any particular whatever. They affected the wines of other countries beside Spain. It was well known that Spanish wines came to this country through France, in the form of Bordeaux; but, of course, we got them at an increased price, and, consequently, while we thought we were drinking French wines we were drinking Spanish. He was glad that the Government had granted the appointment of a Select Committee to inquire into the subject, in the hope that any injustice which existed would be swept away. He believed that the results of the inquiry would not prove prejudical to the Revenue, but would, on the other hand, be a benefit to trade.

MR. NORWOOD

said, he would not have taken any part in this discussion but for the observations of the hon. Member for Birkenhead (Mr. Mac Iver), whose taunt as to the protectional tendency of some of the speeches was not without justification. He would be sorry if the investigation took the form of an inquiry into our trading relations with Spain and other countries, and their respective tariffs. Though Spain had not acted fairly in levying differential duties upon our goods, he trusted that there would be nothing in the shape of bartering with Spain about the duties she imposed upon us. One of them—that levied on export of coals by the Spanish consular authorities at our ports—was monstrous; but still he hoped the whole matter would be dealt with in a straightforward and equitable manner, and not give rise to the belief that we were forced into concessions contrary to the spirit of our Free Trade policy. The only ground on which a Committee should be appointed was to investigate whether the mode in which we had assessed the Wine Duties was fair to all countries, irrespective of any country that might propose alterations in them for their special purposes.

MR. SAMPSON LLOYD

expressed his satisfaction that the Government had granted the inquiry. In reference to the doubt expressed by the right hon. Member for Bradford, as to the levying of differential duties against this country, he begged to remind him that the French Government levied a differential duty on shipping in the form of a surtaxe d'entrepôt, which was exceedingly injurious to the interests of the port which he represented. That was a proceeding inconsistent with the spirit which ought to exist between France and England; and he hoped that it would receive the attention of the Government when they negotiated the next Treaty of Commerce with our neighbours across the Channel.

MR. JACOB BRIGHT

said, the only drawback to the satisfaction with the proposal of the Government was the speech in which it was made. The hon. Gentleman the Under Secretary of State for Foreign Affairs (Mr. Bourke) made an elaborate speech to show that that should not be done which the hon. Member for Oxfordshire (Mr. Cartwright) wished should be done; but he (Mr. Jacob Bright) hoped that that speech did not represent the feeling of the Government in the question; and he was quite sure that the Government had it in its power to promote much larger intercourse between England and various Continental countries. He desired to point out that if we could establish a lower rate of duty upon French wines, we should obtain them from more Departments than we did at present. There were some 60 Departments in France that produced wines, but we obtained them from only three or four, and the reason was that a very large proportion of those wines—some 90 per cent of the whole—were of too poor a quality to allow of the duty of 1s. per gallon to be paid. They were, indeed, usually sold at 1s. a-gallon. If they were introduced at 4d. a-gallon there might be a considerable trade in them. This question should be considered broadly and in reference to all wines, and it might have an influence upon France in regard to her tariff. At any rate, every means should be taken to bring about a better state of things, in the hope of improving the trade of this country, which the Government had done nothing to assist during the time they had been in Office. On the contrary, they had added to taxation, and had thereby embarrassed the trade and commerce of the country. He hoped, however, they would now take up the question in earnest.

MR. YEAMAN

pointed out that the question had been agitated in all the Chambers of Commerce in the country for a number of years, and he was glad that the Government had assented to the appointment of a Select Committee to consider it more fully. After the Committee had completed its inquiry, it would really devolve upon the Government to settle the question with the Governments interested. This country could not expect the relaxation of foreign tariffs on their manufacturers, if an unequal duty on their wines was adhered to.

MR. BIGGAR

thought that the hon. Gentleman the Mover of the Resolution, had made out a wonderfully weak case, for, in his (Mr. Biggar's) opinion, the result of the inquiry would be to raise the Duty. There ought to be only two principles on which they should go—either take the alcoholic test, or the test of value; and, in his opinion, the former was the best test that could be applied in the circumstances.

THE CHANCELLOR OF THE EXCHEQUER

said, he was gratified to find that the course which the Government had taken, in assenting to the appointment of the Committee, had commanded such general assent on the part of the House. He wished, at the same time, to say that, agreeing with the right hon. Gentleman the Member for Bradford (Mr. W. E. Forster), he entirely repudiated any idea that they were about, in taking this step, to initiate anything in the nature of a reversal of the established commercial policy of the country. It was said just now that they were going to take a leaf out of the book of Spain. If they were, he hoped it was only for the purpose of tearing that leaf up, because there could be nothing more unwise or disadvantageous than for this country to undertake a reversal of that policy. But he thought there were some reasons, both fiscal and commercial, why they might expect benefit from an inquiry of this kind; and he wished to say, specially with regard to the commercial reasons, that while he disclaimed the purpose of using the Wine Duties as retaliatory duties on Spain or any other country, he thought it was desirable that they should get rid of the difficulties which they found, in their way when attempts were made to enter into commercial negotiations with any of those countries. We go to Spain, Portugal, and other countries, and we begin to discuss commercial questions and preach Free Trade, and we meet with this argument—"Oh, you have established a differential rate of duty against us in the matter of wine." fie denied that, and we proved in a conclusive manner that this Duty was not put on for differential purposes, and could not fairly be so described. However well that doctrine might be put forward, there could be no doubt that practically it was the impression in many countries that the scale of duty was of a differential character; and not only was that the impression in some foreign countries, but it was an impression which derived strength from its being entertained by a great many persons at home. But they must search the whole question to the bottom and have it, not only on the authority of the Revenue Department, who were supposed to be always more or less prejudiced in the matter, but after fair discussion by a Committee, before which persons holding different views might be able to put forward the views they held, and let the House see what amount of truth there was in this allegation. One thing was perfectly clear, the Duty was not originally introduced with any such purpose—the quarter from which it came (Mr. Gladstone) was sufficient proof of that. He did not say it might not be proved in its working to have had an effect not contemplated at the time it was framed. There was another point adverted to in the course of that discussion—with regard to French wines and the Duties upon them. It had been truly said, and suggestions had been made in the course of communications between the persons who had taken an interest in extending our commercial relations with France, that there were large quantities of French wines which could not come in at the 1s. Duty. He did not express any opinion on the merits of the proposals made with reference to that point; but they were utterly precluded from considering the question as long as there was this grievance on the part of Spain and Portugal, which would, of course, be greatly increased by anything of that sort. It was said, on the part of Spain and Portugal, that wines of much less value coming from the Peninsula were charged a higher duty than wines coming from certain districts of France because they were of different alcoholic strength. All these points were matters which it was desirable to clear up. Then there was another class of questions which it was also useful to consider. If any change was to be made in details, they might usefully consider whether any alterations of rates could be made without interfering with the principle of the alcoholic test, or the rates applied to prevent the introduction of raw spirit, without excluding the wines which had generated a natural spirit by fermentation. He only instanced that as a sort of question which might possibly come before the Committee. He should be glad to consult with the hon. Gentleman, and have the advantage of the views of one or two persons outside who took very great interest in all these questions, before absolutely settling the terms of Reference; but he was not disposed to quarrel very much with the terms the hon. Gentleman had suggested. He quite agreed they ought to be terms which should involve the questions which might fairly be brought up by the Wine Duties, but not questions of a wider character—such as their commercial relations in general.

Motion, by leave, withdrawn.