WAYS AND MEANS—FINANCIAL STATEMENT.—COMMITTEE.

HC Deb 15 April 1886 vol 304 cc1637-715

WAYS AND MEANS—considered in Committee.

(In the Committee.)

THE CHANCELLOR OF THE EXCHEQUER (Sir WILLIAM HARCOURT) (Derby)

Mr. Courtney, I am sure I shall not appeal in vain to the indulgence of the House while I endeavour, to the best of my ability, to discharge an unaccustomed duty in times that are certainly not too propitious. The right hon. Gentleman opposite (Sir Michael Hicks - Beach) the other night told me he did not envy me the Office of Chancellor of the Exchequer. Well, without any extraordinary magnanimity that is a sentiment many people might share at this particular time; and I can assure him I participate in it myself. I will endeavour, as simply and briefly as I can, to lay before the House the present condition of the finances of the country. First of all, with reference to the year that is just concluded, 1885–6, the Budget Estimates for the receipts of that year were £90,790,000, and the actual receipts have been £89,581,301. I am speaking here of the Exchequer receipts, which differ, to a certain extent, from the actual receipts of the year, as hon. Members are aware. Therefore, the receipts have fallen short of the Estimate by the sum of £1,208,699. The Customs were £173,000 less than the Estimate; Excise, £890,000 less; Stamps, £140,000 more; Land Tax, £10,000 less; House Duty, £30,000 less; Property and Income Tax, £240,000 less; making the produce of taxation £1,203,000 less than the Estimate. Upon the other Revenue, not levied on taxes, there is an increase over the Estimate of £150,000 from the Post Office: £20,000 from the Telegraphs; £16,080 from Interest on Advances; and a fall of £191,779 upon Miscellaneous Items, which is, altogether, a falling-off of £5,699 as compared with the Estimates. The net result of this is a deficiency of £1,208,699 on the Revenue as compared with the Estimate. I now come to the Expenditure of 1885–6. The estimated Expenditure for the year—I am speaking of the last Budget brought in by the late Chancellor of the Exchequer—was £93,617,171. The actual Expenditure was £92,223,844, being a diminution in the Expenditure, as compared with the Estimate, of £1,393,327. There is a diminution of £28,641 upon the permanent charge for the Debt; £73,681 upon the interest of loans; £121,613 in other charges upon the Consolidated Fund, making a diminution in Consolidated Fund Charges of £223,935. On the Army there was a diminution, as compared with the Estimate, of £723,616; an increase on the Navy of £274,009; upon the Vote of Credit there was a diminution of £401,000; upon the Miscellaneous Civil Services, a diminution of £91,061; on Customs and Inland Charges, a diminution of £49,226; upon Post Office Charges, a diminution of £60,915; upon the Telegraph Service, £94,816; and upon the Packet Service, £22,767; making a total diminution in the Expenditure on Supply Services, as compared with the Estimate, of £1,169,392. The result, then, is that the Expenditure of 1885–6 is less than the Estimate by £1,393,327. Comparing the Revenue with the Expenditure, we have an Expenditure of £92,223,844, and a total Revenue of £89,581,301, leaving a deficit of £2,642,543. The deficit, as estimated by the right hon. Gentleman, was £2,827,171. The actual deficit is, therefore, less than the estimated deficit by the sum of £184,628. The diminution on the Expenditure is, to that extent, greater than the decrease of the Revenue. The result of the deficit account stands thus—there was a deficit in the year 1884–5 of £1,049,773; there is now a deficit in the year 1885–6 of £2,642,543, making a total deficit for the two years of £3,692,316. Of course, a considerable portion of the deficit of last year, which is smaller than it was estimated to be, is due to the fact that the House declined to adopt the additional taxation which the former Government proposed. However, that is the figure at which the deficit stands. It will be in the recollection of the House that authority was given to the right hon. Gentleman to raise £4,000,000 by Treasury Bills to meet this accumulated deficit. The state of the balances, however, has rendered it unnecessary that, at the present time, more than £3,250,000 of that £4,000,000 should be raised for that purpose, the rest being supplied from other sources. The balances, I am happy to say, have not been reduced in 1885–6; on the contrary, they have increased. On April 1, 1885, they were £4,993,207; and on April 1 this year they were £5,627,944. The balances, therefore, have been raised, in the course of the last financial year, by the sum of £632,737, and are, as near as possible, at the same figure as they stood at on April 1, 1884. According to the experience of recent years, I think I may say that the figure of £5,627,000 represents a fair average balance. These figures, I think, give a complete outline of the financial results of 1885–6, in respect of Revenue, Expenditure, Deficit, and Balances. I will now proceed to offer to the Committee some information, going a little more into detail, as to the particular variations upon the Receipts and Expenditure of the year as compared with the Estimates. First, as to Revenue. The actual receipts from Customs of the year 1884–5 were £20,321,000. The Customs were estimated for 1885–6 at £20,000,000, or £321,000 less than in the preceding year. That reduction of Estimates was made in consequence of the large anticipation of Customs revenue which took place at the close of the previous financial year owing to expected changes in taxation. The actual receipts of 1885–6 have been £19,706,000. This was £294,000 less than the Estimate. These figures do not all correspond exactly, as I have pointed out, with the Exchequer receipts; because, as is known, Exchequer receipts do not, owing to variations in collection, tally precisely with what are called the actual receipts of the year. The House would like to know the cause of this diminution in the Customs receipts. First of all, there is a diminution of £46,000 on dried fruits; that does not result from a diminution of consuming power, but the currant crop failed, and the amount of duty paid on currants is governed by the crop. Upon foreign spirits there is a total loss of £58,000. The loss on foreign brandy is £129,000, due in a great degree to the failure of the French brandy; and there is a gain on the other spirits, mainly German, of £70,000, making a total loss on foreign spirits of £58,000. Wine is less by £77,000. That is a constantly falling revenue. Tea is £200,000 less than the Estimate. That, again, is due to the great anticipation which took place in the Tea Duty at the end of the financial year 1885, and not to any diminution in consumption. This was not sufficiently allowed for in the Estimate. The actual yield is, however, considerably above the yield of 1883–4, which was £4,270,000, the average of the last two years being £4,500,000, which is the fairest test of the present rate of consumption. Tobacco yielded £84,000 more than the Estimate. As to the Inland Revenue, the Excise receipts in 1884–5 were £26,600,000. The Estimate for the year just concluded is £26,350,000, the actual receipts are only £25,460,000—that is to say, less than the Estimate by a sum of £890,000, and less than the receipts of the preceding year by £1,140,000. This is a very important matter as affecting the Revenue, although it has other bearings as regards the social condition of the people. The decline is mainly upon alcoholic drink. I will give the receipts upon alcoholic revenue, taking Customs and Excise together—that is, foreign as well as homemade spirits. Spirits are below the Estimate of 1885–6 by £799,000, and below the receipts of 1884–5 by £1,000,000. Wine is below the Estimate of 1885–6 by £77,000, and below the receipts of 1884–5 by £40,000. Beer is below the Estimate of 1885–6 by £95,000, and below the receipts of 1884–5 by £140,000. The total alcoholic revenue of last year is, therefore, £971,000 below the Estimate, and below the receipts of the preceding year by £1,179,000. The Railway Duty is £51,450 below the Estimate. That is due to the extension of the urban limits of exemption under the authority of the Board of Trade, and also to the larger application of the 1d. rates on the various railways of the country. This source of Revenue has fallen since 1882–3 from £810,000 to £338,000, there being, therefore, a loss on the Railway Duty of nearly £500,000. Passing from Excise to Stamps we find an increase upon the Death Duties. The Probate receipts for 1884–5 were £3,965,000. They were estimated to yield last year £3,950,000. They have actually yielded £4,070,000, the highest sum which the Probate Duty has ever yielded in this country. That I cannot but regard as a satisfactory circumstance, because it is due to the average amount of wills, and not to the falling-in of any great millionaire property. It affords a good test of the accumulated wealth of the country, and a sign that it has not suffered, at all events at present. The Legacy and Succession Duty was estimated for 1885–6 at £3,100,000; the actual receipts have been £3,330,000, the excess on the Estimate being £230,000. This is less than in 1884–5 by £400,000, the excess in that year being mainly due to the abnormal collection of old arrears and reversions made in that year. The Corporation Duty has entirely failed to come up to the Estimate made of it. It was estimated to yield £150,000; it has only actually yielded £32,500, being a deficit of £117,500. The General Stamps have yielded £92,000 less than the Estimate, and almost the same as the receipts of the previous year. The Inhabited House Duty yielded £30,000 less than the Estimate, due, however, not to a fall in house property, but to a retardation of collection, owing to the new assessment, which prevented the collection being completed in the course of the last financial year. As to Income Tax, the receipt for 1885–6 was £15,160,000, being less than the Estimate by £240,000, which is also due, to a great extent, to retardation of collection. I believe that is the opinion of the authorities of the Inland Revenue, and their judgment is confirmed by the receipts which have already taken place in the present financial year. The Post Office and Telegraphs show an increase above the Estimate of £170,000. Miscellaneous Receipts show a decrease on the Estimate of £191,000. This is due to certain calculated arrears of Egyptian contribution towards Naval and Military Expenditure which it was thought would come under this head, but which it was afterwards found would have to go to the different Naval and Military Accounts as extra receipts; and, therefore, this sum really appears on the other side of the account as diminishing the Army and Navy Expenditure. I have thus given an account of the variations between the Estimate of the receipts under the head of the Revenue of last year; and I now pass on to the variations on the Expenditure. The Expenditure, on the whole, is £1,393,000 below the Estimate. The Debt Charges are £224,000 less than the Estimate. The greater part of this saving is due to the low rate of interest obtainable last year in the open market. The interest on Floating Debt was estimated at 3¼ per cent. the rate actually paid was 2½ per cent on Exchequer Bills; on Treasury Bills at three months 1⅝ per cent. and at six months 2¼ per cent. There has, therefore, been a considerable saving of interest, amounting to about £100,000. Other Consolidated Fund Charges are less than the Estimate by £121,000, of which a small part is due to pensions that have fallen in; but the principal part—£110,000—may be ascribed to the fact of the War Office not requiring last year that sum for the localization of Military Forces. There is a large apparent diminution in the Army Expenditure, amounting to £724,000. I am sorry to say this is not real economy in expenditure; but is due principally to moneys which stood over from the previous year. The saving effected was due first to an over-issue in 1884–5 of £560,000. The extra receipts exceeded the Estimate by £164,000, including the Egyptian arrears. These receipts which are appropriated in aid of the Vote were larger than they were expected to be; and therefore the demands upon the Exchequer are lessened by £164,000. This is the sum previously referred to as having been transferred to the account from the head of Miscellaneous Revenue. The Navy is in excess of the Estimate by £274,000. That was due to £38,000 excess on the Vote of the previous year, which had to be made good; and of a net Supplementary Vote of £308,000, of which there was £236,000 issued, making a total of £274,000. The Vote of Credit was £401,000 less than the Estimate. Besides these larger items, there were lesser savings on the Expenditure of £91,000 in the Civil Services; £49,000 in Customs and Inland Revenue; £60,000 in the Post Office; £94,000 in Telegraphs; and £22,000 in the Packet Service. This concludes the facts I have to lay before the Committee relating to the financial results of the year which, has just closed. Before I go to the consideration of the Revenue and Expenditure of the year upon which, we are now entering, I would ask the leave of the Committee to say a few words upon the progress of the Revenue and Expenditure within the last 10 or 11 years. I take the year 1875–6 as a starting point, because the figures have been given in a new and much more convenient form in a Return which has been prepared by my hon. Friend the Secretary to the Treasury (Mr. Henry H. Fowler), who has already rendered such great service to the finances of the country. The figures are given there of the net Revenue and net Expenditure of the country in a form which presents the true facts of the case in a more accurate shape than the ordinary Return. Figures are very often ignorantly employed, both in reference to Revenue and Expenditure, which give a very false impression. You see on the one side large sums of money for the Post Office, which swell the expenditure. You see, on the other hand, large sums of receipts which are not really Revenue. Such statements do not give an accurate view of what is the real Expenditure, and what is the real Revenue of the country. But in my hon. Friend's Return these things are carefully adjusted, and you find there the real, actual, and true account of the Revenue and Expenditure of the country. I will ask the Committee to allow me to place before them—I will do it as briefly as I can—the fluctuations in the Revenue of the country since the year 1875–6, and also the variations in the Expenditure. The facts are very remarkable; I have my hon. Friend's Table made up for this purpose to the present time. I will take the Customs, Excise, Stamps, Taxes, and the Post Office, excluding the Income Tax for obvious reasons. The variations in that tax are so large at different times that it would only confuse the calculations to include it. The figures I am about to give are founded on the Customs, Excise, Stamps, Taxes, and the Post Office, excluding, as I have said, the Income Tax. Now, it is a very curious fact that if you compare the net Revenue for 1885–6 with the net Revenue of the year 1875–6, excluding in both cases the Income Tax, the figures for each of these years are very nearly the same—that is to say, rather more than £62,500,000. But if the sources of that Revenue are analyzed, they will be found to vary much in their constituent parts. There is a considerable diminution in Customs, and a great deal in Excise; but that is recouped, of course, on the other heads. The striking figure in the comparison is the great fall in the alcoholic revenue in that period. I will give the Committee the figures; and though they may be prepared for the general result, I doubt whether they will not be surprised at the magnitude of the totals. In 1875–6 the Revenue derived from wine, beer, and spirits was as follows:—From wine, £1,753,000; from beer, £8,161,000; from foreign spirits, £6,141,000; and from home spirits, £15,154,000, making together a total receipt of £31,209,000. Now, the population at that time was 32,749,000. Therefore, the contribution from wine, spirits, and beer amounted to 19s. 1d. per head for that population. Turning to 1885–6 we have a population of 36,325,000; and had they been consuming as much wine, beer, and spirits as they did in 1875–6, the yield to the Revenue on account of these articles in the last financial year, at the rate of 19s. 1d. per head of the population, would have amounted to £34,660,000. The actual yield was, however, only £26,830,000. The receipts from wine in 1885–6 were £1,225,000; from beer, £8,405,000; from foreign spirits, £4,100,000; and from home spirits, £13,100,000. Therefore, the population now is contributing in proportion, as compared with the contribution in the year 1875–6, a sum upon alcoholic liquors of £7,830,000 less than it did at that period, or at the rate of 14s. 9d. per head. Leaving the ratio out of consideration, it is supplying in 1885–6 an alcoholic revenue actually less in amount than it did in 1875–6 by the sum of £4,379,000. You may say that, roughly speaking, the diminution in your Revenue from alcoholic sources is about £4,500,000 in the last 11 years The decline in the year just concluded is the largest that has ever been known—the decrease amounting to £1,179,000. There is no doubt that a great part of that decline, as I shall show presently, is due to a change in the habits of the people. There is, I hope, a great change in the voluntary temperance of the people. A considerable part of it is, however, due also, I am told by the Inland Revenue authorities, to involuntary temperance; it is believed that the people drink a good deal more water than they suppose in their beverages—more than they did in former times; and the apprehensions of the trade, it is said, have greatly conduced to the weakening of the liquors. We do not now drink ourselves out of a difficulty, as the Earl of Derby, I think, said we had done in the case of the Alabama claim. But although we have been more temperate in the last six years, from 1880 to 1886, than we were in the preceding eight years from 1873 to 1880, we have even now only got back to the figures per head of the seven years from 1866 to 1872, and the alcoholic consumption of the people is at this time higher per head of the population than it was in the years from 1860 to 1865. I do not wish the Committee to believe that this diminution of alcoholic revenue is due mainly to a failure of the consuming power of the people. It is very important to test the matter as far as we can, because persons are apt to jump to the conclusion and say—"Oh, that is in consequence of the people having less to spend." Well, but that is not the fact. As I have stated, we have lost £4,500,000 of the Revenue from alcohol, but yet the Revenue stands under other heads at the same figures as before. It has been recouped from other sources. The yield of the Revenue is higher considerably than it was from dried fruits, tea, and tobacco. I have shown that the receipts from alcohol are £4,500,000 less than they were before; but the articles I have just named now produce together £2,150,000 more than they did at that period. Of that increase, perhaps about £500,000 may be attributed to the increase in the Tobacco Duty. The rest must be ascribed to increased consumption. Now, these things—tea, tobacco, and dried fruit—can, of course, be accurately tested in connection with the duties; but anybody who takes the trouble to study the Import Tables of this country in the Statistical Abstracts will find that they are not only interesting and instructive in their commercial aspect, but that they give an insight into the history of the habits of the people which it is very useful to consider. You will there find that while there has been this very great diminution in the consumption of alcohol, there has been concurrently an enormous increase in the demand for what may be called other comforts of life. If you take, for instance, articles like bacon and ham, imported from abroad, you find that in 1870 there were 545,000 cwt. of bacon and ham imported into this country, while in 1884 the quantity imported had increased to 3,237,000 cwt. I take the year 1884 only because it is the last year given in the Return. In 1870 there were imported into this country 430,800,000 eggs, while in 1884 there were 993,600,000 eggs imported. Of oranges and lemons in 1870 there were imported 2,000,000 bushels, and in 1884, 4,500,000 bushels. Of raw fruit there were imported in 1870,1,200,000 bushels, and in 1884, 5,000,000 bushels. Then there is another article which I think is of immense importance—I mean petroleum. The entries for home consumption of petroleum in 1870 were 7,000,000 gallons, and in 1884, 53,000,000 gallons. You will recollect the days when the labouring man had to go to bed almost by the sun, because he could not afford coal for a fire, and hardly a farthing rushlight for a candle; but now he gets that extraordinarily cheap and bright light to illumine his cottage, and the child who has been educated at the board school is able to read to his parent in the evening, an enormous addition to his comfort. Then take an article like spices. In 1870 the home consumption of spices was 16,000,000 lbs., and in 1884 it was 28,000,000 lbs. Again, sugar has increased from 14,500,000 cwt. in 1870 to 23,000,000 cwt. in 1884. The cheapness and abundance of sugar have been one of the enjoyments most valued by the people. On looking through these Tables I came across figures which struck me very much—I mean the enormous increase in the importation of furs. I saw the figures of furs of all sorts imported into the United Kingdom, which stood in 1876 at 7,500,000; in 1884 they were over 26,500,000. I thought I should like to have some inquiry made as to what was the meaning of that extraordinary importation of furs. A great many of them are brought here to be exported again; but the number of furs retained for home consumption increased from 3,930,800 in 1876 to 15,217,000 in 1884. I inquired what was the meaning of this, and I found that the number of rabbit skins imported from Victoria, Tasmania, and New Zealand has increased from 1,199,000 in 1876 to 14,766,000 in 1884. I hope I may be excused for bringing before the House these figures in respect especially to a quadruped with whose legislative history I have had some connection. Now, if I am not wearying the Committee I should like to go on with this comparison. I have pointed out that the loss of £4,500,000 sustained on alcohol in 10 years has been recouped to the extent of nearly one-half by the increase of the duties on tea, tobacco, fruit, &c, the rest being accounted for by an increase in the Death Duties, the House Duty, and the Post Office Revenue. All these things show an increase in the resources of the nation. I think that the House would like to hear a word upon the subject of the Revenue of the Post Office. The gross receipts of the Post Office for the year 1875–6 were £7,500,000; those for the year 1885–6 being £10,250,000. But although there was this large increase in the amount of the receipts of the Post Office, there has been a decrease in the last few years in the net income of the Department due to the enormous increase in the Expenditure. During the last two years the net Revenue of the Post Office has diminished by a very considerable sum. For the three years 1880–1883 the average net yield of the Post Office and Telegraphs was £2,900,000; while for the two years 1884–1885 it was £2,500,000, being a loss of some £400,000 a-year. This loss is, of course, due to the institution of the Parcel Post and the 6d. telegrams. The Parcel Post is largely mixed up with the Letter Service; but the loss arising from its establishment was estimated at £90,000 for the year 1884–5. The increase in the receipts for the year 1885–6 has, however, been £40,000; so that I am glad to say that the growth of the receipts is beginning to overtake that of the Expenditure, and we hope that the development of the business of this branch of the Department, due to the new rate and the extension of the Service to the Colonies and to foreign countries, will before long bring the Receipts and the Expenditure under this head to, at all events, an equality. In dealing with this point, I desire to say a word in memory of a man who was much esteemed by this House—I mean Mr. Fawcett. Mr. Fawcett estimated the number of parcels that would be conveyed by the Parcel Post at 27,000,000, while the actual number of parcels conveyed in the year 1885–6 was 26,527,000. Those figures show how accurate was Mr. Fawcett's foresight in this matter. I must further say that although there has been a loss under this head for some time the experiment has resulted in great convenience to the public, without, as I hope, any permanent loss to the Revenue. But the case of the Telegraphs is very different. Since 1872 the Telegraphs have never paid the whole of the interest on the capital expended. In 1880–1 the deficiency on the interest of the Stock amounted to about £1,000; while in 1883–4 the deficiency on the working expenses alone without any payment of interest whatever was £20,000, the deficiency being caused by an increase in the salaries of the working staff and a diminished receipt owing to the reduced scale adopted as the result of the Motion of the hon. Member for Glasgow (Dr. Cameron), made in 1882. The sum of £500,000 was spent in three years in preparations for the introduction of the 6d. telegrams; and the result of six months' experience shows that under the reduced tariff the cost of sending a message is greater than the price received for it. It is true that there has been a large increase in the number of messages sent; but, while the receipts in 1880–1 were £1,634,000, and the expenditure £1,309,000, showing a surplus for the year of £325,000, the receipts for 1885–6 were £1,775,000 against an expenditure of £1,922,000, leaving a deficit of £147,000 upon the working expenses alone, without providing anything for interest. The result has been a total loss of £500,000 by the change; and, whatever may be the convenience which that change has afforded the public, I hope the House will bear in mind the financial result of this experiment, and that when demands for altera- tions of this kind are made they will not be coupled with demands for public economy. Up to this point I have spoken only of taxes other than the Income Tax; and I think that I have shown that there has been no substantial falling-off in the sources of the Revenue of the country, except in the case of the alcoholic revenue, and that this defalcation does not indicate a diminished consuming power. Now, I should like to say a word upon the Income Tax. I am able to speak of the yield of this tax with great satisfaction; and I trust that Chancellors of the Exchequer may always be able to look upon that tax as a safe sheet anchor of Revenue. I am far from advocating that the Income Tax should be kept at its present height. What I mean to say is that I hope that as a source of Revenue the Income Tax may always prove staunch and solid, and that it will not fail to respond to the calls which it may be necessary to make upon it. The right hon. Gentleman the Prime Minister, in his Budget Speech of 1881, made a statement of the produce of the Income Tax from its establishment up to that time. From that statement it appears that at the time of its first establishment by Sir Robert Peel, in 1842–3, the tax yielded for each 1d. levied £772,000, while in 1852 it yielded for each 1d. £810,000. In 1877–8, including the tax levied in Ireland, it yielded for each 1d. £1,990,000. In 1881–2, it yielded £1,916,000; in 1882–3, it yielded £1,963,000; in 1883–4, £2,016,000; in 1884–5, it yielded £2,004,000; in 1885–6, it yielded £1,980,000; and in 1886–7 it is estimated to yield £1,970,000 for each 1d. levied in the pound. This shrinkage of the tax in the last two years was not due solely to a diminution in the property and profits of the country; because a high rate of Income Tax causes people to look sharper after their assessment to that tax than they do when it stands at a low figure. For instance, the number of claims for remission in 1876, when the tax stood at 2d. and 3d. in the pound, was 66,000; but that number rose to 125,000 in 1882, when the tax stood at 5d., and to 166,000 in 1885, when the tax stood at 5d. and 8d. in the pound. This year the claims for remission have been very much higher than they ever were before. The tax, however, still yields £50,000 per 1d. more than it did in 1881–2. Those figures do not, in my opinion, exhibit any serious diminution in the present resources of the country. The Returns of pauperism point satisfactorily in the same direction. In the fourth week of February, 1870, the number of paupers in England and Wales relieved were 49 per 1,000 of the population. In 1875—the time of great prosperity—they were 32 per 1,000. This year they were 28 per 1,000. There is also another circumstance which is very satisfactory—namely, that if the people are drinking loss spirits they are saving more money. In 1875, which was a time of prosperity, the amount deposited in the Post Office and Trustee Savings Banks was £67,575,000, being at the rate of £2 1s. 3d. per head of the population; while in 1885, after all these years of depression in trade, the amount so deposited had increased to £94,156,000, in addition to the sum of £3,150,000 invested for depositors, making a total for the year of £97,306,000. Thus the saving power of the population had increased last year so as to reach £2 13s. 6d. per head. I have shown, therefore, that the Revenue has been, though not elastic, yet tolerably steady for the last 10 years; but things are very different when we come to look at the Expenditure. I will give the Committee shortly the gross figures of the Expenditure; and I will take, in the first place, the Expenditure in the interval of nine years between 1875–6 and 1884–5. In those nine years the Expenditure upon the Army and Navy grew to the extent of £1,500,000; Civil Governmenfc,£360,000; Education, £1,900,000; and Grants in Aid, £1,600,000; making a growth of Expenditure in the nine years of £5,360,000. Now, I will take the last two years. In that period the Army and Navy Expenditure has grown £4,800,000; the Civil Government, £200,000; Education, £351,000; Grants in Aid, £150,000; being an increased Expenditure of £5,501,000, of which £4,800,000 is Naval and Military. The total increase for the 11 years is £6,250,000 on the Army, £560,000 on the Civil Government, £2,273,000 on Education, and £1,781,000 on Grants in Aid; making a total growth of £10,864,000 upon these heads of Expenditure in the 11 years. I should like to point out that upon the Civil Services—that is, Civil Establishments, properly so-called—there has been no growth whatever in that period. There is a figure of £555,000 representing an apparent increase under this head; but it is due to Surveys, Irish Land Commission, Education—not Elementary—Museums, Learned Societies, and new Colonial Services in Bechuanaland, Cyprus, and Telegraph Subsidies. That is the whole growth on Civil Expenditure. In 1884–5 the Army cost £15,961,000; in 1886–7 it is estimated to cost £18,473,000, an increase of £2,512,000. The Navy in 1884–5 cost £10,708,000, and the Estimate for 1886–7 is £12,993,000, being an increase of £2,285,000, or a total increase on the Army and Navy of £4,800,000. Just let me sum up this growth of Expenditure in this period, and I should add to those figures £846,000 for Debt Charges, which is really, of course, only money saved for the payment of the Debt. I will give the figures for the last 11 years. The increase in those years on the Debt Charges is £846,000; on Grants in Aid, £1,781,000; Civil Administration, £566,000; Education,£2,273,000; Army, £4,071,000; and Navy, £2,195,000; making in all £11,732,000. During that period 6d. had been added to the Income Tax, which yielded £11,646,000, almost exactly the same amount as you have added to your Expenditure. If you distribute it in rough figures these are the results. Debt charges and grants in aid may be taken together as representing 1¼d. of the 6d. increase in the Income Tax. These can hardly be regarded as, in the ordinary sense of the word, Expenditure. They rather belong to the head of Savings and Transfer of Charge. Education you may take as representing 1¼d.; the Civil Administration is little more than ¼d., and the Army and Navy will stand for 3¼d., out of the increase of 6d. on the Income Tax. That, I think, illustrates with tolerable accuracy the growth of the Revenue and Expenditure of the country for the last 11 years. Now, I come to what will interest the Committee more nearly—that is, the finance of the present year. The total estimated Expenditure of the year 1886–7 is £90,428,599; the Exchequer issues for last year were £92,223,000; therefore, the estimated Expenditure for the year 1886–7 is £1,794,401 less than that of last year. But then, of course, there is no Vote of Credit to be provided. I will give the Committee the details of the figures. The Estimate for 1886–7 is as follows:—Permanent Charge of the Debt, £28,036,917; Interest on Local Loans, £641,000; Interest on Suez Bonds, £200,000; other charges on the Consolidated Fund, £1,762,000; making a total of Consolidated Fund Charges, £30,639,917. The Estimate for the Army is £18,233,200; for the Navy, £12,993,100; Miscellaneous Civil Services, £18,008,691; Customs and Inland Revenue, £2,753,563; Post Office, £5,218,955; Telegraph Services, £1,845,510; Packet Service, £735,663; the total of the Supply Services being £59,788,682—that is, on the whole, £1,795,245 less than last year. Though we are relieved this year from the burden of the Vote of Credit and the charges for the Afghan War to the extent of £9,700,000, our Expenditure will be only £1,800,000 less than last year. The difference, as the Committee will at once assume, is mainly due to the fact that we naturally revert to the arrangement for the payment of Debt by Terminable Annuities, which represents £5,500,000, and the addition to our regular Expenditure represents £2,500,000 more. Of this there is an addition to the Civil Estimates of £282,000—that includes the normal increase for Education, £190,000; an addition to the Post Office and Telegraph Expenditure, £525,000—a great part of that being for new sites and plant; and an addition of £1,500,000 for the Army and Navy. That is the estimated Expenditure for the year 1886–7. I now come to the estimated Revenue for the year just beginning. The gross figure is £89,885,000—that is to say, £303,699 in excess of the receipts of 1885–6. We take the Customs for next year at £19,700,000, being £127,000 less than last year; the Excise we put at £25,710,000, or £250,000 more than last year; Stamps we place at £11,365,000, or £225,000 less than last year; Land Tax and House Duty, £2,920,000, or £30,000 more than last year; the Property and Income Tax, £15,755,000, or £595,000 more than last year; making the total estimated produce of the taxes for 1886–7 £75,450,000, or an increase over the receipts of last year of £523,000. The Post Office we take at £8,270,000, an addition of £120,000; Telegraphs, £1,730,000, a decrease of £10,000; Crown Lands, £370,000, a decrease of £10,000; Interest on Advances, £1,165,000, a decrease of £211,080; Miscellaneous, £2,900,000, a reduction of £108,221; making a total Non-Tax Revenue of £14,435,000, or £219,301 less than last year. Adding these figures together we get a total estimated Revenue of £89,885,000, or £303,699 more than last year. For the Customs we take the same sum as the actual receipts last year. I mentioned before that we expect the loss upon dried fruits to be replaced. We take the decrease upon spirits as amounting to £335,000, and the increase upon wine as amounting to £27,000. We estimate an increase upon tea of £212,000, and upon tobacco of £55,000—so much for Customs. As to the Excise, we estimate an increase of £45,000 upon beer, and £245,000 upon spirits, making together £290,000—thus nearly balancing the estimated loss on alcohol under the Customs. On Stamps we estimate a decrease in the Death Duties of £220,000, owing to the cessation of the whip up for arrears to which I previously referred. The House Duty we estimate will increase £30,000, and the Income Tax we estimate will increase £600,000, the arrears being at 8d. instead of 6d. The increase on the Post Office we estimate at £120,000, which is much less than the increase in the expenditure. In the interest on advances we estimate a decrease of £211,000, owing to there being no arrears of interest on the Suez Canal Shares this year. Under the head of Miscellaneous Sources of Revenue we estimate that there will be a decrease of £108,000. The estimated Revenue is thus £89,885,000; and if you compare that sum with the estimated Expenditure you arrive at a deficit of £543,599, not a very satisfactory result in a time of peace, and when the Income Tax is 8d. in the pound. The increase of Expenditure is principally to be accounted for by the large expenditure upon the Naval and Military Services, an expenditure which the Committee, I fear, must now look upon as normal, as there is nothing special in the circumstances of the Naval and Military Expenditure of the present year. The interesting question is—"How is this deficit to be met?" In ordinary times, no doubt, it would be met by an increase of taxation; but I know no class and no trade at the present time which is in a condition to bear additional taxation. As to indirect taxation, I do not look to that with any sanguine hope, especially after the events of last June, when a blow was struck at indirect taxation from which I do not think it will soon recover. The right hon. Gentleman opposite (Sir Michael Hicks-Beach) said in his Budget Speech— In such times as these it is, I fear, too true that, for the purposes of Revenue, we have arrived at the limits of increased taxation on the most important taxed articles of consumption, except, perhaps, one article only—namely, tea."—(3 Hansard, [299] 131.) Explaining what he had said on the subject of tea, the right hon. Gentleman subsequently used these words— Hon. Members will find in my speech on the Budget that after presenting what seemed to me to be the financial and economical reasons in favour of an increase of duty on tea I intentionally, and, as I think, completely, demolished my own arguments by a practical conclusion conveyed in a single sentence—namely, by stating my belief that such an additional duty would be so unpopular that Her Majesty's late Government could not propose it."—(Ibid.) Then he spoke of the high rate of the Income Tax, saying— I do not think the total burden on the Income Tax payer this year, with the Income Tax at 8d., relatively to the total amounts received by the Revenue for Customs and Excise, is greater than it certainly has been for some previous years. … No doubt, if we only look to recent years, during which we have become accustomed to a low Income Tax, the rate this year may seem disproportionately high; but, if we look further back, the case bears a different aspect. In 1859–60, when the Income Tax was at 9d., the payments into the Exchequer from Customs and Excise, calculated on the same basis as I have taken for the current year, were only £42,765,000. In 1860–1, with a 10d. Income Tax, they were £42,529,000. In 1861–2, with a 9d. Income Tax, they were £39,766,000. … I merely quote those figures to show that the present state of things is not entirely without precedent. It was, I daresay, to a great extent justified in the years to which I have alluded, as I am afraid I must justify it now, by the simple but very cogent argument that we cannot do without the money.—(Ibid. 133–4.) The right hon. Gentleman added— I am afraid, under the circumstances, the Income Tax payer must bear as easily as he can the 8d. Income Tax."—(Ibid. 137.) Thus we have a condemnation from the right hon. Gentleman of the duty on alcohol, because it is a falling revenue. The increased Tobacco Duty has also fallen far short of the results expected from it. The right hon. Gentleman abandons tea as impossible; and sugar is one of the greatest comforts of the poorer classes. Tea and sugar should not be taxed except in times of great emergency. There remain, no doubt, the Death Duties, and everybody admits that they must be dealt with, and that there is an unfair distinction at present between Succession Duty and Probate Duty; but the subject is much mixed up with that of local taxation; and, with the prospect of a measure of local government upon us, it is, no doubt, desirable that these duties should be dealt with in connection with the re-adjustment of local taxation. Besides, it is very doubtful, according to the Estimate made last year, whether any large sum would be obtained immediately from any change to which the Death Duties could be subjected. If, then, we cannot meet this deficit by increased taxation, we can only meet it by some deduction from the sum now appropriated to the reduction of the Debt. I wish to state to the Committee what that fund is exactly. As things now stand, there is, in ordinary circumstances, an annual sum of nearly £7,000,000, available for reduction of Debt. In the century which elapsed between Blenheim and Waterloo we created a Debt of £870,000,000. In the 40 years succeeding 1815 the Debt was reduced by about £50,000,000, besides £50,000,000 which was newly incurred, but covered by reductions to an equal amount, and since the Crimean War there has been a reduction of £110,000,000. If the present Home Secretary's plan is strictly carried out we shall reduce the Debt by the end of this century, or the beginning of the next, by about £300,000,000; in other words, we shall have paid off in a century of peace—happily we may so describe this century up to the present time—£300,000,000 of the Debt of £870,000,000 contracted in a century of war. That is a long way from the fulfilment of the old maxim, that we should extinguish in peace the debts contracted in wars. The century of peace will have discharged little more than one-third of the liabilities accumulated in the century of war. In the 11 years from 1874 to 1885 we have reduced the Debt by £50,000,000; £19,000,000 were paid off between 1874 and 1880, and £31,000,000 between 1881 and 1886. The reduction during the last five years was, therefore, at nearly double the rate of reduction in the preceding six years. The Committee should understand exactly what is the provision for the reduction of the Debt. There is, first, the great fund of the Terminable Annuities, amounting to £4,770,000, provided from taxation. Then there are two Sinking Funds, one established by Sir Stafford Northcote in 1875, and the other created in 1881. Between them these three Funds produce £5,670,000 appropriated to the reduction of the Debt. There are, "besides, other Funds which are not the produce of taxation, and which amount to upwards of £1,000,000 annually, and sometimes to considerably more. They are sums derived from Life Annuities, estimated at £800,000, from the composition for Stamp Duties, estimated at £200,000, and from the operations of the Land Tax Redemption and other sources. There is thus provided for Debt reduction this year a sum of about £6,750,000; and I am obliged to take something from that for the purpose of meeting the deficit and providing the country with a moderate surplus. The deficit is £540,000, and you ought to have a surplus of not less than £250,000; and therefore I propose to take from the Fund appropriated to the payment of the Debt the sum of £800,000. We shall not touch the great machinery of Terminable Annuities at all. But there are two Funds which are specially suitable for our purpose—namely, the new Sinking Fund, £613,000, and the Sinking Fund of 1881, £205,000, both of which are now applicable to the cancellation of Stock by purchase in the open market. This reduction of Expenditure by £818,000, the total of the two Funds, will convert the deficit of £544,000 into a surplus of £274,000. Sir Stafford Northcote, in his speech on June 28, 1875, distinctly contemplated the application of his Sinking Fund to such a purpose as this. The Committee will see that there will still remain in hand for Debt reduction in 1886–7 from Terminable Annuities £4,774,000, and from other sources £1,184,000, making together £5,958,000, or, in round numbers, nearly £6,000,000, for application to the reduction of Debt. It seems to me, under present circumstances, that that is as much as we can be expected to do. Let me now state what has been the result of the finance of the past year on Debt reduction. I give all these figures from the Return moved for by Sir John Lubbock, which is the only Table which presents an accurate view of the state of the Debt. And I would recommend any Gentleman who desires to understand this subject to make use of that Table, which gives results differing considerably from the ordinary Returns. The Debt on the 31st of March, 1885, was £710,856,000. We suspended last year the Terminable Annuities; we created an addition to the Unfunded Debt by Treasury Bills to the extent of £3,250,000, and we issued Exchequer Bonds for the Cape Loan of £400,000, together amounting to £3,650,000, by which the Debt was increased. But it has been reduced in the same period from various sources still in operation—namely, on the Funded Debt, £1,320,000; Annuities, £248,000; and on other heads, making in all £1,664,000. This reduction has also been augmented by increase of assets—namely, increased balances, £632,000; and recoverable loans, £400,000; amounting altogether, in round numbers, to £2,700,000. Comparing this decrease with the sum of £3,650,000, by which the Debt was increased, leaves a net increase of the Debt in the last financial year of no more than £950,000. On the 31st of March, 1885, the Debt was £710,856,000, and on the 31st of March, 1886, £711,813,000. We propose to further reduce the Debt during the present year by £6,000,000; and the Debt on the 31st of March, 1887, will therefore stand at £705,800,000, showing a total reduction in two years—1885–6 and 1886–7—of £5,000,000. Some persons, perhaps, would have preferred that we should have suspended for a time the Terminable Annuities for the purpose of liquidating the Treasury Bills; but that would only have amounted to paying off Unfunded Debt instead of Funded. On consideration of all the circumstances of the case, having regard to the fact that the amount of Floating Debt is not unmanageable, we have thought it best to allow the Terminable Annuities to remain untouched, and it is of great importance to maintain this powerful instrument for the reduction of Debt. The Unfunded Debt has stood for the last few years at £14,000,000, of which £3,500,000 are Suez Bonds which do not come into the market, It is now, including the recent Treasury Bills, about £17,600,000; but from 1878 to 1881 it was much higher. We find no difficulty in renewing Treasury Bills at a low rate. This is not unlikely to continue; and there is the further advantage about a Floating Debt that it can be reduced by instalments, and even temporarily, when the balances admit. It was therefore deemed better to allow the Terminable Annuities to proceed in their integrity rather than to suspend them again for the purpose of liquidating Unfunded Debt. We may look forward, as times improve, to the liquidation of this addition to the Unfunded Debt. With this surplus of £274,000 I cannot, as the Committee will easily suppose, undertake any serious operation for the remission of taxation; but there is one small thing which I am glad to find myself able to do. I have been pressed to give relief to the cottage brewers, whose licences stood originally at 6s. The right hon. Gentleman opposite very wisely reduced them to 4s. It has been represented to me that these cottagers—and I am confining this to cottagers in houses under £8—find this tax a great inconvenience to them, while it is of great advantage to them to brew in their own houses; and I propose to remit this licence altogether on houses below £8 valuation. This relief will free about 60,000 persons, and the loss to the Revenue will not be more than £16,000. This small reduction will reduce the Estimate of Excise from £25,710,000 to £25,694,000; and while the estimated Expenditure is £89,610,229, the total Revenue will be £89,869,000, leaving a net surplus of £258,771. I deeply regret that I am not able to propose to the Committee any serious reduction of taxation; but since 1875 this has been found to be impossible. In the last 11 years there have been numerous increases, but hardly any diminution, of taxation. The great and continual increase in the Expenditure of the country has led to an increase, not a decrease, of taxation. It is no longer our Revenue, but our Expenditure, which grows by leaps and bounds. If we want reduction of taxation we must go back to economy—to principles which were the basis of the financial policy of Sir Robert Peel and of the Duke of Wellington, who was not a man to be frightened into expenditure by scares, either professional or journalistic. His Administration, like that of Sir Robert Peel, will always be regarded as one of the most economical which this country has ever had. In my opinion, we are living too fast. The English are not naturally thrifty. They are a generous people, but not thrifty. I do not wish to be understood to say that the resources of this country are in any way impaired, or that the country is impoverished. I think that the facts which I have laid before the Committee show the contrary. The Revenue is sound, but we are using it up too fast. Habitual spendthrifts are very much like habitual drunkards—they have no reserve to fall back upon. There is a warning for us on the other side of the Channel which we may take to heart. We have not come to that pass yet; but we may well observe what are the causes of the gigantic Debt and the increased taxation in the French Budget. They are foreign expeditions, the extension of dominion, and great public works undertaken for the purpose of giving general employment. We have, in a lesser degree, suffered from the same causes; but we have not yet come to the same pass as that at which French finance has arrived. We are paying our way, and doing something more. We are discharging Debt to a moderate degree. We are still able, like a prudent parent, to lay up something for the future for his children who come after him. But I mention these things in order to entreat the Committee to resist the perpetual demands that are being made from every quarter for further expenditure. I hope the Committee will take up that attitude. It is for the interest of all Parties in this House. The right hon. Gentleman the Member for the Strand (Mr. W. H. Smith), on the Budget of 1884, used these words— The Government, after all, are responsible for the Expenditure of the country"— that is quite true; but the Government get driven very hard sometimes— and it is their duty to see that the whole of the cost of carrying on the affairs of the State are brought within such reasonable limit as the trade and commerce of the country justifies. We are now in a condition of considerable trial in the country; and it should be met as similar circumstances are met in connection with other concerns and in other places, by the exercise of the strictest economy and disregard of all pressure, and by a firm resolve that no right hon. or hon. Gentleman, whether responsible or irresponsible, shall force them to incur charges which bring no adequate return to the country, and inflict unnecessary burdens on the taxpayers."—(3 Hansard, [287] 561.) These are very sound Treasury doctrines, and I only hope that the six months he has spent in the Capua of the War Office have not impaired these sentiments in the breast of the right hon. Gentleman. It may be said that I have laid before the Committee a very commonplace Budget. I shall be content to bear that criticism if it be admitted that, under the present circumstances of the people and of the finances of the country, it may be called a commonsense Budget. This is not a time for original Budgets or ingenuities in finance. When you are in a ship in bad weather sometimes the best thing you can do is to lay her to and not attempt to drive her. We cannot lay fresh burdens upon the people. What we have to do, I think, at the present time is to have patience, to exercise prudence, and to husband our resources for better times. If these are sound principles of finance, and if the proposals of the Government conform to them, I trust they may receive the favourable acceptance of the Committee. There are certain Resolutions which I desire to move with reference to the Tea Duties, the Income Tax, and other formal Resolutions which ought to be taken to night, and which I now beg to submit to the Committee.

Motion made, and Question proposed,

"(1.) That, towards raising the Supply granted to Her Majesty, the Duties of Customs now chargeable upon Tea shall continue to be levied and charged on and after the first day of August, one thousand eight hundred and eighty-six, until the first day of August, one thousand eight hundred and eighty-seven, on the importation thereof into Great Britain or Ireland (that is to say): on

Tea … the pound. Sixpence.

(2.) "That, towards raising the Supply granted to Her Majesty, there shall be charged, collected, and paid for the year which commenced on the sixth day of April, one thousand eight hundred and eighty-six, in respect of all Property, Profits, and Gains mentioned or do-scribed as chargeable in the Act of the sixteenth and seventeenth years of Her Majesty's reign, chapter thirty-four, the following Duties of Income Tax (that is to say): For every Twenty Shillings of the annual value or amount of Property, Profits, and Gains chargeable under Schedules (A), (C), (D), or (E) of the said Act, the Duty of Eight Pence; And for every Twenty Shillings of the annual value of the occupation of Lands, Tenements, Hereditaments, and Heritages chargeable under Schedule (B) of the said Act,—

• In England, the Duty of Four Pence;
• In Scotland and Ireland respectively, the Duty of Three Pence;

Subject to the provisions contained in section one hundred and sixty-three of the Act of the fifth and sixth years of Her Majesty's reign, chapter thirty-five, for the exemption of persons whose income is less than One Hundred and Fifty Pounds, and in section eight of 'The Customs and Inland Revenue Act, 1876,' for the relief of persons whose income is less than Four Hundred Pounds.

(3.) "That it is expedient to amend the Laws relating to the Inland Revenue and Customs."—(Mr. Chancellor of the Exchequer.)

SIR MICHAEL HICKS - BEACH (Bristol, W.)

I think the Committee will have felt that the interesting statement which the right hon. Gentleman has made has done all the more credit to his ability and industry, because, owing to the somewhat unfortunate circumstances of his position, he really had so very little to say. Now, Sir, none of us, I imagine, could have expected anything in the nature of what is called a sensational Budget; and I can assure the right hon. Gentleman that we cordially sympathize with the strong expression of opinion which fell from him as to the financial difficulties of the present condition of the country, and as to the necessity for great economy in our administration and expenditure, and that we shall be delighted to see him put his principles into practice. Sir, I am not quite sure that a year ago, if the right hon. Gentleman had filled the Office which was then occupied by the right hon. Gentleman next him, the Member for Edinburgh (Mr. Childers), he could, with quite so much satisfaction to himself, have expressed to the Committee those strong opinions upon the necessity of economy, when he would have been obliged to call upon Parliament to meet the enormous expenditure which Her Majesty's Government of that day wasted in the Soudan. But now, Sir, we are asked to consider what the right hon. Gentleman has characterized as merely a normal Budget; and I must say I regret, in the first place, that in a mere normal Budget we should be asked to sanction an Income Tax of 8d. in the pound. When I asked the House last year to fix the Income Tax at that limit, I stated at the time that it was merely, as I hoped, a provisional request, and that if it fell to my lot to propose the Budget this year, I hoped to be able to reduce the figure to a lower point. Sir, the right hon. Gentleman has not felt himself in a position to do so. I do not say this in any degree by way of criticism or blame. The right hon. Gentleman has dilated upon the great falling-off in the receipts of the past year from spirituous liquors. I am anxious to say a few words to the Committee upon that subject, because I think the speech of the right hon. Gentleman this evening has proved a remarkable justification, not merely on that point, but also with regard to his own refusal to increase the Death Duties on real property, of the Amendment which I was fortunate enough to carry last year on the Budget of the right hon. Gentleman the Member for Edinburgh. Sir, the Chancellor of the Exchequer has, I think very properly, said that everybody feels that the Death Duties and Local Taxation must be dealt with together. If the right hon. Gentleman the Member for Edinburgh had been of that opinion last year, I think it would have saved the Government, of which he was a Member, from the defeat which terminated their tenure of Office. I can only express my extreme satisfaction that on considering the matter the present Chancellor of the Exchequer has taken a different view. Then, Sir, with regard to the proposals of the right hon. Gentleman for meeting the deficit of the ensuing year. He informed the Committee that he anticipated a deficit of £543,000; and he proposed a mode of meeting it to which, subject to further consideration as to the particular Sinking Fund by suspending which the deficit should be met, I am not going to raise any objection on principle. But he does not propose to deal in the same way -with the deficits of the two previous years. He prefers, I understand, to try to meet them from the balances, or from the accruing surplus Revenue.

SIR WILLIAM HARCOURT

My proposal is to meet them by Treasury Bills.

SIR MICHAEL HICKS - BEACH

Quite so. I understand that the right hon. Gentleman proposes to renew the Treasury Bills, from time to time, keeping this Floating Debt in its present condition until it can be paid off from the accruing surplus Revenue. Well, Sir, the wisdom of that course depends on two things—namely, the rate of interest at which the right hon. Gentleman, is able to borrow on Treasury Bills, and the justice of his sanguine estimate of the possibilities of the Revenue. I understand from him that the rate of interest on Treasury Bills is still as low as when I left Office; and if that is so, no doubt it may be good policy to pursue the course he has informed us of to-night. In his Estimate of Revenue I should think he is rather too sanguine, and perhaps he will give some reason for that Estimate later on. No hon. Member, I think, can be surprised at the difference which has unfortunately occurred between the Estimates of the Revenue from Customs and Excise, and the actual receipts during last year. My Predecessor estimated, as I did in the year just concluded, a revenue from Customs of £20,000,000. The receipts have been less than that by, I believe, £173,000. That seems to me to be no large difference, considering the very exceptional circumstances of the year, and the extraordinary elements of uncertainty that have involved all commercial transactions. For example, who could have expected that, even in spite of the recurrence of the General Election in the autumn, the receipts from beer and spirits would have diminished to the extent they have diminished? I proceed now to the falling-off in the Excise receipts. The right hon. Gentleman told us that the falling-off in beer had been £90,000 more than the Estimate, and that the falling off in spirits had been £790,000. He attributed this to two causes—in the first place, I think, to habits of greater temperance; and, secondly, to a preference on the part of many people to expend their money in other ways, rather than to any very great depression. But, Sir, he omitted to notice one great cause of this falling-off, to which I should like for a few minutes to call the attention of the Committee. It appears to me—and I speak with experience gained from the opportunities which, of course, I had of communication with the able authorities of the Excise—that the falling-off is in no small degree due to the unfortunate disturbance of the trade by the proposals of the right hon. Gentleman the Member for Edinburgh (Mr. Childers) last year to increase the duties on spirits and beer. Now, Sir, what has happened with regard to beer? I have no doubt whatever that what happened was this—that the brewers anticipated the call that would perhaps be made upon them to meet that increased duty which was then proposed by the right hon. Gentleman opposite by, to speak plainly, watering their beer; and thus a decrease in the Excise receipts from beer has occurred which the right hon. Gentleman never in the least anticipated. With regard to the duties on spirits, the spirit dealers, I believe, simply reduced their usual stock; and, having regard to the diminished consumption of spirits, and the continued depression of trade, they found out they could continue their business with smaller stocks than they had been accustomed to, and have not considered it necessary to raise them again. Therefore, in both cases, the result has been a larger loss to the Revenue on beer and spirits than would have occurred if the right hon. Gentleman had never tampered with these duties last year. I ventured then to say that the proposal to increase the duties on beer and spirits was financially unsound. I said that the Revenue from these articles had been decreasing, and on the 10th of July I informed the House, on the authority of the Commissioners of Inland Revenue, that the decrease on spirits would probably be £150,000 more than had been estimated by the right hon. Gentleman. The right hon. Gentleman on the 16th of July, speaking, as he said, with the entire agreement of the right hon. Gentleman the Member for Mid Lothian (Mr. Gladstone), directly contradicted me. He told us that there had been an increase in the yield from the Beer Duty during the previous three years, and that it was not true, as far as the Beer Duty was concerned, to say that the Revenue from it was decreasing. He admitted that there was a decrease in the Revenue from spirits; but he said it was considerably under 1 per cent upon the previous three years ending 1884–5, and certainly was not such a decrease as to inter- fere with financial operations which might, on other grounds, be advisable. Those arguments were brought forward to show that there was no ground for my charge against him that he had committed a grave financial error in proposing this increase, looking at the existing condition of the Revenue from the beer and spirit trade. Well, Sir, the right hon. Gentleman said that it was beyond question that the Revenue from beer, regarded solely as a matter of Revenue, might be raised from 2d. to 3d. per gallon with the greatest possible ease; and that it was perfectly possible to raise from liquor, if Revenue only were considered, between £5,000,000 and £6,000,000 more than is raised at present. I think the result of the finance of last year has shown how singularly deficient in financial foresight the right hon. Gentleman was when he made the proposal which was rejected by the House of Commons. What has the Successor of the right hon. Gentleman told us to-day? He has compared the receipts in the last year with those of 1875–6; and the comparison has shown that, in spite of the increased duty upon beer since that time, the total receipts from beer and spirits have sunk from £30,209,000 to £26,830,000 in the year just concluded. No wonder that he prefers to raise the necessary Revenue by maintaining the 8d. Income Tax without copying his Predecessor's mistake of trying to obtain a corresponding increase in indirect taxation from beer and spirits. And, Sir, that is not all. The right hon. Gentleman the present Chancellor of the Exchequer has made, I think, a very sanguine Estimate of the receipts from these sources of Revenue for the coming year. He has estimated the probable receipts from the Excise at £250,000 more than the actual receipts during the past year, and he also anticipates a very small decrease in the Customs. All I can say is that, having regard to the enormous Excise decrease of £790,000 in spirits and £99,000 in beer during the past year, that seems to me to be a very sanguine Estimate. The right hon. Gentleman has referred to an opinion which I ventured to express last year—that in times such as these we had arrived, for the purpose of Revenue, at the limits of increased taxation upon the most important taxed articles of consumption. I was told that I had by that statement sounded the death, knell of indirect taxation; but I fear that I merely stated what the present Chancellor of the Exchequer has found to be an unpleasant truth. I went on to say that the principle which the right hon. Gentleman had enunciated, that the whole additional taxation in times like these should not fall upon property, could not be carried out without the addition of some articles to our Customs tariff. The present Chancellor of the Exchequer has shown to-night how the expenditure of the people has changed from an expenditure on intoxicating liquors, which are the subjects of taxation, to an expenditure on petroleum and furs and other articles, which are not subjects of taxation. Would the right hon. Gentleman like to propose the taxation of these articles? I do not think he would care to make any such proposal. Surely the condition of our system of indirect taxation is hardly satisfactory when, evening normal year, we are unable to do without an 8d. Income Tax. The right hon. Gentleman, although he alluded to these articles, has not been able to find one upon which he could impose a new tax. He cannot increase taxation upon those articles which have hitherto borne the brunt of indirect taxation—namely, beer and spirits; and, therefore, he is reduced to the necessity of keeping up the Income Tax at a rate at which it certainly ought not to stand in ordinary times of peace, if it is to be available as a great and powerful engine in time of war. This is one result, no doubt, of the financial policy of the past 40 years. Year by year one article after another has been removed from our Customs tariff. Of course, very great advantages have followed to the commerce of the country from that policy; but the result of it has been to place the Chancellor of the Exchequer of the day in the difficulty in which the right hon. Gentleman now finds himself. I was looking back the other day to the Budget debates of 1852, and I found a very pregnant sentence used by the Earl of Beaconsfield, who denounced as most pernicious to the country the system of getting rid of indirect taxation upon every article of consumption, and, at the same time, levying direct taxation from a very limited class. What remedy does the right hon. Gentleman propose? He tells us that we must reduce our Expenditure. How are we going to reduce our Expenditure? He says that we must not agree to any proposal from one side of the House or the other for increasing the Expenditure on our Army or our Navy, or to Motions such as that carried, I am sorry to say, by the hon. Member for Glasgow (Dr. Cameron) for the reduction of the charge upon telegrams. There is a great deal of force in that appeal of the right hon. Gentleman, if it would only be remembered by the House when such proposals are made; but I must say that it applies more to proposals such as that of the hon. Member for Glasgow than to the increase of Expenditure upon our Navy and our Army. At the same time, I am far from believing that our present Expenditure on the Army and the Navy might not produce better results than at present. I think that if it were possible for the Chancellor of the Exchequer and his Colleagues to inquire into the whole Expenditure of the Army and the Navy, in order to see whether the money voted is spent to the greatest advantage, a great deal might be done towards giving effect to those principles of economy which the right hon. Gentleman has advocated to-night; but I should be very sorry indeed if, on the plea of mistaken economy and foolish parsimony, this House should ever refuse to the Government of the day any Expenditure upon the Army or the Navy which is really necessary in the interests of the country. There is a way in which the present Government can really do much to further these doctrines of economy which the right hon. Gentleman has so very ably impressed upon the Committee to-night; they might do their best to teach their followers in the country and in this House that it is extravagant to the last degree for the State to attempt to make everybody happy and comfortable at the public expense. If that doctrine is preached—and it used to be one of the leading doctrines of the Liberal Party—I think the right hon. Gentleman on that Bench may, perhaps, be able to carry into effect the principles which he has put before us in his interesting statement this evening.

THE SECRETARY OF STATE FOR THE HOME DEPARTMENT (Mr. CHILDERS) (Edinburgh, S.)

I think in one respect the right hon. Gentleman who has just sat down has adopted a method which is not very usual on these occasions. I have been present at from 25 to 30 Budget speeches, and the custom has always been for an ex-Minister, and those who take an interest in finance, after the Chancellor of the Exchequer has made his statement, to ask questions in order to arrive at detailed information upon points which the Chancellor of the Exchequer may have omitted to deal with. But the right hon. Gentleman, instead of following that custom merely, has come down with an elaborate bushel of notes relating to my financial proposals of last year, without giving the smallest notification that he intended to depart from the usual practice, and thereby place me in the position of having to answer a most elaborate attack without the smallest idea of the subjects to which allusion would be made. Of course, the right hon. Gentleman is as capable as any Member of this House to raise the question which he has raised; but I could never have expected that the right hon. Gentleman would have brought down a series of notes for me to reply upon. But although I have had no notification, and am consequently speaking without preparation, I will endeavour to make to the Committee in a few words a statement which I think will show that the right hon. Gentleman has not quite done me justice. What I understand from the statement of the right hon. Gentleman is this—that last year, when I proposed certain duties, I did not estimate correctly the position of beer and spirits with regard to taxation, and that I made some very great mistake from which my right hon. Friend the Chancellor of the Exchequer is now suffering. The right hon. Gentleman especially complained of the falling-off in the receipts from liquor as something which I ought to have explained to the House. Let me remind the Committee of what I did say last year. I proposed to the House a certain increase in the duties on spirits and beer, and I stated at the time just the reverse of what the right hon. Gentleman alleges. I stated that I did not expect to have the same quantity of spirits and beer consumed as would have been consumed under the former duties. But I think I estimated under the Budget of last year, if it had been adopted by the House, that there would be a falling-off in consumption of between 2,500,000 and 3,000,000 gallons. I represented that there would be a large falling-off in the consumption of beer. I never dreamt of saying to the House that under the changed rate of duty there would be the same consumption as there would have been if the duty had not been extended. The increase of duty was, as the right hon. Gentleman has said, rejected by Parliament; but I do not wish to enter into that controversy, the subject having passed and gone. The disturbance which that occasioned in the trade undoubtedly led to a very considerable diminution in the consumption. The disturbance was a very great one; no one deplored it more than I did—it was a disturbance which, might very well have led to the diminution in the consumption of spirit which my right hon. Friend has explained. If anyone has made a mistake it is the right hon. Gentleman himself, because we distinctly stated to the House that we did not expect the receipts from Customs and Excise together would be as much as they would have been under other circumstances. The right hon. Gentleman, gave the exact figures of what he expected to receive under the heads of Customs and Excise; he never put down any diminution that might take place in the actual receipts; and, therefore, I say, if anyone is to be blamed in this matter, it is certainly not myself. I repeat that the dislocation which followed the rejection of the Budget led to a very large diminution in the receipts. Therefore, I am not to be blamed any more than the right hon. Gentleman because he did not take into account the falling-off which I expected, and which has actually taken place. The Budget of my right hon. Friend explains the circumstances very clearly; and, for the reasons I have given, I submit to the Committee that I am not open to the charge made by the right hon. Gentleman.

DR. CAMERON (Glasgow, College)

It appears to me that on this occasion the Government have confounded economy with the avoidance of expenditure. I maintain that money invested in plant is a very different thing from money wasted. I had occasion to point out not long ago, when the Parcels Post had been introduced, that £200,000 had been expended in laying down plant; and the right hon. Gentleman, then Chancellor of the Exchequer, and now Secretary of State for the Home Department, said that in consequence of the loss incurred in connection with the Parcels Post, which amounted to £200,000 or £300,000, he would be obliged to postpone the introduction of cheap telegrams for another year or two. When I asked what the loss was on the Parcels Post, it turned out that instead of its amounting to that sum the actual loss was a mere bagatelle, the rest of the sum having been invested in the plant necessary to carry on this business. Well, Sir, I say that in consequence of the delay in turning to account the money invested in plant the amount represented so much waste. Here, again, you have another case. The right hon. Gentleman tells us that last year there was a loss on the Telegraph Service of £147,000. But I ask how much of that is loss, and how much for investment in plant, necessary to meet the work due to the introduction of a lower rate? In introducing the Act of last year, Mr. Shaw Lefevre told us that there was a deficit of £190,000 on the year before; but he went on to explain that that included £175,000 which had been expended on plant. If I remember aright, the expenditure during the past year was exactly the same; and, therefore, the £147,000 which the right hon. Gentleman now speaks of is not loss, because there is involved in it the question of the amount expended on the extension of the telegraph system that was supposed to be required by the introduction of the 6d. telegram. But if you complain of waste, I maintain that the plan could have been carried out perfectly well with a smaller expenditure; indeed, I am informed by persons who, at any rate, know what they are talking about, that it might have been carried out at a very much smaller expense. However that may be, there is no doubt that during the time of the postponement an expensive staff was kept on, and expensive plant was lying idle, and that is what I understand by waste as distinguished from useful expenditure. But there have been other extensions of the telegraph system during the present year. The right hon. Gentleman the late Secretary for Scotland (Mr. Trevelyan), on introducing the Crofters Bill, told us how much the Government had done to benefit the fishermen in the Highlands by extending the telegraph system. What was done in that way has, no doubt, been included in the apparent loss. In the year 1875 there was a great loss on the telegraph system; and we were told by one of the officials—a gentleman of much experience and ability—that if we wanted to see what the postal telegraph system cost we must have an annual balance sheet made out on commercial principles, and for many years such a balance sheet was made out and presented to this House. But as soon as the reduction of the price of telegrams took place these inconvenient balance sheets were withdrawn; and now, when we are told in connection either with the Parcels Post or the 6d. telegrams that there is so much loss, we are unable to contradict it, because these valuable statements, which show exactly how matters stand, are no longer laid before us. I think it right to call the attention of the Committee to this question. There was a great deal of absolute waste in this matter, when £250,000 were expended on plant which was not put into useful operation in consequence of the alleged loss on the Parcels Post. And there was further waste when the delay of two months occurred last year, during which time an increased staff was kept on, and the wires were lying idle. I understand that with regard to Glasgow the expenses were more than realized; that the cost per telegram was less than had been expected, and that the increase in the number of telegrams was more than had been expected. There is, no doubt, a heavy loss to the country under the present system, and I would recommend the right hon. Gentleman to consider where economy can be effected. I think a great economy can be effected in the matter of way-leaves. The Railway Companies make a very good profit on the system along their lines. It has been shown by the Committee that a heavy loss is incurred by the present system. I do not wish to break any bargains made with the Railway Companies; but I think that when they come down to this House to ask for the extension of their monopolies, we might very fairly say that we shall grant them no such extension unless they make a concession in respect of the hard bargain we were compelled to make in the matter of way-leaves.

MR. W. H. SMITH (Strand, Westminster)

I think the hon. Member for Glasgow (Dr. Cameron) has slightly misunderstood the Chancellor of the Exchequer. If I understand the right hon. Gentleman aright, it is that the cost of transmitting these particular telegrams exceeds the amount received for them, and that, therefore, the greater the number of telegraphic messages the greater the loss. That is, of course, a very serious matter indeed, because it cannot be supposed that the people who send telegrams are not in a position to pay for the cost of transmission, putting out of consideration the cost involved in the acquisition of the Telegraph Service. The statement of the right hon. Gentleman I believe to be perfectly accurate, because I remember some time ago seeing an account which showed that the cost of each message then was 8d. or 9d. As the average number received is now somewhat less than it was then, and having regard to the fact that the State is placed at a disadvantage in the matter of labour as compared with private employers, I say it appears to me to be a serious matter that we should be engaged in so extensive an operation of business on conditions which must involve a larger loss every year in proportion as the amount of business transacted increases. The Secretary of State for the Home Department has questioned the statement of my right hon. Friend (Sir Michael Hicks-Beach); but I think it is clear that my right hon. Friend has, nevertheless, proved his case. The Chancellor of the Exchequer has stated that there is a great falling-off in the yield of the alcohol duties, and he stated that the Exchequer and the country lost by the fact that the spirits drunk contained a larger amount of water, the people being under the impression that they were buying something more valuable than that which they actually received. Well, Sir, that is very much the contention of my right hon. Friend. The disturbance caused by the proposal to increase the duty has produced changes from which Revenue does not speedily recover, if it recovers at all. These changes have given those engaged in the trade a method by which they can defeat the object of the Exche- quer. They found themselves placed at a disadvantage for a short period; they found opportunities to their hands which they had not previously availed themselves of; they used them and have adhered to them since I suggest to the right hon. Gentleman the Chancellor of the Exchequer the consideration as to whether he has taken sufficiently into account the tendency to fall which is shown by the figures he has put forward to-night. He has shown that the Spirit Duties have fallen nearly £1,000,000, and he estimates that he is to lose during the year £127,000 on Customs, and to recover £250,000 on the Excise. Now, it occurs to me that there are influences in operation which are usually considered greatly to affect the Excise—that is to say, the conditions of labour, employment, and trade. I hope I am not taking too gloomy a view of the future; but there is one circumstance which is known to persons engaged in trade and monetary operations, and that is that the present year is conspicuous for the absence of enterprize, new undertakings, and new engagements, which promise the employment of large numbers of the working classes. Railway Companies are, many of them, delaying the completion of the branches for which they obtained powers some years ago; and, at the same time, they are not entering into any new engagements. There is a smaller number of Private Bills before Parliament this year than has been known for many years; and that, of course, means that there is a smaller amount of enterprize, and, consequently, a smaller amount of labour to be employed in the prosecution of enterprize, than would have been the case otherwise, with a corresponding diminution of the alcohol duties. Those duties are, of course, influenced by the increasing temperance of the people; but they must still be regarded as a barometer, affected by the amount of wages paid, and therefore as a test of the prosperity of the working classes.

SIR WILLIAM HARCOURT

I have not the Papers with me, but I may mention, in connection with this subject, the remarkable circumstance that in the first three months of this year a very great number—almost double that of previous years—of new Companies have been registered.

MR. W. H. SMITH

I am exceedingly glad to be corrected in any view I express; but I think the right hon. Gentleman may be a little deceived by the simple registration of new Companies. There has, perhaps, never been a period during which so many Companies have been registered as in the past year; but they are merely transfers. They represent private undertakings converted into limited Companies, and are no criterion of prosperity; they rather indicate that individuals have found an opportunity of escaping from liabilities attaching to private enterprize, and of converting unprofitable into profitable undertakings. But I think the right hon. Gentleman has found that, so far as new undertakings which involve the employment of large numbers of the working classes are concerned, there is nothing of the kind going on to the extent which we have been accustomed to see for some years past. There has been, in fact, a falling-off; there has been a tendency on the part of large employers of labour to reduce the number of those whom they employ, and generally a sufficient indication that persons in the mercantile world wish to make their own businesses safe—to make good preparation for the future. I think, also, I am not asserting too much when I say that it is no longer in the power of the landowning class to carry out those improvements on the land which they have been accustomed to carry out; they do not see that they can with advantage proceed with improvements such as drainage, new buildings, improvement and repairs of farm-houses, and other matters that might be regarded as adding to the value of their land. These are, in my judgment, matters which call for serious consideration, and I trust the right hon. Gentleman the Chancellor of the Exchequer will take them to heart.

MR. J. G. HUBBARD (London)

The right hon. Gentleman has expressed an apprehension that the Budget which he has laid before the Committee may be thought commonplace; and he claimed for it, at all events, that it was a Budget of common sense. Well, Sir, in that last respect I think the right hon. Gentleman has claimed the highest quality for his Financial Statement, and it is one, I think, to which it is thoroughly entitled, The right hon. Gentleman alluded to the short period during which he had had to deal with the finance of the country, and to the circumstances in which he was placed, and he said that one of the consequences was that his Budget Statement contained no flights of fancy. For my own part, I always look on those flights of fancy in financial affairs with great alarm; and I have generally found them to end in the grief which follows upon promises unfulfilled. In the present instance, the Chancellor of the Exchequer, having the Estimates before him, finds that he can pay his way, but that he cannot pay off as large an amount of Debt as he could if he had a larger Revenue or less Expenditure; and, therefore, instead of adding new taxes, he says—"I will pay my way, and I will reduce my Debt by whatever surplus there may be at the end of the year." There is no doubt that the Income Tax, which has been commented upon as being high, is very high. But I must remark that the Income Tax is heavy, not because it is high, but because it is so unequal in its application; and I hope that the right hon. Gentleman may occupy his present Office long enough to re-adjust the mode in which that branch of the Revenue is collected. There can be no doubt that long ago the operation of this tax has been grievous in the extreme. What can be more cruel than to tax the precarious earnings of industry at the same rate as the permanent and continuous income derived from property? And the same may be said of the incidence of the Income Tax on landed property, which often for years has been deeply mortgaged at 4 per cent. The income which the owner of land so circumstanced has to pay upon is not the small residue which he receives, but upon an amount which includes all his outgoings, and that fact intensifies the charge upon him to a degree which he cannot bear. Then, all modes of conveyance—mortgages which have taken place with reference to real property—are also subject to the very serious charges which do not apply in the same degree and the same ratio to other classes of property. As I said, I hope the right hon. Gentleman will remain in Office long enough to re-adjust this system, for I am sure it stands in need of it. This re-adjustment has hitherto been utterly neglected; and I hope it has been reserved for the right hon. Gentleman to undertake the duty. The right hon. Gentleman seemed to make a very sincere promise of economy, and, at the same time, he addressed to the House and the Committee an exhortation to be economical in their demands. Now, I venture to say one thing for the country—the country does not want parsimony and economy; it values efficiency more than economy. The people do not want either the Defensive or Civil Services of the country screwed down to a degree which would make the Service or the defence of the Crown a scandal; they want economy, no doubt, but they want efficiency above all things. Having made these few remarks, I can sit down with the feeling that, happily, there is no element of danger contained in the Budget of the right hon. Gentleman; he has given us a Budget which, as far as it goes, is, I think, invulnerable.

MR. SAMUEL MONTAGU (Tower Hamlets, Whitechapel)

Having last month asked a Question of the Chancellor of the Exchequer as to the condition of the coinage—gold, silver, and copper—I hoped that some provision would have been made in the Budget for restoring, at least, the gold coinage to a satisfactory condition. It is generally admitted that 50 out of every 100 gold coins in circulation are so worn that they have no legal right to pass current at all. If they were taken to the Bank of England they would be cut at a loss to the holder of 3d. to 6d. each. If any hon. Member doubts that, let him take five or ten sovereigns to the Bank of England to exchange for a note, and he will find that he has to pay 2s. or 3s. for the privilege of making the experiment. But that is not all. The Bank of England holds generally £20,000,000 in gold, of which a large proportion must be in sovereigns, many hundreds of thousands of which are in such a delicate state that they will not bear the jolting of a railway journey, and a trip to the Continent would be fatal to their efficiency. In proof of that assertion, I hold in my hand an account of the Bank of England relating to 120,000 sovereigns withdrawn a few months ago and sent to the Continent. After a quiet stay there of a fortnight they were returned to the Bank of England in the same boxes, with the result that 1,499 of the coins were declared to be light, and a charge of £15 2s. 10d. was made on that account. When my firm complained of the loss, the answer was—"Oh, it is a very usual occurrence." It seems that when sovereigns are sent to Scotland they do not benefit by their trip; for, notwithstanding that they do not see the light of day there, and that they are returned in the same packages, a certain number of them are found to be light, and are destroyed in consequence. It is well known that there is an average loss of ½ per cent on gold taken out of circulation and paid into the Bank of England. Therefore, many millions of gold coins lie idle in consequence in the hands of bankers and others, with the result that any drain of gold is thrown exclusively upon the Bank of England. The rate of discount is frequently affected by this, and I have known the withdrawal of a few hundreds of thousands to send the Bank rate up, and put a tax upon the trade of the country greater than the value of gold exported. I would remark that they manage these things better in France, where the Bank rate has not changed for years. There is also great steadiness in the Bank rate in Germany, Holland, and Belgium. The most evident cause of the lightness of our gold coins is that they have been too long in circulation. I do not think that anything has been done to restore the gold coinage during this century. Another cause of lightness is that the metal of which the coins are made is too soft. We use 22-carat gold, or 11–12ths fine, whereas most other countries use gold only 9–10ths fine; and the consequence is that our gold coins wear away quicker than do napoleons and American eagles. Very few countries adopt our standard. Russia has the imperial; but gold does not circulate there at all. Portugal and the Brazils employ similar gold to ours. But the Brazils have a forced paper circulation, and therefore need not be taken into account; while Portugal has very little gold coin current. If we were to apply a small dose—say two grains—of copper to each sovereign, its life would be prolonged to double the extent, and the intrinsic value of the coin would remain the same. That increase of weight would represent just about the difference between light and heavy gold. The only use to which 22-carat gold is applied is in the manufacture of wedding rings, which can be continued. I should be glad to see gold 9–10ths fine used for our standard in this country. Besides the effect upon the gold coinage, it might be the first introduction of decimals in weights and measures, as well as in the gold standard. Of course, the Chancellor of the Exchequer will tell us that this restoration of the gold coins would involve a large expenditure, and that it was estimated to cost £500,000. Mr. Birch, I believe, puts it down at £800,000, although I think £500,000 is nearer the mark, because more sovereigns are exported than are returned. English travellers take away a large number of sovereigns, and I am sure they do not bring them all back again. They are spent abroad and are melted down there; therefore I think that £500,000 would restore the gold coinage to its original state, and be a credit to the country. I suggest that the Chancellor of the Exchequer might get this sum, and even more, by issuing 2,000,000 Treasury notes of £1 each; of that sum £500,000 could be used for restoring the gold currency, and the remaining £1,500,000 invested in Consols, which would yield £45,000 a-year, and thereby provide sufficient for keeping up the gold standard and for making good the wear and tear of the notes. I should be considered a radical financier if I proposed to make a legal tender of these notes without keeping gold against them; but I do not propose that they should be a legal tender. Let them be received by the Post Office, Customs, and for taxes, and they would then be very acceptable to the people. The prejudice against £1 notes originated in their being forged in former times; but that danger has passed away, and in Ireland and Scotland they are now very welcome. Two-thirds of the note circulation are in £1 notes—namely, about £4,000,000 in Ireland, and about £2,000,000 in Scotland. I do not think it would be useful at present to issue a larger amount of these notes than £2,000,000; but in Germany they have about £8,000,000 in Treasury notes, against which there is not more than £6,000,000 in gold, which is kept as a war reserve. After nearly 40 years' experience in dealing with currencies of all kinds, I feel justified in offering these few remarks to the Committee.

MR. BADEN-POWELL (Liverpool, Kirkdale)

I shall not detain the Committee at any length in offering to it the few observations I have to make in connection with the statement of the Chancellor of the Exchequer. He has explained, in the most clear and powerful manner, that an extra expenditure of £5,000,000 represents the net result to the English taxpayer of the last six years of government. But the point I wish to refer to is not that of Expenditure, but of the Revenue; and I confess that I agree with the right hon. Gentleman the Member for Westminster (Mr. W. H. Smith) in having the gravest apprehension that the people of this country have not that capacity to pay which the Chancellor of the Exchequer has attributed to them. The right hon. Gentleman has given us six grounds on which he thinks the people have this capacity to pay. He tells us that on tea and tobacco there may be an increase of more than £1,500,000, and then he proceeds to say that the people spend a great deal on bacon, oranges, petroleum, furs, and sugar—that is to say, that there is an increased amount spent upon those things. Now, I have recently made inquiries into the sales of bacon and salted provisions, with the view of finding out what was the produce of Ireland, and it seems to me that the increased expenditure which the right hon. Gentleman supposes is upon bacon imported from abroad; but while the people spend more upon foreign bacon they are spending less upon bacon from Ireland; and, therefore, lam of opinion that there is no real increase in the amount spent under this head. Upon fruit, no doubt, there is an increased expenditure; but it is a very trifling one, and is due chiefly to the increased facilities for bringing the fruit here by steamer. With regard to petroleum, I do not think the expenditure is more, but rather less, than it was; but the people get a better light than they did for their money when it was spent on tallow. As to furs, we expected the right hon. Gentleman would draw a grand picture of the increase of luxury in this Kingdom, and of a large result from sables and ermines; but he merely explained 'furs' by saying that we were spending more upon hare and rabbit skins. I would point out to the Chancellor of the Exchequer that his boasted legislative action has had the effect of destroying hares and rabbits, and now, instead of having our own, we import them from abroad. ["No, no!"] If that is not so, why is the price of these articles of food higher than it ever was before in the manufacturing districts of England? The right hon. Gentleman must know that in Stockport, Derby, Liverpool, and other places, they have risen in price since the passing of his Hares and Rabbits Bill. Then we come to sugar; and of this, no doubt, we import a great deal more than we did formerly. Not many years ago we imported 30 lbs. per head of the population, and now we import 70 lbs. per head. It cannot be said that we eat twice as much sugar as we did before. The fact is, we are using it in manufactures in which it could not formerly be used on account of its price; but the people do not spend more on sugar; on the contrary, I believe that for the purpose of private consumption they spend less; and to say that we import more is no proof that there is more private consumption. The next point is the improved capacity of the people to pay Income Tax. Now, Sir, I should like to point out that if there is an improvement in this respect the Income Tax does not touch the profit or earnings of the working classes, and even if it maintains its old reputation this is no indication whatever of the capacity of the working classes to pay.

SIR WILLIAM HARCOURT

The figures are clear upon that point.

MR. BADEN-POWELL

It does not show the capacity of the working classes to pay. No doubt, there is a marked increase in the investments in savings banks; but I may point out that when Mr. Giffen made an inquiry into the incomes of the population he found that incomes between £70 and £120 had very largely increased in number; but some of us also found evidence that this was not a building-up from below, but that it has been brought about by a reduction of incomes that used to be above £120. I do not know, but I believe there is a feeling in the country that a great many persons are going to the savings banks who used to go to county and private banks; and therefore it must not be considered that the deposits belong to the working classes alone. No doubt, much is due to the facilities afforded by Government that the custom is spreading among the working classes of making these deposits; but again I say that we have in that no proof of the capacity of the people to spend more money. I hope the matters I have pointed to will draw from the Chancellor of the Exchequer some further proof that he is justified in anticipating an increased Revenue this year. Finally, I wish to point out what appears to be an omission in the Budget; and I hope the right hon. Gentleman will be able to explain why there is no mention in the Budget of the transference of Debt to Ireland, or of any contribution from Ireland.

SIR GEORGE CAMPBELL (&c.) Kirkcaldy,

This Committee has been so very like a happy family, that I feel I shall be almost to blame if I say anything that may disturb it. I do not like to allow the opportunity to pass, however, without expressing my regret at observing in the Budget a departure from the severe view of finance which the Prime Minister adopted down to last year—namely, that you ought to meet your liabilities without disturbing the financial arrangements made by your Predecessors for the reduction of Debt. I make these remarks because I think that Her Majesty's Government, in departing from that principle, have followed a course which they have formerly condemned. A burnt child is afraid of fire, however; and, having burned their fingers last year, I am not surprised that they have not tried the same thing this year. But it is a very easy road which leads backward, and I am afraid it will be found by the Government that it is a very easy road which enables them to depart from their previous policy, because it must be remembered that the Chancellor of the Exchequer has not only failed to provide for the deficit of the present year, but he has not touched the deficits of the two previous years, which have been carried forward to this year by means of Exchequer Bills, and the consequence is that the right hon. Gentleman has to deal with £500,000 plus something more than £4,500,000, which is the sum Her Majesty's Government is compelled to provide and carry over to another year. As I have said, in a severe view of finance, we ought to meet these liabilities; and I am compelled to put this view before the Committee, because it prevailed last year when the right hon. Gentleman the Prime Minister was also in power. Leaving that general question, I must confess that I am a great deal surprised that the Chancellor of the Exchequer should, as it were, have called France black in connection with its expenditure on foreign expeditions. It might shrewdly be suspected that Her Majesty's Government have spent a great deal more on foreign expeditions than the Government of France have spent. In the case of Egypt, for instance, the Government of France refused to send an expedition there; but Her Majesty's Government sent an expedition. The right hon. Gentleman in the course of his speech said there would be no Vote of Credit asked for this year. There is only ordinary expenditure before the House; but it seems to me that the extraordinary expenditure which the House is somewhat unwilling to face is really concealed in this proposal. I believe that the £2,000,000 excess in the Army Estimates are really due to the expenditure on the Army maintained in Egypt. There is one more criticism I wish to make. I cannot find that the Chancellor of the Exchequer has made any provision for the new Government proposed to be set up in Ireland, without which provision I do not see how that Government is to be started, if it ever will be started.

MR. AINSLIE (Lancashire, N. Lonsdale)

Perhaps the Committee will extend to me its indulgence for a few minutes. The incidence of the Income Tax should be dealt with by someone more qualified as a speaker than myself, though I doubt if anyone can speak who had felt that incidence more than I have done in connection with certain large industrial concerns. I cannot agree that the figures which the right hon. Gentleman the Chancellor of the Exchequer (Sir William Harcourt) has put before us to-day indicate properly what are the industrial resources and income of the country. It may happen that in a very bad year he will receive from certain sources a larger income than in other years. There are certain bad years, such as those the people occupied in trade have of late passed through, in which it frequently happens of necessity that a higher rate of Income Tax is to be put upon us than in those prosperous years in which we can better afford to pay. I will illustrate the fact by a few figures which have occurred to me since I came down to the House to- day. It must be remembered that in estimating their income certain industries are allowed to take an average, sometimes of three years, sometimes of five years; and it is in regard to this burden I wish to speak. Lot us take a period of 10 years in all. I have put down certain figures which I mean to represent thousands of pounds. I take the figures 30, 32, 36, 38, 44. These divided by five give 36: the rate of Income Tax that year 2d. in the pound. The following year I add the figure 60, and the figure 30 comes off; the result is 42, with, we will say, a 3d. Income Tax. The following year I add 66, and take off 32; the effect is 48⅘, and we will assume the rate of the Income Tax stands at 4d. in the pound. The following year we will adopt 50, and take off the 36; that gives 5⅗, and we will suppose the Income Tax is at the rate of 5d. in the pound. The following year we adopt 36, and knock off 38; the division is 5⅕, and we will say there is an Income Tax of 6d. In the last year of the 10 we drop down to 30 again, and take off the figure 44; the division is 48⅖, and it may be that the Income Tax is at the rate of 8d. in the pound. It is manifest that an Income Tax charged at the rate of 8d. on 48⅖, when the profit made during the year is only 30, is a much more serious burden than an Income Tax at the rate of 4d. paid on 48⅘, the income that year being 66. I think the incidence of the tax is so heavy in the case of bad years that if an average of years is to be taken in the matter of the capital sum, an average, also, might reasonably and properly be taken of the Income Tax during the game period. I see no justification whatever for a heavy burden falling upon a bad year like the one just closed, or upon this year, which apparently will be as bad as its immediate predecessor. Business men will tell you they cannot make their calculations for the proper balancing of books even, because they do not know at what rate the Income Tax will fall. This is one point to which I should have liked the Chancellor of the Exchequer, if he had been present, to have turned his attention. There is only one more point upon which I wish to detain the Committee. It came within my experience a few years ago that a Return had to be made of the outlay on capital account. The tax collector considered that in opening up a mine the money laid out was not to be put down as payable out of the resources or revenue of the year, but was to be charged as a capital sum. Inasmuch as that was so taxed it really became so much capital taxed. The tax collector rested his action upon a decision in some Scotch Court. I have no doubt the Committee must be well aware there are not many firms in the country who would care to contest in Court a decision—certainly not in any Court in England—a decision which had been given in a Scotch Court. The ways of the Scotch are beyond our English ways. But the point is this—and I hope the Chancellor of the Exchequer will give his serious attention to it. In many parts of the country work is let upon tribute; the opening up of a mine depends very often upon the enterprise of three or four individuals with very small capital, and in many cases the opening up of the mine may, within the limited period of five years, mean the destruction of the shaft sunk, and the loss of all the capital expended upon it; and yet during the five years we are not allowed to deduct that loss from our profits, but are made chargeable with it. I should like to hoar from the Chancellor of the Exchequer, either in the House or by some private communication, what his views are with regard to this point, and whether there is any probability that the zeal and ability shown by his tax collectors throughout the country in searching out additional cause from year to year for taxing incomes of various kinds, principally those relating to industries which are heavily burdened enough already, will be abated, and whether he will endeavour to discover some means by which we may be exempted from a tax which, as we think, falls very unjustly and harshly upon us?

MR. MORE (Shropshire, Ludlow)

Having been long associated with the agitation for the repeal of the Malt Tax, and especially for the exemption of private brewers from taxation, I beg to tender my best thanks to the Chancellor of the Exchequer for the great concession he has made to our private brewers. I am sure this concession is one which will be a great relief to the labourers throughout all the counties with which I am acquainted, and will be fully appreciated by them. It is one which I hope no public brewer will begrudge. Twenty years ago, during the time of the agitation for the repeal of the Malt Tax, I took the trouble to go round to some of the brewers and ascertain their opinions upon the question of the exemption of private brewers from taxation, and after that Earl Russell addressed inquiries to the Consuls and Ambassadors abroad in regard to the legislation respecting brewing, and especially private brewing. He found that in different parts of Germany there were different exemptions. In Austria exemption was made according to the amount browed, and in Prussia there was exemption on the brewing of ordinary beer in all families of not more than 10 persons under 14 years of age. Some hon. Members may have heard with dissatisfaction how farmers are to be affected in respect to private brewing; but I wish to point out to them, if they will allow me, that by their own exertions they can obtain relief for a great number of farmers. In the county in which I live, when the Malt Tax was changed to a Beer Tax, we got together about 200 farmers, and, taking advantage of the very narrow definition of a house in the Act, induced them to appeal against their assessments. We succeeded in getting exemptions for the great majority of those farmers, they being able to prove that the houses they occupied were under the value of £15 a-year. I have no wish to trespass longer upon the attention of the Committee. I will simply add, Mr. Courtney, that I think the labourers will consider this boon as the first direct result of their representation in this House. Their success on this occasion is all the more signal, because they are the only class of Her Majesty's subjects who in this Budget have made a successful appeal to the consideration of the Chancellor of the Exchequer.

MR. STAVELEY HILL (Staffordshire, Kingswinford)

I do, indeed, sincerely congratulate the right hon. Gentleman the Chancellor of the Exchequer upon the most lucid and common-sense Budget he has laid before us; but, while I do so, I wish to express on behalf of the great mass of the working people of this country the great regret and disappointment that he has not seen his way to reduce the duty on tea and other popular articles of consumption. We feel that there are other articles which may well be taxed to make up for the remissions of duties which we advocate. I am very glad indeed to hear from the hon. Member for Shropshire (Mr. More) that he thinks the labourers in Shropshire will be benefited by the repeal of the private brewing tax. In my own county there are so few cottagers who brew their own beer that the reduction will have very little or no effect. I do not desire to detain the Committee at any length with any remarks of mine. I have a Motion upon the Paper of the House; but our Rules prevent me in any way anticipating the discussion upon it. I will only say that most sincerely did we hope that in this Budget, at any rate, we might have received some recognition of the principle which has been put forward, and which, I believe, is regarded with great favour by the vast majority of the working people of the country—that if there is such a raising, and proper raising, of the cost of producing manufactured articles in this country by the enactments which have been very properly passed for the protection of the working people, we are not protecting the workmen completely if we allow goods to be brought into this country free from all duty—not articles of primary necessity, not articles of consumption, but articles which are simply used as luxuries, and which displace similar articles which the workmen of this country can produce and have a right to see produced by them. What we say is this—that it is upon such articles that the duties should be placed; that you may well take off £5,000,000 duty upon tea and the like, and best replace it by placing Import Duties on manufactured goods which come into this country, which displace the articles which should be produced here, which do not in any way minister to the necessities, but merely the luxuries of those who can well afford to pay duty.

MR. MASON (Lanark, Mid)

I think that in some respects the Budget which the right hon. Gentleman the Chancellor of the Exchequer has introduced this evening is simplicity itself. It is a Budget which most of the business men in the House were quite prepared for after seeing the Estimates which were submitted to hon. Members some time ago. The late Chancellor of the Exchequer (Sir Michael Hicks-Beach) complained that it was unfortunate that we should have, on the present occasion, to face an 8d. Income Tax; but I should like to know who is responsible for such an Income Tax? Are not right hon. and hon. Gentlemen opposite more responsible for it than any other Gentlemen in the House? ["No!"] Well, we on this side think so, and, of course, hon. Gentlemen opposite are quite at liberty to have their own opinion in regard to it. Had the duties which the late Liberal Government proposed been adopted, I have no doubt we should have had a reduction of the Income Tax on the present occasion. The Tory Party chose to take a different view of the situation; the Liberal Government left Office, and an 8d. Income Tax was saddled on the taxpayers of the country, in order to nearly balance the accounts. But what I have to say in regard to this 8d. Income Tax is what I have said on a previous occasion. I see no reason whatever why our Estimates should not have been cut down by £10,000,000 sterling; and if they had been so cut down the Chancellor of the Exchequer would have been able to have told us to-night that he was in a position to reduce the Income Tax from 8d. to 3d. in the pound. That would have been a sensible relief, not only to the taxpayers of the country, but to the trade of the country. I see no reason whatever why these Estimates should not have been cut down by the amount I have named, considering the enormous fall in the value of everything which Her Majesty's Government require to purchase in connection with the Services. Instead of witnessing an increase in the Estimates during the last 10 years, we ought to have witnessed a great decrease In the face of an enormous fall in prices, the Estimates have reached an abnormal height, such a height which had not been known since the Crimean War. That, I think, is the direction in which we ought to look for the reduction of the Income Tax. The Chancellor of the Exchequer, moreover, deserves to be congratulated on the fact that he does not require, on the present occasion, to increase taxation. The industries of the country could not have borne any increase. Everyone who has anything to do with the business of the country knows how very unprofitable it is at present; and, therefore, we ought to congratulate the Chancellor of the Exchequer on having been able to nearly square his accounts without imposing any fresh taxation. It is true he has trenched on the Sinking Fund to the extent of £800,000. I think it is better he should do so than impose any fresh taxation. Some hon. Members complain that the right hon. Gentleman contemplates tampering with the Sinking Fund. I quite agree that, if we can, we should pay our way as we go on. If we always acted upon the principle of paying our way it would conduce very largely to economy, because whenever it is proposed to impose taxation people begin to look more closely into the accounts. If we could do without touching the Sinking Fund it would be much better. There are many Members of the House who have watched the taxation of the country for many years; and there is one point which the Chancellor of the Exchequer raised to-night—namely, that of the equalization of the Death Duties—which a great many Members of the House feel ought to be seriously pressed. If the right hon. Gentleman had had the courage, notwithstanding the opposition of hon. Members opposite, to propose an equalization of the Death Duties, and thus endeavoured to bring about a certain balancing of the accounts, I am perfectly sure that this House would have supported him. Last year the right hon. Gentleman the Member for Edinburgh (Mr. Childers) estimated that an equalization of the Death Duties would produce between £150,000 and £200,000. That would have gone a considerable way towards making up the deficit. This is one of the points in respect of which the Budget might have been improved. Another point I wish to refer to is the introduction of the 6d. telegram. The hon. Member for Glasgow (Dr. Cameron) fought the battle of the 6d. telegram and fought it well, and the commercial community feel that they have got in the 6d. telegram a great boon. I was surprised, however, to hear the Chancellor of the Exchequer say that the 6d. telegrams had resulted in a loss to the country. Now, I do not think it has been proved that a loss has accrued. The right hon. Gentleman the Member for the Strand Division of Westminster (Mr. W. H. Smith) tried to explain to the hon. Member for Glasgow (Dr. Cameron) that there was a loss, but I cannot see that he made the point at all clear; and, therefore, I should like to have some further information as to how the loss is made out. Do the Government say there is a loss upon the 6d. telegrams? Do we pay so much for the paper and for the messengers and for other expenses which causes the telegram to cost more than the 6d. which the sender pays? I presume there is so much charged for the use of the wires. I am told by persons connected with the Post Office that a large sum—I believe about £500,000—was laid out in the preparations for the 6d. telegrams. I cannot see why every farthing of that amount might not have been saved, and why we might not have had 6d. telegrams without any extra outlay at all. But that is not all. Telegrams have always, I believe, resulted in a loss, and why is that? Simply because this House made a very bad bargain in taking over the telegraphs, paying nearly double what they ought to have paid. A large sum as interest upon the capital has to be paid, and in consequence there has always been a loss. It has not been made out that there is a loss upon the 6d. telegrams, and in the absence of positive proof I decline to believe the statements made to that effect. Now, I should like to make a few remarks with regard to what fell from the hon. Member for Whitechapel (Mr. Montagu) concerning the coinage of the country. There is scarcely a sovereign or half-sovereign that is of the proper standard weight. The right hon. Gentleman the Member for Edinburgh (Mr. Childers) tried to grapple with the fact; but he was baffled. The present Chancellor of the Exchequer has taken a lesson from his right hon. Friend's non-success, and has not ventured to touch the matter. Now, I think it is of the utmost importance that we should have the coins of the country of the proper value. It is not at all satisfactory to a country like this that the coinage should be in its present condition. I do not wish to offer any suggestion at the present moment as to what should be done; but I have a word or two to say in respect of the Scottish £1 notes. We in Scotland sustain a great loss by the absurd law which requires that a certain amount of gold should be sent from England to Scotland twice a-year—every May and every November—in order to keep up the circulation. The gold is sent in boxes from the Bank of England to Glasgow and Edinburgh; without the boxes ever having been opened they are sent back to the Bank of England, and then the gold is always found to be light owing to transit. Although we in Scotland may never use the gold, we are called upon to make good the light weight. We do not want the gold; we are perfectly satisfied with our circulation; our £1 notes are preferred to gold. We believe the £1 note is more convenient than gold; it is certainly more economical. Upon this head I would like to make one suggestion. We do not understand the English prejudice to our £1 notes, especially when we bear in mind the great saving which their circulation represents. There are not less than £100,000,000 sterling in gold circulating in England at the present time—probably more than the sum named. If you substitute £1 notes for at least three-fourths of that circulation you would save in interest and the wear and tear of the coins not less than £3,000,000 sterling per annum. That is a moderate estimate of the saving; perhaps the Chancellor of the Exchequer will take note of it. I pass from that to the question of the sustained income of the country, notwithstanding the trade depression, as illustrated by the amount of Revenue derived from the Income Tax. The right hon. Gentleman the Chancellor of the Exchequer referred to the yield of 1d. in the pound, and thought it was satisfactory that the yield was as large as it was in 1882. While 1d. in the pound yields rather more than it did in 1882, the Chancellor of the Exchequer must remember that the population has very considerably increased since 1882, and that, therefore, the yield is not now as large relatively as it was in 1882. There is no doubt that the income of the country is falling. Mr. Courtney, I have but one other subject to refer to. The right hon. Gentleman the Member for the City of London (Mr. Hubbard) said he was very glad to hear the Chancellor of the Exchequer make a strong speech in favour of economy. It rejoiced the hearts of most of the Members on this side of the House, especially of those below the Gangway, to hear that the Chancellor of the Exchequer is in favour of economy. But hon. Gentlemen opposite are afraid that we may impair our efficiency if we go in for too much economy. It appears to me that economy without efficiency would not be economy at all. We wish economy with efficiency, and we trust that the present Government will be able to practise economy in the way which the right hon. Gentleman the Chancellor of the Exchequer indicated to-night. I am quite sure that the Members on this side of the House, particularly those who sit below the Gangway, will support the right hon. Gentleman in any effort he may make to cut down the Estimates.

MR. MARK STEWART (Kirkcudbright)

I shall not interpose for very long between the Committee and the Business which I understand is principally to take place to-night, but I want to make one or two remarks in regard to matters interesting to myself, and also in regard to certain points that have been alluded to by hon. Members on the opposite side of the House, in casting certain aspersions on Members on this side. The hon. Gentleman the Member for Lanarkshire (Mr. Mason) who last spoke described the large Income Tax which this country is now paying as the product of Conservative administration. Well, I think we had some right to anticipate that if it is possible to find any mode of escape from the payment of so large a tax, it would have been discovered by the great financial abilities which adorn the Bench opposite. We cannot forget that the right hon. Gentleman the Prime Minister, in 1874, proposed to do away with the Income Tax altogether. Upon that point he staked his political reputation; but in that very eventful campaign he was unsuccessful. Of course, I may be told—I probably shall be told—by the Chancellor of the Exchequer that times have altered, and that we are not in the same position now, financially, as we were then; but I think that for this side of the House to be taunted or twitted with the fact that we have a large Income Tax to pay, and to be told that it is our fault, is unreasonable in the last degree. The hon. Member for Lanarkshire further said that he believed a very much less Income Tax would suffice were we to reduce the expensive armaments which this country has already assented to. But why did not the hon. Gentleman protest when these Estimates were before the House? Why did not he and those Gentlemen who co-operate with him move the reduction of these Estimates? [An hon. MEMBER: SO we did.] An hon. Member says "So we did;" but there was no vigorous protest against the expenditure of so much money. After all we heard during the Recess, and after all we heard during those many vigorous campaigns in the North, one would have supposed that a number of hon. Members from Scotland as well as from other parts of the country would have united and formed a strong phalanx to object to so large an expenditure. Hon. Members do not seem altogether to realize the fact that in some degree, at all events, that expenditure has not been so wisely dealt with and administered as it might have been. They ignore the fact that only last year, not 12 months ago, astonishing revelations were made at the Board of Admiralty. If they did not, they would not accuse hon. Members on this side of the House with being so anxious to perpetuate this large and, in their opinion, extravagant expenditure. We do not desire to keep up those payments to so large an extent if they are not necessary for the safety and protection of the Empire. The Chancellor of the Exchequer has shown that they are necessary by the facts of the case. Then the hon. Gentleman the Member for Lanarkshire referred to the Death Duties. I think the Chancellor of the Exchequer has done a very wise and a very right thing in not endeavouring to impose the question of these duties on the House of Commons. He knows very well that land pays a very large amount of taxation which other kinds of personal property do not pay. He knows very well that hon. Members on this side of the House would not object to Death Duties being imposed on their land provided it were on all fours with other taxation, and in that respect I think he has done what is right and equitable. I cannot help thinking that the right hon. Gentleman has taken an inadequate view of the future, looking at the very large Supplementary Estimates which are continually brought in at the end of the Session. He has told us that he reserves to himself something like £258,000 surplus to meet any contingency that may arise in various unforeseen ways. How can he believe that sufficient? Con- sidering our numerous engagements in so many parts of the world, considering our position as a vast Empire exerting so much influence on so many different portions of the world, it is only too probable that we may be entangled in some unforeseen difficulty or other during the year, which may cause us to spend far more money than this £258,000. Though there may be a certain amount of reason in the statement that this ought to be a suitable and proper sum to meet such contingencies, we know that year by year these Supplementary Estimates grow higher and higher, and that, instead of having the very moderate Estimate which we used to have laid on the Table, we now, as a rule, have a very large Supplementary Estimate to deal with at the end of the Session. Then there is another point to which I should like to draw the attention of the Committee, and it is this—that Chancellors of the Exchequer and hon. Members are too much accustomed to look upon the Post Office Department as a paying concern, from which they can always depend upon a large amount of revenue. The Post Office is a State common carrier, and as such I do not think we ought to look upon it as a revenue-earning concern, or, at any rate, not to the extent that Chancellors of the Exchequer too often do. We should know, those of us who live in somewhat remote parts of the country—and I speak as a Scotch Member—that there are many districts very imperfectly provided with postal accommodation. We must know that in the Western Highlands of Scotland there are large areas of country, inhabited, no doubt, by a sparse and scattered population, but still inhabited by many people, who have no means of access to the world, who live in an outer circle, as it were, cut off from communication with the rest of civilization, receiving no letters or newspapers with any degree of regularity. I do think it is the duty of any Post Office Department, or of any Chancellor of the Exchequer of a Government, no matter of what Party that Government is composed, to remedy this state of things. If you only look on the Post Office as a paying concern out of which you are to draw a very large sum, then I say you are looking at the matter from a wrong standpoint, and you will not be able to get the Department to do its duty pro- perly. Reference has been made to the capacity for spending which seems to be inherent in the lower classes, in spite of the very great depression that is visible in every trade in the country. The right hon. Gentleman gave us some figures which, so far as they went, appeared to prove his case; but I am afraid that if he looks a little deeper into this matter he will find the thing is not so self-evident as he appears to regard it. There can be no doubt that the working classes have been in the habit of spending freely just as they have received freely; but those of us who know the country and have spent many years of our lives among the working classes know that they derive their rate of wages from the classes immediately above them, and that if those classes are unable, as many hundreds and thousands are or will be unable, to afford them good wages they will not have the capacity for spending large sums of money which they have had hitherto. No doubt they spend a large amount of money on bacon; but there are great industries in the country languishing for want of the support of these people with the spending capacity. I will take one illustration. Living, as I do, in a large dairy country, where the largest amount of Cheddar cheese, or cheese of other descriptions, is made in the United Kingdom, I am able to state that the farmers are in the position of being unable to sell the product of their industry. But why is this? It is because the people are buying large quantities of cheese of American importation. They are getting, besides large quantities of cheese, a great deal of foreign ham and bacon very cheap. They are not using up the food of their own country, therefore they are not spending the amount in that way that they used to spend; nor, in fact, are they spending the same amount in articles of food throughout as they were spending a short time ago. No doubt they are getting food a great deal cheaper than formerly; and though we may congratulate ourselves that we are not so badly off as the people of many other countries are, still I cannot imagine for a moment that the present condition of things will continue. But the main reason for my rising was to ask the right hon. Gentleman a question—namely, inasmuch as the Government have granted some benefit to the cottar population of the Southern part of Great Britain, whether he will not do another class of deserving people living in the North a good turn? I allude to the drover class. This is a very important class in Scotland—a class of very hard-working men. It is very hard that these people should not be exempted from the payment of licences for the keeping of their sheep-dogs. If they did not possess these dogs it would be absolutely impossible for them to earn their livelihood; but with these dogs they are able to make both ends meet. Now, I do not propose to go at length into this question. I could go back to the year 1796 if hon. Gentlemen desire it; but I will content myself by referring merely to the period of 1867; and I will only give the Committee one or two facts with regard to that period. In that year the duty was reduced from 12s. to 5s. for each dog, and in 1878 the licence duty was raised to 7s. 6d., and the exemption in favour of sheep dogs was revived, dogs used solely by blind persons for their guidance, and hounds under 12 months, which had not been entered in or used with any pack of hounds. Sheep dogs, as I have said, were exempted up to a certain point. If a farmer with an ordinary sized farm, or a shepherd had two dogs, he had not to pay more. If a farmer had a large farm he was allowed exemption for four dogs for 1,000 sheep; and for every 500 sheep beyond 1,000 exemption for one dog additional, so long as the exemption did not extend to more than eight dogs; and that is how the law at present stands. But the drover class are not exempted, and this is the point I wish to bring before the right hon. Gentleman if he will give me his attention for a moment. The drover class, I say, are not exempted. They are a small class, and one possessing very few friends; but inasmuch as they are, generally speaking, very respectable men who from time to time are entrusted with large sums of money—who have to go to market and make purchases and bring back very valuable stock—I say they ought to have some little indulgence shown to them. We must recollect that the answer I got from the hon. Gentleman the Financial Secretary to the Treasury (Mr. Henry H. Fowler) was to this effect. I asked him some days ago whether he could see his way to exempting drovers from the payment of this dog tax? The hon. Gentleman answered "No," and he gave as a reason that since 1878 the amount of the duty collected had materially diminished, on account of the other exemptions which had been granted—namely, in the case of shepherds' dogs. When I looked up the reference I found that no doubt the hon. Member was perfectly correct. But this exemption which I ask the Government to make is, after all, such a small thing. I think the Return of the 31st of December for the year 1883–4 is the last one showing the amount of duty. In that year the duty paid was £335,537. The amount of duty paid on dogs in the year 1876, before the reduction of the duty in 1878 from 12s. to 5s., was £340,544, and in 1877, the year immediately preceding that in which the reduction was made, it was £348,044. Therefore, to exempt drovers from paying licences would cost from £12,000 to £13,000. I think that, inasmuch as the right hon. Gentleman the Chancellor of the Exchequer has considered the case of the cottars of the South, and has exempted all those who live in £8 houses from the payment of the 4s. licence for brewing at home, it would only be just to concede something to this very deserving class in the North. I hope that when he rises to make his reply, as he probably will do in the course of the evening, the right hon. Gentleman will accede to my small and reasonable request.

MR. L. COHEN (Paddington, N.)

I trust the Committee will forgive me for trespassing upon its time; but there are questions of some importance which arise in connection with the statement of the right hon. Gentleman opposite. It has been remarked that to-night upon this financial business we are a very happy family. Well, some think that the happiness of families depends upon their being limited in extent. If these persons are right, no doubt we are able to congratulate ourselves upon one cause for happiness; but on other grounds, as a member of the great commercial family of England, I look with some degree of dismay on the rows of empty Benches which we have seen on this, which I consider the most important evening of the Session. That questions connected with an Expenditure of £90,000,000 sterling should fail to attract the commercial classes and Members generally in this House, I believe to be one of the main causes of all our political troubles, because I think that the prosperity of the country is closely and inextricably connected with sound finance and with those measures of good economy which it ought to be the duty of this Committee to review and to take into consideration. I think there is no circumstance in the condition of the people of this country so conducive to political disquiet, and even political disturbance, as that want of prosperity which I connect in some degree with bad financial administration and with a lack of due attention to the commercial questions which come before this House. There are certain questions which have been raised in the course of this debate with which I am not at all in sympathy. Widely as hon. Gentlemen have travelled in the course of this debate, I do not consider that the crucial point of the right hon. Gentleman's Budget has been sufficiently noticed. We have had some conversation as to the issue of £1 notes as a specific for commercial distress. The hon. Member for Whitechapel (Mr. Montagu) introduced the matter, and he suggested an issue limited to £2,000,000 sterling. That would not have a very large effect. I am not going to be drawn by the observations of the hon. Gentleman the Member for Mid Lanarkshire (Mr. Mason) into a currency debate on the present occasion; but I will say this—that if hon. Gentlemen think that they will find a solution for commercial difficulty, or even a substantial source of income to the State, in the extension of the note issue of the country, they found their observations upon a fallacy. It is impossible to extend the note currency to any extent without, at the same time, displacing an equivalent amount of the gold currency. It is not by putting out notes that you will create a larger amount of circulating medium. It is a question for the State whether or not, by issuing a certain amount of notes, they increase the revenue in their hands. So far as increasing the amount of distribution of notes is concerned, it is entirely new to me that that would be stimulated by the issue of £1 notes to any amount, unless they displaced a corresponding amount of gold. Looking at the interesting history which the right hon. Gentleman unfolded to us in connection with the social habits of the great majority of the people, and their effect upon the finance of the future, there was one point of view from which, I think, it must strike hon. Members with considerable apprehension. Supposing the temperance of the people to progress in the next decade as it has done in the ast—supposing that wine, beer, and spirits should again yield to the Revenue £10,000,000 less during the next 10 years than it did in the past 10 years—are we then to be again restricted in our means of recoupment to throwing the burden of it upon the Income Tax paying lass? If that is so, I say that it becomes a source of serious apprehension that the improvement in the habits of the people, which we know proceeds from temperance, is to be accompanied by an oppressive addition to the burdens upon a limited class. An allusion was made by the hon. Member for Mid Lanarkshire (Mr. Mason)to the pressure of the Income Tax on a particular part of the country which I do not agree with; but it must cause us serious apprehension if we are to confine the resources of future Chancellors of the Exchequer to that mode of taxation, and when we consider that during the whole of the 10 years in which this movement of decline in alcoholic revenue has been going on no attempt has been made to meet it except by fluctuations in the Income Tax, I cannot think that, in taking a Budget of £90,000,000 sterling, and bearing in mind that there have been circumstances which have disturbed the calculations of the past year to the extent of over £1,000,000 sterling, it is a safe provision to allow a margin of £240,000 only between Income and Expenditure. If that Bill which has occupied some of our attention, and is likely to occupy a great deal more of it, should ever make a call upon the finances of the country, it would certainly disturb the calculations of the right hon. Gentleman to a material extent; but, whether it passes or not, my contention is that it will create very great disturbance in the business of the country. The very introduction of the Bill will, in my opinion, cause such a further interruption of business as can only be paralleled by a General Election; and I contend that, whatever be the result, it is calculated to endanger the small margin which the Chancellor of the Exchequer has thought it sufficient to take. We have been accustomed to hear that criticism is in itself not sufficient, and that it is necessary that it should be accompanied by an alternative proposal. Now, I do not presume, being a young Member of the House, to propose an alternative Budget to the Chancellor of the Exchequer; but I venture, very respectfully, to advert to one or two points to which I think attention should be directed, and which are calculated in some degree to tend towards the removal of that depression which causes us so much anxiety. What I think we have to do, in the first place, is to remove the shackles which in any way fetter enter-prize, and to do that in a way that will cause no loss to be sustained by the general income of the country. I do not propose to enter into the vexed question of duties on imports or the merits of the Customs Acts raised by the hon. Gentleman who spoke on the subject below the Gangway (Mr. Staveley Hill); I do not think it is the time to do so, nor am I entirely in accord with him on the matter. But there are one or two departments of Revenue which, I think, are susceptible of change, and which do not raise those large questions which are involved in the alteration of Customs Duties. I allude to the stamps on transfers. It has been my good fortune, or misfortune, throughout the greater part of my life to be connected with business affected b they Stamp Duties, and in relation to them there are two or three gross anomalies to which I desire to call the attention of the Committee and that of the right hon. Gentleman the Chancellor of the Exchequer. There seems to me an immense anomaly in the fact of levying a tax of 10s. per cent on the transfer of securities which are constantly changing hands, while by some misjudgment you only levy a tax of 2s. 6d. on the transfer of what I may call permanent Stocks on which it ought to be higher. I contend that there has been a large and unnecessary loss inflicted on the Exchequer, which has been continued from year to year, by putting a tax of 2s. 6d. instead of 10s. upon the transfer of Debenture Stocks, which have swallowed up £200,000,000 sterling. Now this is a class of securities which change hands very seldon, and upon it a higher Stamp Duty would fall much less heavily than it does upon the securi- ties I have referred to, which are constantly changing hands. The right hon. Gentleman is aware that I have endeavoured several times to persuade him to make a change in the general incidence of these taxes on transfers of Stock, and, as he has not fallen in with my views, it is not desirable that I should now weary the Committee by stating how they might be altered; but, speaking generally, I think that any scheme which would tend to free Corporations from the Stamp Duty on each transfer would also tend to some extent to remove the disability under which Companies are now labouring, and which operates as a serious detriment to trade; and I think that some such scheme should be devised, because anything which checks enter-prize in trade and hinders the association of capital is, at the present time especially, undesirable and noxious. There is another point, a small one as it may appear, on which I can show how oblivious Chancellors of the Exchequer have been of the effect of some taxes. The amount received last year for the registration of Companies was £26,462. The Committee will, perhaps, be surprised to hear that 1,501 Companies contributed to that tax, which it will be seen amounts to about £17 on an average for each Company. Now, I contend that this tax encourages the registration of bogus Companies, and that it is a tax inflicted on a wrong system. A Company with a capital of £10,000,000 can obtain all the privilges of registration by the payment of this average sum of £17. This is the point to which I call attention, and I hope the Chancellor of the Exchequer, if he continues in Office, will not fail to observe what I have described, and endeavour to apply some remedy. A Company when it starts can afford to a pay a much larger fee than the merely nominal fee which the Government exacts; but when the Company is started, and the shareholders want to deal with their own property, you impose a tax on transfers which is prohibitory. Then there is another point which is larger in its bearing and effect upon the Public Revenue. I refer to Grants in Aid—the very system of which is a bad one. There is not the security there ought to be for the application of the money; it is a Vote over which you have no control, inasmuch as large amounts of money are voted and abso- lutely intrusted to Local Bodies. I believe the amount is £1,900,000. [Sir WILLIAM HARCOURT: It is not £1,900,000, but £6,000,000.] The Chancellor of the Exchequer says the amount of contribution is about £6,000,000. Well, Sir, that only strengthens the force of my argument. I do not know that I could meet the whole of that sum; but I do not despair of showing how it may be dealt with to a large extent. There is an increasing tendency at the present time on the part of individuals to live in clubs, in seaside towns, to live in flats in the Metropolis, and in the large towns in the Provinces. It is a habit which is growing, and which, at the same time, tends to free individuals from contribution to local taxation. Now, it seems to me a comparatively easy task to reach these individuals—although, not having had the honour to hold an official position, I cannot be supposed to know the exact procedure—but I say that there must be some means by which you can find out the places where these individuals reside, who draw large incomes, perhaps from the other side of the world, or from London, but who contribute nothing towards local taxation in the towns in which they reside. It must naturally appear that points on which I am only able to speak in this perfunctory manner must be crudely raised, nevertheless I believe that, by dealing with the smaller subjects which I have submitted to the Committee, you will have means by which you can free various branches of industry and enterprize which are at present held back; and I believe further that by the consideration of the larger question you will find some means of providing a substitute for these Votes in aid of local taxation. A very few other points remain to which I desire to call the attention of the Committee. I do not quite understand the right hon. Gentleman to explain why we have not this year received £211,000 from the Suez Canal; but perhaps the right hon. Gentleman will make that clear in the remarks he makes hereafter. I regret to have heard his observations on the subject of the Post Office and the expense of telegrams. To my mind there can be no source more powerful for increasing the business and commerce of the country than by adding to the means which enable people at home and abroad to communicate; and I should have been glad to see some concession made for Colonial postage, such as was asked for some time ago. I think we must all sympathize with the tone of lugubrious warning with which, the Chancellor of the Exchequer concluded his speech. The style is not usual with him, and his change from the tones of banter which he used the other night to those of warning is very striking. But I would point out that economy in public expenditure is not to be obtained by warnings; nor is it to be obtained by desisting from enterprizes on which it is considered necessary to embark; but it is to be attained more and more by a vigorous control of the great spending Departments of the country. The question of the revision of the Estimates, by which I believe great economies may be effected, should, in my opinion, be relegated for investigation to a Standing Committee, which could examine the Estimates more thoroughly than is possible in this House. In conclusion, I apologize to the Committee for the time I have occupied, and I trust that I have not wearied hon. Members by the somewhat discursive observations which I have felt it my duty to make.

COLONEL BLUNDELL (Lancashire, S. W., Ince)

I wish to urge upon the Chancellor of the Exchequer that the expenditure upon the Army and Navy should be decided each year by its incidence per head of the population. The right hon. Gentleman referred in his speech to the year 1828–9, when the Duke of Wellington and Sir Robert Peel were in the same Cabinet, and when there was an exceptionally low expenditure. For the Army it was about £10,000,000, the population being then 22,000,000 instead of 36,000,000 as at the present time. The pay of the troops and the cost of all munitions of war have gone up enormously since then; but I venture to believe that in the last decade of this century—when the population, may be expected to be double what it was in 1828–9—the expenditure will not be found to be in proportion to the increase of population—that is to say, that it will not have doubled. We must not suppose that the Duke of Wellington was satisfied with the expenditure of 1828–9; on the contrary, we learn, from a letter written just before his death, that it cannot be regarded as the measure of the amount he wanted, but as of what he could get. In September, 1883, when the present Secretary of State for the Home Department was Chancellor of the Exchequer, he calculated the incidence per head in 1870, and he took credit for saving 2s. 11d. per head; and he contended that, although expenditure on Education and other Civil Services had increased, yet the expenditure on the Army and Navy, if calculated at per head of the population, had decreased. What I want the Chancellor of the Exchequer to do is—to insure that every year the expenditure per head on the Army and Navy shall be known to the Committee, because I am convinced the expenditure does not keep pace with the population and wealth of the country.

THE CHANCELLOR OF THE EXCHEQUER (Sir WILLAM HARCOURT) (Derby)

I have reason to thank the Committee for the indulgent manner in which they have on the whole treated the Budget which I have had the honour to bring before them. With regard to the observations made from the Front Bench opposite, I do not know that I have anything to say except upon the doubts which were expressed as to whether the Estimates of Revenue were not too sanguine. In this matter I do not rest solely upon my own judgment, but upon information given me by gentlemen of great experience, who are very seldom mistaken in their estimates. It will be observed that we estimate a considerable fall in the duty of spirits from abroad, which is about compensated for by the increased consumption of home-manufactured spirits. That increase might surprise some people in view of the large decrease in the past year, but it is founded on the belief that the stocks are now extremely low. No doubt, as the hon. Member for Whitechapel (Mr. Montagu), who is a great authority, has pointed out, the condition of the gold coinage is very unsatisfactory; but he also knows that the sum of money requisite to place the coin on a proper footing is very large. I can assure the hon. Member that it is not a matter which escapes the attention of the Treasury. Reference has been made to the high rate of the Income Tax. Well, I think that the rate is very high; I think it has been oppressive; but I point out also that the addition of 6d. to the tax since 1875–6 is due solely to the amount of the Expenditure. There was a Roman maxim—Magnum est vectigal parsimonia —which I recommend to the consideration of the Committee. The growth of the Expenditure of the country is mainly due to the classes by whom the Income Tax is paid, and it maybe doubted whether the classes below the payers of the tax are as anxious for this perpetual growth of Expenditure as are the class upon whom the burthen of the Income Tax falls. But the payers of the Income Tax have the remedy in their own hands; and if they will put their shoulders to the wheel they will always find that the Government of the day would be their humble servants. As soon as from the Income Tax paying classes there comes a demand for a reduction of Expenditure, that reduction of Expenditure will take place, and the Income Tax will be reduced, and not before. Now, the hon. and gallant Gentleman who has just sat down has asked me to compare the growth of Expenditure with the growth of population. I think he will find that in most years, especially in the last two years, the increase of Expenditure has been in a far higher ratio than that of the population.

COLONEL BLUNDELL

I refer only to normal Expenditure.

SIR WILLIAM HARCOURT

I say that the increase of £4,500,000 is on the normal Expenditure as compared with the normal Expenditure of two years ago.

COLONEL BLUNDELL

I say that that would not appear if you go back to 1870. If you take the longer period, from 1870 to 1883, you will find it is exactly the reverse.

SIR WILLIAM HARCOURT

That is true; but that is what I say. Unfortunately, the expenditure on the Army and the Navy is going on, not in arithmetical, but in geometrical progression, and with the sort of accelerated velocity like that of a falling body—and each successive stage becomes more and more rapid—and it is in that view that I have ventured to enter my protest against it to-night. Now, my hon. Friend the Member for Kirkcudbright (Mr. Mark Stewart) said something about the Post Office. I should be extremely glad if we were in a position to dispense with the profits derived from the management of the Post Office, and to allow it to be merely a Public Department which brings in no profit. But we cannot afford to do that, because, if I am to lose a revenue of £2,500,000 on the Post Office, I must get it from some other place. Therefore, if the hon. Gentleman has his will, and the Chancellor of the Exchequer gives up the profits from the Post Office, he will have to add 1½d. in the pound more to the Income Tax. For that reason I would strongly advise the hon. Member—because he cannot desire that either for himself or his clients—not to urge that the Post Office revenue should be destroyed. I know the West Highlands, I believe, as well as the hon. Member for Kirkcudbright, and though that part of the country has many wants, deficiency in telegraphs is not one of them. It is a most extraordinary thing that at almost every village, and even small hamlets of only half-a-dozen cottages, in the West Highlands, you can find convenience for telegraphing. In fact, the West Highlands, in the remote parts, and in the smallest places, are far better supplied in this respect than any corresponding places in England. The hon. Member must not, however, understand me to deprecate this expenditure, because I believe it is of immense value, and ought to be incurred. Then the hon. Member said something about drovers' dogs. I have great sympathy with drovers and their dogs, and I promise the hon. Member that the matter shall be very carefully examined. If I can do anything for the drover's dog, without extending exemptions too far, and without interfering too much with the Revenue, I promise that I will do so. I listened to the instructive speech of the hon. Member for Paddington (Mr. Lionel Cohen), and I will undertake to give a careful consideration to the subject of his remarks. The small Stamp Duty on Debenture Stock, as compared with ordinary Stock, seems to me to be very deserving of attention, and if I can see my way to get at Debenture Stock, I promise that I will do so. The hon. Member also made some remarks in regard to the Income Tax which involve the localization of that tax. That matter was very carefully considered by my Predecessor in Office, and I have also paid it considerable attention; but the result of our inquiries leads us to the belief that the difficulties are practically so great in respect of the places in which the income is to be found that the localization of the Income Tax appears an almost insoluable question. And that is the conclusion at which, I think, all those who have carefully studied this somewhat complicated question have arrived.

MR. ILLINGWORTH (Bradford, W.)

I feel that the Chancellor of the Exchequer has not been supported in his appeal for broad economy as he ought to have been. The criticisms on the right hon. Gentleman's speech are, in the main, of a very perfunctory character. He has to provide Ways and Means, and it is impossible for him to regulate taxes so as to please all classes in the country. Ever since I have been in this House, on both sides of the House, somebody has always come forward with a varity of small matters on which trivial reductions could be effected; but I think that we ought to take a much broader view on these occasions of the financial policy of the country. We have been reminded by the Chancellor of the Exchequer that the large increase in our Expenditure is due to the increasing demands of the two great fighting Departments. Of course it is necessary that we should arm ourselves, and that we must bear the burdens; but I will make this appeal to the Chancellor of the Exchequer, that as the demand for these fighting Departments come from those who pay the Income Tax, they should not be the means of imposing such heavy burdens upon the poorer taxpayers of the country. At a time when the country is altogether unable to bear all its burdens, this House, which is responsible for public policy, seems to have determined to place exceptional burdens on the people. I am very glad, however, that the right hon. Gentleman has disregarded the necessity for reducing the National Debt equally in times of depression as in good years. In times of depression the people ought not to be asked to bear an extra burden to reduce the National Debt, for this is a burden which the people ought not to be asked to bear when the distress is so protracted as to be almost normal. I venture to submit to the Committee that the duty rests on the House of Commons, as representing the masses of the people, to vigilantly and diligently look at the expenditure of the two great spending Departments. The time seems to have come when the voices of those who advocate economy in Committee are altogether drowned by the voices of those who represent the Army and Navy; and it is only when we have to pay the piper—when the Budget is introduced—that the voices of the economists are listened to. I earnestly hope that the right hon. Gentleman will resist the appeal which has too frequently been successively made by the Military and Naval Members of this House upon the Public Income of the country. I confess that knowing something of the state of trade in the North of England, and bearing in mind the depression which has existed—a whole decade almost—since 1875, I consider that the burdens the people submit to are intolerable burdens. I believe also that they will not submit very much longer, and that this House will shortly hear this in an especial and unmistakable form. In my judgment, these small questions of mere cheeseparing do not go to the root of the matter; and I think that they exhibit the House of Commons in a way in which it ought not by any means be exhibited before the people. It is perfectly clear that new sources of Revenue are small and very few, and are difficult to find; but I, for one, shall be delighted to find a decrease in the revenue from the tax on intoxicating liquors through a decrease in the drinking habits of the people. I am sure that would not involve a loss, but it would be a saving in every way. We should get it back in our local rates, our prison rates, and our hospital and asylum rates. I earnestly trust that the Chancellor of the Exchequer will persevere even against his own Friends in the spending Departments, and insist that there is a growing demand for a reduction of Expenditure, and that substantial relief shall be given to the country. I hope the military fever from which we have been suffering for the last few years will now be allowed to abate, and that we shall shortly return to a more normal condition of affairs.

MR. J. WILSON (Edinburgh, Central)

Considering that we have only a Budget once a year, I think that we ought not to be grudged one night at least for the expression of opinion on this most important subject. We have heard a good deal to-night from both sides of the House as to the duty of Members to support economy; but, in spite of the recognition of that duty, somehow Budget after Budget comes out with as large or larger an Expenditure than ever. It seems to me that whatever Party is in power we shall still have this enormous Expenditure of something approaching £90,000,000. I believe, however, that the time is coming when the Liberal Party in this House will have to alter its lines and support the country on a different basis, and I hope that basis will be one of sound and true economy; and I am quite sure that whichever side of the House takes the first step in that direction will receive the support of the country. I entirely agree with the hon. Member who spoke last (Mr. Illingworth), that we have tonight gone into trivial questions affecting Expenditure, instead of attempting to get at the root of the evil. Some time ago I called attention to the growth of the Estimates, and I expressed an opinion that this House was not the tribunal to deal with those Estimates in detail; and I ventured to express the opinion that until we had a Finance Committee to deal with the matter we should never have that cutting down of Expenditure which the country demands. The debate of this evening has convinced me that that opinion is well-founded, and I believe that year by year the necessity for such a Committee will become more and more apparant. I must congratulate the right hon. Gentleman the Chancellor of the Exchequer on his lucid and able Statement; but I think that his Estimate of Income for the year is rather too rosy. I am conversant with the condition of almost every department of commercial life, and it is my experience, in dealing with business men throughout the country, that there is not one department of national industry in the country which is at this moment in a flourishing condition. Although the Income Tax has hitherto yielded satisfactory returns, I do not believe that that will continue. I know, from actual knowledge of the fact, that many commercial men return their income on an average of three years, so that it is not until after two or three years that a time of depression tells on the revenue from Income Tax in a strong and stringent manner. Some people do not like to show that their business is falling off, and they return their income at the old figure, in the hope that business will improve. In my own circle of business there have been several bankruptcies of late, in which it was found that the bankrupts had gone on paying Income Tax at the same rate as they did five or six years ago, although they were in such a bad state as to have to become bankrupt. I do not believe, however, they will continue to do this much longer, and the result will be a serious diminution in the return from that source. The Chancellor of the Exchequer has attributed the diminished return from dried fruits to the failure of the crop; but the true reason is chiefly to be found in the competition of France. With regard to fresh sources of Revenue, a legal friend of mine suggested the other day a source from which the Chancellor of the Exchequer might get some additional money. It is very well known that a large number of important legal deeds are not stamped when drawn and signed, and a considerable sum of money may very properly and honestly be obtained by providing that no legal deed shall be valid unless it is stamped at the time when it is signed. I hope that the Committee will bear in mind that the country desires economy, and that they will endeavour to practise it.

SIR JOHN GORST (Chatham)

As the hon. Member for West Bradford (Mr. Illingworth) thought fit to treat the Committee to a supplementary lecture on the subject of economy, perhaps I may be allowed to make a few remarks upon the subject. I think the Committee will quite understand the reason which induced the Chancellor of the Exchequer to give us a lecture on the question of economy, and that in making a general statement in regard to finance he found it necessary in order to eke out his speech. I do not know, however, that such statements are of any great public value. Merely to tell people that they were to be economical, that there had been an immense growth of Expenditure, and to exhort Members of the House to put their shoulders to the wheel, and general phrases of that sort, do not generally tend much to a change in the flow of Expenditure. The right hon. Gentleman exhibited himself as a sort of financial Joseph Surface, giving expression to sentiments of financial virtue without telling us in what way we can economize. What the Committee would have liked to hear from the right hon. Gentleman was in what items of Expenditure economy might have been effected. From what the right hon. Gentleman had said, one would have supposed that the Army and Navy Estimates had been brought into the House by some hostile Power, and not made by the Government of which the Chancellor of the Exchequer is a Member, and on his responsibility and authority, but by some power over which he has a very imperfect control. I think it is not out of place to remind the Committee that these Naval and Military Budgets, which formed the subject of his animadversion, were Budgets which, both this year and last year, were brought in by the right hon. Gentleman's own Colleagues, and that he must have given his sanction to them. May I recommend, very humbly, that Ministers of the Crown in future, instead of coming down to the House and merely expressing general views of the advantage of economy, should address themselves to their own Estimates, and if they are extravagant and more than the needs of the country require, that they will them selves be good enough to cut them down. It is, no doubt, true that the expenditure upon the Army and Navy has increased; but if that expenditure is a useless one, who is more to blame for it, and who is more deserving of censure respecting it, than the Members of the Government, who alone have the control of it, and who, if the expenditure can be cut down, ought to cut it down? I really think that, after the speech of the hon. Member for West Bradford (Mr. Illingworth), the Committee will forgive me for rising to remind them, in a few words, that all that has been found fault with by the Chancellor of the Exchequer is the action of his own Colleagues. If any people are to blame for the excessive Naval and Military Expenditure, they are the present and late Colleagues of the Chancellor of the Exchequer.

MR. MAGNIAC (Bedford, N., Biggleswade)

The hon. and learned Gentleman (Sir John Gorst) complained that the Chancellor of the Exchequer did not indicate the particular Department in which saving might be effected. It struck me the right hon. Gentleman indicated that in the most striking manner possible. Then the hon. and learned Gentleman asked why the Government did not endeavour to cut down the Expenditure? If I remember aright, a discovery was made of what was called the Admiralty scandal. Well, all Governments are responsible for this scandal; but there is one power greater than any Government which is still more responsible than the Government, and that is this House of Commons. There is no question that a rage for Military Expenditure took possession of this House some time ago. Hon. Members were carried away by excitement or by the impulse given by the fighting in Egypt and other parts of the world. Hon. and gallant Members of the House persuaded their Friends that we were not spending enough on the Army and the Navy. The consequence is that we have got at the present moment an expenditure in excess, I believe, of anything known in the history of this country, except in the case of a great European war. It is perfectly horrifying to read the Returns which my right hon. Friend the Home Secretary (Mr. Childers) moved for and obtained a year or two ago, showing how the Military Expenditure has gradually grown to £31,000,000 sterling. Besides, I believe there is a very general opinion that this country does not get value for the £31,000,000 sterling spent upon its Army and Navy. If we compare this expenditure with the expenditure of any European country, we find that we have had nothing like what those countries have, even making allowance for any consideration you choose to name. There is a general belief that the Military and Naval Departments are absolutely rotten so far as the expenditure of money is concerned, and that they require, as an hon. Member has just said, to be overhauled by a Committee of the House. As regards the finances of the country, I cannot help thinking they are deserving of the most serious consideration of the House, because there is no question that the financial and political horizons are very dark indeed. We have got liabilities in front of us which have not been alluded to in this debate; and I am rather surprised the Chancellor of the Exchequer, in speaking of economy, did not at least refer to one or two of them. There is one tremendous liability looming—some Gentleman will say in the distance, other Gentlemen will say very near—and that is the liability which we shall have to incur in respect to Ireland. I confess I was alarmed and frightened to hear one sentence in the speech which the right hon. Gentleman the Prime Minister made the other night. The right hon. Gentleman, in asking leave to introduce the Bill for the better government of Ireland, said— In a case of this kind, after all that has occurred, when two countries are very strong and very rich, compared with a third of far more restricted means, the pecuniary arrangements ought to be equitable and even bountiful in some moderate degree. [A cheer.] Now, I do not in the least object to that cheer; but I merely wish to point out the absolute fact. We know what it means when it comes to England being not only generous but bountiful—we know we shall have to appeal in a very large degree to the Chancellor of the Exchequer. I have endeavoured to make out, on paper, what our future extraordinary expenditure in respect of Ireland will be. On the most cursory examination it will be found to be £1,000,000 sterling, but probably £2,000,000 more will have to be added to it in the long run. We have with which to defray that extraordinary expenditure a surplus of £500,000, a surplus which should be devoted, and which is devoted by law, to another object—namely, the reduction of the Debt. To restore our finances there are only two ways, and two only—the one is a reduction of our expenditure in the great fighting Departments, which I hope will take place, and the other is the extension of our trade. The conclusion of the Spanish Treaty, for instance, is yet in abeyance. At the present moment Spain is consuming from £7,000,000 to £8,000,000 worth of European goods which ought to be supplied, by us. I am sorry to find that the Chancellor of the Exchequer did not indicate any probability of being able to effect an alteration of the Wine Duties in connection with that country. I hope that is something which is in store for us, and that we may before long see Spain again open to British trade. At the present moment Spain is absolutely shut to us; and to my knowledge there are goods in the shape of German raw spirit, to the value of millions sterling, sent to Spain and then forwarded to England. This is done for the purpose of fostering the trade between Spain and Germany, and the British taxpayers are required to pay the piper. Then we have before us an immediate liability in respect to the currency. Everyone will admit that the gold currency of the country is in a most disgraceful condition. I believe that to put it to rights an expenditure of from £2,000,000 to £3,000,000 sterling will be required. It is too late to-night to go into details; but I hope the consideration of those matters will induce the House to practise that economy of which the Chancellor of the Exchequer spoke; because, after all, it is only by economy that we can get out of the difficulties in which we now find ourselves. I hope that, if it is possible, we shall practise economy in the two fighting Departments. The House would do well to insist upon a searching inquiry, with a view of ascertaining whether we are getting value for our money. At present I very much doubt that we are.

SIR ROBERT FOWLER (London)

I must, in the first place, thank the right hon. Gentleman the Chancellor of the Exchequer for the very lucid exposition of the finances he has given us tonight. I have had the good fortune to listen to many Budget Statements, but I do not recollect any occasion on which the state of the finances of the country was more lucidly put before the House. Sir, my hon. Friend the Member for North Bedford (Mr. Magniac) has alluded, with the great authority which deservedly belongs to him, to several questions. He has, for instance, made a great point of the necessity of economy. Well, Sir, we are all for economy. The right hon. Gentleman in different portions of his speech, but particularly in the concluding portion of it, spoke very strongly about the necessity for economy. He referred to the fact that the Army and Navy Estimates have very largely increased of late years. We should all be very glad if these Estimates could be cut down; but the Committee must bear in mind that the salaries of the upper classes and the wages of the lower classes are very much higher than they were a quarter of a century ago, and that it is quite impossible, under these circumstances, that our expenses should not increase. We cannot expect gentlemen to serve in the Army as officers at the scale of pay which was appropriate in the days when Wellington fought in the Peninsula. ["They do!"] It has always struck me that every man, with two exceptions, who serves Her Majesty—from the Prime Minister down to the humblest Post Office messenger—is underpaid. The two exceptions are the Law Officers of the Crown. I believe they are very handsomely remunerated. I see the late Lord Advocate (Mr. J. H. A. Macdonald) shakes his head; but I am not referring to the Lord Advocate of Scotland, but to the Attorney and Solicitor Generals of England. I do not believe the Lord Advocate is at all overpaid, and that remark applies equally to the present Lord Advocate (Mr. J. B. Balfour) as to my right hon. and learned Friend (Mr. J. H. A. Macdonald). Well, I do not think we can reduce the salaries of the officers of the Army, or the pay of the men. Then, when we turn to the Navy, I cannot but feel that there is a very general feeling in the country that the Navy should be kept up at its full strength, and rather increased then otherwise. I had the honour some 12 months ago of presiding at a meeting in the City of London which was addressed by the right hon. Gentleman the Member for the Strand Division of Westminster (Mr. W. H. Smith) and by another right hon. Friend of mine—the late Mr. Forster—and this was certainly their opinion. Mr. Forster was my oldest Friend in this House, and I venture to take this opportunity of paying my humble tribute to the memory of one who, by his great abilities, and by his devotion to the Public Service, earned for himself the respect of all Members of the House, and of all men who love their country. I think, Sir, that the hon. Gentleman the Member for Cardiff (Sir Edward J. Reed) shares the belief that the Navy must be maintained at its full strength, and that we ought to be prepared to increase the Navy Estimates, if necessary. I certainly do not see any reasonable hope of cutting down the expenditure on the Army, and I think that it is very possible that the expenditure on the Navy will have to be increased. As regards the Civil Service, I do not hold with the hon. Member for Northampton (Mr. Labouchere), who, I believe, has given Notice of a Motion to reduce certain salaries, including that of the Chancellor of the Exchequer. That is a Motion against which I shall with great cordiality give my vote. It is quite right the right hon. Gentleman should appeal to the House to practise economy. Every hon. Member must feel that economy is a most desirable thing; but there are limits even to economy, as the Government may find. I am very anxious to see the Debt reduced; yet, under the circumstances in which we are placed—in the present commercial and agricultural depression—I think the right hon. Gentleman has taken the right course in the measures which he has suggested to the Committee.

Motion agreed to.

(1.) Resolved, That, towards raising the Supply granted to Her Majesty, the Duties of Customs now chargeable upon Tea shall continue to be levied and charged on and after the first day of August, one thousand eight hundred and eighty-six, until the first day of August, one thousand eight hundred and eighty-seven, on the importation thereof into Great Britain or Ireland (that is to say): on

Tea

the pound

Sixpence.

(2.) Resolved, That, towards raising the Supply granted to Her Majesty, there shall be charged, collected, and paid for the year which commenced on the sixth day of April, one thousand eight hundred and eighty-six, in respect of all Property, Profits, and Gains mentioned or described as chargeable in the Act of the sixteenth and seventeenth years of Her Majesty's reign, chapter thirty-four, the following Duties of Income Tax (that is to say): For every Twenty Shillings of the annual value or amount of Property, Profits, and Gains chargeable under Schedules (A), (C), (D), or (E) of the said Act, the Duty of Eight Pence; And for every Twenty Shillings of the annual value of the occupation of Lands, Tenements, Hereditaments, and Heritages chargeable under Schedule (B) of the said Act,—

• In England, the Duty of Four Pence;
• In Scotland and Ireland respectively, the Duty of Three Pence;

Subject to the provisions contained in section one hundred and sixty-three of the Act of the fifth and sixth years of Her Majesty's reign, chapter thirty-five, for the exemption of persons whose income is less than One Hundred and Fifty Pounds, and in section eight of "The Customs and Inland Revenue Act, 1876," for the relief of persons whose income is less than Four Hundred Pounds.

(3.) Resolved, That it is expedient to amend the Laws relating to the Inland Revenue and Customs.

Resolutions to be reported To-morrow.

Committee to sit again To-morrow.