WAYS AND MEANS.—COMMITTEE.

HC Deb 25 April 1887 vol 313 cc1804-936

WAYS AND MEANS—considered in Committee.

(In the Committee.)

Motion made, and Question proposed, 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-seven, 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 anuual value or amount of Property, Profits, and Gains chargeable under Schedules (A), (C), (D), or(E) of the said Act, the Duty of Seven 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 Three Pence Halfpenny; In Scotland and Ireland respectively, the Duty of Two Pence Halfpenny; 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 persona whose income is less than Four Hundred Founds."—(Mr. Chancellor of the Exchequer.)

MR. W. E. GLADSTONE (Edinburgh, Mid Lothian)

I believe, Mr. Courtney, it will be agreeable to the general understanding of the House, that upon the present occasion Members should take the opportunity of expressing, with the advantage of two or three days of reflection, that which occurs to them upon, a consideration of the financial proposals of the Government. I shall begin, Sir, by confessing that I, for one, in common, I believe, with a good many hon. Members of this House— probably through my own fault—was under a complete mistake, not as to the fact that the financial proposals of the year were to be made known to us on Thursday last, but as to what the character of those financial proposals was likely to be. This entirely depended upon the construction or misconstruction which we put upon an epithet which the humility of my right hon. Friend the Chancellor of the Exchequer (Mr. Goschen) himself induced him to employ in describing them. It was well understood that my right hon. Friend had stated that he intended to lay before (he House a "Humdrum" Budget. We had to combine with that announcement the universal expectation, amounting almost to a knowledge, that there would be a moderate surplus—serving for unobtrusive and useful reductions as far as that surplus would permit; but that was, I admit, the whole extent of what I anticipated would be shown to the House on Thursday last. Instead of that, we had laid before us a Budget which, whether for good or for evil, will unquestionably, in my opinion, be remembered in future times, because it involves considerations, and proceeds upon principles which, at least, I say again, for good or for evil, entitle it to that distinction. Upon certain of those principles, I have the misfortune to entertain strong opinions; but I bear in mind that we are now dealing with a Resolution, and that that Resolution is the first real stage in the proceedings upon the finances of the year. I conceive that there is no intention in any portion of House to take issue upon any part of those proposals, so far as I know, during the discussion this evening; and I, therefore, regard this discussion as so far a preliminary proceeding. I am justified, and others will be justified, in stating opinions and impressions without reference to the terms in which they may think it their duty to pronounce an ultimate judgment, when the proceedings are further advanced, either on the Customs and Inland Revenue Bill or the National Debt Bill, both of which, I presume, it will be necessary, in order to give effect to the views of the Government, to lay before the House. I feel that there is this great advantage in this state of facts—that it becomes practical, and I hope easy, to discuss these matters, even on the points where our impressions may not be favourable, in terms such as not to create any political difficulty between the different portions of the House with regard to treating them upon their merits. That is my sincere and exclusive desire; and, therefore, I shall certainly so far restrain the expression of my own opinions as to make it a capital object to avoid using any language with respect to any portion of the proposals which would constitute a difficulty of the nature to which I have referred. I am also, of course, aware that the proposals of the Government depend for their ultimate acceptance, not so much upon the Government themselves, not so much upon their supporters—although their supporters constitute a numerous body—as upon the views of certain hon. Gentlemen sitting on this side of the House who have differed from us on the Irish Question. They are Gentlemen who, if these proposals of the Government be highly valuable and excellent, will be entitled to a great part of the merit, and who, if these proposals, or some of them, be the reverse of valuable or excellent, will, in my judgment, undoubtedly bear the principal responsibility. The facts before us are simple enough. I need not follow the details, which were most proper for the right hon. Gentleman the Chancellor of the Exchequer to lay before the House. He starts, as I understand, with a surplus for the year 1886–7 of £767,000, and with an estimated surplus for the coming year of £975,000, which, by means of a minor —and I am inclined to believe a useful— change he intends to make in regard to the transfers of shares and stocks of Companies, he intends to raise to £1,075,000. Not content with the opportunities which the possession of that comparatively moderate sum afford him, by one great stroke, the nature of which I will not even attempt to describe, he raises that surplus to what I may call the round sum of £2,800,000. The points before us are six. First of all with regard to the minor changes, the most important of which, as I have already said, for my part, I am disposed to regard with favour, believing that it is sound in principle and will greatly facilitate financial transactions, while it is not unfavourable to the Exchequer. The second point is the Local Loans Budget; the third is the Tobacco Duty; the fourth is the Grant in Aid of an amount equal to the Carriage Tax for the purposes of roads; the fifth is the reduction of the Income Tax; and the sixth is the reduction of the Sinking Fund of £28,000,000 for the reduction of the National Debt.

THE CHANCELLOR OF THE EXCHEQUER (Mr. GOSCHEN) (St. George's, Hanover Square)

With regard to the Carriage Tax, the total amount of the grants will be equal to the Carriage Tax. The amount now given is only one-half; and, by the proposal, it is doubled In the present year. As my right hon. Friend has stated, the grant will be equivalent to the amount of the tax.

MR. W. E. GLADSTONE

I am obliged by the explanation of my right hon. Friend, which will prevent any misapprehension arising from my imperfect statement. With regard to the Local Loan Budget, I hope my right hon. Friend will hereafter lay before us more fully the case—and an interesting and important case it is—for making the change he is about to introduce into our system. If I remember rightly, Sir Stafford Northcote contemplated a change of this nature—to what extent it was to go I do not know—but, unquestionably, there are many considerations which tend to recommend it. I am afraid it will not be found so easy to obtain from this House a full and free discussion, while the present block of Business continues, of local loans apart from the general finance of the country, at least not to an extent which, in the abstract, may be desirable. I wait, and give no unfavourable opinion, except to this extent—that I intend to express a misgiving, and even, perhaps, to offer a suggestion on a point which I understood from the right hon. Gentleman the Chancellor of the Exchequer is at present more or less open. We are told that the right hon. Gentleman intends to create a stock of £37,000,000, and I understood from an answer given by him, that that £37,000,000 was to be a 3 per cent Stock to be put separately in the market, and to stand upon the same footing there as other Consols or New or Reduced Stock. I own I hope that a better arrangement than that may be found. It appears to me that if there is to be a separate stock at all, it would be far better to make it a 2½ per cent Stock, and to reinforce the 2½ per cents now in the market than to take any other course. Above all, I think, the creation of a now 3 per cent Stock has this disadvantage—that unquestionably it would not possibly represent the public credit in so good, legible, and cheap a form as the greater stocks that now exist. No one is better aware than the right hon. Gentleman the Chancellor of the Exchequer that even between the greater stocks that now exist there is a material distinction. There is a material difference between them, and the price of Consols, as Consols, is, I do not say invariably, a better price than is obtained for New 3 per cents and the Reduced, while, on the other hand, it very frequently, though not invariably, happens that the price borne by the 2½ per cent stock is better than the price borne by any of the 3 per cents. I see no reason why that fact should not receive a full and impartial consideration from the Chancellor of the Exchequer. I must say, whether I agree with or differ from the final determination of the right hon. Gentleman on this point, I think I ought to congratulate the country on having for the first time, I believe, a Chancellor of the Exchequer to manage its finance, who is himself the author not only of a work, but of a standard and classical work, on one of the most complicated branches of monetary science. I pass on to the question of the Tobacco Duty, and upon that point I will not detain the House for any length of time. I am sorry to find that the proposal of the right hon. Gentleman, if it be a right proposal—and I am very far from being prepared to say it is otherwise than right—is a condemnation of the experiment which was made about 1878 under the Government of Lord Beaconsfield. Plainly, if we are now to repeal this 4d. which was added to the Tobacco Duty, the conclusion is inevitable that it was a mistake to make the addition. I am afraid that may not be all. There is no question at all that the addition of 4d. has led to considerable adulteration of tobacco, using the word "adulteration" in the approved technical sense —the addition of material which, whether it be good or bad, is legitimately considered as making a factitious and unreal addition to the commodity to which it is added. No doubt there must be much more water in the tobacco the people smoke now than there used to be before the water was added when the duty was raised by the Government of Lord Beaconsfield; and it is not unnatural, therefore, for the Chancellor of the Exchequer to repeal the addition in the hope of getting rid of the water; but I suspect it is much easier to repeal the addition than it may be to got rid of the water. For my part, I have not any great faith in the operation of the prohibition. No doubt, if it can be enforced it is good, thoroughly good; but if it cannot be enforced, then there only remains the hope that the competition of trade may suffice to bring down to the lowest point the profit necessary for carrying on the trade; and, if so, a sounder article will be got by the consumer than was supplied to him while the additional duty was imposed. But so much depends upon the manner in which trade is organized and upon the concentration of interests and communication upon trade questions which prevails at headquarters, that I confess I do not feel confident, although I am far from saying that it may not be right to make the reduction, that the benefits of that reduction will so far reach the consumer as to place him in the position in which he stood before the additional duty was made. I take next the sum of £280,000 for England in aid of local burdens, together with the £50,000 for Scotland, &c.—a somewhat different allocation for Ireland—which is to be awarded to the Local Authorities in respect of the Carriage Tax. I confess, Sir, I deeply regret this proceeding on the part of the right hon. Gentleman the Chancellor of the Exchequer. If we were discussing the matter in a Party sense, it might be said, and said with truth, that, this is only a precise repetition of what was done by a Government which I had the honour to be connected with. That is perfectly true; but we never concealed or made any scruple of acknowledging that in making that proposal we simply submitted to the will—what we thought the imperious will, but the manifest and determined will—of the House of Commons, and we made the best terms we could for the public. We never pretended that we approved of the step, but we chose the less in preference to the greater evil. We could not have broken up the Government on such a question. On the other hand, the House of Commons would never for a moment have acquiesced in anything less than we proposed, and it was all we could do to prevent the expansion of that compulsion to a much greater length. I shall discuss this matter, not at great length, but with perfect freedom. I may say that I agree in everything which I understand to have been said on the subject by the noble Lord the Member for South Paddington (Lord Randolph Churchill.) The objections to this form of proceedings are strong and manifest. I say that not at all because I think the position of the ratepayer deserves no commiseration and no relief. The position of the ratepayer is a cruel position. He is ground between the upper and the nether millstone. the occupier in this country—using that term as synonymous with ratepayers— is undoubtedly under covenants which largely and properly bind him to meet the charge of the rates, whatever they may be. But when that fashion of agreement come into force, and that liability was laid upon the occupier, the rates wore for certain limited and narrow purposes, and the occupier knew what he was about. But what has happened within the last 20 or 30 years? A completely new set of economic and social wants have come into play, and great additions have been made to the public requirements. I assume that, for the most part, they have been wisely made. But what I say is that the greater part of the burden has been laid upon the occupier of the soil, whereas the ultimate benefit has gone almost entirely to the owner of the soil. The owner of the soil and the owner of houses is the person who will get a better rent in consequence of having better water and better drainage, and better applications of other kinds now provided for the rates; so that one set of people are called upon to pay for the improvements, and receive a short and temporary benefit, while another set of people get the whole of the permanent advantage. That is gross injustice. It will be necessary, therefore, to take into consideration not only the relation between realty and invisible property and visible property, but also the relation between the position of owner and the position of occupier. I do not speak of it as a matter altogether easy to handle. But still, in the case of the Income Tax, you have devised machinery by which it would be vain for the landlord to try to lay on the tenant, or the house owner, or the occupier the burden of the Income Tax. I do not at all say that it may not be the duty of the House to do something in mitigation of the very great hardship which is thrown on the occupier in relation to the owner. And what are all these Grants in Aid? No doubt they give an immediate solace to the occupier, but he does not find in them all the relief he ought to get, because they are opposed to economy and strict administration. Therefore, it is but a limited benefit compared to the benefit which the money ought to produce. No matter whether rents are rising or falling, upon the next adjustment the rates are calculated with the grants taken into account, and the landlord gets so much the more rent in consequence of the grants. These are very grave differences. You pretend by these Grants in Aid to rectify the inequality which undoubtedly exists at present between different kinds of property. That is true; but you are aggravating whatever exists between property and labour, because you are taking off a portion of the burden which ought to be borne by the fund supported in the main by property, and you lay it on the Consolidated Fund, which is to a preponderating degree supported by labour. You are applying a remedy to an evil which you do not cure or remove. You are introducing a new form of inequality, unjust, as I think, and which will always continue unjust to the people at large. But there was the objection stated by the noble Lord the Member for South Paddington, and it is the greatest of all, if it is not a conclusive objection. These grants of money are now given in the worst and most exceptional way, and do not, it is admitted, bear any certain relation to the substantial claims of the occupier of land and houses. But what you have in view, as is admitted on all hands, is a great and stringent reform of local government; and that great and stringentreform of local government necessarily treads on the toes of many persons and classes. Such a measure is not to be propelled by any lively or active movement of public opinion, while it is certain to be resisted by a great vis inertiœ, a great force of private prejudices and interests, which, except by a powerful leverage, you cannot hope to overcome. How does the case stand? It is just this. When the question of local government reform came first to be seriously discussed—when the right hon. Gentleman the Chancellor of the Exchequer himself introduced a large and comprehensive measure on the subject— at that time the system of Grants in Aid was comparatively contracted, and we have in our hands a very large fund; which fund was the operative instrument by means of which we could hope to overcome the resistance to a good system of local government, and smooth the way to its attainment. What have we been doing since? What was done in 1814? The fund was given away piece by piece, and every piece you gave away so far weakened your means of action in regard to procuring any effective reform of local government. That is most unsatisfactory, and I must confess that it does appear to me a matter of regret that the right hon. Gentleman the Chancellor of the Exchequer in a Cabinet, with greater power to give effect to his own views than any Chancellor of the Exchequer who ever sat on that Bench during my recollection, and from circumstances which are by no means dishonourable to him—I say that it is a matter of regret that the right hon. Gentleman without any pressure from the House, or any necessity that I can conceive, should be disposed to continue this exceptional system, and to weaken the ground on which, he and those who act with him stand in the House, for asking Parliament for an efficient reform of the system of local government. Then I come to the Income Tax. We are to have the Income Tax reduced by 1d. I may say, that that is a pecuniary been to every one of us. The right hon. Gentleman is going to put into the pockets of each of us so many pounds. He is going to make us not a Christmas-box, but a sort of Whitsun-box—or rather an Easter offering, an Easter due in the shape of so many pounds a-piece. I admit that an Income Tax of 8d. is an Income Tax at a discreditably high rate for a time like this, when we have upon us no enormous pressure of burdens and no foreign complications—being happily relieved either wholly or partially from those under which a few years ago we were labouring. How ought the Income Tax to be reduced? The tax was put on to meet the growth and the high excess of expenditure. I contend that the Income Tax ought to be reduced as it has been reduced in former years, not by a resort to sources which I, for one, do not think legitimate, but that it ought to be reduced by a wholesome and sound process of public economy. The right hon. Gentleman has given us upon the subject of public economy many excellent and useful declarations, but at the same time he will admit that by the Budget and the measures he proposes economy is not promoted. I am not prepared to admit that the reduction of the Income Tax by the appropriation of another public fund, with out reduction of expenditure, is a proceeding which ought to be approved. No doubt, it is not an agreeable thing to have this 8d. Income Tax. When we made great reductions of the Income Tax before, in 1860–1 and in 1866, they were made in a steady and regular progress of economy. That was before the time when the Revenue exhibited an extraordinary elasticity; indeed, it was at the time when we were suffering extreme pressure from the effects of the cotton famine in Lancashire. But we did continue to keep down the Income Tax by economy, and I must press upon the House that that is what ought to be done now. We now pay an Income Tax of 8d. in the pound, being a far richer people than we were at the time when Sir Robert Peel proposed in a landlords' Parliament—for it was much more of a landlords' Parliament than the present one—when Sir Robert Peel induced the landlords' Parliament to lay on the Income Tax expressly for the purpose of relieving the burdens of the people while commercial and financial reforms wore being effected. That tax was borne for nearly 20 years at either 7d. or over 7d. in the pound, for the purpose of meeting an excess of expenditure. For one or two years it went down to 3d.; but it was borne for more than 20 years almost for the whole time at 7d. or upwards. I must say that there is something repellent to the mind that, having accepted an 8d. Income Tax for the purpose of meeting an excess of expenditure, we should now be content to leave that excess of expenditure untouched, and yet to retain our claim for the reduction of the Income Tax, which was expressly put on for the purpose of meeting that excess of expenditure. I am entirely for the reduction of the Income Tax; but I now come to a question which is vital, and which lies at the root of the whole subject. The matter is so large that it absorbs and eclipses all the other proposals of the Budget—namely, whether the proposed reduction of the Income Tax is brought about by legitimate means. In regard to this part of the subject, I desire to avoid language that may appear to imply censure, or to be dictated by political prejudice or bias. Still, I do submit to the right hon. Gentleman the Chancellor of the Exchequer that the proposals of the Budget bearing upon this matter are not conformable to the principles of found finance. What are those principles of sound finance? We must always bear in mind how large and comprehensive they are. Some people appear to suppose that public economy is the only principle of sound finance. I admit that public economy is a matter of first importance; but it is not the only principle of sound finance. Without an adherence to that principle, it is extremely unlikely that you will be able steadily to maintain your adherence to any other principle. There are other principles of the greatest importance. The first of these principles is that the evenue and Expenditure should balance together year by year. Against that principle there is no offence in the Budget, provided only that you secure that the balance to the credit side is obtained by legitimate means. Another principle that should be borne in mind, and one which is not likely to be observed in the present case, is that the real control of the House of Commons upon Public Expenditure depends upon the Chancellor of the Exchequer presenting one Budget in the year, instead of a number of successive Budgets being presented in each year. That is sometimes excusable, and even necessary and inevitable. In all cases it is a misfortune, and it has a tendency to destroy the control of the House of Commons over the expenditure. In regard, Sir, to that control, I wish it were very different from what it is. It may be doubtful, in the eyes of an impartial reasoner, whether, on the whole, the Expenditure of this country would have been greater or less during the last 30 years if the House of Commons had never meddled with it at all; and if the entire responsibility for the Public Expenditure had been thrown upon the Government, without any money being voted by the House at all. It sounds like a very great paradox that I am attempting to give utterance to; but a paradoxical form sometimes secures attention for a truth which would otherwise be considered extremely dull and uninteresting, and would receive no attention at all. That is a shocking thing to say, and if that utterance is true it is a dreadful thing to say, that the action of the Representatives of the people, with regard to Public Expenditure, has now reached a point when it tends to augment instead of to restrain expenditure. But there is great reason to fear that it is the case. I venture to say that one of the greatest financial difficulties of a Government, and that which is the least popular part of their duty, is to propose to repress and to restrain to the utmost the efforts which are constantly being made by different sections of the House of Commons to press for the increase in the Public Expenditure for the promotion of their own favourite ideas. Then come the last of all these principles—and that is the duty of operating steadily for the redemption of the National Debt. This principle is, in one respect, the most important of all; because it is the one which is most exclusively in the charge of the Executive Government. By ceasing to redeem the Debt the Executive Government can, at any time, repeal taxes; and a proposition by the Executive Government to repeal taxes is one which the House of Commons is almost bound to accept. The House of Commons has no right to impose taxes upon the people except upon the invitation of the Executive Government, who are the sole champions of public duty. If the Executive Government decline to discharge the duties of the championship, it is not for the House of Commons to oppose their action, and, therefore, they cannot resist the request of the Executive Government to take them off. At all times since the present Parliamentary system was established, there has been a sense of the duty and necessity of endeavouring to reduce and cut down the debt in times of peace. When the first National Debt was in its cradle, no one would lend money to the State unless there was an allocation of a portion of the money lent, for the purpose of the redemption of the capital. That was something in the nature of a Sinking Fund. The name of Sir Robert Walpole is closely associated with the Sinking Fund, and, apparently, at one time he thought his fame, in a large degree, would depend upon his measures for the reduction of Debt. Then came Mr. Pitt, the great Finance Minister, and had he continued to be the Minister of Peace, would probably have been the greatest Finance Minister this country has ever seen, and so much did he feel the duty and the necessity of decreasing the National Debt that he arranged a complex Sinking Fund, although he must have known of its defects and inconveniences, for the purposes for which it was introduced. That Sinking Fund of Mr. Pitt's was the subject of discussion down to the time when Mr. Goulburn was Chancellor of the Exchequer; but about the epoch of the Reform Bill the Government adopted the principle that it would look only to annual surplus for the payment of the Debt, because it found that whenever a Sinking Fund had been established it had not been able to keep the hands of Parliament from invading it. At the same time, the Government did continue to pay off Debt in the shape of Terminable Annuities, although they declined to appropriate a given sum for the regular redemption of Debt. And now, Sir, I wish to call attention to this fact, that the objections which used to be taken to the allocation of a large given sum to the redemption of the Debt —so far as these objections were of an economic character—have completely disappeared. The reason of these objections was twofold. Under the old system we provided that a certain amount of stock should be regularly redeemed in the market from the very time of borrowing, and that redemption of stock went on under the old lines while we were borrowing money for loans, and the effect was to lead to a large waste of public money by the double action. Nothing from an economic point of view could be more indefensible. We had also a very large amount of Terminable Annuities, and they were continually dealt in by the Government as buyers and sellers in the open market; but the effect of dealing with those commodities in that manner was to lower and depreciate the public credit. Seeing that when they wore sold the buyer obtained a higher rate of interest, there were exceedingly grave objections to the old Sinking Fund and the old method of dealing with Terminable Annuities. Those objections have now completely disappeared. We now never buy and sell stock in the same market. We now never send into the public market annuities to be sold on the public account. Annuities are created, and have become most powerful instruments both for keeping the Exchequer in funds, and likewise for operating in connection with the reduction of Debt. But these annuities are in the hands of the Chancellor of the Exchequer. He is the seller on the one hand and the buyer on the other. They never touch the market, and the rates of interest fixed is purely a matter of computation on his part. It has become one of mere account in the books, and the country does not lose a single farthing by the tolerably effective system of operations for the reduction of the National Debt. But still there remains one principle of importance in connection with the Sinking Fund which constituted a difficulty, and that was that the principle which was abandoned about the epoch of the Reform Bill, and which was revived by Sir George Lewis in 1855 or 1856, Sir George Lewis was making a loan for the purposes of the Crimean War, and in that loan he inserted a clause which provided, if I remember the sum aright, that £1,500,000 a-year should be regularly paid out of the Consolidated Fund —in respect of that loan—towards the redemption of stock. I was one who, in company with the rest of those who were the followers of Sir Robert Peel, and in company also with the Tory Opposition of that day, who objected to the plan of Sir George Lewis. But we objected to it on the ground that the payment would never be made—that is to say, that on the first occasion when it was convenient this clause would be evaded or repealed. But Sir George Lewis, in the year 1855, carried his Act of Parliament, with the clause in it providing for the payment of £1,500,000 a-year. Mr. Disraeli was Chancellor of the Exchequer in 1858, and he found that he could not afford to pay this sum without imposing taxes in order to defray it. He thought that was unreasonable, and Sir George Lewis's Sinking Fund, after a brief and somewhat inglorious existence of two years, was repealed. Then came the Sinking Fund of Sir Stafford Northcote. We opposed that Sinking Fund of Sir Stafford Northcote entirely upon the ground that it was not desirable to hold out to the country promises and assurances of the redemption of the Debt which experience proved would not become a permanent reality. We were entirely, at that time as much as now, in favour of the annual redemption of the Debt. I believe I may say, as I was Chancellor of the Exchequer at the time —although I say it without any personal vanity—that the Government from 1868 to 1874 redeemed a greater amount of the National Debt, by means of its surpluses and annuities, than ever was redeemed within an equal number of years. Sir Stafford Northcote undertook—what was considered somewhat bold—to induce Parliament to appropriate £28,000,000 a-year to the redemption of the Debt. Our question with him was entirely upon the form, and our objection was that his good intentions would be interfered with by circumstances. When we came into Office we did our best to maintain his Sinking Fund, and we never interfered with the Sinking Fund of Sir Stafford Northcote except for a course which I will mention, and within certain limits. That is the question of the creation of the Sinking Fund, and a rough, rude outline, but I believe a fair outline, of the position in which it stood before the country. We are now asked to invade—or, if the term invade appear sharp-edged—we are asked to diminish the Sinking Fund, and to reduce it in round numbers from £7,000,000 to £5,000,000 a-year. Now, permit me just to make this first observation, which I really hope may touch the minds of all those hon. Members in this House who have Conservative opinions in the sense of being desirous to maintain those principles and usages which have been applied at former times by persons of the highest authority, and which have been approved by the country and by the House, with happy results. We are now going to reduce, if the proposal stands as it now stands— and I sincerely trust that Her Majesty's Government may be induced to change it—we are now going to reduce the total annual provision for the reduction of the National Debt to a point lower than the lowest point at which it has stood in the recollection of any of those who hear me. [Mr. GOSCHEN dissented.] I beg pardon. When I speak of the reduction of the National Debt, I include the interest also, and refer to the total sum applicable for the purposes of the Debt. That total sum applicable for the purposes of the Debt we are now invited to say that we cannot bear—we in this country, with an estimated income of something like £1,000,000,000 a-year, cannot bear to apply to dealing with our National Debt in the form of provision for annual interest and effectual reduction—we cannot bear to apply a sum nearly so large as was applied to that same purpose in the year 1860, when the wealth of the country was not, I think, more than two thirds of what it now is. An income of £900,000,000 or £1,000,000,000 a-year refused to apply to dealing with the Debt, and relieving and providing for the future, as prudent men ought to do, more than I think between £25,000,000 and £26,000,000 a-year; whereas, in the year 1860, that provision, unless I am much mistaken, came to £28,000,000 a-year. Is that a proposal worthy of the present Conservative Ministry? I say worthy, but I do not want to use a word that can by any means be used as a term of censure—even by implication—is it congenial to Conservative tradition? Who are the Conservative financiers whose proposals are favoured and cherished in connection with Con- servative recollections? Is this a proposal that Mr. Pitt would have approved? Is this a proposal that Sir Robert Peel would have approved? Whatever may be said in other respects, I have never heard that the finance of Sir Robert Peel between 1841 and 1846 was deemed anything else but an honour and a credit to the Conservative Party. I myself am convinced that serious, reflective, and sober-minded men, in this determination to stint the means applicable to the payment of the Debt in the view of not only what is called relieving posterity, but with the view of making provision for a rainy day, and enlarging your means and resources for great expenditure when the necessity for great expenditure arises—I cannot think that serious and deliberate reflection will warrant a proceeding so inadequately corresponding to the courageous tradition of Englishmen, to the far-sighted tradition of English statesmen, or to the general interests of the British nation. I now wish to bring to the notice of the House—and especially to the notice of the right hon. Gentleman the Chancellor of the Exchequer—this proposition which I am now going to utter. I will not utter it as if I were absolutely certain of its truth; but it is true so far as my knowledge goes—it is true so far as the recollection of between 50 and 60 years goes—and I believe it is true so far as the entire century is concerned. My proposition is this, that no reduction has ever been proposed to the Sinking Fund of the National Debt corresponding in principle with the reduction now suggested by the Government. Now, let us see whether, so far as we know, that proposition is true or not. I cast aside entirely the idea that the sum of £7,000,000 now applied to the reduction of Debt is an enormous, extravagant, and unbearable sum. I do not hesitate to say that in my opinion, whatever that may be worth, it is an inadequate sum, and that with the wealth of this country we ought to do more in the reduction of Debt from year to year. It is not felt by the country, it is not complained of by the country as an inadequate sum; there is no tendency in the present day to raise an outcry of its intolerable severity, and requiring us to do what I admit we might be compelled to do under pressure and in deference to such an outcry; but on the contrary, it is regarded as a wise, provident, fruitful and truly thrifty system. What has been done has been done in three forms, or at least has been done in two forms, and is now proposed to be done in a third form if the hearts of the Government are so flinty that they cannot be induced to reflect, or if nobody on this side will assist that reflection—as I sometimes hope my noble Friend the Member for Rossendale (the Marquess of Hartington) may possibly be inclined to do, if I can convey the necessity of it to his mind. What has been done I say is now proposed to be done by a third form of interference with the Redemption Fund. Now the form of warrantable interference with the Redemption Fund is that upon which Parliament, upon our instance, acted a few years ago, and, I think, to a limited extent, one year ago. If a very large demand for a sudden expenditure arises, and in the exigencies of a great Empire such demands may be expected to arise from time to time, then a bold and a just Government will persuade Parliament as far as possible —as far as reason and courage will go together hand in hand—to meet that demand by taxation. But it cannot go to all lengths for that purpose. The derangement of your fiscal system by the attempt to meet every demand upon the year by the taxes of the year would be such that, upon the whole, more rashness than wisdom would be evinced by such a course. Although you go as far as possible to meet the demands upon the year by the taxes of the year, yet some accommodation you must grant in order to meet the general working of your system, and such accommodation has been made from time to time. It was made by us, and very much more largely by Sir Stafford Northcote himself; but it was always in order to meet large excesses of expenditure to which Parliament had given its sanction. I thought, myself, that the Government of Lord Beaconsfield did not go nearly far enough in meeting that expenditure by taxation. I thought we went as far as we could—as far as we thought safe; but that is not the question. I want to point out to the Committee that the invasions of the Fund for the Redemption of the National Debt have been founded on those large and sudden demands for additional expenditure. Those I call, in principle, warrantable invasions of the Fund. That is one kind of proceeding in derogation of the principle of the annual allocation for the redemption of the National Debt. The second is that of which Mr. Disraeli's Government gave an example in 1858. In 1858 there was no large and sudden demand for Public Expenditure; but Mr. Disraeli's Government had taken Office under pressure, and its influence in the House of Commons was not commanding. There was no large section of the Opposition prepared to carry it through thick and thin for the purpose of a policy which they deemed to be so paramount as to require the adoption of that course. But Mr. Disraeli found himself in this condition—that he must either lay on additional taxes, or else he must get rid of the Sinking Fund laid by Sir George Lewis at £1,500,000 a-year. He chose the latter alternative. I did not blame him at the time, and I do not blame him now. It would have been difficult even for a much stronger Government at the time to have laid on additional taxes. But it is a questionable proceeding, and I am not sure that he ought not to have sacrificed himself on the altar of duty with the stern resolution of the late Chancellor of the Exchequer the noble Lord the Member for South Paddington in the month of January last. I say so in all truth and sincerity, because no one has heard me speak of the noble Lord's views upon finance, as far as I know them, except in terms of sympathy and respect. I do not say that Mr. Disraeli's proposal in 1858 was as magnanimous and as chivalrous as it ought to have been; but there are these two things to be said. First of all, he had strongly opposed the creation of the Sinking Fund, and he was in a position of perfect consistency that justified him in moving its abrogation; and, secondly, no alternative was before him except the imposition of taxes. Therefore, whether he was right or wrong—and it is open to argument—Mr. Disraeli's case stands in a position entirely different from the case of the Government now before us. This is, I believe, the first proposal in our history, when we have become a richer people than we ever were before— because I am certain that the right hon. Gentleman will not deny that, after all allowances for depreciation of land, for depreciation of farming stock, it is the fact that the accumulations of this country continue to increase—I do not believe he will be of opinion that in any of the years we have been passing through, less than £100,000,000 have been added to the savings of the country —in most of those years much more than £100,000,000 have been added—and it is in these circumstances that we are invited to shrink from the very moderate efforts we have been making in order to pursue this wise and broad policy, supported by all our best financial authorities, of applying considerable and sensible amounts to the reduction of the National Debt. The last stroke in the case is this. It is a case of Et tu Brute. The Sinking Fund of Sir Stafford North-cote is going to be invaded by the representatives of Sir Stafford Northcote, by the men of his Party—nay, in a large majority, I believe, by the individuals who were his Colleagues, and who induced Parliament to establish that Sinking Fund. Is it possible to dwell, as the right hon. Gentleman the Chancellor of the Exchequer is inclined to dwell, on such a doctrine that to exact an excessive payment in reduction of the National Debt is to endanger the principle of reduction altogether? Surely, Sir—and I hope it will not be deemed offensive if I say it—it is a fanciful doctrine ingeniously concocted to meet a case. Is this £7,000.000 a-year an exaggerated sum? I say that it ought not only not to endanger the principle, but that de facto it is not endangering the principle. There has been no movement of the public mind against it. What is it the right hon. Gentleman proposes to do? He is not doing it in obedience to any public demand; he is doing it certainly in derogation of the act of his own Predecessor in the Party with which he is at present co-operating, and with which, I presume, he will continue to co-operate, and by the side of men who were in the Cabinet that established this Sinking Fund. The right hon. Gentleman says —"Let us reduce the Sinking Fund to a moderate amount, and then it will be safe." What is a moderate amount? Has the right hon. Gentleman anything to go by for fixing the moderation of the amount, except his own private judgment? If one Chancellor of the Exchequer may seek to make the reduction of the Sinking Fund from £7,000,000 to £5,000,000, in order to relieve the payers of Income Tax, why is not another Chancellor of the Exchequer entitled to say £5,000,000 is really too much in the present dead state of trade?—"I ask you to reduce it to £4,000,000 or £3,000,000, and I point out to you the enormous advantage you may confer by it;" aye, and possibly he might point out a much stronger case for the reduction of taxes than the right hon. Gentleman. If he were of another school of politics, very likely he may go to some of those indirect taxes that press on the industry of the country, or on the price of articles largely consumed by the people. I have refrained altogether from the use of any strong language. I do not wish to infuse an element of that kind into the debate. I see the right hon. Gentleman moving as if he were about to speak. [Mr. GOSCHEN assented.] I am very sorry if it is so, because what I hope is that he will give the House—having already explained his proposals—an opportunity of hearing at large an expression of impartial opinion, an expression of friendly opinion —an expression of opinion friendly to him from behind me, and an expression of opinion, if possible, still more friendly from the Benches opposite. I ask him—and I do not think it is too much to ask—a candid and unprejudiced consideration of this case at a time when it has been mixed up with no political or Party element. I ask him to read the lesson of former finance, and to assign reasonable weight to the great authorities who have provided rules of guidance for the country on that great subject; to remember how in finance, beyond all other things, it is the beginnings of evil that are insidious, and that are really dangerous; how the wise, prudent man should be on his guard not to admit those beginnings, but to bear in mind the admirable feeling and judgment of the country, which has completely recognized and approved this method of reasonable effort for the reduction of the Debt, and to come to his just and impartial conclusion in the light which history and policy will alike afford him.

MR. GOSCHEN

I had only proposed to follow the right hon. Gentleman now, because I know it is sometimes not convenient for him to remain in the House at this hour; but I hope we may have the pleasure of his presence later in the evening, although we are discussing what I venture to call a humdrum Budget. If so, I shall reserve my observations until a later hour.

MR. W. E. GLADSTONE

I cannot answer for myself entirely. Those who are in their second half-century will appreciate my position in the circumstances.

LORD RANDOLPH CHURCHILL (Paddington, S.)

I do not know, Sir, that it is in my power to add anything whatever to the weight and force of the remarks which have fallen from the right hon. Gentleman the Member for Mid Lothian (Mr. W. E. Gladstone), with respect to the principal proposals of the right hon. Gentleman the Chancellor of the Exchequer for dealing with the Sinking Fund. But as the right hon. Gentleman the Chancellor of the Exchequer has been disposed to yield to the suggestion of the right hon. Gentleman the Member for Mid Lothian, that some opportunity should be afforded to those who are in reality, and in all sincerity, friends of Her Majesty's Government, to give expression to their opinions on this matter, I will venture to ask the House to allow me to supplement a little further the remarks which I made the other night. It is not, I think, in the power of any Member on the Benches opposite, or of any Member on these Benches, to suspect me of speaking with any motive whatever than that of true friendship for the Government. I will not go over all the ground which the right hon. Gentleman has occupied in reference to the Budget proposals; but on the subject of the remission of the Tobacco Duty, I wish to put a point to the right hon. Gentleman the Chancellor of the Exchequer. I can quite understand that on certain grounds there may be much to be said for putting back the Duty to the figure at which it formerly stood; but I hold strongly that such a remission should have been part and parcel of a large review of taxation. I greatly doubt a policy like this at a time when the right hon. Gentleman will be the last to deny that direct and indirect taxation hardly bear that proportion to each other which they ought to bear. Of late years burdens have been placed on direct taxation, whereas no increase has taken place in indirect taxation; and I doubt the policy of choosing this moment for making a largo remission of indirect taxation. That is a point for the right hon. Gentleman himself to consider. He has been one of the sternest advocates for placing boldly on the people whatever expenditure is necessary for the service of the country. He has been one of those quick to point out the apparent pusillanimity of others; and I put it to him whether he can altogether defend this considerable remission of indirect taxation at the present time? I pass from that subject, however, with the remark that the Tobacco Duty is now producing very nearly the amount which Sir Stafford Northcote expected when he raised the Tax. It has taken some years to come up to that amount, and it is only in the last two or three years that it has reached it. It is now producing the exact amount at which it stood before, and yet it is at this moment, when the Tax is producing this amount, which is chosen by the right hon. Gentleman to interfere with it. That seems to me to be a questionable act of prudence, and I doubt very much whether the trade will not be greatly disorganized by the unexpected operation of the right hon. Gentleman, and I greatly doubt whether the public will derive much benefit from the remission of the taxation. The next point is the question of the Grant in Aid of local rates. I can hardly add anything at all to what fell from the right hon. Gentleman opposite; but I can add something, and this addition consists in the words of the right hon. Gentleman the Chancellor of the Exchequer himself. I happened to be reading them only yesterday. I spent my Sunday afternoon in examining some of the financial maxims which the present Chancellor of the Exchequer is responsible for, and which the country, and those who study finance, have a reason to be grateful for. Now, in 1883, there was a Motion made in this House, by Mr. Pell, for the relief of local rates. It was opposed by Mr. Albert Grey, then Member for Northumberland. It was debated with great interest by this House, and Mr. Grey's Motion was carried by a narrow majority. That, I imagine, was greatly owing to the action of the right hon. Gentleman the Chancellor of the Exchequer. Mr. Pell moved for a Grant in Aid of local rates, and it was said that the ratepayers ought not to have to wait for relief from the measure of the Government for the reform of local government. Mr. Albert Grey moved, on the contrary, that local taxation and the reform of local government were indissoluble and must go together. That view was taken by the right hon. Gentleman the present Chancellor of the Exchequer, who made a most powerful speech. The right hon. Gentleman greatly influenced the House by his speech, and the Division was a very narrow one. What did the right hon. Gentleman say? I will only read two short extracts from his speech. They are as follows:— Through good repute and evil repute the Liberal Party have stood by this—that they must introduce local reform at the same time as they introduce local relief. And he concluded in these words— I hope the House will put its foot down against simply giving relief, as it had been given in the past, in a manner which afforded little relief to those who desired such relief, but which struck at the basis of those principles of local self-government which he maintained ought to be upheld."—(3 Hansard, [278] 511–12.) In the right hon. Gentleman's words, I must express an earnest hope that the House of Commons will put down its foot against granting in aid of local rates this further sum of £330,000, given exactly upon the same basis, and in the same manner, as former Grants in Aid of local rates were given, and given, too, without any intimation from the right hon. Gentlemen that a measure of local government reform is about to be introduced.

MR. GOSCHEN

I beg the noble Lord's pardon. I said that even though this is a temporary arrangement, the Government would, even this Session, bring in a Bill for the reform of local government.

LORD RANDOLPH CHURCHILL

I was inclined to think that the right hon. Gentleman made no reference to the question of local government reform.

MR. GOSCHEN

Yes; I did.

LORD RANDOLPH CHURCHILL

I am glad to hear that intimation. It is the best thing I have heard for some time. If the Government are going to bring in a great Bill of local government reform, such as I imagine they would wish to introduce—a Bill which will place at the disposal of the Local Authorities, when properly constituted by Parliament, resources amounting to nearly £3,000,000 in excess of what they dispose of now; a large Bill constituting popular Bodies, popularly elected, which will have not these Grants in Aid, but resources of taxation—probably £3,000,000 in excess of what they now receive—if the right hon. Gentleman the Chancellor of the Exchequer is going to do anything of that kind, then I ask, what is the use of this little morsel or sop of some £300,000, which hardly a ratepayer in the country will know of or receive a farthing of benefit from? Although it may be a general acknowledgment of the grievances of the local ratepayers, is it not rather a waste of public money to throw away this £330,000 in this manner? I have quoted the right hon. Gentleman's words, and I believe them, for when I had the honour to be at the Treasury, I came to the conclusion that nothing should induce me to give one 6d. more in aid of local rates until Parliament and the Government had brought in a large measure for reform of local government. I come now to the proposals of the right hon. Gentleman the Chancellor of the Exchequer for dealing with the Sinking Fund for the purposes which he contemplates. In this matter I want to ask the right hon. Gentleman perfectly amicably, but at the same time very pointedly, what are his views on the subject of public economy and retrenchment in the Public Expenditure? I want him to tell the House fairly and frankly whether he is of opinion that the views which I have expressed as to the possibility, and the desirability, and the necessity of retrenchment are views in which he does not concur, or views in which he honestly concurs, and which he will use his great powers and influence to give effect to. In 1885 the right hon. Gentleman did not agree with the Gentlemen among whom he now sits. In 1885 he contested the City of Edinburgh, and he was then an independent supporter of the right hon. Gentleman opposite, and in those days he placed himself on a great pinnacle of what I may call pure political honesty. He said that he was not going to delude or to humbug the democracy, but he was going to tell them the truth upon all subjects, whether they liked it or not, and it is within my recollection—now I come to think of it—that from the pinnacle which he occupied in 1885 he looked very deep down on such unfortunate mortals as the present Prime Minister, and such still more unfortunate mortals as myself. The right hon. Gentleman the Chancellor of the Exchequer had very little confidence in us, which was very painful to me, and possibly also to the Prime Minister. But what the right hon. Gentleman will not go back from, I believe, is what he said to the people of Edinburgh and to people in other parts of the country in 1885. His words were not intended to be mere words and phrases, but were bonâ fide honest expressions of political opinions which he would be ready to carry out if he came into Office. I ask the House to allow me to read a few quotations from the Chancellor of the Exchequer's speeches on this great question of economy and retrenchment. The principles of economy just as much concern the manner in which you raise your Revenue as they concern the manner in which you spend your Revenue. You are to be economical not only in the way you expend, but in the way you get money. Therefore these extracts apply just as much the one way as the other. I have here 10 extracts, but I will not read them all. I will have mercy on the House. I take the third, which is very remarkable. In a speech which he made on October the 21st, 1885, at Edinburgh, the right hon. Gentleman used these words— The Conservatives hold that such men as Lord Hartington, Lord Derby, Mr. Childers, and others of that stamp, are going' to betray the traditions of which they are the heirs—that they are going to throw over Gladstonian finance, Gladstonian economy, Gladstonian views of economy, and, more than that, of national retrenchment. I call that an offensive view to which I never will subscribe. Now, Sir, I ask the right hon. Gentleman with regard to the passage when he rises to reply, to show the House how this method of dealing with the Sinking Fund for this particular purpose is in accordance with Gladstonian finance, Gladstonian economy, Gladstonian views of National Expenditure, and, more than that, Gladstonian views of national retrenchment. But I will take another passage. The right hon. Gentleman said— The Liberal Party have been, and I trust always will be, the guardians of the public purse—guardians willing oven to incur some amount of unpopularity rather than be the ruthless spendthrifts of the national resources placed in their hands. He then went on to make a comparison drawn from private life. He proceeded— Although there may be public administrators of whom it may be said, 'There is no niggardly economy there—they spend their money like gentlemen,' why do they not remember at every point that the money which they spend comes from the taxation of the people? These sentiments are, I think, not wholly dissimilar from those which I humbly endeavoured to express at the time when I left the Government. I come now to the last quotation with which. I shall trouble the House. The right hon. Gentleman, speaking on the 24th of November at Edinburgh, said— Let me pass from legislative proposals to some matters of importance with regard to the administration of the country. One great point is that of national expenditure and national economy, which is becoming rapidly less popular than it used to be. I confess that I cannot see in certain candidates for Parliamentary honours any sign that they will be ferocious guardians of the public purse. Believe me, some little ferocity is necessary. Now, I ask the right hon. Gentleman the Chancellor of the Exchequer, when he rises to defend his proposal, and when he remembers these words that he spoke in 1885, how he can prove that he has been a guardian of the public purse, willing even to incur some unpopularity —I ask him to show how the proposal which he now makes in regard to the Debt, and the absence from his Budget of provisions as to retrenchment is consistent with the pledge which he gave to the people of Edinburgh that he would be a zealous and ferocious guardian of the public purse? I have prefaced my observations with these quotations, because I had felt, until last Thursday night, that, at any rate on the question of economy, I had a warm ally and a true supporter in the right hon. Gentleman. But what is the effect on economy of his proposal? I imagine that the right hon. Gentleman will not deny that part of an economical policy must essentially be the laying aside of money to repay Debt. But if for a particular purpose you withdraw from the provision which former Governments have made for the repayment of Debt, how can you argue that you are pursuing a truly economical policy? Surely the effect of the right hon. Gentleman's proposed remission of taxation, which is the purpose for which he withdraws £2,000,000 from the Fund for the repayment of Debt—the effect of that remission on the public mind must be this. There is no great embarrassment caused by your present heavy public expenditure, nor can there be any real inefficiency in the Public Departments. Obviously, the stir made by myself and others about the expenditure, the increase of expenditure and departmental inefficiency, was enormously exaggerated, and was wholly uncalled for; there can be nothing of the kind, because the Chancellor of the Exchequer this year is able to remit 1d. of the Income Tax, to remit £600,000 of the Tobacco Duty, and to grant £330,000 in aid of local rates. That must be the effect on the public mind. The public mind has been brought with the greatest difficulty to bear on this question of public expenditure. The public were perfectly ready to place confidence in the Government; nor did I do anything whatever to prevent any portion of the public from placing confidence in the Government on that point. But the right hon. Gentleman has dashed all my hopes on this subject. I am certain that the feeling on the part of the large mass of the people is that the whole stir which has been made about high expenditure is a stir with which they need not much concern themselves, and they will feel that if the Chancellor of the Exchequer is able to make a large remission of taxation, they need not trouble themselves about anything else. Now, I wish to ask the right hon. Gentleman, are those his views and wishes? Is that the frame of mind in which he made these speeches in 1885? Is it a frame of mind that will bring credit on this House, and especially on the Conservative Party—a frame of mind of carelessness, and almost of recklessness, as to the progress of public expenditure? The Members of the House of Commons are often blamed for their extravagant tendencies; but I repudiate the idea, and decline to entertain it, that the House of Commons could be economical unless the Government of the day is economical. In all the great retrenchments of expenditure in the last 35 years, it has been because the Government resolutely led the way. When the Government has a character for thrift, then hon. Members refrain from pressing proposals for expenditure, because they know that it is of no use, seeing that they have to do with a Government which has a tight hold on the public purse. Now, however, we shall have a whole group of Motions of all sorts which contain demands on the public purse. I say, therefore, that unless the Government leads the way, and puts its foot down, it is useless to lay the duty and the responsibility of economy and retrenchment in expenditure on Parliament. I shall be told that retrenchment is impossible—that there is no great retrenchment possible —and that the increase in the Army and Navy expenditure is one which the country must bear. Well, all I can say is, go back to former times. I find that in the year 1860 you had a Government in Office determined on a retrenchment policy, and the Army and Navy Estimates, which stood then at £27,500,000, were by 1865 reduced to £22,500,000, or a reduction of £5,000,000 in five years. In 1868 the Estimates were £25,000,000, and by 1871 they had been reduced to £21,000,000, or a reduction of £4,000,000 in three years. Now, what do you find in this year? Since 1883 the average Army and Navy expenditure has been raised £6,000,000. Does the right hon. Gentleman the Chancellor of the Exchequer mean to get up at that Table and say, in view of the figures of former years, that it is impossible to decrease that expenditure? Now, I challenge him frankly and amicably on that point, to say whether large retrenchments are not possible; and I invite him to declare, in view of this state of things, whether he means to contend that the action he has taken now with regard to the present Budget will strengthen his hands. I wish to treat the House as a perfect judicial tribunal, without any Party prejudices on one side or the other, and I wish to put two Chancellors of the Exchequer before them, and try their standard of finance. I will put the Chancellor of the Exchequer of the late Government—the right hon. Member for Derby (Sir William Harcourt)—and the right hon. Gentleman the present Chancellor of the Exchequer before the House, and I will ask the House to say frankly which presents the nearest approach to the best standard of financial morality. The cir- cumstances of the day are identical, except that the right hon. Gentleman the present Chancellor of the Exchequer is a little more favoured by the increase of the Revenue. The circumstances, as I say, of the time are identical. There was no possibility of any great reform. The House was occupied last year and is occupied this year with the Irish Question. The Chancellor of the Exchequer last year had to meet a large increase of military and naval expenditure, and what was the course he took? Did he suspend the Sinking Fund for the purpose of remitting taxation? There must have been an enormous temptation to make a large remission of taxation. The Government then, like the Government now, did not command a majority of the House. The Government then was advocating a scheme for Ireland which might obviously have been advanced considerably by a popular remission of taxation. Whether the temptation presented itself or not I do not know; but I know this fact—that, so far from touching the Sinking Fund, the Chancellor of the Exchequer revived no less than £3,000,000 of that Fund which had been suspended; and the consequence of his doing that was that he was not able to make any remission of taxation. He told the country fairly, "I cannot lower the taxation, and you have got to meet it." Can the right hon. Gentleman the Chancellor of the Exchequer put his conduct in the same light? He does not maintain the Sinking Fund; he makes a grab at it. He takes £2,000,000 of the Sinking Fund, and with it he makes a remission of taxation. Well, I know it is pleasant to have a remission of taxation; but what my hon. Friend below the Gangway has to consider is whether that remission may not cost us more than the remission which you make. When you embark in unsound finance you pay dearly for it. I have been told that this is a very clever stroke of policy— the stroke of a master mind—this dealing with the National Debt in order to make this remission of taxation. Well, I can only say that my right hon. Friend was the last person who should interfere with the Sinking Fund. It is impossible for anyone to go into the Treasury and not see that great Fund at which the right hon. Gentleman has made a grab staring him in the face. There is no cleverness in discovering this Fund and in manufacturing a surplus. Anybody can do it. I do not believe there is one who has not longed to make a depredatory incursion into that Fund; but, as the right hon. Gentleman the Member for Mid Lothian has pointed out, every Chancellor of the Exchequer has resisted the temptation. No doubt, it was interfered with in 1885. The right hon. Gentleman opposite had to find £l4,000,000ofmoney;of this £4,500,000 were taken out of the Sinking Fund, £3,000,000 more were borrowed, and they proposed, had they remained in Office, to raise the rest by taxation. This is the first time that the Fund is resorted to for such a purpose; and I deplore that it should be a Conservative Government which has attempted it; and I deeply regret what has been done. The Chancellor of the Exchequer has fallen a victim to a temptation which has strongly assailed every Chancellor of the Exchequer, and every one up to now has been strong enough to resist. I do not say that there are not occasions when you may deal with the Sinking Fund other than for purposes of relieving taxation. It has four uses. There may be occasions of large operations. It might be very useful in time of war. You might use it under certain circumstances which I will not describe, but which might be supposed, to carry out large taxation reforms, which might excite against you great opposition, and by using this Fund you might allay that opposition and make a beneficial increase to your resources. But there is another use of the Sinking Fund, and I think the right hon. Gentleman alluded to it in his speech last year. I think he said he would not have proposed so large an operation as the creation of £50,000,000 of stock, if it were not for the enormous power exercised by the Commissioners of the National Debt over Consols. In fact, the Commissioners of the National Debt, by virtue of large funds they hold, may be said to control the value of Consols. It is not within reasonable probability that the value of Consols would suffer any large depreciation as long as the Commissioners of the National Debt have the control of that great sum of money. That is a weapon which might be used in connection with Ireland; and if English credit— [Cries of "No!"]— I do not say that English credit would be involved, but I do say that that is the last weapon in the world that you should weaken or resort to unless for a great purpose. I ask the right hon. Gentleman the Chancellor of the Exchequer— does he really consider that it is a great purpose he has in view in remitting 1d. in the Income Tax or £600,000 of the Tobacco Duty? Does he think that he will add appreciably to the prosperity of the country, or, for more than a passing moment, increase the popularity of the Government? Imagine the principle he has laid down. If the right hon. Gentleman the present Chancellor of the Exchequer can do this, what may not anyone else do? He came to the Exchequer with the highest reputation that any Chancellor could ever approach it with. Others had a reputation to make. He approached the Treasury with a reputation ready made. He was the orthodox apostle; he was the canonized saint of financial purity. I am sorry to tell him that what are called the financial experts are already mourning over his fall. There never was a paper more devoted to the right hon. Gentleman than The Economist. Has the right hon. Gentleman read the article in The Economist on his Budget? When he was appointed Chancellor of the Exchequer, I remember that The Economist said— "Well, thank God that at last we have got a Chancellor of the Exchequer, and that, having someone over every kind of financial impostor" —including my unfortunate self— "We have at last got a recognized financial genius." I will read a short passage from The Economist. It says— But Mr. Goschen does not intend to leave the present arrangements unaltered, and the chief alteration he proposes is one which, coming from him, we regard with the greatest regret and disappointment. He wishes to lay violent hands upon the Debt Sinking Fund, and appropriate no less than £2,000,000 of the amount we now devote each year to the redemption of the Debt. As we show elsewhere the excuse he offers for this is of the flimsiest kind, and it should take arguments far more cogent than he has yet advanced, or will, in our opinion, he able to advance, to induce Parliament to reverse the policy which in this matter it has deliberately adopted. What has the right hon. Gentleman the Chancellor of the Exchequer to say to that? The Economist concludes a very long and able article by saying— Altogether, then, Mr. Goschen's Budget is, though clever, very far indeed from satisfac- tory, and it is weak just where we should have expected to find the strength of so able a financier most conspicuously displayed. I have no reason to feel any great respect for The Economist. It never gave me any credit for financial ability; and I only quote it as the authority which told us that the right hon. Gentleman would lead us in financial courses of rectitude and purity. It now tells us he has done the reverse. I do not know whether the Committee is of opinion I have spoken too strongly on these matters. I cannot help feeling strongly, because I feel that all the hopes I had that the Tory Party would have taken up, and would have identified themselves with, a policy of sound economy, finance, and retrenchment are shattered. We had an immense opportunity of placing before the country in the financial proposals of the year our adherence to a policy of economy and retrenchment. We are now going to plunge into the Irish Question, with which many weeks will be occupied, and financial matters are not likely to come before us again for a considerable time. A golden opportunity for showing the country what our policy was has gone. The Government have been unfortunately tempted, unless there is a glimmer of hope that the right hon. Gentleman may reconsider his proposals, to court, as it were, a little popularity which they do not in the least require. They are strong enough in all conscience on the question of the Union. Apparently to court a little popularity, under the impression that they are weak, they have been tempted to make a remission of taxation which in reality will benefit no one, but which will inflict a fatal blow upon our financial arrangements. This policy of paying off Debt has been built up by both Parties in the House through Parliament after Parliament. It has been a continuous policy, it has been added to by one Party after another, and it has never been interfered with except in times of emergency. Now we are deliberately identifying ourselves with the policy of ceasing to pay off the National Debt. I would ask the Government whether it is not possible to reconsider that particular proposal? It is not necessary for the right hon. Gentleman the Chancellor of the Exchequer to touch the Sinking Fund even if he wants to remit a 1d. of the Income Tax. He has ample resources at his disposal. If he leaves the Sinking Fund alone and remits a 1d. of Income Tax, he will still have a balance of £400,000. If he does not reduce the Income Tax, and prefers to take off the Tobacco Duty, he will have a balance of £800,000. If he touches neither of these, and relieves the rates, he will have a balance of £300,000. He can do any of these things if he will only leave the Sinking Fund alone. He is touching it for a purpose so paltry and so frivolous that I fail to understand for one moment why it ever entered into his mind, and why the right hon. Gentlemen near him, and particularly the right hon. Gentleman the First Lord of the Treasury, so easily fell into his policy. I pray the right hon. Gentleman the Chancellor of the Exchequer to believe that I only make these remarks because of my intense and earnest desire that the present Government, whose career I hope is going to be a long one, may embark upon paths of financial stability.

THE CHANCELLOR OF THE EXCHEQUER (Mr. GOSOHEN) (St. George's, Hanover Square)

I think that, on the whole, it will be most conducive to the convenience of the Committee that I should reply at once to the two onslaughts which have been made upon me—in the first instance, by the great veteran of financial orthodoxy, the right hon. Gentleman the Member for Mid Lothian (Mr. W. E. Gladstone), to whom we all look up with the highest respect as a financial authority, and, in the second place, by the noble Lord the Member for South Paddington (Lord Randolph Churchill), a late but very brilliant recruit to the financial corps. My right hon. Friend the Member for Mid Lothian said he was not present in the House the other day because he believed the Budget would be one to which it would be scarcely worth his while to listen. I put his absence down to another reason. I thought he felt as a first-class performer feels in being exposed to the excruciating torment of listening to an inferior artist playing on the instrument from which he draws such melody himself. I say that, I am sure, in no spirit of unkindness to my right hon. Friend, but only because I feel that for one who has taken part in so many conspicuous Budgets it may naturally be a dreary task to listen to such a speech as was made the other day by me. And yet I should have been glad if the right hon. Gentleman had been present; because, after all, it is easier to catch the whole meaning of a statement by listening when it is made than it is by reading it in print. I will follow, as well as I am able, the various points which have been raised by my right hon. Friend, and so ably and eloquently strengthened by the noble Lord the Member for South Paddington. I am afraid it will be my duty, in the first instance, to deal with what I may call the least exciting part of the question— namely, local loans and the Tobacco Duty, turning to the larger points in the Budget —the remission of 1d. of the Income Tax and the suspension of a portion of the Sinking Fund—subsequently. Now, with regard to local loans, my right hon. Friend suggested that it would be unwise to issue another 3 per Cent Stock, and further suggested that it would be better to issue a 2½ per Cent than a 3 per Cent Stock. [Mr. W. E. GLADSTONE: If you have a separate Stock.] Yes; if you have a separate Stock. My view is, in the first instance, to issue £37,000,000 of the new Stock, in lieu of £37,000,000 of Consols held by the Commissioners of the National Debt, and that course would not involve the placing of a separate Stock on the market in the first instance; but I have not absolutely come to a conclusion on the subject. I will consider the question of issuing a 2½ per Cent Stock. There is a great deal to be said for it; but the difficulty with me is this—it is extremely important that the public should be able to see a distinct relation between the amount of interest paid by the Government on the one side, and the interest it receives from local bodies on the other. I am afraid that if the Stock were issued at 2½ per cent there might be an appearance of profit on the account which would obscure the real position of the account, and tempt those who are insisting continually upon an increase of local loans to force the Government to give them money at a cheaper rate. I do not know how far right hon. Gentlemen opposite are familiar with the controversy which has been going on. It has been said that the Government make too great a profit between the rate at which they borrow and the rate at which they lend. The truth is the reverse of that There is an extremely small margin; and it requires to be shown quite clearly that there is only a small margin. This rather tells against the issue of this Stock at 2½ per cent; but I am obliged to the right hon. Gentleman for making the suggestion, and it is not too late for me to consider the matter again with the recommendation which his high authority gives it. I now approach the question of the Tobacco Duty. My right hon. Friend put a question as to whether it would be possible by any legislation to prevent the watering process which has been going on. I understood him to say we should not be so successful as we anticipated. On this question the officers of the Inland Revenue do not entertain much doubt; and I am bound to say that I believe the tobacco manufacturers do not entertain any doubt either, because I am given to understand that they are already suspending the process by which they offered the public a tobacco with a largo excess of water, in view of the legislation which is now proposed. I have had inquiries made as to how long the manufacturers will continue the process, and I think I may say the trade are entirely of opinion that the proposal made will have the effect it is intended to have. I now address myself to the broader question connected with the Tobacco Duties raised by the noble Lord the Member for South Paddington. The noble Lord, in objecting to the change in the Tobacco Duty, speaks as if the main object in view were to reduce the duty upon one of the articles of general consumption, and he points out to the Committee that already the proportion of direct to indirect taxes seems to bear too much on direct taxation, and, accordingly, argues that it is injudicious to reduce this duty. But the reduction is made on the ground that the increase of duty was not satisfactory in its results, and that it has not produced that increase in the Revenue which it was expected to produce. I will not trouble the Committee with the statistics at this moment; but it has been shown conclusively, that at various times the increase of this duty above a certain point has checked the growth of Revenue, and that there has not been that gain to the Revenue for which the additional taxation has been imposed. But, says the noble Lord, this duty is now yielding the amount which it was expected to yield by Sir Stafford Northcote. Yes, that is so; but there has been an increase in the population of 12 per cent since then, and although there is an absolute increase in the amount of duty, it has not progressed with the increase of population, nor has it stood at the amount it would have stood at, if the increased consumption had not been checked by the increase of duty. So far, that is an answer on the first point. I thought it my duty to restore the duty to what it was, quite apart from any relief which may be given to the consuming classes, because the raising of the duty has been proved to have been a financial mistake. I should be extremely sorry to have to surrender this proposal. If the House will consent— as I hope they will—to remit the duty, I feel very confident that in a few years we shall be able to recoup the loss which we have been obliged to place upon the Estimate of Revenue for the present year. I now pass to a subject on which a great deal has been said—the question of granting some assistance to ratepayers, and every Member of this House is at liberty to call up against me any declaration I have made to the effect that the system of giving these grants in aid of the rates is a system in which there are grave financial defects. I have used strong language to that effect, and I stand by that language now. The noble Lord missed the point in my speech, in introducing the Budget, where I stated that the Government have actually prepared a Bill, a large Bill, for the improvement of local government and local finance, and I think I went so far as to appeal to the right hon. Member for Derby (Sir William Harcourt), who was in the House at the time, to use his influence with his Friends in order that the Government might have sufficient time in the present Session to deal with that large and important subject. We are most anxious to make progress with that Bill; but I confess I am not very sanguine as to our being able to pass it this year. Even if it did pass, a very considerable time would have to elapse before those authorities could be constituted, and before those large changes in local finance to which the noble Lord alluded could be carried out. But let it be distinctly understood, in answer to what fell from the noble Lord, that the Government are determined to revise at the earliest opportunity the whole system of local government and local taxation, and that this small step we have taken in that direction will not in the slightest degree, or to any extent whatever, cause us to slacken our endeavours to carry out the reforms which are necessary. The noble Lord seemed to think that the grant now proposed, though it is very small, was yet quite enough to impede the future action of the Government. I am bound to say we believe that our Bill will be strong enough to defy any such danger. We follow partly on the lines with which the noble Lord, I believe, is entirely in accord. I repeat that what we now propose will not diminish by one tittle the determination with which the Government mean to proceed with the question. Now, I wish to call the attention of the Committee to the fact, that the noble Lord and right hon. Gentlemen opposite have, throughout the whole of their utterances, dealt with—I do not wish to say it discourteously—generalities; they have refrained from going into the precise circumstances of the present moment to a most remarkable extent. The noble Lord has spoken of economy in general without giving the House the slightest indication of these great divisions of Expenditure where economy is possible. [Lord RANDOLPH CHURCHILL: I stated the Army and Navy Estimates.] I mean what divisions of the Army Expenditure. I do not wish to turn from my present argument; but I will ask the noble Lord whether he would cut down the present number of bluejackets, or whether he would reduce the number of our soldiers? I do not know whether the noble Lord says "Yes" or "No" to that question. I thought it doubtful whether the noble Lord would answer that question, so far as the Army is concerned; because, if I am not mistaken, when he was Secretary of State for India he increased the number of men. [Lord RANDOLPH CHURCHILL: India pays for them.] Yes; but the noble Lord knows that the depôts and the whole arrangements connected with the increase of force have increased the Army Estimates. I think I am right in that. At all events, I do not wish to press the noble Lord, who has been extremely courteous, though so very severe, in some of his expressions. The noble Lord did not answer whether he would reduce the number of men in either the Army or the Navy. [Lord RANDOLPH CHURCHILL: I would reduce the number of non-effectives.] we have no power to deal with the Non-Effective Vote, which means pensions. That ground again, is cut from under the feet of the noble Lord. I am sorry to have had to turn aside from my general line of argument to allude to this particular point raised by the noble Lord. I was stating that my right hon. Friend and the noble Lord have both dealt in generalities. They have not looked, or, at all events, they have not told the House they have looked into the special condition of any class of the ratepayers or taxpayers. The noble Lord spoke of my action in 1883. No doubt I resisted the Resolution to which he referred; and one of the results has been that the ratepayers have gone on hoping from year to year that they would receive that contribution towards the relief of local taxation which the House seems unanimously disposed to give them. They have had to wait from year to year; we have arrived at the year 1887, and still in this year we are unable, owing to the force of circumstances and the legislative difficulties by which we are surrounded, to be sure of carrying a Bill which would give them relief. Looking at the depressed state of agriculture, looking at the difficulty people have in paying their rates at all—and I am bound to say I have received representations on this point from hon. Members on both sides of the House—I say, looking to these facts, and seeing that we start no new financial principle at all, I do not think that the Government are to blame in proposing to give this temporary relief—because I distinctly characterize it as such—while the ratepayers are waiting for that large measure which they shall receive as soon as the Government can give it them. I think I have now dealt with the smaller offences which are laid to my charge, and now I come to a greater, which is this —Have we been criminal—as the noble Lord would almost suggest—in suspending the Sinking Fund, and in diminishing the Income Tax? I wish to point out to the Committee and the country the two separate issues which are raised in this matter. One is, are we right in diminishing the Income Tax, and at the same time in reducing the amount of re- payment of Debt. That is one question. The other question, and that is the one which is mainly in the mind of the noble Lord, is whether, quite irrespective of reducing the payment of the National Debt, we ought to have sought relief by reducing expenditure. It is in regard to our expenditure that the worst part of our crime has been committed.

LORD RANDOLPH CHURCHILL

Uutil you reduce expenditure, you are not in a position honestly to remit taxation.

MR. GOSCHEN

I hope the noble Lord does not mean that I am politically dishonest. Well, now, I will deal with the question of the reduction of expenditure. The noble Lord has spoken, to a certain extent, as if further reductions in expenditure could have been shadowed out in the Budget. Now, the Budget is not the proper place for discussing the amount of expenditure on the Army and the Navy, the provision for which has been discussed already upon the Estimates. The charge which is brought against us—namely, that we ought to have reduced the expenditure if we wanted to reduce the Income Tax, is a charge which ought to have been brought forward at an earlier stage of our proceedings. That, of course, does not affect the argument of the noble Lord, but it affects the argument which has been used by the right hon. Gentleman the Member for Mid Lothian, and by others, that the very fact of taking off a 1d. of the Income Tax is an encouragement to extravagance. It is contended that we ought, in fact, to keep up a penal Income Tax of 8d. in the pound in order to make the country thoroughly feel that we ought to reduce expenditure. Is that the position? The other day the right hon. Gentleman the Member for Derby—whom I do not see in his place now—distinctly enunciated the doctrine that because, as he said, the greater part of those who pay Income Tax are "Jingoes," they ought, through the Income Tax, to be made to feel the pressure of their own crime. The right hon. Gentleman the Member for Derby wishes that through the presentation of the Income Tax paper, the payer of the Tax should be, as it were, prodded into the feeling that he is encouraging an expenditure which is much too high. But I think the Income Tax payers will be inclined to ask why they are to be the only class of the community singled out for this process of moral education. They will ask how it is that at this moment when indirect taxes are positively at a lower figure than they were a few years ago—the Income Tax ought to be kept at 8d. in the pound. I do not know to what extent the right hon. Gentleman gave the impression to the House, but language is frequently used as if the Income Tax payers consisted mainly of the wealthy classes of the community. I must beg the Committee to follow me—I hope they will kindly do so—very closely on this point. We have got to examine who are the Income Tax payers who have to continue to bear this 8d. in the pound, while no effort is made whatever to put pressure upon any other class in the same direction. I doubt whether the House and the country are really aware of the extent of the pressure of this tax. The number of persons claiming abatements of £120 on incomes under £400 in 1883–4 was 438,000. That is to say, there were 438,000 Income Tax payers with a smaller income than £400 a-year. The Committee will see that a large number of persons in receipt of small incomes have been hit extremely hard by the Income Tax. It is their case, I think, that the House will do well to take into consideration. I can illustrate this point more fully by an analysis of the assessments under Schedule D, which is generally considered to be the wealthy schedule. There were in 1885–6 under that Schedule 399,378 persons contributing Income Tax on incomes under £500, 32,033 over £500 and under £1,000, 19,250 over £1,000 and under £5,000, 1,907 between £5,000 and £10,000, 1,046 over £10,000 and under £50,000, and 95 over £50,000.

LORD RANDOLPH CHURCHILL

Where are these figures to be found?

MR. GOSCHEN

They are obtained from the Inland Revenue Department. I think the noble Lord will find them in the most able Report of the Inland Revenue.

LORD RANDOLPH CHURCHILL

Do they profess to give the number of Income Tax payers in the country?

MR. GOSCHEN

Yes; under Schedule D, which is regarded as the rich Schedule. Under Schedule E, in 1884–5, there were 165,244 persons assessed under £400. Of course, that means the whole of the clerks and small officials. What I want the Committee to realize is that when you are maintaining the Income Tax at 8d., you are not simply putting a burden upon the wealthy classes, but upon classes where there is much pinching penury. My right hon. Friend opposite admitted that there is no class worthy of more commiseration, in many instances, than those with very limited incomes who are above the working class. Something has been done for them; but remember what 8d. in the pound means to men with incomes of some £500 a-year. It means £15 or £16. I would press this home, because I think it is worthy of being remembered, that what is important to a man is that there should be some margin beyond what is required for the necessities of life which he may devote to other purposes. I say that on an income of £500 a-year, £16 a-year is a large sum to pay in the shape of Income Tax; and it will not be much consolation to a man to know when he pays it that he is doing so in order to keep up the financial morality of the country, while every other class, except payers of Income Tax, are contributing less than they used to do towards the Revenue and towards the discharge of Debt. I am glad that my right hon. Friend the Member for Mid Lothian is still in the House, because I should wish to call his attention while I am on this point of maintaining the Income Tax at a very high figure, I should wish to call his attention to his previous views on the subject. Now, he has taken me severely to task because I propose to reduce the amount payable in reduction of the National Debt. What is that amount at the present moment? It is now nearly £7,000,000. In 1874 we were paying off £3,000,000; and at that time what did my right hon. Friend do—he and his Colleagues, of whom I was one? Did he propose—the Income Tax being then at 3d.—that in those days of prosperity the Income Tax should be increased in order to pay off more of the Debt? Did he propose that the £3,000,000 that was then paid should be increased? Not a bit of it. My right hon. Friend proposed that the Income Tax should be totally repealed.

MR. W. E. GLADSTONE

The right hon. Gentleman will do me the justice to remember that that was to be in conjunction with other measures.

MR. GOSCHEN

Yes; in conjunction with very large, most wise, and satisfactory measures, of which the increase of the amount to be paid in reduction of the National Debt was not one.

Mr. W. E. GLADSTONE

here made an observation across the Table.

MR. GOSCHEN

In the address of the right hon. Gentleman at that time the total repeal of the Income Tax was suggested, and other very large and important changes; but I think the right hon. Gentleman, when he looks back, will find that at that time he did not think it necessary to propose, even when he was reducing the Income Tax, to increase the amount which was being paid in reduction of the National Debt though it was a small amount as compared with the £7,000,000 paid last year, or the £5,000,000 a-year which I hope will still be paid off under the proposal I submit to the House. I trust that both hon. Members in this House, and those who may judge me somewhat harshly out of the House with reference to this proposal, will remember that, at all events, while we intend to take 1d. off the heavily-taxed Income Tax payer who is now paying 8d. in the pound, we shall still be in a position to pay £5,000,000 a-year off the Debt.

LORD RANDOLPH CHURCHILL

How long?

MR. GOSCHEN

That depends, to a great extent, upon who is likely to hold the Office of Chancellor of the Exchequer. There were some important reservations in the speech of the noble Lord which strengthened my impression that it would be an extremely dangerous matter to leave the total amount of the charge at £28,000,000. There were some passages in the speech of the noble Lord which suggested that a hand might be laid on this sacred sum for paying off Debt, if it were in connection with great reforms of taxation. Those reforms of taxation may be extremely wise; but, if they are carried out, what will become of the sanctity of paying off the National Debt? The noble Lord found fault with me for touching the principle upon which we have been acting; but if what I say is correct, he himself admits, in tolerably unmistakable language, that if there were some considerable objects which recommended themselves to him in the future, he would not have any objection to suspend it.

LORD RANDOLPH CHURCHILL

Nothing of the kind.

MR. GOSCHEN

Is that a wrong interpretation of the noble Lord's statement?

LORD RANDOLPH CHURCHILL

I said nothing of the sort.

MR. GOSCHEN

I am sorry if I misunderstood the noble Lord. Just now I was pointing to the suggestions of the right hon. Gentleman opposite in 1874; and I hope the Committee will allow mo, in replying to such important speeches as have been made, to detain them for a few moments longer. I wish to call special attention to this—that the financial situation of the country now is totally different from what it was in 1875 and 1876, when Sir Stafford Northcote made his proposals which we are still carrying out, and when he contemplated that there would be the ordinary growth of Revenue. That growth has not followed as he expected. On the contrary, the Revenue has been most inelastic. And that reminds me that the right hon. Gentleman opposite has spoken of the increase of the wealth of the country, and of the population of the country; and he asks how it is that, with our immense wealth now, we are not able to pay off more Debt and as much of the interest as we did in former times? That, however, must depend upon the financial position of the State, rather than upon the general wealth of the country, and upon the extent to which the right hon. Gentleman and hon. Gentlemen and the country are willing to make that general wealth contribute to the Revenue. The very fact that the Income Tax stands in time of peace at 8d. in the pound shows how great a strain is being imposed upon our existing financial resources. Let me draw the attention of the Committee to the following figures. In 1874–5, when this arrangement for paying off the Debt was established, the Customs and Excise together produced £46,700,000; and if the ordinary growth of the Revenue, as compared with that of the population, had been maintained, the Revenue under those two heads should now be £52,000,000, whereas, in point of fact, they only produced last year about£45,400,000, which is some £7,000,000 less than what they would have produced had the ordinary rate of the growth of the Revenue been maintained. But I have much stronger figures yet. The right hon. Gentleman the Member for Derby (Sir William Harcourt) referred the other day to the increase in the Revenue that had taken place during recent years under the head of stamps; but, as a matter of fact, there has been scarcely any increase under the head of stamps properly so called during the last 12 years. Stamps, properly so called, which produced £4,250,000 in 1874–5, only produced £4,427,000 last year. The increase which appears in the Revenue returns under the general head of "Stamps" is due to the addition which has been made to the Death Duties. But when we turn to the Income Tax, we find that that tax, which produced £3,890,000 in 1874–5, now produces £15,900,000, being an increase of £12,000,000during 12 years. Well, now, let the Committee realize that the total result of thes9 figures is to show that, whereas in 1874–5 the indirect taxes amounted to £42,500,000, and had fallen to £41,500,000 in 1886–7, the direct taxes, which amounted to £20,700,000 in 1874–5, ran up to £34,600,000 in 1886–7, being an increase of £14,000,000 in direct taxation. Do right hon. Gentlemen opposite realize the force of these figures? The force of these figures is that at the time when these proposals were made the Excise and Customs were at a higher point than they now are; therefore, it may be said that the whole increase in the Revenue is derived from the Death Duties and the Income Tax, or, in. other words, that it is the Income Tax payers who are practically called on to pay this large reduction in the National Debt. This is a point which I submit with some confidence to the Committee. I submit this—and I must protest against the course which right hon. Gentlemen opposite desire to take with regard to thi3 question—while you are holding these heroic views of our duty to pay off the National Debt, you really confine your efforts in that direction to putting an abnormally high tax upon one particular class of the community; and I ask the noble Lord and my right hon. Friend to inquire whether that tax is fair, whether it is not affecting those who pay it most oppressively, and whether, after what they have been called upon to bear during the past two or three years, it is not an intolerable hardship upon them that this heavy burden should be maintained, and that this tax should be kept up at such a high rate in time of peace? This is a question which I wish the country to consider. The real question is not whether we are to keep up the sum to be allocated to the National Debt at £28,000,000. If that is to be so, we ought to have some general revision of taxation which will carry out that idea equitably. At the time when Sir Stafford Northcote made his provision for the discharge of the Debt he explained that that provision would be dependent, in a great measure, upon the subsequent growth of the Revenue. I base the proposal, which I have had to make on behalf of the Government, not upon any abstract theories, but upon the fact that the Income Tax rests extremely heavily and inequitably upon one particular class, who are, therefore, entitled to relief whenever opportunity offers. These are considerations which I think will weigh with the Committee. Generally, we must act up to the maxim, with which I entirely agree, that we ought to pay off a large portion of the National Debt every year. We are paying off a large portion, and we shall continue to pay it off. £5,000,000 a-year, with the Income Tax at 7d. in the pound, is by no means a small contribution towards the reduction of the Debt. At all events, I repeat, it is £2,000,000 more than the amount which was thought sufficient by the right hon. Gentleman the Member for Mid Lothian (Mr. W. E. Gladstone) in 1874, when the prospects and position of the country were infinitely better than they are at the present moment. There is one more remark that I should like to make. If hon. Members will look at the whole situation in 1874–5, and compare it with the situation now, they will find that, in every respect, there was at that time room for statesmen to allow themselves to hope and believe that the Revenues of the country were going to continue to increase, that our manufactures and exports, and trade generally, would continue to progress as in times past. That, however, has not been the case. Are we to ignore entirely all that has happened during the last few years? Are we to act as if we were in the same financial position now that we were in those days? The right hon. Gentleman the Member for Mid Lothian said he thought it was a most fanciful argument; but I say that if we string the bow too tight, and continue to maintain, in time of peace, the Income Tax at 8d in the pound, in order to pay off the National Debt, we shall find some day that the Sinking Fund, which we want to preserve, will go with a run. That feeling has very largely influenced me and my Colleagues. We feel that it is not safe to rely too much on the willingness of the country to be taxed at so high a rate. I think it was the right hon. Gentleman opposite the Member for Edinburgh (Mr. Childers) who said it would be difficult to say why it should be safer that the total amount to be paid in respect of the National Debt should stand at £26,000,000 rather than at £28,000,000. I will tell him why it is safer—because, in that way, we can keep taxation on a more reasonable footing, and avoid the danger of a larger amount being knocked off in the end. I think it is better to deal with this matter in good time. For my own part, I attach quite as much importance to the reduction of the National Debt as any of those right hon. Gentlemen whom I see opposite. I trust, so long as I am in Office, to be able to stand by the figures which I have indicated. The noble Lord the Member for South Paddington has twitted me with having departed from the principles which I laid down in former speeches. I had almost forgotten to reply to the noble Lord on this point. Those were speeches in which, to express it shortly, I dwelt on the virtues of economy. Well, I stand by every one of those declarations.

LORD RANDOLPH CHURCHILL

In the Budget?

MR. GOSCHEN

The Budget has nothing to do with them. [Laughter.] Hon. Members laugh; but surely they are aware that in a Budget you accept the figures of the Estimates as they are presented to you. The Budget is no place to make great professions of economy. [A laugh.] Well, it may certainly be made an occasion for the utterance of those generalities which frequently pass muster for performance. It may be made an occasion when you can make a display before the public and say— "These are my Estimates for the year; I am sorry that they are so great, but wait until next year—I am a fanatical friend of economy, and you will then see what you will see." But I am no friend of such prospective professions of virtue. The present Ministry have had to deal with that extraordinary Expenditure which was incurred by the Government of the right hon. Gentleman the Member for Mid Lothian in the year 1884. In that year right hon. Gentlemen opposite came and proposed a large addition to the Expenditure, which cost us £6,000,000 for the Navy—I do not know how much more it may not cost us incidentally in other ways—and then they take us to task, and say that we are financially immoral, because we are not attempting to disgust the country by a very heavy Income Tax with the very Expenditure which they themselves incurred. Now, I ask, is it just for right hon. Gentlemen opposite to increase the Navy Estimates as they did at that moment, and then to cry out against our extravagance because we carry out their own plans. And with regard to the Army Estimates, I do not know that any great reductions were foreshadowed by the right hon. Gentleman who was Secretary of State for War when the late Government resigned. The noble Lord challenges me as to my views with regard to economy. I will give him my views of what is bad economy. In my opinion, it is bad economy when we have paid for ships to be built that we should not provide the guns with which to arm them, and that when we have provided the guns with which to arm them we should not provide ammunition for these guns. Last year the item for ammunition was seriously cut down. The new ammunition that was wanted for certain of the guns was not admitted by the late Government, and was not put into the Estimates. Now, economist as I am, I say that if you have got the guns you must have the ammunition to put into them. I am also inclined to believe that no Government should be satisfied until it has put our coaling stations into a proper state of defence. With regard to economy, I am as anxious as possible to welcome, and I am sure the Government will welcome and hail, the co-operation of the noble Lord. [Ironicalcheers.] I did not cheer the statements of the noble Lord in that ironical manner. I am speaking seriously. The noble Lord cheered before I had finished my sentence. I say we will welcome the co-operation of the noble Lord in endeavouring to check extravagance in every Government Department, and to cut down expenditure of every kind that is not necessary for defence. If the noble Lord had read all my speeches in which I refer to the subject—I could not expect him, perhaps, to do that—he would have found that I have always spoken strongly of the necessity of maintaining efficiency, yet, at the same time, of preventing extravagance; but it is not my idea of combining efficiency with economy, that when we have paid for ships to be built, we should not provide the guns with which to arm those ships, or that when we have provided the guns with which to arm those ships, we should not provide the ammunition for the guns? I have always paid attention, since I had the honour to preside over the Admiralty, to the necessity of maintaining proper economy in that Department, but I insist that all the general declarations of the noble Lord are subject to modification when put into practice. While, as I have said, the Government will welcome the noble Lord's co-operation in endeavouring to check extravagance and careless expenditure in every Department of the Government; it must be quite apparent to everyone, that to reduce the expenditure at the cost of needful efficiency is not the proper method to pursue, and the noble Lord knows that to starve the Navy or the Army is at once to reduce their efficiency, and to provoke a panic. The noble Lord asks me to give him an assurance that I will use my utmost influence in the direction of economy. I will pledge myself in that direction; I will use my utmost influence, and I believe I shall be supported, and that I shall be warmly supported, by my Colleagues. But I will not push that declaration to the extent of saying that it is absolutely possible to reduce the yearly number of our ships, the yearly number of our men, or the yearly number of our guns. That is a matter which has to be considered with the greatest possible care and anxiety, and with a due examination of the details in connection with the various Departments in which the expenditure is made. It would be folly for us to commit ourselves rashly to the assertion that it would be actually in our power to make reductions of £3,000,000 or £4,000,000 in the next year. The noble Lord quoted cases where, in his opinion, enormous reductions of expenditure could appropriately be made. So far as I am concerned, I most certainly trust that reductions will be made. I know that there are, and will be, reductions from the statements made to me by my right hon. Friend the First Lord of the Admiralty (Lord George Hamilton), and by the Secretary of State for War (Mr. Edward Stanhope). But I do not pretend to say that those reductions can be made on the heroic scale which is alluded to by the noble Lord. And if we cannot make heroic reductions, it is not possible, until we have revised our whole system of finance to continue to pay this£28,000,000 without injustice to one great class of taxpayers. I hope I have met or touched upon most of the points raised by the noble Lord and my right hon. Friend (Mr. W. E. Gladstone). I must apologize for having addressed the Committee at such length; but I felt that it was my duty, after the objections which had been urged against our plan, which I consider to be a safe and a prudent plan, and necessitated by the circumstances of time, to make the explanations which I have given.

MR. J. G. HUBBARD (London)

I desire to add my voice to those of previous speakers in acknowledgment of the remarkable ability displayed in the Financial Statement of my right hon. Friend the Chancellor of the Exchequer (Mr. Goschen), who comes to his Office strong enough in his own experience to take his own course unfettered by the traditions of the Treasury. My right hon. Friend will be under no obligation and under no inducement to make apologies for the ill-treatment of one class of people because other classes are treated in another direction; and he will be sure not to regard Her Majesty's subjects as mere material for taxation, because he is perfectly well aware that the happiness, prosperity, and morality of the community are powerfully in- fluenced by the nature of the taxes to which they are subject. Now we have heard a good deal about the progress of the National Debt, and of the duty which is incumbent on the Government of the day of diminishing that Debt, and the right hon. Gentleman the Member for Mid Lothian (Mr. W. E. Gladstone) has made a powerful attack upon my right hon. Friend the Chancellor of the Exchequer, because my right hon. Friend proposes to make changes in the charges on the Debt by a still further diminution in those charges relating to the service of the Debt. I will ask the Committee to recollect the enormous steps which have been already taken in the way of making reductions in this Debt. Not very many years ago the Debt used to be called £800,000,000; nowitiscalled£700,000,000odd, and that is because we have been gradually and steadily making, year by year, a diminution in the public Debt of this country. I do not know quite sufficiently to what extent my right hon. Friend the Chancellor of the Exchequer proposed to go when he stated that he proposes at present a diminution of £5,000,000 a-year in the National Debt. I do not know whether my right hon. Friend proposes that this should be an immediate diminution, which is to be subsequently increased, or whether he proposes that these £5,000,000 should become a permanent charge. I did not absolutely gather from the tenour of the right hon. Gentleman's remarks whether the right hon. Gentleman proposes to deal with the £28,000,000 as a charge to the National Debt; but I rather thought that he mentioned the lower figure of £26,000,000 for that purpose. And if he did, I am not surprised at that. When the £28,000,000 was proposed I myself offered resistance, because I believed that the taxation could be assessed on a more reasonable basis. In my opinion, the only way in which the redemption of the Debt can be practically, and work-ably, and steadily pursued is by fixing on a given determinate amount, and by seeing that this fixed amount shall be applicable to the reduction of the Debt. If the Government decide on that amount, whether it be £5,000,000, £6,000,000, or £7,000,000, they should manage so to compute the Terminable Annuities that they would redeem every year £5,000,000. This is much preferable to using the balance of a fixed sum which remains after paying the interest, because the balance constantly increases as stock is redeemed. There is another subject referred to by my right hon. Friend the Chancellor of the Exchequer, in regard to which I should like to make a few remarks, and that is, as to the incidence of the Income Tax. The right hon. Gentleman has spoken about the inequalities and hardships which result from the incidence and working of the Income Tax, and I think that he spoke very properly on the matter. But to me it seems that when the Chancellor of the Exchequer proposed to deal with the Income Tax, instead of taking off £1,000,000 from the tax, what he should have done was to have adjusted the tax all round. In this manner the same amount of remission would have been made, and everybody would have been equitably dealt with. It would appear that the Income Tax is very generally condemned; but, for my part, I have not observed that there is any disposition to give it up. There is one striking instance of the inequality and hardship of the Income Tax, to which I am very anxious to call the attention of the right hon. Gentleman the Chancellor of the Exchequer. The interest to which I refer is the agricultural interest which has already been mentioned in the course of this debate. The inequality of the working of the tax is felt most severely by this interest, because its representatives to the number of hundreds and hundreds are suffering most acutely. Within the last few years rents have fallen so enormously, that on many estates the unfortunate owners have nothing whatever of residue wherewith to pay the taxes levied on their gross nominal income. I consider that the position of the landed interest in regard to the Income Tax is a crying and obvious grievance. I put it to the Chancellor of the Exchequer, and I hope I may not do so without result; that in this regard the question of the Income Tax is not to be treated simply by taking a penny from the tax, but by an inquiry which should be made into the whole matter with the view of removing the injustices, hardships, and gross inequalities which make the Income Tax a shame and a scandal to the country. I should like to mention with regard to economy, that I do not find anybody in this country or in Parliament who is in favour of extravagance, but I find this, that what the people of this country will insist on is efficiency. Thus the country must be properly defended both without and within. There must be a sufficiency of forces on sea and on land to ensure peace and order at home, and the safety and dignity of the country in its foreign intercourse. These are very necessary duties on the part of any Government. By all means let grievances and abuses be ameliorated or remedied; but for Heaven's sake let us have an efficient Army and Navy, and I am sure that the country will not grudge to pay for such necessary efficiency. I do sincerely trust that before my right hon. Friend the Chancellor of the Exchequer brings forward his Budget another year, he may have and embrace the opportunity of so adjusting his plans as to present the House with the acceptable and welcome gift of an adjusted Income Tax.

MR. CREMER (Shoreditch, Haggerston)

I would like to ask the right hon. Gentleman the Chancellor of the Exchequer, whether his attention has been called to the fact, that the proposal which he has made in regard to the reduction of the Tobacco Duties will have the effect of throwing out of employment some thousands of operatives engaged in the manufacture of tobacco and cigars in the Metropolis. I am not aware whether the right hon. Gentleman has been informed on this matter, but the circumstances as they have been detailed to me areas follow:— I am told that the manufacturers of cigars and tobacco in London are in the habit of keeping only a very limited supply of the raw material in stock, thus having from week to week to get out of bond the necessary quantity of raw material to enable them to manufacture the tobacco and cigars for public consumption. Now, it appears that the amount of stock which the manufacturers have in hand will be consumed during the present week, and I am informed that some hundreds, or even thousands, of operatives have been warned already that on Saturday next their services will be dispensed with until the 21st of May, which I believe is the date fixed by the right ton. Gentleman the Chancellor of the Exchequer for the introduction of the new Budget proposal. If the Chancellor of the Exchequer is able to see his way clear to effect that reduction immediately, or from the 1st of May, instead of deferring it to the 21st of that month, the result would be that the thousands of operatives who have now been notified that their labour will not be required for about three weeks or so will be able to continue their employment, and such a course will certainly give much satisfaction, not only to the operatives and manufacturers of tobacco and cigars in the Metropolis, but to the thousands of persons and families dependent on these for their employment and sustenance. I shall be obliged to the right hon. Gentleman if he will inform me whether he is of opinion that the reduction is capable of being dated from the first of the month for the benefit of the thousands engaged in the tobacco industry?

MR. GOSCHEN

The question was brought to my notice just before the House met this afternoon, and I should like to say to the hon. Member (Mr. Cremer) that it involves a matter with which I can scarcely deal myself without considering or taking advice. At any rate, I have undertaken to see representatives of the manufacturers and others engaged in the trade to-morrow with the view of obviating the danger which has been pointed out to me. I shall be very glad to receive suggestions as to the means of meeting the difficulty from anyone connected with the trade.

MR. TOMLINSON (Preston)

The right hon. Member for the City of London (Mr. Hubbard) has called attention to the hardship and inequality of the incidence of that Income Tax in regard to the case of the landed interest. I would submit that there are similar inequalities and hardships in the incidence of this tax as it affects coal and other mines. The tax, as levied upon the mining property, is admitted to be excessive in proportion to other industries. The owners of colleries claim, as a matter of right and justice, that in calculating the amount of their profits for the purpose of assessing them for Income Tax, they ought to be allowed a fair proportion of the capital expended in opening the mines and making them productive. I hope that the Government will endeavour, between now and next year, to provide some more equitable mode of assessment, and I would like very much to receive an assurance to this effect. It is most unfair that the profits of mines should be calculated for the assessment of Income Tax without allowing the owners, before the sum is estimated upon which Income Tax is to be paid, to deduct a fair proportion of a fund to replace their capital expenditure.

SIR JOHN LUBBOCK (London University)

The right hon. Gentleman the Chancellor of the Exchequer has, no doubt, pursued the usual course, and I am very far, therefore, from alluding to it in any spirit of complaint; but I think we are rather at a disadvantage in discussing Resolutions which are not upon the Paper. I would like to learn from the right hon. Gentleman the Chancellor of Exchequer whether it would not be possible another year to put the Resolutions on the Paper. I do not propose, on the present occasion, to make any Amendment with reference to the Income Tax charge on farmers' profits; but, at the same time, I should like to direct the attention of the Chancellor of the Exchequer to the point which is very worthy of consideration, whether it is fair that English farmers should be called on to pay more than Irish or Scotch farmers. If I heard the Resolution read at the Table rightly, I consider that it is an injustice, that under existing circumstances the English farmers should be called on to pay 3½d. as against the payment of 2½d. by the Irish and Scotch farmer—a difference of 1d., which is very considerable. Under the circumstances when the tax was originally levied, I should like to understand clearly on what basis the calculation will be made if it is elected to make an assessment on the basis of Schedule D? I suppose, in that case, the rate would be the same. It appears to me that the agricultural interest is suffering so much at the present time that it might very well attract the remedial attention of the right hon. Gentleman the Chancellor of the Exchequer. Then I should like to point out, with regard to the Tobacco Duties, that even if the consumer got the benefit from the proposed reduction —even if the tobacconists gave their customers the full advantage—about which, by the way, there appears to be very considerable doubt—still, it is an advantage which will only benefit a portion of the community. I think that there are other duties the reduction of which would have been more generally felt. Thus, for instance, if the Tea Duties had been reduced, everyone would have shared in the benefit, for almost everyone drinks tea. But, besides women—and in this House consisting of men elected by men, I think the interests of the women should be carefully looked after—there are a large number of men who do not smoke, and I think that these facts should have been considered before the Tobacco Tax was reduced. Again, I am not at all sure that even those who do smoke would consider it worth while to have this reduction, or are in favour of the remission. I do not know at all whether the smokers believe that the proposal will benefit them. I feel that I could almost leave them to decide; though I do not say that I would leave them to do so at the present moment, because I am afraid that the temptation is too great. But after the year has elapsed, if we were to ask them what did they think it would have been best to do with this £500,000— to have paid off the Debt or to have smoked it away—to have less Debt or to have smoked more, I doubt very much whether even the smokers themselves would be very grateful to the right hon. Gentleman the Chancellor of the Exchequer for his proposal. Surely there are very few people in this country who would not then be prepared to say that this sum would have been more usefully employed if it had been applied to the reduction of the Debt instead of remitted from the Tobacco Duties. The Chancellor of the Exchequer, in justifying his reduction of the amount devoted to the repayment of Debt, observed that the right hon. Member for Mid Lothian (Mr. W. E. Gladstone) only paid off £3,000,000 of Debt in 1874. But the right hon. Gentleman (Mr. Goschen) seems to forget that the charge for the interest of the Debt was then very much higher than at present, the interest being now very much di- minished owing to the amount since paid off. Now, I would wish to add my appeal to the right hon. Gentleman (Mr. Goschen) to reconsider his proposal to, as the right hon. Gentleman himself described it, "tamper" with the National Debt. I would put it to him that surely, under the circumstances, £7,000,000 is a very small sum to apply to such a purpose. We must all feel that in a time of peace like this that amount towards the reduction of the Debt is no such very heroic effort after all. We must remember that it is not as we sometimes think, a matter of £7,000,000 out of £100,000,000, but in reality it is a matter of £7,000,000 out of £1,000,000,000, which is, speaking roughly, the income of the country. The whole subject, however, has been so ably and well treated by the right hon. Gentleman the Member for Mid Lothian (Mr. W. E. Gladstone) and others who have addressed the Committee, that I will only allude to one point which has not, so far as I am aware, been referred to. If we were able to reduce the interest on the National Debt, we might be able to save at once about £3,000,000 a-year. Now, if we were to follow steadily and firmly in the course sketched out for us by Sir Stafford Northcote on this subject we should, in a few years, be able to reduce the interest on the National Debt very considerably. I am speaking against my own interest as a holder of Consols; but yet I am sure we have only to make an effort and the interest on the Debt could be reduced. At present the Two-and-a-Half per Cents stand at 91, and if the right hon. Gentleman the Chancellor of the Exchequer had adhered to the existing arrangements the tendency would be to raise the Two-and-a-Half per Cents, and then we should be enabled to reduce the interest on the National Debt. I am quite satisfied that if a firm and steady policy were pursued, in a very few years we should be able to secure this great boon.

MR. RANKIN (Herefordshire, Leominster, N.)

I feel that I must, and in common with many other speakers, express my appreciative approval of the speeches on the Budget of the right hon. Gentleman the Chancellor of the Exchequer. At the same time, I must say that, in my opinion, there are fairer ways of relieving the burdens of local taxation than that of allocating local taxes to the districts in which they are levied. It would be much better, I think, to grant sums in aid or subsidies from the general wealth of the country. In rural places the amount raised by the Carriage Tax, for instance, is very small, but I admit that it has been wisely stated that the better way would be to take the tax as a whole, and distribute it proportionately to the local rates. It is on this point that I would like to make one remark. It appears to me that the principle of allocating local taxes in the manner proposed by some, is an objectionable one. I am glad to see that the Secretary to the Local Government Board (Mr. Long) is in his place, as this is a matter which ought to be taken into consideration when the Local Government Bill is being drafted. For instance, the poor rates are higher in a poor than in a rich district, while, at the same time, in a poor district there are not so many carriages and armorial bearings; and, therefore, these poorer districts would not be so much benefited by transferring these taxes in aid of local rates. It does seem to me it would be a far fairer way of granting alleviation to local rates to get hold of the general wealth of the country, and to give a subsidy from that general wealth rather than to allocate certain taxes in the manner proposed. I do not know whether the Chancellor of the Exchequer will again make any remarks in the course of this debate; but, if he does, I should be glad to hear a little further explanation of the question of the rolling annuities, which, I think, was not quite so clear as some other parts of his able speech. I am very glad indeed that some assistance has been given in this Budget to local rates; and I hope that the principle of granting subsidies rather than allocating local taxes will not be lost sight of altogether. I look with great satisfaction on the proposal of the Chancellor of the Exchequer with regard to allowing farmers to pay Income Tax on their real profits; and I trust that that will be an incitement to the farmers to keep better accounts than they have hitherto done.

SIR EDWARD BIRKBECK (Norfolk, E.)

I will not detain the Committee more than two or three minutes, but I wish to say a few words with reference to the agricultural interest. It is with great satisfaction that this interest throughout the country has received the Budget proposals of the right hon. Gentleman. They knew well enough that they could not expect a great concession from the right hon. Gentleman; but they did look for a small concession, and that they have received, and they have received it with considerable gratitude. And I would venture to say as regards one point, whether or not the agricultural depression exists at the present moment as regards the Eastern Counties, the depression at the present moment is more severe than it has been at any time during the past eight or 10 years. There are a number of farmers who are struggling, and are now on the verge of bankruptey; and I feel perfectly convinced that this small concession which has been made by the right hon. Gentleman the Chancellor of the Exchequer will be received by them with great satisfaction and encouragement. I wish to point out to the Financial Secretary to the Treasury one point as regards Schedule D. I hope he or the Chancellor of the Exchequer will see his way to allowing this question to be brought before every Chamber of Agriculture, and before such men as Mr. Clare Sewell Head, in order to get some assistance to enable them to arrive at what would be the best form on which farmers could fill up the Return in Schedule D. Now, it is as well to point out that farmers' valuations never can be very correct. The valuation they make at Michaelmas cannot really be reliable; and I do not hesitate to say that the Chancellor of the Exchequer may be deceived upon this point as to the amount that will be received in respect to farmers' Income Tax in the future. But, at any rate, I hope the Government will consider (his point as regards the best form for farmers to fill up under Schedule D. There is one matter that has been received with great disappointment in the agricultural districts, especially in barley - growing counties; and I regret very much indeed that Her Majesty's Government have not seen their way to make a very small concession to the tenant farmer. The point is this. Inasmuch as the last two Governments have in the one case taken off 2s. from the cottage brewing licences, reducing them from 6s. to 4s., and in the other case, of the late Government, have swept away those taxes entirely; it is a matter of great regret that the present Government have not extended this concession to farmers who brew home-brewed beer for their own consumption, or for consumption on their own farms by their labourers. It is a matter of great injustice that inasmuch as labourers are now able to brew practically free of all tax and of duty, that tenant farmers have not only to pay a Licence Duty, but that they have to pay 3s. a bushel as a tax upon every bushel of malt that is used by them in brewing, and that, notwithstanding that the Malt Tax is abolished. This beer that is brewed by farmers is a necessity. It is a necessity at harvest time; it is a necessity in hay time and at other periods, when they are compelled to give their farm labourers a certain amount of beer to assist them in their work, which has to be carried on under great difficulties. This beer which the farmers are in the habit of giving to their labourers is perfectly pure beer. It is not heavy beer, and the labourers are none the worse for it, and it is considered by the agricultural interest as a great injustice that they should be subject to this tax—not only that they should be subject to a Malt Tax, but that they should have to pay in addition this Licence Duty. On this point I might remind the Committee the fact that in the cider-growing counties, where the farmers have no tax to pay, they give their labourers cider, but there is no tax and no duty to pay, while in the case of beer the unfortunate farmers have still to pay not only their licence, but, as I say, the Malt Tax. The malt that is consumed by these farmers is made from barley grown on their farms, and it seems to me a very great injustice that they should have to pay a tax upon it inasmuch as there is no duty on barley that comes from abroad. It is a great hardship that their own crops should be taxed to this great extent, and that they should be subject to two visits every quarter from the Inland Revenue officers to inspect their brewing papers. The loss to the Revenue, by making the concession I propose, would not be more than £30,000 or £35,000 a-year, and I earnestly hope the Chancellor of the Exchequer will take the matter into his serious consideration. I would only say further that the agricultural interests are most grateful to the Chancellor of the Exchequer for what he had done for them in a time of very great distress. I think that his Budget is an instalment of justice, and I hope he will see his way in the future to continue to make further concessions to England's greatest interest, which is at the present moment suffering so severely.

MR. EDWARD HARRINGTO'N (Kerry, W.)

The hon. Gentleman who has just sat down seems to think that this Budget is an instalment of justice, but I venture to say that it is just because it is not an instalment of justice that it has been so severely criticized. It seems to me that the first act of justice is to take measures for paying your debts, but in this Budget it seems to me that the main proposal is that you should, to a certain extent, refrain from paying off that which you owe. The hon. Member calls this an instalment of justice, but if it is doing justice to anybody it is only doing justice to yourself. I cannot conceal from myself the fact that taking off 4d. from the Tobacco Duty is calculated to be more or less a popular measure on the part of the Chancellor of the Exchequer, and I do not think that the popularity of the right hon. Gentleman in this respect will be confined to one class of the community. I do not think that the Tobacco Duty is a question of the classes or the masses especially. It is one of those points on which there is a community of taste between the classes and the masses; but I would wish to show even on that point that those who smoke the better class of tobacco will benefit sensibly by the reduction of this impost, while I believe that the average working man, who smokes the cheaper and commoner class of tobacco, will not benefit sensibly at all. I do not see—and it is a plain matter for the Committee to understand—I do not see, especially now that farthings are Boycotted or driven out of the market altogether, I do not see the poor man is to get his tobacco cheaper by this proposal of the right hon. Gentleman. They pay 3d. an ounce for it at present, but will the right hon. Gentleman's proposal enable them to get it at 2¾d.? Some time ago, when farthings were used, they might have done that, but the farthing now we know is practically not current, and the result is that the poor man will have to pay the same amount for his tobacco as he does now. The manufacturer of tobacco will derive some benefit, no doubt; but what I want to impress on the Committee is that there is no ground for representing to the public that the average consumer of tobacco is obtaining any relief from the proposal of the right hon. Gentleman the Chancellor of the Exchequer. The right hon. Gentleman said to-night that the manufacturers of tobacco are now going to be honest—that they are now going to put less water in their tobacco. Well, Sir, if, as is practically admitted by the right hon. Gentleman, it has been the practice of the manufacturers to water their tobacco; if it is the fact that the Officers of the Crown have not been able to reach them for the purpose of preventing that practice hitherto, how are any twinges of conscience likely to make them do it now? There is no reason in the world why they should not continue the practice. In fact, they will make more by it. The Chancellor of the Exchequer says he has made inquiries on the subject of all the manufacturers of tobacco, and they have invariably answered him— ''Oh, yes, we are now going to be honest, and as you have been good enough to take off 4d. in the pound upon our tobacco, we are going to give the benefit of it to the consumers, and are going to take 4d. in water out of the tobacco." Well, it does seem to me that to apply to those concerned in a guilty transaction in order to get from them an assurance that they have been at fault in the past, but that they are going to give up their malpractices in the future, is adopting a bad and a fatal policy. It is fatal, to my mind, in arriving at the honest and sincere truth. It is not only this matter that we have to complain of, but I think we also have a right to complain of the wider measures adopted by Her Majesty's Government—measures which would come more under the head of political proceedings than this. We have to complain that Her Majesty's Government, and all Governments that have had the confidence of Her Majesty, have from time to time derived their in- formation of certain conditions and wants of the people from those who have been guilty of malpractices. I ask the Committee whether it is right that this system should be pursued, and that information should be gathered from those who are likely to give them biassed and garbled statements? Here they are seeking information with regard to the adulteration of tobacco, and with regard to the benefit which consumers are likely to derive from manufacturers who have tacitly acknowledged that they have adulterated their tobacco with water to such an enormous extent. I should have much preferred, and I think the Committee would have much preferred, that the right hon. Gentleman should have given us impartial evidence on the matter. The Committee would have preferred. I think, any other evidence than what, I think, I am at liberty to designate as a flimsy and unreliable assurance, given through his mouth, of the manufacturers of tobacco, who, by their own admission, have been guilty of the adulteration of the weed up to this. I was particularly struck by a remark made a moment ago by the hon. Baronet who addressed the Committee on this matter, when he said that though you are taking off £2,000,000 from the payment of debt, you are deriving no advantage from it, and that it is only to be smoked away. Yes; it is to be smoked away, but your smoke is to be none the cheaper. As to the other part of the Budget, we are told that the revenue derived from the operation of the Carriage Tax is to be applied towards what may be called relief through local taxation. I was listening to the right hon. Gentleman when he was making his proposal, and when he declared that he had delved into every corner and had come back with his hands full. Well, perhaps he did come back with his hands full; but when he went to open his fingers, he lifted many of them, but left one little finger closed for Ireland. He gave Ireland only £50,000, and what is it to be used for? He said it was to be devoted to arterial drainage. Well, I entirely object to devoting money to that object. I have no objection to loans being granted when you can get the slightest security that they will be used for the purpose of improvement of a remunerative class, that those who receive them should afterwards pay them back again; but I say if you have anything in the nature of a grant, practically it would be far better to give it to the poor fishermen, and not to bestow it on the improvement of the land, or, in other words, to put it into the pockets of the landlords. I do not intend at any great length to criticize the financial proposals of the right ton. Gentleman. I do not pretend to any great capacity on financial matters at all; but I do think that there is a significant lesson to this country in the fatality and foolishness of the policy the Government are pursuing, when there is practically in the hearts, if not on the lips, of all the Members of this House an unanimous condemnation of the proposals of the right hon. Gentleman, and when this Committee has not the heart to speak it out. And why? Because, according to the statement of the noble Lord (Lord Randolph Churchill) the hands of the Committee are tied. They are tied because of certain great political issues that are at stake. It seems to me that the policy of this country, as represented by the discussion that has taken place, is that you are scratching your nose for fear that you may advance one iota towards the gratification of the Irish demand, for fear that the noble Lord may hamper the Government, for fear that the support of the Unionist crutch may be lost, or for fear that the alliance between the two great Parties might be affected. The noble Lord only enters into a half-hearted criticism of what he should have thoroughly condemned, of what he should have more justly and with more credit to his political views opposed tooth and nail. I venture to say it is the same uncertain sound that will proceed from these Benches, from these particular corners of the theatre I may say—it is the same uncertain sound, though in their hearts as sound financiers they must condemn the policy promulgated by the right hon. Gentleman the Chancellor of the Exchequer. That policy, I venture to say, is not even the right hon. Gentleman's own, but is rather forced from him by the character of the circumstances. Though the right hon. Gentleman and the Gentlemen who sit on these Benches above the Gangway in their hearts condemn these Budget proposals, yet the fear of producing a sensible effect upon the present political stability of the Government, for fear they may injure the prospects of what is called the Union, which really only means the Union between the Liberal Unionists and the Tories, for fear that it may in any way affect them, there is no hearty outspoken condemnation of the Budget which every sound financier as far as I gather most earnestly condemns in his heart. I think that is a lesson to the people of England; and as the constant dropping of water wears the stone, I think that constant lessons like this from night to night as we progress even in the ordinary business of the House, and the ordinary business of Committee when we are in Committee—I think these constant lessons, affecting almost every subject, will gradually be instilled into the minds of the people of this country, and that they will see that the Government and their allies are turning the affairs of the country topsy-turvy in order simply to maintain a ferocious attitude towards the Irish people. Sir, if I were to speak for a great length of time I could not more strongly express the views I entertain upon this matter. I do not think that all the artificial effort which is made on behalf of the Budget of the right hon. Gentleman that it is a popular one with the public; and still less do I believe that it will be a popular Budget with future historians of political economy in this country. I suppose my condemnation of the proposals of the right hon. Gentleman will not very much affect him, but I heartily agree with those who say that after all the right hon. Gentleman seems to have been a huge failure. Great things were expected from him. The noble Lord (Lord Randolph Churchill) went out on questions of economy and retrenchment; and here is a Chancellor of the Exchequer who came in with the highest traditions attaching to his name—traditions so high that we really thought that the Tories would out-Radical the Radicals themselves in the matter of retrenchment. It strikes me, however, that the right hon. Gentleman is one of those who is going to out-Jingo the Jingoes. This seems to be his policy. He does not want you to pay your debts. He does not want you to touch the great spending Departments of the Army and Navy. He is in reality a Tory wolf posing with a fleece upon him, and is going in more and more for a policy of expenditure. When he has a chance of letting the country feel something of its own folly, as has been well suggested to him by the noble Lord the Member for South Paddington, he takes the false attitude of putting the country under the impression that the taxation is light and satisfactory. The method he adopts is by suspending the normal payment in discharge of the National Debt in a time of peace. It has been well pointed out by the right hon. Gentleman the Member for Mid Lothian (Mr. W. E. Gladstone), that with all the depression which existed, and with all the depression which still exists, in the country, that still the accumulated wealth of the country has increased; and certainly if the repayment of the National Debt from year to year could not have been increased, it should at least have been maintained at the former point. I maintain that this Budget, if Members would only speak out and be honest—if they would only declare the thoughts that are in their minds—is an unpopular Budget, not only with them, but with the country. I think that despite the fictitious and false effort that is made to throw dust in the eyes of the public by certain papers, that the Budget will be found to get more and more unpopular, and I shall not be astonished if these proposals, though, perhaps, not at the present moment, still in the future, will be the very means of annihilating the present Government.

MR. T. P. O'CONNOR (Liverpool, Scotland)

I desire to say that this Budget—

Notice taken that 40 Members were not present; Committee counted, and 40 Members being found present,

MR. T. P. O'CONNOR

I must say that the Budget which has been presented by the right hon. Gentleman the Chancellor of the Exchequer is enough to make everybody who believes in the honesty of the finance of this country despair. If I thought there was one man in Parliament to be trusted to bring in an. honest Budget it would have been the right hon. Gentleman who now fills the post of Chancellor of the Exchequer, and yet if ever there was a dishonest Budget it is the Budget of that right hon. Gentleman. Now, I am not going over the ground so ably trod by the noble Lord the Member for South Paddington. He read to us quotations from the speeches of the right hon. Gentleman with which the House is familiar. The right hon. Gentleman has the quality of being able to put his ideas into perfectly clear and unmistakeable language, and accordingly he is in the unfortunate position of having in his own words given the most eloquent and most damning testimony against the proposals in the present Budget. I had the advantage of listening to nearly the whole of the speech of the right hon. Gentleman in introducing his Budget, and I must say I found in it very small defence for the proposals he has made. As I understand his argument in support of the proposal for the suspension of a part of the payment in reduction of the National Debt, he said there was a want of any elasticity in the Revenues of the country. Differing from so high an authority as the right hon. Gentleman, I see in the fact which he makes the strongest argument in favour of his proposal, an argument not in favour, but against, that which he proposes. I should like the Committee to go back for a moment and give attention to the beginning of the policy which the right hon. Gentleman has now interrupted. I suppose there is no one who heard the speech at the time, or who read it here—and you, Sir, who sit in that Chair, less than anyone else—who will have forgotten the remarkable speech in which Mr. John Stuart Mill for the first time aroused this country to a real sense of its financial position. Mr. John Stuart Mill pointed out that while the liabilities of the country remain stationary, or were largely increasing, the resources of the country were liable to reduction, were liable to steadily diminish; and what Mr. Mill said then was, and what remains just as true now as it was in his day, that we were bound as faithful guardians and custodians of the finances of the country to leave the country small liabilities, because we wore leaving it small assets. Now, I ask how that theory squares with the arguments of the right hon. Gentleman the Chancellor of the Exchequer? He says that the Revenue does not show elasticity, or, in other words, that the wealth-producing power of the country, in stead of showing a tendency to increase, shows rather a tendency to diminish; and because the Revenue of the country shows rather a tendency to diminish, he founds an argument upon it towards arresting the payment of the Debt which we are to leave to the country. Why, that, Sir, appears to me to be the most illogical and even the most absurd argument that was ever addressed by a man in the position of the right hon. Gentleman the Chancellor of the Exchequer to the House of Commons. I would put it in the best way, and say that the very fact that our Revenue shows no sign of elasticity makes it more our duty to leave a greater clearness from debt to the people who come after us. The right hon. Gentleman the Member for Mid Lothian was able to point out that the action of the right hon. Gentleman the Chancellor of the Exchequer was not only bad in itself, but was not justified by any precedent on the part, if I remember rightly, of any Liberal, or even of any Tory Predecessor, in the position of the right hon. Gentleman. He is able to point out, that when a Liberal Chancellor of the Exchequer found himself compelled to pause in the admirable work of paying off the National Debt, he had an ample apology for that course in some extraordinary or even gigantic demand on the resources of the country through an unforeseen and great emergency. I hold that it is but in order to meet a great loan, or in order to pay a great Vote of Credit caused by preparations for war or the danger of war—I hold that it is only on a precedent drawn from a circumstance of that description, which would entitle the Chancellor of the Exchequer to interfere with the fund for the payment of the National Debt. We are at peace, and, in spite of our having a Tory Ministry, I am hopeful that we may remain at peace. Perhaps that may be one of those many hopes that are destined not to be realized; but I found that hope mainly on the fact that though the Tories are in Office, the Liberal Unionists are in power. As, however, I have seen almost every Liberal principle abandoned this Session by the Liberal Unionists, I am not perfectly assured that we may not have the Government proposing some entirely unjust and causeless war amidst the ringing cheers of their faithful supporters, the Liberal Unionists; but I would fain go on in the hope, seeing the Liberal Unionists are in power, that in spite of the fact that they are such close allies of the Tory Government, we shall not be called upon to go to war, at least for some time to come. Therefore, we are face to face with this fact, that the Chancellor of the Exchequer pauses in the payment of our Debt in the midst of peace, or, in other words, adopts a war measure at a time when the tranquillity of the country is assured, and there is a prospect of peace being maintained for some considerable time to come. I should like to ask hon. Gentlemen on both sides of the House who are intending to support this action on the part of the Chancellor of the Exchequer, if they think it probable that this country will remain at peace? It may be that if a Liberal Government were in Office at the present moment, recent events in Afghanistan would afford the hon. Member for the Eccles-hall Division of Sheffield (Mr. Ashmead-Bartlett) material for daily interrogation of Ministers and for speeches throughout the country, declaring that the glory of the Empire was about to fade, and that the safety of India and the integrity of the Empire were at stake and were being sacrificed. Well, Sir, the Member for the Eccleshall Division is, happily for the country, muzzled for the present by having a position in the Government. Therefore, we are able to look upon affairs in Afghanistan with a certain amount of tranquillity; but it may be that by-and-bye we shall have another Afghan scare. It may be that by-and-bye we shall have the Tory Party again putting the Ministry of the day on the daily rack of imprudent and unjustifiable interrogation, and we may, as a consequence, have another large Vote of Credit. Well, Sir, what provision are we making for that period? We are making provision for a period like that by exhausting our resources at the present moment, and by ceasing in the great work of leaving to the future generations of this country something like a reasonable amount of debt. I am surprised that of all the people in the world the right hon. Gentleman the present Chancellor of the Exchequer should have adopted such a profligate course of financial extravagance. In season and out of season, against Tories and against Liberals, against his political opponents and against his political friends, he has preached the great doctrine of honest finance. I do not think the noble Lord the Member for South Paddington much exaggerated when he said the right hon. Gentleman has hitherto been regarded not merely as the apostle, but as the canonized saint of finance; though the noble Lord's theology is inaccurate, for at least a century is required to pass before a canonization is contemplated by the Church in which that ceremony takes place, and I am afraid that when the century has passed away few of us will have any chance of even making a claim for canonization, especially for finance and our other proceedings in this Assembly. But here we have now the saint of finance, the Pope of finance, absolutely stepping down from his throne with the three crowns and becoming schismatic on the question of finance. Why has the right hon. Gentleman the Chancellor of the Exchequer done this? "Evil communications corrupt good manners"—that is a quotation which has been rather a favourite of late; I believe it has been applied to the right hon. Gentleman the Member for Mid Lothian (Mr. W. E. Gladstone) in connection with his association with hon. Members belonging to the Party with which I usually Act. But I should be sorry if the right hon. Gentleman the Member for Mid Lothian could point to such a degradation of his political principles, and such a departure from all his lifelong political preachings, as we are able to point to in the case of the right hon. Gentleman the Chancellor of the Exchequer since he became a Member of a Tory Government. Why has been this interruption in the payment of the National Debt, because the right hon. Gentleman has become a Tory Democrat; and a Tory Democrat means a man who opposes all real progress and all genuine reform, and offers instead a series of sops to the appetites and to the prejudices of the public. The right hon. Gentleman pauses in the redemption of the National Debt. Why? Because by so doing he is able to deceive the public by a series of small diminutions in their taxes. If the right hon. Gentleman were free from the trammels in which he has involved himself, if he were sitting on the Front Opposition Bench as a Liberal, we can all imagine the indig- nant eloquence, the fervid rhetoric, and the romantic enthusiasm with which he would describe as infamous the Budget of a profligate Tory Minister who brought forward proposals of this kind. What are the sops the right hon. Gentleman has given to the public? He takes 1d. off the Income Tax. As one who pays a small amount towards that taxation, I should feel a little grateful for the remission if I thought it were purchased fairly; but so long as the tax remains in its present position it will be illogical, unjust and unfair; so long as the Income Tax does not make a distinction between the property which has been handed down from father to son for generations, and will be so transmitted during future generations, and the poor, transitory and uncertain income which a professional man makes out of his own brain, and loses with his own death—so long as Income Tax does not make a distinction between incomes of these kinds, it will be an illogical and an unjust tax, pressing heavily where taxation ought to press lightly, and pressing lightly where it ought to press heavily. I cannot look upon the reduction of the Income Tax as sufficient compensation for our dishonesty in leaving to future generations the Debt undiminished; but then are we to look for compensation to the dole, as it has been properly called, in the shape of Carriage Tax. I must say that if I were in the rig-lit hon. Gentleman's position I would have blushed when I heard the quotations from my speeches made by the noble Lord the Member for South Paddington, in reference to the impregnable union which should exist between local taxation and local self-government. What is the answer of the right hon. Gentleman? We hear of a Local Government Bill that is still in the future. I venture to doubt whether that Local Government Bill will ever be proposed; and I have still greater doubt whether that Local Government Bill will ever be passed. Nothing will please me better than to see the right hon. Gentleman and his Colleagues get all the facilities we can give them for the production of their Local Self-government Bill, for I am perfectly sure that it will be either so Radical as to be sure of rejection by hon. Members opposite, or so reactionary as to be sure of rejection by hon. Members on this side of the House. But on the strength of a paulo post futurum, uncertain, problematical, self-government Bill, the right hon. Gentleman tramples on all his previous speeches as to local taxation and local self-government going together. The final consolation for this dishonest evasion of our duty is the reduction of the Tobacco Duty. I am glad to see a reduction on the necessaries, and on some of the smaller luxuries, of life. I regard smoking as a stupid and rather unhealthy habit; tobacco is only fit for people who have good nerves, and I sympathise with the desire of such people to obtain that tranquillity from the weed which never produces anything in me but excitement and irritability. But, nevertheless, I want to know where the relief in the shape of tobacco comes. The right hon. Gentleman acknowledges that the relief will not come to the person who smokes the tobacco. Of what interest is it to us to know that the manufacturers of tobacco—who are an extremely wealthy body of men as a rule—will make more money. Will it reduce the price of the ounce or the half-ounce to the poor artizan who finds in tobacco a substitute sometimes for breakfast and a tranquillizer in the evening? On the contrary, the working man who pays 3d. an ounce for his tobacco now will pay that price for it in the future. Either the right hon. Gentle-man has done too much or too little; if he had reduced the tax on tobacco to such a point as would have enabled the working man to get his ounce of tobacco for 2d. or 2½d., then I say the right hon. Gentleman would really have made a concession to the working classes of this country. When he leaves the reduction of the taxation at such a point as to leave the price of tobacco to the working man exactly as before, I say relief is given to a class which does not want it, and is withheld from the class which does require it. I do not mean to occupy the time of the Committee any longer; but I have, I think, set forth very proper objections to the proposals of the right hon. Gentleman. I am the more encouraged to bring my observations to a close from the knowledge of the fact that this is not the last occasion on which we shall have a struggle with the right hon. Gentleman on his financial proposals. He cannot himself be unconscious of the fact that these proposals have not met with a favourable reception in the country. Even his body organ in the Press has denounced his proposals, and if it were not for the fact that hon. Gentlemen behind him know he is one of the ablest remaining partitions between them and destruction, his proposals would meet with as strong opposition from them as they do from hon. Members on these Benches.

MR. J. M. MACLEAN (Oldham)

The hon. Gentleman the Member for the Scotland Division of Liverpool (Mr. T. P. O'Connor) has enlivened his speech with some very familiar taunts against the Liberal Unionists, which now crop up as often as Mr. Dick's memorial. But the hon. Member has also said some strong things about this Budget. He said, in the first place, it had been condemned by the country; I should say that there has not been a Budget of late years which has been received with so much favour by all the different classes of the country. The hon. Member also very much misinterpreted the argument used by the right hon. Gentleman the Chancellor of the Exchequer (Mr. Goschen). The right hon. Gentleman said that in the present state of depression of trade which has prevailed for some years past the Revenue is very inelastic, and therefore it is well to give the taxpayers some relief. But the hon. Member thinks that if the Revenue is inelastic that is a reason why you should try and got more out of the taxpayers. According to that argument the less money people have the more the Chancellor of the Exchequer should take from them. Again, the hon. Member said, suppose wars arise; the Income Tax is the great engine you use as relief in case of war; but if you now do not pay off the Debt you will have heavier burdens to be paid off in time of war. Surely, if you reduce the Income Tax by 1d. and leave the money in the pockets of the people their resources are greater, and when we call upon the country for some great expenditure the better able will it be to bear it. We have heard to-night a speech from the right hon. Gentleman the Member for Mid Lothian (Mr. W. E. Gladstone) which seems to have given the cue to the hon. Member for the Scotland Division of Liverpool to denounce this Budget as a dishonest Budget. The right hon. Gentleman the Member for Mid Lothian is an eminent authority, and we all listened to him with the respect that any speech coming from him deserves; but I must say that to-night when I listened to him I was struck less by the force of his argument than with the versatility of his financial genius. The right hon. Gentleman has not always acted up to the lofty and rigid standard of financial orthodoxy which he now sets before the House. What was his own conduct in that period of leaps and bounds when he was at the Exchequer? Was he in the habit of devoting all his surplus to the payment of Debt? When he had one of those surpluses at the time the Treasury was overflowing with wealth and the only difficulty was to know what to do with the surplus, did the right hon. Gentleman devote his funds to the payment of the National Debt? We all know he acted in what he considered a much more judicious manner—he devoted the surplus to remitting many taxes which pressed heavily on the country. If hon. Members wished it I could give particulars from a large number of Budgets for which the right hon. Gentleman was responsible, when he had very considerable surpluses, and when he used the money for the reduction of taxation. The right hon. Gentleman has been virtuously indignant this evening because, he says, we have lost the old finance of English statesmen, and we are actually afraid of maintaining the Income Tax at the poundage which was thought not very high some 45 years ago, when Sir Robert Peel first introduced the tax; and we are told that this tax was placed at 7d. in the pound. One might think that if the right hon. Gentleman was so exceedingly anxious to pay off the National Debt he would, while he controlled the finances of the country, have maintained the Income Tax at least at 7d. in order that he might devote the money he got in that way towards paying off large amounts of Debt. But what did he do? Let me give the Committee figures from one or two of his Budgets, and show what he did with his money. In 1863–4 the right hon. Gentleman had a surplus of £3,750,000, and he immediately reduced the Income Tax 2d. in the pound. In 1864–5 he had a surplus of £2,500,000, and he reduced the Income Tax by 1d. Then we had Mr. Lowe as Chancellor of the Exchequer, and of course at that time the right. hon Gentleman the Member for Mid Lothian was as much responsible for Mr. Lowe's Budget as he had been for his own previously. In 1872–8, Mr. Lowe had a surplus of £3,600,000, and he reduced the Income Tax by 2d. in the pound— namely, from 6d. to 4d.—the cost of which operation to the Revenue was £2,700,000. Such was the financial policy of the right hon. Gentleman the Member for Mid Lothian while he was in Office. But look what a different tale he has to tell now, when other men have the responsibility of administering the finance of the country. Let me ask the Committee to consider what are the circumstances in which Sir Stafford Northcote in 1875 fixed this figure of £28,000,000 to be paid annually for the formation of a Sinking Fund for the redemption of the capital of the National Debt. The finances of the country were then, as the right hon. Gentleman the Chancellor of the Exchequer has pointed out, in a very flourishing and elastic condition, so much so that the Income Tax had been reduced to 2d. in the pound, and at that period the yield of the Income Tax had risen by 75 per cent. That was a more remarkable proof of the steady progress in the wealth of the country. Well, then, at that time, Sir Stafford Northcote pointed out that in 1860 the right hon. Gentleman the Member for Mid Lothian made large remissions, through the falling in of Annuities, amounting to £2,000,000 a-year, and reduced the payment of Debt from £28,000,000 to £26,000,000 a-year. Now, the right hon. Gentleman the Member for Mid Lothian to-night has said there never has been a time in his recollection when the annual payment towards the Debt has reached so low a figure as £26,000,000. But here, in 1860, the sum of £28,000,000 sterling, which had been before that time paid towards the reduction of Debt and payment of interest, was reduced, from the falling in of Annuities, to £26,000,000 sterling a-year; and the right hon. Gentleman the Member for Mid Lothian, instead of renewing those Annuities, seized upon the money and applied it to the reduction of taxation, in order to make himself popular in the country. Sir Stafford Northcote, when he determined to increase the amount to the old figure, £28,000,000 sterling, said he calculated on the ordinary growth of the Revenue to pay £28,000,000 sterling without distress; but he never said this figure was to be maintained for all time if the people of the country could not pay it without distress. On the contrary, he said that a case might very well arise, such a case as has arisen now, in which a future Chancellor of the Exchequer might be inclined to put off the Sinking Fund; and Sir Stafford Northcote added— If the circumstances of the country should materially alter, it would be only right to take steps to take off that which we now propose to put on. I think these words show that Sir Stafford Northcote foresaw that occasions would arise in which it might be justifiable and prudent for the Chancellor of the Exchequer to reduce the amount annually paid in liquidation of the Debt. Now, the only other question is whether in the present instance a fair occasion has arisen for taking off 1d. of the Income Tax. I maintain that this remission of 1d. of the Income Tax is an act of justice which has been too long delayed. We all of us know how very severely the payer of the Income Tax has been punished in recent years. We have had a number of little wars, and a number of other events, entailing large expenditure, happening during the last 10 years, and invariably the Income Tax has been increased for the purpose of meeting the extraordinary expenditure. It may be said that the payer of the Income Tax has had to discharge the whole cost of the long series of disasters and ghastly failures which mark the record of the inglorious Administration of the right hon. Gentleman the Member for Mid Lothian. When Sir Stafford Northcote fixed the annual National Debt payments at £28,000,000, the Income Tax stood at 2d. in the pound. The poundage has been increased since then. In fact, I find that during the last 10 years the Income Tax payers have contributed to the National Treasury £60,000,000 more than they would have done had the tax stood during these years at the figure of 2d. Have the people who pay Income Tax had their means increased so largely that they could bear these extraordinary demands upon them? It was one great point in the speech of the right hon. Gentleman the Chancellor of the Exchequer that of late years the tendency has been towards a larger and a wider distribution of wealth among all classes of the people, and that amongst professional and trading classes there has been a general and considerable shrinking of incomes, and that, therefore, the burden of the Income Tax has been felt very much more severely by them. In fact, a large part of the capital of the country has been transferred from the professional and trading classes, who pay Income Tax, to the wage-earning classes, who pay no Income Tax at all. I think, therefore, that a very fair case indeed has been made out now in time of peace, and when we have no prospect of any great and sudden emergency, for the Government to give the payers of Income Tax that relief which they have been so long entitled to. There is only one other point on which I will trouble the Committee. It has been said that this money might have been got by economy, and that that would have been better than getting the money by ceasing to pay a portion of the Debt. The noble Lord the Member for South Paddington (Lord Randolph Churchill) has expressed, in very pungent language, very admirable sentiments on the subject of economy, and I am sure that if, when we come to discuss the Estimates in Committee, he can give a more precise form to his criticism, and show us where in the Army, Navy, or Civil Services we can make certain retrenchments, without reducing the efficiency of those Services, he will do a valuable work for the State. But I cannot see what necessary connection there is between the question of economy and the question of reducing the annual payment of the National Debt. If we have great economy made in the Public Service I am sure the payers of Income Tax, or the consumers of tobacco, will be happy to have a still further reduction in the amount of taxation. There is no reason why economy should not be practised simply because of the particular scheme the right hon. Gentleman the Chancellor of the Exchequer has set before the House, Economy is not merely a matter of saving money, but the getting of money's worth for what we spend; and that is the economy the country has really set its heart upon. I do not believe, judging from my experience of popular constituencies, that there is a man in this country who would begrudge the payment of any amount of money to give England a strong and efficient Navy; but the public will complain—and complain with reason—if the administration of the Services is inefficient, and if they cannot see clearly that they are getting a fair return for the money they contribute to the State. Now, in connection with this subject, I may mention a point which I ventured to raise during the debate on the Navy Estimates. I noticed that the right hon. Gentleman the Chancellor of the Exchequer the other night in his speech, and again this evening, spoke of the very heavy charge that has been made during the last two or three years for the purpose of putting the Navy on a proper footing, as a temporary and exceptional charge, and he held out hopes to the taxpayers that, now that temporary and exceptional charge has done its work, now that we have once more a strong and efficient Navy, in future years we may hope to see the Navy Estimates reduced. But I cannot gather from the statements made by the noble Lord the First Lord of the Admiralty (Lord George Hamilton), and by others connected with the Admiralty, during the debates on the Navy Estimates, that that is likely to be the case. I give all possible credit to the noble Lord the First Lord of the Admiralty and his Colleagues for the good work they have done since they went to the Admiralty. I believe we never had a better Board of Admiralty or one more anxious to do its duty to the country than the present Board, but I cannot help saying that I do not see from their statements that we are to look for any reduction in the naval expenditure. I think it will be a pity if the Government encourage the taxpayers of the country to look forward to any great reduction in the cost of the Navy, unless it is intended that such reduction should be really carried out. I thank the House for having listened to me with so much indulgence, and I assure the right hon. Gentleman the Chancellor of the Exchequer of my hearty support.

MR. SYDNEY BUXTON (Tower Hamlets, Poplar)

If we assume that the surplus of the right hon. Gentleman the Chancellor of the Exchequer (Mr. Goschen) is justifiably obtained, I, for one, believe that the remissions which the right hon. Gentleman proposes are fairly distributed amongst the different forms of taxation. I think it is clear that the addition which was made to the Tobacco Duty some 10 years ago was of no fiscal advantage, and that it was too small to enter into the price of the article, and, therefore, I am glad that the right hon. Gentleman has seen his way to take off that additional duty. But I wish to point out that the right hon. Gentleman had ample surplus at his disposal for giving that remission without interfering with the repayment of the Debt. When we heard that the right hon. Gentleman had joined a Conservative Government, many of us were glad, because we believed that we had at least in him a Chancellor of the Exchequer of very great financial stamina; and the noble Lord the Member for South Paddington (Lord Randolph Churchill) has quoted a good many sayings of the right hon. Gentleman, which gave us reason to believe that he would show pluck in his financial proposals. I am afraid, however, after what we have heard, that we must change our opinions on that point, because he seems to desire to maintain his surplus merely by plundering the Sinking Fund. I do not wish to detain the Committee at any greater length than may be necessary for me to say a few words on that part of the proposals of the right hon. Gentleman. He says that those who oppose his proposals have dealt in generalities. I will endeavour to avoid that, and to grapple with his arguments closely. I understand that the chief argument of the right hon. Gentleman, which he urges in support of his proposal, is that when this Sinking Fund was first introduced, the burden on the taxpayers was not so heavy as it is now, and that the burden was not so heavy on the Income Tax payer as it is at the present moment. But the whole of that argument seems to me to be founded on the assumption that in 1877, when the Sinking Fund really came into force, the amount applied to the redemption and interest of the Debt was sufficient. But we are equally entitled to assume that the amount applied in that year to the reduction of Debt was not sufficient. The right hon. Gentleman in his speech this afternoon, and also in his Budget Speech, talked almost entirely of the reduction of Debt instead of the whole burden of the Debt charge. He said that in 1874 we only applied £3,000,000 to the reduction of the National Debt, and that now we are applying £7,000,000. But I think the question is, not how large a sum we annually vote for the reduction of the Debt, but what is the total amount of Debt burden. The right hon. Gentleman spoke throughout as though the £28,000,000 applied in 1877 represented a great and heroic effort to meet our Debt Charge; but that was, after all, very much less than we had been paying in previous years, and was but a poor attempt to emulate the courage and virtue of our forefathers. The right hon. Gentleman can hardly have looked back to the old accounts, and to the times when our forefathers were willing to pay £32,000,000 a-year for a considerable time, and later on for 20 years, when, even after the Income Tax had been introduced and was at 7d. in the pound, they were content, although the Revenue in many ways was very inelastic, to apply £28,000,000 a-year, and sometimes £29,000,000 a-year to the interest and reduction of Debt. The right hon. Gentleman now proposes to apply for that purpose only £26,000,000. In 1859, when the Income Tax was 9d. in the pound, the nation was ready to pay £28,600,000 towards the Debt. The right hon. Gentleman seemed to imply that we had no right in considering this matter to compare with the present position the wealth of the country as it stood 20 or 30 years ago, when the nation was paying this amount for Debt, and that we ought to look at the matter purely from the point of view of the Income Tax. I do not want to trouble the Committee with figures; but if hon. Members will refer to the public accounts, they will see that in trade, shipping, Income Tax assessments, and other matters, the wealth of the country is somewhat about double what it was in 1860, whereas the burden of taxation has actually only increased to the small extent of 15 or 16 per cent. I do not know why the right hon. Gentleman should refer to the large Income Tax we are now paying, and use it as an argument for reducing the Debt charge, because, while we were only half as rich at the time to which I have referred, the Income Tax was 2d. or 1d. in the pound more than it is at the present time. I have endeavoured to show the Committee that in former days our ancestors and predecessors, and even men of the present time, were content and willing to bear a heavier burden than is now proposed, while the wealth of the country was infinitely less and while the taxation was proportionately greater. In changing the incidence of taxation, we have, no doubt, placed more on Income Tax and less on indirect taxation. But in discussing this question, we ought, after all, to look at the amount of the taxation, and not at the way in which taxes are at present derived. The burden on the taxpayer is the same, whether it comes from indirect taxation or whether it is derived from direct taxation. The right hon. Gentleman proposes, however, that at the present moment we should pay the smallest actual sum that we have ever applied to Debt, and he proposes, taking into account the wealth of the country, that we should apply a far smaller amount than we have ever applied at any former time. The right hon. Gentleman supports that proposition on the ground that the mode by which we have of late suspended the Sinking Fund is not satisfactory. I would ask how often and under what circumstances has the Sinking Fund been suspended? Will the Committee believe that since the Crimean War we have only three times in any way suspended the Sinking Fund? I am, of course, speaking only of actual suspensions. When from 1877 to 1880 the Conservative Government rejoiced in considerable deficits, there was, no doubt, suspension, but it was not the form of suspension which the right hon. Gentleman now contemplates. As I have said, the Sinking Fund has been suspended only three times since the Crimean War; first in 1858, by Mr. Disraeli; and again in 1885 and 1886; and yet the right hon. Gentleman is so afraid of temptation arising to future Chancellors of the Exchequer, that before such temptation does arise he desires to remove all possibility of their being induced to disturb the Sinking Fund. To prevent future temporary suspension of the Sinking Fund, he proposes permanently to suspend it, so that there will be no chance of anyone else interfering with it hereafter. It seems to me that the right hon. Gentleman is not entirely logical. He says it is not safe to leave the Sinking Fund at its present figure, and he pro- poses to reduce it in order to make it safe. But if that is so, why does he not reduce the Fund still further, and so make surer still of preventing its future suspension? The right hon. Gentleman pluckily proposes that when money is required and there is stress, it should be raised by taxation, rather than by the suspension of the Sinking Fund, and he tells the Committee that it will be a most wholesome restraint that the Sinking Fund should not be available to meet any extravagant or costly undertaking. But the actions of the right hon. Gentleman are stronger than his words. He proposes, in time of peace, that the Sinking Fund should be suspended, but that in time of war it should be the duty of a future Chancellor of the Exchequer to maintain the Sinking Fund by additional taxation. But, of course, there is all the difference in the world between imposing and maintaining taxation, and if the right hon. Gentleman is, in time of peace, unable to maintain taxation, it is only natural that no Successor of his will be able to impose taxation for the purpose of maintaining the Sinking Fund in time of war and trouble. The serious view of this question seems to me to be this —that the right hon. Gentleman is tampering with the system of Terminable Annuities. The great advantage of the system of Terminable Annuities was said to be that it was automatic—that the interest and principal were so intermingled that the public was not aware of the amount paid off; and ever since the creation of Terminable Annuities they have never, with one exception, been tampered with. This is the first instance, except in 1885, that a Chancellor of the Exchequer has come down and asked the House to suspend the system of Terminable Annuities. The right hon. Gentleman, the other night, said that he did not propose to tamper with the system of the Sinking Fund "to any great extent." I may call the attention of the Committee to the use of the word "tamper" by the right hon. Gentleman, which I find is defined by Johnson as "meddling without fitness or necessity." I think, therefore, the right hon. Gentleman has used a most proper word in describing his own proceeding. But I do not believe there is any degree in "tampering," and to tamper at all is just as bad as to tamper to a considerable extent. I am surprised to find the right hon. Gentleman falling back upon the very old excuse that it is "only a little one." The right hon. Gentleman seemed very much afraid the other night that we should pay off Debt at too rapid a rate. He said if we only "steadily persevered" in the system which he proposes, that we should pay off our Debt in, I think, 56 years, and he seemed to be afraid that it would not be long before we should be loft in the deplorable position of having no Debt to pay off. But all depends on whether the system of payment is persevered in. Sir Stafford Northcote in 1875 estimated the amount which his Sinking Fund would redeem in 30 years—something like £230,000,000 if the system were only "steadily persevered in." My right hon. Friend the Member for South Edinburgh (Mr. Childers) was also going to payoff £170,000,000 in a few years if the system he proposed were "steadily persevered in." But I should like to know who is going to guarantee steady perseverance in the system which the right hon. Gentleman proposes? He cannot guarantee it himself, and he certainly cannot stand sponsor for his Successors, for if the right hon. Gentleman starts on his career by plundering the Sinking Fund, it is an absolute certainty that his Successors, following Ms high example, will still further pilfer the Sinking Fund. I believe it to be a most important matter that no effort should be relaxed which tends to the reduction of the National Debt, The Americans are rapidly paying off their Debt, and it will not be so long before the force of circumstances will compel them to embrace the principles of Free Trade. I then fear that England, with this great burden of Debt hanging upon her, will find it very difficult to compete in the markets of the world with the Americans as Free Traders and without Debt. For the sake of our trade, and our commercial supremacy, it is essential that our efforts to reduce the National Debt should in no way be relaxed.

MR. GILLIAT (Clapham)

I should like to bear my testimony to the remarkable ability which the right hon. Gentleman the Chancellor of the Exchequer (Mr. Goschen) displayed in holding our attention for three hours on Thursday last to a Budget of great intricacy. I do not myself know whether to admire most the Budget itself, or the admirable answer which he made to the noble Lord the Member for South Paddington (Lord Randolph Churchill) upon that part of the Budget which he most strongly attacked—namely, the reduction of the National Debt. It seems to me that the whole of the right hon. Gentleman's Financial Statement hinges on two points—one, the reduction of the Income Tax, and the other, the reduction of the Tobacco Duty. These, at any rate, are the main reductions to be made. I think there is only one opinion about these in the House, and that is that they are cordially approved. I think also that the right hon. Gentleman has most properly brought before the House the condition of the Income Tax payer, and shown us that the relief has been given to a class which richly deserved it, and which is really impoverished by the present rate. In doing this, I think the right hon. Gentleman has fully established his claim that the present rate of taxation is excessive. On the other point—the reduction of the Tobacco Duty—I can speak with some little authority. I congratulate the right hon. Gentleman on the courage which he possesses, and which he has shown in proposing to reduce that Duty, because it is now known and appreciated that it was on that Sir Stafford North-cote made a financial mistake when he raised the Tobacco Duty, in the teeth of the protestations of the trade, who made at the time two prophecies, both of which have been fulfilled. One of them was that the increase of Revenue would be counterbalanced by the loss inflicted on the trade; and the other that it would lead, in some cases, to a large increase in the amount of the water used in the manufacture. I myself know of cent per cent of water being used. I believe, also—turning for a moment to other sources of Revenue—that the proposal to increase the Stamp Duty on the transfer of Debenture Stock is one which is both thoroughly approved and thoroughly just, because there is merely a substitution for the previous stamp, and inasmuch as Debenture Stock occupies a favourable position just now, and is being accepted as a trust investment. Therefore, as it is less liable to transfer and disturbance, I consider it fair that the Duty should be increased. The next point I desire to refer to is that most admirable part of the Budget which proposes to transfer the item of local loans from the general Budget to a position by itself. I think that both the principle and the means by which the right hon. Gentleman proposes to effect this arrangement is thoroughly sound. It was, I think, obviously desirable that local loans, in which the public is so much interested, relating as they do to harbours, gas, water, prisons, improvements of labourers' dwellings in England and Scotland, and other works, should occupy a position of their own; and I regard the action of the right hon. Gentleman in this respect as eminently statesmanlike. I consider also as financially sound the proposal which I understand the right hon. Gentleman makes with regard to Treasury Bills. Then I come to the permanent charge of £2,000,000; and I cannot see that there is anything inconsistent in the determination of the right hon. Gentleman to persevere with the reduction of the National Debt, and his arrangement with regard to the Sinking Fund. I pass over the proposal relating to local relief with the remark that I do not lay stress upon it, because it is of a very small matter. But with regard to the reduction of the Tobacco Duty, I can assure the Committee that this reduction will give great satisfaction to the trade. I believe considerable mischief was done by increasing the Duty, which had the effect of destroying the business of the small manufacturers, and giving the public that which was hardly tobacco at all; and I think the right hon. Gentleman has done wisely in uniting with the reduction of Duty the limitation that the amount of water shall not exceed 35 per cent. The limit of 35 per cent is correct; but I remind the right hon. Gentleman that, as the law exists, tobacco is illegally imported with less than 10 per cent of moisture. This was found to be necessary owing to the practice of a Jersey smuggler, who kiln-dried his tobacco to such an extent that the Revenue was defrauded. It is true that the tobacco usually sold at 3d. an ounce is shag, and it is that class of tobacco where the right hon. Gentleman's arrangement will be felt. I will not go farther into details now; but I may refer to the fact that I have a letter from one of the leading manu- facturers, who says that the month allowed for clearing out stock will be a fair allowance of time. It was not made clear in the Budget whether the proposal of the right hon. Gentleman was intended to apply to cigars as well as tobacco. [Mr. GOSCHEN: No.] The right hon. Gentleman says "No." I do not intend to stand up and defend the protective doctrine; but I point out that there has been a reduction formerly from 9s. to 5s. 6d. a pound on cigars, and I think a good deal might be said about what is called the rich man's luxury and the poor man's necessaries of life. I congratulate the right hon. Gentleman on his being the first Chancellor of the Exchequer who has been willing to meet a first deficiency with the view of prospective gain, and I think the right hon. Gentleman, especially in his reply to the noble Lord the Member for South Paddington, has vindicated his character as an economist, which we all know he has through life professed.

MR. HENEAGE (Great Grimsby)

I congratulate the right hon. Gentleman the Chancellor of the Exchequer (Mr. Goschen) on his statesmanlike and courageous Budget—courageous, because he has set forth to the country the real financial situation, and thought it right that the country should know the truth rather than live in a fool's paradise. I believe that our trade is slowly improving, and that we shall not feel any real benefit for a good many years to come; I believe, also, that the Revenue has not felt the full force of the depression which has been experienced up to the present time, and that under Schedules A and B we shall yet see a larger reduction than there has yet been. The landlords have been paying on the whole amount of the rents as they were 10 or 15 years ago, and the tenants have been paying in accordance with the assessment at half rents. They have then been paying on what they have not received, and although this has not yet been apparent, it will soon prove to be the case. Some hon. Members will think that I have placed this matter rather too strongly; but when we know that rents have fallen from 20 to 30 per cent, and that the profits to the farmers have been nil, I think it is extraordinary that, between 1875–6 and 1885–6, the decrease in the amounts paid under Schedule A, which is the Schedule under which land contributes to the Revenue, was only 10 per cent. In 1875–6 the amount produced by 1d. was £250,000, whereas in 1885–6 it was £225,000, or, as I have said, a decrease of 10 per cent. As a matter of fact, if the amount had been reduced 25 per cent, it would have been much nearer the figure. With respect to the farming profits, the amount received in 1875–6 was £74,000, whereas in 1885–6 it was £52,000, or a diminution of 30 per cent. But that, I believe it will be said, does not represent the true state of the case; and I think, when the proposal of the right hon. Gentleman the Chancellor of the Exchequer takes effect, and when the farmer pays upon the profits he has been realizing the results will be very different. I am of opinion that the way in which farmers were assessed was injurious to them in more senses than one. If they had been compelled to keep accounts they would have known their financial position better, and there would not have been so many bankruptcies as has been the case, for they would not have lived so much above their means. I think the proposal of the right hon. Gentleman will be a great boon to the agricultural tenants, and I am sure that they will heartily thank the right hon. Gentleman for it; they will avail themselves of the advantage held out to them, and, like small traders, many of them will pay no Income Tax at all. With regard to the subvention of highways, I hope the right hon. Gentleman will not think that I am ungrateful if I say I cannot heartily agree in that proposal. In 1883 I was the Seconder of the Motion of Mr. Albert Grey, and I am still of opinion that the reform of local government and local taxation ought to go hand in hand. I am afraid that any subvention given to agriculturists will prevent them urging on the reform of local taxation as they ought to do; but, at the same time, I perfectly agree that there has been great remission of taxation in other ways, and that it was time the agricultural community should get something. Therefore, I will not look a gift horse in the mouth; but I, for one, am rather sorry the gift has been made in the form proposed, and I trust we shall all bear in mind that it is but a temporary arrangement. I do not think that this proposal came in the first instance from the right hon. Gentleman the Chancellor of the Exchequer, but rather that it came from the deputation which waited on him—the deputation which was composed of hon. Members who have gone about the country inciting farmers to look to nothing but fair trade for assistance; and if the proposal of the right hon. Gentleman in any way stops the mouths of those who are preaching this pernicious doctrine I believe that the result will have been very cheaply obtained. I will not go into the question of the Tobacco Duty, but wish to thank the right hon. Gentleman for the way in which he has dealt with the question of local leans; and if this were the only point in the Budget, the Budget would have been a great one, because it will enable us to produce order out of chaos. I trust the right hon. Gentleman will look to the question of currency, because I believe that it has a great deal to do with the agricultural question. With regard to the Sinking Fund, in the presence of so many great financial authorities—all differing from one another—I think this a question in which we should be very careful how we decide; but I cannot see how Liberal Members can object to the proposal of the right hon. Gentleman, because when it was made in 1875 the great financial authorities of the Liberal Party on this side of the House all declared themselves against it. The right hon. Gentleman the Member for Mid Lothian (Mr. W. E. Gladstone) did not believe that the plan could be practically carried into effect, and moved an Amendment to the Bill before the House which would have destroyed the proposal; my right hon. Friend also the Member for South Edinburgh (Mr. Childers) opposed it, and said, with reference to the £28,000,000, that the plan, in his opinion, required very deep and careful consideration, and that it was simply a plan to secure credit for a large reduction of the National Debt by applying during the next 10 years a less sum than had been applied by the late Government. Certainly I do not think that the proposal of the Sinking Fund received very cordial support from the Liberal financial authorities then sitting on this side of the House. I, for one, am not prepared to vote against this proposal when it is brought forward with the authority of the Executive Government of the time. As a matter of fact, the National Debt has been in process of extinction faster than was anticipated in 1875, and since that time the Income Tax has been increased by 6d. in the pound, and the expenditure by £13,000,000; and the question is now whether the House and the country will have an extra 1d. placed upon the Income Tax, or postpone for a few years the payment of the National Debt. I, for one, contend that the Income Taxpayers, who have borne the whole of the increased charge, have a right to some remission; and, therefore, if the Government adhere to their proposal, I shall give them my support.

MR. SCLATER-BOOTH (Hants, Basingstoke)

I have always been of opinion that there has constantly been a great deal of subterranean influence under the surface affecting the way in which the question of the reduction of Debt has been bandied about in this House. I think that the only legitimate way of reducing Debt is by applying to it the surplus of Revenue over Expenditure, and that is the mode in which the National Debt of our American cousins has been reduced. The hon. Member for the Poplar Division of Tower Hamlets (Mr. Buxton) has let the cat out of the bag in a truly Liberal spirit in saying that the great advantage of Terminable Annuities was that the object of them was withheld from the people. That may be a good argument; but it is not a good argument as coming from a Liberal Member of Parliament, who ought to address not only the hon. Members of this House, but the constituencies out-of-doors. If the people of this country were consulted, and the question were put to them whether they would have these enormous sums of money raised by taxation when Consols were standing at 102, I think they would all answer "No." When it comes to be necessary to keep up the Income Tax to 8d. in the pound in time of profound peace to effect this reduction, the question then assumes a very serious aspect. Let it not be forgotten that all the windfalls in the shape of long annuities falling in have been withheld from the taxpayers of the country. Hook upon the reduction of the charge upon property as the most important and vital feature of the Budget; it is one which, above all others, I desire to see effected, and I am glad that my right hon. Friend has the courage to do it. Property has borne too large a share of the public burden, and unless a courageous Chancellor of the Exchequer takes it in hand, there is little hope that it will be properly assessed. I agree with the right hon. Gentleman the Member for Great Grimsby (Mr. Heneage) that the falling off under Schedules A and B has not yet been fully felt in our Revenue returns, partly because the applications for reduction of rent have not all been formally made, and partly from the construction and machinery of the Property Tax Acts, which render appeal very difficult, and a matter of great embarrassment to the public. But I have felt for some years the great danger involved in continually adding to the Property Tax, and I rejoice, therefore, to see what I may call this leading feature in the Budget; while I am comparatively indifferent as to the mode by which that result is to be accomplished. I think no one will doubt that for many years Free Trade has been of enormous advantage to the country; but I believe, if the originators of that principle looked back, they would think that some review of the sources of our Revenue might very well be undertaken. I was one of those who waited on the right hon. Gentleman the Chancellor of the Exchequer (Mr. Goschen) a few weeks ago, and urged upon him to take into account the peculiar condition of agriculture at the time. It is true that the question of the subvention in aid of the roads was mooted by the spokesman of the deputation; but I own that I agreed to that proposal with some reluctance, because I feared it would have the effect of displacing the question of reduction of the Property Tax from the position which it ought to occupy; but as both objects have been achieved by the right hon. Gentleman the Chancellor of the Exchequer I can only express my sincere gratitude for what has been done. Now, objections have been taken to the subventions; hut they have been in operation for 15 or 16 years, and I want to know what would have been the position of the ratepayers at this moment if they had been postponed until the time had arrived for the revision of the system of local government under the Bill which has been so long promised? The right hon. Gen- tleman the Member for Wolverhampton (Mr. Henry H. Fowler) the other day sneered at these subventions, and said that the rates were far heavier in the towns than they were in the country. That is no doubt the case; but the reason is that the town rates are in respect of gas, water supply, cleansing, and sewerage, which give, in point of fact, so much additional value in houses occupied, and the cost of these is in no sense additional taxation in the real meaning of the term. Now, the advantage of the proposed subvention is that it will go, for the most part, in aid of expenditure which is borne by the agricultural community, thus alleviating one of the grievances by which they are afflicted. I believe the right hon. Gentleman the Chancellor of the Exchequer connected the announcement of his gift with the expression that it represented the produce of a tax on locomotion. Matters have changed somewhat since it was my duty to examine into this subject. I believe it would result in failure and disappointment, and he almost an impossibility to assign the Carriage Tax to the Local Authorities with the idea that the arrangement would bring about an equal and fair distribution of taxation; but I am of opinion that the produce of the tax dealt with as my right hon. Friend proposes will produce the effect which he desires to see. But if the Carriage Tax were collected locally and expended locally, the greatest anomalies and unfairness would arise as between town and country. I believe that were there a measure for the reform of local government, to which so many of my hon. Friends look with much enthusiasm, it would be found that the Carriage Tax would not be to their advantage if taken in aid of local taxation. It is not my intention to occupy the time of the Committee at any considerable length to-night, partly because the debates so far have been conducted with the greatest ability, and all the points have been thrashed out, and partly because we are approaching the end of the evening and the Division. But with regard to other points of the Budget, I may say that I heartily agree with the proposal in reference to the reduction of the Tobacco Duties. I also entirely acquiesce with the proposal as to roads, and the amount paid in discharge of the National Debt. I think it a wise and statesmanlike pro- posal. I think there is every expectation, if we only have the patience to wait a little longer, that the burden of Debt will be reduced in. a much more effective, natural, and proper way, by the lowering of the rate of interest paid on it. I thank the right hon. Gentleman for the Budget he has laid before the House and the country. I believe it to be popular, and I am quite sure that it will be accepted by the House.

MR. CHILDERS (Edinburgh, S.)

I should like to address to the Committee a few remarks on the Budget of the right hon. Gentleman the Chancellor of the Exchequer (Mr. Goschen); and I would say, what I indicated the other day, that, looking at the extreme complication of the subject, I think my right hon. Friend held our attention for three hours in a marvellously successful way. To me, who am fond of figures, his speech was a great pleasure, and I think to everyone who takes an interest in financial matters the same statement would apply; and I may say that we, none of us, during the three hours to which I have referred, either lost our time or our patience. Having said so much with regard to my right hon. Friend's speech, may I be allowed to say that I would divide his Budget into two parts—one I may call the natural part, and the other the artificial part. The natural part of his Budget was that in which he dealt with his surplus of about £1,000,000, against which he charged the loss in respect of the Tobacco Duty, the £330,000 contribution to the roads in Great Britain and other purposes in Ireland, and other small charges, leaving still a small surplus; and what I may call the artificial part of his Budget was that in which he reduced the charge for the reduction of the National Debt by close on £2,000,000, which he applied to some increased charge in connection with local loans, but mainly to the reduction of 1d. in the Income Tax. As to the natural part, perhaps my right hon. Friend will allow me to make one or two remarks, not in a hypercritical spirit, but really to elicit facts, and possibly to offer suggestions. There is, in the first place, the proposal to add to the duty on Debenture Stock, and to bring under the same class of security in respect of duty as shares and other securities current in the City. But I would ask my right hon. Friend if he has considered whether there were any other Stocks besides Debenture Stock, the stamps on which might be altered if he is going to make this excellent reform? I remember that the same proposal came before me in 1884, and that I did make some alteration in respect to the stamp on the transfer of foreign Stocks; but it was plain to me that the time would come when all this class of duties might be rearranged; and I think that my right hon. Friend will find that there are four or five other duties on securities which, if he is going to carry out this operation, he may include in his Bill. Possibly he is including them. He has taken the most important in the first place; but I dare say he intends to deal with some others. I would also refer to the change which he proposes to make, which I think would be an advantageous one, in the reduction of the Tobacco Duty. The increase which he proposes to take off was undoubtedly made in the time of Sir Stafford Northcote for a specific purpose, and I wish to do Sir Stafford Northcote this justice, and say that he himself declared that that was only a temporary addition, and that he hoped the time might come when the increase might be taken off. I remember his saying that in this House, and also in a letter to those engaged in the tobacco trade. I think my right hon. Friend, therefore, is only carrying out the promise given by a former Chancellor of the Exchequer. There are two points, however, upon which I have grave doubts as to whether my right hon. Friend's calculations are perfectly sound. I would point out that there is a palpable mistake in the estimate my right hon. Friend has made of the failure in the fiscal point of view of Sir Stafford Northcote's increase, and if he is mistaken in that it is not impossible that his estimate of decrease of revenue may be mistaken also. I should like my right hon. Friend to follow me in these figures I am about to quote—the Tobacco Duties increase between the years 1870–8, before the duty was raised, was about 2 per cent per annum. Since 1879, the first year of the increased duty, it has increased at the rate of 1½ per cent per annum. The figures I have before me, and my right hon. Friend I dare say is familiar with them. You may say, at first sight, that this shows the increase has not been since the duty was raised what it was before; but when you take the article tea, you will find that, whereas between 1870 and 1878 the duty on tea increased at the rate of 6 per cent per annum, the increase since 1878 has only been an increase of 3 per cent per annum —that is to say, nearly half the rate of increase of the duty before 1878. If, therefore, you compare tea and tobacco, you will find that the falling-off in the annual increase of the produce of the Tea Duty has been considerably more than the falling-off in the annual increase of the produce of the Tobacco Duty. I do not draw any conclusion from that; no one could do so, unless he is in possession of the facts.

MR. GILLIAT

Has the right hon. Gentleman taken into consideration the increase of population?

MR. CHILDERS

That applies equally to tea and tobacco, and it does not affect my argument. The falling-off in the annual rate of increase in the total produce of the Tea Duty has been such as to make that increase half what it was before 1878; whereas upon the Tobacco Duty the falling-off in the rate of annual increase has been very much less, and that does not look as if, from the financial point of view, Sir Stafford Northcote was wrong. I hope my right hon. Friend has followed these figures. Again, my right hon. Friend proposes, as to marine insurances, to reduce the lower rate duty. I think he said that where the rate of premium on marine insurances is 2s. 6d. or less, he proposes to reduce the duty from 3d. per cent to a fixed amount of 1d. on the policy. That will undoubtedly prevent a great number of policies being taken out in Paris and elsewhere abroad instead of in this country, especially for shipments of bullion, for he will find that those who will principally benefit by this will be dealers in bullion. But I would ask my right hon. Friend why he makes two bites of a cherry? Would it not be better to repeal the graduated duty altogether, and substitute for it 1d. on each policy? After all, the produce of the duty is very small, not, in its unaltered shape, £140,000 per annum; and on this petty receipt my right hon. Friend proposes to introduce an anomaly in the shape of two rates of duty. If his Budget will bear it, 1d. should be substituted as the duty on all marine insurances. The operation of this duty has been before almost all Chancellors of the Exchequer for a long time, and the answer given in recent years is that it is a small matter, and that when the Revenue will bear it a 1d. stamp will be substituted. Another suggestion which he has made is to give farmers under Schedule B of the Income Tax the option of being assessed under Schedule D. I proposed that in 1884, and I am sorry that all the farmers' friends then set their faces against it. They said then that farming was a business of such a peculiar character that no farmers could keep accounts, and that their inability to keep accounts would prevent them from making out a satisfactory return under Schedule D—that they would not be able to know the amount of their profits, and also that they would be reluctant to go before the Special Commissioners, because these Commissioners would probably include their squire and their banker, from whom they would, above all things, desire to keep the facts of their business. I suppose my right hon. Friend has had that difficulty put before him. If he can succeed in persuading the farmers' friends in 1887 to do what I failed to persuade them to do in 1884, I am sure I shall do all in my power to help him in carrying out his proposal. These are all the remarks I wish to make upon this part of the Budget. On the question of aid to roads, I have nothing to add to what fell from the noble Lord the Member for South Paddington (Lord Randolph Churchill) and from my right hon. Friend the Member for Mid Lothian (Mr. W. E. Gladstone). There can be no doubt that as the Government have now, through the right hon. Gentleman, said that they are going to bring in at once their Local Government Bill, with their power in the House it will be carried. If they are going to bring it in this year, it will take effect early next year, the new Local Authorities being then in full working order; and I should have thought it would have been better not to make this change until then, when it would form part of the general policy of transferring the levying of duties to Local or County Authorities. I now come to the grave question of the National Debt, and I want, in the first place, to make it perfectly clear to the Committee what the origin and the history of the great endeavours to reduce the National Debt during the last 25 years has been—how much has really been done, what changes my right hon. Friend in his present proposal is making, and in respect to the exertions not of one Government, but of several Governments, how far what he proposes will affect what we have already done our best to carry out? Great confusion seems to prevail in several parts of the House with respect to the measure of the late Sir Stafford Northcote for the reduction of the Debt. People have thought that my right hon. Friend has implied that he was dealing with and reversing some great increase in the sum appropriated to the National Debt which Sir Stafford Northcote effected. But that is an entire mistake. The whole amount that Sir Stafford Northcote added to the annual Sinking Fund was between £700,000 and £800,000 a-year. It was not a large increase, and it was spread, I think, in steps over three or four years But it was a far less reduction than had been effected by the method of Terminable Annuities carried out by my right hon. Friend the Member for Mid Lothian. The charge for the Debt was increased between 1866 and 1871, by the machinery of Terminable Annuities, by no less than £1,250,000. The charge for the Debt between the years 1875 and 1878, under the Act of Sir Stafford Northcote, only increased by £700,000 and odd. Therefore, when the right hon. Gentleman tells us that the state of things is changed since this Act was passed by Sir Stafford Northcote, and that on that ground we are to be justified in taking £2,000,000 off the amount applied to the reduction of the Debt, I would remind him that Sir Stafford Northcote added nothing like £2,000,000 to the charge for the Debt—that he is now reversing what was settled at a far earlier period, and asking us to apply to the reduction of the Debt a far less sum that Sir Stafford Northcote when he took Office found applied to its reduction, and a sum far less than my right hon. Friend the Member for Mid Lothian applied when the Government of 1868 resigned; and, in fact, I will show to the House that a sum far less than has ever been applied to the interest and reduction of the National Debt, certainly since the Crimean War, and I believe since the great war in France in 1815, will now be the fixed National Debt charge. I will give the Committee one or two figures on this point, in order to put the real facts before my right hon. Friend and the country. Here are the figures with respect to the amount paid for interest and reduction of Debt, commencing in 1859–60. I have taken the year 1859–60 as my starting points. The taxation of that year was extraordinarily heavy, the Income Tax being at 9d., increased in the following year to no less than 10d. in the pound; so that, for the purposes of my comparison, I assume the most unfavourable period imaginable. I would ask the Committee to be good enough to follow me in these figures. In the year 1859–60 the amount applied to the interest and reduction of the Debt was £28,649,000. That was just 20s. a-head on the then population of the country. In the year 1870–1, after my right hon. Friend the Member for Mid Lothian had brought into full operation his plan of Terminable Annuities, the amount charged for the interest and reduction of the Debt was £27,142,000, equal to 18s. per head of the population. I am taking the figures from the annual Return which my right hon. Friend quoted in his Budget speech—the Return commonly known as "Charges on Taxes;" "Exchequer Issues. In the year 1874–5, the year before Sir Stafford Northcote brought in his new proposal, the net charge was £26,495,000—that is to say, at the rate of 16s. per head of the population. In 1877–8, after Sir Stafford Northcote's Act was in complete operation, the net amount was £27,325,000—again 16s. per head of the population. In 1880–1— that is to say, after Sir Stafford Northcote had added to the gross annual charges of £28,000,000, £800,000 a-year to liquidate in five years the debt raised for war purposes, the net charges rose to £28,169,000, and that, also, was just 16s. per head of the population at that time. This year, if my right hon. Friend had not proposed to make this proposed change, the net charge for the interest and reduction of the National Debt would have been £27,680,000, or 15s. 6d. per head of the population. I cannot take from his speech the exact figure of the net charge after the Sinking Fund is reduced by £2,000,000, but it is something like £25,800,000, and this will be only 14s. per head of the population. Therefore, the result of these figures is this—that whereas in 1859–60, at a time when 1d. in the pound of Income Tax produced barely over £1,100,000, we were paying 20s. per head for interest and reduction of the National Debt, now, when we are far more wealthy, and every penny of the same tax produces £2,000,000, we are only going to pay for interest and reduction of the National Debt £25,800,000, or £2,800,000 less than we paid in that less prosperous time, and only 14s. instead of 20s. a head. The right hon. Gentleman said more. He appeared to imply that we now devoted an undue percentage of the taxes to the Debt charged. But what really has happened is that between 1859–60 and the present year the percentage of the whole amount of the taxes, which is allocated to the National Debt, has fallen from 47 per cent to 36 per cent. [Interruption.] I said my right hon. Friend had alluded to the proportion which the charge for the Debt bore to the whole taxation of the country. But in 1859–60 the amount thus contributed to the interest and reduction of the National Debt was 47 per cent of the whole taxation of the country. That has steadily fallen from that time to 45 in l870, 42 in 1874, 41 in 1877, and subsequently to 40 per cent, until, if no change had been made in the Budget this year, the amount contributed to the interest and reduction of the National Debt would have been only 36 per cent of the taxes. The change proposed by my right hon. Friend will further reduce it to 35 per cent. Now, Sir, what is the sum and substance of nay argument? It is that we have steadily maintained until now the sum required for the interest and reduction of the National Debt according to Sir Stafford Northcote's plan, diminishing gradually the charge per head of the population from 20s. to 15s. 6d. per head, and diminishing the percentage on the total taxation of the country from 47 per cent to 36 per cent; and now, in spite of that great diminution, and in the face of the fact that 1d. off Income Tax produces more than half as much again as it did then, the country being so much the more rich, the right hon. Gentleman proposes this year to make a still further reduction, and to make the amount set aside for the National Debt only 14s. per head of the population, and the proportion of the taxes contributed to the National Debt only 35 per cent of the whole. These, I think, are important figures, and I think they compel my right hon. Friend to say why he should this year make an artificial and unnecessary change, still further reducing the charge for the Debt, and breaking into the system which has been established now for so many years? I shall be happy to give my right hon. Friend these figures if he does not follow me; but I think when he examines them he will find that they express an argument which ought to be met, and which has not been met, because all that my right hon. Friend has said up to this moment is that we are worse off now than we were when Sir Stafford Northcote fixed the charge at £28,000,000, or at previous dates; whereas I have shown that the very reverse is the case. I was surprised at one or two suggestions the right hon. Gentleman made, in reply to the vigorous remarks of my right hon. Friend the Member for Mid Lothian (Mr. W. E. Gladstone) and the noble Lord the Member for South Paddington (Lord Randolph Churchill), and one or two of those suggestions I quite failed to understand. For instance, he retorted upon my right hon. Friend the Member for Mid Lothian (Mr. W. E. Gladstone)—"What about your proposed abolition of the Income Tax in 1874?" The answer to that is plain. My right hon. Friend at that date said that, with the surplus annual Revenue of no less than £6,000,000, some additional charge on property would enable the whole of the Income Tax to be remitted. The retort, therefore, was worth nothing. If my right hon. Friend had proposed, in 1874, to substitute for the Income Tax indirect taxation, there would have been some force in it; but that was not the proposal of my right hon. Friend at all. In fact, both the Income Tax and the Sugar Duties might easily have been totally repealed with the surplus of that year. Again, my right hon. Friend said all that was done in respect of the National Debt in 1874 was to pay off £3,000,000. But my right hon. Friend forgets altogether that at that time the old Sinking Fund was in i full operation. [Mr. GOSOHEN: It is now.] No; the policy of Sir Stafford Northcote's Bill was practically to minimize the old Sinking Fund. In the year 1873 the nominal amount applied to the reduction of the National Debt on the old system was about £3,000,000, but really the amount was £6,000,000. [MR. GOSCHEN: £4,000,000.] No; the real amount was £6,000,000. If my right hon. Friend will refer to the entry in The Statistical Abstract he will find that in 1873 the amount of the Debt was £779,000,000, and in 1874 it was £772,500,000, a reduction exceeding £6,000,000.

THE CHANOELLOR OF THE EXCHEQUER (Mr. GOSCHEN) (St. George's, Hanover Square)

The portion set aside for Redemption of Debt in the year 1873–4 was £3,150,000; surplus £870,000; total repaid £4,020,000.

MR. GUILDERS

No, Sir. I hold in my hand the Return which I have already quoted, and which states distinctly that the amount of the reduction was between £6,000,000 and £7,000,000 sterling; but what wore the real facts of Sir Stafford Northcote's charge? Formerly, before the new Sinking Fund was formed, the old Sinking Fund was much larger. The new Sinking Fund was expressly formed by Sir Stafford Northcote so as to bring up the charge as nearly as possible to the actual Revenue, and that action almost annihilated the old Sinking Fund. But my right hon. Friend thinks that the payers of Income Tax have in this matter some special claim for consideration, as no considerable increase has lately been made in the indirect taxes. I must ask him to remember the time when I proposed a moderate increase of indirect taxation. He supported me on that occasion; not in speech, I am sorry to say—I regretted it very much—but he voted with me, and I know how strongly he felt, as I did. But we were defeated, and it hardly lies. I do not say in his mouth, but in those of his Colleagues, to take the objection that advantage has been given to the payer of indirect taxation, when they themselves resisted, and successfully resisted, so lately as in 1885, an increase of indirect taxation. I will only conclude by saying that I think it is greatly to be regretted that this artificial Budget, reducing the amount set aside for the reduction of the National Debt, should have been brought in in a year when it was totally unnecessary. My right hon. Friend says that this is the last year of heavy naval expenditure; that the extraordinary and special naval expenditure proposed by Lord Northbrook, which was to have been spread over five years, will have all been spent in three: and that in this year it will cease. Why, therefore, disturb Sir Stafford Northcote's settlement, when next year, on my right hon. Friend's own admission, it will be quite unnecessary to disturb it? You have unnecessarily, in this last year of high expenditure, made a change which you cannot retrace, but which is opposed to all canons of sound finance.

COLONEL DAWNAY (York, N.R., Thirsk)

As the Representative of an agricultural constituency, and also as a soldier, I feel bound to protest against the remarks of the noble Lord the Member for South Paddington (Lord Randolph Churchill). The noble Lord severely censured the Chancellor of the Exchequer for reducing the sum set apart for the paying off of the National Debt. He told us that no former Chancellor of the Exchequer had ever before permanently cut down that sum; but he need not have taken so much credit to himself for having resisted temptation, because he was never tempted. Happily for the security of the Empire, and the welfare of the agricultural interest he resigned Office before he had an opportunity of bringing in a Budget. The noble Lord has appeared to-night in a new character—as the determined opponent of the interest of the farmers and the ratepayers. He is very fond of telling the House that he has sacrificed himself upon the altar of economy. The sacrifice is greater than I supposed. I had believed his estrangement from the bulk of the Conservative Party was only temporary; but I now believe it to be permanent, because, after the hostile attitude he has taken up tonight towards the agricultural interest, I cannot imagine that he will ever again aspire to lead the great agricultural Party of England. I never should have thought that any Conservative, still less the late Leader of the Conservative Party in the House of Commons, would grudge the necessary expenditure to maintain the efficiency of our Army and Navy, and sneer at the small sum—a mere drop in the ocean—which has been granted in aid of the distressed agricul- tural interest. I believe I, in common with the majority of both sides of the House, regard the efficiency of the Army and Navy as the first necessity of our national existence, just in the same way as we regard the revival of agriculture as the first necessity of our national prosperity. I believe that Parliament would long ago have taken measures for the arrest of the rapid decay of the agricultural interest if it had not been that the good intentions of the majority in favour of helping agriculture were always frustrated by a very small minority who refused to do anything for the assistance of the farmers for fear that the landowners might be helped at the same time. I really think that there is no cause for alarm on the part of these Gentlemen, because the great majority of landowners are pretty nearly ruined already, their property has been steadily deteriorating for the last 10 years, and what with mortgages and increased rates they have very little property left. Now, Sir, the right hon. Gentleman the Chancellor of the Exchequer has shown himself friendly to the agricultural interest, and I believe the great majority of the English people are grateful to him for his Budget. The agricultural classes have undergone many years of depression, they have borne their condition with patience and resignation, and it is generally admitted have great claims for some recognition at the hands of Her Majesty's Government.

MR. S. MASON (Lanark, Mid)

Like the hon. and gallant Gentleman the Member for the Thirsk Division of York (Colonel Dawnay), who has just addressed the House, I represent a county constituency; but I cannot agree with him that the farming interest of my Division will be benefited by subventions from the Imperial Treasury. I listened most attentively, and with the deepest interest, to the very able speech of the right hon. Gentleman the Chancellor of the Exchequer (Mr. Goschen) in introducing his Budget, and also to the speeches which he has since delivered; but I cannot say he has improved his position by his later speeches. My impression is that the first speech was more conclusive than those he has made in reply to the attacks made upon his Budget. Now, Sir, I expected to have heard from the right hon. Gentle- man a humdrum Budget, a title he gave to it himself. I was disappointed in that respect, because, after his speech on Thursday last, I could not help coming to the conclusion that, instead of offering a humdrum Budget, he offered us a spendthrift Budget. [Cries of "Oh, oh!"] Yes; I have no hesitation in characterizing it as a thoroughly spendthrift Budget. It is one step forward and two or three steps backwards. I admit there are some good features in it. The portion which has been described as the local Budget is, in my opinion, admirable, and I think this House will have no difficulty in giving its assent to that proposal. I think, however, that the right hon. Gentleman may very well take into consideration whether or not he should not give the country the option of a 2½ per cent Stock instead of a 3 per cent Stock. I believe that a 2½ per cent Stock commands a better price in the market than a 3 per cent Stock, and that it is to the interest of the Government and the country to borrow money, if we are going to borrow money at all, at the lowest rate of interest possible. I also admit the right hon. Gentleman has made a distinct improvement in regard to the tariff by remitting the excess Tobacco Duty. It was imposed by Sir Stafford Northcote in 1878, and it is not suited to the purpose for which it was designed. I do not think, however, that I can say much more as to the forward steps of the Budget. I am disposed to think that the other steps are very decidedly backward steps. I cannot endorse for a moment the proposal of transferring the Carriage Tax income to Local Bodies, if he is going to give Scotland £35,000, while he gives Ireland £50,000, and England £245,000. I do not believe £35,000 is quite Scotland's share; but, however, I do not make any complaint in the matter. The Scotch people pay at the present time 2s. per head of the population more in the shape of taxation than the English people do; but I do not complain of that either. I suppose is is in consequence of the Scottish people being richer in proportion than the English people. The reason why I condemn the transference of the Carriage Tax to Local Bodies is that by it we set up a vicious system with regard to contributions to Local Bodies from the Imperial Treasury. The system is thoroughly bad. The right hon. Gentleman tells us it is to be a temporary arrangement; but we all know what temporary arrangements of this kind come to. Once made, it is not easy to stop such an arrangement, and the door is opened for Local Bodies to come to the Imperial Treasury to help them in distress when they ought to look to their own energies for relief. Now, the leading feature of the Budget is, as has been very well expressed already, the illegitimate surplus which has been manufactured by the right hon. Gentleman the Chancellor of the Exchequer in tampering with the Sinking Fund. I admit that last year the then Chancellor of the Exchequer (Sir William Harcourt) tampered with the Sinking Fund to the extent of £800,000; but then there was a reason for it. I do not think there is any reason for it now. £800,000 of the Sinking.Fund was taken last year in order that the Chancellor of the Exchequer for the time being might not be called upon to impose any fresh taxation on the country. There is no such necessity this year. By his own showing the right hon. Gentleman has a surplus of £1,000,000. I take the right hon. Gentleman's own figures. Very well; he could have taken 4d. off the Tobacco Duty, and have remitted the Carriage Tax, without in any way interfering with the Sinking Fund. Had the right hon. Gentleman stopped there the Budget, in my opinion, would not have been a humdrum Budget; it would have been a satisfactory Budget, and one which the Committee might have accepted with perfect freedom. Now, I do not know what motive induced the right hon. Gentleman the Chancellor of the Exchequer to lay violent hands upon £2,000,000 of the Sinking Fund, in order to take 1d. off the Income Tax unless it was to please his Friends behind him. He certainly has not given any satisfactory reason for doing so. The right hon. Gentleman told us that the Sinking Fund is not in a safe position, because it is too heavy; and he wished to put matters on a firmer basis to prevent the risk of greater inroads in the future. Now, it seems to me that the right hon. Gentleman, instead of doing what he wishes to do, is going to do precisely the reverse. By setting the bad example of tampering with the Fund set aside for the purpose of liquidating the National Debt, he is opening the door for greater inroads in the future. No proof has been given that the nation is not able to bear the annual payment of £28,000,000 in respect of the National Debt. The right hon. Gentleman took the Committee back to 1860. Now, I have a very lively recollection of 1860. It was a memorable year in the history of this country. It was a year in which I believe the greatest and most marvellous Budget of the century was produced. That Budget was produced by the right hon. Gentleman the Member for Mid Lothian (Mr. W. E. Gladstone), who was at that time, I believe, Member for the University of Oxford. I happened to be in the Gallery that night, and I remember how the right hon. Gentleman electrified the House. It is now 27 years ago; but my recollection of that Budget is that it thrilled the country on account of the magnificent proposals it contained. If my memory serves me right, the right hon. Gentleman produced the Financial Statement in February, two months earlier than usual, because of the great proposals which wore being made by Mr. Cobden in regard to the French Treaty. It so happened that the payment then being made towards the National Debt was £28,000,000; but by the falling in of long annuities—£2,146,000—the contribution towards the National Debt in that year was reduced to £26,000,000. What did the Chancellor of the Exchequer do with the £2,000,000 at that time? I quite admit that he did not seek to reduce the National Debt. The Income Tax had been advanced a year before from 5d. to 9d. in the pound; but the right hon. Gentleman did not propose to remit any part of it. Why did he not seek to reduce either the National Debt or the Income Tax? Because, as the Committee knows very well, we were at that time labouring under deferential or protective duties, and the Chancellor of the Exchequer, fearlessly and boldly, made a clean sweep of all such duties, and established thoroughly and surely the great and sound principle of Free Trade. The right hon. Gentleman felt there was a great necessity for liberating the commerce of the country, and he did not hesitate to enter upon such a course. What did the right hon. Gentleman the Chancellor of the Exchequer tell us on Thursday night was the effect of this great alteration in the tariff at that particular time? Why, that the Revenue immediately went up with leaps and bounds. He compared the period from 1860 to 1875 with the period since. In the five years immediately succeeding 1860, the produce of the taxes under the head of Customs, Excise, and Stamps increased by no less than 10.8 percent, in the next five years 9.9 per cent, and in the five years ending 1875 no less than 24 per cent. Since then, the right hon. Gentleman told us, there has been hardly any increase at all. Now, Sir, does the right hon. Gentleman imagine he will restore to the country great prosperity by reducing the contribution to the National Debt from £28,000,000 to £26,000,000? Does he imagine he will bring about prosperous times by the paltry remission of 1d. of the Income Tax? I cannot understand why he should only take 1d. off the Tax. If the principle is good why not seize the whole of the Sinking Fund and take £7,000,000? He will then be able to reduce the Income Tax to 3d. in the pound, and thus please his Friends behind him, and those people in the country who admire this finance. He might have assigned as a reason that it is not a good thing for the country to pay debts in the Jubilee year. That would have been a reason which the right hon. Gentleman could never assign again, and which could hardly be assigned in the lifetime of any Member of the House. That would have been a reason, but to take £2,000,000 of the Sinking Fund in order to remit a 1d. of the Income Tax appears to have no reason in it at all. [Cries of "Divide!"] I do not often trouble the House with a speech, and I only wish to let it be known what my views are with respect to this Budget. I have no doubt the great bulk of those hon. Gentlemen sitting behind the right hon. Gentleman the Chancellor of the Exchequer, who interrupt one, would have voted with the right hon. Gentleman if he had proposed to seize the entire Sinking Fund. Surely, Sir, if the country was able in 1860 to pay £28,000,000 towards the interest and liquidation of the National Debt, it must be able to do so now. Why, 1d. at that time yielded only £1,100,000; now it yields £2,000,000. The total annual value of the assessments under all the Schedules was only £335,000,000 in 1860. What is it now? It now exceeds £630,000,000; nearly double what it was in 1860. That fact alone might, in my opinion, have given the right hon. Gentleman the Chancellor of the Exchequer a little more courage, and a little more hope as to the future condition of the country. [Interruption] I trust the Committee will exercise a little patience. [Interruption.] I do not intend to stop before I have finished what I am saying. We must look for relief in quite another direction—that is to say, in the direction of reducing the National Expenditure. The noble Lord the Member for South Paddington (Lord Randolph Churchill) seems to have caught the spirit of the age, and I regret that he is not now in his place, because I wish to thank him for the sound, sensible, and able speeches which he has made in the course of this discussion in favour of economy. Taking the three periods of the finance which the noble Lord some time ago indicated, 1868 to 1874–80 and 1881–5, the average Expenditure was for the first £72,000,000. for the second £79,500,000, and for the third £86,500,000. The last sum the noble Lord has characterized as infamous; but hero we are going to spend £90,700,000, and if the noble Lord were here I dare say he would endorse my remark, that the chief causes of this expenditure are in connection with the Army and Navy. I do not see the right hon. Gentleman the Member for East Wolverhampton (Mr. Henry H. Fowler) in his place; but he stated the other night that we paid 30s.. for every £1 worth obtained for the Army and Navy. Here, then, is the direction in which we must go to seek for relief of expenditure. I am a Member of the Public Accounts Committee, and I can endorse the statement of the right hon. Gentleman the Member for East Wolverhampton, who, I believe, has rather under than over-estimated this result. To ask that we should get value for our money is not asking that the efficiency of these Services shall be lessened; and when once we get that, then I say the door is open to you to reduce the Income Tax. You will not got rid of the Income Tax until greater economy and reduced expenditure takes place in regard to the Army and Navy than has been secured up to the present time. Economy is one thing, but I admit that policy must dominate expenditure in this country, and I am strongly of opinion that until the Government comes to the opinion which has been formed by the noble Lord the Member for South Paddington, economy must not only be practised, but we must decide upon a policy of non-intervention with respect to European quarrels before we can get the Expenditure of the country into a proper condition. If the Government decides upon that policy I have no doubt that the right hon. Gentleman the Chancellor of the Exchequer will find himself in smooth water, so far as National Finance is concerned, and that we shall not require to be tampering with the Sinking Fund. I do not wish to detain the Committee further than is necessary to point out one or two matters in connection with the future finances of the country. I was somewhat disappointed that the right hon. Gentleman the Chancellor of the Exchequer did not touch the Death Duties. I think the right hon. Gentleman sitting opposite to him tried to solve that question a few years ago, and I am sorry it did not find a place in the present Budget. I am sure it would be an act of justice to deal with those duties, and I hope the right hon. Gentleman will not be long in turning his attention to a remedy for the inequality which exists in connection with them. There is one other question to which I desire to refer, and upon which I have already put a Question to the right hon. Gentleman the First Lord of the Treasury (Mr. W. H. Smith). I asked him some time ago—I believe in the month of February—how the Government intended to tax profits made or earned upon goods imported by foreigners into this country. The right hon. Gentleman the Chancellor of the Exchequer has not told us anything about his intentions in connection with this matter. The right hon. Gentleman the First Lord of the Treasury said that it was impossible to answer my Question fully at the time, because it had reference to matters which were the subject of appeal to the High Court of Justice; but, speaking generally, he said that the tax would be charged by means of assessments on the agents. Now, I should like to know if the right hon. Gentleman the Chancellor of the Exchequer has decided as to how he will get at these agents? There are many firms in this country who have branch houses, and I believe they pay Income Tax; but there are also many houses in London and elsewhere which I believe entirely escape so far as profits on goods imported into this country are concerned. Therefore, I should be glad to know by what means the right hon. Gentleman intends to reach the profits on goods imported into this country by foreigners. Then, I should like to know what is going to be done with regard to the question of the rehabilitation of the coinage. I think it has been referred to as being under consideration, and I wish now simply to make a suggestion. This is a pressing matter, and the right hon. Gentleman has admitted it to be so—that 60 per cent of our gold coins are at present light. I think this is a disgraceful position for the country to stand in, and the sooner it is adequately dealt with by him the better it will be for our credit. I believe it will take £800,000 to meet the case of light coin; but I wish to suggest that the right hon. Gentleman should turn his attention to Scotland, when he would see the economical way in which the system of £1 notes is worked there, and learn how our coinage may be rehabilitated without taxation. I have no doubt that the right hon. Gentleman, now that I have directed his attention to the Scotch practice, will give this matter the consideration which it deserves. If you had £50,000,000 in £1 notes, it would only be half of what is now circulating in England in sovereigns, and the plan I propose would be of immense advantage, because there would be a saving of £1,500,000 in interest, besides the wear-and-tear of the coin. My belief is that there would be a saving by the adoption of this plan of £2,000,000. Finally, I think the right hon. Gentleman the Chancellor of the Exchequer has been carried away by the desire of making popularity out of the Budget. I must confess that I share the opinion of those who thought that the right hon. Gentleman would have been the last man in the country to have brought in a Budget of that character. We have been led to form a high opinion of the judgment of the right hon. Gentleman —that he would be the last man in the country to be influenced by the desire to introduce a popularity-seeking Budget, and I believe that he would not have evaded his own principles of finance ex- cept in order to please those hon. Members who now sit behind him. It is, however, a fact that great men make great mistakes, and I dare say that his mistake is one of that sort. I hope, however, that he will yet abandon the idea of tampering with the Sinking Fund, and if he does not do so I trust that the House of Commons will take steps to reject his proposal, and even if they do not, I am convinced that at the first opportunity the country will most emphatically condemn it.

COLONEL WARING (Down, N.)

As my right hon. Friend the Chancellor of the Exchequer (Mr. Goschen) is aware, I rise simply to make an appeal to him on a question that touches me very nearly as an Irishman. I trust that the small modicum of £50,000 to be given to Ireland will not be made in such a form as to render it a mere drop in the ocean, but in a substantial way by which the people may benefit. England receives a good subvention in aid of main roads, and I thought we should get something for the same purpose. I very much regretted to hear that the £50,000 was to be thrown into the sink of arterial drainage. Arterial drainage is a very good thing, but it does not come home to Irish taxpayers with so much force as a grant in aid of the county cess would do. Arterial drainage in Ireland has always been considered the business of the landlord, and if the money is given to them the tenants will look upon it as a sop thrown to that class. I cannot help thinking that every farmer would be glad to find 1d. or 2d. struck off the county rate. There is no difficulty in finding the roads which are called main roads in Ireland in aid of which this money might be applied, and therefore I suggest that the same use should be made of the money which is proposed to be given to Ireland as of that which is to be expended in the United Kingdom.

THE CHANCELLOR OF THE EXCHEQUER (Mr. GOSCHEN) (St. George's, Hanover Square)

I am divided between my anxiety to answer all the various questions and appeals made to me, and at the same time not to abuse that large indulgence which has been accorded to me by hon. Members on both sides of the House, looking at the great length at which it was my duty to address them. I hope the Committee— if I refrain from answering on any point put to me—will not attribute it to any want of courtesy on my part. In the first place, I may say that I will not forget the point addressed to me by the hon. and gallant Member for North Down (Colonel Waring), who has just sat down. It was originally in my mind to make a contribution towards the county cess in Ireland. I will not, however, dwell upon that point any further. The subvention in aid of highways in Great Britain, as I have emphatically pointed out, is a temporary arrangement, pending those further more substantial arrangements which may be contemplated. But in Ireland there are no contributions to the Carriage Tax, and were we to apply the principle applied in England we should be introducing positively a new principle so far as Ireland is concerned. And when I look at the enormous sum spent on roads in Ireland, I am afraid that £50,000 would, indeed, be looked upon as a drop in the ocean. At the same time, I should be happy to communicate with any hon. Members from Ireland, if they have in view a form in which the money could be better applied than that which I have reposed. With regard to the observations of the hon. Gentleman the Member for Mid Lanark (Mr. Mason), I repeat that the light-gold question is one which stands among the first subjects to be considered. I trust it may be possible to reach this in the course of the present Session, if we can make progress, by the assistance of hon. Members opposite, with the most important measures before Parliament. It is our fate with regard to more measures than one that we cannot make progress when it is our earnest desire to have those measures placed before the House. The hon. Member for Mid Lanark has alluded to the instruction and guidance which I might derive from the Scotch system of banking. My connection with Scotland was unfortunately cut rather short; but I am sufficiently acquainted with the subject to know the great value attached by the people to their banking system, and to be aware of its excellences as well as of some of its defects. I am obliged to the hon. Gentleman for assisting me with his views with regard to the coinage question, and as soon as that question can be dealt with in respect of England it shall also be dealt with in respect of Scotland and Ireland. I repeat that the Death Duties are a matter of urgent public importance, and they will certainly obtain the attention of the Government, who hope to be able to deal with the subject at an early period. It hope it will not be discourteous to many hon. Members who have addressed the Committee on many of the details of the present financial proposals, if I say that the most important contribution to the discussion since the speeches of the noble Lord the Member for South Paddington (Lord Randolph Churchill) and the right hon. Gentleman the Member for Mid Lothian (Mr. W. E. Gladstone) has been that of another ex-Chanceller of the Exchequer—the right hon. Gentleman the Member for South Edinburgh (Mr. Childers). It has been my fate to deal with four ex-Chancellors of the Exchequer in this debate, and a formidable array it has been to meet. My right hon. Friend the Member for South Edinburgh specially challenged me on the point that the contribution per head of the population towards the reduction of the National Debt and interest is smaller now than it used to be. I do not see that in dealing with this subject it matters much to what extent the population has increased, if that increased population is not called upon to contribute to the payment of Debt. It is no use pointing to the aggregate population, if 9–10ths of that population are free from the obligation to contribute.

MR. CHILDERS

That does not meet my statement at all. The great mass of the present population contributes by indirect taxation.

MR. GOSCHEN

Exactly; but this vastly increased population which ought to contribute towards some heroic system of paying off Debt actually pays at the present moment less indirect taxation than it did 10 years ago.

MR. CHILDERS

I made a comparison with 1876.

MR. GOSCHEN

But there is a much more convenient time to compare with the present.

MR. CHILDERS

I gave a series of computations extending over 27 years, and I showed that the amount devoted to the National Debt had steadily fallen off, first, in its total amount; secondly, in proportion to the total taxes; and, thirdly, per head of the population.

MR. GOSCHEN

Yes; but I have now to deal with the continuation of the proposals made 10 or 12 years ago. I contrast the position now with what it was then; and I find, looking back to the time to which the right hon. Gentleman points, that owing to the changes in taxation which have taken place the whole brunt of paying off the National Debt has been borne by a single class of taxpayers. I repeat that it is of no use pointing to the number of the population, if the burden on one particular class is for this purpose greater than it used to be. Several hon. Members have commented on the position I have thought it right to take up with regard to this matter—namely, that it is not only necessary to consider it from the general point of view, but from the point of view of what is just and fair to those who pay this tax. I refer my right hon. Friend to what happened two or three years ago, when it was necessary to put an extra tax on the Income Tax payers for certain purposes. It is part of my case that this was put on for a special purpose, and, that special object no longer existing, I think it right that a portion of that addition ought to be taken off. At the time I refer to the Income Tax was raised from 6d. to 8d. in the pound; it was raised without any increase of Debt. The only proposal of the defenders of official orthodoxy was to increase the duty on spirits, and they only ventured to do that under the shield of the United Kingdom Alliance. I trust I have answered the point of my right hon. Friend the Member for South Edinburgh. With regard to what has been said about the reduction which is contemplated in the Income Tax, hon. and right hon. Gentlemen opposite have spoken as if the payers of Income Tax were the particular clients of hon. Members sitting on this side of the House. That, however, is not at all the case. I agree with my right hon. Friend the Member for Mid Lothian, who deprecated the introduction of Party politics into a matter of this kind, and I assert that, looking to the character of the Income Tax payers at large, we have not been taking specially into account a class of people who may be supposed to support the Conservative Party, and probably the constituencies of hon. Members on both sides of the House are interested in this proposal in equal numbers. Therefore, I say it is not for hon. and right hon. Gentlemen to argue, as the right hon. Gentleman the Member for Derby (Sir William Harcourt) did, that the concession to the payers of Income Tax has been made upon political grounds. But there is one other point in connection with the payers of Income Tax to which I will very briefly refer. I have been asked by the hon. Baronet the Member for the University of London (Sir John Lubbock) a question as to the accuracy of the figures I quoted relative to the number of persons contributing to the Income Tax. I should state that those figures are not to be looked upon as absolutely correct, because they are largely modified by the fact that in many cases several persons may appear under different Schedules; but, speaking in a broad and general manner, no doubt there are enormous numbers of persons who pay Income Tax, and who have very limited means—means, at least, which would not at all entitle them to be ranked among the wealthy classes. It was to that large number that I called attention in the statistical quoted, and with no desire whatever to exaggerate their number. With regard to the tobacco question, my right hon. Friend the Member for South Edinburgh seemed to think there had been the same increase in the Revenue on tobacco as on tea.

MR. CHILDERS

I said that the increase in the annual receipt of the tea duty had fallen off since 1878, more than the increase in the annual receipt of the Tobacco Duty, taking 1878 as the same starting point, and going back to 1870, and onward to 1886.

MR. GOSOHEN

From 1880 to 1885 the Tobacco Revenue increased by £712,000 only, an increase of 8½ per cent, while in regard to tea the difference between the Duty in 1885 and 1880 amounted to £1,097,000, an increase of 29½ per cent, or, in other words, the figures show that while the consumption per head of tea has increased 10 per cent, and that of tobacco 3 per cent, the Revenue from tea has increased 29½ per cent, and the Revenue from tobacco 8½ per cent. The year 1885 was rather an ex- ceptional year; but still I maintain that in the case of tobacco the increase is not so favourable as regards the relative proportion as is the increase upon tea. I may hero say, with regard generally to the suggestions that have been offered as to the Tobacco Duty, I have to assure the House that I will do my best to consider them, especially with reference to the dates that have been fixed. I do not know whether, at this advanced hour of the evening, there are any other questions on which hon. Members desire that I should enter. There was one suggestion made by the right hon. Gentleman the Member for South Edinburgh, that besides the extra tax on Debenture Stock, of which I am glad to find he approves, there are other securities that might be similarly dealt with. I may state that my attention has been directed to that subject, and the right hon. Gentleman is probably aware that foreign bonds and securities were dealt with recently, and a duty of 10s. placed upon their issue. That appears to be a very moderate duty, and the question might be raised whether it should be increased. As to the question of Stamps, I may inform the Committee that I shall avail myself with pleasure of suggestions that have been made from all parts of the House as to whether some further improvement cannot be made either this year or next. I do not think there are any other matters I need refer to.

MR. CHILDERS

There is the question of marine insurance.

MR. GOSCHEN

The right hon. Gentleman reminds me of the question of marine insurance, as to which it has been suggested whether, considering the smallness of the whole amount to be raised, it would not be wise to abolish that duty altogether. In regard to this, I would say that I feel very strongly and deeply that, considering the fact that the whole of our taxation rests on so narrow a basis and so small a number of taxes, I am not prepared to abandon any single tax without the gravest reflection and the most anxious study. I am well aware that such a sum as £ 130,000 is one for which it is scarcely worth while to keep up a tax; but until I have been able to see more deeply into the whole of our fiscal system, I shall hold on to every tax we now have, making such remissions from time to time as may be calculated to render them more endurable to those who have to pay them. Let us endeavour to aim at simplicity, while at the same time removing inequalities, injustice, and those little annoyances which often aggravate the taxpayer far more than the amount he has to pay; but do not let us abandon any single source of Revenue in the present state of our finances. I have again to thank the Committee for the manner in which, upon the whole, they have received the Budget it has been my duty to propose. I have felt the soundness of some of the suggestions that have been made and the changes that have been recommended, and I can assure the Committee, of whom I hope at least the majority will believe me, that I have made the proposals I have brought forward in conjunction with my Colleagues in the firm conviction that we are doing our best for the credit of our finances, and not, as has been suggested, for the sake of any popularity-hunting motive.

COLONEL NOLAN (Galway, N.)

I must apologize to the right hon. Gentleman the Chancellor of the Exchequer (Mr. Goschen) for an interruption of mine, which, however, was only intended to mark my appreciation of his Budget. In offering such comments as I now have to make, I should like, in the first instance, to contrast the debate in which we are now engaged with the Clôture and Coercion Debates of the past few months. The whole of this discussion has been eminently business-like in character; the Committee has derived a great deal of instruction from what has fallen from the right hon. Gentleman the Chancellor of the Exchequer; everything has gone on in the most amicable manner, and the country will read the debate with great interest and with much enlightenment. If, however, we turn to the other picture, what is it that has been witnessed during the last few months, and is likely to be renewed tomorrow night in the ordinary course of procedure as settled by the right hon. Gentleman the First Lord of the Treasury (Mr. W. H. Smith), and how much better would it be if it could be arranged that you, Sir, should report Progress now, and go into that Chair again tomorrow, so that we might proceed with the Business for which we are really sent here—namely, the discussion and determination of the financial affairs of the nation. Having made my apology for having interrupted the right hon. Gentleman—an interruption not meant to interfere with his speech, but merely as an expression of my admiration for the way in which he was putting his views before the Committee—I will now offer a few remarks upon the Budget the right hon. Gentleman has introduced. I do not propose to go into the question of the Sinking Fund—as to whether it is wise to abolish it or not; because, after we have had so strong an array of ex-Chancellors of the Exchequer speaking on that subject, my contribution to its elucidation would necessarily be a very humble one. Still, I should like to point out to the right hon. Gentleman that his proposal to grant a sum of £50,000 in aid of arterial drainage in Ireland amounts only to what would be a mere drop in the ocean. I admit that there would be nothing more popular on the part of the class of small tenants in Ireland than the development of a really large and useful system of arterial drainage; but it would be impossible to do any good in regard to this matter in Ireland under at least £15,000,000, so that a small sum like £50,000 would count as almost nothing. The drainage of some of the rivers would, it is stated, involve an enormous expense. It has been proposed to expend £500,000 on the drainage of the Shannon; but the fact is that the Shannon could be drained for about £200,000. It would be a very easy thing to spend a large sum of money on such arterial drainage as is really needed, whereas, by draining the rivers, money would, to a great extent, be thrown away, and very little good be done to the navigation. If a sum amounting to £50,000 is to be given to Ireland, I would suggest that it would be much better to give it for some other purpose. I think it would be a good thing to give it in relief of the farmers from the county cess, which, hon. Members may be aware, is the same as the county rate in England, particularly as the rates are largely paid by the very smallest class of occupiers; but I object to the way in which the county cess is administered in Ireland, and especially to the way in which those who administer it are selected. They do not always manage very badly; but the way in which they are selected is disgraceful. I think the best form in which this money could be given would be in relief of the poor rates. I do not mean that it should be given directly to the relief of the poor, because it would not do to have an Imperial grant available for such a purpose; and no one but the local bodies can keep down the taxation levied for the relief of the poor. But, under the system which prevails in Ireland, the poor rates are largely spent, not in the relief of the poor, but on a whole series of burdens, amongst which I may mention the making out of lists of voters in the electoral districts, vaccination expenses, the keeping down of diseases among cattle; and some five or six other matters which have nothing whatever to do with the relief of the poor. Now, I should like to see the right hon. Gentleman the Chancellor of Exchequer take off those burdens, which ought not properly to be charged upon the poor rates, which ought to be matters of Imperial taxation, and which the Poor Law Guardians have no power to keep down. That, I think, would be about the best mode of allocating the proposed grant of £50,000. I would also refer, for a moment, to another subject—I allude to the Tobacco Duty. I was struck with the remark of the noble Lord the Member for South Paddington (Lord Randolph Churchill), that the right hon. Gentleman the Chancellor of the Exchequer, if he had chosen to amend his Budget and kept up the Sinking Fund, had one of two courses open to him. One was to take off 1d. from the Income Tax, and not give anything in the shape of local contributions, avoiding the remission of the Tobacco Duty; and the other was not to reduce the Income Tax and to take off the Tobacco Duty. If the right hon. Gentleman does amend his Budget, I should say keep the 1d. on the Income Tax, but take off a further portion of the Tobacco Duty. I consider that the remission of the Tobacco Duty is the best part of the Budget; but, by the proposal made by the right hon. Gentleman the Chancellor of the Exchequer, the consumer will gain nothing for a year or two. When the Tobacco Duty was increased by the late Sir Stafford Northcote, I was one of the strongest opponents of that proposal, and I pointed out how I thought it would increase the cost to the consumers. I was, however, so far wrong that, in point of fact, it did not increase the cost in point of the price paid; but it had the effect of inducing so heavy a watering of the tobacco, that for what he did get the consumer was paying almost double. Does the right hon. Gentleman think that by giving the remission of Duty he now proposes the result will be that the tobacco will be less watered than at present? For my part, I do not think it will, and in my opinion it will not be found that even in two or three years time the full benefit will be obtainable by the consumer, although perhaps he may get it eventually. What is proposed now is to take off 4d. in the pound. Now, I wish to point out that this 4d. is only divisible into ounces by farthings, there being 16 farthings in that amount; but in ordinary towns throughout the country farthings are not habitually used, and the consequence will be that the farthing per ounce will go into the pockets of the retailers. Now, if the right hon. Gentleman the Chancellor of the Exchequer had taken off 8d. per pound from the Tobacco Duty, the result would have been that the decreased price would have been ½d. per ounce and the consumer would have got the full benefit. I wonder how it is that point did not strike the mind of the right hon. Gentleman. As it is the retailers will get the advantage, and though they are doubtless very estimable people I should very much have preferred that the consumer should have had the benefit of the reduction. These are what have struck me as the blots noticeable in the Budget, and I only wish to add a few words with regard to my opinions upon taxation generally, although they may not be very popular in this House. The right hon. Gentleman the Member for West Birmingham (Mr. Joseph Chamberlain), who is now making a tour of Scotland, and other hon. Gentlemen have pointed out that the poorer classes pay higher taxes in proportion to their incomes than the wealthier class; because so large a sum is raised on tobacco and other articles they consume, and that therefore any revision of taxation should be applied to indirect taxation and not to the Income Tax. Now, I hold it to be very foolish to tax heavily such articles as tea and tobacco which we cannot grow here, and I think it would be wiser to put this taxation on meat and butter, and such articles as we are able to produce. If you were to take off the whole of the duty on tea and half the duty on tobacco and put it on home produce such as I have spoken of the consumer, instead of paying on the former articles, would have to pay on the latter, and although the consumers would not in the aggregate be better off great benefit would thereby accrue to the labourers and the farmers.

MR. HENNIKER HEATON (Canterbury)

I will promise that in what I wish to say I will not detain the Committee more than four or five minutes; and in the first place I will say that I think the right hon. Gentleman the Chancellor of the Exchequer (Mr. Goschen) would have done a much more popular thing if he had devoted the sum he proposes to give by the remission of a portion of the Tobacco Duty to the extension of the system of Imperial Penny Postage. My principal object in rising is to correct the impression which is now gaining currency, and which was favoured by the statement of the right hon. Gentleman the Member for Derby (Sir William Harcourt), who pointed out that a very large expenditure was projected in relation to the Post Office. I wish the right hon. Gentleman the Chancellor of the Exchequer had cleared up this matter. No lesser sum than £700,000 is placed on the Estimates for the packet service, and that service pays extremely well, excepting one instance. The sum of £100,000 is charged for the American Packet Service, and the amount received for postages in letters, newspapers, and other articles from that source is no less than £200,000. We could, without doubt, reduce the postage to America without the slightest loss to the Revenue. If the right hon. Gentleman the Chancellor of the Exchequer were desirous of performing a popular act he could do nothing better than introduce an Imperial Penny Postage to all parts of the Empire. The exception to the profitable Postal Service to which I have referred is in the case of India, and is one that will surprise most people. In the scheme, the carrying out of which I have so much at heart, the greatest blot is what is taking place in connection with the Indian postage, which is nothing less than a scandal. No less a sum than £300,000 is expended every year in the conveyance of letters to and from India, and the entire Revenue obtained from that source is only £55,000. Late as the hour is, I am sure the Committee will forgive me for placing this fact before them. The next point to which I desire to call attention is this; that it is not desired that we should extract money from the Treasury in order to carry our views into effect, but merely that there should be a readjustment of the expenditure on the Post Office whereby economies could be effected that would suffice for the object in contemplation. I now desire to call the attention of the Committee to one portion of my letter to the right hon. Gentleman the Postmaster General (Mr. Raikes), on the subject of Imperial Penny Postage—a letter which was not published by the Post Office, but was refused publication by the right hon. Gentleman the Postmaster General. I there point out one of the gravest scandals of the present system; and how the right hon. Gentleman the Chancellor of the Exchequer has omitted all reference to this subject, while devoting much attention to other matters, I cannot possibly imagine. In that letter I say— Unfortunately for England, under the Postal Union System, each country keeps its own postage. Last week your letter-carriers were engaged in the laborious task of distributing a million of samples of English merchandise and circulars, for which the British Post Office was not paid a farthing. The British merchants and manufacturers sent these samples in bulk to Belgium to be posted back to England at 1d. each. If they had posted them in England, the cost would have been 2d. each from London to any part of the United Kingdom. The consequence was that, as each country keeps it own postage, Belgium alone benefited by the transaction, and England did all the heavy work free—that of delivery! I am informed that the whole of the merchants in one street n London have their letters sent in bulk to France every Friday morning, to be posted there for India, China, and the East generally, thereby saving 100 per cent—the difference between 2½d. and 5d. Here, then, by regulating and assimilating your charges, you have a new source of income; and if England, as the Mother, takes the lead in these great reforms, her children will unquestionably follow her. How the House of Commons can tolerate such a state of things for an instant is, in the right hon. Gentleman the Postmaster General's own words, "a grave scandal." I trust that, before this debate closes, we shall obtain from the right hon. Gentleman the Chancellor of the Exchequer some statement in a direction that will be satisfactory to the country. The next point I have to mention will not occupy more than a moment. I wish to state that I regard the whole Postal and Telegraph Service of the Empire as, in reality, what may be termed the nervous system of the Empire. If you in any way interfere with its free action, you paralyze the whole body. It is monstrous that it is impossible for us to communicate with our friends in Australia by telegraph at a less cost than 10s. a word, and that we cannot send them a letter for less than 6d.; while, on the other hand, there are 100,000 people in Australia who, last year, sent to their friends in this country no less than £346,000 in money orders, or nearly £1,000 a-day, for sums varying from £2 to £5. The Committee will understand the large amount of benefit that was thus conferred upon this country. I will not further trespass on the time of the Committee, but will conclude by expressing a hope that we shall either have a promise of some remedy for this state of things; or that the Government will agree to the appointment of a Select Committee—a proposal in which I feel assured the Financial Secretary to the Treasury in the late Government (Mr. Henry H. Fowler), the late Postmaster General (Lord Wolverton), and other hon. Members of the Opposition will heartily concur. I think that no time should be lost in redressing this Post Office scandal—this great evil of the Packet Service—and in extending, facilitating, and cheapening the cost of our Postal Service to every part of the Empire.

Question put, and agreed to.

(Income Tax.)

1. 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-seven, 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 Seven 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 Three Pence Halfpenny; In Scotland and Ireland respectively, the Duty of Two Pence Halfpenny; 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.

(Stamp Duty on Transfer of Debenture Stock.)

2. Resolved, That, in lieu of the Duties now payable on a transfer of any Debenture Stock or Funded Debt of any Company or Corporation, or any County Stock, whether on sale or otherwise, there shall be charged the Duties hereinafter mentioned or referred to (that is to say):— Where the transfer is on sale, the same ad valorem Duties as are charged by ''The Stamp Act, 1870," upon a conveyance or transfer on sale of other property by relation to the amount or value of the consideration for the sale;

	£	s.	d.
Where the transfer is of any other kind than on sale or mortgage.	0	10	0

And, in lieu of the Duties now payable under section forty-six of "The Customs and Inland Revenue Act, 1881," upon every "Stock Certificate to Bearer," there shall be charged upon every such Certificate a Stamp Duty of an amount equal to three times the amount of the ad valorem Stamp Duty which would be chargeable on a Deed transferring the Stock specified in the Certificate if the consideration for the transfer were the nominal value of such Stock.

(Composition for Stamp Duties.)

3. Resolved, That, by way of composition for certain Stamp Duties, there shall be charged upon the aggregate amount appearing on every half-yearly account delivered to the Commissioners of Inland Revenue as hereinafter mentioned, for every full sum of One hundred pounds, and every fractional part of One hundred pounds of such amount, the Duty of Six Pence: Any Company or Corporation may enter into an agreement with the said Commissioners for the delivery of an account showing the nominal amount of all shares, stock, and funded debt, or of any of them, as the case may be, or the amount thereof in respect of which payment has been made, if the whole sums payable in respect thereof have not been paid, and, after such agreement has been entered into, the account shall be delivered half-yearly in each year: The Justices of any county, liberty, riding, part, or division of a county may enter into an agreement with the said Commissioners for the delivery of an account showing the nominal amount of all the "County Stock," or the amount thereof in respect of which payment has been made, if the whole sums payable in respect of such stock have not been paid, and after such agreement has been entered into the account shall be delivered half-yearly in each year: Where an account is to be delivered the same shall be delivered to the said Commissioners on or within seven days before the first day of February and the first day of August in each year, and the Duty shall he paid upon the delivery of the account: So soon as any account has been delivered, and payment of the Duty thereon has been made, Transfers of any Shares, Stock, or Funded Debt or County Stock included in such account, together with Share Warrants or Stock Certificates relating thereto, shall be exempt from Stamp Duty.

(Stamp Duty on Sea Insurances.)

4. Resolved, That where the premium or consideration for any Sea Insurance does not exceed the rate of Two Shillings and Six Pence per centum of the sum insured by the Policy, the Stamp Duty upon such Policy shall be One Penny only.

(Tobacco Duties.)

5. Resolved, That, in lieu of the Duties of Customs now payable on Tobacco, there shall, on and after the 21st day of May 1887, he charged, upon Tobacco imported into Great Britain or Ireland, the Duties following (that is to say):—

Tobacco manufactured, viz.:	£	s.	d.
Segars the lb.	0	5	0
Cavendish or Negro-head the lb.	0	4	6
Cavendish or Negro-head manufactured in Bond the lb.	0	4	0
Other manufactured Tobacco the lb.	0	4	0
Snuff, containing more than 13 lbs. of moisture in every 100 lb. weight thereof the lb.	0	3	9
Snuff, not containing more than 13 lbs. of moisture in every 100 1b. weight thereof the lb.	0	4	6
Tobacco unmanufactured, viz.:
Containing 10 lbs. or more of moisture in every 100 lb. weight thereof the lb.	0	3	2
Containing less than 10 lbs. of moisture in every 100 lb. weight thereof the lb.	0	3	6

In lieu of the drawback now allowable on Tobacco, there shall, on and after the 31st day of May 1887, be allowed the drawback of 3s. 3d. named in section 1 of "The Manufactured Tobacco Act, 1863."

(Customs and Inland Revenue.)

6. Resolved, That it is expedient to amend the Law relating to the Inland Revenue and the Customs.

COMPARISON OF REVENUE (Exchequer receipts) AND EXPENDITURE (Exchequer Issues), 1886–7.
Revenue (Exchequer Receipts).	Expenditure (Exchequer Issues).
	£		£
Customs	20,155,000	Fixed Charge of Debt	27,366,367
Excise	25,250,000	Debt created for Local Loan Purposes, Interest, &c.	391,712
Stamps	11,830,000
Land Tax	1,070,000	Exchequer Bonds (Suez), Interest, &c	199,944
House Duty	1,910,000	Other Consolidated Fund Charges	1,743,891
Property and Income Tax	15,900,000
Produce of Taxes	£76,115,000	Total Consolidated Fund Charges	£29,701,914
		Army	18,429,272
Post Office	8,450,000	Navy	13,265,401
Telegraph Service	1,830,000	Civil Services (Miscellaneous)	17,826,454
Crown Lands	370,000	Customs and Inland Revenue	2,676,918
Interest on Advances for Local Works, and on Purchase Money of Suez Canal Shares	1,176,192	Post Office	5,436,893
		Telegraph Service	1,935,000
Miscellaneous (including Fee, &c, Stamps)	2,831,566	Packet Service	724,900
Produce of Non-Tax Revenue	£14,657,758	Total Supply Services	£60,294,838
		Total Expenditure (Exchequer Issues)	89,996,752
		Surplus of Revenue	776,006
Total Revenue (Exchequer Receipts)	£90,772,758		£90,772,758

ESTIMATED REVENUE AND EXPENDITURE, 1837–8.
(BEFORE TAKING INTO ACCOUNT THE CHANGES PROPOSED BY THE CHANCELLOR OF THE EXCHEQUER.)
Revenue (Exchequer Receipts).	Expenditure (Exchequer Issues).
		£			£
1.	Customs	20,200,000,	1.	Fixed Charge of Debt	28,036,917
2.	Excise	25,292,000	2.	Loans for Local Purposes, Interest and Sinking Fund	641,000
3.	Stamps	11,658,000
4.	Land Tax	1,065,000	3.	Suez Canal Exchequer Bonds, Interest and Sinking Fund	200,000
5.	House Duty	1,920,000
6.	Income Tax (8d. in £)	15,900,000	4.	Other Charges on Consolidated Fund	1,714,000
	Produce of Taxes	£76,035,000		Total Charges on Consolidated Fund	£30,591,917
7.	Post Office	8,600,000	5.	Army	18,393,900
8.	Telegraph Service	1,950,000	6.	Navy	12,476,800
9.	Crown Lands	370,000	7.	Civil Services (Miscellaneous)	17,931,508
10.	Interest on Advances	1,200,000	8.	Customs and Inland Revenue	2,715,727
11.	Miscellaneous	3,000,000	9.	Post Office	5,420,770
			10.	Telegraph Service	1,950,248
			11.	Packet Service	699,341
	Produce of Non-Tax Revenue	£15,120,000		Total Supply Services	£59,588,294.
				Total Expenditure	90,180,211
				Surplus	974,789
	Total Revenue	£91,155,000			£91,155,000

ESTIMATED REVENUE AND EXPENDITURE, 1887–8.
(AFTER TAKING INTO ACCOUNT THE CHANGES PROPOSED BY THE CHANCELLOR OF THE EXCHEQUER.)
Estimated Revenue.	Estimated Expenditure.
	£	£		£	£
1. Customs	20,200,000		1. Charge for Debt—
Deduct on account of Tobacco Duty	600,000	19,000,000	(1.) Fixed Charge	28,037,000
2. Excise		25,292,000	Reduction	2,037,000	26,000,000
3. Stamps	11,658,000		(2.) Other Charges	841,000
Addition	100,000	11,758,000	Reduction	627,000	214,000
4. Land Tax..		1,065,000	2. Other Charges on Consolidated Fund		1,714,000
5. House Duty		1,920,000	Total Charges on Consolidated Fund		£27,928,000
6. Income Tax	15,900,000		3. Army		18,394,000
Reduction of Tax	1,560,000	14,340,000	4. Navy		12,477,000
Produce of Taxes		£73,975,000	5. Civil Services Additional	17,931,000
7. Post Office		8,600,000	Grants in aid	330,000	18,261,000
8. Telegraph Service		1,950,000	6. Customs and Inland Revenue		2,716,000
9. Crown Lands		370,000	7. Post Office		5,421,000
10. Interest on Advances	1,200,000		8. Telegraph Service		1,950,000
Loss of Interest on Local Loans	960,000	240,000	9. Packet Service		699,000
11. Miscellaneous		3,000,000
Produce of Non-Tax Revenue		£14,160,000	Total Supply Services		£59,918,000
			Total Expenditure		87,846,000
			Surplus		289,000
Total Revenue		£88,135,000			£88,135,000

Motion made, and Question proposed, "That the Chairman do report the said Resolutions to the House."

MR. HENRY H. FOWLER (Wolverhampton, E.)

Mr. Courtney, on this question I desire to put a question to the Government. Some four or five years ago it was the custom to print in the Civil Service Estimates the names of all the pensioners who had been in the Civil Service. The Treasury then made an arrangement that that custom should be discontinued; but that in place of it a List of the pensioners should be presented to the House periodically. When I held the post of Secretary to the Treasury, a Motion was made for such a Return; and I stated on that Motion that the close of the year 1886 was the time agreed upon for the presentation of the List. We have now nearly reached May, 1887, and T will, therefore, ask the right hon. Gentleman the First Lord of the Treasury (Mr. W. H. Smith) whether he will lay on the Table a List of the Civil Service Pensions, stating, in the usual form, the age of the pensioners, for what the pension was granted, the length of the service performed, and so on?

THE SECRETARY TO THE TREASURY (Mr. JACKSON) (Leeds, N.)

Perhaps the right hon. Gentleman will allow me to answer his Question. The right hon. Gentleman has correctly said that this Return was, in former years, given in full; but I suppose for reasons of economy, which evidently actuated the right hon. Gentleman when in Office, its presentation has been discontinued for some time. If the Committee should be of opinion that it is desirable to go to a very large expense for this purpose, the Return can be presented. I have made inquiry about it, and if the expense is of no consequence, there will be no difficulty in giving the Return. The right hon. Gentleman knows that it would cost a good deal of money to publish it in the form he suggests; and perhaps it might be sufficient to show the additions to, or the reductions in, the List. But I do not think, however, that there will be very much difficulty about it, and if the right hon. Gentleman presses for the full List, we will give it.

MR. HENRY H. FOWLER

I shall certainly press for it, and for two reasons. In the first place, because I deem it absolutely necessary that the Treasury should keep faith with this House. The publication of the yearly List was discontinued, on the distinct understanding that the Treasury would lay this information periodically before the House. In the second place, it is absolutely impossible for hon. Members to go through the Lists for a dozen years or so, in order to see who is living, and who is dead. There is no difficulty about it. It is all in print. I really wish to press for it.

MR. JACKSON

I do not want the right hon. Gentleman to remain under any misunderstanding. As far as I know, there is nothing at the Treasury to inform me that any pledge was given to the House, or that there was any understanding such as the right hon. Gentleman suggests. But, of course, I accept the right hon. Gentleman's statement in that respect.

Question put, and agreed to.

Resolutions to be reported To-morrow.

Committee to sit again upon Wednesday,

MR. CHILDERS (Edinburgh, S.)

Perhaps the right hon. Gentleman the First Lord of the Treasury (Mr. W. H. Smith) will tell us, assuming that the usual Bill will be read to-morrow, when the second reading will be taken?

THE FIRST LORD OF THE TREASURY (Mr. W. H. SMITH)

I believe, Mr. Speaker, that 10 days must elapse before the second reading can be taken. Of course, everything depends upon the progress of Business in the House, and I cannot make any announcement until I see what progress is made.