WAYS AND MEANS.

HC Deb 23 April 1891 vol 352 cc1176-213

Considered in Committee.

(In the Committee.)

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

Mr. Courtney, I wonder whether hon. Members of this House who did me the honour last year to listen to my Financial Statement remember how, when I was suggesting that the Estimates of the Revenue for the coming year ought to be framed in a spirit of prudence, they associated themselves with that suggestion by a responsive cheer. I was then suggesting that, when we looked to the barometrical readings which ought to be studied if we would make a forecast of the condition of the people, there were signs in those barometrical readings directing us to frame our Estimates rather in a spirit of caution than in a sanguine spirit. I asked this House at the time whether they considered that I was right in my suggestion. The Committee associated themselves with me, if I may say so, in a partnership in regard to the caution with which the Estimates ought to be framed. Now, Sir, we are able to point to a surplus of £1,756,000 as the result of last year's finance. Nevertheless, I feel confident that the House will feel that they were right in the view which they took, and that it would have been wrong, looking to the circumstances of the time, to have counted upon the Revenue which happily has flowed into the coffers of the State. There was no certainty at that time of a continuance of the progressive prosperity which we now enjoy, nor of the speculative activity which marked the previous year. The Committee will remember that there were some ominous signs. The relations between capital and labour were strained, and there were symptoms of everything not being entirely right in the regions of high finance; and, accordingly, we were justified in presuming that no sanguine view should be taken of the Revenue of the year. Again, the Committee will remember the position of the Spirit Duties, and the part which they played in the Estimates of last year. Were we justified in calculating upon the cumulative force in the tendency to spend a large portion of the increased wages and profits upon them? The close of the financial year has shown that the anxiety we felt at the beginning of the year was not misplaced. There were incidents towards the latter part of last year—dramatic, I might almost say tragic, incidents—which proved that, although we have escaped the great dangers which were besetting us, it was right not entirely to ignore the possible advent of such dangers. Again, fortunately, some of those strikes which threatened to be of a duration long enough to mar any hopes of an increased Revenue, were settled in the end, and there, again, we have escaped from dangers which might have occurred. I believe I may fairly claim that if ever caution was justified by results it has been so in the financial results of the year of which I have now to present the accounts, although the excess of Revenue over Expenditure has reached the satisfactory figure of £1,756,000. This result is all the more gratifying as in the past year it has been my fate to have to provide for a certain amount of unexpected expenditure. The needs of Ireland have compelled us to incur an increased expenditure of £200,000, an expenditure which this country has not grudged to its poorer Sister in her time of need. Then there are the Post Office and the Telegraphs; they required Supplementary Estimates of £200,000, and of that amount £150,000 and more has been due to an increase in the wages of the men employed. I would here suggest that, when the inevitable attack is made some day on the increase of the Expenditure, even our most ardent critics should be good enough to remember both with sympathy and with justice, that public opinion has given the Government the cue that it is no longer to buy in the cheapest market, but in the best, and is no longer to employ the cheapest labour, but the best. This tendency will show itself in a more striking form in the Estimates of the current year. There is another item of increased Expenditure in which the Committee will bear a share of the responsibility with the Government. I allude to the boon that was given to the Volunteers last year; I then included in the estimated Expenditure a Supplementary Estimate of £100,000, and the Secretary for War undertook to find another £50,000. But the result of carrying out the wishes of Parliament has been even more expensive than we expected, and the Supplemental Estimates show an increase of £80,000 on that head. With the history of the Supplementary Estimate of £350,000 for the Navy the Committee is already acquainted. But, apart from these excesses, I have had two bequests of liability left me by my predecessors, which it has been my unhappy fate to have to meet this year. The Irish Constabulary Fund was insolvent; and I hope I have put the fund straight at an expense of £150,000. I have had to provide another quite unexpected £100,000 in respect of what the older Members of the House may remember as the Chancery Book Debt. In 1872 it was supposed that a large amount of money owing to suitors in Chancery would never be claimed, and the sum of about £2,500,000 was written off. But experience has proved that an increased spirit of research, assisted by those means of increased publicity which the present day demands, has enabled many suitors, who it was believed would never claim, to make their claim, and possibly also old business has been cleared off at a more rapid pace, and perhaps there has been a desire on the part of some suitors to invest in other securities. The result has been that I have been called upon to find a sum of £100,000 out of the Revenue of the year and to place it to the credit of this fund. The Committee will sympathise with a Chancellor of the Exchequer who in a heavy year like this has been called upon to find £250,000 to meet such inherited liabilities. I have put before the Committee certain increased charges which we have had to meet. This last item of £100,000 increases the head of " Other Charges on the Consolidated Fund." Under this head there have been some savings, partly of account and partly of fact; £40,000, which was charged on the Consolidated Fund for Ireland in lieu of the licences given to England and Scotland, was not paid by the Consolidated Fund, as the Bill authorising the payment did not pass; but it was voted in Committee of Sup- ply, so that it has no effect on the aggregate expenditure of the year. But we placed on the Consolidated Fund £300,000 for the erection of barracks, which I had undertaken to pay out of the Revenue of the year. Of this sum only £225,000 has been actually required, which gives a saving of £75,000. Lastly, the Committee will remember that a large sum was taken for the drawback on silver plate after the repeal of the duty. I am happy to say that the drawback did not reach the Estimate by £25,000—a very satisfactory result, due in great part to the administrative ability with which this complicated matter was carried out. As the final result of the excesses and savings which I have mentioned, the charges on the Consolidated Fund show a decrease of £65,000 as compared with the Estimates. The Supply Services show an increase of £421,500. The net increase is accordingly £356,000, which is less than one-half per cent. over the Budget Estimate. The exact totals are—£87,377,000, Budget Estimate; Exchequer Issues, £87,733,000, difference £356,000. If I include all that has been granted by Supplementary Estimates the final figures are somewhat different. The total grants were £88,511,000, against an annual Expenditure of £87,733,000, but the Departments have spent £778,000 less than Parliament placed at their disposal. I mention this to show that savings have been going on, and that the Departments have not abused the liberality of Parliament. The past year has not been free from Emergency Expenditure, but nevertheless the elasticity in the Revenue has enabled us to meet the increased expenditure in a manner which I hope will be considered on all sides as satisfactory. What has been the Revenue? The actual Revenue exceeds the Estimate by £1,879,000. Yet, as I have ventured to suggest, the Estimates were carefully framed, and framed with every propriety, of which I hope to submit proof to the Committee. The Committee will be impatient to learn under what heads these excesses have arisen. But let me point out that this increase of £1,879,000 is, after all, but about 2 per cent. on the total Revenue. One turn of the screw, one change in the general current of prosperity, and you might lose that 2 per cent. on which, happily, we are able to congratulate ourselves this year. In 1889–90, the Committee will remember, it was alcohol which played the principal part in depositing no less than £1,800,000 in the coffers of the State beyond my expectations. I refused to believe at the time that it was probable that the increase in the consumption of alcohol would continue and the revenue from its taxation again be exceeded. I think that was the view of the Committee also; but we were wrong in that respect. I believed we had reached the summit of the consumption of alcohol; but this year again, in the various items of alcohol, the consumption exceeds the estimate I had formed by no less a sum than £900,000. Out of the total increase of £1,879,000, alcohol counts for £900,000. There is the same rivalry this year between the various forms of alcohol as there was last year. Brandy, rum, wine, beer, foreign spirits, British spirits—all have shown again an increased yield; but the increase is chiefly in spirits; it has been larger in spirits than in any other department of alcohol. But it must not be said on that account that it is to Scotland or to Ireland that we mainly owe the increase in the Revenue. Being now able to trace the consumption to different parts of the United Kingdom with comparative accuracy, we have been able to see where this increase of consumption has taken place, and we find that the ratio of increase has been considerably larger in England than it has been either in Scotland or Ireland. In England the consumption of home-made spirits was over 18,000,000 gallons in the year—an increase of nearly 9 per cent. over the high figures for the previous year. The consumption beat the record by 1,000,000 gallons; and it was the highest consumption in England since 1880. In Scotland the consumption was 6,500,000 gallons, or an increase of 7½ per cent.; and in Ireland the total consumption was 4,900,000 gallons, showing the same increase of 7½ per cent. over last year. In both these parts of the United Kingdom this height of consumption has frequently been reached before, and sometimes passed; but in England it has never before reached this level. Rum once more shows a large percentage of increase—nearly 4½ per cent. over my estimate. Rum gives an increase of £144,000, brandy of £34,000, wine of £10,000, beer of £127,000, spirts of £586,000—together £901,000. I have taken British and foreign spirits together, because of the change in the system of methylation, which involves a transfer of a certain portion of revenue from Customs to Inland Revenue, amounting last year to £280,000. The net increase of revenue from foreign and British spirits is £586,000. The Committee can scarcely judge of the importance of this increase without reference to the amount on which it is an increase. That amount is about £15,000,000. The aggregate total of alcohol revenue is about £30,000,000. The total increase over the Receipts of the previous year is £720,000, and the increase over the Estimate is £900,000. I had allowed for a slight decrease in the consumption of spirits, not being prepared for the continuance of that considerable increase in every department of alcohol which we have witnessed in the past year. [Sir W. HARCOURT (Derby) here asked a question.] I ought to have said the figures do not include the additional 6d. a gallon on spirits, nor the additional 3d. on the barrel of beer, imposed for purposes of local taxation; I am speaking of Imperial Revenue only, which, of course, makes these figures all the more striking. Although this increase in the consumption of alcoholic beverages may be viewed with some disappointment and regret, there is at the same time in that increase of consumption one element of satisfaction. It shows that the powers of consumption of the working classes, owing to the increase of wages, has been on the increase during the last year. I have now the satisfaction to tell the Committee that the Customs, irrespective of the increase of spirits, show a satisfactory result all round, and bear eloquent testimony to the fact that the year 1890 will stand out as one of the years in which the working classes, as well as all other classes, have been able to add to the Revenue by their power of securing increased comforts for themselves and their families. I estimated the total Revenue from Customs at £19,116,000, and the Receipts have been £19,480,000, showing a surplus of Revenue over the estimated receipts of £364,000. To this must be added, for the purpose of comparison as regards Customs, £280,000 owing to the change made as regards the methylation of spirits, so that the Customs really show an increase of £644,000. Before the change was made as to the methylation of spirits, the spirits that were introduced from abroad first paid duty to Customs and afterwards had it returned in the shape of drawback by the Inland Revenue after the methylation had taken place. The spirits are now methylated in bond, and the Customs, therefore, lose the Revenue they previously obtained. On the other hand, the Inland Revenue is saved from the necessity of paying drawback, and thus the receipts of the Inland Revenue are increased by the sum by which the receipts of the Customs are diminished. The Committee should understand that the total of foreign spirits, owing to the circumstance that I have described, does not show an increase in Customs, but a decline of £107,000 as compared with the estimate. The increased power of consumption shown by the Revenue Returns of last year is also manifested by non-alcoholic beverages. The minor non-alcoholic beverages, including cocoa, show as usual little change, but tea plays a happy part in the history of last year, notwithstanding a Paper which has been circulated this morning to Members of the House in which it is suggested that no greater injury could be done to the consumers of tea than to take off the duty—a somewhat novel doctrine in political economy. I am not sure I do not see in that document some jealousy on the part of importers of tea from China in respect of the teas imported from our own possessions of Ceylon and India. Those possessions are contributing more and more to the tea supply of this country, and I doubt whether the strictures passed upon these newer imports in the document to which I allude are just. The reduction of the Tea Duty last year involved a loss of £1,500,000, but I reduced this loss in my Estimate to £1,282,000, by making allowance for increased consumption and other causes, but an increase in the receipts of £209,000 over my Estimate reduces the net loss to the Revenue to £1,073,000. A certain portion of the increase is due to the remission of duty, and the remainder is due to increased consumption irrespective of the reduction of duty. Making a careful calculation of all the necessary allowances, I conclude that the increase in 1890-91 over 1889-90 was at the rate of 61 per cent. This, however, is not to be judged alone by the imports of the tea leaf, but also by the difference between the teas of China and those of India and Ceylon. Impartial judges say that the power of the leaf from our own possessions as compared with China teas is in the proportion of 71 to 5 gallons of liquid of ordinary strength. Therefore, the increased consumption of tea is really still greater if we calculate the number of cups that have been drunk as distinct from the quantities of tea imported, because the tea from India and Ceylon goes further than the tea from China. I offer no opinion of my own as to relative strength; I only mention it as the opinion of impartial judges; and I believe the comparison is justified by the relative prices of the different teas. Taking into consideration the increase in gallons of liquid, the total increase in the amount of tea drink per head is about 7 per cent., instead of 61 per cent. calculated on imported leaf alone. I pass to another article on which the duty was reduced last year, namely, currants. In 1861 the duty on currants stood at 15s.; it was first reduced to 7s., and last year it was further reduced to 2s. I calculated the Revenue from currants at £120,000, allowing for a considerable increase of consumption, and that Estimate has been almost exactly verified. While by that reduction we lost £215,000 of Revenue, the consumption has increased 26 per cent., and I think everyone will acknowledge that to be a satisfactory result. But, more than this, we obtained at the same time when we reduced the Currant Duty, concessions from Greece as regards the taxes on imports from England. And I see, just as might have been expected, that our imports of currants having increased, our exports to Greece have increased by 22 per cent. I now come to another interesting article. Possibly the majority of the Committee will be pleased to hear, while others will deplore it as an evil sign, that there has been an increased consumption of tobacco. There is no article which played a larger part in the Revenue of last year, considering its position in the Customs, than tobacco, the receipts of the year exceeding those of its predecessor by £474,000. I calculated on an increase of £213,000, but that has been more than doubled. A small portion was due to the cigar trade, but the great bulk was in that kind of tobacco which is sold to the people. I have looked at the quantity supplied, and I find that there has been a large increase of consumption by the wage-earning classes. One ounce of tobacco gives 12 pipes, and, according to that calculation, the increase in the number of pipes smoked last year was 560,000,000 pipes. But, though I put it in that way, there is a serious side to this question, too. We see in all this the increased powers of consumption, on which we are able to congratulate ourselves. We expected to lose by the reduction of the duty on tea £1,500,000, on currants £210,000, and on wine £10,000, making a total of £1,720,000, in addition to £280,000 through the methylation of spirits, which would show a total estimated loss on Customs of £2,000,000, but the actual loss was only £980,000 as compared with last year. Here we have satisfactory evidence of a considerable recuperation. I now pass to the Excise. As regards the Beer Duty, apart from the additional 3d. per barrel imposed for local purposes, it realised £375,000 more than the year before, and an increase of £127,000 over my Estimate. The total is £9,391,000. Of spirits I have already spoken. The increase over my Budget Estimate has turned out to be £870,000, or, deducting the gain resulting from the saving of drawback on methylated spirits, about £600,000. I now pass to the other items of Revenue, and the transition shows some curious results. The considerable advance shown in the Revenue derived from consumption almost immediately disappears. I particularly call the attention of the Committee to the somewhat remarkable figures connected with the Death Duties. One would think that that item of Revenue was most likely to be affected by the changes and chances of this mortal life, but none appears more possible of an absolutely correct estimate. I estimated those duties at £7,460,000, and the receipts were £7,444,000; the whole difference between Receipts. and Estimates being only £13,000. The half Probate Duty was estimated to yield £2,400,000, and it gave £2,412,000, a most extraordinary instance of exact calculation. The increase, as compared with last year, is £148,000. The Estate Duty shows an increase of £124,000, and Succession Duty £110,000. Legacy Duty fell off £262,000, which I must balance by the other two. On the whole, the Death Duties come out right within £16,000. Therefore, they contribute nothing to that excess of Revenue over Expenditure to which I referred at the commencement of my remarks. General stamps have not realised the Estimate by £90,000. I allowed for a decrease of £85,000, land, therefore, the decrease is £175,000 as compared with the previous years. Then there is a loss as compared with the previous year on deedsand other instruments of £92,000; on bonds to bearer, of £50,000; on transfer of foreign securities, £18,000; on tax on formation of companies, £43,000; and on contract notes, of £7,000. In all these cases, while the Estimate has scarcely been realised, there has been no serious loss. It shows the forecast that the year would not be a very fruitful one in speculative transactions was accurate, and the caution exercised was abundantly justified. The whole Estimate under the head of Stamps (which includes the Death Duties) was £13,572,000, and the receipts were£13,460,000—adecrease of £112,000. House Tax was estimated at £1,460,000, and it realised £1,570,000, being £110,000 more than was anticipated, but a loss of £400,000 as compared with the proceeds of last year's tax. The result of the Income Tax again shows a remarkably accurate Estimate. We calculated on £13,200,000, and it realised £13,250,000, the whole difference on that enormous sum being £50,000. The total receipts of Inland Revenue collected for Imperial purposes exceeded the sum estimated by £1,114,000, but if from that is deducted the amount due to the increased consumption of beer and spirits, which comes roughly to £1,000,000, it will be seen that the difference on the total Estimate is less than ½ per cent.—conclusive proof of the caution and accuracy with which the Estimates had been framed. If, on the one hand, there has been a large increase in the produce of indirect taxation, when we come to Stamps, Death Duties, and Income Tax, the Estimate has just been realised, and that is all that can be said. I have still to deal with non-Tax Revenue. The Post Office and Telegraphs show an increase of Receipts over Estimate of £120,000, but that increase of Receipts is less than the increase of Expenditure over my Estimate, and, on the whole, the Post Office and Telegraphs show a loss, taking both sides together, as compared with my Estimates of last year, notwithstanding the fact that we did not realise the whole loss anticipated on the reduction in Colonial Postage, which only came into force on January 1. On Miscellaneous Revenue there is a satisfactory increase of £280,000. Of that sum, £200,000 was derived from profit on silver. In the year before it had given more than the ordinary profit, and we were of opinion that we had supplied the country with as much silver as they required. The country, however, have taken so much more than we anticipated that the receipts have been increased by £200,000 over our estimate. The total increase in non-Tax Revenue is £401,000. Adding to that the increase on Customs of £364,000 and the increase on Inland Revenue of £1,114,000, I get a total of £1,879,000 increase of Receipts over my Budget Estimate; and if I now deduct the Exchequer issues from the Receipts, I find a surplus of £1,756,000, as compared with the margin which I provided last year of £233,000, not, I hope, an unsatisfactory result in a year of uncertainty and doubt. This concludes the story I have to tell as regards the past year; and I venture to hope, although I thought it necessary to, go into some detail, that these figures will not have been without interest to the Committee. I now approach a different, but a cognate, subject of our finance. I have spoken of the Expenditure which has been voted by Parliament and paid. out of the taxes. I now come—and I think that hon. Members opposite will be particularly anxious that I should say a few words on this point—to the expenditure which we have incurred out of loans, and I will put this matter in the simplest form possible. The Committee will remember that there were three Acts passed. There is the Barracks Act, the Naval Defence Act, and the Imperial Defence Act. The Barracks Act I can dismiss in a few words. Our borrowing powers were only to begin in 1891-2. In the past years the funds for proceeding with the building of barracks were provided out of the Revenue of the year. Nothing has been borrowed under this Act. With regard to the Imperial Defence Act, that is divided into two parts—(1) naval, and (2) military. We were authorised to borrow under the naval part £850,000, and under the military £2,600,000. Under the naval portion we spent in the year 1888–9 £270,000; in the year 1859–90, £337,000; and in the year 1890–91, £243,000, or a total of £850,000. This total amount, less £52,000, charged on the Navy Votes, was borrowed from the National Debt Commissioners in 1889–90, the sums spent in 1888–89 and in 1889–90 having been taken out of balances, to which they were restored last year. The whole of this loan is to be repaid by annuities running over the next 12 years, amounting to £97,000 a year. On the other side we receive contributions from the Colonies, for the construction of the ships alone, of £35,000, irrespective of their maintenance. This is estimated at 5 per cent. on £700,000, the original estimate of the cost of the ships, but is actually about 4½ per cent. of the cost. After 12 years this Fleet becomes the free property of the State. I say free property, because up to that time, as the colonies undertake to pay the interest of the debt, the ships are not the free property of the State. They have to be kept in Australian waters, for the defence of which they are used jointly by the Imperial and Colonial Authorities. The annuity of £35,000 is provided by Statute by the Colonial Parliaments. We have proceeded by Statute also, and I will leave it to the impartial critic to say whether, considering that we are to be paid over a course of years by the colonies, and shall be in receipt of a sum of £35,000 for 12 years, it would have been fair to the taxpayers of two years that they should have paid the whole cost of these ships, while the taxpayers of the following 10 years would be receiving as a free gift the sum remitted by the colonies. I think I may say that, whether hon. Members agree with me or not, I have given a rational and fair account of that transaction. I now come to the military portion. Under this there was spent in 1888–9, £390,000; in 1889–90, £500,000; and in 1890–91, £780,000, which with a balance in hand of £60,000 makes up a total of £1,730,000. This total amount' was borrowed on Treasury Bills in 1890-91, the sums issued in 1888–9 and in 1889-90 having been taken out of balances, to which they were similarly restored last year. The repayment of the sums borrowed in whatever form, whether by Treasury Bills or Exchequer Bonds, has been provided for, as the Committee will remember, by the arrangements made as regards the Suez Canal shares. The Suez Canal shares, after the year 1894 begins, will give us a revenue of from £500,000 to £600,000 a year, which, I think, I may call a windfall. Therefore, it will never be necessary to levy any taxation for the repayment of this sum, amounting, on the whole, to £2,600,000, unless, indeed, you consider foregoing all this revenue, on which you never calculated, and which you never before enjoyed, equivalent to taxation. Then I pass to the third head, the Naval Defence Act. Under this Act there has been borrowed in 1889–90 nothing, and in 1890-91 £696,000 from the National Debt Commissioners. In the Return moved for by the right hon. Gentleman the Member for Bradford it was anticipated that a much larger sum would be required. If I had not some special knowledge, I might have been impressed by the utterances which I have heard in a good many directions of a belief that many millions had been borrowed, whereas the actual amount borrowed with regard to naval defence is £696,000. There were two heads under which borrowing was authorised, one being that of naval construction in the Government Dockyards, and the other being that of contract ships. Under the first head, for the purposes of the ships built in the naval dockyards, it was anticipated that £611,000 would be borrowed. As a matter of fact, nothing has been borrowed, but £350,000 was taken as a Supplemental Estimate. Borrowing, according to the Treasury reading of the Act, could not commence till £2,650,000 had been spent, and that sum was only reached within the very last days of the financial year, and nothing was borrowed. On the contrary, I call the attention of the Committee to this: that in the previous year the whole amount which had been estimated had not been spent, and the taxpayer of the year 1889–90 paid more than the Expenditure of that year; and generally under all those Acts it will be found that if there has been any borrowing that ought not to have taken place, according to the judgment of some persons, it is only in the year 1890–91, and the proportions of that borrowing, and the circumstances under which:it has taken place, will not be absent from the mind of the Committee. On he other hand, according to the terms of the Act, balances not expended in previous years had to be paid over to an account styled in the Act the Naval Defence Account. To this account there has been paid over last year £380,000, the unexpended part of the sum voted for Dockyard construction in 1889–90. I now pass to the question of contract ships. Under this head an annuity of £1,428,000 was provided in 1889–90, to be charged on the taxpayer, to run for seven years, and special provision was made by the Estate Duty and the duty on beer. It was necessary, in our belief, to increase the Fleet and for that purpose we established this system of building these contract ships under a statutory programme; and £1,428,000 being the sum established in the Act as the provision for each year. It was my painful duty to find the funds to meet that annuity. I remember the difficulty which I experienced in imposing the Estate Duty, and still more have I a lively remembrance of the difficulty of raising the extra 3d. on beer imposed for that purpose. It will be seen, therefore, that we made provision in that first year to meet that annuity, to go in payment of contract ships. The Estate Duty of £1,200,000 was almost equivalent to the annuity of £1,428,000. What has been the result? In the first year when the Act was passed £1,428,000 was charged upon the taxpayer. The whole of that could not be spent, as the contracts made would not embrace the whole of that sum in that year, and the result was that the Admiralty drew only £653,000, and the balance was retained in the Naval Defence Fund. To sum up as regards the year 1889-90, with respect to contract ships, £776,000, and as regards ships in Government yards £380,000 were put aside. These sums have been paid by the taxpayer of the year, but not spent; so that up to this year, far from the taxpayer being relieved from expenditure which a future taxpayer will have to bear, he has practically paid £1,000,000 more than it has been possible to spend. I trust that neither side of the House thinks that it is unnecessary for me to enter into these details, as so much confusion has prevailed. In the year which has just been concluded it was anticipated that, besides the amount standing to the credit of the Naval Defence Fund from the preceding year, the sum of £2,750,000 would be required. The estimate was made in January, 1890, and those who had to frame it had to consider not only how much the contractors would be able to do in the remaining three months of that year, but also what payments they would become entitled to in the year 1890-91. I think that every one who has had experience of these matters knows how difficult it is to estimate how much contractors will spend in a given time. The Admiralty took a liberal estimate. They considered how much the contractors would require, and they put it in the Return which was moved for by the Member for Bradford. As a matter of fact, partly through strikes and partly through having other work on hand, the Admiralty found that the contractors were not able to do the whole of the work for which it had been thought necessary to borrow money, and so did not draw the amount. The result has been that in the financial year we were only called upon to provide (beyond the money voted in Supply and the annuity charged on the Consolidated Fund) for £1,076,000, under the Naval Defence Act, for dockyard shipbuilding, towards which £380,000 was available from the Defence Fund, instead of the much larger sum which had been anticipated. The National Debt Commissioners have provided this balance of £696,000 out of their resources. To sum up the amounts which have been borrowed during the last three years under all the Acts that have been passed for Defence, the amount borrowed under the Imperial Defence Act was £2,580,000, of which £52,000 has been already repaid. Under the Naval Defence Act £696,000 has been borrowed, making a total of £3,276,000 for the year 1890–91. I am very sorry that it has been my duty to bring together these figures, which occupy a certain amount of time that I would gladly have devoted to subjects of more thrilling interest to the Committee, but, at the same time, it is right that I should have taken the course I have followed. Now I will speak of the estimate of the amounts likely to be borrowed under the Naval Defence Act in the coming year. For Naval Defence it is expected, that £2,300,000 will be borrowed, and the anticipated amount for both the Defence Acts is £2,850,000. I pass now to a heavy subject, but, nevertheless, one which is full of interest, if we look to its effect upon taxation and the ultimate burden upon the people; I mean the reduction of the Debt. Last year in my Financial Statement I showed that £23,323,000 had in three years been applied out of taxes in the process of reduction of Debt. Since the 1st of April, 1890, the Funded Debt has been decreased by £6,665,000. On the other hand, the Unfunded Debt has been increased by £3,888,000, of course including the amounts borrowed for Imperial and Naval Defence purposes, and I have still to add £800,000 borrowed from the National Debt Commissioners for the Australian Squadron, so that, deducting these amounts of increase from the decrease, there has been a net reduction of £1,977,000 of Funded and Unfunded Debt. To this total I add, as usual, the diminished liability in respect of Terminable Annuities of £3,385,000, and the increase in the balance of £1,150,000, which is equivalent, of course, to a reduction in the Debt. Taking these items together, the reduction of liabilities in 1890–91 was £6,512,000, reduced by the repayment of the Cape Loan of £400,000, leaving a net reduction of £6,112,000, after taking into consideration the debt that has been incurred under the Defence Acts. I wonder whether this figure will surprise hon. Members. Let me further state, as I stated last year, the amount actually paid out of Revenue in the last financial year in reducing our capital liabilities, or applicable to that purpose—I mean the amount which the taxpayer actually paid within the year for the purpose of diminishing Debt. By Annuities and the new Sinking Fund, the taxpayer paid off Debt within the year to the amount of £5,860,000, to which I have to add the old Sinking Fund, i.e., the surplus of the Revenue of last year, of £1,756,000, making a total applied from Revenue to the payment of Debt of £7,616,000. Adding that to the £23,323,000 paid in the three former years, the taxpayer has paid £30,939,000 for the reduction of Debt during the four years I have been in Office, or an average yearly application of taxes to the payment of Debt of £7,735,000. May I put the matter in another way? What was the effect of the process of reduction during last year, and of the conversion on the interest which the country is bound to pay on the Funded and Unfunded Debt? The interest for one year, as it stood in 1887, less Local Loans Stock, at 3 per cent. for the Funded, and 21/2 per cent. for the Unfunded, Debt, was £18,771,000. The actual interest paid in 1890–1 was £16,986,000, a reduction of the charge for interest for last year of £1,785,000. Now let the Committee, remember that this repayment of the Debt is optional, but that the charge for interest is compulsory; and it has been the good fortune of the present Parliament to be able to reduce, not the optional, but the compulsory, charge upon the taxpayers for the payment of Debt by a sum of about £1,800,000. Let us consider for a moment the measures as a whole affecting the reduction of the National Debt which have been passed during the last few years. In 1887-8 we reduced the permanent charge from £28,000,000 to £26,000,000, but the change has been materially modified by the result of the conversion, which reduces the interest on the National Debt by £1,500,000. If the whole of that reduction had been left within the permanent charge, the reduction would not have been more than £500,000; but, as hon. Members will remember, I gave the taxpayers the benefit of £1,000,000 of that saving. The permanent charge, therefore, was put at £25,000,000, and now the extent of the reduction of the means available for paying off Debt, as compared with the permanent charge at £25,000,000, is £1,500,000 less, but not less by a greater amount than that. But that is not all. The annuities have also been at work; Debt has also been otherwise reduced; and I am able to inform the Committee that, notwithstanding the reduction from £28,000,000 to £25,000,000, we are practically able to pay off as much Debt now as in 1886. The difference against us is only £369,000, though the charge has been diminished by £3,000,000. However, I do not want the pace of the reduction of Debt to be tried by what I call the measured mile. Let me, therefore, take a some what loner period. The total amount during the last five years applied out of taxation to the reduction of the National Debt has been £37,200,000. The total for the five years before was £24,600,000. We have accordingly in the last five years provided out of taxes for the repayment of £12,000,000 more than was done in the preceding five years. But I will give another comparison. I will omit the years 1885–6 and 1886–7, which were years of exceptional military operations, and I will take the four years before and after, namely, 1887–8 to 1890–1, and 1880–1 to 1883-4. In the earlier years the total was £27,200,000, and in the later years it was about £30,900,000, the difference being £3,600,000 in favour of the later years. I think, therefore, that the present House of Commons has not failed to discharge its duty in following up, and not slackening, the pace of the reduction of Debt, to which we all attach the very greatest importance. Now, let me return for a moment to the question of the Funded and the Unfunded Debt. We paid off a portion of the Funded Debt to the amount of £5,000,000 just at the beginning of the present financial year, and we increased the Floating Debt accordingly, but I am happy to say that the amount of the Floating Debt—for I am anxious not to see it too high—in the hands of the public has been diminished by £2,400,000 during the past year. It stands to-day at about £1,000,000, which is only £7,000,000 in excess of what it stood at before the conversion operation, and that after we had paid off £24,000,000 of the Funded Debt in cash. I have seen a remark in one quarter calling attention to the large increase which has taken place in our Unfunded Debt without the slightest allusion to the reduction in the Funded Debt. It was laid to my charge as a crime that I had increased the Unfunded Debt, and as the, sentences ran one would have thought that this was an increase of Debt altogether. But, as a matter of fact, we have reduced the Funded Debt to an amount quite out of proportion to the increase in the Unfunded Debt. I know-there are men who think we ought to. fund our Unfunded Debt; but if we are-to do so we ought to be able to do it under favourable circumstances, and without loss to the State. I do not know whether hon. Members will remember that I undertook to use my best abilities in carrying out the conversion. in order that we should not increase the capital of the Debt, and by that declaration I have stood. There are, no doubt, inconveniences in a large amount of Floating Debt, but I would rather-gradually reduce that Debt than throw a large amount of Consols on the market in order to fund it. As far as the Floating Debt is in the hands of the National Debt Commissioners, the matter is as. broad as it is long, inasmuch as I propose-to give Exchequer Bonds—and in fact II have given them—running for a certain period. As regards the public, to fund that Debt would mean to offer an equivalent amount of Consols in the market, and that is an operation which those acquainted with the Money Market would not view with any satisfaction. I am sometimes twitted with the price of Consols. The price of Consols is comparatively low, but that has not only been due to the conversion, but to two or three other causes. It has been due in the present year to the immense sales of Consols to meet the financial exigencies in which some of the greatest houses have found themselves. Of course that has had a great effect upon the market. But, besides, it has seemed good to this House and to the other House to make some serious changes as regards Trust Funds; and there has been a kind of invitation issued in every direction that these stately Consols, which our forefathers and our fathers wished should constitute the maintenance of their children, should be replaced by other less patriotic securities. I venture to think, Mr. Courtney, that the bones of some of those patriots would turn in their graves if they knew what was being done in regard to their .intentions that their daughters should subsist on Consols. There has been no sympathy whatever in the view that Consols should be the chief element in trusts. Imperial considerations have given way, I am afraid, before fair legatees and importunate cestui-qui trusts. This accounts for many sales of Consols which have affected the market. But I venture to think that the time will come when Consols will again resume the supremacy which we must all wish for them, and which constitutes the great strength of the nation. And now, before I pass to the finances of the coming year, let me say one word with regard to a subject in which hon. Members of this House take the deepest interest—that is, the question of the relief of local taxation 'and all that hangs thereby. I think the House would like to hear an authoritative statement of what has been done with regard to the transfer of funds to the Local Authorities. We have transferred in 1890–91 for Licence Duties to England £3,011,000, and to Scotland £310,000, making a total from Licence Duties of £3,321,000. For Probate Duty to England £1,930,000, to Scotland £265,000, to Ireland £217,000—total for Probate Duties, £2,412,000. For Beer and Spirit Duties to England, £1,039,600, to Scotland £143,000, and Ireland £117,000 — total from Beer and Spirit Duties, £1,300,000. The grand total transferred in these forms, with a sum of £40,000 voted for Irish labourers' cottages in lieu of the gain accruing to England and Scotland by the transfer of licences, is £7,073,600. But, of course, against that you have to set off the grants in aid which have been dropped, and which would have been given from the Imperial Exchequer in the old time. In the last year in which they were granted—1886–87 —they amounted to £2,944,000, but as some of the contributions expanded from year to year, they would probably have amounted by this time to £3,200,000. If I deduct that sum, the total net relief given to local taxation in England, Scotland, and Ireland is £3,873,600. Generally, I may say, this has been given in relief of local taxation. But the Committee will remember that there were some special purposes to which this was to be turned. There was a sum of money that was available for school fees in Scotland, for payment for intermediate education, labourers' cottages, and national school teachers in Ireland. But, of course, the bulk has gone to the relief of local taxation. If I separate England from Scotland and Ireland, and say what the relief to England alone has been, after making allowance for the dropped grants, the amount is £3,100,000. Now, the Committee will observe that the relief is given not only by the Probate Duty, which represents personal property, but partly by the Beer and Spirit Duties, and this, doubtless, is a new element in our finance. I am prepared to say it is a sound element. I do not see why indirect taxation should not be put under contribution, looking to all the new purposes to which the Local Authorities are obliged to apply themselves. I do not see that it is unfair that indirect taxation should contribute, in some measure, to the relief of local taxation. Well, then, to what purposes has this additional Beer and Spirit Duty been put? It has been applied to three purposes. First, to Police Superannuation, about one-third; second, to general relief of local taxation; and, third, it was intended to be applied to the extinction of licences. I have received a great many communications which would indicate that the tax had been imposed for the last purpose only, but no one who has a shred of memory can forget that that is not so. There were three distinct purposes for which it was imposed. Well, now, I ask, has the higher scale of duty proved that the total duty is more than the alcoholic beverages would bear? I admit that considerable reconsideration ought to be given, if it had been found that this increased duty had generally proved that the duties were too high. That is not so. There is another argument on which I may slightly touch. It is argued that this additional tax falls, not upon the consumer, but upon a particular and limited trade. But I am unable to admit that plea, because, if that were so, I think we should never be able either to reduce or increase a tax. It may be that in some articles a tax falls more heavily upon a particular class interested in that article than upon others, but I do not think that we can hold that any particular class bears the whole amount of the duty put upon the article in which it deals. I will not deny—I will not attempt to deny—that the fact of the failure of one part of our scheme has naturally created much disappointment and irritation; but I repudiate in the strongest degree the suggestion that there was any pledge on the part of the Government that if we could not carry out the whole of our scheme, then this tax would fall to the ground. I am deeply concerned that a body of men engaged in a legitimate business should think themselves ill-treated because they are not relieved of this tax, but I must say at once that to relieve them of the whole of this tax would in any case be absolutely impossible, as it was imposed not only for the extinction of licences but for two other purposes. Then should a portion of the tax be repealed? Should one-third be repealed? I can assure the Committee that this matter has given me a great deal of anxiety, because the charge has been levelled more than once against me that I have broken my pledge in this matter—a charge I once more emphatically repudiate. But at the same time I have looked into the matter very closely. I have received 146 Memorials from the trade and others praying for the repeal of the whole of the tax, but in only one important Memorial has any mention been made of the repeal of a third of the tax. What would a third mean? It would be 1d. a barrel on beer and 2d. a gallon on spirits. Well, I confess it appeared to me at one time that it would be a comparatively small boon to take off these sums. It appeared to me, especially in the case of spirits, that a reduction of 2d. per gallon would disturb contracts, agitate trade, and would cause more confusion than the advantage which would be derived from the repeal. To an important deputation which I received I put the question whether they endorsed the view I held with regard to taking off this one-third, and they did not repudiate it. Then, on the other hand, I asked myself to what purposes has this one-third been put; what has been done with it? In a great many cases it has been applied to the development of technical education. County Councils have taken the greatest interest in the matter, and I think it would be very important if my right hon. Friend the Vice President of the Council would give the Committee and the public full information with regard to it. I may say, roughly, that a very large proportion of the County Councils have assigned the whole of this Revenue by resolution to technical education. A large number of others have assigned a portion of the money to the same purpose, and in other cases no answer has been given. Looking at the whole state of the case, it appears to me that it is felt by the country at large that the assignment of this sum of about £400,000 has been of incalculable advantage in stimulating technical education in the counties and elsewhere. Looking to that fact, and looking, on the other hand, to the very small and doubtful boon which it would be to take off d. a barrel and 2d. a gallon, I have come to the conclusion, I may say not without reluctance, not to disturb the tax. I say not without reluctance, because it will be admitted that those on whom it has fallen have been subjected to a great disappointment; but, at the same time, I should rejoice as much as any man in this House if the grant of this money should have the effect, which we all hope it may have, of stimulating technical education in all parts of the country. Mr. Courtney, at this point it becomes my duty to give my cordial thanks to the Committee for the great patience and indulgence with which they have listened to me hitherto, because, though I think there are many things in the Revenue of the past year which are interesting, and I have only given explanations which ought to have been given, nevertheless I know hon. Members are impatient to hear what the finance of the present year is to be. Well, then, in the first place, I come to the question of the Expenditure of this year. The Committee is already acquainted with the immense sum for which I am bound to provide the means. The Consolidated Fund Services amount to £28,295,000, being a decrease as compared with last year's issues of £408,000. The total of the Supply Services is £60,024,000, an increase of £1,000,000 over last year's figure of £59,030,000. Adding together the expenditure, therefore, as known to the Committee, I get a total of £88,319,000—I am giving round figures—which is an excess on the issues of last year of £586,000, and of nearly £950,000 on my Budget Estimate for 1890-91. That is a large increase; but the whole facts cannot be grasped without an analysis of the charges on the Consolidated Fund, which result in a diminution, as I have said, of £408,000. The Consolidated Fund last year included a sum for barracks of £225,000, for drawback on silver of £95,000, and for another item of £100,000 for the Chancery Book Debts. These figures vanish, at all events for the present, from our calculations. They are not included in the Estimates of the year, but they bring up the real excess of expenditure over last year's issues to nearly £1,000,000. And, further, the Committee is entitled to know that from the Miscellaneous Revenue an item of £120,000 has been withdrawn and appropriated, as Appropriations in Aid to Civil Service Votes, in accordance with the views of the Public Accounts Committee. Thus the Civil Service Votes appear so much the smaller, while the £120,000 vanishes from the item of Miscellaneous Receipts, and in effect our expenditure is so much the larger. Now, I think the Committee will agree with me that I am putting the full significance of these figures before them. I am not attempting to hide in any degree the vast expenditure which we are incurring. Why should we attempt to hide it? Why should we attempt to conceal from the people this expenditure if we believe the expenditure is made in response to the demands of the people and to the requirements of the Imperial Service? Do not attempt to say that we wish to palliate or excuse our expenditure. What we have to do is to defend it and show that it is necessary in the interests of the Empire and not only so, but that the public itself is urging us on and is responsible for a great part of this increased expenditure. There are two ways in which you may show moderate Estimates. You may do so by being moderate in framing your Estimates; but you may do so also, by leaving half the work undone, and it has been the case sometimes that Governments—I do not make any distinction of Party in the matter— have sinned in the direction of entering upon a competition for the moderation of Estimates, while, as a matter of fact, work has been accumulating which their successors had to discharge. Now, I think the Committee will do me the justice to say that I have never attempted to hide our expenditure. Those who remember the language I used last year with reference to the expenditure of the country, especially for the two great Services, will remember that I was not the mouthpiece of a Government wishing to screen themselves from criticism; but I used the language of a Chancellor of the Exchequer anxious for the security and strength of the country, in which no one was more interested than himself. I repudiate the suggestion that we had, or have, any desire to hide the real expenditure from the country. Let me place some of the items before the Committee, and show whence this increased Expenditure arises. We have an increased Expenditure this year, but only £70,000 of that increase is due to the two great Services. No; it arises from other causes. Ireland [a laugh]; yes, do hon. Members wish to dissociate themselves from the increased Expenditure which we have felt ourselves bound to give to Ireland? The increase of Expenditure in Ireland arises from the relief works there, and from the light railways which we are constructing, though they are permanent works, out of the actual taxes of the country; and we ask in this coming year, and without any fear that our action will be repudiated by the House, that £200,000 more should be voted for Ireland for light railways and relief works. £500,000 of the increased Estimates of this year go, I will not say to the debit of Ireland, but to the satisfaction of the desire which has been felt in all parts of the United Kingdom to come to the assistance of our poorer Sister. [Interruption.] At all events, we are not ashamed to ask the taxpayers to vote an extra £1,000,000—for that is the amount in two years—to go to the needs of that portion of Ireland which is suffering from distress. The sneers of hon. Members below the Gangway, if they were sneers, are somewhat misplaced. I think they will prefer that their sneers should not be placed before the taxpayers of the country, who without a murmur, as far as I know—has there been a single public meeting where any member of the opposite side?—[slight interruption.] I do not wish to be controversial. How many men are there who would be reproached at any public meeting of English taxpayers for having assisted Ireland in her need, and having constructed light railways, by which we hope the material prosperity of that, country may be increased? [An IRISH MEMBER: Out of Irish money.] Yes; Ireland contributes. I quite agree—perhaps it was an omission on my part not to say so—th Ireland 'bears her share in the contribution. These are occasions when Ministers are not expected to be controversial, and I apologise to the Committee if I was carried away for a moment .by the interruptions. I am dealing now with matters which do not concern the Executive Government of one day alone. I am pointing to a tendency to increased Expenditure, the results of which will fall as severely on any successors we may have as upon ourselves. It is a tendency to which 1 would call the attention of the country, apart from the assistance to Ireland. The next item, after Ireland, is Education. There is an increase of £140,000, partly due to the automatic increase in the number of school children, partly due to the extension of drawing in the elementary schools — a small matter which, nevertheless, swallows up some £70,000 or £80,000. Public Buildings show an excess of £70,000, and yet we are accused of miserable stinginess for not more rapidly advancing various public buildings which are required. Post Office and Telegraphs show an increase of nearly £400,000. That is the way in which the Expenditure is rising. Of this £400,000 a large proportion is due to increased salaries; and though we have this substantial increase, all the large cities are clamouring for new Post Offices, with sites that are valued at £100,000 or £200,000, and I think the time will come before long when the House of Commons— when the most ardent zealots in favour of the diminution of the Post Office Revenue—will find that in this matter of increased Expenditure they have a difficult element to deal with. Then there is the Census. We have £150,000 this year extra to pay for the Census; and a number of persons — I am not sure whether you, Mr. Courtney, were not yourself amongst the number —thought, on the whole, we were not going to conduct the Census with sufficient liberality and magnificence of statistical scale. Adding together these items we find an increase, after making all the necessary allowances, of £1,090,000 in the estimated Expenditure of this year as compared with the previous year. I have, I think, accounted to the satisfaction of the Committee for this increase in the Estimates. We have two Supplementary Estimates which we shall have to propose, and which hon. Members will be kind enough to add to the Estimate of the Expenditure; of the coming year. There is a sum of £125,000 for the relief—for the continuation of the relief—of the distress in Ireland during the present financial year, and for the amount necessary for the relief of the crofter districts, and for carrying out in them those operations which my right hon. Friend the First Lord of the Treasury has described. Well, now I have done with the Expenditure of the year but for one remark, which, long as I have occupied the Committee, I should wish to make. I wish to make it before I approach the question of the means for meeting this Expenditure. We have some contributions in aid of our Expenditure; but to a very slight extent indeed, from our colonial fellow-subjects. We have had to consider—it was the bounden duty of the Executive Government to consider—while looking to the immensely increasing cost and the increasing requirements of the great Military and Naval Services, looking to the total which the British taxpayer is bound to pay, whether we have not a right to call for some increase of these colonial contributions which have been made in the past. We have examined this matter in no narrow or exacting spirit. We have looked to see whether such colonies as the Straits Settlements, Mauritius, and Hong Kong —we have looked to see whether their revenues have increased as ours have increased, under the protection of the British flag; we have looked to see whether they pay anything like the sum which some of the poorest and smallest States contribute for their defence. We have looked to their population; we have looked to their revenue; we have looked to their trade; and we have thought it to be our duty to see whether, in view of the changed circumstances, those contributions should not be revised. I have thought it right to make this public allusion to the subject, and I wish to assure our distant fellow-subjects trading under the British flag that we do not desire to approach them in a niggardly spirit; but we do think that they should, like some of the larger colonies, take an increased share in bearing the immense burdens of the Empire to which they belong. Some of the colonies, indeed, have come forward. Australia has done much in this direction. Some of the colonies pay their own troops; and I strongly hold that the smaller colonies should feel that they have duties cast upon them in connection with the Empire. I have made these remarks with the view of showing that this subject of colonial contribution is a question of importance to all sides of the House; it is a question for Parliament to consider. And now I pass to a review of the means of the nation to meet its general expenditure, and I ask the Committee, as I did last year—what is the spirit in which we are to frame our Estimates of Revenue? And, again, I invite the Committee, on most substantial grounds, to approach the Estimates of the Revenue in a spirit of caution. 1890 has been a brilliant year in many respects. I speak particularly as to trade and wages; but there are many people who believe that we may find ourselves upon the top of that curve of prosperity, and that we have not so good a year before us as the past. Still, we have two advantages in this year. One advantage is a permanent advantage. There is always that increased consumption which may be put down, to the in- crease in the population, and 1 per cent. would be the normal increase of that portion of the Revenue which is due to the increase of population. Another advantage is that we have a larger number of tax-earning days in this year than last year. In the first place, it will be a Leap Year, which gives us one day more. Then we have no Easter in the present financial year. The present financial year is a year without an Easter. We have no Good Fridays and no Easter Mondays. [A VOICE: "Less consumption."] My right hon. Friend probably alludes to the consumption of certain special articles. True as regards consumption, but not as regards business! The provision for the consumption for holidays does not take place at the moment of the holidays, but at a different time, as experience has shown. The right hon. Gentleman the Member for Mid Lothian, who in 1861 had exactly a similar state of affairs, was able to speculate, and speculate successfully, on an increase of Revenue owing to the increase in the number of tax-earning days in that year. Three extra days mean 1 per cent. on the total working days of the year, and 1 per cent. is a large amount when you come to deal with millions. I add this 1 per cent. to the 1 per cent. for the increase in population, and if I allow for no other causes than those I have stated, we ought to have an increase of Revenue by 2 per cent. That would give about £1,200,000 on the £60,000,000. Now, let me turn to another matter, which I think will interest the Committee. What is the degree of prosperity on which we can count in the country as regards the general Estimates which I have to submit? How far has our prosperity been affected, for instance, by what has happened in the City? I do not think that the general prosperity has been greatly affected by the breakdown in speculation. It might have been otherwise if the danger had not been averted; but as it was met, and as there was no breakdown of credit in the country, the general estimate of the prosperity of the country has not been influenced by these events. I have made the closest inquiry into the state of commerce and industry, of trades and wages, and of agriculture in the country during the year 1890.. Let me give the Committee some figures, because 1890 is a year which has topped all others in regard to the profits of the employer and the wages of the employed. There are exceptions, no doubt. The wool trade has not been so successful, and there is the shipping trade, which has been only fairly successful; but, looking at it broadly, 1890 has been an extremely prosperous year. For computations for the Returns under Schedule D of the Income Tax, the year 1887 vanishes from the average, and its place is taken by the year 1890—i.e., the three years on which the average would now be built are 1888, 1889, 1890, instead of 1887, 1888, 1889. The comparison, therefore, of 1890, with 1887 becomes of peculiar importance. The sums at issue are so vast that it requires an exuberant fancy even to be able to form some conception of them. For instance, the bankers' clearings in London in the year 1890 were £7,801,000,000, against £6,077,000,000 in 1887, an increase of over £1,700,000,000. It seems like calculating the distance from the earth to the sun. The bankers' clearings in the cities of Birmingham, Manchester, and Newcastle-on-Tyne have been £225,000.000 in 1890, against £205,000,000, in 1889, an increase over that year, which was in itself a good year, of some £20,000,000, or 10 per cent. I congratulate the right hon. Gentleman the Member for New' castle, whom I see opposite, on the prosperity of that city. Nor have the profits fallen much behind the transactions. The profits of 18 provincial banks in 1890 were £1,122,000, against £882,000 in 1887, an increase of nearly 40 per cent. The railways have carried more passengers, more merchandise, more minerals, and more live stock. In the vast cotton industry more cotton has been consumed than ever before, and not without some good returns. The profits of 88 companies in Oldham have risen from £86,000 in 1887 to £368,000 in 1890. Let the Committee look behind these enormous figures, and then they will see more work, more wages, more happiness in many homes in this increased prosperity. The increase in the value of coal has been immense. It is calculated that in 1889 the value of coal exported was £14,782,000, against £19,020,000 in 1890. The increase in the value of coal exported is thus no less than 28 per cent. The amount of the coal exported was 28,956,000 tons in 1889, as against 30,130,000 tons in 1890, an increase in quantity of 4 per cent. The profits of 16 Derbyshire Coal Companies in 1887 were £176,000; in 1890 they reached £572,000. In a number of other collieries, which I twill not specify, the profits, which were £770,000 in 1887, rose to £2,330,000, in 1890. I will not carry on the comparison, but I require to state these things in order to justify the estimate of the Income Tax which I am going to make for the year 1891-92. The result of the examination of the Income Tax Collectors and others who report to me with regard to the prosperity of the country is this—that instead of putting the Income Tax down at £13,250,000 for the coming year, I am putting it down at £13,750,000, being an increase of £500,000 over last year. That brings up the Income Tax to £2,300,000 for each 1d. in the£1. The right hon. Gentleman the Member for Mid Lothian can look back to the first statements of Sir Robert Peel with regard to the Income Tax, and will remember that he calculated the d. in the £1 as representing £700,000.

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

No; only £500,000.

MR. GOSCHEN

Yes; only £500,000, the right hon. Gentleman says, and now d. in the £1 represents no less than £2,300,000. But the Committee will not be satisfied if I speak only of the profits of the employers. I have made inquiries into the wages of the employed, and I may cite one instance, which is a pregnant and interesting instance with regard to the rise in wages. In one set of collieries the wages have risen from 1s. 9d. per ton in 1887 to 2s. 4d. per. ton in 1890. I have an estimate before me which places the total increase in the wages in the coal trade in 1890, as compared with those of 1885, at no less a sum than £6,000,000. That is an increase of wages on which we may congratulate ourselves. Well, I have spoken of the past year, but what about the future? I see no great cause for alarm with regard to any decline in the coming year; but I do not see indications that, having realised such high wages in 1890, it would be probable that they will continue to advance. I will not calculate upon a decline, but, looking to the possible effects of the M'Kinley tariff, and to other features upon which I have not .the time to dwell, I am not prepared to expect any increase in the consumption of the various great articles of trade beyond the 2 per cent. I indicated in the earlier portion of this branch of my remarks. I will now proceed as rapidly as I can to give the figures at which I estimate the Revenue of the coming year. The Committee will bear in mind that I put down the Income Tax at £13,750,000. The Customs Revenue of last year was £19,480,000, but from this I have to deduct £200,000 for the Tea Duty collected before the change of duty took effect, and, that, with other adjustments, reduces the amount to £19,280,000. Adding 2 per cent. to this, the sum is £19,665,000, and I put the total of the Customs Revenue for the coming year at £19,700,000. Some of the items in this large figure are coffee, £333,000; dried fruits, £340,000; tea, £3,400,000; tobacco, £9,730,000; rum, £2,370,000; brandy, £1.370,000; and Geneva, £755,000. The total Customs, as 1 have said, I put at £19,700,000. I now pass to Excise, in which we estimated beer at £9,580,000; and British spirits at £15,150,000. I increased the Probate Duty last year by £140,000; this year I raise it from £2,400,000 to £2,450,000. The Estate Duty, I calculate, will produce £1,220,000, and the Legacy Duty, £2,580,000, a very slight increase in each case, because I do not think that in the face of the fall of securities which has taken place it would be wise to calculate on a greater excess. The Succession Duty I increase by £40,000, which brings it to £1,300,000. In general stamps, owing to what I have seen in the last months of the past year, I do not venture to place the figure as high as last year, and I reduce the Estimate by £67,000 to £5,900,000. The grand total of stamps, including general stamps and Death Duties, is £13,450,000. I make no alteration in the amount estimated from the Land Tax, and in the House Duty I allow for a further loss of £120,000, the total from that source being £1,450,000. The total of the receipts of the Inland Revenue I put at £54,980,000, as against £53,983,000 last year, or an increase of £997,000, being about 2 per cent. increase on last year. I add that to the increase on Customs, and I calculate the total increase in the taxed revenue at £1,017,000. I have still to deal with the non-Taxed Revenue. Under this head I hope for an increase of £320,000 in the Post Office and Telegraph Service receipts. In Miscellaneous Revenue, I am sorry to say, I find a tremendous gap. I place it at only £2,500,000, as against £2,979,000 last year, being a decrease of £480,000. I have alluded to the loss of £120,000 as being given in Appropriations in Aid of the various Civil Services. But another loss is due to the fact that I can no longer count on the difference of the profits of the Mint to which I have alluded. Therefore, I am unable to put the miscellaneous revenue at a higher figure than that I have named. I estimate the total of the non-taxed Revenue for the coming year at £15,750,000, as against £15,911,000 for the past year, being a decrease of £161,000. These figures give me a net increase for last year of £941,000, and a total Revenue of £90,430,000. I will now give the Committee a resume of the figures —Customs, £19,700,000; Excise, £25,300,000; Stamps, £13,450,000; Land Tax £1,030,000; House Duty, £1,450,000; Property and Income Tax, £13,750,000; total produce of taxes, £74,680,000; Post Office, £10,120,000; Telegraph Service, £2,480,000; Crown Lands, £130,000; Interest on Purchase-money of Suez Canal Shares, Sardinian Loan, &c., £20,000; Miscellaneous, £2,500,000; total produce of non-Tax Revenue, £15,750,000; total Revenue, £90,430,000. The Expenditure, as the Committee will remember, including the Supplementary Estimate of £125,000, is estimated at £88,444,000. I therefore find myself with a surplus—I will not say to dispose of—of £1,986,000—let us call it in round figures £2,000,000. I have now to ask myself, Am I to have this surplus? Is it to be at my disposal for my own financial purposes? Am I in the position of being able to give any remission of taxation? I approach the consideration of this question with considerable apprehension from the experience I have had of the past. There sits my right hon Friend the President of the Local Government Board with a guilty look which reminds me that one year he deprived me of all power of remitting taxation; another year the First Lord of the Admiralty did the same; and the Chief Secretary for Ireland has cost me an extra £1,000,000 within the last two years, although he may seek to palliate his guilt with the idea that I need not, on principles of financial propriety, have provided the means for the building of permanent railways out of the taxes of the year. Is there on this Bench yet another despoiler of the public purse? Well, Mr. Courtney, I am not without my anxieties, as a few minutes will show. Before I part with, or before the Committee dispose of, the surplus, let them look for one moment at the dimensions of the surplus. It amounts to £2,000,000. It is not a very large sum compared with the Revenue out of which it springs. It is scarcely more than 2 per cent. I do not know that any great things could be done with it. To do great things you want two elements—a surplus of money and a surplus of time; and although I have a moderate surplus of money, I do not know that I have any large, or any surplus of time. There are some great tasks to which I have been invited, including the reorganisation or re-arrangement of the Death Duties, of the Income Tax, and of the Stamp Taxes. My right hon. Friends opposite, as well as my Colleagues, know the difficulties of such gigantic tasks, and the length of time they require. The right hon. Member for Mid Lothian has spoken of the re-construction of the Death Duties as requiring a Session; the re-construction of the Income Tax would require a full Session also.

MR. W. E. GLADSTONE

A century.

MR. GOSCHEN

The right hon. Gentleman has been half a century in the service of his country, and during that half-century he has not been able to submit, or has not desired to submit, a plan for the re-construction of the Income Tax. We have no surplus of time, and I have only a small surplus of money which I mention, as sometimes it is by greasing the wheels, by exemptions, and otherwise, that re-construction can be achieved. I have yet another reason why it would be impossible to attempt the re-construc tion of the Income Tax, even with more time than I have, and that is because I am profoundly convinced that the two tasks, for one of which a Session is required and for the other, according to my right hon. Friend, a century, are practically two tasks that must be undertaken together. The re-construction of the Death Duties could not be undertaken without the re-construction of some features of the Income Tax. The re-construction of the Death Duties involves an increase in the taxes on real property; and, if so, you would have at the same time to consider whether a change in the Income Tax ought not to be balanced by a corresponding change in the House and Land Duties. But, however that may be, we are agreed in this, that both these two efforts would constitute a gigantic task. There remains the third task, the rearrangement of the Stamp Duties, which are full of anomalies, some of which ought to be redressed; but if I might give a word of friendly advice to my successor, of whatever Party, it would be that he should not rush into any precocious passion for the redress of anomalies. There is no field more dangerous, in which there are more pitfalls and snares for the unwary, of which I have had experience myself. I found, for instance, that on the Stock Exchange stately British Stocks, all the most respectable securities, were taxed on their transfer or at, their birth, while a certain class of shady foreign securities escaped scot-free; British respectability was taxed, but foreign gambling went scot-free. I thought that here was an anomaly to be redressed, and I put a tax upon fugitive securities, but I have never heard the last of it and of the "cumbrous method" by which it was done. I only created a grievance in trying to redress a wrong. I maintain that the principle I followed was correct; but if the experts of the Stock Exchange could find a less cumbrous form of taxing these securities, I should be only too glad to listen to them. As to stamps generally, one thing we have been able to accomplish—and I trust the announcement will not be unsatisfactory — the authorities of the Inland Revenue have prepared a Bill in which the existing law is consolidated; and I venture to think that will be a great boon to business men and the public generally. Whether it will be a boon to the Chancellor of the Exchequer I will not inquire, because all the anomalies and exemptions are brought out in the Bill with such clearness that I am doubtful whether I shall have a moment's peace from the denunciation of existing arrangements. While the House may undertake consolidation by referring the Bill to a Grand Committee, we have not time at our command for a general re-arrangement of the Stamp Duties. In none of these fields do I see the possibility of action this year, even if I had time at my command. I say, even if I had time at my command. But the question arises whether I have money at my command. I have £2,000,000 at my disposal, in one sense; but there sits on the Treasury Bench another despoiler of the Public Purse—my right hon. Friend the Vice President of the Council, who, I believe, has serious designs upon me. In the Gracious Speech from the Throne at the opening of the Session this passage occurred— Your attention will be invited to the expediency of alleviating the burden which compulsory education has, in recent years, imposed upon the poorer portions of my people. The Government do not intend to depart from the pledge which was given in that Speech—a pledge which we intend to carry out at the earliest date and in the amplest manner. The cost of that operation is large—the cost of following up compulsory education with a corresponding amount of free education, [A VOICE: "Assisted," and cries of" Free, free! "from the Opposition Benches, followed by cheers.] I do not object to stand by the word " free." We intend to deal with the subject in no niggard spirit, as the Committee will see when I tell them that the cost of that operation will absorb the £2,000,000 at my disposal. The Committee will judge from that of the degree and completeness with which we are prepared to carry out the pledge given in the Speech from the Throne. I have said that it will cost us £2,000,000; that is the aggregate cost, including what will be given to Ireland and Scotland; but, of course, we have now not to deal with an entire year. We do intend, if the House of Commons, as we expect and hope, second us by a resolute determination to get through its Business, that if possible no administrative delay of a single day shall occur, and if our views are carried out, the parents will be relieved under the Bill from fees for the children whose education will be freed under' our proposals from the 1st of September next. It is not for me to disclose the particulars of the Bill which we shall introduce; but I may say that, asking Parliament as we shall to make the Bill operative on the 1st of September forward, we shall require in the course of this financial year something near half the amount of the £2,000,000. 1 must leave a margin, a balance, of course, and that will leave me a balance of £900,000. Am I to dispose of it, can I dispose of it, or must I not look forward to next year when the full £2,000,000, which our plans will cost, will come into operation? I cannot reconcile it with my duty to speculate, looking to the whole circumstances of the day, as to our having an additional £900,000 ready next year if I part with this £900,000. I feel that hon. Members will sympathise with a Chancellor of the Exchequer who is parting with a surplus to other persons, while he is burning to meet all those piteous petitions which are made for the remission of taxation. But one thing I have made up my mind about, and that is that the £900,000 ought not to be disposed of for a certain number of small reliefs. It must be kept together for the finances of next year in order that we may have the certainty of being able to carry out the whole of our task without any doubt and without any anxiety. If there were any strong claimants in this year I am bound to say lit would be the class that could not be relieved by this £900,000, even if it were in my power to do it. Looking to the reductions which took place last year, and looking to the alleviations of the burdens of the masses of the country, I do not deny that the Income Tax payers would have a strong claim, but this £900,000 would be as nothing compared with the £2,300,000 which are wanted; and therefore I say again that it is impossible for me, looking to the future, to mortgage that £900,000. I trust that I may have the support of public opinion, notwithstanding the certain disappointment of many who look for some relief. But hon. Members will ask, what I am going to do with the £900,000? I propose to devote £500,000 to the construction of barracks, relieving me of the necessity of borrowing to that amount, and the remaining £400,000 to a purpose which will occur only once for all,, which will not pledge the future, while it will at the same time, as I consider, meet an urgent public necessity, to which also we are pledged, namely, the withdrawal from circulation of light gold. That will leave me entirely free for next year. It would be improper for me to trespass further upon the time of the House with any explanations as to the measures which I think ought to be proposed as regards the strengthening of the circulation of the country in connection with the withdrawal of light gold. And now I have come to the end of my long story. I hope that the Committee will feel some slight sympathy with a Chancellor of the Exchequer who for the second time finds himself in the position of having his surplus snatched from his hands for other purposes. Again, the cup of pleasure, as regards the remission of taxation, is dashed from my lips, but I nevertheless feel an earnest sense of gratitude for the good fortune which, on the whole, I have enjoyed. The prosperity of the country has gone on increaing in a widening and fertilising stream during the last three or four years, and the energies of the people, followed by increased earnings, have sent more and 'more revenue into the Public Purse. And so we have been able to meet the larger demands made upon us. We have found that the spirit of the people has been requiring from us that we should undertake many costly functions which the State did not undertake before. I hope that in no niggard spirit, but watching the credit of the State, we have been able to meet those demands. I will conclude with the earnest hope that the prosperity which has blessed this nation for the last four years, undisturbed by the crises of big or little wars, may continue to grow, and that the people, in the enjoyment of prolonged peace, security, and plenty, may continue to rise to an even higher planet of physical comfort and of social and mental content.