FINANCIAL STATEMENT, 1892–3.

HC Deb 11 April 1892 vol 3 cc1134-70

Considered in Committee.

(In the Committee.)

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

Mr. Courtney: it frequently happens that when a traveller finds himself in a mountainous country and is ascending a slope he fancies that the point which he sees above him is the highest point of the hill, only to find when he reaches it that it is not the top, and that he has still further slopes to climb. We have had a similar experience during the last few years, as we have been ascending the curve of financial prosperity. For two or three years running we thought that the top was in sight; we thought that we should soon reach the table land, and have no further heights to scale, even if we did not actually find a decline; but still the curve led happily upwards. Time after time, Estimates framed on the theory that the top was in sight have been exceeded—happily exceeded I think for the benefit of the country. Last year we really thought that the top had been reached, and I think I may say, on the whole, that the forecast was justified. I am again, however, permitted by fortune to submit a surplus to the Committee—a surplus of £1,067,000, which I owe, as I say, to good fortune; partly also, I hope I may say, to the moderation of the spending Departments. That surplus is not due-to any great extent to any expansion of Revenue. I do not think any of the great sources of Revenue show any considerable excess over the Estimates which I submitted to the Committee last year. Except with one striking fortuitous exception, the Estimates have been generally exactly realised. I will not conceal from the Committee that there have been times—aye, there have been months—when I have felt very considerable anxiety as to the final result. It is a very anxious period for a Chancellor of the Exchequer when he finds that any of the great sources of Revenue are hanging fire, even for a few weeks. During January and February, I admit, the prospects did not look bright. March was a better month; and I am now able to submit what I hope, as regards the past year, will be a not unsatisfactory result to the Committee. I will, according to custom, deal, in the first instance, with the Expenditure of the last year. The Budget Estimate of Expenditure for that year was £90,264,000, and the actual Expenditure was £89,928,000—a saving of £336,000, which is a contribution to the surplus I have mentioned. The Committee will remember that there were not unimportant Supplementary Estimates submitted to them. Assisted Education, with the concomitant grants made to Scotland and Ireland, was put down in the Budget at £920,000; but ultimately £1,006,000 had to be voted, showing an additional charge of £86,000. When we come to the Estimates for this year, it will be seen that the excess of this charge over the original estimate is considerable, for the Committee will remember that during the progress of the Education Bill the age was lowered in one direction from five to three, and raised in the other from 13 to 15. It is, therefore, not unnatural, from a fiscal point of view, that as the result of that operation my Budget Estimate was exceeded. Well, then, with regard to the Post Office, there was a very considerable Supplementary Estimate. A sum of £362,000 additional was asked for the Post Office, including a tremendous haul, if I may say so, of £175,000 for the site of the Liverpool Post Office alone. I shall have some consolation during the course of my speech to give to those who think that the Revenue derived from the Post Office is too large. There are Members who think that the profit is excessive; but the expense, on the other hand, is rapidly diminishing the margin which hitherto the State has received. Of that £362,000 additional for the Post Office, increased salaries and wages accounted for a great deal. For Irish distress, and for some works connected with the Crofter districts, the Budget Estimate was £125,000, but £237,000 was voted, which gave an excess of £112,000. There were also further miscellaneous Estimates which amounted to £100,000. The total was £660,000 for Supplementary Estimates, which raised the total estimated Expenditure to £90,924,000. But there were savings on the other side. In the Budget it was estimated that the War Office would require £500,000 for the re-construction of barracks, but it was only able during the financial year to spend £325,000, so that there was a saving of £175,000 on that head. The other savings, which hon. Members will be able to trace if they look at the Paper in their hands, scattered over all the various Services, amounted to £821,000, so that the total savings on the total grants were £996,000; and deducting from that the Supplementary Estimates, amounting to £660,000, the saving compared with the Budget Estimate is £336,000. Again, I wish to call the attention of the Committee, as I have done once before, to the remarkably small difference there is in the final Expenditure compared with the Budget Estimate over such a mighty sum as £90,000,000 sterling. If I put the last three years together, on a total Budget Estimate of Expenditure of £264,000,000, the total difference between the Estimate and the Expenditure is only £137,000. There is much that may be said against our fiscal system, and I am not wishing now to claim for the Government or for myself one tittle of credit; but I doubt whether, not only in any State, but in any great financial concern, any similar results could be produced in dealing with that vast number of millions estimated to be spent—results showing so great a control over expenditure and so small a difference at the end of three years. There is only one point more which I will mention in connection with the Expenditure of last year. The £400,000 taken for restoring the gold currency has been, in accordance with the Act of Parliament, invested in Consols. The Proclamation for withdrawing the light gold coin has been issued, and is now in full working order; and though as yet we have not had a long experience, it appears as if the forecast of the loss on the sovereigns is not likely, on the whole, to be exceeded. I will now pass to what will probably interest the Committee more than the Expenditure. I pass to the Revenue of last year. Here, I think, it will be admitted, when I come to the conclusion of the story I have to tell, that there have been some remarkably close Estimates. I shall point out one or two exceptions, but I do not think they will mar the credit which should attach to those who are primarily responsible for framing the Estimates. The Customs were estimated to produce £19,700,000. The out turn to the Exchequer was £19,736,000, being £36,000 more than the Estimate. What are called the net receipts were larger—they were £19,838,000. There cannot be exact correspondence between the approximate net receipts and the amount actually paid to the Exchequer, for the net receipts are the actual sums collected all over the country, part of which may be in transitu and part in the collectors' hands. I may say, in passing, that it has been a neck-and-neck race all the time between estimate and fact. It appeared sometimes as if the fact would fall short of the Estimate; but after a prolonged race, which I am bound to say filled the breast of the Chancellor of the Exchequer at times with some anxiety, the fact won by £36,000 over the Estimate. My calculation was made generally on the basis of allowing for an increase of 1 per cent. in the population, and 1 per cent. for the three extra days—due to Leap Year and to the fact that the last financial year had the peculiarity of containing no Easter. Therefore, I allowed 2 per cent., and that has been generally borne out in the result, though not, of course, in every detail. Spirits have sometimes been that item of Revenue which has saved the calculations of the Chancellor of the Exchequer, and I have something to say that may not be quite uninteresting to the Committee about spirits. But this year tobacco has been the feature, not alcohol. The Committee will wish that I should pass rapidly over some of the smaller items of Revenue. The coffee group has produced £331,000, being £2,000 less than the Estimate. There is a further decline in coffee, while cocoa, as usual, has gained to a slight extent. Dried fruit has done well. It has produced £347,000, an excess of £7,000 over the Estimate, and £23,000 over the receipts of the previous year. But that has not been due to the item of currants. They have been rather disappointing, though there has been a very large crop, and the price has fallen so considerably that the consumer has had the full benefit of the reduction that was made in the duty two or three years ago. It is held that currants would have done better but for the strong competition which fresh fruit made last year. Fresh fruit was extremely abundant, and was worked up in various shapes which competed with those articles of children's luxuries in which currants play so large a part. The House will remember the charge that (to adopt a phrase which was made use of at the time) I frittered away £200,000 in reducing the duty on currants from 7s. to 2s. per cwt.; but that reduction has borne good fruit, not only as regards the price of the article, but also as regards our trade with Greece. Though the Revenue last year was not so satisfactory as was anticipated, the importation of currants has increased 25 per cent.—certainly a satisfactory result from the reduction of duty. Comparing 1891 with the average of the three preceding years, we have an increase of 273,000 cwt., or 25 per cent. I only dwell on this small detail, because it shows how a small reduction of duty does tell upon the consumption and stimulate the trade. There are also substantial increases in the imports from Greece of silver ore, olive oil, and some other products; and our exports to Greece show a material increase. I think that is satisfactory evidence of the benefit which has resulted from the reduction of duty. But I pass to other and more substantial sources of Revenue. Tea has been extremely satisfactory. The receipts from tea were £3,424,000, against an Estimate of £3,400,000, and against the previous year's receipts of £3,412,000. But I must inform the Committee that the result is more satisfactory than it appears, because the receipts of the previous year were swollen by a considerable amount of duty paid at the beginning of the year in respect of tea that had been held back in consequence of the expectation of a reduction in the duty. The amount held back was pretty nearly known, and the real increase for last year is £150,000, which is nearly 4½ per cent. Of that increase 2 per cent. would be due to the increase of population and to there being more days in the year; but the remaining 2½ per cent. is a bonâ fide increase in consumption. I do not mean to say that, apart from fiscal considerations, our satisfaction with regard to the increase on tobacco ought to be so great as our satisfaction as regards tea, but from the fiscal point of view the receipts from tobacco are extremely good. They amounted to £9,952,000 against the estimate of £9,730,000, and against the previous year's receipts of £9,534,000—thus producing £222,000 more than my Estimate, and £418,000 more than the year before. That is, I estimated for an increase of 2 per cent., and, like tea, it has increased nearly 4½ per cent. Hon. Members will remember that it was said that wages had fallen, that there was a certain depression of trade, and that there was gloom in many directions; but in these two items of tea and tobacco, each of which has increased 2½ per cent. clear, after making all deductions, hon. Members will see some reason to hope that wages have not fallen, and that there is still a widely diffused prosperity among the working classes of the country. I do not know whether I may start a theory as to one cause of increase which may not be so satisfactory as an increase of wages. Are our young men taking earlier to smoking? Is there a development of that precocity which we can see in so many directions in the civilisation of the present day—is that development showing itself also in tobacco? I am afraid that many of us in our villages see little urchins becoming taxpayers as regards tobacco at far too early an age. If we remember that in 1890–91 the increase on tobacco was more than 5 per cent. over the year before, the continued rapidity of growth will appear the more remarkable. The present amount of duty, £9,952,000, is nearly £600,000 higher than the highest point the duty reached before it was lowered a few years ago; so that, after making allowance for the whole loss of £600,000 due to that reduction of the duty, it yields now £1,200,000 more than it did at that time. I now approach with the awe which the subject always inspires in the breast of the Chancellor of the Exchequer the taxes upon alcohol—alcohol, which is so important to the Revenue that about £30,000,000 out of the total £90,000,000 of Revenue is paid by that one article. Let me make this one preliminary observation—that there has not been in the past year that general rush in the country to alcohol which characterised past years. Wine no longer shows that toasting of prosperity to which I have alluded in a former year. It seems that wine is the one article which first begins to feel the effect of commercial depression—I presume because during the times of extensive speculation gentlemen fill their wine cellars in advance, but when the bad times come they hold their hand for some time before they replenish their stores. Brandy and rum have not followed, as they did before, an identical course. The consumption of brandy has increased; that of rum has fallen. Hon. Members may possibly recollect that some time ago all spirits were rising together, and here we see some of the effects of the changing times. Beer has been hanging fire, I do not know quite for what reason, but I compare it with the movement which is taking place in regard to home spirits. The interest of the race of which I have spoken in former years between the various forms of alcohol has ceased. Home spirits have won easily with an increased percentage of 6¼. Brandy is a good second with 5¾ per cent. increase, but beer has lagged behind, while rum, and wine, and miscellaneous foreign spirits have been entirely driven out of the race. With regard to wine, I estimated £1,332,000, and the receipts were £1,291,000—a decrease of £41,000 as compared with my Estimate, and of £27,000 as compared with the receipts. of the previous year. In foreign spirits there is a decline, for a very obvious reason, and that is through the high price of potatoes which followed upon the famine in Russia. Thus the foreign spirits have been dearer, and have not been able to compete with home spirits. I find that rum has given £2,334,000, which is £36,000 less than my estimate, while brandy, with a receipt of £1,423,000, has given £53,000 more than I estimated. I can give no explanation why brandy has been increasing in consumption, while rum and wine have fallen, except that it is said that the vine-growers in the Charente are getting over the troubles caused by the phylloxera, and are producing a better article. I give that explanation for what it is worth; otherwise I cannot account for the difference. In Geneva and other foreign spirits there was a large falling-off from my estimate, due to the Russian famine as I have pointed out; it is a deficiency of about £84,000. I add some unimportant items in the Customs Revenue—namely, £65,000 for other articles; and I sum up as I began, with regard to Customs, with a total of £19,838,000 net receipts, of which £19,736,000 has been paid into the Exchequer. I now pass to Excise, where I am met at once by British spirits. Here there is a very large increase—an increase of £922,000 over the year before, and of £543,000 over my Estimate;—yet it was thought at the time that the Estimate was somewhat sanguine. British spirits realised £15,693,000. Taking Customs and Excise together, I estimated a total Imperial Revenue from spirits of £19,645,000, an exact increase of 2 per cent. over the year before, and practically it will be seen that the total is £20,121,000—an excess of £476,000, which makes an increase of about 2½ per cent. over and above the 2 per cent., which is an increase due to the normal growth of the population and to the increased number of days in last year. I wish to mention one point more with regard to spirits, because I think it is not uninteresting, and it is that the increase in the consumption of home spirits has taken place to a very much larger extent in England than in Scotland or in Ireland. For the calendar year ended 31st December, 1891, the increase in England is 6.53 per cent.; in Scotland 1.62 per cent.; and in Ireland it is only 1.05 per cent. Of course we must make allowance for the fact that the increase in population is not the same in all three parts of the United Kingdom, but still those percentages show that the real increase in the consumption of spirits has been due to the English, and not to the Scotch or Irish consumers. I asked myself whether possibly that may account to a certain extent for the fact that beer has not advanced with home spirits or other forms of alcohol. I wondered whether, owing to climatic or other considerations, possibly more spirits might have been consumed in England in the place of beer. I estimated that beer would give £9,580,000, but it only gave £9,459,000—a decrease of £121,000. It is an increase over the previous year of about £70,000, but that is less than 1 per cent., whereas the increase ought to have been 2 per cent. That concludes what I have to say with regard to alcohol for the past year. The total Revenue was £30,871,000, an increase of £900,000, or 3 per cent., on the year before, and of £314,000, or 1 per cent., on my Budget Estimate; and this latter figure represents the real addition due to increased average consumption. Before passing to the other forms of taxation, I hope the Committee will not think I am detaining them if I give them in conclusion—with regard to these articles of great consumption—the following contrast between what is now consumed per head of the population, and what was consumed per head 50 years ago, because it throws a very considerable light upon the spending powers of the population. In 1841 each individual of the population consumed, on the average, 13 oz. of tobacco in the year; in 1891 they were able to consume close upon 26 oz. each, which is double. Coffee and tea are often contrasted as regards their consumption in Great Britain to the disadvantage of the former, and here is this very curious fact. We are said not to be a coffee-drinking people; but if we look back half a century we shall see we were almost as much a coffee-drinking people then as we were a tea-drinking people. In 1840 we each consumed 17½ oz. of coffee against 19½ oz. of tea, so that the consumption of coffee at that time was almost as great as the consumption of tea. To-day we only use 12 oz. of coffee for each person against 87 oz. of tea. But the interest is when you put the two articles together. What an increase of comfort do we find! In 1840 we could only afford 37 oz. of tea and coffee for each person; whilst at the present day each person uses close upon 100 oz. of the same articles. That means that the great bulk of the population are able now to enjoy these non-alcoholic beverages to the extent of three times what they were able to do 50 years ago. I venture to think that while we survey the state of the Exchequer we also see side lights thrown by these figures upon the prosperity of the people and the comfort of different classes. Again, taking raisins and currants, we could only afford 1¾ lbs. weight for each person in the year 1841, while in 1891 each person used very nearly 5 lbs. As regards spirits, they bring in an Imperial Revenue of 19¼ millions now, as against 7½ millions half a century ago. But here the increase must not be set down to the increased use of the articles by individuals, as was the case with the non-alcoholic beverages. We used about seven-and-a-half pints of spirits per head in 1841; we now use a mere trifle over eight pints, so that the great increase of Revenue is not in consequence of any appreciably greater use of spirits per head; it is due to the increase of population and higher Excise duties. But while we see that as regards tea and coffee we use 100 oz. compared with 37 oz. used half a century ago, in the case of spirits there is no corresponding increase in the consumption. Surely the reflection is most encouraging to us. Leaving these great articles of consumption and noting that the railway and other small duties gave £560,000 as against £563,000 in the year before, I put the total Excise receipts at £25,610,000, as against my estimate of £25,300,000. I pass now to the subject of the Death Duties, and here, as is well known, I come to one of those sources of Revenue which show a very considerable increase over the estimate which I submitted for the receipts of last year. The Probate Office was never, I believe, more active than it, unfortunately, was during the months of February and March. The influenza epidemic has told most severely upon the population, and the consequence is a very considerable excess under the head of Probate and of Estate Duty—not so much upon Legacy and Succession Duty, because there the effect generally takes place some months or sometimes even a year later. But as regards Probate Duty the effect is almost instantaneous. Probate Duty, one-half of which goes to the Imperial Exchequer, amounted to £2,808,000, which is £358,000 above my estimate and £395,000 over the receipts of the previous year. Estate Duty amounted to £1,398,000, which was £204,000 over the receipts of the previous year, and £178,000 above my estimate. Legacy and Succession, Duty yielded £4,033,000, being £153,000 above my estimate, and £198,000 above the receipts of the previous year. The total of the Death Duties, therefore, was £8,239,000, an increase of £689,000 over my estimates. This general increase was due to a fortuitous circumstance which must modify any estimate; but, speaking generally, the estimates of the Death Duties have been remarkably regular. I pass now to the General Stamp Duties, which are interesting from the point of view of what I may call commercial activity; and if the story which I have had to tell with regard to articles of consumption points to the activity and employment of the working classes, so the Stamp Duties seem to afford some clue of what is going on in the City and other departments of business. On stamps there has been a considerable decline. Their total yield of £5,501,000 fell nearly £400,000 short of my estimate. Perhaps the Committee would like to know what light this result throws upon the present state of business. I should like to give just a few of the details to show where the Stamp Revenue has fallen off, because there are very significant facts to be learned from it. The total falling-off as compared with the year before is £470,000. That fall is mainly due to the transactions, I think I may say, on the Stock Exchange and in Lombard Street. Deeds and instruments, which I presume pass through the hands of lawyers, show a decline; so that the lawyers, in that particular, share to a certain extent in the depression of trade. The fall in stamps on these instruments amounted to £264,000. In stamps on Bonds to bearer there is an extraordinary falling-off. In the last half of 1890 the yield was £163,000, while for the last half of 1891 it was only £85,000; but there was a recovery in the March quarter. Then again in the transfers of Foreign Securities to Bearer—fugitive stamps—there is an immense falling-off. They started at £27,000 in the first quarter of 1890, but fell to £11,000 in the fourth quarter of 1891. Company promoters had a very bad time. I do not know whether they were on strike or whether there has been a lock out, but the amount received in respect of new companies has been extraordinarily small as compared with former years. The amount received for the first quarter of 1890–91 was £89,000, whilst for the quarter ending March, 1892, it was only £33,000. On contract notes there is not the same decline; there is, in fact, a much smaller fall than I anticipated. There is nothing particularly alarming in those facts which I have related with regard to stamps so far. Perhaps the more important question is, Is there a great falling-off in bills of exchange, which represent international business and a great portion of the home trade? I am glad to say there is no such corresponding decline in that item, which represents so much of what I may call the normal business of the country. It has only fallen from £755,000 to £717,000. Let the Committee therefore note this, which is important if we are going to take an estimate of the future: that the decline has mainly been—though we have heard so much about the depression of trade—the decline has mainly been in what may be called City transactions. The usual business of the country has not fallen off to the same extent. The receipts from 1d. stamps on receipts, drafts, &c., have not fallen, but give a small increase of £10,000. In the course of the year the total of stamps has, I have already said, fallen to the extent of £470,000, as compared with the year before. The Stamp and Death Duties together give a total of £13,740,000 approximate net receipts, of which £13,700,000 have been paid into the Exchequer. This total of £13,740,000 is £326,000 more than last year, and £290,000 more than my estimate. Land Tax and House Duty together have yielded £2,482,000, or £2,000 more than my estimates. Now I come to the Income Tax for the year, that mighty tax which accounts for so large a proportion of our Revenue. I confess that I have had my anxieties with regard to the outcome of that tax, because during a considerable portion of the year I could not see how the increase I had assumed and calculated upon, as compared with last year's Estimates, was going to be realised. But as the time passed by and the end of the year came, I am glad to say that my fiscal hopes were realised to the extent that, while we had estimated for an increase of £500,000, having hoped to get £13,750,000, the ultimate result was receipts of £13,810,000 paid into the Exchequer and £13,843,000 approximate receipts—again a very remarkable piece of estimating. Here I would say that, in the preparation of these Estimates, Sir Algernon West has been my most responsible adviser. He has now placed his resignation in my hands, after a period of service extending over 40 years; and I should not be doing my duty to a very eminent public servant if, in my place in this House, I did not heartily express to him the acknowledgment which I feel, and which I am sure my predecessors feel, for the valuable services he has rendered to successive Governments of this country and to the State. The total of the Inland Revenue net receipts for the year is £55,777,000, showing an excess of £800,000 over the Estimate and £1,940,000 over the receipts of the year before. The amount actually paid over to the Exchequer was not quite so large—£55,604,000, or an increase of £624,000 over the Estimates. I have still to deal with the Non-Tax Revenue. The Post Office and Telegraphs yielded a gross revenue of £12,630,000, which is £30,000 more than the Estimate. Again, that is a remarkably close Estimate. Crown lands yielded £430,000; interest on advances £222,000; and miscellaneous revenue yielded £2,373,000. The total of non-tax payments into the Exchequer during 1891–2 was £15,655,000 as compared with my estimate of £15,750,000—a decrease of £95,000. I deduct this decrease from the excess of the Customs and Excise, which together is £660,000, and I find that £565,000 has been contributed by the Revenue as a whole to the surplus which I have in hand. The total Estimate of Revenue was £90,430,000, and my Estimate of Expenditure £90,264,000, which left a margin of £166,000. To that I add a saving on Expenditure of £336,000 and the amount by which the Revenue has exceeded the Estimate — namely, £565,000, and I arrive at the realised surplus of £1,067,000. I cannot complete my history of the past year without stating what Expenditure has been incurred under the head of borrowed money in connection with the Naval and Imperial Defence Acts. As the Committee is aware, we have borrowed nothing under the Barracks Act during the last year. In respect of the Imperial Defence Act, we have borrowed £440,000, and under the Naval Defence Act £1,300,000, making altogether £1,740,000, which is the limit of our borrowing during last year. As regards the total borrowed up to date during the last four years, since the Imperial Defence Act was passed we have borrowed in round figures for the Australasian Squadron £800,000; for ports and coaling stations we have borrowed £2,170,000, and under the Naval Defence Act we have borrowed £2,000,000 — altogether £4,970,000, or, in round figures, £5,000,000. I do not wish in the present statement to be argumentative to any extent, but I do venture to point out to some of my more ardent critics, who said that millions and millions would be borrowed under these Acts—£20,000,000 was once suggested—that the transaction is one of far smaller dimensions than they could ever have imagined. If they had looked carefully into the matter they would have been differently advised; at all events, Sir, the sum of £4,970,000 is the total sum that we have borrowed up to the present. But I will not pass into an argumentative mood, when my intention is to be historical and explanatory. Now, Sir, as regards the Naval Defence Act, on ships built by contract we have spent up to date £6,800,000. We have raised from taxation three instalments of annuity amounting to £1,429,000 each, which together gave £4,300,000, and £500,000 we transferred from the ordinary Estimates for the Dockyard work, which gave £4,800,000. The remainder—namely, £2,000,000—is the total borrowed for contract-built ships. As regards dockyard-built ships we have borrowed nothing. We have spent seven millions on our Dockyard ships and armaments out of the programme of 11½ millions. Towards that not only have we not borrowed anything, but we have raised sufficient Revenue to enable us to transfer £500,000 temporarily from the Dockyards to the contract ships, so that the whole case stands thus—we have spent 14 millions on this Naval Defence Programme, and out of that sum twelve millions have been raised by Revenue, and only £2,000,000 have been borrowed. We shall have to borrow, perhaps, £1,000,000 in the coming year, and the amount borrowed under the Naval Defence Act will then stand at £3,000,000, the highest point, I believe, that will be reached. Well, now, right hon. Gentlemen opposite wish to know what figures I mean to present to the Committee as regards future borrowing. I have asked my right hon. Friends at the Admiralty and the War Office to give me as precise and definite figures as they could. The Admiralty placed certain figures in their Estimates in November last, but the labour troubles which so constantly interfere with the progress of ships that are being built under contract have again prevented the payment of the instalments which were expected to be paid, and now the prospect of utilising as much money as was originally anticipated has declined. Accordingly all we shall require in the coming financial year will be about £900,000 instead of £1,400,000, which at one time was expected. That is under the Naval Defence Act. Under that part of the Imperial Defence Act which deals with ports and coaling stations we expect to borrow and spend £320,000. Under the Barracks Act we expect to spend £650,000, and this sum we shall borrow, according to the precedent of the Military Forces Localisation Act. The total we may have to borrow will be something under £2,000,000 in the present financial year under all three Acts together. As regards the Naval Defence Act, I have stated to the House the highest point of loans will have been reached. I may now state to the House, as to the expenditure under the Imperial Defence Act upon ports and coaling stations, that the day is not so far distant when we shall have begun to pay off what has been borrowed by the dividends on the Suez Canal Shares. After the 1st July, 1894, that splendid asset of the nation will assume a tangible shape, and the Committee will be interested to know how that asset stands. It cost this country £4,000,000; it has brought in £200,000 or 5 per cent. up to date. The 176,000 shares which belong to the State will from the 1st July, 1894, carry interest and dividends, if the present rate be maintained, to the amount of £625,000; or, if we take the present value of the shares in the market, the value of the asset of these shares will be £19,000,000 sterling on the 1st July, 1894. I envy the Chancellor of the Exchequer on that day if I should not be here. I should envy the Chancellor of the Exchequer, who then will be able to enter this asset not as £4,000,000, where it modestly stands now, but as £19,000,000, and who will be able to say that he has reduced the national liabilities by no less a sum than £15,000,000 sterling. I should like to do it now. I should like to anticipate some right hon. Gentleman perhaps on the other side of the House, but I am too modest to make this entry at the present moment. I hope the right hon. Gentleman opposite will not think I am wrong in placing before the country the existence of this valuable asset, which, if it were realised, would far more than cover all the loans under the Imperial Defence Act, the Naval Defence Act, and the Barracks Act. This one asset would pay for the whole of these. I must ask the Committee now to follow me for a few moments into what is always considered the driest part of the Budget Statement—namely, as regards the Debt. Approaching the question of the Debt, I think the Committee would like to know exactly how we stand; and, in the first place, how we stand as regards winding up the Conversion operation, which has left, to a certain extent, a legacy of Floating Debt. I had first of all to meet an expenditure amounting to £3,052,000, due in part to our having to pay a fifth dividend, and in part due to the payment of a bonus of 5s. to the holders of a portion of the Consols, and to commission and Bank remuneration. That was a sum of £3,052,000. Then I had to pay off in cash £24,378,000 to holders of Consols who did not convert. Thus I had to find cash amounting to £27,430,000. I charged against Revenue £2,052,000; I took out of balances £1,837,000, and I borrowed £23,541,000. Of the sum borrowed £4,711,000 has been repaid, leaving £18,830,000 outstanding. Of that sum, however, the State owes to the public only £5,830,000. The National Debt Commissioners have assisted me to an extent of £13,000,000, and therefore £5,830,000 only remains owing to the public. But out of this sum £530,000 represents Consols, leaving £5,300,000 as the real increase of Floating Debt in the hands of the public due to Conversion operations. I will say a word or two presently upon that sum of £13,000,000 owing to the National Debt Commissioners, as I have a proposal to submit with regard to it; but now I must pass from the subject of conversion to the question of the general Debt. The reduction of capital liabilities under the heads "Funded Debt," "Terminable Annuities," and "Unfunded Debt," has been £6,463,000, the respective reductions being £1,527,000, £4,109,000, and £827,000. As regards other liabilities, the Imperial Defence Loan annuity has been reduced by £57,000, so that I should show a diminution of our gross national liabilities under these heads of £6,520,000. But owing to the Conversion operations there is an increase of nominal liability to the Savings Banks of £1,000,000. This increased liability I have to deduct from my diminution of liabilities, and the diminution therefore stands at £5,520,000. But there is a decrease of assets amounting to £73,000, and of balances amounting to £116,000—about £190,000 in all—so that the net reduction of capital liabilities, counting balances, is £5,330,000. Out of the taxation of the country we have devoted during the past year £7,400,000 to the reduction of Debt. I need say nothing more to the Committee on the reduction of the Terminable Annuities and the Funded Debt, but I should like to say one word more upon the subject of the amount of the Unfunded Debt. The total Unfunded Debt has decreased by £827,000, the figures being £35,313,000 as against £36,140,000 on the 31st March last year. Out of this sum of £35,313,000 there is due to the National Debt Commissioners £18,323,000, and the amount in the hands of the public is £16,990,000. Last year the total amount of Floating Debt in the hands of the public was £22,239,000. As on the 1st April this year the amount stood at £16,990,000, there has been a diminution of £5,249,000. I would call attention to the various forms in which the Floating Debt is in the hands of the public. On 31st March, 1887—that is, before the Conversion brought its attendant increase of the Floating Debt—the amount of Treasury Bills in the hands of the public stood at £8,681,000, and I have reduced it to £8,350,000, so that there are now fewer Treasury Bills in the market than before the Conversion operations took place. The reduction in respect of Exchequer Bills has been from £5,061,000 to £3,340,000. But, on the other hand, there are Exchequer Bonds—a new security—in the hands of the public to the amount of £5,300,000. The total increase of Floating Debt in the hands of the public, comparing the present time with the year 1887, is only £3,248,000, and this notwithstanding the payment in cash of £24,000,000 of the Funded Debt and all the borrowing under the Defence Acts. I will now state what we owe to the National Debt Commissioners. The total amount they hold on short securities is £18,323,000. They have provided me with £13,000,000 of this amount for the purpose of carrying out the Conversion scheme, and with regard to that sum I intend to follow the precedent set by the right hon. Gentleman the Member for Midlothian when—I think it was in the year 1863 or 1864—he converted 24 millions of securities belonging to the Savings Banks into a permanent Book Debt. I propose to turn the floating securities now held by the National Debt Commissioners in connection with the Conversion operations into a Book Debt, or, as the right hon. Gentleman called it, "a passive charge," carrying, of course, 2¾ per cent. interest. That will not only simplify the general transactions between the State and the National Debt Commissioners, but will render the accounts more intelligible. There is another fact concerning the Unfunded Debt to which I must allude. During the past year the average rate of interest at which we borrowed money on Treasury Bills was considerably less than we pay on Consols—namely, £2 9s. 6d. I have only one more announcement to make on the subject of the National Debt to the Committee. It is this: I have been able to come to an agreement with the authorities of the Bank of England with regard to the remuneration of that establishment and the interest on its Book Debt of £11,000,000, by which a saving of about £50,000 a year will accrue to the State. It is a considerable sum, and it will go, not in diminution of Estimates, but to increasing the new Sinking Fund. The Book Debt will bear 2¾ per cent. interest instead of 3 per cent., and other arrangements will be made reducing the remuneration for the management of the Debt, and securing other advantages to the Exchequer. I am confident that, when I submit my proposals to the House, it will be seen that I have carefully safeguarded the interests of the State, while fixing on equitable terms the remuneration of that great institution, the Bank of England, to which at all times in our financial history we have owed so much. I shall take the earliest opportunity to submit a Bill to the House to carry out this matter. One word more as regards the past year, and I shall then be free to approach the consideration of the figures of the present financial year. Those Members of the Committee who take an interest in the ratepayers' point of view and in the share which Local Authorities derive from Imperial finance would like to know how these Local Authorities have fared during the past year; and perhaps they will have thought, when they heard of the increase in the Probate Duty, that the result to the Local Authorities would not be unfavourable. The figures are as follows:—They will receive in the present financial year £2,808,000 from Probate Duty; £1,400,000 from beer and spirits; £3,390,000 from licences — a total of £7,598,000; and if you add the special contribution to Ireland of £40,000, you find a total relief of rather more than £7,600,000. I hope I have not been led away by the interest with which the history of the past financial year has inspired me personally to detain the Committee longer than I probably should have done upon matters which I venture to think are of considerable financial and national importance. I feel relieved at coming to the second and more important part of my task—namely, the forecast for the future of my Expenditure and my Revenue at a time which I think all will admit to be one of considerable importance, looking to the doubt which exists with regard to the continuance of our commercial and manufacturing prosperity. The Committee is acquainted through the Estimates which have been laid on the Table with the total requirements for the Supply Services, including the Scotch and Irish Equivalent Grants. The amount is £61,941,000. The Committee are further acquainted with the recurring items under the Consolidated Fund Service—£25,000,000 within the fixed charge; £200,000 outside the fixed charge. Then there is the Naval Defence Fund, £1,429,000, and the other Consolidated Fund Services, £1,683,000. That will bring the total of the Consolidated Fund Services to £28,312,000. Adding the total Supply Services, the total estimated Expenditure is £90,253,000. Curiously enough, though I shall show in a moment that it is only a coincidence, and that the amount is differently constituted, this sum is almost identical with the Budget provision of 1891–92, which was £90,264,000. But in order to place a fair Estimate before the Committee, I have to take into account the additional cash receipts which are now appropriated in aid of Votes, and which, of course, I ought to add to my Expenditure, in order to show a fair comparison with the Expenditure of last year. These cash receipts were £925,000, which, if treated as they were last year, and paid directly into the Exchequer, would have swollen the Expenditure. If I add that sum to the £90,253,000, it brings up the total Estimate to £91,178,000, an increase of £914,000 over last year. That will not be the Budget Estimate for this year, but that is a comparison which I think it right to make with the Expenditure of last year. I would say at this point that while we (so to speak) gain £925,000 on the Expenditure, we do not lose the whole of that amount on miscellaneous Revenue, because the system has been this—that the receipts of one quarter are not paid over till the next quarter, so that we lose only three-quarters of that amount of miscellaneous Revenue, the loss being a little under £700,000. Now I would analyse very briefly the increase of £914,000 in the Expenditure. Under the Civil Services there is an increase for Assisted Education of £1,477,000. Here I am met, of course, with this large increase over last year, when we only had to provide £900,000. This year we have to meet a full year, and not only a full year as originally estimated, but a full year with those additions to the charge which were introduced into the Bill in the course of its passage through Committee. Knowing the uncertainty of Revenue, I took care last year not so to dispose of the surplus as to have to find the whole of that increased charge this year by means of increased Revenue; and I have to the good £500,000 provided for barracks last year; and £400,000 for gold coinage, which gives £900,000 charged last year upon Revenue, but which will now be dropped. I am relieved by these items, so that I have only £577,000 as the increase I really have to find as regards assisted education. But the ordinary Estimates for Education continue to rise, and they account for another £233,000. There are other services for which increased provision has to be made—Miscellaneous Consolidated Fund Services, £18,000; Army and Navy, £111,000; Miscellaneous Services, Customs and Inland Revenue, £86,000, all not very heavy increases in one year. Lastly, but certainly not least, there is a tremendous increase in the Postal Services of £611,000. That is balanced to a certain extent, of course, by increased Revenue; but the increased Revenue does not make up for that enormous increase. These items together amount to a total of £1,636,000. On the other hand, I have some advantages. We have paid for Irish railways so far out of Revenue. We took £600,000, which we were going to pay in cash out of Revenue. Of that £600,000 we have spent £510,000, and the remaining £90,000 we shall spend this year. But last year we spent a great deal more than £90,000 out of cash, and so this year I have less to provide for Irish railways by £355,000. For the remainder we shall borrow money on Terminable Annuities, as provided for by the Act of last Session. This is a modification of the principle introduced by the Act of 1883, from which we inherit a portion of the sums we apply to Irish railways. I have £130,000 less to provide for Census expenses; and, owing to the administrative vigour of my right hon. Friend the President of the Board of Agriculture as regards pleuro-pneumonia, it has been possible to take this year £70,000 less for that Estimate. There is less for Scotch and Irish relief by £85,000, and on sundries £82,000, so that I am relieved of £722,000 to set against the £1,636,000, giving a net increase of £914,000. I trust that the Committee will see that in these increases there is nothing wasteful. The increase is not in the Army and Navy Estimates, nor the Civil Service Estimates generally, and not in the civil government of the country. Where is it? It is in two directions, both of which will commend themselves to the House. It is in the direction of education and of the Postal Services of the country. Education and the Postal Services account for an increase of £2,000,000 in the Expenditure of this year. As for free education (in which I include, for the sake of brevity, the Scotch and Irish Equivalent Grants), my last year's estimate of the additional cost was £1,100,000; but the additions made to the Bill in its passage through the House have raised the amount to £1,420,000. And it is not only free education, but education all round which, to the satisfaction of the country, but of course somewhat to the despair of the Exchequer, continues to swell our Estimates; for, as I mentioned, there is a further increase of almost £250,000 on the ordinary Estimates for education. The Post Office increase is £611,000, of which £490,000 is due to the increase of salaries and wages, including increase of establishments. That is how our Estimates are swollen; and, while the Government have been anxious to meet the fair and equitable claims of those who are employed in those services, we have endeavoured to deal with the subject at the same time in a spirit of proper economy. As regards the telegraph service, one observation I would commend to some of the postal reformers. The average profit on every £1 of telegraph receipts during the last five years has been 3d. The expenses have been 19s. 9d., and the profit 3d. But during the five years from 1880–81 to 1884–85 the expenses swallowed only 18s. 6d., and the profits were 1s. 6d. There is already a deficit of some £90,000 on the net telegraph revenue for last year, and of some £60,000 expected for this year. In fact, we have now come down to this: that the increase of telegraphic communication and the further facilities as to addresses, so eagerly pressed by postal reformers, must all be given at the expense of the general taxpayer. The increase of postal revenue, which may be called £350,000, is far more than balanced by the increase of the expenses, and the margin of revenue for the Exchequer is rapidly being diminished. One figure more about the Estimates of Expenditure, and that is that the total amount now spent on elementary education amounts to £8,000,000. That is a large item which no one will grudge; but when we talk about our expanding Expenditure, it must be remembered that it is not an expenditure due to extravagance, but to the appreciation by Parliament and the country of the expanding wants of the children of the country. I come now to the Revenue with which we propose to meet the Expenditure. And, first, this year will be a peculiar year. Last year we had no Easter, and we had Leap Year. This year, of course, we lose Leap Year, and we have an Easter; and we have half of another Easter, because Good Friday in this financial year will fall on the 31st March, a most inconvenient and despairing day for Revenue purposes. Let me put this point to the Committee. We may calculate on an increase of one per cent. due to the normal increase in the population, and we ought to take off one per cent. for the loss of those days, which I count as equivalent to three days for Revenue purposes. It has been estimated by careful observers that we ought to take off £900,000 from the Revenue for the loss of those three days, but I think they have made two mistakes. They have taken that loss on the whole of the Revenue, whereas it is not the whole, but, roughly speaking, only two-thirds of the Revenue which is affected by the longer or shorter number of days in the year, and they do not allow for the normal increase of population. These two items will balance themselves. We must count upon the normal progress of the population as one per cent., and allow one per cent. for the loss of the three days. I start with the view that we must compare with last year without any addition for increase of population, and without any deduction for the loss of the number of days—the two factors mutually correspond. I think the Committee will agree that, looking to the general situation, the framing of the Estimates for the present year is a matter surrounded with considerable difficulties. The Bankers' Clearing House Returns for 1891 have been very unsatisfactory — they are not only less than 1890, but they are less than 1888—a significant symptom. The exports, again, have fallen. Many hon. Members in this House will know to what extent trade profits have fallen. I believe there are many painful experiences on that subject. On the other hand, Railway Returns are not unsatisfactory. There was an increase in the Railway Returns as regards passengers, parcels, goods, live stock—in fact upon every head. Their expenditure, however, was higher, and consequently their net profits were not greater; but in their gross receipts under every head there was progress. I have shown that the consumption by the people of duty-paying articles during the past year has been at an increased rate, but that is not enough for the Committee to know. The Committee will want to know whether that increase took place during the commencement or the second part of the year. Has it been declining during the year or not? I am happy to say the second part has not fallen off as compared with the first part. I am told that in the manufacturing districts the banking transactions have not been unsatisfactory; and, looking at the situation as carefully as I can, I see ground for caution, but I see no ground for alarm. I have examined some most interesting diagrams to see in what order the articles of consumption began to fall off in a former period of declining prosperity, and I find this—wine and spirits are the first to fall, tobacco holds out longer than spirits, and tea has never materially gone back. The working man it seems, if his wages should diminish, first reduces the amount of his beer and spirits, he clings longer to his tobacco, and as regards the tea for himself and his family, he does not reduce it at all. That is an interesting social fact which I believe to be absolutely proved by the statistics which I have carefully considered. We had a great time of prosperity in 1874 and again in 1890. We must study the events which followed 1874 to see on what articles we must expect a fall in consumption if we are really entering upon the descending curve after 1890. In 1875, I think it was, the Clearing House Returns began to fall as in 1891. Probably the highest point of prosperity we have ever reached was in 1874, and not long after there was a rapid decline. No great article of consumption showed an immediate decline, but rum toppled first with extraordinary rapidity in 1876; wine and brandy followed in 1877, and descended a precipitous curve, full three years after the Clearing House Returns had begun to fall, and after the commercial and manufacturing world had entered upon a period of gloom. But the non-alcoholic beverages, such as tea, steadily progressed with hardly a check. Tobacco, too, continued to rise, up to and during 1877, and though it descended during 1878 and 1879, this may be chiefly attributed to the increase of duty made in the former year. Not only this, but there is an enormous difference in the amount of the fall. Tobacco only fell six per cent. altogether, while wine and rum fell 36 per cent., and brandy 51 per cent. The Committee will see the bearing of this upon the Estimates of the present year. Taking the Customs Revenue first, I put the coffee group at £330,000, or £1,000 less than last year, and dried fruits at £350,000, or £3,000 more than last year. Wine I put at £1,270,000, or £21,000 less than last year. When I come to foreign spirits—rum, brandy, and Geneva alike—I estimate for a decline, and I put the total at £4,350,000, or £78,000 less than last year. As regards tea, the article which I have shown does not decline, even if wages fall off, I put the total at £3,470,000, an increase of £46,000, or one-and-a-half per cent. I will not allow, because I wish to be cautious, for progress at the same rate as last year, but I believe that tea will follow the same upward course as heretofore. As regards tobacco, I have shown that it is not one of the sensitive articles—it is not an article which begins early to fall. Except tea, it is the least sensitive of all the articles on the list. Looking to the fact that for the last 30 years there has never been a fall in tobacco except in 1878 (when the duty was raised), and then only to a small extent, and looking to the percentage of increase, which after making every allowance for increase of population and extra days was two-and-a-half per cent. during the last financial year and five per cent. in the year before, I believe we are justified in assuming a further increase not at the same rate, but still some increase, and I put tobacco at £10,065,000, or £113,000 over the receipts of the past year. That is only one per cent. instead of the more rapid increase which has hitherto taken place. Other articles I put at £65,000, the same as last year. The total Estimate for Customs receipts is therefore £19,900,000, or £164,000 more than the Exchequer receipts of last year, and £62,000 more than the approximate net receipts. I pass to the Excise. Disappointed in beer during the past year, I feel bound to allow for some decrease in that item, which I set at £9,400,000—£59,000 less than last year's receipts. On British spirits I have more to say. I approach them with considerable caution. I put them at £15,500,000, or £193,000 less than last year's receipts, but in reality I allow for a much larger fall in their consumption, owing to a small administrative change on which I will detain the Committee for a few minutes. I have endeavoured to put a stop—and have put a stop in fact—to a system called "grogging," by which the Revenue is supposed to have lost some £200,000 a year. We have stopped the practice, and so we gain to that extent. The practice consisted in extracting spirit which had been absorbed by casks after those casks had left the bonded warehouse. It is a very interesting process. By filling those casks with water and letting the water stand for a certain time, the spirit left in the cask was drawn out by the water with which it became fused, and so an alcoholic liquid was produced on which no duty had been paid, and which was used for mixing with other spirits. In this manner it is calculated that a puncheon which had held 100 gallons of spirit yielded, through the process of "grogging," one and a-half, and sometimes as much as three, gallons of proof spirit. The Committee, therefore, will see that, as a member of the trade put it to me, this was a system of legalised smuggling. Over and over again these imbibing casks might pass out of the warehouse, carrying away gallons of spirits on which no duty had been paid, absorbed in their wooden sides and to be extracted afterwards by "grogging." They went in and out just as ladies used to pass in and out of the country with lace hidden under their petticoats. I say nothing with regard to the practice, because it was not illegal, but it did put some traders who did not practise "grogging" on an unfair footing as compared with those who resorted to this method. We have now taken steps to prevent those casks from leaving the warehouse except under proper supervision, and we have taken the trade into council on the subject. There have been some complaints, but I believe there will not be much friction, as everybody will now be on an entirely fair footing, one as regards the other, and the Revenue will gain the pleasant sum of £200,000 a year. I may calculate, then, on an increase of £200,000 a year from this source, but as I am anxious with regard to the fiscal future of spirits, I have put the decrease at £193,000 as compared with last year's receipts; and, therefore, with the explanations I have made, it will be seen that the actual diminution in my Estimate as compared with last year is £393,000—£200,000 for "grogging," besides the £193,000. There are some small items which I pass over—chicory and coffee, labels, licences, and Railway Duty. These I put at £552,000, £8,000 less than last year. The total Excise I put at £25,452,000, or less by £260,000 than last year. I now pass to the Death Duties. I shall not, of course, allow in this coming year for the same amount of Death Duty as in last year, as that owing to the influenza. I take £208,000 from the Probate Duty, putting it at £2,600,000, and £98,000 from the Estate Duty, putting it at £1,300,000; but, on the other hand, there is some compensation in Legacy and Succession Duty, which have not yet felt the full effect of the wills that have recently been proved, and for those increases I put £140,000 to Legacy Duty, making it £3,000,000, and £87,000 to the Succession Duty, making it £1,260,000. Upon the Death Duties as a whole I expect to lose £79,000. I again allow for a decline on general stamps, and reduce last year's Revenue by £101,000, putting them at £5,400,000. I am bound to say I consider that an extremely prudent Estimate, for during the last few weeks there has been distinctly a revival in some of the important sources of stamps. On the other hand, there is a possibility that in the general transactions them may be a decline, and that bills of exchange and other documents which are stamped, which have hitherto not yet felt the full fall, may continue to show some falling-off. I shall be prudent in this, as in my other Estimates. The total for stamps, including the Death Duties, I put at £13,560,000, a decrease of £180,000. House Tax and Land Tax I put at £2,450,000, a decrease of £32,000 as compared with last year. There remains under the head of Inland Revenue one great item on which I have still to speak—perhaps it is the most important of all. I have to tell the Committee how I propose to deal with the Income Tax, because it is upon the Income Tax that some persons may think great uncertainty might arise. If I were to judge simply by the statistical Returns, by the gossip of the City, by complaints, in Lancashire, or by the position of Yorkshire; and if I were to listen to, and the Committee were to be influenced by, the general feeling, they might come to the conclusion that there would be a very large gap in the Income Tax Returns of the year. I do not say there ought not to be such a gap, but we must look a little to the details as regards Income Tax, and what we have to ask ourselves is this—what are the proportions in which different classes contribute to the Income Tax, and what are the constituent factors of that tax? And again we have to inquire not only what might be the profits of 1891 assessed to Income Tax under Schedule D, but how the average of the profits will have to be calculated, because that is most important. Let me deal with the first of these two questions. The Committee must not forget that while, on the one hand, we are naturally influenced by the more striking industries of the country, while we see the great cotton industry, or the great coal industry, or generally the great manufacturing or productive industries of the country, yet apart from these there is a mighty trade going on; there is wealth being rolled up like a veritable river of Pactolus—wealth of which no published statistics exist, but which is, nevertheless, accumulating and adding to the wealth of the country. There is the great retail trade which permeates every village of the country—the great home trade which does not always strike our attention so much as the more important and visible trades—we have to bear that in mind. Our imaginations are so stirred by the sight of some industries which stand before us in all the activity of their enormous proportions, that we forget a great many of the constituent parts of our business community. I am not going to be so indiscreet as to place before the Committee figures as to the aggregate profits of the various trades and professions; but I have examined some of their relative proportions, and they are most interesting. These I think I may put before the Committee without indiscretion. I find this—it is astonishing how many quiet callings keep up the average, and how large a proportion is contributed under Schedule D by persons and professions who do not figure as bloated monopolists or rich men in the ordinary acceptance of the word, but who, nevertheless, have earnings which are very material to the general prosperity of the State. Take the cotton manufacture and productive industry, including spinning and weaving; the total profit of those engaged in that vast industry—I am not speaking of wages, but of profits—the total profit of the cotton lords and the cotton companies is less than the aggregate profit made by the medical profession. If I look at the profits of the coal mines—notwithstanding the enormous fortunes made therein—the Committee may be surprised to learn that the total profit from coal mines is less than the profits of the legal profession. The lawyer in his quiet office and the physician in his sombre consulting room are rolling up taxable material almost at the same pace—at a faster pace — than those engaged in the great industries I have named; and it appears to me that it is the ubiquity and steadiness of these professions which compensate for the lower scale on which their profits may be earned. Again, it is easy to leave out of account the immense profits of the distributors of the manufacturing and productive industries. If I take the total of these latter industries, including cotton, wool, silk, ready-made clothing, metals, and hardware of all kinds, shipbuilding, sugar refining, tanning, chemicals, brewing, distilling, and so forth; if I take the whole of these industries, which together cover so vast an area of our national prosperity, the profits only amount to one-half of the profits which fall under the head of distribution and transport. That is to say, that those who distribute and transport merchandise and the products of industry make, on the whole, twice as much profit as the manufacturers and producers of the articles. Of course, I must remind the Committee and the public that I am not alluding to the cost of manufacture or to wages, but dealing exclusively with profits assessed under Schedule D. I thought it my duty to go into these details and see what constituted the vast wealth of this country, and find out, in view of possible adverse times, who it is that keep up that steady flow of profit on which so largely the material prosperity of this country depends. One more illustration of this and I have done. The profits, if they may be called so, or rather the salaries, of employees of every kind, which are assessed under Schedule E and part of Schedule D, form an immense total, far beyond what the public would imagine, and a period of depression may easily pass without diminishing to any extent the productiveness of those heads. There are 350,000 employees assessed to Income Tax under these two Schedules; their aggregate salaries amount to £50,000,000 sterling. Reductions of establishment no doubt occur in bad times, but I doubt whether they more than counterbalance that constant tendency to increase salaries which is the general rule. I believe on no occasion has it been found that there was any backward movement under Schedule E. Now, Mr. Courtney, I pass to the other point I have mentioned—namely, the industries themselves under Schedule D. We have not only to look to 1891, but we have to see what year it replaces in the three or five years' average on which the profits are estimated. In commerce and manufactures the average is three years, and in the case of mines five years. Well, then, 1891 was a most unsatisfactory year in the City as compared with its predecessor. But it takes the place not of 1890 but of 1888 in commercial and industrial profits, and of 1886 in mining profits. The Committee will see that we must not be guided entirely by the impressions derived from 1891. As regards mining profits, 1891 does not show such phenomenal profits as 1890, but its profits are far beyond those of 1886. Thus, though 1891 shows a large decline as compared with 1890, the profits assessable to Income Tax for the coming year will be greater, because, though 1891 comes in, it replaces a year which was worse than itself. As regards iron and steel, those industries were far less profitable than in 1890, but far more profitable than in 1888; and so on these industries, too, there is an increase. The case is otherwise in the great Lancashire industry. Here 1891, speaking broadly, is much worse than 1888, and the average has to be put down. For wool, jute, silk, and other industries, 1891 was a distinctly worse year than 1888, and there is, therefore, a worse average to go on. But I must not survey any more of these great industries. I have gone through most of them in order to be able to form a reasonable estimate for the assessment of the Income Tax for the coming year; and, on a general review of the whole case, I am advised that the actual average of the three preceding years, upon which profits under Schedule D will be mainly assessed, will not fall very much below that on which the Income Tax was based last year. Some decline there may be; in some cases there is increase, and in some decrease; but, on the whole, I am informed—and this is confirmed by my own examination—that there is scarcely any serious decrease in the assessment of profits. Looking at all these considerations, I ask myself if I should be justified in putting down the Income Tax for the present financial year as likely to give the same amount as in the last financial year. I am distinctly of opinion that it would not be safe for me to assume the same amount. I have given many reasons on the one side and some on the other. I do not know that I should make much allowance for the following reason, but I am told it is one which should inspire caution. There is a tendency which is said to be implanted in human nature that when profits are bad, and are lower than the average profits of the three preceding years, there is not in the breast of the taxpayer such absolute impartiality in settling accounts between the Exchequer and himself as there may be under more normal circumstances; that a man's inclination on these occasions is to settle doubts in his own favour; that men are more ready to be generous in their estimate of what they ought to pay when they are making higher profits than the average. Then there is another consideration which inspires caution, and that is the point I have already mentioned—namely, that Good Friday is the last day of the financial year. I hope and believe that most taxpayers will wish to clear their minds and consciences by paying the last demands of the Income Tax collector before they go for their Easter holiday. But the last days of the year are very important, and it is possible, on account of the last day being Good Friday, we shall have to carry over more arrears into the next financial year. Looking into the whole case, I feel compelled largely to diminish my estimate of the Income Tax, and I put it at £13,400,000, or £443,000 less than the approximate receipts of last year. The total Inland Revenue I put down at £54,862,000, a decrease of £915,000 as compared with the approximate net receipts of last year, and of £742,000 as compared with the Exchequer receipts of last year. With regard to Non-Tax Revenue, I put the Post Office at £10,400,000, or £250,000 more than last year; telegraphs, £2,560,000, or £80,000 more than last year; Crown lands, £435,000; interest on advances, £220,000; miscellaneous receipts, £2,100,000. The last item I have to reduce by £700,000, owing to a transfer of receipts which I mentioned before; but, on the other hand, there have to be added several windfalls which accrue this year. The total Non-Tax Revenue is £15,715,000, to which I add the proceeds of taxes, £74,762,000, and I arrive at a total Revenue of £90,477,000. I deduct my Expenditure of £90,253,000, and I arrive at a margin of £224,000, a sufficient margin to make me think I am fortunate in not having to impose taxation, but unfortunate in that it will not place me in a position of being able to make any remission. The Committee will kindly bear in mind that last year and this year the sum—including the Scotch and Irish Grants—of £2,500,000 has been given for assisted education. This outlay has, of course, rendered it difficult to make any prominent reduction of taxation to any other class of the community; but, so far as the recipients of that boon are concerned, it is almost equal to, and is, in fact, a more palpable advantage than, any reduction of indirect taxes. With a margin of only £224,000 at my disposal, it would be unwise, especially looking at the circumstances of the time, to attempt any re-construction of our finances. There are two minor changes, however, which I shall propose to the Committee. The Committee will remember that my right hon. Friend the President of the Board of Trade informed the House of his wish to see the heavy fees charged for the renewal of patents reduced in the interests of the poorer patentees, and with the view of giving the fullest scope to the development of inventions, and small as my margin is, this is a reform which the Government do not wish to delay, and which they think they can afford. The primary fee of £4 for the first four years will remain, and from the end of the fourth year onwards large reductions will take place. At present the fees for the next four years are £10 a year; they will be reduced to £5, £6, £7, and £8 in the several years. In the ninth and tenth years the fee is £15, and it will be reduced to £9 and £10. In the next four years, the last before the patent expires, the fee is £20 a year; it will be reduced to £11, £12, £13, and £14. These reductions will, I believe, give extreme satisfaction to a very large class. They will ultimately involve a loss of £50,000 a year, but we should not ask that the new scale should come into operation before the 25th September, and on that period the loss would be £24,000 or £25,000, which will reduce my margin to £200,000. The other minor change I propose will not affect the Revenue—it is in connection with the tax on sparkling wines. Hon. Members may be aware that great pressure has been put on me to change the system on which that duty is levied. At present it is 2s. 6d. per gallon on wines above the value of 30s., and 1s. per gallon for wines below that value. I understand that even the importers of cheap wines themselves would prefer to pay a higher duty rather than go through what they declare to be an impediment to business—the discussions with the Customs as to the value of their wines. I have thought the friction has been exaggerated, and that, as a matter of fact, it would only arise in the case of that small portion of wines imported at the border line; and I may point out that the experiment of two rates of duty varying with value has not failed in respect of the continuance of the proportion of wine of higher quality to the lower quality. The champagnes above the value of 30s., which constituted two-thirds before the tax was imposed, still constitute substantially the same proportion; there has been no fraud, and the Customs have been extremely watchful. I prefer, I admit, the duty as assessed at the present moment; but if there is, as I am informed, considerable unanimity on the part of the trade in favour of a uniform scale I do not wish to be obstinate, and I shall be prepared to submit a Resolution that the duty be 2s. all round instead of 2s. 6d. and 1s. as at present. This will give a small addition to the Revenue. I do not do it with that object, but I am not prepared under present circumstances to have any loss whatever fall on the Exchequer by any change in the Wine Duties. Before I part with the Wine Duties let me note one point—it is not entirely of a fiscal nature and does not affect the present Budget immediately. The right hon. Gentleman opposite will remember the Spanish Treaty we made in 1886. The duty was then reduced in favour of the Spaniards, with a result which, I believe, has been beneficial to both nations. Spain improved its tariff in favour of this country and we improved our alcoholic scale in favour of Spain. Now, the Spaniards have denounced the Treaty which we obtained by the concessions we made in 1886. All I wish to say on the point is this—that there must not be the impression, either in Spain or elsewhere, that if the concessions which were given to this country in 1886 should be withdrawn, it will be certain that they will retain the fiscal advantages that were given with regard to their wines in 1886. There are strong fiscal reasons why we should put the higher duty on wine of alcoholic strength between 26 and 30 degrees. I do not propose this in the Budget, because I do not wish to force the hand, so to speak, prematurely of our Spanish friends, or put the wine trade into the excitement there would be if we were to impose a scale now which would not come into force for some months, because we could not change our duty before the end of June. But I think it is right, in the most friendly spirit, to say that if the concessions given for a certain quid pro quo are withdrawn, this country will have an open hand with regard to withdrawing the advantages given before. I sincerely trust that these negotiations may come to a satisfactory termination as regards both countries. Now, Mr. Courtney, I have finished my annual discourse. I hope that there may have been some interest in what I have had to tell; because, as I have said, there are many side lights thrown by these fiscal results on the habits and consuming powers of the people. I have had no startling facts to tell; I have had no surprises to reveal. Prudence seems to me to demand moderate Estimates, and I hope the Committee will think I have framed these Estimates with such prudence as was justified by the fiscal situation. I trust that when next year I stand at this Table—(Ministerial cheers, and counter Opposition cheers and laughter)—I do not say on which side—(laughter)—for, on whichever side of the Table I stand, I shall be responsible for the prudence of the Estimates—I hope when I stand at the Table next year these Estimates may prove to have been justified by the facts. The mighty river of our national prosperity, though it may not have been overflowing its banks, though it may have been running on at a more sluggish pace, still remains broad and full; and I trust that all the various watersheds of our national well-being may still continue to pour out their thousand streams with undiminished volume into a grand and mighty flood.