SECOND READING. [ADJOURNED DEBATE.]

HC Deb 10 May 1894 vol 24 cc814-901

Order read, for resuming Adjourned Debate on Amendment proposed to Question [7th May],"That the Bill be now read a second time."

And which Amendment was, to leave out the word "now," and, at the end of the Question, to add the words "upon this day six months."—(Mr. Grant Lawson.)

Question again proposed, "That the word 'now' stand part of the Question."

Debate resumed.

* MR. J. E. ELLIS (Nottingham, Rushcliffe)

said that, in rising to resume the Debate, he wished most emphatically and particularly to associate himself with what had fallen from the Member for Barnard Castle and other hon. Members with regard to the reason why this Bill came before them. The Bill in its present form was necessary on account of the abnormal expenditure on warlike preparations during a time of peace. He was not, of course, about to enter into the policy of that. The course taken by the late Government in that respect and against which they on that (the Liberal) side of the House protested at the time was a precedent which had to a certain extent been followed, as regarded this expenditure, by their successors, and speaking as one of the supporters of the present Government he would only say that it had been taken on what were no doubt good reasons to them; but as they had followed that course, it lay upon them some responsibility to see that upon any suitable occasion they joined, and sought the opportunity for joining, so far as this country was concerned, in any step that might put an end to what he would venture to call an insane rivalry in armaments. He joined in the opinion expressed by the hon. Member for Aberdeen the other evening in doubting very much that if this money had had to be raised by personal visits of a rate collector to the electors or in the ancient form of a Poll Tax, whether this policy would have received the assent of the House of Commons. Passing from that he wished to emphasise the vital distinction between the mode in which the matter was dealt with by the late Government and had been dealt with by the present Government as regarded the discharge of the debt incurred. In this connection the words of the right hon. Gentleman the Member for St. George's, used not long ago, could not be too much emphasised. The right hon. Gentleman said— The Secretary to the Admiralty has said that he is sure that if I had known that our naval defence programme was not to be an exceptional effort I should not have taken the particular financial step that I did take. I think he is right. I admit we did consider it to be an exceptional effort. We were wrong. At that time no one thought it would be necessary to make additional proposals like those now made, and I make a present to my political opponents of this statement: that had we foreseen the final result we should not have taken the particular financial steps we did take. That was very frank, and what might have been expected from the right hon. Gentleman, but he differed with him entirely in saying that no one thought it would be necessary to make additional proposals. The right hon. Gentleman was warned at the time, from the other side of the House, that these would not be the last proposals which would have to be made, but that they would beget other proposals, which had turned out to be the case. He ventured to say that the right hon. Gentleman gave away his whole case when he made that statement. Of course, he was not primarily complaining of the way in which the money was spent by the last Government, but of the way in which the money was raised. The right hon. Geutleman admitted that the late Government made a blunder in their financial policy, and this could not receive too emphatic condemnation in that House and in the country. He said that because he saw that the principal organ of the late Government, The Times, had suggested that no difficulty at all would have arisen now if the Chancellor of the Exchequer had provided for the increased expenditure by a terminable loan. No doubt the present Government would have experienced no difficulty had it followed the evil example of its predecessor; but its successor would have felt the difficulty, just as the present Government had felt it in consequence of the financial policy of its predecessor. He endorsed entirely what Lord Spencer said in the House of Lords when he said, with reference to the proposed expenditure on the Navy— We have not taken more money than we can spend in the year. That was the sound financial and even constitutional ground to proceed upon, and it was the right policy for any Government to pursue. Coming to the Bill itself, he could not help noticing that hon. and right hon. Gentlemen belonging to the Opposition showed a shyness in discussing that portion of it which dealt with the Income Tax. The late Chancellor of the Exchequer had alluded to it, but it was hard to discover what his real attitude was with regard to it. Did hon. Gentlemen object to the extension of abatements on incomes below £500? The late Chancellor of the Exchequer seemed to treat it as if it would be dangerous to offer any opposition to the proposal, but condemned it by implication. The right hon. Gentleman quoted something which the right hon. Gentleman the Member for Midlothian had once said on the subject of the Income Tax, but it was easy to quote from the speeches of the late Prime Minister, who had been a prominent political personage and a leading Member of the House for over 60 years. He should like to know the precise circumstances in which the speech had been made and to have seen the context in which the passage occurred, because it was always difficult to convict the right hon. Gentleman the Member for Midlothian of inconsistency. But considering the increase in wealth and the rise in the standard of comfort, he believed that the abatement would bring the Income Tax to the same proportion to incomes generally and the demands on them as it was previously. It ought to be clearly understood that every man who supported the Amendment of the hon. Member for Thirsk was voting against the abatement on incomes under £500. No remark as to "shyness" in opposing the Budget proposals applied, however, to the way in which the increase of Beer and Spirit Duties had been met. He thought that "the trade"—to use the expression of the hon. Member for Mid Armagh—might feel well satisfied that their case had been amply represented to the House in the discussion. Several hon. Members had frankly avowed that they spoke for "the trade." It had hardly been suggested that the extra duty on beer and spirits would fall upon the consumer, and therefore they might reasonably expect that the argument would not be used that this was a proposal to tax the poor man's beer or spirits. No doubt they would raise elsewhere the cry of robbing the poor man of his spirits and beer, but he wished that they would raise it in the House of Commons. One hon. Member showed the great profits that there were upon soda water, and asked why was that liquor not taxed? Well, when the Judges of the land and others felt it their duty to declare against the danger soda water was to the people, and when the House of Commons was, every Session, considering the question of amending the system of licences for the sale of soda water, then it would be time to talk of placing a tax upon it. It had been said that the profits of the great Brewery Companies amounted to only 6, 7, or 8 per cent.; but it must be within the knowledge of the House that these concerns had been bought at a greatly enhanced value by Joint-Stock Companies from the original vendors, and that these profits were paid on an inflated and watered capital. The hon. Member for Mid Armagh, who, if he might say so, held a brief for a great brewing firm in Dublin, said that it was not fair to place the extra duty on beer, because the shareholders of that firm had purchased their shares at a high premium. That meant that the shares of the Brewery Company were sold at a very high rate in the market, and, therefore, the holders received only a moderate rate of interest on them. But that was not the way in which the value of railway property was estimated and quoted in the Returns of the Board of Trade. They wore not informed in those Returns that the dividends were only a certain amount because of the high value of the shares in the market. They were given the value of the shares as it appeared on the books of the Company, and that was the only fair way of dealing with the matter. The fact was, that they were witnessing, in the application of the joint-stock principle to the case of breweries, effects and consequences which had a most vital bearing on the social condition of the people. The effects of the tied-house system, which had sprung up during the last 15 or 20 years, on the well-being of the people and its bearing on the licensing laws might well be the subject of investigation by a Select Committee. He believed that, when the whole facts of the case were laid fully and fairly before the electors, the proposal of the Chancellor of the Exchequer would receive their approval. The Return obtained by the late Mr. Summers—whom many Members of the House would remember—showed that the licensed victualler now was but the mere paid agent of the brewers, and the article he sold to the public was not always of a high quality. Instead of the old respectable public-house or inn they found glaring gin palaces being erected in the towns and cities. He, for one, desired to do justice to all trades and interests, but he thought there were some evidences of a rising feeling of indignation at the bullying which was going on in that House, and outside it, in the interests of one particular trade. The vital and far-reaching character of the Budget, however, lay in that part which dealt with the Death Duties. It was first necessary to attain a correct appreciation of the basis of this Death Duty. He appreciated the great labour and the economic principles upon which the Budget was framed, and he desired to express his admiration at the fascinating lucidity with which it was explained. The hon. Gentleman the Member for the West Derby Division said the successors would have to pay not in proportion to the property left them, but in proportion to the wealth of the man who left the property. The hon. Gentleman must have forgotten the very emphatic words of the Chancellor of the Exchequer when he introduced his Budget as to the basis of the Death Duties. The right hon. Gentleman said— The title of the State to a share of the accumulated property of the deceased is an anterior title to that of the interest to be taken by those who are to share it. Nature gives a man no power over his earthly goods beyond the term of his life. What power he possesses to prolong his will beyond his life—the right of the dead hand to dispose of property is a pure creation of the law, and the State has the right to prescribe the conditions and the limitations under which that power shall be exercised. Nothing could be clearer or sounder than that. The successor did not pay the State. The State laid its hand on the corpus of the estate before it passed to the successors at all. He saw that this doctrine had been challenged by The Times; but the letter of the Chancellor of the Exchequer, pointing out that at one time the State absolutely settled the succession and left nothing to the discretion of the deceased, was absolutely conclusive. The bogey—if he might use such a word—before the eyes of many hon. Members was the principle of graduation which had been introduced into this Bill. He would say at once in this matter that he held the virtues of industry and thrift to lie at the very roots of a happy and prosperous social system. He had no sympathy whatever with the wild notions contained in the speeches which one might hear any Sunday afternoon in Hyde Park. Those people made a very great mistake who fancied that these wild notions had any root in the country. When they got away from London and its miasma—when they got really down in the country—they would find that this kind of language had no hold whatever. He had the honour to represent a constituency in which more than one out of every six of the electors were freeholders—men who had saved their money, men living in their own houses. They would not tolerate from anyone any nonsense, any wild notions with respect to the spoliation of property or the infringement of the reasonable rights of property. Adam Smith had been quoted by the hon. Baronet the Member for the University of London; but Adam Smith was thoroughly in accord with the principle of graduation. His right hon. Friend said if they admitted the principle of graduation, where were they to stop? The hon. Baronet had a Shop Hours Bill, in which he was very much interested, and it was constantly urged by the opponents of the Bill that it should not be read a second time because it would admit a principle which might be very dangerous. The answer in both cases was that legislation must stop just where it was needful to stop. The question was not to be determined by high doctrines of philosophy, but by principles of common sense. On the ground of justice he had no hesitation in supporting the proposal of the Chancellor of the Exchequer. The view taken of those proposals must depend on the opinion as to whether a particular form of property should continue to enjoy a special exemption from public burdens. The Chancellor of the Exchequer had much hostility to face, but he had on his side the great and unrivalled Mr. Pitt and the right hon. Gentleman the Member for Midlothian; and he believed also that the electorate was on his side. It was said that these proposals would have a terrible effect on agriculture. He had a great sympathy with agriculture. He farmed a little himself, and ever since the days of Elizabeth some of his ancestors had been engaged in the cultivation of the soil. He agreed as to the danger of placing any unfair burden on the land. Agriculture was the greatest individual interest in the country, and he regretted that the Presidency of the Board of Agriculture did not carry with it a seat in the Cabinet. But in this Budget great and just remissions were made under Schedule (A), and the only burden placed on land was a charge which, if spread over the cultivated land of the country, would amount to no more than 3d. an acre. He had noticed, in this matter of the charges and burdens upon land, a curious reluctance to deal with the speech of the Secretary of State for India, and the valuable Return of his local taxation. In the summary of conclusions at the end of it was to be found this fact—that in the rural districts the average rate in the £1 of all rates in 1868 was 2s. 7½d and in 1890–91 it was 2s. 3d.; that was to say, a fall of 14 per cent. The only fair test in the matter was the rating in the £1, providing there had been no arbitrary change of assessment, and therefore it was proved that the burden on land had been reduced. In all its parts it seemed to him that the Bill before the House was a most wise and sagacious plan for dealing with a financial situation which, after all, was not primarily due to the present Government. He had heard from the opposite Benches that it was an electioneering Budget. That was not an opinion shared by a periodical which he confessed he always read—namely, The Economist. The Economist, a most ably-conducted journal, stated on the 21st April— The Budget is free from any electioneering taint. That was very good testimony. He should like to say a word or two, finally, as to the manner in which this Bill was being met by the Opposition. The Amendment now before the House was the strongest form of disapproval which could be brought forward against any increase. It carried with it responsibilities of the highest kind, and he further believed such a course was unprecedented. It was not the course taken on the 8th of June, 1885, when the right hon. Gentleman the Member for Bristol brought forward a proposition which defeated the then Government. An alternative proposition was then submitted, and the Leader of the Opposition, if he supported this Motion of an unofficial Member, knowing the consequences which would ensue if it were successful, was bound to give some indication of the policy he would pursue if he assumed Office. The money had to be found. The electors of the country were entitled to know what the Opposition meant to do, if unhappily they should command the most votes in the Division to-night. Whoever followed the hon. Member for Thirsk committed himself in the most solemn Parliamentary form to the proposition that he disapproved of the abatement of the Income Tax being extended in the case of those who paid on under£500. ["No, no!"] Hon. Members cried"No."Then, why did they not reserve that until the Income Tax Resolution was reached in Committee? They were now taking a course which would, if successful, have the effect of wiping the Bill out altogether. ["Hear, hear!"] That cheer he could understand; the former cheer he could not understand. Hon. Members opposite would, by voting for the Amendment, express a desire to see the unjust exemption of real property from its fair share of the Death Duties continued. He was very glad that the issue between them was so clear, because, as they all knew, this was not a mere Debate as to the merits of a particular Bill; it was in the highest and fullest sense one affecting the life of the Government. He had taken some pains since the 12th of March, when the Rosebery Administration came into Office, to ascertain what was the opinion of those whom he represented with respect to the Government. Their feeling towards the new Administration was that which was expressed by George II. to one of his Ministers. "Deserve my confidence and you shall have it." He acknowledged that this Bill gave the Government a far higher title to the confidence of their supporters than any mere promises in the Queen's Speech, of which they had far too many from the late Government, and he was not sure whether they had not too many from the present. He acknowledged that" this Bill gave the Government a great title to ask their supporters for their confidence. He believed the Chancellor of the Exchequer in particular, and the Government in general, had not only deserved the confidence but had earned the gratitude of their countrymen by making these proposals, because he was satisfied that the provisions of the Bill were just, wise, and statesmanlike; that they contained within their limits the promise and potency of good to the inhabitants of the United Kingdom. He should most unhesitatingly, and with alacrity, record his vote to-night for the Second Reading.

* MR. CLANCY (Dublin Co., N.)

Mr. Speaker, the provisions of the Bill now under the consideration of the House have hitherto been discussed chiefly, if not altogether, from the point of view of Great Britain, and especially of England. I think—and I hope the House will agree with me—that it is time that something should be said upon the subject from the point of view of Ireland, and I rise now, at the request of the group of Irish Members with whom I act, to give, as shortly as I can—for I do not see the necessity for any lengthy statement—the reason why we, as Irish Members, shall act as we intend to do at the close of this Debate. The House at large, and especially the Members of the Government, cannot affect to feel surprised at the fact that who take a deep and anxious interest in this financial question. For the last 30 years at least, since the Report of what has been known as General Dunne's Committee, every Irishman has been convinced that Ireland has been treated in the matter of Imperial taxation with shameful injustice, and from time to time during that period protests in one shape or another have been made against that injustice by Irish Members in this House. Last year the latest of those protests was made in Committee on the Home Rule Bill, and for my own part I heard nothing in the course of the Debates on the question which could by any possibility be described as an answer to the allegations then made from these Benches. With this conviction and those facts in our minds we are now called upon to face what we believe to be a wanton aggravation of the injustice of which we complain, and under such circumstances we should, in my opinion at least, absolutely stultify ourselves, and even offer encouragement to still further and foster plunder of our country, if we did not here and now show in the most decided fashion that we resent most deeply those continued attacks on the material interests of our country. Now, what are the facts of the present case? The Chancellor of the Exchequer had to perform the task— a formidable task, no doubt—of making up a deficit which, after certain manipulations of certain public funds, amounted to £2,379,000. Granting that Ireland ought to pay a proportionate share of that sum, I ask what is that share? My own opinion is that, calculated on the basis of the relative wealth of Ireland, it would be about l-40th. An infinitely higher authority than I can pretend to be—Mr. Giffen—has put it at a much lower figure—namely, l-53rd. I discard those figures, however, for the sake of the argument, as they may be thought exaggerated, and I take instead the estimate of the Government itself. Last year the financial proposals of the Home Rule Bill were based on the assumption that Ireland's proper share of the Imperial burdens would be something between l-25th and l-26th, or something over 4 per cent. Well, that figure being granted, the Irish proportion of the deficit—the l-26th of £2,379,000—would be about £87,000; that I take to be absolutely indisputable. Now, what is Ireland actually asked to pay? With a desire to be accurate I asked the Chancellor of the Exchequer a few weeks; ago to lay on the Table a Return showing what he expected from Great Britain and Ireland respectively in respect of the additions which he now proposes to Imperial taxation. He has not furnished such a Return, but we are, nevertheless,, not without more or less reliable means of arriving at the facts. First, there is the gain from the Estate Duty. In answer to the hon. and learned Member for Cavan on Monday last the Chancellor of the Exchequer himself estimated the Irish portion of that item at 8 per cent. of the whole, or about £110,500. From that amount, however, he said a sum should be deducted, for the reason that, large estates not being proportionately so numerous in Ireland as in England, the new duty would fall more heavily on England than on Ireland. Let this also be granted for the sake of argument, and let a fourth of the whole sum be deducted. There will remain about £83,000, or within £4,000 of the total amount of our share as estimated by the Government itself. The next item of gain is the addition from the Income Tax. It is difficult to estimate Ireland's contribution to that item, but if I set it down for this year at £10,000, I do not suppose anyone will accuse me of exaggeration. Here, then, we have got from the Estate Duty and the Income Tax alone more than the whole of Ireland's share of the deficit, that share, I say again, being calculated according to the estimate of the present occupants of the Treasury Bench themselves. Every penny beyond that amount, therefore, which is taken from Ireland in respect of the deficit is unjustly taken, and must be confessed to be unjustly taken. Is the Chancellor of the Exchequer satisfied with compelling us to pay our proper share as estimated by himself? By no means. He proceeds to dip his hands deeper and deeper into our pockets, even after we have paid him our due. He proceeds to raise the duties on beer and spirits. Every penny taken out of Ireland by this expedient is sheer plunder. But this is not all. In raising these duties he inflicts on us afresh the old familar injustice of levying from Ire-land more than its proportionate share of the estimated gain from those particular increases. The total gain expected on this head is £1,340,000; the Irish share of that sum, taking again the Government estimate of last year, would be about £5 1,000. What are we actually asked to pay? Taking the latest Return I can get—that for 1892–3—I find that what Ireland paid in that year in respect of the duty on spirits was £2,241,000. Supposing the same sum to be paid in the current year under the existing taxes, the addition to it caused by the additional 6d. a gallon will be a 21st part, or £106,000. By a similar calculation, based on the same Return, the additional Beer Tax which Ireland will pay will be £50,000. Taking the results of the two increases together, Ireland will pay at least £156,000, instead of £50,000, ormore than three times too much—in other words, more than three times in proportion to what Great Britain will pay—always assuming that Ireland ought properly to pay any of this sum at all. Now, of course, this particular injustice is that of which we chiefly complain, and the explanation of the manner in which it has been accomplished is as simple as possible, and it is as familiar as it is simple. The explanation of the fact that the combined effects of the new duties on spirits and beer will be to make Ireland pay more than three times too much in respect of the increases in those duties is simply that once more what I may, for convenience, call the popular beverage of Ireland, is taxed more heavily than the popular beverage of England. At present, under the system of uniform taxation adopted many years ago, the duty on 20 gallons, say, of beer containing two gallons of proof spirit is 3s. 9d. On the other hand, the duty on only two gallons of whisky, containing the same quantity of proof spirit, is £1 2s. In other words, as the hon. Baronet the Member for the College Division of Glasgow put it in this House in the year 1885, for every penny of duty which the Englishman pays for a given amount of alcohol in the shape of beer the Scotchman or the Irishman who drinks the same amount of alcohol in the shape of whisky pays from 6d. to 7d. Since 1885 this disproportion has been increased by the iniquitous legislation of the late Government, so that at the present moment the Irish drink is taxed at least seven times more heavily than the Engrlish. Does the Chancellor of the Exchequer propose to wipe away this disproportion? Not at all. Not daring or not caring to go to the entire length of the course marked out for him by his predecessors in his present Office, he mercifully contents himself with imposing on the Irish drink an increase of a taxation about four times heavier per proof gallon than that which he imposes on the English drink, leaving things in about the condition described in 1885 by the Member for Glasgow. The net result is what I have already pointed out. If his proposals are carried, Ireland will pay this year in respect of those new duties on alcohol alone £100,000 more than she ought to pay—or, in other words, £100,000 more in proportion than England. Now, what defence does he offer for fleecing Ireland in this fashion? I have heard from him only two excuses. First, he says that the drink taxation of Ireland per head of the population is less than that of England or Scotland. I am surprised that the right hon. Gentleman should have offered an excuse so evidently beside the question. What does it mean? It means only that the Irish people drink less in proportion than the people of England or Scotland. [Sir W. HARCOURT: Hear, hear.] If that be so I am very glad, but the fact that they drink less does not get rid of the other fact that they pay more for what they do drink, and the right hon. Gentleman must know that this latter point is the one which he has to face. He says again that the extra taxation being so slight will come out of the pockets of the publicans or the distillers, and not of the consumers. That may or may not be true, and according as it is true or false it may be a good or a bad argument to address to Englishmen or Scotchmen, who in either case will keep the money in Great Britain, and will get a return for it in one shape or another. But what answer is it to Irishmen? Whether it comes out of the pockets of Irish distillers or Irish publicans, or Irish consumers, it comes out of Ireland and never returns there. I have heard one other excuse for this fresh burden on Ireland—namely, that it is to be imposed for only one year. The Chancellor of the Exchequer himself seemed at first to give some countenance to this notion, but he has since blown it to the winds. The right hon. Gentleman, on the 23rd of last month, spoke as follows in this House:— All I am pledged to is not at the present time and during the inquiry into the incidence of this tax to make this a permanent tax.

SIR W. HARCOURT

Of course, as I proposed the tax in its original form it would have continued without any further action of the House of Commons; but in the manner in which it now stands it cannot be continued unless renewed for the next financial year.

* MR. CLANCY

The right hon. Gentleman has no doubt put a date into the Bill. But I must read the language of the Bill by the light of the language in which he has expressed his intention. I have not finished the quotation. He said— I am not pledged in any way to make the Spirit Duty end on any particular day. I shall adopt whatever course may be most convenient and safe for the Revenue.

SIR W. HARCOURT

The hon. Member has not quite understood me. That was with reference to the objection taken to making it end on the 31st of March. I intimated that I should have to consider whether it would not be necessary to put in a later date of the same year. The duty is only continued up to the 1st of July.

MR. CLANCY

I do not know whether the right hon. Gentleman is prepared to supplement his statement now, and say that he will not charge the duty next year?

SIR W. HARCOURT

I have not made any statement as to whether there is or is not to be this increase of duty next year at all. That will depend on the financial arrangement of the year, and a good deal, also, on who is Chancellor of the Exchequer. What I have stated in reply to the hon. Member for Kerry is that it shall not be continued without the renewal of the tax next year.

* MR. CLANCY

I am content to leave the matter as it has been put by the right hon. Gentleman. We do not know what is to happen next year.

SIR W. HARCOURT

Nor I.

MR. CLANCY

Exactly; and I only express my opinion that it will be found convenient for the Revenue to keep this tax on. When has such a tax, once put on, ever been taken off? Such a circumstance has been unknown. The history of the last 40 years of British finance is fruitful in lessons on this subject. The favourite game of British Chancellors of the Exchequer in search of money to meet a deficit, or to provide for a war, or to build ships—but never, of course, to benefit Ireland—has been what again, for want of a better name, I may call the popular drink of Irishmen. The last Minister who pursued this game and made his bag as usual was the Member for St. George's. The result has been that the distilling industry of Ireland has been extinguished except in a few places. Fifty years ago there were nearly 100 distilleries in Ireland; I doubt if there are 20 now. Employment, of course, has ceased in proportion, and the farmers have also felt the consequences by barley being made almost as unprofitable as wheat. Again, Ireland is so overtaxed that the extra taxation has now this result, amongst others, that it constitutes the main difficulty in the way of a satisfactory settlement of the Irish National question. In return, we have not even the consolation of knowing that the consumption of alcohol in one shape or another has materially diminished. Now, we had reason to hope that the present Government at least would not add to our burdens and our difficulties. But with what appears to mo at least a cynical contempt for Irish opinion, it not not only adds, in a time of depression, £250,000 to the taxation of Ireland, but it so increases Irish taxation as to increase at the same time the gross inequality of treatment in financial matters of which Ireland has been the victim at the hands of this Parliament. We think all this simply intolerable. Whatever other Irish Members may do tonight, I am authorised by those Irish Members with whom I act to say that they think this system of plundering Ireland ought not to be carried on any longer, and that they will give effect to that view in the Division Lobby by voting against the Second Reading of this Bill.

* MR. GIBSON BOWLES (Lynn Regis)

said, there was an entire lack of argument on behalf of the Budget. There was, indeed, the cynical avowal that the classes were to be punished by special taxation for wanting a Navy strong enough for the country; there had been the bleatings of the Peace Society, the effusive gratitude of the Member for Woodbridge, which had left them in doubt as to what they were to be thankful for, and on the part of the new President of the Local Government Board there had been an ambling and shambling about among figures which had very little to do with the question. An important declaration had been made by the Lender Secretary of State for the Colonies, between whose account of the Death Duties and that given by the Chancellor of the Exchequer an extraordinary discrepaney appeared, to which he would have to call attention. The Chancellor of the Exchequer said truly that at the present time the average charge upon realty in this country was calculated at 14 years' purchase, and the Under Secretary of State for the Colonies (Mr. Buxton) had said that under this Bill the average charge would be on 18 or 20 years' purchase, so that the difference would be only four years. If the period for calculation were increased to that extent, it was clear that the extra duty would amount to 4–14ths.

THE UNDER SECRETARY OF STATE FOR THE COLONIES (Mr. S. BUXTON,) Tower Hamlets, Poplar

What I said was that the average years' purchase would be taken at 14; that on certain classes of land—agricultural land—it would work out at 20 years' purchase, but upon other realty it might work out at 50 or 60. The point I was drawing attention to at the time was that the taxation would fall heavily in rural districts.

MR. GIBSON BOWLES

said, it would not only be 50 or 60, but 70, 80, 90, or even 100. He would show that the Chancellor of the Exchequer was proposing to take not 4–14ths more, but four times as much. The Secretary for India said he referred to certain lands not particularly specified, but he had understood him to refer to the whole. At any rate, the 4–14ths by no means represented the general increase of charge under the Bill. Before going further he would admit that land was not unsaleable now, as had been stated. That was a figure of speech. Land was certainly saleable, though only a small price could be got for it. The hon. Member for West Derby had also failed to appreciate that, under the proposed scheme, the incumbrances on estates would be deducted before the duty was levied. The landed interests and the liquor interests, especially from the point of view of Ireland, had been extremely well represented in this Debate, and he now proposed to deal with the subject from the point of view of the tax collector. He was once a tax collector, having served in the Legacy and Succession Duty Department upon which the collection of the Death Duties devolved; and he might say that no Department had served the State better, and in no Department were there men of greaters knowledge, integrity, and ability—of course, since he left it. He would like to ask the Chancellor of the Exchequer whether he had consulted that Department on this scheme; had he received any figures or Report from them; had he utilised the practical knowledge of the Legacy Duty Department, or had he relied upon the practical ignorance of the Treasury in the matter? He thought the latter was the case, for this Budget bore in abundance all the marks of the handiwork of the presumptuous and ambitious amateur. Probably no branch of taxation was more difficult and complex than that of the Succession and Death Duties. Though he almost despaired of being able to make them clear to the House, he would endeavour to deal with them intelligibly with the indulgence of the House, hoping as he went on to receive some little explanation from the Treasury Bench. He would show that this proposal as to the Death Duties imposed a new and heavy tax on a new and false principle; that it largely increased the tax upon widows and orphans; that it eat up estates in many instances, and would extinguish the present generation of English landowners; that it greatly added to the existing complexity of the Death Duties; that it imposed duties which would be absolutely impossible of collection; that it rendered the final discharge of the Death Duty impossible for ever and ever, and, in the absence of such discharge, forbade the most urgent dealing with the most important properties; that it increased the temptation to, and the facilities for, the evasion of the duties; and that it would probably bring in a net result of little or no revenue at all, as he would proceed to prove. That was a very formidable indictment. The Chancellor of the Exchequer had told them that this was a kind of tessellated legislation. That was a very happy and apt term: it was tessellated legislation, added to bit by bit but always according to a definite plan and settled principles. Now came in the Chancellor of the Exchequer with a pickaxe, and he had made of this tessellation an absolute chaos and heap of stones, over which he passed the steam-roller of his democratic Budget. One word with regard to what the Chancellor of the Exchequer claimed as the "anterior title" of the State. According to The Times newspaper and his own recollection, the right hon. Gentleman had stated that the right of disposing of property by will was "the pure creation of positive law"; but in the speech which the Chancellor of the Exchequer had done him the honour to send him, it was stated to be "the creation of positive law," the purity having disappeared. Had the right hon. Gentleman never read the 48th chapter of Genesis? Did not he remember, before any positive law of which we had any record, how Israel gave his son Joseph, by a testamentary disposition, a double portion of the land he had taken from the Amorites? The Chancellor of the Exchequer had begun too late; he had begun with the Civil Law of the Romans, established long after the power could be shown to have existed. The right hon. Gentleman said that the title of the State to a share of the accumulated property of a deceased person was an anterior title to every other. He said, "Supposing a man left £100,000, the Probate Duty, £4,000, had to be deducted before anybody got anything, and those interested got £96,000 only." "They never had a right to any more," Radical gentlemen opposite might exclaim, but they did not appear to see where that would lead. The beneficiary would have a right to £96,000; but under the proposed plan the State would take £6,000, so that tomorrow a beneficiary would have a right only to £94,000. Afterwards another Chancellor of the Exchequer might take 10 per cent., instead of 4 or 6, leaving the beneficiary only £90,000, and later another Chancellor of the Exchequer might take 100 per cent. The Chancellor of the Exchequer had not been ashamed, in fact, to stand up in that House and claim the right to lay his hand on every farthing of a man's earnings—to take his whole property. He would recall one of the last utterances of Charles I—perhaps the only one he ever made worth preserving—before his death on the scaffold at Whitehall— The freedom, rights, and liberties of the people of England consist in having of Government those laws by which their lives and their goods may be most their own. That was a true and sound principle, and it had always been acted upon in this country until the Chancellor of the Exchequer, less liberal than the least liberal of all the Stuarts, told them that the principle to be now acted upon was that a man's life and goods were to be least his own, and that the State had the right to claim all the goods of every man who died possessed of property. That was not the law of England or the practice of the English people. The principle of English law was that what was contributed to the State was given as a benevolence, and it had never been allowed to be taken otherwise. ["Oh!"] He recommended the hon. Member who ejaculated "Oh!"to read a little Constitutional history, and to observe the very language in which these benevolences were accepted by the Sovereign. The Chancellor of the Exchequer had forgotten, or perhaps he was not aware, that the Death Duties of the United Kingdom were at this moment the highest in the world. He was sorry the right hon. Gentleman had not been able to remain in the House, as he might have been able to tell him one or two things; but perhaps they would be reported to him. A remarkable article was published in The Statistical Journal in March, 1889. It was impossible to compare all the figures given throughout, and he would, therefore, only take the most prominent cases, but in that article it was shewn that in France lineal successors paid only 1¼ per cent.; in Germany nothing; in Belgium, 1¼ in Italy, 4–10ths; in Prussia, 1; while in the United Kingdom lineal beneficiaries paid no less that. 4 percent.; and ccasionally when Succession Duty came in they paid more. It was a very important fact, in short, that the Death Duties in the United Kingdom were higher than they were anywhere else in the whole habitable world. Take the case of Victoria which the Chancellor of the Exchequer had quoted almost as a shocking example. There, in 1891, the Death Duties amounted to £150,351 on a total Revenue of £8,343,000. Hon. Members would mark that this was less than l-50th, but, on an average, it might be taken that the Death Duties in Victoria amounted to rather less than l-40th of the total Revenue. What was it the Chan cellor of the Exchequer was proposing to do? He was proposing to raise the Death Duties in this country to £13,500,000 sterling, which was not l-50th or l-40th, but one-seventh of the whole income of the United Kingdom. Yet the right hon. Gentleman said, forsooth, that he was going to be "much more moderate" than they were in Victoria; but there was another feature in that case. Take the percentages levied there and in England on property passing by death. In Victoria for 1891—and it was practically the same for other years—the amount of property passing by death was sworn at under £7,582,000, and the Death Duties amounted to the sum previously given, which was about 1 9/10 per cent. In previous years they were somewhat over 2 per cent., and it might be taken that the Death Duties in Victoria which had been held up by the Chancellor of the Exchequer as a shocking example which he would not approach were only 2 per cent. What were they in England? Even now, in 1892, on £241,500,000 of real and personal property passing, the total Death Duties levied were £11,000,000 and a fraction, amounting to 4½ per cent. So that, having taken Victoria as the model for this Botany Bay Budget; having appealed to it as a shocking example, and having assured the House that he was going to be "much more moderate" than they were there, he was going to increase the Death Duties to the extent proposed in face of the fact which the figures, unfortunately for him, disclosed—that they were there only 2 per cent., and already far less than they were now here. Then take the United States. The great historian Bryce, writing in October, 1888, said— I have found no instance of a progressive Inheritance Duty or of a progressive Income Tax in the United States. And then he adds— Comparatively little resort is had to the so-called Death Duties—that is, the Probate, Legacy, and Death Duties. The Statistical Society in March, 1889, published this:— In the United States the duties upon successions were superseded by the law of 1870, and they no longer since that date exist. When they did exist they were less than those of the United Kingdom. But here was this remarkable fact: that this democratic United States, having tried these Death Duties, had in 1870 to abandon them, and consequently at this day there existed no Death Duty whatever in the United States. He begged the House to bear that fact in mind. Therefore, neither democratic Victoria nor the democratic United States would bear out the Chancellor of the Exchequer in his proposal. He now wanted to clear up one or two ambiguities in this most ambiguous of all Bills. And the first question he should like to put was: Did the settlement of part of a property apply the vice of settlement and the extra 1 per cent. to the whole of it—did it, so to speak, "settlementise" it all? Clause 4, as the Attorney General knew, charged property with a further Death Duty of 1 per cent. Did that 1 per cent., if part only were settled, extend to the whole of it? Certainly the word "that" was not used with regard to the property, and the words "the property," according to the dictionary of definitions at the end of the Bill, would mean all the property. Did it mean 1 per cent. on that part of the property only, or on the whole? He thought it meant the whole, and he would tell the House why. Clause 3 dealt with cases where property passed upon death to persons other than the family, and excepted that from aggregation, and it seemed that settled property not thus specifically excepted must necessarily be included in the aggregate from which it was not severed by Clause 3. Take the case of a rich American coming over and domiciled in England leaving at death £10,000,000. Of that sum £10,000, say, was settled upon his wife. He wanted to know whether the further Estate Duty was payable only upon the £10,000 or upon the whole £10,000,000? According to his reading of the Bill the latter was the case. Then, if so, mark the ridiculous result: there would have to be paid on the £10,000,000 an extra duty of 1 per cent., or £100,000 of duty in respect of a £10,000 settlement! This was the Budget which they were asked to recognise as Heaven-sent, and which the right hon. Gentleman was said to have so lucidly explained.

THE ATTORNEY GENERAL (Sir J. RIGBY,) Forfar

said, there was nothing of the kind in the Budget. This was all a figment of the hon. Member's own imagination.

MR. GIBSON BOWLES

said, it was certainly no figment of his imagination; he had quoted the statements in the Bill, and one of its ambiguities was that it really did not clear up the question. However, he would pass on, as he understood from the Attorney General's statement that the further duty was only to be payable on the particular part of the property settled, and would not be extended to the other parts of the property. He would take a note particularly of that authoritative statement. Another absurdity in the Bill which was no figment of his own imagination was that it assumed to levy a tax in so many words upon an admittedly false hypothesis in reference to infants—persons who had never enjoyed the property. The Attorney General would remember that in Clause 2 (1a) property passing was described as including property of which the deceased was at the time of his death competent to dispose. That was the property; then the definition was given, in Clause 18, of the person— A person shall be deemed competent to dispose of property if he has such an estate or interest therein or such general power as would, if he were sui juris, enable him to dispose of the property. Did the House know what that meant? It meant that an "infant muling and puking in the nurse's arms" was to be treated as a grown man of 21, capable of doing that which he was not capable of doing—that if the infant had any interest or disposing power under a settlement he was to be treated as though he were sui juris, and as though he had survived to 21, and had disposed under his power. Would the Attorney General describe that as a figment of his imagination? He would not venture an answer.

SIR J. RIGBY

said, the present law was not introduced for the first time by this Budget.

MR. GIBSON BOWLES

said, this Bill made that provision in so many words That, however, was only one of the preliminary ambiguities, and he would proceed to deal with another point. Paragraph 2, of Clause 3, provided in effect that property passing to the wife, husband, or descendant was not to be swelled for the purpose of Estate Duty by the bringing in of other property passing to other persons. The Chancellor of the Exchequer in his speech, and still more fully in his Memorandum, explained that this provision was made for the protection of the "family" against the unfair swelling of the aggregation of property coming to it. This was the case with regard to the property of a wife, a husband, or a descendant, but what about property passing: to a father or a mother? Under the clause such property was to be aggregated. Therefore, the Chancellor of the Exchequer, having told the House that he was going to protect the family from an unfair aggregation, turned the father and mother, so to say, out of the family. He (Mr. Bowles) thought that the Attorney General would have to put the father and mother into the clause again. Now to come to the indictment. The Bill levied a new and a heavy tax on property on a new principle. It was a tax on the corpus of the property, and not on the benefit taken. It took no account of the amount of the benefit which the beneficiary became entitled to on the death, and no account of the consanguinity of the person from whom the benefit was derived. No doubt gentlemen opposite would cite the Probate Duty as some sort of answer. The Probate Duty, however, in its proper form, and indeed in its present form, was a small duty levied by the State as the price for confirming the disposition of the testator. The main and heavy Death Duties must, however, be levied as they were at present—according to the benefit taken and according to the consanguinity of the beneficiary. But the Chancellor of the Exchequer fixed his eyes solely upon the property and not at all on the benefit or the consanguinity, and he was proceeding on an entirely false principle. The Bill also taxed potential value which might never be realised. As to ground rents, no doubt if things went on as they were now going on, and if the Chancellor of the Exchequer could be prevented from plundering the population, one might assume that the ground rents would return greater amounts as estimated by the Chancellor of the Exchequer. London, however, might be sacked, and what would then become of ground rents? This was not only a new tax, but it was a new-fangled tax. His next objection to the scheme was that it greatly increased the charge on the widow and the orphan as regarded personalty. The increase chiefly came in as regarded personalty when the amount was over £28,000, but there it came in rather seriously. In the case of £100,000 passing to widows and children, there would now be levied a tax of £4,000, whilst under the proposed system the tax would be £6,000. On £1,000,000 the present tax was £40,000, and the proposed tax would be £80,000. In the case of realty the case was far worse. He would take the case of a poor landowner with a gross income of £ 1,500 a year, and a net £1,000 a year after paying tithes and insurance, which at 24 and 2–5th years' purchase (the present rate for ascertaining principal value) would realise £24,400. If the landowner died, and the widow took the property now, she would pay nothing; but under the proposed system she would have to pay £1,220. The House must bear in mind that this was not a rich widow, but the poor widow of a poor landowner, who was endeavouring to struggle along upon £1,000 a year. But now, if the poor landowner had by his economies saved £1,000, and settled it, this would increase the capital value of the property to over £25,000,. and consequently there would be an extra duty to pay. If the property passed to children they would have to-pay at present, if it were unsettled, £262 10s., whilst under the proposed system they would pay £976. If the property were settled they would pay the same as at present, but under the proposed system they would have to pay £1,220, or five times that amount. Now, suppose the deceased left, besides this real estate, over £1,000,000 of personalty, none of which went to the children, that would impart a different character to the Estate Duty, and instead of paying £262 10s. the children would have to pay £2,196. Thus, the child or the widow who inherited the property of a father or a husband would pay more as the property got greater. The result would be that it would be the bounden duty of every self-respecting son possessing common intelligence and prudence to ruin his father during that father's lifetime, and a similar duty would devolve upon the wife and the daughter. This precious scheme, therefore, not only carried sack and pillage into the homes of England, but also the demon of discord and of treachery. In certain cases the duty would actually eat up real estate and wipe out the landowners. He would take the case of the rich landowner with real estate which had been settled and resettled in the ordinary way. He would take a net revenue of £200,000 a year, and assume the age of the successor at the average of 44. The sum on which Succession Duty would be now paid would be at 14 years' purchase, or on £2,800,000, and the amount at 1½ per cent. would be £42,000. Occasionally there were several devolutions in a very few years. In the case of the Dukes of Bedford there had been no fewer than four deaths since 1861, or in one generation. Now, four times the duty, or one duty on-each one of these devolutions, would give £168,000 under the present system. Under the proposed system, however, the £200,000 of revenue would have to be capitalised, and, taking it as before, at 24 and 2-oth years' purchase, the duty would be levied upon a principal value of £4,880,000. The payment that would have to be made would he, therefore, no longer £42,000, but £439,200. Supposing there were four devolutions in the course of 30 years, the £439,000 would have to be multiplied by four, and that would produce a grand total of £1,756,000 on an estate the capital value of which was £4,800,000. In other words, in the course of one generation the State would take more than one-third of the value of the whole estate in duty. If it went on at this rate the whole of the property would be gone in three generations. To tax real property or any property in this manner passed the limit of anything that had ever entered into the mind of any previous Chancellor of the Exchequer. It was, indeed, perfectly monstrous. No Eastern despot, no Robin Hood, not even Robert Macaire himself, ever conceived such a system of contribution as this; and when he considered how the Bill would plunder the widow and the orphan, and practically destroy estates, he could not help thinking that it threw into the shade everything that had ever been done in the way of highway robbery, and cast a reflection upon the ancient and honourable profession of brigandage. Could the House conceive the enormous complexity that would arise under this new system of Estate Duty? It was bad enough now. He thought that nobody who had not had practical experience of the Department could have any idea how complicated the present system was. There were now many instances of four or five separate Legacy Duties on one death. There was a famous case in which 99 legatees had died in the testator's lifetime, and each one of the 99 had to be followed out for duty. But things would be far more complicated were this Estate Duty to be levied, for each legatee would have to be followed out not only downwards, but upwards, for the proper aggregation of his whole estate. But, as a matter of fact, a large amount of these duties would be absolutely incapable of being collected. Clause 2 imposed the Estate Duty on property situate out of the United Kingdom, and when the Chancellor of the Exchequer was asked by him (Mr. Bowles) how he was going to collect the duty abroad he said he could do so if the House would give him the power. The time had now arrived for the right hon. Gentleman to say how he was going to do so. He (Mr. Bowies') believed it would be absolutely impossible. Probably the right hon. Gentleman thought he would get the duty somehow or other out of the English executor. Perhaps he had forgotten, or did not know, that in cases where there was considerable foreign property a foreign executor was usually appointed for such foreign property, whilst an English executor was appointed for the English property. How was the Chancellor of the Exchequer going to get the duty out of a foreign executor? He (Mr. Bowles) would take the not altogether imaginary case of a rich German possessed of £20,000,000, with perhaps £1,000,000 in a bank here. When he died the Chancellor of the Exchequer proposed to levy duty at 8 per cent. on the £20,000,000. The duty would, therefore, amount to £1,600,000. If the Chancellor of the Exchequer laid his hands upon the whole of the property in this country he would still be £600,000 short, and did he think that his astute German friend was going to leave his £1,000,000 in this country for the right hon. Gentleman to put his hands upon? Not he. There were banks in Amsterdam and in Paris and in Vienna to which he would undoubtedly transfer the £1,000,000. But there was still another portion of the duty which was incapable of collection. The Chancellor of the Exchequer had stated that, in the case of personalty, he did not propose first to levy the Estate Duty and then to levy Succession Duty on the total amount without deducting the duty already levied, but that he did intend to do that in the case of realty. The right hon. Gentleman, therefore, intended when there was an estate of £100,000 first to levy the Estate Duty of £6,000 on the £100,000 and then to levy Succession Duty not on £94,000, but on the £100,000 without deducting the amount he had already levied. In fact, he proposed to levy a tax on a tax. He was very sorry to inform the right hon. Gentleman that he could not do this, and he would tell him why. The reason arose out of the dates fixed for the rendering of the accounts. Under the Bill the Estate Duty was to be paid and the accounts were to be delivered in six months after the death; but the Succession Duty account had to be delivered and the account paid only 12 months after the death, and the Succession Duty was payable only on the amount that came into actual possession, so that they could not. get the duty on that £6,000 which never did come into possession. Now another point. The rendering of the accounts of an estate as prescribed in the measure was absolutely impossible. The executor was required to render an account of the whole estate, but there was a great part of which he probably knew nothing—debts to and from the estate—and liabilities of which he had no cognizance. The accounts could never be closed, because the property of which the Bill took account included property which might fall into the estate at any future time whatever without any limit. It was not uncommon in this country for persons to settle property on actresses and in America upon type-writers, and not to tell their executors of these settlements. How was it possible for an executor to give information about things of which he knew nothing? The House must observe that when the account was delivered it was by no means an end of the matter, because by Clause 7 the executor was bound to account for "all the property," and this by the Definition Clause included all property passing either immediately on the death or after any interval either certainly or contingently, and not alone on the death, but with reference to the death. Till every farthing was finally brought in the property could not be aggregated nor the varying graduated duty be charged, so that the account would be open to all eternity. This was not an imaginary case. The books of the Legacy and Succession Duty Department were open since 1796, and many could not yet be closed, and no books could ever be closed if this system were adopted. By the time the historic New Zealander came to contemplate the ruins of Loudon he would find the remaining inhabitants liable for untold accounts and untold millions of arrears of Estate Duty. And it was not merely the executor who had got to render an account of the estate, but "any person whom the Commissioners might believe" to have had dealings with the property was bound to bring in an account and verify it on oath. Such a person would be forced to give information about something he did not know of, and to verify it by an oath which must necessarily be false. This was not a tessellated legislation, but Colney Hatch legislation. He knew there were provisions that the Commissioners might give a certificate at the end of two years if they were satisfied that the duties with regard to a particular property had been discharged, but they would require ample proof, which could not and would not be forthcoming; and even then the certificate would only cover that person and that property. In fact, the certificate never could be given. But, suppose his argument was wrong, and a certificate of discharge could be given, had the Chancellor of the Exchequer ever reflected what an enormous number of certificates would be required? In England alone there were 1,000 deaths a week of persons upon whose decease property passed, including stocks and shares, for every one of which a separate certificate would have to be delivered. It was a moderate estimate to say that on an average on each death there were at least ten stocks or shares or sums under policies or moneys at a bank passing, so that the unfortunate Legacy Duty Department would have to issue 10,000 certificates a week, each certificate requiring many inquiries to be made and work to be done. It would take 1,000 or probably 2,000 clerks to perform this work, and the New Zealander was very likely to find London buried under the piles of certificates that would have to be made. The effect of all this would be to increase the opportunities and to give greater facilities to those persons who wished to avoid the payment of the tax. Another consequence that would follow if ever these Death Duties were imposed would be that men of large fortunes would send the greater part of their capital abroad, mostly, no doubt, to the United States, where investments were readily obtained and where Death Duties did not exist. The result of this would be severely felt in England, and the Chancellor of the Exchequer would, when too late, find to his cost that he had frightened away the goose that laid the golden eggs, which now so largely assisted to fill his larder. In future every prudent man would invest his money abroad, and direct that even his English legacies should be paid out of his foreign property by the foreign executor, and the Chancellor of the Exchequer could touch neither, and, so far from getting extra duties, would lose much of those he now got. Therefore, it would be seen how much this Bill increased the facilities for evasion. He believed the Chancellor of the Exchequer fully realised that fact, for he had only reckoned on getting £2,000,000 from personalty and £1,250,000 from realty. These were the proofs by which he trusted that he had established bis proposition that, in spite of the severe and unjust demand that was to be made upon one class of the community, the net gain to the Revenue from the Death Duties, after all charges and falsifications and the enormous extra expense of collection had been allowed for, would be small and slight indeed. The Chancellor of the Exchequer had dreamt a dream of a Democratic Budget, and no doubt in his dream the sinister figures of Debt, Drink, Death, and Income Tax had combined to form an image like unto the one that Nebuchadnezzar beheld—an image which of gold and silver, of iron, of brass, and of clay. To other hon. Members be would leave the duty of showing the gold and silver that could be wrung from drink, the iron of the Income Tax, and the brass that was so apparent in the dealings with the Debt. His task was to stamp on the clay feet of the Death Duties, and to show that they, at least, could never support the image which Nebuchadnezzar, the Chancellor of the Exchequer, had set up. The worst of this Budget was its dishonesty. The Chancellor of the Exchequer had gone about, not to levy a tax, but to oppress a class. The whole of the Budget was marked by a pitiless animosity to all those who held property. The right hon. Gentleman had gone out of his way to hunt down the unfortunate landed proprietor. He deeply regretted that the right hon. Gentleman had not considered it worth while to remain in his seat and listen to the practical remarks that he had addressed to the House that evening. No doubt, however, he preferred pluming himself outside on the results of the "popular Budget" he had brought forward, and on the dire wounds he was dealing to his enemy, property. But the end was not yet. Property was not incapable of resistance. Let the Chancellor of the Exchequer remember that— The man that once did sell the lion's skin While the beast lived, was killed with hunting him. This so-called "popular" Budget might at first sight delude the ignorant and the unreflecting, but when it was considered it would be found to be unsound in principle, immoral, unjust, inexpedient, and wholly impracticable.

SIR ISAAC HOLDEN (York, W.R., Keighley)

said, that during the 12 years he had been in the House be had seldom spoke on any subject, being but a plain man of business, but that he could not refrain from expressing his very cordial approbation of the thoroughly democratic Budget which had been brought forward by the Chancellor of the Exchequer. Whether that right hon. Gentleman was alone responsible for its details or whether other Members of the Cabinet had assisted him he could not say, but in his opinion the Finance Bill for his year was based upon the broadest principles of justice to the people. Whatever might be said against the Death Duties as unjustly oppressing the landed classes, it must be remembered that that class was limited, and that in no country in the world was the soil held in the hands of so few persons as in England. If the new taxation had the effect of breaking up large estates it would be one step, at any rate, in a direction of change and reform, which all who had the well-being of the masses at heart would do their best to support. He fully agreed with the views that had been expressed that the strength of our Navy must be kept up to a standard of efficiency, and, if necessary, it must be maintained at a strength equal to the combined strength of the Navies of any two foreign Powers. The poor were already taxed much beyond the rich-England was, no doubt, the wealthiest country in the world, and the poor paid beyond their share of the general taxation. [Sir W. HARCOURT: Hear, hear!] Well, if they could not put any more on the poor they must go to the rich, and see what they could get out of them. Great wealth was made in various great industries, like wool-combing, of which he had some knowledge: but those who engaged in these industries, and who realised wealth, could do nothing without the protection which they obtained from the Government. They ought not to—and he did not—complain of the graduated duty. If they did not maintain a powerful Navy their commerce, which extended all over the world, would be impracticable, and it was only through the protection of their Navy that their commercial men dare risk their lives and their fortunes in order to extend England's commerce, and without that extension of their commerce they could never employ their population. He thought the landed proprietors should not begrudge to do that which the democracy had done; and he ventured to tell the Parly opposite that the people were not ignorant of what went on in that House. He had a good deal to do with a working population, and it was surprising the attention they gave to that House. Bet hon. Gentlemen opposite, therefore, not delude themselves into the idea that obstructive opposition to this Budget would escape notice. He hoped they would accept the proposals of the Chancellor of the Exchequer—well arranged and matured proposals—and that there would be a large majority for a system which must be accepted and would be approved by the great majority of the people.

* MR. SAUNDERS (Newington, Walworth)

said, the right hon. Gentleman the Member for the Forest of Dean made a valuable contribution to this Debate when he pointed out that the landed interest and agricultural interest were not identical, but separate. The taxation of land was not only not the taxation of agriculture, but frequently meant the freedom of agriculture and the freedom of industry. That had been shown in a practical light by what had happened in New Zealand. Five years ago that colony was (he most depressed of all our colonies. Now it was the most prosperous; and why? Five years ago the land of the colony was inaccessible, because it was held by large speculators and could not be obtained at a reasonable price. Recently taxation varying from 5 to 15 per cent. on the interest of the capital value had been imposed. As a result, the price of land had fallen 33 per cent., and instead of the working classes leaving the colony as they did five years ago to the extent of 20,000 in one year they were now returning thither, and the colony was in a most flourishing condition, because of the adoption of a just principle in the taxation of land. Until we had that principle applied in this country he feared that we should continue to suffer from depression of trade. The taxation of land in this country was conspicuous by its absence. He wished that some of the hon. Members who had complained of the taxation of land had pointed out some instances in which that taxation bore heavily and unjustly. Many instances to the contrary could certainly be pointed to. He should like to invite the attention of the House for a moment to the condition of the working people of London. Take the case of a man who occupied one room in which the whole of his family were compelled to live, and paying for that room 4s. per week. That 4s. a week meant 1s. to the builder, 2s. to the ground landlord, and 1s. to the rate collector. That man paid 50s. per annum in rates. But what did the landowner pay? His contribution to the taxation of the country in that case was simply the amount of the Income Tax, and what he actually paid was 2s. 11d., as compared with the 50s. of the working man. Take another instance of the taxation of land—the case of an estate in the parish in which he lived, and which was only recently occupied by a millionaire. His land amounted to 40 acres, which was not a greater proportion than one acre would be to a business or professional man. Upon that 40 acres the rates payable according to the ratebook amounted to £4 per acre. Two years ago the land was sold to an Artisans' Dwelling Company, and buildings were to be erected for artisans and labourers. What did the House suppose would now be the taxation of that land? It would be at the rate of £80 per acre in addition to the value of the buildings put upon it, whatever they might be. It was quite obvious, therefore, that building operations were paralysed by excessive taxation. All this kind of taxation fell upon the masses and not upon the classes. Possibly there were Members in the House who remembered the declarations made by the late Prime Minister in 18S6, when he knew that he was about to be defeated. He said— I have made concessions to the classes and concessions to powerful interests—concessions which have not been accepted in the same spirit in which they have been offered, and which will not be repeated. Henceforth I shall consider the interests, not of the classes but of the masses, How had that pledge been kept? It was followed by the Newcastle Programme—and a grand programme that was, promising to the working classes of the country the taxation of ground values, the payment of Members, and the payment of registration expenses. Where did they find a vestige of these promises in the present Budget, and why did they not find it? Because this Budget, like the legislation generally which emanated from the classes, was made in the interests of the classes. The Chancellor of the Exchequer made a very clear statement as to what the effect of the Budget was—so clear and brief that he (Mr. Saunders) would venture to submit it to the House. The right hon. Gentleman said— Under the plan of the Government the increase of the Death Duties on personalty will be £2,130,000 and upon realty £1,320,000. But on the total of £1,320,000 put upon realty we have given compensation under Schedule (A) of the Income Tax amounting to £600,000 applicable to realty. That will leave the net additional charge upon realty £700,000, of which sum £350,000 or £400,000 is asked from the landed interests of the United Kingdom of Great Britain and Ireland as their contribution to the defence of the country, to place their taxation upon an equality with that of other classes and interests. Never was a proposal made to the House to accomplish by such small means such great results. And it would not do it. £350,000 or £400,000 was by no means an adequate contribution from the landed interest in the country to meet a deficit in the revenue occasioned by the increase in expenditure. What, then, became of the equalisation of Death Duties? The equalisation of Death Duties was a matter which had been urged by leading financiers for 100 years. In 1853 the right hon. Member for Midlothian (Mr. Gladstone) spoke of equalisation of the Death Duties, and urged that it should be effected, and he referred to what William Pitt had said 60 years before that. For 100 years the landed interest of this country had enjoyed exemption from Death Duties which were paid by other property, and now when the matter came to be taken in hand, how was it dealt with? Instead of considering how much landlords had saved by the extension there was an attempt made to palliate the small burden which the equalisation of the duty would put upon land. The Income Tax was brought in to compensate for simply doing justice to the community in the matter of the equalisation of Death Duties, and in attempting that equalisation the Chancellor of the Exchequer had introduced a greater wrong than that which be proposed to remedy. For what was the state of affairs with regard to Income Tax? It had always been a matter of contention that persons enjoying fixed incomes from real property should pay a larger percentage than people were called upon to pay for a precarious income. In 1842 Mr. Disraeli, the then Chancellor of the Exchequer, proposed that incomes from real property should be rated at 7d. in the £1, and that incomes of a precarious nature should be rated at 5¼d. His successor did not adopt that proposal. And why? Because he said that— Incomes from realty were taxed on their gross value: they should equitably be taxed on their net value, which would make a difference of 16 per cent. The present Chancellor of the Exchequer did what neither of his great predecessors would have dreamed of doing. He not only charged the same on realty and precarious incomes, but he placed the charge on fixed incomes at a net amount instead of at a gross amount as it formerly was, and he allowed a difference of from 8½ to 17 per cent. Now, that was introducing an inequality which might bo of a more serious character than the inequality which was adjusted. Graduated taxation! They were to have graduated taxation, and he (Mr. Saunders) was very glad of it. Graduated taxation was a very important matter; but how was that dealt with in this measure? Here, again, they kept the word of promise to the ear and broke it to the hope. Graduated taxation meant the taxation of large properties at a higher rate than small ones. What was done in the Bill? There was no application of taxation as long as the old fogey who was incapable of applying his money kept it in his own hands. They waited till it ceased to be a large property—until it was divided and would possibly be used more advantageously—and then they came upon it with graduated taxation. It was not graduated in his (Mr. Saunders's) opinion, except that it graduated the wrong way. What was wanted was to catch the capitalist while he was living. Under present conditions he could hold his gold to the very edge of the churchyard mould, and his property was protected, not taxed. Then, as to registration. The course the Government were taking was disappointing. It was expected that the Chancellor of the Exchequer would have made the burden a national one, rendering the access of a poor man to Parliament more easy.

MR. SPEAKER

Order, order! The hon. Member is dealing with another Bill before the House.

* MR. SAUNDERS

said, he would pass on. He ventured to think that the Government would never have been placed in power but for the pledges they had given on these matters. Had they not promised the taxation of ground values, the payment of Members, and the lessening of the cost of registration they would never have had an opportunity of sitting on the Treasury Bench. It was a very serious matter that a Government which got into Office on the strength of promises of this kind should have failed to fulfil those promises. It was said that this would be an epoch-making Budget. He believed it would be an epoch-making Budget, but in a very different sense to what had been represented. What would happen was that the working classes, disappointed of that relief which they expected from the Budget, would cease to have confidence in the statesmanship of their rulers. He had watched politics ever since the introduction of the Reform Bill of 1832, and never had he seen such a dereliction from promises as that which was now being witnessed. It was easy for some to regard with equanimity the existing condition of things, but unjust legislation meant to a great number of the people intense and undeserved suffering. How could hon. Members expect men amongst whom the schoolmaster had been, men who had become intelligent and enlightened, to still remain suffering through injustice with the quietude they had manifested in the past? For eight years they had looked to this Budget to release them from the suffering and injustice they now endured, and they had been entirely and completely disappointed. There was no assistance for the working man in the Budget. There was some relief for a class a good deal above the working man, but no relief for the working man. The poor man who paid 4s. a week for a room for his family would still go on paying 2s. a week to the ground landlord, and 1s. a week to the rate collector, and the ground landlord would still contribute 2s. 11d. a year in taxation, while the working man contributed 50s. How long were the people of this country going to be satisfied with this state of things? He looked forward to the future with very considerable apprehension. There had been great difficulty in repressing the disposition to action other than political, both in the neighbouring country and in our own. What could they say to those men? How could they ask them to be content to starve in quietude, without making any effort on their own behalf? He had talked to them during the last eight years with some effect. What could he say in future? He hoped he would learn something from the Chancellor of the Exchequer as to what could be said to them. This Budget did not give them a vestige of hope, and he believed that the absence of hope might bring about very serious consequences in this country.

MR. BOUSFIELD (Hackney, N.)

said, he would not apologise for inflicting himself upon the House in this matter, because there was very little House to apologise to at the present moment, still he was glad to see there were some hon. Gentlemen behind him who were interested in the subject. He only desired to make a very few observations, and he could as well hang them upon an observation that fell from an hon. Member opposite, who spoke from behind the Ministerial Bench, as upon anything else. The hon. Member stated it was his view that those of them who, on that side of the House, voted against the Second Reading of the Budget Bill, were necessarily setting themselves against any and every proposition contained or involved in this Bill. He humbly begged to differ from that position. It was perfectly possible, and in his own case it was the fact, that one might approve of perhaps even the majority of the principles that had been enunciated by the Chancellor of the Exchequer in putting forth his proposals, and yet one might differ from him in the proposals to carrying out those principles embodied in this Bill. That he was assuming, and he believed it was the position, he would not say of a considerable majority, but of a large number of those who sat on that side of the House, and who were going to vote against the Second Reading of this Bill. When he first heard the speech of the right hon. Gentleman, it appeared to him almost a Budget that might have been introduced by a Conservative Chancellor of the Exchequer. The right hon. Gentleman expounded in roseate colours principles that had received a good deal of approval; he expounded them in such roseate colours that he (Mr. Bousfield) felt one must give a certain measure of approval to those proposals; but then they found, when they were put in the form of a Bill, and the various proposals were bracketted one against another, that after all this Bill was likely to do more harm than good. Of course, he maintained that if in carrying out proposals that were admittedly good they introduced difficulties, they introduced hardships, they introduced inconveniences and inequalities between one class and another, they threw discredit upon those proposals and prevented the adoption of them. He desired to make two observations, and first of all with reference to the general principles of taxation. Probably they might be regarded as a truism, but the House would forgive him if he thought it necessary to make the observation in order to make his meaning clear. He took it everyone would admit the main fund from which the taxation of the country should be drawn was the fund consisting of what might be called surplus income, and by that he meant the income a man had when he had paid for all necessaries of life, including among them the rent of his house, the maintenance of himself and his family, making provision of some sort or other for sickness, old age, and death, and the support of his widow, it might be, after his death. When he had paid out of his income all these absolutely necessary expenses, if he had any surplus income left that he might spend on luxuries and upon civilising agencies, then they had a fund that might be called surplus income out of which taxation should come. In the case of a working man with £100 a year the surplus income would be very small, amounting to, say, £5 a year; in the case of a man with £500 a year it might be from £50 to £100; but in all cases the fund they ought to regard as a man's taxable capacity was the surplus income he had left after providing for all the absolutely necessary expenses of life and of civilisation. Let him apply that to the provisions in this Bill. First of all, there was the proposition of an extra 6d. upon beer and upon spirits. There could be no doubt that in that proposition they were getting at surplus income, because whenever a man bought beer or spirits—he should be very sorry to admit they were necessaries of life—whenever a man had money he could expend in the purchase of beer or spirits he was spending part of his surplus income. They were putting an additional tax upon that, and they were therefore getting at the surplus fund, because they were taxing that which was a luxury, or the money that was available for luxuries. So far so good, and one might find a precedent of a Conservative Chancellor of the Exchequer in the same straits resorting to a similar expedient for raising taxation. But due balance ought to be observed in this matter. It had been already pointed out how this affected Ireland, and specially affected spirit as opposed to beer drinkers. It had been pointed out, moreover, that the incidence of additional taxation of this kind was very partial, because it only touched a certain class of the population, and left another class wholly untouched by it, and not called upon to contribute to emergencies arising. In a case of this kind it was unfortunate that the Chancellor of the Exchequer should have put an extra tax upon what was, in the main, the poor man's drink, and, as the rich man drank wine, that the right hon. Gentleman had not accompanied that additional tax by an additional tax upon wines of different kinds. It might be said that some wines were taxed up to the highest amount they would stand, but that could not be said in the case of light wines, and one found a difficulty in understanding the reason which could have induced the Chancellor of the Exchequer to put the additional taxation he hoped to draw from this source upon the drinks chiefly consumed by the poor man, whilst he left alone the corresponding drinks consumed by the rich man. He did not think that Conservative Chancellor of the Exchequer had done anything like this. What the late Chancellor of the Exchequer did was to put a tax upon wines without putting a tax upon beer or spirits, so that he was obviously putting the tax upon the people who could afford to pay it. But the very reverse was taking place now, and to pick out beer and spirits and leave alone wines was a very invidious thing to do. In order to make things fair all round, the three classes of liquors should have been treated alike. Coming to the question of the equalisation of realty and personalty as regarded Death Duties, he held that in principle the Government were doing a thing altogether good. Nobody could deny that taxation of accumulations where they could get hold of them was a right and just thing. It was a just and convenient form of taxation when they found accumulations on the death of an owner that they should be taxed and a certain proportion transferred to the State. Then, again, the condition that no change from personalty to realty or from realty to personalty should alter the amount of taxation that should be paid was a principle which per se nobody would attack. Upon the principle of the equalisation of Death Duties he was altogether at one with the Chancellor of the Exchequer, but how had the proposal been applied in practice? He thought that by giving a simple illustration one could show better than by wider argument what was the effect of the actual proposals put forward. Let him take the case of a yeoman farmer and a butcher living in the same village, who were making the same income of about £300 a year and each having a surplus income every year to the amount of £100. There could be no doubt that the taxable capacity of these two individuals was precisely the same. It was true that one man had so many acres of land and the other had only a house and shop in the village, but each, by the expenditure of all his energy, was able at the end of the year to show the same amount, practically, of income, and the same amount of money which he might save, if thrifty, or which he might expend in luxuries. Say that the butcher died and that his son succeeded to his estate under the new regime which was to be inaugurated by the Chancellor of the Exchequer, and that the yeoman farmer died and his son succeeded to his estate under the same regime. To work out the analogy one might fairly assume, in the case of the butcher, that his estate might be valued at something like £400, and in the case of the yeoman farmer at £4,000. These figures, roughly taken, represented very fairly cases which would happen in actual practice of two people in the same position making the same income, and altogether, as regarded taxable capacity, on the same footing. The butcher's son under this scheme had to pay a sum of £4 on that estate, but the yeoman farmer's son had to pay £120. That was to say, that although the taxable capacity was precisely the same in both cases, the one had to pay thirty times more than the other under the system inaugurated by the Chancellor of the Exchequer. He ventured to think an illustration of that sort showed there was a screw loose somewhere. Of course, it might be said that in one case they were dealing with a man who had a property, and in the other were dealing with a man whose property was very small. That argument was perfectly right so long as they were dealing with big properties. It was all very well for the hon. Baronet who spoke just before the adjournment, and who was credited with having some millions to dispose of—he hoped his estate might long escape the clutches of the Chancellor of the Exchequer—to say he was perfectly willing to submit his estate to this process. It did not matter to that hon. Baronet if the Chancellor of the Exchequer were to take £1,000,000, or £2,000,000, or perhaps £3,000,000; it would still leave him a very rich man as rich men went even in that House; therefore, socially it might be said they were not doing much harm so long as they were treating big estates in this way. But where was this process to go? A yeoman might have descendants to this big estate, and this process might go on until it was gradually whittled down to an estate which was practically the smallest on which a yeoman farmer could make a living. His land was turned to husbandry; but they were taxing it as one which might be put into the market and sold, whereas really in fairness, comparing the taxable capacity of the yeoman farmer and butcher, in both cases they ought to treat the affair as a going concern, and not on the basis of selling them up. They were taxing one man on a scale 120 times greater than the other. They were doing a monstrous injustice; and in putting forward a scheme which perpetrated such an injustice the Government were doing a disservice to the principle which they professed to believe in, and in which he (Mr. Bousfield) did believe in—namely, the principle of really equalising the Death Duties in the case of real and personal property. Possibly, it might be pointed out that in the case of the butcher he had a precarious income, while the yeoman farmer had not. He did not think that was at all the case. If both men were incapacitated by illness the business of the farmer was quite as likely to go to pieces as that of the butcher; in fact, more likely, for the wife of the butcher might carry on her husband's business. That brought him to another point, in which he thought the Chancellor of the Exchequer had made a grievous mistake. No doubt such an argument did enter into the right hon. Gentleman's consideration of the difference if he looked at the fact that in one case there was more precariousness than in another. But why, when he came to the next part of his Budget—the Income Tax proposals—had he not recognised the same principle, that the precarious income should be charged at a different rate from the fixed income? Why had he not recognised that principle, which had for years past been widely recognised as being practically a difference of the greatest importance? This was a matter to which he had always attached the greatest importance. He had urged it frequently to his constituents: he had been pledged to it for a long time, and he took this opportunity of giving expression to the disappointment felt that in this small attempt at graduating the Income Tax no account whatever had been taken of the precarious income. Suppose there were two incomes of £500 a year, one derived from Consols and the other the income of a professional man—a precarious income as opposed to one derived from a fixed investment. In the case of the precarious income, what the man had to do was this. Any thrifty man, out of the surplus of his income, should make provision for sickness and old age, for the education and starting, in life of his children, and for the support of his widow after his death. How-much would it take out of an income of £500 a year to provide for these contingencies? Suppose both men lived on the same scale as regarded what was-necessary. The matt who lived on that scale from his income derived from Consols had not to make provision for these contingencies, and he would have a surplus of £100 a year to spend in luxuries; but the other man, having to make provision for such contingencies, would really have no surplus at all. The taxable capacity of the two was altogether different, and he protested against any increase of the Income Tax, accompanied with a graduation which professed to give certain advantages to the small incomes, but which altogether overlooked and neglected the difference which existed between precarious and fixed incomes. As regarded the principle of graduation, he was himself in agreement with the Chancellor of the Exchequer, and he had no fault to find with the principle of graduation. They had heard the argument against it, that they could not tell where to stop, and that there was no definite halting place and stage in the, principle involved as to when they must stop. But that was an argument they heard every day, and what they had to do in every case where Nature did not put down landmarks for them was to consider and regard what was fair. That argument was not an admissible argument. If the principle of graduation was a good principle, he took it that it was no argument against it that one could not see, for the moment, how far it might be well to take it, and they could only find this out from experience, which would, after all, tell them how far they might carry out the principle. He rather objected that this principle had been so badly treated, and that the very legitimate application of the principle, and that most called for, had been wholly neglected by the Chancellor of the Exchequer. It might be said that in approving of some of the principles put forward by the Chancellor of the Exchequer, and in disapproving of actual proposals he had made, the proper course for him to have taken would have been to have voted in favour of the Second Reading of the Bill and tried in Committee to have introduced Amendments. In theory that looked very plausible, but in practice how would it work? First of all, the Budget must be taken as a whole; it must be taken to hang together as a whole, and they could not disturb one part without disturbing and overthrowing the whole scheme. Therefore, the alteration which would meet the different views he had put forward, although in theory permissible in Committee, in practice was not permissible, because it would destroy the balance of the Budget. The second and more important reason for taking the course he was taking was that not only had they no security that the Chancellor of the Exchequer in Committee would receive any Amendments which would deal with the inequalities and hardships that had been pointed out in the proposals, but they knew perfectly well that the right hon. Gentleman would resist them in Committee, that they could not carry any such Amendments, and that if this Bill were read a second time it would pass through Committee and through this House in practically the form in which it now stood with all its imperfections on its head, and that being so his only course was to vote against the Second Reading.

* MR. SNAPE (Lancashire, S.E., Heywood)

said, it was gratifying to know that the Government had had the courage to adjust the burden of taxation so that it should rest on the shoulders best able to bear it, and also to find that those who had clamoured most for the increase in National Expenditure would have the privilege of paying very largely for it. It was, further, most satisfactory that a traffic which caused so much waste of money to the country should be laid under additional burdens for the National Expenditure. But he regretted the absence of one proposal from the Bill. There had always been amongst the advanced legislators of the country a desire to withdraw and abolish any grants of public money in the shape of bounties or other protection allowances, and it might not be generally known that spirits was the only article exported from our shores on which a bounty was allowed. That allowance was at the rate of 2d. a gallon on plain spirits and 4d. a gallon on compounded spirits, and amounted in 1892 to £38,000, and in 1893 to £26,000. He was informed by the Secretary to the Treasury, in answer to a question on the subject, that these allowances were made as compensation for the increased cost of production owing to Excise restrictions. But he was told upon the authority of one of the most able and intelligent of the Surveyors of Customs that there was no such extra expense. In fact, the contrary was the fact, for while the brewers of beer and the blenders of tea had to pay the cost of the attendance of officers of Excise, in the case of distillers the cost was borne by the country. He would take another case. Alkali was manufactured under Government regulation. The manufacturer had to pay for a licence to cover part of the cost of the inspection which the Government exercised over his works. He had also to provide very costly plant to comply with the stipulations of the Alkali Works Regulation Act. Yet no bounty was made to him on his exported manufactures, and although the producers of similar foreign goods had to incur no such expense, he had to meet foreign competition with the burden of these restrictions upon him. The exported spirits, upon which the bounties were paid, in many cases did not amount in value to more than 1s. 4d. per gallon, so that the allowance was equal to something like 12½ per cent., which was practically a profit to the exporting distiller, and whether he shipped them to Africa to ruin the aborigines there, or nearer home—to the Isle of Man—the same profit was assured to him. The amount, it was true, was not large, but the principle involved in the discontinuance of these bounties ought to be a sufficient inducement to the Government to take the matter up. He therefore hoped that in Committee it would be favourably considered, and a clause for the abolition of these allowances introduced, in order that this sum of £30,000 could go into the Exchequer.

SIR A. ACLAND-HOOD (Somerset, Wellington)

said, the success of the financial proposals of the Government rested, mainly, on two contingencies—the continual ownership of land by individuals and the consumption of alcohol. He would not deal with the inconsistency of a Government that placed a good part of the money they desired to raise on the trade which they were striying to injure by their Local Veto Bill, But with regard to the first point, he took it that the object of the Government was to extend the ownership of land, as far as possible, to Co-operative Bodies. That was the object of the Parish Councils Act, and undoubtedly a great number of hon. Members opposite desired to see a large transfer of land from individual ownership to corporate ownership. What would be the, result of that policy? Parish Councils, being Corporate Bodies, would pay no Death Duties on realty. Corporate Bodies paid 5 per cent. on their incomes from property: but the income of the Parish Councils from realty would be nothing, because it was! intended that the rent charged for land let out in allotments by the Parish Councils should simply cover expenses, and bring no profit to the ratepayers. All land that passed from individual ownership to the ownership of Parish Councils would be unavailable for Imperial taxation. Therefore, the financial proposals of the Government with regard to land would be a failure to the extent that their Parish Councils Act was a success. He would not go into the vexed question as to whether the increased duties on beer and spirits would fall on the consumer or on the producer. But he was sure that if the increased Beer and Spirit Duties led to a larger use of rice and sugar in the place of barley in the production of whisky and beer, the first result would be very considerable injury to the barley grower, and, whether injury were done to the pocket of the producer or the consumer or not, it was Certain that very considerable injury would be done to the inside of the consumer. The proposed equalisation of the Death Duties would inflict great injury upon rural districts, because agricultural land was wholly unable to bear any increased taxation, and, besides, they had no reliable figures given them as to what that increase would be. On the night the Budget was introduced it was said by the Chancellor of the Exchequer to be £550,000; but the Under Secretary to the Colonies the other night put it at £500,000. It was said that the increased Death Duties were required for the needs of the Navy. If that were so, those who lived by the land would willingly bear their fair share of the taxation. But he would point out that the principal reason why the increase in the strength of the Navy was demanded was for the protection of our largely increasing importation of foreign food supplies. It was owing to those foreign food supplies that: agriculture at home had become unprofitable; and yet agriculture was actually called upon to pay the larger share of the cost of protecting that foreign competition which had ruined it. What would be the position in the future of a man who succeeded to agricultural land? He first would have to convey a portion of his property, then he would have to mortgage—the one thing landowners had tried to avoid, and had made great sacrifices to get rid of—and then he would have to dispute with the authorities of Somerset House. The position of the man of old who went from Jerusalem to Jericho would be most, comfortable compared with the man who succeeded to agricultural laud in future. Of the former, it was recorded that he fell among thieves, but the latter would fall first into the hands of a valuer, then into the hands of a money-lender, afterwards into the hands of the authorities of Somerset Home, and finally into the hands of a lawyer, and be could not imagine a worse position than that. The Chancellor of the Exchequer ought to give the House some idea as to how the proposed valuation was to bo carried out. It was easy enough to value personalty in the shape of Stocks and shares, pictures and plate; but it was much more difficult and much more expensive to value land. What would be the result? So far from equalising the taxation on realty and personalty, the Government were putting an extra burden on realty in the shape of the cost of an expensive valuation. Therefore, there would be no equalisation of realty and personalty. He would like to have an explanation as to the valuation of timber. At the present time, if a man cut down a tree, he had to pay the Death Duties; but under the new arrangement an oak tree which lasted 400 years might be valued 15 or 20 times. The result would be that every man who came into property would cut down his timber, and no man would employ labour in his woods and plantations. It was difficult; enough now to improve a farm—to put up buildings and cottages—but the Chancellor of the Exchequer was going to make it impossible. The Bill would also drive land into fewer hands. The object of the Tarty opposite, with which many on the Opposition side sympathised, was to distribute the land amongst a larger number of persons; but this Budget would make the possession of land more of a luxury for the few by making it impossible for anyone to hold land but a very rich man. The Bill would also place a premium upon bad management. Take the case of two neighbours. One spent. £60,000 on improving his estate. When he died the surveyor would come round, see everything in good condition, and up would go the valuation. The other neighbour did not spend a shilling on his estate, but invested the £60,000 in other ways. The Inspector in that case would see everything going to wreck and ruin, and the heir would pay less. It might be said that the heir in the latter case would have to pay Succession Duty on the £60,000 invested. YES; but he got a return from it, and his father had got a return from it. What return would the man get who invested his £60,000 in improving his property? Not a single shilling of return, but perhaps a reduced rental, and certainly an increase of duty on an enhanced valuation. The thousand pounds yeoman had been mentioned in the course of the Debate. He did not know much about him; but if he existed, he existed in Ireland as a purchaser under the Land Purchase Act, in England as a purchaser under the Land Holdings Act, and in Scotland as a crofter. In any of those oases the man must have a charge on his land for the purchase money; and under the Death Duties he, would have a further charge on his property—a second mortgage—so that, so far from benefitting him, the new proposals of the Government would tax him out of existence altogether. There was another class of yeoman with which he was more familiar—farmers with 150 acres, valued at £4,000, and with incomes of £150 a year. The successor of one of those men would have to pay £120 duty, and probably from 10 to 30 guineas for the valuation. It might be said that the man could sell part of his land. But if he did so it was obvious that a few successions would reduce the land to the vanishing point. It might be said he could mortgage. It was that which had ruined our yeomen off the face of the earth. Therefore, the effect of the Bill would be the ruin of the very class which hon. Gentlemen on both sides of the House maintained they were anxious to see flourishing, and whose loss to the country both sides would equally deplore. So, really, if the Death Duties were levied on the principle proposed, the class of yeoman farmers, farming 150 acres of their own, would cease to exist. One of them said to him the other day, "The Chancellor of the Exchequer has got my shirt, and now he wants my skin." The Chancellor of the Exchequer complained that owners of property were not sufficient]}' grateful to him; and one reason which the right hon. Gentleman advanced why He was entitled to that gratitude was that all property at its owner's death belonged to the State, and that it was very kind of the Slate to allow an owner's successor to have anything at all. He would point out that that was not only true of the property of a dead man, but of the property in possession of a man during his life. If it were not for the protection of the law no man, not even a Chancellor of the Exchequer, would have any security whatever in his property, except what, he was strong enough to hold in his hand, or massive enough to sit upon. It was also said the landowners should be grateful to the Chancellor of the Exchequer for the reduction in the Income Tax. He did not see why they should be thankful. The reduction was not anything like sufficient. Ten per cent. was not anything like the working expenses of an estate. The working expenses of an estate, including rates, taxes, buildings, subscriptions to schools—for they formed part of the expenses of an estate, and if they were not paid they would have to be paid in the form of rates—all those outgoings came to three-fifths of the income. He believed that the new Death Duties would swallow up two years of the gross income of an estate, and swallow up six years of the net income. What could the owner do in the circumstances? The Chancellor of the Exchequer invited him to mortgage; but that was very difficult in those days. It was said the owner could sell. But who would buy? In any case he would be under the disadvantage of baying to sell in a hurry, and surely no one wanted the experiences of the Encumbered Estates Act in Ireland to be repeated in England. That would be the result in most cases. In other cases the owner would have to stop buildings, stop improvements, discharge his servants, and live as close as he could. That would hurt the fanner and small tradesman, but the man it would injure most of all would be the agricultural labourer. He did not believe that hon. Gentlemen opposite had any idea of the number of labourers that were employed on most estates throughout England. Those men would be driven from the country into the towns. The results of the proposed duties would be that there would be less labour employed in the country, building and other improvements would be less, tradesmen would have less custom, and the labourers would have a desperate struggle to get work. It was because he believed that 19–20ths of his constituents would be injured by the Bill that he intended to vote for the Amendment of the hon. Member for Thirsk.

* MR. HUMPHREYS-OWEN (Montgomeryshire)

said, he had to ask the House for the indulgence which it, always extended to a Member who addressed it for the first time. He belonged to the class who derived nearly all their income from the land; and if he thought the prophecies of a sinister character with regard to the results of the proposed new duties which the hon. Member who had just sat down indulged in were likely to come true, he certainly would not vote, as he intended to do, most heartily for the Budget. Hon. Gentlemen who made such gloomy forecasts must be entirely oblivious of the different methods in which labour was employed on agricultural property. In the first place, the owner was bound to keep buildings in proper repair, to attend to fencing, and other works of a similar kind. The view taken by hon. Gentlemen opposite was that, in order to pay the additional Succession Duty on land, the owner would at once cut down all those items of necessary expenditure. He could not conceive any greater libel either upon the solvency or upon the good sense of country gentlemen. Of two things one. Either the successor had sufficient income, after paying Suc- cession Duty, to carry on repairs and improvements; and in that case if he were so regardless of his duty to himself, to his successors, and to his country, as to neglect those repairs and improvements, the sooner he quitted possession the better. On the other hand, if the successor were so utterly insolvent as to be unable, after paying Succession Duty, to defray the necessary outgoings of the estate, equally the sooner he left the better. He thought that was a sufficient answer to the gloomy prophecies indulged in by hon. Gentlemen opposite. Turning to the general principles of the Budget, he wished to give his hearty support, to the principle of graduation, and he did so, as a landowner, for this reason: that he, was opposed to a system which aggregated the largest part of the land of the country in a very few bands, unless that aggregation of property was unaccompanied by any undue privileges or undue exemptions. It was said that the exemptions which land at present enjoyed from Succession Duty was compensated for by land paying heavily in local taxation. He was not going to say that that might not. be the case; but he would say it seemed to him unwise that landowners, unpopular as they were in the country, should not take this opportunity of getting rid of exemptions which their fellow-citizens did not enjoy. Let them get rid of those exemptions, and then they would be able to discuss without any prejudice against them the question of whether or not they were unjustly rated. With regard to the alarm expressed on the other side of the House on the subject of the valuation of land, he had to say that he had some experience of dealing with the officers of Inland Revenue, both with regard to personalty and with regard to realty, and the process had neither been costly nor difficult; and certainly the authorities of Somerset, House had been most reasonable, and had taken a liberal view of the value of the property they had to deal with. Why should the authorities of those great Government. Departments suddenly abandon the principles by which they had hitherto been controlled, and impose upon successors litigation and the other inconveniences referred to by hon. Gentlemen opposite? Having thus expressed his reasons for supporting the Budget as a whole, he should like to make an appeal on one or two points to his right hon. Friend the Chancellor of the Exchequer. The first was with regard to the Income Tax. He was hound to say that the allowance of 10 per cent. did not represent the annual charge necessary for outgoings on an average property. The Assessment Committee of the County Council of the county of which he was a Member held a conference, not very long ago, with the Assessment Committees of the county for the purpose of arriving at a basis of reduction in the county, and the result; was that they unanimously agreed that the reduction should be 15 per cent. In his own experience, he found that the cost of repairs in wages, material, &c., alone for the past three years was 18½ per cent., and for the five years previous it was 15.4 per cent. It would be more equitable to give the landlord the option of paying under Schedule (D) instead of under Schedule (A); or the abatement should be increased. The relief that was given in Income Tax was a most material boon to the tenant-farmers. He believed that in his own county it would release almost every tenant-farmer in the county from paying Income Tax; because unless he paid a rent of £320 a year he would under the Budget be entirely free; and even if he paid up to £1,000 a year he would have material relief. For those reasons, therefore, both as a landowner and as Representative of one of the largest purely agricultural constituencies, he was thankful to the Chancellor of the Exchequer for the Budget., and would vote heartily for it.

MR. A. J. BALFOUR (Manchester, E)

The Prime Minister, on a recent occasion speaking in the country, said of the Chancellor of the Exchequer's present position that by the Budget he had at one stride placed himself in the foremost rank of financial authorities. I do not know whether that was merely a politesse between colleagues. If so, I have no criticism to make upon it. I should be the last person to desire to prevent the oiling of the administrative wheels by any such methods as these which the Prime Minister has adopted; but if we are to take it as a serious judgment by a serious Minister upon the financial proposals of one of his colleagues, it certainly gives us some cause for reflection. If there be one thing more certain than another it is that the present Budget, be it good or be it bad, is at all events a Budget wholly inconsistent with the traditions of Liberal finance; and if the present Chancellor of the Exchequer has risen to heights but rarely reached by any of his predecessors, it is because he has lifted himself upon the ruins of all the principles which his predecessors made it their boast to carry out. The right hon. Gentleman has borrowed from many quarters. He has borrowed, I will not say the actual policy of any Socialist programme, but certainly some of the arguments by which some of those Socialist programmes have been supported. He has also done us the honour to borrow front this side of the House one of the best provisions which characterises his present Budget. The right hon. Gentleman has made it a cardinal feature of his financial proposals that he should give relief at, the lower end of the Income Tax scale, that particular point in the Income Tax scale where the Income Tax payer shades off into the class who pay taxation almost entirely indirectly, and which has always presented problems of great difficulty to the various Chancellors of the Exchequer. But it was Sir Stafford Northcote, in 1876, who set the example which the right hon. Gentleman has now followed, and as to which the whole Liberal Party, including the right hon. Gentleman, voted against the Conservative views in that year. I congratulate the right hon. Gentleman on his conversion to the policy of Sir Stafford Northcote.

SIR W. HARCOURT

You are quite mistaken; I did not.

MR. A. J. BALFOUR

The right hon. Gentleman may have abstained, but his colleagues voted, and his Leader voted, and the bulk of the Party behind him voted. I have not studied the Division List; I have not thought it worth while: but what. I wish to emphasise is the notorious fact that in that year a proposal exactly analogous to this-was made by Sir Stafford Northcote. It, was resisted by the right hon. Member for Midlothian and the Party of which he was the most important Member; and therefore I congratulate the right hon. Gentleman, if not on his own conversion, at all events on the conversion of the Party behind him. I have no criticism to make on this part of the right hon. Gentleman's scheme, which relieves the lower Income Tax payer of a heavy burden and which lightens the load of taxation for a class which, probably of all classes in the community, have had most reason to complain of the weight of the financial system which they have had to support. Having said this much in praise of the right hon. Gentleman's Budget, I pass to the policy which he has formulated and to the speeches in which he has formulated it. Talking of the speeches the Chancellor of the Exchequer has delivered on this question, let me say that I think the way he has chosen in debate of treating the brewers and publicans, on whom he has imposed this additional tax, is not the way in which any Chancellor of the Exchequer ought to treat an interest already heavily weighted, and which he proposes to weight still further. He has thought it consistent not only with good taste but with his position in this matter not only to heap taxes upon them, but to heap insults upon them. He has evidently gone at them as an unpopular class whom he could insult with impunity, and whatever may be his views as the author of a Local Veto "Bill, whatever attacks he may think it fitting to make on brewers and publicans when defending that Bill, I venture to suggest that in his capacity of Chancellor of the Exchequer he should deal rather more tenderly in his speech with interests he professes to attack by the proposals he is making to the House. If the Chancellor of the Exchequer's Budget proposal in connection with the duty on spirits and on beer were directed to" this end—that, the taxpayer, whose sole contribution to public purposes is made by indirect taxation, should bear his portion of the public burdens which are now thrown upon us—I should have had very little to say upon this part of the scheme and should not have dwelt at any length upon it. But that is not the "purpose, and, in the Chancellor of the Exchequer's view, not the effect of this proposal dealing with the Beer and Spirit Duties. According to him, this is not a tax on the consumer. According to him, neither the result nor the intention of the Government is to throw upon the consumer any additional burden what- ever. This is an attack upon a class; it is intended to be an attack upon a class; and whether it be really contrived to injure that class or not, or whether—as it more probably will—it injures other classes than those against whom it is primarily directed, the fact remains clear and certain that the Chancellor of the Exchequer in this part of the Budget had no other end in view than to mulct by an additional duty the brewers of beer, the manufacturers of spirits, and the retail dealers in beer and spirits. Sir, that is the animus which has been evident in the original speech of the Chancellor of the Exchequer, and still more in the speech which he delivered in the course of the Debate which who had upon the first night on which we discussed the Budget Resolutions. As regards the brewers, I think it was in the original speech of the right hon. Gentleman that he said they were a class peculiarly suitable for additional taxation, because at the present moment they made excessive profits. That has been contradicted by those who probably know quite as much of the brewing trade as the right hon. Gentleman, and I have never yet heard before that the remedy for excessive profits is excessive taxation. Hitherto it has been regarded as a cardinal doctrine of English finance that, in regard to excessive profits in any business—such, for example, as were explained to us this evening by the hon. Gentleman who made a great fortune in the early days of the woollen industry in Yorkshire, such profits as may be always made in special circumstances in special industries—the cure, if cure be required for excessive profits, is the natural competition which excessive profits invariably bring; and if there be not this competition in the brewing trade it is a proof, if proof be required, that excessive profits do not exist in that industry. I do not in the least deny that there are very likely great brewing firms who make large profits. There are great firms in every industry which make large profits. There are great firms who, by the goodwill they have acquired, by the magnitude of their capital, the excellence of their plant, or for some local reason or other, make profits far above the ordinary and average profit of the manufacturers. That is no reason for mulcting the trade. That will cure itself. Competition will step in, and the products of that trade, as well as of any other, will gradually assimilate themselves to the trading profits made by the rest of the community. If the treatment of brewers by the right hon. Gentleman was unjust and ungenerous, I think his treatment of the publican trade was even more unjust and ungenerous. He came down to this House, and he explained that he had sent round from public-house to public-house in various parts of the City of London some experts who collected samples of brandy, and, I suppose, gin and other liquors, and had then made an estimate of what these spirits originally cost and what they were sold for in the various public-houses where they were handed over the counter; and he said in such and such district the profit was 100 per cent., in another 130 per cent., and in another 150. I do not recollect the right hon. Gentleman's specific figures, nor are they material to my argument. I am informed his actual figures are incorrect. I am informed that the actual difference between the cost of the article and the price at which it was sold never amounted to anything like that which the Chancellor of the Exchequer attributed to it. But that is a small and not the main point. The main point is this. What retail trade is there in the country which, tested by these tests and measured by these standards, would not be open to the same strictures? What does the right hon. Gentleman suppose would be the difference if he went and asked for articles over the counter of a chemist's shop? What difference does he suppose exists between the retail price of that article and the wholesale price of it and the cost of manufacture? Is is not an elementary fact which ought to be present to the mind of every Member of this House, and most of all to the mind of the Chancellor of the Exchequer, that the profits of retail trade are not to be estimated by the difference between the cost of production and the price on sale, but are to be estimated according to the profits made by the retailor upon his plant, upon his rent, and upon his labour? That, and that only, affords the proper test of whether any trade is making—I will not say excessive, but exceptional profit. That test was not applied by the right hon. Gentleman, and if it had been very different results would have been brought out from those with which he attempted to seduce the House when we were discussing this question a few nights ago. This principle—laid down, I venture to say, now for the first time in the history of English finance—that the mere fact that an industry is profitable is a reason for mulcting it, savours of Oriental and not of Western finance. It is a time-honoured custom of an Eastern potentate, who delights to encourage any industry in his country, because he knows when be has encouraged it to a suitable point he can then come down and withdraw from it all the profit which has been gained by the unhappy manufacturer. These, Sir, though they are the principles of Oriental finance, ought not to be adopted in our finauce, and I am sorry the right hon. Gentleman has found no better reason for imposing this 6d. duty on spirits and beer than the fact that those who manufacture and retail these articles happen to enjoy exceptional prosperity at the present time. But I now pass to the question of graduation and the equalisation of the Death Duties, which, I suppose, the right hon. Gentleman himself would regard as the principal glories of his financial proposals. Here, though I do not wish to go into the metaphysics of the question, I must take exception to this new doctrine, stated, I believe, in this House by the Chancellor of the Exchequer for the first time and endorsed to-night by the Member for the Rush-eliffe Division. Those two gentlemen alone have, so far as I know, advanced and defended this astonishing proposition—namely, that the property of a deceased owner really belongs altogether to the State. It is said, "It is only by favour of the State that some fragments of the property are handed over to the heirs." Was ever such a doctrine advanced in this House before? What was the basis of this proposition? The right hon. Gentleman read something from Blackstone—and I have no doubt he can find some authorities for the principle on which he based his conclusions—the principle—namely, that the right of bequest is the creation of the law. Well, most of our rights are the creation of the law. I do not deny, nor do I suppose for a moment that anyone else will deny, that the law has guarded that right and limited and regulated it. But does that raise a precedent for taking away a man's property after he has bequeathed it? If the law were altogether abolished, that right and every other right would vanish at a stroke. For instance, the right of personal liberty is also the creation of law just as much as the rights over property, and is guarded and limited and regulated; and if the law were abolished, these rights also would cease to exist. I suppose that if no law existed, the weakest would become, as they have often been before, the slaves of the strongest. I do not know who would be the slaves and who the masters. I am not at. all sure, if the right of personal liberty wore abolished, that the right hon. Gentleman the Chancellor of the Exchequer might not find himself in the unpleasant position of a slave; and a very awkward slave to manage, I believe, his master would find him. I think, therefore, we may take it that this right of bequest does not differ from any other right which we enjoy. No quotation from Blackstone can make clearer that which is solidly based on the foundation of common-sense. I do think that it is necessary for us to quarrel over the first principles of the Death Duties and graduation scheme as they stand in the proposal of the Government, because those principles extend outside the only possible system of taxation which can be safely followed. It has been laid down over and over again that the only safe and plain principles are in arithmetical proportion, and if these are left, then we at once get into an unsound, unsurveyed sea without a compass to guide us. I am convinced that if these new doctrines are allowed to pass into law great inequities will result and great injustice will be done. The principles that have before been always adhered to have given a plain, obvious, convenient, and useful rule for the guidance of the imposition of taxation, and have afforded a broad basis for calculating the arithmetical ratio that the contributions of one class should bear to the contributions of the other classes; but the working out of the details of the scheme must be left to the wisdom of the Chancellor of the Exchequer and his Party for the time being. On one point we are all agreed—namely, that we must give our consideration not to the ques- tion of whether any particular principle of arithmetical graduation is good or had, but whether the proposal now brought forward is a good one or a bad one. Whether graduation is good or bad, this graduation is bad, and that is the only proposition I care to maintain, or which I think it worth while for the House as practical men to labour over at half-past 10 o'clock at night on the third day of the Budget Debate. Now, surely we have a right to ask, if the Government gives up a recognised and safe system and adopts one that is unknown and unsafe, their reasons for so doing. This system, if carried out, must involve an enormous increase in expenditure arising from several causes—such as increased staff, litigation, and the difficulty of having proper valuation made of a class of property that is admittedly most difficult to estimate correctly. We do not know yet, indeed, whether it is proposed to enforce the same rates upon securities which can be at once valued—such, for example, as Stocks and shares, the market value of which can always be ascertained—as will be charged on land. If so, that is an obvious injustice. Now take it from the point of view of the community. One of the first principles that ought to guide any Chancellor of the Exchequer in the matter of taxation is to take care that his tax shall bring in money without hampering trade or make financial operations difficult. What will be the result of this proposal? I am informed than an immense amount of business, of industrial undertakings, is constantly registered in the name of two or three directors. It. is essential in order that these firms may be worked to the best advantage that sales should take place at the shortest notice. What have you done? The Stock or shares will appear in the name of an individual and you will have to go through the mill of Somerset House if one of them dies, in order to see that no evasion is practised, and that none of these gentlemen gain an advantage in any form from the fact that one of their number is deceased, and the result of that will be that wherever Stocks or shares are held in more than one name, though it may be that none of those persons in whose names they are registered has any beneficial interest, the whole of the Stocks or shares will be under probate. But that is not all. I go further, and I say as regards laud you have by your provisions gone against the traditional policy of the Party to which you belong, a policy in which I may say I entirely agree, and have made it more difficult to transfer land. You have increased the difficulties of both seller and purchaser. Any man who inherits realty and personalty will not be able to obtain probate for his personalty until the whole question of the realty has been looked into. [An hon. MEMBER: No.] Well, will the right hon. Gentleman explain why it is not so. I fail to see how any final settlement can be come to even about personalty. Take this case. Suppose a man dies in England possessed of £5,000 in England and £500,000 in New Zealand or Australia—not an absurd or extravagant supposition perhaps. The duly on his whole property will exceed the total amount of the English property. How is he to get the property in New Zealand home to pay? I understand that the system of obtaining probate in the colonics is first to prove the will in England. Then the documents are sent out to the colonies, but you cannot prove the will in England until the money is paid, and you cannot take any steps in Australia until the will is proved in England. So you go on in a vicious circle, the unfortunate man in the meantime being entirely deprived of his property. Then other difficulties will arise. He will have to wait until he has gone through the difficult and elaborate process of proving in Somerset House the value of the land and other assets which he may have 10,000 miles away. The time taken by the post even will be many months; but suppose there is a dispute about the property? The only appeal is to the High Court here. You would have to bring over witnesses from the other side of the world, and there would be a litigation costly to the Treasury and ruinous to the unfortunate person concerned, before he could make any use, public or private, of the property left to him. I give this merely as an example showing how inconvenient the scheme is, first as regards the public, then in reference to the commercial world, and next to the individual immediately concerned. I say with regard to laud you have by these provisions run against the traditional policy of the Party to which you belong. Your policy will make it more difficult than ever to transfer land from one individual to another. You have increased the number of difficulties which the seller of land will have to go through, and you have increased the difficulties which a purchaser will have to go through. You have drawn a trammel over that kind of exchange which you specially desire to make easy and free. I now pass to more important principles. I ask whether this is a sound mode of taxation—a just and soundmode in itself? We all know that in their origin these Heath Duties were more in the nature of Stamp Duties on the transfer of property than anything else. They have gradually increased, and their increase has caused some convenience and some inconvenience, but when used as a principal engine of taxation by the Government their evils are enormously magnified. But what was a tolerable inconvenience becomes an intolerable injustice when increased to the extent proposed by the Chancellor of the Exchequer. Notice, in the first place, that the incidence of the Death Duties is abitrary in its operation. There is nothing more certain than that a man must die, but there is nothing more uncertain than the period at which he will die, and if we adopt this system some properties will be severely mulcted, while other properties will get off lightly. The process you are adopting in public taxation is precisely similar to the universally condemned system of copyhold tenure. It is a system of arbitrary interference. Everybody agrees that that is an impossible tenure as between landlord and tenant. Why is it more expedient when you have to deal not with landlord and tenant but with estates and individuals? It is in its character so essentially arbitrary that on account of that very fact alone you should not attempt to exact the money you require for public purposes from this particular form of taxation. That is my first criticism upon the broader aspects of the question. My next criticism is that you cannot possibly carry through this Bill—I defy you to carry it through Committee—unless you are prepared to break existing settlements. The injustice and the inequity would be too intolerable unless you are prepared to release the existing holders of property from the bond and sway by which they have been tied up by their predecessors, who made their settlements under very different conditions. Observe, in the first place, that many persons have actually borrowed from Insurance Offices upon their reversion. The whole value of that reversion is arbitrarily altered by the operation of this Bill. It is not merely, mind you, that there has been an increase in the Death Duties; but that that increase, in regard to any particular reversion, is purely arbitrary and accidental in its character, for it does not depend on the amount of the reversion, but on the total amount of the property left. The result is that the Insurance Offices, who have lent up to the extreme margin of the reversion, based upon the existing Death Duties, or upon any natural increase of them, may and will find themselves—if they are dealing with small reversions on very large properties—arbitrarily mulcted and robbed by the action of the Chancellor of the Exchequer. Take another case, where the proposals are obviously unjust. Supposing, after this Budget passes, a man succeeds to a large settled estate, of which half consists of very valuable pictures. I am myself acquainted with an individual who must in her it picture collections worth £200,000. If such persons could sell a portion of those collections to pay the duties which you impose on them, they would have no more reason to complain than any other holder of property. But as they are bound by their settlements not to sell, and yet as they are to be mulcted in spite of the settlements upon the full capital value of those pictures, the result will be that these unfortunate people will not be able to keep body and soul together, and will be deprived of half their income by your action. I mean to say that that cannot stand. Before this Bill passes through Committee it is certain, at all events, that you will he obliged so to relax the existing settlements that people will be able to sell settled property which brings in no income to meet the obligations thrown upon them by this action of the Chancellor of the Exchequer. There is one more point connected with art collections and property of this kind on which I will say a word. I will address this remark especially to the hon. Member for Battersea. I do not know what his views on this question may be; but I want to know if he, as a member of the London County Council, had to deal with a property like, say, Holland House—and I do not know whether that is settled or not—does he or does he not think it would be for the public interest that it should be at once forced into building land? Recollect, all the natural cupidity of the owner would induce him at present to put it into building land. But he may be restrained by a sentiment which we should all respect; and I believe that that restraint is better for the public interest. If you pass this Bill and relax, as you must, all settlements, every property like Holland House must at once be cut up; and think the loser would not be the owner, who would be, in fact, a much richer man than before, but the public who gain largely by the fact that private and historic sentiment keeps such properties for a long lime outside mere commercial operations of buying and selling! I do not think that this is the time in which to consider at large the problem of our great private art collections. But I will say deliberately that any action of ours which is going to drive those art collections—not into the market: I have no objection to that—but out of the country into regions where Death Duties on this scale do not prevail—any mode of taxation which has that effect impoverishes not the individual who sells the pictures, but the public of which that individual is a member. It. is most eminently worthy of the consideration of the House whether, without doing any injustice to the Exchequer, some plan cannot, be devised by which a result so tragic for our national interest may be avoided, or, at all events, may be partially mitigated. L have to pass rapidly over these topics, for time presses. I pass hastily to the next essential and important part of the right hon. Gentleman's Budget on which I desire to pass a severe comment and criticism. That is his method of estimating the value on the capital amount of the property. I have many objections to that method. My first is that it will be, like many other proposals in the Bill, expensive and litigious. At present you have a simple formula upon which you can decide the value of various properties with which you have to deal. Henceforth you will have no formula. You will have to trust to the expensive opinion of a paid expert. Whenever you gel the expensive opinion of a paid expert, you will always find a more expensive and highly - paid expert to give you exactly the opposite view. The result will be that you must have litigation, out of which no profit will come to the State or to the legatee. There will only be profit to the gentlemen who are called in to give their opinion as to the capital value of the property concerned. But I have a second objection to this system. It is doubtful. No one knows what the issue will be. The man making a settlement for his wife and children will not know what sums he is dealing with. At present he knows pretty well how rich he is, how his property will be estimated by the Exchequer, and how much, therefore, he must leave to each person whom he desires should share in his property after his death. After this Bill passes, people will not know where they are. They will not know what the value of their property is. It will rest upon the arbitrary supposition and conjecture of a single individual, checked possibly by a Department of the State, and by the High Court in the last instance. But it will depend upon a conjecture which no man is really able to form at the time that he makes his will. That is an immense hardship, and it is a hardship which will be increased as every other hardship is increased under this Bill—by the fact that every value which a man leaves acts and re-acts upon another value, and that if he makes a mistake with regard to one portion of his property, the whole bulk of his property may be taxed more or may be taxed less in consequence. It may affect all his testamentary dispositions, which will be very hard upon him and those who may succeed him. I object myself very much to being governed by valuers. We are already governed by inspectors; we are now going to be governed by valuers, and I do not think such a system ought to be encouraged by this House. It is a system so conjectural in its character that when you are dealing, as you must deal under this Bill, with large properties, for which there is no market, I cannot imagine how the right hon. Gentleman can form any estimate as to the yield of his Death Duties, or how anyone can tell how a certain kind of property is to be rated after his demise. Sir, I have a more serious objection to this taxing of capital values. Has it occurred to the House—I am sure it has not occurred to the Chancellor of the Exchequer—that in treating all these capital sums as if they were alike you are treating as identical things which are essentially diverse in their nature? There is no comparison properly to be made between the capital value of sums in Consols and the capital value of a certain kind of estate for the purpose of taxation, because one can be cut up and the other cannot be cut up. It is like cutting up a cartoon of Raphael's or a Madonna of Raphael's into small squares of canvas, and thinking each will sell for one-hundredth part of the total amount. The fact which I am bringing to the notice of the House no one can deny, but I do not think its bearing has been quite realised by the House or by the Government in connection with this taxation of capital values. Your whole justification for graduation—and it is a very powerful justification—is that you desire to exact an equal sacrifice from every individual in the community so far as it is possible. The nominal capital value is the same in the case of the owner of £101,000 in Consols and the owner of an estate worth. £120,000 or £130,000, on which there is a mortgage of £20,000. Nominally the capital value of the two is the same, but consider the position of the two individuals when you proceed to tax them. The owner of the Consols is taxed at the rate of 6 per cent., pays £6,000, and is poorer by about £240 a year, and there is an end of it; but the owner of the estate worth the same amount cannot borrow and cannot sell unless he sells the whole estate. He cannot borrow because there is a second mortgage on his-estate, and he will have to borrow on a second mortgage. Therefore, he will be obliged to sell the whole of his estate in order to meet the obligation imposed upon him by the Government. I am assuming that a large portion of the estate brings him no rout. Do you think you are exacting equal sacrifices from these two men? The one man is £240 a year poorer, but he still has his £4,000 or £5,000 a year; he leads the same life, and probably does not cut himself off from a single luxury. The other man is up- rooted from his home, driven from the place where his father lived before him, and where he hoped his children would succeed him. He has to change his mode of life; he is driven from the country to the city or to cities abroad. I desire to exempt no class in the community from his fair share of taxation, but to tell me that your object of equal treatment is carried out in the cases I have described is to show an ignorance of the elementary facts of human nature and of the obvious conditions of society under which we live, and to show that you have not considered the equitable incidence of the Budget which you propose. My fourth objection to this treatment of capital values I will explain in a sentence. As I understand, you think your proposal as to capital values particularly fair because that which cannot be sold will be taxed very lightly. How will that work out? The most unsaleable property in England at this moment is the large agricultural estate which has been systematically starved by its owner, the estate where the buildings have fallen into disrepair, where every farm ought to have money spent upon it, where everything has been cut down to:the very narrowest limits of expenditure. That estate will pay nothing, or hardly anything, under these duties, while the estate which is saleable will pay very heavy duties. The result will be to put a premium upon taking capital off land and to put a penalty upon putting capital on land. The good landlord is to be penalised; the bad landlord is to be encouraged by being allowed to get off scot-free. I think that argument will have some effect with gentlemen opposite, and there is another argument which ought not to have escaped their notice. This question has been largely argued from the point of view of the country gentleman, and there are many persons on both sides of the House—not belonging to the Party of which I am a Member—who do not see much use in retaining country gentlemen. They say, "He is not a man we desire to see continued," and they think if the worst result is to destroy the squirearchy, let the squirearchy go. I do not agree with that view, although I do desire to see a large increase of yeoman farmers, which we will not see under this Bill. What I wish to point out to hon. Members is that, though this measure may paralyse and destroy the existing land system in England, it will not have the effect of substituting any other or any better plan. Hon. Gentlemen wish to see—and I quite understand the ambition, although I do not agree with it altogether—they wish to see substituted for large properties a flourishing peasantry owning and cultivating their own land. There is nothing in this Bill which can by any possibility conduce to such a result. What this Bill can do and will do is to paralyse the existing system. It will empty your country houses; it will hand over small sporting estates to become portions of a large aggregate owned by some American millionnaire. There is nothing in it, and there can be nothing in it, which will approach by one year or by one day the millennium to which you look forward. Much is to be said for a large system of yeomen owners. There is nothing to be said for a system of large squires who cannot live upon their property, and who are driven by your system to exact rents from the soil which they spend in London or on the Continent. That is the result, and that is the only result, so far as the distribution and management of landed property is concerned, which can by any possibility follow from the Budget which you have proposed. One other criticism I must pass upon this part of the measure—the valuation part of the measure, Imean. You have adopted graduation because you think it is the method to produce equality of sacrifice. Why have you not the sense or the courage to make your system consistent? I understand the advantage of taxing a man at an increased ratio in proportion to his wealth; I do not understand the advantage of taxing a man exceptionally, not according to his own wealth, but according to his father's wealth, and that is what you do under this Bill. You say a property worth £1,000,000 shall pay 8 per cent. I do not argue your figures or your scheme; but that is not what you are doing. What you are doing is to make the people who inherit the property pay 8 per cent. whether they inherit £1,000 or £990,000 of it. What is there equitable in that? Where is your system of graduation? Can you conceive any- thing more grotesquely unjust than a system of that kind? Hon. Gentlemen appear to think they can tax the dead. I can assure the Chancellor of the Exchequer that, whatever he his merits as a financier, they do not extend to the other world. You can tax the living, but you cannot tax the dead. If your idea is to have a graduated tax upon property, it must be upon property owned by living individuals, and not upon property owned by dead individuals. I am sure the public do not realise the extraordinary absurdity of your present proposal. A man dies and leaves £10,000 to his son. He is taxed at the rate of 3 per cent. A man dies worth £1,000,000 and leaves precisely the same sum of £10,000 to his son or his daughter. The son or the daughter has to pay not 3 per cent., but 8 per cent. The thing is unarguable. Graduation may be the greatest discovery of the age. It may be the medicine which is to cure all our financial ills, but in Heaven's name apply graduation like rational beings and graduate property in proportion to the amount enjoyed, and not in proportion to the amount left by those who can no longer enjoy it! I pass rapidly now to what I regard as the greatest blot of all in this Budget—to the absurd pretension of its author that he has done away with the existing inequalities of taxation. The Chancellor of the Exchequer is not the mere head of a Department whose duty it is simply and solely to collect sufficient funds from the public to carry on the financial expenditure of the year. His business, especially if he professes to be a financial reformer, is to look at the burdens which every man pays, not merely to the Imperial Treasury, but into the local treasury, and to consider the sacrifices which the public, be it the local public or the general public, call upon the individual to fulfil, and to apportion the burden fairly among every class and every individual of the community. No attempt to consider local burdens has been made by the Chancellor of the Exchequer. He has refused to realise that realty has at this moment to bear a share of public burdens, though not Imperial burdens, far in excess of anything which equity can require. We are told that these are hereditary burdens; and I do not quarrel with the phrase; but if you admit here- ditary burdens you must also admit hereditary immunities. The two things go together. What has happened is this—realty and personalty were each liable to taxation for all those local purposes; but personalty in ancient days bore a small proportion to the whole wealth of the country, and was exceedingly difficult to get at. Realty, therefore, patiently bore not only its own share of burdens, but also the share which ought to have been borne by personalty. It did this for many hundred years, and the fact that it was thus specially burdened is now used against it; and actually the owners of realty are told that for having sat patiently under these exceptional burdens they have no claim to redress. The owners of personalty have the courage to say that the fact that they have so long escaped what it was their fair duty to bear constitutes a claim to a perpetual right to escape, and that realty is to bear the burden. I cannot agree with that. I admit freely and fully that our existing system is full of anomalies, for which it is impossible to give theoretical justification. But there was, after all, some kind of rough justice in it. This House finding that realty had borne so long a great deal more than its fair share of the common weight of public and local taxes combined, it was not unjust to throw upon personalty some special obligation in regard to new taxation. That is not perfect theoretical finance; it is open to many criticisms. But the idea that you are going to remedy this injustice and these anomalies by the simple process of levelling up in one part of the scale and leaving untouched every injustice in the other part of the scale is utterly unworthy of any man who attempts to approach this question in a statesmanlike spirit. I am perfectly conscious I am able to touch only on the fringe of this great general question. I can truly assure the House that I, at all events, do not desire to protect any class, rich or poor, from its fair share of burdens. If it be true that the wage-earning class of the community now pay too much let the inequality be redressed. At all events, the present system has been formed principally by the labour of Liberal politicians. But, while I desire equality, I do not mean to sit down patiently under what I regard as a crude simplification which absolutely ignores all the difficulties that have to be dealt with. It is complained by some hon. Gentlemen that we are adopting an absolutely unprecedented course in voting against the Budget as a whole. That may be true; I am not aware that we can adduce a precedent; but it is because we object, I will not, say to the principle on which the Budget is founded, but to the method in which those principles have been carried out in the details. This is what we object to, and you cannot very well embody it in a Resolution. No Resolution not so long-as a speech could give the slightest idea of the character and nature of the objections we feel. They are the accumulation of a large number of criticisms which we focus in this Resolution that the Bill be read a second time this day six months. What are the principles of wise legislation violated by this Budget? One of the first principles of sound taxation is that your taxes shall be easy of collection, cheap in collection, and shall not cause undue irritation. Is that condition satisfied by this scheme? Another condition of sound taxation is that it should be certain in its incidence, that those who have to pay it should know exactly what they have to pay and when they have to pay it. Is that condition satisfied by this Budget? Another condition is that it should be equal as between similarly situated individuals. Is that condition satisfied by this Budget? Another condition is that it shall be equal as between classes. Is that condition satisfied? Another condition is that it should not hamper industry, that it should leave capital free to go where it is most useful, and that it should encourage expenditure upon land. Is that condition satisfied? The accumulation of these objections is one which can be only adequately met by a Resolution which says that the scheme as a whole as formulated by the Chancellor of the Exchequer is a bad scheme. It is not because I wish to relieve any individual of his fair burdens, not because I wish to quarrel with the metaphysics of the Chancellor of the Exchequer, but because I believe this Budget to be unjust, to be costly, to be radically inequitable, that I shall follow my hon. Friend into the Lobby in support of the Amendment when he goes to a Division.

* THE CHANCELLOR OF THE EXCHEQUER (Sir W. HARCOURT,) Derby

After this long and protracted Debate, I am glad we have at last arrived at the point which is to determine the fate of the Budget. The right hon. Gentleman. who has just sat down has admitted that the course which the Opposition has-taken is absolutely without precedent. He knows as well as I know that the-Second Reading of a Bill brought forward by the Government to meet the financial obligations of the State has never before been met by an Amendment to read the Bill a second time this day six months. The moving of such an Amendment is a measure far more extreme than that of stopping the Supplies. On former, but on rare, occasions Amendments have been, moved to the Second Reading of a Budget Bill, but they have been Amendments which have fixed upon some particular point, and they have generally—I think almost universally—been moved by some responsible Member of the Opposition. I do not complain of this proceeding. I know it is not aimed so much at the life of the Budget as at the life of the Government. It was thought well to spread the net wide enough to embrace all those who, whatever their views might be on finance, desired to overthrow the Administration. The temptation of securing the aid of an Irish contingent to overthrow a Home Rule Government was too great to be resisted. I do not complain that right hon. Gentlemen opposite have succumbed to it. There is, however, one advantage in the form of this Motion for which I welcome it. It dispenses me altogether from going into all those dreary and minute particulars which belong to Committee, and which are not appropriate to the Second Reading of this Bill. The Opposition have raised what the lawyers call the general issue upon the principles of the Budget. I am glad of it. It enables us to do tonight what we most desire—namely to take the opinion of this House first and of the country afterwards. [Opposition cries of "When"?] Do not be in a hurry; you cannot do it tonight. It enables us to take their opinion upon the principles upon which the finan- cial proposals of the Government are based. The course of the discussion has followed pretty accurately upon the lines upon which it was originally launched. The twin champions who moved and seconded this Amendment represented the two most powerful and the two closest monopolies in this country—the monopoly of land and the monopoly of liquor. That was an antagonism for which Her Majesty's Government were perfectly prepared. I will deal first with what I may without disrespect call the liquor opposition. The right hon. Gentleman has accused me of not only taxing the liquor interest, but of insulting it. But why does he say I insult it? He said, first of all, I had violated all the former principles of finance on this side of the House, and one of his charges against me was that I had said this tax would not fall upon the consumer, but upon the trade. That is precisely what his own Chancellor of the Exchequer said when he put his duty on the liquor interest. I quoted his language in my Budget speech. This is the language of the right hon. Gentleman— I beg the Committee to observe, therefore, that I am obtaining my Revenue by the addition of a tax which cannot be felt by the consumer. That is the charge the right hon. Gentleman brings against me; and then he says I am attacking the liquor interest as no Chancellor of the Exchequer ever did before, and upon principles which I ought not to have adopted. I quoted also the language of my right hon. Friend the Member for Midlothian, who said— We ought to raise the duty upon them as much as we can consistently with the policy and the necessity of preventing the growth of a contraband trade. Therefore, these are principles which are not unknown to previous Chancellors of the Exchequer. There are people outside who impute to me personally as well as in my character of Chancellor of the Exchequer with having made these proposals from personal spite against the liquor trade. I do not think there is any gentleman in this House who believes that I am capable of such a thing. I have made these proposals, as I said in my Budget speech, not upon social grounds but upon fiscal grounds exclusively. I stated that I had taken the pains to ascertain on the principles stated by the right hon. Gentleman the Member for Midlothian whether the trade was in a condition on which the tax might be imposed without oppressing it. I said that I considered it was a trade which was making very large and increasing profits, and I said that if I were challenged I should be prepared to prove it. I will just state a fact which will show that I was justified in my assertion. Of course, I am not going to give the particulars of any individual or of any firm; but I am going to state, and I am justified in stating, what is the general condition of the trade in the country. In 1884 the total profits of the trade assessed to the Income Tax were £6,31 6,000. In 1893–94 they were £10,177,000, or an increase of £4,000,000, or nearly 70 per cent., in the course of the 10 years. The remarkable thing is this: that after that increase of the duty by the right hon. Gentleman opposite the increase of the profits has gone on continuously. Those are facts which justify my assertion. What is the history of this extraordinary profit? I stated that, in my opinion, the main history of these profits was the great fall in the price of material. Generally speaking, you may say that in the last 20 years the price of material used by the brewers and distillers has been something like 40 per cent. lower. The price of malt has fallen 44 per cent., sugar 37 per cent., rice 23 per cent., hops 14 per cent., barley 30 per cent., oats 28 per cent., maize 34 per cent., and molasses 21 per cent. Of course, with an article the material of which falls to that extent—the prices not being substantially lowered—you will naturally expect the profits would be very large. The trade being in this prosperous condition it should take a share in the extra demands which it is unfortunately necessary to make upon the country, but the remarkable part of it is that, indignant as they are, they tell us that they are not going to suffer. The hon. Member for Wimbledon (Mr. Bonsor) tells us that the trade will not suffer at all, and he says they will take care of themselves. Throughout the whole of his speech his tears were reserved for the growers of barley. He told us that the brewers were always anxious to use the best English barley, and in proof of that he pointed out that in 1876 barley was 45s. 6d., and in 1893 it was 28s. 10d. If he could buy barley at 28s. 10d., why did he not use it? In the same speech he added that in that period the consumption of sugar had increased between two and threefold, until in 1893 it had attained the enormous total of 2,122,000 cwt., while the consumption of malt had decreased. Here is this friend of the English barley grower, who can buy barley at half the price, yet goes and buys sugar. The fact that barley has fallen in price is not due to any increase in the duty on beer. Its fall in price has not been equal to the fall in other grains. I think, therefore, that I may leave the solicitude of the hon. Member for English barley growers to take care of itself. Then there was another champion of the brewing interests—the hon. Member for Mid-Armagh (Mr. Barton). He spoke on behalf of the great firm of Guinness, and his solicitude was not for the English barley growers, but for the small brewers. He did not pretend that the firm of Guinness was going to suffer, but he wept tears—I might almost term them saurian tears—for the small brewers in Ireland, What destroyed the small breweries? Not the additional taxation on beer, but those gigantic monopolies which have bought up all the free houses, and turned them into tied houses, converting the publicans from independent tradesmen into mere agents for the brewers.

MR. BARTON

said, the firm of Guinness had never owned a tied house.

SIR W. HARCOURT

Of course, I entirely accept the statement of the hon. Member, but that does not alter the absolute truth—that the small brewers of the country have disappeared under the influence of these great monopolies. Before I leave this liquor question, I should like to know what is the financial position which right hon. Gentlemen opposite are ready to adopt in regard to it. You accept to-night, by the alliance you have made, and by the vote you are about to give—you accept the principle that beer and spirits cannot and ought not to bear additional taxation. [Some Opposition cries of "No!"and Ministerial cheers.'] Will you stand by that? With the prospect of a great and increasing expenditure, are you going to cut off from yourselves, in order that you may get a vote against the Government to-night, the right to tax beer and spirits in the future? What, then, are you going to tax when you want more money? Are you going to tax tea, or sugar, or corn? Or are you going to put it all on the Income Tax? The right hon. Gentleman opposite has severely criticised my methods of dealing with those duties. Well, the right hon. Gentleman has a characteristic method of his own, which I have not thought it right to imitate. In 1889 he imposed an additional duty on beer. Under pressure from the brewing interest he held out hopes that, if the Revenue permitted, a remission would be made in the next year.

MR. GOSCHEN

I did not say that. I did not use those words.

* SIR W. HARCOURT

Well, I copied them this morning. These conditions-were fulfilled. The Revenue did admit of a reduction in the next year, and in fulfilment of his pledge the right hon. Gentleman stated in his speech on the Budget that the increased Beer Duty would be remitted that year for Imperial purposes, and then at the end of his speech he proceeded to re-impose it for purposes of local taxation to replace his unfortunate Wheel and Van Tax. Well, that is characteristic of the right hon. Gentleman. I prefer my direct methods to such shifty finance as that. I do not know whether the browing interest would be-particularly pleased if I were to imitate the example of the right hon. Gentleman. now come to the other great protagonist to the Budget—the lauded interest. They come forward, as they always have done, to insist upon their privilege of exemption from taxes which are paid by other people. The capital of the country has been estimated at £11,000,000,000, and out of that £2,200,000,000 is the proportion of realty. Realty now pays £1,150,000 out of £10,000,000 to the Death Duties, or a little more than one-tenth. Under our scheme it will pay £2,500,000 out of"£13,500,000, or a little less than one-fifth, so that it will still have a slight advantage as compared with personalty. If it paid its full proportion it would pay £2,700,000 instead of £2,500,000. The figures we have given on this subject have been disputed by the hon. Member for Surrey, who was good enough to tell me privately the grounds on which he objected to them. But the estates which he had in view were all great estates and settled estates and estates subject to graduation, and most of them, I think, London estates. I said to him, "If you would only allow me to read to the House that list, you would carry the Budget by acclamation." When the hon. Gentleman used those estates as a measure of what would be the result of the proposal on other estates, that was a fallacy, because there is no doubt that: upon estates of that character a very large amount of additional taxation will be raised. That is our object. But upon the moderate estates the increase will be extremely small. I would remind the House that when they talk of realty a great confusion arises. Realty means - both land and houses, and land, in the ordinary sense of the word, is the smaller moiety. It represents £600,000 of the additional taxation we propose to raise, or about one-sixth of the whole. It is to be subject, to a recoupment under Schedule (A) of £160,000. From whom does this complaint come? Not from realty in the fullest sense of the word. The complaints come from land as distinguished from houses. We have heard very little complaint from settled personalty which will come under this additional taxation; we have heard little from realty other than agricultural land. They are apparently not unwilling to take their share in burdens which must fall upon the nation. In addition to the liquor interest, we have had strong complaints from the landed interest. Leaseholders, an important section of the community, are already subject to the whole weight of this taxation, which the freeholder is exempt from. What is the ground upon which the complaint is made? There are two grounds: One is the payment of rates. The right hon. Gentleman opposite (Mr. Goschen) undertook to redress this inequality three or four years ago, and has stated that he had done so. Shortly after that the right, hon. Gentleman the Member for Sleaford (Mr. Chaplin), speaking on behalf of the Government on a Motion that the Death Duties ought to be equalised, because this compensation had been given in respect of rates, said that the occupier paid a certain sum for the use of the land, and in that sum were included rates as well as taxes, and that the effect upon the owner was, that if the rates were high he got less rent, and if they were low he got more, and the right hon. Gentleman maintained that, it would not be difficult to show that ultimately the whole burden of the rate fell on the owner of the land and no one else. Upon that statement the right hon. Gentleman the Member for Midlothian remarked as to its importance, and pointed out that these subsidies, of which the right hon. Gentleman (Mr. Goschen) was the author, were an actual gift of £5,000,000 or £6,000,000 of money, made to the owners of the land.

MR. GOSCHEN

Not to the owners of land, but of houses and lands.

* SIR W. HARCOURT

Sir, I beg your pardon. These are the words— But this fact stands, that as the whole of that portion of £6,000,000 which went to the relief of rates fell on the rural land, it, is in the long run a sheer, unmixed, undiluted gift to the landlord. That is the statement which I wish to place on record, and a most important statement it is. It has become the habit of hon. Gentlemen to refer to the statements of the right hon. Member for Midlothian in 1853— There is a point I want to notice in the speech of the right hon. Gentleman, because he did me the honour to refer to a speech made by me in 1853 on the subject of the Income Tax, and he had founded on that reference to my speech a case of grievance for the land. These are the circumstances in which I endeavoured to show that land under Schedule (A) pays more than 7d. in the £1, and that the burden upon it is greater than it is commonly supposed to be. My right hon. Friend the Chancellor of the Exchequer reminds me it might be urged that has been redressed by the contribution. If we are to speak of that, will say in my opinion it has been a great deal more than redressed by that contribution. The fact is that while realty has received an enormous boon at the expense of the Consolidated Fund.—a boon of which the whole in the case of rural land goes to the landlord, and of which a large part, not the whole, in the case of land not rural goes to the landlord—while that boon has been given to the landlords of the country in rural and urban districts and is a charge on the Consolidated Fund, a compensation has been given to the Consolidated Fund in return which is, I believe I am right in saying, a few hundred odd thousands. The question between the rates and the Consolidated Fund is not a settled question. No proper equivalent, no fair and proper consideration, has been given to the Consolidated Fund by a readjustment of taxation in respect of that enormous boon which has been handed over to the rates; and that a further and larger change than has yet been made in the Death Duties is, in my opinion, a matter of absolute necessity on the plainest grounds of justice before Parliament will have fully vindicated its character as a just distributor of benefits and burdens among the several classes of the community. Now, the landowners have received their satisfaction, and more than satisfaction, in respect of rates, and it is time that we should equalise the rest. The other objection on the part of the landed interest is one the truth of which I most absolutely acknowledge. They say that agricultural land has fallen in value and also the income. That is unfortunately true, but it is on that diminished income and value, and on that alone, that the tax will be placed. They will have to pay upon what they have, and not upon what they have not. I have endeavoured to show the House how small that amount will be, but we have examples—I do not say wisely brought forward as exceptions to the great principles of finance—of the inconvenience which may fall on particular persons and in particular cases. The hon. Member for the West Derby Division of Liverpool brought forward the case of the estate of Savernake, and remarked upon what difficulty the present owner of Savernake would be placed in by this legislation. But we cannot found legislation in finance of this character upon the difficulties of an estate in the condition of Savernake. The hon. Member for Sleaford came forward, and he passed an eulogium upon an estate in exactly the opposite category—an eulogium in which I desire to associate myself—the great estate of Chatsworth, which has been administered for generations in a manner to the advantage of its possessors and of the country. Rut when he tells me that taxation of this character is going to destroy the magnificent fortune of the possessors of Chatsworth, that is an argument which carries little weight with me.

MR. CHAPLIN

The right hon. Gentleman entirely misrepresents me. I did speak of Chatsworth, but I merely mentioned Chatsworth as a type of a great number of others which it resembled.

SIR W. HARCOURT

I am very glad to hear that Chatsworth represents a great many other estates, because, if so, the landed interest is not so badly off. But a still more extraordinary argument was used by the right hon. Gentleman (Mr. A.J. Balfour) just now. He said that Holland House, under these circumstances, might be turned into a building estate. I am sorry to say that a good deal of Holland House, since I first recollect it, has been thrown into building estate. But you cannot deal with broad questions of finance—

MR. A. J. BALFOUR

I did not use that as an argument in favour of the owner of Holland House, but as an argument in favour of the public. It was a public loss.

* SIR W. HARCOURT

If turning any of Holland House into a building estate was a public loss, a great deal of it has been lost already since I first came to London. But you cannot deal with great questions of finance by consideration of particulars of this character. But, Sir, I observe, in all these Debates, though you put forward Savernake, Chatsworth, and Holland House, there is one class of landowners who have prudently kept in the background—namely, the great owners of ground values. It is upon them, as they know perfectly well, that the chief burden of this taxation will fall, and therefore they have put forward the case of every other class first—the yeoman farmer, the licensed victualler, or the ruined brewer. There is an idea in private circles, I believe, that there are Dukes who expect that they may lose millions of money over this system, and, if so, I suppose it is because there will be millions to meet the demand. That brings me to the question of graduation. The right hon. Gentleman the Leader of the Opposition commenced his speech this evening by criticising the fact that I, as the Chancellor of the Exchequer, had a Colleague in Lord Rosebery who favoured all the schemes I brought forward. I am sorry that I cannot congratulate him in return on having treated his Chancellor of the Exchequer in the same favourable manner. The right hon. Member for St. George's, Hanover Square, Chancellor of the Exchequer of the Leader of the Opposition, denounced the other day the principle of graduation in the strongest terms, and applied to it such words as "plunder" and "fiscal robbery," and he reproached me, his unworthy pupil, of being ignorant of the elementary principles of political economy. He quoted something from the works of Sir Louis Mallet, and he told me that no great economist had ever been in favour of graduation. He even went so far as to refer to John Stuart Mill as an authority for that statement. I certainly was surprised that he was so ignorant of the fundamental difference of taxation as regards graduation in the case of Death Duties and the Income Tax respectively that he did not even realise that one was a tax paid by the living and the other a tax levied upon the dead. I will now read you passages from some authorities in support of our scheme to impose additional Death Duties. The passage from Mill's book is as follows:— The principle of graduation, as it has been called—that is, the levying a higher percentage on larger sums—though its application to general taxation would be a violation of first principles, is quite unobjectionable as applied to legacies and inheritances. I conceive inheritances and legacies exceeding a certain amount to be a highly proper subject of taxation, and that the revenue from them should be as great as it can be made without giving rise to evasion. There was a passage referred to the other night by my hon. Friend the Member for Aberdeen where Adam Smith, after speaking of the necessities and luxuries of life, said it was not unreasonable that the rich should contribute not only in proportion to their revenue but something more than that proportion. Is that not the principle of graduation? What was the proposal of the right hon. Gentleman, with regard to House Duties, but graduation on a lower scale? The right hon. Gentleman, I think, before he undertakes to assail the principle of graduation, should be a little more careful in reading his authorities and a little less reckless in quoting them. But is gradution to be condemned on another ground? The right hon. Gentleman has never been so insulted as by my quoting the case of the Australian colonies. He says that the land ruined by Australian mutton is now to be wiped out by Australian finance. That is the language of the Imperial Party. These are the advocates of the federation of the Empire. Is he going to keep out Australian mutton, which gives cheap food to the working classes? Why should he have such a contempt for Australian finance? Land is the principal capital of Australia, and their experience in dealing with it is very valuable. They have great advantages there which we have not in Lug-land. There land is free from fetters, and you may depend upon it that day by day the people of this country will become more desirous that land should be treated as land is treated in Australia—exactly on the same footing as personal property. The sneers of the right hon. Gentleman at Australia will come home to roost. Very often smart sayings are very foolish things. I have a little refreshed the memory of the right hon. Gentleman as to the views of the doctors of political economy upon the question of graduation. I confess myself that I do not abide altogether by the dogmas of the professors upon this question. As on the bimetallic controversy, when I find all the professors on one side and all the men of business on the other, I follow the men of business. In this case, with regard to graduation, you do not want the professors to teach you whether men of immense fortune, like ground landlords, or whether millionaire brewers should pay something more pro rata than the small man, who has to struggle on on narrow means. That question will not be settled by the professors: it will be settled by the common sense and justice of the community at large. The right hon. Gentleman used tentative language: he said he did not absolutely commit his Party against graduation, but for fear that should not take effect the right hon. Member for Sleaford got up, hammered the nail in, and pronounced graduation to be anathema maranatha; but the right hon. Gentleman the Leader of the Opposition seemed a little timid and did not pronounce quite in the same sense. But if the Member for St. George's, my predecessor and my successor, hold these views on graduation, that will go a long way to settle the question. But there are other political forces in this country, and I should like to know what the views of Birmingham are upon this subject. Graduation is now part of the authorised programme of the Liberal Party; but it was part also of the famous Unauthorised Programme. These were once the views of Birmingham on this question— In my opinion, there is only one way in which this injustice of the incidence of taxation—this injustice of the greater weight of taxation upon the poor—can properly be remedied; and that is by a scheme of graduated taxation, a taxation which increases in proportion to the amount of property taxed. It need not necessarily be a graduated Income Tax: it might be more convenient to levy it in the form of a graduated Death Tax. I do not care anything at all about the method; all I want to offer for your serious consideration is the principle of such taxation. In my opinion, it is the only principle of taxation fair and just to all classes of the community. Now, Sir, I should like to know, comparing that with the speech which we heard the other night from the right hon. Member for St. George's, which of these two conflicting authorities is in the future to govern coalition finance? Which is to be the "predominant partner" in that joint stock concern? Then the right hon. Gentleman opposite sets up two totally inconsistent arguments. He says that the Death Duty will be "evaded," but as a future Chancellor of the Exchequer he retracts that offensive word and says it will be "avoided." There was a time when the right hon. Gentleman denounced settlements as a fraud upon the Exchequer. If the duties are going to be avoided there cannot be hardship, and if they are paid they will not be avoided; you cannot have it both ways. The right hon. Gentleman put as a most extraordinary case the case of the duty being at the highest possible rate. What is the highest possible rate under the present proposal? It is 18 per cent. What is it at present? It is 14 per cent. Do you mean to tell me that if the duties are not evaded at 14 per cent. they will be totally evaded because it is raised to 18 per cent.?

MR. GOSCHEN

Aggregate values?

SIR W. HARCOURT

Aggregate values. We at least have placed this principle of graduation before the country as a just system of taxation. We have placed it before the country, and we place it before the House to-night as a fundamental principle of Liberal finance. If you get rid of this Budget you will not get rid of the principle of graduation. It will survive the factious combinations of to-night. If you desire to go to the country against the principle of graduation we are ready to meet you. You have before you a future of ever-increasing expenditure—demands not only for the Army and Navy, but for every kind of social reform. You will have increased taxation, and you will find that these vast fortunes cannot refuse to bear their share, proportionate to their ability to endure the burden. And, Sir, I will venture upon this prediction. You may have to accept, aye, and you very likely will yourselves propose, provisions less moderate than those contained in this Bill. You have done that before. What has the right hon. Gentleman said upon the subject of the Income Tax? Here, again, we have, I will not say the advantage, but the disadvantage of being in direct opposition to the right hon. Gentleman the Member for St. George's (Mr. Goschen), and here again the Leader of the Opposition (Mr. A. J. Balfour) took the extraordinary course of throwing overboard his own Chancellor of the Exchequer. The very strongest part of the speech of the right hon. Member for St. George's 'was his denunciation of what we had done in the Budget to extend the limit and to enlarge the abatement. He said it was destructive of the Income Tax, and he denounced it in the most vehement language. And at the very beginning of his speech the Leader of the Opposition says that is the part of the Budget of which he most approves. The right hon. Gentleman said, and the Leader of the Opposition repeated it, that I had voted against that proposal. The right hon. Member for St. George's "told" against the proposal in the Division, but he did not "tell" me, and in that he was mistaken. But of all the charges brought against me by the Member for St. George's the most vehement, I think, was that which he made against me in reference to this extension of the abatement. Sir, how was the ground on which we have proceeded, the ground which the right hon. Gentleman denounced as mischievous, socialistic, and destructive of the Income Tax, described by the financier whom he was then opposing? Sir S. Northcote referred to the hardships endured by one portion of the trading classes—the struggling professional men and the struggling tradesmen—upon whom the Income Tax pressed most severely, and he said— In reply to official inquiries which he had made the other day he was informed that those who would profit most by the revision were a very large number of clergy, ministers of all religious denominations, a large number of officers in the Army and Navy, a large portion of the Civil Service—struggling men in all professions, some of whom were just getting their heads above water—many tradesmen, and the widows and single daughters of all these classes. The right hon. Gentleman denounced that policy and divided against it.

MR. GOSCHEN

That was the policy of the right hon. Gentleman the Member for Midlothian (Mr. W. E. Gladstone).

SIR W. HARCOURT

That may be; but. we have had experience of it for 18 years. The right hon. Gentleman is of the same opinion now, and he denounces it still. If you defeat this Budget, every one of those classes will lose this advantage.

MR. A. J. BALFOUR

The right hon. Gentleman did not hear my speech.

SIR W. HARCOURT

Yes, I heard the right hon. Gentleman's speech, but is the right hon. Member for St. George's to be the Chancellor of the Exchequer of the Party opposite? It was impossible for a man to have pledged himself more definitely and distinctly against this principle. There are three doctrines of finance. There is the doctrine of the Leader of the Opposition (Mr. A. J. Balfour); there is the doctrine of what we may call the future Chancellor of the Exchequer (Mr. Goschen); and there is the Birmingham doctrine, which cannot be reconciled with either. There is one great crime I have committed with reference to the Income Tax. I have proposed these exemptions. I do not know whether you mean to go to the country against these exemptions. But there is one exemption against which the right hon. Gentleman did not protest—one compensation under the Income Tax—and that was the grant to the landowners. He had nothing to say against that. Well, it is a little characteristic the way in which that compensation has been treated. Up to this time we have always been told that an enormous loss to the landed interest was involved in this distinction under Schedule (A)—that it far more than outweighed the advantages they derived under these exemptions from Death Duties. The moment it is given, they say "thank you for nothing"; they put the money into their pockets, and are not even thankful. The landed interest may behave in this way, but the relief is not so regarded by the owners of small house property. I have received letters from all parts of the country in which the writers express themselves as most grateful for the concession made. There was a small man who said he had put his earnings into house property, and he wrote— The news is too good to be true. I am told we are going to have 10 per cent. upon house property. I wrote to him, and said— Dear Sir,—The news is better than you believe, because you are going to have 1 per cent. I now come to the most important point of all, which is the treatment which the small properties will gain under this Bill. Upon that subject the right hon. Gentleman the Member for St. George's (Mr. Goschen) said very little. I have always regarded the right hon. Gentleman as the great apostle of the gospel of wealth, but these considerations lie below his political horizon. I wish to call attention to the effect of this Budget upon small property. While it provides for a permanent increase of more than £4,000,000 in the national resources, the Budget makes no increase, but a decrease of taxation on the different classes of persons owning no more than £1,000. Taking the Death Duties alone, there is a decrease upon taxation of this class, and taking the Death Duties and the Income Tax together there is a much larger decrease. Taking free personalty, settled personalty, and realty together, properties under £1,000 pay under the existing Death Duties upwards of £300,000 a year, while under the new system with Legacy and Succession Duty swept away, with the single equal duty of 1 per cent. up to £500 and 2 per cent. up to £1,000, they will pay about £200,000 a year. I say nothing about the saving of expense and trouble by extending the facilities now granted to properties of £300 to properties of £1,000. It comes to this—that the measure will have the effect of increasing the Death Duties as a whole by one-third, and at the same time of reducing by one-third the payments of these small people. Under the head of free personalty alone there are no fewer than 36,000 of these small estates out of a total of 51,000 in 1892–3. The reduction is not so large on the Death Duties, but it is much larger upon the Income Tax. I would like to give a typical case—that of a man dying with personalty worth £500. Take the case of a small tenant farmer leaving £500, or of a small shop-keeper or clerk leaving a similar sum. At present such a property pays a minimum duty of £10, and it may, under the Legacy Duty, have to pay as much as £59. In future under the Government proposals it will pay £5 only, and under no circumstances will it have to pay more. Surely this will be a great benefit and boon to an enormous proportion of the population. Now I will touch upon the Income Tax. What may reasonably be taken to be the income of a man who leaves a capital sum of £500, the result of his personal savings? We may take it to be £200 a year. He will gain under the Budget provisions £1 6s. 8d. a year on his Income Tax, so that he will be able to discharge in four years all the liability of his property under the Death Duties. Depend upon it that the country is going to judge between us on these proposals. These are things more cared for in the country than Savernake or Chatsworth. In the case of realty we come to the small holdings of £500 value, which is a very common kind of property. Taking the least favourable case, such a property left by a man to his son aged 44 will under the Budget scheme never pay more than £5. The Budget, while it confers a great boon to the farmers in respect of Death Duty on their stock, lessens the amount of the Income Tax they will have to pay. I have to apologise to the House for having occupied their time for so long; but I have endeavoured to draw their attention, not to the details of the Bill, not to the difficulties of administration, not to anticipations with which the right hon. Gentleman has filled so much of his speech, but with regard to which I think that the authorities at the Inland Revenue, by whom I am advised, know a great deal more about than the right hon. Gentleman as to the methods and the possibilities of carrying them into execution, but to the great principles of the Bill. I am glad that by the help of the right hon. Gentleman the Member for St. George's this question has been extracted from the chicane of paltry details, and has been reduced to a conflict on fundamental principles, and that we have at last come to a clear issue on conflicting principles of finance. Given the necessity for raising large sums for national defence by increased taxation, how is the money to be got? We affirm and you deny that the powerful and wealthy liquor interests should make a further contribution. Secondly, we affirm and you deny that for the purposes of the Death Duties realty and personalty should be treated alike.

MR. A. J. BALFOUR

No, I did not deny it.

* SIR W. HARCOURT

Then why do you want to throw out the Budget? We affirm and you deny—[Opposition laughter]—I do not know which of you is going to deny—that taking a moderate System of graduation immense wealth should pay at a higher rate than smaller fortunes. That is a clear issue. We affirm and you deny—it remains to be seen how long you will venture to deny—that if great expenditure requires a high rate of Income Tax, the burden should fall more lightly on the humbler incomes—[Mr. A. J. BALFOUR: I asserted it.]—and until the late First Lord of the Treasury and the late Chancellor of the Exchequer can make up their minds on the subject of finance, you are not entitled to throw out the Budget. These are clear issues, which divide our principles from those of the Torty Party.

MR. A. J. BALFOUR

No, they do not.

* SIR W. HARCOURT

If I may use a vulgar expression, I would venture to say that you are beginning to see that it is not safe for you to "face the music." Against these principles you array yourselves to-night. I know not whether that strange combination which you have entered into with those to whom on vital questions you are most opposed will assist you to- night. But if you should defeat this Budget, you will not defeat the principles on which it is founded, those principles being based on just and equal taxation, adjusted to the capacity of the various classes to bear the burden on those proposals. We challenge the vote of the House of Commons to-night, and when the time comes we shall ask the judgment of the country.

Question put.

The House divided:—Ayes 308; Noes 294.—(Division List, No. 44.)

Main Question put, and agreed to.

Bill read a second time, and committed for Monday, 21st May.