§ This, Sir, is an important matter, but I turn to one which is of very much greater importance to the country. We may nowadays be proud in a measure of the enormous revenue which we raise. But what of our expenditure? ["Hear, hear!"] I remember, many years ago, when Mr. Lowe held my present office that he said his great difficulty was to know what to do with the millions of money that kept pouring in upon him. 1071 Sir, millions of money keep pouring in upon me, but the demands keep pouring in upon me far faster than the money; and if we are right to be proud of our revenue, we ought also to think of our increased expenditure. ["Hear, hear!"] I know perfectly well that increase in our expenditure is a necessity. The expenditure of this country must be increased correspondingly with the increasing wants of civilisation, with the natural expansion of our Empire, and—I am bound to add—in consequence of the enormous armaments of foreign countries. But the grave question that I think this House and this country ought to consider is this—whether our expenditure is not now increasing faster than our capacity to bear it. ["Hear, hear!"] In 1881, Mr. Gladstone called the attention of Parliament to this matter. He instituted a comparison, going as far back as the year 1842. He took the annual percentage of increase of population, of revenue, and of expenditure in certain periods. The first period was from 1842 to 1858. He calculated that the population had increased in that time by one-third per cent. per annum; that the revenue had increased by 1¾ per cent. per annum; and that the expenditure had increased by 2½ per cent. per annum. Then Mr. Gladstone took the years from 1859 to 1873, and calculated that in that period the population increased 1 per cent. per annum, the revenue by 3 per cent., and the expenditure by 1⅓ per cent. per annum. He next took the period from 1874 to 1877, in which he calculated the increase of population at 1 per cent. per annum, the revenue at 1½ per cent. per annum, and the expenditure at 3¼ per cent. per annum. The right hon. Gentleman opposite (Sir W. Harcourt) will remember that he entered into a similar calculation in 1886 in regard to the 10 previous years. I have extended my survey to the last 20 years, ending with the year just concluded—that is to say, for each of the three financial years 1875–76, 1885–86, and 1895–96. I have taken the normal expenditure excluding anything like a War Vote or Vote of Credit, under the six following heads—Army, Navy, Civil Service, Education, Grants in Aid of Local Taxation, and Cost of Collecting 1072 the Taxes; and I have taken the actual revenue derived from Customs, Excise, Stamps, and House Duty, and also from Income Tax, treating that separately on account of the variations according to the rate in the pound. In order to allow for changes in taxation, I have taken the actual produce of the four heads of taxation I have named in the first of the selected years. I have analysed the amount of taxation imposed and remitted between that year and the next selected year, and then I have either added to the produce of the first year the net amounts imposed in the interval or deducted from it the net amounts remitted in the interval. This should give the revenue which would have been received in the second of the selected years had the produce of the taxes remained stationary, and, therefore, the comparison of that sum with the actual produce will show whether there has been progression or retrogression—in other words, elasticity or contraction of the revenue. I will not trouble the Committee with any more than the broad results of the comparison drawn on the basis I have described, though I shall be glad to lay a memorandum on the subject on the Table of the House with detailed figures. ["Hear, hear!"] The broad results, then, are these. The second decennial period compares favourably, from a revenue point of view, with the first decennial period. The four heads of taxation which I have named showed in the period between 1875–85 a decline to the extent of 3.93 per cent., while the produce per penny of the Income Tax showed an increase of only 3.23 per cent. In the second decennial period, 1885 to 1895, the produce of the four taxes showed an increase of 21.26 per cent.; and the produce of the Income Tax an increase of 11.46 per cent. That would seem to be a rather favourable result with regard to the elasticity of taxation in the last decennial period, but I would remind the Committee that it is largely due to the results of the year that has just closed. If, however, we turn to the expenditure under the heads I have named—Army, Navy, Civil Service, Education, Grants in Aid, and Collection—we shall find that, while in the first decennial period the expenditure (omitting the debt charge and Votes 1073 of Credit) increased by 21.92 percent.; in the second period it increased by no less than 38 per cent. Taking the whole 20 years together, our population has increased in the whole period by 19 per cent.; the four heads of taxation have increased by 16¾ per cent., and the Income Tax by l5½ percent.; but the expenditure has increased by 68 per cent. ["Hear, hear!"] And how has that increase taken place? The Army Estimates have increased by.£4,066,000, the Navy Estimates £8,866,000, to which we have to add more than £2,000,000 in the year in which we now stand. The Navy expenditure of last year was larger than in any year known since the close of the great war; but the Navy Estimates of the present year are more than double those of the year 1875–6, and yet there are some persons who are not satisfied. [Cheers and laughter.] Well, the Civil Service Estimates have increased in the period to which I have referred by, £1,266,000, the education charges are increased by £6,673,000—nearly quadrupled since 1875–76; the amount in aid of local taxation has increased by £6,634,000, though I must add that it would be hardly fair to put down all that to increased expenditure, because part of it, at any rate, was merely a transfer from one pocket to another. ["Hear, hear!"] Lastly, the cost of collection of the taxes has increased by £113,000. Now, I think the Committee will see that if our expenditure goes on increasing at the rate it has done during the last 20 years, and the revenue shows no greater elasticity, we shall be within measurable distance of a time when we shall have to choose between diminishing or putting an end to the reduction of our National Debt and an increase of taxation. I do not envy the Chancellor of the Exchequer, whoever he may be, who has to impose increased taxation to any large extent on our present financial system. He will have no easy task. ["Hear, hear!"] I should like to draw the attention of the Committee to the way in which the increased expenditure of the last 20 years has almost entirely been borne. Customs, Excise, Stamps, and House Duty produced in 1875 £59,412,000. In 1895 they produced £75,367,000.