HC Deb 13 April 1899 vol 69 cc1025-106

My final balance sheet will be as follows: Customs, £21,770,000; excise, £29,850,000; death duties, £11,150,000; stamps, £8,050,000; land tax, £800,000; house duty, £1,650,000; income tax, £18,300,000; making the total tax revenue, £91,570,000. The total non-tax revenue is £19,587,000; the total revenue is £111,157,000, against an expenditure of £110,927,000, leaving the small surplus of £230,000 for contingencies. Sir, I have now concluded my task, and have only to thank the Committee on both sides of the House for the patient attention they have been, good enough to accord me. I have had to provide for expenditure unprecedented in time of peace, the bulk of which expenditure is due, not to any aggressive policy on our part, but has been forced upon us by the increased and increasing armaments of other nations, and the consideration of the unique conditions of our national prosperity and security. There is a small section of honourable Members opposite who have consistently opposed the increase of our expenditure for war. They are logically entitled also to oppose the provision which I suggest, and the ways and means for meeting it. But I appeal with some confidence to the great majority of the Committee, who have not only cheerfully sanctioned this great expenditure, but have urged and demanded it. I respectfully submit to them that, having done so for reasons which, I believe, commend themselves as satisfactory to the great majority of the people of this country, they are bound to provide for that expenditure. I do not say that they are necessarily compelled to adopt the particular proposals I have made by way of meeting them. These proposals, no one is better aware than myself, are open to criticism. But it is impossible for any proposals to be made for meeting this great expenditure which nobody shall feel and to which nobody can object. There- fore, Sir, I submit my scheme with some confidence to the Committee. I claim for it that it recognises the exceptional circumstances, as compared with past years, with which we have to deal. I claim for it that it deals with those circumstances without adding to our Debt; that, on the contrary, it provides arrangements more reasonable. and, therefore, superior and more permanent for the reduction of our old Debt than those which previously existed; and, finally, I claim that, in the increased taxation which I propose, I have suggested nothing antagonistic to those great fiscal principles from which we receive so abounding a revenue, and have proposed nothing which will seriously interfere with the trade and commerce of this country, or will appreciably add to the burdens of the community.

SIR H. FOWLER () Wolverhampton, E.

I am sure, Sir, that whatever differences of opinion may prevail in the House with reference to some of the proposals the right honourable Gentleman has made, the House will be quite unanimous in the expression of their opinion as to the lucidity, the eloquence, and the masterly ability with which he has made his financial statement. I think that the dullest scholar in finance will be able to clearly understand and to appreciate all his proposals, although it will be necessary that they should be, as he himself has suggested, reduced into writing, and printed, and circulated, both for the convenience of Members and also for the convenience of the country, before the House is asked to pronounce any definite decision upon them. Three years ago, when he made his first Budget proposals, the right honourable Gentleman called the attention of the House to the fact that he was announcing then the receipt of the largest revenue ever known in this country since the great war, the largest surplus almost during a similar period, and the greatest sum devoted to the payment of the National Debt. I think, as he himself has already told us, the experience of the last three years has enabled him, as far as two of those items are concerned, to beat the record. Such a statement as he has made to-night has never been made in the House of Commons before.—with reference either as to figures of income or expenditure. But then, Sir, the Budget, complicated as it is With these various increases, and subject also to the explanations which the right honourable Gentleman has given as to the reasons of the vast additional expenditure, also as to the prosperous state of the country which this year records in the largest revenue ever paid into the Exchequer, may be summed up in one sentence, that sentence being this: The Chancellor of the Exchequer proposes to meet the additional expenditure which will fall upon the country next year by reducing the amount set apart for the payment of the National Debt. The right honourable Gentleman cited the examples of Mr. Gladstone and Mr. Childers, and when the time comes for further discussing his proposals there will be ample opportunity of showing the extremely wide divergence between the proposal of the Chancellor of the Exchequer and the proposals which Mr. Gladstone made in 1860 and those which Mr. Childers made in 1881. But I would point out, simply as a preliminary remark, that the principle of the Sinking Fund established by Sir Stafford Northcote was to set apart a fixed sum every year for the payment of the cost of the Debt, and applying the margin to the reduction of that Debt, and that at the time the right honourable Gentleman has alluded to, when he admits we were not so rich as we are now, when there was no such prosperity existing in the country as exists now, when the yield from taxation was nothing like so great as it is now, Sir Stafford Northcote proposed that £28,000,000 should be set apart for that purpose, totally irrespective of what the future might disclose, keeping that sum up in order to provide for the permanent gradual extinction of the National Debt. When Mr. Childers dealt with it in 1881—Mr. Childers and Mr. Gladstone, although they prevented the windfall coming into the hands of the Chancellor of the Exchequer in the year when the long and other annuities would expire, they made no diminution of the amount to be set apart towards the payment of the Debt. Mr. Gladstone's great object was to keep up expenditure—if I may use such expression—which those annuities required in order to go on paying the cost of the Debt and of liquidating the Debt at a much more rapid rate than had prevailed up to that time. Now, however ably and cleverly the Chancellor of the Exchequer may disguise his proposition, although he may say, "You are really paying off more debts than you ought to," this proposal is to diminish the fund for the payment of the cost of the Debt, and not really to provide for the extinction of the Debt in the future to the extent to which it has been extinguished in the past. Well, the first question we have to ask ourselves is, What is the justification for such a change in our fiscal position? The argument which the right honourable Gentleman enforced on the House with very great ability was, "Oh, there will be a temptation to some Chancellor of the Exchequer, or to some extravagant House of Commons, at some future date to take this money and appropriate it." But he could have provided, and I do not think any one on these Benches would have objected if he had provided, for the extinction of further debt by prolonging these annuities, as Mr. Gladstone and Mr. Childers did. He, however, said, "No; reduce the amount; we have already reduced from £28,000,000 to £25,000,000; let us reduce it from £28,000,000."So that in 1899–1900 the country is to be content with paying £23,000,000, whereas in 1847, under very different conditions, we were content and willing to pay £28,000,000. We talk of burdens, and the Chancellor of the Exchequer said something in reference to our obligations to posterity. He said nothing as to the enormous burdens which fell upon past generations, of the great sacrifices which years ago were made both before and after the great war, to keep up the credit of the nation. But now, at a time of unexampled prosperity—I venture to say that in the whole history of this kingdom there has never been such commercial and financial prosperity in this country as there is at the present moment—the Chancellor of the Exchequer proposes that we should diminish by £2,000,000 per annum the liquidation of the National Debt. I do not wish to forestall what may hereafter be said on that question. It is well understood that the financial proposals of the Budget are not contentiously discussed on the night of their introduction, but I think those of us who feel strongly upon the question should lose no time in expressing our opinion that, at all events, any tampering with the Sinking Fund is an operation which is disastrous and unwise. Not only under the teaching of Mr. Gladstone, but under that of my right honourable Friend the Member for West Monmouthshire, and of the Chancellor of the Exchequer himself, we have regarded this Sinking Fund—this £6,000,000 or £7,000,000, as our war chest. We have felt that in case war broke out we were enabled at once, without adding to the taxation of the country, to raise £200,000,000 or £250,000,000. Without in any way wishing to detract from what the Chancellor of the Exchequer has said as to the necessity of a strong and overpowering Navy, I must express the belief that our financial position is one of our strongest lines of defence, and that the right honourable Gentleman is considerably weakening that position by the course he proposes to take. Now, there are various matters of minor detail upon which, had the right honourable Gentleman been present. I would have asked him a few questions.


He will be here in a moment.


I Will refer to something else while he is absent. One matter to which I should like to call attention is this: the Chancellor of the Exchequer told us that the expenditure which he is asking the House to meet this year will be something like £122,000,000, and he put, as he often has done, the whole strain of the increased expenditure upon our Naval and Military preparations. I have no doubt that those preparations are responsible for a very large amount, the overwhelming proportion, of the expenditure of the last few years, but they are not responsible for it all. Certainly, there has been a margin, I will not say of extravagance, but of very generous expenditure, and I firmly believe that had it not been indulged in, this tam- pering with the Sinking Fund would not have been necessitated. I will say in passing, as the First Lord of the Admiralty is present—I do not sec any representative of the Army in his place—that those who feel the most strongly as to the necessity of upholding the Navy are not quite satisfied with what I may call the tone of the expenditure. The right honourable Gentleman smiles; perhaps it would be better to say the trend of expenditure. There is an impression abroad, whether well founded or not, that, during the last two or three years, there has been a very free, generous, and liberal expenditure upon both the Navy and the Army. It is felt that, if a very strong economical hand had been at work, possibly the expenditure would not have been so great, while, what the Chancellor of the Exchequer laid great stress upon, a strong Navy and an increase of the Army might have been attained. The Chancellor of the Exchequer said nothing with reference to large increases of expenditure on other items. The sum he proposed to take from the Sinking Fund is £2,000,000. Has he made no expenditure of £2,000,000 a year during the last three or four years—an expenditure not for the benefit of the community as a whole, not for the benefit of the taxpayers as a whole, not for the benefit either of the Navy or the Army, or the defence of the country, but for the benefit of a small class of the community, and in order to relieve them of burdens to which they were no more liable than other members of the State? I notice that, in reference to the figures which the right honourable Gentleman gives in reference to the death duties, the right honourable Gentleman said that £3,000,000 was the amount received from realty, but he did not tell us what the amount received from agricultural land had been. He told us that the amount assessed on agricultural land was £11,296,000. I do not know whether he knows the amount that was paid by agricultural land in respect of the death duties.


It would be a very small amount.


Yes, a very small amount compared with the £2,000,000 paid to agricultural land, and, when we come to look at the Very small items of additional taxation which the Chancellor of the Exchequer has proposed, I think we may bear in mind some of these figures. Then the Chancellor of the Exchequer expressed his very strong opinion that this expenditure to which we are now committed is chronic, normal. I agree with him. I do not see much chance of a reduction of expenditure, though I do anticipate considerable and satisfactory results from the forthcoming Conference, and from the general feeling of intolerance of these naval and military armaments which is spreading through the whole civilised world. I think that, at all events, we can stop increasing, and I think there may be some reasonable chance of reduction. The Chancellor of the Exchequer expressed with very great force, and perhaps with some justice, some of his own opinions, which he said were old-fashioned, with reference to this increased expenditure. To some extent I agree with him, but I think there are large branches of future expenditure which will have to be met from Imperial funds for improving the general condition of the people of this country, and there are many items which now stand at comparatively small figures which will be increased. Of course, we cannot forget, though the Chancellor of the Exchequer himself appears to have forgotten, that when he gave out of the public taxes a very large sum in aid of agricultural rates, he promised us that at a future date the case of the urban ratepayer would be considered after the Commission had inquired into it. When that happy day arrives, if it ever does arrive, some demand will be made on the public purse. There has been a considerable increase during the last three years—an increase of nearly £5,000,000—in the bounties, and they will tend to increase. The Chancellor of the Exchequer referred to the Education Vote. There is a feeling—it is a popular feeling, which I share—that that Vote should not be reduced, but should, if possible, be increased. But I think there is a very widespread feeling arising in the country—and certainly it has been stimulated by speeches made by the right honourable Gentleman's colleagues in this House—that our educational system is not only on a very unsatisfactory, but on a very extravagant basis, and that a much better education could be given at a far less cost from the Imperial Exchequer than that which is prevailing now. The Chancellor of the Exchequer seemed to make a very strong point with regard to what was done last year with respect to the tobacco duty. I will take this opportunity of troubling the House with a few remarks on the Chancellor of the Exchequer's arguments and figures. I agree with him that there has been a very golden result—harvest, as he called it—from the tobacco duties. I think he has arrested the progress of that harvest, and I do not share with him his anticipations with respect to the future. The House will, perhaps, allow me to call their attention to what has happened since the year 1888, when, I think, the right honourable Gentleman opposite, the First Lord of the Admiralty, restored the duty which had been taken off by Sir Stafford Northcote. The previous year the tobacco duty was £9,300,000. There was a loss on the first year, which brought it down to £8,700,000, and that loss was not recovered until three years afterwards. But in 1892—and I want the House to note this—when the tax on tobacco stood where it stood up to the last year, the revenue was £10,000,000. It then gradually rose to £10,100,000, £10,120,000 £10,400,000, £10,750,000, £11,000,000, and £11,500,000. You had there a steady, satisfactory increase, and that will be one of the first reasons why I would ask the Chancellor of the Exchequer why he should inflict on the revenue the very heavy loss he has inflicted upon it, and which, I think, will be greater than he anticipates, in order to benefit a very small class of the community. But the controversy arises as to who has been benefited. The Chancellor of the Exchequer told us last year that the benefit would be twofold—either that the consumer would get a better article, that is, a drier tobacco, or, may I put it, a less adulterated tobacco?




Then a drier tobacco, or he would get it at a lower price. The Chancellor of the Exchequer says that the trade has been in a state-of very great confusion during the year. I have no doubt the Chancellor of the Exchequer has read—I believe all Chancellors of the Exchequers are very careful readers of—that very able financial paper, "The Economist," which a short time ago called attention to the increased prosperity which had prevailed in the year 1898 amongst the retailers of tobacco. When their figures were called in question, one of the first firms in the tobacco trade addressed to the "Economist" a communication, in which they said that the whole of the remission did not go into the pockets of the tobacco trade, whether manufacturers or retailers, but that a larger part, if not the whole, went to the consumer. Then they gave the usual description, which the Chancellor of the Exchequer has given, but which nobody finds anybody accepts in private life, namely, that the tobacco is better, or that it is cheaper. They put it into figures, and what their figures came to was this, that the ultimate result was that 2¾d. was practically the amount which represented the improvement in the tobacco, and that 3½d. did go actually into the pocket of the manufacturer and the retailer. The Chancellor of the Exchequer is proposing to interfere with the Sinking Fund to the extent of £2,000,000. I think we are entitled to say, with all respect to him, that he has sacrificed £1,500,000 of revenue for the benefit of a very small class—namely, the tobacco trade, and I can find nobody, either rich or poor, who says that the tobacco is any better, and no one will admit that it is any cheaper. That, I think, is the general consensus of opinion, and I think the Chancellor of the Exchequer would see, reading, as I have no doubt he did, those unspoken indications of the general feeling of the House, that that feeling was not confined to this side of the House when he alluded to the question. But I would ask the Chancellor of the Exchequer one question. Why have the tobacconists been so anxious to release the tobacco before this Budget came on? If this benefit has gone into the hands of the consumer, if they have had no advantage from it, why should they want to clear it on the lower rate of duty? They thought they were going to lose a large bounty, and they were anxious to have as full a share of that bounty as possible. I have great admiration for the Chancellor of the Exchequer's talents, and I have never heard him so ably develop his brief as he did to-night on behalf of the tobacco trade, but with all his masterly skill I do not think he will carry conviction to the country, and I am sure he did not carry conviction to himself in the statement he made. With reference to the other items of his proposal, there can be very little dispute about them, though in regard to the increase on wines, I would like to ask him how he proposes to deal with Colonial wines?


In the same way as with the other wines.


Then, if I recollect aright, it was urged by my right honourable Friend the Member for West Monmouth, when he made his reduction, that it was in the interests of the Colonies, and especially with reference to Australian wines. And now who are going to put on a, duty which would practically be prohibitive. I have no doubt the Chancellor of the Exchequer has fully considered that point, but I should like to know from him, before we pass these Resolutions, what are his reasons for putting an additional burden on an industry which is developing very rapidly, and which is sure to be of very great advantage to our Colonial interests. The honourable Member for Sheffield, who has cheered most of the heresies which have fallen from the Chancellor of the Exchequer, was very quiet on that point, I am afraid he did not look after the interests of the Colonial producers——

* COLONEL SIR HOWARD VINCENT () Sheffield, Central

I am going to move an Amendment.


I am glad to find that the honourable Gentleman is true to his colours under all circumstances. One other question I would like to ask is in reference to the death duties. The Chancellor of the Exchequer takes a low estimate for this year, as he has taken every year. I think for three years his estimates with regard to the death duties have always been, perhaps rightly so, under the mark. What I want to ask him is, what he is proposing to do with reference to what is evident to all per- sons who look into these matters—namely, that there are attempts being made, and successfully made, and attempts on. a very large scale, to evade the payment of these duties. I do not think that evading the payment of the death duty differs very much from evading the payment of the spirit duty, or the beer duty, or the duty on any other article on which Custom and Excise is levied. There used to be very strong laws against smuggling, and very strong laws against the evading of payment of Excise duties. Mr. Gladstone, I think, when he imposed the Account duty, extended its operations to three months before death. I think it was the right honourable Gentleman opposite, the First Lord of the Admiralty, who extended the three months to twelve months when he imposed the estate duty. The two Chancellors of the Exchequer admitted that you must have a sort of close time before death when any dealing with property would not enable the payer of duty to escape. The Chancellor of the Exchequer is satisfied—I think he must be satisfied—that the death duties have been evaded, and evaded to a very large extent, and I want to ask him whether he is prepared to consider this question with a view to increasing the existing period before death. Honourable Members say "No !"but I put it on this ground—that every man who evades payment of the duty increases the burden of other people. He is not injuring the Chancellor of the Exchequer primarily. He is injuring the whole of the taxpayers who honestly pay their taxes, and who have to make good his evasion of the duty. I am simply putting it, and do not think unreasonably, that, if 12 months is found not to be a sufficient protection for the Revenue and for the other taxpayers, it is a fair question to raise for the consideration of the Chancellor of the Exchequer. I will conclude as I began, by saying that while I admire the manner in which the Chancellor of the Exchequer has made his statement, while we take very little exception to the mode in which he proposes to fill up the vacuum, which he himself has partly created by what we think the unwise reduction of the tobacco duty, and while I hope that there may be some opportunity consistent with the forms of the House of raising that question on the distinct and definite issue of whether the House prefers to impose taxation in lieu of the tobacco duty, still, apart from all that, I think the Chancellor of the Exchequer must expect, and it is only fair and candid to say so, that any and every attempt to tamper with the Sinking Fund and to endeavour to provide for the current expenditure of the year out of funds which we think ought to be set apart for the liquidation of the Debt, will be met with strong opposition on this side of the House.

* MR. COURTNEY () Cornwall, Bodmin

On the question of the tobacco duty I am inclined to agree with the Chancellor of the Exchequer. It could not be expected that the full effect of that reduction would be at once felt, but I cannot understand how honourable Gentlemen can deny that, sooner or later, the consumer will experience a greater gain, either in the reduction of the price or an improvement in the quality of tobacco. The action of the Chancellor of the Exchequer last year was a step in the right direction, and it would be most unwise for him to retrace his steps. The central fact of the Budget is the reduction of the sum available for decreasing the Debt by £2,000,000. In this matter, I might say we have been a little deceived by the Secretary of State for India, who, in a serious, deliberate, and well-expressed form, declared that nothing of the kind was going to be done.


I saw that my right honourable Friend had alluded to the speech of my noble Friend the Secretary for India, and I asked the. noble Lord what he said. He explained that he asserted that we did not intend to suspend the payment of the Debt. Neither do we.


The Government are going to suspend the payment of the Debt to the extent of £2,000,000 a year, at all events; but I understood my noble Friend the Secretary for India to say that they were not going to interfere in any way with the Debt. When I realise the scale of our naval and military expenditure now, and what the cost of war would be now or in the near future, I think it is eminently desirable that every possible means should be taken to reduce the debt in time of peace. The cost of the Crimean War, when warlike operations were much less expensive than they are now, was £100,000,000, and that war did not last very long, and was strictly localised. If we had a war now with a first-class Power it would cost in a very short time hundreds of millions of money, and add to the Debt, which would increase far beyond the amount we have succeeded in reducing. It is in view of this that I regret the Chancellor of the Exchequer should have met his deficiency of £3,000,000 by reducing the amount to be devoted to the reduction of the National Debt by £2,000,000. With regard to the proposed increase in the wine duty, I think it is a remarkable thing that the Chancellor of the Exchequer has selected for taxation the particular beverage which is supplied by the foreigner.

SIR C. DILKE () Gloucester, Forest of Dean

The Colonies are not foreigners.


In this respect they are. I was so rejoiced at what the Chancellor of the Exchequer said in regard to the proposal for the reduction of armaments that I heard with a pang of regret that the only resource by way of indirect taxation that the right honourable Gentleman has is to raise the duty on wine—a course which would at once raise reciprocal feelings not of a too friendly character on the part of the great nations of Europe. Is it to be supposed that the people of France and Germany will not feel the raising of the duties on wines? The rise is most severe, too, in regard to some of the cheap wines. The duty is to be increased from 2d. to 6d. a bottle on the lowest class of claret——




The duty on still bottled wines is to rise from 1s. to 3s. per gallon, that is from 2d. to 6d. a. bottle, and that is wholly out of proportion to the value of the wine. Such a proposal is a bad introduction to the Conference at The Hague. It must undoubtedly be regarded abroad as a hostile act on the part of this country towards the winegrowing countries of Europe—that the only increase of indirect taxation resorted to by the Chancellor of the Exche- quer should be in respect of wine. But the whole subject of the tax on wines must be reserved for, a later stage.

* SIR W. HARCOURT () Monmouthshire, W.

I do not rise for the purpose of discussing in detail the Budget on the night of its introduction; and certainly never was there an occasion on which the House of Commons and the country had more reason to deeply consider the proposals of the Chancellor of the Exchequer deliberately. That the time of the largest Revenue and the greatest prosperity, from a fiscal point of view, which this country has probably ever known should be the occasion chosen for what I can only call a repudiation of the obligations under which this country has placed itself with regard to the extinction of the Debt is, I confess, one of the most serious, and I will call it one of the most disastrous, proposals which has ever been made. I will not say it is the most disastrous, because another Chancellor of the Exchequer (Mr. Goschen), who sits by the side of the right honourable Gentleman, did the same thing. Twice in the history of this country has this proposal been made in times of extreme prosperity. The present First Lord of the Admiralty, who was almost as fortunate as the present Chancellor of the Exchequer in the times in which he administered finance, chose that period of prosperity to strike off £2,500,000 from the provision of the Debt; and now comes another Chancellor of the Exchequer who strikes off £2,000,000 more, and tells us that it is in order to secure provision for the future. The Chancellor of the Exchequer gave us admirable precepts on the duties of maintaining the obligation of redeeming the Debt, but I am of opinion that future Chancellors of the Exchequer will be much more likely to follow the right honourable Gentleman's example than to obey his precept. In my opinion, if thin Budget is passed, and it is agreed under present conditions to strike off what is practically one-third of the provision for the redemption of the Debt, that provision has practically come to an end. It is a fatal blow against that system which we have stood by through good report and bad report. Had we never to find sums equal to those which the right honourable Gentleman has been called upon to find?




Why, what was the sum which we had to find in 1894? Yet we did not resort to this proposal. We paid off the debt which had been incurred by the present First Lord of the Admiralty. It is true that at times when there were exceptional burdens the Sinking Fund has been suspended to meet the extreme necessity of the hour—that, I think, is a very legitimate transaction. But the permanent reduction of the Sinking Fund is a different thing, and is fatal to the whole system of finance. The Chancellor of the Exchequer asks, Are we to benefit the people of 1902? But what is the Government's policy doing for these people? Every day you are increasing the liabilities of this country to an extent which you cannot measure, and which you are only commencing. You are issuing the scrip which they will have to redeem. It is the men of 1902, it is your posterity, who will have to bear the enormous burdens of these great liabilities which you are every month creating. And while you are creating these prospective liabilities you are cutting off the provision by which they might be made easier to bear. I will not at this time attempt to enter into all the arguments which the right honourable Gentleman has so ingeniously put forward. He might have dispensed with a great part of his speech. He might simply have said, "I want some money, and I will take it out of the fund for the redemption of the Debt." With all respect to the right honourable Gentleman, all the rest of his argument was mere leather and prunella. He was determined not to ask the country to find the money to meet these obligations, which he believes—and, I daresay, believes truly—the country desires should be undertaken. But I remember the right honourable Gentleman the First Lord of the Admiralty on one occasion, when, I think, we sat together in the same Party, paid me the compliment to quote a sentence which I had used in regard to the great expenditure of the year 1878. I ventured to say then that it was a policy of blood and glory— things that in themselves were no doubt admirable, but that if you undertook the obligations you should not "bilk the bill." The present First Lord of the Admiralty quoted my phrase with approbation at that time. But he himself "bilked the bill" as soon as he became Chancellor of the Exchequer. He set the example to the right honourable Gentleman, in whom, I confess, I am disappointed. I was one of those who bad a profound faith in the inflexible virtue of the present Chancellor of the Exchequer. I know his opinions are sound. I know what his convictions are upon this question, just as much as upon bimetallism, in spite of all the trashy finance by which he is beset and surrounded. I regret this lapse of his from virtue. Never was there a greater example of the truth that evil communications corrupt good manners. His lapse is no wonder to me when I see him with, on the one side, the First Lord of the Treasury—whose abilities in all respects I admire, but whose financial opinions I do not share—and on the other side the First Lord of the Admiralty, who, I think, indulged during five years in every financial heresy which it was possible for a man to commit.

THE FIRST LORD OF THE ADMIRALTY (Mr. G. J. GOSCHEN, St. George's,) Hanover Square

The conversion of the Debt?


I apologise to the right honourable Gentleman. But when a Chancellor of the Exchequer finds himself in sufficient funds to effect a conversion of the Debt I think he might abstain from destroying the provision for redeeming the Debt. Perhaps the right honourable Gentleman thought it so great a feat to accomplish that he ought in some way to neutralise its effect. I deeply regret that this proposal has been made. I know how tempting it is to any man in difficulties to get rid of them by refusing to pay his debts. The right honourable Gentleman seems to have adopted the idea of Sheridan, who said that the worst possible course was to muddle away your income by paying your debts. The right honourable Gentleman has muddled away his income by not redeeming the Debt. I have always held that this provision is one of the greatest sources of strength to the British nation. It gives you credit at home and a character abroad. When we come to discuss this question I shall ask the House to consider which course was taken in 1859 by Mr. Gladstone, when he had to meet an exactly similar sum for an exactly' similar purpose. What was the language which he employed on that occasion, and which was reiterated and re-echoed by Mr. Disraeli, who supported him? They treated with scorn the idea that when the British Empire was called upon to make provision against a scare then existing of war with France they should have to resort to extraordinary measures regarding the Debt, and when those passages are recalled to the recollection of the House, I think it will be ashamed of this financial degeneracy. We shall hold ourselves forth to the world at large, that in order to maintain the greatness of our power and to play our part among the nations, we are incapable, we are too weak—I would say too cowardly—to meet the responsibilities which have been cast upon us.


I believe the great majority of Members on both sides of the House, especially on this, are delighted with the Budget which has been laid before the Committee. A very much larger deficit was expected than that which has actually occurred, and the manner of dealing with it as a whole will commend itself to the taxpayers of the country. But there are one or two matters to which I should like to invite the attention of the Committee, and especially the consideration of my right honourable Friend the Chancellor of the Exchequer. Of the enormous amount of £91,000,000 which he proposes to raise by taxation, far too large a proportion is raised by direct taxation, instead of indirect taxation. As far as I can make out from the figures, at least £60,500,000 is to come from direct taxation. A proportion of two-thirds of the taxation of the country raised by direct taxation is, I think, excessive, under all the circumstances of the case. My right honourable Friend stated that as there was a great increase in expenditure in recent years, with a further increase probable in years to come, it. was absolutely necessary to discover new productive sources of revenue. I only wish my right honourable Friend had called my honourable Friend and myself into council when he was locking for new sources of revenue. I believe we should have been able to direct his attention to a source of revenue far more satisfactory than any of the sources to which he has referred this evening. There is one matter to which I would invite the attention of My right honourable Friend. I think a large number of the taxpayers of the country will be disappointed that at this time of great prosperity he has not been able to reduce the income tax. An income tax of 8d. in the £ in a time of general peace, and when the outlook in foreign affairs is much more pacific than when it was passed, is far too high. The; income tax, which amounts to £18,000,000 sterling, presses very heavily indeed on many of the trading classes in the country. There can be no question about that. There is, I believe, some truth in the statement which is frequently made as regards the great centres of industry—that not infrequently returns are made on fictitious profits in order to maintain local credit. The income tax was imposed a. hundred years ago entirely for the prosecution of the war with France. It was repealed in 1816, and was not reintroduced until 1842 by Sir Robert Peel, who only proposed it for a limited period, and when it was increased at the time of the Crimean war it was entirely for the prosecution of that war. Therefore, in its foundation and essence, it is a war tax, and in time of peace should be kept as low as possible. If my right honourable Friend, instead of maintaining an income tax of 8d. in the £, producing the enormous amount of £18,000,000, would take off 1d. or 2d. in the £, and raise an equivalent sum on other sources for revenue, it would meet with the approval of the great majority of the trading classes of this country. If he asks how he is to raise a sufficient sum to cover the reduction and to obtain the deficit of £2,000,000, he could easily do it by imposing a. tax of 5 per cent. on all imported foreign manufactured goods. That would produce £5,000,000, and would enable him to take 2d. off the income tax, and obtain the £1,000,000 he asks for. The wine tax will, I think, commend itself to the great majority of Members on both sides. There is one matter in connection with it which, however, I regret. The wine industry is a growing one in Australasia and South. Africa, and it is much to be regretted that, with the Secretary of State for the Colonies by his side, my right honourable Friend did not say that wine imported from British Colonies would be exempt from the increased tax he proposes. I would venture to strongly recommend that course. As regards the extra tax on wine, the figures are interesting. The total value of the wine imported in 1898 was, in round numbers, £6,500,000, both in cask and bottle, the proportion being about half and half. Of this amount, no less than £3,500,000 came from France, and I rejoice that the Chancellor of the Exchequer has levied an additional tax on an article coming from a country which increases almost yearly the duty it imposes on imported British goods. The proposal of the Chancellor of the Exchequer will, in all probability, give Her Majesty's Government that leverage and basis of negotiation so long wanted with the French Government, not only with regard to the reduction of duty, but also the exemption from some of the vexatious regulations which now press so hardly on exporters of British goods. France sends to England no less than £53,000,000 worth of goods, and buys only £19,000,000 worth. That is a very unfair proportion, and I believe this extra tax on the £3,500,000 of wine imported from France will give the Secretary of State for Foreign Affairs and our Ambassador at Paris exactly that power of negotiation so long wanted. Two millions' worth of wine comes from Spain and Portugal, and with Spain we may be able to effect some very advantageous commercial bargains. The quantity of wine coming from the British Colonies is so small, that if it were exempted from the extra duty it would not materially affect the amount which the Chancellor of the Exchequer requires. In 1898 only £2,733 worth of wine was imported from South Africa, and only £112,565 from Australasia, a total of about £115,000. If the Chancellor of the Exchequer will, as I hope, consent to this wine being exempted from this extra taxation, his action will be greatly appreciated in both South Africa and Australasia, and will tend to cement that commericial federation which so many of us so earnestly desire. I have not been able to communicate with the Chancellor of the Exchequer on the subject, and, as it is exceedingly difficult to move an Amendment to a Resolution which has only been read from the Chair, it may be more convenient, instead of moving an Amendment this evening, to move it when the Finance Bill is in Committee, as that is the course which my right honourable Friend desires. In the meantime, I hope he will allow me, if I may respectfully do so, to congratulate him on the manner in which he has provided for the necessities of the country, and to urge him with all the power I can to give the most attentive consideration to the proposal to exempt from extra taxation the small quantity of wine imported from British colonies.

MR. GOLD () Essex, Saffron Walden

I must express the very great regret with which I have listened to the remarks of the Chancellor of the Exchequer with regard to the increase of the taxation on wine. I would remind the Committee that the introduction of light wines into this country was greatly facilitated many years ago by Mr. Gladstone, in order to encourage temperance. Prior to 1860, there was scarcely any trade at all in light wines, but at the present moment there is an enormous sale for light wines, imported from France and Germany. They are retailed to the public at a uniform price of a shilling a bottle, and any increase in the duty such as is proposed by the Chancellor of the Exchequer, would render it impossible for those wines to be retailed at their present price, which has induced the public to purchase them. That would be a retrograde step, and one calculated to check a great improvement in the habits of the people, which, I venture to say, has been brought about by the increased use of light wines. There is another point to which I should like to refer. It is whether this is a judicious moment for taxing the produce of a country with which we have lately had, unfortunately, some political differences. It will, I think, rather have the appearance of a desire on our part not to cultivate those very friendly relations which the Treaty of 1860 was meant to bring about. There is only one other point on which I would like to say a word. I feel sure that this increase in the wine duties will not bring the return which the right honourable Gentleman imagines; it will, I fear, check the consumption of these light wines, and the result will be most disappointing. Everything possible should be done to encourage the use of these wines, and it must be borne in mind that it is only of late years that anything like a trade in them has been developed.

* MR. BANBURY () Camberwell, Peckham

The right honourable Gentleman the Member for west Monmouthshire told us that the effect of these Resolutions, if carried, would be to reduce the amount which will be set aside for the reduction of the National Debt by something like one-third. But he evidently is not aware, or he must have forgotten, that in 1903 the reduction of interest on Consols effected by the right honourable Gentleman the Member for St. George's, Hanover Square, will take effect, and will give us an annual sum of something like £1,300,000. Therefore, the actual reduction will only be £700,000, except during the next four years, when it will represent the larger amount. The next point which arises is—is it an advantage to do away altogether with the National Debt? I say distinctly that it is not. The National Debt, if it is so large that it presses unduly upon the people, ought, no doubt, to be reduced. But what are the facts with regard to it? In 1815, in round figures, it amounted to £900,000,000, while our population was 15,000,000. At the present moment our National Debt is £634,000,000, while our population is nearly 40,000,000. Therefore it is impossible to say that the National Debt does in any way press hardly upon the people of this country. What good purpose does the National Debt serve? It provides a safe investment for the savings of the people. Undoubtedly the only drawback to my mind to the provision made by the last Chancellor of the Exchequer on this side of the House for reducing the interest on the National Debt was that it caused a rise in second-rate securities. Therefore I hold that, provided the Debt does not press unduly upon the resources of the people, it is an extremely advantageous thing to have a National Debt. The right honourable Gentleman the Member for Bodmin rather contradicted the statement of the Chancellor of the Exchequer that we were putting up the price of Consols against ourselves, and he said we had only to look at the list of good securities to see that their prices had gone up pari passu with that of Consols. He is mistaken there. It is true that that occurred in the year 1896, but since then good securities have fallen some 10 per cent. or 12 per cent., whereas Consols, owing to the large purchases made in the market by the Government, have only fallen about 1 per cent. or 1½ per cent. I believe the highest price was 113, and now they are down to about 111. I am not quite certain what the effect will be of the 5s. duty on foreign and Colonial bonds; but I am inclined to fear that it will inflict a serious blow upon arbitrage business, which is carried on by a comparatively small number of people, but which is a legitimate and important business.

MR. KEARLEY () Devonport

The honourable Member who last spoke need have no apprehension of the National Debt ceasing to exist. I think we are quite right in using our best efforts to reduce it in times of peace, because if a war should break out we should have that Debt largely augmented, and unless we decrease it in peaceful times the burden would become too heavy to bear, irrespective of the increase of population. Of course, we all hope there will be no more war, but at the same time I expect we are also agreed that that hope is not likely to be realised, and therefore it is our duty now to reduce the National Debt as much as possible. I want to say a few words with respect to the tobacco duty. When we considered this question last year, many of us thought that the right honourable Gentleman had made a mistake in reducing the duty on tobacco. He told us it was to be an experiment, and we now know that the result of that experiment has not approximated his estimate.


Yes, it has approximated it.


Your estimate has not been reached.


It is only £200,000 short, and that is not much in £10,600,000.


Still, we have lost nearly £1,000,000 of revenue, although the right honourable Gentleman thinks that next year it will be made up. I do not agree with him, and I fear he will have to expand his hopes over a much longer period. We objected to it last year, because we felt the reduction was going to benefit nobody whatever, and this year we are, in fact, enabled to point out that it has not materially benefited anybody. The right honourable Gentleman has recently carried on certain investigations, as the result of which he says he is prepared to prove that the public have got the full benefit of this remission. I am prepared to dispute that point with him. He does not appear to be aware of the fact that the tobacco manufacturers throughout the country—in Bristol, London, Dublin, and Liverpool—immediately the duty was reduced met together and formed themselves into a ring, and resolved that tobacco should not be sold below a certain price. The price fixed upon was 3s. 2d. a pound, and at the same time they reduced the discount which they had been in the habit of giving, from 6¼ per cent. to 5 per cent. Prior to this, tobacco had been sold as low as 2s. l1d. per pound. The right honourable Gentleman, in hi6 speech tonight, contended that the consumer was getting the full benefit of the remission, although he admitted it took a long time to percolate through from the manufacturer to the retailer and to the consumer. I venture to say it has not reached there yet. In the case of what are known as "cutting firms" I believe there has been some reduction in the price to the consumer, but let the right honourable Gentleman take his own neighbourhood, and let him have tobacco purchased in the small towns and villages round about, in the public-houses for instance, and I will challenge him to prove that there has been any diminution whatever in the retail price of tobacco. On the contrary, he will find that there has been none. Of course, he is perfectly entitled to 6ay that the consumer is better off in the matter of quantity and quality, and that may be so, because he gets about 14 per cent. more tobacco for his money, whereas he used to get it in the shape of moisture. The right honourable Gentleman mentioned several times that he had reduced the moisture 5 per cent. I do not think that that is quite right. I make it about 14 per cent.


I reduced it. from 35 deg. To 30 deg.


That works out as nearly as possible at 14 per cent., so that the consumer gets 14 per cent. more tobacco now in lieu of the water which he got under the old arrangement. But he was perfectly satisfied with the tobacco as he then had it, and I think the initial mistake was in reducing the percentage of moisture. If the right honourable Gentleman had reduced the duty and not the moisture the public-would have got the benefit of every penny, but the reduction of the moisture enabled the manufacturer and retailer to manipulate things in such a way that it became a perfect juggle, and the public could not tell where the benefit came in. I say that the consumer did not get the benefit of the reduction, and never will. The right honourable Gentleman mentioned another point to which I should like to refer. He said there had been a rise in the price of tobacco of from l½d. to 2d. per pound, owing to the war in tobacco-producing countries. May I remind him that that rise had already taken place before he reduced the duty? The conditions in Cuba and elsewhere were thoroughly acute and had been anticipated by merchants and manufacturers long before the remission was made in this House. Another thing. it is impossible to follow up a rise of that description. When a rise takes place in an article through some temporary cause it cannot be followed at once by the merchant and the retailer. Take the case of tea. Does the right honourable Gentleman suggest that the consumers pay the rise at the moment it takes place?


They do.


I disagree with the right honourable Gentleman. Of course. if the rise becomes permanent and lasts some six, eight, or 12 months, then the consumer does pay it, for the merchant will raise his prices. I say, however, that at the present moment the rise has not affected the consumer in the slightest degree, and it will not affect him so long as it proceeds from temporary causes. Of course, there has been, among the higher-priced tobaccos, some slight diminution in the retail price. The higher-priced packet tobaccos, which fetch 5d. or 6d. per ounce, have obtained the full advantage, and in some cases even more, of the remission of duty. But the cheaper and lower-priced tobaccos remain to-day at precisely the same figure as they stood at before the remission was made. I think it is a pity that the reduction of duty was made. It has lost a million of revenue, and I am sure that if the right honourable Gentleman could have foreseen what was going to happen he would never have taken that step. It caused a great amount of confusion for a long time after the duty was remitted. I would suggest to him it is well worth considering whether the percentage of moisture should not be replaced at its old figure, because then the consumer might get the full benefit of the reduction of duty.

* MR. BRODIE HOARE () Hampstead

I think the right honourable Gentleman will find there is an almost unanimous opinion throughout the country that our National Debt in practice plays a very important and permanent part, and if it were to be extinguished too rapidly it would greatly add to the difficulties of trustees and others in finding proper investments. If I understood the right honourable Gentleman aright, he is at present in this position, that his balances were affected at the end of the year by the fact that he was unable to buy a million of Consols when he wanted them.


I said that the National Debt Commissioners were unable to lay their hands upon Consols when they wanted them.


Yes; that is what I understood. We have £350,000,000 Consols in the hands of the public, and the Commissioners for the Extinction of the National Debt were unable to buy apparently the trifling sum of a million odd when they wanted it. What does that mean? It means that every time the Chancellor of the Exchequer, or the Commissioners for the Reduction of the National Debt, go into the market, they put up the market for Consols against themselves. In 24 years' time the Chancellor of the Exchequer will be able to pay off these Consols at par. Those who must hold Consols now, and there are many, are obliged to buy them at a constantly increasing price. What is the further result of that? It is that in the great scarcity of these investments municipalities and others are encouraged to indulge in excessive borrowing at rates which are certainly low from the investor's point of view, and they are induced to go into all sorts of outside speculations, which they had much better let alone. If I rightly understand the Chancellor of the Exchequer's figures, they are these. Last year we paid off some £7,000,000 of Debt, and even after a reduction of £2,000,000 in the amount set aside for the service of the Debt, we could pay off between £6,000,000 and £7,000,000 again this year. And, in 1902, there will be £2,000,000 further available for the purpose, so that in the course of the next decade we shall be paying no less than £9,000,000 a year off the National Debt. If the ideas of the right honourable Gentleman the Member for West Monmouthshire were to be carried out. we should in a few years hence be putting aside £25,000,000 for the service of the Debt, and devoting £16,000,000 of it to reduction of Debt. Surely no man of business, nobody in his senses, would ever dream of putting taxation upon the people with a view of paying off the Debt within an early period at the rate of something like £16,000,000 a year. I only rose to say that I am quite sure the Chancellor of the Exchequer, in what he has done in this respect, will receive the most cordial support of most of us who have business east of Temple Bar, and I believe he will also have a like support generally throughout the country.

MR. BROADHURST () Leicester

I fear that the hard-workers of this country are being made to suffer by the abstention of the Chancellor of the Exchequer from certain personal indulgences. If the right honourable Gentleman were a tobacco smoker he would understand more thoroughly than he does now how useless to the poor smoker has the remission of taxation on tobacco, made last year, proved. In the Debates last year on this question I told the right honourable Gentleman that the half-ounce men—the very ones who should be benefited—would receive not an atom of advantage from the remission. That has been proved to be absolutely correct. The name of the Chancellor of the Exchequer is naturally a popular one in many places, and, consequently, there is some temptation to make use of it. I have used it at nearly every meeting I have addressed since last Budget Day. I have asked my audiences to tell me how much they have benefited by the Chancellor of the Exchequer's reduction of the tobacco duty, and in no single case have I found anyone who has in the least degree benefited. It is perfectly true, as the right honourable Gentleman stated, that persons who buy expensive tobaccos, who buy it, say, in the pound-tin, have in many cases obtained a reduction of 2d., 3d., or even 4d., but it is the poor worker, it is the labourer, who should have the first consideration, and not the man who can afford to pay 6s. or 8s. for a pound of tobacco. The Chancellor of the Exchequer having, I expect, felt some misgivings as to the effect of the legislation on this matter, told us that from information which he had been able to obtain there had been a reduction in the price of packet-tobacco. I buy tobacco in every form, in packets, in tins, and even by the half-ounce, and, except in the tin form—the higher-priced tobacco—I have found no reduction. He went on further to fortify his position by saying he had learnt that a large part of the packet-tobacco trade was done amongst the working classes. But what happens in regard to packet-tobacco? If the right honourable Gentleman had been a smoker he would have known that packet-tobaccos are not popular with the working-classes, for the reason that a considerable percentage of the tobacco comes out in the form of dry dust. Therefore the man with a small income seeks to avoid these tobaccos, because the only way he can deal with the dry dust is to take it home and put it in a damp place, or lay a wet brick upon it, or put even a potato in the centre, in order to give it the necessary moisture. Therefore, when the right honourable Gentleman extols the packet-tobaccos, and advises working-men to buy them, he certainly is not benefiting them. Again, I say that if he had only possessed practical knowledge on this question, he would not have fallen into this error, and I trust that before he makes his next financial statement he will, by experience and demonstration, have made himself thoroughly acquainted with the ins and outs of this great and important subject. Having shown that I was right last year, and he was entirely wrong, I think I am entitled now to expect him to pay some attention to my admonitions. May I say one word with regard to the wine duties? I cannot imagine a more unhappy choice of an article upon which to levy increased taxation than still wines and cheap wines. The very object of Mr. Gladstone when he took off the duties on these wines was to encourage the consumption in this country of light drinks as against heavy and intoxicating drinks. Now the Chancellor of the Exchequer has reversed that policy. He is more heavily taxing the very wines which he ought, if anything, to have relieved, and I do suggest that if he had particularly desired to get more money from the wine trade he should have increased the duty upon the heavy and more expensive classes of wine. He should not have interfered with the still hocks and other light wines which, in the last few years, have come to be largely used by invalids and persons bordering upon being permanent invalids. There is a class of people who like to have wine upon their table; it does not matter what it is, but the cheaper it is the better, so long as it is called wine; they like to have it, in fact, whether it is good or not. Mr. Gladstone, in his great financial days, saw the desirability of that and encouraged it, but now the Chancellor of the Exchequer of to-day is discouraging this light drink which is so good for the community, and laying a tax upon it, while the heavier drinks of the country are left untouched. I have no doubt that the brewing trade and the whisky trade of the country will recognise in this Budget matters very favourable to their particular interests and shaped to encourage the development of their particular trades. Now, if there is an opportunity—I don't know whether there will be—of voting against the increased taxation on the light still wines, I shall vote against that increased taxation. I won't go so far as to vote against in- creased taxation on all wines, because there are other classes of wines which I think might fairly bear a considerable increase of taxation; but this class of wine ought most certainly to be left untouched by the Chancellor of the Exchequer. Now, may I ask the Chancellor of the Exchequer a question? Is this increased stamp duty on letters of allotment of a share or part of a share in a company—is this increased stamp duty to be on every allotment, however small the amount?


No; I made an omission there. I ought to have stated that the 1d. stamp would be still retained where the allotment was under £5. The stamp of 6d. will be on allotments over £5.


That has met my objection to a very large extent. But will the 6d. stamp be for any amount over £5?


Yes, the ordinary contract stamp of 6d. on all allotments over £5.


I think there ought to be an increase in the allotment stamp duty on all sums above £500, and a further increase on all sums above £1,000. Why should the Chancellor of the Exchequer not adopt a graduated scale in regard to this matter of stamps, as he did so sensibly, as well as so satisfactorily, with regard to the smaller incomes which were affected by the income tax. I think that these are matters of great interest, and which I hope the Chancellor of the Exchequer will be able to make an improvement upon them before we get through with the Finance Bill. Now, while some of the well-to-do men, some of the rich bankers and others who come as they describe themselves, from "east o' Temple Bar," seem to be highly delighted with this Budget, there are many people in the country who will be very disappointed with it. We have an enormous revenue, amounting to £122,000,000, if I understand the Chancellor of the Exchequer right, and there is not one farthing of reduction on the taxation of the poor. Of course, his answer will be that he has to meet current expenditure; but current expen- diture is the result of the Government policy, and therefore the Government which made the policy and created the demands have naturally to pay for these demands. But, then, we find fault with the policy that has led to these enormous demands. There is a poor agricultural community, and what may be called a poor river-side community, in our country, and these are the classes of the people who receive no benefit whatever, or at any rate very little benefit, from our national prosperity. All the benefit they have ever received is in cheap food. These people's wages are very much to-day what they were 30 years ago—there is practically no difference; and they are left struggling on from year to year and from generation to generation without a single benefit from the Budgets of the Chancellor of the Exchequer. I mean to say that the articles of every-day consumption, such as tea, coffee, cocoa, and other little articles which are so necessary for the domestic economy of the poor man's home, remain exactly where they have been for years. With all this enormous, this unprecedented prosperity, the poor are to be left without any benefit whatever. I do think that there will be widespread disappointment with the Chancellor's statement when that statement conies to be read by the people of our country to-morrow. I shall certainly, if no other Member of the House does it, take the opportunity to move Amendments in regard to the tea duties and one or two other subjects of taxation. When we get to the Committee stage I shall take the sense of the House as to the desirability of taking at least a part of the duty off tea, which would benefit those most entitled to benefit, and would not, in my opinion, lead to any great deficiency in the income of the Chancellor of the Exchequer.

* SIR E. ASHMEAD -BARTLETT () Sheffield, Ecclesall

The honourable Gentleman who has just sat down has made some very amusing and interesting statements. He made an attack on the Chancellor of the Exchequer with regard to the non-reduction of the price of tobacco in small quantities. His complaint should be addressed with more correctness to some of the great tobacco dealers on his own side of the House, rather than to the Chancellor of the Exchequer. In regard to what he said as to the duties on light wines, will the honourable Gentleman contend that the working classes drink these light wines?




The honourable Gentleman was speaking ostensibly on behalf of the working classes. I am quite certain that very few of the working men drink these light wines, and if they ever did so, they would not drink them a second time. The second part of the speech of the honourable Gentleman consisted of the usual political clap-trap. He described the increase of the expenditure of the country as due to the policy of the Government. The honourable Gentleman ought to know well that that expenditure is not due to the policy of Her Majesty's Government, but has been incurred for national defences, and that these national defences have been rendered necessary not by the policy of the Government, but by the action of Foreign Powers. Ever since 1893 this country has had to deal with a great conspiracy against our Empire. Why, honourable Gentlemen on the other side of the House are never tired of holding out instances in which the Government has not sufficiently safe-guarded the interests of the country; and I daresay we shall continue to have politicians denouncing the Government because they have not been strong enough in their dealings with foreign countries in such cases as Siam, Madagascar, Tunis, and China. The honourable Gentleman should remember how, for the past five years, British interests have been attacked, especially by two Great Powers in Asia, in West Africa, in China, and in South Africa, and how with great difficulty that organised conspiracy has been checked, and has only been checked because, by a large expenditure, this country has at last created a great and efficient Fleet. Sir, the right honourable Gentleman the Member for West Monmouth, whose re-appearance in this House is so warmly welcomed by every Member, indulged his humour by inventing rather a catching phrase—"bilking the bill. "The right honourable Gentleman has been for many years a leading member of a great Party in the State, and he has been responsible for the conduct of that Party, which has done something worse than "bilking the bill"—that is, destroying or bilking the results of great national efforts. The right honourable Gentleman and his Party were responsible for one of the greatest efforts of the last two generations, the Crimean War, which cost £100,000,000 and the sacrifice of nearly 50,000 British lives. They were responsible for that war, first by their policy, and for entering upon it before the country was prepared for a great war; and secondly for their weakness in the way they carried it on. Not only did they cause that war, but they neglected their duty after it, and then they deliberately threw away all the results of it. The policy of the Liberal Party, before and after the Crimean War, was worse than "bilking the bill." It is made a matter of complaint that the present Government has in two years increased the expenditure of the country by something like £8,000,000 or £10,000,000. But, Sir, that £8,000,000 or £10,000,000 has saved us from one great war, the cost of which would have been something like £300,000,000 or £400,000,000, and will, if the Government are courageous, in all probability save us within the next few months from another great war, the cost of which would probably be much greater. I believe that by that expenditure of £10,000,000 this country has been saved from an outlay of at least £500,000,000, and from a loss of human life and suffering simply incalculable. But what about the actual operation of the Budget? I listened with great interest to the speeches of the honourable Member for Peckham, and the honourable Member for Hampstead, both of whom the Member for Nottingham would describe as hailing from "east of Temple Bar," and are well qualified to speak on finance. Both of these honourable Gentlemen dealt with the question of the National Debt in a practical and sensible manner. I believe with them that the wiping out of the National Debt would be one of the greatest misfortunes that could happen to the country. I hold that the National Debt is, as it at present stands, a moderate debt, and it is an immense boon to the country. The National Debt of France is more than double our Debt. The honourable Gentleman who has just sat down spoke of the enormous burdens entailed on this country by rasing a revenue of £120,000,000. Why, Sir, the French pay in taxation of all kinds £145,000,000. Where should we find a safe investment, or, as the honourable Gentleman for Hampstead calls it, an easily realisable investment, if we had not a National Debt? There would be no really secure, solid, permanent investments for those who are in the position of trustees, and those who are not capable of choosing sound investments for themselves, if there were no Consols. I noticed that the Chancellor of the Exchequer and the right honourable Gentleman the Member for West Monmouth both placed considerable hopes in the results of the coming Peace Conference. I trust these hopes will be realised. I would have preferred to see some tangible proof of a peaceful policy given by the Tsar, who is the author of the Peace Conference. I would have liked to have seen the £9,000,000 given last year by the Tsar of Russia to his fleet dispensed with; and I would have liked to have seen the enormous warlike preparations going on all over the Russian Empire diminished. It would have been more hopeful if, on the eve of that Conference, its Imperial author had not by force destroyed the free Constitution of Finland, in order to further increase his enormous army. I trust these hopes in regard to the results of the Peace Conference will not prove illusive. In the long run the English people will be convinced that the best way to avoid war, and to conserve our great Imperial interests and the interests of the human kind all over the world in liberty and progress, is to take up the position which the Government have taken—that of "the strong man armed who holds his house in safety.' I beg to offer my hearty congratulations to the Chancellor of the Exchequer on the admirable financial statement he has made.

MR. J. A. PEASE () Northumberland, Tyneside

I rise to protest against tampering with the Sinking Fund which the Government proposes. It seems to me that the supporters of the Government are driven to desperate straits when the honourable Member for Central Sheffield has to rise in his place and to contrast the "bilking of the Bill" with the worst things that have happened in the past. He has been alluding to the responsibility of the Liberal Party for events prior to 1857. There is not a single Member of this House who was here in 1857, and to dwell on what happened before that year is a somewhat far-fetched reason for supporting the present Government in the policy just announced. When the Chancellor of the Exchequer was alluding to the reduction of the Sinking Fund from £25,000,000 to £23,000,000, but in favour of which we have heard nothing, I thought I had heard some time ago utterances from the Chancellor of the Exchequer on the principles of sound finance which would have prevented him from ever adopting the policy which he has now suggested to the House. I have been looking back to the Budget Speech made by him in 1896, in which he was alluding, as he did this afternoon, to the enormous amount of money paid in recent years in liquidating our national liabilities. He then said— We have paid off in 39 years £190,000,000 of debt, and £100,000,000 of that has been paid off in the last 13 years. Some may think that our efforts have been wasted, and that we should have done better if we had allowed the money to fructify. as it is said, in the pocket of the taxpayer. That is not my view.


I said so to-night.


He then went on— By this self-denying course the Parliament and the people of this country have raised up a reserve fund of incalculable importance—a reserve fund which, if the time of need should come when this country should again have to fight for its life, would enable us, without imposing a single extra penny of taxation, to raise a couple of hundred millions for the defence of the country, and without imposing, either, an atom more debt upon the people of that day than our predecessors bore without a murmur in 1857.


I maintain that policy.


The right honourable Gentleman continued— That is a thing which, I think, this country may be proud of. It is a source of incalculable strength to this country, and, although it may sometimes be necessary, even in time of peace, as it was necessary in 1885, when I was last responsible for the finances of the country, to postpone temporarily the operation of the Sinking Fund, yet I trust that Parliament will never permanently depart from the wise and prudent policy in this matter which it has hitherto pursued. I think that Parliament, if it reduces the Sinking Fund from £25,000,000 to £23,000,000, will be departing from the policy which every Parliament has adopted in recent years. Of course, the Chancellor of the Exchequer desires to justify his attitude, but I am perfectly certain that in 1897 the Chancellor of the Exchequer had no more idea of justifying a reduction of the Sinking Fund from £25,000,000 to £23,000,000 than he even had last year. Now, the First Lord of the Admiralty has also repudiated such a policy as that which has been adopted by the present Chancellor of the Exchequer. In 1887, when he himself was reducing the Sinking Fund from £28,000,000 to £25,000,000, he did it under exceptional circumstances, and he stated what the exceptional circumstances were. He said— The Sinking Funds have had to be suspended, and they will be suspended again, so surely as anything occurs which strains in the slightest degree the resources of the country. I admit the plausibility of the argument—that it is better you should suspend the Sinking Fund when there is distress, rather than that you should impose additional taxation. But I am not satisfied that the argument is sound. I think it is a most wholesome restraint upon any expeditious or costly undertakings that it should be necessary to impose taxation, and that you should not be able to cut the knot simply by suspending the Sinking Fund. What has happened in the meantime has been that our expenditure has increased in the last four years under Her Majesty's Government by £20,000,000, and this is largely due in connection with costly expeditions, and costly undertakings, but not at all to times of distress. The First Lord of the Admiralty in 1877 proclaimed that the suspension of the Sinking Fund could be only justified by exceptional causes, and yet he is a party to tampering with the Sinking Fund and "bilking the bill" in the present times of exceptional prosperity. I think I was fully justified in the action I took last year in moving that the reduction of taxation should take place on tea rather than on tobacco. We have heard to-day a good deal about tobacco, and, personally, I am unconvinced by the speech of the Chancellor of the Exchequer that any real bene- fit has been given to the poorer classes of the country by the reduction made last year in the tobacco duty. I have endeavoured to obtain information from all over the country as to the prices of the quarter ounce, half ounce, or ounce packages of tobacco which the working classes buy in very large quantities. But I certainly fail to find that there has been any reduction in the price of these small quantities. It is all very well for the Chancellor of the Exchequer to allude to the reduction of tobacco sold per pound, but the working people do not buy their tobacco by the pound; they buy it in quarter ounce, half ounce, and one or two ounce packets. The Chancellor of the Exchequer stated that he was glad that he could not be charged, at any rate, with the increase of 2d. in the pound in the price of tea. No; but what he did do was to refuse the desire of those on this side of the House last year to reduce the tax on tea. Had he so reduced it then, the people, instead of paying 2d. extra per pound for their tea, would not have paid any increase at all. I regret very much that the Chancellor of the Exchequer has not seen his way to reduce taxation. I regret very much that, at a time of unexampled prosperity in the country, is the time that he has thought it desirable to tamper with the Sinking Fund, which, I am sure, will make his duty still more difficult when he comes to find the money for our constantly increasing expenditure.

Upon the return of the Chairman after the usual interval,

* MR. MARKS () Tower Hamlets, St. George's

I think it would be interesting to know—and it is to be hoped that in the course of this evening's Debate we may learn—to what, if to any, extent the £700,000 increase upon the cost of the Postal Service is attributable to the present system of management of the Post Office Savings Banks. Those banks have on deposit something like £150,000,000 to £160,000,000, which has to be invested in Consols at the market price, which to-day is somewhere about III. The depositors receive interest at the rate of 2½J per cent., a rate which is barely obtainable on Consols at the present price. This is an important item, in view of the fact that the deposits are increasing at the rate of something like £9,000,000 a year, and it is rather to investments from this quarter than to purchases by ordinary investors that the continued rise in prices may be attributed. These Savings Banks, strangely enough, have no coin reserve. In time of danger, or what is equivalent, in times of panic, any run upon them, and any great demand for payment out must inevitably result in a sale of Consols, and that sale must necessarily take place at an inopportune time, and upon disadvantageous terms. The only alternative would be the borrowing of money on the security of these Consols, and I need scarcely say that in times of panic even upon Consols money could not be borrowed, except at a much higher rate than the Consols themselves return. In the estimate we have before us for the coming year it seems that the expenditure in connection with the Post Office is put down at £8,553,000, as against £8,200,000 for the last year, so that this increase of £700,000 is not a mere accident and it is not a mere temporary increase, but part of it at least may be regarded as more or less of a permanent nature. Under these circumstances, I do think it is important that we should learn in the course of this Debate to what extent the increase is attributable to the present system in connection with the Post Office Savings Bank deposits. I would also call the attention of the Committee to the fact that while deposits made in the Savings Banks are being invested in Consols at III, so far as I have been able to learn, no preparation is being made for the inevitable time 24 years hence when these Consols will have a value of 11 per per cent. less than we paid for them. I take it that the Post Office Savings Banks, whilst they were designed to aid and encourage thrift, were not intended to enable people to obtain a remunerative rate of interest at the expense of the nation at large. I should like to say one word with reference to the proposed new stamp duties. To the proposed quarter per cent. duty upon the nominal value of foreign securities, I anticipate that there will be very strong objection in the City, particularly among the "arbitrage" dealers. The Chancellor of the Exchequer did not say bonds and he did not say shares. Therefore, assuming that it is to extend to all foreign securities, I should judge that this would bring in a very much higher revenue than that which he has estimated. It is well within the knowledge of those who understand "arbitrage" dealings in foreign securities that not unfrequently a turn of one-eighth or one-sixteenth per cent. is considered a very fair turn, but if that is to be wiped out by a quarter per cent. stamp duty, obviously great difficulties will be created, and the profits on such operations will be wiped out. With regard to the proposed duty upon companies' capital, I foresee no objection, and I do not think that any objection will be urged against the proposed duty on allotment letters, though I would suggest that the 6d. stamp on the latter might be further increased on amounts beyond £500. If it could be done, I should like the Id. stamp on allotment letters to continue up to £5.


The right honourable Gentleman said that the Id. stamp was to continue up to £5.


Yes, Sir, but the 6d. stamp is to serve for anything beyond £5. The suggestion I should make is that beyond £500 the stamp duty might be even further increased. The Chancellor of the Exchequer expressed the hope that by increasing the capital duty of the companies, and by increasing the stamps on allotment letters, something might be done to check over-capitalisation. I do not, however, share his hope in that respect, for whatever increases the expense of forming and floating companies must tend to increase their capital. These expenses are necessarily paid out of capital in one way or another. With respect to what has fallen from one or two honourable Gentlemen opposite with regard to the action of the Chancellor of the Exchequer on the subject of the Sinking Fund and terminable annuities I have only this word to say. Those honourable Gentlemen do not dispute the necessity of raising the revenue which by this Resolution will be raised. They do not dispute that the necessity has arisen to provide the means to defray the expenses incurred in connection with our national defences. They must be well aware that one cannot make omelets without breaking eggs. They are loud enough in their denunciation of the present proposals, but so far I have not heard any alternative proposal put forward for meeting these admitted necessities, and, therefore, I am rather forced to the conclusion that these criticisms are inspired less by a feeling of indignation at outraged financial principles than by a feeling of disappointment that the Budget proposals, which it was predicted would furnish a valuable political cry in the country, have failed to realise their expectations in that direction. If the arguments we have heard to-night are the best that can be brought against the Budget proposals, I, for one, venture to believe that the Budget will receive not only the support of this House, but that it will receive the cordial endorsement of the public at large.

* MR. W. H. HOLLAND () York, W.R., Rotherham

I should like to take this opportunity to associate myself with that large and important band of critics, by no means confined to this side of the House, who are united in condemning the proposals of the Chancellor of the Exchequer this afternoon. I must confess myself that I am very much disappointed with the Budget proposals put before us. Acknowledging, as I do, the very high financial reputation of the Chancellor of the Exchequer, I think it was only reasonable to expect that something better might be brought forward than this tampering with the Sinking Fund. If it is impossible to pay our way under highly prosperous circumstances, I should like to know under what circumstances are we likely to pay our way? Twenty-five years ago, or thereabouts, the sum of £28,000,000 was fixed as reasonable for the service of this Debt, but during the period which has elapsed since that Sinking Fund was founded, I think we must admit that the country has increased enormously in financial strength, wealth, and resources; and if, as a nation, we could afford to find £28,000,000 a quarter of a century ago for this particular service, it is indeed very hard to justify the position which is taken up to-day by the Chancellor of the Exchequer when he declares that £25,000,000 is too much, and that it must be reduced to £23,000,000. If we were to take the present income tax assessment, and compare it with that of a quarter of a century ago, it would indicate that £38,000,000 to-day would involve us in no more sacrifice than did £28,000,000 then. I think further that it is a very dangerous innovation indeed to reduce the amount set apart for this particular task in proportion as the Debt itself is reduced. On that principle how can you ever extinguish a debt? I think it is clearly the best course to take to maintain the contribution in times of peace. Then we have something to fall back upon in times of emergency. If this is done, then our financial position will become strong indeed, and we shall be in a position to face any eventualities which may lie before us. If the same ingenuity had been exercised by the Chancellor of the Exchequer during the last few years in avoiding expenditure as has been exercised to-day by the right honourable Gentleman in evading liabilities on account of debt, our position to-day would have been much more hopeful than it is. We have heard from the Chancellor of the Exchequer that our present national expenditure must not be regarded as extraordinary, and not likely to recur, but rather as our normal expenditure. Now, I think that that is a very serious statement to be made by the Chancellor of the Exchequer. We all of us are very wishful that there may be some practical and useful results from the forthcoming Peace Conference; but I am bound to say that that expression of opinion from the Chancellor of the Exchequer has by no means a hopeful ring about it. I think, on the contrary, it was much more hopeful the other day when the First Lord of the Admiralty made his annual statement, for he indicated pretty clearly that although the amount which he asked the House of Commons to provide was exceedingly large, yet it was capable of revision if other countries would themselves also reduce their naval outlay. I think that was a hopeful position for the First Lord of the Admiralty to take up, but there is no such hope about the announcement made by the Chancellor of the Exchequer this afternoon when he states that the present enormous expenditure is not extraordinary, but is an expenditure which may be regarded as normal. I noticed that there was some reference to the death duties this afternoon, and two statements in regard to them were brought before the House, to which I should like to refer. One of them indicated that in the opinion of the Chancellor of the Exchequer the proceeds of these duties during the next year would be less than during the last year. That is an important statement for the Chancellor of the Exchequer to make. Another statement which he made was that the falling off which had occurred during the last year was most conspicuous in large estates. I hope that does not suggest that in the case of the largest estates there is the most evasion going on. I was much edified, as other Members were, by the remarks of the honourable and gallant Member for Sheffield. I observe that in his criticism the chief sin which he attributed to the Chancellor of the Exchequer was that he had not called him in so that he might have had advised him as to what should have been done in the matter of duties. It is lucky, I think, that he did not, because if the honourable and gallant Member had been called in to the assistance of the Chancellor o f the Exchequer I think we should have had "confusion worse confounded." I notice that the honourable and gallant Member was delighted that there would be an increase in the wine duties. Now, what was the reason why he was so delighted? It was because in his opinion these duties would hit France. Now, I entirely dissent from the views of the honourable and gallant Member for Sheffield in this respect. I think, on the contrary, that when these duties are imposed they will not hit France, but will hit us here in this country who consume the wines. I am sure it cannot have passed out of the recollection of the honourable and gallant Member for Sheffield what was the effect when last the duties were increased on sparkling wines—I suppose on that occasion he would say that the raising of those duties was a blow levelled at France. My recollection of the operation of that increase is that the wine lists of all the hotels in the country were increased, and instead of paying 10s. a, bottle for champagne you had to pay 11s. or 12s. That does not look much like hitting France, but it is hitting those who consume the wines in this country, and the more wine they consume the more heavily they are hit. I do not wish to express any opinion now as to the merits or demerits of this kind of taxation. It may be defended I know on many grounds, but I have heard of none so curious as in the United States, where the new beer duties were justified on the ground that unless a man drank a lot he would never feel them, and that by the time he had drunk a lot he would be in such a. condition) that he wouldn't care what the duties were. I observe that the honourable and gallant Member for Sheffield, if he had been called in by the Chancellor of the Exchequer would have proposed instead a 5 per cent. duty on manufactured goods. I must confess that I think the honourable and gallant Member will have a very long time to wait before he can induce any Chancellor of the Exchequer to agree to such a proposal. So far as I have been able to judge, the present Chancellor of the Exchequer is as sound in regard to Free Trade as any previous Chancellor of the Exchequer. Such proposals as those indicated by the honourable and gallant Member for Sheffield would of course be purely protective. And protection, I think, will never meet with favour at the hands of the present Chancellor of the Exchequer. The duties which he proposes are, on the contrary, not protective in any sense, but are solely for the purposes of revenue.

* COLONEL MILWAED () Warwick, Stratford-upon-Avon

I should like, if I may be allowed to do so, to offer my hearty congratulations to the Chancellor of the Exchequer for the extreme skill with which he has extricated the Government from a very difficult position. I do not say that the Chancellor of the Exchequer is responsible for this expenditure, but I do say that he has shown extreme skill in the proposals which he has made to meet it. I myself have never been an advocate of panic naval expenditure. I have always thought that two circumstances have been often forgotten, and they are that this country is able far more quickly than any other country to build ships and equip them in time of war: and, secondly, we should also remember that if this country met with disaster, we are able probably to build ships quicker than any two countries could destroy them, because it must be remembered that, even if we were involved in war, I presume that our ships would not be destroyed without inflicting some considerable damage. Holding the views I do, I still think that we have every reason to congratulate ourselves upon the state of our preparedness and the strength of our Navy during the September of last year. Upon that the country was united, and we came out of that danger with honour, and I do not think anyone in this House will deny that the great expenditure which we have incurred on our national defences is a matter of very great and sound economy. I look forward with great interest to the Treasury Minute which will appear to-morrow morning upon the subject of the proposed changes in regard to the terminable annuities. I did not exactly gather how that question affects the Budget now before the House, or whether the Chancellor of the Exchequer is looking forward really to something which would occur in the future. But with reference to the suspension of a part of the Sinking Fund, I am heartily in accord with the Chancellor of the Exchequer. Now, there are certain circumstances which must be remembered in connection with that. First of all, when the sum of £25,000,000 a year was set aside for the payment of interest and Sinking Fund on the National Debt, that Debt was very much larger than it is now, and the interest also was very much larger than it is now. We must remember that during the last four years we have paid over £29,000,000 in liquidation of that debt. Therefore, it is quite reasonable that, as the Debt has diminished, we should diminish the sum which we pay off year by year. The figure which I quoted, mentioned by the Chancellor of the Exchequer, was, that out of the £25,000,000 at present set aside for the payment of interest and the Sinking Fund £17,264,000 is for interest and management of the Debt, and £7,736,000 for the reduction of the Debt. Then there are certain other circumstances which must be remembered. First of all, we pay at the rate of £111 for every £100 we buy; secondly, the amount of Consols which is available for other purposes is steadily diminishing year by year. According to the Chancellor of the Exchequer the amount of the Debt held by the public is now £358,000,000. Now, bankers, insurance companies, and foreigners are always trying to obtain these Consols, which are the readiest and safest mode of investment. Now, the smallness of the amount on offer places our merchants and the public generally at a very great disadvantage. Just before the commencement of this sitting a Member of this House, who is a banker, told me that so great is the difficulty of obtaining Consols at the present moment that he was perfectly certain that if he wished to buy a quarter of a million of Consols it would force the price up 1 per cent. Under these circumstances it does seem to me to be foolish to be perpetually buying back the Debt at a great premium year by year; and when questions of this kind arise and the country is in some difficulty, it is a wise and sound policy to reduce to a certain extent the amount of the Sinking Fund. Personally, I confess that I should have had a little more courage than the Chancellor of the Exchequer has displayed, and I should have raised the whole £3,000,000 while I was about it by attacking the Sinking Fund. I am not quite so sure that I approve so fully the other smaller economies which the Chancellor of the Exchequer has resorted to. I do not know what the effect will be of the quarter per cent. duty on foreign bonds. But I do not. think that the effect of raising the duty on the issues of companies from 2s. to 5s. per £100 has been quite realised by the right honourable Gentleman the Chancellor of the Exchequer. I quite admit that so far as bogus companies are concerned I should like to see the duty raised to £5; but the right honourable Gentleman is aware that there is going on in this country at the present time the conversion of private firms into private limited companies, principally for family reasons, and I do think that such conversions will be very hardly hit by this raising of the duty from 2s. to 5s. per £100. I am not speaking of public companies, but private concerns which are being turned into private companies for the purpose of providing for the families of the proprietors. I think if the right honourable Gentleman enquires he will find that it is really a thing which tends to the very great advantage of the country. It is not a question of a private individual giving up his interest in a concern, but merely of becoming directors in a concern in which they are interested. For a company the capital of which does not exceed £100,000 the Chancellor of the Exchequer will receive instead of £100, £250, and I think that that is a very heavy sum to pay for the privilege of turning a private concern into a private company. With regard to the increase of the wine duties, of course, if that is intended for the purpose of bringing some pressure to bear upon France in our commercial interest, I should heartily approve of it. We have far too few means of bringing pressure to bear upon her. We are a very large customer of hers, and she is a small customer of ours, and it is quite possible that occasions may arise in the future when it may be necessary to reduce these duties again in our mutual interests. I have to express my regret that there are two omissions from the Budget. One is, that there has been no reduction in the rating of the tithes of the clergy. This matter has been brought up on one or two occasions, once two years ago; and on that occasion the right honourable Gentleman the Chancellor of the Exchequer told us that we must await the Report of the! Taxation Committee. Who had a Debate upon the subject last session, and at the' end of that Debate, in deference to some advice which I received from the honourable Gentleman the Member for the Oxford University, I withdrew my Motion, but such was the feeling in the House in favour of it that the honourable Gentleman the Member for Northampton insisted upon dividing the House in favour of the doctrine of reducing the rating of our clergy. I am free to admit that the honourable Gentleman was followed into the Lobby by a very small number, but when you find the honourable Member for Northampton telling in favour of a reduction of taxation of the clergy, it is a matter to be considered. But since then an interim Report has been issued by the Committee, and it speaks in very strong terms of this question. I doubt very much whether you would find any question in any Report of any Committee more strongly dealt with than this. But as the right honourable Gentleman has said, his action on that matter must depend upon the Report, and I hope that the very small amount that is required for that purpose will be forthcoming. There is another question in which the right honourable Gentleman the Chancellor of the Exchequer is not in agreement with me, and that is the surtax on rum imported from the West Indies; I think it does behave us to be generous where we can to the West Indies, and if we can meet the views of the West Indies in this respect, I shall be grateful. I conclusion, I congratulate the Government upon their Budget.

* SIR S. MONTAGU () Tower Hamlets, Whitechapel

I cannot agree with the right honourable Gentleman the Chancellor of the Exchequer in the main feature of his Budget, which is the reduction of the Sinking Fund. It is a process which cannot be justified at the present time. If we are not to pay off our debts in such times of peace and prosperity as these, when shall we ever pay them off? It is not what is called Conservative finance, and I am absolutely astonished that so eminent a financier as the right honourable Gentleman should have taken refuge in such means as these, which can only be justified in times of war, or when we have incurred a very heavy permanent expenditure. The difficulty which has been raised by himself and other Members of the House about paying off Consols at £10 or £11 premium could easily have been avoided in various ways. Two and a half per cent. Consols are 103½, and the existing floating debt could have been reduced and even entirely extinguished. There is also the proposal of the Chancellor of the Exchequer to found a Colonial Fund with the guarantee of this Government, and that would give an opportunity to him of taking up that fund. The Bank of England hold a great number of Consols, and they would be glad to convert them on reasonable terms into terminable securities; then, again, the Post Office Savings Bank could have their investments extended to other securities; they might be permitted to buy Crown Colonial Loans and London County Council Stock, and by that means a large amount of Consols would be left free to be paid off, and even if the Government bought them at a premium of 10 or 11, though one Department of the Government would lose, another, the Post Office, would gain. And as the alternative of that, the Chancellor of the Exchequer might have found other sources out of which to raise the small amount he requires in a far more satisfactory manner. There, for instance, are ground values which he might have taxed, and he also very properly might have largely raised the charge for the licenses for public houses. There are a very great number of tied houses, and why should they not pay a heavy licence for their privileges. I think the right honourable Gentleman is quite right to impose the stamp duty on bonds and shares payable to bearer when they are issued out of the country. I have advocated such a duty for years and years, but nothing has been done until the present time in that respect. It seems to me to be perfectly monstrous that hundreds of pounds of securities should be sent here and negotiated here free from duty, and that the same securities issued here should be subjected to a heavy stamp. One or two honourable Gentlemen have raised the question of whether such a course as is proposed would interfere with the dealing of stocks and shares as between one country and another. Now, I know a great deal about that, and I say that it will make no difference whatever. Germany has raised the duty from 4s. to 10s. on bonds sent over there for negotiation, and France has raised it from 3s. to 10s., and there is no complaint whatever. That dealing in bonds and shares between one country and another is not in any way hindered provided the stamp duty is not so high as to be to our disadvantage. If we keep our duty below or not higher than that of other countries we cannot interfere with trade. I have been advocating that this source of income should be tapped, and I hope, now that the right honourable Gentleman has availed himself of it, that the result will be most satisfactory. As the stamp is a, final one, of course you naturally expect more in the first and second years than later on. The First Lord of the Admiralty tried to secure a revenue from these securities by placing a stamp duty of 1s. per cent. upon them some years ago; that was a most inconvenient way of trying to raise revenue, besides a great many shares were held back. Dealers would hold back their shares and borrow stock at interest, and thus avoid the stamp altogether; then there was an option to commute this 1s. a year by a payment of 10s. per cent., but that was not availed of, because everybody thought that he could escape with 1s. duty. I am glad that the right honourable Gentleman has been content with a 5s. duty, as I have always advocated, because a 10s. stamp might operate against trade. I suppose we shall hear later on how the right honourable Gentleman proposes to deal with the currency expressed on the face of these bonds, and whether he will take the gold dollar at 4s. and the paper and silver dollar at 2s. This has been done by Japan. Japan has converted 1,000 yen, which is the Japanese dollar, into £100 sterling, and issued bonds at about 100 sterling. There are other modes of increasing revenue; for instance, by a lower stamp duty on bills of exchange. I am sorry that the right honourable Gentleman has not included that subject in his Budget; but if he is in doubt upon that point, if he would appoint a Committee to inquire into the whole question of stamp duties, and also the diverse regulations affecting bills of exchange, he Would increase revenue indirectly by bringing profit to this country which does not come here now, and give him a benefit in other directions. I trust that he will act in such a manner next Session as to be able to make the necessary financial arrangement, and avoid touching the Sinking Fund.

* MR. GIBSON BOWLES () Lynn Regis

This is a most remarkable Budget, remarkable for the expenditure involved, still more remarkable for the ease with which the income to meet expenditure is obtained, and most remarkable for the simplicity—I will not say brutality—of the method adopted for dealing with this large expenditure next year. First, as to the income. If we take the revenue as it was left by the late Government, and compare it with that of the last four years, we shall see that the Chancellor of the Exchequer has had at his disposal nearly £58,000,000 more than they had. The late Chancellor of the Exchequer estimated and provided for an expenditure of £96,000,000 in 1896, and that included an increase for the Navy and Army, and in four years that amount has been increased by the present Government by more than £57,000,000, not counting, of course, the expenditure which has been met by temporary loans, such as that for Naval and Military Works and Public Offices. I do not say that the expenditure is unnecessary; the House has agreed to it, and there is an end of it; but many Members attribute it solely to the great increase in the Navy and the Army. There are Members who put all increases down to the Navy and the Army; and just as there was once a, stiff-necked people who said always that it was "Jeroboam the son of Nebat which made Israel to sin," they hold that the Navy and Army are the Jeroboam of to-day. But there is the item of Education, for which we provide something more than £10,000,000. I do not say it is not wanted, as honourable Members suggest, but I do say that it is an extremely large sum to provide for the education of other people's children, who are quite ready and able to provide it for themselves. Then there is the increased expenditure in the way of inspectors of every kind—inspectors of factories, of trades, of foods, of health, of ships, and other things. But this increase to the Army, and to the Navy especially, what is that due to? It is due directly to the determination of the people of this country to carry their commerce to new markets, by persuasion if they can, or, if need be, by force of arms, and equally by the determination of the people here that they will foster their Colonies. All these things have to be taken into consideration, and the Chancellor of the Exchequer must take account of them. Moreover, I am sorry to say that I believe this country is so rich and so prosperous that it does not care what it spends. And I do not believe that you will ever get the smallest tendency to economy until the voter is made to feel that he is hit by the taxes more than he is at present. The ordinary voter pays a very small amount of taxes, and those who pay the great bulk of them are in an infinitesimal minority when it comes to the vote. The result of that must be that the voter is always in favour of extensive expenditure, especially when it is an expenditure which extends the trade by which he earns his livelihood without saddling him with the expense. The right honourable Gentleman, having had large sums of money at his disposal, nearly £58,000.000 extra spread over four years, I should have thought would have taken some means to readjust or make some revision of our system of taxation. He has declined to do so, not because it is not necessary, but because, like many other Chancellors of the Exchequer, he lives very largely from hand to mouth. I regard the right honourable Gentleman as an austere prophet, not one of those who believe in bimetallism or even in female suffrage. I look to him as a "Walpole, a Pitt, or a Prosperity Robinson, whom he so much resembles, and I should have expected from him some attempt at an improvement in and a revision of our taxation, which has many defects. Take the system of direct taxation; it is full of the most extraordinary exemptions and abatements, which inflict a most extensive injury on those who really pay the taxes. It is a fact that in the case of the death duties, one-tenth of the estates which pay the estates duty pay nine-tenths of that duty. It is a very insecure financial basis upon which to rely when you rely for so large a proportion of the duty on so small a number of persons. Take again the income tax. The total amount derived from income tax last year, according to the Returns, was £16,000,000. Now, were you to levy 8d. in the £ income tax all round on the incomes not exempted altogether, which amount to £700,000,000, that would give you £23,000,000. You really got £16,000,000, so that through exemptions and abatements, and only taking the incomes of over £160, instead of getting £2:5,000.000, you only got £16,500,000, and lost very nearly £7,000,000. I give that as an illustration of the extraordinary system which is adopted. Again, in inhabited house duty, you exempt one-half in value of the houses. The figures are open to the Committee in the Report of the Inland Revenue Commissioners. Then, coming to indirect taxation—to the Customs—I do not know whether that Committee quite realises that this so-called free trade country levies at its ports in Customs duties a larger amount than any other power in Europe: larger than Russia, larger than Germany, and larger than France. And it is levied on very few articles, on which the duties are very high. Tea pays 33 per cent., so that when I take a cup of tea, the Chancellor of the Exchequer puts his lips to the cup and drinks a third of it. Wine is taxed at 28 per cent., so that if I take a glass of wine he sips a quarter of it. The duty upon spirits is 206 per cent., so that when I treat myself to a glass of spirits I treat him to two; and upon tobacco the duty is 247 per cent., and, therefore, when I light a pipe for myself, I have to light other two and a half pipes for the right honourable Gentleman. Those five articles, together with beer, produce £52,000,000, or about one-half of the total revenue of the country. Now, Sir, I do say that it is not a sound system of finance to rely upon so few persons for the payment of direct taxation, and upon so few articles for the payment of indirect taxation, and I am remarkably confirmed in this opinion by a statement of the right honourable Gentleman himself, and by almost an equally great financier—not quite, perhaps, but almost equally great—the right honour able Gentleman the First Lord of the Admiralty. He said in 1894—he was In opposition then, but that is unimportant—he said— In my judgment our whole fiscal system rests on a very narrow foundation. The whole revenue is derived from a comparatively small number of sources. Any one, indeed, who can broaden the basis and find new sources of revenue by which you can avoid a constant recurrence, for example, to the income tax, would render, and does render, a public service. The present First Lord of the Treasury was equally strong upon the matter on the same occasion. He said— My right honourable Friend made a most interesting comment in passing upon the dangers that we are running in confining too much of our taxation to one or two commodities at most. That danger is a real one; I do not think anybody can deny that. The time may come—I think probably will come—when the right honourable Gentleman's successors may bitterly regret that we have carried to such a length a process which, beneficial though it has been, may be carried too far. The present Chancellor of the Exchequer, on the same date, said— We have arrived now at this position, that in time of peace we have an income tax of 8d. in the £ we have death duties at a point which, I suppose, hardly anybody will wish to increase, and we have indirect taxation levied only on a very few articles of great con sumption, the list of which has not been added to for very many years, and the taxation on which, with the exception of the taxation on beer and wine and spirits, has not been increased at all since the year 1878. I wish to put before the Committee the present condition of our financial system. I wish to ask them to consider at their leisure what the position may be of the Chancellor of the Exchequer, who, in some future year, may have to meet a continuing enormous increase of expenditure under this system of taxation, and I wish to ask them whether they are quite sure that in such circumstances our present financial policy can be maintained. The Chancellor of the Exchequer has entirely given the go-by to this side of the question. He has left taxation to be levied upon a very few persons as regards direct taxation, and upon a very few articles as regards indirect taxation. Let me say, in concluding this part of the subject, that if you choose to carry out the policy which was initiated by"' Prosperity Robinson," and which was carried out by Peel and the late Mr. Gladstone, of substituting indirect taxation for direct, you must have your taxation so that everybody shall feel it, at any rate in a small degree; you must abolish most of your exemptions and abatements, and then, indeed, there will be no objection to getting rid of all your indirect taxation. On the other hand, if you determine to keep up indirect taxation, there again you must not rely upon a few articles taxed at the enormous rate of 200 or 250 per cent., but you must reasonably increase your sources of indirect taxation. After all, if you levy 240 per cent. on tobacco, there is no reason in principle or in free trade why you should not levy 1, 2, or 3 per cent. on lace, embroidery, artificial flowers, feathers, musical instruments, jewels, emeralds, rabies, pearls, and diamonds. This, of course, is merely a suggestion of mine; it is for a Chancellor of the Exchequer or a Secretary to the Treasury to consider such suggestions; and I only presume to put forward the idea as that of an unofficial and unimportant person. All these are articles of luxury; there is no reason why we should not tax them; and, if you are to rely upon indirect taxation, these articles, or such as these, might well be added to your Customs tariff. The Chancellor of the Exchequer made some jokes. Some of them I recognised. They were jokes that the Treasury keeps in pigeon-holes ready to be used by Chancellors of the Exchequer on Budget nights. Others were original jokes. One of the original jokes was that various people had made various mistakes as to the deficit that he would have to face this yea Yes, Sir, they have made mistakes. "The Times" said the deficit would probably be £1,500,000 to £2,000,000. I myself estimated that the amount would be from £3,000,000 to £4,000,000, and it is close on the former of those two sums. But in the Chancellor of the Exchequer's Estimate of the expenditure for 1899–1900 he has not made any allowance for the Supplementary Estimates, which, if we are to trust to the experience of the last four years, must certainly be brought before this House during this financial year. I think the system of Supplementary Estimates has been much abused. They are only intended for occasional, unavoidable, and unforeseen expenditure.


indicated assent,


I am glad the Chancellor of the Exchequer agrees with me; but these unforeseen expenses have been very large during the last four years. They have averaged something like £2,000,000 a year, or rather over. Therefore, if we may rely upon the experience of the past we shall have £2,000,000 to find than the total Estimates now put before us.


indicated dissent.


I am glad to see that shake of the head. I take it that the Chancellor of the Exchequer is going to reform his ways this year: that, he is going to forbid this year what he has allowed in previous years—the importation by the Departments of Supplementary Estimates—and that we shall have very much fewer Supplementary Estimates during the present year than we have had during the last four years. Now, Sir. one word about the proposed increase of taxation. As to the increase of the wine duty, so far as I can make out, the major part of that duty will represent an increase of no less than 50 per cent. on light wines, because the major part of it applies to those wines which are now taxed at a shilling a gallon. The increase of duty will be 6d. a. gallon, and consequently there will be the enormous increase of 50 per cent. in the duty. The Chancellor of the Exchequer has not sought any new form of taxation. He has passed by my lace, my embroidery, my jewels, my feathers, and my diamonds. He will have none of them. He has descended upon one commodity alone, and that a commodity already highly taxed, and he is going to levy the enormous increase of 50 per cent. upon wine. I think that is in very strong comparison with his generous treatment of the tobacco duty. The Chancellor of the Exchequer has told us that he smokes not, neither does he drink.


He does drink!


Oh ! he does drink. Then his generosity is great, for he has extended the benefits of lighter taxation to the tobacco which he does not smoke, but he has levied a, heavier duty upon wine which he does drink. Now, Sir, I come to what, after all, is the most important point of the Budget, and that is the attitude of the Chancellor of the Exchequer with regard to the paying-off of the Debt. I do not think there is any growing impatience of debt in the constituencies. The people of the country do not. I fear, mind how much they owe, but they do mind how much they pay. Consequently, I think the right honourable Gentleman has shown the wisdom of the serpent in choosing the line of least resistance, and in deferring the further reduction of the Debt in order to avoid adding anything to the burden of taxation. I have heard to-night, and I have often heard before, the argument adduced, that it is an advantage to the country to have a National Debt. I cannot comprehend it. [Ironical cheers.] Are those Members of the Committee who make those weak cheers aware that we have to pay £25,000,000 a year extra taxation that we should not have to pay if we had no National Debt? Do they forget that but for the existence of the National Debt we could get: rid of most. if not all. of our Customs duties. and other duties to boot? It is absurd to say that ii is an advantage to us to have a National Debt. And then we have had the old argument that if we had no National Debt we should have no good investments. Why, Sir, it is rot the business of a Chancellor of the Exchequer to find good investments for the public. Anybody can do that. There are already any amount, not only of good investments, but of bad, indifferent, and speculative. Investments for all tastes will never be wanted in this country, and investments at all rates of interest. It is not the business of the Chancellor of the Exchequer to deal with the question of investments; his business is to work the finances of the country on the most economical and sound principles possible. Well, Sir, he stops the payment of £2,000,000 of the permanent Sinking Fund. The Secretary of State for India previously stated, however, that no interference would be made with the arrangements for the liquidation of the Debt.




Did he not say that? Well, will any honourable Gentleman tell me what he did say? If not, I shall adhere to my own words


He said he would not suspend the Sinking Fund.


I am much obliged to the right honourable Gentleman for furnishing me with the words. "Not suspend the Sinking Fund"? Well, Sir, it is not suspended in its entirety, but it, is in part. That is the difference. The Secretary of State for India, no doubt, derived his information from the Cabinet, and I think it is quite conceivable that upon this question the Cabinet subsequently changed its mind. It seems to me, moreover, that the Chancellor of the Exchequer himself changed his own mind during the progress of the Debate. When I heard at the beginning of his speech the glowing eulogium be made of the benefits of the Sinking Fund, I said to myself, "Well, we are safe; he is not going to touch the Sinking Fund"; but he converted himself in the course of his speech, and in the end he told us in the most surprising mam that he was going to raid the Fund. That very much surprised me, because I remember reading a speech which the Chancellor of the Exchequer delivered in the virtuous and budding youth of his Chan cellorship. In April 1896 he said——


It has been quoted already to-night. You need not read it again.


But it is such a valuable and so convincing a speech that it will bear quotation, not once but many times. This is what the Chancellor of the Exchequer said— We have paid off in 39 years £190,000,000 of Debt—[Cheers.]—and £100,000,000 of that has been paid off in the last 13 years. [Cheers.] Some may think that our efforts have been wasted—[an honourable Member: Hear, hear!]—and that we should have done better if we had allowed the money to fructify, as it is said, in the pocket of the taxpayer. That is not my view. [Cheers.] By this self-denying course the Parliament and the people of this country have raised up a reserve fund which, if the time of need should come when this country should again have to fight for its life, would enable us, without imposing a single extra penny of taxation, to raise a couple of hundred millions for the defence of the country, and, without imposing, either, an atom more debt upon the people of that day than our predecessors bore without murmur in 1857—[Cheers.]—and that is a thing which, I think, this country may be proud of.


That is exactly what we are now.


At any rate we shall in future be less proud by £2,000,000 a year. Then the right honourable Gentleman goes on to say— It is a source of incalculable strength to this country. and, although it may sometimes be necessary, even in time of peace, as it was necessary in 1885, when I was last responsible for the finances of the country, to postpone temporarily the operation of the Sinking Fund, yet I trust that Parliament will never permanently depart from the wise and Prudent policy in this matter which it has hitherto pursued. That is exactly what the right honourable Gentleman now proposes to do. This is a permanent departure. It is a permanent alteration of the new Sinking Fund. This is the very thing the Chancellor of the Exchequer had in mind in 1896 when, not foreseeing these contingencies, he said he trusted that Parliament would "never permanently depart from that wise and prudent policy." He permanently departs from the wise and prudent policy to the extent of £2,000,000, and that which he said was a source of incalculable strength will now be incalculable minus two. But not only has the right honourable Gentleman stopped £2,000,000 of the permanent charge for the Debt under the new Sinking Fund, but he has been stopping money from the old Sinking Fund every year since he came into office. £10,000,000 at least of the surplus that he has had since 1895 he has diverted from their legitimate destination, which was the reduction of the Debt, to other purposes. Of course this was done with the consent of Parliament. It is not so difficult, however, to obtain the consent of Parliament when you have a majority of 140 as it is when you only have a majority of 13 or 14, as was the case with the last Government on more than one occasion. Well, Sir, the right honourable Gentleman says that he takes this step "as a precaution." Yes, he takes the precaution by taking the money. He says also that you may overdo the Sinking Fund. That is one of his fears. So he proceeds to under do it. Well. Sir, really this conduct, compared with his speech, seems to me most extraordinary. I do not know how the Chancellor of the Exchequer may view his utterances of 1896, but to me it seems as though he were absolutely eating his own words. The right honourable Gentleman reminds me of Ugolino, who ate his own children in order to preserve to them a father. I now see the noble Lord the Secretary for India has fortunately returned to his place; and I am sure the Committee will be interested to know what were the real words he used when in a recent speech he declared that there would be no suspension of the Sinking Fund this year by the Chancellor of the Exchequer.


Certainly, I said nothing of the kind.


Never mentioned the Sinking Fund?


If the honourable Gentleman wants to know what I said I will tell him.


I do want to know.


I attended a gathering of the municipal corporations, and, after dinner, there were a large number of toasts. One of the toasts associated with Her Majesty's Government was proposed by Sir John Hibbert, a very well known old Member of Parliament. In the speech made by that gentleman he gave the Government some excellent advice, and, in speaking of the expenditure in the course of the year, he suggested that the Government should not suspend the payment of the National Debt. Those were the exact words which Sir John used, and, taking up those words, I, in reply, said that, without revealing any secrets in connection with the Budget, I could assure him that the Government had no intention of suspending payment of the National Debt, and that I was pretty sure that, high as Consols then stood, the day after the statement of the Chancellor of the Exchequer they would stand equally high. I was accurately reported in all the newspapers except one, which attributed to me, not the words "suspension of Debt," but "the suspension of repayment of Debt," which alters the sense. I was not aware of it at the time, but the right honourable Gentleman the Member for Bodmin made reference to this, statement in a speech outside. I then sent for the reports, and I found that in one newspaper I had been misreported. I would gladly have corrected the misstatement, but I did not deem it advisable to do so in view of the statement of the Chancellor of the Exchequer, and I was obliged to allow the misconception to run its course until the discussion took place on the Budget.


After the extremely clear and most succinct statement of the right honourable Gentleman, I gather take what he did say was that the Government would not suspend the payment of the National Debt; but I they have now done so to the extent of £2,000,000 a year. That being so, I can only congratulate the Chancellor of the Exchequer upon the perfection with which his Budget secret was kept, even from the noble Lord the Secretary for India. With regard to the wine and the stamp duty, I have no particular complaint to make, but I am grieved at the most unexpected determination of the right honourable Gentleman to put his hand on the Sinking Fund, provided for the liquidation of the National Debt, established as a permanent institution by one of his former colleagues, respected by successive Governments in circumstances of great difficulty and trial up to this day, and in its character rightly described, both by the right honourable Gentleman the Member for West Monmouth and the Chancellor of the Exchequer himself, as a war chest reserve of great value to this country. I deeply regret that under present circumstances, in time of no stress and with. a rising revenue, the right honourable Gentleman has held it necessary to lay his hand upon this reserve fund. It seems to me to be a timid policy, and therefore a policy unworthy of himself—a dangerous policy, and an improper policy, which ought not to be adopted or sanctioned by this House.


My honourable Friend the Member for King's Lynn in the very happy speech he has just delivered made a point which, perhaps, was not so acceptable to Members on this side of the House as it may be to honourable Gentlemen opposite, when he suggested that the great mass of the voters of this country do not contribute their fair share to the National Revenue at the present time. We, on the other hand, not only believe they do, but we also think that these duties fall too heavily, rather than too lightly, upon the voters. I did not, however, rise to discuss the speeches which have been delivered. For that we shall have other opportunities. I only wish to say a few words upon the resolution now actually before the Committee, and I do so in the conviction that the Committee is hardly aware of the gravity of the circumstances which the passing of this Resolution to-night will produce. My right honourable Friends the Members for Liskeard and Wolverhampton, and one other Member, have spoken very strongly upon the question of these duties, and the right honourable Gentleman the Member for Wolverhampton asked the Chancellor of the Exchequer what course he was going to take with regard to the Colonial contribution towards the wine duties. The Member for Sheffield, in his speech, has given notice of his intention to move the exemption of Colonial wines from the payment of this added duty. I do not think, however, he is likely to succeed in carrying that. We must face the facts as they will be brought about by the passing of this Resolution. We may vote against it, and it may be carried with an approach to unanimity, but for myself I shall, if a Division is pressed, vote against it, because I am convinced that, after its passage, nothing that can be said here will have the slightest effect in regard to its ultimately becoming law. This Resolution. means an enormous increase in the duty on light wines, and the increased duty will press on the trade of France, Spain, Portugal, Germany, Austria, South Australia, and Victoria, and in some degree of the United States of America. The pressure upon the South Australian and Victorian trade will be very great indeed. The Committee, perhaps, is hardly aware of the immense and increasing proportion which the export of wine, in the case of Victoria and South Australia, bears to the total trade. It is a very rapidly increasing trade indeed. What has been the position of this country with regard to wine duties hitherto? We have almost always either reduced them or held out to the countries with which we have been in negotiation a prospect that they will be reduced. The increase in the duty upon sparkling wine, which was imposed some years ago, was one which hit only one town, for practically the whole of that wine comes from a single district. The increased importance of the wine trade has always been fostered by this House by the lightening of the duties upon the cheapest kinds, as compared with the strongest kinds. We have always refused to admit that we were bargaining with regard to our duties, but, in practice, every one must feel we have constantly offered to other countries a reduction of these wine duties by proposing to raise the scale from 28 degrees, at which it formerly stood, to 32 or 33 degrees, so as to admit more freely the wines of Italy and Australia and the lighter wines from Spain and Portugal. Will the Committee consider for a moment what is the gravity of the step we axe asked to take to-night? It is not the case, as the Chancellor of the Exchequer seems to think, that the countries fix on their duties as against our trade. Most of the countries have two columns in their tariff—the most-favoured-nation treatment and the least favourable treatment to be accorded to the goods of other countries. In most cases there is power to take certain classes of goods from the latter column and to put them into the first, and they can give any country the most-favoured-nation treatment for all their goods, or they can apply it to only a certain class of goods. At this moment we receive the most-favoured-nation treatment from all these countries. Surely the Committee must be aware of the enormous weight of opinion in these countries in favour of Protection as against the trade of this country. There is a continually constant pressure on Foreign Governments to remove our goods from the first to the second column of the tariff. Are you going to strengthen that pressure for action which could be easily taken by many Powers? Are you going to risk having our exports put into the the second column of the tariff of these countries, by the sudden raising of the wine duties without any preliminary negotiation? It is a very grave risk indeed to take for a step which is of purely hypothetical value. At one time Spanish wines were refused, because they exceeded the alcoholic limit, and we refused to raise the limit of strength in order to admit them. They, accordingly, put us in the second column of their tariff, and a pretty state of things was the result—enormous pressure being brought to bear upon the Government. And that was only the case of Spain. I pity the Chancellor of the Exchequer, and the Party to which he belongs, if similar action should be taken and similar pressure should be brought to bear in the case of those countries which are the great markets for our goods. The honourable Member for Sheffield cheers these suggestions, because he thinks their adoption would be an object-lesson to France. But it is not France that will be most hit by the increase proposed here to-night. There is a rapidly increasing trade in light bottled wine from Germany, much of it through Holland. It was nearly £700,000 last year, and the hands of German Protectionists will undoubtedly be strengthened by the action we are taking. The Chancellor of the Exchequer told us that these wines could be easily bottled in this country, and that it is only about 50 per cent. of the increase that will hit them, because in future the course of trade will be changed. It may be the case with regard to some classes of these wines, that they will not be injured by being bottled in this country, but it certainly is not the case with regard to all of them, for many of them would be vitally injured by being transported in casks. The Chancellor of the Exchequer will find that he has hit them a very heavy blow indeed by this sudden and enormous increase of duty. I think that this is a very dangerous proposal. I will not myself force a, Division on this Resolution, but if any of my honourable Friends, feeling as I do, should insist on taking one, I shall vote with them, and I shall do so in the certainty that I am voting in the true interests of this country.

MR. BARTLEY () Islington, N.

I agree very much with what fell from the right honourable Gentleman when he said that, considering the small amount to be raised by this additional taxation, it will produce an immense amount of friction and irritation in the wine trade, and I think it is a pity to incur that risk, I only wish to say a few words, because I have consistently opposed every sort of reduction of the system of paying off the National Debt. I agree most heartily with my honourable Friend the Member for King's Lynn, that the duty of this country is to reduce the National Debt as fast as it can, and in days like these, when the nation is unusually prosperous, it is a, most extraordinary thing that we should shrink from that duty. I certainly cannot accept the doctrine that, as the Debt gets smaller, we should pay less. What does this really mean? It means that we are afraid, or seem to be afraid, to ask the people to pay the natural cost of the policy we are pursuing. That policy is a bold and free one, and I personally strongly approve it, I believe, too, that the country approves of it, but surely it is the worst possible system, if a bold, free, and somewhat venturesome policy is put forward, not to ask the people to pay the necessary bill. We hear people talk about Jingoism. If it means being prepared to protect our position, I do not mind being called a Jingo, but if it means that, at a time like this, we are afraid to put our policy clearly before the people and to ask them to pay the cost of it, I say that that is the very worst form of Jingoism that could be conceived. If we believe our policy to be a good one, we ought to ask the nation to pay for it, even though it involves more taxation, rather than to seek to defray the cost of it by reducing the payments off our Debt during a period of great prosperity. What is the real motive inducing Russia and the other Great Powers to go into the Peace Congress? It is because they are feeling the pressure of army and navy expenditure; and I believe that the more the public all over Europe are brought to see that the present system leads to great expenditure the more likely they are to be led to favour a peaceful and pacific policy. The Chancellor of the Exchequer says the increase in our expenditure must be permanent. I certainly think it will be so. We hear of pension schemes of all sorts, and of increases of salary in all directions, and nobody can suppose that our national expenditure is likely to decrease. There is, therefore, all the more reason why, in prosperous times like these, we should be careful to reduce our debts, so that at any period at which we are less prosperous we may have something to fall back upon in the shape of reduced taxation which a reduced Debt will involve. I am perfectly aware of the great difficulty in paying off the Debt. I had not the benefit of hearing the speech of my honourable Friend the Member for Peckham. We all know the difficulties are associated with Consols, and also that the Chancellor of the Exchequer has found not a little trouble through not knowing what to do with the money, because the price of Consols has gone up so high. But there is something else, and that is the enormous sum we are every year spending in the Post Office Savings Bank. That is a matter which, I think, requires careful consideration. I only rose to make this protest, I say that while we are prosperous we ought to raise our voices, apart altogether from any Party considerations, and do our best to reduce this great weight of debt, so that if misfortune should overtake us we should not have this heavy burden around our necks, and should be in an infinitely better position to meet new obligations.


I wish to join in the protest that has been raised in many quarters of the House against the central principle of the Budget, the tampering with the Sinking Fund, and wish to protest still more emphatically against the financial policy which has brought the Government to its present straits. What they were now proposing to do was to rob posterity, because they have been diligently robbing the taxpayer of the present ever since they came into power. The figures which have been quoted by the honourable Member for King's Lynn as to the increased expenditure during the last few years are very remarkable. They show that the total increase of the expenditure of this country since the present Ministry came into power, a period of only four years, including the prospective year—has been £57,000,000 above the standard of expenditure of the preceding Government during their three years of office. The right honourable Gentleman seems to be confident that now he will be able to restrain the powerful forces which appeal for a mighty expenditure for the Army and Navy. But apparently he has made no provision for supplementary expenditure, and I believe we shall find, before the close of the present financial year, that they have spent in these four years £60,000,000 of the taxpayers' money more than was deemed to be necessary to be expended by their predecessors. The amount of realised surpluses placed at the disposal of the right honourable Gentleman in the last four years has been simply stupendous. They come to between £10,000,000 and £11,000,000 sterling, and the whole of that, so far as I have been able to trace it, has been swept away in the Naval Works Act and for other military and naval expenditure. And that has been in addition to the enormous sums which have been placed at the disposal of the Ministry owing to the automatic increase in the revenue of the country. I should like to ask honourable Members opposite, and the right honourable Gentleman opposite, where they would have been had it not been for the Budget of the right honourable Gentleman the Member for West Monmouthshire, which has placed so many millions at their disposal? I have taken the trouble to look a little into the way in which these gigantic sums have been appropriated in aid of special classes of the community. So far as I can gather, within the last three years there has been appropriated in aid of the landlords in England, and then in Scotland, and now in Ireland also, directly or indirectly, a sum either just exceeding or just falling under £7,000,000 sterling. Surely that is a very grave tiling for Parliament and the country to realise, that one single class of the community should have had this money handed over to them, for I cannot admit that they have been suffering to anything like an extent that would justify such an enormous grant in aid. Again, a large sum—over £1,300,000—has been appropriated to the maintenance of the Voluntary school system of this country, and that, again, is a questionable policy. What we have to consider is this. We have had an enormous increase in the expenditure of this country, and I must compliment the Chancellor of the Exchequer, if I may do so, on the extreme honesty and fairness with which, for four years, he has dealt with these vast increases of expenditure. Last year he had pointed out that during the past 20 years, while the population had increased 19 per cent., and the growth of the chief heads of taxation had increased only 15 to 16 per cent., expenditure had increased no less than 68 per cent. In his speech this afternoon he frankly recognised that the increase of expenditure was far too serious a matter to be lightly dealt with. He admitted that it must be faced as a subject of great concern. Now, the expenditure on the Army and Navy for the coming year is estimated at not less than £47,000,000 sterling, and I want the Committee to realise what that enormous sum means. I have been a Member of this House many years, and I well remember a very remarkable speech made by Lord Randolph Churchill, in January 1887, in explanation of his resignation. Lord Randolph said there were several points of difficulty which had arisen between himself and the Prime Minister and other Members of the Cabinet, but they could all have been adjusted except one, and that was the enormous expansion of the expenditure of the country upon naval and military matters, against which he felt it a paramount duty to protest, and to insist on, at least, a beginning in a policy of retrenchment and reduction. The expenditure in that year was only £31,000,000 sterling on the Army and Navy, and Lord Randolph Churchill thought it was imperative at that stage of the country's history to begin a reduction of this enormous expenditure. Now we have a Tory Ministry again in power who have increased the expenditure by leaps and bounds. The expenditure on armaments has reached the gigantic sum of £47,000,000 sterling a year, an increase of 50 per cent. on the amount against which Lord Randolph Churchill protested by resignation 12 years ago, thus sacrificing a career of the brightest promise. The House and the country should wake up to the realities of the position, and recognise that the Chancellor of the Exchequer, instead of supinely saying that he cannot resist this gigantic expenditure on the Army and the Navy, ought to make a vigorous and determined attempt to cut the expenditure down. The enormous claims that have been hinted at by my right honourable Friend the Member for Wolverhampton, for social reform and social development in this country, and the growing claims for secondary education, and other urgent questions have been thrown aside, and this enormous sum has been voted mainly for armaments and for subventions to favoured classes. About £7,000,000, more or less, in three years have gone to the landlords of England, Scotland, and Ireland, and £1,500,000 has been given to the managers of Voluntary Schools during the last three or four years, but what has the Government done for the poorer classes of the community? The Chancellor of the Exchequer would doubtless refer to the remissions and exemption of income tax on the smaller incomes: only £100,000 has been given in the reduction of the income tax on small incomes. Then there is the somewhat illusory reduction of the duty on tobacco, which had been put at £1,120,000: as far as I can discover, it has made no difference whatever to the purchasers of half-ounces of tobacco. So that while over £8,000,000 has gone to help the rich, little more than this £100,000 has gone to the poorer classes. I wish also to support what was said by the honourable Member for Islington with regard to the Savings Banks, and the position in which they stand with regard to the investment of their money in Consols. There may be further opportunity during this Session of discussing this question, but I cannot let this opportunity slip of at least pressing home the point that it may be of very considerable advantage to the finance of this country, and it may also be of very considerable advantage to the humble depositors in the Post Office Savings Banks and Trustee Savings Banks, if there could be some inquiry held which might result in enabling the Government to authorise some other investmnets than Consols for the large sums which remain in the hands of the Savings Banks. What. I have wished to do is to enter my most emphatic protest against the wanton extravagance of the Government in frittering away their vast resources. They may have been wise in not imposing some of the forms of additional taxation that had been suggested. Personally, I would rather that the income tax had been increased than that there should be any interference with the Sinking Fund. I believe it is a protest which will be echoed throughout the country at the next General Election, against the wanton extravagance of the past few years which has brought the Government to its present position.

SIR J. BLUNDELL MAPLE () Camberwell, Dulwich

I have listened carefully to the speeches which have been delivered to-night, most of which have, generally speaking, been directed against the proposals of the Chancellor of the Exchequer. Personally, I view the proposals of the right honourable Gentleman with a great deal of favour. I do not see what reason we have for reducing our National Debt when we are increasing every day our National Defences. If we look at the capital account of the country at the present time, and compare it with our position five or six years ago, we find that to our credit is standing not 10, 20, or 50, but probably £100,000,000 of capital in the way of armaments, etc. And to ask the nation to submit to increased taxation at the present time because there is a small deficit of £2,000,000 is to me an untenable proposition. What is the advantage of decreasing our National Debt? I would not mind the National Debt being increased to £100,000,000, if, in the meantime, we spent £200,000,000 on the defensive forces of the country. It is easy to have a surplus if you do not strengthen your position in the same way as the Government has been doing lately. But to have a surplus at the sacrifice of the defensive forces of the country would be, in my opinion, the greatest possible folly. I would myself suspend the whole of the repayment in respect of the National Debt. The proposal of the Chancellor of the Exchequer is one of the best that could be made in. the interests of the tax-payers of this country. With regard to the stamp duty, I think that matter will require reconsideration. The extra duty of 6d. on allotment papers is rather disadvantageous to investors.


I omitted to state that the increase from 1d. to 6d. was only to be in the case of allotments over £5. The 1d. will remain under £5.


I am obliged to the right honourable Gentleman for that explanation, but I would ask him to consider whether it would not be advisable to limit the 6d. to allotments for £100 and over, with a duty of 3d. for £50. For small investments duty should be left at 1d. If promoters of public companies in allotting shares have to pay 6d. instead of 1d. they will be inclined to pass over small subscribers of shares. However, I am pleased to hear that the Chancellor of the Exchequer is willing to make an exception with regard to allotments under £5. With regard to wine duties, I hope we may be able to get the Chan- cellor of the Exchequer more favourably to consider the question of the duty on the less expensive wines. I disagree with the right honourable Baronet the Member for the Forest of Dean, that this way of collecting our taxes will cause the slightest unfriendliness with foreign nations. I have been connected with foreign countries in business matters for some time, and I am perfectly certain that neither France, Germany, nor any other country, will take exception to the duty put upon wines if the duty is put upon every nation alike. What they would object to would be differential rates. I hope the Government will adhere to their proposal with regard to the paying off of the National Debt, and I commend to all future Chancellors of the Exchequer the fact that it is advisable, from an economic point of view, that our National Debt should increase as long as our defensive power and our capital account is increased. It is far better that we should be in a position to defend ourselves than reduce our National Debt.

MR. HARWOOD () Bolton

I do not propose to offer any suggestions, but simply to say that I do not think the proposals of the Chancellor of the Exchequer will raise the moral reputation of this country, and for this reason, that they seem to me to set a very bad precedent, and to outrage two very good principles. The Chancellor of the Exchequer gave a very glowing and poetic description of how this country is enjoying prosperity such as it has never enjoyed before, and yet there came the sorry ending to his speech that we are not prepared to pay our way. To paraphrase a well-known song— We've got the ships, we've got the men, but we are not prepared to find the money. The two principles which the right honourable Gentleman has violated are these: First, that there should be set aside a fixed amount for the redemption of the National Debt; and, secondly, that temperance should be encouraged by lightening the burdens on liquors containing a small amount of alcohol and rather placing the burden on strong spirits. Speaking on behalf of those who do a great deal of business with foreign countries, I view with considerable trepidation, to use no stronger word, the proposals as to the wine duty. The honourable Member for Sheffield and other honourable Members seem to laugh and speak lightly of our trade with France and Germany, but I would ask the Committee to remember that after all two-thirds of the whole of the foreign trade of this country is done with these nations, and it would be a very serious step indeed if we were to do anything which might make them place our trade in a less advantageous position than it now occupies. I simply rise to make one criticism, which does not refer to this particular Budget or this particular Government; it is a criticism which refers to both Front Benches in this House. I consider that the statement of national account which is presented to us annually is drawn up on very bad principles of book-keeping. By national expenditure the people understand the cost of keeping the nation going by the Army, Navy, and Civil Services, but lumped in with these items is the cost of the Post and Telegraph Services, which upon ordinary business principles should appear in a separate account, for they are reproductive Services, and the net result, be it loss or profit, should appear in the net account. We shall hear to-morrow about the national expenditure having increased to such an amount, but those statements will all be based upon wrong figures. You cannot possibly say that the whole cost of carrying on the Post Office and Telegraph Services is national expenditure when you gain a profit of £4,500,000 upon them. The Chancellor of the Exchequer has informed me that the present arrangement was started by Mr. Gladstone. Of course, such a name must be treated with great respect and reverence, but there might have been reasons for it in 1854, when this system was started, which do not hold good to-day. I am certain that this is a wrong system of book-keeping, and I will prove it by its effect. We have no means of comparing our national expenditure from year to year with any accuracy. The Chancellor of the Exchequer, in his Jubilee speech, compared the expenditure of this country in 1837 with the expenditure in 1897. He worked out some very charming, striking, and interesting figures, which had only one virtue, and that was that they were not true. If the Chancellor of the Exchequer will refer to the Budget Speech of 1837, he will find that that Budget was drawn up on a proper basis of book-keeping, the net account being brought in as an asset. Suppose, for example, the State was to take over the railways. Would it be a proper thing to put on the national expenditure side of the account the whole cost of working the railways? If this were done, hundreds of millions would be added Straight away. The thing is absurd, and I ask the Chancellor of the Exchequer, and future Chancellors of the Exchequer, to give us a proper statement of account, and one which the country can understand. The Chancellor of the Exchequer may say that anyone can work out these figures for himself, but we must consider those who have not these figures before them. I therefore ask the Chancellor of the Exchequer, with all deference, to consider this proposal, because, as our expenditure is increasing, we ought to be more careful to make it as clear as possible, especially in view of the fact that the people of this country are paying more and more attention to this matter than they have been accustomed to do in the past. The national expenditure ought to mean only the expenditure on keeping the nation going by the Army, Navy, and Civil Services, and when the nation undertakes any business the account ought to be kept separate, and the net result given in the general account.

MR. JOHNSTONE () Sussex, Horsham

I decline to believe that any citizen of this Empire, rich or poor, grudges the expenditure upon our Army or Navy, to which Services the increase is mainly due. The expenditure is not of our creating, and the Under Secretary for Foreign Affairs justly said in this House that if the pace is a fast one it is not our setting. The guardians of national expenditure have simply to see that we keep pace with other nations in armaments and that the money is wisely spent. For once in my life I am not able to agree with the Words uttered by the honourable Member for King's Lynn. He spoke of the Budget as a timid one. I regard it as a Budget of courage and common sense, and I think that as such it will commend itself to the country. I cannot help thinking that the diversion of part of the Sinking Fund is an extremely good and sensible business. The honourable Member for King's Lynn said it would be a very foolish thing for a man whose income was decreasing not to at the same time endeavour to pay off his debts. This is rather the case of a man taking capital money out of a security which is producing 5 'per cent. and with it paying off a 3 per cent. mortgage, which I am sure no one would say was good or sensible business or a prudent step to take. The Chancellor of the Exchequer has turned his back on economic fallacies, has looked facts squarely in the face, and has applied the Sinking Fund in a way which the nation will not regret in the slightest degree. I am very thankful that the Chancellor of the Exchequer has made no alteration in the present incidence of the tobacco duty, though I was not one of those who took a favourable view of the remission of the tobacco duty last year. I do not want my tobacco any drier. I get it a great deal drier than I like it at the present time, but I fully recognise that, having regard to the disturbance which took place in the trade 12 months ago, it is desirable that another 12 months should be given in order to see the result of the reduction of the duty which was made last year. No increase has been made with regard to beer, but I consider that a considerable extra burden might have been borne by beer. I would suggest that the great brewing firms and the beer-drinking community of this country should follow the examples set by some of our Colonial brethern, and testify their gratitude to the Chancellor of the Exchequer for letting them off by making a handsome contribution to the defences of the realm.

* MR. E. C. J. MORTON () Devonport

I do not particularly object to the proposals of the Chancellor of the Exchequer, so far as they relate to the imposition of increased taxation, but I totally disagree with the views expressed by the honourable Member who has just sat down, and the honourable Member who preceded him on the other side of the House, with regard to the suspension of the Sinking Fund. The arguments advanced in favour of the suspension of part of the Sinking Fund practically amount to this—that we are engaged in expenditure which is for the benefit of future generations, and that, therefore, we are not bound to pay such expenditure out of current income, but might leave a certain amount of it to those who come after us. Those are practically the arguments in favour of the suspension of part of the Sinking Fund, as I understand them. But there is nothing in the way of National Expenditure which we can say, with any degree of certainty, will benefit posterity. The material progress which has been going on for the last 20 years with increasing acceleration, and which is now going on at a more rapid rate than at any other period in the history of any nation in the world, makes it certain that we can never lay it down as a settled fact that any particular expenditure is for the benefit of posterity. I will just take one instance, which will perhaps make the matter more clear than any amount of general argument. I know a town on the South Coast of England which was supposed, in 1860, not to be sufficiently protected from foreign attack, and Lord Palmerston, when Prime Minister, built a certain number of forts round that town for its protection. Seven years ago those forts, which had been built with public money, were demolished, also with public money, because they had become obsolete. For some years before they were demolished they were known in the district as "Palmerston's Folly." I do not agree with the idea conveyed in this phrase, because my belief is that at the time these forts were constructed they were useful, and probably even necessary in the condition of military science as it then existed, but military science—like all other science—has progressed since then, with the result that those forts became obsolete and had to be demolished. The forts were built not out of current expenditure, but by means of a debt which was incurred, and the argument was that it was right to incur that debt as these forts were for the protection of the nation, and would be for the advantage of succeeding generations as much as of the generation that built them. But, as I have said, by the progress of military science it turned out that instead of being advantageous they were absolutely noxious. They were worse than useless, and the suc- ceeding generation, instead of benefiting by the expenditure from which it was thought they would benefit, actually had to undertake a further expenditure for the purpose of demolishing the forts.


The debt has been paid off.


That may have been the case since then, but the point is the debt was incurred upon the principle that the succeeding generation was going to benefit as much as the generation that built the forts, but the result turned out exactly the opposite. It is absolutely impossible to say that any expenditure in the present is for the benefit of succeeding generations. If you are going to have a sound system of finance you must go on the principle of regarding national improvements as belonging to this generation only. For that reason, therefore, it is incumbent upon us to pay off the debt as quickly as we can. It is a notorious fact that prosperity and adversity go in succeeding waves in this country, and now that we are in a period of prosperity we must look forward in the near future to a period of adversity, and I contend that it is the duty of the nation to carry out its national finance upon an honest basis, and to use these fat years to pay off the lean years which are in store for us. It is not honest finance to reduce by £2,000,000 the sum set aside for the redemption of the National Debt, when, at the time, we are in a state of unexampled prosperity, and when we cannot possibly be sure that any expenditure we are. entering into will be for the benefit of any other generation than our own.

* MR. GEDGE () Walsall

I have never before made any observations upon the Budget proposals, and on that account perhaps the Committee will kindly give me their indulgence for a few minutes. The honourable Gentleman the Member for Devonport could scarcely have chosen a more unfortunate illustration in support of his argument than the forts to which he referred. He said they were built for the benefit of one generation and had to be pulled down by another. I should like to point out that the amount which was borrowed to build these forts was all repaid within the time of the existing generation which built them, and had been repaid long before the forts were dismantled. The whole expenditure now proposed that is not to be repaid during the year will be repaid by 1923–24 years hence—which is during the existence of the present generation. With regard to the National Debt, the real obligation the country is under is only to pay so many millions a year towards its redemption. It cannot be compelled to pay off the Debt. Surely it would be unwise policy to redeem at the cost of £112 what in a few years can be redeemed for £100, or to adopt the suggestion that the whole of our expenditure on fortifications and our Army and Navy should be paid out of the current income in order that the people of this country, seeing the great cost of these preparations, might be more careful to avoid war. I am sure there is no desire for war in any part of the country. We all recognise that peace is essential to our commerce and happiness, and we wage war with very great reluctance. I know no class in England with whom war is popular, but they approve of this large expenditure on our defensive forces, because they know that such expenditure is the best means of averting a war, as experience had taught us during the past year. No doubt what we spend is twice as much as what was paid when Her Majesty came to the Throne, but the population and wealth of the Empire have increased much more in the meantime. We have a great deal more to defend now than we had then, and it is necessary that we should pay for that defence. I am sure there is no one in the country who grudges the expenditure. The Chancellor of the Exchequer, in the very able speech to which we have listened with great attention and pleasure, showed definitely that we are reducing the Debt at a very considerable rate, and I fail to see that we are outraging any sacred principle of finance in adopting the plan in regard to the Sinking Fund proposed by the Chancellor of the Exchequer. I think it would tend to a much better understanding of these matters if the country were to follow the method adopted by all commercial bodies, and have year by year, not only a profit and loss account published, but also an annual balance-sheet showing what the national prosperity consists of. In this way I believe a sounder and safer opinion would be obtained of what the real position of the country is. I should like to say how exceedingly grateful I am to the Chancellor of the Exchequer for his clear explanation of the effect of his reduction in the duty upon tobacco last year. I contended most urgently at the time that the consumer would ultimately get the benefit of the 6d., and I confess I was shaken in that view when, not long ago, on visiting my constituency, it was commonly stated that the consumer did not benefit in any way, and had to pay just as much for his tobacco. I think, however, that the right honourable Gentleman has shown the fallacy of that contention, and has explained that though the tobacco was not in some cases cheaper it was drier, and that though the price has not decreased it would have risen if he had not reduced the tax to the extent he did. The right honourable Gentleman proposes to increase companies' capital duty, and he told us he thought one of the effects of this increase would be to put difficulties in the way which might stop the creation of some of the bogus companies which are now formed for the purpose of bleeding the public. I hope it will have that effect, but I think the increase of the duty from £1 to £2 10s. per £1,000 will tend to decrease the amount of nominal capital, and the result will be that the Chancellor of the Exchequer will be disappointed as to the amount which he will receive as the outcome of this increase in the duty. I would suggest that there can be no reason for the present distinction between companies whose liability is limited and other companies, such as railway and dock companies, which have their own Acts of Parliament. If you charge £1 or £2 10s. for every £1,000 on the capital of the one, I do not see why it should not be charged on the capital of the other. Railway companies should pay as well as joint stock companies. Despite these very slight criticisms which I have ventured to make, I heartily approve of the Budget of the right honourable Gentleman as a whole, and with regard to his proposal about the wine duty, the effect will be that light wines, which are now imported in. bottles from Germany, will be imported in the wood, and the bottling will be done in this country, to the advantage of British manufacturers and British labour. Moreover, wine up to now has been less taxed in proportion than spirits and beer. For this reason I heartily approve of the Budget, and sincerely hope that it will be carried by the usual majority.

MR. MARTIN () Worcester, Droitwich

I hope that before the Debate is quite concluded the right honourable Gentleman will adopt the suggestion that some inquiry should be made into the incidence of the Stamp Duty. I think that some of the recent legislation on the subject of that duty has certainly sent away business from London and England generally, and the small increases which have been made have resulted not in gain, but in loss of business. The matter is a very technical one, and one which will require a great deal of thought and discrimination, but it is certainly a matter worthy of inquiry. I regret that the Sinking Fund has been interfered with. We are always glad in one way to see the interest reduced on the Debt, but it is of far more importance to see that the Debt itself should be reduced, in case of accidents. I fully sympathise with what the right honourable Baronet the Member for the Forest of Dean said with regard to the importation of the German light wines, and I regret that any difficulty is to be placed in the way of the importation of those wines. They come down the Rhine to Rotterdam, and are exported with very little trouble and expense, and I think their introduction into this country was a decided step in the cause of temperance, which I hope the increase in the duty will not destroy.


We have had perhaps a wider Debate than usual on Budget night. It has ranged over many subjects—from the mode of keeping our national accounts—and I still think Mr. Gladstone was a better authority than the honourable Member who has criticised them—to the condition of the Savings Bank. I shall not endeavour to follow the speakers on all these topics. I shall confine myself to the actual proposals in the Budget. Of course, we must all expect a great deal of grumbling when we have to raise money, and I aim not surprised that my proposals have met with criticism. But the proposal to alter the terminable annuities and reduce the fixed debt charge has been unanimously opposed on the other side of the House; and I thought that the opposition was tinged with a little disappointment that some taxation had not been proposed instead, which might have been possibly more unpopular in the country. But I did not observe that any one of the honourble Members on either side of the House who objected to my proposals suggested the particular form of taxation which he would like substituted for the diminution of the fixed Debt charge. Sir, it is all very well for my honourable Friend who has just sat down to say that he does not like this policy—that he objects to any interference with the stamp duties and does not like an increase in the wine duty—but he has to pay the bill. He has voted for the expenditure, and he must pay the bill. I would apply the same answer to other honourable Members on both sides of the House who are in the same position with regard to the expenditure which has been incurred. Sir, I will not attempt again to enter upon the question of terminable annuities or the fixed debt charge, as both the right honourable Member for Wolverhampton and the right honourable Member for West Monmouth felt that it would be far better that the Treasury Minute should be in the hands of honourable Members, and that my proposals and arguments should be fairly considered by the aid of that Minute, before we enter into regular discussion of the proposals. But I demur most strongly to the mode in which my proposals were described by the right honourable Member for West Monmouth. He said that I had adopted a disastrous policy; that I was ceasing to pay off the Debt; that I was repudiating the obligations of the country; and that the provision for the redemption of the Debt had come to an end. Well, Sir, all these statements are absolutely inaccurate. An honourable Member below the Gangway added that the country was not paying its way. Sir, the country is paying its way com- pletely; and, more than that, it is paying off the obligations of our forefathers. If my proposals are adopted by the Committee, it will continue' to pay off those obligations at a greater proportionate rate than they have been paid off in past years, even when the right honourable Member for West Monmouth was Chancellor of the Exchequer. For even in this year nearly £6,000,000 will be devoted to the redemption of the Debt; and I can remember perfectly well—I think it was in 1886—when the right honourable Gentleman, finding himself in rather a tight place for his Budget, and having a difficulty in proposing increased taxation, temporarily suspended one of the Sinking Funds in order to provide himself with a sufficient surplus; and he defended his action on the ground that £6,000,000 were quite enough to devote to the redemption of the Debt in one year. Another criticism has been made from the other side by the honourable Member for Leicester, who complained bitterly that there was no reduction in the taxation of the poor. Last year I thought I had proposed a reduction of taxation in a matter which specially affected the poor? I understand that honourable Members opposite, including the right honourable Gentleman the Member for Wolverhampton, are in favour of a reduction of indirect taxation. I chose an object for that reduction which on every fiscal ground was a proper object for it, and it was the tobacco largely consumed by the poor. I was supported by many speakers on the other side on that very ground. Nothing I can say will alter the views on that matter of the honourable Member for Leicester and the honourable Member for Devonport, but will they propose that the tobacco duty shall be increased instead of the fixed debt charge being reduced? I know very well they will make no such suggestion to the House. I know very well that, although they may criticise my proposal, although they may say I do nothing for the poor man, yet it only means that from a Party point of view they are bound to find fault with me; and if the tobacco duty had been reduced by a Chancellor of the Exchequer on their own side he would have had no more hearty supporters than themselves.


If the right honourable Gentleman will facilitate the working of the forms of the House so that we can raise that issue, I will undertake to raise it.


Several honourable Members have criticised, though not entirely unfavourably, my proposal to increase the stamp duties. I can only say that I shall be happy to consider any representations that are made to me as to any particular feature of the proposals which I have suggested to the House. I have no wish to interfere with the transactions of the Money Market. I believe that the honourable Baronet opposite (Sir S. Montagu) is as well acquainted with this particular subject of the dealings in foreign bonds and stocks as any man in or out of the House, and he expressed the opinion most strongly that in the proposal I have made there was nothing that would interfere with the market transactions in these documents. With regard to the other stamp duties, very little objection has been taken to the increase in the companies' capital duty. I attach importance to that increase. I believe it is a very good proposal. But I am quite willing to consider whether that proposal may not be worded in such a way as possibly to catch a little more than it catches now, and, if that be so, I shall be very thankful for the suggestion. Now, I come to the last proposal—to increase the wine duties. I have no sympathy whatever with the objection raised by the right honourable baronet the Member for the Forest of Dean. He and I are old antagonists upon this question. I have always believed that we in this country have attached far too great importance to the threats of foreign countries as to what they would do to our commerce and trade if we take action in regard to our own revenue which to us seems expedient. I think, if anyone goes carefully into the condition of the trade between any of the great wine-growing countries and ourelves at this time, he will see that in their own interest it would be impossible for them to take such measures as the right honourable Baronet suggested. The great bulk of our exports, for example, to France are of raw material which she wants—coal and such like, which she would be very careful not to prohibit entering into her ports. I think the time has gone by when the bogey of what a foreign country may or may not do if we choose to take such action as seems best calculated to promote our own interests in regard to our own tariff ought materially to affect us. Something has been said in regard to the wine trade of our own Colonies. The wine trade of our Colonies with this country is very small when compared with our total imports of wine.


It is rapidly increasing.


Not at present. Here I have the figures for the last three years. I find the total number of gallons of wine imported from all our Colonies during last year was only 745,000 gallons, out of more than 18,000,000 gallons imported into this country, and the total value of the import was about £125,000, and that these figures are practically the same for each of the last three years. Therefore, that is not the greatly-increasing trade which the right honourable Baronet imagines. I hope the Committee will not only pass this Wine Duty Resolution to-night, but that the House will also carry it into law. It will not be, as it stands, a heavy tax on the light wines. Something has been said about the effect of the duty on the light wines that come from Germany or France. Why, the increased duty is about a, penny a bottle. Is that a tax which would really so increase the price as to make a material difference to the consumption. I must say I have not heard anything which induces me to think that the proposal is in any way a mistake, but of course I shall expect to receive representations from those who are not only interested in, but well acquainted with, the subject, and I shall be prepared, as Chancellors of the Exchequer always are prepared, to consider fairly any representations they may make to me as to any particular hardship that may be inflicted on any particular class of wine. I hope that the Committee may now be willing to pass the Wine Resolution, which it is essential should be carried to-night, in order that the new duty may be levied, and also the Stamp Resolution, which I should desire also to see carried this evening. The Tea and Income Tax Resolutions will be reserved for Thursday, when there will be, of course, an opportunity for general Debate, which always takes place on the second night of the discussion on the Budget.

Question put, and agreed to.

1. Resolved, That in lieu of the duties of Customs now payable on Wine imported into Great Britain or Ireland, there shall be charged, levied, and paid the duties following (that is to say):—

£ s. d.
Wine (other than still Wine imported in bottle) not exceeding 30 degrees of proof spirit, the gallon 0 1 6
Exceeding 30 but not exceeding 42 degrees of proof spirit, the gallon 0 3 0
And for every degree, or part of a degree, beyond the highest above charged, an additional duty, the gallon 0 0 3
Sparkling Wine imported in bottle, an additional duty, the gallon 0 2 6
Still Wine imported in bottle, the gallon 0 3 0

In this Resolution the word "Wine" includes lees of Wine. The word "degree" includes no fraction of the next higher degree—(Mr. Chancellor of the Exchequer.)

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