FINANCE BILL.

HC Deb 20 May 1901 vol 94 cc614-718

Order for the Second Reading read.

Motion made, and Question proposed, "That the Bill be now read a second time."

SIR HENRY FOWLER (Wolverhampton, E.)

The Budget embodied in the Finance Bill which we are now asked to read a second time has been described as a momentous Budget and as a disastrous Budget. I will not quarrel with either of those descriptions; but I regard the Budget as more the result of the financial policy which has been pursued by the present Administration since 1896. I think it is the harvest of what they have been sowing, and we ought not to be surprised at the point which has now been reached. I say the policy of the present Administration, and I wish to emphasise that. I do not myself accept, to the complete extent to which modern usage apparently has developed it, the supreme and departmental authority of Ministers in the various departments. I think we ought to uphold, especially in finance, as well as in other matters, the solidarity of the Cabinet, and that we ought not to individualise the Chancellor of the Exchequer as if these were, so to speak, his personal and private proposals, and as if he alone was to be subjected to criticism, or was to have the credit or discredit of the acceptance or rejection of the proposals by the House. I regard this as a Cabinet proposal, and as such I intend to discuss it, although I can assure the right hon. Gentleman that I have no desire in any way to undervalue his position or authority in this question, or to undervalue the position and authority of the Treasury.

I have to complain, as I have had to complain on previous occasions, of the confused and inaccurate manner in which the national accounts are presented to the House—a manner which necessarily confuses debate, gets the House and the country into the habit of using wrong figures, and, I may say, involves the Chancellor of the Exchequer himself in that unfortunate proceeding. I have said so much on that subject before that I should not repeat it if it were not for what happened in connection with the Budget this year on the day after the finance accounts for the year were published. The Times on the day after the close of the last financial year commenced a leading article with a censure of the Chancellor of the Exchequer for the inaccuracy of his Estimates. They said that Sir Michael Hicks Beach had underestimated to an extent which was probaably without parallel in English finance—by something like twelve and a half millions—the receipts for the year. They said that he estimated a total revenue of £127,520,000, while the actual receipts were £140,018,000. Of course, there were experts who in the evening papers ventured to point out to The Times that they were wrong; and the next morning The Times commenced their article as follows— We are sorry to say that the revenue returns, on which we commented yesterday, were not as satisfactory as we assumed them to be. We have to apologise to the Chancellor of the Exchequer for charging him with an excessive under-estimate of the yield of taxation. Out of the total yield of taxation in 1900–1901, amounting to over 140 millions sterling, upwards of £9,600,000 was paid over out of the proceeds of the estate duties, Excise, and Customs to the local taxation account. This latter sum does not enter, therefore, into the calculations of the national Budget, and the real excess over the estimate of Sir Michael Hicks Beach on last year's revenue is something over £2,800,000. In this and in other respects the form of the public accounts has been complicated of late years by the policy of grants-in-aid of the ratepayers out of the general taxation of the country. I quite agree that much has been complicated by that unfortunate policy, but what I complain of now is the continuance by the Treasury of this misleading statement of accounts. The country is allowed to believe it is paying less taxation than it really is paying. Now this last year, as has been pointed out, the estimate of revenue was twelve millions less than what it really amounted to. Not only was the estimate inaccurate, but we are confused with the receipts of certain sources of taxation which the House, and naturally the country, wish to watch. The Chancellor of the Exchequer told us in his Budget speech that Customs and Excise produced £59,000,000; they produced £65,000,000. He told us that the death duties produced £13,000,000; they produced £17,000,000. These are taxes imposed by this House, imposed by the Imperial authority, collected by the Imperial authority, paid by the taxpayers as one sum. When a spirit distiller pays his tax in respect of spirits, he does not draw two cheques, but one cheque, which covers the whole of his duty. And so also in reference to the payment of the death duties. I complain that the Chancellor of the Exchequer or the Treasury should persist in this misleading practice. These sums form part of the national revenue—payments to local taxation is the euphemism by which they are called, which means subventions to local taxation. All that is wanted to put our accounts right is to state what is the true receipt from the Customs, from the estate duties, and from the Excise, and to add to the payments a separate item, stating the payment to local taxation account.

For the sake of the criticism which I shall make upon the financial proposals of the year I shall disregard the inaccurate statement of receipts and payments, this pretended make-believe that taxation is really less than it is. The history of the question, as the House knows, is connected with the Local Government Act, 1888, and the death duties of 1894. There was a sort of make-believe that the gentlemen on whom the succession duty was being increased were going to be repaid. Again in 1894 the death duties were going somehow or other to be repaid by grants to local taxation. So far as that is concerned, the Chancellor of the Exchequer will pardon me if in going through these figures I make the necessary addition to his receipts. There is another point of inaccuracy in these figures. The country not only levies taxation and pays away taxation, but raises also a large sum of money called non-tax revenue. That really means in the main the proceeds of the Post Office. The Post Office, of course, has to be carried on at considerable-cost. In 1896 the total receipts of the Post Office were fourteen millions and a quarter, and it took ten millions and a half to earn that, so that the real receipts were only three millions and three-quarters. I have observed in a criticism of the Chancellor of the Exchequer's proposals that he is described as increasing the Estimates by something like three or four millions, which really is an increase upon the ordinary expenses of the Post Office. The Post Office is earning more than in 1896, and it costs more to earn it. The receipts that were fourteen millions have gone up to over seventeen millions, and the expenditure has increased to 13¼ millions. A Return, with which I have the honour of my name being associated, was prepared at the Treasury some fourteen or fifteen years ago, and has received the stamp of approval of the subsequent Chancellors of the Exchequer. It is that Return which enables the country really to know what is paid in taxation and what is expended in taxation. It will be hopeless for me to attempt to deal with these figures now, because that Return was only carried to 1900, and we are now dealing with 1902, and I must therefore deal with gross figures.

Subject to these two remarks, I propose to take three epochs in our national finance. The House can hardly appreciate the change that has taken place during the last few years by taking the matter year by year. They must take distinctive epochs and contrast the position now with the position then. I propose to take first the year ended 31st March, 1893, for the finance of which Lord Salisbury's Administration, though it retired in 1892, was responsible; secondly, the year ended 31st March, 1896, when Lord Rosebery's. Administration retired from office; and, thirdly, the year ended 31st March, 1900, before any war expenditure began. I want to draw the attention of the House to what I may call the normal or peace expenditure of the country. Taking those three epochs, I will give the House the figures as nearly accurate as I can. I take first the income. In 1893, when Mr. Goschen left office, the Imperial income—and I include in this the sum for local taxation purposes—was 97½ millions. In 1896 it was 109¼ millions. In 1900 it was 130 millions. Therefore the House will see the enormous sum by which our expenditure has been in-reased—from 97½ millions to 130 millions. But now let us come to the more important question of the expenditure of these three epochs. The expenditure of 1893 was practically the same as the revenue—97½ millions—although there was a surplus of £20,000 at the end of the year.

THE CHANCELLOR OF THE EXCHEQUER (Sir M. HICKS BEACH,) Bristol, W.

Is the right hon. Gentleman going to include in his comparison of expenditure the money paid to the local taxation account, just as he includes the receipts for that purpose in revenue?

SIR HENRY FOWLER

Certainly.

SIR M. HICKS BEACH

Then I think he ought to state it.

SIR HENRY FOWLER

I am doing so, but I am only just approaching the expenditure. In 1896 the House will remember that the income was increased by the death duties coming into operation. In that year the expenditure was increased towards the end of the year by including a good many items which my right hon. friend the Member for West Mon-mouth would, if he were here, probably say ought to be added to the surplus. The expenditure amounted in that year to 105 millions. Therefore the right hon. Gentleman took office in 1896 with an expenditure of 105 millions and an income that gave him a surplus of four and a quarter millions. Now I come down to 1900. The expenditure in 1900—including not a single item connected with the war—the peace expenditure in 1900 reached 120½ millions. I put the income at 130 millions, and so the right hon. Gentleman had a large surplus, which might be put at nearly ten millions, which he applied afterwards to war expenditure. The House will see that we have raised our peace expenditure during the present Administration before the war began by over 15 millions sterling. I ask, where have these increases arisen? What are the items? They can be given in a very few figures. The Army and Navy expenditure in 1896 was thirty-eight millions; in 1900 it had risen—the peace expenditure—to forty-six and a half millions, an increase of over eight millions and a quarter. The grants to local authorities were in 1896 £7,250,000. In 1900 they were £10,000,000. The education expenditure increased from £9,000,000 to £11,250,000, and the ordinary expenditure accounts for the rest of the difference. So that the House will put its finger very readily on two or three points.

The first question I would ask is, Is the policy of the Government on these items of increase defensible? Have they acted rightly? Are these increases necessary? So far as the Navy is concerned they had in 1900 increased the expenditure from £19,600,000 to £26,000,000. I have no hesitation in answering the question I put just now and saying "Yes," so far as the Navy is concerned. I believe that it is not only the sense of the House, but of the country that the Navy must at all risks and at all costs be kept up to that point which experts deem to be necessary in order that we may remain supreme mistress of the seas. The Navy, I venture to think, is our first, our second, and our third line of defence. Do not let us confuse these issues with any imputation or suggestion that there is any desire to reverse the policy which was initiated by the noble Lord the Secretary of State for India, carried on under circumstances of great difficulty but with most courageous perseverance by Lord Spencer, and then completed by Mr. Goschen and his colleagues. I dissociate myself from any adverse criticism so far as the Navy expenditure is concerned. But when I come to the military expenditure a different question is raised. The amount we spend on our Navy is in a great extent our insurance against a very large military expenditure. We cannot, we ought not, and we do not rival the great military Powers of the Continent. Any attempt to rival them must fail. Our frontier is not the land. It is theirs and they require large armies to defend it. Our frontier is the sea, and we have to defend our Empire and to insure our commerce with our Navy. Therefore the conditions are not analogous. Up to 1900, before the sky was disturbed with signs of war, our military expenditure had increased to an alarming extent. Our military expenditure in 1896 was 18½ millions, in 1900 before the war it was 20½ millions. In 1901, exclusive of war expenditure, it was 24½ millions, and the estimate for 1902 is 30 millions. The naval and military estimates for the current year exclusive of all war expenditure have reached the enormous sum of 61 millions. The Secretary of State for War told us the other night that the country demanded an increase in our military expenditure. I do not deny that at the General Election the country was very much dissatisfied with the condition of the Army. I do not deny that the country made a loud demand for such reform. I do not think it was so much a reform of the Army as it was a reform of the War Office. The mandate was from both parties, and hon. Members of all shades of political opinion were nearly pledged to recognise the general feeling of dissatisfaction there was with reference to Army administration, and to do their best to effect a reform. But the crux of my argument is whether it was necessary, in order to effect necessary army reform, to incur an annual expenditure of upwards of 30 millions. The country was ready, and is ready, to pay a proper sum for its military necessities; but it believes, rightly or wrongly, that it does not get its money's worth. The country believes that there has been an atmosphere of extravagance in connection with military expenditure, and those who entertain this view are justified in taking this occasion to discuss the subject. With reference to this expenditure I should like to ask whether there has been any report presented from the Committee which sat on the reorganisation of the Army, and which, if common rumour is to be credited, presented its Report last week. I ask the Chancellor of the Exchequer whether he has seen it?

SIR M. HICKS BEACH

No, Sir.

SIR HENRY FOWLER

I happen to know that the Report has been presented, and I think it ought to be in the possession of the House.

THE FIRST LORD OF THE TREASURY (Mr. A. J. BALFOUR,) Manchester, E.

It is the organisation of the War Office, and not the Army.

SIR HENRY FOWLER

Yes; but there is a question behind which perhaps the First Lord of the Treasury does not appreciate. That Report, I believe, put its finger on the causes of the extravagant expenditure of the War Office, and points out where that expenditure might be, and could be, reduced; and I say it is an astounding thing that that Report is not in the hands of Members as it ought to be when we are discussing this increase in our expenditure. It touches the very essence of the controversy—namely, the bad, the extravagant administration which ought to be dealt with. I do not know whether the hon. Member for King's Lynn will give us an interesting piece of autobiography about the Gibraltar question; but there is another rumour—he has not said anything to me; I am only speaking as one of the ignorant, outside public—that there is a proposal that that Committee should rewrite its Report. And possibly proposals may have been made to the Army Committee to rewrite its Report. This is a Government of rewriting Reports and despatches.

MR. A. J. BALFOUR

There is not a shadow of justification for saying that.

SIR HENRY FOWLER

I do not say anything about the Gibraltar Report; but I do say that the Report with reference to the Army or the War Office has been presented, and I think it is time that the House was put in possession of its recommendations. I come to the third item—the Education Vote—in which there has been a large increase. The Education Vote since 1896 has gone from £9,000,000 to what is rapidly approaching £12,000,000. I am one of those who hold that we cannot spend too much money on education; but we can spend the money foolishly and we can spend it wisely, and I say that here again we do not get our money's worth. A large sum of money is voted readily, enthusiastically, by the House for educational purposes, but there is no proper control over that expenditure. There is in reference to a great portion of it no public control and no public responsibility, and, without desiring in the slightest degree to impair the efficiency, the extent, or the quality of our education, I say there is room for economy in the administration of the public money for that purpose. In 1901 the gross expenditure (exclusive of the war) was 125½ millions, In 1892 it is estimated at upwards of 137 millions—and this does not include either war expenditure or interest on the war debt.

I come now to the point as to how the Chancellor of the Exchequer proposes to meet this extraordinary and increased expenditure. The right hon. Gentleman, in his Budget speech, said that the taxation which in 1896 yielded £102,000,000 would, if it had remained on the same basis, have produced £118,000,000 now. But with the expenditure which we have now reached that would not meet the case. The Chancellor of the Exchequer in his Budget speech the other night stated that, with the ordinary expenditure, the ordinary revenue for 1901–2 based upon the results of 1900–1 would show a surplus of £2,850,000. I join issue with him there because, in the first place, that was not ordinary income. The income of 1901 included a large amount for war taxation, the incraese of income tax to 1s., and the additional taxation of last year. Therefore the actual state of the case is this, that if he had deducted from the income of 1900–1 and his extra war taxation taken at, say, 12 millions, his income would have shown a very large deficit. Assume that there had been no war; assume that there had been an ordinary normal peace expenditure and income: the Chancellor of the Exchequer would have had to have constructed his Budget this year on a peace basis for an enormous deficit and to impose new taxation to meet it.

^*SIR M. HICKS BEACH: I said I should have had to impose some.

SIR HENRY FOWLER

I am glad to hear the Chancellor of the Exchequer admit that, because it will affect the future argument as to the amount of taxation which should be called war taxation. This taxation which is called war taxation is really peace taxation. The actual result, so far as I work it out, is that the estimated expenditure for 1902 is £197,602,000. From this has to be deducted the war expenditure of £58,200, showing the normal expenditure to be £139,400,000. The Chancellor of the Exchequer in his Budget has not provided solely for a war deficit; he has provided for a peace deficit, and we have to deal with his proposals on those lines. Supposing this war had not occurred, and the Chancellor of the Exchequer had had to come down to the House and say," I want to propose a Budget in order to meet this additional peace expenditure." I think that the House of Commons would have been alarmed at the enormous increase of the Estimates which has gone on year after year, and having regard to the surplus which he had when he came into office, the increase in the death duties and other branches of revenue, that there should still be so large a deficit. In the absence of final figures I can only estimate that deficit. I am sure it is more than five—I think it is upwards of seven millions. I want to ask the Chancellor of the Exchequer what he might have proposed under these circumstances. Let us consider the imaginary proposal that he might have made. Supposing he had said, "For this expenditure of £7,000,000 in excess of the present taxation of the country, I want to renew an expenditure which was a temporary expenditure, and for which Parliament has not as yet provided beyond the present year. There are two classes of ratepayers in this country who bitterly complain of the pressure of local rates. One class pays 6s. in the £, and the other class 2s. 2d. Well, I propose to relieve those who pay 2s. 2d., but not those who pay the 6s., and I propose to levy an additional tax for that purpose, and it will take pretty nearly £2,000,000." Under those circumstances what would the House have thought of the Chancellor of the Exchequer if he had come down and said, "I propose to raise this money in an entirely novel way. There is a class of people in this country who are very wealthy. They are the producers of coal, the colliery proprietors; they are unpopular at the present moment, because they have charged very high prices for coal. I think they are a very fair object for taxation. I think it would be a legitimate thing to tax their products for the benefit of the community." But assume he went a step further, and said, "I am going to sub-divide these into two classes. There are a great many wealthy coal proprietors who export their coal; there are a large number who do not export, but who have been making quite as large a profit on the inland coal market as the exporting coal proprietors; they have been sharing in the prosperity, but I shall not tax them. I ask the Chancellor of the Exchequer whether he would not have rejected such a proposal. I want to ask him whether he would have proposed what he is proposing now. The deficit on the year is entirely a peace deficit. It is called a war deficit, but it is really a peace deficit. We are hiding a peace deficit under a war deficit, and a peace expenditure behind a war expenditure.

Now I come to another branch of my Amendment—the branch of my Amendment in which I challenge the mode in which he proposes to meet the war expenditure included in the Estimates for the present year. The total war expenditure is estimated at £153,250,000, and of this, I think, £3,250,000 the Chancellor of the Exchequer attributed to China; therefore we practically have a total war expenditure of something under £150,000,000. How is that to be met? I am told that I have no right to object to the proposals of the Chancellor of the Exchequer for meeting that war expenditure in view of the position I have taken up with regard to this war—views to which I do not shrink from saying I adhere. Many friends of mine, friends for whom I have the greatest possible respect, have their conscientious opinions about the war. I conscientiously differ from them. I have impugned no man's motives, I have attacked no man's character, and I only ask that the same treatment should be accorded to me that I have measured out to others; but the fact that I hold these opinions, whether they are right or wrong, does not compel me also to support all the financial proposals which the Chancellor of the Exchequer intends to apply to that expenditure. In Committee of Supply I voted and would vote again for supplies which the Chancellor of the Exchequer has asked for, but that does not bind me to vote for him in "Ways and Means." I do not object to the payment for the war, but to the mode of payment. I object in the first instance to the proportion between debt and taxation. Our net Debt in 1898 was £613,000,000, in 1901 it was £672,000,000. Now, with the loan the Chancellor of the Exchequer has issued this week, it will be £732,000,000. After the Crimean War the Debt stood at £827,000,000. Now, these being the figures, I want to ask whether the surplus, including the surplus of 1900–1 and the additional war taxation of last year and this, which do not amount to more than £33,000,000 or £34,000,000, is a fair proportion for the country to pay out of taxation, and whether it is fair to defray all the rest by debt. When the Queen came to the Throne the people of this country paid an annual charge for the National Debt at £29,500,000; in 1875 Sir Stafford Northcote put it at a fixed sum of £28,000,000. That was not disturbed until Mr. Goschen reduced that £28,000,000 first of all to £26,000,000, and then to £25,000,000, and the present Chancellor of the Exchequer has since reduced it to £23,000,000; and if you take into account the suspension of the Sinking Fund the amount charged for the Debt this year is very low. It is not easy to propose new taxation, and I can quite understand that it is easier to vote supplies and then say the money must be borrowed, but I do not think that is sound finance. The Chancellor of the Exchequer might say, "If you are not prepared to vote for borrowing we must have increased taxation; how are you going to do it?" But that is not the business of the Opposition—I do not think it is the business of the House of Commons. It is their business to settle the principles of taxation and debt, and to leave it to the Government to work out those principles. So far as taxation is concerned, I think the Chancellor of the Exchequer was right with regard to spirits, but I dissent from him so far as beer is concerned, and I dissent from him so far as wine is concerned, and so far as tobacco is concerned. At the present moment we have actually reduced the duty on tobacco to below what it was before the war. In the Chancellor of the Exchequer's Budget of 1898–9 we took 6d. off tobacco, and then as a war tax we put on 4d., so that the wholesale manufacturers and the retailers of tobacco benefit to the extent of 2d. a pound. I know that the Chancellor of the Exchequer will say that the tobacco is better.

SIR M. HICKS BEACH

There is less water in it.

SIR HENRY FOWLER

Yes, much to the annoyance of the people who smoke tobacco, especially the working men. At all events, what I have said shows that there are spheres of taxation which are not shut out. I have not said anything about the sugar tax.

A NATIONALIST MEMBER

You ought to say something about it.

SIR HENRY FOWLER

That is the hon. Member's opinion. I am only responsible for my own opinion. I am not prepared to say that there are no anomalies in this tax upon sugar. But I know that both Mr. Gladstone and Sir George Cornewall Lewis, when they had to deal with war taxes, imposed a tax upon sugar, as well as upon beer and other articles. I do not like the tax upon sugar; but, at the same time, I have no right to complain of the Chancellor of the Exchequer, when we are pressing him to raise more by taxation, if he puts a tax on an article which the whole of the community will feel.

MR. DILLON (Mayo, E.)

Put a tax on wheat.

SIR HENRY FOWLER

I do not think the Chancellor of the Exchequer would have the courage to do that. When he does we shall be prepared to deal with it. I should like to repudiate the notion which I have seen expressed that it is our duty to penalise working men with reference to the prospective taxation, and that they specially should be made to pay their share of the expenses of the war. ["Hear, hear" from Nationalist Members.] Hon. Members behind me cheer that statement. I do not think, if they pay the sugar tax, they will be paying their share of the expenditure on the war; I think they will be paying their share of the ordinary peace expenditure of the country. I do not like the phrase, perhaps used incautiously, of making people, because they have taken certain views, pay their share, or more than their share, of what those views have involved. I think all classes in this country have participated in the sorrows and the bereavements of the last eighteen months. The highest and the humblest homes have alike been darkened by the shadow of death. The rank and file—the common soldiers, as they are called, the Englishmen, the Scotchmen, and the Irishmen, whose uncomplaining endurance, whose chivalrous self-sacrifice, whose splendid courage, have rivalled the noblest traditions of the British Army—have paid their full share of the terrible total of wounded and dead which has been recorded in the official return circulated to-day. Disease, ruined health, and loss of life are heavier burdens to the soldier and his family, and I think that in the adjustment of the burden of taxation, which I frankly admit all should bear, they are entitled to have no heavier burden than justice absolutely demands.

I have already said something with reference to the proposal of the Chancellor of the Exchequer for imposing a coal tax, and it is to the coal tax that my Amendment points. I regard the tax as calculated to do injury to trade and commerce. In other words, I do not think that the game of imposing this tax is worth the candle, so to speak, which it will produce. I do not know if Members of the House have read the Finance Bill; I read it only this morning; but I find in the Finance Bill a still more ominous indication of the intention of the Government. The income tax is renewed for one year, and the increased duties on beer and spirits are continued for one year, but the sugar tax and the coal tax are perpetual. The Chancellor of the Exchequer has made them part of the permanent fiscal system of this country. I do not think he said he would enact that in the Finance Bill. When the subject comes up next year, it will be out of the power of this House to discuss it; only an Act can deal with it.

SIR M. HICKS BEACH

You can move that the clause be repealed.

SIR HENRY FOWLER

Then I withdraw that, but the point to which I was directing attention was that the tax was. not a temporary tax, but a permanent tax.

^*SIR M. HICKS BEACH: I said so.

SIR HENRY FOWLER

The right hon. Gentleman did not say it in the Budget speech. He said it in the subsequent debate, in Committee on the coal tax. He only used the word "permanent" once. He did not say in proposing the tax that he was proposing it as a permanent addition to the revenue of the country. If that be so, we are at once entitled to say this is not a war tax; it is a peace tax; and then we are entitled to press arguments upon the right hon. Gentleman which we should not have pressed in a temporary emergency. Why do I object to this being a permanent part of our fiscal system? I do so, first, because in sound finance you have no right to levy an export duty except upon an article of which you have a monopoly, which a customer elsewhere is compelled to buy from you because he cannot buy it anywhere else. In those circumstances must inevitably pay. Export duties, he except in those circumstances, have been abandoned by all the authorities on political economy for the last half-century. I say further that this tax will check home industries. I think it will diminish the export of coal, and, so far, it will affect trade and shipping and railway and other industries. It cannot be both a revenue tax and a prohibitive tax. If you mean to prohibit your coal from going abroad your export tax is of no advantage to you. I object to it, further, because the wealthiest coalowners are not touched, The great bulk of the collieries will be exempted from this tax; their trade and their their profits will not be interfered with. This tax has every vice which I think a tax can have, and it produces only something like £2,000,000 a year.

The last clause of my Amendment alludes to the alarming increase in our expenditure—whether you include or exclude the war expenditure. Our Imperial expenditure is increasing by leaps and bounds. But our Imperial expenditure is not all. In dealing with the burdens of the people of this country you should not forget that the taxpayers are not the only people who pay taxes; there are ratepayers, and the rates of this country are increasing with extraordinary rapidity. While we are increasing the National Debt, the local debt is increasing also at something like a rate of £10,000,000 a year. In 1898 the local debt was £262,000,000, and it is, I believe, now nearly £300,000,000, and rates are steadily rising. Of course, the House will remember that a great portion of that local debt is reproductive debt, which will not only pay good interest, but will pay itself. So far as the increase of that portion of the debt is concerned, it is not a burden but an advantage to the community; but I am sorry to say there is a very large amount of expenditure which is not reproductive and necessarily adds to the burden of the people. I do not know whether the Chancellor of the Exchequer will repeat the invitation to-night, but he has said— I hope the new taxation will turn the thoughts of the country, as it has already turned the thoughts of the House, in the direction of economy. That is exactly what I am endeavouring to do. That is my main object. I would not have interposed in this debate except for the purpose of directing the attention of the House and of the country towards economy. I think economy has been ignored. There has been a lavish expenditure going on in all Departments of the State, and I think the time has come to check it.

MR. WILLIAM REDMOND (Clare, E.)

Stop the war.

SIR HENRY FOWLER

Ah, stop the war! If the war was stopped to-morrow you would have to impose nearly all this additional taxation for your ordinary expenditure. In 1885 the Chancellor of the Exchequer made a similar motion to that which I am making to-night. He proposed that the House should not reject the Budget, but he took great exception to the proposals in the Budget. He said— I do not move a vote of want of confidence, but I want to ask the consideration of the House to my arguments, and to invite the Chancellor of the Exchequer to remodel his Budget.' I should not presume to use that language to him. I know what he is smiling at. He is going to say the Government of that day did not take that view. The right hon. Gentleman sitting next to him will tell him better than I can how that Government fell, and why it fell. It did not fall on account of the Budget. There were external and internal causes—which, I think, form a regrettable chapter in our history—which brought that Government to an end. What was the Chancellor of the Exchequer alarmed at then? He was appalled at a hundred millions Budget. Now, I will not say he is appalled, but he is obliged to produce a two hundred millions Budget. He was dissatisfied with the 6d. duty on tea—he thought it ought to have been increased—but he very much objected to increasing the duty on wine and on beer.

SIR M. HICKS BEACH

I opposed the Budget because it did not increase the duty on wine.

SIR HENRY FOWLER

I was mistaken. Mr. Childers did not increase the duty on wine, but he did increase the duty on beer. I think the best remarks made in that debate in support of the Chancellor of the Exchequer were made by the noble Lord the Secretary of State for India. He gave three strong reasons for supporting the recasting of the Budget, and I think history has wonderfully reproduced itself. He said the normal expenditure had reached many millions more than had ever hitherto been the case. That was in 1885; and I think it is so in 1902. He also said that the average annual increase had taken place by leaps and bounds, and that the Supplementary Estimates had attained to an extraordinary high figure.

Now, Sir, the right hon. Gentleman will say that this is a vote of want of confidence in the Government. They make everything a vote of confidence. The Government appears to require a vote of confidence every week. All efforts to dot the "i's" and cross the "t's" of their schemes and plans are treated as matters of confidence. I do not know what the new Members think, but I think they will have already learned that there are now three questions on which the House of Commons is always asked to vote—the first is the suspension of the 12 o'clock rule, the second is the closure, and the third confidence in the Government. The Government is a plant which requires pulling up by the roots and looking at every week. This is a mistake from a constitutional point of view, and it strikes at constitutional government altogether. There should be more freedom for the expression of opinion in the House. The noble Lord the Member for Greenwich said the other day, in a speech which was somewhat misunderstood, that the power of the Cabinet was increasing and the power of the House was decreasing.

LORD HUGH CECIL (Greenwich)

I did not connect that with the present Government.

SIR HENRY FOWLER

Well, the noble Lord's own experience is limited, I think, to the past six years. But I think that this is a great constitutional danger. The old-fashioned doctrine that a Government should not go out except on a distinct vote of want of confidence on a main principle of policy or on a vital proposal was a good one. The course which the present Government adopts reduces the House of Commons to a farce. They assume with respect to the details of their measures the infallibility of the Vatican and the autocracy of the Tsar. Last week the Government carried their proposals against the general opinion of the House because they were made a vote of want of confidence. I should have thought that it would have been desirable for the House to have had a freer hand in the discussion of Ways and Means, but from that we are excluded. I have no doubt that this Amendment will be rejected. The House will again affirm its confidence in the Government—in a Government that can never make mistakes, that can never bring in a Bill which needs amendment, and cannot make a proposal which cannot be regarded as almost of divine origin. I do not expect to shake that belief; but the day will come when the House will wake up to the fact that this policy of concentrating all wisdom and power in the Executive is a mistake, that it is time the House of Commons asserted its individuality and its right of criticism. I believe the mature judgment of the country is that our expenditure is increasing at an unnecessary and dangerous rate; that our taxation is, in the main, raised by the brain labour and the hand labour of the bulk of the nation; and that it is the supreme duty of the House of Commons to require unflinching economy in all departments of the State, to prevent, as far as possible, the waste of public money, and to insist that the public shall have that full value for its expenditure which would be demanded in every well-managed business concern. It is because I believe that that I venture to move the Amendment which stands in mv name.

Amendment proposed— To leave out from the word 'That,' to the end of the Question, in order to add the words 'this House, while ready to make adequate provision for the naval and military requirements of the Empire, is of opinion that the financial proposals of His Majesty's Government are objectionable both with regard to taxation and debt, are calculated injuriously to affect industry and commerce, and do not exhibit that regard for economy which the alarming increase that has recently taken place in the normal expenditure of the country imperatively demands.'"—(Sir Henry Fowler.)

Question proposed, "That the words proposed to be left out stand part of the Question."

SIR M. HICKS BEACH

The right hon. Gentleman commenced his speech with a short dissertation on a subject of which he is very fond—namely, the manner in which the financial accounts of the country are presented to the House of Commons. He accused me of confusing those accounts. He condemned me for not including in my statement of Exchequer revenue the revenue which goes to the Local Taxation Fund, and he blamed me because I did not include it on both sides of the account in introducing my Budget. The right hon. Gentleman failed to do me justice in that matter. I have, in accordance with his own wish, presented monthly, nay, weekly, accounts to Parliament, showing precisely how it stands. I have in every Budget I have had the honour to introduce explained to the House at the time precisely the amount which is devoted to the Local Taxation Fund from taxation, as well as the amount devoted to the ordinary purposes of the expenditure of the country. But I will venture to say that now, after the practice of presenting the accounts which the right hon. Gentleman has complained of has gone on, as he has stated, for thirteen years, to enter on a new departure by presenting the accounts as he has presented them to-night would be simply misleading the House and the country, and make all statistical comparisons in this matter impossible. We are bound by law, whether it be right or wrong, to allocate certain receipts from taxation, from the death duties, from the spirit duties, from the beer duties, to the Local Taxation Fund. Part of that law was in existence when the right hon. Gentleman and his friends were in office for three years, and they never touched it except to confirm it by continuing that allocation. Therefore, though he may now find fault with the system I should not be acting in accordance with the established custom and in accordance with the law if I presented to Parliament the accounts of finance in the manner in which he has presented them to-night.

SIR HENRY FOWLER

The Chancellor of the Exchequer of that day said it was his intention to alter it.

SIR M. HICKS BEACH

Then I am surprised that the right hon. Gentleman did not prevail on his colleagues to alter it during those three years, whereas, as a matter of fact, it has remained in that position ever since and must remain so until the law is altered. But this is only a small part of the right hon. Gentleman's speech, and it has nothing to do with the subject matter of the Amendment which he has submitted to the House. With respect to the Amendment, I do not think I ever remember a time when the notice paper on the Second Reading of a Budget Bill was more crowded with Amendments. They are appalling both in number and variety. But there is only one of them that is absolutely inconsistent with itself, and that is the Amendment which the right hon. Gentleman has just presented to the House, which is the first-born offspring of a united and renovated Opposition. I do not venture to inquire into the parentage of that Amendment. I am afraid it showed traces of that connubial discord which sometimes unfortunately happens in married life when a child represents the faults of both its parents. But who the parents of this Amendment are is entirely beyond me. The right hon. Gentleman said that above all things this action of a reunited and renovated Opposition, which, according to the right hon. Gentleman who sits next to him, is now to undertake a great and serious function, is not intended as a vote of want of confidence in His Majesty's Government. We are blamed by him for constantly demanding from the House of expressions of confidence. I have never done so yet. We are blamed by him for being ready to accept the success of such a motion as this on the Second Reading of the Finance Bill as tantamount to a vote of want of confidence, and that from a member of a Government which went out upon the question of cordite upon a snatch vote in Supply. I have never known an Amendment of this description moved on the part of a responsible Opposition to the Second Reading of the Budget Bill treated as anything else than a vote of want of confidence.

What, Sir, is the main feature, after all, of the Budget of this year? I venture to say that it is the war expenditure. Yet that is the one thing on which the right hon. Gentleman never said a word, and which by the very terms of his motion and speech it is absolutely clear he entirely approves of. This motion if adopted by the House would condemn His Majesty's Government in a great many things, but there is one thing which it affirms, and that is the necessity for the war expenditure. When I introduced the Budget this year I spoke very plainly to the House upon the great expenditure on war—on the war in South Africa and, though to a very much less extent, on the war in China. I saw no reason for concealment. I was not ashamed of it, and I mentioned it to the House. My statement was received with demonstrations which rather puzzled me at the time. But I understand better now what they meant, for they are interpreted in the Amendment which the hon. Member for East Northamptonshire has placed on the Paper. In his opinion the expenditure upon the war is a needless expenditure, the money spent on the war has been wasted, probably he would say worse than wasted, and I dare say he would go on to argue that the magnitude of the expenditure is proof that the war is wrong. Well, that would be a most inconsistent argument. The expenditure of 140 millions upon the war is a matter of great importance to this country; I admit that to the full; but the question is whether it is necessary expenditure or not, and if the issue was whether Briton or Boer should be supreme in South Africa, why, even the expenditure of 140 millions is a trifle in comparison to the importance of that issue. I do not want to go back, of course, to the policy of His Majesty's Government as before the war; that has been discussed here over and over again, has been repeatedly affirmed by a majority of the House of Commons, and has been sanctioned by the verdict of the country at the General Election. Nothing now remains but the judgment of history upon it. [An HON. MEMBER: And payment of the bill.] But as soon as the Boer ultimatum was delivered, as soon as British territory was invaded, one thing was absolutely clear, as clear to the right hon. Gentleman as it was to us—namely, that the war must be brought to a complete and successful conclusion. The question was solved in a wrong way, in our opinion, in 1881, and it had to be solved in the right way now. If it had not been so solved, why South Africa would have been lost to us and the disintegration of the British Empire would have begun. Compared with such an evil as that, Chancellor of the Exchequer though I am, I say the expenditure of 140 millions is a small thing. The right hon. Gentleman has spoken out, as he always has spoken out, plainly and courageously to-night. He approves of the war. He does not agree with certain stray sheep from the Liberal fold, such as the hon. Member for Northampton, who thinks that we are altogether wrong and should make peace on any terms. The right hon. Gentleman approves of the war and so far approves of the main features of this years Budget. All that he disapproves of in the arrange- ment of the war expenditure is the manner in which it is proposed to be raised. He blames me for raising too much by loan and not enough by taxation. He very properly said he was not Chancellor of the Exchequer, and therefore it was not his business to suggest what the taxation should be by which the expenditure should be met. But one tiling he will admit; it is this—that the war charge of fifty-eight millions could not be met by taxation alone. I am justified, then, in borrowing, in his opinion, to a certain extent, and the difference between us is a difference of degree. Now let us see what is the proportion of the cost of the war which has been raised during three years by taxation. I will include both the cost of the China and South Africa wars, and I hope the House will understand that in the cost of the war I include not only the cost of military operations, but the interest on the amount borrowed for the purposes of the war, and in the taxation I include, of course, all kinds of taxation—not merely increased taxation, but all taxation devoted to war purposes, including that which has been or will be so devoted by the suspension of the Sinking Fund.

MR. DILLON

The suspension of the Sinking Fund is the same thing as borrowing.

SIR M. HICKS BEACH

The suspension of the Sinking Fund borrowing! Why, the hon. Member can hardly know what the Sinking Fund is. What is the Sinking Fund? It is simply a surplus—

MR. DILLON

It is laid by for the purpose of paying off debt, and if you cease to pay off debt you are borrowing.

SIR M. HICKS BEACH

Well, I do not know how that may be in Ireland. In England ceasing to pay off debt is not the same thing as borrowing. In any case the Sinking Fund is simply surplus revenue derived from taxation, which the country chooses from time to time to devote to the paying off of old debt. If you were not to include this as taxation, which is just as much taxation as any other kind of taxation, because it is ordinarily devoted to the Sinking Fund, it seems to me, with all deference to the hon. Member, it would be absurd In the year 1899–1900 we devoted £9,335,000 from the surplus revenue of the year to the purposes of the war from taxation. Last year we devoted £15,413,000 of excess revenue above ordinary expenditure raised by taxation for the purposes of war. This year, according to the Estimates before the House, we propose to devote £20,523,000 excess revenue above ordinary expenditure in the same way to the same purpose. These make £45,271,000 altogether, while the total estimated cost of the South African and Chinese wars is put down as £153,317,000. Therefore we have devoted towards this from the taxation of the country £45,271,000, and we have borrowed £108,046,000. Now, I quite admit that the proportion raised out of taxation is less than our predecessors raised for the cost of the Crimean War. But I think that I have imposed a sufficient proportion of the burden on the taxpayers of the present day. This year, at any rate, trade is not so generally prosperous, and it is not a good time to impose an excessive burden of taxation on the country. For that reason I have moderated my demands on the taxpayers this year, and have proposed, and this the right hon. Gentleman has blamed me for, an addition to our system of indirect taxation of a permanent character which will go on beyond the war, and will, therefore, be available towards the formation of a sinking fund in order to pay off the money which has been, or may be, borrowed for payment of the cost of the war. That, I think, is better finance than an attempt to impose excessive taxation in the year in such circumstances as I have described. The right hon. Gentleman practically said in his speech that this is not a fair argument, because the new taxation, according to him, is to go almost as much towards ordinary expenditure as towards war expenditure. Well, I entirely demur to his argument on this head. Let me try to state to the House how the matter appears to me. He would not apparently consider for a moment the taxation of last year as anything but war taxation; but I put it plainly to the House in my Budget speech that a great part of the taxation of last year, originally, of course, intended to be only a temporary war taxation, would be necessarily devoted now if there were no war to the ordinary purposes of the country. I never attempted to conceal this at all; and you must take this additional taxation into account in dealing with this matter. Now, what would be the ordinary expenditure of the present year according to the Estimates if there were no war expenditure at all? I calculate it would be £127,373,000.

SIR HENRY FOWLER

The ordinary expenditure reduced by suspension of Sinking Fund?

SIR M. HICKS BEACH

No. That includes the amount ordinarily allocated to the Sinking Fund, but, of course, does not include that which ought not to be included—the amount paid towards the Local Taxation Fund. Assuming no war expenditure, and adding the interest on the new war loan—£3,350,000—the total ordinary expenditure would be, in round figures, £130,500,000. Now, as against that, I should have to set on the old basis of taxation, before the increase of taxation last year, the actual revenue receipts in the year, which I estimated in my Budget speech at about £118,000,000, but which was not a fair statement of what I may call the proper revenue of the year, because, as hon. Members who have followed these matters know very well, the proper revenue of the year was diminished this year by large forestalments, to the amount of £3,250,000, in the months of January and February. Therefore the £118,000,000 only represents what I anticipate the Exchequer would receive from the revenue on the old basis of taxation this year if there are no similar forestalments next January and February. If there are not the proper revenue for 1902–3, augmented to that extent, would amount, all other things being equal, to £121,500,000. But taking the actual revenue receipts for this year on the old basis of £118,000,000, and deducting that amount from £130,500,000 of ordinary expenditure, I find a deficit of £12,500,000. Very well.

Now, what are the additional taxes that were imposed last year, and that I purpose to impose this year? Their estimated yield together amounts to about £25,000,000. Therefore, as against this deficit of £25,000,000, I have to set £12,500,000 of that to meet ordinary expenditure, leaving a balance of £12,500,000, which might be devoted to the Sinking Fund for the redemption of the new war debt, to the remission of taxation, or any other purpose the financial position at the moment might seem to require. That, I think, is a fair statement of the case as it really stands. But now the right hon. Gentleman objects not merely to the proportion between the amount which I propose to raise by loan and by taxation, he also objects to the war taxes. Very well, but he did not object to the income tax; he hardly said a word about it. A good many Members on his side, I think, would have liked to have seen the income tax a little higher still. [Opposition cheers.] But I knew the right hon. Gentleman would not take that view; he was not speaking on behalf of the united party in that matter, because only two or three years ago he censured me a good deal for not reducing the income tax, which then stood at 8d. in the £. Then he did not find fault with the sugar duties; I thank him for his support. But I am not quite sure that the right hon. Gentleman who sits next to him, the Leader of the Opposition, was so grateful. [An HON. MEMBER: No.] Yes. There we have not got a united Opposition either, because I observed the other day that the right hon. Gentleman the Leader of the Opposition, in addressing an audience in the north of England, spoke of the sugar tax as a dreadful tax upon women and children—though why women and children should not share taxation I really do not know—and as a tax that would cost the ordinary working man earning 15s. a week, with a small family, 4½d. a week, an enormous amount of taxation? That is a most exaggerated estimate of the amount of sugar that would be consumed in such a family; and the right hon. Gentleman entirely forgets what the right hon. Member for East Wolverhampton so properly reminded him of to-night—namely, Mr. Gladstone's views and action on the matter of the sugar duty and the tea duty at the time of the Crimean War.

SIR H. CAMPBELL-BANNERMAN (Stirling Burghs)

Existing taxes.

SIR M. HICKS BEACH

What is the difference in principle between maintaining and increasing, as Mr. Gladstone did, an existing tax and imposing a new one? I do not believe that if it were possible for Mr. Gladstone to be here among us now he would have opposed this sugar duty, any more than has the right hon. Gentleman who moved the Amendment. [A MEMBER on the Opposition benches: We should not have had any war then.] I will venture to say that on this matter the working men are a little more reasonable than the Leader of the Opposition; they are perfectly willing to bear this taxation, they are proud to bear it. They know perfectly well that the duty I propose will not increase the price of sugar more than to the amount at which the price of sugar without the duty stood no longer ago than 1893; they know that their wages have risen since that time, and that they are perfectly well able to bear this tax without stinting themselves or their children in anything that is necessary. But there was a part of the taxation, and the only one, in spite of the terms of the Amendment, to which the right hon. Gentleman objected, and that is the coal duty. Well, we have already discussed the coal duty at very considerable length. The right hon. Gentleman did not say much about it to-night; but what he did say was that he objected to an export duty altogether unless it was a duty upon a monopoly.

SIR HENRY FOWLER

A commodity.

SIR M. HICKS BEACH

Well, a commodity which was a monopoly. I believe, as a matter of fact, that our export coal may be very largely so described. [Opposition cries of "No."] I expected to hear that assertion questioned from the other side; but it is not seriously questioned by those who have spoken moderately with regard to the coal tax as far as regards the best kinds of our coal. The hon. Baronet opposite, the Mem- ber for the Berwick Division of Northumberland, went so far the other night as to suggest that this export duty on coal would rather tend to increase the export of the best classes of coal. And as to the other classes of coal, the more I look into it the more I am convinced that those countries of Europe which do not themselves produce coal cannot get coal so cheaply from any other source as they can from this country, even with the additional duty, and that the same thing is true of large parts of countries like France or Russia, for example, which do produce coal for themselves, but also import coal very largely from this country, imported in spite of the fact that they impose an import duty of 1s. or 2s. upon the coal that comes to them from us. The amount which the coal importers of the countries of Europe and the Mediterranean require, even in a slack year such as this, is so large that I believe it would be absolutely impossible to supply it from any other European source except our coalfields. We are the only country in the world that, with regard to coal, not only supplies its own needs without any importation at all, but also exports largely to other countries; and, although I do not want to go into this argument to night, I will venture to say that there is nothing in this duty on coal which, as far as the discussion has hitherto gone, has in the least shaken my conviction that it can be safely imposed without any injury to the industry or commerce to which the right hon. Gentleman has referred. Why, what is the strongest case of all against this coal duty? That of the Northumbrian coalfield, which was ably put forward by the right hon. Baronet the other night, and which has often been put forward in this matter. What are stated to be the circumstances in that coalfield? Simply these—that the natural outlet of the Northumbrian coalfield is Northern Europe, and not this country, as one would suppose; and that if it is produced at all it must be exported, because there is no demand for it here. And why is there no demand for it here? Because the Scottish coalfield on the north and the Yorkshire coalfield on the south prevent it being consumed in England or Scotland. But why? Because the railway rates from Northumberland to such places as York and Leeds are more than half again as much for that short mileage as the seaborne freights are from Northumberland to places like Hamburg and Cronstadt. I would advise Northumberland coalowners to agitate for a reduction of their railway rates. We are told that there are 150 ships exporting coal from the north of England to the nearest European ports, and coming back only in ballast, many of which would be thrown out of employment if the export of coal from the Northumbrian coalfield were seriously diminished. Well, I live in the south of England; I know something of the price of railway-borne coal in the south of England, and if these ships cannot find a good market in European ports they might do worse than bring Northumbrian coal to the ports in the south of England to compete with the railway-borne coal there. I do not believe in these assertions as to the injury that is to be done to this great industry by a 1s. export duty on coal, still less do I believe in what the right hon. Gentleman suggested to-night as the injury that would be done to our commerce. We have heard a good deal about the way in which this duty could not be imposed on the foreigner, and must therefore fall on the coalowner, and through him upon the miner; but now we are told it is to be borne by the shipowner, and that, because freights have gone down since the commencement of the year, the depression in freights is due to this duty, although the exports of the month of April have really been larger than they were in the month of April of 1900, and although in regard to a large portion of those exports, under existing contracts, no duty will be paid at all by anybody concerned. I do not wish to delay the House with arguments on a matter which I do not think they want to discuss to-night; but I have felt obliged to allude to it shortly, because I differ altogether from the right hon. Gentleman's estimate of the effect of the duty on coal.

Now I come to the remarkable part of the Amendment of the right hon. Gentleman. He is willing to make "adequate provision for the naval and military requirements of the Empire," but he thinks our financial proposals "do not exhibit that regard for economy which the alarming increase in the normal expenditure of the country imperatively demands." I do not understand the connection between those two sentences; they look like two policies. I do not quite understand how he combines them. Now, what is the cause of this increase? He told us: in the first place, he said, the increase of the Navy Estimates, and he spoke out manfully and rightly upon that subject. But did he voice the opinion of the united Liberal party? I noticed that the opinions of the right hon. Gentleman upon the importance of a large Navy were uttered without a single cheer from that side of the House. [Opposition cries of "No."] Yes; then he went on to the only two heads of our expenditure, on which he suggested economy. One was education, but he did not mean to spend less money on education, he did not suggest that for a moment; he thought that the money might be better spent than it is.

SIR HENRY FOWLER

More economically.

SIR M. HICKS BEACH

Well, that it might be spent so as to secure better results.

SIR HENRY FOWLER

That results could be secured at a less cost.

SIR M. HICKS BEACH

Yes; but I think I am not doing the right hon. Gentleman an injustice if I say that he would go on to expend money on other kinds of education than those on which it is at present expended, and that he does not wish to see the diminution of the total expenditure of the State on education, but would rather like to see it increased. That, at any rate, I am convinced, is the opinion of the opposite side of the House. One thing is clear—that if economy means less expenditure, you cannot find it in the matter of education. But the right hon. Gentleman suggested, and I think it was rather an unfair suggestion, that there might be some economy in our grants for the purposes of local taxation—our old friend the "doles." I was glad to notice he did not use that word, because a greater mis- nomer than to describe the Agricultural Rating Act as a dole to landlords I do not think was ever invented.

SIR HENRY FOWLER

I regard them as doles or donations.

SIR M. HICKS BEACH

Why is it a dole to remit a portion of local taxation to the occupier of agricultural land—which was unjust taxation—[Opposition cries of "Oh, oh."]—out of the Exchequer, if it is not also a dole to remit entirely local taxation to the owner of stock in trade by annual Act out of the pockets of the other ratepayers? I see no difference in principle whatever between the remissions. [Opposition cries of "Oh."] But more than that, it has been a favourite argument of hon. Members opposite in the course of our debates on the Budget that if we impose a duty on coal it is not paid by the foreigner but has to be paid by the coal-owner, and that he will pass it on to the miner who works for him, in the shape of reduced wages. Very well. If that be true, if a tax gets to the workman in that way, may not the remission of taxation also get to the workman? This dole, as it is called, under the Agricultural Rating Act, has gone into the pocket of the occupier of agricultural land. [Opposition cries of "No."] I defy any hon. Member to produce a single instance in which it has gone into the pocket of his landlord. Well, if it has gone into the pocket of the occupier of agricultural land has it not enabled him in these times when the wages of the agricultural labourer have happily increased, to employ more labour and to pay his men better than he could afford to pay them when he had higher rates? Why is that argument not true in the case of the agricultural labourer, if the converse is true in the case of the miner? I do not think, if the matter comes to be fairly examined, that these grants can be called doles to the landlord. But the point is this, How are we to economise? If the right hon. Gentleman opposite were standing at this box now, in the office which I have the honour to hold, how could he economise with regard to them? Will he venture to say that he really believes that he could restore to the Exchequer the million and a half, or whatever it is, which is devoted under the Agricultural Rating Act to this purpose? No, Sir; he knows very well that the Members for agricultural constituencies in England and Wales who sit on his side of the House would have nothing to say to such a proposal as that. Does he think that he could deprive Scotland or Ireland of the sums which under corresponding Acts have been devoted to local purposes in Scotland and Ireland out of taxation? I should like to see him try it. No doubt Irish and Scotch Members on that side of the House might desire to see those sums devoted to other purposes than those to which they go now, but as for handing them back to the Exchequer for the general expenditure of the country, the thing is impossible. Then you cannot save on education; you cannot save on these doles, as they are called. The right hon. Gentleman thinks you can save on the Army. He considers that our military expenditure is excessive, and he supported that proposition by the astounding assertion that we have no land frontier to defend. Why, Sir, he is a little Englander indeed in that respect! And yet he was Secretary for India. Has he not spent any money in defending India? Why, do we not keep up a very large part of our Army for the simple purpose of defending India?

SIR HENRY FOWLER

And India pays more than she ought to do.

SIR M. HICKS BEACH

India pays only that portion of the British Army which may happen to be there at the time; but if India were attacked on its land frontier, as India may be attacked some day, as nobody knows better than the right hon. Gentleman, surely it would be necessary for us to be prepared to defend her with a much larger army than that which happens in peace time to be in India. Has Canada no land frontier? Are there no other parts of our Empire which have land frontiers! Hoes the right hon. Gentleman of all men—no, it was a mistake on his part to make such an assertion as that. He knows full well that we keep up our Army not merely for the defence of these islands, but for the defence of the Empire as a whole.

And what are the responsibilities of that Empire? They have been largely increased in recent years. Yes, not merely under the present Government. We did not go to Egypt; we did not accept the protectorate of East Africa. I do not blame our predecessors for either of these actions. The Empire expands in spite of the Government of the day, and as it expands our military responsibilities for its defence increase. We look out from these islands on a world very different to that which presented itself to us a generation ago. Then there was only one great civilised Power which could give us cause for anxiety either as a rival or as a possible opponent. Now there are four, if not five, who have increased in wealth and strength beyond even the increase that has been vouchsafed to us. I will say that there is reason, and good reason, for military expenditure in advance of the standard which was sufficient for this country ten or fifteen years ago. But at the same time I am disposed to be jealous of military expenditure when compared with naval expenditure. I never would be a party to any such military expenditure as would be vying with the great military Powers of the Continent—never. I do not believe it is necessary for this country. I believe it would be the utmost folly to engage in anything of the kind, and I would never be a party to it. But it is the first duty of every Government, whatever its political opinions—it would be the duty of the right hon. Gentlemen who sit on that Bench if they succeeded us to-morrow—to provide for the safety of the country. That need not mean greatly increased expenditure as compared with our present standard, although there might be some increase. I have never stated that in my belief the expenditure of this country could be reduced, but I have said that it might have to be increased, and that therefore we must strengthen the basis of our existing indirect taxation; but I do not think—and I say this with the consciousness of my responsibility as Chancellor of the Exchequer—it is possible for us to continue at the rate of increase which we have seen for the past six years without the gravest danger to that financial system which has long been established in this country, and to which, through its light and easy taxa- tion on the industries of this country, I believe we owe much of our prosperity. Sir, it would be foolish and a false economy to cut down what is required to provide for the safety of the country. But it is not necessary to my mind that the taxpayers of the United Kingdom alone should always bear, as now they almost exclusively bear, the whole charge for the naval defence of the Empire. Further, Sir, it is well that in some things the State should undertake work at the cost of the taxpayers for the benefit of the country at large. But it is not well, and it would be foolish to the last degree if this House ever imposed upon the State largely increased burdens for anything like all the work which we have seen for generations past well done by private enterprise and by individual action, with this great advantage, as it seems to me, that among the proudest attributes of our national character are independence and self-reliance. I do not think you can find the true way to economy in such a speech or such a motion as that of the right hon. Gentleman. I do not question his motive. I know he desires economy for economy's sake. I know that he has spoken to-night, as he has often acted, without being biased by mere party feeling. But this I must venture to say as my own opinion, that it is in such directions as I have ventured to indicate rather than in the mere denunciation of our existing expenditure that the path of true economy lies.

MR. HALDANE (Haddingtonshire)

The concluding words of the speech of the right hon. the Chancellor of the Exchequer contrast with the early utterances in that speech. In this place, as elsewhere, the art of debate consists not a little in diverting the attention of the audience from the point at issue by throwing if possible as many appeals as you can to the discord amongst your opponents. And the right hon. Gentleman has proved himself a past-master in that admirable art of debate. The right hon. Gentleman began his speech by suggesting a number of things, which proved him to be a diligent student of the London correspondents of the various newspapers in the provinces. He suggested that this Amendment, if voted for, would prejudge opinion on the war. He raised the question of the Navy, and suggested that the Opposition would divide itself into various camps over the Amendment, and then the right hon. Gentleman went on to meet the very formidable indictment contained in the speech of the right hon. the Member for East Wolverhampton, and to give what was his real and only answer to that speech.

What was the gist of the speech of my right hon. friend? It was that above everything the Budget scheme as disclosed in this Finance Bill did not sufficiently take into account the gravity of the financial situation of the country. My right hon. friend made his point by showing in a striking fashion that if ten millions extra revenue were raised, five millions must go to covering the normal deficit on the normal expenditure. The right hon. Gentleman answered that, and also the charge that the great burden which the war was throwing on the national finances was not being met vigorously enough, by a suggestion, which I think was the only real suggestion the right hon. Gentleman made in answer to the argument of my right hon. friend. It was that we were laying the foundation, he did not say that he had constituted it, but he suggested that a foundation might be laid—I do not think he put it at more than a hypothesis—of a Sinking Fund of twelve and a half millions a year, which would go to relieve the burden and the cost of the war. The way in which the right hon. Gentleman got at that was by taking a comparison of the revenues of the last three years, and showing, what I have no doubt is quite correct, that forty-five millions has in these three years been paid out of revenue towards the cost of the war, which he estimated at 153 millions. That may be true, but we are face to face with a situation in which on the normal basis of our taxation our expenditure is rapidly overtaking the yield of that taxation. We have got to look forward, and certainly I know no limit, at the rate we are going, to an increase in expenditure, and to talk of twelve and a half millions as anything in the nature of a Sinking Fund is basing his case on the most shadowy foundation The right hon. Gentleman did not suggest that the twelve and a half millions was to be regarded in itself as a Sinking Fund. He only said it might possibly be so treated. I wish to follow out the line which my right hon. friend so appropriately put to the House in his speech. I do not think this is the occasion to discuss particular taxes. We shall have a discussion on them in Committee. We have discussed them to some extent already, and we shall hear a great deal more about them. I do not wish now to enter into controversial questions as to coal or sugar or the amount of the income tax, but I wish to try and impress on the House what seems to me to be the great gravity of the financial position in which this country stands, looked at from the broadest point of view. My criticism upon this Budget Bill is that it does not contain any resolute effort to grapple with that position. By an increased income tax and by a duty on sugar and coal we have this year added some ten millions to our revenue, and by borrowing we have added a very large sum to our debt. My criticism is that the scheme of finance as shown by the Bill is not sufficiently vigorous in view of the position in which we stand to-day. The right hon. Gentleman in the course of his Budget speech said that the position which we were in was that trade began to show signs of falling off, and that he would not be justified in putting heavier burdens on the taxpayers. Does the right hon. Gentleman imagine that he has got to the end of that falling off in trade? Does he imagine that the sources of revenue of this country are going to be again as good as they were three years ago, or as good as they were even a year ago? If there is anything that is more than ordinarily evident it is that within a few months the country will be less able to bear the burdens it has at present than is the case now, and if that process is one which by degrees gets worse and worse, surely it is the duty of the Chancellor of the Exchequer, as long as he has a large revenue, to make as much provision out of it as possible to meet a charge which is becoming heavier and heavier in proportion to our resources. The right hon. Gentleman says, and it is perfectly true, that the income tax at the time of the Crimean war was 2d. in the £1 heavier than it is now. But surely in a time such as that in which we live we cannot take into account income tax only. At the time of the Crimean War the nation made a most resolute effort to discharge the cost of that war in the smallest possible time. The borrowing was comparatively small—under forty millions—and yet the Chancellor of the Exchequer of that day did not hesitate to raise the income tax to 1s. 4d. in the £, notwithstanding that there were other taxes pressing on commodities which do not exist now, and which made heavier charges on the country than anything contemplated under this scheme. In the forty-three years since the Crimean War 198 millions of debt has been paid off, but the borrowing for the war has absorbed the savings of nearly a score of years past, and we are in a position in which, if we do not make a resolute effort to retrieve the situation, we shall have to leave those who come after us in a very much worse position than our forefathers left us. That seems to me to be a consideration which ought not to be left out of account in considering what we are doing in a time such as this, because this war is not like one of those wars with a first class Power, to which the Chancellor of the Exchequer made reference. It is a war of great importance, but it is not a war of which we can say that we have effected by it the saving of the country from such disasters as threatened it during the Napoleonic wars at the end of the last century and the beginning of this. Surely we owe it to those who will come after us to make some provision that the burden of the cost of the war shall not come upon them with the weight that is threatened if the redemption of our position is to proceed at the very slow rate contemplated by the proposals of the Government.

But, apart from that, there are several reasons why it seems to me we ought to deal with this matter upon the basis of making the most vigorous effort in our power. In the first place we have got not only an increase in the normal expenditure, not only an increase in the dead weight of the Debt, but we have got remarkable indications that we are going to be presently face to face with a time in which we cannot count on the elasticity of those sources of revenue to which we have been accustomed to look up to now. I observe with a great deal of concern the suggestions which have come from influential journals, such as The Times newspaper, that we should adopt some other system of taxation than that to which we have been accustomed, for the raising of our revenue. I am glad to think that there is no response to these suggestions, so far, in any of the utterances of the Chancellor of the Exchequer. The Chancellor of the Exchequer has spoken like a strong free-trader, and he is certainly not inclined to turn a listening ear to Sheffield, and I trust he will not turn a listening ear to Birmingham either, in whatever forms those suggestions may come. Any attempt to raise revenue on a large scale on the basis of indirect taxation, any attempt to take to those new principles of taxation, must have this effect, and can have no other—that they will deprive us of the knowledge of the extent to which, as the Chancellor of the Exchequer himself said, we are putting a burden upon the raw material of industry, a burden on the very sources from which we derive our revenue, and which will prevent us from knowing how we stand as regards the basis of normal prosperity in this country. The indications are that we will do well to stand in the very strictest and strongest way by the existing foundations of our national system. What advantages have we in this country? We have a coal supply by no means inexhaustible. For a long time that was thought of as marking us out from the other nations of the world, but they are rapidly developing their coal supplies, and there is no reason to think that we can look forward for an indefinite period to pre-eminence in trade by reason of our coal supply. What has given us a certain position of stability and contributed to a very large extent to our vast and successful commercial activity? It is that this country is the place where the raw materials of industry are brought in free; that we have free trade; that we can get materials to an extent that no other nation can; and thereby have a great advantage in holding our own against people who have advantages of a kind which we at this moment do not possess. Then again there is another advantage we have. Such has been our reputation for financial prudence, such has been our reputation for straightforwardness in the payment of debts, and in making income and expenditure balance, that we have always been able to borrow more cheaply than other nations. That has been a great advantage, and that reputation which enables us to borrow money more cheaply than other nations is one which we shall do well to try and keep with us. Consols are not now at 111 as they were three or four years ago, and the rate of interest is not that to which we have been accustomed, and if we wish to keep the sources of revenue on which our position depends, and to get back to that position which has done us so much good in days gone by, we must keep that reputation. Then there is another danger that alarms me considerably. I am not a pessimist. I am not one of those people who say that our trade is running away from us. I know the stuff our people are made of too well to believe that we shall fail to adapt ourselves to the position when the pinch comes, but I do say that the commerce which is the source of revenue on which the Chancellor of the Exchequer builds is going to be exposed to a strain of competition such as it has never had up to the present time. For the past two years the United States exports of manufactured goods have increased by 40 per cent. to markets, which were our peculiar markets, such as Russia and Japan, and when we look at the cause and the circumstances we see there is not likely to be any change in that respect.

We have got a most formidable rival. This is not the place to discuss these matters, but it must be recognised that American manufacturers are showing intelligence in technical training and scientific education, and are adapting themselves to new means of production which are not availed of in this country. Not only in time-saving appliances, but in the way they are worked, is America proving herself a formidable rival to us. Let us look at the way in which the situation presents itself to her own writers. I will quote from a recent writer in the North American Review, Mr. C. R. Flint, who writes on the new position which has developed between America and this country within the last few years. He writes— Europe needs us much more than we need her. The table of exports and imports shows this very plainly. Last year Europe bought of us 1,111 million dollars worth of goods. During the same period we bought of Europe only 439 millions. This gives us as against Europe alone a balance of trade amounting to 672,000,000 dollars. They bought from us more than two and a half as much as we bought from them. For every dollar invested by us in European productions they invested over 2½ dollars in American productions. Ten years ago, in 1890, we exported to Europe only 682,000,000 dollars, while we imported 474,000,000 dollars. In these few years, therefore, our exports have almost doubled, while our imports have decreased by 35 millions. If we wish to know how that pinches, let us turn to the figures of the steel trade, for example, and see the position of our steel producers in this country as compared with a few years ago in the markets of the world. It is not only America that is to be feared, but Germany is also attacking us in another fashion. Germany is taking away our chemical trade, once so prosperous on the Tyne. It is, as is shown in an interesting special article in The Times the other day, breaking into our indigo trade, which means so much to many of our manufacturers, and it is breaking into our dye and colour trade, and is competing with us almost to the extent of wiping those trades out, and it is also competing with us in electrical engineering. My right hon. friend said to-night that he was not prepared to economise in the matter of education. Neither am I. I think we will have to spend considerable sums on education if we are to keep our position, and one of the things which the Chancellor of the Exchequer should bear in mind is that in his Estimates for the future he will probably be required to expend five millions more on education if our commerce is to be put on as good a position as that of Germany. We used to be first in the production of steel and iron. We have now sunk to the third place. In the last six months we have ceased to produce in the way we used to produce. I have here an article from one of the technical journals, with which I will not trouble the House, but I will read two sentences which sum up the situation— The foregoing figures show very conclusively that the increased growth of production in Germany during the last decade was nearly four times as much as that in England, whilst that of America was nearly six times greater. In 1890 Britain exported 4,001,430 tons, but in 1899 only 3,717,180 tons, whereas the value of American exports increased from 25,542,000 dollars in 1890, to 105,690,000 dollars in 1899. England thus shows a decrease of nearly one-fourteenth, whilst America quadrupled her exports. The American exports of iron and steel to England in 1890 amounted to 222,776 tons. Now, Sir, in that condition of things it is perfectly plain that any Chancellor of the Exchequer framing a financial scheme cannot count on having a sinking fund of twelve and a half millions to be applied to these purposes. We shall have to incur large expenditure in the matter of education, if we are to enable our people to hold their own against the resources supplied by a poorer Government in Germany, and by millionaires in America, to universities and colleges, to give the people that impetus which is at present not possible in this country. We shall have to remember that our chances for the future depend on three things: We have got to preserve our free trade basis; we have got to preserve our reputation for solvency and our power to borrow cheaply; and we have got to train the minds of our people so that they may be able to hold their own against the competition which is coming forward at such an alarming rate. Again I say I am no pessimist. I believe that our people have it in them to hold their own. The trade of this country still continues to increase, and the Chancellor of the Exchequer has still got sources of revenue, but he cannot count on having the increase in the future which he has had in the past. But, at all events, I feel that a much more resolute effort should have been made in the Budget to meet the present state of things. Of course we can only do that just now by raising more revenue. The Chancellor of the Exchequer challenges us to say that the income tax ought to be higher. I say that it ought to be higher. It ought to be as high as it was at the time of the Crimean War, and we ought to have more evidence of a resolute disposition on his part, having behind him Liberal representatives from Wales, England, and Scotland, to repeal the Agricultural Bating Act. I am quite sure the present agricultural community value that Act so lightly that the tenant farmers and small occupiers would part with it to-morrow without concern, and they would feel that they were taking one step towards putting the finances of the country on something like a practical basis.

SIR M. HICKS BEACH

And repeal the Scotch Act also?

MR. HALDANE

The right hon. Gentleman refers to the equivalent grant. At the time that money came we were in a position in which we so often are. We got money at the wrong time. As a matter of fact, we are able to absorb for the purposes of education all the money we can get, but money has been given to Scotland under the utmost clumsy and awkward system which at present exists—namely, by equivalent grants, a large portion of which has been wasted by throwing it into the payment of rates. This system of equivalent grants is one of the most wasteful and indefensible that has ever disfigured the finance of this country. But it is not only in the matter of the Agricultural Rating Act that retrenchment should be carried out. A great deal can be done in getting rid of extravagant expenditure, and certainly we are justified in that policy by reason of the position with which we are face to face. I wish these things were taken more to heart. I think, however, the country is getting more interested in economy; I think I see the awakening of the spirit of economy in this House. I am sure it will be welcomed, and by no one as much as the rght hon. Gentleman himself, but I hope that he, in his turn, will not accept the maxim, vestigia nulla retrorsum. That principle has never been applied in finance. It is in the power of the right hon. Gentleman to use the great weight of his authority to promote that spirit of which I have spoken and to show an example. I often wish his counsels prevailed more among his colleagues than they do. What we want above all things at the present time is a settled principle in these matters, and no one would be more ready to lay down such a principle than the right hon. Gentleman if he could act on his own counsel and authority. What we want above everything else is a policy which shall point to economy, to a realisation of the true condition of the country, and of how precarious is our commercial hold on our sources of revenue. We want a firm principle with which to be able to look proudly towards the future, and to feel that we are doing for those who come after us what our forefathers did for us. At the beginning of this century the burden on the nation was heavier than the burden we have to face to-day, but our forefathers bore it without complaint, and the vast Debt which was raised at that time left them under a load of taxation which they paid cheerfully. Are we to be the only generation to feel that we must look back upon the past with a feeling that we can do nothing comparable to what past generations did? Surely it will be our duty to do for the generations coming after us what previous generations did for us.

SIR EDGAR VINCENT (Exeter)

said he had listened to the speeches from the other side of the House with some disappointment. The hon. Member for Haddingtonshire had given the House a most interesting essay, but he confessed he found very little in it with reference to the Budget before the House. The right hon. Gentleman the Member for East Wolverhampton made a mild attack on certain features of the Budget, but although he stated his objections to certain expenditure, he made no suggestion to reduce it, and when he objected to the proposed taxation he did not propose to supply its place by other taxation.

He read the Amendment on the Paper with some satisfaction, because it appeared to him to indicate that the Opposition had at last awakened to the fact that the enormous increase in expenditure during the last seven years demanded the urgent attention of Parliament. He had seen with surprise the expenditure of this country grow in the last seven years from £95,000,000 to nearly £130,000,000 without any direct challenge on the part of the Opposition against the financial policy of the Government. It had been explained to him as a novice that this abstention on the part of Gentlemen opposite was less due to a conviction that the expenditure deserved their approbation than to a belief that any criticism would be bad electioneering, and he asked himself how far their political fortunes would have to fall before they would pluck up courage to criticise a method of public finance so much at variance with all their traditions. Even now, when the forces which the right hon. Gentleman claimed to have some part in leading to the attack had taken the field, each section apparently declined to march except against that portion of the Government's financial position which they viewed with particular hostility. The Welsh Members had to be warmed by coal, the gentlemen from the Midlands had to be cajoled by the tax on sugar, and the old Cobdenites had to be granted a dole in the shape of a cursory allusion to the ever growing burden of swollen expenditure. With regard to the Bill immediately before the House, the maintenance of our good credit and the sound administration of our finances were subjects beyond the pale of mere party recrimination, and deserved more attention than they had recently received. What was the present financial position of this country? That was the essential point regarding which every Member must make up his mind. What would be the probable aspect of the normal Budget at the close of the war? The Chancellor of the Exchequer had stated with courageous frankness that the real difficulty, the menace to our financial equilibrium, was less war expenditure than current expenditure; but he had so much the habit of stating truths which were a direct apparent condemnation of the policy which he represented that sufficient attention had not been given to this note of warning. In making an estimate of the future Budget, he would suppose that the war would come to an end in six months, and that the total war expenditure of the current year would not exceed the Chancellor's estimate. He would also assume that the extraordinary military Budget could be closed at the end of the present year without throwing charges on the ordinary military Budget. He thought hon. Members would admit that that was taking a somewhat optimistic view. In the third place, he would assume that the civil and military administration of South Africa could be paid for by South African resources, and that no subvention from British funds Would be required for the proper protection of our loyalist fellow-subjects Proceeding on that basis our expenditure in 1902–3 would approximately amount to £130,000,000 or £131,000,000, and the ordinary revenue, including the war taxes voted last year, but excluding the taxes now under discussion, would amount to about £132,000,000. The war taxes of the present year, which were estimated to give an additional £11,000,000, would be required if we desired to constitute any sinking fund to pay off the accumulated war liability. We had, therefore, arrived at this unsatisfactory financial position—that there was a permanent income tax of 1s., together with the increased duties on beer and spirits, and there was a strong probability of an income tax of 1s. 2d. for at least four or five years, together with this year's additional taxation on coal and sugar. It appeared to him that the fact that we had arrived at this state of finance was a condemnation of the system which had been followed, and it should be borne in mind that any increase of military or civil expenditure must necessitate a further increase of taxation over and above the present level. It might be possible for party loyalty to attempt to excuse this position, but it would be difficult to justify it, and hon. Members on this side of the House would do better for the nation and their party if they endeavoured to find means to remedy it. The time of the House could be more profitably applied to the restriction of expenditure than to theoretical discussions regarding the merits of this or that form of taxation, The alternative to both the coal tax and the sugar tax was the reduction of expenditure so that both taxes would be unnecessary.

The argument used somewhat generally in the press, and especially in The Times, that criticism directed against expenditure was beside the point, because the war must be brought to an end, did not affect his contention. He protested against the increase in the permanent peace expenditure in the country, and he was alarmed at the frenzied haste with which the demands of this and that department were satisfied without reference to the general financial position of the country. History contained no instance of any result being achieved in military organisation except by means of scrupulous and rigid economy. The Duke of Wellington stood out as an administrator among his contemporaries. Mr. Gladstone said that he was a more rigid economist than Sir Robert Peel. The hon. Member for Oldham might have claimed to speak for economy on behalf of a more illustrious relative than even his distinguished father. He might have told the House that the history of the battle of Blenheim was written on the back of a carefully revised washing bill. He hoped the Secretary for War would be guided by those precedents of economy. The Secretary for War asked them to abandon generalities and come to close quarters with the military expenditure of the country. But it was impossible to do so in a Second Beading debate, and in Committee of Supply those who thought expenditure excessive could not probe it to the bottom. For nearly 200 years past the Chancellor of the Exchequer had been the most powerful and influential member of the Cabinet. In the present Chancellor of the Exchequer the advocates of economy had a representative with excellent intentions, but it was written large and clear on the Budgets of the last two or three years that he had been overborne, and finding little support in the Cabinet and the House he had consented to Estimates and Votes which he would have gladly seen reduced. He himself believed the House could do a great deal in the direction of economy, and that if evidence was shewn that there was behind the Chancellor of the Exchequer a vigorous and solid body of opinion in favour of economy, the right hon. Gentleman's views would prevail more in the future than in the past. Then, he believed Treasury control could be considerably improved. Its absence of sympathy with the various departments of the Government was so offensive (if he might use the word with deference) that they had succeeded in setting everyone, even the Scotch, against the cause of economy. The Chancellor of the Exchequer should look closely into this, and see if he could not make Treasury control over the various spending departments more effective. The unpopularity of the Treasury was largely due to the fact that its criticisms were based on insufficient knowledge and that it made more fuss over a trivial error than a serious mistake of substance and large amount. Discussions in Committee of Supply, though useful in ventilating grievances, did little to improve the administration of finance. The Estimates of the spending departments should be subjected at intervals of three or four years to the examination of a Select Committee of the House, who could call for witnesses and documents and go thoroughly into the matter by way of question and answer. Such a reform would not tend to diminish the control the House Commons exercised over the Estimates. It would replace nothing now done, but would be supplementary to it. The difference between the present system and that he suggested was that the Committee of the whole House would then discuss the Estimates, of a particular spending department with full knowledge of details and the advantage of having the Report of the Select Committee before them. In that way it would be possible to increase largely the influences which assisted the Chancellor of the Exchequer in his fight for economy, and if that were done he did not see that any real diminution of the authority of the House would result. Finally, he appealed to hon. Members to remember that the greatness and authority of this country had not been built up solely by military or naval force. Our commerce, which had been such a powerful factor in our progress, had developed really because it had not been restricted by regulations of which our statesmen were the first to see the danger, and because it had not been weighed down by the oppressive taxes which their financial requirements obliged foreign countries to impose. The last twenty years had seen a great expansion of our national and imperial possessions; they had witnessed the awakening of Greater Britain, but this expansion of our national feeling, with which he was in cordial sympathy, carried with it inherent dangers which could be guarded against only by severe self-discipline and ceaseless vigilance. He appealed to the right hon. Gentlemen who had the control of the fortunes of this country at the dawn of the new century not to forget in their pride and joy at the consolidation and expansion of the world-wide Empire those principles of wisdom and prudence which had been the foundation of our island strength.

MR. LABOUCHERE (Northampton)

The hon. Gentleman who has just spoken has delivered an interesting speech, but he has dealt more with the affairs of futurity than with the actualities of the moment. He has sketched out what the Budget would be or ought to be in 1902; but for my part, the Budget of 1901 is sufficient and more than sufficient for the present. The hon. Gentleman's proposals in the matter of economy were, if he will excuse me saying so, of the most cheeseparing description. With regard to the Army, he suggested only that we should make certain minor changes which would have the effect of saving a few pounds, and he instanced, as the sort of economy to which he asked the House to agree when we are spending £60,000,000 on the Army and the Navy, the example of the great Duke of Marl-borough, who wrote his account of the Battle of Blenheim on a washing bill. No doubt the Government have a good many washing bills, and a quantity of dirty linen to be washed, but even if they used all their washing bills, and nothing but washing bills, on which to inscribe their accounts, the economy effected would be absolutely nothing. The hon. Gentleman told us he looked for economy in the normal peace expenditure of the country. I do not know what he means, nor has he told us what that economy is to be. I do not want economy in the normal peace expenditure. The country is not so anxious that the Budget should be reduced as that the money collected for taxation should be spent in a proper and useful manner. I want the normal peace expenditure to go up considerably, particularly in regard to education, and so on. The hon. Gentleman concluded by telling us how his great schemes of finance were to be carried out. The House, he says, must do a great deal. I have heard that statement I should think quite 500 times, but I never yet knew it to have any effect in the House of Commons. The next suggestion of the hon. Member was that the Treasury are ignorant people, and that they must be more intelligent. That also is a somewhat vague generality. He added that he thought it desirable that the Treasury should enter into verbal discussion with the spending departments. We had from the Secretary of State for War the other day an account of certain verbal communications between Lord Randolph Churchill and himself, when Under Secretary, and I cannot say that the friend of economy in the person of Lord Randolph Churchill succeeded in effecting any economy through those verbal communications. The next point of the hon. Member was that all discussions in Committee of Supply should be done away with, and that a "Cutting-down Committee," composed of Members of the House, should be appointed every three or four years, with power to call for persons and documents. In connection with the French Chamber there is a Committee which can call for persons and documents, and there it has been proved that the system leads rather to more than to less expenditure. The hon. Gentleman has been a distinguished light in Egypt, and with all respect I would say that his plan of finance is more fitted for that part of the world than for this free and self-governing country.

But my object in rising was to state my own position, and, I believe, that of other hon. Members on this side of the House, with regard to this Amendmen. I object to the Bill. Objections are sometimes taken which can be remedied in Committee, but in this case my objections are so fundamental that they cannot be so remedied. We cannot in Committee of Ways and Means substitute one tax for another.

SIR HENRY FOWLER

Oh, yes.

MR. LABOUCHERE

I am glad to hear my right hon. friend say so, because I have occasionally tried it, but have never been allowed to do so. In any case, you cannot increase taxation, and, as part of the complaint against the Bill is that it does not sufficiently tax the present generation, but throws the expenditure on the war upon futurity by a series of post obits, we could not amend it in that respect in Committee. It is only right and proper, therefore, that we should attack the Bill on Second Reading, and, if possible, secure its rejection. There are two ways of proceeding in such a case. The first is to put down an Amendment, something like that of my right hon, friend, stating reasons why the Bill should be thrown out. The second is to meet the Bill with a simple "Nay," or its equivalent—a motion that it be read this day six months—without any reasons except those adduced in debate. My right hon. friend has chosen the first of those two methods. I do not complain of the reasons he has given; I think others might have been alleged, but as far as they go, I entirely agree with those put forward in the Amendment. But the right hon. Gentleman has not been satisfied with that. He has favoured us with a preamble. That preamble is— that this House, while ready to make adequate provision for the naval and military requirements of the Empire. I am entirely unable to agree to that preamble, and shall be unable to follow my right hon. friend into the lobby. Why has he put in this preamble? It is absolutely unnecessary. The Amendment would have read very well without it. Generally speaking, Bills read very well without preambles, and the modern habit is to do without them as far as possible. The right hon. Gentleman says we are ready to vote adequate provision for the naval and military requirements of the Empire. Does he mean to say that we are not ready to vote for anything else? We are ready to vote adequate provision for everything, including armaments. We are ready to vote more money for education, for the giving of old-age pensions, and for a great many other things, just as well as for the Army and the Navy. We do not consider that the happiness and the well-being of the inhabitants of the Empire are dependent entirely or mainly upon having a great army and a great navy. We think they are dependent upon good education, upon looking after the lot of the poor and aged people, upon doing our best by peaceful means to gain a prominent position—a superior position, if possible—in the markets of the world. Therefore I ask, why armaments? Why should the right hon. Gentleman drag in armaments? Does he conceive that this is an implication that while we would grant money for everything else we would not make adequate provision for the Army and the Navy? According to the old proverb, he who excuses himself accuses himself, and I am bound to tell my right hon. friend that I regard this as gratuitous incense heaped up on the altar of the god of war. I am not going to burn that incense. I do not consider that this is precisely the time for expressing any such opinion. This is a Finance Bill, and the strictures of my right hon. friend are upon the mode in which the money is to be raised. What in the name of goodness has that to do with armaments? The right hon. Gentleman has suggested that some of us are not disposed to follow him because we do not believe that he is actuated by fair motives. Who ever said so? I have never said so in my life. There is a great difference between that and considering, when we have words of this sort interpolated into an Amendment, what are the opinions of the gentleman who proposes the Amendment. For that course of action I have the authority of my leader, the right hon. Gentleman the Leader of the Opposition. In July last Sir Wilfrid Lawson proposed a reduction of the salary of the Colonial Secretary—something for which I should have thought anybody would vote blindly. The Leader of the Opposition said he should vote neither for nor against it, and one of the reasons he gave was that he was influenced by the general views of Sir Wilfrid Lawson. In the same way, having to estimate these words in the Amendment, I am influenced by the general opinions of the right hon. Gentleman in regard to a matter which does affect this expenditure. I am a great admirer of my right hon. friend. I admire his eloquence, of which we have had a specimen this evening. I admire him as a Radical. Hon. Members who are new to the House do not know what a Radical he is. I have heard Members complain of his Radicalism. I have sat on these benches with my right hon. friend, but I was a mild and temperate Radical in comparison with him. I followed him because I respected him so much, but I really trembled at the lengths to which he would drag me. If he is not so Radical at present it is not that he is less Radical in his mind, but that he is cribbed, cabined, and confined by the position that he holds on that bench, and possibly by some of the colleagues around him. I admire him also as a Nonconformist. He has always boldly stuck to his guns. He has been opposed to all State endowments of religion, and he has fought gallantly not only for the liberty but for the equality of religions in this country. I agree with him in all that. I might say that I share his Nonconformist conscience. But what is the present position of my right hon. friend with regard to the expenditure of which he complains? He is one of the high priests of the Birmingham Imperialism. He approved and still approves of the war. He has stated in the country that we ought not to negotiate or to do anything of that sort.

SIR HENRY FOWLER

I have not said that.

MR. LABOUCHERE

I think his words were that there ought not to be a patched-up peace, but that we ought to fight the matter out to a finish. I assume that if he approves of that policy in the present he would approve of it also in the future. Such a policy involves enormous armaments, and if you have armaments you must pay for them. Therefore, it seems to me that with the policy of my right hon. friend any real economies would be practically impossible. We entirely disagree as to the meaning of the word "adequate"; he applies one sense to it, I apply another. My hon. friend the Member for East Northamptonshire has an Amendment on the Paper protesting against the war. That is his preamble. If he had asked me, I should have said that I agree with every word of it, but I think it is inopportune to bring the matter forward as an Amendment on this occasion. Would my right hon. friend vote for that Amendment, or would he refuse to vote for it, on account of the preamble?

MR. ASQUITH (Fifeshire, E.)

It is more than a preamble.

MR. LABOUCHERE

Well, it is an enlarged preamble. If my right hon. friend would refuse to vote for that Amendment on account of the sentiments expressed therein, why should he complain—I do not suppose he does—if I refuse to vote for his Amendment on account of the preamble? It is perfectly true that there are differences on this side of the House. I am glad there are, because it shows that we on this side of the House think, and that we are not sheep blindly following any bell-wether or running anywhere as driven by the dogs behind us. Last week we had an object lesson of the patriotism of hon. Gentlemen opposite in connection with the army reorganisation scheme. Nearly everybody opposed the scheme. Hon. Gentlemen, one after another, jumped up and complained of it, but when it came to voting they went like sheep into the lobby and recorded their votes in favour of a scheme which they considered as bad as it possibly could be. We on this side of this House do not do that sort of thing. We understand patriotism very differently. If we differ from our leaders we give effect to our difference in the lobby.

MR. SAMUEL EVANS (Glamorganshire, Mid)

We do not differ.

MR. LABOUCHERE

My hon. friend says we do not differ, but I have known even him to differ. But it shows that we are a vital, thinking, independent party, and we vote according to our convictions, whereas we have this instance of hon. Gentlemen opposite—

MR. GIBSON BOWLES (Lynn Regis)

Not me.

MR. LABOUCHERE

The hon. Gentleman says "Not me"; he means "Not I."

MR. GIBSON BOWLES

The hon. Member said:—"We had these hon. Gentlemen"; I said "Not me," which was a proper expression.

MR. LABOUCHERE

I give the hon. Member every possible credit for not having voted against his convictions, but I would have given him more credit if he had voted in accordance with his convictions. But I think that, while we have these differences, we ought to take advantage of every opportunity upon which we can act unitedly. We do not differ in regard to the particular Bill before the House, and we are ready to vote against it when the question is put from the Chair. We do not fear even the consequences which would ensue upon the Bill being thrown out, namely, that Ministers would go out of office. My right hon. friend seemed rather to deprecate that idea, and to suggest that this Amendment was not really opposition, but a piece of gentle advice which the Government might well take in the matter of finance. He seemed to think that a Minister should bring in his Budget, and, if the Opposition disagreed with it, say, "Yes, apparently you are right; I will take back my Budget, and bring in another until it pleases you." That is rather an odd argument to come from a right hon. Gentleman who was a Member of a Government which went out on the cordite Vote; it is precisely the reverse of the course they followed.

SIR HENRY FOWLER

We did not go out on that Vote.

MR. LABOUCHERE

But while we do not differ with regard to the Bill, we do differ with regard to this Amendment. Take, for instance, our fellow-workers in Ireland. They are not going to vote for this Amendment. I believe several Radicals intend to adopt a similar attitude. Those Irish Members and Radicals may be right or they may be wrong, but it does not alter the fact. The result will be the same so far as the division on the Bill is concerned. The only distinction is that by the right hon. Gentleman bringing forward this Amendment and asking us to vote for it we are divided, whereas a clean vote against the Bill, without any Amendment of this sort, would have united us. That, therefore, would have been the better course. As I have said, I shall not vote for the Amendment, because I object to the preamble. But even if I approved of the preamble I should not vote for the Amendment, because I am anxious that unity shall prevail on this side of the House, and, if I knew that a certain number of gentlemen were not going to vote for the Amendment, I should say that the better division was the larger division, or the one which united us most, and therefore should vote simply "Nay" against the Bill. I am glad that that opportunity will come at the end of the debate, and all Members, whether English or Irish, Imperialist or pro-Boer, will be able to go into the same lobby, actuated by the same feeling, that the sooner the Government is turned out of its present position the better it will be for the country.

MR. COHEN (Islington, E.)

I am surprised that, for I think the first time, in a speech of the right hon. Gentleman opposite, we have not received that explanation which we always expect and usually receive of the motives which have actuated him in bringing forward his proposal. Some explanation is certainly needed, because I think most Members of the House must have some difficulty in understanding the Amendment as it stands. That difficulty will not be diminished by our knowledge of the opinions of the right hon. Gentleman. The Amendment begins by asking the House to record its opinion that the proposals of my right hon. friend the Chancellor of the Exchequer do not exhibit that regard for economy which the condition of the country imperatively demands. I submit that, looked at from the business point of view, the right hon. Gentleman cannot expect economy from the financial proposals of this or of any Government.

I quite understand from what my right hon. friend said that he looks upon all these financial proposals as coming here with the authority of the Cabinet. Perhaps that is so, but I submit to the right hon. Gentleman that it is not from the financial proposals of a Government that you can expect economy. So soon as the House of Commons votes and the nation requires money to be expended, it really is the duty of the Chancellor of the Exchequer and the Government to submit proposals which will provide the money voted by the House, and which is required by the country, It seems to me that a great deal of cant is sometimes spoken here in the name of economy, and my hon. friend the Member for Exeter has spoken of it as a platitude to talk about the safety of the Empire. It seems to me that it is cant to talk about economy. If you want economy, practically the only way to get it is to reduce your expenditure in those departments where the money is expended—I mean the expenditure upon education, upon the Army and the Navy. Will any hon. Member of this House say that they themselves advocate a reduction of expenditure in any of these directions? If they will say so here, as some hon. Members do, will they say it also to their constituents? The hon. Member for North Monmouthshire, in speaking upon the income-tax resolution, challenged us to go to our constituencies and there advocate the expenditure we have voted for here in this House. I accept that challenge, and I say that before my constituents I have always held out that the expenditure of the country must grow—I do not mean the war expenditure but the normal expenditure. This expenditure is growing and must grow, because of the requirements of education, and because of the necessity for the increased normal expenditure in regard to our defensive forces. It is not only this country which has recognised that necessity for a growing expenditure. I have before me the figures which were given to the Statistical Society by Lord Avebury, in which it is shown that during the last twenty-five years the expenditure of France in this respect has grown from £83,000,000 to £140,000,000; the United States from £64,000,000 to £110,000,000; Russia from £74,000,000 to £149,000,000; and Italy from £44,000,000 to £70,000,000. I will not trouble the House with the figures of all the European Powers, but I do say that it is nothing but cant to talk of economy when you are not yourselves willing to reduce the expenditure which requires this taxation to be imposed.

There is only one other point to which I should like to refer. I look with a little anxiety as to the way the floating debt of this country is going abroad. I make no complaint of the increase in the income-tax, which we all recognise as necessary, and the income-tax payers have always been a target against which successive Chancellors of the Exchequer perpetually fire. I quite recognise that in times of war the income-tax is a tax to which recourse ought immediately to be had. What we complain of, if we complain at all, is not that the income-tax is raised now, but that it is never lowered in times of peace and plenty. I will not dwell upon that, because I wish to call attention to the growing unfunded debt of the country. There is a very interesting Return which has just been presented to Parliament, on the motion of the Member for Exeter, and it shows that the unfunded debt of the country has grown to the unprecedented total of £75,000,000 sterling. Of this amount, £30,000,000 is for the war loan, which is not redeemable until the year 1910. Of the remainder, there are £14,000,000 redeemable in 1905, and £10,000,000 in 1903. I hope both these amounts will be paid off out of the mines and the indemnity to be obtained from the Transvaal. That leaves £21,000,000 sterling in Treasury Bills in the hands of the public, and principally in the hands of the foreign public. That is an element of danger to the money market of England and the world, and it is not advantageous to the Exchequer. The right hon. Gentleman the Member for West Monmouthshire, in his Budget speech of 1894, dwelt upon the importance of keeping the unfunded debt of this country in the hands of the English public. I think the strength of English finance consists in the debt being held by the British public, so that you never need fear a forced realisation by foreigners at a time which would be very inconvenient to your own money market, and which probably might bring disaster to the commercial and industrial classes of the country. I have only to say in conclusion that I think the country has recognised that this Budget is not only, as the Member for West Monmouthshire said, an honest and straightforward one, but it is also a just and equitable Budget. It has distributed the burden of taxation justly upon all classes, and I believe that the vote which will be given upon this Bill will reflect thoroughly and completely the verdict and judgment of the nation on my right hon. friend's financial proposals.

MR. ASHTON (Bedfordshire, Luton)

In the remarks I have to make I shall confine my attention to the question of the ordinary revenue and expenditure! of the country more than to the war expenditure. As to the war expenditure, I will merely say that it is to me, and, I believe, to a very large number of those who sit on this side of the House, a source of very great disappointment that we are not laying upon our own shoulders a larger share of the cost of the war rather than placing it on the shoulders of posterity. I think it must be well known to all the Members of the House that, looking to history, this is not the way war expenditure has been dealt with in previous generations. Allusion has been made to-night to what we did at the time of the Crimean War. I think I am right in saying that the taxpayers then paid something like half of the whole expenditure. If we go further back—if we go back to the really great wars of the beginning of the century—we find a still more satisfactory state of things. We see the patriotism of the people of that time urging them to far greater sacrifices than did the patriotism of the people at the time of the Crimean War. From 1806 to 1815, when not only was the stress of war far greater than it is to-day, but when the prosperity of the people was less than it is to-day, and when the commerce of the country, unlike that of to-day, was interfered with in all directions, the people of the country took upon their shoulders to pay the whole cost with the exception of the interest on the debt. It would seem that the sacrifices the people are willing to make have become less and less. In the beginning of the century the whole of the war expenditure was borne by the people, at the middle of the century half was borne, and now, taking the figures of the Chancellor of the Exchequer, he has shown that we are only putting something like one-third of the expenditure on the shoulders of the people at the present time. I confess that I cannot follow the figures of the Chancellor of the Exchequer, but I do say this, and the figures cannot be manipulated, that last year we raised extra war expenditure of about £12,000,000, and this year that £12,000,000 will go almost entirely towards the ordinary expenditure of the country apart from the war. We are raising this year £11,000,000 more for extra expenditure, and we are raising the rest of the war expenditure entirely in the form of debt. We propose to take power to raise the sum of £60,000,000 by the creation of debt, and we propose to raise only £11,000,000 by the further taxation of the country. In other words, I make out that we are only paying this year one-seventh of the whole of the cost of the war by means of extra taxation of the country. I think that is a very lamentable state of affairs; I do not think that I put it too low when I call it cowardly finance. I think it is cowardly to posterity. I do not think that anyone will contend that posterity will gain pecuniarily by the war which has taken place. We have not done our duty as a nation during this century by paying off the debt with which the country was burdened at the beginning of the century. We have had a century of unexampled prosperity—prosperity which is not very likely to recur again, now that we have the competition of foreign countries in every quarter of the globe. I think myself that with a hundred years of great prosperity we might have done something more than pay off £200,000,000. Now we are proposing to hand on to posterity the remainder of the debt unpaid and our obligations besides. I am afraid that it is the very prosperity of the country which has tended to demoralise the people. Adversity, no doubt, is a hard taskmaster, but, at any rate, it teaches the virtues of self-sacrifice, and it is those virtues which are largely absent from the moral fibre not only of the Government, but of the people of this country at the present time.

Now, Sir, I propose to turn to the ordinary Budget. I cannot help feeling disappointed that, with such great opportunities as the Chancellor of the Exchequer has had in dealing with these hundreds of millions in consequence of this lamentable war, he has not made greater use of those opportunities in the general adjustment of the taxation of this country. As has been stated by the right hon. Gentleman the Member for Wolverhampton this evening, the Government does not seem to have done anything to check the extravagance of the past six or seven years. They seem to have drifted in finance as they have unfortunately drifted in other ways. They have made no attempt to stem the tide of extravagance in the expenditure of the country. The right hon. Gentleman the Member for East Wolverhampton gave some interesting figures of the extent of that extravagance. I think he put it very low, for, as far as I can make out front the figures one can get at, the increase in the ordinary expenditure from 1895 up to the present time has been no less than 30 per cent. I am glad to think that the Chancellor of the Exchequer feels keenly that that is a serious state of things. It is a serious state of things which, if continued on these lines, will bring even this great and prosperous country to the verge of bankruptcy. I regret especially that the Chancellor of the Exchequer has not dealt with the question of local taxation and grants in aid from the Imperial exchequer. The Chancellor of the Exchequer has told us, and I entirely agree with him, that looking to the vast increase in the ordinary expenditure of the country, it is essential, or, at any rate, it is advisable that the framework of the taxation should be enlarged. But before extending the framework of taxation I think the first thing we ought to do is to get back to the national exchequer the vast sums of money going away in relief of local taxation. In order to enlarge the frame work the Chancellor of the Exchequer has only put on the sugar duty and the coal tax, for we can hardly call the increase of the income tax an enlargement of the framework. I for one do not complain of the sugar tax. I feel very strongly that at the time of a war like this which has undoubtedly been a popular war, although I wish it had not been so, popular, it is only right that all classes in the country should be called upon to pay something towards the extra taxation that is necessary for the war. I would suggest to the Chancellor of the Exchequer that, when times of peace return again, instead of abolishing the sugar tax he should leave it at a low rate, so that we should have always the means of increasing it in case of distress. He should also leave the tea duty at a low point, so that in case of distress it could be increased—

Attention called to the fact that forty Members were not present. House counted, and, forty Members being found present—

MR. ASHTON

I wish to say a word about the coal tax. There is a great deal to be said in favour of the coal tax if by that means you can prevent the export of coal from the country. There is also something to be said, on the other hand, for the contention that the tax should be put on all kinds of coal, whether it is consumed at home or sent abroad, but there is nothing to be said, in my opinion, for the miserable compromise adopted by the Government in putting 1s. duty on exported coal. In the first place, it will not have the effect of preventing the export of coal, and, looking at it from the other point of view, it is unfair to put a tax on one half of the industry and leave the other half untouched. The Chancellor of the Exchequer has increased the income tax by 2d. I think, and many of my hon. friends around me will agree, that it would only have been fair that the wealthier people should have been asked to pay a larger share of the taxation which is necessary. Fourpence would have been a very much fairer increase. We are told that this tax is to be part of the permanent framework of the taxation of the country. Well, if it is to be maintained as part of the permanent framework of taxation, all will admit that the time has come when something should be done to free brain capital from paying at the same rate as money capital. We have done something by letting off the small incomes, but have practically done nothing for alleviating the position of those whose incomes come from brain work. I am aware that it is a difficult subject, but I do not think that it is beyond the wit of men to tackle it.

I desire to say a few words in regard to the question of payments to the Local Taxation Account and grants-in-aid, on which subject I feel very strongly indeed. One of the first things which in my opinion we ought to do, considering the growing expenditure of the country, is to get rid of those vast payments that have annually been made towards the local taxation of the country. I am not going for one moment to pretend that if this is done there ought not to be an equivalent for them given to the ratepayers. It is, of course, known to everybody that this system of doles to local authorities is a very vicious system. In the first place it is a constant dead weight round the neck of the Chancellor of the Exchequer. However intent he may be on increasing the yield of his taxes, he has always to consider that a proportion of it is going to be taken out of his pocket and given to those who do not deserve it because they have not earned it. Then, these contributions undoubtedly lead to a great deal of local extravagance, and a grave wrong is thus done both to the ratepayers and the taxpayers of the country. These gifts from the Imperials exchequer to the local exchequers of county and district councils are looked upon as windfalls. I will give one illustration which came under my own observation. A local authority came to me and asked me to assist them in carrying out a local improvement by a gift of land. I replied that I was willing to give the land, but it seemed to me to be a costly improvement, and not worth the expense to the ratepayers. The answer was, "Oh, we are not going to pay for the whole of it, the county is to give us so much towards the cost." So long as these local authorities get the windfalls from the Exchequer they do not consider economy in any way. They do not seem to admit that either as taxpayers or as ratepayers the amount of this extravagant expenditure is really being drawn out of their own pockets. There is another serious point in connection with these contributions to the local authorities. Though the ratepayers and the taxpayers are, in the main, the same, there is no doubt that in transferring part of the obligations of the ratepayers to the taxpayers you are removing obligations from the property owners to the working classes of the country. I do not know whether the House is aware of the extent to which grants-in-aid have grown during the last fifty or sixty years. At the present moment they have reached a total sum of over fourteen millions; but in 1842 they amounted to only £600,000.

If any tax could be found which could be handed over to the local authorities in lieu of grants in aid it must fulfil certain conditions. In the first place it must be collected from the ratepayers. The ratepayers must feet the responsibility for it. In the next place it must be collected without extra cost to the occupiers of tenancies; and lastly, it ought to be distributed fairly over the local area. The house duty seems in many ways to be a tax which might very well be handed over by the Imperial Exchequer to the local authorities. At present the house duty is a graduated tax on all houses over £15 rent, and the total yield is only £1,700,000. That would go a very short distance towards the relief of local taxation. But I suggest that instead of being graduated, a tax of 8d. in the £1 should be imposed on all houses over £15 a year valuation; and that it should be extended to Ireland, which at present escapes the house duty. I believe that by that means £4,000,000 might be obtained from the house tax a year, instead of £1,700,000. Next I would turn my attention to licences. Of course, a number of licences are handed over to the local authorities at present; but what I wish especially to allude to is the licences for fully licenced public-houses. The Chancellor of the Exchequer has told us that we have got to the end of the beer duty. I think that is very likely the case, but a large field still remains open in dealing with this question of public-house licences. At present the duties are levied on licensed houses at different rates. Houses that are valued at from £15 to £20 annually pay a duty which is equivalent to 40 or 50 per cent. of their annual value; but when you get to houses of £600 or £700 annual value, the duty levied only amounts to between 10 and 15 per cent. Now, that is a very unfair method of taxation. The taxation of this country has progressed with the idea that the wealthier people are, the more taxation they are able to bear; but, on the contrary, in dealing with licensed houses we proceed on the theory that the poorer the house the larger the share of the duty it ought to bear. It would not be extravagant to say that the larger and wealthier houses should contribute according to their rateable value, and that the duty should be raised to the same level as that on the poorer houses, namely, 40 or 50 per cent. I go further, and maintain that it would be justifiable to raise the duty to over 40 or 50 per cent. The result of a house being licensed is that the value of the property is increased four or five times. That is a low figure. Again, the public-houses are rated at a lower rate than other houses compared with the annual value to the owner. I do not think it would be an extravagant thing to say that the nation or the ratepayers should get a larger proportion than it does at present of the increased value due to the monopoly granted to these houses. If we were to do that, we should see that this duty was, at any rate, paid to a larger extent than at present by the owners, and not by the occupiers. I go further, and say that the occupiers should be allowed to deduct at any rate a large part of the duty from the rent they paid the landlord. I am not going beyond the mark in saying that if you raised the duty on the more costly houses, instead of getting £1,700,000 a year from licences, you would obtain something approaching £5,000,000 without doing any harm to anybody, and only doing justice to the ratepayers.

For my part, I think that the time has arrived when the Agricultural Rating Act should be allowed to come to an end. The Chancellor of the Exchequer has told us to-day, in a very interesting speech, that it is nonsense to say that the money from the Agricultural Rating Act goes into the pockets of the landowners, but obviously that it goes into the pockets of the farmers, to relieve the farmers who are supposed to be suffering from agricultural depression. Very well, if we were to act practically on this question, we have to recognise the fact laid down by the Chancellor of the Exchequer that we cannot get that money back out of the pockets of the farmers, now that it has been given to them. What I would suggest is to let this Act expire, and give the Chancellor of the Exchequer the £1,500,000 a year; and resort for an equivalent to an expedient for which Liberals have voted in the past—namely, that we should divide the rates between the owners and the occupiers. If that were done the farmers, would get the same advantage as now, and we should relieve a great many who deserve relief quite as much as those who were relieved five years ago—namely, the agricultural labourers and village shopkeepers. I do not think that anyone would say that Lord Goschen is a revolutionist, but it will be in the recollection of the House that in the year 1872, Mr. Goschen, as he then was, was Chancellor of the Exchequer, or at any rate in office, and he brought forward a proposition in this House that the rates in the country should be divided between the owners and occupiers. I do not think, therefore, that we need call that a very revolutionary doctrine. I would further point out to the House that in 1886 Mr. Thorold Rogers brought forward a resolution in favour of the division of the rates between owners and occupiers, and that it was carried in the House of Commons. I have endeavoured to supply the Chancellor of the Exchequer with a local Budget that ought to assist him in forming a new basis of the system of taxation. I have made a present to him of £10,500,000 by the changes to which I most respectfully call his attention. It is perfectly true that a little of that would come off the house duty and licences—say to the extent of £3,500,000, but I am making him a present, at any rate, of £7,000,000. I wish the right hon. Gentleman were here, for I am perfectly sure that I would see his mouth watering on the prospect. I apologise to the House for having detained hon Members so long, but I have long felt strongly the importance of getting rid of the Imperial contributions to local taxation and so relieving in that way the Imperial Exchequer. We have lost the control of our own revenue, and I am sure the suggestions I have made would do something to restore that control to the House.

MR. RENSHAW (Renfrewshire, W.)

The speech of the right hon. Gentleman the Member for East Wolverhampton, to whom the House always pays the attention he deserves, from the admirable manner in which he touches the various subjects on which he addresses it, was a most interesting one. And I am quite sure that those who heard it felt the weight of the arguments which he invited the House to consider and give their votes upon. In the course of that speech the right hon. Gentleman divided the recent periods of finance into three-epochs. The epoch from 1890 to 1893 he spoke of as comparatively blessed, that from 1893 to 1896 as somewhat less blessed, and then he referred to the condition of affairs in 1900 as being very much worse than in either of the two other epochs. But a great difference has taken place in connection with the finances of the country since 1893–6, and I think the House will agree that that was owing to the passing of the Death Duties Act. That was an enormous change in the method by which revenue was collected in this country. It was a revenue which was easily got and it has been just as easily spent, and the lesson we ought to learn from that, in regard to economy, is that, if the population of this country do not feel the burden of taxation, it is in vain for the right hon. Gentleman or any other hon. Member, however great his weight and authority in the House and the country, to suggest economy in the national finances.

MR. M'KENNA (Monmouthshire, N.)

You promised to spend it on old age pensions.

MR. RENSHAW

The death duties Act was not passed by this present Government, but by the Government of which the right hon. Gentleman the Member for Monmouth was Chancellor of the Exchequer. The hon. Gentleman will agree with me that if money is lightly come by it is very easily spent. The outstanding feature of the Budget of the right hon. Gentleman the Chancellor of the Exchequer—and that which recommends it to the general approval of the people of this country—is that it seeks to widen the basis of taxation, to make the people feel that they must pay the cost of every engagement into which they enter.

I think, Sir, that the attack of the right hon. Gentleman opposite to-night was made with blank cartridge. I do not know who has drawn the shot out of the gun he was firing, but I am perfectly certain it was blank cartridge. He has preached economy to us. Although the Chancellor of the Exchequer has told us that he was the only economist left in the House, I believe there are still a large number of us in the House who are deeply interested in the subject, and who are most anxious to see retrenchment in regard to the general expendi- ture of the country. But when the right hon. Gentleman the Member for East Wolverhampton came to deal with the question as to where the retrenchment was to take place, he was somewhat vague. It cannot take place in regard to the Navy. That he admits. He then dealt with the question of education, but in regard to that I believe the party opposite are all in favour of a large expenditure on national education, although they question the wisdom of some of the present expenditure. So do many of us on this side of the House. I doubt the wisdom of educating children under five years of age. I see from the Report of the Department that children under three years of age are being educated. I think that the cost of the education of children under five years of age is what the nation might very well be spared. Then I think the education of people twice over—of grown men and women—is a national expense we might spare ourselves; and if the right hon. Gentleman will urge that view upon the House he would find support on this side of the House. Then comes the question of the Army. I quite agree with the right hon. Gentleman the Member for East Wolverhampton that the country is in favour of making our Army strong enough for the necessities of military defence, and I believe with him that we look to the present Government to carry out substantial reforms in regard to War Office administration. At the last General Election I believe the people were far more deeply stirred in regard to that question than as to reform of the Army itself. The right hon. Gentleman says that the feeling of the country is growing that we do not get our money's worth, that there is a frittering away and wasting of the money of the nation in the support of our military system. I believe that not only on that but on this side of the House the Government will find that in securing military reforms and substantial and effective reforms in the War Office they will be backed up by the feeling of the country.

The right hon. Gentleman, dealing with the question of the new taxation created by the Budget, passed lightly over the subject of the income tax. The hon. Member who has just addressed the House dealt with that question to some extent, and he suggested that it was an unfortunate feature that the Chancellor of the Exchequer had not made the income tax higher than 1s. 2d. He said it had only been increased 2d. in consequence of the war. But I should like to remind the hon. Member and the House that last year there was an augmentation of 4d., and that 1s. 2d. in the £ is a very large tax upon the comparatively small class from which it is collected. For a long time in this country the income tax was regarded as a war tax. It was put on originally in 1799, and reached 2s. in 1806, but in 1815 it ceased to be levied altogether for a long period. In 1842 it was again re-imposed by Sir Robert Peel, and from that date to this a comparatively small class of the community have been called upon to pay a very substantial share of the Imperial charges of the country, and I venture to say that they have done it ungrudgingly. Mr. Gladstone held a tempting bait out to the income-tax payer in 1873, when he made an election speech in which he proposed the definite repeal of the income tax. The country did not respond, however, and the tax has since been levied from year to year. For my part I think it would be a most unfortunate thing if the income tax came to be regarded as the only tax which was to be resorted to in the future whenever the national finances demanded additional taxation. The Chancellor of the Exchequer has, in my opinion, very wisely added to the various methods by which the revenue of this country can be raised. He has put a tax on sugar, and as far as I can understand neither the House nor the country take serious objection to it. [Several HON. MEMBERS: No, no.] Hon. Members say "No, no," therefore I understand that there is a comparatively small section in this House which takes exception to the imposition of the sugar duty. Do the great body of the community express that view? I do not think so for a moment. I believe that the British public appreciate the necessity for additional taxation, and are proud to pay their share of the expense of the war. The right hon. Gentleman at all events took no serious objection to the question of the sugar duty, but he did take exception to the new duty which the Chancellor of the Exchequer proposes to levy on export coal.

I would ask the House for a moment to consider the exceptional grounds on which he argues that this new taxation is an undesirable one. He says that we have no right to levy an export duty unless upon a monopoly. I am not prepared to accept that theory. The necessities of the country override all questions as to whether or not we are theoretically right in creating new charges in respect of the taxation of the country. With regard to the new duty on coal, the gentlemen who have been most loud in their denunciation of it have been the wealthy colliery proprietors who regard it as an undue imposition on their particular industry, but by their own action during the last eighteen months they have levied upon the general trade of the country a very serious charge. I noticed the other evening that figures with reference to the profits of the colliery proprietors were bandied about from one side to the other, but I am quite sure that they are represented very much by the figures which the Chancellor of the Exchequer stated. However, for the purposes of my argument, I am willing to accept even a smaller sum. As far as four-fifths of it was concerned it was a charge upon the households and the industrial commerce of the country. Out of what was the higher price paid if it was not paid for largely by the commercial classes? And what was it which has brought the iron and steel trade of this country into the position in which it is? The high price of coal has demoralised the iron and steel trade. I do not believe a bit in the bogey of American coal competition. American coal can be produced cheaper, I believe, at the pit's mouth than British coal, but I doubt if anybody reads through the reports made by the consuls in 1898 will believe that in European ports American coal is likely to be a serious competitor of British coal. In the Blue Book published by the Board of Trade, 1900, the price of coal in America at the pit's mouth in 1886 was 6s. 4d., and of British coal 4s. 10d. For the year 1898 the price in Great Britain was 6s. 4d., and in America 4s. 5d. That is a serious change, and some official explanation has been given of it. I notice in the Report on Mines and Quarries last year, Mr. Foster gives as a reason— The difference between the two great coal producing countries of the world in respect to the use of labour-saving appliances is very marked indeed; whilst the United States owe 23 per cent. of their total output of coal to the use of coal-cutting machinery, only a little more than 1½ per cent. was so obtained in this country, for we learn from my colleague, Mr. Gerrard, that the total amount of coal cut by machinery in 1899 was only 3½ million tons. And I notice in the same Report it is stated officially that the difference in the use of coal mining by machinery and working in the ordinary way in the State of Illinois was 7d. a ton. When this question of coal production is discussed, it is not unnatural that the question should be asked why it is the production per miner in this country averages 291 tons, whilst in America it averages 490. Is not that due to the widespread use of coal producing machinery? I am satisfied that the general body of people in this country are favourable to this tax, which is put upon the general trade with the country. It is desirable, at all events, that something should be done to prevent the continual extension of the exportation of coal, and this 1s. per ton may do something in that direction. I hope for my part if it does not that the Chancellor of the Exchequer will go a little further I thank the House for having listened to me so patiently. I approve of the Budget as a whole. I think it is a wise and prudent one to meet the large and growing expenditure of the country, and I believe the people were never better able to bear the burden than they are at the present time.

MR. MCCRAE (Edinburgh, E.)

The right hon. Gentleman the Chancellor of the Exchequer made, I think, rather an unfair charge against the right hon. Gentleman the Member for Wolverhampton, when he said that the right hon. Gentleman had attempted to mislead the House and the country, by the figures he presented to the House. I will, so far as I can, meet the Chancellor of the Exchequer on his own ground, and deal with the figures in the way in which he has dealt with them, and analyse the financial position of the nation at the present time. All who listened to his Budget speech must have been impressed by the lucidity and ability with which the right hon. Gentleman presented his case to the House, but the gravity of the financial position is such that no argument, however specious, can palliate, no statement, however brilliant, can deny. But the gravity of the financial position is much more serious than even the case presented to-day by the right hon. Gentleman the Member for East Wolverhampton. Sixty years ago, on the 18th of May, 1841, Sir Robert Peel gave utterance to these words— I view with unaffected sympathy the position of the right hon. the Chancellor of the Exchequer. It has been remarked that a good man struggling with adversity is a sight worthy of the gods; and certainly the right hon. Gentleman, both with respect to the goodness of the man and the extent of the adversity, presents at the present moment that spectacle. Can there be a more lamentable picture than that of a Chancellor of the Exchequer seated on an empty chest by the pool of a bottomless deficiency fishing for a budget? That is what the Chancellor of the Exchequer is now doing. History repeats itself. That is the position to-day, with this difference, that our difficulties are a hundredfold greater, and our financial embarrassments much more alarming. The right hon. Gentleman admits the gravity of the situation, and I think to-day he presented a travesty of the case when he said the main feature of this year's Budget was a war expenditure. No doubt the war expenditure is large, but from a financial point of view the growth of the normal expenditure is much more alarming; and here I differ from some hon. Gentlemen who are lavish with their praise of the right hon. Gentleman's courage and candour. His courage I deny, and candour ceases to be a virtue when it becomes inevitable, when the skeleton at the feast can no longer be hidden from the eyes of the guests. I think the right hon. Gentleman should have taken a much bolder course. We must remember that we were on the downward grade, financially, before the war began; we deplore the heavy responsibilities which the war has occasioned, and that it has obscured the vision and deadened the conscience of the nation to the full import of this alarming increase in ordinary expenditure. That increase has been borne philosophically by the taxpayer because he believed it was a temporary burden; but if expenditure increases in the same ratio as during the last five years the revenue will only be able to keep pace with it by very large additions being made to taxation, apart altogether from war debt and interest.

A large increase of expenditure under a Conservative and Unionist Government is nothing new. During the administration of Lord Beaconsfield, from 1874 to 1880, the expenditure increased by £10,000,000, or £2,000,000 per annum. During the next administration, which was Mr. Gladstone's, it increased by £1,000,000 per annum. During Lord Salisbury's administration, from 1886 to 1891, the expenditure seemed to be normal, but that was only by the sinking fund being reduced in 1887 by £2,000,000, and in 1889 by a further million per annum. The next administration was Lord Rosebery's, and under that the expenditure increased by £1,000,000 per annum. Indeed one could tell the political complexion of the Government in power by a study of the national accounts. A Conservative Government is somewhat of a luxury, and the present Government is no exception to what is apparently an economic law. The increase is not altogether due to the war. During the first four years of the present Government the expenditure increased by £19,000,000, and what is the position now? In 1895–96, the last financial year during which a Liberal Government was only in power a portion of the time, the expenditure, exclusive of the local taxation account, was £97,500,000; now it is £127,000,000, showing an increase of £29,000,000. If we add to that the three millions and a quarter increase in local taxation expenditure and the two millions suspended from the contributions to the sinking fund to the National Debt, the increase amounts to £35,358,000, or an increase of nearly £6,000,000 per annum. Was that expenditure necessary? Since when has it been necessary? In 1897 the right hon. Gentleman, speaking at Sheffield with regard to Army expenditure, said— I wonder whether the Commander-in-Chief himself and his great military coadjutors would really tell the country that they obtained at the present moment an adequate return for the 18 millions a year spent on the Army. That £18,000,000 is now increased to £30,000,000, exclusive of war charges. Is he now convinced that for the larger sum he gets an adequate return? At Bristol, in the May of 1900, the right hon. Gentleman said— He dared say when the war was over that they would have a demand for a great increase in our Regular Army. He disbelieved in the necessity of any such increase. I think, therefore, we may say the Chancellor of the Exchequer is one of those who is opposed to the spirit of militarism, and not in favour of an aggressive policy. With regard to the expenditure on the Navy, I do not think any charge can be made against the Liberal party that when they were in power they neglected the Navy. What is the policy of the Government? What is the objective? A different standard is now being adopted; it is no longer considered sufficient that the Navy should equal the navies of two European Powers; now it has to equal four, and I have no doubt some will say it will not be sufficient until our Navy equals the navies of the whole world. The noble Lord the Member for Greenwich said we ought to be prepared to meet the whole world in arms. If we could finance the country as economically as the noble Lord finances some of the voluntary schools we hear of, it might be done. Russia and France spent on their navies last year £21,000,000, Britain is prepared to spend £33,000,000. It is fallacious to suppose that the mere spending of money is a guarantee of efficiency. The same spirit of extravagance is apparent through the whole expenditure. The Army Estimates have increased from £18,000,000 to £30,000,000; the salaries of the law officers of the Crown have increased during the same period from £19,000 to £30,000 a year. In the collection of income and land tax the right hon. Gentleman is losing at the present time £50,000 a year by insufficient collection. If these taxes were collected in England in the same way as they are in Scotland the Chancellor of the Exchequer would gain another £50,000 a year. The collection at 31st January in Scotland amounts to 67 per cent., and in England it is only 32 per cent. In Scotland at 28th February 93 per cent. has been collected against 53 percent., leaving outstanding in England at that date fourteen millions sterling. I was much struck by a speech of an hon. Member with regard to the subventions to local authorities; there is nothing so fruitful of extravagance as these grants-in-aid of local taxation. In the Report of the Royal Commission which has just sat to consider the question of local taxation Sir Edward Hamilton says— Under the old system the millions appropriated to local purposes were annually controlled and supervised by the House of Commons. The amount—and a still larger amount—which went to meet local requirements under the new system was once for all surrendered. The House has no control over the expenditure, and it is iniquitous in this way that it is unjust to the working class taxpayer, who pays £1 to the Imperial Exchequer, and whose local rates are relieved to the extent of 5s. What we want is a divorce between local taxation and Imperial taxation, and it could be effected by providing some other source of revenue to be levied directly by the local authorities and relieving the Imperial Exchequer of payments to local taxation. I ask the right hon. Gentleman, does he take a courageous course with regard to economy in public expenditure? There is always an alternative for the head of a great Department of State whose views have no effect with his colleagues, but the right hon. Gentleman has not taken advantage of that alternative; he passed the Agricultural Rates Act and the Tithes Act instead. The large expenditure of the country makes it imperative that there should be greater economy. It will take the Chancellor of the Exchequer all his time to provide for his own debts without backing the bills of the Colonial Secretary. The ordinary expenditure, apart from the war, had increased enormously, and before the war the Chancellor of the Exchequer was not paying his way. The right hon. Gentleman admitted it when he resorted to these doubtful expedients in 1899, because he then said— If I do not reduce the amount applicable for the debt by two millions, I shall require to impose taxation, to increase direct as well as indirect taxation. He started with a surplus of £4,000,000, and he had the advantage of the increase of the death duties, which amount to £7,000,000 per annum, and the position to-day was this enormous deficit. There never was a time of greater need for economy, and we on this side welcome the expressions of the hon. Member for Exeter and others on that side who spoke in favour of economy.

The right hon. Gentleman the Chancellor of the Exchequer complained that the right hon. Member for East Wolverhampton had said little about war expenditure. I have always held that this war might have been avoided, and I therefore can speak freely. The Chancellor of the Exchequer says that compared with the issues involved the war expenditure was a trifle. That is not the spirit in which the right hon. Gentleman ought to approach this question of expenditure. The total expenditure for the war is £147,650,000; of that £142,800,000 is attributed to debt, and £4,850,000 to interest. What provision is being made for the liquidation of that amount by those responsible for the war? The Chancellor of the Exchequer said this evening that £45,271,000 had been paid off from all sources. That is not a third part of the debt, but I object to the right hon. Gentleman taking credit for either the suspension of the Sinking Fund or the realised surplus as moneys coming out of taxation. Of this £45,000,000 which was paid off over £9,000,000 came from the contribution from the suspension of the Sinking Fund and over £9,000,000 from realised surpluses, but the £18,500,000 should have gone to decrease capital expenditure. I agree with the hon. Member for Mayo when he said it was only accumulating debt in another form. The National Debt is larger by £18,500,000, and the right hon. Gentleman ought not to take credit for a transaction of that kind. Out of taxation we have only provided £26,974,000, of which £4,850,000 is for interest which must be paid, so that the Government has only provided out of taxation £21,899,000, or a seventh part of the debt, to meet the expenditure of the war in South Africa. It is a species of financial legerdemain unworthy of the nation. The ordinary expenditure, comparing the Estimates with Estimates of last year, shows an increase of £11,300,000. The additional taxation imposed in the present year amounts to £11,000,000 so that nothing additional has been provided for war expenditure, and allowing the Treasury Estimates of increased revenue to be correct, that shows a deficit apart from extra taxation of £9,269,000, and the balance between that and the £11,300,000 shows a provision of only two-thirds of the interest for the year payable on account of the war, but we apply nothing in liquidation of the war debt. Is that good finance? Is that wholesale borrowing consistent with the pledges given to this House by the right hon. Gentleman himself? What did he say in December, 1900, three months after the country was told the war was over— I have said throughout I would not make the borrowing for the war a permanent burden on the country. That is what he is doing now. If he was anxious to keep his pledges he ought to have ear-marked the loan and provided for it on the annuity principle, but he borrowed £60,000,000 on Consols, which will not be distinguishable from the National Debt. When the war was at an end was the former contribution to the Sinking Fund to be increased in respect of these additional sixty millions? I do not hesitate to say that the Government are shifting the responsibility and avoiding their just liabilities. It is the old story of leaving the debt to their successors to pay.

The Chancellor of the Exchequer said some time ago that if the ordinary expenditure increased as it was doing, we should require to find new and productive sources of revenue. We have had duties proposed on coal and sugar; the one cannot be said to be productive, and the other is by no means new. When the right hon. Gentleman is endeavouring to find new sources of taxation, why does he not increase the licence duties? Even in Edinburgh as much as £10,000 and £12,000 have been paid for the transfer of a licence. That is an unearned increment that certainly ought to be taxed. He has lost a great opportunity. If he had faced the situation he might have taken advantage of the crisis to deal with taxation of land values, an increase of licence duties, and other financial reforms deemed too heroic for calmer times. The right hon. Gentleman has many sound financial opinions, but the fatal influence of his environment prevents him carrying them to logical conclusions. He declared himself a free trader, yet imposed an export coal duty. He denounced the inequity of making war expenditure a permanent burden on the country, yet borrowed £60,000,000, and hung up £50,000,000 more for a more convenient season; he warned the country against the dire results of increased expenditure, yet supported the Agricultural Rates Act and the Tithes Act. Whatever gibes may be thrown at the squabbles and altercations in the Liberal party, they have never wavered in their allegiance to the principles of sound finance; but once more it will be their misfortune to succeed to a mortgaged estate. One result at least will follow, that the Unionist party will not for many years again be returned to power.

MR. JOHN REDMOND

I do not think that the oldest Member of this House will be able to recollect so extraordinary and humiliating a spectacle as has been presented by this debate to-night. This is supposed to be a great parliamentary occasion, one of those occasions when great issues are at stake, when there is a conflict of parties, and when the House is deeply moved. We are to-night discussing an extraordinary Budget—a Budget without parallel in the history of this country, a Budget dealing not with millions, but hundreds of millions of public money, a Budget which raises the ordinary expenditure of this country to a higher point than it has ever stood at before, a Budget which raises the Army and naval expenditure to the huge total of £60,000,000, a Budget which imposes new and oppressive taxation on the people, and lays a burden on one of the staple articles of food of the poorer classes, a Budget based upon a war of which no man can see the end, which up to the present has cost this country £150,000,000 of public money; and in this unparalleled crisis in the nation's history, when notice of a vote of want of confidence in the Government has been officially given by the Opposition, there would seem to be all the elements of a great discussion. But the debate opened this afternoon with absolute apathy and listlessness. I have seen more interest expressed on a Wednesday afternoon when the House was discussing the pro- posals of some private Members. I ask myself what does it mean? Is it that the policy of the Government, the policy underlying this Budget, commands the almost unanimous support of all sections of the House. Nothing of the kind. There never was, I believe, a Government in office which has excited a more bitter and deep-seated opposition among the different sections of the House, and there never was a Government whose policy was more bitterly resented and abhorred by many sections of this House. Then what is the reason for the unparalleled scene which was witnessed when the debate was inaugurated this afternoon? The explanation, to my mind, is very simple. It is, in the first place, that the right hon. Gentleman who has been put forward by the official Opposition to move this Amendment is a man who is morally as responsible for the policy underlying and necessitating this Budget as any man on the Ministerial benches. The explanation is that the right hon. Gentleman has been committed on behalf of the official Opposition to move an Amendment which, from beginning to end, is a mere dishonest platitude; an Amendment which neither approves nor condemns a signal vital issue in this controversy, and which is most carefully and skilfully drawn so as not to commit the mover of the Amendment or any of its supporters to any principle or policy whatever.

I desire, in the very few moments I propose to occupy, to get away if I can from all this make-belief, and to deal with what seem to me to be the real issues at stake. So far as the Irish Members on this side are concerned, we object to this Budget root and branch. On the first occasion when the subject of this Budget came before the House I briefly intimated the reasons which animated Irish Members in opposing it. They oppose it, first, on the ground that they believe, on the authority of the Royal Commission, that Ireland is called upon to pay more than her fair share of all this expenditure. That is a subject which it would be quite in order for me to discuss, I apprehend, on this occasion, but I recognise that it is not a convenient opportunity for the discussion, and the Government have announced that they will give us after Whitsuntide a special day for the consideration of this grave question. I pass from it, then, merely mentioning it as the first ground of objection that the Irish Members have to this Budget The second ground is the character of the taxation. I heard the speech of the right hon. Gentleman the Member for East Wolverhampton, in which, making a great grievance of the coal duty, he spoke lightly of the imposition of the duty on sugar. As the representatives of a poor nation, which pays in indirect taxation far more than the proportion paid in Great Britain, we protest against the imposition of the sugar duty—a duty which, small though it may appear in its incidence upon any particular individual family, is yet one which will be felt almost entirely by the poorer classes, and which will bring suffering and hardship into every poor little cabin through the West and South of Ireland. We object also to this Budget because of the cause which underlies it. The cause which underlies this Budget is, of course, the military expenditure necessitated by the war. I will pass lightly over this point—because I always endeavour to avoid repeating myself, and I have already spoken upon this point—but this much I must be allowed to say once more. The Irish Nationalist Members on the question of this war sympathise heartily and wholly with the Boers. These men, fighting in their mountain fastnesses against overwhelming odds, seem to us in the light of a people fighting for the greatest cause to which brave men ever consecrated their swords and their lives; they are fighting for their liberties and their homes. I remember at an early stage of this Transvaal controversy, shortly, I think, after the war commenced, that the Secretary for the Colonies made some allusion to the God of battles. Well, Sir, in this controversy England has had almost everything upon her side. She has had the numbers, and she has had the money; who will say she has had the God of battles? I believe that on the side of England this has been the most disgraceful war in her history. It has been a war promoted by greed, and carried on with untold cruelty. A more shameful record than the Return published the other day of the number of Boer homesteads burned down by your troops is not to be found, I believe, in the his- tory of any civilised country in the world. It has been for you an inglorious war, with your 250,000 men in the field pitted against, as we are told, some 10,000 or 12,000 Boers in scattered parties at present in the field. And, above all—I say above all, because it is what, after all, will probably awaken the conscience of the country more than anything else—it has been a ruinously costly war. Passing over these grounds thus shortly, I say that the Irish Nationalist Members in this House protest against this Budget on these three grounds: because it calls upon Ireland to pay more than her fair share of the taxation; because of the character of the taxation, which presses most hardly upon the poorer classes; and because the whole reason of this Budget is this disgraceful and inglorious war, to which, if we had our way, we would not permit our country to contribute one farthing. The House is really, I admit, most fair and tolerant in listening to views which probably to the majority of Members are not very palatable, but I have felt it my duty, without unduly delaying the House by repetition, to emphasise once more these grounds upon which we object to the Budget. Hon. Members will probably think that our position has been so clear up to the present that this repetition was scarcely necessary. However, I have endeavoured to make this statement short.

It may be said, and fairly said, perhaps, that it was unnecessary for me to speak at all. The real reason I have risen is, not that I believe either the House or the country has any doubt or misunderstanding as to our attitude on this war, but in order that we may make our position perfectly clear and intelligible with reference to this precious. Amendment. I desire to ask respectfully what does this Amendment mean? I confess that before the debate commenced I was considerably puzzled as to the meaning of this Amendment, and, having listened patiently to the speech of the proposer, I am more puzzled now than before. The preamble declares—"That this House, while ready to make adequate provision for the naval and military requirements of the Empire," and so forth. Now, I want to ask what does that phrase mean? The right hon. Gentleman who moved the Amendment spoke, forsooth, of what he was pleased to call the peace expenditure. That is the phrase he gave to what is going to be the normal expenditure of this country—expenditure consisting in part of £60,000,000 a year for the Army and the Navy. That is the expenditure termed by the right hon. Gentleman a peace expenditure. May I use the phrase without offence—What a hypocritical argument! Of all the men in this House the right hon. Gentleman has the least right to stand up here as the champion of economy. He does not complain, indeed, of the increased expenditure on the Navy. He does, in a faint, half-hearted way, complain of the increased expenditure on the Army. I ask this House to recollect that that increase in the military expenditure has not been accomplished by one stroke. It has been gradual during the last few years, year after year. When did the right hon. Gentleman rise in his place in the past to protest even by word or vote against this increase of expenditure? No, the right hon. Gentleman made no such effort on the side of economy; but when this enormous military expenditure was being piled up it was left to the Irish Members on these benches, alone and unaided, to make arguments in favour of economy in the public Departments. The right hon. Gentleman posed to-night as the champion of economy—a pretty champion, forsooth! The apostle of Liberal Imperialism masquerading as an economist! The increases in the military expenditure of this country, with which the right hon. Gentleman found fault, are the direct and necessary result of the policy of Imperialism, which he has preached up and down all through England. The right hon. Gentleman, I am bound to say, although he endeavoured to pose as the champion of economy, did not carry his economical views very far. He does not disagree with the increased expenditure on the Navy. He was not very definite or clear as to how he would reduce the increased expenditure on the Army made necessary by the policy which he has enthusiastically adopted. But he did say something on the amount spent on education. I ask again, what does this Amendment mean? I expected to receive from the right hon. Gentleman some light and leading upon this matter, which would enable men who take an independent view of these things to make up their mind whether to vote for the Amendment or not. Does this Amendment mean approval of the war policy? It says—"While ready to make adequate provision for the naval and military requirements of the Empire." For my part, I would have thought that that committed us to approval of the war, no matter from whose lips the statement came, but when the statement comes from the lips of a man who has openly and enthusiastically supported the policy of the war, I have no alternative but to come to the conclusion that this Amendment does mean an approval of that policy. The right hon. Gentleman is the representative par excellence on this side of the House of that policy. Indeed, it would not be going too far to say that he was elected to this Parliament as a supporter of the Government on the really vital issue at the Election. When a right hon. Gentleman with this past history asks me to vote in favour of a declaration that this House is ready to make adequate provision for the naval and military requirements of the Empire, I take that to be an invitation to vote in favour of the policy of this war. In my opinion, any man who votes for the Amendment will be voting in favour of the policy of the war. ["No."] Does anyone question this? ["Yes."] I am glad to hear that. One or two Gentlemen above the gangway say that voting for this Amendment does not pledge them to the war. Very well. Does this Amendment mean a condemnation of the war?

AN HON. MEMBER

It has nothing to do with the war.

MR. JOHN REDMOND

Very well. There is one great vital issue at stake in this Budget, and an Amendment is proposed on behalf of the Opposition which does not commit anyone either to approval of the war or to condemnation of it! What, then, I ask, does it mean? Why, Sir, it means nothing at all. It is a facing-both-ways Amendment; it is a silly and, it seems to me, rather a contemptible evasion of the real issues at stake. If I might be allowed respectfully to say one word further, I would say that until the Opposition in this House make up their minds to stand by some policy, no matter how mistaken, or to stand by some principle, no matter how hum-drum, they cannot expect to command that respect in the country which must be the forerunner of popular support. Therefore, for the reasons which I have given I denounce this Amendment as a sham and a make-believe, put forward here by a man who—if he stands for anything—stands for all those principles of the present Government which are most abhorrent, as I believe, to the true democratic instinct of the people of Great Britain as well as of Ireland. Of course, I do not know what the rank and file of the Opposition will do upon this Amendment, but so far as the Irish Members are concerned the House may take it for granted that they will not be a party to this sham. This debate must of necessity, from the manner in which it was introduced, and from the character of the Amendment, be a dismal mockery and a hollow farce. The Irish Nationalist Members of this House have had to endure with patience many accusations of wasting the time of Parliament. After all, there is this to be said for us, that when we have been accused of wasting the time of Parliament we have been debating, perhaps, at too great length, with a reiteration which would be avoided by men of greater oratorical skill, subjects which, humble as they may seem to the large intelligence of Imperialist Members of this House, are subjects intimately affecting the lives and the happiness of the poorest of our population at home. That is to be said in extenuation for us if we do in this foreign Parliament occupy too much of your time. What is to be said of the occupation of three valuable nights of Parliament time in the discussion of a ridiculous Amendment like this, which is based upon no principle, and which, upon the admission of hon. Members above the gangway, does not commit anybody to anything? Let this debate come to an end. I regard this day and Thursday being spent in the discussion of this Amendment as a pure waste of time. If there is to be a discussion on this Budget, let it be taken upon a plain and honest issue, and do not occupy three valuable days of Parliament time time in the discussion of a mere platitude such as has been proposed by the right hon. Gentleman the Member for East Wolverhampton. So far as we are concerned on these benches, when the Second Reading of this Bill comes to be put from the Chair, we will, by our votes in the division lobby, show our disapproval of all the great issues underlying the Budget, but on this inconclusive and dishonest Amendment we shall refuse to vote, because we regard it as a foolish and contemptible attempt to sit upon two stools, an attempt to evade every real, honest issue in this controversy, and we shall refuse, once and for all, to make ourselves parties to a sham.

MR. GILBERT PARKER (Gravesend)

It is an agreeable surprise for me to be able for once to agree with the hon. Member for Waterford. I have so many times disagreed from him in the course of the debates in this House that an agreement with him upon the occasion of my first addressing this House is as pleasant as I hope it will be profitable to myself. The hon. Member for Waterford has dissented entirely from the Amendment which has been moved by the right hon. Gentleman the Member for East Wolverhampton. I find no difficulty in agreeing with the hon. Member for Waterford, for I found the same confusion in my mind when I came to study that Amendment. That confusion was increased by the speech which the right hon. Gentleman delivered, and by other speeches which were made on the opposite side of the House, and also, if I may say so, by one or two delivered on this side of the House. I find it exceedingly difficult to be able to dissociate what may be called extraordinary expenditure and expenditure on the Army and Navy from normal expenditure. It would seem sometimes to the new Members in this House, as was suggested by an hon. Member opposite, that we are approaching great public matters in the spirit of a parish council. But the policy which should animate us should not be that of a parish council. I have gained the impression from the speeches which have been delivered that the expenditure which has so largely and so disastrously increased has been a thing which has not had a legitimate origin, and has not proceeded along perfectly legitimate lines. I myself am of the opinion that the expenditure is proceeding along perfectly legitimate lines. The speech made by the hon. Member for Haddingtonshire and other hon. Members gave one the feeling that the spirit of pessimism was abroad in the land, and especially possessed the Liberal party. It is a curious thing, after all, that in the expenditure which has taken place, and in the speeches which have been delivered, so little reference has been made to all those expenditures which affect the Empire at large.

The Amendment which has been moved, and the speech which has been made upon it by the right hon. Gentleman the Member for East Wolverhampton, seem to occupy this ground only, that the normal expenditure is dissociated entirely from what may be called the general expenditure. Is it not within the knowledge of every Member of this House that every step that is taken for the opening up of new markets means an increase of the normal expenditure? Is it not the case that as our trade increases our expenditure must also increase in all the departments of the State in this country? We have been told that during the last twenty years our trade has declined. That is not true, for our trade taken in the bulk has not declined. The Member for Haddingtonshire informed us, in a very pessimistic speech, that the United States and Germany were dispossessing us of our trade. That may be true in part, but it is not true altogether. It is a fact which every Member of this House must be aware of that the United States during the last fifteen or twenty years has largely increased its manufactures and has decreased its purchases from this country. It is likewise a fact that Germany has competed with us successfully in the markets of the world. We have, however, to face this remarkable fact, that no matter what our predisposition concerning the trade of the world may be the total trade of the world thirty years ago was represented by an enormous sum to which England contributed 51 per cent. We have to face the fact that during the years that have passed since then England has, on the whole, maintained her position. She has lost, perhaps, in individual markets, but she has gained upon the whole. The proportion of her gains and her position in the world's trade to-day is exactly the same as it was thirty years ago. Thirty years ago Germany first awoke to her possibilities as a manufacturing country, and at that time the United States was borrowing; heavily from us. I dissent from the proposition of an hon. Gentleman opposite that the ability to borrow at a low rate of interest is a sign of the prosperity of any country. The United States was borrowing from this country largely during thirty and forty years, and this went on so extensively that our securities in the United States represented an extraordinary amount. Those securities we do not now possess, for they have vanished from our purview, and, as to the money which they represented, we do not know where it is. But the United States borrowed with a purpose. She borrowed to invest the money in profitable manufactures rather than to manufacture herself and expend her own capital at the time. But since then the United States has taken back those securities which we owned, and Germany has also taken a high position as a great competitor with us. What is the position now? I dissent entirely from the view that, at the present time, England is in the position of a declining country. Our carrying trade to-day in the world' is exactly what it was in proportion to the world's carrying trade thirty years ago. If that is the case it seems to me that it is somewhat premature for pessimists in this House or out of it to preach only the decline and fall of the British Empire. The normal expenditure to which I have referred may be found to have increased in certain directions which are closely associated with the Empire.

I find it difficult to understand why, when hon. Members upon the opposite side of the House are criticising the Budget, our expenditure in certain departments of the public service intimately associated with our commercial development is entirely omitted from consideration. For instance, in 1881 the expenditure on the Post Office was £3,500,000. In 1901 it was £9,329,000. The expenditure on telegraphs in 1881 was £1,250,000; in 1901 it was over £4,000,000. On the Civil Service in 1881 the expenditure was £17,000,000, and in 1901 it was £23,000,000. May I ask if these services and these departments of the State are not closely identified with the development of commerce? Is it not the case that, as you extend your markets, you increase your normal expenditure? The United States began to take fewer of our exports and shut us out from the advantages of her market. Germany began to possess herself of certain ports and advantages, and she found her way into South America and the United States, and cut us out there by supplying our former customers in Asia Minor and Egypt with goods which we could not supply them with, because of the backwardness of our inventions, and the want of enterprise on the part of our manufacturers. It was then, by virtue of the extension of our colonies and our markets, that our ships and our carrying trade turned to the newer ports and the newer markets, where certain proportions of our Army are now occupied in preserving order. I take it to be an axiom almost that you cannot conduct any business organisation without a perfect command of the system, and without a careful consideration of all those elements which are necessary for the development of that business or commercial organisation. The time has come in this country when we have found it necessary to consider a larger scheme of army organisation. We have steadily increased our expenditure, but at the same time we have gained continuously, and by a proportionate and equable ratio, advantages of trade and of commerce which we should not have otherwise done if we had not kept pace with the necessities of the situation. My position in this matter is that we shall presently have to consider very carefully what our attitude will be towards those organisations, those nationalities, those colonies, which represent to us one-fourth of our trade at the present time. One-fourth of our trade represents an exceedingly large sum. We sometimes hear from hon. Members opposite criticisms upon the expenditure on our Navy for the defence of the colonies.

To-night the Chancellor of the Exchequer referred rather vaguely to the fact that there might come a time when we should have to consider very carefully the question of this country not paying all the expenses attached to the defence of the trade of this country. But this country does not pay all the expense of our trade. This country must realise, and does realise, that it has cost us during the last hundred years £30,000,000 for the actual defence of those portions of our Empire which are known as our colonies. But what is this £30,000,000 set against? It is set against £5,283,000,000, that represents the trade of the colonies of this Empire with this country during the last thirty years, and we in this country have paid about £30,000,000 in defence of those colonies. As the trade of this country declines through the competition which threatens it, to what source of revenue shall we turn? I hope I shall not be considered one of those Jingo Imperialists who stand solely upon the basis of sentiment. We have had our dangerous hours with our colonies, and we never had a more dangerous hour than in the year 1857, when the Liberal party in this country was disposed to let these colonies go. Another time more dangerous still occurred at a later moment in the history of Australia, when the Liberal party was prepared to allow Australia to find its way into an independence, which at this moment would have been a disastrous thing for this Empire. I do not wish to put undue weight upon that sentimental bond which sent to us during the present war an extraordinary number of colonists to support this country in waging the war in South Africa. It is, however, a notable fact that, in proportion to her population, Canada sent the same ratio of troops as that of England. Australia sent to South Africa twenty men in every thousand in her population, which proportion is, I think, four times as large as the number which England sent herself of her civilian population. I do not wish to lay stress upon that fact, because I believe that the future of this Empire does not depend alone upon a sentimental bond. The colonies realise more clearly than any hon. Members of this House are aware that the ultimate natural union is a union which has for its basis mutual consideration, and mutual benefit, backed by a natural affinity. That natural affinity exists, and draws the colonies towards England, but when you consider that at present Canada is attempting once more to negotiate a reciprocity treaty with the United States, and when you realise that that reciprocity treaty will withdraw from us, if it is accomplished, that trade which, during the last three years, has increased to an extraordinary extent—to the extent of £4,000,000 in three years, or 20 per cent. of what it was, and really an increase of 33⅓ per cent.—I take it to be an exceedingly serious matter. It has been the trade of the colonies which has in the course of the loss of certain markets to this country preserved for us our position in the whole volume of the trade of the world, and if we are to preserve that status which it has been the pride of commercial England to occupy, we shall have to consider very carefully, I think, these great commercial questions which are bound up with this very Budget and this very Finance Bill which the Chancellor of the Exchequer has laid before us.

I repeat my belief and opinion that the increase of the normal expenditure—which amounts within the last twenty years altogether, in the four Departments of the Government which I have named, to nearly £15,000,000—covers, I take it, that very deficit which an hon. Member opposite was so keen to lay before us. This means that if the deficit would have been £9,000,000 we might have saved it naturally out of the expenditure on these Departments by disregarding the natural laws of commerce. We might have saved the £15,000,000 in this way but would that have met the case? I do not think it would. I take it that in a private enterprise if you increase the volume of your business or the commercial output you must increase the expenditure upon it. That, I believe, is the law which governs not only private institutions but all Departments of the State as well, and also all great commercial organisations. I have been unable to agree with the Amendment of the right hon. Gentleman, and I have been unable, for good reasons, to identify myself with the extravagant propositions of the Member for Oldham. I find myself unable to obey the firman of the new Sultan of a parsimonious democracy, but I do fine myself able to put on record my faith, if not my unflinching faith, in the judgment of the Chancellor of the Exchequer, I suppose that every hon. Member of this House eventually becomes educated to the fact that every great scheme in human affairs and every invention has its fallible points. I suppose I shall become accustomed to find that even Chancellors of the Exchequer and Cabinet Ministers may be fallible. It is within even my capacity to do this, but I do feel as strongly as the hon. Member for Waterford that most of the objections which have been raised to this Finance Bill are exceedingly belated. I feel that most of the objections which have been raised have not been really raised in the most perfect good faith—I mean perfect good faith if it is to be founded on a clear and hopeful idea of the actual state of the commercial affairs of this country, and a clear and hopeful idea of what the commerce of this country means, not only to England itself but to the Empire. I feel as strongly upon this question as any hon. Member can feel who, as it were, has no ties in this House, but who comes here with an independent feeling, and is yet linked to the Conservative party. I believe to-day that the true Liberals and Radicals are to be found in the Conservative party. I do not find that the principles which animated the great Liberal party, which at one time was so necessary to the development of this country, any longer animate them in any concentration of purpose or clear idea of policy. Therefore, I maintain that if there is a movement which may be considered to be in sympathy with the advancement of this country and the advancement of the Empire, it is to be found in the party to which I belong, rather than in the party opposite, which presents a front which has been decimated by criticism, which has not the advantage of being united in any sense, or of being centred upon any one great vital principle except that devious, vague and uncertain challenge, "You are expensive, you are extravagant," disregarding the fact that the expense and the extravagance of which they accuse this party they themselves have had a share in. During the last thirty years, where they have not had a share in that growth, it seems to me, from my slight reading and observation, to have been because they have not desired to share fully in the proper, natural and inevitable development of the Empire. I, therefore, cannot agree with the Amendment, but am glad to support the Chancellor of the Ex-chequer in his Finance Bill. I hope that all Members of the House—yes, the Liberal as well as the Unionist party—will share as intensely as I and all true Imperialists do—not the Jingo Imperialists, but the Imperialists who have behind them the best conceptions of the commercial needs of this Empire—the rightful ambition of every true citizen of this land, namely, that our colonies, which will ultimately be our fiscal salvation, may not merely have our consideration—because we cannot approach them now as subordinate provinces of this Empire—but will be treated in all matters of a closer commercial union as if they were, as they are, nations by themselves, who could to-day, if they wished to do so, end the association as easily as they might have ended it forty years ago at the will of the Liberal party, and this country would find it most difficult to prevent them. But the colonies are united in the feeling of patriotism and devotion towards this country, and when difficulty arises they will take their stand upon the principle of mutual consideration, benefit, fairplay, and fair concession, either as to expenditure upon the Navy or as to the support of measures which go for the defence of this Empire.

MR. BRYCE (Aberdeen, S.)

Although I am unable to agree with a great deal which has fallen from the hon. Member who has just spoken, it gives me, and I am sure every Member of the House, pleasure to welcome to our debates a Member who has shown that he is able to win high distinction in other fields. But I must at once enter a protest against the suggestion that the Liberal party was the party which ever expressed a desire to part with the colonies. I must remind the hon. Member that the famous phrase about "these wretched colonies" was spoken not by a Liberal Minister, but by Lord Beaconsfield. I do not intend to deal in detail with the various points of the Budget, which require again the marshalling of the figures which the hon. Member for East Edinburgh has so admirably dealt with. There are many Members of the House who have a more minute knowledge of these financial details than I could possibly pretend to. I desire to endeavour to lay before the House a few general aspects of the financial position in which we are placed, and which seem to me to be the main issue raised by the Amendment. I understand this Amendment as asking us to review the finance of the last few years, and to say whether it leaves the country in a position from which we can regard the future with anything but disquiet.

In the first place, let me say a few words with regard to the methods by which the Chancellor of the Exchequer proposes to raise the funds necessary to meet the expenditure of the present year. I assent entirely to the view that the masses of the people must pay their share of the war expenditure. We have placed the destinies of the country, the issues of peace and war, in the hands of the majority of the voters of the country, and they ought to bear their share—not more than their share, but certainly their share—of the expenditure which is the result of a policy which they have sanctioned by their votes. I think that this is all the more necessary in a country like ours, where the safeguard against war which exists in continental countries is absent. I hope it always will be absent; I hope we shall never have conscription in this country. But hon. Members will recollect that in a country where there is conscription there is a security which does not equally exist in this country against the Government embarking upon war. It is, therefore, all the more necessary that the results of war should be brought home to every individual voter by the taxes he has to pay. In the Middle Ages they resorted to the rough-and-ready method of a poll tax. The poll tax was sometimes followed by an insurrection, and the insurrection had the effect of making the rulers of the country realise where they were leading the country to. In our more refined days we are obliged to resort to indirect taxation, and we must choose a form of indirect taxation which, if possible, will enable the body of the people to realise that expenses are incurred of which they must bear their own share. I quite agree that we must bring home to the people the responsibility which they have as citizens. We must make them realise that we are at war, and we must make them estimate what we are going to get by the war. One of the great objections to the policy which the Government have followed of raising a very large part of the expenditure of the war by loan is that it fails to bring home to the country the real gravity of the position in which we stand and a sense of the amount of the expenditure in which we are involved. Altogether apart from other arguments which have been dwelt upon by my hon. friend the Member for East Edinburgh, I feel strongly that it is desirable that the country should be made to realise from the moment war begins how serious is the responsibility it has incurred, and that can best be done by paying a very large proportion of the expenditure out of current revenue.

I will say a word upon two of the taxes which the right hon. Gentleman proposes to impose. The first is the sugar tax. It is not for me, nor is this the time, to compare the merits of the tax upon sugar with several other taxes which have been suggested. Personally, I prefer a tax upon beer, or the tax advocated by the hon. Member for Bedfordshire upon licences, or an increase of the tax upon tobacco. Either one of these would have many reasons to recommend it in preference to the sugar tax, because, although the Chancellor of the Exchequer passes it very lightly by, I think he must feel that it is a little hard upon the classes of the community which are least able to make their voices heard and their influence felt—I mean the very poor and the women—that this tax should fall with special weight upon them. But there are two other objections to the tax. It is a tax upon food and a tax upon raw material. For the last thirty years we have done our best to reduce all taxes upon food, but we are now abandoning that principle. Therefore, although I admit that it has become necessary to impose some tax of this kind, I think it is a pity that this particular tax has been selected. Now I will say a few words about the coal tax and its general effect, but I must make one observation in reply to the Chancellor of the Exchequer. He spoke as if he felt easy as to our command of the Mediterranean market. I do not share his confidence. I believe the Mediterranean market is one of those threatened, and I believe it is especially threatened by the competition of the United States. Already there are powerful syndicates in the United States which, we understand, are preparing to ship coal to the Mediterranean, and taking this opportunity of competing there with us. Although we have an advantage in proximity of the markets, they have an advantage in cheap carriage from the mines from the Atlantic slope, and an advantage from easy mining, because many of their mines are not deep and the coal costs far less in raising. They are anxious at this moment to develop this export trade, and they are willing to take considerable trouble and run considerable risks in order to compete with us in European markets and other foreign ports. Therefore I think the Chancellor of the Exchequer is far too sanguine on the subject. There is another remark on the coal trade to which reference must be made—it was mentioned by the hon. Member for Hartlepool, and also by the hon. Member for Gloucester—and that is the effect the coal tax is likely to have on British shipping. The Chancellor of the Exchequer knows that coal is by far the largest article in point of quantity carried in British bottoms. He knows that it pays by far the largest part of our freights, and that the coal freights are larger than those of all other commodities taken together. It is clear that it must be a very important article in the general profit of shipping, and that it affects the shipping trade in a very particular way. An immense number of vessels are built for the coal trade and employed entirely in that trade. If the export coal trade receives a check by this duty which the Chancellor of the Exchequer is imposing, those ships will have to be worked without profit or laid up, in which case a considerable amount of labour will be thrown out of employment and a great deal of capital will remain unused. If, on the other hand, they continue to be worked, there will be a serious shock and disturbance given to the freights of other commodities, because vessels which go out with coal bring home other articles from abroad; very frequently they are able to bring home cargoes at a lower freight in consequence of the freight obtained in taking out coal. That reacts on the manufactures of this country. Therefore you will disturb the whole trade of the country by disturbing the shipping trade, and you will particularly disturb the possibility of making calculations in the shipping trade as to the expectation of getting a continuation of freight or a return freight. If a ship-owner knows that he will not get a coal freight it will be quite clear that his whole calculations will be disturbed. You add this to the other difficulties which operate to disturb the shipping trade, which is an unusually complicated one. When we remember how large a part of the whole capital of the country is embarked in the shipping trade, how it affects everybody else, and how sensitive the trade is, we must conclude that it was unfortunate for the Chancellor of the Exchequer to try this tax, apart from the effects upon the coal trade, on account of the effect it will have in disturbing other industries. It has always been a maxim of financial policy that we ought to disturb the natural operations of trade as little as possible, and that is a strong argument against the measure taken on this occasion.

I pass from that to say a few words on general finance. The expenses of the war are put down at £153,000,000, but we all know that that figure is likely to be exceeded. The war may last a great deal longer than the War Office or the Chancellor of the Exchequer expect, and we do not know—I do not think they would claim at this moment that they do know—what the expenditure will be afterwards. I say, then, that very probably we shall not be rid of the expenses of the war for a smaller sum than £200,000,000. I do not think that is an extravagant calculation judging from the way our hopes have already been deceived during the course of the last eighteen months. Something has been said as to the relation which this Amendment bears to the war. I do not propose to discuss the war here. I have often expressed my opinion about it in the House, and I am perfectly willing to do so again. There is not a word in the Amendment which expresses approval of the war, either directly or by implication. If there was a word expressing, even by implication, approval of the war. I should not vote for it, because I have often said I look upon the war as having been absolutely unnecessary and entirely deplorable. And having said that, and shown what I think of the construction and meaning of this Amendment, I have no more to say upon that subject. Another point to which we are brought in the present position is this. We have the suspension of the Sinking Fund, that is to say, we are not exactly adding to our debt, but we are stopping the process by which it was being reduced. That is a serious fact. During twenty-five years of economy we paid off more than during the whole of the reign of her late Majesty.

So much for the special expenditure which the war has caused. Now let me say a word about the ordinary expenditure. In 1895 it was £94,500,000, and now, according to the Chancellor of the Ex-chequer' sown figures, it is £123,000,000—that is an increase of thirty per cent. in six years. I do not believe that any equal increase to that in the normal expenditure—I speak entirely irrespective of party—has been produced during any other period in our history. It is, at any rate, certainly something to which we have absolutely no parallel during the late reign or during the memory of any man living. This expenditure has been mainly incurred on the Army and Navy. We have productive and non-productive expenditure. This is non-productive expenditure, or the greater part of it. There has been £12,000,000 increase in the Army, and £12,500,000 in the Navy. The total expenditure on the Army and Navy together is now £60,000,000. When we come to the expenditure on the Post Office, upon the telegraph service, and upon education, we have one of two things, either we have greater facilities, as, for instance, by improved postal service, or else we have, as in the case of education, an expenditure which is, or ought to be, eminently reproductive in increasing the productive power of the people by their improved intelligence and skill. Therefore these are expenditures we need not grudge. I agree that we ought to scrutinise the education expenditure. I agree that we do not get full our value for it, but, at any rate, it is reproductive; but the expenditure upon the Army and Navy cannot be claimed to have any similar benefit to the country. The most we can say is that it is an insurance, and I entirely admit that a country like this, living largely off its commerce, should safeguard its vast mercantile marine. I approve of spending a large sum on insurance, but that does not prevent us from inquiring whether we are paying too high a premium. As regards the Navy, we are all perfectly well agreed that we must have a navy adequate to the defence of the country. That is an old and tried proposition. No one in the House will disagree with that, but it does not follow that we ought to give naval experts everything they ask for, and I am astonished at some of the demands made for the Navy. I think the House ought to remember that one result of our constant increase in naval expenditure has been to increase the naval expenditure of other Powers, and, therefore, we are simply pitting ourselves against other Powers in this matter.

SIR M. HICKS BEACH

No.

MR. BRYCE

Everyone admits that that has been the result. If the Chancellor of the Exchequer will read the debates going on in the French Chamber he will see that the increase of our Navy is constantly cited there as a reason why their Navy should be increased. That is one reason why we should scrutinise more than we have done this naval expenditure, but when I come to the Army I have no confidence at all. We have not had reasons given us by the War Office to show that the increase in our Army expenditure is called for. I am inclined to think that the expenditure on the Army is very largely the result of lax administration, and that we might attain quite as good results at probably several millions less than we spend annually on the Army now. We must remember that both naval and military expenditure is very largely a question of policy. It is foreign and colonial policy that determines our expenditure. If our foreign and colonial policy is aggressive, provocative, unwise, and shortsighted, we are perfectly certain to have to pay a much larger sum for military and naval armaments than we would have otherwise to devote to these purposes. When I am asked how to retrench military and naval expenditure, I say we ought to have a better foreign and colonial policy than the present and previous Conservative Governments have given us. When the present Government came into power in 1895 the Prime Minister acknowledged that we were on the best relations with every foreign Power, and he went out of his way to pay a tribute to our good relations with foreign Powers as left by the outgoing Government. A year ago, when he addressed a speech to the Primrose League, he said we were obliged to admit that we had incurred the hatred and exposed ourselves to the rivalry and danger of the Continental Powers. There is in that statement quite enough to bear out the comment on the policy which I have ventured to make.

There is one other observation I should like to make about expenditure and efficiency. Large expenditure is not necessarily associated with greater efficiency. I think economy means a great deal more in administration than merely saving up the money which economy represents. The easiest way, some people think, to appear to be doing something is to vote money, and when they have voted money they lay the pleasing unction to their souls that they have done all that is necessary. You may go so far as to say that lavish expenditure means lax administration. The surest way to get value for our money is the fear of criticism, and to be obliged to show that you are getting the most out of every shilling you spend, and I believe the extravagant practices of late years have very much reduced the efficiency of the public service. The hon. Member for Gloucester in his interesting speech to-night quoted the Duke of Wellington as being a remarkable instance of a great military man who set the highest value on economy, and always insisted that it ought to be strictly applied to military matters. I will give another high authority—Frederick the Great. I suppose we all remember that there has been no Government in Europe which has devoted for the last 200 years such constant care and attention to its military establishment as the Government of Prussia, and the watchword and the principle of the Government of Prussia since the days of Frederick the Great has been "Economy." I believe the extraordinary efficiency which the Prussian army has reached has been very largely due to strict and close attention to detail and the determination to get value for every thaler spent, which was steadily enforced by all the German generals and officers. I believe we could succeed in very largely reducing every branch of our expenditure, but, above all, our military expenditure, if we applied scrutiny like that which Prussia applies to our expenditure. I am sure that those who have followed the debates on the Estimates must have felt that the examination we give to them is far too slight, and very far from being sufficiently close and searching. I believe there never was a Government which even in the smaller matters, such as the case of the law officers, gave greater evidence of inattention to detail, by which true economy must be secured, than the present Government. The Chancellor of the Exchequer, not only in his speech this year, but in the Budget speech last year, called our attention in a forcible way to the dangerous position in which we stand. He made speeches such as ought to be heard from the guardian of the public purse. He said we ought to beware while it was yet time. I confess that after these exhortations I was a little surprised that he did not suggest to-night that there was any saving we could make or any way to redeem our growing expenditure, except by obtaining contributions towards the cost of our Navy from the colonies. I should have liked some other suggestion, at any rate, as regards a contribution from the colonies. I am sure such a contribution would be welcomed, and we should all be very glad to have it. I do not think there is the slightest difference of opinion in the House as to the desirability of getting a contribution from the colonies. We should be very glad to get it as an evidence of their interest in the mother country, but the Chancellor of the Exchequer must know that it is not an easy matter. He must know that there are other questions which must arise in relation to the application of the money, should such a contribution be made, and with the strongest possible wish that such a contribution should come, it is not a thing we can count upon this year or next.

I am sure the Chancellor of the Exchequer, after the appeals he made last year and this year to us, must desire more control over the purse. He must wish that we should respond to the appeals he has made, and it is with the desire of responding to those appeals that I ask the House to consider the position to which we have come. There would be no danger in the position if our resources were increasing in the same proportion as our expenditure. The reason why there is danger is because our resources do not increase in the same proportion. True, we are increasing in population, and I suppose we are increasing in wealth, but we are increasing both in population and in wealth on a very much lower scale than that at which our expenditure has increased. Our population has risen from 37,000,000 to 40,000,000, and our wealth has risen certainly at no very rapid rate, but our expenditure has risen 30 per cent. in six years. Our exports are not increasing. It is extremely difficult when one looks at the Returns to determine exactly how you are to measure the growth of exports; but this may be said, that if they are increasing it is at a slight rate, and by far the greatest increase is that in coal. Coal is an article of a special kind, and we cannot regard an increase chiefly supported by coal as an increase of the same healthful and hopeful kind as the increase which took place in our manufacturing productions thirty years ago. So far we agree with the Chancellor of the Exchequer. It has been pointed out by my hon. friend the Member for Haddington that we have been having during the last six years a period of exceptionally good trade, that has given increased revenue, but we cannot expect it to be continued. We know that these periods of prosperity are followed by periods of depression. They generally follow at a period of seven, eight, nine or ten years, and therefore we can fairly conclude that we are approaching the end of the period of prosperous trade which we have been lately enjoying, and that the productivity of the revenue during the next ten years will probably be very far below what it is at present. There is also another serious consideration, and that is the foreign competition, from which we have most to fear as regards our exports. America and Germany are increasing their exports far more rapidly than we are doing. There is another source from which danger appears to come, and that is the cheap labour of the East. There are some large classes of British products in which we have immense Eastern markets. Factories are being erected in India and Japan, where there is cheap labour.

There is another aspect from which we should regard the future. The calls upon the revenue are likely to increase, or, at any rate, not diminish. If we could hope that we had come to an end of the further demands on the revenue, we might look at the cost up to the present time with comparative complacency; but over and above that natural increase of expenditure which always goes on in this country, owing to the greater demands made on the Government, and owing to the rise in the price of educated labour, there are a large number of other demands looming in the future which we shall be called upon to meet. I shall only give the House one or two of these to suggest how serious it may be. We are going to do something for technical and secondary education. That means a larger expenditure. You never embark upon things of that kind without finding that you have to pay more for them, and although it may be good expenditure, the money has to be raised some way. You have got the question of old-age pensions. It has been thrown into the background for the moment by the preoccupation of our minds by the war; but when that preoccupation is at an end you may be certain that the question will be revived. You cannot throw down a question of that kind before the people of this country and expect them to forget it. I feel quite sure that Ministers will be obliged to take up and face the question before many years are past. Where are you to find the money to do it? The money which has been spent on the war would have gone a long way to provide the funds required for that purpose. When that question was started there were many economists who expected that the Secretary for the Colonies would deal with it. They will regret that he did not continue to devote his energies to that question instead of turning them to the Colonial Office. There is another question with respect to which there is likely to be a demand for money—the question of Irish land purchase. I do not express any opinion on the merits of that question, for which I have never voted, but it is a demand perfectly sure to be renewed and pressed with constant insistence. The present attitude of the Government towards it does not give us any security that they will not, one day or other, themselves comply with it. Though it may not demand a large sum, the possibility of it will depend on your credit, and the more you borrow the more you will impair that credit upon which we shall have to rely if we undertake the operation. Far larger and more important are the calls likely to be made on this country from those external sources of expenditure which are always growing with the expansion of the Empire in various parts of the world. I would ask the House to look round at what has happened in the last ten years. Whether you look at South Africa, and the expense which is being incurred there, or at China, and the expense that will have to be incurred there some day if Wei-hai-wei is to be of any use to us, you will find in every direction expansion of the Empire. All this means larger and larger calls for expenditure upon this country. Now I think we may say there has been no country in the modern world which has undertaken such enormous tasks as we are always ready to undertake. We take pardonable pride in the growth and greatness of the Empire, but I doubt whether we realise the responsibility which the growth and greatness of Empire bring with them. The mere fact that it is a wonderful and extraordinary phenomenon indicates that it is a phenomenon which cannot maintain itself in its present position without the exercise of the highest qualities of prudence, wisdom, and foresight. The more extraordinary it is the higher are the qualities that are required to keep it in existence. We occupy a small island, and we live by industry and commerce. In the last thirty years we have seen the growth of rivals less and less friendly to us, and making our position more and more doubtful than it was thirty or forty years ago. He is the worst enemy of the country who would tell us to go on trusting blindly in our luck or in our stars. The country has enjoyed in recent years a period of unexampled prosperity. We have been lulled into confidence and ease, and we have come to believe that for us everything is possible. We have thought that "to-morrow shall be as this day and much more abundant." We have had during the past few years a further inducement to indulge in laxity of expenditure. The Government has enjoyed a large majority. The First Lord of the Treasury has himself frequently expressed his regret that he had so large a majority.

MR. A. J. BALFOUR

I never complained of my own side; it was the other side I complained of.

MR. BRYCE

The right hon. Gentleman said it was less easy for him because he had so large a majority.

MR. A. J. BALFOUR

Oh, no; because I had so bad an Opposition.

MR. BRYCE

I think even the right hon. Gentleman will admit that when the Opposition is in so great a minority it is not an Opposition which can offer much effective resistance to the proposals of the Government. I think he will admit in his calmer moments that a Government which commands a very large majority is apt to enjoy a somewhat dangerous immunity from opposition. Under such circumstances the Government is enabled to carry measures with far less opposition and far less criticism than it would receive in normal times. We sometimes throw the blame of all this on democracy, and it is said that, with the large extension of the franchise, everybody leaves everything to the Government. I hope that is not so, but if it be so it only makes the responsibility of the Government all the greater. It is all the more necessary that the Government should undertake to form and guide public opinion. I regret that the Government has not chosen to give to the country, except through the Chancellor of the Exchequer, that guidance and warning which these rapidly and dangerously increasing expenditures demand. I believe this Government has applied a less scrupulous test to the expenditure of the departments than any other Government. In consequence of the policy which we are now so hopelessly pur- suing, the wealthy classes, who have acclaimed this expenditure, and some of whom, I am afraid, have expected to make their own profit out of these large and increasing expenditures, wilt be among the sufferers from the reaction which is certain to follow. I earnestly hope and trust that we shall not cease to make our views heard against the extravagance which has been increasing in our administration. Among other measures, we shall probably have larger and larger taxes upon great fortunes. It is necessary to protest on every occasion against the extravagance into which during the last ten or fifteen years we have been more and more betrayed, and to endeavour to recall the country to the sounder principles which guided it thirty or forty years ago. The true sources of the strength of this country are to be found, not in extension of territory, but in perfecting our resources, in reducing the burdens upon the taxpayers, in promoting the health and vigour of the people, and, above all, in developing their intelligence and productive capacity.

Debate adjourned till To-morrow at Two of the clock.