HC Deb 14 April 1902 vol 106 cc181-5

Now, my primary duty is to look for revenue, and my ideal of a tax is that which will yield the most revenue with the least injury and inconvenience to the community. Some persons, Sir, have thought that they have discovered such a tax in what used to be called the old registration duty on corn and flour. Well, I should like to say something to the Committee on the history of that tax. When Sir Robert Peel, in the year 1846, proposed the gradual abolition of the protective duties on corn, which according to the tariff of 1842 might have amounted to as much as£1 a quarter, he deliberately retained the duly of a shilling per qr. upon corn, and 4½d per cwt. upon flour and meal: and that tax. which was remodelled in 1864, went on for no less than twenty-three years, paying part of the cost of the Crimean War, until Mr. Lowe, not quite knowing what to do with his surplus—I wish I was in that position—abolished it in the year 1869 at a loss to the Exchequer which even then amounted to £900,000 a year.

Why did Mr. Lowe abolish that tax? He gave two reasons. The first was that he believed that, though, of course, it was a very small duty, it had the effect of preventing this country from becoming the commercial entrepôt for the corn trade of the world; and that if it were abolished, this country being situated between America on the one side, and the corn-growing countries of Eastern Europe on the other, would become such a commercial entrepôt for the corn trade, to the great benefit of our merchants. That was very plausible: but Mr. Lowe's expectations have been entirely disappointed. Out of the enormous imports of corn and flour into this country, the most trifling proportion is ever re-exported.

But Mr. Lowe gave a more important reason. He said— This is a lax on only one-third of our total consumption of corn and Hour. At that time only one third of our consumption was imported from abroad whereas at present two-thirds are, imported from abroad. Mr. Lowe said that to levy a tax on only one-third of the total consumption of an article is wrong in two ways. In the first place, it raises the price of the whole quantity of the article consumed—that which is produced in this country as well as that which is imported from abroad. It therefore takes more out of the pocket of the consumer than it gives to the Exchequer; and it gives protection to the home producer at the cost of the public at large. That is, I think, a fair statement of Mr. Lowe's argument. It was a beautiful theory, but with regard to this registration duty it was only a theory, and it had never occurred to anyone before.

When Sir Robert Peel in 1846 alluded to this duty he evidently felt that its effect upon the price of the article was absolutely nothing. If hon. Members refer to the debates of that period, they will find what I am quoting. When he announced that at the end of three years from that date—1846—the protective duties on corn and flour would entirely terminate, and that foreign corn would be imported duty free, almost with the very next breath he interpreted "duty free" to mean that it would be subject only to what he called the nominal duty of one shilling. And in later years, when Budget after Budget saw more and more articles removed from our tariff, this duty still remained. Through times which may be regarded as the heyday of free trade doctrine, no one ever objected to the duty on the ground of its being a protective duty. This was not because the attention of Parliament was never called to it.

In 1864 Mr. Gladstone deliberately remodelled the duty, which had been 1s. a quarter. He altered it to 3d. hundred weight, with the result of increasing the duty on some kinds of corn and decreasing it on others; and he even proposed to include some kinds of grain which had not previously been included. Did any one then suggest that it was a protective duty? No. Was there ever any greater free-trader than Mr. Gladstone in 1864? Never. And yet what did he say of the tax? He did not desire it to be a permanent tax; but even while he was, in that very year, reducing the ditties on tea and sugar, he said with regard to this tax that I it was a tax which produced a considerable revenue and which it would not be convenient then to part with.

Then I come to a later date—the present day. I heard a cheer from the hon. Member for Poplar. He has given some study to financial questions. His words may be listened to with deference, at any rate on the Opposition side of the House. The hon. Member has written a book on this subject, and in that work he has referred to the abolition of this duty by Mr. Lowe. He states his opinion, and I have no doubt that he still holds it that the registration duty on corn and flour violated in theory the principles of free trade; but the hon. Member goes on to say that it did not violate those principles in practice. He says— There was something to be said against the permanent relinquishment of a branch of revenue profitable in itself and collected with very little trouble, expense, or hindrance to trade; and practically not affecting the price of food. And it is pretty certain that if the duty were now in existence it would be retained. I agree with the hon. Member when he adds that it was "a reckless act" to relinquish this duty. And it was proved to be so by the result; for, as I will proceed to show, the abolition of the duty, as the hon. Member states, practically did not at all affect the price of food—not even of corn like wheat, barley, and oats, which are so largely produced in this country.

The duty was abolished on June 1st, 1869. The monthly average price of wheat in January of that year was 51 s. 7d. per quarter. It fell from that time until, in the last week of May, it was 45s. 2d. That was also the last week of the duty. On June 1st the duty was abolished, and the price of wheat remained the same; then it went stead ly up until August, when it amounted to 52s. 1d.; and it was not until the following December that the price of wheat was again as low as it was in the previous May. What does that prove? It proves that the price of wheat is regulated by factors infinitely more potent than that of a duty of 3d. per cwt. It is regulated by questions of demand and supply, by questions of plentiful or bad harvests, by questions of the cost of transport; and as to the effect of a 3d. duty per cwt. on the price of wheat, it could be nothing more at the most than that of the dock clues which are charged on the vessel landing its cargo; it could be nothing nearly so much as the protection now given to foreign wheat by the difference between the freights for that wheat and the rates charged by the railways for our own wheat.

Did the duty check the imports of corn into this country? Did the repeal of the duty increase those imports? From 1849, when protective duties were abolished, until 1859 there was not much change in the total imports. In 1862 they rose to 74,000,000 cwt.—double what they were in 1859. Then they fell. Then in 1869 they rose to 80,000,000 cwt., which was the year of the repeal of the registration duty; and in the following year, when anybody would have supposed that, if the duty had anything to do with the matter, they would have largely risen, they fell again to 74,000,000 cwt.

Did the repeal of the duty have any effect on the price of flour? I find that the price of flour in the Mark-lane returns for the eleven weeks before the repeal was 39s. per sack of 280lb.—precisely the same as it was for the eleven weeks after the repeal. Did it make any difference in the price of bread? I think all who have studied these subjects know that the price of bread does not vary with small changes in the price of corn. The retail price of bread, like the retail price of all articles, is established by averages over a wide range of quantities and qualities, and over considerable periods of time. I have no doubt that our bakers are extremely ready to seize any excuse for increasing the price of bread, and I am afraid that the bakers and dealers together have made proportionately very much more profit out of the low price of foodstuffs in this country than has ever come to the retail consumer. But this 3d. duty on corn would amount to a very small fraction of a farthing indeed on the 2lb. loaf; and there is sufficient competition among the bakers to make it certain that, if any one attempted to raise the price of bread on such a ground as this, he would soon find it to his advantage to return to the former price. The records of price in 1869 are very imperfect; but I find that the fall of wheat between January and May of that year was 6s. 7d. a quarter; and the fall in the price of the quartern loaf in the East End of London was rather less than ½d. And when the duty was abolished, it had no perceptible effect whatever on the price of bread.