INCOME TAX.

HC Deb 21 April 1902 vol 106 cc818-907

Motion made, and Question proposed, "That income tax shall be charged for the year beginning the 6th day of April, 1902, at the rate of 1s. 3d."

*(5.0.) MR. LOUGH (Islington, W.)

As I understand it, there is a general arrangement by which the discussion on the corn and Hour duty is to be taken tomorrow, while today's debate is to range over the remaining features of the Budget, although the income tax is only mentioned in the Question put from the Chair. It seems to me that the Estimates for the year were unfairly and unduly swelled by the Chancellor of the Exchequer at the last moment. When we came here on Budget night, we expected that provision would have to be made for £170,000,000 or £174,000,000, and the Estimates for that huge amount had been closely examined by the House. But the Chancellor of the Exchequer astonished everybody by suddenly increasing them by £18,500,000. The Leader of the Opposition had suggested to the right hon. Gentleman whether, under the circumstances that certain negotiations were going on, he might not defer making provision for the war for a short time. That was wise advice which might well have been taken, but the Chancellor of the Exchequer declined to accept the hint, and added £18,500,000 to the already great Estimate which the House was asked to pass, in order to provide for the service of the year. I want to enter a protest against the bad system which is growing up in this House in regard to the expenditure of the country—the system of which this is a flagrant instance—of not giving sufficient explanations of the demands made on the taxpayers. In asking for this extra £18,500,000 the Chancellor of the Exchequer accounted only for the sum of about £2000,000, and a portion of that affected a matter which might well have been left over till another time. I wish to make the strongest protest in my power against any further grant to the West Indies, but that is a subject which we shall have before us on another occasion. We have already had to find money for these grants, and I do not think that another should have been suddenly sprung upon us in this Budget.

We complain of the lack of information as to what this £18,500,000 is required for, and our protest should be such as to induce the Chancellor of the Exchequer to be more careful in future about springing Estimates upon the House at the last moment. What was the reason given? We were told that provision must be made for gratuities to the troops, and for the expense of bringing them home. Surely the right hon. Gentleman might have waited to see whether the ample provision of £40,000,000 already made for the war would not enable him to meet the additional requirements. Then we have reason to complain, I think, of the mode in which the deficit of £45,000,000 is dealt with. First, £4,500,000 is abstracted from the Sinking Fund, £5,000,000 is to be raised by new taxation, £3,500,000 is to be obtained from the Exchequer Balances and £32,000,000 by loan. The Chancellor of the Exchequer when he told the House that he proposed to borrow £32,000,000 promised to explain the form of the proposed loan later on, but as a matter of fact he simply had a Resolution read at the Table and no explanation was given at all. The loan had been discussed in the Press and on the market, but we were told nothing about the details. Then the right hon. Gentleman went on to say that he might later on have to ask the Committee for further borrowing powers—by Treasury Bills—or a short loan to the extent of £10,000,000 or £12,000,000. I should like to have some further particulars on that point. Is he proposing, in fact, to borrow £47,000,000 instead of £32,000,000? What kind of loan is it to be? We ought surely to have a full opportunity of examining it. I do not think that the country has been fairly treated in this matter. We have read in the papers that the loan has been a gigantic success—possibly too great a success. There has been a great rush for it, and I feel that the Chancellor of the Exchequer might well have proceeded more slowly, for then he might have got a better price than he did. Had he secured only one I per cent. more it would have made a difference of £320,000. In my opinion, however, as much as 2 per cent. has been thrown away. The loan was issued at £93 10s., and this marks a great fall in the price of consols. This is the third loan and each has been lower than the other. The first was£98 10s., the second£94 10s., and now the third has fallen to £93 10s. If the price had been higher the public generally might have taken it up, but the right hon. Gentleman prefers to make a private arrangement to place £16,000,000 before the remaining moiety is offered to the public.

THE DEPUTY CHAIRMAN

The Loan Bill is not before the House, and therefore it is not in order to discuss the details of the loan; although it is in order to discuss the policy of raising the loan.

* MR. LOUGH

As I understand we shall have another opportunity of raising this question, I will not further press the point. Now I come to the amount which is to be raised by new taxation. The right hon. Gentleman complains that objection has been taken to every tax proposed except the income tax, I say that too much has been borrowed, and more ought to be raised by taxation, I think 2d. or 4d more might well have been added to the income tax. By putting it up to 1s. 6d., £8,000,000 or £9,000,000 might have been raised. This war has cost three times as much as the Crimean War, and yet in that war the income tax went up to 1s. 4d. The income tax affords the best and safest way of raising money. It is a most fair tax, based on profits, and it falls where the money is. It would have been better to raise it than to resort to indirect taxation or to put a new tax on bread. I do not believe in widening the basis of taxation because it involves a great interference with trade. I do not regret anything I said by way of protest against the tax on sugar, but I think the Chancellor of the Exchequer might well drop the argument that the public will have to pay no more for bread or sugar in consequence of the imposition of these duties. No matter how cheap an article is. if a tax is put upon it the consumer has to pay it in the long run. I think two of the taxes proposed by the right hon. Gentleman are about the worst that have ever been proposed in this House—I refer to the corn and flour duty and the stamp tax.

I do not suppose the right hon. Gentleman will object to our discussing his proposal to double the cheque stamp duty, for it is well that he should be made familiar with the opposition which is arising in every part of the country to his proposal, which requires a great deal more examination at the hands of the House than it has as yet received. I think the right hon. Gentleman has forgotten the principle which underlies this duty; that principle is the power of the penny as a commercial medium. We have many examples of the great results that have been produced in this country by recognising this force. The most extraordinary, perhaps, is the Penny Postage, established sixty years ago. Why does not the Chancellor propose doubling this? Simply because he must realise that there would be no certainty of extra revenue, and the greatest National inconvenience and dislocation would be suffered. Omnibus, railway and train companies have all realised the great advantage of the use of the penny, and so the country has derived great advantage from it. No manager of such a company would think of increasing his revenue or promoting its prosperity by altering his standard price of one penny. Exactly the same principle applies to the penny charged for a cheque. The Chancellor of the Exchequer estimates that he obtains £800,000 annually, increasing at the rate of about £50,000 a year from this source. I had the pleasure of speaking to a man today who pays 25 per cent. of that revenue. He is the printer of the cheques for all the great banks, and he told me that his customers are unanimous in their opposition to this increase of the stamp duty. They are agreed that it will not produce a larger revenue. Two hundred million cheques are put into circulation every year, and they save the circulation of a vast amount of money. They are an immense convenience to business men and that is a matter which the Chancellor of the Exchequer should not lightly endanger. I mentioned the fact the other day that for a period of seven or eight months yearly over 1,800 cheques were issued by a Co-operative Society, with which I am acquainted. Each of these being drawn for £2, paid 1d. to the Exchequer, the total income from this source alone being £80 or £90 yearly. What would be the result of the right hon. Gentleman's proposal to double the duty? Why, only one cheque would be drawn monthly—the money would be paid out in cash and this revenue would be sacrificed. There is another point to be borne in mind in connection with this matter. On the average a month or six weeks elapses before the cheques are paid back, for the poor people who get them have no banking account, and they keep the cheque as long as possible, knowing how apt money is to melt away when it reaches their pockets. Eventually they pay it to a tradesman; he pays it into his bank, and so the whole transaction goes through without any cash passing at all. Not only, then, is a great commercial facility enjoyed by all these people, but an inducement is given to economy, there is greater safety than if all the payments were made in cash. This system obtains in every rank of life and would be disturbed. I know of the case of a lady who has an income of £600 a year. She draws annually 700 cheques, thus paying the Chancellor of the Exchequer £3. If the duty is increased she will only draw about 250 cheques yearly, and here again there will be a loss to the revenue. The proposed change will also have a very prejudicial effect on small shopkeepers, whose accounts are now paid by cheque remitted by post. These cheques will not be so freely used in the future; the customer will wait till he happens to pass the shop, when he can pay the amount in cash. Thus, the tradesman will be kept longer out of his money, and in some cases may lose it altogether. Again, there will be loss on the postage of the cheques.

The greatest consideration of all, however, is the difference that will be made to the cash reserve of the country and the need that will arise for a great increase in the amount of bullion in circulation. The cash reserve of the country greatly depends on this system of paper money which has grown up under the cheque system. Our cash reserve is placed at £35,000,000. whereas in France it is £100,000,000: and France requires this larger cash reserve, because in that country the cheque system has not been adopted to any large extent. I only wish to touch on one other point. The light hon. Gentleman has very kindly said that he will receive representations on this matter. I attended today a most influential meeting, where there was perfect unanimity in protesting against this proposal. The right hon. Gentleman has indicated that he is willing to make some concession in regard to this matter. But he has suggested that the difficulties will be met if he allows the penny cheque to be used for small amounts and leaves the two pence on larger cheques, but I appeal to him not to make up his mind in that direction. He certainly would not improve matters by providing that the increased fluty should only be payable on cheques above a certain amount. If he draws the line at £20, or even, £100, he will get nothing out of the increased duty, for there is sure to be a decrease in the number of the cheques, I advise him to take a broader and more generous view of this mailer. He must have been advised by some one like those professors to whom the late Mr. Cecil Rhodes made allusion in his will, who have not much experience of business in making this suggestion. The revenue from cheques will not be increased by any such plan. Any disturbance of the duty will mean a great dislocation of business and cause inconvenience in every class of society. He has made a splendid income out of cheques in the past, that income is improving day by day, and I hope he will not tamper with it.

(5.30.) SIR WALTER THORBURN (Peebles and Selkirk)

I much regret I am unable to congratulate the Chancellor of the Exchequer on the Budget as a whole. Of course we all expected additional taxation, and no doubt a fresh area of taxation was necessary to secure the money, but I cannot help thinking that the right hon. Gentleman's selection has been very un fortunate. I have always been a very loyal supporter of the Unionist Party, whether in or out of office, and I have hitherto had no strain put upon my loyalty in supporting their policy. Their legislation has been progressive, but I confess the present Budget does seriously strain it. I have frequently been accused by my opponents of supporting retrograde legislation, but when challenged to name any measure which could be so designated, the only one they ventured to quote was the Agricultural Rating Act. Thirty years ago, while an active Member of the Liberal Party, I strongly advocated a revision of the taxation and rating of Agricultural Tenants as unjust and oppressive, so that in supporting that Act I was perfectly consistent. I think some other method of raising the money should have been adopted instead of putting a tax on the staple food of the people. I know that many hon. Members on this side take a different view. But I wish to be consistent, as I have always endeavoured to be in my political life; and as I believe in food being as cheap as possible, I find it impossible to vote for the corn tax. Surely there were open to the right hon. Gentleman other means of raising taxes. If there had been none. I should have voted for the tax on corn, and I could then have justified my action to my constituents, a great majority of whom would, no doubt, have cordially approved. It may, perhaps, be presumptuous for me to tender any advice to the Chancellor of the Exchequer, but I must say I do consider there are many other things which might have been taxed for instance, aerated water and bicycles, both or either of which would have yielded an enormous revenue.

Then there is a tax which the Chancellor of the Exchequer put on last year—the sugar tax. I differ from hon. Gentlemen opposite in regard to that tax. I think it was a tax which was justified looking to the abnormally low price of the article, and I think if it had been doubled the Exchequer would have been benefited without hurting the consumer. The sugar tax has been practically paid by the continental countries where beetroot is grown, and it has been a source of unalloyed satisfaction to me that the continental countries who have so infamously maligned us in connection with the war in South Africa have, by reason of this tax, been bled to the extent of several millions of money to help to pay for it. The sugar tax has yielded, £6,400,000 in the past year without anyone feeling it. The price of sugar today is actually lower than when the tax was put on, and I have not the slightest doubt that if that tax-had been doubled we should have got as good a revenue as we got this year, and if it had been imposed there would not have been any necessity for cither taxing corn and flour, adding to the income tax, or imposing an additional stamp tax on cheques. As the right hon. Gentleman the Member for West Monmouth said, there might be something said for an increase in the sugar tax, but nothing could be said in favour of this corn tax. There is another thing to be said as to an additional tax upon sugar, and that is, all the machinery is provided for its collection, and, as I have already said, I maintain that the whole tax will be obtained from the foreigners. The Chancellor of the Exchequer, in his Budget speech, alluded to the amount of speculation which has been going on in anticipation of an increased tax, but I understand that that speculation has not been much so far as refiners are concerned. No doubt they kept their stocks full in the hope that if the duty was increased it would enable them to struggle over the critical period between now and the coming into operation in 1903 of the Bounties Convention. As no increase of duty has been put on, and as to carry on refining would entail a ruinous loss, I venture to predict that, with the exception of two or three refiners who make specialties, every refinery in this country will be closed. We will then be at the mercy of the continental refiners, and I assert that we will not only lose six to seven millions of Revenue, but that the consumer will have to pay more for their sugar than if the duty had been increased. According to the last returns, there was an over-plus of sugar this year of between 700,000 and 800,000 tons in excess of the previous year. Now, there is no country in the world which can take it except this country. This country is the dumping ground for all superfluous produce, and this sugar must inevitably come into this country; and I do not think the Chancellor of the Exchequer is wise in not taking advantage of that for revenue purposes instead of raising other taxes. Every new tax imposed will incur the maximum amount of odium with the minimum amount of revenue. I Under those circumstances I cannot but express my regret that he did not see fit to increase the sugar duty. The only objectors would have come from manufacturers of jam and confectionery, but these people have been coining money in recent years and have no competition except inter se I quite agree that all classes should contribute towards the war expenses, but a tax on bread should only have been resorted to when other sources of taxation were exhausted.

As regards the corn tax, I have had several representations from leading farmers in my constituency utterly condemning it, and as feeders it hits them hard. The Chancellor says the tax in corn and flour will not raise the price of bread, but my experience is that when ever flour is advanced, even a 6d. per sack, up goes the price of the loaf. They do not in Scotland grow much wheat, but they use maize to an enormous extent, and also other products coming from abroad. Another objection I have to the tax is that it gives a text for hon. Gentlemen on the opposite side of the House to go up and down the country and preach sermons on free trade and accuse the Government of Protection. There is not the slightest doubt that the feeling in the country against this tax is very great indeed. As regards the cheque stamp tax, the hon. Member who pie-ceded me anticipated every argument I was about to state, so I will not weary the House by going into them again, but I wish to strongly emphasise this point—that the effect of that tax will be to curtail the use of cheques. People will pay in cash rather than in cheques; people who have to pay say £50 a week, and do it now by means of small cheques, will draw one cheque on the bank for the whole amount and pay the smaller amounts in cash. It will further put a large sum of gold into circulation which otherwise would have been held by the banks, and I maintain it will not yield the amount anticipated by the Chancellor while giving inconvenience and irritation to business people.

I will not urge objections to the addition to the income tax, for while increased taxation is necessary the Chancellor could not well avoid adding to it. I may, however, point out that it will press hardly on men of small or fixed incomes who have their expenditure mapped out, and whose calculations may be upset by this unlooked for impost.

I regret having to oppose the Chancellor's proposals, but what I feel is that I must choose between loyalty to party and consistency. I have often said that in my opinion a man should be as consistent in politics as in the affairs of every-day life. It may be a high ideal, but holding these views I am compelled to put consistency before party.

*(5.40.) MR. HALDANE (Haddington)

The remarkable speech which this Committee has just listened to should give the Government some cause for reflection. Like the hon. Member opposite, I know Scotland, and nothing has struck me more than the obvious repugnance with which the great new departure of this Budget has been received both by the people and the Press of Scotland. Anybody who reads the leading articles appearing in the Scotsman at this moment cannot fail to realise that even with them the breaking strain is nearly reached. Scotland does not support a Conservative Government very willingly, and the strain which the corn duty has placed on the electors in Scotland of the present majority is very great, indeed.

I am not going to follow the hon. Member into his suggestions for alternative taxation. A tax on bicycles or sugar may he good, but such taxes are attended by difficulties which can only be considered by experts who are engaged on these matters for months before the Budget statement is made. I agree with the hon. Member opposite that there may be times when, from the necessities of the case, you must resort to indirect taxation upon the food of the people. I am no dogmatist or fanatic in these matters, but I for one would consent to such a duty only with the greatest reluctance. I should only consent after there had been a most careful preliminary inquiry to show not only that such taxation was absolutely necessary, but on whose shoulders the burden would fall. Many people in this country live on the narrowest margin of subsistence, and a tax of this kind falls on the poor of this country with a weight which has no parallel in any other tax. Have the Government made such exhaustive inquiries that they are enabled to say that they had got adequate knowledge on this topic? Another reason for my objection to this tax is that in this country we possess a great manufacturing industry; but that industry rests on no artificial advantages belonging to us as a nation. Our coal fields have always existed, but coal is getting more expensive to obtain, and we have no advantage of the kind which marks us out as the pioneers and leads us to he the pioneers of the world. We have no supplies of iron and steel to compare with those of the United States. It is only by the industry and energy of the Anglo-Saxon race that we have been enabled to keep the great position which we have won. If we have kept it, I think that one fact has contributed not a little to our success—the fact that this country has been the dumping-ground, if we choose to call it so of the raw materials—materials essential for commerce and manufacture—and to the policy that lets them in. Any departure from this principle with regard to these raw materials or to food—for cheap food is an element in successful production and competition—is to my mind a source of possible mischief. Another objection to indirect taxation is that it tends to destroy the sense of responsibility which accompanies direct taxation. At the same time I quite recognise that the time has come when further taxation must be raised. I do not see any prospect of a change in the movement of national expenditure. For one reason, that expenditure has risen, not as an isolated case, but concurrently with the rising of the national expenditure in other countries. We are spending more because we have a larger house, a larger family, a higher way of living, new necessities which have come from an improved condition of things, and we cannot satisfy these needs at the old cheap rate. Then, we are face to face with new rivalries such as we have never had to meet before. I anticipate that in two Departments we shall see a very material increase of our expenditure in the next ten years. To preserve the immense volume of trade which we still possess we shall have to spend a great deal of money on education. In naval matters, too, we cannot stand still. That is the reason why Germany is creating a navy and the United States have created a navy, and that is the reason why we cannot stand still. Other countries are increasing their fleets and we cannot fall behind. In these circumstances some hon. Members take a rather gloomy view of the situation; but notwithstanding that there has been grievous extravagance in the past, I do not think that as a nation we are so badly off as some prophets of evil would lead us to suppose. Let us compare our case with that of France. Taking her expenditure for imperial purposes as the basis, and eliminating local expenditure, the outlay on Government by France is about 142 millions sterling. That, for a population of 38,000,000, as compared with ours of over 41,000,000, works out at £3 13s. 5d. per head.

MR. MCKENNA (Monmouthshire, N.)

That includes local expenditure.

* MR. HALDANE

No, I think not. The basis of local expenditure is very different in France, and I have done my best to eliminate it from the account. In Prussia the expenditure is still more difficult to estimate, because you have there to take into account the Imperial contribution to the German Empire as well as the Imperial expenditure of Prussia itself. I make the expenditure there £130,000,000 altogether, which with a population of 34,000,000, gives £3 17s. 6d. per head. I have not included the expenditure on railways, because that appears on both sides of the account. In our own case, taking the normal expenditure at the high figure of £132,000,000, and the population at 41,000,000, it comes out at about £3 5s. per head.

I turn from that to a comparison taken from another side. I have worked out as well as I can the national income of the country. I do not mean the national revenue from taxes, but the national income, which is obtained by all classes of the community, industrial and otherwise. That is always an approximate calculation, but according to the best authorities it may be taken at the present time at about £1,750,000,000. That includes the interest on foreign investments, and my view of its growth is confirmed to a considerable extent by the yield of the income tax during, say, the last forty years. In 1861, a penny on the income tax yielded not much over £1,100,000; this year I think the Chancellor of the Exchequer told us it would yield about £2,600,000.

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

Not quite so much; about £2,500,000.

* MR. HALDANE

At any rate, in 1901–2, the yield was £2,400,000, which compares very remarkably with £1,100,000 in 1861. That shows an enormous increase in the national wealth. The same authorities who have made these calculations, have calculated the national income of France at £1,000,000,000, and that of Germany as a whole at £1,300,000,000. Comparing these results, I think they show that of all the nations with their increasing expenditure—I am excluding the United States in this connection, because they stand on an entirely different footing—we, at any rate, are the best fitted to bear that increase of expenditure. I put the necessity of that increase down to education—Germany spends just as much as we do (which I take at £25,000,000, local and imperial) on education, although she is a poorer country; the army and the navy—which are much more costly items now than formerly, because of the greater demands of science upon the weapons of warfare and the vessels which bear them; and the general rise in the social scale, due to increased wealth on the part of individuals, and the greater demands they make upon the Government.

But the comparison docs not stop there. If you take Army and Navy together, I find that in Great Britain the normal expenditure on those services is about 3½ per cent. of the national income. In France it amounts to about 4 per cent., and in Germany to 3¼ per cent. There is a striking feature which one cannot leave out of account in connection with these figures. In this country we have no compulsory service, and therefore have no blood-tax to pay, such as is paid in France and Germany. I am not one of those who deny that there are advantages to be obtained from a certain amount of discipline and training, but I am convinced that in this country we do not realise how seriously compulsory military service interferes with the commercial prospects of those countries. The fact that for two years in the best part of a man's life he is transferred from his occupation into a state of things in which through the summer he has to get up at two o'clock, and in the winter at four o'clock, clean stables, and go through the regular drudgery of the common soldier's life, to be under strict discipline, with no time to read and little time to think, tends to cripple all initiative and resource, and if our commerce is still in a flourishing condition and our workmen unbeaten when they have the same chances of education and training, we owe it not a little to the fact that we have these two years free from that crushing dead-weight. Therefore I should greatly regret if ever the time came when conscription was seriously talked about in this country.

Turning to the naval expenditure only, the figures are remarkable. From a Return granted the other day to the hon. Member for Great Yarmouth, giving the naval expenditure of the great Powers in relation to their trade, I make out that our naval expenditure is very little over 3 per cent. on the volume of our sea-borne trade, which I take at over £870,000,000. in France the percentage is 3.7, and in Germany only 1.3. The German Navy is a very small affair at present, but it is rapidly increasing, and the ratio of the expenditure is likely to be much larger. Considering how enormously greater our Navy is than that of any power. I do not think 3 per cent. is an extravagant premium of insurance to pay on the commerce we have.

I have given these figures to the Committee, not because I do not recognise how serious the growth of expenditure is, but because on the one hand, I feel there are some branches of expenditure which we shall not succeed in reducing—some indeed which I want to increase, such as that on education, and we shall probably have to spend more on the Navy if things go on abroad at the rate they are doing; at any rate there is no prospect of reducing the expenditure on education at present incurred, though perhaps some of the money might be spent in a different way, but that is another matter. I am not putting these figures forward in any spirit of optimism, but because I do not think there is any necessity to sit down and weep over the cost of living at this period. What we have to see to is that by increased endeavours we make sure that the great volume of our commerce and trade remains at its present high level. That needs energy and enterprise, it also requires expenditure of a salvage character, and that expenditure there is no prospect of our being able to abate. In view of the money which all this costs, it, is our duty to make such sacrifices as we can in this generation to reduce our debt while the national income remains at its present high standard. France, with a much smaller-income, has a debt of £1,200,000,000 raised at a higher rate of charge than we pay. If, as a result of this war our debt were raised even to £800,000,000, we should still be in a position in which we need not feel depressed. But with this debt in front of us, it is a sacred duty which we owe to the generations coming after us that, while we have this huge national income—which I am not certain we shall be able to preserve, though I believe we shall make every effort in our power to do, so—we should make strenuous efforts to pay off debt as rapidly as we can. Our forefathers of the past generation, poorer far than we did not grudge the sacrifices which were made to bring things into the happy condition in which they were nor long ago. Nor should we grudge the sacrifices necessary to leave them very much as they were handed over to us.

The moral seems to be that the defect of this Budget is, not that it raises too much taxation or revenue, but that it raises too little. In this state of things, with the country as rich as it is, I would rather have seen the income tax 2d. higher than it is going to be than see things remain in their present condition. I am not sure that we have exhausted the resources of civilisation in respect of income tax. We hear a great deal about the impossibility of collecting a graduated income tax. I have a good deal to do with the legislation of the Colonies which comes over to be interpreted and put before the Privy Council. I have constantly to study the income tax in the Australian Colonies. One cannot draw parallels between things in a small country and those in a great country, but, speaking from memory I know there is a great difference made, not only in Victoria, but in other Colonics, between income which consists of interest upon investment—what is called realised property—and income which is realised by the sweat of a man's brow. The one is treated on a wholly different footing from the other. They levy at the source a tax of double the amount on income derived from investments, as compared with that from earnings. Not only so, but there is a great jump. If I remember rightly, the tax on earned income is 4d., and 8d. on realised in come up to £2,000 a year. Then there is a jump to 8d. upon earnings over £2,000, and 1s. 4d. upon the interest on investments. That is a principle which has been applied successfully, with great advantage and universal satisfaction, in the colonies. I am not saying that the Government should resort to anything of that sort without the most careful inquiry. One of the attractions of this country to foreigners, who bring their money here, reside here, and are a source of revenue to us, is that the taxation is in some respects comparatively light. I should be sorry to take any step of this kind without seeing where I was going. But I do not think we have got to the limits of direct taxation even yet. I quite agree that the basis of taxation will have to be broadened to bear the burden we have to carry; it may be you will have to raise some indirect taxation. If so. I hope it will be raised after careful inquiry as to those upon whom it may fall. But of this I am sure, that what will occupy the mind of the country is a doubt as to whether the Government have adequately realised the duty which is upon them at the present moment, and that is to prevent the National Debt from growing while you have the means to do so, and whether the Government have considered the far-reaching and grave consequences which the present Budget involves. It is upon that footing that I for one regret that we did not have as part of the notable, and in many respects admirable, speech of the Chancellor of the Exchequer some indication that the mind of the Government had been applied to the question as to whom these taxes would ultimately fall upon, and to what extent they would be affected.

*(6.20.) MR. GIBSON BOWLES (Lynn. Regis)

The right hon. Gentleman opposite has just given us a most interesting series of figures, and I agree in the main with the conclusion he derives from them. I seriously question, however, the correctness of his figures themselves. To take one instance. To say that the income of the French people is a little more than half of the income of the English people, I think, shows an absolute want of knowledge of the revenues of France. The French are an extraordinarily rich people, and my opinion is that the income of the French people very nearly approaches that of the English people. Franc is one of the richest countries in the world, and earns and saves enormous sums of money, and it is capable of hearing almost incredible burdens, it is the misfortune of the House of Commons and of the advocates of economy in the House of Commons, and it is to some extent the misfortune of the Chancellor of the Exchequer, that the prosperity of this England is so immense and its capacity to bear burdens so extraordinary that, as a matter of fact, no one cares twopence for economy. In passing. I wish to refer briefly to two points. First of all, let me say how completely I agree with the hon. and learned Member for Haddington with regard to the necessity for paying off debt. The Chancellor of the Exchequer looks with equanimity to the raising of the National Debt almost to the figure at which it stood during the Napoleonic wars. It is now approaching that high water mark, which we all thought we should never again come near to. This is due to the successive diminutions we have been brought to make in our efforts to pay off our debts. When the price of Consols was high, the Chancellor of the Exchequer gave that as a reason for suspending the Sinking Fund. Now that Consols are low, I do not know whether the right hon. Gentleman regards that as another reason for suspending the Sinking Fund. I do earnestly urge upon this House to address itself most seriously to the question of paying off debt. It is easy enough to make wars of all sorts if you are going to pay for them out of money that you do not find but out of money that you owe. It is a bad and demoralising system, and undoubtedly one of the first duties of this country will be, as soon as peace is brought about—and we hope it may be soon—to restore the Sinking Fund and find some means of resuming that diminution of the debt which in recent years we have failed to carry on. It is a bad system, demoralising to those whose votes decide on the issues of peace and war, to raise too much by borrowing.

One word as regards this loan. The Chancellor of the Exchequer was authorised to raise £32,000,000 by loan, but he has only raised, as a matter of fact, £29,500,000, or a little over. With regard to the extra penny upon cheques, the right hon. Gentleman will recognise that we allowed him to have his Resolution as to this additional penny, upon the undertaking that he would re-consider the matter. Let me tell him at once that there is only one sort of re-consideration that will avail him, and that is the abandonment of the tax altogether. You cannot put different stamps on cheques. Moreover, if you exempt the smaller cheques the right hon. Gentleman will get very little at all out of the tax. I recognise that the right hon. Gentleman has shown himself open to conviction in this matter. I know that he is sometimes forced to put on a tax to fill up some vacant space in his Budget, and he is driven occasionally to put on a tax which he has not considered in all its bearings. The right hon. Gentleman has been very candid with us, and I hope his re-consideration of this tax will have the effect of getting rid of it altogether. The duty of distinguishing between the right and the wrong stamp, if two stamps are adopted, cannot be thrown on bankers, and such a modification would not result in any gain to the revenue. Of this cheque tax there is universal disapproval in the Press. The Scotsman itself, the very lackey of journalism, has turned against the Government in this matter. I should like just to say one word with regard to the tax on corn. I have already avowed in this House my objection in principle to such a tax, but I felt bound to agree to it on this occasion because of the very serious financial emergency in which we find ourselves. On the ground of emergency I for one am quite disposed to agree to this tax, and I have decided to support it if emergency is shown. I am, however, bound to ask whether this emergency now exists, and if it does not exist I hope the Chancellor of the Exchequer will find some means of withdrawing this tax, and also the income tax.

Now I come to the question of the income tax, which is the Resolution before us. I have often heard complaints in regard to the income tax upon the ground that the income of the brain worker should be charged at a less rate than incomes derived from property. I do not think so. First of all, what is the income tax? It is like all other taxes, and it is intended to be, a measure of the capacity to pay of the person who is taxed. If the professional man's income ceases, so does the tax. But if the income from property continues for ever, so too does the tax. Therefore it does not seem unfair that the professional man should pay upon his income year by year. I have what I think is a most serious complaint against the method by which the income tax is levied. Theoretically, in my opinion, there is no better tax than the income tax if it were levied equally and impartially over a large area. My complaint is that a system has been introduced of levying the in come tax upon what is called the average income of three years. An average is an abstraction; it represents nothing that is actually true. Take a concrete instance. A makes a profit of £1,000 three years ago, of £2,000 last year, and of £3,000 this year. On the average system he will pay 1s. 3d. in the pound on £2,000 although he has made £3,000. B, on the other hand, made three years ago £3,000, last year £2,000, and this year £1,000. But he too will pay on £2,000 although he has only made £1,000. The fortunate prosperous A with a rising income only pays on halt his profits, the unfortunate unprosperous B with a failing income pays on double his profits. He pays, in short, four times as much per cent. as A. That is absurd and unjust, and the more correct and juster system would be to take the actual profits of the year and levy the tax upon them. A far greater complaint is that the tax falls only on large incomes, allowing the smaller incomes to escape, and thus doubling the tax upon those who pay. A tax was originally supposed to be based upon the measure of the capacity, of the taxed person to pay the tax. That is not so in the case of the incometax. That tax is not extended over the whole of the people. It has been stated that the incomes of the people of this country amount to £1,700,000,000. I think it is more than that. But even taking it to be only £1,600,000,000, that is double the amount actually assessed for the income tax at present. In other words, only half the amount received by way of income is taxed. If £1,600,000,000 are taxed at 6d. in the pound it will produce £40,000,000, the yield of the present method of levying income tax at 1s. 3d. in the pound. That is a great scandal in regard to the income tax: it is an absurdity; and it is all because no Chancellor of the Exchequer has yet devised means for obtaining payment, as I am sure he would obtain it, of small rates of income tax from people of small incomes some such method as that by which it is possible to obtain from the same people payment of the penny postage for every letter posted. It argues a want of the quality of imagination—a quality with which I should have credited the Chancellor of the Exchequer—but I am convinced it is possible to obtain income tax on small incomes if only you could devise a method of payment.

As to a graduated income tax to which the hon. and learned Member for Haddingtonshire referred. I think he can scarcely have paid attention to the income tax system of this country when he proposes a graduated system. Is he quite aware that two-thirds of the income tax are levied by deduction? Something like £26,000,000 or £27,000,000 of the £39,000,000 is collected before it ever goes into the hands of the taxpayers, and therefore it would be impossible to graduate the income tax on these deductions. If you had a graduated income tax, what method would you adopt in order to ascertain the proper scale of duty? In this country there is nothing to oblige any man to state the whole of his income to the State, unless it be that he calls for a diminution of the tax, or the return of what he considers to have been an unfair assessment. I do think that the weight of this tax as at present levied upon trade is enormous. In the case of the struggling B I have mentioned he pays one eighth of his income in this tax alone. But take the ordinary case where the revenue of the income tax is £39,000,000. It professes to represent, we are told, at 1/3 in the £ one-sixteenth of the revenue taxed. It is an enormous thing. But the man who pays his proportion of that sixteenth of the revenue in this way, also pays a share of the £35,450,000 of customs; £32,700,000 of excise; £13,200,000 of estate duty; £8,700,000 of stamps; and £2,500,000 of land tax and house duty. In fact, he must pay out of this £100,000,000, what amounts to between £60,000,000 and £65,000,000. It is not too much to say therefore that the ordinary income tax payer, the man with over £160 a year, and certainly the man with over £700 a year, where the abatement allowances cease, pays one-sixth of his income to the State in taxes at this moment. Hon. Gentlemen who have followed my figures will see that I have not overstated it. In other words you call upon a man to give two mouths of his work to the State—not to his family, not to his business, not to productive business, but to what I would call destructive expenditure. That is a very serious state of things to have arrived at, and I for one only trust that the hon. Member for Old ham will get the Committee he seeks in order to see if we cannot somehow reduce the expenditure which requires a man to work two months of the year for the State and only ten for himself.

The Chancellor of the Exchequer has set forth his Estimates for the requirements of the year, and has added thereto £18,500,000. I think I am accurately representing him, although I have not his words here. He says he will want that sum in any case either for the expenses of the war, or, if the war should cease, for the expenses of peace. I do not know, first of all, whether, if he levies the whole of this £18,500,000 for military expenditure in the case of war going on, that it will be in his power to apply it for the purposes of peace—for the rebuilding and restocking of Boer farms. Let me here say that I recognise in him the generosity that makes him ready to rebuild the Boer farms, and, I believe that the country will entirely agree with him. This is a very peculiar conjuncture. Negotiations have been opened for peace, and we all of us hope, and some of us are very strongly of the belief, that the negotiations will end in peace, but if they do end in peace, probably the whole of this £18,500,000, certainly a large portion, will not be required out of the Budget this year. Of course, I acknowledge that the prerogative of making peace or war is the prerogative of the Crown, but the giving of the sinews of war is the prerogative of this House. It is by giving or withholding money that this House expresses approbation or disapprobation of the policy of the Government, and I say that before you ask us to provide this extra £18,500,000 you ought to let us see the issue of the negotiations which are now being carried on. They may render the £18,500,000 needless. No doubt the making of peace is expensive, but if peace should be made I cannot suppose that you can possibly require £18,500,000 in order to bring back the troops, to pay bounties, and to pay such sums as you will be willing to grant to rebuild farms. On the contrary, I do not think it is lawful to divert the money for such purposes as this case. On the other hand let the House look at it in this way. When we get the Papers showing the issue of these negotiations, whether the issue be peace or war, it is conceivable that the House may disapprove of the conduct of His Majesty's Government. It is conceivable that this House may think that the Government has made an unfavourable peace, or that it has gone back without adequate reason into war. But in the meantime we vote £18,500,000. I submit that is the wrong order of procedure. I submit that the House in respect of £18,500,000 is really put in the position of suggesting that they approve of the conduct of His Majesty's Government in regard to these negotiations, of which we know nothing. This is not a new point, for the same contingency occurred in 185G. I will read what Sir George Cornwall Lewis said on that occasion. The Government then did not ask for the supplies of the year, plus £18,500,000. It asked for four months supplies only, and the reasons given are so applicable to the present day that they might almost be repeated on this occasion. In the beginning of 1856, there was a strong possibility of peace being made, and in April of that year it was made, Sir George Cornwall Lewis said— If these Resolutions should receive the approbation of the Committee, and afterwards obtain the sanction of Parliament, they will provide ample ways and means for the present quarter, and for the commencement of the ensuing financial year. We shall then be in a position to judge how far the negotiations which are now in progresson a neighbouring country are likely to terminate in a safe and honourable peace. If, happily, they should lead to the issue, Her Majesty's Government will have it in their power deliberately to consider the state of the revenue, to reduce the Estimates submitted to the House, and to consider what expenditure will be required in the following year, and how that expenditure may best be met. If, unhappily, those negotiations should not terminate in so desirable an event as a peace which will cement, in a lasting and solid manner, the interest of Europe, it will then be the duty of the Government to appeal to this House to place them in a position in which they will be enabled to meet the large expenditure for warlike purposes and to continue that straggle in which we have been engaged for the last two years." [(3) Debates, CXL., 1240.] I say the condition of things is exactly the same now as on 22nd February, 1856, when these words were uttered. I say more that this House should not be called upon to provide for expenditure during the whole year on a war which may be over in a few weeks; and especially with regard to the £18,500,000 the House will be parting with the constitutional control over the expenditure of the Government if it gives the Chancellor of the Exchequer the enormous sums he asks. I should like to know why he has adopted a different method from that which was adopted in 1856, and in 1814, at the end of the great struggle against Napoleon. Why should he not ask us for three or four months supply and see whether peace is made, and then come for more if the war continues. I think the course pursued in 1856 is the right one. I think that in asking the House to take another course he is leading it into what may be a trap, because if the House does not approve of the conduct of the Government when they see the account of the negotiations for peace they will have parted with their power to express disapprobation, for they will already have voted these supplies. This may seem a far-fetched point, but the sum involved is enormous, and in my opinion it is an important constitutional point. I think the right hon. Gentleman has departed from precedent and sound constitutional practice in asking us to agree to an expenditure which we all earnestly hope may not require to be made.

(6.50.) MR. YOUNG (Cavan, E.)

I wish to bring before the notice of the Chancellor of the Exchequer an article of general consumption which is overtaxed. I think the right hon. Gentleman should know that the article of spirits is most excessively taxed. Would this House believe that in proportion to the first cost the duty on spirits is enormous. You can get for 1s. 2d. a gallon of spirits 25 over proof, and on this article there is 13s. 9d. duty. That is equal to 11s. on the proof gallon. I think that beer is possibly sufficiently taxed, but the duty on beer is 2s. 3d. on the alcoholic strength as against 11s. on spirits. I simply place this before the House because this is a day for ventilating grievances. I say this as representing the Irish and many of the Scotch people in this trade. I present my case simply in figures. I do not want to dwell upon and elaborate the matter. It is supposed by many that the Chancellor of the Exchequer has not made any additional tax on spirits. Now this is a mistake. He has actually put an additional tax on spirits. He has placed a tax of 3d. per cwt. on corn. Seven-eighths of the ordinary corn used for distillation is imported, and therefore that is a tax of 5s. per cent. which is equal to 1d. per gallon on whisky. It is possibly something less, but very little—perhaps it is seven-eighths of a penny. I do not know that the Chancellor of the Exchequer when he put this 5s. a grain thought of this matter, but it is an additional tax on spirits. I do not expect that the Chancellor of the Exchequer will make any remission, but I say that the first time he has an opportunity of remitting any taxes it ought to be done on the article of spirits, but I believe we will all be very much older before there is a remission of anything. I think it is rather a pity that the Chancellor of the Exchequer should have put any tax upon Indian corn. In this matter I speak for my own country, because in Ireland Indian corn is an article largely consumed by the poorer people. Indian corn cannot be grown in this country, for climatic reasons which prevent us producing maize. Of course we can produce barley, oats and wheat, and I should not have objected if the Chancellor of the Exchequer had put two shillings or three shillings on these articles, because such a tax would have benefited my country very much.

(6.55.) MR. E. B. FABER (Hampshire, Andover)

I must ask the kind indulgence of the House as it is the first time I have had the honour of addressing it, and I shall not take up much time as there is not very much to be said on this question. With reference to the stamp duty, the proposal of the Chancellor of the Exchequer is ingenious because if a man wants to send a small cheque he will have to pay the additional penny, or, if he does not choose to send a cheque, he will have to depart from his usual practice and send a postal order, so that, in either case, he will have to pay an extra duty. I smiled when I heard the Chancellor of the Exchequer state that he thought bankers would welcome this proposal because fewer cheques would be drawn. Whatever may be the case with London bankers, I can assure the right hon. Gentleman that country bankers do not like his proposal, London bankers do not charge any commission on the turnover or pay interest on the balances, but in the country bankers do charge a commission on the turnover and they allow interest on balances; therefore from the country banker's point of view, if this tax lessens the turnover they will not like it at all. I think this tax may lead very much to the hoarding of money and to a less use of cheques than obtains at the present time. Hitherto the practice has been to use as little gold as possible, but what will happen now? The general public and small tradesmen will pay all their small amounts by cash or else they will go to the Post Office and obtain Postal Orders. Consequently they will use fewer cheques and there will be more danger of theft because they will have to keep more money in their tills. I do not think it would be right to say that this is a very serious matter, but it is well known that cheques are a very convenient and safe method of conducting business transactions, and therefore it is a method which should not be discouraged. I have been told that the Central Bankers' Association have stated that quite 20 per cent. of the whole of the cheques passing through the Clearing House are for sums under £2. I look upon this proposal as harassing and troublesome, and as, more or less, a pin-prick against traders. The Chancellor of the Exchequer, I hope, will not accept the suggestion that, while cheques drawn on business accounts should be still subject to the 1d. stamp, cheques drawn on other accounts should be subject to the proposed additional duty. How can a banker decide between the two? It has also been suggested that there should be a differentiation between cheques above and below a certain sum. That would lead to a serious interference with the banking trade of the country, because cheques coming from the country have to be cleared and got oft' in time for the post, and this differentiation would certainly involve delay, and consequently, inconvenience. I hope that the Chancellor of the Exchequer will do away with this harassing legislation altogether.

*(7.0.) MR. ASHTON (Bedfordshire. Luton)

I cannot congratulate the Chancellor of the Exchequer upon the Budget he has put before us this year, although I think we may congratulate ourselves upon the fact that he has put before us proposals which will bring about united opposition to the Budget on this side of the House. Of course I should like to congratulate the right hon. Gentleman where I can, and I wish to congratulate him upon the fact that he has made a rather larger contribution this year towards the cost of the war, by means of annual taxation, than he did last year. Last year I find that out of £73,000,000 spent upon the war, he only paid £20,000,000 out of annual taxation: but this year I find that out of £64,000,000 he proposes to take at least £24,000,000 out of annual taxation. That is not a big increase, but it is something, and I entirely agree with the hon. Member for West Islington that the Chancellor of the Exchequer might very well have done something more towards paying for the war out of the annual expenditure of the country. It seems to me very unsatisfactory that in times of prosperity like the present we should be placing still further burdens upon posterity for a war for which we alone are responsible, it seems somewhat contemptible that we who have for several years past been shouting about our patriotism should, when the time comes for making sacrifices to pay the bill, make proposals or placing the burdens upon posterity which we ought to pay ourselves. We are leaving posterity to pay much too large a share of the cost of our policy in South Africa. I know there are some hon. Members who will tell us that we ought not to pay all the cost of this war, and that the time will come when we shall be able to put some part of the cost upon the Transvaal. I look upon that as an idle dream. I think if you cannot make the Transvaal pay anything at the present time, you will find that you are able to get precious little out of that country in the future.

Believing as I do that we ought to have paid ourselves a much larger proportion towards the cost of the war, I am one of those who think that more than one penny extra ought to have been placed upon the income tax. I think it would have been just as simple to have put twopence upon the income tax. I believe the country was expecting an increase of twopence upon the income tax, and there would have been no more grumbling about an increase of twopence than there will be about an increase of one penny. When the Chancellor of the Exchequer heard the sigh of relief which went round the House when he announced his intention of putting an additional penny on the income tax, I think the right hon. Gentleman must have been sorry that he did not make it twopence. The poorest classes of the people are being asked to pay for this war by taxes on their food, while the wealthy classes have to pay through the income tax. There are, however, a large number of people with incomes ranging from £100 to £400 a year who are only being called upon to pay a very small portion indeed towards the cost of the war. I maintain that all sections of the community should be taxed. I am not going to say that the best way to do that would have been to do away with exemptions under the income tax. I think it is just possible that the Chancellor of the Exchequer may have put on his extra stamp duty with the idea that he was reaching a large number of persons. I wish to point out, however, that this tax will fall more heavily upon people with small incomes than it will upon people with large incomes. The very fact that you never hear an hon. Member in this House say a word in favour of the stamp tax is enough to show that it is an iniquitous tax. I think it is quite possible that the Chancellor of the Exchequer's estimate may be perfectly right as to what he will realise by the stamp duty, because if he does not get it by means of cheques he will get it all the same, because a larger number of postal orders will be used.

I am inclined to think that the bankers will compel the right hon. Gentleman to give up the stamp tax. Though it may be difficult to tax the small income tax payer at the same rate that everybody else was taxed, I do think there is a way in which the right hon. Gentleman might have raised a considerable sum. I suggest that these people might be more adequately taxed by a re-organisation of the house duty, which is levied only on houses over £20 a year. If the house duty were raised to a uniform rate of 8d., instead of remaining at the varying rates of 3d., 6d., and 9d., a very considerable sum would be added to the revenue of the country. If the house duty was raised to 8d. in the £ all round, instead of raising £1,700,000 this tax would produce at least £4,000,000. Of course I am not suggesting that he should levy such a tax on Ireland, but I do say that if he were to raise the house duty to a uniform rate of 8d. instead of 3d., 6d., or 9d. he would add considerably to his revenue and he would make those who are now escaping pay their fair share towards the cost of this war.

I suppose it would not be in order to say much about the bread tax tonight, and I do not propose to do so. I wish, however, to state that I think the Chancellor of the Exchequer might have got his money without putting this most obnoxious tax upon the food of the people of this country. I call it obnoxious on more grounds than one. In the first place, it is a very wasteful tax, because in order to get his £2,500,000 the Chancellor of the Exchequer will take out of the pockets of the consumers a sum of between £8,000,000 and £10,000,000 of money. Another great objection I have to it is the old argument of the thin end of the wedge. I am not talking so much now of the Protective character of the tax, but in my opinion if you once get a Is. duty on corn that tax will become very much like the income tax. At present it is a very easy thing to put an extra 1d. on the income tax and an extra Is. on beer, and in the case of any future Chancellor of the Exchequer it will be very easy to put another 1s. on corn, and that as a Liberal I very much object to. It seems to me that the Chancellor of the Exchequer might very well have raised the money that he will get out of this tax in one or two different ways that are far less objectionable and far less hurtful to the country. This being a war tax—of course I should not have suggested it otherwise—it would be far less hurtful to the country if the Chancellor of the Exchequer had put another halfpenny upon sugar. The right hon. Gentleman said that the sugar tax had not been felt in this country, and I believe that to be true. That to me mind is a good reason why he should put another halfpenny on sugar and get another £5,000,000. It might be resented by the sugar - raising colonies, but the right hon. Gentleman is raising money to carry on these colonies for the next eighteen months or so. The Chancellor of the Exchequer told us that the tax upon beer had reached its limit, that no more beer was sold, and that the tax was being taken out of the quality. That being so, that is a good reason for not taxing beer; but I would venture to point out that the right hon. Gentleman would have got the same result out of the reform of the licences of fully licensed houses. The present licensing law bears very heavily, as we all know, on a poor house. Why a poor house should pay more than a rich house is beyond my comprehension. I have in my mind at the present moment a house rated at £20 or £30. That house pays 50 per cent. of its value, yet a house rated at £600 or £700 pays only 15 to 20 per cent. for its licence. I think it would be far fairer to make the rateable value of the house a basis for the price of the licence, which should be a percentage on the rateable value. The trade is a monopoly, and the value of these houses is increased by its being a monopoly to three or four times their ordinary value, and I think it would be only fair that the country should get something from them by means of higher licences. I believe by a re-adjustment of the licences for public houses the Chancellor of the Exchequer might easily get £5,000,000 increased revenue instead of the £1,700,000 that he is getting now under this new taxation.

(7.17.) MR. ALEXANDER CROSS (Glasgow, Camlachie),

who was indistinctly heard, was understood to say: I venture to say a few winds in this debate on behalf of the great trading communities. I wish to say, on behalf of the trade in my native city and trade generally, that I think these duties are calculated to irritate and disturb trade to the maximum. The trade of the country is not in a condition of great prosperity. The prolongation of the war, the high price of coal, and the cessation of production of gold have had a very great effect upon it. There are times and occasions when trade, though not prosperous, must submit and pay heavy imposts when they are necessary; but I do not think there exists at the present time any necessity for placing the additional taxes on the trade of the country which the Chancellor of the Exchequer proposes to place upon it. What is the necessity? It is plain it cannot be a great necessity because of the amounts. We are face to face, roughly speaking, with a deficit of £41,000,000, and can it be said to be a great necessity to pick out £5,000,000 and say it is a great necessity and that trade must pay it? I assume, therefore, the result to be derived from these taxes on trade being so insignificant in amount, that it cannot be an essential and absolute crying need. Not only is there no crying necessity from that point of view, but the Chancellor of the Exchequer has to deal with an expenditure of which he is not very certain, and he has therefore estimated on a large scale. He did not do that in the Budgets of the last two years; the supplementary Budgets for the last two years show that on those occasions he did not lean in this direction of excess, he rather under-estimated—

* SIR M. HICKS BEACH

I did not under-estimate last year.

MR. ALEXANDER CROSS

I beg the right hon. Gentleman's pardon; perhaps I used the wrong expression, but I assumed from his own statement that the present Budget is a Budget which has been liberally estimated. The right hon. Gentleman admitted that he was not able to estimate the contribution which the Transvaal will be able to make. On all these grounds I assume there is no Imperial necessity for the imposition of the £5,000,000 of new taxes which we have to pay under this Budget.

I may be told that it is necessary to adjust the burden of taxation as between the various classes of the community, but I do not know that this is the time to adjust' the burden of taxation as between those various classes. Is this £5,000,000 a war tax or an adjustment of the burden of taxation? In the very necessary task of adjusting the burden of taxation careful consideration should be given to all conditions involved, and proposals of such great consideration Ought not to be pressed upon the Committee at the time they are pressed upon us. If Parliament is ever to review our existing system for the purpose of adjusting the burden of taxation as between the various classes of the community, I submit that that task ought not to be taken at a time when we are overburdened by the necessities of the war.

So much for the £5,000,000 which is sought to be placed mainly upon the trade of the country. What are the taxes in themselves? I do not say a word about the cheque stamp duty, because it is not profitable to slay the slain, but in passing I would just press on the Chancellor of the Exchequer not to listen to any suggestions as to differentiation on the question of this stamp tax, which can only result in confusion and annoyance in banking and commercial circles, and difficulties without end. With regard to the income tax, which is the next item, the income tax is regarded by many as a splendid war tax if it be justly and scientifically levied. But I look on the income tax from this point of view—is it fair?—and not from the point of view of the Chancellor of the Exchequer. I submit that the income tax has not been scientifically managed by Chancellors of the Exchequer. It has not been kept low, say at 4d. in the £, and then pushed up when there was a war, as it should have been. That is not the way it has been managed. In times of financial difficulty it has always been the practice to put something on the income tax. I venture to say a word on behalf of the poor payers of income tax. Take the position of a man earning £700 or £800 a year; he has to pay on income tax £50, or one-sixteenth of his income, which is equivalent to giving a month of his time to the public service. These men who have this large proportion of income tax to pay also have to pay their full share of all the other burdens of local and Imperial taxation, and they have not only to pay for their living but to make provisions for those who live after them. These things do not trouble the men of property. Let us get back to the income tax as an elastic war tax, to be used only in times of emergency, and keep it low in times of peace. The Chancellor of the Exchequer himself, speaking on this topic two years ago, said that if the income tax was to remain at anything like the pitch at which it has existed during the last two years its incidence must be reconsidered. Vet the right hon. Gentleman has brought forward a scheme for increasing the tax, but he has not brought forward any scheme for the reconsideration of the incidence of taxation. It is a crushing and terrible burden upon those who have to bear it now, especially the poor taxpayers.

Now, permit me to say a few words on the last item, the corn tax. In addressing myself to that, I regret extremely to find myself being asked again in the history of this country to vote for a bread tax. I bad hoped that no Government would have resorted to such an expedient as asking the House to vote a tax of this sort. I fear this can only be regarded as a disguise, and a thin disguise, for returning to the doctrine of Protective duties. I believe those who look on sometimes see more of the game than those who play, and that some are jubilant with delight at this tax. Even in the newspapers there are praises given to those who are departing from the traditions of free trade. I do not blame the right hon. Gentleman in the least, because I believe he is as staunch a free trader as most of us, but I must say that many on my side of this House think this is a very great departure from some of the most glorious traditions of our fiscal policy.

It has been said that the income tax can be raised or reduced with comparative ease. So can the corn tax. The difficulty is not to raise or lower the tax, but to get it at all. The Chancellor of the Exchequer has told us that this is a small tax, and that the amount is of no consequence. But whether it is a small tax or a large one, the principle upon which it is dependent is the principle that the right hon. Gentleman must face. It is opposed to one of the canons of sound finance. It is a tax on the prime necessity of life of the great bulk of the people, and on that ground alone it ought to be most gravely considered by this House, and, I think, strongly opposed. It is a tax only a small part of which will find its way to the Chancellor of the Exchequer, as is illustrated by the statement of the hon. Member opposite with regard to the markets. A rise of 3d. per cwt. on wheat is practically equivalent to ⅛d. on a four-pound loaf. But bakers do not raise their prices by ⅛d; there is no coin to express it; they resort to the easier plan of increasing the price by ¼B;d. or ½d. But the farthing has practically gone out of vogue, and the great bulk of bakers in the country are either talking of doing so or have actually raised the price by ½d If the Chancellor of the Exchequer expects to get £2,500,000 out of this corn tax at the rate of ⅛d. on a four-pound loaf, it follows that if the consumer pays ⅛d. he pays £10,000,000 in consequence of the operation of the tax, of which, as I say, the Exchequer benefits to the extent of only £2,500,000. I cannot but regard that as a very serious flaw in any method of taxation. If I am right in my calculation, it means that this is a tax which the people will pay to the extent of four times the amount by which the Exchequer will profit by its infliction.

Another objection to the corn tax is that it not only makes the consumer pay more for those articles which are imported, but that it also raises the price of the home produce. Mr. Lowe when he abolished this tax made a similar observation, and the Chancellor of the Exchequer remarked that it was a beautiful theory. I am afraid the facts have borne out that theory, because the day after this duty was imposed the price of corn advanced by exactly the amount of the duty. The statement had been made that English wheat did not advance, that English farmers had patriotically declined to raise the price of their wheat, but that foreign importers, who had foreign grain in stock, had with their usual wickedness and perverseness raised their prices. The contention is preposterous. If I have home grown grain which is worth 30s., proportionately to foreign grain at 28s., the moment any cause—particularly a duty—raised the price of the foreign grain to 29s. I put my price up as well. Of course I do; everybody does. Take the case of a 10s. duty. Is it not obvious what the effect will be? If you burden the importation of wheat to the extent of 10s. or whatever the amount may he, the price of every article affected, whether it is home grown or not, goes up proportionately. If the Chancellor of the Exchequer looks at the newspapers today he will find it recorded that the price of every article put upon the Customs list in respect of this tax has advanced in exact proportion to the amount of the tax, absolutely regardless of whether the articles are home produce or imported. Not only that, but a great many articles which were not on the list have also advanced.

This system of taxation is open to another very grave objection. It breaks up that simplicity of our fiscal system in which we have been wont to take pride. This simple tax of 3d. upon wheat has already resulted in the addition of about forty articles to those upon which duties have to be charged. Then, at the end of the list, there is the statement that— Every article containing any of the above is liable to taxation. I should not be at all surprised if in consequence of that little remark at the end of the list, the forty articles to which I have referred were largely added to. Under our system of free trade we have had an experience of open ports which we are now going back upon. It is a very serious matter that this policy of open ports is to be changed for one of Custom House restrictions. My noble friend below me says that the tax will not benefit the English farmer. He is better informed than many of his friends. Anyone who will take the trouble to see how the incidence of the proposed tax will affect English farmers will discover that instead of giving them an advantage it will be quite the other way. Those who grow wheat will obtain this Is a quarter. But what about those who, so to speak, grow cheese, or milk, or meat? These will have to pay an increased pries; for their raw materials, and they are already stirring in the matter. Chambers of agriculture are passing resolutions insisting that foreign beef should be taxed to the extent of 3d. per cwt. Why should our poor farmers, in addition to their other troubles, be compelled to pay 5s. per ton more for their raw materials I Whatever may be said about wheat-growing, there can be no doubt that the production of meat is the most prosperous department of the farmers' business, and yet this Government, which takes credit for being the friend of the farmers, and which has done great service to the farmers, has, under this system, for the sake of £2,500,000, stirred up among its farmer friends the general impression that nothing can be done except to impose a further duty upon all meat which comes from abroad.

I feel strongly upon this subject. I fear the Government do not apprehend the feeling which is entertained in the the country on this matter. They are departing from the fiscal principles which have guided this country through many years. If it is the invention of the Government to impose a serious tax upon the food of the people, then, of course, I am doing them no injustice. What they are doing is certainly making the people suspicious and giving them the impression that that is the intention. Men pray not to he led into the ways of temptation. What about the temptation to right hon. Gentlemen who in the future sit in the seat of the Chancellor of the Exchequer? They will be subjected to a very grave temptation. This will be the easiest way for them to raise money. The Government were returned to protect the Union. In my opinion, I may be wrong—I hope I am—they are stirring up an agitation which will cause throughout the country very strong feelings of suspicion, and which may have far more effect on the result of the next election than they have any idea of. As for myself, I still remain a strong and faithful adherent of the principles to which I was pledged, but I would follow no man, not even this Government, into the lobby in support of a system which while it lasted was disastrous in the highest degree, and which, if again resorted to, will be equally disastrous.

(7.42.) MR. BRYCE (Aberdeen, S.)

I cannot help feeling pleased that a decided note has been struck by two Scottish Members with whom I have not the pleasure of agreeing in general politics, but who, it is evident, have the interests of their constituents at heart. The hon. Member who has just sat down has expressed, as everyone acquainted with Glasgow must know, the feeling which is very widely spread in that great community. I believe that that feeling is by no means confined to the inhabitants of cities. My hon. friend the Member for East Perthshire, in his short but pointed speech the other night, was the first to indicate that in some respects this tax would be a serious injury to the farmers and breeders of cattle, and I should not Le the least surprised to find that from a section of the agricultural community as well as from the workers in the cities there comes the strongest opposition to the proposal. The Chancellor of the Exchequer has raised a Question of the greatest difficulty, affecting more than one class, which will not be suffered to drop, even if he succeeds in pressing through the measure which he has unfortunately for the moment launched.

But I rose, not for the purpose of discussing the corn tax—we are to have an opportunity of considering that tomorrow night—but to advert to a remark of the Chancellor of the Exchequer when introducing the Budget. The right hon. Gentleman said that in imposing new taxation a Chancellor of the Exchequer ought to have two things in view—first, that the tax should not be of an irritating nature, and, next, that it should produce a large return. We all recognised the force of that observation, and we were proportionately surprised to find the right hon. Gentleman immediately afterwards proposing a tax open to both those objections, viz., the additional penny on cheques. I can hardly conceive a tax more likely to create vexation and annoyance out of all proportion to the amount of return. By this time those of us who read the daily Press must have perceived that that is the case. In Scotland there is as much irritation on the subject as there evidently is among the country bankers, for whom the hon. Member opposite spoke, and as there is among the bankers in the City, who have held a meeting today on the subject. I need not repeat what has been said as to the annoyance the tax will create or as to the difficulty the right hon. Gentleman will find in introducing any modification of the proposal. The matter is really not irritating to those of us who use cheques merely for private purposes. An additional 10s. or 15s. a year is a very small matter. But it will seriously affect many kinds of businesses in which great numbers of cheques for small amounts are drawn. I have had a letter giving the case of a firm which does a very large business, and which gives small bonuses on cases which are returned. It pays these small bonuses by cheques, which exceed in number the enormous total of 30,000 a year. For a firm of that kind to be debarred, as it would be, from paying those amounts by cheques, would be a great inconvenience and annoyance, and might possibly induce it to give up what they had found to be a profitable mode of doing business. Then there are firms which have adopted the admirable principle or dividing their profits with their employees, and at frequent intervals they pay, as a sort of bonus, these shares of the profits in small cheques. That is a practice which I am afraid will in many cases be given up if this proposal is adhered to. We ought to be exceedingly slow to adopt any tax which can directly operate as a discouragement to thrift, and I am assured by those who know the working classes that this proposal will discourage the opening of small banking accounts. A great many people who now find it an advantage to keep small banking accounts will not keep those accounts if they have to pay this extra penny upon cheques. Then again, when a small cheque is paid to a workman, he is less likely to spend it when it takes the form of something to put in the bank, and if that small amount was paid to him in the form of cash the workman would be much, more likely to spend it. Those are two illustrations of the way the present system of cheques operates to promote thrift amongst working people. I am sure the Chancellor of the Exchequer will be the last person to wish to discourage habits of that kind, and if he finds upon inquiry that these statements are true and that the effect of this extra tax on cheques would have the effect of discouraging thrift. I cannot help thinking that the right hon. Gentleman will agree to reconsider this tax. The growth or our present banking system is a natural growth; it is the product of the new commercial conditions of the last thirty or forty years; and we ought to be very slow to interfere with what has been a natural development of economic forces, which we know from employers, and from the banking community, who are in the habit of paying these large sums, is a development which has been attended with very great convenience. I hope when the right hon. Gentleman makes his promised statement he will be able to tell us that he intends to substitute something else for this tax.

(7.50.) MR. COGHILL (Stoke-upon-Trent)

I think the income taxpayers are somewhat hardly dealt with by the Budget of the right hon. Gentleman. I am quite sure that the bankers will not thank the Chancellor of the exchequer for his Budget. In a time of profound peace we had an income-tax of 8d in the £, and year by year it has been gradually increased since the war. A larger sum ought to have been found by the War Loan, and no further recourse ought to have been had to the income-tax payers. The Chancellor of the Exchequer should have displayed more originality. The extra penny on cheques is a needless and irritating tax, which I believe has been condemned from one end of the country to the other. A banker said to me that a more silly and idiotic tax he had never heard of—that the only thing that could compare with it was the match tax, and he believed that this was a worse tax than that. I do not know whether it has occurred to the Chancellor of the Exchequer that if the effect of this tax results in drawing a large number of cheques from being used, then undoubtedly more coin will have to be employed. Only a few years ago we had to find large sums of money for the restoration of gold coins to their nominal value, and I should like to know if the Chancellor of the Exchequer is prepared to bring in another Gold Coinage Act. It this change produces more wear and tear of our coins, then the Exchequer will be called upon to restore those coins to their nominal value. There is another subject on which I complain very much. We have been told that later on in the session we are to be called upon to provide another dole for our West Indian Colonies. I should be only too happy to give them any assistance to which they are legitimately entitled, but for the last six or seven years our West Indian Colonics have been clamouring for countervailing duties upon sugar. Because the Government refused to give our West Indian subjects the remedy they desire, I do not think that is any ground for coining to the British taxpayer for another dole for the unfortunate Colonists in the West Indies.

Last year we imposed a tax upon coal, and I entirely agree that every year the necessity of keeping as much coal in these Islands increases. What has been the result of the coal tax? The Chancellor of the Exchequer proposed a tax of Is. per ton as an export duty upon - coal, and then he proceeded to exempt all existing contracts. The right hon. Gentleman could have got another£500,000 this year if he had not exempted existing contracts. If the right hon. Gentleman desires to make the coal tax effective he ought to raise it to 2s. 6d., because it is a vital matter to this country that we should keep the coal here. There is plenty of use for the coal in this country, and having regard to the very high price which coal has reached, something ought to be done to keep the coal at home to be used by our own manufacturers. If the Chancellor of the Exchequer requires another scource to tax I can suggest a means of raising a very considerable sum which would at the same time assist our manufacturers. My suggestion is that he should place a tax on exported china clay and marl clay. This clay is only found in Cornwall, Devon, and Dorset. Such a tax would be of great assistance to our china and earthenware manufactures. At the present time a great deal of china clay is shipped to the Continent, and continental manufacturers are actually able to get it cheaper than our own manufacturers in the Midlands on account of railway rates in this country whereas the Continental manufacturers have only to pay the cost of transport by sea. It is a great hardship that our English manufacturers should be subjected to this drawback, which could be remedied by the imposition of such a tax as I have suggested.

Undoubtedly the ordinary expenditure of this country has gone up by leaps and bounds in recent years. I do not know whether the First Lord of the Treasury will allow me to call his attention to the fact that the increase in the ordinary expenditure of this country began in the year when his new Supply Rule came into operation. If you reduce the amount of criticism with regard to Supply, you will find all the Departments will take advantage of the fact that the watchful eye of the House is withdrawn from the ordinary expenditure of the country, and they will spend money just as fast as they like, and spend it in any direction they choose. I hope that fact will not be lost sight of by the First Lord of the Treasury when he comes to deal with this question, and I hope greater opportunities will be given for controlling the enormous expenditure of this country. It is a fact that if any one suggests any reform the Chancellor of the Exchange at once does his best to snuff him out at once. If the Chancellor of the Exchequer wishes to have a reduction in the expenditure of this country he should show that he is determined to introduce economy himself, and not content himself with delivering long orations on the virtues of economy. I am afraid that this Budget will not give satisfaction to the country at large, and I feel certain that as far as manufacturers are concerned they will consider it one of the most unfortunate Budgets we have had for many years, (8.5.)

(8.32.) MR. CROMBIE (Kincardineshire)

The widespread opposition which is felt to this Budget in the country, and which has manifested itself so strongly tonight in the almost uniform condemnation brought against it by hon. Gentlemen opposite, relieves me from the temptation to inflict a long speech on the Committee But there is one point on which I should like to say a few words. I know very well that if I were to speak on the question of the corn duty. I should not in the least influence the hon. Gentleman the Secretary to the Treasury, and still less the right hon. Gentleman the Chancellor of the Exchequer. I am also well aware that if I were to follow the course adopted by some of my hon. friends, and were to lay before the Committee the particular schemes which I should have adopted had I been Chancellor of the Exchequer, they would not receive that consideration which, in my opinion, they would deserve. Therefore, unlike my hon. friends, I shall not throw away pearls of financial wisdom tonight. There is, however, one point in the Budget on which I understand the mind of the Chancellor of the Exchequer is in a state approaching penitence, and that is the question of the additional penny stamp on cheques. I think the Chancellor of the Exchequer is very much misled indeed if he supposes that it is merely the users of small cheques who will be hit by this particular tax. I can assure him that small trades people will suffer very severely from it. I will take the case of a small village shopkeeper or tradesman who is making £150 or £160 a year out of his business. I have inquired of country bankers of some experience in my own constituency as to the habits of these people, and I find that they would probably cash four cheques a week for sums varying from £2 to £5 The additional penny in such a case will mean that you are actually putting an equivalent of 3d. in the pound income tax on that man's income. Not only that, but the tax will fall heaviest on the industrious man who turns over his capital most frequently, because the more cheques he draws the heavier the tax will fall on him. The effect will be that these small tradesmen will cease to deposit their money in banks as at present, and will keep it in their tills which will lead to a very considerable increase in burglary. When I say that, it must not be thought that I am drawing on my imagination, I am assured that will be the result. When the Scotch banks some years ago ceased to pay a small rate of interest on ordinary deposits, the small shopkeepers kept more money in their tills than they used, and the consequence was a very large increase in the number of small burglaries in country shops. I feel perfectly certain that if this tax is insisted on it will have a similar effect. I am sure the Chancellor of the Exchequer, who is honestly minded, has no desire to encourage burglary, but if this tax is insisted on that will be the result.

(8.38.) MR. BARTLEY (Islington, N.)

I think the Chancellor of the Exchequer must consider that although the Budget has not been enthusiastically received, it certainly has not met with any serious opposition in the House. I should like to say a few words on the special subject for today, namely, the income tax. I have always taken a very great interest in that tax, and although I must candidly acknowledge that I do not like the increase, still I feel that the Chancellor of the Exchequer has been right in putting it on, inasmuch as he has made a new departure in enlarging indirect taxation. The proportion of direct to indirect taxation is so important that I think it would be unfair, if the Chancellor of the Exchequer proposed to raise a large amount by indirect taxation, without at the same time increasing direct taxation. The hon. and learned Member for Haddington referred to the system which is met with in some countries—I think in France and in America—of having different rates of income tax for what are called spontaneous incomes—that is, incomes derived from investments, and for incomes derived from current labour. On several occasions I brought up a Resolution in this House that this should be carried out. I have always felt that it would be much fairer and wiser if our income tax were based on a different system, and that a man who is simply depending on what he earns should be treated differently from a man who derives his income from investments That would make an enormous difference. The man who enjoys a spontaneous income benefits because he has not to provide for insurance and other matters which other men are bound to provide for and which is a serious tax on their incomes. I have therefore always felt that there should be a new scheme arranged. Some years ago I suggested that there should boa new scheme arranged to meet that. In those days things were comparatively quiet, and Mr. Gladstone and the hon. Member for West Monmouth and Mr. Goschen all objected to making the alteration in this very large tax, and in those days it was not needed. Now, with the war upon us, it is not reasonable to suppose that this could be done, but it is reasonable to hope that the day is not far distant when it can be considered. It seems to me that the income tax is not a fair tax, and will not be until some great change is made with regard to these two branches of income. It certainly seems unfair that a man who trades on his brains, so to speak, should pay the same as a man whose income is spontaneous. I think it could be worked out, and some time, when we have returned to our normal condition, I hope we shall got a Chancellor of Exchequer bold enough to enter into this matter. There is another matter in connection with the income tax to which I might refer, and that is, that it used to be what its name professes it to be—a tax upon income; and it always should be made a tax on the actual income a man enjoys. But there are scores of cases where this is not the case. First of all, the tax is arrived at on the three years system, which is a very bad system and often works hardly and unfairly; but the tax often includes a number of other matters, such as machinery and patents, on which there is no real income at all. I remember the case of a company absolutely working at a considerable loss and paying income tax at the same time. Many hon. Gentlemen will recognise that that is correct. Many people pay a very much larger sum for income tax than they are earning. That should be gone into.

Then comes the question of exemption. I always regarded exemption as the bottom of the scale. Of course, theoretically, everybody should pay on their income, but the main difficulty is to get at a real estimate of the revenue of the country. It is very large, but its ramifications are so great and its complexity is so great that one hesitates to approach it. It is quite clear that if we could get a return of all the incomes it would be an easy method of collecting this tax, but at the bottom of the scab; it would be impossible to collect income tax, and therefore I think exemptions are fair. But I think we went to the extreme limit some time ago. The income tax is very easily collected; it represents a large sum, but it does bear hardly on those at the bottom of the scale. In my opinion, nothing shows the growth and prosperity of this country more than the income tax returns. It seems to me a matter for congratulation that the increase of the revenue from this tax still goes on in spite of the exemptions, ft is, I imagine, from the bottom of the scale there is a gradual rising up to a position of prosperity and success. This tax is of enormous benefit to the country. We used to think that a million was the proper figure to obtain from an extra penny—a little over a million a shore time ago gave cause for great satisfaction. Now we have it from the Chancellor of the Exchequer that it is £2,500,000. I think that, inasmuch as this tax produces this enormous sum, when the times become normal, arrangements should be made so that this tax should only be paid on actual income; and I hope I may live to see the day when a difference will be made between industrial and, spontaneous incomes. When I dealt with this subject some time ago, I think I said the man at the bottom of the scale paid the heaviest income tax, and I also said that men who make a large fortune and get on tolerably well paid the smallest amount in taxation of anybody, and I still think they do; but the late Chancellor of the Exchequer, the right hon. Member for West Monmouth, has, I must say, largely set that anomaly right by the death duties which he created, the principle of winch I strongly approve. There is no doubt he does there catch the man who makes a large fortune, and taxes it very heavily when the man who made it leaves this world for a better. But in spite of the death duties, which, I think, make the general incidence of taxation fairer. I think the whole incidence of taxation should be something like a knapsack, properly packed, and so adjusted to the back that it should not rub in any particular place.

The subject of cheque stamps has been referred to, and I should like to say a word upon that subject. I did say a word or two when it was first broached; I said it would throw a great deal of grit into the commercial machine. I have seen and heard a good deal since then, and I think the expression I used then was correct. I am perfectly convinced it will not bring in what the Chancellor of the Exchequer thinks it will, but I also think that any differential duty would be far more injurious than the 2d. rate itself. I would sooner see a larger rate than a differential rate. I therefore urge this one point on the Chancellor of the Exchequer. I hope he will do away with this tax altogether before the Budget goes through, but if he does not, I hope he will not make a differential tax.

Then, Sir, there is the reduction of the Debt. I have always been one of those who objected to the suspension of the Sinking Fund. I think we are not paying off this enormous Debt fast enough, and I think it would be wiser if we had made a greater effort in a time of great prosperity. I have always objected to the reduction of the fixed sum, fixed by Sir Stafford Northcote, for the reduction of the Debt. I think it is a mistake. I quite agree that it would have been wiser if we had paid more of the cost of this war out of income instead of borrowing so much as we have done. I am a strong advocate for the principle that in case of war or some great emergency the public should feel largely the effect of the policy, whatever it might be. And, although the Chancellor of the Exchequer has laid a good deal of the cost of this war on general taxation, I should have agreed certainly to let the present generation, those who decided for this war, to have paid more than they have done and are doing at the present time. It is a matter of principle, and a matter to show the stability of our country. When we determine upon a line of policy, it is desirable to bring it home to the people by putting the cost on the present generation. Although I think we could not have paid all the cost of the war at present, I think we should have paid more than we have done. I hope this tax in the future will be put on the new Colonies. I should not agree to anything being laid on them now, because they cannot afford it, but I visited the country just before the war, and I think that in the future£30,000,000 or £50,000,000 could be laid upon them without crippling them, and that it would be a profitable investment for us in a few years.

Now just one word about the growing expenditure of this country. I have always been an advocate for economy in every possible way, and one of the reasons why I think we should have paid more of our Debt is because I know it is one of the few practical ways of arriving at economy. We are raising money to pay our expenditure, and we have to pay interest, and that is thrown also on the growing burden. But what is the use of talking of reducing the growing expenditure when people generally have set their minds on getting better salaries? Of course everybody would like to see everybody else get higher up in the social scale. We do not grudge it. Merely for political capital, we are always increasing the expenditure, and it is idle for us to come here and accuse the Government of increasing it when hon. Members complain that we are not spending enough. One hon. Member said we were only spending £25,000,000 a year on education. Well, I have spent a great part of my life in education. For twenty years I was at the Science and Art Department. I had the honour of receiving a letter from Mr. Forster, after the passing of the Education Act, thanking me for what I had done and saying L had materially helped him in that controversy. Therefore, in what I say, it cannot be thought that I do not advocate proper education. But can anyone contend that we really get £25,000,000 worth of good out of the money we spend on education? Can any one say that that £25,000,000, if properly applied, would not produce infinitely better results? A very much smaller sum ought to provide a much better system of education than that which we possess.

The hon. Member for Haddingtonshire says that he wishes that our expenditure may largely increase. Well, we are going to increase it. We are going to establish secondary education, and we are going to spend more money. Only on Saturday last I was looking over an institution of the Girls' Public Day School Company, with which I am connected. That Company was started for educational purposes for children who could pay a good fee. They pay on an average £15 a year. We have now thirty or forty schools, 10,000 pupils, and an income of about £150,000 a year in fees. The Company is successful; we have paid 5 per cent. dividend, and are now paying 4 per cent.; we have reserve and sinking funds; and out of the estimates voted by this House we receive over £1,000. About one-fourth of our dividend is paid by taxation. That may be a very good thing, but that is the way these increases are made. If you do that for our Company, are you going to do it for everybody else? Of course you are, and that means an enormous increase in that way. Then there are old age pensions, and other things that are wanted, and so our expenditure goes on increasing. I agree that these matters are very important, and I am not so young and hopeful as to think that we should succeed in reducing our expenditure. I have been in this House now for nearly twenty years, but I have never seen a real reduction made in anything. The only reduction I have witnessed is one meaning that the Vote in question is not large enough. That is the way we do everything. The law does not allow us to move to increase a Vote, which is perhaps a good thing, so we do it in the way I have mentioned. Unless we take this matter very seriously in hand and apportion our total expenditure on some systematic plan, I cannot see how it can ever be reduced. We talk about the constitutional right of considering the Estimates. I should be the last to say a word against the rights of private Members to debate the Estimates, but can any sane man say that our debates tend, or are likely to tend, towards an efficient control of the expenditure of the country? It is an absurdity to suggest it. In considering the Estimates, we do not take them as a whole. An hon. Member is interested in some particular matter. That particular matter is run on the rails, and, possibly, occupies the whole of the evening. The bearing of the Estimates as a whole is not considered. We do not consider how many: millions we should devote to one subject, and how many to another, and work them as best we can, as any ordinary firm would do. We depend too much on the Government. The only influences in the direction of reducing expenditure are practically those of the Treasury and the Chancellor of the Exchequer. They very often do their work extremely well, and, in consequence, become unpopular: but unless we had some control such as that vested in the Treasury, our expenditure would become quite excessive. This is a matter in which I am keenly interested. I should like to see some efficient control over our expenditure. I do not say that the country should be run in a niggardly or cheap fashion. We are rich enough to be able to do what is right and proper, but we are not rich enough to waste money. I hope, as soon as normal times return, there will come a day when both sides will look into this matter. Let there be absolute liberality in such matters as the Navy, which I consider vital as an insurance for our existence, but let us not waste money as we do, in many ways at present. The great mass of the people—rich as some may be—are very poor, and the taxes fall very heavily on the backbone of the country—the people who really work and labour, and those who represent, as I do, and have worked amongst the poorer people, know that the bulk of them have to consider, not the shillings, but the pence; and in adjusting and arranging our expenditure so as to maintain the glorious power of the country in all directions, we ought to be careful that we do not, for our individual or fashionable fads, throw a burden upon these people which they are really hardly able to bear.

(9.9.) MR. BRYNMOR JONES (Swansea, District)

I agree with many of the weighty and judicial remarks of the hon. Member opposite with regard to the income tax and the stamp duty, and also with some of the more general conclusions with which he ended his speech. I do not intend to follow him into those matters, but simply to make one or two observations in regard to a point which has not yet been touched upon, speaking as a representative of an industrial constituency situated in a part of the country which has been very progressive during the last two generations, I think that under existing circumstance the people of that part do not regard the Budget as one of a very controversial character except in regard to the corn duty, which we shall be able to discuss to-morrow. But last year the Chancellor of the Exchequer imposed an export duty on coal. Many of us were opposed to that duty. The right hon. Gentleman met us in many ways fairly enough. He made concessions in regard to patent fuel and existing contracts which were gratefully accepted by persons interested. I do not complain of his action in continuing the tax this year, but I rise in order that our silence may not be taken as implying assent to the propositions, which have been advanced by the Government. In introducing the Budget, the right hon. Gentleman said— On the whole, so far as the experience of this last year goes, there has been no ground whatever shown for those prophecies of ruin to our great coal-mining and exporting industry, of which we heard so much last year from the representatives of that industry. I think the Chancellor of the Exchequer was a little exaggerating the statements made from this side of the House. So far as I know, none of those interested and experienced in or acquainted with the coal trade ever said the industry was going to be ruined by the imposition of the, tax. All that we said was that, in the long run, whenever a period of depression came, it would tend to the diminution of prices and the lowering of wages, and that, wherever our coal was exported to markets in which we had a competitor, the duty would operate as a bonus to the foreign competitor. I do not know what has been going on in other parts of the kingdom, but certainly in our district we were right in saying that that would be the effect of the duty, and our prophecies have turned out to be true. In Glamorganshire the wages are governed by a sliding scale, established many years ago. Last year in South Wales every bimonthly audit under the seal has shown a reduction in wages amounting in the aggregate to 25 per cent. I can well understand that it might be said that our trade has been exceptional. There are, however, many other causes which have led to the lowering of wages and prices. I am not going to trouble the Committee with a detailed analysis of the causes which have led to this very important reduction, but I feel perfectly certain that hon. Gentlemen on both sides of the House will fully appreciate what a reduction of 25 per cent. means to the miners in Monmouthshire and Glamorganshire. I find that there has been a diminution in the total exports in regard to the whole kingdom to the different markets which are classified in the return which has been recently circulated.

The decrease of exports to West Africa. British South Africa, British North America, Ceylon and to the Indian Ocean has been general. The Return shows that to British South Africa in 1900 the total amount of coal exported from British Channel ports was 461,319 tons. In 1901 the total was 460,166 tons. That is not a large diminution, but I will explain why it is small in this instance as compared with some other places to which I might refer. The reason is that Cardiff coal has a special value and it commands a much higher price. I am informed, too, that the imposition of the tax has led to a great decrease in the exportation of inferior coal, not only from the Bristol Channel ports, but from the other ports of the United Kingdom. I am not going to labour this point but I simply wish to point out to the Chancellor of the Exchequer that he was hardly justified in, congratulating himself in such high terms upon the result of this coal tax as he did in his speech of Monday last. I am convinced that when the war is ended and things take their normal course it will be found that the tax has been a source of no substantial increase to the revenue and has fallen unfairly on the trade.

*(9.22.) MR. PLUMMER (Newcastle-on-Tyne)

As the representative of a large commercial centre I wish to say a word or two upon the imposition of this additional tax upon cheques. Iappeal to the right hon. Gentleman to reconsider that proposition with a view to its entire abandonment. The secret of a successful tax I have always understood to be to take the money from the pocket of the taxpayer without him realising that he is contributing to the taxation of the country. Hon. Members have stated that theoretically this is a bad principle to base taxation upon, but I hold to the view I have just expressed, that in practice it is a very successful method of raising the taxes of this country. I venture to say that this proposal to tax cheques proceeds upon a directly contrary principle, because every time a cheque is drawn—and those connected with large business centres know how constantly and how frequently that operation is undertaken—this tax is brought forcibly to mind, and the inconvenience caused is out of all proportion to the results likely to be achieved. Everything that has been said from both sides of the House goes to show that the financial results of this tax are not likely to be those which the Chancellor of the Exchequer seems to expect. I think this proposal will interfere distinctly with, the collection of small accounts. Many businesses in this country have innumerable small accounts passing through their books, and to them it is a matter of importance that they should have a ready method of collecting these very small accounts. This proposal places a premium upon the less frequent settlement of accounts. The man who has been in the habit of paying his accounts monthly, will in future be encouraged to allow his accounts to run on for three months or even longer, in order to save what may be only a small sum, but what he thinks is a sum which he should not be called upon to pay.

There is another feature to which attention has been drawn, and to which sufficient importance has not been attached, and that is the fact that this proposal must inevitably lock up a certain amount of capital, and thus withdraw capital from the banks which might be very much better made use of, and thus the free circulation of money will be interfered with. It has been well said that good government consists in making it easy for people to do right, and difficult to do wrong. I should like the House to consider for a moment how many cases of petty theft have been avoided by this system of payment by cheques, on which so large a proportion of the business of the country is conducted at the present time. Many a young fellow, after leaving school and entering upon a business life, who has had to handle large amounts for the first time, has been saved from temptation by not being placed under the necessity of handling considerable sums in cash; but if this Budget is passed in its present shape, they will be paid in petty cash. Apart from the value of the cheque system, I am sure it has removed temptation from the path of many a young fellow. For all these reasons I would urge respectfully upon the Chancellor of the Exchequer to consider seriously whether he would not be acting wisely and well in abandoning this proposal altogether. I do not agree with everything that has been said by some hon. Members upon this side of the House, because I have always acted upon the principle that half a loaf is better than no bread, and I am not at all sure that if we cannot secure the abandonment of this tax we ought not to accept it in a more modified form. Any exemption of sums under £10 or even a smaller amount would be placing a premium upon the prompt settlement of accounts, whereas the proposition at present before the Committee really puts a premium upon the slow settlement of accounts. I will conclude by joining in the appeal addressed to the Chancellor of the Exchequer to abandon the proposal altogether, and I venture to suggest that the great success of his loan scheme which has been announced is an additional reason why he should favourably consider the request which I have pressed upon his attention.

(9.27.) MR. ALFRED DAVIES (Carmarthen Boroughs)

I do not trouble the House very often, and this is only my second speech. Although this is so, I do not ask for any special favour, but I may say that I tremble as much on delivering my second as I did on making my first speech. It is no small matter for anyone to speak in this theatre of eloquence. My wish is to have a friendly talk with the Chancellor of the Exchequer. I hope I shall find he is angelic, like St. Michael of old. I do not like his Budget, and I am sure he would not like me to tell him I do like it if I do not. There are many things in his Budget which are most distasteful to me. When the right hon. Gentleman introduced his last Budget he spoke up for economy, and I thought that in this Budget I should find that he was an economist. But I have not done so. I do not like the man who speaks for economy and practises prodigality. What do I find in this Budget? Last year we spent £195,000,000, chargeable to Exchequer income account. This year the Chancellor of the Exchequer asks for £193,000,000, which includes the Sinking Fund of £4,640,000, and there are sure to be some Supplementary Estimates.

When I look upon this Budget I cannot help saying that it is a retrograde and extravagant Budget. Out of this £193,000,000, I find that £40,000,000 are required for the War in South Africa up to the 31st of December next, and £18,000,000 are required for settlement charges in connection with the war. Then I find the Chancellor of the Exchequer includes in this sum £129,000,000 for Supply and Consolidated Service Funds. This means that the amount of all the ordinary yearly income he requires is £129,000,000, as per Table 5 of Financial Statement of April 14th, 1902. Last year we spent £127,000,000, and I want to know why we should have an increase of £2,000,000, if the right hon. Gentleman is an economist. There have been great extravagances in this Budget. Many points have been brought before this House with respect to the purchase of horses, the conduct of the war, the purchase of provisions, the purchase of fodder for animals, and questions have been raised with regard to the transports. If the Chancellor of the Exchequer is an economist what has he done to prevent the waste of money in connection with these purchases? The Government have wasted millions in connection with the war, and I ask the right hon. Gentleman to show what he has done to prevent this great waste of money. I wish to be candid with the right hon. Gentleman. I would remind the House that the last year when a Liberal Government was in office the ordinary yearly expenditure was £94,000,000 and there was a surplus of £6,500,000. Why has the right hon. Gentleman increased this to £129,000,000? If he will explain this, he will give great satisfaction not only to this House but to the nation at large. It is no use paying big sums of money to members of the Government unless they do their business satisfactorily. I am here in the House, and I do not get a penny. The members of the Government get large salaries.

THE DEPUTY CHAIRMAN

Order, order! The hon. Member must not discuss now the payment of Members or the payment of members of the Government. We are now discussing the Budget, and he must confine himself to that.

MR. ALFRED DAVIES

I am sorry I erred, but I would always be right if I could. In this £129,000,000 Budget I find that the Army is down for an expenditure of £30,000,000. Why are we spending this big sum upon the Army? I do not object to any amount of money being spent upon the Navy, or upon bringing the war to a close, but I do say that there is no reason for spending this vast sum upon the Army, for we can never be a military nation. This increase in the cost of the Army is due to the fact that the Government have mismanaged this war and to the fear that if we did not spend these large sums upon the Army some other nation might attack us. If any Continental nation wished to attack us, it would have done so when we were being defeated by the Boers.

THE DEPUTY CHAIRMAN

The hon. Member's remarks would be more in order on the Vote for the Army, and he must now confine himself to the Budget.

Mr. ALFRED DAVIES

I will now refer to the tax upon corn, wheat, and flour. [Cries of "No, no," and "Tomorrow."] I think I am in order, Mr. Jeffreys. This is a tax to which I strongly object on principle, for I hold that there should be no tax put upon the food of the people. I know it is a small tax, but it is the first step towards Protection. I hold that we should never levy taxes upon bread, which is the staff of life. If we remembered what the people suffered when there was Protection, I am sure no Member of this House would vote for this tax. Go back into the past and remember what was the condition of the working men of this country. A labourer had only 7s. a week. Remember that it was at that time, when the people had not sufficient to eat, that Richard Cobden and John Bright fought the battle for the repeal of the corn laws. John Bright, after the Home Rule split, wrote a famous letter on this subject. Some of the Tories suggested that there should be a tax put upon the food of the people. He told them plainly that they were hankering after the corn laws. He told them that they were like the dog which would always return to its vomit. It was strong language, I admit, but, at the same time, he made that statement when he was one of your own followers. [An HON. MEMBER: NO.] Well, he was a dissentient Liberal at that time. Now I must say a word about the Colonial Secretary. He is not present, but his son is here; and I am sure if he thinks it well he will convey my remarks to him. Before the Home Rule split, the Colonial Secretary was a strong supporter of free trade. He stated that the owners of property would tax the food of the people in order to raise the rents of the landlords. I agree with him there. I admire the Colonial Secretary as regards his being a man of affairs. If all the members of the Government were business men like him, we should not be still at war in South Africa. I look upon the Colonial Secretary as my friend the enemy. He climbed up my Radical staircase to get to power, and when he got to the top he forgot me and my Radical friends. If I am not out of order, I should like to say that I often think—

THE DEPUTY CHAIRMAN

Order, order! We are not discussing the Vote for the Colonial Secretary. We are discussing the Budget.

MR. ALFRED DAVIES

Well, I will refer now to the death duties. They have yielded £18,000,000, out of which I believe the Chancellor of the Exchequer gets £14,000,000. That is a great boon to him. In that respect I may say that he has reaped where he has not sown. The right hon. Gentleman the Member for West Monmouthshire introduced this tax, and it has yielded abundantly to the Chancellor of the Exchequer. I do hope that the Chancellor of the Exchequer will consider whether he cannot sow in this direction, so that taxation may be equalised. With regard to the income tax, I should say that I should not object, so far as I am concerned, if 2s. had been put on the incomes of the wealthy on a graduating principle. I feel that it would have a good effect in this respect—that the wealthy would never desire war again. I do not mind how much the wealthy pay, so long as they feel that they must never have war during my lifetime. If we turn to the question of putting a twopenny tax upon cheques, I cannot help saying that I regard this as pettifogging legislation. What earthly use can there be in putting twopence on cheques and putting everyone to inconvenience? I do hope that the Chancellor of the Exchequer will reconsider this question, and also the advisability of withdrawing the proposal. I hope we shall not have a Party vote on this question. It is not a Party question. I take it that all of us in the House desire the well-being of the nation. I must say that I cannot quite understand why we have so much Party feeling in these votes. Personally I think that the Party system has not always been an instrument for good. I hope that when we come to vote we will vote heartily for the income tax, and that we will vote against the corn taxes and the cheque tax. Above all, I do hope that we shall all vote according to our consciences. In conclusion, I may-say that we shall all be below the daisies some day. When we come to the end of our lives we shall probably repeat what was said by one great man—"So little done, so much to do."

*(9.44.) MR. SAMUEL ROBERTS (Sheffield, Ecclesall)

I quite agree with the hon. Member who has just spoken that we should all vote accordingly to our con-scienc, and I mean to vote according to mine, though at the same time I should be sorry to do anything which would hamper the Government in their financial administration. I simply rise for the purpose of supporting the opposition against the tax on cheques. I have the honour of being a director of a large banking company in Sheffield, and I wish to support the argument put forward by my hon. friend the Member for the Andover Division of Hampshire, who spoke earlier on the debate of the very great inconvenience it makes to country bankers in various ways if the twopenny tax was put on cheques. I have received an important communication signed by the managers of seven of the most important banks in Sheffield, and with the indulgence of the House may I just read two paragraphs front the memorandum— We believe that the imposition will be a serious hindrance to business, more particularly as regards small traders. From long custom the penny stamp is taken as a matter of course, but the increased stamp will have the effect of causing people to find oilier ways of making payments, and we believe the duty will thus have an injurious effect upon the business of the country banks and prevent many small customers from opening current accounts. The policy of this House ought to be to encourage thrift, and to encourage thrift we ought to put every convenience in the way of people opening banking accounts. A return has been sent to me in regard to 977 cheques taken haphazard which had been sent from London to our country bank, and the figures are very astonishing. The number of cheques not exceeding £2 was 187, or 19 per cent.; the number not exceeding £5, 418, or 42 per cent.; the number not exceeding £10,571, or 58 per cent.; and the number exceeding £10, 406, or 42 per cent. These figures show conclusively the very large amount of business done by payments in small cheques, and it ought to be encouraged. I appeal to the Secretary to the Treasury on another matter. The Post Office is indebted to the banks for collecting their postal orders. We collect postal orders and pay them into the Post Office in bulk. The manager of the bank of which I have the honour to be a director tells me that they collect as many as 200,000 postal orders in one month and pay them in bulk into the Post Office, giving an indemnity so that they might be paid in the first place without examination. That saves the Post Office a great deal of inconvenience, and I think some little consideration should be given to the bankers for the facilities which they give to the Post Office in this matter. The Parcel Post is to a very large extent responsible for these small cheques. Retailers used to order their goods every three or four months, now they send an order by telegram or letter asking for a single article to be sent by return per parcel post and that is paid for by small cheque. I sincerely hope the Chancellor will realise the great inconvenience it would be to all classes if this tax were insisted on. All the same I shall be loyal and vote for it if he tells us that he cannot raise the money in any other way. But I hope the war will soon be over, then he will not require it and we will all be satisfied.

*(8.49.) MR. CHANNING (Northamptonshire, E.)

Hon. Members during the course of the debate seem to be rather thrashing a dead horse, in this universal chorus of denunciation of the additional charge on cheques. I really cannot imagine that man, even a man, of the courage and capacity and resource of my right hon. friend can, in the face of this opposition, insist on this tax I have had representations from many tradesmen and small business men in my own constituency who have stated that its results will be really serious. They have shown by tables of the small cheques which are drawn in the course of their business that it would mean a considerable addition to the income-tax they now pay. I have no doubt myself that all these considerations will be fully weighed by the right hon. Gentleman and that we shall see the result which certain Members have asked for.

I have risen because it seems to me that the accasion of this discussion tonight is rather one to deal with the general policy of the Budget, than to deal quite with so much closeness the details and with minute facts of certain taxes. The right hon. Gentleman has had a serious problem to face. He has had to face an enormous expenditure. He has faced it by drawing upon the taxpayers of the country, and also by following, I think contrary to his own instincts, and certainly contrary to his own preaching, the policy of loans. It seems to me a serious consideration that the income tax proposed is so small. I protest against the policy of continuing to pay £6 out of every £7 by means of loans. We have no right to saddle posterity with the expenditure to pay for the rapacious speculations of the hour. We have still less right to transfer the burden from the richer to the poorer classes as a loan always does. And we are by a loan imposing a direct and heavy tax on the labour of all but those employed in the manufacture of armaments, etc. I challenge the policy of the income tax most strongly because it does not involve the principle of taxation which the right hon. Gentleman should apt upon. It does not involve equality of sacrifice. I wish to challenge the attitude of the right hon. Gentleman in dealing with the revenue of the year. He dealt with the growth and diminution of different classes of revenue. What, I should like to ask, do the facts and figures really prove in the present year? The Chancellor of the Exchequer attempted to maintain that there was no real diminution in the purchasing power of the consumer of this country, and he dwelt on the fact that his estimates have been exceeded by £523,000. But how has that excess been arrived at? I should really like the Committee to follow these figures. The amount of excess which tea showed over the estimate was £490,000. Sugar showed the enormous excess of £1,290,000. That is £1,780,000 on these two items alone. But as the right hon. Gentleman admitted and as everyone knows, both these large excesses were entirely due to the policy of forestalments on these items. If it had not been for forstalling these things, the revenue would have been £1,250,000 less than it is. Then we have had a considerable increase in the income tax itself, £1,000,000. These figures prove that the taxable capacity of the poorer classes has been diminishing, and that the taxable capacity of the population has been among men of larger business interests and larger means. We have from day to day here, as in America, illustrations of the concentration of vast businesses under the control of small syndicates, which, by this concentration of capital, are able to earn vast fortunes for a few people. That policy has been further promoted by the present position. The war has given exceptional opportunity to earn immense profits in this way.

Now, having regard to that fact, the real increase of prosperity and taxable capacity is in this very wealthy class, and therefore, I say, the income tax is unfair and unjust in its character. You charge an income tax of one penny—which is a mere fleabite to a millionaire—to the man who makes £100,000 a year by these combinations, and you apply the same measure of income to the man earning only £700 a year. You impose income tax without ever trying to arrive at a just policy by a system of graduation, by which you would get at these millionaires, and draw upon them for a greater amount than you get by the death duties, and which is only the fair way of dealing with this tax; you are imposing this income tax without either having a graduated scale, or extending the exemptions of the poorer classes of income tax payers. There is a difference of opinion on this point. I have read articles personally expressing the view that as regards exemption it is right to go lower and lower rather than higher and higher, and that you should thus make the poor man also pay towards the expenditure of the country, but I venture to say that the poorer classes have already, even before the last two or three Budgets, been paying a larger proportion towards the expenditure of the country than was their share, in three successive Budgets the right hon. Gentleman, in my opinion, has been unfair in trying to secure so-called equality of direct and indirect taxation, and in the present Budget that unfairness has become a scandal. This Budget will vastly increase the disproportion which in each previous Budget had been brought about under the pretence of equality between indirect and direct taxation. In this connection I would draw attention to the fact that the poorer taxpayers constitute a large majority of the ratepayers of this country, and that with regard to rates they are paying rates in larger proportion to their position than the large income taxpayers. How unjust it is, then, not to consider claims to exemption of these classes, when you are by your Education Bill proposing to place an enormous burden on the rates, perhaps £2,500,000 a year, which will throw a larger and more unjust proportion of public expenditure on this very class of taxpayers than they now pay.

Now with regard to the bread tax, several speakers have already dealt in detail with the corn duty and the tax upon flour, and I do not intend to touch upon the subject further than to show how very unfair the incidence of this tax is, it you consider it in the form of an income tax on the poorer classes of the community. Is there any equality of circumstances here? It has been urged again and again that the poorer class of taxpayers in this country have not felt the sugar tax. That is true, but the reason is that the glut of sugar in the markets has kept the prices down, and you know perfectly well that if it had not been for your tax upon sugar these poor people would have been just so much the better off, and though they may not see it, they do pay this tax, and are therefore so much the worse off. This bread tax will fall most heavily upon the poorest wage earners of the country. The proportion of income from bread varies from over one third among the poorest to a tenth or twelfth among the larger wage earners. If you take the agricultural labourer earning £36 a year, his bread and flour and other articles which come under this duty represent one third of his income. It has been said that the duty will represent 4 per cent. on the value of these articles. I ask the Committee to follow me on this point. Accept the figure of 4 per cent., you say that that is a trifle that will not be felt. What is the position then of the agricultural labourer. Who earns £36 a year and spends £12 on these commodities? The tax in that case works out—if taken as income tax on his earnings as a tax of 3¼d. in the £. That is a grave addition to the serious contribution which the wage earners have been in previous years called upon to make in the increase of the duty on tea and sugar, and on tobacco and beer, to the expenditure of the country. Assume that it is 4 per cent., and that it is calculated to amount to a fraction of a penny. You are asking these men to pay an enormous proportion of that tax. But this is not all The man will be far worse off. The price of corn and flour has already risen to double the duty, and the baker in that case will try to transfer the burden of the duty to the consumer. The consumer will have to pay, not the duty, but four times the duty. The result will be this—that whereas the tax is only one-eighth of a penny, the minimum addition to the price that a baker can possibly make is one halfpenny a loaf. And in this transaction you have the absurd result that the Chancellor of the Exchequer only receives one-eighth of a penny, while three-eighths of a penny will go to the middle-man, and that the poor man will be paying not 3¼d in the £ on his income, but 13d. in the £, if this tax is carried out under economic conditions, for which you cannot blame either the seller of the flour or the baker. Now I just wish to say one word on the whole policy of this transaction. We know very well what this means. It means Protection, and Protection alone. We know perfectly well where this money is going, and that it is going to swell the rents of agricultural land. The corn-growing land of this country is some 9,000,000 acres, and on those 9,000,000 acres there will be an addition of profit resulting from this tax averaging 3s. an acre, all round. That will not go into the pockets of the farmer; sooner or later it will find its way into the landlords' pocket, and it will become a subsidy of£1,300,000 or £1,500,000 to them. It is another dole to the landlords. I denounce this policy. I think it is grossly unfair to start this policy, which is an income that graduated not upwards but downwards so as to fall with the most crushing severity on the very poorest classes.

But, Mr. Speaker. I rose rather to challenge the whole of the Budget of the right hon. Gentleman. We are hoping for a rapid conclusion of peace, and we hope this Budget may be the last step, the culminating point of the financial policy of this Government. So far as I have examined them, the Budgets of this Ministry are Budgets marked with one policy from end to end. The Chancellor of the Exchequer has accustomed us to loans in order that the eye of the country may be directed away from the gulf into which it is plunging. He has, I know, repeatedly dwelt on the fact that our expenditure was increasing vastly faster than the growth of population, or the growth of our resources; but, reviewing the course of all these Budgets from the year 189C onward, they remind me of nothing so clearly as that which occurred a few years ago in the United States, after the Civil War. There we had vast funds pouring into the Treasury of Washington which the American Government did not know what to do with so, in order to get rid of that money, they raised the pensions of those that fought in the war and devised other means solely for the purpose of using up that money. This policy was deliberately adopted in order to keep up the Protective Tariff there. During the last seven years the same policy has been apparent here. We have seen year by year this reckless expenditure of public money growing faster and faster; and, while I give the right hon. Gentleman the fullest credit for honesty and sincerity in his professed wish for economy, and his repeated warnings that perseverance in this policy of reckless expenditure must bring disaster upon the country. The right hon. Gentleman may have been an unwilling instrument in bringing about these disastrous results, but I ask the Committee whether they do not see in this reckless growth of expenditure an artificial creation of wants and needs, which have to be fed in order that the basis of indirect taxation shall be gradually extended and the duties gradually increased. You have increased the duty on tea and you have taxed sugar, and at last you have reached that point at which an excuse can be made for re-enacting those hateful and detestable corn laws which Sir Robert Peel had the glory of clearing away from the country, and thus laying the cornerstone of its happiness and prosperity.

*(10.10.) MR. DAVID MACIVER (Liverpool, Kirkdale)

said he regarded the agitation against the coal tax, so far as South Wales was concerned, as entirely with the hope of injuring the Government, and precisely of the same character as that now being organised at Manchester and elsewhere to protest against the grain duties. There was no more reality about the one than the other. But although South Wales had not suffered, he thought the North Country, and especially Scotland, were not quite in the same position. The Chancellor of the Exchequer had very wisely made certain concessions with regard to small coal and coal of low value; but he did not think the concessions went quite far enough with regard to the 6s. limit of exemption. This he thought should apply to the price not at the pit's mouth, out at the ports of shipment. Such a concession would tend to increase trade, and be for the benefit of the country, He found himself quite unable to support the Chancellor of the Exchequer's income tax proposals, and thought he should rather get the money by taxing beetroot sugar and other imported manufacture which came into competition with our industries. The principle of an income tax, was, he thought, right enough in so far as it meant taxing profits yielded by the investments of wealthy people, but unfortunately it seemed impossible to apply that principle with any degree of fairness. Investments in Great Britain and Ireland were easily reached, and mulcted to the last farthing in respect of income tax. Not so investments abroad. In the case of every railway company in this country, of nearly every great steamship company, of many manufacturing companies, and of most British or Irish enterprises of any considerable magnitude, the company paid the income tax; and deducted the amount from the dividends. Nothing of this kind could be done as regards the profits derived from investments abroad. We were therefore handicapping our own business, and were protecting the foreigner by the extent to which the profits upon investments in competing industries abroad escaped payment of income tax; and this was what we called Free Trade Our Foreign investments were, admittedly, enormous; but to what extent the Chancellor of the Exchequer succeeded in collecting income tax upon them was a very open question. He had no means of getting at the facts with regard to unregistered Foreign securities, coupons payable to bearer, and the like; and as checking of accounts was impossible in respect of unrecorded transactions, it was not unreasonable to suppose there might be considerable leakage. Foreign investors were only human; and, perhaps, it was not too much to say that few of them paid any more income tax than they could help. We might feel quite sure, however, that they were all of them ardent admirers of our fiscal system, and firm believers in the principles of Free Trade. He expected no help from them tonight. He thought there was something reasonable in the view that the rich man who derived his wealth from realised investments, whether in this country or abroad, should pay income tax; and that he ought to contribute to the necessities of the State some share of his profits, and especially of such profits as he had done nothing to earn. But what of the man or the woman who was not rich—who had no investments of any magnitude—whose income was dependent upon daily toil, and upon the continuance of health and strength, without which no income could be earned? Such people, he thought, should not pay income tax at all; and yet we were told that the majority of income tax payers were of this class, and that their average income did not exceed £250 a year. It was abundantly clear that the lawyer, the doctor, the clergyman, the schoolmaster, the Shopkeeper, the mercantile clerk, or anybody who had to earn his daily bread—whose income was precarious, or might disappear altogether if he were to fall into ill health—was in a very different position from the rich man who derived his income from investments. The income tax, as at present levied, was most unfair. It was largely a tax upon the brains of those workers who had no investments, and who were obliged to earn their living. He declined to vote for any increase in the income tax; but, on the contrary, thought he made out a case strong enough to justify his demand for a reduction, and also for an alteration in the mode of assessment; but he hoped it might be possible before long to sweep away this iniquitous impost altogether, so far as concerned the taxation of our own industries, and the taxation of the earnings of the professional and trading classes. He thought the liability of investors to pay income tax upon profits earned abroad might well be continued; but that those who traded in this country, and who put their money into British industries, should be allowed to go free. At present it was rather the other way about. He disliked the death duties, as at present levied, almost as much as the income tax. By one we robbed the living, and by the other we sought to rob the dead. A man saved money and died. Then stepped in Mr. Chancellor of the Exchequer, and took no inconsiderable share of the property which ought to go to the widow and children. It was no answer to say that large estates paid much and that small estates paid little, because in each case the wrong was the same. The small estate might be as much to the poor man as the large estate to the rich one and the widow and the orphans who had lost their breadwinner might perhaps suffer more from the payment of a few pounds in death duties than the heirs of the rich man whose investments were reckoned by millions.

THE DEPUTY CHAIRMAN

Order, order! There is no Resolution before the House with regard to death duties.

* MR. DAVID MACIVER

said if he was precluded from saying more upon that matter he would only say he much disliked the income tax as it was at present administered, and could not support it being further increased.

*(10.25.) MR. JOSEPH WALTON (Yorkshire, W. R., Barnsley)

I have the highest respect for the financial statements made by the Chancellor of the Exchequer, and I believe that he, equally with other Members of the House, desires that the taxation of the country should proceed on the only equitable principle of taxation—namely, that every man should be taxed according to his ability to pay. The question is how far the present Budget, and especially the mode of assessing and levying the income tax which we are specially considering to night, fulfils the condition of sound finance which I have stated. I desire to draw the attention of the right hon. Gentleman tonight especially to the mode of assessing the profits made in different businesses. When I look into this Budget I find that all mines are taxed for income tax on their profits of the preceding five years, and that tradesmen's and other businesses are assessed on the three year profits, whilst gas works, railways, iron works, and other businesses are assessed on the profits of the preceding year only. Now, I submit that these variations in the assessment lead to unfair inequalities. Take the case of the coal trade. I venture to say the cheapest working collieries this year will not earn a profit of more than one quarter of the average of five years profit—and so instead of paying a tax of 1s. 3d. they will have to pay out of this year's profits an income tax of 5s. But this is not the case in many other trades where the income is fixed and does not vary. In the coal trade you not only have to pay this income tax on profits, but also on capital. Money invested in collieries is largely expended in sinking shafts and erecting engine houses, and in other ways, which when the coal is extracted are practically of no value.

Therefore, it is necessary that during the life of the colliery we should set aside redemption money sufficient to recoup ourselves the capital outlay in sinking the pits and opening the colliery. This is not the case in regard to many other businesses. There the capital remains intact, and the income tax is paid merely on the profits. But in the case of a colliery, the Inland Revenue authorities will not allow to be written off the profits the redemption which from year to year it is necessary to set aside to recoup the capital outlay which will be valueless on the exhaustion of the coal. In this way it is clear that collieries this year will suffer very heavily as compared with other trades. Why we should be assessed on the average of five years while iron works are assessed on the preceding year, it is difficult to understand. It cannot be said that the two trades are dissimilar in their results. Almost invariably a period of inflation in the coal trade is accompanied by a period of inflation in the iron trade, and rice versa It will therefore be obvious that this different method of dealing with and assessing profits leads to the, imposition of disproportionate burdens as between various classes of property. It may be said that in the year 1899. which was a good year in the coal trade, we received a great advantage in being assessed on the profits of the preceding five years. That is perfectly true, and over an average of years it would act fairly it the income tax remained at one uniform amount. But, unfortunately for the coal owners, the income tax which we paid in 1899 on a less amount than our profits in that year actually were, was at the rate of 8d. in the £, while this year, when we have to pay on a much larger amount than our profits will turn out to be, the tax is at the rate of 1s. 3d. We shall therefore pay this year much in excess of the amount we saved three years ago. I would ask the Chancellor of the Exchequer whether some means could not be devised by which in the future every concern should pay upon the actual income of the year, whatever the amount of the tax might be. By the Act of 1842 it was directed that the principle I have described should be applied to the different trades, for it was provided that if the profits in any year turned out to be less than the amount at which they had been so assessed, the return of the amount of income tax paid in excess of the sum actually due in respect of the profits of the year could be claimed. Unfortunately, an Act was afterwards passed under which our only chance of getting any return or rebate is by taking the actual profits of the year, adding to them the profits of the two preceding years, and taking the average of the three. I therefore appeal to the Chancellor of the Exchequer, with his known sense of justice and his strong desire to see the burden of taxation equitably distributed, to take this question into his consideration, and endeavour to find some solution of the problem by which all classes of properly shall pay each year on the actual profits received.

Another question to which I desire to refer is the proposed re-imposition of the Is coal tax. The right hon. Gentleman, in introducing his Budget, said that— On the whole, so far as the experience of the year wear, there had boon nothing to justify the prophecies of evil which they heard last year from the representatives of the coal industry.

THE DEPUTY CHAIRMAN

The hon. Member is in order in discussing the income tax on collieries, but with regard to the Is. duty on coal, that is not the subject of a Resolution of the Budget; that is imposed by an Act of Parliament of last year.

* MR. JOSEPH WALTON

But it is in the Budget. I have had information conveyed to me from the coal owners of South Yorkshire. Durham, and Northumberland, showing how this tax has operated, and I desired to show that that information does not agree with the statement of the right hon. Gentleman to which I have referred.

THE DEPUTY CHAIRMAN

We are now in Committee on certain Resolutions of the Budget; the coal tax is not the subject of one of those Resolutions, therefore the hon. Member will have to find another opportunity.

MR. DILLON (Mayo, E.)

On a point of order. Sir. This. I understand, is a general discussion on the Budget as a whole, not merely on the Resolutions. It would be perfectly in order to propose the repeal of the coal tax.

THE DEPUTY CHAIRMAN

No, this is not a general debate on the Budget; this is a general debate on the Resolutions of the Budget.

* MR. JOSEPH WALTON

I apologise if I have been out of order in entering upon this subject, but I was led into it by Members on the other side being allowed to approve most warmly of the tax, and I naturally thought I was perfectly in order in referring to the same subject. I presume, however, that I shall have an opportunity of placing this information before the right hon. Gentleman on the Second Reading of the Budget Bill, and I will reserve my further remarks until then.

*(10.45.) SIR WILLIAM HARCOURT (Monmouthshire, W.)

I am sure we should be glad, on the Second Reading of the Bill, to hear the information which my hon. friend is in such a good position to otter as to the success of the export duty on coal which we challenged last year. I do not desire to detain the House long tonight, because the most important question in the Budget is that which we shall be able to discuss tomorrow. I think that the right hon. Gentleman, with all the respect which we entertain for him on both sides of the House, must by this time have become aware that his Budget is not a popular Budget. Various persons in this House and out of this House, for one reason or another, have condemned every particular proposal in that Budget. I remember that Sir Robert Peel, speaking of a former Chancellor of the Exchequer, said that there was no more sympathetic subject than a good man struggling with adversity, and, in a bottomless pit of deficiency, angling for a Budget. The deficiency of the present Chancellor of the Exchequer is more unfathomable than that of any of the Budgets of former limes. He has had to angle for his Budget, and time alter time he has brought up fish of a very unpalatable character. It is not so much the fault of the Chancellor of the Exchequer as of the situation in which we find ourselves. War is the producer of bad finance. It has always been so; and, when you have had a succession of deficiences amounting to about £40,000,000 year after year, you have to go to the very dregs of the resources of your taxation. That is the cause of the proposals which we have seen in this Budget, and nothing but the exhaustion of your financial resources would have produced what I may call the insignificant tax upon cheques and the pernicious tax upon corn. There is no greater proof of the exhaustion of your resources produced by this war than that a man like the present Chancellor of the Exchequer should have been reduced to making such proposals. This war has shown many things in the way of exhaustion. As regards your men, you have pretty well exhausted your resources there. [" No."] Why, you have had to depend on your Colonies. That was not one of the former resources of this country, you have not only had to seek aid from the Colonies, but you have had to deplete your forces in India.

But when you come to taxation, what is the condition of things? You have had to throw upon posterity four-fifths or three-fourths of the burden, and you complain of the taxes—and you have reason to complain of them—by which you are to defray one-fifth or one-fourth of the burden which has now fallen upon you. And this cannot be denied, that each Budget, from a financial point of view, has been worse than that which preceded it; and if, unhappily, this war is to continue, will not the Budget of next year be worse than that of this year? What are the resources which are left to you? What are the sources of taxation on which you can depend? If you possess hem, why did you not take this year? And when you come to them, I suppose they will be worse than those which you propose now. That is a very serious condition for the country to find itself in. W hat have you come to?—a tax on corn I am not going into that tonight; I merely refer to it in passing. You may call it what you like—a registration duty or anything else—but it is a tax on the irreducible minimum of the subsistence of the people. That is a fact which you cannot alter, and to that you have come in the third year of the war.

These are the results—and serious results they are—of this war. They have brought you within sight of conscription, and they are bringing you within view of protection. These are among what the doctors call the sequelœ of the war. There have been people in this House who have deliberately argued for conscription; and amidst the resonant cheers of the hon. Member for Central Sheffield, the first parallels have been opened which are to reduce the fortress of free trade. That is the financial prospect hold before us. It is all very well to say that this has no bearing on Protection. Is that the interpretation which is put upon your policy by all the nations of the world? The foreign Press on this subject, and the expression of foreign opinion, have put that interpretation upon it. One of my hon. friends made an observation which was full of force and truth, when he said— If you put one shilling on corn, it is very easy to put on another shilling and to say that that will not affect the price of bread. And then you put on another shilling, when you want more money, until yon pile up a large sum operating as a protective duty on corn. These are the very serious matters opened by the financial position in which we find ourselves, and to the acceptance of which the Chancellor of the Exchequer has found himself reduced. I fear there are people in this country, and even in this House, who are not sorry that we should be driven to such an issue as that, and that the absolute difficulty of the demand made upon us by the expenditure of this country should drive the Chancellor of the Exchequer and the country into measures which they would be the first to condemn. This has always been the case with war. What was the origin of that intolerable, oppressive, injurious state of finance in the country at the beginning of the last century—the great French War? The result of the war then was that the income tax was 2s, and you had every article which man could use, either for his subsistence, for his comfort, or for the decency of living, taxed. Every man who deals with questions of this kind ought to study the conditions of the English people under nuance of that character. I venture to say that for the thirty years from 1815 to 1845 the working classes of this country were in a worse condition than they had ever occupied in the history of this nation. These things are forgotten, but they ought to be remembered when you are engaged in increasing expenditure, both from the war and from the spirit which is bred by the war. When you have enormous expenditure you have the commencement of oppressive taxes growing worse and worse, and, in presence of a deficit of 40 millions, yon have a Member of this House saying that he wants to get rid of the income tax, and if he had been in order he would have disposed of the death duties. The objection is to taxing the dead; but if you only taxed the dead there would be no one to complain. That disposes at once of more than £50,000,000 of taxation; and what does the hon. Gentleman imagine he is going to put in the place of it? I desire to call attention to this, because my hon. friend the Member for Haddingtonshire said that we were only at the beginning of the increase of expenditure. I must say that the Government have a proposal before us this session which would indeed diminish taxation as regards the Exchequer, because they are going to throw a great portion of the cost of education on the rates. ["No."] Whether that will give more satisfaction I do not know; at all events, the County Councils are to raise the rates to defray expenses which are now paid by voluntary subscriptions, and to meet expenditure which the voluntary subscriptions are no longer supplying. My hon. friend is quite right in saying that in the present spirit and temper of the public mind it is obvious that we have before us a danger of this reckless expenditure spreading, and that the shadows seem to lengthen as we go. Therefore, bad as we consider this Budget, yon have worse to follow it before you have anything better.

There is one question I should like to ask the Chancellor of the exchequer. It was raised by the hon. Member for King's Lynn. Every one hopes that we are going soon to have peace. We are at the beginning of the financial year, and supposing that we do have peace, what is the Chancellor of the Exchequer going to do with the money he is about to raise by this taxation and by the loan he has borrowed of £32,000,000? I think we ought to have clear information on that point. We shall not be in the position we were in last year, when it was said we had no more than would meet the ordinary expenditure. We should have more; we may have a great deal more, and I think the right hon. Gentleman ought to tell us what under those circumstances he will do with the money. The Chancellor of the Exchequer has only at present made a case for the war expenditure, He speaks of some extra £18,000,000, but for which he has not yet made any proposal. What is to become of the residuary sum when the peace is made? I suppose we should have new Estimates as to what is necessary for the carrying on of the war as long as it is carried on, and for what may be necessary to bring back the troops. The right hon. Gentleman rather indicated that the money was to be expended, or might be expended, on other objects that were not war purposes. My opinion is that that would be entirely an improper proceeding. It would be unconstitutional; it would not be giving that control which Parliament ought to have over money which it raises by loans or by taxation; it would be a general vole of credit which ought not to be given without some explanation of the objects to which it was to be devoted. I would venture to say that in the circumstances the most proper method of dealing with any residuary sum which was not wanted for the immediate purposes of winding up the war would be to devote it to the reduction of the debt you have contracted. You are in the position now—and a very bad financial position it is—of having an enormous unfunded debt. I think it is something like £67,000,000, and the disadvantage of this position is that when the time comes at which you have to pay the debt off you may have a very bad money market and a very unfavourable condition of things to deal with. If we have borrowed more money than we want, for Heaven's sake let us pay it off. If we have raised more taxation than we want, let the people be relieved from the liability to these taxes, but let us come to a clear understanding in this matter, and before these proposals pass into law revise our situation, supposing we shall be happy enough to see the prospect of peace realised within some months. That is a matter upon which I hope we shall have a satisfactory statement from the right hon. Gentleman. I press this because the right hon. Gentleman mentioned the necessity of borrowing a sum of money to meet the deficiency of revenue in the early quarters of the year. He asked for £10,000,000 for that purpose last year; he asked for £10,000,000 as a margin for the war. As is usually the case in war, the margin was swallowed up, but not only was that margin swallowed up, but the £10,000,000 granted to meet the deficiency. I remember asking the right hon. Gentleman about it at the time, and he said— Of course, when we get our revenue that will be used for the purpose of paying off temporary debt. But it was not used for that purpose£6,000,000 of it went to the war, and the £4,000,000 which he is going to take to meet his deficit this year is only the residue of that £10,000,000, which ought to have been repaid as soon as he got his revenue in the first quarter of the year. I hope, therefore, that we shall have some very distinct understanding as to what is to be done with any margin that may arise. If we have peace, I do hope that there will be something, at all events, to go in reduction of this enormous debt which is accumulating.

With regard to the subjects which have come up for discussion tonight, I do not propose to trouble the House at any length. The Resolution before the House is the income tax, and I heartily agree with what the Chancellor of the Exchequer said—namely, that the life preserver of a Chancellor of the Exchequer in a storm is mainly the income tax. It is wonderful what, under all difficulties and in all circumstances, has been the produce of that tax. I do not propose to go into the objections that have been taken to that tax. They have been taken ever since the tax was established some sixty years ago. The question of distinguishing between professional incomes and incomes derived from what are regarded as more permanent investments was dealt with, and, I think, for any one who has studied the principles of finance, finally disposed of by Mr. Gladstone in his Budget speech in 1853. If anybody is disturbed in his mind upon that subject, I would venture to refer him to a study of that masterpiece of finance. There is another subject which commends itself to some people, and that is the graduation of the income tax. It was referred to by my hon. and learned friend the Member for Haddington. The objection to that is not so much in principle—I have never objected to the principle of a graduated income tax—but it really is impossible in the matter of administration. You cannot have a graduated income tax unless you call upon everybody to declare the whole of their income, and that is to most people an extremely disagreeable thing. It would, in my opinion, make the income tax so unpopular that it could not be maintained. One of the great merits of the method of collection now is, that to a great degree, not in all classes, but in a great portion of the income, tax paying people, the collection is automatic; and since it became automatic, and did not depend on the declaration of the individual, it has become very much more productive, for reasons which it is not difficult to discover. It would be, I believe, absolutely impossible to collect the income tax upon the principle of graduation, if you departed from the present automatic collection, by which you get the tax at its source. That is really the practical difficulty which, in my opinion, makes a graduated income tax administratively impossible. We cannot help feeling some satisfaction that in all these considerable demands this great engine of finance has proved so productive, and has demonstrated the enormous wealth and resources of this country. I do not say that there may not be some improvements made There has been a sort of graduation in the abatements made on the income tax. There is the exemption of everybody whose income is under £160, and there are abatements on incomes up to £700 a year. That has been a successful, and I think a just expedient. I would strongly advise the Chancellor of the Exchequer, and anybody who is responsible for the finances of this country, not to disorganise that great engine on which alone you can depend to meet the enormous expenditure for which this country is liable.

As to the tax upon cheques, I cannot myself treat that as a subject of consummate importance. I think it is an unfortunate proposal, and I should strongly recommend the Chancellor of the Exchequer to dispense with it. I remember very well when I consulted Mr. Gladstone upon the subject of stamps. I said— Do not you think we could get something out of stamps? He said— Ah! Stamps are very ticklish things, and we should he very careful how we meddle with them. The habits of the people are so wedded to particular tonus that yon do a great deal more, harm than good, and get a great deal less money, by tampering with them than by leaving them alone. We had some very salutary warnings too, in the match tax and the adhesive stamp of Mr. Goschen, which yielded a very small income and produced great irritation in the City. I confess that I think this is a most injudicious and un-unnecessary interference with the habits of the people; and for my part I should hope the Chancellor of the Exchequer will not endeavour to introduce any modifications into his proposal. I do not think you can put a higher stamp on higher cheques and different stamps on lower cheques. I believe that the sum the Chancellor of the Exchequer will collect by this tax is very problematical, and I should hope he may see his way to dispense with it altogether.

The main feature of this Budget is, of course, the corn tax. I will not go into that tonight, because it is to be fully deflated tomorrow; but I think the Chancellor of the Exchequer must already have begun to be convinced by the views expressed, as freely and strongly on his side of the House as on this, that a more unfortunate proposal in the way of indirect taxation could not possibly be made. It is a proposal, not only bad in itself, but bad in the consequences with which it is fraught, and the suspicions which it naturally arouses and I am am perfectly certain that it is a tax which ought to be resisted, and which will be resisted, with all the power, I will not say of one Party, but really with all the power of conviction of all Parties in the country. The right bon. Gentleman has argued that it does not signify, that it will never affect the price of bread. But that argument of the right bon. Gentleman is not a very consistent one, for be said he wanted to put on a tax which would make all classes in the community contribute towards the war for which they were enthusiastic. But, having said that this was a tax which would enable all classes to contribute, he proceeded to prove that it would not be felt on the price. I will not delay the Committee any longer, because I am quite sure we shall be extremely glad to hear from the Chancellor of the Exchequer, who always deals with the House so frankly, what qualifications he is prepared to make in consequence of what he has learned in this House and out of it since he contributed his Budget

*(11.15.) SIR M. HICKS BEACH

The Resolution before the Committee is the re-imposition of the income tax, with the addition of 1d. in the pound. Before I enter on the various topics that have been raised, I will make a few observations on the criticisms which hon. Members have made on that particular subject. It has been suggested by the hon. Member for Haddington and others that certain changes should be made in the mode of the assessment of the income tax which would be to the public advantage, as making the assessment of the tax fairer and also yielding a larger revenue. Well, I do not know whether there is anything in the position of Chancellor of the Exchequer that makes one somewhat timid in attempting to alter the organisation of the income tax, but I was glad to observe from the remarks of the right hon. Gentleman opposite that I am not the only person in this House who looks with considerable suspicion upon these suggestions for altering the mode of levying the sax. It is all very well to talk about graduating the income tax, but I will venture to say you cannot do it consistently with the system under which the income tax is levied in this country, which is the only system which has ever yet succeeded any where. As long as you have a very large proportion of your income tax levied at the source, long before the income reaches the person to whom it belongs, so long will it be impossible to graduate the income tax; and if you once depart from that admirable system, you will then be driven to an inquisition into the private means of individuals which has made the income tax odious wherever it has been attempted, and, what is more important to the Chancellor of the Exchequer, which has reduced its yield. Therefore I cannot hold out any hope that, as long as I am Chancellor of the Exchequer, an attempt will be made to graduate the income tax.

Then my hon. friend the Member for the Kirkdale Division asks that the tax should be repealed altogether upon in-comes derived from personal exertion—he asks that a lawyer, for example, earning, as I hope many lawyers earn, £20,000 a year, shall pay nothing on that income, while the widow and the orphan drawing an income of £50 a year from the funds should be charged with income tax. Sir, the proposition is intolerable. What I think it was right to do with regard to correcting the incidence of the income tax on precarious incomes was practically done by the Finance Act of 1894; the increased death duties remedied any unfairness that previously existed, and I do not think that in that respect any real improvement could be made in our present system. Of course there are matters of minor importance. The hon. Member opposite, who is interested in coal mines, raised a question of the average number of years on which the income of a coal owner should be calculated. He admitted, and I confess I thought while he was speaking, that the average of five years worked with great profit to coal owners in the year 1900. But, however that may be, these are matters of detail, and it statements on such points as those are placed before me I will examine them and see if any alterations can be made in the present system which would conduce to a fairer yearly assessment of the income tax. But as far as I am acquainted with the matter I think this system of averages has been adopted, not so much with regard to the Exchequer, as with regard to the persons who pay the tax, and I doubt myself if it would be to the advantage of the tax paying public to make any material modification in that matter. However, I am quite ready to examine the question and see if any change can be made. Then I come to the question of the stamp duty on cheques. I am astonished at the importance that is attached to this. I perhaps did not realise it, and I have already undertaken not only to inquire into the matter, but to see what I can do to remedy the objections that have been made to this increased duty. [An HON. MEMBER: Abolish it altogether.] Wait a moment. I understand that the position is this. It is thought that the duty would be unduly heavy on traders and those who use many small cheques in the way of business, if it were so of course it would work in one of two ways. It would either induce them to draw fewer cheques than they have done, which would not be to my advantage, because it would reduce my revenue, or it would be an exceptionally heavy burden upon them as compared with the taxation which they ought to hear. I feel that that is a fair argument, and one which I must endeavour, to meet with regard to the tax. Then there is another matter. It is argued by hankers, and I think reasonably, that it would be quite intolerable as a matter of business to have more than one stamp, so that smaller cheques would have a different stamp from those which were of a higher value. I have to endeavour to meet both those objections to the tax. I have a scheme under my consideration which I hope may do it, but it is not yet in such a perfect shape that I am able to mention it to the Committee, but I think I see my way to maintain the tax and to meet both those objections.

I next come to the corn duty. For the reason which the right hon. Gentleman and other Members of the Committee have already stated, I do not propose to enter upon that subject tonight, but I have heard with astonishment some of the speeches which have been made in this Committee tonight with regard to that tax. I have been accused of reversing the policy of Sir Robert Peel. I am maintaining the policy of Sir Robert Feel. It is all very well for the hon. Member for East Northamptonshire to speak as he did, but Sir Robert Peel deliberately maintained this shilling duty upon corn, and that is all I am proposing to re-enact. I am accused of bringing back protection. The idea of protection with a 3d. duty per cwt. on corn and a 5d. duty per cwt. on flour is absurd. It is all very well to talk about a certain number of cases in which on the announcement of the duty the price of corn or flour may have been raised, and where bakers have taken advantage of the opportunity to do what they evidently contemplated before. I have had the advantage of reading some of the trade journals on the subject of the increase, and I see that the rise in the price of bread in such districts would, by the bakers' own admission, be considerably higher than the increase in the duty would warrant. Hon. Members refer to these things as if they were not temporary effects, and as if they would permanently continue. They will not continue a week or a month longer than there is any real change in the price of corn or flour. Just the same thing was said and just the same thing was done a year ago when I imposed a duty on sugar. Very soon the ordinary conditions of the trade re-asserted themselves, and now we see that the increase in the duty on sugar has not led to an increase of more than half the amount in price. To argue from anything that has happened as if it would result in a permanent increase in the price of corn, flour, or bread, is to my mind an absurdity.

The right hon. Gentleman has characterised this as not a popular Budget. I never expected that it would be. I have not been in the habit lately of producing popular Budgets. I do not think it is my fault. When the expenditure of the country increases owing to a war which the country approves of additional taxation has to be found, and a Budget involving additional taxation is not likely to be a popular Budget. "When people have to pay the bill, the bill is never popular. But I believe the country at large is willing to pay the bill. Whatever may be said—and no doubt something may be said—by those who are interested from one point of view or the other in the particular articles which it is proposed to tax, or the particular tax which it is proposed to levy, I believe the country as a whole will feel that in time of war it is necessary to increase our taxation. That has been a subject of controversy tonight. The hon. Member for the Camlachie Division boldly said that in his opinion there was no necessity for increased taxation this year at all; that we ought to have borrowed anything we wanted. I differ entirely from that proposition. I will never, while I am Chancellor of the Exchequer, refrain in time of war from increasing taxation in order to provide part of the money. Of course the particular circumstances of the moment may be put forward. The hon. Member for King's Lynn has suggested that in the present circumstances we ought to hesitate about increasing taxation. It is all very well to talk in that way. But this I will tell the Committee, that whatever happens, assuming that all these conferences that are now going on in South Africa end in peace—and I will venture to say that nothing can be more premature than the rumours that have appeared in the Press on the subject. There must still be an infinitely larger expenditure in the course of the year before us than will he defrayed by the taxation which I propose, including the increased taxation which I ask the Committee to sanction. Then the right hon. Gentleman the Member for West Monmouthshire asked what will happen if we do not require all that I propose to raise by taxation and by loan for the purposes of the war, or purposes connected with the war. I have already explained that the latter head covers very large expenditure. The purposes of the war include not only the military operations, but all the payments for gratuities, the payments on disembodiment of the troops, for transport and return of the troops, and matters of that sort, which were not included in the original Estimate of the Secretary of State for War, but which will have to be defrayed out of the Vote which he proposed for the purpose of continuing the war. And then I also said there were further expenses connected with compensation to loyalists, compensation for various purposes in South Africa, for re-settlement, relief, for re-stocking and rebuilding farms and matters of that kind, for all of which the money will have to be found, and for which I should hope the money to be found might be lent by us to the Colonies affected.

SIR WILLIAM HAECOURT

There will be Estimates presented, I presume?

* SIR M. HICKS BEACH

Obviously, Sir. The assent of Parliament will be asked in the ordinary way by Estimates, or Bills placed before Parliament for that purpose. Then the right hon. Gentleman went on to say that he hoped that if there was anything left from the loan it would be devoted to playing off debt. Certainly, Sir; that will be my first desire. We have a very considerable sum of unfunded debt—thirteen millions of Treasury Bills, and I think twenty-four millions of Exchequer Bonds, all of which could be paid off without the least practical difficulty to the extent of any surplus that might be derived from the loan which the House sanctioned the other day. Therefore, I hope I have shown to the Committee that in no case will the taxation we are now asking the Committee to vote be not required for the services of the year, nor can the loan be expended in any way that is not approved. I now turn to the suggestion made in the course of the debate with regard to the general circumstances of the Budget. I have been accused of not raising enough by taxation for the service of the year and raising too much by loan. As a matter of fact, I have proposed to raise by taxation a very large sum for the service of the war beyond the necessary services of the ordinary Estimates. The right hon. Gentleman said we were throwing four-fifths of the cost of the war on posterity.

SIR WILLIAM HARCOURT

Three-fourths.

* SIR M. HICKS BEACH

There is a difference between four fifths and three-fourths.

SIR WILLIAM HARCOURT

The right hon. Gentleman promised the figures, but we have not yet had them.

* SIR M. HICKS BEACH

I can tell the right hon. Gentleman that, according to our Estimates, I anticipate that no less than £28,416,000 will be devoted from the revenue to the purposes of the war, including, of course, the sum saved by the suspension of the Sinking Fund The right hon. Gentleman and I differ upon that latter point. The Sinking Fund is raised by revenue, and is devoted by law to the purpose of paying off the ordinary debt of the country; yet when Parliament sanctions the suspension of that process, and allows it to be devoted to the purpose of the expenditure of the year, the sum so devoted is none the less derived from the taxation of the country.

SIR WILLIAM HARCOURT

It is incresing the debt by robbing it of what should be paid to it.

* SIR M. HICKS BEACH

No, Sir, it is not increasing the debt. It is delaying paying off the debt, and that is a very different matter, as I think the right hon. Gentleman will find if he consults his bankers upon the subject. The hon. and learned Member for Haddington made an interesting speech, in which he admitted that there must be an increase in the expenditure of the country, and said he did not approve of increasing indirect taxation. He suggested certain alterations in the income tax, to which I have already alluded, and in which I am afraid I disagree with him. But he dwelt much on the increase of the wealth of the country and its capacity to bear taxation. The hon. and learned Gentleman is perfectly right; there has been great increase in the wealth of the country; but he forgot in his argument that that increase in the wealth of the country has been by no means confined to those persons only who pay income tax. That is really the crux of the situation. The hon. Gentleman the Member for King's Lynn suggested that the limit of income tax should be lowered from £160 to £100, or something of that kind. That has been often suggested; and what is the obstacle in the way? The obstacle is this—that when you reduce the income tax point, so to speak, you also largely increase the difficulty and expense of collection; and the cheapest way to collect taxation from the classes below the present income tax level is, in my belief, by indirect taxation. Therefore I am absolutely convinced of this—that, in order to provide for the increased expenditure which the hon. and learned Gentleman contemplates in the future, it is absolutely necessary to increase indirect taxation. That is the origin of the proposals I made last year, and of the proposals I have made in the present Budget.

I am not going to enter into the merits of the corn duty tonight, but what are the only practical alternatives which have been suggested? It is said, put fourpence or sixpence on the income tax, and you will not want any additional indirect taxation at all. I venture to say, and I think the right hon. Gentleman will agree with me, that if you were to proceed on that basis with increasing expenditure, you would absolutely ruin the finances of the country; you would permanently maintain the income tax at such a point that it would be absolutely incapable of increase in time of war. What should we, then, do in a time of emergency? Assuming that you are to have increased expenditure, you must have increased indirect taxation. What is the only alternative? An increase in the sugar duties? Will hon. Gentlemen just think for a moment what that means? My hon. friend the Member for Selkirkshire, to whose speech, though he was opposed to myself, I listened with appreciation in the earlier part of the evening, suggested that the sugar duty ought to be increased instead of a corn duty being imposed. But the sugar duty is already 20 per cent. ad valorem on the price of sugar. The hon. Gentleman said sugar was a comfort, not a necessity of life. That was not the argument that I heard from the Leader of the Opposition last year. I really think myself that, looking to the universal use of sugar, you can hardly call it anything else but a necessity. Double that tax—40 per cent. on the price of sugar! Is that better than a tax of 3 per cent. on the price of corn? To my mind, one would be infinitely more severe on the poorer classes of the population than the other. That is all I have to say tonight on the relative merits of taxation of corn and sugar. The point from which I beg he Committee to consider the question is this. Our expenditure is increasing, and must increase; and it is absolutely impossible, I venture to say, for this country to meet that increased expenditure in accordance with any reasonable financial system unless you also increase indirect taxation. Choose, by all means,

for your increase of indirect taxation, that which will press least heavily on the people, that which will be most diffusible and be least injurious to any body or class; but increase indirect taxation you must, and that is why I have made this proposal in the Budget of this year.

(11.43.) Question put.

The Committee divided:—Ayes, 290 Noes, 61. (Division List No. 124.)

AYES.
Acland-Hood, Capt. Sir Alex. F.	Cawley, Frederick	Edwards, Frank
Agg-Gardner, James Tynte	Cecil, Ford Hugh (Greenwich)	Egerton, Hon. A. de Tatton
Agnew, Sir Andrew Noel	Chamberlain, Rt. Hon. J. (Birm.	Elibank, Master of
Allan, William (Gateshead)	Chamberlain, J. Austen (Worc'r	Evans, Samuel T. (Glamorgan)
Allhusen, Augustus Hnry Eden	Channing, Francis Allston
Anson, Sir William Reynell	Chaplin, Rt. Hon. Henry
Archdale, Edward Mervyn	Chapman, Edward	Faber, Edmund B. (Hants, W.
Arnold-Forster, Hugh O.	Charrington, Spencer	Fellowe, Hon. Ailwyn Edward
Asher, Alexander	Churchill, Winston Spencer	Fenwick, Charles
Asliton, Thomas Gair	Clive, Captain Percy A.	Fergnsson, Rt. Hn. Sir J. (Manc'r
Asuith, Rt. Hn. Herbert Henry	Cochrane, Hon. Thos. H. A. E.	Fielden, Edward Brocklehnrst
Atkinson, Rt. Hon. John	Coghill, Douglas Harry	Finch, George H.
	Collings, Rt. Hon. Jesse	Finlay, Sir Rotiert Bannatyne
	Colomb, Sir John Charles Ready	Firbank, Joseph Thomas
Bagot, Capt. Josceline Fitzroy	Compton, Lord Alwyne	Fisher, William Haves
Bailey, James (Walworth)	Corbett, A. Cameron (Glasgow)	Fison, Frederick William
Balcarres, Lord	Corbett, T. L. (Down, North)	Fitz Gerald, Sir Robert Penrose-
Balfour, Rt. Hon. A. J. (Manch'r	Cox, Irwin Edwin Bainbridge	Fitzroy, Hon. Edward Algernon
Balfour, Capt. C. B. (Hornsey)	Cranborne, Viscount	Flower, Ernest
Balfour, Rt Hn Gerald W. (Leeds	Cross, Alexander (Glasgow)	Forster, Henry William
Balfour, Kenneth R. (Christen.	Crossley, Sir Savile	Foster, Philip S.(Warwick, S. W
Banbury, Frederick George		Fuller, J. M. F.
Bartley, George C. T.
Beach, Rt Hn. Sir Michael Hicks	Dalkeith, Earl of
Bell, Richard	Dalrymple, Sir Charles	Galloway, William Johnson
Bhownaggree, Sir M. M.	Dalzicl, James Henry	Gladstone, Rt Hn. Herbert John
Bignold, Arthur	Davenport, William Bromley-	Goddard, Daniel Ford.
Blundell, Colonel Henry	Davies, Alfred (Carmarthen)	Godson, Sir Augustus Frederick
Bond, Edward	Dewar, T. R. (T'rH'mlets, S. Geo.	Gordon, Hn. J. E. (Elgin&Nairn
Brodrick, Rt. Hon. St. John	Dickinson, Robert Edmond	Gore, Hn G. R. C. Ormsby-(Salop
Brookfield, Colonel Montagu	Dickson, Challes Scott	Gore, Hon. S. F. Ormsby-(Line.
Brunner, Sir John Tomlinson	Dickson-Poynder, Sir John P.	Gorst, Rt. Hon. Sir John Eldon
Bull, William James	Digby, John K. D. Wingfield-	Goulding, Edward Alfred
Bullard, Sir Harry	Dixon-Hartland, Sir F'rd Dixon	Grant, Corrie
Butcher, John George	Dorington, Sir John Edward	Gray, Ernest (West Ham)
	Douglas, Rt. Hon. A. Akers-	Gretton, John
	Douglas, Charles M. (Lanark)	Grey, Sir Edward (Berwick)
Caine, William Sproston	Doxford, Sir William Theodore	Guest, Hon. Ivor Churchill
Caldwell, James	Duke, Henry Edward	Gurdon, Sir W. Brampton
Garble, William Walter	Dunn, Sir William
Carson, Rt. Hon. Sir Edw. H.	Dyke, Rt. Hn. Sir William Hart
Cautley, Henry Strother		Hain, Edward
Cavendish, V. C. W. (D'rbyshire		Haldane, Richard Burdon
Hall, Edward Marshall	Majendie, James A. H.	Round, James
Halsey, Rt. Hon. Thomas F.	Malcolm, Ian	Royds, Clement Molyneux
Hambro, Charles Eric	Manners, Lord Cecil	Russell, T. W.
Hamilton, Rt Hn Lord G (Midd'x	Martin, Richard Biddulph
Hamilton, Marq. O (Lond'nderry	Maxwell, W. J. H. (Dumfriessh.)
Hanbury, Rt. Hon. Robert Wm.	Meysey-Thompson. Sir H. M.
Harcourt, Rt. Hon. Sir William	Molesworth, Sir Lewis	Sackville, Col. S. G. Stopford-
Hardy, Laurence (Kent, Aslif' rd	Montagu, G. (Huntingdon)	Sehwann, Charles E.
Hare, Thomas Leigh	Montagu, Hon. J. Scott (Hants.)	Seely, Charles Hilton (Lincoln)
Harmsworth, R. Leicester	Moon, Edward Robert Pacy	Shaw-Stewart, M. H. (Renfrew)
Harris, Frederick Leverton	More, Robt. Jasper (Shropshire)	Sinclair, Louis (Romford)
Haslam, Sir Alfred S.	Morgan, David J. (Walth' mst' W	Skewes-Cox, Thomas
Hay, Hon. Claude George	Morrell, George Herbert	Smith, HC (N'rtlnnb. Tyneside
Hayne, Rt. Hon. Charles Seale-	Morrison, James Archibald	Stanley, Hn. Arthur (Ormskirk
Hayter, Rt. Hon. Sir Arthur D.	Morton, Arthur H. A. (Deptford	Stanley, Edward Jas. (Somerset
Heath, Arthur Howard (Hanley	Mount, William Arthur	Stanley, Lord (Lanes.)
Heath, James (Stalionis., N. W.	Mowbray, Sir Robert Gray C.	Stewart, Sir Mark J. M Taggart
Helder, Augustus	Muntz, Philip A.	Stroyan, John
Helme, Norval Watson	Murray, Rt. Hn. A. Gr'h'm (Bute	Sturt, Hon. Humphry Napier
Henderson, Alexander	Murray, Charles J. (Coventry)
Hermon-Hodge, Robert Trotter	Murray, Col. Wyndham (Bath)
Higginbottom, S. W.
Hobhouse, Henry (Somerset, E.		Talbot, Lord E. (Chichester)
Holland, William Henry		Talbot, Rt Hn. J. G (Oxf'd Univ.
Hope, J. F. (Sheffield, Brightside	Nicholson, William Graham	Thomas, F. Freeman-(Hastings
Houldsworth, Sir Wm. Henry	Nicol, Donald Ninian	Thomas, J A (Gl'morgan, Gower
Howard, Jno. (Kent, Faversh' m		Thornton, Percy M.
Hozier, Hon. James Henry Cecil		Tomkinson, James
Hudson, George. Bickersteth		Tomlinson, Wm. Edw. Murray
Hutton, John (Yorks. N. R.)	O'Neill, Hon. Robert Torrens	Trevelyan, Charles Philips
	Orr-Ewing, Charles Lindsay	Tufnell, Lieut.-Col. Edward
		Tuke, Sir John Batty
Jebb, Sir Richard Claverhouse
Jessel, Captain Herbert Merton	Parker, Gilbert
Johnston, William (Belfast)	Parkes, Ebenezer	Valentia, Viscount
Jones, Willim (C'rnarvonshire	Pease, Herbt. Pike (Darlington)	Walker, Col. William Hall
	Pease, J. A. (Saffron Walden)	Walton, Joseph (Barnsley)
	Penn, John	Warde, Colonel C. E.
	Percy, Earl	Warr, Augustus Fiederiek
Kennaway, Rt. Hn. Sir John H.	Pilkington, Lieut.-Col. Richard	Wason, John Cathcart (Orkney
Kenyon-Slaney, Col. W. (Salop.	Pirie, Duncan V.	Welby, Lt-Col. A. C. E (Taunton
	Platt-Higgins, Frederick	Welby, Sir Charles G. E. (Notts.)
	Plummer, Walter R.	White, George (Norfolk)
Lambton, Hon. Frederick Wm.	Powell, Sir Francis Sharp	Whitmore, Charles Algernon
Langley, Batty	Pretyman, Ernest George	Whittaker, Thomas Palmer
Lawrence, Wm. F. (Liverpool)	Priestley, Arthur
Lawson, John Grant	Pryce-Jones, Lt.-Col. Edward	Williams, Colonel R. (Dorset)
Lees, Sir Elliott (Birkenhead)	Purvis, Robert	Williams, Rt Hn J. Powell-(Birm
Legge, Col. Hon. Heneage		Willoughby de Eresby, Lord
Leng, Sir John		Wilson, A. Stanley (York E. R.
Leveson-Gower, Frederick N. S.		Wilson, Fred. W. (Norfolk, Mid.
Levy, Maurice	Quilter, Sir Cuthbert
Llewellyn, Evan Henry		Wilson, John (Falkirk)
Lockwood, Lt.-Col. A. R.		Wilson, John (Glasgow)
Loder, Gerald Walter Erskine	Randles, John S.	Wilson, J. W. (Worcestersh. N.)
Long, Col. Charles W.(Evesham	Rankin, Sir James	Wolff, Gustav Wilhelm
Long, Rt. Hn. Walter (Bristol, S	Rasch, Major Frederic Came	Woodhouse, Sir J. T. (Huddersf d
Lonsdale, john Brownlee	Ratcliff, R. F.	Wortley, Rt. Hon. C. B. Stuart
Lowe, Francis William	Rattigan, Sir William Henry	Wylie, Alexander
Lowther, C. (Cumb., Eskdale)	Rea, Russell	Wyndham, Rt. Hon. George
Loyd, Archie Kirkman	Reid, James (Greenock)	Wyndham-Quin, Major W. H.
Lucas, Col. Francis (Lowstoft)	Renwick, George
	Rickett, J. Compton
	Ridley, Hn. M. W. (Stalybridge)
Macartney, Rt Hn W. G. Ellison	Rigg, Richard	Yerburgh, Robert Armstrong
Macdona, John Cumming	Ritchie, Rt. Hn. Chas. Thomson
Maconochie, A. W.	Roberts, John H. (Denbighs.)
M'Arthur, Charles (Liverpool)	Roberts, Samuel (Sheffield)
M'Calmont, Col. H. L. B (Cambs.	Robertson, Herbert (Hackney)
M'Calmont, Col. J. (Antrim, E.)		TELLERS FOR THE AYES—
M'Crae, George	Robson, William Snowdon
M'Iver, Sir Lewis (Ediriburgh W	Ropner, Colonel Robert	Sir William Walrond and
M'Laren, Charles Benjamin	Rothschild, Hon. Lionel Walter	Mr. Anstruther.

NOES.
Abraham, William (Cork, N. E.)	Jordan, Jeremiah	O'Malley, William
Atherley-Jones. L.	Joyce, Michael	O'Shaughnessy, P. J.
Blake, Edward	Kennedy, Patrick James	Power, Patrick Joseph
Boland, John
Brigg, John
	Lundon, W.	Reddy, M.
		Redmond, John E. (Waterford)
Campbell, John (Armagh, S.)		Roche, John
Carvill, Patrick Geo. Hamilton	MacDonnell, Dr. Mark A.
Condon, Thomas Joseph	Macneill, John Gordon Swift
Crean, Eugene	MacVeagh, Jeremiah	Sheehan, Daniel Daniel
Cremer, William Randal	M'Cann, James	Soares, Ernest J.
	M'Govern, T.	Sullivan, Donal
	M'Hugh, Patrick A.
Delany, William	M'Kean, John
Dillon, John	M'Killop, W. (Sligo, North)
Doogan, P. C.	Markham, Arthur Basil	Thompson, Dr E C (Monagh'n, N
	Mooney, John J.	Thomson, F. W. (York, W. R.)
	Murphy, John
Farrell, James Patrick		White, Luke (York, E. R.)
Ffreneh, Peter		Wilson, John (Durham, Mid.)
Field, William	Nannetti, Joseph P.
Flynn, James Christopher	Nolan, Col. Johnp. (Galway, N.
	Nolan, Joseph (Louth, South
		Young, Samuel
Gilhooly, James		Yoxall, James Henry
	O'Brien, James F. X. (Cork)
	O'Brien, Kend' I (Tipperary Mid
Hammond, John	O'Brien, P. J. (Tipperary, N.)	TELLERS FOR THE NOES—
Hayden, John Patrick	O'Connor, James (Wicklow, W
	O'Connor, T. P. (Liverpool)	Captain Donelan and Mr.
	O'Donnell, T. (Kerry, W.)	Patrick O'Brien.
Jameson, Major J. Eustace	O'Dowd, John

Resolution to be reported tomorrow; Committee to sit again tomorrow.