LOAN BILL.

HC Deb 04 June 1902 vol 108 cc1457-99

[THIRD READING.]

Order for Third Reading read.

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

At the date of the introduction of the Budget all the elements in the political situation seemed to justify a considerable addition to the Estimates for the possible continuation of the war. The conferences that have been going on for several weeks between the Boer representatives and Lord Milner and Lord Kitchener had just commenced; but on the very day before the introduction of the Budget, as hon. Members will see from the Papers circulated, a telegram was received from South Africa that the Boor representatives had made proposals based on the recognition of the independence of the Transvaal and Orange Free State, and, judging from the tenacity they had shown on a former occasion, and the numerous occasions on which our hopes of the early termination of the war had been disappointed, it was impossible for us, or our representatives in South Africa, to take a hopeful view of any satisfactory issue to the conferences that had begun. I, therefore, deemed it necessary to ask Parliament at that time to provide for an addition of nearly £17,000,000 to the expenditure on the war; and I also stated that, assuming that the war continued, I should have to come to Parliament for further borrowing powers for £12,000,000, in order to finance the Exchequer for the first nine months of the year, in addition to the £32,000,000 included in this Bill. Besides this, having in mind the condition of the money market at the time, and knowing that any hitch, and much more any rupture in the negotiations, would involve a considerable fall in the price of Consols, I felt it right, in the exercise of my judgment, at once to issue the loan authorised by the Resolution of the House, the amount of that loan being, as I may remind the House, fixed at a point which, if the war continued, would provide for our permanent borrowing to the end of the year, and if it terminated, would provide for our temporary needs also for the first nine months of the year. But happily the situation is now changed. I find myself able at once to dismiss from consideration £16,750,000 which I had included in the Budget Estimate, and also any idea of asking Parliament for any further borrowing powers.

Now I will state what appears to me, as far as I can judge, the estimated expenditure of the year before us. The House will remember that in introducing the Budget I put that expenditure at £174,609,000. I need not dwell on any other items of this total except the £40,000,000 taken for the war, because all the other items remain exactly the same as they were at that time. With regard to the £40,000,000 taken for the war, I would remind the House that it provided for the maintenance of a full field force in South Africa for a period of eight months, but it did not provide for terminal charges and the maintenance of garrisons beyond that time. Now the war has lasted for two out of these eight months, but the expenditure upon the war during that time has been somewhat larger than the average of the estimate because larger reinforcements have been sent out to South Africa, both from home and from the Colonies, than were contemplated at the time the estimate was made. Therefore, we have to consider, so to speak, the saving out of the £40,000,000 by the termination of the war—I take the expenditure at £5,000,000 a month—with about £2,000,000 more on the whole time; say £28,000,000 may be considered as, so to speak, saved. But I must remind the House that it is impossible at once to commence saving in this matter; time must elapse, and it will be some weeks before anything can really be done to lessen expenditure incurred. Therefore allowance must be made for that, though, of course, as soon as we received the news on Saturday-night last, orders were sent to stop all expenditure for war purposes that could possibly be stopped. But there will still be very considerable sums to be devoted to military purposes connected with the termination of the war. Among these will be a considerable sum for the gradual demobilisation of the very large force in South Africa, and that involves gratuities, furlough pay, and other charges, and, of course, a large sum for the transport of troops home or to the Colonies, or India or wherever they may have to go. Besides this, large provision has to be made for horses and supplies taken by the military authorities in South Africa, payment for which was deferred to the close of the war; reservists' clothing has to be entirely replaced, and payment has to be made for stores, liability for which has been incurred nearly to the full amount included in the Estimates. Another important item besides which falls on the Army Votes, though it is not a military charge, is the maintenance of a considerable population in the concentration camps. Of course, everybody will be agreed that as soon as possible the people in these camps should be returned to their homes, but then we must remember that it is now winter in South Africa, and that in many cases homes will have to be provided afresh. The House will see that considerable sums will have to be included in addition to the Estimates, which only provided up to September next for the maintenance of the Boer population now in these camps. Finally, of course, provision will have to be made for whatever garrisons it may be considered necessary to leave in South Africa for the remainder of the year. My right hon. friend the Secretary for War will as soon as possible place a detailed statement on all these matters before the House, showing how the expenditure as allocated in the Estimates already before the House will be devoted to the several objects I have alluded to and other objects of a similar nature. It is only necessary for me on this occasion to say that all of this expenditure, with the exception of that upon the concentration camps, will be purely military; all of it will be expenditure necessitated by the war. Now we have examined this matter carefully, and I am satisfied that, in the circumstances to which I have alluded, and taking into consideration all these matters, no less a sum than the £40,000,000 provided in the original Estimate will be required for these purposes in the course of the present financial year.

SIR WILLIAM HARCOUBT

Can the right hon. Gentleman say what will be the extent of the garrisons left in South Africa?

* SIR M. HICKS BEACH

No, Sir; it would be entirely premature to make any statement on the subject. Of course both military and civil authorities on the spot will have to be consulted, and I cannot at all say what garrisons may be necessary; but, having regard to the friendly feeling that appears to exist among the people, as we learn, towards Lord Kitchener and those who lately met as enemies in the field, I hope that a few months hence it will not be found necessary to have very large garrisons.

MR. LOUGH (Islington, W.)

Does the £40,000,000 include the two months already gone?

* SIR M. HICKS BEACH

Of course the two months are included. Therefore I adhere to the figures of the Estimates already placed on the Table, making £174,609,000, and to this amount I have to add three items stated to the House in my Budget speech—£750,000 for the maintenance of a portion of the South African Constabulary; £750,000, roughly speaking, for the interest on the new debt; and £250,000 for the proposed grant to the West Indies—a total of £1,750,000; in all, £176,359,000 as the estimated expenditure for the year that is before us.

SIR WILLIAM HARCOUBT

Including the £17,000,000 for contingencies?

* SIR M. HICKS BEACH

The £17,000,000 was never included in the £174,609,000.

SIR WILLIAM HARCOURT

It is in the £162,000,000.

* SIR M. HICKS BEACH

I can assure the right hon. Gentleman it was not in the £174,609,000. I am not dealing with the loan at all.

SIR WILLIAM HARCOURT

I am very anxious to have this made clear. In the copy of the right hon. Gentleman's speech with which he has been good enough to supply us, he will find in Appendix 3 that the figure £162,901,000 includes£17,750,000 for "Supplementary provision to meet contingencies."

* SIR M. HICKS BEACH

The right hon. Gentleman is quite mistaken. If he will look at page 10 of the speech which he holds in his hands, under the heading "Estimated Expenditure," he will see that I estimated the expenditure of the year, before I touched on that £17,000^*000, as £174,609,000. That is what I am alluding to.

Well, Sir, we have to deal with an estimated expenditure for the year of £176,359,000. Now, I have seen suggestions, and one has been made to me today, that we should not proceed with the proposals for new taxation. Very well. Let me take for a moment the estimated yield to the revenue of the taxes on the old basis as it existed last year. That would be £147,785,000. If you deduct £147,785,000 from the expenditure of £176,359,000, you will find a deficit for the year of £28,574,000, or if the Sinking Fund is suspended in round numbers £24,000,000. If the right hon. and hon. Gentlemen will put the loan out of their minds for a moment and suppose that any Chancellor of the Exchequer had come down to this House and pro posed a Budget for the year showing a deficit of £24,000,000, and had not proposed to increase taxation at all. but had proposed to borrow the whole of that sum, I wonder what would have been said? Why. Sir, if there has been one critic who has been unsparing in his condemnation of me because I have not, as he called it, squared account, because I had borrowed for the war a larger proportion of the expenditure than he thought I ought to have borrowed, and had levied from taxation less than he thought I ought to have levied, it has been the hon. Member for East Edinburgh.

* MR. McCRAE (Edinburgh, E.)

Hear, hear!

* SIR M. HICKS BEACH

I am glad the hon. Member cheers that. And yet the hon. Member suggested to me today that in such circumstances as I have stated I should give up the new taxes. No, Sir, he did not suggest that I should give them all up; he suggested only that I should give up that part of them to which he particularly objects. Will hon. Members do me the justice in this matter to eliminate from their minds for a moment the merits or demerits of my proposals for new taxation? Will they just consider—quite apart from the merits of these new taxes, which we shall discuss, of course, on the Finance Bill—whether the Chancellor of the Exchequer would be justified, in a Budget for a deficit of £24,000,000, in not proposing to increase taxation? I will venture to say that, if the hon. Member or any of my critics on that side of the House who have been in favour of increasing the income tax for this war deficit would consider the matter from the point of view of the income tax alone, they would tell me that I should be right in increasing the income tax. I will venture, on the other hand, to say that these hon. Members, mainly, I suppose, on this side of the House, who are in favour of the corn duty, would with equal unanimity say that I should be absolutely bound to raise the corn duty. And, therefore, if you look on this matter in the abstract, apart from the merits of the particular taxes, I am sure that any one who considers the rights and wrongs of sound finance will say that for me to set the example—an example, I believe, hitherto unprecedented in the financial history of this country—of a Budget for a deficit of £24,000,000 and not to increase taxation would be a thing that I never ought to have done. Sir, I will never take such a course. Of course it may be said, and it has been said, that the circumstances are changed, because under the loan which is now before the House I have borrowed more than the deficit of the year. I deny that the circumstances are changed. If the House agrees to continue to impose, as I hope it will, this additional penny on the income tax and the corn duty the deficit will still be £19,500,000. That £19,500,000 will be paid out of the loan that I have borrowed this year under this Bill, leaving a balance of some £10,500,000 surplus of the loan. Is that a necessary surplus or not? It is an absolutely necessary surplus to have borrowed for the first nine months of the year.

Let hon. Members recollect—I have endeavoured more than once to impress it on the House—that under our system of taxation, raising as we do so large a proportion of our revenue by the income tax, which is not payable till January, the first three quarters of the year are necessarily lean quarters for the revenue; and in a year such as this, when the great bulk of the war charges must necessarily be paid in the first nine months of the year, the first nine months of the year will be extremely large in expenditure as compared with the last quarter of the year. I have calculated, and I believe it to be a fair calculation, that, putting the loan aside, the revenue receipts during the first nine months of the coming year will be less by £45,000,000 than the Exchequer expenditure during those nine months. Perhaps the House will ask how are those £45,000,000 to be provided. I hey will be provided, in the first place, by the proceeds of the loan—in round numbers £30,000,000; secondly, by a heavy draft, probably £7,000,000, on our balances; and, thirdly, by the exercise of those borrowing powers on Ways and Means with which every Chancellor of the Exchequer is invested, but which cannot be exercised beyond the suggested amount of £8,000,000—making up £45,000,000—without serious disarrangement of the money market at the time. And, therefore. Sir, for temporary purposes the borrowing of this £30,000,000 was absolutely required. Now come to the last quarter, when the bulk of the revenue falls in. What will happen then? Under the estimates of expenditure and revenue which I have placed before the House, there should be some £10,500,000 surplus from the loan. Now that ought to be devoted to the payment of Debt. If, in anticipation of a larger war expenditure than it has been necessary for us actually to incur, we have borrowed 10,500,000, or whatever the sum may be, more than we actually require, we are bound to reduce the Debt by devoting the surplus of that loan to that purpose. How is the Debt to be reduced? In the first place, I shall ask the House again to start the Sinking Fund. We have had to suspend for war purposes during the last few years the Sinking Fund of £4,640,000 a year, and by the simple process of omitting a clause from the Finance Bill now before the House that Sinking Fund will recommence. And, I will venture to say, in no possible way could we do more to establish the credit of the country in the present and in the future than by taking the first possible moment to reestablish the Sinking Fund at the close of the war. If that should be assented to, there will still be a margin of £6,000,000. Now, we have a very considerable floating Debt—larger than is wholesome for this country in time of peace. We have £21,000,000 of Treasury Bills. We have also a large sum of Exchequer Bonds—I think £10,000,000 are falling due in 1903. That £6,000,000, as far as it goes, should be devoted to redeeming some of that floating debt. But I would ask the House to leave me liberty in this matter, and I will tell them why. I am not talking of ordinary Supplementary Estimates, but there may be an addition to the expenditure which I have already placed before the House which I cannot foretell at present, or at any rate cannot foretell with any precise certainty of what may be required. I referred in the Budget speech to the possibility of advances being made by us to the Transvaal and the Orange River Colony for the relief and resettlement of the population, for the rebuilding and restocking of farms, and for other purposes. We may very possibly have to make temporary advances of that kind, but as soon as the civil administration is established in the colonies and the necessary arrangements can be made, we shall ask Parliament to and in this matter, not by direct advances, but by guaranteeing a loan to be raised by the colonies for the purposes I have named, and for such other objects as the conversion of their debts, or the acquisition of their railways—which seems to us to be by far the best form of assistance we can give them. I would therefore ask the House to leave my hands free in that matter, with the distinct understanding that, if it is possible, all this £6,000,000 shall be devoted to the reduction of our present debt.

I have endeavoured, as briefly as I could, to put the facts of the case before the House, and I hope I have established three things. In the first place, I hope I have established the fact that we have not borrowed more than we require for the services of the year. No doubt we have borrowed the whole of this £32,000,000 by way of permanent loan, and it is true that part of it, say £20,000,000, might have been borrowed as a permanent loan, and part of it, £10,000,000, as a temporary loan, by way of Treasury Bills, but if I had done that I should have added very largely to the floating Debt in the shape of Treasury Bills, and so raised the interest on those Bills. So that the money would have been obtained at greater cost to the country than that at which it has been obtained by the course I have taken. In the second place, I think I have shown that the surplus of the loan, which may not be required in the last quarter of the year, will lie devoted to purposes of which this House will approve; and, in the third place, I hope I have given some reason for holding that we have no light in dealing with a deficit of £24,000,000 incurred for purposes in connection with the war, to throw the whole burden of that on posterity, who will have burdens of their own to bear, and to shrink from throwing a reasonable part of it on the taxpayers of the present day.

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

(9.33.) SIR WILLIAM HARCOURT

The matter for discussion tonight is one of the deepest interest to this House and the country. The question is : How much cheaper is peace going to be than war? I am sorry to say that, at all events so far as concerns the present year, peace is going to be no cheaper than war. I am afraid that is the lesson we may have to learn from the serious consequences of the war in respect to the country with which we have to deal. We have to learn how much dearer it is to repair a dilapidated State than it is to destroy it. That is the enormous task we have before us whether or not the estimate the right hon. Gentleman has formed of the expenses which lie before him in South Africa are more adequate than those he formed at the beginning of the war I cannot say, but I suspect that in this respect the Government are as sanguine as they were three years ago, before they embarked the country in a war which has cost £228,000,000. I know there are members of His Majesty's Government—there is one very eminent Member, the Colonial Secretary, who thinks that is a trifle; but I have never taken that view of laying a burden of £228,000,000 on ourselves or on posterity. The Chancellor of the Exchequer has stated, in the language he has always held, that we ought to pay some regard to the generations that are to follow us, seeing that they will have burdens of their own to bear. It is certain that generations to come will have their own burdens, and those burdens will not be small. I think what we are going to cast upon them is £150,000,000 or more of Debt, and the contribution this year to that Debt is £32,000,000. What we accept for ourselves this year in additional taxation is £5,000,000.

* SIR M. HTCKS BEACH

Four and a half millions.

SIR WILLIAM HARCOURT

Yes, I know that as it stands now the loan we have raised is £32,000,000. That is for posterity. For ourselves, according to the Estimates before us, the charge is £5,000,000. That is the proportion. Six times as much is placed on those who come after us as upon ourselves. It is all very well to talk about the respect we have been showing for posterity, but in former days the burden cast on posterity was rather less than that we put on ourselves. However, I will not insist on that, because I think the language the right hon. Gentleman has held is sound language, and according to what was within his reach and the possibilities of the case he has done what he can to defend his principles. It is difficult in a statement of this kind to follow the exact figures of the surplus the right hon. Gentleman has to deal with. All I know is that when he was dealing with the £40,000,000 he contemplated for the cost of the war, he added £17,000,000 if the war was to be continued to the end of the year; and the figures given in his final statement are £188,000,000, which include £17,750,000 for "Supplementary provision to meet contingencies." That was the final estimate which the right hon. Gentleman laid before the House : his final table of the Budget. The right hon. Gentleman took £40,000,000 for eight months, but he said very justly at the time— I will take things at their worst. I will assume that the war will last not only eight months but twelve months, and if so I must add between £16,000,000 and £17,000,000 to my estimate. He said— I must remind the Committee that in the Army Estimates of this year there was included a sum of £40,000,000 for war expenditure. My right hon. friend the Secretary of State for War stated that that sum would permit of the maintenance of our forces in South Africa at their present strength for a period of between eight and nine months; but that included no provision for gratuities at the end of the war, for transport, or for any of those charges of great magnitude which had to be included in the similar estimate for last year, the total of which, I think, was £08,000,000, subsequently increased by a supplementary estimate of £5,000,000 to £63,000,000. Then he goes on to say that he thinks it right to contemplate the worst, and to include in his estimate a sum which would carry him through the whole of the year that is before us. That might necessitate a very large addition to the estimate of £40,000,000, an addition calculated at something between £16,000,000 and £17,000,000. Thus in the right hon. Gentleman's final statement, the estimate was not £40,000,000, but £57,500,000.

* SIR M. HICKS BEACH

I think the right hon. Gentleman is under a misapprehension as to that last table. If he will look at the statement, he will see that the total Consolidated Fund services were estimated at £25,560,000, and the total Supply Services at £145,159,000. The right hon. Gentleman has eliminated the cost of the South African Constabulary, and the grant to the West Indies. The expenditure of the present year, under present circumstances, was estimated at £176,359,000.

SIR WILLIAM HARCOURT

I am taking the light hon. Gentleman's statement of the final balance-sheet as estimated for 1902–3 and I find there that the total estimate of expenditure is £188,469,000, the total estimated revenue £152,935,000, and the estimated deficit £35,534,000. That is the final estimate he laid before the House. That being so, the estimated deficit was met principally from the loan, and what the right hon. Gentleman derived from the balances which remained from last year. I am not going to enter into any controversy with the Chancellor of the Exchequer as to his accuracy. I acknowledge that he has better means of knowing than I can possibly have. But I must say I find some difficulty in reconciling the calculations as to the surplus which he made to-night with his circular. That is one of the difficulties in which we are placed. We have not had the time to examine this statement. I assume, as I am bound to assume, that the Chancellor of the Exchequer is right in the figures he has laid before us. But I maintain still, subject to explanation, that the estimated charges for the war, if it had lasted the whole year, were £58,000,000. If you have only spent on the ordinary war charges £12,000,000, you must have £28,000,000 left to account for. In my view of this balance-sheet, you ought to add to that £18,000,000 more. Then the right hon. Gentleman tells us that there will be a very large expenditure for demobilisation and for the garrison that is to be left in South Africa. I assume that we shall have particulars of that, and that Votes will be taken in this House for that which has not yet been authorised by Parliament. I should also like to mention the cost of bringing the prisoners of war back to South Africa, because when peace is restored those prisoners are entitled to return to their own country. That is a charge that must be provided for as well as the cost of bringing our own troops home. As to the garrison to be left in South Africa, of course we shall have an account of that. It will be a most material element in the cost, not only of this year, but of the years that are to come. The right hon. Gentleman also referred to the concentration camps, and to the unfortunate position of the people in them, in terms which we were glad to hear. He said the object ought to be to restore those people to their homes, but I am afraid homes must be made for them first in order that they may be restored to them. The right hon. Gentleman said in his Budget speech— Means will have to be provided for the relief and the resettlement of the two colonies; which have been devasated by the war. Means will have to be provided for the rebuilding and the restocking of farms—farms, I should rather hope, not only of those who have been our friends in the war and who have fought on our side, but, I hope, also the farms of those who boldly and honestly have been our enemies in the war, and whom we hope to make our friends in the future. Sir, I think the House of Commons, if peace is made on terms which, in our belief, will be satisfactory, enduring, and safe, will be generous in these matters. yet do not believe that this need involve any great charge upon the taxpayers of this country. This charge for repairing those homes and restoring the prisoners of war to their homes, I understand the right hon. Gentleman to say, is not to be a charge upon this country. He has alluded to one of the contingencies that may happen to the £10,000,000 of which he has spoken—namely, that it may be used to make temporary advances to the colonies to enable them to meet, charges for this purpose, He said in his Budget speech— Of this I am convinced—and anyone may see for himself, looking at the remarkable progress which has been made already, made even during the prosecution of the war, in the restoration of industrial prosperity in the gold fields and in more important centres of the Transvaal—I am convinced that it will be perfectly possible, with regard to the Transvaal and the Orange River Colony, if we were to advance to them loans for the purposes I have described and for other similar purposes—for railway extension, for enabling them to obtain, on fair terms, control over their own railways and matters of that kind—to repay such advances, both capital and interest, on terms which would be eminently satisfactory to the taxpayers of this country. That is a very sound principle. As I understand, the process of restoration is to be met by a charge upon the resources of the colonies themselves, and especially on the goldfield; and, that being so, the policy of temporary advances to the colonies to meet the cost of that process is one that no one can properly object to.

Now, Sir, according to the figures of the right hon. Gentleman, he will have in hand £10,000,000 more than he wants—though I should have thought the amount would be higher—in consequence of the raising of this loan under conditions of which I do not complain. The right hon. Gentleman says he has got £10,000,000 at his disposal. Certainly he will not find anyone who would advocate that all the charges for the war should be laid on loan. I have always maintained that we have laid too little on ourselves and too much on posterity. However, I will not insist upon that now. As to the disposal of that £10,000,000, there was one part of the right hon. Gentleman's speech which I heard with the greatest satisfaction. That was that he was taking the earliest opportunity of restoring the Sinking Fund. I think that in the course of the long and, on the whole, the prosperous financial administration of the right hon. Gentleman there is no circumstance which I have found myself compelled more strongly to condemn than the suspension of a portion of the Sinking Fund in a period of prosperity. But when we have accumulated a Debt of £150,000,000 in less than three years, the least we can do when peace is restored is to make some effort to reduce that Debt. Those who have gone before us, and we in our time, have done much to diminish the Debt we inherited; and, if we were to make the same efforts which have been made in former times, it would take half a century before posterity was relieved of the Debt that we have accumulated in the last three years. Therefore, when I heard the Chancellor of the Exchequer make that declaration, I thought it was a declaration worthy of an English finance Minister. The old Sinking Fund of Mr. Pitt was founded on mistaken principles, but at least the financial morality of it cannot be doubted. Mr. Pitt thought that when we accumulated a great Debt we ought to make provision for its liquidation. The Sinking Fund has been placed in later times on a sounder basis; and I am bound to say that in the last generation we have made worthy efforts to reduce the debt which we inherited. Therefore I do congratulate the right hon. Gentleman upon his financial courage in coming forward in the first stage of peace to say-that the first duty of the House of Commons is to make provision to relieve posterity in a certain degree of some of the burden we have cast upon it, and to show them an example which I hope they will follow—and that is, that they should not entirely relieve themselves of the responsibility of the burden for a policy which they think is the right policy. Therefore for that proposition of the right hon. Gentleman with regard to a portion of the £10,000,000 which he finds himself at liberty to dispose of, I have nothing but words of the strongest congratulation and approbation. I hope that that is a policy which none of his successors will ever depart from, and that they will maintain the credit of the country. I believe that England, whatever other nations may say, still maintains her great and deserved reputation of having the soundest and best regulated finances of any country in the world. That being so, I hope we shall never depart from those sound principles of commerce and finance which have enabled us, with apparently little strain, to bear the great burden of this war. The restoration of the Sinking Fund disposes of £5,000,000 of the money the right hon. Gentleman has at his disposal.

Now, Sir, I hope the right hon. Gentleman will not think me weak-kneed upon this subject if I say that we ought now to consider what we shall do with reference to the happy condition of things attending the restoration of peace in South Africa. May I remind him that now that peace is restored the country will be hoping to learn what is the blessed difference between peace and war, and that they also shall have some share in the relief which is to follow the cessation of hostilities? It is a curious circumstance that the figure which the right hon. Gentleman has stated he has at his disposal is a figure which would allow him to say to the country, "We have restored the Sinking Fund, which will be a provision for the present and for the future by the reduction of the debt, and, therefore, we have laid the foundation, which does not mean only £5,000,000 to-day, but in the future, as in the past, will mean £5,000,000, £6,000,000, or even £7,000,000 a year to the Sinking Fund." But then there remains another £5,000,000 to be dealt with. While you are taking £5,000,000 for the Sinking Fund I think you might also relieve the country of the £5,000,000 additional taxation which you are placing upon it. That would really dispose of the right hon. Gentleman's surplus of £10,000,000, and it seems to me that it could not be called an unfair partition of the money at his disposal. That is a matter we shall have to deal with, of course, when the Finance Bill comes on. I uphold the principle that there ought always to be a considerable sum raised by taxation when you are increasing debt, but you ought never to rely upon that alone. I am quite prepared to take the Sinking Fund as a great and valuable contribution to the liquidation of the debt you have created, and there are taxes which, in my opinion, being of a highly objectionable character, ought not to be called for, if you find yourself in a position such as that of which the right hon. Gentleman has spoken, of having at his disposal a surplus.

MR. BARTLEY

Is that not the surplus on borrowing?

SIR WILLIAM HARCOURT

Yes. But you have borrowed too much and now you have to give it away. I am very glad to hear this from so ardent an advocate for increased taxation as the hon. Member, and I regret that we did not have his assistance at an earlier stage. I should prefer other taxes than those to which we have a great objection, and if the right hon. Gentleman will propose other taxes I think he will find that I shall be very glad to support him. That being so we cannot discuss now the question of what is to be done with the taxes, but I cannot help thinking that, considering that we started with a Budget which assumed that there would be twelve months of war and that there have only been two months of war out of that period, there will be considerable disappointment when it is found that the amount of relief given is of the limited character stated by the right hon. Gentleman. I do not wish, of course, to bind myself, much less other people, to the view I have suggested, but I think there might fairly be some consideration of that subject, and that we ought not to be told, when we come to deal with the question of taxation, that we must impose the taxes proposed by the Chancellor of the Exchequer in his Budget. There is some difference, apparently, in His Majesty's Government as to the character of these taxes, because one of them was rather indicated by the right hon. Gentleman as a permanent tax of a peace character, while a different view of it was presented two or throe days afterwards by the Colonial Secretary, who said that it was a war tax. I never like to refer to the right hon. Gentleman's speeches without having his ipsissima verba, for fear that I should be said to be inaccurate, and I will quote from the report of his remarks.

* SIR M. HICKS BEACH

May I say that I was rather challenged at Question time by an hon. Member behind the right hon. Gentleman on this very subject, and I refrained from touching upon it in my speech just now because I understood that it would be more in order on the discussion of the Finance Bill?

* MR. SPEAKER

I think the right hon. Gentleman the Member for West Monmouth is going somewhat beyond the scope of the Loan Bill.

SIR WILLIAM HARCOURT

I must reserve that, then, for the Finance Bill, but this tax was stated in a specific manner by the Colonial Secretary to be a war tax. I do not feel that I am able at the present moment to enter into any further criticism of the statement of the right hon. Gentleman. It is something to know that out of this expenditure of £188,459,000, as it is finally stated by the right hon. Gentleman, there is some hope at the conclusion of peace, after two months of war during the current year, there is a possibility of there being a disposable surplus of £10,000,000. I do not know that we can go farther with that matter tonight. We cannot repeal the loan, because the money has been borrowed already. It is a sort of Rhadamanthine process : you borrow the money in the market, and then afterwards you come to the House of Commons for authorisation to borrow. The only thing that we can deal with is the manner in which the loan is disposed of; and certainly, as far as the right hon. Gentleman has disposed of it, by reviving again, and I hope setting on foot for ever, the principle of the Sinking Fund, I have nothing to say, except to congratulate him upon the soundness of his financial principles and upon his courage in carrying them into effect.

*(10.10.) MR. COHEN (Islington, E.)

If there is one thing which is more satisfactory than another in the speech of the right hon. Gentleman the Member for West Monmouthshire, it is the manner in which he has welcomed the restoration of the Sinking Fund. When the right hon. Gentleman was Chancellor of the Exchequer, and even since that time, he was most constant in his advocacy for the maintenance of the Sinking Fund; and I shared with the right hon. Gentleman his regret when the Chancellor of the Exchequer, not at a period of financial difficulty not long ago, suspended the I Sinking Fund. But surely the House has not forgotten that it is not much more than two months ago since the Member for West Monmouthshire said in this House that he feared that there was no hon. Member of the House who would live to see the restoration of the Sinking Fund in this country. Perhaps the right hon. Gentleman will remember that I had the temerity to differ from him in that forecast; and I know that the right hon. Gentleman is never so happy as when he is indulging in pessimistic fore casts, so that it is quite natural that in one of these forecasts he is pleased rather than displeased to find his prognostications falsified. Speaking with some financial experience, I wish to congratulate the Chancellor of the Exchequer very cordially upon the restoration of the Sinking Fund, and I am pleased at this, not exactly because I regard it financially as the most economical arrangement, but because it is quite certain that the application of the surplus to the sinking fund will relieve the country, although it would economically have been better for the Exchequer if the whole of the funds available had been applied to the extinction of terminable Debt. I feel quite sure that the bare announcement of the restoration of the Sinking Fund, which is automatic, and which we hope will be inflexible in its permanent application, will do much, I will not say to restore, for that has never been in doubt, but to elevate the financial credit of this country. But, while I would give a preferential place to the application of this money to the Sinking Fund, because it is automatic and cannot be suspended without the consent of Parliament, I do hope—and in this I differ from the right hon. Gentleman opposite—that any surplus funds in the hands of the Chancellor of the Exchequer will be applied as far as possible to the redemption of the large floating Debt of which both my right hon. friend the Chancellor of the Exchequer and the right hon. Gentleman opposite have always deprecated the accumulation in times of peace. We have been obliged, and properly obliged, to augment the floating Debt of this country to a level which has never before been reached, and certainly the destination of any surplus funds in the hand of the Chancellor of the Exchequer ought to be to redeem the existing contracts of the State by paying off the Treasury bonds and Bills, of which a largo amount will fall due year after year. The right hon. Gentleman opposite has complained that we have cast too large a proportion of our burdens upon posterity.

SIR WILLIAM HARCOURT

In the present year.

* MR. COHEN

I think the right hon. Gentleman could scarcely have pondered over what he said. When we raise a loan of this kind you can scarcely expect to pay off annually one-sixth of the capital. A country ought to raise taxation, so that its income will be brought up to the level of its normal expenditure, and if you redeem your capital charge in the case of an expenditure like this, in the course of ten or fifteen years, then I think you have done all that you can hope to do, and more than you can really expect. I gather from the speech of the Chancellor of the Exchequer that, in his opinion, it is probable that the charge for this loan would not be cast upon this country, and I hope that will be the case. If it is possible, I think we ought to cast those charges on the colonies which are now part of His Majesty's dominions, and I think that those very profitable mining industries in South Africa ought to bear a fair proportion of those charges, on account of their increased solidity of tenure and probable increased prosperity. With this exception I have nothing but congratulations to offer to my right hon. friend upon his statement, and I wish in conclusion to join with my right hon. friend the Member for West Monmouthshire in congratulating the Chancellor of the Exchequer upon having, at the earliest possible moment, announced his intention of restoring the Sinking Fund.

(10.20.) MR. BLACK (Banffshire)

I beg to move the Motion of which I have given notice, that the order for the Third Beading be discharged, and the Bill recommitted to a Committee of the Whole House. I cannot join in the congratulations offered by the right hon. Gentleman the Member for West Monmouthshire to the Chancellor of the Exchequer. It has been the just reproach of this Government that they have invariably prepared for peace, when they ought to have prepared for war, and now the converse proposition has turned out to be equally true, for now they have prepared and estimated for war when they ought to-have prepared and estimated for peace. In the very midst of these peace negotiations, which have terminated so happily, we find the Chancellor of the Exchequer going into the market, and borrowing this huge sum of £32,000,000, and borrowing it at a very disadvantageous figure, as compared with the figure at which Consols now stand. And for what purpose? To a very large extent in order that he may buy back again those very Consols at an increased price later in the year. For these reasons I cannot join in the hearty congratulations indulged in by my right hon. friend the Member for West Monmouthshire. It is a matter of congratulation that the Sinking Fund is to be restored, but it is very much the reverse that we should be called upon to borrow in order that we may repay what we borrow at a higher price. I beg to call attention to the fact that we are still without information with regard to the disposal of a very large amount of this loan. The appetite of the Chancellor of the Exchequer seems to grow on what it feeds upon. When he introduced his Budget he set aside £17,000,000 with regard to which he said he could not give any particulars. He said that he could not say what he was going to do with it, and now he comes to the House and says there is £28,000,000 which he cannot tell us what he is going to do with.

* SIR M. HICKS BEACH

No, no.

MR. BLACK

The right hon. Gentleman said there were certain things he had to look after, but he did not say in what way he was going to spend this money. He said that it would probably be spent in re-establishing government in South Africa. I support my Motion partly upon the ground that the House may have time to consider the statement which has been promised by the Secretary of State for War as to how this £28,000,000 is to be applied. In the course of the speech made by the Chancellor of the Exchequer he said nothing whatever about a very important matter which I know many hon. Members in this House consider to be very largely connected with this question. I refer to the recovery from the Transvaal itself of part of the cost of this war and more particularly from the gold mines. Not one word has been said as to how these millions are to be applied. Nothing has been said to us about an asset which formerly loomed largely : I refer to the recovery from the Transvaal, from the gold fields, of part of the cost of the war. This is a striking contrast to the declarations of the Chancellor of the Exchequer in introducing the Budget. We have heard nothing about that in the statement to-night, but it is a point which will be highly relevant to a discussion in Committee of this Bill. It follows as a matter of course that the whole of the sum borrowed will not be placed upon the gold mine, and therefore we have to consider the question of the proportion which will have to be divided between taxation and borrowing. Even if £100,000,000 were to be placed upon the gold mines, we should still have to bear a large proportion of the borrowings and we should not be casting too much upon posterity, because by the continuation of the Sinking Fund we should clear it off in about ten or twelve years. But what do we find the Chancellor of the Exchequer doing here? He does not say a single word as to what he intends to do in this respect.

I am not one of those who take a very exaggerated view as to what can be got out of the gold mines, bearing in mind what vast cost of the administration of the Transvaal is going to be. That is the judgment of Europe as well as the judgment of those sitting in this House. We know that Consols have dropped since the beginning of the war in the same proportion as our indebtedness has increased, and this notwithstanding the restoration of peace. Therefore, in the eyes of Europe we have lost a great amount of national credit through this war. If we had had some a set in consequence of this war the country would not have had suffered in this way, and Consols would not have fallen, but the judgment of the world is that the money spent upon this war has been thrown away. I take it that the estimate of Sir David Barbour upon this question is not very far out. He says that the ordinary civil expenditure after the war will be £2,500,000; the South African police will cost about £2,500,000, and our military occupation of South Africa will absorb at least £3,000,000, making a total of £8,000,000 which will either have to be met by the Transvaal or placed upon this country. Let us take it that the interest upon the Sinking Fund will be about £4,500,000, making a total of £12,500,000, against which I suppose the Chancellor of the Exchequer or the Colonial Secretary when they conic to deal with the matter will place the estimated revenue of the new Colonies at about £6,500,000. This will leave a deficit of £0,000,000. It may be asked what does it matter whether the deficit is met by way of interest on loans or by way of expenditure upon administration. I venture to submit to the House that it matters a, great deal, because if we impose a loan upon the Transvaal, and that becomes a fixed charge, then the deficit, whatever it is, comes to be a matter of policy and will not be paid by the owners of the gold-fields. I venture to suggest that this is a very relevant consideration at the present moment. If this large charge is not to be put upon the goldfields, then it comes to be a question whether the right hon. Gentleman is not throwing an undue burden upon posterity The justification for throwing a large burden upon posterity is three-fold. In the first place it must be shown that we have obtained an asset for our expenditure, and this we have already shown to be unfounded.

In the second place, it must be established that this expenditure has been incurred in lean years, and that this country may expect fat years in the future, in order to recoup itself for this expenditure. We all know that this war expenditure has been incurred in the fattest years we have ever had, or are likely to have for many years to come. Nevertheless the Chancellor of the Exchequer ignores these considerations, and raises this huge sum by loan, thus placing upon our children a burden which in a large measure ought to be borne by ourselves. In the third place the only justification of throwing this large burden upon posterity, would be that at the time the expenditure was incurred we were in great national peril. When one remembers that the capital value of this country's assets have increased threefold, and the earnings have increased in still larger proportions, there is no excuse for placing so large a burden on posterity and impairing the credit of the future, especially as we are fast reaching a point when we shall not be able to boast of a surplus population. The birth rate is continually decreasing, while the death rate is increasing, and at the close of another thirty or forty years we shall probably find that the population has ceased to grow, and if the population becomes stationary then we must look forward to rocks ahead, and this must be a strong determining factor in the financial policy of this country as well as in Is Imperial policy. 'Then again, posterity will have its own problems to deal with. The right hon. Gentleman the Member for West Monmouthshire has pointed out these difficulties, and if we are hampered by these huge loans on the one hand, and a disaffected population and huge expenses for administration in South Africa on the other hand, the strain upon this country will be very great.

Amendment proposed— To leave out all the words after the word 'be' in order to add the word 'recommitted.' "—(Mr. Black.)

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

(10.35.) MR. DILLON

I rise for the purpose of seconding this Amendment. I listened with some surprise and disappointment to the speech of the Chancellor of the Exchequer because after all the promises he has made to the House he has given us tonight no particulars whatever as to the sum which is to be recouped to this country from the new Colonies as their part of the expenses of the war. I have always held the view that this country had no right to obtain any repayment from any of the new Colonies towards the cost of the war. What I complain of is not that the Chancellor of the Exchequer has not stated that we are to have £20,000,000, £30,000,000 or £40,000,000 promised from those Colonies but that he has not told the House exactly how we stand in this matter. If he would frankly say that the Government really had abandoned the idea of recovering from the Colonies any portion of the £200,000,000 spent upon the war I would heartily support the Chancellor of the Exchequer in that decision. There is an article in the terms of peace which adds a fresh interest to this question and it is one, in my opinion, which deserves the most hearty approbation. I refer to the eighth article, in which it is agreed that no special tax will be imposed on landed property in the Transvaal or the Orange River Colony for the expenses of the war. I think that is a very proper agreement. I think it would be monstrous, alter having deprived these people of their liberty, to impose a tax upon them to pay for the war. In view of this provision in the articles of peace, I think the Chancellor of the Exchequer ought to have given us some explanation of the bearing of this article upon the promises of the Government with regard to the levying of a portion of the cost of the war upon those Colonies, and as to the bearing of this article upon the question of taxing the mines. With regard to the question of taxing the mines, I have only got a word or two to say. It appears to me that hon. Gentlemen opposite are labouring under a delusion upon this question of taxing the mines. They appear to be under the impression that taxing the mines is the same thing as taxing the mine owners or the great millonaires connected with the mines. I do not believe that is so, because you will never be able to tax the millionaires of South Africa by placing a tax upon mines. The only way to get at the millionaire is that which was known in the days of King John, when the rich men's teeth were drawn until they disgorged a quantity of their wealth. I do not believe it would be possible to carry out taxation on these lines. Civilisation has advanced since those days, and, even if you succeed in taxing the mines of the Transvaal, I do not believe you will succeed in reaching the pockets of the millionaire mine-owners; they are far too slippery for anything of the kind. They will get warning of your proceedings in time, and, by a series of Stock Exchange operations, completely defeat your intentions. On every occasion, during the last two and a half years on which the Chancellor of the Exchequer has spoken, we have been led to believe that the moment peace was proclaimed, this matter would be grappled with in a serious spirit. Now, for the first time, the Chancellor of the Exchequer had made a statement on the financial side of the war, without saying a single word as to the recoupment of the expenditure on the war by the new Colonies. Let me say a word as to the disposal of the sum to be raised under this Bill. The right hon. Gentleman has told us that, although peace is proclaimed, he is not able to reduce the War Estimate for the year, because of the expenses contingent upon, and necessitated by, the conclusion of the war. I rejoice that that is so. Every humane man must rejoice that some of those expenses are for objects which the Government has seen its way to take up. Rut what a commentary it is on the way this war has been carried on Three millions are to be spent in undoing the ravages of the war, and providing homes for those now in concentration camps. That is £3,000,000 lost to the taxpayers of this country for re-building farmhouses which were wantonly and uselessly destroyed—["No, no."]—yes, wantonly and uselessly destroyed, in violation of the recognised usages of war.

* MR. SPEAKER

Order! The mode and conduct of the war is not the question before the House.

MR. DILLON

Am I not entitled to consider the causes which have led to the expenditure?

* MR. SPEAKER

That might involve the whole question of the origin of the war. The expenditure has been incurred, and the question is with reference to arranging for the money to be raised to meet that expenditure.

MR. DILLON

Pardon me, the expenditure has not been incurred.

* MR. SPEAKER

The expenditure has been incurred in the sense that there is an undertaking in the terms of peace which involves the expenditure.

MR. DILLON

However, I shall have another opportunity of raising that question. I desire to congratulate the Government on their Resolution to make this free grant of £3,000,000 for the purpose of rebuilding farms; and furthermore I desire to congratulate the Chancellor of the Exchequer for what he said about his intention to see that those who are in the concentration camps are taken care of, and that whatever money was necessary would be used to take care of them until they are returned to their homes. With regard to the disposition of the loan he had only this to say. The statement which had just been made by the Chancellor of the Exchequer fully justified the action of himself and others in the resistance they gave to the original proposal of taking so large a margin as that which was named. Of course, the chances of war were more uncertain than the chances of peace, but the system of producing large surpluses for the purpose of financing the Exchequer appeared to him to result in the greater part of them. I must say that I am extremely sceptical as to the fate of the £6,500,000, and if we are to judge by what happened last year I think it is exceedingly likely—and I ask hon. Members to remember this—that when we come to the end of the year a considerable proportion, if not all, of that sum will have been taken up by Supplementary Estimates.

*(10.48.) SIR M. HICKS BEACH

I wish to appeal to the House not to pursue the debate on this Amendment, but to allow the question to be decided, and then, if necessary, take the discussion on the Motion for the Third Reading of the Bill. The mover and seconder of the Amendment have neither of them given the smallest reason why the Bill should be re-committed. The hon. Member who proposed the Amendment simply said that he desired to see the statement of the Secretary for War as to the new mode of disposing of the money estimated for war purposes, while he wanted to know something more of the intentions of the Government in imposing any part of the cost of the war on the Transvaal. Neither of these proposals can be dealt with in Committee on the Bill. The hon. Member for East Mayo, who seconded the Amendment, does not want to impose anything on the Transvaal. All he desires is that the wealthy mineowners of the Transvaal should be dealt with in a fashion which I suppose the House may be allowed to anticipate would be one of the financial methods of the Home Rule Parliament.

MR. DILLON

The right hon. Gentle man will pardon me. What I said was that I did not believe he could tax the millionaire mineowner without resorting to the methods of King John, and that as civilisation had progressed that was impossible.

* SIR M. HICKS BEACH

I am sure that if the hon. Gentleman had the taxing of the mineowners he would bear in mind the methods of King John, provided the mineowners were sufficiently young to have teeth of their own to be extracted. But I could assure the House that, so far from withdrawing anything I have said with regard to obtaining some of the cost of the war from the wealth of the Transvaal, the Government entertain that view as strongly as ever, and one of the first matters for consideration will be how definitely to carry out the suggestion, which I have made twice already in the House in the course of the present session, as to the manner in which certain of the resources of the Transvaal—those derived from its mineral wealth—should be allocated or devoted to the purposes of the Sinking Fund.

SIR WILLIAM HARCOURT

I can quite understand that the Amendment of my hon. friend behind me might have been necessary and convenient, with reference to the reduction of the debt in Committee, but after the statement made by the Chancellor of the Exchequer I do not think we should have any hope of obtaining more by way of reduction of the debt than he has proposed. Therefore, I think the course suggested by the Chancellor of the Exchequer is convenient and reasonable, and that we should not proceed with this particular Amendment. Under these circumstances I would suggest to my hon. friend that he should not proceed with the Amendment.

MR. JOHN WILSON (Falkirk Burghs)

I should like, before the Amendment is withdrawn, to ask for an explicit assurance from the Chancellor of the Exchequer as to when he will lay his proposals for the taxation of the Transvaal before the House.

* MR. SPEAKER

Order, order! That is not relevant to the matter.

MR. BLACK

asked leave to withdraw' the Amendment.

Amendment, by leave, withdrawn.

Main Question again proposed.

(10.55.) MR. BARTLEY

I am extremely glad that the Government have not yielded to the pressure to withdraw either of the taxes. The right hon. Gentleman the Member for West Monmouth began his speech by condeming the Government very strongly for proposing to pay so small a proportion of the war expenditure out of taxation, and so large a proportion out of borrowed money. I have always held that, if there has been a mistake, we have not raised a sufficient part of the current expenditure for the war from current taxation, but it is rather strange for the right hon. Gentleman the Member for West Monmouth, after he has held forth so strongly on this subject, that he should propose that the Government should take off a tax which he does not like. It shows that the right hon. Gentleman, although he is a strong financier in many ways, has the same weakness as other people when he is particularly interested in a special tax. I think we are paying now too small a proportion of the cost of the war out of current taxation, and I strongly object to any relaxation of taxes at the present moment. I am extremely glad that the Chancellor of the Exchequer proposes to recommence at once the Sinking Fund. One of the best means of economy is the payment of debt. The continual growth of expenditure has been great, and, unless we concurrently with that reduce the enormous burden of debt, I am afraid that in twenty or thirty years the financial position of the country will not be so strong as it is at present, and I say, therefore, that by the resuscitation of the Sinking Fund, we shall be doing a great deal to strengthen our financial position. The Chancellor of the Exchequer, in his last two Budgets, has widened the basis of taxation, and I think we must look upon loans as a temporary measure. As far as possible, the cost of each year should be paid, and more than paid, out of current taxation, and a considerable sum should be paid in liquidation of debt in order to maintain the financial stability of the country.

*(10.58.) MR. McCRAE

I would humbly beg to congratulate the Chancellor of the Exchequer on two things—first of all on the advent of peace, because I am sure that on no one has the burden of the war rested more heavily than on the right hon. Gentleman, and I only wish that I could cherish the hope that the period of large expenditure, extravagant expenditure, for military purposes would cease with the termination of the war. I would also congratulate the right hon. Gentleman on the statement he has made tonight. He has to a great extent, although not wholly, disarmed criticism by the position he has taken up this evening. With the principles he has enunciated I am sure that everyone who has given the slightest consideration to finance must heartily agree. But I think he is in a much better position financially than he has given the House reason to believe. My right hon. friend below me is quite accurate in saying that he has a much larger surplus at his disposal than he has stated this evening. I think there is no question that the right hon. Gentleman Budgeted to provide for an expenditure of £188,000,000, including the £17,500,000 which he excluded from the purview of his statement tonight. That is most important in considering whether we are right in sanctioning this loan of £32,000,000. I think the right hon. Gentleman has met us very fairly but we are also entitled to ask what he is going to do with that money. I had given notice of my intention of moving an Amendment to the Loans Bill in Committee, if re-committed, to the effect that at least £10,000,000 of the £32,000,000 should be devoted to the redemption of temporary borrowing. The light hon. Gentleman has anticipated me in that, and there he has taken up a sound financial position. If the right hon. Gentleman has a large surplus at his disposal—and I think I shall be able to show that he has a large surplus—I still think that, having regard to the circumstances before us, he might have seen his way to remit the corn tax. That is outside our consideration tonight, but I would like the Chancellor of the Exchequer to consider that, when the Army Estimates were submitted, we provided for an expenditure in round figures of £40,000,000. He estimated for supplementary war expenditure £17,000,000. He had in all an estimate of £57,000,000, excluding the civil expenditure in South Africa and the interest on the new debt. Now, if we take the original figure in the Army Estimate of £40,000,000, which was to provide for the war expenditure for eight or nine months, that is the old figure of £1,250,000 per week, or £5,000,000 per month. We have already spent, according to the Chancellor of the Exchequer, £12,000,000 on the war during the first two months, and therefore he has a balance of £23,000,000 of the original £40,000,000. If to that is added the £17,000,000 in the Supplementary Estimate the right hon. Gentleman has a total surplus of £45,000,000. I think there can be no doubt about that. I will take it another way and I will exclude the £17,000,000 for the moment. On the original Budget statement the deficit was £26,824,000, and to that there have to be added the Constabulary grant and the West Indies grant, making altogether £28,574,000. To meet that deficit the right hon. Gentleman has the proceeds of the loan of, in round figures, £30,000,000, and he has in addition a sum which he has not mentioned tonight, namely, £4,000,000, the balance of the £19,000,000 margin from last year, which he has at present in Exchequer balances, which was money borrowed for the war, and which he has not taken into account in his statement this evening.

* SIR M. HICKS BEACH

I think the hon. Member will recollect that in stating how I would provide for the financial needs of the first nine months of the year I said that I should have to draw from the balances.

* MR. McCRAE

I rather gathered that the right hon. Gentleman said that was a temporary purpose for financing the Treasury. I think I am perfectly entitled to take it into account in the debit and credit for the war expenditure.

* SIR M. HICKS BEACH

assented.

* MR. McCRAE

In addition to the two sums there is the additional taxation amounting to £5,100,000.

* SIR M. HICKS BEACH

Four millions and a half.

* MR. McCRAE

Well, that is the reduced amount. Taking it at£4,600,000, that gives a total of £38,500,000, which, set against the deficit of £28,500,000 before mentioned, shows a balance of £10,000,000 after providing for the restoration of the Sinking Fund. I think the right hon. Gentleman must admit that we have reason to be somewhat critical as to the purposes to which the loan is to be applied. I am rather of opinion that the charges to be incurred for the maintenance of the army of occupation, now that peace has been established, are really revenue charges. I admit that charges for the war may have been incurred in excess of the Treasury disbursement. Other items arc—the terminal charges, transport of troops home, and gratuities to the troops; the right hon. Gentleman previously estimated these charges at £10,528,000.

* SIR M. HICKS BEACH

There are more troops now.

* MR. McCRAE

Taking that as a basis, the excess cannot be very large. Then there is the £3,000,000 under the agreement. Taking all these matters into consideration, I maintain that he ought to have, and I think he will find that he has, a balance of £45,000,000 to meet all those different charges. I congratulate the right hon. Gentleman on his pledge, because I take it as a pledge that any balance available from this loan will be devoted to the reduction of our temporary borrowings. There is no doubt that those borrowings are far too large. In considering the real burden of the war taxation, we must exclude the realised I surplus and the sinking fund suspension for two years—£18,500,000—which would leave additional taxation for war purposes at £55,000,000. That is only about a fourth of the total war expenditure, and is a very much smaller proportion than this country met out of taxation for the Crimean War. The result is that the National Debt, if we take into consideration this £32,000,000 under the Loan Bill, will amount to £800,000,000. The Chancellor of the Exchequer has been wilfully obtuse in this matter. In considering the effect of the Sinking Fund on the National Debt, we are entitled to consider what the National Debt would be if we had had no war. It would be in this position. It would be minus the £155,000,000 which has been borrowed; it would also be minus the £18,500,000 the amount of the realised surpluses and the Sinking Fund, and, therefore, the National Debt would be £173,500,000 less than it is at present. That is entirely attributable to the war in South Africa. I should like to ask the right hon. Gentleman one question with regard to the amount borrowed for the war. We have incurred liabilities to the extent of £159,000,000. The cash proceeds of these liabilities only amounted to £152,400,000 leaving a difference of £6,500,000. I should like to ask the Chancellor of the Exchequer whether that difference has been charged to war expenditure, as it undoubtedly ought to have been, because it was a charge incurred entirely on account of the war, or whether it has been met out of borrowings or out of revenue. I' think the House would be interested to know how that liability is to be met, because when we come to repay our borrowings we will require £6,500,000 more than we have received. There is only one further point which I would like to put before the House, and it is an argument in favour of the course proposed by the right hon. Gentleman that we should resume the Sinking Fund contribution, which I am sure every hon. Member on this side of the House, and many hon. Members opposite, will admit to be sound finance. I only hope that when the war expenditure is finished, the amount of the Sinking Fund will be increased. But we ought also to take into consideration that the local indebtedness of this country is very great. Its estimated amount as at the end of this financial year will be £367,000,000, and that, with the. National Debt, shows an indebtedness of £1,107,000,000, which ought to make the House exceedingly careful in adding to the liabilities of the nation. I hope the right hon. Gentleman will take an early opportunity of stating whether, having regard to the fact that he has obtained £32,000,000 by loan, and also has a balance of £4,000,000 from the borrowings of last year, he can see his way to remit the proposed duty on corn. I congratulate the right hon. Gentleman on his statement, and I am sure the House is gratified that he has taken up a position which is so financially sound.

(11.20.) MR. SWIFT MACNEILL (Donegal, S.)

I hope the Chancellor of the Exchequer will allow me to offer him my humble congratulations on his admirable statement and on the absolutely sound financial position he has taken up. I myself have some slight difficulty in intervening in this matter. I have rarely spoken on financial questions, because on financial questions I feel, perhaps, more than on any other question the utter hopelessness of the position of the Irish Members in this House. If all the Irish Members were to advocate a tax, our united voices would count for nothing. On the Loan Bill, however, I wish to say a few words as to the enormous increase in the permanent debt of the country. I object to that not only on the financial grounds, which had been abundantly stated, but also on historical grounds. We, in Ireland, have to pay our share of the interest of that debt, and I cannot forget that when we had our own Parliament, Irish statesmen magnificently kept down the National Debt, and it amounted to only £21,000,000 when it was consolidated with National Debt of England, which amounted to £446,000,000. I have a great regard for the Chancellor of the Exchequer both as a financier and as a very splendid specimen of an English gentleman, and I congratulate him on his excellent finance. When I heard the congratulations of right hon. Gentlemen on the wonderful way the war has been financed, I thought to myself what a wonderful people you English people are. You are admirable in the art of forgetting un" pleasant things; but you are living, not in a fool's, but in a Parliamentary paradise. The Chancellor of the Exchequer admitted that £150,000,000 had been added to the debt by the war; still you are getting out of it very well. Let us contrast the statement tonight with the statement made by the right hon. Gentleman on the 19th of October, 1899, when I laughed in a disorderly way. The right hon. Gentleman then said— I should hope that no member of the Committee would suggest that the war expenditure should be provided for by a permanent addition to the debt of the country; no such permanent addition could be justiliable except, of course, in the case of a war with a first-class power. That was the time when the war was to be over at an expenditure of £10,000,000 and when the Government were telegraphing to the Colonies that they did not want mounted men. If you wage war in the highest interest of patriotism, why not pay for it? You are taxing yourselves only to the extent of Is. out of every 5s. expended, and you are leaving the rest to posterity. Your policy is, Let us eat, drink, and be merry, for tomorrow we die. I have never met a man labouring under such adversity and bearing it with such philosophic calm as the right hon. Gentleman. Let me, by way of variation, say something thoroughly jingoistic. Formerly, England was the wealthiest of nations, but now, as far as I can understand, a large amount of these war loans his been taken up, not by English financiers, but by German, French, and Italian financiers-England is not now a lender, but a borrower. I have a historic regard for England and a great personal affection for many Englishmen, and I hope England will not have to go hand-in-hand with the Ottoman Turk in her borrowings, and that English and Turkish bonds will not be analagous. I would not allow anyone to impute to the Chancellor of the Exchequer anything in the way of what might be called sharp practice, but my opinion is that this war was not waged for the English people, but in the interests of a small group of cosmopolitan financiers. If I am wrong, why not grab the mines to pay for the war? The Transvaal mines are of enormous wealth, and why should they not be charged for the war? The reason is plain and obvious. The mine owners are to be let off, but the working classes will have to pay. As my hon. friend has pointed out, you have received about £6,000,000 lesson loans than you will have to repay, because the loans were negotiated under extremely unfavourable circumstances. There is an amount of luxury in England today which has no parallel in the history of the world, except in the Roman Empire on the eve of its fall; and yet you are saddling 77 per cent. of the cost of the war on posterity. Two years ago the right hon. Gentleman the Member for West Monmouth, speaking on the first Loan Bill, referred to a celebrated speech delivered by John Stuart Mill in this House, which the Chancellor of the Exchequer, who is the youthful Father of the House, probably heard. When the right hon. Gentleman referred to that speech I looked up the report, and I find that John Stuart Mill said that you had no right to contract a debt which you were not to pay yourselves, for, when you did that, you were robbing posterity and acting at the expense of others. One gentleman asked what they owed to posterity, and John Stuart Mill showed what was owed to posterity. He said that every generation received a trust which it was bound to hand down, not impaired, but strengthened. It should be the function of Parliament not to consider the present generation, but to work for the glory and honour of the generations that are to follow.

(11.30.) MR. LOUGH (Islington, W.)

I am sure that the whole House will be disposed to join in congratulating the Chancellor of the Exchequer on the position in which he finds himself on the Third Reading of this Bill, as compared with that in which he stood on the Second Reading. This is a fitting opportunity for us who have criticised the Chancellor of the Exchequer during the last few years to congratulate him on the way in which he has discharged the very heavy responsibility which has rested upon him during this very anxious time. Many of us are not always in agreement with the methods of the Chancellor of the Exchequer, but we must all admit that whatever proposals he laid before us he defended with the greatest ability, and, generally speaking, he was a great deal too strong for the batteries we were able to bring against him. The Chancellor of the Exchequer has had, as he told us, to raise £230,000,000 on the top of the heaviest normal expenditure the country has ever had to provide, and somehow or other the right hon. Gentleman managed to get all he required, and at the same time to sustain the credit of the country during a very trying period. Tomorrow we will return generous thanks to the soldiers who have served us during the war, but I do not think that the servants of the State at home should be forgotten, and not one of them has done his work better than the Chancellor of the Exchequer. Perhaps I may be permitted to express a word of thanks also to the heads of the great Departments who have given the Chancellor of the Exchequer the greatest assistance. I am sure that the permanent heads of the Treasury, the Customs and the Inland Revenue Departments, have rendered very great assistance to the State, and, having regard to the additional burden which was thrown on these servants of the State, I think this is a fitting occasion to recall what they have done.

Having said that, I must take leave to add that I do not desire to withdraw any of the criticisms I have offered, or to abate the criticisms I have urged in regard to the Loan Bill in its earlier stages. I do not wish to trouble the House with figures, but there is a simple way in which we can sec what our I position now is in regard to the Loan Bill. The Chancellor of the Exchequer has told us that the normal expenditure of this country is rather less than £130,000,000. I believe that sum is sufficient to provide for the restoration of the Sinking Fund. The right hon. Gentleman has also told us that, without any new taxation, existing taxation would produce £148,000,000. There-fore, £18,000,000 has been paid out of taxation towards any addition that may be necessary to meet the expenses of the country this year. The right hon. Gentleman the Member for West Monmouthshire made an appeal in a quiet way to the Chancellor of the Exchequer that the loan was too large, and that it might not be necessary. I think the one figure that I have given goes far to substantiate that case. It is not right to say that we are only providing £5,000,000 out of taxation towards the extraordinary expenditure of the year. We are providing £18,000,000 as well, or £23,000,000 altogether, in addition to normal expenditure. All through the period of the war, I joined with the critics who constantly appealed to the Chancellor of the Exchequer to raise a larger sum by taxation and rather less by borrowing, but we were always met with the plea that we could not see the end of our difficulties. But tonight we see the happy ending of our difficulties; and of this very heavy expenditure, and the right hon. Gentleman ought to think seriously before he disturbs the settled basis of commerce in this country by imposing any unnecessary taxation. With regard to the loan, I think the amount is too great. The Chancellor of the Exchequer admits himself that he has taken a few millions too much, and my first criticism, therefore, is that the amount is too large. My second is, that it has been too costly. At a very early stage of this proceeding I and others warned the Chancellor of the Exchequer to go more slowly in regard to this loan. I remember in particular the Leader of the Opposition asking the right hon. Gentleman on the earliest rumour of peace, whether he might not pause, but that advice was entirely neglected, and through its being neglected the country has been put to considerable financial loss in connection with this loan. If the Chancellor of the Exchequer had contented himself with borrowing £10,000,000 in April, and more if he wanted it later, he might have saved four per cent. or five per cent. of the amount of the loan, and in these days, when the country is burdened with such extra taxation, a million or a million and a half ought not to be wasted. I think the right hon. Gentleman will be glad to be done with borrowing, and that he will endeavour to meet in future the charges of the year out of the revenue of the year. I hope that the right hon. Gentleman will regard himself as pledged to bring the large borrowing which has gone on in recent years to an end, and that the Loan Bill now before the House will be the last with which we shall have to deal.

* MR. TOMLINSON (Cheshire, Crewe)

In the chorus of congratulation to the Chancellor of the Exchequer, in which I desire to join, it may appear ungracious to offer any further criticism, but my hon. friend has alluded to the method in which the loan has been taken up, and I desire to add a few words on the point. I have always held that in principle, it is not sound finance to raise money at a discount. As an illustration, I will take the extreme case of the financial methods of Mr. Pitt, in the century before last, when the credit of the country had sunk so low that money could not be raised on better terms than five per cent. or six per cent. For every £100 Mr. Pitt placed on the shoulders of the country, he only obtained £50 or £60, and in this instance the Chancellor of the Exchequer

has obtained some £94 only for every £100 of indebtedness. I agree that the Chancellor of the Exchequer was rather in too great a hurry, and that if he had waited he might have raised the money on better terms.

(11.48.) Question put.

The House divided:—Ayes, 216; Noes, 49. (Division List No. 200.)

AYES.
Acland-Hood, Capt. Sir Alex. F.	Dalkeith, Earl of	Heath, James (Staffords., N. W.
Agg-Gardner, James Tynte	Dalrymple, Sir Charles	Helme, Norval Watson
Agnew, Sir Andrew Noel	Davenport, William Bromley-	Henderson, Alexander
Allan, William (Gateshead)	Dewar, T. R (T'rH'mlets, S. Geo.	Holland, William Henry
Allhusen, Angustus H'nry Eden	Disraeli, Coningsby Ralph	Hope, J. F. (Shellield, Brightside
Anson, Sir William Reynell	Doughty, George	Hoult, Joseph
Arkwright, John Stanhope	Douglas, Rt. Hon. A. Akers-	Houston, Robert Paterson
Arnold-Forster, Hugh O.	Doxford, Sir William Theodore	Hudson, George Bickersteth
Arrol, Sir William	Duke, Henry Edward	Jessel, Captain Herbert Merton
Asher, Alexander	Duncan, J. Hastings	Johnston, William (Belfast)
Atkinson, Rt. Hon. John	Durning-Lawrence, Sir Edwin	Johnstone, Heywood (Sussex)
Bagot, Capt. Josceline FitzRoy	Dyke, Rt. Hn. Sir William Hart	Joicey, Sir James
Bain, Colonel James Robert	Edwards, Frank	Jones, William (Carn'rvonshire
Balcarres, Lord	Elliot, Hon. A. Ralph Douglas	Kenyon-Slaney, Col. W. (Salop.
Balfour, Rt. Hon. A. J. (Manch'r	Faber, Edmund B. (Hants., W.)	Keswick, William
Balfour, Rt Hn. Gerald W (Leeds	Faber, George Denison (York)	King, Sir Henry Seymour
Banbury, Frederick George	Fardell, Sir T. George	Knowles, Lees
Bartley, George C. T.	Fellowes, Hon. Ailwyn Edward	Lawrence, Joseph (Monmouth)
Beach, Rt Hn. Sir Michael Hicks	Fergusson, Rt. Hn. Sir J. (Manc'r	Lawson, John Grant
Bignold, Arthur	Finch, George H.	Lee, Arthur H. (Hants, Fareham
Bill, Charles	Finlay, Sir Robert Bannatyne	Legge, Col. Hon. Honeage
Blundell, Colonel Henry	Fisher, William Hayes	Leigh-Bennett, Henry Currie
Boscawen, Arthur Grifhth-	Fletcher, Rt. Hon. Sir Henry	Leng, Sir John
Brassey, Albert	Forster, Henry William	Leveson-Gower, Frederick N. S.
Brodrick, Rt. Hon. St. John	Foster, Philip S (Warwick, S. W.	Levy, Maurice
Brotherton, Edward Allen	Galloway, William Johnson	Llewellyn, Evan Henry
Brown, George M. (Edinburgh)	Gibbs, Hon. Vicary (St. Albans)	Loder, Gerald Walter Erskine
Bull, William James	Goddard, Daniel Ford	Long, Col. Charles W. (Evesham
Caldwell, James	Gordon, Hn. J. E. (Elgin & Nairn	Long, Rt. Hn. Walter (Bristol, S)
Carson, Rt. Hon. Sir Edw. H.	Goschen, Hon. George Joachim	Lonsdale, John Brownlee
Causton, Richard Knight	Goulding, Edward Alfred	Lowe, Francis William
Cantley, Henry Strother	Green, Walford D (Wednesbury	Lucas, Col. Francis (Lowestoft)
Cavendish, V. G W. (Derbyshire	Greene, W. Raymond-(Cambs.)	Lucas, Reginald J. (Portsmouth
Cecil, Evelyn (Aston Manor)	Gretton, John	Macdona, John Cumming
Cecil, Lord Hugh (Greenwich)	Croves, James Grimble	Maclver, David (Liverpool)
Chamberlain, Rt. Hon. J. (Birm.	Guthrie, Walter Murray	M'Calmont, Col. J. (Antrim. E.)
Chamberlain, J. Austen (Worc'r	Halsey, Rt. Hon. Thomas F.	M'Crae, George
Chapman, Edward	Hamilton, Rt Hn L'rd G. (Midd'x	M'Killop, James (Stirlingshire)
Clive, Captain Percy A.	Hamilton, Marq. of (L'nd'nd'rry	Majendie, James A. H.
Coghill, Douglas Harry	Hanbury, Rt. Hn. Robert Wm.	Manners, Lord Cecil
Collings, Rt. Hon. Jesse	Harcourt, Rt. Hon. Sir William	Martin, Richard Biddulph
Corbett, A. Cameron (Glasgow)	Hardy, Lanrence (Kent, Ashf'rd	Maxwell, Rt Hn Sir H. E (Wigt'n
Craig, Robert Hunter	Harmsworth, R. Leicester	Maxwell, W. J. H. (Dumfriessh
Cranborne, Viscount	Harris, Frederick Leverton	Middlemore, Jno. Throgmorton
Cross, Alexander (Glasgow)	Hay, Hon. Claude George	Milner, Rt. Hn. Sir Frederick G.
Cubitt, Hon. Henry	Hayne, Rt. Hon. Charles Seale-	Molesworth, Sir Lewis
Montagu, G. (Huntingdon)	Renwick, George	Valentia, Viscount
Montagu, Hon. J. Scott (Hants.)	Richards, Henry Charles	Walker, Col. William Hall
More, Robt. Jasper (Shropshire)	Ridley, Hn. M. W. (Stalybridge)	Wanklyn, James Leslie
Morgan, David J (Walthamst'w	Ritchie, Rt. Hn. Chas. Thomson	Wason, John Cathcart (Orkney)
Morgan, Hn. Fred. (Monm'thsh.	Roberts, Samuel (Sheffield)	Webb, Colonel William George
Morrell, George Herbert	Robson, William Snowdon	Welby, Lt.-Cl. A. C. E (Taunton
Morrison, James Archibald	Ropner, Colonel Robert	Wharton, Rt. Hon. John Lloyd
Murray, Rt Hn. A. Grah'm (Bute	Round, James	White, George (Norfolk)
Murray, Charles J. (Coventry)	Russell, T. W.	White, Luke (York, E. R.)
Nicholson, William Graham	Sackville, Col. S. G. Stopford-	Whitley, J. H. (Halifax)
Nicol, Donald Ninian	Sadler, Col. Samuel Alexander	Whitmore, Charles Algernon
Norman, Henry	Scott, Sir S. (Marylebone, W.)	Williams, Osmond (Merioneth)
Orr-Ewing, Charles Lindsay	Seely, Charles Hilton (Lincoln)	Wills, Sir Frederick
Parker, Gilbert	Seton-Karr, Henry	Wilson, A. Stanley (York, E. R.)
Pease, J. A. (Saffron Walden)	Shaw-Stewart, M. H. (Renfrew)	Wilson, John (Glasgow)
Peel, Hn Wm. Robert Wellesley	Smith, Abel II. (Hertford, East)	Wilson, J. W. (Worcestersh. N.)
Platt-Higgins, Frederick	Smith, James Parker (Lanarks.)	Wodehouse, Rt Hn. E. R, (Bath)
Plummer, Walter R.	Smith, Hon. W. F. D. (Strand)	Wortley, Rt. Hon. C. B. Stuart-
Powell, Sir Francis Sharp	Stanley, Edward Jas. (Somerset	Wrightson, Sir Thomas
Pretyman, Ernest George	Stewart, Sir Mark J. M'Taggart	Wyndham, Rt. Hon. George
Pryce-Jones, Lt.-Col. Edward	Stirling-Maxwell, Sir John M.
Purvis, Robert	Stroyan, John	Yerburgh, Robert Armstrong
Quilter, Sir Cuthbert	Strutt, Hon Charles Hedley
Randles, John S.	Talbot, Lord E. (Chichester)
Rea, Russell	Thomas, David Alfred (Merthyr	TELLERS FOR THE AYES—
Reed, Sir Edw. James (Cardiff)	Thornton, Percy M.	Sir William Walrond and
Reid, James (Greenock)	Tomkinson, James	Mr Anstruther.
Remnant, James Farquharson	Tomlinson, Wm. Edw. Murray
	Ure, Alexander
NOES.
Abraham, William (Cork, N. E.)	Joyce, Michael	O'Connor, T. P. (Liverpool)
Ambrose, Robert		O'Donnell, T. (Kerry, W.)
	Law, Hugh Alex. (Donegal, W.)	O'Kelly, James (Roscommon, N.
Barry, E. (Cork, S.)	Leamy, Edmund	O'Malley, William
Bell, Richard	Lundon, W.	O'Mara, James
Black, Alexander William		O'Shaughnessy, P. J.
Boland, John	MacDonnell, Dr. Mark A.
Burke, E. Haviland-	MacNeill, John Gordon Swift	Power, Patrick Joseph
	MacVeagh, Jeremiah
Campbell, John (Armagh, S.)	M'Govern, T.	Reddy, M.
Charming, Francis Allston	M'Hugh, Patrick A.	Redmond, John E. (Waterford)
Crean, Eugene	M'Kean, John	Redmond, William (Clare)
Cremer, William Randal	M'Killop, W. (Sligo, North)
	Markham, Arthur Basil	Sheehan, Daniel Daniel
Delany, William	Mooney, John P.	Sullivan, Donal
Dillon, John
	Nannetti, Joseph P.	Wilson, John (Durham, Mid.)
Ffrench, Peter	Nolan, Joseph (Louth, South)
Gilhooly, James	O' Brien, Kendal (Tipperary Mid	TELLERS FOR THE NOES—
	O'Brien, Patrick (Kilkenny)	Sir Thomas Esmonde and Captain Donelan.
Hammond, John	O'Brien, P. J. (Tipperary, N.)
Hayden, John Patrick	O'Connor, James (Wicklow, W.

Bill read the third time and passed.