HC Deb 09 June 1902 vol 109 cc108-75

Considered in Committee.

(In the Committee.)

[Mr. J. W. LOWTHER (Cumberland, Penrith) in the Chair.]

Clause 1:—

(2.50.) SIR HENRY FOWLER) (Wolverhampton, E.

I rise to move that Clause 1 be postponed. My reason for asking for the postponement of the clause is the unfortunate procedure which has been adopted with reference to what, after all, is a supplementary Budget, a procedure of which the House has had some cognisance of in the last few minutes, by a Question and answer which show the difficulty in which we have been placed by the mode in which this question has been dealt with. The Committee has been placed in a difficult position by the Chancellor of the Exchequer's bringing forward what are his new financial proposals in the altered circumstances on the Second Reading of the Loan Bill. It was impossible on that Bill to have anything like a discussion on the statement he then made; and, by the Orders of the House, we are now precluded from entering upon a general discussion of these Budget proposals on going into Committee. I have no wish to interfere with a large number of the clauses of this Bill, clauses about which there may be some difference of opinion on various points with which we are familiar in Finance Bills, but I do venture to submit to the Government that it is not fair to ask the Committee to proceed any further in the imposition of new taxation until we have from the Chancellor of the Exchequer a statement, not of a vague, uncertain character, but a statement embodied in the shape of Estimates, laid upon the Table of the House, telling the House how he proposes to spend the large sum of money which will now not be required, but which the House has provided for the war. I will endeavour to lay before the House my reasons for arguing that, by pointing out the difficulties with which we are faced. Some eight weeks ago the Chancellor of the Exchequer brought in a Budget in which he estimated for a gross expenditure of £193,109,000. That sum included the ordinary provision for the Sinking Fund, and the estimated expenditure was, therefore, reduced to £188,469,000. I am sure the Chancellor of the Exchequer will not differ from me if I say he would not have budgeted for that sum if eight weeks ago he could have foreseen that in so short a time the war would have been practically closed, and the House have been attending thanksgiving services over a Declaration of Peace, on terms universally satisfactory both at home and in South Africa, and that the normal state of affairs was being rapidly resumed. It was a War Budget; the Chancellor of the Exchequer looked at the position in the gloomiest way, and in those circumstances rightly asked for this very large sum of money. Now a new state of things has arisen, and I ask the right hon. Gentleman to remember what he included in his Estimate. I was not present when the right hon. Gentleman made his statement—


Hear, hear!


But I have read it most carefully, and I cannot reconcile his figures, nor, if I understood the debate correctly, could a much greater authority, the right hon. Gentleman the Member for West Monmouthshire understand them. Therefore there is something to be explained to the ordinary man in the street. As I understood the Estimate, it included, not only the ordinary Estimates for the year, about which there can be no dispute, but £40,000,000 for war expenditure for between eight and nine months. The Secretary for War had only made provision for carrying on the war till practically the end of the year, at a cost roughly of £5,000,000 a month. It included interest, not only on the war debt which had then been incurred, but also on the war Debt in respect of that which was to be borrowed this year.


Which has been borrowed.


The Budget provided for the payment of £750,000 interest on the new war Debt, and, subject to the correction of the Chancellor of the Exchequer, it provided, I think, £750,000 for the South African Constabulary. The Chancellor of the Exchequer did not make that clear the other night, but he included £1,800,000 as a special grant for civil administration in South Africa.


That is in the Estimates already.


Yes. I am enumerating the figures outside the ordinary Estimates which were included in the Budget. It included the £40,000,000, the interest on the Debt incurred, the £750,000 for the South African Constabulary, and over and above that, £17,000,000 for what the Chancellor of the Exchequer said was requisite to carry on the war until the end of the financial year, because he was not satisfied with providing for only eight or nine months expenditure. I cannot make out from the figures whether the right hon. gentleman provided for the £250,000 Grant to the West Indies—my impression is that the right hon. Gentleman did not, and, therefore, I do not put that in; but it was mentioned to the House. But the Chancellor of the Exchequer told the House quite fairly that he had not included a variety of charges with reference to the termination of the war; he had not included the gratuities which would be paid at the end of the war; the transport and other terminal charges, and those are the charges now before the Committee. The Budget of 1901–02 made large provision on the assumption that there would be extra charges at the end of the war, and, though, the bulk of that sum has been expended in consequence of the prolongation of the war, there is still a balance of between £4,000,000 and £5,000,000 which went to swell the Exchequer balances at the end of the financial year. We cannot discuss it now, but I beg to enter my respectful dissent from the Chancellor of the Exchequer's view with reference to these Exchequer balances. The right hon. Gentleman said he did not provide for the stores and horses, payment for which would be required at the close of the war, and he did not provide for the concentration camps. I state frankly that the House had full notice that these sums would be required at some future date.

What was the revenue on which the right hon. Gentleman relied to meet the estimated expenditure? He took a revenue from the existing taxation of £147,785,000 and added new taxation £5,150,000, making his total revenue £152,935,000. Subtracting that sum from the expenditure, he showed a deficit of £35,500,000. That was the position as he left it at the end of the year, and when the change arose he ought to have laid upon the Table a complete statement of the scheme which he had in his mind, so that the Committee could check it at all points. As £40,000,000 was the estimated expenditure on the Army at its full strength for between eight and nine months, and as that estimate is now-reduced by two or three months, we can see without going very closely into figures that there must be a large saving there. I gather that the Chancellor of the Exchequer puts the saving at, £28,000,000. Then there is the extra provision of £17,000,000, and that also is not wanted. Some accounts put this sum at £17,500,000, and others at £16,000,000, but I put it at £17,000,000. At all events, we are not far apart, and that sum is not wanted. But from the expenditure which would be saved, there must be deducted the new expenditure required, and the Chancellor of the Exchequer has stated that for the various items connected with the closing of the war he will require the whole £40,000,000 voted for a war expenditure of eight months, of which he saves £28,000,000. He now says that he will require the whole of that sum for the various items connected with the closing of the war and the transports, and for the other items of expenditure to which I have just called the attention of the House.

Then I raise the constitutional principle, that there has not been any estimate of that expenditure, and that it has never been considered in Committee of Supply. I do not think we ought to commit ourselves to the expenditure of £28,000,000 simply upon the mere ipse dixit of any Minister, however highly we may think of him—and nobody thinks more highly than I do of the Chancellor of the Exchequer. There is a constitutional principle involved of the control of the House of Commons over public expenditure. We know that a good deal of this expenditure will be War Office expenditure, and our past experience of War Office expenditure is not encouraging. Our experience of the War Office expenditure upon horses and stores, upon transport and other items, has not been very encouraging; and I do not think that any Department of the State ought to be given a free hand in regard to an expenditure of something like £28,000,000. Certainly the House of Commons ought not to be asked to vote new taxation until there is laid before it, signed by the Secretary of State for War, a statement of the mode in which the £28,000,000 is to be spent. The right hon. Gentleman has put the surplus, which will remain outside the loan, at £10,500,000. And he proposes to deal with it in this way. He proposes to take £4,640,000 in order to replace the sum which was abstracted from the Sinking Fund. I think that is a proper course to take. It was borrowed money, and I do not question what he said on that point, but it is quite another question when we come to additional taxation. I think my right hon. friend the Member for West Monmouthshire expressed not only his own view on this point but also the view of many other hon. Members who differ from him politically. My right hon. friend said that if we restored the Sinking Fund that would be a provision for the present and for the future reduction of the Debt, and he pointed out that it does not mean only £5,000,000 today, but in the future as in the past it would mean £7,000,000 devoted to the Sinking Fund. My right hon. friend the Member for West Monmouthshire also pointed out that there remained another £5,000,000 to be dealt with, and that while you are taking £5,000,000 for the Sinking Fund you might also relieve the country of the £5,000,000 taxation. That would dispose of the Chancellor of the Exchequer's surplus of £10,000,000 and it could not be called an unfair partition of the money at his disposal. That is a clear issue, upon which the House will be called upon to give a decided verdict. I endorse my right hon. friend's view completely. That is a very proper course, and £4,500,000 is a fair proportion in the interests of posterity. But something is due to the taxpayers of the present, on whom new burdens are to be imposed.

The Chancellor of the Exchequer has given a rather singular account of how he proposes to spend the other £6,000,000 and here another constitutional principle is raised. First, the right hon. Gentleman wishes to deal with the floating Debt. The right hon. Gentleman says there is a considerable floating debt, but that should be dealt with at the proper time and in the proper place, and I do not think it is necessary to impose new taxation to deal with the floating debt which at the commencement of this year was not in contemplation when the right hon. Gentleman introduced his Budget. Then the right hon. Gentleman says that he requires money to finance the Exchequer. Owing to the arrangements now made it is perfectly true that the great bulk of the expenditure is going on all the year and that the great bulk of the money, does not come in until the last quarter of the year. But that is a question of banking and not of borrowing the money. Previous Chancellors of the Exchequer under quite as difficult circumstances have had no difficulty whatever in arranging matters with the Bank of England.


But you cannot go beyond a certain point.


There was no difficulty last year. But if it is necessary to have further borrowing powers, let them be defined and limited. Then the right hon. Gentleman spoke of possible advances to the Orange and Transvaal Colonies, but he has told the House that those charges are to be met out of a loan on the revenues of the Colonies guaranteed by the British Government.


I showed plainly that I did not contemplate any advances made out of these £6,000,000 being more than temporary. Of course, it takes time to make the necessary arrangements for the sanctioning of a loan by the legislative body which will have to be established in the Colonies, and for bringing Bills before Parliament for our guarantee. In the meantime it may be absolutely necessary that advances should be made for the purposes which everyone approves. But the advances will be merely temporary.


I do not understand the machinery of the legislation which is to sanction this loan. I am quite sure, however, that it could not be raised on better terms than the last issue of Consols. I do not think all these numerous schemes of expenditure which the Chancellor of the Exchequer has drawn within his net can come before the House of Commons as objects of expenditure for which new taxation should be imposed upon the country, and new taxation ought not to be imposed until the House of Commons has approved of those measures and until the House knows all about them. I do not wish to detain the House any longer but I want to put this question fairly, and I shall be ready to fight any detail afterwards in the proposals of the Chancellor of the Exchequer. In many of his proposals I do think he is making haste without making much speed. The House ought to have an authorised statement of what is to be done with the sums of £28,000,000 and £17,000,000, and should be given an opportunity of discussing this second Budget of the year.

Motion made, and Question proposed, "That Clause 1 be postponed"—(Sir Henry Fowler.)


I very much regret that the right hon. Gentleman was not present on Wednesday last, when I made the very statement to the House for which he now asks. [Cries of "No."] I can give no other explanation than the repetition of that statement. The right hon. Gentleman has given two reasons for the postponement of this clause. The first is that he wants to know in what way we are going to spend the £28,000,000, of the £40,000,000 taken on the Estimates for the war expenditure in South Africa which will not be required or war expenditure owing to the earlier termination of the war. I said that the money would be required for certain military purposes, including the maintenance for a longer period than had been anticipated of the population now in the concentration camps—all of them being purposes which were not included in the original Estimate of £40,000,000. Then the right hon. Gentleman asks that a detailed statement of the mode in which it will be applied for that service should be laid on the Table. It will be laid on the Table; but I understand that the right hon. Gentleman desires that the money shall be actually voted by the House before the House proceeds with the Finance Bill levying the taxation necessary for the expenditure of the year. Such a proposal was never before made to the House of Commons. The clauses of the Finance Bill are always considered in Committee long before all the Estimates are voted by the House.

MR. DILLON (Mayo, E.)

But not before they are laid before the House.


Then is the demand simply that the Estimates shall be laid before the House?


I ask that the promise of the Secretary of State for War that those Estimates would be laid on the Table shall be fulfilled before the House proceeds with the Bill.


There are certain services admittedly necessary for the termination of the war. They are not like new Estimates or expenditure on which the view of Parliament might be doubtful. It is expenditure which must be incurred, and which every one will be glad to incur in view of the termination of the war. We are asked, before we proceed with the clauses of the Finance Bill proposing the taxation necessary to defray that expenditure, that fresh estimates should be placed on the Table of the House. I must say that the request seems to me to be entirely unreasonable. Then the right hon. Gentleman gives another reason for his present proposal. He agrees with my proposal with regard to the restoration of the Sinking Fund, but he differs from my proposal with regard to devoting the remaining surplus of the loans raised to the paying off of debt to which it ought properly to be devoted; and he referred to the suggestion made the other evening by the right hon. Member for West Monmouthshire that instead of taking that course the proposed new taxes already mentioned by the House, after two considerable debates, should be dispensed with, and, in fact, that we should devote borrowed money towards the reduction of taxation. I decline to take that course. I have declined to take that course already; but I own I am surprised that such a suggestion should ever have come from the right hon. Member for West Monmouthshire. The right hon. Gentleman has not only preached the duty of paying our way, but has practised it under great difficulties; and yet he is actually the person to suggest to me that, with a deficit of £28,000,000, I should devote borrowed money to reduce taxation which has been in operation for nearly two months, and that suggestion is supported by the light hon. Member for Hast Wolverhampton. These right hon. Gentlemen and hon. Members who sit behind them have for the last three years been denouncing me because I did not raise enough from taxation and raised too much by borrowing for the purposes of the war. I am astounded that they should turn round in this kind of way and press me to take that course. It would be an evil precedent in the history of the finances of this country.

No, Sir, their real objection, of course, is not to the abstract principle of increasing taxation in order to provide something towards this deficit of £28,000,000 for the year. Their real objection is to the particular taxes—or to one particular tax which I propose to raise for that purpose. Then let us have the fight out. Why does the right hon. Gentleman interpose with this dilatory and obstructive Motion in order to prevent us from coming to that fight? The fight comes on in the first clause of the Bill, and if he desires to attack me for pressing the corn duty in place of yielding it and devoting borrowed money towards this great deficit, then let him denounce me as he is perfectly able to do when we are discussing that clause. But this is a dilatory and obstructive motion, and I will not pursue its discussion further.

(3.18.) SIR WILLIAM HARCOURT (Monmouthshire, W.)

I do not think I ever recollect an entirely new supplementary statement being produced by the Chancellor of the Exchequer with so much vehemence and warmth. The case he has advanced to us is a very serious one. As to the figures that he laid before the House the other night—I suppose it is due to my own obtuseness—I was not able to understand them at the time, and I have examined them since in print, and I am totally at a loss to understand the statement he made then, or to reconcile the figures in print with his speech on the Budget or the tables accompanying it. He proceeded to talk of £174,000,000 the other nigh as being the figure of the expenditure. I pointed out to him at that time that it was absolutely inconsistent with his own tables, where he showed an expenditure of £188,000,000. Therefore, I remain of the same opinion I held then after the most careful examination I can give to the statement that the surplus he has at his disposal must be considerably more than he stated on that occasion. Now he says that he laid before us the other night particulars of how the £28,000,000 were to be disposed of. He did not lay before us anything except a general statement. He said, "I am going to do this, that, and the other, and that will exhaust the £28,000,000." That is not, Sir, the information the House of Commons has a right to expect. If that is his view of what the Budget means, it is the most extraordinary I ever heard. He says that the Budget does not depend on the voting of Supplies. No, Sir, but it depends on the Estimates presented to the House. That is the essence of the Budget. If you disapprove of the Estimates presented to the House you object to them in the Budget, and you object to the new-provisions of taxation in that Budget.

The right hon. Gentleman chose tonight to treat the matter as if peace had made no change whatever in the financial condition of the country. In his view we, in April, settled the whole finances of the year when we were at war, and when he said, reasonably enough, that what he intended to do was to provide for a twelve months continuance of the war. Now he turns round and says that the House should sanction the whole of this expenditure. Can anything be more unsatisfactory, anything more unreasonable, anything more contrary to the fundamental principles of finance than that when you estimate the taxation of the country on the basis of expenditure at £188,000,000, and then find that that is £20,000,000 too much, you should say all this was sanctioned two months ago, and therefore cannot be altered? It ought to be altered. The conclusion of peace makes it necessary that it should be altered. It is trifling with the House and the country to assert that because you made a statement founded upon a condition of things which has ceased to exist, therefore that statement and that policy is to continue. I say that no finance Minister ever dealt with the taxation of the country on such a basis as that. Under all former conditions of the same kind, when a peace was concluded the whole taxation of the country was altered. What happened in 1815? The House of Commons determined unanimously to abolish the income tax, and that is a precedent in finance against the conduct and the course taken by the right hon. Gentleman. Now we are placed in a very awkward position, and we ought to have some moans of escape from it. We ought really to deal with this matter as if we were engaged in the Second Reading of the Finance Bill. The Second Heading of the Finance Bill was founded on the hypothesis of twelve months war with expenditure corresponding to it; and the House is entitled, looking at the whole condition of things, and the whole of the expenditure contemplated upon the Estimates for which the spending Departments are responsible, to consider what burdens it will or will not lay upon the country. That is the finance of this country, and I hope it will long continue to be so. Now we are in Committee upon the Finance Bill, and no general view can be taken of the financial position when we are asked singly and one by one to vote taxes which, if we had a general view of the whole situation, we might pronounce to be unnecessary and superfluous. I say that the House is entitled to review the altered conditions of the financial necessities of the country in consequence of the happy establishment of peace. To ask in the first two months of the financial year that we should go on for the remaining ten months on a Budget founded on Estimates when war was in progress and might continue for ten months more, is in my opinion irrational and unjust to the taxpayers of the country.

I never listened to anything that astounded me half so much as the statement just made by the right hon. Gentleman. He said that we object to a particular tax. Yes, Sir, of course we object to a particular tax. We object to any tax which we think is unnecessary, whatever it is. If the general condition of the finance of the nation makes any one tax unnecessary, or makes all the taxes unnecessary we have a right, and it is our first duty, to pronounce upon that situation. Now there is a particular tax that we object to more than any other, and the defence of that tax was the condition of war. The Colonial Secretary went down to Birmingham and declared that it was a war tax in these very words— This is a tax for war, a just and necessary war. You have gone down to the very dregs of taxation when you begin to tax the food of the people. It was only the extreme necessity of war that could have driven you to imposing such a tax, and therefore, above all, is it necessary that we should regard this tax, as well as others, from the point of view of the peace which has been now happily proclaimed. I cannot understand the tone assumed by the Chancellor of the Exchequer in this matter. He said the other night, and I entirely agree with him, that it is right and proper that you should raise taxation at the same time that you raise loans. But you have raised loans, and you have raised taxation on this occasion, upon the assumption of war, and having raised the loans and the taxation you find yourself in a condition of peace, and therefore any expenditure of money—


made a remark which was inaudible in the gallery.


I think you have in practice collected the taxes upon the preliminary sanction you obtained. But then that preliminary sanction was given in another state of things, and you have no right to rest on that preliminary sanction when the essential conditions on which it rested have been entirely changed. The House has a right, in fact it is our duty, to take into consideration the change which has come about with the promulgation of peace, In point of fact, the Government finds itself in possession of a large sum of money—the Chancellor of the Exchequer says £10,000,000, I believe it is more—but whether it is £10,000,000 or £20,000,000, there is nothing more unsound in finance than to allow the executive Government to be in possession of such a large sum unappropriated. It is not by that means that we have avoided that waste, extravagance, and mischief to sound finance which has prevailed in other countries. It is in the rigorous adherence to rules which the House of Commons has insisted upon in protecting the money of the people that our system of finance is grounded. What is the condition of things? If you leave this £10,000,000 in the hands of the Chancellor of the Exchequer, he is not bound to apply it in any particular way. It is money in his pocket. It is money of which no account has been rendered to the country at all. The right hon. Gentleman says that the money is wanted for the war. So is the Army wanted for the war, but we do not give £20,000,000 or £30,000,000 to the Chancellor of the Exchequer to spend as he likes on the Army.


I cannot spend a penny of it until it has been voted by the House of Commons.


What are you going to do with it? The appropriation of this money stands on the same touting as that for the Army itself. When we are going to spend money on the Army the Government requires to give the House of Commons the details of the particular items of that expenditure. Why should we not, in regard to this £28,000,000, have the particulars of the expenditure just as much as of the expenditure on the Army itself? The proposed procedure of the Government strikes at the roots of the whole financial system of our country. How ought this money to be dealt with? I say first of ail that we are entitled to have a new Budget. If peace had been proclaimed two months ago we would not have bad these taxes: that is certain. And that being so we ought to have time for consideration and to have an account rendered to us. I do not see why this £28,000,000 should be voted before a statement is laid on the Table of the House just as the Estimates are laid on the Table. That is the demand which the right hon. Gentleman who moved the Motion before the Committee has made.


I promised the other evening to lay a statement on the Table.


What a promise! It is as if the Chancellor of the Exchequer asked for £30,000,000 for the Army on the promise that on some future day he would lay a statement on the Table of the House telling us how the £30,000,000 is to be appropriated. Was there ever such an absurdity as that? What is the meaning of the Order that within a certain number of weeks from the meeting of Parliament the Estimates shall be presented to the House of Commons? It is for the express purpose that Parliament shall know every single farthing you propose to spend; and if the Government does its duty, it ought to present details of all that the money is wanted for for the year; and a departure from that system, and introducing great Supplementary Estimates is a great evil and mischief. Why, part of the Supplementary Estimates are produced even before beginning the consideration of the Finance Bill. We are entitled, before we go a step further in the taxation of the people, to have an account on the basis of the expenditure to wind up the war. The right hon. Gentleman rather censured me for being a party to the suggestion that this money should be appropriated, half to the reduction of Debt, and half to reduction of taxation. There is a clear difference between money raised by borrowing and money raised by taxation. But you find yourselves now in a new position altogether. You have collected this money and have got it in hand, and it seems to me to be not unfair that when you make a disposition of it you should appropriate some of it to the Sinking Fund; and when the Chancellor of the Exchequer announced the other night that he meant to do so, I applauded him. But appropriating the money to the Sinking Fund is very different from appropriating it to paying off Treasury Bills. Is this additional taxation necessary? If not, it is unjust. Those are the grounds on which I sincerely and cordially support the proposition of my right hon. friend. I think we ought not to proceed with further taxation until we have laid upon the Table the Estimates of the expenditure to which that taxation is to be devoted. That is a very simple proposition. I think that if we were to go on in Committee without these estimates, and impose additional taxes upon the people, we should be acting inconsistently with the principles of British finance, and I hope, at all events, the House will pronounce upon that issue.

(3.37.) MR. GIBSON BOWLES) (Lynn Regis

said he thought it was unfortunate that so much heat had been developed on what was after all a pure matter of business. The Budget introduced two months ago was a War Budget; this was a Peace Budget, and it was more portentous than the War Budget. The Chancellor of the Exchequer had a surplus of £12,000,000, and in addition to that there was a saving on war expenditure of £28,000,000, which was to be re-expended yet without details so far given, so that this Budget involved an unspecified expenditure unauthorised by any grants in Supply, of £40,000,000. It had been explicitly laid down by May that Committee of Ways and Means should precede Committee of Supply, and that the Committee of Supply could not go beyond the amount provided for in the Committee of Ways and Means. They were, however, now asked to leave in suspense an amount of £40,000,000. He admitted there was great difficulty in understanding the figures. He had tried his hand at them himself and if he had failed other Members might fail. He was not sure that there was not some misapprehension in the mind of the Chancellor of the Exchequer when he told the Committee that he could not borrow from the Bank of England boyond a certain limit. The right hon. Gentleman could borrow every farthing that was granted for the service of the year. There was no such limit.


I did not say that there was a legal limit; what I said was that we could not borrow on Ways and Means beyond a certain limit without seriously disturbing the money market.


said that that was quite another matter. But the original remarks of the Chancellor of the Exchequer had certainly suggested to him that there was something in the law which provided that he could not borrow beyond a certain point. The right hon. Gentleman was well aware that there was absolutely no limit to his borrowing powers. He might borrow from the Bank every farthing of his Budget, except that he was bound to re-pay his borrowings in the succeeding quarter. This was an entirely new Budget; it was a Peace Budget; but the Chancellor of the Exchequer made no difference between a War and a Peace Budget, except that in the latter he had applied £4,640,000 to the Sinking Fund, and had taken off the Cheque Duty, a sum amounting to £500,000. His total estimated revenue was £152,935,000, but deducting the Cheque Duty it was £152,435,000. Add the produce of the Loan £30,000,000, and the draft the right hon. Gentleman proposed to make on the Exchequer balances of £5,500,000, and that gave a total revenue or resources for the year of £187,935,000. Now look at the other side. The expenditure specified was £170,719,000. Add to that the Sinking Fund £4,640,000—a total expenditure of £175,359,000. Now deduct that from his resources and the House would see that the Chancellor of the Exchequer had a surplus of £12,576,000.


I do not think the hon. Gentleman includes the money for the South African Constabulary and the grant to the West Indies.


said he did not, because they were not in the original Budget. He only gave the changes made in the new Budget.


Oh, yes, they were.


said that if they were, then they were also included in his figures. The right hon. Gentleman asked the Committee to put the loan out of consideration. He could not put the loan out of consideration in dealing with the Budget. The loan had been effected, and the right hon. Gentleman had the money. If he had not had the money, the situation would be wholly different, and he would have been justified in talking about devoting borrowed money to the purposes of taxation. There was an old Italian proverb, "if my aunt were a man she would be my uncle." The right hon. Gentleman had got the loan, and they could not argue as if he had not borrowed it. He had, he thought, shown quite clearly that the right hon. Gentleman had a surplus of £12,500,000; but the right hon. Gentleman also stated that there would be a saving in war expenditure of £28,000,000, which he proposed to apply to purposes only generally indicated. That made £40,000,000 of undenominated expenditure, which the right hon. Gentleman should show reasons for before asking the Committee to provide it. The right hon. Gentleman endeavoured to show reasons, but they were vague and general reasons, not specific reasons, and he himself did not think that they were satisfactory reasons.

The Chancellor of the Exchequer seemed to treat the £40,000,000 surplus quite lightly; and he asked the Committee to be content with a very general and vague expression as to the purposes to which he was about to apply it. He could not treat that surplus lightly. It was more than the whole produce of the income tax for the present year, more than the whole cost of the war for the year as provided in the Budget, and was an enormous sum. The Chancellor of the Exchequer suggested that it would be spent on gratuities—there were no details or figures,—on furlough pay, transport, deferred liabilities of the War Office, concentration camps, garrisons, and finally advances to restock farms. But these latter were purely temporary, because the final provision in regard to them would come out of a loan to be guaranteed by the country. As to his further suggestions that he would want money for financing the Exchequer, it was not a question of financing the Exchequer as it now appeared, but of financing the money market, because the right hon. Gentleman had avowed that what prevented him from borrowing up to his power was not any legal limit, but money market considerations. He could not accept as a Budget statement the vague generalities of the Chancellor of the Exchequer, but let them for the sake of argument accept his figures as far as the £28,000,000 was concerned, and there still remained the £12,500,000 to be accounted for. Here he would remark, that with the peace Budget as in the war Budget the Chancellor of the Exchequer entirely left out of account any contribution which would be received from the Transvaal mines towards the expenses of the war. He thought that was very important. He believed that unless a contribution were levied at a moment when the mine owners had a present or recent sense of danger, no contribution at all would be received, for the mining interests were very powerful, and had means of acting on individuals by salaries and syndicates of a potent character, and they would probably resist any considerable burden. When the war was entered upon, the right hon. Gentleman said he looked principally to the Transvaal for the expenses of the war, and he said that possibly even the whole expenditure and, at any rate, a considerable proportion of it, would be obtained in that manner. That considerable proportion had shrunk and shrunk and shrunk, and now the right hon. Gentleman only suggested that some part of the expenditure might be borne by the Transvaal mines. He passed from that and returned to the £12,500,000. That surplus was partly obtained by the imposition of new taxation—income tax £2,000,000 and the corn tax £2,500,000. Without these taxes there would still be a surplus of £8,000,000. He admitted that he was not quite certain of the figures, but he had taken them from the Chancellor of the Exchequer's own statement, as far as he could make it out. But whether the surplus was £12,500,000 or £10,000,000, or even the £6,000,000 to which the Chancellor of the Exchequer had sought to whittle it down, it was partly formed of taxation which was proposed when there was already a surplus in existence. By no conceivable manipulation of the figures, could the surplus be reduced to the £4,500,000 which was produced by new taxation. Without putting on either of the two taxes he had mentioned, the Chancellor of the Exchequer would not only have ample money to pay every specified expense of the year, but he would have sufficient even for unspecified expenditure. Under these circumstances, it was absolutely unjustifiable to impose any extra taxation at all. It was not a question of issuing a loan to relieve taxation. The right hon. Gentleman had the loan, and it was neither right nor proper to put on £4,500,000 of taxation, in order to swell the surplus he already had.

The Chancellor of the Exchequer said that whatever residue he might have, would, if possible, be applied to the reduction of taxation. But would that be possible? The right hon. Gentleman asked the Committee to leave his hands free; but his hands were full of money. There was no position so dangerous for a Chancellor of the Exchequer, as to have his hands free and yet full of money. That danger was immense. The only protection a Chancellor of the Exchequer had when his colleagues and the Departments of the State came to him with their demands was that he had not the money and would have to ask the House of Commons for it. The right hon. Gentleman would not now have that protection, because his colleagues and the Departments would reply that the right hon. Gentleman had the money and could, therefore, indulge them in any of these demands. Under such circumstances, it would positively rain Supplementary Estimates. There would be Estimates from the First Lord of the Admiralty, from the Secretary of State for War, and from the Vice-President of the Council, who would ask that the expense of education should be borne by the Exchequer instead of by the rates. But supposing the Chancellor of the Exchequer resisted all such demands, and that the £12,500,000 or, if the right hon. Gentleman liked, the £6,000,000, went to the Sinking Fund, he should remember that he had already applied £4,600,000 to that Sinking Fund. If he were to make it £10,000,000 or £6,000,000 more, surely that was a large sum to add to the Sinking Fund, at a time when taxation was extremely oppressive. In 1899 the right hon. Gentleman relieved the taxpayer by raiding the Sinking Fund; now he was raiding the taxpayer for the benefit of the Sinking Fund; he took from the Sinking Fund when he should not have done so; and now he was taking from the taxpayer when there was no need.

He thought he had shown conclusively and clearly that, taking into account the new circumstances which had arisen, and the loan, there was no need, for the purposes of revenue, for increased taxation. Then why was it proposed? The Chancellor of the Exchequer was rather wrath with the right hon. Gentleman opposite who objected to the corn tax; but if that tax were not proposed for revenue, it must have been proposed for some ulterior purpose. (Cheers.) He heard cheers on both sides of the House. The right hon. Gentleman was a Free Trader. He went through Oxford, and the dismal conglomeration of pretentious platitudes which were known by the name of political economy, and emerged a Free Trader. But he was also a land owner, and when he remembered the maxims of Adam Smith, and Cobden and Bright, he kept a warm corner in his heart for the land, and also, perhaps, for the price of corn. He was inclined to apply to the right hon. Gentleman, with some variation, the language of Matthew Prior— The merchant, to secure his treasure Conveys it in a borrowed name. Revenue serves to grace my measure; Protection is my real flame. He did not propose to make a crusade against Protection. He admitted that new circumstances and new contingencies might require a great change of policy, and, if a Minister proposed it, he for one would be prepared to consider it with an open mind. He had never regarded Free Trade as a universal gospel capable of universal application in all circumstances, times, and places. He recognised that other countries had flourished without Free Trade and even under Protection.


The hon. Gentleman will not be in order in pursuing the discussion.


said he was about to remark that this was not the proper occasion on which to discuss that question; but neither was this a proper way for the Chancellor of the Exchequer to begin a change of policy. If such a policy were to be initiated, let the right hon. Gentleman propose to put on 10 per cent. or 20 per cent. on all the imports of the country. A 4 per cent. charge on corn was not sufficient to please either friend or enemy. Would it please the Colonies?


I think the hon. Member is anticipating. He had better wait until I put the clause as a whole.


The real point of the Motion, and the point which made him look with a friendly eye upon it, was that the Committee had not yet had the details of the new Budget before it. As regarded the £40,000,000 included in the Budget they had not the figures or an estimate. Whether by postponing this clause, or in some other way, he submitted that it was absolutely necessary, before coming to a proper judgment upon the financial aspect of the year, that the figures for the year should be placed before the Committee.

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

said in his opinion the Committee were indebted to the right hon. Gentleman the Member for East Wolverhampton for the Motion he had moved today, and he did not think the Chancellor of the Exchequer had given at all a fair reply to the right hon. Gentleman. The Chancellor of the Exchequer had said that he ought to have been present on the last occasion, but if the right hon. Gentleman had been present on the previous Wednesday he would not have been much wiser. The figures of the Chancellor of the Exchequer on Wednesday last were not very clear, and would not have given much information. He himself put a Question to the Chancellor of the Exchequer on that day. He asked the right hon. Gentleman whether he had given up to that date the slightest explanation of what he was going to do with the surplus of £40,000,000 odd of last year's borrowing, but the right hon. Gentleman made no reply. The figures were very simple if they avoided complication, and looked at only those which were necessary. We were face to face with an entirely new-situation. The right hon. Gentleman had told the Committee that he was relieved from the necessity of finding £17,000,000, and also from borrowing another £12,000,000 which he had referred to earlier in the discussion. The right hon. Gentleman had told the Committee that he was relieved from providing in the course of the year £29,000,000. All that was then suggested was that the right hon. Gentleman should give the taxpayer a similar benefit to that which had come to himself. That was the position he took. He thought there was an entirely new situation, and all that the Motion asked was that the right hon. Gentleman should pause before insisting upon new taxation which must and would cause a great disturbance to trade. If that single point were taken, the Committee would see that there was a great deal in the case which had been put by his right hon. friend. We were now in a state of peace; every telegram coining from South Africa showed that everything was going on well. But the Chancellor of the Exchequer wanted to pin the Committee down to the arrangement made two months ago, at a time when the country was at war. The right hon. Gentleman spoke of this taxation as already imposed. The tax had not yet been imposed; and, even if it were, he believed there were many precedents in recent years for rejecting Budget proposals which had been put into force. In the case of the present Budget, if the Committee were not able to look at the new situation in which the country stood, then the whole proceeding of the Committee was a farce. The Motion of the right hon. Gentleman the Member for East Wolverhampton asked that the clause should be postponed in order that the Committee should have an opportunity of looking at it from the point of view of the present situation. I he right hon. Gentleman had revenue to the extent of £149,000,000 without any new taxation, and they had no undertaking as to how some £20,000,000 of that revenue was to be employed. He thought the tax-payer ought not to have to bear any greater burden. Every one knew that it was only temporary, now that we were at peace, and under those circumstances it seemed a very violent thing to increase so largely the normal revenue of the country. What harm would it be to postpone the clause? Lot them go on with the next clause, and go on with the Budget, and let the right hon. Gentleman take time to consider this matter. The income tax payer bad got burdens to bear already. He naturally would say "What is the use of Peace to me, if yon are to wring out of me the last penny?" The same precedent was adopted in 1815. The income tax was taken off immediately on the receipt of the announcement of peace. It was a most reasonable suggestion that this clause should be postponed, and he hoped the appeal of his right hon. friend would be acceded to.

(4.13.) MR. TREVELYAN (Yorkshire, W. R., Elland)

said that at the end of the Crimean War the then Chancellor of the Exchequer took a very different line to the right hon. Gentleman opposite in regard to the Budget generally. When he brought in his first Budget the negotiations for peace were going on, and it was quite uncertain which way they would go. On that occasion the line which the then Chancellor of the Exchequer took, was to bring in a Budget for the first quarter of the year, in order that when it was ascertained whether peace was certain, he would be able to make his financial Statement for the year. The Chancellor of the Exchequer of that day recognised that peace would lead to an entirely new situation and a new Budget, and before he brought that new Budget before the House he laid the revised Estimates upon the Table.


said the debate had shown that no real agreement existed as to the essential facts under discussion. He suggested that the right hon. Gentleman should consent to lay on the Table a revised edition of the Financial Statement. The conclusion of peace had profoundly modified the financial position, and it was only fair that the Committee should know precisely how they stood with regard to the Finances of the country. The Chancellor of the Exchequer had proposed a fundamental change in their financial policy. He believed the corn tax was generally considered as such—and the onus probandi of the necessity of the tax lay upon the right hon. Gentleman. It was impossible to justify such a proposal unless the necessity was first proved, and that necessity could not be proved unless everybody was in possession of the figures relating to the national finance, and agreement established in respect thereof.

(4.20.) MR. SYDNEY BUXTON (Tower Hamlets, Poplar)

endorsed the appeal that the Committee should be put in a position really to judge of the present financial situation before they were called upon to impose new taxation. Hon. Members who had dissented from the statement of the last speaker that large changes were being made, seemed to have forgotten that a sum of £30,000,000, originally proposed for certain purposes, was now to be applied to something totally different, and that a sum of £16,000,000 more than was required, which was borrowed under the Loan for war purposes was going to be applied in other directions altogether. The Committee were entitled to ask for time, properly to consider these fundamental differences between the original Budget and that now proposed. The Chancellor of the Exchequer had said that no such proposal had ever been made before. Of course it had not, for the simple reason, that no Chancellor of the Exchequer had ever made such proposals as the present in previous cases of peace and war. Both in regard to the Crimean War and after the Continental War, the House of Commons had an opportunity with the facts and figures before it, of reconsidering the financial position. In the present year there had been no proper Budget at all. In his original statement the Chancellor of the Exchequer had given—as he seemed to have become accustomed to doing—the loosest possible Estimates, and for some £17,000,000 he could give no proper Estimate at all. Such a course was absolutely unprecedented, except when Supplementary Estimates or a Vote of Credit had been immediately introduced. In the same way, the right hon. Gentleman was now proposing to give the loosest possible Estimate of the way in which the money was to be expended. The Committee was certainly entitled to some delay in order that they might be able to judge of the necessity of the new taxation. The right hon. Gentleman would not be damnified in any way by such delay, as the tax was already in existence and being collected. The fact was the position in which they stood was largely duo to the hurry of the Chancellor of the Exchequer in issuing his loan for more than was ultimately shown to be required. He had borrowed at 93 per cent. some £16,000,000 more than was necessary, and the country would have to pay that money off at par. He agreed with the principle laid down by the Chancellor of the Exchequer that in time of war a large proportion of the necessary expenditure should be met out of current taxation; his quarrel with the right hon. Gentleman was that in no year since the war began had he so raised anything like sufficient. Out of £200,000,000, he had taken out a new taxation of only £40,000,000 or £50,000,000. But there was nothing inconsistent between supporting that principle as a general principle, and objecting to a particular tax, which was not an old tax, being continued, but a new impost, proposed for one purpose, and now apparently to be applied to something entirely different. The country had always understood from the right hon. Gentleman and also from the First Lord of the Treasury and the Colonial Secretary, that the corn tax was to be imposed for war purposes.


No. The hon. Member misrepresents both my colleagues and myself. As a matter of fact, last year, and this year, I stated most plainly that the imposition of the new indirect taxation, whether on sugar, coal, or corn, was not only for the war, but also for permanent purposes.


said that while he strongly objected to the corn tax as a separate tax, he objected to it still more as a permanent impost. He supported the imposition of taxation to meet war expenditure, but this tax was so bad in its nature that he would rather have cowardly finance than fiscal folly. The right hon. Gentleman had spoken of the strength of his financial principles in imposing taxation, but when slight pressure was brought to bear by the bankers he dropped a certain proposal and had brought forward no alternative to take its place. Throughout these debates, the Opposition, in objecting to the corn tax, had suggested alternatives which they would support. Those alternatives had been refused, and, as the right hon. Gentleman would offer no alternative himself, he should support the Motion of his right hon. friend.

MR. CHAPLIN (Lincolnshire, Sleaford)

said that hon. Members who had urged that the conclusion of peace had profoundly modified the financial situation of the original proposals of the Chancellor of the Exchequer, and that before these new taxes were voted the country ought to know the purposes for which the money was needed, must have forgotten the statements made in more or less detail, by the right hon. Gentleman when introducing the Budget. On that occasion the Chancellor of the Exchequer took into consideration the very contingency which had since arisen, and explained that in the event of peace being concluded in a few weeks the money would be required for gratuities and bounties to the soldiers who had served in that war, for disembodiment, for transport home of reservists and others, for the maintenance of a considerable force in South Africa, for the relief and resettlement of the two colonies, for rebuilding and restocking farms, and so on. It was rather hard, therefore, that, because a contingency which the right hon. Gentleman took into consideration at the time had now occurred, he should be told that his proposals were altogether inapplicable to the present situation. Under the circumstances the demand for the postponement of this clause was clearly unreasonable. As for the corn tax being a war tax alone, if they would look at the speech of the Chancellor of the Exchequer they would see that a column or two of his speech was devoted to the necessity of broadening the basis of taxation. The opposition to this clause was aimed at this particular tax, and but for the corn tax this Motion would never have been made. This was simply an attack by a side wind upon a tax which hon. Gentlemen opposite disliked, and with regard to which he thought they were very much mistaken, because it was a tax which would inflict less hardship upon all classes of the community than any other tax which any Chancellor of the Exchequer would be able to discover.

(4.30.) MR. McCRAE (Edinburgh, E.)

said that the right hon. Gentleman the Member for Sleaford had taken up an amazing position, considering that he was such a staunch supporter of Parliamentary procedure. The demand made was that the Chancellor of the Exchequer should indicate the purposes for which the money was required, and that Estimates should be submitted showing how the money was to be spent. No doubt the Chancellor of the Exchequer indicated in his Budget speech that if the war came to an end the money asked for might be required for other purposes of a more beneficial character, but the reason this Motion had been proposed was because the House was entitled to have a more specific definition of how this large surplus was to be applied. They bad heard a great deal about the policy of the open door of which he approved, but this new policy of the open purse was certainly contrary to the usage of Parliament. He would take the Chancellor of the Exehequer's own figures, and prove that he had at the present time £45,000,000 which he might spend, and for which no Estimates had been submitted to the House.

In the Budget speech proposals were made for an expenditure in South Africa amounting to £57,000,000. The right hon. Gentleman had shown that for two months the expenditure on the war had amounted to £12,000,000. That left £45,000,000 to be disposed of, and the Committee was entitled to ask for specific statements and an Estimate to show clearly how that money was to be spent. The right hon. Gentleman, in his very excellent speech last Wednesday, urged the House to leave his hands free, with a distinct understanding that all the surplus of £6,000,000 should be devoted to the reduction of the present Debt. He had every confidence in the Chancellor of the Exchequer, but he did not think they should leave his hands free to dispose of such a large sum of money. It was a most dangerous doctrine that money should be spent without having been previously sanctioned by the Committee. In his interesting Supplementary Budget speech of Wednesday last the right hon. Gentleman explained how he was going to deal with the sum at his disposal. He wished to show the right hon. Gentleman how he could remit the corn tax without disturbing the Budget, and he thought this would constitute a reason why this clause should be postponed. After providing, as the right hon. Gentleman intended to provide, for the restoration of the Sinking Fund to the extent of £4,600,000, and after applying, as he proposed to apply, £6,000,000 to the reduction of the floating Debt, he maintained that in addition to all that the right hon. Gentleman had a sum of £4,000,000 which he took into account in his Budget speech, but which he did not take into account on Wednesday last. If the right hon. Gentleman would apply that he would not require the corn tax and he would have in addition a surplus of £1,000,000 sterling.

He would present the Chancellor of the Exchequer with a Supplementary Budget. In his original Budget, after providing for the Sinking Fund contribution, the right hon. Gentleman showed a deficit of £26,800,000. Since then he had to provide £1,750,000 for the South African Constabulary, the grant to the West Indies, and the increased interest charge for the Debt. That made the total deficit £28,500,000. On the other side, he had the loan of £29,900,000. His proposed new taxation amounted to £4,600,000, and he had also the surplus of last year's loan amounting to £4,000,000, which gave him £38,500,000 after providing for the restoration of the Sinking Fund. The right hon. Gentleman must admit that the Exchequer balances at the present time were abnormally large, and he had in those balances the £4,000,000 which were borrowed last year for the purposes of the war. Therefore, after providing for the restoration of the Sinking Fund and the war expenditure to the conclusion of hostilities, the right hon. Gentleman had a balance of £28,000,000 this year; and in addition to that he maintained he had a further balance of £10,000,000 sterling. The right hon. Gentleman had spoken in no unmeasured terms as to the inconsistency of hon. Members on this side of the House proposing that the corn tax should be remitted, while they had always maintained that the right hon. Gentleman applied too small a portion of taxation to the redemption of war indebtedness. What was the principle he had applied? He would not include the contribution to the Sinking Fund. He had always maintained that the application of the Sinking Fund to war expenditure was like the principle of the Irishman who cut off a piece of his blanket at the top and sewed it on at the bottom in order to make it longer. With regard to this £10,000,000 that was left he asked the right hon. Gentleman to apply the principle which he had hitherto applied in providing for war expenditure. Deducting the Sinking Fund contribution he had gone on the principle that he provided a quarter of the expenditure out of taxation and three-quarters by borrowing. He wished him to apply the same principle to the surplus of £10,000,000, and then they would have £7,500,000 for the reduction of the Debt, and £2,500,000 for the remission of taxation. He hoped the right hon. Gentlemen would consider that, because the £7,500,000 for the reduction of the Debt was in addition to the £4,600,000 restored to the Sinking Fund. He trusted the right hon. Gentleman would accede to the appeal which had been made to him from his own side of the House, and give the Committee some statement as to how this £45,000,000 was to be expended. The Chancellor of the Exchequer, in reply to the hon. Member for Poplar, said he did not regard this as a war tax, and that that was a reason why the clause should not be postponed, but, having regard to the fact that in his Budget speech the right hon. Gentleman said he looked upon the corn tax as a trifling contribution to the cost of the war, now that it had come to a close, he hoped he would respond to the appeal made to him to reconsider the question of the remission of this tax, which to him was a hateful one, and a departure from the principles of Free Trade.

(4.45.) MR. DILLON

said he strongly objected to the particular tax proposed to be imposed by this clause, but the present Motion was not concerned with the merits or the demerits of the tax. The Motion was made in order to give an opportunity of protesting against what appeared to many of them to be a thoroughly vicious system of finance. It was all very fine to attempt to defend this by stating that it would be confined to the present instance, and, saying that the Chancellor of the Exchequer was so excellent a man that they could trust him with a free hand to deal with £40,000,000 after he had stated in a vague way his intentions as to the disposal of the money. That was an absurd way of arguing a case of this kind. It was a question of precedent and principle. If the whole finances of the country were to be conducted in the House of Commons in that way, their business would be turned upside down, and there was no limit to the extent to which that precedent might carry them. He had always understood that if there was one vital principle more than another, which had always been observed in dealing with finance in the House of Commons, it was that Ways and Means should follow Supply, and that no demand should be made in Ways and Means except after Estimates had been laid before the House, on the authority of the heads of the various spending departments. He never heard a Minister until this year ask the House of Commons to raise in Committee of Ways and Means, a large sum of money in respect of expenditure, as to which no opportunity for discussion had been given to the House of Commons. That was not asking for a small thing. It was asking the Committee to make a great and fundamental departure in the whole procedure of the House of Commons in this regard. Why should they be asked to impose an enormous burden of extra taxation on the people on vague statements, and when they bad no information whatever as to the details? The Chancellor of the Exchequer said just now that he made on Wednesday last the statement for which the right hon. Gentleman the Member for East Wolverhampton now asked. He did nothing of the kind. It was not for the Chancellor of the Exchequer to lay such a statement on the Table. His business was not to prepare Estimates, but to provide Ways and Means. He asked the Chancellor of the Exchequer whether, in view of the conclusion of peace, he would lay a revised statement before the House, and be replied that he would make a statement on Wednesday last, but on that evening he merely made a statement of the vaguest possible kind. He said that, roughly speaking, be would be obliged to use the whole of the £40,000,000, set down in the Estimates of the year for the war in South Africa. After giving roughly the figures showing how the money would be distributed, the right hon. Gentleman said he would have a balance of something over £6,000,000 which he would devote, if he got a free hand, to the redemption of the floating Debt. That, again, appeared to be a totally new departure for the House of Commons. When the Departments knew that the Chancellor of the Exchequer was to have a balance of £6,000,000 they would be encouraged to come down on him to get the money out of him.

This discussion was important not only on account of their objection to this particular tax, but also because of their objection to the enormous departure they were asked to make from the regular established custom of the House of Commons in dealing with financial matters. As bearing on the evil consequences which must flow from such a proceeding, he would refer to what was said in reference to the loan. The Chancellor of the Exchequer asked for authority, only about six weeks ago, to issue £32,000,000 of Consols, and on this very same vicious principle he asked that he should be allowed to include in that sum £17,000,000 not allocated or accounted for in the Estimates of the year. He gave only a vague account of what was to be done with the £17,000,000. The hon. Member and others protested against any such permission being given to the Chancellor of the Exchequer, and they pointed out that in the uncertainty which prevailed the proper course, in accordance with purity of financial practice, was to borrow what was required to meet the services of the year, and if additional Estimates had to be laid before the House of Commons authority could be asked for a second loan. By borrowing £17,000,000 more than he required at that particular period, the right hon. Gentleman had lost to the country £1,000,000. That could have been saved if the Chancellor of the Exchequer had postponed the borrowing of the £17,000,000 until a later period when Consols had recovered in price. If the balance of £6,000,000, which was partly due to that loan, was to be used S in the redemption of Debt, he presumed the Debt would have to be redeemed at par, and the loss of £1,000,000 would be the result of borrowing more than was required. They were now asked to provide for a great Budget, which was unduly hurried on the House of Commons quite unnecessarily while the question of peace or war was hanging in the balance. He could understand the policy of the Chancellor of the Exchequer hastening to make a financial statement while the negotiations for peace were going on, to impress the Boer leaders with the idea that the resources of this country were not exhausted, and that the Government were prepared to raise untold millions to carry on the war, but he could not understand why the right hon. Gentleman should force on the Second Reading of the Finance Bill, at a time when the financial accounts of the year could be remodelled in the event of peace being concluded. There was absolutely nothing to justify or explain the extreme anxiety of the Chancellor of the Exchequer to get the Finance Bill forward, once he got the taxes Resolutions. It would have been quite competent to hold back the Second Reading of the Bill until peace was concluded, and the Estimates recast, so that on the Second Reading the right hon. Gentleman might be able to announce the modifications he proposed to introduce in the Budget, in consequence of the conclusion of peace.

What was the position they were placed in now? In the first place they had voted very large sums of money under certain headings in the Military Estimates which, with regard to millions, were not to be spent in the way in which they were set forth in the Estimates; in the second place there were various heads of expenditure which had not come before the House in any shape; and in the third place the Committee were absolutely in the dark whether they would ever be allowed to discuss the revised Supplementary Estimate at all. The Chancellor of the Exchequer said, in answer to an interruption, that he could not spend a penny of the £40,000,000, until it was voted by the House of Commons. That was not absolutely true, because a great deal had been voted by the House on the War Estimates which would have to be revised and corrected. He did not know whether it was the intention of the Government to have that money revoted, or whether they had power to divert it to other purposes altogether. With regard to the Supplementary Estimates, they undoubtedly would have to vote the money, whether they were allowed to discuss the various items or not. A great portion of the £40,000,000 might be taken on a closured night and shoved through the House without a single hour of discussion. That was a monstrous thing. He did not know to what extent they were safeguarded in this matter by the new Supply Rule. It was now fortunately enacted that, in regard to new services, they would have an opportunity, apart from the closure, of discussing them. With regard to the other services connected with the conclusion of the war, he was afraid they would be ruled out of that exemption. They might have all the new Votes on the Table two or three days before the end of the session, but what satisfaction would that be when they would all be closured in Committee of Supply without a single word of comment being allowed upon them. What the Chancellor of the Exchequer was asking was that this Committee of Ways and Means should provide £30,000,000, in respect of which there were no Estimates, and no security that Parliament would ever have the opportunity of discussing them. If that method of dealing with national finance were sanctioned, what was to prevent the Chancellor of the Exchequer introducing, at some future time, his Budget before the Estimates of the year had been laid before the House? The right hon. Gentleman might say—"I estimate the expenditure at £100,000,000 and you may trust me that it is all right. I want £30,000,000 for the Naval Service, £30,000,000 for the Army Service and £40,000,000 for the other services; and by-and-by you will have the Estimates presented to you." He had noted in his experience of the House of Commons the truth of the saying in the catechism that if you once fall into a venial sin, these venial sins mount up by little and little until you become all bad. Practically the House of Commons commenced sinning in small venial transactions. But these formed precedents, until, at last, a principle was established. Therefore, he maintained, that if this principle were sanctioned on the present occasion by the House of Commons it would form a departure from the old Rule that both Committee of Ways and Means and Committee of Supply should have before them the Estimates for the year. Otherwise there was nothing to prevent a Chancellor of the Exchequer from basing his demand on a Budget night for a Vote on his own rough estimates, given in round figures, as to what would be required for the service of the year.


The hon. Member has based his support of the Motion of the right hon. Member for East Wolverhampton not so much, or, indeed, not at all, upon objection to the particular tax referred to more than once, but upon objection to proceeding with the subject on the present occasion. The view of the hon. Member appears to be that, although I stilted in my speeches on introducing the Budget, that, in the event of the war coming to an early termination, the expenditure otherwise required for the war would be devoted to services connected with the termination of the war, and although I promised on Wednesday to lay on the Table a full Statement explaining how the diversions would be made, yet he is not prepared to go on with this Bill until he has seen that Paper. That, I think, was the position taken by the hon. Member. But that is not the position of the right hon. Member, who merely moved to postpone this particular clause. There was not a word in his speech to indicate that he was not perfectly prepared to proceed with the other clauses of the Finance Bill.


I said we should have a, new Budget in order that we might consider the whole of the financial position.


Then the contention is more unreasonable than I supposed, Hon. Gentlemen opposite will not proceed with the renewal of the ordinary taxes for the year which are required for the service of the year until this Statement in relation to the new allocation of the Army Estimates for the service of the war is in their hands. A more unreasonable proposal I never heard submitted to the House. I undertake to lay a Statement before the House, at as early a date as possible; and I will promise, on behalf of my right hon. friend the leader of the House, that proper opportunity shall be given for discussing the alteration of the allocation of items as compared with the Estimates, before the end of the session, and in fact at a reasonably early date. I explained on Wednesday last the alterations in my financial proposals necessitated by the termination of the war. I will undertake that a Statement showing the differences from the Statement circulated at the date of the Budget shall be in the hands of Members within a short time; and, seeing that we have occupied two and a half hours in discussing whether we shall proceed with this clause or not, we might without further delay come to a decision on that point.


The right hon. Gentleman, with an air of great candour, as if making a great concession, has not really conceded the point we wish to impress upon the House. His promise that in a few days a Statement shall be laid on the Table and an opportunity for discussion given before the end of the session—


That was in reply to the hon. Member for East Mayo as to the closure being inflicted.


His promise to discuss the change in the Estimates does not meet us We are invited today not only to continue old taxes but to agree to the imposition of a new tax of a peculiar character in a condition of things in which it is difficult to see the necessity without the detailed Estimates and the Statement which ought to be in the hands of Members before they are called upon to vote on any such tax. The right hon. Gentleman has drawn a distinction between the postponement of this clause and the postponement of this stage of the Bill to a later date; but the whole matter centres upon this one clause, because it is a peculiar clause; for we are invited not only to impose a new duty, as to which there is a strong feeling in the country contrary to its imposition, but a duty of no ordinary kind; it is a duty which is to lead to a total subversion of our whole financial system in regard to the commercial relations of this with other countries.


I never said so.


No, but the right hon. Gentleman's friends have said so. We have had the greatest difficulty in discovering what this duty is. I am not going to discuss it. Sometimes it has been called a war tax, to-day it has been described as part of the permanent revenue of the country.


It is not a war tax only.


It is partly a war tax and partly it is not. I will concede this, that the right hon. Gentleman was very adroit and astute in his Budget speech, which I think I have in my pocket. This is all in the right hon. Gentleman's favour. I thought I had got hold of a good weapon against him. This is what he said— I am convinced that the people know and feel, with the high wages of the present day and bread so cheap"—and so on—"the tax I am proposing could at the very worst be but a very trifling contribution on their part to the cost of a war which the great bulk of them approve, and to the ever-increasing charge of the Navy, one of whose primary duties it is to protect the food supply of the country. I am bound, therefore, to offer my meed of admiration to the right hon. Gentleman for the astuteness with which at this early stage of the proceedings he anticipated the little difficulty that would arise on this point. Well, now we are to understand that this is partly a war tax and partly a permanent tax, and this means, I suppose, that it is meant to be a permanent tax; but advantage is taken of the war to get it imposed—that is the plain English of it. It is regarded, I think, by eminent persons near the right hon. Gentleman, as the door to a great change, the means for securing a fundamental change in the financial relations of this country with our Colonies and foreign countries. That is an additional reason why we should look at it once, twice, and thrice before accepting it. That makes us more and more particular to insist, or demand, for we cannot insist, unfortunately, that we should have in our possession the full and accurate facts that justify the taking so strong a step at this particular juncture. That is the reason why my right hon. friend moved the postponement of the clause, and I certainly think the circumstances justify him.

(5.14.) MR. McKENNA (Monmouthshire, N.)

said that, as far as he could judge from the cheers of hon. Gentlemen opposite and the emphasis of the Chancellor of the Exchequer, the two arguments on which the right hon. Gentlemen relied were, that, there being a deficit on the year of £24,000,000, he was bound to make provision for that deficit other than by way of loan; and, secondly, that it would be improper to devote the borrowed money towards the reduction of taxation. He contended that the real deficit on the ordinary taxation of the year was not £24,000,000, but £47,000,000. How did the Chancellor of the Exchequer in preceding years provide for the war expenditure? In 1900–1901, out of a total war expenditure of £68,000,000, £15,000,000 was provided by taxation; in 1901–1902, out of £73,000,000 of war expenditure, the right hon. Gentleman provided £20,000,000 out of taxation. In the present year out of £47,000,000 of war expenditure, £23,000,000 was provided out of taxation. It was not anything like the same proportion. In the first year 22 per cent. of the amount required was found by taxation, in the second year 21 per cent., and now the right hon. Gentleman's conscience was not satisfied with less than 59 per cent. of the war expenditure being found out of taxation. Under those circumstances they were entitled to say it was not, as the right hon. Gentleman alleged, a necessary provision out of the taxation of the year for the cost of the war. It was a, provision of three times as much as the right hon. Gentleman thought necessary to make in the first year of the war. That being so, the Committee was entitled to say that to make this arrangement for the provision for the deficit was really hoodwinking the Committee on the part of the right hon. Gentleman, and, he submitted, with all respect, that the right hon. Gentleman was not acting on anything like the same principle as that on which he acted in the first year of the war. With regard to the right hon. Gentleman's second point, he submitted that, when the current expenditure was paid, not out of taxation, but out of money raised by way of loan, then they were relieving the necessary taxation by loan. Everyone would agree that, if the loan had not already been raised, it would not be proper to remit existing taxation, and then raise a new loan to meet any deficit that might arise. But that was not the case in this instance. Hero we had £10,000,000 in hand, but the Chancellor of the Exchequer did not propose to use that money in relief of taxation. He proposed to impose new-taxation and devote that surplus to the reduction of Debt, Was that an economical proceeding? New taxation cost money; the Treasury did not get it all. The right hon. Gentleman in his last borrowing had lost millions, owing to the price at which he had to issue his loan. That had gone, and could not be recovered, and he now proposed to add to that loss by compelling the people to pay an additional cost in the coming year on every pound raised. Under the circumstances he submitted that both the arguments of the right hon. Gentleman had failed. This was obviously bad finance, and he should be much surprised if hon. Members did not agree that it was bad finance to leave the Chancellor of the Exchequer with a balance of £10,000,000, which was a, bait for everybody on his side of the House, and which was a temptation to himself, inasmuch as it was money which he could spend without consulting again the House of Commons, and money over which the Committee had lost all control.

MR. GEORGE WHITELEY (Yorkshire. W. R., Pudsey)

thought that all would agree that the Motion of the right hon. Member for East Wolverhampton was eminently reasonable and justifiable. The Motion was that the first clause of the finance Bill should be postponed until Parliament was fully seized of all the figures and facts of the new position of affairs, and until they knew how the Chancellor of the Exchequer was about to deal with this surplus which he had in hand. The Chancellor of the Exchequer was raising revenues which were not appropriated in any shape or form, the expenditure of which had not been debated or passed by any Committee of Supply, and the expenditure of which had not in any way been foreshadowed by the Government; large sums of money, the destination of which was unknown, and the disposal of which nobody knew anything whatever about. It had always been the opinion of Chancellors of the Exchequer up to the present time that it was undesirable to take money out of the pockets of the people unless it was necessary; that it should be left to fructify; but the right hon. Gentleman opposite had struck out an entirely new line, and one which up to the present time had not been countenanced by any Chancellor of the Exchequer. The Committee had heard about floating Debts. Now they heard about floating surpluses. By this action on the part of the Chancellor of the Exchequer, he lost all his safeguards against the spendthrift habits of Government Departments. What was the right hon. Gentleman doing? At a time when taxation was heavier than it had ever been known by any hon. Member of the House, when the income tax had reached the high water mark of this generation, when now duties had been imposed on foodstuffs not before taxed, the right hon. Gentleman proposed that he should absorb a large sum of money for which he had no use in the reduction of Debt. The Committee had been bewildered by the figures of the surplus of the right hon. Gentleman. Some experts had put it at £45,000,000, whilst others had brought it down to £6,000,000. The right hon. Gentleman himself fixed it at £10,000,000.


There would be a surplus from loans of £10,500,000; £4,500,000 of that will go to the Sinking Fund, and I may add that I pledged myself on Wednesday last that the remaining £6,000,000 should be used for paying off floating Debt, except so far as it might be necessary to divert it for the temporary advantage of South Africa. I never dreamt of devoting it to ordinary Supplementary Estimates.


said the explanation of the right hon. Gentleman showed the necessity of having some Statement with regard to this matter. Nobody but the right hon. Gentleman understood the position of affairs at present. Our fiscal affairs were in a state of jumble. The fact that the right hon. Gentleman stated that he would devote this surplus to the reduction of floating Debt pre-supposed that there would be a surplus. That being so, was the extra penny on the income tax, were these new grain duties, necessary at the present time? He submitted that they were not only entirely unnecessary, but mischievous and iniquitous. It had been urged that the Amendment of the right hon. Member for East Wolverhampton was obstructive, but it could not be said to be anything of the kind. It raised the whole question of whether this new taxation was necessary or not, and he considered that this matter should be deferred until all the figures had been placed before Parliament. The Committee was arguing the matter in the dark, and would be well advised to accept the Amendment.

(5.30.) MR. WINSTON CHURCHILL (Oldham)

said there was undoubtedly a difference between the present situation and the situation as it stood when the Budget was introduced; but he thought that difference might easily be very much exaggerated. The Army was still in South Africa, and would still have to be fed, and would have to be be brought home, so that practically the only immediate economy was in the reduction of expenditure on ammunition. It was true that the charges which the right hon. Gentleman would have to meet in bringing home troops and so on were not put forward with the detailed accuracy to which the House was accustomed; how could they be in the expenditure of winding up a war? It was one of the evils of war that the House could not have the same control over expenditure of that sort as they had over the ordinary expenditure of the country. He confessed that he preferred taxation to increasing the Debt. Supposing the estimated expenditure when the Budget was framed had been less by the amount of the possible surplus, would hon. Gentlemen opposite have refrained from putting on new taxation, or would they have reduced the amount to be borrowed? Unquestionably they should reduce the amount to be borrowed. It was only proper that strenuous efforts should be made to meet increased expenditure largely by taxation, and he was rejoiced that the Chancellor of the Exchequer, instead of falling back on the easy and self-indulgent policy of borrowing, had held to the austere method of raising from taxation as much as he possibly could. The principle of the new taxation which had been put in had been affirmed by the House, and acquiesced in by the country, and it was much better to utilise the money so obtained for the reduction of the Debt and the restoration of the Sinking Fund, than to go back upon the arrangement that had been made.

(5.35.) MR. BLAKE (Longford, S.)

said the discussion had evidenced in a concrete form the viciousness of the course which the Government proposed that the House should take, and the utter disregard which it involved of the ordinary precautions taken in financial questions of this kind. Had the recognised and settled foundation of their financial principles been maintained on that occasion, it would have been quite impossible for such a discussion to take place. It would have been impossible that such doubt and difference as to the excess of the Ways and Means proposed over duly estimated Supplies. He would trot enter into figures, but was disposed to agree with the Member for King's Lynn in his large estimate of that excess. Why this doubt and dispute? It was because they had departed from what had been the established, and, up to now, as far as he knew, the invariable practice of the House of Commons that it should have laid before it in detail first of all what were the estimates of expenses which those responsible for the government of the country thought should be demanded in the interests of the nation during the year. This gave the House the opportunity of satisfying itself as to the amount which ought to be proposed. Then, and not till then, came the consideration of the question—what should be the ways and means? Ways for what, means for what? The ways to provide and the means to make good that Supply which the Estimates of the year had indicated to the satisfaction of the House were required for the public service of the country. But they had not yet had the usual and proper opportunity of satisfying themselves that the gross amount raised by the various resources of loan, old taxes, and this additional taxation ought to be provided, not for the purposes originally named, but for other purposes under the new conditions. That was the difficulty which arose, because the Chancellor of the Exchequer found it convenient and in the public interest, upon the whole, to proceed with his Budget at a period when the finances of the country could not be absolutely arranged—matters being in the balance—at a period when the peace negotiations were about to commence. Notwithstanding, he considered it necessary at once to bring in a war Budget and to make a war Statement. It was on that basis that the Supplies were voted, the loan granted and the taxes proposed. It was quite true that the Chancellor threw out a vague alternative idea, and, in a mere sketch, a mere adumbration of a plan, spoke of some millions of money which might not be required, and of many more millions which might be otherwise employed, if the peace negotiations were successfully concluded. But who in the world would dare suggest that that adumbration would have been adequate ground for voting that motley directly for those vague purposes? No one. Estimates would have been demanded. Still less could it be solid ground when the mind of the House and country was at the moment fixed, not on the sketch, but wholly on the war estimates presented. No one would have been bold enough, upon the sketch thus propounded to the House, to say that they should agree to the Budget then brought down. It was thrown out as something which might satisfy the House, that a good deal of money would be required anyway, but that there was a possibility that they would have to reconsider those Estimates, because some other method of spending that money, or some other wants, would be brought forward in case the negotiations were successful. The vicious course was repeated, which had been pursued in the previous year, of asking, even on the war basis, for more money than was specifically estimated for. From the tone of the Chancellor of the Exchequer's remarks that day, he rather suspected that it was intended that a very large proportion of the money voted by the House for pay for the Army and other expenses of carrying on the war would be otherwise used without the House having any further opportunity to vote upon it—that was to say, used for quite different purposes, for purposes connected with the end of the war, when the arrangements would be quite different, as they would have to do wholly with peace instead of wholly with war. These arrangements would demand as much consideration from the economical point of view as could be conceived, and would require far more scrutiny than any ordinary arrangements in peace times. But, as to these many millions, he feared there would be no check at all; and, as to the rest, there would be no effective check. Money voted for specific proposed charges would be spent on quite different charges, and the effective control of Parliament would be lost. The Chancellor asked for a free hand for himself. That was an unconstitutional demand; a free hand for the Chancellor meant a palsied hand of Parliament.

Now, what was the reason of the rule which had here been violated? The reason of it was that it was very much more difficult to persuade the representatives of the people to vote supplies before ways and means had been provided than it was to induce them to acquiesce in the spending of money that had been already borrowed and provided. Once the money was in the Bank the demands upon it were inexorable, and the power of resistance was nullified. To depart from the settled system of first dealing with supply, and later with ways and means for such supply was to enter upon a path predestined to extravagance and corruption. [Opposition cheers.] Then having, in the uncertain state of affairs, provided for a condition now changed, for war instead of peace, what ought they now to do? What they ought to do was to revert as quickly as possible to the normal and customary method. The moment the new state of things arose, the moment it was to be a peace Budget instead of a war Budget, the moment the position was altogether changed so far as concerned the application of a sum approx-mating to £40,000,000; that moment it was the duty of those responsible for the government of the country to bring down fresh Estimates for the utilisation of the money which had not been voted for purposes other than the carrying on of the war. That was the wise and prudent course, and thus they would be upholding the sound system of finance which had been departed from in this instance. The House should have specific details as to the proposed expenditure of that money. The House should not be asked to proceed further with the consideration of Ways and Means till they had received satisfaction as to estimates of Supply. To preserve the rights of the House of Commons and protect the interests of the people, they resisted further progress at this time and would certainly vote in favour of Sir Henry Fowler's Motion.

(5.45.) SIR JOSEPH PEASE (Durham, Barnard Castle)

said the hon. Member who spoke a few moments previously made a great point in his speech between raising money by taxation and raising money by loan. He had professed a great preference in favour of taxation to loan. He could not help thinking when that hon. Member had seen as many years pass over his head as he (Sir Joseph) had seen, he would probably be not quite so eager to raise money by immediate taxation as he would by a loan which he might not be called upon to pay! The Chancellor of the Exchequer had said very properly, that the money now asked for by the loan was already in his hands. The question before the Committee was, therefore, not that of the manner of raising money, but one which he looked upon as; much more important and serious. The objection was to any Chancellor of the Exchequer being left with a large amount of money in hand for purposes with which the House of Commons was not acquainted. The right hon. Gentleman the Member for the Sleaford Division had urged that, in the difficult and obviously uncertain circumstances at present surrounding him, the Chancellor of the Exchequer ought to be left with a large amount in hand. No doubt in view of having to wind up a war—especially one in which such excellent and generous conditions had been laid down as to providing money for the people in whose country hostilities had been carried on—the Chancellor of the Exchequer had a larger claim to have a sum in hand than most Chancellors had, but if the House once admitted the principle that the Chancellor of the Exchequer should have money in hand unappropriated, and of the appropriation of which the House knew nothing, it would lose that control over the purse-strings, which had been one of the strongest features of the Constitution the House had always possessed. The question of the particular taxes was as nothing compared with the principle contained in the Motion that the clause should be postponed until the Committee knew definitely the purposes for which the money was required. He trusted that, in deference to the old customs and habits relating to the authorities of the House of Commons, the right hon. Gentleman would give way, in order that the Committee might know for what they were voting, and how the money required was to be raised.

MR. CHANNING (Northamptonshire, E.)

pointed out that the amount raised by taxation in the present Budget was £152,000,000, which represented £9,500,000 more than in the preceding year. Of that amount £4,500,000 was raised by the addition to the income tax and the duty on corn. The right hon. Gentleman therefore had a sum of £5,000,000 or £6,000,000, from the increase of previously imposed taxation, which, in his opinion, was an ample margin to justify the principle of dealing with war expenditure largely by taxation, so that both the increase of the income tax and tin; duty on corn were wholly unnecessary from the financial point of view.

(5.53.) Question put.

The Committee divided:—Ayes. 176; Noes, 264. (Division List No. 209.)

Abraham, William (Cork, N. E.) Doogan, P. C. Langley, Batty
Allan, William (Gateshead) Duncan, J. Hastings Law, Hugh Alex. (Donegal, W.)
Allen, Charles P. (Glouc., Stroud Dunn, Sir William Layland-Barratt, Francis
Ambrose, Robert Edwards, Frank Leamy, Edmund
Asher, Alexander Emmott, Alfred Leigh, Sir Joseph
Ashton, Thomas Gair Evans, Sir Francis H (Maidstone Leng, Sir John
Asquith, Rt. Hn. Herbert Henry Farquharson, Dr. Robert Levy, Maurice
Atherley-Jones, L. Fenwick, Charles Logan, John William
Austin, Sir John Ferguson, R. C. Muuro (Leith) Lough, Thomas
Barlow, John Emmott Ffrench, Peter London, W.
Barry, E. (Cork, S.) Fitzmaurice, Lord Edmond MacDonnell, Dr. Mark A.
Bayley, Thomas (Derbyshire) Flynn, James Christopher MacNeill, John Gordon Swift
Beaumont, Wentworth C. B. Foster, Sir Walter (Derby Co.) MacVeugh, Jeremiah
Blake, Edward Fowler, Rt. Hon. Sir Henry M'Cann, James
Boland, John Gilhooly, James M'Crae, George
Bowles, T. Gibson (King's Lynn Goddard, Daniel Ford M'Hugh, Patrick A.
Broadhurst, Henry Grant, Corrie M'Kean, John
Brown, George M. (Edinburgh) Grey, Sir Edward (Berwick) M'Kenna, Reginald
Brunner, Sir John Tomlinson Haldane, Richard Burdon Mather, William
Bryce, Rt. Hon. James Hammond, John Mooney, John J.
Burke, E. Haviland- Harcourt, Rt. Hon. Sir William Morgan, J. Lloyd (Carmarthen)
Burns, John Harmsworth, R. Leicester Morley, Charles (Breconshire)
Burt, Thomas Harwood, George Motley, Rt. Hn. John (Montrose
Buxton, Sydney Charles Hayden, John Patrick Nannetti, Joseph P.
Caldwell, James Hayne, Rt. Hon. Charles Seale- Newnes, Sir George
Campbell, John (Armagh, S.) Hayter, Rt. Hon. Sir Arthur D. Nolan, Col. John P. (Galway, N.)
Campbell-Bannerman, Sir H. Helme, Norval Watson Nolan, Joseph (Louth, South)
Causton, Richard Knight Hemphill, Rt. Hon. Charles H. Norman, Henry
Cawley, Frederick Hobhouse, C. E. H. (Bristol, E. Norton, Capt, Cecil William
Channing, Francis Allston Holland, William Henry O'Brien, James F. X. (Cork)
Craig, Robert Hunter Horniman, Frederick John O'Brien, Kendal (Tipperary Mid
Crean, Eugene Humphreys-Owen, Arthur C. O'Brien, Patrick (Kilkenny)
Cremer, William Randal Jacoby, James Alfred O'Brien, P. J. (Tipperary, N.)
Crombie, John William Joicey, Sir James O'Connor, James (Wicklow, W.)
Davies, Alfred (Carmarthen) Jones, David Brymn'r (Swansea O'Donnell, T. (Kerry, W.)
Davies, M. Vaughan-(Cardigan Joyce, Michael O'Kelly, James (Roscommon, N.
Delany, William Kearley, Hudson E. O'Malley, William
Dewar, John A. (Inverness sh.) Kinloch, Sir Jno. George Smyth O'Mara, James
Dilke, Rt. Hon. Sir Charles Kitson, Sir James O'Shaughnessy, P. J.
Dillon, John Lambert, George Palmer, George Wm. (Reading)
Partington, Oswald Shaw, Thomas (Hawick B.) Toulmin, George
Paulton, James Mellor Sheehan, Daniel Daniel Trevelyan, Charles Philips
Pease, Alfred E. (Cleveland) Sinclair, John (Forfarshire) Wallace, Robert
Pease, J. A. (Saffron Walden) Smith, Samuel (Flint) Walton, Joseph (Barnsley)
Pease, Sir Joseph W. (Durham) Soames, Arthur Wellesley Warner, Thomas Courtenay T.
Pirie, Duncan V. Soares, Ernest J. Wason, Eugene (Clackmannan)
Power, Patrick Joseph Spencer, Rt. Hn. C. R (Northants White, Luke (York, E. R.)
Price, Robert John Stevenson, Francis S. Whiteley, George (York, W. R.)
Rea, Russell Strachey, Sir Edward Whitley, J. H. (Halifax)
Reckitt, Harold James Sullivan, Donal Whittaker, Thomas Palmer
Reddy, M. Taylor, Theodore Cooke Williams, Osmond (Merioneth)
Redmond, John E. (Waterford) Thomas Abel (Carmarthen, E.) Wilson, Fred. W. (Norfolk, Mid.
Redmond, William (Clare) Thomas, Alfred (Glamorgan, E.) Wilson, J. W. (Worcestersh. N.)
Reid, Sir R. Threshie (Dumfries Thomas, David Alfred (Merthyr Woodhouse, Sir J. T (Huddersf'd
Roberts, John H. (Denbighs.) Thomas, F. Freeman-(Hastings Young, Samuel
Robertson, Edmund (Dundee) Thomas, J A (Glamorgan, Gower Yoxall, James Henry
Robson, William Snowdon Thompson, Dr. EC (Monagh'n, N
Runciman, Walter Thomson, F. W. (York, W. R.) TELLERS FOR THE AYES— Mr. Herbert Gladstone and Mr. William M'Arthur.
Schwann, Charles E. Thorburn, Sir Walter
Shaw, Chas. Edw. (Stafford) Tomkinson, James
Acland-Hood, Capt. Sir Alex. F. Colston, Chas. Edw. H. Athole Greville, Hon. Ronald
Agg-Gardner, James Tynte Cook, Sir Frederick Lucas Guest, Hon. Ivor Churchill
Agnew, Sir Andrew Noel Corbett, A. Cameron (Glasgow) Gunter, Sir Robert
Allhusen, Augustus H'nry Eden Corbett, T. L. (Down, North) Guthrie, Walter Murray
Allsopp, Hon. George Cox, Irwin Edward Bainbridge Hain, Edward
Arkwright, John Stanhope Cranborne, Viscount Hall, Edward Marshall
Arnold-Forster, Hugh O. Cripps, Charles Alfred Halsey, Rt. Hon. Thomas F.
Bagot Capt. Josceline FitzRoy Cross, Alexander (Glasgow) Hamilton, Rt Hn Lord G (Midd'x
Bain, Colonel James Robert Cross, Herb. Shepherd (Bolton) Hanbury, Rt. Hon. Robert Wm.
Balcarres, Lord Cubitt, Hon. Henry Hardy, Laurence (Kent, Ashf'rd
Balfour, Rt. Hon. A. J. (Manch'r Dalkeith, Earl of Harris, Frederick Leverton
Balfour, Capt. C. B. (Hornsey) Dalrymple, Sir Charles Haslam, Sir Alfred S.
Balfour, Rt Hn Gerald W. (Leeds Davenport, William Bromley- Hay, Hon. Claude George
Balfour, Kenneth R. (Christch. Davies, Sir Horatio D. (Chatham Heath, Arthur Howard (Hanley
Banbury, Frederick George Dewar, T. R (T'r H'mlets, S. Geo. Heaton, John Henniker
Barry, Sir Francis T. (Windsor) Dickinson, Robert Edmond Helder, Augustus
Bartley, George C. T. Dickson, Charles Scott Henderson, Alexander
Bathurst, Hon. Allen Benjamin Dickson-Poynder, Sir John P. Higginbottom, S. W.
Beach, Rt Hn. Sir Michael Hicks Digby, Johh K. D. Wingfield- Hoare Sir Samuel
Beckett, Ernest William Dixon-Hartland, Sir Fred Dixon Hope, J. F.(Shefield, Brightside
Beresford, Lord Chas. William Dorington, Sir John Edward Houldsworth, Sir Wm. Henry
Bignold, Arthur Douglas, Rt. Hon. A. Akers- Hoult, Joseph
Blundell, Colonel Henry Doxford, Sir William Theodore Howard, J.(Midd., Tottenham)
Bond, Edward Duke, Henry Edward Hozier, Hon. James Henry Cecil
Boscawen, Arthur Griffith- Durning-Lawrence, Sir Edwin Hudson, George Bickersteth
Boulnois, Edmund Dyke, Rt. Hn. Sir William Hart Hutton, John (Yorks, N. R.)
Bowles, Capt. H. F. (Middlesex Elliot, Hon. A. Ralph Douglas Jackson, Rt. Hon. Wm. Lawies
Brassey, Albert Faber, George Denison (York) Jeffreys, Arthur Frederick
Brookfield, Colonel Montagu Fellowes, Hn. Ailwyn Edward Jessel, Captain Herbert Merton
Brown, Alexander H. (Shropsh. Fergusson, Rt. Hn. Sir J (Manc'r Johnstone, Heywood (Sussex)
Brymer, William Ernest Finch, Goerge H. Kennaway, Rt. Hon. Sir John H.
Burdett-Coutts, W. Finlay, Sir Robert Bannatyne Kenvon-Slaney, Col. W. (Salop.
Butcher, John George Fisher, William Hayes Kimber, Henry
Carson, Rt. Hon. Sir Edw. H. Fletcher, Rt. Hon. Sir Hemy Knowles, Lees
Cautley, Henry Strother Flower, Ernest Law, Andrew Bonar (Glasgow)
Cavendish, R. F. (N. Lancs.) Foster, Philip S (Warwick, S. W. Lawrence, Joseph (Monmouth)
Cavendish, V. C. W. (Derbyshire Galloway, William Johnson Lawson, John Grant
Cayzer, Sir Charles William Gardner, Ernest Lecky, Rt. Hn. William Edw. H.
Cecil, Lord Hugh (Greenwich) Garfit, William Lee, Arthur H. (Hants, Fareham
Chamberlain, Rt. Hon. J. (Birm. Gibbs, Hn. Vicary (St. Albans) Lees, Sir Elliott (Birkenhead)
Chamberlain, J. Austen (Worc'r Gordon, Hn. J. E. (Elgin & Nairn Legge, Col. Hon. Heneage
Chaplin, Rt. Hon. Henry Gordon, Maj. Evans T'rH'ml'ts Leigh-Bennett, Henry Currie
Chapman, Edward Gore, Hn G. R. C. Ormsby-(Salop Leveson-Gower. Frederick N. S.
Charrington, Spencer Gore, Hon. S. F. Ormsby-(Linc.) Lockwood, Lt.-Col. A. R.
Churchill, Winston Spencer Gorst, Rt. Hn. Sir John Eldon Long, Col. Charles W. (Evesham
Clive, Captain Percy A. Goulding, Edward Alfred Long Rt. Hn. Walter (Bristol, S)
Cochrane, Hon. Thos. H. A. E. Graham, Henry Robert Lonsdale, John Brownlee
Coddington, Sir William Gray, Ernest (West Ham) Lowe, Francis William
Cohen, Benjamin Louis Green, Walford D (Wednesbury Lowther, Rt. Hn. James (Kent)
Cellings, Rt. Hon. Jesse Greene, Sir E. W (B'ryS Edm'nds Lucas, Col. Francis (Lowestoft)
Colomb, Sir John Chas. Ready Greene, Henry D.(Shrewsbury) Lucas, Reginald J. (Portsmouth
Macartney, Rt Hn. W. G. Ellison Platt-Higgins, Frederick Stewart, Sir Mark J. M'Taggart
Macdona, John Cumming Plummer, Walter R. Stock, James Henry
MacIver, David (Liverpool) Powell, Sir Francis Sharp Strutt, Hon. Charles Hedley
Maconochie, A. W. Pretyman, Ernest George Sturt, Hon. Humphry Napier
M'Arthur, Charles (Liverpool) Pryce-Jones, Lt.-Col. Edward Talbot, Lord E. (Chichester)
M'Calmont, Col. J. (Antrim, E.) Purvis, Robert Talbot, Rt. Hn. J. G (Oxf'd Univ.
M'Iver, Sir Lewis (Edinburgh W Pym, C. Guy Thornton, Percy M.
Majendie, James A. H. Quilter, Sir Cuthbert Tomlinson, Wm. Edw. Murray
Malcolm, Ian Randles, John S. Tritton, Charles Ernest
Maxwell, Rt Hn Sir H. E (Wigt'n Rankin, Sir James Tufnell, Lieut.-Col. Edward
Maxwell, W. J. H. (Dumfriessh. Rasch, Major Frederic Carne Valentia, Viscount
Melville, Beresford Valentine Rattigan, Sir William Henry Vincent, Cl. Sir C. E. H (Sheffield
Middlemore, J no. Throgmorton Reid, James (Greenock) Wanklyn, James Leslie
Milner, Rt. Hn. Sir Frederick G. Remnant, James Farquharson Warde, Colonel C. E.
Milvain, Thomas Renshaw, Charles Bine Warr, Augustus Frederick
Molesworth, Sir Lewis Ridley, Hn. M. W. (Stalybridge) Webb, Colonel William George
Montagu, G. (Huntingdon) Ritchie, Rt. Hn. Chas. Thomson Welby, Lt.-Cl. A. C. E. (Taunton
Moon, Edward Robert Pacy Roberts, Samuel (Sheffield) Welby, Sir Charles G. E. (Notts.)
More, Robt. Jasper (Shropshire) Robertson, Herbert (Hackney) Whitmore, Charles Algernon
Morgan, David J (Walthamst'w Ropner, Colonel Robert Williams, Colonel R. (Dorset)
Morgan, Hn. Fred.(Monm'thsh. Round, James Williams, Rt Hn J Pow'll-(Birm.
Morrison, James Archibald Rutherford, John Wills, Sir Frederick
Morton, Arthur H. A. (Deptford Sackville, Col. S. G. Stopford- Wilson, A. Stanley (York, E. R.)
Mowbray, Sir Robert Gray C. Sadler, Col. Samuel Alexander Wilson, John (Glasgow)
Muntz, Philip A. Samuel, Harry S. (Limehouse) Wilson-Todd, Wm. H. (Yorks.)
Murray, Rt. Hn. A. Gr'h'm (Bute Sassoon, Sir Edward Albert Wodehouse, Rt. Hn. E. R. (Bath)
Murray, Charles J. (Coventry) Seton-Karr, Henry Wolff, Gustav Wilhelm
Murray, Col. Wyndham (Bath) Sharpe, William Edward T. Worsley-Taylor, Henry Wilson
Myers, William Henry Shaw-Stewart, M. H. (Renfrew) Wortley, Rt. Hn. C. B. Stuart-
Nicholson, William Graham Simeon, Sir Barrington Wyndham, Rt. Hon. George
Nicol, Donald Ninian Sinclair, Louis (Romford) Wyndham-Quin, Major W. H.
O'Neill, Hon. Robert Torrens Skewes-Cox, Thomas Yerburgh, Robert Armstrong
Palmer, Walter (Salisbury) Smith, Abel H. (Hertford, East) Younger, William
Parker, Gilbert Smith, James Parker (Lanarks.)
Pemberton, John S. G. Smith, Hon W. F. D. (Strand)
Penn, John Spear, John Ward TELLERS FOR THE NOES— Sir William Walrond and Mr. Anstruther.
Percy, Earl Spencer, Sir E. (W. Bromwich)
Pierpoint, Robert Stanley, Edw. Jas. (Somerset)
Pilkington, Lieut.-Col. Richard Stanley, Lord (Lancs.)
(6.10.) MR. CHANNING

said the Amendment which he had to propose raised a definite and restricted issue-Its object was that the tax should be imposed for one year, and one year only, in the same way as the tea duty and the income tax, and that at the end of one year it should be proposed again if necessary. It was not necessary to deal with the nature of the tax except as bearing on that issue. With regard to new taxes and there-imposition of old taxes, the onus of proof as to their necessity rested upon the Government. In the case of an old tax they ought to prove that the conditions under which it was originally imposed were renewed, or that the disadvantages which compelled its disuse were not now present or were outweighed by a supreme necessity. But the obligation to show cause was tenfold stronger when they sought to impose new taxes or re-impose old taxes in a permanent form. If a tax on bread was open to the gravest objections upon economical grounds, and if they were agreed that it did not bring into the Treasury the full amount which was imposed upon the consumer, and that it imposed a heavy burden upon the poorest of the people, and made a revolution in the established principles of taxation on which the prosperity of the Empire had been built up, there was the strongest grounds for insisting that the Government should show cause before such a tax was imposed in a permanent form. The right hon. Gentleman had now admitted that this was partly a war tax and partly a tax for ordinary purposes, but they had a right to know what was the real meaning of this tax. Was this a war tax, and was it to be considered as an expedient to meet one of those grave emergencies which call for any or every sacrifice? Or was it to be part of the ordinary machinery to raise our ordinary taxation in the future? They were being left too much in the dark. The right hon. Gentleman had obtained an extra margin of 10 millions one year, and 17 millions the next, and now he had a loose sum of 6 millions. The Government were now asking for indefinite powers, and imposing taxes for indefinite purposes, and the Committee had a right to challenge this policy fully and fairly upon the present occasion, and to insist on knowing what this tax meant, and where ail these proceedings were taking us. The Colonial Secretary said this was a tax for a just and necessary war, which interested the working class as much as any other portion of the public. If that were so, it, was an irresistible argument for imposing this tax for one year only. They knew perfectly well that the tax was not wanted as a permanent one on that basis. It was perfectly obvious from the figures submitted by the right hon. Gentleman the other night that the tax was not needed for the purposes of the war. It was not even needed in any sense whatever for the winding up purposes of the war. Was it needed for the ordinary expenditure of the country at the present time? The right hon. Gentleman boasted in his Budget speech that the enormous growth of ordinary expenditure was being arrested, and that, while the increase in 1901 had been no less than £12,500,000, the increase in 1902 had only been £3,500,000, or not more than the normal increase of revenue without additional taxes. This tax, therefore, was wholly unnecessary as part of the ordinary expenditure of the country. What would be the position of the finances of the country twelvemonths hence? It was perfectly clear that the ordinary revenue, irrespective of this tax, would provide a vastly greater amount than would be necessary to meet the ordinary expenditure. At the close of the present year, according to the Statist, there would be a surplus, supposing no new large expenditure was entered upon, of between £15,000,000 and £19,000,000 sterling, by the normal growth of the revenue without the taxes proposed this year. [Sir M. HICKS BEACH shook his head.] The right hon. Gentleman shakes his head, but that is the contention of one of the foremost financial papers of the present day. Therefore, there was no justification for placing this war tax on a permanent basis.

Now he came to the apology given the other night by the right hon. Gentleman for going on with the tax—that it was, necessary to deal with the Sinking Fund and to proceed with the paying off of the Debt as fast as possible. He heartily agreed with the right hon. Gentleman in that. But that was an afterthought. When the resolution on this tax was moved, there was not the slightest hint given by the right hon. Gentleman that it would be treated as a means of restoring the Sinking Fund in any way, There was quite enough tax revenue this year, and plenty next year, for that purpose. It was not necessary to place this tax on a permanent basis as a war tax, and he had shown that it could not be justified as an ordinary item of the tax revenue, because, while the ordinary expenditure would be amply covered, there would be an important surplus at the end of the year. In endeavouring to ascertain the real reason for this policy they could not shut their eyes to the declarations of Sir W. Laurier in the Canadian Parliament, and also, he believed, of the Prime Minister of New Zealand, welcoming this tax as an instrument for asking the Government to institute a system of preferential duties between this country and the Colonies. That was not a question which he would develop at the present time, but it was a matter of the most supreme gravity. In view of the opinions held by the representatives of Colonial Parliaments, with respect to the bearing of the tax on the fiscal system of this country, he maintained that the Committee had a right to ask that it should only be imposed for one year, and that it should be open for Parliament to reconsider it twelve months hence when they had all the facts before them, and when they would be able to decide as to consequences of so portentous a fiscal revolution. Recent events had aroused the patriotic spirit of the Empire, but it was a perfect scandal if the patriotic impulse of the people, wherever it existed, were to be availed of in order to carry out this gigantic economic folly by placing this tax in a permanent form.

Amendment, proposed— In page 1, line 17, after the word 'Two,' to insert the words 'Until the 1st day of August. 1903.' "—(Mr. Channing.)

Question proposed, "That those words be there inserted."


I rise in order that the Chancellor of the Exchequer may have the opportunity of explaining to us exactly what his view is as to the character of this tax. That must be, to a great degree, the deciding question both here and in the country. That it was not a war duty, or intended to be a war duty, but that it was proposed for the purpose of what was called broadening our basis of taxation, quite irrespective of the war, was the impression which was left on the House by the original Statement of the Chancellor of the Exchequer. But then the Colonial Secretary goes immediately after to Birmingham and states the exactly opposite view. [HON. MEMBERS on the Ministerial Benches, "No."] Here is the litera scripta; here are the words— What is the argument in favour of this tax? It is raised for the war. That is the argument for the tax. Now, nothing could be more completely contradictory of the Statement made by the Chancellor of the Exchequer.




Did you say that the argument in favour of this tax was that it was a war tax?


Yes; it is.


Then be it so. All the authorities are agreed. It is a war tax. That is conclusive. Then why impose it after the war is over? But the statements with reference to this tax are rather confused, for the Colonial Secretary, having stated it was a war tax, went on to recommend it on another ground. He said it will enable him to negotiate preferential duties with the Colonies. Now, I have another question to ask the Chancellor of the Exchequer, and I hope he will give an equally definite answer to it. Does he contemplate this tax as a means of negotiating preferential duties with the Colonies? That, too, is a point upon which the country desires to be enlightened. Whole columns of the newspapers are taken up in showing how this tax will be of use in binding the Colonies to us by making preferential treaties with them. We all know what preferential duties mean. They mean limiting the supplies of this country to one-third of the sources of supply. That means, of course, an enormous rise in the prices of all commodities introduced into this country. Besides that, it means making commercial' enemies of other countries. You embark in commercial hostilities and these are apt to end in international quarrels. We have only concluded the war in South Africa to open a war of duties with every nation all over the world. Preferential duties involve not only war with all other nations on questions of duties, but involve infinite quarrels with the Colonies themselves. No one colony will want exactly the same thing as the others. It will be a perpetual quarrel, always arising, because the demands will change every year, it will be necessary to continually make new arrangements which will disturb your commercial relations with each colony and all the rest of the world. That is what preferential duties mean, and, therefore, it is of consummate importance that we should know exactly where we stand. I cannot believe that that was in the mind of the Chancellor or the Exchequer when he introduced this tax. When he was speaking the other night, and my right hon. friend the Leader of the Opposition suggested to him the speech of Sir Wilfrid Laurier, both he and the Leader of the House indignantly repudiated the notion that the tax had any such connexion. But the Colonial Secretary goes down to Birmingham and develops at full length the subject of preferential duties and their relations to the Colonies. This is a matter of the deepest possible importance to the Chancellor of the Exchequer. I am certain that could never have been in the mind of the right hon. Gentleman—he is much too frank—when he introduced the tax. He has too much pluck, he is too honest to introduce a tax of this kind without saying anything at all as to these sinister motives which lay at the bottom of it. I take the right hon. Gentleman's contradiction; and that is exactly what I want. The right hon. Gentleman says that this is a war tax. Then is it to cease after the war? The right hon. Gentleman the Chanceller of the Exchequer said that this tax has nothing to do with preferential duties or treaties. That is very satisfactory; and I am quite sure that there will he some concordat established between the Treasury and the Colonial Office. I only rose to put these questions because it would be highly satisfactory to hear the view upon them of the Chancellor of the Exchequer.


I confess I am astonished at the speech we have just heard. The hon. Member for East Northamptonshire had in a very moderate tone asked the Committee to limit the operation of this tax to one year. That is not a novel proposal, because the hon. Gentleman made it himself last year with reference to the sugar duty, and I think also with reference to the coal duty; and this year he has placed on the Paper Amendments of the same kind with reference to the duty on sugar, the duty on coal, and the excise duty on glucose. The mind of the hon. Gentleman appears to be turned in this direction with regard to every tax of which he does not approve. He seems to think that, by limiting the operation of a tax to only one year, he is giving Parliament a control over a tax which would be placed beyond the possibility of any Parliamentary interference if no such limitation was applied. Anyone who considers our system of taxation knows perfectly well that that view is not correct. Every year for many years past the Finance Bill has re-enacted two taxes—the duty on tea and the income tax. They are annual taxes, and they are annual taxes in order that the House of Commons may never be without the opportunity of checking the Government in dealing with the finances of the year. It is open on the Finance Bill to any Member of the House of Commons to move the alteration or repeal of any and every tax with which he does not agree, and, therefore, the House retains entire control over all our taxes. I should oppose the limitation of this corn duty to one year, just as I opposed the limitation of the coal duty, the sugar duty, and the glucose duty to one year. It has never been the habit of this House to impose a new indirect tax for one year only, and that for the obvious reason that it would leave every one uncertain as to the future; for imposing any indirect tax only for twelve months would undoubtedly interfere with trade, for a reason which would probably be entirely inadequate, and which no Chancellor of the Exchequer would think of putting forward. That is the position so far with regard to the Amendment of the hon. Member for East Northamptonshire. But the right hon. Gentleman the Member for West Monmouthshire sees in my proposal to place this tax on the same footing as all our indirect taxes and all our direct taxes, except the tea duty and the income tax—on the same footing as it occupied when it existed for twenty years, and on the same footing as the sugar duty has always occupied—some extraordinary notion of turning it into a scheme for revolutionising our whole Customs tariff, and of instituting in its place a Protectionist tariff against foreign countries.

This tax was imposed for two purposes. It was imposed to bear its share, together with the increase in the income tax, of the cost of the war in the present year, which would thus be divided between direct and indirect taxation. It was imposed for the second object of adding, I hope permanently, to the heads of indirect taxation. In my belief such has been the growth of our expenditure during the past few years, and such is likely to be its continued growth under any Administration, that it is absolutely necessary to increase the heads of indirect taxation. Now I know perfectly well that the right hon. Gentleman who has just sat down, and the right hon. Gentleman the Leader of the Opposition are always telling us that this growth of expenditure is all the fault of His Majesty's Government. The Leader of the Opposition said the other day that it was mainly due, as it is mainly due, to increased armaments, and he intimated pretty clearly his own opinion that we had gone too far in that direction. Sir, the country differs from him. I do not believe that the country is likely to take that view, either with regard to the Navy or with regard to the ordinary peace establishment of the Army; and if I wanted some testimony to the correctness of that opinion I should quote some words which recently fell from Lord Rosebery at Leeds. Lord Rosebery is a politician and statesman of great ability; but I sometimes think that he would be more powerful as a Leader if he had more definite and decided opinions of his own. He is remarkably apt to follow what he thinks the popular opinion, or at any rate not to go contrary to it. There is a curious difference in this matter between those two right hon. Gentlemen opposite and Lord Rosebery. Lord Rosebery referred to our great expenditure. Did he condemn it? Did he say that our armaments were excessive, that we had wasted money in colonial extension or in extension of our protectorates in Africa, as the right hon. Gentleman opposite said the other day? No, Sir, not a word of it. All he said was that it might be necessary, and for all he knew was necessary, that the ordinary expenditure of the country should have gone up by £32,000,000. He could pass no opinion upon it except that the situation was grave. Well, the Leader of the Opposition the other day compared me rather unfavourably to a signpost.


Hear, hear!


He told me that I was always pointing out the dangerous way, as I have sometimes stated it to be, in which the expenditure of his country has increased, but that I had done nothing to check it. The right hon. Gentleman does not know what I have done to check it. But this, I think, even he will admit. A signpost that does show the way in a certain direction is better than a signpost that does not show the way at all, and that is Lord Rosebery's position. But I agree with Lord Rosebery in his opinion in regard to our expenditure—I am speaking of our ordinary expenditure. Why do I think so? It is not so much because it is so very high, but because it has seemed to me that even in the short time that has elapsed since the termination of the war the first idea of persons of all shades of politics in the country has been, not as the idea of our ancestors used to be when a war was over—how we should reduce expenditure, and how, therefore, we should reduce taxation—but how we should spend the money which we have, to what new purposes we should devote it. That is to my mind a grave situation. To my mind but a small portion of the ideas which are floating in people's minds at the present time ought to be realised at the expense of the national Exchequer; but even to realise that portion certainly involves a still further increase in our ordinary expenditure. Where is the money to come from? Is it to come entirely from the income-taxpayer? That is really the question which Parliament has to answer in this matter. If it comes from indirect taxation, is it to come from piling on more and more upon tobacco or alcohol—articles already taxed over and over again beyond their value? Yes, they are. Tobacco bears taxation amounting to 500 per cent. of its value, and alcohol is taxed in a similar way. It is perfectly certain that you will not raise increased revenue by piling on taxation on articles already so heavily taxed beyond a very small point. If you want to increase your revenue from indirect taxation you must add new articles to your list, and that is why I added sugar and coal last year and propose to add corn in the year now before us.

I have asked, "What is your alternative?" It is to keep up the income tax perhaps at very nearly its present limit in time of peace. What would be the result of that? Why you would raise such a feeling of injustice among the small class who at present pay income tax, such a feeling of unfairness as compared with other classes of the country who do not pay it, that I venture to say you would endanger the tax in a way that this country has not yet seen. But you would do something more. Keep your income tax at 1s. or 1s. 2d. in time of peace, and where is your great financial engine in time of war? God forbid that we should in our time ever again enter into a great war. But there may be circumstances, not the fault of our people, which may involve us in a great war. And, if it be so, Sir, if you commence a great war with an income tax of 1s. or 1s. 2d. in the pound, you will have to raise your revenue—unless you borrow it all—you will have to raise your revenue for that war by indirect taxes of which we do not dream, and which would cause infinitely greater injury to the trade and commerce of this country than can be imagined for a moment from such taxes as those we now have upon sugar or coal, or corn, which to my mind cause no injury at all. I have been challenged as to the financial position of the future. That is my view of the financial position of the future. That is why I have proposed this corn duty as part of our permanent system of taxation.

And now I hope I have answered that question of the right hon. Gentleman. I come to the second part of his speech. I never was more astonished in my life than I was when the Leader of the Opposition got up at the close of one of our previous debates on this corn duty, and stated to the House that his great objection to the corn duty, apart from the incidence which he considered it had upon the very poor, was the idea that it was the precursor of a complete change in our fiscal relations with the Colonies and foreign countries. He put it, I think, that it was a prelude to a Customs union of the Empire upon a Protectionist basis. Well, I have proposed this duty as a revenue duty and nothing else. I know that Sir Wilfred Laurier made some observations on the subject in the Dominion House of Commons. I have the greatest respect for Sir Wilfrid Laurier as an able and loyal statesman, but this I must say, that I do not think Sir Wilfrid Laurier's opinions with regard to the tendency or the effect of any fiscal legislation here are of more value than my opinion might be with regard to similar matters in Canada. I disclaim altogether the interpretation which Sir Wilfred Laurier has placed upon the corn duty. But now I should like to say something to right hon. Gentlemen opposite. In a few weeks we hope that there will be a conference of representatives of the Colonies upon this question of commercial relations, as well as upon other questions affecting the interests of the Empire. Now, what is the position which right hon. Gentlemen opposite take upon this question of our commercial relations with the Colonies? Supposing it were possible that we should have Free Trade throughout the British Empire, an Imperial Zollverein, do they not think that such an arrangement as that would be an arrangement binding together our Colonies and the mother country, and our Colonies themselves, more, perhaps, than anything else that could be devised?


Does the right hon. Gentleman mean Free Trade with all the world?


I mean Free Trade with the Colonies. Was it a good thing or was it a bad thing that the Zollverein was established in Germany? Was it a good thing or was it a bad thing that the United States formed themselves into a group with no Customs barrier between them? If we could have Free Trade with our Colonies, I do not see why that should necessarily involve increased duties on our part against foreign nations; but if we could have Free Trade with our Colonies, even some sacrifice in that direction might be made. Let us carry the matter a little further. It is not possible, as every one who has looked into the matter knows, that there should be Free Trade at the present time between England and her Colonies. Cannot we try so to settle the commercial relations between us that we may make trade freer than it is now, and that without necessarily injuring any foreign country at all? I am bound to say that my idea of dealing with this great question is upon the basis of Free Trade, not upon the basis of Protection. I know that some persons have suggested that you should impose duties against foreign nations—duties which do not now exist against foreign nations—in order to give an advantage to our colonies. That is not the policy of His Majesty's Government. But it is our policy, adhering to our own principles, to do what we can to make trade between ourselves and our Colonies freer, in order, as we believe, to promote the best interests of the Empire. I think I have answered the questions which have been asked. I am afraid I have trespassed beyond the limits of the Amendment of the hon. Member for East Northamptonshire, but I felt bound, after the direct challenge of the right hon. Gentleman, to state what, in my opinion, is the position. I have proposed this duty as a revenue duty; I have proposed it absolutely without prejudice to any discussions which may take place between us and the Colonial representatives on the question of commercial relations. I hope those discussions may be fruitful of good results; but it is not with regard to those discussions, but with regard to the necessity of raising revenue for this and future years, that I have submitted this duty to the Committee.

(7.3.) MR. COURTENAY WARNER (Staffordshire, Lichfield)

said everybody had listened with great interest to the speech of the Chancellor of the Exchequer, and his statement of the position of the Government had relieved many minds upon the subject of what might be called Free Trade or Protection. He, however, could not help thinking that the acceptance of the small Amendment before the House would give assurance to a great number of people who still felt anxious on this subject. It was not possible for everybody interested in free trade—who thought that the property of the Empire depended on Tree Trade—to have an opportunity of hearing, or even reading, the statement of the right hon. Gentleman, and knowing with what energy and whole-heartedness he delivered it; and he did not see that the acceptance of this Amendment would in any way-alter the policy of the Government. This was a matter which he believed would be realised to a far greater extent by hon. Members when they came to see their constituents. They would then see how unpopular this tax was, and how it pressed upon the poorest of the people. He would, therefore, like to see this tax terminable at some fixed period. That would not upset our fiscal system, because if it were made terminable say in August next year, long before the duty came to an end the Finance Hill for that year would have been passed. If the duty were made terminable it would relieve the minds of many, and assure them that it was not a tax levied for the purpose of Protection and for giving relief to the Colonies. He thought in the future when there was a surplus the Government would relieve the country of the burden of this tax.

MR. KEARLEY (Devonport)

said, although the Committee had every confidence in the right hon. Gentleman as a Free Trader, he felt that when the right hon. Gentleman came to throw the weight of his judgment against that of his colleagues, the right hon. Gentleman was in a hopeless minority. The right hon. Gentleman had asked whether it would not be a good thing to have preferential trade with our own Colonies, and somebody had interrupted and said we wanted Free Trade all over the world. What were the Colonies to give us? Would the right hon. Gentleman suggest for a moment that the Colonies would sell to us cheaper than they sold elsewhere? The Colonies also would take our trade so long as they could not get a cheaper market elsewhere. They would, no doubt, not object to our buying dear of them and selling cheap for their benefit. However deep the attachment of the Colonies might be, he did not think it would stand the strain of a dearer market than they could find elsewhere. What was the proposal of the Amendment? Under the extraordinary circumstances of the last two years, we had added to our tariff eighty-four new duties, and the proposal was that for a year or two we should have the opportunity of bringing them before the House and subjecting them to revision. In the previous year the right hon. Gentleman, when imposing the sugar duties, admitted that he was proceeding on very indifferent information, and stated that the duties must be looked upon as a tentative scale; that he had worked on the best materials he could obtain, and that he would be glad to have better knowledge. Put when the Committee brought that criticisim to bear which it was entitled to bring and the knowledge which the right hon. Gentleman had asked for, before the right hon. Gentleman, he refused to appoint a Committee of experts, and he simply clung to his duty in spite of the fact that it was pointed out that the plan that he had adopted was altogether faulty. At the end of the session the matter was again brought up by the hon. Member for North Louth, and the right hon. Gentleman pointed out that any adjustment required could be made next year. How could that adjustment be made? They did not desire to repeal the duty but to adjust it. Innumerable articles had been added to the Customs tariff, and the House ought to have an opportunity of reviewing them. The right hon. Gentleman said today what he said then, that the question could be raised on the tea duty, which was always put in for the purpose. But what earthly chance was there of discussing on the tea duty the numerous miscellaneous duties which had been imposed in the last two years? The demand that they should come up for revision was a fair demand, and he thought it should be acceded to. Another point involved was, the enormous amount of taxation levied year by year under permanent Acts of Parliament which never came up for review. Of the £140,000,000 of taxation £102,000,000 was so levied. Why should the Committee be confined to discussing one article—tea? Was it suggested that there would be long and wearisome discussions? ["Yes."] That would not be the case at all. The tea duty came up annually, but the discussion occupied only four or five hours, and there was no reason to suppose it would be different in regard to these other articles. One of the causes of the weakening of the influence of Parliament was that the House of Commons was parting with its former powers and functions, and was not only putting the control into the hands of Ministers, but was allowing the Government to deny the opportunity of discussing these things from time to time. Parliamentary control over taxation was becoming a mere figure of speech; there ought to be an opportunity of discussing these taxes every year, and he should support the Amendment.

(7.17.) MR. BLAKE

said the Chancellor of the Exchequer had spoken of his serious apprehension at the mental attitude which led everybody to say not "How should we save after the war is over," but "How should we spend the money we have." It was a pity the right hon. Gentleman had not remembered that before voting on the last proposal to postpone. That was the very ground on which postponement was maintained. As to the purposes of the corn tax, there were some things in the right hon. Gentleman's speech with which he was in entire agreement. He himself had never entertained the idea that the tax had been proposed with the secret idea of converting it into a preferential tax in favour of the Colonies. It would have been a dishonourable and disingenuous action on the part of the Chancellor of the Exchequer to have proposed the tax with any such secret object in the words he used, or for the purposes he professed. Those words and purposes were plain, direct, and distinct, as was usual with the right hon. Gentleman, and they entirely precluded the notion that he intended to modify the tax in a way which would have reduced its productive qualities, and would at the same time have involved this great, far-reaching and most complicated question of preferential treatment. Therefore he had not believed that this could be the design of the Government. Notwithstanding that, the recent speech of the Colonial Secretary, coupled with previous utterances and movements of that right hon. Gentleman, had doubtless given rise to some anxiety, but that anxiety had in his view now been set at rest by the statement of the Chancellor of the Exchequer. He had stated plainly that it was clear that at present no mutual fiscal arrangement could be made between this country and the Colonies on the basis of free trade between the Colonies and this country. That had been perfectly obvious all these years. It was a great pity that it had not been officially recognised before, and it was extraordinary that the Colonial Secretary, of all men, should not have perceived it. However, the basis of the original proposal of the Colonial Secretary was that of absolute free trade between the Colonies and the Mother Country, with the further suggestion that this country should therefore impose duties as against others than the Colonies upon certain articles of very large general consumption. The first part of this proposal was, as he had said, absolutely impossible from the Colonial point of view. The second part of the proposal, the imposition of duties by this country on certain extra Colonial Imports here— which was the quid pro quo—the Chancellor of the Exchequer had also now plainly declared to be no part of the policy of His Majesty's Government, and in his (Mr. Blake's) view it would be a very damaging policy for this country. Thus neither the quid nor the quo were practicable. For his own part, he was not sorry. He had always been convinced that such a proposal would be one in which the mutual disadvantages far outweighed the mutual advantages, He had had occasion to look at this matter from both the Colonial and the Imperial point of view, there having been a day when he gave up his political position rather than support a policy of unrestricted reciprocity with the United States, because he thought it would in its political aspects and larger tendencies be bad for his country, leading to absorption with the States. While he would be delighted at any proposals which would enlarge the natural course of trade between the Colonies and the Mother Country, he was averse to the policy—to which the Chancellor of the Exchequer had declared the Government also to be averse—of influencing that course of trade by the unnatural restrictive method of exclusive preferential duties. This was a radically different thing from offering to lower tariff dues in favour of all nations who had done or might do like wise. That would tend towards Free Trade and the open door, while this was the reverse. He would not enter into the argument, it was enough to say that the Chancellor had knocked the bottom out of the scheme of mutually exclusive preferential tariffs. It was true the right hon. Gentleman added a few general expressions indicating that there would be no objection to discussing some method whereby some mutual advantages should be secured, which would promote greater trade between the Colonies and the mother country, adding, however, that it was not right for him to prosecute that inquiry any further or make any suggestions then—that those were matters for the conference, and so on. The Chancellor could hardly avoid such general phrases, which, however, in face of his specific declarations did not count. These schemes would, doubtless, remain matters for the conference, and probably after this debate the public would hear very little more about them. As to the corn tax itself, he was fundamentally opposed to the tax; he thought it ought not to go into force at all; he thought it ought not to last even for a year; but he would rather see it on the Statute Book for a year than for all time, and, therefore, he should vote for the Amendment.

(7.27.) MR. LOUGH

deplored the fact that the speech of the Chancellor of the Exchequer had tended to draw the attention of the Committee away from the precise point under discussion. The reason given by the right hon. Gentleman took away the whole strength of his case, for refusing to accept the Amendment. The reason given was that no such Amendment was necessary, because any Member could in any year raise any question he pleased with regard to the sugar, coal, or corn tax, when the Finance Bill came before the Committee. If that was so, what was the objection to the Amendment? The only object of keeping the taxes out of successive Bills was to prevent the facilities being given for such discussions as they desired. It was important that from time to time these great taxes should come under review, and that a regular opportunity should be provided for looking at the experience of the year with regard to particular imposts. Nobody had said a word about the sugar tax, and the Chancellor of the Exchequer had taken advantage of the fact of their being unable to raise the question in a regular manner to beast of the great success of that tax. He did not believe it had been a success at all, and in twelve months' time the country would, probably, not be in nearly so good a humour about the sugar tax as it was today. The Chancellor of the Exchequer had again referred to the fact that he was broadening the basis of taxation. That was true, but he was also extinguishing the control of taxation. The country and the House were beginning to feel that heavy burdens were being imposed on the people, while the old facilities for bringing those burdens up for consideration were being quietly stolen from Parliament. The right hon. Gentleman had repeated that the country was not in favour of economy. He did not agree with that statement; and the last election, which could not at all be taken as a test, showed that a strong feeling was arising as to the heavy burdens the Chancellor of the Exchequer was flinging upon the country.

It being half-past Seven of the clock, the Chairman felt the Chair to make his Report to the House.

Committee report progress; to sit again this evening.