FINANCE BILL.

HC Deb 12 May 1902 vol 107 cc1368-435

[SECOND READING.]

(FIRST DAYS DEBATE.)

Order for Second Reading read.

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

I wish, in moving the Second Reading of the Finance Bill, to make a statement in regard to the proposal to impose an extra penny stamp duty on cheques. When I first made the proposal to impose that extra stamp duty on ordinary cheques I did not appreciate to how very large an extent those cheques were drawn for very small sums by persons engaged in business, often of very small moans, for the ordinary transactions of trade. When the matter was discussed, I think on the second evening of the Budget debate, I undertook to consider that question with a view to relieving small cheques. A few days later, in answer to a Question in the House, I made a suggestion for that purpose, which I am bound to say did not meet with a favourable reception. But I think, and it was probably through my own fault, it was somewhat misunderstood. I never imagined that the drawer of a cheque would take the trouble to visit a post office in order to obtain the rebate of a penny on a single cheque; nor did I anticipate that in the working of the proposal those who had drawn the cheques would act personally in the matter at all. I thought that the bankers, who do a great deal in many ways for their customers, would not object to add this to what they already do, and to apply periodically to a collector of Inland Revenue or a post office for a rebate on a number of cheques drawn by their customers. I may say that the Commissioners of Inland Revenue were perfectly prepared to make arrangements by which a banker's certificate as to the amount of rebate due to a particular customer might have been accepted in place of the presentation of drawn cheques. But when I came to consult the bankers on the question I found they were entirely opposed to any such proposal; and when, further, I put to them the other alternative, namely, that of having different stamps upon cheques of different values—a penny on a cheque below £2, and twopence on other cheques—I found they considered, perhaps with reason, that this would add, in the case of large banks, so much to the work of their clerks that it would be in practice almost impossible. But I was very much more impressed by the very strong and widespread feeling which I found entertained in the country as to the interference with the ordinary transactions of business which would be involved by this additional stamp duty—an interference which was considered by very many persons to be far in excess of the amount which the duty itself would yield to the Exchequer. I also found that this feeling prevailed to so very large an extent that it soon became clear to me that I could not anticipate to receive nearly as much from the additional duty as I had proposed, owing to the large extent to which payment in cash would be substituted for payment by cheque, which gave some colour to the fear of the bankers that in that way it might even lead to a serious interference with their cash reserve. Therefore, as there is really no principle at stake in this proposal, and as the amount which I could expect to receive from it is comparatively small, I have decided not to press it further on the House. I may add that, of course, it will be necessary to consider whether, and, if so, in what way, the amount of revenue which it was anticipated we should receive from the proposal shall be levied; but I think, in existing circumstances, I may reserve any decision upon that subject until a future occasion. I beg to move.

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

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

I am sure the House will have been glad to hear the announcement so frankly made by the Chancellor of the Exchequer that, on consideration, he does not propose to insist on the tax which he intended to put upon cheques. I wish he had gone further, and had taken off another tax. He has said that the cheque tax rested upon no principle. I should like to know on what principle the corn tax rests. We should like to have some explanation as to that. We have been told that it is a tax which is to exhibit the readiness of the country to support supplies, but that it is not to fall upon anybody. That is not an explanation of the principle of the tax, and therefore I hope that in the course of the debate we shall elicit from the right hon. Gentleman what is the principle upon which this tax rests. I rise to move the Amendment which stands in my name on the Paper, viz.— That this House declines to impose Customs duties upon grain, flour, and other articles of the first necessity for the food of the people. I cannot help thinking that, perhaps, instead of being in the hands of one of the oldest Members of this House, it ought to have been placed in the hands of the youngest Member. He would deal with it in more eloquent numbers than any which I can command. But as he has not had the opportunity of putting down a notice on the Paper, I must deal with it as well as I can.

This Amendment presents a very straight issue. It takes issue on what I will call the blackest spot in this Budget—its most glaring vice. When that has been disposed of, the main Question will be put from the Chair, and the House can then go into the general discussion of the Finance Bill. I wish that to be clearly understood. If this House, after the lapse of more than a generation, is prepared to maintain this tax upon the food of the people, I venture to say that its answer to this question will go far to determine the reputation of this Parliament, and, what is a good deal less important, the sentence which will be passed upon this Government. I will affirm that this is a tax which is bad in principle, and still worse in its application and in its consequences. There are objections, of course, to every form of taxation, but this is a tax which manages to accumulate every possible objection that can be made to any tax. There is no necessity upon this occasion to go into any economical subtleties. They have been discussed at sufficient length in the former debates on this tax. For my part, I may say that we are perfectly prepared to rely upon the arguments that have been presented by my hon. and learned friend the Member for South Shields, upon the very practical speech of my hon. friend the Member for South Somersetshire, and, above all, upon that comprehensive and conclusive argument presented by my right hon. friend the Member for East Wolverhampton. In my opinion, to that argument there has been no reply that deserves the name, and therefore the Government are fain to shelter themselves under the great name of Mr. Gladstone. I observe that, even after the exposure that has been made of the futility of that pretence, it is still being repeated; and I therefore ask leave to quote what, as far as I know, is the last recorded declaration of Mr. Gladstone's upon this tax. It was when the tax was reconstructed in 1864. Mr. Gladstone then said— I should be reluctant to see Parliament committed to any plan which might appear to assume that a duty of this kind on corn—not a very heavy impost, but still more than a nominal one—which in principle it would be difficult to defend—(hear, hear)—should be regarded as a permanent imposition upon the greatest article of human subsistence among us That, then, was Mr. Gladstone's view of this tax. It was a tax which could not be defended upon principle; it was one which ought not to be permanent; and it was objectionable because it was on the greatest article of human subsistence among the people. How, then, can the Government justify their reliance on the authority of Mr. Gladstone?

SIR M. HICKS BEACH

He made it permanent.

SIR WILLIAM HARCOURT

When was that declaration made? It was made in 1864. In 1865 Mr. Gladstone went out of office. He came back in 1868, and the first thing he did when he returned to office was to abolish this tax. You may argue about it as you like, but those are facts that cannot be denied, and I say you have here a clear condemnation of this tax.

MR. JAMES LOWTHER (Kent, Thanet)

He did not go out of office till 1866.

SIR WILLIAM HARCOURT

He was not responsible for the existence of the tax in 1866 and 1867, and in 1868 he abolished the tax. Therefore, I say, give us some better reason than the assent of Mr. Gladstone to this tax in order to justify your revival of it now. His last act in connection with the tax was to abolish it, and that shows what was his feeling on the last occasion on which he had the power to deal with it. What is your position with reference to the tax if you have to rely upon Mr. Gladstone? Do you say that it is defensible in principle? If so, let us know what that principle is. Mr. Gladstone said it was not. Do you propose it here as a permanent tax? You have never suggested that it is a war tax or anything but permanent. It is, therefore, one of those permanent taxes which belong to your fundamental principle of broadening the bases of taxation. Therefore, do not let us be told that you agree with Mr. Gladstone on that point. Do you agree with Mr. Gladstone that it is an imposition upon the greatest element of the subsistence of the people, or do you say that it is not a tax upon the eaters of bread at all? Let us hear what is your view upon the fundamental principles on which Mr. Gladstone condemned the tax. Then it is said that it was not the act of Mr. Gladstone and his Government, but that it was a vagary of Mr. Lowe's. That is a very extraordinary doctrine of Ministerial responsibility. Are you going to say of this and other taxes that they are vagaries of your Chancellor of the Exchequer? I do not believe anything of the kind; and that is not an argument which any Government is entitled to use. We have heard a great deal about the "pedantry" of Air. Lowe. But the duty was condemned by Mr. Gladstone four years before Mr. Lowe had anything to do with it. Therefore the suggestion that the removal of the tax was a fancy of Mr. Lowe's is utterly unfounded, and it is only made because there is no other I defence for your restoration of the tax.

It is unnecessary for me to go into any elaborate economical discussion as to the incidence of the tax. In some form or another this tax must fall upon somebody. Mr. Gladstone said that it fell upon the greatest article of subsistence of the people, and that is why thirty-three years ago he removed it. Why are you going to restore it? That is the question we have to ask you today. The duty raises the price of corn and Hour and other articles. Do you deny that? You are confronted by the facts. The price has been raised of corn, flour, and other articles. Is there any article in the world of which, if you put an increased charge upon it, that charge does not raise the market price? That is a question I should like to have answered. Certainly I should like to know on what principle you assert that, when you put a charge—I do not care whether it is of 1s., 5s., or 20s.—upon an article of the magnitude of corn, that that charge does not raise the price. I suppose even Protectionists would allow that they put on a duty for the very purpose of raising the price. If the price is raised the increase must be paid by somebody. Of course it is paid in the first instance by the importer, who proceeds to pass it on. Nobody contends it is paid by the exporter. It happens in this particular trade that there are a number of middlemen who have to deal with the corn before it reaches the consumer. Each of these middlemen puts on a charge for advancing the duty and the other expenses which he has to meet, and the charge ultimately falls on the man who must have the commodity whatever it costs, and that is the consumer. Those are propositions so simple and so obvious that I do not think even a statistician or a professor of political economy can confuse them, and men of business and common sense recognise them as the very basis of all trade. It is said quite truly that the main element in determining market price is supply and demand. Be it so; but you are going to add some-thing to that price. These are the variants—to use a technical expression—of price, but if you add to these variants a constant tax of course you raise the price. It is a tax added to the market price which depends on supply and demand. It is said that there must be a substantial rise in the price of corn or flour to lead to a rise in the price of bread as charged by the baker. I daresay that is true. The Mark Lane Express of April 28th states that "it is not the custom of the baking trade to advance prices to customers except where wholesale prices rise 2s. a quarter on the wheat, which is tantamount to a farthing on the loaf, and that it is not the custom to reduce the price until the total fall of wheat values equals 2s. per quarter." Consider this: the market price, through the operation of supply and demand, rises a shilling. That does not alter the price of the loaf. You put on another shilling, and you have the total rise of 2s., which produces a rise in the baker's charges. Will you say it is not your shilling that has caused the rise in the price of bread? Of course it is. Those, again, are propositions so clear that I do not understand how they are disputed.

I feel that I owe some apology to the House for even having said so much on the subject of price. What is the use of asking whether the duty will raise the price of bread when the price of bread has risen? The price of bread has risen, and where it has mostly risen is on the low-priced loaf, the food of the poorest people. The poor people know this very well, and therefore I affirm that in London and in many parts of the country this tax has caused a rise in the price of bread by causes which are perfectly obvious. This is an answer to all the ratiocination and elaborate subtleties that have been resorted to by the First Lord of the Treasury. Solvitur ambulando. The right hon. Gentleman the Leader of the House told us that we were demagogues—without offence, of course—when we told the people that the duty-would raise the price of bread. Equally without offence, I would say that the Government are blunderers not to have seen that the duty necessarily would have that effect. Then it was said that the effect would only be temporary. A temporary deprivation of bread is a serious matter. What we pray for is our daily bread; and I do not know whether this doctrine of bread once a fortnight would suit anybody. Of course, if the market price of corn fell 2s., the evil would be removed or would be lessened, but the fall would be shown by one shilling than it would otherwise be, but supposing it rises 2s. a quarter? Your shilling always remains a factor in the question. It diminishes the effect and benefit of fall and it aggravates the rise. I should like to know on what principles it is proposed to defend a tax of that kind. I say this is a bad tax—a thoroughly bad tax—from every point of view. It is a bad fiscal tax. The worst kind of tax is one which imposes a burden of which the fruits do not go to the Chancellor of the Exchequer. Is that a test which this tax will stand? Your tax is pretty accurately stated to operate on two-thirds of the supply of corn and flour, and the proceeds of that go into the Exchequer. But you equally raise the price of the other third raised at home, and nothing of that goes into the Exchequer from that. That is the vice of all Protective taxes. You may call this Protection, or whatever other name you choose, but it is a tax which has the effect of laying on a burden of which the public does not derive the full advantage. It is said that the duty is not imposed for the purpose of Protection. We care very little what your intentions are; we have to look at the consequence of your action in this respect.

The right hon. Gentleman also used a most singular argument. He asked, "How many additional acres of land will be brought into cultivation by this tax? Of course that is the only test of what will govern demand and supply." A more fallacious argument was never advanced. If not a single acre of land extra was brought into cultivation, what is the effect of a good harvest or the effect of a bad harvest? In the case of a bad harvest the supply is limited, and consequently there is an increase of prices. In the case of a good harvest there is an increase of supply, and with the increase of supply there is therefore a lowering of prices. The question, then, of additional land being brought into cultivation is entirely beside the mark. This tax, which was removed in 1869 by Mr. Gladstone's Government, was renewed by Mr. Lowe expressly on the ground of its Protective character. They may say that they do not intend it to be Protective, but is that the view taken by the public at large—that it has no relation to Free Trade or Protection? Has it no relation to Protection? Let me apply to it the principle of the judgment of Solomon—"Whose child is this?" Why, we all heard the vociferous applause of the tender mother the hon. Member for Central Sheffield on the introduction of the Bill, and it was caressed with delight, in more prudent ways, by those who hold the views of the hon. Member. We all know perfectly well how it has been received by the Protectionists throughout the country, and what they expect from it. Let us ask what this tax has done, what hopes have been raised, and what expectations have been encouraged. Everyone knows that at the bottom of this tax does lie the question of Free Trade or Protection. It is just like the dams in Holland, which, to keep out inundation, the people take very good care shall not be undermined by rats. There is not a partizan of either school, of Free Trade or Protection, who does not know that this step which you are taking has a very significant effect on the situation. Why, everybody believed until you brought in this proposal that this question of a tax on corn had been settled, never to be heard of again. Why have you raised it by the proposal of this tax? How has it been regarded in the Press which deals with this matter specially? I will quote a highly respectable financial journal: not like us demagogues, as the right hon. Gentleman has called us. The Economist is not a demagoggic newspaper. It is a supporter of the Government, and what does it say of this Budget and this tax? In a headline they call it "a vicious and reactionary Budget," a "reversal of our traditional fiscal policy, the adoption of a system of Protection in its worst form—that of a tax on the food of the people." That is what the Economist says in reference to the bearing of this tax upon Protection. Then I turn to the journal I have already referred to, the Mark Lane Express, a Protectial journal. It says— The registration duty is not a large item in itself, but it has broken the spell. The Chancellor of the Exchequer has laid profane hands on the sacred ark, and no avenging stroke has fallen. But that was written before the Bury election. The newspaper goes on to say— The discovery that Free Trade was only a fetish after all, a mummy and not a living issue—that it is which pleased the farmer, not because he is a farmer, but because he is, presumably, a sensible man. Protection and Free Trade are the shibboleths of a dead era. The 20th century means to paddle its own canoe. I have no doubt that those who take that view are discreet enough not to mention it at the present stage, but everybody knows that in its effect it is an advance towards Protection.

The right hon. Gentleman quarrelled I with me because I quoted Lord Cross on this subject. He said that Lord Cross did not believe it would not have any effect on the price of bread, but Lord Cross said he was; very glad that this tax was removed, because it would remove the suspicion of putting a tax on the food of the people. What have you done? You have revived that suspicion which Lord Cross rejoiced had been done away with when this tax was removed by Mr. Gladstone's Government. I cannot help feeling the greatest astonishment at the introduction of this tax by the Chancellor of the Exchequer. He knows very well that I have not been a hostile critic of his financial proposals. I cannot understand how it was that a man of his great intelligence, his firm mind, and his sound sense should ever have meddled with corn at all. That is a thing I am totally unable to comprehend. Of all taxes, it is the one which provokes all the bitter memories that belong to the Corn Laws. My right hon. friend the Member for East Wolverhampton demonstrated conclusively, I think, that there were other taxes, to which the right hon. Gentleman might have had recourse, which are not accompanied by all these difficulties and fiscal objections which are attached to this tax. The right hon. Gentleman took a very extraordinary course—I think the most extraordinary course ever taken by a Chancellor of the Exchequer, for he went down to Bristol months before the Budget, and assured one particular interest that they were safe. That was, I say, a very extraordinary thing to do—to go over the whole range of taxation and tell the people connected with one particular business that, whatever happens, he would not put a tax upon beer. I think the Government will discover that the world does not consist exclusively of brewers. There are other classes, I will not say as important, but which are more numerous than those who brew beer, and, possibly, even than those who drink it. I ask—What have you done in the course of your administration with the finances of this country? You have lavished resources which might now be at your disposal on doles to favoured classes. They would have supplied the money which you are now proposing to put upon corn and the food of the people. You have given the money in the relief of rates upon land and in subsidies to the clerical schools. If it had not been for that, you would have had at least some of the money which you are proposing to raise by this tax. You have now withdrawn the cheque tax because you find that among many of the classes affected by it there is a strong feeling against it, and that it was one which it would be difficult to deal with. But what are the bankers compared with the interests of the people who eat bread? Why is that tax to be withdrawn because it is objected to by the men with cheque-books and the bankers who cash these cheques? And this tax is to be imposed on men who never knew what a cheque-book is. Since this tax was proposed the feeling against it is stronger than against any other tax

But, Sir, this tax is to be condemned not only on its financial aspects, but, in my opinion, a great deal more upon its social and its political aspects. I use the word "political," which is not, thank heaven, identified with Party. Polity is a thing above Party, and it is in its political aspect that I condemn chiefly this tax. I challenge the policy of this tax as against sound finance; and what I understand sound finance to be, as I learned it from its greatest masters, is that the fundamental principle is that the burden shall not be cast on those who are the least able to bear it. That was the view of the Liberal finance Ministers who have conferred such lasting benefit on the country. It is not merely that they gave them greater domestic comforts; they bestowed on them greater political contentment. That was manifest in the spirit of the people as compared with the feeling which existed before the repeal of the Corn Laws. Sound finance is not a matter of dry figures. It is a great deal more than that. It demands the statesmanship of the heart. It demands sympathy for those to whom taxation, which is burdensome to all, is intolerable; and it is intolerable to those who have not the means to bear it. And that is what I mean when I say this tax sins against considerations much higher than mere fiscal considerations. You ought to, and you must, so distribute your taxation that it shall not be beyond the capacity of the poorest people to bear it. The Chancellor of the Exchequer paints pretty pictures of his own Arcadia. He tells us of whole I families with 13s. a week who live upon meat every day. That picture is so charming that I wonder the whole population, rural and urban alike, do not migrate to Gloucestershire. In the valley of the Colne they will have charming scenery, they will find delightful inhabitants, as I know, and they will enjoy legs of Cotswold mutton and sirloins of beef, which will be the fare of the rural ordinary. That is a charming picture, but that is not the situation everywhere.

Now, the right hon. Gentleman entered upon what I venture to think is the most fallacious of all arguments—the argument from averages. He said there is such and such a population, they have such and such wages, and consequently they must have on an average so much to spend. Sir, of all arguments the statistical argument from averages is the most fallacious. You have a number of people, some of whom have £1,000 a year, some of whom may have £100 a year. Throw in a millionaire and a great many more who have not anything, and you take the average and prove that on the average they all have £500 a year. That is an argument which is absolutely fallacious in a case of this kind. What is the value of an average to a class who are hopelessly below the average? What you have to look at is the absolute condition of the poorest people in this country, quite irrespective of averages of that description. We rejoice to think that, in consequence of that Tree Trade policy which some, at least, desire to destroy, the average condition of the population of this country has vastly improved. But, unhappily, there is always a substratum—there is, and always will be, a residuum of poor people. The poor are always with us. And what are the numbers of those unhappy people? In 1900, according to the last Return I have seen, there were 1,000,000 paupers, out of 40,000,000 people, receiving outdoor and indoor relief. Therefore, one out of every forty persons is in such a condition that he must seek relief. In London last month there were 111,000 people out of 4,500,000—that is nearly the same proportion—who were in that situation. And how many thousands more do you believe are upon the brink of the workhouse, struggling not to become paupers? And these, I think, are the class who are most to be considered and who suffer most.

Then the right hon. Gentleman used an argument derived from intemperance. No doubt that is a very painful argument, and it is a great shame to this House that it has done so little to reform it. It is perfectly true that a great part of the people of this country waste their substance upon drink. In my opinion, that makes the argument upon this particular question still stronger. You have a man with high wages; he drinks away his wages and leaves his wife and children with scarcely enough bread to sustain them. This is the result of intemperance, and it is a reason why you should not put a tax upon bread. These are social and political considerations which lie at the bottom of sound finance. I believe that this tax sins against these principles and ought to be condemned on that ground as well as upon fiscal grounds. And that is why I call this a shabby tax—a tax which is not creditable to a nation of this enormous wealth. Are the people who are luxuriating in a superfluity of wealth, the millionaires and the men who have sums of money which they know not what to do with, are they not willing to undertake the burden of this tax? I say you ought to resort to any other tax; there is none, whatever may be the objections to it, which would not have been better than this. For us, at least, who are disciples of these principles of sound finance, our path is clear, our course is taken. We shall oppose, as we have opposed at every stage, the imposition of this tax. I know not whether we shall succeed. I fear not. You are in command of a great majority obtained at an election fought upon false pretences. Gentlemen on the opposite Benches are perpetually telling us that there is only one thing that they suffer from, and that is from the want of a vigorous and united Opposition. Sir, we are amiable people, and we will try to accommodate them as far as we can. It is the darling desire of their hearts that they should have a vigorous Opposition; we will do what we can to gratify their aspirations. You have hoard something upon this subject of a united Opposition in the country, and of its result. A very remarkable election has taken place. Various people will give their own interpretations to the cause of it. I observe that the unfortunate candidate—I desire to say nothing hard of him; he is an old friend of mine, who once was a very good Liberal; he is a belated convert to the Unionist camp; but he had chosen a bad time—an unlucky moment. At the declaration of the poll, he said he could not understand or explain the cause of the change, or why the constituency had changed its mind. There is one explanation I would suggest to him, and that is—because he had changed his mind, and the constituency changed its mind also. I will tell him, in all good feeling, that the explanation of his failure upon that occasion is that he put his money on the wrong horse, that he backed a sinking cause, and gave his support to a discredited administration. He would have done better, in my opinion, to have stuck to his old colours. But I should like very much to hear the explanation of it from a neighbouring town. Oldham is not very far from Bury. The Member for Oldham might tell us something about it—proximus ardet. I should like to hear from him whether this tax is one of the results of that Tory democracy of which he is the hereditary representative in this House. Is this his conception of the model finance of the Government of which he is a constant and ardent supporter? I should like to know whether this is a sample of their social progress; whether it is what is called the Birmingham programme of social reform. You promised old-age pensions. This is the sort of pension that you offer to the aged—to people who can no longer work. They ask you for bread and you give them a corn tax. Do you call that social reform? Is this a war gift which you are going to bestow upon the widows and children, who have little enough to live upon? We are very well content with the issue as it stands. Whatever happens upon this division, at all events the country will know who are for and who are against a tax upon the bread of the people. It was hailed on its introduction with a vociferous shout of "well done." There has come back a strange echo from Tory Lancashire, and that echo is "ill done," and when this matter is more thoroughly understood and felt throughout the country, I believe the cry against the Government will be "undone." I know not what may be the verdict of the House of Commons upon this tax, placed on the poorest of the people; but it is my belief that there is a feeling in this country, deep-seated and spreading, which condemns the Government—that the people are dissatisfied and disappointed with the manner in which it has mismanaged their affairs, and that they condemn you for the way in which you have wasted and misused the great majority with which they had entrusted you.

Amendment proposed— On Second Reading of Finance Bill, to move, 'That this House declines to impose Customs duties upon grain, flour, and other articles of the first necessity for the food of the people.'"—(Sir William Harcourt.)

(3.48) SIR M. HICKS BEACH

There is a singular contrast between the course which has been taken by the official Opposition in regard to the Budget of the present year and that which the same Gentlemen took only a year ago. On that occasion the right hon. Gentleman the Member for East Wolverhampton stood forward as their spokesman. He moved a reasoned Amendment to the Second Leading of the Finance Bill. That Amendment expressed a policy. He stated that he and those on whose behalf he spoke were ready to make adequate provision for the naval and military requirements of the Empire; and in his speech he added that he approved of the main reason for the Budget, which was the expenditure on the war, that he would be behind no one in his support of necessary expenditure on the Navy, and that, although he thought in regard to the Army and education that we might get better value for our money, yet he would pay more to India towards the cost of the Army maintained for her defence and would spend more on education. That was the policy which the right hon. Gentleman put forward in behalf of the Opposition. What is it we are being treated to tonight? Throughout the whole speech of the right hon. Gentleman for West Monmouth there has not been the faintest recognition of the fact that we are face to face with an expenditure—a necessary expenditure—for which this House is bound to provide. Sir, I think in his heart the right hon. Gentleman agrees entirely with what was said only the other day by the Leader of the Opposition in this House, who told his followers that it was time to stop the process of widening the basis of expenditure, and that a check must be put on the wild schemes of the Government for military and naval extension. That is the view now adopted by the official Opposition. They will give us no support in obtaining the means for the necessary expenditure on the war in South Africa. Not one word in the speech of the right hon. Gentleman testified to his recognition of that necessity.

SIR WILLIAM HARCOURT

I certainly intended to say, which is the fact, that I and all my friends have voted all the supplies.

SIR M. HICKS BEACH

But what is the use of voting supplies if you propose Amendments to the Budget which ignore altogether the necessities of expenditure, and which, if carried, would certainly put an end to the Government and the Budget at once. The right hon. Gentleman's sentiments are very well known. He would have allowed Boer supremacy to be established in South Africa; he would cut down the necessary expenditure of this country on the Navy, and, with regard to the Army, I am certain that he would stint the cost that is required to secure its efficiency. That is the policy of the right hon. Gentleman. The right hon. Gentleman thinks that he can run this Empire on the cheap. Our Empire, no doubt, is costly to maintain, to develop, and to defend; but there is one obstacle to the policy of the right hon. Gentleman. It is that the nation would not support it, and the nation recorded that verdict unmistakably at the last general election. What has been the complaint often made of my action in regard to the financial policy of this country? I have been told, over and over again that I have failed to provide from taxation enough to meet the expenditure of the year, that I have imposed too much on our successors by borrowing more largely than hon. Gentlemen opposite thought was justified by the occasion. That has been the complaint. But, after all, as a Return recently placed on the Table shows, I have provided from the revenue of this country in the course of four years no less than £74,000,000 out of a war expenditure of £228,000,000. Although I admit that that is not as large a proportion as was provided at the time of the Crimean War, yet surely hon. Gentlemen must consider that the larger the cost of the war, the less it is possible to provide the whole of it from the taxation of the year, and the more justified you are in imposing a certain portion of it on posterity.

But this complaint is a curious preface to opposition to the taxation I propose on the ground that it is placed on the masses of the population of this country. What is the argument on which the complaint is based? Why, surely, that it is necessary that the electorate, who govern this country, should realise what the expenditure on war or in preparations for war involves; and that they should be made to realise it by not putting the whole burden of this war, and the preparations for war, on the future. What is the suggestion of the right hon. Gentleman? It is to put it on the millionaires. Do you suppose the masses of the population of this country will care how much you spend in war, or in preparation for war, if you make the millionaires pay the whole of it? There were some very wise words, in my humble opinion, used by the right hon. Gentleman the Member for the Montrose Burghs on this subject last year. He said— I cannot conceive a great Empire existing under more dangerous conditions than if a great army of electors is to decide on questions of peace or war or great issues of policy without it being brought home to them clearly and directly what the effects of their acts and decisions will be. I appeal to the right hon. Gentleman from the Member for West Monmouth. As I am always being twitted with the finance of the Crimean War, let ma remind the House what the finance of the Crimean War was. Were the masses exempted from taxation for the purposes of the war by such Chancellors of the Exchequer as Mr. Gladstone and Sir George Cornwall Lewis, who surely cannot be charged with indifference to the burdens of the people? What was the taxation proposed in the year of the greatest expenditure on the Crimean war, viz., 1855–6? At that time the income tax rose to Is. 4d. in the £, a penny more than I propose this year. But the death duties, allowing for the increase in the wealth of the country since that time, are double the burden at the present time on the class which pays direct taxation compared with what they were then. Then, other direct taxation has increased since those days to a considerable extent. In 1855–6 the direct taxpayers of this country bore 41.4 per cent. of the total amount raised in taxation. Last year they bore 52.3 per cent. In the former year direct taxation amounted to 19s. 8d. per head of the population; last year it amounted to 32s, 11d. As to indirect taxation, anyone who looks back to the tariff of 1855 will find it crowded with articles since removed from it; some of them returning a very small amount of revenue, but other articles, such as timber and paper, returning a very considerable amount of revenue indeed. When the right hon. Gentleman told us today that Mr. Gladstone objected to the permanent continuation of the corn duty, and that he took the first opportunity of removing it, I was reminded that in the year 1866, after the statements made in 1864, which the right hon. Gentleman has quoted from Mr. Gladstone, that the corn duty should not be a permanent tax, Mr. Gladstone preferred to remove not merely the duty on timber but the extra duty on bottled wines as compared with wines in casks, in place of touching the corn duty. I have stated something of the indirect taxation of 1855; but what was the taxation then on articles of food? There was the corn duty which we seek to reimpose; there was a duty of 5s. a cwt. on butter, which is gone; tea which is now taxed at 6d. on the lb., was then taxed at 1s. 9d. on the lb.; sugar, now taxed at 4s. 2d. a cwt. was then taxed at 20s. a cwt. Was not that a far higher charge on the working classes, who were infinitely less able to bear taxation in those days than they are now, than anything I propose in the taxation now under consideration by the House?

Well, I think I have shown that if we are to go back to the precedent of the Crimean War in our fiscal arrangements, if we are to revert to the last time that this country was face to face with an abnormal expenditure for war, we are bound to impose in our Budget some additional taxation on the masses as well as on the wealthier classes of the country. Then the question is. What shall that taxation be? That was the point to which the right hon. Gentleman the Member for East Wolverhampton devoted a great deal of his speech the other night, and to which the right hon. Gentleman the Member for West Monmouth also alluded this afternoon. I do not think I need dwell on the possibilities, although they have been suggested, of direct taxation on the masses of the population. It has been suggested that we should lower the limit of exemption from income tax from £160 to £100. I am glad to see that the right hon. Member for West Monmouth shakes his head at that suggestion. If you did, you would tax, perhaps, the most necessitous class in the country, and the collection would be so difficult that you would add little to your revenue by the change. It has been suggested, too, that we should lower the limit of house duty from £20 to £10. Why, Sir, the very poor in our great cities live so largely in houses of such a valuation that to impose such a duty upon them would be cruelty, and the houses between £10 and £20 in the rural districts are so few in number that any such alteration of the house duty would not produce £300,000 a year. Therefore you are reduced, as I believe anybody who has studied the finance of this country must have been reduced, to new indirect taxation of some kind or other if you are to impose a fair share of the increasing burdens of the country upon the masses of the population. It was suggested the other clay that the sugar duty should be increased. I was glad to see that neither of the right hon. Gentlemen opposite gave any support to that view. We have heard a great deal from the right hon. Gentleman the Member for the Stirling Burghs about sugar being the food of the people, and, as sugar is already taxed to something like 20 per cent. of its value, to double the sugar duty would be a greater burden upon the poorest of our population than the imposition of 3 or 4 per cent. on the value of the corn and flour imported into this country.

Then I come to the particular items to which allusion has been made—beer and tobacco. The right hon. Gentleman has blamed me for stating somewhat prematurely my opinion that beer and spirits would not stand increased taxation. I stated it in the House a year ago. I have never concealed it. I do not believe—and I have gone into this matter very closely—that you could take the increased taxation which is necessary from either of these sources. I dismiss spirits because I know the right hon. Gentleman opposite agrees with me on that matter, and I turn to beer. What has been the condition of the revenue from beer for the past few years? Between 1895 and 1900 the revenue from beer, without any increase of taxation, increased by more than £1,500,000. In 1900 we increased the duty, with the result, of course, of an addition to the revenue. But the increase in the yield of the duty was checked, and the increase in the consumption of beer was checked to so large an extent that, in the two years following 1900, the consumption fell off by no less than one million barrels. I do not say that this was entirely due to the increase of the tax. It may have been due partly to other causes, but I will venture to say that to obtain anything like the £2,500,000 from beer which I desire to obtain from indirect taxation in this Budget you would have to impose, as a matter of calculation, at least 2s. a barrel on beer; and, when you had imposed it, you would never get your revenue, because the result of it would be that both the brewer and the retailer would have to increase the price to the consumer, and the consumption would largely fall off, to the serious injury of the revenue.

Now I turn to tobacco. The tobacco revenue, as anybody who has attempted to deal with it will know—and I have suffered from it myself—is a revenue of a very ticklish kind. There are some facts in the history of the tobacco revenue to which, perhaps, I may very shortly call the attention of the House. Between the years 1870 and 1877 the tax upon tobacco was rather more than 3s. a pound, and the yield of the duty increased during those years by an average of 3 per cent. per annum. Then Sir Stafford Northcote raised the duty to 3s. 6d. per pound. He anticipated an increase of £800,000 from that change, but he actually got only £500,000. The duty went on at that rate until 1886, and the annual increase from it was only 1.89 per cent. per annum instead of the 3 per cent. per annum as before. Then it was altered to 3s. 2d. the pound, and remained at that figure until 1897, showing an annual increase of 3.12 per cent. per annum. A more conclusive proof than those figures demonstrate as to the danger of raising the tobacco duty much above 3s. on the pound I think it would be impossible to show. But I have something more. The duty is now 3s. on the pound with a legal limit of moisture of 30 per cent., that legal limit being necessary for the security of the revenue. If you wanted to raise £2,500,000 more from tobacco you would have to calculate on another 1s. on the pound at least for that purpose, and when you have done that, what would be the result? You would have asked the consumer of tobacco to pay something like £3,500,000 more in duty in order to return £2,500,000 to the Exchequer. The great bulk of the receipts from the duty on tobacco comes from the working-class consumer—the man whom I have heard the hon. Member for Leicester often describe as the 3d. an ounce man. He buys his tobacco at 3d. an ounce, or l½d. for half an ounce. He has always been in the habit of doing so, and it is everybody's opinion that he will give no more. But, if you were to increase the duty on tobacco by 1s. the pound, the price to him must be raised, and the result would be that he would be charged a halfpenny, or even a penny, an ounce more than he pays now. The consumption of tobacco would inevitably fall off so much that the revenue would receive very little from the change. I am arguing this matter simply from the point of view of the revenue. Of course, it may be said that it would be a very fine thing if the consumption of beer, or even the consumption of tobacco, decreased. I am not concerned with that matter at all. I have to raise a certain amount of money from indirect taxation for the purposes of the expenditure of the country; and it would be absolutely useless for me—it would be worse than useless, it would be deceiving Parliament—if I made proposals for increasing the revenue which, however popular or plausible they might be at the moment, in my heart I knew would not tend to secure the money.

I now come to the particular tax to which the right hon. Gentleman objects. That tax is a very small tax upon the value of the article on which it is imposed. The real test of the burden imposed by a tax is the amount the consumption is decreased by its imposition. But will any one think of suggesting for a moment that the consumption of corn or Hour or bread in this country will be decreased by the imposition of 3d. per cwt. on corn? The idea is absurd. The right hon. Gentleman asks who will pay the tax; and he refers to the recent rise in the price of corn and bread. Of course there has been, within the last few weeks, a rise in the price of corn. There always is a rise in the price of corn when stocks are low in the spring of the year; and I suppose if it had been possible for me to impose this duty after harvest, when stocks were large, or during harvest, when anticipations were favourable, there probably would have been no rise at all. But corn has been rising quite irrespective of the duty for weeks past. It has risen in America where the duty could have no effect whatever. It has risen because stocks are low. And when people complain to me, as they have complained, of the high price of maize in particular, anybody who looks back at the records of the market and sees that the American crop of maize last year was hardly more than half what it was in the previous year, and that, as a result, from November until May this year we only imported from America 800,000 quarters of maize, as compared with 11,355,000 quarters in the same period last year, will see what the reason is for the present rise in the price of maize. But even so, at present wheat is only the same price as it was, within a little, in March, 1901, and flour on May 5th in Mark Lane was almost exactly the same price as it was on that date a year ago.

Of course the right hon. Gentleman says this is a bread tax, and he refers to a rise by bakers in the price of bread as if it were not only a general, but almost a universal rise. It is nothing of the kind. I have obtained information on this point from the thirty largest cities in this country, including the Metropolis, up to the 5th May. There has been no general rise in the price of bread in London; there has been a rise in the price of bread by a good many bakers in London, but a general rise in price there has not been. And out of the other twenty-nine cities I find that in nineteen there has been no rise in price at all, in nine there has been a rise of ½d. on the quartern loaf, and in one there has been actually a decrease in price since 1st March. But any one who has paid any attention to the price of bread will know that it is extremely difficult to found an argument on ordinary bakers' prices, because the price of bread varies in the most extraordinary way in different towns and villages, and even in different streets of the same town. Therefore I have obtained what I think is something more reliable that statistics of bakers, and that is statistics from co-operative societies all over Great Britain. Even a co-operative society may, I am told, be sometimes influenced in fixing the price of bread by—well, political considerations. But I think generally it may be argued that co-operative societies will not raise the price of bread before it is necessary, but that they will raise it if they find it necessary to do so. I have obtained returns from as many as 284 co-operative societies in Great Britain, and I find that out of those only thirty-two have raised the price of bread by ½d. the quartern loaf. I find that in the north, east, north-midland, west-midland, and south-eastern districts of England there has been no rise at all in the cooperative price of bread, nor has there been in Scotland. In London, in Lancashire, and Cheshire, in the south-midland and the south-western districts of England, there has been an average rise in the co-operative price of bread of ¼d. the quartern loaf. When the right hon. Gentleman talks of the price of bread as if it were a question almost of starvation prices at the present moment, I can tell him this, that out of all these societies the mean co-operative price of bread throughout the United Kingdom is not more now than 5d. for the quartern loaf. I do not think that is quite a starvation price.

But, after all, the main argument of the right hon. Gentleman was not so much with regard to the present as with regard to the future. He asked who would pay this tax. Well, I do not think anybody could say with certainty who pays any indirect tax. I should say that it mainly depends on whether the demand is greater than the supply, or whether the supply is greater than the demand. For the moment here we have short stocks of corn and of flour, and we have other elements far more important than this 3d. per cwt. on wheat which have tended to raise prices, and all that you can fairly say as to this duty is that it may, as the right hon. Gentleman said the other night, have tended to cause to overflow a cup which was already full. You cannot possibly attribute more to this duty than that. But what is the position with regard to the future? For the moment the demand is greater than the supply. Is that likely to be often the case in future? The right hon. Gentleman forgets that not only is it necessary for us to obtain wheat and flour from America or other quarters, but that it is quite as necessary for them to sell their productions to us. Does anybody suppose that the imposition of 3d. per cwt. on wheat would cause a single acre less corn to be cultivated in America? Why, the idea is absurd. They will go on producing corn just as they have done before; they must send it here because they cannot send it to other countries, on account of the Protective tariff against wheat in those countries. Therefore, directly the supply of corn becomes greater than the demand, the producer and the carrier of the corn will pay it, because they are obliged to send it here. That is exactly what happened in the course of last year in the case of sugar. An enormous crop of beet sugar was grown in Europe which was obliged to come here because it could not go anywhere else, and the price largely fell. What has happened already? The Millers' Federation in the United States is a powerful organisation. I have seen statements from that organisation which agree in the view that the duty here will be a trifle in regard to their exportation of flour to this country as compared with the extra charges which the freight companies make for carrying flour instead of corn, and they have even now persuaded an important railway company in the Western States to carry their flour at cheaper rates than it did before the imposition of the duty. What is that but the payment by the shareholders of that railway company of a portion of the duty?

Now, in regard to the probable future, I have seen a calculation, and I believe it is right in its main particulars, from which it is clear that the production of wheat throughout the world is increasing at a greater ratio than the demand for that production. It is stated that the total wheat production of the world last year was 100,000,000 qrs. more than it was in 1880, while the increased consumption is put at only 37,000,000. We want in this country about 7,000,000 qrs. more a year, taking an average crop, than we did in the year 1880. But again, taking an average crop, the United States, owing to the extension of cultivation, could spare us 15,000,000 qrs. more than they could in that year, and the Argentine Republic could spare us 2,500,000 more quarters; and, therefore, putting aside altogether all the other wheat producing countries in the world, is it not clear that the probabilities are that the supply of corn to us will so far exceed the demand in future as to keep the price down? If so, what becomes of the suggestion that this 3d. per cwt. can by any possibility be a Protective duty to the British farmer, or raise the price of corn in this country?

The right hon. Gentleman said that at the bottom of this proposal lies the question of Free Trade or Protection, and he suggested that we were undermining the dam between the two policies, a dam which in his opinion is absolutely necessary to prevent this country being converted from Free Trade to Protection. Well, if we are undermining the dam by the proposal of this duty, it is very remarkable that the dam was not undermined between the years 1849 and 1869, when the duty existed. All that the right hon. Gentleman has said upon this subject really arises from what my hon. friend the Member for Glasgow described the other day as a kind of superstition that has grown about the principles of Free Trade. Those who imposed this duty in 1849 never supposed that it was against the principles of Free Trade, those who maintained it were staunch upholders of those principles. Mr. Gladstone in 1864 continued it, not as an annual but as a permanent tax, and when he had the chance of repealing it he chose instead to reduce other duties which in his opinion were more injurious to the people. The right hon. Gentleman says that it is a Protective duty because it produces less to the Exchequer than the charge which it imposes on the consumer. Granting his assumption, and supposing it to be correct that the duty would increase the price of corn in this country, why, Sir, it sins less in that respect, at any rate, now than it did in the years 1849–1869? For what is the position? In the year 1868, assuming that the duty on wheat increased the price of the whole consumption of wheat in this country by 1s. a quarter, £716,000 would have gone into the pockets of the producers in this country, and only £447,000 into the Exchequer. But now, when we import three-quarters of our wheat, not more than £363,000 could by any possibility go into the pockets of the farmers in this country, while the Exchequer would benefit to the extent of £1,128,000.

There is one thing I cannot understand. The right hon. Gentleman has often stated to the House that above all things he is anxious to bring home to the minds of the mass of the people the cost of war, and our great and growing expenditure, and, I think, only the other day he said he thought this duty was the very thing that would do it. Why does he object to a duty which would have the precise effect which he so earnestly desires? It has been called mean and shabby. Sir, is it mean in us if we believe that even the very poor people of this country, are as patriotic as the wealthy, and that they will be as willing to bear something of the burden of the increased expenditure which is necessary for the policy of which they have approved? This duty has been called a cowardly duty. Was ever epithet so misplaced? Is it a cowardly thing for the Government to face the old cry of "the big loaf or the little loaf," the "tax on the food of the people," which, with so little cause, has been so promptly raised by hon. and right hon. Gentlemen opposite? I think it might be cowardly when we had to impose new taxation, if we imposed all upon the few and the wealthy who could not resist it at the polls.

We have faced this danger, and according to the right hon. Gentlemen we have suffered already. But, Sir, Manchester may be placarded all over with posters inciting the people to rise in their thousands against the bread tax; a few hundred electors of Bury may be deluded, by appeals to the memory of the great Sir Robert Peel into opposing the reim-position of the very duty which he himself devised and imposed; but I think that the commonsense of the people of this country will recognise the absurdity of arguments of that kind. I remember what happened a year ago with regard to the sugar duty. I remember an electoral address by a candidate on the other side, which said that the duty would cripple the confectionery and the jam trades, would paralyse the fruit-growing industry, and would make the food of every man, woman, and child in the country dearer, and their lives harder if they were poor. Does any one who has watched the course of the price of sugar during the last twelve months believe that statements of that kind were justified? In a very short time any effect of this duty on the price of wheat and of bread will have found its proper level; and I am convinced that it will be felt generally through the country that the exaggerated anticipations of its result will never be realised, and that a duty which, when it existed, nobody felt, for the removal of which nobody was grateful because-nobody desired it, will no more in the future than in the past, have, to borrow the words of the hon. Member for Poplar, any practical effect on the cost of food.

(4.35.) MR. ROBSON (South Shields)

The right hon. Gentleman has based his case for this tax on totally different grounds to those upon which he based his Budget speech. He has told us that he believes that the working classes are willing to bear their fair share of taxation in order to meet the expenditure for war. He has rather belittled the credit he was before entitled to by saying that it imposes no burden upon them at all, and that where it is not borne by the bakers it is borne by the American railway companies; and I think that that goes some distance towards depriving him of the credit for manly courage in the face of theory of the democracy anxious to preserve its bread. Let us take what the right hon. Gentleman said upon the first stage of the controversy, when he introduced this tax. The Chancellor of the Exchequer did not then connect this tax with war expenditure, for he was most careful to dissociate it from the war charges. When he proposed the addition to the income tax he was careful to specify that tax as a war tax, and he accompanied his proposal with the statement that the tax would cease with the war. But when he came to the corn tax he put it upon a very different basis.

He introduced this tax, as he did last year the coal export duty, not as an emergency tax, but as a new and additional basis for the taxation of the country to prevail in times of peace. Hon. Gentlemen opposite will not have forgotten what the right hon. Gentleman said when he drew attention to the enormous increase in the ordinary expenditure of the country. He says that it is necessary that the increase in expenditure should be met by new sources of taxation, and as the ordinary expenditure is permanent so, of course, must the taxation derived from these new sources be treated as permanent; and having given us that prelude to the tax he said he did not believe that he could put more permanent taxation upon direct taxation, and in looking for a new source of indirect taxation he had to look to some commodity of universal use. Therefore this has not been introduced as a war tax, but as a deliberate readjustment of the relative burdens of direct and indirect taxation upon the taxpayers of the country. In 1896, when the right hon. Gentleman was dealing not with deficits, but the ample and unbounded surpluses handed down to him by his distinguished predecessor in the office he now holds, the right hon. Gentleman warned us then that we were reaching the limits of direct taxation. What did that mean? It meant that if our then scale of expenditure continued or increased it must be provided for, not by the direct taxes, but by taxes upon the food of the people. That was what the right hon. Gentleman and his Party had in view in 1896 before the South African troubles were thought of, or at any rate before they were thought I of on the Front Bench opposite.

Therefore the introduction of this tax is a step in the retrograde policy which the Chancellor of the Exchequer has had in view ever since he held his present office. In 1896, although lamenting the increase in expenditure, he proposed to support and advocate a huge transfer to the general taxpayer of the burdens hither to borne by particular classes and he did this at a time when he knew that we were reaching the limits of direct taxation, and that, therefore, sooner or later, the burdens he was putting on the general Exchequer must inevitably be borne by the trade and the food of the people. Tonight the right hon. Gentleman has criticised the various suggestions which have been made as alternatives to this tax, and he has thought fit to ignore the suggestion thrown out by my right hon. friend the Member for West Monmouth that he should remit the doles he has given in place of imposing the bread tax. That suggestion the Chancellor of the Exchequer thought fit to ignore altogether. Not for the first time are we able to observe that the silence of Ministers is so much more suggestive than their speech. The right hon. Gentleman has reverted to the argument that the tax will not be a burden upon any one, that it is, in fact, a sort of bloodless victory over the hated foreigner - who feeds us, and that it certainly will not result in any rise in price. The action of the markets has given a very swift answer to that plea. There has been a rise in the price of bread, and where this has been imposed the rise has been out of all proportion to the fraction represented by the amount of the tax. We are all agreed that the price of a commodity in any particular district must be somewhat delusive as to the general price.

The right hon. Gentleman has given us a number of statistics taken under a variety of conditions under which the tax might wholly fail to tell upon the price. There is no doubt that at the places and times chosen by the right hon. Gentleman his figures are quite accurate. I agree that there are moments and conditions in any trade when the cost of production of an article and of placing it on the market is almost an unimportant factor. But although at times the cost of production is unimportant, yet, if instead of having regard merely to particular moments we regard the trade as a whole, and if we take not this, that, or the other abnormal conditions of the market but take the markets over a long period of time, it will be seen that not only is the cost of placing the commodity upon the market an important factor, but it is the all important factor, in fact, it is the dominant factor in the price. If the right hon. Gentleman was imposing this tax just in reference to the particular condition of the market, and limiting its operation to some short period of time, then his argument would have an excellent application. But the right hon. Gentleman is making this a permanent tax, and nothing can be more fallacious than to judge it by pointing out that it may have no effect in a peculiar condition of the market. It is a commercial and economic fallacy. There are plenty of men of business on the other side of the House, and I wonder whether there is any one of them who, on sitting down to consider the price which he should charge for his commodity, would have no regard whatever to the cost of placing it on the market, but would simply consider what the price might he owing to the conditions of supply and demand at a particular time. The dominant factor in fixing the price is undoubtedly the cost of placing your goods on the market, and that is the point of view from which we must consider this tax. Instead, then, of this tax being a gain to the producer, it would rather seem to be the case that it is not coins to be a grain to anybody. We have had a great many suggestions thrown out that perhaps the agricultural industry might possibly gain something by this. I do not think that any one who ventured to make that claim would do so now. The farmers have discovered that much of this tax is to be paid by them. Some will gain, but the agricultural industry as a whole will suffer along with the rest of the community. The farmer, unless he is able to shift the cost of his feeding-stuffs on to the consumer of his produce will have the opportunity of learning a somewhat unpleasant lesson. He will discover that a Protective tax in his favour does not always bring him benefit to the full extent of the tax. In this case, perhaps, it will not do so, but he will also discover that a Protective tax in somebody's favour—in favour, to wit, of the American wheat producer—puts on him a burden far greater than the amount of the tax.

I need not repeat the argument which has already been admirably developed by my right hon. friend as to the tax increasing the price of the cost of production in a manner out of proportion to the amount of the tax itself. The farmer will find that out. He will have to pay more as a consumer than he will gain as a producer. It may be a fleabite, but, if so, it will be a fleabite in this respect, that the magnitude and irritation of its results will be out of all proportion to the cause. The friends of the farmer have a good deal to answer for. They have been to him throughout the whole of his history very fatal friends. They are always trying to excite his trade selfishness and cupidity. They seek to arouse him as the hon. Member for Central Sheffield seeks to arouse the industrial class by a sort of I crusade against the customers. The customers are to pay more for the goods bought, but then they are to receive for that sacrifice, if not compensation, at all events, comfort in the knowledge that they are hurting the foreigner. That seems to me to be a detestable propaganda. It is detestable whether it is applied by the farmer's friends or by Protectionists. One need say nothing about the morality of it. There are a good many gentleman who seem to think that the moral law does not apply in the economic sphere. I venture rather to believe that there is no sphere of human affairs in which the law applies with more striking scientific precision and severity than it does in the economic sphere. Those rapacious gentlemen who are always wanting to raise rents and prices to some figure beyond that which they can get from free and honest trading, generally find that they are outflanked one way or another. They either do not get what they want, or if they do, they have some convenient reason for ceasing to want it. If the farmer does get any protection out of the corn duty then the farmer will very soon be glad to barter that advantage in order to got feeding stuffs free of all duties.

The Government have now hit the three great mainstays of public nutrition. They began by hampering the meat trade of the country by forbidding the import of store cattle, and we are feeling the result of that today in the rise in the price of meat. They went on to try to raise by a legislative act the price of sugar. I confess that I do not see why we should go on giving protection to the German coal owner, as we did last year, and to the American meat producer, as we are doing this year, if we are not to get an advantage from the German in the way of cheap sugar. At all events we determined to forego that advantage. Meat is to be more dear, sugar more dear, and now bread is to be more dear. They have taken care that the consumer shall suffer much more than the Exchequer shall gain. Hence, for instance, the popularity of the sugar tax with the refiners; hence also the popularity of the flour tax with the millers. In each case the right hon. Gentleman has taken care to give a protection bonus, which, of course, is imposed at the expense of the poorest. What does this policy mean to the poorest of the people? We hear a great deal about the prosperity of the working class. Undoubtedly, as we all see perfectly well, the working class of England has advanced enormously in prosperity and social condition since the establishment of Free Trade. But when we talk of the working class it is very desirable to be definite. There are all sorts of classes in that class which we loosely describe as the working class. There are every class and section of the people from the absolutely starving to the relatively comfortable. In the most prosperous times of English trade we have always with us an underfed class.

The right hon. Gentleman the Member for West Monmouthshire drew attention to the number of paupers in England, and he asked us to infer from that that if there are so many who have reached actual destitution there must be many more on the verge of destitution, and that is just the inference to make where we are able to be more precise. We are able to give the proportion of that underfed class with extreme precision. When I last addressed the House on this subject on the night of the introduction of the Budget I gave some figures from Mr. Rowntree's book with regard to the population of York. I painted out that by a most admirable calculation Mr. Rowntree had given the family budgets of 1,465 families. He showed that these people were systematically underfed, and that the scale of dietary allowed to them by their means was such as did not permit, I shall not say of their living like the imaginary peasant the right hon. Gentleman has discovered, but did not permit of flesh meat at all if proper allowance were made for other articles of food, and above all, that the scale of dietary of these people was systematically and necessarily less than the workhouse scale of diet. That is in regard to the underfed class of York. Let me give the House figures collected from a wider area with no less precision. They are the figures which Mr. Booth published with regard to the condition of the poor in certain districts. In the collection of the facts he received assistance from all classes. Ministers and School Board inspectors, and a great army of investigators assisted Mr. Booth in ascertaining the condition of the poorest classes in the areas with which he was dealing. He dealt with a population of 904,000, and he pointed out that of that population 111,000 were what he called the very poor, meaning by that that they live in a state of chronic and severe want. By the very poor he means, generally speaking, those who hardly ever have enough. Of course, they have occasionally too much, and no doubt these people will occasionally suffer from excess, but taking their life generally, these people are underfed. Then he goes on to give the class just above them. He gives 75,000 as being people who live on the proceeds of intermittent employment. These people are also generally underfed, though not invariably. Then he gives the class above them, numbering 129,000, of whom he says that their earnings are small and irregular. He proceeds to give their family budgets, showing that they have just barely enough for decent physical subsistence, provided that no unpleasant contingencies come to disturb the equilibrium of their life. For instance, if they desire to have anything extra, such as articles of furniture, or clothing, or even boots, it has to come out of what Mr. Booth calls with grim picturesqueness the exchequer of the belly. Adding these together, we have a population of 315,000 out of something like 904,000, making between 30 and 35 per cent., who live in want. In the case of some of them, it is habitual and chronic; in the case of others, general; and in the case of the very best of them, occasional. That is your underfed class, and when the Chancellor of the Exchequer gets up here, and tells us that he believes we ought to tax the poor, I would ask him—Does he think that we ought to tax that class?

Do not let us have these vague generalties about the prosperity of the working-classes. Let us distinguish between one kind of working class and another. Let us distinguish between the working class, of whose existence every now and then we know as the unemployed class, and those who have work to do, and let us know from this Government whether in their claim for financial courage they are going to have the courage to say that these people should be taxed. I say if they do they are placing the tax where it will be most severely felt. We cannot take away the nutriment of the people without attacking the physical stamina of the race. The right hon. Gentleman says that there will not be less bread consumed; but how can he imagine that if you put an addition on the price of bread you will not affect people who are unable to be properly fed? Of course, those people who are already half starving will starve a little more. Why, 15 per cent. of the population of York, and 35 per cent. of the population of the largo districts of the East End of London are in that condition. And these people form our labour reserve; it is from their ranks that our manufacturers draw their extra workmen in times of boom. But they are not only our labour reserve, they are to a far greater extent than I like to contemplate, our army reserve; and we have had lately an exhibition of the diminution of the physical standard of the class from which our recruits are drawn. What does that mean? It means that many of these people come from the underfed class. In these days of Imperial expansion are we going to lower and diminish the physical standard of the men who are to fight our battles? I hope it is not too late to appeal to the right hon. Gentleman to give some attention to these considerations, for we cannot build a big England on a little loaf. There are a number of hon. Members on the other side of the House who were once professed Liberals and who still claim to have some share in Liberal ideas. Are they going to ally themselves with this Tory reactionary policy or will they draw back before it is too late? Will they join in the taxation of the food of the people this year, as they did the taxation on trade last year by the coal duty? This reactionary policy is now pervading every Department, and I ask the Liberal Unionists whether they are going to take part in it. If they ally themselves to that policy let them at least have the grace to drop all pretence of any connection with the Liberal name or Liberal traditions.

(5–6.) EARL PERCY (Kensington, S.)

The hon. and learned Gentleman who has just sat down is always an able and eloquent speaker, but he will pardon me when I say that many of his propositions and descriptions of the poverty of the working classes are self-evident truisms. His speech only served to confirm me in the general impression I derived from the debate, that the issue between the two Parties in the House is not so much a difference of principle difference of opinion about facts. If Members opposite believed that this tax will not have the slightest permanent effect in raising the price of bread, the bitterness of their opposition to it would, at all events, be modified, while if we on this side really believed that it would be a serious burden on the working classes, more especially on those who are on the borderland of actual want, then not one of us would vote for the tax. Hon. Gentlemen opposite have made no serious attempt to show why the re-imposition of this tax should have a permanent effect in increasing the price of bread, any more than its abolition caused a permanent fall. They have preferred to fall back on the catchwords of a bygone controversy.

The right hon. Member for West Monmouth professed to think that the result of the Bury election—and why the Bury election should be more significant than that at Woolwich the other day, I do not know—was owing to the agitation in regard to this tax. I do not believe that that had much to do with the result. I prefer to take as the real opinion of the Party opposite the speech delivered at Newcastle by Lord Tweedmouth, in which he deplored the apathy of the country, and its indifference to the appeals made to it in regard to this tax. No one can say that there has been any real movement of indignation about the tax amongst the great mass of the working classes. At any rate, there would have been a far greater movement if they had thought that they were going to be seriously affected by it. That of itself requires some explanation, for the people are not less, but more educated and more intelligent now than in the days when they did not possess the franchise, and when the cry of a little loaf frequently determined the issues of a general election. The appeals of hon. Gentlemen opposite have fallen on deaf ears, because the people have seen through their antiquated shibboleths, and know that the tax will not put too heavy a burden on their private means or their public spirit.

I do not propose to base my argument in defence of the tax on the proposition that it will not fall wholly or in part on the consumer. I do not say that it will be paid mainly or wholly either by the middleman or the producer, although I believe that the latter argument is supported by experience, and is, at any rate, as plausible as that of hon. Gentlemen opposite whose prophesies in regard to the coal tax were so completely falsified. But I hold it to be a dishonest course to impose any tax or embark on any policy the natural or possible consequences of which you are not prepared to defend. I assume for the purposes of argument that the main part of this tax will fall on the consumer. Even on that hypothesis, and making another assumption, manifestly not warranted by the facts, that the whole amount of this tax will be added to the cost of bread, and that the only people who will pay for it will be the 30,000,000 whose wages range from £3 a week and under—assuming these two propositions, the net contribution which this tax will represent to the Chancellor of the Exchequer from the working classes will amount to no more than a penny three farthings per head per month. Is it seriously maintained that such a contribution will make all the difference to the personal comforts of the working classes suggested by hon. Gentlemen opposite? I venture to say that the growing increase of rates, and consequently of rents, in our great towns which goes on year after year, without protest being heard on the part of hon. Gentlemen opposite, imposes a far heavier burden on the working classes than any increase in the price of bread that can result from the corn and flour tax. It is not pretended that in imposing this tax we are disturbing the relative proportion of direct and indirect taxation which recent years have established. The Chancellor of the Exchequer has, if anything, modified that relative proportion in favour of the consumer, and no one will contend that a time of war presents a favourable opportunity for introducing a still further change in that direction.

The objections to this tax are not so much practical as theoretical. It is urged that this is the thin end of the wedge, and that this tax, which in itself is admittedly not Protective in its character—[Hon. Members on the Opposition Benches, "Oh, oh!"]—may lead to the revival of a distinctly and avowedly Protective policy. Now, if I really held that opinion, I should vote with hon. Gentlemen opposite. Free Trade in corn products is, I believe, a necessity for all time for the people of this country, the vast majority of whom are engaged in manufacturing industries. No amount of cereal products which could ever be raised in this country would compensate the people for the rise in price which would inevitably result from the abandonment of the policy of Free Trade, and a return to Protection. I do not think that there is the very slightest chance of a return to agricultural Protection; the voting power is no longer with the classes interested in the land.

Another argument which weighs with hon. Gentlemen opposite, far more than the abstract fear of Protection, is their adherence to the doctrine, which has been erected into a fetish, that in no circumstances is it justifiable to put a tax on the necessaries of life. If by that is meant that it is objectionable to increase the profits of one trade at the expense of another, then I subscribe to it. But if your object be to levy a contribution from everyone, then I say that that is a most irrational doctrine, and most pernicious in its effect. Surely it is impossible to draw a hard and fast line as to what is a luxury and what is a necessary of life. Half the articles on the tariff not many years ago were luxuries, but they are now passing into the category of necessaries; and if you are going to contend that on that account these are to be considered as outside the area of taxation, what will be the result? The richer the country grows, and the more widely its wealth is distributed, the larger will be the sphere of exemption, until at last we shall be able to point out to an admiring world that in free and happy England the only members of the working class who really contribute to Imperial expenditure are the people who frequent the public houses. The noble Lord the Member for Greenwich painted the other day the dangers of an Imperialism which consists in the study of trade Returns, and which pays no attention to the intellectual and moral needs of the people. What, he asked, will it profit us if we gain the whole world and lose our own souls? My hon. friend the Member for Oldham and the Chancellor of the Exchequer are less ambitious; they would care less about the conditions of our souls if they were quite certain that we were gaining the whole world, and that our Imperialism was not likely to land us in bankruptcy. Is there any of us so blind that he cannot see that if we are to inculcate in our people that high moral standard which will make our rule a blessing, not a curse, we must plant in them a sense of personal responsibility? If we are to encourage a desire for economy, we must found it in a sense of personal self-sacrifice. I should have thought that hon. Gentlemen opposite would have been most interested in the assertion of a creed like that. They have adopted the cry of peace and retrenchment; they are perpetually, moaning over the vast sums spent on war and warlike armaments which ought to be available for education, and I should have imagined that they would have been the first to defend the financial policy of the Government. If these evils exist, they cannot be cured on the principles of homeopathy, you will never be able to teach the people to be pacific by shielding them from the consequences of war. For my own part, I think that hon. Gentlemen opposite are as wrong in their diagnosis of the disease as in the remedy they propose. If the people have no real care for the economic administration of the Empire, it is because they have no visible interest in economy.

There is one real injustice which our financial policy imposes on the people of this country. It is not that the burden is too light or too heavy; it is that the burden is disguised. That is an evil inseparable from the whole system of indirect taxation; but the disguise is least complete when taxes are levied on the necessaries of life. It may be open to argument that the rich do not pay their proper share of the total burden of the expenditure of the country. It may be that too great a strain is put on the people who live on the very verge of destitution. If that be so, then redress the balance, and ask of the poor no more than the widow's mite, which far outweighs all that your rich men cast into the Treasury. But let us ask for the mite openly and courageously, and not filch it from her pocket as if we were ashamed or afraid that she should know what we are doing. The age in which we live has many defects, but it has one redeeming virtue: it is marked by a growing sense of humanity, and a juster realisation of the responsibilities of wealth than was possessed by our ancestors. That is a change in the bringing about of which the Liberal Party have had no small share. But do not let us forget that test is not all that is required—that the supreme test of a nation's faith and fitness for its mission is not the involuntary effort which is made by the rich and poor of the community alike, but the conscious sacrifice which is made by every individual in the community in support of the cause in which they each and all believe. Distribute the burden as you will, but I would have one tax, at all events, to which all are proud of contributing, which is ear-marked and set aside for some great national object, and which both Parties in the State agree to regard as sacred, and agree to maintain. If the right hon. Gentleman tonight, instead of moving the rejection of this tax, had moved that it should be so ear-marked—and there could be no greater security against its even becoming Protective in its character—then I should have voted in support of the Amendment. There is no such tax in our tariff today. The nations of Europe around us pay it in the form of military conscription. We call that a "blood-tax." We thank God, and with reason, that He has placed us in a position which dispenses us from the necessity of such a sacrifice, that He has isled us here, and roughly set His Britain in blown seas and storming showers. Yes, but are we to ask for no equivalent sacrifice from the people of these islands, or from that great family of nations which rests secure under the aegis of our strength? Is there to be no tax apparent in its incidence?—a tax which is levied on all alike; which will be a guarantee of interest in policy and of jealous scrutiny in administration, and which shall represent the visible embodiment of the patriotism of the whole British race. History supplies one instance of such united national effort, so striking, so suggestive in its symbolism, that I may perhaps be permitted to quote it here. More than three thousand years ago an insignificant and persecuted race, whose national glory has long been a thing of the past, but whose very name is associated to this day with the most burning patriotism and love of country which the world has ever known—imposed upon the whole manhood of its people one tax, the principle of which—and it sounds a strange one to modern ears—was that all should contribute alike, "the rich should not pay more and the poor should not pay less." Out of the silver coin they gave were cast the pillar sockets of that moving Tent, in which their highest national hopes, their holiest national ideals were enshrined. Is it too much to ask that we who-have spread the curtains of our Empire under every sky; whose harbours are the marts of the world, whose merchants are princes; whose wealth exceeds all the fabled hoards of Some, of Babylon, and of Tyre—that we also should be proud to lay the foundations of that Empire deep in the devotion and self-sacrifice of all who claim a share in that common and glorious heritage?

(5.31.) MR. M'CRAE (Edinburgh, E.)

We welcome the adhesion of the noble Lord the Member for South Kensington to the principle of Free Trade, and while I listened to his moving and eloquent peroration—his ideals are very high—I remembered that you cannot feed the people on high ideals. We have a much more serious question to face in discussing whether we shall tax the food of the people or not. But I turn from the speech of the noble Lord to that of the Chancellor of the Exchequer, whose ability we all concede, and I think the House will agree with me when I say that today he is less convincing than usual. I was amazed to hear the right hon. Gentleman say in reply to my right hon. friend below mo, that this side of the House had opposed all his proposals, for taxation.

SIR M. HICKS BEACH

I did not say that.

MR. M'CRAE

I think the right hon. Gentleman must have forgotten——

SIR M. HICKS BEACH

If I said so it was a mistake, because the right hon. Gentleman himself supported them.

MR. M'CRAE

I have no desire to labour this point, and if the right hon. Gentleman says that I freely accept his statement. Now the right hon. Gentleman is a strong advocate for economy in public expenditure, in theory; but his. Budgets of increased expenditure have been unparalleled in the nation's history. The right hon. Gentleman is a strong, advocate for Free Trade, in theory; but his present proposals for taxation are a departure from the principles of Free Trade. His Free Trade doctrine is not the Free Trade doctrine of Adam Smith, but rather that of the hon. Member for Central Sheffield. I would ask the House to pause for a moment and consider the effect of the proposal of the right hon. Gentlemen to put a tax on corn. The Times correspondent in Berlin wrote— The Radical and Liberal journals regret that England should have broken with the traditions of half a century; the Conservative newspapers point out that even England is obliged to forsake the policy of Free Trade. Then I turn to the colonies and in these days the colonies are the final appeal to Cæsar. What does Sir Wilfred Laurier say in the Canadian House of Commons— England's new policy is Protection, but not a large measure of Protection; and I do not complain but rather rejoice in it. And if we take the Press of the country, the Financial Press and many of the newspapers which have supported the policy of the Government in regard to the war, it is easy to sec that it is a Protective duty. Take the Scotsman, which has been commended by the right hon. Gentleman the Secretary for the Colonies for its unwavering support of the Government. It had an article in which it dealt with the statement of the Chancellor of the Exchequer when he said this duty was not protective. The Scotsman then said there was no use in the Chancellor of the Exchequer making such a declaration as that, because it was Protective; and here I hope the House will allow me to quote from the speech Mr. Lowe made when he was abolishing the corn duties. He said— It is impossible to imagine any tax which combines more of the qualities that make a tax odious—that is, it is a duty on an article that is produced in England with no countervailing Excise duty upon it; it is therefore effectual as a Protective duty—that is to say, it not merely raises the price of the portion of the article that pays it, but also raises the price of the portion of the article which does not pay it. It therefore inflicts on the subject a burden more can iderable than the benefit it confers on the Revenue. The Chancellor of the Exchequer has defended this tax by saying that at the very worst it is a trifling contribution on the part of the working classes to the cost of the war of which they approved. That is a dangerous doctrine, and I will commend to the notice of the right hon. Gentleman an able article, written by a professor of political economy in Edinburgh University, called "Little taxes and great principles." We maintain that this tax is economically wrong apart from its Protective character, because it puts an artificial restriction on trade. It is difficult to foresee the complications which invariably result from taxation of this kind. Some are even now disclosed. The price of paper is to be increased because of the tax on starch, we have the horse owners meeting owing to the rise of feeding stuffs; and even in the operation of the tax we have this anomaly that although at the beginning, the tax on whole rice was to be 3d., on rice flour it was to be 5d. I find now whole rice is to be charged 5d. as well as the rice flour. Let me take another instance. The manufacturers in this country of split peas and split lentils are objecting because there is only a tax of 3d. put on the imported article—they have to pay 3d. on the raw material and that will cut them out from competing with the foreigner. I am quite sure if the present Cabinet had a business turn of mind they would never for a moment have proposed such a tax as this. I should like to hear the Colonial Secretary speak in his convincing way in defence of this tax.

We have heard a good deal of the cost of production, and have been told that prices are regulated by supply and demand. But under normal conditions what is the effect of a tax of this kind? What is the result? If I may venture to quote John Stuart Mill upon this point he says— When the cost of production is increased artificially by a tax, the effect is the fame as when it is increased by natural causes; if only a few commodities are affected, then their value and price will rise so as to compensate the producer or dealer for the peculiar burthen. We were told that this tax would not increase the price of bread. We have a conclusive answer to that. It has raised the price of bread. In Liverpool the price of the 4lb. loaf has been increased by one penny; in Swansea it has been increased a penny; and although there has not been a rise all over London. What has taken place in the East and North of London, the poorest districts of London, the 4lb. loaf has been increased a halfpenny.

When we turn to Bury, we are told that the bakers were all Radicals, and increased the price of bread in order to influence the electors. But let us go from Bury to Bristol, a district which the Chancellor of the Exchequer knows very well. There we find that the price of the best bread has been increased a halfpenny, but the second class of bread, the bread which is consumed by the poor, the price has been increased a penny. It is all very well for the Chancellor of the Exchequer to say the tax does not justify that rise in the price, but the Chancellor of the Exchequer ought to have been warned by the political economy of John Stuart Mill, who says— A tax on any commodity will as a general rule raise the value and the price of the commodity by at least the amount of the tax. There are few cases in which it does not raise them by more than that amount. I am amazed at the guileless simplicity of the Chancellor of the Exchequer, which is as refreshing as it is amazing.

The Chancellor of the Exchequer in introducing the duty on sugar gave utterance to a doctrine with which I am sure all on this side of the House would agree. He said— I want a tax that shall not be open to the economical objection to which a Protective duty on an article largely produced in this country would certainly be open, namely, that it would raise the price of the whole amount of that article to the consumer by a far larger sum than it would yield to the Exchequer. Although according to the Chancellor this tax ought to increase the price of bread by only ⅛th of a penny, we know it has increased it by a much larger amount, and that the total increase paid by the people, instead of being £2,600,000 will be at least £4,000,000. We oppose this tax because we feel it will be an unjust burden on the people. It has been called a bread tax, but it is in reality a blood tax, because if you stint the people of bread you lower their vitality. The Chancellor of the Exchequer may speak about the rural labourer with 13s. a week who has meat every day, and it sounds very rural and romantic, but what about the poor in our large towns, some of whom have meat neither every day nor any day. The extra halfpenny a loaf to them means diminishing the supply. We saw an instance given the other day by Dr. Berdoe in the East End of London of a poor widow with four children who will have to pay an increase of 7d a week. Sevenpence a week does not seem very much to many, but to the people who live on the borderland of poverty it is a very serious item.

The first principle of taxation, the ability to pay, has been departed from in this proposal, and I would like to ask one question with regard to that. Is this a war tax or not? If it is a war tax, it can only be temporary. It has been imposed, like the sugar duty, under the guise of a war tax, and I wish to know, when the war is over, is the income tax to be reduced and this tax on bread to remain? These are the questions we put to the Chancellor of the Exchequer. The fact is, these are not war taxes. They are the price to be paid for Unionist administration of the ordinary functions of Government. Apart from all expenditure on the war, taking simply the increase of the ordinary expenditure of the country, what do we find? That, but for additional taxation, there would have been a deficit in 1901 on the ordinary expenditure as compared with the ordinary revenue of £3,189,000; in 1902 there would have been a deficit of £11,805,000, and an estimated deficit this year of £10,390,000. In the present year the estimated ordinary expenditure is £129,159,000, or if, for the sake of comparison, we add the £2,000,000 by which the Sinking Fund was reduced in 1899, £131,159,000. That, compared with the expenditure of £97,764,000 in 1896 shows an increased expenditure of £33,395,000. To that must be added £2,500,000, the increased expenditure under the Local Taxation Account, or a total increase of £35,895,000. I have taken 1896 as the year in which this Government first produced a Budget. Compared with the year 1895, the last completed year under a Liberal administration, the increase amounts to £40,000,000. I would ask the Chancellor of the Exchequer to consider this fact in connection with the taxes he has imposed to meet that expenditure. We talk of taxation direct and indirect; I will consider only the indirect. The new taxes are estimated to produce this year—on sugar, £4,850,000: on tea, £2,150,000; and on corn, £2,650,000; in all, on absolute necessaries of life, £9,650,000. But on what may be called luxuries, taxes have been imposed to the extent of £1,333,000 on tobacco, £1,100,000 on spirits, and £1,800,000 on beer: or only £4,233,000 on luxuries, as against £9,650,000 on necessaries. The fact is, if this expenditure is to continue, unless we are to have a permanent income tax of 1s. in the £, we shall require a much larger duty on corn and other necessaries of life. What strikes one in considering these proposals is the want of originality and resource exhibited by the Chancellor of the Exchequer. This miserable expedient of a duty on corn is not sufficient to meet the demands of the situation. The right hon. Gentleman claims to be a Free Trader, but he has made shipwreck of his principles, and sold his birthright for a mess of pottage. This corn tax, which means a great deal to the very poor, equals only a single penny on the income tax. We are told by the Chancellor of the Exchequer that at the time of the Crimean War the income tax was Is. 4d. in the £. Why not have made the income tax 1s. 4d. now, and spared this great hardship on the poorest of our people? No. the right hon. Gentleman may say he is a Free Trader, but the expression "never again" has been used in connection with this war, and I say, "Never again let the Chancellor of the Exchequer claim to be a Free Trader while he stands by this tax."

Some time ago the right hon. Gentleman said it was impossible for any one, however great his financial ability, to deal completely with our system of taxation, or to impose a new burden equitably on all taxpayers. We, on this side, do not subscribe to that doctrine of despair. We believe it is possible to find a new source of revenue which would act equitably on the people of the country. The right hon. Gentleman says he must broaden the basis of taxation. Yes, but before you broaden your basis of taxation you should see that that basis is a just one. Broaden your basis of taxation if you will, not by taxing the food of the people, but by making that large and increasing increment in the value of land in our large towns contribute to the service of the State. History repeats itself. The landowning Parliaments of old made laws, the operation of which now enormously increased the burden of house rent to our very poor; today their lineal descendants are increasing that burden by making the toiler pay a tax on the bread he eats. We, on this side, at any rate, will give the proposal a sustained and determined opposition, not only in this House, but also in the country.

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

The speech of the hon. Gentleman who has just sat down seemed to me to be composed of the old-fashioned statements on the subject of Free Trade which do not apply on the present occasion.

MR. MCCRAE

They do apply.

MR. BARTLEY

That, of course, is the point. To my mind, they do not. The real point is that a large increase is required in the revenue of the country. Whenever we are discussing items of expenditure our opponents demand greater outlay; but when the Bill has to be paid they always raise these objections. We believe in Free Trade. I myself believe that a great part of the prosperity of this country, and of our immunity from many of the troubles which other countries have had to bear during the last forty or fifty years, has been due to the policy of Free Trade. If I thought that this proposal was a step in the direction of doing away with the blessing of cheap food for our people, I, as representing a by no means rich population in an urban district, should oppose it altogether. But I emphatically say that this tax is in no way an indication that the Government are departing from the Free Trade principle. I agree with my noble friend—and it is very much for the reasons he gave that I strongly support this tax—that it is necessary to make the people understand that they are subscribing to the great purposes for which this Empire exists. Although we are always talking about educating the people and making them understand everything, I am afraid that politicians, on both sides, are very often afraid to put the real issues before the people. But if ever a matter was put before the country, the questions of the war, and the increased expenditure involved by the war and by what is called an Imperial policy, have been. The public thoroughly understand that this war has cost money, and also that if the Navy is to be maintained at its present great strengh, and this country kept in a safe and sound condition, a largely increased expenditure is necessary. That being so, I say that it is wise politically that they should understand and feel that that increased expenditure must, to some extent, come out of their own pockets.

I have devoted considerable trouble to investigating the burden of taxation on a large class of the community. The investigations of Mr. Rowntree and others, referred to earlier in the evening, have been very important and useful, but statistics regarding the incomes of private persons with small incomes are hard to get at, and very difficult to generalise upon. One great item upsets all calculations concerning taxation, and that is alcohol. Theoretically, one would wish the burden of taxation to fall upon everybody in proportion to his means, but as long as we so enormously tax an article like alcohol, it is practically impossible to carry out that theory. On the other hand, no sane person would propose that we should do away with the tax on alcohol in order to adjust taxation according to a theoretically perfect system. It is often said that the poor do not contribute as they should. I emphatically say that many of the poorest of the community pay a much larger share of taxation than any other class. It is because, unfortunately, they pay very largely in the form of alcohol, the tax on which we cannot reduce. If you take the amount of money spent by small families in alcohol, it will be found that the amount paid in taxes by the lower stratum of society is larger than other classes. This all arises from the fact that the tax upon alcohol is so large, and this affects a very large proportion of their expenditure. But this tax, as my right hon. friend has said, is paid willingly, but the poor people do not realise the effect which it has upon them. I cannot help thinking that a great part of this tax will fall upon the poor, and I do not support this tax by saying that it will not be paid by the consumers of bread. I prefer to say that it will be paid by them, and I prefer also that the poor people should understand that in this way they are subscribing and helping to pay for the expenses of the war, and for the increase in the expenditure upon the Army and Navy, of which I approve. I think a large number of hon. Members on both sides of the House agree that the policy of this country in the future must be to continue to spend a very much larger sum upon the Army and Navy than we have done before. I think that both sides of the House agree that, at any rate, the expenditure upon the Navy should be permanently increased.

MR. WILLIAM ALLAN (Gateshead)

No.

MR. BARTLEY

The hon. Member opposite says "No," but I think his-opposition applies chiefly to a particular sort of boiler. I think it is also agreed hat our expenditure upon education should be increased, and that there should be a growing increase in our expenditure upon various other items. If this is so, the money must be found, and therefore I cannot see why we should not place this tax upon corn boldly upon all classes of the people, and let them understand clearly why it is put on. The poor in large towns have been referred to in regard to what they pay as compared with the poor in agricultural districts. I represent part of a very poor constituency, and, as I have said before, a great proportion of the taxation of the very poor districts is, I think, very high owing to the consumption of alcohol. A most graphic picture has been drawn by the hon. Member of poverty in certain parts of London, where I think he said that 33 per cent. of the population were bordering on starvation. I know the East End of London extremely well, and I do not say that he exaggerates the condition of the locality in the statement he has made. But is it not a fact that in that district at nearly every corner of the street there is a public-house, and if you take the amount spent by these poor people unnecessarily in alcohol in such places, it will be seen that they are inflicting upon themselves a far larger tax than anything which the Chancellor of the Exchequer is demanding. When we are talking about the condition of the poor, is it not rather deceiving ourselves to ignore this great and important fact? As one of those who try to improve the condition of the people in this way, it does seem to me unfortunate that in party politics we should ignore the real crux of the whole question. The taxation of this country, in my opinion, heavy as it is at the present time, is light in proportion to the amount of money wasted in this way every year; and, although I for one am most anxious to see the poor people relieved of any unnecessary tax wherever this is possible, I say that we cannot go on adding to our expenditure for war, for the Army and Navy, for education, and even for local matters, and not lot the people themselves see and feel that they are themselves paying; for it. My hon. friend the Member for Oldham is always preaching economy. I agree with him in theory very much, but it is idle to preach economy unless we have the boldness to show where the shoe pinches. If we attempt to conceal the source from which taxation is derived, and wrap it up in indirect taxation, and try to make people believe that they are not paying it, I think it is a mistake.

But so far from this proposal being a cowardly one, I think it is one of the few bold things that the present Government have done. They have distinctly put on a tax which looks as if the people paid it, and I congratulate them heartily upon it. I was amused to see the procession which went along Pall Mall yesterday to Hyde Park, and I saw the big loaf and the little loaf, and I suppose that this tax will be used in an effort to increase the number of Bury incidents. Let the Party opposite use this as much as they like, for I do not believe that the public are quite so ignorant as they seem to think. An hon. Member opposite says that in some places bread has gone up 1d. a loaf. That is simply 8s. or 9s. a quarter, instead of the 1s. which has been put on as a tax. And we all know perfectly well that that state of things cannot last. The public know very well what all this means. They know full well that in the course of a few weeks, the balance of trade will right itself. The people understand that this tax does affect them, but practically speaking, the amount is so small that it will not injure them to any appreciable extent. The great question which comes up every year is the question of our increased expenditure. I congratulate the Chancellor of the Exchequer upon being bold enough to broaden the basis of taxation. I protest altogether against the idea that we ought not to broaden the basis of our taxation, but simply increase the income tax. It is absurd to think that the income tax can do everything, for it falls upon a large class of people who have great difficulty in saving money. The fact remains that if we add to our income tax we are running enormous dangers on account of the narrow margin we have for increased taxation. The Chancellor of the Exchequer has added to our taxation the sugar duty, the export coal duty, and the registration duty on corn, and I hope these taxes will show the public that although it is a very fine thing to spend enormous sums of money on every conceivable object, still the day must come when the Bill has got to be paid, and nothing will tend to promote and increase economy more than the fact that by these taxes the public will see and feel that if they do insist upon these great items of expenditure they must pay for them. Whenever an effort has-been made to suspend the Sinking Fund or reduce the amount, I have always; opposed it because I think the reduction of the National Debt should go on, for it enables the people to see that they are paying off their debts, and I think thrift and economy are encouraged in that way. Inasmuch as our expenditure is now going up by leaps and bounds, I am sure that the country will realise that the Government has done right in putting this tax on corn, and although the people may feel it, still they will also feel that it is only right and proper that they should subscribe something to pay for a policy of which they approve. I am sure that long before a general election comes round the public will realise that this is a right fiscal system, and the Chancellor of the Exechequer will get credit for having raised money in an open and honest way rather than attempting to raise it in a way which nobody can quite conceive.

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

The hon. Member who has just sat down has spoken on the question of who will pay this tax, and has justified the imposition of the tax upon the ground that certain people will pay it who ought to pay it, and who ought to know that they pay it. It would be desirable that the Government, and those who sit on that side of the House should, at this early stage, agree as to what is the line they are going to take. The story is told that in the last Cabinet, before the dissolution of 1841, when various opinions were expressed on the repeal of the duty on corn as against Protection, Lord Melbourne put his back to the door, and said— Let us settle one thing before we go, will it cheapen bread or make it dear. The question to be settled now appears to be—Will this tax be paid by the poor, or will it not? Will it be a burden on some one whom nobody knows, and about whom nobody cares, or will it administer with proper discipline that stern lesson of public economy which the hon. Member for Islington thinks should be imposed upon all sections of the community?

The Chancellor of the Exchequer, in his speech at the commencement of the debate, complained rather strongly of the action of the Member for West Monmouthshire in proposing the rejection of the tax on corn, instead of following the precedent of last year, and proposing a reasoned Amendment. But in this he followed a precedent which, I think, the right hon. Gentleman did approve. When my right hon. friend in 1894 introduced his great Budget Bill that did not impose a tax upon the poor, but did impose a very heavy tax upon the rich, he was met by au Amendment, moved by the official Opposition, "That the Bill be read that day six mouths." The precedent, indeed, is stronger. For the objection then was to passing the Tax Bill at all. My right hon. friend has only opposed it so far as the corn tax is concerned; but the rejection of the Bill was proposed in 1894, and it had the support of the right hon. Gentleman the Leader of the Opposition, who approved of meeting the Bill with an Amendment of that description, on the ground that the tax was unjustifiable—and, of course, all the other usual adjectives were used upon that occasion. But whether that precedent be good or bad the right hon. Gentleman is not justified in the mode in which he referred to the debate of last year. It is perfectly true that the Opposition said then, as they have said officially over and over again, that they were ready to furnish the Crown with all the supplies that were asked for for the prosecution of the war; but I said then, and I say today, that the action the Opposition took in Committee of Supply in no way binds them in dealing with a Bill in Ways and Means. If we were satisfied that a large sum of money ought to be voted to the Crown for a specific purpose, are we to take helter-skelter any proposal the Chancellor of I the Exchequer may make for raising the money? Public opinion outside this House has absolutely killed the cheque tax, and my impression is that although the right hon. Gentleman may succeed in carrying this Bill through the House during this session—and possibly this tax may remain for a few years—a similar fate awaits it when it is committed to the constituencies as a whole. The Chancellor of the Exchequer said that we were trying to run the Empire on the cheap. Well, Sir, I can hardly make that tally with voting whatever supplies the Chancellor of the Exchequer asked for. Since the day he took office until the present hour, not one single shilling he has asked, for the security or defence of the country in time of peace, or for the Navy or the Army in time of war, has this House refused; but we have reserved our right, certainly, to question the mode in which he proposes to raise these funds.

Now, Sir, I wish to say a word about the right hon. Gentleman's history at this stage, and the extraordinary eagerness with which Gentlemen in this House and elsewhere have tried to shelter themselves under the great authority of Mr. Gladstone. The Chancellor of the Exchequer said that Mr. Gladstone made this a permanent tax. It was enacted by the statute repealing the corn laws, and it never was an annual tax. Mr. Gladstone refused, when the amount was small and insignificant, to interfere at the time with the various financial projects which he was proposing, and which were of great benefit to the country. The Chancellor of the Exchequer and the First Lord of the Treasury have accumulated all their adverse criticisms of the repeal of this registration duty upon the head of Mr. Lowe. I can tell the House—I shall not tell them the authority on which I speak, but the House will trust me not to make a statement on unreliable authority—I can tell the House that I know that the first thing Mr. Gladstone instructed Mr. Lowe to propose as Chancellor of the Exchequer was to repeal this tax, and that took precedence of all the other financial schemes in 1869. I think it was my right hon. friend the Member for the Forest of Dean who stated that directly Mr. Gladstone was master in his own house and became Prime Minister he proceeded at once to repeal this tax. That action may have been right or wrong, but the Chancellor of the Exchequer, at all events, in this matter took all the credit of undoing Mr. Lowe's work as if it was not the act of Mr. Gladstone. Mr. Gladstone would have abhorred, detested, and adjured any attempt to restore this tax.

The Chancellor of the Exchequer says that our objection to renew the tax is that we object to impose taxat on. Nothing of the sort. We are not like silly children. Having voted the money we are not going to refuse to find the means to get it. We criticise the proposal the Chancellor of the Exchequer has made, and we contend that this is an unfair application of the principle of indirect taxation which the Chancellor of the Exchequer says is necessary in the finances of this country. I have never denied that at the present rate of public expenditure it is impossible to meet it by direct taxation, but our opposition to this tax is that it is the very worst form of indirect taxation. It is Protection and taxation combined, and you get a minimum of the one with a maximum of the other. I do not know exactly what the Chancellor of the Exchequer's view is; but I observed that the First Lord of the Treasury said at the conclusion at the debate on the Resolution— I do not believe the working men of this country will object to pay a tax which in its effect upon them, in my opinion, will probably be nothing. Whoever objects to pay a tax which costs nothing? If the Chancellor of the Exchequer can invent some mode of imposing the income tax so that nobody shall feel it, we will vote income tax to any amount he likes, but I think the people who have to pay would have a very different story to tell. With reference to the feeling of the working classes upon this question, I have received a letter from a working labourer's wife. She writes to me very bluntly, and she draws attention to a point with which she is evidently very much taken, the 13s. a week—the Arcadia in Gloucestershire to which the right hon. Gentleman referred. She seems to be very sceptical about this 13s. a week, but she thinks it might do if there were only a man, and his wife, and one or two children, but she asks what would be the case when there were five or six children, or, as in one case she knows of, a dozen. She says— We are asked to pay more for everything since the war began, even for a reel of cotton, or coals, and also on meat and other articles. I have eight children, and I know all about what short commons on 11s. a week mean, and I know there are many who are worse off than I am. And she adds that the rise in the price of bread will be that the one piece of meat they get on a Sunday will be gone. That will be the result of the imposition of the bread tax. There are men in this House who, no matter what may be the taxation of the country, will not feel a shadow of the burden from January 1st to December 31st, and they appear to regard a rise in the price of bread of ½d. or 1d. per quartern loaf as a trifling matter. What does ½d. on twelve loaves mean? It is a tax of 6d. a week out of wages of 11s. or 13s., and I think that is a pretty heavy income tax.

This is not only a Protective duty on wheat, but a much heavier Protective duty on flour; and, although the right bon. Gentleman may have given the farmer a small amount of Protection, he has given the miller a very considerable amount. I will give the House some figures furnished to me by a large importer of these commodities. He says that a threepenny duty on 100 cwt. of wheat amounts to 25s. If that wheat is imported in the shape of flour or offal, there would be 72 cwt. of flour, and a five penny duty on that would be 30s., or 5s. more than on the wheat unground, and to that is to be added the duty on the other 28 cwt. of offal. The figures work out in this way: He would pay duty to the extent of 25s. on wheat imported as wheat, while he would pay on the same quantity, if ground in America, 37s.—that is to say, 30s. on the flour, and 7s, on the offal. That is a Protective discrimination of 12s. in favour of the home miller.

SIR M. HICKS BEACH

That is precisely the discrimination Mr. Gladstone established in 1864.

SIR HENRY FOWLER

I have the greatest respect for Mr. Gladstone's memory, but in 1902 let us deal with the conditions existing in 1902. The wheat and flour imported into this country in 1864 was absolutely infinitesimal compared to what it is now, and there is now a distinct Protective advantage to the English miller, in respect of flour, which is not given in respect of wheat. Now, Sir, I come to what seems to be the solace to the right hon. Gentleman's conscience. He asks, "Who pays it?" And the question of price he entirely puts down to the variation in demand and supply. I do not admit that. But supposing it is absolutely true, you must work out the equation on the line of supply and demand being actually equal, and then you put 1s. tax on an article. Who pays it then? The price must be increased by 1s., and somebody must pay it. But take the Chancellor of the Exchequer's theory—it is a good thing to have a weather prophet on the Treasury Bench—and admit it to be perfectly true that there are going to be good harvests in the next few years; but the poor are to get no benefit from the good harvests. They are to suffer from bad harvests, but if prices go down on account of good harvests they are not going to get the benefit. I do not believe in these prophecies of good harvests. Our experience shows that they vary up and down. But I say that what we should have regard to are the peculiar circumstances of taxation on bread, wheat, and flour which do not arise in the case of any other commodity. Bread is a prime necessity of life in this country. It is what Mr. Gladstone called the great means of subsistence. Therefore, apart altogether from the question of Protection or Free Trade, we ought to accept, as political economists, as impartial legislators, the principle that the burden of taxation should be fitted as far as possible to the shoulders which are to bear it, and agree that a tax on elementary human food is a tax we should not resort to, because it would be felt by the poorest of the poor to a degree which no other class would experience.

The Chancellor of the Exchequer has found fault with my suggestion that additional taxation should be placed instead on tobacco and beer. Therefore I must trouble the House with a few remarks upon that subject, because I think the House and the country should clearly understand what these figures are. The right hon. Gentleman puts them together, but what he says about the tax on spirits having reached the highest possible point does not apply to beer. The revenue from beer in 1895 was £10,494,000. In 1899, before the war, it reached £12,345,000. After the first war Budget, which put on additional taxation, the revenue from beer went up to £13,940,000.

SIR M. HICKS BEACH

I cannot accept the right hon. Gentleman's figures.

SIR HENRY FOWLER

I have taken them from the Report of the Inland Revenue. I cannot get a higher authority. The House will take them as being objected to, but I can get no higher authority, nor can I got from the right hon. Gentleman the amount of beer that was brewed in 1901 and what was the amount sold. But, luckily for us, there is the Inland Revenue Report. The Chancellor of the Exchequer said in his Budget speech there was a loss in the revenue from beer last year of £200,000. But the Commissioners of Inland Revenue tell us that there was a decrease in the quantity of beer brewed of half a million barrels, which they attribute to the war, the scare about arsenic, and the abnormal prices of coal. Surely that does not show that there is a closed door with regard to further taxation on beer. That is a question which should be fairly considered. Then, with reference to tobacco, the right hon. Gentleman called it a decreasing trade and a decreasing revenue, and he gave the House some percentages—always misleading—showing that the tobacco trade has not grown so rapidly as it might. The revenue in 1896 was £10,748,000, in 1897 £11,000,000, and in 1898 £11,433,000, showing each year a gradual increase. In 1901, when the duty was increased by 4d., the real revenue, after adjusting the forestalments, was £11,338,000, and in 1902 it was £12,065,000. I say, therefore, that the suggestion of further taxation on beer and tobacco is worth the consideration of the Chancellor of the Exchequer and the House.

It is all very well to say there is no change in our policy, but I say that this Bill is a change in the policy of the country. It is a very small change, perhaps, but it is a change. I am willing to admit it is a very small baby indeed, but it will affect the poorest class of the community. It imposes not only a tax on the elementary food of the people, but a duty which is Protective. It may be a small duty, but the principle of Protection is there. It is said it is not Protective because it is only Is. Would a duty of 2s., 3s., or 4s. be Protective? It does not matter whether it is 1s. or 20s.—the principle is there. The Government now ask us to reverse the policy of 1846. If we once admit the principle, where can we stop, or where ought we to stop? Why should you not tax bacon and butter, as well as bread? That would fulfil the consummation of the noble Lord. All the country would feel it then. They are not so essential as bread. Why, in fact, should you not tax the whole range of the enormous imports of food into this country? At the present moment Canada has made very great concessions to us and given us preferential rates. We have met their views by saying it is against our policy to impose Protective duties. But you cannot say that to Canada now. Canada may say—"We only want to be put in the same position as Great Britain, as we are all members of the same Empire, with common interests." In fact, this may be the commencement of a great Zollverein of the British Empire. But you cannot stop. Australia may say—"We do not send over flour, but we send over great quantities of meat." In my belief, the House is "getting into the rapids" on this question. It is going whore perhaps the Government did not mean to go, where the House do not wish to go, and certainly where the country will not go. Therefore I think my right hon. friend was justified in moving an Amendment asking the House to declare that it will not agree to this taxation of food, because it is a tax which presses most unjustly and harshly on the poorest classes of the community, and violates those principles of Free Trade to which I thought the Chancellor of the Exchequer himself believed the commercial prosperity of the country is due. The Chancellor of the Exchequer says, "If I put a tax on this, I cannot get £2,500,000." But, however that may be, this is a foolish thing and an unjust thing. It is a thing the country will not have. You have found that out already, and you will find it out to a much greater extent before long. It is not the question of the big loaf or the little loaf that has so much appealed to the people. It is the reversal of a great policy which the people know means cheaper food, prosperous trade, and good wages, and upon that issue I cordially support the Amendment.

(6.39.) MAJOR RASCH (Essex, Chelmsford)

Perhaps the House will allow me, as representing an agricultural constituency, to say one or two words on this subject, because it is one in which my constituents take great interest. I cannot quite follow the argument of hon. Gentlemen opposite. They are pretty much the same arguments as they used on the Second Beading of the Debates Bill three years ago, which were so completely answered by the right hon. Member for Sleaford, when they said that the relief given under the Bates Act was so small that it could not do the farmers the slightest good; and when the right hon. Member for West Monmouth, who did me the great honour to answer the few words I used, said himself that the relief given under the Bates Act was precisely as if you took a bucket of water and; poured it over a duck's back. The hon. Member for Pudsey, however, took a different line, and found salvation on the other side of the House in consequence, and has sat there ever since. Hon. Gentlemen and right hon. Gentlemen opposite take precisely the same line today with regard to the proposals made by the Chancellor of the Exchequer. They say the farmer does not benefit in the slightest degree, and on the other hand the right hon. Gentleman the Member for East Wolverhampton says that this tax is going to crush the agricultural labourers. Hon. Members cannot have it both ways. They ought to have made up their minds before they came here which line they were going to take. Hon. Members will forgive me if I remind them of what was said by Lord Rochester when he was told by a man, "My wound is great because it is so small." Rochester said, "And 'twould be greater were it not at all." As for the agricultural districts, I cannot say that they are absolutely satisfied with the proposal. They seldom are satisfied, perhaps, about anything. They would rather have the tax on flour than corn, because then they would save the offal. But they cannot have everything, and they are satisfied with what they were going to get. In my part of the country the proposal is not regarded as a measure of Protection at all. It is a pious opinion on the part of the Government in favour of broadening the basis of indirect taxation. And if any hon. Member thinks he is going to raise the old bogey of the small loaf and the big loaf he makes a mistake, because the tax can only raise the price two-sevenths of a farthing. So far as I am concerned, I should be very willing to take the opinion of my constituents, if it were necessary, upon the subject, and I have no doubt as to the way in which they would vote under the circumstances. The right hon. Member for East Wolverhampton just now called this proposal a baby; he said it was a small baby and did not much matter. I have heard that argument used in another way which I need not refer to here, but I may say this, that as it is so small it is not worth while to make any fuss about it.

(6.45.) MR. ASHTON (Bedfordshire, Luton)

During the course of his speech the Chancellor of the Exchequer told us of a number of taxes which would fall on the consumer, but the bread tax was the only one in which the price of the commodity would not be raised and the consumer hurt. The right hon. Gentleman told us if he raised a tax on beer, tobacco, or houses, poor people would suffer materially and that bread alone apparently was the only thing that could be taxed without the people suffering. I agreed with my right hon. friend who opened this debate, when he said this was a thoroughly bad tax which would injure trade to the maximum and do the minimum amount of good to the people. It will give the maximum of hardship to the poor and the minimum of revenue to the Exchequer. The Chancellor of the Exchequer says it is not going to affect the price of bread, but if he tells us that, how can he at the same time say that he cannot raise the tax on beer, because if he puts more on beer or tobacco he will stop the consumption. When I was a boy at school I was taught that one times nothing was nothing, and that five times nothing was equally nothing; if this 1s. duty is nothing it would follow that a 5s. duty would be nothing. It stands to reason that you cannot raise the price of an article from 4 to 8 per cent. without its affecting the price of the commodity to the consumer. But if, as the right hon. Gentleman says, this tax is not going to fall on the consumer, on whom is it going to fall? Is it going to fall on the producer? I rather gathered from the Chancellor of the Exchequer that he thought at any that a tax of this kind would fall upon the producer. I quite admit you can impose a tax which might fall on the producer in the case of an article for which there was only one market. Take Indian tea which has only the British market; in a case of that sort the tax will fall upon the producer, because the producer has no other market, and when the tea comes here it comes into competition with China tea. But that is not the case in an article like wheat because if we impose a tax on wheat it can go to other countries, and if America cannot sell its wheat here it can sell it elsewhere. Therefore, this tax must fall on the consumer. When this tax was announced an endeavour was made on the part of some persons to put it on the other side and persuade New York to pay it, but the reply came back, "A tax on corn does not scare us." But if, as the Chancellor of the Exchequer says, it does not fall on the consumer and if it does not fall on the producer, as I think I have shown, it must fall upon the middleman. If it falls on the middleman, a small class of the community, then the First Lord of the Treasury is unjust to that class of the community, and is offending against the canons of economic law.

This tax, of course, does come out of the pockets of the consumers. The Chancellor of the Exchequer argued that the tax would not fall upon the consumer, but to wards the end of his speech he let the cat out of the bag, because in the necessities of his peroration he made the usual appeal to all the people of the country to make some sacrifice in a great cause like this. He told us then that the consumers of this country, the working men, would be glad to make this sacrifice for a war which was their own creation. I always thought that Kruger created the war. I will not develop that argument, but I will say this, that the First Load of the Treasury distinctly confessed that this tax did fall on the consumer, and we have ample evidence in the newspapers that the prices not only of bread but of flour also are being raised all over the country. The right hon. Gentleman made a point of the fact that the price of bread had not risen all over the country, but he said nothing of the rise in the price of flour, and the rise in the price of flour is the forerunner of the rise in the price of bread. In the north many of the poor make their own broad, and though the price of the 4 lb. loaf has not increased, the price of flour all over the country has increased as a result of this tax. Then the right hon. Gentleman, in the course of his speech, said that if the price of bread did rise it would settle down again. That is a fallacy. In the case of a commodity like sugar which is taxed by the lb. and sold by the lb., the price may level down, but when you levy a tax on the cwt. and the commodity is sold by the lb., which is another unit, what is the result? The result is, you cannot divide the wholesale unit down to the retail unit, and in order that the baker may save himself from the rise in prices, he is bound to raise his price, not by the amount of the tax, which is one-eighth of a penny, but by one halfpenny, which is the smallest coin he can employ under these circumstances.

I object to this tax altogether. It is a thoroughly wasteful tax; whereas you are only getting one-eighth of a penny per 4 lb loaf in to the Exchequer, you are extracting one halfpenny a, 4lb. loaf out of the consumer, which moans that a considerable sum of money goes into somebody else's pockets. I had a correspondence the other day with one of the largest importers of grain at Liverpool on the question of how far prices would be raised by the imposition of this tax, and to show how thoroughly wasteful it is going to be, I venture to quote the letter I received in reply— There is no doubt that the burden of the tax will fall on the consumer; the millers here have advanced the price of flour 1s. 6d. per sack, though the duty which they pay on wheat is only equal to 11d. per sack of 280 lbs. I should like to emphasise that further-by saying that this gentleman is himself interested in a very largo bakery company, the capital of which is £40,000, and he told me the rise in the price of bread would put "£10,000 into the pockets of the company. The Chancellor of the Exchequer is going to get only £2,600,000, but he will take £4,000,000 out of the pockets of the people because the price of home-grown wheat will go up in proportion. Therefore, I am justified in calling this a thoroughly wasteful tax. But the right hon. Gentleman is also going to take £1,400,000 out of the pockets of the consumers on the home-grown wheat. A great deal has been said about the Agricultural Rating Act, and we think the Chancellor of the Exchequer, instead of putting this broad tax on the bulk of the country, ought to have got his money by doing away with the Agricultural Eating Act and the Agricultural Tithes Act. I think a, time of stress like this is the time to repeal those Acts rather than to impose fresh taxation on the poorest people of the country. This is a tax that I would call an infamous tax because it is one which no one can escape however poor they arc. A tax on tea can be escaped because if people are very poor they can drink water, but in this case the poorer the people become the less meat they eat, they leave off meat and fall back on bread. The more you tax these people the more you make them take out of their pocket because you drive them off dearer food and throw them on to the cheaper food. And when you are imposing a tax like this you are grinding down the poor. That is a phrase that has not been used in this House for forty years, but it is a phrase that must be used now that you are imposing this Protective tax. You are grinding down the poor of England once again.

The right hon. Gentleman says it is nonsense to call a shilling duty on corn Protection, but what did he say when talking about the import of flour? He said that it was not in the interest of this country that the import of flour should be substituted for the import of grain. Why not? I have always thought that the Free Trade policy was that we should be able to buy in the cheapest market and sell in the dearest. This is an argument in favour of Protection for the millers, and in favour of getting cheaper offals and foodstuffs for the farmers, but as my right hon. friend the Member for East Wolverhampton said—Where are you going to stop? What a handle you are giving to men like Lord Masham by such a policy as this. What will the silk and the woollen manufacturers say? They will say—Let in the raw material and tax the imports of the manufactured article that we may compote; and the same argument will be used by the cotton manufacturers and the steel manufacturers. But if the right hon. Gentleman wants to get his offals and foodstuffs cheap, why is he putting an import duty on offals and foodstuffs? You are going to tax the farmers for quite as much as you give them. You are going to give 1s. to one set of farmers, but the graziers and the stock farmers and pig raisers you are going to tax to the extent of that which you are putting into the pockets of the corn growers. You are going to tax the labourers on what they eat themselves, on their wheat and flour, and also on the offals they give to their pigs, which go a great way towards paying the rent of their cottages; and, if I may say so, we shall be able to make good play in the agricultural districts with this double taxation. For you tax the poor man's pigs and you allow the American hogs to come in free of duty. From this very point of view the tax is thoroughly bad.

The Chancellor of the Exchequer quarrels with those who say he ought to put a further tax on sugar, but I should have said, in spite of what the right hon. Gentleman said, that I think it is a tax he might have doubled, for this reason: Although, as he said, it is not fair to put a tax on anything of more than twenty per cent., he said at another part of his speech that this tax had not been felt. He would have got from the sugar tax a far larger amount, and would have added to a tax where there would have been no temptation to increase. One of the worst features of this tax is the largo temptation there will be to increase it. It is as easy to clap on another shilling on the corn duty as it is to put another penny on the income tax. I hope the right hon. Gentleman will reconsider this tax in all its points. During the last forty or fifty years we have made large strides towards prosperity in this country. By the fiery oratory of Mr. Bright, and the quiet eloquence of Mr. Cobden, this House was converted to the true principle of Free Trade. That principle has now existed for fifty years or more, and nobody can say that under it we have not prospered. We have prospered as we never prospered before, and if you reverse that policy you will kill the prosperity. It is lamentable that the right hon. Gentleman should be the man to set the ball rolling down the hill which leads to the abyss of Protection, to the ruin of the country, and to the misery of the people.

(7.15.) LORD WILLOUGHBY DE ERESBY (Lincolnshire, Horncastle)

It is not my intention to dwell at any length on the question of upon whom this tax will fall, but personally I believe that any tax, no matter what it may be, will, to some extent, directly or indirectly, fall upon the wage-earning classes. As I understand, we have to face the situation that we require more money, and I cannot help expressing surprise at hon. Gentlemen opposite opposing the tax on the ground that it is a return to Protection. Up to the present time the British farmer has always had the worst of the markets because the foreign producer, and not he, has been protected. No doubt it would be very difficult to prove that charges in the way of rates and taxes at the present moment have the effect of putting up the price of wheat and bread, but it is equally difficult to prove that this tax on com will have that effect. I have looked into the matter, and I find that if an excise duty of 1s. was levied on all imported corn, and instead of paying rates we had to pay an excise duty on every quarter of corn we sold, I should be a considerable gainer. My rates last year amounted to £75, after receiving the help of the Agricultural Rating Bill; and the quantity of corn I sold, at 1s. a quarter, would have represented £38. Therefore, I do not admit that the people can grumble at this tax on the score of Protection. I should be happy to see no tax at all on the food of the people. I think, however, it would be very hard to disprove that the heavy taxation which has to be borne by the farmers and landlords does not have the effect of keeping some land out of cultivation, and preventing other land being farmed to the best of its ability. Personally, I should have thought that for the good of the country it was of far more importance that every acre should be kept under the plough rather than that the American or Argentine exporter should be relieved from having to pay something towards the revenue of the country. Levy an excise duty, and let us off' the rates, and we will accept it. Up to the present we have had to pay taxes on all we produced, whereas the foreign producer is allowed to enter into open competition with nothing at all to pay. Every single grain of wheat we grow, and every pound of meat we produce, has to pay a tax in the way of rates and other burdens. So far from considering this a Protective duty, I look upon it merely as an excise duty and a matter of justice to the country.

(7.20.) MR. BROADHURST (Leicester)

When the Budget was first introduced I prophesied that the commercial classes would compel the Chancellor of the Exchequer to withdraw the proposal to increase the tax on cheques. That prophecy has been fulfilled. If the right hon. Gentleman had followed my advice on other points, he would not have been in the position in which he now finds himself of being strongly attacked from many quarters in regard to the proposed bread tax. In the first debate the Leader of the House declared that up to 1868, when this duty was in existence, none of the leaders of the working people objected to it. The right hon. Gentleman was mistaken. All the leaders of the labour movement were strongly opposed to the tax, and were keen advocates of the "free breakfast table." I also was of that party, and voted against the taxation of food then as now.

I was much amused by the description given by the Chancellor of the Exchequer of the labourers in his part of the country. One almost yearned to become a farm labourer under the auspices of the right hon. Gentleman. Meat, bread, and butter always on the table—I thought he was going to tell us that lamb and mint sauce, duck and green peas, were common food amongst his labouring people. If that is the condition of farm labourers in Gloucestershire——

SIR M. HICKS BEACH

I did not say it was the condition of all of them.

MR. BROADIIURST

The right hon. Gentleman said "the labourer"; he did not limit the phrase.

SIR M. HICKS BEACH

I did. I said I knew instances of it; that is all.

MR. BROADHURST

But rare instances should not be brought forward to justify a tax on the food of the people. I spent yesterday amongst farm labourers. I met the wife of one of them—a very intelligent woman. She has nine children; her husband's wages are about 12s. a week; and she is now paying 8d. per week more for her breadstuff's in consequence of this tax. That is 2d. per stone on the flour, because most of the women bake their own bread in that district. I then asked this good woman how she fared with regard to sugar. She uses four pounds a week, making an increase of another 2d., or 10d. per week increased taxation on the necessaries of the one family circle, with a wage of 12s. I then asked about the meat. The Chancellor of the Exchequer may not be directly responsible for the price of meat, but it shows the upward tendency of food since the war began. In that part of the country the labouring people rarely see anything but pork; they are not so fortunate as the Gloucestershire folk. Pork has gone up 1d. or 1½. per pound during the last two years. Allowing 4lbs. per week, which is not an extravagant allowance for a family of eleven persons, that means 1s. 2d. or 1s. 4d. increased cost of living to the household per week. Is that fair? Coming to the situation today. I met a man whose wages are 16s. a week. He has seven or eight children. In consequence of the illness of his wife, he has been unable to have his bread baked at home, and has had to buy it from the baker. The family eat two 4lb. loaves per day, which means seven pence extra per week for bread alone. These are facts you cannot get over. When the right hon. Gentleman proposed this dreadful scourge on the poor, he said that in 1868, when the tax was taken off, there was no diminution in the price of bread; therefore, why should there be any rise when it was reimposed? I was really amused at his assumed innocence. A reduction in the price of flour is never instantly followed by a reduction in the price of bread, whereas if the price of flour is increased in the least degree those whose necessities are greatest feel it at once, and most keenly. I cannot understand why the Chancellor of the Exchequer should have been led back into the paths of Protection against his better judgment and all that he has said or written on the' matter. I remember his election address, and I read his speeches; and if I read those speeches aright, the right hon. Gentleman was all for keeping our national expenditure within a reasonable compass in order that taxation should not be increased. He spoke highly of our fiscal system—

It being half-past seven of the clock, the debate was suspended until the evening sitting.