HC Deb 14 May 1902 vol 108 cc251-75

[SECOND BEADING.]

Order for Second Reading read.

*(5.45.) SIR M. HICKS BEACH

Perhaps in moving the Second Reading of this Bill I may express the hope that the House may., be willing to pass the Second Reading today, although the time before us is comparatively short, on the understanding that a proper opportunity will be given for debate on the Third Reading. The House is aware that a Bill of this sort is merely carrying out the Resolution of the House, and raises no question which is likely to involve any alteration in Committee. It is important, as I have already explained to the House, that we should make progress with this Bill, and that it should become law in order to meet our requirements.

Motion made and Question proposed—" That the Bill be now read a second time."—(Mr M. Hicks Beach.)

MR. DILLON (Mayo, E.)

I think the proposal of the Chancellor of the Exchequer is a very fair and reasonable one. Of course, a Bill like this ought to be fully discussed, but I do not see myself, inasmuch as the loan has already been resolved upon, and that the money is in the Exchequer, that it makes much difference whether the discussion takes place on the Second or Third Reading or partially on the one and partially on the other. I think, as the Chancellor has offered a fair opportunity for discussion on the Third Reading, that we might very fairly give him the Second Reading today and conclude the discussion on the Third Reading.

I now propose to move the Amendment which I have put down on the Paper. I desire to say, first of all, that I believe the course we are asked to adopt in regard to this Loan Bill is entirely with out precedent. Certainly such course has not been taken within my experience. A Loan Bill is according to all precedent to provide the Chancellor of the Exchequer with the means of discharging liabilities either voted by the House or laid before the House by way of Estimates for the current year, but on the present occasion we are asked to place at the disposal of the Chancellor of the Exchequer a sum estimated by himself at £18,500,000 as a provision for contingencies. I consider that proposal to be one of the most extraordinary character, and in order to emphasise that point I turn to the balance sheet issued by the Secretary to the Treasury after the Chancellor of the Exchequer had made his Budget statement. I find there on the expenditure side the following item: £17,750,000 "supplementary provision to meet contingencies." Can the Chancellor of the Exchequer produce at any time a balance sheet of a similar character with the sum of £17,000,000, or a sum approaching that amount, inserted as the amount to meet contingencies? At the outset I want to remind the House of the figures and of the method by which the deficit to meet which the loan has been issued is made up. The deficit on the Estimates for the year was £26,824,000, but the Chancellor of the Exchequer, with a magnificent disregard for trifles, announced that he would, if necessary, ask the permission of the House to add to that deficit a sum mentioned by him as between £16,000,000 and £17,000,000 in respect of additional charges for the war or other circumstances in South Africa to provide for the Estimates of the Year. I put that down at £16,500,000. He explained that 4,000 of the 10,000 constabulary would have to be provided for by the Imperial Government, and put the cost of that down at £750,000 for half of the South African financial year. The interest on fresh Debt will amount to £1,000,000, and the grant in aid to the Colonies in the "West Indies will amount to, say, £250,000. The total deficit therefore was £45,324,000, from which has to be deducted the sinking fund £4,500,000, leaving the total net deficit £40,824,000. When he deducted from that sum the total of £5,150,000, estimated to be received from new taxation, there remained a deficit of £35,654,000 which the Chancellor of the Exchequer calls £35,000,000.

I wish first of all to direct attention to the way in which the Chancellor of the Exchequer deals with the deficit. He says it is to be met first by a loan of £32,000,000, and then by drafts on the Exchequer balances, which have been increased by £4,000,000. A small balance remains from the£60,000,000 of last year. The wording of the statement would give one to understand that he was going to raise £32,000,000 by way of loan, but we all know that that would not be the result if the loan be asked for. As a matter of fact, the proceeds of the £32,000,000 stock which has been issued, is £29,920,000. In other words, we have lost £2,080,000 in placing the loan on the market. Therefore, the balance of deficit being £35,500,000 and the amount raised by the loan £29,920,000, the balance of £5,600,000 will have to be taken from the Exchequer balances. That is an enormous loss which is to come about by the depreciation of the credit of this country through the prolongation of the war, and owing to the stupid and preposterous policy of the Chancellor of the Exchequer in reducing the sinking fund. Last year we lost £3,500,000 on the £60,000,000 loan, and in the previous year on the £30,000,000 we lost only £500,000, so that the process of loss in this way is rapidly increasing. I would point out this remarkable fact, that whereas the £30,000,000 loan issued on 5th April, 1900, at the same percentage of interest as the consolidated stock was insured at, produced £29,519,000, the £32,000,000 issued this year produced £29,920,000. That is only about £400 more than the £30,000,000 loan produced. The result of that on the three loans is that the Government have lost £6,000,000 on the issues below par. Before the war broke out the same amount of stock issued, would have brought in something like £15,000,000 or £20,000,000 above par. In other words that amount of stocks has been deteriorated in value not less than £25,000,000. That is an element of loss which many are apt to forget. It is one of the disasters of the war. I have no doubt that that element of loss has been greatly increased by the foolish action of the Chancellor of the Exchequer, in cutting down the old sinking fund, on the ground, that consols stood too high on the market. The result is that they do not stand too high now, and are not likely to stand too high for many a long year to come.

I come now to the first item in this additional expenditure. To the astonishment of the House, when he was making his speech introducing the Budget, the Chancellor of the Exchequer announced that he had been compelled to ask permission to add a sum of £16,000,000 or £17,000,000 in respect of war charges in South Africa, It will be in the recollection of the House, that when the Vote for South African War charges was introduced, only six weeks before the Budget statement was made, some of us on this side of the House criticised the £40,000,000, which was put in the Estimate as being an absurd sum to put down for the charges of the campaign. But how were we met? We were met by the Secretary of State for War, and the Chancellor of the Exchequer, who declared that they had gone over the Estimates together, with more than ordinary care, and that this was a most correct and trustworthy Estimate on which they might rely, and that the great economy was due to Lord Kitchener himself. I say that is not dealing fairly with the House of Commons it is another instance of the policy pursued throughout this war of endeavouring to lure and lead on the country by from time to time presenting a flattering picture based on too optimistic an estimate of the expenses and liabilities of the war. I ask, what occurred, between the date on which the Estimate for the year was submitted to the House of Commons and that on which the Budget statement was made, to justify so gigantic a change in the Estimate for South African operations as to involve an addition of £16,000,000? Nothing has occurred, and, therefore, I say that the Secretary of State for War was not dealing frankly with the House of Commons when he put down in the Estimates £40,000,000 as the full expenses of the war for the year.

* SIR M. HICKS BEACH

When the £40,000,000 was placed in the Estimate, as the hon. Member will find if he will look at the memorandum circulated with the Estimate, it was stated that the amount was inserted as sufficing for the prosecution of the war at the current rate for eight or nine months. But it did not provide for terminal charges of various kinds. When I introduced the Budget I stated that in our opinion it was necessary to provide for the possible cost of the war throughout the year, and therefore, I proposed to add a sum of nearly £17,000,000 to the Estimate which was laid on the Table, but which never purported to cover the total cost of the war for the year.

MR. DILLON

That is my point. I remember that perfectly well; but why should not an Estimate be laid on the Table? My point is that the Government had evidently calculated that the war would end at that period; but is it in accordance with precedent, or is it dealing frankly with the House to put down Estimates not intended to cover the expenses of the whole financial year? That is why I contend that this £17,000,000 asked for in the Budget is not to meet current expenses, but to meet contingencies. When the Estimates were being drawn up this year that must have been done in view of two possible events—either that the war would go on to the end of the financial year, in which case provision should have been made for it; or, on the other hand, that peace would be made, as I hope it soon may be. The essence of my argument is that whether the war went on, or that peace was made this money is required. The Chancellor of the Exchequer went on to say— Perhaps I may be asked what is to happen if peace should come in a few weeks, and if the large sum of £58,000,000 or £57,000,000 I have suggested should not all be required for the purposes of the war. Well, I would remind the committee that, in the first place, though war is a very costly thing to wage, it is also a very costly thing to terminate. We shall have to provide for gratuities and bounties to our soldiers who have served in the war. We shall have to provide large sums for their disembodiment; considerable sums, I hope, for transport of reservists and others home; and for the maintenance no doubt of a considerable force in South Africa. Yes, but all that ought to have been foreseen; and in making up the Estimates of last year all that was foreseen, and was provided for in the Estimates, The Government must have known, taking the statement of the Chancellor of the Exchequer, that £40,000,000 would fall enormously short of the necessities of the case. I maintain that the Government were not acting frankly with the House of Commons and were pursuing the policy with which they began the war by asking for £10,000,000 and by luring on the country from time to time by presenting a flattering picture based on too optimistic an estimation as to the expenses which the war would involve. Therefore, in asking us to vote this £17,000,000 or £18,000,000 to be raised by way of a loan, for contingences, before any Estimate is laid on the Table giving us detail of how these millions are to be expended, we are asked to do what has never been done before in the House of Commons in my experience. It is bad finance. We hear a good deal about economy, but so long as the Chancellor of the Exchequer sets such a bad example to the spending Departments in his Budget there will be no economy. The Departments know that the money is there; and it is a direct incentive to them to get rid of all these millions. I contend that this is a system of finance which is absolutely destructive of all economy.

But on what is this money to be spent? We are told that in the case of the war being continued it will be spent, of course, in warlike operations; but in the event of peace, the Chancellor went on to say— Means would have to be provided for something more—something which I am sure would be more agreeable to all of us than expenditure on war. Means will have to be provided for the resettlement of the two Colonies which have been so terribly devastated by the war. Means will have to be provided for rebuilding and re-stocking farms—farms, I should hope not only of those who have been our friends in the war, and have fought on our side, but also of those "who boldly and honestly have been our enemies in the war and whom we hope to make our friends in the future. I think the House of Commons, if peace is made on terms, which in our belief will be satisfactory, enduring, and safe, will be generous in these matters. That is new language coming from the Treasury Bench, and I rejoiced to listen to it. Speaking in behalf of the Irish party, we will vote unstintingly and with a whole heart any money to be devoted for that purpose. If the feeling of the Chancellor of the Exchequer is to be carried into practice, if there is to be a settlement in which no distinction will be made between those who fought on the side of the British, and those, who fought against them, of course that will take a very largo sum of money. I think if that had been stated early last year, instead of a niggardly offer of a loan of a million and the virulent temper in which the Boers were treated, the war would probably have been ended last year and the country would have been spared the loss of 10,000 lives and the expenditure of 60 millions of money. I trust that the negotiations that are now going on will be carried out in the spirit displayed by the Chancellor of the Exchequer, although I confess that I am not altogether hopeful of it.

Now I come to another portion of the Budget about which I must say a word or two; and that is the £750,000 which is to be expended for maintaining for half a year 4,000 mounted constabulary in the Transvaal and the Orange State. I think that is a most monstrous expense. I resist it as a portion of this loan on two grounds. In the first place, I think it is wasteful; and in the second place I think it is highly mischievous. I believe that the foundation of this constabulary force is one of the greatest blunders of the whole of this unhappy business. When I raised this point some weeks ago the Chancellor of the Exchequer in reply said "how absurd it was for the hon. Gentleman to object to the formation of a constabulary force in the annexed territories? He forgot that there had been a similar mounted force in Cape Colony for years." But could anything be more ridiculous than to compare the two? The mounted force in Cape Colony is a military force; is very small; and is chiefly used in dealing with native troubles. Practically it is not used against white men. But the essential difference between the Capo mounted police and the proposed mounted constabulary in the Transvaal and Orange State is that the former are under the control of a Minister responsible to the Cape Parliament, and therefore cannot lead to same evils as I foresee will arise in the case of the new constabulary in the Transvaal and Orange State. The proposal is to organise a mounted force which will owe no allegiance to the people of the country, which will be like the constabulary in Ireland, a centralised force with its headquarters in Pretoria, and which will be hated and detested throughout South Africa. I do not want to say anything offensive to the new force, but it will consist of daredevils, gentlemen drawn from all parts of the world by a love of an adventurous life, unacquainted with police duties and strangers to the country. The creation of such a force will not tend to anything like a peaceable or amicable settlement in South Africa. If peace is established it will be an unreal peace. For that reason, I am most irreconcilably opposed to the provision of any money for the formation of such a constabulary.

I go on to examine the promises held out to the House in regard to these various loans. We have been told, over and over again, from that fatal morning in October, 1889, and on every other occasion when the Chancellor of the Exchequer has risen to propose to raise a loan, that we should get back a great portion of it from South Africa. I think it must be becoming apparent, even to the Chancellor of the Exchequer, that the chances of getting back any portion are now further off than ever; and yet this unfailing hope is held out to us, that we need not be alarmed, because the Transvaal is rapidly flourishing, that it is quite able to pay its way, that next year it will be able to pay for its constabulary, for improving the country, re-building the farm-houses, and re-stocking the farms. And it is also to contribute a very large sum towards the expenses of the war, although we have never been able to get the figures of these very large sums to be contributed towards the expense of the war. On what basis is this fallacious hope held out to us? It is a ludicrous delusion to suppose we shall get any money back from the Transvaal for this war. Last year, in addition to the enormous expenditure on the war, we were called on to vote at short notice £6,700,000 for a grant in aid for the Civil administration of the Transvaal, and in addition £700,000 for the constabulary. Therefore, before we get repaid a penny for the war, these two devastated and ruined countries will be asked to make up that £9,000,000. But, putting that on one side, I do not believe there is the slightest ground for believing that in the next two or three years they will be able to pay this money. I believe the right hon. Gentleman is labouring under a delusion in this matter. I would remind the House of what Sir David Barbour said when he was sent out to report on the resources of these colonies with a view of their paying part of the cost of the war. In 1901, at a time when the devastation of these countries bad only commenced, when they were in a very-different position to what they are now, He states it as his opinion, that for some years these colonies will not be able to pay their way. Since then these colonies have been devastated, many towns burnt to the ground, all the farms destroyed, and all the cattle wiped out; therefore the position of these colonies, from the point of view of producing revenue, is infinitely worse than last year. If you give these countries nine or ten years, in that time they might make some progress towards paying the expenditure of the war, but before then to expect anything is absurd. Now that peace is within the limits of possibility, the Chamber of Commerce in Johannesburg has been called together to implore the Government not to destroy the great I industry of the country by taxing the mines. If you ever tax the mines, you will have both the Uitlanders and your old enemies against you. The Government have not treated the country honestly in this matter. They will not get any of this money back from the colonies, and I hold they have no right to get it; and if tomorrow proposals were made to saddle on the Transvaal a part of the cost of this war, if I were alone I would vote against it. In my opinion, the people of the Transvaal have an unanswerable case to any such proposal. They can say this is an Imperial war, undertaken by you in the interests of the Empire, and as you have always paid the cost in past cases, you can pay this.

There is one matter on which I would make a further appeal to the Chancellor of the Exchequer. When he drew so rosy a view of the extraordinary development of the finances of the Transvaal, he did not say much about the Orange River Colony—he said it was paying its way in civil administration, and that the Transvaal had a surplus. I ask him to communicate a balance-sheet, as it were, showing the real financial position of these countries. We are absolutely in the dark. We do not know the sources of revenue, or to what extent it is due to the luxuries and stores supplied to our troops. What is the present condition of the railways? The Chancellor of the Exchequer told me they were in the hands of the military, which was actually making a profit on them. Whether the receipts are derived from military or civilian sources, we do not know. We ought to know what the sources of revenue are. They ought to be checked and corrected, so that this House may know, when it comes to form a judgment on these colonies, how they are going on, and whether there is a shadow of hope that they will pay their way. I respectfully ask the right hon. Gentleman to lay on the Table of the House such a Budget statement, so that we can see how the figures are made out. I now come to my last point—a point more serious than all the others. In this Bill we are asked to raise this sum of £17,500,000 for contingencies. The destination of this sum of £17,500,000 would be affected by a favourable issue of the peace negotiations. We are told if peace is concluded it will be spent with a generous hand in re stocking the land and re-building the houses and the farms. My attitude would be different if I thought peace was at hand, but the Government has kept us so long in the dark on that subject. The House was told some time ago that it would be three weeks before any news was received of those negotiations; five weeks have now elapsed without a word of information being imparted on the subject. Never in modern history was a nation so kept in the dark on a matter of such supreme interest. I saw in a newspaper, in a published telegram, that the Premier of Natal had declared to his Legislative Assembly that he had been consulted by the British Government on the terms of peace, and The Times, in its well-known fashion, made a semi-official announcement as to the negotiations, clearly indicating the existence of a peace and a war party in the conduct of negotiations. It is, therefore, time for the House of Commons to press for information. In an article published on May 12th, The Times, in scarcely veiled language, intimated a threat of Lord Milner's resignation. These were the words— Upon no one of these matters can we give way without adding enormously to the difficulties of the future civil rulers of South Africa. Those difficulties will, in any circumstances, be such as to tax the statesmanship and administrative ability of Lord Milner to the uttermost. If from any false desire to patch up peace, or any yet more foolish feeling of false sentiment, we yield to the importunities of Mr. Steyn, it may well be that we should make Lord Milner's position untenable. This was evidently inspired by high official authority, and it is an unfortunate thing that the House should be without information accessible to the editor of a newspaper. It is no secret that The Times has moans of obtaining such information, and the type and character of publication indicate an official source. It will be a deplorable thing that the House should separate for the holidays without being placed in possession of information that is open to the Premier of Natal and the Editor of The Times. It will be a disaster, a crime, and an outrage on humanity if, owing to some miserable quibble of Lord Milner's, or threat of resignation, the attempts to conclude peace should break down, and the House meet again with the country still engaged in this miserable war. I beg to move.

Amendment proposed— To leave out from the word 'That,' to the end of the Question, in order to add the words this House disapproves of the raising of so large a sum by way of loan, in the absence of fuller and more detailed information than has been given to the House, as to the manner in which the money is to be expended and the grounds on which it is expected that large contributions towards the expenses of the war will be recovered from the annexed territories.' "—(Mr. Dillon.)

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

(6.38.) MR. LOUGH (Islington, N.)

No one from the empty appearance of the House would believe we were engaged in such a serious business as we are. I quite agree with what has been said, that it would be ridiculous to suppose that a matter of such gravity could be disposed of In so short a time as we have at our disposal; but there are a few business matters on which some discussion might be had, and I will address myself to them in the briefest possible manner; the larger matters that arise may well be left for the occasion which the Government has promised to give us. We are making now provision for the services of the year, but not out of the revenue as we ought to do. We are borrowing' a vast amount for the requirements of the country. This is the fourth session that the House has been driven to adopt that course. In the first year of the right hon. Gentleman's adminstration, eight years ago, we enjoyed a surplus of £40,000,000; in the fourth year the surplus had dwindled to £200,000 and then in the fifth year there was a deficit. This year the deficit is £36,000,000. It is a matter of the greatest gravity. The Chancellor of the Exchequer explains the position, in my opinion, far too readily. He says "We are at war, and when we are at war the cost must be found," but when it is remembered that we were told by a responsible member of the Government a year ago that we were only carrying on "a sort of war," if that is so we ought surely to find the money out of revenue.

Let us look at this Bill in the simplest way. We sanction the raising of a loan of £32,000,000—an immense sum. That has only produced £29,000,000 odd, but this amount is made up at the last moment by the Chancellor of the Exchequer adding to the Estimates of the year £18,000,000. Now there has never been sufficient explanation given to the House of the addition at the last moment of that £18,000,000. What the Government will beheld to account for one of these days and what they have been called to account at Bury for, is this—that the amount of money, whether it be by loan or taxation, which the people have got to provide, has been doubled during the period that the Government have been in office. We have not the facts of the total expenditure put before us. We speak of the expenditure as if it were only £29,000,000 or £30,000,000, but during the last year the expenditure has been £180,000,000 or £190,000,000. The total expenditure is £210,000,000, that is, £4,000,000 a week have to be found in cash, whether by loan or taxation, for the requirements of the country under the present Government. Just one half of that sum was sufficient when they came into office! The effects of this bad finance are apparent; I will refer to one only. The national credit has declined. When the Chancellor of the Exchequer brought out his first loan, he was able to get £98 10s. per £100 stock; for his second he obtained £94 10s.; while the third was issued at £93 10s. The right hon. Gentleman ought to take this opportunity of telling us why that third loan was issued so cheaply and at such great cost to the nation. He told us in his Budget speech that he would take an early opportunity of explaining the provisions under which this money would be raised. The House has never had that explanation, and from a business point of view we are entitled to ask the right hon. Gentleman to defend the course he has adopted.

As I have said, the third loan was issued at £93 10s. The House would naturally assume that the Chancellor of the Exchequer received that sum. Not at all; a far less amount was received. The particulars require some explanation. The success of the loan was secured at a, terrible cost. In the first place, a full quarter's interest is to be paid on July 5th. On that date the Chancellor of the Exchequer will have received only £18 10s. per cent. of the money, the interest on which would be simply 1s. 5d., but the right hon. Gentleman will pay 13s. 9d., a premium of 12s. 4d. The same thing is true of the second quarter. In that quarter 7s. 3d. would pay the interest on the money the Chancellor will have received, but again he will pay 13s. 9d., a further premium of 6s. 6d. My figures may be wrong, but I make it that there was a premium of 18s. 10d. in the £100, in addition to the loan being issued at the low price of £93 10s. We want some explanation of that. A large sum of the taxpayers' money was given away quite unnecessarily by these too favourable terms.

Then there was another arrangement which needs some defence. The loan was for £32,000,000, but only £16,000,000 were issued to the public. The Bank of England issued a circular urging every bank to send in applications to make the loan a success, and they did so. But when the public, in a patriotic spirit, sent in their applications, only one half the loan was given them. £16,000,000, I believe, were issued to two or three banking houses.

* SIR M. HICKS BEACH

Oh no—much more than two or three.

MR. LOUGH

I understand there were some favoured banking houses. Why was not the full amount offered to the public?

There is only one other point. The disposition the Chancellor of the Exchequer has shown ought to satisfy the House that for some reason or another he has been borrowing too freely. This £18,000,000 sticks in my mind; I do not know why it was put in; we have never had it explained; the House ought to have a full explanation. Once you begin to borrow you borrow too much. There are always people willing to lend; they are the rich minority, who have to be well-paid for lending; but it is the great bulk of the people who become creditors and have to repay. The House would do well, even this afternoon, to express its criticism of the freedom with which the Chancellor of the Exchequer has borrowed such large sums of money. To put the amount of the expenditure in another way, the total expenditure of the nation twenty-five years ago was only eleven per cent. on the total imports and exports of the country. That was a large amount on trade, but it is now twenty-two per cent. It is a burden which even this great commercial people will not be able to stand, but there is no way in which the Government will be able to reduce it except by adopting a policy of economy, and being less ready to raise money by loan than the Chancellor of the Exchequer has shown himself to be under the circumstances I have described.

(6.50.) MR. CREMER (Shoreditch, Haggerston)

May I ask the Chancellor of the Exchequer what time he proposes to allow for the discussion of this subject on the Third Reading? Are we to understand that a morning or evening sitting after Whitsuntide will be allowed for that purpose?

* SIR M. HICKS BEACH

That is a question I cannot answer, because the allocation of the time of the House rests with my right hon. friend the Leader of the House. But what I understand to be his desire is that an evening sitting should be allotted after Whitsuntide to the discussion of the Third Reading of the Bill.

The hon. Member who moved this Amendment travelled over much the same ground that he travelled over last year in the discussion on the Loan Bill, 1901, and I do not think the House will desire me to follow him at any length into the many topics that he has raised. For example, he takes exception to this loan on the ground that in his belief the hopes which I held out of the possibility of the Transvaal providing something in the course of time towards the expenses of the war, were a ludicrous illusion. I have been cautious in this matter, and I have not said one whit more than I believe to be the fact. What I said to this House on a previous occasion was this— After the termination of hostilities we believe it will be practicable to earmark certain sources of revenue and apply them from time to time to the service of some portion of the loans raised by us for the war. We anticipate that these specially indicated sources of revenue will be sufficient within a few years of the close of the war to provide for the annual charge on a capital sum of £30,000,000 in the first instance. Subsequent additions will be made on the prospective increases of these sources of revenue. The hon. Member seems to think that the present condition of the Transvaal, which, of course, has suffered considerably by the war is an indication of what it will be for a long time to come. I can assure him that all the information we have received from Lord Milner, and much of the information which has appeared in the public newspapers, as to the re-starting of the industries in the Transvaal, and the increase of the revenue of the Transvaal, leads me to believe that what I have stated to the House already on this subject is by no means too favourable a view. But, however that may be, the objection raised by the hon. Member for East Mayo to the Second Reading of this Bill is. I am bound to say, a curious one. If I had proposed a loan for the war, the interest to be charged on the Transvaal—and the hon. Member had objected that the Transvaal would never be able to pay the interest—that I could understand. But this is a loan, of course, for which we are ourselves responsible—it is raised on the credit of this country—and that the hon. Member should have raised this objection, of all others, to that loan seems to me to be remarkable. Then the hon. Member asked me to say why I propose a loan when estimates for about £17,000,000 of the amount which will be covered by it have not yet been placed before the House and opposes it as intended to meet purely contingent expenses. I may explain to the House how the financial position stands. Of course, it is clear to every one that, should the war unhappily continue all this money will be required, and then Estimates will be laid on the Table for the Amount which put roughly at £17,000,000—showing precisely how it will be expended. Again, if part of that money is required, as it may be required, for the purposes which I referred to in my Budget speech of relief and resettlement, of which the hon. Member was good enough to approve, of course, then again estimates would be laid before the House, and they would be asked to sanction that expenditure.

But, quite apart from this £17,000,000, the position is this. The Estimates already laid on the Table for the Consolidated Fund services of the year, after allowing for the suspension of the Sinking Fund, but including interest on this new loan, amount to £25,560,000. The Estimates for the Supply services laid on the Table amount to £145,159,000. There is an additional estimate of £750,000 for the South African Constabulary, and, roughly, another £250,000 for the West Indian grant, making altogether £171,7 19,000. The revenue as estimated in the Budget is £152,935,000, and the estimated deficit is £18,78 1,000. That, deducted from the proceeds of the loan, £29,920,000, leaves a balance of £11,136,000 beyond the Estimates already laid on the Table.

Let me explain what the hon. Member for East Mayo does not seem to appreciate. On introducing the Budget, I referred not only to the necessity for these borrowing powers of £32,000,000, but also the necessity, if the war expenditure went on, of an application to the House for further borrowing powers to the extent of £12,000,000 for temporary purposes, in order to finance the Exchequer during the first months of this year. It is well known that the bulk of the revenue comes into the Exchequer in the fourth quarter of the year, especially when the income taxis at so high a point as it is at present, and so large a part of the revenue is, therefore, derived from income tax. The first three quarters of the financial year are the loan quarters, and, if the expenditure is greater in those quarters than in the fourth quarter—as it may prove to be this year even if the war expenditure is to cease then the Exchequer must be financed during that period beyond the receipts from taxation. I have powers under the law to do that to a certain extent by borrowing on Ways and Means, and, in an ordinary year, that is sufficient. But it is impossible to borrow so beyond a certain point, because it would greatly interfere with the money market. Therefore, I slated to the House that I should have to ask for this additional borrowing power of £12,000,000, to be used merely for the temporary purposes of financing the Exchequer, and to be devoted in the last quarter of the year to paying off Treasury bills. As it is, I have to provide means for that purpose; and the £11,136,000 which I have just referred to as the surplus raised by this loan beyond the Estimates on the Table will be used for that purpose if the money is not required for the prolongation of the war. As revenue comes in at the latter part of the year it will be devoted to the redemption of floating debt in the shape of Treasury bills, or of the Exchequer bonds issued nearly three years ago. I hope I have made it clear to the House that really in this matter I am not providing for contingencies such as the hon. Member for East Mayo has supposed.

* MR. McCRAE (Edinburgh, E.)

May I ask whether the right hon. Gentleman has included the balance of the £19,000,000 from last year?

* SIR M. HTCKS BEACH

That balance is £4,000,000. It will also be required for the purpose of financing the Exchequer. It is included in the Exchequer balances, which amounted at the end of last year to nearly £10,000,000.

* MR. McCRAE

Is that in addition to the sums already mentioned by the right hon. Gentleman?

* SIR M. HICKS BEACH

Certainly. The hon. Member must not suppose that I can finance the Exchequer for three-quarters of a year with £10,000,000. We require that balance and other advances on Ways and Means. I come to the remarks of the hon. Member for East Mayo on the question of peace and war. No question can be of greater interest to every man in this House than the events which are now pending. But I do not think that we can be fairly charged with keeping the House in the dark in the matter, because the hon. Member happens to have seen in one newspaper or another a statement as to what is or is not going on, or as to what may be or may not be the state of affairs in the future. What has happened is this. There has been a consultation between the Boer leaders and Lord Kitchener and Lord Milner, as to which we are not at liberty to say anything further than what has already been stated to the House, but the result of which was that some weeks ago the Boer leaders separated in order to consult their commandoes and adherents generally as to the course which they should take with regard to the future. Those consultations have been going on and are not yet completed, and we know no more than the hon. Member himself as to the course which they have taken. But throughout this matter I hone the hon. Members and the public will be cautious how they believe all the immature rumours which gain currency. The hon. Member seems to think that it was a great grievance that the Prime Minister of Natal had been consulted in this matter. I think that His Majesty's Government would have failed in their duty if they had not considered the views of the Prime Ministers of colonies so closely affected by the struggle in South Africa as to the settlement in the future. We are responsible here. We shall form our own opinions as to what should be done in the negotiations which we hope will soon begin again; but it is right that we should consult those who have so loyally acted with us.

With regard to the mode in which the loan was issued, the hon. Member for West Islington accuses me of being responsible for the fall in the price of Consols. Is he not aware that every kind of high-class security besides Consols has fallen heavily in the last two years? Some of them—such as railway securities—have fallen more than Consols.

MR. LOUGH

It is our borrowing.

* SIR M. HICKS BEACH

I am open to blame for many things, but I do not think I can be accused of making railway securities go down. The hon. Member said that I had issued one loan at 98½, the next at 94½, and the third at 93½. But the first loan was one bearing for a number of years interest higher by a ¼ per cent. than the loan now issued; and if the bon. Member thinks that you can get the same price for a loan, irrespective of the interest it bears, I cannot convince him to the contrary. It is true that I was able to issue Consols 1 per cent. higher last year than the present year. Last year Consols had a very steady market just before the issue, and the price was considerably higher than it was this year. Four or five days before it was known that the loan would be issued, Consols stood at 93⅞, and in getting 93½ for the loan, I do not think I made a bad bargain for the country. I am sure that last year no one made very much out of the issue of Consols, and this year there was a desire for a loan bearing a higher rate of interest—a loan guaranteed by the Imperial Government on the revenues of the Transvaal. There was not a desire in the Money Market generally for a further issue of Consols. I have not been unfavourably criticised, so far as I have heard, for the way in which this year's loan was issued, or for the price at which it was issued. It was taken up by a considerable number of the leading financial houses and Banks in London. Part of it was taken by large houses having establishments both in London and New York. There were a number of banks who joined, and I can assure the hon. Member that the part first issued was far

more widely spread than he supposed. With regard to the part issued to the public, all subscribers were treated as they have always been treated, and a great many came forward for the loan. As there will be a further opportunity for debating the Bill, I hope the House will now come to a decision.

(7.14.) Question put.

The House divided:—Ayes, 232; Noes, 109. (Division List No. 171.)

Parker, Gilbert Rutherford, John Warr, Augustus Frederick
Pease, Herbert Pike (Darlington Sackville, Col. G. S. Stopford- Wason, John Cathcart (Orkney)
Pemberton, John S. G. Seely, Maj. J. E. B. (Isle of Wight Welby, Sir Charles G. E. (Notts.)
Penn, John Seton-Karr, Henry Wharton, Rt. Hon. John Lloyd
Percy, Earl Simeon, Sir Barrington Whiteley, George (York, W. R.)
Pilkington, Lieut.-Col. Richard Sinclair, Louis (Romford) Whiteley, H. (Ashton und. Lyne
Plummer, Walter R. Samuel, Harry S. (Limehouse) Whitmore, Charles Algernon
Pretyman, Ernest George Sassoon, Sir Edward Albert Williams, Colonel R. (Dorset)
Pryce-Jones, Lt.-Col. Edward Smith, Abel H. (Hertford, East Williams, Rt Hn J Powell-(Birm
Purvis, Robert Smith, HC (North'mb. Tyneside Willoughby de Eresby, Lord
Pym, C. Guy Smith, James Parker (Lanarks.) Wills, Sir Frederick
Quilter, Sir Cuthbert Spear, John Ward Wilson, A. Stanley (York, E. R.)
Handles, John S. Stanley, Edward Jas. (Somerset) Wilson, John (Glasgow)
Rankin, Sir James Stanley, Lord (Lancs.) Wilson-Todd, Wm. H. (Yorks.)
Ratcliff, R. F. Stewart, Sir Mark J. M. Taggart Wodehouse, Rt. Hn. E. R. (Bath)
Rattigan, Sir William Henry Strachey, Sir Edward Wolff, Gustav Wilhelm
Renwick, (George Stroyan, John Wortley, Rt. Hon. C. B. Stuart-
Richards, Henry Charles Talbot, Rt. Hn. J. G (Oxf'd Univ. Wrightson, Sir Thomas
Ridley, Hon. M. W. (Stalybridge Thornton, Percy M. Wyndham, Rt. Hon George
Ritchie, Rt. Hn. Chas. Thomson Tomlinson, Wm. Edw. Murray Younger, William
Roberts, Samuel (Sheffield) Tritton, Charles Ernest
Robertson, Herbert (Hackney) Tufnell, Lieut.-Col. Edward TELLERS FOR THE AYES—
Rolleston, Sir John F. L. Valentia, Viscount Sir William Walrond and Mr. Anstruther.
Ropner, Colonel Robert Walker, Col. William Hall
Round, James Warde, Colonel C. E.
NOES.
Abraham, William (Cork, N. E.) Hayden, John Patrick O'Kelly, James (Roscommon, N.)
Abraham, William (Rhondda) Hayden, Rt. Hon. Charles Seale- O'Malley, William
Allen, Charles P. (Glouc., Stroud Hayter, Rt. Hon. Sir Arthur D. O'Mara, James
Barry, E. (Cork, S.) Horniman, Frederick John O'Shaughnessy, P. J.
Bayley, Thomas (Derbyshire) Jones, William (Carnarvonshire Partington, Oswald
Bell, Richard Joyce, Michael Power, Patrick Joseph
Blake, Edward Kearley, Hudson E. Priestley, Arthur
Boland, John Law, Hugh Alex. (Donegal, W.) Reddy, M.
Broadhurst, Henry Layland-Barratt, Francis Redmond, John E. (Waterford)
Burns, John Leamy, Edmund Rickett, J. Compton
Came, William Sproston Leng, Sir John Roberts, John Bryn (Eifion)
Caldwell, James Levy, Maurice Roberts, John H. (Denbighs.)
Campbell, John (Armagh, S.) Logan, John William Robertson, Edmund (Dundee)
Carew, James Laurence Lough, Thomas Roche, John
Channing, Francis Allston Lundon, W. Roe, Sir Thomas
Clancy, John Joseph MacDonnell, Dr. Mark A. Schwann, Charles E.
Cogan, Denis J. MacNeill, John Gordon Swift Shaw, Charles Edw. (Stafford)
Condon, Thomas Joseph MacVeagh, Jeremiah Shaw, Thomas (Hawick B.)
Craig, Robert Hunter M'Crae, George Sheehan, Daniel Daniel
Crean, Eugene M'Fadden, Edward Shipman, Dr. John G.
Cremer, William Randal M'Hugh, Patrick A. Soames, Arthur Wellesley
Davies, Alfred (Carmarthen) M'Kenna, Reginald Sullivan, Donal
Delany, William M'Killop, W. (Sligo, North) Thomas, David Alfred (Merthyr)
Dillon, John Markham, Arthur Basil Thomas, J A (Glamorgan, Gower
Doogan, P. C. Mooney, John J. Thomson, F. W. (York, W. R.)
Duncan, J. Hastings Morley, Charles (Breconshire) Tully, Jasper
Dunn, Sir William Moss, Samuel Walton, Joseph (Barnsley)
Edwards, Frank Murnaghan, George Wason, Eugene (Clackmannan)
Evans, Samuel T. (Glamorgan) Nannetti, Joseph P. Weir, James Galloway
Ffrench, Peter- Nolan, Joseph (Louth, South) White, Luke (York, E. R.)
Field, William Norton, Capt. Cecil William Whittaker, Thomas Palmer
Flavin, Michael Joseph O'Brien, James E. X. (Cork) Wilson, John (Durham, Mid.)
Flynn, James Christopher O'Brien, Kendal (Tipperary Mid Yoxall, James Henry
Gilhooly, James O'Brien, P. J. (Tipperary, N.)
Goddard, Daniel Ford O'Connor, James (Wicklow, W.) TELLERS FOR THE NOES—
Griffith, Ellis J. O'Connor, T. P. (Liverpool) Mr. Patrick O'Brien and
Gurdon, Sir W. Brampton O'Dowd, John Mr. Haviland Burke
Hardie, J. Keir (Methyr Tydvil) O'Kelly, Conor (Mayo, N.)

(7.26.) Main Question put, "That the Bill be now read a second time."

The House divided:—Ayes, 224 Noes, 102. (Division List No. 172).

AYES.
Acland-Hood, Capt. Sir Alex F. Finlay, Sir Robert Banuatyne Molesworth, Sir Lewis
Agnew, Sir Andrew Noel Fisher, William Hayes Montagu, G. (Huntingdon)
Aird, Sir John FitzGerald, Sir Robert Penrose- More, Robt. Jasper (Shropshire
Anson, Sir William Reynell Fitzroy, Hon. Edward Algernon Morrell, George Herbert
Archdale, Edward Mervyn Flannery, Sir Fortescue Morton, Arthur H. A. (Deptford
Arkwright, John Stanhope Foster, Philip S.(Warwick, St. W Mount, William Arthur
Arnold-Forster, Hugh O. Galloway, William Johnson Murray, Rt Hn A. Graham (Bute
Arrol, Sir William Godson, Sir Augustus Frederick Murray, Charles J. (Coventry)
Atkinson, Rt. Hon. John Gordon, Hn. J. E. (Elgin&Nairn) Newdigate, Francis Alexander
Austin, Sir John Gore, Hn. S. F. Ormsby-(Line.) Nicholson, William Graham
Bailey, James (Walworth) Gorst, Rt. Hon. Sir John Eldon Nicol, Donald Ninian
Baird, John George Alexander Goschen, Hon. George Joachim O'Neill, Hon. Robert Torrens
Balcarres, Lord Greene, Sir E W (B'ry S. Edm'nds Palmer, Walter (Salisbury)
Balfour, Rt. Hn. A J.(Manch'r Greene, Henry D. (Shrewsbury) Pease, Herbert Pike (Darlington)
Balfour, Capt. C. B. (Hornsey) Greene, W. Raymond-(Cambs. Pemberton, John S. G.
Balfour, Rt Hn Gerald W. (Leeds Gretton, John Percy, Earl
Balfour, Kenneth R. (Christen. Groves, James Grimble Pilkington, Lieut.-Col. Richard
Banbury, Frederick George Gunter, Sir Robert Platt-Higgins, Frederick
Bartley, George C. T. Guthrie, Walter Murray Plummer, Walter R.
Beach, Bt. Hn. Sir Michael Hicks Hain, Edward Pretyman, Ernest George
Beckett, Ernest William Halsey, Rt. Hon. Thomas F. Priestley, Arthur
Bhownaggree, Sir M. M. Hamilton, Marq. of (L'nd' nderry Pryce-Jones, Lt.-Col. Edward.
Bignold, Arthur Hanbury, Rt. Hn. Robert Wm. Purvis, Robert
Bill, Charles Hare, Thomas Leigh Pym, C. Guy
Blundell, Colonel Henry Haslam, Sir Alfred S. Quilter, Sir Cuthbert
Bond, Edward Hatch, Ernest Frederick Geo. Randles, John S.
Boulnois, Edmund Hay, Hon. Claude George Ratcliff, R. F.
Brassey, Albert Heath, James (Staffords. N. W. Rattigan, Sir William Henry
Brotherton, Edward Allen Henderson, Alexander Renshaw, Charles Bine
Burdett-Coutts, W. Hickman, Sir Alfred Renwick, George
Butcher, John George Hogg, Lindsay Richards, Henry Charles
Campbell, Rt. Hn. J. A. (Glasgow Hope, J. F. (Sheffield, Brightside Ridley, Hon M. W. (Stalybridge
Carlile, William Walter Hornby, Sir William Henry Ritchie, Rt. Hn. Chas. Thomson
Carson, Rt. Hon. Sir Edw. H. Hoult, Joseph Roberts, Samuel (Sheffield)
Cavendish, R. F. (V. Lancs) Howard, John (Kent, Faversham Robertson, Herbert (Hackney)
Cavendish, V. C W. (Derbyshire Howard, J. (Midd., Tottenham) Rolleston, Sir John F. L.
Cayzer, Sir Charles William Hozier, Hn. James Henry Cecil Ropner, Colonel Robert
Cecil, Lord Hugh (Greenwich) Jebb, Sir Richard Claverhouse Round, James
Chamberlain, Rt. Hon. J. (Birm. Jessel, Captain Herbert Merton Rutherford, John
Chamberlain, J. Austen (Wore. Johnstone, Heywood (Sussex) Sackville, Col. S. G. Stopford-
Charrington, Spencer Kenyon, Hon. Geo. (Denbigh) Samuel, Harry S-(Limehouse)
Churchill, Winston Spencer King, Sir Henry Seymour Sassoon, Sir Edward Albert
Coghill, Douglas Harry Knowles, Lees Seely, Maj. J. E. B. (Isle of Wight
Cohen, Benjamin Louis Lambton, Hon. Frederick Wm. Seton-Karr, Henry
Collings, Rt. Hon. Jesse Laurie, Lieut.-General Simeon, Sir Barrington
Colomb, Sir John Charles Ready Lawrence, Joseph (Monmouth) Sinclair, Louis (Romford)
Colston, Chas. Edw. H. Athole Lawrence, Wm. F. (Liverpool) Smith-Abel H. (Hertford, East
Cook, Sir Frederick Lucas Lawson, John rant Smith, HC (North'mb. Tyneside
Corbett, A. Cameron (Glasgow Lecky, Rt. Hn. William Edw. H. Smith, James Parker (Lanarks.
Cox, Irwin Edward Bainbridge Legge, Col. Hon. Heneage Spear, John Ward
Cranborne, Viscount Leigh-Bennett, Henry Currie Stanley, Ed ward Jas. (Somerset)
Cross, Herb. Shepherd (Bolton) Leveson-Gower, Frederick N. S. Stanley, Lord (Lancs.)
Cust, Henry John C. Lockwood, Lt.-Col. A. R. Stone, Sir Benjamin
Dalrymple, Sir Charles Long, Col. Charles W. (Evesham Stroyan, John
Denny, Colonel Lonsdale, John Brownlee Talbot, Rt. Hn. J. G. (Oxf'd Univ.
Dewar, T. R. (T'r H'mlets, St. Geo. Lowe, Francis William Thornton, Percy M.
Dickson, Charles Scott Lowther, C. (Cumb., Eskdale) Tomlinson, Wm. Edw. Murray
Dorington, Sir John Edward Loyd, Archie Kirkman Tritton, Charles Ernest
Douglas, Rt. Hon. A. Akers- Lucas, Col. Francis (Lowestoft) Tufnell, Lieut.-Col. Edward
Doxford, Sir William Theodore Lyttelton, Hon. Alfred Valentia, Viscount
Duke, Henry Edward Macdona, John Gumming Walker, Col. William Hall
Durning-Lawrence, Sir Edwin MacIver, David (Liverpool) Warde, Colonel C. E.
Dyke, Rt. Hn. Sir William Hart Maconochie, A. W. Warr, Augustus Frederick
Elibank, Master of M'Arthur, Charles (Liverpool) Wason, John Cathcart (Orkney)
Elliot, Hon. A. Ralph Douglas M'Iver, Sir Lewis (Edinburgh, W.) Welby, Sir Charles G. E. (Notts.)
Faber, George Denison (York i M'Killop, James (Stirlingshire) Wharton, Rt. Hon. John Lloyd
Fardell, Sir T. George Malcolm, Ian Whiteley, George York, W. R.
Fellowes, Hon. Ailwyn Edward Manners, Lord Cecil Whiteley, H. (Ashton und. Lyne
Fergusson, Rt. Hn. Sir J. (Mano'r Meysey-Thomson. Sir H. M. Whitmore, Charles Algernon
Fielden, Edward Brocklehurst Middlemore, John Throgmorton Williams, Col. R. (Dorset.)
Finch, George H. Milner, Rt. Hn. Sir Frederick G. Williams, Rt Hn J. Powell-(Birm.
Willoughby de Eresby, Lord Wodehouse, Rt. Hn. E. R. (Bath Younger, William
Wills, Sir Frederick Wolff, Gustay Wilhelm
Wilson, A. Stanley (York, E. R. Wortley, Rt. Hn. C. B. Stuart- TELLERS FOR THE AYES—
Wilson, John (Glasgow) Wrightson, Sir Thomas Sir William Walrond and
Wilson-Todd, Wm. H. (Yorks.) Wyndham, Rt. Hon. George Mr. Anstruther
NOES.
Abraham, William (Cork, N. E.) Hardie, J. Keir (Merthyr Tydvil) O'Shaughnessy, R. J.
Abraham, William (Rhondda) Hayden, John Patrick Partington, Oswald
Allen, Charles P. (Glouc, Stroud Jones, William (Carnarvonshire Power, Patrick Joseph
Barry, E. (Cork, S.) Joyce, Michael Rea, Russell
Bayley, Thomas (Derbyshire) Law, Hugh Alex. (Donegal, W. Reddy, M.
Bell, Richard Layland-Barratt, Francis Redmond, John E. (Waterford)
Blake, Edward Leamy, Edmund Rickett, J. Compton
Boland, John Leng, Sir John Rigg, Richard
Bolton, Thomas Dolling Levy, Maurice Roberts, John Bryn (Eifion)
Burke, E. Haviland- Logan, John William Roberts, John H. (Denbighs.
Burns, John Lough, Thomas Robson, William Snowdon
Caldwell, James Lundon, W. Roche, John
Campbell, John (Armagh, S.) MacDonnell, Dr. Mark A. Roe, Sir Thomas
Carew, James Lawrence MacNeill, John Gordon Swift Schwann, Charles E.
Charming, Francis Allston MacVeagh, Jeremiah Sheehan, Daniel Daniel
Clancy, John Joseph M'Fadden, Edward Shipman, Dr. John G.
Cogan, Denis J. M'Hugh, Patrick A. Sinclair, John (Forfarshire
Condon, Thomas Joseph M'Killop, W. (Sligo, North) Soames, Arthur Wellesley
Craig, Robert Hunter Markham, Arthur Basil Sullivan, Donal
Crean, Eugene Moss, Samuel Thomas, David Alfred (Merthyr)
Cremer, William Randal Murnaghan, George Thomas, J A (Clamorgan, Gower
Davies, Alfred (Carmarthen) Nannetti, Joseph P. Thomson, F. W. (York, W. R.)
Delany, William Nolan, Joseph (Louth, South) Toulmin, George
Dillon, John Norman, Henry Tully, Jasper
Doogan, P. C. Norton, Capt. Cecil William Walton, Joseph (Barnsley)
Duncan, J. Hastings O'Brien, James F. X. (Cork) Wason, Eugene (Clackmannan)
Dunn, Sir William O'Brien, Kendal (Tipperary, Mid White, Luke (York, E. R.)
Evans, Samuel T. (Glamorgan) O'Brien, Patrick (Kilkenny) Whittaker, Thomas Palmer
Ffrench, Peter O'Brien, P. J. (Tipperary, N.) Wilson, John (Durham, Mid.)
Field, William O'Connor, James (Wicklow, W.) Yoxhall, James Henry
Flavin, Michael Joseph O'Connor, T. R. (Liverpool)
Flynn, James Christopher O'Dowd, John
Gilhooly, James O'Kelly, Conor (Mayo, N.) TELLERS FOR THE NOES—
Goddard, Daniel Ford O'Kelly, James (Roscommon, N. Mr. Broadhurst and Mr.
Griffiths, Ellis J. O'Malley, William M'Crae.
Gurdon, Sir W. Brampton O'Mara, James

Bill read a second time, and committed for tomorrow.

House adjourned at 7.40.