HC Deb 18 July 1904 vol 138 cc296-347

Considered in Committee.

(In the Committee.)

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

Clause 2:—

Amendment again proposed— In page 2, line 3, to leave out from the word 'pound' to the end of the clause."—(Mr. McKenna.)

Question proposed, "That the words 'and the duties payable under the same section on' stand part of the clause."


said that several questions were put to him in the last debate with reference to the tax on stripped tobacco, on which Amendments stood in the names of the hon. Members for the Kirkdale and Exchange Divisions of Liverpool, and the Rotherham Division of Yorkshire. The deputations which waited upon him, and which were, as he was told, fully representative of the interests concerned, thought that his proposals dealt harshly with the owners of strips in bond as at the date when the Budget was introduced, as, of course, they had no notice of the intended change; at the same time, they did not complain of his proposals as a whole. Since then he had had interviews with several hon. Gentlemen, but he had thought it only courteous to the Committee that they should have the first information of any change or modification in the original proposals. He hoped the Committee would appreciate how much he regretted the delay which had occurred. Nothing could be more disconcerting or injurious to trade than uncertainty as to the intentions of the Chancellor of the Exchequer or of the House. He very much regretted that the trade should have so long suffered from that uncertainty. The Amendments on the Paper referred to the case of the importers, not of the manufacturers, and their apprehension was that, while the manufacturers might be quite able to protect themselves by increasing the price, the importers were not in an equally fortunate position, and that they could not raise, at any rate to the full extent, the price of their goods. He thought there was some force in their argument, and he was prepared at the proper time to move the following Amendment as a new sub-section to Clause 2— A rebate at the rate of 1½d. for every pound of tobacco shall be allowed on any increased duty under this Act paid on or after 19th July, 1904, in respect of any stripped tobacco which is shown to the satisfaction of the Commissioners of Customs to have been deposited in a bonded warehouse before the 20th day of April, 1904. The Committee would see that while in one respect he went less far than the Amendment on the Paper, in another respect he went further. He was not prepared to admit these stocks at the old rate of duty, but he would allow a rebate of one-half the additional duty. His hon. friends proposed to limit this relief to stocks in merchants' hands. He thought there would be extreme difficulty in defining what were stocks in merchants' hands, and it would be undesirable to leave that matter to subsequent litigation, whilst it would not be satisfactory to the trade if in a matter of so much importance and perplexity the discretion of the Customs were absent. He proposed to make the rebate general as regarded stocks in bond previous to the announcement of the increased duty.

MR. AUSTIN TAYLOR (Liverpool, E. Toxteth)

What is the exact date?


The 20th April, 1904. I made my Budget statement the evening before.


The right hon. Gentleman mentioned in his Resolution the 19th July.


said he thought hon. Gentlemen were under a misapprehension on this point. It was the importers who certainly had a claim to relief, but the difficulty in confining it to the importers would be very great indeed. He did not recommend that course, and he proposed to make the rebate as from the next day. Probably the Committee was familiar with the fact that there had been no sales of strips since the Budget announcement, and during the time the uncertainty had prevailed; therefore, by making the rebate begin to-morrow they would not he deprived of any relief which they thought they were entitled to. If they had made no sales there could be no duty on which a rebate could be made. If be dated the rebate back he would be making it not to the importers, but to the manufacturers, who probably had already been able to recover it by an adjustment of their prices. It was a custom of the trade that tobacco should be sold by the importer in bond and that the manufacturer who bought it should pay the duty on withdrawing it from bond. If, therefore, the manufacturer had purchased and withdrawn any tobacco from bond it was to the manufacturer that relief would have to be given; but if the manufacturer had guarded himself by offering a smaller price for the strip he would, if he received the rebate, get relief twice over. He had felt it his duty to make this explanation at the earliest moment, although it was not immediately germane to the Amendment under discussion. He hoped that this very considerable concession, a rebate of no less than 50 per cent. of the duty imposed, would be felt by those interested to be a sign that he had given not unfavourable and even not ungenerous consideration to the arguments which had been placed before him. He hoped even that he might not be too sanguine if he trusted that it might somewhat ease the discussions in Committee and relieve him of some part of the burden which would otherwise fall on his shoulders in that House. But he wished to impress on the Committee that he had made the concession out of a desire to do no injustice to any section of any trade, and at the proper time he would commend it to the careful consideration of the Committee.

MR. SYDNEY BUXTON (Tower Hamlets, Poplar)

asked what was the estimated cost of the rebate.


said he would not like to speak definitely on that point, but from the proposals as a whole he originally anticipated an additional revenue of £550,000; if the rebate now proposed was accepted, he estimated roughly that the net gain to the revenue would be £350,000. The calculation must, however, to a certain extent be a matter of conjecture, and his proposals must be considered as a whole. The Committee was entitled to the best information he could give, but he hoped he would not be pressed too hard as to the accuracy of those figures.

MR. LOUGH (Islington, W.)

On a point of order, is it possible for such a change as this to take place to-morrow. Would it not be necessary first to have a Resolution in Committee?


No. This proposal so far from imposing a fresh charge relieves an existing one.


It is a change in the law.




The duty is now being collected at 3d., so it amounts to a change in the law, which should be brought in in the manner I suggest.


No; if that were so it would be impossible at any time to make any reduction or any change, and surely the hon. Member would not wish that.


asked if it had been possible to ascertain how much the holders of stocks would suffer under the amended proposals. The duty represented £15 per hogshead in bond, and the right hon. Gentleman only proposed to remit £7 10s. It seemed to him that their loss would still be very serious in view of the large stocks they held. No doubt the concession of the right hon. Gentleman was a step in advance, and in view of the serious effect of the original proposals on a small class of merchants no one would regret that the discussions had been prolonged. He would give the right hon. Gentleman a concrete example of the effect of his proposal. There was a firm in his constituency which held very large stocks of stripped tobacco; and the effect of the duty in their case would simply have been ruinous. It was noteworthy that a Government which professed itself so solicitous for the interests of other forms of property—such as licensed houses—should in the case of the tobacco trade come forward with a proposal little short of confiscation. The speech of the hon. Baronet the Member for Bristol and the Report of the Inter-Departmental Committee had shown that the original proposals of the Chancellor of the Exchequer would have been a great injustice to the importers of tobacco. As, they stood the proposals were purely protectionist. There was no question of raising revenue, but there was a question of differential duties in order to give British employment. It was extremely doubtful if even in their modified form they would give much employment, and undoubtedly more would have been secured by a small increase of the drawback. This first attempt to introduce protection in the Budget was not only a violation of the understanding that there should be nothing of this kind during the present Parliament, but the right hon. Gentleman's proposals had given rise to a general feeling of insecurity, had stopped trade, and were still a gross injustice to a certain class of traders.

MR. ROBSON (South Shields)

said that the Committee would no doubt be glad to hear the announcement of the Chancellor of the Exchequer. The rebate would no doubt be of great value to the importers. But the question raised by the Amendment was of far wider import than any question of transient injustice, however severe, on any particular class. The Amendment under discussion did not relate simply to the incidence of the tax upon importers or manufacturers; it dealt with the tax as a whole, and he was inclined to think that the announcement of the right hon. Gentleman helped their arguments against the tax as a whole, although it did diminish the injustice upon a particular class of persons. During the past fortnight there had been a startling corroboration of the arguments advanced against this tax. The right hon. Gentleman introduced the tax first of all as a non-protective tax. He said that so far as his intention was concerned he did not mean it to be protective, and in order to accept that statement they were obliged to suspend the application of the well-known rule, that a reasonable man must be taken to foresee the obvious consequences of his own action. Those obvious consequences had been shown again and again, and beyond all doubt and argument the tax had been proved to be pure protection. There had been the case put forward by the Tobacco Section of the Liverpool Chamber of Commerce, which had proved that statement to an extraordinary degree.

It was worth while to review briefly the history of this matter. It might be called almost a "Comedy of Errors" were it not for the widespread loss and misery which the tax had already imposed and was likely to produce. They had, therefore, better call it a "Tragedy of Errors." First of all the Chancellor of the Exchequer introduced it as a revenue tax. The statement he had made that afternoon had an important bearing on that argument. It was a disadvantage to the revenue that stalks should not be imported; but that argument of the Chancellor of the Exchequer's was disposed of before he had finished his Budget speech, because it turned out in the latter part of the speech that he was providing for an increased drawback on these very stalks. Instead of the import of stalks being an advantage to the Exchequer, the right hon. Gentleman was so far misinformed as not to know that the import of stalks was a loss to the manufacturer and to the State because of the drawback. He made these remarks not out of any desire to paint out errors into which the right hon. Gentleman might have fallen, but in order to draw the attention of hon. Members opposite, who were opposed to protection, to the fact that they had been led into voting for this tax under the mistaken impression that it was a non-protective duty. The next argument of the right hon. Gentleman was that, although it was desirable to have stalks in order to increase the revenue, it was necessary that he should establish a parity between the whole and the stripped leaf in the matter of duty. Here again the right hon. Gentleman forgot his drawback. He forgot that, although the whole leaf was said to have been at a disadvantage, that disadvantage was wholly removed by the increased drawback which he was prepared to give. The Tobacco Section of the Liverpool Chamber of Commerce had declared that the revised scale of drawbacks was not advantageous. Let the House observe the situation. The right hon. Gentleman brought in a Budget in which he revised the scale of drawback and enlarged it so that, according to the opinion of his own Committee and his own experts, he left stalk tobacco under no kind of disadvantage as compared with stripped tobacco so far as the drawback was concerned. The drawback was put at a figure which not merely covered any disadvantage which might attach to stripped tobacco but actually tended in the direction of a bounty. And now on the top of the drawback the right hon. Gentleman proposed to put a tax of 3d. on one of these kinds of raw materials. The reason he advanced was that he wished to establish parity between the two kinds. What had happened? Trade in strips had been paralysed; it had been absolutely stopped as if by a ukase. That was a remarkable result of an effort to establish parity. And the right hon. Gentleman that day actually relied on those circumstances in order to show how generous was the concession he was giving to the importers.

The trade in strips had ceased. The average import in June for five years past was 2,459 casks, whereas in June this year the quantity was only 344 casks, and even that was imported under contracts previously made. Hence the Chancellor of the Exchequer in his first essay in scientific taxation had not merely hampered, but actually paralysed and stopped a great branch of English trade. And what was likely to be its effect in the future? Could anybody believe that any substantial revenue would be drawn from the tax? The import had stopped; it was to the shipment of strips the Chancellor of the Exchequer had to look for his revenue, but he would be unable to induce merchants to resume shipment. What did free-trade Unionists think of all this? The tax was not a revenue or a continuing tax. Was it likely that people would continue to import strips with a differential duty of 3d. against it, when the drawback upon unstripped had been raised to such an adequate figure as to bring both classes upon an exact par? The wholesale cost of tobacco was 6d. or 7d. per pound, so that the duty on strips represented about 50 per cent. upon its wholesale price. As the cost of stripping was only about ½d. per pound, the duty of 3d. was absolutely prohibitive to the import of strips. What could be the Chancellor of the Exchequer's conception of business that he should believe it possible to put a tax on a commodity, equal to half its value, without affecting its price in relation to other commodities of almost the same class? On a previous occasion the right hon. Gentleman greatly impressed the Committee by reading quotations from certain price lists to show that the relative prices had not changed. It was pointed out at the time that the figures could only be upheld upon the assumption that there had been no sales of strips, and hence no alteration of price, and that had turned out to be the fact. According to the Tobacco Journal the sale of strips had been at a standstill since the introduction of the Budget, and the quotations referred to sales prior to that date.


was understood to say that the Tobacco Journal gave the prices under the heading "Latest Market Sales," which in the circumstances was a misleading description.


said he had no doubt that the right hon. Gentleman himself was misled. He had no desire to cast the slightest reflection upon the ability, vigilance, or intention of the right hon. Gentleman. The whole strength of his argument lay in the fact that it was impossible for any Chancellor of the Exchequer safely to interfere with the movement of trade. As soon as a Minister began to interfere with trade for the purpose of giving more employment or for any other purpose, he entered a sphere to which the ability of any human being was wholly unequal. That was one of the fundamental propositions of the free-trade belief, which was traversed by protectionists who believed that they could tap a source of enormous wealth by the burden which they placed upon the shoulders of the people.

Let the Committee apply business instinct to the question. According to the Tobacco Section of the Liverpool Chamber of Commerce, there had been practically no business in imported strips since the introduction of the Budget, and merchants were unable to find buyers for their existing stocks except at a reduction in price of 3d. per pound, which, on the old figure, meant a loss of hundreds of thousands of pounds sterling to a small group of importers. It was the tobacco trade that was hit to-day; it might be the shipping trade tomorrow, and the iron trade after that. No single trade was safe when once ideas of this kind found place in the proposals of statesmen. The Chancellor of the Exchequer had based his calculations upon a statement that the whole leaf came into this country substantially moister than the stripped leaf. The tobacco trade declared that statement to be inaccurate, and that if there was any difference at all, it was rather in favour of there being a slight theoretical excess of moisture in the leaf as compared with the stalk. That being so, the Committee were entitled to know from whom the right hon. Gentleman obtained his information. The statements were those of people interested in the creation of a fiscal burden, who had come forward not in the capacity of business men hoping to make a profit for themselves, but as public advisers. Who were they, and what was their interest in the matter? The Chancellor of the Exchequer in a letter had stated that "many manufacturers" had been advising him. Who were the "many manufacturers? They must not lurk behind the fiscal throne of the Chancellor of the Exchequer. The conduct of Mr. Gallaher bore favourable comparison with that of the "many manufacturers;" because he stepped boldy into the arena of public controversy and challenged comment on his action. He claimed to have outlined the idea of a differential duty which should have the effect of encouraging stripping in this country. The Chancellor of the Exchequer's statement to the effect that Mr. Gallaher had given no such advice, while hardly consistent with that gentleman's own assertion, made no difference to the proposition which he (the hon. Member) had made both in the House and elsewhere in regard to fiscal morals. He entirely disputed the right of the Chancellor of the Exchequer to say that he was acting upon the advice of gentlemen whose names he refused to give to the public. In a technical constitutional sense the right hon. Gentleman was doubtless the responsible person; but in the real sense, which alone was of importance in this controversy, the responsible persons were those who had advised him and supplied the information upon which he had acted.

In view of the present protectionist agitation and the policy inaugurated in the Budget it was necessary for the Committee to consider their standard of fiscal morals. The tobacco trade declared that no important manufacturer would give such information to the Chancellor of the Exchequer. That disposed of Mr. Gallaher, because he certainly was a manufacturer of importance. It was necessary to know who these many manufacturers were, and what was their interest in the matter, in order that the Committee might test the value of their opinions. All protectionist taxes were put forward on high-sounding pleas of patriotism, Empire, and so forth. If those who advocated such taxes were absolutely disinterested, he was prepared to listen to their perorations about Empire; but if their object in suggesting fiscal burdens was simply to make private profit he preferred that they should keep all their talk about Empire to themselves. Was the advice given by these people real patriotism, or a mendacious travesty of patriotism inspired by greed? Was it or was it not fiscal corruption against which the country ought to be on its guard? He was afraid the Liverpool Chamber of Commerce would ask in vain for the names of the Chancellor of the Exchequer's advisers. Personally, he would not press the right hon. Gentleman further, but he did ask free-trade Unionists to take note of this the first example of protectionist methods.

MR.CHARLES McARTHUR (Liverpool, Exchange)

was understood to say that he had always held that the prospective loss to which a number of gentlemen were rendered liable was an obstacle which had to be removed before the proposal could be considered on its merits. The Chancellor of the Exchequer had previously held that no loss whatever would fall on the holders of strips. He had now abandoned that position and offered a compromise to the extent of one-half of the tax. That was an entire abandon- ment of his former position, and no ground whatever had been given for the change. The right hon. Gentleman had not adopted the principle for which the merchants had contended; he had taken up a new position for which there was no support whatever.


said he was quite prepared to go back to his former proposal.


said it was impossible for the right hon. Gentleman to go back after the statement he had made that day. He fully recognised the spirit in which the right hon. Gentleman had made his offer, but it was, after all, an arbitrary proposal based on no ground or reason. The right hon. Gentleman had put forward certain calculations showing that one pound of strips made from imported leaf would pay 3s. 4d., while each pound of strips imported would pay 3s. 3d, and, therefore, instead of imported strips being penalised to the extent of 3d., strips made from imported leaf would pay a penny more. Both statements could not be true. Having, with all the expert advice he could obtain, gone into the matter thoroughly, he believed the Chancellor of the Exchequer was mistaken. The right hon. Gentleman had assumed as the basis of his calculations that there was more sand in leaf than in strips, whereas experience showed the contrary. Experience showed that the amount of moisture in leaf and in strips was about equal. In support of that he would quote the Government Blue-book which gave various samples of Virginia leaf compared with Virginia strips, and Western leaf compared with Western strips. They showed in each case that there was more water and more sand in strips than in leaf. His own feeling was, that although the holders of strips might be disposed to accept the offer of the Chancellor of the Exchequer, yet they recognised that the offer was not a fair one. It did not free them from loss, but rather divided the loss between them and the revenue. Why should innocent merchants be placed in the position of having to bear part of the loss themselves? Why should they be subjected to a compromise of that character. He ventured to point out that in connection with all previous Budgets, there had been full allowance made in cases where the tax could not be passed on from the person who paid the tax to the consumer. He instanced the case of the export duty on coal. In that case an allowance was made in the case of pre-Budget contracts, the amount refunded being not merely sixpence but a shilling. Why should not an equally generous course be taken in this case? Why not say if the merchants or manufacturers could prove satisfactorily to the Customs officials that, having incurred this loss of threepence and being unable to recover it, they should be allowed the amount in full. He thought it would have been far more satisfactory if this tax had been withdrawn altogether. The difficulty would then have been removed. That was the opinion of the whole of the tobacco trade. They would be thankful to the Chancellor of the Exchequer if, instead of dividing the loss with them, he would withdraw the tax.

This tax was proposed with two objects. The first was to add to the revenue. He thought it had been clearly shown that in this respect it had been a failure. During the present year the tax could not be raised without inflicting a very unjust burden on certain persons who did not deserve to be treated in that way. But with regard to the future it was generally admitted that the differential duty would be entirely protective, and for this reason. It would put an end to the importation of strips, and, of course, when the importation of strips ceased, the differential duty would cease. The second object of the imposition was to transfer the business of stripping tobacco from the United States to the United Kingdom. He admitted that that object would be to a certain extent attained. It would not be entirely attained. Of course, when the importation of stripped tobacco was put an end to, the business of stripping, as far as was necessary, would be done in the United Kingdom. It would give employment to British labour, and to that extent the tax would attain its object. It would only succeed partly, because it would probably lead to stems being ground in by manufacturers, and accordingly the quality of tobacco would become degraded. Tobacco would become a mixture of stem and leaf. It was clear that the tax would become entirely protective in its nature, and that it would fail for the purpose of raising revenue. It was only useful as a tax for the purpose of fostering a home industry. Therefore it seemed to him to be entirely inconsistent with the declaration of the Government when they introduced the Budget that it was entirely a free-trade Budget. It was not entirely a free-trade Budget if this particular tax was in its essence of a protective nature. He believed this proposal was intended to be an object-lesson of the advantages of protection, but instead of that it was an object-lesson of the evils of protection. It showed how very dangerous it was to attempt to interfere with trade by fiscal arrangements. Although the trade might be compelled to accept the offer which the Chancellor of the Exchequer had made—and he acknowledged the spirit in which it was made—he could not pass from the subject without placing on record his opinion that even the modified tax would involve substantial injustice, and that the tax should be removed altogether.

MR. McKENNA (Monmouthshire, N.)

said he desired to associate himself with everything that had fallen from the hon. Gentleman who had just sat down. With him he gladly accepted the offer made by the Chancellor of the Exchequer for what it was worth, because to some extent it did save something from the wreck of the fortunes of the merchants. But there were some obvious questions which he thought the Committee ought to ask for itself. Why did the Chancellor of the Exchequer make this reduction of l½d. a pound on stocks in bond? If it was true, as the right hon. Gentleman alleged when this question was last debated, that the duty cost on strips was 3d. more than the duty cost on leaf—the phrase was the Chancellor of the Exchequer's—it was clear to everyone that there was no reason for taking anything oft stocks in bond, because the owners of strips in bond had agreed to give him 3d. on the existing duty. Why then relieve them? Did the Chancellor of the Exchequer admit that the duty cost on stocks was not 3d. but 1½d.? Was that the reason for giving the exemption of 1½d. a pound on stocks in bond? If that were the right hon. Gentleman's reason it was an admission that to the extent of 1½d. a pound this duty was a protective duty. The point was well worthy of the careful attention of this Committee. They had to decide what the financial proposals for the year were going to be, and if the case put forward by the Tobacco Section of the Liverpool Chamber of Commerce were true, this Committee would become responsible for a gross injustice, and the inflicting of undeserved hardship upon some twelve or twenty men. The hardship, it was true, would be reduced by the proposal of the Chancellor of the Exchequer — a hardship which would unfortunately, if his statements were true, amount to something like £150,000. It therefore became their duty to examine with the utmost care what ground the Tobacco Section of the Liverpool Chamber of Commerce had for the case put forward.

What had been the answer made by the Chancellor of the Exchequer? The right hon. Gentleman alleged that the difference in the duty cost on leaf and strips was 2½d. a pound in the case of ordinary tobacco, and 4d. a pound in the case of bright Virginia. He based his case upon samples which he had taken in four cases of bright Virginia. Ai regarded the other class of tobacco the right hon. Gentleman had not given the Committee any case at all up to the present. In regard to bright Virginia the right hon. Gentleman said there was an additional cost of 4d. a pound, and if that was so why on earth take 1½d. off the pound? The right hon. Gentleman had endeavoured to prove this by stating that in 100 pounds of strips there was more smokable tobacco than in the corresponding weight of leaf. The duty of 3s. a pound on stripped remained, and the duty of 3s. on leaf became 3s. 4d. The right hon. Gentleman justified his case by the samples he had taken. He appealed from the right hon. Gentleman's samples to the Report of his own Committee. Anyone who took the trouble to read that Report would find in it absolute proof, so far as proof could be given, that the case put forward by the Chan- cellor of the Exchequer was a mistaken one. The right hon. Gentleman had declared that the moisture in the strips was less than the moisture in the leaf, and quoted from examples in support of that contention. There were forty-three samples of American tobacco mentioned in the Blue-book, and he supposed that they were taken by the same gentleman who took the four samples. The four samples showed more moisture in the leaf than in the strips, but the forty-three samples, which covered a much wider area of American tobacco, showed the exact contrary. The case that the Chancellor made out—based on the excess of moisture in the leaf—therefore fell to the ground.

As to the case of sand he admitted that in bright Virginia there was considerably more sand in leaf tobacco than in the strips. He was glad that statement was confirmed by the hon. Baronet the Member for North Bristol, than whom they could find no greater authority on this matter. The Chancellor had quoted a difference of upwards of 4 per cent. in sand on his four samples. There was a series of about forty samples taken for sand in bright Virginia leaf, and these showed, not upwards of 4 per cent. of sand, but only just a little over 3 per cent. But how about other leaf tobacco? The Committee had got to remember that bright Virginia was a special article, but the great article of commerce in the tobacco trade was Western leaf. It was from Western leaf that the right hon. Gentleman ought to have taken an example. He found from the Blue-book that out of sixteen to twenty samples of Western strips, the percentage of sand was 5.05 and of Western leaf from corresponding samples only 2.19 per cent. So that on Western leaf the exact reverse was the truth to what was put forward by the Chancellor of the Exchequer—viz., that there was more sand in the leaf than in the strips. Now they had it on evidence, if the Chancellor of the Exchequer did not find it necessary, between this and the next stage of the discussion, to reconsider his attitude, it would become necessary to bring before the Committee in detail that evidence given before his own Departmental Committee, to prove up to the hilt that he could not make out a case, except a protective case, for this differential duty. Witness after witness before that Committee came forward and said that all they asked for was for a fair chance to be given to the industry of stripping in this country, for leaf and strip to be put on an equal footing, and that an amendment should be made in the drawback, and this the Chancellor of the Exchequer had done. That being so, were they not entitled to turn to the arguments of the Liverpool Chamber of Commerce—arguments which were supported by the whole course of business for the last fifty years?

What did the Chamber of Commerce say? They maintained that if it were true that there was a difference in the duty cost, on the average, of 3d. per lb., that duty cost would be a mark of the price more than the cost of the duty on strips. The Chancellor of the Exchequer had not attempted to answer that. It was quite obvious that nobody would buy leaf at 3d. per lb. more than duty cost except there was 3d. per lb. less duty than on strips. All the tobacco dealers for the last fifty or 100 years would have been fools to go on importing leaf with this additional duty coat when they. might have had strips so much cheaper. As he had shown from the evidence in the Blue-book there was no ground for the belief of the Chancellor of the Exchequer that his four samples represented either the average facts in regard to bright Virginia tobacco or the actual facts in regard to all other kinds of tobacco. Was it not more reasonable to suppose that the tobacco merchants and manufacturers had known their own business and that there had been no such differentiation in price between leaf and strips as the difference in duty cost would justify? Was it not reasonable to suppose that the Chancellor of the Exchequer was mistaken and that the difference in duty cost was not what the right hon. Gentleman suggested it was; that such difference in duty cost as might exist had been shown by the difference in price, and that difference in price had been five-eighths of a penny in the lb., and that that difference was absolutely taken away by the Amendment as to drawback in the Bill. If that were so—and it ought to be inquired into—was this Committee going to be a consenting party to the plunder of a number of innocent gentlemen, who had carried on a trade for numbers of years under the sanction of Parliament, of from £150,000 to £200,000? It was only they who would bear this loss. They had stocks in bond sufficient to last for two years. The remaining 1½d. per lb. would have to be paid by them, and the Chancellor of the Exchequer would have got a certain amount of revenue, not from the public, but out of their pockets. Was it reasonable that the Committee should consent to this protective duty, when they had been assured on the highest authority, on behalf of the Government, that no protective legislation would be introduced in this Parliament? They ought not to. He was convinced that if the Chancellor of the Exchequer were to give his attention to the subject; if the right hon. Gentleman were really to take the trouble to understand what were the true facts about the tobacco duty; if he were even to master the contents of his own Blue-book and its Appendices, the right hon. Gentleman would discover that there was no justification for the case put forward by him. That being to, it was nothing but a gross injustice to the nation and the trade to continue this tax at all.


said that the discussion naturally divided itself into two sections. First, that which concerned itself with the unfortunate position of the holders of strips in bond, and second, the general question as to whether the differential duty on strips and whole leaf was a desirable departure in our fiscal system. As to the position of holders of strips in bond, whether merchants or manufacturers, he was inclined to think that the concession which the Chancellor of the Exchequer had announced was, on the whole, not an ungenerous appreciation of the position in which the holders of strips in bond were placed. He quite agreed with the hon. Member for the Exchange Division that it would by no means recoup them for the loss to which they were at present exposed; but he thought it would go a certain distance in that direction, and possibly, for a Chancellor who was on the look-out for revenue, it was as much as they could expect. Therefore, he hoped they would not look a gift horse too closely in the mouth, but as far as they were concerned, would accept this concession as on the whole, an alleviation of a position which by unanimous consent was altogether intolerable. As the Chancellor of the Exchequer was going to concede to holders of strips something like a quarter of a million of the revenue he anticipated, perhaps the right hon. Gentleman would say how he proposed to make up the deficiency.


said that he proposed to sacrifice that part of the revenue.


said he gathered that the calculations of a surplus which the Chancellor of the Exchequer made at the beginning of the financial year would be sufficient to justifiy him in making that sacrifice. He thought the holders of strips in bond would be well advised to accept this concession.

But, with regard to the differential duty which was proposed, the Chancellor of the Exchequer rested his whole case upon the alleged excess of moisture and sand in the whole leaf as against imported strips. On this point his right hon. friend and his experts were at issue with the tobacco trade, and the question naturally arose whether the tobacco trade knew its business. He had been himself in business for a good many years, and on such matters he would be much more disposed to take the evidence of a practical man who had been handling a particular article from the profit and loss point of view, than the evidence of the most careful experts in the most elaborately organised Government Department. From that point of view, the differential duty fell to the ground. Even on the analysis of the Departmental Committee it was perfectly clear that in strips, as against leaf, there was often rather an excess of moisture and sand than a deficiency, and, taking the evidence of that Committee as a whole, he did not think there was any- thing whatever to make out the necessity for the imposition of a differential duty of 3d. per lb. in order to place stripped tobacco and leaf tobacco on the same footing. The fact that for a long course of years whole-leaf tobacco had been imported into this country at a similar rate of duty with strips was conclusive evidence that there could not have been that enormous difference in favour of strips which his right hon. friend seemed to think prevailed. One point had been omitted by the Chancellor of the Exchequer in his calculation — namely, the fact that the cost of whole leaf tobacco was from a penny to twopence per pound less than the cost of strips imported. That was a natural handicap in favour of leaf as against imported strips, which made it still more unnecessary for the Chancellor of the Exchequer to come to the rescue of whole leaf and put on that differential duty. Therefore they were driven to the conclusion that the differential duty was, in fact, a protective proposal. It was quite true that the Chancellor of the Exchequer disavowed any intention of advocating or illustrating protectionist principles when he first introduced the differential duty, but the proof of the pudding was in the eating. It was perfectly well known that large firms of tobacco manufacturers on this side of the water had already made arrangements to cease to carry out the operation of stemming in the United States. It might be considered a good thing from the point of view of employment in this country that colored ladies in America should no longer strip the tobacco plant, but they had no security that, even if this were the case, there would be an increase of employment here. He was given to understand that manufacturers would be able by means of their machinery to utilise stein and stalk for the purpose of tobacco manufacture. Therefore the Chancellor of the Exchequer, having displaced the labour of coloured persons in America, would have the melancholy satisfaction of knowing that the only increase in labour in this country would fall upon the smoker, who instead of smoking leaf would have to go to the additional trouble of smoking stems and stalk as well. If protection was to be tried he would prefer to see it tried on a large scale. Personally he did not want to see it tried at all. He was an entire opponent of a protective system for the country in any shape or form. But let them not have peddling experiments, let them not have what was called "the thin end of the wedge" introduced in a popular free-trade Budget. If the controversy was to be fought out on some practical and complete scheme of protection in this country, he preferred to have to face a large and concrete effort emanating from that home of protection, Birmingham, where it was understood the forges were already at work. He was glad that the Chancellor of the Exchequer had seen his way to meet the case of those unfortunate individuals who held stocks of strips in bond in this country. He regretted that the tax had been introduced, because he thought it was entirely needless. The extra threepence now proposed would merely prevent the import of strips into this country, and possibly would displace labour in America without really leading to an increase of labour in this country. Then from the point of view of revenue, which the Chancellor of the Exchequer said at the beginning of the session was his main object as Chancellor, he ventured to predict that Mr. Chamberlain would have reason to remember before many years had passed the warning given by the late Chancellor of the Exchequer who solemnly cautioned him as to the danger of meddling with such a delicate subject as the tobacco duties. He earnestly trusted that even yet the Chancellor of the Exchequer might reconsider this proposal. It was evident that the revenue he anticipated from it was a diminishing quantity. The more it was examined the less fruitful it would be found. It introduced an element of discredit and doubt into the fiscal policy of the Government as agreed upon during the present Parliament, and if it were swept away it would leave them more free to deal in future Parliaments with larger controversies, about which so much was said at the present time.


said he must traverse all the plausible arguments of the right hon. Gentleman the Chancellor of the Exchequer and endeavour to show the Committee that the right hon. Gentle- man had not the slightest ground for his. proposal. In his opinion the right hon. Gentleman ought either to give back the whole amount on the uncleared stocks in bond or nothing at all. It was quite clear that if he did not give the full rebate the right hon. Gentleman would only take out of the pockets of one class money he was not justified in taking. It was nothing more nor less than robbery. Before this proposal the right hon. Gentleman was able to say, "I have not injured any one," but that was not so now. In his opinion there was no real fiscal reason for this tax in regard to what the right hon. Gentleman had called the fiscal gap between the raw material and the manufactured article. Such a gap was non-existent because there was no system in this country whereby the duty was so arranged as to accord with the amount of manufacture given to the raw material. The right hon. Gentleman had founded his case for the differentiation of these duties upon the practice of other countries, but in France, Germany, and Austria no such differentiation was made; in the case of Belgium the excess of duty was nine-tenths of a penny more, and in Holland it was one-twenty-eighth of a penny. If that could be done in Holland the right hon. Gentleman could have arrived at the result desired equally well by the imposition of an extra penny where he had imposed 3d. A penny at the outside would have covered all the cost of the manipulation of the tobacco. But putting aside the question of the threepence, it would afterwards be practically within the free choice of the importing merchant and manufacturer to decide whether he would buy stripped or unstripped tobacco. And that was the whole position, beyond which the right hon. Gentleman did not wish to go. He had said that the drawback would adjust itself to the various qualities of tobacco, the proportion varying from 18 to 32 per cent. After the Report of the Departmental Committee and the evidence of the witnesses—who, without exception, when asked the question; said they would be satisfied if the drawback was brought up to the proper amount—he thought the Chancellor of the Exchequer had no argument in regard to the question of disability. If he was going to support the tax he must do so on different grounds. He was aware that it was quite within the power of the right hon. Gentlelman by continuing the tax to create greater employnment. This proposal practically gave a differential duty in favour of unstripped tobacco, it followed that this would not only bring a larger amount of stripped stalks into the country but that althought we should give more employment we should get worse tobacco.

Coming next to the primary object of the right hon. Gentleman's proposal, that of revenue—a laudable object, especially with the present expensive Government—the right hon. Gentleman had to prove that this gratuitous change, and what they regarded as a protective change, would produce a considerable and permanent source of revenue. If the Chancellor of the Exchequer had proposed a uniform addition of threepence to all raw tobacco there would have been no particuhr objection. He would have had a permanent £1,000,000 a year, whereas now he would get only £500,000 and give away £250,000, and in subsequent years at the outside he would get £100,000 to £150,000. Putting it roughly, the additional threepence duty on raw tobacco brought in about £1,000,000. That would be a revenue duty. It was clear from the figures already given by the right hon. Gentleman that this was not a revenue tax for the reason that if it had been instead of £500,000 he would have estimated it at £750,000. If it had been a revenue tax without any ulterior object—as any tax ought to be—threepence on the whole of the raw material would have produced about £1,000,000, as the percentage at the present moment of strped tobacco was about 70 per cent. The Chancellor of the Exchequer had this been a revenue tax might have anticipated £750,000 instead of £500,000. Even on the basis of the gross amount of his tax it was not in the least likely that the Chancellor of the Exchequer would get the £100,000 that he had estimated. Before the Budget was introduced the proportion of imported leaf tobacco was something like 23 per cent. and stripped tobacco 77 per cent. Last April those figures were almost reversed; the imported stripped tobacco was 35 per cent., the leaf was 65 per cent. In May the leaf imports had risen to 71 per cent. whilst the stripped had fallen to 29 per cent. If the Chancellor of the Exchequer estimated that he would get £500,000 on the 70 per cent. proportion of stripped tobacco, which then came in with certain deductions, he could not possibly have anticipated the enormous fall that had been caused by the tax. It was clear that if threepence would produce £1,000,000 on the whole of raw tobacco imported, and there was only going to be 39 per cent. of stripped tobacco, the gross amount that he could expect would only be £300,000 and not £500,000. There was the further fact that in the last few weeks the falling off had been still more remarkable. Whilst last year in the same month the number of imported casks of stripped tobacco to London, Liverpool, and Glasgow was 2,460, this last month it was only 344 casks.


You omit Bristol.


said it was admitted that there had also been a decrease with regard to Bristol, but the figures he had given were enough for his purpose. If that falling off were to continue there would be no revenue whatever from this tax in the coming year, as the gross amount would be only £250,000, and the right hon. Gentleman was going to give away the whole amount. This tax would damage the position of the tobacco trade and yet at the end of the year it would yield no revenue at all. The right hon. Gentleman presumably desired to keep stripped tobacco out of the country in order to give additional employment to home workers. If he was successful in that endeavour he would get no revenue. The only way to get a revenue would be for his plan to be unsuccessful, and if that was a good free-trade fiscal system he (Mr. Buxton) could not understand it. As a rule a trade cried out before it was hurt, and as a rule it managed to throw off the duties imposed upon it on the consumer. The Chancellor of the Exchequer was bound to admit that this could not be done in the present instance, and he proposed to give them a rebate of £250,000, whereas in justice he ought to give them £500,000. What was the position of these unfortunate importers? The money was not going into the pockets of the taxpayers. it was only passing from the pockets of one set of taxpayers into those of another set. There would be something to be said in favour of this proposal if the tax would form a good permanent basis which could be used in the future, but it would only injure one section of the trade to give a benefit to another section, and no revenue would be received from it.

Then looking at it from the point of view of a protective duty. The Chancellor of the Exchequer was very indignant at their allegation that this was a preferential or protective duty. The right hon. Gentleman had had a long correspondence with the Liverpool Chamber of Commerce in regard to this matter. He (Mr. Buxton) was not very competent to deal with the complicated figures that had been stated, but at all events, he thought they were entitled to, say with reference to those figures that the Report of the right hon. Gentleman's own Departmental Committee showed the fallacy of his argument, and that the whole of the trade was entirely against him. The speech of the right hon. Baronet the other night absolutely knocked out the whole case for the proposal of the right hon. Gentleman. If it were true, as the right hon. Gentleman had argued, that stripped tobacco had a benefit of from 2½d to 4d. per pound at present, he could hardly believe that there would be any leaf whatever in the country. But whatever basis was taken, any existing disability would be met by the drawback. An infinitesimal amount of revenue would be derived from the tax, and he strongly objected to a proposal which upset and, to a large extent, destroyed a flourishing branch of industry for the miserable return which the right hon. Gentleman would obtain in the present case.


said the contention of the hon. Gentleman was that if there was a proper and adequate drawback there was no reason whatever for a differential rate of duty as between the different stages of manufacture. He ventured to say, however, that the two questions, the drawback and the difference of duty, were quite distinct. The drawback was given in respect of tobacco exported; but for the purposes of that discussion it was more important to note that it was given in respect of offals returned to the Customs in order that the duty paid upon them might be paid back. The drawback had been confessedly inadequate hitherto, and they were making it much more adequate; but he did not think they should in cases even now return to the manufacturer the full amount of duty, because if they were to make their scale high enough to do that it would be too high in other cases, and people would set to work to import those tobaccos out of which they could make a profit on the rebate. They were therefore obliged to keep the rebate at a moderate but, he thought, a reasonable figure. Now came the question whether it was right to have a differentiation between raw tobacco and tobacco which had undergone a process of manufacture. If there were no difference they would protect not the manufacturer here, but his competitors abroad. They would, in fact, penalise the home manufacturer and make it impossible for him to compete with the manufacturer abroad. As to the principles, therefore, they were agreed; it was only a question of degree.

The process of manufacture took time. Before it could be carried through in this country the manufacturer must already have paid duty. He would be out of pocket with regard to the interest on his duty, not merely for the time that he would have been if he had manufactured straight from the strips, but for the additional time required to convert the whole leaf into stripped tobacco, and he would be out of pocket with regard to the interest on the money he had paid in duty on stalks and offals for a still longer time until he could recover that duty from the Customs. Then they came further to the question of moisture and sand. Hon. Gentlemen opposite were extremely suspicious of statistics which he gave them, and he did not know that anything he was likely to say would carry conviction to minds which did not desire to be convinced, but he would say that the figures upon which he had gone were the result of samples fairly taken, not for the purpose of this particular tax, by the Customs authorities and analysed in the Government laboratory. Samples had been quoted from which very different results were obtained. But those samples were of a particular class of tobacco not characteristic of the tobacco which generally came into the country. It was extremely improbable that fair samples of stripping would contain more sand than whole leaf, because the process of striping would shake loose a certain amount of the sand contained in the whole leaf. They had in this matter to make allowance for the loss of sand and for the loss of moisture in regard to the great bulk of the tobacco imported. As regarded sand, hon. Members thought that his figures were too high, and they rightly attributed great weight to what his hon. friend the Member for North Bristol said. But he thought his hon. Friend would accept the evidence of the Imperial Tobacco Company before the Drawback Committee, in which it was shown that the percentage of sand in Virginia leaf was no less than 6.63 and in strips 3£.56.


You have put it at 2.08.


said the figures he had given were the result of experiments made by the, Drawback Committee themselves. But he differentiated altogether the drawback question from the rate of difference between strips and the whole leaf. The fact that they had made the drawbacks fair was no reason why the difference between the leaf and the strip should not be marked and that the process of manufacture should not be marked, just as the difference between the fully manufactured tobaccos and the raw leaf from which they were made was marked. His contention was that hitherto strips had received a preference and whole leaf had been penalised. He thought from the first that, if they treated both fairly, the natural result would be that a greater quantity of the whole leaf would come in and a smaller quantity of strips. He never ventured to say exactly what the proportions would be, but it was quite obvious that if they removed the disabilities under which the whole leaf had suffered it would be more able to compete in this market with strips than it had been in the past.


said he was dealing with the question of revenue. The effect of the additional duty would be to destroy the importation of strips, and hence no revenue would be derived from the tax.


said he had refrained from forecasting what the ultimate importation of either strips or leaf would be, and had said that the additional revenue must be dependent on the extent to which strips held their own. He himself believed that, though they would cease to enjoy the unnatural favour they had enjoyed in the past, there would still be room for a considerable importation of strips. The concession he had proposed to make in reference to strips in bond at the date of the Budget statement had been received in a spirit that was not encouraging, and that certainly would not tempt another Chancellor of the Exchequer to try and meet the representations made to him with fairness or even with generosity. The hon. Gentleman who spoke last said that all he had done by making this concession was to show that he was wrong, and that he ought to give up the whole duty. That, the hon. Gentleman said, would be following the precedent of the coal tax, which excluded pre-Budget contracts for the sale of coal. He thought the hon. Gentleman hardly carried in his mind what the coal tax precedent was. It relieved of the duty a man who had contracted to sell coal to the foreigner before the date of the Budget and who had covered that contract by actually purchasing the coal. That was because in the case of the foreigner he could not, with regard to a pre-Budget contract, add the price of the tax to the contract price. That was in order to put him in the same position in which any trader, who had a contract to sell a dutiable article, was here when the duty was raised. He was able to add that duty to the price in such a case. It was difficult, if it was not impossible, to adjust a duty of this kind so that it should he in all cases the exact additional dutiable cost of the article and nothing more. It must be a rough-and-ready adjustment. He had desired to meet those Gentlemen who felt that they had a great grievance and whose friends in the House apparently thought that they had a great grievance. He had not tried to discover exactly to what extent they might be unable to recover the tax or to limit the relief to the exact amount by which they would be the losers. He had attempted to deal with them fairly and generously, so that they might not have a sense of injustice left in their minds, and he hoped they would receive the concession he had offered in the spirit in which it was made. He did not think the attempt to put him on the horns of a dilemma was in the interests of those on whose behalf the hon. Gentleman was speaking. After all, the proportion which the tax would bear, when it was in full force, to the value of strips was less than the proportion which the tax bore to the value of the whole leaf. The Liverpool Chamber of Commerce informed him that the value of a pound of leaf might be taken at 5d. On that the duty would be 3s. The value of a pound of strips they put at 6½d. On that the duty he proposed was 3s. 3d.—3s. 1½d. as regarded stocks already in bond. It would be seen, therefore, that, while the duty on the whole leaf was 720 per cent. greater than its value, the value of the duty on the new strips was not more than 620 per cent. He did not think that that bore out the contention that he had put on an unduly high duty in proportion to the value of the article, nor did it suggest to him the ruin which had been predicted. He ventured to hope that, whatever their differences, the Committee would facilitate further progress and enable them to deal a little more rapidly than they had done with the consideration of this Bill.

* MR. REA (Gloucester)

said the Chancellor of of the Exchequer, while possibly making the tax less oppressive, had made it more illogical and more protective by making it less productive. The controversy as to its merits stood where, it did before the rebate was announced, and that controversy was doubtless a difficult one for the Committee to judge of. The arguments depended upon abstruse arithmetical calculations which were difficult to follow, and upon delicate experiments which the Committee had not the means of testing. The right hon. Gentleman had no doubt made two or three dialectical points in his argument with the trade, but they were extremely small when compared with the general principle of the tax. The points which the Committee could not judge were vital, and upon them rested the decision whether or not the tax was protective, whether or not individual firms were about to be ruined, and whether or not the tax would be abortive as a productive tax in future. But though the Committee could not judge on the technical argument involved in this matter, they could judge what the effect of the tax on the trade had been, and to his mind that was a convincing argument. From 20th April this trade had ceased—it had been killed. No strips had been taken out of bond except small quantities, which had gone mostly to the Continent and to America. This kind of taxation rather reminded one of the mixture of dentistry and taxation that was practised upon the Jews in the time of King John. What was the unfortunate owner of stocks of tobacco to do? The best thing appeared to be for him to take his stripped tobacco out of bond, and to ship it to some country where they had not yet learned to discriminate between stripped and unstripped tobacco. There would be a temporary revenue from the imposition of this tax, but no permanent addition to the Revenue. There would, however, be a great disturbance of trade, and an enormous loss to individuals. There might also be the disappearance of a great part of our two years selected stocks of tobacco. If that happened some Members of this House would ask what they were to smoke for the next two years.

It was said that there would be one net gain from this tax, and that was the rise of a greatBritish industry. He had his own idea as to the wisdom of importing parasitic and exotic industries at the cost of the taxpayers. What kind of industry was going to be imported through the operation of this tax? One of the very lowest classes of industry, below that practised by any of our pauper aliens. He was told that the stripping of tobacco was at present done by old black women and small black children, who got about ¼d. per lb. for it on an average. The policy of the Government with reference to coloured labour was really wonderful. In one direction they were importing the yellow man to help the black man to do the work which the white man would not condescend to do; on the other hand, they were taking over an industry which was too low for the black man, who left it to the old women and children, and giving it to the white man. These were not the first fruits—the Sugar Convention was the first fruits—but the second fruits of the new economics. The proposal involved great economic injustice, and was a fiscal futility.

MR. LOUGH (Islington, W.)

said the Chancellor of the Exchequer seemed to complain that the offer he had made was ungratefully received by the Committee. That was an unfair complaint to make. They were not there to discuss what consideration should be given to the unfortunate merchants in Liverpool. They were engaged in the consideration of the question whether they would have this tax as a whole. He hoped the right hon. Gentleman would not hurry the Committee to a conclusion on that question. The right hon. Gentleman told them three months ago that there was no hurry and that the merchants of Liverpool were not suffering at all.


I said exactly the opposite.


said the right hon. Gentleman explained that there was no urgency for bringing forward the Bill. He did not then make any case for relieving the pangs of the people on whose behalf he now appealed to the Committee. The Amendment as a whole raised the question as to this new tax and he wished to ask two questions in regard to the matter. First of all was it of such a protective character that the House should refuse to touch it? He knew that in discussing this question they were told that all tobacco duties in this country were protective; to some extent that was true, but they were not so protective as this tax would leave them. The defence of the Chancellor of the Exchequer was remarkable, for he seemed almost to have abandoned the idea that this was a tax to produce revenue. The right hon. Gentleman said he wished to mark a stage in the manufacture of tobacco, and he had done so by a piece of pore and undisguised protection. He did not think this was the time when the Committee should allow a proposal to pass which was commended on such grounds. The hon. Member for South Shields had said that tax was suggested by Mr. Gallaher, the tobacco manufacturer. He did not find that that was absolutely proved by Mr. Gallaher's evidence, but he gave some very remarkable evidence. In Question 2121 he used these words— Lord Goschen said "the people of this country were all for free trade…. I said the sooner we drop the idea of free trade the better. (2147) They might give employment… which is just the very same thing that the Chamberlain Commission is proposing to do. (2148) (Chairman.) Your arguments all tell in favour of encouraging the importation of tobacco in the leaf in order that the stripping may be done in this country? (Mr. Gallaher.) Yes. That evidence was given before the Committee by Mr. Gallaher, and when they were considering this proposal they should remember in the first place that it had a purely protective origin. It had been defended in this House by the Chancellor of the Exchequer as a protective tax. If the Committee's Report was carefully read, hon. Members would see there ww3no other reason for the tax. It was their duty to recall the simple free-trade arguments against the tax. It was assumed that if it did not do any good it would not do the country any great injury. He believed it would tend to diminish exports. It would be far better to allow this industry to be carried on by the old negro women who were at present engaged in it. Let our merchants import tobacco from where they pleased. The Committee ought to have a little more regard for the argument as to the revenue side of the question. What were they there for? They were there simply to get revenue. The hope of the tax producing revenue was gone already. The Chancellor of the Exchequer did not accept the argument that no more stripped tobacco would be brought in. If the right hon. Gentleman maintained the tax, it was as sure as day that no more of it would be brought in. The Chancellor of the Exchequer had asked the Committee to agree to the tax on the ground that there was an inequality between whole-leaf and stripped tobacco, and that the trade in whole-leaf tobacco was unfairly handicapped. The argument against that was that for fifty years there had been a great importation of whole-leaf tobacco into this country. During that time the duties had been the same on both classes, and they did not find that whole-leaf had been banished from the country. The Chancellor of the Exchequer told them that the difference between the two was 3d. a pound. That was 50 per cent. of the value. If it was true that the whole-leaf trade had been labouring under this disadvantage there would have been evidence of it in the state of imports. The truth was that every year 16,000 hogsheads of this whole-leaf tobacco was imported. A duty of 3d. a pound on that quantity would give something like £200,000 a year which our foolish silly merchants and manufacturers had been throwing away. This showed that the origin of this tax was something quite new for the Committee of this House to consider. The impost was not required for any purpose of equalising or stimulating the trade; there had been a large trade done in whole-leaf tobacco up to this time, and that trade could very well be left alone. It was a purely protective tax, and as such he did not think the Committee should have anything to do with it.


recognized that the Chancellor of the Exchequer had endeavoured, from his point of view, to meet the case which had been presented to him on a former occasion in stating the concessions the right hon. Gentleman proposed to make to merchants, and the rebate proposed to be given to manufacturers with stocks. At the same time the right hon. Gentleman was still going to place a heavy fine on the tobacco merchants—not so heavy as he proposed originally — a fine, however, which, instead of being £300,000 or £400,000, would now be £200,000. He could easily understand the position of the Chancellor of the Exchequer, who wanted to get money; but was it a right thing for the right hon. Gentleman to try to get money in this way? Would it not be even safer for the right hon. Gentleman to say that he hoped the general revenue of the country would turn out better than his expectation, and that he would forego an additional £200,000, rather than introduce a measure which would impose a fine on a really deserving body of men to whom the country was to a very considerable extent under obligation? They were men who, by their enterprise, had imported three or four years stock into this country without which the manufacturers would not have been able to carry on their business, and without whose enterprise the Government could not have collected a revenue of £12,000,000 a year. It was a very serious matter for the Government to interfere with that trade. He, himself, was placed in a very difficult position, for he was there as a supporter of the Government; but he could not see this act of injustice done to these men who really did not deserve it. Of course he would rather that they were fined £150,000 than £300,000; but he did not like that they should be fined even £150,000. He was very sorry that his right hon. friend had not seen his way to do away with this extra taxation altogether. His right hon friend had upset the tobacco trade to a very considerable extent. All the prices had had to be readjusted as between retailers and the manufacturers, and the trade in stripped tobacco had become absolutely stagnant. The merchants were at their wits' end. They had blank ruin staring them in the face. He did not suppose that all of them would go into the Bankruptcy Court, for some of them were rich men. But if the Chancellor of the Exchequer had not made the concession he had done now, several of the merchants would have found their way into the Bankruptcy Court. That was a thing which, he was sure, his right hon. friend would thoroughly deprecate. He appealed to his right hon. friend to see whether he could not find a way to abstain from altering these tobacco duties altogether. He knew that that might involve a loss of £250,000 to the revenue; but, after all, that would not be a very heavy loss, while his right hon. friend would avoid placing a loss of from £150,000 to £200,000 on innocent people who had served their country exceedingly well, and who, through their trade, provided the country with a revenue of £12,000,000 a year. To judge from the expressions of opinion on both sides of the House, he was sure that the Chancellor of the Exchequer would be justified in not carrying out his proposal in regard to the alteration of the duties on tobacco.

MR. RUNCIMAN (Dewsbury)

said that the Chancellor of the Exchequer had told the Committee that everyone in the trade had suffered from the uncertainty caused by the proposal contained in the Amendment to strike out the extra duty of 3d. per lb. on stripped tobacco. That was, however, a very strong condemnation of the proposal of the Government. It was not the fault of the Opposition that the Budget had not been pushed on; but of those who were responsible for arranging the business of the House. The whole arrangement was made with the object of pushing the Licensing Bill forward. So far as he could gather from the Report of the Departmental Committee, the grievances in the tobacco trade could have been amply dealt with by drawbacks. No grievance had existed in that respect, from the days of Mr. Gladstone, which could not have been met by drawbacks. He gathered from page 10 of the Report of the Departmental Committee that they were of opinion that had the drawbacks been adjusted with this object in view, it would have cost the Chancellor of the Exchequer only £7,000 a year. The Chancellor of the Exchequer, having to face this position, set himself to devise some way of counterbalancing this loss. But the effect of the new duties showed that the right hon. Gentleman could have little understood the circumstances of the trade with which he was dealing. The men engaged in the importing business in stripped tobacco might not only lose £150,000 to £200,000, but the whole of their business, built up by many years of effort, might be wiped out by a stroke of the pen of the Chancellor of the Exchequer. To sum up the grievances, the tax damaged the importers; it caused great confusion and uncertainty; and it was not worth the trouble it caused.

What were its effects on the financial arrangements of the country? It had been shown that had the duty been placed on the whole of the tobacco imported the tax would have yielded considerably over £1,000,000. The Chancellor the Exchequer had now made the sacrifice of £250,000 on the year's revenue, so that the surplus he had anticipated was almost wiped out. He did not want to trouble the House with any remarks on the general financial situation. It was serious enough, he knew, but let this be taken as an example of what the Chancellor of the Exchequer would experience if ever he had to deal with a protective Budget. He had found that when he came to deal with drawbacks, which were essential to protection, he would have a battle of wits with those engaged in the trade, and he thought that those who studied the papers would find that he would come off second best. Such a battle of wits would not always be to the advantage of the country. In the United States, when an industry was fighting for its life, it frequently happened that its leaders were ingenious enough to get to the windward of the Government officials, however great their devotion to the public interest. The Chancellor of the Exchequer was hardly likely to find himself better equipped in the details of a business than those who had studied it all their lives. He hoped the country would take notice of the fact that in the first example of this kind of strife the Chancellor of the Exchequer had got distinctly the worst of it and had made a hopeless bungle of it.


said he ventured to point out that the Chancellor of the Exchequer had given no answer to the point he had endeavoured to raise as to the justice of the tax. If it was unjust to tax the importer or to confiscate the property of the importer of stripped tobacco to the extent of £15 per hogshead, why was it just to confiscate it to the extent of £7 10s., which was what the Chancellor of the Exchequer would do under his amended proposal? When the tobacco was rendered unsaleable the right hon. Gentleman proposed to bear one half of the loss. If it was just to take off one half, justice demanded that the other half should be taken off. The tax would only be raised on stocks available for taxation; the trade in strips would be killed, and the only good purpose served by the debate would have been to show the preposterous character of the Chancellor of the Exchequer's proposals.

Question put.

The Committee divided:—Ayes, 223; Noes, 173. (Division List No. 242.)

Agg-Gardner, James Tynte Fisher, William Hayes Lucas,Reginald J.(Portsmouth)
Anson, Sir William Reynell Fison, Frederick William Lyttelton, Rt. Hon. Alfred
Arnold-Forster, Rt. Hn. Hugh O. FitzGerald, Sir Robert Penrose- Macdona, John Cumming
Arrol, Sir William Fitzroy, Hn. Edward Algernon Maconochie, A. W.
Atkinson, Rt. Hon. John Flannery, Sir Fortescue M'Iver, Sir Lewis (Edinburgh,W.
Bagot, Capt. Josceline FitzRoy Flower, Sir Ernest Martin, Richard Biddulph
Bailey, James (Walworth) Forster, Henry William Massey-Main waving, Hn. W. F.
Bain, Colonel James Robert Galloway, William Johnson Maxwell, W.J.H.(Dumfriesshire
Baird, John George Alexander Gardner, Ernest Melville, Beresford Valentine
Balcarres, Lord Garfit, William Mildmay, Francis Bingham
Baldwin, Alfred Gibbs, Min. A. G. H. Milner, Rt. Hn. Sir Frederick G.
Balfour, Rt. Hn. A. J.(Manch'r) Gordon, Hn. J. E. (Elgin & Nairn Milvain, Thomas
Balfour, Rt. Hn. Gerald W.(Leeds Gore, Hon. S. F. Ormsby- Mitchell, Edw.(Fermanagh, N.)
Balfour, Kenneth R. (Christch.) Gorst, Rt. Sir John Eldon Montagu, G. (Huntingdon)
Banbury, Sir Frederick George Graham, Henry Robert Montagu, Hn. J. Scott (Hants.)
Barry, Sir Francis T. (Windsor) Greene, Sir E.W(BurySEdm'nds Morgan, David J.(Walthainstow
Bartley, Sir George C. T. Greene, W. Raymond-(Cambs.) Morrison, James Archibald
Bathurst, Hon. Allen Benjamin Gretton, John Morton, Arthur H. Aylmer
Bhownaggree, Sir M. M. Greville, Hon. Ronald Mount, William Arthur
Bignold, Sir Arthur Gunter, Sir Robert Mowbray, Sir Robert Gray C.
Bigwood, James Hall, Edward Marshall Muntz, Sir Philip A.
Bill, Charles Halsey, Rt. Hon. Thomas F. Murray, Rt. Ho. A. Graham(Bute
Bingham, Lord Hambro, Charles Eric Murray, Col. Wyndham (Bath)
Blundell, Colonel Henry Hamilton, Rt Hn Lord G.(Midd'x Myers, William Henry
Bond, Edward Hardy, Laurence (Kent, Ashford Newdegate, Francis A. N.
Bousfield, William Robert Hare, Thomas Leigh Nicholson, William Graham
Brassey, Albert Harris, F. Leverton (Tynem'th O'Niell, Hon. Robert Torrens
Brodrick, Rt. Hon. St. John Haslett, Sir James Horner Palmer, Walter (Salisbury)
Bull, William James Hay, Hon. Claude George Parker, Sir Gilbert
Butcher, John George Heath, Arthur Howard (Hanley Pease, Herbt. Pike (Darlington)
Campbell, Rt. Hn. J.A.(Glasgow) Heath, James (Staffords.,N. W.) Peel, Hn. Wm. Robert Wellesley
Campbell, J.H.M.(Dublin Univ.) Helder, Augustus Percy, Earl
Carlile, William Walter Henderson, Sir A. (Stafford, W.) Pierpoint, Robert
Carson, Rt. Hn. Sir Edw. H. Hickman, Sir Alfred Platt-Higgins, Frederick
Cautley, Henry Strother Hoare, Sir Samuel Plummer, Sir Walter R.
Cavendish, V.C.W. (Derbyshire) Hobhouse, Rt. Hn. H.(Somers't E Pretyman, Ernest George
Cayzer, Sir Charles William Hope, J.F(Sheffield, Brightside Purvis, Robert
Chamberlain, Rt. Hn J.A.(Worc. Horner, Frederick William Pym, C. Guy
Chapman, Edward Houston, Robert Paterson Ratcliff, R. F.
Charrington, Spencer Howard, J. (Kent, Faversham) Richards, Henry Charles
Clive, Captain Percy A. Howard, J. (Midd., Tottenham) Ridley, Hn. M. W.(Stalybridge)
Coates, Edward Feetham Hozier, Hon. James Henry Cecil Ridley, S. Forde (Bethnal Green)
Cochrane, Hon. Thos. H.A.E. Hudson, George Bickersteth Roberts, Samuel (Sheffield)
Coddington, Sir William Hunt, Rowland Robertson, Herbert (Hackney)
Coghill, Douglas Harry Jebb, Sir Richard Claverhouse Rollit, Sir Albert Kaye
Colston, Chas. Edw. H. Athole Jeffreys, Rt. Hon. Arthur Fred Round, Rt. Hon. James
Cook, Sir Frederick Lucas Johnstone, Heywood (Sussex) Royds, Clement Molyneux
Craig, Charles Curtis(Antrim,S. Kenyon, Hon. Geo. T.(Denbigh) Sackville, Col. S. G. Stopford-
Cripps, Charles Alfred Kerr, John Samuel, Sir Harry S.(Limehouse)
Cross, Herb. Shepherd (Bolton) King, Sir Henry Seymour Sassoon, Sir Edward Albert
Crossley, Rt. Hon. Sir Savile Laurie, Lieut.-General Scott, Sir S. (Marylebone, W.)
Cubitt, Hon. Henry Law, Andrew Bonar (Glasgow) Seton-Karr, Sir Henry
Dalkeith, Earl of Lawrence, Sir Joseph (Monm'th Sharpe, William Edward T.
Davenport, William Bromley- Lawson, J. Grant (Yorks., N.R.) Simeon, Sir Barrington
Dickinson, Robert Edmond Lee, Arthur H.(Hants. Fareham) Sinclair, Louis (Romford)
Dickson, Charles Scott Lees, Sir Elliott (Birkenhead) Sloan, Thomas Henry
Dorington, Rt. Hn. Sir John E. Legge, Col. Hon. Heneage Smith, Abel H.(Hertford, East)
Douglas, Rt. Hon. A. Akers- Leveson-Gower, Frederick, N.S. Smith, James Parker(Lanarks.)
Duke, Henry Edward Llewellyn, Evan Henry Smith, Hon. W. F. D. (Strand)
Durning-Lawrence, Sir Edwin Lockwood, Lieut.-Col. A. R. Stanley, Edward Jas.(Somerset)
Dyke, Rt. Hon. Sir William Hart Loder, Gerald Walter Erskine Stanley, Rt. Hn. Lord (Lancs.)
Egerton, Hon. A. de Tatton Long, Col. Charles W.(Evesham) Stewart, Sir Mark J. M'Taggart
Faber, Edmund B. (Hants, W.) Long, Rt. Hn. Walter(Bristol, S.) Stone, Sir Benjamin
Fergusson, Rt. Hn. Sir j.(Manc'r Lonsdale, John Brownlee Stroyan, John
Finch, Rt. Hon. George H. Lowe, Francis William Talbot, Lord E. (Chichester)
Finlay, Sir Robert Bannatyne Lowther, C. (Cumb., Eskdale) Thorburn, Sir Walter
Firbank, Sir Joseph Thomas Loyd, Archie Kirkman Thornton, Percy M.
Tollemache, Henry James Welby,Lt.-Col.A.C.E.(Taunton Wolff, Gustav Wilhelm
Tomlinson, Sir Wm. Edw. M. Wharton, Rt. Hon. John Lloyd Wortley, Rt. Hon. C. B. Stuart-
Tritton, Charles Ernest Whiteley,H. (Ashton und. Lyne) Wyndham, Rt. Hon. George
Tuff, Charles Whitmore, Charles Algernon Wyndham-Quin, Col. W. H.
Tufnell, Lieut.-Col. Edward Williams, Colonel R. (Dorset)
Valentia, Viscount Willoughby de Eresby, Lord TELLERS FOR THE AYES—Sir Alexander Acland-Hood and Mr. Ailwyn Fellowes.
Vincent,Col.SirC.E.H.(Sheffield Wilson, A. Stanley(York, E.R.)
Warde, Colonel C. E. Wilson, John (Glasgow)
Webb, Colonel William George Wilson-Todd, Sir W.H.(Yorks.)
Abraham,William (Cork, N.E.) Fuller, J. M. F. O'Connor,James(Wicklow,W.)
Abraham, William (Rhondda) Gordon, Sir W. Brampton O'Dowd, John
Ainsworth, John Stirling Harcourt, Lewis V.(Rossendale) O'Kelly,James(Roscommon,N
Allen, Charles P. Harcourt,Rt.HnSirW(Monm'th O'Malley, William
Ambrose, Robert Hayden, John Patrick O'Shaughnessy, P. J.
Asher, Alexander Hayter, Rt. Hon. Sir Arthur D. Parrott, William
Asquith, Rt. Hn. Herbert Henry Hemphill, Rt. Hon. Charles H. Partington, Oswald
Barlow, John Emmott Higham, John Sharpe Paulton, James Mellor
Barran, Rowland Hirst Hobhouse, C. E. H. (Bristol, E.) Pease, J. A. (Saffron Walden)
Beaumont, Wentworth C.B. Holland, Sir William Henry Philipps, John Wynford
Bell, Richard Horniman, Frederick John Pirie, Duncan V.
Benn, John Williams Hutchinson, Dr. Charles Fredk. Power, Patrick Joseph
Boland, John Hutton, Alfred E. (Morley) Price, Robert John
Bolton, Thomas Dolling Jacoby, James Alfred Rea, Russell
Bowles, T.Gibson(King's Lynn) Joicey, Sir James Reckitt, Harold James
Broadhurst, Henry Jones, David Brynmor(Swansea Redmond, John E. (Waterford)
Brown, George M. (Edinburgh) Jones, William (Carnarvonshire) Rickett, J. Compton
Brunner, Sir John Tomlinson Joyce, Michael Roberts, John Bryn (Eifion)
Bryce, Rt. Hon. James Kearley, Hudson E. Robertson, Edmund (Dundee)
Buchanan, Thomas Ryburn Kemp, Lieut.-Colonel George Robson, William Snowdon
Burke, E. Haviland- Kennedy, VincentP.(Cavan,W.) Runciman, Walter
Burt, Thomas Kilbride,Denis Russell, T. W.
Buxton, Sydney Charles Kitson, Sir James Samuel, Herbert L. (Cleveland)
Caldwell, James Labouchere, Henry Schwann, Charles E.
Cameron, Robert Lambert, George Shaw, Charles Edw. (Stafford)
Campbell, John (Armagh, S.) Langley, Batty Shaw, Thomas (Hawiek B.)
Campbell-Bannerman, Sir H. Law, Hugh Alex. (Donegal, W.) Sheehan, Daniel Daniel
Causton, Richard Knight Lawson, Sir Wilfrid (Cornwall) Sheehy, David
Cawley, Frederick Layland-Barratt, Francis Shipman, Dr. John G.
Channing, Francis Allston Leamy, Edmund Smith, Samuel (Flint)
Churchill, Winston Spencer Leese,Sir Joseph F. (Accrington) Soames, Arthur Wellesley
Clancy, John Joseph Leigh, Sir Joseph Soares, Ernest J.
Condon, Thomas Joseph Lewis, John Herbert Stanhope, Hon. Philip James
Craig, Robert Hunter (Lanark) Lloyd-George, David Strachey, Sir Edward
Cremer, William Randal Lough, Thomas Sullivan, Donal
Crombie, John William Lundon, W. Tennant, Harold John
Crooks, William Lyell, Charles Henry Thomas, Sir A. (Glamorgan, E.)
Cullinan, J. Macnamara, Dr. Thomas J. Thomas,DavidAlfred (Merthyr)
Davies, Alfred (Carmarthen) MacNeill, John Gordon Swift Thomson, F. W. (York, W. R.)
Davies, M. Vaughan-(Cardigan) MacVeagh, Jeremiah Tomkinson, James
Delany, William M'Hugh, Patrick A. Toulmin, George
Devlin,CharlesRainsay(Galway M'Kean, John Trevelyan, Charles Philips
Devlin, Joseph (Kilkenny, N.) M'Kenna, Reginald Tully, Jasper
Dilke, Rt. Hon. Sir Charles Mappin, Sir Frederick Thorpe Wallace, Robert
Dobbie, Joseph Markham, Arthur Basil Walton, Joseph (Barnsley)
Donelan, Captain A. Mooney, John J. Warner, Thomas Courtenay T.
Doogan, P. C. Morgan, J. Lloyd (Carmarthen Wason, Eugene (Clackmannan)
Dunn, Sir William Morley, Charles (Breconshire) Weir, James Galloway
Edwards, Frank Morley, Rt. fin. John (Montrose) White, Luke (York, E. R.)
Elibank, Master of Murphy, John Whiteley,George (York, W. R.)
Ellice,Capt.E.C(SAndrw'sBghs Nannetti, Joseph P. Whittaker, Thomas Palmer
Esmonde, Sir Thomas Newnes, Sir George Wills, Sir Frederick
Farquharson, Dr. Robert Nolan, Col. J. P. (Galway, N.) Wilson, Henry J. (York, W.R.)
Ferguson, R. C. Munro (Leith) Nolan, Joseph (Louth, South) Woodhouse,SirJ.T.(Huddersf'd
Flavin, Michael Joseph Nussey, Thomas Williams Young, Samuel
Flynn, James Christopher O'Brien, James F. X. (Cork)
Foster, Sir Walter (Derby Co.) O'Brien,Kendal(Tipperary,Mid TELLERS FOR THE NOES—Mr. Herbert Gladstone and Mr. William M'Arthur.
Fowler, Rt. Hon. Sir Henry O'Brien, Patrick (Kilkenny)
Freeman-Thomas, Captain F. O'Brien, P.J. (Tipperary, N.)

said the Amendment he now proposed to move was to reduce the duty on strips from 3d. to 1½. per lb. After the announcement which the Chancellor of the Exchequer had made he would have supposed that it would hardly be necessary for him to support this Amendment by argument. The right hon. Gentleman in the announcement he made admitted that the duty on strips in bond should be reduced to l½d. per lb. and all that was now asked was that all strips on which duty had not been paid should be subject to the same reduction. The Chancellor of the Exchequer appeared to have based his argument on the ground that as there was less smokable tobacco in leaf than there was in strips, there ought to be some differentiation, and that differentiation he had put down at 3d. on the lb. If that difference was necessary to put these two kinds of tobacco on an equality, why was this rebate now given to the merchants. This rebate had been referred to by the right hon. Gentleman as a concession to the merchants and manufacturers in response to protests on their behalf by Members of this House. But if this 1½d. gave them something to which they were not entitled, the right hon. Gentleman was most unfairly putting money into their pockets at the expense of the public. The right hon. Gentleman had said there was in practice a differentiation against leaf in our present scale of duties because there was more sand and moisture in leaf than in strips. The right hon. Gentleman was wrong there, however, as he would presently prove. But if there was a differentiation of 3d. in the lb. and the right hon. Gentleman gave up 1½d. of that to the merchants, he gave to them something to which they were not entitled even if the figures were true and accurate. But the facts were different. It was not true that in leaf before the stem had been taken out there was more sand and moisture than in strips. The evidence given before the Committee was the extract contrary with regard to Western leaf. As regarded bright Virginia it was true the sand was shaken off in the process of stripping, but on the Western leaf what was called sand would more properly be described as dirt and it did not shake off in the process of stripping. In fact there was less sand on the midrib than on the lamina. But even if the right hon. Gentleman had proved that there was more sand and moisture in the leaf than in the strips he had not proved that it was equivalent to a duty of 3d. The right hon. Gentleman now submitted that the duty should be 1½d. What he wanted the Chancellor of the Exchequer to do was to give a clear relevant argument in favour of this tax. At present they had not had a word in favour of the duty being 3d. which might not have been equally revelant to a duty of 1d. or 6d. or any other sum. With regard to moisture, forty-three samples were taken by the right hon. Gentleman's own Committee, and the average result showed less moisture in the leaf than in the strips. In the face of that, what was the good of the right hon. Gentleman founding his case upon the result of four samples only? The Chancellor of the Exchequer was convicted by his own Departmental Committee, and by the experiments of his awn experts; the evidence of the witnesses before that Committee showed that there was no greater duty cost upon leaf than upon strips than was met by the improved rate of drawback. He begged the right hon. Gentleman not to take two bites—at the leaf. He was already giving 1½d. on stocks in bond; let him for the very same reason allow 1½d. on all imported strips. Curiously enough, by reducing the duty he would increase the revenue. In consequence of the duty of 3d. the imports of stripped tobacco had fallen from 2,725,000 lbs. in April to 1,610,000 lbs. in May, and to 1,193,000 lbs. in June. The duty had all but killed the imports of strip; it would absolutely kill them hereafter. The reason of the slight respite was that there were accumulated in the United States considerable stocks of leaf stripped for the English market; those stocks would soon be exhausted, and not another pound of tobacco would be stripped abroad. Where, then, would the revenue come from? Was this to be a revenue or a protective tax? If protective, it was a breach of faith. If revenue, it would produce no revenue. Hon. Members opposite were on the horns of a dilemma. They must make up their minds whether they would choose protection and dishonour or honour and no revenue. They could take their choice but they could not have both. If the duty were reduced to 1½d., though the great bulk would be shut out, there would remain certain kinds of tobacco which on account of excessive moisture and sand it would still pay to import stripped, and from those revenue would be derived. In his Budget speech, the Chancellor of the Exchequer said — In the first place I think it is demonstrable that there was an error in the calculation on which Mr. Gladstone worked. He himself, indeed, subsequently corrected his error but he did not alter the rates which he had proposed, and the result is that the home manufacturer, making for home consumption, has a larger measure of—shall I say compensation?—than Mr. Gladstone had intended. From the context it was clear that by "compensation," the right hon. Gentleman meant "protection." He concluded by saying— It is clear that the stripped leaf has a definite and distinct value differing front that which the whole leaf enjoys. It is not right that this separate value, this process of manufacture which the leaf has undergone, should not, like all other processes of manufacture, which add to the value, be marked on our scale and find its reflection in the proper way. That meant getting "compensation" or "protection." How much of this threepence was protective? The right hon. Gentleman had not attempted to prove that the alleged loss by virtue of sand and moisture in the leaf was worth 3d. in the duty; he had simply instanced bright Virginia, which was the only case that could be established. The Amendment suggested that the protective part of the tax would amount to 1½d., and asked for its abandonment to that extent.

Amendment proposed—

"In page 2, line 6, to leave out the words 'three pence' and insert the word 'three-halfpence.'"—(Mr. McKenna.)

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


said that the hon. Gentleman was prepared to make a difference of 1½d. between strips and whole leaf, and had admitted that that would do no more than place certain kinds of whole leaf and strip on a parity as regarded duty cost. He differed from the hon. Gentleman as to his results, but he was grateful to him for the admission that there was a case for a difference of duty between the two, and that the basis of his argument had been correct. In the course of his remarks the hon. Member had quoted a passage from the Budget speech with the object of showing that it had been the intention to make this new duty on strips as protective a duty as the duty on manufactured tobacco. The rates on manufactured tobacco were undoubtedly protective, but if he had fixed the rate on strips on the same basis as Mr. Gladstone fixed his rates on manufactured tobacco he would have put it at from a 1d. to 3d. higher than he had done. He hoped, therefore, he had avoided the error, if error it were, in which the later stages of m manufacture were involved under our present Customs duties. He must point out once more that different kinds of tobacco varied enormously among themselves, and that it was impossible to devise a rate either of duty or drawback which worked out exactly in the same way upon every sample of tobacco, but this rate of 3d. was fair having regard to general average samples. It had been said that, having offered a rebate in respect of stocks in bond, he was precluded from arguing that stocks not in bond should pay a higher duty than those in bond. Strips had hitherto been favoured at the expense of whole leaf, and it was not unnatural that the great imports had been of strips and that there was a large accumulation in bond at the present time. To facilitate the distribution of these large stocks he had offered a rebate which, in his opinion, still gave preferential treatment to strips over leaf. That was not a reason why for other strips not now in bond the same preferential treatment should be continued. He hoped the Committee would support his view.


said the Opposition had always contended that any adverse discrimination ought to be, and could be, met by a proper drawback. The right hon. Gentleman had not in any way met the figures put forward by the hon. Member for North Monmouth showing that threepence went further than the discrimination demanded, and that to that extent it was a protective duty. The Report of the Drawback Committee went to show that on the question of sand and moist re the facts were against the contention of the Chancellor of the Exchequer. By imposing this tax the right hon. Gentleman expected to at once very largely reduce the import of strips, so that it would have a considerable fiscal effect in regard to the trade. The mere proposal to impose the tax had carried the matter further. The trade in strips had been greatly demoralised, and day by day during the past month less strips had been coming into the country. In a very short time they would be prohibited altogether. The right hon. Gentleman had not met the figures and arguments which had been advanced in regard to this matter by hon. Members on his own side of the House. He had already given away more than half the revenue he expected to receive, and the other half he would only get for the current year. He was creating a disturbance in the tobacco trade, and it would be better to drop the tax and meet the deficit by some proposal consistent with what they were promised—a free-trade Budget.


said the Chancellor of the Exchequer in the last quarter of an hour had admitted that the tax which he proposed was to a certain extent a protective tax. What he and his colleagues desired to know was how much of threepence did he think was protective? To that they had had absolutely no reply. Let him put to the right hon. Gentleman the question which had been put to him again and again, and which he had as frequently evaded. He was reminded by an hon. Member near him that while they were discussing the sand and the leaf the Chancellor of the Exchequer was endeavouring to throw dust in their eyes. Why had the Chancellor in his calculations asserted that in the whole leaf there was 15.85 per cent. of additional moisture. What justification had he for that? If that was the percentage which was obtained from four samples would he be so good as to lay the report of the analyst before the House in order that hon. Members might judge whether those samples were representative or not. How did he arrive at the figure that stripped tobacco, as regarded additional moisture, stood at 13.50 per cent.? Certain figures which the right hon. Gentleman had given in regard to the whole leaf were entirely upset by his own Committee's Report. That did not state that the percentage of moisture was 15.85 per cent. He gathered from the Committee's Report that of all the samples of leaf there was not a single one over 13.70, a discrepancy of over 2 per cent., which was enough to entirely destroy the virtue of the Chancellor's calculations. If this was his justification for stating that threepence was a justifiable margin between the two kinds, would he give the Committee some definite answer as to how much of the threepence was protective? What they urged was that the readjustment of the drawbacks would have been sufficient to redress the grievances of the different qualities which came in under this tax. The effect of this threepence would be to destroy the business of a large number of importers of stripped leaf. He noticed the right hon. Gentleman appealed always to the precedent of Mr. Gladstone and he had actually told them that his appetite for protection was rather less than Mr. Gladstone's. Really that was more than they could honestly believe. He did not think the right hon. Gentleman could persuade anybody inside or outside that House that, if there was a protective element in the tobacco taxes as they at present stood, he was justified in increasing them, so far as stripped tobacco was concerned.


said if the proposed tax would give a permanent increase to the revenue he should be very much in favour of it, but it was denied that it involved any permanent increase at all. If he was wrong in that he should like the Chancellor of the Exchequer, the Secretary of the Treasury, or some other competent financial authority to contradict him. The hon. Baronet the Member for North Bristol had stated that the trade in strips was killed. Did it not follow that no more duty on strips could be expected. The Chancellor of the Exchequer had offered a rebate of half the duty on all the stocks on hand when the Budget Resolution was passed. What was the effect of that? That only duty amounting to £250,000 would ever be levied at all. Consequently the Chancellor of the Exchequer was ruining or half ruining a great many merchants in the stripped tobacco trade in order to get £250,000. Was it worth while? He would not go into the questions of sand, and moisture, and rebates. The broad question for a statesman in the position of the Chancellor of the Exchequer to consider was, whether what he was doing was worth doing. It seemed to him that it had been demonstrated that it was not. The tax was liable to the suspicion of being protective. He did not go into that, but as a financial operation by the Chancellor of the Exchequer it was absurd. The levying of£250,000, which would not ha a permanent annual addition to the revenue, was not the opening of a new rill to fill the fiscal river. This was merely a destructive and injurious tax which in its Lature was of an evanescent and dying character. This was an irritating and yet evanescent tax, and he was very sorry that the Chancellor of the Exchequer had disregarded the warning of the right hon. Gentleman the Member for West Bristol, and had put his finger into the hornet's nest for so small a sum. Falstaff warned a great historical character not to imperil his soul gratis; and he hoped the Chancellor of the Exchequer would not imperil his soul for the sake of £250,000.


said that there was now a preferential treatment of leaf as against strips amounting to 4d. per pound —3d. per pound originally proposed, the

further advantage given to leaf on the drawback—five eighths of a penny per pound—and the cost of stripping, which amounted to three-eighths of a penny per pound. If there was this preferential treatment, then strips must be 4d. per pound dearer than leaf. He maintained that a protection of 2½d. per pound was given to leaf as against strips.

SIR JAMES JOICEY (Durham, Chester-le-Street)

said that he regretted that the Chancellor of the Exchequer had not seen his way to abolish this tax altogether. In putting on a tax the Chancellor of the Exchequer should first consider whether it could be equitably levied; and he thought it was a monstrous injustice, which the Committee ought not to sanction, to impose a tax amounting to half a million of money which would have to be paid by twenty people. It was all very well to say that the Chancellor of the Exchequer must have money, but he ought not to get money regardless of the injustice done to the people who had to pay it. He believed that the principle of this tax was bad, and, as an independent Member, he protested against raising a tax in this way on such a small number of people.

Question put.

The Committee divided:—Ayes, 228; Noes, 166. (Division List No. 243.)

Agg-Gardner, James Tynte Bousfield, William Robert Dalkeith, Earl of
Anson, Sir William Reynell Brassey, Albert Davenport, William Bromley-
Arnold-Forster,Rt.Hn.Hugh O. Brodrick, Rt. Hon. St. John Denny, Colonel
Arrol, Sir William Bull, William James Dickinson, Robert Edmond
Atkinson, Rt. Hon. John Butcher, John George Dickson, Charles Scott
Bagot, Capt. Josceline FitzRoy Campbell,Rt.Hn.J.A.(Glasgow) Dickson-Poynder, Sir John P.
Bailey, James (Walworth) Campbell,J.H.M.(Dublin Univ. Dimsdale, Rt. Hn. Sir Joseph C.
Bain, Colonel James Robert Carson, Rt. Hon. Sir Edw. H. Dorington, Rt. Hn. Sir John E.
Baird, John George Alexander Cautley, Henry Strother Douglas, Rt. Hon. A. Akers-
Balcarres, Lord Cavendish, V.C.W. (Derbyshire) Duke, Henry Edward
Baldwin, Alfred Cayzer, Sir Charles William Durning-Lawrence, Sir Edwin
Balfour, Rt. Hn. A. J. (Manch'r Chamberlain,Rt.Hn.J.A(Wore. Dyke,Rt.Hon. Sir William Hart
Balfour,Rt.HnGerald W.(Leeds Chapman, Edward Egerton, Hon. A. de Tatton
Balfour, Kenneth R. (Christch.) Charrington, Spencer Elliott, Hon. A. Ralph Douglas
Banbury, Sir Frederick George Clare, Octavius Leigh Faber, Edmund B. (Hants, W.)
Barry, Sir Francis T. (Windsor) Clive, Captain Percy A. Fergusson,Rt. Hn.Sir J.(Mane`r
Bartley, Sir George C. T. Coates, Edward Feetham Finch, Rt. Hon. George H.
Bathurst, Hon. Allen Benjamin Cochrane, Hn. Thos. H. A. E. Finlay, Sir Robert Bannatyne
Bhownaggree, Sir M. M. Coghill, Douglas Harry Firbank, Sir Joseph Thomas
Bignold, Arthur Colston, Chas. Edw. H. Athole Fishier, William Hayes
Bigwood, James Cook, Sir Frederick Lucas Fison, Frederick William
Bill, Charles Craig, Charles Curtis (Antrim, S. FitzGerald, Sir Robert Penrose
Bingham, Lord Cross, Herb. Shepherd (Bolton) Fitzroy,Hon. Edward Algernon
Blundell, Colonel Henry Crossley, Rt. Hon. Sir Savile Flannery, Sir Fortescue
Bond, Edward Cust, Henry John C. Flower, Sir Ernest
Forster, Henry William Long,Col.Charles W.(Evesham Robertson, Herbert (Hackney)
Galloway, William Johnson Long,Rt.Hn.Walter (Bristol,S.) Rollitt, Sir Albert Kaye
Gardner, Ernest Lonsdale, John Brownlee Round, Rt. Hon. James
Garfit, William Lowe, Francis William Royds, Clement Molyneux
Gibbs, Hon. A. G. H. Lowther, C. (Cumb., Eskdale) Sackville, Col. S. G. Stopford-
Gordon,Hn.J.E.(Elgin & Nairn) Loyd, Archie Kirkman Samuel, Sir HarryS.(Limehouse
Gore, Hon. S. F. Ormsby- Lucas, Col. Francis(Lowestoft) Scott, Sir S. (Marylebone, W.)
Graham, Henry Robert Lucas,Reginald J.(Portsmouth) Seton-Karr, Sir Henry
Greene,SirE.W.(B'rySEdm'nds Lyttelton, Rt. Hon. Alfred Sharpe, William Edward T.
Greene, W. Raymond-(Cambs. Macdona, John Cumming Simeon, Sir Barrington
Grenfell, William Henry Maconochie, A. W. Sinclair, Louis(Romford)
Gretton, John M'Iver,SirLewis(EdinburghW.) Skewes-Cox, Thomas
Greville, Hon. Ronald M'Killop, James (Stirlingshire) Sloan, Thomas Henry
Gunter, Sir Robert Martin, Richard Biddulph Smith, Abel H. (Hertford, East)
Hall, Edward Marshall Massey-Mainwaring, Hn. W. F. Smith,H.C(North'mb.Tyneside
Halsey, Rt. Hon. Thomas F. Maxwell,W.J.H.(Dumfriesshire Smith,James Parker (Lanarks.)
Hamilton,Rt.Hn.LordG.(Mid'x Melville, Beresford Valentine Smith, Hon. W. F. D. (Strand)
Hardy,Laurence(Kent,Ashford Mildmay, Francis Bingham Spear, John Ward
Hare, Thomas Leigh Milner,Rt.Hn. Sir Frederick G. Stanley,Edward Jas.(Somerset)
Harris, F. Leverton (Tynem'th Milvain, Thomas Stanley, Rt. Hon. Lord(Lancs.)
Haslett, Sir James Horner Mitchell,Edw.(Fermanagh,N.) Stewart, Sir Mark J. M'Taggart
Hatch, Ernest Frederick Geo. Montagu, G. (Huntingdon) Stone, Sir Benjamin
Heath, Arthur Howard(Hanley Montagu,Hon. J. Scott (Hants.) Talbot, Lord E. (Chichester)
Heath, James (Staffords. N.W.) Morgan,DavidJ(Walthamsto'w Taylor, Austin (East Toxteth)
Helder, Augustus Morrell, George Herbert Thorburn, Sir Walter
Henderson, Sir A (Stafford,W.) Morrison, James Archibald Thornton, Percy M.
Hickman, Sir Alfred Morton, Arthur H. Aylmer Tollemache, Henry James
Hoare, Sir Samuel Mount, William Arthur Tomlinson, Sir Wm. Edw. M.
Hope,J.F.(Sheffield,Brightside) Mowbray, Sir Robert Gray C. Tritton, Charles Ernest
Horner, Frederick William Muntz, Sir Philip A. Tuff, Charles
Houston, Robert Paterson Murray, Rt.Hn.A.Graharn(B'te Tufnell, Lieut.-Col. Edward
Howard, J. (Kent, Faversham) Murray, Col. Wyndham (Bath) Valentia, Viscount
Howard, J. (Midd.,Tottenham) Myers, William Henry Vincent,Col.SirC.E.H.(Sheffield
Hozier, Hn. James Henry Cecil Newdegate, Francis A. N. Warde, Colonel C. E.
Hudson, George Bickersteth Nicholson, William Graham Webb, Colonel William George
Hunt, Rowland O'Neill, Hon. Robert Torrens Wharton, Rt. Hon. John Lloyd
Jebb, Sir Richard Claverhouse Palmer, Walter (Salisbury) Whiteley, H.(Ashton und.Lyne
Jeffreys,Rt. Hon. Arthur Fred. Parkes, Ebenezer Whitmore, Charles Algernon
Jessel, Captain Herbert Merton Pease, HerbertPike(Darlington Williams, Colonel R. (Dorset)
Johnstone, Heywood (Sussex) Peel, Hn.Wm.Robert Wellesley Willoughby de Eresby, Lord
Kerr, John Pemberton, John S. G. Wilson, A. Stanley (York, E.R.)
Keswick, William Percy, Earl Wilson, John (Glasgow)
King, Sir Henry Seymour Pierpoint, Robert Wilson-Todd, Sir W.H.(Yorks.)
Laurie, Lieut.-General Platt-Higgins, Frederick Wolff, Gustav Wilhelm
Law, Andrew Bonar (Glasgow) Plummer, Sir Walter R. Wortley, Rt. Hon. C. B. Stuart-
Lawson,J. Grant (Yorks.,N.R.) Pretyman, Ernest George Wyndham, Rt. Hon. George
Lee,ArthurH.(Hants.,Fareh'm) Purvis, Robert Yerburgh, Robert Armstrong
Lees, Sir Elliott (Birkenhead) Pym, C. Guy
Legge, Col. Hon. Heneage Ratcliff, R. F. TELLERS FOR THE AYES.—Sir Alexander Acland-Hood and Mr. Ailwyn Fellowes.
Leveson-Gower, Frederick N.S. Richards, Henry Charles
Llewellyn, Evan Henry Ridley, Hon.M.W.(Stalybridge)
Lockwood, Lieut.-Col. A. R. Ridley, S.Forde(BethnalGreen)
Loder, Gerald Walter Erskine Roberts, Samuel (Sheffield)
Abraham, William (Cork, N.E.) Buchanan, Thomas Ryburn Crooks, William
Abraham, William (Rhondda) Burke, E. Haviland- Cullinan, J.
Ainsworth, John Stirling Burt, Thomas Davies, Alfred (Carmarthen)
Allen, Charles P. Buxton, Sydney Charles Davies, M.Vaughan-(Cardigan)
Asher, Alexander Caldwell, James Delany, William
Asquith,RLHon.HerbertHenry Cameron, Robert Devlin, Joseph (Kilkenny, N.)
Barlow, John Emmott Campbell, John (Armagh, S.) Dilke, Rt. Hon. Sir Charles
Barran, Rowland Hirst Campbell-Bannerman, Sir H. Dobbie, Joseph
Bayley, Thomas (Derbyshire) Causton, Richard Knight Donelan, Captain A.
Beaumont, Wentworth C.B. Cawley, Frederick Doogan, P. C.
Bell, Richard Channing, Francis Allston Duncan, J. Hastings
Benn, John Williams Churchill, Winston Spencer Dunn, Sir William
Boland, John Clancy, John Joseph Elibank, Master of
Bolton, Thomas Dolling Condon, Thomas Joseph Esmonde, Sir Thomas
Broadhurst Henry Craig, Robert Hunter (Lanark) Eve, Harry Trelawney
Brown, George M. (Edinburgh) Cremer, William Randal Farquharson, Dr. Robert
Brunner, Sir John Tomlinson Crombie, John William Fenwick, Charles
Ferguson, R. C. Munro (Leith) Lough, Thomas Roberts, Jonh Bryn (Eilion)
Flavin, Michael Joseph Lundon, W. Robson, William Snowdon
Flynn, James Christopher Macnamara, Dr. Thomas J. Russell, T. W.
Foster, Sir Walter (Derby Co.) MacNeill, John Gordon Swift Samuel, Herbert L. (Cleveland)
Fowler, Rt. Hon. Sir Henry MacVeagh, Jeremiah Samuel, S. M. (Whitechapel,W)
Freeman-Thomas, Captain F. M'Arthur, William (Cornwall) Schwann, Charles E.
Fuller, J. M. F. M'Hugh, Patrick A. Shackleton, David James
Gladstone, Rt.Hn.HerbertJohn M'Kean, John Shaw, Charles Edw. (Stafford)
Grant, Corrie M'Killop, W. (Sligo, North) Sheehan, Daniel Daniel
Gordon, Sir W. Brampton Markham, Arthur Basil Sheehy, David
Haldane, Rt. Hon. Richard B. Mooney, John J. Shipman, Dr. John G.
Harcourt, RtHnSirW(Monm'th Morgan, J. Lloyd (Carmarthen) Smith, Samuel (Flint)
Harwood, George Morley, Charles (Breconshire), Soares, Ernest J.
Hayden, John Patrick Morley,Rt.Hon.John (Montrose Stanhope, Hon. Philip James
Hayter, Rt. Hon. Sir Arthur D. Murphy, John Strachey, Sir Edward
Hemphill, Rt. Hon. Charles H. Nannetti, Joseph P. Sullivan, Donal
Higham, John Sharpe Newnes, Sir George Tennant, Harold John
Hobhouse, C. E. H. (Bristol,E.) Nolan, Joseph (Louth, South) Thomas, Sir A. (Glamorgan, E.)
Holland, Sir William Henry Nussey, Thomas Willans Thomas, DavidAlfred(Merthyr)
Horniman, Frederick John O'Brien, James F. X. (Cork) Thomas, F. W. (York, W. R.)
Hutchison, Dr. Charles Fredk. O'Brien, Kendal(TipperaryM'd Tomkinson, James
Hutton, Alfred E. (Morley) O' Brien, Patrick (Kilkenny) Toulmin, George
Jacoby, James Alfred O'Brien, P.J. (Tipperary, N.) Trevelyan, Charles Philips
Johnson, John (Gateshead) O'Connor, James (Wicklow,W) Wallace, Robert
Joicey, Sir James O'Dowd, John Walton,John Lawson(Leeds,S.)
Jones, David Brynmor(Swansea) O'Kelly, James (Roscommon,N Walton, Joseph (Barnsley)
Jones, William (Carnarvonshire O'Malley, William Warner, Thomas Courtenay T.
Joyce, Michael O'Shaughnessy, P. J. Wason, Eugene (Clackinannan)
Kearley, Hudson E. O'Shee, James John White, Luke (York, E. R.)
Kennedy,Vincent P.(Ca van,W. Parrott, William Whiteley, George (York, W.R.)
Kitson, Sir James Partington, Oswald Whittaker, Thomas Palmer
Labouchere, Henry Paulton, James Mellor Wilson, Henry J.(York,W.R.)
Lambert, George Pease, J. A. (Saffron Walden) Wilson, John (Durham, Mid.)
Langley, Batty Philipps, John Wynford Wood house,SirJ,T.(Huddersf'd
Law, Hugh Alex. (Donegal,W.) Pirie, Duncan V. Young, Samuel
Lawson, Sir Wilfrid (Cornwall) Power, Patrick Joseph
Layland-Barratt, Francis Price, Robert John TELLERS FOR THE NOES.—Mr. McKenna and Mr. Runciman.
Leanly, Edmund Reckitt, Harold James
Leigh, Sir Joseph Redmond, John E. (Waterford)
Lewis, John Herbert Rickett, J. Compton

Amendment proposed— In page 2, line 6, at the end, to add the words, (2) A rebate at the rate of three halfpence for every pound of tobacco shall be allowed on any increased duty under this Act paid on or after the nineteenth day of July, nineteen hundred and four, in respect of any stripped tobacco which is shown to the satisfaction of the Commissioners of Customs to have been deposited in a bonded warehouse before the twentieth day of April, nineteen hundred and four.'"—(Mr. Chancellor of the Exchequer.)

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


said he expected the right hon. Gentleman to move the next Amendment standing in his name on the Paper. Was that to be dropped?


explained that the present Amendment was moved in order to give effect to the compromise regarding the stocks of tobacco in bond at the date of the Budget.


certainly thought the Committee ought to look into this matter, with regard to which no explanation had been given by the Chancellor of the Exchequer. Why did the right hon. Gentleman only give half? Surely that was not only most unjust but against all precedent. In every one of the cases in which it had been found that a tax which had been proposed in the Budget should not he levied, the precedents were in favour of the full rebate being allowed. Some explanation really ought to be given as to why only 1½d. in the lb. was to be given instead of the whole.


pressed the Chancellor of the Exchequer for an explanation of the conclusions which led him to believe that 1½d. would be the clear loss which the owners of stocks in bond would suffer, because if it was more than the loss they would suffer, they would receive more than they were entitled to, and if it was less they would not get enough.


said owing to the preference that strips had had over leaf the imports into this country had been mainly strips, and the stocks here were out of all proportion. It was in order to facilitate the clearing of those stocks that the rebate was given.


said the right hon. Gentleman had given the Committee not the slightest reason why he had fixed the rebate at 1½d. If the right hon. Gentleman was right in his argument that there was a reason for levying another 3d. per lb., then he clearly ought to give no rebate whatever. If the right hon. Gentleman believed that strips got a preference of 3d. did he think buyers of leaf would pay more than 3d. as the difference in price between leaf and strips? His case was unanswerable. If there was any preferential treatment of strips as against leaf there must be the same difference between the price of the two articles, and if that difference in price was 1½d. it was ridiculous to say there was a difference between the two of 3d.

And, it being now half-past Seven of the clock, the Chairman left the Chair to make his Report to the House.

Committee report Progress; to sit again this evening.