§ Considered in Committee.
§ (In the Committee.)
§ [Mr. J. W. LOWTHER (Cumberland, Penrith) in the Chair.]
§ Clause 2:—
§
Amendment again proposed—
In page 2, line 2, to leave out from the word pound,' to the word and,' in line 3."—{Sir Walter Foster.)
Question proposed, "That the words and in the case of the cigarettes by' stand part of the clause."
§ MR. GEORGE WHITELEYsaid that before the adjournment for dinner he was proceeding to argue that the tax was protective in its character. How far it might be said to be protective was, of course, a matter of opinion. According to his hon. friend, only £20,000 would find its way into the Exchequer, whereas the consumer would have to pay £225,000 or £250,000 owing to the rise in the price of cigarettes. The Chancellor of the Exchequer said that the figures were exaggerated; but he did not give any estimate of his own as to what the cost to the consumer would be. It would be very interesting to know from the Chancellor of the Exchequer what he estimated the consumer would have to pay in order that the Treasury might benefit to the extent of a mere bagatelle of £20,000 or £25,000. His objection to the tax was that it was a step in the direction of protection. It might be modified protection; but as a free-trader he objected to it. The Chancellor of the Exchequer said that there was a distinct character about foreign cigarettes which could not be mistaken; but foreign tobacco made up into cigarettes in this country was absolutely indistinguishable from cigarettes manufactured abroad. With the right hon. Gentleman's permission he would present him with a certain number of cigarettes, and ask him to say which were foreign and which were British; and if he met the occasion he thought they had the proper man as Chancellor of the Exchequer.
§ MR. RENWICK (Newcastle-on-Tyne)ssid he was surprised that objection had been taken by hon. Members opposite to the proposal of the Chancellor of the Exchequer to increase the duty on imported cigarettes. It had been said that there was something of a protective character about the proposal, but, even if that were the case, he would not be inclined to take exception to it on that ground, since, if the benefit of the doubt was to be given at all it should surely be given to the British manufacturers, and he certainly would rather see English girls employed in the East End of London and else where in the making of cigarettes than know that French and Italian girls were being employed abroad for the supply of our markets. It was said that a large 'proportion of the increased cost which would fall on the consumer in consequence of the duty would go into the pockets of the manufacturers. That was always said when such taxes were proposed, but whether it was the case or not, he maintained that more than one class of the community would be benefited. The interests of the country as a whole should be considered, and, even if there was a falling-off in the revenue derived from cigarettes, he would not object, because much cigarette smoking, especially by boys, was an undoubted evil. There was a striking circumstance in connection with that debate. Nearly all hon. Members who had opposed the tea duty were teetotalers. He believed, however, that hon. Members who were opposing the Chancellor's cigarette duty were nearly all smokers. That seemed to him to be extremely suspicious. It was said that the effect of the duty would be to increase the cost of cigarettes. Well, only that afternoon he went into a shop and bought a well-known brand of cigarettes for 4d., though when the duty was first proposed the price was raised to 5d. It was only human for anyone—manufacturer, shopkeeper, or working man—to get a little bit extra when he had the opportunity, but he did not think the proposed small increase in the duty would have the result of permanently increasing the price. If it was desired to see cigarette smoking checked he could not understand the objections to the proposal. The debate showed the absolute necessity for the entire revision of the fiscal system of the country. 897 It had been said that the income-tax I payers should be saddled with a greater proportion of the deficit to help to remove which the duty on cigarettes was proposed. He did not think that would be popular. Hon. Members opposite were disciples of Mr. Gladstone, who always believed that the income-tax ought to be abolished.
§ MR. RENWICKsaid that if the proposal of the Chancellor of the Exchequer was defeated the money needed would have to be obtained from some other source. Hon. Gentlemen opposite suggested a few ironclads might be dispensed with, but he did not think that would be popular in Devonport or anywhere else. At present £13,000,000 was raised from tobacco, but, large as the duty was, and though it had recently largely increased, the consumption of tobacco had also increased. Under those circumstances, was it likely that a simple proposal like that of the Chancellor of the Exchequer would tend to decrease the consumption of tobacco? He did not believe it, and he trusted the Committee would reject the Amendment and accept the Government proposal.
§ MR. BULL (Hammersmith)said that whatever the opinions of the Committee might be with reference to taxation, it was clear that the Chancellor of the Exchequer, in framing his first Budget, had an enormous task to perform. He had to find a very large sum of money; and to place it as fairly and equitably as possible on the right shoulders. He was rather surprised that the hon. Member for the Ilkeston Division should have moved this Amendment. One would have thought that an hon. Gentleman of his knowledge and attainments would have been one of the first to discourage cigarette smoking. A friend of his who had returned from India after twenty years service, when asked what was the chief alteration he had noticed in London, said it was the increase in cigarette smoking. There were men who smoked fifty or sixty cigarettes a day; women now 898 carried their cigarette cases; and children were continually to be seen with fags in their mouths. That was a very serious state of things; and he thought that the Chancellor of the Exchequer was justified in increasing the duty. There were some directions in which his right hon. friend might have made the Budget more popular; but he declined to follow them. He had looked into the matter and he was satisfied that all the cheap forms of cigarettes were of foreign manufacture. In Holland, Belgium, and America children under fourteen vears were not permitted to smoke; and he was rather surprised that the hon. Gentleman the Member for the Ilkeston Division should, in all the circumstance, shave proposed his Amendment.
§ MR. HARRIS (Tynemouth)said he had listened with very considerable interest to some of the speeches of hon. Members opposite, which no doubt would be received with considerable approval by the schoolboys of this country, because, according to the hon. Member for Northampton, cigarette smoking would not only do them good but also make them good. The question was raised whether this tax was or was not a protective tax. For his own part he thought that, although possibly the tax might have in it a small element of protection, that was a matter which they might disregard under present circumstances. The hon. Gentleman for Carnarvon Boroughs said that while the Treasury would only derive the small sum of £25,000 from the tax, some £225,000 would be received by the manufacturers as extra profit on the cigarettes they sold. But hon. Members lost sight altogether of the competition which must inevitably occur between the various manufacturers. They forgot that the country was permeated with manufacturers of cigarettes, who would be certain to compete with each other; and that competition would have the effect of reducing the price. It had often been demonstrated that when production was increased, the cost at which an article could be produced was decreased, and the reduction in the cost of production also reduced the net cost of the article sold. What had been said with regard to tobacco applied equally to iron and steel.
§ MR. WHITLEYasked, on a point of order, if a tariff reform lecture was in order?
THE CHAIRMANWe have had some free-trade lectures, but I suggest to the hon. Member that, although he may refer to iron and steel as an illustration, he would not be entitled to go far into the subject.
§ MR. HARRISsaid the only reason he referred to iron and steel was that certain conclusions had been drawn from them by the hon. Gentleman for Carnarvon Boroughs.
§ MR. LLOYD-GEORGEsaid he only quoted them as illustrations, and not as arguments.
§ MR. HARRISsaid that he thought he, too, might refer to them as illustrations; but he would not continue that part of the argument. The most remarkable thing connected with the debate was the appeal of the hon. Member for Saffron Walden to hon. Members to vote against the Government. He was astonished at his credulity. Even free-trade Members on that side of the House would not be caught in such a flimsy trap; and he was, therefore, quite sure that all his hon. friends would support the Government.
SIR WALTER FOSTERsaid he was rather surprised that the Chancellor of the Exchequer had not attempted to refute his figures. The right hon. Gentleman's answer was merely confined to endeavouring to show inconsistencies between different parts of the arguments he had advanced. There were, however, no inconsistencies whatever. The right hon. Gentleman said that the retailer would not suffer by the imposition of the tax. The Chancellor of the Exchequer took a superficial view of the question when he said his argument was inconsistent with the distribution of £225,000 among the trade. It was not inconsistent for the reason that the retailer was at the mercy of the manufacturers. He received his articles in certain packages at certain prices. A penny packet of cigarettes would still be sold at that price whatever duty might be imposed. The retailer 900 would not be able to raise his price to the public, but the manufacturer, on the other hand, might put four instead of five cigarettes into the packet, or by altering the size he would get back a profit equivalent to the shilling duty. It was a very hard case for the retailers, and the same argument applied to the duty on strips. It could not be denied that monopolies by lowering prices could force the retail traders into a combination or drive them out of the trade altogether. The right hon. Gentleman was placing a weapon in the hands of a monopoly that held 50 per cent. of the tobacco trade of this country, and the result might be to keep down prices for a time, and then the monopoly would go into an El Dorado and receive as the benefit of this tax a sum of at least £250,000 a year extra profit by raising the price of cigarettes equivalent to the amount of the duty. It was because he recognised the danger of this leaning towards protection in its worst form that he appealed to the Chancellor of the Exchequer not to stick to the duty. It would only bring in £20,000 a year, and they would run the risk of putting a power in the hands of a monopoly which would be disastrous, and would alter the fiscal system of the country. If he could ask any Government to give an object lesson I that the public would appreciate as against the Tariff Reform Commission he could not seek a better. It was bad for the revenue; it would encourage the creation of trusts and monopolies, and he hoped that the Chancellor of the Exchequer would see his way to withdraw a tax so little lucrative to the Exchequer of the country.
§ MR. DALZIELsaid that if this debate had had no other effect it had been the means of enabling the House to listen to hon. Members who did not often take part in debate, and the only reason he could put forward for the pleasure they had been given was that certain hon. Members had come to the conclusion that the protectionist side of the argument had not been properly submitted from that side of the House. So far as he could see, until the protectionist speeches were delivered hon. Members were content to rest satisfied with the debate that had already taken place 901 and with the explanations of the Chancellor of the Exchequer. But the speeches that had been lately delivered had introduced a new element into the debate, and he could only hope that the new points which had been raised would evoke some sort of reply by the Chancellor of the Exchequer, who, probably at two or three o'clock in the morning, would ask the House to sit a little later to debate the question. They had had a speech from the hon. Member for Newcastle, who was so satisfied that nobody could reply to his argument that he left the House immediately afterresuming his seat. That hon. Member said that this cigarette proposal would help towards the building of two new ironclads. He (Mr. Dalziel) was afraid ho must be wrong in thinking that the hon. Gentleman came from Newcastle otherwise he must have known that £20,000 would not go far towards the expenditure upon two new ironclads. Then they had an hon. Member opposite who gave them his reasons for supporting this tax. The hon. Member had boldly announced that this was a protectionist tax, and he was distinguished by being connected in a prominent manner with the Tariff Reform League. It was curious to understand the reasons why hon. Members on that side of the House supported this proposal. Some supported it because it was a free-trade proposal; some because it only contained a little bit of protection. The hon. Member for King's Lynn came under the latter category, and his arguments almost reminded him of the man who declared he could not get intoxicated because he only took his drink out of liqueur glasses, and therefore only took a very little at a time. Then another section said that this was protection pure and simple. He did not know amongst so many pleas which one might be correct, but he was inclined to think that there was more protection in this proposal than in any other proposal except that, perhaps, relating to the tobacco duties. The wholesale manufacturers were delighted with this idea and it seemed to him to be nothing more or less than a protectionist proposal. He was surprised that the hon. Member for Shropshire had not availed himself of the opportunity for expressing his opinions, and surely the hon. Member for West Bristol would not allow this debate to close without giving them the benefit of his views. The right hon. Gentleman was an expert, and 902 no one in the House had more authority to speak on this matter than he. Could it be that the right hon. Gentleman was satisfied with this protectionist proposal, or was he content to let the House go to a division without expressing his opinions upon it. In conclusion, he wanted to ask the Chancellor of the Exchequer had he made any calculation with regard to the increased cost of collecting this new tax, and secondly whether it was his intention that there should be a Government stamp on these foreign cigarettes? In his judgment no case had been made out for a stamp to be affixed, and he would remind the right hon. Gentleman that in the case of America such a step had created a great deal of objection and dissatisfaction.
§ MR. AUSTEN CHAMBERLAINsaid he did not propose to put a special stamp on foreign, cigarettes, and he did not anticipate that there would be any increased cost in collecting the duty because it was not a case of imposing a new duty.
§ MR. TREVELYANsaid he had appealed to the Member for North Bristol earlier in the day on the question of cigars, and he would like to appeal to him, or to the Chancellor of the Exchequer, now in the case of cigarettes. No answer had been given to his inquiry regarding the increase of duty last imposed upon manufactured tobacco by the right hon. Gentleman the Member for West Bristol. When that duty was imposed there was a fall in the returns of duties from manufactured tobacco. In 1898–9 the amount received was over £800,000, whereas the duty received last year was only £776,000, and it appeared to his untutored mind that the effect of raising the duty would be to exclude so much foreign-manufactured goods that the duty so far from being of any value to the Treasury would actually result in decreased returns. He suggested that this was merely a protective duty and certainly it came within that category.
§ SIR FREDERICK WILLS (Bristol, N.)said he had boon called upon by hon. Gentlemen opposite to answer a question as to the taxation of foreign cigarettes. If it were a matter that assumed the form of protection, as a free-trader he should 903 feel it his duty either to vote against it or certainly not to vote for it, but he might point out that the foreign cigarettes imported were not of such a nature as to compete with the cigarettes that were made in this country for the simple reason that they were manufactured in such a way and of such materials as would not be allowed to be used here, and that the manufacturers would not use even if they
§ were allowed. Therefore in his opinion the foreign cigarettes would not compete in any way with the cigarettes made in this country. They were of a different flavour and different nature altogether.
§ Question put.
§ The Committee divided:—Ayes, 167; Noes, 135. (Division List No. 171.)
905| AYES. | ||
| Arnold-Forster, Rt. Hn. Hugh O | Gretton, John | Plummer, Walter R. |
| Arrol, Sir William | Guthrie, Walter Murray | Pretyman, Ernest George |
| Atkinson, Rt. Hon. John | Hare, Thomas Leigh | Pryce-Jones, Lt.-Col. Edward |
| Bagot, Capt. Joseeline FitzRoy | Harris, F. Leverton (Tynem'th | Pym, C. Guy |
| Bain, Colonel James Robert | Harris, Dr. Fredk. R.(Dulwich) | Randles, John S. |
| Balcarres, Lord | Haslam, Sir Alfred S. | Ratcliff, R. F. |
| Balfour, Rt. Hon. A. J. (Manch'r | Haslett, Sir James Horner | Reid, James (Greenock) |
| Balfour, Rt. Hon. G. W. (Leeds | Heath, Arthur Howard Hanley | Remnant, James Farquharson |
| Balfour, Kenneth R. (Christen. | Heath, James (Staffords., N. W. | Renshaw, Sir Charles Bine |
| Banbury, Sir Frederick George | Heaton, John Henniker | Renwick, George |
| Bignold, Arthur | Hermon-Hodge, Sir Robert T. | Ridley, Hon. M.W.(Stalybridge |
| Bigwood, James | Hickman, Sir Alfred | Ridley, S. Forde (Bethnal Green |
| Brodrick, Rt. Hon. St. John | Hogg, Lindsay | Roberts, Samuel (Sheffield) |
| Brotherton, Edward Allen | Hope, J. F. (Sheffield, Brightside | Robertson, Herbert (Hackney) |
| Bull, William James | Hornby, Sir William Henry | Rollit, Sir Albert Kaye |
| Butcher, John George | Howard, J. (Midd., Tottenham) | Ropner, Colonel Sir Robert |
| Carson, Rt. Hon. Sir Edw. H. | Hozier, Hn. James Henry Cecil | Round, Rt. Hon. James |
| Cautley, Henry Strother | Hunt, Rowland | Royds, Clement Molyneux |
| Cavendish, V. C. W. (Derbyshire | Hutton, John (Yorks., N. R.) | Rutherford, John (Lancashire) |
| Cayzer, Sir Charles William | Jeffreys, Rt. Hon. Arthur Fred. | Rutherford, W. W. (Liverpool) |
| Cecil, Evelyn (Aston Manor) | Johnstone, Heywood (Sussex) | Sackville, Col. S. G. Stopford |
| Chamberlain, Rt Hn. J. A (Worc. | Kenyon, Hn. Geo. T. (Denbigh) | Sadler, Col. Samuel Alexander |
| Charrington, Spencer | Kenyon-Slaney, Col. W. (Salop. | Sharpe, William Edward T. |
| Clive, Captain Percy A. | Keswick, William | Skewes-Cox, Thomas |
| Coates, Edward Feetham | King, Sir Henry Seymour | Sloan, Thomas Henry |
| Cochrane, Hon. Thos. H. A. E. | Law, Andrew Bonar (Glasgow) | Smith, H. C. (Nort'mb. Tyneside |
| Colston, Chas. Edw. H. Athole | Lawrence, Sir Jos. (Monmouth) | Spear, John Ward |
| Cook, Sir Frederick Lucas | Lawson, J. Grant (Yorks., N. R. | Stanley, Hn. Arthur) Ormskirk) |
| Craig, Charles Curtis (Antrim, S.) | Lee, A. H. (Hants., Fareham) | Stanley, Edward Jas.(Somerset |
| Cripps, Charles Alfred | Loder, Gerald Walter Erskine | Stanley, Rt. Hon. Lord (Lancs. |
| Cross, Herb. Shepherd (Bolton) | Long, Rt. Hn. Walter (Bristol, S. | Stock, James Henry |
| Crossley, Rt. Hon. Sir Savile | Lonsdale, John Brownlee | Strutt, Hon. Charles Hedley |
| Dalkeith, Earl of | Lucas, Reginald J.(Portsmouth | Talbot, Lord E. (Chichester) |
| Davenport, William Bromley | Lyttelton, Rt. Hon. Alfred | Taylor, Austin (East Toxteth) |
| Davies, Sir H. D. (Chatham) | Macdona, John Cumming | Thorburn, Sir Walter |
| Denny, Colonel | MacIver, David (Liverpool) | Tollemache, Henry James |
| Dickson, Charles Scott | Maconochie, A. W. | Tomlinson, Sir Wm. Edw. M.: |
| Doughty, George | M'Arthur, Charles (Liverpool) | Tritton Charles Ernest |
| Douglas, Rt. Hon. A. Akers | M'Killop, James (Stirlingshire) | Tuff, Charles |
| Duke, Henry Edward | Majendie, James A. H. | Walker, Col. William Hall |
| Dyke, Rt. Hn. Sir William Hart | Martin, Richard Biddulph | Walrond, Rt. Hn. Sir William H. |
| Egerton, Hon. A. de Tatton | Middlemore, Jn. Throgmorton | Webb, Colonel William George |
| Fielden, Edward Brocklehurst | Milner, Rt. Hn. Sir Frederick G. | Welby, Sir Charles G. E. (Notts. |
| Finch, Rt. Hon. George H. | Milvain, Thomas | Wharton, Rt. Hon. John Lloyd |
| Finlay, Sir Robert Bannatyne | Moon, Edward Robert Pacy | Whiteley, H.(Ashtonund, Lyne |
| FitzGerald, Sir Robert Penrose | Morpeth, Viscount | Wills, Sir Frederick |
| Fitzroy, Hn. Edward Algernon | Morrell, George Herbert | Wilson, John (Glasgow) |
| Flower, Sir Ernest | Morrison, James Archibald | Wilson-Todd, Sir W. H. (Yorks.) |
| Forster, Henry William | Morton, Arthur H. Aylmer | Wodehouse, Rt. Hn. E. R.(Bath |
| Gardner, Ernest | Mount, William Arthur | Wolff, Gustav Wilhelm |
| Garfit, William | Murray, Charles J. (Coventry) | Wortley, Rt. Hon. C. B. Stuart |
| Gordon, Hn. J. E. (Elgin & Nairn) | O'Neill, Hon. Robert Torrens | Wrightson, Sir Thomas |
| Gore, Hn G. R. C. Ormsby-(Salop | Palmer, Walter (Salisbury) | Yerburgh, Robert Armstrong |
| Gore, Hon. S. F. Ormsby-(Linc.) | Parker, Sir Gilbert | |
| Greene, Sir E. W (B'ryS Edm'nds | Parkes, Ebenezer | TELLERS FOR THE AYES—Sir |
| Greene, Henry D. (Shrewsbury) | Pease, Herb. Pike (Darlington) | Alexander Acland-Hood and |
| Grenfell, William Henry | Percy, Earl | Mr. Ailwyn Fellowes. |
| NOES. | ||
| Abraham, William (Cork, N. E.) | Grant, Corrie | O'Shaughnessy, P. J. |
| Abraham, William (Rhondda) | Hammond, John | O'Shee, James John |
| Ainsworth, John Stirling | Hayden, John Patrick | Parrott, William |
| Allen, Charles P. | Hayter, Rt. Hn. Sir Arthur D. | Pease, J. A. (Saffron Walden) |
| Austin, Sir John | Helme, Norval Watson | Power, Patrick Joseph |
| Barlow, John Emmott | Hemphill, Rt. Hon. Charles H. | Rea, Russell |
| Barran, Rowland Hirst | Henderson, Arthur (Durham) | Redmond, John E. (Waterford) |
| Barry, E. (Cork, S.) | Holland, Sir William Henry | Reid, Sir R. Threshie (Dumfries |
| Bayley, Thomas (Derbyshire) | Horniman, Frederick John | Rickett, J. Compton |
| Bell, Richard | Johnson, John (Gateshead) | Roberts, John Bryn (Eifion) |
| Black, Alexander William | Jones, William (Carnarvonshire | Roberts, John H. (Denbighs.) |
| Blake, Edward | Joyce, Michael | Roche, John |
| Roland, John | Kearley, Hudson E. | Rose, Charles Day |
| Brigg, John | Kennedy, Vincent P. (Cavan, W. | Russell, T. W. |
| Broadhurst Henry | Kilbride, Denis | Seely, Maj. J. E. B. (Isle of Wight |
| Buchanan, Thomas Ryburn | Kitson, Sir James | Shackleton, David James |
| Burke, E. Haviland | Lambert, George | Sheehan, Daniel Daniel |
| Burt, Thomas | Langley, Batty | Sheehy, David |
| Buxton, Sydney Charles | Lawson, Sir Wilfrid (Cornwall) | Shipman, Dr. John G. |
| Caldwell, James | Layland-Barratt, Francis | Slack, John Bamford |
| Cameron, Robert | Leamy, Edmund | Soares, Ernest J. |
| Churchill, Winston Spencer | Levy, Maurice | Spencer, Rt. Hn. C. R (Northants |
| Cogan, Denis J. | Lewis, John Herbert | Stanhope, Hon. Philip James |
| Condon, Thomas Joseph | Lloyd-George, David | Strachey, Sir Edward |
| Crean, Eugene | Lough, Thomas | Sullivan, Donal |
| Cullinan, J. | Lundon, W. | Taylor, Theodore C. (Radcliffe) |
| Dalziel, James Henry | MacVeagh, Jeremiah | Thomas, Sir A. (Glamorgan, E.) |
| Davies, Alfred (Carmarthen) | M'Crae, George | Thomas, D. Alfred (Merthyr) |
| Davies, M. Vaughan (Cardigan) | M'Fadden, Edward | Toulmin, George |
| Devlin, Chas. Ramsay (Galway | M'Kenna, Reginald | Trevelyan, Charles Philips |
| Devlin, Joseph (Kilkenny, N.) | M'Killop, W. (Sligo, North) | Wason, Eugene (Clackmannan) |
| Dilke, Rt. Hon. Sir Charles | Markham, Arthur Basil | White, George (Norfolk) |
| Donelan, Captain A. | Mooney, John J. | White, Luke (York, E. R.) |
| Doogan, P. C. | Morley, Rt. Hn. John (Montrose | Whiteley, George (York, W. R. |
| Douglas, Charles M. (Lanark) | Moss, Samuel | Whitley, J. H. (Halifax) |
| Edwards, Frank | Murphy, John | Wilson, Fred. W. (Norfolk, Mid. |
| Evans, Samuel T. (Glamorgan) | Nannetti, Joseph P. | Wilson, Henry J. (York, W. R.) |
| Farrell, James Patrick | Nolan, Joseph (Louth, South) | Wilson, John (Durham, Mid.) |
| Fenwick, Charles | O'Brien, K. (Tipperary, Mid.) | Woodhouse, Sir J.T (Huddersf'd |
| Ferguson, R. C. Munro (Leith) | O'Brien, Patrick (Kilkenny) | Young, Samuel |
| Fitzmaurice, Lord Edmond | O'Brien, P. J. (Tipperary, N.) | Yoxall, James Henry |
| Flavin, Michael Joseph | O'Connor, James (Wicklow, W. | |
| Flynn, James Christopher | O'Donnell, John (Mayo, S.) | TELLERS FOR THE NOES—Mr. |
| Foster, Sir Walter (Derby Co.) | O'Donnell, T. (Kerry, W.) | Herbert Gladstone and Mr |
| Fuller, J. M. F. | O'Dowd, John | William M'Arthur. |
| Gilhooly, James | O'Kelly, Jas. (Roscommon, N.) | |
| Goddard, Daniel Ford | O'Malley, William |
Motion made, and Question, "That the Chairman do report Progress; and ask leave to sit again,"—(Mr. Munro Ferguson)—put, and agreed to.
§ MR. MCKENNA (Monmouthshire, N.)said the object of the Amendment which ho rose for the purpose of moving was to do away with the proposed new duty of 3d. per pound on tobacco strips. The protective character of the proposed tax had been recognised by Unionist free-traders, who had dismissed it with a phrase. There was said to be "a whiff of protection" about it. It was quite true that the amount of revenue involved was not large, and that the number of persons affected by the tax was small, but if it could be shown that the tax possessed the worst vices of a protectionist impost, that it disorganised trade, that while it enriched a few men it impoverished others, that it would ulti- 906 mately bring in no revenue, and that it was a breach of the formal pledge of the Prime Minister, he hoped free-traders on the Government side of the House would agree with him that it was a tax to be condemned. The Chancellor of the Exchequer had justified the tax on two grounds—first, that our existing Customs regulations were at fault; and, secondly, that the existing duties were an anomaly. The right hon. Gentleman's exact words were—
These regulations had actually driven employment away from our shores.And that—It was an anomaly in our tobacco duties that leaf and strips should be subject to the same charge.907 It would be noticed that the first ground of objection depended exclusively upon the insufficiency of the existing drawback. He agreed with the Chancellor of the Exchequer that the drawback allowed upon stalk taken from the leaf had been insufficient, but the appropriate remedy for the defect in our Customs regulations was to amend the drawback, and inasmuch as the light hon. Gentleman proposed to effect such an Amendment in the present Bill that particular argument disappeared. With regard to the second ground of justification the case put forward by the Chancellor of the Exchequer was that the existing tobacco duties were on a rising scale of protection, that protection was given varying in degree according to the amount of manufacture involved. The right hon. Gentleman stated that stripping was a part of the process of manufacture, and that it alone in the whole series of processes did not receive protection from the duties.
§ MR. AUSTEN CHAMBERLAINdid not use the word "protection."
§ MR. MCKENNAthought the right hon. Gentleman, with a smile, used the word "compensation," in order to avoid the word "protection." His words were—
But the principle of the scale being that there should be a rate for raw tobacco, with a correlative but increased rate for each form of the manufactured article, it has always been an anomaly that the first process of manufacture or treatment which the leaf goes through is marked by no corresponding rate in our scale.And—The result is that the home manufacturer, making for home consumption, has a larger measure of—shall say compensation—than Mr. Gladstone had intended.From the inquiries he had been able to make into the processes of manufacture, he (the hon. Member) had been unable to find any justification for the theory advanced by the right hon. Gentleman. The general rate of the duty on manufactured tobacco was 3s. 10d. per pound. Whether the tobacco was spun into roll, or pressed and cut, or cut loose as in the case of shag, there was no difference in the amount of duty. There were exceptions to the rule, but not at all ranged on any scale of manufacture. The 908 exceptions were Negro Head and Cavendish, charged at 4s. 4d: and cigars, charged at 5s. 6d. In the case of cigars, the principle was that a pound of tobacco did not make a pound of cigars, and that consequently it was right and proper that a pound of cigars should be charged a heavier rate than a pound of tobacco. As regarded Negro Head and Cavendish, there was a difference in the rate according to whether they were manufactured in bond or when imported, but the reason for the difference was not to be found in any Act of Parliament so far as he had been able to discover. It was beyond all dispute that the existing duties on manufactured tobacco were protective, but it was to be remembered that the protection of manufactured tobacco dated back to the days when England was a protectionist country. Mr. Gladstone found the trade in tobacco protected, he did not altogether take the protection away. But that was no reason why a new element of protection should be introduced, by which a branch of the industry which for sixty years had not received protection should be protected now. The argument of the Chancellor of the Exchequer was an admission that the duty of three pence on strips was protective of the industry of stripping. Stripping was unskilled labour, done by negroes in the United States at a charge of about ¼d. per 1b. If the work were done in this country, it would probably be performed by girls at wages of from 6s. to 10s. a week. The total value of the industry if no more strips were imported could not exceed £60,000 a year. That was the industry for the sake of which the tobacco trade was to be disorganised, and a first sample of protection re-introduced into the country. Every freetrader believed that if the industry of stripping was protected and caused to be carried on in this country instead of in the United States, some other service or industry by which we paid for the work now done in the United States would no longer be done here. Every free-trader believed this, and every protectionist avowedly or implicitly denied itAfter the speech of the Prime Minister at Sheffield, he should have thought that it would not have been necessary to raise the argument in this House, but unless the tax were withdrawn the argument would 909 have to be raised, because the tax was a protectionist tax, introduced on protectionist principles, and in contradiction of the pledge given by the Prime Minister.
One special and overwhelming objection to the tax was that it embodied something which was absolutely new in our fiscal policy and which ought to be utterly condemned. There were in this country large stocks of tobacco held in bond. The amount was approximately 200,000,000 pounds, or enough to last upwards of two years. Those stocks were owned partly by manufacturers and partly by merchants, and they were partly held here by merchants on commission for American owners. Hitherto the duty on leaf and strips had been the same—3s. per 1b. A differential duty was now to be introduced. What would be the; effect? Hitherto a manufacturer who wanted to buy raw tobacco had gone to the merchant owning the stocks in bond, and purchased from him either leaf or strips, according to his requirements, and having purchased what he wanted he took the tobacco out of bond and paid the duty. Under the present proposal the duty on the leaf would be 3s., and on the strip 3s. 3d. The two commodities were practically the same. Leaf could be converted into strips for the cost of stripping, which in this country was less than a halfpenny per pound. What would be the consequence? A manufacturer who went to a merchant to buy would be offered the strips at, say, 6d., and the same quality leaf at 5d., the difference being largely due to the defective drawback. The manufacturer would have to pay 6d. for the strips and 3s. 3d. duty, or 3s. 9d. in all. But leaf lie would get for 5d. and 3s. duty, or 3s. 5d. in all, a difference of 4d. The cost of stripping being a halfpenny, the manufacturer would be able to buy leaf and strip it at the total cost of 3s. 5½d., and naturally he would never buy strips at 3s. 9d. The effect of the proposal had been to render the large stocks of strips absolutely unsaleable. That was the new principle. The owners of leaf had had a great run on their commodity. Lucky owners of leaf! The owners of strips possessed a commodity which was a drug in the market; their stocks were unsaleable unless they would offer them at two pence or three pence per pound cheaper than before the Budget. Unfortunate owners of strips! It was an 910 absolutely new principle in our taxation that we should distinguish between two kinds of property in this way. They could not make the nation rich by taxes: all they could do was to transfer money from the pockets of one set of men to the pockets of another set.
He would not have ventured to make these statements on his own authority; he had with him a number of authorities to quote to the Committee. The Monthly Journal of Tobacco stated—
The differentiation between leaf and strip tobacco with the idea of transferring the work of stripping from negro labour in America to British working people in this country is in the abstract estimable. But in practice to have induced the trade to import strips because of an inadequate drawback allowance on the stalks and stringent moisture regulations, as that an accumulation of two years' consumption of strips is stored in the bonded warehouses, and then to depreciate the value of this immense stock by legislation, is, in the most moderate language, unfair.The same paper also stated—The threepence imposed on strips has widely different effects. While it is most injurious to the importers of American tobaccos, which have formed the bulk of the consumption, it will be most beneficial to importers of substitutes, whose business has been stagnant for years. While it gives a decided pull to Irish manufacturers, who have always been large users of leaf, it almost ruins the smaller North Country trade of brown roll, for which strips is exclusively used.On the occasion of a deputation to the Chancellor of the Exchequer, Mr. Maxwell, the representative of a large and important firm, said—Strips had been used in this country for the last 100 years, and whenever there had been a change of duty strips and leaf alike had been affected,and he used the argument to show what a thunderclap the proposed differentiation was upon the owners of strips who had accumulated large stocks in bond, which stocks were now unsaleable. Mr. McLeod, another representative of the trade, said—The trade had always considered leaf, whether stripped or unstripped, as raw tobacco, and merchants would never have thought of accumulating strips to the extent they had if there was any possibility of strips alone being penalised.The imposition of a differential duty without any modification would cause most serious loss to importers and merchants who had large stocks of strips on hand in the natural course of their business. It would pay the manufacturers much better to use leaf at 3s. than strips 911 at 3s. 3d., and it would be impossible therefore to find a market for the present stocks of strips. It would be difficult to exaggerate the seriousness of the position.The case was also fully stated by Mr. Goodwin, the representative of one of the oldest firms in the leaf import trade, who declared that many of the firms went back over a century, and that during the whole of that time leaf and strips had been subjected to uniform rates of duty; that was to say, that even during the most protectionist period of the country's history there had never been any differentiation between the two commodities. Mr. Goodwin went on to say that—He desired to put one fact before the Chancellor as showing the way in which his proposal would operate. Ten days ago he had a considerable amount of strips in offer, and had partly arranged to sell 120 hogsheads at 4£d. per lb., but a binding contract was not entered into. On Tuesday the Budget announcement was made, and when he saw it he knew that the transaction must fail through. The intending purchaser told him that he had estimated the effect of the proposed differentiation very carefully, and that when he was prepared to take 2Jd. per lb. for his strips he might offer them again.The Chancellor would therefore see that the effect of the Budget was to depreciate his property by nearly 50 per cent. There was another point. Strips had for the last century been a negotiable security with bankers. How was that security to be classed in the future if it was liable to a depreciation of from 25 to 50 per cent, in the market? The foundation of business was confidence, and if bankers lost confidence in an article like tobacco it would be impossible to conduct business; it would be impossible to negotiate with firms if the security offered was subject to such a sudden and heavy fall. There were plenty of precedents for the course which they asked the Chancellor to take. There were the cases of the coal tax and the corn tax, in both of which rebates were allowed, and he was told that in the publican's compensation Bill the Government had laid down the principle that it was unfair to have confiscation without compensation. It seemed to them that in the tobacco trade the events of the last ten days had to a very great extent confiscated the value of their property.Upon the other aspect of the question, the rise in the value of leaf, he would quote only the Secretary of the Liverpool branch of the Tobacco Dealers' Alliance, who, at an interview, stated that—in consequence of the shortage of stock the Western leaf has been withdrawn from sale, and common filler Western leaf has fetched close on 5d. per 1b. between merchant and manufacturer, whereas a few days ago it would be bought at 3d. The situation is causing 912 much uneasiness among manufacturers, importers and wholesalers.Such was the summary of the case presented to the Chancellor of the Exchequer on the first introduction of the proposal. In the course of his reply, the right hon. Gentleman said—They represented to him that in the first instance it [the new duty] would fall only on the shoulders of some twenty houses in the country with no possibility of recovering it elsewhere and with no compensation for this added charge. [Hear, hear.] He was glad to hear that concurrence in his description of what they had said; at any rate, it showed that he appreciated what the point was that they wished to bring before him. It was in itself a reason for the course which he had indicated to them he should take—namely, that before saying anything further he should wait to hear what other people had to say in this matter. His correspondence had been extensive and varied; it came from every section of the trade, and he observed that each section of the trade assured him that the whole of the new tax would be borne by them exclusively.The right hon. Gentleman then went on to give them his amusing and ingenious reply, in which he told them that they could not all bear the whole of the tax. There were two points which he desired to observe in the reply of the Chancellor of the Exchequer. He had remarked that not a few of them welcomed the duty. Of course they did; but if the right hon. Gentleman had been cautious that statement ought to have put him on the alert. The members of a trade did not usually welcome a tax on the commodity they were producing. The owners of leaf welcomed the duty because it was giving them a bounty, and business men would naturally welcome anything that would give them a greater profit in their business. But, so far from being on his guard, the Chancellor of the Exchequer welcomed this approval as evidence of the beauty of his proposal. Was it wise for Parliament to encourage business men to combine in wealthy leagues to promote the taxation of their fellow-citizens? Taxes of this character encouraged men to subscribe to those leagues, and however inefficient and ineffective their efforts might be, they were never in want of funds. The second point to be observed was that the Chancellor of the Exchequer was under the impression that he appreciated the case brought before him by the owners of strips. He likened their case to 913 that of the manufacturers, the wholesale dealers, and the retailers, and he told them that they could put up their price And get the duty back from their buyers. He had already shown that the merchant who owned stocks of strips had no chance at all of putting up his price. The manufacturer would not buy his strips because he could get the leaf stripped himself at about one-halfpenny per lb., and why should he buy strips and pay 3d. extra duty? The essence of the merchants' case was that the tax was on strips and not on leaf. The grievance which the owners of strips had got was that they could not sell their stocks except at a grievous loss, and the complaint he made against the right hon. Gentleman was that he never seemed to appreciate that the effect of his duly would be to give a bounty to the owners of leaf and reduce the value of the strips. Of 40,000,000 1bs. held in bond by merchants about half was owned by them or held on commission on terms that they had advanced almost the whole of the money, therefore a loss of at least 2d. per pound would fall on the owners of 20,000,000 1bs. of tobacco—something like a loss of £200,000 on a few merchants in the country, who, without notice and without power of redress, had this serious loss illegitimately inflicted upon them by this Budget.When this subject was raised earlier in the session there was considerable doubt in the House as to what the effect of the duty would be, and he remembered very well that when he referred on a former occasion to the Board of Trade Returns for the month of March, he was subjected to two forms of attack, one from hon. Members who believed that he was entirely wrong in his view that the Budget had been anticipated, because anybody who had anticipated the Budget would not have imported leaf, but would have imported strips and taken them out of bond. He was also subjected to another form of attack from the right hon. Gentleman the Prime Minister on the altogether erroneous ground that he had imputed personal dishonour to the Chancellor of the Exchequer. Needless to say it was not, as he explicitly stated, and it never had been, and was not now, his intention to impute the faintest personal charge against the right hon. Gentleman. He did not believe that 914 the Chancellor of the Exchequer understood the meaning of the tax when he proposed it. He did not, however, think that that was sufficient ground for the subsequent attack made upon him—an attack which, although not continued in consequence of a letter he wrote, had never been withdrawn. He was bound to say for himself that he had never been able to understand how the Prime Minister was able to evade one or other of two courses. He had never been able to understand why, if he believed him in what he wrote in his letter to him, he did not withdraw the charge made against him, and if he did not believe him why he did not continue the attack. He should be most unwilling to say anything offensive or disagreeable to the Prime Minister, because apart from this particular incident he had always treated him, as he treated everyone else, with the greatest courtesy and fairness; but he ought to have remembered that when he made an attack upon a private Member of this House all the organs of the Press up and down the country reported his speech in full, giving the widest publicity to every charge made against a humble individual like himself, whereas any reply that he might make did not receive, ho would not say equal attention, but scarcely any attention at all. The right hon. Gentleman, whose name was written so large in the book of chivalry, should not have allowed that letter to be characterised as an appeal, and the writer to be represented by some organs of the Press as going down on his knees in an appeal ad misericordiam. If the circumstances were brought to his knowledge the right hon. Gentleman should surely have taken an opportunity to relieve him from the stigma of that charge.
When quoting the Returns of the import of strips in March he argued, as any man of ordinary business acumen would argue, that somehow somebody had anticipated what the Budget would be. In March the importation of strips was 3,400,000 1bs. or 43 per cent; of unstripped, or leaf, 4,600,000 1bs. or 57 per cent; whereas before the Budget was anticipated the proportion of stripped was 77 per cent. and of unstripped 23 per cent. In April the stripped imports were 2,700,000 lbs., and the unstripped 5,000,000 lbs., or 65 915 per cert In May the stripped dropped to l,600,0001bs.and the unstripped amounted to 3,800,000 1bs., or 71 per cent. What would become of the revenue if strips were no longer imported? There were certain stocks of strips held by British manufacturers in the United States before the Budget was introduced, but once those stocks were exhausted not a single pound of strips would come to this country, for no man would pay 3d. duty on strips over and above the leaf when he could strip the leaf for one halfpenny a pound. Two years hence this revenue would disappear. The Chancellor of the Exchequer would not be in office then. He would have left his mark as a protectionist, but he would have left no revenue for his successor. If he had put the duty on the leaf and strips alike how different would the result have been! The revenue would have been permanent, he would have avoided a cruel injustice to the owners of strips in bond and he would have been faithful to the pledge of the Prime Minister that the question of protection should not be raised in any form in the present Parliament.
Upon the subject of this pledge he proposed to quote, not the Prime Minister, but the right hon. Gentleman the Member for West Birmingham. He did so because one of the qualities which he admired most in the late Colonial Secretary was that they never had any doubt as to his meaning. What he admired most in the statements of the Prime Minister, on the other hand, was that he was always successful in leaving his meaning in doubt. Both right hon. Gentlemen had their duty to fulfil, and when he wished to know what the pledge of the Prime Minister was, he naturally turned to the right hon. Gentleman the Member for West Birmingham. He would quote his interpretation of that pledge which at the time was approved of by the Prime Minister. It was given on the occasion of the Motion moved by his hon. friend the Member for Banffshire on the 18th of May last. Then the late Colonial Secretary said—
I understand that, following the repeated statements of my right hon. friend the Prime Minister, and following also what has always been my own opinion with regard to the propriety of this matter, we do not desire that the question should be discussed, and we do not believe it could be practically discussed in the present Parliament. We say you may raise 916 the fiscal question if you please, and you may say what you will about it upon a private Member's abstract Resolution; but the Government have pledged themselves not to raise it in any form.Upon the statements which he had ventured to bring before the Committee, which he believed that he had supported with sufficient testimony, he submitted that this duty was a protective duty upon the industry of stripping. He could not conceive that the Prime Minister would say that, inasmuch as there was already a protective duty upon manufactured tobacco, it was no departure from our present fiscal system to introduce a new protective duty upon another process dealing with tobacco. He could not imagine that the Prime Minister would say ^that, because such an argument could only be characterised as a quibble. The process of stripping had never before been protected in this country, and to protect it now was to introduce a new protective duty. It was not relevant to assert that there were other processes which were protected. This duty raised the whole fiscal question. It was a protective duty, and if it was imposed he submitted that it would be a breach of the pledge given by the Prime Minister. That pledge was given to the whole world, and it was open to even the humblest Member of that House to call for its unreserved fulfilment. Ministers had relied upon that pledge in the course of this very debate for their protection, and they, too, were entitled to rely upon it now for protection. He argued that if the Government fulfilled that pledge they would have to give up the protection of the industry of stripping. The industry which the duty would protect was one which we could well do without, but, even if it was an important industry, the preservation of Ministerial faith was of far greater importance.
§ MR. AUSTEN CHAMBERLAINsaid the hon. Member had been good enough to say that he had no suspicion of his honour, but had suggested that he had been duped by somebody more clever and less honest than himself.
§ MR. MCKENNAsaid he did not impute dishonesty to any business man who, in the furtherance of his own business, 917 desired to get a tax that would benefit him at the expense of others.
§
Amendment proposed—
In page 2, line 3, to leave out from the word 'pound,' to the end of the clause."—(Mr. M'Kenna.)
§ Question proposed. "That the words 'and the duties payable under the same section or' stand part of the clause."
§ MR. AUSTEN CHAMBERLAINsaid he was trying so to frame his remarks that there would be no necessity for contradiction or interruption. The hon. Member had repeated the allegation that this duty was anticipated by a person, or by persons, who had an interest in the knowledge which they obtained, and who profited by it to import an unusual quantity of strip tobacco. He was glad to say that the hon. Member had mentioned no name. On the first occasion the hon. Member associated this charge with a reference to Mr. Gallaher, a manufacturer of Belfast, who, he said, was a member of the Tariff Commission. If the hon. Member wished to call attention to the unusually large importation of strip in the month before the Budget statement was made without imputing or making any suggestions of improper conduct against any one, all he could say was that the hon. Member worded his speech imprudently, and he made a misapprehension of his meaning almost inevitable. He had given him no hint that he was going to call attention to these figures or to the particular case of Mr. Gallaher at the time, and naturally he was not prepared to reply at once on the figures which were given. He did not think it would be right for him now to give the exact figures with reference to each particular merchant or dealer in any particular dutiable article, but Mr. Gallaher's name having been introduced, and suggestions having been made concerning him, he thought it was right to say a few words as to his importation. The suggestion made was that Mr. Gallaher was a great user of leaf tobacco, that he had some knowledge of what the Budget intended which enabled him to import largely in the month of March.
§ MR. McKENNAinvited the right hon. Gentleman to read what he said if he wished to quote him. What he actually stated was that Mr. Gallaher was 918 a large owner of stocks, that the importation of March would have been a mere trifle to Mr. Gallaher, that he personally had not the faintest knowledge who had imported, and did not inquire, but that someone had imported largely, without doubt.
§ MR. AUSTEN CHAMBERLAINreplied that the hon. Member did not say that. [Cheers and OPPOSITION cries of "Read."] It was a question of fact. If there was no intention to insinuate that Mr. Gallaher had taken advantage of his connection with the Tariff Commission or with the Chancellor of the Exchequer, or of a supposed connection between both, to secure this alteration of duty for his own purpose, why was his name connected with this large importation? There were three statements he could put in a few words which he thought the Committee ought to know. The importation of strips by Mr. Gallaher in March a year before the Budget was more than four times as large as it was in March immediately preceding the Budget. His average importation over the twelve months preceding was more than three and a half times as much as it was in the month before the Budget. If any further answer was needed to the suggestion that Mr. Gallaher or any one else obtained knowledge of his intention and that the increase in the stock of leaf was made in the month before the Budget, he thought that it would be sufficient to say that his first suggestion of this duty on strips was made in answer to an inquiry of his addressed to the Board of Customs in the month of April. The fact of the matter was that owing to the wet season in America, or from other causes, the usual imports of leaf had not taken place in the closing months of last year and the early months of this year. There was accordingly a greater quantity in the month of March last. Even making allowances for that, the importation of whole leaf during the months from September, 1903, to March, 1904, were over 1,250,000 lbs. less than they were in the preceding; year. He must apologise to the Committee for dealing at such length with this side of the question.
Now, perhaps, he might be allowed to deal with what, after all, was the pleasanter subject of the merits of the tax itself. There were two questions 919 raised—whether it was right to differentiate between strips and whole leaf, and whether, if so, the difference proposed was proportionate to the difference between the values of the two articles. The theory on which our tobacco duties were worked was that the duty on the manufactured article should be greater than the duty on the raw material from which it was produced. That was admittedly reasonable, for the manufacturer in this country must have some compensation for the restrictions to which he was subjected if he were to carry on his trade at all. The hon. Member said that there was no differentiation between spun and twist tobacco. But neither of these was a process in the manufacture of the other. They were two separate articles produced from the same raw material; but strips were a stage in the process of manufacturing raw tobacco for sale to the public. The principle of marking the different stages of manufacture by separate duties found expression in the Customs tariffs of many of our Colonies, and of most foreign countries. It was not considered illogical by the trade itself. A correspondent writing in the Journal of Tobacco, from Richmond, Virginia, the centre of the industry which the hon. Member supposed to be most injuriously affected by this proposal, said—
The opinion is freely expressed on this side that it is a wonder that the tax on strips has not been adjusted in this way years since.On 1st June the Journal of Tobacco, which he did not cite as a supporter of his proposals, declared that there were sound reasons for the differentiation of the duty. He thought that those who had carefully followed what he had been saying and who were interested in the merits of the question would have seen that the distinction he proposed to make in the present Budget was not an artificial distinction. It was not a distinction unknown to people in the trade, and it would not be peculiar to this country. It was a matter of surprise among those who were most conversant with the subject that we had not adopted it long ago in our own country.Coming to the question—Is this differentiation protective he thought the whole of the Committee must see that if the duty on a raw material and the duty on a manufactured article requiring con- 920 siderable time and labour and elaborate appliances for its manufacture should be exactly the same, the home manufacturer of the finished article would be at a disadvantage as compared with the foreign importer. The home manufacturer would have to pay his duty on the raw material before the process of manufacture, and he would have to stand out of the duty for the whole of the time during which the process was going on. Therefore it was not true that prima facie there was reason for the duty being the same on a manufactured article as it was on the unmanufactured article. Prima facie the reasonable thing was that the duty on the manufactured article should be higher than the duty on the raw material; and, if that were true of a manufactured article which had undergone many stages of manufacture, was it not true—not to the same extent, indeed, but equally true in principle—of any stage or process in that manufacture? The result of our present tariff was to penalise any manufacturer who attempted to do the stripping in this country. He did not want to protect anybody and he was not attempting to protect any industry which could not exist on perfectly fair terms by itself. He had not said one word in support of this tax which was based on protectionist grounds as the strongest free-trader interpreted them; but he would ask the strongest free-trader whether he thought that it was part of the sacred doctrine of free trade, as he understood it, that our Customs duties should be so drawn as to make it practically impossible for a manufacturer to carry on a particular manufacture in this country. Was it really essential to the safety of our present fiscal system that we should maintain our duties in such a condition that the employment of British labour was actually penalised and discouraged by these duties? If that was the attitude which they were taking up, they were striking the heaviest blow at free trade, as it had hitherto been practised, that had ever been struck at any point of the fiscal controversy.
The primary reason for the action that he was now taking was in order to obtain revenue, but, that being so, he confessed that he thought it no disadvantage of his tax that it would not protect a British industry against foreign competition, 921 but relieve it from the disability and burden under which it at present laboured in competition with the foreign trade. He was not attempting to place it in any privileged position, but to place it in a position of equality in competition with the imported article. The hon. Gentleman continued to be of opinion that, quite apart from anything in the scale of duties, there was some essential condition of nature which would necessitate this work being done in America and not elsewhere. That was not his opinion. For certain purposes, especially for cigar making, the manufacturers in this country would much rather have the whole leaf than the stripped. They could then get a better article for their purpose and make a better article, but they were actually prevented by the present state of our duties from importing the whole leaf where they would wish to do so. The stripping of leaf abroad, he was also told, was on the increase, and certain classes of leaf which had hitherto been always imported as whole leaf were now being imported as stripped, in spite of the fact that it would be better for the trade itself and for the natural course of trade that the stripping should take place here. He received a letter the other day from a large manufacturer in this country who used about two and a half times the quantity of stripped tobacco that he did of unstripped in which he said that he would like to import tobacco direct from the United States to this country, but at the present time he had to import it to Holland and then to bring it in here. He was, therefore, not asking the Committee artificially to stimulate an industry which could not exist in this country without stimulation, but to remove from that industry artificial disabilities which were prejudicial to it.
§ SIB JAMES JOICEY (Durham, Chester-le-Street)asked whether he was right in understanding from the right hon. Gentleman's statement that the difference of duty in the cases of stripped and unstripped tobacco represented only the actual cost of stripping.
MR. AUSTEN CHAMBEKLAINsaid that was the question to which he was coming. He hoped to be able to satisfy the hon. Gentleman on that matter before concluding. If he had carried the Com- 922 mittee with him in showing that it was natural that there should be a distinction, and that the absence of a distinction did not promote the natural course of trade, the question arose whether the distinction which he proposed was fair and reasonable. The hon. Gentleman's allegation was that he had by this proposed differentiation greatly appreciated the price of leaf and depreciated the price of strips. He did not know where the hon. Gentleman got his figures from. He had with him the monthly tobacco circular shoving the prices of leaf and strips on 31st May compared with 31st March. For strips there were nine or ten quotations given for each month. There was absolutely no difference between the prices quoted for 31st May, after the Budget, and the prices quoted for 31st March before the Budget.
§ MR. McKENNAIs the right hon. Gentleman prepared to say that there has been any dealing in stripped tobacco at all?
§ MR. AUSTEN CHAMBERLAINsaid he was proceeding stage by stage. For the present he desired to call the attention of the Committee to the fact that; according to this tobacco circular there was absolutely no variation in the price quoted for stripped tobacco before and after the Budget. But then the hon. Gentleman said the whole leaf had greatly increased in price. There were ten quotations for the whole leaf in the two months, and the only one which had changed was the quotation for medium to good Western leaf, which stood on 31st March at 4½d. to 5½d., and on 31st May at4¾d. to 6d. Was not that rather a shadowy foundation for these imputations of a vast and illicit transfer of property from one class of the community to the other, owing to the misfortune of having an ignorant and unskilled Chancellor? As regarded the sales he would make a comparison with a year ago. The Tobacco Trade Review of 1st June contained particulars of actual sale:—
Virginia strip, 1903, 5½d. to 10d.; 1904, 5½d. to 10 7d.There was accordingly no change.Virginia whole leaf. 1903, 5d. to 6½d.; 1904, 4d. to 7d.923 As to strips, the price in 1903 was 5d. to 6½d.; in 1904,4d. to6½d. The price of whole leaf was—1903, 4d. to 5½d.; 1904, 4d. to 5d. These figures referred to the actual sales which had taken place. He thought, therefore, he had not made the great difference in the value of the two articles which the hon. Gentleman suggested. He had tried to make some calculation what the actual value of strips compared with leaf of the same character should be, or in other words what were the saleable articles produced on the one hand from imported strips and on the other from imported whole leaf of the same character, and what the amount of duty paid per pound of the article as sold would be. On an average of some twenty-four samples, after making certain allowances—among them allowances for the extra cost due to Excise restrictions, and the loss owing to the greater amount of moisture—the duty cost on tobacco made from the whole leaf, imported as whole leaf, would be 3s. 2½d.or a little over. On black Virginia the actual amount that would be paid in duty if the whole leaf were imported would be 3s. 4d., as against 3s. 3d. which would be paid if the manufacturer imported the strips and manufactured the tobacco. There seemed to be great apprehension that the value of strips would be adversely affected by this duty. As a matter of fact, the differentiation made between whole leaf arid strips by the duty of 3d. on strips was only enough to put whole leaf and strips on an equal footing, and that it was entirely the convenience of the manufacturer which decided whether he should work with strips or with whole leaf. The Western Tobacco Journal of Cincinnati—a quarter which could not be considered prejudiced in his favour, for, of course, it was its interest that the duty should be reduced rather than increased—stated that dealers in strips were needlessly alarmed, and it advised holders of strips to continue to hold their stocks, for the time would come when strips would again be wanted. This was his conviction also. The time would come when the present uncertainty would be put an end to by the House affirming the duty. Strips would be then demanded and holders would be able to clear their stocks without loss.He apologised to the Committee for the length at which he had spoken, but this 924 matter had assumed what he thought was perhaps an exaggerated importance. His desire was to put the Committee in possession of his views in regard to the matter. There was only one other point to which he wished to refer. The hon. Member who moved the Amendment had said that the imposition of the duty on strips was a violation of the pledge given by the Government not to raise any new fiscal issue in this Parliament. In his opinion it was nothing of the kind. It was no part of our fiscal system that the course of trade should be unnaturally diverted against the interests of our manufacturers and labourers. That mistake would be rectified by the imposition of this duty. The hon. Member seemed to think that there would be no revenue derived from the duty. But if strips were only imported because they were given an unfair advantage over whole leaf, the inequality should be removed and both be placed upon the same fair basis. That was what he was now doing in proposing this duty. He believed that strips would continue to be imported and that additional revenue would be obtained under this very proper, simple, and natural duty, which in no way interfered with our present fiscal system.
§ MR. WINSTON CHURCHILLsaid the Committee was indebted to the Chancellor of the Exchequer for his very lengthy, considerate, and lucid speech. This was a very complicated and technical subject. There were the complication of prices, the operation of drawbacks, the variety of the classes of tobacco and the processes through which the tobacco passed. There were all the actions, reactions, and counter-reactions which took place by the operation of these different factors, the one or the other. It was satisfactory, therefore, to the Committee that they had had two speeches with a high degree of technical knowledge, and they had been able to follow the whole subject with the utmost clearness. He confessed that he had been led to a. perfectly definite conclusion on the subject. It appeared to him quite obvious that this tax was vicious in principle, though, perhaps, it was not vicious on a great scale. It might be protection with a hypodermic syringe. 925 but it had undoubtedly a protective flavour about it. The money went into the Exchequer, there was no doubt about that; but the burden was not equally distributed over the tobacco trade. Some people were enthusiastic about the tax, but a considerable injury was inflicted on those tobacconists who did not derive any advantage from it. It had been quite clearly shown that this tax practically amounted to a bounty on the tobacco leaf and a corresponding drawback and disadvantage on stripped tobacco. Anyone who wanted to make money before the tax was introduced had only to find out that the Chancellor of the Exchequer was going to introduce it. They could buy leaf and import it in considerable quantities, and they were in a position to be made rich by a mere vote on the Budget Resolutions in the House. Before the Budget was introduced, the average importation for many years was 77 per cent, stripped and 23 per cent. leaf. In March, a month before the introduction of this Budget, which made the importation of leaf profitable, the importation of stripped fell to 43 per cent, and the importation of leaf rose to 57 per cent. It was no good being indignant about this. That was the fact. No one was making any charges against the right hon. Gentleman.
§ MR. AUSTEN CHAMBERLAINDoes the hon. Member suggest that that was due to the leakage of my intentions to alter the duty on tobacco?
MR. WINSTON CHURCHTLLsaid he suggested that the alteration in the percentages was due to some person or persons unknown importing in the month of March a very unusual percentage of leaf, and not importing so much stripped tobacco as they had imported during the last few years. He knew the right hon. Gentleman suggested that this was due to the wet season in America. Those who found that a satisfactory and adequate answer would no doubt console themselves with the fact that the wet season of America altered the percentages from what they had been under the influence of recurring wet seasons during many previous years and the continuance of the wet season now, so that the importation of stripped of stripped was no longer 926 profitable and had fallen to nearly 29 per cent, and leaf had risen to 71 per cent. The right hon. Gentleman was anxious to know what he actually suggested. He suggested that a deplorable scandal was the only adequate explanation of these figures. He put it perfectly plainly. The suggestion of his hon. friend so much resented by the Prime Minister on a previous occasion was not that the Chancellor of the Exchequer had gone about making some corrupt bargain with other people for his own personal and sordid profit. Nobody had ever made such a suggestion, and the indignation manifested by the right hon. Gentleman was not, he thought, wholly due to the fact that any intention to make such a charge was believed. He ventured to hope that we should never reach the stage when charges of that kind could be readily thrown against the Ministers of the Crown. His right hon. friend on the previous occasion got out of this amazing discrepancy in figures by defending his own personal honour. To-night he endeavoured to get out of it by defending Mr. Gallaher's personal honour. He had no more intention to make charges against Mr. Gallaher's personal honour than against the right hon. Gentleman's. If a volume were compiled on Parliamentarv tactics, he would certainly suggest that the Prime Minister should write a chapter on how to turn a charge against personal honour to Party advantage. No one was more capable of conveying a rebuke for a pretended crime, and he said in all seriousness that the attacks made on his hon. friend, with an air of moral indignation, on the day hon. Gentlemen came down to the House to see him receive a castigation, were greatly more diverting than they were impressive or deserved. In answer to the Chancellor of the Exchequer's inquiry, what he suggested plainly was that information must have leaked out about his intention. He could not put it more plainly than that.
§ MR. AUSTEN CHAMBERLAINWill the hon. Gentleman allow me to repeat what formerly said? My intention could not have leaked out under any circumstances in time to enable importations to be made, for my intentions were not formed, or even suggested, until April.
§ MR. WINSTON CHURCHILLsaid it was quite obvious that before the right hon. Gentleman's intentions crystallized into action he must have been considering all sorts of subjects of taxation—the Prime Minister need not leave the House. He was not going to allude to preference—and that someone connected with the tobacco trade must have had some cause for knowing what was likely to be done. Through whom did the information leak out It must have been either from the officials of the Treasury or it was due to the deductions which trade experts, whom the right hon. Gentleman consulted, drew. Which was the more probable He had no hesitation in declaring his opinion. He entertained the very highest opinion of the officials of our public Departments, and, above all, of the Treasury officials. It was a thing of which the country could be justly proud that, when many thousands of pounds might easily be made by anticipating the decisions of Chancellors of the Exchequer and when details of a coming Budget must be known to twenty or thirty men in receipt of small salaries, no leakage had taken place enabling traders to take advantage of the fiscal changes intended. He did not believe that the leakage had been through the officials, and therefore he was driven to the conclusion that trade experts whom the right hon. Gentleman consulted or approached, directly or indirectly, drew their own conclusions as to which imports were likely to be profitable and which, in fact, did prove profitable. It was a very great honour to a business man to be consulted on any business matter, for he was expected to be actuated by a high sense of honour, and if he used his knowledge, either directly or indirectly, to make a farthing out of it that man was dishonoured. But that had been possible because this tax was vicious in principle and in character protective. With taxes of a complicated and protective character there were scores of ways by which individuals could make profit, and the inevitable strain was too great for human rectitude. Protection had a corrupting effect, and now that taxation schemes were on foot they ought not to overlook this sinister feature, which had crept in in consequence of the right hon. Gentleman tampering with protective experiments in the tobacco duties.
§ SIR FREDERICK WILLSsaid he was 10th to intervene in the debate, because it might be suspected that as a member of the Tobacco Company he was anxious to trundle his own wheelbarrow. He should like, however, to ask his right hon. friend the Chancellor of the Exchequer whether in the calculation which he had set before the Committee as to the difference between the price of stripped tobacco and leaf tobacco he had charged 3d. per lb. more for duty on stripped tobacco If the right hon. Gentleman had done that he could understand the result at which he had arrived.
§ MR. AUSTEN CHAMBERLAINwas understood to say that he had included the duty in his calculation. The manufacturers were out of pocket on the raw material and for the expenses they were put to by the Excise regulations.
§ SIR FREDERICK WILLSsaid that the proposal of his right hon. friend was that there should be a differential duty between stripped tobacco and leaf tobacco. No doubt the manufacturers were quite able to look after themselves, but there were merchants in London, Liverpool, and Glasgow who had in their hands large quantities of stripped tobacco which was at present practically unsaleable. These gentlemen stood to lose between £300,000 and £400,000. The Chancellor of the Exchequer expected to get half a million of money from this duty, but he was perfectly sure that the right hon. Gentleman never contemplated that he was going to take £300,000 or £400,000 out of the pockets of twenty men in order to obtain that revenue. The Chancellor of the Exchequer did not intend that; but that would be the effect of his proposal. In most cases, the tobacco was not the property of the merchants. In the ordinary course of business, shippers in America sent tobacco over to this country, and the merchants advanced from 70 per cent, to 75 per cent of its value. The shippers dictated to the merchants the price they should ask; and the merchants then tried to sell the stock on commission. If the merchant could not sell at the shipper's price, he asked the shipper for the return of his money; but in many cases the shipper was not in a 929 position to return the money; and then he told the merchant to sell at the best price he could. If the right hon. Gentleman thought that people were going to buy stripped tobacco at an addition of 3d. per lb., he was particularly sanguine. His right hon. friend was at one period Postmaster-General—a position which he filled with very great credit to himself and with great advantage to the public. His right hon. friend had then in his employ many thousands of young women who were paid from perhaps 15s. to 30s. a week. In the firm with which he himself was connected, the young women, if paid 3d. per lb. for stripping tobacco, would earn £A 10s. a week. The Chancellor of the Exchequer seemed to think that stripped tobacco was worth 3d. per lb. more. His own opinion was that tobacco could be stripped at ½d. per 1b.; and that the girls employed in it would even then earn a substantial wage. This £300,000 or £400,000 would be borne by some twenty different firms, and he would like to appeal to the Chancellor of the Exchequer to explain why they should be fined in this manner. It was not right, in the interests of the country at large, to impose this fine. He appealed not only on behalf of the manufacturers, but also for the retailers, upon whom a great deal of the loss would fall, because the latter had, in many cases, to sell at certain fixed prices and could not go beyond them. Hon. Members opposite must bear in mind that it was impossible to adjudicate a tax imposed by the pound in order to distribute it by the ounce or half-ounce, and that when an added duty of twopence per pound was imposed it was difficult to say how the half-ounce was to be assessed.
MR. EOBSON (South Shields)was glad to be relieved of the technical points raised in the course of the debate, but there were one or two points that ought not to be left unanswered. One had reference to the name of Gallaher and to the question of upon whose advice the Chancellor of the Exchequer acted in seeking to impose this tax. It had not occurred to any previous Chancellor of the Exchequer, and the present one had gained a certain amount of credit for finding a new subject for taxation. Ho (Mr.Robson) had looked through the pages of the 930 Tobacco Journal, and he found that Mr. Gallaher had been informing the public upon the Budget proposals and that he claimed the credit of putting his views before the Chancellor of the Exchequer. He was not touching the question of fore stalling the Budget. He thought a man of business was entitled to use his intelligence and run a certain amount of risk in seeking to forecast events relating to duties on the goods in which he dealt, but he did not think that any tradesman occupying a high position on the Tariff Commission was entitled to go before a Departmental Committee and advise the imposition of a tax without informing the Committee that it would operate to his benefit and private interest. He should be glad to learn whether Mr. Gallaher, in suggesting this tax, informed the Committee that it would be an admirable thing for him and would put many pounds in his pocket. If that gentleman had made such a suggestion he (Mr. Robson) would be prepared to inscribe his name on the roll of British patriots, but if he had withheld it Mr. Gallaher must be prepared to hear more of the matter later. This kind of thing could not be limited to any particular article, but would happen in the case of other taxes. Who would suggest such protective taxes? The consumer Certainly not. These taxes were going to be suggested by those who meant to make money out of them, and it was in the highest degree instructive that this tax should be traced home to one who was to make money out of it, and who yet put his advice before the Committee without informing them of that circumstance. This matter, although it was most material to, had a bearing far beyond, the scope of the present discussion. He protested against the attempt to obscure the important public bearing of this part of the case by introducing questions of personal honour. Never in the history of the country had the question of personal honour been introduced with less excuse than when the right hon. Gentleman attempted to extract from the remarks of the hon. Member for North Monmouthshire an attack on his personal honour which was not only not intended but expressly repudiated. He begged the House and the country not to allow any such cloud to obscure the true bearing of this part of the question—namely the interest that 931 manufacturers had in going before Departmental Committees and Chancellors of the Exchequer who were not acquainted with the technical details of the trade, and using pleas of more employment, British labour, and other false hypocritical and discreditable pleas in order to get money out of the pockets of the British taxpayer. None of these trivial and unworthy attempts to import questions of personal honour would prevent him from endeavouring to trace back every one of these protectionist suggestions to its proper and its corrupt source.
§ MR. AUSTEN CHAMBERLAINWho does the hon. Gentleman suggest has been corrupt in this case?
§ MR. ROBSONsay it is corrupt to go before a Departmental Committee and advise a tax which will put money into the pocket of the witness without so warning the Committee.
§ MR. AUSTEN CHAMBERLAINunderstand the hon. Member to say that he has traced home corruption to Mr. Gallaher. All wish to say in connection with Mr. Gallaher is that have had no personal communication with him.
§ MR. ROBSONnever said you had.
§ MR. AUSTEN CHAMBERLAINHe did not suggest the tax, and the only indirect communication have ever received from him was that if had read his evidence before the Departmental Committee should have seen that my proposal was a mistake and should not have made it.
§ MR. McKENNAThat referred to cigaret'es.
§ MR. AUSTEN CHAMBERLAINNo, it referred to the duty on stripped tobacco.
§ MR. ROBSONsaid the right hon. Gentleman was seeking again to introduce the question of personal honour. He would be delighted, and he would be surprised, if it was found that Mr. Gallaher, in advising this tax, warned the Departmental Committee that he was personally interested. If he did not he did a wrong thing. With regard to corruption, his view was that almost every 932 one of these protective taxes had an origin, which, speaking from the point of view of fiscal morals, was justly called corrupt. Did the Chancellor of the Exchequer or the protectionist party justify the conduct which he had been denouncing?
§ COLONEL LOCKWOOD (Essex Epping)Will the hon. and learned Gentleman call Mr. Gallaher corrupt outside the House of Commons?
§ MR. ROBSONWhatever say inside the House my hon. friend will hear me say outside. Will the Chancellor of the Exchequer defend outside the House or inside the conduct am denouncing?
§ MR. AUSTEN CHAMBERLAINThe hon. Gentleman asserts that Mr. Gallaher before the Departmental Committee advised the imposition of the tax, and that that is the corrupt origin of the tax. deny it absolutely and entirely.
§ MR. ROBSONsaid it was the right hon. Gentleman who was now attacking Mr. Gallaher. It was Mr. Gallaher who said that he suggested the tax. He said—
In my evidence before the recent Committee outlined this idea, and my views were generally accepted.That was his authority—Mr. Gallaher. Was he to understand that the right hon. Gentleman was charging Mr. Gallaher with making an untrue statement So far from charging Mr. Gallaher with dishonour or corruption, he thought that gentleman was quite entitled to put before the Departmental Committee ideas which more distinguished persons preached in the country. All he asked of him was that he should warn the Departmental Committee of his interest. Mr. Gallaher talked about trusts, and said,If the independent manufacturers are squeezed out of the trade by the trust octopus. will take care that the British Government become their own manufacturers.That was what he threatened to do. They were not, however, going to be deterred from discussing all the bearings of this protectionist attack upon the taxes, resources, and means of the people by any attempts to import questions of personal honour into them.He would now deal with the speech which the right hon. Gentleman had 933 made that evening. The Chancellor of the Exchequer had represented that all he had tried to do in repaid to stripped and unstripped leaf was to establish equality for the purposes of manufacture. He had listened with surprise to that representation. This was the first time that he had heard that the prices of unstripped leaf had nut moved. The Committee had heard what the hon. Member for North Bristol had said upon this point, and without any disrespect to the right hon. Gentleman, he wished to say that, in a matter of trade technique, the Committee would be rather more disposed to take the word of the hon. Member for North Bristol than the price list given by the right hon. Gentleman, who had given them such an extraordinary story about the prices not having moved. He had heard from some eminent importers that since the right hon. Gentleman introduced his Budget they had not sold one ounce of stripped leaf. When the right hon. Gentleman came down to the Committee with this price list, and wished the Committee to believe that prices had not moved, where did he get his information, and where did it come from? He would like to know that. The Committee knew that in this matter they were not dealing with the right hon. Gentleman, for he came down to the Committee with the in formation supplied to him. What did hon. Members know about tobacco? Upon this subject they all depended upon information which they received from others, and it was important when a statement was made involving such a very serious contradiction of fact as that raised by the right hon. Gentleman, that they should ask who were his advisers He had a shrewd suspicion that the gentleman from whom the information was derived would probably: be found to be not without interest in the tobacco trade. They had got to look back a long way in dealing with protection. There was no foundation in fact for the supposition that this tax had not affected prices. If a person seriously told him that they could put a tax of 50 per cent, upon an article without affecting the price he should not believe him. Such a tax must affect the price. The right hon. Gentleman had had a deputation of importers before him who were honourable men of high standing, and they told him that this tax meant a depreciation of something like £10 a cask. Now, on 135,000 934 casks in bond that represented a depreciation of £1,350,000, These gentlemen had made these statements to the Chancellor of the Exchequer, and did he think they were lying The right hon. Gentleman had swept their testimony aside and he came down to the Committee with this price list, which showed an utterly impossible state of things, and he asked them to reject the testimony of men of honour in the trade. For his own part he did not accept the price list which had been put before the Committee by the right hon. Gentleman. He suggested that the right hon. Gentleman having by his Budget stopped sales, the old prices had been carried forward in the price list and he was glad to hear that in that view he was confirmed by the hon. Member for North Bristol. Upon whose behalf did the right hon. Gentleman put in this trade list? Who were they They did not desire to treat this Committee fairly whoever they were, or at any rate they did not desire to treat; the Treasury fairly. He should be the last man in the world to say anything against the Treasury, because there was no Department stood higher in the public estimation than the Treasury, both for vigilante and purity, but even the Treasury, like the rest of them, had to depend upon information which they received from others.
Taking advantage of the information which the right hon. Gentleman had given them, let them consider what had happened? There had been a cessation of sales. Why? Because this was not merely a protective tax but a prohibitive tax. The Chancellor of the Exchequer said that he desired to make the two classes of tobacco equal. Now there were two ways of doing this—either they could put a tax upon stripped tobacco, or they might adopt Mr. Gladstone's method and put the same tax on both, giving drawback to the unstripped leaf in order to put it on a parity with the stripped leaf. Now that was what he proposed. The right hon. Gentleman talked of the disadvantages attached to the unstripped leaf, and therefore he said he must put a tax upon the stripped leaf. In another part of his Budget he arranged drawbacks which, if adequate, completely deprived the unstripped leaf of any disadvantage whatever. The differentiation now established by this proposal 935 amounted to 600 per cent. That was establishing what the right hon. Gentleman called a parity, and putting the two classes of tobacco upon an equality. He denied that Mr. Gladstone committed an ' error in this matter, for he did not establish any anomaly. What Mr. Gladstone said was that he would put these two kinds of raw material on the same footing by allowing a drawback on the unstripped leaf. Therefore, as things now stood, unstripped leaf was at some disadvantage as compared with stripped leaf. That was an anomaly which the right hon. Gentleman was going to correct by an additional drawback so that the anomaly which he pleaded as an excuse for the taxes was one that he had amply and adequately corrected. That only made the tax the more ridiculous. Mr. Gladstone's plan was perfectly clear and simple, but it had worked somewhat disadvantageously for this reason, and he begged the Committee to note the reason. When a manufacturer had taken the stalk out of the leaf he was entitled to take it back to the Customs and ask a rebate. But before giving him the drawback they compelled him to put the offal through an elaborate and troublesome process to test it for moisture, and in order to ascertain the proper amount of the drawback. That cost money, and the Customs allowed for that something like a penny on the amount of the duty. The manufacturers had said that was not an adequate allowance, and the right hon. Gentleman was going to correct that by an increased allowance. The importation of stalk hitherto had involved some loss to the manufacturer or importer, and it had also involved some loss to the Custom. By the proposal the Committee were now considering the right hon. Gentleman was going to increase the loss to the Customs, and yet what was it he told the House when he introduced the Budget He made a statement in which he pointed out that the revenue gained by the importation of stalks. The revenue did nothing of the kind. The revenue never had gained by the importation of stalks. It had always lost from the importation of stalks. Who on earth would have supposed that from the statement of the right hon. Gentleman He must have been aware that there was a drawback on stalks. Why 936 did he tell the House that it was to the advantage of the revenue to encourage the importation of stalks Hon. Members who called themselves Unionist freetraders understood this to be a revenue tax. It was nothing of the kind. It was a prohibitive tax. There was no-duty on stalks if the manufacturer chose to bring them back to the Customs. Of course, all stalks were not brought back for the purposes of the rebate. There were some tobaccos in which the stalk was used. Was it the right hon. Gentleman's object to make the working men of the country smoke stalks instead of leaf tobacco Not at all, and, therefore, the only ground on which he could hope for an increase of revenue from the importation of stalks did not exist. The right hon. Gentleman was absolutely misinformed on this, matter. That remark was not made in order to say anything disagreeable about the right hon. Gentleman. They recognised the courtesy with which he had conducted the debate. They felt strongly on the question.
He wished for another reason to draw attention to the misapprehension under which the right hon. Gentleman had introduced the tax. It had a bearing on a wider question. If one so careful and painstaking as the right hon. Gentleman was thus easily misled by, he dare say, advisers whom he never saw but who had an interest in misleading him, what were poor free-trade Members on this or the other side of the House to hope for if they had to deal with a Chancellor of the Exchequer in a protectionist Government? What had happened in this case showed that the House was peculiarly unfitted for dealing with the technical details of a business which the bulk of the Members did not understand. The Prime Minister-had very often said that the House was unfit to deal with ecclesiastical matters He did not know how that might be, but, he was quite certain that the House was-unfit to deal with the technical details of a business of this kind. They got the most conflicting statements from persons who had a financial interest in the matter-How was the House to decide on those conflicting statements How was the Chancellor of the Exchequer, or anybody else, to avoid being misled by statements which he had pot not technical konwledge to check or correct? The might well 937 tremble if the fortunes of trade were to be put to such risks as the tobacco trade had had to undergo during the past few weeks. It would give a terrible shock to the confidence of every Englishman in the trade he carried on. The object of taxing anything was as far as possible to throw the burden OH the consumer. It was never intended by any Government, acting fairly, to put the burden so that it should fall on a particular section of the community. It was intended to put the burden on any section in such a way that that section would be able to transfer it to the rest of the community. How was that possible in connection with this tax? It would punish those who had existing stocks, but it afforded no prospect of revenue for the future. It was not a continuing tax. It was a tax which would disappear when the existing stock was taken out of bond. From the point of view of revenue this was not a continuing tax. He hoped the right hon. Gentleman would devote further attention as to what free-trade objects were, and he would see that this tax was useless for the purposes of revenue, and unjust to a very deserving class of traders.
§ MR. DUKE (Plymouth)said that a remarkable circumstance of this debate was the opportune way in which hon. Gentlemen opposite had discovered a case of corrupt misconduct due to what they called protection. The debate had been of a progressive character. The hon. Member for Monmouth had pointed to the large increase in the amount of leaf tobacco imported relative to stripped, and thought that that required considerable explanation. The hon. Member for Oldham said that the facts disclosed amounted to a great public scandal, but that he made no charge against Mr. Gallaher. Now, his 938 hon. and learned friend who had just sat down had denounced Mr. Gallaher as the corrupt author of a protective duty.
MR. KOBSONsaid he must protest against the meaning which his hon. and learned friend put upon his words. He did not say that Mr. Gallaher was the corrupt source of a protective duty. The expression he used was that all protectionist taxes were likely to come from a corrupt source.
§ MR. DUKEsaid he was in the recollection of the Committee. He did not know whether his hon. and learned friend's enthusiasm had carried him beyond what he intended to say, but when he was challenged from the Ministerial Benches as to whether ho would repeat outside the House that direct imputation of corruption, he said he would not hesitate to repeat anywhere the charge he had made.
§ MR. ROBSONNot that charge.
§ MR. DUKEsaid that if this was not the hoped-for necessary case of corruption, what had they been spending the last three or four hours about? The progressive charge had reached its utmost development, and now his hon. and learned friend repudiated it as soon as he came to appreciate what it meant. It was said that Mr. Gallaher had given evidence with a corrupt object, and with a design to get a protective duty for his own benefit, and additional discredit had been fixed upon him by stating that he was a member of the Tariff Commission. Nobody in the House knew what evidence Mr. Gallaher had given except the Chancellor of the Exchequer, and the Chancellor of the Exchequer had assured the Committee that Mr. Gallaher's evidence would have led not to the imposition of 939 this tax but to the rejection of the idea of a protective duty. [OPPOSITION cries of "Oh, oh."] That was the Chancellor of the Exchequer's statement, and the right hon. Gentleman spoke on his responsibility. He believed that hon. Members on that side of the House would accept the statement of the Chancellor of the Exchequer. It was said that Mr. Gallaher had perpetrated a concealment from the Committee that he was interested in the trade as between stripped and leaf tobacco and that he had done so corruptly for private gain. In what character did hon. Members suppose Mr. Gallaher had been examined as a witness. It was said, again, he had used his knowledge of the intentions of the Government, for his personal profit. But the Chancellor of the Exchequer stated that Mr. Gallaher had imported less leaf tobacco in the early months of this year than he was wont to do. He ventured to say that when charges of this kind were, without an atom of evidence in fact, fixed upon men who had endeavoured to serve the public interest, the scandal did not lie with the men upon whom the charges had been imposed, but it lay elsewhere. When charges of this nature were put forward in the House of Commons with levity—charges which were exploded on the shortest possible examination of the facts—there was a distinct danger of political life in this country being lowered.
§ MR. CHARLES McARTHUR (Liverpool Exchange)said he wished to support the appeal of his hon. friend the Member for North Bristol to the Chancellor of the Exchequer to make a concession to the holders of depreciated stocks of stripped tobacco. He agreed with every word that had been said by his hon. friend; 940 and if some concession were not made the holders of these stocks would be subjected to something approaching confiscation, as their property would be practically unsaleable. He had an Amendment on the Paper to the effect that the proposal should not apply to any stocks held on 20th April; and he should be glad to know whether the Chancellor of the Exchequer would favourably consider a concession in that direction. If not, he would he compelled to vote for the Amendment.
§ MR. MUNRO FERGUSON (Leith Burghs)said that, in view of the interest taken in this branch of the Budget, he would ask the Chancellor of the Exchequer to consent to report Progress.
§ MR. AUSTEN CHAMBERLAINsaid he was anxious that the question should be disposed of to-night, as it would be generally seen that the uncertainty under which the trade laboured rendered the transaction of business difficult, if not impossible. If, however, hon. Gentlemen felt unable to finish the question to-night he would accept the Motion to report Progress. He hoped that his readiness to meet the wishes of the Committee in the matter would be recognised when the discussion was resumed. He would then deal with the points raised by his hon. friends.
§ Committee report Progress; to sit again upon Friday.
§ Adjourned at ten minutes after One o'clock.