§ Order read, for resuming adjourned debate on Question [3rd May], "That this House doth agree with the Committee in the Second Resolution, 'That the additional Excise duties on beer and spirits imposed by Sections 6 and 7 of the Finance Act, 1900, shall continue to be charged until the 1st day of August, 1905.'"
§ Question again proposed.
§ MR. FLYNN
drew attention to the fact that this Resolution was drawn up in exact conformity with the terms of the corresponding Resolution of the Budget of 1900, and said that in the discussion on the Budget then marvellous justification for the attitude they had taken up was to be found in the speech of the then Chancellor of the Exchequer, the right lion. Gentleman the Member for West Bristol. The right hon. Gentleman then admitted that the tax on spirits was a very heavy one, but justified the addition of 6d., which he then put on, by the statement that it was a temporary war tax which would be taken off in the following year. No one could foresee that the war would have lasted so long and have cost so much blood and treasure, and therefore no blame was to be attached to the right hon. Gentleman for not reducing the tax on spirits in 1901; but what the House ought to know, and what they wanted to know, was why the present Chancellor of the Exchequer should now, when the war was concluded, still levy this tax. He should not oppose the tax upon beer if the right hon. Gentleman was hard up, but the tax on whiskey was quite a different matter. Over and over again both Irish and Scotch Members had protested against this unfair and continuous taxation of spirits to this high amount. Such a tax unquestionably led to intemperance, owing to the inevitable tendency there was to dilute the spirit in the first place, or to the placing of impure spirits on the market in order to ensure a profit to the retailer at the expense of the consumer. In 342 the interests of temperance, only such a tax should be placed on this commodity as would ensure a spirit of a healthful and innocuous character, and not of a dangerous one, being placed upon the market. In Ireland they might fairly complain that this tax was specially unfair to them. Fifty years ago the tax was only 3s. 4d. a gallon; a few years later it rose to 4s. 8d.; then in 1858 it rose to 8s.; and in 1860 was increased to 10s. In 1894 it went up to 11s.; it was subsequently reduced to 10s. 6d. at which point it remained until 1900, when the right hon. Gentleman, as a purely temporary expedient to raise money for the war increased it again by 6d.; and at the present moment it stood at 11s. The tax upon beer represented only one-sixth of the value of the article taxed, that upon whiskey three or four times the value. He contended it was most unfair to continue this duty, and opposed the Resolution, first, because the extra 6d. was put on as a temporary war tax, and it was not right to keep it on in time of peace; secondly, because it was against the interests of temperance; thirdly, because it was a direct violation of the pledge given by the right hon. Member for West Bristol to remove it when the war came to a conclusion: and lastly, because it increased the burden of indirect taxation, already too high in Ireland.
§ SIR E. DURNING-LAWRENCE (Cornwall, Truro)
said he felt very strongly that it was the duty of the Chancellor of the Exchequer to make the duty on spirits as high as possible. In the interests of temperance they should not be too cheap, and as the continuous raising of the duty from 3s. 4d. to its present limit had prevented intemperance, he congratulated all the Chancellors of the Exchequer who had contributed to the increase of the duty, not forgetting the late Mr. Gladstone. The last Radical Government in this country—the last he hoped for, many years to come—in 1894 reduced the duty on whiskey by 6d. and that was the Party which called itself the "Temperance Party." When it became necessary to raise money for the war the right hon. Gentleman the Member for West Bristol reimposed, as he thought wisely, the 6d. on the duty on spirits. Was this 343 the time to take it off? He thought not. He did not think it was the time to reduce any taxation, least of all that on spirits. Various Chancellors of the Exchequer had considered this question, and Mr. Gladstone laid it down almost as a law that the Chancellor of the Exchequer should put as high a duty on spirits as could be collected. If spirits could be retailed at anywhere near the price they cost to produce he did not know what would become of temperance in this country, and therefore a high duty was most beneficial. Spirits could be produced at about the rate of 5d. a bottle. Whether 11s. a gallon was the highest limit of taxation that could be put upon whiskey he did not know, but if it were he did not think that the temperance reformers would thank the Government for reducing it. Every Member of the House—with the exception of the representatives of Ireland on the National Benches, who were never tired of telling the House that they would provide nothing towards the expenditure of this country—was proud to think that there was a Government in power strong enough to carry this tax. In his opinion a time when a great European nation was threatening us with regard to our operations in Tibet was not the time to reduce our taxation, and he should certainly support the Resolution.
§ MR. SAMUEL YOUNG (Cavan, E.)
said of all articles of general consumption whiskey was the most heavily taxed. Whiskey could be produced at from 1s. to 1s. 3d. a gallon 25 degrees over proof, and the tax upon that was 13s. 9d., or 11s. per gallon of proof spirit. He associated himself with all that had been said against the Resolution, and if a division was taken he should vote against it.
§ MR. GROVES (Salford, S.)
said that althought to his mind the additional tax on beer and spirits imposed in consequence of the war might with advantage have been remitted to a certain extent, still he was prepared to accept it for another year, in the hope that when the financial outlook became brighter the Chancellor of the Exchequer would carry out the half promise which he had made them and would consider favourably the claims made by the trade affected.
§ SIR. FREDERICK BANBURY (Camberwell, Peckham)
in supporting the Resolution, said the arguments adducted against it by the other side were of a most extraordinary character. The expenses of the country now were just as great as they were during the war, yet hon. Gentleman opposite intended to vote against this Resolution which was to provide for the expenditure of the country. The record of the House for the last two months had been most extraordinary; the arguments of hon. Members who endeavoured to secure economy in the expenditure of the country which was, they thought, too great, had always been met by someone who got up with some special object on which he thought more money ought to be spent, and who, if listened to, would effectually prevent that economy which was so much desired by others. He did not see, if the argument that whiskey was too highly taxed were successful, how that would tend to the economy of expenditure, but assuming, for the sake of argument, that the tax on whiskey were to be reduced, it would be found that, instead of increasing sobriety, a very long step had been taken towards increasing inebriety, and this at a time when the Government were considering a measure of temperance reform. One hon. Gentleman opposite announced, as a reason for opposing this Resolution, his intention of voting against every tax proposed by the Government. He appealed to hon. Gentleman opposite to say whether it was possible to carry on the government of this country if the Party opposite were proposed by the Government on the ground, not that it was a bad tax, but that the Government proposed it.
§ MR. J. F. HOPE (Sheffield, Brightside)
said he had no fear as to the result of the division, if a division were to be taken, because it was painfully apparent that the hon. Member opposite, the hon. Member for Cork, could not hope to receive the support of the Opposition as a whole. It was quite clear the hon. Member for Halifax could not support him. If he ventured to do so he would not dare to show his face in Halifax again. Nor could the hon. Member for Barnstaple. 345 Because if he did what would the Bible Christians of Barnstaple say? Would the constituents of the hon. Member for Barnstaple approve of his action if he supported the Amendment?
§ MR. SOARES (Devonshire, Barnstaple)
said his constituents would approve of anything that would turn out the present Administration.
§ MR. J. F. HOPE
said he thought that the Bible Christians of Barnstaple would put their religious belief above Party; and he was quite certain that they would not approve of anything which would increase the consumption of spirits. Again, there were well organised temperance societies in Crewe, and he would put it to the hon. Member for Crewe what would they say if he encouraged the drinking of cheap ardent spirits? What would the, Rechabites of Keighley say if the hon. Member for that constituency voted for an Amendment, the only result of which would be to promote intemperance. The hon. Member for Kincardineshire promoted a Bill the ostensible object of which was the promotion of temperance. It was quite clear he could not possibly vote for the Amendment. He had mentioned five Members who could not oppose the Resolution; and there were many others. This was a serious question which ought to be properly debated. [An HON. MEMBER: Your majority has arrived and it is all right now.] That was really an impertinent observation. [HON. MEMBERS: Order, order!]. He remembered a few years ago that the Chairman of Committees ruled that if the word "impertinent" were used in an offensive sense it was out of order, but that if it were used in the sense of not being pertinent it was in order. It was in the latter sense that he had used it. It was a reductio ad absurdum that he should be denounced as a protectionist if he proposed a tax on a fully manufactured piano imported from abroad, and yet these duties should be placed not only on spirits and beer but also on tea. From that point of view he would be inclined to vote against these duties; but the Chancellor of the Exchequer wanted the money, and if taxation was to be revised it certainly would not be the spirit 346 duty that would be the first to be reduced. Hon. Members opposite were all in favour of the taxation of luxuries. Was whiskey a necessity or a luxury? Would the hon. Member for Barnstaple say that whiskey was a necessity? Of course, he would not. If it was a luxury it could only be consumed by persons with plenty of mean who could afford to pay for it. He agreed that the barden of taxation should fall on the rich.
§ MR. FLAVIN (Kerry, N.)
asked if the hon. Gentleman would say whether a pigtail was a luxury or a necessity?
§ MR. J. F. HOPE
said that if he could not grow his hair in any more becoming fashion, he should say it was a necessity. If the Chancellor of the Exchequer wished to encourage temperance he should pass a Resolution whereby all spirits should be kept in bond for two or three years.
§ SIR JOSEPH LEESE
rose in his place, and claimed to move, "That the Question be now put," but Mr. SPEAKER withheld his assent, and declined then to put that Question.
§ MR. J. F. HOPE
said he wished to know if hon. Gentlemen opposite would vote for the abolition of Customs duties on foreign spirits. If they were prepared to do that, and also vote against this Resolution it was quite clear that they would be violating one of their fundamental principles, because in that case they would be voting against Customs duties on foreign spirits, and, at, the same time, doing away with Excise on home spirits. If, for instance, the hon. Gentleman for Accrington said he was ready to vote against the taxation of foreign spirits he could not possibly vote against the Resolution. With regard to Ireland, the treatment which the English Government meted out to that country in the eighteenth century was something which no Englishman could contemplate with equanimity.
§ * MR. SPEAKER
The hon. Member will not be in order in entering on the question of taxation as between England and Ireland.
§ MR. J. F. HOPE
said that undoubtedly the tax on spirits did weigh very heavily on Ireland; and he should be very glad if something could be done to relieve Ireland in this matter. He wanted to know when he was drinking a glass of Irish whisky whether he was helping Ireland or not. One theory was that the tax fell on the producer, and another theory was that it fell on the consumer. He should like to know from some authority like the right hon. Gentleman the Member for East Wolverhampton where the incidence of taxation really was in this matter. What he wanted to know was—Did the burden of the duty fall on the Irish taxpayer or the English consumer? He could suggest many better means of raising revenue, and he proposed to invite the attention of hon. Members opposite to other sources of taxation to show them how the general basis could be broadened. Personally he felt bound to vote for these duties and to give the Chancellor of the Exchequer his loyal support, although there were many points in the Budget which he was compelled to adversely criticise. If he had to produce a Budget representing his own fiscal views it would, no doubt, differ from that which was now before the House. He would read to the House some words of Burke with regard to the consumption of spirits from a moral point of view. The hon. Member, amid many interruptions, proceeded to read a long extract from a speech by Burke on the whisky duty.
* MR. SPEAKER (interrupting)
I hope the hon. Member will endeavour to make: his observations more relevant.
§ MR. J. F. HOPE
said he always had had a weakness for Burke, but he would not press the matter further. Because he believed the duties were just he should vote for their continuation and against the Amendment.
§ MR. SOARES
said the speeches to which they had just listened were a scathing commentary on the Motion for the suspension of the Twelve O'clock Rule that night. They were to sit there until a late hour in the morning in order that they might have the privilege of listening to speeches made by hon. 348 Gentlemen opposite, who had suddenly developed an intense interest in the discussion. He had been challenged as to his vote. It was true that Liberals had voted against the tax on tobacco and the tax on beer, and if there was a division they would vote against the tax on spirits. Yet when they got into power, as they very soon would, they had not the remotest intention of diminishing these taxes by a single penny. What was the reason for it? In acting thus they were acting on the good old constitutional rule of refusing supplies to a Government which had not got the, confidence of the country. They intended to follow this policy until the present Parliament came to an end.
§ MR. AUSTEN CHAMBERLAIN
Before I deal with the remarks of the hon. Member for Barnstaple I wish to say a few words as to what has fallen from my hon. friend the Member for South Salford lest they should give rise to some misconception at a future time. My hon. friend alluded to a deputation which he introduced to me, and which put their case very fairly before me, and he suggested I made a certain half promise. Well, I made one definite statement which was more than half a promise. I said I thought I did them no injustice in saying that they came to me not so much with the idea of getting an immediate remission of the duties which press upon dealers in alcohol as with a desire to keep alive their claim to consideration whenever a chance of remission arose. What I did promise was that if I were responsible at. that time I would consider their claim along with the claims of others. My hon. friend will see that this was a promise which I should make to every taxpayer.
§ MR. AUSTEN CHAMBERLAIN
And I do not wish to destroy that hope. Still it is a promise which every man in my position might make, and would be bound to fulfil with regard to every taxpayer who feels himself aggrieved by any tax. Certainly the trade is entitled to full consideration, and all that it can 349 urge in favour of a remission of duty shall be considered. So, also, all that can be urged by other taxpayers in favour of the remission of the taxation which presses hardly on them will be considered. It is, however, useless to discuss the relative urgency of their claim when there is no possibility of relief. It has been stated by the hon. Member for North Cork that the continuation of these duties is a distinct violation of a promise made by my right lion, friend the Member for West Bristol when imposing them. It is true that the right hon. Gentleman when imposing them did express a hope that they would be only temporary, and no doubt that is the utterance to which the hon. Member for North Cork refers. But the right hon. Gentleman recurred to the matter on a subsequent occasion, and expressly stated that even when the war came to an end the ordinary expenditure would not permit the remission of the additional taxation. The right hon. Gentleman in 1901 said—I have never stated that in my belief the expenditure of this country can be reduced. I have said it might have to be increased, and therefore we must strengthen the basis of our existing indirect taxation.and the right hon. Gentleman went on to say—It is perfectly clear that in now asking that the duties shall be continued I am breaking no promise.I pass from that to the speech of the hon. Member for Barnstaple, who I see is not in his place. His speech, interesting as it was, constituted a curious comment on the action of hon. Members opposite with regard to the serious business of this country. I have been fiercely attacked this afternoon for wishing insidiously by a slight readjustment of the tobacco duties, to introduce the heretical principles of protection. I have been accused of infringing the sacred doctrine of free trade. Yet Gentlemen opposite, who voted in favour of the Customs duty on foreign beer and spirits, are now going to vote against the corresponding Excise duty on home-made beer and spirits. Hon. Members opposite go on to say that we are incapable of dealing with the temperance question, because we are too much in the hands of the distiller and the brewer, and yet these temperance 350 advocates are ready, without a word of explanation, to go into the Lobby and vote for a reduction in the duty of spirits, and to translate free food into free drinks. Then the hon. Gentleman the Member for Barnstaple, in his philosophic justification of that attitude, said they were only applying the constitutional rule of refusing supplies to a Government in which they have no confidence. But the fact is that Supply has already been voted by this House, and the hon. Member is only seeking to refuse the means of paying the Bill. He says he will vote against any and every tax without reference to the merits if only he can thereby displace the present undeserving Government. Having secured that object, he will be prepared to-morrow to vote black what to-night he has declared to be white; and he is, in fact. ready to treat all the interests and trades of the country as mere pawns in the lowest form of Party game. The discussion would not have been complete without that very frank exposition of the policy of the Opposition, and I shall be curious to see whether right hon. Gentlemen on the Front Opposition Bench are prepared to treat the great interests of trade and finance on the principles laid down by the hon. Member for Barnstaple.
§ MR. WHITLEY
said the right hon. Gentleman had forgotten that the greatest interest of the trade of this country was to get the present Government out of office. Hon. Members on the Opposition Benches were most anxious to divide on this Resolution, and would have done so before the interesting flow of eloquence which followed the entrance of the hon. Members for Peckham and the Bright-side Division of Sheffield. The right hon. Gentleman himself had sought to fill up the time until his cohorts could be Drought up, but he was under a delusion if he thought the Opposition's idea in seeking an early division was to defeat the Government. What they wanted was to get to the next Resolution in which they were far more interested. He was sorry the right hon. Gentleman had thought it necessary to waste so much of the time of the House with his lecture on temperance.
§ MR. PIRIE (Aberdeen, N.)
said the Chancellor of the Exchequer had made some very pointed remarks as to the attitude of hon. Members on the Opposition Benches, but that attitude was justified by the necessity for getting rid of an Opportunist Government—a
§ Government that was double-minded, double-faced, and double-tongued.
§ Question put.
§ The House divided:—Ayes, 206; Noes. 146. (Division List No. 109.)
|Stone, Sir Benjamin||Vincent, Col. Sir C. E. H (Sheff'ld)||Wilson-Todd, Sir W. H. (Yorks.|
|Stroyan, John||Vincent, Sir Edgar (Exeter)||Wodehouse, Rt. Hn. E. R. (Bath|
|Strutt, Hon. Charles Hedley||Walrond, Rt. Hn. Sir William H||Wylie, Alexander|
|Talbot, Lord E. (Chichester)||Warde, Colonel C. E.||Wyndham, Rt. Hon. George|
|Tomlinson, Sir Wm. Edw. M.||Welby, Lt.-Col. A. C. E (Taunton||Wyndham-Quin, Col. W. H.|
|Tritton, Charles Ernest||Welby, Sir Chas. G. E. (Notts.)||Younger, William|
|Tuff, Charles||Williams, Colonel R. (Dorset)|
|Tufnell, Lieut.-Col. Edward||Willoughby de Eresby, Lord||TELLERS FOR THE AYES, Sir|
|Tuke, Sir John Batty||Wilson, A. Stanley (York, E.R.||Alexander Acland-Hood|
|Valentia, Viscount||Wilson, John (Falkirk)||and Mr. Ailwyn Fellowes.|
|Abraham, William (Cork, N. E.)||Gladstone, Rt. Hn. Herb. John||O'Dowd, John|
|Abraham, William (Rhondda)||Goddard, Daniel Ford||O'Malley, William|
|Ainsworth, John Stirling||Griffith, Ellis J.||O'Mara, James|
|Allen, Charles||Gurdon, Sir W. Brampton||O'Shanghnessy, P. J|
|Asher, Alexander||Hammond, John||Partington, Oswald|
|Barran, Rowland Hirst||Harcourt, Lewis W (Rossendale||Pirie, Duncan V.|
|Barry, E. (Cork, S.)||Hayden, John Patrick||Power, Patrick Joseph|
|Bayley, Thomas (Derbyshire)||Hemphill, Rt. Hon. Charles H.||Priestley, Arthur|
|Black, Alexander William||Hope, John Deans (Fife, West)||Reddy, M.|
|Boland, John||Horniman, Frederick John||Redmond, John E. (Waterford)|
|Brand, Hon. Arthur G.||Humphreys-Owen, Arthur C.||Robertson, Edmund (Dundee)|
|Brigg, John||Hutchinson, Dr. Charles Fredk.||Roche, John|
|Broadhurst, Henry||Jacoby, James Alfred||Roe, Sir Thomas|
|Drown, George M. (Edinburgh)||Jones, William (Carnarvonshire||Runciman, Walter|
|Brunner, Sir John Tomlinson||Joyce, Michael||Samuel, S. M. (Whitechapel)|
|Buchanan, Thomas Ryburn||Kilbride, Denis||Shaw, Thomas (Hawick B.)|
|Burke, E. Haviland||Labouchere, Henry||Sheehan, Daniel Daniel|
|Burt, Thomas||Lambert, George||Sheehy, David|
|Caldwell, James||Law, Hugh Alex. (Donegal, W.||Shipman, Dr. John G.|
|Cameron, Robert||Leese, Sir Jos. F. (Accrington)||Sinclair, John (Forfarshire)|
|Campbell, John (Armagh, S.)||Leigh, Sir Joseph||Slack, John Bamford|
|Campbell-Bannerman, Sir H.||Leng, Sir John||Soames, Arthur Wellesley|
|Causton, Richard Knight||Levy, Maurice||Soares, Ernest J.|
|Cawley, Frederick||Lewis, John Herbert||Spencer, Rt. Hn. C. R (Northants|
|Charming, Francis Allston||Lough, Thomas||Stevenson, Francis S.|
|Condon, Thomas Joseph||Lundon, W.||Strachey, Sir Edward|
|Crean, Eugene||Macnamara, Dr. Thomas J.||Sullivan, Donal|
|Crombie, John William||MacVeagh, Jeremiah||Taylor, Theodore C. (Radcliffe)|
|Cullinan, J.||M'Arthur, William (Cornwall)||Thomas, Sir A. (Glamorgan, E)|
|Dalziel, James Henry||M'Crae, George||Thomson, F. W. (York, W.R.)|
|Davies, Alfred (Carmarthen)||M'Fadden, Edward||Tomkinson, James|
|Davies, M. Vaughan (Cardigan)||M'Hugh, Patrick A.||Toulmin, George|
|Delany, William||M'Kean, John||Trevelyan, Charles Philips|
|Devlin, Chas. Ramsay (Galway||M'Kenna, Reginald||Waldron, Laurence Ambrose|
|Dewar, John A. (Inverness-sh.||M'Killop, W. (Sligo, North)||Warner, Thomas Courtenay T.|
|Doogan, P. C.||Mansfield, Horace Rendall||Wason, Jn. Cathcart (Orkney)|
|Douglas, Charles M. (Lanark)||Mooney, John J.||Weir, James Galloway|
|Duncan, J. Hastings||Morley, Charles (Breconshire)||White, Luke (York, E. R.)|
|Dunn, Sir William||Murphy, John||Whiteley, George (York, W.R.)|
|Edwards, Frank||Nannetti, Joseph P.||Whitley, J. H. (Halifax)|
|Evans, Sir F. H. (Maidstone||Nolan, Col. J. P. (Galway, X.)||Whittaker, Thomas Palmer-|
|Eve, Harry Trelawney||Nolan, Joseph (Louth, South)||Williams, Osmond (Merioneth)|
|Farrell, James Patrick||Norman, Henry||Wilson, John (Durham, Mid.)|
|Fenwick, Charles||Norton, Capt. Cecil William||Woodhouse, Sir J. T (Huddersf'd|
|Ferguson, R. C. Munro (Leith)||Nussey, Thomas Willam||Young, Samuel|
|Ffrench, Peter||O'Brien, K. (Tipperary, Mid.)|
|Flavin, Michael Joseph||O'Brien, Patrick (Kilkenny)||TELLERS FOR THE NOES, Sir|
|Flynn, James Christopher||O'Brien, P. J. (Tipperary, N.)||Thomas Esmonde and Captain Donelan.|
|Fowler, Rt. Hon. Sir Henry||O'Connor, James (Wicklow, W)|
|Gilhooly, James||O'Donnell, John (Mayo, S.)|
§ Third Resolution, "That it is expedient to amend the Law relating to the National Debt, Customs, and Inland Revenue," further considered:—
§ Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."354
§ MR. DALZIEL
asked whether this Resolution was intened to cover the proposal with regard to unclaimed dividends.
§ MR.AUSTEN CHAMBERLAIN
said that the clause necessary for that purpose would be included in the Finance Bill.
§ MR. DALZIEL
thought Members were entitled to protest against the departure of the right hon. Gentleman in appropriating a portion of the unclaimed dividends. It was true that the Chancellor of the Exchequer had quoted as a precedent the course taken by Mr. Gladstone many years ago, but there was really no analogy between the two occasions, inasmuch as Mr. Gladstone used the money for the reduction of debt, whereas it was now being taken for the purposes of revenue. The right hon. Gentleman was practically selling an asset, and was thereby setting a precedent which would doubtless be followed by future Chancellors of the Exchequer who did not care to face the odium of imposing necessary taxation. The support now being given to the right hon. Gentleman would be a direct instigation to other right hon. Gentlemen to raid not only the unclaimed dividends but also the unclaimed balances. Only the gravest national emergency could justify the course proposed, and the House were entitled to a full defence of the revolutionary action of the right hon. Gentleman. Of all the proposals of the Budget this was the most objectionable, inasmuch as it set a bad precedent which was bound to be followed. No real cause had been shown for departing from the rules which generally governed the Chancellor of the Exchequer in placing his annual proposals before Parliament. For these reasons he thought he was justified in opposing the Resolution.
§ MR. WHITLEY
hoped the right hon. Gentleman would further explain this question, as he was unable to understand from his Budget speech exactly how the matter stood. What he desired to know was, how the account stood as regarded both capital and dividends before this raid, and what the result would be afterwards. He agreed with the right hon. Gentleman in taking the money, because it was absurd to allow the accounts to run on for ever when any claim upon it was out of the question, but he contended that the money should go to the reduction of debt and not to meet a deficit in revenue. The right hon. Gentleman had prided himself on not hiving raided the Sinking Fund, but by this means he was indirectly doing the 356 same thing. He hoped a full explanation of the matter would be given on the present occasion.
§ MR. AUSTEN CHAMBERLAIN
said the facts of the case were very simple, and if hon. Members had only read carefully his remarks on the subject in his Budget speech they would have been in no doubt as to the nature of the proposal. Unclaimed stock after a period of ten years was transferred to the National Debt Commissioners, together with the dividends which had accrued upon it. Those dividends, with the dividends subsequently accruing, were invested by the Commissioners and formed the Unclaimed Dividend Account. The liabilities of that account were for the dividends which had accrued—that was, the simple interest on the amount of stock originally transferred—but as the dividends themselves were invested the fund accumulated at compound interest, and, consequently, the fund was always making a profit and creating an asset in excess of its liabilities. That would be the case even though its nominal liabilities were the same thing as its practical liabilities. But as no stock was transferred until it had been unclaimed for ten years and every effort to trace its owner had failed, the House would see that to the greater part of the money there would never be any claim at all. Accordingly there was not only an actual excess of assets over liabilities, but there was also the amount by which the nominal liability exceeded any liability which was ever likely to be enforced. When Mr. Gladstone dealt with the fund in 1863, the assets amounted to £3,087,375 in 3 per cents., with nominal liabilities of £804,509. Mr. Gladstone cancelled the whole of the £3,000,000 of stock, leaving assets amounting to £87,375 in 3 per cents. against the nominal liabilities of £804,509, and no inconvenience had ever arisen from the operation. The amount paid from the fund in the course of the year averaged between £4,000 and £5,000. The assets at present, though not as large as in Mr. Gladstone's time, exceeded the liabilities—including both the liability of Mr. Gladstone's day and that which had accrued since—and if there was not much prospect in Mr. Gladstone's day of the nominal liability 357 being turned into an actual liability, the chances of such an event now were considerably smaller.
§ MR. AUSTEN CHAMBERLAIN
replied that it had not. The assets at the present time amounted to £1,864,309. What was the effect on the fund of Mr. Gladstone's operation compared with his own? Mr. Gladstone cancelled £3,000,000 of stock and left £87,375 3 per cent. stock. He now proposed to realise stock to the value of £1,000,000, and to leave stock to the value of £642,000; that was to say, after Mr. Gladstone's operation the remaining assets were 13.5 per cent. of the liabilities, while, if his proposals were approved, the assets when the operation was carried out would be 37.4 per cent. of the liabilities.
§ MR. AUSTEN CHAMBERLAIN
said that was the point he was coming to. Mr. Gladstone wrote off the liability. He did not actually destroy it. It remained; and if the assets he left over had proved insufficient, the liability would have fallen on the Consolidated Fund. He now proposed to realise an asset standing to the credit of this fund and to pay it into the balance at the bank. Was there much difference between reducing the overdraft at one's bank and adding to one's balance? Surely the effect of the two operations was very much the same. Mr. Gladstone did not reduce the liability but he wrote off the liability.
§ MR. AUSTEN CHAMBERLAIN
said that was so, but the liability remained and if the fund had not proved sufficient the State's obligation remained just the same. The mere fact that Mr. Gladstone cancelled the debt did not release the 358 State from any obligation it was under. Mr. Gladstone cancelled the stock, leaving the liability unchanged to provide money to repay dividends if ever a claimant made good his case. In the present case he did not propose to cancel the debt, but to add to the balance at the bank, and he could not imagine a more prudent or a wiser policy in present circumstances. Hon. Gentlemen opposite were under some misapprehension because they appeared to suppose that he was financing the present year by this means. In addition to providing for the anticipated deficit of this year, he had to provide for the realised or the inherited deficit of last year. That had been temporarily met by a draft on the Exchequer balances; and he proposed to replace that draft to the extent of £1,000,000 from the unclaimed dividends. That was the only way in which he could deal with that realised deficit. He would not have been justified in proposing fresh taxation for a single year for the purpose of making good the whole of the realised deficit, and certainly, had he done so, he would not have received the support of hon. Gentlemen opposite. He did not think it possible to have adopted a more prudent or a less irksome course.
§ * SIR HENRY FOWLER (Wolverhampton, E.)
said he did not propose to follow the right hon. Gentleman in the proposal which he had just explained to the House, because he did not think that this was the proper time or that they were in a position to discuss it. He interposed at this stage because he had a sort of personal responsibility with reference to the insertion of this Resolution in the Budget every year. For a long time it was the rule to pass this as a general Resolution at the end of the Budget Resolutions in order to enable private Members to propose clauses in the Finance Bill affecting the National Debt, the Customs, and the Inland Revenue. One of the predecessors of the Chancellor of the Exchequer proposed to omit this general Resolution. The alteration was resisted by the House and was then withdrawn. No doubt the right hon. Gentleman would insert in the Finance Bill his exact proposal with reference to the £1,000,000 of unclaimed 359 dividends, and when the Bill was in Committee the time would arrive for the discussion of that proposal. In the circumstances nothing was to be gained by opposition to the Resolution.
* MR. McCRAB (Edinburgh, E.)
said that whatever might be the merit of the Resolution, he thought the House should take every opportunity of protesting against the course which the Chancellor of the Exchequer was following with regard to the deficit of last year. He agreed that the right hon. Gentleman was providing for the estimated deficit of this year out of taxation, but what was his proposal with regard to the £1,000,000 of unclaimed dividends? He was introducing a new system entirely in this respect; he was talking money which had formerly been applied to the reduction of debt, and he was applying it to purposes for which taxation ought to have been imposed. This £1,000,000 was to be applied to wiping out the deficit of last year. The right hon. Gentleman had borrowed the whole of the money for his deficit of last year out of the Exchequer balances and therefore the greater part of it was borrowed money. Supposing the right hon. Gentleman got this £1,000,000 to strengthen his balances, what position would those balances be in after he had added this £1,000,000 to them? The balances, in 1899, the last year before the war, were £8,000,000 sterling and they were now £4,000,000, and even with the additional money from these unclaimed dividends the Exchequer balances would Only then amount to £5,000,000 as against £8,000,000 sterling in 1899. What he wished to impress upon the House was that this proposal was part of a general policy to meet the deficit of last year by borrowing for the whole of it. It was now proposed to take £1,000,000 from the unclaimed dividends which had hitherto gone to the reduction of debt, and what light had the right hon. Gentleman to say that he was going to meet the deficit of last year out of any realised surplus for this year? The Chancellor of the Exchequer knew very well that realised surpluses also went to the reduction of the National Debt. Therefore he maintained that this proposal was only another 360 way of doing what the right hon. Gentleman's predecessor did in 1899, namely, raiding the Sinking Fund instead of proposing taxation. The result was that the National Debt to-day was £135,000,000 more than it was in 1899. Last year, although they were told that the Sinking Fund contributed £5,149,000 to the reduction of debt, still their national indebtedness last year, taking into account the £3,000,000 due from the Transvaal, was only reduced £3,800,000. If they took away the £3,000,000 from the Transvaal, then their national indebtedness last year was only reduced by £800,000. They might just as well adopt the principle in force on the Continent and borrow money to meet their current expenses. The whole system was pernicious, and the House ought to take every opportunity of protesting against it. It appeared to him that, in addition to Chinese labour in the Transvaal, they were having Chinese finance at home.
MR. GIBSON BOWLES
pointed out that this Resolution was necessary in order to enable hon. Members to deal with matters of finance which were not submitted to the House in the Resolutions. What this Resolution did was to extend the purview and the capacity for alteration and amendment to that part of the system of national finance which was not included in the Finance Bill of the year. He did not think there was any need for the Chancellor of the Exchequer to defend his conduct in taking the £1,000,000 from the fund which he held to meet possible claims for unpaid dividend. His case was quite as complete as was that of Mr. Gladstone when he performed the same operation. But he made a serious error in departing from the example of Mr. Gladstone. When Mr. Gladstone took £3,000,000 he cancelled £3,000,000 of debt, and relieved the State for ever from the payment of dividend on that sum. Were the right hon. Gentleman to follow that example, he would relieve the State for ever from the payment of 2½ per cent on £1,000,000, and that would be the proper way, and the only proper way, of dealing with the money. When a part of the debt was cancelled the liability to pay the perpetual annuity disappeared for ever, and 361 that was the difference. If the Chancellor of the Exchequer had cancelled this £1,000,000 of debt, the liability to pay the perpetual dividends on that sum would have been extinguished, but as he had taken the £1,000,000 and spent it, the liability to pay the dividends would continue. He thought that was a very important difference, and to that extent he did not think it was the right way of dealing with it.
§ * SIR JOHN LENG (Dundee)
said the Chancellor of the Exchequer had stated that every means had been taken to ascertain claimants for the dividends. It had been over and over again urged in this House and elsewhere that the names of those to whom this money was due should be periodically advertised, and he had never heard any sufficient reason why that plan had not been adopted. In connection with the savings banks in Scotland very large sums had been returned to claimants as the result of publishing the names. In Canada and Australia there was a systematic—he believed annual — publication of the names of people who had funds invested in the public banks. There was reason to believe not only that Government stocks were unclaimed but that joint stock banks also possessed large unclaimed balances. When he first came to the House, he session after session put Questions on this matter, but he found that no impression could be made. The Chancellor of the Exchequer seemed to think it was his duty to stand between the public and the banks and the Government in this matter. He assured the right hon. Gentleman that out of doors there would be a large amount of dissatisfaction as to the appropriation by the Government of £1,000,000 not belonging to them, but belonging to the successors of the people who originally deposited this money, whom, it was believed, no adequate means had been taken to discover. On that ground alone he protested against this appropriation.
§ SIR JAMES JOICEY (Durham, Chester-le-Street)
said there was a great laxity and negligence in the efforts made to discover the owners of these unclaimed dividends, and he could speak of this from his own experience. He happened to be 362 a trustee of a certain amount invested in Consols, and several years ago he received the interest upon these Consols. But, when once making up the accounts, he discovered that the interest was missing for one half-year. He immediately set to work to ascertain how this had happened, and he discovered at the Bank of England that the usual warrant had been addressed instead of to "Longhirst" to "Langhirst," the "o" being turned into an "a," and no effort was made to discover him in Northumberland. Whatever might be said by hon. Members of his not being known in the House, he was at any rate known in Northumberland, whether other hon. Members were known in their own counties or not. He was told at the Bank of England that there was a large file of dividend warrants and among these was found the one addressed to him. He asked the right hon. Gentleman to consider whether it was a proper proceeding to leave these dividend warrants lying there? He maintained that there was not any effort whatever made to discover to whom they were due, and he protested against the Chancellor of the Exchequer taking possession of this £1,000,000 of unclaimed dividends, because he was satisfied that if proper precaution was used and some care was taken the owners would be found.
§ * MR. MARTIN (Worcestershire, Droitwich)
said he had always found the greatest facilities given to him by the Bank of England in connection with any financial transactions he had had with it. He had often had amounts due to him which he should never have recovered but for the extreme courtesy and care which the Bank of England had given to these matters. He supported the proposal of the Chancellor of the Exchequer with respect to these unclaimed balances, and he thought he had made it quite clear that if the money which he proposed to appropriate ever found a claimant who made good his claim, that claimant would get his money.
§ MR. LEVY (Leicestershire, Loughborough)
asked the Chancellor of the Exchequer whether he was going to sell in the open market. If that was not so, he should 363 be glad to know what the right hon. Gentleman meant by realisation, for at present it was not quite clear. It must be perfectly clear that if he realised in the open market he would have a double liability—the liability which attached to the money if it should at any time be claimed by the owner, and also the permanent liability of paying dividend on the shares to whomsoever they might be sold. By the system adopted by Mr. Gladstone, there could only be one responsibility. It would be only fair to the House that the right hon. Gentleman should give a clear and definite reply as to how he proposed to deal with this large sum, because he thought there was some confusion in the minds of many. It seemed to him that the right hon. Gentleman was going to create a new liability by selling the stock and still retaining the liability which he said Mr. Gladstone retained by the cancellation.
§ SIR JOHN BRUNNER
said the right hon. Gentleman had told them that he was about to realise these Consols. He understood that he was going to sell them in the open market. If the Consols were sold in the open market he supposed they would only produce their market value, but the right hon. Gentleman would remain liable for £100. Mr. Gladstone's operation was a perfectly simply one. He cancelled the stock and there was an end of the matter. What was the difference between cancellation and realization?
§ MR. AUSTEN CHAMBERLAIN
said that he hoped none of the stock would be sold in the open market, but that the National Debt Commissioners would be able to provide the sums which the Exchequer wished to raise. The liability of the State to a possible claimant was limited to an annuity calculated at the rate of 2½ per cent., and not for the market value of the stock to be sold.
§ * MR. HERBERT SAMUEL (Yorkshire, Cleveland)
said the position was now perfectly clear, but it turned out to be a very remarkable position. Apparently there was an amount of £1,000,000 in the hands of the Treasury on the unclaimed dividends account and that was to be sold to the National Debt Commissioners 364 and the money put into the Exchequer balances. Where would the National Debt Commissioners get their money from to buy that stock? Obviously the money voted for the Sinking Fund. The House had to vote some £6,000,000 for the Sinking Fund, and out of that £1,000,000 was to be taken to buy this stock and to be used by the Chancellor of the Exchequer for last year's deficit. And yet the right hon. Gentleman would have them believe that he was not meeting his deficit out of borrowed moneys. He was precisely in the position of the lady who declared with great pride that she had been able to borrow money enough to pay off all her debts.
§ MR. LOUGH
said the hon. Member for King's Lynn had made the matter perfectly clear to his mind. [Laughter.] He questioned whether the hon. Members opposite who laughed understood it. The right hon. Gentleman had instanced Mr. Gladstone's operation as a parallel to his own, but it was not a fair illustration of the very doubtful transactions we were having in these days. What Mr. Gladstone did was the only possible thing that could be done, according to consistent finance, with these unclaimed dividends. He absolutely extinguished the liability of the State with regard to them, as was clearly pointed out by the hon. Member opposite. What the present Chancellor of the Exchequer proposed to do was as far removed from what Mr. Gladstone did as one pole from another. The hon. Member said that the Chancellor of the Exchequer ought to have put on more taxation. He did not like taxation at all, and he was going to persistently oppose all the new taxes. There was another alternative. The Chancellor of the Exchequer ought to have reduced expenditure. Then he would have been able to make his accounts balance without resorting to doubtful expedients.
§ * MR. WEIR (Ross and Cromarty)
said cancellation and realisation were two very different things. In cancellation they got rid of the liability for ever. The Chancellor of the Exchequer proposed to realise these Consols at a time when they were moving up, in order that he might add to his balance at his 365 bankers. If Consols were going up, why should not the right hon. Gentleman wait for a better price? What occasion was there for hurry-skurry in this matter? The right hon. Gentleman did not tell them what efforts had been made to find owners for the unclaimed dividends. From experience he knew how tenaciously the right hon. Gentleman held on to what he had got. There is a saying that the Scotch father advised his son to keep the Sabbath and all he could lay his hands on. The Chancellor of the Exchequer had no doubt, regarded that advice most religiously. There was no evidence that the right hon. Gentleman's Department took any steps to return money which had come into its possession, whether legally entitled to it or not. The right hon. Gentleman should tell the House clearly and distinctly what steps had been taken to find out the owners of the unclaimed dividends. Was any list of owners of these unclaimed dividends published? Would the Chancellor of the Exchequer grant a Return of them every year or every three years?
§ * MR. AINSWORTH
said he would ask the Chancellor of the Exchequer to guarantee that these Consols would be cancelled and a corresponding reduction be made in the National Debt. If the right hon. Gentleman consulted any banker in the city he would obtain exactly the same statement of the position as he had got from that side of the House.
§ MR. JOHN REDMOND (Waterford)
said that he, for once in his life, found himself in complete agreement with the right hon. Gentleman the Member for Wolverhampton. This Resolution, if passed, would not give the sanction of the House to the proposals of the Chancellor of the Exchequer. It was a Resolution for the protection of the rights of the House; and as one who desired to discuss the Budget proposals fully in Committee, he would vote for the Resolution.
§ Question put, and agreed to.366
§ Ordered, That it be a further Instruction to the Gentlemen appointed to bring in a Bill upon the Resolution reported from the Committee of Ways and Means on the 26th day of April last, and then agreed to by the House, that they do make provision therein pursuant to the said Resolution.—(Mr. Chancellor of the Exchequer.)