FINANCE BILL.

HC Deb 16 May 1904 vol 134 cc1400-63

[SECOND READING.]

Order for Second Reading read.

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

SIR H. CAMPBELL-BANNERMAN (Stirling Burghs)

We have now arrived at a period in the work of the session, and I think it is the earliest period, when it is possible for us to take a general review of the financial policy of the Government as a whole. True, the Bill which is before us concerns itself with ways and means, with the raising of revenue, with the imposition or modification or relaxation of duties; but this House would be taking a somewhat narrow view of its functions and responsibilities if it allowed itself to be lost in the technicalities of taxation, and if, while dealing with all those matters which legitimately come before it on this Bill, it were to weigh one tax against another one, and one burden against another, and not direct a large share of its attention to the large question of the circumstances which necessitate the taxation which we are invited to impose. While I think this to be true in all years, I think it is especially true at the present moment, when the question which attracts attention in the country and excites alarm is not the question of one tax or another tax, but that of the unprecedently vast and growing expenditure which is incurred on behalf of the people of the country. There ought to be, there must be, surely one period in our financial business when this House can pronounce judgment upon the general financial situation in all its parts and aspects, and that period appears to me to be the Second Reading of the Finance Bill. I will not spend time in making excuses therefore, but will proceed to submit my Amendment, which invites a protest against the large and continuous increase of national expenditure in recent years.

But first may I be allowed briefly to anticipate two stock replies that are always made when this complaint is put before the House? We shall be told, no doubt, as we have been told on previous occasions, that we have already assented to the Estimates of the year, or are in course of giving assent to them, and that it is too late, therefore, to raise objection. Well, putting aside the fact that objections are often taken to Votes, and especially to the governing Votes of the great spending services, such as the number of men in the Army, and that if those objections are carried to a division and the contention is defeated, at all events those who raised the objection are absolved from being liable to this reply, the Estimates come before us piecemeal and in individual Votes, and how are we to tell which ought to be rejected and which ought to be approved? We have not the knowledge or the materials for the knowledge; and I confess at once that I am not one of those who take a very sanguine view of the good effects that would follow if the House were to enlarge its responsibility in this respect in some of the ways which are sometimes suggested. But I have on this subject a little bit of sound doctrine, an ounce of doctrine which I hope may be allowed to have that degree of weight, and which I should like to quote to the House, by Mr. Gladstone. I shall have occasion, I think, again in the course of my observations to quote Mr. Gladstone, and I think everybody, even those who differed most warmly from him in general politics, will admit that he was in our time the highest authority on this question of financial procedure. This is what he said in 1868— To my astonishment the doctrine seems to have been laid down by the Chancellor of the Exchequer that when once the Estimates have been accepted by independent Members the House is responsible, for them in the same degree as the Minister of the Crown. It is impossible too emphatically to pronounce against that opinion. It is entirely contrary to the relation in which he stands to the House. The doctrine is monstrous. The Government have unlimited opportunities of investigating the Estimates of expenditure through the departments under the supposed control of the Treasury, and how is it possible that those who have no such power, even if they agreed to the Estimates, can be responsible in the same degree, as the Government? That, I think, is high authority, sound constitutional doctrine, and also, by good luck, common sense at the same time. The second answer which we shall probably receive—we always do, and I believe that every Chancellor of the Exchequer will give it on every similar occasion—is that we are called upon not to confine ourselves to vague and indeterminate declarations, but to indicate the precise head of charge which we would wish to see dropped and to put our finger upon the cause and source of mischief. To that I make the same reply. We have not access to the facts and the causes. We do not know the relations and the comparative importance of the claims of particular developments of expenditure. What we see is the swelling torrent of expenditure swamping the country, exhausting and exceeding the ordinary resources of the country, necessitating the imposition of fresh taxes at a time when we had every reason to expect that taxes would be removed, bearing cruelly upon the taxpayer, crippling him and crippling the nation. We see, also, that certain policies and lavish expenditure appear to go together. Now it may be, and it generally is, that policy, according to the accepted dictum, governs expenditure; but there may be an occasion when expenditure is indulged in and then a policy is adopted or adapted in order to justify that expenditure. But, however this may be, we have seen them associated in like circumstances before, and we believe in their connection now; and that is ample ground for our complaint. It is idle to ask us, who have neither power nor responsibility in the matter, to say where and when, in what particular and at what time a more prudent coarse should have been taken.

Now, how do we stand in regard to this great growth of expenditure? The figures have often been put before the House. Putting aside the cost of the war, £230,000,000, there has been since 1895 an addition of £49,000,000 per annum to the ordinary expenditure That is an addition of £1 3s. 4d. per head of the population to what was previously paid. The population has increased by 10 per cent., the expenditure by 50 per cent. Of this increase of £49,000,000 £40,000,000, have gone to the fighting services. Those are the main facts, but let me take the two services individually. Take first the Army. It cost in 1895 £17,900,000. The current year's Estimates are for £28,900,000. That is an increase of £11,000,000. To this we must add £3,600,000 of capital expenditure under the Military Works Act. As the hon. Member for Exeter said the other day, each Department has a little private debt of its own. I assume that that expenditure will be the same as last year. Then we must add anything from £1,000,000 to £2,000,000 for Supplementary Estimates, for the second Budget has come to be a second nature. Put the sum at £1,500,000 and we have a total of £34,000,000, close upon double the charge of 1895. I turn to the Navy. In 1895 the cost was £17,500,000. This year's Estimates and the capital charges for naval works amount to £42,300,000, and with the probable Supplementary Estimates we shall be fortunate if they are not swollen to £44,000,000. Therefore the two services together account for £78,000,000. But let us make the Government a present of the Supplementary Estimates. Let us give them credit for turning over a new leaf under the new administration. Then—and I think this is treating the right hon. Gentleman extremely handsomely—the cost will be £74,800,000 as compared with £34,400,000 in 1895. It is into this bottomless gulf of unprofitable expenditure that the money has been flung. This outbreak of expenditure has had its fiercest developments in coincidence with the South African War. Between 1895 and 1899 there was an increase of £9,000,000 on the fighting services. But in the three following years the expenditure on the Army alone increased by £9,000,000, and on the Navy by £7,000,000—together £16,000,000. That brings us up to the financial year ending March, 1902. In the next year the Estimates were practically stationary, but last year—the first complete year of peace—there was another and a most significant upward movement. The Navy charges were augmented on the Estimates by over £3,000,000. If we take into account the Supplementary Estimates and works, there would be a total of £40,000,000. This process of expansion has been carried further again in this present year. The Estimate increases have not been so serious, but the fact remains that they have not diminished, but rather augmented. If retrenchment had been used at the close of the war how different the situation would have been. It is, of course, inevitable that spending Departments should get out of hand in war. War always means wasteful expenditure in the field and at home—necessarily so. The purse strings, if not actually cast away, are at all events greatly slackened. This, I am afraid, is not in the spending Departments alone; the spirit is contagious. Again I fall back on my authority, Mr. Gladstone. In 1863—in his great financial days—Mr. Gladstone said that together with the so-called increase of expenditure there went up what might be termed a spirit of expenditure, a tendency which, insensibly and unconsciously, perhaps, but really, affected the spirit of the people, the spirit of Parliament, the spirit of the public Departments, and perhaps even the spirit of those whose duty it was to submit the Estimates to Parliament. This demoralisation is a thing we have often seen before, but never more conspicuously than within the last half-dozen years. And the gravity of the situation seems to me to lie in this, that, so far as the Army Estimates are concerned, a state of things necessarily abnormal is apparently adopted as the starting point for fresh and, as far as we can sec. unlimited demands on the taxpayer. We are to march on without a halt and never to turn our eyes back to the standard of national expenditure which existed before the war.

Now, can it be pleaded that the millions thus added to Army expenditure have been laid out in accordance with any fixed plan or scheme or purpose? No. The Prime Minister within the last few months has announced the discovery of the true functions of the Army. The Secretary of State for War told us in introducing the Estimates that the discovery was not yet complete. All we know for certain is that the new conception, whatever it may be, destroys the other and earlier discovery, which was announced with no less elation two years ago. Then let the House observe that the naval expenditure also must have been conducted to a great extent in the dark, seeing that it had no reference to any co-ordinated theory of defence. Let us hope that the newly-organised department of direction at the War Office, under the Cabinet or over the Cabinet—I do not know what the relation is—will not be obliged to take the expenditure incurred and the additions made to our forces during the war as a chose pugée. The expenditure was incurred under the pressure of undoubted patriotism—still, without much discernment. But the House is expected to hold this standard sacred, apparently, so far as the Estimates submitted to us this year are concerned. This is the central part of the situation, and the one that differentiates it from the other cases, when at the close of the war, the question of expenditure has come up for consideration. I am afraid that reference to anything before the nineties will be set down as being early Victorian or even prehistoric: but the Prime Minister's military researches must have led him to consider what happened on two occasions in the last century—at the end of the great Continental war at the beginning of the century and at the end of the Crimean War in the middle of the century. In 1816 the Army Estimates were cut down at once, and when a famous military predecessor of the right hon. Gentleman—the Duke of Wellington—became Prime Minister, in 1828, the knife was ruthlessly and unsparingly applied. What happened after the Crimean War? Mr. Disraeli and Mr. Gladstone vied with each other in giving the Government of the day no peace and insisting on bringing expenditure back to the standard existing before the war. These precedents may be considered too remote, but they are not uninteresting or uninstructive to the country. So far as we are informed in this House, no hope of diminished expenditure has yet been exhibited. The Secretary of State for War said, taking the aggregate Vote and comparing it with last year's, we had £280,000 less than what he thought was the normal War Office Estimate. That is, the normal state of things must be taken as having been reflected by the expenditure of last year—an expenditure which was, practically, twice what it was ten years ago, and £10,000,000 in excess of the immediate pre-war standard. Then, in 1901, we were promised a reform of the Army. The Army, accordingly, was reformed amid much jubilation and self-congratulation. The reform is now gone, and all that remains is the share of taxes that was imposed. Then comes this more recent discovery. What said the Prime Minister last year, speaking on the Address, when this discovery must have been at least in part revealed? He said— I greatly doubt whether any study that we can give to the strategic problems of the Empire is likely to show that in the future any great diminution in our armaments or in the cost of our armaments is likely or possible. We should be utterly contemptible if, in obedience to a natural, though I think an unfortunate, change in public opinion, we were to admit for a moment that we did not believe that the forces we have asked for are forces necessary for the safety of the Empire; if we were to diminish them by a jot, if, after having gone to the country and made Imperial speeches for four years, we were to go back to them and say, 'Imperialism was all very well when it was popular, it was all very well before the public realised what it cost, and now that it is a little less popular we will change our scale of demand for Imperial defence, and we will trim our sails to suit the changing gales of popular faith.' Brave words; but take the bravery out of them, and they amount to a confession of helplessness in the presence of the Frankenstein of expenditure that Ministers seem to be held by as in a vice. I do not mean any double entendre in using the word vice. When stripped of rhetoric this amounts to a preposterous claim to manipulate and exploit in perpetuity the war fever which is now dead and gone. But then we have the Central Asian terror. The Prime Minister is very much impressed with that. We have been face to face with that Central Asian terror for a great many years, and it has been largely used on many occasions. I think it is reasonable, at all events, to say that events are occurring in Asia which, whatever the issue of them may be, must considerably relieve the minds of those who are anxious in the matter. Let the Government follow in Asia their own good example in Europe —on which we offer them unreserved congratulation; let them come to a good understanding and settle our differences with our neighbours. That will give more strength to our Indian Empire than doubling or trebling the South African garrison or pursuing in Tibet or elsewhere the singular policy of occupying the far side of a practically invulnerable frontier.

I will only say a word or two as to naval expenditure. Everyman among us is in favour of a strong Navy. He would be blind, indeed, who did not see that it was the first condition of the policy of this country. But when we hear in after-dinner speeches, and read in leading articles, statements triumphantly made that this country will grudge no money for expenditure on the Navy, that goes considerably beyond the truth. The country must have proved to it that the expenditure is necessary; and such language, and the sentiment that it indicates, is mischievous in its effect, because it encourages expenditure which may be excessive, and, if excessive, wasteful, and, if wasteful, then hurtful to efficiency. But, again, here let the Government courageously follow their own good example to which I have already referred, and again, by friendly negotiations, secure for the States of Europe that immunity from the intolerable burdens of naval armament which can be secured by no height to which jealousies and rivalries and insane competition can carry us. When the Navy Estimates were before the House, I quoted some words of M. Delcassé, which I think are very significant and apposite. I take leave to quote them again. A Motion had been made urging France to take the initiative in suggesting a reduction of armaments to the other Powers. M. Delcassé said— France has no need to speak to the nations. She has acted for several years so that her naval and military estimates have been slightly lowered. Other nations," he added, "can follow her example. Acts are worth more than idle words. There could not be a more paradoxical situation than that in which we have the Foreign Secretary, with the earnest and noble help of His Majesty himself, turning scowling faces into the smiling faces of friends, and substituting for isolation a good mutual understanding with half-a-dozen States of Europe, and the Prime Minister, on the other hand, presiding over his military department and, as he tells us, seeing nothing but aggression and sinister designs against us on every hand.

THE PRIME MINISTER AND FIRST LORD OF THE TREASURY (Mr. A. J. BALFOUR,) Manchester, E.

I never suggested such a thing.

SIR H. CAMPBELL-BANNERMAN

The right hon. Gentleman suggested that the navies of other countries were maintained for the purpose of aggression against us, whereas our Navy was built with no idea of engaging in aggression against anybody. Let the two great Western Powers join in choosing the better part, and secure for Europe at once relief and a new era of peace.

I have dwelt on military and naval expenditure—Why? Because in them is to be found the greatest mass of the increase—they account for four-fifths of it—because they take from us unproductive expenditure, mortgaging this immense revenue for armaments, which is unfair to the prospect of other sources of expenditure of greater direct interest to the people of the country. I speak of them especially because they ought to be most capable of reduction, and also because they are the branches of expenditure which are most dependent on policy. Again I am forced to fall back on Mr. Gladstone, and this is the last time I shall shelter myself under his authority to-day. This is what he said in 1873— In the consideration of the charge for the Army and the Navy there is always mixed the question of policy together with the question of expenditure. Not only the credit of the Government, but also the whole character of the policy of the country is attached to the Estimates of the year for the Army and Navy in a sense and to a degree to which they are not attached to the Estimates for the collection of revenue and the Civil Services. But the fact remains that in all branches of expenditure proper financial control is the touchstone of good administration. If a due hold upon the purse-strings is lacking, policy as well as expenditure goes adrift. Prudent finance strengthens the position of the country. Easy finance goes with clap-trap Imperialism. We do not require to look far to find instances of the sort of things that lead to great expenditure. We have the case of Somaliland, we have the case of Nigeria, and we have now the case of Tibet. We all know exactly how it comes about. The man on the spot, full of zeal and full of public spirit, full of knowledge from his own point of view, and deeply impressed with the importance of that which is immediately before him, but possibly with no perspective and no view of wider considerations, urges on the Minister at home to take a certain step either against a tribe or against an individual, or whatever else it may be. There is an excuse for some hostile or strong action. He is refused, but he insists, and, if he insists long enough, he knows that the people with whom he is dealing will ultimately yield to his importunity. The same process is set up between the Minister and the Chancellor of the Exchequer, and again we have the Chancellor of the Exchequer standing firm and whispering, or doing more than whispering, perhaps using very strong expressions, to convey the idea that he will not consent, but finally consenting. And then we have the Prime Minister, as controller of the general policy of the Government, all on the side of peace, but, on the other hand, daily and weekly, in his new capacity as director-general of the naval and military affairs of the country, always hearing the other side, the side which tends to action; and then it probably ends in permission being given to take the step that is recommended. But it must only be the first step. Never, never, never will they agree to anything more. Then, in one case after another, we at home, in our melancholy way, see the result. Circumstances have the mastery over us. You cannot stop. You must go on. Your prestige is involved. You might as well command the waters of Niagara to be still. Over you must go. Engagements have to be accepted and acted on which commit the country to responsibilities and burdens which were never dreamed of. And how much is this sort of thing likely to be increased when we have Ministers at home who are known to encourage this forward spirit in different parts of the Empire, and when the man on the spot, as I have called him, knows that he has at least one or two powerful assistants within the Cabinet itself?

Well, Sir, that is the cause of this large expenditure, that is the spirit of which I complain; but when we speak of expenditure and deplore it, then it is said that it is all nonsense to denounce it, that the country can well afford it. The ability to pay has nothing to do with the justice or the necessity of the demand. I believe that the Eastern, the Oriental, fiscal method is to say, "Here is a taxable matter, let us tax it. Here is a man with money, let us take some of it from him." But that has never yet been our way. Our principle has been to take only what was strictly required for public purposes. It is largely due to the watchfulness exercised over expenditure and the adoption of such fiscal methods as will best suit the interests of the people, that the wealth of the country, which is being cut to pieces by taxation, has increased, and that its commerce has greatly developed. Therefore we should be suspicious of excuses such as that the country does not feel the pinch or that the taxation will be of a painless character, like painless dentistry. This House is in the position of a trustee. We are bound to see that no expenditure is incurred which we are not satisfied will be wise and necessary. This is a truism, but it is apt to be overlooked. But can the country afford it? What do you mean by the country? If you mean the whole wealth of the country, then it is easy to show that the expenditure will diminish it by only such and such a percentage. But that has nothing to do with it. Who are the classes and individuals who pay? The men with small incomes; the men with low and precarious wages; the family of slender resources, where every increase of price is felt. They may be able still to get their necessaries, but if they get them at a higher price they have to lose certain comforts which they had before. The right hon. Gentleman the Member for West Birmingham last year made the announcement, as I understood, that he intended to visit a large number of cottages in order to prove to the working classes by means of a table, that the working man would gain by an extended system of indirect taxation. I do not know whether that tour has yet been made. The right lion. Gentleman was busy in the winter, and we are glad to know that he has been recovering his health in the spring. But now the summer has, as it seems, set in, and it would be a good time to make that tour. If there is any advantage in such a series of domiciliary visits, why should not the Chancellor of the Exchequer also visit these cottages—they cover many square miles in this country? The right hon. Gentleman might not find that the inmates were consuming less sugar, or less tea, or even less tobacco, but they will have a smaller sum to lay out upon other things, and there must be a corresponding loss to the home trade. The payers of income-tax, too, would have a story to tell of painful economies they have to set on foot, and these again are prejudicial to trade. It is ridiculous and it is the purest nonsense to pretend that the question is disposed of by the statement that the country is able to afford it, and that 50 millions of extra taxation can be levied without causing inconvenience, suffering, and depression of trade, and that of those 50 millions 40 can be sunk in unproductive expenditure without damage to trade and employment.

And now I come to another point, and I am glad to tell the House it is my last. This Bill has for its sponsors a Government pledged to great changes in our fiscal system, and the main doctrine upon which that system has hitherto rested is to be deleted, annulled, in fact, obliterated altogether. More than that, they are overshadowed and dominated by fiscal projects of an even wider character than those they openly profess. As sponsors for the Finance Bill they enlarge on the prosperity of the country as able to bear the additional burden of 50 millions a year; as fiscal reformers they enlarge on the serious condition of trade and the scarcity and precariousness of employment. Let them be careful to attribute effects to their true causes. Expenditure is a vital factor in fiscal policy, as the use which has been made of the present scale of expenditure in the fiscal agitation has shown. What said the right hon. Gentleman the Member for Birmingham last week? "We have," he said, "a new issue altogether; we have to find a great revenue by taxation, and I want to raise that revenue as far as possible from the pockets of foreigners." Now what does this mean? I am not going into the merits of the policy itself, but what does it mean? That fiscal reform is to be an alternative to economy, that the country is to go on squandering money, but it is to be under a system of fresh taxation, of lucrative taxation, taxes paid by other people, taxes which hurt nobody and bless everybody. That is the only alternative policy that holds the field against a policy of retrenchment, and for the advocates of high expenditure it may not be ill designed. It may, perhaps, account for the easy financial methods of the Government. But from our point of view the exploiting of expenditure in this fashion is one of the gravest dangers of the financial situation. When we give credit to the Government for a Budget which in the main—there are blemishes in it I know —but which is in the main a free-trade Budget, we cannot shut our eyes to the fact that, on the other side of the account, fiscal reformers desire, and proclaim the desire, to use it as a means to hold free trade to ransom. This is the reason for which I ask the House at this stage to agree to this Amendment and to declare with a strong voice against extravagant expenditure.

Amendment proposed— To leave out from the word 'That' to the end of the Question, in order to add the words 'this House, having regard to the heavy burden of taxation proposed by this Bill in a time of peace, deems it necessary to declare its condemnation of the large and continuous increase of the national expenditure in recent years.'" —(Sir H. Campbell-Bannerman.)

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

* THE FINANCIAL SECRETARY OF THE TREASURY (Mr. VICTOR CAVENDISH,) Derbyshire, W.

said the right hon. Gentleman had traversed a large area in the course of his speech, but such comparisons of expenditure as he had made were not very useful. He proceeded on the assumption that up to 1895, the last year when the right hon. Gentleman and his friends were responsible for finance, expenditure was above reproach, and since then it had fallen away and offered unfavourable comparison. Of course, it must be admitted that since that year expenditure had increased, and to a considerable degree; but it must be remembered in what condition the right hon. Gentleman and his Party left the national defences. The present Government had often been blamed for what had been called want of foresight in preparing for the Boer war, but in the three or four years before the outbreak of war they were able to do an immense amount of preparation for such emergencies as might occur. Did the right lion. Gentleman really imagine that the condition of our naval and military forces was, when he left office, suitable for facing war of any sort or kind? In instituting a comparison this side of the account must be looked at. Under those circumstances he did not think the Opposition had any ground for taunting the Government with not pursuing a policy of retrenchment. He did not think that their policy, prior to the outbreak of the war, could be accurately described by the term extravagance. He was justified in saying that the policy of attempting to avoid war from the fear of being accused of an agressive policy had been carried to a dangerous extent. There was every reason at the present time for saying the country was able to bear the burden imposed, heavy though it was and severely though it pressed on some classes, and the needs of the country must be taken into consideration. Upon this the right hon. Gentleman had nothing to say. The right hon. Gentleman accused the Government simply of piling up huge armaments, both naval and military, but he did not deal with their national needs and necessities. He gave the Government good advice as to acting in friendly relations with other countries, and congratulated the Government on the success which had attended their recent efforts in that direction, but he did not allude to that strength of position which was favourable to friendly agreements and commanded respect. Were they not now in a better position, without any wish to appear aggressive, to be able to make those friendly agreements of which he had spoken? They had no wish to use that force or to boast of their strength, but by being strong they were able to earn respect and, he hoped, the genuine friendship of other countries. Did the right hon. Gentleman mean that we should avoid doing anything in Somaliland or Tibet in order to avoid the possibility of hostilities?

The right hon. Gentleman confined his criticisms to naval and military expenditure, and he scarcely alluded to the other portions of national expenditure. There were, however, u few matters to which he should like to direct the attention of the House. At the be ginning of his speech the Leader of the Opposition said there was a wave of extravagance in regard to expenditure going over the country, and he seemed to think that that was due to the fact that the Government had taken the view that it was necessary to spend a considerable amount of money upon the Army and Navy. He did not believe that in the past sufficient attention had ever been given to putting the defensive forces of this country upon a better scientific basis. They saw now a systematic attempt being made for the first time to co-ordinate the two great forces of the Empire. The right hon. Gentleman did not refer at any length to the Civil Service Estimates or suggest extravagant expenditure was taking place there. It was his privilege as Secretary to the Treasury to have, perhaps, more correspondence with Members than any other Minister, and from all sources he was in the habit of receiving almost daily suggestions that were certainly not in the direction of economy. Hon. Gentlemen wrote to him advising increase of wages to Government employees, expenditure on manuscripts, or for the preservation of ancient monuments, or for better provision for the comfort of the people, and much of his time was spent in writing politely but firmly to decline undertaking further expenditure. He did not believe there was anybody in the House, outside the Treasury Bench, who not only preached economy but made some effort to practise it. He was not going to refer to all that had happened through the session, but he would refer to what took place during three days last week. On Wednesday it was proposed that they should pay themselves. On Thursday they spent the whole day discussing the Post Office Estimates; he was in the House most of the time. Not a single word was said in the course of that debate in favour of economy or retrenchment. It was one succession of representations from both sides of the House to his right hon. friend the Postmaster-General that this or that postal facility ought to be given. On Friday last a proposal was brought before the House that the country should undertake another large amount of expenditure on lighthouses. The only word of warning came from the right hon. Gentleman the Member for West Bristol, who pointedly asked hon. and right hon. Gentlemen on the Opposition side of the House if they were going to vote in favour of putting this extra charge on the Imperial taxes on Friday, and if they were going to support the Amendment of the right hon. Gentleman to-day. He did not think it fair or right that the Government should take all the blame to itself. He was not going to give statistics, but if hon. Gentlemen would go through the debates which had taken place from time to time on Bills which had been introduced by private Members, they would see that there had been almost constantly a demand for additional expenditure. Personally, on Saturday morning when he came to consider the work which had been done during the course of the week by the House of Commons, he gave a sigh of relief if the Government had not been forced to add some further expenditure to the Imperial finance. He did not mean to say, or to suggest, that hon. and right hon. Gentlemen should not bring those matters before the House. No doubt they were matters of importance, and no doubt if there was money available it might be usefully applied to these purposes. He wished at the same time, when they were bringing these Bills and Resolutions before the House, they would bear in mind their own most admirable economic maxims on the occasions when the Budget Resolutions were being discussed. When the Budget Resolutions were being considered recently they heard a great many criticisms, and no doubt in the course of this debate they would hear a great many more, but he wished that hon. Gentlemen would take a little more note of some of their own speeches, and that, instead of pressing certain views on the Gentlemen sitting on the Treasury Bench, they would spend a little time in sending extracts from their own speeches to the correspondents who were continually pressing demands upon them.

He would say to the right hon. Gentleman when he brought up this matter of economy in the form of the Amendment now before the House that he ought also to bring it up on the discussion of the Estimates. The House had made certain alterations in the rules of procedure during the last few years, and he thought he was rightly interpreting the wish of the Prime Minister when he said it was his right hon. friend's desire that on Thursday, which was allocated to Supply, the Votes brought forward should be chosen by the House as a whole, and by the Opposition in particular. Time after time he had appealed to his hon. friend the Parliamentary Secretary to the Treasury to let him know what Supply was wanted for certain Thursdays. It was really no exaggeration to say that his hon. friend who was responsible for the business of the House had almost to go round begging hon. Gentlemen to tell him what Supply was wanted. Except possibly during the discussion of the Army Estimates there had scarcely at any time been a symptom of a general desire to reduce expenditure. On the contrary, the whole tendency shown in Supply was towards increasing the expenditure. He did not wish to press this point too strongly, but he ventured to say that nobody more than his right hon. friend the Chancellor of the Exchequer would welcome the support of the Leader of the Opposition, when the Estimates were before the House, in getting hon. and right hon. Gentlemen opposite to assist in the direction of economy. The right hon. Gentleman had said in connection with the debates in Committee of Supply that they had, of course, not got the materials which were in possession of the Government Departments in framing the Votes. He himself understood that that was exactly what Committee of Supply was for—that was to say, it was intended that in the debates in Committee of Supply the Minister responsible for the Vote should be criticised and examined, and that he should have an opportunity of defending the proposed expenditure. The right hon. Gentleman the Leader of the Opposition had said that they were not prepared to discuss the Navy in any hostile spirit. He did put in a few words of warning with which nobody would disagree, but it was a most remarkable fact that when the Estimates were discussed in the few hours before half-past seven they were able to run through all the Navy Votes with the exception of one which was left outstanding in order that it might be discussed later on.

SIR H. CAMPBELL-BANNERMAN

How many days discussion had gone on before?

MR. LOUGH (Islington, W.)

Three days.

* MR. VICTOR CAVENDISH

Well, there were three days, but he did not think that could be taken as indicating a great wish to discuss the details of expenditure in public. If the House did not wish to attack the proposals of the Government he was sure that he should be the last to do so.

MR. LOUGH

We did attack them.

* MR. VICTOR CAVENDISH

said hon. Members were not so ready when Supply was put down for discussion as they were on the Second Reading of the Finance Bill to talk about economy.

MR. LOUGH

We tried to knock out two churches.

* MR. VICTOR CAVENDISH

said that if in stating their views as to how economy should be effected hon. Members opposite could only attempt to knock out two churches on the Navy Estimates, the policy of the Government was not one which could be seriously attacked. He hoped that during the present debate the Government would hear more definitely what their sins in the direction of extravagance had been, and also that hon. Members opposite would give a clear declaration of their policy, because, after all, it was nothing else except a matter of policy. [An HON. MEMBER: Heat, hear!] He admitted it. He hoped that they would have an equally frank admission from the other side, and if they could show a policy which, with greater economy, would do all that the country considered necessary to meet the requirements of the public service and to preserve the de-fences of the Empire, he should be very much surprised indeed if they were able to show much retrenchment. He could assure the House that the Government realised the importance of economic management and administration, and that they would be glad to receive the help of the House itself in the exercise of economy.

SIR CHARLES DILKE (Gloucestershire, Forest of Dean)

said there was one sentence in the good-humoured speech of the hon. Member which he was afraid most of them heard with deep regret. While professing to answer the statement of the Leader of the Opposition that the policy of the Government had in some cases been unduly aggressive, the hon. Member went out of his way to apply that statement to one case only, namely, the South African War. The hon. Member said if there was fault to be found with their South African policy it was that it had not been sufficiently aggressive. He would be out of order if he went into the South African War policy, but surely they might be allowed to remind the House of the Jameson Raid, On the subject that was really before the House the Financial Secretary to the Treasury attacked the predecessors of the Government for having in 1895 left the naval and military services of the country in an abnormal condition. Now as regarded the Navy every statement made at that time, on either side of the House, was that the Spencer programme was sufficient and proper under the circumstances of the day; and, as regarded the military side, he appealed to hon. Members who were interested to read the Report of the War Commission to see what they made of the Prime Minister's assertion that the Army before the South African War had been brought up to a proper condition—he meant as regarded stores. In two speeches on that subject the Prime Minister hid said that the condition of the Army in 1896 had been satisfactory.

MR. A. J. BALFOUR

That is your view of what I said.

* SIR CHARLES DILKE

said that the Prime Minister's statement was to the effect that, by the efforts of the predecessors of his Government, the defences of the country had been left in an adequate condition. That was the fact.

MR. A. J. BALFOUR

No; you are quite wrong.

* SIR CHARLES DILKE

said that as to stores, the Prime Minister had, on repeated occasions, said that at last the condition of the stores was satisfactory; but the Report of the War Commission showed that that condition had up to 1902 still been unsatisfactory, and the strongest possible language was used on that subject by them. The entire expenditure, amounting to £11,000,000, for bringing up the reserve of stores had been approved by all sides of the House, but that did not affect current or year by year expenditure to the present time. The Financial Secretary to the Treasury also claimed that the present Government for the first time recently, had reduced the management of the Army and Navy to a scientific basis; that, for the first time, the Army and Navy services had been co-ordinated. Exactly the same claim was made in 1890. One of the main charges of extravagance and bad administration was that only now, under the new arrangements that had been made by the Government, the economy was to be achieved which ought to have been successfully made before, but which, as a matter of fact, did not appear on the present Estimates. The Financial Secretary to the Treasury spoke in a chastened spirit about the expenditure of the Government, and tried to throw the whole blame on the House of Commons. It was hardly characteristic of a strong Government having the support of the House of Commons, to complain of letters which were received in favour of particular expenditure on London parks, etc. The House of Commons had to look to larger questions in a larger way, and the Government ought to resist the pressure from individual Members.

The Financial Secretary to the Treasury represented, he understood, the free-trade section of the Treasury, and he was not open to the suggestion made by the Leader of the Opposition as to the effect of fiscal policy on the financial control to be exercised by the Government. They all knew that protectionism tended towards public waste, and against efficiency in finance. The hon. Gentleman attacked the House of Commons individually and collectively. He attacked the House as though the Opposition, as a body, had supported the Lighthouse Dues Bill. Now the hon. Gentleman must know that in past years, when the condition of the finances of the country was very different from what it was now, some members of the Opposition had supported that demand for the abolition of the lighthouse dues, thinking that there was no more reason why the shipping community should be charged for these light dues than all members of the community should be charged individually for the lights outside their houses. Yet those same Members on this occasion had either walked out like himself, or even voted against the Bill solely on account of the state of national finance. This question would have to be considered in a wider spirit than that in which it was considered by the Financial Secretary to the Treasury, and all of them ought to be on their marrow bones and take their share of the blame for excessive expenditure. He should have thought that in a debate of this sort each side ought to have made large admissions to one another. He knew that it was not considered wise to make admissions, because they might be quoted against hon. Members in future debates; but, on the whole, he suggested that it was wiser to take a subject fairly and make all due admissions, and that the Government, in order to obtain support, should likewise make due admissions. He took it that hon. Gentleman on the other side of the House had been trying to admit that the present Government had been extravagant. The Chancellor of the Exchequer had been trying to maintain that the Government had not been extravagant. He was alone in that opinion. It was not shared by his predecessors even, on his own side. The right hon. Member for West Bristol made speech after speech to his constituents, in which he made that statement as emphatically as it could be made. A right hon. Gentleman opposite shook his head, but he preferred to take the statement of the right hon. Member for West Bristol, although it must be said that the right hon. Gentleman the Member for West Bristol's statement was somewhat stronger than was due to loyalty to his collective responsibility. They all admitted—it was impossible to deny—that as regarded Army expenditure, the Government, by not knowing their own mind, by changing their system from time to time, had been extravagant.

There was another matter on which there should be admissions. It was that the fiscal policy of the country must affect this question of extravagence. It did so elsewhere. But when they had 120 Members on the other side of the House who were most emphatic in giving a kind of support to the Government, and who said that they had the support of the constituencies behind them, who were in favour of raising an average 10 per cent, duty upon all foreign-manufactured goods, who claimed that the tax would be paid by the foreigners, that in itself that duty would be a blessing to the country—these hon. Members would not be actively interested in economy as some other hon. Members would be. It used to be a complaint that some Chancellors of the Exchequer spoke of the Consolidated Fund us like manna which fell from heaven. But these proposed import duties were to be more than manna. Hon. Members opposite had discovered a new heavenly blessing, a new fund, a new source of revenue, which they thought they would be able to spend with perfect freedom. He believed that two more admissions might be made on the other side.

Was there any control over South African finance, over the finance of Lord Milner which affected the finance of this country? The Leader of the Opposition pointed out that the Government was managed from the outside in one direction; he wished to make the same remark but that it was managed from the outside in another direction. The grand delector of the Government was outside the Government; and he was more powerful than the Government. That elector raised a case, the basis of which rested upon the taxation which did not tend in the direction of a reduction of expenditure. There used to be a Portuguese Minister in this country, who, although accredited to the Court of St. James, used sometimes to take a steamer to Lisbon, and there turn out a Government, appoint a Government in its place and then re-appoint himself as Portuguese Minister to London. Here the right hon. Member for West Binning ham could do that if he pleased. The Government was dominated by the right hon. Gentleman, somewhat unconstitutionally, on this fiscal question; and therefore it could not be trusted to insist on that careful administration of the finances of the country which the Constitution demanded. Coming to details, the Financial Secretary to the Treasury attacked the House of Commons for their treatment of the Navy Estimates; and he complained that the House of Commons had passed these Estimates in the course of one afternoon. But what were the facts? Every Member knew that the naval expenditure was entirely governed by the first Vote, Vote A, and the Shipbuilding Vote; and after they had had full discussion on Vote A, it was only on churches, chaplains, and such like, that they could hope to effect any reductions. There was a full discussion on Vote A, but the Vote for the Navy, from its popularity as being the first line of defence of this country, had not the same opposition in these debates as the Vote for the Army. At any rate, there was a very full debate this year, and a portion of the Shipbuilding Vote was kept over with the understanding that there would be a similarly full discussion in relation to it in July.

Those were admissions which hon. Gentlemen opposite should make; but there were also admissions which Radical Members ought to make in regard to national expenditure. One admission they ought to make was that they should not attack a mere increase of expenditure without reason and without understanding. They should not attack an increase without examination. He thought, as the Chancellor of the Exchequer had stated, that they might expect an increase, not only an increase in proportion to the increase of population, but greater. Some thought the household occupier voters more extravagant than the £10 householders of 1832. He doubted the Tory Party began their appeal to the new voters of 1867, the question submitted being in 1869 "who starved the cats." The cats belonged to the dockyards and victualling-yards; and their allowance was cut down from 8d. a week to 4d. Mr. Gladstone pointed out that a question of efficiency was involved, because the cats were kept to cat mice, and that, therefore, a reduction in their allowance would be likely to secure a diminution in the number of mice. That was the first question put before the now electors by the Conservative Party. As to the wage questions alluded to by the Secretary to the Treasury, there appeared to be a belief on the part of the hon. Gentleman, and also on the part of the Chancellor of the Exchequer, that any agitation in regard to the wages of Government employees was a dishonest agitation fomented by Members directly interested. There was more than that in it. There was a belief that the Government ought to set an example in those matters; and many hon. Members who had strenuously set forward that claim were those who did not represent the constituencies immediately concerned. Radicals, Labour Members, and Socialists would be stronger in the next Parliament; and they would be all in favour of higher activity in the functions of the State. It would be open to the Chancellor of the Exchequer to contend that those efforts would tend in the direction of increased expenditure. Those were admissions they should all make. There was no wickedness in the matter; it was a question of scientific administration. Just as the fiscal reformers had a new fund so had the Radicals also a new fund on which to draw. The Local Authorities Taxation Bill would give a new source of revenue to the State; for it would replace the wasteful expenditure under the present doles to local authorities and to that extent save the Exchequer.

When they had admitted all that, what did the Amendment before the House assert? It declared that there was a great increase in recent expenditure, and he thought that it was specially directed against the recent increase in the national expenditure having regard to what the country got for it. It should, however, be remembered that one of the great causes of the increase in national expenditure in recent years had been the swing given to expenditure as the result of the South African War; and for his part he had always thought in the present state of the national life of the country, with rivals pressing upon it, with America coming rapidly to the front, and with Germany with 60,000,000 of well-educated people competing with it, that it was national lunacy to spend £200,000,000 in buying a white elephant in South Africa. But he admitted on the other hand that up to the present time the increased expenditure on the Fleet was one which was proper as long as the Kaiser was telling the world that he was trying to knock this country off its perch and willing to engage with two other Powers against it. The course taken with regard to naval expenditure was one which no Government could avoid; but now a change had taken place owing to the circumstances which had been alluded to; and undoubtedly some improvement might be looked forward to in the future. Making all those admissions, however, he alleged that as regarded military expenditure there was an overwhelming case of waste against the present Government. Even now the Government admitted that a large reduction in Army expenditure ought to take place; but they did not make it.

To his mind, one of the difficulties in this debate was that they could not dwell unduly on examples from one partcular class of Estimates without being out of order; but he would wish to give an instance of the want of continuity in military policy which had occurred in South Africa. The first plan was the plan of the South African Constabulary. It was entirely a South African plan, after being once started in this Parliament; and was to be maintained from South African sources. Then arose the inability of the present Government to cope with Lord Milner's finance, and the result was that the British Army, to its great detriment and to the diminution of its efficiency, was now discharging the duties which ought to have been performed by the South African Constabulary. Money had been spent in hutments in the Northern Transvaal, but owing to the unhealthiness of the district the troops lad to be removed and money was lost. The result was that there had been not only waste, but that the efficiency of the Army had been impaired; and that process was still in progress. Again, it was said that the garrison regiments were only needed for Gibraltar and Malta; but after a considerable sum of money had been spent, the garrison regiments were hustled off to South Africa. As regarded Somaliland, the Secretary to the Treasury was apologetic and said that, in his opinion, the Government could not have acted otherwise. The hon. Gentleman defended the expedition, but the Government had brought it to an end without having achieved its object; in contradiction to the speech of the Secretary of State for War, less than a week Wore. That was a condemnation of the whole course of the policy on which the expedition was based. The expedition was condemned in the House of Commons on information supplied by Ministers themselves; and there was this difference between the Somaliland case and every other case, that Somaliland was officially admitted to be a totally worthless country, so that it was quite impossible for this country to ever recover its money. The Chancellor of the Exchequer during the debates on the Budget not only maintained that there had been no extravagance, but he said that in all those cases the country had got its money back; but in the Somaliland case there was absolutely no possibility of the country ever getting its money back.

The Leader of the Opposition said one very true thing among the many true things he said in his speech when he stated that wasteful expenditure always meant inefficiency. That could be proved in the case of the Army. Owing to want of continuity of policy in South Africa the troops there were now dispersed, and that was destructive to efficiency and fatal to discipline. The Chancellor of the Exchequer said that he did not think it was right that the House of Commons having assented to a certain military programme should complain of the expenditure. It was true that the House of Commons had assented to military programmes, each of which was inconsistent with the other, and all of which caused inefficiency and waste. How could the House give guidance to the Government? All that it could do it did do. It had a programme presented at its head suddenly with the assent, by telegram, of Lord Roberts and the assent of the right hon. Gentleman the present Secretary of State for India, and the whole Opposition and a great many Members on the Government side voted against it. It was now admitted that those Members were right. No one now said a word against them. The censure passed on that programme by the Report of the Committee of three to which the Prime Minister assented was the strongest censure that had ever been passed by anybody. The most essential part of the programme, the mixing together of the Auxiliary and Regular portions of the Army, had been absolutely abandoned. Another few days would see another scheme before the House, and the present scheme would be abandoned for ever. What could the House of Commons do which they did not do? What they could they said and did. The Army represented to the country the subject upon which there had been the most difficulty; on which the Government might have obtained the greatest credit if they had brought in a well-considered scheme of reform, but on which the failure of the Government had been greatest. At the present time the Estimates the House were asked to pas; were taking unnecessary money from the taxpayer. The Government had said that next year they would be able to make a great reduction in military expenditure. The right hon. Gentleman the Member for Croydon when Chancellor of the Exchequer had said it could be promised within two years. But that was a death-bed repentance, having regard to what the right hon. Member for West Birmingham had said on Thursday last. He admitted that those who disagreed with the expenditure of the Government ought to show in what way economy could be practised and where there had been extravagance. He contended that this Army scheme was a concrete instance of extravagance and that the saving which was promised next year ought to have been given years ago. There had been steady opposition to the policy of delay which had been going on for several years past, and for which the country had had to pay year after year. They had protested against these extensions of the Empire and prophesied the evils they were bound to bring in their train. Those who had opposed the war, these extensions of Empire in Africa, and the Somali policy, and who had supported the reduction of men in the Army Estimates, could fairly support this Amendment.

The Leader of the Opposition had spoken of the amounts shown in the Estimates for the two services. The Navy was officially considered to cost £42,000,000, although in reality it only cost £41,500,000. The cost of the Army —of the land defence of the British Empire—was overwhelmingly greater. It was no less than £55,000,000, of which £35,000,000 was the expenditure here at home on Army, and £20,000,000 in India and from the Civil Service Estimates, because it must not be forgotten that there was war expenditure on the Civil Service Estimates. There was room for a great reduction of expenditure in this item, and if the Administration had been a strong one it would have been made long since. The Estimates were taking money unnecessarily from the pockets of the taxpayer. He should vote heartily for the Amendment because it had, in his opinion, been proved that there had been great extravagance under the present Government, and because of what the House had been told he believed that that extravagance was likely to continue.

MR. HAYES FISHER (Fulham)

said that while admitting that expenditure had so enormously and so very rapidly increased that it was a matter of grave national concern, he denied that the Government was to be blamed for that expenditure. Still further did he deny that if hon. Gentlemen opposite were in the position of governing the country even as much as £1,000 would be struck off it. There was no doubt a tendency to spend money on Imperial defence, armaments, and naval development, most of which had been fully justified; on the other hand there was a desire to lavish money on the hundred and one little things which went to swell the national expenditure. When at the Treasury he had the honour of framing the Estimates for the year 1903–4, in doing which he had taken the trouble to make a note of the demands made upon him during the short period he was in office, and he came to the conclusion then that with the support of the Chancellor of the Exchequer he might have had £2,000,000 a year for very different objects to those for which it was applied. The right hon. Gentleman opposite had stated that Mr. Gladstone at one time said: "The spirit of Empire is abroad." It was the same with national, municipal, parochial, and private expenditure. Everybody was extravagant; they ordered things whether they could pay for them or not, and trusted that the Lord or the Chancellor of the Exchequer would provide. As a vote of censure had been moved on the Government, it was germane to consider the growth of municipal expenditure which had been controlled, not by the Government, but largely by gentlemen belonging to the Party opposite. In twenty years the national expenditure had increased by 50 per cent. Who did not know areas of local government in which there had been an increase of 50 per cent, in the expenditure — areas in which twenty years ago the rates were 5s. in the £, and were now 7s. 6d? Then there were the municipal borrowings, which, as revealed by the Return lately issued, were quite as serious a menace to our financial stability as any of the expenditure which had been so much animadverted upon in the course of the debate. Lord Welby, who had recently resented the criticisms of the Chancellor of the Exchequer on the expenditure of the London County Council, was himself the first to call attention to the fact that that body was outstepping the bounds of prudence. He was not attacking the London County Council, he was merely giving it as an example of how municipal bodies had been forced by the weight of public opinion to borrow and to spend large sums of money, sometimes on remunerative, but too often on unremunerative works. Economy was of no value at all as an election cry for Parliament, county council, or any other body. Whether the time was coming when the people would begin to feel the pinch of the heavy taxation rendered necessary by the expenditure for which they had so gladly voted he could not say, but, at all events, no regard for economy could be seen at present among the electors.

The right hon. Baronet the Member for the Forest of Dean had found fault with the Financial Secretary to the Treasury for imputing to Members of the House of Commons a great deal of the blame for the increased expenditure. But it was not only his hon. friend who held that view. In the year 1903 a Select Committee was appointed to devise, if possible, some better means of controlling national expenditure through the House of Commons. That Committee, which examined many distinguished witnesses, such as Lord Welby, Sir Francis Mowatt, Sir George Murray, and others, stated in their Report— Eight witnesses who had had special opportunities of noticing the effect of discussions in the Committee of the House of Commons on Supply, gave it as their opinion that for many years past the result was to urge increased, not decreased, expenditure. The whole of the evidence went to show that since Mr. Gladstone was a great power in the House a different spirit had prevailed, and that the result of discussion nowadays was to increase rather than diminish expend iture. Where could any barrier be looked for? There was none to be found in public opinion. He had no valuable suggestions to make, but he thought Ministers of the Crown, especially the Prim' Minister and the Chancellor of the Exchequer, would have to develop a high moral and political courage, and refuse the demands constantly made by their colleagues for increased expenditure. It was no good the Secretary to the Treasury saying "No" if he was not backed up by the Chancellor of the Exchequer; nor was it any use for the Secretary to the Treasury and the Chancellor of the Exchequer to say "No" unless they were backed up in their refusal by the Prime Minister and the Cabinet. Every Minister naturally desired to glorify and magnify his own Department, but it was highly necessary that the Prime Minister and the Chancellor of the Exchequer should review the expenditure of the country as a whole. The development of our protectorates, for instance, was more of a missionary than a commercial enterprise, and he could not help thinking that over the shores of East and West Africa we ought to write festina lente. He had never objected to the development of those portions of Africa, but he thought we ought, to be careful how far we went into the hinterland, and see how much revenue we might expect in return for the expenditure we incurred.

The Financial Secretary who refused the demands of Departmental Ministers was not popular, but no Financial Secretary or Chancellor of the Exchequer should expect to be altogether popular with other Departments. The House of Commons itself ought to take more trouble to review the expenditure. Through the Select Committee on National Expenditure he suggested that each Estimate should have attached to it a table showing the decennial growth of that particular Estimate, so that the increase, instead of being concealed, should be conspicuously revealed, and he believed that suggestion was being adopted. There was really no proper stated occasion on which the whole expenditure of the country could be reviewed. The Budget discussions were a series of Party fights, which afforded admirable opportunities for the worst kind of Party recrimination but did not give opportunities for really valuable criticism. It would be much better to have even one stated occasion for a general review of expenditure than to fritter away their energies on so many useless discussions. It was doubtless true that expenditure in the main depended on policy and policy on the Government, but there was a large field in which the House of Commons itself might so review methods of expenditure as to ensure greater efficiency and economy. The establishment of a new "Estimates Committee" had been suggested, but he doubted whether any such Committee would effect a decrease of expenditure, because, inasmuch as expenditure largely depended on policy, the Committee would find that it could touch only the vegetables, while the real joint of policy was beyond its reach. All were anxious to reduce expenditure, or, if that were impossible, to get the utmost value for the money we spent, but when one analysed the expenditure and asked where money could be saved, a satisfactory answer was difficult to find. During the last twenty years Civil Service expenditure had increased only in proportion to the population, and the greater part of the increase was in the Vote for Education. In these days of fierce competition would anyone propose to reduce the expenditure on education? Administration was, he believed, becoming expensive, and possibly some saving might be made in that direction, but whereas administration might account for thousands, it should not be forgotten that it was policy that was responsible for millions. He doubted, too, whether the Party opposite would face the unpopularity involved in any reduction of grants-in-aid.

By far the larger portion of the increase of expenditure was undoubtedly due to armaments. During the last twenty years our expenditure on the Army had doubled, and he was one of those who had an uneasy feeling as to whether we were getting full value for the money. On the other hand, he had great hopes that the new Defence Committee, when it correlated the expenditure on the Army and on the Navy, would succeed in getting a better Army than we now possessed for considerably less money. It was on the land and not at sea that he expected to see expenditure reduced. The Government hoped that in a short time the result of the deliberations of the Defence Committee would effect economies in the Army without diminishing its efficiency. He should personally deprecate any proposal that the expenditure on the Navy ought to be reduced. It was quite true that, since 1883, they had more than quadrupled their expenditure upon the Navy, In that year they only spent £10,000,000 on the Navy, but he was sure that that was a period of peril which none of them desired to go back to. The Navy expenditure gradually increased from 1886 to 1892, but did the members of the present Opposition when they came into power reduce those Estimates? What did Lord Spencer do when he was First Lord of the Admiralty? Why, he entered upon the biggest shipbuilding programme ever submitted to the Parliament of this country, and in two years the Party opposite, under the guidance of Lord Spencer, raised the Navy Estimate by £4,500,000. Since that time there had been a vast increase of this Empire and its commerce, and a great growth of colonial and Imperial aspirations. The right hon. Gentleman the Member for Montrose, speaking in 1899, said the real operative force in our success in regard to Fashoda was that France was conscious of her own maritime inferiority. The fact that the Government of that day and the Government in which Lord Spencer was First Lord of the Admiralty had expended large sums upon the Fleet of this country no doubt saved them from a terrible war. He did not believe that the people of this country grudged the money which had been spent upon the Navy, and they did not want to return to the state of things in the early eighties when one Admiral described our Fleet as "a menagerie of curious but ill-assorted vessels;" and another Admiral said he was in command of a vessel which was rotten to the core, and which could neither fight nor run away. Although reductions might be made here and there by a proper control and a general review of the whole system of expenditure, he did not believe the country would be justified, as long as Germany was building at the rate she was, in reducing, its expenditure upon the Navy. Just as the Japanese were ready to die for their country, the people of this country were ready to pay for the preservation of this Empire. Better times were coming, and one of the glories of this country would be that the sons and daughters of this Empire would readily give their contribution to this great expenditure which the country was called upon to incur for the maintenance of the British Navy.

* MR. McCRAE (Edinburgh, E.)

said the hon. Member opposite had stated that the present Government could not be held responsible for this great increase in the expenditure. The present Government, and that Government alone, were responsible for the expenditure of the country. Even the Secretary to the Treasury admitted that responsibility, and in the most pleasing manner he stood forth as the champion of economy in the smaller details of expenditure. The hon. Member had also asserted that this expenditure had placed our defensive forces on a scientific basis. That word "scientific" sounded strangely familiar. They had heard a good deal about scientific taxation, but that was the basis upon which they were told the six Army Corps scheme, which was part of this expenditure, was to be placed, but which had now been declared to be of no service whatever. Through the whole speech of the Secretary to the Treasury there was no reference to the grave condition of our national expenditure at the present time, although he twitted the Opposition with urging upon the Government increased expenditure in the smaller details of the services. That was a very cheap sneer, but it did not at all go to the root of the matter. The right hon. Baronet the Member for Berwick said that this Government was parsimonious in thousands but profligate in millions. While the Government objected to the Bill which was passed for the relief of the shipping trade, they forgot that that relief would be very small in comparison with what was done by the Agricultural Rating Act, which gave £2,500,000 a year in doles to the landlords. The same objection which he had taken to the speech of the Secretary to the Treasury also applied to the various speeches they had had from the Chancellor of the Exchequer, who had left the impression upon the House that he had not fully realised the gravity of our financial position, and he had made no attempt to grapple with a reduction of the expenditure after the conclusion of the war. As his right hon. friend had pointed out, a reduction in the expenditure was made after Waterloo, and the Crimean War, but the present Government had made no attempt to reduce the enormous expenditure which had been growing up in what in sarcasm had been called the "ordinary" expenditure. That expenditure, in round figures, had now reached £143,000,000 whereas in 1894–95 it was £94,000,000 or an increase of nearly £50,000,000. But that was not the whole case. The expenditure was increasing enormously, and that it was appalling was admitted even by right hon. Gentlemen opposite. In the discussion on the Budget on the 19th of last month, the right hon. Gentleman the Member for West Bristol, whose experience at the Treasury they all recognised, admitted that the present expenditure was extravagant, and the right hon. Gentleman the Member for Croydon, in his Budget speech last year, termed our expenditure not only extravagant but reckless. The fact of the matter was that this evil was hereditary in any Conservative Government, and they had extravagant expenditure whenever there was a Conservative Government in power. The Secretary to the Treasury had asked them whether the state of matters in 1894 was an ideal state of expenditure. All he could say was that when the Liberal Government went out of office in 1895 they left a surplus of over £4,000,000 to their successors, and now after all these years with a Conservative Administration in power they had an increase in the expenditure of over £50,000,000 and a deficit of over £5,000,000.

He would like to consider the progressive nature of this expenditure under the present Government, for it had been increasing in a sort of compound interest ratio. If they compared the expenditure of 1897–98 with the expenditure under the Liberal Government in 1894–95 they would see that in those three years there had been an increase in the expenditure of £9,000,000 per annum. In the next three years they had an increase of £16,500,000 or an increase of £25,500,000 for the first six years of the present Administration. Take the three years from 1901 to 1904, excluding war expenditure, and they would find that the expenditure in 1901 was £119,000,000 in round figures, whilst in 1904 it was £146,000,000, or an increase; in three years of £27,000,000. But that was not the whole case, because in addition to that expenditure there was the increase under the Naval and Military Works Acts and other capital expenditure. If they took that into account, and also the sum raised and given over to the local taxation account, they found that the comparison was as follows. The expenditure including the two items he had mentioned for the present year was estimated at £162,500,000, as compared with £102,000,000 in 1894–5, being an increase of £60,500,000. No doubt that increase had taken a little time to develop, but the Government had taken fall advantage of the opportunity. This method of incurring capital expenditure and borrowing was a very serious one, and he thought that would be realised from the Report of the Public Accounts Committee which had recently been put into their hands. It was so important that with the permission of the House he would read the following passage from the Report— Your Committee entertain serious doubts as to the financial method by which naval works are provided for by means of loans. The same remark applies, of course, to military works, and other similar loan services. For special works of permanent character and large cost, it may, as an exceptional measure, be desirable to provide by loan repayable within a limited number of years. But the resort to such procedure should be the exception, not the rule. In recent years, annual or biennial Military and Naval Works Acts have become a regular part of military and naval linance. Your Committee would deprecate the continuance of this practice. They believe that it would be more in accordance with sound rules of finance and would tend to simplify the national accounts and maintain an efficient control over expenditure if the bulk of these services were included as formerly in the annual Estimates. The amount in the present year's Estimates under that head was £10,000,000, but even that sum was only an instalment of the total expenditure to which the House was committed, The House passed the other day a Bill to spend £3,000,000 on telephones. He wished the Chancellor of the Exchequer in his reply to give the House an idea of the expenditure to which the nation was committed under this head. The enormous growth of indebtedness could be realised when they considered that in the National Debt for the year just closed there was no less than £31,868,000 under the head of naval and military works, as compared with only £3,000,000 in 1894–5. This system could have only one result. It disguised to a certain extent our ordinary expenditure and it enormously increased the National Debt. In 1904–5 the Nation Debt was £794,490,000, being an increase of £135,480,000 on the amount in 1894–5. The Chancellor of the Exchequer in his Budget speech said in respect of the dead-weight Debt—that was the Funded Debt, apart from these borrowings for naval and military works—that a sum had been laid aside to sinking fund by which they had reduced the Debt £5,149,000. Supposing that had been so, it would have been nothing to boast of, because he found that Mr. Gladstone in 1865–6, when the National Debt amounted to very much the same Bum, said that the effective reduction of Debt amounted to £5,179,000, almost the same as the sum mentioned by the Chancellor of the Exchequer in his Budget speech last year. Mr. Gladstone also pointed out that of the total expenditure of that year the Debt charge amounted to 43 per cent. The Debt charge this year only amounted to 19 per cent, of our total expenditure. The Chancellor of the Exchequer did not make it quite clear that the reduction of £5,149,000 only applied to the dead-weight Debt, while on the other hand he was borrowing under the other heads of capital expenditure. If they excluded the money borrowed, and the Transvaal loan, they found that the Chancellor of the Exchequer had increased the Unfunded Debt by £4,298,000, leaving the not Debt reduction only £851,000 upon last year. Of course, the right hon. Gentleman claimed to have reduced it also by the £3,000,000 which we got out of the Transvaal loan, but that was only a very pleasing way of putting the matter, and when the House considered the method by which that sum was raised they would realise that it was not really an effective reduction of debt. It had been said that "mercy is twice blessed." These £3,000,000 had been twice borrowed. They were borrowed first of all to lend to the Transvaal. Borrowed again by the Transvaal to repay us by a loan guaranteed by ourselves: applied to the reduction of Debt for which we were really still responsible, as well as for the other £3,000,000 which the Chancellor of the Exchequer had put into his Exchequer balances. He wished to point out in regard to our national indebtedness that there was no sinking fund added in respect of the extra borrowings on account of the South African War. The addition to the National Debt charge was hardly sufficient to meet the increased interest in respect of the Debt, and no part of the Debt charge actually went as sinking fund for the increased expenditure due to the South African war. The Exchequer balances had been reduced to £4,000,000, as compared with £8,900,000 before the war. In 1864 Mr. Gladstone said that £7,352,000 was "an ample but an excessive amount. "But the Exchequer balances should bear some proportion to the expenditure for the year, and the expenditure in 1864 was £67,000,000, against an expenditure this year of £143,000,000. The Exchequer balance should also bear some proportion to the charge for income-tax, otherwise large borrowings must be made to finance the Treasury during the lean periods of the year. Yet in 1864 the charge for income-tax with Exchequer balances at. £7,000,000 was only £9.000,000. This year with Exchequer balances at £4,000,000 the charge for income-tax" is £30,000,000.

With regard to the National Debt, the Chancellor of the Exchequer had not fairly stood up to his responsibilities, but had resorted to narrow and flimsy expedients in meeting a deficit, as he hoped to be able to show the House. No amount of explanation from the Chancellor of the Exchequer could get over the fact that he had met the deficit out of the Exchequer balances. How did he provide for the deficit? He had borrowed it out of the Exchequer balances, and he made a call on the unclaimed dividends to the amount of £1,000,000.

Attention called to the fact that forty Members were not present, House counted and forty Members being found present.

MR. MCCRAE

said he was deeply grateful to the hon. Member for having given him a larger audience. He had shown that the Chancellor of the Exchequer had taken borrowed money to the extent of £2,288,000, and £1,000,000 from unclaimed dividends, but how did the right hon. Gentleman propose, according to his plan, to meet a balance of £1,500,000 when he only anticipated in his Budget a surplus" of £730,000? Now, supposing that the surplus was much larger than he had estimated, the Chancellor of the Exchequer had no right whatever to that sum. Realised surpluses had always been looked upon as an addition to the sinking fund for the re- duction of debt, and the right hon. Gentleman by looking forward to this anticipated surplus to increase his Exchequer balances, or to meet the deficit of last year, was making a gamble in futures, which was unsound finance. This policy of shifts and expedients was quite unworthy of a Chancellor of the Exchequer. He claimed that he had shown that the Chancellor of the Exchequer had not fairly met his obligations, that he was a kind of financial smuggler, who not only evaded the Customs duty but had not paid for his goods in the country of origin. The right hon. Gentleman had anticipated a surplus which ought to go to the reduction of debt in order to meet the ordinary expenditure of the year.

They all knew that the burden of taxation was enormous. He thought that the country hardly realised that the £25,000,000 of extra taxation put on for the war was still in existence for ordinary expenditure, and that the greater portion of that increased burden rested on the poor. The Chancellor of the Exchequer interrupted him when he was speaking about Mr. Gladstone's Budget of 1859 and stated that the tea duty in that year was very much higher than at the present time. But if the right hon. Gentleman had gone to the year 1866 he would have found that the tea duty was 2d. per lb. less than was proposed for the present year. They had therefore good reason to complain that this extra 2d. per lb. was imposed this year. It was a cruel tax, and next to the corn tax, it was the most oppressive that could be put on the poor. Moreover, when they increased the tea duty 1d. per lb., which was 100 per cent, on the value of the article, lie maintained that it was inequitable taxation. It was a melancholy fact under the head of Customs, apart from Excise, which really bore most hardly on the poor, to find that the estimated revenue was £1,000,000 more than the estimate of 1902–3, which was the highest year of taxation during the war, and included the corn duty. The Chancellor of the Exchequer ought to give some explanation of the principles on which he had founded this extraordinary Budget. The Customs and Inland Revenue in 1902–3 amounted to £92,000,000, and the income-tax to £38,600,000, or a total of £130,600,000. The estimate of Customs and Inland Revenue for 1904–5 was £91,150,000, and of income-tax £30,000,000, or a total of £121,150,000. That was a reduction of the income-tax revenue of £8,600,000 compared with a reduction of less than £1,000,000 on the indirect taxes. Not only that, but there was no promise that there would be any reduction in the indirect taxation in the future. That was unfair to the indirect taxpayer. Moreover, what did the Chancellor of the Exchequer say in his Budget speech in regard to future policy as to income-tax? The right hon. Gentleman stated— I say for myself, that, in my opinion, it is the income-tax payer who will have the first claim to relief. The income-tax payer had already been relieved to the extent of 3d. per £, while there had been no reduction on the war taxes to the indirect taxpayer. All his war taxes were continued. He was perfectly certain that the country would have something to say in regard to this method of finance. The Chancellor of the Exchequer said that he was only faced with temporary difficulties. If that were so, his bold course would have been to put 2d. per £ on the income-tax to make up for the 1d. wrongfully remitted last year.

THE CHANCELLOR OF THE EXCHEQUER (Mr. AUSTEN CHAMBERLAIN,) Worcestershire, E.

said that that was a very simple, but not a good course.

* MR. MCCRAE

said that the right hon. Gentleman would admit that on the question of income-tax he had the courage of his convictions, and had supported the Government. When the financial Nero was fiddling or dining he had come to his rescue. He asked, were the right hon. Gentleman's difficulties really only temporary?

MR. AUSTEN CHAMBERLAIN

The difficulties are partly temporary.

* MR. MCCRAE

said he accepted the correction; but the right hon. Gentleman had said— I look for further relief to the cessation of military operations in Somaliland. He spoke with bated breath, but he congratulated the Chancellor of the Exchequer on the fact that the cessation of military operations in Somaliland coincided with the introduction of the Budget. He was afraid, however, that the Chancellor of the Exchequer could not look for a reduction of expenditure in that direction, because so far as they could gather from the answers to Questions put in the House, the Somaliland question was again causing anxiety. Now, while it was not the duty of the Opposition to make specific proposals for the reduction of expenditure, he thought they were all agreed with the right hon. Gentleman in his Budget speech that they must look to Army reforms for a reduction in expenditure. The Estimates which the House passed in regard to the Army were bogus Estimates, Estimates for a scheme which had been declared to be defunct. If the Chancellor of the Exchequer secured a large reduction of expenditure on the Army, was the saving, to be devoted to the promised relief of the income-tax payer? In the last year of the Liberal Government, 1894–5, the Army expenditure amounted to £17,700,000. This year it amounted to-£29,400,000, or an increase of £11,700,000,. The increase on the naval expenditure was £20,000,000. The greatest need of the present day was the need for financial reform. We must have a check on expenditure; we-must have greater control. What was the real remedy for all this? It was very simple, very effective—a change of Government. The root of the evil lay in the policy of His Majesty's present advisers. What was wanted was to get back to the old paths of sound finance, and put in power the traditional guardians of the public purse who would exercise a wise and discriminating economy. The Secretary to the Treasury said—and he agreed with him —that expenditure depended on policy, and the hon. Member had asked what policy they, on that side of the House, had to offer? He would tell the hon. Member. It was a policy of peace. A peaceful policy was in the nature of things an economical policy. He was glad to see that there was soon to be an opportunity of getting a change of Government. They heard a voice last week from Birmingham, a high, if not the highest, authority in these matters, which said that a general election would take place in a reasonable time. They on that side of the House would welcome the opportunity of appealing to the constituencies of the country. They were waiting for that opportunity, and hoped that the Prime Minister would not be long in taking the plunge.

* MR. BECKETT (Yorkshire, N.R., Whitby)

said he thought the House would agree that the Motion of the Leader of the Opposition was not superfluous. The question of national expenditure must appeal both to the House and to the country, though, judging from the aspect of the House just then, little practical interest seemed to be taken in it. He believed, however, that the economists were being daily recruited. He could assure hon. Gentlemen opposite that zeal for economy on the part of the Opposition was shared by Members on the Ministerial side of the House. The Secretary to the Treasury said he was rather tired of hearing professions of economy and that he would prefer to see them carried into practice. If he found himself walking into the Division Lobby against the hon. Gentleman on behalf of reductions in the Estimates, which made for economy, he trusted he would not be blamed by his Whips, but would plead the advice of the hon. Gentleman as sufficient justification. As a matter of fact, many Members had given positive proof that their professions were to be followed up by practice, because last year they moved that the Army should be reduced by 27,000 men. That was a practical measure in favour of economy, which might perfectly well have been carried out. It could hardly be contended that the present state of affairs was not a weakness and danger to this country which ought not to be allowed to continue. To wage a successful war you required three things, ships, men and money. It was perfectly true that the public could bear this burden and a still greater burden. But if an animal had to go a long journey they must not load it up to its full carrying capacity. He trusted that this country would go a long journey, but that journey would be shortened if that carrying capacity was over-loaded, and it was over-loaded since we continued the war expenditure in peace time. He did not think it could be denied that the present expenditure was a war expenditure. It was true, as the Chancellor of the Exchequer pointed out, that it was only right and reasonable that our expenditure should increase with the increase of wealth and population, but the increase should be a proportionate increase. The increase during the last few years had been a totally disproportionate increase, and it was that disproportionate increase that was so alarming to all serious economists.

What had been the rate of increase in recent times? The last speaker had suggested a change of Government as the remedy for the present state of affairs. He was not quite so sure as to that when they considered the figures he proposed to bring before the House. They must compare the present time with a period when the state of affairs was pretty much as it existed to-day. A quarter of a century ago, at the end of Lord Beaconsfield's Administration, the expenditure of this country was £71,500,000. Lord Beaconsfield, it must be supposed, was fully alive to the Imperial necessities of the country; at any rate, he was denounced by hon. Gentleman who came into office on the cry of "Peace, Retrenchment, and Reform;" but during that tenure the expenditure increased to £81,000,000. Then the Conservative Party came into office, and in six years Lord Salisbury's Administration reduced the expenditure to £78,000,000. There were many hon. Gentlemen who pretended that a large expenditure was vital to the security of the nation. Did they mean to say that when Lord Salisbury reduced that expenditure he proved himself indifferent to national security? Did they pretend that Lord Salisbury starved and neglected the services, and was guilty of a cheese-paring Little Englandism? Yet, if there was anything in the contention that one was only a true patriot if one was spending money, Lord Salisbury himself fell into that category of Little Englandism. When Lord Salisbury went out the Party opposite came into power, and Sir William. Harcourt, a most stern and rigid economist, became Chancellor of the Exchequer. Again the expenditure rose from £78,000,000 to £81,000,000. This was what the Party of retrenchment did during their last tenure of office, and he therefore thought, without any discourtesy to the hon. Gentleman opposite he might somewhat question his statement that a change of Government would provide the right remedy for this policy of expenditure. In 1895 the present Government practically came into office; and in that year a remarkable thing happened. There was a coalition with the Liberal Unionists. Then the expenditure rose by leaps and bounds. In the first year it rose by £4,000,000, in the second year by £3,000,000, in the third year by £1,000,000, and in the fourth by £5,500,000. Then came the war. Before the war the increase of expenditure since the present Government came into office was at the extravagant rate of £3,500,000 a year, and if they reckoned what the expenditure should be during the present year at that rate— though he did not admit it was a fair rate—it ought to be £112,000,000 instead of £142,100,000. There was, therefore, an excess of £30,000,000 above what the rate of expenditure ought to be, even at the high rate of increase of £3,500,000.

During the last ten years the expenditure of the country had increased from £78,000,000 to £142,000,000, or £64,000,000. Was there anything that had happened during those ten years which could possibly justify that enormous increase? He thought he was justified in saying that they had a war expenditure in a time of peace, and everybody would agree that it was time to cry halt and to retrace their steps. Hon. Gentlemen might say perfectly truly, "you must prepare for war. "But in continuing the present high rate of expenditure they were not preparing for war. As a matter of fact they were doing the very reverse. War was made by three things, viz., by ships, men, and money. There should be due order and proportion observed between the three. If they were spending too much on their men and ships, they were depleting their resources and weakening instead of strengthening themselves for war. It was just the same as if a prizefighter spent his time in developing his muscles and took too little food. He might be able to strike a hard blow, but could not fight to a finish. If we persisted in maintaining war expenditure in times of peace in order to prepare for war, we should have nothing to fall back upon when war did at last arise. They were more exhausted by the South African War than they thought they were, and the result was that they could not make war with a Great Power at the present moment. No Government would dare to involve this country in a great war at the present moment unless in defence of the national existence of the country. They had the men and the ships but they had not got the money, and until they had the money it was impossible for this country to go to war with a Great Power.

The Chancellor of the Exchequer made a great parade of the wealth of the country in his recent Budget speech, after having tried during the autumn to persuade the country that it was on the verge of ruin. The late Colonial Secretary said last week that England was a third-rate Power, and that if it did not follow his advice it would fall to a fifth-rate Power. That would be possible if the country continued to spend more money than it could afford. The point was that the limits of the taxable capacity of the country had now been pretty well reached. Customs and Excise were no longer buoyant, and if expenditure were to be increased more would have to be put on tea, tobacco, beer, and spirits. Without raising a controversial question, he might add that the Licensing Bill would deprive the country of a potential source of revenue. Commodities were now taxed as highly as they could bear, and if they were taxed more the result would be to diminish consumption. In imposing taxation what ought to be borne in mind was that they should fix duties at such rates as would produce increased consumption, because that implied increased trade, that more capital was put into ships, that more sailors were employed, more goods were imported, and in order to manufacture those goods more raw material had to be imported, and more ships would have to be built for that purpose, and also to take the manufactured goods to other countries. That meant that they would make more machinery, would employ more men, and would generally enjoy greater prosperity as a result of increased consumption. Considering that they were in a time of peace, he was justified in saying that the taxable capacity of the country in respect of duties had been exploited to the utmost extent that was advisable in times of peace. There only remained the income-tax, which was already high enough. If money had to be raised for war purposes it was well known that the second shilling would not produce anything like as much as the first shilling had produced. Hon. Gentlemen opposite were in favour of a graduated income-tax, but, speaking as a banker, he thought the difficulty of graduation was insuperable. It would lead to falsehood and evasion and should not be imposed, especially as the death duties were graduated. They were a fruitful source of revenue, and at the same time a fruitful source of hardship. The point now was that the Government could not continue to raise revenue from a reluctant people. The people were not paying cheerfuly, and a wise Government would lighten the burden in times of depression even though it involved the delay of the ship building programme, especially when there was no immediate cause for anxiety.

He thought the Government had given practical proof that they now favoured a policy of peace. That treaty having been ratified, and the danger of war with France averted, he hoped for ever, was surely a time when we could afford to economise even in our Fleet. Our Fleet was now fully up to the two-Power standard which was sufficient for all purposes. With regard to the Army nothing more need be said. Everybody agreed that the Army expenditure could be decreased, and he and those who thought with him were of opinion that without impairing the efficiency of the Army the expenditure could be reduced by £5,000,000 or £ 10,000,000 a year. Nature had placed us in such a position that we did not need a large Army, and by our excessive expenditure we were throwing away that defence which nature had given us. We spent on armaments £1 10s. per head of the population; in France, it was £1 1s. 2d.; in Germany, 15s. 6d.; in Russia, 6s. 11d.: in Austria, 7s. 10d.: and in Italy, 9s. 11d. Was there anything that could justify us in spending on armaments at a greater rate than our neighbours. This competition of expenditure with neighbouring nations, in which we had left them far behind, was bound to be most disastrous to this country. The price to which Consols had fallen showed that to some extent the credit of the country was impaired, and if we went to war now, and had to borrow £200,000,000, we should have to pay very different terms to those on which we had secured money hitherto. He was not satisfied with the position of the Sinking Fund. The House had been led to suppose that £7,000,000 a year would be paid in reduction of debt, but that was not the case; only £3,800,000 had been paid. Not so long ago when the income-tax stood at 6d., £6,000,000 a year was being, paid in reduction of debt. Now when it stood at 1s. only £3,800,000 was paid in reduction, and our debt was £200,000,000 higher. That was a state of things that ought not to be allowed to continue. The Chancellor of the Exchequer had been very severe on municipalities, but had not a word of rebuke for national extravagance, but he would venture to point out that, so far as municipalities were concerned. £121,000,000 of their expenditure was reproductive and produced an income after paying the interest on the debt and a certain sum in reduction of the principal, and setting aside a sum for depreciation of £400,000 a year. If the national expenditure was reproductive in the same way, something might have been said for it. He deprecated this expenditure. The best preparation for war, in his opinion, was a moderate expenditure in time of peace.

SIR BRAMPTON GURDON (Norfolk, N.)

said he was glad to have heard the speech just delivered, because, though the Resolution might not be carried, it showed that there were those in the House who were desirous of decreasing the present great expenditure. In the early years of the reign of Queen Victoria, the country was almost forced into economy. The country then had a very heavy debt to bear, and for the first five years of that reign there was a continued deficit of about £1,500,000 to make good. Sir Robert Peel was the first to stem the tide of expenditure, and he established a rigid system of economy which was afterwards carried oat by Mr. Gladstone and Mr. Disraeli. At that time expenditure and income averaged £50,000,000 a year, and that average was continued during the whole of Sir Robert Peel's Administration and through that of Lord John Russell. Then came the Crimean War. During the first year of that war the national expenditure jumped up £30,000,000, in the second year £50,000,000, and in the third year £34,000,000, because directly the declaration of peace took place £17,500,000 were knocked off the Estimates. That war had the effect of promoting in this country a spirit of militarism, and naval and military expenditure had never got down to ante-Crimean days. Much had been said about the state of un preparedness in which the country was at the time of the Crimean War. The Navy was less powerful than now, and we had a small Army. On the other side we had France as an ally and Russia as an enemy, but the fact remained that our enemy was so exhausted and our ally so weakened in finance that they accepted terms while we could have gone on for five years more. Our success did not depend so much on our armaments as on our credit. Our naval and military expenditure when Queen Victoria came to the throne was £12,000,000; in fifty years it increased by 150 per cent, and at the second Jubilee it had increased to £42,000,000. The history of the past five years was most alarming, for in that period our naval and military expenditure had increased to £72,000,000. In twelve years the income raised by taxation had increased from £75,000,000 to £121,000,000, although the population had grown only from 38,000,000 to 42,000,000. There had been added £13,000,000 to the income-tax, £6,000,000 to the death duties, £4,000,000 to the tea duty, £4,000,000 to the liquor duties, and £2,000,000 to the tobacco duty; £6,000,000 had been drawn from the sugar duty, and £2,000,000 from an ex- port duty on coal. It was a question whether the country could bear any more. Most people had been obliged to recast their style of living and to retrench in every possible way. Personally, he had never felt the pressure of taxation until now, he could not bear any more; and if, whether by taxes or by rates, any more was to be compulsorily taken out of his pocket it could only come back to him in the form of Poor Law relief.

Much had been said about "broadening the basis of taxation. "To his mind society was designed like a pyramid. At the base was the labouring class, then came the artisans and mechanics; then shopkeepers and merchants; and finally the millionaires at the summit. Hence when Ministers spoke about broadening the basis of taxation, it simply meant putting a heavier burden of taxation on the base of the pyramid, viz., the working classes, by whom four-fifths of the taxation on articles of consumption was paid. He was glad to think that economical ideas were reviving. It seemed as though the public were being taxed into economy. The Motion to which reference had been made, for a reduction of the Army by 27,000 men was the first real Motion in that direction for many years. The House of Commons had tried to deceive itself about the expenditure. Estimates had been reduced by a system of appropriations in aid; they had been further relieved by the allocation of taxes to local bodies; and a system of Loans Acts had served to keep expenditure out of the Budget. The truth, however, could not be concealed. He fully sympathised with a remark made by the Financial Secretary about the Civil Service Estimates. He strongly protested against the idea that Civil servants should be paid liberally. They ought to be paid justly, and there was no reason why the Civil servant should get more than his master, the taxpayer; he ought to be paid at the market rate, and no more. The division taken on Friday last was hardly a fair illustration of the extravagance of the House, because the Bill then under consideration was not for increased expenditure; it was merely a question of whether taxes already levied, though not by the Government, for the upkeep of lighthouses fell on the right shoulders. The increase in the Civil Service, however, had the advantage that it did not lead to more expenditure, as was the case with increases in military and naval Estimates. On that point he would recommend the House to read a recent article by Lord Cromer on "Imperialism." It was unnecessary to discuss Army expenditure, as there was a general feeling that we could have a smaller and more efficient Army for less money than we were now paying.

In regard to the Navy, it was fashionable to say that the country would grudge no expenditure, but it should be borne in mind that this year we were spending £11,500,000 upon new ships and machinery, without arms, which was more than we used to spend upon the whole Navy. In the last year of Lord Goschen's tenure of office, France and Germany were building, but £8,000,000 were considered to be amply sufficient. In 1901, Germany, France, and Russia together spent £33,415,000 upon their navies: we alone spent £33,791,000, or more than these three Powers together. Since 1901, France, Germany, and Russia had added only £1,500,000 to their combined naval expenditure, while we had added £10,000,000. On the Admiralty's own calculation, that armour plated ships became obsolete in twenty-two years, cruisers in fifteen years, and torpedo and small boats in twelve years, an annual expenditure of £4,500,000 would be sufficient to replace the ships which became obsolete, while the present rate of £11,500,000 was sufficient to double the number of war vessels in ten years. An increase in the size of the Fleet would require larger establishment, more dock space, and more basins. Since 1883, we had launched forty-one new ships, or exactly the same number as France, Germany, and Russia together, but whereas their tonnage was 455,000, ours was 550,000. Therefore, instead of keeping to the two-Power standard, we were going beyond a three-Power standard, and that at a time when we were on better terms with France than ever before in the annals of history, when the war in the East had crippled Russia, and when there was a growing opposition to expenditure in Germany. Much, too, might be said about the burden imposed upon the people of the United Kingdom for armaments which were necessary for the defence not only of these islands, but also of the Colonies. We were a loyal people, and had borne the war taxes with patience; whatever grumbling there had been had come mainly from those whose services to the country had consisted in shouting with the band; and he hoped the Government, knowing how patiently the country had borne its burden, would not in time of peace try their loyalty too severely.

SIR GEORGE BARTLEY (Islington, N.)

said that, although he had been a Member of the House for a considerable number of years, he had never before known a "count" to be moved in the course of the debate on the Budget Bill, especially when a virtual vote of censure upon the Government in regard to expenditure had been moved. That it should have been possible seemed to prove the hollowness of much of the cry for economy. That the debate was hardly a serious one was shown by a comparison of the state of the House to-day and a few nights ago when the question of salaries to Members of Parliament was under discussion. He had always felt that the question of economy ought to be considered by the House of Commons to a far greater extent than was at present the case, and one of the reasons he had strongly urged the maintenance of the Sinking Fund was that it was an indirect way of insisting on economy. National expenditure had grown in a remarkable and unsatisfactory manner. He did not intend to discuss naval and military expenditure. He might say, however, with regard to the Navy, that he believed it was essential that the Fleet should be above suspicion in efficiency, quality, and quantity, as it was the main defence of the Empire; but there was a growing hope in the country that, in view of the recent treaty with France, and events in the East, it might be possible before long to effect a large reduction in the Navy, and certainly in the Army.

It should not be forgotten that a large portion of the increase of expenditure was on the Civil Service Estimates, and it was to that that he desired to direct his remarks. It was useless for Members to say that too much money was being spent unless they were prepared to point to items which they considered ought to be reduced. He had studied these Estimates for many years, and he "found that in fifteen years they had practically doubled. That was a very large increase in the expenditure, and those who talked so much about our expenditure being excessive were bound to go into those details. In going into these details he wished to refer to the various items of this great increase in the expenditure. He would first take Class I., which was the expenditure for buildings. He would give the gross increase in the twelve years from 1893 to 1904, which extended over the special period they were discussing and which included what had been called the misdoings of the present Government. For this period the increase in Class I. amounted to very nearly £1,000,000, and this was enough for hon. Members opposite to talk about the enormous extravagance of the Government. That argument might go down all right at a public meeting where nobody knew any better, but he wished the House to look into the figures in order to see how that £1,000,000 was made up. A quarter of that increase was due to the rating of Government property, and surely the Government could not be blamed for that. Then there was an increase of £150,000 for post office and telegraph buildings. Could any hon. Member put his finger on that item and say it was extravagant? Such expenditure showed the development of business and increased prosperity. Then there was an item for extra land and insurance £75,000, and fuel £50,000. There was also an increase in the wages of Government employees, which was continually being urged upon the Government by hon. Gentlemen opposite. The other day a proposal was made that everybody employed by the Government should receive a minimum wage of 30s. a week. For the last ten, twelve, or fourteen years they had been continually increasing wages—he did not say wrongly —but after they had done this, was it fair to turn round upon the Government when all this had been done by the order of the House, and say that it was due to their extravagance. The various items he had mentioned made up nearly the £1,000,000 increase in Class I. of the Estimates.

He would now turn to Class II., which included the salaries and expenses of the various Government Departments. This Vote had increased by £870,000 a year during the twelve years he was considering. The amounts for the House of Lords and the House of Commons were less, the amount for the Treasury was the same, but the sums taken by the Foreign Office, the Privy Council, and the Charity Commissioners were also less, and a great number of the smaller offices spent smaller sums. He would show the House, however, where the great increases came in. In the Home Office there had been an increase during the period he was considering of £62,000; in the Board of Trade Department there had been an increase of £40,000; whilst the Board of Agriculture, which had been created owing to the demand of the public, was responsible for the expenditure of another £60,000, All those Government Departments really represented expenditure upon a matter of policy which had been forced upon the Government by the various interests in the country, representing all shades of opinion on both sides of the House, and therefore, it was absurd to turn round and charge the Government with extravagance, because the policy of the country demanded an enormous increase in the various inspections and inspectors and in the various Departments of the State, in order to make the State better and more competent to carry on the work of government, to make the various Departments more efficient, and to see that the working people had healthier and more sanitary surroundings. When they found that all these matters cost something like £1,500,000 was it not childish and absurd for them to turn round and condemn the Government that; had carried out this policy, for extravagant expenditure. It was the policy of the country that had dictated this expenditure. As one who had always been I keenly interested in the welfare of the people—although he thought sometimes this expenditure had been rather overdone —still, whether they approved of it or not the money had all been spent with the idea of improving the habits, conditions, and happiness of the people of this country. He was glad that they had expended this money, and it was neither right nor reasonable that hon. Gentlemen opposite should turn upon the Government and charge them with extragavance because they had increased the expenditure in that direction. He noticed that during the twelve years under consideration there had been an increase of £l17,000 for stationery and printing. He thought this was very excessive, and might be reduced, because it was largely due to the printing demanded by hon. Members of the House which handled to a very large increase in this Vote. With regard to printing and stationery they were luxurious in their habits and they demanded it, and therefore this was another instance where it was unreasonable to charge the Government with extravagance. In Class II. there had been an enormous increase in the wages, and that again was an expenditure for which the Government could not be held responsible.

The law expenses were practically the same as they were thirteen years ago, but when they turned to Class IV., which was for Education, what did they find? Why, that during the twelve years he had taken the Vote for education had increased from £9,000,000 to nearly £16,000,000, or, in other words, the Vote had increased by nearly £7,000,000. He did nor think that even hon. Gentlemen opposite were disposed to reduce the amount which was now being spent upon the education of the people. The regular cry all over the country was to increase the expenditure upon this Vote. He remembered when he first entered the Education Department more than forty years ago, the Education Vote was keenly criticised because it showed an increase of £2,000 or £3,000, but now every year this Vote increased not by thousands or by tens of thousands, but by hundreds of thousands. He hoped they were getting all the advantage which had been predicted out of this expenditure, but it was childish to abuse the Government because during their term of office an increase of £7,000,000 had taken place in the Education Vote, when hon. Members opposite knew that on every platform they were always telling the people that this was one of the best forms of expenditure they had, and that it was necessary in order to enable them to compete with the foreigner. The items he had mentioned accounted for a very large increase in the expenditure. Class V., for foreign and colonial services, also showed an increase of nearly £1,500,000, and this included the expenditure upon Uganda, colonial services, and Northern Nigeria. This expenditure might be either right or wrong, but at any rate it accounted for a part of the increase. The sixth item showed a satisfactory indication of economy, and it dealt with the' Pension Vote, which was actually less now than it was twelve or thirteen years ago. It looked as though they were not quite so liberal in regard to pensions as they used to be when they took into consideration the increases which had taken place in the staff. Class VII. was for commissions in the Navy which showed an increase of £150,000. There was an item of £70,000 for the St. Louis Exhibition, which again was a matter of policy, although he did not think it would do much good. At any rate it pleased America and helped the nations to work harmoniously together, and it would be a pity if this country, for the sake of saving this amount of money, had not been a party to that great Exhibition which would be an advantage to unity, peace, prosperity, and commerce. Then the Irish Development Grant had taken £185,000, so that vote these items were taken out of this Vote there was actually a reduction in the total expenditure.

He was afraid that he had wearied the House with these various details but it seemed to him that it was really necessary and desirable, in discussing a question like this, for all these items, which might appear very insignificant, became very important in regard to the increase in the expenditure. The Secretary to the Treasury had referred to the decision of the House in regard to the Merchant Shipping (Lighthouses) Bill. The other night a proposal was made for the payment of Members, which would have involved something like £350,000 a year, and it was also suggested that the profits derived from the Post Office should be given up and that the rich shipowners should be relieved of the charges made for light dues at the expense of the State. He did not think that the shipowners were a class of men who were in such desperate pecuniary difficulties that they should burden the taxpayers with an additional half a million of money. Those things showed the absurdity of talking about economy in this House, and he regretted very much that the debates in this House had practically no tendency towards economy. He did not think for a moment that the country was in such a bad way that it could not bear the taxation which was now imposed upon it. He believed that even at the present time they were taxed less heavily than most European countries, and they were a great deal better off than a great many of those foreign countries. There were an immense number of people who were in great poverty, and who had great difficulty to live. They found taxation extremely hard, and this House was bound to consider their position.

The hon. Member for North Norfolk had referred to the cost of the Army and Navy now as compared with what it was at the time Her late Majesty came to the throne. He thought those comparisons were perfectly useless. Guns and everything in connection with these services were different, and the cost now was very much more. The nation had developed enormously in wealth, and if they considered the increase in prosperity and population, the increase in expenditure was not so remarkable as it might otherwise appear. He thought, however, there were many small ways in which they might economise. He was quite certain that during the last twenty years most of the extravagance of which they complained had been due to the action of the House of Commons itself. In theory every hon. Gentleman, on both sides of the House, advocated economy: but every hon. Gentleman had a particular fad of his own which meant extravagance. The result was that every individual was always pressing for something which he thought most important and which was increasing the expenditure of the country, though when he came here and spoke in the abstract he wished to reduce expenditure. The Government had no doubt many faults to correct. No doubt that went without saying of any Government. They had done many things they ought not to have done, and had left undone many things they ought to have done. He had never seen or heard of any Government that had not. In regard to extravagance, he thought that could not be laid on the shoulders of the Government. The expenditure was what this House desired. They were delighted that the Navy had been strengthened, but they were like the man who had enjoyed a good dinner when he came to pay the bill. They did not like it so well. In regard to the Army, they knew perfectly well the expenditure had been somewhat extravagant in connection with, the war in South Africa. When they were in difficulty in the dark hours at the end of 1899 they were very glad to find that though there had been large expenditure they had been able to send out men. The cost of the Civil Service had enormously increased, and that was due very much to the action of this House. If they wished to reduce that expenditure they must carefully consider every item, but as long as they were determined to increase the expenditure on education and various other matter —he should be sorry to advocate reductions in certain directions—they could not expect for some time to come to reduce these items of expenditure.

MR. EDMUND ROBERTSON (Dundee)

said that a great deal had been said about the Navy, and it was because of an allusion made by the Secretary to the Treasury that he desired to say a few words about the Navy Estimates. The hon. Gentleman was most unfair to the Opposition, lie taunted them with the small portion of time devoted to these Estimates. What had happened this session? More time had been devoted to the Navy than in any session he could remember, and the reason undoubtedly was that the Admiralty was as usual, better prepared than any other Department. The Votes allowed to pass with, little or no discussion were comparatively unimportant—for non-effective services and other matters in which no serious reduction could be thought of. What was important was the Vote which was postponed, and of which hon. Gentlemen talked as if it were of no importance. The Vote postponed was Section 3 of the Navy Estimates, Vote 8, which included the Note for new construction, upon which the whole growth of the Navy Estimates depended. They arranged for its being postponed because it was unfair to take it in a small House, and because it was the desire of both sides that for once, at all events, the policy of the Government respecting new construction should be seriously considered. He hoped his hon. friends who tad been joining in the appeal for economy would remember that the new construction Vote had been kept back for further discussion, and if they meant anything by their professions of economy they would for the first time face the responsibility of saying whether or Dot they would assent to this unparalleled demand for £11,500,000 for new ships which would result in the £38,000,000 to be spent on the Navy this year becoming £50,000,000 or £60,000,000 in a very short time hence. He regarded the declaration in his right hon. friend's Amendment as at this stage merely a pious opinion, which must be translated into action on the Estimates, and particularly on the Vote to which he had reterred.

There was no doubt that Supplementary Estimates upset the financial equilibrium of the year, and as Mr. Gladstone used to say withdrew from the House of Commons a portion of its power of controlling expenditure. This year the Supplementary Estimates had two particular general features. There was a power which the Government of the day had of spending public money for purposes not authorised by Parliament at all. When he asked the Chancellor of the Exchequer the other day about the Chilian battleships he appeared to resent the question, and his friends appeared to think that it was another imputation upon his honour. In the course of the recess the right hon. Gentleman made himself responsible for the application of public money—he was not calling it in question—for a purpose which Parliament had never sanctioned, and when he put it to him the right hon. Gentleman did not admit it, but he tried to excuse it.

MR. AUSTEN CHAMBERLAIN

I did admit it.

MR. EDMUND ROBERTSON

said what he was complaining of was that he did not get from the right hon. Gentleman the frank acknowledgment be wanted for the information of the House. Did the House know by what means this expenditure was possible? Perhaps the right hon. Gentleman would tell him how he got hold of the money. They had been accustomed to believe that no money could be taken out of the Consolidated Fund for a purpose not sanctioned by Parliament, and that the Comptroller-General was the officer accredited for the purpose of preventing any such expenditure taking place. Now it appeared that that was all wrong, and that public money might be applied subject to an Act of indemnity passed by the House. That was a very serious state of things. He supposed that the money for these Chilian battleships was obtained by using a credit given by the Comptroller-General to carry out the Supply voted in the previous year. But the money having been placed at the disposal of the Treasury was illegally used for a purpose which Parliament had not sanctioned. That was an extraordinary kind of financial control, and he thought the House would agree that it did not make for the supervision of the House over expenditure or for economy in administration. Supplementary Estimates were bad always, but this year they were used deliberately to create a deficit. Practically the whole deficit of the year was the result of these Supplementary Estimates. His complaint was that it did not make it possible for them to know, when that deficit was being created or how the Chancellor of the Exchequer was going to meet it. If they had known that the whole of the deficit was to be met out of capital, not a man in the House would have passed it. It was a great blot on the Budget that a deficit so created should have been paid for out of capital in time of peace. It was unworthy of a British Chancellor of the Exchequer. Yet the Chancellor of the Exchequer had plumed himself on the fact. The real truth was that the deficit of last year was £5,500,000, for which the Chancellor of the Exchequer provided by the £3,000,000 from the Transvaal and £1,000,000 of unclaimed dividends. That was as if he had sold £1,000,000 of the Suez Canal shares. The Transvaal money had been not only borrowed, but twice borrowed. Three millions more than were wanted were borrowed for the war, and we lent that money to the Transvaal Government. It was repaid out of the money borrowed by them and guaranteed by this country.

Another blot on the Budget was that it increased the taxation levied on the very poorest of the poor who had less than the absolute necessaries of life. There was a margin of the population, numbering many millions, who had so little to live on that they should not be taxed at all. All taxation of that class, which wa3 always indirect—if they knew they were being taxed there would be a revolution in this country—was an irremediable wrong. He did not think there was any legitimate necessity for relieving coordinately direct and in direct taxation. All increase of indirect taxation in the way proposed by the Budget was not only doubly wrong, but became a crime when they knew that the Chancellor of the Exchequer did not scruple to add to the burdens of those who ought not to bear taxation at all and especially when he deliberately ignored publicans' licences, from which some of his hon. friend estimated that a revenue of £8,750,000 could be obtained. The right hon. Gentleman had refused to the House an inquiry as to the monopoly value of these licences, and in another Bill the attempt was going to be made to give that monopoly value to the publicans.

MR. SPEAKER

Order, order! The hon. Member is beyond the questions involved in the Finance Bill.

MR. EDMUND ROBERTSON

said he was not going to discuss that point further, but, restricted as he was, he would advise his hon. friends beside him not to be unduly downcast be the result of the vote on the Licensing Bill. He would invite them to believe that the proper place for them to fight that Bii—

MR. SPEAKER

Order, order! The hon. Member is engaged in discussing the Licensing Bill.

MR. EDMUND ROBERTSON

I am very sorry that I have what I meant to say.

AN HON. MEMBER

"Lead us not into temptation."

MR. EDMUND ROBERTSON

What he wanted to discuss was the value of the monopoly given by the State to the publicans by their licences. The claim he made was that these licences were a proper subject of taxation and that they were a national asset, that that asset ought to be realised before any increase was made on the already heavy burden of taxation on the poorest of the poor. That was a point which, he submitted, might be made on the present Budget Bill, and it would certainly be enforced by Amendments in Committee. The House of Lords could control certain kinds of legislation; bur they could not refuse to assent to a Money Bills, and it would be perfectly open to a future House of Commons to declare that these licence duties were still too low, that the value of them was still public property, and that it was the duty of the State to appropriate that value.

MR. H. C. RICHARDS (Finsbury, E.)

said that if he were in order, arguments could be addressed which would completely demolish the case which had been attempted to be set up by the hon. and learned Member for Dundee. But that would be reserved for another occasion. How could it be successfully contended that the expenditure on the Chilian war ships was illegal when the Chancellor of the Exchequer, as soon as possible, informed the House of their purchase, and asked the permission of Parliament to sanction it He would call the attention of the House to the fact that the money for the purchase of the Suez Canal shares was obtained by Mr. Disraeli when the House of Commons was not sitting. The question of legality or illegality was a question whether the House of Commons would give approval for what had been done. He remembered the late Lord Chief Justice. Coleridge stating that it was absolutely impossible to contend that the House of Commons had acted illegally in such circumstances: because if they had sanctioned anything afterwards they had made it legal by their subsequent action. That was ex-pres-ed in the Prayer-book when it spoke of this being the High Court of Parliament. So long as the Chancellor of the Exchequer came to this House, at the earliest possible opportunity, and disclosed what he had done, it was absurd for the hon. and learned Member for Dundee to make his appeal to the House of Commons and to threaten the Chancellor of the Exchequer with having been guilty of some high crime and misdemeanour which would in olden times have led him to the scaffold. The hon. Gentleman had said something about there being only pious opinions on the other side of the House: but one of the greatest difficulties of hon. Gentlemen opposite would be when they transferred themselves to the Government side of the House, to justify the promises they had made. It would be the old, old story. He must confess that it might be his want of financial experience, but he could not follow the hon. Gentleman in regard to the missing doubly borrowed money from the Transvaal. It showed the necessity not only of auditors for municipal, but for Government, accounts.

He agreed with the hon. Gentleman who referred to the growing items of municipal expenditure, but he did not accept the hon. Gentleman's figures, or his statement that a large part of that expenditure was reproductive. The majority of municipalities had no independent audit, and until they had an independent audit he could not accept figures as to what should be put to capital and what to revenue. He could not follow the argument of the right hon. Gentleman who attacked the Chancellor of the Exchequer, and who said that the first object of the Supplementary Estimates was to create a deficit at the moment when the Chancellor of the Exchequer was preparing his first Budget. The country did not look forward with pleasure to a deficit; and he never yet heard that it we is any part of the policy of a new Chancellor of the Exchequer to create a bogus deficit unless he had the deliberate desire to make himself, and the Government of which he was a member, unpopular. The hon. Member for Whitby gave tie House two figures which should be well studied in connection with expenditure on the Army and Navy. Did the lion. Gentleman imagine that this country would be satisfied with the miserable pittance paid to soldiers and sailors in France and Germany, that this country would have conscription and insult its soldiers and sailors with two or three sous per day. He could not imagine what was the object of the comparison of the hon. Gentleman, except to damage his own Party. He knew something of the misery which was endured by the common soldier in Germany, and knew that he was unable to keep body and soul together unless he received a weekly remittance from his parents. If this country were to pay its soldiers a living wage, and have intelligent men in the ranks of the Army, they could not reduce the amount per capita now paid. He had some sympathy, however, with the suggested reduction in the number of troops. The first vote he ever gave against his Party was given against the Army Corps scheme, because he was convinced that if the War Office would make more use of the Volunteers and the Reserves it would not be necessary to have such a large standing Army. He had seen such a desire on the part of the middle classes to serve in the Auxiliary Forces, that he was convinced that if more attention was paid to that branch it would not be necessary to keep up the Regular Army at anything like its present strength. He hoped that the Chancellor of the Exchequer, in consultation with the War Office, would make it clear that while the nation wished its soldiers to be properly trained and paid, the enrolment of civilian soldiers should also be encouraged. He was very much struck, in travelling through India two years ago, with the magnificent physique and splendid position of the native forces, who might be relied upon more and more; to defend the extremities of the Empire. The hon. Gentleman who referred to the French and German military system was speaking only to the Press Gallery, and he must have known perfectly well that it was impossible to adopt any such system in this country.

The hon. Gentleman for one of the Divisions in Norfolk referred to the period when Mr. Ayrton was Chancellor of the Exchequer but was there ever a more economical or a more unpopular person? No less a person than the right hon. Gentleman the Member for West Monmouth, who had great experience in this House, said that economy in itself was not popular; and all who knew anything of the working classes knew that they did not approve of anything approaching a policy of cheese-paring in connection with the Army and the Navy. Unquestionably, the burden of taxation was now breaking the back of the middle classes. In his own constituency he saw the small shopkeeper being driven out by the large companies. That was caused not only by competition but also by the great burden of the rates. It was no use for lion. Gentlemen opposite to contend that municipal taxation did not fall heavily on the working classes; and he was not at all surprised that in some districts the rents had been reduced, the tenants being required to pay the local rates, not the landlords. That brought home to the tenant what the burden of the local rates was.

MR. SPEAKER

The hon. Gentleman is now discussing a wider question than that before the House.

MR. H. C. RICHARDS

said the only other point to which he would refer was the great and growing expenditure which had now fallen on the Civil Service Estimates, and he thought that that was a matter which demanded attention.

And, it being half-past Seven of the clock, the debate stood adjourned until this Evening's Sitting.