HC Deb 17 May 1904 vol 135 cc113-55


Order read, for resuming adjourned debate on Amendment to Question [16th May], "That the Bill be now road a second time."

Which Amendment was— 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 again proposed, "That the words proposed to be left out stand part of the Question."


said he found it difficult to follow the hon. Member in his comprehensive and indiscriminate onslaught on the financial scheme of the Chancellor of the Exchequer and, by implication, upon the whole policy of the Government. But in common with everybody in the House and in the country, he could not but feel deeply concerned at the continually increasing and apparently unlimited tale of expenditure. Nothing had been suggested to bring that expenditure more effectively under the control of the House. To an ordinary observer and student of public finance it was difficult to discover the ground for this increase of our Estimates. It could hardly be explained by the increase of population. There was no necessary or recognised equation between the increase of expenditure and the increase of population. In 1893–4 the population of this country increased by 3,000,000 and in the same year the expenditure increased by £12,500,000. In 1903–4. while the population had only increased by 3,750,000, or 750,000 more than the increase shown in 1893–4, the expenditure had increased by £85,500,000. The figures were appalling, but was that expenditure unnecessary? Persons with more courage than responsibility might say it was, but he agreed with the light hon. Gentleman the Chancellor of the Exchequer and said that no man could put his finger on any item and say that it could be reduced or done away with. He agreed that we must have a strong Navy, and there was a good deal of force in the contention that the two-Power standard should only apply to battleships and not to cruisers, for the reason that, with the exception of France, foreign Powers had few possessions oversea to protect and guard, whilst on the other hand we were under very heavy obligations to protect our huge mercantile marine, our sources of supply, and our kinsmen across the sea. He mentioned these facts to accentuate the difficulties in which the House found itself in considering this expenditure, and not to demonstrate the justice of the Estimates. It was obvious that when they came to the Army they had less substantial ground to go on. We could not expect to vie and compete with foreign Powers in huge territorial armies, and therefore the Government would do wisely in limiting the establishment of the Army to the smallest point consistent with Imperial obligations.

He was, however, at one with those who objected to the additional taxation of tea; that was an altogether retrograde tax and must be regarded with grave misgivings. In so far as this fresh impost would tend to raise the price of the higher grades, and consequently to fall on the well-to-do classes, he had not a word to say; but the effect it would necessarily have of rendering the low-grade leaf higher in cost to the poorest of the poor was much to be deplored. Was it denied that the price would be raised? If so, those who did deny it must admit that the dealers would have to recoup themselves by adulterating their wares. His belief was that the incidence of this further tax would have to be shared between the consumer and producer. And who were these producers? They were fellow-subjects of their own who sent practically 93 per cent, of all the teas consumed in this country; who had, by dint of considerable expenditure of capital, of laying down machinery and plant of a costly description and by the display of resource and ingenuity, built up this interesting and important industry. They had also had to bear the racket of the artificially-raised rupee and of having to pay a higher scale of wages, owing to the standard of comfort and of living having appreciable risen within the last twenty years. What a strange and scarcely creditable commentary it was on the policy pursued by this House—and both Parties were tarred with the same brush—that, while they insisted on our maintaining the doctrines of free trade against India's own well-considered wishes and convictions, and while they insisted on her Government avoiding the merest scintilla of protection, or of protective tendency, even in cases such as the lower kind of cotton fabrics, where by no stretch of the imagination could any protective effect be proved to ensue, they were about to endorse the imposition of a tax on tea which, on the most numerous category of imports, could not be less than 100 per cent.

The present situation was due to the fact that the late Chancellor of the Exchequer, in an ebullition of somewhat misplaced generosity, took off a penny too much on the income-tax, and, in a still weaker moment, abolished the small registration tax upon corn which was easy of collection, harrassed nobody, and therefore was the most ideal tax that could be levied. It was a thousand pities that the Chancellor of the Exchequer disdained other sources of revenue, because, he supposed, they were out of the beaten track; in which circumstances tea fell an easy prey to the grasping exactions of the Treasury. Was the right hon. Gentleman quite sure that he had exhausted all other possible and innocuous expedients? There was, for instance, the article of aerated and mineral waters. Something like 3,500,000,000 half-pints were, it was estimated, consumed annually in the United Kingdom. If the Chancellor of the Exchequer taxed the waters sold at 2s. a dozen 1d. per dozen, and the water sold at a higher price 3d. perdozen, he would obtain the£2,000,000 of which he stood in need. Then there were the imports of wasteful articles of luxury—such as diamonds, feathers and plumage, lace, expensive skins and furs. As regarded diamonds, the statistical abstract showed an import of only £46,000 for 1902, but that was a ludicrously low figure, and he should think the amount would be nearer two millions. Feathers and lace, seal skins, and furs amounted to over £6,000,000, so that a tax of three per cent., excluding diamonds, would bring in enough to balance the Budget. If these suggestions were rejected, he urged the right hon. Gentleman to consider the possibility of giving an advalorem character to the additional tax on tea, so as to mitigate, if not avert, the severe incidence of the tax upon the poorest of the poor. The criticisms upon the Budget from the other side of the House had been singularly sterile. It was all very well for hon. Members to say they would only prescribe when called in, but he thought it was their duty to endeavour to make a Budget, which was admittedly framed on normal and traditional lines, as satisfactory as possible, rather than try to manufacture Party capital out of it. Until they did so he would have no difficulty in reconciling his own criticisms with support of the Bill.

*MR. JOHN ELLIS (Nottinghamshire, Rushcliffe)

said the general trend of the remarks of the hon. Baronet, who, from his wide experience in commercial affairs was always listened to with interest, showed that he was alarmed at the magnitude of the national expenditure. The hon. Baronet had intimated that there had been a great sterility in suggestions and proposals from the Liberal Benches as to how the revenue which it was necessary to raise should be obtained. It did not lie with the Opposition to make proposals of that kind; they were not in office and it was not for them, who did not know and had not the information which the Government possessed, to bring forward any proposals. He was anxious to call attention to a different and wider aspect of national finance. During the half century previous to the last great settlement of the franchise and redistribution questions, the House was predominantly Liberal, and during the eighteen years since then it had been predominantly Conservative. If it were shown that the latter period had been marked by a policy which had led to an enormous increase of expenditure he thought the Conservatives would admit that that was their responsibility. There were signs that a new era was about to be entered upon, and that the period to which he had referred, with some of its great characteristics, was coming to an end. He could not understand hon. Members apologising for quoting figures in this debate. Finance was based upon figures. He remembered that Mr. Gladstone used to say that of all inanimate things Consols were the most intelligent, and that figures revealed the industrial and commercial state of the country in a way that nothing else did. It was admitted on all hands that the growth of expenditure was alarming, if not appalling; but even more serious than the growth itself was the rate of that growth. According to Sir Henry Fowler's Return, the expenditure during the financial year ending 31st March, 1887, was £78,000,000; during the year ending 31st March, 1896,£86,000,000; and during the year ending 31st March, 1905,£126,000,000; therefore, during the first period of nine years the rate of growth was 11 per cent., whereas in the second period of nine years it was 50 per cent. That was the way the country was drifting and its seriousness; could not be exaggerated.

There had been a significant admission made in the course of the debate, that we had now reached the limit of the taxable capacity of the people. The Chancellor of the Exchequer in his reply had mentioned the national income as£1,700,000,000 or £1,800,000,000, but. doubts had been expressed as to the accuracy of that figure. An interesting Return was got out for Mr. Gladstone's; Budget speech of 1881 showing the population, revenue, and expenditure. He wished very much that some revised Return showing those figures could be presented, for they were most interesting and most vital. He believed; that taxation was growing at a much faster rate than either the population or the ability of the people to contribute, and such a condition of affairs was much to be deprecated. Another interesting point was the relation of the various heads of expenditure one to another. He took the expenditure under three heads. Under the first head lie took all that was paid by way of interest or repayment of debt; under the second head all Civil expenses; and under the third head expenditure on the Navy and Army. Out of every £100 of expenditure in 1887, £32 went in interest and repayment of debt; £24 for the Civil Service, and £44 for armaments; in 1896 the corresponding figures were £30, £27, and £53; whereas £23 was now spent on interest and repayment of debt,£26 on the Civil Service and £51 on the Navy and Army. Surely it would be admitted that to increase expenditure on armaments relatively to that spent on civil affairs showed a nation was travelling on wrong road.

But the whole question, as all would admit, rested on policy. During the eighteen years that the Conservative Party had been predominant this country had entered on an unparalleled course of expansion abroad, and the dominant note had been a certain restless aggressiveness. He would quote in connection the words of a very high authority indeed— For the last twelve years you have been laying your hands with almost frantic eagerness on every tract of territory adjacent to your own or desirable from any point of view you thought it desirable to take. That has had two results. The first result is this, that you have excited to an almost intolerable decree the envy of other colonising nations, and that in the case of many countries, or several countries rather, that were friendly to you, you can reckon, in consequence of your colonial policy, not on their active benevolence but on their active malevolence. This was strong language coming from such a statesman as the Earl of Rosebery—"malevolence" on the part of other countries must have had its influence in this need for Greater naval expenditure. By this territorial extension during the eighteen Years to which he had referred 60,000,000 people had been added to the Empire. It must be borne in mind that these and indeed millions of the coloured races which were included in the Empire were governed not as self-governing colonies, by their own free will and consent, but in the last resort by force. That was a great factor in the increase of the Army during the last eighteen years. Lord Salisbury had spoken in strong terms against the policy of expansion. He also noticed that the late Secretary for India had lately declared, and the Prime Minister had agreed, that this country had quite as much on its hands in the way of territory and people in Asia as it could manage. The most potent influence in this policy was the ex-Colonial Secretary. That right hon. Gentleman had over and over again claimed that it was to the advantage of this country to add to the Empire these peoples and areas, that it was good for trade, and what not. In regard to trade, there was no proof whatever that that belief had been realised. Trade had not developed in proportion to these additional responsibilities. Not even in Egypt, with all the advantages of lord Cromer's master-hand, had British trade increased So fast as that of other nations. Something had been said as to Committee of Supply in relation to national finance. But he did not believe that debates in Committee of Supply would have any effective control over national expenditure, nor had he any faith in setting up new Committees. They would rather fritter away the responsibility of the Government. It might be an old-fashioned notion, but he preferred that the Government of the day should have full and entire control over, and be responsible for, their Estimates.

The matter really resolved itself into the question of whether the money spent upon armaments could be lessened. That was the real crux of the matter. He was not an expert in naval matters, but the right hon. Gentleman the Member for West Bristol said the other day that no sufficient reason had been given for the increase in the Naval Estimates this year; and such an opinion coming from a Gentleman with the experience and ability of the right hon. Gentleman was quite sufficient for him. He did entreat the Government to see whether there was not an opening for making an agreement with other Powers for the reduction of armaments. He agreed with the Prime Minister that the preservation of the honour of our country could be consistent with the preservation of the peace of the world. He regarded the Amendment as a pledge that the Liberal Party when it came into power would endeavour to reduce our national expenditure, and particularly in regard to armaments. The nation wanted, and he hoped they would soon have, a return, to the spirit and methods of Gladstonian finance. The Chancellor of the Exchequer had said there was not much interest taken in the debate if the number of Members in attendance could be taken as a criterion. The right hon. Gentleman might have added that the absentees were mainly on the Government side of the House.


said that his point was that hon. Members opposite were contending that a grave crisis had arisen in the financial affairs of the country, and yet there were not twenty members of the Opposition present to emphasise the gravity of the crisis.


said he would leave the right hon. Gentleman to settle the exact number of Members in attendance, but it was the fact that there had been a much larger attendance on the Opposition than on the Government side of the House. No doubt the right hon. Gentleman's reason was that on the Ministerial side there was satisfaction and on the Opposition side there was dissatisfaction with the present state of things. This Parliament had been distinguished by its want of attention to debate from the Government benches. It was a significant fact that the Ministerial Benches had been constantly empty during the debates. He thought there was another reason for that, and it was to be found in the fact that this was a moribund House of Commons. [MINISTERIAL cries of "No, no!"] That was so, and that was why the attendance of hon. Members opposite was so poor. They were not interested in what was going on because many of them did not expect to return to the House of Commons. He supported this Amendment because he believed that the House of Commons should be mainly occupied with considering the wants, wishes, and feelings of the dwellers in the British Isles. They were the people upon whom lay the enormous responsibilities of empire, and upon whose character and capacity the whole of the structure depended. He hoped and believed that the efforts of the new Parliament which would be elected before long would be mainly turned in that direction.

MR. CUST (Southwark, Bermondsey)

said he did not think it was necessary for him to answer, at any great length, the speech of the hon. Member who had just sat down. The hon. Member began his remarks by defining the attitude of the Opposition, and he accused the Government of sterility. He would venture to point out to the hon. Member that it was not only the duty of the Opposition to criticise, but also to correct, and if they only criticised without correction, they were but barren fig trees and cumbered the ground. The only suggestion which had been made by the hon. Member was that the present expenditure of the country ought to be diverted into other channels. He thought that criticism was somewhat cryptic. The hon. Member made an accusation against Unionists as being responsible for the growth of the expenditure, because they had been the predominant Party for the last eighteen years. He would venture to point out that the Unionists could not have remained a predominant power in the country unless they had had the support of the majority of the House of Commons and of the electors. Therefore he thought the growing expenditure was justified, for otherwise the Government could not have existed. As for the figures into which the hon. Member had plunged, they were interesting, but they were all admitted, and they all knew in what direction the expenditure had gone. It seemed to him that the interesting speech to which they had just listened, showed once more that there was something unreal, something of pose in this blind frontal attack on expenditure. Speaker after speaker, like phantom after phantom, with the Leader of the Opposition in the part of Banquo, rose up eloquent in criticism, but dumb in suggestion. For instance, the hon. Member for Oldham, who was pleased yesterday to amuse himself at the expense of the House, and to amuse the House at the expense of himself, talked as if economy was the be-all and end-all of national existence. With great respect to his hon. friend he wished to say that that seemed to him to be mere nonsense. Of course, all money was wealth, but all wealth was certainly not money. The capitalised value of Russia, for instance, was infinitely greater than the capitalised value of Japan, but it was Japan's timely expenditure upon what the Opposition had called wasted armaments which had placed Japan in the advantageous position in which she stood in relation to her wealthier enemy.

Everybody wanted low taxes and everybody wanted economy, and nothing was more likely to secure popularity than a loud cry for retrenchment. At the same time he wished to point out that nothing was more liable to cause panic retrenchment. The two tendencies of panic retrenchment and panic expenditure were bound inevitably to succeed each other. He thought that the history of the last century showed that panic economy was fully as dangerous as panic extravagance. To-day, as after every war, there was, he would not say a panic, but a passion for economy, and it was, perhaps, worth while to consider the position in general facts and not simply as regarded the figures. Many of the facts seemed to have been ignored altogether, and the figures had been exaggerated. One obvious question with regard to the increased expenditure must be considered, and that question was how far this increase of expenditure was singular to ourselves, and was it normal or abnormal? It was generally admitted that when a man or a business or a nation increased its establishment it also increased its expenditure. Whether the increased establishment was desirable, or necessary, or not, might be another question, but that question was not raised in this debate. The fact was, that the establishment had been raised and they were now dealing solely with the expenditure. They were merely told that economy for economy's sake was a very desirable quality and characteristic. It seemed to him that, in what the right hon. Gentleman opposite had called the Gladstonianepoch, there had been a certain confusion between the word "Retrenchment and the word "Reform," and they had become almost interchangeable terms. But retrenchment was not necessarily reform, and very often it was exactly the opposite of reform For instance, in the new Army scheme the cutting down of the Auxiliary Forces to such an extent as to seriously impair their value and efficiency as a military body was not a measure of reform but an absolutely riotous measure of false economy. It was worth while in this respect to consider what other countries were doing in order to see whether we were singular, or normal, or abnormal. The House ought to remember that the whole modern tendency was towards increased establishment and a larger central expenditure, over a more widely expanding area of government. Centralisation and expansion must of necessity mean expenditure, and of the new order of things he would suggest that Germany and Italy were two quite new spending centres, whereas the United States, France, Russia, and Great Britain were continuously expanding Empires. He wished the House not to altogether forget that expansion of territory and government ultimately meant new sources of wealth. They had now the markets of Canada and Australia and the Colonies, which were a great source of wealth and credit.

There was also another reason for the rise of expenditure during the last thirty years. There were periods when every business and every nation and every spending body had to go through a certain number of years of re-equipment, and the further that day of re-equipment was postponed the larger would be the arrears and the greater would be the outlay required to bring it about. He would quote three instances in totally different spheres which proved this point. In the first place he would give the case of the American railways. They were originally built on light rails, with light ballast, light trucks, and light engines, but as the railways expanded and the trade enlarged a period of re-equipment had to be faced. Consequently heavier rails, ballast, trucks, and engines had to be provided, and during the time that this conversion was taking place, involving KH enormous outlay, the dividends of the companies practically came to an end. But since that re-equipment had come into full working order the dividends had largely increased and were now more than repaying the enormous expenditure for re-equipment. In the second place, he would take the case of the British Navy. The Navy, they had been told, was making to-day abnormal demands upon the public purse not very far behind the requirements of the National Debt. The outlay they were asked to meet to-day was only the logical fulfilment of Lord Spencer's naval programme which was brought in under a Liberal Government. He would take as his third case an instance which occurred only yesterday. As they would have observed from the newspapers, there had been a sudden awakening of the Austrian Government, and they had discovered that their armaments were not up to the European standard, and as soon as they were satisfied that they would be placed at a disadvantage in this respect in case of war, they brought in a demand for £16,000,000, which of course might possibly be dead loss, but which the Austrian Government recognised as a necessary insurance for the future security of the country. He quoted that simply to illustrate what he believed to be the truth, namely, that the cause of the great expenditure in this country during the last thirty years was very largely a subsidiary cause and was due to the fact that this country had been passing through a period of re-equipment not only in regard to the Army and Navy and education, but in all other branches of the spending services; and although it might not be necessary to go on for ever spending at such a high rate, such expenditure had been justified up to the present time. He had no doubt that the high rate of expenditure from 1885 to 1903 was very largely due to the starvation of the expenditure between the years 1859 and 1885.

He had made a comparison between the expenditure of this country with other countries during the last ten years. This was an extremely difficult task, because the comparison could only be made piecemeal, for France, wisely or unwisely, kept practically no accounts, and Germany adopted the "federal" system, under which her accounts were very complex things to study. The United States adopted the States system, and that again made it a country almost impossible to compare with our own. There were, however, certain points worth noting, and he would take, in the first place, the case of France. During the last thirty years the ordinary Budget in France had more than doubled. This meant more than it did in the case of our own Budget, because the ordinary Budget of France excluded what they called "special" budgets, such as the cost of the expedition to China, subventions to various industries and trades, and also what were known as the "extra-Budgetary" expenses, such as railways, which from 1874 to 1899 amounted to 1,315,000,000 francs or about £52,000,000, or equal to about £2,000,000 a year. The Budget of France also excluded the Colonial Budgets, which were very difficult to estimate, but which amounted, at least for the period he was considering, to 110,000,000 francs or about £4,000,000, excluding Algeria. This made the total Budget of France, as far as could be gained from the French authorities at least, £160,000,000 or £170,000,000 a year, and that had been doubled in thirty years. There was some explanation for that expenditure on account of the increased establishment which had been going on in France as in this country, and in the same way the wealth of France had been expanding in order to meet the expenditure.

If he was not wearying the House he would like to make a comparison in regard to the National Debt. Hon. Gentlemen opposite had sobbed at large over the additions to the National Debt caused by the war, but in the year 1892 the French National Debt was 21,000,000,000 francs, and the interest upon that sum was 739,000,000 francs. In 1902, the French National Debt stood at 30,000,000,000 francs and the interest paid upon it was 1,200,000,000 francs. Therefore, the British National Debt was £770,000,000, with a charge of £23,000,000, as compared with the French National Debt, excluding local debt amounting to £1,214,000,000, with a charge of £48,500,000. In other words, to put it quite clearly, the French public debt represented in capital £31 3s. per head of the population, with a charge for interest of £1 5s. per head of the population, whilst the British public debt was represented in capital by £18 17s. per head of the population, and the charge for interest 12s. 10d. per head. France was the only country whose expenditure and income could be taken as like to our own, but the task was rendered difficult because France kept no accurate account. However much expenditure was exaggerated in Opposition speeches or in speeches made by alarmist Conservatives, he thought the record of public burdens in the comparison he had made with France showed that from the actual figures this country had nothing to fear by a fair comparison. Even in the United States there was sufficient evidence of a similar expansion of expenditure, due largely, but not entirely, to an expansion in establishment. In 1892, the expenditure in the United States was $345,000,000; in 1903, $640,000,000; in 1904, the estimate was $661,000,000; and for 1905 the estimate was $727,000,000. This showed that whereas in the year 1892 the expenditure in the United States was $345,000,000, in 1905 the estimated amount required was $727,000,000, OT nearly double the amount required in 1892. It should be remembered that this was in addition to the State taxes, which for 1890 where put at $470,000,000. He did not say that these figures were conclusive, but he did say that they were illustrative and suggestive. His object had been to show that the recent rise in expenditure had not been merely due to a mad spirit of waste and extravagance, but the expenditure had reasons and limits. The outlay was a reasoned one and was limitable.

There was one other point he wished to raise. It should be remembered that they were not taxing the same estate between 1898 and 1902 as during the period between 1883 and 1897. Twenty years had elapsed and they were now taxing a totally different property. During that period wages bad risen 50 per cent. The inland revenue had risen 40 percent. Smaller profits and salaries which did not come within the purview of Somerset House were calculated to amount to £200,000,000 a year, and the total income of the country made up by all these figures was now very close upon £2,000.000.000 a year. "We were now taxing that amount as compared with £1,400000,000 twenty years ago. The national income showed an increase of 38 per cent., and the population an increase of 15 per cent. He thought all these considerations ought to be taken into account in forming a judgment on the increased expenditure of the country. He did not say that there was no cause for serious inquiry, but he did say that there was no cause for panic or trembling at our national expenditure. It seemed to him that any inquiry into national expenditure ought to go hand in hand with an inquiry into the system of taxation, its incidence on various classes, and above all its possible and equitable. At expansion. At present our hands were tied. Apart from a few necessary articles on one side, and the income-tax, which was strongly condemned by Mr. Gladstone and Mr. Cobden, we had absolutely no new sources of supply to fall back upon. A graduated income-tax had been quite possible in Prussia, and he believed that a wide increase of graduated direct and indirect taxation might ensure the elasticity of our future finance. New taxes, protectionist or not, would always be unpopular, but the House should remember that popular or not, they simply implied a wider distribution of the burden of public taxation. But they must increase the possible area of taxation, and they could pot do that in a moment. If they had a wide field of possible taxation, if the expenditure was carefully presented in a way they would be able to understand, and if they throw away formulas for common sense, he humbly thought there need be no fear for the financial future.

*MR. GOUDARD (Ipswich)

said he wished to offer some practical suggestions for reducing the very heavy expenditure they were now considering. Nobody who had listened to the debate would say that a discussion on the expenditure of the country was either untimely or unneeded. The watching of expenditure was one of the principal functions of the House of Commons, and it demanded far closer attention than had hitherto been given to it. They found all sorts of questions raised on proposals of taxation, and yet, after all, taxation was not so important as expenditure. Taxation was the outward and visible sign of expenditure, and, argue as they might as to the incidence of taxation, as to the kind of articles that ought to be taxed, and as to the persons upon whom taxes would fall, taxation depended on expenditure, and expenditure in its turn depended on policy. Policy was a matter for which the Government of the country was responsible, and anybody who had followed the history of the country since this Government came into office in 1895 on the question of cordite, would see that it had been a very bleeding time for the people. Soon after the Government came into office the first step in the downward grade of extravagant policy was made in connection with the doles. There was money enough, at all events, to expend in the interest of their friends—those whom they wished to keep on their side while in office, and after they went out of office. That alone involved the country in an expenditure of £3,000,000. They were told that there was no use grumbling about taxes, that they passed the Estimates, and that they must find the money to pay for them. That was the one argument which had been used against the Amendment. There was a great deal of truth in that, but he would ask how much control had Parliament over the Estimates? He could not help saying that the policy of the Government on the question of the Estimates had never been favourable to economy, or the reduction of expenditure. The debates in Committee of Supply were limited to twenty-one or twenty-three days, and he thought that this arrangement lent itself to extravagance. How many Votes were passed by the House under the guillotine without comment or debate? In 1903 they ran through Votes after ten o'clock amounting to £5,552,896 without any comment. In 1902 they passed Votes under the guillotine Rule for over £12,000,000, and that included £2,317,800 I on the Navy, £758,600 on the Army, and £2,440,185 on Revenue Services. In 1901, under the same Rule, they passed Votes for upwards of £67,000,000 in something like an hour, that sum including £14,209,300 on the Navy, £44,988,600 on the Army, and £2,884,880 on Revenue Services. These Votes never received the slightest Parliamentary criticism, and in view of those facts he asked—What was the use of the Government asking hon. Members to deal with expenditure on the Estimates?

It was this very Government that set up a Committee to deal with the question of public expenditure. Why had the Government, if they had any real regard for economy, paid no heed to the recommendations of the Committee on Public Expenditure? One recommendation was that the Estimates should be submitted to some kind of Committee. With, regard to the Army and Navy Votes, he could not help thinking that the diversion of money from one Vote to another was a dangerous practice and led to extravagance. He found that under this system very large sums had been devoted to purposes which had never been considered by Parliament at all. It might be said that this was done in accordance with a long established custom of this House, and that the Government were not responsible, but he could not help feeling that this Government were in an exceptional position, having been long in office, with a large majority behind them, and if their policy had made for economy they could have altered the system. In the third Report of the Public Accounts Committee, 1900, the following words appeared— Estimates of cost submitted for Parliamentary sanction should be such as the House of Commons can accept as final. That was sound sense, but it had never been acted on, and never would be so long as they allowed the money voted for one purpose to be diverted to another. To illustrate the working of this system, he mentioned that in the Army Estimates for 1901–2, under Vote 10, Works, etc, there were twenty-two items which were largely exceeded, with Treasury sanction. The excess sometimes was as much as 100 per cent, on the money voted by Parliament. There were seven cases of money voted by Parliament, amounting to £17,800, of which not a penny was spent. There were four cases of work begun without estimate at all and merely on Treasury sanction. He contended that was making Parliamentary control a mere mockery The Comptroller and Auditor-General had called the Committee's attention to a case where the House had passed an estimate for £14,019 for three lighters, while the actual cost was £28,306, being more than double what the House voted. In any ordinary man's business that would spell ruin. What was the explanation? That it was a convenient time to build a fourth lighter and that, instead of the excess being 102 per cent., it was only 49 per cent. A new lighter was ordered, for which an Estimate was never brought before Parliament. By this extravagant system, if the Admiralty came to the Treasury and declared it was urgent to begin to build a new battle-ship at once—it would cost £1,000,000, but only £100,000 would be spent this year and that sum had been saved from other Votes—the Treasury had power to sanction the expenditure, and commit the country to a new battleship, though it had never been considered or sanctioned by Parliament. He would instance "another case. A store was built at Gibraltar for the Navy, and the cost on the Navy Vote was £42,000, but it was found to be too damp for holding ammunition, and it was converted into a cold meat store at an additional cost of £47,000, making a total of £89,000, of which the Army paid £23,000 and the Navy £66,000. What relation was there between that expenditure and the Estimate laid before Parliament? This removal of Parliamentary control was a, most harmful thing in connection with our finances. The knowledge that surpluses of one Vote could be used to meet deficits of another Vote, removed one of the incentives to economy.

They had been challenged to give practical suggestions. The practical suggestion the would make was that the power of Treasury sanction over the Votes for the Army and Navy should be limited in the same way as it was over the Civil Service Votes, in regard to which it had no power to sanction the application of money voted for one purpose to another and different purpose. There were cases in which the Treasury had to give sanction to certain expenditure which had been, incurred before sanction was asked. In 1902 there wag the question of the rifle range at Enfield. The War Office, on the ground of the urgency of the work, put it in hand and asked sanction. The Treasury replied that in that case they did not see sufficient justification for their not being consulted before the expenditure was incurred, but of course they gave way. Parliament had no control over the Treasury, because, after the money had been spent, they were obliged to give sanction to it. If the Government had really in their mind the idea of economy there were many practical ways of dealing with it if they chose. Laxity in the large spending Departments depended on the lavish policy of the Government, and they would continue to have all the paraphernalia of extravagance so long as there was laxity and extravagance on the Treasury Bench. Peace, retrenchment and reform were still the watchwords which the House, as the guardian of the people's treasure, should respect in fact as well as in sentiment. He heartily supported the Amendment, because he thought that there was great need indeed for peace, retrenchment and reform.

SIR CARNE RASCH (Essex, Chelmsford)

said that be ventured to remark with profound respect, in regard to the speech of the Leader of the Opposition, that economy with reference to the Army Estimates was not always the short cut to efficiency. They all knew that after the Peninsular and Crimean Wars the Estimates for the Army were cut down, and that on account of economic views then prevailing, the Army was afterwards without transport, ambulances, and almost everything that was wanted. In 1857, during the Indian Mutiny, the Army was rather better off; but when the expedition up the Nile was, undertaken, Lord Wolseley had to take the cream of 100 battalions in order to get an effective force of 17,000 men. There were many other illustrations in recent history that it cost a good deal more than judicious expenditure at the right time and in the right way. If he might venture to allude to the speech of the junior Member for Oldham, he would say that that speech might as well have been read from the other side of the House; and he utterly failed to see what the hon. Member's attack on the right hon. Gentleman the Member for West Birmingham, had to do with the question before the House. He should like to say that if the representatives of the agricultural interest of the country had had their way, they would have liked to have had the re-imposition of the registration duty on wheat and a little something on flour which would have been a benefit to the farmers of the country. It was reported that the Emperor Charles V. of Spain had said that if he had only been consulted as to the Creation, he might have given some useful hints to the Almighty. If the agricultural interest had been consulted in regard to the com duty they would have said that they were perfectly content to leave things as they were.

MR. ASQUITH (Fifeshire, E.)

There has been so much general agreement in the course of this debate in all quarters of the House outside the Treasury Bench as to the main proposition affirmed by the Amendment of my right hon. friend that I can assure the House that I am going to occupy only two or three minutes in pressing once more and for the last time upon the Government for a further defence of the past and a more definite assurance as to the future. Sir, the sum and substance of the debate which has taken place in the last two nights may, I think be fairly expressed, with a slight modification in language, in the classic words of a Resolution once passed by this House—"That our expenditure has increased, is increasing, and ought to be diminished." The principal facts are undisputed because they are beyond dispute and they are expressed in figures. I will only trouble the House with two or three figures which speak for themselves and are more eloquent than any comment which could be made upon them. It is conceded that during the last ten years our national expenditure—I am leaving out of account expenditure for local purposes—has increased by £50,000,000 in round numbers, or at the rate of £5,000,000 a year. It is conceded that the annual cost of the Navy and Army during that time has doubled, indeed more than doubled. It is an undoubted that the capital of the Debt has been added to by at least £135,000,000 and, although that, of course, was a debt incurred for abnormal expenditure, yet the burden of the interest is, until it is liquidated, a standing charge upon the annual finances of the country. And if you turn to the other aspect of the matter, as it is natural and appropriate to do in discussing a Finance Bill, and measure our expenditure by the additional taxation imposed upon the people, you will find this significant fact—that of the £33,500,000 which was put on in the shape of additional taxation either actually for the war or, at any rate, under the pressure of circumstances connected with the war, we shall in the year whose financial arrangements we are considering, still be subject to £25,500,000. In other words, the war being over, except for the permanent addition to the Debt, and the expenses of the war being completely liquidated, out of that additional taxation of £33,500,000, we have only saved some £7,000,000 or £7,500,000.

These are figures that, are beyond controversy, and one naturally asks—What is the apology which is offered on the part of those who are responsible for our finance? It has taken various forms in the course of the debate. The first, and from a Parliamentary point of view, the simplest and most obvious is what we may call the tu quoque, which is addressed on this occasion not only to those who sit on this Bench and have been themselves responsible for the finances of the country in the past, but to private Members and to the House at large. As regards us who sit here and here and were most of us responsible, in a greater or 1osser degree, for the finances of the country during the years 1892–95, I do not think we have any reason to fear comparison with those who succeeded us. I am not in the least degree ashamed to avow that I was a party to that expenditure, and I am perfectly prepared to justify it both in scale and proportion, as against those who came after us. What is the addition that we made during the three years that we were in office from 1892 to 1895? The average annual increase was a little over £2,000,000 a year. During the next four years—and, I think, the right hon. Gentleman the Member for the West Bristol was entirely responsible for the finances of the country during the four years which succeeded our Administration—the annual average increase was £4,000,000 a year; and during the last five years, in which the administration of the finances has been shared by different Chancellors of the Exchequer sitting on that Bench, the annual average increase has been no less than £6,000,000 a year. So, our record being a little over £2,000,000, during the next four years—I am taking a slightly different distribution of period from that adopted by the Chancellor of the Exchequer this evening, but it is perfectly accurate—during the next four years that was multiplied by nearly two, and during the succeeding five years it amounted to £6,000,000. I do not think we have any reason to fear a comparison. The other form of tu quoque is a reproach addressed to the House at large. The House is supposed to be particeps criminis in this large expenditure. I agree that the Executive Government of the day, to whatever Party it belongs, is entitled and bound to resist improvident demands for extravagant expenditure for particular services from whatever quarter they proceed. But I have looked into the matter as to this session, at any rate, and I doubt very much whether, if all the proposed additions of expenditure suggested by private Members in any part of the House were added together they would amount to as much as the cost of a single battleship, [MINISTERIAL cries of "Oh, oh!"] I am speaking of discussions in Committee of Supply, which is the place where these suggestions are mainly made, and I ought to add the payment of Members and the lighting dues of the shipping interest. I believe that as far as my estimate goes, if added together the amount, comparatively speaking, is relatively an insignificant sum. However that may be, it is not essential to my argument. I venture to repeat with the strongest emphasis what was said by my right hon. Friend the Member for East Wolverhampton, that there is a totally different measure of responsibility as regards the private Member and the Executive Government of the day. They have to regard public of the day. Expenditure as a whole. It is the right and the duty of the private Member in regard to some particular interest and claim to urge them on the Executive of the day; but no aggregation of claims of that kind can possibly justify neglect on the part of the Executive in discharging the primary function of safeguarding the finances of the country.

The second line of defence adopted by the official apologists of this increased expenditure is the growing prosperity of the country. I confess that is a line of defence with which I have considerable sympathy. We have been told so often in the past few months that the country is on the verge of ruin owing to our fiscal arrangements, that it is a 'relief to hear, after all, that we have this abounding reservoir of wealth out of which we can defray this unprecedented increase of expenditure. In one of the speeches made it was declared that "disaster was only kept from us by our increased trade and commerce." I accept the official assurance given to us by the Chancellor of the Exchequer and the Secretary to the Treasury that we may dismiss from our minds this gloomy cloud of pessimism which his hung so heavily on our spirits. On this point of the argument, that derived from the increased prosperity of the country, I will venture to repeat what was said by the Leader of the Opposition, that you must regard not only the amount, but the distribution, of the national income and expenditure. It is easy to say, as the Chancellor of the Exchequer said in his able and interesting speech, that a ma n who is below the level of the income-tax, If he forswears beer, spirits, and tobacco, and confines himself to the consumption of bread and meat, and a little tea, may voluntarily escape a great deal of taxation which we commonly call indirect taxation. When we are discussing the apportionment of the burden of expenditure and taxation as between different classes of the country, you must take things as they are and men as they are. You must not take an ideal and abstract person, the man who lives an ascetic and isolated life, who shuts himself off from the common enjoyments and more or less perilous luxuries of our experience. You must deal with the human being as you find him. And if you come to analyse the burden of expenditure you will find that, it presses with increasing weight on the people less able to bear it.

The third and the last defence suggested, by the Chancellor of the Exchequer consists in asking, "Where are you going to reduce your expenditure?" Primarily that is a question for the Executive themselves, I will show very high authority for that proposition. The Chancellor of the Exchequer referred to* the "doles" given from Imperial funds in aid of particular interests—agriculture and the owners of tithe rent-charge—and he asked, "When you come into office are you going to repeal them?" I will reply by a quotation from the greatest of our financial authorities. Speaking in 1869 on this very subject, Mr. Gladstone said that he knew no reason why £3,000,000 should at that time have been added to the public expenditure. "But it is one thing to put on £3,000,000, and it is quite another to take them off. By putting on £3,000,000 you create a number of offices, a number of new claims and new expectations, and you could not and ought not to destroy all these in a moment. Therefore the work of retrenchment must be a gradual work." Therefore, without discussing how far it would be possible, with regard to any specific class of expenditure, to retrench or reduce, the House must always remember that putting on is a very different to taking off. One thing is extremely easy and the other is extremely difficult. When you have created interests and expectations, a whole network of difficulties have been brought into existence. Let me give one or two illustrations. The right hon. Gentleman took the case of West Africa, and asked if we were going to diminish the grant spent in developing that part of the Empire for what we are all agreed to be a great Imperial need—the supply of an alternative field for the growth of cotton. I do not answer one way or the other. Personally, I am strongly in sympathy with the scheme, and I think it improbable that the grant would be discontinued. But you must not look to "West Africa alone. Suppose you look to Somaliland. During the very time that this defence is offered, you have expended in Somaliland £2,500,000 upon an adventure which, as far as we can now judge by the admission of the Government themselves, was from first to last misconceived, mishandled, and futile.

Then, again, the right hon. Gentleman points to the Army. The Army has been a natural and proper topic in the course of this debate. It is very easy to talk generalities about the Army, and we all agree that if we have an Array it is a mere platitude to say that we want one that is sufficient in size, efficient in equipment, and economic in administration. But have we any assurance when we look back upon the history of the last five years either that we have such an Army or are likely to get such an Army from the present Government? Only three years ago the Government launched with much expenditure of Parliamentary time and with a rhetorical benediction from the Prime Minister an ambitious and expensive scheme which now they themselves admit to be unseaworthy, and which they are going to withdraw. I listened to the speech of the Secretary of State for War in introducing the Army Estimates this year. I will not say it was the foundation of his case, but a point on which he strongly insisted was that the system with which he found himself confronted and which he was about to reform was one which in many of its most vital features was unduly costly and totally inefficient. And what is the system put in its place? For many of the changes proposed I have much sympathy. But this House of Commons, asked to pass the Second Reading of this Finance Bill, has not the remotest idea of what is to be the cost of the Army. We have dummy Estimates put upon the Table and admitted by the Secretary of State to be framed upon lines which the Government have discarded; and until we have the further information which we have not yet extracted from the Government we have not the remotest idea what will be the ultimate Army account. That fact alone is sufficient to entitle us to challenge the abnormal expenditure which the House is asked to vote.

As to the Navy, here again it is possible to indulge in generalities on which everyone will agree. We all hold that the Navy is our first and may be our last line of defence, and that the maintenance of the supremacy of the sea is not only expedient but absolutely necessary for a country which is more dependent than any country in the world for its food supply upon sea-borne commodities. That necessity is still further enhanced by the fact that we possess by far the largest mercantile tonnage of all the marines in the world. I was rather relieved to hear that acknowledged by the Chancellor of the Exchequer. We had been told in authoritative quarters that our shipping was declining and that we were being rapidly overhauled by competitors and were on the verge of ruin. This is part of the invisible exports which, because they are invisible, some people treat as if they were non-existent. But, admitting that all these duties are cast upon our Navy and that the make it necessary for us to look upon that Navy as our first and most important line of defence, I should like to ask one or two questions of the Prime Minister as to what is called the two-Power standard suggested by the Estimates of this year. That standard applies, as we understand, only to battleships and does not apply to cruisers. When we had a discussion in Committee of Supply the Prime Minister told us that, apart from battleships, the two-Power standard was an elastic standard. Now a standard that is elastic is, from the very word, not a standard at all. I think the House is entitled to know what is the standard which, apart from battleships, the Government, on the advice of its naval experts, adopts. The second question I would put to the Prime Minister is with regard to the two-nation-power—the actual number and the equipment. I should like to know something about that. What is the relative quality, the age, the tonnage, and the power? I should also, in connection with this question, like to ask how it is that, if our standard as regards battleships is only equivalent to that of the two largest Powers of the world, our expenditure for four or five years past is as much as the combined expenditure of three combined Powers. I do not put this question with any desire that there should be an undue retrenchment—I think I am entitled to Bay that. I have consistently voted every year in favour of an adequate naval expenditure and I do not press this retrenchment beyond the level of safety. There is a natural and inevitable expenditure in naval matters to meet the needs of the country, and I believe it is one of the cardinal features of this House to regard that with vigilance. The burden, however, has been steadily growing during the last ten years, and during the last five years it has been growing at an accelerated and a wholly unexampled rate. I think the figures speak plainly without any addition from me. Here we are in a time of profound peace, with an expenditure of £120,000,000 raised out of the taxes, I am not dealing with other expenditure, with an income-tax at 1s. and a tea duty at 8d., which is equal to 100 per cent. In such a position I think there is a real justification for the Amendment of my right hon. friend, and the House will be failing in its duty if it does not express its lively dissatisfaction and anxiety, and Ministers will equally fail in their duty if they do not take in hand without further delay a diminution of the burdens which already press, and which must, in the course of time, press more and more heavily and more and more disastrously, not only upon the comfort of the people, but upon the resources and the very credit of the Empire itself.


The right hon. Gentleman who has just summed up the debate in which the critics of the Government have taken part bases his charge naturally and rightly upon the undoubted and unquestioned growth of the expenditure of this country, not merely during the last few years, but over a large series of years. I am the last person to deny that the great growth of expenditure, whether it be Imperial or whether it be local—and local expenditure causes me quite as much anxiety as the other—should make every person responsible, either in the one class of expenditure or the other, carefully consider what it is that justifies such a growth, and whether or not the community is in a condition to bear it. I would point out that the malady from, which we suffer is not a malady confined to this country, but, as was pointed out in the interesting speech of the hon. Member for Bermondsey, is a disease which can be detected, not in the germs, but seen in full and luxuriant growth, in every other community as well as our own. I think on the whole that the growth of British expenditure, serious as it undoubtedly is, will bear favourably a comparison with the growth of expenditure in other great European countries. But, Sir, as my reply will be limited, I need not perhaps follow the right hon. Gentleman into some parts of his speech—that part, for instance, in which he ventured on the most paradoxical assertion that this House, or the Members of this House, or large sections of the Members of this House who are now clamouring for economy and are going down to their constituents to denounce the extravagance of the Government, have not done their very best, in so far as votes in the lobby can do anything, to make the expenditure of the Government not merely great, but absolutely overwhelming. The right hon. Gentleman, I think, said that the growth of expenditure recommended by this House did not exceed the cost of a battleship. Well, I do not pretend to have a complete list of the suggestions made or the votes given by various Members either on this side or the other—for both sides are ardent devotees of expenditure so long as they are not responsible for the finances of the country—but I am informed that one hon. Gentleman on the Address recommended a process of afforestation which would have cost the modest sum of £35.000,000; that a Pension Bill has passed its Second Reading which would cost £5,000,000 a year at the smallest estimate; that the Second Reading was passed of another Bill which would cost more than £500,000 a year; that a third measure was discussed, though not passed, for the payment of election expenses which would have cost anything up to £500,000 a year; and that a proposal has been made that the whole profits of the Post Office, amounting to £4,000,000 a year, should be expended either in the improvement of the position of the Post Office employés or in adding increased facilities to those members of the community who desire to send or receive letters and telegrams, among which I do not count myself. Well, I think, without going further into the details of these Parliamentary excursions and alarums, if the right hon. Gentleman will add up the sums which I have sketched to the House, he will see that a battleship would be expensive indeed if it approached in cost the total to which these schemes would amount.

But there are, as I have said, two main questions which we have to ask. First, can the country bear the expenditure? secondly, is the expenditure necessary, regrettable as we all admit that it is? We all desire to diminish it. Even the Treasury Bench desire it. It may be difficult for hon. Gentlemen opposite to believe it, but if they will exercise a little faith even their scepticism may be allayed, and they may come to the conclusion that even the extravagant Gentlemen sitting on this Bench might perhaps have an easier time if they were not compelled to suggest taxes in the Budget, or to deal with the various criticisms of their expenditure, to which from time to time they are subject. Now, granting that the expenditure ought to be diminished, is it nevertheless of an amount which the country is incapable of bearing? Are we to be as pessimistic as the right hon. Gentleman the Member for West Monmouth was in the most interesting and able speech which he delivered this afternoon—a speech which delighted us all? Are we to take his gloomy estimate of the finances? Well, I confess that even from the right hon. Gentleman's own speech I should be disposed to draw a contrary conclusion. To begin with, he compared, naturally, the extravagance of the present day with the economic theory with which Mr. Gladstone ruled the finance of this country. He looked back to the halcyon period of the early sixties. Well, but I believe that if he will work out the sum he will find that the expenditure of the country now in proportion to the wealth of the country now is smaller than the expenditure of the country in 1864 compared with the wealth of the country in 1864. So far from having gone down hill in this matter, we have improved. [HON. MEMBERS: Hear, hear!] I am amused. I gather from the unexpected approval that my observations appear to have met with from various quarters of the House that hon. Members were more intent on extracting admissions for their own fiscal doctrines than following the argument which I was endeavouring to address to the House. Considering that I am an advocate of free trade I do not see why they should do so. Any gentleman who has taken the trouble to study my opinions may find them very clearly expressed. But to take them on their own ground, I would point out that, if their sole test of the merits of their particular doctrine is that this country has grown in wealth under free trade, they would be greatly embarrassed by a similar argument if applied to other countries which have not free trade. I think myself the argument on either side is a very childish one. If you are to decide whether a particular fiscal system is good or bad because the country which enjoys it has increased in population and wealth, you will make a very small advance in any knowledge of political economy. If the House will allow me to revert to what is the proper point of the argument I am addressing to it, let me repeat that if the right hon. Gentleman the Member for West Monmouth is of opinion that we are now staggering fatally under the burden of taxation, I can only say that the burden of taxation, relative to our powers of bearing it, is now lighter than it was forty years ago.

Then the right hon. Gentleman said the State Debt is appalling, that public credit is shaken to its foundations. But the Public Debt, as he told us himself, is now at the point it was somewhere in the seventies, I think. Yes, 1874 was his date, just at the end of Mr. Gladstone's first Administration. The amount of the Debt now is exactly what it was at the end of Mr. Gladstone's Administration. I quite agree that, considering what efforts we have made to pay if off, it is greatly to be regretted that the great war in South Africa and the increased expenditure have brought it up to its present limits; but to say that the Debt is too much for us now, with all the growth of wealth I have described, when we bore it without sinking under the burden in 1874, is surely an absurdity. If you turn your attention from the capital charge of the Debt to the interest of the Debt, the comparison is equally against the right hon. Gentleman; because he told us himself in the course of his speech that the interest of the Debt now was at the same figure as it was towards the end of Mr. Gladstone's second Government in 1884. Under those circumstances, deeply as we may deplore that the Debt has increased, yet, in view of the fact that with a smaller population and smaller wealth that Debt was borne, I will not say lightly or with ease, but without distress and anything in the nature of destruction of credit—in view of that fact, we need not think the burden of debt is going to distress us.

Then comes the more difficult question whether the burden is a necessary burden. I will deal briefly with the points raised by the right hon. Gentleman opposite in the speech he has just made. He said that my right hon. friend the Chancellor of the Exchequer had informed the House that one of the great burdens of the Exchequer consisted now of contributions to local taxation, among which contributions were certain contributions which were bitterly, even obstructively, fought by hon. Gentlemen opposite not many years ago. Then the question arises, does the right hon. Gentleman intend to repeal that burden on the Exchequer when he comes into office? And here I saw the first dawning of financial responsibility which has illumined the Front Opposition Bench through all these debates. The right hon. Gentleman discovered a reason apparently, or thinks he discovered a reason, for obtaining contributions to local taxation when he is in office which he bitterly attacked when he was out of office. He said, You create all sorts of subsidiary interests, all sorts of employés—I do not know what the interests were that were created. But I do know this, that if there was the smallest sincerity in the opposition offered to the Tithe Rent Charge Bill, or the Bill for the Relief of Agricultural Rates, there would not be the slightest difficulty in any Government which comes in, and thinks those measures were wrong, repealing them. I will not discuss Somaliland. Hon. Gentlemen by their cheers seem to think it is because I am afraid of the topic; I am not afraid of that or any other topic; and if they will insist on my referring to it, I will refer to it. And I say this, that much as we regret the necessity we have been under of expending money and valuable lives in Somaliland, let no Government which may come into office in this country, whose responsibilities extend to every quarter of the globe and to every continent, think they will be able to avoid expenditure of that kind. Hon. and right hon. Gentlemen opposite have been the greatest sinners in that, if sin there be. But in truth these are the unhappy burdens and responsibilities of an Empire such as ours; and you will no more be able to escape them in office by making fine speeches when in Opposition than you will be able to avoid any of the laws of nature by which, regret it as we may, we are inevitably bound.

The right hon. Gentleman discussed the Army policy of the Government. Does he intend me to go through that before I sit down? The right hon. Gentleman said we were now proposing to change the Army system, a system which in our hands had no doubt proved very costly, and which we thought was not suited to the existing conditions of the Empire. Is that a subject of criticism? It cannot be the subject of criticism. It is perfectly true the Government have been considering, and I hope shortly will be able to give to the House their views on Army reconstitution. But the Army system which exists now is a system which we did not create, which has been systematically defended by the right hon. Gentleman opposite, which we have done our best to bring up to the needs and requirements of the country, and which, I will say it boldly, under the most able direction of the present Secretary of State for India and his predecessor was turned into a fighting machine such as never has been known before in the history of the nation. That system, even perfected as it has been by those eminent administrators—[OPPOSITION laughter]—Gentlemen who laugh know nothing about the subject—even perfected as it has been by those eminent administrators, is one which, we think, does require change. Who is responsible for the system? Why, Sir, it has been the proudest boast of hon. Gentlemen opposite that they are its authors, and, indeed, I believe their solitary claim to constructive Army reform was the establishment of the very system which we now propose to alter. Then, Sir, the right hon. Gentleman went on to ask me certain questions about the Fleet, and he asked me what our standard was with regard to cruisers. He twitted me, rather unnecessarily I think, with having described it as an elastic standard. It is incapable of the semi-mathematical accuracy of what is called the two-Power standard of battleships. The cruisers have got very different and much less definable duties to perform. It is necessary, in the first place, to provide a sufficient number of cruisers to form the proper complement to the fighting Fleet, and, in the second place, to provide the number of cruisers necessary to patrol the waters through which British commerce flows. It is impossible to lay down a standard for the second of these requirements, nor can any parallel be drawn between the marine policing which is incumbent on this country, and the marine policing which is incumbent on any other country; and that being so, whatever standard we might lay down is not to be found in a comparison of the number of our cruisers with the number of cruisers used by other Powers, but in a comparison of the number of our cruisers with the work those cruisers have to perform. The right hon. Gentleman has asked me further questions to which I could not now give him any conclusive or accurate answers, but I would point out that there are many reasons which must make a navy which is used as our Navy is used more costly than those of other countries. Take the case of Germany, for instance; she keeps her fleet in two ports, her ships are constructed to fight close at home, she does not contemplate oversea responsibilities of any great or important character, and she does not depend on the voluntary system of enlistment which we necessarily depend upon. You cannot have fleets of that character with objects so different, and expect them to be worked at a like cost. That, I think, will do something to satisfy the right hon. Gentle man third question.

But there is a deeper question underlying all this question of expenditure on the Navy and Army, and on the Army in particular. The right hon. Gentleman the Leader of the Opposition made a great many very sarcastic references to the Defence Committee and to myself, as head of that Committee. I need not tell the right hon. Gentleman that I am sure he meant: nothing personally offensive to myself, and I go much further and say I do not object to anybody making criticisms of that kind. I have never put any service that I have been able to perform on the Defence Committee at any high level at all. I can conscientiously say that I have never pretended that I have done much—well, I have hoped to do much—but I never raised any undue expectations of my own performances tin this connection during such time as I may remain president of that Committee. But not a meeting of that Committee passes—and we meet I weekly—without impressing more and more deeply upon me my sense of its absolute necessity, and of the incalculable loss this country has suffered from not having had such a Committee at work for many years past. Our work is necessarily slow. The president of the Committee, as the House may very well conceive, is a very hard worked man, a man who has got to keep in his mind an immense variety of subjects; and results therefore may not be arrived at with all the rapidity we had hoped and which the public have had a right to expect. But we are making progress, progress of the most valuable kind; and I frankly tell the House that, while the conclusions at which we have arrived with regard to Home Defence are undoubtedly reassuring as regards the number and cost of troops required to keep inviolate these shores from the only kind of invasion to which we believe them to be susceptible, it is brought home to me more and more every day that we have become by the mere inevitable march of events a Continental Power with borders coterminous with one of the greatest military empires of the world, or, if not coterminous, in the near neighbourhood of one of the greatest military Powers of the world. We have been told that if we only come to a friendly arrangement with that Power no force need be provided for the defence of our Indian Empire—well, at all events, that we may diminish the force otherwise necessary for the defence of the Indian Empire. Is that a policy adopted by any other country in the world, whatever be its relations with its near neighbour? There are countries on the Continent—I do not specify, it would be absurd to name names—but there are countries on the Continent in the closest friendship and alliance with their neighbours, who, nevertheless, put every man they can under arms, and would feely if they altered that policy, however close the ties of treaty might be with their neighbours, that they would practically be handing themselves over to any change of public opinion in either country to be coerced and possibly defeated by their whilom friends. You can improvise much, but there is much in an army you cannot improvise; and, believe me, it would be perfect madness for this country to put itself, whatever its agreements were—and I hope our feelings towards our neighbours in Asia are of the friendliest description—it would be madness for us to lay down the proposition that, because we were able to come to a friendly understanding in regard to pending questions between us, therefore we were not to have all the preparations at our command which could not be invented on the spur of the moment. We must have preparation if our defence is to be effective and if we hope that defence will stand the strain and test of time. No other nation does that. Do not let us imitate a folly

which has been committed by no other nation. [An IRISH MEMBER: A four-leaved shamrock!] I am glad I carry part of the House with me. In deference to the more stolid majority, let me correct my statement and say, do not let us perpetrate a folly which has been committed by no other nation. The House may depend upon it that this question of the needs of Empire and of the cost of Empire is one which is continually engaging and preoccupying the attention of His Majesty's Government. It is not a question we are allowing to sleep. It is not a question which we feel can be hastily settled. But it is, perhaps, of all the questions pressing upon our attention the one which is most closely engaging us; and if it be possible, and I hope it will be possible, to diminish the cost of these defensive armaments, let it at all events be done in conformity with a reasonable and rational plan, and not in obedience to some quite unjustified panic about the strength of the taxpayers of this country to bear the burdens which we have reluctantly put on, which we would gladly take off, and which we are convinced they will equally gladly bear if we are able to show that it is only at that price that the Empire can be adequately and honourably sustained.

Question put.

The House divided:—Ayes 297; Noes, 213. (Division List No. 125.)

Agnew, Sir Andrew Noel Aubrey-Fletcher, Rt Hn. Sir H Banbury, Sir Frederick George
Allhusen, Augustus Hen. Eden Bagot, Capt. Josceline FitzRoy Barry, Sir Francis T. (Windsor)
Allsopp, Hon. George Bain, Colonel James Robert Bartley, Sir George C. T.
Anson, Sir William Reynell Balcarres, Lord Bathurst, Hon. Allen Benjamin
Arkwright, John Stanhope Balfour, Rt. Hn. A. J.(Manch'r Bhownaggree, Sir M. M.
Arnold-Forster, Rt. Hn Hugh O Balfour, Capt. C. B. (Hornsey) Bignold, Arthur
Arrol, Sir William Balfour, Rt. Hon. G. W. (Leeds Bigwood, James
Atkinson, Rt. Hon. John Balfour, Kenneth R. (Christen. Bill, Charles
Blundell, Colonel Henry Gordon, J. (Londonderry, S.) Loyd, Archie Kirkman
Boscawen, Arthur Griffith Gordon, Maj Evans-(T'rH'mlets) Lucas, Col. Francis (Lowestoft)
Boulnois, Edmund Gore, Hon. S. F. Ormsby-(Line.) Lyttelton, Rt. Hon. Alfred
Bousfield, William Robert Goschen, Hon. George Joachim Macdona, John Cumming
Bowles, Lt.-Col H. F(Middlesex) Goulding, Edward Alfred Maconochie, A. W.
Brassey, Albert Graham, Henry Robert M'Arthur, Charles (Liverpool)
Brodrick, Rt. Hon. St. John Gray, Ernest (West Ham) M'Calmont, Colonel James
Brymer, William Ernest Green, Walford D (Wednesbury M'Iver, Sir L. (Edinburgh, W.)
Bull, William James Greene, Sir E. W (B'rySEdm'nds M'Killop, James (Stirlingshire)
Butcher, John George Greene, Henry D. (Shrewsbury Majendie, James A. H.
Campbell, J.H.M (Dublin Univ. Greene, W. Raymond (Cambs. Malcolm, Ian
Carlile, William Walter Gretton, John Manners, Lord Cecil
Carson, Rt. Hon. Sir Edw. H. Greville, Hon. Ronald Martin, Richard Biddulph
Cavendish, V.C.W. (Derbyshire Groves, James Grimble Massey-Mainwaring, Hn. W.F.
Cayzer, Sir Charles William Hain, Edward Maxwell, Rt. Hn. Sir H. E.(Wigt'n
Cecil, Evelyn (Aston Manor) Hall, Edward Marshall Maxwell, W.J.H (Dumfries-sh.
Cecil, Lord Hugh (Greenwich) Halsey, Rt. Hon. Thomas F. Melville, Beresford Valentine
Chamberlain, Rt. Hn. J. (Birm. Hambro, Charles Erie Meysey-Thompson, Sir H. M.
Chamberlain, Rt Hn J. A(Worc. Hamilton, Rt Hn Lord G(Midd'x Middlemore, Jn. Throgmorton
Chaplin, Rt. Hon. Henry Hamilton, Marq of(L'nd'nderry Mildmay, Francis Bingham
Chapman, Edward Hardy, L. (Kent, Ashford) Milner, Rt. Hn. Sir Frederick G.
Charrington, Spencer Harris, F. Leverton (Tynem'th Molesworth, Sir Lewis
Clare, Octavius Leigh Harris, Dr. Fredk. R. (Dulwich Montagu, G. (Huntingdon)
Clive, Captain Percy A. Haslam, Sir Alfred S. Montagu, Hon. J. Scott (Hants
Coates, Edward Feetham Haslett, Sir James Horner Moore, William
Cochrane, Hon Thos. H. A. E. Hay, Hon. Claude George Morgan, D. J. (Walthamstow)
Collings, Rt. Hon. Jesse Heath, James (Staffords., N.W. Morpeth, Viscount
Colomb, Rt. Hon. Sir John C.R Heaton, John Henniker Morrell, George Herbert
Colston, Chas. Edw. H. Athole Helder, Augustus Morrison, James Archibald
Compton, Lord Alwyne Henderson, Sir A. (Stafford, W. Morton, Arthur H. Aylmer
Cook, Sir Frederick Lucas Hickman, Sir Alfred Mount, William Arthur
Corbett, T. L. (Down, North) Hoare, Sir Samuel Mowbray, Sir Robert Gray C.
Cox, Irwin Edward Bainbridge Hobhouse, Rt Hn H (Somers't, E Muntz, Sir Philip A.
Craig, Charles Curtis (Antrim, S. Hogg, Lindsay Murray, Rt Hn A. Graham(Bute
Cripps, Charles Alfred Hope, J. F (Sheffield, Brightside Murray, Charles J. Coventry)
Cross, Alexander (Glasgow) Hornby, Sir William Henry Myers, William Henry
Cross, Herb. Shepherd (Bolton) Hoult. Joseph Newdegate, Francis A. N.
Crossley, Rt. Hon. Sir Savile Houston, Robert Paterson Nicholson, William Graham
Cust, Henry John C. Howard, J. (Kent, Faversham) O'Neill, Hon. Robert Torrens
Dalrymple, Sir Charles Howard, J. (Midd. Tottenham Palmer, Walter (Salisbury)
Davenport, William Bromley Hozier, Hon. James Henry Cecil Partes, Ebenezer
Davies, Sir H. D. (Chatham) Hudson, George Bickersteth Pease, Herb. Pike (Darlington)
Denny, Colonel Hunt, Rowland Peel, Hn Wm. Robert Wellesley
Dewar, Sir T R(Tower Hamlets Hutton, John (Yorks. N.R.) Pemberton, John S. G.
Dickinson, Robert Edmond Jameson, Major J. Eustace Percy, Earl
Dickson, Charles Scott Jebb, Sir Richard Claverhouse Pierpoint, Robert
Dimsdale, Rt. Hn. Sir Joseph C. Jeffreys, Rt. Hon. Arthur Fred. Pilkington, Colonel Richard
Disraeli, Coningsby Ralph Jessel, Captain Herbert Merton Platt-Higgins, Frederick
Dixon-Hartland, Sir F. Dixon Johnstone, Hey wood (Sussex) Plummer, Walter R.
Doughty, George Kennaway, Rt. Hn. Sir John H. Powell, Sir Francis Sharp
Douglas, Rt. Hon. A. Akers Kenyon, Hon. Geo. T. (Denbigh Pretyman, Ernest George
Duke, Henry Edward Kenyon-Slaney, Col. W.(Salop. Pryce-Jones, Lt.-Col. Edward
Dyke, Rt. Hn. Sir William Hart Keswick, William Pym, C. Guy
Elliot, Hon. A. Ralph Douglas Kimber, Henry Quilter, Sir Cuthbert
Faber, Edmund B. (Hants, W.) Knowles, Sir Lees Randies, John S.
Fardell, Sir T. George Laurie, Lieut.-General Rankin, Sir James
Fergusson, Rt Hn Sir J(Manc'r. Law, Andrew Bonar (Glasgow) Rasch, Sir Frederic Carne
Fielden, Edward Brocklehurst Lawrence, Sir Joseph(Monm'th Ratcliff, R. F.
Finch, Rt. Hon. George H. Lawrence, Win. F. (Liverpool) Reid, James (Greenock)
Finlay, Sir Robert Bannatyne Larson, J. Grant (Yorks. N.R. Remnant James Farquharson
Fisher, William Hayes Lee, A, H. (Hants. Fareham) Renwick, George
FitzGerald Sir Robert Penrose Legge, Col. Hon. Heneage Richards, Henry Charles
Fitzroy, Hon. Edward Algernon Leveson-Gower, Frederick N.S. Ridley, Hn. M. W.(Stalybridge
Flannery, Sir Fortescue Llewellyn, Evan Henry Ritchie, Rt. Hn. Chas. Thorn son
Forster, Henry William Lockwood, Lieut. Col. A. R. Roberts, Samuel (Sheffield)
Foster, P. S. (Warwick, S.W. Loder, Gerald Walter Erskine Robertson, Herbert (Hackney)
Fyler, John Arthur Long, Col. Charles W.(Evesham Robinson, Brooke
Gardner, Ernest Long, Rt Hn Walter (Bristol, S. Rollit, Sir Albert Kaye
Garfit, William Lonsdale, John Brownlee Round, Rt. Hon. James
Gibbs, Hon. A. G. H. Lowe, Francis William Royds, Clement Molyneux
Gordon, Hn J.E (Elgin &Nairn Lowther, C. (Cumb, Eskdale) Rutherford, John (Lancashire)
Rutherford, W. W. (Liverpool) Stanley, Edward Jas.(Somerset Welby, Sir Charles G. E(Notts.)
Sackville, Col. S. G. Stopford Stanley, Rt. Hon. Lord (Lanes. Wentworth, Bruce C. Vernon-
Sadler, Col. Samuel Alexander Stewart. Sir Mark J. M'Taggart Wharton, Rt. Hon. John Lloyd
Samuel, Sir H. S. (Limehouse) Stirling-Maxwell, Sir John M. Whiteley, H.(Ashton-und. Lyne
Sandys, Lt.-Col. Thos. Myles Stock, James Henry Whitmore, Charles Algernon
Sassoon, Sir Edward Albert Stone, Sir Benjamin Williams, Colonel R. (Dorset)
Saunderson, Rt Hn. Col. J. Stroyan, John Wiloughby de Eresby, Lord
Scott, Sir S. (Marylebone, W.) Strutt, Hon. Charles Hedley Wilson, A. Stanley (York, E.R.
Seely, Charles Hilton (Lincoln) Talbot, Lord E. (Chichester) Wilson, John (Glasgow)
Seton-Karr, Sir Henry Talbot, Rt. Hn. J.G(Oxf'dUniv. Wilson-Todd, Sir W.H. (Yorks.
Sharpe, William Edward T. Taylor, Austin {East Toxteth) Wodehouse, Rt. Hn. E. R(Bath
Shaw-Stewart, Sir H.(Renfrew Thorburn, Sir Walter Worsley-Taylor, Henry Wilson
Simeon, Sir Barrington Thornton, Percy M. Wortley, Rt. Hon. C. B. Stuart
Sinclair, Louis (Romford) Tollemache, Henry James Wrightson, Sir Thomas
Skewes-Cox, Thomas Tomlinson, Sir Win. Edw. M. Wyndham, Rt. Hon. George
Sloan, Thomas Henry Tritton, Charles Ernest Wyndham-Quin, Col. W. H.
Smith, Abel H. (Hertford, East Tuff, Charles Yerburgh, Robert Armstrong
Smith, James Parker (Lanarks. Valentia, Viscount
Spear, John Ward Walrond, Rt. Hn. Sir William H. TELLERS FOR THE AYES—Sir Alexander Acland-Hood and Mr. Ailwyn Fellowes.
Spencer, Sir E. (W. Bromwich) Warde, Colonel C. E.
Stanley, Hn. Arthur (Ormskirk Welby, Lt.-Col. A. C. E(Taunton
Abraham, William (Cork, N.E. Davie, Alfred (Carmarthen) Helme, Norval Watson
Abraham, William (Rhondda) Davies, M. Vaughan (Cardigan) Hemphill, Rt. Hon. Charles H.
Ainsworth, John Stirling Delany, William Hobhouse, C. E. H. (Bristol, E.
Allen, Charles P. Devlin, Chas. Ramsay (Galway) Holland, Sir William Henry
Ambrose, Robert Devlin, Joseph (Kilkenny, N.) Horniman, Frederick John
Ashton, Thomas Gair Dewar, John A. (Inverness-sh. Humphreys-Owen, Arthur C.
Asquith, Rt. Hon. Herbert Henry Dilke, Rt. Hon. Sir Charles Hutchinson, Dr. Charles Fredk.
Dobbie, Joseph Hutton, Alfred E. (Morley)
Atherley-Jones, L. Donelan, Captain A. Jacoby, James Alfred
Barlow, John Emmott Doogan, P. C. Johnson, John (Gateshead)
Barran, Rowland Hirst Douglas, Charles M. (Lanark) Joicey, Sir James
Beaumont, Wentworth C. B. Duncan, J. Hastings Jones, D. Brynmor (Swansea)
Beckett, Ernest William Dunn, Sir William Jones, William (Carnarvonshire
Bell, Richard Edwards, Frank Jordan, Jeremiah
Black, Alexander William Elibank, Master of Joyce, Michael
Bo land, John Ellice, Cpt. E. C(SAndrw'sBghs. Kearley, Hudson, E.
Bolton, Thomas Dolling Ellis, John Edward (Notts.) Kilbride, Denis
Brand, Hon. Arthur G. Emmott, Alfred Labouchere, Henry
Brigg, John Evans, Sir Francis H(Maidstone Lambert, George
Brown, George M. (Edinburgh) Eve, Harry Trelawney Langley, Batty
Brunner, Sir John Tomlinson Farquharson, Dr. Robert Law, Hugh Alex. (Donegal, W.
Bryce, Rt. Hon. James Fenwick, Charles Layland-Barratt, Francis
Buchanan, Thomas Ryburn Ferguson, R. C. Munro (Leith) Leamy, Edmund
Burke, E. Haviland Field, William Leigh, Sir Joseph
Burns, John Fitzmaurice, Lord Edmond Leng, Sir John
Burt, Thomas Flavin, Michael Joseph Levy, Maurice
Buxton, Sydney Charles Flynn, James Christopher Lewis, John Herbert
Caldwell, James Foster, Sir Walter (Derby Co.) Lloyd-George, David
Cameron, Robert Fowler, Rt. Hon. Sir Henry Lough, Thomas
Campbell, John (Armagh, S.) Freeman-Thomas, Captain F. Lundon, W.
Campbell-Bannerman, Sir H. Furness, Sir Christopher Lyell, Charles Henry
Carvill, Patrick Geo. Hamilton Goddard, Daniel Ford Macnamara, Dr. Thomas J.
Causton, Richard Knight Grant, Corrie M'Crae, George
Cawley, Frederick Grey, Rt. Hon. Sir E. (Berwick) M'Hugh, Patrick A.
Channing, Francis Allston Griffith, Ellis J. M'Kean, John
Churchill, Winston Spencer Gurdon, Sir W. Brampton M'Kenna, Reginald
Clancy, John Joseph Harcourt, Lewis V. (Rossendale M'Killop, W. (Sligo, North)
Condon, Thomas Joseph Harcourt. Rt Hn Sir W(Monm'th M'Laren, Sir Charles Benjamin
Craig, Robert Hunter (Lanark Harmsworth, R. Leicester Mansfield, Horace Rendall
Cremer, William Randal Harwood, George Markham, Arthur Basil
Crombie, John William Hayden, John Patrick Mellor, Rt. Hon. John William
Cullinan, J. Hayter, Rt. Hon. Sir Asthur D. Mitchell, Edw. (Fermanagh, N.
Mooney, John J. Rea, Russell Thomas. Sir A. (Glamorgan, E.)
Morgan, J. Lloyd (Carmarthen) Redmond, John E. (Waterford Thomas, David Alfred(Merthyr
Morley, Charles (Breconshire) Rickett, J. Compton Thomas, J A (Glamorgan, Gower
Morley, Rt. Hn. John {Montrose Rigg, Richard Thomson, F. W. (York, W.R.)
Moss, Samuel Roberts, John Bryn (Eifion) Toulmin, George
Moulton, John Fletcher Roberts, John H. (Denbighs.) Trevelyan, Charles Philips
Murphy, John Robertson, Edmund (Dundee) Waldron, Laurence Ambrose
Nannetti, Joseph P. Robson, William Snowdon Wallace, Robert
Newnes, Sir George Roe, Sir Thomas Walton, John Lawson(Leeds,S.
Nolan, Joseph (Louth, South) Rose, Charles Day Walton, Joseph (Barnsley)
Norman, Henry Runciman, Walter Warner, Thomas Courtenay T.
Norton, Capt. Cecil William Russell, T. W. Wason, Eugene (Clackmannan
Nussey, Thomas Willans Samuel, Herbert L. (Cleveland) Wason, John Cathcart (Orkney
O'Brien, K. (Tipperary, Mid.) Samuel, S. M. (Whitechapel) Weir, James Galloway
O'Brien, Patrick (Kilkenny) Schwann, Charles E. White, George (Norfolk)
O'Brien, P. J. (Tipperary, N.) Shackleton, David James White, Luke (York, E.R.)
O'Connor, James (Wicklow, W. Shaw, Charles Edw. (Stafford) Whiteley, George (York, W.R.)
O'Connor, T. P. (Liverpool) Sheehy, David Whitley, J. H. (Halifax)
O'Dowd, John Shipman, Dr. John G. Whittaker, Thomas Palmer
0'Kelly, James(Roscommon N, Sinclair, John (Forfarshire) Williams, Osmond (Merioneth)
O'Malley, William Slack, John (Bamford) Wilson, Fred W.(Norfolk, Mid.
O'Shaughnessy, P. J. Smith, Samuel (Flint) Wilson, Henry J. (York, W. R.
O'Shee, James John Soames, Arthur Wellesley Wilson, John (Durham, Mid.)
Palmer, Sir Chas. M. (Durham) Soares, Ernest J. Woodhouse, Sir JT(Huddersf'd
Partington, Oswald Spencer, Rt Hn. C. R(Northants Yoxall, James Henry
Paulton, James Mellor Stevenson, Francis S.
Pease, J. A. (Saffron Walden) Strachey, Sir Edward
Philipps, John Wynford Sullivan, Donal TELLERS FOR THE NOES—Mr. Herbert Gladstone and Mr. William M'Arthur
Power, Patrick Joseph Taylor, Thoedore C. (Radcliffe)
Price, Robert John Tennant, Harold John
Priestley, Arthur Thomas, Abel (Carmarthen, E.)

Motion made and Question, "That the debate be now adjourned"—(Mr. Clancy,)—put, and agreed to.

Main Question again proposed.

Debate to be resumed to-morrow.