KING'S SPEECH (MOTION FOR AN ADDRESS).

HC Deb 01 March 1905 vol 142 cc30-100

Order read, for resuming adjourned debate on Main Question [14th February], "That an humble Address be presented to His Majesty, as followeth:—

"Most Gracious Sovereign,

"We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the gracious Speech which Your Majesty has addressed to both Houses of Parliament. "—(Mr. Mount.)

Question again proposed.

*MR. BUCHANAN (Perthshire E.)

, in moving the, Amendment to the Address which stood in his name, said it might be suggested that his Motion was a very wide one and that it was by no means a new one. He admitted it was impossible for any one in his position to do more than touch upon the main features of his subject. It was not a new Motion in substance, because the subject was not a new one, but in these days it was necessary to continually repeat the views it was desired to advance in order to enforce them on the public mind. He should, therefore, make no apology if, during the course of his remarks, he dealt with subjects which had been debated on previous occasions. He hoped he would not be met with the argument, or rather with the excuse that it would be better to wait till the Estimates were presented. He would have been very glad indeed had the Estimates for the current year been before them, because that would have facilitated his task. But it was well known that such a Motion as he had on the Paper could not be discussed on the proposition that Mr. Speaker do leave the Chair on any branch of the Estimates, and, therefore, no opportunity would arise for him on going into Committee of Supply. Anyone who chose to read his Amendment would recognise that it raised the question of the past policy and expenditure of the Government during the many years they had been in office, rather than particular details of its present policy and still less of its future policy. The Prime Minister had suggested why not wait for the Budget in order to discuss those points. No doubt, on the Budget, the general financial policy of the Government could be raised. But he would like to ask the Chancellor of the Exchequer were they to have a Budget this year? Were they sure that Parliament would continue in session till the Budget was presented? Further, it was obvious to anyone who considered the political situation that the Budget for the present year would be in its main features a dissolution Budget, and the attention of the House, therefore, would be concentrated upon details rather than upon general principles, and, of course, the most interesting question at that time would be the future financial policy of the Government. His Amendment really dealt with a question of a wider character, which was eminently suited to the occasion of an Amendment to the Address, because it impugned, or was meant to practically impugn, the whole trend of the financial policy of the Government and of the Party opposite during the five or ten years they had been responsible for the financial interests of the country. This had been one of the subjects very largely debated in the country during the past two years. It had held a very prominent place indeed in the discussions which had gone on at various by-elections, and he believed that hon. Members on the Opposition side of the House would be wanting in their duty if they did not take that, the first opportunity, of bringing it under discussion in the House of Commons.

Now he came to the subject-matter of his Amendment. What were the main counts of the indictment against the Government? They were these—(1) the general question of the excessive increase of expenditure; (2) as a consequence, the increased burden on the people, the increase of taxation, bringing with it distress, depression of trade, depreciation of capital, and many other consequences in its train; (3) the laxity of financial methods, which had become the practice of the Government; and (4) the reckless piling up of debt year after year, utterly irrespective of the consequences, and without any due or adequate provision for its discharge.

With regard to the first count, the excessive increase of national expenditure, it was confessed in all quarters of the House and generally throughout the country, and the figures on the subject were quite familiar to them all. They knew that since 1898 the net revenue of the country had gone up from £90,000,000 to £140,000,000. These figures were taken from what was known as the "Fowler" Return, and he was simply quoting round figures. The growth had been enormous, and was absolutely without a parallel in our past political and financial history. Let them look at the previous decennial periods 1874–84 and 1884–94. They would find that the decennial increase was in one case £13,000,000 and in the other £11,000,000, whereas during the last decennial period the expenditure of the country had gone up by no less than £50,000,000. They knew that the great increase had been in naval and military expenditure. Again he would take the figures from the "Fowler" Return, although that Return did not give the full amount of our naval and military expenditure. In 1894–5 our naval and military expenditure amounted to £35,000,000. In 1903–4 it had gone up to £71,000,000; it had more than doubled. Let them compare that with the expenditure in preceding decennial periods. Between 1874–84 the increase was £6,000,000, between 1884–94 it was £5,000,000; but between 1894 and 1903 the increase was £36,000,000. That was to say, that while formerly this branch of our expenditure had increased at the rate of £500,000 per annum, it was now increasing at the rate of no less than £4,000,, 000 annually. Surely that amply justified his first contention that our expenditure had been excessive in its character, and that the rate of increase had been too great. It was quite obvious that any such increase of expenditure could not possibly be met by any ordinary growth of revenue. The Party opposite during their tenure of office had had, one might fairly say, five fat years and five comparatively lean years. During the first five years they were in office they had large surpluses, the taxes were yielding more year after year, and the revenue was increasing by leaps and bounds. Indeed, the ordinary increase of revenue was unexampled during the first three or four years the Government were in office; it was an increase of something like £9,, 000,, 000 in the automatic expansion of ordinary revenue. They also inherited from their predecessors in office something like £3,, 000,, 000 or £4,, 000,, 000 extra revenue from the death duties introduced by Sir William Harcourt. Thus they had this great advantage, that during their first four years of office they had an expanding and increasing revenue—increasing at a rate unexampled in our previous financial history. Then, undoubtedly, a change began to come over the scene. About the year 1900 the taxes ceased to be buoyant; they became almost stationary; the yield for each penny of income-tax, which had been steadily rising from £2,000,000 to £2,500,000, became stationary in 1901. In the same way, in another branch of our revenue, the consumption of tea, which also had been steadily increasing year by year, gradually became stationary, and now it was actually showing symptoms of declining. As they were all aware, other important articles from a taxation point of view—beer and spirits—were no longer so elastic and so remunerative as they had been.

Without going into details he would ask—what would have been a prudent course for any Government to pursue under these circumstances? What would have been the ordinary prudent course for a private individual if the same fortune had befallen him? Surely a man in commercial business who suddenly found his profits largely increasing would have recognised that in business there were ups and downs and that large increases of profits were not likely to continue perpetually. He would have shown his wisdom by not spending every farthing of his increased profits, but would have endeavoured to keep something for a rainy day. He would have paid off any mortgages on the business and would not have immediately and permanently increased his regular expenditure. But what had the Government and the Party opposite done? They had done exactly the reverse. Mainly under the leadership, not of the present Chancellor of the Exchequer, but of one of his predecessors the right hon. Gentleman the Member for West Bristol, it had spent every sixpence of revenue that had come in in these times of prosperity, and it had spent more than had come in. Instead of making a substantial and special effort to reduce debt they had increased the national establishments and permanently added to our scale of expenditure. They had gone to work as if the good times were to continue for ever. But then came the war. He did not propose to discuss the policy of the war, to which he was opposed, for that was not the proper occasion. All he would deal with were the financial effects of the war. This House and the country undoubtedly raised a large amount of money for the war, both by taxation and by loans. They responded freely to the call, notwithstanding there had been bad miscalculations—financial as well as military and political—miscalculations which they overlooked. Surely under these circumstances they had some claim for consideration at the hands of the Government. They had a right to say, "While we pay this large extra expenditure and while we bear these heavy extra burdens the Government should take care that our ordinary expenditure should not at the same time be continually increasing." Was that done? Not a bit of it. The expenditure, apart from the war, went on increasing during the war at an even greater rate than previously to the war, and now that the war had been concluded for more than two years the people were waking up to find that the new taxes, put on primarily and ostensibly for war purposes, and intended only to be of a temporary character, were permanently saddled upon their shoulders for peace purposes. Even worse was their fate last year, when the present Chancellor of the Exchequer not only retained the increased taxes, but added to them.

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

I replaced part of the taxation which had been taken off.

*MR. BUCHANAN said he thought that when the war ended the people of this country would have been prepared to continue the great bulk of the war taxation for a certain period on certain conditions. They had a right to expect when the war came to an end that those responsible for the finances of the country should lay before the House of Commons some scheme for effectively reducing the burdens which had been imposed in consequence of it; that they should have a real systematic and well thought out proposal for diminishing the burdens of war debt and taxation. But no such proposal was made either by the present Chancellor of the Exchequer or his predecessor, with perhaps one exception, the promise of £30,000,000 from the Transvaal, which probably never would be received.

He had already pointed out that in the prosperous years the Government did not pay their way. That brought him to the third branch of his indictment—the lax methods of the finance they had introduced. There were many such new methods, he would deal with only one, viz. :—the evil practice of supplementary budgets for naval and military purposes, which had enabled them to obtain large sums of money over which officials of the spending Departments had extra wide powers, and of which the House of Commons, as representatives of the people, had little knowledge, and still less control. They had borrowed money for expenditure which should have been met out of revenue, and by so doing they had thrown part of the burden of our own extravagance on the shoulders of the coming generation. He was, of course, referring to their policy in dealing with naval and military works by a system of Loan Bills—a policy which was being extended to other branches of our administration. He quite recognised that such a policy might be defensible, and was, indeed, defensible on special occasions and for special emergencies. Indeed, when the question was raised, the present Chancellor of the Exchequer always turned round and sought to close their mouths by quoting the precedent of the Naval Works Act of Lord Spencer in 1895. But the gravamen of the charge now was that that which might have been defensible or justifiable on a special occasion had now become an established and growing practice in our finance. Military and Naval Works Acts were regularly introduced every two years. They had added about £5,000,000 to our annual naval and military expenditure, and up to the present, something like £25,000,000 to our debt, an addition which was likely to become £50,000,000 or £60,000,000 if all the schemes embodied in these Acts were carried out. But the loans had been so entirely diverted from the purposes for which they were originally intended as to have become mere additions to Army and Navy expenditure. When these Bills were first introduced, the noble Lord the Member for Ealing and Sir William Harcourt made a great point that if they were defensible at all they should be for special defence and permanent works to be completed within a limited time and cost. All these limitations had gone by the board. There was an even worse development, for, instead of being used for permanent works alone, money was being raised by loan for dredging and electric lighting, which surely ought not to be treated as capital expenditure. That was to say, under the Works Acts of 1901 and 1903, the money borrowed was no longer applied to specific works of a large and definite character, but to general objects of naval utility, which, according to sound principles of finance, should be provided for in the annual Estimates. The schedule of the Military Works Act was even worse. Various military works in connection with the Army reform schemes of the past, now condemned, were paid for under a Loans Act without the knowledge of the people of this country. Grants for Volunteer ranges for sums as small as £4 or £6 were not paid for outright and charged to revenue, but the money was borrowed and repayment spread over thirty years. Was that a sound financial policy for a rich country like this? The system was absurd and wasteful, and took away the control of expenditure from the House of Commons and the country. This was practically the view of the Public Accounts Committee, who last year reported on the subject in these words— 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 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 of such procedure should be the exception and not the rule. In recent years annual and biennial Military and Naval Works Acts have become a regular part of the military and naval finance. 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. That was good sound commonsense and good finance, and he hoped that the views thus expressed would before long be adopted by the Government of this country.

The fourth count of the indictment he would leave subsequent speakers to develop. It was the reckless piling up of debt by the Government, and the absence of any real attempt to reduce it. When they came into power in 1895 the floating debt was £8,000,000, now it was over £80,000,000. All the debt reductions of the past thirty years had gone for nought, our funded debt had gone back to about the same figure as in 1880, and, so far from making any substantial reduction of the debt, we were increasing it. The discharge of debt which we professed to make by means of Sinking Funds and Terminable Annuities was more than counterbalanced by the creation of new debt under the Naval and Military Works Acts.

And now as to the cause of all this. There was an old quotation from Mr. Disraeli, "Expenditure depends on policy." That was a fundamental principle of politics, but there was one thing more expensive than a new policy, and that was a perpetual changing of policy. They could find many instances in the history of the present Government of the way in which our financial burdens had been increased both by new policies and by changes of policy. The Agricultural Rating Act, the endowment of church schools, the Tithe Rent Charge Act, the Licensing Act, and Irish Legislation, all these increased the burdens of the people and left an indelible mark on the finances of the country. And what about our foreign and colonial policy? In South Africa we had 20,000 British soldiers to maintain at an extra expense of something like £2,000,000 per annum as compared with some 5,000 before the war. Did the Government intend permanently to keep that large body of troops there at our expense? Besides that we were spending in South Africa over £3,000,000 in providing permanent barrack accommodation. That was a striking comment on our expressed desire to give the new colonies representative, and eventually responsible, government. If a generous measure of representative and responsible government were promptly given it would do much to reconcile them to their position, and would, if they were made responsible for their own defence, save large amounts to the Exchequer of this country. Look elsewhere in Africa. The then Chancellor of the Exchequer in 1897 complained that at that date there was an increased charge of £1,000,000 per annum on the Exchequer for Central East and West Africa. Since 1897 that charge had more than doubled. In reply to the right hon. Gentleman the Member for the Forest of Dean the Prime Minister in March of last year told them that the Colonial Office had an army of 17,000 men, the Foreign Office 4,000, all mainly in Africa, and the charge for these two military forces, outside the control of the War Office, and borne by the Civil Service Estimates, amounted to over £2,000,000 per annum. This was a new charge since the Party opposite came into power, and here there was distinctly room for retrenchment.

Again, a very interesting table was given annually in the Army Estimates showing the number of men serving outside the United Kingdom, but not in India. That meant the men in the Colonies and Egypt. A comparison of the number now as compared with ten years ago gave some remarkable results. In the early nineties there were in round figures 37,000 men serving outside the United Kingdom, and the cost was between £2,000,000 and £2,500,000. According to last year's Estimates there were 72,000, and the cost was within £1,000 of £6,000,000. Of course, that included the garrison in South Africa, but it would be found that this was an increase all over. Surely that was due largely to the policy pursued during the past ten years by the Government. Perhaps the right hon. Gentleman would say "Oh! We are going to remedy all that, or a good part of it. "Some interesting information had been lately given by the Secretary for the Colonies that the defences of Halifax and Esquimault were going to be taken over by the Canadian Government. It was a step in the right direction. That was a form of colonial help of Imperial expenditure of which he highly approved, much better than begging for naval contributions from the Colonies. Another important statement was made with regard to Bermuda and the West Indian garrisons. The garrison of Bermuda was to be diminished, roughly speaking, by a half, some changes were to be made at Jamaica, and the St. Lucia garrison was to be withdrawn altogether. The garrison in Bar-badoes was also to be withdrawn. So far so good. But how did this illustrate the point about expenditure being dependent upon changes of policy. What had we been doing in all these places right up to the present year? We had been spending money hand over hand in all these places on permanent military and naval works, and we were not going to get a penny back from the Canadian Government or the West Indian Colonies. From the figures given by the Financial Secretary with regard to Bermuda, Jamaica, St. Lucia, and Halifax, we had spent £2,000,000 in the past ten years, and of that sum more than half was spent in the last three years. Expenditure had been going on there during the current year up to the very moment of this change of policy. Whilst he for one welcomed the change he thought it showed a certain want of consistency of purpose and a want of thinking out the military and strategic problems before us, and that had made us go so far in the wrong direction. If this was thinking Imperially, which was so often recommended, he would say "Heaven preserve the finances of the country," because it was clear that the cultivation of that particular form of thought was one which cost the pockets of the people of this country very dear indeed.

In connection with the change of policy in the Navy it was announced that 130 ships were to be knocked out of the active list. Many of these ships were reckoned in the present year as fit for war purposes, and were repaired and refitted at considerable cost during the present and immediately preceding years; and yet with all their repairs recently completed they were to be sent to the Clyde to be sold as scrap iron. They had always been told that they might have confidence in the sagacity and foresight of the naval administration of the country. Here was a sudden change in naval policy which would certainly entail a considerable loss of public money. That shook their confidence. He would defer what he had to say on that subject until they got fuller statistics upon it.

They were told that the Prime Minister was a very skilful strategist, and they knew he was a Parliamentary strategist. He admired the strategical way in which the right hon. Gentleman treated this subject when speaking in Glasgow. The right hon. Gentleman described this policy as a "courageous stroke of the pen, "but in so saying he knew he was confessing to the utter want of foresight on the part of the Government of which he had been a leading member for many years. That might be good strategy for a public meeting, but it was cold comfort for the taxpayers of the country, who had to pay dearly for this change of policy on the part of the Government. It was the duty of the Opposition in the House and in the country to advocate that the spirit of economy should replace the spirit of expenditure and extravagance which had so long prevailed in the spending Departments, in Parliament, and in the nation. No doubt the distress, the depression in trade, the fall in Consols and other securities, and the pressure of taxation had brought home to the people that they had been spending far too much, and that they must needs call a halt. In the last speech which the late Sir William Harcourt delivered, the advice which he gave to that Assembly and the country was that in this rapid growth of expenditure and reckless career of extravagance it was time to call a halt. If it was time then it was still more so now. They might not be able to do anything very heroic or very speedily, for they knew that there were commitments for the future put on their shoulders by the Government which were very heavy indeed, and would take a considerable time to work off, but there was no one in the Government, the House of Commons, or the country who did not believe that substantial reductions in our expenditure were possible and that the present moment was also favourable. The foreign outlook in this country was also favourable. He thought everybody allowed that the Army might be much reduced and the expenditure on it greatly lessened, and that this would contribute to its efficiency instead of impairing it. If they could not go back to the expenditure of ten years ago let them try to go back five years. What sufficed before the war surely ought to suffice now. In that way we should be able to diminish the war taxes, to lighten the burdens on industry, to improve our credit and take the most effective means to render the country prosperous and strong within and without. The final words of the Amendment were taken from a Motion moved by Mr. Gladstone in 1857, just before the dissolution of that year. A dissolution was impending then, and he supposed the Government would not deny that another was impending now. Mr. Gladstone said then, and he had tried to urge now, that these matters were of supreme importance to the welfare of the country and that they should be brought prominently before the judgment of the country at the general election, so that when the new Parliament came into being it and the Government which should represent its opinion should be irrevocably committed, after a full discussion before the nation, and with their approval, to a real retrenchment and a substantial reduction of our expenditure.

MR. GUEST (Plymouth)

said that in rising to second the Amendment he wished to avoid anything in the nature of exaggeration. He quite admitted that they could not expect that the expenditure of the country would remain stationary from year to year. There was the consideration of growth of population alone which must lead to a legitimate increase in our public expenditure. There was also the consideration of a rise in the scale of wages, which of course reacted upon remuneration the Government had to offer its employees and Civil servants, and the fact that the Government had undertaken many functions which previously they never dreamt of doing would also react upon the expenditure of the country. But the increase of which they complained could not be accounted for under these heads, and the balance could in no way be explained except upon the hypothesis that the Government had neglected their first duty, namely, the guardianship of the public purse. Taking the last decennial period, he found that the expenditure of the country had risen from £107,000,000 to £176,000,000, or very nearly an increase of £70,000,000 sterling. He arrived at the figure by including the receipts from borrowed monies under the Military Works Acts, interceptions from local taxation, and money for grants-in-aid. He had no doubt that the Chancellor of the Exchequer would reply that to include these was to give a false impression as to what part of the revenue fell upon the taxpayers as a public burden. In comparing expenditure they must include these. With regard to the Debt, taking the unfunded debt and other debts, it had risen in that decennial period by no less than £127,000,000 sterling, and if to that they added other capital liabilities for which we were more or less contingently responsible and which had risen by £83,000,000, it was perfectly obvious that the capital liabilities of this country had increased in that period beyond anything that had ever been known before. He asserted that the expenditure of the country was disproportionate to the increase of population, to the growth of wealth, to fresh services rendered by the State, or indeed to the growth and development of national and Imperial responsibilities, or lastly, to the menace of foreign States. His hon. friend the Member for Exeter had given more than once figures to this House to prove that in all this expenditure along the road to ruin it was Great Britain that had always set the pace. If a French Minister or a German Chancellor wanted an argument or a lever to extract from the Reichstag or the Chambre a certain sum of money, it was always the ship-building programme of Great Britain that was pointed to. On the contrary they never heard in that House Votes defended on any comparative basis whatever.

Of course, the Chancellor of the Exchequer was responsible for this state of affairs, and he sometimes thought that the position of the Chancellor of the Exchequer was neither a very enviable one nor readily understood. Of course, in dealing with small sums of money he could settle them out of hand. There were Treasury Rules and Departmental practice to enable him to deal with these. But in the case of large sums of money the Chancellor of the Exchequer must depend certainly upon his Parliamentary position and reputation; and the sympathy and connection which subsisted between him and the Prime Minister, and not less, but to a far larger extent, upon the tone and temper of the House in regard to expenditure. Now, was it not rather a curious thing that side by side with this growth of expenditure of which they complained, there had been a weakening and a slackening of Parliamentary control? Take the question of appropriations-in-aid. Everybody was aware that these were entirely withdrawn from the purview of the House; and yet these appropriations-in-aid, regard them as they liked, were money actually expended in the current year, just as much as money derived from any other source. These appropriations-in-aid had increased from £6,000,000 in 1898 to £12,000,000 in 1903, or exactly double. Then there was the question to which his hon. friend had alluded and which was very important; he meant the Supplementary Estimates. It struck at the basis of the whole of Parliamentary control if the Government could budget by compartments. If a budget was brought in for some Departments at one part of the year and another for other Departments at another period it was perfectly clear that the control of the House over expenditure was weakened. Then there was the matter of the new rules. The Prime Minister very often took credit to himself that these new rules had had the effect of enlarging the discussions on the Estimates. He did not deny that there might have been some improvement in that respect, and that more time had been given to the consideration of the Estimates, but judged by the standard of economy he sometimes doubted whether this improvement had not insidiously deprived the House of an appropriate, though crude and effective weapon of checking Departmental expenditure. A sort of bargain which took place between the Opposition and the expenditure Departments might not have been very dignified, but, at any rate, it was very effective for its purpose, and there was not the least doubt that the dwindling and decline of the control over public expenditure was caused by the new rules.

As to the debt due to war there was not much to complain of in that part. There was, of course, the Funded Debt and the Unfunded Debt, and they differed in this respect, that whereas the Funded Debt had a sinking fund which automatically reduced it, the Unfunded Debt had no sinking fund. Although he believed the Unfunded Debt consisted of sums of money which fell due at short intervals of time, he believed that in practice they were renewed as they fell due. Would the Chancellor of the Exchequer reduce the £52,000,000 at which the Unfunded Debt stood in 1904? It had this in common with the Funded Debt, that they both depended upon a fixed annual charge for the payment of the interest which fell due, and so it was obvious that the increase of the Unfunded Debt was made at the expense of the extinguishing power of the Sinking Fund. When the right hon. Gentleman the Member for Croydon made his Budget speech in 1903, he made an ingenious calculation by which he defended the fixing of the fixed charge for the Sinking Fund at £27,000,000. The right hon. Gentleman calculated the number of years under that régime which would elapse before the total debt of the country would be extinguished; but when he made the calculation he did not forsee the increase in the Unfunded Debt, and consequently the whole calculation was vitiated. At the time he made that calculation the Unfunded Debt was between £20,000,000 and £30,000,000 less than it was at the present day—a state of things which he could hardly have realised. The partial suspension of the Sinking Fund which had been made was doubly important as it affected the credit of the country. If they looked at the debt of the country over a period of years it would be found that credit varied inversely with the amount of debt. As the debt rose credit fell, and vice versa.

What was the origin of this state of affairs? He supposed that everybody would admit that it was the war which first revealed to the Party opposite the enormous treasure in this country, the collection of two generations of thrift and peace. The South African War had differed from other wars in so far that to-day we had forgotten thrift and indulged in prodigality, whereas the Napoleonic and Crimean Wars begat economy. The South African War had been used as an instrument to forward lavish designs. The fact was that we went into the South African War with a normal expenditure of £100,000,000, and came out of it with a normal expenditure of £140,000,000. Now, what was the explanation of this vast increase of expenditure? It was largely because we had in the Government men whose sole idea of statescraft was the spending of money. Was there any legislative or administrative difficulty, money was always forthcoming to meet it. If there was an educational hitch the Chancellor of the Exchequer came down and asked for a new fund. If Ireland demanded self-government the Government gave £13,000,000 to buy off the landlords' claims. If agricultural or clerical rates required relief, the public revenue was sacrificed to meet them. And what applied to legislation equally applied to finance. Take the £35,000,000 de- voted to the necessities of South Africa. There was a bogus understanding that this £35,000,000 was only to be advanced on the condition that we were to obtain £30,000,000 of an indemnity. When were we going to see any of this £30,000,000 which was due two years ago? In fact, there was no single legislative or administrative act which did not involve some form of call on the public resources. This striking universality, he could not help feeling, was done on purpose. The spending of money conferred a sort of popularity. An open-handed man was generally popular, but he was a spendthrift. The Government had discovered that it was, on the whole, more popular to spend money on their friends than to incur the odium of the taxpayers by thrift and economy. When the discovery of the national wealth was made the Conservatives attempted to turn it to Party account. The murmurs of the taxpayers would have been drowned but for the inefficiency of administration. It was national exigencies that revealed the hoard of treasure; it was Party necessities that had dictated its lavish distribution. And if it had not been for inefficiency the pernicious waste would not have been revealed.

The important question for the House to consider was whether this expenditure could go on? He was inclined to say that the alacrity of the response with which both old and new taxation had been met was due rather to past immunity than to the bottomless resources of the taxpayers. But if it could go on, at any rate it could not go on at a rate of increase of £7,000,000 a year. It would not take much imagination to conceive that before many years were over that sort of thing would land us in national ruin. But even if they took their stand on the standard now reached, he thought, from what he had said, that it would be admitted that the question would arise. Where would the Chancellor of the Exchequer turn; from what new sources would he draw to meet this alarming increase in the national expenditure? They were told that the old sources of taxation were exhausted to the utmost, and that new sources must be discovered; that the basis of contribution must be broadened. Now, at this moment, most opportunely, proposals of protection came upon the scene. He thought that was a perfect windfall to the Chancellor of the Exchequer. But it was a rather surprising circumstance, because what was the position of the Chancellor of the Exchequer? He needed indirect taxes, and he would have been more than human and less than filial had he not welcomed that fiscal reform which would automatically create them. On the other hand, the right hon. Gentleman the Member for West Birmingham, who wanted fiscal reform, would have been more than human and less than paternal if he had deplored that excessive expenditure which seemed to render indirect taxes a fiscal expedient. Stripped of Imperial finery, fiscal reform turned out to be nothing more than a fiscal expedient, a revenue device. But could any Member of the House suggest other alternatives to the Chancellor of the Exchequer, which would be no less lucrative to him and would not increase the burdens on the poor, while providing a salutory lesson to the authors of this extravagance?

Now as to economy he was quite certain that the Chancellor of the Exchequer would indulge in the usual taunt of all Chancellors of the Exchequer, that, whereas expenditure had been deplored, no practical suggestions as to economies had been offered. Of the £70,000,000 increase, to which he had referred, no less than £50,000,000 was accounted for by naval and military armaments. As far as the Army was concerned, he had previously urged the advisability, the wisdom, and the practicability of reducing its expenditure; and now they had on the most eminent authority in this House, namely, the Secretary of State for War, the admission that the Army was the most costly machine ever devised by man. The right hon. Gentlemen's friend, General Turner, was not quite willing to go the length that the Secretary for State imagined he would; but he wrote to the papers to say that the expense of the Army was in inverse proportion to its utility. There was a ground upon which the Chancellor of the Exchequer could take his stand. The House, the country, the Government, the War Office all admitted that the Army was the most costly, expensive, and wasteful machine ever devised. Surely here was an opportunity for the Chancellor of the Exchequer to effect some reduction. But a far more remarkable thing had happened. They all knew that the Army was extravagant; but now they were told that the Navy was also extravagant. The Prime Minister went down to Glasgow and said that the Government proposed to reduce the Navy by no less than 140 ships, while adding to its fighting efficiency. Every year the Naval Estimates were presented in accordance with the dictates of the strictest economy; they were calculated by experts who compared ton for ton, and gun for gun, with the navies of two or three foreign Powers. These Estimates, the wisdom of which it would be folly to question, and some of the money for which it would be treason to refuse, were now, they were told, not to be relied on. Surely, here again there was an opportunity for the Chancellor of the Exchequer to effect economy. He admitted that this country was a rich country; but it contained a great many poor people. Perhaps in no other country in the world was the contrast between rich and poor so great. Taxation imposed for the war still remained, and deprived humble people of the small comforts of life. This year there was a fresh feature—the existence of a great extension of the unemployed. What was that due to? It could not be due to any ordinary depression or any falling-off in the oversea trade of the country, because never before had the import and export trade stood at such a high figure. What was the operative factor which had produced this new feature? Might it not be a restriction in enterprise on the part of the capitalists of this country owing to the excessive taxation to which they had been subjected for so long. The Government had gratified with a lavish hand all the greedy instincts and expensive vanities of their Party; they had piled up expenditure out of proportion to any standard, they had increased the burdens of the poor, restricted enterprise, depressed public credit and discouraged Parliamentary responsibility. Surely retrenchment had become a vital necessity in this country. Lord Burleigh once said that England would never be ruined except by Party. It would not be the fault of the Prime Minister if that ancestral prophesy remained unfulfilled.

Amendment proposed, at the end of the Question, to add the words— But humbly represent to Your Majesty that the increase in National Expenditure under Your Majesty's present advisers has been excessive, and has imposed heavy burdens on the people, for the relief of which it is urgently necessary that at the earliest moment the expenditure of the State should be revised and reduced. "(Mr. Buchanan.)

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

*SIR EDGAR VINCENT (Exeter)

said in the course of the interesting speech which had just been delivered the hon. Gentleman appeared to attribute all responsibility for the large increase in expenditure to the Government. He thought the hon. Gentleman struck a truer note earlier in his speech when he said that expenditure depended mainly on the tone and feeling of the House and the country. He had always deplored large and rapid increases of expenditure; but he recognised that the Government were the servants of the popular will and the exponents of a policy which had obtained popular support. He would say at the outset that Gentlemen who sat on the two front benches had not been as strong in the direction of economy as many private Members on both sides of the House would desire. The fact was that the burden of restricting expenditure had fallen to a very large extent on private Members. He exempted from any stricture the late Sir William Harcourt, who rendered such strenuous and admirable support to the cause of public economy. What he desired to hear from the Chancellor of the Exchequer was whether the description of the general state of the business of the country which was contained in the pamphlet issued by the hon. Member for Kings Lynn, and which had alarmed all who followed the course of public finance, was accurate. He hoped to hear that the figures contained in that pamphlet were to a considerable extent exaggerated. Unless some statement of that kind could be made on official authority the position of the finances of this country was such as to constitute a national danger. He thought, there- fore, the House would expect from the right hon. Gentleman a very clear statement upon the points brought forward by the hon. Member for King's Lynn. For years past they had been endeavouring to induce the Government to reduce expenditure, and they had always been met with the reply that while in the abstract it was desirable to reduce expenditure, it was extremely difficult to indicate in what direction that reduction should be. It was obvious from the nature of the case that the Budget must always be a matter of compromise. There was a conflict between the claims of the spending Departments and the resistance put forward on behalf of the Treasury. He thought in late years that the claims of the spending Departments had perhaps been listened to too willingly. He believed that hon. Members could do a great deal to lay down the conditions under which sound administration of finance would not only be possible but probable.

He hoped to carry with him the assent of hon. Members on both sides when he put forward three conditions without which it was impossible that the country could be well administered. The first was clear accounts, so established that all the expenditure of the year was included in them, and so clearly laid down that even any non-expert would be capable of realising their contents. The second condition was that there should be a careful revision of the Estimates, so that useless or redundant expenditure might be avoided; and the third was a close examination of the accounts, to avoid all misappropriation and diversion of public funds. He ventured to say that on each of these three points a very considerable improvement could be introduced into the present system. Expenditure might not have grown beyond the capacity of the State to bear; but it certainly had grown beyond the capacity of the accounts as now presented. No one who had attempted to arrive at a clear and precise idea as to the position of the country could fail to be harassed and irritated by the confusing manner in which the financial results and Estimates were put before the country. He hoped the Chancellor of the Exchequer would take the matter in hand personally, and endeavour so to recast the form of the accounts in the manner he indicated. The ordinary figures of the Budget expenditure this year were £140,000,000, but that amount did not by any means represent the total estimated expenditure of the country. Several items were either left aside altogether or veiled in small print. That was misleading, and anything that was misleading was thoroughly and radically wrong. If the country had known the full extent of the the naval and military expenditure it would never have grown to its present enormous proportions. Did the House or the country realise what really had been spent. He ventured to assert that not ten Members would be able to state what the expenditure on the Army and Navy for the present year was. He would give any ordinary hon. Member, not a financial expert, three hours in the library and all the Blue-books, and he would guarantee that he would not then have discovered the amount.

The hon. Member who moved the Amendment referred to the Works Bills. He did not think that the Chancellor of the Exchequer would contend that the expenditure provided under these loan operations, for they were nothing else, differed essentially from the expenditure contained in the Estimates. He had heard certain specious explanations and precedents of past Chancellors of the Exchequer alluded to, and Mr. Gladstone had been often quoted, but neither Mr. Gladstone nor any other Chancellor of the Exchequer of that time would have put up for one moment with a loan expenditure increasing year by year on naval and military works, and amounting in the current year to something like £7,000,000 or £8,000,000. This was nothing more or less than an extraordinary Budget. The Budget figures which the Chancellor of the Exchequer in a few weeks time would produce to realise his surplus would not be a clear or correct statement of the real financial operations of the year. No one who had attended the debates in Committee of Supply in the House of Commons would contend that they were in any degree debates tending towards economy. It was notorious that the majority of the speakers were far more interested in the particular claim of this or that constituency than in the general aspect of finance, or the maintenance of proper economy. No private Members who had not been properly instructed by a critical examination by means of Question and Answer could possibly be in possession of the necessary information to press the Minister in charge for a proper reduction of the Estimates. What probably occurred was that an ignorant private Member addressed a more or less ignorant Minister on that particular subject. The hon. Member who asked the question probably did not know, and the Minister who replied to it only knew partly, the subject, and he simply repeated what had been supplied to him from under the Gallery. The Prime Minister appointed a Commission on National Finance which took a large amount of evidence and spent a good deal of time in the elucidation of the question, and they presented a Report. That Report suggested that the Estimates should be divided into four or five sections, and that each year one-fifth of the Estimates should be submitted to a Committee on the lines of the Public Accounts, and that the Committee should report to the House in detail after a critical examination. Unfortunately, no results had followed from that Report, and the House had not even had an opportunity of discussing the Estimates in the way suggested. If the Chancellor of the Exchequer or the Government did not see their way to accept those particular recommendations they should at least grant the House an opportunity for their full discussion; and seeing the grave public danger of the present system if these proposals did not find favour, the Government ought at once to put forward some alternative scheme. It was a national scandal that this matter should be left as it was.

The present examination of the Estimates was insufficient, and this fact had been amply proved by what had occurred with regard to the Navy. The Government had recently reduced the Navy by a large number of more or less obsolete and useless vessels. He thought that policy would find cordial approval on all sides of the House, but it could not fail to raise the question of what these vessels were doing on the list for so many years. Possibly after careful examination it might have occurred to some other genius at an earlier stage that those vessels should be struck off the list if sufficient attention and examination had been devoted to the subject. As to the control of accounts, he could not help thinking that Parliamentary control in this respect had gradually become largely formal. It appeared to be the case that Government Departments could waste as much money as they liked if they only put in the proper vouchers, and the actual merit or necessity of the expenditure was a matter of considerably less importance. He could not help arriving at the conclusion that while the control of the accounts at the present time was certainly harassing and irritating, it was not in practice very effective. A disagreeable impression was made last year when it was discovered that about £900,000 had been spent in the coarse of the year 1901 without any authority having been obtained from the House until fully two years after the money had been expended. He did not question the diligence of the officials concerned, but surely this showed that the system was defective.

But outside the question of method there was another point, viz., that the Chancellor of the Exchequer should not be content with too low a standard of finance. It appeared to him that a great and prosperous country like ours, with an enormous revenue, with great future responsibilities and calls upon the Exchequer, ought not to be allowed to sink in time of peace and fair prosperity into the position of being unable to pay its way and reduce every year by a considerable sum its indebtedness. He ventured to think that in the arrangements made for the past year the Chancellor of the Exchequer had aimed a little too low, and it would have been much better to have been somewhat more ambitious in his scheme of finance and somewhat bolder in his scheme of taxation. He did not agree with the mover of the Amendment in his complaint with regard to taxation, because taxes were, or should be, a necessary consequence of expenditure. He did not think the right hon. Gentleman had put on too many taxes, but, on the contrary, he thought he had put on too few. Having recently added an enormous sum both to the Consolidated Debt and the floating debt of the country, it was the strict and bounden duty of those responsible for our finances to reduce the public indebtedness every year by a minimum sum of £6,000,000. He hoped that in the arrangements for the coming year, whatever temptations the Chancellor of the Exchequer might feel towards the popularity of a reduction of taxation, he would only think of a reduction after he had provided for a proper Sinking Fund. The Government had been severely criticised for their extravagance in the past, but he was glad to see what appeared to him signs of financial repentance. He hoped and believed that the Budget of the coming year, whether it would be the last of the present Government or not, would put the finances of the country back upon a higher level. He trusted that the last months of the Government would be employed in regaining the high financial standard of past years so that they might leave upon the financial history of the country a creditable and honourable record.

SIR ROBERT REID (Dumfries Burghs)

said the criticisms of the last speaker had certainly been of a very mild character, but he would remind the hon. Member that speeches delivered in that key, accompanied by consistent support in the lobby on all occasions, was not the way to obtain economy in the national expenditure. He agreed with the hon. Member in one thing, and that was in regard to his request that the accounts should be presented in an intelligible way. He might mention that upon one occasion it took him not three hours, but more like three days, to find out how much money had been devoted by this country to the Transvaal for the two years after the war, and not including war expenditure. He would defy the most skilful accountant to obtain this information in anything like a reasonable time. He did, however, manage to find £21,000,000 in the two years, and this was admitted in the debate by the Colonial Secretary. This was an instance of the great difficulty they experienced under the present system of accounts of finding out what their expenditure actually was. According to the Blue-book on "Public Receipts and Expenditure," published last year, between 1889 and 1904 the expenditure increased from £74,000,000 to £130,000,000. One very important, though not the chief cause, was the absence of effective control over expenditure by the House of Commons. The allocation of twenty-three days to Supply had had a most prejudicial effect on the influence of the House. The bargains which used to be made were no longer entered into. The terror of Ministers lest Parliament should be shocked at extravagant Estimates and insist on adequate explanations had disappeared, inasmuch as it was only necessary to wait until the expiration of the allotted days and then the whole of the outstanding Estimates would be voted without any discussion whatever. Great changes had taken place since 1880, when he first entered Parliament. At that time Ministers had only two days in the week, the remainder of the time belonging to private Members, who were thus enabled to bring forward in their own time questions of policy, whether important or unimportant. Consequently the time devoted to finance could be applied to the discussion of the Estimates as such, to suggestions of practical economy, and so forth. But the position now was very different. The private Member had been practically squeezed out of existence as a potent force, being looked upon as a poor harmless creature whose interests might be safely ignored, and the indirect effect was very serious. Questions of policy had now to be and were almost exclusively discussed on the Estimates, that being the only opportunity Members had of raising them. In that way the control of the House had been rendered ineffective, because the discussion was no longer directed to the question of economy.

Why had not the Government adopted the recommendation, made at the instance of the hon. Member for King's Lynn, that every year one-fourth of the Estimates should be submitted to the special scrutiny of a Committee upstairs? In his opinion the recommendation did not go nearly far enough. No business in the country could be conducted on the footing of examining the accounts of expenditure submitted by the heads of Departments only once in four years. The whole thing was really absurd. Public scrutiny had gone; and apparently private scrutiny was refused. To examine the accounts once in four years would have some good results; but the Departments would be on their good behaviour when the fourth year came, and be more indifferent during the three years of their "close time." The Government ought to state why they would not grant this simple business facility. The only explanation he had heard was that the heads of Departments could not afford time to come and give the House of Commons information about expenditure. There was no foundation whatever for such an idea. If necessary, an additional permanent official could be appointed, but the House of Commons ought to be given the necessary information. It really seemed as though the Government did not recognise their duty to allow the House of Commons to exercise control. The Government was held in high esteem by their supporters; he did not wish to say that they also thought very highly of themselves, but they were not a substitute for the House of Commons in controlling matters of finance. It was the duty of the Government to enable the House of Commons to control the expenditure of the country, especially in view of the inordinate growth during recent years.

But there was another cause far more operative and far greater in its results, namely, policy. Policy always had controlled and ever would control expenditure. This fact might be illustrated by reference to what he might call the capital account, and the account of revenue and expenditure. The National Debt had increased during the last five or six years by about £160,000,000. That was due solely to the war. He disagreed with the hon. Member for Plymouth that war tended to economy. It did nothing of the kind. War always tended to extravagance, not merely at the time, but for years afterwards. It was so in the cases of the war of 1748, Pitt's Seven Years War, the Napoleonic wars, and the Crimean War, and it was being so in regard to the South African War. The increased annual charge between 1889 and 1904 was £56,000,000, of which £4,000,000 was due to the service of the National Debt and kindred subjects. A portion of that, again, was due to the war. He had always held a very strong opinion about the war, but he did not intend to dwell upon it on the present occasion. When Ministers submitted, and the House of Commons approved, a warlike policy, the blame was shifted from the Ministers to the House of Commons; and when after the dissolution of Parliament the country chose to adopt the policy, wise or foolish, propounded to them, the responsibility was very largely shifted from Parliament to the country. Therefore he did not think there was much room for reproaches in that matter, but he did think it necessary that the House should appreciate, without recrimination or ill-humour of any kind, the real financial significance of such a force as the recent war. The annual service of the Debt had been increased by £4,000,000, in addition to which large sums had been raised by taxation, and other money had been filched from the Sinking Fund to cover expenditure. He did not use the expression offensively, but the apparent outlay was less than the actual expenditure. Then there were items for Somaliland and the China War, amounting to between £8,000,000 and £9,000,000. The heading "Other Charges connected with Capital Liabilities" was concerned, not with the service of the Debt, the permanent debt or the floating debt, but with items under particular Acts of Parliament which had come into existence practically during the last eight or ten years. In 1889 £104,000 sufficed to meet that expenditure, but in 1904 it had risen to £2,035,000. That showed a change of policy in passing Act after Act by which were imposed upon the country permanent liabilities which ought almost entirely to be met out of revenue. Included in that sum was £1,400,000 in respect of the Barracks Act, the Naval Works Act, the Military Works Act, the Imperial Defence Act, the Uganda Railway, and the Royal Niger Company. Those were the subjects upon which money had been raised amounting to about £1,400,000 a year. He had recently been serving on a Royal Commission in regard to London traffic, and it had struck him that it would be much better to spend this money upon London railways instead of such places as Uganda. Then there was the Royal Niger Co. expenditure.

MR. AUSTEN CHAMBERLAIN

I think that was the policy of your Government, and we are only carrying it out.

SIR ROBERT REID

said he was simply dealing with the policy of spending large sums of money outside the country. Upon such matters as the Royal Niger Co., Uganda buildings, fortifications at Halifax, and other parts of the world, he thought this expenditure had gone a great deal too far, and if they desired to keep an eye upon economy they ought to look to those items. With regard to the current expenditure on the Army and Navy he found that in 1904 it amounted to about £58,500,000. As for the Colonies and naval expenditure, he thought the right view was taken by the late Colonial Secretary at the Colonial Conference of 1902 when, in substance, he told the Ministers of the self-governing Colonies that it was not worthy of their dignity that they should leave all the burden of expenditure upon the Army and Navy to this country. He hoped that language would be noticed by the present Colonial Secretary. In regard to our naval expenditure it had grown from £15,000,000 some years ago to £37,000,000. He wished to know if it was true that 120 ships were not only put out of the service but were going to be broken up and sold for old iron. He would also like to know if it was true that some of the ships had been built in comparatively recent times. They would probably know this when the statement of the First Lord of the Admiralty was made. He thought there must be a good deal of wasteful expenditure in regard to the Navy. They were all agreed that a very strong Navy was necessary, but he was by no means clear that the policy the Government had pursued last year of successive large naval programmes had been a wise one. It seemed to him that that policy had a tendency to induce similar expenditure on the part of other nations. With regard to the Army, his hon. friend who moved this Amendment had pointed out that a few years ago the number of troops we kept in the Colonies and other dependencies of the Crown, excluding India, was about 37,000; but now it amounted to 73,000, and we were maintaining no less than 20,000 or 25,000 in South Africa. These 20,000 men in South Africa were one of the results that had flowed from the war. He thought a great deal of the increase on Army expenditure had been due to the increase of garrisons outside this country. The Colonies ought to provide for their own military defence, and some policy should be adopted which would enable this country to withdraw its troops from South Africa, leaving only the same number of troops as there were in that country before the war broke out. He had attempted to show that the large expenditure had occurred partly because of the absence of control of the House, and if the people of this country were prepared to support a quarrelsome and aggressive policy, and adopt the doctrine of pegging out claims for posterity, then they might be certain the expenditure would not go down and, no matter how skilful a Minister might be, the people would still have to bear these intolerable burdens.

*MR. GIBSON BOWLES (Lynn Regis)

said he conceived that there was no subject more deserving of the attention of the House and of Ministers than national finance. He was sorry there was no Cabinet Minister present except the Chancellor of the Exchequer. He regretted that the Colonial Secretary was not present, because he was about to challenge some of his statements. The finances of this country for which the Chancellor of the Exchequer was responsible to the House demanded at least some attention from the rest of the Cabinet. There was no subject of greater importance, for the whole destinies of any country depended upon its finances. Our prosperity depended upon sound finance, and if this were true in time of peace it was even more true in time of war. It was the taxpayer and not the soldier or sailor who really waged war. At Austerlitz and Jena and Leipsig it was not Austrian, Prussian or Russian troops that con- fronted Napoleon—it was the British guineas furnished by the British taxpayer, who paid for more troops and who finally defeated Napoleon. If the finances of a country were bad, and if a nation was crushed by a load of debt, it could not do its work or rise to its destinies either in peace or in war; and if wastefulness and extravagance were perpetually indulged in the nation lost all sense of what was being done, and a country which kept on that road was on the certain way to ruin. Something had been said about the responsibility of this House and the responsibility of His Majesty's Government. What was the use of talking of the responsibility of this House when its control had first of all been destroyed by those most ruthless new Rules, and when the Government for the last ten years, with such a majority as had never been known before for so long a period, had employed that majority with the utmost ruthlessness to serve their own purposes? It was His Majesty's Government that was responsible for this expenditure and not the House of Commons. What his hon. friend opposite had said was perfectly true because the opportunities which existed before the new Rules of bargaining behind the Speaker's Chair for concessions in return for Estimates had now disappeared. He had frequently availed himself of such opportunities with the late Sir William Harcourt. Of course no Member of His Majesty's Government would ever break a promise or falsify a pledge deliberately given. The members of the Cabinet were all charming, plausible, smooth, open gentlemen; delightful in their manners, pleasant in their smiles, but the most unconquerable, hopeless spendthrifts, perfectly incapable of appreciating the value of money. The reckless profligate extravagance of the last few years had no parallel in the history of the world. Their debt was being piled up to a gigantic height, and if they continued for another ten years in the same way their credit would be destroyed and they would be approaching national bankruptcy. If the Government gave honest clear accounts the taxpayer, the simple plain man in the country, would understand what the actual national expenditure was, and would have intervened long ago to prevent its increase. But instead of this the Government falsified their accounts, and consequently, however anxious an elector or taxpayer might be to do his small part in bringing about economy he never had any real opportunity of knowing what the national expenditure was. That was one reason why so little interest was manifested in the country with regard to financial matters, and really one could hardly blame the taxpayers when His Majesty's Ministers showed so little.

Another reason was this. This country was extremely rich—the richest of all the countries. They were told by the right hon. Gentleman the Member for West Birmingham—and even he was not here—that the country, with all its riches, was bleeding to death. Yet the riches and prosperity of the country were such that as a matter of fact the taxpayer did not greatly feel the exactions of the Exchequer. But if by concealment in the accounts and through the prosperity in the country caused by free trade His Majesty's Government was encouraged to pursue the desperate and unfortunate part that they had been taking during the past ten years, we should soon awake to a national catastrophe beside which all that had hitherto passed would be small indeed.

The system of national accounts varied in different countries. In some places, as in France, they invested the year with a personal character, and referred to that year, which was known as the Exercice, every expense which properly or logically belonged to it, whether incurred before or after. That was a rational system, but it sometimes took fifty years to close an account, and it was not a system which facilitated national control. Our system consisted of a cash account or a banker's account in which all receipts were put on one side, and all expenditure on the other. That was the theory of the British accounts. They started without a balance and ended without a balance. They represented concrete receipts and concrete payments within the year. They had nothing to do with any theory of the burden on the taxpayer. Some of the receipts and expenditure might no doubt represent a real burden and some of it an apparent burden, but nevertheless they must put on both sides of the account what they had received and what they had ex- pended. It was perfectly legitimate to explain that such and such items were not really a charge on the taxpayer. In fact an attempt had been made by the right hon. Gentleman the Member for Wolverhampton, in what was known as the "Fowler" Return, to do this, but it was so unsuccessful in arriving at what was the real minimum burden on the taxpayer that, in his opinion, it should be rather known as the "Fowler Falsification." If hon. Members would refer to the Sinking Fund Act of 1875, they would see that by statute the accounts should show all receipts and all expenditure. But when each successive Minister wished to prove that his expenditure was less than that of his predecessor, it was in the falsification of these accounts that they had worked their wicked will. They had kept the accounts, not with the view to their being true, but with a motive. If accounts were kept with a motive they could not be true accounts. The motive here was two-fold—first of all to show the expenditure of the country to be as small as possible, and in the second place to make the expenditure from year to year vary as little as possible—whereas if the facts varied the accounts must either vary with them or be false. That was supposed to be the triumph of the Chancellor of the Exchequer. He should say that the real triumph would be to present true accounts and to pay his way as he went.

They had had two Chancellors of the Exchequer in his recollection, and no more—he meant Sir Stafford Northcote and Mr. Gladstone. Mr. Gladstones policy in many respects was to his mind to be condemned, but he was one of the greatest financiers that ever lived. He laid down a true principle which he embodied in the Exchequer and Audit Act,1866—the true charter of true national accounts—that every public receipt of every kind should be paid into the Exchequer, and, consequently, that when it was expended it must be paid out of the Exchequer. The hon. Member did not know whether the House realised to what an enormous extent that true principle had been departed from. Instead of the whole revenue being paid to the Exchequer, a very large amount of it, indeed, never reached the Exchequer at all. By successive Acts of Parliament passed by successive powerful Ministers the Audit Act had been trenched upon, and gnawed away, and instead of every farthing being paid into the Exchequer and paid out of it by Vote of the House, no less than £22,000,000 of receipts in 1903–4, never reached the Exchequer at all and never figured on either side of the account, and the Chancellor of the Exchequer took no account of any part of it when he professed to give a statement of the national finance. In other words, over £22,000,000, every farthing of which was received and every farthing expended, was excluded both from the receipt side and the expenditure side of the national accounts. That was falsification made with a motive, and deceiving to all who saw the accounts. There was the "Payments to Local Taxation Account," out of Customs Excise and Estate Duties, and consisting in the last year of £9,795,073. In addition to that there were Appropriations-in-Aid of over £12,300,000, Appropriations-in-Aid being, as the House knew, receipts by the Department from other sources than the Votes of this House which by Statute the Treasury was empowered to apply to their expenditure. The result was that there was altogether in 1903–4 a sum of no less than £22,687,000 of public receipts which never reached the Exchequer at all, every farthing of which was received and expended, and not a farthing of which was allowed to appear either on the receipt or the expenditure side of the account. He made that statement as the result of a considerable amount of trouble. He had given two months of hard work to trying to place before his countrymen the true position of the finances of the country, so far as he could reach them, restoring their omissions and their proper character. He replaced in the accounts what belonged to them. He thereby endeavoured to, and he thought to some extent did, make it possible to institute the comparison which had been made impossible by the false official system of accounting. He sought to make it possible for the country to understand what our accounts were. He had been flattered by the number of people who read his pamphlet, and he conceived there was some little merit in it, because it had been persistently boycotted by everyone of the Government organs in the Press, from The Times downwards.

In regard to Appropriations-in-Aid, undoubtedly there was something to be said for taking the receipts by the Department and applying them in alleviation of expenditure when the amounts were small and insignificant. It was, however, a bad system at the best. It was an unprincipled system not informed by a true theory of accounts, but it would be relatively excusable if the Appropriations-in-Aid were small. But there had been the most enormous growth in these Appropriations-in-Aid. In 1873–4 they amounted to only £394,966, in 1893–4 they had grown to £5,535,931, and in 1903–4 they amounted to the enormous sum of £10,382,407. In 1873–4 the total amount diverted from the Exchequer was £1,200,000, while last year it was £22,200,000, and it was that increase, that enormous falsification of accounts, that had so alarmed him and set him to the humble work he had endeavoured to do for the information of his fellow-countrymen. He conceived, therefore, that one of the greatest of our financial necessities at the present time was the institution of a system by which our accounts should be made true. With the desire of obtaining this he ventured to propose to the Prime Minister the appointment of a small Commission of three or four persons, Treasury officials, and others who should settle a true system and put the accounts on a proper basis. His right hon. friend replied that this was a matter which should be considered by the Public Accounts Committee. Strictly that was so, but really the Public Accounts Committee had been treated in a way which he thought did not conduce to the credit of the Prime Minister or the dignity of the Committee itself. He joined that Committee last year at the request of the Ministry, on the express condition that they were to have a day given to them for the consideration of their Report by the House. That condition was not kept. He would apply to that no harsh term, but hon. Members could find the proper term for themselves. If the Public Accounts Committee were to be treated in that way he could not conceive that it would be so good a body as the small Commission he had proposed. He might be asked why he selected 1903–4 of the preceding years for his work. It was simply because the years 1903–4 was the last year for which any complete figures could be obtained, and having taken that year it followed naturally that he should go back by intervals of ten years for purposes of comparison. It so happened that the comparison took him back first to the year preceding that in which the Government took office and consequently represented the measure of the unbridled extravagance which had certainly been practised by them.

Now, had there been extravagance? It was not denied. They were told that the Ministry boasted they were going to take £6,000,000 off the Navy Estimates by discarding obsolete ships. It was a most proper step? But why was it not taken before? This was a most proper measure in his opinion; but they owed no thanks for it to the First Lord of the Admiralty, but to Sir John Fisher. Why had these ships been allowed to grow old and rotten and kept up so long with their skeleton crews? Was it only in 1905 that they had discovered obsolete ships? They had been there all the time. If the Government had had this luminous idea ten years ago it was not £6,000,000 they would have saved, but £60,000,000. To his mind the fact that they were able to promise these economies on the Navy was the strongest and most complete condemnation of the policy pursued in regard to the Navy for the whole of the past ten years. He had ventured to say, and he repeated, that the remedies for our expenditure and the debt resulting from it were first a jealous frugality, that frugality which caused everyone of the spending Departments to have to fight for every shilling they got. That used to be the rule. The conflicts that went on were terrible over half-crowns and crowns. But now nobody ever came near the Chancellor of the Exchequer who did not go away without a million or two in his pocket. The difficulty now was not to get a necessary shilling but how not to get an unnecessary half-crown. The Gentlemen under the gallery from the Departments knew that he was speaking the truth. The Departments had often found the very greatest difficulty in spending the money forced upon them by the Government. What could be expected when a system of that kind went on?

He supposed the right hon. Gentleman would make the usual argument against all criticism: "The hon. Gentleman is very destructive in his criticisms, but has he anything to propose?" He had a great deal to propose, and when the appropriate moment came he would be ready to publish his proposals. In the meantime he would indicate some general heads under which this economy and frugality might be effected. He took the Navy. He held that by the delay in saving the £6,000,000 a year they had lost a very excellent opportunity of practising frugality. Take the Army. He had been speaking to a gentleman in a high position in the Army administration who said that at least £10,000,000 to £15,000,000 could be saved on the Army expenditure without in the least impairing the efficiency of the Army, any more than the £6,000,000 saving on the Navy impaired the efficiency of the Navy. He did not know whether that was true or not; he had been told it. The idea of an Army in some quarters, however, was a band of music and a few men marching. If there was no band they did not recognise that as an Army. Take the Civil Service. There was a vast deal of economy that might be effected there. He could name instances in which three or four men were employed to do one man's work. Let it not be supposed that he wanted to cut down all the salaries in the Civil Service. He was perfectly convinced that there were salaries that ought to be raised, but yet many which ought to be cut down, where three men were employed to do one man's work, as for instance in rates and taxes, in collection, and the greater part of their time they were idle. The matter of appropriations-in-aid he had already dealt with, but he would remind the House that this House did not in Committee have any control whatever over these appropriations-in-aid. They were appropriated in virtue of the Public Accounts and Charges Act,1891, by direction of the Treasury, and could not be voted in the House. It was a domestic affair between the Department and the Treasury. Here he would ask attention to the fact that there was one opportunity for the intervention of the House as to appropriations-in-aid. It was on the Appropriation Bill. In Committee on that Bill an Amendment could, he apprehended, be made to and debate might arise on the clause which appropriated the appropriations-in-aid.

Now as to the capital expenditure. The so-called capital expenditure was a mere delusive title intended to disguise. There was no capital, properly so-called, unless the National Debt was capital. Neither was there any national capital account nor could there be capital expenditure. There was no capital account and they could not have one. If there were a capital account it would be necessary to set forth liabilities on the one side of the ledger and on the other the assets; but who was to judge of the value of the assets of the British Empire or of South Africa? It was quite impossible, and therefore this term "capital expenditure'' was a deception to disguise the fact that they had made considerable loans—for brick and mortar works mainly—loans that had increased most stupendously and caused a very serious charge every year. Let him tell the House what these were. They were divided between the Army, Navy, and Civil Service. He would show how it worked in the Army and Navy first. The whole cost of the official spending Departments had been and was concealed from this House. The Chancellor of the Exchequer told them that the Army was going to cost in 1903–4 £36,600,000. That was true, but far from the whole truth. For, besides this sum, there was £6,800,000 for appropriations-in-aid, capital issued under the Works Loans Act, £2,950,000, and for work done by the Civil Department, £498,000; so that the total cost of the Army was not the £36,600,000 dealt with by the Chancellor of the Exchequer in his Budget statement, but close on £47,000,000. Again, the cost of the Navy was presented as £35,500,000. As a matter of fact, when the corresponding items to those in the Army were added, the Navy cost £40,500,000. The result was to entirely mislead the public and to enable this mis-statement of the finances to be made, which was at the root of all our financial troubles.

The hon. Gentleman who preceded him truly said that one of the great sources of irregularity was the Supplementary Estimates. If the House would pardon him he would like to read what Mr. Gladstone had said on the subject. He would first give the figures. In 1873–4 they amounted to £4,781,419, but that included £3,200,000 for the Alabama Claims, and the Ashanti Vote of Credit £800,000. Deducting these, the Supplementary Estimates in that year were £781,000. In 1893–4, the year before this Government came into office, they were £592,000. But in 1903–4 they were £4,600,000. This vast increase was very largely the fault of the House, for if the House would, as it should, resist and reject every Supplementary Estimate which did not arise from unforeseen circumstances, and could not have been provided for in the ordinary Budget, these Supplementary Estimates would not have grown to such an extent. He pressed on the House the importance of absolutely refusing to any Government Supplementary Estimates which could not be justified as absolutely unavoidable. This was what Mr. Gladstone said in 1863— It had been a matter of regret to him that on several occasions, from very grave and sufficient reasons, Supplementary Estimates had been presented during his term of office, but he was firmly convinced that the whole effectiveness of Parliamentary control depended upon the state of the finances—the balance of income and expenditure—being once a year gathered together and submitted as a whole to Parliament, and in a plan being submitted to Parliament which should substantially, and, in the main' govern the whole expenditure and income of the year. But, if from any idea of the supreme control of Parliament, the Government were to be called on every week or every fortnight to bring down Supplementary Estimates, the control of Parliament over the expenditure of the year would be entirely nullified under the semblance of consulting its dignity. And in 1866, Mr. Gladstone said— With respect to the Supplemental Estimate, for about £200,000, or perhaps something more, His Majesty's late Government are substantially responsible. It is always a matter of very great regret to me when any Supplementary Estimate has to be proposed. I am quite certain there is nothing by which it is so easy to break down everything effected by a system of Parliamentary control as a needless or great extension of Supplementary Estimates. He would make his last quotation from the next year. Mr. Gladstone, in 1867, said— He was persuaded that if any Party or any Government wished to undermine the constitution of this country, and the control of Parliament over the public finances, they could adopt no more effectual method for the attainment of that object than the presentation of Supplementary Estimates. He thought he had now made out his case against these Supplementary Estimates which had been so monstrously increasing. He apologised for having taken up so much time, and he would say very little upon Votes on Account. The custom used to be to take these Votes for from £3,000,000 to £5,000,000 sufficient to provide for the expenditure of one or two months, but they were now taken for £20,000,000 or sufficient to provide for five months, and that represented a great loss of control to the House. Improvements had been suggested by which one class of Estimates would be examined each year, but these suggestions had all been set aside by the Government.

All this wasteful and extravagant expenditure had resulted in a most stupendous increase in the Debt, and the worst of it was that this increase had taken place in the most objectionable form, namely, in the Unfunded Debt. This debt was of the same character as the five pound note which a man borrowed from his friend without any security. In round figures the Unfunded Debt on March 31st,1874, amounted to £4,500,000; in 1884, it was £14,000,000; in 1894, £21,000,000; but in 1904, it had been swollen to the appalling total of £73,600,000; and it was now over £81,000,000. This form of debt had many objections, and one was that it was not equipped with a proper sinking fund, and that it took a great deal of the floating capital in the money market which would otherwise be lent to traders. Therefore when they increased the Unfunded Debt they seriously hampered and impaired trade. They had looked for some diminution of the Debt from the promised contribution of £30,000 000 from the Transvaal. He was going to read certain passages from the speech of the right hon. Gentleman the Member for West Birmingham, which the Colonial Secretary could either dispute or explain as he thought most appropriate, to show that they were promised £10,000,000 at the begining of 1904, another £10,000,000 at the beginning of 1905, and the last instalment of £10,000,000 at the beginning of 1906, and a most rosy picture was presented of the wonderful position we should then be in. The late Colonial Secretary, speaking on May 6th,1903, when asking the House to guarantee a loan to the Transvaal, said— Let me say, in the first place, that this loan, which is, as the Committee knows, a guaranteed loan of £35,000,000, for the purpose of the two Colonies, is closely connected with the question of the war contribution. It is true we are not dealing to-day with the raising of the loan of £30,000,000, which will be required in order to pay the British Exchequer the contribution the Colonies are willing to make; but the whole arangement must be treated together; and I might almost say that the support of the Committee to the loan which is now under consideration is indeed conditional upon the contribution of £30,000,000 to which I have referred. That was very explicit, but the right hon. Gentleman went on to say that— There was a universal acceptance of the principle of the contribution, and a universal willingness to make sacrifices in order to meet it. He explained that when he first visited the Transvaal he had an idea of a larger contribution, but being a generous-minded statesman—especially with other people's money—he stated that he had reconsidered the matter and he said— I was thrown back upon the arrangement which we have adopted, which was to fix the contribution of the Transvaal at the largest possible sum which it could pay, having regard to its present resources, in the course of the next year or two; and the proposal which I ultimately made with the approval and authority of my colleagues to those with whom I was negotiating was by them—and I think I may say by the British population in the Transvaal generally—accepted unanimously. It was that the Transvaal accepted as their contribution of the British cost of the war a sum of £30,000,000, payable in three annual instalments of £10,000,000 each, which would be provided by a loan, secured solely upon the assets and resources of the Transvaal, and not guaranteed by the British Government; and, in order that the success of the loan might be made assured and to show their own confidence in the prospects of this country in which they are interested, the financial groups associated with the gold industry undertook to underwrite the first £10,000,000 off the loan so as to make its issue an absolute certainty. The late Colonial Secretary thus declared that the issue of the £10,000,000 and our receipt of it was an absolute certainty, and it was expressly on that declaration that he asked and induced the House to agree to guarantee the other loan of £35,000,000. The present Colonial Secretary indeed had suggested that this was not an absolute certainty, that it was only a contingent certainty, but they were told by the author and negotiator of the whole thing that it was universally and gratefully accepted by the Transvaal, that they were delighted with it, and that it was an absolute certainty. The ex-Colonial Secretary went on to say— What are the advantages of this arrangement? In the first place it is a final arrangement; after three years we shall hear no more on the subject. The bill will have been paid, the claim will have been met, and we shall have no longer any ground whatever for intervention, and all interference in the internal finance of the Transvaal will have been avoided. Next year—that is, in 1903–4—the charge will come upon the Transvaal for its first instalment of the contribution. In the third year the whole loan will be issued, and the total charge for it of £1,200,000 will come to bear. The Legislative Council will, without any difficulty, pass this Ordinance giving legal security to the loan which we will raise, and the first instalment of which we will probably raise at the commencement of 1904. Thus it was proved that a promise was made by the then Colonial Secretary that if we would agree to guarantee the £35,000,000 we should have £10,000,000 of the £30,000,000 contribution by 1904 and the whole of it by 1906.

THE SECRETARY OF STATE FOR THE COLONIES (Mr. LYTTELTON, Warwick and Leamington)

suggested that more should be quoted from the speech which the hon. Member had read.

*MR. GIBSON BOWLES

I have read a great deal of it; would you like any more?

MR. LYTTELTON

My recollection is that my right hon. friend laid down in that speech that there were three conditions under which this loan was promised. These three conditions have not been read. One was (I speak from memory) that the contribution should be voluntary, the second that it should be made not at the expense of the development of the colony, and the third that the issue should be made at a favourable time.

*MR. GIBSON BOWLES

said all these conditions were provided for according to the speech. The first condition was that it should be voluntary. That condition had already been fulfilled. They had not only agreed to it, but had done so gratefully, cheerfully, and unanimously, and it was a certainty. What was the good of talking of contingent conditions when it was to be a certainty, and when on that representation they had induced the House of Commons to guarantee a loan of £35,000,000? After their confident prediction as to the first £10,000,000 was not fulfilled, they knew that they had incurred a grave responsibility, and he did not wonder that they went looking about the whole of the inhabited world to find something to divert attention from their failure. But he had further evidence. He would now quote the Chancellor of the Exchequer. On April 23rd,1903, in his Budget statement, the late Chancellor of the Exchequer said— In the present year immediately the Transvaal loan is floated, which I hope will be within a very short time, we are going to repay out of that loan the £4,000,000 which we advanced to the Transvaal, and which will be repaid as a first charge upon this loan. And then he goes on— On January next"—that is, January,1904—"we are to receive £10,000,000 more money, not out of the guaranteed loan, but out of the loan which has been underwritten by the Transvaal mineowners. So that within twelve months we shall receive £14,000,000 and the interest upon that £14,000,000 will be £420,000, which will be added to the Sinking Fund as part of the fixed debt charge, and by that time the amount of the fixed debt charge which is available for the extinction of the Debt will be increased by nearly £500,000. In another year"—which is this year,1905—"we shall get another £10,000,000. This was the Chancellor of the Exchequer speaking on the authority of the Colonial Minister, who had had the conduct of the proceedings— And in the next year—1906—we shall get a further £10,000,000. So that we are really going to put into the Sinking Fund a sum of about £1,000,000, since the debt which bears this amount of interest will be extinguished in three years. The £1,000,000 which will no longer be required for interest will remain part of the fixed debt charge—that is, will be added to the Sinking Fund, so that by the time this £30,000,000 is paid we shall have a Sinking Fund of close upon £9,000,000 sterling. He submitted to the House, therefore, that he had established, and that the qualifications suggested by the right hon. Gentleman the Colonial Secretary had not shaken the establishment of the fact that we were not contingently but absolutely promised by the Colonial Secretary and by the Chancellor of Exchequer this Transvaal Contribution—£10,000,000 at the beginning of 1904, £10,000,000 at the beginning of 1905, and £10,000,000 at the beginning of 1906. The reason he insisted on this was that he was appalled at the Unfunded Debt, and that this sum of £30,000,000 was just what was required to pay off a part of it. If he had any influence with the Government, and could suppose that they took any other interest in his proceedings than that which centred at King's Lynn, he would beg them either themselves to make directly, or again to send out the Member for West Birmingham for the purpose of making, some arrangement for the retarded payment of this £30,000,000. Hallam tells us that St. Louis for the salvation of his soul and those of his ancestors pardoned the Christians one-third of all the debts they owed to the Jews. He was afraid that example was going to be followed by the present Chancellor of the Exchequer, who for the salvation of his own soul and that of his ancestor would practically pardon the Jews of the Transvaal the debts they owed to the Christians of England.

He would not dwell on other national liabilities such as that for guaranteed loans, which was stupendous, the Savings Bank liability, the whole of which was payable at call, or the local debt of this country. All these liabilities added together made a total that was perfectly appalling. The remedies were frugality and retrenchment. Let not the smallest economy be despised, let every item be scrutinised closely. It was in this way they got those small economies, which mounted up to so much in the end. In order to get back to sound financial principles and make some provision for our debt, two things at least were required—a Prime Minister who was convinced of the necessity of economy, and a Chancellor of the Exchequer who had some natural ability for finance, some intelligence, some aptitude, and some knowledge of finance. The right hon. Gentleman the Member for West Birmingham said he could not accept the hon. Member for Croydon as a Chancellor of the Exchequer merely because he had passed two or three months under the tuition of the permanent officials of the Treasury. That was true of every Chancellor of the Exchequer, whether he had risen to the position of Chancellor of the Exchequer by his own merit, or whether he had been jobbed into that position by a family pact or a political intrigue. He took a great financial interest in the right hon. Gentleman the Chancellor of the Exchequer, and if the right hon. Gentleman could do something to reduce the burden of debt, make an adequate provision for the sinking fund of the Funded Debt, which could only be done by the allocation to that purpose of a specific tax, and if he could do something to reduce that most mischievous thing the Unfunded Debt, and would claim and obtain for that purpose the fulfilment of the promise made by the Transvaal that we should have this £30,000,000—if the right hon. Gentleman would do that, and attempt to put our financial house in a little better order, he would aid the right hon. Gentleman in such a course to the utmost of his power. The financial history of this Government had been disastrous. However desirous he might be of supporting the Government—and desirous of it he was, for he was a Tory, and would always remain a Tory; yes, and a much better Tory than some of those who had been imported from Birmingham—there were matters on which he must follow out the political convictions which he had always avowed. One of these was Finance, the present position of which was most dangerous. He felt the danger most seriously, he could not therefore resist this Amendment, and should feel it to be his bounden duty to give his vote in support of it.

MR. McCRAE (Edinburgh, E.)

said the right hon. Gentleman the Chancellor of the Exchequer represented a Government which was incompetent, and a system of finance which was deplorable, and therefore every opportunity ought to be taken to protest against it. One fundamental principle which must not be lost sight of was that a Conservative Government from the nature of things must be an expensive Government, as they had particular interests to conserve and propitiate, and it had been the fate of this nation that whenever a Conservative Government was in power expenditure had gone up by leaps and bounds. Lately the country had suffered from a Liberal Unionist amalgamation which had put all Conservative Administrations altogether in the shade so far as expenditure was concerned. In no period of history had there been more reckless expenditure or callous disregard of the grievous burdens they had placed upon the people. That was the price we had to pay for this Administration. If we looked at our national expenditure for the year 1894–5, we found that the amount for Consolidated Fund and Supply purposes was £94,000,000. For the current year that amount had increased to £143,000,000, and the local taxation account had increased during the same period from £7,000,000 to £9,600,000, whilst the naval and military works which at that date stood at £810,000 for the year, were now £10,000,000. There had been an increase of £60,500,000 altogether apart from appropriations-in-aid with which he would not at the present deal for fear of complicating his argument. The aggregate of the increases that had taken place came to a sum that was appalling. The aggregate increase over the expenditure of 1895 for the last ten years amounted to £248,000,000. He quite admitted that there must be a gradual increase of expenditure as every fair-minded man who studied finance must admit, but if we made due allowances for increase of expenditure during those ten years, and made allowance for the expenditure on the war, we had to face an increase amounting to the appalling total of £400,000,000.

Were we getting value for the money that was being spent in the ordinary expenditure of the nation? The expenditure on the Army in ten years had increased by £12,000,000, altogether apart from military works, yet it was an admitted fact that our Army now was less efficient than in 1904. The right hon. Gentleman the Secretary of State for War himself admitted that the expenditure on the Army was excessive, and was about to make reductions. The House welcomed the reduction of expenditure in the Army, and would welcome it in the Navy as well. He would like to compare our national expenditure with that of a foreign country. The population of Germany was 58,000,000, against our 42,000,000, yet the German estimate of expenditure for the current year was only £97,250,000, against our £143,000,000. The real revenue of Germany was unable to meet that expenditure. Here was a lesson he would commend to the Tariff Reformers. The food taxes were so oppressive that they could not raise any further revenue, and they had to borrow to meet a part—£2,500,000—of the ordinary expenditure. The Chancellor of the Exchequer last year seemed to have adopted the German method, seeing that he made up the deficit of £5,500,000 partly out of borrowed money, partly out of the unclaimed dividend account, and £1,500,000 had still to be met. It was no wonder that the Debt was increasing under the present system of finance as administered by the present Government. Our Sinking Fund was a sham, and our floating debt a danger. In 1894 Sir William Harcourt, in his Budget speech, said— I have always been desirous that the amount of the Unfunded Debt, so far as it may be considered floating debt, in the hands of the public should be reduced. The floating debt at that time was £11,500,000, and Sir William Harcourt proposed to reduce it by £750,000. Now, as the hon. Member for King's Lynn had pointed out, the total Unfunded Debt in round figures amounted to £21,000,000. The floating debt now stood at £82,000,000, and as £4,000,000 of that had to be paid off before the end of the financial year, it left the Unfunded Debt at £78,000,000. The Sinking Fund in 1894–1895 reduced the indebtedness, which was then £667,000 000, by £6,500,000, but last year under the system of finance as administered by the present Government the Debt was reduced on the one hand by £5,149,000, and was added to on the other by £4,298,000, leaving the total net reduction at £850,000. The hon. Member for King's Lynn also referred to the question of the floating debt, and the desirability of its being reduced. He would make a suggestion to the right hon. Gentleman. The right hon. Gentleman's predecessor, the Member for Croydon, in 1903 estimated how the then floating debt was to be reduced, but there were one or two figures the House ought to bear in mind in considering this question. The right hon. Gentleman the Member for Croydon estimated in 1903 that there would be a sum of £40,000,000, which would go to reduce the Unfunded Debt, made up of £30,000,000 from the Transvaal, £4,000,000 due on account of expenditure made by this country on behalf of the Transvaal, and £6,000,000 from the Chinese indemnity—he had only got £3,000,000 out of that £40,000,000. The first instalment of £10,000,000 of the Transvaal loan was guaranteed by fifteen mineowners. Their number was now reduced to thirteen. If others were removed to another sphere, would those who remained be responsible for the £10,000,000? He thought the Chancellor of the Exchequer should tell the House why this first instalment was not being issued. One way in which the right hon. Gentleman could get another £30,000,000, which could be appropriated to the extinction of the Unfunded Debt, was from the terminable annuities. The terminable annuities falling in this year amounting to £3,000,000 or £4,000,000. If the right hon. Gentleman renewed those he could write off a block of Consols to the amount of £30,000,000, which would not only reduce the Debt by that amount, but would have a splendid effect on the money market. There had lately been wholesale reduction of expenditure. That was well and good, but he hoped the reductions were real, and that the Government had not simply put off expenditure for which their successors would have to provide. What was wanted to-day was a return to the spirit of Gladstonian finance. Mr. Gladstone lived in times of great difficulty, when, as he himself said, it was harder to save a shilling than to spend a million, but he faced the difficulty boldly. The present financial position demanded the greatest care, and he trusted the Chancellor of the Exchequer would look the situation boldly in the face, that he would answer the questions which had been put with reference to the Transvaal Loan, and that with the coming year the Sinking Fund would be put on a firm and sound basis.

MR. AUSTEN CHAMBERLAIN

I am certain that any one who has listened in this House as often as I have done to the hon. Member for Perthshire knows the interest that he has always taken in our financial discussions and the constant pressure that he has attempted to exert on the Ministry of the day to secure further economy. I cannot therefore be surprised, and I do not in the least complain, that he should have seized this opportunity of putting down the Amendment which he has moved to-day and initiating a discussion upon it. But the fact that the discussion is raised at this time has its inconveniences, and, as the House can see, necessarily limits the scope of my reply. The debate has travelled very far afield, far, I think, beyond the terms of the hon. Gentleman's Amendment, and certainly far beyond his opening speech. It has engaged hon. Members in a discussion as to the policy of the Admiralty in regard to ships which are being put out of commission, as to the future policy of the War Office, as to what would be the right course for the Chancellor of the Exchequer to pursue in presenting this next Budget, and as to other matters of this kind in regard to which, within a few weeks at the outside, we must be in possession of full information, but in regard equally to which it is impossible for me, speaking here to-day, to anticipate the information which will be laid before the House. Quite obviously it is not for me on the occasion of a debate of this kind to justify the alterations which the Board of Admiralty have made upon their responsibility. I neither accept nor deny the estimates given by various gentlemen as to the financial results of those proposals. Neither can I anticipate to-day the Estimates of military expenditure which will be laid in a short time by my right hon. friend the Secretary of State for War. These subjects must be discussed, and no doubt will be discussed, by the House when it is in full possession of the facts. The most I can do to-day is to refer to those more general subjects with which various hon. Gentlemen have dealt, and with some of the criticisms of what has occurred in the past, without indicating in any manner what action we may be proposing to take in the near future in regard to them.

The hon. Gentleman and others who have taken part in the debate complain of an excessive growth of expenditure and of an insufficient care on the part of the Government to maintain the ends of economy and preserve that close scrutiny and inquiry into all our expenditure which is necessary to see that none of it should be wasted. I confess that in one respect this debate has been an unusual and pleasant experience. Since I have held my present office I have been accustomed to severe criticisms of what are supposed to be my own peculiar views, shared by none of my predecessors. The hon. Gentleman who opened this discussion, however, said that his Amendment was meant to impugn the whole financial policy of the Government during the past ten years. It is therefore not so much my own misdeeds, if misdeeds they are, that I am called upon to defend, as the financial purity or wisdom of my right hon. friends the Members for West Bristol and Croydon. The right hon. Gentleman the Leader of the Opposition has invented a theory which he has repeated on several occasions in the country and once or twice in this House, that the present Chancellor of the Exchequer has secret motives, ulterior motives of his own—which the ingenuity of the right hon. Gentleman alone enables him to pierce—for stimulating expenditure, for maintaining expenditure at the highest figure possible, in order that he may not be called upon to reduce taxation, or take off any of our present burdens, and, indeed, that he may find an excuse for imposing fresh ones.

SIR H. CAMPBELL-BANNERMAN (Stirling Burghs)

What I said was that the high rate of expenditure is, undoubtedly, if one may use a pedantic word, ancillary to the adoption of the policy which it is understood the right hon. Gentleman favours in fiscal matters.

MR. AUSTEN CHAMBERLAIN

If that is all that the right hon. Gentleman meant to be understood——

SIR H. CAMPBELL-BANNERMAN

It is what I said.

MR. AUSTEN CHAMBERLAIN

I do not challenge it. Undoubtedly the level at which the existing taxes stand, the smallness of any reserve which is open to us if we should be faced by another great emergency, the inability to extend the existing taxes to any large extent to meet such an emergency, is in itself a grave reason for considering carefully our fiscal position, and for seeking, whatever our views on the fiscal question, some other means by which a portion of our revenue may be raised and by which the level of the present taxes may be reduced. But I think that if the right hon. Gentleman looks back on what he said he will see that he used language which not merely led inevitably to the inference that such an argument was ancillary to the argument of tariff reformers, but which would lead his hearers to infer that I was deliberately keeping up expenditure in order to produce such a result. Well, I accept, of course, the right hon. Gentleman's disclaimer. I am glad to hear that he gives me a clean bill in that respect, and that he, at any rate, would not suggest that I have not, according to my means and according to what appear to me to be the true interests of the country, done my best to observe, and cause others to observe, economy in the administration of the finances of the country.

Now, Sir, the growth within recent years has been very large. The hon. and learned Member for Dumfries was perfectly correct when he said that a large portion of that growth was directly due to the great war which we waged in South Africa, and that any great war must always leave us with largely increased expenditure. ["No, no!"] He was perfectly correct when he said that that is not, as the hon. Member for Plymouth appears to think, an exceptional result following on the late war, but that it has been the actual result following upon all previous great wars. If the hon. Member for Plymouth would study the speeches of Mr. Gladstone after the Crimean War as carefully as the hon. and learned Gentleman has done he would see that among the evils of the war, in Mr. Gladstone's opinion, not the least was that it fatally led to expansion of expenditure.

MR. GUEST

Not on this scale.

MR. AUSTEN CHAMBERLAIN

That is not a contradiction of what I am saying. I said that the hon. and learned Gentleman was perfectly right in saying that a very considerable increase in our expenditure was due directly to the war. Further, it is no doubt due indirectly to the war that the experience of that war, still fresh in the minds of some of us, pointed out defects in our organisation for the defence of Imperial interests which, at the time, it was made a ground of complaint that the Government had not already provided for, and which we should indeed have been lacking in our duty if we had not sought to provide for after that experience. But do not let it be supposed that the whole of this growth is by any means due to the war or to military or naval preparations intended to place us in a proper position of defence in case of a future war. Our expenditure grows, and grows much faster than I like, by a normal, and what I might almost call an automatic process. Take a single subject as an illustration, the growth of our educational expenditure. That expenditure grows year by year, apart from new demands which the House of Commons makes, apart from new duties imposed, by very large sums, by the purely automatic growth which occurs in the number of children attending the schools. Take one other illustration—the growth of our Post Office expenditure. The Post Office expenditure has risen largely in the course of the last ten years, partly because we are doing a bigger business and have a larger turnover, partly because we have spent considerable sums of money either in giving increased facilities to the public or, to an even larger extent, in giving increased advantages to the employés of the State.

Now, I do not think that much is gained by general complaint as to the growth of expenditure. That does not help you to reduce expenditure. We are all agreed, and no one in my position can fail to agree, that this high expenditure is undesirable in itself, that any reduction which can be safely made it is highly desirable to make, and that all new demands should be closely scrutinised not merely with regard to the desirability or otherwise of the actual expenditure proposed, but with regard to the general state of our financial resources and the compatibility of our financial position with the fresh demands made upon it. Again, I venture to say that the House in this matter is itself largely responsible; and if expenditure is not greater now even than the huge figure it has attained, that is not due to any check or control exercised by the House of Commons, but is due to the resistance of my colleagues, my predecessors, and myself to incessant and almost daily demands which the House of Commons makes upon us. The House of Commons in these matters is apt to separate itself as it were into two entirely different personages, the one taking no responsibility for the deeds of the other. At one moment we are urged to re-arm the artillery, then to build more ships, to pay postmen higher wages, to give a penny postage for the whole world, to light the coasts and harbours of our land free, to give larger grants to local authorities for education, and for half-a-dozen, I might almost say half-a-hundred, other purposes, such as the increase of Government interference in trade and industry, the appointment of new inspectors, the sending of a fresh army of officials travelling throughout the country. If this should be thought not to be a sufficient enumeration of what is expected of the Government in its capacity of a body of reformers, let me recall the demand made for the establishment of State works to provide labour for the unemployed which is favoured by the hon. Member opposite, who represents one of the Divisions of Leeds, and the demands with which I am favoured very nearly every day, certainly every week, and are familiar to every member of the Government for the establishment of harbours of refuge or fishing harbours in the constituencies of hon. Gentlemen in England, Scotland, and Ireland. I could go on enumerating the demands; they are of daily, almost hourly, recurrence. My right hon. friend the Secretary of State for War told me this morning that he had spent two days on this bench recently listening to a discussion on the Army, in which each and every economist urged an increase in expenditure. Then comes round the time when the Chancellor of the Exchequer is taken to task, when the House of Commons, assuming a serious aspect, shakes its finger bravely at him, and tells him he is an extravagant man, and that if he does not check expenditure still further he will bring the country to ruin. Now, cannot hon. Members themselves bring the two sides of their personalities together when they come to discuss these matters in the House; and when they desire a reduction of expenditure, a decrease in the national burden, have I not a right to ask that they should exercise as much self-restraint as is demanded in not pressing on the Government fresh expenditure or other objects which the Government are anxious to avoid?

The hon. Gentleman who moved this Amendment recognised the difficulty of sudden reduction in expenditure, and made an observation which is full of truth, but which, I think, sometimes escapes the attention of hon. Members on that side of the House. "Sudden reductions," he said, "do not always lead to true economy. "The hon. Member who spoke last gave an illustration of how reductions might fail to produce economy by boasting that, whenever his own Party were in office, they managed to reduce expenditure on the Army and Navy, and that whenever gentlemen of our Party came into office that expenditure went up. A portion at least of the increased expenditure under us has been due to the fact that their reductions were not economies and were not justified at the time they were made. We have had to make good their negligence and fill up the gaps which they left. [Cries of "No, no, "and "Artillery. "] Yes, we recognise our obligation in regard to artillery; we are proceeding with the rearmament of the artillery in a time and with a rapidity no Government in this country has ever attempted before—I am almost inclined to say no great Power has ever achieved. But I only say this in passing, that we recognise the obligation, and that it will cost a great deal of money.

MR. GUEST

Who is going to pay?

MR. AUSTEN CHAMBERLAIN

The taxpayers of this country, but what is the good of pressing that expenditure should be reduced when you admit the necessity for the expenditure? What is the use of blaming us because an increase is involved?

MR. GUEST

explained that his remark had reference to the contrast the right hon. Gentleman was making between reductions and expenditure.

MR. AUSTEN CHAMBERLAIN

I remember how this time last year the hon. Gentleman held different views. Those among whom he now sits were speculating in the same way on an early dissolution, and saying that the Chancellor of the Exchequer was going to make a dissolution Budget in the same way as has been suggested to-night. I am not going to disclose Budget secrets; but, at any rate, whatever hon. Gentlemen may think, I have sufficient regard for the high responsibilities of my great office not to allow myself to be deflected from the path of wise and sound finance from any desire to snatch a political or Party gain. I think I may at least claim that in the only Budget for which I have been responsible I did not shirk the burden that devolved upon me; I did my best to fairly meet, and not without courage, a very difficult position.

Now I turn from the general question of the growth of expenditure to some of the other criticisms and questions which have been addressed to me. A great deal has been said as to the form of our accounts, and my hon. friend the Member for Exeter in particular put forward a request that accounts should be recast and presented in a clear form so that every hon. Member and every intelligent citizen could easily see what our exact financial position is. Well, I shall be heartily glad to consider any criticism he may offer on the best form of accounts, and as far as in me lies to facilitate a clear understanding of the financial position by the House and the country. But I do not think hon. Members are at all agreed as to the data that would give us a true account of our financial position. So far as I know, if I may be permitted to say so, the best financial Return that is laid before the House is that which is known by the name of its author, the right hon. Member for Wolverhampton—the "Fowler" Return. That, I think, gives a better statement than any of the other Returns issued. But I do not know how far that meets the views of my hon. friend. It is all-important in this matter to arrive at a decision as to what the accounts ought to show in order that a correct view of the position should be given. The hon. Member for King's Lynn has a theory of his own. He has intervened in the debate to-night and has undertaken to give His Majesty's Government what he is pleased to call his usual support, but perhaps he will allow me to say his claim is excessive. It appears that in future when he speaks he requires the presence in the House of all the members of the Cabinet, together with other Members to whom he may refer.

MR. GIBSON BOWLES

I never made any such statement. The right hon. Gentleman is grossly misrepresenting me.

MR. AUSTEN CHAMBERLAIN

I am in the recollection of many Members who were present. I maintain the statement I have made; his attacks upon my colleagues were meaningless unless they had the meaning I have ascribed to them. The hon. Member has alluded to a pamphlet he published during the recess, from which, I think, Members have culled a good deal of the information we have had to-day. Now in the accounts put forward by the hon. Member—to take one figure alone—the expenditure 1893–94 is made out to be £177,000,000, but according to the "Fowler" Return the correct figure should be £130,500,000, or, if local taxation is included, £140,000,000.

*MR. GIBSON BOWLES

The ''Fowler" Return does not deal with expenditure, but with a theory of the burden on the subject.

MR. AUSTEN CHAMBERLAIN

It is the burden on the subject that has been the burden of this debate, which is the object of this debate, and is, after all, what the subject wants to know. The hon. Member for Exeter said the accounts required clearness, and he com- plained of the method by which capital expenditure was dealt with under the Naval and Military Loans Works Act. We have often debated the policy of these measures, and I think I have made my views on the subject pretty well known. The meeting of exceptional capital expenditure by means of short loans with special sinking funds attached was a policy initiated by the late Government for excellent reasons when Sir William Harcourt was Chancellor of the Exchequer. There will and must be occasions when need arises for a very large sum for capital expenditure for works of permanent advantage to the country, and which cannot fairly be charged on the annual revenue. If you attempted to charge this expenditure on the annual revenue you would so disturb the taxation and financial system that you would have a great reaction against the policy you pursue. One of two things must happen—either the works must be included in annual expenditure or you must have recourse to the expedient initiated by hon. Gentlemen opposite when in power, and developed by us. I recognise that they may say that we have given too large an extension to the principle they have set up. That is the criticism of the more careful among them. I myself have always held that such loans should not be a permanent, part of our annual financial system, that they were only justified in cases where very large capital expenditure was a necessity, and that we should seek, as far as possible, and apart from these exceptional occasions, to defray our expenditure from year to year as we went along out of the revenue. I am anxious that the era opened by the first Naval Works Bill should be brought to a close as early as possible, and that so far as possible we should confine any expenditure under this system to the works already included under those Bills by Parliament, and should not admit new subjects of expenditure.

The hon. Member for Exeter claimed also as a point on which we should agree a careful revision of the details of all Votes in order to see that there was no extravagance, no waste. I entirely agree with him. It is the primary duty of each Department in regard to its own expenditure; and any Department which fails to carry out that review year by year fails in its duty to the House and to the country. It is secondarily the duty of the Treasury, and it is the main method of that financial control which the Treasury exercises over all the ordinary expenditure of the country. But I do not believe, as my hon. friend does, that the House will undertake the detailed work necessary for that kind of examination, or that it can effectively discharge the duties of the office primarily by means of a Committee upstairs. We have heard a great deal about the new Naval Memorandum expounding the policy of the Navy. Some hon. Members have attempted to argue that because it was right in the opinion of the Admiralty to make this change now, it must have been right to make it at any indefinite period in the past. They complain that surrounding circumstances did not change in a given way on a given day, but surrounding circumstances have shown that a great change of policy was possible. Such a change in the adaptation of means to an end could not possibly be enforced by a Committee like the Public Accounts Committee; and if the House refers the subject to any Committee like that, then the House, without gaining a more efficient financial control, will either take from Ministers a large share of their responsibility, which will be spread instead over the whole body of the House, or they will deprive themselves of those opportunities of influencing policy which the House now possesses in discussing the Estimates in Committee.

There is one other observation of my hon. friend with which I have considerable sympathy. He alluded to what I may describe as the posthumous control of expenditure, the control exercised by the Controller and Auditor-General and the Public Accounts Committee on all expenditure already incurred. He suggested that the activities of the Public Accounts Committee and of the Controller and Auditor-General were too much directed to an observance of red tape and too little to the real facts of the financial situation. I think that control was established to prevent something which now practically never occurs. It was established in order to prevent fraud or improper use of money voted by the House. The elaborate system of audit- ing the accounts was adopted for that purpose, and now that there are no longer any great abuses the objections of the critics are naturally drawn to minute points. It is within the power of the Public Accounts Committee—and it has been used within recent years in my own experience when I sat on it as Financial Secretary—to examine into that class of questions which my hon. friend desires to see inquired into; and I agree with him that so employed the Public Accounts Committee is doing some of its most useful work. The suggestion has been made that we should have an opportunity of debating the Reports of the Public Accounts Committee. To my mind that is a most reasonable proposal, a most sensible and businesslike proposal. It is almost due to the members who sit for so many days and give up a great deal of time, and I believe that it will be useful to the House and not unprofitable to Ministers. I am certain that if the House were generally pleased to allot one of the days given to Supply to use in this way the Prime Minister would be perfectly ready to accede to the wishes of hon. Members.

I have a few further observations to make on the general state of our accounts. The hon. Members for King's Lynn and Plymouth took great exception to the system of Appropriations-in-Aid. That is no novel system. It is a system of old standing, adopted and continued after full inquiry and careful examination. Unless the House has some such system as that it will falsify its own maxim. Suppose a Government Department sells waste stores and substitutes stores of a better quality. What is the real cost to the country? It is the difference between the two; and if you give, not the difference between the two, but the whole cost of the new stores, you do not bring the truth home; you disguise it. The most serious point, however, is the statement of those two hon. Members as to our debt and the existing provision for liquidating it. The hon. Member for Plymouth said that there were two kinds of debt, Funded and Unfunded, and that for the Unfunded Debt there was no sinking fund. He is under a complete misapprehension. For the Unfunded Debt, except that part of it which is raised for military and naval works and similar purposes, the ordinary sinking funds are as much available as for the Funded Debt.

MR. GUEST

Do I understand that the sinking fund extinguishes the Unfunded Debt?

MR. AUSTEN CHAMBERLAIN

It is applied at the discretion of the authorities of the day to the Funded or Unfunded Debt. The one portion of the Unfunded Debt to which the sinking funds are not available is sums raised for capital purposes, and all those sums are provided for with their own special sinking fund. I say nothing as to the sufficiency or otherwise of the provision made for the reduction of debt, but I should like the House to know what the provision is, and to compare it with 1894, the year before the Unionist Party came into office. On March 31st,1894, the deadweight debt stood at £664,795,000 and the borrowing for capital purposes was £2,496,000, making our capital liabilities £667,291,000. The total amount devoted to paying off the deadweight debt and new debt was £6,687,000, which represented a percentage of 1.002 of our total liabilities. On March 31st last year the deadweight debt was £762,630,000, and there was borrowed for capital purposes £31,868,000, making the total debt £794,498,000. The total amount devoted to paying off the two kinds of debt during the present year was £8,326,000. That represents a percentage of 1.047 of the total present capital liabilities, or a fractional increase over the percentage of sinking fund and liabilities ten years ago.

MR. WHITLEY (Halifax)

Are the £8,000,000 a reduction of debt after making allowance for the new creation of debt for military and naval works?

MR. AUSTEN CHAMBERLAIN

I hope the hon. Member will allow me to pursue my argument. He asks me a question, the answer to which he knows perfectly well. If the hon. Gentleman wants an answer, that is not in excess of the new capital raised for works this year, any more than the figure which I gave for the earlier year was in excess of the new capital raised. The figures for the two years were on the same basis, and the proportion of sinking fund to our liabilities is fractionally higher now than it was at that time.

There is one further observation I must make in regard to this matter. The hon. Member for King's Lynn seems to think that no portion of the terminable annuities is really available for the sinking fund. That is a complete misapprehension. All that part of the terminable annuities which is replacement of capital is an actual part of the sinking fund. One other observation on the account given of the financial position by the hon. Gentleman the Member for King's Lynn. The hon. Gentleman sums up the country's liabilities, national and local. He includes in the national liabilities the whole of the local loans, and when he talks of the local liabilities he includes them again. Thus they appear twice. There are some corrections which I hope the hon. Gentleman will introduce into the next edition of his pamphlet, and I hope that in his attempts at high finance he will not forget simple arithmetic. There is one other question to which I must allude, if only that I may not seem discourteous to the hon. Gentleman who immediately preceded me. He thought the House was entitled to a full explanation from me or from the Government as to their intentions and policy with regard to the Transvaal war contribution. The House is entitled to full information at the earliest possible moment at which we can give it. I told the House the other day, and the Colonial Secretary repeated it, that we are not in a position to make any statement on this subject at the present time. We shall be only too happy, when we are able, to take the House into our confidence and give them all the information they can desire or have a right to expect.

*MR. McCRAE (Edinburgh, E.)

Can we have it at an early date?

MR. AUSTEN CHAMBERLAIN

I hope we may have it before very long, but I cannot make any pledge, for I know that if I did so the hon. Gentleman would put Questions down twice a week with the object of finding out when the early day is to be. I think I have covered as far as is necessary, or possible, in the present circumstances the scope of this discussion. My answer on many points is necessarily incomplete, because we are really invited to a discussion of the Army and Navy Estimates, which are not yet in the hands of Members, the Transvaal war contribution, upon which the Government is not yet in a position to make any further statement, and of the proposals of the Budget, which I shall have to make in a month or six weeks time, but which I must decline to anticipate, even to gratify the curiosity of hon. Gentlemen of this House. It must be, as long as I hold my present position, my earnest endeavour to see that not more money is taken from the taxpayer's pocket than is really required for the service of the nation. It has been my duty many times already to resist expenditure, desirable in itself, which I thought the taxpayer could not afford or ought not to afford at the time. I do not doubt that it will be my duty to do so in the future. I hope when I come to resist unreasonable and exorbitant demands I shall have the support of all those advocates of economy who have been so lavish of their criticism to-day.

SIR H. CAMPBELL-BANNERMAN

I did not intend to take any part in this discussion, but there is one line of defence which the right hon. Gentleman has adopted which induces me to say a few words to the House. He said that the main part of the blame rests not with the Government or their policy, but with the House of Commons. When the right hon. Gentleman says he cannot give a complete answer or make a complete statement on behalf of the Government, because the Estimates of the coming year are not yet in the hands of Members, that is not the question before the House at all. The question before the House is the general tendency and current of the expenditure of the Government for the last ten or fifteen years; and however much by a death-bed repentance they may redeem themselves, as they think, in the Budget that is to come, that does not in the least affect our judgment of the course they have pursued in the past. The right hon. Gentleman, as I have said, blames the House of Commons. I agree with him to a certain point. When he denounces the habit of Members of urging—rightly or wrongly—additional expenditure upon the Government, of attacking the Government for refusing demands that are made upon them—sometimes, no doubt, demands to which individual Members engage themselves among their constituencies—in all that I am entirely in accord with the right hon. Gentleman. But that question does not affect the case before the House of Commons, because we assume that this Government of all the virtues is strong enough to refuse those demands that are made upon them. The Government introduces Estimates, and it is by the Estimates and the side matters of expenditure affiliated to the Estimates that we judge the expenditure and policy of the Government. It is part of their duty to give the tone in this matter to the House of Commons, and if there is recklessness in the country or in the House—a recklessness as to expenditure, an indifference to expenditure, a desire to see greater expenditure—an idea that great expenditure is good for the country—and I am afraid to some extent there is—no one has contributed to the creation of that feeling so much as the right hon. Gentlemen who sit on the bench opposite. The right hon. Gentleman has been objecting to the tone which he has noticed. I am afraid he condemns the result of his own teaching. It does not lie in his mouth to say it is the fault of the House of Commons.

We have had a great deal said in this most instructive debate. I regret that most Members of the House did not hear the speeches of my hon. friends the mover and seconder, which I thought admirable, of the hon. Member for Exeter, whose authority we all recognise, and, of course, the masterly speech of the hon. Member for King's Lynn, who has made this subject his own. A great deal has been said about methods of improving the control over expenditure by the House of Commons. I think there is much need for improvement. But I have never yet quite seen my way to the manner of giving it. I have seen and heard a good many things proposed which I am afraid when they came to work, instead of having a beneficial would have a prejudicial effect on the expenditure of public departments. I think one thing has conduced to lowering the power of the House of Commons in this respect, and that is the new arrangement with regard to Votes in Supply. Hon. Members have pointed out that after a certain day the guillotine falls and then the whole thing goes by the board. But there is a great deal more than that; because when a day is set aside for a discussion of the Votes of a certain Department the Minister in charge of that Department knows that, if he can only harden his heart and set his teeth and pass through the ordeal of the discussion, then from the moment twelve o'clock strikes he is a free man. able to snap his fingers at the House of Commons, and perfectly indifferent to what their opinion may be; his Vote will not come on till next year; and, therefore, to that extent the influence and power of the House of Commons has been lowered. In the old days, it is true, there was a great deal of irregular discussion, there was a great deal of uncertainty as to the time when the discussion would come on; the Minister always was liable to have his Vote deferred and deferred, postponed and postponed, and always had the fear hanging over him that sooner or later he would have to bear the brunt of discussion, and probably meet divisions and the criticism of Members. But, after all, the one thing I wish to dwell upon, having now been drawn to enter upon the matter, is that, however important those matters that I have just been speaking of may be, and all the questions of forms of account and of financial machinery—which are, indeed, worthy of all attention from the House—the thing which governs the whole matter is the policy of the Government. No amount of good accounting, of good control by the House of Commons, will do any good to stop this dreadful current of expenditure. Nothing less than a change of the policy which creates that expenditure will suffice.

Let me refer just before I sit down to one observation which the right hon. Gentleman made. He imputed to me that I had been saying somewhere in the country that he was perhaps not very sincere in his opposition to expenditure, because expenditure rather played up to certain fiscal doctrines to which he is supposed to be attached. I do not know that I have gone the length of attributing to him, and certainly never intended to attribute to him, anything in the nature of insincerity; but I do think that, having the opinions he holds on that subject, he is not so likely to look at high expenditure with the same horror as others of us look upon it. If you trace the history of protection, you will find that high tariffs everywhere have had their origin in high expenditure. In Germany, France, and the United States, indisputably, high tariffs were not adopted at all because of a love for high tariffs, but because expenditure being so high these countries were driven to protective taxes. It was in that sense that I said we could hardly expect that strong objection to a high rate of expenditure in a devotee of that system that you would expect in those who take, as I think, a more orthodox view of our fiscal position. I merely rose to express my opinion upon two or three points; but I venture to reiterate, before I sit down, what I think is the hinge upon which everything turns—namely, that our high expenditure is not the fault of the House of Commons or its rules, or its financial methods, but is the fruit of the policy of His Majesty's Government, and it is by changing that policy, and by such means alone, that that expenditure can be reduced.

*MR. KEIR HARDIE (Merthyr Tydvil)

said he should vote for the Amendment, not because he regarded the expenditure as excessive, but because it was misdirected. The Chancellor of the Exchequer had named certain matters in connection with which he was continually being pressed to incur expenditure, but which pressure, as the guardian of the national purse, he had resisted. One of those matters was education. The Government were starving education, and then clamouring for protection against the product of better education abroad. Another matter in regard to which the right hon. Gentleman had resisted expenditure was harbours of refuge, which were intended to give seamen and fishermen opportunities of saving life in time of distress. Then there was unemployment. The existence of thousands of men out of work had created a demand for certain expenditure, but the Chancellor of the Exchequer gloried in the fact that he had resisted that demand. The right hon. Gentleman apparently boasted also of the fact that the Government did not pay its workers the same standard rate of wages as was paid by private firms for the same kind of work. On all these subjects the Government was proud of its economy. But therein lay the charge against the Government. Educational expenditure during the last ten or eleven years had increased by £5,500,000, while in the same period military expenditure had gone up by over £50,000,000. Personally, he did not complain of the growing expenditure, but he did complain of money being wasted on war and military experiments whilst causes which would protect life, make life better worth living, and develop better citizens, were starved for lack of expenditure. The question of a reduction in the expenditure had been raised, but he did not believe that any reduction was either possible or desirable. As civilisation grew and expanded the demands upon the national purse must increase proportionately as humanitarian feelings increased amongst the people. They should not forget that there were at the present time 120,000 children, in London alone, going to school hungry, whereas they could and should be provided with meals at the national expense. He did not advocate, and he did not desire, any decrease in the expenditure of the nation, but he did

desire that the money now being frittered away in injurious courses should be diverted to useful and fruitful objects for the benefit of all concerned. Nor did he dream of any increase of expenditure, or even the maintenance of the present expenditure being raised by further taxes upon the people, for there were other sources of revenue still to be tapped which would provide for all the requirements of government without imposing any further burdens upon the poor. Recent Returns showed that 3,700 persons had died whose combined estates were valued at £186,000,000. The surplus wealth of the nation was yearly being added to, and he felt sure that the nation would find before long an opportunity for increasing the national income without adding to the burdens of the poor. Any attempt to broaden the basis of taxation in exchange for old age pensions or things of that kind would be resisted to the utmost by those with whom he was associated. Whilst they demanded a higher standard of expenditure, as the Chancellor of the Exchequer had said, they insisted that it should not come from the pockets of the people but from the surpluses in the banking accounts of the over-rich.

Question put.

The House divided:—Ayes,201; Noes,250. (Division List No. 11.)

AYES.
Abraham, William (Cork, N. E.	Burke, E. Haviland	Doogan, P. C.
Abraham, William (Rhondda)	Burns, John	Douglas, Charles M. (Lanark)
Ainsworth, John Stirling	Buxton, Sydney Charles	Duffy, William J.
Allen, Charles P.	Caldwell, James	Duncan, J. Hastings
Ashton, Thomas Gair	Cameron, Robert	Dunn, Sir William
Asquith, Rt. Hn. Herbert Henry	Campbell, John (Armagh, S.)	Edwards, Frank
Atherley-Jones, L.	Campbell-Bannerman, Sir H.	Elibank, Master of
Austin, Sir John	Causton, Richard Knight	Ellice, Capt EC (S. Andrw's Bghs
Barlow, John Emmott	Cawley, Frederick	Ellis, John Edward (Notts.)
Barran, Rowland Hirst	Channing, Francis Allston	Emmott, Alfred
Barry, E. (Cork, S.)	Cheetham, John Frederick	Esmonde, Sir Thomas
Beaumont, Wentworth C. B.	Cogan, Denis J.	Evans, Samuel T. (Glamorgan)
Bell, Richard	Condon, Thomas Joseph	Eve, Harry Trelawney
Black, Alexander William	Crean, Eugene	Flavin, Michael Joseph
Blake, Edward	Cremer, William Randal	Ferguson, R. C. Munro (Leith)
Boland John	Crooks, William	Ffrench, Peter
Bolton, Thomas Dolling	Cullinan, J.	Field, William
Bowles, T. Gibson (Kings Lynn	Dalziel, James Henry	Findlay, Alex. (Lanark, N. E.)
Brand, Hon. Arthur G.	Davies, M. Vaughan (Cardigan	Fitzmaurice, Lord Edmond
Brigg, John	Delany, William	Farrell, James Patrick
Bright, Allan Heywood	Devlin, Chas. Ramsay (Galway)	Flynn, James Christopher
Bryce, Rt. Hon. James	Dilke, Rt. Hon. Sir Charles	Foster, Sir Walter (Derby Co.)
Buchanan, Thomas Ryburn	Donelan, Captain A.	Freeman-Thomas, Captain F.
Furness, Sir Christopher	M'Fadden, Edward	Runciman, Walter
Gilhooly, James	M'Hugh, Patrick A.	Samuel, Herbert L. (Cleveland)
Goddard, Daniel Ford	M'Kean, John	Schwann, Charles E.
Grey, Rt. Hn. Sir E. (Berwick)	M'Kenna, Reginald	Shackleton, David James
Guest, Hon. Ivor Churchill	M'Killop, W. (Sligo, North)	Sheehan, Daniel Daniel
Gurdon, Sir W. Brampton	Mooney, John J.	Sheehy, David
Haldane, Rt. Hon. Richard B.	Morgan, J. Lloyd (Carmarthen)	Shipman, Dr. John G.
Hammond, John	Moulton, John Fletcher	Sinclair, John (Forfarshire)
Harcourt, Lewis	Murnaghan, George	Slack, John Bamford
Hardie, J. Keir (Merthyr Tydvil)	Murphy, John	Smith, Samuel (Flint)
Harrington, Timothy	Nannetti, Joseph P.	Soames, Arthur Wellesley
Harwood, George	Newnes, Sir George	Soares, Ernest J.
Hayden, John Patrick	Nolan, Col. John P. (Galway, N.)	Spencer, Rt. Hn. C R (Northants
Hayter, Rt. Hon. Sir Arthur D.	Nolan, Joseph (Louth, South)	Stanhope, Hn. Philip James
Helme, Norval Watson	Norman, Henry	Stevenson, Francis S.
Hemphill, Rt. Hn. Charles H.	Norton, Capt. Cecil William	Strachey, Sir Edward
Higham, John Sharpe	Nussey, Thomas Willans	Sullivan, Donal
Hobhouse, C. E. H. (Bristol, E.)	O'Brien, James F. X. (Cork)	Taylor, Theodore C. (Radcliffe)
Hope, John Deans (Fife, West)	O'Brien, Kendal (Tipperary Mid	Thomas, Abel (Carmarthen, E.
Horniman, Frederick John	O'Brien, Patrick (Kilkenny)	Thomas, David Alfred (Merthyr
Hutton, Alfred E. (Morley)	O'Brien, P. J. (Tipperary, N.)	Thomson, F. W. (York., W. R.)
Jacoby, James Alfred	O' Connor, John (Kildare, N.)	Trevelyan, Charles Philips
Johnson, John	O' Donnell, John (Mayo, S.)	Waldron, Laurence Ambrose
Joicey, Sir James	O' Dowd, John	Wallace, Robert
Jones, William (Carnarvonshire	O' Kelly, James (Roscommon, N	Walton, Joseph (Barnsley)
Joyce, Michael	O'Malley, William	Warner, Thomas Courtenay T.
Kennedy, Vincent P. (Cavan, W)	O'Mara, James	Wason, Eugene (Clackmannan
Kilbride, Denis	O'Shaughnessy, P. J.	Wason, John Cathcart (Orkney
Kitson, Sir James	O'Shee, James John	Weir, James Galloway
Labouchere, Henry	Parrott, William	White, Luke (York, E. R.)
Lambert, George	Partington, Oswald	Whiteley, George (York, W. R.
Langley, Batty	Perks, Robert William	Whitley, J. H. (Halifax)
Law, Hugh Alex. (Donegal, W.)	Pirie, Duncan V.	Wills, Arthur Walters (N Dorset
Lawson, Sir Wilfrid (Cornwall)	Power, Patrick Joseph	Wilson, Chas. Henry (Hull, W.
Layland-Barratt, Francis	Rea, Russell	Wilson, Fred. W. (Norfolk, Mid
Leese, Sir Joseph F (Accrington	Reckitt, Harold James	Wilson, John (Durham, Mid.)
Leigh, Sir Joseph	Reddy, M.	Wilson, John (Falkirk)
Levy, Maurice	Redmond, John E. (Waterford)	Wilson, J. W. (Worcestersh. N.
Lewis, John Herbert	Reid, Sir R. Threshie (Dumfries	Woodhouse, Sir J T. (Huddersf'd
Lloyd-George, David	Richards, Thomas (W Monm'th	Young, Samuel
Lundon, W.	Rickett, J. Compton	Yoxall, James Henry
Macnamara, Dr. Thomas J.	Roberts, John Bryn (Eifion)
MacNeill, John Gordon Swift	Roberts, John H. (Denbighs.)	TELLERS FOR THE AYES—
MacVeagh, Jeremiah	Robertson, Edmund (Dundee)	Mr. Herbert Gladstone and
M'Crae, George	Roche, John	Mr. William M'Arthur.
NOES
Agg-Gardner, James Tynte	Bentinck, Lord Henry C.	Chamberlain, Rt Hn. J. A. (Wore.
Agnew, Sir Andrew Noel	Bill, Charles	Chamberlayne, T. (S'thampton
Allhusen, Augustus Henry Eden	Bingham, Lord	Chapman, Edward
Allsopp, Hon. George	Blundell, Colonel Henry	Coates, Edward Feetham
Anson, Sir William Reynell	Bond, Edward	Cochrane, Hn. Thos. H. A. E.
Arkwright, John Stanhope	Boscawen, Arthur Griffith	Cohen, Benjamin Louis
Arnold-Forster, Rt. Hn. Hugh O	Boulnois, Edmund	Colomb, Rt. Hn. Sir John C. R.
Arrol, Sir William	Bousfield, William Robert	Colston, Chas. Edw. H. Athole
Atkinson, Rt. Hn. John	Brodrick, Rt. Hon. St. John	Cook, Sir Frederick Lucas
Bailey, James (Walworth)	Brotherton, Edward Allen	Corbett, T. L. (Down, North)
Bain, Colonel James Robert	Burdett-Coutts, W.	Craig, Charles Curtis (Antrim, S.
Baird, John George Alexander	Butcher, John George	Cripps, Charles Alfred
Balcarres, Lord	Campbell, Rt. Hn. J. A. (Glasgow	Crossley, Rt. Hon. Sir Savile
Balfour, Rt. Hn. A. J. (Manch'r.)	Campbell, J. H. M. (Dublin Univ.	Cust, Henry John C.
Balfour, Rt. Hn Gerald W (Leeds)	Carson, Rt. Hn. Sir Edw. H.	Dalkeith, Earl of
Balfour, Kenneth R. (Christch.	Cavendish, V. C. W(Derbyshire	Davenport, William Bromley
Banbury, Sir Frederick George	Cayzer, Sir Charles William	Denny, Colonel
Banner, John S. Harmood-	Cecil, Evelyn (Aston Manor)	Dewar, Sir T. R. (Tower Hamlets
Bartley, Sir George C. T.	Cecil, Lord Hugh (Greenwich)	Dickson, Charles Scott
Bathurst, Hon. Allen Benjamin	Chamberlain, Rt. Hon. J. (Birm	Dimsdale, Rt. Hn. Sir Joseph C.

Disraeli, Coningsby Ralph	Keswick, William	Rolleston, Sir John F. L.
Dixon-Hartland, Sir Fred Dixon	Kimber, Sir Henry	Rollit, Sir Albert Kaye
Dorington, Rt. Hn. Sir John E.	King, Sir Henry Seymour	Ropner, Colonel Sir Robert
Douglas, Rt. Hn. A. Akers-	Lambton, Hon. Frederick Wm.	Rothschild, Hon. Lionel Walter
Doxford, Sir William Theodore	Laurie, Lieut. -General	Round, Rt. Hon. James
Duke, Henry Edward	Law, Andrew Bonar (Glasgow)	Rutherford, John (Lancashire)
Dyke, Rt Hn. Sir William Hart	Lawrence, Sir Joseph (Monm'th)	Rutherford, W. W. (Liverpool)
Egerton, Hon. A. de Tatton	Lawson, Hn. H. L. W. (Mile End)	Sackville, Col. S. G. Stopford
Faber, Edmund B. (Hants, W.	Lawson, John Grant (Yorks N R.	Sadler, Col. Samuel Alexander
Fergusson, Rt. Hn. Sir J. (Mancr.)	Lee, Arthur H(Hants., Fareham	Samuel, Sir Harry S (Limehouse
Fielden, Edward Brocklehurst	Lees, Sir Elliott (Birkenhead	Scott, Sir S. (Marylebone, W.)
Finch, Rt. Hon. George H.	Legge, Col. Hon. Heneage	Sharpe, William Edward T.
Finlay, Sir R B. (Inv'rn'ssB'ghs)	Leveson-Gower, Frederick N. S.	Shaw-Stewart, Sir H. (Renfrew)
Fisher, William Hayes	Llewellyn, Evan Henry	Sinclair, Louis (Romford)
Fison, Frederick William	Lockwood, Lieut.-Col. A. R.	Skewes-Cox, Thomas
FitzGerald, Sir Robert Penrose	Long, Col. Charles W. (Evesham	Sloan, Thomas Henry
Fitzroy, Hon. Edward Algernon	Long, Rt Hn. Walter (Bristol, S.)	Smith, Abel H. (Hertford, East)
Flannery, Sir Fortescue	Lonsdale, John Brownlee	Smith, H C (North'mb. Tyneside
Flower, Sir Ernest	Lowe, Francis William	Smith, Hon. W. F. D. (Strand)
Forster, Henry William	Lowther, C. (Cumb. Eskdale)	Spear, John Ward
Foster, Philip S. (Warwick, S. W	Loyd, Archie Kirkman	Spencer, Sir E. (W. Bromwich)
Galloway, William Johnson	Lucas, Col. Francis (Lowestoft	Stanley, Hon. Arthur (Ormskirk
Gardner, Ernest	Lucas, Reginald J. (Portsmouth	Stanley, Rt. Hn. Lord (Lancs.)
Gibbs, Hon. A. G. H.	Lyttelton, Rt. Hon. Alfred	Stewart, Sir Mark J M' Taggart
Godson, Sir Augustus Frederick	Macdona, John Cumming	Stock, James Henry
Gordon, Hn. J E (Elgin & Nairn)	Maconochie, A. W.	Stone, Sir Benjamin
Gordon, J. (Londonderry, S.)	M'Calmont, Colonel James	Stroyan, John
Gordon, Maj. Evans (T'rH'mlets	Majendie, James A. H.	Strutt, Hon. Charles Hedley
Gore, Hon. S. F. Ormsby-	Malcolm, Ian	Talbot, Lord E. (Chichester)
Gorst, Rt. Hon. Sir John Eldon	Manners, Lord Cecil	Taylor, Austin (East Toxteth)
Goschen, Hon. George Joachim	Marks, Harry Hananel	Thorburn, Sir Walter
Gray, Ernest (West Ham)	Martin, Richard Biddulph	Thornton, Percy M.
Green, Walford D (Wednesbury	Massey-Mainwaring, Hn W. F.	Tollemache, Henry James
Greene, Henry D. (Shrewsbury	Maxwell, W. J. H (Dumfriesshire	Tomlinson, Sir Wm. Ed. M.
Grenfell, William Henry	Milner, Rt. Hn. Sir Frederick G.	Tuff, Charles
Gretton, John	Molesworth, Sir Lewis	Tufnell, Lieut.-Col. Edward
Greville, Hon. Ronald	Montagu, G. (Huntingdon)	Tuke, Sir John Batty
Hain, Edward	Montagu, Hon. J. Scott (Hants.	Turnour, Visount
Hambro, Charles Eric	Moon, Edward Robert Pacy	Valentia, Viscount
Hamilton, Marq. Of (L'nd'nderry	Morgan, David J (Walthamstow	Vincent, Sir Edgar (Exeter)
Hardy, Laurence (Kent, Ashf'rd	Morpeth, Viscount	Walrond, Rt Hn Sir William H.
Hare, Thomas Leigh	Morrell, George Herbert	Warde, Colonel C. E.
Haslam, Sir Alfred S.	Morton, Arthur H. Alymer	Welby, Lt. -Col. ACE. (Taunton
Hay, Hon. Claude George	Mount, William Arthur	Welby, Sir Charles G E. (Notts.)
Heath, Sir James (Staffords N W	Mowbray, Sir Robert Gray C.	Wharton, Rt. Hon. John Lloyd
Helder, Augustus	Murray, Charles J. (Coventry)	Whiteley, H. (Ashton und. Lyne
Henderson, Sir A. (Stafford, W.)	Myers, William Henry	Whitmore, Charles Algernon
Hermon-Hodge, Sir Robert T.	Nicholson, William Graham	Williams, Colonel R. (Dorset)
Hickman, Sir Alfred	Palmer, Sir Walter (Salisbury)	Willoughby de Eresby, Lord
Hoare, Sir Samuel	Parker, Sir Gilbert	Wilson, A Stanley (York, E. R.)
Hogg, Lindsay	Peel, Hn. Wm. Robert Wellesley	Wilson, John (Glasgow)
Hope, J. F. (Sheffield, Brightside	Pemberton, John S. G.	Wilon-Todd, Sir W. H. (Yorks.)
Hornby, Sir William Henry	Percy, Earl	Wodehouse, Rt. Hn. E. R. (Bath)
Horner, Frederick William	Pierpoint, Robert	Wolff, Gustav Wilhelm
Hoult, Joseph	Pilkington, Colonel Richard	Worsley-Taylor, Henry Wilson
Houston, Robert Paterson	Platt-Higgins, Frederick	Wortley, Rt. Hon. G. B. Stuart
Howard, John (Kent Faversham	Powell, Sir Francis Sharp	Wrightson, Sir Thomas
Hozier, Hon. James Henry Cecil	Pretyman, Ernest George	Wylie, Alexander
Hunt, Rowland	Pym, C. Guy	Yerburgh, Robert Armstrong
Hutton, John (Yorks. N. R.)	Quilter, Sir Cuthbert
Jameson, Major J. Eustace	Rankin, Sir James	TELLERS FOR THE NOES—
Jeffreys, Rt. Hn. Arthur Fred.	Ratcliff, R. F.	Sir Alexander Acland-
Jessel, Captain Herbert Merton	Reid, James (Greenock)	Hood and Mr. Ailwyn
Kennaway, Rt. Hn. Sir John H.	Ridley, S. Forde	Fellowes.
Kenyon, Hon. Geo. T. (Denbigh)	Roberts, Samuel (Sheffield)
Kenyon-Slaney, Rt. Hn. Col. W	Robertson, Herbert (Hackney)

Main Question again proposed.

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