HC Deb 24 May 1905 vol 146 cc1250-315

Considered in Committee.

(In the Committee.)

[Mr. JEFFREYS (Hampshire, N.) in the Chair].

Clause 7:—

*MR. MCCRAE (Edinburgh, E.)

said that it was not too much to say that this clause was the most important of the proposals which had been put before the House of Commons by the Chancellor of the Exchequer, who proposed under this section—the omission of which he (the speaker) was advocating—that £10,000,000 of Exchequer bonds, maturing in December next, and created under the Supplementary War Loans Acts, 1900, should be paid off. In considering that, it was important to realise that this proposal dealt with the Unfunded Debt, and that it did not touch the Consol debt which they had under consideration the other day. The Unfunded Debt amounted on March 31st last to £71,600,000. Of that £20,500,000 consisted of Exchequer bonds, which was the nature of the debt they were now considering, and the balance of the total was made up of war stock to the extent of £30,000,000, and of Treasury short-dated Bills to the extent of £21,000,000. It was recognised, and, indeed, it had been so considered by the Chancellor of the Exchequer, that this large floating debt was a standing menace to our financial position. Under this head, of course, came the borrowing under the Naval and Military Works Acts, and he proposed in only one sentence to draw the attention of the Committee to the fact that under that head, in 1898, the gross outstanding liabilities amounted to £3,700,000, whereas at the end of the present financial year the total would be £47,600,000. That was one reason why they should be exceedingly cautious in any powers they gave to the Chancellor of the Exchequer over the creation of new debt, which was, after all, what he was seeking to do under this clause.

Another reason why they should consider this matter very carefully was to be found in the fact that the Chancellor of the Exchequer had not boldly faced the situation in regard to the national indebtedness, because last year, for the first time in our history, we increased our gross liabilities to the extent of about £2,250,000, instead of reducing them at the rate of some £7,000,000 a year. According to an Answer made by the Chancellor of the Exchequer on the preceding Monday the estimated reduction of the National Debt in the current year would only amount to a little over £3,000,000, so that it meant that for two years practically there would be no reduction whatever in the gross liabilities of the State. What did the Chancellor of the Exchequer propose to do under this Bill? He proposed to pay off £10,000,000 of Exchequer bonds. These bonds were created in 1900 by the right hon. Gentleman the Member for West Bristol when he was Chancellor of the Exchequer, and £14,000,000 would mature in December next. It was this £14,000,000 with which the right hon. Gentleman was going to deal. He was going to pay off £4,000,000 of that with money obtained from the Transvaal and from the Sinking Fund, and this particular section dealt with the remaining £10,000,000. The right hon. Gentleman, in his Budget speech, said that it was a limited funding transaction. It was a very limited funding transaction when they considered that the proposal was to pay off £10,000,000 of debt by creating £9,000,000 of new debt, for that would be the result at the end of the financial year. He did not think that that could be considered in any way a brilliant financial operation. The intention of the right hon. Gentleman the Member for West Bristol when he created these Exchequer bonds was that they were to be of a temporary nature, and he made a statement to that effect in his Budget speech of the following year, when he said— I have so arranged the borrowings hitherto-sanctioned by Parliament that they will mature from time to time at such intervals that it will be easy for anyone having charge of the finances of this country, if the Transvaal is in a position to give good security for a loan, to enable it to pay a reasonable contribution towards the cost of the war, and to raise a loan to be devoted towards paying off such portions of our borrowings as may be possible. That was the intention of the right hon. Gentleman the Member for West Bristol, and he thought it was the duty of the Chancellor of the Exchequer to have dealt with the Transvaal contribution in that clause of the Finance Act. It was rather strange that while they forced the Chinese Labour Ordinance through the Legislative Council, they had delayed the Ordinance which was submitted to that Council for the purpose of raising this £30,000,000 loan, of which they were to obtain a contribution of £10,000,000 per annum for three years.

He would also like to ask the Chancellor of the Exchequer what had become of the Chinese War Indemnity. The right hon. Gentleman the Member for West Bristol and the right hon. Gentleman the Member for Croydon distinctly promised that the contribution which they were to get from China in respect to the Chinese War Indemnity—estimated to amount to £6,000,000—would be applied to the reduction of the war debt. He understood that that indemnity had been transformed into an annual payment in the form of an annuity to this country, and that up to last year the payment had been devoted towards meeting the claims of private British citizens. Now, however, they would have a clear contribution, and he wished to ask the Chancellor of the Exchequer whether he intended to apply that, as promised by the right hon. Gentleman the Member for West Bristol, and the right hon. Gentleman the Member for Croydon, to the reduction of the debt. If that were so they ought to have some provision made in that clause for giving effect to that payment.

He did not hesitate to say that these proposals of the Government showed a great lack of courage on the part of the right hon. Gentleman the Chancellor of the Exchequer. He had had in the present year an unique opportunity for dealing with the national indebtedness. He could have dealt with the terminable annuities which matured next year, and he ought to have dealt with the contribution from the Transvaal. He would like to point out to the Committee what he did not think had been quite realised—namely, that the gross national liability amounted to close upon —800,000,000 sterling, exactly the amount at which our debt stood in 1867 after we had discharged the new debt created on account of the Crimean War. Yet to-day they had the Chancellor of the Exchequer under this section proposing to raise another £10,000,000 of debt. That was really what it came to, because these bonds were created only for a term of five years, and now, instead of renewing them for another term of five years, the right hon. Gentleman was proposing to renew them for a term of ten years, with an annual reduction of £1,000,000 sterling which would have equally applied had he added that as contribution to the Sinking Fund. In addition to that, he had led them into this peculiar position, that they were adopting a lottery system of annual drawings, which was entirely foreign to British finance. He did not think that the Chancellor of the Exchequer could say that this proposal had given him any advantage at all from a financial standpoint. He had had to borrow at a high rate of interest. It had not reduced the rate of interest; it had not really enticed the market to come forward to take up these bonds, and he thought the right hon. Gentleman could not fail to realise that it would have been better to have renewed these bonds, and to have applied a £1,000,000 increase to the Sinking Fund. For these reasons he begged to move that the subsection be omitted.

Amendment proposed— In page 3, line 19, to leave out Sub-section (1)."—(Mr. McCrae.)

Question proposed, "That the words proposed to be left out, to the word 'ten,' in line 22, stand part of the clause."

*COLONEL WILLIAMS (Dorsetshire, W.)

said the hon. Member had crowded a good many curious theories into his speech, some of which he would find it hard to justify when he was sitting behind a Chancellor of the Exchequer of his own side. In his opinion the course adopted by the Chancellor of the Exchequer in regard to this £10,000,000 was a bold and not a craven course. If there had been an innovation it was one which he was rather glad to see, because the right hon. Gentleman had established a new form of Sinking Fund. It was not in any way a lottery as the hon. Member opposite chose to call it, but instead of burdening the Chancellor of the Exchequer in future years with the repayment of £10,000,000 at one time, the right hon. Gentleman had increased the service of the Debt from £27,000,000 to £28,000,000 permanently, and had allotted £1,000,000 of that to paying off one of the £10,000,000 every year, with the result that the Chancellor of the Exchequer who happened to be in office when the operation was completed would find himself with a fixed debt-charge of £28,000,000 instead of £27,000,000 to deal with, and the £1,000,000 allocated for a limited period would be freed for the reduction of the Funded Debt. The hon. Member had spoken as if the paying off of £1,000,000 a year would effectually bar the Chancellor of the Exchequer from using the Transvaal war contribution—whenever it was received—for the reduction of debt. There were more millions of Unfunded Debt to be dealt with, and many ways in which the Transvaal contribution could be applied to the reduction of debt. He was astonished to hear the hon. Member blame the Chancellor of the Exchequer for not dealing with the terminable annuities which fell in next year. Surely one of the things most to the credit of the right hon. Gentleman was that he had resisted the temptation to do so, and that he had realised that sound finance required the finance of the year to be dealt with by the resources of the year. Hs hoped the Committee would not be led away by the contradictory arguments of the hon. Member, and that they would reject his Motion by a considerable majority, thus showing that they were grateful to the Chancellor of the Exchequer for having had the boldness to initiate a new form of paying off the Debt.

*MR. ASHTON (Bedfordshire, Luton

was sorry that the action of the Chancellor of the Exchequer had met with the approval of the hon. and gallant Gentleman, especially after the way in which this issue of Exchequer bonds had been received in the market. It had proved; costly experiment to the Exchequer. He agreed with his hon. friend that apart from, the war debt the floating debt of the country was far too large. It was perfectly true that £30,000,000 of it ought not to be considered as floating debt, seeing that it was a war loan, but the fact remained that the floating debt was something like £45,000,000, whereas a few years ago it was but a tenth of that amount. The fact was that Treasury bills, which used to be employed merely as a means of tiding over the lean periods of the year, were now being used in place of Funded Debt because of the difficulty of raising that debt. During the war they were obliged to raise a very large amount by Treasury bills, and that was a legitimate thing to do, but big houses still carried such a large amount of the Funded Debt that it was almost impossible now to market Consols in the City of London at anything like a reasonable price. But when the Chancellor of the Exchequer told them that by issuing this form of debt he was reducing the floating debt of the country he failed to see how he was doing it. On the contrary, it appeared to him that the Chancellor of the Exchequer in this case was merely creating a new and very objectionable form of debt. It would have been far better to have added this £10,000,000 to some existing form of debt than to have created a new form which was less marketable in the City.

The hon. and gallant Member opposite objected to the phrase lottery loan. That phrase was very rightly used of the transaction by the hon. Member for King's Lynn the other day. It was obviously nothing but a lottery loan, and it was not a very dignified position for the Chancellor of the Exchequer of this country to take up to issue a form of loan of the kind. It might be very well for a third-rate South American Republic, but it was certainly not the kind of debt which ought to be undertaken by a great country with a credit such as we possessed. A lottery loan was a very expensive article; it was not suitable for City purposes, neither was it suitable for the permanent investor, who wanted to know definitely what rate of interest he would receive and when he would be repaid. Then with regard to the City of London, bankers, insurance companies, bill brokers, and discounters were those who chiefly took up Exchequer bonds. Did the Chancellor of the Exchequer imagine for one moment that they liked this gambling transaction? No, they too preferred to know the exact rate of interest and the exact currency of the obligation. When they knew where they stood they were willing to pay the best market prices for an article when guaranteed by the Government, but when uncertainty prevailed as to the time of repayment they were not likely to run the risk for the same amount of money. The result had been that the Chancellor of the Exchequer had had to pay 3⅛per sent., whereas he might have got the money on Exchequer bonds at 2⅞per cent.—a very considerable difference indeed. That was not what he called wise finance, and he hoped that in case of future necessity the right hon. Gentleman would profit by the experience of the past and not seek to raise money in so expensive a way or in a manner incompatible with the dignity of a great country.


replying first to the Question of the hon. Member for East Edinburgh as to the Chinese war indemnity and the Transvaal war contribution, said that the earlier receipts in connection with the Chinese indemnity had been wholly devoted to the payment of private claims, delay in which might involve great hardship to individuals. He hoped a point had now been reached when some satisfaction would be received year by year on account of the Government claim. The exact amount of the claim was still the subject of diplomatic negotiation, and he did not think he could make definite proposals to the House until those negotiations had come to a conclusion. But he would say at once in the most positive form, in order to remove the anxiety of the hon. Member, that, in his opinion, whatever we might recover on that account ought undoubtedly to be devoted to the reduction of the Debt, and it was to that purpose that, so long as he was responsible, he would take care that it was applied. If anything was received on that account before he was able to explain the situation in full to the House and make definite proposals on the subject, the money would be held on suspense account until it could be applied to the reduction of the Debt. There need be no apprehension that he would be tempted to apply that money in relief of taxation or payment of the ordinary current expenses of the year. The money ought, undoubtedly, to be applied to the reduction of the Debt


Am I right in assuming that during the last two or three years we have received £300,000 a year, that that has been applied to the satisfaction of British claims, and that they have now all been met.


said he was speaking from memory, but he thought that until very recently the whole of what we had received had been devoted to the satisfaction of private claims. He believed there was at this moment a sum of money in our hands which had not been required for the satisfaction of those private claims but he also believed that the whole of the private claims had not yet been satisfied. The claims of individuals had been satisfied, but there were railway claims outstanding to which the same conditions did not necessarily apply as applied to the individual claims. By the former he meant the cases in which hardship would be caused to individuals if they did not receive their money at once. Probably the railway need not receive the full satisfaction of their claims at once, but might share with the British Government in the payments that now became due. At any rate, whatever money now accrued to the British Government would go to the reduction of the, Debt.

As regarded the Transvaal war contribution he had already explained in his Budget Speech the position of the Government, and he thought it would serve no useful purpose to go over the ground again. He agreed with the opinion to which expression had been given by the right hon. Gentleman the Member for West Bristol, that further discussion of the matter at the present stage was not likely to be conducive to the public advantage, or to facilitate the recovery of the contribution.

The hon. Gentleman the Member for Edinburgh had accused him of great lack of courage in dealing with the Debt, and of failing to take advantage of a great opportunity. A number of terminable annuities would fall in next year, and he understood that the contention of the hon. Gentleman was that he ought to have anticipated the falling-in of those annuities, and this year set up fresh annuities to cancel a further amount of debt. He was at a loss to conceive why the hon. Gentleman considered that that would have been a more courageous course than he had actually followed. If he had proposed to reduce the Sinking Fund or the amount of money available for the reduction of debt, he could have understood the charge of lack of courage, but he had taken exactly the opposite course. The operation which he was blamed for not undertaking was a purely paper transaction, which would not in fact reduce by one penny more than his own proposals the liabilities of this country or the amount of its debt. He had not thought it any part of his duty to anticipate what the Chancellor of the Exchequer might think fit to do next year. What he did think was a part of his duty—a duty which he had attempted to discharge—was to strengthen the provision made for the reduction of the Debt, but he did not think it would be wise to prejudge the decision of the Chancellor of the Exchequer next year as to whether the amount we had available for that purpose should be applied in one particular way rather than another. What it was expedient to do in a matter of this kind must depend on the circumstances existing at the time the operation had to be performed. He thought hon. Members were occasionally misled by the opinion that there was some peculiar sanctity about terminable annuities of this kind, and that a sinking fund wrapped up in terminable annuities was protected against interference or raiding by the House of Commons or the Chancellor of the Exchequer in a way that no other sinking fund was. They did not, in fact, afford any additional security. That view was confirmed by the fact that during the recent war in South Africa the House consented to suspend the whole of the Sinking Fund.


said it was only that part which was held by Government Departments.


said he thought the hon. Gentleman was in some confusion of mind. Life annuities, granted to individuals, constituted a contract between the State and the individual which could not be interfered with. But those were not the annuities about which the hon. Gentleman was talking. They were not affected in any way by the proposals which the hon. Gentleman brought before the Committee; of course the free operation of the Sinking Fund was really their first reserve. As to the allegation that he was not reducing the Debt at all, but, on the contrary, increasing it, if he reborrowed the same amount of money to pay off an old loan he did not increase the Debt, though if that were the whole operation he would not diminish it. But that was not the whole operation, and he had taken steps to diminish the Debt. The hon. Gentleman did not approve of the steps he had taken, and said that it would have been much better if he had renewed the bonds for five years. He had power to do that under the Exchequer Act, which gave power to raise money by Exchequer bonds not merely for the purposes of the Act, but for paying off sums raised under that Act. But the War Stock bonds stood on a different footing to those Exchequer bonds, although these Exchequer bonds were raised for the purpose of the war. The phraseology was necessarily confusing, and it was difficult to make his point clear, especially when hon. Members seized that particular opportunity to raise points which really were not germane to the particular matter under consideration.


(who had interjected the remark which elicited, these observations) said he thought that according to the letter of the Act the right hon. Gentleman was justified in the statement he had made, but he doubted whether that was the spirit of the Act.


said that as a general rule they had to interpret Acts of Parliament according to the letter. If they allowed themselves to interpret the spirit according to their own inclinations, probably the hon. Member and he would differ materially as to the spirit of some Acts of Parliament. The law gave the Treasury power to reborrow ad infinitum for the purpose of paying off debt. Having once raised money on Exchequer bonds, as soon as they fell due the Treasury could borrow the same amount again and could continue the operation to the end of time. It was indeed a complete circle which need never be broken. But it was quite clear it was not a desirable course, and it was not the intention of his right hon. friend when he passed that Act, for he hoped to be in a position by the time the bonds fell due to clear off the whole. He, however, was not in a position himself to do that, but he thought he ought to make provision to clear the bonds in a fixed and limited period and by a regular systematic process. That was really the main object which influenced him in pursuing the course he recommended to the House, and in making him select the form of security he did. There was obvious inconvenience in having so large a sum as £14,000,000 falling due on a single day unless he had reason to anticipate that about that time he would have a similar amount available for its extinction. To meet such a liability it would be necessary to accumulate money in advance, and while it was so accumulating the interest on it would be lost; or, having failed to accumulate the money in advance, it would be necessary on the day it fell due to go to the market and raise the whole sum. He need not remind hon. Members that the month of December was not usually a particularly favourable moment to go to the market for a loan. He had therefore to make arrangements in advance. As regarded £4,000,000 of the debt outstanding, he hoped to be in a position to extinguish that altogether, and as regarded the other £10,000,000 he was obliged to provide for its renewal, but he made that provision subject to the repayment of the debt by regular annual instalments within a period of ten years.

The hon. Gentleman who spoke last, with great vehemence and almost passion, denounced the step he had taken as having some immoral taint about it, that it was a pure lottery unpopular with investors and with persons in the City of London, and quite unworthy of the British Government. He could only say that the British Government had not thought it unworthy of itself to issue loans with similar provisions, and the House of Commons had not thought it unworthy of the dignity of the country to sanction those loans, and had provided that in regard to municipal enterpris in certain cases exactly similar arrangements could be made.


Were these other bonds issued at par? They are not lottery bonds if issued at par.


said they were not lottery bonds whatever price they were issued at. The Egyptian Loan was not issued at par. Surely it was a gross abuse of language to describe these bonds as lottery bonds, and to suggest that investment in them was only a gambling transaction. It was no more so than an investment in Consols. What was the alternative step? If he had made a fresh issue of Consols he would have had to issue them very much below par, and he would have further depressed Consols. Houses that tendered for these Exchequer bonds had to take account of the liability of the bonds to be drawn at the rate of one-tenth each year. They had to average their tender on the assumption that the average life of a bond would be five years. It was a very simple calculation, and was in no sense a gambling transaction; and it was absurd to suggest that there was anything likely to corrupt the morals of the City or the large financial houses in Paris which dealt with millions on the same principle, or that there was anything derogatory to the dignity of the country in issuing bonds of this nature. He had been told he was not reducing the Debt by this operation at all.


The floating debt.


I am paying off £4,000,000, at any rate.


I was only referring to the £10,000,000.


said he was reducing the £10,000,000 by £1,000,000 a year instead of allowing it to go on for ever. The only question relevant to the present issue was whether he had or had not complied with statutory requirements. He was not concerned at that moment to defend the policy which Parliament had laid down in the Naval and Military Works Acts. The only question that could be relevant to the present issue was whether he had or had not complied with the statutory requirements of Parliament. His views on the matter were well known to the Committee, for he had explained them on more than one occasion. The whole matter had been carefully considered by the House on the Military and Naval Works Acts. It was obviously impossible, and he believed it would be out of order, to discuss the policy embodied in these Acts, or the actual expenditure provided in them on an occasion like the present. He thought he had said enough to meet the charges which the two hon. Gentlemen had levelled against him. The proposal he had made was one which met the necessities confronting them in such a way as to secure a considerable immediate reduction of the floating debt which had been inherited from the war. It secured, in addition, a regular diminution of the floating debt year by year until another £10,000,000 of it was extinguished. At the same time it did not draw on the resources which had hitherto been devoted to the payment of the Debt. The Sinking Fund had been specially increased in order to make provision for that debt. The proposal had met on the whole with favour in this Committee when he first expounded it, and he believed it had met with approval elsewhere. When it was realised that in taking this step the Government were recognising an obligation which was incumbent upon them, it would be felt that they had chosen the best means of providing for its fulfilment.

MR. CAWLEY (Lancashire, Prestwich)

said he wished to say a word or two on the question of the South African contribution. It would have been unnecessary for him to make any remarks on the point at all had it not been for the circumstance that on his side of the House opinions had been expressed on the Transvaal loan which he utterly objected to.

MR. DILLON (Mayo, E.)

rose to order, and asked whether it would be more for the convenience of the House that the question of the Transvaal contribution should be discussed on the clause.


It would be more convenient for the Committee that the discussion should take place on the clause.


said the Chancellor of the Exchequer had referred to the question.


That was a passing comment, and I did not wish to interrupt the right hon. Gentleman.


said he would refer to the question when the clause came before the Committee.

MR. MCKENNA (Monmouthshire, N.)

said he would state in a sentence why some hon. Members had called these lottery bonds. The essence of a lottery transaction was that those engaged in the transaction drew lots. What the Chancellor of the Exchequer proposed was that the holders of these bonds should draw lots.


That is done in transactions in this House.


said that was so, but no pecuniary advantage was given in that way. The essence of this proposal was that pecuniary advantage was obtained by those who were lucky in the lottery.


That happens very often on Tuesdays and Wednesdays.


There is no pecuniary advantage. There is no law against lotteries where no prize is given.


Is not a fiscal debate a prize?


When the Prime Minister runs-away! What happened in regard to these bonds was that certain bonds on being drawn were redeemed at par. The person who was first successful in the lottery, and whose bonds were redeemed, got a greater financial advantage than the person who was unsuccessful in the drawing, and so on each year in turn until the last of the bonds were drawn. If that did not constitute what was ordinarily understood by the word lottery, he failed to understand what a lottery meant. The term lottery as applied to these bonds was strictly accurate in letter and spirit.

SIR FREDERICK BANBURY (Camberwell, Peckham)

said the hon. Gentleman was mistaken in saying that the holders of these bonds drew lots. The lots were drawn for them. The hon. Gentleman also said that there would be a gain to the holders by having the bonds drawn early. That would depend on the state of the market. If these bonds stood at 101 there would be a loss.


It is equally a lottery.


said the system of drawing bonds was extremely common. It was practised by every Government in Europe and in all parts of the world. The only Government which had not hitherto practised it on its own particular stock was the British Government. But they had practised it upon the guaranteed loans in the shape of the Egyptian Loan and the Greek Loan. The only objection to this loan which he could see was that we should not get such a good price in the market because these bonds were not so popular. If the Chancellor of the Exchequer wished to redeem this particular loan within ten years he would have been in an awkward position if he had adopted the other course, because he would have had to deal with it in a way which would have disturbed the money market.


The hon. Baronet entirely forgets that we have £21,000,000 of Treasury bills which the Chancellor of the Exchequer can redeem. That would not upset the money market.


said that only made it worse, because the Government were continually borrowers or lenders in what was called the short-money market. The taking of £10,000,000 out was an advantage to the money market not only of London but of the world.


said he took an entirely different view from the hon. Member as to the difficulties of a Chancellor of the Exchequer who had £1,000,000 at his disposal. The hon. Member seemed to think that the difficulties were insuperable. He could always buy Exchequer bonds.


What I said was that if this particular £1,000,000 had to be ear-marked for a special purpose it would be difficult to know how to employ it to advantage, and that it would be better to use it in the way proposed.


said that supported his view. If the money was ear-marked it went to the purpose for which it was ear-marked. He believed he was the first to call these bonds lottery bonds. He did so for the simple reason that there was a direct element of chance in them. The objection to these lottery bonds was that they did not give the advantages of a lottery. The advantage of a lottery was that it appealed to everybody at large, to rich and poor, and especially the poor man in the street, but the appeal here was necessarily restricted, In the State lotteries abroad certain people who were successful at the drawings did get a great amount of profit out of the vicious propensities of their fellow-citizens. There was great need for meeting the Unfunded Debt, which was the worst form of debt we had at the present moment. He had worked it out and he found that the interest was about £3 5s. per cent. [An HON. MEMBER: £3 4s. 4d.] It was an onerous debt, and it must seriously affect the money market. He gave the Chancellor of the Exchequer considerable credit for the effort he had made to deal with it. Reference had been made to the powers conferred by the Act of 1900. The Exchequer bonds authorised by that Act were really war bonds. They would not have been issued but for the war. He had carefully studied the Act and he was bound to say that by the strict interpretation of the Act the right hon. Gentleman was not unjustified in saying that these bonds should be paid off in 1915 and not in 1910. The net result of that was that the repayment of the debt was really extended for five years. Now, as he made out, the man who held these bonds which were to be paid off the first year, would receive interest at the rate of rather over 4 per cent., while the man who held bonds to be paid off in ten years would receive interest at a considerably less rate. The average interest, he understood, would be 3¼ or 3⅛ per cent. Well, that was a very high rate of interest to pay, because we were a 2¾ per cent. country at this moment, as was shown by the price of Consols.

MR. SYDNEY BUXTON (Tower Hamlets, Poplar)

said that reference had been made as to whether these bonds were or were not lottery bonds. They might be classed as lottery bonds because one investor at one period got more interest than another investor at another period. The question whether they were issued at or below par made them more or less lottery bonds. He could say that as long as the present Government was in office the bonds would not go beyond par. The particular objection which he had to these bonds was, as the hon. Baronet the Member for Peckham, who was a recognised authority in regard to financial questions, had stated, that they were an unpopular form of investment. That was shown in a two-fold way. The application for them was very limited, and they were issued at a very heavy price to the Exchequer. As his hon. friend behind him had said, it could not be an advantage, having regard to the money market, to issue a new form or denomination of bonds. Already we had on the money market, in respect to the Unfunded Debt, far too many different denominations of stocks. Everybody knew that the larger the stock the easier it was to deal in it; and, therefore, the better the price obtained so far as the Government was concerned. Therefore, it could not be to the advantage of the Government, to the money market, or the credit of the country to issue a denomination of stock which was unpopular. There was another matter to which he attached considerable importance. He congratulated the Chancellor of the Exchequer on having added £1,000,000 to the fund for the extinction of the Debt. But, in his opinion, it would have been better if the right hon. Gentleman had not tied his hands in the manner he had done in applying that £1,000,000 to the Sinking Fund instead of to the floating debt.

MR. COHEN (Islington, E.)

said that the hon. Member for King's Lynn was mistaken in believing that the interest on these bonds would amount to £3 5s. to £3 10s. per cent. It would not be more than £3 2s. Speaking as one who was very much in sympathy with all the observations which had been made as to the necessity for a speedy reduction of the Debt, he approved of the mode of repayment outlined in the Finance Bill because he believed it would secure the automatic action of the depletion of the Debt more than if the matter were in the hands of the Chancellor of the Exchequer. The present Chancellor of the Exchequer said that it was his wish to redeem the Debt as much as possible; but, for himself, he liked much better an arrangement which was concluded between the State and the bond-holder, and which removed the control from the Chancellor of the Exchequer in the redemption of the Debt. His hon. friend spoke of the Debt being increased by this five years arrangement. Certainly it would be increased. Nobody believed that these bonds were going to be paid off by the year 1910. They had had already experience of the disappointment of expectations of the repayment of debt. His hon. friend said that if Exchequer bonds, instead of these bonds, had been issued, they could have been issued on much lower terms; and in proof of that he quoted the Stock Exchange List of the previous day. That reminded him of the old saying that "If only I knew to-day what you will know to-morrow, how much richer both of us would be." He thought the hon. Member must perceive that his argument was misleading. In his opinion the arrangement made by the Chancellor of the Exchequer was an excellent one; and he liked it all the better because it was novel and would popularise this form of the repayment of the Debt.


said that the question whether these bonds were lottery bonds was so obscure that it ought to be ignored. He himself would have preferred that these bonds should have been issued for £20,000,000, to be redeemed by £2,000,000 each year, instead of £10,000,000 to be redeemed by £1,000,000 each year. He agreed also that the number of the different issues and the complicated way in which the Debt redemption was arranged was a great misfortune. It required many Questions, and the issue of many Papers, to get out the fact that this year the Debt had only been reduced by £3,000,000. Any one looking at the ordinary Returns would have been led to suppose that the amount of the Debt paid off was £10,000,000. He thought it was not creditable to this country that we were only paying off debt to the extent of £3,000,000 a year. He thought that the £10,000,000 a year, which most people thought we should pay, was the sum which ought to be paid. Most people who read the speech of the Chancellor of the Exchequer thought

we were doing much more than we were, and he strongly urged that the House should take this matter in hand. In the interest of the Army, the Navy, the defence of the country, and of every other interest, financial and political, we should really pay off a much larger sum than this pittance of £3,000,000. In bygone days, when the country was not so rich, those responsible for the finances of the country made much greater efforts and the country was now deriving the benefit of them. It would be a sign of the degeneration, physical, mental, and moral of the present generation if, in the repayment of debt, we could not do something far greater than at present.

Question put.

The Committee divided:—Ayes, 205; Noes, 170. (Division List No. 177.)

Agg-Gardner, James Tynte Corbett, A. Cameron (Glasgow) Gretton, John
Agnew, Sir Andrew Noel Corbett, T. L. (Down, North) Greville, Hon. Ronald
Allhusen, Augustus Henry Eden Cox, Irwin Edward Bainbridge Gunter, Sir Robert
Allsopp, Hon. George Craig, Chas. Curtis (Antrim, S. Hamilton, Marq. of (L'nd'nderry
Anson, Sir William Reynell Cross, Herb. Shepherd (Bolton) Hardy, L. (Kent, Ashford)
Arnold-Forster, Rt Hn. Hugh O. Dalkeith, Earl of Hare, Thomas Leigh
Arrol, Sir William Dalrymple, Sir Charles Harris, F. Leverton (Tynem'th
Atkinson, Rt. Hon. John Davenport, William Bromley Haslam, Sir Alfred S.
Aubrey-Fletcher, Rt. Hn. Sir H. Dickinson, Robert Edmond Heath, Sir J. (Staffords. N. W.)
Bagot, Capt. Josceline FitzRoy Dickson, Charles Scott Heaton, John Henniker
Bain, Colonel James Robert Dimsdale, Rt. Hn. Sir Joseph C. Helder, Augustus
Baird, John George Alexander Dixon-Hartland, Sir Fred Dixon Hickman, Sir Alfred
Balcarres, Lord Doughty, Sir George Hoare, Sir Samuel
Baldwin, Alfred Douglas, Rt. Hon. A. Akers- Hogg, Lindsay
Balfour, Rt. Hn. A. J. (Manch'r.) Doxford, Sir William Theodore Hope, J. F. (Sheffield, Brightside
Balfour, Capt. C. B. (Hornsey) Dyke, Rt. Hn. Sir William Hart Hoult, Joseph
Balfour, Rt Hn. Gerald W (Leeds Egerton, Hon. A. de Tatton Howard, J. (Midd., Tottenham
Balfour, Kenneth R. (Christch. Fardell, Sir T. George Hozier, Hon. J. Henry Cecil
Banbury, Sir Frederick George Fellowes, Rt Hn Ailwyn Edward Hudson, George Bickersteth
Banner, John S. Harmood- Fergusson, Rt. Hn. Sir J (Man'cr. Hunt, Rowland
Barry, Sir Francis T. (Windsor) Finch, Rt. Hon. George H. Hutton, John (Yorks. N. R.)
Bartley, Sir George C. T. Finlay, Sir R B. (Inv'rn'ss B'ghs. Jebb, Sir Richard Claver house
Bignold, Sir Arthur Fisher, William Hayes Kennaway, Rt. Hn. Sir John H.
Bingham, Lord FitzGerald, Sir Robert Penrose Kenyon, Hon. Geo. T. (Denbigh
Blundell, Colonel Henry Fitzroy, Hn. Edward Algernon Kenyon-Slaney, Rt. Hn. Col. W.
Boscawen, Arthur Griffith Flower, Sir Ernest Kerr, John
Boulnois, Edmund Forster, Henry William Kimber, Sir Henry
Bowles, T. Gibson (King's Lynn Foster, Philip S. (Warwick, S. W. Knowles, Sir Lees
Brodrick, Rt. Hon. St. John Gardner, Ernest Lambton, Hn. Frederick Wm.
Brown, Sir Alex. H. (Shropsh.) Godson, Sir Augustus Fredrk. Law, Andrew Bonar (Glasgow)
Brymer, William Ernest Gordon, Hn. J. E. (Elgin & Nairn Lawson, John Grant (Yorks. N R
Campbell, J. H. M. (Dublin Univ. Gordon, J. (Londonderry, S.) Lee, Arthur H. (Hants, Fareham
Carson, Rt. Hn. Sir Edw. H. Gordon, Maj Evans (T'rH'mlets Legge, Col. Hon. Heneage
Cavendish, V. C. W. (Derbyshire) Gore, Hon. S, F. Ormsby Leveson-Gower, Frederick N. S.
Chamberlain, Rt Hn J. A. (Worc. Gorst, Rt. Hn. Sir John Eldon Llewellyn, Evan Henry
Chapman, Edward Goulding, Edward Alfred Lockwood, Lieut.-Col. A. R.
Clive, Captain Percy A. Graham, Henry Robert Long, Rt. Hn. Walter (Bristol, S
Cochrane, Hon. Thos. H. A. E. Greene, Sir E W (B'ry S Edm'nds Loyd, Archie Kirkman
Cohen, Benjamin Louis Greene, W. Raymond (Cambs.) Lucas, Col. Francis (Lowestoft
Collings, Rt. Hon. Jesse Grenfell, William Henry Lyttelton, Rt. Hon. Alfred
Macdona, John Cumming Pryce-Jones, Lt.-Col. Edward Taylor, Austin (East Toxteth)
Maconochie, A. W. Purvis, Robert Thorburn, Sir Walter
M'Arthur, Charles (Liverpool) Pym, C. Guy Thornton, Percy M.
M'Iver, Sir Lewis (Edinburgh W. Rasch, Sir Frederic Carne Tollemache, Henry James
Majendie, James A. H. Ratcliff, R. F. Tomlinson, Sir Wm. Edw. M.
Marks, Harry Hananel Reid, James (Greenock) Tritton, Charles Ernest
Maxwell, Rt. Hn Sir H. E. (Wigt'n Remnant, James Farquharson Tuff, Charles
Melville, Beresford Valentine Renwick, George Tufnell, Lieut.-Col. Edward
Meysey-Thompson, Sir H. M. Ridley, S. Forde Vincent, Sir Edgar (Exeter)
Mildmay, Francis Bingham Ritchie, Rt. Hon. Chas. Thomson Walker, Col. William Hall
Montagu, G. (Huntingdon) Roberts, Samuel (Sheffield) Walrond, Rt. Hn. Sir William H.
Moon, Edward Robert Pacy Robertson, Herbert (Hackney) Welby, Lt.-Col. A. C. E (Taunton
Moore, William Rollit, Sir Albert Kaye Welby, Sir Chas. G. E. (Notts.)
Morgan, David J(Walthamstow Round, Rt. Hon. James Wharton, Rt. Hn. John Lloyd
Morpeth, Viscount Royds, Clement Molyneux Whiteley, H. (Ashton und Lyne
Morrison, James Archibald Rutherford, W. W. (Liverpool) Whitmore, Charles Algernon
Morton, Arthur H. Aylmer Sackville, Col. S. G. Stopford Wilson, A. Stanley (York, E. R.
Murray, Chas. J (Coventry) Sadler, Col. Samuel Alexander Wilson, John (Glasgow)
Murray, Col. Wyndham (Bath) Samuel, Sir Harry S. (Limehouse Wilson-Todd, Sir W. H. (Yorks
Myers, William Henry Sharpe, William Edward T. Wodehouse, Rt. Hn. E. R (Bath
O'Neill, Hon. Robert Torrens Sloan, Thomas Henry Wolff, Gustav Wilhelm
Parker, Sir Gilbert Smith, Rt Hn J. Parker (Lanarks Wrightson, Sir Thomas
Parkes, Ebenezer Spear, John Ward Wylie, Alexander
Pease, Herbert Pike (Darlington Stanley, Hn. Arthur (Ormskirk Wyndham, Rt. Hon. George
Peel, Hn. Wm. Robert Wellesley Stanley, Edward Jas. (Somerset) Yerburgh, Robert Armstrong
Percy, Earl Stanley, Rt. Hn. Lord (Lancs.)
Platt-Higgins, Frederick Stewart, Sir Mark J. M 'Taggart TELLERS FOR THE AYES—Sir
Plummer, Sir Walter R. Stirling-Maxwell, Sir John M. Alexander Acland Hood
Powell, Sir Francis Sharp Stock, James Henry and Viscount Valentia.
Pretyman, Ernest George Stroyan, John
Abraham, William (Rhondda) Dunn, Sir William Kilbride, Denis
Allen, Charles P. Ellice, Capt. E C (S. Andrw's Bghs Kitson, Sir James
Austin, Sir John Ellis, John Edward (Notts.) Labouchere, Henry
Barlow, John Emmott Emmott, Alfred Lambert, George
Barran, Rowland Hirst Evans, Sir Francis H. (Maidstone Lamont, Norman
Barry, E. (Cork, S.) Fenwick, Charles Law, Hugh Alex. (Donegal, W.
Bell, Richard Ferguson, R. C. Munro (Leith) Lawson, Sir Wilfrid (Cornwall)
Benn, John Williams Ffrench, Peter Layland-Barratt, Francis
Blake, Edward Field, William Leese, Sir Joseph F. (Accrington)
Boland, John Findlay, Alexander (Lanark, N E Leigh, Sir Joseph
Brand, Hon. Arthur G. Flavin, Michael Joseph Leng, Sir John
Brigg, John Flynn, James Christopher Levy, Maurice
Bryce, Rt. Hn. James Foster, Sir Walter (Derby Co. Lloyd-George, David
Buchanan, Thomas Ryburn Gladstone, Rt. Hn. Herbert John Lundon, W.
Burke, E. Haviland Goddard, Daniel Ford MacNeill, John Gordon Swift
Burns, John Grey, Rt. Hn. Sir E. (Berwick) MacVeagh, Jeremiah
Burt, Thomas Griffith, Ellis J. M'Arthur, William (Cornwall)
Buxton, Sydney Charles Guest, Hon. Ivor Churchill M'Fadden, Edward
Caldwell, James Hammond, John M'Hugh, Patrick A.
Cameron, Robert Harcourt, Lewis M'Kenna, Reginald
Causton, Richard Knight Hayden, John Patrick M'Killop, W. (Sligo, North)
Cawley, Frederick Healy, Timothy Michael Mansfield, Horace Rendall
Cheetham, John Frederick Helme, Norval Watson Mooney, John J.
Clancy, John Joseph Hemphill, Rt. Hon. Chas. H. Morgan, J. Lloyd (Carmarthen
Craig, Robert Hunter (Lanark Henderson, Arthur (Durham) Moss, Samuel
Crean, Eugene Higham, John Sharp Murphy, John
Cremer, William Randal Hobhouse, C. E. H. (Bristol, E.) Nannetti, Joseph P.
Crombie, John William Holland, Sir William Henry Nolan, Col. John P. (Galway, N.)
Dalziel, James Henry Hope, John Deans (Fife, West) Nolan, Joseph (Louth South)
Davies, M. Vaughan (Cardigan Hutchinson, Dr. Chas. Fredk. Nussey, Thomas Willans
Delany, William Hutton, Alfred E. (Morley) O'Brien, James F. X. (Cork)
Devlin, Chas. Ramsay (Galway Jacoby, James Alfred O'Brien, Kendal (Tipperary Mid
Dewar, John A. (Inverness-sh. Johnson, John O'Brien, Patrick (Kilkenny)
Dilke, Rt. Hn. Sir Charles Joicey, Sir James O'Brien, P. J. (Tipperary, N.)
Dillon, John Jones, Leif (Appleby) O'Connor, James (Wicklow, W.
Donelen, Captain A. Jones, William (Carnarvonshire O'Connor, John (Kildare, N.)
Doogan, P. C. Joyce, Michael O'Donnell, John (Mayo, S.)
Douglas, Charles M. (Lanark) Kearley, Hudson E. O'Dowd, John
Duncan, J. Hastings Kennedy, Vincent P. (Cavan, W O'Kelly, James (Roscommon, N
O'Mara, James Russell, T. W. Thomas, J A (Glamorgan, Gower
O'Shaughnessy, P. J. Samuel, Herb. L. (Cleveland) Toulmin, George
Parrott, William Schwann, Charles E. Walton, Joseph (Barnsley)
Partington, Oswald Seely, Maj. J. E. B. (Isle of Wight Warner, Thomas Courtenay T.
Perks, Robert William Shackleton, David James Wason, Eugene (Clackmannan
Pirie, Duncan V. Sheehan, Daniel Daniel Wason, John Cathcart (Orkney
Power, Patrick Joseph Shipman, Dr. John G. White, George (Norfolk)
Price, Robert John Slack, John Bamford White, Luke (York, E. R.)
Rea, Russell Smith, Samuel (Flint) Whiteley, George (York, W. R.
Reddy, M. Soares, Ernest J. Whitley, J. H. (Halifax)
Redmond, John E. (Waterford Spencer, Rt. Hn. C. R. (Northants Whittaker, Thomas Palmer
Reid, Sir R. Threshie (Dumfries Stanhope, Hon. Philip James Wilson, Fred. W. (Norfolk, Mid.)
Richards, Thomas (W Monm'th Stevenson, Francis S. Wilson, John (Durham, Mid.)
Rickett, J. Compton Strachey, Sir Edward Young, Samuel
Robertson, Edmund (Dundee) Sullivan, Donal Yoxall, James Henry
Robson, William Snowdon Taylor, Theodore C. (Radcliffe)
Roche, John Tennant, Harold John TELLERS FOR THE NOES—
Roe, Sir Thomas Thomas, Sir A. (Glamorgan, E. Mr. M'Crae and Mr. Ashton.
Runciman, Walter Thomas, David A. (Merthyr)

said he desired to move the two Amendments he had put upon the Paper in the form of one Amendment. He did not wish, in moving this Amendment, to go over the ground already covered on the Second Reading of the Bill at any length, he would merely recapitulate briefly the arguments then stated. Two years ago the fixed debt-charge was established at £27,000,000. At that time they argued that it should be £28,000,000. The right hon. Gentleman the Chancellor of the Exchequer might no doubt say that when he now proposed to put the fixed debt-charge at £28,000,000, hon. Members were not satisfied, but wanted it increased to £29,000,000, but the position had changed, and the £28,000,000 now were only as effective as the £27,000,000 two years ago. Every argument then used against the debt-charge being less than £28,000,000 was valid now against its being less than £29,000,000. Two years ago we thought to get £34,000,000 from the Transvaal, which was to be used in repayment of the Debt. £1,000,000 of that was to be obtained in the course of this year, and that was to be applied in reduction of the Debt. Of the remaining £33,000,000 we had received £3,000,000, which had not been used in reduction of debt, but to make up the deficiency of revenue in 1904. The remaining £30,000,000 we had not seen. Of the £34,000,000 anticipated by the right hon. Gentleman the Member for Croydon in 1903, the Chancellor of the Exchequer was thus only able to use £1,000,000 this year for the purpose of the reduction of debt, and therefore we were £33,000,000 worse off than when the right hon. Gentleman the Member for Croydon fixed the debt-charge at £27,000,000. Had that £33,000,000 been received we should have been saved interest which we now had to pay to the extent of £920,000 a year, which was practically the equivalent of the £1,000,000 now proposed to be added by the Chancellor of the Exchequer, so that in fact the right hon. Gentleman was only making up the excess which we now had to pay beyond the amount anticipated by the right hon. Member for Croydon in 1903. To-day we had the same Sinking Fund available out of a fixed debt-charge of £28,000,000 as was anticipated by the right hon. Member for Croydon in 1903 would be obtained for a fixed debt-charge of £27,000,000. whilst the total amount of the Debt stood at £33,000,000 more than it would have done had the right hon. Gentleman's anticipations been realised. It was not enough for the Chancellor of the Exchequer to say the total provision was now larger than it had ever been, nor was it sufficient to say the percentage was larger in proportion to the total debt.

There were other points to be taken into consideration, and those he wished shortly to bring before the Committee. First, there was the present price of Consols. Our credit stood too low. The high price of Consols was given in 1899 by the Chancellor of the Exchequer of that time as a reason for reducing the fixed debt-charge from £25,000,000 to £23,000,000. The reverse of the argument would apply to-day. With Consols standing at 90, it was our duty to make any reasonable sacrifice to raise the price to par. Power to borrow at a low rate was one of the best of national defences. For the purpose of renewing Treasury and Exchequer bonds the Chancellor of the Exchequer was every year the largest borrower in the market. In the course of the present year he would have to borrow at least £40,000,000, mainly for the purpose of renewing old debt. Last year the money was borrowed at an average rate of £3 4s. 4d. per cent., and the national credit standing at about the same level now as then, it was reasonable to assume that a similar rate of interest would obtain this year. Consols at their present price yielded to the investor £2 15s. 6d. per cent., but they were largely in the hands of holders who were not likely to come into the market; and consequently Consols were at a much higher level than would be indicated by the rate at which the Chancellor of the Exchequer could borrow on bills or bonds. What would be the effect if the right hon. Gentleman had to borrow a capital sum in Consols? At the very best he would have to borrow at the same rate as for bills or bonds, which would mean that the Consols would have to be raised not at 90, but at 80. That showed that by allowing the national credit to drop so low we were running a very grave risk in the event of war. Vast sums of money were spent every year during time of peace simply for the purpose of being ready for war. It was just as important for purposes of defence that the national credit should stand high, and he submitted that it would be well worth while to spend one or two millions more a year in buying Consols in the open market in order to force Consols at least up to par, so that the national credit might stand again on a 2½ per cent. basis. By paying £3 4s. 4d. instead of £2 10s. for interest there was a loss of 14s. per cent., representing £290,000 a year on the £40,000,000, which had to be borrowed, and this sum would be saved automatically if the necessary sacrifices were made to bring the Sinking Fund up to a proper level.

His second point was that we were not in fact paying off debt at all at the present time. The Chancellor of the Exchequer had stated that during the current year debt would be paid off to the extent of £3,000,000. There was provided in the fixed debt-charge a sum of £8,400,000 for the purpose of the Sinking Fund, and £1,600,000 would be provided on the Votes, making £10,000,000, and the right hon. Gentleman had thrown in another £1,000,000 which was to be received from the Transvaal. Against this total of £11,000,000 there was new borrowing to the amount of £8,000,000, leaving a net reduction of debt of £3,000,000. But it was not paying oft debt in the ordinary sense if assets were used for the purpose. The real amount by which the Chancellor of the Exchequer proposed to reduce debt this year was only £2,000,000 because the £1,000,000 from the Transvaal was an existing capital asset. So far from reducing debt since the war we had not been paying our way, with the result that three years after the war we should be actually £2,000,000 worse off than at the close of the war. That was not a satisfactory position for the country to be in. There were still over £14,000,000 to be borrowed on capital liabilities, so that for at least another two years the Chancellor of the Exchequer would go on borrowing, and it was not too much to say that at the close of 1908 debt would not have been reduced during the preceding five years by any appreciable sum at all. It had to be remembered that all the purposes for which money was now borrowed used to be satisfied out of revenue, and if the present system were continued it would ultimately mean that while an average amount of £7,000,000 a year was being borrowed, we should be repaying in interest and sinking fund on the total sum of such borrowings at least an equal amount. Thus the system would have to be brought to a close, but with what result to the taxpayer of the future? He would be saddled with interest and sinking fund on the borrowed money to the extent of not less than £3,000,000 a year, and he would have at the same time to meet out of revenue all those purposes for which money was now borrowed He submitted that that was a ground for a greater effort being made, so long as the borrowings in respect of capital liabilities continued, to increase the total amount of the Sinking Fund.

His third point was the inadequacy of the present Sinking Fund. In 1875–76, when the Debt stood at about the same figure as now, but the revenue was only half as large, Sir Stafford Northcote put the fixed debt-charge at £28,000,000. In the present year we were making a sacrifice of £2,000,000 for the reduction of debt. In Sir Stafford Northcote's time, with half the revenue, the sacrifice was £3,500,000, so that even if the Sinking Fund were extended by £1,000,000, as he proposed, the level of sacrifice attained by the taxpayers of 1875–76 would not have been reached. It had to be remembered that future wars would be vastly more expensive than past wars had been, and consequently if new debt had to be incurred for war purposes it would be in far larger amounts than hitherto. That meant that a comparison of the provision made for Sinking Fund in former years and the provision made today was not a useful comparison. Our resources for the repayment of interest and debt were far greater to-day than thirty years ago, and we ought to be willing to make greater sacrifices. This was not at all a Party question. Economists on both sides agreed that sufficient sacrifices were not being made at present, but their criticisms, valuable though they were, would never be effective unless they were backed by votes. He believed that in the present condition of the House of Commons, if hon. Members opposite who had spoken strongly on this question merely threatened to support their speeches by their votes they would get their way in the matter. Savings could admittedly be made this year on Army expenditure, and by such savings the provision for the reduction of debt could easily be increased by £1,000,000. He appealed to economists on both sides to insist that the Government should not be satisfied with a fixed debt-charge of £28,000,000 as now proposed. He begged to move.

Amendment proposed— In page 4, line 2, to leave out the word twenty-eight' and insert the words 'twenty-nine million pounds,' where of one million pounds shall be paid by the Commissioners of Inland Revenue in such manner, by such payments, and under such regulations as the Treasury direct, to the Commissioners of the National Debt out of the proceeds of the estate duty."—(Mr. McKenna.)

Question proposed, "That the word 'twenty-eight' stand part of the clause."


said that if he remembered rightly, at an earlier stage of the proceedings, the Opposition, led by right hon. Gentlemen on the Front Bench, instead of supporting the endeavour the Government were making to increase the Sinking Fund, went into the lobby against any increase of the fixed debt-charge. He need say very little about the Amendment itself, as probably the form in which it appeared on the Paper was dictated more by a desire to get round the rules of the House than by admiration of its exact wording. The two parts of the Amendment were inconsistent the one with the other. By Section 1 of the Sinking Fund Act, 1875, the permanent annual charge was directed to be charged to and issued out of the Consolidated Fund, and that would be inconsistent with the procedure commended in the second part of the Amendment, which also was open to the objection—and he was surprised that the hon. Member should be guilty of such fiscal heresy—that it attempted to intercept revenue before it reached the Exchequer. If the Amendment were put forward on its merits those observations would be sufficient, probably, in the estimation of the hon. Member himself, to dispose of it. The Amendment, however, was put forward not on its merits, but as a vehicle for the suggestion that the amount devoted to the reduction of debt in the present year was insufficient. The hon. Member had dealt once again with the Transvaal contribution, but he did not propose to follow him in that, and he regretted that there should be further discussion upon it at the present time, because it was understood that it should be dealt with on the Motion that the clause stand part of the Bill. ["No."] At any rate, at the present stage of the discussion he did not wish to add anything to what he had already said upon that subject.

It was said that it was a most urgent thing that they should make a larger contribution to the reduction of the National Debt, and one hon. Member had suggested that he should have used the whole of his surplus for that purpose. He thought an increased contribution for this purpose was eminently desirable and indeed urgent, but if they pressed this argument for a high Sinking Fund too far they might defeat the object they had in view, because they found it difficult to maintain steadily even at a reasonable amount. At a time when taxation was already so high he could only repeat that in his opinion he thought he had held the scales fairly between conflicting interests by devoting an additional £1,000,000 to this purpose during the current year.


said he agreed with the hon. Member for Monmouth that the strength of a nation depended not so much upon its warlike forces as upon its financial resource. He considered, therefore, that the position of this country had been considerably weakened by its present financial position as compared with its position five years ago. Our Debt was not only much larger than it ought to be; but larger than it was a year ago. If the Chancellor of the Exchequer had adhered to all the taxation enforced a year ago he thought the Opposition would not have done unwisely if they had followed him into the lobby in support of retaining taxation in order that the Debt might have been by so much reduced. To show how important the financial resources of the nation were, he would instance the course of the war in the Far East, and the constant anxiety of the Japanese and Russian Governments, not so much to maintain the number and standard of their forces, but to borrow a sufficient amount of money at a low rate of interest. And it was the extraordinary and complete recovery of the financial position of France which enabled her to shake off the yoke imposed upon her by Germany and to resume her place among the foremost countries of the world. What had been instrumental in enabling us to take, a foremost place in the councils of the world had been rather our extraordinary and superior command of money and all that money carried with it than our Army and Navy. It was those potential resources that had enabled this country to scramble through contest after contest with other Powers, because it had been fully realised by other nations that we could carry on hostilities longer than they owing to out financial resources. It seemed to him that in spite of our unparalleled prosperity during the last ten years, we had wasted our resources on wrong objects, because we had had insufficient advice and because the control which the Chancellor of the Exchequer ought to keep over other Departments of the State had been constantly relaxed. If this proposal were carried, and we devoted more money to paying off our liabilities than we had hitherto done, we should have what was much more valuable than a gold reserve, we should have our credit unimpaired, and, more than that, it would be vastly increased. It was in our credit that the strength of this country lay.


said he thought he could show that the Chancellor of the Exchequer was under a misapprehension as to what was the Consolidated Fund. After the revolution of 1688, for 100 years every tax was allocated to a special purpose, and as a matter of fact there were in the Customs alone seventy-five taxes, each devoted to its own particular purpose. In 1787 they got rid of this system; the Consolidated Fund was instituted, and it was enacted that that should be the reservoir to which every public receipt should go and from which should flow every item of public expenditure. The Consolidated Fund had since then ceased to be entitled to be name through the practice of intercepting the moneys that belonged to it before they reached it. The hon. Member proposed to follow that example by his Amendment. What were the real merits of this matter? They had had the advantage of an object-lesson, showing the extreme facility with which, when once the matter was understood, any Member of the House could take hold of public money and apply it to any purpose he pleased. The hon. Member was the first who had done this. No Committee was required, no recommendation by a Minister of the Crown, and none of the ordinary financial securities which the House had placed around public money. Any Member at any moment might get up and move an intercepting Motion of this sort, applying the whole of the death duties to any purpose he chose in his wisdom to select. He would remind some of the hon. Gentlemen from Ireland who were occasionally inclined to apply public money to purposes which would benefit their country, that the hon. Member had taught a very great object-lesson. The hon. Member sought to intercept a million of money out of the estate duties and to add it to the permanent fixed charge for the National Debt.

That our Sinking Fund was too low, and that it ought to be higher, was a belief which nobody had affirmed with greater industry than himself. It appeared to be perfectly wanton that we should go on with a fixed National Debt charge only £28,000,000, the sum which Sir Stafford Northcote applied to a really smaller Debt, because we had not then the vast Unfunded Debt we had now. The sacrifice made by the community to get rid of the great burden of debt was greater when the Debt was smaller, and, therefore, he was a strong advocate for increasing the Sinking Fund. He reminded the Committee that the financial enemy of the Sinking Fund was the Chancellor of the Exchequer. There never was a Chancellor of the Exchequer who got into financial difficulty—and however short his tenure; of office might be it was always long enough to get into financial difficulty—but he attacked the Sinking Fund. A Chancellor of the Exchequer was a brigand by nature. When he met the Sinking Fund in the wood he robbed it; this had happened time after time. It was a simple method of getting rid of his obligations. There was one method by which a proper Sinking Fund could be maintained in such a way that no Chancellor of the Exchequer could touch it. That method was to attach one source of revenue to the National Debt, say the estate duties. If the estate duties were affected to the National Debt—he did not mean to affect them alone, but in addition say, to another £16,000,000—that part of the Sinking Fund would never be touched, because, although the Chancellor of the Exchequer would always feel the same temptation to rob it, he would be deterred from it by the insuperable dislike which the Chancellor of the Exchequer always felt to taking off existing taxation. If the House were to affect the estates duties to the Debt they might have confidence that that source of the Sinking Fund would not be tampered with.

The reproach had been made that this Amendment was a wicked example of interception. Yes, but who snowed the example? It had not been the unofficial Members, but the Government themselves. He had always strongly protested against it as a most improper thing to do. It had led to the falsification of the public accounts and the depletion of the Consolidated Fund, which was every year £20,000,000 poorer than it should be on account of the violations and partial repeals of the Exchequer and Audit Act of 1866, which prescribed that all the money should go into the Consolidated Fund. The hon. Member's Amendment was not out of order, and, after the strong advice he had himself given that the fixed National Debt charge should be increased, he felt bound to vote for the Amendment.


said the question whether we should get the £30,000,000 contribution from the Transvaal was important at the present time. Certain of his hon. friends had expressed the opinion that we should not get the money. An hon. friend wrote to a paper in which he said we had no right to claim the War contribution from the Transvaal, because we had conquered and annexed the country. It was, he said, the first time he had ever heard the South African War talked about as conquering and annexing. He always thought that we went there to relieve the so-called intolerable oppression from which our countrymen and others were suffering. We had relieved them from that oppression, we had given them cheap dynamite, cheaper railway fares, cheap and abundant labour, and he thought now was the time when they ought to perform their part of the bargain. Not only so, but we had in doing this reduced the cost of mining and extracting gold from the quartz lower than ever it was before, and thus greatly benefited the people of the Transvaal. For the gold mines were the Transvaal, and the Transvaal South Africa, therefore, in helping the mining industry we had helped everyone dependent upon it. For these reasons he thought the people of the Transvaal ought not and would not be guilty of the dishonourable evasion of a fair bargain and a just obligation. We had spent £230,000,000 on the war, and he thought it was the least they could do to make this small contribution to the heavily-burdened taxpayer of this country. Besides that, we had pledged our credit for the guaranteed loan of £35,000,000, which was at the time considered part and parcel of the bargain.

He supposed that quite half the shares in Transvaal mines were held by foreigners, and he could quite understand foreign shareholders in Germany and France and other places thinking they would rather have the £30,000,000 in their pockets than employ it in giving relief to the British taxpayer. But it was said that those people who arranged to pay the money were not at all representative, that they were merely a few people met together with the right hon. Gentleman the Member for West Birmingham. That was a mistake. Rightly or wrongly, they were the people who organised the agitation which led to the petition that ultimately led to the war. They were looked upon as leaders by the people of the Transvaal, and it was with the sanction of the people of the Transvaal that those great leaders of the mining industry made those representations to this country. Now those very same people had a perfect right to pledge the credit of the Transvaal in the way they had done. To say that there was no debt of honour was a great mistake. He could not think that our kith and kin across the seas would, for a moment, try to wriggle out of this honourable undertaking given by their leaders.

The right hon. and learned Member for Dumfries, with whom on this question of the war he generally agreed, spoke of the enormous debt per head of the white population of the Transvaal. It was an enormous debt per head, but they had enormous resources. And at present kaffir and coolie labour was increasing in very much greater ratio than white labour. Therefore, the more kaffir and coolie labour increased, the richer would become the country, yet the debt per head would remain and possibly increase. There was nothing in the argument to take the debt per head, because they had to consider the enormous resources of the Transvaal. He did not believe the leaders in the Transvaal would try to get out of this debt, and therefore they ought to deprecate anything said in that House which would give them an excuse for thinking that they ought not to pay. If they thought that contribution too much, no doubt this country would be very glad to consider any reasons for reducing it. He would suggest, in order to make the burden as light as possible, that this country should guarantee a loan of £15,000,000. Of the ability of the Transvaal to pay there could be no doubt—in fact the profit accruing to the Government from the Premier Mine would be enough to pay the interest at 3 per cent. on a loan of £15,000,000. He said again that for the people of the Transvaal to attempt to wriggle out of their just obligation would be a dishonest and dishonourable course.

SIR JOHN GORST (Cambridge University)

said he had listened a short time ago to the pessimistic statement made by the hon. Member for Monmouthshire as to the decline in British securities. He did not think there was any reason for despairing about British securities. It was quite true that when we were borrowing huge sums of money to carry on the South African War, naturally British securities fell in the market. After the war was over they all thought that the securities of the British Government would recover, but that expectation had been disappointed. The reason was obvious. It was because the world, instead of settling down to industry and commerce, saw the outbreak of another great war between Russia and Japan. These countries were, in order to carry on the war, borrowing funds from the Western markets. Until that war was over it was unreasonable to expect any cheapness of money. After all, a 2½ per cent. security at 90 was just the same thing as a 3 per cent. security at 108. He did not think the Chancellor of the Exchequer could reasonably be called upon to increase the Sinking Fund more than he had done for the purpose of restoring British credit. British credit was very good at the present moment. Great Britain could borrow money as cheaply as any other country in the world. [An HON. MEMBER on the OPPOSITION Benches: The United States.] It was said that the Chancellor of the Exchequer ought to have raised the Sinkling Fund by more than £1,000,000, and that he ought to have put it in the Same condition it was under the right hon. Gentleman the Member for Croydon. He remembered that the right hon. Gentleman the Member for Croydon would have raised the Sinking Fund to £28,000,000, but that he believed the Transvaal Government would repay very quickly the war contribution of £30,000,000. The present Chancellor of the Exchequer did not count on the repayment of that debt. He thought that the Chancellor of the Exchequer had made a very reasonable provision for the repayment of the National Debt, and that there was no fear of any decline in the credit of this country.


said that the right hon. Gentleman opposite declared that the great fall in English securities was only the same as had occurred in regard to the securities of all other nations. That was not the case. While the credit of England had fallen, that of Italy had enormously increased, and the same was true of many other countries. There was no getting out of the fact that England had now to pay £3 2s. 6d. interest for a loan extending over ten years. He insisted that that was a tremendous fall in the credit of England. In spite of what the Chancellor of the Exchequer and other experts had said, English Consols had fallen to the very lowest point and showed no sign of recovery. That involved an enormous loss to this country and especially to Ireland. The sufficiency of the Sinking Fund was inextricably bound up with the question of the payment of the Transvaal in- demnity; and what he complained of was that in all these recent discussions the House of Commons had been treated most unfairly. They could never get at the real facts of the situation. They had been told by successive Chancellors of the Exchequer that the Sinking Fund was to be increased as soon as peace was restored. But not a penny additional had been paid off the Debt. In 1903 the Debt of the country was £798,349,000 and the assets were £5,283,000. Therefore the net debt was £793,066,000. In the present year the Debt was £796,736,000. The realisable assets of the country had declined by over £3,000,000; so that the net Debt had increased by about £1,500,000 as compared with two years ago.


asked if the hon. Member included the Suez Canal shares in his estimate.


said he did not include the Suez Canal shares, because they were not to be sold. They were not in the sense liquid assets. The speeches of successive Chancellors of the Exchequer were most misleading in this respect. Last year the Chancellor of the Exchequer, being in a difficulty, annexed £1,000,000 of unclaimed dividends, of which there was no entry in the Return. That, in his opinion, vitiated the Return to that extent. The total net result was, although the figures were covered by complexity and confusion, that the country now owed £2,500,000 more than it did two years ago.

The question of the Transvaal contribution was another illustration of the unfairness with which the House of Commons was being treated. Two years ago the right hon. Gentleman the Member for Croydon delivered a most optimistic speech in introducing his Budget. He indicated that the Debt would vanish away like a morning's mist before the sun. The right hon. Gentleman then said that before deciding what the annual debt-charge should be, the Committee should consider the arrangement entered into by his right hon. friend the then Secretary for the Colonies, under which £4,000,000 was to be obtained from the Transvaal immediately, and, in the course of the succeeding three years, a sum of £30,000,000 towards the expenses of the war. The right hon. Gentleman accordingly fixed the annual debt-charge at £27,000,000. However, not a penny had been received from the Transvaal; and there was now a worse prospect of getting anything than there was three years ago.

The whole financial structure of the right hon. Gentleman the late Chancellor of the Exchequer was based on the assumption of the receipt of £30,000,000 from the Transvaal. He calculated that on March 31st, 1908, the Debt would be reduced to £694,000,000; and that the Sinking Fund would be £8,841,000, or 1.25 per cent of the Debt. Now they were half way to the stated time and instead of the Debt being reduced it had been increased by £2,500,000. The right hon. Gentleman stated that the whole of this gigantic Debt would be wiped out in fifty years. Yet the Debt was increasing at the rate of £1,000,000 a year. After the previous great war Sir Stafford Northcote fixed the annual debt-charge at £28,000,000, although the Debt was then £30,000,000 less than at present. That charge was maintained until the Debt was reduced by £100,000,000. During the recent war £159,000,000 had been added to the Debt, and the country did not make even the most ordinary effort to repay a war debt in time of peace. When the right hon. Gentleman the Member for West Bristol was Chancellor of the Exchequer he said he proposed to raise the war expenditure by means of bonds, not by an addition to the Debt. The latter, he added, would only be justified in the case of war with a first-class Power. That had reference to the character of the Power.

SIR M. HICKS BEACH (Bristol, W.)

And the cost of the war.


said that the condition was war with a first-class Power; and no one would contend that the Transvaal was that. The right hon. Gentleman further stated that he hoped the war debt would be paid off in two years or sooner. Of course, the right hon. Gentleman was then only contemplating an expenditure of £10,000,000. There was an obligation on the part of the country to discharge this war taxation. The House of Commons had not been treated fairly in the matter. Was it not better to face the matter and deal with it honestly instead of being led on like a pack of fools by Chancellor of the Exchequer after Chancellor of the Exchequer telling them that they were going to get the money shortly? They were not going to get the money, but they were going to give General Botha and the Responsible Government Association, largely composed of Englishmen, the most popular cry they could possibly have. They were going to lose this money, but not by generosity, not by doing frankly and handsomely what they would have to do in the end meanly and contemptibly, and they were going to set up an agitation in the Transvaal in which they would have every man in South Africa against them. The mineowners would not mind. They had got all they wanted—their £35,000,000, their cheap dynamite, and their Chinamen. They would take a back seat now. He protested against the House of Commons being "hung up" and deluded, It was a shame for responsible Ministers to delude the country by building up the financial system of the Budget on the assumption that they would ever get a shilling of the money.

MR. RITCHIE (Croydon)

said he was sorry to have to trouble the Committee again with a defence of his action, because he had already explained it more than once very fully. The remarks just made by the hon. Gentleman with regard to the payment of this contribution from the Transvaal were not at all likely to improve our prospects of obtaining that which was undoubtedly due. When he thought of the amount arranged as that contribution he regarded it as a tribute to the great moderation of this country. One would almost imagine that the hon. Member held a brief for repudiation. Not only the words he uttered, but the tone in which he uttered them, constituted a direct incitement to those who desired to repudiate obligations properly undertaken.


said he was only following the example of the Morning Post.


thought the hon. Member preceded the Morning Post. He remembered a speech made by the hon. Gentleman much on the same lines many weeks ago. Coming to the complaint made against him for his optimism in assuming, when framing his Budget, that this contribution would be received, what was the financial position at that time? The country had been groaning under extraordinarily heavy burdens of taxation for some years, and all classes of the community were suffering in consequence. Trade was depressed, and he was naturally anxious to moderate these burdens. When he had to decide what amount of Sinking Fund he was prepared to recommend to the House, was he, in his natural and proper survey of the money likely to come in not only in that year but in the succeeding year, to leave out of account the arrangement for the payment of £30,000,000 from the Transvaal? It must be remembered that he had before him not only the views which the Colonial Office held on the subject, but views which had been arrived at after careful consideration on the spot by the right hon. Gentleman the then Colonial Secretary, and all information which was in the possession of the Colonial Office. He had to take that into account. Not only that. It was his duty to study carefully for himself all the bases on which the right hon. Gentleman had rested the belief that this money would be received. Having done so, he came to the conclusion, independently of the right hon. Gentleman, that they had a perfect right to expect that the money would be received in due time. So far as the first payment was concerned, the subscription of the first £10,000,000 was practically guaranteed by those most able to give that guarantee in the Transvaal. He had every reason to expect from the financial statement of the resources of the Transvaal sent to him by Lord Milner that the revenue of the Transvaal would be such during the next three years as would amply provide for all the cost of administration in the Transvaal as well as for the interest of the debt which would be created for the contribution. But, of course, as every one knew, the view then taken, both by himself and others and all who had studied the matter, was too optimistic. He did not pretend to be a prophet at all. He judged from the material at his hand at the time; and he came to the conclusion that when he had to settle the burden to be pat on the taxpayers of this country he not only had the right, but it was his bounden duty, to consider that during the three years, including the one in which he was speaking, there was every reason to believe in the receipt of £10,000,000 a year from the Transvaal. He arranged his Budget accordingly, and everything quoted from his speech would have been fully justified had the contribution been paid. It would have been true that the amount of the Sinking Fund would have been greater than any percentage of previous times. It turned out that the rosy views of the prospects of the Transvaal, of its revenue and its progress, were not justified.

Earlier in the afternoon it had been asked why payment of the first £10,000,000 was not insisted on. The reason was perfectly obvious. It was true that there was a guarantee from the mineowners, but what the Government had to consider was not the question of taking up the £10,000,000. About that there was no doubt at all. What they had to consider was the possibility of the Transvaal being in a position to find the interest on the debt. They had to consider whether they should exercise the power of compelling the Transvaal, whose conditions were, of course, extremely grave, to issue a loan when the finance of the country showed it was quite impossible that the interest on the loan could be paid along with the other charges necessary for carrying on the government. It would have been the height of folly to insist upon the loan being issued in these conditions merely because the floating of £10,000,000 had been guaranteed. He could conceive no greater disservice that could be done either to the Transvaal or this country than to have insisted on doing such a preposterous thing.


said the right hon. Gentleman forgot that the Transvaal was asked to raise a loan of £35,000,000.


said that was all the more reason for not putting the other burden upon the colony. The £35,000,000 loan was for purposes altogether different. It was mainly for the purposes of the development of the Transvaal itself, and for the payment in the Transvaal of money to those to whom it was owing. It was after considering that the interest on that loan would have to be debited to the revenue of the Transvaal that they found it impossible to insist upon £10,000,000 being raised at that time. He had greater hopes than the hon. Gentleman of the future of the Transvaal. He believed its future would be one of boundless prosperity. He based that opinion, not only on the produce of the mines, but on the agricultural future before the colony. He did not take the view that the new body which was created was likely to repudiate that which was undoubtedly properly and fairly due to us; only he did not think the best way of maintaining good relations with the Transvaal was to endeavour to incite the people there to repudiate the undertaking which those who were at the time responsible gave to us. His main object, however, was to show that from the information he then had in his possession, he was not only justified in so doing, but would have been deserving of condemnation if he had not taken into account that large sum of money which we had every reason to expect from the Transvaal and which, in the opinion of the Government, would in course of time come into the British Exchequer.


said he made no charge of want of good faith on the part of the right hon. Gentleman. What he complained of was that false information had been systematically sent from South Africa to delude this country.


said he was not attributing any charge to the hon. Member; he was simply defending his own action. No one regretted more than he did that the hopes of the Government had been disappointed; but, while he admitted he had been too optimistic, he repeated that, looking at the information he then had, be was justified in taking the course which he did.

MR. EMMOTT (Oldham)

said he had no desire to blame the right hon. Gentleman the Member for Croydon for having been misled by the invincible optimism of the right hon. Gentleman the Member for West Birmingham. The right hon. Gentleman the Member for West Birmingham had misled the Member for Croydon, misled the Government, and misled the House of Commons. Where was he? How was it that whenever debates arose about this £30,000,000 loan the right hon. Gentleman was never in his place? This mania on the part of some Members on the other side for running away whenever an awkward question arose was really becoming a matter of considerable inconvenience to the House of Commons, and ought to be severely reprobated. The right hon. Gentleman the Member for Croydon had stated that the sum of £30,000,000 was undoubtedly and justly due. Could he give any instance in modern times in which one country which had been conquered by another had been made by that other country to pay part of the cost of the war? The right hon. Gentleman had also said that the amount of the claim—i.e., the £30,000,000—was a tribute to our moderation, that we might reasonably have asked for more, and he had also accused the hon. Member for East Mayo of inciting the inhabitants of the Transvaal to repudiate the loan. He ventured to say that there was something very much more important than the repudiation of the loan, viz., our future relations with the Transvaal and the great danger that the inhabitants might feel that we were pressing unduly for our pound of flesh.

He wanted to ask the House to consider the actual facts of the case. In the first place there was no guarantee as to the £30,000,000. The guarantee was for the £10,000,000, and the guarantors were perfectly willing to carry that out. All he knew as to the £30,000,000 was that a resolution was passed by certain persons in Johannesburg approving the principle of the loan. That approval was subject to conditions; in the first place the financial position of the Transvaal was to allow of it; in the second place, no tax was to be placed on land; in the third place, only 10 per cent, was to be put on mining profits; and, in the fourth place, it was not to hinder the development of the Transvaal. He did not think anybody could call that a guarantee, neither could they call it a debt of honour on the part of the country. The people who passed the resolution were bound in honour to try to induce the country to pay the £30,000,000, but that was the only obligation of honour that pertained to the matter. It was true that other circumstances had arisen since. It was true that the £30,000,000 loan was made an excuse for inducing us to allow the introduction of Chinese labour. It was true that diamonds had been found in the Premier Mine. But it was rather a monstrous doctrine that we should seek to take advantage of the Premier Mine, except in so far as it relieved the financial situation there, in order to enforce the £30,000,000 or any part of it. If we did that we should be straying dangerously near to the principle of interfering with taxation—a principle that lost us our American Colonies 100 years ago.

Would anybody venture to say that the conditions laid down for the issue of the £30,000,000 loan were likely soon to be found in the Transvaal? His hon. friends on the Opposition Benches, although they might not agree with the hon. Member for East Mayo or himself about the matter, practically all agreed that we were not going to get this money, but a great many of them said we ought to try to get it. On a previous occasion, when dealing with this matter, he made an appeal on "broad Imperial grounds," and the phrase was somewhat laughed at. Might he remind his hon. friends that the enthusiastic loyalty of our Colonies was due to the principles adopted and pushed by the Liberal Party, principles that gave them freedom to direct their action as they liked and principles that gave them absolute fiscal autonomy? He admitted that the Liberal Party stumbled upon those principles almost by chance. Some members of the Liberal Party desired to make it easy for the Colonies "to cut the painter," but they at any rate said, "We cannot keep them by force perma- nently; let us give them autonomy." And autonomy was given, with the result that our self-governing Colonies had become enthusiastically loyal. It was because he saw in the great eagerness of this House to enforce this £30,000,000 loan a danger of interfering with that fundamental principle of fiscal autonomy that he ventured to ask the House to pause.

He knew that those who took the line he was taking would be taunted with inciting to repudiation. He was not inciting the people of the Transvaal to repudiation. We had a perfect right to the £350,000 which we had saved them by guaranteeing the £35,000,000 loan, and we were fully entitled to ask for the issue of the £10,000,000, because the interest would be paid by that £350,000. But if we sought to impose the further loan, he was convinced that the Het folk and the Responsible Government Association would inevitably use the refusal to find the money as one of the chief planks in the first contested election under the new Constitution. That would be a serious matter, because it would inevitably stir up bad blood between them and us. Even if he stood alone—but he was glad to know that he did not—he would beg the House seriously to consider this matter, and not in any way to seek to enforce the loan. If the people of the Transvaal chose to send us the money, well and good, but let there be no talk about a "debt of honour." There was no debt of honour, but there was an obligation of honour upon certain individuals who had no right to speak for anybody but themselves and the association they directly represented. They did not represent the Boers or a great portion of the whites. He appealed to the House to leave the matter to the people, and not to be disappointed if we did not get any of the money. Beyond the £10,000,000, he doubted whether we ought to claim the money; he did not think we ought, but he was certain we should not get it, and he wished the House would see the wisdom of giving up the claim.


said he had been in the House a good many years, but he had never heard a more unprovoked, more ungenerous, and more unfair outburst than that with which the hon. Member for Oldham began his speech.


Why is it unfair?


said he supposed the subject of the Transvaal Loan was sufficiently germane to the Finance Bill to admit of its being discussed in this clause, but there was nothing in the clause itself to suggest that such a discussion would arise, and there was nothing either in the Amendments on the Paper to suggest it. Yet the hon. Member, in the absence of the Member for West Birmingham, and without giving what was usual between private Members—notice to the Member whose conduct he proposed to challenge——


I think the right hon. Gentleman is perfectly fair in that. I ought not to have attacked the Member for West Birmingham for his absence this afternoon, and I withdraw that part of what I said entirely, but I cannot withdraw it entirely as regards previous occasions when he has not been here. I ought not to have said it in reference to this afternoon, and I am sorry.


said he wished the hon. Member would withdraw the whole, but he should say no more about it. As to the debate, he could only beg the House to consider whether it did in fact advance any national interest by such a discussion. He needed scarcely to say that he did not in any way share in the criticism directed against his hon. friend the Member for Croydon for his Budget speech two years ago, or for the anticipations which he then made. Although the result of the past two years had been to slow that he had expected the prosperity of the Transvaal to come earlier than in fact it had done, he did not doubt to-day, any more than the right hon. Gentleman the Member for Croydon did, that there was a great and prosperous future before the Transvaal, and that it might be well within its power in the future to fulfil the obligation which they had anticipated might have been fulfilled in the course of the three years spoken of; but he did ask whether the national interest or the Imperial interest was served by a series of speeches in which our fellow-subjects in the Transvaal were alternately told that they were too mean to pay, that they ought not to be called upon to pay, that they were too poor to pay, and that they ought to be ashamed of themselves for not paying. He did not believe any of these lines was calculated to promote either good feeling or mutual respect, or to secure a settlement of this question as he hoped it would be settled, and as he was sure it ought to be settled, by the common support of both Parties acting in support of common Imperial interests and with a common regard to the honour and dignity of the British name. He appealed to the Committee to bring to a close a discussion which led to no useful result, in order that they might start clear on Monday with the first of the new clauses which raised the important question of the coal duty, and which he was as anxious as other hon. Members should begin at the most convenient time.

MR. LABOUCHERE (Northampton)

said that if any hon. Members took the trouble to look through the accounts of bankers they would find an item "doubtful debts." Why was that put in? Everybody knew that doubtful debts meant bad debts. What they complained of was that the Chancellor of the Exchequer persisted in treating this very doubtful debt as a positive asset. He did so in his calculations, and they had not got a larger Sinking Fund because of this asset. He should like to know whether an actuary in the City would say that this debt was worth more than £1,000,000 sterling. Could the right hon. Gentleman induce any firm in the City to give him £1,000,000 sterling for this debt? It was all very well for the Chancellor of the Exchequer to take a sanguine view of the Transvaal and say he was sure they would pay this debt. They might say that, of any kind of property. They might say it in regard to land, but if a mortgage was asked for upon land, it would only be advanced in proportion to the actual value and not according to the prospective chance value. The Chancellor of the Exchequer said they were doing a bad service to the cause of Imperialism when his hon. friend the Member for Oldham said he did not think the Transvaal ought to be called upon to pay this debt. They must deal with actual facts and not probabilities, and surely his hon. friend had a right to protest against the right hon. Gentleman taking this asset as being of any actual value.

The right hon. Gentleman the Member for West Birmingham went to South Africa, and they were told that they would at least get £40,000,000, £50,000,000, or even £60,000,000 from the Transvaal. That was the prevalent idea at that time. The right hon. Gentleman's bargain was, "I will guarantee interest on £35,000,000, provided you will agree to raise a loan of £30,000,000 in consideration of what you owe for the war." The right hon. Gentleman's boast was that this was not as much as it ought to have been, but in his opinion "a bird in the hand was worth two in the bush." If the right hon. Gentleman had come home with this £30,000,000 instead of the benevolent guarantee that these millionaires would pay, or if he had come back with good bills saying that they would take the risk, then he should have said that he had made a good bargain. But he came home and said they were to have this £30,000,000 some time. They now knew that the Transvaal could not pay it, and all they had got was a promise to pay. They had derived no benefit whatever from the loan they had guaranteed. He was sorry that the right hon. Gentleman the Member for West Birmingham was not present, because he should have liked an explanation from him as to why he made this extremely bad bargain. He did not think the Chancellor of the Exchequer ought to take it into his consideration

at all, because if they got this money it would be simply wonderful. He would suggest that they should say to the gentlemen who guaranteed this money, "You pay the £10,000,000 down and agree to raise the interest on the balance as a specific debt to be charged upon your mines." That would be a good bargain for this country. He protested against the Chancellor of the Exchequer perpetually treating this debt as a good asset, because it was not a good asset. If he were one of the inhabitants of the Transvaal, and not connected with the mines, he should object to this debt. The right hon. Gentleman the Member for West Birmingham, when he was in South Africa, called a meeting of some of the mineowners and they made this bargain with him. He wished to know what right they had to pledge the country. They were told that it was a matter of honour with the Transvaal to pay, but the people of the Transvaal had not pledged themselves to pay. The right hon. Gentleman said that the guaranteed loan was intended to develop the country, but who would benefit by that. Why, the mineowners. A large amount of the money had been spent upon railways, and the mineowners were the persons who mainly benefited by railways. They had largely benefited by the expenditure of the £35,000,000 loan, and therefore they ought to be ready themselves to pay the £30,000,000.

Question put.

The Committee divided:—Ayes, 226; Noes, 181. (Division List No. 178.)

Agg-Gardner, James Tynte Balfour, Rt. Hn. A. J. (Manch'r Boulnois, Edmund
Agnew, Sir Andrew Noel Balfour, Capt. C. B. (Hornsey) Brodrick, Rt. Hon. St. John
Allhusen, Augustus Henry Eden Balfour, Rt Hn. Gerald W (Leeds Brotherton, Edward Allen
Allsopp, Hon. George Balfour, Kenneth R. (Christch. Brown, Sir Alex. H. (Shropsh.)
Anson, Sir William Reynell Banbury, Sir Frederick George Brymer, William Ernest
Arnold-Forster, Rt. Hn. Hugh O Banner, John S. Harmood- Butcher, John George
Arrol, Sir William Barry, Sir Francis T. (Windsor) Campbell, J. H. M. (Dublin Univ.
Atkinson, Rt. Hon. John Bartley, Sir George C. T. Carson, Rt. Hon. Sir Edw. H.
Aubrey-Fletcher, Rt. Hn Sir H. Beach, Rt. Hn. Sir Michael Hicks Cautley, Henry Strother
Bagot, Capt. Josceline FitzRoy Bhownaggree, Sir M. M. Cavendish, V. C. W. (Derbyshire)
Bailey, James (Walworth) Bignold, Sir Arthur Cayzer, Sir Charles William
Bain, Colonel James Robert Bigwood, James Chamberlain, Rt. Hn. J. (Birm.)
Baird, John George Alexander Bingham, Lord Chamberlain, Rt Hn. J. A. (Worc.
Balcarres, Lord Blundell, Colonel Henry Chamberlayne, T. (S'thampton
Baldwin, Alfred Boscawen, Arthur Griffith- Chapman, Edward
Clive, Captain Percy A. Heath, Sir James (Staffords. N W Plummer, Sir Walter R.
Cochrane, Hon Thos. H. A. E. Helder, Augustus Powell, Sir Francis Sharp
Coddington, Sir William Henderson, Sir A. (Stafford, W.) Pretyman, Ernest George
Collings, Rt. Hon. Jesse Hickman, Sir Alfred Pryce-Jones, Lt.-Col. Edward
Corbett, A. Cameron (Glasgow) Hoare, Sir Samuel Purvis, Robert
Corbett, T. L. (Down, North) Hope. J F (Sheffield, Brightside Randles, John S.
Cox, Irwin Edward Bainbridge Hoult, Joseph Ratcliff, R. F.
Craig, Charles Curtis (Antrim, S. Howard, J. (Midd., Tottenham Reid, James (Greenock)
Cripps, Charles Alfred Hozier, Hon. James Henry Cecil Renwick, George
Cross, Herb. Shepherd (Bolton) Hudson, George Bickersteth Ridley, S. Forde
Dalkeith, Earl of Hunt, Rowland Ritchie, Rt. Hon. Chas. Thomson.
Dalrymple, Sir Charles Hutton, John (Yorks. N. R.) Roberts, Samuel (Sheffield)
Davenport, William Bromley Jebb, Sir Richard Claverhouse Robertson, Herbert (Hackney)
Denny, Colonel Jessel, Captain Herbert Merton Rolleston, Sir John F. L.
Dewar, Sir T. R. (Tower H'm'ts Kennaway, Rt. Hon. Sir John H. Round, Rt. Hon. James
Dickinson, Robert Edmond Kenyon, Hon. Geo. T. (Denbigh) Royds, Clement Molyneux
Dickson, Charles Scott Kenyon-Slaney, Rt. Hn. Col. W. Rutherford, W. W. (Liverpool)
Dixon-Hartland, Sir Fred Dixon Kimber, Sir Henry Sackville, Col. S. G. Stopford
Doughty, Sir George King, Sir Henry Seymour Sadler, Col. Samuel Alexander
Douglas, Rt. Hon. A. Akers- Knowles, Sir Lees Samuel, Sir H. S. (Limehouse)
Doxford, Sir William Theodore Lambton, Hn. Frederick Wm. Sandys, Lieut.-Col. Thos. Myles
Duke, Henry Edward Law, Andrew Bonar (Glasgow) Seton-Karr, Sir Henry
Dyke, Rt. Hn. Sir William Hart Lawrence, Sir Joseph (Monm'th Sharpe, William Edward T.
Egerton, Hon. A. de Tatton Lawson, John Grant (Yorks. N. R Shaw-Stewart, Sir H. (Renfrew
Elliot, Hon. A. Ralph Douglas Lee, Arthur H (Hants., Fareham Sinclair, Louis Romford
Faber, George Denison (York) Legge, Col. Hon. Heneage Sloan, Thomas Henry
Fardell, Sir T. George Leveson-Gower, Frederick N. S. Smith, Rt Hn J Parker (Lanarks
Fellowes, Rt. Hn. Ailywn Edw. Lockwood, Lieut.-Col. A. R. Spear, John Ward
Fergusson, Rt Hn. Sir J. (Manc'r Long, Rt Hn. Walter (Bristol, S. Stanley, Edward Jas. (Somerset
Finch, Rt. Hon. George H. Lowther, C. (Cumb., Eskdale) Stanley, Rt Hn. Lord (Lancs.)
Finlay, Sir R. B. (Inv'rn'ss B'ghs Loyd, Archie Kirkman Stewart, Sir Mark J M'Taggart
Fisher, William Hayes Lucas, Col. Francis (Lowestoft) Stock, James Henry
FitzGerald, Sir Robert Penrose Lyttelton, Rt. Hon. Alfred Stroyan, John
Fitzroy, Hon. Edward Algernon Macdona, John Cumming Taylor, Austin (East Toxteth)
Flower, Sir Ernest M'Arthur, Charles (Liverpool) Thorburn, Sir Walter
Forster, Henry William M'Iver, Sir Lewis (Edinburgh W Thornton, Percy M.
Foster, Philip S. (Warwick, S. W. Majendie, James A. H. Tomlinson. Sir Wm. Edw. M.
Galloway, William Johnson Malcolm, Ian Tritton, Charles Ernest
Gardner, Ernest Manners, Lord Cecil Tuff, Charles
Gibbs, Hon. A. G. H. Marks, Harry Hananel Tufnell, Lieut-Col. Edward
Godson, Sir Augustus Frederick Martin, Richard Biddulph Tuke, Sir John Batty
Gordon, Hn. J. E. (Elgin & Nairn Maxwell, Rt Hn Sir H E. (Wigt'n) Vincent, Col Sir C E H. (Sheffield
Gordon, J. (Londonderry, S.) Melville, Beresford Valentine Walrond, Rt Hn. Sir William H.
Gordon, Maj Evans (T'rH'mlets Meysey-Thompson, Sir H. M. Welby, Lt.-Col. A C. E. (Taunton)
Goschen, Hon. George Joachim Montagu, G. (Huntingdon) Welby, Sir Charles G E. (Notts.)
Goulding, Edward Alfred Montagu, Hon. J. Scott (Hants.) Wharton, Rt. Hon. John Lloyd
Graham, Henry Robert Moon, Edward Robert Pacy Whiteley, H. (Ashton und. Lyne
Gray, Ernest (West Ham) Moore, William Whitmore, Charles Algernon
Greene, Henry D. (Shrewsbury Morgan, David J. (Walthamst'w Williams, Colonel R. (Dorset)
Greene, W. Raymond (Cambs.) Morpeth, Viscount Wilson, A. Stanley (York, E. R.)
Grenfell, William Henry Morrell, George Herbert Wilson, John (Glasgow)
Gretton, John Morrison, James Archibald Wilson-Todd, Sir W. H. (Yorks.)
Greville, Hon. Ronald Morton, Arthur H. Aylmer Wolff, Gustav Wilhelm
Gunter, Sir Robert Murray, Charles J. (Coventry) Wortley, Rt. Hn. C. B. Stuart
Hain, Edward Murray, Col. Wyndham (Bath) Wrightson, Sir Thomas
Hamilton, Rt Hn Lord G (Midd'x O'Neill, Hon. Robert Torrens Wylie, Alexander
Hamilton, Marq. of (Lond'nd'ry Parker, Sir Gilbert Yerburgh, Robert Armstrong
Hardy, Laurence (Kent, Ashford Parkes, Ebenezer
Hare, Thomas Leigh Pease, Herbert Pike (Darlington TELLERS FOR THE AYES—Sir
Harris, F. Leverton (Tynem'th Peel, Hn. Wm. R. Wellesley Alexander Acland-Hood and
Haslam, Sir Alfred S. Percy, Earl Viscount Valentia.
Hay, Hon. Claude George Platt-Higgins, Frederick
Abraham, William (Rhondda) Bell, Richard Burns, John
Allen, Charles P. Benn, John Williams Burt, Thomas
Ambrose, Robert Blake, Edward Buxton, Sydney Charles
Ashton, Thomas Gair Boland, John Caldwell, James
Austin, Sir John Bolton, Thomas Dolling Cameron, Robert
Barlow, John Emmott Bowles, T. Gibson (King'sLynn Campbell, John (Armagh, S.)
Barry, E. (Cork, S.) Brigg, John Causton, Richard Knight
Beaumont, Wentworth C. B. Buchanan, Thomas Ryburn Cawley, Frederick
Cheetham, John Frederick Kennedy, Vincent P. (Cavan, W. Redmond, John E. (Waterford)
Craig, Robert Hunter (Lanark) Kilbride, Denis Reid, Sir R. Threshie (Dumfries
Crean, Eugene Kitson, Sir James Richards, Thomas (W. Monm'th)
Cremer, William Randal Labouchere, Henry Rickett, J. Compton
Crombie, John William Lambert, George Roberts, John H. (Denbighs)
Crooks, William Lamont, Norman Robson, William Snowdon
Delany, William Lawson, Sir Wilfrid (Cornwall) Roche, John
Devlin, Charles Ramsay (Galway Leese, Sir Joseph F (Accrington Roe, Sir Thomas
Dewar, John A. (Inverness-sh. Leigh, Sir Joseph Runciman, Walter
Dilke, Rt. Hon. Sir Charles Leng, Sir John Russell, T. W.
Dillon, John Levy, Maurice Samuel, Herbert L. (Cleveland)
Donelan, Captain A. Lloyd-George, David Schwann, Charles E.
Doogan, P. C. Lundon, W. Seely, Maj. J. E. B. (Isle of Wight
Douglas, Charles M. (Lanark) Macnamara, Dr. Thomas J. Shackleton, David James
Duncan, J. Hastings MacNeill, John Gordon Swift Shaw, Charles Edw. (Stafford)
Dunn, Sir William MacVeagh, Jeremiah Sheehan, Daniel Daniel
Ellis, John Edward (Notts.) M'Arthur, William (Cornwall) Shipman, Dr. John G.
Emmott, Alfred M'Crae, George Sinclair, John (Forfarshire)
Eve, Harry Trelawney M'Fadden, Edward Slack, John Bamford
Fenwick, Charles M'Hugh, Patrick A. Smith, Samuel (Flint)
Ffrench, Peter M'Kean, John Soames, Arthur Wellesley
Field, William M'Killop, W. (Sligo, North) Soares, Ernest J.
Findlay, Alexander (Lanark, N E M'Laren, Sir Charles Benjamin Spencer, Rt Hn. C. R. (Northants
Flavin, Michael Joseph Mooney, John J. Stanhope, Hon. Philip James
Flynn, James Christopher Morgan, J. Lloyd (Carmarthen) Strachey, Sir Edward
Foster, Sir Walter (Derby Co.) Moss, Samuel Sullivan, Donal
Fowler, Rt. Hon. Sir Henry Moulton, John Fletcher Taylor, Theodore C. (Radcliffe)
Furness, Sir Christopher Murphy, John Thomas, A. (Carmarthen, E.)
Gladstone, Rt. Hn. Herbert John Nannetti, Joseph P. Thomas, Sir A. (Glamorgan, E.)
Goddard, Daniel Ford Newnes, Sir George Thomas, David Alfred (Merthyr)
Grey, Rt. Hn. Sir E. (Berwick) Nolan, Col. John P. (Galway, N.) Thomas, J A (Glamorgan, Gower
Guest, Hon. Ivor Churchill Nolan, Joseph (Louth, South) Tillett, Louis John
Hammond, John Norton, Capt. Cecil William Toulmin, George
Harcourt, Lewis Nussey, Thomas Willans Trevelyan, Charles Philips
Hardie, J. Keir (Merthyr Tydvil) O'Brien, Kendal (Tipperary Mid Wallace, Robert
Harwood, George O'Brien, Patrick (Kilkenny) Walton, Joseph (Barnsley)
Hayden, John Patrick O'Brien, P. J. (Tipperary, N.) Warner, Thomas Courtenay T.
Healy, Timothy Michael O'Connor, James (Wicklow, W Wason, Eugene (Clackmannan)
Helme, Norval Watson O'Connor, John (Kildare, N.) Wason, John Cathcart (Orkney)
Hemphill, Rt. Hon. Charles H. O'Donnell, John (Mayo, S.) White, George (Norfolk)
Henderson, Arthur (Durham) O'Dowd, John Whiteley, George (York, W. R.)
Higham, John Sharp O'Kelly, James (Roscommon, N Whitley, J. H. (Halifax)
Hobhouse, C. E. H. (Bristol, E. O'Malley, William Whittaker, Thomas Palmer
Holland, Sir William Henry O'Mara, James Wilson, Fred W (Norfolk, Mid.)
Hope, John Deans (Fife, West) O'Shaughnessy, P. J. Wilson, Henry J. (York, W. R.)
Hutchinson, Dr. Charles Fredk. Parrott, William Wilson, John (Durham, Mid.)
Isaacs, Rufus Daniel Partington, Oswald Wilson, J. W. (Worcestersh. N.
Jacoby, James Alfred Pearson, Sir Weetman D. Young, Samuel
Johnson, John Pease, J. A. (Saffron Walden) Yoxall, James Henry
Joicey, Sir James Pirie, Duncan V.
Jones, Leif (Appleby) Power, Patrick Joseph TELLERS FOR THE NOES—Mr.
Jones, William (Carnarvonshire Price, Robert John M'Kenna and Mr. Dalziel.
Joyce, Michael Rea, Russell
Kearley, Hudson, E. Reddy, M.

Question proposed, "That the clause stand part of the Bill."

MR. DALZIEL (Kirkcaldy Burghs)

said that as the right hon. Gentleman the Member for West Birmingham was now in his place, it was only right, in the interests of decency and fair play, that he should be apprised of what took place in his absence. Several hon. Members had complained that on every occasion when the Transvaal war loan contribution was discussed the right hon. Gentleman had never been present. He rather thought that on one occasion the right hon. Gentleman did make a speech on the subject, but at any rate complaint was made that he was not present that afternoon. That complaint was hardly justified, because the Amendment, as it stood on the Paper, gave no indication that the question would be raised. But as the right hon. Gentleman was now present, and as he was the person principally concerned in this matter, he would probably avail himself of the opportunity which he, with great modesty, offered him of making an explanation. The remarks he was making were not directed in any personal sense against the right hon. Gentleman, but he was the only person who was able to give the required information.

The question was whether this guarantee received by the right hon. Gentleman during his visit to the Transvaal was something which could be regarded as a valuable asset or not. That was the whole point. Were we or were we not to receive a contribution from the Transvaal towards the expenses of the war? It was said that the gentlemen who gave the guarantee had no authority to speak for the people of the Transvaal, and he believed that that was to a large extent true. It was a personal guarantee. They had now got to a point when there ought to be no humbugging or finessing. For two years they had been told that the money market was unfavourable, but now it was very favourable, and still there was no attempt to issue this loan. He noticed that the Chancellor of the Exchequer had a consultation with the ex-Colonial Secretary. Had he still the same confidence that the pledge would be redeemed? His confidence was shaken. They could not blame the Chancellor of the Exchequer, who was sitting there with a claim which he inherited. There was every indication that this claim would be repudiated by the Transvaal. It was on the threshold of representative government, and this matter would be made the subject of agitation and would be one of the governing issues in the colony unless the Imperial Government came to some definite opinion on the matter. Was this asset of any value, and did the Government attach any importance to it? Would the Government make any representation to the Transvaal that they must pay this contribution? There was a complaint that they were apt, in discussing this question, to interfere with the prospect of the contribution being paid. He admitted that might be so; but was the House to sit silent while no effort was being made by the Government. They had now arrived at a point when that policy had to cease. They had a right to ask if the Transvaal was going to pay. He did not suggest, for a moment, that any undue pressure should be brought to bear; but the Committee ought to know whether the Transvaal intended to repudiate responsibility in the matter. The right hon. Gentleman the Member for West Birmingham had now an opportunity of explaining how the matter stood.

MR. J. CHAMBERLAIN (Birmingham, W.)

I am much obliged to the hon. Member opposite for his good intentions in affording me the opportunity of which he has spoken. So far as he wishes to have my opinion in the matter under discussion I am perfectly ready to give it to him, but he will understand that as I am no longer in the Government, I cannot speak for the Government; I can only speak of what happened while I was a member of the Government. Before, however, I come to that, let me say that if anyone in my absence has been complaining that I was not here to meet any charges that might be brought against me. I think that is extremely unreasonable. I had not the remotest idea that anything in connection with the Transvaal loan was coming on this afternoon, and by the merest chance I happened to enter the House, and that only after the division had been called.

Speaking for myself and not for the Government, I do not think there is anything I have ever said on the subject of this loan which I wish now to withdraw or change in the slightest degree. It is quite likely that, speaking to this House, I expressed anticipations as to the way this loan would be raised and this contribution would be made which time has shown to be too sanguine, but beyond that I cannot call to mind anything on which I need express a change of opinion now. What were the circumstances? I think the majority of the people of this country—and none were more strenuous than hon. Gentlemen opposite—were of opinion that the British subjects of the Transvaal were under an honourable obligation to contribute towards the expense of the war in which they were so much interested, and in which they had entirely concurred. I share that opinion. The only question was, What would be a fair sum for them to pay, and under what conditions? I went to the Transvaal with the idea of ear-marking certain sources of revenue and continuing to set them to the credit of the Exchequer until a large fixed sum had been reached. But on the representations that were made when I went to South Africa I agreed that that was not a wise policy to adopt, that it was a kind of policy which most probably would result in friction and dissatisfaction, that it would be regarded as a tribute, and not only as a tribute, but it would have caused a constant and perpetual interference on the part of the Exchequer of this country in connection with the finances of the new colony, a state of things which would be intolerable in a self-governing colony; and, as my view was that we should treat the new colonies as far as possible as self-governing colonies, it was also, as I considered, intolerable in the preliminary stages. Therefore I had recourse to an attempt to agree upon a fixed sum which should be raised immediately, or as early as the market would allow, and which should be raised by way of loan, the transaction being thus concluded at the earliest possible moment and in the simplest possible way.

Now, by whom was that view of the arrangement which was ultimately come to assented to? Of course the Boers did not assent to it. However fair it might be that they should pay some sort of indemnity for the war they commenced, you could not expect them to assent to the arrangements made willingly and voluntarily; but I must say that, at the time of which I am speaking, there did not seem to be any strong feeling—not a particle—and the reason was that they were more anxious for other things, and knew perfectly well that a very small proportion of this tax could under any circumstances fall upon them. They saw, as did everybody else, that it was really a question how much the gold industry, speaking widely and including every class engaged in it, from the millionaire to the smallest labourer, should pay. Of that interest the representatives that were got together were, I think, most satisfactory. There was not a branch of the industry, no important section of the industry, which was left out, and we specially took care to call upon the representatives of the working classes, who appeared at the final meeting. This meeting sent to me a resolution which was passed by the whole of those present with the exception of four, agreeing and pledging themselves to give their support in every way in their power. The four who did not sign that statement or requisition were the four working men. After this was known—I think within twenty-four hours, or, at all events, forty-eight hours—these four gentlemen came to me to say that they had been mistaken, that they had objected to some small question, but that they were entirely in favour of the contribution, and that they, the working men, were quite as ready to pay their share of the expense as anyone else. I may say that the broad and patriotic view taken by them was confirmed by some of the smaller trade unions of the country. That is the position, and I have no reason whatever to believe that any of these persons have changed their opinions, I am sure every one of them feels that he is bound in honour to do everything in his power to carry out that agreement.

I confess I do not think it very encouraging to them, indeed I think it is, if not insulting, most offensive to assume, as hon. Members opposite have done, that they do not mean to observe their obligation. I think it is bad policy in the case of a debt of this kind to tell your debtor he is a fool if he pays. I do not believe that that sort of argument will have any effect upon the men with whom I dealt. If you express the belief that they will be false to their word it may be they will feel offended and not pay, and I certainly do not think that you are assisting, I will not say the Government, but the people of this country, in obtaining the relief to which I think they are honestly entitled. If you do not get the £30,000,000 I think you are largely responsible for their default, but that I do not anticipate. At that time everybody expected—that side of the House as well as this—there would be an immense development and increase in the prosperity of South Africa, and that that increase would take place immediately and continuously. [OPPOSITION cries of "No."] Of course, if you hold me literally I will not say every one did, but the majority did, and let me say also that those people whose business it is to govern their actions by their knowledge or financial probabilities had complete confidence in the future of the country. There was a beginning of the development, but it came to an end very soon. Instead of finding the gold industry recovering as quickly as we had anticipated it would, and that the development of other industries such as the copper and coal mines was making greater progress, we know for a time there was a very great depression. In consequence of that the conditions under which this contribution was promised did not arise, they were postponed. It was a condition that we should not place on the Transvaal additional taxation for the purpose of paying interest on this contribution. It was another condition that we should not introduce the loan or force the introduction of the loan at a time when the money market was unfavourable, and we undertook to consult financiers conversant with the matter before we put the loan upon the market. It is quite true that I thought the loan would be introduced, and that in less than three years the whole of the contribution would be paid. In that I have been disappointed, and I think everybody with me. The trade, prosperity, energy, and enterprise have not come as quickly as I expected. Now I believe most people think that things are improved. The hon. and learned Gentleman opposite shakes his head.

SIR ROBERT REID (Dumfries Burghs)

No, I only hope it may be so.


I beg his pardon; I thought by that gesture the hon. and learned Gentleman was expressing dissent. All I can say is that all concerned in the Transvaal take a very hopeful view of the situation. It may have been impossible in the present year to furnish sufficient income to pay the interest on the first instalment of £10,000,000 in addition to what is required for the needs of the Transvaal itself, but there is no reason whatever to doubt that the money will be forthcoming next year, and, if so, next year is the time when we ought to ask those who gave the assurance to do all in their power to get the obligation acknowledged. If His Majesty's Government had not decided to give to the Trans- vaal a more liberal Constitution than it possessed before they could have gone to the Legislative Council—and there was not the least doubt as to what their decision would have been—or the Government could have done another thing, they could have gone back to the original idea of earmarking the sums to which they thought they were entitled as a charge on the revenue. But they thought they were justified in trusting to those with whom we had hitherto treated and who had given us the only undertaking that could have been given at that time, when there were no representative institutions in the Transvaal and when those gentlemen only represented themselves. The Government have explained their reasons for leaving it to the new representative authority to decide whether or not they will confirm the action of those with whom I had necessarily to negotiate.

The hon. Gentleman opposite asked me what my opinion is, whether I think we have a valuable asset? Yes I do. I am quite certain of this, that in the new Assembly there will be some of these men. I should not wonder if it did not include a large proportion of those who are direct representatives of the Boer population, still I hope there will be a majority who will accept this obligation as an obligation of honour and will give it legal application. I can only give my own opinion, I can give no proof. It is open to hon. Gentlemen on the other side to think I am too sanguine, but I am sanguine because I believe absolutely in the honour of those with whom I have dealt. I may be disappointed, but that is a hypothesis that I refuse to consider. It is because I believe in the thoroughly honourable spirit of these men that I say it is a valuable asset, and that I see no reason whatever why in a comparatively short time we should not get the whole sum.


said he remembered very distinctly the speech in which the right hon. Gentleman first dealt with the subject of the Transvaal contribution towards the expenses of the war, and he never heard a rosier picture of the prospects of any country than the right hon. Gentleman then gave of the future of South Africa. The right hon. Gentleman then said nothing about the payment of the money being conditional, except that it was conditional upon the £35,000,000 loan being issued and the absolution of the mining industry from taxation in excess of 10 per cent. Both of those conditions were fulfilled, but nothing had been paid. More than that, the right hon. Gentleman stated that the first instalment was to be paid on January 1st of last year and the second instalment on January 1st of this year. Bearing these facts in mind, it was somewhat astonishing to hear the right hon. Gentleman now declare that he had nothing to withdraw from the statement which he originally made to the House. He had no doubt that the right hon. Gentleman in his visit to South Africa was actuated by the most patriotic motives. He was quite ready to credit the right hon. Gentleman with patriotic motives; he only wished the right hon. Gentleman would be as ready to give similar credit to those who opposed him. But the right hon. Gentleman went out in a spirit of impulse and in a spirit of credulity, ready to listen to all who sympathised or pretended they sympathised with his Imperialistic ideas. The right hon. Gentleman also believed implicitly the statements which had been sent home by Lord Milner. The most brilliant anticipations were indulged in by the right hon. Gentleman and by Lord Milner and they had all turned out to be appallingly wrong from beginning to end. All he could say in reference to that was that he thought the right hon. Gentleman did owe to the House something in the nature of a withdrawal or expression of regret that he had misled the House—not consciously, of course, because he believed the right hon. Gentleman was perfectly sincere; but by the erroneous judgment he formed on the materials laid before him.

The right hon. Gentleman said it would be insulting to expect that the Boers should willingly pay any part of this contribution. He was astonished when he heard that. He did not wish to say, anything in the least suggestive of repudiation or anything affecting the honour of the persons who made the bargain, but he did say that, if they were to believe that to ask one-half of the population of that country willingly to contribute would be an insult, what conclusions were the Chancellor of the Exchequer or the House to draw as to the propriety of asking anything at all? Nothing could be more dangerous, as our experience in the United States showed, than for us to endeavour to exact from any people who were under our rule, and especially people of our own stock, money which they did not think they ought to pay. For himself, he was perfectly content with the position the Government had taken up. The people of the Transvaal should not be pressed either way; the matter should be left to their sense of right and wrong, fairness and unfairness; but he could not help feeling, when they were dealing with this whole transaction, that it was not quite right of the right hon. Gentleman, after this tremendous blunder in regard to finance had been made, to come to the House and say he had nothing whatever to withdraw from the statement he had made.


appealed to the Committee to come to a decision on the clause in accordance with the arrangement that had been made.

MR. LLOYD-GEORGE (Carnarvon Boroughs)

said he was sorry that he was not present when the arrangement alluded to by the right hon. Gentleman took place, but he understood from his hon. friends that there was nothing in the nature of a pledge given by hon. Members on the Opposition side of the House. If such a pledge had been given he certainly should not have broken it, but he was informed that it was not the case that any such pledge had been given. It was most important that they should have a full discussion upon this matter, especially after the very important speech of the right hon. Gentleman opposite. The right hon. Gentleman held a peculiarly important position in regard to this transaction, which was negotiated and carried through by him. When the right hon. Gentleman said he had nothing to withdraw from the statement he made two or three years ago he could not possibly have looked up the speech he delivered on that occasion, otherwise he would never have made such an assertion. In the course of his speech on May 6th, 1903, the right hon. Gentleman said, speaking of this transaction— In the first place it is a final arrangement. After three years we shall hear no more of the subject. The bill will have been paid; the claim will have been met. and he added— This undertaking to pay the contribution was part of the bargain on the strength of which the Transvaal was to get a loan of £35,000,000. They had had their £35,000,000, but what had become of their part of the bargain?


That is what we have got to see.


said he supposed it was another case of next year. It was always "this year, next year, some time, never," with regard to South Africa. The right hon. Gentleman said he had the pledge of four working men, but how could he expect four working men in the Transvaal to keep their pledges if Prime Ministers at home broke theirs—and at the right hon. Gentleman's instigation? The right hon. Gentleman said they had got to trust these men. They had trusted too much and had got too little. They had spent all this money, and had got nothing but promises. He remembered that the prospectus was exceedingly glowing, but the only people who had had the dividends were the mine-owners. The right hon. Gentleman told them that these mine owners had actually promised to give them £10,000,000;

in fact, they had signed such an undertaking, and said that he had got the signature of all these British patriots. Those were the people for whom this country spent £250,000,000. They signed this contract, and the right hon. Gentleman said, "They are men of honour; you must trust them, and they will pay." Was the right hon. Gentleman as sure now as he was three years ago that they would pay? These mineowners said, "Give us £35,000,000 down and we will pay you £10,000,000 some time or other." They had got the £35,000,000, but where was our £10,000,000? It was the confidence trick which had been played over and over again in South Africa. Last week two dividends, one of 137 per cent. and another of 112 percent., were declared by this industry which could not carry out a contract, and he thought the House were entitled to know when these people were going to pay this £10,000,000. It was time that they got to know once for all whether the Government really meant to press for this contribution. Every promise that had been made by the Government, every prospect that had been laid before them with regard to South Africa by the right hon. Gentleman and those who advised the House, had turned out in the past to be false, and this was only one out of the myriad of similar statements that had been made.

Question put.

The Committee divided:—Ayes, 201; Noes, 162. (Division List No. 179.)

Agnew, Sir Andrew Noel Barry, Sir Francis T. (Windsor) Chamberlayne, T. (S'thampton
Allhusen, Augustus Henry Eden Hartley, Sir George C. T. Chapman, Edward
Anson Sir William Reynell Bhownaggree, Sir M. M. Clive, Captain Percy A.
Arnold-Forster, Rt. Hn. Hugh O Bignold, Sir Arthur Cochrane, Hon. Thos. H. A. E.
Arrol, Sir William Bigwood, James Collings, Rt. Hon. Jesse
Atkinson, Rt. Hon. John Blundell, Colonel Henry Corbett, A. Cameron (Glasgow
Aubrey-Fletcher, Rt. Hon. Sir H. Boscawen, Arthur Griffith Craig, Charles Curtis (Antrim S-
Bagot, Capt. Josceline FitzRoy Brodrick, Rt. Hon. St. John Cripps, Charles Alfred
Bailey, James (Walworth) Brotherton, Edward Allen Cross, Herb. Shepherd (Bolton)
Bain, Colonel James Robert Brymer, William Ernest Dalkeith, Earl of
Baird, John George Alexander Butcher, John George Dalrymple, Sir Charles
Balcarres, Lord Campbell, J. H. M. (Dublin Univ. Davenport, William Bromley
Baldwin, Alfred Carson, Rt Hon. Sir Edw. H. Denny, Colonel
Balfour, Rt Hon. A. J. (Manch'r Cavendish, V. C. W. (Derbyshire Dickinson, Robert Edmond
Balfour, Capt. C. B. (Hornsey) Cayzer, Sir Charles William Dickson, Charles Scott
Balfour, Rt Hn Gerald W (Leeds Cecil, Lord Hugh (Greenwich) Dixon-Hartland, Sir Fred. Dixon
Banbury, Sir Frederick George Chamberlain, Rt. Hon. J. (Birm. Doughty, Sir George
Banner, John S. Harmood- Chamberlain, Rt. Hn J A (Worc. Douglas, Rt. Hon. A. Akers-
Duke, Henry Edward Knowles, Sir Lees Roberts, Samuel (Sheffield)
Dyke, Rt. Hon. Sir William Hart Lambton, Hn. Frederick Wm. Robertson, Herbert (Hackney)
Egerton, Hon. A. de Tatton Law, Andrew Bonar (Glasgow) Rolleston, Sir John F. L.
Faber, George Denison (York) Lawrence, Sir Joseph (Monm'th Round, Rt. Hn. James
Fellowes, Rt. Hn. Ailwyn Edw. Lawson, John Grant (Yorks, N R Royds, Clement Molyneux
Fergusson, Rt Hn Sir J (Manc'r Lee, Arthur H (Hants., Fareham Sackville, Col. S. G. Stopford
Finch, Rt. Hon. George H. Legge, Col. Hon. Heneage Sadler, Col. Samuel Alexander
Finlay, Sir R B (Inv'rn'ss B'ghs) Leveson-Gower, Freder'k N. S. Samuel, Sir Harry S. (Limehouse
Fisher, William Hayes Llewellyn, Evan Henry Sandys, Lieut.-Col. Thos. Myles
FitzGerald, Sir Robert Penrose Lockwood, Lieut-Col. A. R. Seton-Karr, Sir Henry
Fitzroy, Hn. Edward Algernon Long, Rt. Hn. Walter (Bristol, S.) Sharpe, William Edward T.
Flower, Sir Ernest Loyd, Archie Kirkman Shaw-Stewart, Sir H (Renfrew)
Forster, Henry William Lyttelton, Rt. Hon. Alfred Skewes-Cox, Thomas
Foster, Philip S (Warwick, S. W. Macdona, John Cumming Smith, Rt. Hn J Parker (Lanarks
Galloway, William Johnson M'Arthur, Charles (Liverpool) Spear, John Ward
Gardner Ernest M'Iver, Sir Lewis (Edinburgh W.) Stanley, Edward Jas. (Somerset
Gibbs, Hon. A. G. H. Majendie, James A. H. Stanley, Rt. Hn. Lord (Lancs.)
Godson, Sir Augustus Frederick Marks, Harry Hananel Stewart, Sir Mark J. M'Taggart
Gordon, Hn. J E (Elgin & Nairn Martin, Richard Biddulph Stirling-Maxwell, Sir John M.
Gordon, J. (Londonderry, S.) Maxwell, Rt. Hn. H. E. (Wigt'n) Stock, James Henry
Gore, Hon. S. F. Ormsby Melville, Beresford Valentine Stroyan, John
Goschen, Hon. George Joachim Meysey-Thompson, Sir H. M. Taylor, Austin (East Toxteth)
Gray, Ernest (West Ham) Mildmay, Francis Bingham Thorburn, Sir Walter
Grenfell, William Henry Montagu, G. (Huntingdon) Thornton, Percy M.
Gretton, John Montagu, Hn. J. Scott (Hants.) Tollemache, Henry James
Gunter, Sir Robert Moon, Edward Robert Pacy Tomlinson, Sir Wm. Edw. M.
Hain, Edward Moore, William Tritton, Charles Ernest
Hamilton, Rt Hn Lord G (Midd'x Morgan, David J (Walthamstow Tuff Charles
Hamilton, Marq of(L'nd'nderry Morrell, George Herbert Tufnell, Lieut.-Col. Edward
Hare, Thomas Leigh Morrison, James Archibald Tuke, Sir John Batty
Harris, F. Leverton (Tynem'th) Morton, Arthur H. Aylmer Vincent, Col. Sir C. E H (Sheffield
Haslam, Sir Alfred S. Mount, William Arthur Walrond, Rt. Hn. Sir William H
Hay, Hon. Claude George Murray, Charles J. (Coventry) Welby, Lt.-Col. A. C E (Taunton)
Heath, Sir James (Staffords, N W. Murray, Col. Wyndham (Bath) Welby, Sir Charles G. E. (Notts.
Helder, Augustus O'Neill, Hon. Robert Torrens Wharton, Rt. Hn. John Lloyd
Henderson, Sir A. (Stafford, W.) Parker, Sir Gilbert Whiteley, H. (Ashton und. Lyne
Hickman, Sir Alfred Parkes, Ebenezer Whitmore, Charles Algernon
Hope, J. F. (Sheffield, Brightside Pease, Herbert Pike (Darlington Wilson, A. Stanley (York, E. R.
Hoult, Joseph Peel, Hn. Wm. Robert Wellesley Wilson, John (Glasgow)
Houston, Robert Paterson Percy, Earl Wilson-Todd, Sir W. H. (Yorks.
Howard, J. (Midd., Tottenham) Platt-Higgins, Frederick Wolff, Gustav Wilhelm
Hozier, Hn. James Henry Cecil Plummer, Sir Walter R. Wortley, Rt. Hon. C. B. Stuart
Hudson, George Bickersteth Pretyman, Ernest George Wrightson, Sir Thomas
Hunt, Rowland Pryce-Jones, Lt.-Col. Edward Wylie, Alexander
Hutton, John (Yorks. N. R.) Purvis, Robert Yerburgh, Robert Armstron
Jebb, Sir Richard Claverhouse Randles, John S.
Jessel, Capt. Herbert Merton Ratcliff, R. F. TELLERS FOR THE AYES—Sir
Kennaway, Rt. Hon. Sir John H. Reid, James (Greenock) Alexander Acland-Hood and
Kenyon, Hn. Geo. T. (Denbigh) Renwick, George Viscount Valentia.
Kenyon-Slaney, Rt. Hon. Col. W. Ridley, S. Forde
Kimber, Sir Henry Ritchie, Rt. Hon. Chas. Thomson
Abraham, William (Rhondda) Campbell, John (Armagh, S.) Ellis, John Edward (Notts)
Allen, Charles P. Causton, Richard Knight Emmott, Alfred
Ambrose, Robert Cawley, Frederick Evans, Samuel T. (Glamorgan
Ashton, Thomas Gair Cheetham, John Frederick Eve, Harry Trelawney
Atherley-Jones, L. Craig, Robert Hunter (Lanark Fenwick, Charles
Barlow, John Emmott Crean, Eugene Ferguson, R C. Munro (Leith)
Barry, E. (Cork, S.) Cremer, William Randal Ffrench, Peter
Beaumont, Wentworth C. B. Crooks, William Field, William
Bell, Richard Delany, William Findlay, Alexander (Lanark, N E
Blake, Edward Devlin, Chas. Ramsay (Galway) Flavin, Michael Joseph
Boland, John Dewar, John A. (Inverness-sh. Flynn, James Christopher
Bolton, Thomas Dolling Dilke, Rt. Hon. Sir Charles Foster, Sir Walter (Derby Co.)
Brigg, John Dillon, John Furness, Sir Christopher
Brunner, Sir John Tomlinson Dobbie, Joseph Gladstone, Rt. Hn. Herbert John
Burt, Thomas Donelan, Captain A. Goddard, Daniel Ford
Buxton, Sydney Charles Doogan, P. C. Grey, Rt. Hon. Sir E. (Berwick)
Caldwell, James Duncan, J. Hastings Griffith, Ellis J.
Cameron, Robert Ellice, Capt E C (S. Andrw'sBghs Hammond, John
Harcourt, Lewis M'Kean, John Samuel, Herbert L. (Cleveland)
Hardie, J Keir (Merthyr Tydvil M'Kenna, Reginald Seely, Maj. J. E. B. (Isle of Wight)
Harwood, George M'Killop, W. (Sligo, North) Shackleton, David James
Hayden, John Patrick Morgan, J. Lloyd (Carmarthen) Shaw, Charles Edw. (Stafford)
Healy, Timothy Michael Moss, Samuel Sheehan, Daniel Daniel
Helme, Norval Watson Moulton, John Fletcher Shipman, Dr. John G.
Hemphill, Rt. Hon. Charles H. Murphy, John Sinclair, John (Forfarshire)
Henderson, Arthur (Durham) Nannetti, Joseph P. Slack, John Bamford
Higham, John Sharp Newnes, Sir George Smith, Samuel (Flint)
Holland, Sir William Henry Nolan, Col. John P. (Galway, N) Soames, Arthur Wellesley
Hope, John Deans (Fife, West) Nolan, Joseph (Louth South) Soares, Ernest J.
Hutchinson, Dr. Chas. Fredk. O'Brien, James F. X. (Cork) Spencer, Rt. Hn. C R. (Northants
Isaacs, Rufus Daniel O'Brien, Kendal (Tipperary Mid Strachey, Sir Edward
Jacoby, James Alfred O'Brien, Patrick (Kilkenny) Sullivan, Donal
Johnson, John O'Brien, P. J. (Tipperary, N.) Taylor, Theodore C. (Radcliffe)
Jones, Leif (Appleby) O'Connor, James (Wicklow, W. Thomas, Abel (Carmarthen, E.)
Jones, William (Carnarvonshire O'Connor, John (Kildare, N.) Thomas, Sir A (Glamorgan, E.
Joyce, Michael O'Donnell, John (Mayo, S.) Thomas, David Alfred (Merthyr
Kennedy, Vincent P. (Cavan, W O'Dowd, John Thomas, J A (Glamorgan, Gower
Kilbride, Denis O'Kelly, James (Roscommon, N. Tillett, Louis John
Kitson, Sir James O'Malley, William Toulmin, George
Lambert, George O'Mara, James Trevelyan, Charles Philips
Lamont, Norman O'Shaughnessy, P. J. Wallace, Robert
Law, Hugh Alex. (Donegal W.) Parrott, William Walton, Joseph (Barnsley)
Lawson, Sir Wilfrid (Cornwall) Partington, Oswald Warner, Thomas Courtenay T.
Leese, Sir Joseph F. (Accrington Pearson, Sir Weetman D. Wason, Eugene (Clackmannan).
Leigh, Sir Joseph Pease, J. A. (Saffron Walden) Wason, John Cathcart (Orkney).
Leng, Sir John Pirie, Duncan V. White, George (Norfolk)
Levy, Maurice Power, Patrick Joseph Whitley. J. H. (Halifax)
Lloyd-George, David Reddy, M. Whittaker, Thomas Palmer
Lundon, W. Redmond, John E. (Waterford) Wilson, Fred. W. (Norfolk, Mid.)
MacNeill, John Gordon Swift Reid, Sir R. Threshie (Dumfries Wilson, Henry J. (York, W. R.)
MacVeagh, Jeremiah Richards, Thomas (W. Monm'th) Wilson, John (Durham, Mid.)
M'Arthur, William (Cornwall) Rickett, J. Compton Young, Samuel
M'Crae, George Roberts, John H. (Denbighs)
M'Fadden, Edward Roche, John TELLERS FOR THE NOES—Mr.
M'Hugh, Patrick A. Roe, Sir Thomas Dalziel and Mr. Benn.

And, it being half-past Seven of the clock, the Chairman left the Chair to make his Report to the House.

Committee report Progress; to sit again this evening.