§ A Chancellor of the Exchequer who touches the tobacco duty is apt to find, as many of my predecessors have found, that he has put his hand into a wasps' nest. But there is one change under this head which, in view of what took place in the last Parliament and of our subsequent experience, I feel bound to propose without delay. I almost tremble to utter, and hon. Members who were present in the last House of Commons will, I am sure, tremble to hear, the two words "leaf" and "strips." Hours and days, and even weeks, of embittered controversy are associated in our memory with these simple monosyllables. It will be in the recollection of all who sat in the House in 1904 that my predecessor for the first time differentiated between leaf and strip tobacco, and proposed an extra duty of 3d. per lb. on strips. The ground alleged for the alteration was that stripping was a process of manufacture, and to admit raw leaf and strips at the same rate of duty was in effect to discourage stripping at home and encourage it abroad. It was further contended that as leaf carries more moisture and sand than strips, there was more smokable tobacco in a pound of strips than in a pound of leaf, and therefore it ought to pay a higher duty. A fierce controversy ensued, in which my hon. friend who sits near me, the Secretary of the Treasury, and my hon. and learned friend the Solicitor-General, took an extremely belligerent part, and the Chancellor of the Exchequer was only able to carry through his scheme by consenting to a rebate of half the duty, 1½d. out of 3d., on all strips then in bond. The effective duty has ever since been at that rate, 1½d., as the quantity of strips in bond was over 140,000,000 lbs. weight—;rather more than two years consumption. I am satisfied that little or no revenue will ever be derived from the 3d. duty. 302 The curious result, which was predicted by both the hon. Gentlemen, has been that in two years the stock of leaf in bond has considerably more than doubled, and that of strips has diminished by half. A differential duty is in my opinion wholly unjustified, being at the same time prejudicial to the trade and unfruitful to the revenue. I propose to reduce the duty on strips from 3s. 3d. to 3s. 0½d. which will leave a difference of a halfpenny between strips and leaf. Leaf will have that advantage, and considering the relatively short supply, and that that supply cannot be materially increased for the purpose of consumption for the best part of two years, the existing holders of leaf ought to have no difficulty in disposing of their stocks. The reduction of the duty on strips will entail a reduction in the scale of drawbacks. I propose that the new scale of duties shall come into force at once, and the new drawbacks three weeks hence, May 21st. I do not anticipate in view of the prospect in any event of a considerable addition to the consumption of tobacco, that this charge will involve any appreciable loss of revenue.