LAND PURCHASE (IRELAND)(FINANCE.)

HC Deb 05 July 1907 vol 177 cc978-1035

MR. JOHN REDMOND (Waterford)

I rise to move the following Resolution: "That, in the opinion of this House, the method at present in force for providing money for Land Purchase in Ireland has broken down in practice, and, if persisted in, will throw such a ruinous charge on the already overburdened ratepayers of Ireland as to endanger the entire scheme of Land Purchase." The question with which the Resolution deals is not an attractive one. It is an intricate one, and I do not suppose that there are very many English Members of this House who are to any appreciable extent familiar with the intricacies of Irish land finance. I can quite imagine some English Member saying to me that, after all, we made our bargain in 1903 on this question of land purchase finance, and that we ought to be called upon now to stand by it. In the first place, I think I shall be able to show that the bargain then made with the Treasury has not been carried out. Further than that, I might plead that no one could foresee, at any rate no one did foresee, that the money market would continue as it has done, and that it would remain as it is at the present moment. But apart from this consideration altogether a state of things has arisen in connection with the working of land purchase in Ireland of so serious a character that something must be done, unless either land purchase is to come to an absolute stop, or else absolutely ruinous charges are to be thrown upon the ratepayers, entirely dislocating the whole system of local government in the country. The great scheme of 1903, therefore, with all the great hopes based upon it, is at this moment in imminent danger of complete collapse owing to the state of things which has arisen. Enormous and, as I have said, ruinous charges are about to be thrown, and to some extent have been thrown, upon the ratepayers, and the whole system of local government in Ireland, which was established in 1898, is threatened with destruction. For a considerable time it has been apparent to those who are taking an interest in this subject that the finances of the Act of 1903 have proved to be unsound and must be completely overhauled, but it was only a few months ago that this growing dissatisfaction came to a head, and that people in Ireland thoroughly realised the state of financial unsoundness in which the whole system was rooted. A few months ago, without notice, the ratepayers, through the county councils, were called upon to pay £70,966 for losses in connection with the working of the Land Purchase Act. They had received no notice whatever, and had struck their rates for the year. The money was deducted from sums given to them for their share in the death duties and the agricultural grant and the Exchequer contributions. That in itself is an exceedingly serious matter, but after all its real seriousness lies in the fact that it is simply a symptom of the complaint that we have to make as to the general financial position in connection with the land purchase. It was useful in this way, that it immediately arrested attention in Ireland and in this House. Hon. Members will recollect that a series of Questions were asked across the floor of the House and answered voluminously by the Prime Minister, and the whole of the House recognised that the matter was so serious that the Prime Minister offered us this opportunity for a thorough discussion of the whole question. Let me if I can, in a few simple words explain to those Members who are not familiar with Land Act finance how this matter stands. The money which is required for the working of the Land Purchase Act in Ireland is raised by 2¾ per cent. stock, and the dividend on the stock is paid out of the purchase annuities which purchasers pay to the Land Commission. These annuities amount to 3¼ per cent. on the amount of purchase money. A½ per cent. is retained as sinking fund, and the 2¾ per cent. which, as interest, goes to make up the income of the Land Purchase fund from which these dividends are paid. Therefore, it is apparent that if the income is insufficient to pay the dividends there will be a loss, and it is provided by the Act that that will fall upon the guarantee fund, which I will explain. Now this 2¾ land stock, too, has been from the very first floated at a considerable loss— at a discount of from 12 to about 15 per cent., and this loss is made good by the issue of what is called excess stock, the interest and sinking fund on which are charged on the Irish Development Grant Fund. This loss for discount on flotation of stock is quite distinct from the £70,000 that has been claimed from the county councils, which arises from a different kind of stock, and this loss on flotation is infinitely more important. It runs into millions of money. Now that loss is charged on the development fund, and after that it is charged on the Guarantee fund. The whole of this loss on flotation, if the Development fund fails, will fall on the Guarantee fund, that is to say upon the ratepayers of Ireland. Now let me ask what is this Development fund? In the year 1902 a great Education Bill was passed for England and an annual sum of £1,400,000 was voted for the purpose to England under that Act, and in accordance with the principle that had been acted upon for some years it was decided that an equivalent sum should become payable to Ireland. Of course, in strict justice that equivalent sum should have been spent upon the same object for which that £1,400,000 was given to England, namely, to educate, but it was not, and it was earmarked to meet, in the first case, losses on flotation of land stock. That equivalent fund amounted to £185,000 a year, and there was a charge of £50,000 a year for the first four years towards meeting the loss of working of land purchase. These four years are now up and, therefore, on making the calculation I need not go into that part of the charge at all. In that time £200,000 has been taken out of the Development fund, but the charge no longer exists. The permanent charges on the funds are £20,000 for the Congested Districts Board, and £5,000 for Trinity College. There has boon already charged on this fund an annual sum of £70,253 for losses incurred in the flotation of land stock, making, therefore, a permanent annual charge at this moment of about £95,000— I think my figures are right, but they are subject to the correction of those who have official information — on the Development fund of £185,000, leaving about £90,000 a year only towards meeting future losses on the flotation of land stock. About twenty millions of land stock have already been issued, and if land stock in the future is issued to about the same amount every year and with a similar loss to that incurred up to the present, then this Development fund, in the course of two or three years, will have absolutely disappeared, and thon nothing will stand between the loss on the flotation of land stock and the Guarantee fund which is, in other words, the ratepayers of the country. Now, what is this Guarantee fund? It consists of a cash portion and a contingent; portion. The cash portion consists of the portions duo to Ireland of the death duties, the agricultural grant, and the Exchequer contributions. The contingent portion consists of the grant in lieu of rates on Government property, grant for national education, grant for industrial schools, grant for the Poor Law (medical and educational) and the grant for the lunatic asylums of the country. I need not point out to hon. Members in this House that the ceasing of these funds, the withholding of these funds from the public bodies of Ireland, would bring to a stop the whole system of government of the country; and in point of fact, however this loss is to be met in future, no practical politician can say that it can be laid on the ratepayers of Ireland and upon those funds. Allow me to give you some figures as to what this loss will probably be. The Chief Secretary, I think, said recently that the total sum required for land purchase in the end would not be much short of 160 millions. Of that sum about twenty millions has already been raised. The issue of twenty millions more will extinguish altogether the Development fund, That will leave 120 millions still to be raised, and will leave the loss on the flotation of the 120 millions to be met by those funds going at present to the ratepayers of Ireland. I have here an interesting and valuable document issued the other day by the county councils in Ireland which met to consider this matter. Here is what they say:— The average loss upon land stock already issued has been 12 per cent., involving a charge upon the Irish Development Grant in respect of each £1,000,000 of land stock issued of £4,000 per annum for a period of 68½ years. The issue of, at the outside calculation, £40,000,000 land stock would, therefore, completely bankrupt and exhaust the Irish Development Grant. The total cost of land purchase in Ireland has been estimated to amount to £160,000,000. Therefore, after the exhaustion of the Irish Development Grant the entire loss of flotation at a discount of up to £120,000,000 land stock, will fall upon the Guarantee fund, and in the words of the Chief Secretary— Every penny of loss on the scheme of land purchase will have to be borne in a short time by the ratepayers of Ireland. Then the report of the County Councils' Committee goes on to say— At present market prices land stock cannot be floated at a lesser discount than 15 per cent. At this discount the loss on flotation of £120,000,000 land stock would amount to £18,000,000. The rateable valuation of Ireland is £15,536,767. A loss of £18,000,000 is equivalent to 23S. 2d. per £ of the rateable valuation. Going on the basis of these figures and on the basis of the money market continuing as it is now the report says— The loss to the ratepayers in respect of land purchase may be broadly stated thus— a rate of 9½d. in the £ for 68½years, an annual payment of over £600,000, a total payment of £41,000,000. Now it is not a question as to whether these figures are strictly accurate. They are estimates based on problematical circumstances— based on a forecast of the money market and so forth, and the amount which it is estimated it will take to finish these transactions. These are all problematical matters, but still they are figures of such a character as to show to the House without the possibility of doubt what an enormously grave question this is for the ratepayers of Ireland, and how serious the question is which the Government must immediately take into consideration. Let me say a word on the immediate and small loss which I have already alluded to, and the infliction of which really arrested public attention in Ireland to this whole question. This immediate loss of £70,966 which has been deducted from the county councils is for losses quite distinct from the flotation loss of which I have been speaking. It consists of certain losses which according to the view of the Treasury ought not to fall upon the Development Fund in the first instance at all, but ought to pass over the Development Fund and fall on the Guarantee Fund immediately. This loss of £70,966 is made up of five items. The first was arrears of annuities, £9,119; unearned dividends on issue of stock, £23,750; advance dividend, £13,650; interest due but not received, £15,500; and unproductive balances, £8,977— making a total of £70,966. These losses are quite distinct from the enormous losses I have been dealing with on flotation, and they arise in this way. If all the cash raised by the issue of Land Stock was immediately issued and began to bear interest, there would be just interest enough to pay the dividends on that stock. But all the money raised by Land Stock cannot be immediately issued, and in any case there is no margin to meet the necessary working expenses and temporary losses. This loss, according to the present view of the Treasury, should fall in the first instance on the Development Grant Fund. I contend that the Treasury has not carried out the intention of the framers of the Act of 1903. It was distinctly their intention that this loss should fall in the first instance on the Development Fund. The Treasury has not carried out its bargain in this respect, and the ratepayers of Ireland have been wrongfully charged with this £70,966. Take these items: arrears of annuities, £9,119, that is not a real loss, for most of that sum has since been paid. The proportion of loss on account of the non-payment of annuities has been and will be comparatively small, and at any rate I do not suppose that anybody will object that Ireland as a whole ought to be made responsible for any default on the part of the purchasers in the payment of their annuities. I do not lay stress on that. But the second item is peculiar and is the most important of all, viz., £23,750 for what is called unearned dividends. The way that arises is that in order to make this Land Purchase Stock more attractive on the market it has been provided that a full half-year's dividend shall be paid on the first dividend day of the stock, so that stock bought in March or April would on the 1st of July have six months interest paid. Manifestly, therefore, there is a loss on the interest for some months. It is said that if that attraction was not held out to purchasers the price of the stock would be worse, and the discount on flotation would be greater. That may be so, but certainly the loss ought not to fall at present, at any rate on the ratepayers of Ireland, but on the Development Fund. I want to know what the Government have to say on this matter, and how they propose to deal with it. That is the real important item in this £70,966. The-next item is "interest due but not yet received." This also is not a genuine loss, but only a book-keeping loss. The interest which those people had to pay has been paid by now. It is a great embarrassment that county government in Ireland should be troubled by what is after all only a book-keeping matter. The last item is "unproductive balances," amounting to £8,977. I regard that as a monstrous imposition. I should say that large balances should not be left in the hands of the banks without interest to the disadvantage of the ratepayers. The right hon. Gentleman the Member for Dover on 25th March, 1903, when introducing the Land Purchase Bill, referred to this matter— This is not the only difficulty which attaches to the stock operation. There may, in the earlier years there must almost inevitably, be losses clue to the issue of an amount of stock which is temporarily in excess of the amount of cash you are prepared to advance in Ireland. I say that it was never intended that the ratepayers of Ireland should pay for that. The right hon. Member for Dover on the same occasion, speaking of the losses that might arise, said that in certain cases— You have to pay your dividend on the stock which has been issued, although you do not get the repayment at the early date which you anticipated would be the case. Then it is anticipated that there would be losses due to the issuing such a stock below par. Then the right hon. Gentleman went on to say that— Last year the House voted an annual sum of £1,400,000 to a purely English purpose, viz., that of education in this country, and we may say that in strict accordance with precedents which have been observed we now owe to Ireland or Ireland really possesses at this moment in equity an annual sum of £185,000. The losses which may be due to the discrepancy in the dates, and the losses which may be due to flotation in temporary excess of the amount under-written in Ireland we have covered by placing upon this money, which is not British but Irish money, a first charge of £50,000 during each one of the first four years. To meet the difficulty of a loss accruing from issuing Irish stock below par this Irish money will also be charged with the repayment of any additional stock which you have to issue. I contend that in this matter the Treasury has not carried out the bargain made by the right hon. Gentleman, and certainly not the intentions of the framers of the Act. I say that as long as the Development Grant money lasted the Treasury was bound to take money out of it for the purposes I have indicated. The really serious feature of the situation is that the Development Grant Fund may now be regarded as practically gone. At any it is bound soon to disappear. How then does the Government propose to meet all these charges arising out of the fluctuations of the market, and the losses in the working of the Act, which are calculated to amount to £40,000,000? I know that no Government would throw these charges on the shoulders of the ratepayers and thereby bring county government in Ireland to a standstill. I ask the Government what they are going to do. How are they going to deal with this £70,000? And have they considered the larger question? Are they going to allow land purchase in Ireland to stop, or to starve the county councils? I take it for granted that they must be contemplating some entirety new financial scheme in Ireland. It is no business of ours, at all events it is no business of mine, and I have not sufficient evidence in my hands to put forward a scheme of this sort, certainly not on my own initiative and without consultation with experts. Has it, however, never occurred to the Government that this Land Stock at 2¾ per cent. sells at practically the same price as Consols at 2½per cent.? Would it not be possible to raise all the sums necessary for land purchase by the the issue of Consols and make some provision whereby the National Debt Commissioners should charge the Land Commission 2¾ per cent. on the money for land purchase, and leave the ¼per cent. over to meet all these losses? That to the financial expert, may seem a somewhat crude proposal. I am not a financial expert, but I want to know whether the Government have considered the suggestion and whether it is worth considering. It seems to me it is a proposal worth considering. If it is a feasible proposal, it certainly is an easy way of meeting the difficulty. But in any case I end as I commenced by pressing on the Chancellor of the Exchequer and the Irish Government that this is a most serious matter, and that it cannot possibly be allowed to rest as it is at this moment. I ask, therefore, from whoever is going to speak on behalf of the Government, first of all a declaration with reference to this £70,000 which, I contend, ought never to have been collected from the ratepayers, but ought to have fallen on the Development Fund. If they admit that, will they refund this money to the county councils and take all from the Development Grant? What do they propose to do in connection with that £70,000 next year? But that being only a small and temporary question, I ask them on the larger question, have they considered their policy? Are they going to allow land purchase to come to an end, or are they to allow the county government of Ireland to come to an end, or fulfil their manifest duty— no matter what responsibility they might have had for the framing of the Act of 1893— and come to the rescue by some well-considered plan that, on the one hand, will enable land purchase to go on in the country, and, on the other hand, prevent this enormous and absolutely ruinous burden from being cast on the already over-burdened ratepayers of Ireland? I beg to move.

*MR. GINNELL (Westmeath, N.)

seconded. He said it was lamentable that on this subject of Irish land, on which drastic legislative reform was so urgently needed, they were to get no such reform this year, and could have but a slender hope of it even next year. Nor were they certain that the reforms within the scope of administration would be carried out. The financial arrangements under which the present loss arose were only one aspect of the land question. To contract this still further by treating these losses as a question exclusively of high finance, and disregarding the leakage in individual cases, would be like trusting one's ship at sea, with all its occupants, to a chain, all the links of which were rotten. The losses known to the Treasury being big, glaring, and recorded in public accounts were calculated to attract attention. Great though they were, being comparatively few in number, he maintained that they were exceeded in amount, still more in gravity of consequences by the aggregate of the losses in individual eases which were not recorded in public accounts and which did not come to the official knowledge of the Treasury, and the existence of which the Treasury tried to obscure, conceal, and even deny. The loss in each individual case might be small. However severely it hit a family, however annoying it might be to a county or a district council whose income it diminished, if it stood alone it would matter little to the entire country and would be beneath the notice of superior statesmen. But when the families severely hit comprised a large proportion of the population; when the average loss on the £100 farm exceeded £1,880; when the aggregate of these losses exceeded the total loss of which account was taken by the Treasury and the forces of economic loss made their growth certain; when they threatened not only the individual but the ruin of many families, and the whole country with stagnation and bankruptcy, and when this was brought about by practices so dishonest as to justify general repudiation, the matter became worthy of the attention, if not of accountants, at least of all who cared for the welfare and peace of the country. Confining his remarks to the modest finance of individual cases, which, if not made right, necessarily vitiated the whole superstructure, he would concentrate his attention upon what he considered the most important point and the kernel of the matter, that was, the official method of dealing with the ownership of property. This method, in violation of morality, law and business principles, had been in operation since the administration of the Land Act of 1881 was placed in the hands of partisans, but it had received legislative sanction under the Landlord Relief Act of 1903. The relevancy of a method of rent fixing to the question of prices arose from the fact that prices were now being fixed upon rents without any immediate inspection. If the rents were unjust, so also necessarily must be the prices based upon them. But although unjust rents were bad, yet being in their nature temporary and binding only individuals who could escape at least through the Bankruptcy Court without involving their neighbours, the country could tolerate them. When, however, unjust rents were changed for permanent annuities calculated upon unjust rents and upon individuals breaking down, the ratepayers must make good the damage; it was impossible to deny either the dependence of price upon rent or the dangerous consequences of what was occurring. The importance of a just system of rent fixing was not diminished but enhanced by the introduction of a system of purchase in zones without inspection, by making the price depend not upon value but upon the skill of one of the parties, and the simplicity and embarrassment of the other, and by extending the liability for these fancy prices beyond the so-called purchasers to their rate paying neighbours. An embarrassed tenant ironically exiled a purchaser had no more to do with the fixing of the price than a drowning man had to do with the growth of the straw at which he clutched. To avoid eviction and keep a roof over the heads of his wife and children the tenant agreed to pay whatever price the landlord fixed, and he then borrowed money, if he could get it to borrow, to pay the landlord for the privilege of being allowed to sign a. purchase agreement at a price which he knew his holding would never yield and which he knew to be more than the gross value of the holding, including his own property in it. It might be said that this was dishonest conduct, but the law was dishonest towards the tenant and left him no alternative except to walk out of his home, which was in part his property, leaving that property in the hands of his co-partner, who was in effect his enemy. The landlord was paid in cash a price which was fixed by himself, with a bonus of 12 per cent. calculated upon and added to it. Money for this purpose was raised in a way in which money was never raised for English purposes and in a way which involved enormous loss, and the Irish ratepayers were bound to make good the damage. It was a system so unjust, dangerous, and indefensible, so calculated to bring about general bankruptcy and to justify general repudiation, that no free and sane people would submit to it. To boom the Act which enabled this infamy to be committed and then divert attention from the infamy itself, which was a daily and universal occurrence, to a mere amendment of Treasury rules, would be silly if it were not done by right hon. Gentlemen who knew how futile it was. The proposed amendment of Treasury rules would not in the least tackle this evil, or protect either purchasers or ratepayers against the monstrous system by which these monstrous prices were extracted. It seemed to him that this scheme was merely intended to throw dust in the eyes of the public, and was simply an elaborate pretence of locking the stable door after the steed had been stolen. It was evident that the Treasury did not intend to bear this loss which was involved by ignoring the tenant's interest in the holding and paying the landlord the gross value of the whole holding which was jointly owned. This involved handing over to one partner the property of the other, because the only thing that could be sold was the property of the one partner. The landlord was paid public money for that which they knew was not his, and the tenant in paying the entire amount paid for what was already his own property. The British Parliament, it was true, had repeatedly tried to protect the tenant, but in vain. It would be hard to devise language more clear and explicit than that used in various Acts which were intended to protect the tenant's property in his holding. The Land Act of 1870 in Clause 5 provided that all the improvements should be deemed to have been made by the tenant or his predecessors in title, and in Clause 8 of the Act of 1881 it was provided that no rent should be payable in respect to the improvements on the holding made by the tenant or his predecessors in title and for which the tenant or his predecessors had not been compensated. Similarly the tenant's pre- existing right to sell his tenancy was confirmed by the first section of the Act of 1881 as follows:— "The tenant for the time being of every holding not herein specially excepted from the provisions of this Act may sell his tenancy for the best price that can be got." That language was plain enough for every intelligent and honest man, but the administrators and the land laws had proved more than a match for Parliament. In spite of those plain enactments and of common knowledge that the tenant made all the improvements and the landlord none, the officials acted on behalf of one against the other of the two parties. Instead of administering strict justice the administrators and the landlords of Ireland held that the tenant had no property in his holding; that the thing which Parliament empowered him to sell as his own was not his but the landlord's, and that in case of purchase he must pay for what was already his own. In short, they snapped their fingers at Parliament. All the statutes to which he had referred in support of justice to the tenant still had such force as Parliament could give them, but every provision favourable to the tenant was disregarded. This insecurity obviously prevented the tenant making such improvement as a freeholder would make, although he was forced to make some improvement in order that he might be able to live. To require him legally to prove and establish the cost of all his improvements was to deprive him of the statutory presumption in his favour and deliberately confiscate his property and transfer it to the landlord. It was worse than that, because it imposed upon him, in the form of either rent or annuity, a perpetual fine for having made those improvements. The officials with the fullest knowledge of these facts talked of the fairness of charging the tenant the full true value of his holding. That would be fair if the tenant had acquired the holding in that condition from the landlord as the result of a fair business transaction as tenants did in England, but when as was the rule in Ireland the holding had never been the subject of a fair business transaction, and when the buildings, drains, fences, farm roads, and other improvements, constituting, in the case of a reclaimed farm, the greater part of its value, had been made and maintained by the tenant and his predecessors in title who had never been compensated for them, the actual value of those improvements belonged to the tenant and he should not be charged for them in either rent or price. When the gross value of the holding was ascertained the landlord's share and the tenant's share should be fairly ascertained, and the tenant should be left in undisturbed possession of that which was his. The landlord should be compelled to sell to the tenant for the value of the raw material. That and nothing more should the tenant be obliged to buy. The Act of 1881, if legally administered, would have done all this and would have settled the land question by reducing the rents to economic and just dimensions and in that way have made the landlords sell out at a smaller number of years' purchase. The partial failure of the Act of 1881 and the subsequent worry of further legislation was due to the placing of the administration of that Act in the hands of partisans. It was a heartless mockery and an insult to the people whose equities were being trampled upon, whose property was being filched in this way before their eyes, to attempt to befool them by the simple word "equity," and to suggest that an Amendment of a Treasury rule would cure the evil. The people of Ireland knew there had never been such a thing as equity as a condition of the administration of English Land Laws in Ireland, and the empty word "equity" now used to deceive them was a bird from the same nest that produced the zones. Under these spurious conditions the losses had arisen under which the ratepayers were now smarting and far greater losses and dangers were being run. It followed that so far as ratepayers and individuals were concerned, unless something more practical than a suggested Amendment of Treasury rules was done, the whole system would go on as before, and neither ratepayers nor purchasers would benefit by this debate. All the rules, forms, and instructions under which these officials worked disclosed the same strong bias in favour of the landlord and against the tenant, and therefore contributed to the loss and danger. They were all deliberately designed to ignore and by ignoring to confiscate the tenant's property in his tenant right and improvement. In this way the tenants of Ireland had been continually juggled out of their property. A reform was quite within the power of the Government if they were disposed to carry it out without any new statute. If the present Government with its ample powers and its principle of universal justice failed to discharge its duty in this matter it could only be for want of will.

Motion made, and Question proposed, That, in the opinion of this House, the method at present in force for providing money for land purchase in Ireland has broken down in practice, and, if persisted in, will throw such a ruinous charge on the already overburdened ratepayers of Ireland as to endanger the entire scheme of land purchase."— (Mr. John, Redmond.)

MR. MOORE (Armagh, N.)

said he did not wish to deal with controversial matters; therefore the hon. Gentleman who last spoke would forgive him if he did not follow him in the very controversial matters he had raised. He could hardly see the relevance of some of the hon. Gentleman's remarks to the Motion, the purpose of which was to enable the House to discuss the necessary means for providing the funds for the working of the Land Act and its condition at the present time. The question was financial, and largely one for experts. When they had heard the proposals of the Government they would criticise them fairly and, probably, fully; but this was really a question for financial experts, and one which only they could explain. Consols were now standing somewhere about eighty-four, and by a very ordinary sum in proportion the man in the street should be able to see that Irish land stock, which received a higher rate of interest, should be quoted at about ninety-one, and he would suggest that the attention of the Government should be directed to finding out the cause of the extraordinary disproportion between the prices of the two stocks. Some held the opinion that Irish land stock should have a more attractive name, whilst others thought it should be made better known by being planted out by means of the Post Office savings bank. These were all means of improving the market for land stock, and it was that line which he expected the Government would take, but he left that to be dealt with by experts, and turned to the very serious state of things in Ireland. The sun shone on the just and the unjust alike, and the county council authorities were complaining very bitterly of the stoppage of these grants in aid. He did not think that there was anything more than a temporary embarrassment. It might or it might not be, and he did not suppose that anyone was ready to commit himself to the principle that because the pinch was felt in 1907 it was going to continue for ever, nor were they disposed to say that the whole finance of the Act of 1903 had broken down; at the same time, it did not allay their desire to see this temporary embarrassment remedied as soon as possible, and he and his friends would always be ready to co-operate with other members from Ireland in any way in order to get over the difficulty. The whole policy of the Land Act of 1903, which was acclaimed by hon. Gentlemen below the gangway just as much as by Unionists, was that everything in Ireland had to be earmarked to provide capital and security for land settlement. They gave it with a light heart. The civil service was to be reduced, and there was to be retrenchment in every branch all through the country. Every fund which came to Ireland prior to 1903 was mortgaged in some way or other as a guarantee of security for the purpose or working out the Land Act. It was owing to the very low price of Consols that the present pinch was being felt. That was the position, and he thought everybody who was interested in having a good market must seek to keep up the credit of this stock by every means in his power. He thought, however, that it was not good policy on the part of those who were interested in the working j of the Act to say in the House that there was a chance of circumstances arising in the near future which would justify repudiation, and he should not understand that from anything that fell from the hon. and learned Member for Waterford. They had had their share of the money in all parts of Ireland, and he did not think that there was any chance of repudiation. If, however, such repudiation was contemplated by those responsible he considered that the British taxpayer might very rightly decline to advance any more money for the purpose of the Land Purchase Act. That being so, he thought Members should help the Government in every way in their power, if their proposals were reasonable, to finance the Act properly. He trusted that the Government would do what they could to meet the necessities of the present case.

*MR. JOHN O'CONNOR (Kildare, N.)

said the hon. and learned Member for North Armagh could scarcely have been in the House on the 22nd April, or he would never have made use of the words "temporary embarrassment." From the answers to Questions then put from that side of the House, it was clear to everybody that the embarrassment which had arisen was not temporary, but was much more likely to be permanent; neither was the hon. and learned Gentleman sufficiently a judge to know that the breakdown was not a breakdown which affected the stock, but one that affected the Irish people who paid the rates. The loss which had to be made good by Irish rates was caused by the security being given to the persons who invested in the stock. The losses in Ireland were induced by the gains of those who dealt in the stock. The speech of the hon. Member for Water-ford could not possibly affect the issue of stock. He felt sure the House fully appreciated the gravity of the situation. His hon. and learned friend had made it clear from the speech of the right hon. Gentleman who was responsible for the introduction of the Act of 1903, that at all events, so far as losses by discount were concerned, they were to be paid out of the Irish Development Grant. But there still remained the large item of unearned dividends. The unearned dividends, which amounted for the last two years to £23,000, and in previous years to £60,200, were a very serious item, and he thought there was some misapprehension with regard to them. In reference to the issue of stock, the Secretary to the Treasury stated, in answer to a Question by the hon. and learned Member for Waterford on the 22nd April, that it was an open question whether unearned dividend could not be treated as a capital charge, to be paid for out of the annuity fund or the Irish Development Grant, but he added that an amending Act of Parliament would be required in order to effect that purpose. That might or might not be so. His proposition was that there was power already in the Act to deal with unearned dividend in connection with the issue of stock. He directed attention to Section 28 of the Act, Sub section 4, which said— Any sums raised by means of the stock after providing for the expenses of the issue shall be carried to the credit of the capital account of the Irish Land Purchase Fund. His submission to the Government was that this unearned dividend was really an expense of issue, and he directed attention to Section 29— The stock may be issued in such time, in such amount, and subject to such conditions as the payment of deposits and instalments and the issue of scrip certificates carrying dividends. He submitted that the issue of these scrip certificates bearing dividends was not unlike the issue of debentures by a company. A company provided when it issued debentures that the loss incurred upon such issue was not to be paid out of profit, but out of capital. So here the issue of scrip was the cause of the loss to the fund, and not the payment of dividends. He therefore submitted that the expenses of the issue should have been deducted from the capital before that capital was carried to the credit of the Land Purchase Fund. If that was done those sums would never have fallen upon the rates, and would have been provided for, as he submitted, by the very terms of the section. There they had provision made for a charge on the special fund, but there was no provision for any loss incurred except what was provided by Section 28. There was no mention that there should be a guarantee fund or an Irish Development Grant, because, he submitted, it had been provided by Section 28, Subsection 4. There was perhaps another reason. The loss arising by the issue of scrip certificates occurred only once. If it were a continuing loss it would be provided for, but occurring only once, and that at the moment of issue, he submitted to the band of lawyers on the Front Government Bench that it should have been regarded as an expense of issue, and charged to the capital raised. If it were intended that this should fall on the guarantee fund the Act would not be silent on the point, because it expressed by a particular section where the loss was to fall when it was on account of discount. This affected the items of £63,200 and a portion of the £23,750— probably it would affect an amount of about £70,000, and therefore would cover the losses which had been charged to the rates during this year. The serious aspect of the matter was that the loss to the county councils was an increasing loss. As the development grant was extinguished, so would these losses fall upon the death duties in the next instance. It was estimated that when an issue of £40,000,000 had been made, the Irish Development Fund would be exhausted. If the £40,000,000 would exhaust the £160.000 which was available, it would take £600,000 a year to provide for the loss incurred on account of discount on £150,000,000, which, it was estimated by Mr. Finucane, it would take to carry out the whole of the land purchase transaction. That discount of £600,000 per annum must come out of the rates before the transaction was complete. There was to credit, as against that £600,000, the Irish development grant of £160,000, and the death duties, amounting to £230,000, making £390,000. That, deducted from the £600,000, left £210,000, which would go against the £727,600, the amount of the agricultural grant made under the Act of 1898; so that, after this transaction of land purchase was carried out, they would only have £500,000 left as the grant in aid of rates in Ireland, instead of £1,117,600. All that difference would fall upon the rate in Ireland. In reference to these figures, which referred to the whole country, he had to bring before the right hon. Gentleman the particular case of the county of Kildare, part of which he represented. In Kildare they had been very severely hit owing to the large transanctions of land purchase that had taken place in that county. He submitted that they had been severely hit by an operation which was against the spirit and the letter of the Act of Parliament itself. It was provided by the Act that because of the expenses on account of these matters, the grant made out of death duties should first be made applicable to the loss, before the Agricultural Grant was touched. Now, by what operation did it come to pass that, while the Irish death duties were still, he would not say intact, but were unexhausted, any portion came upon the Agricultural Grant? He submitted that the process by which it was done was in opposition to the terms of the Act itself. What was the operation? First of all, there was allocated to each county its proportion under the Agricultural Grant. If there should happen to be a loss on these transactions, first and foremost the amount allocated to the county under the head of death duties was seized upon, and if that was not sufficient to cover the loss in respect of purchases within the confines of the county, then the Agricultural Grant had to supply the money necessary to meet the loss. He submitted that that was a wrong process. He submitted that the whole of the death duties ought to be made available for the entire loss before the Agricultural Grant was touched. He submitted that proposition on the terms of Section 40 of the Act.

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

*MR. JOHN O'CONNOR,

resuming, said that nothing could be clearer than the terms of the section, and he submitted that the rules made in 1904 by the Lords Justices of Ireland were ultra vires, because they were in contradiction to the terms of the section. He submitted, therefore, that the death duties, amounting as they did to £230,000 a year, ought to have been first made available, and, if that had been done, Kildare would not have suffered to the extent she had. The whole of the amount allocated to Kildare, over £2,000 under the death duties, was first seized, and it was necessary to deduct from its share of the Agricultural Grant about £5,000, in order to meet the losses upon the sales that were carried out. He submitted that there was nothing in the Act, or in the Treasury Rules of 1905, that would enable the Local Government Board to carry out the transaction in the manner they had done, and if they had acted strictly according to law, he submitted that Kildare would not have suffered the additional loss of £5,000, which was deducted from her share of the Agricultural Grant. His observations with regard to Kildare also applied to five other counties in Ireland. In all the remainder of the counties the deductions had only been made from the Death Duties Grant, because the contri- butions from that source met the deficiencies. But in the five counties he referred to, especially Kildare, the contributions from the death duties did not meet the deficiencies, and therefore the Agricultural Grant was diminished to that extent. That was a matter which needed to be looked into. He submitted that there was a provision in the Act itself to deal with the unearned dividends upon the issue of stock, and ho would emphasise the words "issue of stock." He further submitted that the manner of allocating those losses to the counties was not in accordance with the Act itself, and that also needed to be remedied. If his point was good with regard to the unearned dividends, it would release, and there must be carried back, over £70,000, which would meet the losses of last year and the year before. If that point was good, and he thought it would be found to be so, it would relieve the present situation, at all events, while the Government was making up its mind in regard to a more permanent settlement of the case. The Irish Development Grant had scarcely been created before it was stolen and diverted to a purpose for which it was not originally intended. In the first place it was intended to apply to education, and then it was applied to the Irish Land Purchase fund. There was then an unused balance, and the next shuffle was to take £98,000 and apply it to the Labourers Act. Finally the whole sum was ear-marked to make good the discount on flotation of land stock. The whole thing from beginning to end was a juggle in finance, and why? Because the whole system of finance in Ireland in regard to these Acts of Parliament was vitiated by a selfishness and a grudging spirit which entered into all legislation with regard to that country. Year after year, when the Estimates came up, they could not help noticing the liberality with which England was dealt with, and the manner in which money was lavished upon education in this country and thrown about right and left, and voted to the Local Government Board for this, that, and the other purpose, to provide work for the unemployed and to carry out various philanthropic intentions. But when an Irish subject came up, when an Irish Act was to be administered and means provided, the money was found only by stealing it from some other Irish Fund. He perhaps ought not to use the word "steal," and he would withdraw that word and substitute "plunder." The money was taken from one object and devoted to another, and it was simply robbing Peter to pay Paul. And all this kind of thing was resorted to in order to evade the responsibility of the Government to provide the funds in the Estimates for the proper carrying out and administering of Acts of Parliament. It was a shameful and dishonest transaction, and could be stigmatised in no other way. Money could be provided for every other object under the sun by this Parliament except for the proper carrying out and administering of Irish Acts of Parliament. If Irish finance was treated in a more honest way there would be no necessity to occupy the time of the House in bringing forward these irregularities which were having such disastrous consequences in Ireland.

THE FINANCIAL SECRETARY TO THE TREASURY (Mr. RUNCIMAN, Dews- bury)

said he felt himself at a considerable disadvantage in that, first, he happened to be a layman, and, in the second place, he was not familiar with the whole of the very complicated legislation which led up to the Act of 1903, and must in future lead to other legislation. He was in the House when the 1903 Act was passed, and any financial arrangement that was then made was made first of all at the initiative of the Government, and secondly with the consent of the Irish Party. A great deal of their trouble was due to the fact that the discussion on the 1903 Act was by no means ample, and was indeed suppressed. One result of that had been, in the first place, a misunderstanding in regard to the interpretation of the Act, and secondly, if he might say so, the appearance of faults in the Act of a very serious nature, which might have been avoided had there been anything like thorough discussion in the House at the time. They were now seeing unfortunate charges falling on the ratepayers of Ire-land which might have been avoided had there been more ample consideration, and if the opponents of the measure had voiced their case with anything like the degree of energy which usually characterised an attack upon a Government Bill. In 1903 the right hon. Gentleman the Member for Dover, in the course of a number of very lucid and picturesque speeches, which the hon. and learned Member for Waterford had quoted, laid down the policy of the Government. He then declared that the original intention was that the Development Grant should bear some of the charges which in their sum total amounted to £70,000 this year. The suggestion was made by the hon. and learned Member for Waterford that some of those charges should have fallen this year on the Development Grant and not on the guarantee fund. On that specific point, the statement made by the right hon. Gentleman the Member for Dover was that— The loss which may be due to discrepancy in dates and the loss which may be due to flotation in temporary excess of the amount underwritten in Ireland will be covered by placing on this money, which is not British money, but Irish money, a first charge of £50,000 during each one of the first four years. It was not until those four years had elapsed that the present situation arose and the burden was thrown upon the guarantee fund. Therefore he suggested that the right hon. Gentleman the Member for Dover was actually stating what was the bargain between the Treasury and the Irish Government at the time, that the four years which the hon. and learned Member for Waterford now referred to had expired, and that the provisions of the Act must govern the financial transactions. But they were not governed by the speeches of the right hon. Gentleman the Member for Dover. He admitted it was very difficult to inquire into the right hon. Gentleman's mind and discover exactly what the intentions of the Irish Government at that time were and what might have been the arrangements made between the different Parties in the House. The predicament they had been in was that they had to administer, not speeches of the right hon. Gentleman, which might have led them into trouble in more ways than one, but the Act for which he was responsible. He had no idea what the right hon. Gentleman was likely to say to-day on the subject of this Act, but they had to take the provisions of the 1903 Act as they stood. They were bound by the law just as if they were Judges declaring what the law was and not by the speeches of the promoters of that law. Therefore if there was any discrepancy between the right hon. Gentleman's speeches and the Act, it was a discrepancy which the right hon. Gentleman would have to explain away.

MR. WYNDHAM (Dover)

said the Clauses were drawn by the Treasury.

MR. RUNCIMAN

said, if that were so, the right hon. Gentleman should have criticised them, because he alone was responsible for the wording of that Act. The specific items which made up the sum of £70,000 could to some extent in the future be dealt with rather differently. In every case they had acted within the four corners of the 1903 Act, and when the hon. Member for North Kildare suggested that the rules which had been passed by the present Government were ultra vires he differed from the law officers of the Crown. He would tell the House what he believed to be possible within the law as they now found it. The first big item in the total of £70,000 was the bonus, or unearned, dividend charge. In view of the opinion of the law officers, the only way to relieve local authorities from this charge would be either by an amending Act, providing that the bonus dividend should be treated as an expense of issue, or an entirely new interpretation of the Act. He did not anticipate the latter, and, therefore, this year, in order to relieve the Irish ratepayers of the heavy charge, they had made arrangements with the Treasury, which would require a good deal of manipulation, that there should be no public issue, and that would do away altogether with this charge. The total amount which would be issued during the current calendar year would be absorbed entirely by the National Debt Commissioners and the various departments with which they acted, and the result of that would be to avoid any charge whatever for bonus dividend.

MR. CLANCY (Dublin County, N.)

What does the hon. Member mean by bonus dividend.

MR. RUNCIMAN

said he meant the unearned dividend. The next item, advance dividends, they proposed to meet by charging the purchaser an additional month's interest on his first gale. Owing to a gap, the tenant purchasers might be required to pay an extra month's interest up to 1st July or 1st January, and effect would be given to the proposed arrangement by an alteration of the Treasury Rules, if the tenant purchasers would agree.

MR. CLANCY

It is not intended, as I understand, to make the tenant pay thirteen months interest instead of twelve? It is not intended to make them pay additional interest?

MR. RUNCIMAN

No; it was only a rearrangement. In the first half-year he would pay seven months interest, but afterwards six months for the remaining half-years of the period of sixty-eight and a half years. This was because the gale day on which the month's payment should be made was one month earlier than the dividend day. That was necessary to enable the dividends to be paid over to the National Debt Commissioners. If the tenant purchasers were prepared to take that burden upon themselves, they could at once, within the four corners of the Land Act of 1903, give effect to it, and relieve the ratepayers of the burden.

MR. CLANCY

Will the tenant purchaser get credit for this one month's advance interest?

MR. RUNCIMAN

Certainly, at the end of the period he would get credit for it. The next item, that of accrued interest, was not charged against the guarantee fund; it was now provided for out of the balances remaining under the Labourers Act of last year. They would, therefore, have no further charge in respect of it.

MR. WYNDHAM

was understood to ask for details of the arrangement in regard to accrued interest.

MR. RUNCIMAN

said that accrued interest was the interest due in respect of amounts which did not receive interest all on the one day which fitted in with the working of the Act, and therefore they had interest accruing from day to day, which had not yet been received; and therefore the gap occurring had to be provided for out of funds which must be raised out of the guarantee fund. It was an ordinary sort of current account charge which would occur in an ordinary business transaction. This was now provided for under the Labourers Act of last year. The temporary arrears were a charge, however, which he understood no one wished to take off the guarantee fund. He understood that was to remain exactly as it was. If he interpreted the hon. and learned Gentleman rightly, he took it that if arrears occurred, the guarantee fund, in the view of hon. Gentlemen opposite, should bear that burden. It was the one guarantee they had of the punctual and full payment of all land purchase charges.

MR. JOHN REDMOND

Personally, I am not at all afraid of that.

MR. RUNCIMAN

said he took it that that was the view. They were therefore left with the three items— the bonus dividend, the advance dividend, and the accrued interest. The advance interest was, as he had said, dealt with under the Labourers Act, and it could only be met by the purchaser in the first half year paying seven months instead of six months interest, and the bonus dividend which could only be met either by an alteration in the law, or an upsetting of the law as it now stood. There was the larger question, how they were to meet the enormous deficiency on the issue in respect of these great transactions, and that was not one with which he was prepared to deal at the present time. The figures given by the hon. and learned Gentleman were substantially correct, and it was quite clear that the enormous difficulty that the money market now imposed in connection with the Development Grant would absorb the Development Grant in about two years unless the market improved. That really was a very serious matter. As to the charge of £70,000, he was not competent at present to make any statement whatever upon that. His right hon. friend would refer to the questions raised in the debate.

MR. AINSWORTH (Argyllshire)

said the speech of the Financial Secretary, though interesting in itself, did not touch the crux of the question. The plain question now before the House and the country was how were they to find £100,000,000 at least to deal with the Irish land purchase scheme? This country was committed to the policy of land purchase in Ireland, and they all hoped it was going to be a success. He might remind the House that John Stuart Mill said that it was the only solution of the land question in Ireland. What they had to consider now was whether some means could be devised for hastening the procedure and enabling the system which had already succeeded well in a few cases to be carried out with the utmost speed over the whole of Ireland. He thought a great many people had now come to the conclusion that it was a mistake in the original Land Purchase Act to provide for payment of the purchase price being made to the landlords in cash. There was considerable difficulty in raising the cash in London, and then when it was sent over to Dublin the first thing that was done by the proprietor who had sold his land was to pay off the mortgages, and the probability was that the mortgagee was not particularly anxious to be paid off, for he had to send back the money to London to be reinvested. He thought the depreciated value of land stock as compared with Consols could be easily explained from the market point of view. Land stock was subject to redemption after a fixed period, whereas Consols were not subject to certainty of redemption within a specified time. It was not surprising, therefore, that Consols were higher than Irish land stock, the market view being that the former were more suitable for money available for permanent investment. He wished to bring before the House a suggestion which he had already brought to the notice of the Chancellor of the Exchequer. The secretary and manager of one of the largest financial houses in Scotland said he regretted that the suggestion made when the late Government was in office to issue scrip in connection with Irish land purchase instead of paying in cash had not been further proceeded with; he also stated that if it had been proceeded with, and if scrip had been issued subject to repayment at par in a certain number of years, his house would have accepted it. That house, whose business it was to lend money on the security of property throughout the kingdom, had already made advances against Irish land. If the Treasury had the option of saying to the vendors of properties that in place of payment in cash scrip would be given bearing 3 per cent., and redeemable in a certain number of years, there were, he believed, a great many cases in which the proprietors would take the scrip and hand it over at once in payment of the mortgages. Would it not be, infinitely simpler and more satisfactory for the mortgagee to receive scrip in that way than to get cash for which he had to find a new investment? That method of financing Irish land purchase would conserve the interests of all parties. A great portion of the scrip when issued would go at once into the coffers of solicitors and banks to be held for be hoof of the parties concerned. It would come on the market very gradually, and the money market would not be interfered with if the suggestion were adopted. The hon. and learned Member for Waterford had indicated that £120,000,000 would be still required in connection with the scheme, and, if that was so, the sooner the money was found the better not only for those interested in Irish land, but also for the British taxpayers, because the sooner the question was got out of the way the the better it would be for everybody. Circumstances might arise at any moment which would interfere with the successful working of the Land Purchase Act. He sincerely trusted that the suggestion he had made would be seriously considered, and that a scheme would be formulated which would enable the purchase of Irish land to be brought to a successful conclusion as early as possible.

MR. T. M. HEALY (Louth, N.)

said the hon. Member for Argyllshire had made a very sound contribution to the debate. He welcomed the kindly tone and spirit in which he had brought the suggestion before the House. He himself had put his name to two proposals. He had first signed the Trinity College report, which was very much on the lines the hon. Gentleman had suggested, except that they did not recommend the issue of a 3 per cent. stock, but a continued issue of the existing 2¾per cent. stock, the seller of an estate getting it at the price of the day. Of course, that would involve some ultimate loss, but as it would not be dealt with for many years to come, by that time some further arrangement could have been considered. He was greatly astonished when that report, which came with the authority of a Lord Justice of Appeal in Ireland, was rejected by the Government. There remained an alternative proposal, which he ventured to put forward some weeks ago. He did not think the difference between the price of Consols and land stock was altogether accounted for by the 5S. difference in interest, and he could not understand why the investors of this country were not more attracted to what were known on the Stock Exchange as " Shamrocks." But as the market had failed to appreciate, the question was what ought to be done? It was a matter which must be viewed from the point of view of the Irish taxpayer quite as much as from that of the Treasury. Hon. Members from Ireland had been responsible in 1903 for guaranteeing to the British public the regular fixed payment under the Act, and he cordially agreed that anything like a suggestion of repudiation would be not only dishonourable to the Irish as a nation, but the very worst of bad business. Although he had not very much sympathy with the way in which the Land Acts had been worked, he did not think that what had fallen from the hon. Member for North Westmeath expressed the opinion of hon. Members on that side. He wished the House to disabuse its mind of the idea that anybody in Ireland wished to repudiate their obligations in this matter. To do so would be as dishonourable to the Irish people as the breach of the Treaty of Limerick was dishonourable to the English. What, therefore, they had to consider was the alternative solution, which was that the stock should be made a 3 per cent. stock, increasing the interest by 5S. He believed it would then be found that the stock would go to par. The question was who should bear the 5S. loss, and he was bound to say that he thought that the Irish people were prepared to bear a proportion of that loss. It was not a popular thing to say, but they would never get on by merely trying to be popular.

MR. RUNCIMAN

said he wished to ask the hon. and learned Gentleman in what form the Irish purchasers or ratepayers should bear their proportion of this loss of 5S.

MR. T. M. HEALY

said he had not any authority to make a suggestion of that kind; but the Irish people were committed by their pledges to a certain course of action, and they would not shrink from carrying out those pledges.

MR. RUNCIMAN

said he did not wish to be unfair to the hon. and learned Member. He only asked for information. Did the hon. and learned Member suggest that the Irish portion of the 5S. should be borne by the guarantee fund— that was to say, by the taxpayers or the ratepayers— or by the intending purchasers? That was very important.

MR. T. M. HEALY

said that that was not his proposition at all; and he was not going further to adumbrate what should be done while he was on his legs. He would not deal with this as an isolated transaction; the whole question of finance in Ireland had to be considered, and they must not look at this matter through one slit in the shutter. He had viewed with great suspicion the action of the Treasury during the last six months, as not being bona fide. He regarded it as a political, not as a financial, move. He knew very well the ingrained hatred of every Treasury official for Ireland. They regarded Ireland in exactly the same way as a Thug regarded his victim. It had been said that when a volcano was going to burst out into action there were preliminary disturbances, but without a word of warning a volcanic disturbance had fallen on the financial Budget of the year; and the poor peasants of Ireland had to suffer for it. He had been asked, "What would be the effect of the issue of 3 per cent. stock, and on whom should the loss fall?" When he spoke of Ireland, he included the landlords and the tenants, and in his opinion it would necessitate the land lords taking a less price for their estates. To that extent he answered the Secretary to the Treasury by saying that the loss was to fall on the landlords. But the landlords, on the other hand, were getting £12,000,000, of bonus. It was all very fine for hon. Gentlemen to sneer at the British Government, but he maintained now, as he had done in 1903, that the British Government had come forward in a handsome, generous, and magnanimous style when they offered £12,000,000 of money towards the solution of this question. He maintained at the time that it was good business, and he had not changed his opinion since then. But he did not see why some of this loss should not be borne cut of this bonus. It might be said that the result would be to cause a shrinkage in the purchase operations. To some extent that was true; but, on the other side, the Government had a method of quickening land purchase operations and in bringing the landlords who were unreasonable to more reasonable terms by the appointment of honest commissioners on the fair rent side of the question. Another solution would be compulsory purchase. At the present time he did not consider that that was a position which the Government was likely to take. Although the 3 per cent. stock would inevitably have a tendency to a shrinkage in the sales, he said, on the other hand, that if the Government were fairly alert in their appointments of sub-commissioners, the tenants would be well advised, in his opinion, to have confidence that this measure would not ultimately bring about any real stoppage in land purchase, because if they reduced rents sufficiently to living rates, the landlords would be quite keen to obtain the money on a 3 per cut. stock. The bonus was there; and out of it the whole question could be solved. He begged the Chief Secretary not to ignore the offer made to him from the Unionist side through hon. and learned Gentlemen, and to bring in his Bill at once. The commitments for next session were sufficiently large, and they should accept the offer made by the hon. and learned Member in a non-Party spirit, and make an appeal to the Unionists of Ireland to facilitate the progress of the measure. The men who stood to lose in Ireland were the landlords and their representatives. They should, therefore, take a statesmanlike view of the question, and let the question of the evicted tenants be dealt with on reasonable lines. The result of their passing that measure in a reasonable spirit would react on the measure which the Government proposed in dealing with the solution of the land stock difficulty. He did not believe that any good was to be got by cattle driving, nor at this hour of the day by firing into people's houses. The Irish question as far as the land was concerned was on the right road to solution, and that road to solution was purchase. Unionists could stop it by making attacks on the "wounded soldiers" of the land war, but they must look at the question in a large way; and the promise of the hon. Member for North Armagh was one which the Government should fairly take into account. The Government could not escape from the guarantees and the pledges given by the right hon. Member for Dover, and his recommendation to Ministers was, "Do not let it be believed in Ireland that this great question of land purchase is going to be broken down."

MR. FLYNN (Cork, N.)

said he was sorry that the late Chief Secretary for Ireland was not present to give his views on this very important question. He had been much impressed by the speech of the Leader of the Irish Party. Those who had the pleasure of listening to his statement must have recognised the command which the hon. and learned Gentleman had of the subject of the local government of Ireland. There had been a very significant interchange of ideas between the Secretary to the Treasury and the hon. Gentleman, but at any rate the Treasury were bound by the Act of Parliament, and not by speeches of Ministers made in the House. He believed that Members on both sides were desirous of carrying out land purchase with the greatest possible facility. The Secretary to the Treasury would acknowledge that the very anxiety of the tenants to have land purchase had led them to persuade the Members for Ireland to rush the Bill through; and he dared say that neither the right hon. Member for Dover nor the Irish Members had the prescience to look forward to the complications which had arisen since the Act was passed. There had been enormous losses in the flotation of the stock. The right hon. Member for Dover on the Second Reading of the Rill had admitted that there would be a certain amount of loss on flotation, but he thought that the difficulty, though great, was not insurmountable. Of course, nobody believed four years ago that Consols would remain at the low price which they now stood at, and the loss now amounted to £5,263,000 on account of the continued depreciation of the price of Consols. He thought it was hard that the ratepayers of Ireland should be called upon to pay this enormous deficit, while the landlords of Ireland were getting the benefit of the bonus of £12,000,000 without loss. He complained of the very arbitrary way in which the Treasury had dealt with these Irish funds. The hon. and learned Member for Louth had talked about the issue of a three per cent. stock, but that would involve new legislation. There had been no mala fides on the part of the Irish people. The purchasers had been most punctual in their payments, and he thought that it would be a hard and cruel thing, in connection with a measure which was not only just but foolishly generous to the landlords, that the loss on the operations of the Act should fall on the innocent victims, the poor tenants of Ireland.

THE CHIEF SECRETARY FOR IRELAND (Mr. BIRRELL. Bristol, N.)

I think, perhaps, it is desirable that I should interpose now in this debate. Various questions have been raised of great importance, and I think all the House is now alive to the gravity of the situation. It might be said that there is £00,000 a year at present between the ratepayers of Ireland and the heavy loss which is likely to occur for some little time to come on the flotation of this Irish land stock. The Irish development grant was appropriated by Act of Parliament to bearing this particular burden, and therefore I do not think that any language ought now to be employed such as his been employed to some extent in this debate, as if the English people were to blame for having utilised this grant for the purpose of meeting this particular loss. However, there it is. We have £90,000 a year available at present out of this fund, which was assigned particularly by common consent to that purpose — we have £90,000 a year between us and the general body of the ratepayers of Ireland. I speak as one who considers that this House is pledged by its legislation of 1903 and by the action that was then taken by the British Treasury. I say we are pledged to do everything in our power to maintain and carry out the land purchase system in Ireland. It has worked exceedingly well to this extent, that a great number of tenants have availed themselves of its operations; they have become owners of the soil, and they are paying with a regularity which excites admiration and completes the confidence which the British people felt when they consented to this measure. Bargains have been struck to the extent of over £30,000,000 between landlords and tenants who have come to agreements for the transfer of land from one party to the other. I say the scheme has succeeded. I am not for a moment going into the question as to whether the landlords have not had very good terms. I think they have. It is also noticeable that they are being paid in cash, and the heavy fall in gilt-edged securities will give them an opportunity of selecting, as I trust they will, being cautious men, gilt-edged securities and acquiring them at a very low rate, which will procure them and those who come after them a satisfactory family income. It is not for anybody sitting on these benches to seek in any way to repudiate a bargain simply because it has worked out in a particular way. The hon. Member for North Louth made an appeal to the landlords, and though there was very great force in what he said, I think we must proceed on the footing that you ought not to be parties to anything which would endanger the continuous working in the future of what was treated as a great experiment — a great experiment which required British credit, which required generous treatment on the part of the British taxpayer. I would not have anything to do with any proposals that did anything to arrest that scheme being carried out. Modifications it undoubtedly does require. Alterations in the law will have to take place as it proceeds. It has been said, I think truly, that compulsory purchase was not now present before anybody's mind; but it must have been in mind that the time would come when, after you had got the landlords who were willing to sell to come to terms with their tenants and had transferred under the operation of voluntary clauses three-fourths of the land of Ireland, it could not be contemplated that the remaining one-fourth should remain in the ownership of the landlords if the tenants wore desirous to have it. Therefore, undoubtedly, compulsion in the last resort was involved in the measure as originally proposed. The hon. Member for North Westmeath has given a good deal of study to this subject. Although his views do not always agree with those of my legal advisers as to the true construction of the Act, I have never heard any proposal from him which did not indicate that he had himself carefully studied the whole system of land legislation. Modifications will have to be made, possibly very soon, in this matter. I desire to say, however, that the reason why I am so alarmed and so eager to recognise the gravity of the present situation is because I say that it does, in the words of the Resolution, endanger the satisfactory working of this great scheme. Anything which endangers that is a matter of national importance and requires the most careful consideration. We must not assume that the framers of the Act of 1903 had not in contemplation that there would be a loss on flotation. There never has been a period when this land stock has not been issued at a very heavy loss. The loss on the first issue of £5,000,000 was £475,000. The stock has never been issued at par or anything like par, and. although now lower than it was during the time the right hon. Gentleman was in power, there has been a continuous fall, and there never was a time when there was not this loss contemplated. Therefore, I do not want now to refer more than necessary, or indeed at all, to the language of the Act of 1903, but it stares you in the face. Anybody who reads it must see that from the beginning the framers of that legislation intended that the loss occasioned by the issue of this stock at a discount should fall upon the Development Grant and ultimately upon the guarantee fund. Therefore, it must be taken as a thing that was in the minds of the people who passed this Bill, and if they did not think fit to call greater attention to it that is not the fault of the present occupants of this Bench, who are absolutely bound hand and foot and can only carry it out till it is altered. Therefore, there is this heavy loss. In two and a half years time there will be, unless times change, this heavy burden cast upon the rates. I do not want to say a word about that. I am sure the ratepayer in Ireland is as willing as the ratepayer everywhere else to pay his fair share, but to cast upon him this enormous obligation for a period of sixty-eight and a half years is another matter. I do not want to exaggerate it. I hope Irish land stock may rise, but I cannot hold out any prospect that this loss as it now stands will not ultimately to some very considerable extent fall upon him. Any notion of repudiation of the stock I also entirely repudiate. We have not sunk to the level of a South American Republic. I do not think that has entered into the mind of anybody, and I hope it will not enter into the mind of anybody, because nothing could be more injurious than to use language about this stock which will keep it down. I have never been able to understand why Irish land stock does not occupy a much better position in the market than it does. It is impeccable. It is better than Consols in the rate of interest, and it has the whole of the Consolidated Fund behind it. So long as this Empire is an Empire the holders will get all they bargained for. They will get their interest, and they will be paid for it at par at the end of seven years. There is nothing between them and the fullest realisation of their hopes when they make their investment. Why it is unpopular on the Stock Exchange I do not know. The hon. and learned Member says it is called "shamrock" stock. I believe it is called "bog" stock. But whether it is called shamrock stock or bog stock, it is the best stock in the world, having regard to the guarantee that is behind it and the interest that is paid for it. I hope, therefore, we shall not say anything which will interfere with the public esteem of that security. Why it is not popular I cannot understand. We all know the traditional character given to Consols by Sydney Smith; and it may be that there may have been some obstacle placed in the way of making this stock popular. If any honest means can be adopted to remove that measure of unpopularity I am quite sure the Treasury will do their best. The public service are themselves large holders of this stock. As the Financial Secretary said, the present new issue of £6,000,000 is being taken up by the public service, and everything that can be done will be done for that purpose. But we have to consider what possibly can be done to secure an improvement in the state of the case. Of course it has been suggested to us that the landlords might be paid in stock instead of in cash. That is going back to the system which has worked very well under the previous Land Acts, but it would be a very violent interference with the bargain of 1903. The objection of the landlord would be obvious. He would only get £83 instead of £100 at present prices. You may point out to him that, having regard to the low price of gilt-edged securities, he will be able to invest his £83 upon a most satisfactory return, but I do not know that that would be likely to get over his objection. You really cannot throw the whole obligation of settling this question upon the Treasury. You cannot turn to the Chancellor of the Exchequer and the Financial Secretary and say "You have got to settle this." There are throe parties to the bargain. There are the landlords, the tenants, and the Irish ratepayers. They have got to put their heads together and to give assistance in this matter to the Treasury. The great scheme brought in by the late Government has undoubtedly worked badly in the result by tending to throw, and apparently very shortly throwing, upon the ratepayers of Ireland a much greater burden than it was ever contemplated that they should be called upon to bear. It is language of the Act. There is no getting out of it. No ratepayer, nor anybody else, could say it is not. So far as the loss on flotation is concerned, it stares them in the face. The £12,000,000 of money was a gift, and I certainly quite agree with the language employed by the hon. and learned Member. I think, on the whole, it was a generous gift made by the general taxpayers of this country to bridge over the gap— there is always a gap in these matters— between what the landlord wanted and what the tenant felt he could properly and reasonably give. That gap was made up by this gift. On the other hand, there is, I think, some justification for the suggestion that the bonus should be made to pay some portion of this loss. The landlord may very fairly be required to contribute his part towards the difficulty which has arisen, and which, unless it is alleviated, will crush the ratepayers of Ireland and inevitably lead, somehow or another, while we are in the very middle of the stream, to the cessation of what was intended to be a final national settlement of the Irish land question. I think, therefore, that that suggestion ought not to be lost sight of. Then there is the suggestion of new stock at 3 per cent. That is a suggestion which is favourably regarded by the Treasury so far as they have had yet a complete opportunity of going into it. It would require legislation. It would, I presume, alter the period of years over which the purchase annuity system is to extend. It would probably require the increase of the sixty-eight and a half years to a greater number. But that does not alter the gravity of the situation. What I am i concerned about is that, this being a voluntary arrangement between landlord and tenant, they should continue to act on it to the general good of the community, and that is hardly likely to be the case if there is a great loss to ratepayers, and people who are not personally concerned in the matter are called upon to bear a heavy burden which, perhaps owing to the fault, of their representatives, they never thought they had any liability to undertake. Therefore, this is really a matter in regard to which the landlords, the tenants, and the ratepayers, now that the gravity of the situation has been brought home to their minds, must make some suggestions. There is, first, the idea of paying the landlords in stock. I do not think that is an idea which we can recommend to the House, because T think it would be a departure from the bargain which has been struck, and when once a bargain has been struck I do not think the parties ought to go back upon it simply because it has turned out rather more advantageously than was expected for one side or the other. Another sug- gestion is that the landlords bonus should be used for meeting these discount charges. That suggestion was made, I think, by the hon. and learned Gentleman. I have no doubt that that also would be very hotly resisted. It would not, I am afraid, obviate all the loss, because, although I hope some day such a stock might reach par, we have nothing at the present moment which would justify us in supposing that it would reach par. Therefore, even under such a stock there would be some loss; but I think it would be a much smaller loss, and consequently the call upon the £90,000 which is between us and destruction would be less. Therefore, I can only say that it is a proposal which will require careful consideration at the hands of the Government. Then there is the notion in some people's minds of the issue of Consols. I am bound to say that that is a suggestion which is not smiled upon by the Chancellor of the Exchequer. The increase in the National Debt is the very last thing he wishes to be connected with; all his efforts are in the opposite direction. Therefore, I do not think the issue of Consols can be regarded as a likely way out of the difficulty. Then there is the idea that the Treasury should bear all the loss themselves. Of course, that recommends itself at once to what, in Ireland, is called all creeds and classes. But if I accepted that proposal, even though it recommended itself to all creeds and classes, I am not sure that when I got back to England and knocked at the door of the Treasury I should not meet with almost as cold a reception as that which at the present time is almost always accorded to me. I do not think it would be honest if we were to assume that the Treasury will calmly take upon itself the whole of this burden. We know there are people who think that all these things are mere book entries, and it does not matter to the Treasury what happens. It is not a sinking fund really. They do not keep it in a box and keep it there, and at the end of sixty-eight and a half years open it, and say, "Oh, here is the 100 millions of money that we have been advancing all these years to the people of Ireland." They do not do that. They get it for purposes of their own. You cannot suppose that at any time you can go and ask them for money, and it does not affect them. That is, if I may use the expression, utter nonsense. There is no difference between a company's keeping accounts and an individual's keeping accounts. If you make people a loan you have to secure by the process of a sinking fund that at the end of the time the money will be repaid, just as a prudent man who buys the lease of a house at an expenditure of £3,000 or £4,000 sets aside a certain sum annually— he will invest it in Irish land stock if he is a wise man— so that at the end of the lease he will be none the worse. Therefore, although the natural man within me induces me to regard it with favour I think the Treasury has an unanswerable reply to any such demand as that. Speaking on behalf of the Irish Government, all I can say is that the Irish Government is determined to do all that it can to carry out, subject to such modifications as from time to time may be necessary, the general scheme of land purchase in Ireland; and it will not willingly become a party to or do anything or abstain from doing anything which will have the effect of interfering with the maintenance of that system, so that it will come to an end— I hope a peaceful and successful end— in ten, fifteen, or twenty years. We therefore consider ourselves as pledged to carry out the system of land purchase. We recognise the difficulties, and although they are there facing you in the Act— not things coming by surprise, not things that ought to take anybody by surprise— we do recognise that, owing to the low price at which the land stock continues to be issued, a heavy loss is likely within a short time to fall on the ratepayers, and that this would be likely to endanger the system of land purchase; and we are determined before the. £90,000 which is still left to the development grant is exhausted to make proposals to the House which will mitigate, and, I hope, reduce to quite bearable proportions the loss falling on the ratepayers. I repeat that this is a question which the landlords, no less than the tenants and the ratepayers, will have to consider as one upon which it is for them to make suggestions, that they will most likely have to bear loss in some way between them, and that scheme which is the best of the various schemes which have been suggested, and other schemes will receive the fullest consideration by the Treasury. We are quite alive to the gravity of the situation. We feel that something must be done if we are to carry out— as I hope by the general sense of the country we shall be allowed to carry out — the great scheme of Irish land purchase.

MR. WYNDHAM

said that he had thought it might probably be his duty to take part in the debate, but what had last fallen from the Chief Secretary had made him less sure that it was his duty to speak. The right hon. Gentleman had said that the Government considered themselves pledged to continue the system of land purchase in Ireland, and that the losses, due to whatever cause under that system, ought not to fall in any, except an insignificant, degree upon the Irish ratepayers. The first pro position there would be time to examine. Some two years were to elapse during which suggestions were invited from all parties concerned; but upon this proposition he might say that the Government would not continue the system of land purchase in Ireland if they reverted to the payment of landowners in stock. He claimed high financial authority for the system of cash payments to the landlords— not only that of the late Lord Ritchie, but of Lord St. Aldwyn. There must be a stable medium of exchange between two such parties as the Irish landlord and the Irish tenant. They had conflicting interests, and it-was only after considerable difficulty and long negotiation that they arrived at an understanding. The understanding was that the tenant in future would have to pay so much a year and the landlord would receive a sum of money which he could invest to yield him a certain income which would be less, but not much less, than his net income on a second term rent basis. If they were going to pay them in a medium which, like that of Consols, had varied from 113 to eighty-four in a few years, they were making it impossible for the two parties so situated to come to agreement. The announcement that the Government would not adopt the plan of paying the landlords in stock was implicitly conveyed in the statement that the Government intended to continue the present system of land purchase in Ireland. He regarded the observation of the Chief Secretary that the losses on flotation must have been in the minds of the authors of the Act of 1903 as an invitation to him to repeat what he believed was clearly said in 1903. It was not unusual to find that an Act of Parliament did not fully carry out the intentions of the authors. Often one Court was found saying that an Act meant what the authors said in their speeches that it meant, another Court saying it meant something else, and finally the House of Lords saying that the authors of the Act were after all, able to express themselves intelligibly in the Bill. It was not to be supposed that the Treasury was going to be at law with the Irish county councils. It was, therefore, pertinent for Parliament to inquire what the authors of the 1903 Act contemplated, and what was anticipated with all but unanimity by all parties in the House. They were confronted in 1903 with three categories of possible loss. About one there was no dispute. Everybody agreed that when losses accrued owing to the default of the purchaser or his delay such loss did fall on the guarantee fund, but the value of the holding was there as full security, and the only difficulty to deal with was the payment of interest and sinking fund on the amount advanced, a difficulty which arose solely on the depreciation of the value of Consols and other gilt-edged securities. Going on to the other two categories of loss, the Chief Secretary had dealt with one category— losses which accrued from the Government of the day authorising the issue of stock bearing a dividend almost at the date of issue; losses arising from the dividend payable on the stock being due before the half-yearly payment of the purchaser was due; losses arising as they might, and he thought perhaps did, arise, by the issue of stock for the round value of five or six millions, and then finding that the whole of that value could not be advanced immediately; losses arising from unexpended balances being left uninvested in the hands of those who had managed the finance of the Act. It was never intended that losses accruing on any one of these accounts should fall upon the ratepayers of Ireland. They were confronted with losses from issue at a discount. The Chief Secretary would not be surprised if he told him that the solution of the Act was not the solution advocated in the first instance by the Irish Government, and when the loss due to issue of stock at discount was by agreement placed in the first case on the Irish Development Grant, it was clearly understood that other losses arising from what was called management of the finances were not to fall upon the ratepayers. They were legislating in anticipation, and when the Development Grant Act was brought in almost at the same period the minutiœ of financial calculation had not been completely threshed out; and the proper management of the finances and the way in which the sum of £200,000 from the Development Grant, referred to in Clause 38, was to be used in order to obviate any loss would have been threshed out upon a Bill which he introduced in the next year dealing with and transferring certain economies and unused sums of money to the Irish Development Grant, to which a clause was attached dealing with this question of £200,000. That Bill did not pass. He ceased to be Chief Secretary, and that clause was tacked on to the Labourers Act of last year by the present Government. If it had been his good fortune to handle that matter, he would then have been in a position to make it clear that all those losses on what he might call the management of the finance of the Land Act, as distinguished from loss on flotation at a discount, were to be met, and in the opinion of the Treasury, could have been met, if they started with a working capital of £200,000. That was not an unintelligible opinion at the time when it was held. The difficulties of the present situation created by the fall in Consols did not confront the authors of the Act of 1903. The South African war had been over for a year, Consols were above 90, and there was an anticipation that they would rise to 96.

MR. RUNCIMAN

said that as the right hon. Gentleman had definitely suggested there was an understanding with the Treasury that the whole of the expenses of working the finances of the scheme should fall on the Development Grant, perhaps he would explain why there was a provision in the Act that they should be met out of the Guarantee Fund.

MR. WYNDHAM

was sorry the hon. Gentleman had interrupted the flow of his argument, as the matter was complicated and not easy to make clear. The expectation in the minds of the authors of the Act was that the losses due to the managing of the finances of the Act could be met if the managers started with a working capital of £200,000 in hand; and the provision referred to, which was in one of the financial clauses covering many cases, must be read in the light of the fact that this £200,000 was to be taken out of the Guarantee Fund and set apart for that particular purpose. Moreover, the question of the bonus dividend was never before the authors of the Act. That was an arrangement by the Treasury. Surely it would be agreed that, if the inducement of a dividend at an early date was held out in order to get stock at 88 instead of 86, it was only another way of floating stock at 86 instead of 88. If it were floated at 86 there would be a greater discount, and the loss would fall on the Development Grant and not on the Guarantee Fund. The Treasury were responsible for the management of the finances of the Act, and if they selected one way instead of the other, surely they should not charge the loss involved against the ratepayers. Certainly to charge the loss to the ratepayers was against the intentions of the authors of the Act. But these losses incidental to the management of all great financial transactions were small in comparison with the difficulty which they had apparently now to face— the losses accruing from floating the parent stock at a considerable discount. At the passing of the Act there was no reason to anticipate that Irish Land Stock would stand at 84 in the present year. The hon. Member for Waterford seemed to argue that it was almost a hardship to place the incidence of this loss on the Development Grant, which was primarily intended for education. Under the Education Act of 1902 an additional sum of £1,400,000 was made available for education in England. The Government felt that Ireland was entitled to some set-off against that sum, and as there were then no new services required for education in Ireland, they adopted the principle of earmarking the equivalent grant to Ireland as a development grant. They also felt that, as they were asking the House of Commons to pledge British credit for advances of £100,000,000 for land purchase and to vote a grant of £12,000,000 for the same purpose, they could not also ask it to take up the liability of the loss on the flotation of the stock, and accordingly they thought as this money was due to Ireland it was only reasonable to hypothecate the development grant to cover the loss in the first instance on the issue of the stock below par. It was not his duty to throw out suggestions to the Chancellor of the Exchequer as to how the difficulty was to be got over. The Secretary to the Treasury had dwelt upon the mysterious subject of the accounts which the Treasury kept. As he understood the present difficulty, owing to the fall of stock to 84, the £3 5S. paid by the Irish purchaser was insufficient to provide for the 10S. to the sinking fund as well as for the interest. In these circumstances the Treasury said the sinking fund of the stock became absorbed in the payment of the interest. But, if this bookkeeping view was to be adopted, the present position of the sinking funds of the earlier Land Purchase Acts must be borne in mind. Under the Ashbourne Acts the sinking funds of £1 and £1 5S. were calculated upon the then high value of Consols; and now that Consols bad fallen to £84 these sinking funds had a far greater purchasing capacity and redeeming power than was contemplated at the time. The Treasury could not have it both ways. If because of the fall in stocks now the Irish purchaser had to extend his period or to pay more, or if the landlord had to sacrifice part of his bonus, then the Treasury must take into account the fact that the sinking funds of the earlier Acts were helping them far more than was anticipated when those Acts were passed. When the premier securities were at a premium the Treasury could have said, and no doubt did say, that the sinking funds would not go far enough, that they would not pay off £100 as soon as they anticipated, but that if they ever fell the Treasury would get the benefit. That was what might be called taking the rough with the smooth. But would the Chancellor of the Exchequer say that they would never have the smooth again? Did he think that Consols and 2¾ per cent. Guaranteed Stock would never rise again? If he did think they would rise again, then there was no reason why he should not pay temporarily these losses in the hope that, when stocks were at a premium again, he would be recouped. As matters were now, Ireland stood all the risk. Ireland in the Act was given a prospective benefit to be derived at any time when our premier securities reached par again or rose to a premium. It would be perfectly fair for the Chancellor of the Exchequer to say, "I will take the risk instead of you, but when and if our securities are ever at par or a premium then that advantage must accrue to the British Treasury." If, however, the Government took such a gloomy view of the future as to suppose that eighty-four, or anything approaching eighty-four, was likely to be the figure for Consols and 2¾ percent. Stock, then it was going to be all rough, and the Chancellor of the Exchequer was not entitled to credit the Exchequer with the greater purchasing capacity of the sinking funds paid by the purchasers under the earlier Acts. £10,000,000 worth of land was purchased under the Ashbourne Act, and £32,000,000 under the later Act, at a time when Consols were above par, and if the Government believed that Consols would be above par again then they should share the risk with Ireland and credit the fund with the increase of purchasing power under the earlier Acts. Of one thing he was certain— that they could not alter the terms on which the landlords and the tenants had come to an agreement. The Chancellor of the Exchequer might say, "Well, but then your solution would be to allow men who purchased with a sinking fund of £1 when Consols were above par to continue paying for a much shorter period, for Consols are now at eighty-four." But would he say that? and, if he did not, he must, he thought, conclude that the parties must abide by the terms which they made. Thirty-two millions had been agreed to under this Act. He did not see how the right hon. Gentleman could go back on the agreements which had been entered into in respect of those £32,000,000. If he did not, and if he did not propose to give a shorter period of repayment to those who had purchased under the Ashbourne Acts, he trusted the right hon. Gentleman would not reject from his mind altogether the suggestions which had reached him, that they might take a year to think about this question and ultimately discover some way by which not only the ratepayers of Ireland might have this menace removed from their heads, but by which landlords and tenants should continue to bargain under terms which, on the whole, had not proved unsatisfactory to either class. The Government had only recently become doubtful of the superstructure of the Act. Last year they placed the whole finance of the Labourers Act upon the same foundation, and they had introduced a scheme which would have allocated £650,000 to Ireland under the Council Bill. A Government with such resources at its command surely did not think it necessary to say that the Irish purchaser must pay one month additional to make up the broken period between the dividend and the annuity, and was not going to despair of the future and say that Consols were always to remain at eighty-four. If that was not their opinion, there was no case for taking any hasty or violent action now. He remembered that when Consols were at a great premium many people, including the Treasury, were alarmed in regard to the arrangements as to Post Office securities, and thought they were not as satisfactory as when Consols were at 100. They need not have entertained that alarm. The high premium soon vanished. Some people attributed it to the war: others asserted some doubts as to the soundness of investments in America and the Colonies, and said this caused a glut of money at home. He wished there was a glut of money to-day. Nobody could prophecy the future of finance or that Consols at 114 would fall to eighty-four. Why were they to believe they would never rise to 114 again? It was absurd to say that people were going to pay sinking fund and interest at such and such a rate for sixty-eight and a half years. They did not know what the interest would be on first-class securities five years ahead. It depended on many circumstances which could not be counted at this moment. He trusted the Chancellor of the Exchequer therefore would take a more cheerful view of this matter, see that land purchase should go on, and discard the solution of allowing losses to fall on the ratepayers of Ireland which were never intended so to fall. If the right hon. Gentleman saw his way to make Consols what they were intended to be, the consolidation of all our debts, all these difficulties would vanish, and in his humble opinion he believed the credit of the country would be stronger than it was when we masked our liabilities under four or five descriptions of securities as binding upon us as the obligation to pay off Consols.

THE CHANCELLOR OF THE EXCHEQUER (Mr. Asquith, Fifeshire E.)

I do not propose to say more than a very few sentences, because the position of the Government has been very clearly and adequately explained, first by my hon. friend the Financial Secretary to the Treasury, and later by the Chief Secretary. Nor shall I enter into some of the points which have been raised by my right hon. friend who has just sat down. I do not, for instance, consider at all relevant to the present discussion what wore the terms upon which the loans under the Ashbourne Acts were raised. That is a totally different character of obligation, and I do not see that it has anything really to do with the question we are now considering. The point raised by the hon. and learned Member for Waterford is confined entirely to the proceedings under the Land Act of 1903, and it is to that point that I wish to address myself. A good deal has been said, particularly by the right hon. Gentleman who has just sat down, as to the intensions of the authors of that Act, but, as in the case of every other piece of legislation, we can only construe the intentions of Parliament by that which Parliament has enacted. In other words, the statute, and the statute alone, must form our guide in interpreting what Parliament really meant. And, when we come to look at this statute, it is abundantly clear what the nature of the bargain as between Ireland on the one side and the taxpayers of the United Kingdom on the other side was. It was this. The taxpayers of the United Kingdom agreed to make themselves responsible for paying a bonus of £12,000,000 sterling to the Irish landlords. It is true that the right hon. Gentleman offered us at the time, as a part consideration for that undertak- ing, certain reductions in Irish expenditure, but I have not yet seen any attempt to begin any of those-reductions. The taxpayer of the United Kingdom has got nothing as consideration, so far as that is concerned, for his promise to pay this bonus. On the other hand, the bargain was pretty clear— namely, that whatever loss there might be upon the flotation of this stock should be borne by the Irish Development Grant, and after that, in so far as it was insufficient for the purpose, by the guarantee fund, which means the subtraction of necessary resources from the administration of local government, and really means a burden on the Irish ratepayers. That was the bargain, written in the four corners of this Act, and assented to by every Party in the House, and it received the Royal Assent. I must say I cannot admit for a moment the legitimacy of the kind of argumentation indulged in by the right hon. Gentleman to the effect that when a statutory bargain of that kind has been concluded you are entitled to go behind it, and, by reference to obiter dicta and expressions of intention, to give it a different constuction from that which the Act itself really bears. As regards the subsidiary losses, let me say that we are doing our best for the time being to prevent their recurrence by not issuing fresh Irish land stock on the market, but taking up, through the National Debt Commissioners, advances made by them for purchase operations. But with regard to the really important point raised by the hon. and learned Member for Water-ford, I agree that the loss on flotation is a most formidable one. I do not want to recriminate, but I think if any of us had foreseen, or taken the trouble to exercise ordinary prevision in 1903, we should never have assented to what I do not hesitate to call the improvident system of finance embodied in this Act. The landlords ought never to have been paid in cash, but in stock. That would have been more in accordance with sound canons of finance.

SIR F. BANBURY (City of London)

I recommended that.

MR. ASQUITH

No doubt the hon. Baronet is very far-seeing, but unfortunately Parliament did not take his view All our subsequent difficulties are due to the fact that landlords were not paid in stock. However, we cannot go back upon that. We are all victims. We were all falling on each other's necks in the desire to solve the Irish question by kindness, and did not quite realise the difficulties, with the result that we passed these financial clauses without adequate supervision. The right hon. Gentleman does not deny it, and we have now to make our account in the best way we can I am confident that, if and when the Development Grant should be exhausted, nobody contemplated that the loss should fall on the Irish rates. The only contribution which the taxpayer of the United Kingdom agreed to make was the very large contribution, this bonus of £12,000,000, which was to be paid as a douceur to the landlords of Ireland in order to induce them to come into the purchase arrangements. When the right hon. Gentleman suggests to us that there has been an unforeseen and unforeseeable collapse in the price of gilt-edged securities which the authors of the Act could not possibly have forecast, and which utterly upset their arrangements, let me point out that the first issue of land stock made in March, 1904, or within six months of the passing of the Act, was at £87, and it was taken up at that price. The second issue was on the 3rd January, 1905, at £89 8S. 8d., while last year, when I made an issue, I secured the price of £89. So that if you take the period from the passing of the Act down to the last issue of stock, the price has slightly improved, and certainly has not diminished as compared with the price when the Act was passed. The authors of the Act are therefore not entitled to say that any change has occurred in the money market to upset the calculations they made when they brought their Bill before the House. I am sure the hon. Baronet, who knows these things so well, will bear mo out when I say that I have quoted the actual figures. I am not making any public issue of Irish land stock this year, and for two reasons— in the first place, in the interests of the stock itself, and still more in the interests of Ireland, because if I had issued this stock in May or June I should not have got for it more than £83, or a fraction over, which would have represented a loss of something like 17 per cent.— a much greater loss than ever hitherto has been incurred. Happily, we shall be able, I hope and believe, to provide for the exigencies of purchase during the remainder of this year with the funds we have in hand from the National Debt Commissioners, and the loss on flotation will certainly not be so great as otherwise it would be and most of the subsidiary and ancillary losses will be entirely avoided. And now I come to the future. I can assure hon. Gentlemen who represent Ireland that I do no in the least degree quarrel with the manner in which they have presented their case to-day. It is a most serious thing to contemplate that within two or three years you will have reached a point when you will have swallowed up the unexhausted margin of the Development Grant, and you will be face to face, so far as any further issue of stock at that date is concerned, with the prospect of having to throw on the ratepayers of Ireland, many of them not interested in the land question, the responsibility of making good this ever growing loss on flotation. The Act of Parliament throws it upon them. We are not directly responsible for that Act, and we can only avert its consequences by some form of fresh legislation. Now I want to put this in perfectly plain language. I do not think this is a loss which ought to fall on the taxpayers of the United Kingdom. I think the taxpayers of the United Kingdom, in contributing £12,000,000, have done very well. But, on the other hand, I do not think that this is a loss, which, if it can be avoided, ought to full on the ratepayers of Ireland. I want hon. Gentlemen, if they will, to be content with this assurance from me, as representing the Treasury and also the Government as a whole— namely, that we can go on for the next year, possibly for two years. I do not say that by way of suggesting that we are going to postpone longer than may be needful the consideration of the necessary legislation. But I ask you to be content with this assurance, having regard to what I have said, that I am as fully alive as you are to the necessity of revising the whole of the system of finance connected with the Irish Land Act. It would be most unwise of me at the present stage to state precisely the lines on which I intend to remodel the scheme, but it cannot go on as it is now. A 2¾per cent. stock which you can only float on the market at a discount of 15 or l6 per cent., with an ever-disappearing margin of the actual primary security— namely, the Development Grant— throwing the burden on the Irish ratepayers at large, who are not willing to bear the burden, and who, I think, in justice ought not to be asked to bear it— that is a prospect which no statesman responsible for the management of the finances of this country can possibly view with equanimity or without coming to a strong determination to remedy it. I ask hon. Gentlemen to be content for the moment with the assurance that the best way of escaping from the situation is a matter which is engaging my most earnest attention, in conjunction with my right hon. friend the Chief Secretary and those who advise him. I hope that next year it will be possible, certainly before the time comes when any burden can actually fall on the ratepayers, for us to submit to Parliament proposals which will put the whole system of Irish land purchase on a sounder and more equitable basis.

SIR F. BANBURY

said he thought that the right hon. Gentleman was entitled to a certain amount of gratitude for the course he had taken in regard to the issue of Irish Land Stock. His right hon. friend below him had stated that when Consols were at 114, in the year 1896, the majority of people thought that they were going up to 120. That was the general opinion. Now that Consols had got down to 84, the general opinion was that they were going down to somewhere about 50 or 60, never to rise again. After nearly forty years experience in the City, he found, as a rule, that the general opinion was always wrong. What possibly it was thought was going to happen never did happen. Therefore, the right hon. Gentleman was more than justified in delaying for the present any issue of stock, because if things did right themselves a little bit, his position would be much easier. With regard to the past, he could not help reminding his right hon. friend below him that on the occasion of the First Reading of the Irish Land Bill he ventured to talk with him in the lobby, and told him that he would never get his money at the price he thought he was going to get it at and he further asked him how, in that event, he was going to raise his ½ per cent. sinking fund. His right hon. friend replied that there was the Irish Development Grant, and he understood that, in the event of that failing, the ratepayers would have to bear it. He had pointed out to his right hon. friend that he must be quite certain that the people of Ireland would not be at all pleased to see any amount taken from the ratepayers. He then saw Mr. Ritchie, the then Chancellor of the Exchequer, and he implored him to pay the Irish landlords in stock, and his answer was that the Irish landlords were not satisfied with getting stock under the Ashbourne Act, because they could not sell it. He pointed out that the stock would only be quoted in Dublin, but that it would make all the difference if it were quoted in London where the transaction would be with the Bank of England. He could not, however, persuade Mr. Ritchie, who fell into the net of the hon. and learned Gentleman the Member for Waterford, and, everything being couleur de rose at that time, nobody thought there would be any such result as they had now. As to the future, he quite agreed with the Chief Secretary that a bargain was a bargain, and that having made the arrangement with the Irish landlords, they must pay them in cash and pay them in full. But he would point out that by consent they might come to some agreement, he did not say for a moment by coercion. The hon. and learned Member for North Louth had made a suggestion that some price near the price of the day should be fixed and that they should be paid in stock at that price. Something of that sort, he thought, ought to be done. With regard to the sinking fund, it was only a question of book-keeping; they had to make the loss, and they might just as well make it in that way as any other. The Irish Secretary said he contemplated a new 3 per cent. stock. He sincerely hoped that would not happen.

MR. ASQUITH

I should not like that to go forth. My right hon. friend did not say he contemplated that. He said that was a suggestion that had been made.

SIR F. BANBURY

Quite true; he should say, that if the right hon. Gentleman was considering it favourably he hoped he would not. And he would give the reasons. The only stock they could compare with Irish Land stock was the Local Loans stock, which stood at 95¼. It was true that at that price it returned three guineas per cent. to the investor, while Irish Land stock at 84½ returned £3 5S.; but the issue of £120,000,000 of Land stock would at once cause the Local Loans stock to go down in price, while probably the Irish Land stock would rise. They could not issue a large amount of stock without depressing the market, unless there was a very large demand, which there was not at the present moment, nor was it likely to occur. The Chancellor of the Exchequer would remember that Lord Goschen, following the example that had been set by the big railway companies, had consolidated three issues into one, a course which had a great many advantages; they got a larger market for the one stock, to the advantage not only of the holders but of the Government or the company, as the case might be, issuing the stock. Lord Goschen had, to his mind, very foolishly issued Local Loans stock, a proceeding which upset the apple cart altogether, and it had a very bad effect during the period of the war, because naturally corporations, not being able to obtain money easily, came to the Government and borrowed at the very time the Government were issuing it at a lower rate. What they had to do in the future was to endeavour to consolidate existing stock, and not to issue fresh stock, as was being considered by the Chief Secretary or by the Chancellor of the Exchequer. The real thing they had to consider was what was to be done in the future. It was no use looking back to the past. He ventured to say the course the right hon. Gentleman was pursuing was right— that he should not issue any more stock, that, he should endeavour to pay for it as he was doing now, and that he should endeavour also to come to some arrangement with the landlords to take their payment in stock at a price to be fixed. If, as he would wish, the Chancellor of the Exchequer issued the stock at the price of Consols, he would at once save about 5S. per cent. per year. Irish Land stock yielded £3 5S., and Consols £2 19S., and that was a saving of 6S. per cent. per annum. They would be gradually consolidating the stock, and he was sure that that was the right way to act, and it was the only course which would free the right hon. Gentleman from the troubles that had come upon him.

MR. CLANCY (Dublin County, N.)

said he had listened to the Chancellor of the Exchequer with some satisfaction. He understood the right hon. Gentleman to say that the question must be dealt with very soon, and that the ultimate loss would not be thrown on the Irish ratepayers, and it was not to be thrown upon the taxpayers of the United Kingdom. But the right hon. Gentleman had said that the difficulty must be met and conquered, and that he would endeavour at the earliest possible time to introduce legislation which would prevent the loss to the Irish rate paying body. They did not expect the Chancellor of the Exchequer, or the Chief Secretary, to lay before the House a complete plan, and he for one did not expect that they should pledge themselves to any particular plan. Therefore, he, at any rate, did not feel disappointed after the speech of the Chancellor of the Exchequer, because they had now a distinct pledge on two things, at least, which he valued, namely, that the question was of the utmost possible urgency, that it would be dealt with, therefore, as soon as possible, and that the burden was not to be thrown on the ratepayers of Ireland. He regarded that as a matter of great importance, and he was bound to say that he had not expected to hoar mere from the right hon. Gentleman. The right hon. Member for Dover had nude two important admissions. Ho had stated that it was the intention of the promoters of the Bill of 1903 that what the Chancellor of the Exchequer had called the subsidiary loss should not, at any rate, be borne by the ratepayers of Ireland. The right hon. Gentleman had also stated that as regarded the loss on flotation it practically should be borne by the Development Grant. When the Chancellor of the Exchequer came to deal with those very important statements he had made a reply which he should have hardly expected from one who was a statesman as well as a lawyer. The right hon. Gentleman said he was bound, not by any statements of the promoters of the Act of 1903, but by the Act itself. That was an argument which might be used in a Court of law, but they were not in a Court of law now. They were now considering how the statute of 1903 should be amended in view of the altered circumstances. It had been admitted that it was never contemplated that there would be such a fall in the value of gilt-edged securities, and consequently the very basis of the finance of the Act of 1903 had gone altogether. Could anyone deny that the time had now arrived for a recasting of the finance of the Act of 1903? He thought the Chancellor of the Exchequer had exhibited a somewhat narrow spirit in saying that they could not enter into this matter according to the intentions of Parliament because they had to interpret the Act itself. In view of the altered circumstances, his opinion was that they ought now to review the whole transaction. He could not see any relevancy in the remark that the right hon. Gentleman could not be bound by the intentions of the promoters of this measure.

MR. ASQUITH

said that before a bargain was altered it was necessary to understand the terms of the bargain. He had only pointed out what the statutory bargain was.

MR. CLANCY

said that whatever the intentions of Parliament were in 1903, the whole system must be recast, or Ireland socially would be rocked to its base. Some part of this loss might be met out of the bonus without substantial loss to the landlord. Let the Government pay the 12 per cent. to the landlord in respect of his actual interest in the property only, and give the rest of the bonus to pay the subsidiary losses on the issue of stock. He thought it was rather a mean and shabby transaction to add a month's interest to the sum to be paid by the tenant purchaser. He understood that the difficulty they had raised was to be met this year by not issuing any stock at all.

MR. ASQUITH

We shall not make any public issue.

MR. CLANCY

said that meant that they were to be relieved of this charge for one year, but he thought they ought to be relieved of the loss for past years. The Irish people had never quarrelled with their responsibility for the payment of annuities; but that was the only loss which the ratepayers were intended to bear.

*MR. GORDON (Londonderry, S.)

said that all parties in Ireland were interested in the successful working of the Land Purchase Act of 1903. They all recognised the difficulties of the position which had arisen. At the time of the passing of the Act of 1903 it was not anticipated that there would be such a great fall in the value of securities. That might have been very short-sighted, but with the exception of one or two hon. Members, both sides of the House acquiesced in the passing of that measure, and they approved of its financial provisions. If there was any short-sightedness it was shared, not merely by Irish Members, but also by English and Scottish Members. He agreed that no part of this loss should fall on the Irish ratepayers, but he could not agree that no responsibility should fall on the people of the United Kingdom. If there was any responsibility for short-sightedness, and for not giving sufficient consideration to the finance of the Land Purchase Act, the representatives of the three Kingdoms equally shared in it, for they all, including great financial authorities in the House, acquiesced in the Act. When the time came he thought the Chancellor of the Exchequer and the Chief Secretary ought to consider how far the Development Grant should be supplemented to meet any loss upon the Land Act, and he based this claim not only upon the statement of the Chancellor of the Exchequer as to what had occurred when the Act of 1903 was passing through the House, but upon the fact that the Chief Secretary in connection with his Irish Council Bill admitted that £650,000 should be given to Ireland. That would not now be given in the way proposed, but no better use could be made of a portion of it than by applying it to get rid of the financial difficulties under the Act of 1903. To the ordinary layman in financial matters it was strange to look at the newspaper quotations of the two stocks— Consols at 2½ per cent. quoted at 84⅛ to 84¼, and Irish Land stock at 2¾ quoted at 84⅜ to 84⅝. Why should a poor country like Ireland suffer this loss? The stock had the security of the British Exchequer behind it, no doubt, but for some unexplained reason it did not command what it ought to command, and he thought that those who were responsible for financial affairs should find out and remove the blot that depressed the stock by 8 per cent. It was too much to ask that the whole of this loss should fall upon the Irish people.

MR. PATRICK WHITE (Meath, N.)

strongly advocated part payment to the landlords in land stock. At the present time the landlords were getting twenty-five years purchase for second term rents with three years added, which brought the price up to twenty-eight years purchase and yielded 91 per cent. of the gross income. The expense ought to be borne by the landlords, who were getting 68½ per cent. more for their land than they would have got before the passing of the Act of 1903.

Question put, and agreed to.

Resolved, That, in the opinion of this House, the method at present in force for providing money for Land Purchase in Ireland has broken down in practice, and, if persisted in, will throw such a ruinous charge on the already overburdened ratepayers of Ireland as to endanger the entire scheme of Land Purchase.— (Mr. John Redmond.)