LAND VALUES (SCOTLAND) BILL.

HC Deb 10 July 1907 vol 177 cc1625-723

Order for Second Reading read.

Motion made, and Question proposed, "That the Bill be now read a second time"

*MR. REMNANT (Finsbury, Holborn),

in moving the rejection of the measure, said that the Bill proposed a valuation of land in Scotland apart from the buildings and erections upon it, and thus sought to give effect to one of the recommendations of the Select Committee on the Land Values Taxation (Scotland) Bill of last session. It might be affirmed without hesitation that the overwhelmingly preponderant weight of the evidence heard before the Committee was against such a change in the law. Indeed, the Report adopted by the majority of the Committee could hardly be said to have been based upon any substantial evidence, being little more than a reproduction of some crude fallacies expounded by a solitary witness, a Mr. Adam. This Mr. Adam favoured the Committee with a hash of Henry Georgeite fallacies, and the Solicitor-General for Scotland in his Report favoured the Committee with a rechauffé of Mr. Adam's evidence. On the other side, the Com- mittee had before them the evidence against separate valuation of a number of men of great business experience, known throughout Scotland as experts on all such matters. Against the findings of the Select Committee of last Session, after some months of inquiry, must also be set the findings, after years of inquiry, of both the Select Committee of this House on Town Holdings, in their Final Report presented in 1892, and the Royal Commissioners on Local Taxation, in their Final Report presented in 1901. Those bodies both condemned the separate valuation of sites. The Commissioners reported that— Such a system would certainly be attended with considerable uncertainty, complication, and expense; and the Town Holdings Committee reported that— The scheme is open to very great objection on the ground of the difficulty and uncertainty of the proposed system of valuation. As regarded one of the most important parts of the Report of the Select Committee of last session—viz., that which dealt with the assessment of feu duties and the violation of contracts—the Prime Minister had recently, in answer to a Scottish deputation, completely thrown over the Report of that Committee in favour of the findings of the Royal Commission. They might, therefore, hope that, on further reflection, the Government would go further in the path of wisdom, and see that on the other questions at issue also the Report of the Royal Commission was greatly to be preferred. The overthrowing of the finding of the Select Committee had produced the most extraordinary results. They had the Solicitor-General for Scotland practically staking his reputation on the valuation of existing contracts and carrying it in Committee by his own casting vote, and then they had the Government once more throwing over their own law officer. They all knew what had happened in the case of the Trade Disputes Bill—viz., that the Attorney-General was thrown over. Now the Solicitor-General for Scotland had also been thrown over, and so they had these two gentlemen bottling up their opinions and remaining in this extraordinary Government. As regarded land that was built on, the proposal to value sites was futile to the point of absurdity. Since the value of land was included in the valuation of the rateable hereditament as a whole, land values were already taxed, and the Bill by separately valuing sites would not increase local revenue at all, any more than a man would increase his stock of fruit by cutting his apples in half. No doubt separate valuation of sites, if used as a basis for assessment, would increase the assessment on some houses and reduce the assessment on others, but the results so attained would be, as he pointed out in a draft report which he submitted to the Committee of last session, most Anomalous. There were only two cases where the proposed method of valuation might yield an approximately reasonable result—viz. (1) when the site was already utilised to its fullest commercial capacity by the existing building upon it, but these cases were just these which the existing system of valuation completely covered; and (2) when the existing buildings were so unsuitable or ruinous that their presence added nothing to the value of the site, but these cases were so extremely rare as to be for practical purposes negligible. In all other cases such a method of valuation would lead to most anomalous results. In the case of a very considerable proportion of the older property in the centre of towns, the value of the site considered as cleared was greater than its value as a site for the buildings at present upon it. Yet the value of the property as it stood was greater than any value which could be obtained for the site alone, so that it would be absurd to pull down the buildings in order to utilise the site for new buildings. The site value was thus one which the proprietor could not realise, because in order to realise it he would require to sacrifice more than he could possibly obtain. The proposal to value the site was therefore consonant neither with justice nor with sound economics. The price which might be obtained for a single site if placed upon the market was no guide to the value of the whole of the sites in the street. The site came into the market as a building site for new premises when that stage was reached, through the growth of site value and the decay of the existing buildings, at which more could be obtained for the ground as a site to be cleared than for the ground and present buildings in their present state. In an important thoroughfare it might happen once every two or three years that a suitable site for a large building so came into the market, and when it did so happen there might be one or two purchasers in the market anxious to acquire a site in the neighbourhood for an important building or for some special purpose, and in that way a large price might be paid for the site. But the price would naturally be somewhat smaller if three properties happened at the same time to reach a corresponding stage of deterioration, and so come simultaneously into the market, and it would be vastly smaller if the number were fifty. As the number of sites coming into the market for the purpose of being cleared was limited, so was the number of purchasers wanting such important sites and able fully to utilise them. In the course of fifty years every site in the street might in succession come into the market in this way and obtain a large price, but in endeavouring to ascertain the present value of the aggregate sites in the street it was necessary to discount that long period. Failure to observe this had led to a huge over-estimate of the value of covered sites. It was obvious, too, in view of the foregoing considerations, that a single sale, or even several sales, of site property in a street, would afford to the assessor a most untrustworthy index to the true average value of a site in the street. The Report of the Select Committee of last session described the object of the proposed change in the law as being— to measure the ratepayers' contributions, not by the value of the improvements on the land to any extent, but solely by the yearly value of the land itself. The Bill ran directly counter to this object. The definition clause exempted " structural improvements," but not other improvements. In many agricultural holdings the expenditure upon the improvement of the soil exceeded the whole of the present capital value. How was the valuation of such improvements under the Bill to be reconciled with the professed object of its supporters? And in the case of urban sites large sums were often spent upon the preparation of the sites for building and the construction of streets and sewers. The Report of the Select Committee of last session stated— In some instances exceptional and substantial expenditure has been incurred in preparing a site for building. As it originally stood the site was, on account of unevenness of surface, slope, or it may be the character of the soil, unfit for building operations. But judicious expenditure has rendered it suitable, In such a case, if the owner can satisfactorily prove the amount of the expenditure, your Committee consider that allowance ought to be made for it, at all events if it has been incurred within, say, twenty years of the date of the valuation. To make such an allowance would, in the opinion of your Committee, be in strict conformity with the principles of the Bill, which aims at relieving all owners of rating based on industrial expenditure. The allowance proposed by the Committee was obviously inadequate, but even that was not made in the Bill. The Select Committee of last session also reported— Discretionary powers should be given to the local authorities to exempt totally or partially from local rating any gardens or open spaces in private hands which in their opinion are beneficial to the community. If such open spaces were not to be rated they ought not to be valued, but they were not exempted under the Bill. A good deal had been said about precedents for this system of valuation in certain of the Colonies, in Prussia, and in the United States. In the two last mentioned cases no rate was levied on the site value as apart from the combined value of site and buildings. In New Zealand and some other Colonies a system of rating on unimproved value had been adopted, but reports showed that it had been in operation for so short a time that no substantial conclusion could be drawn as to its effects. It should be noted that the process of ascertaining the unimproved value necessarily presented much fewer difficulties in a new-country. As regarded New Zealand, Dr. David Murray had shown that, as all the land in the colony which was subject to valuation, rural, suburban, or urban, had been disposed of by the Crown within recent years, its original unimproved value without crops, without stock—that was, in its primitive condition—was accurately known. The improvements were necessarily of recent date and were visible; they were being constantly surveyed, and it was easy to estimate their value. The circumstances of New Zealand were so entirely different from these of Scotland, that, so far from proving that what was done there could be done here, they showed that every element which made the ascertainment of land values possible was wanting in Scotland. If the Bill was to be considered as a means of procuring a rough valuation of the bare land value to satisfy curiosity or any other purpose which was an end in itself, that could be attained by means of a Government Return to be furnished by the assessors in Scotland. In this way it would cost nothing to the people in general, although, of course, it would throw a small charge on the Exchequer. If the valuation, however, was to be so accurate as to furnish a foundation for rating proposals, it must throw on the owners of land and buildings and ratepayers in Scotland a cost of several millions sterling. Dr. Murray estimated the cost for valuation alone in Glasgow at half a million, viz.,,£340,000 on the part of the owners and £160,000 on the part of the assessor. This figure did not include any allowance for litigation, which might be enormous, as of course each property was in a sense rated against the rest. If they allowed half a million for Glasgow, it would not be out of the way to estimate the cost of valuation in Edinburgh at £350,000 to £400,000, the acreage being very nearly as large. Dundee and Aberdeen, on the same basis, would not cost less than from £80,000 to£100,000, and so on throughout the burghs and counties of Scotland. It was impossible to follow any rule of thumb in proceeding from one place to another, as was shown by the evidence before the Committee, Mr. Binnie estimating the site valuation of Glasgow at one-fifth of the rateable value, while the Edinburgh site value was stated to be one-sixth, and Aberdeen from one-eighth to one-tenth. It had indeed been suggested that an official valuation of land would facilitate the process of buying land under compulsory powers for small holdings or for public purposes, but it was obviously much cheaper to value the comparatively small parts of land that might be so acquired when they were wanted than to start with a valuation of all the land in Scotland. The latter method was about as wise, from an economical standpoint, as to burn down a house in order to roast a pig. It could not therefore be imagined that the Government wished to throw this enormous burden on the people of Scotland unless a rating Bill was to follow, and this being so the question of an alteration in the system of rating was directly in point, as the merits of the change had to be shown to exceed the merits of the present system by the whole cost of making the change. What value then could be attached to the Bill as providing a new basis for rating? As regarded land that was built on, it had already been shown that it was absolutely futile. As regarded vacant land, it was true that the Bill would bring about a higher valuation. But the assessment of such property could yield only an apparent gain to the municipalities. It would only relieve the owners of occupied land of some part of the rates, and cast that part on the owners of unoccupied land. The present practice, under which owners were taxed when they had income with which to pay the taxes, was more convenient to them, and did not ultimately cause any loss to the public. People who talked about "holding up" land for a rise forgot that the owner and the municipality were really in the same boat. The object of a landowner who kept his land out of the market was to get a greater price for it at a later date when the value had gone up. In most cases self-interest would guide him wisely, and in the long run he would make a gain. In this matter the interests of the municipality and the owner were identical If the owner gained by waiting, the municipality also gained, because it got proportionately higher rates. Even the apparent gain from the capital valuation of vacant land would be very small. The cities and suburbs of Scotland did not differ materially in this respect from these of England, and in the debate on the English Land Values Bill of 1905 the present Chancellor of the Exchequer gave figures showing what the effect of the assessment of vacant land would be upon the actual rates in two districts, one suburban and the other metropolitan. In the case of Hornsey the result would be a reduction in the rates of that community only from 7s. 6d. to 7s. 2d. in the £. A similar calculation in regard to Fulham showed that in that case there would be a reduction of the rates only from 7s. 4d. to 7s. 2d. While worthless as a rating measure, the assessment of vacant land would do a great deal of harm by driving in to the building market all gardens and other open spaces in private ownership in the populous parts of towns. There could be no question of the expediency of preserving such additional breathing spaces or "lungs" in towns, or of the undesirability of adding new piles of bricks and mortar within crowded areas. This drawback had been insisted upon in the Report of a Committee appointed by the Fabian Society to consider the housing problem, which stated— The direct tendency of taxation of urban land values would be to bring into the market as building land these oases of garden and pleasure ground at present enclosed within our urban areas. The tax would therefore promote housing on exactly that class of land which in the interests of the health of the community should be most carefully kept vacant. Owners of gardens and fields in towns have already ample temptation to sell for building the valuable sites which yield them little or no actual revenue. The taxation of urban land values would increase this temptation. The sort of house-building which land taxation would facilitate is therefore exactly the worst sort in that it would tend to increase the density of our towns, and retard the movement of population towards the suburbs. What was feared here had taken place in the United States, where for very many years (he believed from time immemorial) vacant land had been taxed on its full selling value. In New York there was far more dense over-crowding than in the worst slums in this country. For the sake of the whole community, and especially of the working classes in out-cities and towns, he asked the House to refuse to take the first step towards the introduction of this cruel system of taxation into Great Britain. The system of valuation which this Bill proposed to introduce offered such unattractive results for a great waste of money that the proposal could be explained only as a first step towards carrying out a programme of confiscation of all rent by taxation, as advocated by the late Mr. Henry George. It had been explicitely admitted that that was the object of the real promoters. Mr. John Paul, Secretary of the Scottish League for the Taxation of Land Values, wrote— The Scottish League for the Taxation of Land Values is the one organization in Scotland exclusively devoted to promote the teachings of Henry George. It should be observed that Henry Georgeism was much less deserving of respect than the most extreme Socialism. Socialism was a considered theory, defended by some learned economists and affecting all forms of property equally. The "single tax," on the other hand, was a wild proposal for confiscating only capital invested in land, put forward by a half-educated fanatic whose views had been condemned by every competent economist who had condescended to examine them. It was noteworthy that when the name of Henry George was mentioned in this House it should find on the Liberal Benches so many cheers. It found plenty of supporters in the Select Committee, and it was mainly on his theories that the majority Report was based. When that fact was mentioned in this House he hoped he would be excused for taking up so much of the time in endeavouring to influence the House to reject the Second Reading of this Bill

*MR. YOUNGER (Ayr Burghs),

in seconding the Amendment, said that the Bill was one of such vast importance and of such far-reaching effect, that it was the duty of these who had considered this question to do what they could in the House to awaken the people of Scotland to a sense of what was looming in the distance if the Bill were passed. The manner of its introduction was not what they would have expected. It was introduced under the ten minutes' rule, and in his opinion it was an abuse of that rule to introduce so controversial a measure under it. Nobody had an opportunity save the Leader of the Opposition of attacking the principle or the import of the Bill. He complained not only of the Bill being introduced under the ten minutes' rule but of the whole tone and import of the right hon. Gentleman's speech. No one knew better than the right hon. Gentleman himself that he was introducing a Bill which was designed to effect a complete revolution in the system of local taxation in Scotland, yet he not only had the audacity, there was no other word for it, to suggest that the Bill should be considered non-contentious, but said it only added one more to the columns in the valuation roll of Scotland, of which there were already eight. The right hon. Gentleman no doubt designedly spoke in that way in order to allay suspicion and not to arouse too soon that opposition of which after the debate on the Second Reading he hoped there would be a good deal. The Prime Minister in no uncertain language repudiated the proposals of the Solicitor-General and the majority of his Committee as to taxation of feu duties, as he was certain to do after the declaration of the Lord Advocate in the Bill last year, certainly the most important fact embodied in the Report of which the hon. Gentleman had constituted himself a knight-errant all through Scotland in the winter. The Prime Minister's refusal to have any thing to do with it thoroughly discredited the whole Report. The original suggestion for reform in the laws which governed every form of taxation of land value in Scotland arose from the mistaken idea, freely circulated, that feu duties escaped taxation. If the Select Committee did nothing else it completely exploded that mistaken notion. It was explicitly stated in the Report that the land values were fully taxed, and that should disabuse the minds of the people of Scotland of the notion that there was any exemption on the part of those who owned feu duties. That mistaken belief resulted in the Bill of last year, a Bill the principle of which was accepted by the House by a unanimous and overwhelming majority. He was glad to think the whole of the Committee were sensible enough to take the view they did in condemning that Bill as indefensible. There were also signs of a return to sanity on the part of the Corporation of Glasgow, because at a recent meeting the report of the Land Values Committee on this Bill, of which it approved, was not accepted by the Corporation, and a motion was carried that the report of the committee be not accepted and that the Bill be referred not to the Select Land Values Committee, but to the Parliamentary committee, which was analogous to its being shelved. This Bill was to provide for the rating in Scotland of land at its annual value from year to year. The gross valuation only appeared on the roll at present, and these who supported this particular proposal quoted the minority Report, for which Lord Balfour of Burleigh was responsible, as a justification of their action in asking for the separation of land value from structural value. But they, unfortunately, ignored the fact that the recommendation was not for the separation of the land from the heritage—the system proposed in this Bill to form a basis for taxation—but for the separation of the two subjects, in order that where the gross value appeared on the roll the deductions usually made for poor rate and education rate should be taken off the structure only, and not off the land value. That did not in the slightest degree support a proposal of this kind, which was of a totally different character. In point of fact, the present valuation rested upon facts; the new valuation would rest upon a hypothesis. The Bill proposed that owners should return the capital value of the land, whether urban or rural, and it defined capital value as follows— Capital land value in reference to any lands and heritages means the sum which such lauds and heritages might lie expected to realise in the open market at the time of the valuation if (1) divested of buildings, erections, or structural improvements, and fixed or attached machinery; and (2) sold free from all burdens, public and private, except building restrictions or other servitudes. He would note, in passing, what his hon. friend had mentioned, that there were very many improvements on rural and urban lands which under this particular clause would be left in the land value For example, in the case of rural land they had reclamation, drainage, fencing (he was not very certain whether this was a structural addition or not; he assumed that perhaps it was), a good water supply, etc. In the case of urban land there were levelling, preparation of sites, in many cases piling, street-forming, and all that sort of thing; and he wanted to ask whether this formed an intentional departure from the recommendation of the Committee, or whether they were willing to enlarge this definition clause as to improvements to something like the recommendation which the Committee made, namely, that the valuation should be the value of the land apart from buildings and all the improvements upon it, or in other words, whether it was to be the bare land entirely apart from improvements. What was needed, if this theory of land valuation was to be carried out was a definition something like what they had in Now South Wales, which was as follows— It includes houses, buildings, fencing, planting, excavations for holding water, wells, ring barking, clearing from timber or scrub or sweet briar, or noxious weeds, or laying down in grass or pasture, and any other improvements whatever, the benefit of which is unexhausted at the time of the valuation." That was Section 68 of the Land and Income-Tax Assessment Act of 1895. He read that clause as embodying at all events what he believed to be the recommendations of the Committee, and he asked whether this was an intentional omission, and whether, as a matter of fact, the right hon. Gentleman and hon. Gentlemen who at present ruled Scotland had at last discovered that, if they included all these improvements, in a very large number of cases there would be no land value left, and therefore no basis of land valuation at all in many rural parishes of Scotland. He was inclined to think that was the true explanation. If it were so—he did not wish to use strong language—it was not a particularly worthy way of bolstering up their particular theory. What about the difficulty of the task which was set the assessor in valueing land on the principle of this Bill? In the first place, the assessor got no proper directions at all. There was insufficient definition of what improvements were, and there were many things not provided for. For example, they did not know the position as to shootings, fishing, minerals, or plantation, and a thousand and one other things of that kind. It was impossible to say from the Bill whether they were dealt with, and, if they were dealt with, how. He had a most interesting collection of the views of assessors published, in the Scottish papers not very long ago on this Bill. | He would read some of them. He knew the Lord-Advocate had claimed that he had expert opinion, and some evidence before the Committee in favour of this proposal. A couple of assessors gave a qualified approval to the scheme, but no professional valuator examined gave it any support. But the House would hear what the assessors had got to say about this Bill. Here wore a few extracts. The first was assessor of a southern county; he said:— The Bill is perfectly unworkable in its present form. We receive no guidance in it as to the manner in which we should set about to carry out its provisions. Another one said:— The duty laid upon the proprietors of lands and heritages will without doubt be puzzling to a degree, but to the assessors who have the carrying out of the provisions, more especially these who have to do with burghs where there are many small proprietors, the bulk of whom are in perfect ignorance that such a Bill is oven contemplated or that it affects them in the least—the work must be herculean before it is possible to get a return from them of the capital value of their lands; and it is perfectly safe to say that it will take the corrections of several years before the Valuation Roll will be even approximately correct. A third said— I have not given the Bill any serious thought because I think the proposal so impossible to carry out with any degree of accuracy, that I think it is almost sure to be thrown out or abandoned. Yet another assessor said— Capital land value will be found so be a very difficult and puzzling item to estimate when one considers the deductions and restrictions to be ascertained as stated in the definition clause. He had many other extracts of the same character. And he had a letter from an assessor, whose name he could supply privately if it was desired, who said exactly the same thing, that it was quite impossible, so far as he could see, in the county with which he had to deal, and in regard to the varied subjects which he had to value to estimate according to the directions given in the Bill. The system of valuation proposed was somewhat extraordinary. The site was supposed to be cleared of all structural buildings and improvements upon it; the assessor was to imagine it clear of all structural improvements. When he had done that, he had also to imagine a hypothetical market for a site which was purely hypothetical. Then he had to imagine a buyer who did not exist, in a market which did not exist, for an article which did not exist. And arising out of these hypothetical principles they would have a highly hypothetical result, and yet they had sensible men asking the people of Scotland to accept this as the basis of their future taxation. It was most astounding. How could the latter justify it? They attempted to justify it by pointing out that every now and then, under the existing system, a hypothetical tenant had to be discovered, and that, as a matter of fact, it was just as difficult to find a hypothetical tenant as to find a hypothetical buyer. He had for twenty years presided over the valuation of a typical Scottish county. They had had all kinds of subjects to value, and during the whole of the twenty yews only one case had been appealed to the Court of Session, and on that occasion their judgment was upheld. His point was that they had dealt only with actual subjects for valuation; the factory and the land were in actual being, and there was no difficulty in finding the hypothetical tenant. They had an actual basis of fact to work upon and not a nebulous hypothesis. The Lord Advocate, when he made his speech, claimed that he had skilled witnesses who backed up his proposal. Two assessors had given him a certain amount of countenance; and one of them, Mr. Henry, of Glasgow, after making the best case he could for these who employed him, at the end of his evidence, being a thoroughly honest man, told the Committee that this proposal involved such an enormous change that, if the Bill were passed, and they were to tax these land values, it should not come into operation for a generation. The second argument in favour of the change was based on Colonial and foreign experience. His hon. friend below him had said all that was necessary on the subject. To bring in New Zealand as an example for dealing with the land of Scotland, seemed to him to be ineffective for the purpose. Unimproved land there was an ordinary staple commodity, and would sell in New Zealand at a price which was easily ascertainable. There was no difficulty, whatever. All were taxed on the same principle and it did not matter, and there was no difficulty, but this Bill would establish a very different state of things in Scotland, where no unimproved land existed except perhaps on such places as the top of Schiehallion, and it would entirely change the incidence of taxation. He knew a country town where the rates at the present time were 5s. in the £, but if they were levied on land values alone they would be 30s. He could give an instance there of a factory building erected on one and three-quarter acres assessed at a rental of £1,040 and paying £260 in taxes. If taxed on its land value that factory would only pay £45. In another instance there were one and a half acres at a rental of £350 which yielded £8 10s., but under the new system the amount would be £45. In another case there were five acres containing large buildings routed at £3,850 a year which at present paid £962 in taxation, but if the basis were altered to land value taxation the amount would be £125. In this case all such deficiencies would be made good by the heavily-increased rates payable by the owners of villas and cottages with garden ground attached. He might take another illustration of farm land where the rental was £180 for about as many acres. He had had this farm's improvements valued, including the farm buildings, drains, roads, and everything else, and he found that while before the Liberal Government came into power they could get in Scotland twenty-five years purchase, and that at a rental of £180 the farm would be worth £4,500, the improvement alone reached a total cost of £5,125, which was £625 more than the capital value. In that case there was no land value left to tax. That was the position of most of the agricultural farms in the districts of Scotland which he happened to know. It had been admitted by experts that in many cases there would be no land values to tax, and it naturally occurred to these who had to do with county government where on earth the basis for local taxation was going to be found, and who in future would pay the rates. The effect of this Bill would be to compel people in Edinburgh and Glasgow to get the best price they could by feuing the land for the highest possible purpose, wholly regardless of amenity or obligation to existing feuars. The Leader of the Opposition upon a previous occasion asked the Secretary for Scotland if he would give to the House before the Second Reading an estimate of the cost of this Bill. A week or two after that he put a Question himself in order to elucidate this point, but he only got the usual answer that his premises were not admitted, and that there was not the smallest necessity to call for the estimate asked for. That was a way they had got at the Scottish Office, It did not appear to him that Dr. Murray's estimate was much out of the way. In one county there were 250 landed proprietors, and it was impossible for them to prepare their statements under £50 each. There were 4,000 feuars, and he did not think any of them would be able to fill up the schedule without expert assistance, which would cost them 30s. each. The cost would amount to about £20,000, and the assessors' outlay and remuneration had also to be provided for. It would be seen that even in a sparsely populated county in Scotland the expense would be very great. This was certainly a charge which ought to be borne by the nation and not by the individual. One of the most extraordinary proposals in the Bill was the exemption of railways. The Select Committee undoubtedly reported that in their opinion railways should be exempted from this particular form of rating, but they made no provision—and the Bill made no provision—for the fact that railways were rated on their commercial value, and if that commercial value was to remain as the annual rateable value, there would be precious little dividend left for any of the shareholders. He could not believe that that was intended. His hon. friend the Member for Dumbartonshire who saw this absurdity in the Report introduced a clause to deal with the point, but when the time came to propose it he incontinently dropped it. He had then moved it, but was only supported by the Unionist Members and the hon. Member for West Aberdeenshire whose acute mind realised the absurdity of the recommendation. If they were to have any change at all, what they wanted was not a narrowing but a broadening of the basis. Then local rates were increasing hand over hand. They were no doubt very burdensome, and he could understand the reasons which actuated rating authorities in endeavouring to find some new source of taxation and income. There was an enormous amount of personal property which escaped taxation. This did not use to be so, and if there was to be any change at all it ought not to be in the direction contemplated by this Bill, which was impracticable and unworkable. It would be very costly, and would cause an infinite amount of trouble in its administration, and it would be perfectly worthless for the purpose which hon. Gentlemen opposite had in view. There was only one thing to do with this measure, and it was that at the earliest possible moment it should be be consigned to the Parliamentary scrap heap in which far better measures had found their haven.

Amendment proposed— To leave out the word 'now,' and at the end of the Question to add the words ' upon this day three months.'"—(Mr. Remnant.)

Question proposed "That the word " now ' stand part of the Question."

THIS SOLICITOR-GENERAL FOR SCOTLAND (MR. URE, Linlithgowshire)

said he was afraid he could not congratulate his hon. friend upon having thrown any fresh light upon this somewhat thorny and difficult topic. The subject was one which had been threshed out on four separate and distinct occasions. The sole object of this Bill was to set up a new standard of rating, a new measure by which to fix the contribution of the citizens to the rates. The Bill expressly stated (hat nothing contained in the measure would affect the question of rating or of assessment. Reference had been made to the divergence of view between the Lord Advocate and himself with regard to the scope of the application of the standard once it had been set up, and that had given rise to a personal note in the discussion which was always so welcome in the House. He would not fail before sitting down to respond to the personal note so vigorously struck by his two hon. friends opposite. He hoped to satisfy even them that the difference between the Lord Advocate and himself with regard to the scope of the application of the standard once it had been erected was a difference which was confined exclusively to that and was not such as to debar him from rendering such humble aid as he could in carrying this measure and in co-operating heartily with the Government of which he was a member. He invited the House to consider the only two questions which seemed to be worthy of attention in regard to the measure. The first was: Ought they to set up a new standard by which to measure the citizen's contribution to the rates? The second question was: Could they set up a new standard? It was obvious that an answer in the negative to either or both of these questions would end the measure. To the question: Ought they to set up this standard? he answered unhesitatingly, yes. He said so, because it would lead to a more equitable distribution of the rates on the shoulders of the citizens At the present moment, to defray the cost of the local services on which the comfort and well-being of the individual citizens and the prosperity of the community so largely depended, all the citizens were laid under contribution, and the amount of their contribution was determined by the yearly value of the houses they owned or occupied, or of the business premises in which they carried on their calling. There were two ingredients involved in the citizen's obligation to pay rates. There was, in the first place, the personal benefit which the citizen, his tenantry and retainers, derived from the local services to which the rates were devoted; and there was, in the second place, the advantage to the citizen's property, the maintenance of or the increase in its value depending largely upon the enterprise of the community and the expenditure of the rates contributed by his fellow citizens. In the Scottish rating law both these ingredients were recognised, and a certain portion of the local rates fell upon the owner and a certain portion upon the occupier. They were not equal divisions, but some sort of arbitrary divisions. It was quite plain that to apportion the burden according to the precise amount of personal benefit derived, with any approach to scientific accuracy, would be impossible. On the other hand the advantage to property was capable of being gauged and estimated, and the citizen's ability to pay the rate was determined by the yearly value of the house which he occupied, or the yearly value of the business premises in which his calling was carried on. No attempt was made under the present system to sever the value of the buildings erected on the land from the value of the land itself. No attempt was made to estimate what each contributed to the total value. It was, indeed, a rough and ready test which was applied at present, and necessarily so, because valuable premises were often occupied by firms and individuals whose profits were small and approaching the vanishing point. Millionaires might live in garrets, and they sometimes did, while a man of slender means might occupy commodious premises, because he was blessed with a large family or a fashionable wife. The present standard, therefore, was only a rough and ready method of determining a man's ability to pay rates. There was no use longing after the ideal, for it was hopelessly unattainable. The question was: Could they have a better system set up which would result in a fairer and more equitable distribution of the burden so that they should as far as possible lay the heavy burden on the broad back and ease the burden on the backs of these least able to bear it? In the selection of a standard of rating, their area of choice was very small. Some wiseacres in that House—formerly, but not at present—had suggested that the area for the standard of rating should be bank stock, railway stock, or Consols. If any one of these three was selected, it must be obvious that there would be no ratepayers in many parts of Scotland, and that these who were ratepayers today would sell out, so that to-morrow there would be no ratepayers at all. It was obvious that for the purpose of rating they must take something which the citizens had and could not do without. If they were all equal citizens, a poll tax would do, but as they were not the rates must be levied on the land, or on the buildings erected on the land. That was what the Bill proposed to set up. It was proposed to exclude altogether from the rating standard, as at present existing, houses erected and structural improvements on the ground. It was perfectly obvious that there would be very great difficulty in ascertaining the value of such improvements, as the hon. Member opposite had suggested. The Government proposed that the value of, the land, apart from the buildings and structural improvements upon it, should be taken as the new standard of rating, That was a standard which expanded or ' contracted, not like the present standard according to the enterprise and the expenditure of the individual owner of the property, but according to the energy, enterprise, and expenditure of the community surrounding it. If a man was minded to erect handsome and commodious buildings, to spend generously upon wages and material, and to do his very best, he could do so under the new standard without being haunted with the idea that whatever improvements he made would instantly be followed up by a substantial rise in his rates. He would feel assured, because he would know that the measure of his contribution to the rates would be determined by the value of the land. On the other hand if a man for some reason, or for no reason at all, chose to allow his property to fall into a state of dilapidation and decay, or if he chose to have on his land inferior property unsuitable for the site,, he would not thereby escape the rating which was applicable to the value of the site he possessed, and which on ac count of his neglect or heedlessness was not being fully utilised He would not, whatever the misuse he might put his property to, pay any less rates than he would have had to pay if he had put it to the best use. Accordingly the objection to the present standard was that it operated as a burden upon industry, it operated as a deterrent to a man to spend wisely and generously in wages and in material in putting his property to the very best use possible. It discouraged a man from spending freely and generously and doing the best he could with his property, because he knew that when the value was increased the burden of higher rates would fall upon his shoulders. Under the now system no man who had spent generously in doing the best he could with his property would be asked to pay more than his air share of the rates. It was a standard of rating which had a direct and immediate connection with the expenditure of the rates. When the rate expenditure was wise, prudent, and generous, his standard expanded and enlarged; when, on the other band, the rate expenditure was unwise, prodigal, extragant, and foolish, it contracted. But it lever expanded or contracted according to the wisdom or the unwisdom of the individual owners of property. That was the method which the Bill proposed to set up. The House would very naturally ask, although the application f the standard was expressly excluded from the measure, what, in general terms, would be the effect of adopting this new standard. The effect would obviously e threefold. In the first place, a umber of citizens who at present contributed nothing to the rates would be included in the ranks of ratepayers. These were men who at present held building land which was standing vacant and unbuilt upon, or which was used merely for temporary purposes or for agricultural purposes, although really within the building area and zone. He would deal with these three points when he came to the question of the practicability of their scheme. These men at present escaped rating altogether or wore rated merely upon the agricultural value or upon the rent derived from the temporary erections which stood on their property. The second effect would be that men who were insuring their property, men who hold valuable sites upon which the buildings wore either being allowed to dwindle into dilapidation or decay, or sites which carried buildings obviously unsuitable to the situation, which did not take the full value out of the site, and which were inferior to the site on which they stood, would be asked a substantial increase to the rates on that which they at present paid. In the third place, men who were at present owners of property upon which there were handsome buildings and erections of better value comparatively than the site on which they stood would require to pay a smaller contribution to the rates than they did at present. He would offer an illustration as an example of a wealth of instances of the enormous value given to land by the progress and industry of a surrounding community. He took one illustration, because it afforded a good example for a demonstration of all his points. Some three years ago there changed hands in the open market agricultural property in Princes Street, Edinburgh, at the handsome figure of £100,000. Upon the site at the time there were comparatively modern buildings, which were entered in the valuation roll at £2,750. The purchaser proceeded to remove these buildings. They wore obviously unsuited to the value of the site on which they were erected, although they were comparatively modern buildings. He proceeded to expend some £40,000 on new buildings suitable for the site. Although the former owner was rated at £2,750, he really gained £100,000 for the site alone, because the instant the new owner purchased he proceeded to clear away the buildings which then existed. A very modest return on £100,000 was 4 per cent., and, accordingly, if the owner were rated upon the land value, he would stand in the roll as proprietor of ground worth £4,000; but under the present system they would add to the valuation (and correspondingly to the rate) £1,600, which was 4 percent. on £40,000 spent on the buildings. Accordingly in the valuation roll for this year the property would probably stand at £5,600 instead of £2,750. A century and a quarter ago, when the ground was first given up, its capital value was between £60,000 and £70,000. In the first place, there was an illustration of an enormous increase of value due entirely to the progress, prosperity, and expenditure of Edinburgh; in the second place, there was an illustration of property entered in the valuation roll at £2,750, substantially less than the yearly value of the ground alone; and in the third place, there was illustrated the very great injustice of rating an enterprising man upon £40,000 which he had spent in erecting handsome, palatial buildings. That was the case of the Bill upon the question whether or not they ought to set up a new standard. He now turned to the second question. Could the proposed standard be set up? Was it reasonably practicable to set it up? He stated the case in that way, because nobody now said, though some time ago they did, that it was impossible to value land apart from the buildings erected upon it. It was done every day in his own experience. Nobody maintained that it could not be done. Everybody now knew that it could be done, but the question was, "Is it reasonably practicable?" That resolved itself into whether the objection usually stated, which was that their valuation was necessarily arbitrary and uncertain, and that it was expensive and difficult, was well founded. To say that their valuation was arbitrary and uncertain was merely to say that they were in the region of valuation, but not in the region of mensuration. Accuracy and precision were not only unobtainable in the region of valuation, but also unintelligible. Accuracy and precision the might have upon questions of fact; but when they were in the region of valuation they were in the region of speculation and opinion, where necessarily they must go by guess work more or less near the mark according to the experience and skill of the man who guessed. After all, no great harm was done, for let the House never forget that what they were in search of was really a standard by which to measure the citizen's contribution to the rates. Although they might have in one local area what they called high valuation and in another low a valuation comparatively, amongst the ratepayers themselves no injustice was done, because they were all valued upon a high scale in one area and upon a low scale in another area. In Scotland there was an annual revision of the valuation roll so that any gross error made in one year was readily corrected in the next, and no great harm was done. Let it never be forgotten that the present system, which had been in vogue upwards of fifty years, so far as machinery and method were concerned, was based upon speculation and opinion. They would suppose, from what they had heard, that under the Valuation Act of 1854 all they had to find out was the actual rent paid for premises and then to insert it in the rent roll. But the basis was a totally different one. The basis in the Statute of 1854 was not the actual rent which the owner put in his pocket, but the yearly value on which the property might be reasonably expected to pay. Whenever they approached the Statute of 1851 they were in the region of expectation and therefore out of the region of accuracy and precision. To speak of reasonable expectation as being anything else than speculation and opinion seemed to him absolutely absurd. No doubt he would be reminded by hon. Gentlemen opposite that the Valuation Act of 1854 first directed that where there was an actual rent that was to be taken as they early value of the property. True, but in how many instances was there no actual rent to go upon at all? The vast majority of good houses in the west end of Glasgow and Edinburgh, in all their large towns and in many other towns, were owned by their occupiers. There was no actual rent there, and they must proceed as best they could to find out what an hypothetical tenant would give, and he entirely agreed with the hon. Member for the Ayr Burghs that the hunt for the hypothetical tenant was an even more baffling pursuit than the hunt for the hypothetical buyer. In nine cases out of ten they had to grope for the value. The assessor had to do the best he could. He knew many houses which never had been and never could conceivably be let. Yet the assessor had to put a yearly value on them with the penalty of getting no rates out of them if he did not. Further than that, wherever they found any other consideration than the rent, or wherever they had a lease for twenty-one years and upwards, or a lease given to a favourite child or to a faithful servant, they tossed aside the actual rent altogether. The Statute so directed and enjoined, and there again they were left to grope for what was the true yearly value. When they considered that probably the large majority of substantial houses were in the occupancy of their owners, and that wherever they had any consideration other than rent or a lease of twenty-one years and upwards they were thrown back upon speculation and opinion, the House would see that it was preposterous to suggest that the present system was based upon yearly rent. It was based upon reasonable expectation. It was in the region of speculation and opinion. The best test of all as to the success of the present system and the efficiency with which the assessors performed their duties was this: From the whole of Scotland last year there came not a single appeal against the assessors" valuation to the Supreme Court from any one of the great population centres. [An Hon. MEMBER: It shows how easily it is done.] From the whole of Scotland there came not a single appeal against the assessors' valuation, but the valuation of dwelling houses was child's play as compared with the valuation of business premises which in nine cases out of ten were in the occupation of the owner and the annual yearly value of which was always a matter of speculation and of opinion. The assessors in Scotland had to value an infinite variety of such business premises, foundries, distilleries, breweries, coal workings and the rest, not one of which had ever been let. How was the assessor to perform this apparently impossible task? If the duty was put upon them for the first time, it would be said to be impossible for men to do it, at all events without some of the attributes of omnipotence. The Valuation Act of 1854, which cast the duty upon them, would, however, never have been passed if the views of his hon. friend had been given effect to. How did the assessors perform the task at present? They performed the duty by the application of a series of artificial rules, not one of them obligatory or statutory, but serving as indexes. All might be taken into account but not one of them could be exclusively followed without leading to some blind alley. Yet the overseers performed the work with perfect ease. Sometimes a percentage' was taken of the expenditure on buildings and machinery; usually they took the value of the land on which the business premises were planted. That was the usual rule. They took the value of the land. Sometimes they took a percentage on profits, sometimes they took the floor space and sometimes the output or working capacity. Sometimes they had the valuation of a neighbouring lot to guide them, and then they had to make allowances for comparative advantages and disadvantages, arriving in the end at a result eminently satisfactory both to the ratepayers and to the owners themselves. Thus it was as he had said, that positively there was not a single appeal coming from any one of the great industrial centres in Scotland, although in every case these valuations were reached by speculation, by opinion, by guess work, by looking at this circumstance and that, having in many cases no more guidance and in many cases much less than was to be found in estimating the value of the land without the buildings or the property upon it. That was done every day. There were three cases in which land might have to be valued without the buildings. There were the cases in which they might have the land already covered with buildings. How were they to proceed? They had to imagine the buildings on that particular plot of ground cleared away; they had to imagine what if they placed a ticket "For sale "on the property a willing buyer would give to a willing seller for that site, cleared of the buildings, with all its environment as they found it at the present time. The valuers had a rule-of-thumb method by which they reached the value of the buildings. How was the task performed? It was done by finding the nearest instance of a sale in the open market. He had never found a valuator yet who was not able with perfect ease to tell how much ought to be allowed for buildings, and even in keenly contested cases he had never yet found, and he thought the Lord Advocate would agree with him, one where the valuators on each side were in disagreement as to the value of the buildings. The Lord Advocate and himself had never yet had to argue the question of the value of the buildings. In the second ease, the. site might be actually vacant, and the value was arrived at by comparison with other sites, and allowance for relative advantages and disadvantages. The third case was that of building land entirely vacant or in use for agricultural purposes, but undeniably within the building zone. The valuer found out at what price ground in the vicinity had changed hands in the open market. He then found out at what rate feuing had been progressing in the neighbourhood. He put his value on the particular plot in hand, and considered how many years it would be before that plot would be utilised for building, and by discounting for that number of years reached the present value. That was a matter of everyday practice, and there; was no mystery and no difficulty about it. The hon. Member had objected to the proposals contained in the Bill on the ground of the expense of the inquiry. He did not understand him to say, however, nor could he understand him to say, that if the House came to the conclusion that it was desirable to set up this standard, the expenses which arose would be absolutely prohibitive. The question was rather this: Would the expense be so far out of proportion to the advantage to be gained that the House on considering the question should at once drop the proposal? The estimates he had heard as to the cost of making this valuation had been, in his opinion, greatly exaggerated. It was made a matter of complaint that the Government presented no estimate. The same objection might have been urged against the Act of 1854, which made a much more sweeping change in valuation than this Bill would effect. At present they had in Scotland the most efficient assessment machinery. They had more skilled and quick-witted valuers than any country in the world. How could the Government estimate the expenditure in a matter where the personal factor entered so much in to the consideration of the problem? Each area knew best its own need. In some areas there were assessors who would be able to accomplish all that was' necessary without outside assistance. In others a considerable amount of help might be required. An estimate would be entirely valueless. It was wiser and safer to leave each area to determine for itself the amount of assistance which its assessors would require. As to the difference between the Lord Advocate and himself upon the true scope of the Bill if it became law, his right hon. friend held, for good reasons no doubt, that the definition of owner under the new Rating and Assessing Act which was intended to follow this Bill should remain as it was under the present Valuation Act. He agreed that under the present Act these who drew feu duties were not included in the definition. Under the old law they were included in the category of owner, and were made to contribute to the rates, but under later developments of the law that view had changed. He held that these who drew feuduties should be included in the definition. It was a question of degree, but it was not a matter which could affect his views with regard to the valuation that ought to take place. This was nothing more nor less than a Bill to secure a valuation of all the vacant land in Scotland, free from the buildings and erections upon it. It would be idle to pretend that mere curiosity prompted the measure. There was an ulterior object in view. This was only a preliminary investigation to an entire alteration of the basis of rating, which would be more or less far-reaching according to the relation which the bare value of the land bore to the valuation of the composite subject. The Bill was designed to supply the present lack of information, and in that light he commended it to the House. The Government were under no misconception with regard to the object. Whatever the value of the land might turn out to be—and, in his judgment, in the populous centres it would turn out to be much greater than any one had anticipated—the Government were the victims of no delusion. They would not consider they had chanced on an El-dorado, some gold mine from which they might seek the precious metal to relieve the ratepayers, or some infinite source of revenue from which to replenish their pockets. Whatever the value of the land might be, they would regard it as nothing more nor less than a standard of measure by which to fix the contribution of the ratepayer to the rates, and to secure, as he firmly believed it would, a nearer approach to justice and equity than they had ever yet seen.

MR. A. J. BALFOUR (City of London)

I am disposed to regret that the audience I see before me is in so large a measure composed of Scottish Members only, because everybody knows that if we are going to change the whole principle of rating in Scotland, and to change it in obedience to certain abstract theories with regard to what is called the unearned increment of land, these principles, if adopted for one part of the United Kingdom, must by logical necessity be extended also to the other parts. That, of course, must be not only the opinion, but the wish of every man who supports this Bill. It is, therefore, all the more desirable that these who are affected by the Bill—not only Scotsmen, but Englishmen and Irishmen—should understand what is the change the Government have in view and what is their motive for the change. There is a dispute between the learned Gentleman who has just spoken and my hon. friends who moved and seconded the rejection of the Bill as to the extent of the cost the Bill will involve. My hon. friends on the highest authority say it will be very great, and the learned Gentleman thinks they exaggerate. The learned Gentleman admits, however, that in the earlier years of the new valuation roll the expenses are likely to be considerable. Why are the Government going to impose on the ratepayers of Scotland a tax, an obligatory expenditure, which, as I and my friends, think, will amount to a very large sum and which the promoters of the Bill admit will be an important and far from negligible sum, unless they are going to make some immense and fundamental change in the incidence of taxation and the sources from which they are going to get their revenue? Of course, everybody knows that is the object of the Government and of these behind them. It is an open secret in Scotland that the forces moving the Government are these who accept to the full the theory that every owner of land is a man who owns what he has no right to own, and that it is the duty of the State at the earliest possible moment to relieve him of his ill-gotten property. That is the avowed view of the most earnest advocates of the group of measures of which this is one. Did the learned Gentleman hear the cheers from his own friends which greeted the allusion of his hon. friend behind him to the doctrines of Henry George? The doctrine on which the Bill is founded is the doctrine of Henry George. I ask the Government why the localities in Scotland are to be burdened with this heavy charge, unless it' is to bring into the area of local taxation sources hitherto untapped these sources, though they have indirectly paid their share, are the feuduties and the rents paid by long leaseholders of houses; and undoubtedly the object of the learned Gentleman and of these who promote the Bill is to tax the owners of feus and the owners of long leases.

MR. URE

The long leaseholder is already taxed under the Valuation Act.

MR. A. J. BALFOUR

It would ill become me to dispute with the learned Gentleman on a matter of law, but does he mean to say that there, is anything in Scotland analogous to that which we have in England of a man taking a house for forty years and paying all the rates.

MR. URE

What I did say was that the long leaseholder as we call him in Scotland, has to make good his contribution to the rates in proportion to the amount of rent he derives. When he pays his rates, he deducts from the rent which he pays to the long leaseholder the proportion of rates applicable to the amount of rent which he pays,

MR. A. J. BALFOUR

I think that we must be at some cross-purposes in this matter. I do not think that there is any serious dispute between us. The principle is fundamental, but about the facts of the case I do not think there need be any dispute. At all events let us confine the discussion to the feuars. To use a somewhat vulgar expression, would there be any steam behind this Bill unless it was the intention of these who are pressing for it in Scotland to include in the net of local taxation the existing feuduties? Every human being knows that there would not. Everyone knows that the Solicitor-General for Scotland would like to include the feu duties. Every human being knows that the Prime Minister, the Lord-Advocate, and the Chancellor of the Exchequer, frightened not too soon by the well-founded alarm instilled into these who hold the ordinary views with regard to property in Scotland, have declared that they do not mean to break contracts. If they do not mean to break contracts at some future time, then this Bill will most certainly lose its most ardent supporters in Scotland; and it is in the hope that on this Bill will be founded another Bill which will break contracts that we have had the agitation which has induced the Government to enter upon the perilous course which they are now pursuing. The right hon. Gentleman has openly and avowedly said that he wishes entirely to alter the standard of rating, but I say that it is impossible to alter the standard of rating without committing the grossest injustice to particular individuals and to corporations; and this is manifest on the face of it. What does the hon. Gentle man want to do? He wishes to transfer from buildings and from business interests and machinery, entirely to the owner of the soil, the whole cost of every species of expenditure which goes on in a given urban or rural community. I will deal with the rural question presently, and I will now confine myself to the urban owner. In the first place I would ask an what principle of equity is that particular class concerned with the town to pay all the cost not merely of maintaining the fundamental needs of society, but of cheapening a large part of the luxuries of society? If you consider, a man may own land in a town and yet may not live in the town at all; le may have invested his savings in the feu or ground site in the town. Why Put on his shoulders and on these of his fellows the whole of the burdens? The only conceivable justification of such a course is, after all, to say that everybody else in the town had by his own exertions obtained the valuable privilege which he enjoys; he has either built a house or made a business or done a large share of the work which conduces to his own well-being, whilst the owner of the soil is merely the owner of the unearned increment. That is the only justification of the inequities of this Bill. The doctrine of unearned increment is not held in its logical form, as I will come to show directly, in certain parts of the Bill. Does not the House see that it is perfectly true to say that in a civilised community nothing is of value to the owner except through the exertions of the society in which he lives and the predecessors of that society; that we are all inheritors of wealth; that even the weekly wage earners are inheritors of wealth, or at all events of a subsistence—put it as low as you like—to which they are only in part contributors? Do not let me make my argument too wide; I know that the House does not like generalisations to be too extended in their scope. Take the case of a man who owns a house in a thoroughfare which has become a fashionable thorough fare and whose business opportunities go up; he makes a great deal of money by the mere accident of the situation of his premises, and he gets his wealth just as much from unearned increment due to the society in which he lives as the owner of any site in the very centre of this great metropolis. Who are these that contribute to this unearned increment? Hon. Members sometimes talk as if the people who had made the unearned increment of the plot of land were the other citizens of the town, and they only. That is a proposition which no man can believe if once he grasps the fact that it is not the living citizens, but the dead citizens who have done even more than the living citizens; and in the second place, it is not the community who collect the rates or these who benefit by the rates who alone have been concerned in this social development. What would Glasgow be if you circumscribed it within walls, and did not bring into the general system of which it is a part, the fellow workers, not only from every part of Scotland but from every part of the world, who have contributed to its development just as much as its own citizens? Then if that is true, why are you going to take away from a particular individual in Glasgow his unearned increment and hand it over, not to the people who have contributed to the making of that increment, but to the ratepayers of Glasgow, who. It is admitted, have not taken any hand in bringing that increment about? The doctrine of unearned increment if it is once really understood will be seen to have very unexpected consequences, and if driven to its logical conclusion would produce legislation which it would tax even the ingenuity of the hon. and learned Gentleman the Solicitor-General for Scotland to find any cause for. The truth is that it is simply mere robbery, as far as I can see, to say to a man who has bought, perhaps while the late Government were in power, a site near some great town in Scotland, and say to him: "You bought that on the faith of the rating system which prevails in England and Scotland and which you had every reason to believe would he a permanent system. You bought at a price based on that system of rating which you thought would be carried on. That site was to be valued, let us say, at £50 a year, and henceforth, it is to bear rates at £70 a year." The Solicitor-General knows perfectly well that if you are going in our great towns to throw the whole burden of the rates on the land the cost of the rating will be a great deal more than 20s. in the £. It must be so; it is inevitable; and, therefore, you are not merely going to diminish the resources of this unfortunate purchaser of a site, but you are going to deprive him of all that he has got; you are going, first, to take every shilling which he has in the world, and then you are going to leave him burdened with a sum costing per £ more than the whole value of the land of which he is the owner, and which he has bought out of his own savings. If the word "robbery" is not applicable to that transaction will any Gentlemen tell me what is applicable? What is proposed to be done? Apparently the Prime Minister and the Chancellor of the Exchequer have been frightened out of interfering with the feu duties; that was a breach of contract. But there is no express legal contract in the case which I have been discussing; therefore the Prime Minister and the Chancellor of the Exchequer and the Lord Advocate have nothing to say to this unfortunate purchase of a site in or near a big town. But this House has surely to consider the equities of the case, and I again wish to ask why the trustees of an estate, who have purchased land quite recently close to a big town, or within a big town, believing that the land was to be rated upon the ordinary equitable principles to which we are accustomed, are suddenly to find that not only every single shilling which that land has brought in is to be taken for purposes from which the owner of the land gets no profit, but that the owner of the land is to be saddled besides with a total charge of 3s. or 4s. in the £ more than the whole value which the land brings in. That is a transaction which, I am convinced, if only hon. Gentlemen will consider it, they will see is perfectly unjustifiable. The hon. and learned Gentleman did not say anything about two parts of his Bill on which I should like to ask the Lord Advocate a few more questions. The theory of the Government in bringing in this Bill is that anybody who expends money upon land is to be rated in respect of that land. But there is one very remarkable exception, and that is the railway land. Why? What is the ground for it?

THE LOUD ADVOCATE (Mr. THOMAS SHAW, Hawick Burghs)

said that in his reply he would be happy to give an answer on that point. The whole valuation of Scotland for half a century had proceeded on an entirely different basis of machinery as regarded railways and canals. The railway companies themselves, along with the Government thought that until this first step was taken as to a general scheme there should be no inclusion of railways.

MR. A. J. BALFOUR

That interruption is of a highly technical character, and does not touch the fundamental equities of the case. If the Government are going to make an arrangement by which railways will be entirely relieved from any rating except such as conies from the bare, naked value of the land upon which their lines and stations are laid, it is evident that they will absolutely ruin whole districts in Scotland, where the railway companies are, and have long been, the principal ratepayers. The Government will cause a large amount of inconvenience and suffering by such a violent revolution of our system of valuation. But if, on the other hand, the Government are not going to carry out such a violent revolution, but are going to rate railway companies in the future as going concerns, with only slight modifications of the existing system, then what becomes of the theory of prairie value and unearned increment? Why is a railway company to be treated differently from a gas company? Why should capital in the one case be regarded as a proper subject for rating, while in the other it is to be free from that imposition? I do not know which horn of the dilemma the Government will take, but I hope the right hon. Gentleman when he comes to reply will not deal with the mere technicalities of the case. I hope he will tell us whether or not there is going to be a substantial alteration in the existing system. If so, I say that he will cause infinite inconvenience and hardship in large districts in Scotland in which at the present time the railways are the principal ratepayers as is the case in large districts in England. On the other hand, if he is going to leave the railways as they are, why is this particular form of capital and this alone to be required to contribute to the rates of the district in which those undertakings are situated? I come now to agricultural land. So far as I know there has never been in any Bill an attempt to deal with the value of the land of agricultural holdings apart from the improvements upon it. The present Government, if not fearless themselves, are the humble servants of people who are fearless. But I notice with regret that they have not the logical instincts which animate those whose theories they adopt and spoil in the adoption. If there is to be a general system of spoliation in rating, at least let it be consistent and logical. The theory the Government has adopted in towns throws the whole burden of the rates upon the bare unoccupied land. Why do they not follow out that theory in dealing with agricultural land? I think the reason is that in a large part of Scotland, if you merely consider the value of the land, apart from what has been done to the land, and if you estimate by any fair method the annual value of what has been put into the land by the owners and their predecessors, you will find that the prairie value of the land which is to bear all the rates is non-existent and a minus quantity, and you will have your whole fabric of rating upon no basis at all. The Bill says— 'Capital land value' means the sum which such lands may be expected to realise in the open market at the time of valuation if divested of buildings, erections, or structural improvements, and fixed or attached machinery. But that is not a full, or anything like a full, enumeration of the capital expended on agricultural land in Scotland or England, especially in the highly-farmed districts. Under this definition, I suppose, a stone wall would be included under "erections," while a ditch would not be included. I am not quite so sure about a hedge. A field which is surrounded on one side by a wall and on three sides by hedges would not be rated in respect of that side where the wall is, but I suppose it would be rated in respect of the expenditure upon the hedges, because a hedge is hardly an erection or a building, or fixed or attached machinery. That does not seem very rational. A hedge has as good a claim to exemption as a wall, and a drain, which is certainly not an erection, has probably a better claim than either, because it is more directly associated with the increased fertility of the soil. A friend of mine, who was once a Member of this House, wrote a letter in which he contrasted the different treatment of two contiguous acres of land in a rural district, one of which was used entirely for building residential houses and appurtenances and the other for purely agricultural purposes. As I understand the matter, on the acre which was used entirely for building purposes everything expended in the way of building sewage works, water works, roads, and all the absolutely necessary additions required by building would all escape rating, and everything would go upon the so-called original value of the soil. But his neighbour, owning land of precisely the same character in plots of precisely the same size, and using the land not for residential but for agricultural purposes, would find that he wag rated on the hedges and drains and water supply, and upon all he had expended to improve the quality of the soil. And then the Government tell us that they do not propose—and think it very unjust—that rates should fall upon industry. Then how about forests? Hon. Members below the gangway are fond of urging afforestation as a cure for all our social ills and as a method of bringing the people back to the soil. To plant a wood is regarded as a great social re- form. Is it the intention of the Government to rate the wood? Do they propose to rate trees? I have not the least idea, and perhaps the Solicitor-General will tell me.

MR. URE

We propose to rate them.

MR. A. J. BALFOUR

Are trees the original property of the soil? Are they not the result of industry? Do they not require industry to plant them, preserve them, thin them, and keep them in health? The logic of the Government is really of a most extraordinary kind. Their whole scheme as to agricultural land appears to me utterly absurd. In future the valuer will have to ask himself, "What will any independent purchaser give now in the open market for this plot of land? "What does "now" mean? Does it mean when this Bill is passed, or when the public think it is going to pass, because if that is so I venture to suggest nobody will ever buy a plot of land. It will have no value at all. The Government are going to rate it at 24s. in the £ in some places, and in others at a still higher figure. What is the value of a plot of land rated at 21s. to 30s. in the £, or what will a purchaser give for an article which will cost him 4s. in the £ more than it will bring him in? Of course he is going to give nothing. Up to a recent date feu duties were among the most valuable securities in existence; thirty years' purchase was a common price, and it was given by trustees, owners of charities, and all those who desired to have what they regarded as an absolutely sale gilt-edged security. Bu- the economic speculations of the Solicitor General for Scotland and his colleagues have destroyed all that already. Who can get thirty years purchase, or twenty-five years purchase for a feu in Scotland? Who is foolish enough to pay that rate? Nobody. Since it was realised that the Government were contemplating these precious schemes I do not believe that a single feu in Scotland has been sold at twenty-five years purchase. You have absolutely destroyed the value. You have thrown into the sea, with no benefit to anybody, a large fraction of these valuable gilt-edged securities, and I think you have done a very great evil to Scotland by so doing. But you are going to do much worse with regard to unoccupied lands in towns. Let us take the case of the Merchant Company in Edinburgh, a great and ancient corporation owning large wealth, which, they use for purely philanthropic and educational purposes. A large part of their property is unoccupied land in Edinburgh, or its immediate neighbourhood—I believe the number of private owners of unoccupied land in Edinburgh is extremely small. Every unoccupied acre which this unfortunate Merchant Company owns will henceforth, if this Bill and the consequential measure should be passed, be rated at 24s. or 25s. in the £. That is simply robbing the corporation. It is doing nothing else. On what principle, too, is the valuator to estimate the value or the owner to return it? Evidently the whole of this unoccupied land will undergo a complete revolution if this Bill is passed, and no valuator can ignore that. He would say, "If it is going to be rated at the present level its value is so and so, but if you are going to throw the whole rates of Edinburgh on it its value is nil." If that be true, does it not condemn the Bill absolutely? Here you have a measure which does not, indeed, touch existing contracts, and which, therefore, does not meet the demands of those who have supported the Bill, but which absolutely robs—there is no other words which can be used—the owner of every site in or near one of our big towns. On what system the land is to be valued, the new or the old, is one, and only one, of the problems raised by the terms of the Bill. The theory on which is based the transfer of the whole burden of urban expense from those who now bear it to those who own the land and houses is one which does not hold water. It is a theory which can be knocked into a cocked hat by a little ingenuity of argument; and the matter will, of course, be pressed in every Court, and before every tribunal, because the fortunes of the people who own the land are absoutely at stake. You cannot avoid the litigation which has already choked the efforts of Glasgow to deal with the matter on its own account. It seems to me that the Government have in this case treated Scotland as they are rather accustomed to treat it, as a kind of experimental ground on which all the wildest crotchets, all the rawest political speculations may be tried by rash and thoughtless innovators. I see nothing in the structure of this Bill—I do not refer to other Bills—to indicate that the Government have thought out the problem at all. It is avowedly only a door which is to lead to some scene beyond; the Government themselves do not know precisely what, and nobody knows precisely. The Bill itself is drawn on inconsistent lines, and the speeches in which it is defended touch very little on the real difficulties of the situation. It is clear that its framers, or, at all events, those who are driving the framers of the Bill along their course, will never be content without some revolution in our rating system which manifestly inflicts the most cruel hardship on a relatively small section of the community. I do not believe that the provisions of this Bill when thoroughly understood will be accepted in any part of Scotland except by that small section who seem to think this is going to be the beginning of that happy state of things when all land will be taken away from its owners without the payment of any compensation. As far as the agricultural interests are concerned I do not know that the result will be very serious, but when you come to urban property, it is as clear as daylight that under the guise of a mere alteration of the system of valuation you are really beginning a great revolution which can, I believe, do little good to the general body of the ratepayers, which certainly will not stimulate those social reforms of which we hear so much in speeches and see so little in Bills, but which, at the same time, will inflict a most cruel and unmerited hardship on a large part of the community which as much deserves the protection of equal laws and equal justice as any other portion of His Majesty's subjects.

MR. A. DEWAR (Edinburgh, S.)

said it was a little difficult for anyone speaking on this side of that House to follow the Solicitor-General for Scotland, who in the Committee upstairs, as hon. Members on both sides would admit, rendered conspicuous service to the House of Commons. The Leader of the Opposition had assumed that the object of the Bill which was to follow this measure was to remove the burden of the whole of the rates from the bulk of the individuals in the towns, and to place it on the few landlords who were there. He thought that was a misconception of the intentions of the Government. He understood the Solicitor-General to state expressly that the proposal was to change the standard of rating from what was now the standard, namely, the houses on the land, to the land itself. The whole question, therefore, was whether it was preferable that the rating standard should be the land itself or the land with the buildings upon it. He asked the House to consider how the present system worked out. It meant a tax on a man who improved his house. It was a haphazard system. An assessor looked at a house and decided the valuation on which the owner was to be rated. The valuation was regulated very much by the size of a man's family. According to the present rule, if a man had a large house, his rates were high, and if he had a small house his rates were low. If a man required a large house for the accommodation of his family, up went his rates. He knew a place where there was a row of workmen's houses, similar in size and accommodation, and each valued at £20 a year, but one of the men, who had an addition to his family, got another room added to his house. His rates were increased in respect of that improvement. Another man who neglected his property and allowed it to fall into decay actually had his rates reduced. The present standard was bad from that point of view. It took away a man's inducement to give light and air to his children and encouraged him to neglect his property. As showing the unsatisfactory nature of the present system of rating he instanced the case of a manufacturer who provided premises where his workpeople had plenty of light and air. That man's rates were high because he provided that kind of accommodation, while his competitor across the street had low rates because his premises were not so commodious and well-equipped. The shopkeeper who built a shop to give plenty of light and air was rated high, not because he could afford it, but because he had spent money. The man in a back office was rated low, although probably he could much more afford to pay rates than the shopkeeper. He thought anyone would agree that the present system was haphazard and contrary to the best interests of the community. What difference would it make to any of these men if, instead of taking his house and land, they said they would take only his land and make that the standard? Then a man might put as many rooms on his land as he chose, and erect what shop or factory he pleased. The standard of rating would be the same. The right hon. Gentleman the Leader of the Opposition had overlooked that point.

MR. A. J. BALFOUR

The hon. Gentleman has appealed to me as though. I had omitted something. Would not the system he has been advocating drive all the poor out of the wealthy quarters of a town?

MR. A. DEWAR

said that was undoubtedly so, but the fact of the standard being changed would not in the least throw a burden upon different shoulders. That was his point. It would still be on the whole community. Valuable land was in the centre of the city, and it would no longer be used by the poor people, crowded together there in the most extreme way. The right hon. Gentleman the Leader of the Opposition said that it would probably be an expensive problem, although he did not exactly say how much it would cost. That argument was based on the theory that a skilled valuer would value every house and that he would be paid the ordinary fees. He agreed that in that case it would be expensive, but he thought the right hon. Gentleman had overlooked the fact that they in Scotland had skilled assessors, who did their work admirably and gave absolute satisfaction. The work they did at present was quite as difficult as that they would have to do under this Bill. Two of the most skilful and experienced of those assessors gave evidence before the Committee. One of them said it would probably cost £4,000 a year to do the whole of Scotland for the first time. He had reason to believe that the valuation of Edinburgh, with a rateable value of £300,000 odd a year, would cost under £3,000 for the first time, and, as hon. Members knew, the first time was most costly. They had some corroboration from new countries. A Blue-book was presented to the House last week for Australia and New Zealand, and it showed that the whole of South Australia was valued in a few months from one centre without any organisation, such as they had in Scotland, of assessors. The House would be surprised to learn that it was estimated that the cost would not exceed £5,000 a year. Surely if Australia could do it for £5,000 a year Scotland could do it, as the Solicitor-General said, at a reasonable sum. The taxation of land values had been enforced in New Zealand now for several years. In reply to Lord Elgin, who telegraphed asking them for information with regard to the effect of the taxation of land values in various provinces, the Governments of both Australia and New Zealand reported that it had added to the solid prosperity of the country. Out of fifty-two districts in New Zealand which had adopted the taxation of land values, two only did not approve of it or gave a qualified approval, others from time to time had expressed cordial approval of it, and several said that they had not yet had time to form an opinion; not one had gone back to the old system, although they had the option. The hon. Member for Ayr Burghs had indicated that it was a simple matter in New Zealand, as though he was talking of a dreary and desert island with only one man on it; where- as Wellington, the largest town in New Zealand, had 58,552 inhabitants. It was no answer to say that the countries were dissimilar. They should be told in what respects they were dissimilar. New Zealand was a new country and had fewer people it was true, but the economic conditions which regulated life there were precisely the same. There was another point. He would give an instance within his own personal knowledge. Similar instances would be within the knowledge of every Member of the House. Twenty-five years ago two fields in the city of Edinburgh, absolutely unbuilt upon, had a rent roll of £450 per annum. Now they had a rent-roll of £12,500 per annum. The capitalised value of the fields at thirty years purchase would have been about £13,000, its value to-day at thirty years purchase was over £300,000. That enhanced value was due to the energy and enterprise of the community. Was it unreasonable to provide machinery to tap sources of wealth of that kind? They might depend upon it that in the next thirty years other fields would be subject to precisely the same condition. He supported the Bill for two reasons: first, because to take the rates off buildings would encourage men to build, and secondly, because to put them on land would tax unearned increment, some of which ought to come back to the community.

*MR. J. M. HENDERSON (Aberdeenshire, W.)

said that what seemed to have vexed his hon. friend was that somebody had increased the value of his land from £400 to £12,500, but supposing he remained the owner of it he would have to pay taxes on that increased amount. Then as to, the other point raised about New Zealand the prosperity of the towns was not attributable to this tax, and indeed hon. Members would forgive him for saying that nothing in the nature of prosperity was attributable to any tax. In other words taxes could not give prosperity. What brought prosperity to New Zealand was the frozen meat trade. Several people used to attribute the stopping of garrotting to flogging, but garrotting had stopped long before flogging was resorted to. People were very apt to attribute an effect to a cause which had ceased to operate. The enormous prosperity of New Zealand must be attributed to the improved refrigerating machinery on ships enabling meat to be brought to this and other countries. As to the Report which had been referred to, it was written by the very gentlemen who were justifying their existence, the assessors. Surely it was impossible to say that that was evidence which they could accept or to suggest that they should go to America or New Zealand, which were Protectionist countries, and take their policy from them. The argument was one which was not legitimate and was very far-fetched. This Bill was introduced on the recommendation of a Select Committee, and before he joined this House he always thought that a Select Committee was a Committee selected of open-minded men who would bring judicial minds to bear upon the evidence submitted to them, and according to that state of mind they would weigh the evidence submitted to them and so give their Report to the House. Since he had joined the House, however, he had learned something very different. This Committee consisted of fifteen members, one of whom retired and took no part in the proceedings. That reduced the number to fourteen, and of that fourteen eight were pledged up to their very eyes in support of this principle. Three of these included his hon. friend the Solicitor-General for Scotland, and the hon. Member for South Edinburgh, both of whom are honorary vice-presidents of the League for the Taxation of Land Values. That league was promoted for the promulgation of the doctrine of Henry George, that— It is not necessary to confiscate land it is only necessary to confiscate rent. Let the individuals who now hold it, still retain, if they want to, possession of what they are pleased to call their land. Let them buy and sell and bequeath and devise it. We may safely leave them the shell if we take the kernel. What this Bill therefore was going to lead up to was nothing less than the carrying out of that doctrine of Henry George. Before that Committee they had the evidence of the best surveyors and assessors from Edinburgh and Glasgow and from all over Scotland—men of the highest eminence, who gave them the most important evidence. He was bound to say that the whole weight of that evidence was against this principle, but the whole of it was brushed aside, and he assured the House that the Report was a condensed form of the evidence which was given by the present president, the late president and another ex-president of this very league. He was very sorry to say it, but there was a great deal of ignorance throughout the country on this question, and some of the leading Liberal papers had largely contributed to that ignorance. Some of the literature which had been sent through the country by means of tracts also was most misleading. The object of the foolish piece of legislation which was foreshadowed by this Bill was to strike off the buildings from the sites and relieve them from rates, but they could not get away from buildings in estimating any site value. It was imposible. The picture his hon. friend drew of a man being able to put up as much building as he liked and not pay rates was ridiculous and it would be iniquitous. Supposing a man had a house with two storeys and paid rateson £100 a year. Were they going to allow his neighbour to build twenty storeys and still pay on £100 a year also? If the two storeys accommodated twenty people and the twenty storeys 200, were they going to give water, sewage arrangements, street lighting, police and other amenities to the 180 people for nothing? According to that principle, three-fourths of the people would be enjoying these municipal amenities for nothing. Was such a proposal to be defended for a moment? Let them suppose that there were six houses in a street which were all, say, two storeys high, that the assessor came along and fixed the site value of these houses at £100; and that one of the owners built his house up to four storeys. Was the assessor to come next year and say to the other five people, "You have not made the best use you could of your site as you have not built four storeys, and you must pay the same rate as the four-storeyed house which I have now valued at £200?" In New York they were building twenty-four storeys high. He was glad that the Prime Minister had been so wise as to throw over the Solicitor-General for Scotland in regard to feu duties. He did not think it much mattered who paid the rates, so long as rent was the guiding factor in regard to rating. He should be glad to see the owners pay all the rates, as they did in a large proportion of cases in the City of London. ["Oh!"] Well, that was a fact, and was according to the evidence before the Committee. If a man wanted an office in the City he understood that usually the owners paid the rates and included it in the rent. If it was an unpopular district the tenant got a cheaper rent, and by that means the owner paid the rates. He was quite content that the owner should pay the rates. The difficulty arose when they proceeded to deal with the outlying property. Let him take as an illustration the town of Aberdeen. The Committee had a Return carefully prepared by the City Assessor, the Parish Assessor, the Town Clerk and several others who took a great interest in this subject. That Return showed that the total rateable value of Aberdeen was £750,000, and the estimate of the land value £107,000. So that the whole of the land value would only amount to half the present rates, which were over £200,000 a year, and therefore the rates could not be paid out of the land values. But he understood from the hon. Member for South Edinburgh that there was to be an additional rate on the buildings. If that was so, then that was exactly the ground on which the Glasgow Bill was thrown out. They (the Committee) objected to a double standard. The estimated land values in Aberdeen were £107,000 a year, the rates were over £200,000, and the other £100,000 must be obtained from the buildings. Therefore they broke their principle of a single standard. It was said that the balance would be obtained from the unbuilt-upon land. Let them observe what would be done in every town when they came to deal with the figures. The unbuilt-upon land in Aberdeen was taken at 3,340 acres, and all this land was assumed to be nearly ripe for building purposes. The town of Aberdeen only covered 1,685 acres, so far as the buildings were concerned, and it had taken several hundred years to do that. The meaning of these calculations was that if it were assumed that all this land was ready for building upon to-day the land value of it was £50,000. But that still left £50,000 short of the amount of the rates. What did that mean? There was this danger. An assessor would go to one of these men and say: "You have an acre of land. I propose to value it at £1,500, that is equal to £60 a year." The man might say: " But I am only getting £3 a year for it." To which the assessor would reply: "I cannot help that. Somebody will give you £1,500 for it." Who was to be the judge in a matter like that? The Solicitor-General spoke of a building zone. He did not know what that might be. And no one would buy 500 acres surrounding a town to build upon immediately. The most speculative builder in Aberdeen, if anybody went to him and offered him 500 acres at £500 an acre, provided he at once covered them with buildings, would decline. He would be ruined if he accepted. What would be the result of an extension of this sort in Glasgow? The gentleman whose land would be operated upon at the end of this twentieth century would have to pay the rates upon it now, that was, double, treble, or quadruple the actual rent he was receiving. A good deal had been said of the expense of it; but this matter had been brought forward by the Scottish Municipalities. Some of them had been very keen about it, let them pay for it. He was sure when the truth came out it would demonstrate the folly of the whole thing, unless the full principles of Henry George were adopted. How would it affect the land values? Was it a wise thing to attack property so as to reduce its value? One of the objects of the Bill, as stated in the Report, was to settle the housing question. One of the economic advantages was— that houses and their improvements would be relieved from rates, which would encourage building and facilitate industrial developments. One of the points taken by the hon. Member for South Edinburgh was that directly a man began to add to his house his rates increased. The 1854 Act did not say a word about taxing buildings. What it did was to tax rents, and it was right that it should. If he had a house at £100 a year, and his neighbour had a house at £120 with two rooms more, and he built two more rooms to his house, he would have a house with the same accommodation as his neighbour. Then why should he pay rates on £100 only and his neighbour on £120? The test was what rent the house would produce, and the reason for that was that the larger the house was the greater the number living in it, who got the benefit of police protection and other matters on which the rates were spent. The right hon. Member the Leader of the Opposition made a reference to Sub-section (2), which provided that this valuation was not to affect railways and canals. The right hon. Gentleman could not find a reason for that. The reason was that when this principle of site values was being discussed in Committee, they ran against the dead wall of railways and canals, because they had no values as building land. The companies were under obligations to use the land for the purpose of the railways and canals, and therefore it could have no site values. But the Committee said that would not do. It was the money they wanted, and the principle must go. But that was no kindness to the railways, because if railways were rated on the present principle it might mean that the percentage in the £ would be doubled, and instead of paying, say, 6s. in the £ as they did now they would pay 12s. on the same assessment, and he did not think any railway company in the country could stand it. The principle was all right so long as money was obtained by adopting it, but as soon as the principle ceased to provide money the principle was abandoned, and they stood on the old method of assessment. They had witnesses before the Committee from Glasgow, who were asked how much of a workman's rent was paid to the ground landlord, but they had never taken the trouble to work it out. The Committee worked it out, and it came to 15s. a year at most. Was it to be contended that if people were forced to give builders a bargain, for that was what it came to, which enabled the tenant to pay 7s. 6d. a year instead of 15s., they were going to settle the housing question for the other 7s. 6d. a year? What about the housing question? For the rich and middle classes there was no housing question. Mr. Harper, the statistical officer of the County Council, admitted that there were houses by the hundred in every suburb of London which could be bought for less than the mortgage money. In Dulwich, Norwood, and other suburbs, houses of £20, £50, £70, and £100 rental could be bought for less than the mortgage money, which was usually two-thirds or three -fourths of the value, and the other fourth might be written off for ground value. Mr. Harper also admitted that there was land in any quantity in Poplar and in other districts that might be had. Sir Samuel Montagu had offered to the London County Council 25 acres for nothing on which to build workmen's dwellings, and the County Council had refused the offer. The reason of overcrowding was insufficiency of income among the workpeople, who could not afford the rent of the houses which were built. Even if they had the ground for nothing they could not build houses which could be let at a rent which the poor class of workpeople could afford, and which would give a return to the builder. The reason of this insufficiency of income was that there were great numbers of men who did not receive regular wages; they only earned on the average from 15s. to 25s. a week, and they could not afford to pay the rent of any decent house which might be built for them. If anyone attended the police courts they would hear applications for separation and alimony by this very class of workpeople. The Legislature years ago gave the magistrates power to grant separation orders, and he found that in England during the year 1904–5 —he could not get the figures for 1906—the number of separation orders granted was no less than 6,750 in each of those years. That was a very serious thing. In three years, at the rate separation orders were granted, they had about 20,000 workpeople who, instead of requiring 20,000 houses, under these separation orders would require 40,000 houses to house themselves and their wives and families. [Laughter.] It was all very well to laugh. He was in the police court the other day—[laughter]—not in the dock but on the Bench—and what happened? A woman who had five children applied for arrears of separation allowance; and another woman, who made a similar application, had four children. Women in such circumstances as these were too poor to rent any houses which they could build for them, even if they got the land for nothing on which to build. It might be that some provision would have to be made to meet the needs of these people, but at any rate let them all subscribe to that work; let them not take one particular form of investment and confiscate it, but let every investment share and share alike in the burden. He observed that a good many people who favoured these proposals had their money very carefully invested in private industrial undertakings where it could not be attacked. In opposing the Second Reading of the Bill he did not feel that he was opposing the Government. He felt that the Government had got entangled with those who held the doctrines of Henry George. The Prime Minister had thrown them over on the question of the feu duties; and when they got this valuation he believed that the Prime Minister would throw the doctrine on which it proceeded over also. As a humble supporter of the Government he felt it his duty to oppose the Bill. He warned the Government that if this or any other confiscatory doctrine was coquetted with or adopted it would split the Liberal Party in a way that it had never been split before. The country would reject any such principle as that of Henry George, a principle which he was certain was at the bottom of this proposal. He could only say that he was very sorry that he should have to oppose the Bill, but he felt that it contained proposals which were a great danger to the Party, and that being so, he would oppose this first, and any further steps which he believed would lead to disaster to the Liberal Party.

*MR. WOOD (Glasgow, St. Rollox)

said his hon. friend the Member for West Aberdeenshire had complained that the majority of the Committee were pledged to a particular view on this subject. But he thought it might be said of the minority of the Committee that they came equally pledged. The fact of the matter was that it was perfectly impossible to form a Committee of Members who were not pledged to a view on this matter. Hundreds of Members in that House were pledged to the taxation of land values, and he supposed hon. Members opposite were equally pledged against it. With regard to women separated from their husbands, the hon. Member said that they mostly belonged to the working classes. He did not think they did out of due proportion.

MR. J. M. HENDERSON

I omitted to state that the Home Secretary gave me a return of the orders made in the Probate Court, and the figures were twenty-two and twenty-five for 1904 and 1905, respectively. ["What about the divorce cases?"]

*MR. WOOD

said that undoubtedly many thousands of the working classes could not obtain the house-room they required. Those who advocated the taxation of land values thought it was a reform which would do something to remedy the existing condition of things. The right hon. Gentleman the Leader of the Opposition had described the proposal of the Government as robbery; he had assumed that they were going to change the whole incidence of rating at a single operation and without any regard for existing contracts, and then drew strange conclusions from that assumption. He did not think the assumption was at all borne out by any language used by the Prime Minister or any Member of the Government. The conclusion at which the Leader of the Opposition had arrived was that the rate on the land would be 24s. in the £, and that therefore the landlord would pay away the whole of his rent and another 4s. in the £. As one with a little practical experience of rating, it seemed to him that if, as the right hon. Gentleman assumed, they reduced the value of the land to nothing at all, then even a rate of 24s. in the £. would produce nothing. This question of the taxation of land values was closely bound up with the housing question. It was represented as a mere measure for taking away from the present occupying ratepayer the burden which he bore, and placing it on someone else; that was not so much their object as that by altering the basis of rating they should relieve industry and assist commerce by lightening the burden upon building and improvements. That question had been adequately dealt with, and he would confine his remarks to the question of housing. He did not think they could more radically touch the housing question than by this reform. The hon. Member for West Aberdeenshire had referred to an experience of the London County Council. On one occasion a well-known and respected Member of that House offered them some land for housing purposes, for nothing. Of course, the land had value, no doubt considerable value, and it was offered to them for nothing to build workmen's houses upon. His hon. friend the Member for West Aberdeenshire seemed to think that their refusal of the offer told in favour of his case, whereas it told in favour of the case for the other side. They could have erected buildings on the land and let them at reasonable rents, and made it a profitable speculation both to the ratepayers and the occupiers of the houses; but when they took into account the fact that the rates were about 8s. or 9s. in the £, and that they had to be paid, not on the value of the land only, but on the composite subject—the buildings and the land, they found that the burden was such as to prevent their building on the ground. It was obvious that the land upon which building must take place for the working-classes must be the cheaper land. It had been said that the effect of this reform would be to drive the working classes out of the neighbourhoods where the land was costly. That process was now going on in some parts of London, where warehouses were taking the place of dwellings, whilst in other parts the population were being displaced by the erection of large banks and insurance offices. This Bill would provide in such cases other land to which the working classes could go to obtain houses at reasonable rents when they were driven out of the central parts of large towns. If they could by degrees and with due regard to justice and equity alter the basis of rating from the composite subject to the land, they would be able to get building land on the outskirts of towns where workmen's dwellings might be erected at a cheap rate. The London County Council had been criticised for not building houses for the lowest and poorest class of the population. As a matter of fact, they could not do that without charity rents, but they would be assisted to do so if the proposed reform were carried. Some hon. Members seemed to be proceeding on the assumption that this Bill was going to do something which was utterly absurd. The hon. Member for West Aberdeenshire seemed to have fallen into that error. All they desired was to know what the value of the land was before a scheme was formulated and placed before the House. He happened to be a Member of the Committee which dealt with the Scottish Bill, and they had had widely different estimates given as to the value of the land. One witness said that the annual value of the land in Glasgow was a little over half a million, the figure given being £577,000. but the assessor for Glasgow put it at nearly £2,500,000. This Bill had been represented as a predatory proposal, but he believed it was one which would bring about very considerable economic results. It was not me rely a question of shifting the incidence of rating, but of shifting the burden of rating from the objects of industry and from what was a vital necessity of the people, namely, houseroom, to the basis of the land. It had been the favourite argument of hon. Gentlemen opposite that whatever burdens were placed upon the rates ultimately fell upon the land. He was not prepared to accept that argument without qualification, but undoubtedly there was some truth in it, because if there were no rates the landlord would obtain a much larger rent for his land. How did that agree with the arguments put forward to-day? Hon. Members opposite sometimes used the argument that it was no use to tax ground values because the burden would be shifted, but occasionally they world argue that it was unfair to tax the land because it was a new subject of taxation and would be making people pay who had never paid before. The burden did to a large extent fall on the land, but it fell unequally and unfairly, and it would be an enormous advantage if it fell more equally. The occupying ratepayers did not appear to feel the burden of taxes so acutely as they felt the burden of the rates. They imagined that if rates were relieved by doles from the taxes that they were the gainers. This reform would bring about clearness of vision on the part of the electors, and that was a most desirable thing. He hoped they would get this Bill for Scotland, and then they would be able to discover the real value of the land.

*MR. MUNRO FERGUSON (Leith Burghs)

said he was afraid that his experience of rating in towns was somewhat out of date, because it was many years since he served on the Small Holdings Committee. That Committee, however, gave him an opportunity of forming certain conclusions, and they were quite in harmony with the proposals of this Bill. He thought it was necessary to have a separate valuation for urban houses and land, and it was quite feasible to provide for that separate valuation. The question of the cost had been raised, but he did not think the expense thrown upon the occupiers would be very heavy, and the returns could very easily be made. A good deal of work might be thrown upon the assessors, and in view of the novel character of the new form of taxation there might be considerable litigation. He thought under the circumstances that a grant in aid of costs should be given. The town council in his constituency had asked that three years should be allowed to elapse after the passing of the Bill before it came into operation. Nothing could be simpler than the proposal of this Bill. It did not provide for the carrying out of the scheme of Henry George, but it was a Bill to clear the way for rating land separately from houses. His opinion was that there should be a higher tax upon land than upon houses, because the rental of land was a net rental. He had always felt that unoccupied building land ought to bear a fair proportion of local taxation. To his mind that was one of the strongest reasons for making progress with this Bill. He was not a man holding extreme views in regard to the land question, but so far from thinking this an extravagant proposal he had himself brought in a Bill under which local authorities would have been able to place a valuation upon all building land within their areas and under which at any sub- sequent period they might take over the land at that valuation plus anything done by the owners to increase its value. He thought local authorities ought to own the whole of the land values created through the increase of the population. He could not understand from the legal phraseology used by the Solicitor-General whether there was any difference between him and the Lord-Advocate as to the placing of taxation on existing contracts. Much built-on land had changed hands so often that it would not be possible to put the ordinary incidence of local taxation on the existing contracts without doing an injustice and raising an amount of opposition which would be fatal to the progress of any legislation of this kind. As regarded urban land, he saw no difficulty whatever in the working of this proposal, nor did he see any difficulty in the way of gradually building up a system of local taxation much fairer in its incidence than that which they had to-day. He had even suggested that a small tax should be put on existing feu duties on the ground that municipal expenditure tended to run up the value of those duties. Feu duties, however, had not been rising in value of late. He doubted very much whether much change could be made in applying the Bill to the landward districts. The whole value of arable land really consisted in the capital expended on it, and if that was not rated, he did not quite see what was to be. There were many parishes where but for the buildings, fixtures, and equipment on the land there would be little left to rate at all. He was sorry that the Report of the joint Secretaries of the Treasury had not received more consideration in this discussion. He had taken part in inquiries himself and he had followed closely what had been done by others, and he looked upon the Report of the joint Secretaries as by far the most stable foundation on which to build. If the Government went upon the lines laid down in that Report there would not be much wrong in their policy. The pressure of the rates was so great that, if they found a subject such as unoccupied building land to which the community had given the whole of its value, it could surely not be expected that that subject should continue to escape local taxation as it had done up to now. The great justification of this Bill and of the further legislation which was contemplated was that it would remedy the unfair incidence of existing taxation. The Bill did not by any means cover the whole of the urban land question, but it gave a basis which for dealing with the reform of local taxation was essential to all parties, and he warmly welcomed it, but, like every other Member, he retained his liberty to discuss the details of any new methods which might be proposed.

*MR. BARRIE (Londonderry, N.)

said he wished to remind the House of the change which had taken place since the Bill was introduced. There was when the Bill was introduced opposition from every quarter of Scotland, chiefly, or at least largely, because of the direct attack it was making on existing feu duties. It was not for him to comment at length on the explanations offered by the Solicitor-General for Scotland of the change of policy on the part of the Government in that matter, or to inquire how far the hon. and learned Gentleman remained in agreement with, or continued to differ from, the Lord-Advocate. In the opinion of those best able to judge, the proposal made by the Solicitor-General in the Committee, and carried by a bare majority, was not approved by any volume of public opinion in Scotland. Therefore many Members of the House were distinctly relieved when they found the Prime Minister, wisely interpreting the signs of the times, and seeing that the opposition to the proposal was going to be overwhelming, gave an assurance that the proposed attack on existing feu duties was not to be proceeded with. He acknowledged the earnest, faithful, and fair-minded manner in which the Solicitor-General had discharged his duties as chairman of the Committee, and if he and others on his side of the House attacked the line which the Report took, they did not in the slightest degree wish to minimise the skill and courtesy with which the hon. and learned Gentleman had discharged the duty laid upon him by the Government. The movement which had led up to the measure now before the House originated in the doctrine promulgated by the late Henry George, who was the first to preach it in Scotland, after he had—with little or no success—preached it in America. After Henry George had preached his new gospel of restoring the land to the people, a number of associations were formed to promote reforms in land tenure and local taxation, and he thought he was correct in saying that several of those who now sat on the Treasury Bench had been actively associated with, and had publicly supported, the views of the Scottish Association for the Taxation of Land Values. The corporation of Glasgow had started an active propaganda in favour of those views. Why were they so active in supporting them? It was because of the constantly increasing taxation, and the necessity for finding relief in some new form of revenue. That desire to find a new source of revenue was, he thought, the key to the whole of the agitation which followed. It was not a redistribution of the burden on a more equitable basis that was called for; the doctrine preached was that the land was escaping its fair share of taxation. It was undoubtedly an attractive doctrine. "Unearned increment" and "betterment" were nice-sounding titles which were attractive, and needy corporations, advanced socialists, and municipal traders joined hands. The owners of sites were numerically a small body, and it was easy to mark them down for prey and to make them the scapegoats of this special legislation. At a very early stage the corporation of Glasgow adopted, by a majority of one, a Bill on the lines of the measure of last session. That corporation in its enthusiasm sent missionaries all over the country preaching the new doctrine. About £2,500 of public funds were expended in exploiting it, and so far as he could gather from the public prints, the English and Scottish corporations who had associated themselves in the work had been remarkably slow in paying their quota of the expenditure. It had now been declared to be an illegal expenditure, and it would be interesting to see whether they did pay or not. The ratepayers of Glasgow had a special interest in this subject, because a large proportion of them were, and had been, strongly against the propaganda to which he referred. The views held by certain members of the Glasgow Corporation were of the most extraordinary character. Ex-Bailie Burt, one of the most active members of the Scottish Association for the Taxation of Land Values, gave evidence before the Royal Commission on Local Taxation. He would read the following extract from that gentleman's evidence:— Q. —But all I understand this proposal is put before us to do is to shift the burden of rating from one class of owner to another? A. —The proposal starts with altering the basis of taxation in relation to rentals; that is, instead of being, as at present, on the annual rent they receive from the tenant, they shall pay upon the annual value of the ground; that is the beginning of the principle, or foundation of the principle, for altering the incidence of taxation altogether. Q. —What is to be the next step? A. —Increase the tax upon the value of the ground. Q. —Until you take it all? A. —Until you take 20s. in the £. He would read to the House the examination of Bailie John Ferguson, also an eloquent exponent of this new gospel:— Q. —What is your proposal as regards the rating of this valuation of the site? A. —Having separated the sites or ground and houses, as by a motion which we have carried in the Glasgow Corporation to have a Bill formulated to present to Parliament; having separated the house value from the land value, we would shift the burden of the local taxation upon the site value, beginning with a certain amount. Q. —All local taxation, or the owner's share of it only? A. —We would put all local taxation on site values, and set everything free that is the product of individual labour and capital from taxation. Q. —At present, I understand, you would put upon that the whole of the rating of Glasgow, owner and occupier? A. —£600,000; the municipal rates of the city of Glasgow. Q. —Both on owner and occupier? A. —Both. We would take the whole£600,000, not necessarily in a rapid method, but by a transition method. Q. —What do you mean by not necessarily in a rapid way? A. —Supposing you were to put 2s. in the £, or a tax not exceeding that, upon the whole land values of the city of Glasgow—that is to say, £2,000,000 sterling—that would give us a certain sum. Q. —But you do not limit your demand upon this fund to either £200,000 or £400,000 a year? A. —No. Q. —If the voters in Glasgow desire it, would you think it right to take the whole of the £2,000000? A. —Yes. Except that the Imperial Taxes have to be considered, and the Imperial Government has a right to a portion. That, they would understand, was the advocacy—confined, he thought, to this witness—of quite a new aspect of this matter. Questions by members of the Royal Commission addressed to witnesses as regarded the equity of this course were followed by reluctant admission of the Imperial claim, but the witnesses last Session before the Select Committee did not agree in that suggestion. His last extract was a brief one. It was from the examination of Lord Provost Chisholm, now Sir Samuel Chisholm:— Q. —Mr. Ferguson, whom you know, told me quite candidly that he would go the length of 20s. in the £. Would you agree? A. —It all depends upon how that is to be interpreted. I recognise that land values belong to the community. But if any one were to propose that the moment this schedule is adopted as the basis of valuation and of taxation we should then rate land values at 10s., 15s., or 20s. per £, I could not on any consideration agree to it, because I would regard it as what your Lordship has said—as revolutionary—and I think it would be attended with so much hardship and suffering that it would be unwise or wrong to propose it. But recognising, as I do, that land values belong to the community, I would be quite prepared to see a very slow advance in the amount of rating chargeable to the land values, though it should be only at the rate of addition of 1 per cent. per annum. Q. —But, like Mr. Ferguson, you look ultimately to getting the whole 20s.? A. —I recognise the land values as the creation of the community. Q. —I think I am right in the view that your final object is that the land in every town should belong to the public authority of that town? A. —Yes, you may put it that way. All these witnesses of whom he had spoken were estimable gentlemen in their private capacity, but they had clearly had a distorted vision as regarded the question of land values and the appropriation of the whole value of the soil. The late Sir James Warwick, Town Clerk of Glasgow, advised against the legality of the Corporation expending funds in exploiting this scheme. Since then, as he had already mentioned, a considerable sum having been spent, this opinion had been forced upon the Corporation, and he was glad to note, even at this late date, that that expenditure had now finally ceased. He was also glad to think that there was evidence that the Glasgow Corporation had begun to take a saner view upon this important subject, and that there was also a growing indication amongst that body of a desire to reconsider their attitude towards what had long been looked upon as one of the best and safest forms of investment in Scotland. They had had different illustrations that afternoon as to how this clause might work out, and others must be within the knowledge of every member who had taken the trouble to dip into the Blue-book giving the work of that Committee. But he would take an illustration of two prominent buildings close together in Glasgow on opposite sides of St. Vincent Street. There was the Western Club, which occupied 1,295 square yards of land. The site and building were valued by the assessor of Glasgow at £2,500 per annum, which equalled £15 10s. per square yard. They crossed the street, and they had there the National Bank building, occupying 1,218 square yards, the site and building being annually assessed at £6,011, equal to £65 per yard. Now, what he would like to suggest to the House was, if the legislation of which this was a preliminary were passed into law, how could any assessor declare what would be the true value of either the one side or the other of these sites? They had other cases equally remarkable brought before the Select Committee. The Lord Advocate would find in the Blue-book numerous and striking illustrations. On the corner of a certain street they found one comparatively modern building yielding four times per square yard what another did. He pressed, in examination, the Glasgow assessor—one of the fairest witnesses they had before them, although they might disagree with his views, but he gave his evidence in the most frank and straightforward manner—he pressed him as regarded these illustrations, but all the Committee could get from him was that he would be reasonable under such circumstances, and he thought he added that he would accept the prices paid for each for valuation purposes. The matter at issue, however, was far too important to be left to what might be the reasonable interpretation of any individual assessor. The views of the promoters could not be called either moderate or reasonable. When they came to dealing with such amazing differences as had cropped up they would see how involved and difficult the subject was, and the immense trouble and worry and litigation any such measure would lead to. He had already said how fair he considered the evidence of the Glasgow assessor, and yet he told them that he believed that the increment should belong to the assessing body, the Corporation, not to the persons or company who improved the fabric! In answer to that he thought every Member who knew the West of Scotland would bear in mind the striking illustration supplied in Clydebank. Before the great Singer Company went down to Clydebank it was purely a farming district. They, a little ahead of others, went there and purchased a large slice of the countryside, and he thought it was a matter of world-wide knowledge how they had developed their industry there, and given large employment and brought much prosperity to what was now a flourishing township. Under the measure which they believed this Bill led up to, they would be penalising the Singer Company for their early enterprise. They would be assessing them on the present value to which they had so directly and so largely contributed, rather than on the value which they originally paid for the land and which they had developed, bringing the community to the land. They had heard a great deal about the principle of betterment, but was there not also a principle of worsement in these matters? Until he studied this question in Committee he was under the impression that the cost of land surrounding all our great cities was perhaps slowly in some cases but continuously going up, and he was considerably surprised when a statement was put in by one of the most influential witnesses who came before them, Mr. Birnie, of Glasgow, showing how altogether erroneous that view was. The information that statement disclosed was, he thought, of such importance that he must ask the House to allow him to make a brief reference to it. Mr. Birnie handed in a list of eleven estates, large estates all convenient to the centre of the city—he did not think any of them was more than four miles from the centre of the city—and in every case it was brought out that there had been a sharp fall in value during the last twenty-five years, rather than an increase. On the Govanhill Estate between 1875 and 1877 from 20s. to 27s. per square yard was obtained; in 1899 feuing took place at 14s.; in 1901 14,700 yards were feued as low as 12s. Then there was the Hilling-ton Estate. In 1877 it was sold for £21,829 for 29 acres, and in 1905 it was re-sold for £10,000. On the Scotstoun Estate in 1877 15 acres were feued at 9s. per yard; in 1897 it was refeued at prices averaging 6s. 4d. per yard; and in 1904 another part was refeued at 6s. per yard. He might go on with the list which throughout showed a substantial fall, but he did not wish to make an unreasonable demand upon the House. Another matter was brought before them, equally important, viz., that at the close of last year there was unlet property in Glasgow to the annual value of £307,000. He thought that legislation on these lines was detrimental to the object which the professed friends of all such legislation had in view. They carefully analysed in Committee at how much a reduction, even of 25 per cent., on the value of land would work out when they considered the rent at which the houses could be let to working men, and the value of the land when they were dealing with tenants was so small compared with the value of the fabric that it was found that 3d. per week was the very greatest difference that that would make. Reference had been made that afternoon to the effect which even the suggestion of legislation on the lines of the Report of that Committee had had in Scotland. He was bound to support the Leader of the Opposition as to the effect which that Report had on feu duties in Scotland. They had hitherto been regarded as gilt-edged securities, but immediately on the publication of the Report, coupled with the want of confidence in the Government, large blocks of feu duties had been taken off the market as there was no free and open market for them until people knew how far the Government were going. Relief followed immediately upon the declaration of the Prime Minister. The Lord Advocate declared this to be an uncontroversial Bill; he was alone in that opinion, for unless there was something behind it, some intention to go further, there would be no necessity to trespass upon the time of the House with such a measure.

MR. C. E. PRICE (Edinburgh, Central)

expressed regret that this measure was not introduced before the last measure dealing with land in Scotland. If it had been, it would have been passed in a very short time. He thought the land should bear the burdens of the State instead of commercial industry, energy, and enterprise bearing the burdens of the land. He, therefore, welcomed the Bill, because he believed it would have the effect of forcing land into the market and make it bear a fair share of the burdens that were now cast upon the industry and the enterprise of the community. The ex-Prime Minister had said that the Edinburgh Merchant Corporation was a wealthy body which spent its money upon beneficent objects, but how did it come by its wealth? By putting its money in land round Edinburgh, and he said that for these few people to derive the benefit of the increased value of the land was morally wrong.

MR. R. DUNCAN (Lanarkshire, Govan)

asked whether that remark would apply to a Friendly Society.

MR. C. E. PRICE

said it would apply to anybody, because it affected the whole community if land lying round towns passed into the hands of a few individuals. This Merchant Company held land in a district in which his firm took a feu. The price was formerly a £40 feu, but when the firm with which he was connected took it it was £60. The Merchant Company had done nothing to increase the value of that feu by £20, but still his firm took it at £60 an acre, and the Company got the benefit. The moment they took that feu, the land on the other side of the street was advanced to £120 and other land in the neighbourhood advanced to £200. The value of the land increased from the fact that his firm put a factory there and employed a large number of workers, and thus the increased price of the land had come about through the energy of people like his firm. He would show how that worked out. Having erected a factory, they went through the sad experience of having it burned down, and they then made up their minds that, so far as it could be done, the place should be rebuilt in such a way and be of such a nature that the whole place could not be burned down. They, therefore, took every precaution, division doors were erected and every appliance was used to prevent such a catastrophe. When they had done that the Factory Inspector for Scotland congratulated them upon the erection of such a building, but the assessor inquired what money they had spent and they were practically fined in the way of rates for their own virtue. They said that that was absolutely wrong, and it was because they wanted to alter that system that this Bill was brought in. Lying alongside them was vacant land which was being "held up" until someone wanted it. How was that rated? At practically agricultural value. They said that was wrong after their experience in taking the land and building a factory and also rebuilding it. This case illustrated the iniquity of the present system, and it was because they wanted to alter it that this Bill was brought in. In Edinburgh a friend of his the other day purchased for £21,000 property which changed hands twenty years ago for £3,000, In another case, land which had been worth £26,000 was sold for £62,000. This increase in value had been brought about by the whole community, who should have the benefit of it. As to the question of feuduties, he was exceedingly sorry that the Prime Minister had departed from the recommendations of the Report of that Committee which dealt with the value of them. What security had they for those feu duties? Nothing but the good government of the place by the community, and if they excluded feu duties from this Bill it would create great confusion in the future. The great basis of all taxation of land was value, and these people were getting from the community what was their value. He thought, however, the Bill would work a revolution in Scotland, and on this ground he gave it his hearty support.

MR. HART-DAVIES (Hackney, N.)

wished to relate to the House a personal experience as to how land was dealt with in Canada. Some years ago he was inspired by the example of the great London landlords, such as the Duke of Westminster and the Earl of Cadogan and Mr. Astor. He bought land in Canada on the outskirts of a city, hoping that other people would make the land valuable for him—a thing one could do in England with absolute ease—but after a time he found he had entered on an extremely losing speculation. That was owing to the separate land valuation from year to year and the heavy taxation he had to pay upon it. On representing to one of the local officials that he had been rather hardly dealt with, he was told, "You are exactly the kind of man we want to get rid of; you are checking the development of the city by holding the land for purely personal motives." He arrived at the conclusion that the official was right. That was in his unregenerate days before he became a land reformer, but he got the value of his money in the moral teaching which he received. They or, that side felt that when land was a monopoly and when other people than those who owned it made the value of it, it was only fair that those who made the value should have the benefit of it and that it should go to a community. This system was in vogue all over America, New Zealand, and Canada. It was a perfectly cheap process and he thought it could be carried out here. That was why he was strongly in favour of this Valuation Bill for Scotland, and he only hoped that in a short time they should have a similar Bill for England.

MR. RICHARDSON, (Nottingham, S.)

speaking on behalf of the Labour Party, supported the Bill, in the first place, because, they had been told by the Solicitor-General for Scotland that the measure was the forerunner of another measure in which they were interested, and, in the second place, because he believed that when the measure was passed it would be a pattern on which a like measure would be based in the interests of this country. It had been said during the debate that whatever the intention of the framers of the laws relating to the incidence of rating, as a matter of fact rates were levied on the rental value of buildings, whether they were dwelling houses, factories, or workshops. Seeing that the occupiers of these places—in the main workshops and factories—were chiefly those who did the work of the country, the rates were levied not upon the landlords but upon industry. According to the statement of Lord Justice Fletcher Moulton, who was one of the very greatest authorities on this question, half the rates levied in our large cities and towns were spent on new streets, parks, and the like, all of which benefited financially one class, namely, the landlords who did not work, while all this expense came out of the pockets of those who did the whole of the work, namely, the workmen. The landlord as such did not contribute anything towards the rate, and the tenant or the worker found the whole of the rate. The direct result of spending half the rates in public improvement was that the landlord immediately raised the rent. In his own city a few years ago the district rate was increased for the purposes of education, and circulars were sent out to the occupiers of industrial dwellings by house agents, stating that on account of this increase the rent of their houses would be increased by 6d. a week. He took it that the Bill was in the main intended to relieve the industrial classes and place the burden upon the shoulders of those who not only were best able to bear it but had not done a hand stroke except as members of the community to increase the value of the land on which the property was built. If they taxed occupied land inside a borough area they made it produce more wealth, but if they taxed industry they handicapped industry. Therefore in the interests of the whole community he believed that unoccupied lands in large cities and towns should be taxed. For these reasons he would have pleasure in supporting the Bill.

*MR. MCCRAE (Edinburgh, E.)

said he had listened very carefully to the arguments advanced in support of the Amendment and in his opinion they had largely added to the strength of the arguments adduced by the supporters of the Bill as to the necessity for its being passed. The Leader of the Opposition was a student of economy but he must have laid aside John Stuart Mill before he made the speech which he had delivered that afternoon. The right hon. Gentleman had evidently not made himself acquainted with the facts of the case, otherwise he would not have committed himself to the statement that all the steam would betaken out of the agitation for the taxation of land values if feu duties were taken out of it. All who had given the slightest study to the taxation of land values must realise that the taxation of feu duties was only a fringe of the question. The right hon. Gentleman said his friends who had moved and seconded the rejection of this Bill had based themselves on the highest authority in Scotland with regard to the question of expense. The right hon. Gentleman surely could not have read the evidence before the Committee, because that was exactly what the opponents of this Bill did not do. Instead of basing themselves on persons qualified to give an opinion they acted on the evidence of those who gave opinions on matters requiring expert knowledge which they did not possess. Dr. Murray, of Glasgow, was a very able lawyer, but he knew nothing whatever about valuation and assessment. The hon. Gentlemen who moved and seconded the Amendment accepted the authority of Dr. Murray against the authority of the expert assessor of the city of Glasgow, who was dealing with a question with which he was intimately connected. The question of expense with regard to valuation was inquired into very carefully by the Royal Commission. The minority stated that the separation of the land from the buildings could be made without any great expense. Those who raised this question of expense forgot that if the Bill was passed to-morrow it would not necessitate the creation of a new office and machinery. The machinery existed at the present time, and all that would be needed for the first year would be an addition to the staff of the assessors, who were perfectly competent to make these valuations, and who at the present time had to deal with practically similar questions. What was required with regard to this question of land values was information, and both sides ought to support this Bill because it was a Bill to obtain information as to the value of land. The hon. Member for West Aberdeen should welcome the Bill, because if he was right it would demonstrate the soundness of his opinion, whilst those who held opposite views advocated the change because they held that the taxation of land values was not only practicable but eminently just. This Bill, if it became an Act, would afford machinery by which land would be taxed by either of two methods. He had given some little attention to this subject to the length of introducing Bills which proceeded on the lines that valuation must be the first step to be taken in this matter, and he was glad that the Lord Advocate had taken this course, because when they had the valuation it would be open to them to decide whether they should make a complete change in the basis of rating. Though logically, and on economic grounds, the position for an alteration of the standard of rating was unassailable, he for one had not shut the door to the other alternative, namely, that it might be the best course to put a new and additional rate on land values. But that was a question which they would be able to decide when they had all the materials before them, when they had the actual value of the land which this Bill would give them. He passed on one side altogether the question whether it was impossible to separate the land from the buildings. That was held very tenaciously, but he thought that the Committee which sat last year, and supplemented the evidence given, by the Report of the Royal Commission, would wholly dispel that delusion. Until they had the facts with regard to the value of the land, it was impossible to come to a conclusion as to what was a just system of taxation for either local or Imperial purposes. Those who sat on the Committee which considered the income-tax were very much impressed by the fact that this country was behind almost every other country of importance, and behind the Colonies, in the statistical information which was really essential before deciding what wag a just system of taxation. That applied to income-tax and certainly to land values. He would read one passage from the Report of Mr. Goschen in 1870 in which he said— Speaking very broadly, in England fifty years ago the land bore two-thirds of the local taxation, and real property and houses and other property one-third. The latter now bear two-thirds, whilst land bears one-third. That was an entire reversal of the position up to 1868. What was the position since? The last official information was in the Report on local taxation by the right hon. Gentleman the Member for Wolverhampton, in 1803, when he was President of the Local Government Board. The one-third which was borne by land in 1868, or 33 per cent. of the whole, had fallen in 1891 to 15 per cent., and houses then bore 85 per cent. of the local taxation. It was only fair to point out that these figures were quite misleading, for this reason, that the division was an arbitrary and an unjust one. There had been what he might call an economic transfer as between land and houses. The figures given there were for houses, and included, of course, the value of the land on which the houses were built. Therefore, that went further to show that the present system of taxation was based on a foundation which had not enabled them really to ascertain whether it was a just or an unjust one. Therefore, to his mind the proposals of this measure would have a much more far-reaching effect than some hon. Members on the other side realised, because he believed that it would place at the disposal of the State information of the greatest possible value, which would guide them in considering not only problems of local taxation but problems of Imperial taxation. A good deal had been said on the other side as to the effect of these proposals. He would give the House one illustration. It would show what the taxation of land values meant in the case of unbuilton land in the City of Edinburgh. He was glad to think that a great change had come over the opinion of the other side of the House with regard to the taxation of unbuilt-on land. He did not wonder at it, because the case he was about to cite showed the utter absurdity of the present system. In Edinburgh the result was that out of a total taxation of £360,000, the unbuilt-on land, which was about one-fourth of the land of the city, only paid to the taxation of the city £420. He had taken the trouble to make a calculation, and he found that if that land was rated at only one-half of the feuing rate—which was allowing a very fair margin—the City of Edinburgh instead of receiving £420would receive £30,000 per annum. If they looked at it from the point of view of taxation, there they had a new source of revenue. If they said that land ought not to be taxed at its real value, but only on the agricultural rent, then he replied by saying that if the land was required for public purposes it ought to be bought by the municipality on its rental value. If it was a question of rating, then the land was to be taken on its agricultural value. But if it was a question of purchase, it was a matter of ascertaining its real value; then there was no difficulty in finding out what that real value was. When the City of Edinburgh wanted new gas works they had to buy ground. There were 105 acres of land which was let at £5 10s. an acre; it belonged to a nobleman in the vicinity of Edinburgh. The Edinburgh and Leith Corporation Gas Commissioners thought that thirty years purchase would have been a very fair thing. That was a very generous calculation of the value of the land. Instead of paying thirty years purchase the Corporation had to pay 212 years purchase of the annual value. That transaction had taken place within the last few years, and it proved, he thought, that some such measure as that now before the House was very much wanted. He was glad that his right hon. friend was proceeding on the lines of first dealing with valuation, and, having then the real facts of the case before them, they would be able to arrive at a fair and just decision as to what course should be followed with regard to taxation.

MR. R. DUNCAN

said the Leader of the Opposition had devoted his argument to showing what would be the consequences of the Bill. Personally he did not think that there was very much danger in trying to distinguish between sites and the buildings on them. But the Leader of the Opposition had remarked that there was something more dangerous behind, and that suggestion had not been repudiated by anyone in authority on the other side of the House. If they were really waiting for proposals of an extreme character such as had been indicated by his hon. friend, who had quoted the evidence, then he thought that they ought to make a stand and show that they would not do anything that would be a repudiation of a fair and honest bargain. Landowners were not always individual men; land was owned by friendly societies and other voluntary organisations, composed of men who laid their heads together and very often their slender purses for worthy purposes which required that they should obtain land. There were many on both sides of the House who were afraid that they were embarking on methods that were not really honest— that they were aiming at plundering one class for the benefit of another. They had heard a very honest admission from one hon. Member of the House—he referred to the hon. Member who came from Greater Britain, one of those Canadians or New Zealanders who came to this country and obtained seats in the House, and spoke with, authority on these subjects. He had found, in passing through a severe ordeal of heckling in a Scottish constituency, that what was generally at the back of the opinion of the heckler was the practice of men who tried to secure land in the hope that the community would come and live round so that the price might rise and thus enable the owner to make a fortune. He thought the community should always have the right to acquire the land at a fair valuation, and that would check any such process as that. He found that his hecklers were generally satisfied with that answer. If it could be shown that land near a town or in any part of the country was not being put to a fair use, but was being held up, then the community should have the right of acquiring that land at a fair valuation; he presumed that they had that power now, and no effective resistance could be offered to such a transaction as that. With regard to the ulterior object of the Government, he did not think that they could face that House as honest men if they really desired to confiscate the property of the landlords, whether that landlord happened to be an individual or a society. Did they propose to resort to extreme measures and put taxation entirely on the land? No one had yet replied to one of the main arguments put by the Leader of the Opposition that the effect of the process inaugurated by this Bill would be that land would fall in value. It was said that the taxing of land values would benefit industry. He was a manufacturer, and as such he rejected this attempt to bribe him dishonestly at the expense of the landlord.

*MR. GULLAND (Dumfries Burghs)

said that to him it seemed very difficult to understand the policy of the Opposition upon this question. Usually they described all measures introduced by the present Government as revolutionary, which ought not to be entered upon without a full inquiry; but when the Government suggested an inquiry they took the other line and argued that the Government had no right to inquire unless they stated the ultimate object of the future Bill to be introduced. This Bill seemed to him to be rightly founded upon theory and practice, and the difficulties which had been raised by hon. Members opposite were quite imaginary. It was always easy to find excellent reasons for doing nothing. The Leader of the Opposition said the House ought to consider the equities of the case, and he quite agreed with that argument. Anyone who had had any experience of municipal work in Scotland must know of numerous instances of the great injustice of the present system. Personally he had, for a long time, been a strong supporter of the principle of the taxation of land values. As a member of the Edinburgh Town Council his view on that subject had been greatly strengthened, and in municipal work one might find a great many object lessons upon which to strengthen one's theoretical belief. Two cases came before his notice on the town council which convinced him that the present system was not satisfactory. Some electors in his constituency brought before his notice the case of a road in East Edinburgh which was badly lighted, and he found upon inquiry that the road was too narrow and dark because on one side of it there was a field of a few acres belonging to a firm who were holding it up. That particular road led to a large district in which there had been erected artisans' tenements, and the people had to go to their houses along this dark, badly-paved road because that firm was holding up that large field almost in the centre of Edinburgh. He discovered that that land was let at a rental of £5 a year for feeding donkeys, and it paid rates on a sum of £1 5s., being one-quarter of its agricultural value. That piece of land was growing in value every day, because it was being gradually surrounded by houses, and the owners were holding it up until they might feu it at a large price. In another instance there was a piece of ground in Edinburgh in a central position which had not been used very profitably, and an enterprising Methodist Mission took it and built a number of shops upon it, which were now yielding big rents and rates, and on the top of the shops they built a church which they called a hall, and which they used for the benefit of the community on Sunday and week-day. Because they called it a hall and let it, the council rated it and assessed its value at £800 a year, and it had to pay about £200 a year in rates. At the present time property was assessed at its rental value. The owner made a return and it was accepted or modified by the assessor, and if the owner had any fault to find and could not come to terms with the assessor, he could appeal to the town council, which was generally composed of shrewd, common-sense business men who knew local circumstances and were advised on points of law by the town clerk. There need not be any fear that the men would not get justice. That system had in the past worked perfectly smoothly. The hon. Member for Ayr Burghs had said that practically there never was any appeal to the Court of Sessions. That was quite true, the only exception being where a large sum of money was involved; the ordinary run of cases was decided in the easiest and smoothest possible manner. As had been the case in the past, so it would be in the future. In Scotland the assessors held a very high position, and enjoyed the confidence of the public. About ten years ago a case occurred in his own personal experience. He was going to be the tenant for storage purposes of part of a large building which was being erected. He could not agree with the owner about the rent, and he suggested that they should leave the matter to the assessor to decide. The assessor fixed a sum for rent which was something between the owner's price and his own, and they both agreed to it in the most friendly way. In Scotland the assessor was considered to be a very fair man in whom the public had every confidence. Some new system was desirable, and there was a strong feeling in Scotland that the right hon. Gentleman was taking the right line in this Bill which would not lead to unnecessary friction.

*MR. MITCHELL-THOMSON (Lanarkshire, N.W.)

said the debate had shown a tendency to range over a very wide field. He would not follow the hon. Member opposite in his disquisition upon the taxation of land values in the colonies, beyond stating that although the South Australian municipalities had the power to tax land values they had never availed themselves of it. The Committee had stated in their Report that no material conclusion could be drawn from Colonial experience. The first proposition laid down by the Solicitor-General for Scotland was that the proposals in the Bill were equitable. What was the principle on which the proposals rested? He could not do better than quote the words of the Committee. The Report said— The main principle which in the opinion of your Committee underlies proposals to tax Land Values is the setting up of a standard of rating whereby the ratepayer's contribution to the rates is determined by the yearly value of the land, which he owns or occupies, apart from the buildings and improvements upon it, the object being to measure the ratepayer's contributions, not by the value of the improvements in the land to any extent, but solely by the yearly value of the land itself. The justification given in the Report was stated in the following manner— The justification given for the adoption of the new standard is that land owes the creation and maintenance of its value to the presence, enterprise, and expenditure of the surrounding community. The House would see that this Bill was merely, as the hon. Member for the Dumfries Burghs had said, an exploring Bill. It was a measure which proposed to set up a fishing inquiry in order to find out what were to be the practical details of the new standard of rating, because the House would have already recognised that the principle which underlay the proposals in the Bill was not that a new and additional rate was to be imposed, but that there was to be an alteration in the standard of rating. The hon. Member for Tyneside had said that the institution of a system of taxation of land values would enable them to provide a fund out of which old-age pensions could be paid. If he or the Lord Advocate thought that under the provisions of this Bill they would be able to tap some unknown source of revenue, some gold mine not hitherto worked, they would find that they were making a mistake. This was not a Bill to tap any new source of revenue, but to make an alteration in the system of rating. [MINISTERIAL Cheers.] He was glad to hear these cheers. The only way in which any material fresh contribution to the revenue, local or Imperial, would have accrued would have been by the adoption of the proposal of the Solicitor-General to tax the owners of existing feu duties. But that proposal had been put out of court by the Prime Minister. The original proposition of the Solicitor-General for Scotland was to take for local purposes 10 per cent. of the value of feu duties in existence. The Lord Advocate said last year that the Government could not accept Clause 7 of the Bill then before the House because existing contracts must be respected. What happened? The Solicitor-General went up and down Scotland preaching the new doctrine of the taxation of feu duties, and not one word of contradiction came from any member on the Treasury Bench until at last a most representative deputation waited on the Prime Minister and stated their case. Then only was the declaration made that, whatever happened, no taxation would be imposed on existing feu duties. That being so, this Bill would not provide any material accession to the revenue, but it would have far-reaching effects. It was introduced not for what it would bring in, but for what it would do. That was a departure by the Government from the free-trade principle of taxation for revenue only. What were the grounds on which a departure from the present system was proposed? They were told that the present system was assessment on rental. That was true. So far as the owner of property was concerned, it was assessment on rental; but it was more than that. It was assessment upon his income. What the owner paid was, as it were, a local income-tax. So far as the occupier was concerned, it was assessment on rental, but the rent which he paid was a measure of his ability to pay the assessment. He was taxed according, to use a well-known Scottish phrase, to his means and substance. If he paid a certain amount of rent, it was presumed that he was in a position to pay it, and it was further presumed that he was able to pay taxes upon it for the purposes of the local exchequer. He was far from saying that the present system of local taxation was perfect. He did not think it was. It was only a rough approximation to justice, but he thought it was a nearer approximation to justice than would be obtained under the proposals of the Solicitor-General. One objection which had been stated to the present system was that it allowed a tax on industry. If that was so, Scotland was not the only country which suffered from the injustice. In Prussia there was not only a land tax, but an additional tax was deliberatley imposed on the lines of the existing system of taxation in Scotland. He had never known a case in which a man refused to make improvements, or to build a new house, because he was afraid of the burden of rates which might ensue. Supposing they took it for granted that the idea underlying the Bill was correct, did the Bill carry it out? Not a bit. The theory was that there ought to be no taxes on industry. This Bill deliberately imposed a tax on improvements. He had looked through the Bill, and he did not find any exemption even in favour of reclaimed land. It was said that land was not a product of industry. That was true in a sense. No doubt the actual silica was not the product of industry, but before land was fit for agriculture, or for the erection of buildings, money had to be spent upon it. He now came to the second position that this Bill proposed to create—the equality of sacrifice in the payment of rates. He had some doubts as to that doctrine. There was a passage in Mill, who was often quoted as an authority on this subject, where he said with a great deal of force that whether the person with£10,000 a year cared less for £1,000 than the person with £1,000 cared for £100, and if so how much less, did not appear to him capable of being decided with that degree of certainty on which a legislator or a financier ought to act. But supposing they admitted the doctrine of equality of sacrifice, did the Bill carry that doctrine out? Not a bit of it. So far from bringing about equality of sacrifice, it accentuated the inequality. It had been pointed out that the practical effect of this Bill in the great cities of the country would be to drive the poor into the slums. Land, it was said, must be taxed according to its full use; if it was not being fully used it was not bearing its full value in producing capacity to the community. It followed therefore, that if they had land with comparatively poor houses on it, the proposal of the Government was to say to the occupiers of those houses: ''You have no right to be here; you have got to pay for the full value of this house if you stay, and if you will not pay these rates you must go away from this quarter of the town and live in another quarter of the town which is fit for the poor." That, reduced to all its nakedness, was the proposition of the Government. Let them see how the equality of sacrifice came in in another way. Let them take one of the Secretary for Scotland's small holdings. A man lived and worked on his plot of 50 acres and paid, say, a rent of £50 a year. Next door to him lived a great captain of industry, who also had a plot of 50 acres, on which he had built a magnificent villa, with pleasure grounds, hot-houses, fish ponds, and all the other appurtenances of luxury, and he paid £1,000 a year in rent. Under the existing system these men were rated according to their ability to pay. The small holder would be rated on £50, and the captain of industry on £1,000. Under the system proposed by the Government, these two men would pay the same amount in rates because they were both living on the same amount of land. The doctrine of the equality of sacrifice was being stretched to pretty lengths if that was to be the result. Then he came to the third proposition, the doctrine of the unearned increment. He must say that that was an odd proposition coming from the free-trade Party—that any restraint of trade should be enforced by law. But he let that pass. The doctrine of the unearned increment had been defined that day, and it was said that there ought to be an appropriation of the increase in the value of plots of land which had been earned by the community. The hon. Member for South Edinburgh had said it was an absurdity and that it was hard and intolerable that a man who sat still and did nothing should see his land increase in value from£3 10s. to £25 per acre per annum; that that obviously called for redress. But let the House consider that the increment from £3 10s. to £25 was not the product of a day. The land while that increment was going on was "extra commercium," it was locked up, but so was the capital. And let the House further consider that £25 a year per acre meant, roughly speaking, about £500 for a purchase price. £500 to-day for a purchase price was £70 fifty years ago, and £70 fifty years ago was £3 10s. per annum. The result was that if a man sold his land for £25 to-day, that land was at once rated by the community at £25, and moreover, when they came to consider the unearned increment for the past fifty years they had been rating it at £3 10s. Therefore, they got the result that the community for fifty years had been rating the land at £3 10s., and that £3 10s. increasing over fifty years brought out exactly the same sum of £25 per annum which was realised by the value of the land to-day. That was purely a fortuitous instance proving the correctness of the theory that the increment in value was not the product of a day, but had got to be looked at over a series of years. As to the second point of the proposition "earned by the community," there were increments in value—the Thames Embankment, for instance—which were caused by special improvements made by the municipality. In Scotland the municipality levied what was called an improvement rate on those whose properties were supposed to have been improved. A rate was levied, and ex hypothesi those people who shared in the benefits were supposed to contribute towards its cost. And they did. But that was not the paint at issue. It was the general industry of the community which had created the increased value. It was an increase in demand, but what created an increase in demand? Let him put a case to the House. Was the increase in the demand invariably created, or largely created, or at all created by the presence of the community? Let them take a case that had happened recently, where a manufacturer went down to a country district—to Alexandria—the other day. He put up works and workmen's cottages. He not only put up those houses in value, but all the land values in Alexandria. Did the hon. Members say that that was directly attributable to the community? Supposing the manufacturer manufactured for the foreign market, and not for the English market. Let them take Glasgow. Glasgow was the Clyde, and the Clyde was Glasgow. If the Clyde were to become a ditch with a foot of water in it to-morrow the prosperity of Glasgow would be gone. Glasgow lived by its oversea trade, and if to any community was to be ascribed the rise in land value, in the case of manufacturers who found their market in the community overseas, it was the community overseas to whom the rise should be ascribed. And if they were going to give the result of that increment to any community, to be logical they should give the result of the rise in land value in Lancashire to the communities in India, China, and Japan. Further, let them suppose they had a manufacturer who was carrying on a flourishing industry. By his skill and enterprise he had built up his industry; his works had increased the land value; then for some reason or another, from the operation of some foreign tariff or other, he was cut out of his overseas market, and he closed his mills; down went the land value, and the community would be there all the same. The community could not save the land value. There were then the other clouds of glory which were supposed to follow in the wake of this Bill. It was suggested that the Bill would stimulate building and reduce rents. The only remark he had to make on that was that it was absolutely certain it would reduce the margin of profit for the builder. And whatever reduced the margin of profit, reduced the inducement to build; that therefore reduced building, and reduced building would invariably mean increased rents. He could develop that if he liked, but hon. Members who were interested in its development could read it in the minority report of the Committee on the Taxation of Land Values. One thing was certain, and that was that the value of certain premises would be lowered. Upon large works which were now paying a large return it would be lowered; upon property which stood upon a comparatively small square of land and brought in a large rental; and upon public houses. In all other cases the value would be increased to a limit in many cases far beyond 20s. in the £. There were places in the north of Scotland where 20s. in the £ was the basis of rates now, and if they were to take this basis it lessened the amount of the assessable rental, and it followed that the rate of imposition would have to be increased, and increased in many places considerably beyond 20s. in the £. As to the contention that the Bill was practicable, he had said already that it was a fishing inquiry, and, if so why did not the Government select certain areas for the purposes of their experiment? Why experiment with the whole of the land of Scotland? It had come down to this: that valuation was a matter of opinion, a matter of uncertainty, and that accuracy and precision were unattainable and unintelligible. But the Bill proposed to enact that the owner was to make a return and estimate the value of his property. He was to make a guess. If he did not make a guess he was fined £20, if he made a wrong guess £50, and if he did not pay he was to be sent to prison. Those penalties were imposed by the Act of 1854 in relation to a valuation on facts, and if a man did not make a return he did it wilfully, if he made a wrong return he made it knowingly, and hence the penalties. They were continued by this Bill, where accuracy was impossible and unintelligible. Was it such an easy matter? The Solicitor-General suggested that the assessors did it now. What were the real facts at present? In the ordinary case the valuer had to find the value to a hypothetical tenant. He took the actual facts, buildings and circumstances, and he estimated for a hypothetical tenant. He either estimated the cost of the buildings and took a percentage of the cost, or he took a reasonable percentage on the profit the man made out of the building. Both those methods had repeatedly been condemned by the Courts as unjust. Those valuations were made on actual facts with only one unknown factor in the equation, and yet they were not felt to be satisfactory by the Courts. How was it supposed that the Courts would regard an estimate founded upon a hypothetical buyer of a hypothetical property under hypothetical circumstances? That was the proposition in the Bill. It was suggested that they might apply the rule of thumb; that they might deduct the value of the building from the site, if sold in the open market. That view was carefully inquired into in the Committee and disapproved, because it was shown that it would lead to fallacious results. A case was brought forward of a house which cost £5,000 to build but which to-day could be purchased for £3,000, and if they deducted the value of the building from the value of the site they were left in that case with a minus quantity. They were therefore left with the proposal that individual valuations should be made. That would take a long time and would be very costly. One assessor before the Committee said he could, in. the ordinary "jog-trot" of business of an assessor, value sites apart from the buildings in five minutes. It rather savoured of " valuation while you wait" but, taking five minutes for each valuation, if six skilled assessors were to start valuing the sites of Glasgow—225,000 of them—and went on working day and night without cessation for meals or rest, they would only just complete that valuation by Christmas. If they were to value the site on the basis that it was the only site in the market, it would be intelligible; but if it was valued as a site that was clear and on the assumption that all the other sites were in the market at the time, the former valuation must be fallacious. Any man could give a valuation, for instance, of £1,000 of Great Northern Stock, but no concatenation of experts could give the value of £100,000 of Great Northern Stock if it was all put upon the market at the same time. The Government professed to be a free trade Government. Mr. Lowe, in his Budget speech of 1883, said that the grand principle of free trade—far more valuable than free trade itself—was that no class of the community should be made tributary to any other class. [Cheers.] Hon. Gentlemen cheered that. He commended that to the attention of the seventy hon. Members who sat in various parts of the House, and to those hon. and right hon. Gentlemen who sat on the Treasury Bench, who were members of the league for the nationalisation of land. The doctrine of Henry George had been received with certain modifications and accepted by a considerable number of hon. Gentlemen opposite; but he and those with whom he sat continued to believe with John Stuart Mill that the principle of an exclusive tax such as a tax on land was a principle foreign to common honesty. Should such a scheme ever enlist a large Party in its support, that fact would indicate a laxity of pecuniary integrity in national affairs.

*MR. BARNES (Glasgow, Blackfriars)

said he desired to associate himself with this Bill, which he regarded as a first step in the direction of restoring to the community that which had been earned by the community. The matter of increased value accruing to land and of the tilting of that value into the buckets of those who did nothing for it, had gone on so long that it was a marvel that the people had been so patient as to allow it. He had in his mind the case of a shop in the main street in the city of Glasgow the rent of which during the occupancy of the present tenant had risen from £150 to £450. Who had put on that increased value? It was the industry and enterprise of the occupier together with the presence and necessities of the surrounding community. There was certainly no increased value in the building during the last thirty or forty years, because whatever the value might have been when it was erected it was of less value now owing to the deterioration of the bricks and mortar which had depreciated in value as all products must. The increase value was therefore due to the industry of the occupier and the necessities of the surrounding population. Yet everything sold in that shop had to be increased in price because of the rates that had to-be paid and also of the rent. He did not think that the analogy of the Alexandria manufactory had any relevance to this discussion. Far too much was made of the foreign demand as against the home demand which exceeded the foreign by at least ten times. This Bill was preparing the ground for something which was to follow. As had been said by another speaker in the debate, it was not so much increased revenue that was looked for in this Bill and the one which he hoped would follow on, but that it would open up areas for the workers which wore now closed to labour by the private land owners. In the outskirts of towns land was held idle in the anticipation of obtaining an increased value, and other land was artificially increased in value and the demand for labour decreased. The main and practical thing was that the supply of land would be increased and the price diminished and rent would be decreased as a natural consequence. Reference had been made to trade union and friendly societies being largely interested in land values just as other corporations were interested and that therefore the Labour representatives should be loth to put their hands on land values. The interest of friendly societies and trade unions in land values was infinitesimal as compared with their interests as citizens. He welcomed this Bill, and he hoped that the Government would go on with it. The last speaker had put his finger on a weak spot in regard to the taxation of land values, and that was that in the towns, and especially on the outer fringe of towns, the value of land was so great that if it was taxed according to value it would be impossible to get land for cottages and gardens, and the cottager would be driven elsewhere; but he would remind the hon. Member that that was just what took place now. The centres of large towns were frequently taken up by warehouses or other high buildings of six or eight stories, and it was impossible for workmen to get land for their dwellings, with the result that they were driven out four, five, or six miles, and they had to travel that distance to and from their work every day. Though the taxation of land values might have the effect of perpetuating that state of things, yet the advantage on the other side was so great that he thought it overbalanced the disadvantage. For his part he was ready to support what he believed to be the right principle, even taking that slight disadvantage into account, for he believed that the advantage to the community would be immense, and that the demand for labour would be such that they would soon have something towards old age pensions, or at all events wages would be larger as a result of this reform, while the money which ought long ago to have gone to the remedying of social evils would now be devoted to that purpose instead of going into the pockets of those who had not earned it.

*MR. COCHRANE (Ayrshire, N.)

said that of all the reasons which had been given in support of the Bill he thought the most astonishing was that given by the hon. Member for the Blackfriars Division. They were to have old-age pensions, cheaper houses, and larger wages, and all this was read into a Bill which the Lord Advocate had said was for information only and to add one column to the valuation roll. If these were the expectations which were entertained of the Bill he was not surprised that it should have given rise to considerable debate and expressions of opinion on both sides of the House. Expressions of opinion hostile to the Bill had not been confined to one side, and some very trenchant criticism had come from an hon. Member opposite. The hon. Member for South Edinburgh had invited the House to follow the example of Australia and New Zealand: it seemed rather strange that he should ask the House to adopt a system existing in some of our Colonies as regarded rating, and yet he of all others would be the first to say that on fiscal questions we were to pay no regard to either their example or their desires whatever. The hon. Member had adduced some very strange propositions, for he had said that a poor man who lived in a big house ought therefore to pay lower rates. What were the objects of rates after all? They were to provide for policing, tramways, lighting, and poor rates. The Solicitor-General had told them that agricultural land within what he called the zone would have a substantial increase of rates; and the hon. Gentleman poured his sympathy on the man who lived in "a sumptuous house" and said he must pay lower rates. For his part his sympathy was for the agriculturist. Why should he have to pay a higher rate than the man who lived in a sumptuous mansion? On the contrary, in the case of the agriculturist who had to earn his living they ought rather to reduce the rates which he had to pay. Why should the man with a sumptuous house escape with a lower rate? He could not see any reason. The Solicitor-General had given them an example which was familiar to them—that of a corner house in Edinburgh which had been pulled down and rebuilt to a height of seven storeys. The man had laid out capital on the building in order to get additional trade; and, if there was any unearned increment in the case, it ought to go to the railway company who had brought from every part the tourists who dealt with that very shop and enabled the owner, from the profits which he made, to add to his premises. But the learned Solicitor-General said that because he had put up this building he should rather pay a lower than a higher rate. He ventured to say that if he had put up this expensive building as a profitable speculation, it was in some degree a test of the owner's ability to pay the rate, and he-could see no earthly reason why he should be relieved of any portion of the rates at the expense of some of his neighbours. They all knew that at the present moment the landed interest seemed to be fair sport for the Radical Party, who from Scottish and English Grand Committees shot at those unfortunate persons who were interested in land, and who were now being attacked in respect of land values. They hid fair to make the investment of capital in enterprises connected with land impossible in the future. What was to be the position of an unfortunate proprietor under the Lord Advocate's Bill? His duty now was to furnish a return, and if he failed to do so he was liable to heavy penalties under the Act of 1854. The smaller the proprietor the-more difficulty would he find in making his return. A large proprietor had his agents and factors, but what would be the position of the small proprietor who had nobody to help him? To compel the small proprietor to make the proposed. return would inflict a grievous burden upon Mm. The statement that no immediate taxation was to follow would give him a false sense of security. He would say why should he incur this expense if no taxation was to follow, and the result would be that the assessors would each fix the valuation according to his fancy and the opinions he might hold, and so the figures of the third column would be arbitrary, haphazard, and unreliable, and they would have a misleading series of valuations which would possibly be used afterwards to lend colour to some Socialistic experiment on the part of the present Government. The Lord-Advocate said on the First Reading that Parliament would be able to note those facts in the valuation as a basis not of assessment alone but for land transfer. If it was intended to base a system of land transfer upon a valuation return made up in that way he ventured to say that the figures upon which they would have to rely would not be at all suitable for any purpose of that kind. Why should they depart from the existing practice under the Act of 1854? Under that system there was a uniform valuation of land in Scotland which was familiar, which had worked extremely well, and from which, according to the Lord Advocate, had worked with "smoothness, precision, and efficiency," and on the admission of the Solicitor-General, there had been this year no appeals. That being so, a strong and definite case ought to be made out before they set up a different system. Rent was considered to be some test of the capacity of a man to pay rates, and it would be a much safer test than the hypothetical value provided for in this Bill. One man might have a large mansion and another a small building occupying the same space of ground, and in estimating the value of those sites why should they exclude all the buildings and erections and other improvements. The result would be that they would have the small man occupying a site not fully covered by a comparatively small house paying the same rate as the man who lived in a large building, on a site contiguous and of the same size, and the Solicitor-General argued that that was quite proper because the smaller man was occupying a site which was unsuitable. Was it suggested that people should be divided up into classes? Were the men occupying large houses to be driven into one part of the town and the small men into another part? Was the Solicitor-General not aware that it was one of the most important necessities in the life of a working man that he should have a dwelling place as near to his work as possible? The present system was, in his opinion, a far fairer system than that proposed in this Bill. He would like to ask who sought this change and upon what grounds. He knew there had been men going about Scotland advocating a single tax on land, but notwithstanding what had been said by the hon. Member for Blackfriars, the Socialist Party were not all in favour of this system of a single tax. The hon. Member for Merthyr Tydvil had repudiated the single tax proposal. They wore told that nothing was to happen until Parliament otherwise determined. It was evidently contemplated that there was to be some further legislation, but they had not heard so far any clear definition of the shape that legislation was to take. Judging from the speeches of the Solicitor-General in the country, and from an address delivered by the Lord Advocate at a meeting in connection with an association which had for its basis the nationalisation of land values, he thought the present Bill might be taken as merely the fingerpost that pointed in the direction of absolute confiscation of the whole of the land values. It was not enough for the Lord Advocate to say that it was merely a matter of filling up a column which would be added to the valuation roll. There were certain practical difficulties which would present themselves to everyone familiar with the subject. In urban districts the proprietor who was responsible for making the valuation would have to estimate the value of the site apart from the buildings or structural improvements, but his position would be nothing as compared with that of the unfortunate owner of a farm, who would be required under this Bill to imagine his property divested of its house, its farm buildings, and its stone walls, but still retaining its hedges and trees. Why, too, should the sums spent on drainage be included in the value of the land, when drainage was not to be taken into consideration as an improvement, as a stone wall or building was? The Government were asking the landowners to perform an impossible task when they asked them to discriminate between the value of the land and the value of the buildings on it. The Local Taxation Commission went carefully into that question, and, after hearing witnesses, they came to the conclusion that to value land and the buildings upon it separately would be a matter of the greatest difficulty, and, indeed, that it would be practically impossible. Various estimates had been put forward as to the cost of these proceedings, and the authority of Dr. Murray had been quoted. Whatever the figure might be, the amount would be enormous, and it was to be put on the ratepayers. For what reason? Everyone admitted that the present system worked on the whole extremely well, and any change of which the country could approve would require very great evidence and weight of opinion behind it. It was estimated that the local authorities in Scotland had borrowed £61,000,000 on the security of the rates. The proposed change in the form of the security would practically paralyse the finances of these local authorities. While the taxation of land values would not ease any of the burdens which now fell upon the ratepayers, it would still further depreciate the already depressed value of securities which were largely held by charities, benefit societies, and the working classes in Scotland. He challenged any hon. Member for Scotland to deny the depreciation which had taken place in the value of feu duties in Scotland since this class of legislation was first introduced into the House, and that in consequence the value of that favorite security of the working classes had been largely reduced. He thought it would shake the confidence of the small investors and discourage thrift, and, above all things, drive the poor man who now occupied a house in a position suitable for his work from that position, because he would have to pay a higher rate than at present. He thought it would inflict a great amount of hardship, and he had failed so far to hear one single argument in favour of the proposals of the Government.

MR. THOMAS SHAW

The debate on this Bill has in more than one respect been very gratifying to its authors. I think the whole House will bear me out if I say that while there have been here and there criticisms of the principle underlying the Bill, so far as the shape and frame of the Bill is concerned there has not been delivered from either side of the House any criticism except one by the right hon. Gentleman the late Prime Minister, and that criticism affected the clause as to definition of improvements, which is a fair subject for inquiry, and I propose to address myself to that subject. Apart from that statement it will be observed that so far as the frame of the Bill is concerned nothing has arisen to shake its structure, and, so far as the one criticism affecting it is concerned, it is purely a Committee point which is capable of adjustment and amendment. My hon. friend who has just addressed the House has put the whole case in regard to the opposition to this Bill in the well-known formula, "Why depart from the existing system?" That is the whole case against the Bill—why depart from the existing system?—and that query is presented to us by the right hon. Gentleman the Leader of the Opposition as if we were living in a land of obstruction, and as if we, like himself, were haunted by the spectre of no other person than Henry George. The fact is that this Bill is presented to the House after numerous preliminary inquiries and after the discussion in this House year after year of numerous Bills affecting this question. During the last Parliament a majority was obtained for a Bill having a principle underlying it which is the principle to be approached by the present Bill, and indeed at that time—and I can hardly conceive that it was in view of a possible appeal to the electors—the Tory Party in this House voted by a very considerable majority, of which I shall give the figures, in favour of the principle of just such a Bill as this. The development of opinion in this country on the subject, not theoretical opinion, but the opinion of practical and skilled men upon this important social topic, has been very marked, and if the House will forgive me, I do not mean to shirk the issue which is contained in the questions that have been addressed as to what is behind this Bill. This is a Valuation Bill pure and simple, confined absolutely to that, and by expressed terms it leaves out the whole question of assessment and rating, but that assessment and rating are behind it, that they will in future years take account of the standard which is now to be set up, either wholly or partly, or in circumstances such as Parliament will then determine, I do not for a moment mean to deny, and indeed I should not be here urging the Second Reading of this Bill unless I were convinced that behind it there is to be provided a remedy for the present state of matters, more particularly in our municipal centres. I was proposing to show that we are not acting from mere theory, but after a very careful scrutiny of very powerful and skilled advisers. Hon. Members will have heard of the Housing Commission so far back as June twenty years ago, in 1885. What was the verdict of that Commission? If the House will permit me I will read this passage— At present land available for building in the neighbourhood of our populous centres, though its capital value is very great, is probably producing a small yearly return until it is let for building, and they can thus afford to keep their land out of the market, and to part with it only in small quantities, so as to raise the price even beyond the natural monopoly price. Meantime, the general expenditure of the town on improvements is increasing the value of their property. If this land were rated, say, at 4 per cent. on its selling value the owners would have a more direct incentive to part with it, and a twofold advantage would result to the community. First of all, the valuable property would contribute to the rates, and thus the burden of the occupiers would be diminished by the increase in the rateable property; secondly, the owners of the building land would be forced to offer their land for sale, and thus their competition with one another would bring down the price of building land and so diminish the tax in the shape of ground-rent or price paid for the land which is now levied by the adjacent landowners—a tax, be it remembered, which is no recompense for any industry or expenditure on their part, but is the natural result of the industry and activity of the townspeople themselves. If there ever was a demonstration of the need for a transaction which will change the standard of rating, this is that demonstration. But it does not end there. Reference has been made in the course of the debate—too little reference, I think—to the Minority Report of the year 1891. I wonder if the right hon. Gentlemen the late Prime Minister thinks that that Minority Report was dictated or animated by the principles of Henry George. It was written by the late Lord Kinross, a well-known and most eminent authority on rating both in Scotland and in this country, a man whose opinion and whose arbitrative power were appealed to on both sides of the border. Who concurred with him in this revolutionary minority? There was Sir J. B. Balfour, there was Lord Balfour of Burleigh, there was Sir Edward Hamilton, late Secretary to the Treasury, and there was Sir George Murray, present Secretary to the Treasury, and these are the authorities, and not Henry George, although with regard to Mr. Henry George, I will venture in the face of Parliament to make this observation, that he is one of those authors whom, if you carefully read, you will ever afterwards avoid sneering at. You may differ from him, but that you are dealing with a master mind no one who has ever carefully studied that great author will deny. I differ from him. Coming back to this Minority Report, what did these revolutionary authorities reply to the question, "Why change the present standard?" They said— There is a strong argument for rating site values on the ground of public policy, regard being had to the effect of the tax on industries and developments. Our present rate indisputably hampers building. Buildings are necessary to life and necessary to business of every kind. Now the tendency of our present rate must be to discourage building, to make houses fewer, worse, and dearer. Anyone who knows the condition, as I happen to know it, of some of our congested districts, not only in the towns of Scotland, but in very remote districts will endorse that statement. If I had said that I should have been denounced as using most explosive language, but that is the written testimony of these highly skilled persons. In answer to the question "Why change the present standard of rating?" our answer is, "We stand upon writings such as these, which have been presented to the House and the country in the skilled Reports and the documents prepared by skilled people."

MR. YOUNGER

Do they suggest this as the basis of rating?

MR. THOMAS SHAW

Yes, they suggest it as the basis of rating, and their summary and conclusion is— It will do something towards lightening burdens in respect of buildings, and it will do something towards solving the difficult and urgent housing question. The right hon. Gentleman the Leader of the Opposition was good enough to say that he wondered why the land problem was always presented in a Scottish form first, and most acutely. He seemed to think that we were a corpus vile, as one distinguished speaker called his country, for experiment. To that I answer that we have the most acute experience in Scotland of any country in Europe of the evils of overcrowding in the housing of our population, and the Government are determined, if they can, to address themselves to the remedying of that social question. [Cheers.] That seems to be assented to by both sides of the House. My further proposition is that if we want radically to attack the housing question we must attack the valuation of land, as shown by these skilled Commissioners. The question is often put, "Is land held up?" If land is not held up, this Bill will show it. If land is held up, this Bill will show it. That is a fact worthy of being ascertained by Parliament. We do not hear so much now of the impracticability of valuation. The time was when my learned friend Mr. Cripps and I would break a lance over this question of valuation. Mr. Cripps' point was that it was an impossible job, but everyone who has had experience, as men of my own profession have had, of the practicability of valuing land separately from houses knows that it is done every day. The idea that it is an impracticable task cannot be maintained. It is not a novel experiment. The Leader of the Opposition seems to think the Government have got this by some sudden inspiration from the clouds, and that they have for the first time put it into Parliamentary shape. It is not so. There is experience much nearer home than South Australia or New Zealand. The Manchester Corporation Act was passed having this specially in view, and under that Act it is the duty of the assessing authority to lay the value of the assessment on the land as distinct from the houses. The London County Council Improvements Act with regard to the purchase of the Tower Bridge has a clause of exactly the same kind. I maintain, therefore, that we are following, not only the Reports of Royal Commissions, but almost the text of certain clauses and sections which have passed through this House. I am aware that the Bill will tend to the better development of land and the throwing of land open, but the cardinal consideration in my mind, however, is that our proposal will ameliorate the acuteness of the problem as to housing in our great cities. But there was another object. The hon. Gentleman who last spoke said that I had thrown out the suggestion that this assessment of land values might be of Parliamentary use in the question of land transfer. I hope it will be reported far and wide that in the opinion of the Government when these capital values are obtained they may be taken notice of in the future by Parliament in the case of the transfer of land. The instances are so familiar. [Hear, hear.] I suppose the other side defend them, judging from the cheer of the hon. Member for Lanarkshire, but we have not forgotten them. There is the Rosyth case in which a most estimable Lord in Scotland, acting under the most skilled advice, dealt with the Government of the day, and obtained for agriculture land eighty-five years purchase. We remember the case of Granton where 105 acres rated at £5 10s. an acre which, with an equivalent of thirty years purchase, would have given £17,300 was sold for public purposes to the Edinburgh Corporation for £224,000, or 124 years purchase. But there is a further and more acute case than that, namely, the case of the Water Trust of Edinburgh, who required some land for a small reservoir. They purchased forty-five acres of land rated at £3 5s. an acre, the total value of which at thirty years purchase was £4,387, and the actual price paid was £20,000 or 136 years purchase. A further case which were member is the Clyde Trust, which, in the neigbourhood of Renfrew, acquired 110 acres of land at a price equivalent to 435 years purchase. I venture to say that apart altogether from rating, even if the fact of the capital value had to be disclosed year by year these lands would, never have appeared in the valuation roll of Scotland with a capital value of anything like that. If there be an attempt to keep down the capital value in future negotiations to an unduly small figure, I think that attempt would be baulked by the possibility that the public fact and the capital value record will remain as a thing to be taken note of. With regard to expense there has been a great deal of wild language. It is said that it will cost £160,000 to the assessors of Glasgow to value Glasgow; the assessor himself says the figure will be only £6,000. Who is going to judge between the man who is not a valuer, and the man who has been a valuer for forty years? I will take Mr. Harper, the statistical officer of the London County Council. He said he could value the land in London at an expense for the first year of only £25,000, and afterwards of £5,000 a year. I think that at once dispels the fears of the people of Scotland or their spokesmen in this House with regard to the question of expenses. The Leader of the Opposition remarked that there was no steam behind the Bill if we left out of it a proposal to tax under existing contracts feu duties. I do not blame him in any way, but may I explain that the best support for this Bill in all these municipal agitations, where 500 public bodies have demanded this reform, has come from the large corporations in England? They want to get at the value of the land by taxing the owner for the time being. The idea that the want of these little items as to existing feu duties is to take off steam from the agitation is grossly to miscalculate the real social forces which are behind the measure. But the right hon. Gentleman said, if the community has made the value, and the community are to gel it, who are the community? They are our citizens. Some of them in past generations have been working up these values, and this is only a restoration, and the answer of the present community is that this mischief has been going on for generations; that the injustice has been going on for a long time, and we are determined to deal with it. The right hon. Gentleman asked why railways and canals were not included in the scheme. If we were going to start a new system of rating altogether, as at the beginning of things, we should no doubt make the state of affairs somewhat different from what it is, but I will try and explain in as untechnical language as possible the situation with regard to railways and canals. The situation with regard to railways and canals, as the House knows, is that they form a series of threads passing over the areas of a large number of municipal, parish, and county authorities. We can only take a railway as a unit, which has a monopoly granted by the State that can only be valued by a reference to its returns, and there are elaborate provisions for taking stock of the receipts of railways, of estimates, of values, of stations, and wharves and docks, and then for taking the entire line and dividing certain actuarial results which are thus produced over the whole chain of operations. It is perfectly manifest that this requires a separate set of considerations, and for over fifty years in Scotland it has required also a separate set of officials. We have determined to take the line of least resistance, and we have taken the line which is in accordance with the precedent of the last fifty years in Scotland. When we have got the whole of these returns, with all the experience, I know not what we will do, but, as at present advised, I shall certainly be very slow indeed over to suggest that railways and canals should come under the same system of rating. It is said with regard to agricultural land that the schedule of improvements here is so specific that it deals with what I may call visible improvements, fencing, building, dwelling-houses, and the like, and with that visibility attaching, it necessarily, says the right hon. Gentleman, leaves out of account those improvements which may have gone on from the time of Noah and the Flood until now. Of course it does, and I can imagine an argument which would have delighted the House if we had attempted to begin at the point of prairie value; but because we rigorously confine the scope of the improvement which can be inexpensively dealt with, in the sense of its being visible to all parties, and being the subject of ordinary everyday estimates, we are told that we have violated the theory that improvements should be separated from the land. We have not violated any theory at all. We have taken what in practice will prove to be a very fair and sound method of getting at the value of the land, less the improvements which are the subject of ordinary-estimate. I hope I have not put this too technically in answering the request made to me. There is one final request which the right hon. Gentleman made to me, and that is with regard to woods. Upon that I will concede that while we have only included the buildings, erections, and structural improvements, there may well be a point for fair consideration in Committee whether woods should not also be included. The Government is in no way against that. We deal with woods as an ordinary crop, and that is the value of the crop along with the land, but if it be thought that the woods come into the value of the land we are quite open to conviction, and I think probably a word or two might effect the Amendment. In conclusion, with regard to the whole Bill, I will state one or two propositions. This Bill will establish definitely the relation that land value bears to the capitalised rental value. The House is hardly aware of how much confusion and contradiction there is on this subject. Some people hold that the site value is only equal to one-half, and some say it is equal to one-tenth of the whole existing capital value. There are other difficult and troublesome questions of that kind which can only be settled when we have ascertained the facts, and this Bill will ascertain them. My second proposition is, that it will provide an annual record, which may be of extreme advantage, of the increment of land values as such. This would go on from year to year. Every district will be distinct in the Parliamentary Return, to which each proprietor would be a party. It will then be open for consideration whether there should not, in the terms of the Minority Report, be a distinct clause also for site values. There are many serious cases, I believe, of land held up from building or profitable uses as agricultural land. That will aggravate the case, because agricultural land is favoured by the Legislature, and was particularly favoured by the late House of Commons. Therefore the hardship is two-fold. It is favoured in point of taxation to begin with, but when it is agricultural land inside the ambit of a borough, it is going to get an additional favour; it escapes the value of the capitalised sum, and, being also agricultural land, it is specially favoured by the Legislature. Our view is that there will be revelations made by this Return which will make demonstrable, especially in urban and suburban areas, and even in the districts surrounding villages, that the cases are such as to be dealt with practically on capitalised value. Furthermore, the Bill will give a return of the capitalised value

AYES.
Abraham, William (Rhondda)	Balfour, Robert (Lanark)	Benn, W.(T'w'rHamlets,S.Geo.)
Alden, Percy	Baring, Godfrey (Isle of Wight)	Bennett, E. N.
Allen, A. Acland (Christchurch)	Barker, John	Berridge, T. H. D.
Armitage, R.	Barlow, Percy (Bedford)	Black, Arthur W.
Astbury, John Meir	Barnes, G. N.	Boland, John
Baker, JosephA (Finsbury,E.)	Beale, W. P. ,	Brace, William

of unoccupied land in the country, which is not at present rated at all. There is a large amount of agricultural land which is rated at too little, but there is a large amount which is not rated at all, and, so far as these two elements are concerned the community and the local authorities will undoubtedly tap a fresh source of additional revenue. Besides, it will definitely show the feasibility of transactions, whether of taxation or transfer, with land value as the basis. Then I think it will pave the way for gradually lessening the burden of taxation upon improvements, and for securing that the value which is made by the community, in increasing the value of the land, shall share all the burdens of the community, so that, in fact, the value which the communal activity has made shall be recognised as a subject for recouping the community. Now the importance of these reforms is conceded on all hands. But we also concede that it is a very complex subject. No man can handle it without feeling that it is a very complex subject indeed, and the urgency of reform is apt to be lost sight of in its appalling complexity. If we remove that complexity we shall be able to give more attention to its urgency. Not only is this a rating question, but it is undoubtedly associated with housing, the health of the people, and social reform. At the root of all this lies the land question. This in town or in country is a peculiarly arduous task for any Party to tackle, but, though arduous, it is an honourable one. The Government are impelled to it by the desire for greater and more equitable activity in the community, and among the humblest of the population we have this in view, that the conditions of health and housing will be promoted by the reforms of which I hope this will be the happy inauguration.

Question put.

The House divided; Ayes, 294; Noes; 76. (Division List, No. 274.)

Branch. James	Greenwood, G. (Peterborough)	M'Killop, W.
Brigg, John	Greenwood, Hamar (York)	M'Laren, Sir C. B. (Leicester)
Bright, J. A.	Guest, Hon. Ivor Churchill	Maddison, Frederick
Brodie, H. C.	Gulland, John W.	Mallet, Charles, E.
Brooke, Stopford	Gurdon,RtHn.Sir W.Brampton	Marks,G.Croydon(Launceston)
Brunner,J. F. L. (Lancs., Leigh)	Hall, Frederick	Marnham, F. J.
Brunner, RtHnSirJ.T(Cheshire	Halpin, J.	Mason, A. E. W. (Coventry)
Bryce, J. Annan	Harcourt, Rt. Hon. Lewis	Massie, J.
Buchanan, Thomas Ryburn	Harmsworth,. Cecil B. (Worc'r	Menzies, Walter
Burns, Rt. Hon. John	Harmsworth,R.L.(Caithn'ss-sh	Micklem, Nathaniel
Burnyeat, W. J. D.	Hart-Davies, T.	Molteno, Percy Alport
Burt, Rt. Hon. Thomas	Harvey, A. G. C. (Rochdale)	Mond, A.
Buxton, Rt. Hn.Sydney Charles	Harvey,W.E. (Derbyshire, N.E.	Montgomery, H. G.
Byles, William Pollard	Harwood, George	Mooney, J. J.
Campbell-Bannerman, Sir H.	Haslam, Lewis (Monmouth)	Morgan, G. Hay (Cornwall)
Carr-Gomm, H. W.	Haworth, Arthur A.	Morley, Rt. Hon. John
Causton,Rt.Hn.RichardKnight	Hayden, John Patrick	Morrell, Philip
Cawley, Sir Frederick	Hazel, Dr. A. E.	Morse, L. L.
Chance, Frederick William	Hazleton, Richard	Morton, Alpheus Cleophas
Channing, Sir Francis Allston	Helme, Norval Watson	Murray, James
Cheetham, John Frederick	Hemmerde, Edward George	Napier, T. B.
Cherry, Rt. Hon. R. R.	Henderson, Arthur (Durham)	Nicholls. George
Churchill, Rt. Hon. Winston S.	Henry, Charles S.	Nolan, Joseph
Cleland, J. W.	Hobart, Sir Robert	Norman, Sir Henry
Clough, William	Hogan, Michael	Norton, Capt. Cecil William
Clynes, J. R,	Holt, Richard Durning	O'Brien,Kendal(TipperaryMid
Coats,SirT.Glen(Renfrew, W.)	Hope, W.Bateman(Somers't,N	O'Donnell, G J. (Walworth)
Cobbold, Felix Thornley	Horniman, Emslie John	O'Grady, J.
Collins, Stephen (Lambeth)	Horridge, Thomas Gardner	O'Malley, William
Collins,SirWm.J.(S.Pancras, W	Howard, Hon. Geoffrey	O'Shaughnessy, P. J.
Cooper, G. J.	Hudson, Walter	Parker, James (Halifax)
Corbett,CH(Sussex,E.Grinst'd)	Hyde, Clarendon	Pearce, Robert (Staffs. Leek)
Cornwall, Sir Edwin A.	Illingworth, Percy H.	Pearson, W. H. M.(Suffolk, Eye)
Cory, Clifford John	Isaacs, Rufus Daniel	Philipps,Col.Ivor(S'thampton)
Cotton, Sir H. J. S.	Jackson, R. S.	Philipps, J. Wynford (Pembroke
Cowan, W. H.	Jacoby, Sir James Alfred	Philipps, Owen C. (Pembroke)
Craig, Herbert J. (Tynemouth)	Jardine, Sir J.	Power, Patrick Joseph
Crean, Eugene	Johnson, John (Gateshead)	Price, C. E. (Edinb'gh,Central)
Cremer, Sir William Randal	Johnson, W. (Nuneaton)	Price, Robert John(Norfolk, E.)
Crombie, John William	Jones, Leif (Appleby)	Priestley, W. E. B.(Bradford, E.)
Crooks, William	Jones,William(Carnarvonshire)	Radford, G. H.
Crossley. William J.	Jowett, F. W.	Rainy, A. Rolland]
Cullinan, J.	Joyce, Michael	Raphael, Herbert H.
Curran, Peter Francis	Kearley, Hudson E.	Redmond, John E. (Waterford)
Dalziel, James Henry	Kekewich, Sir George	Redmond, William (Clare)
Davies,David(MontgomeryCo.	Kelley, George D.	Rees, J. D.
Davies, Ellis William (Eifion)	Kilbride, Denis	Richards,T.F.(Wolverh'mpt'n)
Davies, Timothy (Fulham)	Kincaid-Smith, Captain	Richardson, A.
Devlin, Joseph	Laidlaw, Robert	Ridsdale, E. A.
Dewar, Arthur (Edinburgh, S.)	Lamb, Edmund G. (Leominster	Roberts, Charles H. (Lincoln)
Dickinson, W.H.(St. Pancras,N.	Lambert, George	Roberts, G. H. (Norwich)
Duffy, William J.	Lamont, Norman	Roberts, John H. (Denbighs.)
Duncan, C.(Barrow-in-Furness	Lardner, James Carrige Rushe	Robertson,SirG.Scott(Bradf'rd
Dunn, A. Edward (Camborne)	Law, Hugh A. (Donegal, W.)	Robertson, J. M. (Tyneside
Dunne, Major E. Martin(Walsall)	Layland-Barratt, Francis	Robinson, S.
Edwards, Enoch (Hanley)	Lehmann, R. C.	Robson, Sir William Snowdon
Edwards, Sir Francis (Radnor)	Levy, Sir Maurice	Roche, Augustine (Cork)
Elibank, Master of	Lewis, John Herbert	Roche, John (Galway, East)
Erskine, David C.	Lough, Thomas	Roe, Sir Thomas
Esslemont, George Birnie	Lupton, Arnold	Rowlands, J.
Evans, Samuel T.	Luttrell, Hugh Fownes	Russell, T. W.
Fenwick, Charles	Lyell, Charles Henry	Rutherford, V. H. (Brentford)
Ferens. T. R.	Lynch, H. B.	Samuel, Herbert L. (Cleveland)
Ferguson. R, C. Munro	Macdonald, J. R. (Leicester)	Samuel, S. M. (Whitechapel)
Foster, Rt. Hon. Sir Walter	Macdonald,J.M.(FalkirkB'ghs	Scarisbrick, T. T. L.
Freeman-Thomas, Freeman	Mackarness, Frederic C.	Scott,A.H.(Ashton under Lyne)
Fuller, John Michael F.	Maclean, Donald	Seaverns, J. H.
Fullerton, Hugh	Macnamara, D. Thomas J.	Seddon, J.
Gibb, James (Harrow)	MacNeill, John Gordon Swift	Seely, Major J. B.
Gill, A. H.	Macpherson, J. T.	Shackleton, David James
Gladstone,Rt.Hn. Herbert John	MacVeigh,Charles(Donegal,E.)	Shaw, Charles Edw. (Stafford)
Goddard, Daniel Ford	M'Crae, George	Shaw, Rt. Hon. T. (Hawick B.)
Gooch, George Peabody	M'Kenna, Rt. Hon. Reginald	Sheehan, Daniel Daniel

Shipman, Dr. John G.	Thompson, J. W. H. (Somerset, E	Whitehead, Rowland
Silcock, Thomas Ball	Thorne, William	Whitley, John Henry (Halifax)
Sinclair, Rt. Hon. John	Toulmin, George	Wiles, Thomas
Smeaton, Donald Mackenzie	Trevelyan, Charles Philips	Wilkie, Alexander
Smith, F. E. (Liverpool, Walton)	Ure, Alexander	Williams, J. (Glamorgan)
Snowden, P.	Verney, F. W.	Williams, Osmond (Merioneth)
Spicer, Sir Albert	Walker, H. De R. (Leicester)	Williamson, A.
Stanger, H. Y.	Walsh, Stephen	Wills, Arthur Walters
Steadman, W. C.	Walton, Sir John L. (Leeds,S.)	Wilson, Henry J. (York, W.R.)
Stewart, Halley (Greenock)	Warner, Thomas Courtenay T.	Wilson, John (Durham, Mid)
Stewart-Smith, D. (Kendal)	Wason, Rt. Hn. E. (Clackmannan	Wilson, J. H. (.Middlesbrough)
Strachey, Sir Edward	Waterlow, D. S.	Wilson, J. W. (Worcestersh. N.)
Straus, B. S. (Mile End)	Watt, Henry A.	Wilson, W. T. I Westhoughton)
Stuart, James (Sunderland)	Wedgwood, Josiah C.	Winfrey, R.
Summerbell, T.	Weir, James Galloway	Wood, T. M'Kinnon
Sutherland, J. E.	Whitbread, Howard	Young, Samuel
Taylor, Theodore C(Radcliffe)	White, George (Norfolk)
Tennant, H. J. (Berwickshire)	White, J. D. (Dumbartonshire)	TELLERS FOR THE AYES—MR.
Thomas, Sir A. (Glamorgan, E.)	White, Luke (York, E.R.)	Whiteley and Mr. J. A.
Thomasson, Franklin	White, Partick (Meath, North)	Pease.
NOES.
Anson, Sir William Reynell	Faber, George Denison (York)	Parkes, Ebenezer
Anstruther-Gray, Major	Fell, Arthur	Pease, Herbert Pike(Darlington
Arkwright, John Stanhope	Fletcher, J. S.	Percy, Earl
Balcarres, Lord	Forster, Henry William	Rawlinson,JohnFrederickPeel
Balfour,Rt Hn.A.J.(CityLond.)	Gretton, John	Remnant, James Farquharson
Banbury, Sir Frederick George	Hardy,Laurence(Kent, Ashford	Roberts,S.(,Sheffield, Ecclesall)
Beach,Hn. MichaelHughHicks	Harris, Frederick Leverton	Ronaldshay, Karl of
Beckett, Hon. Gervase	Helmsley, Viscount	Salter, Arthur Clavell
Boyle, Sir Edward	Hill, Sir Clement (Shrewsbury)	Scott, Sir S. (Marylebone, W.)
Bridgeman, W. Clive	Houston, Robert Paterson	Sheffield,SirBerkeleyGeorgeD.
Burdett-Coutts, W.	Hunt, Rowland	Smith,Abel H.(Hertford,East)
Butcher, Samuel Henry	Kennaway,Rt. Hon.SirJohnH.	Smith, Hon. W. F. D. (Strand)
Campbell, Rt. Hon. J. H. M.	Kenyon-Slaney,Rt.Hon.Col.W.	Stanley, Hon. Arthur(Ormskirk
Carlile, E. Hildred	Keswick, William	Starkey, John R.
Castlereagh, Viscount	Lambton, Hon. Frederick Wm.	Talbot, Lord E. (Chichester)
Cave, George	Lane-Fox, G. R.	Tennant,SirEdward (Salisbury)
Cecil, Evelyn (Aston Manor)	Lockwood,Rt.Hn.Lt.-Col.A.R,	Thomson, W. Mitchell-(Lanark)
Cecil,LordR.(Marylebone, E.)	Long,Rt.Hn.Walter(Dublin,S.)	Thornton, Percy M.
Coates,E.Feetham(Lewisham)	Lowe, Sir Francis William	Walrond, Hon. Lionel
Cochrane, Hon. Thos. H. A. E.	Lyttelton, Rt. Hon. Alfred	Warde, Col. C. E. (Kent, Mid)
Corbett,A.Cameron(Glasgow)	Mason, James F. (Windsor)	Willoughby de Eresby, Lord
Corbett, T. L. (Down, North)	Meysey-Thomson, E. C.	Younger, George
Courthope, G. Loyd	Middlemore, JohnThrogmorton
Craig,CharlesCurtis(Antrim,S.	Mildmay, Francis Bingham	TELLERS FOR THE NOES—Sir
Craik, Sir Henry	Morpeth, Viscount	Alexander Acland- Hood and
Douglas, Rt. Hon. A. Akers-	Nicholson, Wm. G. (Petersfield)	Viscount Valentia.
Duncan,Robert(Lanark,Govan	Nield, Herbert