FINANCE BILL.

HC Deb 13 May 1907 vol 174 cc651-701

Order for Second Reading read;

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

MR. AUSTEN CHAMBERLAIN (Worcestershire, E.)

rose to move, "That, in the opinion of this House, the financial needs of the country, as disclosed in the Budget statement of Mr. Chancellor of the Exchequer, require that the basis of taxation should be broadened, in order that the anomalies and hardships inseparable from the present high rate of particular taxes may be diminished, the revenue necessary for the public service and for social reform raised with fairness to all classes of the community, and our fiscal system adapted to the present condition of national and imperial trade.' He said that the Chancellor of the Exchequer, in making his Budget statement, took a somewhat unusual, but, if I may say so, a very commendable course when, instead of confining his survey to the results of the past year, or the needs and the prospects of the present year, he invited the House to take a wider horizon, to look further ahead and to see what our prospects were, as far forward as the Government or the House of Commons could be expected to foretell. We accepted that invitation. We have made that survey to the best of our ability and the Motion standing in my name on the Paper is the result of the consideration we have given to the matter. That Motion, like the statement of the right hon. Gentleman, is of a wider scope than these Motions usually are. It is not intended to embody a particular fact, or merely to indicate objections to individual proposals which the Chancellor of the Exchequer has made. It is an appeal to the House and the country to consider whether the time has not come for a complete revision of our fiscal system in order to suit it to the needs of to-day. In our opinion the present system has ceased to be adequate to those needs, and, in a large measure, to meet the very purposes it was created to serve. What is the position that is disclosed by the Chancellor of the Exchequer? It is that, after two prosperous years he finds an inelasticity in the revenue which is certainly, to use his own words, "in some respects disappointing." I made, not when the Chancellor of the Exchequer made his Budget speech last year, but at a later period, when I had returned to the House of Commons, a criticism of his Budget statement, and said that he had under-estimated his revenue for the present year. I make this confession, that if I was right verbally I was wrong in spirit—the Estimates I thought were inaccurate have been painfully accurate. The surplus is due to circumstances on which the right hon. Gentleman has no right to count, and on the recurrence of which he cannot base future expectations. In spice of good trade our taxation on articles of consumption has shown no elasticity. And as to the expansion of the income-tax, I doubt very much whether the whole of that is to be attributed to increased wealth in the country. Some portion of it is; but even then it does not prove that that wealth is well or advantageously distributed from the point of view of the nation as a whole. I doubt whether the expansion of the income-tax in recent years is at all a fair measure of the growth of the wealth of the country. Owing to circumstances the collection of the tax has become much more exact and, I may say, exacting. A great portion of the revenue which formerly could not be collected at the source can now be and is collected at the source, and as commercial activity progresses the tendency of private concerns to be turned into public limited companies continues. A larger and larger portion of income is now earned under circumstances which enable the tax collector to ascertain the full extent of it and to secure its full contribution to the revenue. The expansion of the national income, such as it has been this year, has been mainly duo to accidental circumstances. It has been due to the number of very rich men who have died and the extraordinary demand for the coinage of silver. We cannot expect, that to continue or to be repeated year in and year out. We can expect, and I do expect, some expansion in our present duties following on the continuance of good trade, but I do not believe that the resources on which we at present draw are sufficient for our great and growing needs. Our expenditure increases out of all proportion to the yield of our present taxation, and for almost the first time in our financial history we have a Chancellor of the Exchequer coming to this House and declaring, after two properous years, that not only is he unable to make any remission of taxation now, but that, having regard to the demands which he sees coming on him in the course of the next few years, he cannot consent to deal with his surplus, great as the apparent surplus is, in such a way as to involve any permanent diminution of revenue of a substantial character. Accordingly we have no remission of taxation, though we have some readjustments of taxation, upon which I will speak later; but putting them at their brightest and their best, they are not a relief to the taxpayer, but a transference of the burden from one set of shoulders to another. But that is not all. I remember a speech which, owing to circumstances, I have not been able to look up, and therefore I cannot give the Chancellor of the Exchequer's exact words, which the right hon. Gentleman made in Scotland in the course of the last electoral campaign, in which he dealt seriatim with all the principal taxes except those on alcohol, and declared that each of them was too high and ought to be reduced, and that it would be the duty of the right hon. Gentleman and his friends to reduce them. What progress had we made? We have taken a penny off tea, with, I am afraid, very little advantage to the consumer. That is the sum total of the reduction that has boon made. But that is not all that the Chancellor of the Exchequer put before the country at that time as his task. The right hon. Gentleman said, and has repeated many times since, and insisted upon it, that one of the primary duties of the Government was to restore the credit of the country. I have already admitted to the right hon. Gentleman, and I stand by the admission, that I think a great many of the criticisms on the credit of the country are grossly exaggerated, and unfair both to him and to his predecessors; but although our credit stands higher than that of any other Power, as measured by the price of Consols, I agree with him that there is urgent reason for bettering our credit still further. Our credit is not merely the price which the obligations which we have already issued stand at in the market; our credit is also our power to borrow in the market again should the emergency arise. Although it can be shown that Consols at their present price are comparatively as high as they were in most previous years, when they paid 3 per cent., who will say what price they would fall to if for any reason it was necessary for the Chancellor of the Exchequer now to make great demands on the money market? We, therefore, cannot measure our credit by the price of Consols. You have something much more intangible, something which you cannot put into figures in the same way, something which must be matter of grave and anxious speculation to the Chancellor of the Exchequer, namely, his resources should an emergency come upon us. His resources for such an emergency are not adequate either in the state of our credit or taxation. There is not a sufficient margin in the taxes as long as they stand at their present level. There is not sufficient margin in our borrowing power as long as our credit does not stand higher than at present. That goes far to make good my case that our present resources are too narrow. But that is not all. It has become a commonplace of our political discussions, and is now admitted by both sides, that a multitude of prophecies, forecasts made at the time when our present system was instituted, have not been fulfilled. I am not here to say that the forecast that not an acre of wheat should go out of cultivation was an unreasonable forecast at the time it was made, or that enlightened men should not honestly believe it, but that forecast has proved false; the forecast that our agriculture would always enjoy a natural protection of 10s. per quarter, that our competitors would be forced within five years to follow our example or be ruined by not doing so, is now gone. But there is something else equally important which has not been recognised, namely, that the fiscal system then established was part of a considered whole, and that it is the only part of that considered whole which now remains extant in our political or national life. The fiscal system then established was intimately associated with the idea that we ought to have and needed only small Budgets, that our national expenditure would be on a small scale. It was intimately connected with the hope and expectation that free trade, or free imports, as adopted by us, would subsequently be adopted by other nations, and that arising from the free flow of commerce a new millennium would shortly be on us, in which armaments would be reduced, war would cease, and the only rivalry between nations would be of a peaceful and friendly character. It was intimately associated with the idea that the self-governing dominions would manage their own affairs independency of us, and that if we could not rid ourselves of the obligations we had incurred in respect of many dependencies, we would at least be careful to take no fresh obligations of that kind upon us. Every one of these expectations has been falsified by the event, and not merely falsified by the event, but they are no longer the aspirations of any considerable body of citizens among us ["Oh."]

MR. MADDISON (Burnley)

Is it not an aspiration to desire peace?

MR. AUSTEN CHAMBERLAIN

Yes, I was not speaking of such aspirations; I was referring to the other part of my observations. I take the question of peace and armaments. The Prime Minister is sanguine, or was sanguine, that he might induce the Conference of the Powers to put some limit on the growth of armaments. I am afraid that he has not a very bright prospect before him. Be that as it may, does any Member believe that we shall ever again see the expenditure of the nations on armaments, I will not say less than when our fiscal system was adopted, but anything approaching that figure? No; they are, and they will remain, far in excess of anything that was contemplated at that time. And in other spheres all the tendency of public opinion, all the progress of legislation, makes it impossible that we should return to the narrow Budgets of the Forties, Fifties, and Sixties. The policy of Free Traders at that time was a consistent whole; it was a policy of laissez faire throughout; they wished to restrict Government interference and action within the narrowest limits. With the single exception of the hon. Member for Preston, possibly supported by my hon. friend the junior Member for the City of London—who, after all, I think, is not wholly beyond suspicion—there is not an advocate of that policy in the House of Commons. We are constantly demanding increased action on the part of the State. I believe we rightly demand it. Yes; but it costs money; you cannot have the State interfering in the business, the lives, the safety, the health, the happiness, the food, every detail of daily life of millions of our people, unless you are prepared also for great expenditure on the part of the State on officials, who must be reasonably well paid, if you are to have men of the competence and independence necessary to the proper discharge of their duties. What is the result? Between 1846 and 1849 the Chancellor of the Exchequer had to budget for an annual expenditure of £50,000,000; between 1880 and 1886 the amount had risen from £68,000,000 to £75,000,000. In 1895 the annual expenditure had still further risen to £86,000,000. I have chosen the periods when a Liberal Government was going out of office, in order that I might not be open to the retort that these figures are the result of the Tory or Unionist extravagance. I well remember Mr. Gladstone's denouncing the swollen Budgets of £80,000,000 and, unless my memory serves me ill, he foretold to the House that such large budgets would break down the system of taxation which our fathers had established. Today, instead of a budget of £80,000,000 you have a budget of £140,000,000. Instead of a prospect of a reduction, we have had, as we all of us can see, an increase going on for years. It may be said that there is now not a prospect of reduction but a prospect of steady increase. You may cut off expenses here and there. You have done something to cut down expenditure on the Army. That means cutting down the number of men you have available in the active forces of the Crown; yet it was hon. Gentlemen opposite who, with such a light heart, cut down those forces today, were the first to condemn the late Government when they sent to South Africa more men than any Government had ever pretended to be able to send abroad and still had not enough to meet the crisis which bad arisen. You have cut down the Navy, though in so doing you say that our naval strength—a hope, which I trust, is rightly entertained—will not be reduced. But that process cannot go on. If you want to make further reductions there will be a cutting down of the shipbuilding programme, and that will be undermining the future naval supremacy of the country. Then there is the question of education. There is no Party in the House who think it in the least possible to reduce expenditure on education; and I believe each Party, and almost every individual looks forward to a still larger expenditure upon it, Then comes the whole series of social reforms, to the importance of which both Parties are equally alive though we may differ as to the means and solutions which ought to be adopted. Temperance reform, land reform, housing reform, old age pensions, all cost money, and you cannot carry them out with other people's money. You may speculate on behalf of the State in land at the expense of the landlords, but that between private individuals would be called robbery. You might promote temperance reform at the expense of individuals who, under legal encouragement and sanction, have vested their earnings in the licensed trade. But that, too, is wrong; it is not only robbery, but it is killing the goose that lays the golden eggs. What is your object in temperance reform? The object of many, I think, is to hit the brewer or to injure the publican; but that is not the object, I would fain believe, of hon. Gentlemen opposite. Their object is to reduce drinking. But the drink taxes have been in the past one of the mainstays of our revenue, and even now they are one of the largest sources from which we draw money for our national expenditure. You are in the right to encourage temperance. You will be in the right if you encourage it on fair terms, and, as far as sacrifices are necessary, if you exact those sacrifices from the community and not from individuals. Be under no misapprehension as to what you are doing. Just in proportion as you are successful in reducing the consumption of drink, so you are destroying the equilibrium of the Chancellor of the Exchequer's Budget. We find that the Chancellor of the Exchequer has pledged—perhaps he objects to the word "pledged"—has held out hopes of the establishment of a system of old ago pensions upon a plan which is the most costly of any that can be devised. The right hon. Gentleman the Member for the Forest of Dean has referred to my having expressed a desire for a contributory scheme. I am not ashamed of that view. I hold it still. I think that a scheme which recognises the principle embodied in our Compensation Acts, and which, carrying it a stop further, recognises that a trade must not only contribute to those engaged in it during sickness or accident, but must also contribute to them in old age, is on a sounder basis than that proposed by the Chancellor of the Exchequer. If you recognise the obligation of the individual, if you reduce within manageable limits the contribution which you have to exact from the State, I believe that you would be within measurable distance of a practical scheme of old ago pensions. The Chancellor of the Exchequer takes the most costly scheme. He expects to make a great saving in Poor Law expenditure, but the President of the Local Government Board does not. He told us the other day that whatever scheme of old age pensions we had, our Poor Law expenditure would be very little reduced. I agree with what he said. But the Chancellor of the Exchequer, as I gather, hopes also to limit the initial cost of the scheme by some age rule, or some other exclusion. I venture to say that the establishment of a system of old age pensions begining at the ago of seventy-five, or any age like that, would be a mockery. You have to contemplate, in laying the foundations, the whole problem; you have to contemplate so building up your scheme that you will include the whole. In passing, I desire to protest against one form of exclusion which appears to be contemplated by the Government. I was not here when the President of the Local Government Board spoke last Friday; I was not able to be here; but he repeated his references to the number of people who were getting old ago pensions from friendly societies and trade unions. I say that it would be not merely a mockery but a scandal to exclude from the benefits of a State scheme those people who have by their own thrift contributed something to provide for themselves in old age. If that was not the meaning—and I do not know at all whether it was or not—of his reference to these societies, then I cannot understand why he introduced that at all, at that moment, into the discussion. Old age pensions, on a broad scheme, if it costs you anything, will cost you from £20,000,000 to £30,000,000. What has the Chancellor of the Exchequer got towards that sum? He has put by, or ear-marked, £2,250,000, which he means, or rather meant to keep as a nest egg for next year. Ah! but how our hopes may be disappointed. On the £2,250,000 his colleagues are already laying greedy hands. The Chief Secretary for Ireland has taken £650,000 as a beginning, in order that the Irish people may not lose the valuable opportunity of receiving education in habits of dignity, self-restraint, and self-government. I should be sorry to put any obstacle in the way of their education in those desirable directions. We have always been told that English government in Ireland was extravagant and costly. But here is the Government trying to establish an Irish Council to do the business which the British Government has hitherto done, and the Irish Council cannot even be launched on its path without being given £650,000 a year more than the British Government has ever spent. Under these circumstances the outlook for the taxpayer is not pleasant. His taxes have to remain where they are, and all we can look forward to is the placing of additional burdens upon the shoulders of the direct taxpayer through the taxing of land or an increase in the death duties or the income-tax, or additional burdens upon the indirect taxpayer by taxing alcohol still further, even if no other articles are included in the Chancellor of the Exchequer's net. To maintain these taxes at there present high level is dangerous—that has been admitted even by the Chancellor of the Exchequer—and to raise them still further would be to increase that danger. I assert that for the new needs that have come into existence new sources of revenue must be found, that more taxes must be imposed, and the net cast more widely. So, and so only, can we diminish the hardships and anomalies which are inseparable from maintaining the existing taxes at excessive rates. The Chancellor of the Exchequer does not take away the hardships and anomalies; he only changes the venue, he only transfers the burden from one place to another. What the Chancellor of the Exchequer has done is to apportion the burden, not according to ability to pay, but according to an entirely arbitrary distinction between earned and unearned income. If the right hon. Gentleman proceeds upon ability to pay he ought to look, not at the question of whether income is earned or not, but to the amount of income available for spending by a prudent possessor, whether the income is of a permanent character or whether it would terminate with the life of the man who draws it, and whether, therefore, he is bound year by year as a prudent man to put by part in order to make provision for his wife and family. I will give instances to show that instead of removing hardships the right hon. Gentleman is only creating them. I asked the other day what was going to be done in regard to the pensions of soldiers and sailors, but that question is evidently being held in suspense. Take, for example, a man part of whose remuneration is held back by the State till he reaches pensionable age. What is the distinction between the pension which the State accumulates for the individual who serves it and a pension which a man accumulates for himself by saving out of his annual income? I might put that into the form of an annuity, and it then becomes exactly analogous to a pension. You cannot persuade men who have worked and laboured, who have denied themselves not only pleasures but comforts in order to make provision for old age, that the pittance they receive year by year when they come to retire has not been earned by the sweat of their brow. I think it will surprise a great number of people to know that under the definition of earnings adopted by the Chancellor of the Exchequer a man who writes a book or patents an invention is not to be deemed to have earned anything which he is happy enough to receive for his book or his patent. In replying to this point the other day the President of the Board of Education said it was a simple case, because the income he drew would come under the property tax at the rate of one shilling, and the other part would come under the tax at nine pence. The right hon. Gentleman said— If he were paid so much money down for his invention he would naturally have to pay 1s. in the pound, because his invention would represent property, and it would come under the property tax. For work done and paid for within the year a man with an income of less than £2,000 a year would have to pay 9d. in the £. When income is derived from accumulated property, and not from something on which a man is working at the time, he pays on the property rate. Mark the significance of that. No inventor will ever earn anything by his patent. It will not begin to return anything in the year in which he works at it, and the inventor will be told that he has not earned it. I gather from the correspondence I have seen in the papers that whether by the necessities of the case or in consequence of the practice of the publishers, no author ever earns anything in the year in which his book is published, although some authors are fortunate enough to earn something in subsequent years. I understand that no publisher renders an account until six months after publication. I think I am right when I say that the whole of the author's earnings would be treated as unearned for the purposes of the tax. I think it will surprise a great number of people when they find that, under the definition of earnings adopted by the Chancellor of the Exchequer, a man who writes a book or patents, an invention is not thought to have earned anything which entitles him to come under the lower rate. I maintain, then, that the Chancellor of the Exchequer does not remove the anomalies of the tax. I do not think the right lion. Gentleman is quite correct in assuming that Mr. Gladstone's objection to differentiation was based only on the case of the poor widow. Mr. Gladstone's objections were much deeper and broader; he said you could not make a reasonable or fair distinction. Mr. Gladstone said that by attempting to differentiate they would destroy the tax, and I venture humbly to repeat the statement. If that is true of direct taxes, it is true also of taxes on consumption. Is it not a hardship that the tax on the cheapest qualities of tea is something like 100 per cent, of its value, and that the poorest consumers pay out of all proportion to their richer fellow-citizens? These things are not novel; they have been foreseen by the right hon. Gentleman's predecessors, and because they were foreseen, Lord St. Aldwyn, under whom I served my first apprenticeship at the Treasury, made a serious attempt, under the pressure of a great war, to broaden the basis of taxa- tion. These taxes are sometimes spoken of as war taxes. They are in one sense war taxes, but they were not, in the contemplation of my noble friend, intended to finish with the war. There were certain taxes which he hoped to remit when the war was over. These were the additional duties on Customs and Excise which the present Chancellor of the Exchequer makes permanent; but the sugar, coal, and corn taxes he proposed as a permanent part of our revenue, because, as he impressed on the then House of Commons, the greatest difficulty we had to meet was not to finance the war during its progress, but the future needs of peace which he foresaw in the years which followed. It is therefore no new doctrine I am propounding in saying that we must broaden the basis of taxation, but in so doing we hope to serve other purposes as well. We hope to strengthen our financial system. A financial system which is ample for a Budget of forty or fifty millions is ludicrously inadequate for a Budget of £140,000,000. All of us have present in our minds the great Imperial Conference which has just been sitting in London. Few gatherings have aroused such hopes among the British race through all the King's dominions, or have so concentrated upon themselves the attention of all His Majesty's subjects. What has been the result of all their deliberations? They went smoothly enough in the early days when concessions were asked by one Colonial Minister or Colony of another, but when the time came for us to meet them with concession for concession, then, I am sorry to say, difficulties arose. [An HON. MEMBER: Were yon there?] I was not there, and I am obliged to rely on the inadequate published summaries of the proceedings. For some reason the précis writer has not been able to comprehend the arguments of the right hon. Gentleman, or to represent his figures correctly before the public. The figures have been wrongly described on one side or the other in the published summaries, with the result that the Chancellor of the Exchequer has been made to say a thing which was not instead of a thing which was. I am not going to dwell upon that, because we have been promised a full account of the Conference, and we must have a discussion on those Papers when they are presented. Therefore I propose to say very little on this subject indeed, but I cannot pass it by. I should be taunted by hon. Members opposite if I did pass it by. This is a matter to which I cannot be indifferent, and, even if there was no such argument on the basis of taxation as I have hitherto maintained, I should desire to alter our fiscal system in order to reciprocate the commercial offers of our fellow-citizens beyond the seas. The Prime Minister is very angry at the attitude of the Opposition towards the Conference. He complains that we try to make Party capital out of it I am not sure that there was any particular delicacy on the other side in using Colonial opinion when they thought it concurred with their own and would serve their purpose. The Chancellor of the Exchequer's memory requires refreshing. Perhaps he would remember his use of Colonial opinion as to Chinese slavery. But, after all, coming to the solid fact, what have we done? The Prime Minister at Manchester the other day said that the attitude of the Government had been perfectly sympathetic. He told his audience the old story of the man who was moved at a charity meeting by the speeches delivered, and who banged his purse on the Table, declaring "I sympathise £5; how much do you sympathise? "That," added the Prime Minister, "is after all the true test." Well, judged by the Prime Minister's true test, how much have the Government sympathized? The Government have refused to meet them on the matter of preference even on the existing duties, and almost brutally. The Chancellor of the Exchequer tried to soften his refusal by holding out hopes that in the matter of shipping subsidies he and his colleagues might do something, and the President of the Board of Trade, whose manners are softer, on a later day met them on this point, and gave a gentler but an equally firm refusal to assist them. Again, I ask, judging by the Prime Minister's test, how much do the Government sympathise? We do sympathise, and we are anxious to meet the offers made and not to repel the first united advances towards closer unity which have come from all the King's dominions oversea. We believe that if you create the common affairs and common business which such a policy would establish you would find that the common machinery to guide our common interests and protect them would not be slow to develop itself. No juggling with the income-tax will suffice to distribute wealth in this country. That can only be done by means of wages, and wages are obtained through employment. I lay to the charge of our fiscal system that instead of serving, as it was expected to do, the interests of employment and trade, it acts as a handicap on our industries and commerce. One reason is that it leaves us defenceless against the attacks made upon our commerce by foreign tariffs. We have nothing to bargain with except the wine duties. With the exception of these duties we have practically nothing with which we can negotiate. We are therefore defenceless as negotiators in all tariff concerns. I appeal to hon. Gentleman opposite as business men to give the question a dispassionate and non-Party consideration. What is the most important thing in business success to-day? Surely it is the scale on which you can produce, and the certainty that you can produce on a largo scale, as well as the certainty of being able to keep the workshops and the mills running full time. This condition of affairs enables our business men to sell cheap and to undersell competitors—[An HON. MEMBER: That is what we arc doing.]—encourages them to expand their trade, and enables them to introduce fresh capital into their business. Germany, with its 60,000,000 of population, has given to its own manufacturers a preferential market, and these manufacturers can reach 40,000,000 of consumers in this country on terms as easy and as light as our own manufacturers reach them. If we look to the manufacturers of America we see that they are encouraged whenever a spurt comes in business to extend their plant, because when a bad time comes and trade is restricted they have at least a preference in their own market, and the knowledge that they have access to ours. Our manufacturers are, on the other hand, hampered. In their home market they have no preference. They have no preference except in Colonial markets. On the ground of the handicap that our manufacturers will suffer from increasingly, I ask for a revision of our present system which, instead of confining our Customs duties to a few high taxes on a few articles of general consumption, should make a general reform in our tariff, and should raise our revenue by duties on manufactured goods, by wider duties on foodstuffs, lower and more moderate than those we have at present, and which will thus enable us not merely to meet the advances of our friends, but to chock the inroads of our opponents. That there are difficulties in such a course I do not deny; but hon. Members are here to overcome these difficulties. The wider our fiscal system, the more broadly based it is, the more likely is it to rectify the injustices and the anomalies which now exist, to enlarge the resources of the State without inflicting the hardships which increasing the present taxes would involve, while at the same time providing us with a capacity for expansion in the time of danger or emergency such as the Chancellor of the Exchequer has not got at present, but such as it is necessary the country should possess. I beg to move.

Amendment proposed— To leave out all the words after the word 'That,' and at the and of the Question to add the words 'in the opinion of this House, the financial needs of the country, as disclosed in the Budget statement of Mr. Chancellor of the Exchequer, require that the basis of taxation should be broadened, in order that the anomalies and hardships inseparable from the present high rate of particular taxes may be diminished, the revenue necessary for the public service and for social reform raised with fairness to all classes of the community, and our fiscal system adapted to the the present condition of national and imperial trade."—(Mr. Austen Chamberlain.)

Question proposed, "That the words proposed to be left out stand part of the Question."

THE PRESIDENT OF THE BOARD OF EDUCATION (Mr. MCKENNA,) Monmouthshire, N.

I confess that I have some little difficulty in replying to the speech of the right hon. Gentleman. In the first place, the terms of the Amendment are not very explicit, and I do not think that any Chancellor of the Exchequer would get much help from it. looked to the right hon. Gentleman's speech for something in the nature of an outline of the scheme which he would recommend by which a sufficient revenue could be raised to meet current expenditure. The right hon. Gentleman is an ex-Chancellor of the Exchequer; he is accustomed to framing Budgets, and I assumed that he had in his mind some proposals mote or less definite in their character which would enable us to understand how he proposed to carry out the ideals which he has before him; but all that the right hon. Gentleman has suggested is wholly insufficient to raise even the present revenue. The right hon. Gentleman proposes to get rid of a large part of the income-tax; he is going to reduce the existing taxes on food stuffs, and is going to replace the loss of revenue by taxation on manufactured goods, in respect of which a preference is to be given to the Colonies. Now, the imports of last year for home consumption of wholly or mainly manufactured goods amounted to £130,000,000, and a tax of 10 per cont., if all the goods still came in, would only produce £13,000,000. The present revenue from income-tax is £32,000,000, and the taxes on food stuns such as sugar and tea, cannot be loss than £12,000,000. I ask him then how this poor paltry hypothetical £13,000,000 could provide for the loss of such a revenue, as well as provide the means for great social reforms and for Colonial preference? The right hon. Gentleman proposes to "broaden the basis of taxation." That is a plausible phrase, which presents to the mind an object obviously desirable in itself. But what is "the basis of taxation?" In this country, and in even-other country the only basis of taxation is the taxpayer, and broadening the basis of taxation must therefore mean to bring into the net of the Chancellor of the Exchequer some class of persons who at present escape taxation. But in the United Kingdom we already impose an income-tax on every person with an income of £160, and we tax everyone who consumes beer, wine, spirits, tea, sugar, tobacco. Is there, therefore, anyone with the barest means of livelihood who is not already a taxpayer? "Broadening the basis of taxation" cannot mean the bringing in now classes of taxpayers. The right hon. Gentleman must intend to readjust the burden of taxation as between existing taxpayers. Let us see how the right hon. Gentleman proposes to do that. He proposes to impose new taxes upon a great many people in order to reduce the taxes which now fall on a small number of people. But the larger number are the comparatively poor, and the small number the right hon. Gentleman proposes to relieve are the comparatively rich. The right hon. Gentleman's "broadening the basis of taxation," therefore, can only mean the shifting of the existing burden from the shoulders of the rich on to the shoulders of the poor. On this side of the House we all desire to adjust the burden of taxation according to ability to pay. There may be some difference of opinion as to the proportionate degree of ability to pay of the comparatively poor and comparatively rich; but there is no difference of opinion as to whether the poor are not sufficiently taxed already. We are consequently opposed to any "broadening of the basis of taxation" which can only mean that the poor must pay more and the rich less. The right hon. Gentleman shakes his head; but the poor pay on their tea, their sugar, their beer, spirits, and tobacco. Not content with that, the right hon. Gentleman wishes them to pay also on their furniture, on their clothes, on their boots, on their food, on the wife's bonnet, and on the children's shoes, on their bread, and on their milk and butter, and on everything that they eat, use, or wear. Yet the right hon. Gentleman would not add to the taxation of the poor, but would relieve it, while increasing the revenue, and granting a preference to the Colonies! The right hon. Gentleman says that he knows how to do it, but he has not explained his method of doing it. He began by saying that his intention was not so much to criticise the proposals in the existing Budget, as to point out the need for a complete alteration in our fiscal system. In his speech, it is true, the right hon. Gentleman dealt with one or two matters in regard to the income-tax which are more appropriate to the Committee stage of the Finance Bill, but I will not trouble the House with a discussion of those now. He also criticised the proposal with regard to old age pensions, but that will be dealt with in next year's Budget. The right hon. Gentleman declared that our whole fiscal system must be changed in order to obtain new sources of revenue, and he illustrated his case by referring to the conditions in which we found ourselves in a time of war a few years ago, when the then Chancellor of the Exchequer bad to propose "new permanent taxes," on coal, corn, and sugar. The tax on corn was repealed by the late Government, and that on coal was repealed by my right hon. friend the Chancellor of the Exchequer. The tax on sugar still remains, but if our revenue proves more elastic no doubt the "permanent" tax on sugar will follow those on corn and coal. The right hon. Gentleman said that our revenue is inelastic. Yes, our revenue has not been as elastic as we would wish to see it. But down to the close of 1905 there was for some years an actual decrease in the weekly wages paid to the working classes. For the first time for four years the average weekly wage increased in 1906; and as that increase is continuing a corresponding elasticity in the revenue would be shown this year and next year from increased consumption. From 1896 to 1901 wages were continuously increasing. From 1901 to 1905 they were continuously decreasing, and only now have we begun a new period of increase. From 1896 to 1900 the revenue showed extraordinary elasticity, and the doubts which the right hon. Gentleman entertained as to the elasticity of the revenue in the future, and on account of which he would change our whole fiscal system are based on grounds not sufficiently examined. The right hon. Gentleman says that our existing means of revenue are not sufficiently continuous to meet our expenditure, and he compared the growth of expenditure with that of ten years ago. Our present expenditure is £140,000,000; but out of that no less than £29,500,000 goes to the fixed debt charge. That is £6,500,000 more than was paid under the late Government before the war. That cannot be regarded as a permanent charge, because as the debt is paid off so rapidly, the fixed debt charge will be gradually, almost automatically, reduced, and we shall have some means for decreasing expenditure and for the purpose of initiating social reforms. Again, out of this £140,000,000 a sum of £2,000,000 goes to pay the interest and annuities on the capital borrowings of the right hon. Gentleman's friends. Altogether, some £8,500,000 more than the late Government provided is devoted by the present Budget for the repayment of debt.

MR. AUSTEN CHAMBERLAIN

We always met the annuities year by year; if the right hon. Gentleman continues to borrow he will have to add to the annuities.

MR. McKENNA

The system of borrowing began in 1894–5 and the amount of annuities then came to only a few thousand pounds a year; but since then we have accumulated Debt to an enormous amount. Consequently while the late Government had to spend a few thousands a year on this service we have to spend millions a year and to go on paying off the debts incurred by right hon. Gentlemen opposite. Therefore, in that respect, the right hon. Gentleman's anticipations of bankruptcy unless we adopt his fiscal system are not quite justified. The right hon. Gentleman went on to speak of our relations with the Colonies. I heard with some astonishment the descriptive account the right hon. Gentleman gave of the Colonial Conference, and I think the Colonial Prime Ministers themselves will be somewhat surprised. The Colonial Prime Ministers did not come here as beggars. They did not come here to ask that the good feeling which they have for us shall be paid for. Their affection towards the mother country is a fooling which we reciprocate, and we no more ask them to pay for our good feeling towards them than they ask us to pay for their good feeling towards us. They came to us—some of them, at least, not all—and made a proposition which they regarded, from their point of view, as a business proposal; but there was no brutal refusal on our part. The reply made to the Colonial Prime Ministers was of a nature, I think, that even the most susceptible of thorn must have considered could not have been dictated by anything but good feeling towards them and a proper regard for the welfare of this country. The right hon. Gentleman has failed, if I may say so, to appreciate the fundamental difference between the colonial position and ours. The Colonies tax for two purposes—for the purpose of revenue and for the regulation of trade. We tax only for the purpose of revenue. When the Colonies offer us fiscal advantages by way of preference, it would be wholly inconsistent with our principles of taxation to accept them, and they offer them in such a way as neither to interfere with their revenue nor with the protection of their own manufactories. But if we, who did not tax for the regulation of trade, adopted their system of preference, we should have to introduce a new principle into our fiscal system, and we must depart from our present system of taxation. We represent the majority in this country and that majority believes that taxation for the regulation of trade will be bad for us. They believe that any advantages which individual manufacturers may obtain will be too dearly bought, and that our gigantic interests, built up as they are now upon a free-trade basis, will be far more injured than the interests of any other people in the world by any alteration of our existing fiscal system. The right hon. Gentleman seems to forget what is a fundamental fact in trade. We all know, by observation of foreign countries, that, under protection, they get great vested interests which have grown up under that fiscal system. It is quite true that we get great vested interests which have grown up under free trade; but those vested interests in this country are the most important and the most profitable in our industry, Take, for instance, the shipping trade. The shipping trade is dependent for its very existence in its present proportions upon the freedom of trade and the freedom from tariff. I go further, and say that not only our trade, but our very existence as an Empire depends on the strength of our mercantile power. If you attack free trade, if you ask us to alter our fiscal system in order that we may give a benefit in our markets to the Colonies, we shall injure great interests, like the shipping interest, which have grown up under free trade.

MR. AUSTEN CHAMBERLAIN

In what way? Surely our shipping trade was founded and established, primarily, under the old mercantile system.

MR. McKENNA

Under the old maritime laws of the nations of the world we had a shipping trade, it is true, but by no means a preponderating shipping trade. We have to-day a shipping trade which exceeds the shipping trade of all the rest of the world put together, and that shipping trade, I contend, has grown to its present size and importance under the influence of free trade. When some of the Colonial Premiers asked us to make a change in our fiscal system, the House will agree that we were bound to consider what would be the effect of that change upon our trade as a whole. They told us that they believed that adopting a system of Colonial preference would draw the bonds of the Empire more strongly together. Yes, provided it is not at too dear a price. What can be more calculated to draw the bonds of Empire together than that we should have free trade within the Empire—free trade within the Empire and protection against the outside world? We said that, but did the Colonies say that? Not at all. Let the right hon. Gentleman opposite propose to Mr. Deakin to have free trade with this country and see what his reply would be. He would say, "Oh, no. The great advantages of commercial union or commercial preference would be too dearly bought," and he would add, "We will consider that proposition when our population is as big as yours." We say that the Imperial advantages of Colonial preference may be too dearly bought when our population is forty millions and theirs is four millions. The argument upon which they reject free trade is exactly the same argument upon which we reject Colonial preference. The good feeling between the Colonies and ourselves is not to be disturbed so easily as the right hon. Gentleman thinks. After all, the sentiment which has grown up has grown up under the present fiscal system. It is a very remarkable thing, but it is the fact, that the whole change of Colonial sentiment towards the mother country which took place during the latter half of last century exactly coincided with the time when we had free markets in this country, when we had enormously increased, as I say in consequence of those free markets, our shipping, and therefore our intercourse with the Colonies, and had been content to leave the Colonies absolutely alone to govern themselves, whether politically or fiscally, as they pleased. I am sure that the good sentiment which has grown up under these conditions is much more likely to survive if we leave them unchanged than if we begin to tie round our Colonies hampering and fettering bonds, and if we introduce the haggling of the market-place into the relations of good feeling which exist between us and the Colonies. I hope that the visit of the Colonial Premiers will not be treated in the Colonies as it will be treated if the words of the right hon. Gentleman are listened to. I cannot help regretting that, whether it is on the grounds of prejudice, or from motives of making political capital, hon. Gentlemen opposite should in public and in this House endeavour to instil into the minds of the Colonies the notion that the majority of the people of this country—and, after all, the majority support the Liberal Government—are not friendly to them. That is an absolutely mistaken notion, and as it has been the consistent policy of the Liberal Party during the last century to favour the growth and development and independence within the Empire of the Colonies, so it will be the policy of the Liberal Party in the present century.

MR. EVELYN CECIL (Aston Manor)

said he could not pretend that he was in the least convinced by the speech of the President of the Board of Education. The right hon. Gentleman had endeavoured to prove that this Budget was a perfect Budget. He, on the contrary, remained of the opinion that it was far from meeting the necessities of the case, and that the right hon. Gentleman's speech, and that of the Chancellor of Exchequer earlier, rather exposed the deadlock and the absolute nakedness of the land to which the present financial position of the Government had brought the country. This Budget did not broaden the basis of taxation. On the contrary, it showed, to his mind, an inelastic helplessness. When the right hon. Gentleman who had just sat down spoke of the possibility of elasticity of revenue in the future he did not know on what ground he based his opinion. They were always hearing of the splendid Board of Trade Returns, but yet there was now to be it appeared a continuous income-tax of 1s. in the pound; and no prospect of altering that state of things was apparent, though any future scheme of old age pensions could not but enormously increase the demands upon the Exchequer. If a sudden strain was put on, the whole system would snap, and we should find ourselves in great difficulty. Colonial preference, on the other hand, would encourage Colonial food supply in time of war or emergency, but the Government scheme of taxation really handicapped our very existence. The right hon. Gentleman had twitted them with the fact that they were not pretending to put forward a broadening of the basis of taxation by the Amendment, but what the Amendment asked was, as a general proposition, that the basis of taxation should be broadened in order that revenue necessary for the public service and for social reform might be raised with fairness to all classes of the community. And why could it not be broadened both with a view of extending taxation to more articles and by way of bringing foreigners within its area? He did not see why it could not be so broadened as to compel foreigners to contribute to a larger extent to the taxation of this country. The right hon. Gentleman did not mention that. He did not know why. The right hon. Gentleman had talked about the undue burden of taxation put upon the poor, but he might remind him that while the Chancellor of the Exchequer was laying more taxes on the few he had not lightened the burden on the many, that while he was relieving the middle classes he was putting a tax on the dividends, as unearned income, of the savings which had been effected for the widow and her children. Did hon. Gentlemen really consider that the proposals made for retaining trades in this country by alteration of the tariff were or were not a breach of free trade? He heard the other day a gentleman who was fully qualified to speak for free importers say that whether duties were or were not protection depended on whether or not the extra amount paid by the purchaser went into the national treasure. Was a whole trade a national treasure? If duties were put on to retain a trade in this country were they protection or not? He said they were not. Hon. Gentlemen opposite, he believed, said they were. Let them take a case which he had recently come across in a factory which he knew. A certain metal fitting was produced there, of which the cost of manufacture was 2¾d. and the market price 3¼d. or 3½d. It was always cheaper to produce on a big scale than on a small one; and Germany could produce on a big scale as she had access to our markets as well as her own since we had no tariff to prevent her; while we could only produce on a smaller and dearer scale because though we had our own market to sell in, Germany kept us carefully out of hers by high tariff walls. Accordingly, she had been able to flood this country with this particular fitting at 2¼d. a piece, a price which just about represented the mere cost of the metal used. The British manufacturer in consequence had been obliged to cease manufacturing that fitting, and had discharged a number of men, and now bought the fitting from Germany to sell at a profit. The result was that the work was done by German workmen, the fitting was sold by the manufacturer at a profit, and the only people seriously injured were the British workmen the manufacturer was compelled to discharge. If we put on a duty to prevent a trade being throttled in this way in this country, was it protection or not? If hon. Members thought it was, he could only say he thought their views were entirely against the original doctrine of free trade. He thought it used to be admitted that it was perfectly desirable under the old free trade doctrine to put a duty on an article rather than to allow the industry to be killed by foreign competition. No wonder capitalists said that had they to start again in business they would not build a factory, but take an office, and buy articles from abroad to sell at a profit to themselves. The right hon. Gentleman had spoken of Imperial trade and the question of preferential trade dealt with at the Colonial Conference. He would like to point out one or two difficulties that would arise if the attitude of the Government in slamming the door against Colonial preference was consistently maintained. It was perfectly well known that Canada proposed to introduce a general tariff to be employed against foreign nations who would give her no advantage, an intermediate tariff which was open to nations who would bargain with her, and a preferential tariff to British goods. But in so far as bargains were made between Canada and foreign countries, by so much would British preference be prejudiced. And local districts would be affected. For instance, Lancashire and Yorkshire which were accounted as main centres of free trade, had an enormous trade in cottons. If Canada were to bargain, for example, with Italy, which had lately built a number of mills for the manufacture of cheap cottons, and give her the benefit of the intermediate tariff for these cottons, Lancashire and Yorkshire would suffer to the extent that the British preference was reduced. And the greater the time that elapsed before we came to an arrangement on this basis of business with our Colonies the less likely were we to get good terms for our own manufactures. The right hon. Gentleman talked of Colonial preferences as fettering bonds, and at the Colonial Conference the Government stated that preference would merely be the means of fomenting quarrels between the Colonies and the mother country. Had the Government considered whether if Canada asked for or obtained a bargain with a foreign country which was refused by this country, that would not raise feeling both here and in Canada, which might result in strained or even dangerous consequences? He did not think it would be wise to look on while such an arrangement was being come to between Canada and foreign countries under the delusion that no harm would happen to us. It was, he believed, supposed in some fiscal schools that no harm could arise because a negotiation of that kind by Canada was always subject to revision by the Crown. But did hon. Members suppose that such matter as that could be held back for revision by the Crown without great friction and disturbance? In theory revision might be quite possible, but hon. Gentlemen who supposed that kind of thing was; likely to occur, and still more, occur effectually, would seem to have forgotten the whole reasons of the United States "War of Independence. Largo States which knew what they wanted and knew their obligations and responsibilities were not likely to allow their bargains to be put on one side and gratuitously shelved by the mother country. Why should the mother country be left out in the cold if the Colonies were to establish preference among themselves? The Colonies were satisfied that it was of advantage to themselves and to the mother country. Why, then, should we throw cold water on it and remain outside the scheme? He did not think that showed the affection for the Colonies which all in this country felt and which all desired to show. If preference was against all the theory of free trade, why did the Government allow Bechuanaland and Basutoland under the dominion of the Colonial Office to give prefer- ential treatment to British goods? The Chancellor of the Exchequer had said recently that no advocate of preference had answered the question of how they proposed to give effective preference to South Africa when South Africa only produced wool and hides, which, being raw materials, they did not propose to touch. Had he interrupted the right hon. Gentleman at the time, which he did not because he thought that a perfunctory answer would have been misleading, he would have mentioned South African wines. [MINISTERIAL laughter.] Hon. Members laughed at South African wines, but it was only on wines that the South African Colonies asked for a preference, and a generation or two back South African wines were very much in fashion in this country. The whole of that trade was got by the preference then given. But the subject was a great deal more far-reaching, and he thought that the question which the Chancellor of the Exchequer put seemed to show clearly that he did not quite appreciate the very broad policy which they considered Colonial preference really was. They were not seeking for mathematical accuracy in the preferences between the Colonies. That was not what the Colonies themselves were seeking. They did not want a uniform scheme between one Colony and another, or between the mother country and the Colonies. They were content if gains were sufficiently in the ascendant. The question was one really not of statics but of dynamics. The object of preference was really to develop normal industries. In the case of South Africa he would suggest that the tobacco trade was a normal industry which might be developed. The object of Colonial preference was to develop, with great emphasis on the word, the normal industries of various Colonies, and to stimulate those activities most conducive to our position there. Each constituent State of the Empire, he submitted, would work out its own tariff in its own interest, and then offer it to other Colonies and other States. They were free to accept it or not. What appeared a very small preference at the present time might appear a very large one in the future. If they appealed, as he thought the Chancellor of the Exchequer did, to the Board of Trade figures to show that the preferences which would be granted were very small, his answer was that the Board of Trade figures, as they existed, however accurate, were not a true guide to the advantages of preference, because they could not measure by them the potential development of new industries which preference would encourage. That was the whole intention of their policy of Colonial preference; it was a creed, it opened out as part of a broad political philosophy. They advocated State action for combining the Empire, as Mr. Deakin had said, for Imperial co-operation in peace as well as in war. In the Conference the Colonial Premiers might have made little recorded advance on the resolutions of 1902; but in the country they had, he ventured to say, broken the back of unreasoning Cobdenism; and if hon. Gentlemen opposite could only realise the untold possibilities of developing trade that would come from Colonial preference, the great increase of friendship, and communication, and mutual understanding that would arise between ourselves and our Colonies, the importance that such a consummation would have in regard to Imperial unity and co-operation in peace as well as in war, he did not believe that they would any longer oppose this policy, but that they would support it, as the Opposition did, with the determined intention and confident belief that before long it would be realised.

*MR. BARNES (Glasgow, Blackfriars)

said those for whom he spoke were entirely with the Government in the reply that had been made to the speech of the right hon. Gentleman the Member for East Worcestershire. They wanted closer relationship with the Colonies as much as anyone, but they believed with the Government that anything which was done in the way of tightening the bands of the Empire, or of increasing the revenues of this country, must be done on the basis of free trade. They wanted to be friendly with the Colonies, because they had faith in their free political institutions; and they had so much pride in the fortunes of their countrymen abroad that they naturally wanted to see them prosper. Moreover, as workmen, and representatives of workmen, they wanted the fullest possible outlet for the labour and enterprise of their own countrymen, and therefore they were all interested in seeing the Colonies prosper and in their having the closest relationship with us. But there was the old Scottish adage, which might be commended to the consideration of their Colonial brethren, and it was this, "If you want to make friends you must be friendly." It seemed to him a curious way of making friends that our Colonies should impose tariffs on our goods. There was nothing to prevent the fullest possible freedom of exchange of goods between ourselves and the Colonies, as far as he knew, on our side. He agreed with the President of the Board of Education that the best way to develope our commercial relations with the Colonies was that goods should tie taken freely as between them and the mother-country. It was quite true that we could set up preference for the Colonies if, in the first place, we imposed a tariff on food stuffs; but for his part he was not disposed to increase the price of food and to increase the difficulty of living among our people-here for the purpose of increasing our friendship with the Colonies. The interests of labour, social reform, the readjustment of the burdens of taxation, which the right hon. Gentleman the Member for East Worcestershire deplored as pressing so heavily on some members of the community—all these things were to be achieved, if at all, on the basis of free trade rather than upon the proposals put forward by the; mover of the Amendment. He must repeat the oft-told tale as to old age pensions, because they deplored that something had not been attempted as well as promised in regard to that matter. This theme had fired the imagination of the people, and had enabled politicians, especially Labour politicians, to got the ear of the electors and to be returned to Parliament. He had a Return ordered by the House of Commons at the instance of Mr. Burt, in 1903, entitled "Boards of Guardians. Persons in receipt of relief.'' It included a great many figures, and went to show that poverty in old age was a permanent feature of our social life— It appears that the proportion of paupers over sixty-five years of age has not varied much, though it has risen since the 1st of January, 1892, and that the proportion of paupers over sixty-five years of age to the estimated number of persons in England and Wales over that age on the respective dates has remained almost the same. The total number of paupers over sixty-five years of age has on each date formed more than half the total number of paupers over sixteen years of age. The table shows that a larger proportion of the total number of aged paupers have boon relieved by admission to workhouses and infirmaries on each succeeding date. He thought they were all agreed as to the problem and as to the remedy, which was a system of pension upon a non-contributory basis. The junior Member for the City of London had said there were 5,000 pensioners on the funds of the Amalgamated Society of Engineers' trade union organisation, and he put it to the House that what had been accomplished in that way could also be done by everybody else, and in that way the pension question could be solved. He differed from the hon. Baronet in that respect. It was true that the Amalgamated Society of Engineers, of which he was proud to be chief officer, had been able to provide for 5,000 pensions in that way, and the reason was that they had been able through trade unions to wrest from capital a little over and above the average requirements of the workpeople. But this could not apply to such people as agricultural labourers and the poor women workers in mills and factories, and other people engaged in the sweated industries. To talk of such people saving up for their old age through any system of mutual help or individual thrift was discreditable to the heart as well as to the head of those who made such a statement. Upon this question, where he differed with the Government was in regard to the urgency of the problem. In his opinion the provision of old age pensions was infinitely more important than giving relief to men with incomes up to £2,000 a year. They had had in the past a great many promises with regard to old age pensions. Such pensions formed the chief item in the programme of the right hon. Gentleman the Member for West Birmingham in 1895. He did net wish to go back so far, and he would content himself with reminding hon. Members of what took place only three months ago when it fell to his lot to propose an Amendment to the King's Speech, regretting that no provision had been made for old age pensions this year. On that occasion he made a forecast as to the amount of funds which would be at the disposal of the Chancellor of the Exchequer, and he urged the Government not to go in for retrenchment without reform, and not to relieve the income-tax payer in preference to a fair consideration of the old and needy. He reminded the Government on that occasion of the thousands of speeches made by hon. Gentlemen opposite before they were elected, and he told them that if they did not consider this subject they would belie all those speeches. The Chancellor of the Exchequer at once hastened to assure them, on behalf of the Government, of his entire sympathy with the objects he had described, and the Labour Members in their simplicity took the right lion. Gentleman to mean that he meant business. Consequently they withdrew the Amendment and refrained from voting in the subsequent division which was claimed by hon. Gentlemen above the Gangway. Now they found that the Budget was by no means different in its essentials from the Budgets which had been introduced for the last twenty years. Stripped of its embellishments what did the Budget moan? It simply gave to those who had, and took away the hope which was the all of many an old man and woman who had been looking forward to these pensions. He was opposed to relieving the income-tax payer until old ago pensions had been provided. If any relief had to be given it most certainly should have been given to those who were suffering from the sugar tax, and to the poor people who consumed sugar. the free breakfast table had again been relegated to the dim and distant future, and the poor old folk would have to go to their graves with the hope "deferred that maketh the heart sick," in order that the man with £2,000 a year might be relieved of a contribution which would in each case have provided two old age pensions upon the scale they were asking for them. He was aware it had been stated that a definite promise had been made that something would be done next year. Personally he would rather have the sparrow in the hand than the bird of Paradise in the land of promise. He would much rather have had the £2,000,000 which had been thrown away in relieving the income-tax payer, and as much more as they could get, this year, instead of waiting until the dim and distant future. This Budget was a mere pandering to the City dork and the small gentry who thought themselves superior persons, and took their politics from the Daily Mail. He believed this scheme would fail, the Daily Mail would start another hare, and nothing would be gained by the Government, who might just as well devoted that £2,000,000 to a good democratic purpose. The Chancellor of the Exchequer was relying upon further economies next year through a better system of income-tax collection and other things, and in that way he hoped to have funds to be able to start with old age pensions. But what would happen if those things did not come off? He would remind the House that already £650,000 had been taken for another purpose. He was afraid that the poor old men and women who had been looking forward hopefully would next year again be disappointed and have to go short. The Chancellor of the Exchequer made his announcement by saying that that would be the policy of the Government "if they were allowed to have their way," and, he said, that was ft, very big "if." He would like to know who was going to stop them having their way. They had a majority which consisted for the most part of hon. Gentlemen who were willing and anxious to give them all the support necessary to carry out this long-promised reform, and if the Government did not have their own way in the matter there would be nobody to blame but themselves. The promise of a start next year really carried but little consolation to his mind. There had been in the past promises of a far more definite character which to this day remained unfulfilled. On the 19th February last year they were promised in the most definite manner possible in the King's Speech an Amendment to the Unemployed Workmen's Act. Five months after that the same promise was repeated through the mouth of the President of the Local Government Board, and they were now just as far off realising that promise as over they were. Consequently, these promises carried with them very little consolation. A good deal of revenue had been sacrificed to improve the national credit, but he thought the same results might have been achieved by the inauguration of some system of old age pensions, because it was well known that if they increased the purchasing power of the working classes they at the same time increased their economic effectiveness, and greased the wheels of industry and benefited all round. Those for whom he spoke were profoundly discontented and dissatisfied because nothing had yet been done to carry out those promises, in regard to the question of old age pensions, which had been made by politicians on both sides of the House, as the result of which high hopes had been entertained. He hoped that the pressure would be kept up this year, and that the Government would at the earliest possible moment make a really good start in earnest to carry this reform into effect. How to raise the money was a matter which rested primarily with the Chancellor of the Exchequer. He was aware that it was a very big task, but he knew that it was not going to be solved by tinkering with such quack remedies as those which had been proposed from hon. Members sitting above the gangway. He honestly believed that the Chancellor of the Exchequer had the means at his disposal to accomplish this reform quite consistently with the great principles of free trade. He wished to dissociate himself from the suggestion made by the hon. Member for Wirral on Friday last in reference to the income-tax, when he said that he believed the money could be raised by an income-tax which should start right at the bottom and go on in an increasing ratio right up to the top. He was not in favour of imposing an income-tax upon a man with £1 a week, because the State had no right to tax any man until the means at his disposal were sufficient to allow him to live in health and comfort. A man with £1 a week could not live that life. Therefore he was not in favour of that way of collecting the tax. Nor was he in favour of imposing additional burdens on the local authority for this purpose. It seemed to him that there were many poor localities where the people were in need of old age pensions, which had sufficient burdens to bear at the present moment without increasing them to the extent of 10 per cent. It seemed to him that the most hopeful method of getting the money was by taxing the wealth of the country—taxing those people who received large sums of money which he believed were social in their origin and therefore ought to be taxed for social purposes. There were 275,000 people in this country who, according to the hon. Member for North Paddington, took one-third of the national income. A tax of 5 per cent, might be taken from those incomes, or they might graduate the tax in such a way as to take most from those who were at the top. There were 750,000 people with over £700 a year, and a tax of 5 per cent, in their case would realise £29,000,000, a sum sufficient to provide for old age pensions, for a better system of education, and for carrying out a great many other reforms which were ardently desired by himself and his friends. They were told that 16,000 people in the country had incomes of over £5,000 a year. That amounted to £200,000,000 every year, and here again a tax of o per cent, could raise something like £20,000,000 a year, a sum more than sufficient, taking into consideration the economies that might be effected in Poor Law administration, to provide the old age pensions they were pleading for. These were one or two of the directions in which money could be obtained, and in which new sources of revenue of a more sensible and scientific character could be tapped, than those urged from the Benches above the gangway. He and his friends hoped that the Chancellor of the Exchequer would open his heart and yet induce the Government to do something at an earlier date than he mentioned in introducing the Budget in order to give effect to the many promises made on this question and to inaugurate a system of old age pensions which would relieve those people who had been looking forward so hopefully to the Budget and also take away from this rich and powerful country the stigma of leaving its aged veterans to taper off their lives in the shadow of the workhouse.

MR. BOTTOMLEY (Hackney, S.)

said he was not astonished that the late Chancellor of the Exchequer should have moved this Amendment. He could not resist the opinion that the Chancellor of the Exchequer had almost invited it. For, after nearly two years of office and in times of unprecedented prosperity, he came before the House and said, "Here am I, a great free trade Chancellor, representing a Government pledged to the dual policy of maintaining the national credit and of promoting social reform, obliged to admit at the outset that the penny I took off tea last year has done no-good to anyone, and that it is impossible to-day to make any further concessions off any of the food taxes—tea, sugar, coffee, cocoa, and other articles of food must still bear their heavy burdens. All I can do it to make some slight modification of the income-tax in favour of people with incomes under £2,000 a year; whilst as regards old age pensions, to-which I am pledged up to the hilt, the utmost I can do is," and here he would draw the special attention of the Labour Party to the Chancellor's words when introducing his Budget— to begin to provide the nucleus of a fund— and to lay firm the foundations of this reform, language about as vague as any Minister could possibly use, and as subtle as that which the Chancellor adopted when he proclaimed himself an enemy, in times of peace, of a uniform income-tax at the rate of 1s. in the £. That little word "uniform" possessed virtue which few people suspected at the time. Looking at the Amendment, as it stood upon the Paper, he was not sure that he ought not to vote for it. It simply suggested that the basis of taxation should be broadened in order that certain burdens at present pressing upon the community might be more equitably adjusted and lightened. he remembered Lord Brampton, when Mr. Justice Hawkins, once telling him that he was frequently convinced of the innocence of a prisoner until he heard his defence And so, when they were asked to read into those words the particular meaning ascribed to them by the late Chancellor of the Exchequer, it was with reluctance that he turned away from the Amendment, and asked himself whether, within the limits of our present fiscal system, it was possible to accomplish the objects to which the Chancellor and his Government were pledged. At any rate, he proposed to offer certain suggestions to the Chancellor of the Exchequer, in the hope that when he made his next Budget speech, he would have found some better solution of the difficulty than the hazardous proposals of the Party opposite. He would not, however, be content if, in a year's time, the right hon. Gentleman was still unable to do more than 'begin to provide the nucleus of a fund.' That was far too remote an achievement. The right hon. Gentleman might just as well speak about beginning to produce a protoplasm and then claim that he had brought into being a fully developed human creature in all the glory of robust manhood. What had the Chancellor of the Exchequer done in regard to this important reform of old age pensions? He had taken £1,500,000 off his estimated surplus, and ear-marked it, so he told them, as the nucleus of the fund. But where was it? As a matter of fact he had placed it to the credit of the New Sinking Fund, and he asked how was it to be got back without special legislation? Suppose in the meantime it had been spent? What about the £600,000 it was proposed to hand over to Ireland in connection with the Devolution Bill? And who knew what other special demands, unforseen by the Chancellor to-day, might arise during the financial year? Then there was to be £750,000 uncollected balance from the income-tax making with the £1,500,000, if they got it, a total sum of £2,250,000 as the 'firm foundation of this reform.' They had been told again and again on behalf of the Government that a system of old age pensions of 5s. per week to every person of sixty-five years and upwards would require a sum of at least £28,000,000. He did not agree with the figure, and he would endeavour in a moment to show that it was grossly exaggerated, but assuming it for the moment to be correct, it followed that all the Chancellor of the Exchequer could say was that under the present system of taxation the very best he could do towards an old-age pension system was that if he spent the whole capital and got the same sum every year the amount he gave, namely £2,250,000, would just give 4¾d. per week for every person over sixty-five years of age.

THE CHANCELLOK OF THE EXCHEQUER (Mr. ASQUITH,) Fifeshire, E.

I have not said so.

MR. BOTTOMLEY

said the right hon. Gentleman very properly corrected him and said that he had not even promised that. He was only drawing the inference that with £2,250,000 in hand, and that being the only sum which the Chancellor of the Exchequer had earmarked for the purpose, it was only equivalent to 4¾d. a week. If they treated it as a capital sum, it came only to a farthing per week for every person over sixty-five years of age. The point he wished to put before the House was that they had been very much misled in regard to the language used on this problem. It had been said again and again that £28,000,000 or £29,000,000 was necessary. According to the President of the Local Government Board he at present spent £10,000,000 a year on the maintenance of paupers and criminal lunatics. These people, who were at present maintained at the expense of the State, would have to be maintained whether there were old-age pensions or not, and therefore they were entitled to deduct £10,000,000 from the £28,000,000. [Cries of "No, no."]

*MR. JOHN BURNS

said that the cost of maintaining paupers, and pauper lunatics in the United Kingdom was £16,500,000. The £10,000,000 to which the hon. Member referred were applied to a different condition of things—to granting pensions to 200,000 members of the Army, Navy and Civil Services.

MR. BOTTOMLEY

said that even so, a sum of at least £8,000,000 might be reduced from the £28,000,000 or £29,000,000 which were required for an old age pension scheme at the age of sixty-five years. Then it had been assumed that everyone in the country at the age of sixty-five would claim the pension; but his belief was that an enormous number of people would not do so. He did not approve of the proposal that people should have to attend at their town hall and wait outside the door like a theatre queue for their pensions, but he did suggest that under any scheme they should at least have to make some application for the pension, and it was certain that a very large percentage would not do so. Taking all these considerations together, he had come to the conclusion that £12,000,000 is the outside sum which would be required for a scheme of 5s. per week at the age of sixty-five. He suggested that there were one or two sources open to the Chancellor of the Exchequer without adopting those suggested by the right hon. Gentleman who moved the Amendment. He had always been of opinion that a tax of a penny in the pound should be imposed on all employers on the wages which they paid. That would be a tax easily collectable, and would produce a sum of nearly £5,000,000 a year. It was ridiculous co suggest that large employers of labour, say with 5,000 men or more in their workshops, would be crippled by such a tax. The income of this country divided itself automatically into sections. It amounted to £2,000,000,000—£1,000,000,000 was derived from profits in trade in the United Kingdom, and £1,000,000,000 from investments abroad; and 1d. in the £ on these latter would bring in £5,000,000 a year; and it would not press hardly on any section of the community. There never had been a more futile reason urged against a complete system of graduation or differentiation of the income-tax than that advanced—that they should not overwork a Government Department! The Chancellor of the Exchequer had said that his object was to maintain the national credit and to provide means for carrying out social reforms. But the Chancellor of the Exchequer said that the chief difficulty was that they could not get people to declare truly what their income was. He could not help thinking that that was a sorry confession to make after fifty years of simple Bible teaching; and that they could not trust Bishops. Judges or even Cabinet Ministers to set out in a return the truth as to the amount of their income. He suggested that every member of the community should be bound to disclose his income. At present we had nominally, although by no means actually, an income-tax of Is. in the £, or o per cent. If this tax were equitably adjusted so as to produce its full yield, taking the national income at £2,000,000,000 per year, the present income-tax should produce £100,000,000 instead of £30,000,000. His suggestion was that 5 per cent, should be reduced to 2½, or 6d. in the £, and that it should be so graduated as ultimately to yield the amount, which would mean a net revenue of £50,000,000 against the present £30,000,000, or again of £20,000,000 per year. There alone they would have a surplus much more than sufficient to provide the old age pension fund. He suggested that the Chancellor of the Exchequer should sometimes take into his confidence and counsel business men who could indicate to him how large sums which at present eluded the vigilance of his officials could be gathered in. It was indisputable among business circles in the City of London that from £2,000,000 to £3,000,000 per annum were lost to the revenue from investments abroad. He heard a gentleman in the City the other day declare that every farthing of his company's fund was invested abroad, although they looked to the English Government to protect their interests. There were, he thought, methods by which, without great ingenuity, the profits on those investments abroad could be taxed. He did not know whether it would violate copy-book text books, but his opinion was that the incomes derived from foreign investments should be taxed higher than those derived from home investments. Such a tax would bring in at least £2,000,000 a year under a proper revision of the income-tax. The Chancellor of the Exchequer had hinted at a tax on motor-cars; that the running of motorcars was not only a luxury but a luxury with a tendency to degenerate into a nuisance. He agreed with the right hon. Gentleman, and he thought that it would have been quite possible without waiting to readjust the Local Taxation Account to tax motor-cars. Again, an enormous revenue might be gathered from a tax on advertisements, as in Franco. That would be no tax on knowledge; and would not be grudged by advertisers, largo or small. Another source of income would be a tax on theatre tickets, as in France. It could be easily collected. Then, an enormous income was derived in France from racing. Some hon. Gentlemen were shocked at such a proposal, although they were quite complaisant about the still greater revenue derived in this country from the drink traffic. They held up their hands in holy horror at the idea of the State deriving a revenue from betting and horse-racing as a State recognition of a great vice. That reminded him of the Roman Emperor who was rebuked for having derived a tax from some tainted source and who took a handful of the money and smelt it, and said "non old—." If, having established the principle of reaping £30,000,000 a year from the drink traffic, was there not stupidity in refusing to reap a revenue from betting and racing? He had put a question to the Home Secretary that day, in which he had asked whether the attendances at racecourses since the Street Betting Bill had been passed had not enormously increased, and the right hon. Gentleman admitted that it was so. As a matter of fact there was no standing out against the betting and gambling instincts of mankind, although the evils of gambling were fearfully exaggerated. Millions of money were, however, turned over every year in connection with betting in one form or another, and if the Government would only take its courage in both hands, and say, as they said with regard to the drink traffic, "We will tax the gambling habits of the people, and, by so doing, regulate them as we cannot do at present," they might derive from such a system a revenue of between two and three millions a year. He knew that the idea, like all great ideas, would take two or three years to develop; but after the next general election they might have a more level-headed man at the head of affairs, who would see that he could make two or three millions a year out of horse-racing, and who would be willing to garner it in to the credit of the State, it was a strange and amazing thing that this, the richest country in the world, with the largest credit in the world, was unable to provide its aged people with the decencies of humanity and the ordinary comforts of life. Whatever the hon. Member for Preston or the hon. Member for the City of London might say, he did not think that was a proper state of things. As to the hon. Member for the City of London, he had no constituents who were interested in this matter, except a few asthmatical housekeepers; so that he could afford to sneer at the workers of the country. He was unable to understand the position which the Chancellor of the Exchequer had taken up. They had waited patiently for nearly two years, and personally he was prepared to wait another year, to give him the fullest opportunity of considering whether, and without the violent disruption of our fiscal system which the late Chancellor of the Exchequer proposed, it was possible to carry out the Government's policy of national credit and social reform. If when the time came he had made no further progress, he confessed he would listen with a more sympathetic ear than he did to-day to the voice of the charmer on the Front Opposition Bench. He did not appreciate the national credit which said that the greatest and richest country on earth was unable to provide the funds for admittedly urgent social needs. We had long since acknowledged the principle that it was the duty of the State to protect its young, and despite all doctrinaire objections, we now recognised a similar obligation towards the old. A revolution in our fiscal policy was an enormous risk to take, but he would almost rather face it than be forced to admit such utter helplessness and despair as that which characterised this year's Budget. Whilst he would vote for the Second Reading of this Bill, he would do so with the fullest reservation of his freedom next year to reconsider the position if a brilliant and able Free Trade Chancellor, such as they had today, again came forward and told them, with all the responsibility of his knowledge and his position, that wealthy England was unable, without the indignities of the Poor Law and the gloom of workhouse, to provide its aged and helpless poor with the decencies of civilisation and the primary comforts of humanity.

*MR. LYTTELTON (St. George's, Hanover Square)

I do not wish to follow the hon. Gentleman who has just spoken in the numerous and ingenious suggestions he has made, but I think we may fairly claim that after his remarks he should vote for the Amendment and against the Government of which he is supposed to be one of the supporters. I do not think anyone can doubt that, during the last three weeks, the principles that lie at the base of this Amendment have received very great and remarkable stimulus. We shall all agree that the revenue of the country should be equitably raised, and that it should interfere as little as possible with the processes of production. The Members on this side of the House also maintain that in raising that revenue the interests of the Empire as a whole, as well as those of the United Kingdom, should be considered. That principle has received during the last few months remarkable corroboration at the hands of the Government. The Minister who is responsible in this House for Colonial affairs has welcomed with the utmost cordiality the forging between the Colonies of those very bonds which have, in another connection, been described as "squalid." The President of the Board of Trade is reported to have said at the Colonial Conference that the Empire would be a great gainer if much that was now-bought from foreign countries could be produced and purchased within the Empire. The right hon. Gentleman acknowledged the advantage conferred on the British manufacturer by the existing Colonial preference, and expressed gratitude for the spirit of comradeship and affection which inspired that policy. These admissions show a great advance in opinion on the Ministerial side of the House. The basis of taxation needs widening, not in the sense referred to by the Minister for Education, but in the sense of bringing a greater number of commodities under taxation. I wish to appeal to orthodox free traders on this point. Is it or is it not contrary to the old free-trade doctrine to bring an additional number of commodities under taxation1? Fifty or sixty years ago Mr. Gladstone, when taking off a great number of duties, spoke of the enormous burden resting on the taxpayer, and expressed a doubt, in view of the magnitude of the national expenditure, whether the proposals he was making could long be maintained. Hon. Gentlemen opposite will recognise the authority in this matter of Sir George Cornewall Lewis, who said that if he were to define a good system of taxation it would be a system bearing lightly on a great number of points and heavily on none.

MR. ASQUITH

What was the date?

*MR. LYTTELTON

That was in 1857. To keep the taxes on existing commodities in their present state and impose; more would, I agree, be to tax the poor more heavily; but the case would be different if we lessen those taxes some-what, brought a greater number of commodities into the area of taxation, and diffused the burden. The advantage of this would be great, but we should, as an additional advantage, have the opportunity of introducing the principle of Colonial preference. I cannot help thinking that the attitude taken up by the Government at the conference and in the House of Commons to-night is really based on the dogma which has existed for some sixty years in England, which lays down that if ever a tax on a commodity coming into this country though imposed for revenue only should benefit a producer of the commodity in this country, then you must have a countervailing excise, or the tax is unsound. You must tax for revenue only. Is that principle based on any consideration of human nature? If it was claimed that it was, I should deny it entirely. Suppose I have to pay a tax on an article, should I pay it the less because one of my neighbours was going to be benefited by the fact that I paid it? Surely not. Take the tax on tobacco, a commodity on which we pay the appalling tax of 500 per cent. Should I pay it with more reluctance because I knew that some of my hon. friends from Ireland were going to get some benefit out of it for the Irish tobacco growing industry? I do not believe in the truth of the consideration of human nature in the least. It seems to me to be on a par with an argument greatly used by the Chancellor of the Exchequer in introducing his Budget, namely, that every taxpayer expects the exact mathematical burden of a tax to rest on his shoulders equally with the rest of the community. The Chancellor of the Exchequer, in objecting to Colonial preference, said it is impossible to tax all members of the Empire with exact mathematical accuracy.

MR. ASQUITH

I have never advocated exact mathematical accuracy. I said you cannot do it—you cannot come to anything like even remote approximation to accuracy.

*MR. LYTTELTON

Of course, I accept the correction; but I say that my right hon. friend's corrected statement is equally unsound. The Colonists are practical men. They know the conditions of their own Colonies, and of this country. They are not so utterly unreasonable as to suppose that all those conditions can be equated, and they would be perfectly ready to accept an advantage, even though the advantage be less to some than to others. I say, therefore, that this dogma, which has hung round the neck of the fiscal system of this country for fifty years, is not based on human nature; it is based not on real human nature, but on a fiction which the Treasury tells in is human nature. I put it again to the House that, if anyone pays a tax, the circumstance that some of the payer's neighbours get a little advantage over his foreign competitors out of the payment, so far from causing anxiety, will give him nothing but pleasure. If that is so, surely also the fact that the levying of a tax enables the Government which levies it to differentiate that tax in favour of the Colonies, as distinct from those who are not members of the Empire, ought to be a circumstance in its favour. So much the more now, because the right hon. Gentleman will admit that the custom of the Colonies is now a matter of the greatest importance, and in future will probably be of vital necessity to this country. If that be so, may we not invoke another argument? Will any man of business deny that an individual trader will often make a small sacrifice in purchasing a commodity if by doing so he will not encourage or stimulate the trade of a rival? Suppose there is a competition between A. and B., and suppose B. can sell to A. cheaper than C, D., and E., A. would make a little sacrifice rather than add to his power. It is frequent in business that a man, rather than add to the power of a rival, will make temporary sacrifice so as not to advantage one whose competition is acute.

*MR. MOND (Chester)

I do not wish to interrupt the right hon. Gentleman, but as he challenged business men, as a business man I wish to say that I do not agree with him. If those are his views on business I am very glad for his own sake that he is not in business.

*MR. SPEAKER

I must point out to hon. Members that they have no right to interrupt in order to make such statements as that just made. If an hon. Member has any arguments to bring forward the proper time is to do so when he is making a speech. He should not do it by interpolation.

*MR. LYTTELTON

I gave way because by the courtesy and custom of this House if any hon. Member has a statement to make it is usual to do so; but when advantage is taken of that courtesy to make a rude and, as I think, an irrelevant remark, it certainly does not encourage the continuance of what, before the hon. Member was a Member of this House, was a courtesy readily accorded. Notwithstanding the hon. Members authority, if he has any in the matter, I will say without the slightest fear of contradiction that in many cases a trader will find it better policy to make some sacrifice rather than increase and thus cheapen his competitor's output. The object of colonial preference is the joint prosperity of the United Kingdom and of the Colonies, and the essence of it is that we should strengthen our allies rather than our rivals. The discredit which the President of the Board of Education sought to attach to colonial preference on historical grounds, namely, the friction which he alleged existed in the past, is perfectly easily understood, if you read history carefully. The reason was that preferences were imposed on the Colonies in favour of the Mother Country, and by the Mother Country. It is absurd to confuse the results of such colonial preference as this with the results of those. The present proposals have nothing to do with the imposition, by force or with a high hand, on the Colonies. On the contrary no advocate of Preference has ever passed beyond the principle recognised and expressed in the clearest terms by the late Lord Salisbury: give nothing to the Colonies except that which you can freely give to them and take nothing from them except what you can freely receive. The whole system is to be on a voluntary basis. I quite accept that. From this Government, pledged as they are, the Colonies could not expect any great or radical change in the fiscal system of the country, but I think the Government, without any sacrifice of principle or setting aside a single pledge made at the election might have taken the position that out of the existing taxes they might have made a trifling sacrifice of revenue without putting on a single extra tax, in order to establish the principle. I think the Colonies are entitled by their kinship with us and by the immense expectations we have from them in the future to the admission of the principle. I regret the Government have not seen their way to do that: not indeed as a Party man, for I can imagine nothing in the face of the movement of public opinion that will ultimately advantage us more than the attitude of Ministers who have asserted that a system which has only been in existence for some fifty or sixty years is unalterable. The Chancellor of the Exchequer and his colleagues have drawn the inference that the Colonial Premiers are asking for something unreasonable, and upon what is that supposition based? Upon nothing except the belief that our present fiscal system is so perfect that it cannot, even for a gain so splendid, receive the slightest modification. These are the grounds which make me give my adhesion to this Amendment, with the greatest possible enthusiasm, and I can only say that, four years from now, if this Conference again assembles, the right hon. Gentlemen, whoever they may be, who have to meet our Colonial friends, will, in Imperial interests, find themselves forced to give way in this matter.

MR. LAMBTON (Durham, S.E.)

said the speech just delivered differed very much in tone from that of the right hon. Gentleman who moved the Amendment. The right hon. Gentleman who hid just spoken had asked a Question about the Colonial Conference—why ought we not to meet the wishes of the Colonial Premiers? He had spoken in a more statesmanlike manner than the right hon. Gentleman the Member for East Worcestershire, who had said that the Colonial Premiers had been met with a brutal refusal, while his right hon. friend had said that he had never expected that the Colonial Premiers would receive a favourable answer from the Government. He did not see that there was any reason why the Colonial Premiers should expect from the Government, at the head of a Free Trade Parliament, any other answer than that which they had received. His right hon. friend the Member for St. George's, Hanover Square, had said that preference might be given to the Colonies without altering taxation, and he understood that these preferences were to be exceedingly slight. It would be almost laughing at the Colonies to offer them such a thing. His hon. friend the Member for Aston had alluded to South African wines. He really thought that they would not satisfy South Africa by giving her pre- ference on wines. Who drank South African wines?

*MR. LYTTELTON

Dr. Jameson said he would very much like to see a preference given.

MR. LAMBTON

said he knew that Dr. Jameson had said that he would very much like it, but we had our interests to consider, and we could not take our policy from the Colonial Premiers. Let them take, for instance, South African wines; how were they going to give the Colonies a preference on them? We did not drink so much wine now as we did some time back. Why was that? The public taste had altered. Was the hon. Gentleman going to dictate to the public of England what sort of wine they were to drink by imposing an import duty? If the people said that they did not want South African wines, Dr. Jameson would then say that the preference was of no good, and that they must put a higher tax on French and German wines in order to force the English people to drink South African wines. That would occur in most of the cases which the hon. Gentleman had put before them. He had never had much doubt about the meaning of the Amendment himself. From its wording it might have a good many meanings, but the speech of the right hon. Gentleman in moving it had dispelled that idea, for his speech was purely and simply protectionist. There was an Amendment on the Paper in the name of the hon. Member for Aston; it was not so long nor so complicated as that of the right hon. Gentleman, but it carried out the wishes of hon. Gentlemen on those benches who called themselves tariff reformers. The hon. Member for Aston's Amendment was blunt and straightforward. The official Amendment was rather like an overdressed Lady Godiva. He wanted to know why his hon. friends were afraid to call their proposals protection. Was not protection their aim and object? They must know that they were protectionists. Tariff reform as they presented it was protection. There might be a difference, but it was a very slight one and required considerable talent to find it out. The difference was exactly the same as the difference between grilse and salmon. Just as the grilse became salmon when it went into the deep sea, so the tariff reformer became a protectionist when he reached the city of Birmingham. Why should they be afraid of being called protectionists? They were never tired of abusing free trade and appealing to foreign countries. We were asked, "Are all these foreigners fools?" If they were, they were not ashamed of their folly. Why were tariff reformers? Why did they depreciate free trade if they did not want to get rid of it. They were always appreciating protection. Why did they appreciate it unless they wanted to justify it? He was reminded of the custom of the market. They wanted to barter for free trade and they went about abusing free trade. It was like the Vicar of Wakefield's horse sent to the fair. In treating with the dealers at the fair Dr. Primrose was told that the horse was "a blind spavinned galled hack only fit for the dog kennel." Dr. Primrose said— By this time I had a most hearty contempt for the animal myself; I did not believe all they told me, yet from the number of witnesses I was under a strong presumption that they were right. On the Opposition Benches there was a band of witnesses against free trade, but he would not join that band of witnesses. He could not give evidence contrary to his convictions, and he would not be an accessory to what he believed to be a crime against his country. He did not know how many there were, but he believed that there were many Members on that side of the House who shared his views. How many would come forward openly to state their objections to the Amendment he did not know, but he did know there were hundreds of thousands of Unionists in the country who would be grievously disappointed if they did not maintain in that House the principles which they adopted in the country. It might be pleaded that the unity of or loyalty to the party was a reason for adopting a policy which had shattered the Unionist Party, and, which in the end, if persisted in, would ruin the party. The candid friend was a very disagreeable person, but at all events he was more loyal than a false flatterer. What excuse had been adduced for this Amendment? Nothing and been urged, no new argument had been advanced, nothing but what had been refuted hundreds and thousands of times during the last four years. The only reason for the Amendment seemed to be that the tariff reformers were trying to raise sympathy and popularity, because at the present moment the Colonial Conference was taking place. They waved the Imperial flag in one hand, and in the other the Hag of social reform, old age pensions, and many other impossible promises. He must say that he viewed with great concern this attempt to introduce the Colonies into a party question. The Colonial Premiers came here, as they had a perfect right to do, and the country, whose hospitality had been exorcised, took great interest in them. The people of this country would feel sorry if their guests went empty away. He did not believe they would. He would ask hon. Members, were they prepared to give the Colonial Ministers everything they asked? Did they think that the Colonial Premiers, who had perfect liberty in their own countries over their own fiscal systems, should have a voice in the conduct of our fiscal arrangements? Would his hon. friends attach the same importance to the views of the Colonial Premiers on the Irish Council Bill, or on the larger policy to which that Bill would lead? There was no doubt in the world that home Rule in Ireland would lead to protection, most probably to preference with the Colonies, and if the Colonial Premiers argued on that ground that they must give Home Rule to Ireland, would his hon. friends on those benches listen to such an argument? He thought that this was a great and serious occasion for the Unionist Party. It was a deliberate attempt by this Amendment to bind round the neck of the party the policy of protection. Why should they undertake these pledges? What was the necessity? In the Amendment his right hon. friend promised all sorts of things. He spoke of the "anomalies and hardships inseparable from the present high rate of particular taxes," which he said "may be diminished, the revenue necessary for the public service and for social reform raised with fairness to all classes of the community, and our fiscal system adapted to the present condition of national and Imperial trade," Why did hon. Members of his side want to hang these pledges round their necks? They were perfectly well aware that these taxes would in the long run be imposed, not because they would benefit the State, but because they would benefit someone else. That was observable in America, and yet there were hon. Members who said they wished to improve the trade of the country by imposing onerous conditions which would do no good to any man. They seemed to think that the more taxes there were the better it would be. There was a good deal of talk about goods "made in Germany." They would only be displaced by goods "taxed in Birmingham," and they would not be in any better position if we taxed thorn. It was a strange anomaly that hon. Members should suggest that we I should tax everything because a man had I to pay more for everything he used from his cradle to his coffin. These suggestions were embodied in this Amendment. They had been told by the right hon. Member for East Worcestershire that this Amendment was moved for other purposes as well. These other purposes were to capture the froe traders who still remained in the party. He had some doubts whether they would go so far as to oppose the Amendment, but after the purely protectionist speeches f they had heard it was the duty of hon. Members who believed in free trade to vote. What are they afraid of? Personally, he would not sit in this House one hour if he could not voice his opinion. Some of them might lose their seats, but at all events they would retain their honour."

*SIR EDWARD SASSOON (Hythe)

said the Minister for Education had stated that the effect of the argument used by the late Chancellor of the Exchequer would be to tax the poor more and relieve the rich. In the absence of the President of the Board of Education, he would like to ask the Secretary to the Treasury whether he thought that all those legislative projects introduced by the President of the Board of Trade, the main object of which was to protect and defend the rights of British industries and British workmen, were tarred with the same brush, and tended towards injuring the poor and benefiting the rich. The right hon. Gentleman had alluded to the paucity and the meager-ness of the concessions foreshadowed by the Australian Premier. He wished to state that the Australians had not had a proper chance of drawing up any outlined scheme in consequence of the way in which they had been treated by the Government, because they were given plainly to understand beforehand that chore was not even a shade of a shadow of a chance of the British Government, pledged as they were to the status quo of the present fiscal system, of even considering any preferential arrangement that might be outlined by the Colonial Premiers. The Minister for Education had said that the arguments they used against accepting the Colonial terms would have been the very arguments, the Colonies themselves would have used if we had asked them to change their fiscal policy. Did the right hon. Gentleman think the 33⅓ per cent, preference which Canada gave to this country constituted no derogation from the advantages Canada would have received if instead of doing that she had given that preference to the United States? Statistics proved conclusively that the granting of this preference to the Mother Country by Canada, had had the effect, not only of checking the dwindling away of British trade with Canada, but it had enormously added to its volume and importance. How could they expect the Colonies to come forward with any cut and dried scheme when they knew that the Government were absolutely opposed to even the smallest departure from the basis of existing taxation? In every part of the country it had been argued that the Canadian preference would he of no advantage to this country, and that it was given by Canada as a sort of attempt to extort further concessions from the Government. He thought the ascription of motives in this way was a very undesirable method to adopt even in regard to foreigners, but it was a still more undesirable course to pursue when dealing with a race of people of whom they were proud, and with whom they desired to carry on larger commercial relations. He looked upon this Budget as absolutely a Budget of despair. Not satisfied with the enormous revenue which the death duties and the income-tax at 1s. in the £ produced, the Chancellor of the Exchequer continued to pile on the agony. He thought he was quite justified in asking whether in any of those countries where democracy was in the ascendancy such taxes as those he had alluded to, so withering and blighting in their character, had been sanctioned. It was quite obvious that hon. Gentlemen opposite had yet to learn that capital, unlike labour, was extremely fluid, and when they tried to crush it out of existence, it was then that its mobile character became apparent; it sought more congenial surroundings. And yet, with all these disquieting prospects before him, the Chancellor of the Exchequer refused absolutely to turn to a perfectly legitimate and reliable source of taxation. For all his terrific onslaughts on every form of property, delivered and foreshadowed, what had the Chancellor of the Exchequer to show? A mere £2,000,000 for some scheme of old age pensions that would cost at least £26,000,000. There was absolutely no demand for old age pensions from the prudent and thrifty amongst the members of friendly societies. In any scheme of old age pensions it was the personal contributory element which alone could free it from the stigma of pauperism and charity, and that feature was conspicuously absent from the scheme which had been put forward.

And, it being a quarter-past Eight of the clock, and there being Private Business set down by direction of the Chairman of Ways and Means under Standing Order No. 8, further Proceeding was postponed without Question put.