§ Order for Third Reading read.
§ Motion made, and Question proposed, "That the Bill be now read the third time."—(Mr. Lloyd-George.)
§ MR. AUSTEN CHAMBERLAIN (Worcestershire, E.)
When the history of this Parliament comes to be written I should not be surprised if it should be found that the Finance Bill of the present year is the most important with which this Parliament has had to deal, alike in the precedents which it sets up and in the effect which it has on our future fortunes. The first of these precedents is connected with the circumstances under which we have been called upon to discuss the B:11. The Government has taken the discussion at a later period of the session than, I think, has ever before been the case in a session of Parliament which was interrupted by no Government crisis or a dissolution of Parliament, and they have placed the Third Reading of the Bill as the second Order at a Saturday sitting towards the end of July at a time when it is impossible to expect the House, as is perfectly obvious from its appearance at the present moment, to give serious attention to the great problems involved, and when it is impossible to take the sense of the House fairly and representatively upon the merits of the measure. Under these circumstances, I do not propose to follow the course which, during the Committee stage of the Bill, I had indicated I meant to take, and shall not make the Motion for the rejection of the Bill, the hope of doing which was at once the excuse and justification for taking no detailed part in the discussions and divisions which accompanied the Committee stage. I take note of the action of the Government in this respect and of the new precedent which they are creating for Finance Bills. Finance Bills as we go on are not likely to become less important, less complicated, or perhaps less contentious. But the Government with all their responsibility have set a precedent for the treatment of such Bills from which probably neither this Parliament nor future Parliaments can escape. More important than the procedure in relation 664 to these Bills are the intrinsic merits of the Government's financial proposals themselves, and in that respect this Bill stands out as one of quite exceptional and extraordinary importance. It is one of an unparalleled character, I think, in our financial history. The Government this year have been engaged in laying financial burdens upon the country in pursuit of a great scheme of social reform of a character and of an amount which are wholly unparalleled in our history. They have, I had almost said, by a stroke of the pen, but I would say by a single measure, laid these great financial burdens upon the country and on the future taxpayer, but what constitutes the most remarkable feature of their policy is that whilst by a single act they have assumed these great burdens they have made no provision for meeting the new liabilities that are created, and they have given no intimation of the way in which they propose to make good the gap yawning before us between expenditure and revenue. Of the many expectations held out by the Government and its supporters at the last election, and whilst they were in opposition, none was more constantly repeated than the assurance that they would reduce the expenditure of the country. They have failed in the two years that they have been in power to reduce that expenditure, and now by their action in the present session they have made reduction of expenditure in future an impossibility. They have remitted here and there a tax or a portion of a tax, but they are collecting a larger revenue than any of their predecessors have ever attempted to collect in time of peace, and that revenue is, by confession of the Chancellor of the Exchequer, wholly inadequate to the burdens which the House of Commons have already laid on the people. At what moment are they doing it? They are doing it at the close of a succession of prosperous years in which the revenue has advanced by great leaps, but when already the signs of a reaction are everywhere patent around us, when by the Chancellor of the Exchequer's confession taxes are yielding less than they did before, and when there is, therefore, special reason to regard with jealousy and suspicion 665 all new burdens which we have not yet decided how to meet. It used to be the boast of the Liberal Party, and under Mr. Gladstone it was a boast that the Party could rightly make, that they steadily pursued in office a reduction of our expenditure, and that though reduction can never be sudden, as increase may be, when they had a fair field and a reasonable time before them they did do something to reduce the annual national liabilities. The present Government are acting on an entirely different principle. They are not merely extending liabilities beyond the provision that they make this year, but they are encouraging hopes and expectations which subsequent Parliaments will be expected to fulfil, and which must themselves involve an increase of the very liabilities for which the Government are at present failing to provide. There is another aspect of the case which renders this matter one of increased gravity. I have spoken of our domestic situation, of the want of elasticity in the existing taxes, and of the need for caution, therefore, in regard to our national finances. But is not the international position one which. also requires and demands our careful consideration in respect of this matter, having regard to the liabilities which may arise out of our international relations, which do not depend solely upon our action, and yet may at any moment involve us in the heaviest expenditure which the country has ever seen? I do not know whether other Members of this House have read as I did the speech which Lord Cromer delivered on the Old-age Pensions Bill in another place. I differ widely from Lord Cromer as to the proper basis and character of our fiscal system, but although the President of the Board of Trade accused tariff reformers of having spoken in ignominious terms of Lord Cromer at the moment he chose to differ from them on the fiscal question, not one of them has ever used language about Lord Cromer which did not recognise his great authority and the wealth of experience which he brought to the consideration not merely of fiscal but of political questions. Hon. Gentlemen opposite are very glad to quote the authority of Lord Cromer on behalf of 666 his fiscal views. Will they pay any attention to his warning as to the result of the financial course on which they are now embarking. He said the other day—What, I would ask, in the present condition of Europe, is the main duty which devolves on the Government of this country? For my own part, I have no sort of hesitation in replying to this question. Their main duty is to make provision betimes for the European conflict which may not improbably be forced on us before many years have elapsed. I am aware that the mass of the people of this country, who do not follow foreign affairs with any very close attention, are not alive to the possibility of any such conflict taking place. I say it is the duty of a Government gifted with both patriotism and foresight, who have means of information at their disposal which is not available to the general public, to provide betimes for that danger—a danger of which I, in common, I believe, with most people who can speak with real authority on foreign affairs, ant very firmly convinced.Now, what provision are Government making for a time of possible danger of that kind? They are making none. Their attitude is not purely negative; their attitude is one of positive destruction of the resources on which we should count. It has been a favourite thesis of the Party opposite—and not confined to them, for at different times Mr. Disraeli lent the weight of his authority to it—that the surest preparation for the emergency of a great international conflict in which this country might be engaged, is not the piling up of armaments, but the piling up of financial resources with which to meet them. I accept that statement only with great qualification. War in recent times, perhaps in all times, has not been a matter of improvisation. Least of all is it possible to improvise either the material or the personnel of war in the highly scientific and highly trained day in which we live. Therefore, in my opinion, it would be short-sighted indeed if we allowed our defensive forces to fall below the highest standard of efficiency that we are able to obtain. But I do not for a moment deny that second only to our naval and military forces for the purposes of a great war are the financial resources, which indeed depend on the efficiency of naval and. military strength to give them time to develop and us time to use them, but which are rather the life blood of a struggle of any long continuance, How are these affected by 667 the financial policy of the present Government? When Mr. Gladstone studied economy and not less the reduction of the naval and military preparations of the Empire, he was careful so to husband the financial resources he set free, that in the case of a great emergency they might be readily available to meet the financial pressure that might come upon us. But that is not what the Government are doing now. The financial resources which the Government have abandoned are of two kinds. There are the taxes which they have abandoned, not primarily on the ground that they are unnecessary, but on the ground that they are intrinsically and on principle bad and ought never to have been imposed. The tax on the export of coal was abandoned, not because we did not want the money that it provided, but because the Government objected to it on principle and held it to be a tax to which we ought in no circumstances to have recourse. The sugar tax which they are reducing this year fell, in their eyes, into the same category. The only reduction which has been made, which, in their opinion, according to their principles it would be legitimate to go back upon, is the small reduction of a penny in the tea duty. The other reductions which have been made on sugar and on coal have been possible only by maintaining the direct taxes at the full rate at which they stood when the Government assumed office. They have provided no additional resources; they have, in fact, destroyed or abandoned part of the resources on which we had to draw when they came into office if we were faced with a new war. Now, for the purposes of war we have two great financial resources. We have the amount which we devote under normal conditions of peace to the annual reduction of the National Debt, and which on any great emergency of war we can suspend and devote instead to the prosecution of the war. We have, in addition, the amount by which the taxes which we levy can be raised without impairing their yield and without inflicting too great a hardship on our people. To the resources of taxation the Government have added nothing. From them they have subtracted much. The resources of the Sinking Fund they had announced their intention of apply- 668 ing next year, not in order to meet a great emergency, but in order to help them over the financial difficulties which they and their policy have created. What the effect of the policy they have pursued may be on the public opinion of the country I do not know. I observe that Lord Cromer, approaching the question, as I have said, from a very different point of view from mine, accuses the Government of making a great breach in the walls of the stronghold that they were put there to defend, and I think it is not improbable that the great and intolerable strain which the Government are placing upon our present narrow fiscal resources will make more converts to fiscal reform than all the speeches which fiscal reformers have been delivering in the country. For my own part, whatever may be the effect of the Budget in helping forward the question of tariff reform, of which I am anxious to see the fruition, I regret—I more than regret, I view with great anxiety, the financial situation the Government has created, and the financial liabilities left for other years to meet. I do not think it is consistent or honest finance to offer to the poorer classes of the country the great boon of old-age pensions, coupling with it at the same time relief from part of the taxation they now pay. When such a proposal, essentially confined to the poorer classes, so costly, so vast in its character is made, while the Government has a right to call on every class in the community to contribute to this great social reform, it is the bounden duty of responsible statesmen to call on those who will be the beneficiaries under the new scheme to make some contribution towards the expenditure instead of teaching them that they can not only receive this boon without contributing towards it, but receive it in conjunction with relief from taxation which they have shared with others who will be excluded from any benefit under the scheme. From the point of view of national and domestic politics this is an unwise step for the Government to take; it sets a bad precedent, and in the hands, if not of this Government, of those who may follow them, will lead to the temptation on the part of those seeking entrance to the House to purchase the support of the 669 masses in constituencies by raising hopes of progressive relief in the same direction. On this ground, and because it goes dangerously near inaugurating a vast system of national political corruption, I regret the Budget proposals. I regret them because of the strain placed on our financial resources at a critical time, and because of the encouragement given by action and speeches—notably by the Chancellor of the Exchequer—to those who are seeking now still further to reduce our naval and military forces, and to rely not on defensive preparations, but on soft words and good intentions in a situation where our contemporaries trust to stronger measures. Viewing the Budget in this light, I regret that circumstances, and the way in which the Government have used their control of business, prevent me from taking the opinion of Members in a full House. I do not qualify what I have said on the Report stage and only regret that the circumstances of the time have led me to confine my protest to speech.
§ *MR. HAROLD COX (Preston)
noted as a curious accompaniment to the right hon. Gentleman's argument against the action of the Government in passing the Old-age Pensions Bill that he voted for that Bill. It was a position not easy to understand. The right hon. Gentleman had laid great stress on the duty of the Government to retain taxation upon those who were to receive the benefit of pensions, and, on the surface, the argument was attractive; but, looked at closely, it would be seen that, as this was not a proposal that the taxpayer should provide his own pension, but that he should provide other people's, it would be absurd to place a burden upon those who were considered too poor to pay their own pension. If taxation was to be used as a means for redressing the inequalities of fortune, clearly it would be absurd to tax people to provide money for others less poor than themselves. That was what they were going to do, because the Chancellor of the Exchequer remarked to the friendly societies deputation that an extra shilling would be given to the man with 12s. a week, which he might speed in tobacco. He did not know whether the Chancellor of the Exchequer regarded tobacco 670 as a necessary of life. Surely it was absurd to tax families who had only 12s. a week to live upon, and to snatch away some of their food, in order to give 1s. a week for tobacco to an old man who already had 12s. and only himself to keep. If this was to be the destination of our taxes it was unjust to impose any taxation at all upon the very poor. On the other hand, if taxation was confined to providing for common national purposes, he held that, however poor a man was, he ought to contribute something to the upkeep of the nation to which he belonged, and from what he knew of the poorer classes they were willing to do so. They realised they were part of the nation as a whole, and were not merely concerned with the necessities of life; they did not live for bread alone; they had a pride in their country, and were willing to contribute towards national purposes; but, if the new principle was to be adopted and taxation used to subsidise the moderately poor, it was absurd to tax those who were yet poorer.
§ *SIR EDWARD SASSOON (Hythe)
moved: "That this House declines to proceed with a measure which, while reducing substantially the tax on sugar, the produce of foreign countries, does nothing to relieve the burden of the tax on tea, an infinitesimal part of which is imported from possessions other than our own; and, while parting with a large part of revenue, renders the discharge of prospective obligations of unknown magnitude embarrassing to the finances and injurious to the credit of the State." He assured the House-that he was not actuated by any considerations of a party character, but rather that he was filled with unaffected misgivings as to the trend and tendency as much as to the actual scheme which this year's Budget represented. His hon. friend the Member for Preston had just taxed his right hon. friend the Member for East Worcestershire with inconsistency in not opposing the Old-age Pension Bill, and yet with condemning the Budget. The inconsistency was only apparent. He himself followed exactly the same course, and what they objected to was that the Government, in view of the colossal commitments in which they were involved, should light-heartedly part 671 with revenue such as the sugar tax. That was the whole point, and the Chancellor of the Exchequer would on consideration see that there was some method in the plan which they had pursued. If there was one feature which more saliently stood out than another in this Bill, it was the determination, implied if not avowed, to afford no relief to the payers of direct taxation. That justified their belief that it was in pursuance of a settled policy on the part of His Majesty's Government gradually to exonerate and ultimately wholly to relieve those who contributed to the indirect taxation, those who represented four-fifths if not seven-eighths of the population, in order to maintain the present burdens, and to impose fresh charges upon the remaining one-eighth. That might be magnificent, heroic finance, but it was neither business nor practical politics. Anything but a moderate income-tax used to be considered a sort of reserve, a kind of nest egg for periods of emergency. Under the new dispensation we appeared to have changed all that, and he could not, therefore, resist the conclusion that when times of stress and trouble arrived, as they must in the chances and changes of European or international politics, we should find that that egg would assume attenuated and shrunken proportions. The Prime Minister had somewhat lightly repealed the coal tax, every shilling of which practically was paid by the foreign consumer, because he was unable to obtain that hard, smokeless coal elsewhere, and basing himself upon the well-accepted maxims of political economy, he (Sir Edward Sassoon) said without fear of challenge that the incidence of the tax inevitably fell upon the foreigner. [Dissent.] If that was doubted he would go to the highest authority in the House. It would be within the recollection of hon. Members that when the Prime Minister was asked to abolish the tax for the few months that remained in 1906, the repeal having been already decided on, he distinctly refused, on the ground that it would mean anything over £800,000 to the foreigner. Sir George Livesey, also an authority, the Chairman of the South Metropolitan Gas Company, employing 5,000 hands, and the inaugurator of co-operative 672 profit sharing, told his shareholders that their gas bill for the year immediately following that repeal showed an increase of no less than £250,000 sterling. So that a prime ingredient in all industries, an article of necessity to every but and cottage, had been raised in price by the direct action of the Government, while a clear present of £2,000,000 sterling a year had been made to foreign manufacturers. That was a curious frame of mind on the part of the Government. Whenever they were moved by a spirit of generosity, it seemed that it was towards the foreigner that their yearnings instinctively turned. He had already alluded to the coal tax. They had refused to renew the registration duty upon corn, which brought in millions without in the slightest degree affecting the price of bread. But let that pass. Now they had the tea and the sugar tax. Which of these did the right hon. Gentleman select for relief? How did they stand relatively to each other? Both were articles of universal consumption. Both had become commodities of necessary luxury to the poor, but whereas tea was imported from our own fellow-subjects, which gave employment to hundreds of thousands of lowly agriculturists in India and Ceylon, sugar, with the insignificant exception of what was imported from our West Indian Colonies, we got from possessions other than our own. The Prime Minister told them that the sugar tax was bringing in six millions of money, and that that was the soundest argument against its being lightly touched. Might he ask the right hon. Gentleman whether it brought ill less now? Under this benevolent administration what were they going to do? Did they relieve tea? Not a bit of it. It was sugar that was the object of their affections, and as regards tea, there was none so poor to do it reverence. This incorrigible sub-conscious bias to benefit he stranger and to ignore one's own people was revealed to the House in the altruistic psychology of the Government with an amazing and a monotonous consistency. The Government were engaged, and properly so, in punishing those who were endeavouring to foment sedition among the ignorant and ill-balanced minds in India. But what 673 were they doing for the peaceful, the law-abiding, and the staunchly loyal portion of the people? They talked of conciliating them, and he was convinced they talked sincerely. Here was a chance. Let them remove the extra tax upon tea, imposed for the purposes of the war, and they would have done more to convince the Indians of their earnest. desire to encourage them in the arts of peace than any number of those vague and nebulous schemes which, from their very nature, must take years to develop and to come to fruition. The Chancellor of the Exchequer deluded himself into the belief that capital was accumulating in this country at a rate which he called colossal. But it was notorious that capital was leaving, and had been leaving the country. When he ask the Prime Minister a question across the floor of the House on that very subject, he seemed to belittle this remarkable phenomenon, and said it was to be accounted for by the return of capital, by greater vigilance and stringency in the collection of revenue, and he would make him a present of a further admission, that some securities held abroad had now entered the dividend paying list, but after all was said and done, and after all these deductions had been made, there still remained a huge amount which had beer, driven out of the country. The figures supplied by the Board of Inland Revenue testified to this. It was true they were getting the interest on the capital, but did the right hon. Gentleman not see that the capital went to fertilise and irrigate foreign industries abroad, to the detriment of the British workman at home? Why, we were fast becoming rent chargers. We were creating a sort of absentee landlordism in British capital. Was that a prospect so alluring and so satisfactory to the right hon. Gentleman's financial conscience? Then there was another gross misconception. The Chancellor of the Exchequer, when he went upon that ill-starred pilgrimage to the shrine of free trade, North-West Manchester, indulged in several statements—promises to working men, thick as the showers of Danae, sops to the Jews, doles to the Catholics, free bets taken and offered about old-age pensions—but there was one point which it would be a pity not to rescue from unmerited 674 oblivion. He talked about the expansion in the exports of cotton fabrics. He said, with that picturesqueness of language of which he was so great a master—Look ! See how your industry has prospered during the last year ! There was more business in one district of Lancashire than in the whole of the United States put together.If the right hon. Gentleman had been addressing some befogged and benighted electors in the backwoods or the backwaters of the Lake District, he could have understood it, but he was addressing the most enlightened and the most wide-awake electors in this country, and the best proof of their perspicacity was seen in the fact that they had returned his hon. friend whom he saw near him to represent them in this House. They knew what he must charitably assume was removed from the purview of the right hon. Gentleman's knowledge, that the average price of middling American cotton in 1907 was something like ½d. a pound higher than it was in 1906, and that this increase in the price of the raw material represented almost within the sixteenth part of a ¼d. the 11 per cent. increase in the imports over 1906 to which the right hon. Gentleman called attention. To be quite accurate, the increase worked out at 10.08. This represents no increase in trade profits, not a penny more in wages, not an ounce of extra employments Let him now revert for an instant to the problem of fresh sources of revenue. The Chancellor of the Exchequer's name was indelibly identified with three enactments on the Statute-books of the realm which, by universal admission, had enured to the industrial interests of the country. He (Sir Edward Sassoon) was only a humble searcher after the truth. He was disposed to sit at the feet of this modern Gamaliel, and was tempted to ask him why, if it was right to protect the outcome of a man's brains and skill, as was done in the Patents Act, it should be so frightfully wrong to protect another man's unskilled work. Again, why, if it was permissible to protect the British seaman from the competition and the lower standard of living of his foreign and Asiatic rival, it should be pure anathema to protect his fellow-worker 675 and fellow-subject from the competition of the Californian fields, say hops tended by Chinese cultivators, or from the sweated, certainly tariff-protected and bounty-fed, manufactures of the polyglot population of the United States. These phenomena were sinking into the minds of the people here. They were beginning to puzzle things out for themselves. The Sphinx-like attitude of right hon. Gentlemen opposite afforded them neither light, leading, nor guidance. He knew they did not like the bother of thinking out solutions for novel aspects and phases of devolution of economic manifestations going on all the world over. They could do that with impunity when trade was brisk and manufacturers were prospering. But now that they had entered upon a period of slackening activity and deflated trade, when they had launched the ship of State upon a career of ambitious social reform, now that our colonists, tired of knocking at our doors, had started arrangements with foreign nations, the inevitable effect of which must be enormously to reduce the preferential advantages they spontaneously offered us, were the Government still going to rub along, to muddle through upon their restricted schedule of taxation, or were they going to tamper with the normal operations for the reduction of debt in times of peace? From some observations which fell from the Prime Minister, he feared he had given a direct incentive to his successor at the Treasury to embark upon some such predatory enterprise. With heavy Naval Estimates looming before us if the Prime Minister's pledge was to be carried out, as they hoped and believed it would be, because no one in his senses believed that Germany, who had shown so marvellous a tenacity in adhering to her naval programme, to the point of borrowing at 4 per cent. on onerous terms, to the point of straining her credit, was likely to relax her efforts in that direction; with considerable prospective demands for education, both in its technical and social aspects, with large liabilities for the Rosyth and Plymouth harbours, the lines of the Chancellor of the Exchequer had not fallen on pleasant places. Let them embark upon the amelioration of the lot of those who toiled and earned 676 their bread by the sweat of their brow. certainly, but let them not embark upon that by means of quack nostrums and empirical panacea. Let them throw wide their financial net. Let them tax moderately the goods upon which foreign labour and enterprise had been expended, rather than those which, from climatic or other reasons, we or our fellow-subjects abroad do not or cannot produce. The Chancellor of the Exchequer had shown great resource and responsiveness in helping British trade. He had the knack of assimilating profitably, novel ideas. He implored him to look with a tender eye upon the state of our finances, and in order to emphasise his protest he begged to move.
§ *MR. JOYNSON-HICKS (Manchester, N.W.)
said that after the references to North-West Manchester he could not do otherwise than second the Amendment, which seemed to involve two propositions. First, it raised the question of fiscal reform, and, secondly, the question of how the money was to be found to meet the large increase of expenditure in this country. He should have thought that the question raised by the Amendment would have appealed to those free traders who had the Imperial instinct. The proposals did not cut across the main line between free trade and protection. If the Amendment had raised the question of protection he would not be voting for it. He was not in the ordinary acceptation of the term a protectionist, but he had a strong belief in that form of Imperial co-ordination which we could establish between ourselves and the Colonies. What they proposed by this Amendment was to relieve the taxes on commodities which were grown in our own Colonies and Dependencies, and keep them on those which were grown in foreign countries. They had lately had a debate on India; they were all proud of India, and they were all desirous that the condition of our Indian fellow-subjects should be improved in every way possible. Well, here was an opportunity for the Government. It was just as easy for them to take the tax off tea instead of off sugar. There had been as much agitation about the tax on tea as about the tax on sugar. Tea was just as much an ingredient of 677 the free breakfast table as was sugar. Every Member opposite had spoken in bygone days in support of the free breakfast table, and he had always understood that it involved the remission of the tax on tea, which was one of the principle ingredients of the breakfast table. In giving away a large slice of revenue, surely our Colonies and Dependencies should have the advantage of any relief rather than sugar, which was grown almost entirely in foreign countries. He did not like to suggest to the Chancellor of the Exchequer that the decision of the Government had been arrived at in view of the pressing emergency of a particular bye-election, but at all events he thought that the Government might have paid Borne attention to the exigencies of our own Colonies and Dependencies. He went further than the Amendment, and would exempt, so far as he could, Indian tea, and levy the tax on China tea. That would not be an infringement of the principle of free trade, though it might be an infringement of the Cobdenite free trade of fifty years ago. Without in the slightest degree being protectionist, and without in the slightest putting a tax on the people of England to bolster up English industries, he could see nothing whatever to which the consistent free trader, brought up in the strict school of Manchester, could take objection if instead of taking the tax off sugar they had taken some of the tax off Indian tea. He had been frequently challenged both in that House and in the country to show how they were going to give a preference to the Colonies without putting a tax on wheat. This Amendment did not raise the question of the tax of wheat, and he did not propose to discuss it; but here was an opportunity to the hand of the Government to give preference to one of our. Dependencies without imposing on the British public any single further tax on food stuffs. Many of them on both sides of the House were Imperially inclined, and put a high value on the relations between Great Britain and her Colonies. They realised, moreover, that the Colonies were in earnest in asking us for some closer commercial union between the Colonies and the Mother Country. There would be other opportunities in time to come 678 where taxes could be taken off, and he appealed to the Chancellor of the Exchequer, if he was to continue to occupy that position, and introduce more than one Budget, and had money to give away, to take the taxes off the commodities grown in our own Colonies and Dependencies rather than off commodities grown in foreign countries. The second part of the Amendment raised a wider issue than the fiscal question in the first portion of the Amendment—namely, as to the undesirability of parting with a large part of the revenue before they knew how far the obligations of the Government went. Old-age pensions, of course, involved a very large expenditure in years to come. He represented a constituency with very large commercial interests, and he was bound to tell the Chancellor of the Exchequer that commercial men and bankers in Manchester and in Lancacashire were very seriously troubled with regard to the commitments of the country in regard to old-age pensions. He knew that it was not beyond the wit of the Chancellor of the Exchequer to provide a scheme of contributory old-age pensions; there were rumours that the right hon. Gentleman himself would have provided such a scheme, only that a scheme had been provided for him by his predecessor, the Prime Minister. But in regard to the finances of the country, having passed a non-contributory scheme, it was of no use going back upon that. The hon. Member for Preston had challenged the late Chancellor of the Exchequer, his right hon. friend. the Member for East Worcestershire; and some others for having voted for the Old-Age Pensions Bill. He saw no inconsistency in it. He had been in favour of old-age pensions for years past. They would have preferred a contributory scheme, which they believed to be perfectly possible—it had been done in other countries, and surely it could be done here. However, that had been ruled out by the Government, and when they brought in their non-contributory scheme those of them who were in favour of old-age pensions, knowing that they could not get a contributory scheme, were of course obliged to vote with the Chancellor of the Exchequer in favour of such a system as he was prepared to give 679 them. He thought he was consistent throughout the consideration of the Bill in voting for the elimination of all those blots upon it which restricted the pensions. He would be prepared to vote in another session for a further removal of restrictions on the issue of old-age pensions. He very strongly objected to the system which prevented a man who had benefited his country by saving 10s. a week from having a pension. He would give a man a greater pension for having done good to his country by saving out of the 15s. or 20s. a week he had earned than to the man who had just slipped through life without coming on the Poor Law, though in every other respect he had been practically a waster and had done no real good to his country. He thought that they would be bound to recognise sooner or later that there would be a very large increase in the cost of these pensions; it would be eight, ten, or fifteen millions a year. That was why he was strongly supporting the second portion of the Amendment, and resisted the idea of the Chancellor of the Exchequer in giving away this large amount of indirect taxation, which he thought they would be bound to put back again as soon as old-age pensions came into operation, unless they had some undiscovered source of income which at present had not been brought before the House. This system of finance, he wished to point out to the Chancellor of the Exchequer, did not commend itself to the merchants and bankers and traders of the country, though it might commend itself to some of those remoter constituencies where the finances of the country were not considered; but in the City of London, Manchester, Liverpool, Birmingham, and the great financial centres there was very considerable unrest at the present moment. They had all been told that Consols would go up when the price of money went down, but money was cheaper to-day than ever it had been since the Government had come into power, yet the price of Consols had not risen in accordance, as was expected, with the cheapness of money. Income-tax remained as high as it was before, and his hon. friend had told them that there was a falling off in trade in all the great commercial centres of the country. Therefore, he suggested that it was an inop- 680 portune moment to dispense with the revenue from sugar. At all events they might have kept it as one of those nest-eggs, about which the Prime Minister had told them some years ago, for old-age pensions. But when they came to the Old-Age Pensions Bill this year the nest-egg did not exist. About a million and a quarter had to be provided (and the Chancellor of the Exchequer had thrown away a portion of his revenue), partly for old-age pensions, partly for the Navy, and partly for expenditure on education. They should think twice and thrice before dispensing with indirect taxes which were not felt half as much as direct taxation.
To leave out all the words after the word 'that,' to the end of the Question,in order to add the words 'This House declines to proceed with a measure which, while reducing substantially the tax on sugar, the produce of foreign countries, does nothing to relieve the burden of the tax on tea, an infinitesimal part of which is imported from possessions other than our own; and, while parting with a large part of revenue, renders the discharge of prospective obligations of unknown magnitude, embarrassing to the finances and injurious to the credit of the State.' "—(Sir Edward Sassoon.)
§ Question proposed, "That the words proposed to be left out stand part of the Question."
§ THE CHANCELLOR OF THE EXCHEQUER (Mr. LLOYD-GEORGE,) Carnarvon Boroughs
The right hon. Gentleman who introduced the debate has complained amongst other things that the Bill has been postponed to a very late period of the session. I do not think it is absolutely without precedent, and I am not sure that he himself is not responsible for a precedent even worse than ours. In 1904 I understand the Budget did not secure its final passage until about 1st August. I do not think there is really very much in it this year apart altogether from precedent, because practically we have been discussing nothing but the Budget in one shape or another for the last two or three months. The old-age pensions were discussed on the First and Second Reading and then we had very prolonged discussions upon the Old-Age Pensions Bill, and practically the whole of the summer has been taken up in the discussion of the Budget. We have really 681 had nothing else, and I do not think, therefore, the Opposition can complain that we postponed the debate on our financial proposals to so late a period of the session as not to afford a full opportunity for criticism. When I come to the more substantial part of his criticism, I am not sure that I quite understand what it is. It is rather vague, if I may say so. He has used phrases about the intolerable strain and about no provision being made for it, but what does he mean? There is only one strain upon the taxpayers in the Budget beyond what this Government inherited from its predecessors, and that is the strain of old-age pensions. Is that what the right hon. Gentleman objects to? Because if not I really am absolutely at a loss to know what his criticism is directed against, and I think it would have been fairer to the House and to those who take an interest in our debates, if the right hon. Gentleman were to formulate distinctly what his grievance is against the Government. If he thinks we ought not to have made the old-age pension proposal he ought to have said so.
§ MR. AUSTEN CHAMBERLAIN
I am very loth to interrupt, but I do not wish the right hon. Gentleman to be under any misapprehension as to my views. I did not divide the House against the Old-Age Pensions Bill. I should have voted for the Third Reading if I had been in the House at the moment. But it is not that Bill standing by itself which is the gravamen of the charge I made; it is the imposition of large though uncertain liabilities which are bound to grow, simultaneously with the remission of a large part of our resources for the financial burdens.
§ MR. LLOYD-GEORGE
I now understand. The right hon. Gentleman does not object to the imposition of the burden; what he objects to is to pay for it. The right hon. Gentleman representing the Opposition on this occasion does not protest against the addition to £6,000,000 or £7,000,000 to the burdens of the country at all. He objects to the absence of any provision to meet burden. I think he also rather hinted that he objects to the indefinite 682 character of the burden. Really he has close acquaintance with the subject, and he must realise that that is not a fair criticism. I do not care what Government brings forward a scheme of old-age pensions or what the character of the scheme; it is bound to be more or less indefinite in the actual amount of the burden, whether it is a contributory scheme, a Danish or. French, a Belgian, or a Colonial scheme, or a scheme of the right hon. Gentleman's distinguished relative. Any scheme that has ever been submitted is bound to be more or less conjectural in amount. £1,000,000 or even £2,000,000 one way or the other must be a matter of experience of the first two or three years. Every scheme is liable to that. That might be an objection to undertaking the thing at all, but the right hon. Gentleman does not say so. He does not object to our having old-age pensions. He will not bind himself down to that. The right hon. Gentleman next said that the situation in Europe is such that the pension scheme ought not to be entertained now but ought to be put off. That is really a very serious thing, especially when you are dealing with old people. I never recollect a time in politics when the situation in Europe was not serious. It is always the present. state of Europe. Yon may shift the particular quarter from which the menace comes. At one time it might be the East or the Far East; the next it would be nearer. I have seen it as near as the French coast. Within the last five or six years people were talking glibly and solemnly about the prospect of war with France. There were prospects of invasion and plans for invasion. But that has shifted and now nobody ever dreams of that. Now there is another Empire which is supposed to be just as threatening. But this will go on from year to year and generation to generation, as it has done in the past, until nations realise the folly of scowling at each other and sharpening their knives to plunge into each other, and spending gigantic sums of money which might be more profitably utilised. for the purpose of improving the condition of their own people. There is no nation which has not got its social problems, its poverty and destitution, and it would be far better for all countries if, instead of 683 spending £400,000,000 a year on munitions of war, they Would come to a mutual understanding that two or three reasonable individuals could easily have arrived at long ago for the purpose of improving the condition of their own poor population. You cannot wait until this thing passes over. I hope it is not a permanent phase of human character, and that it will eventually pass away. But when the right hon. Gentleman talks about the present menacing condition of things I must point out that the condition has improved. Formerly there were three or four nations which were said to be hostile to us. We were always half-quarrelling with Russia about the Far East, and with France about Africa and other parts of the world. The differences have now all been removed, and so far from the condition being worse than it has ever been it is very much better. And what is the use of trying to create an atmosphere of suspicion and distrust and by constantly talking about some Power going to attack us, as if we are on the lookout to strike them or they to strike us? That is the way people come to blows. I am perfectly certain that if social reform is to be postponed until foolish people cease to write wild articles in newspapers to create distrust and malice and enmity between one nation and another, human hearts may well despair, for nothing will be done. I think that if we were placed in the position of having to defend ourselves against any foreign nation that wanted to make an attack upon us our resources are ample—should there be such persons—and we have enough and to spare afterwards to look after our own people at home. I do not think the right hon. Gentleman's argument, or Lord Cromer's, with every respect to Lord Cromer, is a good and sound one, that we should put off all social reform until people have ceased to write leading articles about prospective invasions of each other's territory. The right hon. Gentleman proceeded to say that it is not so much the fact of old-age pensions that he objected to but that it is not the way he would have done it if he had been responsible. He said what he objects to is that although we impose this burden on the country we make no provision for it. Here again what does he mean by making provision? Does he mean 684 that the Government should have brought in a Bill this year to impose a burden of seven millions upon the country when we do not require more than one or two millions? What is the use of raising taxation, not to meet a burden, but in order to show you can do it when the occasion arises—to show Germany and everybody else that if you did want it you really could do it? The Government do not want to put on more taxation than is really required to meet the burden of the year, because they do not want to withdraw that six millions from trade. Surely the right hon. Gentleman does not mean that we ought to raise the six millions of taxation this year? Then what does the right hon. Gentleman mean by an "intimation"? Of one thing I can assure the right hon. Gentleman, and that is that the Government are not going to follow the example of the late Government in meeting the current liabilities of the year by borrowing. But if the right hon. Gentleman means by "intimation" to go beyond that, then what sort of tax will he impose? Surely the right hon. Gentleman knows, as a former Chancellor of the Exchequer, that the last thing which a Chancellor of the Exchequer can do is to "intimate" that he is going to tax a certain commodity. If I did this, then the right hon. Gentleman ought to know that in a short time there would. be no commodity to tax. Is it to be urged also that I should indicate clearly now how I am to distribute my direct or indirect taxation next year, and to what extent I shall tax any particular commodity? The right hon. Gentleman knows well that that is impossible. No such grotesque demand has ever been made upon a Chancellor of the Exchequer. What then does the right hon. Gentleman mean by "intimation"? I can give no "intimation" for the sufficient reason that I am not so simple as to tell people in advance what exactly are the things that I am going to tax. I am, therefore, at a loss to know what this "solemn fact" of the Budget means. The right hon. Gentleman does not object to old-age pensions, which is the only additional burden, and I cannot understand the motive of the right hon. Gentleman when he urges that taxes ought to be raised and that information should be given of the tax that I shall impose. 685 The hon. Member for Hythe objected to the sugar tax. But the difference between tea and. sugar is that one article is a raw material of industry and the other is not. Sugar is the raw material of some very important industries. It is by our supply of cheap sugar that we get our start in the competition with foreign countries, and therefore a tax on sugar must to a certain extent impair our chances of competing in one of the markets at least for our custom.
§ MR. LLOYD-GEORGE
The existence of a drawback does not really make a difference. There are drawbacks in America, but the Americans have no chance of competing with us in foreign markets because we have no tax on imports.
§ MR. LLOYD-GEORGE
I know it is urged that the tax does not reach the consumer. If the tax had been reduced only a half, the reduction might not have reached the consumer. It would have got into the pockets of the middleman; but the Government made the reduction over a half so as to make it certain that the consumer obtained relief. Then the hon. Member said it was notorious that capital was leaving our shores for foreign countries. But a good deal of our trade depends upon that system of investment. Take the case of Argentina, where we have invested very heavily. Our trade with Argentina has grown enormously within the last few years, due very largely to the fact that every great investment in Argentina is an investment of British capital. This country is supposed to have invested between £100,000,000 and £200,000,000 there; and the result is that our trade has gone up to £20,000,000 a year. No country in the world can touch us in respect of trade with Argentina.
§ MR. AUSTEN CHAMBERLAIN
The comparative trade return with South America and the Argentina does not bear out that statement.
§ MR. LLOYD-GEORGE
Yes, it does. If the right hon. Gentleman takes the Argentine alone he will see that there has been an enormous increase during the last few years in trade with the Argentine, and I attribute that fact largely to the circumstance that we get the advantage of being a free trade country, combined with the investment of enormous sums of money in that country. The Argentine does not send us cash to pay dividends on capital; it pays in goods. The same fact is seen in our shipping trade. There has been an enormous increase of trade between Argentina and this country in shipping. Thus it is not a circumstance to be deplored that we have invested capital abroad. We are the richest country in the world, and therefore we have much more money to spend, and we can invest it abroad. The hon. Member is wrong when he imagines that it has been only, in the last two or three years that there has been a great flight of sovereigns from this country to other parts of the world. On the contrary, there is a return of capital which showed that the greatest increases were in 1903, 1904, and 1905. Indeed, since the Government came into power there has been some arrest in the progression of increase. Since the Government came into power the confidence in British industry seemed to have been restored to such an extent that the investment of British capital on British soil has rather increased in comparison with the rate of investments. abroad. The adventures in "industrials" outside the United Kingdom have been £14,000,000, £17,000,000, £19,000,000, £20,000,000, and £21,000,000 in respective years; and "industrials" are a far more important test than Colonial and other securities. British capital, therefore, instead of being invested at home, was being invested abroad in the earlier period; but the former increase of about £5,000,000 has since been £2,000,000 in the return from abroad. There are only one or two more points I wish to refer to.
§ SIR GILBERT PARKER (Gravesend)
I would like to ask the right hon. Gentleman whether it is not possible that, the decrease is due to the disturbed industrial condition in the United States during 687 the last year and a half? It is not a normal period, but an abnormal period, on which the right hon. Gentleman has based his contrast.
§ MR. LLOYD-GEORGE
I am glad of the interruption. The hon. Gentleman, who is a pronounced tariff reformer, has confessed that the conditions are so bad in the greatest Protectionist country in the world that really they cannot meet the interest on the money we have invested in their industrial concerns.
§ MR. LLOYD-GEORGE
I say that disturbance diminishes profits, and that I should not like to see the cause of that disturbance encouraged in this country. I am not sure but that the disturbance is the result of protection, and that is why I do not wish to see the trade of this country disturbed by the introduction of such a system as exists in the United States. It is perfectly true that the industrial condition is disturbed there. A very good word ! It creates such a sense of insecurity to trade and industry that profits are diminished, and there has been an arrest of the progress of investment from this country. People are afraid of it, and they prefer to retain their money in a free trade country.
§ SIR GILBERT PARKER
Does the right hon. Gentleman suggest that that is due to the protective conditions in the United States?
§ MR. LLOYD-GEORGE
Certainly, that is largely what produces these great fluctuations. It is an artificial state of the industrial system. The temperature at one moment is very high, and the next moment it is below normal. It is due to this artificial system. They have closed the windows, pulled down the blinds, and stopped all the ventilators, and they are living in this heated atmosphere produced by tariffs with neither light nor air. That sort of thing does 688 foster the growth of certain fungi. These are the conditions under which they are grown—artificial manure and artificial heat and light. That is the cause of the suffering which we witness there while our industries are going up enormously. There is a constant arrest of profits in protected countries which it would be worth while for the hon. Member for Gravesend to study more than he has done. I come back to the point with which I was about to deal when I was interrupted by the hon. Member. I come back to Lancashire, to which the hon. Member for Hythe confined himself—back to Lancashire with its prosperous cotton industry from the United States with its troubled finance.
§ MR. LLOYD-GEORGE
That is another of the lessons which the right hon. Gentleman has yet to learn. All countries depend on markets either at home or abroad. Where you get all these microbes away from the natural light and heat you get the state of the markets which has been described. It reacts upon us, but to nothing like the extent to which it exists in the protected country. You have not here an enormous amount of railway rolling stock lying idle, and you have not 30 or 40 per cent. of the working classes out of employment. In France they have actually had to start distress committees in the textile districts. We have not come to that yet.
§ MR. LLOYD-GEORGE
The hon. Member is making himself very happy over the prospect of having relief and distress committees next year. I hope he will be disappointed, and I am sure that will be the feeling of every right-minded man, whatever opinions we have on controversial matters one way or another. The fact is we cannot support a gamble in suffering for the sake of any system. Let me point out 689 to the hon. Gentleman who said that the increase in cotton was entirely due in Lancashire to the increase in the price of the raw material, that it is not merely an increase in the price, but an increase in the yards.
§ MR. LLOYD-GEORGE
Yes, in quantity. It was not necessary to go to Lancashire for that information. If the hon. Member had only taken a walk as far as the library he would have found it out. If he will study the statistics, he will find that there is an enormous increase in the yards. There is an increase of 38,000,000 yards. The hon. Member gave me a piece of information, and I am very glad to return the compliment.
§ SIR EDWARD SASSOON
May I remind the right hon. Gentleman that the increase in the price of the raw material is nearly 11 per cent.
§ MR. LLOYD-GEORGE
That is where the skill of Manchester comes in. They are able, in spite of the price of the raw material, still to sell all these commodities to the world, and at the same time to keep their customers perfectly happy. That is really the system of an intelligent free trade community, and I hope the hon. Member will not press me for any further explanation. So much for the past. The right hon. Gentleman said that this is not the time to restrict the schedule of taxes. Here again you increased your burdens. Well, we have been diminishing our burdens. My own view is that you ought to diminish your unproductive expenditure and increase your productive expenditure. That is the first principle of business. You do not always benefit a business by merely cutting down. On the contrary, you can wreck a business by cutting down. I agree that the first principle of business is that you should not spend a penny piece more upon any branch of a business than is absolutely necessary. You should not spend anything for what is unproductive if you can avoid it, and you should spend 690 freely and boldly upon every extension of business which is of real benefit to your trade. That is the principle we have followed here, and that is why I have watched with a jealous eye and scrutinised rigidly every penny spent on armaments. I hope that that will be the first principle of every Chancellor of the Exchequer. It was the principle of the greatest financier this country has ever produced, Mr. Gladstone, that every penny spent beyond. what is necessary for absolute security is money thrown away, and that every penny spent unnecessarily is a menace to other countries. It provokes and irritates, and creates other expenditure which may end in disaster. That has been the lesson of every unnecessary expenditure which has been incurred. That does not mean that any Chancellor of the Exchequer is ever going to propose to cut down our expenditure on armaments below the level of absolute security, and I should be the last to propose that. When the right hon. Gentleman says that this is not the time to restrict the schedule of taxes, he hints that you should increase the number of things you tax. It is not the goods you tax that pay the tax. A tax on a parcel of sugar does not pay the tax; a tax on a canister of tea does not pay the tax. It is the person who consumes the article who pays. [An HON. MEMBER: Or produces it.] Well, I will not go into that argument now. The consumer is the man who pays, and if, instead of having six taxes, you had 600, you would not be increasing the resources of the country by increasing the number of things you tax. It is one of the mast fundamental, and one of the crudest errors ever advanced that the moment you begin to tax 1,000 instead of ten commodities you are by some magic means increasing the resources of the country. The right hon. Gentleman talked about destroying our resources. We began by taking more than half the duty off the sugar duty, by taking a penny off ale tea duty, and by remitting the tax on coal. Then we are told that we are destroying our recources. It is the first time that I have ever heard of a country destroying its resources by taking away a tax. If it is a resource at all it is still there. The right hon. 691 Gentleman talked about the safety of the State as being far more important than reductions in the expenditure on the Army or Navy. If it is necessary to reimpose the taxes we have taken off for armaments or war, the commodities are there, and we can do these things again. The people of this country will consume sugar although the tax is taken off. They will drink tea although the tax is only 5d. instead of 6d., and they will drink it if the tax is 7d. instead of 5d. if the time ever comes when you require these resources. I do not understand the right hon. Gentleman when he talks about destroying the resources of the country by taking off taxes. On the contrary, we say that you do not. What we do at the present moment is to set them on one side.
§ MR. AUSTEN CHAMBERLAIN
I am glad to hear you say that, but it was very different from what was said by the spokesman of the Government when they too k the taxes off.
§ MR. LLOYD-GEORGE
I think the right hon. Gentleman has been presupposing a sort of Armageddon when we shall be fighting everybody in the world, when it will be necessary to tax everything. I deprecate all this lugubrious talk, as if we are at the end of our resources. It is not true. As a matter of fact, our taxation is much less than it was when the right hon. Gentleman left office, and during the last ten years the income which has passed under survey for income-tax has increased to the extent of £220,000,000 a year. Our taxation during that period has increased probably by £20,000,000 or £30,000,000, or about one-tenth; but the taxable resources of the country have increased by nine-tenths of that amount, so that to talk as if we are at the end of our resources is not doing justice to the power of this country. And, if anything, it is doing harm to this extent—that it does encourage foreign countries to imagine that, now we have got to the end of our power, we have got to choose between social reform and the end of our country. This country is not put to that option. We are a long way off that. And really to say, when we propose to 692 give £7,000,000 to the old people of this country, that we are either to leave them to starvation or to abandon the country to the mercy of Germany or any other Power: such wild talk has nothing in common with the facts of the case. We need do neither. We are not yet driven 'to the resource of Germany—to borrow money for defence. But if there were a real danger, there is no Chancellor of the Exchequer who would hesitate for a moment to pledge the credit of the country to make it secure from prospective attack from any quarter. We have got command of the sea and are free from invasion. Nobody can calculate what that means to the country and no Government, whether Liberal or Conservative, is ever going to run the danger or even the risk of forfeiting that for a moment. I agree with the hon. Member that there is a temporary lapse in our trade; but trade is like a tide—it comes and. goes. You have got your ebb and you have got your tidal wave which sweeps away much. The spring tide has passed; we are in for the neap, but the spring will come again. That is the history of our trade. We have got our winters and summers, but every time that there is a bit of a lapse in trade there is a considerable number of people who say our trade is going. If they would only look at the experience of the past they would know that their fears are groundless. And, at any rate, if this is a time when trade is on the down grade for the moment, it is not the time for a great country like this, sure of its resources, with its industrial powers founded on the most solid foundations that any industrial country of the world has ever seen, to say: "We will begin to economise, to stint, to draw in—not in armanents, but in providing for the aged poor." This project is a great one. It is not my conception. It belongs to the Prime Minister. It has been my pride that my right hon. friend has given me the privilege and the opportunity of taking a humble share in piloting through this House a Budget which is the one Budget in my recollection in this House in which money has been raised for the poor, the unfortunate, and, the destitute.
§ SIR GILBERT PARKER
said there was one thing quite certain, and that was that the change of office 693 had not changed the right hon. Gentleman's charm of style, or the influence of his speeches upon his audience; but even while they fell under the spell of his eloquence the natural, and, should he call it, the tariff reform intelligence, reasserted itself. He was therefore disposed. to make one or two criticisms on what the hon. Gentleman had just stated. He would not follow the right hon. Gentleman in his peroration on old-age pensions which had naturally moved all of them; and if the Opposition did not criticise the provision for the poor of which the right hon. Gentleman had spoken, it was not because they believed that the measure put forward by the right hon. Gentleman and his colleagues was the best for relieving the necessities of the poor. They had asked the hon. Gentleman and his colleagues to show the House and the country the sources, not the resources, from which the Government was going to get the money for the old-age pensions. The right hon. Gentleman made play with the term "resources," but he knew perfectly well that what the Opposition meant was the sources from which the right hon. Gentleman said he was certain he knew where he was going to get his money.
§ MR. LLOYD-GEORGE
said he really did not know what the hon. Gentleman meant, or what he wanted to know from him.
§ SIR GILBERT PARKER
said he thought he was quite clear in saying that the Opposition did not know the sources from which the right hon. Gentleman was going to get his money to pay for old-age pensions. The Opposition said there was a very narrow basis of taxation on tea, sugar, and certain other necessaries of life. They said that the income-tax was at a war rate, and that the liquor trade was taxed heavily. It was quite possible that the right hon. Gentleman was going to find a new source of taxation, a new foundation of finance, and he thought that the Opposition were entitled to ask the right hon. Gentleman where he was going to get the money for this vast scheme, this far-reaching 694 permanent demand on our fiscal system. The Prime Minister had never answered the question, nor had the right hon. Gentleman. In referring to the subject of indirect taxation, he did not think the right hon. Gentleman had put the case quite fairly. They on the Opposition side said that if taxation was placed on a very few articles, by increasing that taxation consumption was lessened, and therefore the return from the taxation of those articles which was needed to make up the annual Budget was lessened. Did not the right hon. Gentleman see that it would be better if the taxation were placed upon a series of articles which would not press heavily on the individual article, and therefore would not necessarily lessen consumption? The Opposition were reasonable in showing that such a system was found effective in almost every other country in the world. The right hon. Gentleman was an Imperialist; he did not shrink from that term being applied to himself; did lie not think it, therefore, strange that there was not a single British Colony which, starting with free trade, had not come ultimately to adopt the principle of indirect taxation? All that the Opposition asked was that the arguments which they put forward might be treated with due respect. They were not a handful of people advocating a policy of indirect taxation. They represented far greater constituencies and a far greater number of people than the right hon. Gentleman. They might be wrong; it was quite possible; but at any rate, they ought, when they were bringing forward their views, to be listened to with common courtesy. The right hon. Gentleman's reference to the United States was not entirely felicitous from his own standpoint. He did not think that his remarks were very well founded. Hon. Members below the gangway were aware that unemployment in this country was last month 8 per cent., which was double what it was for the same month of last year. It did not become the Chancellor of the Exchequer to talk as if we were free from embarrassment in this country from want of employment whilst the United States were suffering. He himself had only recently returned from the United 695 States, and knew the disturbed conditions there. But the right hon. Gentleman suggested that the disturbed condition of the United States was due to protection. After all, there was no sharper statesman in this country than the right hon. Gentleman, and he made that point. Whether the point did true justice to his knowledge of the information conveyed to him by the Department. over which he presided was another matter. The United States was passing through a crisis which this country would also have to pass through. We also had trusts. Trusts were growing and developing under our system of free trade every day. There were British trusts which were springing up in various parts, syndicates which existed for controlling prices, in restraint of trade. In the engineering trade particularly had these great trusts and syndicates sprung up in restraint of trade. They were absolutely opposed to the free trade which hon. and right hon. Gentlemen opposite so strongly and properly, as believed in it, advocated. He suggested that it was such trusts in the United States, trusts which the President had strongly attacked by the passage of laws to restrain them, that had been the cause of the disturbance of trade and want of employment in America. Did anybody with any sense—did the right hon. Gentleman with the information at his disposal really believe the United States was in a paralysed condition with regard to her industries or her trade? The United States had suffered a check, but. she would recover from it. Her vast resources would enable her to do so, and the right hon. Gentleman was neither fair nor just in suggesting that this momentary check, this disturbance of trade in the United States was due to the fiscal system there. The right hon. Gentleman spoke of investments abroad. He spoke of the Argentine, with his usual brilliancy, as the most gorgeous flower of the bunch of the South American republics. The Argentine was precisely the country where money was invested. because it was an agricultural country. As the right hon. Gentleman had. observed, and entirely accurately, the interest of the money invested was paid in goods. But did he seriously suppose that nothing was lost to this 696 country when this £200,000,000 went for investment to foreign lands? Certainly the interest was paid in goods, but was nothing lost in the wages which would have been paid if this money was invested here? He did not quarrel with investments abroad, but he did say that the right hon. Gentleman was wrong when he argued that the only thing we had to consider was the dividend that came from that investment. He ventured to say, and many free traders in the House would agree with him, that if we could have kept the money, that £200,000,000, in this country——
§ SIR GILBERT PARKER
The hon. Gentleman said we had nothing for it to do; that was exactly the point to which he was coming.
§ MR. J. M. HENDERSON (Aberdeenshire, W.)
said we had plenty of capital for all our industries and then £200,000,000 to spare.
§ SIR GILBERT PARKER
asked if the hon. Gentleman suggested that there were no wide opportunities for developing British industries. Did he know that what the right hon. Gentleman said in 1903 was true; that some industries had disappeared altogether; that some were disappearing, and that others were only holding their own by meeting competition by a strenuous fight to the death. Was not there a disappearance of industry if we had not the raw material worked up from the lowest to the highest? The United States admitted nearly as much raw material free as she taxed. If we worked up all our raw material in this country, would the hon. Gentleman or any other Member of the House suggest there would not be more scope for British capital? They thought the Chancellor of the Exchequer treated this matter far too lightly. The right hon. Gentleman never did himself justice in his conduct in the House, because his attitude was bound by conditions imposed upon him at the last election and 697 by his followers behind him. It was only in his own Department that he gave his mind that opportunity which some day, if they were not mistaken, would lead him and others into the path of indirect taxation in order to seek revenue from sources which had been too long disregarded, and which, until they were regarded, would exclude from the National profit those sources of taxation.
§ MR. C. E. PRICE (Edinburgh, Central)
quoted an extract from the Report of the American Consul at Manchester.
§ MR. HARMOOD-BANNER (Liverpool, Everton)
pointed out that the amount of bales of cotton used in America and Germany largely exceeded the amount of bales used in this country and that the proportion of bales used in Germany and. America increased in greater ratio than the bales used in the country.
§ MR. HARMOOD-BANNER
said he had not the exact figures, but they were given recently in the Outlook and they had never been challenged. The Chancellor of the Exchequer, towards the end of his speech, had dealt with the fact that the Opposition supposed that he was at the end of his resources of taxation. Where that charge had come from he did not know, but it was an easy one to set up a howl at. Their complaint, however, was not that this country was at the end of its resources for taxation, but that the Chancellor of the Exchequer had so arranged the finances of the country that they were going to attack the income-tax payer and the Sinking Fund in order to meet the enormous deficit which must arise on the expenditure next year. It was a very serious point to be met. With regard to the sources of taxation from which this new expenditure was to come, the Prime Minister in his speech as Chancellor of the Exchequer when introducing the Budget had distinctly mentioned those sources as the sources from which he desired to obtain the 698 monies to pay for old-age pensions. Though the right hon. Gentleman did not directly state that the Sinking Fund was to be one of them a reference was made to the Sinking Fund which suggested that the right hon. Gentleman or his successor might go to that source to carry the pension scheme further. The complaint was that such a statement as that, combined with the reduction of the sugar duties, showed that the money for the expenditure for old-age pensions was to be found by one particular set of taxpayers. Labour had had its day and was now earning its full reward from the benches opposite, and one of the reasons why the City was so depressed was that men would not lend them money; and why ships were going without cargoes, and railways without full wagons, was because there was not a capitalist now who had the slightest confidence in what was going to happen to this country, because of the financial attacks which were made on them. It was very rare that a word was said on behalf of the capital interests of the country. In his opinion they were the saving classes, and it was the savings of capital which created the money which was found to pay labour. They had nothing this session except a tax on every interest connected with capital, and, the result was seen in the depressed state of trade. One of the great pioneers of industry told him recently that he wished he was out of this country, because it was almost impossible now not to feel that any man who had any interest in looking after the diffusion of capital was the enemy of the Government. That was his reason for saying that with reference to the reduction of the sugar duty it was premature, and in face of the enormous expenditure to be incurred next year, it was unwise. Had the gold reserves been touched by the present Parliament? They all recollected the dreadful panic that afflicted the commercial world. during last winter, and at that time the outcry was that the god reserves should be dealt with. The bankers on the opposite side of the House had not been able to influence the Government, and nothing had been done to alter the position that were the enormous amounts due from the savings 699 banks there was not an atom of gold in the Bank of England to represent them. The Government would have been better advised to deal with that question, and not to reduce the sugar duty. The Chancellor of the Exchequer had talked a great deal about the reduction of liabilities of the Sinking Fund, but what did that mean? He paid so much off and said he was clever and had paid off money running at 2½ per cent., but in Transvaal Loans, local loans funds, and Irish Land stock he was incurring on British responsibility equal amounts with interest at 3 per cent., so that the debt was not diminished in any way whatever. As between the Government and the public the debt remained the same. He would like to congratulate the Government on the clause which related to the duty on tobacco produced in Ireland, because that was a breach of free trade which they knew must in the end bring down the wall of free trade. One of the laws of free trade was that if they had a duty for revenue purposes they must impose an equal excise duty on any article of that description manufactured or grown in the country in which the tax arose, and the result had been shown in Egypt in the crushing of the cotton mills and in India in penalising the poor natives for the benefit of the Manchester manufacturers. But now for Ireland a breach had been started of that law to which he had referred. For once in a way the Government had adopted the theory that it was possible in order to protect an industry to differentiate between Excise and Revenue duties; and in that way they had started what he hoped they would carry out in the future, the idea of abolishing the Excise in Egypt and in India. The Finance Bill imposed an enormous liability on the taxpayer, it attacked every interest of capital which was capable of being attacked, and it showed that in the future there was to be no mercy in the House for anyone except the one Party which sat on the benches below the gangway.
§ *MR. J. M. HENDERSON (Aberdeenshire, W.)
said he wanted to correct an impression given to the House by the hon. Member for Gravesend, who seemed to think that because £200,000,000 had 700 gone from this country to Argentina and other foreign countries, that money had been lost as capital in this country. But he would ask the House to consider what the money was for. In the case of Argentina, for instance, the money was principally for the development of railways owned to a very large extent by the people of this country. The money was spent in this country in making engines and railway carriages for those railways. But even if it were not so spent, that money was our extra money that we did not require. A little while ago Irish stock was put on the market, and it was subscribed four or five times over, and that alone showed that there was plenty of money left for industries in this country. Because trade went down people did not throw their money into businesses and concerns that were not remunerative. We had plenty of money left and almost unlendable at the present day. He would point out that there was at the present time a bank rate of 2½ per cent., and that meant that for every British industry which could show a reasonable prospect of success there was ample and sufficient, capital left in the country.
§ Main Question put, and agreed to. Bill read the third time, and passed.