§ MR. MOND (Chester), in moving "That, in the opinion of this House, any attempt to broaden the basis of taxation by placing small import duties on a large number of articles is opposed to all principles of sound finance, wasteful and uneconomical as regards collection, disturbing and harmful to industry and commerce, would tend to raise the price of all the taxed articles to consumers, and, in practice, would lead to the imposition of high tariffs of the same character as those in force in protected countries," expressed his thanks to the hon. Member for Hereford who, by his courtesy in withdrawing the Resolution which stood in his name on the Paper, had given him the opportunity of raising what he thought was not an unimportant phase of the fiscal question. If asked why he put the Resolution on the Paper, he would say that he did so because of his sympathy with the right hon. Gentleman the Leader of the Opposition who some time ago went down to Birmingham and issued a new edition of the fiscal programme. Although that edition was accepted as evidence that at last the protectionists had been successful in casting the noose of protection round the unprotected neck 404 of the right hon. Gentleman, he had observed that in speeches in the country at bye-elections and to constituents no reference was ever made to the programme promulgated by the right hon. Gentleman in Birmingham. As the right hon. Gentleman had been somewhat shy of further elucidating his programme on public plaftorms this occasion had been taken to give him an opportunity which it was hoped he would seize. The four principles laid down at Birmingham covered a great deal of ground, and he had endeavoured in his Resolution to confine himself to the first two propositions and then to establish what was the true basis of taxation for revenue. A small duty on manufactured imports was a most foolish, costly, and futile expedient, to which no Chancellor of the Exchequer should ever resort. It was contrary to the great work of Sir Robert Peel and Mr. Gladstone, and to those great Budgets which had been the admiration of financiers all the world over, which were based, not on abstract principles, but on concrete results and facts. Undoubtedly there was a certain number of difficulties to encounter in attacking this question in a theoretical manner. Some of those difficulties were in the mere vagueness of the words used, and he would have to make a certain number of assumptions in dealing with the subject at all. Let him deal with the question of what was meant by "broadening the basis of taxation." There was an impression in the minds of many people, and certainly he would not have expected to have found it in the mind of the Leader of the Opposition, that taxation was paid by articles; but every economist knew that taxes were paid by the people, and the number 405 of articles the taxes were spread over in no way affected the question of the amount of taxes which an individual finally had to pay. An eminent economist, Mr. A. C. Pigou, in an article some time ago, said that certain politicians appeared to suppose that taxes were paid by articles and that taxing a new article would open up a new source of revenue. Taxes were not paid by articles but by the people, and whether they made the taxpayer pay an amount in income-tax, or an amount on twenty articles, he still paid the same amount of taxes. By this so-called broadening of the basis of taxation did they suppose that they in the least relieved the individual from taxation? He asserted with confidence that the principle was financially unsound. It was unsound as was all indirect taxation. He would not assert that it was unpopular, or that it was not convenient, and he would not go as far as Bismarck did in 1879, when, in a famous speech, he said that indirect taxation was a good form of taxation because nobody knew what they had to pay, and, therefore, nobody felt the taxes, whilst direct taxation was very unpopular because everybody knew what they paid. Indirect taxation was not seen clearly, and, therefore, the burden was not felt: if they admitted that, they also admitted the argument in favour of direct taxation. To say that the taxes spread over a number of articles became more and more difficult to trace was to argue, not from the point of view of financiers, but from the point of view of company promoters. The fact that they could not trace the incidence of taxation did not make the taxation any less, but merely made it more difficult for the individual taxpayer to see how much money was taken out of his pocket. Sound finance meant that the taxpayer ought to know how much his taxes amounted to, and then he would begin to feel the burden of taxation and take an interest in economy of administration; until he did that he was not really taking that due part in the government of the country and in sound finance which undoubtedly every taxpayer ought to take. He would go further and say that not only was the finance 406 of our taxation unsound, but it was entirely illusory. And here he came to some of the difficulties to which he hoped that they would have answers that night. The Leader of the Opposition, in a speech at Birmingham, spoke of small duties. Perhaps he would inform them what he meant by small duties. Was 2½per cent. a small duty, or 5 per cent., or 10 per cent.? How many duties were to be levied, were they to be ad valorem or specific duties, and were the duties to be raised equally on every article, or were they to be variable duties? Until they had answers to some of those points it was, of course, difficult to make the calculations which were necessary in order to get the financial results from them. He would like to point out in this connection the curious fact that in the countries where there was a protective system the amount of revenue derived as a result was extremely small. In the United States of America for the year 1904–5 it was only 28 per cent. of the total revenue from the customs taxation on manufactured goods; in Germany less than 20 per cent. of the total customs revenue came from manufactured goods. From raw material in Germany came 5.8 per cent., and from the tax on food 74.2 Per cent total amount of revenue collected in 1904–5 from manufactures was some £6,000,000, and if they took from that the £800,000 in rebates and drawbacks to the German manufacturers, the net yield from customs duties on manufactured articles was £5,200,000. That was not a very large revenue to be derived from the enormous machinery which was put in operation. But were we to have a larger revenue from the machinery to be put in operation in this country? He would like to ask the right hon. Gentleman whether he had gone into the matter arithmetically, though it might appear rather a prosaic method of looking at the subject. Firstly, they wanted to know whether or not the manufactures imported from the Colonies were to be subject to this duty? He could scarcely think that hon. Gentlemen opposite were going to bind the Colonies closer to our hearts by putting a 10 per cent. duty on their manufactured products. In 1906 the total schedule—and 407 our schedules were very imperfect in this matter—of manufactured and semi-manufactured goods imported into this country was £136,000,000. Did they propose to put a 10 per cent. duty on all those products? Of the £136,000,000 something like £20,000,000 was on lead, copper, zinc, etc., and nobody he should think would call these manufactured products. They had been desiring for a long time a definition of raw material and manufactured products. When were they going to have that definition? Were broken stones and iron manufactured products? The distinction between raw material and manufactured products was a fictitious one; it did not exist in fact. It was one which did not exist in any tariff in the world. The American, German, and French tariffs taxed raw material, and Members might find in their constituencies some who would want to treat as manufactured products goods which had been considered raw material, and they would find that granite for tombstones would have to be shifted to meet the wishes of some of their constituents. If he took the Board of Trade classification, imperfect as it was and including as it did manufactured goods like cotton seed oil and cotton seed cake, he could not arrive at more than £100,000,000, and not more than £50,000,000 fully manufactured goods. He would give them the benefit of the larger figures, and with a 5 per cent. duty, which he called a small duty, they would have a revenue of £5,000,000. But what was that revenue going to cost to collect? That was a point which never seemed to have been gone into with sufficient care by those who had investigated the matter on the other side. Our present cost of customs collection was over £1,000,000, and we had an exceedingly simple tariff and exceedingly few ports of entry. The cost of revenue collection in Germany was something like £3,000,000, and there it was obviously a simple thing. The number of their harbours and waterways was small. We had £1,000,000 paid now on a small number of articles. He had been through the Civil Service Estimates, and he thought it was no exaggeration to say that under such a schedule the additional cost would be something 408 between £3,000,000 and £4,000,000 a year, or even £5,000,000. Supposing he took the least figure, the amount for which they were going to harass and wrong every importer, cancel the whole of our commercial treaties, and cause disturbances and dissatisfaction to the trade and commerce of the country, was only £2,000,000. Perhaps 10 per cent. was a small duty; they would with a 10 per cent. duty have a total revenue of £4,000,000. Surely nobody would say that it would be worth while, not for any protective idea, not for the purpose of providing more employment, not to exclude the pettifogging foreigner, and not for the purpose of binding the Colonies together, but for a revenue only of £5,000,000, to upset our whole fiscal structure. The right hon. Gentleman opposite would upset and worry every importer and merchant in the City of London in order to raise £4,000,000.
§ MR. AUSTEN CHAMBERLAIN (Worcestershire, E.)I do not wish to interrupt the hon. Gentleman, but he appeals directly to me. £4,000,000 is roughly the amount raised by the coal-duty. What was the cost of collection?
§ MR. MONDsaid he had no access to official figures, but the right hon. Gentleman was proposing to put a duty on about 1,000 articles. Had he ever read the German schedule of sixty pages of manufactured articles? The difficulty was that all the articles would have to be inspected infinitely more carefully than now. However the line was drawn between manufactured and unmanufactured articles, the former would have to be inspected in a manner in which they were not to-day. The export of coal took place in a concentrated area and the duty was very easy to collect. There were 196 ports registered, at each of which there would have to be some kind of preventive officer. Were they going to make it practically impossible to import manufactured goods except at the few ports where the necessary arrangements now existed, or were they going to establish Custom House officers at those 196 ports fully equipped? The right hon. Gentleman had never told them how he was going to deal with the 409 enormous transit trade passing through England, amounting to £94,000,000 a year. That was a business question to which they must have a business answer. Were they going to have a series of free ports about the coast, and if so which towns and ports were to be favoured? If they did not have free ports, were they going to throw this £94,000,000 of transhipment business into the free ports of Hamburg and Bremen? Anyone who knew anything about this business knew how delicate it was, how small difficulties in loading, port dues, and matters of that kind would drive traders from one port to another—from one centre to another. How were they going to deal with the £94,000,000 of transhipment trade? It was a very big figure and it was a very big business, and they ought to have the scheme before them before they were asked to plunge wildly into reversing the fiscal system which had stood them in good stead for two generations. Bonded warehouses formed a large part of the expenses of duties in foreign countries. Were they going to establish bonded warehouses, and if so had the cost been estimated? Were they going to pay for them out of the revenue? If so, what was collected would very soon go in bricks and mortar. Were hon. Gentlemen going to follow their usual practice and borrow money for a free trade Government to pay back? Even then it would cost a lot of money. Were they going to allow drawbacks as the German and American manufacturers did? If so, could anybody inform them how much further the revenue would be diminished by the amount of duty repaid? Did the right hon. Gentleman think even £5,000,000 was a reasonable revenue for which to upset the whole fiscal structure of the country? There was one point it seemed to him which was misapprehended, and that was the enormous worry and disturbance to trade and commerce. Whether the article was dutiable or non-dutiable they would give an amount of trouble, extra clerical labour and work and anxiety to every trader in the country. He could give an example in his own experience. He was interested in some mines in Canada, and they were importing from a well-known firm in America a large amount 410 of mining machinery which was duty free Some of the machinery for nearly a fortnight remained on the railway siding to wait for an inspector to come and pass it as duty free. In the meantime the hands, the erectors and contractors, were all standing at the mine incapable of proceeding with their work while this red tape was being gone through. That was one example out of hundreds. A friend of his took a quilt to Germany. When it got there, the Custom House officer said it was dutiable as silk. It was not silk, and his friend had a long argument. Finally he got it through. He did not say that if they could turn this country into an earthly paradise, if more men could be employed at high wages, and if there could be no longer any distress or trouble, it was not worth while to go to a great deal of inconvenience to bring that about. But if they told him it was worth while for £4,000,000 or £5,000,000 a year to give an immense amount of trouble to traders and importers, if every lady who came back from Paris had her luggage turned out and all her things examined in the way they were at New York—if they thought that was going to be a popular policy they were widely mistaken. It was foolish. It was unworthy of any great mind. He was interested in the erection of engineering plant in Germany and Italy. They had tariffs in those countries and the wretched people who were buying this plant, which they could get made in England much better than in their own country, had to have a larger capital to carry on their industry. The amount of trouble that the calculations gave to the seller and the purchaser was simply incredible. They found the same trouble in the United States. A great part of the time of the merchants in New York was taken up, not in business, but in disputes with the Custom Houses as to which schedule their products should come under. If the Customs people were right, the importer sometimes made not a profit but a loss. That was a great waste of energy and time, and the extra clerical work and labour entailed represented increased cost to the consumer. These people were not going to keep an extra staff and increase their general charges in that manner out of their 411 own pockets. Was it worth while for four or five millions a year to incur all this expense and trouble and create all this dissatisfaction? There was one further point of considerable importance, and that was the question of the future. The last part of his proposition was that they might establish a tariff for revenue purposes only. They might be as innocent as new born lambs, their souls might be as white as the driven snow, but if they once introduced this subtle element of a tax on the article which was manufactured untaxed in this country they had begun to walk down that decline on which nothing had or could or would ever arrest a nation. Germany, America, Canada, and France all bore eloquent testimony to the truth of his proposition. Germany, after a period of happy free trade from 1870 to 1880, called for a revision of her tariff and requested Bismarck for the purpose of financing the Empire to undertake a revenue tariff. They were supposed to be small duties. Germany had a tariff in 1879, another in 1885, another in 1887, another in 1890, another shortly afterwards, and they had had another since. The tariff produced for revenue purposes only had mounted and mounted and mounted till it had become a protective tariff. What had happened? The last tariff the German Parliament passed was forced by the agrarian party under the threat that they would refuse to vote the money necessary for the Navy; they were as patriotic as protectionists always were; they demanded a high duty on corn and the starvation of the people or there would be no Navy. With the sword held to their breasts the German Government were compelled to pass the last tariff. The United States had a long record in the matter. They began with a tariff in 1790, which was a revenue tariff. In 1816 they tried a little protection. In 1824 they started a little more. In 1833 they had a compromise tariff. In 1842 they raised their tariff again. In 1846 they put the tariff down again. In 1851 they put it down again. In 1861 they put it up again. In 1862 they had another tariff. In 1864 they raised it again. In 1870, 1882, 1890, 1894, and 1897 they had Tariff Acts. What an occupation for a great Parliament and a 412 great country! What a happy prospect to hold out to them to spend their time in bolstering up decayed and ruined industries. They would find very curious phenomena if they went into the thing a little. When trade was bad it was always the fault of the tariff. It was either too high or too low. When the tariff was low and depression came along they screwed it up. When there was a high tariff and trade depression they put it down. What a splendid regulating system! The result was always uncertain, producing something entirely different from what was expected. In every country a tariff had always been the starting point, but protection had been the end, and it had gained and gained. Interests were set up which no statesman had ever been strong enough to resist, as had been shown in Canada, where the tariff was retarding the progress of the country. Naturally they would be raising up interests which they could not throw off. If they induced people in this country to establish industries under a revenue tariff, they would be establishing another lot of vested interests, and, as in the United States, they would perhaps have to find sources of expenditure in order to keep up the tariff. If there was to be a tariff, let it be a high one; then it would do something. The right hon. Member for West Birmingham never talked about small tariffs, never said he wanted little innocent revenue tariffs; he wanted to exclude the hated foreign product, which was taking the bread out of the mouths of English workmen. A revenue tariff would not do that; then why not tell the workmen so? It was because the Party opposite wished to allay the fears of their more timid supporters. Yet the free trade Unionists, the sacrificial lamb of the Party, were always being led to the slaughter by the confederates, and the arch-priest of the Party told them it would not hurt much. Let them cut its throat! Let them know what the issue was which every tariff reform speaker and lecturer was putting before the country. It had taken a long time to drive the Leader of the Opposition so far, but let him now plunge a little further. The tariff reformers could not persuade this country that the great work was fruitless which Gladstone and 413 Peel did in striking off thousands of duties that were found to produce no revenue and which it did not pay to put on. Let them forsake the flimsy ground of the new Birmingham eirenicon and take their stand by the old Birmingham policy; then the trade of the country would know where it was. He submitted his Resolution with confidence to the House, and he submitted it with equal confidence to any body of expert traders and to the consumers of this country. He begged to move.
§ *MR. RUSSELL REA (Gloucester)said he rose to second the Resolution which had been so ably moved by his hon. friend. He would not occupy very many minutes, because he felt that on an occasion like that the time at their disposal was so limited that it was not justifiable for him to occupy long. Tariff reformers professed that they did not want to return to the old full-blooded protection of the early years of the 19th century. But they forgot that in the middle of that century there was a great tariff experiment on their own lines. It was a scientific tariff of the modern kind and contained colonial preference, and it was the failure of that tariff that completed the full conversion of Peel and Gladstone to free trade. A Committee of the House of Commons which sat in 1840 and was presided over by Joseph Hume recommended a scientific tariff, which was adopted by Sir Robert Peel in 1842. The principles of that tariff were the reduction of duties on raw material, which in no case were to exceed 5 per cent., of duties on partially manufactured articles to a point not to exceed 12 per cent., of duties on manufactured articles to a point not to exceed 20 per cent., and it also contained the principle of preferential reductions of the duties on colonial products. That was the tariff advocated to-day by tariff reformers. It proved a failure, and it was its failure that converted Peel and Gladstone to free trade. In the course of his study of the economic history of that period he was very anxious to purchase a copy of the Report of the Hume Commission, but failed until he came across a second-hand copy, which he found had been in the possession of 414 the late Sir Stafford Northcote, and had voluminous notes upon it in that statesman's own handwriting. Those notes showed that the late Sir Stafford Northcote had no belief in small duties, and one calculation he made was to the effect that in the two years following the tariff of 1842 the produce of the tariff on 17 articles was £21,417,000, whilst the total revenue was £22,710,000, so that 95 per cent. of the whole revenue of the country was collected from 17 articles which were subject to tariff. That illustrated what he had said that there were only 46 articles in the tariff which yielded revenue worth collecting while 822 articles produced nothing. They knew what the state of the country was in what were known as the "hungry forties." The whole system of small tare; had been changed since then. The only people who paid taxes on imported goods were the taxpayers who lived in the country where the taxes were imposed. What he would like to know was whether tariff reformers and the Party opposite advocated the institution of a general tariff or not. "General tariff" was a term which had a very definite meaning in diplomacy and finance. It meant a tariff in which taxation was the rule, and freedom from taxation by the construction of a "free list" the exception. It meant a tariff that could be expanded into a penal tariff or reduced into a preferential tariff. He thought they had a right to ask the advocates of tariff reform whether they desired a general tariff in this country. Hon. Gentlemen opposite had spoken with two voices, and it was very hard to reconcile them. Speaking in the Albert Hall on 8th July, 1905, the right hon. Gentleman the Member for West Birmingham, dealing with the subject of small taxes and a general tariff, said—
Retaliation is an excellent text; so is Mesopotamia.… It is no use for a man to go down into the country and to propose to be an advocate of preference for the colonies, and at the same time to boast that he is unwilling to pay the price. We want the big revolver when we meet the men who are armed at all points. [Cheers, and "Well-loaded, sir."] I agree with the interruption. That is the whole point of my argument. What is the use of a revolver which is not loaded? We will load our revolver with a general tariff.… The revolver is not given to us as a toy—it is meant for use, that its charge—this general tariff of which I speak—may be turned 415 at a moment into a penal tariff. What is the good, for us, in our case at any rate, for us who are not politicians, to conceal what we mean?The right hon. Gentleman the Leader of the Opposition, speaking in the Merchant Taylors' Hall on 12th February, 1906, said—When I am told by another section of my friends that a small duty on corn is an absolute necessity and you can do nothing without it, I say why lay that down as a proposition? Are you sure it is a necessity? Are you sure that when the question has practically to be dealt with it will be dealt with by machinery? In the same way with a general tariff, do you mean that it is impossible to carry out what is called retaliation unless a general tariff is part of that scheme? I refuse, for my part, to make that limitation as I have refused to make the other limitation.In view of these statements, they had a right to ask what was the policy of the Party opposite. It they came into power, did they mean to impose a general tariff? He did not think the Leader of the Opposition could complain if the country universally interpreted his vote to-night, it he voted against the Resolution, as a vote for a general tariff.Motion made, and Question proposed, "That, in the opinion of this House, any attempt to broaden the basis of taxation by placing small import duties on a large number of articles is opposed to all principles of sound finance, wasteful and uneconomical as regards collection, disturbing and harmful to industry and commerce, would tend to raise the price of all taxed articles to consumers, and, in practice, would lead to the imposition of high tariffs of the same character as those in force in protected countries."—(Mr. Mond.)
§ *MR. HILLS (Durham)said the mover of the Resolution had covered a very wide field. He could not pretend to soar to the heights which the hon. Member had reached. The hon. Member had stated that those on his side of the House had great minds, while their opponents had small minds. He was quite content to look at this question from the point of view of the national interest and to see how far it affected the country at this particular time. He agreed that persons were taxed, 416 not things; but that only half stated the case. The object of extending taxation over a large number of articles was to tax the person according to his ability to pay. He would give a concrete case. He supposed that the hon. Member for Chester smoked cigars sometimes or he might have a motor car. If these things were taxed, he was taxed according to his means and substance, or, in other words, according to his expenditure. But if all the revenue of the country were raised by indirect taxation, it would be a far less fair means of making the individual pay according to his ability to pay, than a tariff would be. [MINISTERIAL cries of "No."] The second point was this. At present they taxed a large number of articles. The things taxed, however, were the very last that would be taxed, if they taxed people according to ability to pay. Take sugar, the sugar tax was practically a poll tax. It was said that if we had a general tariff the sum obtained would be so small and the cost of collection so great that in the end we should be no better off. The proposal of a revenue duty on manufactures was not a blind 10 per cent. all round. It was a 10 per cent. net revenue. If the hon. Member asked on what standard it was proposed to fix the amount of the duty, he would refer him to every scientific tariff the world had ever known. Did the hon. Member not know that in the German tariff, for example, the gradation of taxes depended on the labour involved in the production of the article? According as an article was produced by the employment of much or little labour, so the tax was increased or lessened. Instead of the 5 per cent. or 10 per cent. on manufactures being a blind duty all round, it was a 5 or 10 per cent. net revenue. After all, the amount taken at customs was only one part of the revenue produced by taxation. He held that the effect of any taxation of this sort was to a certain extent protective; but in so far as it was protective it must have some effect on the industries of this country. All the internal taxes were in some sort taxes on production. The income tax was certainly, correctly speaking, 417 was a tax on production. If production was simulated the taxable capacity of the country was stimulated, and therefore there was a large increase in the standard or staple taxes. When the mover of the Resolution got up and reduced his sum to four or five millions, he ought to look further a field to see whether there were not certain things which he had not considered. Ever, at the Custom House the returns would be much greater than he made out, and if there were added the increase of the taxable capacity of the country, it would be found a very great deal. He was entirely at one with the mover of the Resolution as to the difficulties of any proposed new system. In his own opinion the present system of taxation had gone mad on simplicity. [Ironical MINISTERIAL laughter.] Yes, gone mad on simplicity, and for this reason; that they had gone entirely for ease of collection. All they had thought of was what the Chancellor of the Exchequer could get in most easily in the way of taxation. They had gone in for Mr. Gladstone's principle of a few taxes on articles of general consumption. He maintained at once that that was the worst standard that could be had. It simply meant that the poor paid an excessive amount of that taxation. It seemed simple to collect, but from the point of view of the poor taxpayer it was demonstrably wrong. Although the scheduled manufactured articles in the German tariff occupied 70 pages, and although it looked a very formidable list yet it presesd much less hardly upon the German taxpayer than the sugar duty did here. To say that it would be difficult to introduce a new system was a pure confession of weakness. If the thing was right, it ought to be their duty to do it. For seven years a Committee of experts had sat on the German tariff, the whole trade of Germany for the last twenty years had been examined, and 2,000 witnesses had given evidence. The result of that labour might or might not be accepted by hon. Gentlemen opposite, but it was absurd to say that it was wasted time. All the free trade party seemed to think that it was not the business of the country to consider what industries were carried on in the country. 418 They seemed to think that the interest of the individual was always the same as the interest of the State. They knew that the manufacturer looked quite rightly to get his profit, and yet they seemed to think that by doing so he must conserve the interests of the State. But he maintained that the State had a great interest in the industries of the country apart from the interest of the individual producer. It had a perfect right to say that certain industries were good for, or were necessary for, the community. All the arguments about the selfish nature of protection were rather small; it was not as if they argued for tariff protection only for the sake of the producer of manufactured articles. He might be entirely wrong, but did they suppose that people like those who had gone into this movement of tariff reform were mainly concerned for the themselves and that they took all this time and trouble for the mere protection of their own interest? Surely not. The State was directly interested in the amount of production turned out by the manufacturing industries; but according to free trade doctrine that did not matter to the State. He contended that the interest of the individual was at nearly all points in conflict with the interests of the State, and that it was the duty of the State to interfere and regulate production, and it could only do that by means of taxes. Gentlemen on the other side of the House talked about giant industries held down by the unseen bonds of thousands of taxes. He disagreed with that entirely. The only way in which the State could interfere with and help industry was by means of taxes. [MINISTERIAL cries of "Oh, oh!"] What other ways were there? If they gave up that means they surrendered all control over the industries of the country, and that was a counsel of despair. It meant saying that they simply meant to let people do what they liked, and that those who represented the whole community were to do nothing at all. He took his stand on quite different grounds. He held that by taxes they could raise revenue and also do a great deal for the productive power of the country. The mover of the Resolution had told the House a great deal about the evils which existed in 419 protective countries, about the people eating horse-flesh and black bread and all that sort of thing. He suspected that the hon. Gentleman was not quite serious in that part of his argument. He would ask the hon. Gentleman to look for a minute and see how the protective system really worked in Germany. The hon. Gentleman spoke of Germany in the happy days of free trade. Happy days of free trade—when Germans were leaving the country at the rate of 200,000 a year! When they came to look at any industrial system they must look at it from the point of view of what it had done. Hon. Members opposite defended their system, but any system broke down which did not employ the people of the country, and surely they who advocated a change had something to say for themselves. What was happening now in Germany? She was absorbing into her industrial life double the number of people we were. They ought not to speak of unemployed and of the percentages of people who were out of work. They ought to look at those who were employed rather than at those who were not. They never said how many people this country absorbed into its system year by year; and on that ground all the figures quoted by hon. Gentlemen opposite were beside the question. The President of the Board of Trade had told them a few days ago about the amount of unemployment in the United States. The answer to that was, that in the last ten years the United States had absorbed 15,000,000 people, for whom they had, more or less, found work. Of course, it might be said that the United States was a new and undeveloped country, and not a fair test to take; but let them look at Germany, where they had absorbed 4,000,000 people, and their system had suited their country so much better than our system that they had added double the number to their population that we did. It might be said that emigration was a remedy for unemployment. It was not a remedy; it might have been so in the old days when we sent men across the seas as consumers who bought our goods. But now we sent producers who competed with us. The more people we could absorb into our system the better for us. We were only 420 on the threshold of a new day, when the number of people would be increased to an incredibly greater extent than now, and when they would find employment through the enormous extension of machinery and of our productive power. If an industry was started, population and capital flowed in, and if we started industries here, people would not leave us, and this drain which we had every year would not take place. The hon. Member who moved the Resolution talked about protectionist interests. He quite admitted that all fiscal systems must help somebody—certain interests were suited by certain systems. Free trade suited certain interests. But what they had to look at was not the interests of this body of men or of that industry, but the interests of the country as a whole. Did the Party opposite mean to defend their system as perfect? Did they mean to go on year after year, with all these people out of employment, and suggest no remedy at all? Everything they suggested was merely a palliative, and when they on that side tried to find a remedy, hon. Gentlemen opposite said they were selfish, simple-minded, and stupid protectionists. But they did not answer the question that was before them now. Their speeches might be made anywhere; they were perfectly out of place there. It was the existing condition of things they had to meet, and the Party opposite made no sort of attempt to meet them. If they did not, he could assure them that they on that side of the House would get their chance.
§ *MR. HAROLD COX (Preston)said he had listened with so much pleasure to the speech which they had just heard that he would try and answer a few of the points which the hon. Member made. He began by using what appeared to be a very fair argument, that there was theoretically a case for a multitude of duties, because by that means they would spread the burden of taxation over a multitude of people, and would make people pay according to their means. He thought, however, the hon. Member overlooked the fact that they were by no means more sure where the burden was going to fall than they were at present. He had also overlooked the much 421 more serious consideration, that if they were going to get a large revenue that way they must tax the things that the mass of the people used. They could not get a large revenue by taxing the things which the wealthy people used, though by doing so they might get a little but not much. He quite agreed with what the hon. Member said about the sugar and tea taxes. He was opposed to those taxes, but he would point out that if the hon. Member wanted scientifically to make taxes rest on those people who could best bear the burden, then the only scientific tax was the income-tax. He, personally, was in favour of extending the income-tax downwards so that every man should pay an income-tax, however small it might be, and make some direct contribution to the great club to which they all belonged, and so that he might know the amount of the contribution he was making. The reason they did not extend the income-tax downwards was the trouble of collection, but he believed the tremendous moral and political value they would gain would fully justify the extra cost involved in the extra trouble of collecting. The hon. Gentleman had also told them that the German scientific tariff was based on the theory of putting extra duties on those things that contained a larger amount of labour. On that theory he presumed the hon. Gentleman would put a larger duty on cloth than he would on yarn. Would that be an ad ralorem duty?
§ *MR. HILLSsaid not necessarily. It was not always the same thing. The labour value of each product would have to be found and the labour value taken into consideration in the tax.
§ *MR. HAROLD COXBut how? By weight or by value? With staple articles of manufacture, ultimately the 'question came down to one of money value.
§ *MR. HILLSNot money value, labour value.
§ *MR. HAROLD COXsaid the point he wished to make was that the amount of labour on £100 of yarn was the same as on £100 of cloth. If the hon. Member 422 doubted that he would ask him the old question of their childhood—Which was the heavier, a pound of feathers or a pound of lead.
§ MR. CARLILE (Hertfordshire, St. Albans)said in transferring yarn into woollen cloth they added to the amount of labour.
§ *MR. HAROLD COXthought with all respect he had already got as far as that. His point was that £100 of yarn contained a greater weight of yarn than would be made up into £100 of cloth. If they took £100 worth of each they would find the same labour in the lump. It must be so.
§ *MR. HILLSIn £100 worth of yarn there is a certain amount of wool and a certain amount of labour. In £100 worth of cloth there was a smaller amount of wool and a larger amount of labour.
§ *MR. HAROLD COXsaid that the wool represented labour. The hon. Member for Durham was suffering from a difficulty which all tariff reformers had felt—the difficulty of discriminating between raw material and manufactured articles. He challenged anyone to say whether leather was a raw material or a manufactured article. Let them take the case of oil, which was raw material in the manufacture of linoleum, but oil was also a manufactured article. A Scottish manufacturer of lineolum had told him that he was so troubled by the French tariff that he thought of transferring his factory to France. He had gone so far as to select a site, when it occurred to him to ask at what price he could get his raw materials in France. He then discovered that the French duties were so heavy that it paid better to continue the manufacture in Scotland. The hon. Member said that he was in favour of the principle of regulating the industries of the country for the good of the country. But it was impossible to give an advantage to particular industries by means of a tariff, unless that tariff enabled the manufacturer to obtain higher prices than he could without a tariff. By encouraging some industries we must consequently depress others.
§ *MR. HILLSThe thing that interests the producer is not the price, but the profit. A larger sale means a larger profit; and, therefore, an extended market may give a larger profit without raising the price.
§ *MR. HAROLD COXsaid that any producer could get a larger sale by selling more cheaply. What the producer wanted was a price above what he would get if there were no duty, and that must be paid by the rest of the community, and thus fall on other industries. It should be asked what industries hon. Members proposed to benefit and what they proposed to injure. No hon. Member opposite had said what industries they proposed to benefit, although when they went into particular districts of the country they advocated a protective tax for the benefit of the industries of those districts, as, for example, cement and hops. But as a national policy they had not declared that for the national interest such and such industries should be extended. It was impossible for them to do this, because, while the agricultural industries would be benefited by taxing agricultural imports, the manufacturing industries would be injured by the same duties. Hon. Members could not benefit all the industries of the country at the same time, and they had never said what was the industry from the national point of view they wished to benefit. Reference had been made to the growth of daffodils in the Scilly Isles. But why was it an objectionable industry to grow daffodils? They gave a great deal of pleasure to humanity, and if we could produce daffodils here at a greater advantage than we could produce corn, why should we not produce them? What national advantage was there in producing corn when we could produce daffodils more profitably? If the object of hon. Members was to increase the amount of labour on the land it was better to grow things like fruit and daffodils than corn, because corn growing was a machine industry, meaning that fewer people would be employed on the land. Did the hon. Member realise that the effect of his plan was not to encourage people to improve their methods of production, but to discourage them in taking pains? He would give a practical illustration of this. A 424 maker of damask table cloths for the market in the United States had an offer of particularly fine linen yarn from Belgium. He wrote to the Irish spinners by whom he was usually supplied stating that he had this Belgium offer at a lower price. The Irishmen protested against the conduct of the foreigner, but some of them went to Belgium and discovered that the success of the Belgians was due to a new machine made in England. They erected this machine in their own works, and now they supplied the yarn at a lower price than that at which the Belgians could supply it. The hon. Member in his test of employment omitted the case of Lancashire, which lived on an export industry. The whole of Lancashire was dependent upon an industry which imported its raw material from the ends of the earth, and sent out manufactured goods to the ends of the earth. What duty could hon. Members put on which would benefit the industry of Lancashire? There was not a single duty which could possibly bring any advantage to the Lancashire industry, representing, as it did, one-fourth of our total exports. On the other hand, there was scarcely a duty which could be put on which would not injure that industry. The effect of all these schemes of fiscal reform was to subsidise particular industries at the expense, of the whole community. Free trade, also, might be looked upon from a selfish point of view, but there was this great difference, that the free-trader was the man who sought to get his materials cheap, and in making that request he was putting himself at one with the whole of his fellow-beings. The protectionist was always wanting to sell something dear, and in doing so he was setting himself against the whole of the rest of the community. In the one case the selfishness was social; in the other, anti-social. The difference between the protectionist and free-trader was that the free-trader sought something which would benefit himself and all his fellow men, the protectionist sought something which would benefit himself against his fellow-men. He ventured to suggest that those Gentlemen below the gangway who advocated socialism, and those above the gangway who advocated tariff reform, were advocating the same principle. Both were appealing to the 425 State to subsidise somebody; both were trusting to what they could wheedle out of Parliament instead of trusting to their own energies and efforts. Those above the gangway wished to tax the food of those who sat below, and those below the gangway wished to tax the dividends and rents of those above. This difference of opinion naturally gave rise to some little ill-feeling. But give them time. The irresistible laws of logic and the exigencies of political campaigning would bring both groups into one camp, whence they would march forth shoulder to shoulder to plunder honest men.
§ MR. A. J. BALFOURIt is, I suppose, an inevitable law of these debates, in whatever narrow limits they appear to be fixed, to wander at large over the whole vast area of the fiscal controversy. I am not going to intervene in that part of the hon. Gentleman's dialogue which he had with my hon. friend the Member for Durham. It was highly instructive and entertaining. It had more resemblance to the modes of discussion of the sixteenth century than it had to the ordinary debates of this House, but I am not sure that it has any relevancy to the Motion we are now discussing. The Motion is strictly defined. It relates strictly to the question of whether we should or should not broaden the basis of taxation and increase the number of articles from the taxation of which the revenue of this country is obtained. Amusing as was the hon. Gentleman's speech, especially in its latter portion, in which he drew a parallel between the Party sitting below the gangway and those sitting on these benches, and spoke of us both as assaulting the citadel of which the hon. Gentleman himself has become almost the only defender, I do not see that there is any sign of any cooperation with him either in this or any other question. But the hon. Member did not profess to touch the subject of the Resolution, and if I turn from his speech and go back to the speeches of the mover and seconder, which did more or less touch on the issue before us, I suppose I have to regard the Motion they were defending as the lineal but rather degenerate successor of those private Members' Motions with which 426 we were so familiar in the last Parliament, and from which hon. Gentlemen opposite derived so much gratification. That gratification, I suppose, is diminishing. I do not fancy they look forward to those Tuesday and Wednesday evenings devoted to fiscal reform with the same exhilarating sentiments of hope and expectation which formerly animated them. A good many causes may be suggested for that change of view, some of them purely electoral, to which I will not further refer—some of them purely electoral, others relating to the real economic basis of this controversy on which I think they are beginning to discover there is a good deal to be said which their economic philosophy has so far not dreamed of. There are a certain number of them, no doubt, who still with perfect self-contentment continue to repeat the old fallacies long ago given up by every competent economist. [MINISTERIAL Cries of "Name."] There is the hon. Gentleman who seconded the Motion, the Member for Gloucester. He announced as an axiom that the whole duty on all imported goods was necessarily and inevitably and always paid by the importing country.
§ *MR. RUSSELL REAMy opinions on that point have been published, and I did not express my view in that absolute manner.
§ MR. A. J. BALFOURThe hon. Gentleman said the people of the country which put on the indirect taxation were the people who paid it.
§ *MR. RUSSELL REAThere are other cases in which, of course, the incidence of the tax is divided.
§ MR. A. J. BALFOURI think if the hon. Gentleman looks at the report of his speech to-morrow he will see that he made the proposition in a far more unqualified form. Of course, I accept his statement. He does not go the length of the Chancellor of the Exchequer, who lays it down as an economic proposition that not only do the taxpayers, of the country which puts on the tax pay all, but they probably pay more. If either the Chancellor of the Exchequer 427 or the hon. Gentleman who seconded the Motion were to give any such answer at an examination in political economy in any of our Universities, he would undoubtedly be plucked. I was rather astonished to hear the hon. Gentleman who has just sat down, who has given a great deal of study to these questions and is as competent as any man in the House to deal with them, say that because Germany was twice as large in area as this country it was twice as easy to employ its population.
§ MR. HAROLD COXI only said there was obviously room for more expansion of the population.
§ MR. A. J. BALFOURI think, if the hon. Gentleman reflects on the proposition, he will see that the power of any country to support a population depends hardly to any extent upon the area; it depends on the resources of the country. I mean on its capital and its power of organising industrially. These are elements which enable a country to support population, and to bring in a mere question of square miles as a solution of that problem is a method of dealing with economic problems which is not, I think, quite worthy of the knowledge and dexterity of the hon. Member for Preston. All the Gentlemen on that side of the House have, I think, so far followed their previous examples on similar occasions as to occupy most of their speeches in earnestly pressing us for details of any plan for carrying out fiscal reform. There was a period when that kind of appeal had a certain plausibility. I always thought it very irrational. I always took the view that it was only the Government that actually had to prepare the Budget and conduct the policy of the country which could be expected to deal with the details of the measures they put forward. I am aware that when they were in Opposition hon. Gentlemen took another view. They have become far tamer now that they are in office. If they will allow me to say so, they take a far more rational view of the situation. We wanted very much to know last night what they were going to lay before the Country upon another question—a question not less important than fiscal 428 reform. Two Ministers spoke. They involved themselves in a cloud of words. Friends and foes left the House absolutely ignorant as to what the view of His Majesty's Government is in regard to Home Rule. I am not going to dwell upon that theme. At all events, it saves us in the future from that preposterous method which hon. Gentlemen have indulged in for four years, and which even after last night they have not yet got out of the habit of employing, of insisting that one Parliament should pronounce upon what the next Parliament is going to do. Hon. Gentlemen opposite choose to keep their own counsel as to what they are going to do when the next Parliament returns them, but it is very inconsistent with their own appeals and requests on previous occasions. The mover of the Motion, both in his speech and in the words of the proposition which he has laid before the House, says that any small duty upon imported goods, whatever it may be in the beginning, will lead inevitably to a policy of protection. All through my Parliamentary life I have belonged to a. Party which has watched with anxiety the beginning of things which, though very good, may develop into something which we think would be bad. I suppose that is the Conservative attitude of mind, and it may be pardonable in a Conservative politician. We have always been denounced by hon. Gentlemen opposite for that attitude. They have always said: "Treat the thing on its merits. Do not consider what is going to become of it when it is passed into law. Leave that to future Parliaments and to public opinion. Do what is right and best at the moment, and leave posterity to prevent any irrational, harmful developments of the good system which you establish." Let the hon. Gentlemen who moved and seconded the Motion follow that principle. Let them not disturb their dreams by the idea of a strange and extraordinary system of taxation in this country, which nobody, So far as I know, has ever recommended, and certainly does not follow rationally or logically from the broadening of the basis of taxation which I have consistently recommended both before and after the fiscal controversy arose. It is quite true the hon. Member who moved 429 the Motion conjured up all sorts of terrors as to what would happen to our commerce if a small general duty were imposed upon foreign manufactured goods. He said trade would leave your ports—[MINISTERIAL cries of "So it would "]—and would go to the free ports of Bremen and Hamburg. I thought Bremen and Hamburg were situate in Germany, and that, in the opinion of the hon. Gentleman. Germany was the ideal of a country which had adopted protection.
§ MR. J. M. ROBERTSON (Northumberland, Tyneside)Hamburg is a free port,
§ MR. BALFOURThen a free port can exist in a country which is protected.
§ MR. A. J. BALFOURThat is not what the hon. Gentleman said in his speech. He slid in his speech that the result of adopting a small duty would be that our commerce would go to the ports of a country that had a big duty. The hon. Gentleman spent the greater part of his speech in dealing with the enormous cost of collection inevitable, as he supposed, to the imposition of small duties on manufactured goods. I am amazed at that view. In the first place, the hon. Gentleman is wrong in supposing that a duty which is in itself simple necessarily carries with it simplicity of treatment in the Customs House of the country. I suppose no duty could be more simple to impose than the sugar duty. Has the hon. Gentleman consulted the Blue-book issued by the Commissioners of Customs upon the sugar duty? He repeated from a very old Blue-book of 1840 the arguments against a complex tariff based upon the assumption that if you have a complex tariff very small duties are raised. If the hon. Member will look at page 68 of the Blue-book he will find that, as 430 a result of our putting on the sugar duty, we have to examine and differentiate between an enormous number of separately imported articles. From one of these articles I observe that the net amount collected in the year was £4, from another article £79, from a third £24, from another £35, from another £90, and from another £1. Therefore it is clear that the simpler system of duties which now prevails in this country may be simple so far as the legislation in this House is concerned, but it is not simple so far as the tables show us in its working at the Customs House. But I believe that the apparent complication is in reality a very small argument against the sugar duty. The sugar duty may be good or bad, but the enormous number of articles which have to be enumerated as taxable under the sugar duty are taxed without any difficulty, and I believe that the drawbacks claimed by manufacturers when they export are repaid without any difficult and friction and without that enormous cost which the hon. Gentleman appeared to think was the inevitable result of such fiscal arrangements. I am told for example that Huntley and Palmer's, whose biscuits require a small amount of sugar for their manufacture, can therefore claim a drawback when they export their biscuits. At first sight we might expect there would be no transaction more complicated than giving back to the exporter the exact amount of drawback on the fractional amount of sugar contained on each biscuit in one of their boxes. But it can be done, and is done, without the smallest difficulty. It involves no expense and no trouble, and carries with it no fraud. I heard some gentleman express dissent. I do not believe what I have stated will be contradicted by anyone who has access to the officials of the Board of Customs, and it is a great illusion to suppose that a system which looked complicated on paper was necessarily under modern organisation a 431 difficult system to carry out in practice. The mover of this Resolution talked about the enormous cost necessarily involved in the raising of taxation under a new system. Has he compared the cost of raising taxation in this country, with the cost in foreign countries? Is it so clear that the simpler system of this country carries with it necessarily and inevitably that cheapness of collection by which the hon. Member set so great a store? From his point of view there can be no worse system of taxation than that which now prevails in the United States. I am told if you take the whole taxation internal and external of that country, they raise their enormous revenue with a smaller percentage of cost to the taxpayer than we do here in this country under our system. I do not know whether the hon. Gentleman is aware of that. If the hon. Member was aware of that fact he might have taken the House into his confidence.
§ MR. MONDI did state that the total cost of the Customs collection in the United States was 1 per cent. On the total imports, and if I took that basis the cost of collection on our imports would be £5,500,000. In America there is no income-tax and the internal revenue is absolutely irrelevant.
§ MR. A. J. BALFOURThe thing is not irrelevant at all. I believe it is true that the cost of collecting the Customs in America is slightly in excess of the cost of collecting the Customs in England—not a great deal, but fractionally in excess. But the total cost of collecting is less than in Great Britain, they do collect their enormous revenue for less cost than we do. I believe that is the fact, and at 432 any rate nobody contradicts me. I turn to other matters. One would really suppose from the speeches of the mover and seconder of the Motion, and they are the only Gentlemen who have spoken to the question on that side of the House, that it is a preposterous, antiquated, and absurd method of raising national revenue to put a small tax on a large number of articles. Well, there are two large communities over whose policy this country has absolute control, India and Egypt, and both India and Egypt, as far as I know, raise their revenue by small duties upon imports. The hon. Gentleman talked as if it was an accepted axiom of every sound economist that you ought to pile your taxation on one or two articles, neglectful of all the collateral effects which that process may have, and that it is obviously and plainly on the face of it sound finance. It is not sound finance, it is not the finance we adopt in dealing with other countries, it is not the system which any other country has adopted. It is not the system of finance which theorists accept and it is not the system which practical men accept. When the hon. Gentleman talks as if it were axiomatic, there is a kind of insular arrogance about that, which is the more extraordinary when you reflect that the insular Government whose domestic policy he recommends, when they have to deal with Egypt and India, do not recommend the policy which he regards as clearly the only one which any reasonable man would for a moment think of adopting. Therefore, I think we may dismiss from our minds the pessimistic arguments which the hon. Gentlemen opposite have employed when they are looking forward to the time, I daresay not very distant, when there will be a great extension of the basis of 433 taxation in this country. But there was one aspect of the question, in my opinion a more important aspect, on which nobody so far has touched at all, and that is the source from which you are going to get your revenue in the future if the needs of this country increase. I am astounded when hon. Gentlemen opposite talk of Mr. Gladstone and Sir Robert Peel and their predecessors as supporters of their view. What is their view? It is that the only scientific system of taxation which any rational man would adopt is the system of direct taxation—they would like to substitute the income-tax for indirect taxes. And the men who recommend that policy appeal to Mr. Gladstone and Sir Robert Peel as their masters in finance. They must know, even those who have taken the least trouble to acquaint themselves with the history of this topic, that the income-tax was adopted both by Sir Robert Peel and by Mr. Gladstone as a temporary expedient for reconstituting and remodelling the system of import duties in the country. They would have regarded with horror and indignation the hon. Members for Cheshire, Preston, and Gloucester. The hon. Member for Gloucester gave us a most amazing version of Peel's great Budget of 1842. I have always understood that that Budget was regarded as one of the greatest triumphs of a great financier. That is not the view of the hon. Member for Gloucester. The hon. Member says it was the failure of that Budget which converted Sir Robert Peel and Mr. Gladstone to free trade.
§ MR. J. M. ROBERTSON (Northumberland, Tyneside)It was the failure of the tariff of 1842.
§ MR. A. J. BALFOURMy point is that it has always been claimed by those who, 434 from the point of view of hon. Gentlemen opposite, have surveyed with approving eyes the fiscal policy of this country for the past hundred years that the Budgets of 1842 and 1843 were great Budgets. Now we are told it was the failure of the Budgets that made Peel and Gladstone free traders. But that is by way of parenthesis. The argument with which I am concerned is that the great masters of finance in this country have never held the view which has been put forward to-night in all its nakedness by the mover of the Amendment and the hon. Member for Preston and, I think, the hon. Member for Gloucester. They would like to substitute direct taxation for indirect taxation over the whole area of national finance. Who contradicts that? The mover of the Resolution and the hon. Member for Preston would like to see direct instead of indirect taxation. That they say, is the only sound and scientific system of taxation. I say that that doctrine would have horrified Sir Robert Peel and Mr. Gladstone, and it is a matter of common notoriety that not only did Mr. Gladstone object to the income-tax being made a permanent part of the fiscal system of the country but he appealed to the electorate in 1875—unsuccessfully indeed—to return him to power because the one positive plank of constructive policy in his programme was the abolition of the income-tax. Now, I understand, the Party who profess to have inherited Mr. Gladstone's system of finance regard the income-tax, not as an expedient for putting indirect taxation on a sound basis, but as a permanent and necessary part of the finances of the country; which, indeed, I am afraid we must regard it in view of the present state of national expenditure, as the only proper means by which revenue is to be raised. They 435 support that view by saying that it is the bounden duty of every Chancellor of the Exchequer to make the taxpayer feel the full weight of the burden he is imposing upon him. That is not a theory which has been invented to-night for the first time. I have always thought it the most absurd financial theory ever advanced by responsible persons. At all events, if I were Chancellor of the Exchequer, I should like to impose taxation in such a way that nobody would ever know they were paying any at all. If I were fortunate enough to attain that consummation I believe I should be the most popular Chancellor of the Exchequer that this country has ever produced. [An HON. MEMBER: What would you tax?] When you talk of the burden of taxation on individuals you ought to mean what the individuals suffer in paying taxation. If I could prevent individuals feeling it at all I should feel that I had taken away the whole of the burden, because it is what we feel in this matter, and any other doctrine to me seems purely speculative and devised for the purpose of compelling unwilling colleagues to give up expenditure which they may think necessary in their several departments. Let the House consider what the financial position of the country is, so far as we can guess it before the Chancellor of the Exchequer's statement. We have got 1s. on the income-tax, a very heavy duty on sugar, which hon. Gentlemen opposite are pledged to reduce, enormous taxation on tobacco and on tea, and you have got expenditure which is obviously going to rise and rise enormously in the next few years. If you count up your commitments in regard to the Army, Navy, and various branches of the civil service, quite irrespective of old-age pensions, a financial 436 prospect is before you which might make any Chancellor of the Exchequer uncomfortable. You have beyond all that pledged yourselves to some beginning of old-age pensions which is admittedly only a beginning, and which, therefore, is going to carry with it new commitments of great extent falling not on this Budget but on future Budgets. It is impossible to meet these claims out of existing sources of taxation unless you raise the taxes either upon your imports, your income, or your death duties. It would be perfect madness to raise the taxes on any of those things. You would be seriously crippling industry; you would be inflicting a great injury on every class of the community, and I believe you will be driven whether you like it or not to widen the basis of your taxation. What is the use of the hon. Gentleman coming down to the House and getting his friends to vote in a great majority that they will not increase the burden of taxation when it is perfectly manifest to everybody that you will either increase your income-tax to a point which destroys it as an instrument to meet a case of public emergency, which promotes evasion, which will leave a feeling of hardship in the class specially affected, and will have all the ill effects of which every financier to whom you appeal laid the greatest stress in their Budgets, or increase the sugar duty, or the tea duty, or the death duties, which is a way of diminishing the capital assets of the country? It is madness to look to these sources for any considerable increase in your revenue, and if you do not look to those sources, the only sources you can look to are that increase of Customs duties which I advocate on financial grounds, and financial grounds alone, but which I frankly admit I should 437 welcome, and doubly welcome, if they offered me, or any Government with which I am connected, a chance of making those arrangements with our Colonies to which I personally look forward as a great source of strength to the Empire. Putting that consideration altogether aside, as perhaps we ought to put it aside on a night when finance, and finance alone, is occupying our attention—quite apart from that, such arrangements will most unquestionably and on free trade grounds increase the manufacturing powers of this country, its market beyond the seas outside these narrow shores to a degree great now, yearly increasing, and of which no man can see the end. Sir, it is in the power of hon. Gentlemen opposite, if they retain the confidence of the country, to prevent any of these collateral consequences of broadening the basis of taxation; but I believe it is neither in their power nor in the power of any Government of this country, in view of the enormous financial responsibilities we have already begun, which are daily growing, whatever their view may be of our relations with the Colonies, to adhere to that system, fitted, indeed, and well fitted to our needs two or three generations ago, at a time when we considered the income-tax as a temporary incident of our fiscal system, but utterly unfitted to a period when more and more is daily being claimed by the community of the Government at its head, and when more and more is daily asked from this House to carry on those great social reforms to which every party is committed, which every party desires to carry through, but which nobody with the smallest knowledge of the practicabilities open to us can imagine can be carried 438 through on the financial basis on which we are now working.
§ THE FINANCIAL SECRETARY TO THE TREASURY (Mr. RUNCIMAN,) DewsburyI do not complain for one moment of the fact that I have only six minutes in which to address the House on so large a subject, for it is seldom that we have the pleasure of hearing the right hon. Gentleman make a speech so momentous, so full of commitments, as we have heard to-night. I gather that the right hon. Gentleman has committed himself to a general tariff.
§ MR. A. J. BALFOURI certainly have committed myself to a very wide increase in the basis of taxation, but that is all. [MINISTERIAL cries of "Oh."]
§ MR. RUNCIMANThe right hon. Gentleman then has committed himself to a very wide increase in the basis of taxation. That, however, is another way of transposing or paraphrasing the phrase "a general tariff." He has committed himself also to the principle of taxation which is based upon colonial preference. I think I might add that not one single Member of the Party opposite, so far as I can gather, views this plunge with any disapproval, and the right hon. Gentleman does not contradict what I say. ["Oh, oh."] I am sure no one knows better than the right hon. Gentleman himself to what he has committed himself. He has committed himself, through Colonial preference, to food taxes; and when the right hon. Gentleman commits himself to Colonial preference, which involves food taxes, and when he says he wishes to widen the basis of taxation, he means 439 he wishes to have taxes on more articles of food, and not on less. I notice that the right hon. Gentleman, in the course of his speech, made some reference to the fact that he had in times past watched with anxiety the introduction of the thin end of the wedge. Well, on this question he watched with similar anxiety the introduction of the thin end of the wedge, but he has himself now gone as far as any front bencher whom I see opposite, and I need hardly say that we on this side of the House view that final step of his with the utmost satisfaction. We know now exactly where we are. [Cries of "Peckham."] Well, I turn in the few moments left to me to one or two considerations dealing with the Exchequer, for let the House remember that this Motion really is an Exchequer Motion. It deals with the principles of sound finance. In the very forefront of the Resolution is the statement that any departure from our free-trade finance would be unsound. I venture to say that if the right hon. Gentleman ever introduces a tariff, if he ever extends the basis of taxation, which he is now pledged to do, he will find, first of all, that his tariff becomes unproductive, secondly, that it becomes costly to the Exchequer, and, thirdly, that it becomes immensely costly to the consumer; and—what is more than that—he will find that he has tied his hands, and that in future he will not be free to frame any tariff that he thinks fit. If we only had a tax for one year it would immediately create a vested interest. If we had it for five
§ years or ten years you would find that the whole machinery of a great industry was used in every election all over the country—in every constituency, in every town, and in every village—in order to bolster up that particular trade or industry. I will ask the House to compare what has happened in England with what has happened in Germany. During the last two years, while we have been in power, we have adhered strictly to free trade. ["Oh, oh."] Our free-trade finance has proved sufficient for all the needs of our time, and when the right hon. Gentleman asks how are we going to deal with the future, I can assure him that so far as our projects for the future are concerned, we will finance them without any departure from free trade. In Germany during that very period they have seen their revenue from indirect taxation go down, and they have ended in the last year with a deficit of £6,000,000, they have absolutely suspended the redemption of debt, and they have had to follow the example of our predecessors in office, and to pay a pretty good deal of current expenditure out of loan money. If we compare that with the experience of the United Kingdom during the last two years, I think we have reason to say that free-trade finance has stood the strain which has been placed upon it, and that we have no reason whatever for departing from our principles.
§ Question put.
§ The House divided:—Ayes, 280; Noes. 91. (Division List No. 62.)
443| AYES. | ||
| Abraham, William (Cork, N.E.) | Alden, Percy | Armitage, R. |
| Abraham, William (Rhondda) | Allen, A. Acland (Christchurch) | Astbury, John Meir |
| Adkins, W. Ryland D. | Allen, Charles P. (Stroud) | Baker, Sir John (Portsmouth) |
| Baker, Joseph A. (Finsbury, E. | Flavin, Michael Joseph | Mac Veagh, Jeremiah (Down, S. |
| Balfour, Robert (Lanark) | Fuller, John Michael F. | MacVeigh, Charles (Donegal, E.) |
| Baring, Godfrey (Isle of Wight) | Fullerton, Hugh | M'Callum, John M. |
| Barker, John | Gibb, James (Harrow) | M'Crae, George. |
| Barlow, Percy (Bedford) | Gill, A. H. | M'Killop, W. |
| Barnard, E. B. | Gladstone, Rt. Hn Herbert John | M'Laren, Sir C. B. (Leicester) |
| Barnes, G. N. | Glen-Coats, Sir T. (Renfrew, W.) | M'Micking, Major G. |
| Barry, Redmond J. (Tyrone, N.) | Glover, Thomas | Maddison, Frederick |
| Beale, W. P. | Gooch, George Peabody (Bath) | Mallet, Charles E. |
| Beauchamp, E. | Greenwood, G. (Peterborough) | Manfield, Harry (Northants) |
| Beck, A. Cecil | Grey, Rt. Hon. Sir Edward | Marks, G. Croydon (Launceston) |
| Bell, Richard | Griffith, Ellis J. | Marnham, F. J. |
| Benn, Sir J. Williams (Devonp'rt | Gilliland, John W. | Mason, A. E. W. (Coventry) |
| Benn, W. (T'w'r Hamlets, S. Geo. | Gurdon, Rt Hon Sir W. Brampton | Massie, J. |
| Bennett, E. N. | Haldane, Rt. Hon. Richard B. | Menzies, Walter |
| Black, Arthur W. | Hall, Frederick | Micklem, Nathaniel |
| Boulton, A. C. F. | Harcourt, Rt. Hon. Lewis | Mond, A. |
| Bowerman, C. W. | Hardy, George A. (Suffolk) | Money, L. G. Chiozza |
| Brace, William | Harmsworth, Cecil B. (Worc'r) | Montagu, E. S. |
| Bramsdon, T. A. | Harmsworth, R. L (caithn'ss-sh | Mooney, J. J. |
| Branch, James | Harvey, W. E. (Derbyshire, N. E. | Morgan, G. Hay (Cornwall) |
| Bright, J. A. | Haslam, James (Derbyshire) | Morrell, Philip |
| Brocklehurst, W. B. | Haslam, Lewis (Monmouth) | Morse, L. L. |
| Bryce, J. Annan | Haworth, Arthur A. | Morton, Alpheus Cleophas |
| Buckmaster, Stanley O. | Hazel, Dr. A. E. | Muldoon, John |
| Burt, Rt. Hon. Thomas | Healy, Timothy Michael | Murnaghan, George |
| Byles, William Pollard | Hedges, A. Paget | Murphy, John (Kerry, East) |
| Cameron, Robert | Hemmerde, Edward George | Myer, Horatio |
| Carr-Gomm, H. W. | Henderson, Arthur (Durham) | Nannetti, Joseph P. |
| Causton, Rt Hn. Richard Knight | Henderson, J. M. (Aberdeen, W.) | Napier, T. B. |
| Cawley, Sir Frederick | Henry, Charles S. | Newnes, F. (Notts, Bassetlaw) |
| Chance, Frederick William | Higham, John Sharp | Newnes, Sir George (Swansea) |
| Channing, Sir Francis Allston | Hodge, John | Nolan, Joseph |
| Cherry, Rt. Hon. R. R. | Hogan, Michael | Norman, Sir Henry |
| Churchill, Rt. Hon. Winston S. | Holland, Sir William Henry | Norton, Capt. Cecil William |
| Cleland, J. W. | Holt, Richard Durning | Nussey, Thomas Willans |
| Clough, William | Hope, W. Bateman (Somerset, N | O'Connor, T. P. (Liverpool) |
| Clynes, J. R. | Horniman, Emslie John | O'Grady, J. |
| Cobbold, Felix Thornley | Hudson, Walter | Parker, James (Halifax) |
| Collins, Stephen (Lambeth) | Hutton, Alfred Eddison | Partington, Oswald |
| Collins, Sir Wm. J. (S. Pancras, W | Hyde, Clarendon | Pearson. W.H.M. (Suffolk, Eye |
| Corbett, C H (Sussex, E. Grinst'd | Illingworth, Percy H. | Pease, J. A. (Saffron Walden) |
| Cory, Sir Clifford John | Isaacs, Rufus Daniel | Phillips, John (Longford, S.) |
| Cotton, Sir H. J. S. | Johnson, John (Gateshead) | Pollard, Dr. |
| Cowan, W. H. | Johnson, W. (Nuneaton) | Price, C. E. (Edinb'gh, Central) |
| Cox, Harold | Jones, Leif (Appleby) | Priestley, W.E.B. (Bradford, E.) |
| Cremer, Sir William Randal | Jowett, F. W. | Radford, G. H. |
| Crooks, William | Joyce, Michael | Raphael, Herbert H. |
| Crosfield, A. H. | Kekewich, Sir George | Rea, Russell (Gloucester) |
| Crossley, William J. | Kelley, George D. | Rea, Walter Russell (Scarboro' |
| Dalziel, James Henry | Kilbride, Denis | Rees, J. D. |
| Davies, Ellis William (Eifion) | King, Alfred John (Knutsford) | Rendall, Athelstan |
| Davies, Timothy (Fulham) | Laidlaw, Robert | Richards, Thomas (W. Monm'th |
| Davies, W. Howell (Bristol, S.) | Lamb, Edmund G. (Leominster | Richards, T.F. (Wolverh'mpt'n |
| Dickinson, W.H. (St. Pancras, N | Lambert, George | Richardson, A. |
| Dillon, John | Lamont, Norman | Ridsdale, E. A. |
| Duckworth, James | Layland-Barratt, Francis | Roberts, Charles H. (Lincoln) |
| Duffy, William J. | Leese, Sir Joseph F. (Accrington | Roberts, G. H. (Norwich) |
| Duncan, C. (Barrow-in-Furness | Lehmann, R. C. | Roberts, John H. (Denbighs.) |
| Duncan, J. H. (York, Otley) | Lever, A. Levy (Essex, Harwich | Robertson, Sir G. Scott (Bradf'rd |
| Dunne, Major E. Martin (Walsall | Lever, W. H. (Cheshire, Wirral) | Robertson, J. M. (Tyneside) |
| Edwards, Clement (Denbigh) | Levy, Sir Maurice | Robinson, S. |
| Edwards, Sir Francis (Radnor) | Lloyd-George, Rt. Hon. David | Roche, John (Galway, East) |
| Elibank, Master of | Lough, Thomas | Roe, Sir Thomas |
| Essex, R. W. | Lupton, Arnold | Rogers, F. E. Newman |
| Esslemont, George Birnie | Lyell, Charles Henry | Rowlands, J. |
| Everett, R. Lacey | Macdonald, J. R. (Leicester) | Runciman, Walter |
| Fenwick, Charles | Macdonald, J. M. (Falkirk B'ghs | Russell, T. W. |
| Ferens, T. R. | Mackarness, Frederic C. | Samuel, Herbert L. (Cleveland) |
| Ffrench, Peter | Maclean, Donald | Samuel, S. M. (Whitechapel) |
| Fiennes, Hon. Eustace | Macnamara, Dr. Thomas J. | Schwann, Sir C E. (Manchester) |
| Findlay, Alexander | MacNeill, John Gordon Swift | Scott, A.H. (Ashton under Lyne |
| Sears, J. E. | Tennant, H. J. (Berwickshire) | White, Sir George (Norfolk) |
| Seaverns, J. H. | Thomas, Sir A. (Glamorgan, E. | White J. D. (Dumbartonshire) |
| Seddon, J. | Thomas, David Alfred (Merthyr) | White, Luke (York, E. R.) |
| Seely, Colonel | Thomasson, Franklin | Whitley, John Henry (Halifax) |
| Shackleton, David James | Tomkinson, James | Wiles, Thomas |
| Shaw, Rt. Hon. T. (Hawick B.) | Toulmin, George | Wilkie, Alexander |
| Shipman, Dr. John G. | Trevelyan, Charles Philips | Williams, Llewelyn (Carmarth'n |
| Silcock, Thomas Ball | Verney, F. W. | Wills, Arthur Walters |
| Simon, John Allsebrook | Villiers, Ernest Amherst | Wison, J. H. (Middlesbrough) |
| Smyth, Thomas F. (Leitrim, S.) | Wadsworth, J. | Wilson, J.W. (Worcestersh. N.) |
| Soares, Ernest J. | Waldron, Laurence Ambrose | Wilson, P. W. (St. Pancras, S.) |
| Spicer, Sir Albert | Walsh, Stephen | Wilson, W. T. (Westhoughton |
| Stanley, Hn. A. Lyulph (Chesh.) | Walters, John Tudor | Winfrey, R. |
| Stewart-Smith, D. (Kendal) | Ward, W. Dudley (Southampt'n | Wood, T. M'Kinnon |
| Straus, B. S. (Mile End) | Wardle, George J. | Yoxall, James Henry |
| Strauss. E. A. (Abingdon) | Waring, Walter | |
| Stuart, James (Sunderland) | Wason, Rt. Hn. E (Clackmannan | TELLERS FOR THE AYES—Mr. |
| Summerbell, T. | Waterlow, D. S. | Whiteley and Mr. Herbert |
| Taylor, John W. (Durham) | Watt, Henry A. | Lewis. |
| Taylor, Theodore C. (Radcliffe) | Wedgwood, Josiah C. | |
| NOES. | ||
| Anson, Sir William Reynell | Douglas, Rt. Hon. A. Akers- | Mason, James F. (Windsor) |
| Anstruther-Gray, Major | Du Cros, Arthur Philip | Meysey-Thompson. E. C. |
| Arkwright, John Stanhope | Faber, George Denison (York) | Moore, William |
| Aubrey-Fletcher, Rt. Hn. Sir H. | Faber, Capt. W. V. (Hants, W. | Morpeth, Viscount |
| Balcarres, Lord | Fardell, Sir T. George | Muntz, Sir Philip A. |
| Baldwin, Stanley | Fell, Arthur | Nicholson. Wm. G. (Petersfield) |
| Balfour, Rt Hn. A. J. (CityLond.) | Fetherstonhaugh, Godfrey | Nield, Herbert. |
| Banbury, Sir Frederick George | Fletcher, J. S. | Parkes, Ebenezer |
| Banner, John S. Harmood- | Gretton, John | Pease, Herbert Pike (Darlington |
| Baring, Capt. Hn. G (Winchester | Guinness, Walter Edward | Percy, Earl |
| Barrie, H. T. (Londonderry, N.) | Haddock, George B. | Randles, Sir John Scurrah |
| Bignold, Sir Arthur | Hamilton, Marquess of | Rawlinson, John Frederick Peel |
| Bridgeman, W. Clive | Hardy, Laurence (Kent, Ashf'rd | Remnant, James Farquharson |
| Burdett-Coutts, W. | Harris, Frederick Leverton | Roberts, S. (Sheffield, Ecclesall) |
| Butcher, Samuel Henry | Harrison-Broadley, H. B. | Ronaldshay, Earl of |
| Campbell, Rt. Hon. J. H. M. | Hay, Hon. Claude George | Rutherford. W. W. (Liverpool) |
| Carlile, E. Hildred | Helmsley, Viscount | Salter, Arthur Clavell |
| Cave, George | Hill, Sir Clement | Sassoon, Sir Edward Albert |
| Cecil, Evelyn (Aston Manor) | Hills, J. W. | Sheffield, Sir Berkeley George D. |
| Cecil, Lord John P. Joicey- | Houston, Robert Paterson | Starkey, John R. |
| Chamberlain, Rt Hn. J.A (Wore. | Hunt, Rowland | Talbot, Lord E. (Chichester) |
| Chaplin, Rt. Hon. Henry | Kennaway, Rt. Hn. Sir John H. | Thomson, W. Mitchell- (Lanark) |
| Clark, George Smith | Keswick, William | Walker, Col. W.H. (Lancashire) |
| Clive, Percy Archer | Lane-Fox, G. R. | Warde, Col. C. E. (Kent, Mid) |
| Coates, E. Feetham (Lewisham) | Law, Andrew Bonar (Dulwich) | Willoughby de Eresby, Lord |
| Cochrane, Hon. Thos. H. A. E. | Lee, Arthur H. (Hants, Fareham | Winterton, Earl |
| Collings, Rt. Hn. J. (Birmingh'm | Lonsdale, John Brownlee | Wyndham, Rt. Hon. George |
| Corbett, T. L. (Down, North) | Lowe, Sir Francis William | |
| Courthope, G. Loyd | Lyttelton, Rt. Hon. Alfred | TELLERS FOR THE NOES—Sir |
| Craig, Charles Curtis (Antrim, S. | MacCaw, William J. MacGeagh | Alexander Acland-Hood and |
| Craik, Sir Henry | M'Arthur, Charles | Mr. Forster. |
| Doughty, Sir George | M'Calmont, Colonel James |
§ Resolved, That, in the opinion of this House, any attempt to broaden the basis of taxation by placing small import duties on a large number of articles is opposed to all principles of sound finance, wasteful and uneconomical as regards collection, disturbing and harmful to industry and commerce, would tend to 444 raise the price of all the taxed articles to consumers, and, in practice, would lead to the imposition of high tariffs of the same character as those in force in protected countries.
§ Adjourned at a Quarter after Eleven o'clock.