HC Deb 26 May 1908 vol 189 cc992-1029

4. "That it is expedient to amend the law relating to the National Debt, Customs, and Inland Revenue."

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."—(Mr. Lloyd-George.)

MR. McARTHUR (Liverpool, Kirkdale)

said that if the House passed this Resolution in its present form without any provision for rebate great hardship would arise in the case of those who held duty-paid stocks of sugar and glucose in the United Kingdom on 8th May, the day following that on which the Resolution was passed in Committee. A very large amount of foreign refined sugar was imported into the United Kingdom from the Continent. That sugar came in this way. It was brought in through bills of lading from Continental ports to inland towns in the United Kingdom and the duty upon it was paid at the port of entry. On 7th May the position was this. There were large stocks of foreign refined sugar which had been brought in and upon which duty had been paid. These stocks had been brought in in the ordinary course of trade, because there was no reason to expect or to hope at that time that the duty on sugar would be reduced. The effect of the announcement made on 7th May was to reduce the value of the stocks to the extent of the reduction in the duty. The foreign refined sugar, as the House was aware, came into competition with the sugar produced in British refineries. That sugar was placed in bond, and the result was that the bonded refined sugar got the benefit at once of the reduction in the duty, whereas the foreign refined sugar could not get the benefit unless a rebate was made, because the duty had already been paid. Orders at once ceased after 7th May. The customers of the various dealers held their hands and said they were not going to pay the duty-paid price when by waiting a week they could get the sugar at the reduced price. The trade was at a complete standstill, and stocks were left on their hands. Unless a rebate was made they would have to bear a loss equivalent to the difference between the old and the new duties. He would respectfully ask the Chancellor of the Exchequer to explain why he had departed from almost unbroken precedent. In 1830, 1845, and 1870 rebates were made in regard to the sugar duty. In 1903 rebates were given in connection with the duties on corn and glucose in order that those who had stocks on hand might get the benefit. They all understood that the sugar duty was to fall on the consumer, and not on the importer, and yet in this case very heavy loss was to be thrown on the importer. He hoped the Chancellor of the Exchequer would reconsider the matter. The case in regard to glucose was really stronger than that of refined sugar. That article was manufactured in the United Kingdom, and the duty had been paid immediately it was manufactured. On 7th May there was a large manufactured stock of glucose in the United Kingdom on which the duty had been paid, and the effect of the reduction in the duty was at once to lessen the value of these stocks. A large amount of glucose came from the United States and was put in bond, and the English made article had to compete with that which was imported. Therefore, the foreign manufacturers competed with an advantage over the home producers. Here again the manufacturer of glucose was powerless. He could not sell his glucose unless he allowed to the customer the rebate, and that rebate it was surely most reasonable for him to ask the Government to grant, in order that he might get rid of his stock and indemnify himself for the loss which would be thrown upon him. There was one other point. Some weeks before this change was made the sugar refiners and the glucose manufacturers brought this question before the Prime Minister, who was then Chancellor of the Exchequer. They wrote him a letter in which they said that if he was going to reduce these sugar duties, would he kindly remember that it would expose them to a very heavy loss unless a rebate was made. The Chancellor of the Exchequer wrote a letter in reply promising that he would give every attention to their complaint and that the utmost care would be taken to avoid any loss falling upon interests they represented in the event of any change being made.

MR. ASQUITH

Will the hon. Gentleman quote the terms of the letter?

MR. McARTHUR

said that the letter was from the London Wholesale Sugar Dealer's Association, and was dated 27th April of this year. It stated— The object of this letter, however, is to point out that not only does a heavy and continuous loss fall upon them in various ways while the duties exist, but that in regard to sugar, they would be called upon to suffer severely in the reduction or abolition of the duty (either of which they would rejoice to see), unless their interests were safe-guarded in the transition period. I will endeavour, as briefly as possible, to point out the changes that have occurred in the methods of trading in sugar since the abolition of the duty in 1874. Up to that period sugar was landed and warehoused only in the larger ports of the kingdom, in all of which bonding facilities existed. On the removal of the duty, however, it immediately became obvious that cheaper methods of distribution could be employed by landing at many smaller outports, or by carrying the sugar on through bills of lading from the continental ports, into inland depots. By this change a considerable saving was effected in warehousing charges and land carriage, to the direct benefit of consumers generally. When the duty was re-imposed in 1901, this method was maintained, but at considerable sacrifice on the part of the sugar dealers. In many outports and inland towns there are no bonding facilities, and the duty has had to be paid by the dealers on the arrival of the vessel; and a large amount of extra capital has been employed by them, without any return whatsoever. In the ordinary course of their business, my members hold large stocks of sugar in these places, the duty on which must of necessity be paid at the port of entry, when and as the goods arrive. In the case of the abolition of, or a reduction in the duty, they would be called upon to suffer a very serious loss, unless the circumstances of their position be taken into account in the Budget proposals. This loss would be so severe as to wipe out the net profit they are able to make in months, and probably indeed even in years of trading. They would (as past experience has conclusively proved in regard to sugar as well as other articles), be compelled by the force of competition to immediately reduce their prices to the extent of the duty remitted, and would in this way be called upon to bear a loss on their stocks in such places where the sugar must of necessity be held duty paid, which loss it is obvious was never intended to fall upon them individually. I am instructed to inform you that the matter has had the most earnest and careful consideration, and my members are convinced that there is only one way in which it can be met, viz., by a rebate upon stocks held in public stores or warehouses or railway or steamship depots, in the event of any change in the direction indicated. The matter is one of the deepest importance to my members, and I beg to urge upon you in the strongest possible terms, to give it your most serious consideration, so that they may be saved from a crushing and altogether undeserved loss. I trust most sincerely that you will be good enough to favour me with some assurance that in the event of any change, it will be made immediately operative (so as to avoid any paralysis in the trade), but that a rebate to the extent of the duty previously paid will be granted on sugar waiting for distribution, and lying in the public stores above mentioned. I desire to point out that there are precedents for the action which I am asking you to take, but on no previous occasion has the necessity for it been at all as great.

This is the reply to that letter—

MR. ASQUITH

What is the date?

MR. McARTHUR

It is dated 24th April, 1908— I am desired by Mr. Asquith to acknowledge the receipt of your letter of the 22nd instant, and to say that the arrangement necessary for mitigating any hardship to traders which might otherwise arise in connection with a repeal of the sugar duty would be a matter which would require very careful consideration, with due regard to the various interests involved, if and when such a change were decided upon. Mr. Asquith fears that he cannot at the present time give any pledge as to the particular steps which would be taken in a contingency which has not arisen; but you may rest assured that the interests which you represent equally with the other interests involved, would not fail to receive the anxious attention of any Chancellor of the Exchequer who may be in a position to propose the repeal. I am to add that Mr. Asquith has read very carefully the note of the deputation from your and other associations to Sir Thomas Pittar, on the subject of the burden of Customs duties upon the trades concerned with dutiable articles, but that he does not think that he can add anything to the reply which Sir Thomas Pittar gave to them, with which he is in substantial agreement. He submitted that the Association had a right to rely upon the Government following the precedents set in previous years and that protection would be afforded them.

MR. ASQUITH

I expressly guarded myself against giving any pledge to follow precedents. I said the matter would receive anxious consideration.

MR. McARTHUR

said that they invariably found that letters from Government Departments were in the most guarded terms; but the trade, when a serious matter was brought before the Government in the event of a contingency arising, and when that contingency had arisen, relied that consideration would be given to their representations. The merchants had sustained a heavy loss, and unless an equivalent rebate was made according to the amount of duty, they would have to bear that loss. That was very hard on individuals, and in a matter of this kind care should be taken to protect individuals against loss. He could speak from his own personal experience in the past. He had had to bring matters of this kind to the notice of previous Chancellors of the Exchequer, and he came to the conclusion that Budget announcements were in the first instance of a tentative character and that Chancellors of the Exchequer were advised by their staff that they could not tell what the effect of the changes would be until they were considered by commercial men. When commercial men had dealt with the matter they invariably found when they could shew that the effect of the changes would be unfair that the Chancellors of the Exchequer were willing to re-consider the position they had taken up. He hoped that that would be the case in the present instance.

MR. STUART WORTLEY (Sheffield, Hallam)

was understood to say that he supported the representations made by the hon. Member for the Kirkdale Division, and the very reasonable request of the sugar dealers. In February of last year a memorial from the trade was presented to the Chancellor of the Exchequer, who replied that if at any time he should be in a position to reduce or abolish the sugar duty it would be his policy to secure that as little hardship as possible should be inflicted on the interests of the trader or manufacturer. These words were calculated to excite the expectations to which the hon. Member for the Kirkdale Division had referred. He supposed the excuse was going to be put forward that there had been in fact sufficient bonding accommodation at all the ports, and that requests for bonding accommodation were received and not refused. That answer, although true as regarded part of the trade, was quite irrevelant as regarded the present request, because this particular importation of foreign refined sugar had gone on under circumstances in which bonding accommodation had never been provided. While making these remarks, he wished to thank the Chancellor of the Exchequer for the reduction of the sugar duty. He had pleaded in past years for its remission, as it was a tax on the raw material of an important British industry, and he regretted that he s w so little prospect of the Chancellor being able, without sound financial methods, to give any further remission of the duty.

MR. ASQUITH

said he would leave the Chancellor of the Exchequer to reply to the arguments. He would not have intervened but for the suggestion that some language used by him might have given rise to expectations which had not been fulfilled. He would be very sorry if that were the case; but he could not charge himself with having used any expression upon which persons engaged in the industry could found reasonable expectation that, if there were a reduction in the duty, rebate would be allowed. The expression to which reference had been made was that the Chancellor of the Exchequer would have a due and anxious regard to the interests of persons engaged in the trade. With the exception of the case of corn and one or two minor cases, there had been no rebate when duties were changed in amount or abolished. The only real exception to the uniform practice during the greater part of the last fifty years was in respect of the corn duty. Since to give a rebate in such cases had been a rare exception granted for special reasons, there was no ground to expect that, if the sugar duty were dealt with in the ordinary way, consideration for the traders would take the form of a rebate. Consideration was shown in the period of notice given. The question of the duration of that notice was open to argument, though he still thought it was a reasonably long notice. In regard to a rebate, he could not acknowledge having given any undertaking.

MR. BONAR LAW (Camberwell, Dulwich)

said it was not a question of breaking faith, it was a question of satisfying the reasonable expectation raised in the minds of the dealers in sugar. He was not in the least speaking against the figures of the Prime Minister, but in this case he wished to ask whether the Government were not dealing rather unfairly with the trade. He would point out what the actual position of the trade was. In the first place, the loss fell not on the consumer, but upon the unfortunate people who held stocks of sugar at the time the duty was taken off. It might be contended that that was a fair trade risk; that when the duty was imposed they got the benefit and when it was taken off they should sustain the loss. But that was not a fair test of fairness for the reason that the people who made the profit were not those who sustained the loss. The whole question was whether the trade were taking a gambling risk, in which case there was nothing further to be said, or whether they were making a loss through no fault of their own, and were entitled to the protection of the Government in the matter. The business of the sugar trade could not be carried on without the dealers carrying large stocks. The importance of this particular case lay in the fact that when the duty was first imposed the importers of sugar made a bargain with the Customs authorities by which the duty was paid at the ship's side when the ship came in. The Customs authorities were thus saved the great expense of supplying bonded stores. If bonded stores had had to be provided the Government would have been put to great expense during the years that this duty had been in force; therefore the Government had been saved a great deal of money by not having to provide the bonded stores. By the nature of the trade it was impossible for those engaged in it to protect themselves. Some of the dealers were afraid of the duty being reduced at this time, and the loss that might accrue, and they applied to the Customs authorities for additional bonding facilities, which were refused. Therefore for the loss which had now fallen upon them the Government, and not they themselves, were responsible. There was this point with regard to the higher question, that even from the point of view of the general trade of the country the course which the right hon. Gentleman now proposed to adopt would be prejudicial in the highest degree to all engaged in the trade. At this time next year and every year that the duty remained in force every exporter in the trade would hold his hand, because they would be afraid of the loss that might accrue. He now came to the pledge given by the Prime Minister. The letter which he held in his hand was much more important than others which had been referred to which were formal. This letter was an answer to a letter which put the exact case which had now arisen, and in which the Chancellor of the Exchequer at the time was asked what action he would take in such a case.

MR. ASQUITH

What is the date?

MR. BONAR LAW

said the letter was dated 11th February, 1907. It commenced in the usual formal way about the desire of the Chancellor of the Exchequer to meet particular cases, and then came the very point which had now arisen.

MR. ASQUITH

That was last year.

MR. BONAR LAW

Does that make any difference?

MR. ASQUITH

I think it does, a great deal.

MR. BONAR LAW

said the value of it was that the people who got the letter last year had been trading since on the authority which the letter gave them. It continued— I may however say with reference to the hypothetical case which you put to him"— that was the case which had now arisen— that you may assume it would be his policy as it has been the policy of his predecessors in the Office of the Exchequer to provide for as little hardship," &c, &c.

MR. ASQUITH

Hear, hear.

MR. BONAR LAW

said that surely the Prime Minister must be acute enough to see what that meant. It undoubtedly meant that he was going to follow the precedent of his predecessors. If the right hon. Gentleman was right in saying that the precedents which he had given were the real precedents, then he had given no pledge, and these gentlemen had no right to complain. But the precedents the right hon. Gentleman put before the House were far from the actual facts of the case. There were two ways in which this difficulty could be overcome. One was by giving a rebate and the other by giving the dealers a longer time for the stocks to be used up. He cared not which the right hon. Gentleman chose, but to adopt neither was to inflict a hardship on the traders of the country. In every other case there had been either a rebate or time given. In case neither was given, it would be impossible for people to get rid of the stocks on which duty had been paid, and if any individual took such an advantage of a fellow-trader he would be accused of very sharp practice. This Government which could afford to do without £4,000,000 of taxation could also afford to be just, and they were bound to give the dealers either a rebate or time to get rid of their stocks. In his opinion the Prime Minister had committed himself to give one or the other, but under his Resolution he had given neither.

MR. AUSTIN TAYLOR (Liverpool, East Toxteth.)

said he felt bound to support what had fallen from the hon. Gentleman who had just sat down. He was one of those who introduced a deputation to the right hon. Gentleman on this matter. It was true he had received a letter from his right hon. friend which was published, in which he regretted his inability to meet the case. He fully understood that one practical difficulty at the present time arose out of certain financial obligations. The hon. Member opposite, however, did not keep sufficiently before the House the fact that this was not a question of raw sugar but of foreign refined sugar, and it was important to note that the proportion of trade in the import to this country of sugar refined abroad and raw sugar showed an increase on the side of the foreign refined sugar. The import of the sugar was larger than that of raw sugar. There was no comparison between the amount of sugar refined in this country and that refined abroad. The trade in the foreign refined sugar was conducted by means of through bills of lading from town to town, the duty was paid at the ship's side, and whatever arrangements the Government had made were not compatible with bonding facilities. He therefore thought that these gentlemen were entitled to consideration. The instance quoted by the right hon. Gentleman only went to show that when people were misled consideration was shown in these cases. He believed the deputation he introduced did not desire an extension of time. Certainly, no adequate time to reduce stocks was given to them. They were only given a matter of ten days, and they felt they could not get an extension of time. What they desired was a rebate. He understood that under the Customs arrangements the British sugar refiners were in a preferential position, a position of marked preference as compared with the importers of sugar refined abroad. This was a free trade Government, and stood for equality of opportunity all round, but a circular had been issued from the Customs this year which enabled the British refiner, if he had duty-paid refined sugar, to put the sugar into bond and use it for export or for ships' stores. With that facility he had an opportunity of getting out of the loss caused by this duty, but no opportunity was given to the importers of foreign refined sugar. If he desired to use it for export or for ships' stores he could not get the drawback, yet the foreign sugar had paid duty exactly in the same way as raw sugar. If it was fair to give this preference to sugar refined in this country, why was it not fair to give it to the importer of foreign refined sugar? He hoped his right hon. friend would deal with that point, because the trade in foreign refined sugar was more important in bulk than the trade in raw sugar. He believed the people engaged in that trade had suffered, and it was impossible to set against the loss they now sustained the profit some other people made six years ago.

MR. SAMUEL ROBERTS (Sheffield, Ecclesall)

was understood to say that, if the Prime Minister's view was correct as to precedents, he ventured to urge him to reverse those precedents. If they led to hardship as they were doing at present, it was time they were altered. He belonged to a constituency where they bought sugar to a very large extent. One firm had bought £50,000 worth and had paid the duty on it. ["Where?"] In his own constituency. Surely that was a very great hardship. The whole cost of the rebate only involved something like £100,000, and surely the Government when they were raising such a large revenue, should be very careful that in making any alteration no injustice was done to any class of the people.

MR. LLOYD-GEORGE

said he did not know that he could add anything to what had fallen from the Prime Minister. If there was any unfairness at all in the action of the Government it was that they gave a slight advantage to the home producer as against the foreign importer. His hon. friend had pointed out that they made the case a very invidious one if they gave the slightest advantage to the home producer against the importer of foreign produce. They were attacked by the hon. Member for Dulwich for showing even this slight advantage to the home producer. The hon. Gentleman was the champion of the importer of foreign commodities, and he was supported by the hon. Member for Sheffield. The favour to the home producer, if there was any favour at all, was very slight. His hon. friend was wrong in rather exaggerating the extent to which the home producer had been favoured in the matter of exporting during the fortnight allowed by the Budget. It was a very small matter, to meet which it was hardly worth while dislocating the whole of their arrangements. He must complain of the way in which the hon. Member for Dulwich had exaggerated the whole thing. He had talked of its being a calamity and unfair to the trade.

MR. BONAR LAW

I know of the case of a friend of mine, not by any means a rich man, who will lose £2,000. That to him is a calamity.

MR. LLOYD-GEORGE

said the hon. Member had talked as if it was a calamity to the whole trade. He himself had met some of the chief representatives of the trade, and he asked them the state in which they would be left, and they certainly did not represent anything which could be justly described as a calamity to the trade. One of the best-known importers of foreign sugar in London had told him that he would probably lose about £1,200, and that the imposition of the duty on sugar had caused a loss of £18,000 to his firm during the years it had been on; so that the result was that the firm would benefit to the extent of £3;000 or £4,000 by the withdrawal of half the duty.

MR. BONAR LAW

It is not the wholesale dealers; they do not benefit at all.

MR. LLOYD-GEORGE

said the in stance he had given was that of a wholes sale dealer who had lost £18,000 in the course of the five years the duty had been on. But here the trader suffered a temporary loss by the making of a change which brought permanent gain to him and his trade. To talk in the way the hon. Member for Dulwich had talked was really misleading, and perhaps the hon. Gentleman had not taken the trouble to investigate the very elementary facts which bore on the matter. When the sugar duty was imposed, the traders knew perfectly well what was coming. They knew the Government at the time of the war had to impose a duty on some commodity of this kind, and that sugar was about the likeliest to be taken for such a purpose. Every trader throughout the country made up stocks for about three or four months. They had stocks, as hon. Members knew perfectly well, when the change took place, for three or four months, and what was the result? They had the 4s. 2d. per cwt. added to the stocks which they had in hand and which paid no duty, and no doubt they made a very considerable sum by that change. Now came the present change, and a very important change which benefited them as permanent traders. Surely any reduction must benefit the trade, otherwise what was the good of all this debate about the trade in the last few years? It did not lie in the mouths of traders to turn round and say that the change was of no good to them. At any rate they had benefited to the extent of three or four months' supply with 4s. 2d. duty added on; yet they now complained of a calamity because they had given them a fortnight in which to clear out their stocks.

MR. AUSTEN CHAMBERLAIN

It is not a fortnight, but ten days including' Sunday.

MR. LLOYD-GEORGE

said it was not a very serious thing to the trade, and the advantage which they got in general trading more than compensated for any possible temporary loss which they might sustain. He had made an offer to the traders to strike an account. He had offered that if they brought the money they made when the duty was put on and debited the Exchequer with the amount they would now lose, he would give a rebate if the balance was against them, but that if the balance was in their favour he wanted them to send in their cheques.

MR. BONAR LAW

Did you make that offer to each individual?

MR. LLOYD-GEORGE

said he had made that offer to the trade as a whole. In a sense it was made to all the great firms, and practically they were the same firms as were doing business five or six years ago. But really taking the trade as a whole, there was not bound to be any serious loss. But there would be a very serious loss to the Exchequer, because it was not merely the sugar traders who would claim; the same thing applied to manufacturers who used sugar, and there was no limit to the industries affected by the reduction. They could not grant this rebate merely to the trader; they would have to grant it to the manufacturers, and the Exchequer would by-and-bye incur a loss. He did not think, having regard to the precedents read out by the Prime Minister, or to the precedents they had when the duty on sugar was either reduced or abolished, that they could really grant this rebate, for in every one of these cases it would be found that the Chancellor of the Exchequer had refused the rebate.

MR. BONAR LAW

Since 1870.

MR. LLOYD-GEORGE

said that surely the precedents since 1870 were quite good enough to justify their action, and the Prime Minister had given the cases which justified their action in this matter. An hon. Member had suggested that there should be an extension of time, and the hon. Member for Dulwich had put that point. But if they had extended the time there would have been a protest from the whole of the trade, and, as a matter of fact, there had been a strong deputation headed by his hon. friend, and another strong deputation from the representatives of the sugar refiners and some sugar dealers, appealing to the Exchequer not to extend the time, because it would dislocate the whole of the industry, that it would hold up sugar, and that there would be no business done in the meantime; in fact, that it would seriously affect and dislocate the whole trade. Under these circumstances he thought he would be justified in asking the House of Commons to come to a decision to give neither a grant of rebate nor an extension of time. It was a purely temporary loss which the trade would sustain and which would be much more than compensated by the permanent benefit which would accrue from the remission of half the duty. The temporary loss did not compare with the permanent gain which accrued to almost all those firms when the duty was first arrived at.

MR. AUSTEN CHAMBERLAIN

regretted the decision of the Government, as it was a matter of serious consequence to particular traders, and was also one which seriously affected the future of our fiscal system in the conduct not merely of this particular trade but of all dutiable trades about Budget time of each year. He regretted the decision of the Government on that account, and also the tone of the right hon. Gentleman's speech. He admitted that as the Chancellor of the Exchequer had to deal with his predecessor's Budget, the circumstances were difficult and might well try the temper of the right hon. Gentleman; but it was to be hoped that the right hon. Gentleman would bring his grievance against the Prime Minister who had left him with such a Budget, and not against those who were sitting on the Opposition side of the House.

MR. LLOYD-GEORGE

I have no grievance.

MR. AUSTEN CHAMBERLAIN

said he also hoped that the right hon. Gentleman would make a little more effort to deal with the points put to him by the hon. Member for Dulwich. He knew of no man in the House who could put his points more clearly or more concisely than his hon. friend. He hoped the right hon. Gentleman would show a little more fairness in dealing with his points in future, and a little more consideration for the traders whose interests were committed to his care. They need not be particularly sensitive about traders who took more than the ordinary trade risk. What was his hon. friend's contention? It was that when they made a change for fiscal purposes, and when they made a change in the Customs duties, it was their bounden obligation to do so with as little disturbance and hardship to individuals concerned in the trade as possible. To tell his hon. friend that he was favouring the foreign importer at the expense of the home producer, and to trail the tails of the fiscal coat across the floor of the House, was to divert attention from a serious practical grievance of a great number of traders that was quite unconnected with any fiscal question. He regretted that the Prime Minister had not remained in the House to hear this debate which must turn upon the language he used whilst he was Chancellor -of the Exchequer. His hon. friend had quoted passages from the Prime Minister's speech which assured the trader that he would have regard to precedents in this matter, and when the right hon. Gentleman's attention was called to that statement he considered it was sufficient to recite a series of precedents and state that in only one or two cases was any rebate given. That was perfectly true, but it did not settle the question. In every one of the cases where a rebate was not allowed, time was given sufficient for the traders who had duty-paid stocks on hand to dispose of them. The Prime Minister had referred to the reduction in the tea duty in 1905; that was one of his precedents. He was on the point of interrupting the right hon. Gentleman at the time, but he did not think that was courteous, although he should have done so had he thought that he was not going to remain in the House. But that was not a precedent for what was being done now. The change which he himself made when Chancellor of the Exchequer he believed did not come into force for three months, or at any rate it was an unusually long time, because he wanted a portion of the additional revenue in that year. He wanted to get some revenue during that year from the 2d. he was taking off, and at the same time he wanted to give plenty of time to allow for the reduction of stocks. He gave three months, and there was hardly a pound of duty-paid tea in the possession of dealers at the moment when the change of duty took effect. In order to avoid inconvenience, special arrangements were made to have tea in bond, not merely in London, but in many towns in the country, so that on the day the lower duty came into force the stocks might be delivered to the dealers and the ordinary means of supply replaced. He did not say that that was altogether a convenient arrangement, but he did not see how the Prime Minister could claim that he had followed precedent in respect to giving the alternative of time. He was prepared to take it from the Chancellor of the Exchequer or the Prime Minister that the inconvenience of allowing time in this case was so great that it would not be a satisfactory solution. What was the Chancellor of the Exchequer's defence? In the first place, that as the owners of stocks gained at the time when the duty was imposed, so the owners of stocks when the duty was reduced might very well bear the loss. He thought that was singularly unjust. It was not true that the same people would lose, or that they would lose to the same extent as they benefited before, and the proportion in which individuals lost would be different from the proportion in which individuals gained when the tax was first imposed. The right hon. Gentleman stated that after all the loss to traders was very small, that they need not concern themselves about it because it was so trifling; and that he could not make this change because it would cause a very serious loss to the Exchequer. Of course, if it was not the Exchequer that bore the loss then it would have to be borne by the individual traders, and if it was such a serious loss to the Exchequer a fortiori it must be also a very serious loss to a trade which was much less wealthy than the Exchequer. With regard to the purely trade aspect of the case, the right hon. Gentleman was doubtless perfectly correct when he said that individual traders told him that they would not lose much or that the loss was not very serious to them. He could mot help thinking that if the right hon. Gentleman carried his inquiries further, he would find that the loss was most serious and bore the highest proportion in the case of the smallest traders and those least able to bear it.

MR. LLOYD-GEORGE

was understood to say that the most serious loss would occur in cases where a dealer bought largely in anticipation of a rise in the market.

MR. AUSTEN CHAMBERLAIN

said he did not think the right hon. Gentleman's figures were quite right, but surely they had no right to penalise those traders because they bought in anticipation of a rise in price. It would be a great misfortune if merchants did not do that. They could not always wait to ascertain the world's price before making purchases: that was not business. Even without making very speculative bargains, it was their business to try and anticipate the course of trade, and estimate the world's price as indicated by the world's production. He did not pretend to say how those losses would fall, but he had evidence which went to show that small dealers would be hardly hit. He did not say it would amount to as high a figure as in the case of the bigger men, but in proportion the small dealer would suffer a considerable loss. He wished to reinforce the argument of the hon. Member for Dulwich, to the effect that it was not in the interests of the Exchequer that this loss should be borne by any particular trader; because it would create uncertainty in all the trades affected—in fact uncertainty was created in all trades by taxation. There was always uncertainty when they were expecting any change in taxation. The Chancellor of the Exchequer would remember the years of the war when additional taxes were expected and when it was known each year that additional taxation would have to be imposed; they all remembered during that period the nervousness and disturbance of trade which preceded the close of each financial year and the introduction of the Budget of the next year. Similarly when the time came at the end of the year for some of those taxes to be remitted, there was again a similar anxiety and nervousness, and an inclination on the part of everyone to restrict business and hold back as long as possible in order that they might know what the Chancellor of the Exchequer was going to do. That was most embarrassing to the Chancellor of the Exchequer.

MR. LLOYD-GEORGE

Nobody need be afraid of any taxes being taken off during my time.

MR. AUSTEN CHAMBERLAIN

The Chancellor of the Exchequer says that nobody need fear that any taxes will be taken off as long as he was Chancellor of the Exchequer. What he wished to emphasise was that it was in the interests of the Treasury to minimise interference with trade as much as possible, and, by fair treatment when making a change, encourage traders to continue their business as much as possible in the normal course. On that ground and on behalf of the small traders concerned, he pleaded with the Government for a reconsideration of the decision which had been arrived at in this case. He wished to call attention to another precedent which the Chancellor of the Exchequer did not mention, and which he thought was germane to this case, though it related to the imposition and not to the remission of taxation. When Viscount St. Aldwyn as Chancellor of the Exchequer was imposing the coal duty, he well remembered the hon. Member for Durham rising from that side of the House and alluding to the question of treatment of merchants who had entered into contracts to supply coal abroad. He pointed out that they had bought from the collieries and sold the coal to other people at a narrow margin of profit and that by the sudden imposition of the coal tax that very moderate profit would be turned into a loss. Viscount St. Aldwyn saw at once the reasonableness of that contention, and made provision for existing contracts. It cost him something, but he felt, as they felt now, that if there was some loss of revenue incurred, it was better that it should be endured by the Exchequer than that an injustice should be inflicted upon traders carrying on their business in a non speculative way. He submitted that the Chancellor of the Exchequer would be wise to reconsider his position upon this matter. It was useless now to ask for time, because the new duty had already come into force, although some of the traders would have been very glad to have got it at first. He would ask the Prime Minister to have the consideration of the sugar duty postponed from the first night in order that this question of which he had just been seized, and which had been raised by the hon. Member for Liverpool, might be discussed. They had had no opportunity of impressing upon the Chancellor of the Exchequer the adoption of an increased time-limit for the disposal of the sugar stocks. Under these circumstances the Government ought not to complain if they were pressed upon this point. He was quite certain that as long as they had any opportunity they would continue to press the case of these traders upon the attention of the Chancellor of the Exchequer.

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

desired strongly to reinforce what the right hon. Gentleman the Member for East Worcestershire had said. The Chancellor of the Exchequer could not expect to have it both ways. If he could not give the rebate because it would cost him too much, then he could not contend that it was not going to be a serious blow to certain traders. He agreed that to a trade with a turnover of over £20,000,000, this item was not very serious, but to individual traders it meant a very serious loss, and that was the whole point. He thought the Chancellor of the Exchequer rather confused the issue when he talked about the trade having made profits in the past, and therefore, they ought to place their present losses against past gains. That argument would not convince the individual trader who was being hit by this proposal. Upon this question, however, he was chiefly concerned about the principle. He understood that the right hon. Gentleman admitted the principle that when they were making changes in taxation they ought to try and arrange matters so that they pressed as lightly as possible upon the people affected. The question was whether this end had been achieved in the present case. The facts which had been brought forward showed that there were going to be cases of hardship, and he put it to the Chancellor of the Exchequer that the sum involved in the way of loss would not be as big as he had made out. He would like to know how the right hon. Gentleman arrived at his estimate of £140,000 to £200,000.

MR. LLOYD-GEORGE

The amount will probably be £300,000.

MR. McARTHUR

said that the sugar refiners placed the sum at between £60,000 and £70,000 on foreign refined sugar, and the glucose merchants estimated it would be £30,000 on glucose, making about £100,000 altogether.

MR. LLOYD-GEORGE

said he could not confine the loss to those two trades.

MR. MITCHELL-THOMSON

said that as far as his information went there were 25,000 tons in stock, and that would certainly not represent more than £35,000' or £45,000. He was content to rest the case upon the principle to which he had alluded and which he understood the Government accepted, namely, that when they were making changes in taxation, they should make them as far as possible consistently with justice to individuals. In the present case they were going to inflict upon individuals admitted hardship which might have been avoided if the Government had given a little more time.

SIR F. BANBURY

said that the Chancellor of the Exchequer had taken a very superficial view of the question. His defence had been that when the duty was imposed possibly a certain number of people made a profit, but he did not see that that had anything to do with the question before the House. Probably those who had made a profit were not those who were suffering loss now. But it was not a question whether anybody had made a profit or a loss. It was a question of justice. It was not a question whether the Exchequer was going to lose £200,000, £300,000, or £500,000. That was where he thought the right hon. Gentleman had taken a superficial view of the question, and he had been rather encouraged by the hon. Member for East Toxteth, who had entered into a long discussion as to whether or not refined sugar or raw sugar was touched, or whether there was a preference to the home trade. The plain simple question was whether the Government having the ace up their sleeve should take advantage of the trader. The Government knew they were going to reduce the sugar duty. That was the ace up their sleeve. The ordinary person engaged in business could not know it, and it was sharp practice on the part of the Government to take advantage of that knowledge which was not known to the world. He did not advocate any concession to people who had speculated and whose speculation had gone wrong, but when a man had a stock of sugar on his hands in the ordinary way of business and was placed at a disadvantage with other people, the Government should deal fairly and squarely with him. The loss to the Government was really nothing. The right hon. Gentleman said the trade was going to make a large sum of money by the abolition of the duty. So were the Government, because they said they were in such a prosperous position that they could take off £3,200,000. His belief was that they ought not to take it off. When his attention was first drawn to this question he thought that after all the sugar people made a great fuss when the duty was put on and were making a great fuss when It was taken off, but on looking at it more carefully he had come to the conclusion that any man in business would think he had a genuine grievance when he was put to a large loss because the Chancellor of the Exchequer suddenly came forward with this reduction of duty and made no attempt to give a rebate or an extension of time. With trade in its present condition it was not a good thing to discourage traders from entering into a genuine business. The right hon. Gentleman must see that he had not weighed this case as he should have done. He did not believe he wished to deal hardly with anybody in the matter, and he suggested that if anybody could show that in the ordinary course of business he had suffered a loss which he could not have avoided, owing to the reduction of the duty, it would be only fair to allow a rebate. The right hon. Gentleman would add greatly to his prestige if he showed at the outset of his career as Chancellor of the Exchequer that he could see both sides of a question. It would give him great pleasure if he had been instrumental in pointing out to the right hon. Gentleman the error of his ways, and he trusted he had not risen in vain.

MR. RICHARDSON (Nottingham, S.)

, speaking as one very closely connected with the small shop-keeping class, said they had not suffered and would not suffer the slightest inconvenience. On behalf of this class he thanked the Chancellor of the Exchequer for the course he had taken in relation to this matter. He must have been exceedingly well advised by somebody who knew the general trend and habits of the trade. Not only had he made it perfectly easy for the retail trader to reduce the price of sugar by the exact amount of the reduction of duty without any loss, but the time that was given, somewhere in the neighbourhood of fourteen days, corresponded closely with the terms on which sugar was usually bought by the retail trade. One could understand when dealing with the tea trade why the Chancellor of the Exchequer should give two or three months notice, because tea was bought as a rule from the merchants in London on three months' terms, and it was fair to suppose that retailers were likely to have sometimes two or three months' stock. But in the case of the sugar duty retailers would have an opportunity of clearing the whole of his stock before the duty came into operation. He could assure the House that the retail trade had not suffered at all with the exception perhaps of a few dealers who had speculated. He was exceedingly surprised at large manufacturers who had speculated early in the year in refined sugar, crying out arid squealing because they had been nipped, because within two months of the Budget refined sugar had gone up 2s., 2s. 3d. and 2s. 6d. a cwt. so that whatever they had lost by the reduction in the duty they had gained by their speculations. As far as the retail trade was concerned in all the large towns and cities there was not two days stock of sugar in the whole of the shops. Great inconvenience was caused when changes were made in the duties on tea and sugar. He hoped the present Chancellor of the Exchequer would prevent the recurrence of the inconvenience which had been caused to merchants by taking off the tax altogether.

MR. R. DUNCAN (Lanarkshire, Govan)

said that whether they liked it or not they were engaged in the House in making precedents. The Chancellor of the Exchequer had admitted that this was an unfortunate incidence of hardship and had admitted that honesty would compel him to make amends, but that he could not afford to be honest. If the manner of the imposition bore hardly on the individual, the Government should have the courage to be honest, even if it should cost a little money.

MR. FELL (Great Yarmouth)

said he was afraid that the answer the Chancellor of the Exchequer had given in this case would be given in regard to other matters. The hardship must fall on somebody, and in this instance it must fall on the large holders who would not be able to sell at a price to recoup themselves. The Chancellor of the Exchequer had admitted that there would be a serious loss to the holders, but declared that his Budget would not allow him to face it. The reason was that such liabilities had been undertaken for next year that the Chancellor would have to search in every quarter for the money required. That was the only argument which the right hon. Gentleman had been able to adduce in support of the course he was now following. The Chancellor of the Exchequer had said: "I cannot afford it, and therefore there is no use discussing the matter any more." The same argument was used yesterday, when it was pointed out that a hardship would be suffered by married couples over seventy if they were to receive only 7s. 6d. instead of 10s. a week as old-age pension. Would the purchasers of confectionery get their articles cheaper as the result of the reduction in the sugar duty? Confectionery was bought in such small quantities that it was doubtful whether it would be possible to make a difference in the price. Therefore, he took it that the whole of the profit would be retained by the manufacturers of confectionery. They were told that the reduction in the duty would largely affect the makers of aerated waters. It was impossible to suppose that the public would get any benefit by the reduction in the tax. Hon. Members had received large numbers of circulars urging them to vote for the reduction of the sugar duty. These circulars came not from grocers or the public, but from the large manufacturers who were deeply interested in the matter. Nothing had been done to meet the case of the large holders.

MR. GWYNN (Galway)

moved an Amendment reducing the duty on manufactured tobacco from 3s. 10d. to 2s. 10d. the pound. He said that this was a proposal to continue the arrangement which previously existed, whereby the Exchequer allowed tobacco grown in Ireland a rebate of 1s. in the pound. It had been represented in some quarters that the Amendment was of a protectionist character. Of course, in a certain sense it was so, but it was protectionist under very singular circumstances. If any country was entitled to protection, it was one where there had been deliberate destruction, of industry. What the Irish representatives now asked was, not that there should be protection for tobacco growing, but that an industry which was suppressed by law should be built up by law. Tobacco-growing was an agricultural industry which formerly flourished in Ireland. In the seventeenth century tobacco was so successfully grown in Ireland that the Colony of Maryland objected to the competition and threatened to revolt unless the growing of it was forbidden there. In the reign of Charles II. tobacco-growing in Ireland was forbidden in order to prevent Maryland from revolting. In the period when Ireland had a Parliament of her own it was again proposed that Ireland should grow tobacco. At that time England was no longer interested in Maryland, for the Colony had revolted. Grattan's Parliament passed a law enabling tobacco to be grown in Ireland. Then came the Act of Union, and, although tobacco was not specifically mentioned, there was actually a clause which provided that certain cultures which were formerly forbidden should not again be prohibited. No doubt a certain amount of inconvenience was caused to the English Customs owing to the fact that Irish tobacco, on which no duty was imposed in Ireland, was smuggled into England, but the agitation which took place in this country against Ireland having permission to develop this particular industry was an agitation put forward in the interest of the Bristol merchants. When the matter ultimately came up for debate in the House of Commons in 1832 the argument was all based upon the convenience of the Customs and the demoralisation which smuggling would occasion. In fact, one Gentleman said that he would rather see a grant of £250,000 a year given to Ireland than allow the continuance of tobacco-growing in that country. Ireland, however, never got the £250,000 a year and she lost the advantage of the industry. Grattan's son said during the debate that it was a very serious thing to emigrate the Irish peasants because there was no employment for them at a time when they were killing employment in Ireland. In reply to that hon. Members said that they had heard a great deal about the poor Irish peasant, but why should not the House consider the poor English manufacturer? The House considered the English manufacturer and everybody knew that the growing of tobacco in Ireland was then killed. In fact a regiment of Dragoons was sent down to the county of Wexford where the people persisted in growing tobacco in defiance of the law, to tear up the plants by the roots. So matters stood till 1887 when the Chancellor of the Exchequer made a provision in his Budget for an experiment being tried in tobacco growing, and that the duty should not exceed £50 on the produce of an acre. The experiments, however, only began in 1898, and from that time to this there had been continuous and successful experiments in growing tobacco in Ireland. These experiments had been carried on principally by one man, Colonel Everard, who had consistently proved that any tobacco which was grown in America could be grown in Ireland. The ripening of the tobacco leaf was done under glass and not in the sun, but that gentleman had proved that Sumatra tobacco of the highest class could be grown in the open air in Ireland, while in America it could only be done by an arrangement of screens which cost £80 or £90 per acre to put up. He hoped he would have the support of the Vice-President of the Board of Agriculture in Ireland for the development of an industry which might be of the utmost importance to that country. Every agricultural country in Europe encouraged and developed that industry because it employed an enormous amount of labour. Moreover, it gave employment when other employment was slack and it also gave employment to women. But if it was valuable in any sense, it was valuable as a kind of agricultural education, because no man could grow tobacco without skill. The destruction of the industry in Ireland by this House in 1832, for which no adequate compensation had been made, also entailed a loss of agricultural skill on the part of the people. If an ordinary town-bred man, although an excellent workman, was put on to farm work he was not worth much for a long time, and that consideration applied in far greater measure when they came to the culture of tobacco, which was more like market gardening than farm work. Then the leaf had to undergo a process of cure, and the whole machinery for that did not at present exist in Ireland. In America the curing of the leaf was only done by the farmer in a temporary way, the leaf being sent to the manufacturer who finished the sweating or fermentation. The machinery for that process had been improvised since 1898 in Ireland, and it was recognised that it was necessary to subside the industry so as to carry the business over the experimental stage. If the Government gave a bounty that would be only making a restitution for the loss of the skill and knowledge which existed when the culture was permissible. He did not think that the cultivation at present exceeded 70 acres in one year, and it was carried on at only three or four points. There had not been till now fully skilled labour employed, though it was skilled enough for the cheaper kinds of tobacco. Colonel Everard and others, however, were trying to grow and cure cigar leaf, and that meant a long, difficult technical process. The difficulties the industry had to contend with were not only unskilled labour but the existing prejudice against an unknown article. When hon. Members for Ireland talked of growing tobacco in that country everybody became witty and asked them if they passed the tobacco and the cigars made from it on to their friends. He understood that those gentlemen who had been growing tobacco had their position secured to them under certain limitations, and though they were limited in the amount of their crop they were entitled to the rebate up to 1913. What he claimed was that the industry should be treated all over Ireland as being still in the experimental stage, and he contended that the House was bound, in consideration of what had been done in the past, to encourage it. Up to the present time the total amount of money paid by way of rebate probably did not exceed £5,000. That sum was ridiculous if it was admitted that some kind of reparation was due to Ireland He submitted to the Chancellor of the Exchequer that the question of free trade versus protection did not enter this matter at all. At present the tobacco growers in Ireland had to compete with growers in the West Indies and America, who had inherited skill which had required generations to acquire. Then people were perfectly willing to acquire that skill. If the Government preferred that what he asked for should not be called a rebate, let them call it a grant. That would avoid the accusation of protection; but it was quite evident that the remission of duty was the best way to distribute the assistance required for the industry, as before they could get the rebate they would have to grow a crop, cure it, put it on the market, and find a buyer. He most earnestly urged on the Chancellor of the Exchequer that, considering the history of Ireland and how hard it was to get a strong agricultural life now, he should look with favour on this experiment which, but for the action of the House seventy years ago, might have become a solid, well-established industry. He hoped the right hon. Gentleman would make this small concession which would enable those in Ireland who wanted to take advantage of the recent repeal of the Act of 1832 to do so with profit to themselves. It was the kind of industry that was wanted most in Ireland. It was an agricultural industry. It was being taken up in districts where at present there was hardly room for the men to live, and it had given great heart to those who had entered into it. He urged the right hon. Gentleman in the strongest way to consider this matter and give this experiment the full opportunity they asked for it. He believed that if he did the result would make for the good of Ireland. He begged to move.

MR. KETTLE (Tyrone, E.)

strongly supported the Amendment moved by his hon. friend. He deplored the absence of the hon. Member for East Clare who was specially interested in tobacco culture in Ireland and was the pioneer in the matter. For his part he could not speak with detailed knowledge. He had smoked Irish-grown tobacco, as had other hon. Members, with satisfaction, and he had seen with interest the manufacturing operations in West Meath. Whatever the official view the Chancellor of the Exchequer might be called upon to take, this proposal should commend itself to the Chief Secretary for Ireland for its influence against cattle-driving. Why were the cattle on the grazing lands in Meath in the possession of Colonel Everard undisturbed? Because his tobacco-growing enterprise was on the point of becoming an established useful industry in Ireland. The Bill passed last year enabled everybody to obtain for 5s. a licence entitling him to grow tobacco. He could not conceive that anybody who knew anything of the actual state of the tobacco-growing industry in Ireland would be able to bring against the Amendment a single argument founded on real knowledge of the subject. The only argument against the Amendment was that it shocked the free-trade principles of the Liberal Government. Well, Ireland had ever been sacrificed to the principles of other people. They suffered from the Unionist Party when in power because they had no principles; they suffered from the Liberal Party when in power because they had too many principles. He asked that on this occasion common sense should be allowed to prevail over economic principles and political economy. As his hon. friend had pointed out, that great apostle of free-trade, John Stuart Mill, would, have given a certificate for this industry in Ireland because it was in the experimental stage. This was an infant industry of feeble growth, though of great promise, and this rebate would so encourage it that fresh heart and hope would be given to the people of Meath. He begged to second the Amendment.

Amendment proposed— In line 5, to leave out '3s. 10d.' and insert '2s. 10d.' "—(Mr. Gwynn.)

Question proposed, "That '3s. 10d.' stand part of the said Resolution."

MR. LLOYD-GEORGE

associated himself with the regret expressed by the hon. Member at the absence of the hon. Member for East Clare, though he thought his cause had not suffered in the hands of the two hon. Members who had supported it. The difficulty, as hon. Members must realise, was a practical one. This was, as the hon. Member who moved it had admitted, a protective proposal. The hon. Member was quite frank upon that point and defended it upon that ground; it was, as he said, Government assistance to an industry, and if such assistance was to be given at all, it should be given openly as a subsidy.

MR. GWYNN

It has been since 1900 in the way of a rebate.

MR. LLOYD-GEORGE

said he was aware that up to the present indirect assistance had been given in the form of a rebate, and he believed direct assistance had been given by the Board of Agriculture. To the assistance direct and indirect that had been given there was no objection so long as it was assistance to an experiment. But the hon. Member wished support to be given to an infant industry by this proposal, and the danger was that it might be carried beyond the region of experiment, to which extent the Government were willing to continue assistance, and the assistance might be given at the expense of the revenue, at the expense of the general tobacco trade of the country.

MR. GWYNN

asked would not the difficulty to which the right hon. Gentleman referred arise on tobacco grown in Ireland without a Government subsidy? A subsidy would not affect that.

MR. LLOYD-GEORGE

said it would not, because it would not pay the people in Ireland to raise tobacco for the purpose of eluding the revenue unless the difference in duty made it worth their while. If the experiment became a success that would ensue and it would not be possible to prevent it. As the hon. Gentleman said, this proposal was protectionist in its character, and therefore it was quite impossible that it could be accepted by the Government. If they accepted it with regard to tobacco in Ireland he did not see how they could refuse it in the case of hops in Kent.

MR. GWYNN

Was the other ever prohibited by law?

MR. LLOYD-GEORGE

said that both cases were on the same ground. The other case put by the right hon. Gentleman was probably a better case than the one he had quoted: that was the cultivation of beet sugar in this country. It had been suggested that special terms should be given to an industry of that kind. The support which the hon. Gentleman would get from hon. and right hon. Gentlemen on the other side of the House was an indication of the real peril of accepting an Amendment of this kind. The support he would get was not to encourage the growth of tobacco in Ireland, but really because this would be a concession of the principle for which they were fighting. If they accepted the hon. Member's Amendment what would be said was: "You are willing to protect the growers of tobacco in Meath, but you will not protect the hop growers in Kent, and the wheat growers in Lincolnshire," and he must say that it would be very difficult to resist arguments of that kind put on English, Scottish and Welsh platforms. That was the real position. Under these conditions he was afraid that it was absolutely impossible for a free trade Government to accept an Amendment couched in these terms, and supported by such arguments, and no other arguments were possible. Therefore he must take issue on that point. It was of very great importance. Once they began to protect one industry in this way he did not see how it would be possible to defend themselves against the appeals that would be made to protect other indsutries in other parts of the country, which might for the time being be rather hard pressed, and which might be even in distress for the moment. He deeply regretted that it was not possible for him to do more to assist an industry of this kind, which appeared to be a very promising one. The hon. Member had spoken very enthusiastically about the quality of the tobacco. He was not in a position to say anything about it either one way or the other. He had never experimented with it or gone into its peculiar qualities.

MR. KETTLE

Will the right hon. Gentleman wait till he has received a sample of Irish tobacco before making up his mind?

MR. LLOYD-GEORGE

said that that might have a disastrous effect upon his views, and he would recommend the hon. Member not to rely on arguments of that kind, which might rather tell against him. But he heard that the experiment was a considerable success, and knew that the tobacco was warmly esteemed. As far as the experiment was concerned they were quite willing that it should proceed so long as it was purely an experiment. It only extended to about 100 acres which were now under cultivation in Ireland. Once it went beyond that, and it was attempted to make an exception in favour of tobacco growing, then he said frankly that it was impossible for them to accept it.

MR. AUSTEN CHAMBERLAIN

said he had never expected that there would be sympathy in a practical form for this proposal, and he thought that it was clear, from the position which the Government had taken up on the general question, that it would be too embarrassing for them to make any exception in favour of Irish tobacco. But he confessed that he did not think that the attitude of the right hon. Gentleman was quite right. He did not follow his argument. The ground on which the mover of the Amendment asked for its acceptance would lead to no risks to the revenue which were not caused by the mere growing of tobacco. There he was in entire accord with the mover of the Amendment. There were risks to revenue if tobacco was grown in the United Kingdom, but those risks the House of Commons had consented to run in the case of Ireland and in the case of Scotland, and having consented he did not see how the risks would be in any degree aggravated by granting the rebate duty for which the Amendment asked. He was not surprised at the attitude which the Government had taken up on the question. He did not want to turn the debate into a tariff reform discussion and reopen the whole of the topics which they had discussed at other times and which, no doubt, they would discuss again in the future. He thought it was possible even from the free trade point of view to defend and justify the request which the hon. Member had made. There was a famous sentence of Mill to justify the protection of an infant industry in order to give it a start and enable it to take root. And if there ever was a case in which the trader might consider himself justified and in which an orthodox free trader might think it advisable to grant protection to a nascent industry, surely it was in such a case as that of tobacco-growing in Ireland, or the growing of sugar beet in this country and in Ireland as well. The hon. Member had made a special claim for Ireland on the ground that this industry had in fact taken root in Ireland, though it was prohibited by law. He thought that the industry had taken root under a system of protection and not under a system of free trade.

MR. GWYNN

I think that the right hon. Gentleman is wrong there. There was practically free trade at the time of the Union.

MR. AUSTEN CHAMBERLAIN

said there was free trade in England, but he did not think that we were growing tobacco here. He did not think that the competition was with English tobacco but with foreign and colonial-grown tobacco. The hon. Member's point was that the growing of tobacco had been prohibited and stopped by an Act of that Legislature for revenue reasons, although the industry was already established, and that, therefore, there was a special claim on behalf of that industry to tender and sympathetic treatment. Now Irishmen were attempting to re-introduce the industry, and that was a claim which did not apply to the growing of sugar beet. He looked at it from a broader point of view. He did not think that there was a man in that House, whatever his fiscal views or whatever his party complexion, who could view without regret and anxiety the state of the agricultural industry generally, or that which they were constantly lamenting in their debates, the flow of labour from the country districts to the towns. How were they to prevent it? Surely the best way was by encouraging some agricultural industry which required a great deal of labour, and the growing of sugar beet and of tobacco were both good for the land and employed a great deal of labour. These industries would cause a demand for labour at a time when agricultural labourers were slack. There was, therefore, not only the advantage of the additional labour afforded, but there was the benefit that the labour would be wanted at times when there was the least demand for labour in other directions. He believed that there would be a great field for sugar beet both in England and in Ireland, and in regard to the hon. Member's claim in respect of the growing of tobacco, that once it was fairly established it might be able to hold its own without any protection or preference whatever. If this country adopted a perferential system, and could give a preference to such goods when coming from the Colonies, then they could apply the same preference to all produce of the same kind. But putting that on one side, here was a case where, without overstepping the bounds laid down by the most orthodox economist, they really could assist a new agricultural industry of a most valuable and desirable kind. Surely it was economic pedantry, carried to the extreme limit, to refuse the Amendment on the ground that it was protection, and at the same time to say that it was legitimate to give the same encouragement in the form of a bounty or State grant. If the Chief Secretary or the President of the Board of Agriculture paid the duty, or a portion of the duty, on behalf of the cultivator, the Chancellor of the Exchequer thought that was a reasonable thing to do. Surely to grant a rebate at once was no more heterodox from the political point of view, and it was a much simpler process, and he confessed that he thought that it ought to be done. He was struck with one other observation of the hon. Gentleman who moved the Amendment. It was quite true that in order to establish this industry they needed skilled labour. It was very difficult to obtain that skilled labour among those who came new to the industry. They had to acquire that skill which was inherited and handed down from generation to generation in? those places where the industry had been long practised. It was a really satisfactory experiment that in two or three places in Ireland something less than 100 acres of land should have been employed, and was it fair, if they were going to continue the rebate for another five or six years to these people, to refuse the same treatment to other people who were making a similar experiment? The rebate was first given by the late Mr. Ritchie, whose political economy was unimpeachable from the point of view of hon. and right hon. Gentlemen opposite. It was his own fortune when Chancellor of the Exchequer to sanction its continunace for a longer period, but if it was to go on as long as the hon. Member said, he thought the present Government must have given a yet further extension. If those who had established this industry had received this rebate already, and also a grant from the Irish Board of Agriculture, or from Irish funds, surely it was only fair that others who were embarking on the same business should receive the same encouragement, at least for the remainder of the period during which the rebate lasted. He had striven to put the case without attempting to conceal his fiscal views which it would be too late in the day to do. He had put the case for this particular demand in such a way as not to make it more difficult for the Chancellor of the Exchequer to deal favourably with it.

MR. BOLAND (Kerry, S.)

said they were very glad the right hon. Gentleman could support them in this demand. He was sure everyone must have recognised that the Chancellor of the Exchequer had very carefully left out of view the main contention of both his hon. friends that this was not a pure protectionist plea. Their claim was that by the Act of 1833 Parliament had deliberately put an end to an Irish industry and ought in justice to make an act of reparation. It would be entirely different if they were taking up the case, say, of the woollen industry. It was true that in centuries gone by when the English woollen manufacturers found themselves faced with Irish competition they did all they could to stop it, but in spite of those efforts the Irish industry had survived, and was in a very flourishing condition. While they asked for some such measure as this as an act of justice they could not help recognising that the Chancellor of the Exchequer was in a rather difficult position, and they would be quite satisfied, seeing that he was not prepared to give them this rebate, if he would adopt the practical suggestion that had been made that something should be done to help the Department of Agriculture to extend services which it already had given towards this experiment in growing-tobacco in Ireland, and if before the debate closed the Chief Secretary or the Vice-President of the Department of Agriculture would give some promise to that effect, his hon. friends, he was sure, would not press the Amendment to a division. He would particularly urge upon the right hon. Gentleman that it was reparation they were seeking and that what had been done during the past seven years in enabling the experiment to be carried out should be continued for a few years longer. In the case of such an industry, requiring long technical training, if it was to take root in other parts of the country they must allow a certain time to elapse before skilled hands would be able to carry it on in the future.

MR. BARRIE (Londonderry, N.)

said that he and his colleagues had watched this experiment in the South of Ireland with great interest, regretting that in the North their soil did not enable them to follow the example set by public-spirited agriculturists. He had listened with regret to the narrow view which the Chancellor of the Exchequer had taken of the question. However much he might be a protectionist, he refused to see any danger of protection in the very modest proposal made by the mover of the Amendment. They hoped the day would come when there might be a danger to the revenue from the development of the tobacco industry in Ireland, but he would be sorry to think there was any fear of that danger for a few years more. Progress must be slow in cultivating such a delicate plant. He had the utmost pleasure in supporting the Amendment and hoped the House would accept his word that he did not do so on protectionist grounds. He did not think the mover of the Amendment was quite justified in claiming so fully that it was a protectionist Amendment. He would prefer to call it a fostering proposition to encourage this industry which could only succeed with some help. The Agriculture Department, by the bounty they had given to it, had added greatly to the success of the experiment. He should not complain if the Chancellor of the Exchequer promised to get over the Amendment by increasing the bounty which had previously been given. He was absolutely sincere in his desire to see the industry cultivated and fostered in the different parts in which it had taken root, and he had only risen to assure the Chancellor of the Exchequer that in Ireland, whatever their differences of opinion on other subjects might be, there was no difference on this.

MR. LLOYD-GEORGE

said he was glad it was recognised quite sincerely that the Amendment was of so protectionist a character that it would be quite impossible for him to accept it. But he had expressed himself very clearly that the Government had already rendered direct assistance to the Agricultural Department for the development of the experiment. He had not had an opportunity of consulting the Vice-President of the Agricultural Department, but he would promise to go into the matter very carefully. He quite agreed that encouragement could very well be extended to an experiment of, this kind without infringing the most rigid principles of free trade; but he did not quite agree with the right hon. Gentleman that that might be extended to other purely experimental stages that had been made in this country. He could not add more at present.

MR. GWYNN

said he would like the right hon. Gentleman to admit a little more fully that they were making a claim of right in this matter, and not merely claiming indulgence for an experiment, but in view of what he had said he would not press the Amendment.

Amendment, by leave, withdrawn.