FINANCE BILL.

HC Deb 02 November 1909 vol 12 cc1654-771

Order for Third Reading read.

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

Mr. AUSTEN CHAMBERLAIN

I beg to move to leave out the word "now," and at the end of the Question to add the words "upon this day three months."

I think it must be with a sigh of relief that the House will enter on the last and shortest stage of this long and contentious measure. For myself, I have spoken so often and so much upon it that I can assure the House that it is with real reluctance I trespass once more on their patience. It falls to my lot in the last stage of the strife to repeat on behalf of my party the Motion I made on the Second Reading and to summarise the objections which we feel to the proposals of His Majesty's Government. I suppose no Bill has ever occupied the time and attention of the House so long as the present Finance Bill, or cast so heavy a strain on the general body of Members of the House, and especially on those on one side or the other who have most closely followed the discussions. I take the opportunity of acknowledging the good temper with which the Chancellor of the Exchequer has borne the prolonged strain to which he has been subjected, and, I would add, the readiness he has shown on many points to meet criticisms in regard to his Bill. Indeed, I suppose no Bill has ever been so cut and carved in the course of its passage through this House as the Bill which comes up for Third Reading to-day. One-third of the Clauses as they stand in the Bill to-day are new since the Bill was introduced. Its length has been increased 50 per cent. and its complications many hundreds per cent. I believe the Chancellor of the Exchequer rather prides himself on these alterations. He thinks that they show the sweet spirit of reasonableness in which he has conducted the discussions on the Bill. I do not wish to underestimate the necessary changes which a measure of this complication must in any case suffer in its passage through this House if it is to be made a really efficient and equitable measure, but I must say that on this occasion the changes have gone beyond anything that can be explained in that way. They are, in fact, the measure of how ill-prepared the Bill was when it was first presented to us, with how little forethought it had been conceived, and with how little knowledge of the circumstances and the facts of the matters with which it was dealing. I think it was the daughters of Pelias, in classical story, who cut their father into pieces and boiled him in a pot in the vain hope that that might prolong his life. The Chancellor of the Exchequer has treated his little bantling in very much the same way. I do not remember that the original experiment was successful. Perhaps the Chancellor of the Exchequer's will not be successful either, for, so far as we at any rate are concerned, though some blots have been removed from the measure, and some of its grosser inconsistencies have been alleviated, our objections to the principles on which it is founded remain unchanged. But before I come to them may I make one observation on the general financial situation? We have now enjoyed four years of Liberal finance. It is perhaps worth while to consider the result it has had upon our national position. At the last election many pledges were made by hon. and right hon. Gentlemen who are sitting opposite. Many charges were brought against their opponents. There was no pledge more frequent than the pledge that they would study economy and reduce our "bloated expenditure." There was no charge more frequent than that we had been "grossly and wildly extravagant."

As months pass and years go on, we get farther away from the last election and nearer the next, and a new set of pledges are already being given and a new set of promises made by hon. Gentlemen opposite, it is worth while to pause for a moment and ask how they kept the old ones. [An HON. MEMBER: "Old Age Pensions."] The last Budget for which we were responsible provided for an expenditure estimated at £151,750,000. The Budget which we are considering to-day provides for an expenditure of £162,500,000. The promises of economy have resulted in an increase of £10,250,000 in four years. And that is not the whole truth; that does not show the full increase for which the party opposite is responsible, for they have subtracted £3,500,000 from the provision made by their predecessors for the redemption of debt, and the true comparison is, to a Budget of £166,000,000 in the present year, with an increase of £14,250,000 over that for the extravagance of which they denounced their predecessors. And this in spite of the fact that they are reducing the provision for paying off old liabilities, and are not meeting the new ones; in spite of the fact that they have cut down the provision for the Navy below the point of safety, and ordered new ships for the payment of which they make no provision in the existing Budget, leaving the liability, with all the added liabilities that they can see to be met from the Budgets of future years. And further, this is at a time when, as I ventured to point out to a few Members who were present in the House the other day, competition of every kind is growing keener with us year by year. Competition in naval armaments waxes without ceasing. We cannot afford to lag behind with our defences. Competition in commerce, rivalry in industry, are becoming keener and more strenuous every day. It is a time when anyone, if he had the power, would sooner lighten the burden upon our industry than add to the heavy weight which it already has to carry on its shoulders. It is a time above all things for husbanding our resources. Yet that is the time which the Chancellor of the Exchequer and his colleagues have chosen for foreshadowing in necromantic vistas the vaguest schemes as to which nothing is certain, either their nature or the time when they would be fulfilled, as to which nothing is certain except the additional burden which they will place on the national shoulders and the National Exchequer. I think that the Chancellor who has so big a gap to meet in the national resources created by the past policy of his Government should be a little cautious about how he launches forth on fresh promises before he has paid the old debts which the Government have created.

How do they meet this great debt? The first observation I have to make in this connection is that half the Bill with which we are dealing has absolutely no reference whatever to the fiscal situation. You might have omitted the whole of the Land Clauses from the Bill, and the revenue would not be a penny the worse. On the contrary, it would be the better. If that is true of the revenue, still more true is it of the country, for the cost of these new taxes to the Treasury is but a small portion of the cost which they will inflict on the country as a whole. For every pound the Government spends on valuation, private citizens will have to spend another pound checking and examining their calculations, and all these burdens that will fall upon private citizens, all the expenses of seeking skilled advice, of possible lawsuits and of appeals, burdensome as they are, and will be, to the wealthy taxpayer, will be a crushing and, in many cases, an intolerable burden to the poor man, who is equally affected. The Chancellor of the Exchequer in his wilder moments talks, if I may say so, a great deal of clap-trap about his own Budget. He is always fond of representing the opponents of his Budget as a few rich men who grudge a halfpenny a year or a penny a year to expenditure on the defences for which they have clamoured, or on helping the necessities of the poorest of their countrymen. I am not here to claim unexampled generosity for the richer classes in this country. I suppose all of us, whether we are rich or poor, dislike taxation. The taxgatherer from all times has never been a popular person, but I will say that the people who are supposed to be affected by these Land Clauses, the great landed interests of the country, at any rate, have as good a record as any class could show alike for public service and private generosity. You will find no class in any country who have more fully or more generously discharged both their public and their private obligations, and if they rebel with others against the proposals of this Budget it is not because the wealthy among them object to paying their full share of taxation. If it were we on these benches would not be here to support their cry. It is because you do not tax men, in this Budget, according to their wealth; you do not tax wealth equally where you find it, because you pick out in the Land Clauses and other places capital invested in particular forms for exceptional and injurious treatment; because you translate into the clauses of what pretends to be a Finance Bill all the rancour and animosity which you have accumulated in political campaigns.

Let the rich bear their share and pay according to their wealth, and let the poor pay according to their necessity. Let the taxation of the rich be apportioned to their means, as the taxation of the poor is apportioned to their means. But do not pick out particular forms of property, without regard to whether the owners are rich or poor. Do not create an invidious distinction against them which is founded on no basis either of equity or exigency. Our objection to this Budget is not, as I have said, to be met by detailed Amendments here or there, because they leave its inherent views untouched. It is constructed not with any single-minded view to provide for our financial necessities, not even with a view to providing for our financial necessities, coupled with the desire to make the taxes work at the same time with the greatest possible amount of general good to the community, but it is conceived with the desire and avowed intention of placing special burdens on special people, and those not the people who are most able to bear them, because those people are under the ban and censure of the party who have the majority in the House now. In order to carry out this scheme the country is invited to embark on an expenditure of something over two millions in order to secure—what? Aid for the current year? Three hundred thousand pounds. Two millions are to be cast upon the water before they will see any money back into the national revenue. Does anybody believe that the Government would embark on a scheme of that kind for the purpose of getting all that they can hope to obtain from the taxes now under review? It is not to establish those taxes at their present level that this long campaign has been conducted, or this vast expense incurred. It is because if you once pick out particular individual and particular forms of property for special taxation, if you once establish the machinery to do so, then your rates, which are 20 per cent. or 10 per cent. to-day, become 50 per cent. or 100 per cent. tomorrow. The principles on which you defend and justify the beginning will serve you equally well to carry you to the ultimate aim of those who are the true parents, the real authors of this policy. They make no concealment of it. They do not pretend that the increment in land is so certain and secure, so special and peculiar, that that is right in regard to the landlord which is not right to the capitalist whose capital is invested in other places. Hon. Gentlemen opposite watch their neighbours' houses burning. They are happy; they warm their hands at the fire, but presently their own thatch will be alight. Men are there ready to apply the torches. Then we shall be interested to see how those who so cheerfully vote special taxes for others will bear special taxes imposed on themselves. I do not desire at this stage of the Bill—I do not think it would be fair to the House to enter at any length upon a detailed examination of the clauses, which we have looked at by night and by day for weeks and months together. Lest anyone should suppose that with all this cutting and carving, with the thirty or more new clauses, with all these Amendments and changes, you have made this Bill either just or logical, let me briefly notice one or two features which still remain.

Agricultural values we were told were to be excluded altogether from this taxation. It was not until the Report stage that Liberal Members sitting for agricultural constituencies appeared to realise how slight was the protection which they received, how hollow the promises that were sounding in their ears. The moment a parcel of agricultural land finds a possible purchaser at anything beyond its agricultural value, all the added wealth that the labour and sweat of the owner or occupier has put into the land is confiscated—is swept away. Agricultural values in those circumstances—I take the words of the learned Attorney-General—are "superseded and ignored," and the State comes in and says, "This is none of your doing; pay us a toll of 20 per cent to-day and as much more to-morrow as we like to take." Will you ever persuade the small owner, who, by ceaseless labour and toil, has improved the fertility of his land, who has brought up its value, that if he sells it to a builder it is just to tax all that improvement which he made as an agriculturist on the ground that it is now "superseded and ignored" in some building value, and thus deprive him of the fruits of his labour? Is it fair even in the case of a landlord? You want to force the landlord to sell and build on the land—to turn the land to building use in such conditions. Before he can do so, he must pay his tenant for all that his tenant has done to increase the value of the land. Then you go to him and say, "Oh, but this is unearned increment." "I have paid for it," he says. "Paid for it?" reply the Government; "that is neither here nor there. It is a social value added by the community; we are the community, and we take one-fifth of it. See how moderate we are."

To turn from agricultural values to the condition of friendly societies. Have they any reason to be grateful to the Chancellor of the Exchequer, they who have invested their money in property of this kind? He has not saved them from this tax; he has only altered the time at which it is collected. If they want to occupy a particular bit of land with their own offices, that, indeed, may be exempt, but all their capital which is invested in this land will be subject to these taxes whenever they turn it over and deal with it. [HON. MEMBERS: "Why not?"] Hon. Gentlemen say "Why not?" Then you recognise it is done? That is an admission of which we take note. Then do not go to the country now and tell your friendly societies that they are exempt. You know it is not true. Ask them why they should not pay like other men. I agree there is no reason if you are to have those taxes why they should not be taxed also, but you are discouraging thrift, the most popular form of thrift among the working classes, and one of the most valuable to the social stability of the community as a whole.

But, then, that is not all. You not merely tax an increment which exists, but you tax where there is no increment at all. Take the case of builders or companies engaged in developing land. They have to strike an average of a good speculation and a bad one. It is recognised that they must do so. In your Income Tax law you allow them to set the losses at one place with the profits at another, and you tax them on the difference. Here you ignore every case where they had an unfortunate speculation, and every time they have shown good judgment and had a successful result you come in to claim a share of their profits. You tax them on their trade profits, and you tax other people in certain cases on profits which they never receive at all. Take the case of the incumbent of glebe land which enters upon the attention of the Government. He enjoys a revenue from that glebe only, so long as he is incumbent. He may leave or he may die the day after you have levied your tax. You take a capital sum from him on the ground that he is going to receive increased revenue, while not a penny of that revenue may ever reach his pocket.

This is the logical, fair, reasonable Bill, doing justice as between man and man, and interest and interest, which six months' labour of the House of Commons has produced out of the efforts of the Chancellor of the Exchequer. What is the object of it? Not revenue, for, as I have already said, that revenue you will not get. The object was stated by one of the hon. Members for the City of Liverpool in a passage in one of the shortest speeches on record when he said that the object of this Bill is to force land into development. Is your Bill calculated even to do that? I venture to say if a man does not want to develop his land he need not. He has only got to sign a five years' agreement with some cricket club, of more or less stability or reality, and his land is exempt from the Undeveloped Land Tax. What is the result? Every man who is willing to say "For five years at least I mean to hold this land up" can escape scot free from the tax. It is only the man who is trying at the very earliest moment to develop his land will be hit, and the man who will be most hit is the man who is actually engaged in the work of developing the land. I do not know that it is worth while going into all these intricacies. Five acres of land attached to a rich man's residence is exempt, and five acres of market garden subject to tax. And this is the poor man's Budget.

Is it worth while at this stage of our discussion—I do not think it is, at any rate it is not for me who have spoken so much on the subject to spend longer than I can help on details of this kind, but I must say one word upon the general effect of taxation of this kind. You want to develop land, and what do you mean by developing it? In order to develop it you need men who will put their money in it and risk their money on it. Half the development of the country, much more than half the development, you may say almost the whole development of the country, is done on borrowed money. Do you think you will borrow money on better terms with this kind of taxation hanging over the head of every man who engages in it, when the State claims a share of every profit that he makes, whilst absolving itself free of risk for his losses. When it taxes him, not merely as it does every man who has similar wealth engaged in any other forms of industry or commerce, but lays upon him a special tax, levied on him alone, it must have the effect of discouraging men from investing their money in this particular way. A worse day's work for the housing of the working classes, a worse day's work for the building trade, this House has never done and never will do than on the day on which it passes this Bill—by the treatment of those, be they rich or poor, and a great deal more poor men are affected than rich men, who have invested their money inland, good or bad.

What are you to say of the spirit and the manner in which the Budget treats other trades? Take the treatment of the licensed trade. It is unequal as between man and man; it is unfair as between trade and trade. It is placing upon that trade such a burden as no trade in this country has ever been asked to bear, and one which, by the admission of the Government themselves, would crush out of existence many of those who are now earning their living in this business. Is that a fit object of taxation—is it proper so to plan your tax that you destroy without compensation the means of livelihood of honest citizens, many of whom since the Act of 1904 have had a Parliamentary title as long as they were well-behaved, and for which they have paid by insurance collected from themselves, and many of whom, such as in the case of the 1869 beerhouses, had a Parliamentary title much older than the Government? When the Lord Advocate goes about the country suggesting that we on these benches will break Parliamentary obligations, I think he had better examine the beam in his own eye before inquiring into the mote in ours. Let him fulfil the Parliamentary obligations for which he and his colleagues are responsible before they accuse others of being willing to break obligations of the State to its citizens. Taxation levied on such a scale that it makes carrying on business impossible to many of those who are engaged in a lawful calling—that is not taxation for the revenue, it is taxation for revenge. The speeches of the Government show in what a revengeful spirit they approached the problem.

Look again at whisky. We had a very interesting statement from the Chancellor of the Exchequer on Friday last, and he has been kind enough in the interval to supply me with some further information for which I asked him on the subject. I gather that he anticipates at least that the consumption of whisky in this country is going to be reduced 20 per cent. as a result of the enormous new duty which he has imposed. I think, having regard to all that has happened, that he is underestimating the reduction in consumption. He talks about stocks being reduced to their lowest level. No doubt they are. But does he think that they are going back to the old level? My information leads me to a different conclusion. A smaller trade requires lower stocks; and I do not think you will find that the merchants of the country, when the fate of this Budget is decided, if it becomes law, will hasten to replenish the stocks for which they no longer have any use. Twenty per cent. reduction in consumption produced by a tax! [An HON. MEMBER: "Hear, hear."] I know the views of the hon. Gentleman. He regards the trade as an immoral trade. He regards all alcoholic liquor as poison; and some other hon. Gentlemen opposite agree with him. Let them have the courage of their convictions, and say what is the truth, "This is not taxation in order to raise money; this is taxation to stop drinking, and to drive men out of the trade in drink." Consider what it means. Twenty per cent. reduction, one-fifth of the output, and an increased cost over all the remainder that is produced. Many distilleries and businesses cannot support the combination of extra charge and diminished output. The Government are destroying the trade, under the name of raising revenue.

Let me put it another way. If this new tax of 3s. 9d. per gallon on whisky had not reduced the consumption, making allowances for the anticipatory clearances in March, and for the fact that the tax did not come into force until one month of the present year had elapsed, it ought to have produced to the revenue something like £5,000,000 in the year. How much is it going to produce? £800,000. I venture to say that, when you look at these facts, the tax as a fiscal weapon, whatever it may be as a political weapon, stands condemned. You would have done better had you been more moderate; you would have obtained much more than you will do by your present exorbitant demands. It is the boast of the Government that no trade is injured by their Budget. No trade? Not the building trade? Not the trade in land? Not the licensed trade in all its branches? Not the tobacco trade? The Financial Secretary to the Treasury told us the other day that Bristol was well content. I had a letter from one of his most important constituents, who, after being good enough to say that he agree with all that I said in my speech the other day, states that never in the history of the trade had it suffered such a blow as is inflicted upon it by the present Budget. Is this the way to help trade and to foster employment, at a time when trade needs every encouragement and employment every increase that the wisest legislation of the State can give? Then, as if this were not enough, the Government have recourse for the second or third time to the Death Duties. Again you increase the chunk which you take out of the capital of the dead man whenever his property passes on death. That, carried to the length to which you have carried it, may have widespread and disastrous consequences to the rural life of this country. But these evil consequences will not be confined to the rural districts. Every small private business, with none too much capital to spare, struggling against the competition of the huge combinations which are an increasing feature of our modern life, will be hampered, cribbed, cabined, and confined, whenever one of its partners dies. Money which ought to be available for the development of the business, for remodelling its machinery, or for extending its premises, will go into the maw of the Exchequer, there not to pay off the capital liabilities of the State, but to meet our current expenses. These taxes, carried to the length the Government have carried them, might be a last resort in a great emergency. They are grievous if they are necessary; they are criminal if they are not necessary.

4.0 P.M.

We, at any rate on these benches, believe that there is a better way of meeting the financial necessities of the country. There are other precedents in taxation, both in foreign countries and in British lands beyond the seas, than those which the Chancellor of the Exchequer has thought fit to embody in his White Paper. Let us learn by their experience. All around us change; are we alone to stand still? Every science advances; has political economy alone said its last word? Let us open our eyes, and not swaddle ourselves in the theories of a bygone age. Our greatest needs at this moment are employment for our working people and security for our industries. Let us seek to build up instead of to destroy. Cease to ruin particular trades by burdens too heavy for them to bear. Cease to place upon the necessaries or comforts of the poor exorbitant rates of taxation. Spread your net wider. Let the luxuries of the rich bear their part too. Let the vast masses of foreign importations, which come to our shores to compete with the produce of our own labour, bear their share, and pay some toll for the benefits of the market by which they profit. The foreigner will bear his part, as our manufacturers have to bear their part, in the taxation of foreign countries when they seek to trade with protected nations, and as every political economist, from John Stuart Mill downwards, who is not first a Member of Parliament and a partisan, admits that he must do if you impose import duties. But if, when all is said and done, a portion of the tax falls upon our own people, the burden will be less irksome than in the form in which you impose it; and men will be better equipped to meet it. "Give us work," our people may well say, and we will find you the revenue. "Give us security for our industry, give us good employment, and you will benefit the Treasury," which will share in the prosperity, which is the prosperity not of a class but of a nation. Put our people on an equal footing with our great competitors, give them a fair start in the race, and I am not afraid of the result. You will then not only have opened a new source of revenue to fill the gap which is yawning at your feet, but you will have done something to relieve the greatest of our social necessities; you will have found work for the workless and bread for the hungry.

The ATTORNEY-GENERAL (Sir William Robson)

I have to compliment the right hon. Gentleman upon the felicity with which, after more than six months of debate, he has been able to come, I think more closely, to the issues between the two parties than either he or any other Member on that side of the House has done during the whole course of the Committee or Report stage. He has, if he will allow me to use a popular phrase, at last "touched the spot." He tells us that his complaint against us is that we do not cast our net wider. We have apparently chastised him with whips. He would have us chastise him with scorpions. He makes a complaint against us that we have hampered trade by our Budget. We all know the classic, or, rather, the Scriptural illustration, in which a great potentate is said to have somewhat inconsistently reproved sin. Satan reproving sin is, I think, a mild type of inconsistency compared with the right hon. Gentleman the Member for Worcester rebuking us for having hampered trade. He began by referring to our increase of expenditure. He told us that we had, in fact, added something like 14¼ millions to the expenditure of the country. He said, "But that is not the whole truth." He is quite right. It is not the whole truth. The whole truth would spoil his point. I should like to ask the right hon. Gentleman with regard to that reproach two simple questions. First of all, which of the expenditure would he not have incurred; and next, I would like to ask him how much of the expenditure would be reduced if his party had had their way? They have throughout urged and insisted upon great expenditure. In Bill after Bill which had been brought before the House we have not heard from the other side a single effective or genuine demand for the reduction in the estimates laid before us. I think if we had given way to their demands for expenditure we should have had a much greater deficit, and had to devise many more new taxes. I think the right hon. Gentleman is right. We should have had to spread our net a great deal wider. Then he went on to attack the motives of the Government in the proposals that they have laid before the House. It is always easy to attack motives. You can only meet an attack of that kind by a denial, and by a denial very easily disbelieved. But I think the charge of vindictiveness in relation to a policy which has been so long before the country as that relating to the Land Clauses ought to have been really supported upon something more than epithet and allegation. The whole country knows perfectly well, and the right hon. Gentleman can scarcely be unaware, that the policy of land taxation has been an item in the programme of the Liberal party for many years—for nearly the whole of our time—and that it has been affirmed by substantial majorities in a Tory House of Commons. We have had a Land Bill laid before a House of Commons composed—I was going to say almost wholly, but certainly composed mainly of Tories, and that Bill was passed by a large majority. It was a Land Bill introduced just before a General Election. Did it meet with any active Tory opposition? Certainly, so far as I remember, I believe it was mainly opposed by only one hon. and learned Member. It received many Tory votes. It was far more comprehensive in its sphere than this Bill, but it was not denounced as a revolution. I do not remember that it was even called Socialistic. Certainly no one suggested that its promoters or introducer were animated by purely vindictive motives. The right hon. Gentleman has repeated in slightly different form the advice that he had so frequently given to Parliament and the country that we should broaden the basis of taxation. That is the meaning of his peroration, of one may unkindly analyse and dwell upon a peroration. We are to spread our net wider. I think that is exactly what we are doing. We are broadening the basis of taxation. That does not seem to satisfy our advisers! They have implored and warned us that we must find new sources of revenue. That is just again what we are doing. The question is: In what direction are we to broaden?

Let me put before the right hon. Gentleman the choice that lay before us. We had to broaden the basis of taxation, and there were three directions in which it was open to us to move. I should like to ask the right hon. Gentleman which of them he would have chosen and why? On the one hand, we might have taxed property. In that case, of course, we ran the risk of diminishing in some degree the growth of capital in the country. But every tax of necessity in some measure affects the growth of industrial capital, and affects it adversely. We might, on the other hand, have laid our burdens, as the right hon. Gentleman suggested we should have done, on the great machinery of trade. We should in that have proceeded to hamper and interfere with the great source both of national wealth and national revenue. Well, we thought—and I do not proceed, of course, to argue the question, but only to state conclusions—we thought—and I think rightly—that we would lose more on Income Tax than ever we should gain with a tariff which interfered with the operations of trade. Then there was a third course: That was to broaden the basis of taxation by laying burdens upon the general necessities of consumption in the country. That would mean a tax on labour, a tax on labour in its most insidious, most mischievous, and most dangerous form. Well, now, these were the three courses open. We had no difficulty about our choice. There was the taxation of unearned and often wholly unexpected wealth. A tax on industry is fatal to the profits of capital, because you really not only diminish the amount, but, what is much worse, the productivity and efficiency of the capital which remains. There was taxation of labour, under the form of general necessities of consumption. As I have said, we made our choice, and it is perfectly obvious that the right hon. Gentleman has made his choice. We decided that the fittest of these three possible subjects of taxation was the taxation of unearned and often wholly unexpected wealth. Will any hon. Gentleman not carried away by party feeling or party prejudice look at these three alternatives as we have had to look at them, and say that we did not on the whole make a fair and essentially moderate choice? The question I admit that I have put to myself is that you may carry the taxation of property, even though it be unearned and unexpected, to a point at which it becomes confiscation. You may easily do that. But that cannot be suggested against this Budget. We have heard from the right hon. Gentleman to-night, not for the first time, animadversions upon the smallness of the amount expected. So that whatever we have done we have not gone as far as confiscation. Our tax is novel, and so would any tax be that hon. Gentlemen opposite would have to introduce. But it cannot be called extravagant or extreme. We have had humour and satire cast upon the smallness of the amount we expect to get. Well, hon. Gentlemen opposite seem a bit puzzled—I thought that even the right hon. Gentleman himself, well as he knows the Bill, clear as his arguments have always been throughout—also seemed to be in a little doubt as to whether to condemn this tax for its oppressive enormity or its futile triviality.

Mr. AUSTEN CHAMBERLAIN

For both.

Sir W. ROBSON

The right hon. Gentleman says both. He is more courageous than many of his colleagues. I have watched, with the interest of a philosophical spectator, the line of argument of hon. Gentlemen opposite, and I have noticed a little hesitation in their minds as to what really is the party line in this particular respect. I cannot understand why, when taxes are put upon property of a particular kind, this should be met with such a degree of almost ethical indignation as the right hon. Gentleman has shown. What is his reason for shouting "Robbery" and "Socialism" on this tax upon unearned increment, while he yet treats as highly meritorious and most moral taxes upon the operations of trade or upon the purchasing power of wages—a tax on labour? The right hon. Gentleman's policy to-day is quite clear. It has been that long enough, but to-day he has been a little more explicit. He would tax trade and he would tax labour. We have made our choice. He has made his. I hope the country will understand clearly what it amounts to!

I pass from the right hon. Gentleman to deal with the arguments which he has not advanced to-day, but which I think lie at the root of the objection of the party opposite to this measure. They have denounced again and again the Budget as a measure of Socialism. I regard that as something more than an epithet. I think it is an argument worthy of analysis and consideration. I would beg hon. Gentlemen opposite quite sincerely as one as much opposed to the doctrine of pure Socialism as they are, to consider a little more carefully the charge of Socialism which they are bringing against this Budget; because, in my view, they are giving the hon. Gentleman the Member for Blackburn (Mr. Snowden) and his Friends an unjustly and dangerously good advertisement. Depend upon it: There could be nothing worse in the interests of property than to tell people that these taxes, so closely and so obviously founded on simple justice, are to be placed to the credit of Socialism.

In my opinion that cuts at the very root of Socialism. I am afraid I shall not carry the hon. Member for Blackburn (Mr. Philip Snowden) with me in this regard. What is the essential principle of Socialism? It is the substitution of State action, which I regard as cumberous, ignorant, and hidebound, but which the hon. Member for Blackburn would treat as elevated, noble, and disinterested, for individual enterprise and energy. I pass over the question who is right in his adjectives. I say Socialism means the substitution of State action for that individual enterprise and energy which has built up the great machinery of industry on which civilisation subsists. The keynote of this Bill is the protection wherever it is imperilled by the operation of our taxes of individual enterprise and energy. We have stuffed its clauses with provisoes and safeguards against the taxes falling upon the industries and enterprise of the commercial and working classes. I wonder when the right hon. Gentleman comes to frame his Budget—perhaps he may, I am not making prophesies—will he be able under the system of taxation he has foreshadowed to-night to make exceptions and provisoes? Will he be able, as we have done in the case of the smaller holders and owners, to exempt the poor? Will he be able to exempt industries, to exempt enterprise, to take care that no man's capital is interfered with, that no man's speculations are imperilled? I hope he will be able to do it as well as we have done it, but I am afraid not. The very keynote of this measure is an endeavour to prevent anything like a tax or burden falling upon industry. How can that be called Socialism? Why, so far from being Socialist, we are daily reproached by hon. Members opposite on platform after platform and in the House for our commercial individualism.

We are told that this Bill, whatever it may appear to be, however moderate its taxes, however small their amount, must be rejected because there is an incurable Socialist temper or Socialist intention or policy, of which this is but the first step, stamped upon it. That is what we are told at one moment when we have hardly got out of our ears the reproaches that we were antiquated Cobdenites. The doctrines of Cobden are the very antithesis of Socialism. I seem to remember some phrases that occurred to the mind of the Leader of the Opposition in a very important work upon the fiscal question, though it professes to be only a series of economic notes, in which he reproaches those who prefer that which is natural in the economic sphere to that which is State contrived. He tells us that belongs to an antiquated mode of thought, and he goes oh to reproach the Free Trade party and warn them against a feeling of deep distrust of Legislatures. These are words from "Economic Notes on Insular Free Trade." Then the reproach was that we were anti-Socialists. That has been the reproach again and again. To-day we are so Socialistic we cannot be trusted, although we make most vigorous protestations against the charge. I ask hon. Members opposite seriously whether their fear is well founded. It is a charge against our intentions and against our policy, against, if you like, our political temper. I think that fear which is at the root of the opposition to this Bill would vanish if they would look at the financial situation as a whole and at the policy of this Government as a whole. I would remind them of one measure we have in hand at this very moment, which is taking some part of our hard-worked time during this Session—a measure which inevitably makes the greatest blow against Socialism of any measure ever passed in this House or in any other House—the Irish Land Bill. There you have this Government which you are charging with being Socialist—charging not on truth but on suspicion—proposing and carrying through this House a measure which will give a most enormous extension to the power of private property in this country. It establishes here a solid guard of I should say a hundred Members for some indefinite period who will be pledged to vote and fight against every single article of the Socialist creed; and yet you profess to fear our Socialism. Even the Socialists themselves voted for it to a man. That, I think, ought to make you cease your alarms, not only in regard to the Government but in regard to the hon. Member for Blackburn and his Friends below the Gangway, although their claim to an independent existence is that they desire to limit the range and rights of private property, yet when there comes the question about voting for it they go peacefully and patiently into the Lobby in support of it.

I venture to say that the rejection of this Bill will do more to encourage Socialism than anything else we can possibly do. Depend upon it, whatever the motive of our policy might be, the results of yours will encourage Socialism. The right hon. Gentleman spoke of the record of the landed classes on matters of government. I will not say one word which might seem to show any lack of appreciation of the great services which the English landed class, like every other class in England, has in its turn rendered to the political life of this country. The life of England is made up of the efforts and virtues of all classes. But there is one part of the record of that great class which I think they do not like to reflect upon, or did not a few years ago, and that was their fiscal record in relation to the very questions which are now coming for consideration before the country. That is a record of which the country ought to be reminded, but not to be reminded in the interests of the wealthy classes of this country. That is a record which will be brought again into life if the landed classes propose to reject this Budget because of the burdens it puts upon them.

We were told by the right hon. Gentleman again and again—it is an old charge—that this Budget is something more than fiscal, more than financial, and that seems to be treated as a reason—I believe it is being put forward as a reason—why extreme action should be taken against the Budget outside this House. I daresay it is more than financial. I am rather surprised, however, to hear that reproach from the right hon. Gentleman, because I understood that his Budget when it comes, I am not going to trouble about it, would also be more than financial. The right hon. Gentleman the Leader of the Opposition last May at St. James's Theatre congratulated those whom he was then addressing—the Fiscal Reform Association—upon the fact that their motives also were more than financial, that their propaganda did not turn on really material considerations, but that their fiscal and financial proposals were animated by imagination and sentiment, and he said if they were not they would not be fit to govern an Empire like this. I do not see why hon. Gentlemen opposite should be at liberty to bring forward Budgets that are animated by imagination and sentiment. When the Leader of the Opposition said it would be folly not to connect with other objects, I do not see why they should have that privilege, and we should be debarred from considering the collateral consequences of the taxes we suggest. I am glad that this Bill, though a Finance Bill, has not been framed with out regard to greater considerations. The higher considerations to which it has regard have put finance on a higher plane. It is quite true that in laying our taxes we have had regard to matters which are not merely those of imagination or sentiment, but we have had regard also to history. We have made an advance—the furthest advance that has yet been made—from those evil days destined, I daresay, soon to disappear, when the burdens cast upon the poor were so adjusted, nay, when they were deliberately created, so as to give some private profit to favoured sections of the community. We have passed away from those days, and against that policy we put these proposals. I have stated they hamper trade not at all; certainly as little as any tax could possibly hamper trade, and the real objection to them is not that which we have heard with such frequent iteration during the last few months; it is that they treat property which is due substantially to the efforts of all as being a fit subject for contribution to the needs of all. Hon. Members opposite may procure, but not in this House, the defeat of these proposals. The more they are defeated the more they will be debated; the more they are debated the more resolute will become the intention of the English people to see that they are applied—applied, it may be, in forms which will make hon. Members opposite regret their opposition to these taxes.

Mr. HAROLD COX

Although I am strongly opposed to some portions of this Bill I voted for the second reading, and I intend to vote for the third reading. I do not propose to repeat the arguments I have used against the Land Taxes. The House is well aware of my opinion in regard to those taxes. I believe they are utterly unsound in principle, and I am convinced that if they come into operation they will become so unpopular that there will be a universal demand for their repeal. If the Land Taxes formed the whole or even an important part of this Budget I should vote against the Bill. But they do not form the whole of it nor even an important part of it. Financially they are utterly insignificant. I will take the greatest estimate given by the Chancellor of the Exchequer of all the Land Taxes this year. He says they will yield £600,000, and half of that goes to the local authority. Another £250,000 is required for the levying of the taxes, leaving a net sum of £50,000, and therefore we have had all this hullabaloo over £50,000. But that is not the Budget. The real Budget is a series of taxes to meet a deficit of about £14,000,000 sterling, and that is what I support. I object, it is true, to some of the taxes, and I stated upon the second reading my reasons for believing that a tax on beer would have been preferable to a tax on licences. My objection to a tax on licences is the same as my objection to taxes on land, namely, that you are picking out a particular form of property for taxation. But beyond that I have a further objection that all the taxes in the Budget are too high. The Whisky Duty, the Tobacco Duty, the Death Duties are too high, and the Income Tax is also too high. I think it is dangerous to have such a high rate of taxation on any of these things in time of peace.

But who is to blame for this? I do not blame the Chancellor of the Exchequer. I think we must exonerate him from the primary blame. The Chancellor of the Exchequer is not to blame, but this House is to blame for voting the expenditure. The right hon. Gentleman has got to find the money. When I first came to this House I was pledged to economy in public expenditure, and I took that pledge partly because I did not think you would be able to preserve Free Trade without economy in public expenditure. I took that pledge with a good heart, because it was put forward as part of the programme of the Liberal party. Speaking at the Albert Hall on 21st December, 1905, the late Prime Minister said:— The fact is yon cannot pile up debt and taxation as they have been piled up without feeling the strain in every fibre of society. Expenditure calls for taxes, and taxes are the plaything of the Tariff Reformer. Militarism, extravagance, and Protection are weeds which grow in the same fields, and if you want to clear the field for honest cultivation you must root them all out. With those words ringing in my ears I went to my Constituency and pledged myself to economy in public expenditure, and I have done my best to adhere to that pledge. I do not say that I have been very successful. Since the Liberal party has been in power the expenditure has increased by something like £16,000,000 a year—just a little less—but what has the party opposite done to stop that increased expenditure? As the Attorney-General has pointed out, on no single occasion have they protested against this increase in the expenditure. On the contrary, they have taken action which, if it had been followed, would have led to a still further increase in our expenditure. It seems to me that hon. Members opposite are very much in the position of those ladies who spend a large part of their time changing their frocks, each one more beautiful than the preceding one, and thoroughly content with themselves, but when the time comes for paying the bill they turn round horror-stricken with their extravagance. The House is committed to this expenditure. The bill must be paid, and the real Budget before us is a very good way of paying it.

This Bill proceeds on two sound principles, namely, that you should tax people according to their means, and that you should tax luxuries and not necessaries. Those are two perfectly sound principles. Let me take up a point raised by the Attorney-General. I venture to express my entire agreement with the hon. and learned Gentleman in saying that there is nothing Socialistic in this part of the Budget. I know that the hon. Member for Blackburn has picked out one portion, namely, the Super-tax, and he has said that that is the essence of Socialism or the most Socialistic portion of the Budget. I venture to disagree with him, and although I bow to his superior authority as to what is Socialism, I think in this particular case he has made a mistake. He has rather taken the Socialism of the street corner than the Socialism which he himself would be likely to put forward. The hon. Member for Blackburn's philosophic conception of Socialism is that the State should become the owner of all the materials and the director of all the industries of the country. I wish to point out that hon. Members opposite have now accepted the Super-tax, and they cannot go about the country denouncing it as Socialistic, because they have accepted it. Personally, I do not see any Socialism in the means adopted for raising revenue. Socialism lies more in the expenditure; but, again, hon. Members opposite accepted the expenditure. Let me take as a test the case of the old age pension. A year ago, by an Amendment which I moved to the Old Age Pensions Bill, I raised the question as between contributory and non-contributory pensions. That seemed to me to be a clear test case between Socialism and non-Socialism. A contributory pension means that the individual is to be made responsible for his own future as well as for his own present, whereas non-contributory pensions mean that the State is to be made responsible for the individual, and that is the dividing line between Socalism and non-Socialism. When the House decided upon my Amendment what happened? The Leader of the Protectionist party voted with the Government and the Leader of the Unionist party walked out.

Let me go a little further. The Government with their Socialism have succeeded in landing a very large fish. In the Development Grant you have pure Socialism. Hitherto it has been our boast that this country has been able to develop its resources by individual effort, but now it is proposed that the State is to develop the country. What happens? There is the right hon. Gentleman the Member for Wimbledon (Mr. Chaplin), whom we have all regarded as the very type of the sturdy, self-reliant Englishman, and yet when it was proposed that the State under the Development Grant should do something for agriculture, the right hon. Gentleman jumped at the bait, hook and all, and was landed. He does not mind Socialism so long as somebody else pays for it. The means adopted for meeting this vast deficit are not Socialism, but the deficit has been created by Socialistic expenditure which hon. Members opposite have voted for. How do hon. Members opposite propose to meet this expenditure, because that is the real issue? The right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain) rather upbraided hon. Members on this side of the House for not being sufficiently progressive, and he said we were living in the past, and did not move with the times like other countries. But what does the right hon. Gentleman propose? I know what is in his mind. They say, "Are you going to be bound by theories adopted 60 years ago, because that is not progress." No, but according to the right hon. Gentleman opposite progress means picking up the ideas of 70 years ago. To my mind that is not progress but atavism. I wish the right hon. Gentleman had developed his thesis a little more. One of the right hon. Gentleman's points against the Land Taxes was that, though they would yield an absolutely insignificant revenue, yet they would be extremely burdensome. Is that not the case with many of the taxes which he proposes? Is it not the very essence of a Protective Tax that it imposes a heavier burden upon the consumer than is equivalent to the revenue which it brings to the State? What are they going to tax? We know hon. Gentlemen opposite propose to tax food. They are also going to tax clothing, furniture, and building materials. They are always talking to the carpenters, and saying, "We will make more employment for you, because we are going to tax imported doors and window frames." What are doors and window frames used for? They are used for the building of houses. Consequently it is part of the policy of hon. Gentleman opposite to make housing more expensive. They are going to tax everything that comes into the poor man's house. They are going to tax it heavily, or otherwise they will not get the revenue they require.

I do not think hon. Members opposite, and perhaps only a few hon. Members in this House, have fully realised what even a little tax means to poor people upon an absolute necessity of life. I was talking only the other day to a poor man, who told me of the case of a widow left with a family who was rejoicing because bread had been lowered in price one farthing per loaf, her comment being, "That means threepence per week in my pocket." That may seem a little matter to hon. Members in this House, but it means a good deal to a, family with only about 15s. per week coming in, and a large family to keep. I hold that the poor should pay something toward the revenue, but they ought to pay in proportion to their means, and the tax on the necessities of life is in inverse proportion to their means, and falls most heavily upon the poor consumer. A tax on bread is not felt by rich people and scarcely by people moderately well-to-do, but it is intensely felt by the very poorest people.

May I call attention to what was, I think, a slip made by the Leader of the Opposition on a former occasion when speaking on these taxes? He said, in reply to something said on this side, that to his mind a tax which was not felt was a very desirable tax. What he really meant was a tax which was not seen, and I think he will see there is a great difference between a tax which is not seen and a tax which is not felt. It happens that most of your taxes on commodities are not seen, and that is why they are so easily imposed. I daresay the vast majority of the people of this country are not aware that they are paying a tax of 5d. on every pound of tea they buy. The tax is not seen, but it is felt. It is taken out of their household budget, and it means a skimping of something else. Hon. Members opposite have tried to get out of that difficulty by going about the country and saying they mean to tax the foreigner that the foreigner is going to pay these taxes. Do hon. Members opposite really believe that? They are very angry, perhaps rightly angry sometimes, when there is a misrepresentation from this side of the House, but do they really mean what they say when they get up and tell ignorant people that the foreigners are going to pay the taxes? If they mean that, why do they not make the taxes higher? Why are they not proposing to tax raw materials? Is there any alchemy by which you can discriminate and say the foreigner will not pay a tax on something you call raw material and will pay a tax on something you call a manufactured article? Is there any line betwen a small tax which the foreigner will pay and a large tax which the British consumer will pay? There is no posible line or discrimination. May I ask them this? Have they ever thought how the foreigner is going to pay these taxes of ours? How is it going to be done? I am quite sure all hon. Members opposite have got beyond that very crude phase of political economy which assumes that international commerce is settled by cash. They all of them know that international commerce is an exchange of goods against goods. Then, if the foreigner is going to pay our taxes, he can only pay them by sending us more goods, or, what amounts to the same thing, by taking fewer of our goods in exchange for his goods. How is that going to increase employment?

I go beyond that. I said just now that the financial proposals in this Budget were not in my judgment Socialist, but the financial proposals of hon. Gentlemen opposite are essentialy Socialist. They opposed, as I opposed, the Right to Work Bill; but what is it they are suggesting from almost every platform in the country? That they are going to make employment; that it is the duty of the State to find work. Is not that the crudest form of Socialism? Have they thought out how they are going to do it? There is nothing they are so fond of doing as glorifying home trade at the expense of foreign trade. They have an argument borrowed from Adam Smith—a very good argument, as any argument borrowed from that source must be—in which they say that, if instead of Englishmen trading with foreigners, you have two Englishmen trading together you will have more employment in this country. Yes, but that supposes necessarily that you must have less foreign trade. You cannot get back the trade which the Englishman has organised with foreign countries and locate that trade in this country without losing the foreign trade. That may possibly do very well for some constituencies, but I should like to know how it is going to do for all the Lancashire constituencies? Lancashire lives by foreign trade. Lancashire has built up a marvellous trade with the whole world, and you are going to destroy that in order to give a preference to home trade. How is that policy going to help your shipping industry, your ship-building industry, and all the people who have invested money in docks and harbours? Is their property to be destroyed? We heard only this afternoon of the wickedness of taxing an industry out of existence, but you are proposing to tax out of existence the capital which has been invested in docks and harbours. Let me put the matter, I hope, simply: You have two Englishmen, each of whom has organised a trade with some foreign country. Then the State—this Socialist State which calls itself a Tariff Reform State—steps in and says to these two Englishmen: "You shall no longer trade with the foreigner: you must trade with one another." These two unfortunate men reply: "Yes, but we do not want to. We do not want one another's goods. It so happens that the things we make have a market abroad and have not got a market at home." "Never mind," says the Tariff Reform party, "in the sacred name of Tariff Reform you must trade with one another." What is that but the crudest form of Socialism?

May I put another question to them? They have always told us, and I have no doubt my right hon. Friend opposite will repeat it again, that they do not mean to tax raw material. I have asked again and again some Tariff Reformer to tell me whether leather was a raw material or not. At last we have got the answer. Bermondsey has given the reply. [Mr. G. D. FABER: "Hear, hear."] I am glad, at any rate, that there is one hon. Member opposite sufficiently loyal to accept the verdict of Bermondsey. If I may assume that he speaks for his Leader and his whole party, the whole of the Unionist party is committed to a tax on leather. I am glad that they have the good taste not to repudiate that suggestion, because Bermondsey would be broken-hearted if they were to do so. But what about Lancashire, Leicester, and Northampton? They do not only use leather for boots and shoes in Lancashire, but leather is an essential material in the process of spinning, and tons of leather are thus used up every year. Is all that to be taxed? You suggest sometimes that the manufacturer should be compensated by giving him a drawback. How are you to give a drawback on the little fraction of leather used in a pound of yarn. It cannot be done. Sir Michael Hicks Beach, when Chancellor of the Exchequer, was approached on that question in regard to flour used in size in the manufacture of cotton, and he replied that you could not possibly give a drawback, because there was no means of measuring the amount used in a yard of calico. It is exactly so with leather. It must increase the burden on that great export industry, an industry which accounts for one quarter for the whole exports of the country. We know now that it is the policy of the party opposite to tax these export industries in order to encourage Bermondsey. If they think out their policy they will see clearly enough that their scheme, as they call it, for creating employment only means redistributing employment; for every plus there must be a minus, and their policy is to redistribute employment in this country by giving a subsidy to some industries and taxing other industries out of existence. I contend that is one the crudest forms of Socialism, and one of the most vicious.

5.0 P.M.

Then many of them, while attacking these taxes, have also complained of the manner in which some of them have been commended to the country. I sympathise with their complaint. I think it is a great pity that some of these taxes should have been commended by some of the arguments which have been used. I think it is a pity we should encourage envy of the rich or any class, but are they scathless? Have they never appealed to base motives in arguing for their taxes? Do they not go up and down the country saying, "Hit the foreigner, tax the foreigner"? Are they not stimulating a malignant hatred of foreign countries? And for what offence? For the offence of sending us the good things we want to buy. For these reasons I hold there is no essential difference between the Socialists above the Gangway and the Socialists below the Gangway, and I confess I am surprised that a man of such acute intelligence as Lord Hugh Cecil should recently have written to say that Tariff Reform is an alternative to Socialism. It is no alternative. It is another phase of Socialism. More than that, it is an additional phase, and this is the point I wish to press upon the House. Tariff Reformers accept all the things put forward by this side of the House which are in their essence Socialism. They accept non-contributary pensions, the feeding of school children, and doles to the unemployed, and, in addition, they would add a Socialism of their own. Therefore, I believe that Tariff Reform, instead of being an alternative to Socialism, means more Socialism. I believe that in opposing Socialism of both these types I am expressing the convictions of tens of thousands of my fellow-countrymen. I believe the majority of the people of this country have no desire either to plunder other people or themselves to be plundered. They wish to be left free to earn their own living. I know perfectly well that, in the growing complexity of modern life, and in the growing concentration of masses of human beings on a limited space, it is necessary more and more to appeal to collective action to do things which the individual cannot do for himself. It is because of that necessity that it is of infinite importance to preserve those influences to build up individual character. You cannot make a good machine out of bad materials. You cannot make a good State out of bad men. In the case of the State it is even more important than in the case of a machine that the materials shall be good. In the case of the State the materials are living beings. It is through them, and through them alone, that the State thinks and acts. Without them the State would be inert. It is they who give life to the State, not it to them, and, therefore, the final result in the progress of the nation must, in my opinion, depend on the strength, activity, and self-reliance of the individual citizen.

Mr. PHILIP SNOWDEN

It must have been a very pleasant experience to the hon. Gentleman who has just sat down to deliver a speech met with silence on the Tory benches and with resounding cheers from those who sit on his own side of the House. I suppose that about two hours later hon. Members opposite will be repairing to the dining-room to eat the fatted calf and to celebrate the return of the Prodigal Son. I do not intend to follow the hon. Member in his curious and confused ideas about Socialism. I will come at once to the consideration of this question: If Tariff Reform and Socialism are one and the same creed, how is it that we Socialists are opposed to Tariff Reform? Let me turn to the two first speeches delivered in the course of this Debate—the speech in which the rejection of the Bill was moved and the reply furnished to it by the Attorney-General. The learned Attorney-General noticed an omission in the speech of the right hon. Gentleman who moved the rejection of the Bill, and it was an omission which I think must have been noticed by every other Member of the House. The right hon. Gentleman the Member for East Worcester began his speech by saying that he was going to state the objections of his party to this Finance Bill. I have followed, as far as I have been able, the speeches and arguments advanced in the country in opposition to these proposals, and, so far as I can judge, there have been not many objections but only one objection to this Bill, and that one has been that the Bill is Socialism, or, in the words of Lord Rosebery, it "is the end of all things—religion, property, and family life." I expected therefore that the speech of the right hon. Gentleman would be devoted mainly, if not entirely, to proving the identity of the proposals of this Budget Bill with what is known as Socialism. But he was singularly silent on that point, and, in consequence, I shall have to confine my remarks to dealing with the objection that this Budget Bill is Socialism. I may begin by attempting to define what we, who profess to be Socialists, mean by Socialism. The Attorney-General was right in saying that Socialism means State action, but that is not exactly the definition of Socialism which was given by the right hon. Gentleman the Leader of the Opposition at Birmingham about 12 months ago. If I may be permitted I will read the right hon. Gentleman's words, because they admirably serve my purpose. The Leader of the Opposition—speaking, I believe, at the opening of that curious anachronism, a. Tory labour club, about 12 months ago, a club which I believe has since found its way into the Bankruptcy Court—gave this as his definition of Socialism:— It seems to me there is no difficulty or ambiguity about the subject at all. Socialism has one meaning, and one meaning only. Socialism means, and can mean nothing else, than that the community or the State is to take all the means of production into its own hands, that private enterprise and private property are to come to an end, and all that private enterprise and private property carry with them. That is Socialism, and nothing else is Socialism. Social reform—— and I ask here the attention of the House to the distinction which the right hon. Gentleman attempted to draw between Socialism and Social Reform—I shall, later on, endeavour to show that there is really no distinction where the right hon. Gentleman attempts to establish it. The right hon. Gentleman goes on to draw a distinction between Socialism and Social Reform, and he says:— Social reform is when the State, based upon private enterprise, recognising that the best productive results can only be obtained by respect of private property and encouraging private enterprise, asks them to contribute towards great national, social, and public objects. That is social reform. I accepted the statement made by the Attorney-General that Socialism is State action. But it is something more than that. It is State ownership of the means of producing and distributing wealth. There may be State action which is not connected with the ownership, control, and management of industry. We as Socialists recognise that. We recognise, too, the existence of conditions which everybody deplores, and we recognise further that the cause of those conditions is to be found in the monopoly of the means of production and distribution—at any rate in the monopoly of land and capital. Our purpose is to substitute for private ownership of land and capital public ownership and control of both. But that is not a thing which can be accomplished at once. We realise that. Meanwhile we are anxious to do something towards bringing it about. The right hon. Gentleman defines Socialism as the State ownership of the means of producing and distributing wealth. May I say I do not accept that? The definition by Socialists of Socialism is not the State ownership of land and capital. That is only a condition of Socialism or a means of Socialism. Socialism means that all socially created wealth shall be owned by the community, and that its distribution shall be directed by the community for the good of the community. The national ownership of land and capital is a necessary condition to attaining a state of things like that. We recognise that we cannot reach our goal under the present system and at once, and we are anxious, therefore, in the meantime, to divert as much as we can, and as rapidly as we can, socially created wealth for the purpose of dealing with industrial and social evils which are the result of the private ownership of land and capital. Therefore, although the taxation of socially created wealth may not be Socialism in itself, it is a step towards Socialism, and therefore, in so far as this Budget taxes socially created wealth for social purposes, it is Socialistic. But it is not Socialism.

Now I come to the point whether there is anything new or novel in the proposals of this Budget. The Attorney-General, no doubt, described certain proposals as being novel, but I have not been able to discover any novelty whatever in any one of the proposals of the Finance Bill. To my mind there is nothing new in it. It is too late in the day to begin to talk about the beginning of Socialism; as a matter of fact we are well on the road to Socialism, and all the legislation of the nineteenth century has been nothing more nor less than an effort on the part of this House to deal with the evils resulting from the private ownership of land and capital. Throughout the whole of the nineteenth century we have been moving in our legislation towards Socialism—first of all by constantly increasing legal restrictions in the free and individual use of land and capital. Our public health legislation is an illustration of that. If you require further illustration there is the Factory legislation. There is no difference whatever in the economic effect upon private monopoly of the Workmen's Compensation Act and the factory legislation and public health legislation, and the direct taxation upon the profits on monopoly which has been acted upon by all parties in the State. The second way in which we are moving towards Socialism has been the gradual supplementing of private voluntary charities by public organisations for dealing with the poorest parts of our population. That is accepted by the party opposite and, indeed, by every party in the House, and the Old Age Pensions Act is an illustration of that. Then we have been trying to raise the condition of the poorest part of the population by such measures as the Education Act. What makes a measure of that kind all the more Socialistic is that to a very great extent it is provided for by taxation on socially created wealth. The third way in which we have moved towards Socialism is on the lines of the proposals of this Bill by constantly increasing the taxation on rent, interest and profits for the purpose of dealing with the results of the private ownership of land. Your Income Tax is an illustration of that. The fourth way, and the most Socialistic of all, is the gradual supplanting of private enterprise and private institutions by public initiative and public organisations. You have that illustrated in our magnificent and highly successful municipal and State undertakings. Now, one of the four ways in which we have been moving towards Socialism is by increasing taxation upon rent, interest and profits, which are recognised even by the right hon. Gentleman himself as being Socialistically created. Is there anything novel in any one of these things? What are Land Taxes? Land taxation simply proposes to tax socially created wealth for social purposes. That is nothing new. It is one of the difficulties of attempting to apply a principle partially. If you attempt so to apply a principle you are certain to create an apparent injustice. I have a certain amount of sympathy with those who urge that it is not fair to discriminate between social increment on land and social increment in other forms. That is an objection which cannot be urged against Socialism. It can be urged only against hon. Gentlemen opposite who do draw a distinct line about land and Capital. We do not make any such distinction, and it must be recognised that we are not in a position to put our ideas in a Finance Bill. We have to take what we can get, but if we had the power of saying in what way the revenue of the country is to be raised, I am quite certain no Socialist Chancellor of the Exchequer would distinguish between social increment of land and social increment in regard to the taxes which would ordinarily fall upon the community.

We support the land taxation proposals, not because we think they do everything or go far enough—we support them because they are as much as we can get at present, but when a Chancellor of the Exchequer comes forward to propose and apply taxation of unearned increment to any other form of property he will find that we shall be quite as hearty in our support as we are in the support which we have given to the Land Taxes in the Budget. In regard to the Income Tax proposals, I remember the right hon. Gentleman himself in Committee when we began to discuss the Income Tax part of the Bill expressed his relief that at last we were coming to legitimate finance. What is Income Tax? It is the taxation of socially created wealth, and the fact that the Government are imposing in this Finance Bill a Super-tax is nothing new. It is only a further graduation of the Income Tax. The graduation below £700 was, of course, adopted in order very roughly to make a man contribute more because of his greater capacity, and the Super-tax is nothing more than an extension of this principle. I notice that the hon. Member for Preston (Mr. Cox) referred to a statement I made in the country, that the Super-tax is the most Socialistic part of the Budget. That newspaper report did not quite express what I meant. The hon. Member for Preston tried to draw a distinction between the method of the taxation and the purpose to which the tax revenue was to be devoted.

I am quite ready to admit that it is quite possible for taxation not to be Socialistic, but it may be applied to a purpose which is Socialistic in its character. You have an illustration in this Budget. Take, for instance, the Tobacco Tax. The Tobacco Tax is not Socialistic it is not taxation of socially created wealth, but the Tobacco Tax is being applied to some extent to the financing of the scheme of old age pensions—a purpose which is Socialistic. The method of raising the revenue, however, is not Socialistic, and, therefore, it is most important that you should have, if you are going to have complete Socialism itself, that you should have harmony in the method of raising taxation and the purpose to which that taxation is going to be devoted. I said that I regarded the Super-tax as being the most Socialistic proposal in the Budget, and from this point of view: I believe it will be the best revenue-raising part of the Bill. I believe there are great possibilities in it, and, seeing that in connection with this Finance Bll certain schemes of social reform have either been proposed or foreshadowed which will require a large amount of revenue to finance, that is what I meant when I said that I looked upon the Super-tax as being the best part of the Budget, because I believe the schemes of social reform which are to be carried out by means of this Budget are to be rightly put upon the Super-tax For their finances. There is nothing new or novel in the proposals of this Bill. The Income Tax is not novel, the Land Taxes are not novel, the Estate Duties are certainly not novel. It is Socialistic in part, but it is not Socialistic in other parts. I have already referred to the Tobacco Duty. That is not Socialistic because the Tobacco Tax is indirect taxation, it is not taxation on social wealth, and it is taking from a very needy class of the community a great deal more than they can afford to pay.

We do not expect to have, of course, a measure which is consistently Socialistic from men who are not Socialists. For a long time to come we expect that the legislation which will be introduced even by a Government anxious to promote reform will be of an inconsistent character. It will be Socialistic partly and anti-Socialistic in its other parts. This Budget is neither complete Socialism nor is it revolution. Why, it is such a slight movement of the wheel as to be hardly perceptible, and I will tell hon. Members above the Gangway what it is: It is a preventive of revolution. What the right hon. Gentleman calls social reform is only a preventive of revolution. Do hon. Members above the Gangway think that such a state of things as exists in this country to-day can be indefinitely prolonged We have had 40 years of elementary education. The masses of the people have been taught to read. Reading has made them think, has made them feel more acutely. They are not going to be content for ever to be hewers of wood and drawers of water. The unemployed are not going to continue to walk the streets of our great cities and see their despair and poverty mocked by the evidences before their eyes of ostentatious wealth. Something is going to be done by this Parliament to remove these great inequalities of poverty and wealth, ignorance and culture, want and luxury, and we welcome this Bill because it is a very moderate beginning to deal with questions like that. We welcome the proposals to which I have referred, because they begin to apply, in a small way, proposals which we on these benches have been asserting for many yeans. We shall support the third reading of this Bill. I have only one word more to say. I want to refer to the alternative which was put forward by the right hon. Gentleman who moved the rejection of the Bill. I said at the beginning of my remarks that we who are Socialists are opposed to Tariff Reform. We are sometimes told by hon. Members that we are inconsistent in being Trade Unionists for the protection of our trades and in opposing a duty on articles coming from foreign countries. There is nothing inconsistent in that. I will tell them why we are opposed to Protection in the way of import duties. So long as you have a monopoly of land and of capital any import duty can only have one result, and that result is to increase the rent of the landlord or to increase the property of the capitalist. It cannot possibly benefit the workman. Where you have competition in employment there is always a tendency for wages to be forced down, and competition will prevent the wages rising, and no system of reform, as long as you have a monopoly of land and capital, can, under such a system, be depended upon to benefit the working classes.

An hon. Member talked of taxing the foreigner. There have been in the last two or three months elections in Germany; those elections have been fought almost exclusively upon the question of taxation. The Socialists to a man in Germany are opposed to taxation on imports. They are Free Traders, and they are oposed to Protection because of their painful experience of it. May I put this question, and possibly some Member who follows me may deal with it? If it is possible to raise a revenue by taxing the foreigner Why did not Germany during this year adopt the practice of taxing the foreigner? It required to raise something like £26,000,000 of taxation, and every penny of it has been raised by internal taxation. No, if I cared to give candid advice and useful information to hon. Members above the Gangway in view of the propaganda work which it will be necessary to do during an election campaign, I would say to them, "Do not talk to the working man of this country nonsense like that. You are depreciating their intelligence, you are insulting them, you are not playing the game of politics to your own advantage." I know the working people of this country, I belong to them, I have lived with them, and I know their capacity of thinking. I know their capacity of reason, and why I have faith in them is because of it. I think if you appeal to that intelligence it will respond. For these reasons we are going to support the third reading of this Bill, which will leave this House in two or three days backed up by an overwhelming vote. What will happen in another place I do not know, but if the worst comes to the worst, and if it be necessary that we should go to the country on this question, I can assure the Government that those who sit on these benches and the party which we represent outside will not be amongst the least of the earnest and enthusiastic supporters of that part of the Bill which I commend to the House.

Mr. EVELYN CECIL

The hon. Member who has just sat down has given us a very interesting speech upon what Socialism is from his point of view and what it is not. The hon. Member for Preston (Mr. Cox) gave us what I might call a lecture on Tariff Reform. The Attorney-General contented himself not with defending the Budget but with abusing the policy of the party to which I belong and saying the Budget had no Socialistic tendencies in it. I think I may dismiss the speech of the hon. Member for Preston by saying that we are perfectly satisfied with our policy, that we do not admit the conclusions to which he comes, and we are convinced that Tariff Reform is the best single remedy for the present state of unemployment because it destroys unfair foreign competition which is working against our trades and manufactures and the employment of our workmen, and will introduce equal terms for the British workman as against the foreigner. It of course also brings to the fore our great desire to create a united empire by means of Preference to our Colonies, and we are satisfied that that policy, will commend itself to the vast majority of the people of the electorate of this country, if only the other side give them a chance of understanding it. In spite of the hon. Member who has just sat down there is a good deal more to be said on the subject. He has explained to the House that he is in favour of the national ownership of land and capital, and he argues in favour of the Budget because he thinks that that ideal of his will be reached so soon as he has his way, and upon examination of different portions of the Budget I am certain that it will be found that he is likely to get his way, notwithstanding the remarks of the Attorney-General. The Attorney-General has told us that there is nothing new in the taxes here proposed. I certainly do not agree with him in that. These taxes, he says, cut at the very root of Socialism, and there are provisos and safeguards which will secure the nation against it. I fail entirely to see what these provisos and safeguards are. He talks to us of security against Socialism. I do not believe that security really exists. There is nothing less secure than security, and, looking at and criticising this Budget, I am afraid there is nothing less common than common-sense. Each of the essential portions of this Budget seems to me to savour of Socialism. Look at the Increment Value Duties, which proposes to take 20 per cent. off the increased value of land. Why remain at 20 per cent.? We are openly told that Socialists do not intend to remain at that figure. They believe they can secure the nationalisation of property by first introducing this machinery and then putting the screw on and increasing the percentage of the tax. I do not see that there is any logic or consistency in saying, as the Chancellor of the Exchequer does, that if there is increment value he is to have it, and if there is no increment value nothing will be charged. It is a form of saying "Heads I win, tails you lose," which is putting a sure tool into the hands of Socialists which assuredly they will make use of.

As regards these Land Taxes in particular, I sometimes wonder how far the charges imposed in this Bill affect the framers of the Bill. No doubt many aggrieved taxpayers will feel disposed to say that a little fellow feeling makes us wondrous kind, but what about the little fellow feeling in one's coat behind. I think that is an imagery, which very fairly describes the Chancellor of the Exchequer, and which very fairly assists his Socialist allies. Then turn to the vast increase in Death Duties and the effect of Death Duties, Income Tax, and Super-tax together. Their joint effect must necessarily be that there will be less money forthcoming for the development of new industries and new enterprises. That means less employment. It means that we are taxing capital which is in the course of being saved. It affects the desire for thrift, and it largely affects small estates. The Government pride themselves that this Budget does not touch trade. The right hon. Gentleman (Mr. Austen Chamber-Iain) has pointed out how it touches the building trade, the licensed trade, and the tobacco trade. But these vastly increased Death Duties also seriously affect trade. By abnormally increasing the Death Duties you are striking at every business in the country, and, therefore, you inevitably bring about a diminution of trade and business, and reduce the amount of employment. I quite agree with the hon. Member (Mr. Snowden) as to his view of the machinery of Super-tax. It may be perfectly true that those who have specially large fortunes ought to contribute more. I think they ought. They ought to contribute in full proportion to the needs of the country. But I object myself to this Super-tax on principle. I look upon it as a very dangerous weapon. You talk about super-taxing incomes over £5,000 a year, but why should you not come down very far below that figure it it suits your needs? If the hon. Member were Prime Minister it would not be £5,000 a year, but much more like £500 a year which would be super-taxed. And equally at the other end of the scale, why should you remain at the figure of 1s. 8d.? Why not Super-tax up to 5s. or 7s., or any other figure that suits the whim of the Ministry of the day? You are setting up a new Socialistic machinery which can be used to nationalise all kinds of property and to introduce State ownership and public control. I believe much more in private enterprise and energy for increasing the prosperity of this country, and I do not for a moment believe that if you continue to create machinery which may put weapons into the hands of the Socialistic party you are serving the best interests of this country or are likely to increase its trade or its employment. On the contrary, you will do precisely the reverse. You will diminish the trade, and you will force it to go into other countries where it is more fairly treated, and you will consequently diminish British employment and the wages of working men.

If these be rather special considerations, let me call attention to one or two more general considerations. Who will benefit by this Budget I Will it be the tenant? He does not gain anything in consequence of the extra taxes which are put on the landlord. Will it be the consumer, in the case of the Licence Duty? Not he. He does not gain anything because the trade is taxed. Who, then, will it be? Do hon. Gentlemen opposite suggest that it is the old age pensioner? What is the use of a system which discourages thrift and diminishes employment. I am heartily in favour of old age pensions, but I do not believe in old age pensions which are non-contributory and in a system which leads to national bankruptcy. What we want is a fair and just system which is financially sound and which distinguishes between the deserving and the undeserving, and I cannot imagine a more crude piece of government than introducing old age pensions without having thought out how they are going to be financially safeguarded, and then complaining that if the Finance Bill were to be thrown out by one House or the other there will be financial chaos, and that the blame would rest with one House or the other. The blame rests with those who initiate a policy which leads to all this financial trouble. I therefore place the blame wholly on the Government. If we have introduced a system of this kind which is likely to lead to national pauperisation, I do not think any class will benefit. I am certain that by this Budget no class will benefit, and it is perfectly ludicrous to talk of it as a poor man's Budget. He will be taxed severely for the purposes of discouraging thrift and diminishing employment, and if he has not yet found it out I am quite certain he will very shortly find it out, and that the authors of this unwise and disastrous policy will rue the day when they introduced it. The proposals of this Budget, from their Socialistic tendency, and from the chances which they give to the hon. Member and his party, create a general feeling of insecurity to property on the part of everyone who has sixpence in his pocket, and that kind of feeling, once introduced, is not easily allayed, and I very much fear that when that kind of feeling is about it necessarily forces trade into other parts of the world to the detriment of this country. I cannot believe that any Government can undertake such a policy with their eyes fully open to the consequences. It is perfectly futile for the Chancellor of the Exchequer to defend this policy by the appeals of the demagogue. He tries to catch votes which, for the moment, may be deceived by his appeal to prejudice and his grossly unjust and un-statesmanlike appeals to divisions between class and class., and if these votes are temporarily misled, as I can hardly believe they will be, nothing can happen but disaster to the country and a species of revolution which none of us would like to contemplate.

I feel the more concerned with the whole changed aspect of politics in this matter because I do not think anyone would have said at the time of the last General Election that the Radical party intended to go in for a revolution such as we have in this Budget. If you look at their election addresses or at their election speeches, can anything be found to suggest that this revolutionary and Socialistic Budget was likely to be introduced. I looked up one of the Prime Minister's speeches during the General Election, and, in view of what he then said, it is quite inconceivable that he finds himself in the position in which he now is. On 25th January, 1906, the Prime Minister, speaking at East Fife, said:— Turning to his own Department, the Treasury, he pointed out that he could make no reduction in taxation until the national expenditure had been reduced to a proper level. It must necessarily take some time before they can make much way with it. It was, however, not only their intention, but their hope and expectation, in the course of no very long time that they should have brought this inflated expenditure down to a proper standard to relieve the enormous and wholly excessive burdens now pressing upon the nation. I wish the Prime Minister would contemplate these words and give effect to them. Talk of retrenchment! There is none. My right hon. Friend has shown that the permanent annual charges upon the country have increased by £14,000,000 or £15,000,000, and this has been done by the party led by the Prime Minister who used these words, and he has in no way attempted to justify them or to carry them out. To adopt a policy of that kind is necessarily to play into the hands of those who desire to nationalise property altogether. It is not a sufficient excuse to say that you wish to raise money, and that money must be found somehow.

Attention called to the fact that 40 Members were not present. House counted, and 40 Members were found present.

Mr. EVELYN CECIL (resuming)

I should like once more to say that if the House passes this Budget framed on these principles which open out the way to endless extension, and the extension of which we are promised partly by Members of the Government and still more by Members below the Gangway, I think it will only have itself to blame if it finds that the trade of the country, the security of property, and the employment of the people are all put in the greatest peril.

Sir DANIEL GODDARD

Hitherto I have been a silent supporter of this Bill, and I should like to take this opportunity of explaining the general reasons why I heartily and thoroughly support the measure. I wish to consider the Budget in itself, and in relation to its general effect. The question the country has to ask is: Is this Finance Bill a fair and right way of raising the revenue that is required? After all, that is the true object of the Finance Bill. Whatever else may be said, it is to raise revenue to meet the expenditure of the country—expenditure which has been declared by hon. Members opposite to be too small. There was one remark which fell from the right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain) which I would like to make the text on which to hang the few observations I have to make. He said:— Let the rich bear their share as the poor pay according to their means. That is exactly the point we want to arrive at, and I would ask the attention of the House to the proportions in which this Bill proposes to raise new revenue. It will be remembered that it was about £15,752,000 which was to be added to the revenue. The Bill proposed to raise that revenue by means of Customs and Excise to the amount of £6,700,000. These taxes included, of course, the taxes on petrol, motor cars, the increase in the Spirit Duties, Tobacco, and the increased Licence Duties. It was proposed to raise by direct methods £7,500,000 from Estate Duty, Stamps, Income Tax, and the Land Duty. The point I wish to draw attention to is the proportion which the direct taxes bear to the indirect taxes. Since the Budget was first brought before the House there have been considerable concessions made, but they do not materially alter the proportions between one class and the other class of taxation. It works out in this way: 47 per cent. of the increase is imposed by indirect methods and 53 per cent. is imposed directly. I would ask, Is that an unfair apportionment of the taxation? Can that in any way be said to be unduly hard upon the owners of wealth? Is not the scale still largely against the workers and the poor? We use roughly the expressions "direct taxation" and "indirect taxation," but these are not exact terms. It is not always easy to define when a tax is direct or indirect. For instance, take licences. A licence is imposed on a public-house. In the first instance it is a direct tax upon the owner of the house, who may be a brewer, but if he chooses to raise the price of his beer, it becomes an indirect tax upon the consumers of the article. I prefer to use the terms which have the sanction of a very great financial authority in days gone by—the late Sir Edward Hamilton. In the Local Taxation Report of 1899, when dealing with the taxation finance of 1895–l6 he came to the conclusion that the national revenue was raised by taxes incidental to property—37 per cent., and not incidental to property 63 per cent. That was his method of dividing taxation instead of using the term "direct" or "indirect," I think it is a much more accurate way of calculating in these matters.

6.0 P.M.

Taking Sir Edward Hamilton's methods of calculation, and applying them to the last financial year, 1908–9, I find that the national taxation works cut in this way: Taxes incidental to property 44 per cent., not incidental to property 56 per cent. I have also tried to work out the effect of the taxation imposed by this Finance Bill in the same way, and so far as I can make out it will mean that the taxation incidental to property will be 48 per cent., and not incidental to property 52 per cent. That means that under this much-abused Finance Bill the percentage of Imperial taxation is still less on property than on other commodities. Of course, that is not the whole case, because if the percentage were equal it would not in any sense ensure equality of sacrifice as between one taxpayer and another. That will be easily seen if you work out concrete cases. I would ask. How does taxation in the last financial year bear on different classes of the community? Take, for instance, a working man earning £1 a week. I take him as a man with a wife and three children—a family of five altogether. I take another man earning £500 a year, with the same family, and a third man earning £2,000 a year, also with the same family. I know that if I were to take extreme cases I would make the burden appear very much greater on the working man, but I wish to be fair in coming to a judgment in this matter, and therefore I have not taken the lowest type of wage-earner—I have taken a medium case. I have taken an ordinary working man who drinks beer moderately and smokes moderately. In order to arrive at the calculation I have used a return which was made in 1904 as to the cost of living of the working classes. I take the quantities which people are supposed to consume. On that basis the working man pays £5 10s. a year—that is about 2s. 1d. a week. The man with £500 a year pays £36, and the man with £2,000 a year pays £137. Of course, the conditions of life vary in different ranks. I have taken all the commodities which a working man consumes in calculating the taxation. I have taken in the case of the £500 a year man a sum which I have multiplied by three, and I have added Income Tax, House Duty, and Land Tax. In the case of the man with £2,000 a year I have multiplied the taxation by six, because probably he has a larger household to keep up. What does that really mean? It means that the working man I have been describing has to pay 11 per cent. of his income in taxation, that the man who has £500 a year has to pay 7 per cent. of his income in taxation, and that the man with £2,000 a year has to pay 6¼ per cent. of his income in taxation. I admit it is only a rough calculation, but I do not think it is an unfair one at all. It shows how much is still needed to make taxation conform to what I will call the cardinal principle of equality of burden. But that is not the worst of the case. Even if the percentages of taxation were equally high in each case, it would not be sufficient. You have also to ask yourself: What have they left after they paid the taxation? That is a very serious point of view. This working man who has to pay £5 10s. out of his income of £52 has only £46 10s. left out of which to pay his rent and buy food for his family and clothing, and pay club money and all the expenses of a household for a year. Such a man must constantly be surrounded by anxiety and faced with penury. Take now the man with £500 a year, and deduct the tax from his income, and he has £454 left, so that he is not a poor man with that. Take now the man, with £2,000 a year. After paying his taxes he would have £1,860 left. Even a uniform percentage would not bring us near to an equality of sacrifice as between the various classes. It is clear to everybody who looks at it from my point of view that it is fair and just that the man who has £2,000 a year ought to pay a much larger percentage of his income than the man who has only £1 a week. That is the reason I regard with satisfaction the gradual approach to a graduation of the Income Tax and the Super-tax. We have in this Finance Bill the virtue of graduation of the Income Tax and a real graduation of the Estate Duties and the Death Duties, and I say that these two are distinct steps towards a juster distribution of burdens upon the taxpayer. I recognise while this Bill has regard to proportion according to the taxpayer's means, it introduces another principle, and an important principle, which I personally welcome. Of course, I am referring to these duties on land values. I agree with what has already been said that these are not entirely novel taxes, because, of course, since Parliament decreed in 1833 that the old Land Tax should only be charged on land, and no longer on personalty, we have had the principles of these duties in operation. What we are doing is to enlarge it.

I heartily agree with these duties because, notwithstanding what has been said, I do regard land as in a special category of property. My hon. Friend the Member for Preston (Mr. Cox) may repeat as often as he likes that land is the same as every other kind of property for this purpose, but I do not believe that he will be able to convert the ordinary man outside to that opinion. Property in land is not the same as other kinds of property. Every man in every station of life must use land in some way or another. There is not an unlimited amount of land, and in that sense it is not subject to the law of supply and demand as other property is. I think, therefore, it is perfectly right that land should be made an especial contributor to the public revenue, and one of the reasons why I think so is that it involves a new valuation, which is a thing very much to be desired, and which I believe will be welcomed all over the country. However reluctant hon. Gentlemen opposite may be to have this valuation, there can be no question at all that the country at large will rejoice to know that such a valuation has at last been undertaken. Another reason why I support this Finance Bill is because it is a readjustment of the burden of taxation, and the necessity for this is all the greater on account of the extraordinary growth of national wealth. To completely establish estimates of national wealth at various periods is an exceedingly difficult thing to do, but we are not without some means of judging of the matter. We can take the sums that are assessed to Income Tax—I mean the sums that have passed under the review of the authorities—and we can take the capital sums on which Death Duties have been paid; and these two I consider are clear indications of the growth of wealth. With respect to these we have this remarkable fact, that for every pound of income which passed under the review of Somerset House in 1868 there is now passed under review £2 4s. That is an enormous growth. It is a growth equal to 120 per cent. in the 40 years. We have seen the fact that the capital—I am not speaking of the amount paid, but the capital on which the amount is paid—the capital paying Death Duty now is nearly 2½ times what it was in 1868. That shows an increase of 130 per cent.

I think those are very striking figures, and form an additional reason why the taxes that are being imposed in this Bill should be passed. Of course, I admit at once that during that period of time the incomes of workmen have increased. This is also a fact that I think is too often ignored by the advocates of Tariff Reform, who seem to think that all our affairs are on the down grade. But what will be evident is this, that while the incomes of workmen have increased, they have not increased in anything like proportion to the growth of national wealth, and I think that is another very good reason for supporting the Increment Value and the Reversion Duties and the Undeveloped Land Tax, and such new imposts as are put into this Bill. There is no doubt that a great deal of the surplus wealth of the country is to be found in the enhanced value of the soil and the site value of the land, and the policy of the Bill aims at making visible wealth contribute more largely to the revenue. I do not overlook the fact that this Bill has indirect benefits in addition to raising direct revenue. First it is a revenue Bill. There is the money required to meet the expenditure, and this is the Bill to provide the money; but beyond that we provide for pensions, we provide for defence, and we provide for the admission of people from the ranks of pauperism to the ranks of pensioners by enabling the administration to hold out hopes of organised Labour Exchanges, by the hope of assisted insurance for wounded workmen, and by giving hope of experimental development in agriculture and in forestry. I think that all these things open the way to social reconstruction and higher comfort, and will commend the Bill to the hearty support of all lovers of their poorer fellow men. The one question which has run through all the Debates on this Finance Bill is the question, Who shall pay? We who are supporters of the Bill and of the Government say that those who have should pay a larger share. Our opponents say, I think, in effect, though they do not say these actual words, "No, let the toilers pay."

Mr. CHAPLIN

Quite the contrary.

Sir DANIEL GODDARD

That is what the right hon. Gentleman says, but what is the alternative? The only alternaticve that has been suggested, so far as I can make out, is that of taxing imports. Everybody must know that the effect of taxing imports will be to place a greater burden on the poor and the working classes. That is really why I made that observation, and if it is not so, let the Opposition show us how to raise 14 millions in addition to the present indirect taxation of the country. Until that has been done this Finance Bill will command the support of this House and, I believe, of the country. This Bill, which is now before the country, has been framed, studied, and amended with marvellous patience and with great ability, and I am not speaking now merely of the uniform courtesy which my right hon. Friend the Chancellor of the Exchequer has shown in the conduct of this Bill, but I am speaking also of the criticism and the discussions which have arisen on it, and have been carried on from different parts of the House. It is a complete, convenient, coherent, and just plan of raising the revenue of the country. There is no rival. There is nothing else to compare it with. A mere promise to make the foreigner pay by means of import duties surely by this time is known to be a document of no value. This Bill is just and practicable. It is the only businesslike method of raising the revenue required that is before us. It will aid in bringing much that is desirable to the poorer classes of this community, and for these reasons I very heartily give my support to the third reading of the Bill.

Mr. REMNANT

I do not propose to side track into the question of Tariff Reform or any other of the interesting subjects which have been alluded to by hon. Gentlemen opposite. I wish to say how much one agrees with all that fell from our right hon. Friend the Member for East Worcester (Mr. Chamberlain). There is no part of his speech with which I agree more heartily than with that in which he said that we must all be thoroughly glad that we have arrived at the last stage of this Budget. The hon. Member who has just sat down said that it was the only alternative before the country. I have yet to understand how there can be two Budgets, or that it is our duty to frame our Budget before we are in office. All I can say is that when we have the opportunity of going to the country—and, personally, I hope that that opportunity will come sooner rather than later—then will be the time for us to give our Budget, and I believe that it is one that will commend itself to the various interests of our great country. With reference to this Bill I wish now to refer to two or three points that have presented themselves to my mind in looking over the Debates which have taken place in this House. As regards Part I. of the Finance Bill, I think it may safely and accurately be described as one to promote taxation without principle. If any principle does underlie these new Land Duties it is Henry Georgeism, but Henry Georgeism is not a principle; it is only a delusion begotten by verbosity out of ignorance. The long Debates which have taken place in Committee have established, in my opinion, all that was alleged against these duties in the earlier portions of the Debates, while the concessions made by the Chancellor of the Exchequer only admit and in some degree alleviate hardships which they do not remove. I still think that our allegations have been substantiated by what has taken place. The Increment Value Duty is to be levied on the plan of "Heads I win, tails you lose," the increment being partly confiscated while the decrement is very conveniently ignored. What would be said of the Government if it attempted to apply this mode of taxation to Stock Exchange transactions or to the profits of commercial undertakings? Yet the hundreds of thousands of investors in real property, which from time immemorial has been commercially interchangeable, have just as much right and claim to the protection of equal laws as any other class. This duty shows how very far His Majesty's Ministers have departed from the old Liberal doctrine. The policy of Liberalism used to be, as far as I can read, the assimilation of real to personal property, alike as regards taxation and as regards transfer. But this Bill reverses that policy, and it seeks to impose unequal taxation, making the transfer of land more complicated than ever. I would ask the House whether anything could be more illogical than the provisions of Clause 2, Subsection (3), of the Bill, where special treatment is sought to be given in respect of land which has been transferred within the last 20 years? What conceivable excuse can there be for punishing an owner on account of unearned increment when his land is worth less than he pays for it, say, 25, or even 30, years ago? Why, there can be none, save that the Chancellor of the Exchequer must keep his new duty unjust in order to make it profitable, because otherwise it would not be profitable. Then we have the Reversion Duty, which seems to me to be a very flagrant evasion of the pledges given by the late Sir Henry Campbell-Bannerman when he was Prime Minister, and also by the present Prime Minister when he was Chancellor of the Exchequer, namely, that the Government would respect always, and intended to respect, existing contracts. You deprive the purchaser of a freehold ground rent of the exemption for which he has given full consideration in his contract if you put a special tax upon him when the reversion falls in, just as much as if you tax him during the currency of the lease. And here again we have one of those inadequate concessions which only reveals the injustice—injustice that they partly palliate. Purchasers of existing leases are exempt if the leases are determined within 40 years. No one has attempted or can explain why a contract of 40 years ago should be respected while one made 45 or 50 years ago should be ignored. The Government know that if all existing leases were exempt the duty would be comparatively unproductive; so another compromise with honesty has been made, and all pretence to consistent principle has been abandoned.

The Undeveloped Land Duty was defended on the plea that it will stimulate development, but the great majority of our leading builders confirm the opinion which is held by our greatest land surveyors, that it will have exactly the contrary effect. Are these opinions, are these practical men, whose business keeps them in daily touch with such matters, to be thrown on one side while we are asked to agree with the drafts which are made on the imagination of Radical politicians for the purpose, as we all know, of their gaining a fresh increase of strength in the country? There is another illustration of imperfect concession, or, may I say, without offence, only half-hearted admission. It is contained in Clause 13, Sub-section (4) of this Bill, with regard to gardens of between one and five acres in extent. These are to be exempt only when below a certain scale of value. I would remind hon. Gentlemen and right hon. Gentlemen that either it is or it is not desirable in the interest of public health that gardens and open spaces should be exempt from special taxation. If it is not desirable, then, I can see no reason for any exemption at all; but, if it is desirable in the interest of public health the exemption is most needed in populous places, where land is of most value. Again, we have the Mineral Rights Duty. Surely that shows, if anything shows, how hollow was the talk, of which we heard so much, about stimulating development. It seems to me that Ministers have turned their backs upon their old professions, and they now propose, in the case of Mineral Duties, to tax not the man who has failed to develop his land, but the man who has developed it. In other words, the greater the development the more he has to pay. In regard to this part of the Bill I should like to refer to the question of agricultural land, one of the most important subjects in connection with this Budget. The Government boast—I do not know whether the boast is thought to be due to its own merits, or whether it is due to the criticisms passed on the Bill since it has been before the country—that agricultural land, and, consequently, agricultural industry are to be safeguarded from any further burdens. I think a moment's consideration will prove the absurdity of that assertion. Land, whether in towns or in the country, is going to be valued at a very heavy cost to the taxpayers if it is not to be a farce. The valuation which is proposed is, I think, to be a very serious valuation. I believe there is a good deal behind it, and it will, therefore, be necessary to make a very accurate valuation. Does anyone outside Bedlam think that the owners of land are likely to leave this valuation entirely in the hands of Government officials? Of course they will be represented, and they will be advised by expert valuers. They will see that their interests are safeguarded in any decision which is arrived at. [An HON. MEMBER: "Hear, hear."] At all events I have the hon. Member with me there. I would ask him further, does he think that this is likely to involve any burden on the owners of agricultural land? Of course it will.

We know from experience the enormous cost of valuations which have been made in the past, not by the Government, but where big schemes have been carried out. And when the Government assert, as they do assert, that no further burdens can be thrown on agricultural land, they surely must have forgotten the enormous cost to land-owners of the country in arriving at a valuation of this sort. I have only to remind the right hon. Gentleman of the very simple matter of the taxation of law costs. Whoever heard of any lawyer being left entirely in the hands of Government officials? He represents his clients, and if he did not fight for his own side it would be a serious dereliction of duty, but one which is not likely to occur. I desire to refer to the licensing legislation proposed by the Government. Apart from the injustice to the trade—and it is very unjust—there is the great question of unemployment. I venture to say that there is not a Clause in this Bill affecting licensing interests which, if given effect to, will not result in throwing many honest and deserving citizens out of work, and in inflicting an enormous amount of hardship and misery upon those who depend upon the trade. I go further, and say the proposals of the Government are distinclty dishonest. [Laughter.] It will not be denied I think that the proposals of the Government in reference to these licensing matters are distinctly dishonest. If the right hon. Gentleman (Sir John Brunner) will carry his mind back to last November, he will find that the Government were quite ready and prepared—in fact they admitted the justice of it—to give a lease of 14 years, 21 years, and even more to the present licensed premises in this country. The Government did not argue then, and did not attempt then to treat the trade as a fresh source of revenue. They admitted on all sides on the benches opposite that the licensed trade had a very strong case for special treatment. They were all quite willing—they may be judged by their professions in this House—to give 14 years, 21 years, and even longer periods to licensed premises without casting further burdens upon them. How is it then that within two or three months they come before this House—I do not know whether the right hon. Gentleman thinks this is a joke—and propose legislation, and special taxation, which I believe everyone honestly believes will have the effect within a very short time of crushing out of existence many of these licensed premises, and in two or three years more will add a great many to that number. The light hon. Gentleman, like a good many of his Friends, have treated this as a matter of joke. I am extremely sorry to see that the right hon. Gentleman, or a man in his position, should approach the matter in that way. I think that is not the general view of the House. It is a serious matter, and when I say it is a dishonest proposal, it is dishonest to that extent. [An HON. MEMBER: "Say it again."] And again I say it is dishonest. I will comply with the hon. Gentleman's request, because on the one hand they admit that they are entitled to special treatment, and on the other hand they propose legislation which will have the effect of crushing and destroying the very houses which they urged ought to be specially treated.

I cannot help recalling in reference to this matter a speech made by the Prime Minister not many months ago, when he said in effect that he thought that the Chancellor of the Exchequer would be perfectly justified in getting fresh revenue from the licensed interest, even if it had the effect of closing a good many of the houses. That principle is, I think, a dangerous one, and it will be used on many occasions by hon. Gentlemen who are Socialists as a precedent in the policy of spoliation and robbery. Coming from the right hon. Gentleman the Prime Minister, it is one, I think, that must be regretted by all those who have learned to respect him and to respect his decisions. The strange shifts to which the Government has been reduced in order to defend this Budget in this Parliament and in the country tell their own tale. They have altered the Standing Orders for the express purpose of stifling discussion. Worst of all, so sure are they that they have lost the confidence of the country that they have allowed without repudiation platform orators like the Lord Advocate to perambulate the country creating dismay and misery among the aged and deserving poor with the express object of side-tracking the issues which they will have to face before very long. I venture to ask the House in all seriousness whether there could be any more damning confession of logical impotence?

Mr. HILAIRE BELLOC

I intend to occupy a short time as one of the few Members on these Benches who have criticised, and who still criticise, certain parts of the financial proposals of the Budget, to state that I support them as a whole. Before we go further I would like to ask how this matter would be looked at if, instead of being organised as it is, largely for the purposes of advocacy, it were competent for every man in this Debate to have free speech and give his free opinion on the subject. We have to find £16,000,000 of money, and nearly £14,000,000 of that sum, I believe, since the concessions were made, over £14,000,000 have to be found by some form of taxation. We are a community, one province of which, the Irish, are, on the whole, poorer in proportion to the rest than any other province. We are a community which, even if we include that misruled, impoverished, and ruined province, on the whole is wealthy, and which cannot be said to consume much more than £1,000,000,000. I know that there are staticians who put it as high as £1,800,000,000, but they allow for imaginaries and for types of wealth which could not be reckoned in the scale of economic values. We have under the heading of economic values a consuming power, perhaps, of £1,200,000,000 as a maximum, and perhaps a minimum of £1,000,000,000, and we have to find on that £160,000,000 by taxation; and we have as well this deficit of £14,000,000.

How is that deficit to be met? There is the crux of the whole matter. The Prime Minister put it in one phrase, which might have been written in letters of gold up there during the whole of the Debates, "How is this very large sum to be met?" The right hon. Gentleman who opened the Debate, the ex-Chancellor of the Exchequer, put, though very briefly, with equal emphasis, the alternative. We must either meet that vast deficit, for it is a vast deficit, by some such proposals of direct taxation as are contained in this Budget, or we must have a heavy import duty on the type of goods which are manufactured in this country, as well as those very heavy import duties we have on types of goods which cannot be manufactured in this country, or we must borrow. Any one of our great rivals would borrow. Germany would not hesitate; Germany is building her fleet, that fleet which has so often been discussed, and which is the spur which has produced this high expenditure, and Germany is producing that fleet by loans. Why do we not borrow? We do not borrow because the state of our credit has fallen, in my opinion, through the past foreign and Colonial policy, but I do not discuss that now. The state of our credit has fallen to a certain level below which we dare not push it. We dare not have Consols below 80, and, therefore, we are not borrowing. If we are to have this very large sum raised by exceptional taxation, what sources are we to touch? The normal Budget, and I may say the Budget of past generations, had two great sources open to it if there was an exceptional strain. The first is the increase of the Income Tax, and the second is the increase of the indirect taxation upon the necessaries, or what are called the luxuries, for they are not luxuries, of the very poor. We either increased the tax on tea, or the tax on sugar, or the tax on tobacco, and at the same time the Income Tax, or we tried to save the indirect taxation on those necessaries, or small luxuries, and found the money in some other way. Had you attempted to find this very large sum by the old financial method of raising the Tea Tax and raising the Tobacco Tax, which has been done now, but might be to a larger extent—had you proceeded on those lines you could not have filled the cup.

In the matter of what you have done to the Income Tax you have a means more justly to be recommended, and you have graduated the Income Tax, with which I believe the whole community agrees. I think it ought to be said it is to the honour of English politics that a tax of this kind, falling mainly upon the wealthier members of the community, and heavily upon them, has not been seriously contested. I confess for myself, as I have listened to these Debates for many weeks in Committee, and on Second Reading, and again on Report, nothing has struck me more than the acquiescence of the wealthy men of the community in the Super-tax. I think it ought to be said that perhaps in no other community than ours would that acquiescence have been given As to the taxes on land, I would beg hon. Members to remember that merely to tax land as undeveloped land, or with Increment Duty, or royalties, is not always to tax the same persons. If a man holds up land, and does not sell it when he dies, I suggest that the State has a perfect right to say, "You could have sold it for, say, £20,000," and if the man for whatever reason—sometimes it is because he likes the amenities of his farm—or for whatever other reason he may have held up the property, then there is no conceivable reason why he should not be taxed on that amount. That is the principle of it, that is the reason of it, and that is the argument in favour of it.

When it comes to tax the future increment value of land, hon. Members opposite are perfectly right when they say that the principles there advocated are based upon the works, not of Henry George, who was a man who did not think very clearly, but on the works of almost every economist who has written throughout the nineteenth century. They are based on the conception, and after all it is common-sense, that in an industrial community, or at any rate in any community of any activity, the rise in the value of land in the neighbourhood of great towns, other than agricultural land, is almost entirely due to the action of the community. That principle has been accepted and is contained in the present Bill which determines that from all probable increment in the future, or all unexpected increment, you take 20 per cent., not the whole, or the half, or the third. I admit if the land of this country were well divided amongst a very large number of small interests, and widely diffused amongst the citizens, that this tax, even if it were arguable on abstract grounds, might be defeated, and justly defeated, on concrete grounds. The argument in favour of the Increment Duty is roughly this, that in this particular community in which we live a very small number of men, through historical process for which their families are responsible, have become possessed of the land upon which other men have to live. That very small class will, unless some such tax as this be levied, be overwhselmingly the masters of the community in the next generation.

Will anybody tell me that any one of the great owners of the London estates to-day would be a less happy man, a less prosperous man, I would add a man even counting less in the community, if this tax had been levied fifty years ago? Not at all. These families would still be great, wealthy families, great among the dominating families of the State, and meanwhile they would have contributed, and justly contributed, a proportion of the revenue. I would say, with regard to the Increment Tax, my own conviction is, and it is the conviction of many others, that the only danger is that we may be putting it on too late. If we had put it on generations ago many of the problems with which England has to deal now would have been solved. The tax on existing royalties, not on future royalties, is the only example in the Bill among all these proposals that can be called Socialism. It is a tax on one particular type of property, because that type of property is regarded as a means of production which properly belongs to the community and not to individuals. There is that feeling behind the tax on royalties. I will say two things in regard to it. First—it is a very old joke—it is a very little one. That, in a matter of principle, is of no account. Secondly, you must remember that almost every civilisation of the past regarded minerals as the property of the State. The getting hold of minerals by the landed families is a comparatively recent development of English history. I will not make that an argument for confiscation, though if the tax were very much larger it might be taken into account. But you must remember, when you are arguing against the injustice of the tax on royalties and minerals, that in almost every other community than ours it would seem a monstrous thing that a comparatively small number of men should be the owners of minerals, which everywhere else are regarded as the property of the State.

The Super-tax I have already dealt with. As I say, it is an honour to English politics that there has been accepted in such a way a policy involving a strain on the richest members of the community.

Sir JOHN BRUNNER

No.

Mr. BELLOC

My hon. Friend says "No," and he ought to know. But his interjection is only a further proof of the truth of my statement that the manner in which this policy has been accepted is one which reflects much honour, and augurs well for the future advantage of the country and the future harmony of the State.

Then I come to the part which I personally have criticised, namely, the Licence Duties. I am convinced that the motive—and motive is everything—lying behind these proposals is that the consumption of fermented liquor is immoral, or, at any rate, is bad for the community, and that therefore you may treat the trade as an immoral trade or as a trade of such a sort that if you suppress you do no great harm, while if you increase it, great harm is done. When the Chancellor of the Exchequer said the other day that the drop in the consumption of whisky was a thing on which he congratulated the House, and was heartily cheered for saying so, he was propounding that doctrine. No man can talk to masses of the English people without knowing that that doctrine is very widely held. I would suggest to the House of Commons this perfectly clear principle. If you have made up your minds by a determining majority that a particular trade or avocation or habit, once thought moral, is now in your opinion immoral—the slave trade is the great example in the past—and if you have allowed a vested interest to arise in that trade, or if by prescription you have permitted a sense of property to exist in that which you are about to condemn, it is your bounden duty to recoup the owners. You cannot get away from that. You have never attempted to get away from it in the past, and you ought not to attempt to get away from it now on a false issue. If you are trying to recover the monopoly value for the State—which is quite another matter, and one in which I heartily agree—you ought to do it by slower steps, in a more gradual manner, with less harshness than is involved in the Licensing Clauses of the Bill. Though I shall support the Bill as a whole, and though when I speak of the alternative I shall say that as com-compared with that alternative it is as a blessed thing compared with a curse, nevertheless I condemn that particular section of the proposals, and have voted against them in detail. That is the course I should take again if need be, and it is the position I shall maintain in my own Constituency in what I believe to be the approaching elections.

Now let me ask the House to consider what is the alternative. We are asked to meet a very difficult moment in the national fortunes by the imposition of import duties upon foreign manufactured goods. I will not insult the House of Commons by supposing that there is anyone present who wants to tax raw materials for the advantage of the Colonies, and also manufactured goods for the advantage of English manufacturers. It is ludicrous to suppose that anyone wants to tax bacon, leather, and corn, and at the same time to tax iron billets, steel rails, and other forms of manufactured goods. He cannot want both. I know that in the newspapers there are many men who say that they do want both; but at least for the honour and intelligence of the House of Commons let me believe that no one here wants both those policies at once. [An HON. MEMBER: "They do."] We have had from the ex-Chancellor of the Exchequer to-day a fairly definite statement of his proposal, which I take it is the proposal of the Opposition as a whole, with the exception perhaps of the Noble Lord the Member for Marylebone (Lord R. Cecil), the hon. Member for Norwood (Mr. Bowles), and one or two others. According to that statement, the general alternative of the Opposition is to tax manufactured goods coming into the country. But have they thought, first of all, what revenue can be got from that, and, in addition to its effect upon our own trade, whether they can conceivably get by any machinery whatsoever more than £5,000,000 from it? Have they thought, secondly, which is most important of all, whether our fiscal system would stand the strain? I am not going to argue here—it will be argued on a thousand platforms in the course of the next few weeks, and it has been argued threadbare, usually by men who know very little about it—whether the system is possible, or would ultimately be for the benefit of the country. Those are the two points which, speaking as one who is quite independent in the matter, would always make me vote against that alternative. Have the Opposition considered those two points? Are we importing manufactured goods on such a scale that an import duty of 10 per cent. could meet the great strain upon our fiscal system through which we are now passing? Secondly, could we, commercial community that we are, with our traditions and with the enormous expansion of our trade during the last few generations, undertake that experiment and live? Could we survive the complete upsetting of commercial conditions that would follow? It is my profound conviction that we could not. I would rather see this country undertake a dangerous war with a great rival than undertake an experiment of that kind. On that account, accepting this Budget as the alternative to that very dangerous suggestion, although I differed from every other thing in it, I would support it as a Free Trade Budget at the present time.

7.0 P.M.

Sir JOHN BRUNNER

The hon. Member for Holborn (Mr. Remnant) was very good-humored to me when he observed me laughing. But I am bound to tell him that when he accused those who oppose him of lack of interest, and on three occasions in his speech gives us to understand that he thinks those who differ from him ought to be in a lunatic asylum, he must forgive me if I do laugh. May I say the same to my hon. Friend the Member for Salford (Mr. Belloc). He has suggested that if everybody in the House spoke out his mind as freely as he does himself, the result of the discussions on the Budget would be very different. That amuses me also, because my hon. Friend is not at all alone in the sincerity with which he expresses his opinions. I should like to tender my thanks and congratulations to the Chancellor of the Exchequer. I tender him my thanks for the brilliant ability with which he has set the case of the Government before the House and the country, and for the good example he has set, which has been very largely followed on the other side, of conducting these Debates with perfect good temper. I tender him my congratulations on the fact that he is as good a man physically to-day as he was before the Debates commenced. He has been working under very great strain, and strong accusations have been made against him; but he is a standing proof of the old proverb that hard words break no bones. But besides hard words we have had from the Opposition, I am glad to say, a large amount of perfectly fair and sincere argument. Because I do not agree with a man I do not say he ought to be in a lunatic asylum. I am glad to make a perfectly sincere acknowledgment to hon. Members opposite that throughout all these months the Debate has been conducted in a fashion which does them credit, and I am glad to gather from a recent speech of the Leader of the Opposition that he at any rate does not actually hate my right hon. Friend. Let me say for the one hundredth and fiftieth time or the two hundredth and fiftieth time that this Budget aims at finding money for "Dreadnoughts" and old age pensions. I believe that it is framed on thoroughly sound and wholesome lines, especially in that it makes its chief demands upon the men of wealth in the country. It has a second good point in the fact that no man, woman, or child will go short by a single jot of food, clothing, or shelter on account of the Budget. To be as frank as my hon. Friend the Member for Salford, I am bound to say that my sense of justice will not be perfectly satisfied by the passing of this Bill. I feel a sense of shame in asking any payment whatever from a man earning no more than 12s. a week, on which he has to maintain a family. My view of taxation is that it is a demand from the individual in payment of services rendered by the community to that individual. I would ask any man what services has the community rendered to a man earning only 12s. a week? I repeat that individual. I would ask any man what except in regard to liquor and tobacco, any contribution to the maintenance of the State, I shall be ashamed. I have said over and over again in this House and out of it that I deplore from the bottom of my heart the need for "Dreadnoughts"; but when this House has once decided that "Dreadnoughts" should be built, I take it to be my duty to pay my share towards them. Whilst I have no pity or sympathy for those who first cried for them and then refused to pay for them, I am delighted to offer then some consolation, namely, that I do not believe that the need for "Dreadnoughts" on the present scale will last very long. Sir, the Germans have learnt better. What my hon. Friend the Member for Blackburn has told the House to-night has impressed me very deeply. I congratulate those who asked for "Dreadnoughts," and do not want to pay for them, on that method of displaying their patriotism. I congratulate them on the prospect, which I believe to be a very sound one, that Germany will so conduct her affairs in the future that our need for "Dreadnoughts" will diminish. I rejoice with all my heart upon the increased Whisky Tax. I rejoice that the result of that tax should be a diminution of consumption. I believe that reduction of the consumption of whisky means more sobriety and greater happiness in the homes of poor people. As a man of business, what have I to say about the result of the reduction of the consumption of whisky? That money is not going to be hoarded—to be put into stockings—but it is going to be spent in commodities, and in commodities which provide ten times more labour than whisky does. The result of the increase in the Whisky Tax is, without a shadow of a doubt, a gain to trade. What about the great item of the expenditure on old age pensions? Everybody who knows anything whatever about the weekly budget of a poor family and of the poorest of the poor, who very often do not belong to any family at all, that the moment that money is paid it is immediately converted into goods of some sort or another. I am profoundly convinced that the expenditure of the poorest is far more immediately followed by a demand for goods and an improvement in trade than the expenditure of the wealthy.

I look upon these Land Taxes only as the beginning of a great and greatly to be desired reform. If it is not followed by a reform in local rating very shortly it will be a truncated reform. A reform in local rating will do far more in the direction that this Budget aims at—very much more—to bring the land into the occupation of people, very much more in distributing fairly the burdens upon the community than this Budget. In this matter of local rating things are very, very far wrong. I ask the House to imagine the sum of £100,000 spent upon one house; the sum of £100,000 spent upon 20 houses of £5,000 each; again upon 100 houses of £1,000 each; and again on 500 houses at £200 each. When we get down to the latter figure we call the houses cottages. If the rate-books of the country are examined with the object of learning the truth in this matter any hon. Member who undertakes the work will find that the proportion of the poor-rate is lowest upon the house of £100,000 value; higher upon the £5,000 house; higher again upon the £1,000 house; and enormously greatly higher upon the cottage property. [An HON. MEMBER: "And so is the rent."] So is the rent. I remember very well indeed that is was calculated that the cubic contents of dwelling-houses in the East End of London were much more highly rented than the West End. The disproportion between the charge for local rates upon the wealthy man's house and the poor man's house is absolutely incredible until it comes to be examined into. I cordially welcome these Land Taxes, and to my hon. Friend the Member for Holborn I say that more especially do I welcome the tax on reversions. I do not grant his argument that it is an infraction of the contract. The contract was made between the lessor and the lessee. The State has made no contract with either of them.

Mr. REMNANT

The contract was made under the law after full consideration of all the circumstances.

Sir J. BRUNNER

We do not disturb the relations between the two. The question is to whom has the State paid this enormous fine? It is hardly an exaggeration to say that every 100 years we have to buy our towns backs from a few people. I would very much rather that that enormous fine were paid to the State to be spent for all, than that it should be paid for the benefit of a small class. Broadly, the lessee in this country is in the position of a toad under the harrow. He lives under a system of grinding oppression, which has been perfected, refined, and polished through the desires of generation after generation of grasping superiors, and by the extreme and highly-paid ability of a learned profession. It is not only the poorest who are fined in this fashion for the benefit of a few. All my class of people who build cotton and woollen mills, and erect iron and alkili works on leasehold land are all fined. I will not use any such word as "dishonest" in relation to this matter. It is bad enough without applying epithets and words of that kind. But all these extraordinarily minute clauses and leases mean that time after time, over and over again, during the course of the year whole properties are forfeited through a technical breach of an extremely technical covenant, which may not be a covenant into which the lessee himself has entered. This, however, is such a commonplace that we have begun to be content and look upon it as the appropriate and proper thing. It is because this tax is an earnest of the intention on the part of the leaders of the Liberal party to bring an end to this system that I support their proposals. I have no objection to a fair payment for an honest bargain, but it is because these taxes are an earnest of the intention of the Government to amend this system of leasehold laws for this country that I welcome it with such extreme cordiality. I am amused at the thought that I myself am affected. I have spent a large amount of money, but would not spend any to put up anything on land not freehold in the country; but I come to London for a residence, and find I can only get leasehold property, and that I am the mere ghost of the owner of a house. Into this house I wanted to put a window to let the light into a dark corner where my young secretaries sit one after the other. The window cost £26 to put in, and the permission to put it in cost £8 8s. It would be hardly worth discussing a matter of this kind if it were one only between a few superior individuals and a larger number of inferior individuals. It is very much more important than that. If you were to transform the leaseholders of London into freeholders an amount of trade would follow in the train of that operation that would exceed anything this country has ever known.

Mr. SPEAKER

I really fail to see the relevancy of these remarks. It seems to me they are more suited to a discussion of a leasehold enfranchisement Bill.

Sir J. BRUNNER

Mr. Speaker, I accept your reproof. It would be impertinent on my part to say I believe it to have been deserved, but I do. I have only a few words left to say, and they are words in further commendation of the Budget. It finds money to be spent on load improvement and the development of the country. I have for very many years been convinced that this country is suffering, and will continue to suffer, unless we make our minds to do by State action that which the country is determined should be done, and is not done, because it is not taken up by private enterprise. I do not agree with my hon. and learned Friend the Attorney-General that State action is a full definition of Socialism. If State action or municipal action were that I should fall down and worship the next lamp-post I come to as a perfect exemplification of Socialism. For over 40 years I have been watching, and have seen in very many countries abroad the enormous advances that have been made in the provision, through State action, of what are broadly called public works. In this country our habit is to pinch, and squeeze, and bleed adventurers who undertake any public work, so that such public works are with us delayed and hindered and often prevented. I am satisfied from what I have seen abroad that unless we change our polity in this measure; unless we give up and abandon entirely the policy of laissez faire, which was forced upon us through the impatience of the Free Traders of 60 years ago, and adopt the new one which is foreshadowed by the Development Bill, that the trade of our country will suffer. I desire, above all things, very greatly that the trade of this country should broaden and expand, and that the benefits of it should go down lower and lower until all feel it. It is because this Budget aims in that direction and gives a promise of good results that I have voted, and shall vote for it again, with great cheeriness of heart.

Mr. E. A. RIDSDALE

The right hon. Gentleman who has just sat down made one statement about the Budget with which I am afraid I cannot agree. He said that the Budget which we are now discussing is to provide money for "Dreadnoughts" and old age pensions. I do not think that is an accurate statement of the case, and for this reason. That the amount of naval expenditure since the time that this Government took office up to now is only half-a-million more than it was in 1905–6. So that it is perfectly clear that it is not "Dreadnoughts" this money is required for. It is the social expenditure and the general expenses of the various Departments which His Majesty's Government have not been able to keep down, that has occasioned these heavy demands. I should like to preface my remarks by saying I think in every part of the House there must be general sympathy with the right hon. Gentleman who undertook the very severe task of making good something like a deficit of £15,750,000. I feel the right hon. Gentleman who undertook that office deserves and ought to get the sympathy and support of every Member of the House wherever he may sit, and I feel even more strongly that he has a claim upon the loyalty of those who sit behind him. I say that because I want to make it clear that the feeling of those who oppose the Budget must be extremely strong to force them to still further criticise it in the way I am afraid I shall have to do to-night.

The hon. Member for Blackburn (Mr. Snowden) made a most eloquent speech, the most eloquent I ever heard coming from him. He gave a long explanation of what constituted Socialism and what did not, and he gave an explanation as to the Budget being Socialistic or not Socialistic. To my mind any proposition brought in by an English Chancellor of the Exchequer which could for a moment be suspected of being Socialistic, must be condemned by that fact. If the hon. Member succeeded in pinning down that doubt upon the Budget I am afraid he really would be merely giving an indication to another place to make sure whether there is Socialism in it or not. I think it is an invitation that the Budget should die. The hon. Member went on to say that Socialism in the State and public ownership of land could not be accompished all at once and that the Budget goes a certain way on the road towards that ultimate goal. That is exactly what I think. I am inclined to agree that the Budget is the first step, and I think it is very clearly indicated in the strange article which was recently written in a weekly newspaper by the Chancellor of the Exchequer. That article shows clearly that collective ownership of land and the general taxation of the people for the purpose of what they are pleased to call social regeneration is the ultimate aim of this Budget. I am sorry to say I personally cannot conceive anything more foreign to what I always considered the real principle of Liberalism.

I thought the old Liberal policy was a policy of retrenchment and reform; a policy of keeping down expenditure in every possible way, and that the real and truest good that could be conferred upon any citizen of the country was to reduce his taxation. But it seems to me that they are on the way to alter all that, and that we are going to apply our taxation to the purpose of finding prosperity. We are going to tax people into prosperity. I do not believe it can be done. That old cry originated with the Opposition. They were going to put on a tariff. They wanted to produce prosperity in this country behind their tariff walls. We are going to tax people into riches by direct taxation. I am bound to say as a choice between two evils that if I were to make my choice of an oppressive direct tax or an oppressive indirect tax, then I think I would have an oppressive indirect tax as the lesser evil of the two. [An HON. MEMBER: "It falls upon the poor."] Yes, but are you so clear that very oppressive direct taxation does not fall upon the poor? I am quite aware that the immediate effect of it comes out of the pocket of the person who is liable for it, but does it not react eventually upon the people who are employed? Are the tenets of hon. Gentlemen opposite that taxation, no matter on whom it is imposed, does not filter down finally to the persons who can least afford to pay? Is not the effect of taking money from any citizen of the country to make that citizen look around him and see whether he can recoup himself? And does it not come down and fall upon those who have got the least. [An HON. MEMBER: "Not always."] But one of my main objections to this direct taxation is that it is being imposed unfairly, and that it does not fall equally upon all classes.

Take the landed classes—the landlords and the people who own material property in this country. I do not think, as far as I can ascertain, that they will be able in any way to evade this taxation. The Super-tax is being put on and the Death Duties increased, and I think that every owner of tangible property in this country will have to meet his tax and will have to pay. But you must not forget that there is a very large proportion of fairly wealthy people in this country of whom, if I may say so, without calling myself wealthy, I am one, who do not own that form of property, or, if they do own it, only in a very small degree, but who own property in the shape of stocks and shares and bonds, and in the shape of obligations of other peoples in other countries to pay them interest. They have in many cases larger incomes than landowners, or even than the cotton-owner, who has a cotton mill, or than anyone who has a tangible estate. But by your taxation you make it easy for them to avoid the whole of these duties. I personally, except for such property as is settled upon me, could have evaded the whole of the right hon. Gentleman's taxes if I choose to do so. That will be done in a very large scale in the City, and, as I endeavoured to point out the other night, a great deal of this taxation put on, and which is supposed to bring in revenue, will defeat its own purpose by driving investments into those channels from which revenue cannot be obtained. You will see that if this Budget goes through, and I myself am not going to vote against it. That sounds weak after what I have said, but if the House wants to know the reason why, I will tell it. Six or seven months of the financial year have already elapsed, and I am personally not prepared to take the responsibility of leaving the country without any financial provision.

I believe these taxes to be thoroughly unsound. I believe the effect they will have in the country will be grave in the extreme, but I am bound to leave in hands of the right hon. Gentleman the Chancellor of the Exchequer who has put them on the responsibility five months after the financial year has closed to decide that they shall be the method by which the money, which is absolutely required for the country, shall be raised. I was expressing doubt at the time I was led off at this tangent as to whether these taxes could not be evaded. We all know that an increased amount of business is done through limited liability companies. There is a great tendency on the part of private individuals sometimes for the purposes of the division of money among relatives, or for many other reasons, to gradually convert private trade concerns into limited liability companies. What is any promoter going to do in the future who wishes to float limited liability companies, and wants to get subscriptions from the country? He will not do it in the way in which it has been done during the last ten, fifteen, or twenty years. He will not issue shares registered in a way that they can be traced and tracked and followed by the Inland Revenue Department in case the owners may happen to die within three years, or in which the owners may have to pay sums off, or to give gifts to his children. They will issue bonds to bearer. The right hon. Gentleman tried to stop the issue of bonds to bearer knowing that there would be a slipping away of revenue from these bonds, and he increased the tax upon them, but he found he had to give it up. He did give it up because he found it would have driven further business on to the continent. Those who merely formerly issued registered shares will issue bonds to bearer. People will not subscribe unless they are issued bonds to bearer. The public will take them readily, and other companies will quickly fall into line.

What is the result going to be? My right hon. Friend the Chancellor of the Exchequer will lose in stamps. Every possessor of shares will have in his pocket what he can take out of it, and use when he wants it, and what he can give to his friends, and no Chancellor of the Exchequer will ever be able to find out either that the bonds have been given or will be ever able to trace in any way how the money has gone. I really think that if that were the only blot upon the Budget, it is a severe one. You are going to put on this heavy Super-tax, these crushing Death Duties, upon people who cannot afford them, and, on the other hand, you make it perfectly easy for other people to avoid taxation. There is another very severe blot upon the Budget, to my mind, and that is the increased degree in which the Chancellor is levying taxation upon capital. Taxes upon capital, judging by the statement from my hon. Friend the Member for Blackburn, will be pleasing to him and those who sit around him, because they believe that eventually private capital may disappear, but I do not take that view, and certainly the great bulk of the Liberal party do not take that view, and they dislike the extraordinary increase in the taxation of capital. The Death Duties now have been increased to such an extent that it is impossible for any careful, prudent person to guard himself against them in the way in which it has always been done. A thrifty individual guarded himself against the Death Duties by insuring against them, but a person getting on in years cannot insure against something which is put on him, especially when that something is unknown. That renders it impossible for any individual to be able to protect himself against the exactions of the State in the matter of the Death Duties. The result will be that the individual will not take the trouble. He will say, "No, I will meet my ordinary taxation, but this is a tax I can provide against." His next generation consequently will receive a diminished amount of capital in other ways, and the accumulated fund upon which the nation depends under our present system will be gradually diminished. That result cannot take place without a very great deal of hardship amongst a most deserving part of the population, namely, that part which is striving to be thrifty and to put by something for an evil day, and doing everything which, as a Liberal, I have been taught in doing for myself I was doing for the good of the State. You are going to penalise that thrift and declare that all that trouble is so much waste, because the State is going to take it if a man makes any savings. You are declaring that the person who saves is the person to be taxed and the person you are going to look after is the man who takes "no thought of the morrow." The gravest part of this Budget is the prospect which it holds out for the future. This is a system of fighting poverty with taxation, for that is what the Chancellor of the Exchequer said in introducing his Budget. He said, "This is a Budget to carry on a battle against poverty." This idea of taxing people in order to build up a fund to promote their prosperity seems to me to be so absurd and dangerous that I feel it my duty to enter a most earnest protest against it. I cannot help thinking that the whole idea of this Budget has been borrowed from some book like "Baron Munchausen." I remember that Baron Munchausen fell into a slippery bog with a heavy burden, and the narration is that he pulled himself out of the bog by means of his hair. The process adopted in this Budget is something like that. You may hurt yourseves very much by the process of pulling out, but you will never get the lower part of you out of the bog. I am quite clear that if that is the settled policy of His Majesty's Government—and I may say we have never had an authoritative statement from the Prime Minister on this point—as an old Liberal I cannot possibly follow the Government in these proposals, and I cannot see how anybody else holding Liberal doctrines can do so either. I was born and bred a Liberal, I have endeavoured to live a. Liberal, and I hope to remain a Liberal, but I cannot follow the Chancellor of the Exchequer upon the path which he has chosen. I shall not vote against the third reading of this Bill on the ground that its rejection would leave the country without provision for the money which is necessary for carrying on the ordinary work of the nation, but I do record my protest against it, and I shall certainly not give it my support.

Mr. D. MACLEAN

I have listened with very great interest to the speeches which have been made, and I am glad that the hon. Member who has just sat down is showing signs of returning to the fold. I was apprehensive lest the hon. Member for Brighton at the last moment would have decided to vote against this Budget. My alarm was increased when he gave utterance to the sentiment that if he had to choose between increasing direct and indirect taxation he would choose indirect taxation. Now, if there is one tenet which Free Traders hold, it is that so far as you can you ought to get rid of indirect taxation and place your taxes in a direct form, so that those who pay will have the greatest interest in relieving themselves of the taxes or adjusting them in a more equitable manner. There is one point which has been very much touched upon in this Debate, and it is the question of Socialism. I think the striking speech which was delivered by the hon. Member for Blackburn (Mr. Snowden) interested us all. I do not think the right hon. Gentleman the Member for East Worcestershire need be alarmed about this Budget being the first step towards Socialism. Let me point out to those who talk of the Socialistic nature of this Budget what a really light burden these taxes will be upon the incomes and the capital of the nation. The capital of the nation is estimated at £16,000,000,000, and the aggregate income at £1,600,000,000, while the annual savings may be put down at not less than £250,000,000. The £16,000,000 which has to be raised is one-tenth of 1 per cent. of the capital and 1 per cent. of its income. Therefore, for anyone to suggest that is a wild Socialistic swoop upon the capital or income of this nation, is quite ridiculous and will not bear examination for one moment.

A good deal has been said in regard to the increase of direct taxation as compared with indirect taxation. I think the most striking feature of the new taxes as proposed by the Chancellor of the Exchequer is the very sharp advance he makes in the direction of the increase of direct taxation as distinguished from indirect taxation. I find on examination of the figures that, comparing the position with the year 1895–6, the increase which the Chancellor of the Exchequer has put for this year, as compared with direct taxation, is 80 per cent. of increased taxes as compared with 21 per cent. of indirect taxes. That is a perfectly sound policy. You are dealing with the individual who feels the tax most sharply, and therefore is most concerned in seeing that the attention of the nation is drawn very sharply and definitely to taxation—the way it is levied, its collection, and also its expenditure. The whole principle upon which this Budget is founded is in no sense Socialism as it has been defined to-night. This Budget simply runs upon the well-established principle laid down by Adam Smith, that— The subjects of every State ought to contribute to the support of the Government as nearly as possible in proportion to their respective abilities, that is, in proportion to the revenue which they enjoy under the protection of the State. That is the principle upon which all previous Budgets have been based, and upon which this Budget is safely and broadly founded. There are a large number of people in this country possessing an enormous amount of wealth, who can thoroughly well bear these additional taxes. The increase in the returns relating to the Income Tax are too well known to require any repetition. Take the year 1896, when £67,000,000 were brought under review. This year nearly £1,000,000,000 have been brought under the review of the Income Tax authority. There has been an enormous increase in the amount of capital as shown by the returns which are brought out by the Income Tax.

Let me refer to one point which has been constantly made with regard to the incidence of the taxes which are levied upon large estates. The suggestion is that by these taxes you are taking a large amount of capital away from productive to non-productive use. That all depends upon the way in which the capital is used, and if the State uses the money which it takes from the large estates in this manner for productive purposes it is as usefully employed as it would be if used by the private individual. In support of my proposition I will quote the words which Professor Pigou used in a letter which he wrote to "The Times" on 26th August this year. He said:— Upon this point it is important to observe that capital investments may be made in people as well as in things. If the Government spends money on reproductive works it adds pro tanto to the capital resources of the country. But if it spends money on schemes that build up the health and strength of the people it also does this. Expenditure that makes efficient men is just as truly an investment as expenditure that makes efficient machines. I agree you have to be very careful to see that the money raised is spent productively. As far as the expenditure on the Navy is concerned, hon. Gentlemen opposite raise no opposition to that, which is simply a measure of national insurance, which it is necessary for the State to incur. With regard to the uses to which the money raised by this Budget is going to be put, I venture to assert that it is going to be spent on the lines suggested in the quotation which I have just read. Take, for example, old age pensions. Let hon. Members have in mind some little village in the country. The money which goes for old age pensions is spent there by the people at small grocers' shops, small boot-makers' shops, and all those other little avenues of expenditure which are of a most productive character. Therefore, the principle in this case is soundly based, and the money thoroughly well spent in every possible sense of the term. Therefore, the money which has been taken from large estates and used by the State in this and other similar ways to promote social reform is devoted to productive purposes, and the charge that we are applying it to unproductive purposes will not bear the test of examination for a moment.

With regard to the Licence Duties, I want to make two observations. After the passing of the Act of 1904 when the Tory Government of that day transmuted what was an annual licence into a freehold they must have known that the logical sequence of that would be the Licensing Bill of last year, or the high Licence Duties provided for in this Budget. No other result could follow, and when the Licensing Bill of last year was rejected in another place there was, in fact, no alternative left except the course which has now been adopted in this Budget.

Of course, they say we are not Budgeting so much for revenue as for revenge, but I venture to say that will not bear examination at all. The Chancellor of the Exchequer had to find money, and, looking round, he found, among other things, this great monopoly, enormously strengthened by the State itself in 1904. He immediately turned to it, as any Chancellor of the Exchequer would have turned to it. I believe if the party opposite had been face to face with this expenditure they would have had no alternative but to make some levy, much in the manner that the Chancellor of the Exchequer has done, upon the liquor licences of this country. We cannot be otherwise than struck by the extraordinary virulence of the attack upon the Government in connection with the Land Taxes. I hold that land is a national possession, and absolutely different from any other class of property that men can hold. It is laid down in Williams' book on real property that in England there is no such thing as absolute ownership of land. There is an overlord-ship on every yard of land in England and Wales, and that ownership is in the King and the State. That alone constitutes a very marked difference between land and any other kind of property, and we are simply enforcing, by the proposals of the Budget, the overlordship of the State in this national possession, of which the nation, through the King, has the reversion. May I just quote what the right hon. Gentleman the Member for West Birmingham (Mr. Joseph Chamberlain) said in Hull in August, 1885, with a lucidity of expression which no one else can surpass:— The soil of every country originally belonged to its inhabitants, and if it has been thought expedient to create private ownership in place of common rights, at least that ownership must be considered as a trust, and subject to the conditions of a trust. That may sound very extreme to a lay-man, but it does not sound extreme to a lawyer, bearing in mind the history of the tenure of land in this country. We are entitled to look to this exceptional thing we find in our midst, namely, the tenure of land, to bear an exceptional share of the national burden in cases of national necesity. One must have noticed in reading and hearing the speeches on the Budget the complaint that the Liberalism of to-day is absolutely a different thing from the Liberalism of long ago. Liberalism to-day is going through precisely the same kind of attack which was made upon it in former years, when it was then as we are now dealing with an exceptional crisis in financial matters. If hon. Members would read the reports in "Hansard" of some of the Debates which took place upon the Succession Duty, they would be astonished at the remarkable similarity of expression between those who opposed that tax and those who opposed the present taxes. Everybody now admits that that was a right and proper tax. Let me quote what was said on 14th June, 1853, by a Member of this House with reference to the first attempt to deal with the direct taxation of land, and to place it, although in a small degree, on a similar basis to that of personal property. Sir John Pakington said the right hon. Gentlemen might call the measure taxation, but he called it plunder. Lord Galway considered the Bill, as a whole, was downright robbery. Colonel Sidthorp said he thought the Bill one of the most iniquitous ever brought into the House. He did not think the words "robbery" and "plunder" were too strong to apply to it. It was a decided attempt to plunder the aristocracy and landed proprietors of the country with the view of pleasing the multitude and to undermine the best safeguards of the Crown and Constitution in order to gratify the Manchester School. Nothing could be more identical with the expressions used to-day by those attacking the Land Clauses of the Budget, and Liberalism or any other progressive thought associated with this Budget may take to itself the reflection that it is simply dealing with circumstances which are almost identical with what happened in 1853, and that before very long the propositions of this Budget, especially with regard to land, will be mere axioms for future Chancellors of the Exchequer. All this talk of plunder and robbery will pass away, and no matter what party may be in power they will accept these as natural and normal means of raising revenue.

Tariff Reformers argue that we are seriously handicaped by the enormous amount of manufactured goods we receive into this country as compared with the amount of manufactured goods we send out, and they say that by levying a tax on imported manufactured goods we could easily solve all our difficulties. Last year we exported to foreign countries manufactured goods to the value of £185,202,000, and to British possessions £111,753,000, making a total of £296,955,000, and we imported into this country, according to an answer given by the President of the Board of Trade, manufactured goods to the value of £91,000,000 odd. The balance of manufactured goods in our favour last year was, therefore, no less than £200,000,000, and hon. Members opposite are entirely wrong in saying we could raise the money on our imports of manufactured articles. If they want to get the money they must put a tax on our exports of manufactured goods, and that would be an absolute inversion of every accepted canon of our customs. I claim that this Budget is one for national protection in every possible sense of the term. It provides for the rising needs of the Army and Navy, and also for the development of the nation. It is not a Budget for the payment of debt at all, but for development, and the development of the nation and national security consist, as we all know, not only in armaments, but also in the well-being of the people. If I had any message for or any influence with those who are very highly placed, either by means of rank or possession of great wealth, and who are opposing this Budget, I would say to them, "Why your very safety consists in this. It is much better for you, with the huge possessions which a complex system of society enables you to hold, that you should have behind you, not jealousy and ill-will, but the goodwill of the masses of the people." I support this Budget most heartily, because it makes for national security in all departments of national life.

8.0 P.M.

Mr. ARTHUR FELL

The remarks of the hon. Member for Brighton (Mr. Ridsdale) were so interesting and so much to the purpose that I do not think they should be passed over. After objecting to every one of the taxes he finally said he was going to vote for the Budget, because seven months had been occupied in discussing it, and because, I suppose, time would not allow of another Budget being brought in. However bad the taxes are, and however much they are against his principle, still he thinks it necessary to vote for the Budget, because we have taken seven months over it. I think that is one of the most illogical things I have ever known. I have often tried to show how the Land Taxes have already created a large amount of unemployment and how, if they ever become law, they will very largely increase that unemployment. We have all received numerous circulars signed by various auctioneers, estate agents, surveyors, and people of that kind. Few of us can pretend to be experts in the matter, but it struck me that the names attached to those circulars were those leading men in London and many of the country cities and towns who really ought to know, if anybody in the country does. These men, according to these circulars, have all said that that Budget is having a most prejudicial effect upon the opening up of building estates and upon the development of land. Unless we can get strong evidence to show that is not so, we are bound to accept the opinion of these experts, and I, therefore, say that the Budget is having a most deplorable effect upon employment in this country, particularly in the building trade. With regard to un-employment, it has been stated that at the present time it amounts to 78 per thousand, whereas when the present Government came into office it was only 45 per thousand. It was anticipated by many that if the Government stayed in office for a reasonable period unemployment would be largely increased.

Attention called to the fact that 40 Members were not present.

Mr. SPEAKER

It is only comparatively recently that the House was counted, and I do not think it necessary to count it again.

Mr. FELL

I said since the Liberals came into office unemployment has, roughly speaking, doubled. It is not a question now of 78 per thousand. The percentage in the building trade is very much larger than that. It is larger than it has been for many generations. No doubt at the present time in the North of England, especially in the cotton, iron, and steel industries, the percentage is very low—only perhaps 2 per cent.—but if you turn to the "Board of Trade Journal" you will see that, according to the last monthly return, the unemployment among carpenters has reached 120 per thousand, and among plumbers 130 per thousand. That carries out my contention that the Budget, so far, has had a most depressing influence on the building trade of this country, and has largely tended to increase unemployment. I have had particulars given me by a number of firms in the building trade with regard to the discharges of hands which they have had to make. In one case they have 50 men less in employment than a year ago. In another case 300 less; another firm is employing 25 per cent. fewer hands, and still another firm has had to get rid of 67 men since last year. I need not multiply these cases. I think I have quoted sufficient examples to show that the builders have had to dismiss a large number of hands this year, and I think we are not unfair in drawing the deduction that this is owing to the Budget, and that it bears out the anticipations which were expressed in the Debate on the first and second readings.

No doubt the distress is most acute in the building trade. That is partly owing to the depressed times we are going through. But unemployment is also increasing in the licensed victualling trade. That is not surprising when we consider the statement made by the Chancellor of the Exchequer last week in which the right hon. Gentleman told us of the decrease in the consumption of various kinds of intoxicating liquors—how greatly they had fallen off in the past four or five months. The sales by the publicans having decreased, that fact must necessarily lead to economy, and they must have had to part with men in their employ, so that has been an occasion of unemployment in that particular trade. I was particularly struck the other day with a paragraph which appeared in a trade journal with regard to machinery used by brewers. It was stated that a firm engaged in this industry had practically received no orders this year for new plant, and that was practically an unknown occurrence. It was also stated that the firm were employing 200 fewer hands than at the same time last year. It it, therefore, clear that, as a result of the Budget, the brewers are ceasing to buy the metal work ordinarily ordered of this firm. The Chancellor of the Exchequer admitted the other night that his proposals would throw out of employment a certain number of men engaged in the malting and brewing industry, but he said that the benefit to the country would be much greater than the unfortunate loss to particular individuals. It may or may not be so, but it has been calculated that, on the whole, this Budget will throw out of work over 180,000 men. It has further been estimated that from 13 to 15 millions sterling will be abstracted from the ordinary trade of the country—from channels in which it was previously used, and necessarily the withdrawal of that expenditure will throw out of work an enormous number of men. It means unemployment, at any rate, for over 150,000 people. It may be said, on the other hand, that the expenditure of this money in other directions will occasion fresh work and give additional employment. That may be true to an extent, but I would point out that, while the unemployment results are immediate, the employment from the expenditure of the money in other directions will be brought about very slowly, so that this Budget will occasion a very large amount of unemployment, which will only be partly remedied by employment in other directions.

There is again the question of the Sinking Fund. It only affects us in the way that we shall be able to repurchase a lesser amount of Consols from the Sinking Fund, and that may lower the value of Consols. It may affect credit in that way, although the absolute cause of unemployment will be very indirect. Reference has been made to the taxes upon whisky and upon tobacco. It is a very curious position that articles which are the most heavily taxed should have been selected for further taxation. Old masters of finance used to say that a small increase of taxation affected very slightly the sale of any particular article. If it is a very small tax or import duty it may not have any effect at all on the sale, but when you increase the tax 25 per cent. then you arrive at the result which has happened on the present occasion, i.e., an immense decrease in the sale. The Chancellor of the Exchequer has said: "I am going to tax the article you sell, so that it will be more difficult to sell it, and at the same time I am going to charge you more for the privilege of selling it." That is the position the right hon. Gentleman has taken up. It is as if he were to say to a chemist selling a proprietary article on which there is a stamp duty of 1½d.: "I am going to put more taxation upon this, and you will consequently sell less; but I am also going to charge you a heavier price for the permission to sell it." That is the proposal of the right hon. Gentleman at the present time, and it is a proposal which has never before been made in regard to any other article. You tax the article, you thereby make it dearer and more difficult to sell, and then you say to the man who sells it, "You must pay a higher duty than before for the privilege of selling it." Can one be surprised if, under these circumstances, many of the men who are asked to pay the increased License Duty have said, "We cannot do it; our business will not allow us to do it. We cannot make our revenue if that license is put upon the sale of these particular articles." If the price of the article is raised the Government get the money, but they are also raising the price of the licence, and they are thereby preventing the man who has hitherto made his living from the sale of the article from continuing the business. Surely that cannot be in the interest of the revenue. Would it not be better to give a man a premium to induce him to sell rather than to tax him for selling it? That is what would be done in ordinary life. You would encourage him in every possible way to increase his sales, and, instead of putting a heavy License Duty upon him, you would take something off in order to encourage him to push the sale of the article, and thereby prevent the revenue losing. But the Government are not only increasing the price of the article, they are also charging a heavier License Duty, and to both increase the price of the article and the price of the license is to put a double tax on the same thing and the same person. That, I say, is very unfair. I have had cases given to me from the place where I represent in which people cannot possibly, under the circumstances, make the sales necessary for them to make both ends meet, and they will have to go out of business. Their capital, as it is now, is decreasing, and, as the result of this Budget, they will, I regret to say, have to join the unemployed—that is supposing this Budget will go through. When first it was introduced, people were sceptical that it would go through, but, if it does, it will have the effect which I have described. I know that there are many at the present time who have their money at the bank, and, if this Budget is passed, they will consult their advisers as to how they can send this money abroad. If this Bill does not pass they will consult their advisers as to how they can best invest it here and obtain the best advantage. My opinion is that the result of this Budget has not been nearly so much felt as it would otherwise have been because there has been this large public opinion which is very doubtful as to whether it will become law. Once it does become law the full effect of it will be felt, but that has not been the case at present. I wish that the Chancellor of the Exchequer, or one of his representatives, could give us some little assistance with regard to the tax on drugs for hospitals and the tax on petrol which is used in the motor cars of veterinary surgeons. They come very much into the same category.

The reason the right hon. Gentleman gave why hospital drugs could not be exempted, and why these drugs should be so largely increased in price struck me as most inconclusive and unnecessary. He said that when the taxes on whisky and other spirits have been raised those on chloroform and ether have always been raised in proportion, and that that was wise and necessary. When he was asked if he thought that people would drink these drugs in place of whisky, he laughed at the idea, and at such a suggestion being made, but under these circumstances, and unless these drugs compete with others in regard to consumption, why, I ask, should these drugs be taxed? They are not going to be taxed for the large amount which they can produce, and I cannot see why they should be taxed when the people who sell them, and who are only just able now to make both ends meet, will suffer. The "Lancet" said that the increase in the tax on drugs would not affect the wealthy medical man in the West End of London, but it would be a burden to those country doctors who contract to supply clubs and other bodies with medicines at low prices. We know that they do it on an exceedingly cheap scale, and any tax which they have to pay will affect their earnings. If, however, they are not to be met, there is nothing more to be said about it, because this is the third reading of the Bill, but it affords an additional reason for hon. Members to vote against the Budget. Another additional reason is the refusal to make an exception in the case of veterinary surgeons in regard to petrol for motor cars. He made an exception as to doctors, and he said that if he made an exception in this case also he would be asked to make a further exception. I do not see why he should not exclude veterinary surgeons for the reasons that he gave for exempting in the one case appear to me to apply to the other.

I do express my sincere regret that we cannot be met on these two points of drugs supplied to hospitals, and as to veterinary surgeons. We have been asked a question as to what we are proposing from these benches. We have had fanciful statements made as to what we are proposing—extremely fanciful. I am not going to say what we are proposing, but I made a note to quote to the House the effect of what I was reading yesterday in some Canadian papers which were discussing this Budget in England, and also Tariff Reform here. I was much struck by reading the articles in one or two of the papers to this effect, that it was singular to see England going through exactly the same crisis, and the same discussions that they went through in Canada, I think it was in 1894. They said in effect that the same arguments are being brought forward now against Protection and against duties that we had brought forward in our country, and it is prophesised in England that exactly the same things would happen as were prophesied in Canada. They said they knew that none of these things had happened in Canada, and, on the contrary, they knew that the Protective duties they had put on had been extremely successful, and ever since they were put on Canada had made gigantic strides towards prosperity, and is now one of the most prosperous countries in the world. Canada has, however, one of the strictest systems of protection which prevails in the world, although I am glad to say that they prefer us in their markets, but I am also glad to quote the Canadian papers to show that the bogies which are brought forward here do not exist, and that if we only face them boldly, as we ought to have done before, we shall improve as a nation.

Mr. A. H. CROSFIELD

The hon. Member has devoted a good part of his speech to the question of unemployment, and I propose in the brief remarks I have to make to refer to that in a moment or two, but I would like first of all to give one of the other reasons why I shall vote for the third reading and why I most emphatically support the Budget. In the first place, there is, I think, a broad general agreement on both sides of the House that the money is wanted, and I think there is a considerable amount of agreement as to the objects for which the money is wanted. We are pretty generally agreed as to the question of Imperial defence, old age pensions, the best possible educational equipment for the young, and purer air—and more of it—for both old and young, and particularly for the population of our cities in overcrowded and congested centres. These things, of course, cost money, and we also need money—I think we are all agreed upon that—for the remedial measures that are necessary to prevent to some extent unmerited hardship and distress. I support the Budget because I am perfectly satisfied that the money is wanted, and I most heartily approve of the way in which the money is going to be spent. To my mind these remedial measures, to which I have referred, are becoming more and more urgent every year that passes. It is said that as civilisation progresses the capacity of enjoyment increases. I think it is more important for us to remember that unfortunately there is another side to the picture, and that the capacity for suffering increases pari passu with that. I entirely agree with what the Chief Secretary for Ireland said the other day, that it is many and many a year since any measure has been passed by Parliament more calculated to reduce the sum of human suffering and to add to human happiness as the Old Age Pensions Act. That is a humane measure for all our old folk of over 70, and I do not know that these contributory schemes, for which this Budget provides the funds, of insurance against the risk of sickness, premature breakdown and unemployment, are not every bit as important. We need the money for that and for the Development Bill, and for providing Labour Exchanges. These strike me as two very practical ways of helping to mitigate what to my mind is perhaps the greatest curse of modern life, this evil tragedy of unemployment.

If it was only on the question of the alternative, I should be a strong supporter of the Budget, because, although the hon. Member (Mr. Fell) would not tell us exactly what the alternative plan is, we know a good deal about it. It has been preached at the street corners all through the country, and it is no secret to us in great manufacturing districts that this alternative plan will increase the cost of manufacture in the mills and in the factories and workshops of the whole country. That will have a simply terrible effect on the question of employment in both the great branches of our vast national industries, both in our export trade and in our home trade. The cotton trade of Lancashire, together with our shipbuilding and our carrying trade, are the wonder and the envy of the whole world. There has been, ever since 1903, when the right hon. Gentleman (Mr. Joseph Chamberlain) told us cotton was doomed, an enormous development of that industry to provide, directly and indirectly, employment for millions of our population. A certain amount of that increased trade and of the whole cotton trade is held by pretty narrow margins, but it is held; and Lancashire, in the vast neutral markets of the world, leads the way. What is going to happen if, with increased cost of manufacture, we lose 10 per cent., 15 per cent., or 20 per cent. of that oversea cotton trade? I do not say that low cost of manufacture is the only essential to the great success which the cotton industry of England has had, but it is one of the essential factors, and if it is increased, and a considerable fraction of the trade is lost, there will be an increase of unemployment which is simply terrible to contemplate. At the same time, the same kind of effect in the whole of our home industries will be more serious still—an inevitable rise of prices, diminished purchasing power, and therefore a diminished demand for manufactures. Another reason, which appeals to me most strongly, for supporting the Budget is the question of industrial peace. Supposing you have increased cost of manufacture, and a certain reduction in the foreign cotton trade, and you have besides a certain increase in the cost of living. What follows? The Lancashire operative at once goes to the cotton spinner and asks for an advance of wages to meet it. But the cotton spinner says "No; my trade is down, my output is reduced, and with reduced output all standing charges are a heavier burden upon me as a manufacturer. If I am to recover that 15 per cent. or 20 per cent. of trade to keep the mills going and find employment for the operatives, I must reduce my wages bill." Along that road, which is pointed out to us by Tariff Reformers, we travel directly towards industrial strife.

I give my emphatic support to the Budget, and I am prepared to go on fighting for the principles that it embodies, first of all because it does not put a single penny of additional taxation on any single article which is vitally necessary to our population as a whole; secondly, because it very substantially develops the principle of graduated taxation, because through this whole scheme of taxation the Chancellor of the Exchequer has carefully borne in mind the ability to pay of those of whom he asks the money, and because in the Land Taxes we have a great principle embodied, the principle that wealth socially created shall contribute to social needs. I respectfully submit to the House that a policy of this kind, narrowing the chasm between the extreme of wealth and the extreme of poverty, and tending in the direction of a better distribution of wealth, makes not only for industrial peace but for the welfare and prosperity of our whole people.

Mr. GEORGE HARWOOD

There are some who predict that we are going to have an electoral battle over this Budget. If that is going to come about we shall have to clear the decks for action, and look not at the details which necessarily come up so much in a Debate of this kind but at the principles which will have to be put before the public in an electoral contest. Firstly, what are the objections that have been offered to the Budget? And, secondly, what is the plan which the opponents of this measure would substitute for it? The objections seem to me to centre round two points. We are told that this Budget—the Leader of the Opposition has frequently put this point—will withdraw capital from trade and so diminish employment. We constantly hear talk about the difference between capital and income, and we are told that somehow this Budget will touch that peculiarly sacred thing called capital. It seems to me that there is no distinction between capital and income. Whatever comes each year may be regarded as income. It may go to capital in one form or another, or it may be consumed, but whatever you do with it it really comes out of the one large family fund of the nation. Supposing, as has been said again and again, that this money will be subtracted from the pocket of capital which provides employment, will it mean a further diminishing of the means of giving employment? It will not be subtracted from anybody's pocket. It will remain in the country, and it will go to somebody. If you pay it to pensioners they will spend it on something and in that way employment will be given. If the money circulates in the country and goes for the purchase of commodities, there will therefore be employment of labour, and it is quite ridiculous to talk about it as if it would mean the diminishing of employment. If the money is spent in this way it can be easily proved that it will give more employment than in other ways. We are not suffering from a scarcity of capital for trade. Everybody who has capital in the country is searching the wide world over to find employment for his capital where he may make a return. If we are suffering from anything—I do not say that we are suffering—it is that we have a plethora of capital. We want to find occupation for that capital, and even if we did diminish it—and it would be quite untrue to say that we are—we should not be diminishing employment, because there is already a large surplus upon which we can draw before we come to trench at all upon the fund which affects the employment of the people. That is the first objection, and I have no doubt it will be freely argued in the country that by taking the capital of the rich we are diminishing the employment of the poor. We are doing nothing of the kind. The whole country must be regarded as one. The capital fund of the country, whether it goes to capital or to pay wages or for food, is all one common fund, and we do not diminish it in the least by passing a portion of it to one class of the population rather than to another class.

The second objection is one which is commonly heard, namely, that this Budget is Socialistic. There is nothing that is a more common implement of party polemics than the use of vague words which nobody quite knows the meaning of. I think it was Daniel O'Connell who was having a swearing match with a Billingsgate fishwoman, and when getting the worst of it he turned round and called her "a parallelopipedon." She gave up the struggle, and said she never expected to be called anything like that. You call this Budget Socialistic, and so rule it outside of the region of respectable parties. We are all more or less Socialists now. My hon. Friend the Member for Brighton (Mr. Rildsdale) struck me as a sort of charming fossil. I regard him with wondering interest as a specimen of a kind of politician who has gone out of being—a sort of prehistoric man. It would ill become me to run down or depreciate the old school of Liberalism. Liberalism means learning. It does not mean adopting a theory and never changing it. I think we have all, whether Conservatives, Liberals, or Radicals, learned something in the last 40 or 50 years. Among other matters we have learned that there are a great many things that can be done better by the combined action of the community than if left to the competition of individuals. There are three stages. There is first of all the stage of competition on the part of individuals—the struggle in which men act on the principle of "Devil take the hindmost." There are certain virtues in that, but we all recognise that that is going too far. In our municipal management we have given the fullest acknowledgment of the larger knowledge. I can remember when my father was mayor of the town that I represent, it was thought that a corporation should do no more than sweep the streets and look after the police. Now every intelligent corporation does a hundred things we can call Socialistic. In these days we provide trams, parks, libraries, cemeteries, technical schools, and scores of things which in former times would have been thought Socialistic. Is there anyone on the other side of the House who will say that this has not turned out well? Does any one wish to go back and act on the fossilised ideas of the hon. Member for Brighton? We have come to learn that men combined can do things which would never be done otherwise, and we have come to learn that politics mean more than the struggle of the individual. They mean the development of the nation, and they mean that that development cannot be maintained by the principle of individualism.

Socialism! The word is used as if it were something horrible. What in the world does it mean? Really a very simple knowledge of Latin would warn anyone against using the word "Socialism" as if it were a bad word. Surely it means nothing but brotherhood, and we have learned in our higher polities and our more moral politics that not only must every man be allowed to struggle for him self, but also that we must bear one another's burdens and so fulfil the law of the Master. And yet we have this horror expressed at Socialism. There is a third form of Socialistic development which would probably have evil effects—the doing away with competition and private motive, and so on; but this Budget does not stand for that. It stands between the two extremes—the extreme of individualism, on the one hand; and the extreme of communism, on the other. It does not go an inch beyond the line that leaves us all the full benefits of private enterprise and competition. Therefore, I accept the term "Socialism" with the greatest possible pride. During the time that I have been in this House there are many things which the Government have done with which I have not quite agreed, but I accept this Budget with the most joyful heart, and I accept it because I believe it is founded upon the highest principles.

Another form of this Socialistic attack is in regard to the land. We have been told that this Budget is the outcome of the teachings of Henry George. Why, the origin, or I do not say the origin but the justification of this Budget goes much further back than that. I say it goes back to the Norman Conquest. The settlement after the Norman Conquest established the two principles which are the essential principles of this Budget. My Friend behind me, the Member for Bath (Mr. Maclean), pointed what an amateur lawyer like myself, and indeed everyone, knows, that English law does not allow the ownership of land. It only gives a man an estate in land. There is no such thing according to English law. There is no man owns any land to-day except an estate. All you can get for any deed whatever is an estate in land subject to the overlordship of the State. But we often have, particularly in the Upper House, people who rejoice in descent from the Norman conquerors. I think most of the Members do not go by any means so far back, but they go back to a much more reputable origin, that is to trades, banking, and commerce; because the Norman conquerors were a body of buccaneers, about whose morals the less said the better. But at any rate they settled the land system, and they settled the principles of law which have remained ever since. What was the settlement of the Norman Conquest? William the Conqueror established two things which are at the very root of this Budget. The first was that the land should be held on trust from the State, and the second was that there should be a map and a valuation of the land of the country, and we have that still remaining in the Doomsday Book which anybody can see to this day. He saw the importance of the principle of holding the land as a trust from the State? He parcelled the land of the country into estates, and he said that these estates were allowed to be held by this man or that man not as a present, but as a trust, and a trust in return for which he should give certain services. What were his services? He said that the land should pay for the fighting forces of the country. The consequence was it was taken out in the form of service rather than of money. But he allotted so many fighting men, according to the acreage, and the value of the land, and not only that—for there are frequent cases where it would not go to a man's successor—not only did he refuse to recognise the ownership of land absolutely, but he would pass over the direct heir if he had any objection to him or thought him incapable, and would hand on the trust to some other person because he thought he would better perform the business of the State.

These are the principles of the Budget. We are the good old Tories. We are not horrible Radicals. We are the blue-blooded Norman-Conquest Tories. We are going back to an old settlement that rejoices the hearts of Members in the other House, and from which they are so proud of tracing their origin. We say to-day if the land will find the fighting forces of the country, as it did in the time of the Norman Conquest, I daresay we shall be quite content; but here you are going on adding to the burdens of the country as a fighting power, and yet you object not only to the thing which in the old days you would have had to do—that is, to pay all the money for the "Dreadnoughts"—but you do not wish even to pay the small amount which we are charging to-day. The hon. Member for Preston is not here, but I wish just to touch on another point about this question of land. I speak as the president of the Land Nationalisation Society of Lancashire. We have been at this for between 30 and 40 years. I have been working in my small way at this, in season and out of season, and the Government is not pronouncing or acting upon any new principle. To us these principles are the mere axioms of Euclid, and we have accepted them for years, and we believe also that the nation has. It wants someone with a political constitution like the Member for Preston not to see that the land is not to be spoken of in the same way as other property. One of the hon. Members opposite this afternoon spoke of it as if it were the same thing as shares. It is really almost incredible that anyone should talk in that way. It seems impossible to understand how anyone cannot recognise that there are certain elements about the land which put it in a category by itself.

One need not repeat them, but we may refer to some. Surely it is obvious to anyone that there are, at any rate, three things about land which put it in a category by itself. In the first place, nobody made it; in the second place, everybody needs it; and in the third place, nobody can make any more of it. We live in an age of aviation when, I suppose, we are beginning to move about in the air; but even when we do we have always to come back to the land, very often with a good deal of disaster. We cannot even be buried without the land. Our own experience in towns, in my own county of Lancashire, shows the monstrous injustice of our present land system. It is not a matter of theory, but we have experienced it over and over again. Many of our towns are at this moment being throttled with the hand of the landlord at the throat of the community; and I do not wish to raise any angry feelings, but I do say that the time has come when we ought to have justice, and where the community has manufactured a value the community has a right to at least some portion of that value. I feel when I see what the Government has done—I know that the Opposition may be shocked—like, I think, it was Lord Clive or Warren Hastings who, when charged with taking too much, said that when he thought of what he might have taken, he was amazed at his own moderation. I certainly think when we only take a fifth of the added value conferred by the community—and remember that the Government has consented to every safeguard that could have been suggested to make sure that nothing shall come into this value but that which is added by the community—to say that this is robbery and Socialism, because we ask only for that which we ourselves have made, is really a monstrous use of language. The word "revolution" has been used by several speakers. I should be very unwilling to bandy words about an expression of that kind. I see a good deal of the masses of the people, I have watched their feelings on this land question for years, and I am quite certain of this—that unless some such step is taken as is now suggested by the Government you will very shortly have a much more severe proposal to deal with in reference to this land question. I advise Noble Lords across the Lobby to think twice before they upset this arrangement. If they send this Bill back to the people there will very shortly be something else in its place compared with which the present proposal of the Government will be regarded by them as very moderate indeed. The time has come when the demands of the people must be met, and I suggest that the proposals of the Government meet those demands with as much moderation as is possible, if there is to be any attempt to meet them at all. In regard to another proposal as to the licensed trade, it has been asked, "Why should you lay this heavy burden upon that particular trade?" The answer is quite obvious. If I may say so, the object is to act on one principle—to tax the one thing, and that is monopoly. Land is a monopoly, and the Government say that those who hold that monopoly must contribute a fair share towards the needs of those who gave it to them. The licensed trade is in just the same position. I am sorry to say I am old enough to remember the attempt made by Lord Aberdare to bring licences into the possession of the nation. It was defeated by a lack of sympathy on the part of extreme people. But the principle has never been forgotten by the people of this country. The Member for Salford (Mr. Belloc) complained of these licensing proposals of the Government because they were too drastic; he said we should have gone more slowly. But the hon. Member for Salford must remember how long we have been waiting. There is an accumulation on our side. We have been waiting for 30 or 40 years. This monopoly unhappily was granted most foolishly by the nation without any return. I remember about 40 years ago a man who had got a licence said to my father, "Mr. Harwood, you have put £2,000 into my pocket"; he got £3,000. I recollect saying to my father, "Why into his pocket?" And I have been asking that question ever since, and nobody has ever given me an answer. We foolishly parted with this monopoly without getting anything from it. We are told that brewing companies do not pay, but that is because they have been over financed. Our monopoly has been turned—we all know it who know anything of finance—into an enormous asset which has been over financed, and that is why these brewing companies do not pay now. But if we had our proper share we should be enormously better off, and we have a perfect right, therefore, to say that if we confer a monopoly they have a right to pay for it.

9.0 P.M.

In the days of the Stuarts they granted monopolies, but anyone who knows anything of the history of England, knows that they were always paid for. We are wakening up to our folly at last, and we only ask for a small proportion of what we ought to have. I say we are perfectly justified in supporting this proposal. We were told by the right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain) that the only other alternative to our proposal is that of taxing imports and manufactured articles. What is the object of taxing them, supposing you did it? Is your object in taxing them to give labour to the people in England, or is it to raise money to pay your debts? Remember, you cannot do both. You cannot both keep our foreign manufactures and so give employment, as you think, to these people, and at the same time take the taxes on foreign manufactures to pay old age pensions. You cannot have it both ways. These things are quite opposite to each other, and it is impossible to bring them together. This is one of the most serious issues that can possibly be put to the nation—not merely serious as affecting our trade, but serious for much greater and deeper reasons than those which I have stated. First as to trade. If I may say so, I have suffered in my small way as much from foreign tariffs as perhaps any Member of this House. When I went into my own business of cotton spinning we were followed by these tariffs, and as the tariffs were raised we were driven from one market to another. Our warehouses had to be closed in Switzerland, in France, in Germany, and in the United States of America, and it seemed as if the gates of the world were being closed upon us. I am only speaking for myself, as one representative of a whole trade. What is the result to-day? It is that we are doing more business in all these countries than ever we did before; we stand in a higher position relatively to their own people than ever we did before. Only a few weeks ago I was waited upon by a Swiss merchant, one of the largest merchants in Switzerland, who was wishing to do business with me. He said, "I am no Free Trader, but the time has come when we need you English, and must have you because we are manufacturers, and unless we can get yarns as good as our competitors obtain our trade is lost, and therefore we must have you whatever the duties are." He used this significant remark, "Protection has ruined the capacity of our own spinners for competing in the markets of the world. It has demoralised and ruined them." That has been the case all over. I am in touch daily with Germany and France and Italy and Russia. I often hear friends on the other side say, "Look at Germany, look at the United States, is it not a success there?" No, it is Free Trade that succeeds in the United States and Germany. We must remember that the United States is a Continent, a cosmos in itself. If you had duties between State and State, then you would have seen the effects of those tariffs, but they have got Free Trade over the whole range of that wide Continent, and, therefore, they have the benefits of Free Trade. In Germany it is the same. I remember when there were 35 different customs in Germany. With the foundation of the German Empire they were all swept away. The consequence is that Germany has got the benefit of Free Trade, and in so far they have been Free Trade countries the United States and Germany have prospered. But let me tell the House I know something of the feeling both in the United States and Germany. There is a strongly growing feeling against this Protection, a feeling that has a bitterness and an intensity that would long ago have expressed itself more in action were it not we all know how difficult it is, once having got a tariff, to get it off your back again. It is one thing to pass a tariff; it is very difficult when interests have been aroused to have it taken off again. Read the speeches of the present crisis in the United States. I know that in Germany, amongst the most earnest and intelligent, they feel that the mistake has been made of allowing this Protection to spread and get such a hold, and the movement will be towards Free Trade and not towards greater Protection.

Then we are asked, Is England to be behind? Yes, but I ask has England generally learned its lessons from Germany and other countries? Is it not possible that we are right, and they are wrong? Is it not possible that we have got our feet upon the bed-rock of truth, and that they will have to come to us, and not we go to them? I believe it is, and therefore I beg my country not to make the mistake of going back, not for the reasons connected with the trade in which I am concerned, but for something much more important. It is a direction, and it is a scheme which would demoralise our English politics for ever. Then we are told to work with our Colonies, and give them an advantage. Let anyone who knows anything of history inquire what has broken up all the great colonial empires of the past. What broke up the Greeks? What broke up the Romans? And what will break up our own—tariffs or money? It is that which breaks up families and which breaks up empires. I remember hearing Mr. John Bright say, when the Canadian Commonwealth was being established:— It may be that we cannot build an Empire upon the basis of perfect self-government, but I am certain that we cannot build it upon any other. I have never forgotten those words, and how true they have proved to be. Has there ever been a colonial empire as successful as our own? Has there ever been Colonies so attached to the Mother Country as ours have proved, and why? Because we have given them freedom, and because we have kept free from the taint of money bargains. If we once begin to have trades struggling in that Lobby, and to have our Colonies haggling with us and with each others for tariffs, then goodbye to the greatness of England. Our friends on the other side pose, and justly pose, as friends of the Empire, but let me ask them this: Who are the true friends of the Empire in this matter? Not those who boast about its greatness, not those who sing its songs, but those who take care that nothing is done to lower the basis upon which its greatness rests. That is what we are trying to do, and I am certain that we could not give a greater blow to the Empire than by bargaining with our Colonies or bringing in for a moment any of those money calculations. It is those things that break up families and break up Empires. Therefore, I warn my countrymen, if these be the last words I ever speak, not to enter upon that way which slopes down to degradation and despair. Last of all, I oppose the proposal of the other side as a substitute for this method, because I believe that it is based upon a wrong principle. It is based upon an immoral principle, and it can never succeed. If I may say so, I may ask why has God made the world, so various, with all its varieties of soil and climate and productions, with its varieties of nations and of products? Surely one may say, with all reverence, that the lesson is not that men shall shut themselves off by tariffs, not that nations shall build high walls round themselves, and say, "We will not deal with you, we will not trade with you." No, but that all shall have the benefit of it.

Mr. J. SEDDON

I do not wish to give a silent vote upon this Bill. We have had some very interesting speeches this afternoon. I am sure everyone in the House who has heard the last speaker will give him credit for the earnestness and the knowledge he has given to the House. Some of the speeches have not been quite so interesting, and I do not think quite actuated by the same spirit as the one we have just listened to. So far as I am concerned, I want to express my opinion, and also my pleasure, in having the opportunity of supporting this Budget. It is not a Budget that warms my heart to the greatest enthusiasm. I probably would be much more enthusiastic over a Budget introduced by my hon. Friend the Member for Blackburn (Mr. Snowden), but I, along with him, accept this Budget as a means of doing something to mitigate the social evils of the present time. No one can go about the country without knowing the suffering that exists, knowing that the workers are becoming educated, and studying not only political economy but studying the sources of wealth, and if we are anxious to prevent that growing army of misery and want from becoming a lawless mob we have got to do something to lift them out of the slough of despond they are in at the present time.

So far as the Budget is concerned I again want to say that I am opposed to indirect taxation of any sort. I have been told by some gentleman on the other side that that is an old Whig sentiment. I do not care whether it is old Whig or Tory, I am going to accept it, as it is right. I am a firm believer in direct taxation. I believe if every person in this country had to contribute directly, if the revenue collector came to the door week by week or month by month, as the rent collector comes, the working classes would take much more interest in the expenditure of public money. I am convinced that a good deal of the waste permitted under the guise of Empire, and many of the pensions paid to hon. and right hon. Gentlemen, would be more closely inquired into if the general body of the taxpayers knew week by week the amount they have to pay to the national Exchequer. But we shall probably have to wait for a development so far as the people are concerned before they will be prepared to accept that as a basis of tax collection. I am against indirect taxation also because it hits the poorest hardest. I think the duty upon tea is not only a burden but a real injustice to the poorest in the land. I see an hon. Member opposite who, like myself, has had an opportunity of supplying a good many people with this commodity; and he will know as well as I do that the lowest grades of tea are as a rule bought by the poorest people. They are compelled by their poverty to buy it, and it is grossly unfair that the poorest in the land, because of their poverty, should have to pay hundreds per cent. more taxation on their tea. The same applies to tobacco. If we were anxious to do justly we should have our taxes, if indirect, ad valorem and not as they are at present.

I am prepared to support the Budget also because it imposes no increase of taxation upon the necessaries of life. A good deal has been said about whisky and tobacco, and to the effect that this is not a poor man's Budget. As a fairly heavy smoker I would say that so far as the Tobacco Tax is concerned it is one in regard to which we have a choice. If we do not want to pay the tax we can stop smoking. If we object to pay the Whisky Tax, we can stop drinking whisky. Many people who say they cannot do it would perforce have to if they became guests of His Majesty for any lengthened period. Therefore I accept the taxes upon whisky and tobacco because they do not touch the necessaries of life. Those commodities are the luxuries of the workers, and they ought to bear some contribution towards the increased expenditure of the country.

Much has been said by the hon. Member for Yarmouth (Mr. Fell) about unemployment. But the hon. Member had to admit, however, that unemployment was not so great in many trades now as it was when the Budget was introduced. He fastened on the building trade, which he said is in a horrible condition. He also stated that engineers working for breweries had not been getting their orders for beer engines and the necessary equipment of breweries. We know very well how these people can manipulate their wants to present a case of hardship to the general public. Brewers may not be ordering engines, but it is not because they do not want them to the degree suggested by the hon. Member. It is because they are trying to make out that under this "wicked confiscatory Budget" they are too poor even to buy the implements for the production of their present output. With regard to the building trade, hon. Members have overlooked the great changes which have taken place during recent years. Look at any of the large buildings, whether in London or in the provinces, and you will find a wholly different method of construction from that which obtained a few years ago. The excavation is largely done by mechanical means, many navvies being thereby displaced. A few weeks later, after the steel girders have been put up, you find the bricks being placed right by the brick-setter by means of a derrick, and many hod-carriers are in consequence displaced. I have heard it stated that under modern conditions a £100,000 building job requires 100 men less than would have been required 20 years ago. That is one means of increasing unemployment in the building trade. The hon. Member for Yarmouth largely confined his complaint with regard to the state of the building trade to London. If you take a railway journey by any of the trunk lines you find that works which used to be centred in London are going into the country. Why? Because of the avarice of the ground landlords. To that extent builders in London are robbed of jobs which are being done by builders in other parts of the country. As far as unemployment is concerned, surely no one who has studied the question, unless he be blinded by Tariff Reform leaflets and Budget Protest League pamphlets, believes that by juggling with your fiscal policy you will solve the unemployed problem. We on these benches are quite as alive to that problem as hon. Members above the Gangway. We are in communication with our fellow-workers in countries where they have Protection. To hear the stories that are told here and at by-elections, one would imagine that protected countries were an El Dorado to the workers and that in them unemployment was unknown. In February last Mr. Sam Gomers, President of the American Federation of Labour, to which considerably over two millions of trade unionists are affiliated, paid a visit to the Secretary of Labour and Commerce at Washington, and he stated that he was firmly convinced that it was no exaggeration to say that from October, 1907, to that period there were over two million workers unemployed in the United States. He gave figures, which had been secured by a census of the affiliated societies, of the percentage of workmen unemployed in the various trades. Amongst the moulders the percentage was as high as 70, and amongst hod carriers it was 40. When we have such figures as these from a Protectionist country, we refuse to accept, without careful examination, statements from politicians who tell us that by juggling with the fiscal system you will solve the unemployed problem.

I support this Budget also because it is a breakwater against a tax upon the food of the people. I regard such a tax as one of the greatest menaces and dangers to the workers of this country. Some few months ago a number of my colleagues and myself visited Germany. We went there with inquiring minds. Our primary duty was to create a spirit of friendliness, and I am glad to say that our feelings were reciprocated wherever we went. We also made it our business to inquire into the social conditions of the people. We visited a large sanatorium in the neighbourhood of Berlin. It was a beautiful building, reflecting credit upon the country for the care demonstrated for the unfortunate people stricken with a terrible disease. Being struck with the high percentage of consumptive subjects, I asked how it was, in a country where they have Labour Exchanges and invalidity schemes of insurance, and where the children are the care of the State from their childhood until they enter the army, that with all this paternal care on the part of the German Government the percentage of consumption was so high. Those who volunteered an expression of opinion stated that they could only give one reason, and that was that owing to the high taxes upon food the German workmen were unable to buy the same sustaining food as the British workmen could buy under a system of Free Trade. When I got back into Berlin, I could readily understand that. I visited a friend of mine there, and I partook, not of horseflesh, but of a decent beefsteak. I passed a comment upon the quality, because it is rarely that you can get good quality—even in this country by paying a fairly good price—and the wife of my host replied: "The beefsteak ought to be good, because it cost me two marks per pound." That statement I made on a public platform, and early in July I wrote to my friend in Berlin, and asked him or his wife to buy a pound of beefsteak in that city and send me, not the beefsteak, but the bill. I got the bill endorsed from a Berlin butcher on July 26th. The pound of steak I found had cost 2 marks 25 pfennig. Well, that is considerably over 2s. per pound. I hazard this speculation: That if the working classes of this country had to pay that amount for beefsteak, the stamina of this nation would rapidly go down, and that disease would spread as well as in Germany. I believe the real strength of any country is the physical fitness of its people, and the first thing to undermine that physical fitness is to make access to sustaining food more difficult than at the present time. Therefore, I support the Budget warmly, because it will prevent what, to my mind, would be a catastrophe. If we entered into a system of Protection, it would mean taxation of the food of the people. I believe that once we get away from the sophistry, and one might almost say the fairy tales, of what Protection would do when the workers really understand that it means a tax upon their food, which will be a menace to their virility and ability to produce—the danger of Protection will pass away so far as this country is concerned. Having had some opportunity in the country to defend this Budget where there has been no opposition except that which has been imported from London by the Budget Protest League, I hope that in this House the Budget will be passed by a substantial majority. I hope members who are favourable to the underlying principles of this Budget will make an effort to come, like some of my friends are doing, so that we shall be able to give a message to the other House that so far as this Chamber is concerned both the Labour and the Liberal vote—I hope our friends from Ireland will stand behind it, too—is sound, and that the Budget will leave this House with a majority that will give pause to the other House. If they are going once more to fulfil the old saying "Whom the gods wish to destroy they first drive mad," they will throw the Budget out. Speaking for myself, I think I express the sentiments of my colleagues on these benches that we shall be quite ready for that event. We will go to the country with no misgiving. We shall go there believing that we have more than one account to settle with that Chamber. We shall go believing that this Budget, based upon right principles, aims at the prosperity of the greatest number; and it will save the workers of this country from a great catastrophe which would mean the downfall of the Empire. Believing that whole-heartedly I support the Budget here to-night, and am prepared to support it in the country if the need comes to fight an election upon it.

Sir J. DICKSON-POYNDER

Like the hon. Gentleman who has just sat down, I should like, before giving my vote in support of the Budget, to say a few words. I have a greater desire to do so because I have not been in the House during the last few weeks, and have therefore not had the opportunity of hearing detailed discussions upon subsequent compartments of the Bill like I had the opportunity of doing during the earlier period when the Land Clauses were being dealt with. As the right hon. Gentleman who took objection to the Bill truly said in his opening remarks, it will be quite impossible for any individual speaker to attempt to analyse or criticise all the various details of this tremendous Bill. I do not think in the present mood of the House that it would either be grateful to or tolerant of any Member who undertook, or attempted to undertake, so formidable a task. I desire therefore to pass over that greater portion, that most important portion of the Budget, which is going to bring about the real revenue for the year. The Liquor Licensing Clauses have been dealt with in previous speeches this evening, and have been commented upon by the Opposition. But I think that in those generally agreed to by all sections upon this side of the House, with hardly an exception, the modifications which have been made reduce that portion of the revenue-producing part of the Budget to moderate and reasonable dimensions. I come to the Income Tax and the Surtax. These, along with all those who have spoken—and there has been no adverse comment upon this portion of the Bill—I am in entire sympathy with. I should like to express gratitude to the Chancellor of the Exchequer and to the Government for their sensible and substantial concessions made to this portion of the Bill with regard to the extension of remissions under Schedule A of the Income Tax. Twenty-five per cent. remission of the Income Tax on agricultural land is, I venture to say, an advantage granted to the agricultural world greater than any advantage which has been given in recent years. It has very often been talked of by Gentlemen opposite, but it is the Liberal Government which has not only talked about it but has carried it out. Pass to the Death Duties. I confess in regard to this portion of the Budget that I should like to have seen some further concessions granted. These duties constitute in that increased form in which they are now presented a further heavy burden upon those who have to bear them, and in those families whenever there may be—and I hope they will be not too frequent—a rapid succession of deaths, their burden will be so onerous and so heavy that in some cases it will almost come to breaking point. I am doubtful also, apart from the individual hardship which must ensue in those instances, whether this tax will prove of that ultimate benefit to the State that some of its advocates are apt to apprehend, because it will involve the annual absorption to the State of large lumps of concentrated individual capital. It is said, and quite truly, that a scheme of annual insurance will provide against the chief burden of liability at the time of death. It is true that in many cases this insurance can be carried out, and there are a great many things to be said in favour of it quite apart from the actual result of the system of insurance. But I would point out that in these cases where these increased Death Duties will come, and where the present owner of the property has reached an advanced age, it will be very difficult and well-nigh impossible for him to insure his property on account of the immense dimensions of the premium he would have to pay. I would also point out this, that these Death Duties, which we have come to recognise in principle as perfectly just and absolutely necessary for the revenues of the State, if carried too far might reach a non-economic stage, because you would find cases where the owner of a property cannot provide against the heavy premium of insurance which has to be paid annually, and that heavy premium would have to be paid at the sacrifice of the property from which the income is properly derived. If that be the case, and it will be in many agricultural properties, the convenience of those who dwell upon their estates and the efficiency of those who dwell upon them must be correspondingly impaired. Again, it has been argued, and I heard it argued this afternoon with considerable force and lucidity, that this absorption of large lumps of individual capital to the State only means the passing through channels of taxation into the more diffuse form the capital over wide portions of the population, and that, therefore, there will be no loss to the State. Well, I am not quite so certain myself that capital in that small and diffuse form will realise so much benefit and advantage to the State as it has hitherto in the more concentrated form, because if it is diffused in small amounts over too wide a population, although it may be utilised for economic purposes in the country, it will not form a subject of taxation, and therefore to that extent the State will be deprived of revenue which it would get if the capital existed in a more concentrated form.

I have pointed out these two evils. I should have preferred to have seen less heavy Death Duties, and I should have been quite prepared to have supported an even higher Income Tax if money had to be found in substitution, because I believe it will be found to be a more economical method of raising the necessary revenue for the State. These duties are unquestionably heavy, and they will prove onerous in many directions. Two things must be always remembered in their defence. They are first of all imposed to meet the necessary annual expenditure which has to be met with the general consent of both parties in the State. There is no doubt now, whatever doubt may have existed before, that it is not only the Navy, but also old age pensions, which the Opposition are not only prepared to support, but are vehemently determined to maintain, and even to in-increase the expenditure on them in the future. Throughout the whole of these controversial Debates I do not think any serious complaint has been made against the Government in regard to prodigality or waste of expenditure. That being the case there is another feature which undoubtedly appeals to all of us on this side of the House, and which has been alluded to on many occasions in this Debate, and that is that these taxes are being raised without in any way infringing the main principle of Free Trade. Whatever may be the faults of this Budget, whatever its imperfections, it is a Budget which is going to find the revenues for the State without introducing any of those mischievous elements which we consider to be inherent in a system of Protection.

I have reserved for the last a few remarks in regard to Part I. of the Finance Bill, which imposes the new sources of taxes upon land. They are at one and the same time—and I am not committing myself to a paradox in saying this—the most important and the least important in this years' Finance Bill. They are the most important, and have had by far the most attention devoted to them, both in this House and in the country, in that they introduce for the first time an entirely new system of taxation upon the land; but they also may be said to be the least important, because, at any rate for the current year, and I am afraid for several years to come they will afford little or no additional revenue to the State. They would, therefore, play a comparatively insignificant part in the actual revenues for this year, and probably, as I say, for some years to come. These land clauses have undoubtedly undergone many serious changes, and they certainly present to-day a very different appearance from what they originally presented when first submitted to Parliament. They first consisted of 28 complicated and controversial clauses. They to-day consist of 42 not so controversial but, I believe, even more complicated clauses. From the point of view of fairness to the landed interest they are certainly a great improvement upon the original clauses. They have undergone very many vital changes after discussion in this House, so that in many respects they may be said almost to be a different set of Land Clauses from what they were originally. I do not think that anyone who is willing and prepared to support the principle of a tax on land can now feel in any way justified in recording his vote upon this score against the third reading of this Bill, although he may feel—and I frankly admit myself I feel in many respects—dissatisfied with the actual framework of the proposals as they now stand.

The Opposition have from the outset quite consistently opposed these taxes, because they have an inherent objection to land taxation of any kind. [HON. MEMBERS: "No, no."] Well, to land taxation of any kind proposed in the Bill, if my hon. Friends opposite prefer it in that way. That has not been the attitude, with the exception, the brilliant exception if I may say so, of my hon. Friend the Member for Preston (Mr. Harold Cox), of anyone on this side, even those who criticised the details. Speaking as one of those critics of the Land Clauses I must here say I have not been able to appreciate the arguments of Gentlemen opposite that land taxation represents a policy of Socialism. We have had many speeches this afternoon arguing the matter from that point of view, and we have had the very interesting and eloquent speech of the hon. Member for Blackburn arguing the merits from his point of view of Socialism, and how the Bill might apply Socialistic principles. We have had also a very cogent argument from the Attorney-General showing that this Pill is quite free from any indictment in that direction. Take, for example, the Increment Tax and the Reversion Tax. Those two taxes are going to be the main tax-producing revenue of the Land Clauses. To say that a proposal which in one case provides that a man who is going to receive £80 of what is proved to be unearned increment instead of £100, and another man who is going to receive £90 instead of £100 in the case of reversion, is being imposed by the State on Socialistic principles is an argument which cannot bear investigation for a moment; nor do I accept with any feelings of apprehension that argument which has been reiterated time after time, which is known as "the thin end of the wedge" argument. To say because 20 per cent. is going to be placed on increment and 10 per cent. upon reversion; that by some gradual revolutionary process that 20 per cent. and that 10 per cent. will develop into 100 per cent. is just as reasonable as arguing that the Income Tax, which to-day is 1s. in the £—and will, if this Budget passes become in some instances 1s. 8d. in the £—will also undergo this peculiar development and become in the future 20s. in the £. I think it is an unfortunate feature in this controversy that arguments have been employed by responsible Ministers in order to advance the Bill, and to present it before the public, which could be construed and undoubtedly are construed by large sections of the public as being Socialistic. I have a great admiration for the ability of the Chancellor of the Exchequer, and although he has argued with great suavity, and on lines of exceptional moderation in this House, I am bound to say that on the public platform he has not presented this Budget on lines which we desired to see it presented from one who holds such a high and distinguished position in a Liberal Government.

I have no comments to make upon the principle of the increment and the Reversion Tax. All I would say at this stage of the proceedings is what I said at the commencement, that I think the Increment Tax might have been applied in a much more profitable and a much less complicated manner than it has been applied by the Chancellor of the Exchequer. In the early days I argued and moved Amendments in that direction in the hope that I might induce the Chancellor of the Exchequer to confine these taxes to those occasions when the increment had actually matured. I contend that there are only three occasions when this can be fairly done, namely, on the occasion when land has been actually diverted from agricultural purposes to building purposes, and enjoys increment as the result; on the occasion when the reversionary interest falls in at the end of a long lease; and, thirdly, on the occasion of sale. Those are the three occasions when the tax could be collected with a minimum of friction and with the least possible difficulty and scrutiny, and with a maximum of profit to the State. The moment you go beyond those three occasions—and unfortunately the Chancellor of the Exchequer has done so—you find yourself plunged into a whole series of difficulties and complications which have necessitated under the force of debate exemptions, abatements, and all the complicated anomalies that must ensue from those abatements. I am afraid that these Clauses as they stand now with these additional occasions and exemptions will necessitate considerable irritation and friction in the future.

Quite 90 per cent. of the yield of these taxes could be collected on those three occasions which I have mentioned, and it is only in respect to the remaining 10 per cent. that all these abatements and complications I have mentioned have been introduced. I am sure that these complications will largely absorb the revenue derived from these simpler 90 per cent. which I have mentioned. It will be small consolation to those who have to pay these taxes in the future to feel that a very large proportion of what they pay is not going to the pockets of the State to meet the necessary expenses of Government, but is being largely absorbed by the machinery which will have to be set up to raise the taxation, or else go into the pockets of surveyors and lawyers. I think all the ambiguities and complications connected with this tax could have been avoided had more care been taken in the earlier working out of the scheme, and had rather less ambitious aspirations been entertained when the scheme was first submitted to Parliament.

The whole scheme as it stands must be contingent upon a system of universal valuation, and I should like to say a few words upon this point, which, in my opinion, is one of the most important branches of the whole scheme. I do not share the objections reiterated by hon. Gentlemen opposite, who have a rooted objection to anything in the nature of a capital valuation in this country. I think it is pretty obvious to everyone that the time has arrived when we should have a well-worked-out system of capital valuation throughout the country. It is difficult to carry out in a Finance Bill a scheme of this character, and I should have liked to have seen this part of the Bill omitted. I should also like to have seen the Increment and Reversion Duty confined to the occasions I have mentioned, in which case the existing machinery would have been sufficient to raise that taxation. At the same time, I think the day is overdue when there should be some complete reform of the whole of our system of valuation in this country. It is difficult for us to know from the Clauses of this Bill connected with valuation how the valuation is going to be carried out in the future. I should like to urge—and I speak in no sense of hostility to the Chancellor of the Exchequer—with all the force I can that in working out this scheme of valuation the right hon. Gentleman should proceed on the lines I have indicated. We have been told that a scheme of this character can be carried out for £2,000,000. I think everyone in this country competent to give an opinion on this matter will agree that this is an absurd under-estimate of what this State valuation is likely to cost. What I want to point is that whenever this valuation is established in the country it ought to be in complete accordance with the existing machinery for local assessment and valuation.

Commission after Commission have reported for it, and Minister after Minister on both sides of the House have declared how urgent and important it is that we should have a reform of valuation. I think it would be a thousand pities, and almost a disaster, if a scheme of State valuation were established in the country and the existing local system ignored and allowed to go on alongside with it. The time has arrived when the State officers who have to undertake the capital valuation of the country should work in close conjunction and in co-operation with those bodies which are to form the assessment and valuation committees for local purposes in the country. I believe there is now a great opportunity, and I hope it will be taken advantage of at the earliest possible date, and that the whole organisation of the country for valuation, whether State or local, will be under one head and on one system. I am not going to repeat anything I have said on former occasions with regard to the halfpenny tax on undeveloped land. I have always taken the greatest possible exception to that tax. I think it is utterly wrong in economics to have a capital basis for taxation on a certain class of property whilst continuing the annual system of taxation for all other kinds of property. If only a complete system of capital valuation were carried out in the country and it was made the general basis for both rating and taxation, then equal justice would be meted out to all classes of the community, and all the remedies sought for under this halfpenny tax would be assured, whilst there would be none of the injustices which to my mind now appear so conspicuously.

T have already said that there appears to me to be no argument in favour of op-posing this Bill, because it is a Socialistic Bill. I believe these are perfectly legitimate taxes to raise the necessary funds for the country, and I would, in conclusion, actually venture to point out that neither will these taxes be likely to bring about some of those future collateral advantages which some of the more enthusiastic supporters of the Budget have been advocating. I see no prospect of these taxes appreciably influencing the wider distribution of land among the people. A wider distribution of land upon a proprietary basis is one of the most urgent problems for early solution, but there is nothing in these proposals on increment and reversion—though there may be in a small degree in the halfpenny Undeveloped Land Tax—which is likely to bring that about. I make no complaint upon that score, because I do not think a Budget is the proper vehicle for carrying out land reform upon a comprehensive scale of that character. At the same time I am rather afraid that some of the wild speeches made in the country have led people to believe that the ultimate result of the Increment and Reversion Taxes will be to bring about this wider distribution. Land reform, by which I mean the multiplication of actual proprietors of land, and not the mere segregation of land through the county councils, is a matter which I hope will be dealt with in another measure, and by a Liberal Government at no distant date. I would seriously urge upon hon. Members to pause before they vote against the Bill. The rejection of the Finance Bill at this period of the year will lead to a dislocation of the trade and finances of the country of which one hardly dare think, and I hope, when the Bill has passed through this House, and has to be considered in another place, that wiser counsels will prevail among those who sit in that Chamber, and that they will, in their wisdom, allow this Bill to pass, thereby averting what must otherwise inevitably be financial chaos, and one of the gravest constitutional crises this generation has ever known.

10.0 P.M.

Mr. J. A. CLYDE

In almost all—I think in all—the very interesting and admirable speeches which have been delivered this afternoon by hon. Gentlemen who sit opposite, two features have been especially conspicuous. I think it would be fair to say of all those speeches that they have been addressed more to their own Friends than to their opponents, except, no doubt, in so far as diversions were made into the more flowery and attractive part of the denunciation of Tariff Reform; but, so far as those speeches have occupied themselves with what is, after all, the subject-matter of the present Debate, the present Budget Bill, they have been addressed in the main to the right hon. Gentleman the Chancellor of the Exchequer, upon whom congratulations have been showered by supporters loyal and by supporters recently doubtfully loyal. After all, so far as that feature of these speeches is concerned, it will be none of my business to make comment, and I may content myself with congratulating our Friends on the other side of the House on having, if not achieved, at all events approximated, a restoration of domestic harmony upon their Budget policy. The other feature which has distinguished these speeches concerns us more directly on the subject of to-night's Debate. Almost all these speeches have consisted of mutual assurances that, whatever may fairly be said about this Budget, it really cannot be said that the party which is the author of it by being the author of it is adopting or becoming tainted with anything in the form of a Socialistic policy. I do not know whether it is Scotch caution, but I am disposed to doubt protestations which are so ardently and constantly repeated. I really want to draw attention to a feature about this controversy which I think is new in Budget controversies in this country, and which, if I am right in my own view about it, has at all events direct relevancy to the question of what the true nature of the proposal is and where, if you are loyal to it, it will lead you. It is not unfair to consider this Budget from that point of view, for at least one material part of it, and a part of it not the least controversial, is admittedly a part which is worth really nothing at all from the point of view of filling up the deficit of £17,000,000. And it is worth nothing at all therefore from the point of view either of enabling the present Government to pay its old age pensions or to pay that portion of naval expenditure, at least, which falls upon a year such as this. After all, if anything is certain, it is that if our naval expenditure alone be regarded, one of the main, one of the large increases, in the annual expenditure of this country, is to be found in future years in the course of what may turn out to be something not less than a rebuilding of the British Navy, extending over many years, no doubt, but involving a naval expenditure compared with which the very small pittance devoted to "Dreadnoughts" this year is trivial indeed. Therefore it is I turn particularly to that part of the Budget, and to those features of it which, we are assured by the Chancellor of the Exchequer, has the future in view and contains the key of a golden treasury not to be drawn on in this year, but to afford a flowing revenue in years to come; in other words, to the permanent principles which this Budget embodies. These are, at all events, of less importance when one considers the principle which is paramount and on which the Budget is built. I think if anything is new about this Budget, and the hon. Member for Blackburn reminded us quite rightly that nothing under the sun is new—and Socialism itself is a very antiquated idea—if there is an idea which is new, so far at least as modern times are concerned, it is an idea which is adopted as one of the leading and most important principles in this Budget. That idea is that what is called wealth socially created—what is called sometimes, by way of nickname, ill-gotten gains or blackmail—the wealth or values which are alleged not to be created by the individual, and therefore not to belong to him, these are said to be specially appropriate subjects for the State to draw upon in its hour of need. The new principle is the adoption for selection of particular subjects as appropriate for taxation, and the degree to which these subjects can be said to owe their value to social considerations. It is a new idea to adopt as the basis of selection for taxation certain media for raising revenue under the Budget. In that respect it is new, and not only new but, if I am not mistaken, it marks a very important departure in fiscal policy.

I want to say one word about this. As I understand, in what was the school of thought in the Liberal party when I myself had the honour to be a member of it, the theory on which taxes were raised was that on the one hand the elements, as far as possible, of wealth were to contribute, but the incidence was to be made as fair, equal, and just as possible. Hardships, as far as possible, were to be avoided, and, lastly, the assessment and collection were to be as cheap and easy as possible. These were the principles which were to regulate the raising of the national revenue. I look in vain for the application of these principles in the Budget. There is no attempt in it to distribute equally, justly, and fairly among the various possessors of wealth, or of the many and various kinds of wealth in this country, the fiscal burden you intend to impose. On the contrary, you deliberately select some for exceptional and extravagant treatment in the distribution. There may be reasons, good or bad for it, but I will not go into them. All I will say is that of the old idea of fair, just, and equal apportionment of the burden on wealth, well or ill founded, no matter what it is, or what its object may be, of that principle you will find remarkably little in the way of practical effect in this Budget. If you come to the question of hardship, I have to say this is a Budget which, deliberately and of set purposes, imposes on certain media for raising revenue—and I am thinking particularly of the liquor traffic—a serious burden, which admittedly is hard and harsh, and such as to diminish by something like one-fifth or one-third the total volume of business done by that particular trade, and which, so far as present policy is concerned, is intended to extinguish, by rendering unprofitable, a very considerable proportion of the business of those actually engaged in the distribution of it. If one is to consider the raising of revenue without doing exceptional hardship to particular people, you will not find an example of that in this Budget. If you turn to the last principle, which requires that your methods of taxation shall be simple, easy, and cheap, can you imagine anything more completely subversive of those principles than the adoption of a system of valuation estimated at £2,000,000, and more probably costing eight or ten millions sterling, for the purposes of revenue in this year which, on the estimate that you limit your expenditure to a matter of £200,000, is to be worth a paltry £75,000, and, besides involving the State in an expenditure of this kind, it is going to involve the proprietors of those who own particular kinds of property in at least an expenditure of as much again. No man is going to submit to the ipse dixit of the Commission, and the man who is not going to do that will have to make his own valuation. There are, I believe, something like 50 million separate properties in this country. I am including all property, interest in land, leases, and like property. I am only giving my own estimate, I put it forward on my own authority, but I hold that there are something like 50 million units of valuation, and, if each valuation only costs 5s., you will see what the owners of these interests may be called upon to pay.

Mr. CHIOZZA MONEY

There are only nine million families in the whole country.

Mr. CLYDE

That is not in the least my point, as I am sure the hon. Member will see. Be the figure what it may, my proposition is, that at least as much again as the Government is going to spend on this valuation will be imposed upon those whose property is valued, and who require to check that valuation. Whether my estimate is right or wrong my suggestion is that if it is two millions for the Government it will be two millions for those whose property is being valued, and if it is ten millions in the one case it will be ten millions in the other. I repeat that on the question of facility and ease of collection you cannot imagine machinery more complicated and machinery more unlike the kind in the days to which I am referring would have been regarded as proper to the raising of the national revenue.

I am quite aware, if everybody is to believe the public prints, that even the shade of Mr. Gladstone himself is being raised to utter a blessing upon the principles which the present Budget embodies, aided by a prayer from the Greek Church and the chanting of the Doxology, but I am bound to say that the leaders of the party, when I had the honour to belong to it, would turn in their graves at the spectacle of such machinery as this. Apart from the Socialism of these principles, it appears to me that the novelty of the present Budget is in this, it uses as a means of discriminating certain kinds of property for special taxes a theory based upon the view that some property, at all events, is not earned, therefore is not so fully owned by the proprietor of that property before the law. If that theory is accepted it leads you by the shortest step, a step which you will be driven to take, to the conclusion which, for example, the hon. Member for Blackburn (Mr. Snowden) would never dream of disputing, that the goal of all this, the end of all this, and the real justification for it, is that property which has a socially created value is truly the property of the State. I am reminded by the right hon. Gentleman that on that account it may be a fair subject of taxation, but that is not the point I am putting. What I am putting is that it is made the subject of exceptional taxation, it is made the subject upon which the burden is to be piled, and which is to bear a great increase of expenditure in years to come. In the filling up of this gap it is out of social value that the Chancellor of the Exchequer hopes to make the golden harvest which he wants to reap and to spend in coming years. It is because it is the subject of exceptional permanent taxation which is to be increased in amount and in volume as the necessities of the State increase—it is for that reason, I say, that to adopt as a ground of selection the quality of the property in question as having a social value does mean exactly what the hon. Member for Blackburn says is the theory underlying all these proposals, and that is that, in one way or another, this property does not really belong to the man who owns it before the law, but is reclaimable by the State. If that is not pure Socialistic doctrine to say, that the land of the country so far as its value is due not to the energy of the proprietor, or to his brains and exertions, but to the demand outside, and therefore its social value is to be used as an inexhaustible source from which what looks like immense expenditure is to be met—if that is not a doctrine that the value of the land ought to belong to the State which is entitled to reclaim it because it has earned it and not the individual, then I confess I frankly do not know what is. And if this is the doctrine, that doctrine and the right of private property, which is part and parcel of the principle of liberty, cannot stand together. I think the expression "socially created wealth" is one of those expressions which people are apt to use in a short-handed way, although it is a description only in itself, to arrive at a proposition. It seems to be assumed that if a property is called a social value that means that the value belongs to society. That is a fallacy. There is no value that is not socially created. There never was anything that was exchanged against another thing, there never was anything that had exchange value, that owed its exchange value to anything else than the circumstance that there was someone willing to exchange something for it. There never was such a thing as value in the sense of wealth, wealth in the sense of something which could be the subject of taxation, which was not due to circumstances other than the exertion of the man who offered the thing for sale by anything that he did or contributed to it. Can anyone defend the system of private property, or of liberty, upon the basis that by means of it the value of what a man has bears a proportion to the exertion and the trouble that he has taken in connection with it? If anyone chooses to adopt the principle that value is to depend on the amount of exertion that the man who owns a piece of property spent over it, he can just as well hand himself over to the Socialist body at once, for he has adopted their main doctrine. Accordingly, when the right hon. Gentleman selects the subject on which he is to put this prospective taxation on the ground that it is a subject whose value is due not to the exertion, or relatively little to the exertion of brains, labour, or whatever it may be, he is deliberately making a selection for the only reason on which the hon. Member for Blackburn (Mr. Snowden) would say that the property in question is the property of the State, and the only reason which enables the Chancellor of the Exchequer's supporters, both on the platform and in the journal to which he contributes his views, to say that in making this proposal the State is only reclaiming that property which truly is its own. In his speech the hon. Member for Blackburn said, I think truly, that, because you are a Socialist, you certainly need not be a Tariff Re-former, and because you are a Tariff Reformer you certainly need not be a Socialist. The two things have nothing in the world to do with each others and that is simply because the idea that social evils can be cured by making State property out of land and capital—which is Socialism according to the definition of the hon. Member—has nothing to do with the question whether you prefer to conduct the finance of the nation on a basis of Protection or Tariff Reform. I say therefore it is relevant to discuss the problem of Socialism with the right hon. Gentlemen opposite, because it is relevant to discuss the nation's interest in or right over some particular forms of property. In particular it is land to-day, though it may be capital to-morrow. It is relevant to discuss that with right hon. Gentlemen opposite. It seems to me that they are under the impression that some complete remedy for social ills is to be found in connection with the manipulation of the wealth of this country. Their proposals are commended for popular acceptance on the ground that they are going to dispossess some of those rich people of their superfluities and transfer these by various new forms of machinery to those who are less fortunate. That, after all, is at the bottom of the proposals which the hon. Member for Blackburn has at heart. But what I would like to say to the hon. Member for Blackburn and his Friends below the Gangway is this: "Suppose you had established to its full limit the, State right or the State interest in socially-created values, suppose you or your party or your Government had complete control of the land and capital of this country, suppose you had it in the hollow of your hand for disposal in accordance with what you think would be best in regard to production and distribution, you would be face to face none the less with the tyranny of a monopoly—I suppose you would call it so—which I am afraid you would find far more inexpungable than that of land and capital." They would find themselves face to face with the necessity of managing this enormous concern. People are apt to think that wealth is a material thing you can handle and use. This is not so. Wealth depends on the energy, persistence, and brains of the men who use it. All the land and capital in the country is not worth anything at all if you do not have the right men to handle it.

These land values about which hon. Gentlemen and right hon. Gentlemen talk so freely are all represented at the present day in the form of borrowed money, the control of which is in the hands of those able to use it. I should like to know, when they came to the ultimate problem, what my hon. Friends below the Gangway would say when they found themselves face to face with the necessity of going to harness these men to their Juggernaut? Are they to come to them and say, "We are the masters of your fate; we are the arbiters of your destiny; harness yourselves to our car or out you go and starve"? That is why I say it seems to me to tamper with the question of social values to suggest that men's private property is not to be treated in the ordinary way, but is to be treated exceptionally because you can say of it that an unusually large part, or a relatively large part of the value of the property, is due to circumstances not directly under the owner's control. It is for that reason, it seems to me, that to adopt that principle is to take the first step towards Socialism which leaves you only the shortest step further to take, a step which, if I am not mistaken, under the same influences as directed the first one would be extremely difficult when the time comes to resist. For that reason, it seems to me, there is something that is new in this Budget. This idea of social value is new. The selection of property for exceptional taxation because it has a social value is new. The idea that you can deal not fairly, not equally, but exceptionally with one kind of property because it has a social value is new, and the novelty in it is in the attributing a less degree of sanctity, a less degree of right, and justice and fair treatment to one kind of property than to another. Hon. Members opposite are trusting, I venture to think to a distinction that is thinner than air if they fancy they can congratulate themselves, as some of them do, on the limitation of these principles to land and the exclusion of capital. When the time comes they will have the satisfaction of looking back to many pleasant afternoons spent in the smoking room of the House of Commons during the Debates, in which their energies have been wholly devoted to the problem of how they can manage successfully to evade the Chancellor's taxes on their capital. It seems to me that this new feature is one which is properly made the subject of animadversion in this Debate. It seems to me also it merits more in the way of considered attention than the mere congratulatory passages which pass between hon. Members opposite that after all they are not as these Socialists are.

The FINANCIAL SECRETARY to the TREASURY (Mr. Hobhouse)

I do not know what may be the effects on the minds of the hon. and learned Gentleman's supporters of the eloquent speech to which we have just listened, but I confess it left on my mind the impression that the hon. and learned Gentleman had sauntered into the House during the speech of the hon. Member for Blackburn, and the moment that speech was concluded had walked out again. He delivered an eloquent and interesting essay upon the advantages and disadvantages of Socialism, but except for one concrete statement, which I think was inaccurate—and I shall endeavour to show that it was so—he made no allusion to the Bill which he was supposed to be criticising, and he seems to have stated his case not from a real, but from an imaginary Bill; not from a Bill which he had read, but from a Bill which he had had described to him by a partisan on his own side in the Smoke-room, to which he alluded in the concluding passage of his speech. The statement relative to the Bill, which I take—and I think the House will agree—from his speech, was that the proposals of my right hon. Friend were neither fair nor just, that no attempt had been made to avoid hardships, and that the taxation which the Chancellor of the Exchequer proposed was exceptional. I hope to be able to disprove each of these assertions. The hon. and learned Gentleman had one advantage over me. He was able, at all events, to allude to the speeches in this House of his opponents. I find some difficulty in doing that, because during a considerable period of this afternoon I think there was only one Member on the benches opposite, and that, strangest of all, upon a Bill which the Opposition profess to regard with the greatest apprehension and alarm, there were five occasions upon which not a single Gentlemen on the Benches opposite even rose to ask the leave of the Speaker to address the House. Whether that abstention is deliberate and calculated, or whether it is accidental I cannot say. It may be that they propose not only to give up the right of decision, but even the privilege of debating the Finance Bill. I cannot understand on any other proposition than that the complete abstention of hon. Gentlemen opposite for practically the whole period of this afternoon on the third reading of the Bill. The hon. and learned Gentleman alluded to the case of hardships which occur in this Bill. I venture to say that no Finance Bill, and no alteration of any fiscal system whatever, can be entered upon without a dividing line being fixed—whether it be in regard to tariffs or Income Tax or Death Duties or Land Tax—upon one side of which you will find unmerited hardship, and upon the other side of which you will find perhaps undue leniency. The argument of individual hardships is as old as this House. It is repeated from every side of the House; it is repeated by every Opposition upon every occasion when you have a hard and fast line. In no Bill which has been presented to this House during the memory of any Members of this House have so many concessions been made to so many different interests as have been made by my right hon. Friend on this occasion. While I have been a Member of this House there have been at least two occasions when the right hon. Gentleman opposite (Mr. Balfour) was in office—the occasions of the Defaulting Authorities Bill and the Voluntary Schools Bill—on which he refused to make any single concession upon those most debatable subjects; he would not make any concession at all—not a word, not a line, not a comma—upon questions which excited the interest, the deep and permanent interest, of hundreds of thousands of people in this country.

One of the hon. Gentlemen opposite talked about my right hon. Friend's concessions as removing no hardships. I only know that they mean a loss of a million in revenue, and that the right hon. Gentleman has done his best, even in the case of the licensing trade—[An HON. MEMBER: "Except on-licences"]—to meet with concessions as far as his revenue permitted. I do not think, notwithstanding what I may call the rather exaggerated opinion of the hon. and learned Gentleman who has just sat down, that there is really, if you examine this Bill, nearly as much difference between the two sides of the House as he suggests. There is no need to go into the question of expenditure. Speaker alter speaker has told us of that, and there has been only one Division, that on the Navy, on the Estimates, and there has been no serious question of the amount proposed by my right hon. Friend. There has even been some agreement on the actual taxes proposed by him. Take the question of the licensed trade; the difference between us is not that the licensed trade should not contribute anything. It is admitted by the hon. Member for Ayr Burghs (Mr. Younger) that it is fair that they should contribute, and that they should pay something extra to the national needs. Take the question of land. It is agreed land should contribute to the rates, but not to the taxes, an increased amount. Take the Death Duties. Even the hon. Member for Chelmsford (Mr. Pretyman) admits that in a time of great national necessity you may slightly and justifiably increase the Death Duties Then, again, the right hon. Gentleman the Leader of the Opposition a few days ago admitted, he said for himself, but I think he would carry the most of his party with him on the point, that the Super-tax was not an immoral or unreasonable tax in itself; and, therefore, it is not a question of principle but of detail. Take the Income Tax. I think the hon. and learned Gentleman (Mr. Clyde) has admitted that you might perfectly and, indeed, more properly impose an increased Income Tax, higher than we suggest, rather than have recourse to the proposals of the Government. Therefore I say, without any fear of contradiction at all, that there is some measure of agreement between the two sides, and that it is upon the allocation and adjustment of the taxation rather than upon the principles involved that we are quarrelling upon this Bill.

The hon. and learned Gentleman (Mr. Clyde) did, in the few allusions he made to the Bill, lay more stress on the inequality of the taxation proposed to the interests which would have to bear that taxation. The hour is far too late to give a whole series of figures as illustrations in reply to the hon. and learned Gentleman, but I should like just to take certain concrete examples, because I think it was the hon. Member for Chelmsford who, during the whole course of the Debates on this Bill, asserted that it is not a single and simple tax which is destructive of property, but that it is the accumulation of taxes upon any one particular subject or interest that will eventually involve their ruin. I have taken out four instances of what I believe to be typical estates. The first is an estate of £900 a year, purely agricultural land. That represents the class from which are usually recruited naval and military officers and Civil servants of the higher class. The Income Tax in such a case, before the Bill, was £39; after the Bill is carried it will be £35. Death Duties before the Bill were £900; they will be £1,575, and it will be possible to insure against the extra payment for £14 a year. So that in the case of a property between £900 and £1,000 a year, the extra taxation which is going to bring the owner to ruin, dissipate private property, and destroy the existing landed system, will be £10 a year.

Mr. A. J. BALFOUR

Is the owner an old man?

Mr. HOBHOUSE

In the case of an old man, he will save £5 a year for himself during the remainder of his life, and his successor will have to pay £600 extra, or two-thirds of a year's income. That is not an unreasonable or impossible tax, and I do not think the right hon. Gentleman will suggest that it is.

Mr. CLYDE

What is the age on which these figures are calculated?

Mr. HOBHOUSE

Thirty-five, which is not an unreasonable age to take. I am not sorry the right hon. Gentleman interrupted me in reference to reversions, because it enables me to quote from the Estate Market report of "The Times" of Saturday last, as showing the attitude of the people on the matter, that leaseholds in the inner suburbs were in fair demand, and a few lots of freehold ground-rents, with comparatively early reversions, changed hands at good prices. So that the Reversion Tax seems not to have affected the market at all. Then take an estate of £5,000 a year, of which £4,000 is derived from land, and £1,000 from dividends. The Income Tax, before the present Bill, was £225; after the Bill it will be £233, an increase of £8 only. It is an astonishing fact that the increased deduction of 25 per cent. almost exactly balances the increase of 2d. on the Income Tax in the case of landed property. Death Duties upon such an estate were £7,500; the increased amount can be met for a payment of £120 a year. So that the increase is only £128 upon a gross income of £5,000 a year.

Mr. WALTER LONG

At the age of 35?

Mr. HOBHOUSE

Yes.

Mr. WALTER LONG

Why not take 55?

Mr. HOBHOUSE

Do people, as a rule, succeed to their estates at the age of 55?

Mr. WALTER LONG

Do they at 35?

Mr. HOBHOUSE

If the right hon. Gentleman will inquire he will find that the average age is 35, and that is why I have selected that age. Then take an estate of £10,000 a year—£8,000 from land and £2,000 from securities. This is the case of a more than comparatively rich man. There is an increased charge of £140 for Income Tax, £13,000 for Death Duties, and he can insure for £300 a year. So that in such a case the owner can hand over the whole property to his successor exactly as he received it from his predecessor for an extra charge of about £450 on an income of £10,000. These are no predatory and con-fiscatory charges; they are legitimate taxation in times of peace in respect of the comparatively rich citizens of the country. Their contributions, I believe, will not be grudgingly given, if you can only establish, as I think the Government have established, the necessity for increased revenue. There is only one more point upon which I would like to dwell. There have been constant allusions—I think there was one by the right hon. Gentleman the Member for East Worcestershire—as to the exportation of capital, and as to the experience of foreign countries. I propose for one moment only to ask the House to listen to my views upon that subject. I stand here to represent the Treasury, and, therefore, the Treasury view—that purely financial view—is, I think, worthy of the consideration of the House and ought to be expressed by its representative. What is the Budgetary position of foreign countries at the present moment—of those foreign countries to which it is said that capital has to go for safety, investment and accumulation? Really in some respects this is almost an annus mirabilis in the matter of finance. There is not a single country upon the Continent, hardly a single country in the world, that is not at the present moment suffering from an increase of taxation, from a realised or expected deficit, from an adjustment of that deficit by loan, and from a complete or nearly complete absence of amortisation of debt. That is the normal position to-day of nearly every country in the world. There is only one difference between their Budgets and ours, and that is, that we are making a substantial contribution out of our resources towards the reduction of debt. We have this advantage, which is not always recognised when you are redeeming debt, that, at all events, from a national point of view—so long as you are redeeming debt, so long as you do not want to raise money in the money market—the low price of Consols enables you to redeem debt very much faster, and to a very much greater extent, than a much higher price of the same security would do.

Let me point out that most of these countries to which I have referred are in effect countries protected by the most stringent, scientific, and ingenious fiscal systems that the skill of those who are responsible for such defence could devise. Yet no protection has been able to protect them against the evils to which I have been referring. It is to these countries, and under these conditions that capital is supposed to go for protection, for investment, and for profit; and it is to leave this country where it can find none of these advantages. I wonder whether hon. and right hon. Gentlemen opposite have any knowledge of the fact that capital is not leaving this country at any greater rate than it has done for the last 40 or 50 years, and that although the total amount of capital leaving this country is very much greater than before the percentage of capital leaving it is not one point greater than it was 40 or 50 years ago? The fact of the matter is that the increase of capital following from investments out of savings is so enormously increased that it is possible to-day to export to Canada or the United States, and even Germany—and indeed in many respects we finance Germany—capital to the extent of £100,000,000 without exporting more than one-half, if it is as much as that, of the total savings of this country. You must judge in this matter not by the amount but by the proportion of the capital going abroad, and you must remember that while it goes abroad the dividends from it return later to swell the ever-growing capital of the country.

There is only one other point I should like to make, and it is this. There is not one of those countries which is not, at the present moment, whatever its financial system may be, having recourse to the very taxation which in this country is described as predatory, ineffective, wrong in principle, and fatal in application. France with all its tariffs, strictly prohibitive as I think most of them are intended to be, is raising her extra taxation out of Death Duties, out of stamps, and out of tobacco. The United States—and the President of the United States has made a most memorable and remarkable declaration that Income Tax on dividends and Estate Duties are going to be imposed for the purpose of breaking up large estates—the United States, with all its protective tariffs, is going back to our Death Duties and Income Tax Duties, and Dividend Duties. Germany is concentrating upon beer and spirits, tobacco and stamps. And we are told that in the immediate future she is to have recourse, and recourse be it remembered at the instance of a Conservative Government, to that Socialistic departure—the Increment Tax. I venture to say all these taxes, in the view of the capitalist going abroad, will have a vital and sinister signification. He will find, if he takes his capital from this country, the Revenue officers waiting for him upon the shores to which he is going. He will speak a different language, but he will make the same demands upon his capital; he will find exactly the same demands for Income Tax and Death Duties and increment charges which he thinks he has left behind when he was leaving this unhappy country. Let me remind the House that this is no accidental coincidence; the same causes have created a deficit on the Continent as have-created a deficit in this country. They are well-known causes. They are naval and military preparations and the reforms of social amelioration. The former—naval and military requirements—are unproductive expenditure. They give no return to the nation or to the individual and they are at a great disadvantage as compared with social needs. The latter do return either to the individual or the nation a remarkable and increasing dividend. You get it in the removal of disease, in the increasing physical and moral regeneration of the rising youth of the country. The greatest enemy the capitalist can possibly find is not the requirements which you lay upon him for the purpose of socially improving your people, but the necessity for providing naval and military armaments. I venture to say that the greatest asset of capital and the capitalist is peace. It is not until the capitalist of this and all other countries recognise that, as a matter of fact, it is in their own interest not to undermine this Budget, but to undermine the causes which have led to the proposals contained in this Bill. If you could only eliminate the naval and military estimates from our expenditure you could, so far as finance goes, abolish the Income Tax and the Death Duties altogether. It is the most curious interdependence of capital and the charges upon capital that the two figures of naval and military expenditure count for almost exactly the same amount within half a million that is raised by the Death Duties and the Income Tax upon the capital of this country. The interdependence of all countries upon taxation for war and on capital is not as fully recognised as it ought to be, but when it is as universally recognised as it ought to be we may quarrel as much as we like over the taxation we have to propose; we shall dislike that taxation, and do our best to remove it; but while it lasts we ought all, no matter from what class we come, or what interest we represent, to do our best, to contribute to the taxation for the country at large.

Debate adjourned until to-morrow.