CLAUSE 84.—(Duties and Drawback on Tobacco.)

HC Deb 28 October 1909 vol 12 cc1249-303

(1) In lieu of the duties of Customs payable on tobacco there shall as from the thirtieth day of April nineteen hundred and nine, be charged, levied, and paid upon tobacco imported into Great Britain or Ireland the duties specified in Part I. of the Fourth Schedule to this Act.

(2) In lieu of the Excise Duties payable on tobacco grown in Ireland there shall, as from the thirtieth day of April nineteen hundred and nine, be charged, levied, and paid on tobacco grown in Ireland the duties specified in Part II. of the Fourth Schedule to this Act, and on and after the first day of January nineteen hundred and ten Excise duties at the same rates shall be charged levied and paid on tobacco grown in England or Scotland, and there shall be charged on a licence to be taken out annually by every person growing, cultivating, or curing tobacco in England or Scotland an Excise Duty of five shillings.

(3) Drawback allowed under Section one of the Manufactured Tobacco Act, 1863, as extended or amended by any subsequent Act, on tobacco exported from Great Britain or Ireland or deposited in a bonded or King's warehouse shall, as from the first day of June nineteen hundred and nine, be allowed at the rates set out in Part III. of the Fourth Schedule to this Act, instead of at the rates set out in the First Schedule to the Finance Act, 1906, but subject to the provisions affecting allowance of drawback contained in the Schedule to the Finance Act, 1904.

(4) Section three of the Finance Act, 1908, shall apply with reference to the Excise Duties imposed by this Section as it applies with reference to the duties imposed by that Section, and Sub-sections (2) and (3) of that Section shall apply to tobacco grown in England and Scotland in the same manner as they apply to tobacco grown in Ireland.

(5) So much of any Act as prohibits or restrains the growth, making, or curing of tobacco in England or Scotland shall, as from the first day of January nineteen hundred and ten, cease to have effect.

Mr. CHARLES M'ARTHUR moved to leave out Sub-section (1). My object is to give the House its first, and, I believe, also its last, opportunity of looking at the fresh taxation imposed on tobacco as a whole. The Chancellor of the Exchequer, speaking just now upon another matter, described a fit subject for taxation as a taxable animal. I thought that that expression had a special significance in regard to tobacco. Tobacco has been a taxable animal, a beast of burden, on which Chancellors of the Exchequer have from time to time imposed fresh burdens. The tobacco trade has borne those burdens patiently, though with an occasional grunt of dissatisfaction; but something more than that is required with respect to the proposals now before the House. It is well known, in fact it is almost a truism, that however you may tax an article of trade, however strong that article of trade may be, there comes a time when you tax that article beyond its power of enduring the taxation, with the result that its vitality is impaired, the yield of the tax falls off, and ultimately it ceases to be productive from the Exchequer point of view. My right hon. Friend the Member for East Worcestershire (Mr. A. Chamberlain), when Chancellor of the Exchequer in 1904, referred to a suggestion to impose fresh taxation on tobacco in these words:— Tobacco has done well during the past year, but it is already heavily taxed, and I am advised that to attempt to raise the whole sum that I require from tobacco alone would involve so great an increase in the duty as seriously to check consumption and destroy the purpose for which it was imposed.

That, I think, is a very sound point of view from which to regard this taxation. From the point of view of the trade, the point has now been reached when this taxation is absolutely insupportable. The Chancellor of the Exchequer, when referring to this subject on Friday last, said:— Tobacco is getting on all right. We are likely to realise our estimates.

It may be that the Chancellor of the Exchequer will realise his estimate. I am not quite sure of that. According to the latest calculation I have made, there has been, so far, a serious deficiency, and that if that goes on unchecked till the end of the year it will result in something like £450,000 to the bad. It may be that that will pull up. But what is good for the estimates is not necessarily good for tobacco or the tobacco trade. Estimates may be getting on all right, but tobacco may be getting on all wrong. It is a significant fact that in the five months which have elapsed since this Resolution came into effect the withdrawals of tobacco for consumption have decreased by 10 per cent. as compared with the corresponding five months of last year. The Chancellor of the Exchequer has said quite truly that in that you have to make allowance for withdrawals before the Resolution came into force, in anticipation of some possible increase of the tax. To allow for that I take off the first month, when no doubt there was a very serious fall—I think 24 per cent. Taking the other four months alone, the decrease amounts to 6½ per cent. That is not all. It must be remembered that before this fresh taxation was imposed for the last six years the consumption of tobacco had been steadily growing. It had grown at the rate of 2 per cent. per annum. This new taxation has had the effect, not only of causing an actual decrease of 6½ per cent., but of neutralising the increase of 2 per cent. to which I have referred, so that the real falling off is 8½ per cent. Whom is that good for? Certainly it is not good for the manufacturer. It injures the manufacturer in four ways. First, it decreases his turnover. I am told that the decrease of the turnover in tobacco for the five months is no less than 4,173,290 pounds. The second effect is that the manufacturer has to find an increased amount of capital equal to the amount of duty expected to be realised. Thirdly, the manufacturer sustains a loss in the collection of the duty. He has to pay an extra 8d. per pound. The consumer has to pay that 8d., but it does not find its way back to the manufacturer who paid it. It is subject to various trade commissions and deductions, so that the manufacturer gets only 6d. back, instead of 8d. The fourth effect is only a temporary one, but it is very serious as long as it lasts, namely, that the Revenue officials have been collecting the additional 8d. per pound duty on tobacco, but that the unfortunate manufacturer when getting his drawback can only get 6d. For some reason or other, what is sauce for the goose is not sauce for the gander. The Chancellor of the Exchequer gets 8d., but at present he will return only 6d., and the amount that the manufacturer is out of pocket on account of that 2d. is £118,473. Therefore it is very bad for the manufacturer. And it is not good for those whom he employs. Something like 2,000,000 people are employed in this trade, and, of course, if trade falls off a number of people are thrown out of employment. That result has already taken place in Germany, owing to the fresh taxation on tobacco there. I read that 1,100 employés have been sent away from the factories in Hamburg, that further dismissals are pending, and that the working men's associations are appealing to the Government to accelerate the payment of the £200,000 set aside in the Budget for the relief of unemployment caused by the Tobacco Tax. It seems that the Germans in these matters, as in some others, are more far-seeing than we are. They have foreseen that an increase of the Tobacco Duty must result in a decreased consumption, which will throw people out of employment, and they have provided a special fund for that. I think the least the Government could do would be to provide some special fund for the workmen who in all probability are going to be thrown out of employment.

Then look at it from the point of view of the consumer. It cannot do the consumer any good. He has to pay so much more for his tobacco, or else he has to accept an inferior kind. And this democratic Budget has already had the effect of putting out one pipe in every 10 in the United Kingdom. Now, if it is not good for the manufacturer, or the workpeople, or the consumer, who is it good for? It is only good for the Exchequer, and even there the advantage seems to me to be very doubtful, because if for a temporary sum of money which is wanted for some special purpose you diminish permanently and impair the vitality of this trade which has been your great stay and source of supply for the finances of the country, then you are building upon a very bad foundation. Therefore I have—though possibly I do not feel much hope in appealing to the Chancellor of the Exchequer—tried to put the matter as it appears to me fair and right. It seems to me that the proper course is, in view of the great disadvantages which will accrue all round, either to reduce or modify the tax, or, better still, adhere to the present state of things.

Mr. STEPHEN GWYNN

I rise to second this Amendment, and to identify myself with the proposal to repeal the general increase of the tax on tobacco, quite apart from the question that will come on later. I have two objections to this increase of taxation. The first is the question of the incidence of the tax. Broadly speaking, in this Budget you have to raise £16,000,000 by extra taxation. This Tobacco Tax raises a certain proportion of it. What I should like to point out to the Chancellor of the Exchequer or his representative is that there are certain classes of people in the community who do not contribute under this. Budget to that extra taxation at all, good or bad. On the other hand, the working man, as against the rather better-paid wage-earner, contributes more than his share, and contributes it largely in view of this Tobacco Tax. Take the case of the man who stands to gain most on this Budget—the man who has the best right to thank the Chancellor of the Exchequer for it, but who is not likely to vote for him—the ordinary clerk in a Government office, or some similar office; the man making an income of £150 to £700 a year. That man does not find his Income Tax raised. On the contrary, it is lower probably than two or three years ago he expected it would be. If that man does not happen to drink whisky I do not see how this extra taxation is going to reach him at all, except in the matter of tobacco. But, curiously enough, the man who uses the more expensive kinds of tobacco may quite possibly escape this extra tax altogether, for you will find in heaps of tobacconist's shops that the cigarettes that so many people nowadays smoke, which are 1s. per ounce, remain practically fixed in price, and with no perceptible difference in their quality, whilst the lower-price cigarettes have been raised to meet the extra taxation. So that men of the class who smoke these 1s. per ounce cigarettes, who happen to be teetotalers, escape totally, I maintain, from any contribution to this Budget.

Take, on the other hand, the case of the working man. What does this tax mean to him? It means that in a general way he will pay three-halfpence a week more on his three ounces of tobacco, which is, apparently, so far as I can ascertain, about the average used. That, of course, in itself is not a big thing, but that extra tax hits the man who is getting 10s., 15s., and £1 a week just as certainly as it misses the man with the higher salary to whom I have referred. You are charging the working man in this Tobacco Tax from 3d. to 1½d. in the pound on his weekly earnings, whilst the man in the clerk or professional classes is being charged ¼. in the pound on his weekly earnings. These two classes, so far as I can see, are affected only under this Budget by the taxes on tobacco and whisky, and those that are teetotalers escape altogether under the latter head. In the matter of tobacco, however, the poor man is taxed at precisely the same rate as the rich man, but naturally the tax represents a very much larger percentage of his weekly or monthly earnings. That is why I object to the incidence of this tax that I think arises inevitably out of the scheme upon which the Government have gone in bringing in this Budget. Some time ago the Chancellor of the Exchequer gave us an account of his mental processes when he sat down to consider how the money he needed was to be got. There was to be a certain amount raised by indirect taxation. He said practically that there were only five possibilities that presented themselves to him in this connection. Tea, sugar, and beer he discarded for reasons which he gave—he had just taken taxes off the first two—and as for the beer it was not good, from his point of view, because a tax on the consumer would bring him in too much money. The result was that he was reduced by a logical process of exclusion to these taxes on whisky and tobacco. What is the effect of that decision? The effect of it is that you are going to deal with these articles from the point of view of the Government, in which they are not regarded so much commodities as the media of taxation. In the case of whisky the tax that is imposed is in relation to the value of whisky as four to one; in the case of tobacco it is as eight to one. Thus tobacco becomes something in the nature of a banknote, its value inflated by taxation, and being in value in like proportion as the face value of a banknote is to the paper itself—especially if you take as an illustration countries where you have really small-value banknotes. I maintain that that principle is thoroughly unsound, and that what it comes to is this: That you are really using this Tobacco Tax for a poll tax. It is an unfair poll tax. It does not hit all round. If you really want to make everybody pay—and I quite see there is a fair case for the working man paying for old age pensions for which he is going to receive the benefit—you should make them pay all round. I would infinitely prefer a system of direct taxation to this kind of indirect taxation, which is so unfair in its incidence.

That is my first objection—the incidence of the tax. I come to another point, which I must develop fully later upon another amendment; that is its industrial effect. I hold that these huge taxes, like the taxes you are putting on whisky and tobacco, are uncertain, and therefore very bad from a revenue point of view. But if such taxes —assuming that you cannot be at all sure of them—may be disappointing from the point of view of revenue, from the industrial point of view they are dangerous. You may crush an industry, as you have yourself shown in the whisky trade and damage the revenue at the same time. This tax on tobacco has not been considered from this point of view up to the present time; nevertheless, we here from Ireland insist that it shall be so considered, because tobacco growing over there is not an academic matter. It is not a question whether it is possible for tobacco to be grown. It is a proved fact that you can grow tobacco in Ireland, and that you can grow it on a commercial basis. What I have to contend here is that in imposing a tax like this you make that industry almost impossible. You have got to deal with the grower. Every leaf of tobacco sells for 9d. wholesale. Of that 9d. 8d. is tax. But how is the grower to dispose of his damaged stuff—tobacco that does not come up to the mark? Damaged or sound it cannot sell for less than 8d., and the difference at which he will sell in disposing of his damaged stuff is only the difference between 8d. and 9d. You will never be able to develop the tobacco-growing industry in that country while you maintain a system of taxation in which the value of the tax and the value of the article is as 8 to 1. These are the two main objections. I would just like to speak a word as a candid friend—a looker-on—to the Liberal Government. If they are going to maintain the present system of taxation out of luxuries they cannot go on their present basis. They will have to widen their basis of taxation. The people will not stand it. You tax champagne at 6 per cent. of its value and whisky at 300 per cent. You tax the poor man's tobacco at 600 per cent. of its value and the rich man's at 50 per cent. If you put the Chancellor of the Exchequer to justify these taxes, and put up against him, say for preference, the hon. Member for Shropshire, telling him that the Government are letting off champagne and taxing whisky, and letting off cigarettes and taxing plug, the Chancellor will be beaten every time.

Sir W. BULL

Having regard to the present state of the tobacco trade, I desire to make a last appeal to the Chancellor of the Exchequer. I have some right to speak. I have been hon. treasurer of the West London Federation of Tobacco Retailers—a very large federation, and I have seen a great many members of that society. I have also in my own Constituency two or three very large manufacturers.

8.0 P.M.

I have not very much hope that the Chancellor of the Exchequer will respond to my appeal, but I feel it my duty to speak, as hitherto we have not had a chance, owing to circumstances, to have a Debate upon this matter and to press upon him these views. However, I believe that like the Whisky Tax the Tobacco Tax will carry its own punishment to the Government, and that instead of gaining revenue they will lose it. I am certain that a first result of the unpopularity of this and the Whisky Tax will show itself about 10 o'clock this evening. What do these increased duties means? In the first case, with regard to the retail tobacconist, it means that he has to ask more, and he will get less profit. If he cannot find the extra capital which he will inevitably require if this tax goes through he must go bankrupt. A great many of them are now on the verge of bankruptcy. Therefore, the members of a very hard-worked trade, already very much overburdened and now acting as unpaid tax collectors for the nation, will not only lose their revenue, but will have to turn to some other source of living altogether. How does this affect the working man? He will have to pay more, and he either gets less tobacco or worse tobacco, and if he cannot pay for his tobacco he will have to go without. That is exactly the position the working man is in on this question. The tobacco trade is not a particularly united trade. There is the Imperial Trust at the one end, the small wholesale houses in the middle and the retailers at the other end. I do not think the Chancellor of the Exchequer has put the case as it ought to have been put, and the result is that he cannot be aware of the widespread distress which is now going on in this trade owing to its being overtaxed. The hon. Member who moved this Amendment quoted from the speech of the right hon. Gentleman the Member for East Worcester (Mr. Austen Chamberlain). I should like to go back a little further and to quote from the speech of Sir Michael Hicks-Beach, as he then was, in April, 1902. On that occasion Sir Michael Hicks-Beach said:— Tobacco is not the growing revenue for what cause I cannot say, but it would be absolutely impossible in my humble judgment, and I can only give my opinion to the House, that any possible increases of tobacco duties would raise anything like a sum of £2,100,000. Again, in April, 1901, Sir Michael Hicks-Beach said:— Twice in three years the tobacco duties had been changed. There is no trade more sensitive to a change in duty whether it be up or down, and I do not think it is at this moment wise to impose an additional tax upon tobacco. As regards the public this new tax on tobacco, if carried out, will increase the workman's tobacco by a halfpenny per ounce. It forces him to smoke less or else to use a commoner article, and it puts a prohibitive tax upon the poorer class of the community. I understand that in this way, while the rich man is taxed off one pound of Havanna cigars at the rate of 3s. 6d., the poor man's tobacco is taxed at the rate of 14s. 6d. per pound. I interrupted the hon. Member for Galway (Mr. Stephen Gwynn) when he was speaking a while ago, and I said that the tax was at the rate of 600 per cent. It was at that rate before the Budget, but it now works out at 820 per cent. over the cost of the article. The result has been a reduction of 4,500,000 lbs. since the introduction of the Budget. The Chancellor of the Exchequer has taken duty upon 27,000,000 lbs. at the rate of 3s. 8d., which means £5,000,000 of money up to the 1st September. Last year his predecessor took £4,500,000. Therefore the profit that the present Chancellor has made is £500,000, while he expects from the tax £1,750,000. Matters, however, are even worse than these figures suggest, for besides the expenditure of additional capital which is rquired, when prices are changed the trade waters are rushing over the weir instead of turning round.

Mr. HOBHOUSE

Is that a quotation?

Sir W. BULL

No, it is not a quotation. The manufacturers have endeavoured, as far as they could, to try to stop this rush by not raising the prices to the consumer. But that cannot go on much longer, and the result will be that there will be a still further diminution. I should like to refer to the serious case of the cigar makers. Mr. Frank J. D. Ellisdon, secretary of Messrs. Sydney Pullinger, Ltd., Birmingham, in which he says:— Our experience of the Budget is as follows: It has greatly reduced the number of hands we usually employ at this time of the year—it has stopped contracts we had running—we hear of several manufacturers having to shut down, and others that are preparing to do so. The 8d. per pound on tobacco cannot be distributed over one hundred cigars, consequently the retailer or manufacturer would have to pay for it. Manufacturers know by experience that the proposed increase will not realise expectations, and therefore refuse to make stock. The Government are meanwhile taking the increased duty, but withholding the corresponding increase in drawback on stalk. The cigar business is meanwhile paralysed, and the ranks of the unemployed have been greatly increased. The consumption of cigars has decreased—the cigar smoker appearing to have been affected. The cost of labour entailed in cigar-making is enormously more than in the manufacture of tobacco and cigarettes, as machinery cannot be satisfactorily employed. Oigar-makers have to serve a very long apprenticeship. That is the experience of a large firm of cigar manufacturers in the Midlands. At the present moment there is a loss of 12½ per cent. on the manufacturers' turnover, and the manufacturers are complaining that they cannot get the additional capital necessary to carry on their business. Because by an extraordinary position created at the Treasury they cannot get their drawbacks. At the present moment there is a sum of £119,000 locked up in the Treasury. The Chancellor of the Exchequer explained that the moment the resolutions were passed the tax came into force, and became operative, and the money had to be collected, but when the manufacturers waited upon the Treasury and said "as you admitted in your Budget that there will be drawbacks let us get our money back." "Oh, no," says the Treasury, "by some mistake it has not appeared in the Resolution, and consequently we cannot give you the money back." On the one hand the Treasury takes the tax, but they refuse the drawback, and this money is accumulating in the hands of the Treasury, and no interest is being paid upon it. The manufacturers have to find fresh capital to carry on their business.

To come back again to the cigar trade, there are usually 2,700 hands employed in Leicester and Nottingham in the cigar trade; 650 of these are to-day out of employment, and 1,200 are on short time. In this state of unemployment in this country, which all parties must view with the greatest anxiety, it seems a strange thing that the Chancellor of the Exchequer should hit upon a trade which undoubtedly will increase unemployment to a remarkable degree. I have heard that many tobacco factories have closed down altogether and discharged their hands. With this additional 8d. the trade is quite impossible, unremunerative, and absolutely unworkable. The Board of Trade figures already shows a reduction of nearly 25 per cent. in tobacco clearances as against last year, irrespective of any increased taxation. I would also like to draw the attention of the Treasury to the fact that very much fewer tobacco licences have been taken out this year. As a rule, there is a natural flow of applications to Somerset House for tobacco licences during the year. These have enormously fallen off since the Budget has been introduced. The manufacturers, the wholesale middleman, and the retailers are all now absolutely bound to find extra capital if they are to carry on their trade. The retailer pays the extra 8d., and personally is practically unable to make any profit. His turnover has not increased, his business is going down all round, his profits are diminishing, and he loses on all those articles into which competition forces him and the manufacturer to sell at low prices. The loss on a penny package, for which he pays 6d per thousand more, is apparent to anyone; he pays more and distributes at the same price as he had paid. The average lot of the retailer is far worse than that of the labourer at the present time. The retailer works seven days a week and 18 hours a day. He is getting less than 3d. an hour for his work, and that is what this Budget; has reduced these people to.

Mr. HOBHOUSE

Both the hon. Gentleman who proposed and the hon. Gentleman who seconded this Amendment spoke of and gave figures about the reduction of consumption, and they estimated the result which would follow from the new duties. It is very important in a matter of this sort that the House should be in possession of the fullest possible information on this subject, because undoubtedly there has been a great deal of misconception and misinformation upon the point. I therefore propose, with the leave of the House, to give a few figures, both as to what the estimate would be of consumption, what would be the revenue, and what has been both the revenue and consumption up to to-day. The predictions of Lord St. Aldwyn when he was Chancellor of the Exchequer fortunately have been falsified. The taxation, which has from time to time been alternately increased and diminished, and ultimately increased again, instead of fulfilling the predictions of Lord St. Aldwyn that the consumption of tobacco would go down with the increase of taxation, shows a steady increase, almost constant, or about 2 per cent. of the consumption, and consequently in the revenue enjoyed from consumption. The yield therefore for last year was £13,800,000, and taking the estimate for this year that yield ought to be increased by £1,900,000. The receipts up to 23rd October are £8,930,000, as against £7,776,000 for the corresponding period of last year, which shows an increase of revenue for the first half of the year of £1,154,000. From that revenue, if we are to treat it as a net revenue, must be deducted the amount of drawback which will eventually have to be paid when the Bill becomes an Act in respect of the extra duty. That sum upon the first six months of the year and up to the 23rd October amounts, not to £100,000, but to £123,000. The estimated reduction in consumption which we expected to follow upon the increased duty was 4.5 per cent., and in addition to that you have to add the ordinary normal growth of 2 per cent., so that the falling off ought to have been 6½ per cent. upon the year. Instead of that, however, the figures I have quoted show a falling off, not of 6½ per cent., but of 4.3 per cent., so that from the point of view of revenue the returns have been thoroughly Satisfactory. For the corresponding period of last year the figures were 44,817,000 lbs. Reduce that by the estimated reduction of 4½ per cent., it comes to 42,800,000 lbs., which we ought to have got this year. Then there were forestalments in March and April to the extent of 2,118,000 lbs., and that brings down the estimated clearances which we ought to have got upon our estimate for the first six months of the year to 40,682,000 lbs. As a matter of fact, what we have in fact-cleared from 1st May to 24th October, 1909, is 42,900,000 lbs. In 1908 the amount was 44,817,000 lbs., showing that instead of a deficit of 4,000,000 lbs., which is the figure mentioned by the hon. Member of Liverpool there has been a reduction in consumption of 1,900,000 lbs.

Mr. M'ARTHUR

My figures were taken from a reply given by the Chancellor of the Exchequer to a question in this House on the 18th of this month, and those figures show a falling off of 4,117,000 lbs., or 10 per cent.

Mr. HOBHOUSE

The figures I have given are the latest available, and the House may rely upon their accuracy. Upon this question I claim to be able to speak not merely as the representative of a City which has probably a greater tobacco industry than any other city in this country, but I also speak on behalf of a very large number of working men, because out of the 20,000 voters I represent almost 99 per cent. are working men. I am, therefore, in a position to assure the three hon. Gentlemen who have spoken that amongst the many remonstrances which I have received from my Constituents in regard to various taxes, from no section, whether they agree or differ from me in politics, have I received any remonstrances upon the subject of the tobacco tax. I do not claim any particular virtue for my own Constituency in this respect, which is not shared by other constituencies, but if I may take that as a fair example of the opinion of the people of this country, and at all events they appear to regard with no disfavour the imposition of this increased duty upon tobacco.

The hon. Gentleman who spoke last said that consequent upon the extra taxation on tobacco there had been a very considerable burden placed upon the trade, and he spoke in particular of a reduction of employment in the cigar trade. Anyone familiar with the conditions of the manufacture of British cigars in this country is well aware that that particular industry suffers from two disabilities. One is that public taste has turned from cigars to cigarettes, and the other is that there is unquestionably a far greater percentage of moisture in the tobacco used in the manufacture of cigars than in any other tobacco introduced into this country. They also labour under this further disadvantage: That whereas most forms of tobacco are placed upon the market in a moister condition than it is introduced into this country, the cigar makers import their tobacco in a more moist condition than they sell it to the public. They are handicapped by these two great difficulties, neither of which are of their own making, and they are unquestionably placed at a greater disadvantage in respect of this tax than those other people who are employed in the manufacture of tobacco.

There is a third reason which operates as against all dealers and manufacturers in tobacco, and it is that owing to the increased consumption here and in other countries the diminished production has also to be taken into account. Undoubtedly the price of the raw material of tobacco has very considerably increased in the course of the last few years. But, notwithstanding that particular difficulty in the way of tobacco manufacture, the consumption in this country has very greatly increased. I will not weary the House with a great number of figures, but I wish to point out that 10 years ago the consumption of tobacco used in this country was 76,000,000 lbs. Seven years ago it was 80,000,000 lbs., and for the last completed year it was 90,000,000 lbs., showing that notwithstanding the increase of price that accompanied the tax there has been a continuous and progressive increase in the consumption of tobacco, mainly by the working classes of this country.

Mr. AUSTEN CHAMBERLAIN

Can the right hon. Gentleman give the figures per capita?

Mr. HOBHOUSE

In the year 1899 it was 1.88; in 1902 it was 1.92, and last year it was 2.02, so that not only the total consumption but the consumption per capita has also increased very considerably. The hon. Gentleman the Member for Hammersmith (Sir W. Bull) dealt with another point which he says has resulted from the imposition of this extra tax, and that is the additional capital required to conduct the business. I have had the advantage of meeting a great number of tobacco manufacturers, and they all, or nearly all, insisted upon the extraordinary burden and difficulty of finding the increased capital required. One gentleman went so far as to say he would have to increase the capital of his business by no less than 20 per cent. in order to finance the burdens placed upon him by the extra tax. When I pressed him upon that point, which is a very important point indeed, it really all came down to this: It is the custom of the trade to give about three months' credit, whether by the manufacturer to the wholesale dealer or by the wholesale dealer to the retailer; and it is clear that the sum of money required to finance this duty at the outset does not represent more than one-quarter of the sum which is paid in duty by any particular firm in the course of a whole year. The money which is paid in the course of the first quarter becomes available again towards the end of the second quarter, and so the money is turned over constantly. The whole sum which is required to pay the duty to the Customs for the importation of tobacco is a comparatively small sum, and you have only got to add to that the proportion which the additional tax bears to the original tax, that is, as 8d. is to 3s., so is the ratio of increased cost placed upon the firm. The House will see by a simple calculation that that is a very small sum indeed. It amounts not to 20 per cent. of the amount originally employed, but to something like 5 per cent. With regard to the diminished consumption of tobacco, which, as I have pointed out, amounts to about 1,900,000 pounds, I think it has got to be remembered that my right hon. Friend the Chancellor of the Duchy (Mr. Herbert Samuel) passed through the House a Bill last year which dealt with smoking by children under the age of 16. I have made inquiries upon that subject, and as to the result, and it is very satisfactory I think both for my right hon. Friend and the House which passed the Bill unanimously to learn that there has been a considerable falling off in the sale of cigarettes in consequence of that restriction. That has undoubtedly been responsible for a very respectable proportion of the diminished consumption.

May I deal for one moment with the power given to the trade to collect the tax from the consumer? We are all agreed that it is only just and fair that, in imposing taxation, it should be so imposed that it is possible for the persons concerned in the trade to recover it from the consumer. There were always a certain number, perhaps the greater number, of those comprising the deputations which waited upon the Chancellor of the Exchequer and myself who represented that it was impossible to recover this increased taxation from the consumer, because all they were able to demand from the people was a halfpenny for every halfpenny they had to pay to the Customs. This statement is true within a measure, but it contains a fallacy, and the fallacy is this: Tobacco is imported with a percentage of moisture, which, speaking generally, may be said to be from 11 per cent. to 14 per cent., and it is passed on to the consumer with a maximum moisture of 32 per cent. I leave out altogether the case of cigars, which I have explained stands on a different footing. The grosser or the worse the tobacco the higher the rate of moisture at which it is sold, and the lower the rate of moisture at which it is imported. The better class of tobacco, on the other hand, instead of having an average entry percentage of moisture of 14, often runs up to 18 or 20, and, instead of being sold at a moisture of 32, it is sold at something like 28 per cent. It will therefore be clear that the trade recovers from the consumer, not the exact halfpenny it has paid to the Customs, but the halfpenny plus the amount of extra moisture they have introduced into the tobacco between the point of importation and the point of sale to the consumer. May I give a concrete example to the House? If a pound of raw tobacco with moisture at 14 per cent. was made up into shag or roll or something of that sort, and was sold with a moisture of 30 per cent., the extra duty which is payable is, not 8d., but 6½d., as near as possible, and that leaves a profit of about 1½d. on the duty itself, which recoups, or ought to recoup, and does, as a matter of fact, recoup, the trade for the payment to the Customs. I have made careful inquiry throughout both the country and London as to what, as a matter of fact, has been done by the Trade to recoup itself for the extra burden which has been placed upon it, and I find that cigarettes have been raised by ½d. the ounce packet of 10, representing something like the price of the duty; that tobacco has been raised ½d. per ounce on proprietory brands, that cigars sold in hundreds have been raised 6d. or 1s., and that cigars sold singly have been reduced in size. There is no question at all that, as a matter of fact, the trade has recouped itself, as I think it was entitled to recoup itself, and as it was intended to recoup itself, from the consumer. I venture to suggest, so far as my knowledge of the consumer is concerned, that in this matter without any respect to party the consumers who are mainly the working classes of the country have not objected to the imposition of this tax, whatever they may or may not have done in respect of the other taxes. They have recognised that in the burden which has been placed upon them they are contributing to two things which they regard as important to the country, namely, its external safety and the payment of those pensions to aged people which have been agreed to without any Division in this House. The hon. Member for Hammersmith complained that the drawback had not been paid in respect of the increased duty in the same way as the duty had been demanded from the importers. As I have explained, in answer to many questions, the Resolution of the House which imposed the duty did not, in accordance with precedent—and the precedents have always been the same—whether the duty has been lowered or raised—the Resolution did not deal with the question of the drawback. It is quite true that there is a sum of £127,000, which will be distributed as soon as this Bill becomes law. It is strictly in accordance with precedent thus to hold back the drawback, and it has been the long-continued practice of the Treasury, as no doubt the right hon. Gentleman is aware.

Mr. AUSTEN CHAMBERLAIN

The right hon. Gentleman has made a very interesting speech, and has included in it a great deal of information, much of which is of value, and has been very clearly stated, but some of which, I confess, I have found great difficulty in understanding, having regard to the information which has reached us from other sources, and even the information which the Government themselves have supplied. I cannot help regretting that, after all our effort, in which I am bound to say the Chancellor of the Exchequer met us very fairly, to raise this important subject has come on in the middle of the dinner hour, when Members are thinking much more of the smoking of tobacco than of the taxing of it. I do not propose to follow the right hon. Gentleman into all the details with which he has dealt, almost necessarily at length, but I will confine my observations mainly to certain broad features of this taxation, and to its effect.

Before I do so I wish to say a word upon the subject of the drawback. I am afraid the right hon. Gentleman gave me too much credit for knowledge of Treasury practice when he said I was familiar with the fact that what the Government had done in this case was exactly in accordance with precedent. I do not remember that that matter ever came before me. I am not surprised at the answer he has given, but I do not think it is a good answer. The Government are acting strictly according to precedent in what is an entirely unprecedented case, and I must say I think it is sacrificing convenience and justice to red tape and pedantry. The Government say: "We are authorised by Resolution to collect a new duty. We propose, as a natural and necessary corollary of that duty to pay an increased drawback on the offals which are surrendered, but, inasmuch as the increased dawback was not mentioned in the Resolution we cannot give you that until the Bill passes." What has that involved up to date? It has involved the locking up in the Treasury of £127,000, the capital of the manufacturers of this country. That is a most serious thing for anyone; it is a really intolerable state of things that £127,000, to which the Government have no right, and which they never intended to claim, should be locked up for so long a period and taken out of the trade in which it ought to be employed. The right hon. Gentleman says it is in accordance with precedent. If so, I think he ought to create a new precedent on this occasion, because, as I have already pointed out, the circumstances of the year are unprecedented in the first place, and have the rise in the duty is very great—indeed, I do not recall any previous rise of 8d. in the pound. The highest I remember was 6d., and that was many years ago. In any case, whether there has previously been so great a rise or not, the present is a very-high one. In the second place—and this is equally important—the Budget, instead of being pressed forward and passed rapidly as was the custom in the days to which the right hon. Gentleman has referred, has on this occasion lasted right into the month of November. It is usually brought on at Easter, and it has usually been possible to get it through before the end of June. Of course there was some hardship, even under those circumstances, in regard to the holding back of the drawback, but the hardship is infinitely greater now that the proceedings on the Budget have, as in this instance, been prolonged by five or six months. I say that under these circumstances it is pure pedantry for the Government to base itself on precedent, and to say that, because the drawback was not mentioned in the Resolution it cannot be handed over. Why was it not put in the Resolution? The Resolution must cover the highest charge you wish to put on the subject. It need not, and indeed it never does, cover the exceptions, rebates, or drawbacks which you intend to allow. That is a necessity of our Parliamentary procedure. It is a necessity for the Government if they want to levy their taxes at all, but I think that where they are levying taxes only on a Resolution of the House, and not on an Act of Parliament, a practice which has nothing but custom to sanction it, but still a custom which, no doubt, would be sanctioned by a court of law—I say when they are relying on a custom of that kind they ought to strain a point in favour of the subject rather than in favour of the Treasury. It is a monstrous inconvenience and hardship for this trade, as it would be for any trade, to have these large sums locked up for so long a period, when, if the Treasury only showed a little courage and desire to meet the convenience of the trade, it could, with perfect confidence that Parliament would support it, have repaid this money as it became due to the subject.

Having dealt with that point, on which, I am afraid, we cannot get any satisfaction at this stage from any Amendment we can possibly introduce into the Budget, I turn to what I have to say upon the tax itself. The Chancellor of the Exchequer has defended this tax and the Whisky Tax on a ground which, if it applied to them, would be a sufficient one, namely, that when for purposes of national defence and old age pensions you have to find a large increased revenue, every individual in the community and all classes of the community ought to make some contribution to the cost. I agree with that statement. I agree that on a great national necessity arising—in the first place, out of national defence, which is equally the interest of every citizen of the country, and in the second place out of the establishment of old age pensions for the aged poor, which is especially to the advantage of the poorest class—that to a deficit arising under such circumstances it is not merely not unreasonable, but it is proper, that everyone should be asked to contribute according to his means. And the first objection I have to the Government proposal is that they do not carry out their own principle, but they select two articles of consumption—whisky and tobacco—which are not consumed by every individual, for their taxation. Moreover, they select these two articles, which have already borne very high taxation indeed, and impose a further large additional sum upon them, which they themselves admit they desire and hope to see recovered from the consumer; but this burden, intended to be imposed upon all, is not in fact shared equally by all, and is not contributed to by many who have better means and who are in a better position to make a contribution to our taxation than some of those, at any rate many of those, upon whom these taxes fall. The taxes are unequal in their incidence, though that does not matter if they form part of a large system of taxation, and if that particular failure of them is rectified and corrected by other proposals, but it is not so in relation to the Budget of the present year.

Then my second objection is to making so high as these Tobacco Duties will stand, a tax upon any single article. I say that the heighth of the taxation, and the proportion which it bears to the value of the article, is, in itself, an objection to the addition which the Government are making. I do not think, although we have often mentioned the subject in the course of these discussions in relation to these taxes and other taxes of the Government scheme—I am afraid we have not brought home the fact, which surely must be evident to every reasonable and thinking man, that where a moderate taxation is tolerable or even desirable, the mere fact of raising taxes to an immoderate figure magnifies their objection, multiplies their hardship, increases to the point of rendering them intolerable their anomaly, and turns what in many cases as a moderate tax is a good tax into a very bad one indeed. I think the Government are doing that in regard to the Tobacco Tax. Having it already taxed many hundreds per cent., they now propose to raise the duty by 8d. on the existing 3s., and that is a course which is open to still stronger objection, as stated by the hon. Member for Galway (Mr. Gwynn), because the Government, following precedent, I admit, and for reasons which I readily understand have made no attempt to proportion the burden to the value of the article. It is, at any rate as the tax has existed hitherto, an inherent fault of the Tobacco Tax that the percentage paid in tax by the consumer who buys a packet of cheap tobacco is so much higher than the percentage paid in tax either by the consumer who buys an exceedingly higher quality of smoking mixture or still more if he buys high-class cigars.

Mr. HOBHOUSE

The right hon. Gentleman will remember that in the case of the cigars there is what is called a distinct luxury tax put on, and he will notice in the Schedule of the Bill that that tax is increased in a greater measure by the proposal of the Government themselves to put on the higher-priced articles, namely, 1s.

Mr. AUSTEN CHAMBERLAIN

I have not forgotten that. If I remember rightly, I myself increased that luxury tax. I have not forgotten it, but the fact remains, when all is said and done, that the tax bears no proportion to the cost of the article. One man pays several times the amount in taxes which he actually pays for tobacco, and another man, and he the richest, pays a much smaller proportion in tax and gets a larger value out of his total expenditure in tobacco. I know the reasons. I know all the reasons which are urged why you should not make these ad valorem taxes. I know how unpopular it would be, at any rate, among many traders if you attempted to do it, but I suppose, like every Chancellor of the Exchequer, and still more like those who have never had that responsibility upon them, I have a hankering, if we could see our way to do it without great inconvenience, to bring the amount of tobacco and the amount of tax in any particular purchase or in different puchases into some relation one with another. But I do not blame the Government for not having done that now, because I know that is a very big thing to do, and there are great objections and great difficulties in the way, and the objection has been applicable as far as it goes to the old tax. No Chancellor of the Exchequer has ever been willing to try that experiment. But why I mention this matter is, that it is just one of those points where the higher tax gives a greater anomaly and becomes a greater hardship. Such a matter would be always an anomaly, but the anomaly would be latent for all practical purposes if you were dealing with a low tax, but when you get the tax to these tremendous figures it really becomes a very serious objection to the tax—an objection which hon. Members below the Gangway are not slow to seize upon—and to which you have no real answer; and I think you are jeopardising a useful source of revenue when you make the anomaly of such magnitude as you are now doing.

My next objection to the tax passing, away from its magnitude, is its effect upon the trade and the disturbance which it is creating. The right hon. Gentleman said that he represented a city in which tobacco manufacture is a very important industry, and which, indeed, holds quite the first place amongst our cities in regard to the tobacco industry. He further said that he had great numbers of workmen among his constituents, and neither from manufacturers nor workmen had he received any objection to this tax. I am sorry that his position in the Government appears to have protected him from correspondence which has reached a great number of other people. But though his constituency plays a very important part in the tobacco trade he is mistaken if he thinks that the interests of the Bristol trade are always the same as the interests of the trade as a whole. The right hon. Gentleman is associated in a representative capacity with the great tobacco trust in this country. I am not going to criticise them or speak ill of them in the least, but their interests are not always the interests of those who are outside the combine, and sometimes a change may suit them very well which may be very injurious to many of their smaller and less prosperous competitors, and I think in the case of this increased duty it is the smaller competitors in the trade who will find it most difficult to support their output, pay their duty, and put up with the inconvenience, and find the increased capital which the duty calls for from them. The tobacco trade has had very difficult times to go through. I ventured a very small alteration, in the tobacco trade when I was in office, and I learnt, as Lord St. Aldwyn warned me in the House when I sketched my proposal on the first night of my Budget, that if you touch tobacco you are very likely to get burnt. I cannot help expressing the opinion that whether I was right or wrong in the change I made the present Government were very foolish, for what was after all a purely pedantic objection, to disturb the settlement I had made within a year and cause a fresh disturbance in the trade, and, by so doing, to throw out of employment, as they undoubtedly did, a great number of people who, owing to the change I made, though not to an effect foreseen by me, had got employment through it.

9.0 P.M.

The tobacco trade has been disturbed pretty often, but I do not think it is a favourable moment for disturbing it again, at a time when there is this great combine within the trade against which smaller competitors have great difficulty in holding their own, at a time when not only has there been disturbance in the home market but there has been a difficulty about getting the supplies of the raw material, and when to meet the combination of the great manufacturing trusts in America and in this country there has sprung up amongst the growers a combination of their own in order to secure themselves, with the general effect that, I think, the smaller men have carried on their trade under much greater difficulties during the last few years than probably was the case at any time before then. Under all these circumstances I think this was an unhappy moment to raise this tax, and especially to raise it by so large an amount. Of the figures which the right hon. Gentleman has given us I shall say little, but I find it very difficult to reconcile them with a previous answer given by the Chancellor of the Exchequer and with the comparisons which I have seen of the clearances of tobacco this year and last year, even when you make all allowances for the forestalment which took place in the closing months of the last financial year, and which affected, of course, to the extent of this forestalment, the clearances in the early months of this year. I believe, if you had the money to do it, the Tobacco Tax is one of those taxes which would rapidly respond if you could make a substantial reduction, and I do not believe you can make a large increase of this kind and not seriously check your revenue. The right hon. Gentleman, if I understood him rightly, admitted that whereas there ought normally to have been a growth of 2 per cent. on the consumption there had actually been a fall of 4 per cent.

Mr. HOBHOUSE

No, what we expected was that there would have been a fall of 4½ per cent. which would have had to be added to the 2 per cent. normal growth, making a total of 6½ per cent. When you have allowed for what ought to have been the normal growth, instead of being a loss of 6½ per cent., there was a loss of rather less than 4½ per cent.

Mr. AUSTEN CHAMBERLAIN

That is a less serious drop than I had supposed from the figures I have seen, but it is, of course, a serious matter. It is not very good for the revenue—we like to see a growth instead of a fall—but it is much more serious for the trade, which, like all other trades, suffers not only the immediate loss of profit on that portion of their output which they cannot sell, but suffers also from the fact that their fixed costs go on just the same, and they now have to be distributed over a smaller output, and therefore absorb a larger portion of the price they receive for every pound of the article. But I myself believe there is room for a great extension in the consumption of tobacco. It has steadily grown, but, unless I am much mistaken, we are still small smokers compared with Continental nations. I know of no reason in the habits of our people except the very heavy revenue which we raise from the article, and the consequent restrictions we put upon the purchase of the article by raising its price. I do not think it was reasonable in a year of this kind to expect the Government to make any reduction in tobacco, though, I believe, had such a thing been possible, it would very quickly have recouped itself, and that is one additional reason for thinking that the Government made a bad choice when they selected tobacco as an article of common consumption from which they would raise a portion of their revenue this year. Holding the views that I do, I was anxious to, at any rate, make clear the position I take up in regard to this duty, and of course I shall support my hon. Friend if he goes to a Division.

Mr. PHILIP SNOWDEN

I would like to associate myself with the opposition to the proposed increase of the Tobacco Duty. Apart from the reasons which have been given as applying to this tax specially, I oppose it for the reason which I have put before the House on former occasions, namely, that I am opposed to all indirect taxation. This Tobacco Tax proposes to raise something like £2,000,000 a year, and we have learned from the figures which have just been given to the House by the Secretary to the Treasury that in the first six months of its operation it has brought in increased revenue of more than a million sterling. But the reason which has been given by the Government for the imposition of this tax, and also for the increased duty on spirits, is that which was stated by the right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain), namely, that it is advisable the increased taxation should be spread over every section of the community. I am prepared to accept that contention with certain qualifications. I do not object at all to increased taxation being apportioned fairly amongst those who are able to bear it, but my chief reason for objecting to this proposed increase of the Tobacco Duty is that it is going to fall very heavily upon a section of the community who are already grievously and oppressively over-taxed. The right hon. Gentleman, in the course of his speech, over and over again stated that it would be the working classes who would pay the greater part of this new impost. It might be urged in opposition to the point I am endeavouring to put forward that this is a tax not upon necessaries, but upon luxuries. But that does not affect at all the economic result. So far as its effect upon the economic conditions of the working classes goes, it does not matter in the least whether the tax is imposed upon a necessary or upon an article of luxury, provided that the tax is paid, because the working people during the last six months have had to pay £1,000,000 more for tobacco. That means that there must have been a corresponding reduction in their expenditure in other directions, because it is certain that there has not been in the last six months an increase in their wages and purchasing power. As a matter of fact, in the last six months the wages and purchasing power of the working people have been going down. The right hon. Gentleman made a point of what he stated to be a fact—and no doubt it is a fact—that he has received no remonstrance from his own constituents against the increase of the Tobacco Duty. That does not prove at all that the working people in his own constituency are in favour of the tax. May I tell him that working people are not in the habit of formulating in definite terms by resolution their opposition to proposed increases of taxation? At the time when Sir Michael Hicks Beach was Chancellor of the Exchequer I do not think that throughout the length and breadth of the land they passed formal resolutions against the proposed increases in the food taxes. The working people may not put their objections to this proposed increased of the Tobacco Duty in a formal manner, but, having addressed great meetings in all parts of the country during the past six months, I have found everywhere among working people very strong objection to this impost. Working people do not like to pay increased taxation any more than others. I shall vote against this increase, and I think my colleagues will vote against it, too, because we believe it is an unjust and unnecessary increase in the already disproportionate share of taxation which is paid by the working people of this country. At the same time that this extra impost is being levied, they are paying another £2,000,000 increase under the Whisky Duty, and as a matter of fact nearly half of the additional revenue proposed under this Budget will be paid by the working people. That is mainly why we are opposed to this increase of the Tobacco Duty.

Mr. ROWLAND HUNT

The Secretary to the Treasury said that none of his constituents had made any complaint at all about the extra duty on tobacco. I can assure the right hon. Gentleman if he happens to come up my way working people will tell him about it. I have hardly met a working man at all who has not complained bitterly of it. When it is remembered that there are nearly £600,000,000 of untaxed foreign imports coming into this country every year, including among them many million pounds worth of luxuries of the rich, and of manufactured goods which the poor never buy, I really think that it is perfectly impossible to justify the imposition of a tax of about 600 per cent. on the tobacco of working men. May I say tobacco is just as much a raw material as wheat. Undoubtedly, as the hon. Member for Blackburn (Mr. Snowden) pointed out, working men spend money on tobacco which would otherwise be spent on food or drink, clothes or boots. When I say drink, my hon. Friends on the other side of the House will recognise that it need not necessarily be alcoholic drink. Tobacco taxation is particularly unfair and unjust to the working people, because they pay so much more than the rich. While this Budget increases the taxation on the poor man's tobacco 100 per cent., it hardly makes any difference at all on the rich man's cigars. I will give an example how it works out. When a poor man pays 4s. 8d. for a pound of tobacco he really pays more than 3s. 8d. duty, because the manufacturer has put a considerable amount of water in it. When the rich man spends the same amount on 8d. cigars he pays less than 6d. tax. The poor man pays in proportion seven times as much as the rich man. When the poor man buys an ounce of tobacco for 3½d., at least 2¾d. is paid in actual taxation, and the increase in this taxation is 100 per cent., because an extra ½d. is put on, and the absolute value of the tobacco is barely ½d. As for the tax on raw tobacco, I do not see how the Government can put forward any justification for it. The taxation on raw tobacco under a so-called system of Free Trade involves the necessity of putting an equally heavy Excise taxation on the home-grown tobacco, and; actually prevents us from growing tobacco either in this country or in Ireland. In 1831 Ireland produced a considerable proportion of the tobacco consumed in this country——

Mr. DEPUTY-SPEAKER (Mr. Emmott)

The hon. Member must confine himself to the Customs. We are not now dealing with Excise.

Mr. HUNT

The same thing applies to beet. This extra taxation would be so heavy that we could not grow either tobacco or beet. Hon. Gentlemen will observe how very differently the Government treat their friends the tobacco manufacturers. The protection already given as regards cigarettes is increased under this Budget, although hon. Members opposite declared that the tobacco manufacturers were protected before. I have here a quotation from a speech by the late Chief Whip of the Liberal party on 22nd June, 1904. He said in the House of Commons, speaking against the increase of the duty on cigarettes, that the objection to it was that it was a protective tax, and he went on to add that the Committee would remember that when a duty was laid on cotton goods entering India with no corresponding Excise duty the Lancashire manufacturers in the House of Commons protested so strongly against the proposal that the Indian Government was compelled to levy a corresponding Excise duty on the Indian manufactured goods. How is it that the Free Trade Government does not put a corresponding Excise on cigarettes and cigars? The right hon. Member for West Islington (Mr. T. Lough) said that this tax on cigarettes was a protective tax, and one of a very bad kind.

Mr. DEPUTY-SPEAKER

The hon. Member is not having regard to what I pointed out to him, that we are now only dealing with Customs. We are not dealing with Excise. He is dealing with both. He must confine himself to Customs.

Mr. HUNT

The taxation on cheap tobacco, which is really a necessity of the working man, is a tax to the extent of 600 per cent., and it certainly cannot be justified by any means that I know of. It is to a great extent a tax on raw materials,-while millions of pounds worth of luxuries of the rich are allowed to come into this country without paying a single halfpenny. The hon. Gentleman will find when the working men really thoroughly understand the nature of this tax they will let the Government know their views in a way which Ministers are hardly likely to appreciate or guess.

Mr. GEORGE RENWICK

I listened with the very greatest interest to the speech of the right hon. Gentleman the Secretary to the Treasury (Mr. Hobhouse). He asked the specific question whether we who oppose the tax represent our constituents. I certainly say that, in my opposition—and I strongly oppose this tax—I represent, I believe—and I have good reason for the belief—my Constituents. I agree generally with the hon. Member for Blackburn (Mr. Snowden) that, although the working classes have not demonstrated to a very large extent against the tax, they deeply resent it, and I venture to state that the right hon. Gentleman who represents the Government on the Treasury Bench at this moment, before another half hour is over will learn very emphatically what the working classes think of this particular tax. There was one other very noteworthy part of the Financial Secretary's speech to which I wish to refer. Not for the first time during these discussions in regard to the Budget have we noticed the solicitude of His Majesty's Government, not for the poor consumers, not for the middlemen, not for the little men, but for the monopolists and those who are well off. The right hon. Gentleman referred to the tobacco manufacturers. I would remind the House how the Government have gone out of their way to meet the views, not of the consumers, but of the manufacturers in the tobacco trade. One of the greatest and one of the most wealthy monopolies in the world is that of the Imperial Tobacco Company. It has its headquarters in Bristol, which city the right hon. Gentleman had the honour to represent. That enormous trust is composed of 18 of the largest tobacco manufacturing companies in the country. The House will be rather surprised to hear that last year its profits were about £1,500,000. It paid 10 per cent. dividend, and 2 per cent. bonus. Surely a monopoly of that wealth and that magnitude is not one which the Government need go out of its way to placate or in any way whatever to meet. That tobacco trust has obtained that enormous revenue undoubtedly out of the pockets principally of the working classes of this country, who, we all know, are the largest consumers of tobacco. The House will recognise that, in addition to the £1,600,000 extra taxation which the Government expected to get, there are these enormous profits I have already mentioned, and which also come out of the pockets of the working classes. I just want to call the attention of the right hon. Gentleman to one of his own speeches, when he received a deputation on 6th July, of the Tobacco Trade Section of the London Chamber of Commerce. What did he tell that deputation? He assured them that the Chancellor of the Exchequer had no intention of imposing any burden on the trade. That is all very well, but, at the same time, I think the country would have appreciated the fact if he had said that neither did he mean to impose any burden on the consumers of tobacco.

That, I think, would have been the only proper way to meet the case. These millionaires engaged in the tobacco manufacturing trade are making colossal fortunes, I remember Sir Henry Fowler once said in this House that in no trade were more colossal fortunes made than in the tobacco trade. There I leave the point as to the Government's solicitude for the wealthy manufacturers in the tobacco trade, and I now come to the consumers' point of view. We have heard during the course of this Debate some rather telling points with regard to the hardship on the working classes caused by the burden they have to bear in connection with this particular duty. I remember in a speech which the Chancellor of the Exchequer delivered, he said that the bulk of the Tobacco Tax was paid by the 3d. per ounce man. To-day the 3d. per ounce man has to pay 3½d. I went to a tobacco shop in close proximity to the House, and asked for an ounce of tobacco usually used by the working classes, and they gave me a packet for which they charged me 3½d. I asked whether that tobacco was originally sold at 3d., and they replied that it was. I then bought three cigars at 8d. each, which, when weighed, were exactly half an ounce in weight. The House will remember that under this Finance Bill the tobacco is to be 3s. 8d. per pound. The tax upon cigars is to be 7s. Therefore, it is a matter of simple arithmetic that I paid only the same amount of duty for my three cigars, for which I paid 2s., as the working man pays on the ounce of tobacco for which he gives 3½d. Can the Chancellor of the Exchequer or the Secretary to the Treasury go before any working class audience in the country and defend an imposition of such an enormous character as this undoubtedly is? I agree with the right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberalin) that this extraordinary impost of 8d. per pound is to be imposed upon those who are already heavily taxed by this Bill. What is the history of that is more In 1898 the Tobacco Tax was 2s. 8d. per lb. In 1900, at the time of the South African war, when it was absolutely necessary to have money, it was raised by 4d. a lb. The Government, in a time of profound peace, are raising it by 8d. a pound. There was a significant speech on that occasion from an hon. Member on the Irish benches—the Member for North Cork, who protested against the increase of the Tobacco Duty. He reminded the House, and especially Irish Members, who on this occasion support the Opposition, that to the Irish working man tobacco had become almost a necessity, and he spent upon it a larger proportion of his earnings than was spent by the working man in the wealthier country of England. The hon. Member added that any hard-working Irish peasant or town artisan would rather go without his breakfast than forfeit his dearly loved pipe of tobacco. If that be so, and I believe it is so, what do we hear from the right hon. Gentleman to-night? He acknowledges that, having expected to get £1,600,000, he has already got £1,000,000. Rather than deprive himself of his tobacco the hardworking artisan, considering his tobacco a necessity, will pay the extra price for it. That is another argument, therefore, to show that this million is coming out of the pockets of the working classes. I do not remember a greater injustice having been inflicted upon the working classes of this country than that of this tax.

I object to this tax for the reason that I object to any tax by which the manufacturer and the retailer can take out of the pockets of the consumers by adding moisture to the tobacco. It is a direct inducement to the retailer to add this moisture, and the Chancellor of the Exchequer acknowledges it. In his Budget speech he said:— One pound of unmanufactured, as imported, produces after allowance has been made on the one hand for waste in manufacture, and on the other for the moisture which is added in preparing it for sale, nearly one-fifth pounds of the tobacco of the retail trade.… And now mark the words:— So that an addition of a halfpenny an ounce to the retail price leaves the tobacco trade with an ample margin to finance the increased duty. Mark the solicitude of the Members of the Government for the wealthy monopolists rather than for the consumer. The country objects to this duty, the working classes object to it, and I venture to say, as I have already said, that in the course, it may be of half an hour, the Chancellor of the Exchequer will receive an emphatic declaration of what the country thinks of this.

Mr. STEPHEN COLLINS

I would not have risen if it had not been for the remarks of the hon. Member for Blackburn (Mr. Snowden). I do not pretend to have the wide knowledge and experience of the working men or working men audiences that he has, but I do not really think he was speaking from his heart when he was opposing this tax. We all know it is only a tax on a luxury. As to what the hon. Member (Mr. Renwick) said about force of habit, the fact that a man may get to like tobacco better than his breakfast does not show that it is better for him, any more than the same argument would apply in the case of the opium eater or the gin drinker. I have had a little experience lately, and have had the good fortune or misfortune to be in large audiences within the last few months; working-class audiences, some of them outdoor, and numbering from 200 to 2,000, and I can say truthfully that not 5 per cent. of the audiences I have been amongst have ever made a protest, not a feeble protest, against this tax. In fact, I think the matter is rather well put in a remark I heard in this House not long ago. A Member was giving some illustrations of the feeling of the people, and mentioned the case of an old man. Someone was speaking to the old man about paying his extra penny on two ounces of tobacco. He said:— It is a penny more, but I have 4s. 11d. profit because I have an old age pension.

Mr. JOHN GRETTON

I am inclined to ask the Government whether this is one of their measures of social reform, and I am encouraged to think there is some reason for that question by the speech we have just heard. Do I understand this is a social reform Budget, and is it intended to do certain things besides collecting revenue? Is this tax intended to diminish the consumption of tobacco as an evil which should be suppressed in this country, or, at any rate, discouraged? That appears to me to be a question the Government ought to answer, because undoubtedly it will diminish the consumption of tobacco, while the poorer classes of this country will be paying increased taxation which the Government pride themselves on collecting. I cannot consider that tobacco in the present age is altogether a luxury. It is more than a luxury It is a solace to many men who have little comfort and little solace in a hard existence. The hon. Member for Newcastle (Mr. Renwick) spoke for an industrial constituency, and I now speak for an agricultural constituency, where the majority of the voters work in the open, and spend their lives in cultivating the land. I can speak with the utmost confidence for the Constituency which I have the honour to represent that this tax is deeply resented by the majority of voters in that constituency. Most of them smoke, and find great solace in their tobacco, and they look upon it as a great hardship that they should be asked to pay this enormously increased taxation when that taxation is paid by them in exactly the same amount as upon the more luxurious forms of tobacco are paid for by those who can afford to spend comparatively large sums on their cigars.

I complain bitterly of this tax because you cannot make the importer bear any share in the duty. Every advantage which is gained by any adjustment of this tax is gained by the middleman, the dealer, the man who makes up the tobacco for his customers. The Treasury think that by their regulations they are able to adjust this difference, but I have heard many Debates, and I remember the Government party when in opposition and showing with great force and much reason that in spite of all regulations and all adjustments there is some advantage always gained by the manufacturer in these alterations of taxation. My hon. Friend (Mr. Renwick) pointed out the advantage is always gained in these cases by the great trust which controls the tobacco trade in this country. This tax is not only a great hardship to the taxpayer, but goes deeper than that. I have had to pass more than once every week through the city of Nottingham, where there is a considerable tobacco industry. I am told by friends that there is great want of employment there, and that the tobacco factories are working on short time, and in many cases they have had to dismiss a proportion of their hands. This tax is leading directly to unemployment in the tobacco trade in my own experience and knowledge in that city. There was a small tobacco industry in Boston, and this tax has crushed it out of existence and thrown 150 people out of employment. The Government do not think of those things. They think that alcohol, tobacco, and all matters of that kind are luxuries, and that it is well to discourage them by their taxation. They proceed to tax those articles. This throws a considerable number of people out of employment, and puts a considerable number of others on short time. I do not think that that can be called a measure of social reform, and a Budget containing proposals of that kind certainly cannot be called a democratic measure. I look back to the time when the taxation on tobacco was 2s. 8d.; it was then increased to 3s. for war purposes, and I think that that is the absolute maximum justifiable. If the Government desired to raise any greater revenue from tobacco, they ought to have brought in an ad valorem duty, increasing the tax on a graduated scale, so that the consumer should pay in proportion to the quality and cost of the tobacco which he purchased. That would have been a justifiable expedient, and one which I at any rate could have supported. This tax is undoubtedly a great hardship upon the poorest portion of the population. It makes them pay unduly for one of the few luxuries which they can enjoy, and it ought to be resisted by every Member of this House representing a working-class population in a democratic constituency.

Mr. J. F. REMNANT

In one or two sentences I wish to challenge the remarks of the hon. Member for Kennington (Mr. S. Collins). I also represent a London Constituency; but my experience of the working classes differs very materially from that of the hon. Member opposite. He says that he has addressed during recent weeks meetings ranging from 200 to 2,000 persons, and that he has not met with more than 5 per cent., if that, of opposition to the increased tax on tobacco. These wonderful meetings could not have been London meetings, nor meetings of working-class people dwelling in London.

Mr. COLLINS

One meeting of nearly 2,000 people was in my own Constituency, and it was not a ticket meeting.

Mr. REMNANT

If it was not a ticket meeting it must have been an exception to the meetings held by hon. Gentlemen opposite, and I am delighted to hear that a Member representing a London constituency feels sufficient confidence to allow his meetings to be non-ticket meetings.

Mr. COLLINS

All our meetings are open meetings.

Mr. REMNANT

I am delighted to hear it. I only hope the next time the hon. Member addresses a non-ticket meeting in London he will ask definitely whether the meeting is in favour of an increased tax upon the tobacco of the working classes, and leave it to the meeting and not to his judgment to decide.

Mr. COLLINS

We do so at the meetings.

Mr. REMNANT

Lambeth must be a very exceptional part of London. All I can say is that all parts of London, with the exception of the Division of Lambeth, represented by the hon. Member, strongly resent the increased taxation put upon the working man's tobacco by the present Budget, and we shall probably get a proof of that very shortly. I wonder that the hon. Member does not recommend the Chancellor of the Exchequer, for the sake of political votes, to add a little more to the Tobacco Tax which he thinks is so popular, and to take it off in other directions, which even he must admit are most unpopular. In the hon. Member's recommendation the Chancellor of the Exchequer would have an easy way out of some of the unpopularity which unfortunately attaches to his Budget. Representing, as I do, a London constituency, and being acquainted with other constituencies in London, I can assure the hon. Member that his experience is most exceptional, and that working men throughout London and the country would not agree with his assertion that this taxation is popular. A point which seems to be overlooked is the result of this extra taxation in the matter of employment. I have had many letters from those who can honestly speak on behalf of this great industry, one and all saying that the result of this extra taxation has been that employment in the tobacco trade has very considerably diminished, and that the unemployment is likely to increase in the near future. But we on this side of the House believe, and many Members opposite if left to exercise their own discretion would agree with us, that the great point nowadays is to increase, rather than diminish, employment. That is one of the great objects we have in advocating Tariff Reform. [Laughter.] Hon. Members opposite are always asking us for an alternative, and when we give it they laugh. But let those laugh who have no experience of business matters. Those who have such experience will agree that the great thing we have to aim at nowadays is to provide employment for our unemployed. If we support this increased taxation of tobacco we shall diminish employment and inflict upon the tobacco industry a burden which it ought not to have to bear

Mr. FELL

I represent a constituency the people in which believe that they will suffer by being deprived of one of their few luxuries in life by being compelled to smoke less than they have done before. It is said that since this Budget was introduced there has been a diminution of upwards of 400,000,000 pipes of tobacco smoked in this country. Those figures seem almost impossible to believe, but the decrease in ounces of tobacco sold during the last six months bear them out. That decrease represents 10 pipes per head in the country, including men, women, and children. [HON. MEMBERS: "Hear, hear."] You may say "Hear, hear," but to these men to whom this is a solace and a comfort it is no "hear, hear" matter. It is one in which I sympathise with them, because I smoke myself. It is difficult to see why in discussing the subject of the poor man's tobacco the matter should be treated with laughter. I do not think that those Members who deride now would have treated the matter in that fashion if talking of it to their constituents before the election. It is perfectly true that it may be necessary to put on this duty for the sake of revenue. It might have been said, "We are very sorry that the needs of the nation require that this duty should be put on; tobacco is one of the things upon which we can best put it; we must have the money; you can pay your share like others." Of course it is an excessive duty. No one will deny that, there is no duty in the world so heavy as this tax on English tobacco, which is something like from five to eight times as much as the article is worth. This Tobacco Tax has already had the effect of reducing the consumption, and proportionately reducing the revenue which might have been anticipated to be derived from it.

May I point out to the Chancellor of the Exchequer what was the result when the Tobacco Tax was reduced 6d. in the pound, about 12 years ago? It stood at 3s. 2d. and was reduced to 2s. 8d. That reduction resulted in an increase of consumption of eight million pounds in a year. It might have been thought from the rate on which it was being levied that there would have been a loss of revenue of £1,200,000. Instead of that the loss that the Exchequer sustained was only £400,000, or one-third of what had been anticipated. We see thus, on the one hand, how a great increase in price reduces consumption; and we see on the other hand how, in the halcyon days of the Liberal Government that had a Chancellor of the Exchequer who was able to reduce the taxation, instead of increasing the duty, that that reduced taxation, instead of meaning a loss to the revenue of over a million pounds only meant a loss of less than half a million. On this occasion we have to pay on a very heavy duty, an extra heavy duty. We shall see what the result will be.

I fear that not only will the Chancellor of the Exchequer's expectations not be realised—though he says tobacco is going on well—but I fear still more that it will be a cause of hardship to those in poor circumstances in life, for there are other subjects which could have been selected for taxation a great deal better than tobacco.

10.0 P.M.

Mr. R. W. ESSEX

It would have been well if those who advocate Tariff Reform had dealt with this tax upon those lines. Practically every shred of tobacco consumed in this country comes from the foreigner. I should have been glad if hon. Members opposite had told us how they can justify the posters all over the country saying that the foreigner pays the tax. It would have been a very great deal better if that had been shown in the contribution made by the hon. Member for Yarmouth (Mr. Fell), who shed tears over the poor working man, and who, he now says, can only have less tobacco because of the high tax put upon it. You cannot have it both ways. Now is the time for those who clamour for taxation on the foreigner to show how it can be arranged. At the beginning of the year I, for one, offered to resign my seat if the president of a big Tariff Reform association in the West of England could show the Chancellor of the Exchequer how he could get, without greater injury still to his own countrymen, £10,000,000 out of the foreigner. If the hon. Member for Holborn and the right hon. Gentleman the Member for Worcester, or any of the bright and shining lights of the Tariff Reform League, can get up and tell us how this tax can be levied on the foreigner, I am prepared to go home and leave them to lay the tax on the foreigner. The whole pith and centre of their arguments to-night is that this is a burden upon the consumer. We admit that. What we say is that the poor consumer, by his

pipesful, is paying it gladly, knowing that he is bearing his fair share of the burden. It is not the poor man who is squealing at this tax. I am saying in this House to-night what I said the night before last to a big meeting in the very centre of Birmingham. I asked that large meeting whether any of the working men present objected to paying this small added contribution to Imperial necessities. Not one man lifted his voice—even in Birmingham. [An HON. MEMBER: "Was it a ticket meeting?"] No, sir, it was an open meeting. We think we can leave that method of gathering audiences to our Friends opposite. I soberly and seriously invite hon. Members opposite to get up in this House, and with this wholly foreign-made product explain to the House categorically and in detail how they can lay a tax on the foreigner. I promise them that there are lots of hon. Members behind me who, if they can demonstrate that a foreigner can be made to pay, will follow me in voting for it.

Question put, "That the words' in lieu of the duties payable on tobacco' stand part of the Bill."

The House divided: Ayes, 172; Noes, 69.

Division No. 863.]	AYES.	[10.5 p.m.
Acland, Francis Dyke	Dickinson, W. H. (St. Pancras, N.)	Hyde, Clarendon G.
Ainsworth, John Stirling	Dickson-Poynder, Sir John P.	Illingworth, Percy H.
Alden, Percy	Dunne, Major E. Martin (Walsall)	Isaacs, Rufus Daniel
Allen, A. Acland (Christchurch)	Edwards, A. Clement (Denbigh)	Jackson, R. S.
Allen, Charles P. (Stroud)	Edwards, Sir Francis (Radnor)	Jardine, Sir J.
Astbury, John Meir	Essex, R. W.	Johnson, John (Gateshead)
Atherley-Jones, L.	Esslemont, George Birnie	Jones, William (Carnarvonshire)
Balfour, Robert (Lanark)	Evans, Sir S. T.	King, Alfred John (Knutsford)
Baring, Godfrey (Isle of Wight)	Everett, R. Lacey	Laidlaw, Robert
Barker, Sir John	Ferens, T. R.	Lamb, Ernest H (Rochester)
Barnard, E. B.	Fiennes, Hon. Eustace	Lambert, George
Barran, Rowland Hirst	Findlay, Alexander	Lamont, Norman
Beauchamp, E.	Fuller, John Michael F.	Layland-Barratt, Sir Francis
Bell, Richard	Fullerton, Hugh	Lehmann, R. C.
Bennett, E. N.	Glendinning, R. G.	Levy, Sir Maurice
Berridge, T. H. D.	Goddard, Sir Daniel Ford	Lewis, John Herbert
Bethell, T. R. (Essex, Maldon)	Greenwood, G. (Peterborough)	Lloyd-George, Rt. Hon. David
Bowerman, C. W.	Greenwood, Hamar (York)	Lupton, Arnold
Brace, William	Griffith, Ellis J.	Macdonald, J. M. (Falkirk Burghs)
Brigg, John	Harcourt, Rt. Hon. L. (Rossendale)	M'Callum, John M.
Brooke, Stopford	Harcourt, Robert V. (Montrose)	M'Laren, Sir C. B. (Leicester)
Brunner, J. F. L. (Lancs., Leigh)	Hardie, J. Keir (Merthyr Tydvil)	M'Laren, H. D. (Stafford, W.)
Brunner, Rt. Hon. Sir J. T. (Cheshire)	Hardy, George A. (Suffolk)	M'Micking, Major G.
Bryce, J. Annan	Harmsworth, Cecil B. (Worcester)	Maddison, Frederick
Burns, Rt. Hon. John	Harmsworth, R. L. (Caithness-shire)	Marks, G. Croydon (Launceston)
Carr-Gomm, H. W.	Haslam, James (Derbyshire)	Marnham, F. J.
Channing, Sir Francis Allston	Haworth, Arthur A.	Mason, A. E. W. (Coventry)
Cheetham, John Frederick	Helme, Norval Watson	Middlebrook, William
Clough, William	Henderson, J. McD. (Aberdeen, W.)	Montgomery, H. G.
Cobbold, Felix Thornley	Henry, Charles S.	Morgan, J. Lloyd (Carmarthen)
Collins, Stephen (Lambeth)	Herbert, T. Arnold (Wycombe)	Morrell, Philip
Compton-Rickett, Sir J.	Higham, John Sharp	Morton, Alpheus Cleophas
Corbett, A. Cameron (Glasgow)	Hobart, Sir Robert	Murray, Capt. Hon. A. C. (Kincard.)
Corbett, C. H. (Sussex, E. Grinstead)	Hobhouse, Rt. Hon. Charles E. H.	Myer, Horatio
Cornwall, Sir Edwin A.	Hodge, John	Newnes, F. (Notts, Bassetlaw)
Cotton, Sir H. J. S.	Hooper, A. G.	Norman, Sir Henry
Davies, David (Montgomery Co.)	Howard, Hon. Geoffrey	Nussey, Sir Willans
Davies, Ellis William (Eifion)	Hudson, Walter	Nuttall, Harry
O'Donnell, C. J. (Walworth)	Shackleton, David James	Walker, H. De R. (Leicester)
Pearce, William (Limehouse)	Sherwell, Arthur James	Wardle, George J.
Philipps, Owen C. (Pembroke)	Shipman, Dr. John G.	Waring, Walter
Pollard, Dr. G. H.	Silcock, Thomas Ball	Wason, John Cathcart (Orkney)
Price, Sir Robert J. (Norfolk, E.)	Simon, John Allsebrook	Waterlow, D. S.
Priestley, Sir W. E. B. (Bradford, E.)	Soames, Arthur Wellesley	White, Sir Luke (York, E. R.)
Raphael, Herbert H.	Stanger, H. Y.	Whitehead, Rowland
Rendall, Athelstan	Stanley, Hon. A. Lyulph (Cheshire)	Whitley, John Henry (Halifax)
Richards, Thomas (W. Monmouth)	Steadman, W. C.	Wilkie, Alexander
Ridsdale, E. A.	Sutherland, J. E.	Williamson, Sir A.
Roberts, Charles H. (Lincoln)	Taylor, Theodore C. (Radcliffe)	Wills, Arthur Walters
Robinson, S.	Thomas, Abel (Carmarthen, E.)	Wilson, Hon. G. G. (Hull, W.)
Roe, Sir Thomas	Thomas, Sir A. (Glamorgan, E.)	Wilson, Henry J. (York, W. R.)
Rogers, F. E. Newman	Thompson, J. W. H. (Somerset, E.)	Wilson, J. W. (Worcestershire, N.)
Rose, Sir Charles Day	Toulmin, George	Wilson, P. W. (St. Pancras, S.)
Rutherford, V. H. (Brentford)	Ure, Rt. Hon. Alexander	Wood, T. M'Kinnon
Samuel, Rt. Hon. H. L. (Cleveland)	Verney, F. W.	Yoxall, Sir James Henry
Samuel, S. M. (Whitechapel)	Villiers, Ernest Amherst
Scott, A. H. (Ashton-under-Lyne)	Vivian, Henry	TELLERS FOR THE AYES.—Mr. Joseph Pease and Captain Norton.
Seely, Colonel	Wadsworth, J.
NOES.
Abraham, W. (Cork, N. E.)	Glover, Thomas	Powell, Sir Francis Sharp
Balcarres, Lord	Goulding, Edward Alfred	Remnant, James Farquharson
Balfour, Rt. Hon. A. J. (City, Lond.)	Gretton, John	Renwick, George
Banbury, Sir Frederick George	Hamilton, Marquess of	Roberts, S. (Sheffield, Ecclesall)
Barnes, G. N.	Harrison-Broadley, H. B.	Rutherford, Watson (Liverpool)
Barrie, H. T. (Londonderry, N.)	Hunt, Rowland	Smith, F. E. (Liverpool, Walton)
Beckett, Hon. Gervase	Kennaway, Rt. Hon. Sir John H.	Snowden, P.
Bignold, Sir Arthur	Kimber, Sir Henry	Stanier, Beville
Boland, John	King, Sir Henry Seymour	Stanley, Hon. Arthur (Ormskirk)
Bull, Sir William James	Law, Hugh A. (Donegal, West)	Starkey, John R.
Carlile, E. Hildred	Lockwood, Rt. Hon. Lt.-Col. A. R.	Summerbell, T.
Cecil, Evelyn (Aston Manor)	Lonsdale, John Brownlee	Talbot, Lord E. (Chichester)
Chamberlain, Rt. Hon. J. A. (Worc'r.)	Lynch, A. (Clare, W.)	Talbot, Rt. Hon. J. G. (Oxford Univ.)
Coates, Major E. F. (Lewisham)	MacCaw, William J. MacGeagh	Valentia, Viscount
Courthope, G. Loyd	Magnus, Sir Philip	Walrond, Hon. Lionel
Craig, Charles Curtis (Antrim, S.)	Mason, James F. (Windsor)	Walsh, Stephen
Dickson, Rt. Hon. C. Scott	Mooney, J. J.	Warde, Col. C. E. (Kent, Mid.)
Doughty, Sir George	Morpeth, Viscount	White, Patrick (Meath, North)
Faber, George Denison (York)	Nolan, Joseph	Wilson, W. T. (Westhoughton)
Fell, Arthur	O'Brien, Patrick (Kilkenny)	Younger, George
Fletcher, J. S.	O'Connor, John (Kildare, N.)
Forster, Henry William	Pease, Herbert Pike (Darlington)	TELLERS FOR THE NOES.—Mr. C. M'Arthur and Mr. Gwynn.
Gibbs, G. A. (Bristol, West)	Percy, Earl

Mr. HUNT moved, in Sub-section (1), to leave out the words "the duties specified in Part I. of the Fourth Schedule to this Act."

Tobacco is grown in Holland and Germany, and there is no reason why it should not be grown in this country. It is only the idiotic system which hon. Members opposite call Free Trade that prevents us from growing tobacco here. It has been grown in Ireland, and up to 1821 she sent to us the bulk of the tobacco which we consumed in this country. If we had fair encouragement there is not the slightest reason why it should not be done again. Because of Free Trade we are not allowed to employ our own labour in growing this raw material. If we were, in all human probability it would have the effect of making tobacco cheaper than it is at the present time. The foreigner with whom we have now to compete would, under this proposal, have to pay half the duty. [An HON. MEMBER: "No."] I know that hon. Members opposite are not able to understand that. They frequently tell us that they are anxious to get people back to the land, and yet by opposing a proposal of this kind they are doing their best to stop them. The present system not only increases unemployment, but it directly decreases healthy employment. Tobacco could be grown to an enormous extent in the United Kingdom, and this might very well be made a very useful industry indeed. It would provide a very great deal of labour and food for man and cattle. The production of tobacco would be just as profitable as cocoa if it only had the same protection. Under the present system this is a tax on the employment of the people, and it helps to drive the people from the land into the slums of our great cities. I hope some day hon. Gentlemen opposite will see their way to give a little bit of protection to tobacco and also to beet sugar, because that would provide more regular employment for our people at better wages.

Mr. HAY seconded the Amendment.

Mr. HOBHOUSE

The hon. Gentleman's Amendment would, if carried, have the effect, and I suppose that is his intention, of not merely giving protection to, but practically a bounty upon, tobacco grown in Ireland and this country. Tobacco-growing in England' and Scotland is of such a non-existant character that I need hardly deal with that point at all. The question concentrates itself, as the hon. Gentleman has concentrated his Amendment, upon tobacco grown in Ireland. I am really nappy to be able to say that the experiments in Ireland, which were very largely, if not entirely, initiated at the instance of the hon. Member for East Glare (Mr. W. Redmond), who secured the passage through this House of a Bill which is still known by his name, have been of a very successful character, without any of these adventitious aids suggested by the hon. Gentleman. The amount of tobacco grown in Ireland, which in 1905 was very little over 7,000 lbs., had gone up to 18,000 lbs. in 1906—or perhaps I ought to say the amount of tobacco on which duty was paid, which is, practically speaking, the same thing—and in the following year it went up to 60,000 lbs. Although there was a temporary drop last year of about 1,000 lbs., yet it is clear that the experiment has found favour with the consumers of tobacco, and that the considerable amount of capital which has been embarked in the industry is receiving appropriate and happy reward. This has been done without any of those strong measures to which hon. Gentlemen opposite would resort. It has been done under a system of Free Trade, upon which the hon. Gentleman has on this and many other occasions found it necessary to advert in the course of his speeches. I should like to point out to hon. Gentlemen opposite, who, I understand, are going to move an Amendment almost immediately on this subject, that we have by making a difference between the Customs and Excise Duty actually given considerable encouragement to the growers of tobacco in Ireland, and I have, no doubt, it has helped the experiment. The average quantity of tobacco grown in Ireland is 1,000 lbs. per acre cultivated, and in one case 1,900 lbs. were grown on one acre. Taking it at twopence per pound, the difference between the Customs and the Excise Duty, to say nothing of the grant in aid, comes to something like £8 6s. per acre—a very substantial sum paid for the first ten years in aid of the expenses incurred by those engaging in the enterprise. The Government has not been neglectful of this very interesting and what, I hope, will prove profitable enterprise, and I think it is quite unnecessary to resort to the means and expedients advocated by the hon. Gentleman.

Mr AUSTEN CHAMBERLAIN

We are all indebted to my hon. Friend for moving this Amendment, if for no other reason than that it has produced the speech to which we have just listened. That speech is worthy of the attention of the House. The right hon. Gentleman said that my hon. Friend proposed for the tobacco-growing industry in this country, and especially in Ireland, not merely Protection but a bounty. Does he think one worse than the other? I presume he does. I assume that he thinks Protection is the lesser evil of the two, and we now know that bad as is Protection in any shape or form in the opinion of the right hon. Gentleman a bounty is even worse. Then he proceeded to say that he was glad to be able to inform the House that the tobacco-growing industry, which is in its infancy in Ireland, promises to be a very healthy one, that it is doing well so far, that from small beginnings it has grown rapidly, and, though it is still a very small matter, the growth has been quite remarkable. He goes on to say that all this has occurred under Free Trade without any of the adventitious aids which my hon. Friend and I think may be of advantage to British industries! I do not know how many Members of the House are acquainted with the facts of this case. The industry would never have been started in Ireland but for a concession which was made by Mr. Ritchie, and continued by me, because I wished to see the experiment given every chance of a successful trial. Neither could it have been started without the concession made by Mr. Ritchie, and continued by me without the sanction of law and in defiance of our practice and in contravention of every principle of Free Trade. What did Mr. Ritchie do? In the first place, he undertook to allow tobacco to be grown in Ireland, a thing which is prohibited by law. All honour to him for having done so. Earlier in the evening I spoke of the pedantry and red-tape which the Government had allowed to interfere with trade convenience in connection with another matter affecting the Tobacco Duty. In this case Mr. Ritchie took a broader view. He waved the legal prohibition, but he went further. He actually gave a preference to tobacco which was grown in Ireland. As at that time the growth of tobacco in the United Kingdom was prohibited, there naturally was no Excise Duty, but in order to allow this industry to be planted in Ireland Mr. Ritchie agreed not to charge the equivalent of the Customs Duty. This industry would never have got a start in Ireland at all had he not given it a preference by charging a lower Excise Duty than the Customs Duty which then prevailed. During his Chancellorship and during my Chancellorship, and until the present Government came into office, that continued. I cannot fix the date exactly when it ceased.

Mr. HOBHOUSE

It was altered in 1907.

Mr. AUSTEN CHAMBERLAIN

Well, during Mr. Ritchie's Chancellorship, during my short Chancellorship, and in 1906, when the present Prime Minister was Chancellor of the Exchequer, this preference was continued and tobacco was allowed to be experimentally grown in Ireland on a limited area. In 1907 his Free Trade conscience pricked him and he suddenly became aware that this was anathema, and something which was contrary to all his principles. What did he do? Abolish the attempt to favour an infant industry, leaving it to fend for itself in a world in which it would have no particular claim; impose upon it an Excise Duty exactly equal to the Customs Duty, and give it no advantage? That is what Free Trade requires. But that is not what he did. He said that the preference which Mr. Ritchie gave was Protection, and could not be tolerated; and what did he do? He gave a bounty instead. I am not certain that I am not doing an injustice to the Prime Minister, and the person whom I have in my mind is really the present Chancellor of the Exchequer; but let me say that my facts are correct, although my dates, which I take from the Government, may be wrong, and we are all speaking from memory. But whether I am right in attributing this to the Prime Minister, or whether it was the present Chancellor of the Exchequer who did it, my story of what was done is correct. The question of who ought to be accused and who ought not to be, depends upon the date at which it occurred; but whoever was responsible, what happened was, that they withdrew the preference and gave a grant in aid instead, and then the Financial Secretary comes down to the House, relying I really think on the short memories of Members, or upon their ignorance, and tells us that this particular progress of this Irish tobacco industry has been made under a system of Free Trade, without any exceptional assistance.

That is the exact contrary of the fact. There never would have been the growth which we have seen if there had not been, first of all, Mr. Ritchie's provision, and subsequently, if under the present Government this industry had not been favoured. But it is forbidden by Free Trade principles to favour any industry. I do not blame the Government for having done on the sly what they were not willing to do openly. I am glad that it was done under any circumstances. I am glad that an industry which promises well for Ireland, and maybe for other parts of the United Kingdom, has been benefited. I declare that Ireland has a prospect of a new and prosperous industry, and I am glad to hear all that the Financial Secretary to the Treasury has to say as to these efforts, but the moral which is to be drawn from it is not the moral which he would draw, that it is our Free Trade system which produces these results. I was going to say that this is the single instance in which so-called Protection has been applied, but I should be wrong, because in the case of British manufacturers of tobacco and British manufacturers of cocoa also part of their success is attributable to that Protection, and particularly as regards the tobacco trade it was to the measure of protection embodied in the tobacco Duty that the success of the English manufacturers and those interested in the English tobacco trade in fighting the American Tobacco Trust was due, or else they would have succumbed, as many other trades have succumbed, to powerful foreign trusts. I do not say that the exact proportion of preference which my hon. Friend proposes is, or could be, established in a case of this kind, where there must be a corresponding Excise if you wish to get the full measure of your revenue out of the article. But the history of this experiment in Ireland goes to disprove, and not to prove, the claim which the right hon. Gentleman makes for our Free Trade system, and goes to establish the contention of my hon. Friend that, as you have created the beginning of a new industry in Ireland with every prospect of success by departing from our Free Trade system, and that an agricultural industry, so you might by similar encouragement to import industries of other kinds in the United Kingdom produce similar results upon a larger and an even more beneficial scale.

Mr. LLOYD-GEORGE

I do not complain at all of the statements of fact of the right hon. Gentleman. They are substantially accurate, but I complain of the accentuation and the emphasis. The most important fact of all he mentioned, but did not dwell upon, and that is the fact that he justified the late Lord Ritchie, who was a strong Free Trader, and the present Government, in drawing a distinction between this particular industry and the other industries of the Kingdom. The reason why a special distinction was made in the case of the tobacco industry was that Parliament was responsible, not merely for discouraging it in Ireland, but, for absolutely prohibiting it. An Act of Parliament was passed to prevent tobacco from being cultivated in this country. For over 70 years you could not plant tobacco, you could not manufacture it, and you could not trade in British or Irish tobacco. Can the right hon. Gentleman point out a single industry which is comparable to that? If he can his analogy will have some value, otherwise it will not—not the slightest. If any industry that he could mention had actually been prohibited by Act of Parliament, and the foreigner allowed to go on selling it in this country, there would be some glimmering of reason in the case put forward by the Tariff Reformers. Otherwise there is absolutely nothing in common between this and other cases.

The right hon. Gentleman has drawn a lesson from this. So will I. The actual figures contain a very valuable lesson. The present Government commuted the amount of protection which was given into actual cash, which is a frank and open way of doing it. Whether it is a right thing to do or not is a wholly different matter. What has it cost the country? £6,000 a year. What is the total amount produced? 51,000 lbs. of tobacco. To produce 51,000 lbs. of tobacco costs this country £6,000 a year. That is the great lesson. I quite agree that it is very significant, and I hope it will not be lost. That is the cost of a mere attempt to foster an industry in this country by artificial means, there being special grounds in this case why there should be expenditure of public money. Parliament had undertaken the responsibility for fiscal reasons of prohibiting the business, and therefore I think Parliament ought to give it an opportunity of making up for lest time. What did it cost to produce 51,000 pounds? [An HON. MEMBER: "Weight?"] Yes, weight, that is most important. It cost more than the whole value of the tobacco. And this is the great lesson.

Mr. AUSTEN CHAMBERLAIN

That is due to the change which the Government introduced.

Mr. LLOYD-GEORGE

Not at all. The change was absolutely stated in figures. The £6,000 represents the actual figure. There might be £500 added, but that was to meet the growth of this year. It was a simple computation of what it cost the Revenue before. That is what it means. If it cost 30s. to produce a pound's worth of tobacco, just think of all the thousands of millions worth of industries in this country under a protective system, and fostered' by something like £1,200,000,000.

Mr. STEPHEN GWYNN

I do not altogether oppose this Amendment, but I should have preferred very much the Amendment on the Paper in my own name in regard to the Schedule. After all, I do not think it matters very much, because we are really discussing here a point which ought to be discussed on the Schedule. I want to discuss a practical business point and not the question of Free Trade as against Protection, which for the representatives of Ireland is an academic question. What is the meaning of the 2d. in the pound concession that is made at the present time off Irish tobacco? I take a totally different view from that taken by the right hon. Gentleman. I do not regard that as a bounty at all, and I am not prepared to admit the contentions put forward by the Chancellor of the Exchequer and the right hon. Gentleman the Member for East Worcestershire as to result of the existing experiment in Ireland. I contend that the 2d. per pound conceded to Irish tobacco growers is intended as an equivalent for the inconvenience and loss which your Excise system imposes upon them. In my opinion the concession is not adequate.

The Financial Secretary made a speech on the last Amendment which showed an acquaintance with the conditions of the tobacco manufacture carried on in Great Britain, but I should like very much to know if his constituents or any experts on tobacco-growing had been consulted as to the Excise regulations put upon the tobacco trade in Ireland, where the tobacco is to be grown, because we contend that these regulations are such as to make tobacco-growing almost impossible. My contention simply is this: that there are many complex regulations imposed upon the Irish tobacco grower by the Excise. With reference to the concession of 2d. per pound, I understand that the Treasury view is that the Irish tobacco grower is hampered as compared with the American grower to the extent of 2d. per pound. My contention is that the difference in advantage which the American tobacco grower has over the Irish tobacco grower is more than would be represented by 2d. an the lb. We Irish Members do not argue this matter on a question of Protection at all. We do not even go into the historic question of what may be due for wrongs done to Ireland in the past. Dealing simply with the facts of the moment we say that in America the tobacco growers are working under a system so infinitely freer that they have an advantage over the Irish tobacco grower that is not adequately represented by a concession of 2d. in the lb. After all, growing tobacco is very much the same thing as growing cabbage, only that it is a little more complicated. The first of these regulations is that if the tobacco grower is also a re-handler as he is in many cases in Ireland. He is not allowed to plant his tobacco near the place where he manufactures it. The things must be kept separate by a zone. Then, again, he can only grow the tobacco in a place licensed by the Excise Commissioners. Every man in America may grow tobacco anywhere he pleases. In Ireland you have to specify the field, and you have to get the leave of the Excise Commissioners to grow tobacco there. Then you have in advance to say also what buildings will be used. You have to specify every shed that is going to be used for storing the tobacco. Anyone familiar with agriculture will realise what a demand it makes upon the farmer to say exactly what he is going to do with the crop as he carts it out of the field. If he leaves it to dry on a hedge, as he might do if the weather is suitable, he will be infringing the law unless he specifies the hedge as one of the places where he is going to store the tobacco. Even to put it in a temporary shed in the same way would be an infringement of the law. Or, again, before he begins to grow tobacco he has to give security in such a sum, and such a form as the Commissioners may require, and they are to observe all the regulations. That involves the farmer in a wholly new class of business. I press upon the right hon. Gentleman as one interested in the tobacco trade, that it is specified that all tobacco must be taken up for preliminary weighing by the Excise officer not later than 1st January, following the cutting or gathering of the tobacco. Assuming that the man is making up his tobacco for cigars, as has been done in several places in Ireland, at that time the cigar tobacco would be perfecting in bulk, and I need not say that it would be ruinous to break up the bulk for fermentation for the purpose of having it weighed. These regulations, if enforced, would render the industry impossible, so far as my information goes. The amount of duty which will be charged on the tobacco will be determined by the preliminary weighing, the Commissioners marking off what is to be allowed for shrinkage and loss of moisture.

Mr. HOBHOUSE

Apart from the question of security, if these regulations, in regard to which we have received no complaint from the actual growers, are found to be injurious, the Treasury will be very glad to consider whether they can remove any regulation which bears hardly on the industry, and which can be dispensed with.

Mr. GWYNN

I am quite sure that the Treasury will be glad to do it where they can, but how far will that go? Here is a regulation—every manufacturer of tobacco is bound to keep separate in his factory the parcels he receives from the different growers. The effect of that is that the Excise may check in the factory and set it against the grower's return. That is very proper and reasonable from the Excise point of view, but from the point of view of the grower and manufacturer how does it work. The manufacturer sorts his tobacco not according to the farms on which it grows, not according to its biography or pedigree, but according to its quality. In any consignment of tobacco there will be half a dozen, ten, or twenty different kinds, and the manufacturer will group his tobacco into different classes. But, according to your regulations, large amounts of tobacco, good, bad, and indifferent, will have to be kept in separate parcels. To conduct an industry under those conditions is practically impossible. It is ridiculous to compare the development of the Irish tobacco trade, hampered by these regulations, with the industry as carried on in America, where the planter grows his tobacco as a farmer grows cabbages here. The whole essential difficulty is that the tobacco leaf in Ireland is not treated as tobacco leaf but as an instrument of taxation. It is worth eight times for the purpose of taxation what it is for its simple value as tobacco, because those are all bills on the Excise that are lying in the man's field. I shall vote for the hon. Member's Motion, although I think it puts forward a reduction that is excessive and impracticable in a way. I do not think that there ever could be an agricultural industry of tobacco-growing in England, Scotland, or Ireland, so long as you maintain your present enormous duty, and so long as you apply the Excise regulations which compel a man to keep every leaf in the field, and so long as he cannot sell his damaged stuff at a lower price. Then the rebate which is necessary to protect the grower and put him on a level with the foreigners who are working without all those hindrances will not be adequately represented by 2d. in the pound. I have got an Amendment down to increase that to 4d., so that the Tobacco Duty for Ireland should be, not 3s. 6d. as the Government propose, but 3s. 4d. I appeal to the Chancellor of the Exchequer for that Amendment. I cannot address the appeal to the Chancellor of the Exchequer that would be addressed to him by my hon. Friend the Member for East Clare (Mr. W. Redmond), and I do wish most sincerely that the hon. Member for East Clare were here present to make one of his pathetic appeals to the Chancellor of the Exchequer, and ask him to increase the advantage that is given. It might, perhaps, be necessary to move the Amendment formally in order to get a reply, but for the moment I shall identify myself with the Amendment that is put forward.

11.0 P.M.

Mr. A. LYNCH

I feel that the best argument that I could possibly use, and without which no argument is of any account, is to secure the goodwill of the Chancellor of the Exchequer with regard to this tobacco industry. I happen to know from the words of my colleague the Member for East Clare (Mr. W. Redmond) that in the beginning of this industry in Ireland the Chancellor of the Exchequer was extremely helpful to it, and I hope that what has happened since has been of the nature to encourage that goodwill then expressed in the most practical way. This question of Irish tobacco is still in the experimental stage, because I believe that the total yield secured from the increased duty is extremely small. It is so small that although I got these figures from a book on the subject I am almost afraid to trust them, and I think there must be some mistake. I gather that that increase will amount to only £1,624. That is an extremely small amount to come to the Exchequer. I do not propose to go back to the era of the prohibition of the growing of tobacco in Ireland. I am one of those, and I hope the number will increase, who are in favour of letting bygones be bygones, turning our backs on the past, resolutely facing the future, and endeavouring to develop our country on the best lines. This is not a case of killing the goose that lays the golden eggs, but rather one of endeavouring by paternal care to nurture the goose that it may become strong enough to be profitable. Although the tobacco industry is at present so small, there are many things to encourage the belief that it has a great future in Ireland. One is that for many reasons tobacco is a good crop. It provides work not only for the breadwinner, but also for women and children, all the year round. Another point greatly valued in Ireland is that it grows upon poor land, and utilises acreage which is useless under prevailing conditions of agriculture. Moreover, Ireland at present imports 2,000,000 lbs. of unmanufactured tobacco, and over 10,000,000 lbs. of manufactured tobacco, representing a total expenditure of £720,000—and this in regard to an industry which might be so far cultivated in Ireland as to supply all the needs of the country. This question is far removed from any party considerations. The chief growers of tobacco in Ireland are connected with the party opposed to the bulk of Members representing Ireland. In no sense is it a party question. On the other hand, I am inclined to believe that the argument put forward by hon. Members above the Gangway on this side of the House that in the present state of our civilisation tobacco is not, and cannot now be, considered a luxury is true. It is a necessity for the poor man. The House seems a little disturbed at the present time—[By allusions to the result of Bermondsey election]—and I shall conclude, therefore, by renewing my appeal to the Chancellor of the Exchequer.

Mr. JOHN BOLAND

I think perhaps the House may not have fully appreciated the point of my hon. Friend. I think if we had the figures it would help us to get on—[The Bermondsey election figures were handed to the hon. Member.]

Mr. SPEAKER

I must ask the hon. Gentleman to discuss the matter now before the House. He can discuss other matters in the Lobby, which is open.

Mr. BOLAND

I am wishful to continue my speech if able to do so. What my hon. Friend the Member for Galway is anxious to obtain is that permission should be granted to growers outside the allocated area in Ireland to undertake tobacco growing. A rebate of 2d. in the pound would not enable growers to take it up to any large extent. It is all very well for the Chancellor of the Exchequer to say that a rebate has been granted. It is quite true that it has been granted. But the Chancellor has now added an extra 8d., and we fail to see how a rebate of 2d. granted last year is going to encourage an industry if an extra 8d. is going to be put upon it this year. If the Chancellor of the Exchequer can see his way to meet the suggestion of the hon. Member for Galway I believe that a real successful effort will be made to make tobacco growing successful. As the restrictions have already been pointed out, it is hardly necessary to repeat them. But there was one restriction which my hon. Friend did not refer to. As I understand it, in addition to having the tobacco carefully marked and numbered every grower must give notice to the Excise officer to come and examine the tobacco that is undergoing the process of drying in the barns. It is required that 48 hours before the arrival of the Excise officer the barn cannot be open, and the process of the fermentation of the tobacco cannot be watched during that time, with the result that a proper supervision of the curing of tobacco under those regulations cannot be carried out. The Secretary to the Treasury said the Treasury would be ready to consider any of these regulations if they interfered with the carrying on of the industry. I bring this one to the attention of the right hon. Gentleman. If this industry of tobacco growing is to be extended beyond the 120 or 130 acres of restricted area, and if it is to be made an agricultural industry in all parts of Ireland, I do not think it could possibly be carried on with this small rebate. I press upon the Chancellor the advisability of altering the figure from 2d. to 4d. when we come to the Schedule.

Mr. G. L. COURTHOPE

The Chancellor of the Exchequer told us just now that the reason the Government treated Irish tobacco-growing in a way that seemed strange to Free Traders was because the Legislature had for many generations been exceptionally hard upon tobacco grown in Ireland, and that, therefore, the present Government were under an obligation to give special attention and assistance to that Irish industry. If that is the truth, I should like to ask the Chancellor why, when English agricultural Members attempted to secure the assistance and advantage for English-grown tobacco as was given to Irish-grown tobacco they were resisted by the present Government. The right hon. Gentleman dissents, but when the Scotch Tobacco Bill was before the House a number of Amendments which were on the Paper to extend similar advantages to England were rejected.

Mr. LLOYD-GEORGE

If similar experiments were tried either in England or Scotland as were in Ireland, as far as I am concerned I should certainly be prepared to extend the same financial treatment to them as was extended to Ireland.

Mr. COURTHOPE

A number of Amendments were on the paper at that time with the object of getting the same facilities for England as were given to Ireland, and they were rejected by the present Government without discussion. As to the argument that the Legislature had been exceptionally hard on tobacco grown in Ireland, it was equally hard on tobacco grown in England. The Chancellor went on to explain that in 1907 the present Prime Minister thought that the preference given to Irish tobacco was abhorrent to Free Traders, and he abolished the preference but gave an exact equivalent in pounds, shillings, and pence. They gave £6,000 instead of the former preference. In other words, they did away with the preference and gave a bounty. That bounty was not an exact equivalent; I think the bounty ought to have been larger if it was to be an equivalent for the preference first given by Mr. Ritchie. I think it is very extraordinary that this kind of argument should be adduced as a justification of the action of the Chancellor of the Exchequer. The Financial Secretary has informed us that the situation of the Irish tobacco industry is most satisfactory under Free Trade, and ten minutes later we have the Chancellor of the Exchequer telling us that the situation of the Irish tobacco industry under Protection is most unsatisfactory, because £51,000 worth of tobacco was grown at a cost of £6,000 more than the value of the whole crop. The fact of the matter is that the tobacco industry in Ireland is only in its infancy, and has not yet been allowed to pass beyond the experimental stage. Under these circumstances it is perfectly futile for any Chancellor of the Exchequer to argue for or against any particular fiscal system from the figures of an industry which is admittedly only in the experimental stage, and which is precluded by Statute from going beyond that stage. If the right hon. Gentleman will allow the Irish, English, or Scotch tobacco industry to go beyond the experimental stage I do not think he will find it will give

him much cause for congratulation from the point of view of a Free Trade Chancellor. I felt bound to intervene in this Debate in order to call attention to the extraordinary and inconsistent arguments of the Chancellor of the Exchequer, who, in the course of his speech, not only contradicted the Financial Secretary to the Treasury, but he also twice contradicted himself.

Question put, "That the word 'half' be there inserted."

The House divided: Ayes, 59; Noes, 168.

Division No. 864.]	AYES.	[11.20 p.m.
Abraham, W. (Cork, N. E.)	Guinness, Hon. W. E. (B. S. Edmunds)	Peel, Hon W. R. W.
Balcarres, Lord	Hamilton, Marquess of	Powell, Sir Francis Sharp
Banbury, Sir Frederick George	Harrison-Broadley, H. B.	Remnant, James Farquharson
Barrie, H. T. (Londonderry, N.)	Hay, Hon. Claude George	Renwick, George
Beckett, Hon. Gervase	Keating, M.	Roberts, S. (Sheffield, Ecclesall)
Bignold, Sir Arthur	Kennaway, Rt. Hon. Sir John H.	Rutherford, Watson (Liverpool)
Boland, John	Lockwood, Rt. Hon. Lt.-Col. A. R.	Smith, F. E. (Liverpool, Walton)
Bull, Sir William James	Lonsdale, John Brownlee	Stanler, Beville
Carlile, E. Hildred	Lowe, Sir Francis William	Stanley, Hon. Arthur (Ormskirk)
Cecil, Evelyn (Aston Manor)	Lynch, A. (Clare, W.)	Starkey, John R.
Chamberlain, Rt. Hon. J. A. (Worc'r.)	MacCaw, Wm. J. MacGeagh	Talbot, Lord E. (Chichester)
Coates, Major E. F. (Lewisham)	M'Arthur, Charles	Talbot, Rt. Hon. J. G. (Oxford Unit)
Courthope, G. Loyd	Mason, James F. (Windsor)	Valentia, Viscount
Doughty, Sir George	Mooney, J. J.	Walrond, Hon. Lionel
Faber, George Denison (York)	Morpeth, Viscount	Warde, Col. C. E. (Kent, Mid)
Fell, Arthur	Nicholson, Wm. G. (Petersfield)	Winterton, Earl
Fletcher, J. S.	Nolan, Joseph	Wortley, Rt. Hon. C. B. Stuart-
Forster, Henry William	O'Brien, Patrick (Kilkenny)
Gibbs, G. A. (Bristol, West)	O'Connor, John (Kildare, N.)	TELLERS FOR THE AYES.—Mr. Hunt and Mr. Gwynn.
Gretton, John	Pease, Herbert Pike (Darlington)
Guinness, Hon. R. (Haggerston)
NOES.
Abraham, William (Rhondda)	Dunne, Major E. Martin (Walsall)	Johnson, John (Gateshead)
Acland, Francis Dyke	Edwards, A. Clement (Denbigh)	Jones, William (Carnarvonshire)
Allen, A. Acland (Christchurch)	Edwards, Sir Francis (Radnor)	King, Alfred John (Knutsford)
Allen, Charles P. (Stroud)	Essex, R. W.	Laidlaw, Robert
Atherley-Jones, L.	Esslemont, George Birnie	Lamb, Ernest H. (Rochester)
Balfour, Robert (Lanark)	Evans, Sir S. T.	Lambert, George
Baring, Godfrey (Isle of Wight)	Everett, R. Lacey	Lamont, Norman
Barker, Sir John	Falconer, James	Layland-Barratt, Sir Francis
Barnard, E. B.	Ferens, T. R.	Lehmann, R. C.
Barnes, G. N.	Fiennes, Hon. Eustace	Levy, Sir Maurice
Barran, Rowland Hirst	Findlay, Alexander	Lewis, John Herbert
Beauchamp, E.	Fuller, John Michael F.	Lloyd-George, Rt. Hon. David
Benn, W. (Tower Hamlets, St. Geo.)	Gladstone, Rt. Hon. Herbert John	Lupton, Arnold
Bennett, E. N.	Glendinning, R. G.	Macdonald, J. M. (Falkirk Burghs)
Berridge, T. H. D.	Glover, Thomas	Maclean, Donald
Bowerman, C. W.	Goddard, Sir Daniel Ford	M'Callum, John M.
Brace, William	Greenwood, G. (Peterborough)	M'Laren, Sir C. B. (Leicester)
Brigg, John	Harcourt, Rt. Hon. L. (Rossendale)	M'Laren, H. D. (Stafford, W.)
Brodie, H. C.	Harcourt, Robert V. (Montrose)	M'Micking, Major G.
Brooke, Stopford	Hardie, J. Keir (Merthyr Tydvil)	Maddison, Frederick
Brunner, J. F. L. (Lancs., Leigh)	Harmsworth, Cecil B. (Wocester)	Marks, G. Croydon (Launceston)
Brunner, Rt. Hon. Sir J. T. (Cheshire)	Harmsworth, R. L. (Caithness-shire)	Marnham, F. J.
Bryce, J. Annan	Haworth, Arthur A.	Mason, A. E. W. (Coventry)
Burns, Rt. Hon. John	Helme, Norval Watson	Middlebrook, William
Byles, William Pollard	Henry, Charles S.	Mond, A.
Channing, Sir Francis Allston	Herbert, T. Arnold (Wycombe)	Morgan, G. Hay (Cornwall)
Cheetham, John Frederick	Higham, John Sharp	Morrell, Philip
Churchill, Rt. Hon. Winston S.	Hobart, Sir Robert	Morton, Alpheus Cleophas
Clough, William	Hobhouse, Rt. Hon. Charles E. H.	Murray, Capt. Hon. A. C. (Kincard.)
Cobbold, Felix Thornley	Hodge, John	Myer, Horatio
Collins, Stephen (Lambeth)	Hooper, A. G.	Newnes, F. (Notts, Bassetlaw)
Corbett, A. Cameron (Glasgow)	Horniman, Emslie John	Norman, Sir Henry
Corbett, C. H. (Sussex, E. Grinstead)	Howard, Hon. Geoffrey	Nussey, Sir Willans
Cornwall, Sir Edwin A.	Hudson, Walter	Nuttall, Harry
Cotton, Sir H. J. S.	Hyde, Clarendon G.	O'Donnell, C. J. (Walworth)
Davies, David (Montgomery Co.)	Illingworth, Percy H.	Parker, James (Halifax)
Davies, Ellis William (Eifion)	Isaacs, Rufus Daniel	Pearson, W. H. M. (Suffolk, Eye)
Dickinson, W. H. (St. Pancras, N.)	Jardine, Sir J.	Philipps, Owen C (Pembroke)
Pollard, Dr. G. H.	Shipman, Dr. John G.	Waring, Walter
Priestley, Sir W. E. B. (Bradford, E.)	Silcock, Thomas Ball	Wason, John Cathcart (Orkney)
Raphael, Herbert H.	Simon, John Allsebrook	Waterlow, D. S.
Rendall, Athelstan	Snowden, P.	White, Sir Luke (York, E. R.)
Richards, Thomas (W. Monmouth)	Stanley, Hon. A. Lyulph (Cheshire)	Whitehead, Rowland
Ridsdale, E. A.	Steadman, W. C.	Whitley, John Henry (Halifax)
Roberts, Charles H. (Lincoln)	Strachey, Sir Edward	Wiles, Thomas
Robinson, S.	Summerbell, T.	Wilkie, Alexander
Robson, Sir William Snowdon	Sutherland, J. E.	Williamson, Sir A
Roe, Sir Thomas	Taylor, Theodore C. (Radcliffe)	Wills, Arthur Waiters
Rogers, F. E. Newman	Thomas, Sir A. (Glamorgan, E.)	Wilson, Hon. G. G. (Hull, W.)
Rose, Sir Charles Day	Toulmin, George	Wilson, Henry J. (York, W. R.)
Rutherford, V. H. (Brentford)	Ure, Rt. Hon. Alexander	Wilson, J. W. (Worcestershire, N.)
Samuel, Rt. Hon. H. L. (Cleveland)	Verney, F. W.	Wilson P. W. (St. Pancras, S.)
Samuel, S. M. (Whitechapel)	Villiers, Ernest Amherst	Wilson, W. T. (Westhoughton)
Scott, A. H. (Ashton-under-Lyne)	Wadsworth, J.	Wood, T. M'Kinnon
Seely, Colonel	Walker, H. De R. (Leicester)
Shackleton, David James	Walsh, Stephen	TELLERS FOR THE NOES.—Mr. Joseph Pease and Captain Norton.
Sherwell, Arthur James	Wardle, George J.

Lords Amendment considered, and agreed to.

Drafting Amendments made.

Resolved—That further consideration of the Bill as Amended be now adjourned.—[Mr. Lloyd-George.]