Commons Sitting of 13 September 1909

Preamble
The House being met at a Quarter before Three of the clock, the Clerk at the Table (Sir Courtenay Ilbent) informed the House of the unavoidable absence of Mr. SPEAKER from this day's Sitting:—
Whereupon Mr. EMMOTT, the Chairman of Ways and Means, proceeded to the Table, and after Prayers took the Chair as DEPUTY-SPEAKER, in pursuance of the Standing Order.

PRIVATE BUSINESS.
Clydebank and District Water Order Confirmation Bill,—read the third time, and passed.
Irvine Harbour Order Confirmation Bill,—considered; to be read the third time upon Wednesday.

ORAL ANSWERS TO QUESTIONS.

  Territorial Force.
  Mr. HUNTasked the Secretary of State for War what was the total number of recruits enlisted since 1st January last, who went to camp this year?
  The SECRETARY OF STATE for WAR (Mr. Haldane): The returns of attendance at camp do not distinguish between recruits and other men. The information required is therefore not available.
  Mr. HUNTasked the Secretary of State for War whether he will publish a Paper giving the average age, weight, and chest measurement of non-commissioned officers and men in each branch of the Territorial Force?
  Mr. HALDANE: The ages of the noncommissioned officers and men will be included in the annual Return furnished in October, and they will be published in due course in the annual Return of the force. The weight and chest measurement are only taken on enlistment, and no subsequent statistics are recorded. Any compilation of the nature suggested would involve the examination of every attestation.
  Mr. HUNTasked whether all the recruits enlisted since 1st January last had done the prescribed drills for recruits before they went to camp; and, if not, did any of the recruits who had not done the prescribed course of drills receive camp pay?
  Mr. HALDANE: There is no information available at the War Office to enable me to reply to this question. I may, however, point out to the hon. Member that under paragraph 378 Territorial Force Regulations the G.O.C. has power to grant exemption from the prescribed conditions, under the circumstances specified in that paragraph.
  Mr. HUNT: Will the right hon. Gentleman make inquiries?
  Mr. HALDANE: I do not think there is very much to inquire into. It is only in proper cases that the Commander-in-Chief exercises his dispensing power.
  Mr. HUNTasked what was the number of non-commissioned officers and men now in the Territorial force who were serving on a four years' engagement; and would these four-year men be allowed to re-engage on completion of their four years' engagement?
  Mr. HALDANE: The exact numbers of men so serving are only obtainable from the annual Returns, which will be furnished to the War Office during the month of October, but as a rough estimate there were about 176,000 men on a four years' engagement on 1st July. The re-engagement of these men for a term to be fixed by the county association will depend on the recommendation of the commanding officers, provided that the establishments of units are not exceeded.
  Mr. HUNTasked how many of the officers, non-commissioned officers and men of the Territorial Force attended camp this year, and how many of these stayed for 15 days?
  Mr. HALDANE: The figures showing the numbers attending camp will be furnished with the annual Return rendered to the War Office in October. I cannot before that time supply the hon. Member with the information he requires.
  Mr. RENTONasked whether artificers of units of the Territorial Force are expected to repair public equipment—vehicles, harness, saddlery, and arms—at their own expense during the period outside the annual training?
  Mr. HALDANE: These artificers are expected to do their repairs to public equipment—vehicles, harness, and saddlery—as part of their drill. The materials for such repair will be provided for them. They are not permitted to repair arms.
  Mr. RENTON: If the artificer does not do this, and thus render himself efficient, by whom will the public equipment be repaired?
  Mr. HALDANE: It is hoped to have sufficient artificers to do the work, and if they will not do it, it will have to be done otherwise.

  Royal Military Academy, Woolwich (Science Text Books).
  Mr. ARTHUR LEEasked the Secretary of State for War whether it was the practice of the War Office to prescribe certain text books in science for the use of gentlemen cadets at the Royal Military Academy, Woolwich; if so, whether he could state the name of the author and the date of publication of a text book on electricity and magnetism recently issued from His Majesty's Stationery Office; whether, as stated in that book, practical use had not yet been made in the services to any great extent of alternating currents; and if he would inquire when the book in which this statement occurred was last revised, with a view to bringing it up to date as a trustworthy guide for military students on the modern applications of electricity?
  Mr. HALDANE: It is the practice of the War Office to prescribe the text books in question. The particular book in use is the official text book of electricity and magnetism, which was revised in 1902, and a reprint was recently issued pending a further revision of the manual which is under consideration. As regards any information in this book which may not be up to date, the Chief Instructor, by means of lectures and notes, adds the necessary supplementary information.
  Mr. ARTHUR LEE: May I ask whether he is aware that this must be a reprint of a much earlier date, and will he issue a revised version?
  Mr. HALDANE: It is a reprint of a book printed in 1902. A new book is being prepared. These books take much longer to prepare than I should have thought, but things move slowly in these matters.

  Special Reserve (Rifles).
  Captain MURRAYasked the Secretary of State for War whether he can state if the Special Reservists who this year were supplied with the new short rifle, but who retained the long rifle bayonets pending the issue of new bayonets, had, during a-previous training, been instructed in the use of the long rifle; and whether a sufficient number of long rifles was actually in store during the training to arm those Special Reservists to whom the short rifle had been issued?
  Mr. HALDANE: Previous to the issue of the short rifle the Special Reserve had been trained with the long rifle. During the training of the Special Reserve this year there was an ample stock of long rifles in store, sufficient to have re-armed the whole Special Reserve if necessary.

  H.M.S. "Terrible" (Relief Crews).
  Mr. ARTHUR LEEasked the First Lord of the Admiralty whether his attention has been called to the overcrowding of H.M.S. "Terrible" on her recent voyage to the East with relief crews; whether he is aware that the total number carried was over 1,100, for which the sanitary arrangements were insufficient, and also the boat accommodation in the event of it becoming necessary to abandon the ship: whether he is aware that the accommodation for officers was quite inadequate, especially for a voyage through the Red Sea in the hot season, and that ten wardroom officers had no accommodation beyond hammocks; and whether he will take steps to prevent this overcrowding in future voyages?
  The FIRST LORD of the ADMIRALTY (Mr. McKenna): The number stated is approximately correct, and with proper temporary organisation the sanitary arrangements in a vessel of this type should be sufficient. No representation has been received as to the ship being overcrowded, but inquiry will be made of the commanding officer on her return. The number of ward-room officers without cabins was 11. Junior ward-room officers are only entitled to cabins so far as accommodation admits, and in view of the great cost of passages by packet it was decided to take advantage of the Government opportunity.
  Mr. ARTHUR LEE: Will he have this case inquired into in view of the fact that the information has come from a number of officers who have been on the ship?
  Mr. McKENNA: I will certainly inquire on the facts of the case. I understand the numbers given are quite right, but the actual numbers reported to the Admiralty were not quite the same. I will inquire into the whole circumstances.

  Grants for Agriculture Abroad.
  Mr. STANIERasked the hon. Member for South Somerset, as representing the President of the Board of Agriculture, if he is now able to give the amounts voted for agriculture by the Governments of France, Germany, United States, and Denmark?
  The TREASURER of the HOUSEHOLD (Sir Edward Strachey): I am not yet able to give any figure for Germany. The amount voted by the Government of France is nearly £2,000,000; by the United States approximately, £3,500,000; by Denmark about £160,000.
  Captain CRAIG: Can he say whether the respective Governments or Parliaments keep any control over those sums?
  Sir E. STRACHEY: The hon. Member must give me notice of that question.

  Sunday Delivery of Telegrams (Withington, Manchester).
  Mr. JOYNSON-HICKSasked the Postmaster-General whether he has now considered the series of complaints received from Mr. Riley, of Manchester, relating to the free limits of telegram delivery on Sundays; whether, as Withington is now in-eluded within the civic boundaries of Manchester, he will cause the free delivery limit to be extended so that all citizens of that city may enjoy equal rights in this respect; and whether he will reduce the charge of Is a mile, having regard to the fact that a telegraph boy can now proceed by the corporation's electric tramcar at a cost of less than 1d. a mile?
  The POSTMASTER-GENERAL (Mr. Sydney Buxton): I have carefully considered Mr. Riley's application for a free delivery of telegrams outside the postal area of Manchester on Sundays, and I have written to him fully on the subject. The rule restricting the free delivery on Sundays, after the usual office hours, to places usually served from telegraph offices within the town postal areas of large towns, and imposing a uniform charge of a shilling a mile for special delivery beyond those limits, is of general application.

  Berners-street Post Office (Telegram Delivery).
  Sir FREDERICK BANBURYasked the Postmaster-General whether his attention has been called to the delay in the delivery of telegrams sent from the Berners-street Post Office; and if he will take steps to prevent this occurring in the future?
  Mr. BUXTON: If the hon. Member will furnish specific particulars of delay to telegrams from the office in question I will have inquiry made. I am not aware-of any general delay in the delivery of telegrams sent from the office named.
  Sir F. BANBURY: Am I to understand there is no complaint?
  Mr. BUXTON: I understand not. They have not been made to me, and there has been no general complaint. We shall be very glad to look into it.

  Flax Seed Supply (Ireland).
  Mr. HUGH BARRIEasked the Vice-President of the Department of Agriculture (Ireland) what was the total-amount of compensation paid to farmers who were supplied with improper flax seed last year; and what sum was recovered from the firm who sold the seed to the Department?
  The ATTORNEY-GENERAL for IRELAND (Mr. Cherry): The sum paid by the Department was £807. A claim for damages has been made by the Department against the firm from which the seed: was purchased, and the matter is at present in the hands of the Department's legal advisers.
  Mr. BARRIE: As this matter is now a year old, how much longer time is required before the Department press the claims?
  Mr. CHERRY: The Department is-pressing the claims. The Law Officers were consulted and it is a very difficult and doubtful point if there is the right to-recover. We have advised in the matter, which cannot be tried until October.

  Agricultural Statistics (Ireland).
  Mr. HUGH BARRIEasked how many circular letters had been issued to farmers, asking particulars of their crop acreage; and what advantage had been gained by thus supplementing the collection of these statistics by members of the constabulary?
  Mr. CHERRY: About 1,300 circulars have been issued. The information furnished is of advantage in testing the accuracy of the agricultural statistics.

  FINANCE BILL.

    CITY OF LONDON LANDS.
    Sir FREDERICK BANBURYasked whether lands belonging to the Corporation of the City of London, not as a local or rating authority, but as trustees or otherwise, would be exempt, under Clause 24 of the Finance Bill, from the payment of duties leviable under Part I. of that Bill?
    The FINANCIAL SECRETARY to the TREASURY (Mr. Hobhouse): Clause 24 applies to any land held by a rating or local authority (terms which include the City Corporation) without any limitation as to the purposes for which they are held.

    HAMBURG SHERRY (DUTY).
    Mr. FELLasked what was the Customs duty on a gallon of Hamburg sherry containing less than 30 per cent. of proof spirit?
    Mr. HOBHOUSE: The Customs duty on all wine containing not more than 30 per cent. of proof spirit is 1s. 3d. per gallon if imported in cask. An additional 1s. per gallon is leviable if imported in bottles.
    Mr. FELL: May I ask whether, as no countervailing Customs duty has been placed upon it, this is not the cheapest spirit that can now be obtained in the market?
    Mr. HOBHOUSE: To answer that question would involve considerable research. I could not say off-hand.
    Mr. YOUNGER: Does the reply mean that this spirit comes in at 4s. 3d. per proof gallon, a difference of 10s. 6d. as compared with other spirits?
    Mr. HOBHOUSE: I have not made the calculation.

    FRIENDLY SOCIETIES (EXEMPTION FROM LAND TAXES).
    Mr. HART-DAVIESasked whether friendly societies, which have invested some of their funds in land, and draw ground rents from the houses situated on their land, would be regarded as using and occupying such land so as to bring them under the purview of Clause 25 of the Finance Bill?
    Mr. HOBHOUSE: The answer is in the negative.
    Mr. HART-DAVIES: Do I understand that only land actually occupied will be dealt with?
    Mr. HOBHOUSE: That is so.

    SPIRIT DUTIES (YIELD).
    Mr. PATRICK WHITEasked Mr. Chancellor of the Exchequer what was the reduction in revenue on spirits taken out of bond in Great Britain and Ireland during the four months May to August this year as compared with the same period last year; and whether he would state the quantity of spirits taken out of bond for the seven months, September, 1908, to March, 1909, and the quantity which would require to be taken out during the corresponding seven months of 1909–10 to produce revenue which, added to the preceding four months' yield, would give an amount equal to the revenue derived from duty on spirits in the corresponding eleven months of 1908–9, plus the estimated increase of revenue from the new duty?
    Mr. HOBHOUSE: The reduction in the revenue from spirits in the four months May to August, 1909, as compared with May to August, 1908, was £2,489,000. The quantity of spirits on which duty was paid for the seven months September, 1908, to March, 1909, was 24,574,000 gallons. The quantity which would require to be cleared for the seven months from September, 1909, to March, 1910, in order to make the spirit revenue for the last eleven months of 1909–10 exceed that for the corresponding period of 1908–9 by the estimated increase of revenue from the new duty, i,e., £1,600,000, would be about 23,680,000 gallons.

    DEVELOPMENT ADVANCES (STATUTORY POWERS).
    Lord ROBERT CECILasked what statutory powers at present exist for making advances by way of free grant or by way of loan from Imperial or municipal funds for the purposes referred to in Clause 1 of the Development Bill?
    Mr. HOBHOUSE: My right hon. Friend will cause to be laid on the Table of the House a paper containing the information asked for by the Noble Lord.
    Lord R. CECIL: Will the right hon. Gentleman take steps to enable that to be clone before Wednesday?
    Mr. HOBHOUSE: Oh, yes; as soon as possible.

    MOTORISTS AND CARRIAGE TAX.
    Mr. JOYNSON-HICKSasked whether motorists, in addition to the duties imposed upon them by the Finance Bill, would also have to pay the Carriage Tax under 51 and 52 Vic, cap. 8.
    Mr. HOBHOUSE: The answer is in the negative,

    OFF-LICENCE HOLDERS (REPRESENTATIONS).
    Mr. JOYNSON-HICKS (for Captain Faber)asked the Chancellor of the Exchequer if he would say on what date the modifications suggested by the conference of off-licence holders were communicated to him; if, amongst their recommendations, it was suggested that the saleable quantity of liquors should be reduced in England and Wales; and on what date he informed the representatives of the off-licence holders that the Government Amendment reducing the restriction would be withdrawn?
    Mr. HOBHOUSE: The communications between the representatives of the off-licence trade and the permanent official responsible for the administration of the Excise licences were of an entirely private and confidential nature, and my right hon. Friend does not therefore think it would be proper for him to give the information asked for.

    MINERAL TAXES.
    Mr. FELLasked if the new Mineral Taxes would apply to way leave rents and royalties paid in respect of getting granite, Bath stone, and slate?
    Mr. HOBHOUSE: The answer is in the affirmative.

    CHAMPAGNE, BEER, AND WHISKY (RESPECTIVE DUTIES).
    Mr. JOYNSON-HICKSasked, if a man spent 20s. in champagne at 10s. per bottle, 20s. in beer at 2d. per pint, and 20s. in whisky at 4s. per bottle, how much in each case would be represented by duty?
    Mr. HOBHOUSE: The duty on two reputed quart bottles of champagne would be 1s. 3d. The data given by the hon. Member are not sufficient to enable me to work cut the sum for beer and whisky.

    ESTATE DUTIES (APPLICATION OF INCREASED SCALE).
    Viscount CASTLEREAGHasked the Chancellor of the Exchequer whether payments under the increased scale of Estate Duties proposed by the Finance Bill were being claimed upon the estates of persons who had died since 29th April, 1909, or, if not, what arrangement it was proposed to make in the cases of the estates of such persons passed for duty while the Finance Bill was under discussion; and whether he could state what number of such estates had at present come under the consideration of the Commissioners?
    Mr. HOBHOUSE: In connection with deaths occurring on or after 30th April, Estate Duty is accepted only at the rates set out in the relative Budget Resolutions. As regards the second part of the question, the number of the estates of persons who have died since 29th April, 1909, is not known, but there have been 2,757 payments of Death Duties at the increased rates provided by the Resolutions.

    Old Age Pensions (Calculation of Applicant's Incomes).
    Major M'MICKINGasked the Chancellor of the Exchequer whether his attention had been called to a recent award by the pension committee in the Stewartry of Kirkcudbright by which a person with over £750 in the bank was given an old age pension; whether he proposed to amend the law so that such misapplications of public money might be stopped; and whether, in any proposed legislation dealing with this subject, provision would be made that the incomes of applicants for pensions derived from uninvested funds should be calculated at a sum equivalent to the amount of the annuity such uninvested funds would purchase?
    Mr. HOBHOUSE: My right hon. Friend's attention has been called to several cases similar to that mentioned in the question, and the matter is receiving his careful consideration in connection with the Bill for the Amendment of the Old Age Pensions Act which the Government contemplate introducing next Session.

    Agricultural Land (Assessment for Estate Duty).
    Mr. YOUNGERasked what was the average number of years' purchase at

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    which agricultural land was assessed for Estate Duty in 1907–8; and at what number of years' purchase the value is computed at the present time?
    Mr. HOBHOUSE: The average number of years' purchase at which agricultural land was assessed for Estate Duty in 1907–8 was as follows: Freehold, 18.75 years' purchase on gross annual value; 22.67 years' purchase on net annual value. Other tenures, 17.30 years' purchase on gross annual value, 23.06 years' purchase on net annual value. Statistics are not available with reference to agricultural property passing on deaths on or after 30th April, 1909.
    Mr. YOUNGER: Is that the average over Great Britain and Ireland?
    Mr. HOBHOUSE: Yes, I think so.
    Mr. YOUNGER: Is the right hon. Gentleman aware that in Scotland at present the Inland Revenue authorities are insisting upon valuing at 25 years' purchase estates which are valued, by most competent people, at very much less than that, and which are certainly not worth that in the market?
    Mr. HOBHOUSE: Valuation very much depends on whether the valuer is employed by the buyer or the seller; the same person often gives different valuations.
    Mr. KILBRIDE: Is the right hon. Gentleman aware that the number of years' purchase of which this complaint is made is considerably less than the number of years' purchase charged to Irish tenant farmers by Irish landlords?
    Mr. HOBHOUSE: I believe that that is so in many cases.

    Development Bill (Amendments).
    Captain CRAIGasked whether the Government Amendments to the Development Bill would be placed on the Paper before the Bill went into Grand Committee.
    Mr. HOBHOUSE: My right hon. Friend will endeavour to place on the Paper, before the Development Bill goes into Committee, any Amendments which it may be necessary to move on behalf of the Government.
    Captain CRAIG: Will these Amendments be placed on the Paper before they are given to the favourite Radical Press?
    Mr. HOBHOUSE: I have said that any Amendments which it is thought necessary to make will be placed on the Paper.

    Agriculture in Denmark (Reports).
    Lord ROBERT CECILasked the Chancellor of the Exchequer whether he would lay upon the Table a copy of the Report on Co-operative Agriculture and Rural Conditions in Denmark, prepared on behalf of the Department of Agriculture and Technical Instruction for Ireland, and published in 1905 (Bulletin No. 7, Miscellaneous Series), and also a copy of the Report of the Scottish Commission on Agriculture to Denmark?
    Mr. HOBHOUSE: If these Reports are not already available in the Library of the House my right hon. Friend will endeavour to have a copy of each placed there, which will probably be more to the convenience of Members than the course suggested by the Noble Lord.
    Lord R. CECIL: Is the right hon. Gentleman aware that they are not in the Library?
    Mr. HOBHOUSE: In that case we will send a copy to the Library.

    Winchester Estate, Kilbeg, County Meath.
    Mr. PATRICK WHITEasked whether the Estates Commissioners had sent a second inspector to report on the estate of the Marchioness of Winchester, situate at Kilbeg, county Meath, which was offered for sale to them; and if they proposed to purchase the lands?
    Mr. CHERRY: The Estates Commissioners have directed another inspector to visit the estate, and are waiting his report before coming to any decision in the matter

    Assault on Water Bailiff (Cahirciveen).
    Captain CRAIGasked the Chief Secretary to the Lord Lieutenant of Ireland whether he was aware that on the night of 1st September a water bailiff, named John Driscoll, was waylaid on the public road as he was returning home from Cahirciveen Fair with his wife land son, and so brutally knocked down and kicked by three or four people that he died that night; whether three young men

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    have been arrested in connection with this occurrence; and could he say what reason was assigned for the attack?
    Mr. CHERRY: Four men have been arrested in connection with this occurrence, and the case is now sub judice. It is not, therefore, desirable to make any statement on the subject.

    Land Acts (Loans for Improvements).
    Mr. WILLIAM ABRAHAM (for Mr. Crean)asked the Chief Secretary to the Lord Lieutenant of Ireland whether, seeing that under Section 31 of The Land Law (Ireland) Act, 1881, present tenants were entitled to obtain loans for improvements amounting to five times the valuation of the lands charged; that, by a subsequent Order, tenants whose valuation was but £7 were enabled to obtain the minimum under the Act of £50; that, by a recent Order of the Treasury, the borrowing powers had been reduced to three times the valuation, except where vesting Orders had been obtained; and that the result of this would be that all tenants under £12 valuation, except those who had secured vesting Orders, would be deprived of the rights they had under the original Act; and, if so, in view of the fact that the Dairies and Cowshed Orders were now being put into force by the Local Government Board, he would restore their rights under the old Act to enable them to meet the new expenses put upon them?
    Mr. HOBHOUSE: Occupiers are not entitled under Section 31 of the Land Law (Ireland) Act, 1881, to obtain advances, and there can therefore be no question of restoring rights. Since these never, existed all that the section does is to give the Treasury power to authorise the Board of Works to make advances when satisfied as to the security. No amount is specified. Since 1893 the limit has been three times the judicial rent with a minimum amount of £35. To obtain that amount therefore an occupier must have a valuation not less than £11 13s. 4d. The date of the Dairies and Cowsheds Order is 13th February, 1908, and so far there has been nothing to show that anyone has been prevented from complying with it by the limitation as to loans.

    Land Banks.
    Sir GILBERT PARKERasked the Prime Minister whether he would take
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    into consideration the advisability of establishing land banks, such as exist in Denmark, Germany, Egypt, and Ireland, for the purpose of assisting a citizen of small means in the purchase of land, thereby aiding materially in the solution of the problem of land ownership and adding to the independence and character of the people?
    Mr. HOBHOUSE: I believe that such institutions are not altogether unknown in this country; and the Government would welcome any extension of the system under proper safeguards. Any steps which they could take to this end would require very careful consideration.

    Missing Steamship "Waratah."
    Mr. STANIERasked the First Lord of the Admiralty whether he could give any information as to what the Government is doing to assist in the search for the missing steamship "Waratah"?
    Mr. SIMONasked whether the Admiralty had given directions for any of His Majesty's ships to assist in the search for the missing liner "Waratah"; and, if not, whether instructions for this purpose could be given forthwith?
    Mr. McKENNA: Acting under the instructions of the Senior Naval Officer at Simonstown, in the absence at sea of the Commander-in-Chief at the Cape of Good Hope, search was made by His Majesty's ships with full Admiralty approval, as follows: His Majesty's ship "Forte"—from 1st August (the "Waratah" being then four days overdue at Cape Town) practically continuously up to 17th August; His Majesty's ship "Pandora"—from 3rd August practically continuously till 23rd August; His Majesty's ship "Hermes" (flagship) arrived at Durban from Beira on 12th August, employed on search from 12th to 17th August. The search by His Majesty's ships was discontinued in accordance with the opinion of a conference held on the 17th August, at which the Governor of the Cape, the acting Prime Minister and another Minister, the captain of the Union Castle steamship "Briton," the agent of Messrs. Lund and Sons, the owners, and the naval Commander-in-Chief were present. The conference suggested the chartering by the owners and underwriters of a steamer for a month. This is now being done with the concurrence and financial support of the Australian Government, the vessel being chartered for 90 days. The Admiralty on 6th September were asked to lend

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    a lieutenant for three months for this vessel and agreed to do so. The Commander-in-Chief has detailed an officer accordingly. Five naval ratings have also been lent as a search party to the steamship selected, which sailed on Saturday.
    Mr. J. D. REES: Would not the vessel have been found long ago if she had been fitted with wireless apparatus?
    Mr. McKENNA: It is impossible to say without knowing the actual circumstances in which the ship may have found herself.
    Mr. REES: Has wireless telegraphy not proved efficacious in such cases?
    Mr. McKENNA: In certain cases it has. But we do not know the conditions of the "Waratah."

    Development Grant (Ireland).
    Captain CRAIGasked the Prime Minister whether the funds proposed under the Development and Road Improvement Bill accruing to Ireland will be amalgamated with the Ireland Development Grant or will they be earmarked by the Treasury for the specific purposes for which they are granted; and, if so, can he state whether the Lord Lieutenant in Council or the Treasury will have the final word in the disposal of such grants?
    Mr. HOBHOUSE: As explained in the speech of my right hon. Friend the Chancellor of the Exchequer on the second reading of the Bill, it is not intended that any fixed proportions of the respective funds should be specifically earmarked to particular portions of the United Kingdom, but that for the purposes of the Bill the United Kingdom should be treated as a whole. The new funds will be entirely independent of the Ireland Development Grant, and the machinery for making grants in respect of Irish services will be the same as that for services in Great Britain.
    Captain CRAIG: Is it not a fact that the taxation which will raise this Development Fund is in a fixed proportion between the various parts of the United Kingdom, and would the Government therefore not be prepared to allot a fair proportion from the Fund to Ireland?
    Mr. JEREMIAH MacVEAGH: Is the right hon. Gentleman aware that the proposal of the hon. and gallant Gentleman is of a separatist character?
    Mr. HOBHOUSE: I cannot go into political arguments raised by supplementary questions. It is not intended to fix any fixed proportions in which the Development Grant shall be expended.
    Captain CRAIG: Would it not be possible under these circumstances for one part of the United Kingdom to get an. undue part of this Development Fund and another part not to get a fair share?
    Mr. HOBHOUSE: Personally, I think there are many people in this country who are already of the belief that one part of the country is already getting a larger share of grants than another.
    Captain CRAIG: Then I shall oppose-the Bill.
    Mr. CHARLES CRAIG: May I ask does the right hon. Gentleman refer to Wales?
    Mr. HOBHOUSE: No; I did not refer to any particular country by name.
    Mr. CHARLES CRAIG: But the right hon. Gentleman said that many people-were of opinion that one part of the Kingdom got a larger share than another; may I ask to what part he did refer?
    Mr. HOBHOUSE: You may ask; I am not prepared to answer.
    Mr. EUGENE WASON: Does not the right hon. Gentleman think that it would be better for the proportions to be fairly divided among the different parts of the United Kingdom, including Scotland, so that each might gets its proper share?
    The DEPUTY-SPEAKER: That appears to be a matter suitable for discussion in Committee.

    Vandeleur Estate, Limerick (Evicted Tenants).
    Mr. JOYCEasked the Chief Secretary for Ireland what steps, if any, have been taken by the Estates Commissioners to restore the evicted tenants on the Vandeleur estate at Cloughakeating, in the county of Limerick; has this estate been finally sold; if so, why have the evicted tenants not been restored; who has been grazing the evicted farms for the past two or three years; and what hope is going to be held out to those tenants that they will be restored at an early date?
    Mr. CHERRY: Proceedings for the sale-of this estate have been instituted by the owner under the Irish Land Act, 1903, but

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    the property has not yet been dealt with by the Estates Commissioners. The Commissioners have decided to take no action in reference to Mary Bourke's application for reinstatement. Mrs. Manning's application will be dealt with when the property comes before the Commissioners in order of priority. The holdings referred to in these applications are being worked (by the owner.

    Estate of Richard W. Smith, Rebogue, Limerick.
    Mr. JOYCEasked the Chief Secretary for Ireland whether the estate of Richard W. Smith, at Rebogue, Limerick, has yet been sold to the tenants or whether such sale is pending; and has the claim of Mr. James Ryan, evicted tenant on this estate, been taken into consideration by the Estates Commissioners, with the view of restoring him to his former holding on the completion of sale of this estate?
    Mr. CHERRY: No formal proceedings have been instituted by the owner before the Estates Commissioners for the sale of these lands. The Commissioners have had a preliminary inspection made, but the owner is unwilling to sell at their estimated price unless he is assured that he will get a 12 per cent. bonus. As the law at present stands the bonus cannot exceed 3 per cent. Mr. Ryan's application will be considered when the estate comes before the Commissioners to be dealt with.

    Queen's University, Belfast.
    Mr. CHARLES CRAIGasked the Chief Secretary for Ireland whether the Crown will be represented at the appeal before the Universities Committee of the Privy Council against the establishment of a lectureship in scholastic philosophy in Queen's University, Belfast; and, if so, whether the establishment of such lectureship will be supported or opposed by such representative?
    Mr. CHERRY: The Crown will not be represented before the Committee, but counsel for the Belfast University Commission will be instructed to appear at the public expense. I cannot say what attitude counsel will adopt as to the questions which may arise. They will take their instructions from the Commission itself, through the Chairman, and not from the Government.
    Mr. CHARLES CRAIGasked the Chief Secretary for Ireland whether the lecturer in scholastic philosophy lately appointed
    1738
    in the Queen's University, Belfast, has made the declaration required by Subsection (2) of Section 3 of The Irish Universities Act, 1908, for securing the respectful treatment of the religious opinions of members of his class, or any corresponding declaration?
    Mr. CHERRY: The lecturer in scholastic philosophy, like all other lecturers appointed by the Commission, has made a declaration in the terms of the declaration which professors are required to make under the provisions of Section 3 of the Irish Universities Act.

    Cork Untenanted Lands (Mr. Leader' Estate).
    Mr. PATRICK O'BRIEN (for Mr. Flynn)asked the Chief Secretary for Ireland whether the Estates Commissioners have been recently in negotiation with Mr. Leader, D.L., Dromagh, county Cork, in respect to the purchase of untenanted lands for public purposes; if so, with what result; and will he state whether Mr. Leader was informed by the Commissioners that during the negotiations for sale he must oppose all applications by labourers for cottage plots and allotments; and, if so, upon what grounds?
    Mr. CHERRY: The Estates Commissioners are in negotiation with Mr. Leader with a view to the purchase of these lands, but up to the present they have not come to an agreement with him. The Commissioners did not inform Mr. Leader to the effect stated in the question, but their inspector told him that if the Commissioners agreed to purchase the lands in question he might be required to oppose the acquisition of any further plots on such land pending the consideration by the Commissioners of a scheme for its allotment.

    National School Teachers, Ireland (Triennial Increment).
    Captain CRAIGasked the Chief Secretary for Ireland whether he can state the number of national school teachers in Ireland who, though ineligible for promotion, have not yet received their triennial increment due since 16th July?
    Mr. CHERRY: As I pointed out in reply to a question asked by the hon. Member for the Ossory Division on 4th May last, the award of increments to teachers is a process going on continuously in the office of the Commissioners of National Education, and there are always hundreds of cases pending. This year being the close

    1739
    of the triennial period, the number of cases to be dealt with is very large. The Commissioners inform me that the claims are being considered and paid as promptly as possible.
    Mr. SLOAN: Can the right hon. Gentleman state whose fault it is that the money due for months to the teachers cannot be paid until questions are asked in this House?
    Mr. CHERRY: I am not aware that the fact is as stated.
    Mr. SLOAN: But it is.
    Captain CRAIG: May I inform the right hon. Gentleman that since I put this question on the Paper a great number have been paid from whom this increment has been kept for months and months past?
    Mr. CHERRY: Certainly; questions put in the House have frequently a stimulating effect.

FINANCE BILL.
Considered in Committee.—[28th Day.]
[Mr. EMMOTT in the chair.]
(IN THE COMMITTEE.)

FINANCE BILL.
  PART III.—DEATH DUTIES.

    CLAUSE 40.—(Amended Bates of Estate Duty and Settlement Estate Duty.)
    The scale set out in the Second Schedule to this Act shall, in the case of persons dying on or after the thirtieth day of April, nineteen hundred and nine, be substituted for the scale set out in the First Schedule to the Finance Act, 1907, as the scale of rates of Estate Duty, and two per cent. shall be substituted for one per cent. in Section seventeen of the Finance Act, 1894 (in this Part of this Act referred to as the principal Act) as the rate of Settlement Estate Duty:
    Provided that where an interest in expectancy within the meaning of Part I. of the principal Act in any property has, before the thirtieth day of April, nineteen hundred and nine, been bonÂ fide sold or mortgaged for full consideration in money or money's worth, then no other duty on that property shall be payable by the purchaser or mortgagee when the interest falls into possession than would have been payable if this Section had not passed, and in the case of a mortgage any higher duty payable by the mortgagor shall rank as a
    1740
    charge subsequent to that of the mortgagee.
    The Second Schedule, referred to in the Clause, contains the following scale of rates of Estate Duty:—

    Where the principal value of the estate

    Estate duty shall be payable at the rate per cent. of

    £

    £

    Exceeds

    100 and does not exceed

    500

    1

    Exceeds

    500 and does not exceed

    1,000

    2

    Exceeds

    1,000 and does not exceed

    5,000

    3

    Exceeds

    5,000 and does not exceed

    10,000

    4

    Exceeds

    10,000 and does not exceed

    20,000

    5

    Exceeds

    20,000 and does not exceed

    40,000

    6

    Exceeds

    40,000 and does not exceed

    70,000

    7

    Exceeds

    70,000 and does not exceed

    100,000

    8

    Exceeds

    100,000 and does not exceed

    150,000

    9

    Exceeds

    150,000 and does not exceed

    200,000

    10

    Exceeds

    200,000 and does not exceed

    400,000

    11

    Exceeds

    400,000 and does not exceed

    600,000

    12

    Exceeds

    600,000 and does not exceed

    800,000

    13

    Exceeds

    800,000 and does not exceed

    1,000,000

    14

    Exceeds

    1,000,000

    15

    Mr. EVELYN CECILmoved to leave out the words, "The scale set out in the Second Schedule to this Act shall in the case of persons dying on or after the thirtieth day of April, nineteen hundred and nine, be substituted for the scale set out in the First Schedule to the Finance Act, 1907, as the scale of rates of Estate Duty and."
    We are now come to a fresh portion of this Bill which, in accordance with arrangements quite well known to the public, the Chancellor of the Exchequer will find himself face to face with a fresh phalanx of the Opposition, who have endeavoured to make a special study of this, portion of the Bill. I cannot pretend to. have any special claim to represent either millionaires or great landowners, but what I want to direct special attention to is not only the case of this comparatively small class but the case of the large class of small estates which will suffer severely from this increased duty, which I consider most unjustifiable, and I move to omit the Schedule in so much as it increases this duty to a wholly unjustifiable extent. I should like in the first place to point out the general objections there are to this high rate of duty quite apart from the particular objections to which I shall also refer. As regards the general objections to these Death Duties, they must

    1741
    be all considered in conjunction with the objections to the Income Tax, the Succession Duties and the Legacy Duties, as they all, to a great extent, hang together, and it is because they are all increased that the injustice becomes so flagrant. Later on, when we shall be able more specifically to discuss the Income Tax and the Succession Duty, it will be seen that they not only hang together, but that they must be considered as all weighing down and affecting seriously these various estates.
    The first of my general objections is that these Death Duties are nearly always paid out of capital. There is a general and gradual diminution of capital as you increase the Death Duties, because it is very seldom, as you will find, that people make provision in their lifetime for Death Duties pure and simple. They pay their Income Tax out of income, but they leave the Death Duties to the chance of whatever their estates may be at the time of their death. So that it is undoubtedly true there is a gradual diminution of capital where there are very high Death Duties, and, as an inevitable corollary, where there is a general diminution of capital there must also in the long run be a general diminution of wages and employment. I cannot believe sometimes that the country has fully realised that you cannot strike as vigorously as the Chancellor of the Exchequer is now striking at capital through Death Duties without in the long run striking at wages and employment.
    Capital and labour necessarily walk band in. hand; if you injure one you must injure the other. You cannot help it. If you strike at capital you must also to a very grave extent strike at labour, and if you strike at labour you strike at the capitalist. Let us look at what would occur in the first place as regards land, and in the next as regards business, suppose these Death Duties are imposed. I shall not go very largely into the question of land, because that has been very fully discussed in this House so far, and there will be other opportunities of discussing it by those who are experts in the matter, and I shall not encroach upon that ground, but before I quite leave the question of the effect of these Death Duties upon land I should like to call attention to the latest proposals—I believe they are the latest; one cannot be sure, they change so from day to day, and it is so very difficult to know where we are—which are in the form of an Amendment
    1742
    of the Chancellor's, that the Death Duties might be paid in land. [HON. MEMBEBS: "Hear, hear."] That seems to be a proposal that meets with the approval of certain hon. Members below the Gangway opposite.
    Mr. CHIOZZA MONEY: You approved it yourselves—
    Mr. EVELYN CECIL: I never approved of it.
    The CHANCELLOR of the EXCHEQUER (Mr. Lloyd-George): There are two Amendments down by the Opposition.
    Mr. EVELYN CECIL: I never put down such an Amendment, and it seems to me to be a very unreasonable proposal. The Chancellor of the Exchequer put an enormous tax upon the landowner which we contend he cannot bear, and then he says, "If you cannot pay, hand over a chunk of your land to the Government. [HON. MEMBEBS: "Hear, hear."] Let me ask hon. Members on the Labour Benches who cheer that how they would like a tax of, say, £5 a year put on suits of clothes—
    Mr. JOWETT: You could send the trousers to the Government.
    Mr. EVELYN CECIL: And if the tax could not be paid, how they would like to give the Chancellor of the Exchequer power to say, "Hand over the trousers to me." I think it is nothing but robbery to apportion other people's property in that kind of way. You overtax a man to such an extent that he cannot pay, and then you say, "If you cannot pay hand over some of your property." That is the proposal of the Chancellor of the Exchequer, and it certainly does not commend itself to my approval. Look at the effect of the Death Duties upon a large business. They come—and must necessarily come—at an extremely inconvenient time from the point of view of the business. The head of a business—the supervising partner, perhaps, who has had all the strings of the business in his own control—dies. That is not the moment when you should charge 15 per cent. or any other per cent. upon the capital of the business if it is to prosper. It is sure to affect the business to some extent. The business not only loses the brains that guided it, but a considerable portion of the corpus of the capital. I submit you cannot tax any business, large or small, at such an inconvenient

    1743
    moment as the death of the largest partner without to some extent affecting the prosperity of the business, and therefore the prosperity of the whole neighbourhood and district. It creates disturbance of trade, and it will create reduction of employment. This is one of the most important results of the intensely heavy Death Duties either upon land or business.
    But there is a second general objection to Death Duties, and that is their unevenness and the arbitrariness with which they will bear in different cases. It is a wellknown fact that some families have in them much more hereditary disease than others, it may be consumption, or any other disease, and it is likely that in these families there will be more successions than in healthy families. Upon these families Death Duties bear excessively hard, and unduly hard, and I urge it is not fair from that point of view to impose taxes which inevitably, from the course of human circumstances, are likely to bear much more heavily upon some families than upon others. This is an arbitrary tax, and it falls with excessive arbitrariness upon families whose health is weaker than on others.
    A third general objection I have to Death Duties is that they discourage thrift. The spendthrift really gains an advantage over an industrious man. If I or anyone else choose to spend our money during our lifetime wastefully, or in any other right or wrong way we like, we stand in a far better position from the point of view of Death Duties from our own standpoint than if we had saved our money and been thrifty. I am not exaggerating in the least when I say that I have heard a good many people urge recently that they intend to spend somewhat more freely, rightly or wrongly, upon their own travelling or pleasure, simply because they say they prefer to spend it in that way and they think it is more useful to their purpose than if they keep the money and let the Chancellor of the Exchequer get it at their death. It may be an unreasonable feeling but it is a very human one, and I can assure the Government that it is a very general feeling, and that there are many who are saying just now, "What is the use of being thrifty, working hard and saving up money if the Chancellor of the Exchequer is going to pounce upon it in a wholesale manner and spend do upon certain objects of which he approves, but of which we do not approve?"
    1744
    In the fourth place, extra heavy Death Duties encourage their avoidance. It is not the Chancellor of the Exchequer who is the judge as to whether these Duties are just or unjust in any particular case, but the man himself who has to pay; he is the person who will decide whether, according to his conscience, he ought to pay or whether he conceives these duties to be so grossly excessive and unfair that he will avoid them in every possible way. The Chancellor of the Exchequer knows perfectly well from the provisions of Clause 43 that these duties are likely to be avoided by gifts inter vivos. It is quite certain that persons will not stand having to pay these enormous sums, and they will try to lessen their estates by giving gifts inter vivos to their children during their lifetime. That is the most natural thing in the world, which I think ought to be encouraged rather than not. That is by no means the only way in which people are likely to avoid undue impositions. They are likely to avoid them in a way which has been shown by Sir Henry Primrose, and which applies to many large businesses in the country. I do not happen to possess a large business, but if I did I have not the least hesitation in saying I should seriously consider how far I should split it up, how far I could transfer a large portion of it abroad, and how far it would be practicable in that case to retain my profits in any other country. It is perfectly possible, especially in some of the large businesses in the Far East, or in any other part of the globe, to constitute those businesses as separate companies, no longer returning profits to this country, and those great businesses may keep their profits over there, and have merely a branch business in this country. That has been pointed out by Sir Henry Primrose, and that is what, no doubt, will be done. I do not believe any amount of legislation can prevent this being done if the duties imposed are felt to be so grossly unjust.
    There is another general objection to Death Duties which I should like to comment upon. I have always been brought up to believe that taxation and representation ought to go together. It appears to me that a new Liberal or Radical principle is introduced by the present Government, and it is that you ought to put the heaviest taxation on those who are least represented, and therefore the least able to defend themselves. Is that a fair or a just proposal? I venture to say that every one who has been brought up in the poli-

    1745
    tical school of the last generation, be they Conservatives or Liberals, would say that taxation and representation ought to go together, and that those who have large properties are entitled to special protection and special representation. Now the position is quite the reverse. There is no doubt in the mind of anyone who studies the details of this Budget that the Chancellor of the Exchequer is bent upon putting far the heaviest burden upon those who can least defend themselves. He is putting the burden upon large corporations who have no votes whatever, and upon large owners of property who have very few votes collectively.
    I should like to call the attention of the House to some of the more particular objections to the large increase of duties which the Government are proposing. Assuming that graduation in itself is just—and that is an assumption upon which I do not propose at this moment to express an opinion one way or the other—it is certainly very liable to abuse. Graduation was introduced for these purposes more particularly in 1894, but it was steepened by the present Government In 1907, and again within only two years there is to be another excessive steepening proposed. That is why I remarked that graduation is very liable to abuse, and when these frequent steepenings occur it is no doubt being greatly abused. Look at the effect on moderate sized properties of these increases of duty. A man may have an estate just over £40,000, which sum invested at 3½ per cent. would bring in an income of £1,400 a year. Under the proposed scale his executors will have to pay in Estate Duty alone—and this is not considering Succession Duty, Legacy Duty, or Settlement Duty—£2,800, that is to say, exactly two whole years' income on an estate of £40,000. A man with an income of that amount has to keep up some society appearances, and his friends expect him to do so. I venture to say in such a case when a man is asked to sacrifice two years' income in Estate Duty alone it is grossly unjust. What, after ail, was Sir William Harcourt's intention when this graduation was introduced? We have just heard from Lord Rosebery a speech of great eloquence and great force. He was especially entitled to speak, as he was in the Cabinet with Sir William Harcourt. His evidence, therefore, is very direct. He had just heard from him that Sir William Harcourt's intention, in putting on these
    1746
    Death Duties, was to make up for and redress the inequality between earned and unearned income. That inequality was further dealt with by the Prime Minister in 1907. Lord Rosebery said that Sir William Harcourt, and therefore that Government of which the present Prime Minister was a Member, intended 8 per cent. as a maximum charge on even the largest estates. We have, however, not only Lord Rosebery's evidence. We have the evidence of another very eminent person, whose remarks and opinions are even stronger than Lord Rosebery's from the fact that he was the Chairman of the Inland Revenue at the time Sir William Harcourt was consulting him about the Budget, I mean Lord Milner. I do not know whether the Committee is aware that Lord Milner has given very fully his opinion of what the intention of Sir William Harcourt was when he fixed the maximum of these Death Duties at 8 per cent. Lord Milner at Bristol this spring said:—
    "It was not the intention of Sir William Harcourt that the great structure which he raised should be lightly altered, or that the rates should be rashly increased. I remember that at one time he was inclined to fix the maximum rate at 10 per cent., but after weeks, and I think I may say months, of consideration and of consultation with his expert advisers, Sir William Harcourt came to the conclusion that 8 per cent. was the highest rate which was either fair or financially wise to impose, and that only on the largest fortunes, amounting to upwards of a million."
    The House is well aware that the Chancellor of the Exchequer now proposes 15 per cent. The maximum has therefore gone up nearly double in the 15 years from 1894 to the present time. I have quoted Lord Rosebery and Lord Milner. Let us hear what Sir William Harcourt himself has to say about it. In this House, on 10th May, 1894, Sir William Harcourt used these words:—
    "We affirm that, taking a moderate system of graduation, immense wealth should pay at a higher rate than smaller fortunes."
    "Taking," let me observe, "a moderate system of graduation." We know from Lord Rosebery and Lord Milner that Sir William Harcourt's idea of a moderate system of graduation, after very careful thought, was 8 per cent. Where is the moderation of the present Chancellor of the Exchequer? I suppose we are to find it at Limehouse! If that is his idea of moderation or the moderation that ought to apply to Death Duties I can only say that his statesmanship and the wisdom of his finance are more than doubtful. Is the moderation that of the Lord Advocate? He has told us that he desires almost unlimited expansion, and, therefore, I

    1747
    imagine, there is no chance of his, at any rate, desiring to keep these duties within any moderate limits at all. We have seen the moderation of the President of the Board of Trade at Leicester. His words, I think, are beneath notice. He seems to me to act with an entire lack of principle and to be ready to adopt any programme which appears to be a short cut to the Premiership. We have also some idea of what a moderate system of graduation is from the speeches and writings of the hon. Member for Blackburn (Mr. P. Snowden). He tells us that he desires to see 7s. in the pound as a very reasonable tax. And if I consult the remarks of the junior Member for Merthyr Tydvil (Mr. Keir Hardie), he told us at Coalville on 10th July last that if the Labour party were twice as strong the tax on surplus wealth would be twice as large. I suppose that means instead of 15 per cent. we should have 30 per cent. Can these hon. Gentlemen give any guarantee that it will stop there? I do not believe they can bind their successors any more than Sir William Harcourt could bind his. I do mot know, therefore, quite where this steepening of the Death Duties is likely to stop, but so long as there is this intense feeling of nervousness and anxiety as to how much more tax is to be put on these properties there will be a great sense of insecurity and a great hesitation and diffidence in trying to increase the prosperity of the country or in bringing further wealth into it.
    Foreign countries are sometimes consulted by the Treasury Bench when they think it suits their purpose. The Government consult them for certain purposes, but they are not always inclined to consult them in such essential matters as Tariff Reform. Germany has no Death Duties whatever on lineal descendants. The Income Tax in different States, notably in Prussia, goes up to a maximum of 5 per cent., and in addition to that there are certain municipal charges, which I may also put at a maximum of 5 per cent., so that at the very highest, as the best of my information goes, they amount to 10 per cent. Here you are proposing 15 per cent. [An HON. MEMBER: "Not Income Tax."] But there are no Death Duties in Germany, and the Income Tax and the municipal charges there are only what you can fairly compare with our Death Duties, Income Tax and other charges. In France there is no Income Tax at present. There has been a good deal of talk about it in
    1748
    France, but I do not think there is any Income Tax such as ours. There are Death Duties. On the lowest estates they are 1 per cent. on lineal descendants, and. they rise gradually to 5 per cent. on the highest estates.
    Mr. CHIOZZA MONEY: Twenty per cent.
    Mr. EVELYN CECIL: The hon. Member will be able to give his version later on. I have stated the result of my inquiries, and it is also the opinion of Sir Felix Schuster—a point which will perhaps weigh more with the hon. Member than any statistics I may put forward. As regards the estate duty in France, I want to make this observation: that it is only a charge on the amount inherited, and not on the total estate, and, therefore, it is a much fairer measure of the ability to bear it. If a person receives £500 out of an estate which is valued at £500 only he only pays 1 per cent.; if he receives £500 out of an estate of £50,000 in France he only pays 1 per cent., but in England it is entirely different; you charge him 1 per cent. on an estate of £500, but should he receive £500 out of a £50,000 estate you charge him 7 per cent. under the proposals of the Chancellor of the Exchequer. Of course if the £500 is intended to be an addition to a poor man's fortune and to help him, 7 per cent. is a severe tax, whereas 1 per cent. would only be a fair measure of his ability to bear the burden. Look at this question in what way you will, whether from the general objection to the higher Death Duties, which are so financially unwise, or whether you look at the particular objection that they specially bear so unfairly on estates of a certain size, and are not at all what was orginally intended by Sir William Harcourt, who laid the foundation; or whether you look at the foreign comparison, which cannot be adduced as a support, it seems to be that the only conclusion that can be come to is that they are grossly unfair; that they bear exceedingly hardly on a large number of estates, that they ought not to be passed, and that no sane man will submit to them tamely or without a vigorous protest.
    The SECRETARY of STATE for WAR (Mr. Haldane): The hon. Member has not spared his own Friends, for early in his speech he began with a reproach addressed, not only to the Government, but to his own side—a protest against the proposition to allow the Government to

    1749
    accept in payment or part payment of Death Duties a share of the property. I think it was a little hard to reproach the Government with that, because after all the Amendment put down toy my right hon. Friend is designed to take the place of a much more stringent but strangled proposition put forward in the name of his own political Friends. The hon. Member for Chelmsford has fought here; he has given hard knocks, and he has received hard knocks, but his worst enemy would not accuse him of being a Socialist. But that is what the hon. Member who has just spoken suggests; he describes his proposition as Socialistic. May I point out that that proposition goes further than the one standing in the name of my right hon. Friend, because it would compel the Government to take part of an estate in payment of the Death Duty. So much for the minor point raised by the hon. Member. Now I come to his very much wider point. I listened closely to his arguments, and I endeavoured to distinguish what he said against the increase of the Death Duties proposed by the Government on this occasion from what he said against the Death Duties generally. I find myself wholly unable to dissever the two. But if what he said as to the Death Duties, as to the way they interfered with thrift and plundered estates be true, I should like to task him what he has to say about the action of Mr. Goschen, who increased (the Succession Duties; and what about Lord Rosebery, the Prime Minister under whose Government was carried the very great and Successful Bill which has been taken advantage of and considerably added to by right hon. Gentlemen opposite?
    Mr. AUSTEN CHAMBERLAIN: What does the right hon. Gentleman mean by "considerably added" to?
    Mr. HALDANE: Clauses have been made more stringent, and the network has been filled in, with the result that there has been a considerable addition to the tax. Bearing these facts in mind, I think the hon. Member was as one crying in the wilderness—not at something to come, but at something which is past.
    Mr. EVELYN CECIL: The question is, what is moderation?
    Mr. HALDANE: I will come to that in a moment. I have been addressing myself to the question of the Death Duties. But what about moderation? What is it that these changes effect in the law? The
    1750
    average duty is 5 per cent. The hon. Member took extreme oases—he took the case of a millionaire whose estate pays 15 per cent., as if that were the standard of the duty exacted. But look at the law of France. There the Inheritance Duty on an estate of over a million is 20½ per cent.
    Mr. EVELYN CECIL: For a stranger in blood.
    Mr. HALDANE: The hon. Member is taking the extreme maximum cases, and I wish to test them with similar extreme cases.
    Mr. AUSTEN CHAMBERLAIN: But the right hon. Gentleman is taking in one case lineal descent and in the other a stranger in blood. Let him take exactly similar cases.
    Mr. HALDANE: An estate in this country, if over a million, will, if passing to a stranger in blood, pay 25 per cent.
    Mr. EVELYN CECIL: Plus 2 per cent.—27 per cent.
    4.0 P.M.
    Mr. HALDANE: No; many will be exempt from the 2 per cent. The other day the German Government did something; still more objectionable to hon. Members, for it proposed that when a man dies intestate to abolish any right of succession to anybody beyond the children; the collateral would not take at all. The Government are not adopting any scale which contains any far-reaching proposition. We are taking a moderate tax, and the true comparison is to be found not in extreme cases. I take extreme oases against extreme cases, but I wish to deal with the average under the law as it is, and as it was when this Resolution was framed. I am now talking of the Estate Duty, and the average then was 5 per cent., and it will be under these proposals 6½ per cent. The average under Sir William Harcourt's Succession Act of 1894 was 4½ per cent., therefore you have increased from 1894 by under 2 per cent. and only l½ per cent. from the law as it at present stands, and I do not think that can be said to be excessive. If you take the smaller cases, the figures are smaller still. It is only the greater cases which bring up the average. The hon. Member went on to refer to foreign countries. He said: "Look at France, there is no Income Tax in that country, and you must take that into account in considering the

    1751
    question of the Death Duties." In France there are four direct taxes, which are, roughly, equivalent to the English Income Tax, and they produce something over £25,000,000 a year, so really it is absurd to say there is no Income Tax in France under this condition of things. Moreover, in other foreign countries, there have been proposals analogous to those contained in the Finance Bill on the value of property. A Land Tax has been introduced, which is precisely in the form of the Development Duty on land. Therefore, I do not think that the hon. Member gains much support for the argument against this proposal by taking analogies from foreign countries. But, after all, what does the argument of the hon. Member amount to? He says you are taking too much; you are asking too much in the way of taxation.
    No doubt we are asking a great deal in the way of taxation, because there is a great increase of expenditure to be provided for, but is it unreasonable, in comparison with the resources of the nation? I read the other day an admirable pamphlet, written by an old Treasury official, Sir Francis Powell, and he pointed out that in working out the figures, right through our history, for some time past, the tax on national income of the nation had been 8 per cent., and he estimated the national income of the nation at the present time at something like two thousand million pounds, and he estimated that the hundred and sixty-four millions which is proposed to be spent by the Government this year will be in exactly the same proportion as was the case in the time of Mr. Gladstone 40 years ago. The Schedules of the Bill are the only mode of bringing out the money which is required, and the aim of this part of the Bill, and the whole point of the proposals which we are discussing at the moment, is to effect a beneficent distribution of the burdens. On the other hand, we rejoice that the resources of the nation are such that the nation can bear it. The figures of the Estate Duty are very steady, although I notice that there are various fallacious remarks made about it. Everybody knows that the value of securities depreciated very much after the South African War, and consequently, as those fluctuations in value have gone up and down, you sometimes find a certain amount of apparent diminution in the amount of the estates, which is really due to the depreciation in the value of the
    1752
    stocks and the property which makes them up, but if you average them you will find a steady growth in the yield in this country, and a steady growth in the amount obtainable from the taxation under the Death Duties.
    Is it to be said that to take the duties which we are proposing to take at this moment is to put forward an excessive demand? Is it excessive to take at this stage a similar average to what has been taken in the past? I do not think it is. I quite agree, and I have always felt, that the case of land is the hardest of all cases, but I do not think there is any hardship in taking 15 per cent. from a millionaire's estate, where it is put upon property which is easily realisable. In the case of land, however, it is sometimes hard. For instance, take the case of a great house containing really valuable pictures, which it is really in the interests of the public to keep together. Up to the present they have been kept separate, but there is a proposal here which will very much lighten the budren in these cases, because all articles of artistic value, even amounting to a very large item in the estate, will be exempt from duty, until they are sold. Of course, they will have to pay duty, but they will not pay until then, but taking the duties all over the amount of growth in them, is certainly not, looked at and decided by the average, anything startling or big, as it is less than 2 per cent. from the 1894 level, and only 1½ per cent. over the later level. The hon. Member this afternoon took his argument further than that point. He says the Death Duties are objectionable, in so far as they are a real tax upon capital, but it is very late in the day to say that, and it is quite another view of Death Duties to that which has been held, not only in this country, but in every country for very many years, and that is, that as it is only by the assistance of the law that inheritance can take place it is right that the State, which makes inheritance possible and protects it, should have some toll.
    If that is Socialism, it was the Socialism of Mr. Gladstone, Mr. Goschen, and the Socialism of the right hon. Gentleman opposite, who did not repeal the Death Duties. It has been the Socialism of every country that has had any history or any civilisation, and it is a little late in the day to raise the point which we now have put forward. Every one of these arguments was put with much more savage force against the Succession Duty of 1853,

    1753
    and I have been reading in one of the newspapers a choice collection of epithets which were hurled at the then Chancellor of the Exchequer when he introduced his Succession Duty. What is the true nature of these duties? I say emphatically that they are duties on capital, and proper duties on capital. A man by his energy and ability succeeds in earning more than his neighbours. Another man, by his good fortune, succeeds to more property than his neighbours. They have these things during their lives, and after their deaths they pass by virtue of the provisions of the law. In some countries they do not pass, but in this country we allow a very large latitude in the way of disposition of property. We have got past the days when the Church used to take toll for religious purposes, and now that you have not the Church it is quite reasonable that a principle which has always been part of English history should be carried out as it has been laid down in successive Acts of Parliament since the days of Peel, and should be continued at the present time, namely, that the State, which sanctions the inheritance and protects the man who succeeds to it, should take a moderate tax.
    Sir EDWARD CARSON: Why not the whole?
    Mr. HALDANE: I will tell the right hon. and learned Gentleman why. Because this country is one which is governed by people who are, on the whole, moderate and reasonable. The propositions which from time to time are made for the reform of the law have always been denounced as unreasonable, and have always been accepted about five years later as being rather too moderate, and I do not know what the right hon. Gentlemen opposite may do when they come to deal with these duties; they will perhaps increase them. But we are going to make these taxes as steep as they are now and no steeper, and we intend to keep them, within certain limits, in a sound and businesslike fashion. This is a duty which is levied on what a man has in his life collected in excess of what his neighbours collected, and it is not an Income Tax, and he has no right to expect that the whole of it should pass to those who come after him, and who have done nothing, which ha has done, to collect it. He has no right to say it shall pass without diminution. All he has a right to say is that the diminution should be a reasonable one and in the nature of a moderate tax, and that is what the House of Commons aim at doing. The hon.
    1754
    Member said that taxation and representation ought to go together, and therefore as children take this money they ought not to be taxed to the Death Duties at all. It is ridiculous, however, to say that because children cannot vote therefore there ought to be no tax at all upon inheritance, and the argument of the hon. Member, if it was good for anything, would be good against all the proposals that have hitherto been made, as I have shown. The average increase of duty is only an increase up to 6½ per cent. from something like 4½ or 4¾ per cent., and the argument of the hon. Member, to be a valid one at all, should not have been taken in regard to an extreme case. It reaches further than it would be just for us to take. It should have been addressed to an average state of things, and if it had been addressed to that scale it would have proved that the tax does not err in being in excess of what is levied in other countries.
    Mr. E. G. PRETYMAN: The right hon. Gentleman who has just sat down, when he spoke the other day, said that he de-fended the Budget in his capacity as an hon. and gallant Member, and not in his capacity as an hon. and learned Member, and I think that his speech confirms that view, because I do not think there was any real answer in it to the arguments which have been advanced against these Death Duties at all. His speech divided itself, naturally, into two portions. First as to the defence of these Death Duties from the old familiar standpoint that similar Death Duties are imposed abroad. Are hon. and right hon. Gentlemen opposite prepared to accept that in justification of all taxes?
    Mr. HALDANE: It was not a justification.
    Mr. PRETYMAN: If it is not a justification, where is its valu? Is it intended as a justification of this tax to say that there are such taxes abroad?
    Mr. HALDANE: No, certainly not. Otherwise my right hon. Friend would be proposing a tax on food. My argument was intended to refute the argument of the hon. Gentleman opposite, who said that they did not have any of these taxes abroad.
    Mr. PRETYMAN: Then it is perfectly clear that so far it is no justification of the tax that it is levied abroad, and, in so far as the comparison goes, it is entirely fallacious, because in regard to France there is no Income Tax as there

    1755
    is in this country; there is a tax upon dividends, but there is no tax upon profits. I myself made an inquiry of a hotel-keeper in France as to whether he paid any Income Tax whatever on the profits of his business, and whether the proprietors of the largest businesses in the country paid any Income Tax whatever on the profits of their businesses. They pay none. There is a tax upon dividends and upon ownership, but if a man is building up a business and deriving an income from it in trade or industry there is no Income Tax upon it whatever. There is no annual tax.
    Mr. HALDANE: I, too, have inquired, and I discovered that in business after business there is a tax for the right of carrying on the business, though there is no Income Tax on profit.
    Mr. PRETYMAN: That is a licence, that is all, and it is a licence on certain trades only, and the two things are not on the same footing. It is always easy to take one particular tax and to find some single country where that tax may obtain in equal measure, although I do not think the Chancellor of the Exchequer can show us any single country where Death Duties alone, with or without Income Tax, are levied to the extent that he proposes in these duties. Here it is combined with many other heavy duties. The second part of the right hon. Gentleman's speech was directed to the question of hardship and to the general question of Death Duties, but he did not go beyond that, and he never attempted to defend the tax on what is, after all, a much more important ground. I do not propose to touch the question, of individual hardship at all. I propose only to deal with the question of national expediency and the effect of the tax upon the national prosperity. I will make the right hon. Gentleman a present of all his answer as to hardship. It is not nearly so important as what is to be the effect of the tax upon the community as a whole. First of all, what is this tax? Is it a tax on income, which can be reduced to income, or is it a tax on capital? Sir William Harcourt, who is the originator of this Estate Duty, when he introduced the Death Duties, was perfectly clear upon that point. He said:—
    "The measures of penal discovery and irritating inquisition which would be involved in any place which required the determination of every man's income from all sources would make the collection of the Income Tax so odious as to imperil its existence, and in all probability make it impossible to maintain the tax. A
    1756
    graduated Estate Duty may be, in fact, reckoned in terms of annual charge upon the estate, and in that aspect may be regarded as Income Tax, which is levied only upon realised property and does not fall upon what are called precarious incomes, so that in point of fact you arrive at the result which is aimed at in the demand for a graduated Income Tax falling upon what are called spontaneous as distinguished from industrial incomes."
    That is a perfectly clear statement that the author of the tax, Sir William Harcourt, imposed it and intended it to act as a graduated Income Tax. The first question is, What is its amount as a graduated Income Tax, and how does the comparison work? Fortunately for that we have official figures, and if analysed they give us a perfectly ready means of comparison which anyone can apply for himself. Sir Henry Primrose submitted to the Income Tax Commission a paper in which he dealt with this point, and showed how Death Duties should be reckoned in their effect upon income, and it works out at this, that every 1 per cent. on Death Duty is equal to a 3d. Income Tax. It is 2s. in the £ at the rate of 8 per cent. [An HON. MEMBER: "The figure is indefensible."] I do not think so. The figure may be indefensible from the point of view of showing that the successor is bound to replace this income. This 3d. is on the basis of replacement. Either it is replaced, or it is not. If it is replaced the burden is 3d. for every 1 per cent. of duty on any property and on any amount. We need not confuse ourselves with graduation, it covers the question of graduation. Every 1 per cent. of Estate Duty levied upon any property is the equivalent of a 3d. Income Tax for a whole generation upon the owner of that property if he replaces it. If he does not replace it he will have to that extent wasted the national capital; from that dilemma I can see absolutely no escape.
    But that is not all. The 3d. does not express the real state of the case, especially in regard to large incomes, because the basis of that calculation of Sir Henry Primrose was this: He assumed that practically the whole property had been yielding an income at the rate of 4 per cent., and it was on that 4 per cent. basis that he calculated his equivalent, but it is obvious to everyone that the capital value, particularly of a large estate, is in no sense 4 per cent., or anything the least like it, and there is a very considerable proportion of property which is producing no income at all. There is first of all residence, and there will be furniture, pictures, insurance, and other things of that kind which are producing no income at all, and over and above all that, in the case of landed property, it is a matter of general know-

    1757
    ledge that the income returned to the owner of the capital value will probably be 1 per cent., 1½ per cent., or 2 per cent., and I should say it is not far from the mark to say that where a man dies worth a large sum of money anything over £100,000 or £200,000, he has not been receiving an actual spendable income of very much more than 2 per cent. of his money. If that were the case the 3d. would become 6d. It falls in proportion. That is on a 4 per cent. basis. A 1 per cent. duty is equivalent to 3d., and, of course, if a man was getting 8 per cent. for his money the equivalent would only be l½. If he is only getting 2 per cent. for his money the equivalent would be 6d., and so on. Therefore the incidence of the duty is enormous. The question of whether the capital belongs to one man or to many men does not touch the question from my point of view at all. From the point of view of hardship it does, and the defence of these duties is always to point out a man who dies worth a million, and to say, "what is the hardship in taking £250,000 of that and letting his successor have three-quarters of a million?" That is not the point of view from which I hope the Chancellor of the Exchequer will defend the tax. There is a million of national capital from which the Chancellor of the Exchequer proposes to take a sum when it happens to belong to one man. It is equally national capital whether it goes to a brother, a son, a wife, or a cousin. Here is a million of national capital from which you propose to take 25 per cent. and to spend that as income. What business could stand on those principles? Are not the capital and the income of a nation to be regarded on exactly the same basis as any private capital or income which belongs to any individual, or is running any business? What can be simpler? The very facility of this is its condemnation; it is the easy road to ruin. The resource-less company director when he has no genius for finance and wants to pay a dividend draws upon capital, and that is exactly the position of the Chancellor. The burden is even greater, because, taking the rate at 20 per cent., you get an Income Tax of 5s.; you have to add to that the Income Tax which on a large estate is 1s. 8d., and on a landed estate you have to add Land Tax, which amounts practically to 1s. Then you have to add Inhabited House Duty, indirect taxes, licences, and rates as well, so that the double burden which is imposed upon property amounts in many cases practically to confiscation, and if you
    1758
    reduce this tax to income you are taking, for the purposes of the State, in taxation, either Imperial or local, a burden which is anything from 5s. to 10s. in the £.
    The right hon. Gentleman says it is not a tax upon income. He disagrees with Sir W. Harcourt, the author of the tax, who said it was in place of a graduated Income Tax. Now the right hon. Gentleman proposes not only to largely increase this tax, which we were informed was in lieu of a graduated Income Tax, but to impose a graduated Income Tax as well. I do not wonder he says it is not a graduated Income Tax, because if he had admitted that it was one that would remove an excuse for imposing a new one which he proposes to impose this year. I have referred to the point that if these Death Duties are not replaced there is clearly a direct loss of national capital. To that there can be no answer. If capital is taken and spent as income—
    Mr. HALDANE: It goes towards the productive expenditure of the nation.
    Mr. PRETYMAN: May I ask the right hon. Gentleman what is productive expenditure?
    Mr. HALDANE: I should have thought that there was no more productive expenditure than money well spent in improving the government of the country.
    Mr. PRETYMAN: That is a kind of insurance, but it does not produce any increase of income. What would happen in the case of a water company whose directors said that nothing would be better than an increase of the directors' salaries?
    Mr. HALDANE: That is not an analogy. What would happen to the directors and the company if they had no police to protect their wealth?
    Mr. PRETYMAN: When their works were ruined and shut up the police would have nothing to do. If they took their capital and spent it as income that must be the result, and, therefore, 10,000 police would not prevent ruin. The police do not keep out ruin; they keep out the enemy from without. We are quite safe from the enemy from without, but are we safe from the enemy from within? What is the use of the Government pretending to protect the industry of this country when they are taking this method of ruining it? A surer method it is impossible to take. If you take this capital, and it

    1759
    cannot be replaced, it is so much national capital gone. What is the amount of it? It is £26,000,000 a year. That is the amount which under these taxes alone are to be taken from the national capital and spent as income. Is that sound financial policy? The Chancellor of the Exchequer thinks it is. Do the figures bear it out? The right hon. Gentleman and his Friends are always telling us that the national wealth is increasing enormously, and that, notwithstanding these Death Duties, the national capital is replaced somehow because it is steadily increasing. The figures show something quite different. Here we have a greatly increasing population; we have a nation which requires more and more maintenance expenditure every year, and, if what the right hon. Gentleman said were true, the amount of capital falling in to pay Death Duties every year would increase. Does it increase? [An HON. MEMBER: "There is evasion."] Well, evasion will cease when there are no more fortunes to tax. The amount of capital upon which Death Duties were paid was over £288,000,000 in 1899, and last year it was £271,000,000. It had decreased.
    Mr. HALDANE: What was the drop in the value of securities?
    Mr. PRETYMAN: The drop in the value of securities is only a branch of the ruin; that is merely a reflection of the kind of action the Government contemplate. Does the right hon. Gentleman think that we can drive some securities into the market without depressing the value of other securities? The extraordinary fallacy on the Government Bench is that they can take a bit of capital from one man and spend it as income without affecting other capital. They seem to think that other capital is insensitive and totally unaware of what is going on. As a matter of fact, if you attack one part of the great industrial concern, you will injure the whole of it, and you are bound to injure the whole of it. Of course, securities have fallen in value, and that fall is reflected in these figures. That is only part of the indictment against the Government to which the right hon. Gentleman has been good enough to call my attention. I have the figures here, and they show that on the whole the yield of the Death Duties has been falling. The largest amount of capital on which duty was paid in the whole of the ten years to which the figures
    1760
    relate was £288,000,000, and it has gradually gone down to £271,000,000. The lowest point was £262,000,000, so that on the whole it is true to say that the tendency has been to slightly decrease. There is no increase at all. Is that a justification for raising the duties? We have something further to go upon. My hon. Friend the Member for Stepney (Mr. Leverton Harris) asked the Chancellor of the Exchequer what was the average amount of the estates paying duty. We wanted to see whether there was an increase or a decrease. The reply showed that there has been a steady and material decrease for the last three years. [An HON. MEMBER; "Not material."] Well, I think it is very material. Hon. Members below the Gangway look on a decrease in the average of 1 or 2 or even 11 per cent. as not material, but if they know how in business matters are cut fine, how fierce competition is, and how much ½ or ¼ per cent. affects business they would understand that these decreases are not so immaterial as they suppose. The average value of estates on which Death Duties were paid three years ago was £4,400, then the average fell to £4,100, and then to £3,900, and this is the opportunity which the Government take to enormously increase the scale of duties. Therefore the obvious deduction is against the Government that you cannot spend capital and treat it as income without reducing the resources of the country. All the figures that are available prove the same thing, and, of course, in the immense body of industries such as this country possesses, an entity of such magnitude does its work slowly, and even this Government cannot ruin the country in four years. They have gone a good way towards it. I admit they have made good use of their time. The figures show that there is a distinct tendency towards the reduction of national capital. They also yield another fact which shows the same thing. The present Prime Minister when Chancellor of the Exchequer raised the Death Duties to get more money. Did he get more? Did not be get less with a higher rate of duty? Is not that what is going to happen?
    Mr. HALDANE: Would the hon. and gallant Gentleman say what year was highest in respect of yield from estates subject to Death Duties?
    Mr. PRETYMAN: I have not the figures here for every year, but I think the figures show that the yield of the duties was lower after they had been raised than before.
    Mr. HALDANE: Can the hon. and gallant Gentleman say if the highest figure was in 1899?
    Mr. PRETYMAN: I thought the right hon. Gentleman referred to the total yield of the duties. The highest figure was in 1899.
    Mr. HALDANE: Well, that was after Sir W. Harcourt had increased the Death Duties.
    Mr. CHIOZZA MONEY: In 1908 the estates that passed amounted to £247,000,000. Two years afterwards they amounted to £293,000,000 and that was six years after the imposition of the Death Duties by Sir William Harcourt.
    Mr. PRETYMAN: The figure I gave, £288,000,000, is exclusive, and that given by the hon. Member is inclusive.
    Mr. CHIOZZA MONEY: I have taken the figures from the Inland Revenue Report, and the amount for the year 1899–1900 was £293,000,000
    Mr. PRETYMAN: We are going back into ancient history, so far as these figures are concerned. I am not, arguing that there should be no Death Duties. If I have been taken as doing so I am glad to have the opportunity of stating that I am not arguing the question from that point of view at all. I am not objecting to Death Duties as long as they are not more than can automatically and reasonably be replaced. What Sir William Harcourt maintained was that he imposed a scale of duties which was as high as could reasonably be borne from the national point of view. That was his point, and the facts prove him to have been correct. The facts I have been giving have been quoted with that object, namely, to show not that all Death Duties but that your Death Duties are injurious to the nation. I think from necessity there must be Death Duties, but I maintain that the moment you increase them to a point when replacement becomes impassible you are not only doing no good, but you are doing harm to the country. What does it matter from that point of view how beneficent your object may be? When you are spending national capital which you cannot replace what defence is it to say that you are spending the money on old age pensions? You may be spending the money on the most beneficent objects in the world, but there must come an end,
    1762
    and the end is that which is actually desired by hon. Members below the Gangway. An hon. Member below the Gangway actually produced a suggested Budget. He proposed taxes on these lines, but he proposed a very much heavier tax upon large incomes. With what end? First of all to confer great benefits on the poorer classes. That is a most laudable object. Do hon. Members below the Gangway think that we should not like to see every child in the country supported and everybody made comfortable at the expense of the State? But where is the money to come from?
    The CHAIRMAN: I think we had better not get into a discussion of all the objects of the Budget. If we do it will mean a second reading Debate on each of the new taxes. The question of all the purposes for which the money is required cannot be discussed on the Amendment now before the Committee.
    Mr. PRETYMAN: I am sorry if I went too far. I must, if I may, object to what is proposed by hon. Members below the Gangway with the view to the ultimate extinction of all private capital. I would ask, when that ultimate extinction has come, where is the money to come from for those beneficent objects? I will not pursue the subject any further in view of your ruling. But it lies at the root of the whole matter. The argument which hon. Members opposite when on the platform perpetually use is that in imposing these and other taxes they are putting the burden on shoulders that can bear it, and that they are taxing the strong. But if you destroy the strong, what becomes of the weak? The industry of the country is supported upon the shoulders of the strong. The industry of the country is financed by men who are strong, and if you make it impossible for them to pursue their trade and industry to advantage by imposing penal taxation, you break down the strong and the weak with them. The moment the burden becomes so heavy that the strong cannot bear it, you put a burden on them which makes them fall, and with redoubled force the weak men who stand behind them also fall. The result of the duties will simply be to bring down the rich man to nothing but a moderate competence, to bring down the man of moderate income to poverty, and to bring the poor man to beggary.
    Mr. CHIOZZA MONEY: I have listened, as I always do, with admiration to the

    1763
    speech of the hon. and gallant Gentleman (Mr. Pretyman), and I am glad to add that I disagree with him even more than usual on this occasion. In regard to the main point of his speech, the effect of the heavy Death Duties upon the national income, I think he dealt with it, if I may say so, with some confusion of mind when he pictured the toll taken by the State in respect of Death Duties as a loss of capital. How can it be that within the borders of this nation? If the State takes a toll upon the estate left by an individual is there a loss of wealth in the country? It cannot be said that there is. Take one or two cases, and see what really happens. If it is land obviously the area of the country is not diminished by the mere toll taken by the State. If it be shares in an industrial company—say, a railway company—the undertaking of the company is not diminished by a single tie or sleeper because the State has taken toll. What really happens is this: In any given year there is a certain amount of capital offering for new investment. If through the operation of Death Duties the executors of certain individuals sell, or are compelled to sell, then those properties will pass from one hand to another hand in the nation, and the capital of the nation will not be diminished. The hon. Gentleman is entitled to argue that if there were not those offerings of old capital then possibly new capital might be called into existence; that new permanent capital might be created through the operations of that new investment, which would not be wanted if the State took this toll. But when he comes to argue that the whole point resolves itself into one of degree, and degree only, I think that the hon. and gallant Gentleman would be the first to admit that. He does not argue, of course, and he could not argue, that the actual levy by the State diminishes existing capital. He is only entitled to argue that the offer of old capital by the executors of owners dying may prevent new capital being called into existence. On that point it is a matter of degree only. The hon. and gallant Gentleman quoted the figures of Sir Henry Primrose which were given to the Income Tax Committee. I should like to deal with those figures, if I may be allowed. He argued that Sir W. Harcourt's 8 per cent. duty on a millionaire's estate was equal to a 2s. Income Tax, because he said £100 would buy a 30 years' terminable annuity of £5 and, therefore, £4,000 a year would buy £80,000 in 30 years. Surely the
    1764
    fallacy of that is apparent on a moment's, consideration. Is it really necessary to put by £5 a year to buy £100 in 30 years? If it were just put by by itself without interest it would amount to £150 in 30 years. If the hon. and gallant Gentleman inquires he will find this, that he can buy £100 at the end of 30 years by paying about £2 a year, and not £5 as Sir Henry Primrose argued. It comes to this, that Sir W. Harcourt's Death Duties on a millionaire's estate were very much less than 2s. in the £, considered as an Income Tax, and if the Death Duties proposed by my right hon. Friend are enacted, as they will be enacted, then the millionaire's estate will only pay an Income Tax of 1s. 4¾d. in the £.
    Mr. WALTER GUINNESS: I want to know whether he allowed anything for the loss of income on the capital which has been taken by the Death Duties? On the assumption that the capital will return 4 per cent., the amount obviously is twice as much again as he says.
    Mr. CHIOZZA MONEY: If a further allowance is made to replace the income on the amount taken out a slightly increased sum would be required, but only a slightly increased sum. The major part of the problem is dealt with by the figures I have given.
    Mr. WALTER GUINNESS: To makeup the loss of the annual income you must not only take what is necessary to get the total sum back in 30 years, but you must take also the loss of 4 per cent. during the lifetime of the successor, owing to a portion of the capital having been taken away; so it is twice as much again as the hon. Gentleman presents to us, and his. 2 per cent. becomes a loss of 6 per cent. on the slice of capital taken as Death, Duties.
    Mr. CHIOZZA MONEY: If the hon. Gentleman works it out he will find that the figure does not come to anything like 2s. in the £. But take a broader survey, because it is most important that we should consider this question in its relation to the capital of the country. If we take the private capital of the country as only £12,000,000,000, what is the proposal of my right hon. Friend equivalent to? This toll of £21,000,000 would only represent one sixtieth part; and if we take the capital of the country as £15,000,000,000, as I think we are entitled to do, it represents only one-seventieth part. Can the hon. and gallant

    1765
    Gentleman contend, even in the matter of degree, that the capital savings of the country are in any way touched to any extent? The hon. and gallant Gentleman dealt at some length with the figures relating to estates. What he forgot to do was to compare those figures with the realised income of the country. He gave us figures—of course he did not give us a complete list—taken during the last 10 years. He did not give sufficient prominence to the fact that the years 1907 and 1908 were two of the largest years of the last 12 years. At the same time I should be quite willing to agree with him that the amount of capital brought under review for estate duties has not increased as it was expected it would increase. The explanation of the hon. and gallant Gentleman is, I suppose, that capital has been frightened out of the country and lost to the country. If that were the case the income of the country would be rapidly falling. But has the income of the country fallen? Take the same period. During that period the estates brought under review have been almost stationary, and during the same period of 12 years the gross income assessed for Income Tax has risen from £734,000,000 to £1,040,000,000 It is obvious that if these figures relating to estates fully represented the amount of the estates left at death these figures relating to income could not possibly obtain. Now we know that these figures have obtained, and therefore we know that the figures relating to Estate Duties have suffered from some influence. There are two influences. The first is this—that gifts inter vivos have been increasing. The second is that there has most unquestionably been, as I ventured to point out to the House recently on another occasion, a considerable amount of under-valuation for Death Duties, because if one takes the amount of property that passes it does not bear the relation which it ought to bear to these particular figures quoted by the hon. and gallant Gentleman. In other words, through the two influences I have named, the estates brought under review do not properly represent the wealth of the country. But the figures relating to income do more properly represent the facts, and since then they have increased by about one-third in a little more than a decade, which is a sufficient proof that the wealth of the country, the invested capital of the country, has not been trenched upon I will not say in any marked degree, but has not been trenched upon to
    1766
    any degree worthy of our particular consideration.
    On that matter of degree of course the whole question of graduation rests. Roughly, the facts in regard to graduation are these, and are easily remembered. We have got about £300,000,000 passing every year at death, and we have the estimates of what is left put at a low amount. Of that £300,000,000, £200,000,000 are left by only 200 persons in a year. That is the case for graduation; that is the case which I have urged again and again upon the attention, of this House. When I see my right hon. Friend taking the toll which he proposes to take in his Budget, I say that when the graduation is considered it is not excessive. I do not know whether the hon. and gallant Gentleman used the word "Socialism," but certainly at the end of his speech he implied that he saw before him a vista of Socialism increasing, in which the property owners of this country would be chivied from one position to another. What are the facts? Take the hon. Gentleman who moved this Amendment. Would he really be content for proprety owners of this country to revert to a condition of absolute Individualism? When it comes to a controversy between Socialism and Individualism in this matter, then, if the hon. Gentleman relies upon Individualism, what becomes of inheritance? It disappears unless the property owner or executor or heir of the property owner can hold his own, and can hold what has been left to him against all comers. The whole theory of the Death Duties is not so much that it is an Income Tax, although that is an arguable position I admit, but it is that a sum or a charge, if you will, is exacted by the State in return for services which to the hear are very great services indeed. They are a return for the safe inheritance of the property kit by the deceased. Reliance upon Individualism in that connection would leave the heir in a very dubious position. There is another point with regard to this matter of which I would like to remind the hon. and gallant Member. When the State taxes, in whatever way, it does not decrease the wealth of the country; it merely transfers expenditure from one person to another person. Whether it is likely in any particular case to be good or bad for the country depends entirely upon what was being done with the money before it was transferred, or what would have been done with it

    1767
    if it was not transferred, and what will be done with it by the State. If we take a particular case, the hon. and gallant Gentleman seems to see a vision of people spending their money more furiously because of the taxes of my right hon. Friend. I thought that the proposition was a very different one. I thought that the argument, was that they would have to contract their expenditure, and that they may have to refuse their subscriptions to clubs, charities, and for other purposes of that kind. I am happy to think that they will spend their money more furiously.
    5.0 P.M.
    Take the case of a duke—I may be pardoned for referring to dukes, who are making themselves somewhat prominent just now—who refuses to continue his subscription to a football club. If his subscription had gone to the football club what would have happened? Possibly it would have gone to paying the rent of the football ground, or it might have been devoted to purchasing a football, or it might have been devoted towards paying the salary of a professional football player. That is one class of expenditure. When the State takes it what does it do? Hon. Gentlemen opposite would like to transform that guinea into part of a destroyer or of a battleship; but it might conceivably be transformed into the salary of a teacher. But, whatever becomes of it, the actual money does not disappear. My right hon. Friend is not going to drop the money into the ocean. He is going to take the money from some people who would spend it in one way and transfer it to people who will spend it in another way. But whether or not that expenditure is good or bad for the country is a question which is not settled, as the hon. and gallant Gentleman seems to think, by merely saying that the Government are taking the tax. We have got to keep in mind and ask ourselves what the State is going to do with the money. I hold myself that it is very much better at this moment, as far as I can read the situation, for that money to be put into the form even of a super-"Dreadnought," or into the form of an old age pension, than to devote it to the salary of a professional football player. All these things have to be considered on their merit, and whether or not they are for or against the best interests of the country is the question which must be decided by what we know as to the expenditure of wealth, and as to what we
    1768
    know, or what we decide in this Committee, as to what is to be done with the money which the taxpayers have paid. The question I submit to the Committee respectfully is very much more complicated than has been submitted to the Committee by the hon. and gallant Gentleman. It goes very much deeper and very much further than he put it to us this afternoon. It is such considerations as those I have advanced which should be seriously considered, to see whether we can—I do not say we are now, but certainly we may—much more usefully, much more fruitfully, devote to national purposes a larger proportion of the total income, the total wealth of the country, than is disposed of at this moment by the present individual expenditure. Again, the State may not merely use this money for current expenditure in the building of schools, in training teachers, or in building up a navy, but I hope to see such money employed in the way proposed by the Bill introduced by my right hon. Friend for public development.
    Is there anybody who compares this nation with other nations of Europe; is there anybody in this Committee who is satisfied with the attention given to national economic development by the State? I do not think that anybody can be satisfied. It would be out of order for me to go into the purposes of the Development Bill; but generally I may say this, that in more than one direction the State might very usefully employ money which would not fructify or be used to such good purpose by private individuals, and very possibly, therefore, the transfer of money by Death Duties, instead of meaning a waste of national capital, may mean an addition to national capital—at least, we can make it do so, if we agree to do it. I myself believe there is certainly more to be said for the argument of the hon. Gentleman who opened this Debate on the point of the uncertain application of these duties as between one family and another. I am a very strong supporter of the view that persons should contribute to the State in proportion to their resources. Hardship may, indeed does, arise where property passes. I can name one place where the title has passed, and, I presume, the estate with it, every 16 years; on the average every 16 years that estate has passed. In another case the title and property have passed every 40 years. Obviously the incidence of the Death Duties in these cases is very different, very unequal, very unfair, and, therefore, I do think there is something to be said for that argument. That is why I

    1769
    myself look into the future, and think that, if either party of this House desires to raise money—as hon. and right hon. Gentlemen opposite will find that they themselves will have to do—I should like myself to see more reliance placed on Income Tax and less reliance placed on Death Duties, for the particular reasons to which I have referred. But up to the point to which my right hon. Friend has taken these duties I cannot admit, I cannot allow from the national point of view, or from the point of view of individual hardship, that there is anything to be said against the proposals of my right right hon. Friend.
    Reference has been made to France and the inter vivos duty. Here are the facts. For lineals the range of Succession Duty in France is from 1 to 5 per cent.; between husband and wife the range is up to 9 per cent.; between brothers and sisters up to 14 per cent.; between uncles and aunts and nephews and nieces up to 13½ per cent.; for relations it ranges up to 19½ and for strangers up to 20 per cent. My right hon. Friend has gone back five years for the purposes of the Death Duties, and if in that five years anything is given away from the estate it is as though the owner had died five years ago. The French, by the inter vivos duty, raise one million, in addition, to 10 millions from ordinary Succession Duty, making 11 millions, in a country where the amount of wealth which passes in any one year is very much less than in England. [An HON. MEMBER: "No."] It is so; I think you will find that, whereas in this country about £300,000,000 a year pass under review for Death Duties, in France only £200,000,000 a year pass, showing that the proportion of wealth in the two countries is as three to two. While it is true that the French Succession Duties are not quite so heavy as they axe in this country, they do approximate to the amount which is levied in this country. All these facts remind us, indeed, that all modern civilisations are compelled, not merely for the purpose of defence in the ordinary use of the term, but for those greater and wider purposes, which, I rejoice to think, are gaining greater ground, to increase their expenditure—whether it be France, Germany, or whatever country is named. It is not because of armaments alone that those countries—which have the only alternative that hon. Gentlemen opposite offer—pay increased Death Duties, Income Tax, and Land Tax; and, that being the case, I think that the proposals now under discussion may be viewed with
    1770
    confidence and without any alarm that we are in any way interfering with or injuring the welfare of the nation, which we all have at heart.
    Mr. WALTER GUINNESS: I am sure that, at all events, those who sit on these benches have been awaiting with great interest the declarations of the hon. Member who has just sat down with regard to the Death Duties. We have had a really instructive economic address from him, as we all expected, but we have had very little on the merits of this particular proposal to increase the Death Duties. The reason I have been awaiting it with so much interest is that we all remember an interesting letter which the hon. Member (Mr. Chiozza Money) wrote to the "Daily News" before this Budget was introduced. That letter was published in that journal on 14th April, and in it the hon. Member argued very strongly against any increase of the Death Duties.
    Mr. CHIOZZA MONEY: I think the hon. Gentleman will agree with me that a more accurate description of that article would be this: I argued that the yield of the Death Duties was not satisfactory, owing—for the reasons I gave in my speech—to the increase of Death Duties passing inter rivos. My right hon. Friend has now provided against that, and thus removed my objection.
    Mr. WALTER GUINNESS: The Committee will be able to judge if I read an extract from what the hon. Gentleman wrote in his letter:—
    "Although the average rate of Death Duty was raised by Mr. Asquith, the Death Duties in the financial year just closed yielded less than in either 1908–7, 1901–2, or 1899–1900 This avoidance of the Death Duties is not only a perfectly legal but a perfectly moral thing, and as the State can scarcely tax gifts there is no remedy for such avoidance to be found without the compass of Death Duty taxation. What then would be the effect of a further increase of the Death Duties. There is unfortunately little doubt that to raise the duties much further would be to increase the value o£ estates passing inter vivos. The probability is that by raising the duties a little more revenue could be obtained, but the increase would be by no means proportionate to the increase of the rate of tax. Indeed, there is the possibility that so muck stimulation might be given to the gifting of property, that the yield might actually fall."
    I think these words show far better than anything I can say that the contention of the Opposition with regard to these in creased duties is correct. I think we must all feel disappointment at the hon. Member not having been able to put forward arguments in support of his conversion.
    Mr. CHIOZZA MONEY: I dealt with the whole of the points in my speech.
    The CHAIRMAN: It would toe inconvenient if hon. Members always thought it necessary to interrupt when their arguments are not, in their opinion, fully appreciated. I think the hon. Member need not explain that he has dealt with the points.
    Mr. WALTER GUINNESS: The House listened with great interest to the hon. Member's speech, and no doubt he did deal with some of the points. In discussing this proposed increase of the Death Duties, I think we must look at the question in two ways. First of all, we must look to see whether the increase in revenue which it is hoped to derive from the tax is reliable, and whether we can realise a regular yield. The question whether the yield will increase or decrease must greatly depend on whether the tax is or is not easy of avoidance. It is well known that the Death Duties are easy to avoid if it is worth while to do so, and when you get this tax, in an extreme case, up to one-fourth of the total value of the estate, it is certainly worth any-body's while to hand over a large proportion of his estate during his lifetime to his heirs. The figures of the last two years show in the return from the Death Duties that the point of diminution has already been passed in the case of these taxes. The rate was raised in 1907, and so far from bringing in any greater yield the return has actually fallen. In the year ending 1907 the yield was £15,236,000, then after the rate was raised, in 1908, the return was £14,359,000, and in 1909 it had fallen still further to £14,173,000. Those are the yields, leaving out Legacy and Succession Duty, although of course we cannot really look at Estate Duties alone. We must also bear in mind the enormously increased rate on Legacy and Succession Duties, which, I think, will make it almost impossible to leave estates in settlement.
    I think that the Government have apparently realised that this big decrease is explained by the fact that people are handing over their estates during their lifetime, and that they are trying to make up for the loss by the desperate expedient of raising the rate, regardless of the fact that they are undoubtedly by so doing drying up the sources from which this revenue is to be obtained. Therefore I think this tax is a very uneconomical one,
    1772
    and one which cannot be relied upon, because as soon as the period comes to an end during which gifts inter vivos will be ruled out, and will be made liable to duty, that there will be a very large drop, and if this rise is now made the drop at the end of whatever period is taken will be so much as that you will probably get less than you do from the tax at its present rate. Then one must look at the tax from the point of view of its economic effect, whether it is going to destroy capital and discourage industry and the employment which depends on that capital. I think to realise the probable effect of this tax we must notice the fact that the scale is so greatly steepened at its lowest end. That is the outstanding feature of the new graduation. The Government have apparently realised that the pyramid of wealth is very broad at its base, but that it grows very small indeed at its apex. They have come to the conclusion it is impossible to found a really productive tax on the apex, and that if they want to get a large revenue they must take it very low down. Therefore, we find that the smallest estates are very heavily taxed; in fact, the tax is almost double if you compare it with the taxation in Sir William Harcourt's Finance Act of 1894. Originally under that Bill estates up to half a million pounds paid 7 per cent. Now not estates of half a million pounds pay 7 per cent., but estates of from £40,000 to £60,000. Therefore this tax has been brought far lower in its oppressive action than Sir William Harcourt ever dreamt of.
    The right hon. Gentleman the Secretary of State for War said it was rather late in the day to raise the argument that this tax was going to deplete capital. Surely when the graduation is so enormously steepened as it is there is every likelihood you may deplete capital, even though you did not when the same rate of tax was only applicable to incomes about ten times as large. When you put on this increase on small incomes I think it is almost certain you will drive people to pay this out of capital, because they will not be able to pay it out of revenue. I will not discuss the justice of this tax. I know that when the Chancellor of the Exchequer goes "Limehousing" his sense of justice rather seems to depend on the numerical importance of the class that is asking for justice. I will rather restrict myself to discussing the financial expediency of this tax, and I do

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    think if it can be proved that this tax is going to be paid out of capital and not out of income it is certain you are depleting the resources of the nation. It would be otherwise if you were applying the whole of the product of this tax to decreasing the National Debt. It might be right to tax in order to wipe out the National Debt, which, after all, has only been raised on the security of our national capital; but the Death Duties this year bring in £18,600,000, and the decrease in the National Debt is to be only £7,000,000, so that the Death Duties are bringing in two and a half times more than the sum which you are using to decrease the debt of the nation. We have had the argument this afternoon that Death Duties were imposed on the assumption that they were a form of deferred Income Tax, and that the successor would prevent capital being depleted by insuring against the operation of the tax. That was quite possible in 1894, but since the tax has been enormously increased I believe it is quite impossible. The hon. Member for North Paddington dealt with Sir Henry Primrose's figures. He said that it was not a fair statement of the case to say that every 1 per cent. increase in the rate of Death and Succession Duties meant a 3d. increase on the annual value in the £. I have worked it out on a basis which I will give, and I find it comes to more than 3d. I make it out as rather more than 3½d. I will not take the case of large estates, although, of course, the ratio is just the same. I think it is quite possible that in the case of large estates millionaires may be able to insure, but I do not believe that the small man possibly can. I think you will find the insurance premium so onerous that rather than insure he will be content to hand on his estate diminished to his successor.
    I agree with the hon. Member for North Paddington that it is very difficult to understand Sir Henry Primrose's argument as to the incidence of these Death Duties. It seems to me you must take two factors into account. I think that the difference between the hon. Member and myself is that he is only taking one factor into account, namely, the factor of insurance premium. The two factors I would take into account are—first, the loss of income and then the insurance premium. Let us take the loss of income at 4 per cent., and let us also accept the hon. Member's figure that you can insure against Death Duties at 2 per cent. I think 2 per cent. payment on the £ at 3½ per cent.
    1774
    amounts to rather over £100 in 30 years, so that I think 2 per cent. is probably quite a fair figure at which a man of 30 years of age can insure his life against Death Duties. Let us take an estate of £40,000 bringing in, at 4 per cent., an income of £1,600. The successor to that estate must face an additional Income Tax of 2s. 5d. in the £. He has got to face two-thirds of that amount owing to the decrease of capital to which he has to submit, and he has got to submit to one-third of that amount owing to the insurance premium of 2 per cent. In the same way the man who does not inherit from his father, but from his cousin, would have to submit to an annual tax on this basis of 5s 1d., in addition to his Income Tax of 1s. 2d. I think it is quite certain in the case of the estate of £l,600 that the man will not have a sufficient margin, and that he will prefer to cut down his insurance premium, and not to replace the capital so as to hand on his estate undimmished. For that reason, I believe, it is perfectly certain when you graduate this tax as at present, so that it presses far more onerously on the small income, that you will, at all events in the future, deplete our national capital. I think that that is disastrous from every point of view, and I think also it is very undesirable to hide from the country the true state of affairs by concealing the diminished return which will really be brought in by Death Duties by the increased rate, although you know perfectly well, at the end of the period, when gifts inter vivos are no longer liable to be taxed, that there will be a very large drop in the tax, and that the future revenue will be to that extent greatly decreased.
    Mr. MUNRO FERGUSON: The hon. Member for North Paddington spoke on the inequality of the Death Duties as applied to families. I should like to refer to the inequality of the Death Duties as applied to industries and as between different industries. The Chancellor of the Exchequer has been much more reasonable than any Chancellor of the Exchequer that I can remember in respect of the suggestions which have been made to him from either side of the House I cannot remember any Chancellor of the Exchequer—and I remember them for the last 25 years—who has been so reasonable in taking into consideration suggestions that have been made and in putting them into his Bill. I am quite sure that no Bill has been modified by so many suggestions. For example, there was the first part

    1775
    which dealt with the Land Clauses, and whether we approved of them or not, at any rate a great number of suggestions were accepted. I merely call attention to the fact because I have not the slightest doubt that reasonable and practical suggestions would be received by him also with respect to the Death Duties as they were with respect to the Land Clauses. Therefore I shall put what I believe to be, or what might be, the prejudicial effect on two industries which I understand best, namely, agriculture and sylviculture. I will deal with the incidence of the duties on those industries. On the general question, whilst I quite approve of the proportion of taxation which it is proposed to levy in the lump from Income Tax, Supertax and Death Duties, I think that upon the whole the proportion taken from Death Duties is high as compared with what is taken from Income Tax and Super-tax. The Super-tax is a new tax, but I think it is a very reasonable one, and no exception can be taken to the basis upon which it is to be levied. Indeed, I think that that tax might be a great deal higher without doing harm to any industry; and certainly another penny on the Income Tax would not imperil any industry; but the Death Duties as they stand in the Bill will extirpate one industry and probably deteriorate another. The rotation for a soft timber crop is only 100 years, while that for a hard wood crop runs up to 200 years. In Germany the old oak rotation was three centuries, but it has been reduced to two. In the space of two centuries nine or ten Death Duties might be levied off a growing crop, while three or four Death Duties might be levied off a coniferous crop. With the disappearance under this Bill of the 25 years' arrangement which has hitherto prevented the Death Duties falling with all their weight upon wood, I think the private owner will disappear. I have always said that a great part of the work of afforestation will have to be done by the State; but I think it would be a great mistake to extirpate the private owner from this region. Amongst the private estates in Germany you find the best examples of sylviculture, and the individual will always beat the State at his own trade so long as he has sufficient capital. Therefore I think it would be a public misfortune to extirpate from that particular sphere of activity the individual landowner who afforests. The lock-up of capital is so long, and the risks during a rotation of one or two centuries are so
    1776
    great, that to levy the Death Duties as proposed so many times over would make it necessary to clear the woods which are now standing and render it utterly impossible to carry out any system of new planting in the future. That, at any rate, is my view of the case. I think, therefore, that sylviculture ought to be treated specially, and that if the industry is not to be checked it must be treated as a separate estate. To give a standard of comparison, if 25 years' purchase of feu duties is a fair basis of valuation for Death Duties, as I think it is, about 12½ years would be a fair rate for the rent of land and the timber growing upon it. Unless some special arrangement is made, I do not see how you can avoid doing great injury to sylviculture by these Death Duties.
    As regards agriculture, the Death Duties have been limited by the 25 years' arrangement, which is now to cease. The tendency of the Inland Revenue has been to make that 25 years the minimum rather than the maximum. In some cases which have been brought to my notice there has been an allowance of 5 per cent. for management, and in other cases 10 per cent. for maintenance, while at other times the allowance for maintenance or management has been refused. The rate has, therefore, now got to be very high on agricultural land. Here, again, it may be said that the taxation is unjust as between the owner of agricultural land and the owner of other forms of property. But what, to my mind, is more important is that, just as the Income Tax is avowedly levied on too high a basis upon agricultural land, upon a fancy schedule—Schedule A—instead of on the Schedule on which every other industry is taxed, if the Death Duties are levied at too high a rate on agricultural land, you will denude the equipment fund so far that agriculture must deteriorate. After all, all the value in arable land is the equipment, and unless there is some clear income there is no fund from which to provide that equipment. Of course, there are several ways in which the Death Duties can be met. Under the provision to be made by the Government for allowing land to be transferred in payment of Death Duties, no doubt a considerable quantity of land might be transferred to the State. In respect of sylviculture I think that that would be a very sound plan, but I have more doubt about it in the matter of agriculture, because I do not think that the State, at present at all events, is fitted to

    1777
    manage a large quantity of agricultural land. Instead of agriculture being a 2 per cent. investment, it might be only a 1 per cent. investment in the hands of the State. Therefore, the opening for the transfer of land is very limited. Then there is insurance. On that point I am inclined to think that, taking a man of 50 years of age, it would require about one-third of his clear income from agricultural land to insure against Death Duties, and that again would mean a very serious diminution of his power to equip. Of course, economies can be practised by the owner. But economies very often mean a cessation of the necessary development works.
    Upon these grounds I think that the Death Duties, as proposed in the Bill, will weigh very heavily upon agriculture, and that they will put an end to sylviculture unless some provision is made to deal specially with the industry. I hope that these points will be considered before the Report stage. Whilst I fully support the general propositions of the Government with respect to the amount of new taxation, that should be levied from large incomes in the lump—from Income Tax, Super-tax, and Death Duties—I think the proportion to be taken from Income Tax is not high, and that we have come to rattier a high line in the matter of Death Duties, which have to be taken in conjunction with the Succession and other Duties. Saving upon a large scale is not a quality unduly to depreciate. The man who saves really occupies much the same position in the social system as the chalk strata has in the geological system. He becomes the reservoir of the community, from which the Treasury has to draw the national revenue, and the man who saves is more apt to be depressed by the Death Duties than by the Income Tax and Super-tax. Death Duties fall with great weight upon agriculture and sylviculture, because of the great locking up of capital in the one case, and because no sufficient deductions are made for the cost of maintenance of agricultural land.
    Mr. GEORGE CAVE: We have listened with great interest to the practical speech of the hon. Member opposite (Mr. Munro Ferguson), who has touched on one aspect of a very large question, namely, the extent to which Death Duties, especially as now proposed, are in effect a tax upon industry. The hon. Member for North Paddington (Mr. Chiozza Money) attempted to controvert the view that this is a tax upon capital. Take the case of a man who succeeds to a business. If you
    1778
    tax him upon his profits, he pays the tax out of income, and allows less for his ordinary expenditure. If you tax him upon his capital you take away a part of the fund which but for the tax he would invest in his business; consequently, he must withdraw from his business, and therefore from his productive funds, a large and increasing proportion. Hence, if the nation is spending for income purposes, a part of the capital of its citizens, it must be reducing the amount of capital available for productive use, and, therefore, injuring to that extent the industries of the country. One answer given to this argument is that if you tax a man's capital he will save it from his income; that he will insure or provide beforehand, so as to replace his capital. One might guess that that would be so; but Members will recollect the circular issued this year by a large number of bankers of great experience, not drawn from one side in politics, who said that their experience was that Death Duties are paid out of capital and not saved out of income. I do not see how you can go behind that. Their experience is, to my mind at any rate, conclusive. The War Secretary said that you are taking from capital something which you are using for productive expenditure. He was challenged rather unkindly to give an instance of the productive expenditure to be made out of these taxes, and he could think of nothing but the police. It is certainly new political economy to me that expenditure on police, or on "Dreadnoughts," or on any of the great purposes for which the revenue of the country is raised, is productive expenditure. [An HON. MEMBER: "Education."] Of course, it is nothing of the kind. It is a commonplace of political economy that that expenditure is non-productive expenditure. Then another argument was this—and I was surprised to hear it from the Treasury Bench. It is said: "Oh, but capital must pay for protection." I thought it was part of our common law that property was entitled to protection, and that property was to descend from testator to donee? I think it is a dangerous argument to use to represent the State as standing by like a brigand and saying: "We will let you pass, and allow you to keep your property, if you give up 15 per cent." One other point, because it has not been dealt with. It is this: Have the Government considered, and can they tell us, what will be the increased yield by reason of the increase in the Estate Duties? We have

    1779
    had more than one warning on that point. The House will remember what was said in 1900 in the Memorandum of the Commissioners of Inland Revenue:—
    "It does not seem possible to contemplate seriously any addition to the total amount now levied on property passing at death, the existing charges being as high as can safely be imposed."
    That was their view in 1900. The present Prime Minister took a different view in 1907. He screwed up the Death Duties by a considerable amount. He estimated to bring into the revenue by that increase something like £1,000,000. What was the result? He had his answer at once. In the very next year, with the higher duties, the yield of the tax went down. They fell by over £700,000 in one year. The fall was not confined to that year. There has been a fall yearly ever since. You could not have better proof than these figures that you do not increase the yield by putting up the tax. You do increase the hardships, but you do not get more money for the State. You risk getting less. That may seem a paradox, but it can be proved by the figures. Surely the reason is this: that when you put up the tax in this way the larger estates escape. They escape by a process of gift in life, a process which no one has yet condemned [An HON. MEMBER: "They shift their obligations"]—but which indeed so many great Liberal statesmen have praised. Mr. Gladstone himself recommended that as a fair and proper thing to do. But he did not confine himself to words. He practised what he advocated, and made over a great bulk of his estate to his son during life. If that is so, it is not a thing to be condemned, but the natural result of raising the duty. The effect is that you lose income to the State. Another effect is—I do not think hon. Members opposite will agree with me—that if you put your duty too high you will encourage the investment of money abroad. That may be a good or a bad thing. I will not go into it on this particular Amendment, but I believe it to be absolutely true, because one hears it from people who are experienced in these matters. Many wealthy men in this country are driven in these days to invest their money where they will not come under these taxes. This is the practical point which has not been answered at all. I invite whoever speaks on the other side to address himself to that one figure: "How is it that in 1907 when the tax went up the yield went down?"
    1780
    I said the large estates escape. I do not think the smaller estates do. If you look at the figures you will find that the great bulk of estates coming under the Death Duties are not large but small estates. Of the 38,000 last year more than half certainly were between £5,000 and £25,000. That is, they were estates of the very kind which I think ought to receive special protection. To them you are applying higher taxes under this Bill. These are the estates of men who are not wealthy, but who have saved a little perhaps during a busy life, and have put aside from £5,000 to £25,000 for their wives and children, and yet they are to be pressed more heavily under this Bill, not only by an increase of the Estate Duties, but by a doubling of the Settlement Estate Duty. I think the figures given earlier by the Chancellor of the Exchequer in reply to the hon. Member for Stepney (Mr. Leverton Harris) are instructive on this point. Those figures show the result of a higher taxation. They show that the average value of the estates coming under the taxation decreases year by year. The statement showed that in 1906–7 the average value was £4,472, in 1907–8 it was £4,100, and in 1908–9 it was £3,900. I believe the more you increase the tax the more that will be true. You are depleting the capital of the country, and pressing hardly on small estates, and you are pressing matters to a point where, far from this tax being a valuable and increasing source of income to the country, it will become less and less valuable year by year, and less and less expedient to adopt.
    Mr. E. A. RIDSDALE: I do not propose to follow the example of certain speakers earlier in the Debate in comparing the methods of taxation adopted in this country and abroad. We have always understood that in finance we stand first among the countries of the world. That being so, I do not propose to look abroad for any system to adopt in lieu of that practised in this country. The right hon. Gentleman the Minister for War and the hon. Member for North Paddington, in defending this increase of the Death Duties referred to the Death Duties as being a toll taken by the State for the passing of property from the deceased owner to those whom he wished to devolve the property upon. I quite agree with that defence. I quite accept the principle of the Death Duties. But what is this? This is not the Death Duty as originally foreshadowed. This is the scheme to advance

    1781
    the Death Duties. I am aware that the Death Duties were advanced in 1907. It may be said: "Then why did you not speak in 1907, and not leave it till 1909?" Well, the increases which took place in 1907 only took place on the very big estates, and were very small increases. The lowest estate to which the increases applied was an estate of £150,000, and then the increase was only ½ per cent. It was not till the estate reached a quarter of a million that they increased as much as 1½ per cent. What then? I do not wish to urge it unduly, but I do not think that the Minister for War seriously meant to say that whereas the original duties were sufficient to secure the safe transfer of property under the late Conservative Government, it was necessary to increase the same in order to secure the transfer under a, Liberal Government in 1907. Now in 1909 matters have gone so far—they have gone in many things a great deal further than some of us can follow—that it is absolutely necessary, it is said, in order to secure the safe transfer of so small a sum as £5,000 and a few odd pounds to increase the duty by so much as 25 per cent. I really think—
    Mr. HALDANE: Not 25 per cent. on £5,000, but on millionaire estates.
    6.0 P.M.
    Mr. RIDSDALE: My right hon. Friend misunderstands me. What I said—or all I intended to say—was that the increase in the duty on the transference of £5,000 now in 1909 compared with what it was in 1907 and previous years was an increase of 25 per cent. In other words, the duty, which was, so far as my memory carries me, 3 per cent. in those years, is now 4 per cent. It is, in some cases, 33⅓ per cent., and I really believe I have understated the case. I cannot think that there is any argument to show why it should be necessary from any point of view that an estate of the sum of £5,000 should pay an increase of 33⅓ per cent. in order to pass into the bands of those to whom the deceased wills it. These are not wealthy people. The estates that are between £5,000 and £10,000 are owned by people in the middle and lower middle classes, who have toiled hard to amass this sum by personal thrift and by considerable personal sacrifice, and it is very hard to come down on them suddenly and say, "We are going to increase the tax which you are paying by adding 33⅓ per cent. to the duties." If you are going to increase a tax I believe in going by slow gradations. In
    1782
    one of the cases the increase is no less than 60 per cent. I know the argument is put forward: "It is all very well, but you can always insure against the Death Duties; it is the duty of every prudent man who wishes to leave some sort of provision for his wife and family to do so." So long as you left the Death Duties at their original figure no one could have perhaps objected to that. But no one can insure against the future where the Chancellor of the Exchequer suddenly comes down to the House of Commons and announces the increases that he has announced. No foresight, no human prudence, can insure against a contingency like that! In other words, you are getting these vast increases in a way which no prudent man by any possibility can in any conceivable manner insure himself adequately against. I heard it said in this Debate that the Death Duty is only a deferred Income Tax. Therefore I suppose the increase in the Death Duty is only a deferred increase in the Income Tax. But really I must entirely dissent from that proposition. I do not think the Death Duty can be fairly described as deferred Income Tax. I think it would be just as fair and reasonable to describe death as deferred sleep. The fluid pulse has ceased to circulate, it sets as it were in capital, and you can no longer draw upon that capital sum. The hoarded wealth has become firm and has become concrete in the shape of buildings and in other works, in ships, and in the shape of the thousand and one other forms in which capital will crystallise itself once it is put out for profitable use. You cannot take away from this concrete investment of capital money in the same way that you could from annual income coming in to the individual. What happened is that if an individual has saved his money and put his small profits out in the form in which he thinks it would bring in wealth to himself, and incidentally give employment and occupation to others, while increasing the whole wealth of the country, he thinks that, having so invested it, he will merely derive income from it. But when he dies the State comes down and says to his heirs: "We want a chunk of this land or so much of your railway, or the poop of your ship," or whatever else the State requires. That part of the invested capital cannot be taken without injury to the whole, even if the individual capitalist borrows the money, which is the usual way to provide for these Death Duties.

    1783
    If he raises a mortgage upon whatever his capital is, the raising of that mortgage incidentally weakens his position as a trader. He is always water-logged with this accumulation of debt, and he cannot, so well as he used to do, compete in the markets of the world. It is quite true that my right hon. Friend the Chancellor of the Exchequer has appreciated that this is a very serious matter, and he has placed upon the Paper an Amendment, which, as I understand it, means that estates shall be allowed to pay the Death Duties in kind; that, by arrangement, the State can take some of the property instead of taking cash. I do not propose to discuss that matter beyond saying that it seems to me that a piece of land, or, say, part of the stock of a second-hand clothing establishment, are rather curious ornaments to a Finance Bill. I do not propose to deal with that matter further; but there is one other matter about which I do wish to speak, and that is that the continual fallings in of these sums of capital paid into the Exchequer are met by the realisation of the more liquid forms of securities. When the executors are called upon to pay not a small sum annually but a large sum all at once to the Exchequer, the way they get that is by selling the more marketable form of security, and where the money is raised by way of mortgage, then the mortgagee sells liquid security, and the executor hands the proceeds over, and whenever an executor sells part of the estate, there is a continual drain of realisable securities in the markets of the country. The result of that is that prices, more especially of gilt-edged stocks, tend continually to fall, and no doubt it has been a source of some astonishment to all of us that the price of Consols remains so persistently low.
    To a certain extent this is no doubt due to the fact that investors, rightly or wrongly, have got scared, but a very important factor is the continual drain of money for those Death Duties, and it will continue to go on, and if those Death Duties are increased to the extent which my right hon. Friend suggests then this dribble will be very largely increased. I believe my right hon. Friend, as far as my memory serves me, carried forward at the close of last year a sum of £7,000,000 which had not been invested for the Sinking Fund up to that date. Not only has ordinary Sinking Fund money been pouring into the market to support Consols, but I assume that £7,000,000 was also put in to support Con-
    1784
    sols too. Yet in the face of that we find the market still in a flat condition and I suggest to my right hon. Friend that the flatness is largely the result of the flight of capital at these large increases in the Death Duties. Hon. Members have spoken of capital going abroad as of no injury to the State. If you ask any bank, especially a bank connected with Canada, they will tell you that money has been going abroad, and very largely abroad. Hon. Members may laugh at the suggestion that capital cannot leave this country without having a bad effect upon the prosperity of the country. Although it may be a very important factor in the development of Canada, it undoubtedly is a very serious factor to those who wish to raise money for native industries, and to those workers who are dependent upon native industries. I think perhaps that that is accentuated by the fact that at the present moment we have money which is barely lendable, yet at ordinary times, when money is cheap, it is brought into the stock market in order to derive a better rate of interest. This is not going into Consols now, and it is not being used for ordinary trade purposes. It is idle and idle from mistrust. I really think that is a point that ought to give any Government reason to pause which has the prosperity of the country at heart. I would urge my right hon. Friend to think before he insists upon passing this financial Resolution in its somewhat exaggerated form that if it is so necessary to derive large sums of money from the richer classes—and I believe the richer classes are perfectly ready and willing to pay—in that case it is far better that he should take it in the form of income than in the form of capital.
    Mr. JOHN CLANCY: The Debate has lasted for a considerable time and has been taken part in only by English Members, and the question has been considered so far only from the English point of view. It will not surprise the House if I say that it ought to be considered from the Irish point of view also. In putting that side of the case before the Committee I do not intend to deal with some of the general topics which have been touched on. I shall not deal with the question whether there ought to be Death Duties or not. I desire to draw attention to the fact solely that if these increased Death Duties now are so hard to bear in the case of England, and especially in the case of the poor millionaires of whom we hear so much, there

    1785
    is a very much more genuine grievance in the case of the Irish agriculturist. I think it is quite impossible to consider this particular Amendment which relates to the increase in the scale of the Death Duties without referring, not in detail, but incidentally by way of reference to other provisions of the Bill. In regard to Ireland, there are three or four points on which I should like to say a word, and in regard to which the observation may be made that the increase proposed by this Bill is really even more burdensome in the case of Irish agricultural property than in the case of English agricultural property.
    In the case of Ireland I call attention to this fact especially. In 1894, in the case of Sir William Harcourt's great Act, the market value of the land for the purpose of Estate Duty was taken as the basis of assessment. It was stated that at the price to be obtained in the open market was the value of the property for the purposes of the tax. With regard to agricultural property special exemption was made not dealing with Ireland or Scotland only, but in the case of the three Kingdoms, by which it was enacted that the value for the purpose of Estate Duty was to be limited to 25 times the value of the property after making other deductions. One of the principal proposals of this Bill is to repeal that provision, so that henceforth the normal market price of the property sold in the open market without any deduction in the shape of that practically allowed by the proviso to Sub-section 7, and henceforward no deduction whatever would be allowed in the case of agricultural property. That might not work very much harm in England—I mean in the case of the interest in land which is freehold or leasehold. In the case of yearly tenancies in England there is no saleable value. The yearly tenancy in England is never sold; it is not worth anything, and if it were worth anything it would be sold. What is the case in Ireland. They are quite the most valuable property owing to the exceptional circumstances of Ireland, and owing to the exceptional competition, especially from small holders, the most valuable kind of agricultural property is yearly tenancy. What would be the result if this Bill passed as it is? Not only will the Death Duties be increased, but the increase will be aggravated in the case of Ireland by reason of the fact that competition exists in Ireland for holdings, that there is a value in Ireland for such holdings that does not exist in England at all, and that consequently you will have a tax
    1786
    directed against Ireland especially which does not apply to the whole of the United Kingdom.
    I do not propose on this occasion a special Amendment for Ireland. I do not suggest to the Chancellor of the Exchequer that he should adopt a proposition exempting Ireland from this new provision, but I do say that he ought to accept or put down an Amendment which would protect the tenancies which have a saleable interest in the market. I do not understand why a proposition like that should not be accepted. In this proposal there is a discrimination against Ireland, under which England will be free and Ireland will be taxed. There are other classes of holdings besides those of yearly tenants. There are farms bought out under the Land Purchase Acts. In these cases I am not so sure that the necessity for some special provision is so plain as it is in the case of yearly tenants, because at present the practice has been, and I think it is in accordance with the law, to deduct from the normal market price, although the practice has been to deduct from the capitalised value of the annuity. I for one am of opinion that unless there is some special provision making the practice continue that it will be altered by the provisions of this Bill. The deduction is now made as a debt in accordance with the general law applied to England, Ireland, and Scotland; but if this Bill passes, and the normal price of land without any deduction is to be the basis of assessment, we run great risk of having no deduction made in respect of unpaid money under the Land Purchase Act. I would suggest to the right hon. Gentleman that there should be an Amendment to this Bill or a new Clause preserving the practice hitherto adopted and ensuring beyond all doubt that the practice should not be changed.
    In the third place, it seems to me that a very great hardship is caused in Ireland in another matter, namely, the mode of paying in the case of those holdings bought out under the Land Purchase Acts. In England you take very good care by the Land Transfer Act of 1897 to secure that, although the property on passing was to be personal property for some purposes, it was to remain real property for the payment of duties or otherwise. The meaning of that was that in the case of personal property you have to pay out within the year the whole amount of the Estate Duty, whereas in the case of real property you need not pay anything for one year, but you might pay eight years afterwards and

    1787
    pay by half-yearly instalments. In the case of Ireland, owing to the Local Registration of Title (Ireland) Act, under which every holding in Ireland must be registered, the very fact of registration, by another provision, turns the property from realty to personalty, and the result is that in the case of all these holdings, which are in point of fact and in substance real property in the strictest sense of the term, the man who is bought out has to pay at once the whole of the Estate Duty, whereas if the Local Registration of Title Act did not declare his property to be personal property he would have had nine years to pay the duty. Then there is the question of the small estate. A property left which is valued between £100 and £300 gross is subject to a fixed duty of 30s. only. If it is a property between £300 and £500 it is subject to a fixed duty of 50s. Consequently, if you deduct in any case the amount of the unpaid purchase money of the holdings bought out under the Land Purchase Acts that holding will not get the benefit of the Small Estates Clause. Is that fair? The mere fact that the rent has been abolished and that an annuity payable for nearly 70 years has been substituted for the rent ought to make no difference in principle and in point of substantial justice. In my opinion some provision ought to be imposed by the Government, preserving the power for the benefit of the Small Estates Act, which they would have in England if they were paid out under any circumstances except those prevailing in Ireland. I have mentioned these matters in order to show that if the increase in the scale of duties is burdensome in England that increase is rendered exceptionally burdensome in Ireland by reason of those four or five matters to which I have called attention. It seems to me a matter of plain public policy and expediency to take care that Irish agriculturists are not overburdened with taxation applying to all classes of the community. The Imperial Treasury has lent money on the face of the credit of the Empire for the purchase of these estates, and Irish ratepayers have made themselves willingly and voluntarily responsible for the payment of any deficiency in the annuities. They have done so on the faith that Parliament, after having conferred those benefits, would not take other steps to pauperise them, and thus make certain that these annuities would not be paid. I do not desire to stand between the House and the Leader of the Opposition, but I thought it right in
    1788
    advance of the speech of the Chancellor of the Exchequer to draw attention to these matters, which are especially important, as showing that the increase of these duties, if it affects England or Scotland, affects Ireland in a much greater degree.
    Mr. A. J. BALFOUR: I do not propose to follow the hon. and learned Gentleman who has just sat down in his reference to the particular bearing which this tax will have in Ireland as distinguished from England and Scotland; nor perhaps should I altogether agree with the particular illustrations he has brought forward in defence of his thesis. I will, however, go this length with the hon. and learned Gentleman: My main objection, or one of my main objections, to this tax is that it is a tax on capital, and so far as it is a tax on capital I agree that there is no part of the United Kingdom likely to be more severely hit than Ireland, from which country capital has fled, I am afraid for various reasons, and to which it is being sought to coax it back in such proportions as are likely to increase the prosperity of that important part of the United Kingdom. It is more upon general considerations that I propose to say a few words to the Committee, and in doing so I shall be as careful as I can not to trench upon the sphere property covered by future Amendments, or to deal with objects for which this taxation is being raised, objects which the Chairman has very properly ruled cannot be discussed on the present occasion.
    May I begin by congratulating the Government upon having come to a portion of their Bill which really is more like an ordinary Finance Bill than either of the two portions we have previously considered. Unlike the first portion, it does raise money, or at all events it is hoped that it will raise money. Unlike the first and the second part, it attacks no particularly special interest, and the framers of this third part have forgotten the maxims of the new finance, and have not followed the President of the Board of Trade in his view that the business of the Chancellor of the Exchequer is not to consider what a man has got or where he got it from. I feel now, almost for the first time since this long controversy began, that I really am engaged in a purely financial discussion which touches finance and finance alone, and I propose to deal with it only from that point of view. The main question I want to ask the Committee is whether this

    1789
    is or is not a method of raising money which will or will not add to the general prosperity of the country, or, to put it in a more legitimate way, whether it will diminish that prosperity as little as other taxation of equal magnitude would diminish it? I hope that the Chancellor of the Exchequer, when he proceeds to answer me, will not imitate the rather haphazard methods of the Secretary for War, who, I think, was not fair in the reply he made to my hon. Friend behind me. My hon. Friend behind me introduced the topic of foreign examples, and pointed out how widely the case of France and the case of Germany, to say nothing of other countries, differ from our own case, and how different were the proposals which had received acceptance in those countries from the proposals now made from the Treasury Bench. The Secretary for War dealt in a much too cavalier fashion with that argument. On this point I rather agree with the hon. Gentleman who spoke last but one. I do not know, however, that it is necessary for me to go into these controversial questions of foreign parallels drawn with other countries, because they rather take our minds off the broad issues. May I observe, however, that when my hon. Friend pointed out how different the case of France was from the case of England, it is not a good argument for the Secretary of State for War to say that the maximum in England is 15 per cent. whilst the maximum in France is 15½ per cent. That is not the way in which the Government ought to deal with this question. It utterly misrepresents the facts. The maximum under this Bill will be 25 per cent. excluding the 2 per cent. on settled estates. The maximum in France is only 20 per cent.
    Mr. HALDANE: I said so.
    Mr. BALFOUR: The right hon. Gentleman admitted it when my hon. Friend rose and corrected him, but he will forgive me if I say that he will see, when the report of his speech is issued to-morrow, that he certainly did attack my hon. Friend for having quoted France when, according to the right hon. Gentleman the maximum in France is really greater than in England. That is not so. The right hon. Gentleman was equally rash in his dealings with Germany. In Germany, as I understand the matter, the Income Tax and the Death Duties and duties upon property of that character or of an analogous character are not merely contributions to Imperial purposes, but they are a substitute, or almost
    1790
    a substitute, for rates, and that is a thing of importance to remember if you compare real property in this country and real property in Germany. May I rather protest against the airy way in which the right hon. Gentleman quoted the proposal made before the German Reichstag. He said there was going to be special treatment of intestate estates as if it had been passed into law, it would really not have the least reference to the Debate before us. It has no reference, and it is not passed into law. That was a proposal rejected by the German Reichstag. If the Government are going to pursue the argument of foreign analogies, I hope they will do it in a more careful spirit that that which characterised the hasty and rash excursions of the right hon. Gentleman into the field of comparative international finance.
    I congratulated the Government, in the first sentences of my speech, on having at last reached the region of legitimate finance. In one point I do not think this is finance more legitimate than their other finance. It is not legitimate in this particular: They are increasing taxation of a kind in technical language known as inelastic. They have already had the experiment of raising the Death Duties without any increase of revenue, and on top of that experiment they clap a fresh duty on in the hope that that augmentation will bring in fresh revenue. It has never been supposed to be good finance to increase the burdens on the people and not to increase the revenue of the Exchequer. Surely it is the very worst way of raising national revenue, and, unless the Chancellor of the Exchequer can bring forward facts of which neither he nor his colleagues have given us any indication at present, I think he will hardly deny that the figures, he has given us with regard to the yield of the duty during the last ten years, and the experience we have had with regard to the last attempt of the Government to raise an increment on the duty, show that we are here dealing with a source of revenue which is inelastic, and is, therefore, open to one of the most serious objections which can be brought against any new proposal for taxation. What is the explanation of that inelasticity? It was dealt with in a very interesting passage of a rather interesting speech by the hon. Member for North Paddington (Mr. Chiozza Money). If I understood the hon. Gentleman rightly, he admitted the fact that the total sum on which the revenue had been raised either did not increase at all or had increased very little.

    1791
    He did not deny the fact that the last experiment made by the late Chancellor of the Exchequer showed that financial experiments of this character may, and had, lately proved to be doomed to very serious disappointment. He has his explanation, and it was based upon the contemporaneous fact that, while Death Duties are going down or, at all events, are not rising, the Income Tax is rising, and he said that the Income Tax, after all, must have some direct relationship to the capital possessed by the country.
    If you find that the income goes up whilst the capital subject to the Death Duties does not go up, it shows there is some weakness in a system under which the Chancellor of the Exchequer does not find that body of capital awaiting taxation which the general indications of the country led him to anticipate. Does not that suggest that taxation of this kind has reached a point when it is practically impossible to prevent those who are taxed so arranging their affairs that the result of the tax in many cases is disappointing, and will not the result of increasing the tax be to increase also the disappointment? I do not like to use the word evasion; indeed, it is quite inappropriate. I remember when we first became familiar with this topic in 1894, Sir William Harcourt was never tired of telling us that, if the result of this taxation was to produce an increase in the amount of gifts between living persons, nobody would rejoice more than he. He could not imagine a more legitimate or admirable social result from his taxation. Therefore, if I use the word evasion, I do not use it as carrying any condemnation. There is no condemnation. I believe there are any number of methods by which the tax can be avoided, and not merely gifts inter vivos. I have no doubt there are many kinds of property which can only evade this tax by gifts inter vivos, but there are many other kinds of property which can be so treated that the State does not get the toll which the hon. Member and the Chancellor of the Exchequer alike desire to raise. If that be true, as admitted by the hon. Gentleman it is true, even under the existing scale fixed by the late Chancellor of the Exchequer, how much more will it be true when that scale is augmented by the very large amount which the Government propose to place upon this tax? I should say, therefore, that the very circumstances, referred to by the hon. Gentleman as showing
    1792
    that capital is really increasing, although you do not see the increase in the Death Duties, shows that, from a practical point of view, from the point of view of a Chancellor of Exchequer anxious to raise money, we have reached a point at which it is inexpedient, so far as my judgment goes at all events, to augment a tax which has already reached a level at which the inducements to avoid it is so great that people will take the trouble and make the sacrifices by which avoidance can be really effected. That is a practical point, and it is one, as we are now discussing legitimate finance, or, at all events, finance which is finance and not something quite different, which specially requires an answer, and I have no doubt will get an answer from the right hon. Gentleman who is going to follow me.
    There is one other point on which I may be allowed to say one word before I touch upon what seems to me the greatest objection to this part of the Government's proposals. That objection arises from the admitted injustice of this tax as between different persons of equal wealth. That injustice is admitted by the hon. Gentleman the Member for Paddington. He said, and I think he said perfectly truly, that a tax of this kind, levied at uncertain intervals upon the corpus of a property, affected different properties of equal magnitude in quite different ways. He gave a case in his own experience in which the same property, I think he said, had changed hands many times, or several times, at intervals over 16 years. If that property was a considerable one, and it was not settled, it is quite evident it must have been practically wiped out of existence. It must have entirely changed its character in magnitude. The total of that particular property must have dwindled under this fiscal treatment to a relatively insignificant amount, and no one can pretend that is a just treatment of those particular owners of property as compared with other owners of property of equal magnitude. I think the Government really ought, to set themselves to work, in face of the experience we have had of these Death Duties and when raising the scale, to find some method of rendering a gross injustice of this kind practically impossible. I do not know whether it is—
    Mr. LLOYD-GEORGE: We have said that over and over again. It is very difficult to deal with. I think the right hon. Gentleman himself has said it.
    Mr. BALFOUR: I can quite believe that, because the injustice becomes all the more apparent. We have often had occasions to point out that admitted injustices which are tolerable when the scale of taxation is small become intolerable when the scale of taxation is greatly raised, and I think the Government are bound to do their best to deal with an admitted injustice which is so great in some cases that while some kinds of property may go through this ordeal, severe as it is, without serious diminution, other kinds of property of equal magnitude—that is the important point—may be entirely wiped out. That is a very serious objection to any tax. If it is inevitable it is a strong argument in favour of keeping the tax at as low a level as you can. I do not want to dwell upon the personal aspect of this or indeed of any other tax more than I can help, but it is one we cannot altogether neglect. It is relevant, and therefore I will add what fell from the hon. Gentleman the Member for Leith (Mr. Munro Ferguson), who pointed out that this might be especially hard upon certain classes of the agricultural industry. That, after all, is not the main point which moves me to think this is a very dangerous fiscal proceeding. The main point which moves me is the one dealt with by the hon. Member who moved the Amendment, and by others on the other side of the House, namely, that this does affect the capital accumulations of the country. There is a difference on this point amongst the authorities on the Treasury Bench. The Secretary of State for War, who, so far, is the only Minister who has addressed us in Committee on the subject, quite plainly and avowedly states his opinion that this is and ought to be a tax on capital. That is what it is designed to be. It is a tax on capital and not on income. That is what the Government desire, as well as what they anticipate. But that was not the view taken by Sir William Harcourt in 1894. A quotation, read by my hon. and gallant Friend near me, quite conclusively proved that it was contrary to any principle put forward by Sir William Harcourt, and other quotations equally conclusive could be produced. I have a recollection of the Debates in which I took some part, and the whole argument of the then Government was that these new Death Duties were a form of Income Tax adopted because they could be graduated, whereas the Income Tax in its ordinary form could not. That opinion is evidently not shared by the present occupants of the
    1794
    Treasury Bench. Sir William Harcourt always indicated that, if he could have seen his way to a graduated Income Tax, he would have preferred that course; and he was only forced to adopt this form of tax because he believed, in the first place, that a graduated Income Tax was not possible, and, in the second place, that on the scale on which he put these Death Duties it would be, broadly speaking, not only practicable for each owner of property in turn to fill up the gap caused by the Death Duty, but that it would be easy to do so.
    The Government have now entirely changed their position. They say it is not an Income Tax, and they do not expect the gap to be filled up. That is a vital change of policy—a change both vital and fundamental, and it is perfectly useless for any Member of that bench to say that they are merely continuing Sir William Harcourt's traditions when they come down to this House and recommend additions to the Death Duties which Sir William Harcourt would never have sanctioned—when they advocate principles diametrically opposed to those by which Sir William Harcourt was guided. Let the House not be deceived into thinking that this is an old tax furbished up to meet new necessities. It is a new tax, with new objects, having, in the opinion of those who framed it, entirely new and undisputed results which the originators of the tax, years ago, never contemplated. If it be admitted it is a tax on capital, it cannot be turned into a tax on income. It certainly cannot. Is it a good tax? For the first time I have heard a responsible financier advocate openly, avowedly, and unashamedly the propriety of taxing capital as such. The present Government are committed to a graduated Income Tax. The hon. Member for North Paddington says: "It is true, it is a tax on capital, but," he asks," what is the harm in it." You take a certain amount of money not from the income of "A" but from the property of "A." You take that and the State appropriates it, and he says "What reason have we to believe it will not be just as good for everybody that the State should have it as that 'A' should have it." That may be a good doctrine. It certainly is a new doctrine. There is a phrase which used to be current in orthodox financial circles to the effect that what you want money to do is to fructify in the pockets of the people. I do not know that that is very good rhetoric, but it was a familiar phrase universally accepted as a

    1795
    commonplace of sound finance. That, however, is not the new finance. We are having a great many new doctrines in finance put forward, but we have to-day heard for the first time from a responsible Minister that we ought not to consider where the money comes from. Now you hear their defender (the Member for North Paddington), and you also hear by implication the Ministers themselves, asserting that they regard with perfect equanamity the taxation not of the income of the individual but of the capital from which that income comes, and which, by implication, is very largely the source of the enterprise and commercial energy on which this and every other community must practically live. I do not know how far the Government are going in this respect. Are they going the full length of the hon. Member for Paddington? Are they going to contemplate with perfect unanimity the fact that they are not asking citizens to defray from their annual revenue the annual cost of Government, but they are asking citizens from their capital to meet the annual expenditure? That is a point which must not be left out of account. You raise your national income, your Exchequer income, each year to meet the yearly expenditure of the country. Surely you ought to do it from the annual income of the country; otherwise you put the State collectively in precisely the position of the individual. If you insist that he shall spend out of his capital for the year that which is required to meet his household books, the time must come when he can meet those household books no longer. I do not wish to press the analogy too far. I quite admit there is a distinction between the individual and the State, but, broadly, there is truth in that objection. Never before has that truth been denied by any responsible Government. The hon. Member for North Paddington, the only speaker who has defended with the greatest courage and in the greatest detail these new doctrines, seems to think that the proper thing to tax in the country is its capital. He seems to hold that no injury is done in that way, because capital will be quite as fruitful in the hands of the Government as it is in the hands of the private individual. There are cases, of course, in which it may be true, but you cannot alter the universal proposition about matters of this kind. If you consider the individual case you will see, at all events, there are a certain number of cases in which it is not true, and that proves that it will in-
    1796
    flict injury on the community at large. Take any ordinary commercial business in this country. The tax-gatherer comes down at the moment when the head of that business dies. If he has been in active work the tax-gatherer comes down at the very moment when there is a change in the government of the institution, and when, naturally, the greatest difficulty is arising—when there may be a strain upon the finances, due to the fact that the capital has to be shifted. He comes down and says that an important fraction of the capital of the business is to be appropriated by the State for other purposes. The Member for North Paddington surely will not say that that is good for the business, or that it can be met out of the savings of the business? Broadly speaking, there is no pretence that it can. It therefore comes out of the business; and how can it be otherwise than injurious, especially to the great mass of relatively small businesses—I mean businesses which are small compared with the huge joint stock and syndicate enterprises, with which we are becoming more and more familiar in this country? How, I ask, can it be otherwise than injurious to the smaller manufacturers, who do not always find it easy, in the vast productions carried on on these gigantic scales, to hold their own, and who naturally do not wish to incur any special burden? Nobody can deny, whatever their views are, whether they toe Socialistic or otherwise, that so long as you are carrying on the industries of your country by private enterprise it must be injurious, not merely to the owner of capital, to tax the industry which that capital nourishes, but also to the men whom that capital employs.
    7.0 P.M.
    What is true of small businesses is equally true of agriculture. An hon. Gentleman who recently spoke told us that he regarded with considerable dismay the effect that this tax was going to have on a large number of Irish cultivators. Everybody knows it must have a serious effect upon the management, from a commercial, industrial, and national point of view, of a large number of moderately-sized landed estates in this country. The hon. Gentleman the Member for Leith speaks with much authority on this subject, and just now he spoke in no uncertain voice. It really hardly requires any argument to show that where the burden of local taxation is thrown, as you propose, on the land, you are taking out of that income what is equivalent to a very large amount of the capital required for its proper conduct.

    1797
    I may here make a passing reference to the scheme of the right hon. Gentleman for allowing this tax to be paid partly in kind. I will reserve what I have to say on that subject, although I adhere to what I have on previous occasions urged on that point, until this particular Amendment comes up. But with that Amendment, or without it, the fact; remains that agriculture is in the same difficulty. Middle-sized estates in agriculture are in the same position as middle-sized manufacturing enterprises. You cannot hit middle-sized manufacturing enterprises or middle-sized landed estates without doing an immense amount of harm, not to the owner alone, but to the whole business of which he is the head and for which he provides the funds. I do not wish to labour that point further, but I do hope the right hon. Gentleman will tell us how he justifies this change of policy on the part of himself and his Friends. How does he and those who worked with Sir William Harcourt in 1894 justify a change which fundamentally and completely changes the whole scheme? How do they justify this revolution in their fiscal ideas? How do they now say, what they never said 15 years ago, namely, that the Death Duties were not tolerable if they were regarded as capitalised interest? How do they justify a new departure which for the first time avowedly and explicitly taxes capital because it is capital, and they glory in the fact? That is the main question which I venture, respectfully, to put to the Chancellor of the Exchequer. The task which lies before him is not that of merely repeating the old defences of an old tax. It does not consist of merely saying this is an extension of a method of taxation originally passed 15 years ago and assented to since by both sides of the House; he has to justify an absolutely new departure and a new principle, and to show that the ill consequence will not follow which every Chancellor before himself, on whichever side of the House he may sit, has expected is the inevitable consequence—bearing in its train not merely the taxed persons, but all with whom they are connected—which must inevitably follow upon a scheme of imposts which avowedly and intentionally taxes not merely the income, but the capital of the community.
    Mr. LLOYD-GEORGE: The discussion has gone much beyond the immediate Amendment. I am not complaining of
    1798
    that. On the contrary, I recognise that it is quite impossible to discuss merely the Estate Duties without glancing at the other Death Duties in the subsequent Clauses, because I can quite understand that they have all got to be taken together in considering the burden which it puts upon estates at death. The right hon. Gentleman has, if I may say so, made a very powerful and searching examination of our position as to the Death Duties which was a very fair one. He, at any rate, has not been guilty of the extravagance which has been practised by almost every other critic of the Death Duties. He has not taken extreme cases as if they were typical cases. Almost every other critic of the Death Duties, whether inside or outside this House, has always gone to the extremest cases, as if they were the ordinary case. It is said that a million is the usual sort of thing to be left by trading people. That is what we were assured even last week; the trader leaves his million, it is said, to his partner. Of course, that is the maximum, and a very exceptional and extreme case, and if there is a man who is fortunate enough to make a million in trade and to have a partner who is a bachelor, with whom he is on such excellent terms as to get the whole of his property, I do not think he ought to complain at having to pay 15 per cent. We have had cases of that sort, and also cases in which 25 per cent. is the figure. Twenty-five per cent. is a very extraordinary and unusual case. I am sorry to say that the millionaires' estates that come to the Exchequer range from six to eight per annum, and the Chancellor of the Exchequer is extremely lucky if he gets eight. The usual thing is something like six or seven, and it is absurd to take these extreme cases, as if they were the cases by which the Death Duties proposed by the Government have to stand or fall. The vast majority of cases, however, range from £5,000 to £10,000, £15,000 and £20,000, and I was very glad that the right hon. Gentleman was not carried into those extravagances and into that rather unfair method of taking extreme cases. [An Hon. MEMBER: "What about Gorringe?"] I observe a disposition on the part of hon. Gentlemen opposite to discuss the Gorringe case when it is irrelevant, but always to avoid it when there is a full chance of discussing it. I will come to it in a moment, as I have something more to say about it, though it goes back to the whole controversy of the land, about which we have had three months' discussion, which

    1799
    I should think would satisfy hon. Members for some time.
    The right hon. Gentleman has asked me a series of questions, and I will do my best to answer him, and I will answer him seriatim. He said, first of all, "Is not the revenue an inelastic one? Take the figures of the last few years, do they not demonstrate clearly that this is a falling revenue, that instead of being a fruitful tax it has become an increasingly barren tax, and therefore from the point of view of finance it is an undesirable tax to continue." If the figures demonstrated that, I think it would be undesirable that you should revert to the tax—if the statistics of the last ten years proved it to be a constantly diminishing tax. That is not the case. The figures upon which the right hon. Gentleman relied are figures quoted by the hon. and gallant Member for Chelmsford (Mr. Pretyman), and although the hon. and gallant Member is a very close student of this particular tax, I think he has been misled in regard to the figures. Let me take the figures from 1897 to 1908. When you deal with Death Duties you have to take figures, at any rate, of 10 or 11 years. You cannot take the figure for this year and compare it with the last; you cannot take the figures of these three years and compare them with the preceding three years; they depend upon so many circumstances that you must take as wide a survey as you possibly can in order to arrive at any conclusion with regard to the effect of the Death Duties.
    Before I come to the figures let me give one word—I will not say of warning to the Committee, but of reminder. There has undoubtedly been since the war a very undoubted fall in the value of securities. I am not trying to distribute the blame, but before the war Consols were at 114 (I am speaking from memory), and there was a very considerable drop not only in Consols but in securities all round. As far as the Death Duties are concerned, the great bulk of the properties which pass through the Estate Duty Office are either in the form of land or in the form of other British securities; it may be buildings—you must remember that all the buildings in the country pass through as well as land—railways and every other trading business passes through, but I am perfectly certain of this that the great bulk of the businesses which pass through the Death Duty Office is in respect of British capital. There was an undoubted fall com-
    1800
    pared with the year before the war in the year that followed after the war. In the year immediately before the war the total estates in respect of which Death Duties were paid amounted to £326,000,000. That is in 1899, and that is gross, without any deductions. That figure of £326,000,000 was the highest figure which the Death Duties had reached up to that date. The following year, 1900, it fell to £294,000,000, and that was purely due to the fact that the securities had tumbled down in the market; but I am not going to apportion the blame. The following year, 1901, the sum was £320,000,000, and in the following year £298,000,000. Between 1900 and 1902, therefore, there had been an increase, though it was not the same rate of increase, and in the following years there has been an appreciation.
    I am going to take four triennial periods, and that is rather a good test. The first began in. 1897, and the total estates which passed through the Death Duties Office in those three years come to £880,000,000; in the second triennial period they come to £913,000,000, in spite of the fall in securities, and in the third period, 1903, 1904, and 1905—securities were still falling heavily—there was a falling off to £890,000,000. The last triennial period the figure has gone up to £944,000,000. So, comparing the first triennal period with the last, there has been an increase on the estates in respect of which Death Duties are paid of £64,000,000 sterling. So far, therefore, from there being any steady diminution, it has been a steady increase taking all these 12 years. These figures I have taken from the official statistics.
    Mr. PRETYMAN: May I interrupt the right hon. Gentleman on this very question of figures? I have the actual figures given by the right hon. Gentleman himself in answer to a question in the House of Commons on 10th May last, in which he gave the figures of the capital sum on which Estate Duty has been paid during each of the last ten years. I have these figures, and in the last five years immediately preceding this date the total is £1,390,000,000, and in the preceding five years it was £1,370,000,000, and this is practically on equality with the last five years and the five years immediately preceding.
    Mr. LLOYD-GEORGE: I will take that from the hon. and gallant Member. I have not time to look, but here are the figures, which I have taken from the Fifty-first Report of the Inland Revenue Commissioners, and what the hon. and gallant Gentleman

    1801
    has done is that he has taken in a five years period two or three years probably when securities were at their very worst. He is including in the first five years the period when securities were at their very highest. I am taking three years: 1897, 1898, and 1899. The total amount is £880,000,000. I am taking the last three years, and the total amount is £944,000,000. Why should that be unfair? That shows that, really, so far from there being a constant decrease, there is a real progression, and that, therefore, the very basis upon which the right hon. Gentleman starts his argument is not consistent with the facts and the figures of the case. I think I have answered his point in regard to that.
    I come, to the next point. The right hon. Gentleman asks: Is it a good tax? He says you are inflicting a burden upon industry. Of course, you cannot take three millions of money, ranging up to £8,000,000 eventually, without its being taken out of some fund. If we were imposing the tax merely for the sake of imposing a tax and merely for the sake of drawing in millions out of the pockets of individuals without drawing it for some justifiable public purpose, and for this purpose we have to assume that the object is a justifiable one, because, if it is not, any tax is a. bad one; but, if the object is a justifiable one, I do not see the distinction really between taking £3,000,000, £5,000,000, or £8,000,000 in this form and taking it out of businesses annually in the form of an Income Tax. Assuming that you have to take the millions at all, I think it is preferable. The right hon. Gentleman says you are taking it from a business just at the time when it is embarrassed, and when there are other charges upon it. This is a mistake he has made in common with every critic in connection with that argument. He assumes that in the businesses of this country, in the case of death, you actually draw your £5,000 or £10,000 duty from the business. In the first place, a very large proportion of the businesses—certainly the biggest businesses—in this country have been converted into limited liability companies, and, when a partner dies, he does not take the money out of the business. He has the shares. That is what he is dealing with. He may not be able to get rid of the shares at a price which he thinks should be adequate, but, at any rate, the money is not taken from the business. That is really the case in re-
    1802
    gard to the vast majority of the great businesses of this country, and, when it comes to small businesses, the scale is a very low one, and you only pay upon the net amount after making every deduction. The right hon. Gentleman talks about heavy charges, and the hon. Member for Brighton (Mr. Ridsdale) made a strong criticism on these proposals. He said a business may be waterlogged. But a waterlogged business does not pay a heavy percentage of its revenue. If it is a business of that kind it only pays on the net; if there are debts, then they are all deducted; if it is overwhelmed by liabilities there is no margin on which it pays. My hon. Friend knows that when you value an estate for Death Duty purposes you do not put 100 per cent. upon it. It does not pay anything approaching full value. I say this after full inquiry into the matter. I am surprised at the hon. Member (Mr, Joynson-Hicks), who has been a solicitor and has passed a good many of these accounts. I have no doubt he did his duty by his clients, but the more he did his duty by them the less the percentage was to the State; and, speaking as one solicitor to another, I am saying what the vast majority of the profession say, that you do not pay anything like the full percentage upon the value of a property. Therefore, a waterlogged property which pays 25 per cent. is a figment of my hon. Friend's own imagination.
    Mr. RIDSDALE: That is not the case I intended to put. Supposing a small shopkeeper, with £5,000 capital, is taxed now at £200. My suggestion is that the £200 tax waterlogs the business.
    Mr. LLOYD-GEORGE: My hon. Friend is so anxious to criticise the Government that he does not take the trouble to know what the Bill is. I am not touching the £5,000 man at all. He is still paying his Death Duties at 3 per cent., therefore there is really nothing in that criticism. The right hon. Gentleman said, Is it a good tax? I still say it is a fair tax. It is a just tax and it is an effective tax. No unjust tax can be effective in the long run, so that when the hon. Baronet (Sir F. Banbury) cheers my statement that it is an effective tax, it is inferentially an admission that it is a just tax. You have to raise so many millions of money. We have distributed that. We have taken a certain amount in direct taxes, a certain amount in indirect taxes, a certain amount on unearned increment, and we propose to take a certain amount in Death Duties. What

    1803
    is the transaction that that represents? Take any figure. Do not take millions, because it looks as if you were attacking millionaires. If a Chancellor bases his finance upon millionaires his schemes will come to grief. I do not want to take extreme cases, but take a case of £25,000, £50,000, or £100,000. A man leaves that net after payment of all liabilities and debts and encumbrances, because that is what he pays upon—upon a fairly liberal valuation. How has he been able to accumulate that? From the security which is given by the State. The protection to his property, the protection of this country even against invasion, has enabled the country to accumulate greater wealth than any other country. But all that costs money. Not only that, but money which is spent upon education, upon improving the condition of the people and making them more efficient even as wealth-creating machinery, is part of the £25,000 or £50,000. With an inferior population in intelligence, in physical condition, in general contentment, with a state of greater insecurity against dangers of invasion, he would not have accumulated his £25,000 or £50,000. All that costs money to the State. Is it, therefore, unfair to say, when you are passing that £25,000, £50,000 or £100,000 to someone else, the State ought to take a toll upon it, not merely in recognition of its services, but to enable it to continue those services in future for all, even for the person who has inherited the money and who may convert the £25,000 into £250,000 under similar conditions? What is unfair in that? This is talked about as if it were some great raid upon property, and the hon. and gallant Gentleman (Mr. Pretyman) said, "Do you know what it costs? It means an addition of 2s. to his Income Tax." That is not the way to put it. Supposing we charged a man who had accumulated property an Income Tax throughout his life. The average life is 30 years, as far as Death Duty calculations are concerned. What sum of money invested at compound interest would represent the additional charge we impose under our new scale? Threepence three-farthings in the £ is the addition. This is the revolution; 3¾d. is the end of all. It is a ludicrous contention. Why should it mean ruin? The hon. and gallant Member said that the effect of the Death Duties had been that the average value of the estates paying duties had gone down. Why has the
    1804
    average of the estates gone down? It is not because the wealth of the country has gone down, and that was the suggestion of the hon. and gallant Member; but they have gone down, because there is a wider distribution. The hon. and gallant Member said that the average had gone down from £4,400 to £3,900 in three years. He asked: Does not that show the paralysis that is gradually creeping over the wealth of the country because of the Death Duties? What is the real position? In 1898 there were 71,000 estates for Death Duties. In 1908 there were 85,000 estates, so that if you divide the much bigger figure by 85,000 and find that the average has gone down, does it show that the wealth of the country is decreasing? It shows that there are more people coming into their fair share of the fruits of the earth. That is really what it means. Again I ask: What do hon. Gentlemen opposite give us by way of alternative proposal? How do they say that we should raise the £8,000,000 of money in a way which would do less harm ultimately? What would it mean on corn? The raising of this sum of money on corn with a preference would be 5s. a quarter duty. [An HON. MEMBER: "We do not propose that."] I thought the hon. Member was asking for it. I am glad to know that he has some other alternative. I thought the hon. Member was in favour of Tariff Reform. Would not a tax on corn do far more harm? I say that it would do more harm to the country as a whole. Really all these things that have been said about the Death Duties have been said of every proposal ever made of this character. I know that when I propose to increase these duties Sir William Harcourt is quoted against me. When Sir William Harcourt proposed to increase them Mr. Gladstone was quoted against him. There has not been a proposal by Mr. Gladstone or Sir William Harcourt in regard to which exactly the same arguments were not used. It is very interesting to know that exactly the same arguments were used against Mr. Gladstone when he first proposed the Succession Duty. In a Debate in the House of Commons in 1853, when Mr. Gladstone proposed the Succession Duty, an hon. Member said:—
    "The whole object of the Chancellor of the Exchequer was war against property. It might he popular in some quarters, but he was sure it would be productive of hardship to industry. He warned the right hon. Gentleman how he struck a blow upon public confidence, the effect of which might be felt to an extent of which he had no present conception."
    [An HON. MEMBER: "Who said so?"] That is from a speech by some Conservative

    1805
    Member who was criticising the Budget of that day. I think it was Sir John Pakington. Another Conservative Member ended his peroration upon the same kind of proposal with these words:—
    "He could not give his support to a Bill which he believed would inflict the greatest hardship and the most serious and burdensome consequences, and which, when its real effect becomes known, would in 20 years make the right hon. Gentleman to be considered one of the most dangerous and mischievous Chancellors of Exchequer this country had ever seen"
    Speeches of that kind were delivered then. There is, therefore, no novelty in all this vituperation. The same charges, almost in identical language, were made years ago. We were told that the whole country would turn. I could quote passages in which it was said that the House of Commons would repeal the duty. We have had a Conservative Administration since then, and Mr. Goschen, in 1888, increased the burden. The Leader of the Opposition was in power for some years, and he did not alter any of these things. These are simply, I will not say part of the stock in trade, but the kind of attack upon any proposal of a Government which may be expected. I say that in distributing the burden which we are compelled to place on the shoulders of the people of this country we have distributed it fairly and equitably, land in a way that will inflict no damage on any industry in this country.
    Mr. A. J. BALFOUR: I do not rise to make another speech. I do not think the right hon. Gentleman's speech had much reference to the one that preceded it. I wish to emphasise the very important figures the Chancellor of the Exchequer gave about the number of estates. In answer to a question on 7th September, the Secretary to the Treasury said that the number of estates in 1906–7 was 67,220; in 1907–8, 68,670, and in 1908–9 68,465. I understood the Chancellor to say that there had been an immense increase in the number of estates. I cannot reconcile that statement with the figures given by the Secretary to the Treasury.
    Mr. LLOYD-GEORGE: I think I can explain to the right hon. Gentleman. The numbers I quoted were of estates passed under review.
    Mr. SAMUEL ROBERTS: The general opinion of the commercial and financial community of this country is that the duties now under consideration are the greatest and most serious part of this Budget. The Committee will remember
    1806
    that a resolution was passed at a great meeting of bankers in the City of London stating that the great increase in the Death Duties, already materially raised two years ago, would prove seriously injurious to the commerce and industries of this country. We are agreed, I believe, on both sides of the House, that some Death Duties must be levied. They have been levied now for a long period of years. They were levied, I believe, in the time of the Romans, but the point at issue between the Chancellor of the Exchequer and ourselves is as to whether this is a reasonable and moderate rate, or a rate that is going to injure the industries of the country? The commercial classes think that these new duties are going to be very serious in eating up capital instead of allowing that capital to be devoted to commerce. The Chancellor of the Exchequer, in his Budget speech, said that rates had increased from 5 to 7 per cent., but the right hon. Gentleman did not include what is the most important item. He did not include the increase in the Legacy and Succession Duty of 1 per cent., and he did not include the increase in the Settlement and Estate Duty. These two occur in the vast majority of estates. If you add these two, it makes an increase of from 5 to 9 per cent. in those cases. What is the amount of the increase? Last year the Death Duties yielded £18,370,000, and the Chancellor of the Exchequer estimates that the year after next the increase will be £7,425,000, or nearly 40 per cent. We cannot, in considering this matter, look upon the Death Duties alone. We must regard also that important tax which is allied with it, namely, the Income Tax. The Chancellor of the Exchequer proposes ultimately to get an increase from this tax of £6,720,000. Together these sums make over £32,000,000 increase in these two important taxes. I should like to read to the Committee the opinion of Sir Robert Giffen in the "Quarterly Review" of July last on this question. He says, referring to this figure:—
    "It is altogether excessive and dangerous without the heavy increase made by the Budget. Such sums cannot be raised without becoming real taxes upon capital, taking from the community much that would otherwise have been saved and devoted to industrial investments—that is to the promotion of the wealth of the country and the payment of wages."
    This tax is going to fall most heavily on-small estates. I do not know whether the Committee are aware of the number of estates which come up for taxation every year. A very large majority of the small estates are under £10,000. Last year the

    1807
    number that came up for review and taxation was 38,411, and it is a very remarkable fact that out of that large number 34,000 did not exceed £10,000. How are these little estates going to be dealt with by the Budget? They are to be affected very largely indeed. Suppose there is an estate of between £5,000 and £10,000, with a widow and a young family left. The rate per cent., if that estate is settled, as very often they are, is 4 per cent. The increase under the Chancellor's proposals will be from 4 per cent to 6 per cent. Go a step higher, and take estates from £15,000 to £20,000, and the duties will be increased from 5 per cent. to 7 per cent. In the case of estates of between £20,000 to £25,000 the corresponding increase will be from 5 per cent. to 8 per cent. These are very serious cases, and must bear very hardly upon those families who have to meet this situation.
    One point has been mentioned this afternoon which I think the Chancellor would meet if he was able, and that is a case of death occurring frequently in families. As we know, families do vary in health and strength, and in some families death occurs very frequently, at intervals of a few years, and the Chancellor comes in and demands the whole duty over again. Take the case of a £100,000 estate. The Estate Duty in such a case after three deaths will be £30,000, or nearly one-third of the estate. In the case of an estate of £1,000,000 after three deaths these duties will amount to nearly half a million. Sir Herbert Maxwell sent a remarkable instance to "The Times" newspaper in the month of July, in which he said that a neighbour of his in Scotland died in the year 1899. He left two sons. Full duty was paid on the father's death. The eldest son died three years afterwards. The whole set of Estate Duties had to be paid over again, and the younger son came into the property, charged with the liability of paying the jointure of the widows of his father and his elder brother, which crippled him so much that he had to give up his house where his forefathers had spent 300 years. The result of this is not only that he has not the means of keeping, his house in what has been the home of the family for more than three centuries, but that he is unable to maintain the expenditure necessary to secure the fruits of operations undertaken prospectively by his predecessors, such as plantations, etc. It is the working people on that estate who will suffer most. Where the master as put
    1808
    in a crippled condition and not able to keep up his situation as it used to be kept up, it is his servants and labourers who will suffer. I venture to make a suggestion in an Amendment which may not be reached, and therefore I would ask the Chancellor kindly to pay attention to it. My suggestion is that if death occurs within 10 years after Death Duty has been paid once there shall be a, graduation of that 10 years if Estate Duty has to be paid over again in that interval. That is to say, suppose death occurs in the first year alter the Estate Duty has been paid once there shall be only one-tenth of the whole duty paid. If it occurs in the second year, there shall be two-tenths paid, and so on until the tenth year, when the whole Estate Duty will be again paid. I think some proposal of that kind would be workable, and certainly it would be more just as between one family and another that Estate Duty should not be levied too frequently.
    About the result of these duties I received a letter a short time ago from a solicitor in large practice, I think the largest practice, in the City of Sheffield. He had written the letter for the purpose of sending it to "The Times" newspaper, but I had written a letter to him about a matter, and he sent this on to me, and said I could make use of it. He says:—
    "Some years ago a friend of mine bequeathed an amount of 4 per cent. Guaranteed Railway Stock valued for probate purposes at £l,500 to his trustees upon trust to apply the income to the repair and upkeep of workmen's clubs. Since his death I have paid duty, namely, Estate Duty, Settlement Duty, and Legacy Duty to the amount of £285, and the payment of these duties absorbed rather more than five years' interest as the stock was at a premium. Now, under the present Budget proposal, that property would have to pay £345, or 23 per cent. of the value."
    He finished the letter up:—
    "This is, however, not the worst of it, as testators will in the future find some better and cheaper mode of carrying out their charitable instruction. I shall take very good care not to let any clients of mine waste their money in the same way as the testator referred to in my letter."
    I hope, therefore, that these very heavy duties will not be charged at all, and so interfere with the charitable intentions of testators. Reference was made this afternoon to a comparison between English Death Duties and foreign Death Duties in France and Germany. France has been dealt with, and there is no doubt about it though they have Death Duties there the Death Duties are very moderate compared with those in this country. With regard to Germany, they are extremely moderate. In the year 1908 the whole produce of the Death Duties in Germany only amounted to a little over a million of money, in a country with a larger population, and

    1809
    quite as wealthy, I think, or nearly so. The Minister of Finance in Germany estimates the burden of Succession. Duty in this country—that is, Death Duty—at 9.42 marks per head of the population, compared with 5 or ½ per cent. in Germany. Take Italy; the Death Duties there are only a little over 2 per cent. as a maximum, and they are levied in fractions the same as they are in France. I do appeal to the Chancellor to consider that this is a very grave step which he, in the name of the country, is taking; that the commercial classes regard it distinctly as a tax upon capital which ought largely to be devoted to the industry of the country; that it is a discouragement to thrifty people—and I think there is no doubt about it that it is the saving classes of this country who are the backbone of our prosperity; and, finally, I hope that the Chancellor will consider the cases of those small people and those small estates to which I have ventured to allude, and also the cases of death—and I think this as a very great hardship—occurring frequently, and the toll being taken, with the result that the estate is gradually reduced from perhaps a large estate to a very small one.
    Mr. JOHN DILLON: I wish to ask the Chancellor of the Exchequer for some reply to the case made by the hon. Member for North Dublin (Mr. J. J. Clancy). He will remember that my colleague in his speech pointed out that it is absolutely necessary to consider this proposed increase in the Death Duties as portion of the whole system of dealing with the Death Duties in this particular Bill, and that he proved quite clearly that the scheme which has been submitted in this Bill for dealing with the Death Duties discriminates against Ireland most unfairly, especially as against the poorer and smaller estates in Ireland. That being so, of course, if the Chancellor of the Exchequer was not prepared to meet the case made by my hon. Friend it would undoubtedly make the proposed increase of the Death Duties in this particular class very much more objectionable from our point of view. The Chancellor of the Exchequer will remember that my hon. Friend mentioned four points, which I do not propose now to repeat. They were pointed out very clearly by the hon. Member for North Dublin, and I am sure they will be within the recollection of the Chancellor of the Exchequer. But it would be a very great satisfaction to us if
    1810
    the Chancellor could give us an indication of what the policy of the Government on these points is.
    Mr. LLOYD-GEORGE: The hon. Member for North Dublin did make three points which I have noted. As I understand his contention was this—not that Ireland ought to get preferential treatment in respect of the Death Duty, but that if the Bill was retained in its present form Ireland would get worse treatment than Great Britain. In one or two particulars I am rather disposed to agree with the hon. Member. I have looked into the matters referred to by the hon. Member for North Dublin. The first of the three points is with regard to tenant right. Here there is no such thing as Death Duties imposed upon tenant right at all. We do not value the right of a tenant to a holding which is held from year to year. In Ireland it has a very marketable value which in certain cases runs up, I believe, to as much as 40 years' purchase. In its present form undoubtedly the Irish tenant will be worsened to that extent. There are one or two Amendments down on the Paper which, as far as I can see, are quite unobjectionable, and which will meet the case, in the name of the hon. Member for North Dublin.
    Mr. AUSTEN CHAMBERLAIN: Will the right hon. Gentleman say what it is intended to do by those Amendments?
    Mr. LLOYD-GEORGE: To leave tenant right exactly where it is at the present moment, so that it shall not be in a worse position than it is at the present moment. The second point is there is some doubt as to whether you deduct the unpaid portion of the land purchase annuities as if it were a mortgage. It is obviously unfair that you should charge the whole value of the freehold without deducting what is after all a mortgage upon the property to the State, and I understand there is also a grievance with regard to unpaid purchase money. If that is the case I should certainly put that right. The purchaser might pay the Death Duty upon the whole amount taken into account in calculating the gross, and that is obviously unfair. The third point is that in Ireland, for some curious reason, a tenant's holding, although it is really a freehold, is treated as personal, so that he does not get the advantage of paying in eight annual instalments. That is obviously unfair, and it is purely the result of the interpretation in

    1811
    the Law Courts of the effect of local Acts. It would be realty here, and therefore the freeholder would get the benefit of Sir William Harcourt's Act. I agree that the freeholder in Ireland ought to get the same treatment. These three Amendments I shall be disposed to accept. I do not want to discuss them now. Obviously it would be out of order. But I mention them as indicating the view of the Government, which is also the view of the hon. Member for North Dublin, that Ireland should have the same treatment in that respect as the rest of the United Kingdom.
    8.0 P.M.
    Viscount CASTLEREAGH: I had hoped to hear from the right hon. Gentleman in his speech more adequate justification for what is obviously a great inroad upon the capital of this country. In all the speeches from this side of the House there has been conveyed the question whether it is right that the right hon. Gentleman should make his inroad upon the capital of the country. The principle of the Death Duty has been admitted for some time, and in going back to the year 1894 I think I am right in saying that the taxation, when brought in on that occasion was of an entirely novel character, and was rather in the nature of an experiment. Consequently, I think that before any addition is made to that taxation the experiment should have been allowed to go on a little longer than 15 years in order that it might be effectually seen whether or not the experiment was successful, or likely to be successful. It is not my intention to discuss anything in the nature of hardship or unfairness, which the right hon. Gentleman took so long a time in his speech to disclaim. I do not think that has anything to do with the question. What we really want to know is whether taxation of this kind will injure the stability of capital in this country. This taxation has been increased in the last 15 years on two occasions, and the Chancellor of the Exchequer and the Government, in making this proposed addition, are adopting a very dangerous course. The original object of the Death Duties was, naturally, to raise money, but coincident with that object there was also the further object of encouraging thrift among the people of the country. Sir William Harcourt himself said that it was to encourage the settlement of property. It was undisputed that the Death Duty on that occasion would be paid out of savings for the purpose, or out of income. I think we
    1812
    can look to no higher authority than Lord Rosebery, who, in his speech the other day, told us that at the time he was head of the Government he stated that the object of the Liberal Government of 1894 was that the Death Duty should be established at the figure of 8 per cent., which should be the highest point to which it could ever rise. Certainly neither Sir William Harcourt nor himself had ever contemplated that the Government would go to the extent that this Government is doing. There are manifold objections to the Death Duties, and I suppose the most important is that they fall at a very inopportune moment—at the time when the breadwinner has been taken away, and when the family are faced with a great many difficulties. It is obvious that the higher you make this tax the heavier you make the incidence to those who survive, and it naturally multiplies to a great extent the hardships with which that family is confronted.
    The Death Duties are naturally a very fluctuating source of revenue. They fluctuate from 14 millions on one side to 14 millions on the other. The amount which can be derived from the Death Duties—I am supported in this opinion by the hon. Member for North Paddington in a letter which he wrote to the "Daily News" some time ago—has reached, I think, the highest point which we will see. I think I am right in saying that the figures which have been brought forward rather point to the fact that any stringent form of Death Duties, any high and drastic taxation, brings about a great number of evasions; and I believe when the Death Duties reach the point to which the right hon. Gentleman is now bringing them they will not produce so much as if the scale was on a lower figure, as at the present moment, because people will go out of their way, being forced to do so, to evade this drastic form of taxation which falls upon them. I think there is a great fallacy abroad in this country—and it is a fallacy which certainly is held by hon. Gentlemen on the other side and their leaders, among them the tight hon. Gentleman himself—that there are only two classes of people in this country, the workman and the millionaire. The workman in a great many cases does not pay the Death Duties, and I do not think that the millionaire, in many instances, deserves much compassion in respect of the Death Duties he has to pay; but there are classes between these two on which this tax, although

    1813
    graduated up to a certain point, will fall heavily. It will act and react in a very harsh manner on those individuals who have a certain amount of capital, and who come between the working classes and the millionaires. As I stated, when Sir William Harcourt brought the Death Duties in the maximum was to be 8 per cent., and it was to act, as was said, when graduated, as a 4 per cent. Death Duty all round. The right hon. Gentleman the Chancellor of the Exchequer is converting that 4 per cent. into a 6½ per cent. duty all round, If he does not think that 2½ per cent. extra is a very heavy and drastic burden to place ion a great many individuals in this country, all I can say is I cannot agree with him on that point. In the last 15 years the Death Duties have been raised twice. Two years ago the right hon. Gentleman the Prime Minister, in his Budget statement, raised the Death Duties, and now they are again to be raised at the end of 15 years, in a Very oppressive form.
    This brings me to say a few words with regard to the old idea of the Death Duties—the idea that they should be paid out of savings or out of income. It is obviously impossible now that these duties, which are imposed by the Chancellor of the Exchequer, can be paid out of anything whatsoever except capital belonging to the individual. In making this impost the right hon. Gentleman is effecting a very serious inroad, indeed, on the amount of capital in this country. There might be something to be said about making this inroad on capital if it was used for entirely different purposes from those proposed; but I very strongly condemn the policy of the Government in making use of the capital of the country for the purpose of defraying annual expenditure. It is impossible to get away from the fact that the capital which belongs to the individual in this country employs labour, and we know well that it is an axiom that labour and capital go hand in hand. Without the one the other is powerless. I go so far as to say that capital in the hands of individuals employs more labour than if
    that capital was sequestered by the State and placed in the hands of the State. We know very well that the State is a very large employer of labour, and I venture to say that the portion of capital taken from, the individual, and which that individual has used for the employment of labour, can be used by the State for the purposes of annual expenditure; so that the amount of capital thus withdrawn does not employ the same amount of labour as it did before. Either capital is used for employment or it is used in an extravagant manner as annual expenditure. I have always held the theory—and I know I am not alone in the idea—that any money which you pay in the form of Death Duties, which takes away the capital of the country, which takes away the national capital, should be used for the purpose of defraying the National Debt, the capital debt of the country. We have seen in the last 15 years that £350,000,000 have been taken in Death Duties—£350,000,000 of the national capital of this country, and it is obvious that, in another generation, about £600,000,000 of capital will have been taken in Death Duties. If that were used for the purpose of paying off the National Debt, there might be something to be said in support of this higher form of taxation. If the £600,000,000 were used in the way I suggest, it would remove from around the neck of the people of this country a millstone which is weighing them down at this moment to a degree more than they can bear. I really should have liked to have had from the Government a more adequate justification of the objects they have in view in sequestering the national capital of this country for the purpose of using it in annual expenditure.
    Mr. LLOYD-GEORGErose in his place, and claimed to move, "That the Question be now put."
    Question put, "That the Question be now put."
    The Committee divided: Ayes, 169; Noes, 81.

    Division No. 635.]

    AYES.

    [8.12 p.m.

    Acland, Francis Dyke

    Barnard, E. B.

    Bryce, J. Annan

    Allen, A. Acland (Christchurch)

    Beauchamp, E.

    Buckmaster, Stanley O.

    Allen, Charles P. (Stroud)

    Bell, Richard

    Burns, Rt. Hon. John

    Ashton, Thomas Gair

    Berridge, T. H. D.

    Burnyeat, W. J. D.

    Baker, Sir John (Portsmouth)

    Bethell, Sir J. H. (Essex, Romford)

    Burt, Rt. Hon. Thomas

    Baker, Joseph A. (Finsbury, E.)

    Black, Arthur W.

    Buxton, Rt. Hon. Sydney Charles.

    Balfour, Robert (Lanark)

    Boulton, A. C. F.

    Byles, William Pollard

    Baring, Godfrey (Isle of Wight)

    Brace, William

    Carr-Gomm, H. W.

    Barker, Sir John

    Bright, J. A.

    Cherry, Rt. Hon. R. R.

    Barlow, Sir John E. (Somerset)

    Brunner, J. F. L. (Lanes., Leigh)

    Clough, William

    Clynes, J. R.

    Lambert, George

    Robson, Sir William Snowdon

    Cobbold, Felix Thornley

    Lamont, Norman

    Roch, Walter F. (Pembroke)

    Collins, Stephen (Lambeth)

    Layland-Barrett, Sir Francis

    Rogers, F. E. Newman

    Corbett, C. H. (Sussex, E. Grinstead)

    Lea, Hugh Cecil (St. Pancras, E.)

    Rose, Sir Charles Day

    Cornwall, Sir Edwin A.

    Lever, W. H. (Cheshire, Wirral)

    Runciman, Rt. Hon. Walter

    Cotton, Sir H. J. S.

    Levy, Sir Maurice

    Samuel, S. M. (Whitechapel)

    Cox, Harold

    Lewis, John Herbert

    Schwann, C. Duncan (Hyde)

    Curran, Peter Francis

    Lloyd-George, Rt. Hon. David

    Schwann, Sir C. E. (Manchester)

    Davies, M. Vaughan-(Cardigan)

    Luttrell, Hugh Fownes

    Shackleton, David James

    Davies, Timothy (Fulham)

    Lynch, H. B.

    Sherwell, Arthur James

    Davies, Sir W. Howell (Bristol, S.)

    Macdonald, J. R. (Leicester)

    Shipman, Dr. John G.

    Dewar, Arthur (Edinburgh, S.)

    Macdonald, J. M. (Falkirk Burghs)

    Simon, John Allsebrook

    Dickinson, W. H. (St. Pancras, N.)

    Maclean, Donald

    Snowden, P.

    Dobson, Thomas W.

    McKenna, Rt. Hon. Reginald

    Soares, Ernest J.

    Essex, R. W.

    M'Laren, Sir C. B (Leicester

    Stanger, H. Y.

    Esslemont, George Birnie

    M'Laren, H. D. (Stafford, W.)

    Stanley, Hon. A. Lyulph (Cheshire)

    Evans, Sir S. T.

    Maddison, Frederick

    Stewart, Halley (Greenock)

    Everett, R. Lacey

    Mallet, Charles E.

    Stewart-Smith, D. (Kendal)

    Faber, G. H. (Buston)

    Markham, Arthur Basil

    Straus, B. S. (Mile End)

    Fenwick, Charles

    Marks, G Croydon (Launceston)

    Strauss. E. A. (Abingdon)

    Fuller, John Michael F.

    Marnham, F. J.

    Summerbell, T.

    Fullerton, Hugh

    Masterman, C. F. G.

    Taylor, John W. (Durham)

    Gibb, James (Harrow)

    Molteno, Percy Alport

    Tennant, H. J. (Berwickshire)

    Gill, A. H.

    Money, L. G. Chiozza

    Thompson, J. W. H. (Somerset, E.)

    Glover, Thomas

    Morse, L. L.

    Thorne, G. R. (Wolverhampton)

    Harcourt, Rt. Hon. L. (Rossendale)

    Morton, Alpheus Cleophas

    Thorne, William (West Ham)

    Harcourt, Robert V. (Montrose)

    Murray, James (Aberdeen, E.)

    Trevelyan, Charles Philips

    Hardy, George A. (Suffolk)

    Myer, Horatio

    Verney, F. W.

    Harmsworth, R. L. (Caithness-shire)

    Newnes, F. (Notts, Bassetlaw)

    Vivian, Henry

    Hart-Davies, T.

    Nicholson, Charles N. (Doncaster)

    Walsh, Stephen

    Hazel, Dr. A. E. W.

    Norman, Sir Henry

    Ward, W. Dudley (Southampton)

    Helme, Norval Watson

    Nussey, Sir Willans

    Wardle, George J.

    Henderson, J. McD. (Aberdeen, W.)

    Nuttall, Harry

    Wason, Rt. Hon. E. (Clackmannan)

    Higham, John Sharp

    O'Grady, J.

    Wason, John Cathcart (Orkney)

    Hobhouse, Rt. Hon. Charles E. H.

    Parker, James (Halifax)

    White, Sir George (Norfolk)

    Holt, Richard Durning

    Partington, Oswald

    White, J. Dundas (Dumbartonshire)

    Hooper, A. G.

    Pearce, Robert (Staffs, Leek)

    White, Sir Luke (York, E.R.)

    Hope, W. H. B. (Somerset, N.)

    Perks, Sir Robert William

    Whittaker, Rt. Hon. Sir Thomas P.

    Horniman, Emslie John

    Pointer, J.

    Wiles, Thomas

    Howard, Hon. Geoffrey

    Ponsonby, Arthur A. W. H.

    Williams, W. Llewelyn (Carmarthen)

    Hudson, Walter

    Radford, G. H.

    Wilson, J. W. (Worcestershire, N.)

    Isaacs, Rufus Daniel

    Rainy, A. Rolland

    Wilson, P. W. (St. Pancras, S.)

    Jardine, Sir J.

    Rea, Rt. Hon. Russell (Gloucester)

    Winfrey, R.

    Jones, William (Carnarvonshire)

    Rees, J. D.

    Wood, T. M. M'Kinnon

    Jowett, F. W.

    Richards, T. F. (Wolverhampton, W.)

    King, Alfred John (Knutsford)

    Roberts, G. H. (Norwich)

    TELLERS FOR THE AYES.—Mr.

    Laidlaw, Robert

    Robinson, S.

    Joseph Pease and Captain Norton.

    Lamb, Ernest H. (Rochester)

    NOES.

    Anstruther-Gray, Major

    Faber, George Denison (York)

    O'Donnell, C. J. (Walworth)

    Balcarres, Lord

    Fell, Arthur

    Parkes, Ebenezer

    Baldwin, Stanley

    Fletcher, J. S.

    Pease, Herbert Pike (Darlington)

    Balfour, Rt. Hon. A. J. (City Lond.)

    Forster, Henry William

    Peel, Hon. W. R. W.

    Banner, John S. Harmood-

    Foster, P. S.

    Percy, Earl

    Baring, Capt. Hon. G. (Winchester)

    Gardner, Ernest

    Powell, Sir Francis Sharp

    Barrie, H. T. (Londonderry, N.)

    Gibbs, G. A. (Bristol, West)

    Pretyman, E. G.

    Beach, Hon. Michael H. H.

    Gordon, J.

    Randles, Sir John Scurrah

    Bowles, G. Stewart

    Haddock, George B.

    Rawlinson, John Frederick Peel

    Bridgeman, W. Clive

    Hamilton, Marquess of

    Renwick, George

    Bull, Sir William James

    Hardy, Laurence (Kent, Ashford)

    Ridsdale, E. A.

    Burdett-Coutts, W.

    Harris, Frederick Leverton

    Roberts, S. (Sheffield, Ecclesall)

    Butcher, Samuel Henry

    Hermon-Hodge, Sir Robert

    Rutherford, Watson (Liverpool)

    Carlile, E. Hildred

    Hill, Sir Clement

    Salter, Arthur Clavell

    Carson, Rt. Hon. Sir Edward H.

    Hills, J. W.

    Stanier, Beville

    Castlereagh, Viscount

    Hope, James Fitzalan (Sheffield)

    Stanley, Hon. Arthur (Ormskirk)

    Cave, George

    Hunt, Rowland

    Starkey, John R.

    Cecil, Evelyn (Aston Manor)

    Joynson-Hicks, William

    Stone, Sir Benjamin

    Chamberlain, Rt. Hon. J. A. (Worc'r.)

    Kerry, Earl of

    Talbot, Rt. Hon. J. G. (Oxford, Univ.)

    Clive, Percy Arthur

    Kimber, Sir Henry

    Thomson, W. Mitcheil-(Lanark)

    Cochrane, Hon. Thomas H. A. E.

    King, Sir Henry Seymour (Hull)

    Thornton, Percy M.

    Courthope, G. Loyd

    Lambton, Hon. Frederick William

    Walrond, Hon. Lionel

    Craig, Captain James (Down, E.)

    Lane-Fox, G. R.

    Warde, Col. C. E. (Kent, Mid)

    Craik, Sir Henry

    Lee, Arthur H. (Hants, Fareham)

    Williams, Col. R. (Dorset, W.)

    Dalrymple, Viscount

    Lowe, Sir Francis William

    Wyndham, Rt. Hon. George

    Dickson, Rt. Hon. C. Scott

    Lyttelton, Rt. Hon. Alfred

    Doughty, Sir George

    Mason, James F. (Windsor)

    TELLERS FOR THE NOES.—Sir A.

    Douglas, Rt. Hon. A. Akers-

    Morpeth, Viscount

    Acland-Hood and Viscount Valentia

    Question put accordingly, "That the words proposed to be left out to the word
    1816
    'thirtieth' ["thirtieth day of April"] stand part of the Clause."
    The Committee divided: Ayes, 170; Noes, 82.

    Division No. 636.]

    AYES.

    [8.20 p.m.

    Acland, Francis Dyke

    Hart-Davies, T.

    Ponsonby, Arthur A. W. H.

    Allen, A. Acland (Christchurch)

    Hazel, Dr. A. E. W.

    Radford, G. H.

    Allen, Charles P. (Stroud)

    Helme, Norval Watson

    Rainy, A. Rolland

    Ashton, Thomas Gair

    Henderson, J. M. (Aberdeen, W.)

    Rea, Rt. Hon. Russell (Gloucester)

    Baker, Sir John (Portsmouth)

    Higham, John Sharp

    Rees, J. D.

    Baker, Joseph A. (Finsbury, E.)

    Hobhouse, Rt. Hon. Charles E. H.

    Richards, T. F. (Wolverhampton, W.)

    Balfour, Robert (Lanark)

    Holt, Richard Durning

    Roberts, G. H. (Norwich)

    Baring, Godfrey (Isle of Wight)

    Hooper, A. G.

    Robinson, S.

    Barker, Sir John

    Hope, W. H. B. (Somerset, N.)

    Robson, Sir William Snowdon

    Barlow, Sir John E. (Somerset)

    Horniman, Emslie John

    Roch, Walter F. (Pembroke)

    Barnard, E. B.

    Howard, Hon. Geoffrey

    Rogers, F. E. Newman

    Beauchamp, E.

    Hudson, Walter

    Rose, Sir Charles Day

    Bell, Richard

    Isaacs, Rufus Daniel

    Runciman, Rt. Hon. Walter

    Berridge, T. H. D.

    Jardine, Sir J.

    Samuel, S. M. (Whitechapel)

    Bethell, Sir J. H. (Essex, Romford)

    Jones, William (Carnarvonshire)

    Schwann, C. Duncan (Hyde)

    Black, Arthur W.

    Jowett, F. W.

    Schwann, Sir C. E. (Manchester)

    Boulton, A. C. F.

    King, Alfred John (Knutsford)

    Shackleton, David James

    Brace, William

    Laidlaw, Robert

    Sherwell, Arthur James

    Bright, J. A.

    Lamb, Ernest H. (Rochester)

    Shipman, Dr. John G.

    Brunner, J. F. L. (Lanes., Leigh)

    Lambert, George

    Simon, John Allsebrook

    Bryce, J. Annan

    Lamont, Norman

    Snowden, P.

    Buckmaster, Stanley O.

    Layland-Barratt, Sir Francis

    Soares, Ernest J.

    Burns, Rt. Hon. John

    Lea, Hugh Cecil (St. Pancras, E.)

    Stanger, H. Y.

    Burnyeat, W. J. D.

    Lever, W. H. (Cheshire, Wirral)

    Stanley, Hon. A. Lyulph (Cheshire)

    Burt, Rt. Hon. Thomas

    Levy, Sir Maurice

    Stewart, Halley (Greenock)

    Buxton, Rt. Hon Sydney Charles

    Lewis, John Herbert

    Stewart-Smith, D. (Kendal)

    Byles, William Pollard

    Lloyd-George, Rt. Hon. David

    Straus, B. S. (Mile End)

    Carr-Gomm, H. W.

    Luttrell, Hugh Fownes

    Strauss, E. A. (Abingdon)

    Cherry, Rt. Hon. R. R.

    Lynch, H. B.

    Summerbell, T.

    Clough, William

    Macdonald, J. R. (Leicester)

    Taylor, John W. (Durham)

    Clynes, J. R.

    Macdonald, J. M. (Falkirk Burghs)

    Tennant, H. J. (Berwickshire)

    Cobbold, Felix Thornley

    Maclean, Donald

    Thompson, J. W. H. (Somerset, E.)

    Collins, Stephen (Lambeth)

    M'Kenna, Rt. Hon. Reginald

    Thorne, G. R. (Wolverhampton)

    Corbett, C. H. (Sussex, E. Grinstead)

    M'Laren, Sir C. B. (Leicester)

    Thorne, William (West Ham)

    Cornwall, Sir Edwin A.

    M'Laren, H. D. (Stafford, W.)

    Trevelyan, Charles Philips

    Cotton, Sir H. J. S.

    Maddison, Frederick

    Verney, F. W.

    Cox, Harold

    Mallet, Charles E.

    Vivian, Henry

    Curran, Peter Francis

    Markham, Arthur Basil

    Walsh, Stephen

    Davies, M. Vaughan-(Cardigan)

    Marks, G. Croydon (Launceston)

    Ward, W. Dudley (Southampton)

    Davies, Timothy (Fulham)

    Marnham, F. J.

    Wardle, George J

    Davies, Sir W. Howell (Bristol, S.)

    Masterman, C. F. G.

    Wason, Rt. Hon. E. (Clackmannan))

    Dewar, Arthur (Edinburgh, S.)

    Molteno, Percy Alport

    Wason, John Cathcart (Orkney)

    Dickinson, W. H. (St. Pancras, N.)

    Money, L. G. Chiozza

    White, Sir George (Norfolk)

    Dobson, Thomas W.

    Morse, L. L.

    White, J. Dundas (Dumbartonshire)

    Essex, R. W.

    Morton, Alpheus Cleophas

    White, Sir Luke (York, E. R.)

    Esslemont, George Birnie

    Murray, James (Aberdeen, E.)

    Whittaker, Rt. Hon. Sir Thomas P.

    Evans, Sir S. T.

    Myer, Horatio

    Wiles, Thomas

    Everett, R. Lacey

    Newnes, F. (Notts, Bassetlaw)

    Williams, W. Liewelyn (Carmarthen)

    Fenwick, Charles

    Nicholson, Charles N. (Doncaster)

    Wilson, J. W. (Worcestershire, N.)

    Fuller, John Michael F.

    Norman, Sir Henry

    Wilson, P. W. (St. Pancras, S.)

    Fullerton, Hugh

    Nussey, Sir Willans

    Wilson, W. T. (Westhoughton)

    Gibb, James (Harrow)

    Nuttall, Harry

    Winfrey, R.

    Gill, A. H.

    O'Grady, J.

    Wood, T. M'Kinnon

    Glover, Thomas

    Parker, James (Halifax)

    Young, Samuel

    Harcourt, Rt. Hon. L. (Rossendale)

    Partington, Oswald

    Harcourt, Robert V. (Montrose)

    Pearce, Robert (Staffs, Leek)

    TELLERS FOR THE AYES.—Mr.

    Hardy, George A. (Suffolk)

    Perks, Sir Robert William

    Joseph Pease and Captain Norton.

    Harmsworth, R. L. (Caithness-shire)

    Pointer, J.

    NOES.

    Acland-Hood, Rt. Hon. Sir Alex. F.

    Castlereagh, Viscount

    Foster, P. S.

    Anstruther-Gray, Major

    Cave, George

    Gardner, Ernest

    Arkwright, John Stanhope

    Chamberlain, Rt. Hon. J. A. (Worc'r)

    Gibb, G. A. (Bristol, West)

    Balcarres, Lord

    Clive, Percy Archer

    Gordon, J.

    Baldwin, Stanley

    Cochrane, Hon. Thomas H. A. E.

    Haddock, George B.

    Balfour, Rt. Hon. A. J. (City, Lond.)

    Courthope, G. Loyd

    Hamilton, Marquess of

    Banner, John S. Harmood-

    Craig, Captain James (Down, E.)

    Hardy, Laurence (Kent, Ashford)

    Baring, Capt. Hon. G. (Winchester)

    Craik, Sir Henry

    Hermon-Hodge, Sir Robert

    Barrie, H. T. (Londonderry, N.)

    Dalrymple, Viscount

    Hill, Sir Clement

    Beach, Hon. Michael Hugh Hicks

    Dickson, Rt. Hon. C. Scott

    Hills, J. W.

    Bowles, G. Stewart

    Doughty, Sir George

    Hope, James Fitzalan (Sheffield)

    Bridgeman, W. Clive

    Douglas, Rt. Hon. A. Akers-

    Hunt, Rowland

    Bull, Sir William James

    Faber, George Denison (York)

    Joynson-Hicks, William

    Burdett-Coutts, W.

    Faber, G. H. (Boston)

    Kerry, Earl of

    Butcher, Samuel Henry

    Fell, Arthur

    Kimber, Sir Henry

    Carlile, E. Hildred

    Fletcher, J. S.

    King, Sir Henry Seymour (Hull)

    Carson, Rt. Hon. Sir Edward H.

    Forster, Henry William

    Lambton, Hon. Frederick William

    1818

    1819

    Lane-Fox, G. R.

    Randies, Sir John Scurrah

    Thomson, W. Mitchell-(Lanark)

    Lee, Arthur H. (Hants, Fareham)

    Rawlinson, John Frederick Peel

    Thornton, Percy M.

    Lowe, Sir Francis William

    Renwick, George

    Valentia, Viscount

    Lyttelton, Rt. Hon. Alfred

    Ridsdale, E. A.

    Walrond, Hon. Lionel

    Mason, James F. (Windsor)

    Roberts, S. (Sheffield, Ecclesall)

    Warde, Col. C. E. (Kent, Mid)

    Morpeth, Viscount

    Rutherford, Watson (Liverpool)

    Williams, Col. R. (Dorset, W.)

    O'Donnell, C. J. (Walworth)

    Salter, Arthur Clavell

    Wyndham, Rt. Hon. George

    Parkes, Ebenezer

    Stanier, Beville

    Pease, Herbert Pike (Darlington)

    Stanley, Hon. Arthur (Ormskirk)

    TELLERS FOR THE NOES.—Mr.

    Peel, Hon. W. R. W.

    Starkey, John R.

    Evelyn Cecil and Mr. Leverton

    Percy, Earl

    Stone, Sir Benjamin

    Harris.

    Pretyman, E. G.

    Talbot, Rt. Hon. J. G. (Oxford Univ.)

    Mr. SAMUEL ROBERTSmoved to leave out the words "and 2 per cent. shall be substituted for 1 per cent. in Section 17 of the Finance Act, 1894 (in this Part of this Act referred to as the principal Act), as the rate of Settlement Estate Duty."
    The Committee will remember that the Settlement Estate Duty was first imposed by Sir W. Harcourt in 1894, by Section 5 Of the Finance Act of that year, which provided that "where property in respect of which Estate Duty is leviable is settled by the will of the deceased, further Estate Duty, called Settlement Estate Duty, on the principal value of the settled property shall be levied at the rate hereinafter specified," and it is specified at 1 per cent. The Chancellor of the Exchequer in his Budget statement explained to the Committee the reasons which prevailed in Sir William Harcourt's mind for setting up this duty. Previously to that year, the Committee will remember, there was a fixed 3 per cent. Probate Duty payable on all estates. That duty was altered in a graduated scale ranging from 1 to 8 per cent., and Sir William Harcourt thought that where property was settled, and therefore according to that Act of Parliament Estate Duty should only be payable once during the continuance of the settlement, it was only just and right that some equivalent should be paid by the receiver of the legacy or bequest which was settled to make up in some way the loss of duty where only one Estate Duty was levied. The Chancellor of the Exchequer made this statement:—
    "When we remember that the expedient of settling a whole estate is often adopted as an alternative to dividing it in the first instance, that the average age at which a life tenant succeeds is probably much higher than that of the average beneficiary taking full property, and last that the difference in value between the fee simple of the property and the life interest or life interests of the tenant or tenants for life passes, in theory at any rate, directly from settler to the remainder man, it is not unreasonable that a substantial abatement should be made from the present value (calculated on a strictly actuarial basis) of what would probably be the future liability in respect of Estate Duty, in the event of the whole estate being charged in full every time it passed upon death under the settlement."
    The position therefore is this: where a testator dies Estate Duty is paid on the
    1820
    whole of the corpus of the property. If any part of the estate is settled, an extra 1 per cent. is paid by the settled portion of the property, and no further duty is leviable in respect of the settled property until it comes into the possession of a person competent to dispose of it, that is, a person who owns it absolutely, and can dispose of it by sale or otherwise. The proposal now is to increase that 1 per cent. Settlement Estate Duty to 2 per cent., because the Chancellor of the Exchequer said that what was an equivalent when the graduated scale of Sir William Harcourt was fixed in 1894 is not an equivalent to the Estate Duty as now stiffened up. I do not think that that completes the whole question. The question is this: is it the public policy of the State to encourage or discourage settlements? I say that it is distinctly in the interests of public policy. A testator, as very often happens—in fact, in most cases—leaves a widow and young family, too young to be trusted with absolute control. The only safe and proper policy in such a case, both for the children and for the estate, is to settle that property. If you make the duty burdensome by raising it you pro tanto discourage testators from venturing to settle property, because they have not only to pay full Estate Duty but, in the case of the families, under this Bill, unfortunately both the Legacy and Succession Duties are reinstituted at the rate of 1 per cent. where the succession is in direct line. That 1 per cent. was repealed by the Act of Sir William Harcourt, but now the Government propose that where an estate is left in the way I have described there shall be three sets of duties, namely, the Estate Duty on the whole corpus, the Settlement Estate Duty at the rate of 2 per cent., and Legacy or Succession Duty, according to whether the property is personalty or realty, at the rate of 1 per cent. I venture to submit to the Committee that these duties are too heavy, and that a Settlement Estate Duty, at all events, of 1 per cent., is quite heavy enough in a case of this kind. If you stiffen it up in proportion to the way you are stiffening up

    1821
    the Estate Duty you will to that extent discourage testators, and, therefore, you will be following a course which, in my opinion, and, I think, in the opinion of most sensible men, will be a mistake. It will not be conducive to their benefit that property should be left to a young man or young woman at an age when they are not fit to have it left under their full and absolute control. The only safe way in their interest, at all events, and also, I think, in the interests of the estate, is that the property should be properly settled, especially where you have small estates. A majority of estates of this kind are small estates, and therefore that is all the more reason why full liberty, without unduly fettering each testator, should be given them to leave the property settled.
    The ATTORNEY-GENERAL (Sir William Robson): I think the hon. Member has gone perhaps beyond the scope of his own Amendment in dealing with the whole principle of settlement, and asking whether the Government proposes to encourage or discourage settlement as a means of arranging family affairs.
    Mr. SAMUEL ROBERTS: Discouragement by reason of the increase of duty.
    Sir W. ROBSON: The principle of Settled Estate Duty is well established, and will not, I think, be disputed from any part of the House. I do not think it necessary to follow the hon. Member into any general principle, because I think it may be said, and should be said, that the present incidence of these duties is to encourage settlement, which the increase that the Government proposes will not in any way tend to discourage. It may have the effect of removing some undue preference which settled property now gets as against other property. But, indeed, although that would be its tendency, I doubt very much whether in considering the advisability of settlement anyone takes into consideration the amount or incidence of Settled Estate Duty. The question we have to decide on this Amendment is solely and simply, Is the increase necessary and, under the circumstances, the legitimate and proper means of raising the money which is required? When Settled Estate Duty was first imposed it was imposed as a tax suplementary to Estate Duty, because it was thought that if no duty were imposed at all in respect of settlement many estates and interests might pass which would escape the burden of
    1822
    Estate Duty altogether. It was thought then that Settlement Estate Duty was a fair equivalent, and would put settled and unsettled property on to something like the same footing. It has been discovered by experience which, I think, can scarcely be disputed that the proportion of Settled Estate Duty imposed with that object in view turns out to have been insufficient. It was thought under the original scheme of the late Sir William Harcourt that it might be taken for granted that property would pass about once in 30 years, and the rate of settled Estate Duty under Sir William Harcourt's Act was put at 1 per cent—instead of being rated at 3 per cent—on the basis of the average enjoyment of the property for that period of time. It was then calculated that the Estate Duty would work out at about 2½ per cent. on the whole amount of property chargeable thereto. In fact, the duties had worked out at 4¾ on that property. It has been ascertained by experience that the amount of Estate Duty upon the capital value of the estate passing was under-estimated by Sir William Harcourt, and that instead of the average being 2¾ or 2½ per cent., it has been nearer 4¾ per cent. Under the new scale it will be about 6½ per cent., so that 1 per cent. no longer remains an equivalent for the lost Estate Duty such as it was thought it would be under the Act of 1894. However, the reason given by the Chancellor was, I think, a sufficient reason, and perhaps better reason than referring to these calculations, and that was that in raising the Estate Duty he was in fact compelled, not only by fiscal, but by logical reasons, to raise also the Settled Estate Duty, which is an equivalent, in some degree in certain cases, to the Estate Duty. He considers that the Settled Estate Duty was in the first instance made too low. As an equivalent, seeing that we have since raised the Estate Duty as a whole, the extra 1 per cent. I do not think unjust and unfair.
    Mr. AUSTEN CHAMBERLAIN: I rather regret we did not have the figures which the Attorney-General has given to us in the discussion which closed a few minutes ago. I understood the hon. and learned Gentleman to say that where Sir William Harcourt estimated that the average tax on estates passing by death would be either 2½ per cent. or 2¾ per cent., under the scale which he then set up it has turned out to be 4¾ per cent. Very well, the first point which rests upon that is that Sir William Harcourt's tax was very much

    1823
    heavier than he thought. Obviously it was very nearly double what he expected it to be. That is not all. That is not the only way in which Sir William Harcourt's calculations have been shown to be wrong. It is no reflection upon Sir William Harcourt's scale to say that all his expectations have not been realised. He was dealing with the matter without experience, and could not therefore be exact. No doubt he had his advisers, and they used the best calculations available at the time. There was another respect in which the matter went wrong, and went wrong to the disadvantage of the taxpayer and the advantage of the Treasury. The hon. and learned Gentleman said that the tax was fixed at 1 per cent. with reference, to the number of years which it was expected an ordinary succession to endure. He took that number at 30 years. In discussing the Land Taxes it has been stated by the Government that the period has come round more rapidly than was expected at the time, and that instead of the enjoyment of the estate averaging 30 years it averaged nearer 25 years. I asked the hon. and learned Gentleman what the figures 2½ per cent. and 4¾ per cent. were. He told me they were the average percentage which the State too it from the fortunes passing at death. It has nothing to do with how often they passed; it only means that it is shown they realise more than Sir William Harcourt expected. You take a larger sum than he expected. The Attorney-General's statement shows no connection between the Death Duties and the frequency at which these deaths occur and property passes. It appears that in all respects Sir William Harcourt's Death Duties were very much more onerous than he believed. It is not denied he thought he put his duties high enough, but it was found, from experience, that they were higher, and they occurred at more frequent intervals than he thought; and, with that knowledge, and using as an advancement of their proposals that the increase obtained was much higher than was thought would be the case, the Government put the Estate Duties, and also the Settlement Estate Duties, on a higher scale now. I agree that the Settlement Estate Duties ought to bear a proportion to the Estate Duties, and if I thought the Government had made out their case on the last proposition that we were discussing some time ago, I do not think what my hon. Friend has said would have caused me
    1824
    any grave doubts as to the wisdom of the present proposals; but I do not think that the Government made out their case on the last proposition, and if my hon. Friend goes to a Division I shall vote with him.
    Mr. CAVE: There is one point which has not yet been covered that I should like to refer to. It is common ground that the Settlement Estate Duty was imposed in order to make up for the advantage enjoyed by settled property by reason of Sub-section (2), Section 5, of the Finance Act of 1894. Under this provision, once Estate Duty was paid upon property that was settled, no further-Estate Duty would be paid while it remained settled. You are taking away, by Clause 41, a great part of that advantage. It is a fact now that where property as settled and the reversioner dies first, duty is paid at the reversioner's death—no further duty is paid upon the death of the life tenant. This Bill proposes to alter that, and to take away from settled property this advantage which it has enjoyed under Sub-section (2) of Section 5. Is it right, at the very moment when you take away that advantage, to double the duty imposed upon settled property for the purpose of counterbalancing that advantage? Certainly, if you are taking away half the advantage, you ought to diminish the duty or leave it where it is. That is good reason for the Amendment moved from this side of the House. The conclusion arrived at by the right hon. Gentleman opposite leaves the advantage entirely out of account. Let me add one ether consideration. You are, I think, by this particular proposal discouraging settlements; you are increasing the duty on settlements made by will, and to that extent and by the provisions of Clause 41 you are discouraging settlements. More than that, by a later clause of the Bill you are increasing very greatly the Stamp Duty, so that in at least these four different ways, first by this provision, then by the next clause, then by the increase of the Succession Duty, and then by the increase of the Stamp Duty you are discouraging settlement. I cannot help thinking that it is part of the Government's policy to discourage this very reasonable and justifiable practice. For the reasons I have given I oppose the doubling of this duty.
    Mr. WATSON RUTHERFORD: I do-not think that ordinary people outside the rank of lawyers altogether appreciate the

    1825
    peculiar position which the Settlement Estate Duty occupies. The Settlement Estate Duty is imposed with the ordinary Estate Duty upon all property that is settled or contingently settled. It was held by a series of decisions culminating in the case of the Attorney-General and Farley that in all cases where there was a contingency settlement of any estate that the whole estate became immediately liable to Settlement Estate Duty. I will give a familiar illustration. It is that of a man who, when making his will, desires to leave his property to his wife for life, but ultimately to his children equally. He happens to have among his children either one or two daughters, and he settles shares upon the daughters. He provides in his will that his daughters' shares shall be held upon trust by her giving her an income for life, which is then to go to her children, and if she has no children it is to come back, and to be divided amongst his other issue. That is the ordinary will which the common or garden testator usually makes. It will hardly be believed by the ordinary layman that it was solemnly held by the Courts that upon the Finance Act of 1894 the effect of a man making his will in that ordinary way was that the whole of his estate was held to be contingently settled, that his son might die under age, and that the whole estate might drop into the share of the daughter, and conjointly be settled. The result was that by a series of decisions the estate of anybody who died having made a will of that ordinary kind was held to be liable, not only to full Estate Duty, but to full Settlement Estate Duty. That was fixed at 1 per cent. It is now proposed to double that. I venture to think that of all the Estate Duties ever inflicted upon a people, this of Settlement Estate Duty is the most irksome and irritating, and especially with regard to the decision of the Courts when they impose the full Settlement Estate Duty upon the whole of the estate. On the occasion when there was one daughter who might conjointly succeed to the estate it became a great hardship. By the Finance Act of 1898 it was provided that where a property was conjointly settled, and paid the whole of the Settlement Estate Duty, when a contingency arose, when the son, for instance, attained the age of 21, the executors could apply to the Inland Revenue and get back the exact proportion already paid in advance, and it left the duty upon the piece of property now found not to be settled.
    1826
    What has been the result? Upon this point I challenge the hon. and learned Gentleman in charge of the Bill. The result has been that in more than half the cases where the settlement Estate Duty has been so paid, and where in the events I have mentioned the property was not really settled at all, in more than half the cases the duty has not been applied for back.
    The DEPUTY-CHAIRMAN (Mr. Caldwell): The hon. and learned Member is really not discussing the Amendment which is down on the Paper.
    Mr. WATSON RUTHERFORD: I was anticipating an Amendment of mine which is on the Paper—
    The DEPUTY-CHAIRMAN: That is not in order, neither is the discussion of it in order. This Clause simply deals with the question of raising the rate, whether it shall be from 1 per cent. to 2 per cent. and nothing further.
    Mr. WATSON RUTHERFORD: May I be allowed to submit that if I can show that the tax is unjust or unfairly levied as it exists at present that is an argument against doubling the tax?
    The DEPUTY-CHAIRMAN: It is not in order on this Amendment to discuss questions of that kind.
    Mr. CAVE: This point is not of so much importance so long as the tax is a low one, but when it is proposed to raise the tax by doubling it, surely it is open to us to consider whether that proposal is a just one or not.
    The DEPUTY-CHAIRMAN: That question does not arise under this Clause. The scope of the Clause simply deals with the question of increasing the rate, and what the hon. and learned Member has been referring to would come on the new Clause dealing with this matter.
    Mr. PRETYMAN: Debate will become impassible if, in considering the question of the doubling of this tax, we are not allowed to consider what the incidence of that tax is. I put it that it is germane to the question of doubling a tax to state what the incidence of that tax is, and what the particular hardships are.
    The DEPUTY-CHAIRMAN: Yes; but the hon. and learned Member was going into the terms of an Amendment which is further down on the Paper.
    9.0 P.M.
    Mr. WATSON RUTHERFORD: I was informed that my Amendment would be out of order, and I realised that that was the case. If my Amendment had been in order it should have been put in the shape of a new clause, and, therefore, my intention was to argue against the doubling of the tax on the ground that the incidence of the tax was already very onerous without being doubled. I will not refer again to that particular point, because I desire to obey the ruling of the Chair. The argument against the doubling of this tax is confined entirely to the fact that the duty itself has been found—and this has practically been admitted by the Legislature—to be levied at the present time and imposed in a manner which does cause great hardship. Under the Act of 1898 it is provided that in the cases I have referred to there should be a rebate of the duty. Several cases have come under my own observation where the amount of the duty was not large. The amount of the duty in the cases I have mentioned was something under £60. I had three or four eases of that kind in my own experience.
    The DEPUTY-CHAIRMAN: Order, order. The hon. and learned Member is again disregarding my ruling.
    Mr. WATSON RUTHERFORD: I apologise for appearing in any way to disregard you ruling, and it was not my intention to do so. I did think, however, I should have been allowed to refer to the general hardships of the Settlement Estate Duty upon this Amendment. If you rule that I shall be out of order entirely in referring to the general hardship of that duty as it stands as an argument why it should not be doubled I feel that I cannot continue the Debate.
    The DEPUTY-CHAIRMAN: The hon. Member is discussing this question as it it were a separate and distinct matter. I allowed the hon. Member to proceed and develop his points in a general way, but he subsequently went into details on the matter, and that is not in order.
    Mr. WATSON RUTHERFORD: I may be allowed to conclude in a few general words protesting against this Settlement Estate Duty. It is bad enough for estates varying from £3,000 to £7,000, £8,000 or £10,000 to have to pay not merely the ordinary Estate Duty, but to be charged on the whole amount and then to be subjected to all the annoyance of trying to get pieces of that duty back when the contingencies arise which I have mentioned.
    1828
    It is bad enough to be subject to all that taxation and all that difficulty, but here is perhaps the most objectionable tax that exists to-day in the whole taxation of the country, and what do the Government propose? Do they propose to take it off? No; they propose to double it. The whole raison d'être for this particular Settlement Estate Duty which was given when it was imposed, and which was supposed to be the reason why it was created was that when property was settled there was less chance of it coming up and paying the ordinary Estate Duty, and, therefore, the provision against that was clear. But now in the very next Clause of this Bill all that protection is swept away, and the whole basis on which Settlement Estate Duty was founded, the whole reason for which it was created, is swept away by Clause 41 of this Bill, and instead of being asked to abolish this tax we are actually asked to double it. I think we have a case both in regard to the way this duty as levied, and more especially the difficulty of getting these pieces back under the new provisions contained in Clause 41. I think we have got an unanswerable case against the imposition of this double tax in regard to the Settlement Estate Duty. It is for those reasons that I join with my hon. Friends in supporting the Amendment.
    Mr. JAMES HOPE: Two points were raised by my hon. and learned Friend the Member for Kingston (Mr. Cave) which the Government have made no attempt to answer. The original 1 per cent. was imposed against certain contingent advantages. They are to be abolished by a later Clause in the Bill, and that is therefore a reason, not for doubling, but for abolishing the tax already existing. The other point made by the hon. Member was that this was not to be taken in isolation. It is accumulative. There are other provisions, such as the Stamp Duties, in this part of the Bill. Those points were made by the hon. Member for Kingston, and were enforced by the hon. Member for Liverpool (Mr. Watson Rutherford), and I think we ought not to go to a Division until some answer has been made. I would ask the Attorney-General whether it is really the wish of the Government to discourage settlements? So long as a fair toll is paid to the Revenue, and so long as they are not used for evading taxation, they are a thing to be encouraged and not discouraged; but by the accumulative effect of their Bill the Government rather seem to discourage than encourage them. I repeat those two questions, and ask the Attorney-

    1829
    General or the Financial Secretary to the Treasury to answer them. I would ask, further, what is the yield expected from the extra 1 per cent. Imposed?
    Question put, "That the word 'and' stand part of the Clause."
    The Committee divided: Ayes, 155; Noes, 68.

    Division No. 637.]

    AYES.

    [9.10 p.m.

    Acland, Francis Dyke

    Harmsworth, R. L. (Caithness-shire)

    Rainy, A. Rolland

    Allen, A. Acland (Christchurch)

    Hart-Davies, T.

    Rea, Rt. Hon. Russell (Gloucester)

    Allen, Charles P. (Stroud)

    Haworth, Arthur A.

    Rees, J. D.

    Ashton, Thomas Gair

    Hazel, Dr. A. E. W.

    Richards, T. F. (Wolverhampton, W.)

    Baker, Sir John (Portsmouth)

    Helme, Norval Watson

    Ridsdale, E. A.

    Baker, Joseph A. (Finsbury, E.)

    Higham, John Sharp

    Roberts, G. H. (Norwich)

    Balfour, Robert (Lanark)

    Hobhouse, Rt. Hon. Charles E. H.

    Robinson, S.

    Barker, Sir John

    Holt, Richard Durning

    Robson, Sir William Snowdon

    Barlow, Sir John E. (Somerset)

    Hooper, A. G.

    Roch, Walter F. (Pembroke)

    Barnard, E. B.

    Hope, W. H. B. (Somerset, N.)

    Rogers, F. E. Newman

    Bell, Richard

    Hudson, Walter

    Samuel, S. M. (Whitechapel)

    Berridge, T. H. D.

    Isaacs, Rufus Daniel

    Schwann, C. Duncan (Hyde)

    Bethell, T. R. (Essex, Maldon)

    Jardine, Sir J.

    Schwann, Sir C. E. (Manchester)

    Black, Arthur W.

    Jewett, F. W.

    Shackleton, David James

    Boulton, A. C. F.

    King, Alfred John (Knutsford)

    Sherwell, Arthur James

    Brace, William

    Laidlaw, Robert

    Shipman, Dr. John G.

    Bright, J. A.

    Lamb, Ernest H. (Rochester)

    Simon, John Allsebrook

    Brunner, J. F. L. (Lancs., Leigh)

    Lambert, George

    Snowden, P.

    Bryce, J. Annan

    Lamont, Norman

    Soares, Ernest J.

    Buckmaster, Stanley O.

    Layland-Barrett, Sir Francis

    Stanger, H. Y.

    Burns, Rt. Hon. John

    Lea, Hugh Cecil (St. Pancras, E.)

    Stewart, Halley (Greenock)

    Burnyeat, W. J. D.

    Lever, W. H. (Cheshire, Wirral)

    Stewart-Smith, D. (Kendal)

    Burt, Rt. Hon. Thomas

    Levy, Sir Maurice

    Straus, B. S. (Mile End)

    Buxton, Rt. Hon. Sydney Charles

    Lewis, John Herbert

    Strauss, E. A. (Abingdon)

    Byles, William Pollard

    Lloyd-George, Rt. Hon. David

    Summerbell, T.

    Carr-Gomm, H. W.

    Luttrell, Hugh Fownes

    Taylor, John W. (Durham)

    Cherry, Rt. Hon. R. R.

    Lynch, H. B.

    Tennant, H. J. (Berwickshire)

    Clough, William

    Macdonald, J. R. (Leicester)

    Thompson, J. W. H. (Somerset, E.)

    Clynes, J. R.

    Maclean, Donald

    Thorne, G. R. (Wolverhampton)

    Collins, Stephen (Lambeth)

    M'Laren, Sir C. B. (Leicester)

    Thorne, William (West Ham)

    Cornwall, Sir Edwin A.

    M'Laren, H. D. (Stafford, W.)

    Trevelyan, Charles Philips

    Cotton, Sir H. J. S.

    Maddison, Frederick

    Vivian, Henry

    Cox, Harold

    Mallet, Charles E.

    Walsh, Stephen

    Curran, Peter Francis

    Markham, Arthur Basil

    Ward, W. Dudley (Southampton)

    Davies, M. Vaughan- (Cardigan)

    Marks, G. Croydon (Launceston)

    Wardle, George J.

    Davies, Sir W. Howell (Bristol, S.)

    Marnham, F. J.

    Wason, Rt. Hon. E. (Clackmannan)

    Dewar, Arthur (Edinburgh, S.)

    Masterman, C. F. G.

    Wason, John Cathcart (Orkney)

    Dickinson, W. H. (St. Pancras, N.)

    Molteno, Percy Alport

    White, Sir George (Norfolk)

    Dobson, Thomas W.

    Money, L. G. Chiozza

    White, J. Dundas (Dumbartonshire)

    Dunne, Major E. Martin (Walsall)

    Morse, L. L.

    White, Sir Luke (York, E.R.)

    Essex, R. W,

    Morton, Alpheus Cleophas

    Whittaker, Rt. Hon. Sir Thomas P.

    Esslemont, George Birnie

    Myer, Horatio

    Wiles, Thomas

    Evans, Sir S. T.

    Newnes, F. (Notts, Bassetlaw)

    Williams, W. Llewelyn (Carmarthen)

    Everett, R. Lacey

    Norman, Sir Henry

    Wilson, J. W. (Worcestershire, N.)

    Fenwick, Charles

    Nussey, Sir Willans

    Wilson, P. W. (St. Pancras, S.)

    Fuller, John Michael F.

    Nuttall, Harry

    Wilson, W. T. (Westhoughton)

    Fullerton, Hugh

    0'Grady, J.

    Winfrey, R.

    Gibb, James (Harrow)

    Parker, James (Halifax)

    Wood, T. M'Kinnon

    Gill, A. H.

    Partington, Oswald

    Young, Samuel

    Glover, Thomas

    Pearce, Robert (Staffs, Leek)

    Harcourt, Rt. Hon. L. (Rossendale)

    Pointer, J.

    TELLERS FOR THE AYES.—Mr.

    Harcourt, Robert V. (Montrose)

    Ponsonby, Arthur A. W. H.

    Joseph Pease and Captain Norton.

    Hardy, George A. (Suffolk)

    Radford, G. H.

    NOES.

    Acland Hood, Rt. Hon. Sir Alex. F.

    Clive, Percy Archer

    Harris, Frederick Leverton

    Anstruther-Gray, Major

    Cochrane, Hon. Thomas H. A. E.

    Hermon-Hodge, Sir Robert

    Arkwright, John Stanhope

    Courthope, G. Loyd

    Hill, Sir Clement

    Balcarres, Lord

    Craig, Captain James (Down, E.)

    Hills, J. W.

    Baldwin, Stanley

    Craig, Sir Henry

    Hope, James Fitzalan (Sheffield)

    Banner, John S. Harmood-

    Doughty, Sir George

    Joynson-Hicks, William

    Baring, Capt. Hon. G. (Winchester)

    Douglas, Rt. Hon. A. Akers-

    Kimber, Sir Henry

    Barrie, H. T. (Londonderry, N.)

    Faber, George Denison (York)

    King, Sir Henry Seymour (Hull)

    Beach, Hon. Michael Hugh Hicks

    Fell, Arthur

    Lane-Fox, G. R.

    Bowles, G. Stewart

    Fletcher, J. S.

    Lee, Arthur H. (Hants, Fareham)

    Bull, Sir William James

    Forster, Henry William

    Lowe, Sir Francis William

    Burdett-Coutts, W.

    Gardner, Ernest

    M'Arthur, Charles

    Carlile, E. Hildred

    Gordon, J.

    Mason, James F. (Windsor)

    Carson, Rt. Hon. Sir Edward H.

    Guinness, Hon. W. E. (B. S. Edmunds)

    Meysey-Thompson, E. C.

    Castlereagh, Viscount

    Haddock, George B.

    Morpeth, Viscount

    Cave, George

    Hamilton, Marquess of

    O'Donnell, C. J. (Walworth)

    Cecil, Evelyn (Aston Manor)

    Hardy, Laurence (Kent, Ashford)

    Parkes, Ebenezer

    Pease, Herbert Pike (Darlington)

    Salter, Arthur Clavell

    Walrond, Hon. Lionel

    Peel, Hon. W. R. W.

    Sandys, Col. Thos. Myles

    Warde, Col. C. E. (Kent, Mid)

    Powell, Sir Francis Sharp

    Stanier, Beville

    Williams, Col. R. (Dorset, W.)

    Pretyman, E. G.

    Stone, Sir Benjamin

    Randles, Sir John Scurrah

    Thomson, W. Mitchell-(Lanark)

    TELLERS FOR THE NOES.—Mr.

    Rawlinson, John Frederick Peel

    Thornton, Percy M.

    S. Roberts and Mr. Watson Rutherford.

    Renwick, George

    Valentia, Viscount

    Mr. SAMUEL ROBERTSmoved, in the first paragraph, after the word "and" ["rates of the Estate Duty, and"], to insert the words "where the principal value of the settled property exceeds ten thousand pounds, and does not exceed £25,000, one and a-half per cent., and where the principal value of the settled property exceeds twenty-five thousand pounds."
    The Committee will see that the object of this Amendment is to graduate the Settlement Estate Duty, so that settled estates under £10,000 shall pay as now 1 per cent., those between £10,000 and £25,000 l½per cent., and those over £25,000 the percentage proposed by the Government, namely, 2 per cent. I submit this Amendment with confidence. It is in the interest of small estates, and under this Bill it has been recognised that these small estates are entitled to consideration. If the Committee will look at Clause 42 they will see that the Government have recognised that small estates ought to pay less; in fact, their new proposal is that where an estate is under £15,000 in value there shall be no Legacy or Succession Duty levied; where the legacy is under £1,000, whatever the value of the estate may be, there shall be no Legacy Duty; and where the person taking a legacy under £2,000 is a widow or a child under 21, whatever the value of the estate, there shall be no Legacy or Succession Duty levied. Bearing these provisions in mind, I submit that my proposal is most reasonable, and I hope the Government will accept it.
    The FINANCIAL SECRETARY to the TREASURY (Mr. Hobhouse): The effect of this Amendment, as the hon. Member very truly said, would be to graduate the duty down in the case of very small estates. But the hon. Gentleman must realise that there would be a certain loss of revenue in carrying it out, and there would consequently have to be a corollary: if the Estate Duties are to be graduated down in the case of small estates they would have to be graduated up in the case of larger estates. I take it the hon. Member is not prepared to accept the latter alternative, and I very much regret that the Government cannot see its way to agree to his proposal.
    Mr. PRETYMAN: I think that is a most extraordinary reply. Considering that the Government have already graduated duties at the bottom, I should have thought they had graduated them also at the top to as great an extent as was possible. If they have not done so I do not see how the right hon. Gentleman's argument applies. Surely, in the case of small estates like these, it is not worth while to inflict this extra duty of 2 per cent. To exact this small amount would only create a great sense of hardship. If the right hon. Gentleman has no better argument to adduce than that he has already put forward, I must say he has no answer at all. We certainly have right on our side.
    Sir E. CARSON: What would be the amount of loss to the revenue if this Amendment were accepted? It would certainly prove a great relief to small estates. The Government have already admitted in regard to the Legacy Duty, the Succession Duty, the Estate Duty, the Income Tax, and various other taxes that they ought to be graduated. Why should a different principle be applied to the Settlement Duty?
    Mr. HOBHOUSE: It is evident that the amount involved is very small—not very appreciable, but still there would be a loss. It has been pointed out in previous Debates that this is a composition for several possible payments, whereas in the cases alluded to by the right hon. Gentleman (Sir E. Carson) only one duty is payable.
    Mr. PRETYMAN: Does the right hon. Gentleman suggest that compensation for a low rate of duty should be equal to the compensation for a high rate? Surely, if 2 per cent. is fair compensation for a duty on which the rebate may be as high as 15 per cent., it is not possible to defend a claim to impose 2 per cent. where the rebate is only 3 per cent. The right hon. Gentleman cannot possibly defend that.
    Mr. EVELYN CECIL: This is a very small concession to ask, and I hope the right hon. Gentlemen will reconsider their decision. They have shown they are

    1833
    anxious to do what they can for small estates. Here, probably, an infinitesimal amount is involved, and the estates concerned would certainly be grateful for the concession. The Government have always been willing to listen to appeals on behalf of small estates.
    Mr. CAVE: I also hope the right hon. Gentleman will listen favourably to this appeal. The proposal is in the case of estates under £25,000, instead of doubling the Settlement Estate Duty to only increase it by 50 per cent. There is a good deal of reason behind this, and although it is a very small matter to the Exchequer it is not small to the persons interested. Taking an estate of £20,000, it may mean a matter of £100, and that is a matter of some importance to those beneficiaries who are not well off. We were told that the proposal was to double the Settlement Estate Duty, because we were raising the Estate Duty generally, and therefore you had to compensate matters. That is a very good argument as regards a large estate, but not so in regard to the small estates, where you are not increasing the Estate Duty, or at all events the increase is not so great pro rata, and the rise in Settlement Estate Duty ought to bear some proportion to the rise in Estate Duty. I must press the Government for a more favourable consideration of this Amendment.
    Mr. HALDANE: I unfortunately had not the pleasure of being here earlier in this Debate, but I heard what the Secretary to the Treasury said, and I agree with him. The real situation is that the Settlement Estate Duty at 1 per cent. never compensated, or anything like compensated., for the loss of revenue through settlement. It was intended to give an advantage to settlements, but a much larger advantage was given in the result, when we bad the benefit of experience, than was originally contemplated. The 2 per cent. does not compensate either, and to begin to graduate and differentiate down would mean a very large differentiation at the other end. We do not think it right or desirable that we should enter upon this process of graduation, having regard to the fact that the Settlement Estate Duty is nothing like an equivalent for the loss which arises from the settlement. The Settlement Estate Duty was instituted for the purpose of meeting certain cases of succession, and it was felt that it would be hard in cases where there
    1834
    was settlement not to allow some abatement. It was thought at the time that 1 per cent. would not wholly compensate for the loss of Settlement Duty and the various charges of the settlement, and that it would approach near them. Experience has shown that it is nothing like so much, and even 2 per cent. does not compensate under the present scale, or anything like it. Therefore, if we were to carry out the proposal of the hon. Member we should have to graduate at the other end, and I am sure there would be great feeling about that, and it is better from that point of view to take the argument put forward by the Secretary to the Treasury, and to hold to the principle of 2 per cent. as the price of exemption from the Settlement Duty.
    Mr. JAMES HOPE: The argument of the Secretary of State for War amounts to this: We cannot be logical, therefore we cannot be just. We cannot graduate downwards without a new Resolution. Therefore he says they will stick to the 2 per cent., but it is estimated that in many cases 2 per cent. is more than an equivalent for the Settlement Duty. What would be the loss to the Treasury if this Amendment were accepted? The Secretary to the Treasury failed to answer this, but perhaps information is now available?
    Mr. HALDANE: The loss would be £150,000 to the Exchequer if the Amendment were accepted, and it would be unfair to adopt it having regard to the fact that the small estate escapes the differential duty or has to pay it on a smaller scale, and having regard to the loss it is not just to the Exchequer to forego the ordinary Settlement Estate Duty and bear the large loss which I have indicated.
    Mr. COURTHOPE: Surely the right hon. Gentleman's last argument destroys his former argument, that the Settlement Estate Duty was an equivalent for the Settlement Duty. Here is a Minister who gets up twice on the same Amendment, and on the second occasion he entirely destroys the argument which he used on the first. It is an extraordinary thing that no better opposition should be given to the Amendment than that given by the right hon. Gentleman. I hope some notice will be taken of this extraordinary state of things outside, though I fear the public at large may not be sufficiently up to these technical matters to appreciate the extraordinary arguments which the representative of the Government has used.
    Mr. JAMES HOPE: Could the right hon. Gentleman say what will be the total yield of the extra 1 per cent? The Secretary to the Treasury was not able to answer that question.
    Question put, "That those words be there inserted."
    The Committee divided: Ayes, 68; Noes, 169.

    Division No. 638.]

    AYES.

    [9.40 p.m.

    Acland-Hood, Rt. Hon. Sir Alex. F.

    Fell, Arthur

    Parkes, Ebenezer

    Anstruther-Gray, Major

    Fletcher, J. S.

    Pease, Herbert Pike (Darlington)

    Balcarres, Lord

    Forster, Henry William

    Peel, Hon. W. R. W.

    Baldwin, Stanley

    Gardner, Ernest

    Powell, Sir Francis Sharp

    Banner, John S. Harmood-

    Gordon, J.

    Pretyman, E. G.

    Baring, Captain Hon. G. (Winchester)

    Guinness, Hon. W. E. (B. S. Edm'ds.)

    Randles, Sir John Scurrah

    Barrie, H. T. (Londonderry, N.)

    Haddock, George B.

    Rawlinson, John Frederick Peel

    Beach, Hon. Michael Hugh Hicks

    Hardy, Laurence (Kent, Ashford)

    Renwick, George

    Bowles, G. Stewart

    Harris, Frederick Leverton

    Ronaldshay, Earl of

    Bull, Sir William James

    Hermon-Hodge, Sir Robert

    Rutherford, Watson (Liverpool)

    Burdett-Coutts, W.

    Hill, Sir Clement

    Salter, Arthur Clavell

    Carlile, E. Hildred

    Hills, J. W.

    Sandys, Col. Thos. Myles

    Carson, Rt. Hon. Sir Edward H.

    Hope, James Fitzalan (Sheffield)

    Stanier, Beville

    Castlereagh, Viscount

    Joynson-Hicks, William

    Stanley, Hon. Arthur (Ormskirk)

    Cave, George

    Kimber, Sir Henry

    Thomson, W. Mitchell-(Lanark)

    Cecil, Evelyn (Aston Manor)

    King, Sir Henry Seymour (Hull)

    Thornton, Percy M.

    Clive, Percy Archer

    Lane-Fox, G. R.

    Valentia, Viscount

    Cochrane, Hon. Thomas H. A. E.

    Lee, Arthur H. (Hants, Fareham)

    Walrond, Hon. Lionel

    Craig, Captain James (Down, E.)

    Long, Col. Charles W. (Evesham)

    Warde. Col. C. E. (Kent, Mid)

    Craik, Sir Henry

    Lowe, Sir Francis William

    Williams, Col. R. (Dorset, W.)

    Dickson, Rt. Hon. C. Scott

    M'Arthur, Charles

    Doughty, Sir George

    Mason, James F. (Windsor)

    TELLERS FOR THE AYES.—Mr.

    Douglas, Rt. Hon. A. Akers-

    Meysey-Thompson, E. C.

    S. Roberts and Mr. Courthope.

    Faber, George Denison (York)

    Morpeth, Viscount

    NOES.

    Acland, Francis Dyke

    Evans, Sir S. T.

    Maddison, Frederick

    Allen, A. Acland (Christchurch)

    Everett, R. Lacey

    Mallet, Charles E.

    Allen, Charles P. (Stroud)

    Fenwick, Charles

    Markham, Arthur Basil

    Ashton, Thomas Gair

    Foster, Rt. Hon. Sir Walter

    Marks, G. Croydon (Launceston)

    Baker, Joseph A. (Finsbury, E.)

    Fuller, John Michael F.

    Marnham, F. J.

    Balfour, Robert (Lanark)

    Fullerton, Hugh

    Masterman, C. F. G.

    Banbury, Sir Frederick George

    Gibb, James (Harrow)

    Molteno, Percy Alport

    Barker, Sir John

    Gill, A. H.

    Money, L. G. Chiozza

    Barlow, Sir John E. (Somerset)

    Glover, Thomas

    Morgan, J. Lloyd (Carmarthen)

    Barnard, E. B.

    Haldane, Rt. Hon. Richard B.

    Morse, L. L.

    Beauchamp, E.

    Harcourt, Rt. Hon. L. (Rossendale)

    Morton, Alpheus Cleophas

    Bell, Richard

    Harcourt, Robert V. (Montrose)

    Myer, Horatio

    Berridge, T. H. D.

    Hardy, George A. (Suffolk)

    Newnes, F. (Notts, Bassetlaw)

    Bethell, T. H. (Essex, Maldon)

    Harmsworth, R. L. (Caithness-shire)

    Norman, Sir Henry

    Birrell, Rt. Hon. Augustine

    Hart-Davies, T.

    Nussey, Sir Willans

    Black, Arthur W.

    Haworth, Arthur A.

    Nuttall, Harry

    Boulton, A. C. F.

    Hazel, Dr. A. E. W.

    O'Donnell, C. J. (Walworth)

    Brace, William

    Helme, Norval Watson

    O'Grady, J.

    Bright, J. A.

    Higham, John Sharp

    Parker, James (Halifax)

    Brunner, J. F. L. (Lanes., Leigh)

    Hobhouse, Rt. Hon. Charles E. H.

    Partington, Oswald

    Bryce, J. Annan

    Holt, Richard Durning

    Pearce, Robert (Staffs, Leek)

    Buckmaster, Stanley O.

    Hooper, A. G.

    Pointer, J.

    Burns, Rt. Hon. John

    Hope, W. H. B. (Somerset, N.)

    Ponsonby, Arthur A. W. H.

    Burnyeat, W. J. D.

    Hudson, Walter

    Radford, G. H.

    Burt, Rt. Hon. Thomas

    Isaacs, Rufus Daniel

    Rainy, A. Rolland

    Buxton, Rt. Hon. Sydney Charles

    Jardine, Sir J.

    Rea, Rt. Hon. Russell (Gloucester)

    Byles, William Pollard

    Jones, William (Carnarvonshire)

    Rees, J. D.

    Carr-Gomm, H. W.

    Jowett, F. W.

    Rendall, Athelstan

    Cawley, Sir Frederick

    Laidlaw, Robert

    Richards, Thomas (W. Monmouth)

    Cherry, Rt. Hon. R. R.

    Lamb, Ernest H. (Rochester)

    Richards, T. F. (Wolverhampton, W.)

    Clough, William

    Lambert, George

    Ridsdale, E. A.

    Clynes, J. R.

    Larmont, Norman

    Roberts, G. H. (Norwich)

    Collins, Stephen (Lambeth)

    Layland-Barratt, Sir Francis

    Roberts, Sir J. H. (Denbighshire)

    Corbett, C. H. (Sussex, E. Grinstead)

    Lea, Hugh Cecil (St. Pancras, E.)

    Robertson, Sir G. Scott (Bradford)

    Cornwall, Sir Edwin A.

    Lever, W. H. (Cheshire, Wirral)

    Robinson, S.

    Cotton, Sir H. J. S.

    Levy, Sir Maurice

    Robson, Sir William Snowdon

    Curran, Peter Francis

    Lewis, John Herbert

    Roch, Walter F. (Pembroke)

    Davies, M. Vaughan-(Cardigan)

    Lloyd-George, Rt. Hon. David

    Rogers, F. E. Newman

    Davies, Sir W. Howell (Bristol, S.)

    Lupton, Arnold

    Rose, Sir Charles Day

    Dewar, Arthur (Edinburgh, S.)

    Luttrell, Hugh Fownes

    Samuel, S. M. (Whitechapel)

    Dickinson, W. H. (St. Pancras, N.)

    Lynch, H. B.

    Schwann, C. Duncan (Hyde)

    Dobson, Thomas W.

    Macdonald, J. R. (Leicester)

    Schwann, Sir C. E. (Manchester)

    Dunne, Major E. Martin (Walsall)

    Maclean, Donald

    Shackleton, David James

    Essex, R. W.

    M'Laren, Sir C. B. (Leicester)

    Sherwell, Arthur James

    Esslemont, George Birnie

    M'Laren, H. D. (Stafford, W.)

    Simon, John Allsebrook

    Snowden, P.

    Thorne, William (West Ham)

    Williams, J. (Glamorgan)

    Soares, Ernest J.

    Trevelyan, Charles Philips

    Williams, W. Llewelyn (Carmarthen)

    Stanger, H. Y.

    Vivian, Henry

    Wilson, J. W. (Worcestershire, N.)

    Stewart, Halley (Greenock)

    Walsh, Stephen

    Wilson. P. W. (St. Pancras, S.)

    Stewart-Smith, D. (Kendal)

    Ward, W. Dudley (Southampton)

    Wilson, W. T. (Westhoughton)

    Strachey, Sir Edward

    Wardle, George J.

    Winfrey, R.

    Straus, B. S. (Mile End)

    Wason, Rt. Hon. E. (Clackmannan)

    Wood, T. M'Kinnon

    Strauss, E. A. (Abingdon)

    Wason, John Cathcart (Orkney)

    Young, Samuel

    Summerbell, T.

    White, Sir George (Norfolk)

    Taylor, John W. (Durham)

    White, J. Dundas (Dumbartonshire)

    Tennant, H. J. (Berwickshire)

    White, Sir Luke (York, E.R.)

    TELLERS FOR THE NOES—Mr.

    Thompson, J. W. H. (Somerset, E.)

    Whittaker, Rt. Hon. Sir Thomas P.

    Joseph Pease and Captain Norton.

    Thorne, G. R. (Wolverhampton)

    Wiles, Thomas

    Mr. LLOYD GEORGE: I beg to move to leave out the second paragraph of the Clause. I propose this Amendment because I want to insert a new Clause which will cover not only Estate Duty, tout Succession Duty as well, so that the mortgagee shall be protected. Amendment agreed to.
    Motion made and Question proposed, "That the Clause as amended stand part of the Bill."
    Mr. JOYNSON-HICKS: In a previous discussion to-day the Chancellor of the Exchequer made some reflections on the profession to which I have the honour to belong with reference to the valuations made for the purposes of the Estate Duty. I should like to say a word with regard to the method of valuation. When the right hon. Gentleman made the statement referred to, I think he spoke from his own personal experience.
    Mr. LLOYD-GEORGE: No; from observation of others.
    Mr. JOYNSON-HICKS: I felt that the eminent custodian of the National Revenue would never connive at anything like defrauding the Revenue, but he did not hesitate to cast a wholesale aspersion on the legal profession. I have had considerable experience in regard to valuations for Estate Duty purposes, and I can state that the utmost value is put on the whole of the property. Unless the valuation is satisfactory to Somerset House they insist upon a subsequent valuation being made. Where estates consist, as nearly all estates do, of stocks and shares, from Consols downwards, the Stock Exchange quotation is taken as indicating the absolute value. When the valuation is sent in the Somerset House officials go through the Stock Exchange list of the day, and if there is the slightest mistake, even to the extent of ⅛per cent., word is sent that the valuation is too low, and further Estate Duty is charged. The same is done in regard to house property. A most careful examination is made in order to ascertain the
    1838
    value. I was concerned professionally with the valuation of property on which Estate Duty for a certain amount was paid. The property was afterwards put up for sale, and we could not get anything like the valuation on which duty was paid. It was not quite fair that the Chancellor of the Exchequer should make that statement as to the way in which Estate Duty valuations are made. We do not object to this Clause because we object to pay our fair share of the taxation of the country, but I do want to make it perfectly clear that we, on this side of the House, want to know where the raising of these duties is going to stop. In 1894 the Estate Duties w ere raised very largely; they were raised again in 1907; and they are to be raised again in 1909; and I cannot see why on the basis of the argument used by the Chancellor of the Exchequer there is any reason that they should not be raised again in 1911, 1913, or 1915. I wonder that no Member of the Labour Party got up in the course of the Debate and challenged the Chancellor of the Exchequer to really carry out the principle propounded in the well-known book of the hon. Member for Blackburn (Mr. Snowden). It is because this part of the Budget relating to Estate Duty carries out to some extent the theories of the hon. Member for Blackburn that we object to it. I agree with the speech made by the Secretary of State for War that every person who has property is bound to pay a certain share towards the taxation of the country for the benefit of the protection which he gets from the body politic, but where is this taxation to end, and where does resumption by the State begin? We do not object to anything that is necessary to keep the State going, but we do object to the Socialistic doctrine that the State has a right to resume possession of property which has up to the present moment been the property of private individuals. We want to know where the Chancellor of the Exchequer parts company with the hon. Member for Blackburn, and I am afraid he will not tell

    1839
    us. If he will not tell us, we are really en titled to know before passing this Clause whether he agrees with the principle of the hon. Member for Blackburn as to taking 25 per cent. I do not want to be accused of defending millionaires, but I say that if you take 25 per cent. of any man's property, be he multi-millionaire or not, you are rapidly approaching the point where taxation ceases to be taxation and becomes confiscation or resumption by the State. An hon. Member below the Gangway said you have not gone far enough, and—
    The DEPUTY-CHAIRMAN: The hon. Member must confine himself to the Clause which is under discussion.
    Mr. JOYNSON-HICKS: I understood that this Clause was a clause which raised the rate of Estate Duty upon practically all the estates of the country, and raised it upon the estate of the millionaire to 15 per cent., and by a subsequent clause Legacy Duty is raised to 10 per cent., and I was commenting on the fact that those two duties, the duty under the Clause we are now discussing and the duty in a succeeding Clause, give the State one-fourth of the entire property in certain circumstances of the millionaire, and I was suggesting that this Clause—
    The DEPUTY-CHAIRMAN: The hon. Member must confine himself to the Clause under discussion.
    Mr. JOYNSON-HICKS: I was doing my very best to confine myself to the Clause, but this is the only point in the Bill where we can discuss the cumulative effect.
    The DEPUTY-CHAIRMAN: There will be an opportunity on the third reading.
    Mr. AUSTEN CHAMBERLAIN: May I call attention to the fact that the Chancellor of the Exchequer, in his interesting speech earlier in the evening, admitted it was not possible to discuss this particular tax without reference to the other taxes with which it is connected. Of course, I quite agree that it would be out of order to discuss in detail the other tax, but will you not allow Members on this side of the House to make that reference to the other taxes in connection with this tax which the Chancellor of the Exchequer himself thought fair?
    Mr. LLOYD-GEORGE: It is perfectly true I did say the reason why I did not
    1840
    raise the point of Order was that I thought it very desirable that there should be latitude. That latitude was allowed on an Amendment, and the understanding was that the general Debate was taken practically on that one Amendment. I am not saying that the other taxes are not to be criticised each on its own merits, but the general Debate was to be taken on that Amendment. That was the understanding on which we were proceeding, otherwise if a strict point of Order was taken the Chairman would be bound to rule that no such general reference to taxes should be allowed. Every speaker, one after the other, went into the matter thoroughly and discussed the whole thing, as it was the general feeling of the House that there ought to be one Debate on the whole of the Taxes.
    Mr. AUSTEN CHAMBERLAIN: I do not want to suggest that we should have exactly the same debate on every clause, but I think it impossible to discuss this tax without reference to other duties which are included in another clause. I think it would be quite out of order to discuss those duties in detail, but I venture to protest against my hon. Friend or other Members being prevented from taking into account in discussing this Clause the fact that there are other taxes which are linked with this tax, and which will increase the levy which this tax makes.
    The DEPUTY-CHAIRMAN: In discussing this Clause you must deal with the tax under this Clause, and under this Clause alone.
    10.0 P.M.
    Sir FREDERICK BANBURY: I wish to submit that the question be fore the Chair is that the Clause stand part, and that it is competent to discuss any argument relating to this Clause, whether it was discussed on Amendment or net. I also ask in regard to your ruling that my hon. Friend can raise this point on the third reading whether it would be possible to do so, inasmuch as on the third reading he can only vote for or against the whole Bill, whereas he may be in favour of certain clauses and against other clauses.
    The DEPUTY-CHAIRMAN: That is a different matter. This Clause has been discussed fully. The hon. Member is not prevented on the Motion that the Clause stand part from referring to anything in the Clause, but he is certainly excluded from anything outside the Clause.
    Mr. JOYNSON-HICKS: I will endeavour to confine myself as closely as I can to the Clause. At any rate, it is not disputed that the Clause as it is now sought to make it stand part of the Bill does take in certain circumstances 15 per cent. in Estate Duty and 2 per cent. for Settled Estate Duties—that is, 17 per cent.—and I suggest to the Committee that that is not merely approaching but that it has gone beyond the borders of fair taxation and it has become resumption, or, as I call it, confiscation, by the State of a portion of the man's capital; and if it is allowable for the State and fair, reasonable, and right for the Slate to take 17 per cent. of a millionaire's capital, there is no reason whatever—I think that the hon. Member for North Paddington will agree with me—why they should not take 27 per cent., or as the hon. Gentlemen below the Gangway would say, that there is no reason why they should not take 37, 47, or 57 per cent. What we want to know is: Where are you going to stop? There must be a stop unless you are going to leave us all as the followers of the hon. Member for Blackburn would suggest. Is this to be for many years the final limit, or is the thing to be opened again within two or three years?
    I may pass from the millionaires and refer for a moment to the much poorer man, the man with an income of from £200 to £300 a year, who has saved £5,001. That man, under this Clause, is to have further Estate Duty put on him to the extent of £50 extra. Even in the presence of hon. Gentlemen below the Gangway, I venture to suggest that a hard-working, small professional, or the hard-working, small trader, is just as much entitled to the sympathy of this Committee as the artisan; and I am fortified in that by the right hon. Gentleman in his Budget speech, where he said there was no class in the community—he was speaking of the classes whose incomes were under £500 a year—which has a much harder struggle or a more anxious time than the class composed of men earning so and so, who are often much worse off and more to be pitied than artisans who earn half their wages. Here is a man who earns £200 or £300 a year, who by dint of extreme economy and extreme thrift and hard work has saved up £5,001 in order to leave a couple of hundred a year at 4 per cent. to his widow and family. The taxation is to be increased under the provisions of this Bill, but there is no Estate Duty payable, and no Income Tax
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    payable by these artisans, and the Chancellor of the Exchequer says they are not so much to be pitied as the small professional or the small struggling tradesman. By this tax you are taking a big slice out of the capital of the country. I am always prepared to sit humbly at the feet of the Member for North Paddington (Mr. Chiozza Money) on financial subjects. But when he says that this tax will not really deplete the capital of the country I cannot help thinking of the speech made by an equally great financial authority, namely, Lord Courtney, who is at all events a good Radical, at the National Liberal Club, at the time these duties first came up. I am prepared to accept the authority of Lord Courtney rather than even the authority of the Member for North Paddington, that this tax will come out of capital. Lord Courtney pointed out that, unlike the Income Tax, this duty must, if it was to be just, be applied to payment of the National Debt. If you take capital to pay off capital liabilities, that is one thing; but if you take capital and spend it on the ordinary purposes of the country, on the Army, on the Navy, and on education, and so on, you are deliberately eating up your capital. That is the opinion of Lord Courtney, and it is an opinion I am prepared to accept. From the business point of view I cannot help thinking that in plunging into these Death Duties rather than into Licence Duties or Income Tax, or whatever they may be, of the one hundred and one other duties which are charged under the provisions of this Bill, you are depleting the national capital. During the last 15 years the tendency has been growing to send capital abroad, and by sending capital abroad you decrease the possibilities of employment in this country.
    Mr. LLOYD-GEORGE: I trust the hon. and learned Gentleman will not think I am guilty of disrespect if I decline to follow him into all the considerations which he has put before the Committee. In the main they are the arguments which were advanced in the Debate which took place five hours ago, and in which we traversed the whole of the ground. The hon. and learned Gentleman asked me for a definite answer to a very specific question. He asked me whether in two years I propose to increase the percentage. I take note of a very gratifying and subtle flattery which is involved in that question, that I shall be here at all two years hence as Chancellor of the Exchequer in charge of the finances of the country.
    Sir E. CARSON: You will be Prime Minister by then.
    Mr. LLOYD-GEORGE: The right hon. and learned Gentleman is exceedingly flattering, but at any rate I give this undertaking, that as far as I can see from the prospect of national finances there is no reason why any Chancellor of the Exchequer, certainly two years hence or for some time, should submit to Parliament a proposal to increase the Death Duties. When I made my Budget statement, I stated that I was taking a survey not merely of the financial provisions for the year, but of the probabilities of the immediate future. At any rate, I wanted to impress on Parliament that we anticipated we should meet all our liabilities as far as human foresight could go. I can assure the hon. and learned Gentleman, with regard to the suggestion that I cast an aspersion on the profession to which he and I belong, so far from my having done so, I thought I was complimenting it. There are two different points of view with regard to valuation, and except perhaps in regard to theology there is no subject which causes a greater chasm between individuals than that of valuation. One person may say a thing is worth £10,000 and the other that it is worth £50,000, yet both are honourable men. After all, the solicitor tries to do his best by his profession, and when it comes to a conflict between the solicitor and the Commissioners of Inland Revenue, up to the present at any rate, the solicitor has always come out on top. Solicitors do their best for their clients, they deserve well of their clients, and I have no doubt their services are recognised. One other observation with regard to the Settlement Duty. I really deprecate the 2 per cent. being added to the 15 per cent. If the hon. Member would like to propose that there should be no Settlement Duty I think he would get very little backing from his hon. Friends. Two per cent. is a very good bargain, 1 per cent. is a very considerable bargain—even the 2 per cent. is an actuarial bargain. The 2 per cent. simply franks the estate for the next death. You have no right to add the 2 per cent. to the 15 per cent. Death Duty. You are simply paying 2 per cent. to frank the estate for perhaps the next two deaths. It is a very unfair criticism which is directed to the 2 per cent., and it ought not to be added to the 15 per cent. I thought it was necessary to answer the hon. and learned Gen-
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    tleman, and I think I have now dealt with the points he has raised.
    Mr. AUSTEN CHAMBERLAIN: The right hon. Gentleman in defending himself against the suggestion that he had cast an aspersion on the legal profession, made observations which I hope he will take to heart. He said there is nothing which causes a greater chasm between people than the question of valuation. They are all honourable men, he said, yet one man places the value of the thing at £10,000 and another at £50,000. That being the nature of valuation, the right hon. Gentleman none the less thought that the valuation of all the landed property in the kingdom was so simple a matter that it might be trusted to Inland Revenue officials without any appeal to any court of law. [An Hon. MEMBER: "Question."] If it is not the question I must apologise to impatient Members for venturing to make observations in reply to the speech delivered by the Chancellor of the Exchequer, and, after all, if they did not think it necessary to interrupt him, they need not think it necessary to interrupt me.
    Mr. LLOYD-GEORGE: I was dealing with valuation for Estate Duty.
    Mr. AUSTEN CHAMBERLAIN: His observations were of wider application, and were intended to be of wider application. He did not say that these peculiar differences arose only in regard to Estate Duties. He said a great many things which. I think he will find it a little difficult to support in the course of these discussions. He has never said anything quite so foolish as that. Then he tried to reassure the hon. Member behind me by saying, well, as far as he was concerned and as far as he could forecast the future, he saw no reason why the Chancellor of the Exchequer in two years or in the near future should either increase the Death Duty scale which he is setting up. I confess that that would be more reassuring if Sir W. Harcourt had not said exactly the same thing. The right hon. Gentleman may perhaps tell me, or his friends, that after all Sir William Harcourt's scale has lasted for 15 years, and that that is a fair time to expect any settlement to endure. But that would not carry greater comfort, for the party, almost at the first opportunity when they returned to power, revised Sir William Harcourt's scale. It is no comfort to us or to the country to say that Sir William Harcourt's scale lasted without being increased or its severity

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    being added to as long as the Liberal party was excluded from office. It is a poor pledge to offer to a frightened taxpayer, either for the Chancellor of the Exchequer personally or for the party with which he is connected. Except from his anxiety to treat my hon. Friend with no discourtesy, and therefore to offer some kind of answer to some of the questions which my hon. Friend had put, I cannot say that the Chancellor of the Exchequer added to the information at our disposal or to the argumentative case of the Government by the reply which he has just made. He did, earlier in the evening, undertake to answer the questions which my right hon. Friend (Mr. Balfour) had put to him. He said he would answer them seriatim, but, carried away by his own persuasiveness, he entirely forgot the question with which my right hon. Friend concluded and which was the principal question to which my right hon. Friend desired to have an answer. Let me remind him of what it was. When the Death Duties were proposed by Sir William Harcourt he proposed them in lieu of a graduated Income Tax. As my right hon. Friend said, and as is common knowledge, had Sir William Harcourt seen his way to work a graduated Income Tax he would have preferred a graduated Income Tax rather than to graduate the duties, and so, I think, would anyone who has considered the matter. But Sir William Harcourt, like every other responsible statesman up to the present time, thought that the difficulties of graduating the Income Tax, the hardship and confusion to which it would give rise, the inquisition into private affairs which it demanded, and therefore the hostility that it would arouse, and the injustice it would work, were so great that you could not attempt to graduate the Income Tax. The present Government no longer hold that opinion, they are going to graduate the Income Tax. Putting that on one side, it was as an alternative to a graduated Income Tax, and not as an adjunct to it, that Sir William Harcourt proposed the Death Duties. Hs argued the matter, therefore, from the point of view of Income Tax—Income Tax not payable year by year, but deferred till the death of a man from whom it was due; and he alleged that the proper way to meet these taxes, the way every sensible and prudent man would meet them, and the way it was reasonably easy for him to do so, was by an insurance where the premiums would take the place of the annual tax, and would provide on his death the
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    money for the cumulative duties which became payable. The Government have thrown over the whole of that theory of the Death Duties. In place of regarding them as deferred Income Tax collected at death instead of annually during life, they now deliberately put forward the theory that they are a chunk out of the capital of the deceased man, which he or his heir is to pay for permission to transmit his property to his descendants, or to those whom he wishes to succeed him. My right hon. Friend asked, "What is your justification or reason for that complete change of front? "The Chancellor of the Exchequer gave no answer. It is an old debating device to begin with an air of great candour, acknowledging the force of the reasoning which your opponents have brought to bear, recognising the moderation of their speech; to go on to say that as you now have serious arguments to meet you will proceed to meet them; then to lose yourself in a maze of words and sit down without having touched the case which you professed to be going to demolish. In that art the Chancellor of the Exchequer is a pastmaster. He does it with the best of temper, with a good deal of humour, with much applause from, his own side, and, I imagine, with a pleasant satisfaction at the knowledge that he has got himself out, as he hopes un-perceived, from a very disagreeable position to which he saw no other reasonable issue. But, after all, I think that this Committee and the country will note that the Chancellor of the Exchequer gave no-answer to my right hon. Friend, and that we have had up to this time—and I suppose we cannot expect to get it after this time if we do not get it from any Member of the Government before we part with this Clause—absolutely no justification for the change of front which the Government has made.
    Mr. STANLEY WILSON: Haldane.
    Mr. AUSTEN CHAMBERLAIN: The Secretary of State for War might give an answer, but, after listening to his other speeches, does my hon. Friend think it likely that he will? I should, however, be very glad to hear him try. My right hon. Friend is entitled to have one Member of the Government at least try to answer the case which he put with so much force and moderation. No answer has been made up to the present time. The Government treat this as money to be taken out of capital, which the life-owner of the estate cannot and is not expected to replace. These

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    admissions of the Government are in themselves sufficient, in my opinion, to condemn the rates to which they have raised this tax as a fiscal expedient. I quite agree that the extent to which the Death Duties trench upon the capital of the country is a question of degree, hat when you are imposing Death Duties they should be such that a man, with some reasonable sacrifice, can provide for in his lifetime. There is no reason why the Death Duties should make a greater in road upon capital than anything else. But I say what you are doing now is to put upon a man in the form of Death Duties the equivalent to an annual charge that is so extravagantly high that if it were in fact proposed as an annual charge the country would not accept it. You are at tempting to conceal, and to some extent have concealed, what is going on from the country, that the result of this tax to some extent already, and to a greatly added degree, as you increase the rate of tax, will be to deplete the funds which are available for the industrial development of this country; for not merely earning an income for their possessors, but for the production of new national wealth in the future; that you are not merely draining your resources at the moment, but causing at the very lowest a diminution of the rate of increase which those resources might reasonably be expected to attain. That is a matter of some gravity, because, whatever your resources may be, there is not much possibility that your expenditure is going to be reduced. On the contrary, whether it be from the pressure of foreign competition or the necessities of domestic development, many a man has hoped to see the restriction in expenditure, and there are those who cannot carry out their election pledges because of it. I do not believe that any man can make a great reduction in our expenditure; and, under these circumstances, anything which tends to reduce the capital of the country, and tends to lessen or destroy its wealth-producing power, is doubly bad. You have a great emergency to face—
    Mr. H. MYER: £240,000,000 for the Boer War.
    Mr. AUSTEN CHAMBERLAIN: The hon. Member is remarkable not only for the frequency of his interruptions, but for their irrelevancy.
    THE CHAIRMAN: Really that interruption had nothing to do with the case.
    Mr. MYER Mr. MYER rose.
    The CHAIRMAN: Will the hon. Member resume his seat until I have finished? I think it would be very much better to allow the right hon. Gentleman to continue his speech undisturbed.
    Mr. AUSTEN CHAMBERLAIN: I say nothing about the interruptions, Sir, because it does not seem to me to affect my argument, and it would lead me too far astray. I say that if this were merely a passing emergency, where you required for temporary purposes a great accession of revenue, there might be something to be said for these high charges. At any rate, it would modify my objection. But when you have to look forward to an expenditure which cannot be reduced, which, I fear, will inevitably tend to grow, then it is doubly dangerous to do anything which saps the source of national wealth and productivity. A few other observations as to the extent of the increase which the Chancellor of the Exchequer has proposed. More fortunate than some of my hon. Friends, he has a speech which is relevant to every Amendment, and which even the Deputy-Speaker never interferes with—
    The CHAIRMAN: I hope the right hon. Gentleman is not reflecting upon the Deputy-Chairman?
    Mr. AUSTEN CHAMBERLAIN: I ask leave to withdraw that observation; I was led astray by the incident of some little time ago. But I say that the Chancellor of the Exchequer has succeeded in framing a speech that is relevant to every Amendment, and which he introduces on most of them. The right hon. Gentleman says we must have money; we have got a deficit of £16,000,000; how are we to fill it? Of course, you have got to raise the money, but it does not follow because you are going to raise the money to fill this great deficit that the Government has created that you are to swallow whatever nostrums the Government provide. The right hon. Gentleman says, "We have this great, large sum to raise in taxation. Is my tax moderate? Is it reasonable? That is the only question you can argue." I am ready to meet him on his own ground. Is the increase he proposes reasonable and moderate? I share the dislike of the right hon. Gentleman for taking the millionaire as a typical example of the effect of his taxation. The right hon. Gentleman out-

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    side the House is very prone to take the millionaire or the exceptional case, because he thinks they will meet with no kind of sympathy, and because he is confident the poor man will never believe that the man of great wealth can be in any possible distress or will realise what the outgoings of such a man may be. I share the right hon. Gentleman's objections to taking millionaires; they are not typical cases. Let us take a more typical case, the case of the small fortunes. What has the Chancellor done? A person with a fortune of over £5,000 and between that and £10,000 has his duty raised by 33⅓per cent.
    Mr. CHIOZZA MONEY: It is raised by 1 per cent.—
    Mr. AUSTEN CHAMBERLAIN: Between £10,000 and £15,000 it is raised by 25 per cent., which is a heavy addition; £15,000 to £20,000, by 25 per cent.; £20,000 to £25,000, the duty is increased 50 per cent.; from £25,000 to £40,000, it is increased by 33 per cent., and from £40,000 to £50,000, it is increased by 50 per cent. That is what the right hon. Gentleman calls moderate increases in taxation. Heaven save us from the moderation of the right hon. Gentleman! See what the Government are doing. They have bewailed the case of a man who is dependent upon his own exertions for his income derived from secure investment. He has gradually built up a little fortune for himself, and the Government have taken credit, I suppose, on every platform in the country for the differentiation which the Prime Minister made between earned and unearned increment. These little fortunes of £5,000 or £10,000 are the result of earned increment managed by thrifty men with families for whom they provide, and what the right hon. Gentleman's predecessor gave to these men in the differentiation of the incomes the right hon. Gentleman the Chancellor of the Exchequer is going to take back from the children by his increased Death Duties. I never thought that the Prime Minister's proposals were well conceived, but I think at least when a Government is boasting of having given this relief, it should not, by a side-wind, strike at the men it is professing to relieve, and take away with one hand what it professes openly to bestow upon them with the other. The millionaire's ease may, or may not, be a hard one, but the cases of these small men are very hard, and the hardship in their cases
    1850
    is of a kind which my right hon. Friend the Leader of the Opposition drew attention to earlier in the day, and the hon. Member for Brighton also dwelt upon. The hardship in these cases is that their fortunes are very largely engaged in business, and when you deduct, at their death, from those fortunes these comparatively heavy sums, you are dealing, not merely a blow at them and fining their children by depriving them of what their parents hoped to secure for them, but you are dealing at the same time a blow at countless little businesses in the country which require all the capital they can get, and for which you cannot get fresh capital under such circumstances. The Chancellor of the Exchequer and the Prime Minister have boasted from time to time in second reading speeches and in platform utterances that this Budget hampers no industry. I believe in my heart that no Budget this House has seen during the last 50 or 100 years has done so much in countless ways to hamper and interfere with industry and with employment as the one we are now discussing.
    Mr. PEEL: The question which has been put by the Leader of the Opposition and reiterated by the right hon. Gentleman the Member for East Worcestershire has met with no reply whatever from the Chancellor of the Exchequer. The right hon. Gentleman has been challenged to state what is the basis of these new taxes. Does the right hon. Gentleman contend that they are founded upon the cid basis, or is he establishing a new basis, the principles of which have been criticised by the Leader of the Opposition? I have seen and heard a certain number of Budgets introduced, but I have never seen before a Government so affectionately proud of a deficit as the present Government. The remarkable thing is that they have selected this special time when they are taking a larger slice out of the capital of the country than on any previous occasion to make a raid on the Sinking Fund, I want to allude to the figure which the Chancellor of the Exchequer gave to us at an earlier Stage in the Debate. He gave us one set of figures as to the gross amount of capital that came before the Exchequer for settlement each year. He gave a certain set of figures on 10th May, 1909, in answer to a question, and obviously there is a discrepancy between those two sets of figures. When the Chancellor was challenged upon that point, his object, of course, was to

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    make out that the amount on which these Death Duties were levied during these ten years had not diminished but rather increased. The Chancellor said: "Oh, yes; the figures you are quoting are not my figures, but the figures on which the tax is levied." That is precisely the point we urge on this side of the House. The important point is not the amount of capital which comes up for review, but the amount on which he is going to levy his duties. Although there may be a great deal of capital, if the taxes are evaded or avoided or if there are exemptions, that capital may be said not to exist. If you will look at the figures on which the tax is levied, you will find that during the last ten years, which is a considerable time to extend your range, that there has not only been no increase, but there has been an actual steady downward movement. The Chancellor's argument about these triennial periods, on which he tried to show there had been an increase, after he had told us the decennial period was the period to take, is not one which I think will carry conviction with the Committee. The Chancellor tried to defend himself on another ground. He said the falling off was simply due to the decrease in the value of securities, comparing the two or three years before the war with the subsequent years. The time when securities have fallen and when presumably the property of the country is of less value is made the very occasion by the Chancellor for increasing the Death Duties. He tried, not very successfully, to rebut the attack that these taxes fall upon and affect large businesses, by saying these businesses were mostly those of limited companies, and that you do not sell a portion of the property of a company, but its shares. Everybody knows, of course, that, if large blocks of shares are cast upon the market the property and credit of the company is injured. You cannot deal with property in that way without injuring the credit of businesses, making it thereby more difficult to borrow capital. Probably they will have to borrow at a higher rate.
    In this way there is a close connection between the steepening of Death Duties and large businesses. The Chancellor went further and said, in addition to large businesses of limited companies, they had small business partnerships, and so on. There are a great many large businesses indeed run by exceedingly few persons, in some cases by only one individual. In those
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    cases the taxes fall directly upon the businesses, and they ought to be looked after. In this case the damage is direct and definite. This duty will fall on these businesses precisely at the time when the brain of the business has gone, when probably it is being conducted by trustees or executors unfamiliar with it, and possibly when there is a necessity for raising large sums of money for the purpose of carrying it on. The hon. Member for North Paddington said, "If you look at the capital of the country it may be decreasing as far as taxation is concerned, but the income is increasing, so what damage is there to fear?" But there are several considerations which would diminish, from the point of view of the cheerfullest Chancellor of the Exchequer, the effect of the increased income. One is that a large amount' of the increase is due to foreign investments; another large part is attributable to considerable purchases of annuities which, for the moment, give apparently a higher income to the people; and the third is the recent tightening up of the collection of taxes. Much Income Tax is now got in which escaped in former years, and if one, comparing the present Income Tax with that of ten or twelve years ago, could compare like with like, I do not think the discrepancy would be found to be so great as has been suggested.
    The Secretary for War has tried to reassure the Committee by quoting the example of the late Mr. Gladstone. He said, Take the capital of the country in the last few years of Mr. Gladstone's time and compare that capital with the amount of taxation from Death Duties, and you will find it bears much the same proportion to the capital of that day that the new taxation and Death Duties bear to the capital of the country at this period." I am very distrustful about these great figures relating to the capital of the country. They are, I believe, arrived at by the multiplication of the income of the country. But when you examine that income and attempt on any basis to arrive at the capital by a multiple of the income you get a value which is very doubtful and dubious indeed. I was reading only a few days ago a speech delivered to a certain number of business men by a late very prominent Member of the Liberal party. [HON. MEMBERS: "Name."] He is a Member of another place, and it would hardly be in order to mention his name. His view is a very different one. He said if the late Mr. Gladstone were to meet the

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    present financial luminaries of the Treasury Bench, those Gentlemen would have an exceedingly bad quarter of an hour at the hands of that deceased statesman.
    Mr. JAMES MASON: The Chancellor of the Exchequer has told us on more than one occasion that the tax falls, not upon the man who leaves the fortune, but upon the man who succeeds to it, and therefore he ought to be very glad to get anything at all. The Leader of the Opposition raised the question of whether or not the tax was injurious to industry, and the Chancellor of the Exchequer said it was "better that the tax on industry should be taken at uncertain intervals than that it should be annually collected from the profits of the business. Apparently the reason he gave for that statement was that almost all businesses were now in the form of limited liability companies, and therefore the successor to shares in that business had only to sell a certain number of shares to raise the necessary money. I fail to see how that answer affects the point of whether the tax should be collected at uncertain periods or at a regular annual period; but is the right hon. Gentleman correct in saying that most of the businesses in this country are limited liability companies? At any rate, there are a great many businesses which are still private businesses, and it is in these cases where, I think, the right hon. Gentleman has failed to see the possible incidence and effect of these taxes. Take the case of a factory which has been built up by the energy and individual work of two or three individuals, who have during a long series of years put back every penny they can save into the capital of their business, and in that way have built up the capital. I know cases where this has been done to a very large extent. In such a case these two or three individuals have no capital, except that which is embarked in their business. One of these partners dies and leaves his interest to his son, and that business is immediately burdened by having to pull out of the business a large amount of money necessary to pay Death Duties on the share of the partner who is deceased. You may say that falls upon the son. It does not, as the pulling of capital out of the business enormously hampers it in the industry in which it has been embarked. Expansion has been going on for years, and in a business there is nothing more hampering than the curtailment of working capital. This does not fall upon the son who inherits his fortune from his father;
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    the principal sufferers are the two other partners, who are in no way related to the deceased, and who, through no fault of their own, have to have their business considerably crippled because one of their members happens to die. This is one case of hardship. I do not propose to harp upon the question of hardship and injustice, but I am sure if I did it would be difficult to discriminate between this injustice and hundreds of others. But there is one case of hardship and injustice which arises under this tax owing to the extreme uncertainty of the period at which the tax will be paid. You have the case of three families. In one case you very likely have a succession of deaths occurring perhaps on an average of 10 years apart. In another you have the more normal case of son succeeding father at periods of about 24 to 30 years, and you have another possible case where the son is dead and the man who leaves the property is succeeded by his grandson, who may possibly hold the property for 50 years without being subjected to Death Duties. In this case you have the extreme difference of the incidence of the tax. In. the first family it practically means ruin in 30 or 40 years, whereas in the other case, where a very young man succeeds an old one, the tax may not become leviable again for such a long period that its incidence is comparatively light.
    But my real objection to this tax, and to the increasing of it is that I believe the principle to be entirely wrong. The right hon. Gentleman (Mr. Haldane) apparently answered this afternoon that the principle was not under discussion, because it had been accepted, and because it was too late in the day. I think he might have said it was too late in the Session. But at any rate the question of principle does arise because it is quite obvious that if the principle of the tax is bad, that is a very good reason for not increasing it. The question of principle depends very much on the question whether or not the tax, really does destroy national capital. On a previous occasion when I raised this question of the amount of national capital which was destroyed during the last 14 years, the Chancellor of the Exchequer replied that it was an insignificant amount, in face of the fact that during the same period there had been an accumulation of £3,500,000,000 of capital, and that the capital of the nation was £15,000,000,000. These figures of national capital are extremely difficult to estimate, and are very uncertain; but the Chancellor of the

    1855
    Exchequer has undoubtedly taken the very highest figures he could get in giving that answer. He quoted Sir Robert Giffen, who has since written an article repudiating the use which has been made of the figures which he gave. To show the extreme uncertainty of the estimate made by Sir Robert Giffen, which is based on the Income Tax Returns, these same Returns have formed the basis of estimates of the national property, which have varied from below £8,000,000,000 in one case to nearly £15,000,000,000 in another. It. is certainly as reasonable, and, I think, much more, in fact, instead of taking the Income Tax Returns to multiply the capital which comes up for review for the purpose of the Death Duties by the average duration of ownership, and calculations which have been made on that basis have shown that the increase of national capital during the 12 years from 1895–6 to 1907–8 has been, not £3,500,000,000, but only £1,657,000,000, which makes all the difference in calling the destruction of £250,000,000 insignificant. It is more than one-seventh of the whole. Even that does not include the whole destruction of capital. We have destruction in other ways, and, during that same period, there has been a very large increase in our population, and if we bear all these things in mind, far from the destruction of capital having been insignificant, it has amounted to something like, per head, one-fourth of the amount that has been built up in the same time. Under this Bill this tax, which has destroyed a considerable amount of capital during the last 14 years, is to destroy a considerable amount more.
    At the same time you are putting other taxes on capital in the shape of Land Taxes. I cannot help thinking that the Government pay very scant attention to certain weighty warnings which were given them by the merchants and bankers of London, of the City of London. I am sure that no one will deny that they are a body of men who are well qualified to give an opinion on such a subject. They told the Prime Minister that there was considerable danger of capital being reduced below the point necessary for the trade in which it is employed in this country. I wish to say a word as to the effect of this increase in the duty on thrift. No one will deny that with these taxes in force there will be a very strong temptation for a man who has to consider whether he shall spend £100 or save it to say, "If I spend it I am only spending £90, because the other £10 is coming out of the Chancellor of the Exchequer." I am sure that is a reason which will guide many people in deciding to save less than they have done hitherto, and if they save less, whence is to come the replacement of the capital you are about to destroy if it is not replaced by the savings of the individuals? How is the capital of the country to be kept up to the present level, and how is the increase hitherto maintained to be continued?
    Mr. HALDANErose in his place and claimed to move, "That the Question be now put."
    Question put, "That the Question be now put."
    The Committee divided:—Ayes, 192; Noes, 92.

    Division No. 639.]

    AYES.

    [11.3 p.m.

    Acland, Francis Dyke

    Bryce, J. Annan

    Dewar, Arthur (Edinburgh, S.)

    Agnew, George William

    Buckmaster, Stanley 0.

    Dickinson, W. H. (St. Pancras, N.)

    Alien, A. Acland (Christchurch)

    Burns, Rt. Hon. John

    Dobson, Thomas W.

    Allen, Charles P. (Stroud)

    Burnyeat, W. J. D.

    Dunne, Major E. Martin (Walsall)

    Ashton, Thomas Gair

    Burt, Rt. Hon. Thomas

    Erskine, David C.

    Asquith, Rt. Hon. Herbert Henry

    Buxton, Rt. Hon. Sydney Charles

    Essex, R. W.

    Baker, Joseph A. (Finsbury. E.)

    Byles, William Pollard

    Esslemont, George Birnic

    Balfour, Robert (Lanark)

    Carr-Gomm, H. W.

    Evans, Sir S. T.

    Baring, Godfrey (Isle of Wight)

    Cawley, Sir Frederick

    Everett, R. Lacey

    Barker, Sir John

    Cherry, Rt. Hon. R. R.

    Fenwick, Charles

    Barnard, E. B.

    Clough, William

    Ferguson, R. C. Munro

    Barran, Sir John Nicholson

    Clynes, J. R.

    Foster, Rt. Hon. Sir Walter

    Beauchamp, E.

    Cobbold, Felix Thornley

    Fuller, John Michael F.

    Beaumont, Hon. Hubert

    Collins, Stephen (Lambeth)

    Fullerton, Hugh

    Bell, Richard

    Collins, Sir Win. J. (St. Pancras, W.)

    Gibb, James (Harrow)

    Berridge, T. H. D.

    Cooper, G. J.

    Gill, A. H.

    Birrell, Rt. Hon. Augustine

    Corbett, C. H. (Sussex, E. Grinstead)

    Glover, Thomas

    Black, Arthur W.

    Cornwall, Sir Edwin A.

    Gooch, George Peabody (Bath)

    Boulton, A. C. F.

    Cotton, Sir H. J. S.

    Grey, Rt. Hon. Sir Edward

    Bowerman, C. W.

    Curran, Peter Francis

    Guest, Hon. Ivor Churchill

    Brace, William

    Davies, M. Vaughan-(Cardigan)

    Haldane, Rt. Hon. Richard B.

    Bright, J. A.

    Davies, Timothy (Fulham)

    Harcourt, Rt. Hon. L. (Rossendale)

    Brunner, J. F. L. (Lanes., Leigh)

    Davies, Sir W. Howell (Bristol, S.)

    Harcourt, Robert V. (Montrose)

    Harmsworth, R. L. (Caithness-shire)

    Markham, Arthur Basil

    Scarisbrick, Sir T. T. L.

    Haworth, Arthur A.

    Marks, G. Croydon (Launceston)

    Schwann, C. Duncan (Hyde)

    Hazel, Dr. A. E. W.

    Marnham, F. J.

    Schwann, Sir C. E. (Manchester)

    Helme, Norval Watson

    Massie, J.

    Shackleton, David James

    Henderson, Arthur (Durham)

    Masterman, C. F. G.

    Sherwell, Arthur James

    Henderson, J. McD. (Aberdeen, W.)

    Middlebrook, William

    Simon, John Allsebrook

    Higham, John Sharp

    Money, L. G. Chiozza

    Snowden, P.

    Hobhouse, Rt. Hon. Charles E. H.

    Morgan, J. Lloyd (Carmarthen)

    Soares, Ernest J.

    Holt, Richard Burning

    Morse, L L.

    Stanger, H. Y.

    Hooper, A. G.

    Morton, Alpheus Cleophas

    Stanley, Hon. A. Lyulph (Cheshire)

    Hope, John Deans (File, West)

    Myer, Horatio

    Stewart, Halley (Greenock)

    Horniman, Emsile John

    Newnes, F. (Notts, Bassetlaw)

    Stewart-Smith, D. (Kendal)

    Howard, Hon. Geoffrey

    Nicholson, Charles N. (Doncaster)

    Strachey, Sir Edward

    Hudson, Walter

    Norman, Sir Henry

    Straus, B. S. (Mile End)

    Isaacs, Rufus Daniel

    Nussey, Sir Willans

    Strauss, E. A. (Abingdon)

    Jardine, Sir J.

    Nuttall, Harry

    Summerbell, T.

    Jones, Sir D. Brynmor (Swansea)

    O'Grady, J.

    Taylor, John W. (Durham)

    Jones, Leif (Appleby)

    Parker, James (Halifax)

    Tennant, H. J. (Berwickshire)

    Jones, William (Carnarvonshire)

    Partington, Oswald

    Thompson, J. W. H. (Somerset, E.)

    Jowett, F. W.

    Pearce, Robert (Staffs, Leek)

    Thorne, G. R. (Wolverhampton)

    Kekewich, Sir George

    Pointer, J.

    Trevelyan, Charles Philips

    King, Alfred John (Knutsford)

    Ponsonby, Arthur A. W. H.

    Verney, F. W.

    Laidlaw, Robert

    Priestley, Sir W. E. B. (Bradford, E.)

    Vivian, Henry

    Lamb, Ernest H. (Rochester)

    Radford, G. H.

    Ward, W. Dudley (Southampton)

    Lambert, George

    Rainy, A. Rolland

    Wardle, George J.

    Larmont, Norman

    Rea, Rt. Hon. Russell (Gloucester)

    Wason, Rt. Hon. E. (Clackmannan)

    Layland-Barratt, Sir Francis

    Rees, J. D.

    Wason, John Cathcart (Orkney)

    Lea, Hugh Cecil (St. Pancras, E.)

    Rendall. Athelstan

    White, Sir George (Norfolk)

    Levy, Sir Maurice

    Richards, Thomas (W. Monmouth)

    White, J. Dundas (Dumbartonshire)

    Lewis, John Herbert

    Richards, T. F. (Wolverhampton, W.)

    White, Sir Luke (York, E.R.)

    Lloyd-George, Rt. Hon. David

    Roberts, Charles H. (Lincoln)

    Whittaker, Rt. Hon. Sir Thomas P.

    Lupton, Arnold

    Roberts, G. H. (Norwich)

    Wiles, Thomas

    Luttrell, Hugh Fownes

    Roberts, Sir J. H. (Denbighshire)

    Williams, J. (Glamorgan)

    Lynch, H. B.

    Robertson, Sir G. Scott (Bradford)

    Williams, W. Llewelyn (Carmarthen)

    Macdonald, J. R. (Leicester)

    Robinson, S.

    Wilson, J. W. (Worcestershire, N.)

    Maclean, Donald

    Robson, Sir William Snowdon

    Wilson, P. W. (St. Pancras, S.)

    McKenna, Rt. Hon. Reginald

    Roch, Walter F. (Pembroke)

    Wilson, W. T. (Westhoughton)

    M'Laren, Sir C. B. (Leicester)

    Roe, Sir Thomas

    Winfrey, R.

    M'Laren, H. D. (Stafford, W.)

    Rogers, F. E. Newman

    Wood, T. M'Kinnon

    M'Micking, Major G.

    Rose, Sir Charles Day

    Maddison. Frederick

    Rutherford, V. H. (Brentford)

    TELLERS FOR THE AYES—Mr.

    Mallett, Charles E.

    Samuel, S, M. (Whitechapel)

    Joseph Pease and Captain Norton.

    NOES.

    Acland-Hood, Rt. Hon. Sir Alex. F.

    Doughty, Sir George

    Moore, William

    Anson, Sir William Reynell

    Douglas, Rt. Hon. A. Akers-

    Morpeth, Viscount

    Anstruther-Gray, Major

    Faber, George Denison (York)

    Nicholson, Wm. G. (Petersfield)

    Arkwright, John Stanhope

    Fell, Arthur

    Parkes, Ebenezer

    Balcarres, Lord

    Fletcher, J. S.

    Pease, Herbert. Pike (Darlington)

    Baldwin; Stanley

    Foster, P. S.

    Peel, Hon. W. R. W.

    Balfour, Rt. Hon. A. J. (City, Lond.)

    Gardner, Ernest

    Pretyman, E. G.

    Banbury, Sir Frederick George

    Gibbs, G. A. (Bristol, West)

    Randles, Sir John Scurrah

    Banner, John S. Harmood-

    Gordon, J.

    Rawlinson, John Frederick Peel

    Baring, Capt. Hon. G. (Winchester)

    Guinness, Hon. W. E. (B. S. Edm'ds.)

    Renwick, George

    Barrie, H. T (Londonderry, N.)

    Haddock, George B.

    Roberts, S (Sheffield, Ecclesall)

    Beach, Hon. Michael Hugh Hicks

    Hamilton, Marquess of

    Ronaldshay, Earl of

    Bowles, G. Stewart

    Hardy, Laurence (Kent, Ashford)

    Rutherford. Watson (Liverpool)

    Bridgeman, W. Clive

    Harris, Frederick Leverton

    Salter, Arthur Clavell

    Bull, Sir William James

    Hay, Hon. Claude George

    Scott, Sir S. (Marylebone, W.)

    Burdett-Coutts, W.

    Hermon-Hodge, Sir Robert

    Stanier, Beville

    Carlile, E. Hildred

    Hill, Sir Clement

    Starkey, John R.

    Carson, Rt. Hon. Sir Edward H.

    Hills, J. W.

    Staveley-Hill, Henry (Staffordshire)

    Castlereagh, Viscount

    Hope, James Fitzalan (Sheffield)

    Talbot, Lord E. (Chichester)

    Cave, George

    Hunt, Rowland

    Talbot, Rt. Hon. J. G. (Oxford Univ.)

    Cecil, Evelyn (Aston Manor)

    Joynson-Hicks, William

    Thomson, W. Mitchell-(Lanark)

    Cecil, Lord R (Marylebone, E.)

    Kerry, Earl of

    Thornton, Percy M.

    Chamberlain, Rt. Hon. J. A. (Worc'r.)

    Keswick, William

    Walker, Col. W. H. (Lancashire)

    Chaplin, Rt. Hon. Henry

    Kimber, Sir Henry

    Walrond, Hon. Lionel

    Clive, Percy Archer

    King, Sir Henry Seymour (Hull)

    Warde, Col. C. E. (Kent, Mid.)

    Cochrane, Han. Thomas H. A. E.

    Lambton, Hon, Frederick William

    Williams, Col. R. (Dorset, W.)

    Courthope, G. Loyd

    Lane-Fox, G. R.

    Wilson, A. Stanley (York, E.R.)

    Craig, Charles Curtis (Antrim, S.)

    Lee, Arthur H. (Hants, Fareham)

    Younger, George

    Craig, Captain James (Down, E.)

    Long, Col. Charles W. (Evesham)

    Craik, Sir Henry

    M'Arthur, Charles

    TELLERS FOR THE NOES.—Viscount

    Dalrymple, Viscount

    Mason, James F. (Windsor)

    Valentia and Mr. H. W. Forster.

    Dickson, Rt. Hon. C. Scott

    Meysey-Thompson, E. C.

    Question put accordingly, "That the Clause, as amended, stand part of the Bill."
    The Committee divided:—Ayes, 192; Noes, 95.

    Division No. 640.]

    AYES.

    [11.12 p.m.

    Acland, Francis Dyke

    Haldane, Rt. Hon. Richard B.

    Pickersgill, Edward Hare

    Agnew, George William

    Harcourt, Rt. Hon. L. (Rossendale)

    Pointer, J.

    Allen, A. Acland (Christchurch)

    Harcourt, Robert V. (Montrose)

    Ponsonby, Arthur A. W. H.

    Allen, Charles P. (Stroud)

    Harmsworth, R. L. (Caithness-shire)

    Priestley, Sir W. E. B. ((Bradford, E.)

    Ashton, Thomas Gair

    Haworth, Arthur A.

    Radford, G. H.

    Asquith, Rt. Hon. Herbert Henry

    Hazel, Dr. A. E. W.

    Rainy, A. Rolland

    Baker, Joseph A. (Finsbury, E.)

    Helme, Norval Watson

    Rea, Rt. Hon. Russell (Gloucester)

    Balfour, Robert (Lanark)

    Henderson, Arthur (Durham)

    Rees, J. D.

    Baring, Godfrey (Isle of Wight)

    Henderson, J. McD. (Aberdeen, W.)

    Rendall, Athelstan

    Barker, Sir John

    Higham, John Sharp

    Richards, Thomas (W. Monmouth)

    Barnard, E. B.

    Hobhouse, Rt. Hon. Charles E. H.

    Richards, T. F. (Wolverhampton, W.)

    Barran, Sir John Nicholson

    Holt, Richard Durning

    Roberts, Charles H. (Lincoln)

    Beauchamp, E.

    Hooper, A. G.

    Roberts, G. H. (Norwich)

    Beaumont, Hon. Hubert

    Hope, John Deans (Fife, West)

    Roberts, Sir J. H. (Denblghs.)

    Bell, Richard

    Horniman, Emslie John

    Robertson, Sir G. Scott (Bradford)

    Berridge, T. H. D.

    Howard, Hon. Geoffrey

    Robinson, S.

    Birrell, Rt. Hon. Augustine

    Hudson, Walter

    Robson, Sir William Snowdon

    Black, Arthur W.

    Isaacs, Rufus Daniel

    Roch, Walter F. (Pembroke)

    Boulton, A. C. F.

    Jardine, Sir J.

    Roe, Sir Thomas

    Bowerman, C W.

    Jones, Sir D. Brynmor (Swansea)

    Rogers, F. E. Newman

    Brace, William

    Jones, Leif (Appleby)

    Rose, Sir Charles Day

    Bright, J. A.

    Jones, William (Carnarvonshire)

    Rutherford, V. H. (Brentford)

    Brunner, J. F. L. (Lanes., Leigh)

    Jowett, F. W.

    Samuel, S. M. (Whitechapel)

    Bryce, J. Annan

    Kekewich, Sir George

    Scarisbrick, Sir T. T. L.

    Buckmaster, Stanley O.

    King, Alfred John (Knutsford)

    Schwann, C. Duncan (Hyde)

    Burns, Rt. Hon. John

    Laidlaw, Robert

    Schwann, Sir C. E. (Manchester)

    Burnyeat, W. H. D.

    Lamb, Ernest H. (Rochester)

    Shackleton, David James

    Burt, Rt. Hon. Thomas

    Lambert, George

    Sherwell. Arthur James

    Buxton, Rt. Hon. Sydney Charles

    Lamont, Norman

    Simon, John Allsebrook

    Byles, William Pollard

    Layland-Barratt, Sir Francis

    Snowdon, P.

    Carr-Gomm, H. W.

    Lea, Hugh Cecil (St. Pancras, E.)

    Soares, Ernest J.

    Cawley, Sir Frederick

    Levy, Sir Maurice

    Stanger, H. Y.

    Cherry, Rt. Hon. R. R.

    Lewis, John Herbert

    Stanley, Hon. A. Lyulph (Cheshire)

    Clough, William

    Lloyd-George, Rt. Hon. David

    Stewart, Halley (Greenock)

    Clynes, J. R.

    Lupton, Arnold

    Stewart-Smith, D. (Kendal)

    Cobbold, Felix Thornley

    Luttrell, Hugh Fownes

    Strachey, Sir Edward

    Collins, Stephen (Lambeth)

    Lynch, H. B.

    Straus, B. S. (Mile End)

    Collins, Sir Wm. J. (St. Pancras, W.)

    Macdonald, J. R. (Leicester)

    Strauss, E. A. (Abingdon)

    Cooper, G. J.

    Maclean, Donald

    Summerbell, T.

    Corbett, C. H. (Sussex, E. Grinstead)

    McKenna, Rt. Hon. Reginald

    Taylor, John W. (Durham)

    Cornwall, Sir Edwin A.

    M'Laren, Sir C. B. (Leicester)

    Tennant, H. J. (Berwickshire)

    Cotton, Sir H. J. S.

    M'Laren H. D. (Stafford, W.)

    Thompson, J. W. H. (Somerset, E.)

    Curran, Peter Francis

    M'Micking, Major G.

    Thorne, G. R. (Wolverhampton)

    Davies, M. (Vaughan-(Cardigan)

    Maddison, Frederick

    Trevelyan, Charles Philips

    Davies, Timothy (Fulham)

    Mallett, Charles E.

    Verney, F. W.

    Davies, Sir W. Howell (Bristol, S.)

    Markham, Arthur Basil

    Vivian, Henry

    Dewar, Arthur (Edinburgh, S.)

    Marks, G. Croydon (Launceston)

    Ward, W. Dudley (Southampton)

    Dickinson, W. H. (St. Pancras, N.)

    Marnham, F. J.

    Wardle, George J.

    Dobson, Thomas W.

    Massie, J.

    Wason, Rt. Hon. E. (Clackmannan)

    Dunne, Major E. Martin (Walsall)

    Masterman, C. F. G.

    Wason, John Cathcart (Orkney)

    Erskine, David C.

    Middlebrook, William

    White, Sir George (Norfolk)

    Essex, H. W.

    Money, L. G. Chiozza

    White, J. Dundas (Dumbartonshire)

    Esslemont, George Birnie

    Morgan, J. Lloyd (Carmarthen)

    White, Sir Luke (York, E.R.)

    Evans, Sir S. T.

    Morse, L. L.

    Whittaker, Rt. Hon. Sir Thomas P.

    Everett, R. Lacey

    Morton, Alpheus Cleophas

    Wiles, Thomas

    Fenwick. Charles

    Myer, Horatio

    Williams, J. (Glamorgan)

    Foster, Rt. Hon. Sir Walter

    Newnes, F. (Notts, Bassetlaw)

    Williams, W. Llewelyn (Carmarthen)

    Fuller, John Michael F.

    Nicholson, Charles N. (Doncaster)

    Wilson, J. W. (Worcestershire, N.)

    Fullerton, Hugh

    Norman, Sir Henry

    Wilson, P. W. (St. Pancras, S.)

    Gibb, James (Harrow)

    Nussey, Sir Willans

    Wilson, W. T. (Westhoughton)

    Gill, A. H.

    Nuttall, Harry

    Winfrey, R

    Glover, Thomas

    O'Grady, J.

    Wood, T. M'Kinnon

    Gooch, George Peabody (Bath)

    Parker, James (Halifax)

    Grey, Rt. Hon. Sir Edward

    Partington, Oswald

    TELLERS FOR THE AYES.—Mr.

    Guest, Hon. Ivor Churchill

    Pearce, Robert (Staffs, Leek)

    Joseph Pease and Captain Norton.

    NOES.

    Acland-Hood, Rt. Hon. Sir Alex. F.

    Bridgeman, W. Clive

    Courthope, G. Loyd

    Anson, Sir William Reynell

    Bull, Sir William James

    Craig, Charles Curtis (Antrim, S.)

    Anstruther-Grey, Major

    Burdett-Coutts, W.

    Craig, Captain James (Down, E.)

    Arkwright, John Stanhope

    Carlile, E. Hildred

    Craik, Sir Henry

    Balcarres, Lord

    Carson, Rt. Hon. Sir Edward H.

    Dalrymple, Viscount

    Baldwin, Stanley

    Castlereagh, Viscount

    Dickson, Rt. Hon. C. Scott

    Balfour, Rt. Hon. A. J. (City, Lond.)

    Cave, George

    Doughty, Sir George

    Banbury, Sir Frederick George

    Cecil, Evelyn (Aston Manor)

    Douglas, Rt. Hon. A. Akers-

    Banner, John S. Harmood-

    Cecil, Lord R. (Marylebone, E.)

    Faber, George Denison (York)

    Baring, Captain Hon. G. (Winchester)

    Chamberlain, Rt. Hon. J. A. (Worc'r)

    Fell, Arthur

    Barrie, H. T. (Londonderry, N.)

    Chaplin, Rt. Hon. Henry

    Fletcher, J. S.

    Beach, Hon. Michael Hugh Hicks

    Clive, Percy Archer

    Foster, P. S.

    Bowles, G. Stewart

    Cochrane, Hon. Thomas H. A. E.

    Gardner, Ernest

    1860

    1861

    Gibbs, G. A. (Bristol, West)

    Lee, Arthur H. (Hants, Fareham)

    Rutherford, Watson (Liverpool)

    Gordon, J.

    Long, Col. Charles W. (Evesham)

    Salter, Arthur Clavell

    Guinness, Hon. W. E. (B. S. Edmunds)

    Lyttelton, Rt. Hon. Alfred

    Scott, Sir S. (Marylebone, W.)

    Haddock, George B.

    M'Arthur, Charles

    Stanier, Beville

    Hamilton, Marquess of

    Mason, James F. (Windsor)

    Starkey, John R.

    Hardy, Laurence (Kent, Ashford)

    Meysey-Thomson, E. C.

    Staveley-Hill, Henry (Staffordshire)

    Harris, Frederick Leverton

    Moore, William

    Talbot, Lord E. (Chichester)

    Hay, Hon. Claude George

    Morpeth, Viscount

    Talbot, Rt. Hon. J. G. (Oxford Univ.)

    Hermon-Hodge, Sir Robert

    Nicholson, Wm. G. (Petersfield)

    Thomson, W. Mitchell-(Lanark)

    Hill, Sir Clement

    Parkes, Ebenezer

    Thornton, Percy M.

    Hills, J. W.

    Pease, Herbert Pike (Darlington)

    Walker, Col. W. H. (Lancashire)

    Hope, James Fitzalan (Sheffield)

    Peel, Hon. W. R. W.

    Walrond, Hon. Lionel

    Hunt, Rowland

    Percy, Earl

    Warde, Col. C. E. (Kent, Mid)

    Joynson-Hicks, William

    Pretyman, E. G.

    Williams, Col. R. (Dorset, W.)

    Kerry, Earl of

    Randles, Sir John Scurrah

    Wilson, A. Stanley (York, E.R.)

    Keswick, William

    Rawlinson, John Frederick Peel

    Younger, George

    Kimber, Sir Henry

    Renwick, George

    King, Sir Henry Seymour (Hull)

    Ridsdale, E. A.

    TELLERS FOR THE NOES.—Viscount

    Lambton, Hon. Frederick William

    Roberts, S. (Sheffield, Ecclesall)

    Valentia and Mr. H. W. Forster.

    Lane-Fox, G. R.

    Ronaldshay, Earl of

  PART III.—DEATH DUTIES.

    CLAUSE 41.—(Limitation of Belief from Estate Duty in respect of Settled Property.)
    For the purpose of any claim to relief from Estate Duty under Sub-section (2) of Section five on Sub-section (1) of Section twenty-one of the principal Act, in the ease of persons dying on or after the thirtieth day of April nineteen hundred and nine, payment of or liability to duty, whether the payment was made or the liability attached before, on, or after that date, shall not be deemed to be a payment of or liability to duty in respect to settled property if the payment was made or the liability attached in respect of an interest in expectancy in any property and on the death of a person (other than the settlor) who—

    (a) was at the time of his death competent to dispose of the property; or

    (b) in the case of a claim to relief under Sub-section (2) of Section five of the principal Act, had been at any time during the continuance of the settlement competent to dispose of the property, and if on his death subsequent limitations under the settlement take effect in respect of the property, was sui juris at the time of his death, or had been sui juris at any time, while so competent to dispose of the property; or

    (c) in the case of a claim to relief under Sub-section (1) of Section twenty-one of the principal Act, had been at any time since the will or disposition by which the settlement was made took effect, competent to dispose of the property.

    Mr. PRETYMAN: On a point of Order. The limitation which exists in the Clause as originally printed [from paragraph (a)] is a repetition of the limitation in the Resolution. The first part of the Resolution clearly covers the purport of the first
    1862
    part of the Clause. I need not read it; the Clause is so simple and easy to understand that I am sure that hon. Members will appreciate it at once. But the last part of the Resolution, after "(other than the settlor)," reads "who was at the time of his death or had been at any time during the continuance of the settlement competent to dispose of the settled property." These are evidently intended to be limiting words, and words to exactly the same effect are inserted in the Clause. Therefore if the removal of these words removes the limitation, it is obvious that the Clause will not be covered by the Resolution. If these words are not a limitation they have no meaning; but I can hardly conceive that the Government draughtsman, under the guidance of the Chancellor of the Exchequer and the Secretary of State for War, would have inserted these words unless they had a meaning. Therefore, if the words are limiting words and have any meaning, by their removal the Clause is clearly extended beyond the terms of the Resolution. If that is so, a new Resolution will be required in order to cover the Clause in its new form.
    The CHAIRMAN: I think these words, in the Resolution are rather a recital of. the present position of the law than an operative provision. But independently of that question—and I am much obliged to the hon. and gallant Member for giving me notice of the point of order—the whole matter is extremely complicated, and I could hardly have decided it otherwise—these words inserted in the Clause are not in the original Resolution. The words are "in respect of an interest in expectancy in any property and." Now these words, I think, cannot make a case chargeable which would not be chargeable under the Resolution; I mean, if any case would be chargeable under these words which would

    1863
    not be chargeable under the Resolution clearly it would not be in order to leave out the subsequent words. But where an interest in expectancy exists with no power to dispose no duty is now payable. Where it exists with a power to dispose then the Resolution covers the exemption of these two exceptions. Therefore I think these words can be left out on account of the new words which are put in.
    Mr. PRETYMAN: I do not wish to argue the point any further. So far as I can understand the Clause, or the original proposal, you, Sir, if I may say so respectfully, have dealt with it in a correct way. It is a very difficult thing. But I will be glad if the right hon. Gentleman will tell us what the words originally meant. He carefully avoided telling us why the words were there if there was no limitation.
    Mr. HALDANE: In the Clause as it now stands in the Bill the words "in expectancy" were inserted in the original draft. These words being in it does not matter whether the person entitled to expectancy is competent to dispose or not. The words of the Resolution are words purporting to cut down the exception in favour of the subject, which the Courts, in interpretation of the Act of Parliament, have made in two very well-known cases. The purpose of the Resolution was to limit the exception which the Courts had established—that is to say, to impose a further charge upon the subject. The purpose of the insertion of the words "in expectancy" is to limit the cutting down, or, in other words, to give a greater advantage to the subject than the Resolution contemplated. The words which follow (a) and (b) at the bottom of the page, to which the hon. and gallant Gentleman referred, were words which were appropriate words. Now when we put in the words "in expectancy" it does not matter whether it is competent to dispose of or not. It is all in favour of the subject, for enlarging the exception in favour of the subject, and for cutting down the limitation which the Resolution sought to impose.
    Mr. J. W. HILLSmoved in Sub-section (1) to leave out the words "or Subsection (1) of Section twenty-one."
    If I understand this obscure Clause, it limits the exemption that settled property enjoys now from the State. Settled property is exempt under two heads, firstly, under Sub-section (2) of Section 5 of the Act of 1894; and secondly, where there is
    1864
    a settlement before the Act of 1894, and the property, under that settlement, has paid the old Probate Duty of 3 per cent., it is free from Estate Duty if the testator died before the commencement of the Act of 1894. I am afraid this is very complicated. Two classes of property are exempt from Estate Duty—settled property once it paid the Estate Duty until the settlement came to an end, and all settled property before the year 1894 and which paid the old Probate Duty is also exempt. This Section proposes to cut down both these exemptions in this way. It says where Estate Duty is. only being paid on an interest in expectancy the property shall not be exempt. Perhaps I can best explain the meaning by giving a concrete case.
    A man happened to marry a lady who had a large sum of money, and she, by a quite reasonable and proper precaution, insisted, upon a settlement, and also that after the life interest of her husband the property should come back to her. The property was therefore settled upon the husband for life, after which it was to go back to the wife. She died first, and Estate Duty was charged upon her expectancy. The whole corpus of the settled property did not pay Estate Duty. The property charged with the estate was the value of the settled property less the value of the life interest, and so the duty paid was on the expectancy. When the husband died later on the Revenue claimed duty upon the whole property. The Courts said "No; as soon as you pay duty upon the property, even though it is only expectancy, it franks the property for the rest of the settlement." Now the Chancellor proposes to remove that exemption. The case of a man who had made a settlement before the Act of 1894, and thereby franked the property from further duty, is very much the same as the first case. In both cases the duty was paid in interest in expectancy, and that freed the whole property from duty. I wish to get at the second limitation. I can conceive quite a strong reason why, I think, in the first case the Revenue does suffer, and I think it suffers perhaps in a way it was never intended it should suffer. In the case I gave a moment ago if the husband died first Estate Duty would have been payable on his death and upon the death of the wife also, but because she died first—I suppose it was a matter of chance—the Revenue only got the single Estate Duty. I do not think the same reason applies to the second case. In the one case the

    1865
    exemptions under Sub-section 1 of Section 21 are much fewer than in the other, and are becoming less every year. I do not think you lose much by giving up this provision. The Clause as drafted does not really remove the exemption under Hub-section (1) of Section 21 of the principal Act, which says that no exemption from duty is to be made when you pay duty in respect of an interest in expectancy and on the death of a person who is not the settlor. The only way the exemption arises under Section (1) of Section 21 of the principal Act is that on death you paid your Probate Duty and therefore you were exempt. I do not see how the wording of this Section really meets the case cited, because in that case the duty is paid on the settlor's death, but here you say that the exemption is removed when you pay in respect of an interest in expectancy in any property and on the death of a person who is not the settlor. The two provisions are rather artificially drawn together, and I do not think they quite join. For these reasons I think the Government would do well to accept this Amendment.
    Mr. HALDANE: I think if hon. Members knew how difficult it is to deal with this point they would have appreciated the real lucidity of the example given by the hon. and learned Member, who was absolutely fair in his point. The question he raises comes under Section 21, Subsection (1) of the old Finance Act of 1894, and I think I shall be able to show that this proposal is on the same footing. Our proposal deals with a smaller class of cases, but they are dealt with on the same footing as those under Section 5 (2) of the Act of 1894, and the ground is very narrow indeed which divides me from the hon. and learned Member. When the Finance Act of 1894 was passed it established the right to make the exemption in the case of settlement to a great extent. When property was limited by a deed to A for life and afterwards to B for life, and then to C in fee, on the death of A the duty is paid. But the duty franks the death of B, franks everything until the death of C. That is what is meant by the words of Section 5. Then came Section 21, which said the same result should ensue where, not the Estate Duty, but the old Probate Duty had been paid in cases of the kind of settlement referred to in Section 5. The words are exactly and precisely the same. It was intended that if duty was paid on A's dearth B should be free and no duty
    1866
    should be payable when C succeeded. Nobody seemed to have thought of the case of C dying during A's lifetime. His reversion is of very small value. The duty was paid on that small reversion in-stead of on the full principal value as it would if B had died. The hon. Member deals with that view under Section 5, but there is no difference between that case, either in substance or technically, and the second case, which was the only one he questioned. The second case is that where a person died before 1894 and Probate Duty had been paid. If probate had once been paid on A's death, no duty was payable on B's death or until the death of 0, who was competent to dispose. If C died in the lifetime of A a very small duty would be paid to the State, instead of the full duty, and, as the Courts have interpreted the law, the State loses the duty on B's death. The Courts treat Sections 21 and 5 as being on precisely and identically the Same footing, and consequently the Government have put them on the same footing. I believe cases under Section 21 are getting fewer, but on the other hand they affect immediate revenue and therefore we could not consent to put them on a different footing.
    Sir E. CARSON: I feel a great deal of hesitation in trying to add any contribution whatsoever to this difficult subject which may be of any assistance to the House, but at the same time it is a matter which lawyers hold to be of great importance in the settlement of estates. The broad result of the attempted Amendment by the Government is to take away a considerable amount of the advantages which were given by the Act of 1894 in the case of settlements. Everyone who was in the House at the time and followed the Debates will recollect that Sir William Harcourt, in introducing the Bill, claimed to have given great advantages to settled property.
    I need not go into the reasons why. But he claimed to give considerable advantages to certain property, and the chief advantage he gave was this, that when once in the course of settlement the Death Duty was paid on the whole value of the estate, then the duty was not to again become payable until the estate fell into the hands of somebody with complete disposition of it. First we doubled the Settlement Duty and now by this Section we are going to cut down the benefits of the settlement. That is the result of the two Sections taken together. I agree with the right hon.

    1867
    Gentleman that there is really no point for argument on this Section. Although there may be some difference, there is no difference between Sub-section (2) and the one moved to be omitted by my hon. and learned Friend. It is quite true that the Clause to which my hon. and learned friend refers in his Amendment is a diminishing matter, because it refers to the Probate Duty payable before the Act of 1894–5, and is therefore from day to day passing out of existence, but the principle is really the same on the two Amendments. Let us try and see what it is. If you settle the property on A and leave it to B, C having the expectancy, the right hon. Gentleman says that should the person with expectancy (that is C) die before the tenants for life, the latter, when they come to pay the Death Duty do not pay on the whole estate because they deduct the value of the intervening or prior life. That is so, because when the life interest fell in there was no duty payable, and of the settlement there was no duty payable on the estate at all. But what does the right hon. Gentleman want us to do now? He wants, when the expectancy falls in, they should pay a part. Yes, but when the life estate falls in, you pay the duty on the life estate.
    If you are to pay on the full expectancy and on the falling in on the value of the life which you have deducted, then you will have paid on the whole value of the estate at one time of the existence of the estate. This Amendment goes further, because the expectancy may be very nearly the value of the whole estate. For instance, the life estate may be very old, and the expectancy may be an immediate one. Then again, on the falling in of the life estate you are asking the taxpayer to pay not merely what has been deducted, but the whole value. 'That is really, as I understand it, the whole matter. There are two Amendments down on the Paper, which put the matter exactly as it ought to be put, if you want really to arrive at what is the upshot of this Debate. If these Amendments were accepted you would not be having what was always contemplated, the payment on the full value of the estate during existing lives, but if this Amendment is carried in the form in which it is, you will have not merely that, but that which will amount almost to a double duty, which was never contemplated, and it becames all the more oppressive now, when
    1868
    you have doubled the Settlement Duty which would have had to be paid in relation to these very matters.
    Mr. HALDANE: The right hon. Gentleman has very clearly defined the point. I accept his view that the difference between us is this. We are claiming another duty. What was intended was this, as we see by the Act, that if the order of death was A, B, C, you would get the duty on A's death, no duty on B's, but another duty on C's. If by accident C dies in the lifetime of A, then you lose the duty on A's death, and you lose the duty on B's death, that is to say, you lose the whole duty. If the sequence is A, B, C, you get duty on A and C, but if the sequence of death is C, A, B, then you get no duty on A's death. The right hon. Gentleman has quite fairly denned the issue between the two sides of the House, and it is on that the Amendment turns.
    Sir E. CARSON: May I ask as to the meaning of the words of the Clause "other than the settlor." Is that to leave the law as it is?
    Mr. HALDANE: In a sense "Yes." We think it is substantial justice that no man should be taxed on his own property passing, and therefore we have put in those words "other than the settlor" in order to give exemption in that case.
    Mr. CAVE: I think we have now got something like a clear issue. Surely the intention of the Act of 1894 is that when property is settled in this way, and Settlement Estate Duty is paid, the estate shall be franked until the settlement comes to an end and the property comes into the possession of someone absolutely entitled. Apply that to the case of property settled by will on A for life, and then on B. You have paid Settlement Estate Duty. On A's death, it goes to B, and it is not until B. dies that a further Estate Duty accrues. No further Estate Duty accrues until the happening of the last of the two events—namely, the deaths of A arid B. Now take the other event for which we are providing. B happens to die first, and A dies afterwards. As the law now stands, again you do not get the second duty until the happening of the last of the two events—namely, the death of the survivor of A and B. That is a perfectly fair result, and it corresponds exactly with the first case, because in the other case you wait for the last event to pay your second duty. The Government are now providing in the second case that on the death of C you

    1869
    shall pay, not the whole duty, I agree, but what may be a substantial part of it. But on the happening of the second event—the death of A—you pay the whole duty over again. You are imposing on the estate an extra Estate Duty, which will make an exceedingly heavy burden. Everyone has said to-day that where deaths occur in succession on an estate of this kind, great hardship may accrue. By this provision you are increasing that hardship. There was a chance under the existing law of escaping the hardship for a time. You are taking away that chance. Is not the common sense of the matter this, that in a case where the reversioner dies first, the estate does not vest in anyone until the death of the first life tenant B? It is not until then that the estate really vests, and the settlement comes to an end, and therefore not until then should you pay the one duty in full. I adopt entirely the argument of the right hon. and learned Gentleman (Sir E. Carson), that as the law now stands the State gets rather too little because it does not get, in the case dealt with, the full Estate Duty. It only gets the Estate Duty less the value of the life interest, and I quite agree it would be fair to say that on the second death you shall get the balance, and that is the effect of the Amendment in my name. As matters stand you are imposing a very heavy extra liability, and it is a mere chance under this Clause whether the estate pays two duties or one. If A dies first it pays one. If B dies first it pays two. The effect of my proposal is that in either case it pays one full duty, and the proper duty upon the total value of the estate. With regard to the particular Amendment I quite agree that the cases are the same except in one respect. In this case C must have died at least fifteen years ago, and the parties who have been alive must have been acting under the law of 1894. I suggest that after fifteen years it is unfair to charge the Estate Duty. The man who is entitled to succeed has been relying en the old law, and there is that distinction between the two cases. Here you are going back fifteen years and changing the rate which has crystallised during that period. In that respect I think the Amendment has merit behind it, and I suggest that it might be accepted.
    12.0 P.M.
    Mr. BALFOUR: I am going to ask the Government a simple question. The hon. Member or North Paddington (Mr. Chiozza Money) pointed out that in the case of property owned n succession by several
    1870
    people who live for a short time, the Estate Duty paid in respect of that property would be very much greater than in the case of a property of equal value which only passed in forty years, and he admitted that the incidence of the duty is unequal and unfair. The attempt to avoid that was obvious in the Act of 1894. That may to a certain extent be avoided by the Clause giving the privilege which we have been discussing this afternoon. I understand that the Government, after considering the matter carefully, have come to the conclusion, on actuarial calculations, that the property under settlement got off too cheaply. I do not think it ought to get off cheaper than other property. It is agreed that, if we adopt the plan now proposed, it is in order to give some chance of equalising properties where deaths may occur in unduly rapid succession—that is to say, where the succession occurs in more than the average length of life in the settlement of the property. I entirely agree with my hon. and learned Friend that if, under the Settled Land Clauses, any special privileges are given to certain property, they should be abolished, but do not let us in abolishing them throw an extra burden on them in certain other eventualities. I think that would be unfair. I do not understand that to be the object of the Government, and the question I wish to ask them is this: Are they sure that in remedying what my hon. and learned Friend agrees is an undue privilege they are not imposing in other eventualities an undue burden? That is the real thing that they have got to convince us on. I do not think they have made that point clear. On this side of the House we do not wish to give an undue privilege to certain points, but let us be sure that we are not doing an injustice in certain contingencies. I am submitting now with great diffidence, as a non-legal Member of the House, what is the real thing to be aimed at, leaving it to the lawyers to tell me whether the two Clauses as now amended carry out that policy.
    Mr. HALDANE: The right hon. Gentleman asked first about the 1 per cent. It was calculated on what was then supposed to be likely to be the rate of duty. The 2 per cent. does not frank the present scale of duty. In both cases the settled Estate Duty returns to the Crown less than would be returned if matters had been left alone. That has been carefully calculated.
    Mr. BALFOUR: Even in exceptional cases I trust the Government to inform us accurately whether, if the order of death is not that of A, B, C in the illustration chosen, but B, C, A or C, A, B, what he says would equally apply?
    Mr. HALDANE: I should be much more cautious about answering that. Our view is that C, A, B is an order that cannot be provided for. We are taking the duty upon A. That is the very purpose of the Clause. The calculation of which I have spoken is based on the natural order of things. But when you come to the exceptional, cases, I am not so sure, because our view is we should have lost the duty if they ought to pay on A's death, and for that reason I would not like to say that I am sure as to what the right hon. Gentleman asks about in these exceptional cases.
    Mr. BALFOUR: On the general principle we are all agreed, but it ought not to matter whether the order is A, B, C, B, C, A, or C, A, B. Therefore, when the right hon. Gentleman tells me he is not quite sure on that point then the Government have not convinced me that the Clause is a fair Clause. They have not got to the bottom of the matter.
    Mr. HALDANE: Taking the duty as it will work out, even with the Amendment, it will be under 6&½ per cent. The average Estate Duty under the old order of things was 4&¾ per cent., and 1 per cent. did frank. Similarly the 2 per cent. was to frank the 6&½ per cent. It may be that in individual cases, like C, A, B, there will be a difference, but making allowance for these cases not happening, as they will not happen under our Amendment, though the 2 per cent. will not frank the whole of the cases taken, it will do so on the average as I have put them now. In other words, 2 per cent. is calculated to be very much on the footing of 1 per cent.
    Mr. AUSTEN CHAMBERLAIN: This is an extraordinary difficulty, and it has become a little more difficult for laymen, though it is being put into a shape in which they may venture to take some part in the discussion. My right hon. Friend's suggestion is that settled property ought to be treated exactly like the average of un-settled property. The advantage of a settlement was to make a large estate follow the average, which was the average of the whole of the other estates, and might not apply to any particular un-
    1872
    settled estate. The right hon. Gentleman said that even with the Amendments which the Government propose, the result would not be wholly attained, and that the settled estate would get off rather more cheaply than the unsettled estate. Therefore, as between settled and unsettled estates, the settled estates, I take it, are in a rather more favourable position.
    Mr. BALFOUR: What about C, A, B?
    Mr. HALDANE: C, A, B will not happen.
    Mr. AUSTEN CHAMBERLAIN: The right hon. Gentleman has advanced in his objection further than he advanced in his statement.
    Mr. HALDANE: I understood the right hon. Gentleman (Mr. Balfour) to put this case: Suppose the order of deaths were C, A, B, then would C, A, B be in the same position under the new state of things of 2 per cent. as before? I said I could not be sure about that, but I said, C, A, B, being eliminated, the whole of the case taken from the 2 per cent. would obtain.
    Mr. AUSTEN CHAMBERLAIN: We have got to this actual point. We have been enquiring whether if the deaths followed in the order of C, A, B, the result would be the same as if they followed in the order of A, B, C. Now the right hon. Gentleman says "No, the result would not be the same." If you cannot make things fair as between unsettled estates and settled estates, is that any reason why you should introduce disparity between the treatment of settled property and unsettled property? You have two cases of settled property both exactly the same. In the one case if A or B dies before C, you get one rate of duty, and in the other case, if C dies before A and B you get a different duty. What is the justification? Surely the right hon. Gentleman will say that as a fair thing they ought to get the same duty. If you have got settled estate at 1 per cent. or at 2 per cent., as it is now, the assumption is that that is, roughly, going to balance settled property as against unsettled property, and, in order to find out whether it does or not, you assume the average duration of settlement. The average of settlement depends upon C living. In the greater majority of cases C will be the longest life, and the one who will be expected to live longest. If C dies before A and B the settlement will fall, and it is only in that case you are going to collect additional duty. I

    1873
    think that really strikes at the whole basis of the proposal of the Government, and that the only end which is being disclosed by these discussions lies in the proposals of my hon. and learned Friend the Member for Kingston, that whatever the
    order of the death one full duty shall be paid, one and no more.
    Question put, "That the words proposed to be left out stand part of the Clause."
    The Committee divided: Ayes, 171; Noes, 89.

    Division No. 641.]

    AYES.

    [12.15 a.m.

    Acland, Francis Dyke

    Haworth, Arthur A.

    Priestley, Sir W. E. B. (Bradford, E.)

    Agnew, George William

    Hazel, Dr. A. E. W.

    Radford, G. H.

    Allen, A. Acland (christchurch)

    Helme, Norval Watson

    Rainy, A. Rolland

    Allen, Charles P. (Stroud)

    Henderson, Arthur (Durham)

    Rea, Rt. Hon. Russell (Gloucester)

    Ashton, Thomas Gair

    Higham, John Sharp

    Rendall, Athelstan

    Balfour, Robert (Lanark)

    Hobhouse, Rt. Hon. Charles E. H.

    Richards, Thomas (W. Monmouth)

    Baring, Godfrey (Isle of Wight)

    Hogan, Michael

    Richards, T. F. (Wolverhampton, W.)

    Barker, Sir John

    Holt, Richard Durning

    Ridsdale, E. A.

    Barnard, E. B.

    Hooper, A. G.

    Roberts, Charles H. (Lincoln)

    Barran, Sir John Nicholson

    Hope, John Deans (Fife, West)

    Roberts, G. H. (Norwich)

    Beauchamp, E.

    Horniman, Emslie John

    Roberts, Sir J. H. (Denbighs.)

    Beaumont, Hon. Hubert

    Howard, Hon. Geoffrey

    Robertson, Sir G. Scott (Bradford)

    Berridge, T. H. D.

    Isaacs, Rufus Daniel

    Robinson, S.

    Birrell, Rt. Hon. Augustine

    Jardine, Sir J.

    Robson, Sir William Snowdon

    Black, Arthur W.

    Jones, Sir D. Brynmor (Swansea)

    Roch, Walter F. (Pembroke)

    Boulton, A. C. F.

    Jones, Leif (Appleby)

    Roe, Sir Thomas

    Bowerman, C. W.

    Jones, William (Carnarvonshire)

    Rogers, F. E. Newman

    Brace, William

    King, Alfred John (Knutsford)

    Rose, Sir Charles Day

    Bright, J. A.

    Laidlaw, Robert

    Rutherford, V. H. (Brentford)

    Brunner, J. F. L. (Lanes., Leigh)

    Lambert, George

    Samuel, S. M. (Whitechapel)

    Bryce, J. Annan

    Lamont, Norman

    Scarisbrick, Sir T. T. L.

    Buckmaster, Stanley o.

    Layland-Barrett, Sir Francis

    Schwann, C. Duncan (Hyde)

    Burns, Rt. Hon. John

    Lea, Hugh Cecil (St. Pancras, E.)

    Schwann, Sir C. E. (Manchester)

    Buxton, Rt. Hon. Sydney Charles

    Levy, Sir Maurice

    Seely, Colonel

    Byles, William Pollard

    Lewis, John Herbert

    Shackleton, David James

    Carr-Gomm, H. W.

    Lloyd-George, Rt. Hon. David

    Sherwell, Arthur James

    Cawley, Sir Frederick

    Lupton, Arnold

    Simon, John Allsebrook

    Cherry, Rt. Hon. R. R.

    Lynch, H. B.

    Stanger, H. Y.

    Clough, William

    Macdonald, J. R. (Leicester)

    Stanley, Hon. A. Lyulph (Cheshire)

    Clynes, J. R.

    Maclean, Donald

    Stewart-Smith, D. (Kendal)

    Cobbold, Felix Thornley

    Macnamara, Dr. Thomas J.

    Strachey, Sir Edward

    Collins, Stephen (Lambeth)

    MacVeagh, Jeremiah (Down, S.)

    Strauss, E. A. (Abingdon)

    Collins, Sir Wm. J. (St. Pancras, W.)

    M'Laren, Sir C. B. (Leicester)

    Summerbell, T.

    Cooper, G. J.

    M'Laren, H. D. (Stafford, W.)

    Taylor, John W. (Durham)

    Corbett, C. H. (Sussex, E. Grinstead)

    Maddisen, Frederick

    Tennant, H. J. (Berwickshire)

    Cornwall, Sir Edwin A.

    Mallet, Charles E.

    Thompson, J. W. H. (Somerset, E.)

    Cotton, Sir H. J. S.

    Markham, Arthur Basil

    Thorne, G. R. (Wolverhampton)

    Davies, Timothy (Fulham)

    Marnham, F. J.

    Trevelyan, Charles Philips

    Davies, Sir W. Howell (Bristol, S.)

    Massie, J.

    Verney, F. W.

    Dewar, Arthur (Edinburgh, S.)

    Masterman, C. F. G.

    Vivian, Henry

    Dickinson, W. H. (St. Pancras, N.)

    Middlebrook, William

    Ward, W. Dudley (Southampton)

    Dobson, Thomas W.

    Morgan, J. Lloyd (Carmarthen)

    Wason, Rt. Hon. E. (Clackmannan)

    Dunne, Major E. Martin (Walsall)

    Morrell, Philip

    Wason, John Cathcart (Orkney)

    Erskine, David C.

    Morse, L. L.

    White, Sir George (Norfolk)

    Essex, R. W.

    Myer, Horatio

    White, J. Dundas (Dumbartonshire)

    Esslement, George Blrnie

    Newnes, F. (Notts. Bassetlaw)

    White, Sir Luke (York, E.R.)

    Evens, Sir Samuel T.

    Nicholson, Charles N. (Doncaster)

    Whittaker, Rt. Hon. Sir Thomas P.

    Everett, R. Lacey

    Norman, Sir Henry

    Wiles, Thomas

    Ferguson, R. C. Munro

    Nussey, Sir Willans

    Williams, J. (Glamorgan)

    Fuller, John Michael F.

    Nuttall, Harry

    Williams, W. Llewelyn (Carmarthen)

    Fullerton, Hugh

    O'Brien, K. (Tipperary, Mid)

    Wilson, J. W. (Worcestershire, N.)

    Gill, A. H.

    O'Grady, J.

    Wilson, P. W. (St. Pancras, S.)

    Glover, Thomas

    Parker, James (Halifax)

    Wilson, W. T. (Westhoughton)

    Gooch, George Peabody (Bath)

    Partington, Oswald

    Winfrey, R.

    Haldane, Rt. Hon. Richard B.

    Pearce, Robert (Staffs, Leek)

    Wood, T. M'Kinnon

    Harcourt, Rt. Hon. L. (Rossendale)

    Pickersgill, Edward Hare

    Harcourt, Robert V. (Montrose)

    Pointer, J.

    TELLERS FOR THE AYES.—Mr.

    Harmsworth, Cecil B. (Worcester)

    Ponsonby, Arthur A. W. H.

    Joseph Pease and Captain Norton.

    Harmsworth, R. L. (Caithness-shire)

    NOES.

    Acland-Hood, Rt. Hon. Sir Alex. F.

    Bridgeman, W. Clive

    Courthope, G. Loyd

    Anson, Sir William Reynell

    Carlile, E. Hildred

    Craig, Charles Curtis (Antrim, S.)

    Balcarres, Lord

    Carson, Rt. Hon. Sir Edward H.

    Craig, Captain James (Down, E.)

    Baldwin, Stanley

    Castlereagh, Viscount

    Dalrymple, Viscount

    Balfour, Rt. Hon. A. J. (City, Lond.)

    Cave, George

    Dickson, Rt. Hon. C. Scott-

    Banbury, Sir Frederick George

    Cecil, Evelyn (Aston Manor)

    Doughty, Sir George

    Banner, John S. Harmood-

    Chamberlain, Rt. Hon. J. A. (Worc'r.)

    Douglas, Rt. Hon. A. Akers-

    Baring, Capt. Hon. G. (Winchester)

    Chaplin, Rt. Hon. Henry

    Faber, George Denison (York)

    Barrie, H. T. (Londonderry, N.)

    Clive, Percy Archer

    Fell, Arthur

    Bowles, G. Stewart

    Coates, Major E. F. (Lewisham)

    Fletcher, J. S.

    Forster, Henry William

    King, Sir Henry Seymour (Hull)

    Salter, Arthur Clavell

    Foster, P. S.

    Lane-Fox, G. R.

    Scott, Sir S. (Marylebone, W.)

    Gibbs, G. A. (Bristol, West)

    Long, Col. Charles W. (Evesham)

    Stanier, Beville

    Gordon, J.

    Lyttelton, Rt. Hon. Alfred

    Starkey, John R.

    Guinness, Hon. W. E. (B. S. Edm'ds.)

    Mason, James F. (Windsor)

    Staveley-Hill, Henry (Staffordshire)

    Haddock, George B.

    Meysey-Thompson, E. C.

    Talbot, Lord E. (Chichester)

    Hamilton, Marquess of

    Moore, William

    Valentia, Viscount

    Hardy, Laurence (Kent, Ashford)

    Morpeth, Viscount

    Walker, Col. W. H. (Lancashire)

    Harris, Frederick Leverton

    Nicholson, Wm. G. (Petersfield)

    Walrond, Hon. Lionel

    Hay, Hon. Claude George

    Pease, Herbert Pike (Darlington)

    Warde, Col. C. E. (Kent, Mid)

    Hermon-Hodge, John

    Peel, Hon. W. Robert Wellesley

    Williams, Col. R. (Dorset, W.)

    Hill, Sir Clement

    Percy, Earl

    Wilson, A. Stanley (York, E.R.)

    Hope, James Fitzlan (Sheffield)

    Pretyman, E. G.

    Wyndham, Rt. Hon. George

    Hunt, Rowland

    Renwick, George

    Younger, George

    Joynson-Hicks, William

    Roberts, S. (Sheffield, Ecclesall)

    Kerry, Earl of

    Ronaldshay, Earl of

    TELLERS FOR THE NOES.—Mr.

    Keswick, William

    Rutherford, Watson (Liverpool)

    J. W. Hills and Mr. Joynson Hicks.

    Mr. SAMUEL ROBERTSmoved in Subsection (1) to leave out the word "whether" ["liability to duty, whether the payment was made"] and to insert instead thereof the word "where."
    I hope that the Government will see their way to accept this short Amendment. The right hon. Gentleman has told us the reason the Government wish to alter the law, and the Chancellor of the Exchequer in his Budget speech told us that the law as interpreted was not the intention of the Act, of 1894. It is really to prevent the operation of the Act being retrospective. In the case of A, B and C that has been given to us by the Secretary for War, my Amendment is that C must die after the 30th April of this year. If otherwise, great injustice might be done, for C's representatives might have over the property, the reversion, or undertaken their arrangements on the understanding, as the law was then, that no further Estate Duty was to be paid. My Amendment is that if the law is to be altered—and the last division I suppose has settled that point—it ought not to do an injustice by being retrospective. C's death must occur after the alteration of the law.
    Mr. HALDANE: We cannot accept this Amendment. In the case defined, A had no right to expect C's death in his lifetime.
    Mr. S. ROBERTS: I was dealing with C's representatives.
    Mr. HALDANE: But C is not dead. Otherwise C's representatives would have to pay.
    Mr. S. ROBERTS: C's representatives have paid.
    Mr. CAVE: The case is simply this. The estate has been settled on A for life, with remainder to C. C has died, and the reversion on the death of A has
    1876
    become vested in D. The point my hon. Friend makes is this. As the matter now stands, D has had reversion free from any further Estate Duty. That is the law as it stands; he has made his arrangements, upon that basis; he will come into a net estate when the present life tenant dies. You are now going to change all that, and you say when the present life-tenant dies, the new man will have to pay large estate duties. In that way you are making the duty retrospective. You are, as has been said, taking a chunk out of the estate on this reversion. You make him pay something he has hitherto not been required to pay. I quite agree that when the reversion is sold you are going to save the purchaser by a new Clause. But if there is no sale, you are going to make the duty retrospective by a new law.
    Mr. HALDANE: What we are doing is to make clear what the Resolution says—namely, that there should be a duty on the death of A according to the original intention of the settlement.
    Mr. PRETYMAN: It is clear you are going to make it retrospective. Under the present law you may have made a bargain with the State and the State may have taken the money and put it into its pocket, and you may have sold to someone else, and the State comes down and says that, although the bargain occurred and the money has been paid to the State we are going to take this money retrospectively.
    Mr. HALDANE: Under the Act of 1894 that was done wholesale in the case of the Succession Duties. In the Act of 1894 there was a Clause for the protection of purchasers and mortgagees. That is right enough, because mortgagees and purchasers are strangers dealing with the property, but in the case of settled property we dealt with the matter in retrospect just as much under the Act of 1894 as now.
    Mr. S. ROBERTS: The right hon. Gentleman has not answered my question. If C dies before the 30th April this year, the people who stand in C's shoes take the property on the understanding that there will be no further Estate Duty to be paid. My Amendment says that if C dies before the 30th April, the people who stand in his shoes shall not be liable to second Estate Duty.
    Mr. HALDANE: The hon. member means the duty paid on A's death. It is the intention of the Clause to impose the duty on A's death.
    Question put, "That the word 'whether' stand part of the Clause."
    The Committee divided: Ayes, 155; Noes, 71.

    Division No. 642.]

    AYES.

    [12.35 a.m.

    Acland, Francis Dyke

    Hazel, Dr. A. E. W.

    Priestley, Sir W. E. B. (Bradford, E.)

    Agnew, George William

    Helme, Norval Watson

    Radford, G. H.

    Allen, A. Acland (Christchurch)

    Higham, John Sharp

    Rea, Rt. Hon. Russell (Gloucester)

    Allen, Charles P. (Stroud)

    Hobhouse, Rt. Hon. Charles E. H.

    Rendall, Athelstan

    Ashton, Thomas Gair

    Hogan, Michael

    Richards, Thomas (W. Monmouth)

    Balfour, Robert (Lanark)

    Holt, Richard Durning

    Richards, T. F. (Wolverhampton, W.)

    Baring, Godfrey (Isle of Wight)

    Hooper, A. G.

    Ridsdale, E. A.

    Barker, Sir John

    Hope, John Deans (Fife, West)

    Roberts, Charles H. (Lincoln)

    Barnard, E. B.

    Horniman, Emslie John

    Roberts, G. H. (Norwich)

    Barran. Sir John Nicholson

    Howard, Hon. Geoffrey

    Roberts, Sir J. H. (Denbighs)

    Beauchamp, E.

    Isaacs, Rufus Daniel

    Robertson, Sir G. Scott (Bradford).

    Beaumont, Hon. Hubert

    Jones, Sir D. Brynmor (Swansea)

    Robinson, S.

    Berridge, T. H. D.

    Jones, Leif (Appleby)

    Robson, Sir William Snowdon

    Birrell, Rt. Hon. Augustine

    Jones, William (Carnarvonshire)

    Roch, Walter F. (Pembroke)

    Black, Arthur W.

    King, Alfred John (Knutsford)

    Roe, Sir Thomas

    Bowerman, C. W.

    Laidlaw, Robert

    Rogers, F. E. Newman

    Brace, William

    Lambert, George

    Rutherford, V. H. (Brentford)

    Bright, J. A.

    Lamont, Norman

    Samuel, S. M. (Whitechapel)

    Brunner, J. F. L. (Lanes., Leigh)

    Layland-Barratt, Sir Francis

    Scarisbrick, Sir T. T. L.

    Bryce, J. Annan

    Lea, Hugh Cecil (St. Pancras, E.)

    Seely, Colonel

    Buckmaster, Stanley o.

    Levy, Sir Maurice

    Sherwell, Arthur James

    Burns, Rt. Hon. John

    Lewis, John Herbert

    Simon, John Allsebrook

    Byles, William Pollard

    Lloyd-George, Rt. Hon. David

    Stanger, H. Y.

    Carr-Gomm, H. W.

    Lupton, Arnold

    Stanley, Hon. A. Lyulph (Cheshire))

    Cherry, Rt. Hon. R. R.

    Macdonald, J. R. (Leicester)

    Stewart-Smith, D. (Kendal)

    Clough, William

    Maclean, Donald

    Strachey, Sir Edward

    Clynes, J. R.

    Macnamara, Dr. Thomas J.

    Strauss, E. A. (Abingdon)

    Cobbold, Felix Thornley

    MacVeagh, Jeremiah (Down, S.)

    Summerbell, T.

    Collins, Sir Vim. J. (St. Pancras, W.)

    M'Laren, Sir C. B. (Leicester)

    Taylor, John W. (Durham)

    Cooper, G. J.

    M'Laren, H. D. (Stafford, W.)

    Tennant, H. J. (Berwickshire)

    Corbett, C. H. (Sussex, E. Grinstead)

    Maddison, Frederick

    Thompson, J. W. H. (Somerset, E.)

    Cornwall, Sir Edwin A.

    Mallet, Charles E.

    Thorne, G. R. (Wolverhampton)

    Cotton, Sir H. J. S.

    Markham, Arthur Basil

    Trevelyan, Charles Philips

    Davies, Timothy (Fulham)

    Marnham, F. J.

    Verney, F. W.

    Davies, Sir W. Howell (Bristol, S.)

    Massie, J.

    Vivian, Henry

    Dewar, Arthur (Edinburgh, S.)

    Masterman, C. F. G.

    Ward, W. Dudley (Southampton)

    Dickinson, W. H. (St. Pancras, N.)

    Middlebrook, William

    Wason, Rt. Hon. E. (Clackmannan)

    Dobson, Thomas W.

    Money, L. G. Chiozza

    Wason, John Cathcart (Orkney)

    Dunne, Major E. Martin (Walsall)

    Morrell, Philip

    White, Sir George (Norfolk)

    Erskine, David C.

    Morse, L. L.

    White, J. Dundas (Dumbartonshire)

    Essex, R. W.

    Myer, Horatio

    White, Sir Luke (York, E.R.)

    Esslemont, George Birnie

    Newnes, F. (Notts, Bassetlaw)

    Whittaker, Rt. Hon. Sir Thomas P.

    Evans, Sir Samuel T.

    Nicholson, Charles N. (Doncaster)

    Wiles, Thomas

    Everett, R. Lacey

    Norman, Sir Henry

    Williams, J. (Glamorgan)

    Fuller, John Michael F.

    Nussey, Sir Willans

    Williams, W. Llewelyn (Carmarthen)

    Fullerton, Hugh

    Nuttall, Harry

    Wilson, J. W. (Worcestershire, N.)

    Glover, Thomas

    O'Brien, K. (Tipperary, Mid)

    Wilson, W. T. (Westhoughton)

    Gooch, George Peabody (Bath)

    Parker, James (Halifax)

    Winfrey, R.

    Haldane, Rt. Hon. Richard B.

    Partington, Oswald

    Wood, T. M'Kinnon

    Harcourt, Rt. Hon. L. (Rossendale)

    Pearce, Robert (Staffs, Leek)

    Harcourt, Robert V. (Montrose)

    Pickersgill, Edward Hare

    TELLERS FOR THE AYES.—Mr.

    Harmsworth, R. L. (Caithness-shire)

    Pointer, J.

    Joseph Pease and Captain Norton.

    Haworth, Arthur A.

    Ponsonby, Arthur A. W. H.

    NOES.

    Acland-Hood, Rt. Hon. Sir Alex. F.

    Beach, Hon. Michael Hugh Hicks

    Chamberlain, Rt. Hon. J. A. (Worc'r.)

    Anson, Sir William Reynell

    Bowles, G. Stewart

    Chaplin, Rt. Hon. Henry

    Balcarres, Lord

    Bridgeman, W. Clive

    Coates, Major E. F. (Lewisham)

    Baldwin, Stanley

    Carlile, E. Hildred

    Courthope, G. Loyd

    Banbury, Sir Frederick George

    Carson, Rt. Hon. Sir Edward H.

    Craig, Charles Curtis (Antrim, S.)

    Banner, John S. Harmood-

    Castlereagh, Viscount

    Craig, Captain James (Down, E.)

    Baring, Capt. Hon. G. (Winchester)

    Cave, George

    Dalrymple, Viscount

    Barrie, H. T. (Londonderry, N.)

    Cecil, Evelyn (Aston Manor)

    Dickson, Rt. Hon. C. Scott-

    Doughty, Sir George

    Joynson-Hicks, William

    Salter, Arthur Clavell

    Douglas, Rt. Hon. A. Akers-

    Kerry, Earl of

    Scott, Sir S. (Marylebone, W.)

    Faber, George Denison (York)

    King, Sir Henry Seymour (Hull)

    Stanier, Beville

    Fell, Arthur

    Lane-Fox, G. R.

    Starkey, John R.

    Forster, Henry William

    Long, Col. Charles W. (Evesham)

    Staveley-Hill, Henry (Staffordshire)

    Foster, P. S.

    Lyttelton, Rt. Hon. Alfred

    Talbot, Lord E. (Chichester)

    Gibbs, G. A. (Bristol, West)

    Mason, James F. (Windsor)

    Valentia, Viscount

    Gordon, J.

    Meysey-Thompson, E. C.

    Walrond, Hon. Lionel

    Guinness, Hon. W. E. (B. S. Edmunds)

    Moore, William

    Warde, Col. C. E. (Kent, Mid)

    Haddock, George B.

    Morpeth, Viscount

    Williams, Col. R. (Dorset, W.)

    Hamilton, Marquess of

    Nicholson, Win. G. (Petersfield)

    Wilson, A. Stanley (York, E.R.)

    Hardy, Laurence (Kent, Ashford)

    Pease, Herbert Pike (Darlington)

    Wyndham, Rt. Hon. George

    Hay, Hon. Claude George

    Peel, Hon. W. Robert Wellesley

    Younger, George

    Hermon-Hodge, Sir Robert

    Percy, Earl

    Hill, Sir Clement

    Pretyman, E. G.

    TELLERS FOR THE NOES.—Mr.

    Hope, James Fitzalan (Sheffield)

    Ronaldshay, Earl of

    Samuel Roberts and Mr. J. W. Hills

    Hunt, Rowland

    Rutherford, Watson (Liverpool)

    Mr. HALDANEmoved to leave out the word "and" ["attached in respect of an interest in expectancy in any property and"].
    Sir E. CARSON: I think before this Amendment is made we ought to have some explanation. It will, as I understand, Involve leaving out thirteen lines of the Bill. I think we really ought to know why they were put in. Did they get in by inadvertence; was it the fault of the draftsman, or was there an arrangement with anybody which was afterwards repudiated? Is it a case of the small bottle and the grocer over again? The Government seems to think it makes no matter whether they put in or strike thirteen lines out without the slightest reason. The Secretary of State for War earlier said that it was quite clear if the word "expectancy" had been in, these words would never have been there at all. He said that because somehow or other the words "interested expectancy" had appeared in some previous part, therefore these 13 lines should be omitted.
    Mr. HALDANE: I agree that the right hon. and learned Gentleman is entitled to some explanation. It is a perfectly reasonable request. This Clause is now very different from what it was when it was originally drafted, and as the words "interested expectancy" were not then in it, it was felt right to include these lines. But as soon as we got them in by virtue of one of the Sub-sections, it was no longer necessary to draw a distinction between the case which was only an expectancy and that which was not. The omission of these words is, theoretically speaking, in favour of the subject, for it lessens the chance of taxation.
    Mr. PRETYMAN: The explanation of the right hon. Gentleman is no doubt a very lucid one, but the unfortunate part is that the words "interested expectancy"
    1880
    were included in the original draft. What we asked the right hon. Gentleman to explain was why these words, which are now to be removed, appeared in the Clause. He tells us that they have been rendered unnecessary, and that in order to render them unnecessary the words "interested expectancy" were inserted. But why were they not taken out when these words were not in? I am afraid it rather looks as if this explanation had been discovered somewhat late in the day.
    Mr. HALDANE: The words as they stand now will work all right. The omission of these lines will be theoretically in favour of the subject.
    Question, "That the words proposed to be left out stand part of the Clause," put, and negatived.
    Amendment made: To leave out after the word "settlor" ["other than the settlor"] the words, "who—

    (a) was at the time of his death competent to dispose of the property; or

    (b) in the case of a claim to relief under Sub-section (2) of Section 5 of the principal Act, had been at any time during the continuance of the settlement competent to dispose of the property, and if on his death subsequent limitations under the settlement take effect in respect of the property, was sui juris at the time of his death, or had been sui juris at any time, while so competent to dispose of the property; or

    (c) in the case of a claim to relief under Sub-section (1) of Section 21 of the principal Act, had been at any time since the will or disposition by which the settlement was made took effect, competent to dispose of the property."

    —[Sir W. Robson.]
    Mr. JOYNSON-HICKSmoved after the words left in the Clause to add: "Provided that any property which shall be-

    1881 come, chargeable to duty under this Section, and which but for this Section would not have been so chargeable, shall if liable to be aggregated with other property under the principal Act and the Acts amending the same instead of being so aggregated be treated as an estate by itself."
    I do not propose to go over the A, B, and C, and the C, A, B again, but I would suggest to the Government that as they are proposing this new additional tax, and as it might be rather difficult to determine whether the aggregation is on the life of A or B, they should make it a separate estate and do without aggregation. It is perfectly clear that they are stopping up a gap in the old Act of 1894, and I think they might have two duties, one payable on the death of A and another on the death of B. That might be at different rates of duty according to the aggregation of the two estates of A and B. I think in those cases they might leave out the aggregation, as there is really no occasion for it.
    Sir WILLIAM ROBSON: The hon. Member, I think, has not suggested any reason whatever why property generally which is made subject to the duty of this Clause should be separated from the rest of the assets so as not to come into aggregation. It would be making a totally unnecessary distinction in the case of property which is just as much property to be aggregated as any other property of the deceased. There is no reason for the exemption of this class of property from aggregation.
    Mr. CLAVELL SALTER: I think, considering the way in which it is proposed to deal with certain property in this Clause, that this proposed indulgence might be granted. It is proposed to deal as it seems to me with very scant justice with the class of settled property to which this Clause is applied, and it is to be applied to a very
    large number of cases, because we were told in the Budget speech that no less than a quarter of a million a year was to be realised by this proposed change. What is proposed to be done appears to me to be hardly fair and consistent. Settled property pays Estate Duty on fewer occasions than unsettled property. To counterbalance it pays through the Settlement Estate Duty at a higher rate, and what is proposed to be done is in all these cases to treat settled property for the purpose of determining the occasion when it is to be paid as though it were unsettled property, and when it comes to determine the rate at which it is to be paid then it is to be treated as settled property. This property ought not to be treated in this exceptional manner, to its disadvantage in both cases. It is to be treated as settled property for the purpose of making it pay at a higher rate than it otherwise would pay. It ought to be made to pay on those occasions which are proper only for settled property, and not unsettled property. It is most unfair to the owner of such property to tell him first that although his property is settled it is to be treated as unsettled property for the purpose of making him pay, and when he turns round and says: "If you are treating my property, though it is settled, as unsettled, I presume I shall pay at the rate appropriate to unsettled property," he is told it is settled property and he must pay at that rate. That is a most unfair and inconsistent way of dealing; with a large amount of settled property, and I think the very small indulgence which my hon. Friend has asked, which affects only the rate at which the duty is to be paid, might very reasonably be. conceded.
    Question put, "That those words be there added."
    The Committee divided: Ayes, 60; Noes, 137.

    Division No; 643.]

    AYES.

    [1.0 a.m.

    Acland-Hood, Rt. Hon. Sir Alex. F.

    Cave, George

    Guinness, Hon. W. E. (B. S. Edmunds)

    Anson, Sir William Reynell

    Cecil, Evelyn (Aston Manor)

    Hamilton, Marquess of

    Balcarres, Lord

    Coates, Major E. F. (Lewisham)

    Hardy, Laurence (Kent, Ashford)

    Baldwin, Stanley

    Courthope, G. Loyd

    Hay, Hon. Claude George

    Banbury, Sir Frederick George

    Craig, Charles Curtis (Antrim, S.)

    Hill, Sir Clement

    Banner, John S. Harmood-

    Craig, Captain James (Down, E.)

    Hills, J. W.

    Baring, Cant. Hon. G. (Winchester)

    Dalrymple, Viscount

    Hope, James Fitzalan (Sheffield)

    Barrie, H. T. (Londonderry, N.)

    Dickson, Rt. Hon. C. Scott

    Hunt, Rowland

    Beach, Hon. Michael Hugh Hicks

    Douglas, Rt. Hon. A. Akers-

    Kerry, Earl of

    Bowles, G. Stewart

    Faber, George Denison (York)

    King, Sir Henry Seymour (Hull)

    Bridgeman, W. Clive

    Forster, Henry William

    Lane-Fox, G. R.

    Carlile, E. Hildred

    Foster, P. S.

    Long, Col. Charles W. (Evesham)

    Carson, Rt. Hon. Sir Edward H.

    Gibbs, G. A. (Bristol, West)

    Lyttelton, Rt. Hon. Alfred

    Castlereagh, Viscount

    Gordon, J.

    Mason, James F. (Windsor)

    Moore, William

    Scott, Sir S. (Marylebone, W.)

    Williams, Col. R. (Dorset, W.)

    Morpeth, Viscount

    Stanier, Beville

    Wilson, A. Stanley (York, E.R

    Nicholson, Wm. G. (Petersfield)

    Starkey, John R.

    Wyndham, Rt. Hon. George

    Pease, Herbert Pike (Darlington)

    Staveley-Hill, Henry (Staffordshire)

    Younger, George

    Pretyman, E. G.

    Talbot, Lord E. (Chichester)

    Roberts, S. (Sheffield, Ecclesall)

    Valentia, Viscount

    TELLERS FOR THE AYE.—Mr.

    Ronaldshay, Earl of

    Warde, Col. C. E. (Kent, Mid)

    Joynson-Hicks and Mr. Salte

    NOES.

    Acland, Francis Dyke

    Helme, Norval Watson

    Priestley, Sir W. E. B. (Bradford, E.)

    Agnew, George William

    Higham, John Sharp

    Radford, G. H.

    Allen, A. Acland (Christchurch)

    Hobhouse, Rt. Hon. Charles E. H.

    Rendall, Athelstan

    Allen, Charles P. (Stroud)

    Hogan, Michael

    Richards, Thomas (W. Monmouth)

    Ashton, Thomas Gair

    Holt, Richard Durning

    Richards, T. F. (Wolverhampton, W.)

    Balfour, Robert (Lanark)

    Hooper, A. G.

    Roberts, Charles H. (Lincoln)

    Barnard, E. B.

    Horniman, Emslie John

    Robertson, Sir G. Scott (Bradford)

    Barran, Sir John Nicholson

    Howard, Hon. Geoffrey

    Robinson, S.

    Beauchamp, E.

    Isaacs, Rufus Daniel

    Robson, Sir William Snowdon

    Berridge, T. H. D.

    Jones, Sir D. Brynmor (Swansea)

    Roch, Walter F. (Pembroke)

    Black, Arthur W.

    Jones, Leif (Appleby)

    Roe, Sir Thomas

    Bowerman, C. W.

    Jones, William (Carnarvonshire)

    Rogers, F. E. Newman

    Brace, William

    King, Alfred John (Knutsford)

    Rutherford, V. H. (Brentford)

    Bright, J. A.

    Laidlaw, Robert

    Samuel, S. M. (Whitechapel)

    Brunner, J. F. L. (Lanes., Leigh)

    Lambert, George

    Scarisbrick, Sir T. T. L.

    Bryce, J. Annan

    Lamont, Norman

    Seely, Colonel

    Buckmaster, Stanley o.

    Layland-Barratt, Sir Francis

    Sherwell, Arthur James

    Burns, Rt. Hon. John

    Levy, Sir Maurice

    Simon, John Allsebrook

    Byles, William Pollard

    Lupton, Arnold

    Stanger, H. Y.

    Carr-Gomm, H. W.

    Macdonald, J. R. (Leicester)

    Stanley, Hon. A. Lyulph (Cheshire)

    Cherry, Rt. Hon. R. R.

    Maclean, Donald

    Stewart-Smith, D. (Kendal)

    Clough, William

    Macnamara, Dr. Thomas J.

    Strachey, Sir Edward

    Clynes, J. R.

    MacVeagh, Jeremiah (Down, S.)

    Strauss, E. A. (Abingdon)

    Cobbold, Felix Thornley

    M'Laren, H. D. (Stafford, W.)

    Summerbell, T.

    Collins, Sir Wm. J. (St. Pancras, W.)

    Maddison, Frederick

    Taylor, John W. (Durham)

    Corbett, C. H. (Sussex, E. Grinstead)

    Mallet, Charles E.

    Tennant, H. J. (Berwickshire)

    Cotton, Sir H. J. S.

    Markham, Arthur Basil

    Thompson, J. W. H. (Somerset, E.)

    Davies, Sir W. Howell (Bristol, S.)

    Marnham, F. J.

    Thorne, G. R. (Wolverhampton)

    Dewar, Arthur (Edinburgh, S.)

    Massie, J.

    Trevelyan, Charles Philips

    Dickinson, W. H. (St. Pancras, N.)

    Masterman, C. F. G.

    Verney, F. W.

    Dobson, Thomas W.

    Middlebrook, William

    Ward, W. Dudley (Southampton)

    Dunne, Major E. Martin (Walsall)

    Money, L. G. Chiozza

    Wason, Rt. Hon. E. (Clackmannan)

    Erskine, David C.

    Morrell, Philip

    Wason, John Cathcart (Orkney)

    Essex, R. W.

    Morse, L. L.

    White, Sir George (Norfolk)

    Esslemont, George Birnie

    Myer, Horatio

    White, J. Dundas (Dumbartonshire)

    Evans, Sir Samuel T.

    Newnes, F. (Notts, Bassetlaw)

    White, Sir Luke (Yorks, E.R.)

    Everett, R. Lacey

    Nicholson, Charles N. (Doncaster)

    Whittaker, Rt. Hon. Sir Thomas P.

    Fuller, John Michael F.

    Norman, Sir Henry

    Wiles, Thomas

    Fullerton, Hugh

    Nussey, Sir Willans

    Williams, J. (Glamorgan)

    Glover, Thomas

    Nuttall, Harry

    Williams, W. Llewelyn (Carmarthen)

    Gooch, George Peabody (Bath)

    O'Brien, K. (Tipperary, Mid)

    Wilson, J. W. (Worcestershire, N.)

    Haldane, Rt. Hon. Richard B.

    Parker, James (Halifax)

    Wilson, W. T. (Westhoughton)

    Harcourt, Rt. Hon. L. (Rossendale)

    Partington, Oswald

    Winfrey, R.

    Harcourt, Robert V. (Montrose)

    Pearce, Robert (Staffs, Leek)

    Harmsworth, R. L. (Caithness-shire)

    Pickersgill, Edward Hare

    TELLERS FOR THE NOES.—Mr.

    Haworth, Arthur A.

    Pointer, J.

    Joseph Pease and Captain Norton.

    Hazel, Dr. A. E. W.

    Ponsonby, Arthur A. W. H.

    Mr. CAVEmoved to add at the end of the Clause:
    "Provided always that in all cases where, but for this proviso, a claim to duty under this Section would arise by reason of I the passing of property on death no greater amount of Estate Duty shall be chargeable on such death than the Estate Duty chargeable on the principal value of the property passing on such death, less a deduction of the amount of the Estate or Probate (as the case may be) Duty which has already been paid or for which liability has already attached in respect of an interest in expectancy in such property of the character mentioned in this Section."
    1884
    This has been discussed already, and therefore I am not going into it; but I want to say that I think the Government, without intending it, are over-reaching the subject by the imposition of this duty. The effect of the Clause is that, in the event of the reversioner dying before the life-tenant, you are exacting two duties, first the duty on the reversion when the reversioner dies, and secondly the duty on the whole estate on the death of the life-tenant. We have agreed right through that you ought to have one whole duty, and that is the object of this Amendment. If you reject it you will have two duties, and you will exact from a man the very duty from which he has obtained exemption. Unless-

    1885
    you accept the Amendment you are not keeping faith with the man who pays Settled Estate Duty.
    Mr. HALDANE: In substance, as the hon. and learned Gentleman said, we did discuss this Amendment in the course of the earlier argument, because the contention, which was the subject of a division, was that we were entitled to a full duty on the death of A, and for better or for worse that proposition was accepted. Why should you make any deduction on the duty payable on the death of C? True it is that that duty is small; so much the better for C's estate. But the whole point with which the Amendment has been concerned is not the duty on C's estate but the duty on A's estate, and virtually the Committee has already come to the conclusion that there should be a full duty on A's estate.
    Mr. PRETYMAN: Really I do not think the right hon. Gentleman has stated the whole case, because he omitted to mention the somewhat important fact that C never had the property at all. It really has some bearing on the case.
    Mr. HALDANE: It is not necessary for the purpose of the Death Duty that the owner should be necessarily in possession. He has an expectancy sometimes of enormous value.
    Mr. PRETYMAN: But C had the property in expectancy only. He never possessed it, and the expectancy is only worth something less than the whole. On A's death and on C's death both duties payable were covered by the partial payment on C's death only. That is the present state of the law. The Government now claim not only the full duty on A's death, but the partial duty on C's death as well, so that instead of having a partial duty only you are to have a partial duty and a whole duty, although a bargain has been made with the State that only one duty should be paid on a settlement. That is the clear fact. Settlement of Estate Duty is payable simply for no other reason than that the duty in that settlement should be limited to one payment. C has an interest in expectancy only, and
    he disposes of his interest in expectancy to D. Does the right hon. Gentleman maintain for one moment that it is not the fact that because C does not pay the duty, D will have to pay it?
    Mr. HALDANE: Certainly, on A scale.
    Mr. PRETYMAN: An ordinary common case is that of C, who has only an interest in expectancy when he makes a will, and he makes a new settlement. If he had paid the duty no duty would be payable by D, who was the first tenant for life under the new settlement. If C has not paid the duty D will have to pay it.
    Mr. HALDANE: Certainly.
    Mr. PRETYMAN: I think the disadvantage in arguing with the right hon. Gentleman is that he has much greater legal knowledge. I suppose we shall have to continue the discussion until the Committee entirely understand the point. I cannot get away from the point that this Amendment is meant to deal with, viz., that there is a bargain made by which 2 per cent. is paid, and only one duty is paid on settlement, and now the Government intends to take a duty and a half. The Government are not content with the whole duty, but they intend to take a duty and a half, and they are doing as great an injustice in one direction as they were doing an injustice to the Crown in the other. If this Amendment is accepted it is a fair adjustment, and I appeal to the right hon. Gentleman to accept it.
    Sir E. CARSON: May I ask the right hon. Gentleman whether C has any vote?
    Mr. JOYNSON-HICKS: I cannot help saying that no answer has been given to the Amendment from this side of the Committee, and that you are really imposing a duty and a half on the falling in of these two lives. I think it would be right and fair to accept the Amendment.
    Question put, "That those words be there added."
    The Committee divided: Ayes, 56; Noes, 133.

    Division No. 644.]

    AYES.

    [1.20 a.m.

    Acland-Hood, Rt. Hon. Sir Alex. F.

    Bridgeman, W. Clive

    Craig, Charles Curtis(Antrim, S.)

    Anson, sir William Reynell

    Carlile, E. Hildred

    Craig, Captain James (Down, E.)

    Balcarres, Lord

    Carson, Rt. Hon. Sir Edward H.

    Dalrymple, Viscount

    Banbury, Sir Frederick George

    Castlereagh, Viscount

    Dickson, Rt. Hon. C. Scott

    Baring, Capt. Hon. G. (Winchester)

    Cecil, Evelyn (Aston Manor)

    Douglas, Rt. Hon. A. Akers-

    Barrie, H. T. (Londonderry, N.)

    Coates, Major E. F. (Lewisham)

    Faber, George Denison (York)

    Bowles, G. Stewart

    Courthope, G. Loyd

    Forster, Henry William

    Foster, P. S.

    Long, Col. Charles W. (Evesham)

    Stanley, Hon. A. Lyulph (Cheshire)

    Gibbs, G. A. (Bristol, West)

    Lyttelton, Rt. Hon. Alfred

    Starkey, John R.

    Gordon, J.

    Mason, James F. (Windsor)

    Staveley-Hill, Henry (Staffordshire)

    Guinness, Hon. W. E. (B. S. Edm'ds.)

    Moore, William

    Talbot, Lord E. (Chichester)

    Hamilton, Marquess of

    Morpeth, Viscount

    Valentia, Viscount

    Hardy, Laurence (Kent, Ashford)

    Nicholson, Wm. G. (Petersfield)

    Warde, Col. C. E. (Kent, Mid)

    Hay, Hon. Claude George

    Pease, Herbert Pike (Darlington)

    Williams, Col. R. (Dorset, W.)

    Hill, Sir Clement

    Pretyman, E. G.

    Wyndham, Rt. Hon. George

    Hills, J. W.

    Roberts, S. (Sheffield, Ecclesall)

    Hope, James Fitzalan (Sheffield)

    Ronaldshay, Earl of

    Hunt, Rowland

    Salter, Arthur Clavell

    TELLERS FOR THE AYES.—Mr.

    King, Sir Henry Seymour (Hull)

    Scott, Sir S. (Marylebone, W.)

    Cave and Mr. Hicks Beach.

    Lane-Fox, G. R.

    Stanier, Beville

    NOES.

    Acland, Francis Dyke

    Hazel, Dr. A. E. W.

    Pensonby, Arthur A. W. H.

    Agnew, George William

    Helme, Norval Watson

    Priestley, Sir W. E. B. (Bradford, E.)

    Allen, A. Acland (Christchurch)

    Higham, John Sharp

    Radford, G. H.

    Allen, Charles P. (Stroud)

    Hobhouse. Rt. Hon. Charles E. H.

    Rendall, Athelstan

    Ashton, Thomas Gair

    Hogan, Michael

    Richards, Thomas (W. Monmouth)

    Balfour, Robert (Lanark)

    Holt, Richard Durning

    Richards, T. F.

    Barnard, E. B.

    Hooper, A. G.

    Roberts, Charles H. (Lincoln)

    Barran, Sir John Nicholson

    Horniman, Emslie John

    Robertson, Sir G. Scott (Bradford)

    Beauchamp, E.

    Howard, Hon. Geoffrey

    Robinson, S.

    Berridge, T. H. D.

    Isaacs, Rufus Daniel

    Robson, Sir William Snowdon

    Black, Arthur W.

    Jones, Sir D. Brynmor (Swansea)

    Roch, Walter F. (Pembroke)

    Bowerman, C. W.

    Jones, Leif (Appleby)

    Roe, Sir Thomas

    Brace, William

    Jones, William (Carnarvonshire)

    Rogers, F. E. Newman

    Bright, J. A.

    King, Albert John (Knutsford)

    Rutherford, V. H. (Brentford)

    Brunner, J. F. L. (Lanes., Leigh)

    Laldlaw, Robert

    Samuel, S. M. (Whitechapel)

    Bryce, J. Annan

    Lambert, George

    Scarisbrick, Sir T. T. L.

    Buckmaster, Stanley O.

    Lamont, Norman

    Seely, Colonel

    Burns, Rt. Hon. John

    Layland-Barratt, Sir Francis

    Sherwell, Arthur James

    Byles, William Pollard

    Levy, Sir Maurice

    Simon, John Allsebrook

    Carr-Gomm, H. W.

    Lloyd-George, Rt. Hon. David

    Stanger, H. Y.

    Cherry, Rt. Hon. R. R.

    Lupton, Arnold

    Stewart-Smith, D. (Kendal)

    Clough, William

    Macdonald, J. R. (Leicester)

    Strachey, Sir Edward

    Clynes, J. R.

    Maclean, Donald

    Summerbell, T.

    Cobbold, Felix Thornley

    Macnamara, Dr. Thomas J.

    Taylor, John W. (Durham)

    Collins, Sir Wm. J. (St. Pancras, W.)

    MacVeagh, Jeremiah (Down, S.)

    Tennant, H. J. (Berwickshire)

    Corbett, C. H. (Sussex, E. Grinstead)

    M'Laren, H. D. (Stafford, W.)

    Thompson, J. W. H. (Somerset, E.)

    Cotton, Sir H. J. S.

    Maddion, Frederick

    Thorne, G. R. (Wolverhampton)

    Davies, Sir W. Howell (Bristol, S.)

    Mallet, Charles E.

    Trevelyan, Charles Philips

    Dewar, Arthur (Edinburgh, S.)

    Markham, Arthur Basil

    Verney, F. W.

    Dickinson, W. H. (St. Pancras, N.)

    Marnham, F. J.

    Ward, W. Dudley (Southampton)

    Dobson, Thomas W.

    Massie, J.

    Wason, Rt. Hon. E. (Clackmannan)

    Dunne, Major E. Martin (Walsall)

    Masterman, C. F. G.

    Wason, John Cathcart (Orkney)

    Ersklne, David C.

    Middlebrook, William

    White, Sir George (Norfolk)

    Essex, R. W.

    Money, L. G. Chiozza

    White, J. Dundas (Dumbartonshire)

    Esslemont, George Blrnie

    Morrell, Philip

    White, Sir Luke (York, E.R.)

    Evans, Sir S. T.

    Morse, L. L.

    Whittaker, Rt. Hon. Sir Thomas P.

    Everett, R. Lacey

    Myer, Horatio

    Wiles, Thomas

    Fuller, John Michael F.

    Newnes, F. (Notts, Bassetlaw)

    Williams, J. (Glamorgan)

    Fullerton, Hugh

    Norman, Sir Henry

    Williams, W. Llewelyn (Carmarthen)

    Glover, Thomas

    Nuttall, Harry

    Wilson. W. T. (Westhoughton)

    Gooch, George Peabody (Bath)

    O'Brien, K. (Tipperary, Mid)

    Winfrey, R.:

    Haldane, Rt. Hon. Richard B.

    Parker, James (Halifax)

    Harcourt, Rt. Hon. L. (Rossendale)

    Partington, Oswald

    TELLERS FOR THE NOES.—Mr.

    Harcourt. Robert V. (Montrose)

    Pearce, Robert (Staffs, Leek)

    Joseph Pease and Captain Norton.

    Harmsworth, R. L. (Calthness-shire)

    Pickersgill, Edward Hare

    Haworth, Arthur A.

    Pointer, J.

    Question put, "That the Clause, as amended, stand part of the Bill."
    The Committee divided: Ayes, 130;Noes, 53.

    Division No. 645.]

    AYES.

    [1.30 a.m.

    Aeland, Francis Dyke

    Brunner, J. F. L. (Lanes, Leigh)

    Davies, Sir W. Howell (Bristol, S.)

    Agnew, George William

    Bryce, J. Annan

    Dickinson, W. H. (St. Pancras, N.),

    Allen, A. Aeland (Christchurch)

    Buckmaster, Stanley O.

    Dobson, Thomas W.

    Allen, Charles P. (Stroud)

    Burns, Rt. Hon. John

    Dunne, Major E. Martin (Walsall)

    Ashton, Thomas Gair

    Byles, William Pollard

    Erskine, David C.

    Balfour, Robert (Lanark)

    Carr-Gomm, H. W.

    Essex, R. W.

    Barnard, E. B.

    Cherry, Rt. Hon. R. R.

    Esslemont, George Birnie

    Barran, Sir John Nicholson

    Clough, William

    Evans, Sir S. T.

    Beauchamp, E.

    Clynes, J. R.

    Everett, R. Lacey

    Berridge, T. H. D.

    Cobbold, Felix Thernley

    Fuller, John Michael F.

    Black, Arthur W.

    Collins, Sir Wm. J. (St. Pancras, W)

    Fullerton, Hugh

    Bowerman, C. W.

    Corbett, C. H. (Sussex, E. Grinstead)

    Glover, Thomas

    Brace, William

    Cotton, Sir H. J. S.

    Gooch, George Peabody (Bath)

    Haldane, Rt. Hon. Richard B.

    Markham, Arthur Basil

    Scarisbrick, Sir T. T. L.

    Harcourt, Rt. Hon. L. (Rossendale)

    Marnham, F. J.

    Seely, Colonel

    Harcourt, Robert V. (Montrose)

    Massie, J.

    Sherwell, Arthur James

    Harmsworth, R. L. (Caithness-sh.)

    Masterman, C. F. G.

    Simon, John Allsebrook

    Haworth, Arthur A.

    Middlebrook, William

    Stanger, H. Y.

    Hazel, Dr. A. E. W.

    Money, L. G. Chiozza

    Stanley, Hon. A. Lyulph (Cheshire)

    Helme, Norval Watson

    Morrell, Philip

    Stewart-Smith, D. (Kendal)

    Higham, John Sharp

    Morse, L. L.

    Strachey, Sir Edward

    Hobhouse, Rt. Hon. Charles E. H.

    Myer, Horatio

    Summerbell, T.

    Holt, Richard Durning

    Newnes, F. (Notts, Bassetlaw)

    Taylor, John W. (Durham)

    Hooper, A. G.

    Norman, Sir Henry

    Tennant, H. J. (Berwickshire)

    Horniman, Emslie John

    Nuttall, Harry

    Thompson, J. W. H. (Somerset, E.)

    Howard, Hon. Geoffrey

    O'Brien, K. (Tipperary, Mid)

    Thorne, G. R. (Wolverhampton)

    Isaacs, Rufus Daniel

    Parker, James (Halifax)

    Trevelyan, Charles Philips

    Jones, Sir D. Brynmor (Swansea)

    Partington, Oswald

    Verney, F. W.

    Jones, Leif (Appleby)

    Pearce, Robert (Staffs, Leek)

    Ward, W. Dudley (Southampton)

    Jones, William (Carnarvonshire)

    Pickersgill, Edward Hare

    Wason, Rt. Hon. E. (Clackmannan)

    King, Alfred John (Knutsford)

    Pointer, J.

    Wason, John Cathcart (Orkney)

    Laidlaw, Robert

    Ponsonby, Arthur A. W. H.

    White, Sir George (Norfolk)

    Lambert, George

    Priestley, Sir W. E. B. (Bradford, E.)

    White, J. Dundas (Dumbartonshire)

    Lamont, Norman

    Radford, G. H.

    White, Sir Luke (York, E.R.)

    Layland-Barratt, Sir Francis

    Rendall, Athelstan

    Whittaker, Rt. Hon. Sir Thomas P.

    Levy, Sir Maurice

    Richards, Thomas (W. Monmouth)

    Wiles, Thomas

    Lloyd-George, Rt. Hon. David

    Richards, T. F. (Wolverhampton, W.)

    Williams, J. (Glamorgan)

    Lupton, Arnold

    Roberts, Charles H. (Lincoln)

    Williams, W. Llewelyn (Carmarthen)

    Macdonald, J. R. (Leicester)

    Robertson, Sir G. Scott (Bradford)

    Wilson, W. T. (Westhoughton)

    Maclean, Donald

    Robinson, S.

    Winfrey, R.

    Macnamara, Dr. Thomas J.

    Robson, Sir William Snowdon

    MacVeagh,. Jeremiah (Down, S.)

    Roch, Walter F. (Pembroke)

    M'Laren, H. D. (Stafford, W.)

    Rogers, F. E. Newman

    TELLERS FOR THE AYES.—Mr.

    Maddison, Frederick

    Rutherford, V. H. (Brentford)

    Joseph Pease and Captain Norton.

    Mallet, Charles E.

    Samuel, S. M. (Whitechapel)

    NOES.

    Anson, Sir William Reynell

    Faber, George Denison (York)

    Moore, William

    Balcarres, Lord

    Forster, Henry William

    Morpeth, Viscount

    Banbury, Sir Frederick George

    Foster, P. S.

    Nicholson, Wm. G. (Petersfield)

    Baring, Capt. Hon. G. (Winchester)

    Gibbs, G. A. (Bristol, West)

    Pease, Herbert Pike (Darlington)

    Barrie, H. T. (Londonderry, N.)

    Gordon, J.

    Pretyman, E. G.

    Beach, Hon. Michael Hugh Hicks

    Guinness, Hon. W. E. (B. S. Edm'ds)

    Roberts, S, (Sheffield, Ecclesall)

    Bowles, G. Stewart

    Hamilton, Marquess of

    Ronaldshay, Earl of

    Bridgeman, W. Clive

    Hardy, Laurence (Kent, Ashford)

    Salter, Arthur Clavell

    Carlile, E. Hildred

    Hay, Hon. Claude George

    Scott, Sir S. (Marylebone, W.)

    Castlereagh, Viscount

    Hill, Sir Clement

    Stanier, Beville

    Cave, George

    Hills, J. W.

    Starkey, John R.

    Cecil, Evelyn (Aston Manor)

    Hope, James Fitzalan (Sheffield)

    Staveley-Hill, Henry (Staffordshire)

    Coates, Major E. F. (Lewisham)

    Hunt, Rowland

    Talbot, Lord E. (Chichester)

    Courthope, G. Loyd

    Joynson-Hicks, William

    Warde, Col. C. E (Kent, Mid)

    Craig, Charles Curtis (Antrim, S.)

    King, Sir Henry Seymour (Hull)

    Williams, Col. R. (Dorset, W.)

    Craig, Captain James (Down, E.)

    Lane-Fox, G. R.

    Dalrymple, Viscount

    Long, Col. Charles W. (Evesham)

    TELLERS FOR THE NOES.—Sir

    Dickson, Rt. Hon. C. Scott

    Lyttelton, Rt. Hon. Alfred

    A. Acland-Hood and Viscount Valentia.

    Douglas, Rt. Hon. A. Akers-

    Mason, James F. (Windsor)

    CLAUSE 42.—(Amendment of Rates of Legacy Duty and Succession Duty.)
    (1) Any Legacy or Succession Duty which under the Stamp Act, 1815, or the Succession Duty Act, 1853, or any other Act, is payable at the rate of three percent, shall be payable at the rate of five per cent., and any Legacy or Succession Duty which under the said Acts is payable at the rate of five per cent. or six per cent. shall be payable at the rate of ten per cent. on the amount of value of the legacy or succession.
    (2) The Legacy and Succession Duty payable at the rate of one per cent. on the amount or value of any legacy or succession under the Stamp Act, 1815, and the Succession Duty Act, 1853, or any other Act, shall be levied and paid notwith
    1890
    standing any repeal effected by or anything contained in the principal Act or any other Act, and the duty shall also be levied and paid in cases where the person taking the legacy or succession is the husband or wife of the testator, intestate, or predecessor, as in cases where the person taking the legacy or succession is a lineal ancestor or descendant of the testator, intestate, or predecessor:
    Provided that the duty shall not be levied—

    (a) Where the principal value of the property passing on the death of the deceased and chargeable with Estate Duty (other than property in which the deceased never had an interest) does not exceed fifteen thousand pounds, whatever may be the value of the legacy or succession; or

    1891

    (b) Where the amount or value of the legacy or succession, together with any other legacies or successions derived by the same person from the testator, intestate, or predecessor does not exceed one thousand pounds, whatever may be the principal value of the property so passing and chargeable; or

    (c) Where the person taking the legacy or succession is the widow or a child under the age of twenty-one years of the testator, intestate or predecessor, and the amount or value of the legacy or succession, together with any other legacies or successions derived by the same person from the testator, intestate, or predecessor does not exceed two thousand pounds, whatever may be the principal value of the property so passing and chargeable.

    (3) In this Section, the expression "deceased" means in the case of a legacy the testator (including a person making a donation mortis causa) or intestate, and in the case of a succession arising through devolution by law, the person on whose death the succession arises, and in the case of a succession arising under a disposition, the person1 on whose death the first succession thereunder arises; and the expression "legacy" includes residue and share of residue.
    (4) This Section shall take effect in the case of Legacy Duty only where the testator by whose will the legacy is given or the intestate on whose death the Legacy Duty is payable, dies on or after the thirtieth day of April, nineteen hundred and nine, and in the case of a succession arising through devolution by law, only where the succession arises on or after that date, and in the case of a succession arising under a disposition, only if the first succession under the disposition arises on or after that date.
    Mr. G. A. GIBBSmoved, in Sub-section (1). to leave out the words "Any Legacy or Succession Duty which under the Stamp Act, 1815, or the Succession Duty Act, 1853, or any other Act, is payable at the rate of three per cent., shall be payable at the rate of five per cent."
    This proposal of the Government is to raise the sum paid by a brother, or sister, or children to 5 per cent. Suppose a man had a large family of sons, and he either made or succeeded to a fortune. At his death he leaves it to his eldest son, and
    1892
    the largest portion would have to pay 1 per cent. If the eldest son dies, at the present moment the second son would pay 3 per cent. You propose to raise that to 5 per cent. It seems to me that when the relationship is as close as this, it is very hard that the second son should have to pay more than his eldest brother did when he succeeded his father. The rate in. this sort of case ought to be as low as possible. After all, the brother is in direct succession, and there is a very great difference between him and a cousin. There is, as the Committee will see, no question here of him only having a remote chance of succeeding, or of the property coming to him when he does not expect it. The eldest brother may be an invalid, who can. never marry, and it may be only a question of time when he will die. It may be uncertain also whether he predeceases his father or not. If he does not he might very likely only live a short time afterwards, but if he should survive his father for a short period his unfortunate brother will have to pay 5 per cent. It seems to me, therefore, that by this Clause you are penalising families who by reason of their state of health are less able than others to keep up the family fortunes. For many reasons I think this is a case where the rate should certainly be left at 3 per cent.
    Mr. LLOYD-GEORGE: Of course, the hon. Gentleman has a perfect right to challenge this alteration specifically now we have come to it in the Bill, but I may point out that we considered this as part of the whole proposals when we had our very exhaustive discussion on these duties earlier in the sitting. I do not think, and I believe the Committee will agree with me, that the case put by the hon. Gentleman is really a harsh one. Take the case of a bequest by a father, first to-one son and then to a second son. In that case the relationship refers not to the brother, but back to the predecessor in the title. The suggestion put forward by the hon. Member (Mr. Gibbs) was that instead of paying 3 per cent. he would pay 5 per cent.
    Mr. PRETYMAN: The point was not that at all. The case my hon. Friend put was one where a father left the property to one son, and that son passed it on to the other son.
    Mr. LLOYD-GEORGE: The case put was that of a brother who was an invalid and would not last long. Let us, however,

    1893
    take this case which I will put to the Committee. The predecessor in title leaves the whole of the property to one brother. There is no immediate anticipation that the second brother will ever come into the property, and no arrangements have been made of any sort or kind. The hon. Member says, "Here comes the second brother, the unfortunate brother." This unfortunate brother had no right to expect it, he did not expect it, his parent had never thought that he would get it—this unfortunate brother comes to be owner of the property. What happens? Supposing it is a property of £100,000. It is given first of all to the first brother entirely. The first brother meets with an accident and is without any issue. Then comes the second brother and—poor, wretched creature—he inherits £100,000. This unfortunate brother has got to pay 5 per cent. But the unfortunate brother receives 95 per cent. That is the extent of his misfortune—he gets £95,000 which he never expected. Of this £100,000 he gets £95,000. At the present moment he would pay £3,000. Under this Bill he would contribute another £2,000 to the needs of the State for the £95,000 which he gets. I do not think the hon. Member, made out a very good case in this particular. I do not think it is a hardship in the slightest degree, and I do not think the individual who gets such a sum of money is very much to be commiserated with.
    2.0 A.M.
    Mr. PRETYMAN: I really think that method of argument has been used too much, and it is not argument worthy of the House of Commons at all. Where a property is handed on from brother to brother 5 per cent. every time is an extremely heavy duty when added to the Estate Duty already imposed. Has the right hon. Gentleman considered the other side of the case in regard to a settlement? I mean the case where a man leaves a property to his brother, settled with remainder to his brother's son and remainder to the latter's unborn children. Has he considered the fact that the 5 per cent. duty, and in a further part of the Clause the 10 per cent. duty in another relationship, would be payable on every one of those deaths, three or four times over in the one settlement, although the son succeeded the father and the grandfather? You have there the case of a man who leaves a property to his brother. The brother pays 5 per cent. The brother's son succeeds him, and he pays
    1894
    5 per cent. His son succeeds him, and he has again got to pay 5 per cent. I think that suits hon Gentleman below the Gangway, but the fact of their cheering it should certainly not commend it to the right hon. Gentleman. If those are the principles upon which these duties are to be increased and are to be imposed, of course we understand them, and the country will understand them. If that is to be the issue we are perfectly prepared for it. That it is a crime to own property, that the owner of property is to be harried and penalised—that is what it comes to when these duties are accumulated to such a point. An unfortunate individual, who happens to fall under the high scale of both duties, although he may succeed his own father, being a man who has been brought up on a landed property, and his grandfather before him, and perhaps hardly knows that his grandfather's brother was the original settlor—that man is saddled with an extra duty over and above the duty which is already imposed, and which is heavy enough, and in addition to the Estate Duty. I say that the existing 3 per cent. duty in a case of brother succeeding, or of several brothers succeeding, is amply sufficient when taken with the great increase of the Estate Duty which we have already been discussing. You are destroying the value of a settlement in this way. You have just accepted a further duty of 2 per cent. on a settlement. We have had arguments used time and again from the other side of the House that property put into settlement is escaping duty, that you are not getting an equivalent for the escape of duty. Here you have a proposal which is going to render the lives in that settlement, every life in that settlement, liable to a duty which cannot be escaped because Succession Duty falls on succession. All I can say is, looking at this change, not only that there will be very little advantage in putting property into settlement at all, but the advantage of putting property into settlement will be almost entirely destroyed. Is that the object of the right hon. Gentleman? Here we have it from below the Gangway that their object is to destroy settlement; that, I take it, is the meaning of the cheers. If they do not mean that, what do they mean? They must mean that and can mean nothing else. If the object is to destroy settlement I can understand the duty, only let the right hon. Gentleman

    1895
    say so and not pretend that this duty is a reasonable duty, because it is not a reasonable duty. It is a very unfair increase, and I for one desire most earnestly to protest against it.
    Mr. CAVEmoved in Sub-section (1) to leave out the words "and any Legacy or Succession Duty which, under the said Acts, is payable at the rate of five per cent.
    Question put, "That the words proposed to be left out, to the word 'five' ["five per cent."], stand part of the Clause."
    The Committee divided: Ayes, 120; Noes, 52.

    Division No. 646.]

    AYES.

    [1.50 a.m.

    Acland, Francis Dyke

    Hazel, Dr. A. E.

    Priestley, Sir W. E. B. (Bradford, E.)

    Agnew, George William

    Helme, Norval Watson

    Radford, G. H.

    Allen, A. Acland (Christchurch)

    Higham, John Sharp

    Rendall, Athelstan

    Allen, Charles P. (Stroud)

    Hobhouse, Rt. Hon. Charles E. H.

    Richards, Thomas (W. Monmouth)

    Ashton, Thomas Gair

    Holt, Richard Dunning

    Roberts, Charles H. (Lincoln)

    Balfour, Robert (Lanark)

    Hooper, A. G.

    Robertson, Sir G. Scott (Bradford)

    Barnard, E. B.

    Herniman, Emslie John

    Robinson, S.

    Beauchamp, E.

    Howard, Hon. Geoffrey

    Robson, Sir William Snowdon

    Berridge, T. H. D.

    Jones, Sir D. Brynmor (Swansea)

    Roch, Walter F. (Pembroke)

    Black, Arthur W.

    Jones, Leif (Appleby)

    Rogers, F. E. Newman

    Bowerman, C. W.

    Jones, William (Carnarvonshire)

    Rutherford, V. H. (Brentford)

    Brace, William

    King, Alfred John (Knutsford)

    Samuel, S. M. (Whitechapel)

    Brunner, J. F. L. (Lanes., Leigh)

    Lambert, George

    Scarisbrick, Sir T. T. L.

    Bryce, J. Annan

    Lamont, Norman

    Seely, Colonel

    Buckmaster, Stanley O.

    Layland-Barratt, Sir Francis

    Sherwell, Arthur James

    Burns, Rt. Hon. John

    Levy, Sir Maurice

    Simon, John Allsebrook

    Byles, William Pollard

    Lloyd-George, Rt. Hon. David

    Stanger, H. Y.

    Carr-Gomm, H. W.

    Lupton, Arnold

    Stanley, Hon. A. Lyulph (Cheshire)

    Cherry, Rt. Hon. R. R.

    Macdonald, J. R. (Leicester)

    Stewart-Smith, D. (Kendal)

    Clough, William

    Maclean, Donald

    Strachey, Sir Edward

    Clynes, J. R.

    Macnamara, Dr. Thomas J.

    Summerbell, T.

    Collins, Sir Wm. J. (St. Pancras, W.)

    M'Laren, H. D. (Stafford, W.)

    Taylor, John W. (Durham)

    Corbett, C. H. (Sussex, E. Grinstead)

    Maddison, Frederick

    Tennant, H. J. (Berwickshire)

    Cotton, Sir H. J. S.

    Mallet, Charles E.

    Thompson, J. W. H. (Somerset, E.)

    Davies, Sir W. Howell (Bristol, S.)

    Markham, Arthur Basil

    Thorne, G. R. (Wolverhampton)

    Dickinson, W. H. (St. Pancras, N.)

    Marnham, F. J.

    Trevelyan, Charles Philips

    Dobson, Thomas W.

    Massie, J.

    Verney, F. W.

    Dunne, Major E. Martin (Walsall)

    Masterman, C. F. G.

    Ward, W. Dudley (Southampton)

    Erskine, David C.

    Middlebrook, William

    Wason, Rt. Hon. E. (Clackmannan)

    Essex, R. W

    Money, L. G. Chiozza

    Wason, John Cathcart (Orkney)

    Esslemont, George Birnle

    Morrell, Philip

    White, Sir George (Norfolk)

    Evans, Sir S. T.

    Morse, L. L.

    White, J. Dundas (Dumbartonshire)

    Everett, R. Lacey

    Newnes, F. (Notts, Bassetlaw)

    White, Sir Luke (York, E.R.)

    Fuller, John Michael F.

    Nuttall, Harry

    Wiles, Thomas

    Fullerton, Hugh

    O'Brien, K. (Tipperary, Mid)

    Williams, J. (Glamorgan)

    Glover, Thomas

    Parker, James (Halifax)

    Williams, W. Llewelyn (Carmarthen)

    Gooch, George Peabody (Bath)

    Partington, Oswald

    Wilson, W. T. (Westhoughton)

    Harcourt, Rt. Hon. L. (Rossendale)

    Pearce, Robert (Staffs., Leek)

    Winfrey, R.

    Harcourt, Robert V. (Montrose)

    Pickersgill, Edward Hare

    Harmsworth, R. L. (Caithness-shire)

    Pointer, J.

    TELLERS FOR THE AYES—Mr.

    Haworth, Arthur A.

    Ponsonby, Arthur A. W. H.

    Joseph Pease and Captain Norton.

    NOES.

    Acland-Hood, Rt. Hon. Sir Alex. F.

    Faber, George Denison (York)

    Nicholson, Wm. G. (Petersfield)

    Anson, Sir William Reynell

    Forster, Henry William

    Pease, Herbert Pike (Darlington)

    Balcarres, Lord

    Foster, P. S.

    Pretyman, E. G.

    Banbury, Sir Frederick George

    Gordon, J.

    Roberts, S. (Sheffield, Ecclesall)

    Baring, Capt. Hon. G. (Winchester)

    Guinness, Hon. W. E. (B. S. Edm'ds.)

    Salter, Arthur Clavell

    Barrie, H. T. (Londonderry, N.)

    Hardy, Laurence (Kent, Ashford)

    Scott, Sir S. (Marylebone, W.)

    Beach, Hon. Michael Hugh Hicke

    Hay, Hon. Claude George

    Stanier, Beville

    Bridgeman, W. Clive

    Hill, Sir Clement

    Starkey, John R.

    Carlile, E. Hildred

    Hills, J. W.

    Staveley-Hill, Henry (Staffordshire)

    Castlereagh, Viscount

    Hope, James Fitzalan (Sheffield)

    Talbot, Lord E. (Chichester)

    Cave, George

    Hunt, Rowland

    Valentia, Viscount

    Cecil, Evelyn (Aston Manor)

    Joynson-Hicks, William

    Warde, Col. C. E. (Kent, Mid)

    Coates, Major E. F. (Lewisham)

    King, Sir Henry Seymour (Hull)

    Williams, Col. R. (Dorset, W.)

    Courthope, G. Loyd

    Lane-Fox, G. R.

    Wyndham, Rt. Hon. George

    Craig, Charles Curtls (Antrim, S.)

    Long, Col. Charles W. (Evesham)

    Craig, Captain James (Down, E.)

    Lyttelton, Rt. Hon. Alfred

    Dalrymple, Viscount

    Mason, James F. (Windsor)

    TELLERS FOR THE NOES.—Mr.

    Dickson, Rt. Hon. C. Scott

    Moore, William

    G. A. Gibbs and Lord Ronaldshay.

    Douglas, Rt. Hon. A. Akers-

    Morpeth, Viscount

    or six per cent. shall be payable at the rate of ten per cent. on."
    This is the second branch of the Subsection which raises the Legacy or Succes-

    1897
    sion Duty on bequests to cousins and certain other relatives from 5 per cent. to 10 per cent. In other words, it puts an uncle or a cousin on the same footing as a stranger. I take the view that property ought to be left to relatives in a proper case, and that where a cousin, for instance, is the nearest relative, as may often happen, he is the proper person to succeed to the property, and the law has always recognised that the property should be left to relatives rather than to strangers. For that reason the duty hitherto has been put at 5 per cent. in the case of a cousin, at 6 per cent. in the case of a cousin further removed, and at 10 per cent. in the case of a stranger. This Clause puts all on the same footing. Blood is thicker than water, and we all recognise it. It is a mistake to put everyone on the same footing as a stranger. For this reason I propose this Amendment, and although I do not discuss it at length, I think we ought to make our protest.
    Mr. LLOYD-GEORGE: I will not suggest that a cousin is not a proper person to whom to leave property. That is not the question at all. The question is whether it is fair where a cousin comes into property he should make this contribution to the State. I can well understand that a stranger may have a better claim than a cousin upon the bounty of the owner of property. A cousin, after all, is not like a lineal descendant with a certain claim upon the estate, perhaps no claim except that of a remote kinship. In many a case a stranger may have a much more considerable claim—the claim of a close, intimate friendship—and I do not think it is at all unfair in cases of this kind that the contribution which has been exacted up to the present from these relatives should be doubled when the State is in need of money. That is the ground on which we decided to raise this contribution.
    Mr. PRETYMAN: I really do not think that the right hon. Gentleman, if he gives a little consideration, would say, especially in the case of settled property, that where a family has for many generations held property, and a generation or two is skipped and the property comes to a first cousin, that it is not a comparatively near relationship. What happens in such a case? A property has passed from generation to generation in the same family, and has always been entailed upon the same name, and it happens on one occasion that it goes in the ordinary course of succession to a first cousin of the
    1898
    last owner. The latter settles the property naturally in the ordinary course of events on his first cousin of the same name, and he becomes the head of the family. He takes the property, and is succeeded again by his son and by his grandson. But what follows? There would be three 10 per cent. duties to pay on that landed property—duty to pay on the succession of each of these men; 10 per. cent, to pay on each life interest. [Hon. MEMBERS: "NO no."] Well, if I am wrong, I shall be glad to hear so from the right hon. Gentleman. I take the family property of a man who was last in the settlement. The property has come to him in the ordinary way with full power of disposal. That property is naturally passed on by him, as in duty bound, to "the next head of the family, who happens to be his first cousin; he settles it upon him with remainder to his children and to their unborn children. That property on the settlor will pay 10 per cent. It will again pay 10 per cent. on his successor succeeding, and again 10 per cent. when his grandson succeeds. Does the right hon. Gentleman deny that, on their relationship to the original settler?
    Mr. CHIOZZA MONEY: Three times in a century.
    Mr. PRETYMAN: No; it may be in very much less time than a century. The cousin may be a middle-aged man or past middle age. His son succeeds him, and his son succeeds him. That does not take a century; only 40 years, perhaps. I say that that is an enormous duty to impose upon the head of a family succeeding as first cousin, and I think there should be some differentiation in a case of that kind compared with a case in which the person succeeding is a complete stranger in blood. I admit there are often ties of kindness and familiarity which will justify a man leaving a legacy to a person who is a stranger in blood rather than to a man who is his first cousin. But the right hon. Gentleman must not confine himself to that particular case. I do put it to him that there is ground for special consideration in the case of landed property descending in the way I have described. As the Government propose to legislate, real hardship and real injustice is involved.
    The ATTORNEY-GENERAL (Sir William Robson): I think the hon. and gallant Gentleman has been misinformed as to the effect of the duty. It is a mistake to say that in the case of Legacy Duty—
    Mr. PRETYMAN: Not Legacy Duty.
    Sir W. ROBSON: Or Succession Duty that there is no provision made by statute for the succession of interests in the way the hon. Member has described analogous to the 2 per cent. Settlement Estate Duty. Under the original Legacy Duty Act of 1796, which was incorporated in other statutes, it was set forth that where a legacy is given to persons in succession, liable to the same rate, then the duty is to be paid once for all on the capital, and that franks all others in the same interest. The provision is incorporated for the purpose of Succession Duty in Section 32 of the Act of 1853. That covers the case of personalty. Now as to the case of realty.
    Every successor there pays on the actuarial value of his life interest.
    Mr. PRETYMAN: I said so.
    Sir W. ROBSON: I understood the hon. and gallant Gentleman to say that he pays on the whole estate on the termination of the life interest. [MINISTERIAL cheers.] That probably was a misapprehension on my part and on the part of the House. But what I have pointed to will greatly lessen the hardship which the hon. and gallant Member has described.
    Question put, "That the words proposed to be left out stand part of the Clause."
    The Committee divided: Ayes, 118; Noes, 48.

    Division No. 647.]

    AYES.

    [2.10 a.m.

    Acland, Francis Dyke

    Helme, Norval Watson

    Rendall, Athelstan

    Agnew, George William

    Higham, John Sharp

    Richards, Thomas (W. Monmouth)

    Allen, A. Acland (Christchurch)

    Hobhouse, Rt. Hon. Charles E. H.

    Roberts, Charles H. (Lincoln)

    Allen, Charles P. (Stroud)

    Holt, Richard Durning

    Robertson, Sir G. Scott (Bradford)

    Ashton, Thomas Gair

    Hooper, A. G.

    Robinson, S.

    Barnard, E. B.

    Horniman, Emslie John

    Robson, Sir William Snowdon

    Beauchamp, E.

    Howard, Hon. Geoffrey

    Roch, Walter F. (Pembroke)

    Berridge, T. H. D.

    Jones, Leif (Appleby)

    Rogers, F. E. Newman

    Black, Arthur W.

    Jones, William (Carnarvonshire)

    Rutherford, V. H. (Brentford)

    Bowerman, C. W.

    King, Alfred John (Knutsford)

    Samuel, S. M. (Whitechapel)

    Brace, William

    Lambert, George

    Scarisbrick, Sir T. T. L.

    Brunner, J. F. L. (Lancs., Leigh)

    Lamont, Norman

    Seely, Colonel

    Bryce, J. Annan

    Layland-Barratt, Sir Francis

    Sherwell, Arthur James

    Buckmaster, Stanley O.

    Levy, Sir Maurice

    Simon, John Allsebrook

    Burns, Rt. Hon. John

    Lloyd-George, Rt. Hon. David

    Stanger, H. Y.

    Byles, William Pollard

    Lupton, Arnold

    Stanley, Hon. A. Lyulph (Cheshire)

    Carr-Gomm, H. W.

    Macdonald, J. R. (Leicester)

    Stewart-Smith, D. (Kendal)

    Cherry, Rt. Hon. R. R.

    Maclean, Donald

    Strachey, Sir Edward

    Clough, William

    Macnamara, Dr. Thomas J.

    Summerbell, T.

    Clynes, J. R.

    MacVeagh, Jeremiah (Down, S.)

    Taylor, John W. (Durham)

    Collins, Sir Wm. J. (St. Pancras, W.)

    M'Laren, H. D. (Stafford, W.)

    Tennant, H. J. (Berwickshire)

    Corbett, C. H. (Sussex, E. Grinstead)

    Maddison, Frederick

    Thompson, J. W. H. (Somerset, E.)

    Cotton, Sir H. J. S.

    Markham, Arthur Basil

    Thorne, G. R. (Wolverhampton)

    Davies, Sir W. Howell (Bristol, S.)

    Marnham, F. J.

    Trevelyan, Charles Philips

    Dickinson, W. H. (St. Pancras, N.)

    Massie, J.

    Verney, F. W.

    Dobson, Thomas W.

    Masterman, C. F. G.

    Ward, W. Dudley (Southampton)

    Dunne, Major E. Martin (Walsall)

    Middlebrook, William

    Wason, Rt. Hon. E. (Clackmannan)

    Erskine, David C.

    Money, L. G. Chiozza

    Wason, John Cathcart (Orkney)

    Essex, R. W.

    Morrell, Philip

    White, Sir George (Norfolk)

    Esslemont, George Birnie

    Morse, L. L.

    White, J. Dundas (Dumbartonshire)

    Evans, Sir S. T.

    Newnes, F. (Notts, Bassetlaw)

    White, Sir Luke (York, E.R.)

    Everett, R. Lacey

    Nuttall, Harry

    Wiles, Thomas

    Fuller, John Michael F.

    O'Brien, K. (Tipperary, Mid)

    Williams, J. (Glamorgan)

    Fullerton, Hugh

    Parker, James (Halifax)

    Williams, W. Llewelyn (Carmarthen)

    Glover, Thomas

    Partington, Oswald

    Wilson, W. T. (Westhoughton)

    Gooch, George Peabody (Bath)

    Pearce, Robert (Staffs, Leek)

    Winfrey, R.

    Harcourt, Rt. Hon. L. (Rossendale)

    Pickersgill, Edward Hare

    Harcourt, Robert V. (Montrose)

    Pointer, J.

    Harmsworth, R. L. (Caithness-shire)

    Ponsonby, Arthur A. W. H.

    TELLERS FOR THE AYES.—Mr.

    Haworth, Arthur A.

    Priestley, Sir W. E. B. (Bradford, E.)

    Joseph Pease and Captain Norton.

    Hazel, Dr. A. E. W.

    Radford, G. H.

    NOES.

    Acland-Hood, Rt. Hon. Sir Alex. F.

    Coates, Major E. F. (Lewisham)

    Hardy, Laurence (Kent, Ashford)

    Anson, Sir William Reynell

    Courthope, G. Loyd

    Hay, Hon. Claude George

    Balcarres, Lord

    Craig, Charles Curtis (Antrim, S.)

    Hill, Sir Clement

    Banbury, Sir Frederick George

    Craig, Captain James (Down, E.)

    Hills, J. W.

    Baring, Capt. Hon. G. (Winchester)

    Dalrymple, Viscount

    Hope, James Fitzalan (Sheffield)

    Barrle, H. T. (Londonderry, N.)

    Douglas, Rt. Hon. A. Akers-

    Hunt, Rowland

    Beach, Hon. Michael Hugh Hicks

    Forster, Henry William

    Joynson-Hicks, William

    Bowles, G. Stewart

    Foster, P. S.

    King, Sir Henry Seymour (Hull)

    Carlile, E. Hildred

    Gibbs, G. A. (Bristol, West)

    Long, Col. Charles W. (Evesham)

    Castlereagh, Viscount

    Gordon, J.

    Lyttelton, Rt. Hon. Alfred

    Cecil, Evelyn (Aston Manor)

    Guinness, Hon. W. E. (B. S. Edmunds)

    Moore, William

    Morpeth, Viscount

    Salter, Arthur Clavell

    Warde, Col. C. E. (Kent, Mid)

    Nicholson, Wm. G. (Petersfield)

    Scott, Sir S. (Marylebone, W.)

    Williams, Col. R. (Dorset, W.)

    Pease, Herbert Pike (Darlington)

    Stanier, Beville

    Wyndham, Rt. Hon. George

    Pretyman, E. G.

    Starkey, John R.

    Roberts S. (Sheffield, Ecclesall)

    Talbot, Lord E. (Chichester)

    TELLERS FOR THE NOES.—Mr.

    Ronaldshay, Earl of

    Valentia, Viscount

    Cave and Mr. Bridgeman.

    Mr. G. D. FABERmoved in Sub-section (2), to leave out the words "levied and paid notwithstanding any repeal effected by or anything contained in the principal Act or any other Act, and the duty shall also be levied."
    Mr. LLOYD-GEORGE: Now that we have got to Sub-section (2) I move, "That the Chairman do report Progress, and ask leave to sit again."
    Committee report Progress; to sit again to-morrow (Tuesday).
    Whereupon Mr. DEPUTY-SPEAKER, in pursuance of the Order of the House of 20th August, adjourned the House without Question put.
    Adjourned at Twenty minutes sifter Two a.m. (Tuesday, 14th September).