HC Deb 09 August 1911 vol 29 cc1273-305

Postponed proceeding resumed on Question, "That the Bill be now read a second time."

Question again put. Debate resumed.


Before I refer to the Finance Bill proper may I refer to a remark made by the Chancellor of the Exchequer? In the first place I should like to refer to his manner of treating the interruption of the hon. and learned Gentleman the Member for North-East Cork (Mr. T. M. Healy), and then my own interruption. What are the facts? The Chancellor of the Exchequer, when he was speaking about the fall of gilt-edged securities, stated that there was no question but that the Trustee Act was the main cause for that fall. He certainly said it was one of the main causes, if not the main cause, in the depreciation of our credit and the fall in the price of gilt-edged securities. The right hon. Gentleman went on to say that there was only a limited amount of cash in the country, and that if you increased the field of securities you naturally would be bound to bring about a depreciation in all these securities. My interruption was to the effect that, though that was quite true, instead of depleting the amount of cash by the transference of your investment from, say, Consols to Colonial securities, you did otherwise. The right hon. Gentleman immediately attacked me as disputing his statement that the Trustee Act was the main cause for this depreciation.

I think the House will agree with me that that was entirely unjustifiable on his part, and that my interruption was a perfectly justifiable one. If, for example, a man owns securities that are not gilt-edged, such as Harrod's Stores, and he sells those and buys Colonials or Consols, the cash, of course, which he obtains from his sale of those securities which are not within the Trustee Act still remains in the country. In turn, when he purchases other securities, such as Colonials or Consols, he transfers his cash to the holders of those securities. I venture to say that although the Trustee Act has undoubtedly had some effect that effect has been very much exaggerated indeed. The right hon. Gentleman himself has again and again enlarged upon this far-reaching effect of the Trustee Act. Anyone who has the slightest knowledge of finance of that kind knows that although it is quite true it has enlarged the field for the investment of loanable capital which filters from one source to another everyone can tell for himself, if he makes research and compares the difference in prices between Colonial securities and Consols prior to the Trustee Act and since the Act has been at work, there has not been a great deal of difference in the proportion. This question of finance is a most important one; the question of our credit goes to the root of all our reform and national defence.

The effect of the Trustee Act has not been anything like what the right hon. Gentleman would have us believe. I find, for example, that one security alone, Canadian Three and a Half per Cents., was actually higher prior to the Trustee Act than it is to-day. It is only fair, and I desire to be fair, to state that that particular security is liable to be redeemed at par and is not likely therefore to move much up or down, but the fact that it was higher prior to the Trustee Act and is now selling at 101 indicates that the Trustee Act had not a very great effect upon the price of that security; and the proportion, which is after all the effect of the Trustee Act on the price of Colonial security compared with a gilt-edge security such as Consols, is not, I think, a very large one.

I hope that disposes of what has been almost the main contention of the Chancellor of the Exchequer, that that is the chief cause of the fall we are now experiencing. Whatever else may be reason there is no question that the fall in British capital is largely due to our national expenditure. There is no getting away from that fact. Anyone is bound to admit it. Whether we are in favour of social reform, as I am, and of proper and adequate defence, still the fact remains we have enormous expenditure on armaments and an ever-increasing expenditure on social reform, and money does not drop like manna from Heaven. These laws are inexorable, and if you spend your money, whether you spend it on armaments or social reform, you have not got it, and if your expenditure of an unreproductive nature is greatly out of proportion to the amount you get from the people in the way of taxation one thing or another must give way. There must be adjustment, and if you increase your expenditure to such an extent as we have in the last four or five years, and throw a very heavy drain upon your loanable capital, gilt-edge securities are bound to fall, and to fall not only in this country but in all other countries. Although there are various kinds of credit, and although in Russia and other countries there has been some depreciation or rise and fall in credit, still I think it will be found that the price of gilt-edge securities the world over have fallen very materially in the last ten years. That I think can be directly traced in a large measure to the policy of this country. Take, for example, our expenditure upon armaments, which was largely stimulated through the blundering policy of the Admiralty. We are all in favour of an adequate expenditure upon armaments, but we do not wish to be let in for an expenditure which is not justifiable. The House will remember how the. First Lord of the Admiralty had to admit, on the evidence supplied in this House, that he had——

Captain MURRAY

On a point of Order, Mr. Speaker. I wish to ask if the hon. Member is entitled to go so deeply into the question of armaments?


The hon. Member is not entitled to go so deeply into these questions, and he should confine himself to the Bill we are now discussing.


My point was that through that blundering policy this House authorised expenditure which we should not otherwise have been let in for. That policy also created an excess of expenditure in other countries like Germany and Austria, and the result of that expenditure is that you deplete and reduce the loanable capital available throughout the world, and if you do that you must affect your credit. The fall in gilt-edged securities, which has been touched upon tonight in the address of the Chancellor of the Exchequer and the right hon. Gentleman the Member for East Worcestershire, has been partially brought about through the policy of His Majesty's Government. The argument that Consols have only fallen 9 points since the Liberal Government took office, as against 18 points when the Conservatives were in office, is quite beside the point. Our credit was depreciated when the Conservatives were in office because we were engaged in a great war, and, in addition to that, war loans have brought down the price of Consols and affected our credit.

Other parts of the world have also experienced great wars. Finance has an international effect. If you have wars like those between Japan and Russia, or between Spain and America, the loan capital used must have an economic effect, because wars are a waste and they are not reproductive. Wars reduce the amount of capital available for industry, and if you use your loanable capital in other parts of the world it is bound to have an effect upon your credit and your finance. There is no getting away from these fundamental facts, which lie at the foundation of all credit. I should like to refer to some remarks which the Chancellor of the Exchequer made in introducing his Budget. I say, frankly, that in many ways I distrust his finance because by his speeches he indicates that he does not understand the principles underlying his proposals. He has twice made the remarkable assertion when introducing his Budget about the output of gold, and he has enlarged on the enormous benefit which an abnormal output of gold has been to the world. His actual words in a speech delivered on 16th May this year was to the following effect:— Even in the United States of America the prospects are better than they were. There is in addition to that a great output of gold. Those who have given any study to finance, while agreeing that a larger output of gold is of service and a necessity for the credit of the world, admit that an abnormal increase in the output of gold is not a benefit. On the contrary—I apologise to the House forgoing into such abstruse subjects—it is necessary to tackle these problems, especi- ally when the Chancellor of the Exchequer enlarges on these advantages. He has spoken of the rise in prices. Here is one of the principal contributing causes for the rise in the price of commodities which leads to unrest in the labour world, because the labourer, whose wages are more or less stationary, if you decrease the purchasing power of those wages for a variety of causes you undoubtedly make it harder for him to live. He wonders how it is that with all this prosperity around him his state is not so good because of the decrease in the purchasing power of his wages. Let me give one small quotation from Bastiat, one of the ablest French economists, who laid down this proposition with regard to the large increase in the production of gold which took place at the time of the discovery of gold in California. It is only right to state that the discovery recently in South Africa far exceeded that in California. He said:— I do not believe that, on the whole, the treasures discovered in California will add much to the enjoyments, to the real satisfactions, of mankind. If the Californian gold merely replaces in the world that which has been lost and destroyed, it may have its use. If it increases the amount of cash, it will depreciate it. The gold diggers (or rather mine owners) will be richer than they would have been without it. But those in whose possession the gold is at the moment of its depreciation will obtain a smaller gratification for the same amount. That is to say, if there is an abnormal increase, as there has been in South Africa, in the supply of gold it undoubtedly tends to raise the price of commodities and affects very harshly those who are in receipt of a daily wage. Then Bastiat goes on to say:— I cannot look upon this as an increase, but as a displacement of true riches, as I have defined them. I only mention that to show that when the Chancellor of the Exchequer makes a statement such as I have quoted in his speeches he really gives one the impression that he does not understand the principles of political economy. He ought to regulate his finances according to his credit and to the loanable capital available at the time. Although we are all strong social reformers, we have, to use a homely phrase, to cut our coat according to our cloth, and we must have regard, therefore, to our finances. The right hon. Gentleman the Member for the City of London to-night asked what position we should be in if in the present state of our credit we were compelled to go into the market to raise £100,000,000 on Con sols, and he added that we should probably see Consols at 50. I submit that this question of our credit is a supreme question. It is the question which lies at the very root of all reform, at the very basis of our material and commercial prosperity. The position to-day is somewhat similar to what took place after the Crimean War. We then had, as we are apt to have after a war, excessive expenditure. We then had Mr. Disraeli in this House and Mr. Gladstone attacking Lord Palmerston, the Liberal Prime Minister, on this very same ground of expenditure. These two gentlemen were pleading for economy:—one a great Conservative and the other a great Liberal; they were pleading for the same reason as many of us are pleading to-day.

You must have regard to your liabilities. You must face the position as practical business men. The economic laws are inexorable. If you spend beyond what you are entitled to spend you are bound to suffer and to undermine particularly the position of the wage earners of the country. I do not know if it is again necessary to remind hon. Members of the enormous increase in our expenditure. I have referred to the increase in our Navy Estimates and in our Civil Services Estimates, but I would like to call attention to a very interesting Return issued only the other day with regard to the enormous increase in the number of salaried positions in the country during the last four years. Mr. Gladstone on one occasion wrote a very long memorandum to Lord Palmerston in order to point out that a post held by a clerk who had died was really unnecessary and that the country might be saved a paltry £200 or £300 a year if it were not filled up. Imagine a great financier and a future great Prime Minister spending the time to write an exceptionally long memorandum to Lord Palmerston simply in order to save so small an amount! But it was not the amount; it was the principle that was involved; it was the necessity for economy in the public service that Mr. Gladstone had in view on the question of credit, and we must face the real facts; it is of no use hiding our heads in the sand; we must not deceive either ourselves or the public; we must not try to make things appear otherwise than they are.

I should like to point out with reference to this Return that in one Department alone in the number of Civil servants in receipt of salaries ranging from £150 to £500 a year—posts, say, with an average of £300 a year salary attached—there have been 660 added in the last four years, representing an increased charge to the revenue of over £180,000 a year. Then, again, with the number of posts not exceeding £150 a year and those exceeding £500 a year, the total increase in the number of Civil servants added on account of recent legislation has been 1,161 permanent and 3,130 temporary. Of course, we recognise that if you have legislation, such as the Shops Bill, the Coal Mines Bill and the Insurance Bill, entailing an additional number of public servants to carry them out, you must face the difficulty, but I wish to impress upon the Chancellor of the Exchequer the necessity of cutting down the number of public servants instead of increasing it.


Is the hon. Member in order in discussing the estimates of the different Departments?


The hon. Member appears to be referring to the affairs of the country generally. I hope he may be merciful to the House.


I am sorry if, in my zeal for economy, I have gone somewhat beyond the limits of the Bill. I will endeavour to cut my remarks on this subject short. I rather agree with the hon. Baronet the Member for the City of London that the particular policy in paragraph (5), Clause 8, of taking money from the old Sinking Fund for the Development Fund, for sanatoria, and for loans granted to the East African Protectorate, is based on a vicious and unsound system. These reforms, of course, are very admirable in themselves, but undoubtedly all surpluses should go to the reduction of debt, and if we indulge, as I hope we shall, in these admirable reforms, such as sanatoria, we ought to face the expenditure and pay as we go. After all the reduction of debt is a most important principle. One of the first duties of any business man or of any nation is to reduce its liabilities. The country would welcome any party which would again present those questions which the Conservative party presented in the days of its highest fame, namely, that of conserving the resources of the country, reducing debt and taxes. But if we find to-day that party drawn off into the bypaths of Tariff Reform, we who are anxious to see a real Conservative party inspired with that old economic idea can only despair. I hope Conservatism will again recognise that it is better to leave things alone. I believe the great mass of the people in time will come to recognise and give whole-hearted support to the policy of husbanding our resources, reducing our taxes, increasing our Sinking Fund and improving the credit of the country.


It is a very striking comment on the manner in which the present Government treat the financial affairs of the country that they should ask the House to read the Finance Bill a second time on the 9th August, incidentally the hottest day of the year, on a day when three hours of the time of the House have been consumed on the discussion of a private Bill. We were told by the Chancellor of the Exchequer that the actual surplus last year amounted to £5,607,000, and if all arrears had been cleared off that total would be £8,500,000. He told us also that this total of £5,500,000 was made up partially from savings on expenditure amounting to £1,238,000, and the rest arose from excess over estimates. From what sources is this total of £1,500,000 derived from savings over expenditure? I imagine these savings accrued from certain public Departments having sent in estimates which were unnecessarily large, and I think it is a rather striking comment on the supervision of the Treasury that they did not exercise sufficient care in examining the details of the estimates to allow these various public departments to send in estimates amounting to £1,500,000 over the sum they actually required.

I would also draw attention to the fact that this surplus ought really to have been very much larger than it actually was because certain instructions were sent out to various railway companies at the end of March asking them to defer payment of income tax until the first week in April. That had the effect of transferring between £500,000 and £600,000 into the balance of this current year, instead of placing it where it ought to be as a realised estimate of last year. To that amount the Government have defrauded the old Sinking Fund of a sum which undoubtedly ought to have been placed to the redemption of debt. A realised surplus of this kind should be devoted to the repayment of debt, but the right hon. Gentlemen who were so punctilious about the redemption of debt when in Opposition have adopted a rather extraordinary course this year in taking in the first place £1.500.000 out of the old Sinking Fund and voting it for the purpose of sanatoria.

When in Opposition the Members of the Government criticised rather severely any proposal of the Unionist Government to spend any capital sums on the erection of barracks for the Army or on various naval works. All these various military and naval works were specially provided with their own sinking funds, and certain sums are devoted every year not only for the payment of interest but for the payment of the capital sums, thereby ensuring that these loans will be paid off in a certain number of years. Now we have a financially pure-minded Government taking away £1,500,000 which ought to have been devoted to the redemption of debt and spending it in a lump sum on the building of sanatoria. I fail to see the merit of a system of finance which devotes a large capital sum to the building of sanatoria without making any arrangement for paying off that sum in a certain number of years. I think it is very wrong to proceed with the building of these sanatoria out of capital. I am one of those who believe that if you spend a large sum of money on valuable sanatoria, it is conceivable that after they have been put up some new method may be found by the medical profession which will tend to prove that the present method of treating tuberculosis is entirely wrong, and that therefore the sums spent on these buildings would be entirely wasted. On the other hand, if you are going to erect temporary buildings, you ought to pay for these, not out of capital, but out of the annual income. The Government are taking a very wrong step in defrauding the old Sinking Fund and devoting the money, as they propose, for the erection of sanatoria.

Allusion has been made to the devoting of another £1,500,000 for making a present to the Development Commissioners. I wish to draw the attention of the Committee to this fact. Sub-section (2), Section 2 of the Development and Road Improvement Funds Act, 1900, reads as follows:— There shall be charged on and issued out of the Consolidated Fund, or the growing produce thereof, in the year ending the thirty-first day of March, nineteen hundred and eleven, and in each of the next succeeding four years, the sum of five hundred thousand pounds. What does that mean? It means that when they passed the Development Act the House of Commons deliberately put in a clause compelling the Government of the day to contribute out of the yearly revenue of the country a sum of £500,000 each year for four years. In repealing this Section the Government have done something entirely contrary to the spirit in which the Act was framed, and have done something which was not right in taking away another sum of £1,500,000 which should have been devoted to the repayment of the National Debt of this country. On those grounds alone the Government deserve to be censured for the manner in which they have disposed of the surplus of the year.

Coming to the Death Duties, I understand that the Chancellor of the Exchequer estimated for a total sum of £25,150,000; that is an increase of £1,078,000, after deducting for arrears to come in. I would ask have not the Treasury been over-sanguine in making this estimate? I do not think that the Government fully realise what really has been the main, effect of the very large increase in the rates of Death Duties. Undoubtedly it has induced people very materially to split up their estates before they leave this life. Instead of giving their sons and daughters a yearly allowance on marriage they have in a great many cases deliberately handed over large capital sums, thereby reducing the sums which will come under the action of Death Duties. That must have a considerable effect on the yield of the Death Duties. It withdraws a large sum of money from payment of this particular taxation, and considerably reduces the capital sum in individual cases and therefore the rate at which the duty is charged. These Death Duties are a peculiarly crushing burden upon the industry of the country. Surely it is wrong that we should be spending every year no less a sum than £25,000,000 of what is after all the capital of this country upon the ordinary annual expenditure.

Besides that, the huge rate of these Death Duties has a very prejudicial effect on the trade and commerce of the country. The partner in a small private business may die. Surely if his successor has suddenly to find a large sum of money which must come out of the capital of the business it must be a very serious thing for the prosperity of the business. When all these vast sums have to be collected every year it means continuous selling in very large amounts of some of the best securities in this country, and this must have an effect in tending to diminish the prices of some of the chief securities in the market at the present day. There is one other point. I wish to ask for information regarding the Super-tax. I see that the Chancellor of the Exchequer Budgeted for some £3,000,000 to be produced by this tax. and I would be very glad if he would give us actual details of the expenditure incurred in the collection of the tax. I was one of those who did not record my vote in favour of the tax, because I believed that the total net sum it would produce would be remarkably small. I also believed that if this tax was to be fairly collected it would involve a large increase of the staff of the Inland Revenue. I quite admit it is a very simple thing to collect a large sum out of a Supertax if you do not take steps to carefully check the returns. Human nature being what it is, a certain particular class of people will defraud the revenue as much as they can. The Inland Revenue must exercise a continual supervision over the people it suspects of not making accurate returns.

As to the total net cost to the Exchequer of the Insurance Bill, it was going to be £50,000 this year and £4,781,000 in the year 1914. I gather that the latter figure would be the largest sum which would be taken out of the National Exchequer. Let us remember the case of the old age pensions. We were told they were to cost about £6,500,000. What has happened? The amount has practically doubled. If the House of Commons and the country had been told what old age pensions were to cost when the scheme was first introduced, there would not have been so many people who would have given their votes in favour of the Bill or abstained from voting against it. I wish to ask the Chancellor of the Exchequer whether this rate of increase of expenditure can go on. It is curious to remember that the present Prime Minister when he assumed office as Chancellor of the Exchequer had to Budget for £141,000,000. He said that was far too much, and he said, "A return to more economical administration is the first, and paramount, duty of the Government."

Instead of budgeting now for £141,000,000. the present Budget is for no less an expenditure than £181,284,000. That is the very remarkable way in which the Liberal party, who came into power in 1906, mainly on the cry of economy, have carried out their promises at the election. In all seriousness I ask all parties in this House to consider whether the time has not come to put a check on this awfully grave expenditure. We cannot go on like this. Here you have an increase of no less than £40,000,000 in the past five years. Who are the people to suffer in the end? It is very easy to put a tax on rich men, but the high rate of Income Tax of 1906 was a check upon the trade and commerce of the country, besides which it prejudicially affected the profits on industry and the wages of the working classes. You cannot continue piling up taxation upon capital and upon the profits of trade and industry without the working classes really feeling the effects upon themselves. I ask the Chancellor of the Exchequer and the House to try and see whether some check cannot be put upon this largely increasing expenditure, so that there may be in regard to it some better prospects in the future.


The right hon. Gentleman must not be surprised if we in this quarter of the House do not leave the question where it was left by the hon. Member for East Mayo. I ask the Government to give us a sufficient statement as to their Estimate under this Budget of increased Irish expenditure. We had such a statement in 1909, and according to my recollection the figure was put at £450,000 by the right hon. Gentleman the Chancellor of the Exchequer. We had such a statement last year, when I think the Chancellor of the Exchequer estimated that the increase in Irish taxation resulting from the Budget was £750,000. So far, we have not had any statement from the Government as to what they consider the effect of the present Budget will be. I hope the right hon. Gentleman will not think us unreasonable if we ask him to give us such a statement on this one day in the year which is the sole opportunity we have had of discussing Irish finance. We have had no official statement from the Treasury, but we have had a non-official statement given in a curious ventriloquial fashion, the voice being the voice of the hon. Member for East Mayo and the arguments being the arguments of the Treasury clerks. I think the right hon. Gentleman will not quarrel with us if we claim that we should get the regular Treasury statement from the regular Treasury officials. If the hon. Member for East Mayo were a Treasury official I would congratulate him upon having made a typical Treasury statement in the speech which he made to-day.

The first question which I wish to ask the right hon. Gentleman the Chancellor of the Exchequer is whether he adopts the figures which the hon. Gentleman the Member for East Mayo gave us. The average Irish Member of the House of Commons is in a singularly helpless position when he endeavours to discuss this question, helpless I mean as compared with the Treasury expert, who has—I will not say invented the figures, but at any rate the manipulation of the figures with which he supplies the House. My hon. Friend the Member for North-East Cork (Mr. T. M. Healy) pointed out that prima facie, to put it no higher, the figures of this Treasury Return show an increase in Irish taxation of more than two millions of money since the Budget was passed. I quite agree that is not, and my hon. Friend did not say it was, the net amount of Irish taxation. He said there were certain adjustments to be made resulting from the fact that the whole of the taxes had not come in the year 1909–10.

We, the rank and file of Irish Members, who have not had the assistance, as the hon. Member for East Mayo had, of the Treasury, we have none of the figures which enable us to make out those adjustments for ourselves. We may grope through these reports as much as we can, and when all is said and done we have simply the figures which this Return gives, and on those we are compelled to argue, whether we agree or disagree with them. It is said that figures can be made to prove anything, but the primary fact disclosed by this Return is the fact, which I think may justly be described as portentous, that in the last financial year Irish taxation reached the colossal figure of over eleven millions of money, or £11,665,000. In giving that figure I am adopting the Treasury view that the gross figures of collection must be adjusted and must be sifted to get what they describe as the net Irish taxation. I do not adopt these figures. I do not believe they are correct, but they are the only figures I have before me, and consequently the only figures on which I can argue. We start with what I have called the portentous fact that the last financial year saw Irish taxation reach the colossal figure of £11.665,000 as compared with the taxation of £5,200,000 levied at a time when the Irish population was nearly a million and a half greater than it is now. What is the figure to be compared with that? We are told that we cannot compare it with the figure for the previous year, because, in consequence of the financial dislocation caused by the rejection of the Budget, the taxes uncollected during that year reduced Irish taxation to a figure which makes it valueless for purposes of comparison. Accordingly I think the right hon. Gentleman was entitled to claim that we should put out of consideration the figure £8,355,000 for the year 1909–10, and that we should take as our starting point the figure for the year 1908–9, £9,250,000. Therefore we start with the proposition that, taking those two typical years, one typical of the taxation existing before the Budget and the other which we must take for the present as typical of the taxation after the Budget, there is an enormous increase of £2,400,000. Will any English Member tell me that if, instead of sitting in a Parliament at Westminster, we were sitting in a Parliament in Ireland, it would be possible for a Minister to get up and make his financial statement without once adverting to the fact that the taxation of our country had increased by £2,400,000? Yet that is the position in which we are left by the Minister to-day. With that monstrous fact staring us in the face, not one word has been said on the subject of Irish taxation.

I need not go back to the time when we had a Parliament of our own. Suppose we were at the time when we had an Irish Chancellor of the Exchequer sitting at the side of the English Chancellor of the Exchequer, would we be left without-one word on a topic of this kind? Yet I dare say many Members of the House think that an Irish Member is somewhat intruding on their attention because at twenty minutes past twelve he ventures to make a slight allusion to it. I do not hope to make any impression on Members on this question. It is vain for me to attempt to do so, because I belong to a small minority of the Irish representatives, and the voice of the majority as expressed to-day has been raised not in protest against this state of things, but in mild and enthusiastic defence of it, and in bitter condemnation of any Irish Member who ventures to raise his voice in protest. When the only official statement on behalf of the majority of the Irish representatives has been not in criticism of or attack on the British Treasury, but in its enthusiastic defence, minority though we are, not merely now in criticising the Budget of 1910–11, but as we were in criticising the Budget of 1909–10, it is our duty as Irish Members to make our protest.

I consider that we would fail in our duty if we did not do so. I hope the right hon. Gentleman, when he comes to reply, will give us the Treasury Statement and the Treasury defence of this Return, and not leave us to the unofficial defence which was given before The question I want to ask is: does he adopt the figures of the hon. Gentleman the Member for East Mayo (Mr. Dillon)? The hon. Member for East Mayo is driven to defend his previous attitude on the Budget, and to-day rose to demonstrate that all his vaticinations had been belied. Four hundred and fifty thousand pounds, or £500,000, was estimated to be the effect of the Budget on Irish taxation, and so it has turned out. How is it he has got that? By falsifying the amount of taxation from what we stated, and by falsifying the amount of the taxation which we have reached. As the right hon. Gentleman the Secretary to the Treasury has pointed out, there was a reduction of taxation from 1907–8 and 1908–9, the taxation on sugar having been reduced by a slight amount. Whether the figures of the hon. Gentleman the Member for East Mayo were Treasury figures, or contained Treasury figures, or whether they were put forward as Treasury suggestions, or were the product of the unaided genius of the hon. Gentleman himself, they were false!

The question is not what was the increase of the taxation as compared with 1907–8, but what was the increase of taxation as compared with the state of things existing when the Budget was passed? Accordingly we have to start not from the datum line of the half-conjunct taxation of 1907–8 and 1908–9, as the hon. Gentleman the Member for East Mayo has admitted. Now we come to the taxation of £9,435,000, but we have to start from the taxation of 1908–9, which was £370,000 less, and resulted in that year in a total taxation, as the Treasury Minute showed, of £9,250,000. That, therefore, is the datum line from which we should start, not the false datum line invented by the hon. Member for East Mayo to serve the purpose of his argument, and which placed the starting point at the figure some £370,000 higher than it ought to have been placed. The hon. Member for East Mayo started from a false basis. His second figure is equally false. He takes an average, as he said, of two years before the Budget and of two years after. You must necessarily take from one year before the Budget—for the basis of the two years was different— and not start from any average. It was equally false to take an averge of two years after the Budget had passed.

The Budget did not take effect in the first year of its operation. To give only one instance of that fact, the right hon. Gentleman knows that the increase in the Stamp Duties did not at all come into force in the first year of the Budget, and even for a short period of the second year. Furthermore, the familiar complaint of the Chancellor of the Exchequer in the many statements which he made to the House when the Budget was passing through it was that the whole finance, not merely of Ireland, but of the United Kingdom, was so demoralised by the Parliamentary occurrences of the year 1909–10 as to make the fiscal product of the year a figure wholly unreliable for any purpose of comparison. The question then is, if we do not take the average of the two years, as suggested by the hon. Member for East Mayo, what figures are we to take? I do not pretend to be able to speak with any authority upon that subject. I rather complain that upon that subject we have got no statement from the Treasury Bench. It is not for us to make calculations and to put estimates before the House; that is the business of the Treasury officials. Accordingly I cannot have any hope that the figures I put forward are necessarily accurate, but I have made my calculations as well as I could, and instead of the sum of £500,000 odd which the hon. Member for East Mayo has given as the increase of Irish taxation, my estimate, fallacious possibly also, would put the figure at something nearer £1,500,000, and I will tell the House how I arrive at that figure.

I admit that the figures of the taxes for 1910–11, which are £11,600,000, require some adjustment in view of the fact that the arrears of the previous year came into the calculations, and I have endeavoured to arrive at what the accurate figures for that purpose ought to be. The only data given us by the Government are the figures of the taxes for the years 1909–10 and for 1908–9. I have taken the figures for 1908–9 as being a fair basis from which to start, and deducting from that figure £9,250,000, the taxation for 1909–10, which amounted to £8,355,000, it would seem to show a deficit in calculation of something like £895,000. My calculation, therefore, is that the adjustment necessary to be made in the figures for 1910–11 in order to arrive at the normal taxes for that year is the figure of £11,665,000 reduced by £895,000, and that would seem to show that what we call the normal taxation for the year 1910–11 is something like £10,770,000, and it seems to me that that is the figure we must compare with the figure £9,250,000 for the year prior to the Budget.

Taking it on that basis, it appears that the increased taxation from the Budget amounts to £1,500,000. I do not contend that my figures are necessarily accurate. We are seeking information, and surely in view of the portentous facts disclosed in this Return we are not intruding too much upon those who represent the Treasury when we ask what are their figures, and inquire if our figures are wrong, and what is the Treasury estimate of the extra taxation which Ireland has to pay. It is the essence of the situation that the extra taxation from the Budget must increase year by year, and consequently we are entitled to assume that the figures will be larger than last year. Will the Secretary to the Treasury inform us what the Treasury figures are, and will he say whether he adopts the extraordinary calculations put before us by the hon. Member for East Mayo (Mr. Dillon)? The Chancellor of the Exchequer could not conclude his financial statement to-night without having the accustomed Treasury kick at Irish land purchase. He was called upon to explain why there had been such a decrease in the price of gilt-edged securities, and amongst other reasons he gave the familiar one of the calls the Treasury had to make on the public purse by large issues of Consols for Irish Land Stock to carry out land purchase in Ireland.

The right hon. Gentleman said that was one of the causes which led to the fall in gilt-edged securities. I do not understand that argument. I can understand you saying that if you from time to time make large issues of Government securities it will necessarily decrease their price. The amount of money available for investment is necessarily limited, and if you make an unusually large call upon that surplus you will send up the price of Money and send down the price of Government securities. Yet we ask how does that affect gilt-edged securities outside Government securities? It is true that if you raise £10,000,000 for the purpose of buying powder or guns or for paying wages to build "Dreadnoughts," pro tanto you reduce the amount of money available for investment. You send up the price of money and send down the price of Government Stock. But the money invested in land purchase is not spent on guns or "Dreadnoughts" because it is reinvested. How does the issue of Land Stock affect gilt-edged securities? Land Stock is saleable, and it can be put on the market.

When a vendor sells Land Stock and turns it into sovereigns he reinvests it in other securities and presumably in those gilt-edged securities to which the Chancellor of the Exchequer has been referring. That may send down the price of Land Stock or Government Stock, and £5,000,000 of Government Stock may send down the price of Land Stock generally. If you immediately, by the issue of that Land Stock, release five million sterling to be invested in gilt-edged securities you do not send down the prices of those securities: you send them up by giving the general public so much more money to invest in them. Whatever may be said for the view that the price of Government Stock generally is affected by these periodical issues of Irish Land Stock, there is absolutely nothing to be said for the proposition of the Chancellor of the Exchequer that it is accountable for the fall in gilt-edged securities, and therefore I venture to say that that particular kick at Irish land purchase might very well have been left out from the right hon. Gentleman's speech. I will not further intrude on the attention of the Committee. I will wind up by saying that I regard it as a satire on Parliamentary Government that we Irish Members should have to compress the debate upon Irish finance, covering a whole year, into one sitting at this period of the Session.


It would be an outrage to address the House at any length at this hour of the night. But I rise to make a vigorous protest against taking the Second Reading of the Budget at this time of the year. I would point out to the right hon. Gentleman opposite, who is representing the Treasury (Mr. Hob-house), that it is a scandal of the very first class, seeing that on more than one occasion the Prime Minister has suggested to us that we have ample opportunity every year on the Budget to review the whole question of taxation, that since 1909 we have never had a chance of doing so at all. In 1909 a new scheme of taxation was adopted, one to which many of us had very great objection, yet never since then have we had an opportunity of reviewing and discussing it, either when the House was full or at a period when it was convenient for hon. Members to consider the question. For the third time in succession we are put in exactly the same position, and we are asked to debate this subject in the dog-days with the temperature 90 degrees in the shade, with a great hotel in flames near by, and even the time allotted for the purpose is shortened by a discussion lasting three hours on a private Bill. We are invited to discuss this question with some amount of intelligence and with some degree of interest. It cannot be done. Then there is a veiled threat that next week we are to have the Committee stage of this Bill forced down our throats. That will be a still grosser outrage. Although I know it is hopeless to expect to be able to make any impression on the Chancellor of the Exchequer or anybody else when the taxation of the year has to a large extent been collected. I would prefer to discuss this question in cooler weather—even in the months of November or December, when we could give a little more time to it. I trust this is the last time we shall be treated in this manner. We are sent here as representatives more or less—more rather than less—to look after the expenditure of the country and to see that taxation is levied on a fair and just basis. That is our first duty, but we never have had a chance of fulfilling it since the Budget of 1909. I am glad that the Parliamentary Secretary to the Treasury (Master of Elibank) is in his place. I hope that another year he will see that we are not jockeyed out of the rights we possess.

There are two points only I want to raise now. One was referred to by the Chancellor of the Exchequer in his speech to-day, and has reference to the delay in the preparation of the Annual Register of Licence Values. Into the discussion tonight has been pitchforked a very interesting Debate by the Irish party. The Chancellor of the Exchequer left the House today under the impression that the entire responsibility for the delay in producing the Annual Register of Licence Values rested on the unfortunate publican who is taxed to death, and who seems to be liable on all occasions to abuse ad lib. But the publican has nothing to do with it. The Chancellor of the Exchequer and Somerset House issued to these unfortunate people a form, consisting of six or seven pages, asking for particulars which no publican on earth could possibly give. It was the most ridiculous, the most ludicrous, and the most insane circular or form ever issued by a Government Department.

No advice could have been sought in regard to it from those at all acquainted with the subject. Apparently some ingenious clerk at Somerset House was set down to frame as many absurd and impossible questions as he could, and the result was that in a very short space of time four pages of the Form were withdrawn, and only the two last ones were insisted upon. And the joke is that the only information worth 2d. in settling the value of premises was obtainable in the first four pages, and if the authorities had selected some of the interrogations contained in the withdrawn pages they would have been able to get information which was in the possession of the publicans and might have been able to prepare a complete register. One would like to know how far, with the reduced information at their disposal, they have been able to proceed with their register. We only know that the larger houses of £500 and over—of which there are only about 2,000—have been valued by means of the information extracted by the Chancellor of the Exchequer and his satellites. But how many of the remaining 120,000 houses have been valued: how many have had provisional valuations sent them? I know of very few cases myself, and I am afraid there cannot be very many of them.

It has been admitted from the beginning of this controversy that the Licence Duties are excessive. That has been admitted even by the Chancellor of the Exchequer himself. Consequently they are being charged on an entirely wrong basis. We were told when the Budget was brought in that within three or four months the register would be ready. But twelve months have elapsed, and still there is no register of licence value except in the case of the 2,000 houses of over £500, and at the present rate of progress it will be years before the register is completed. Yet all this time the licences are being charged on a ridiculously unfair and unjust basis. It seems to me in this matter the Government have set themselves an impossible task. I do not think it is possible to do it, and the sooner it is acknowledged and some better means are found of levying the duty the better. They ought to be levied on the trade a man does. That of course is the intention of Clause 44, but on the principle on which it is being carried out it will never be satisfactory On the ques- tion of Ireland the right hon. Gentleman put an extraordinary question from the Treasury Bench to the hon. Member (Mr. T. M. Healy). He was talking about the valuation of public-houses in England and Scotland under Clause 44. He was informed by my hon. Friend that those forms had been issued and withdrawn. Then the Chancellor of the Exchequer asked, "Do you want a new valuation or do you not?" The Chancellor of the Exchequer under Clause 44 is bound to have a valuation. He has no right to ask that question.

The law says there shall be an annual register of value prepared for the three kingdoms. While in England and Scotland a valuation upon the new basis under Clause 44 would probably get rid of a great many anomalies and unjust charges, in Ireland the effect would be very different. Ireland at present gets the advantage of an extremely low valuation. The Licence Duties paid in Ireland are far lower in proportion than in England and Scotland, but if Clause 44 were put into effect they would be levied on exactly the same basis as in England and Scotland, and even this Government would be required to pay the same percentage on that basis in the one country as in the other, and therefore the Licence Duty in Ireland would be a great deal higher than it is now. That matter was brought out in Debate in 1909. The hon. Member (Mr. T. M. Healy) pointed out that the Irish Members had made a mistake in allowing Clause 44 to pass. The hon. Member (Mr. Dillon) said, "No, that is all right. He cannot do that without legislation," forgetting entirely that all the legislation which was required was to apply a percentage to the basis which in Clause 44 he and his friends had already passed. That is the exact position of the matter and no one knows it better than the Chancellor of the Exchequer. Another point I wish to mention is that in virtue of a pledge given by him on the Revenue Bill, an attempt has been made to deal in this Bill with a definition of the word "premises." It is made in the interest of the licence holder and is intended to relieve him from being charged on premises which are not used for the licensed trade but which under the old definition were in some cases roped in. The attempt has been honestly made but I do not think is has succeeded. I do not think the Clause is a good one or that it gives what the right hon. Gentleman suggested it would give, and we shall have to propose some Amendments to it.


I should like to join in the protests which have been made against taking this Bill on a day on which three hours have been consumed by a private Bill, depriving the Opposition of its opportunity of criticising the finance of the Government.

It is absolutely impossible now to attempt to raise the various points which it was my intention to raise to-night. While strongly protesting against the course to which we have been subjected, I shall therefore content myself with dealing with one point only, and that is the extraordinary document issued this morning, and which is called "Instructions to Land Valuers." For a long time I felt the greatest possible difficulty in understanding how Increment Duty was going to be worked, or how you were going to arrive when a sale took place at the increment which had accrued. I am sure the House never understood that the effect was going to be what it is according to the "Instructions to Land Valuers." It Is no longer to the Act we have to look for ascertaining that, but to this document. I was not in the House at the time the Bill was being discussed, but from reading the Debates one would understand that it was not to be duty arising on the sale of the building. Over and over again the Chancellor of the Exchequer assured the building trade that that was not his intention, and that it was not the effect of the Act. You have only to read through this document to see that that is its effect. What happens?

Take the simplest case and apply these instructions to it. Assume a case of land and building of which the gross value—land and building together—is £800. The site value of the land alone is £400. Assume that that is sold at the original valuation—assume that it is sold for £1,000—how do you arrive at the amount of the increment value? If you look at the instructions, you will find that what the valuer has got to do is to make two independent calculations. I would like to ask the right hon. Gentleman whether he draws any distinction between a calculation and a valuation. Apparently it is not to be an independent valuation, but a calculation. What is a "calculation" with regard to value? Is a calculation intended to mean a valuation? If so, then surely he had better say so in his instructions. The instructions say that it is to be an independent calculation, and without necessarily—the word necessarily being in italics—being bound by the actual consideration paid. What are the circumstances under which the valuer is bound by the consideration paid? There is no indication. Apparently it is simply left to the absolute discretion of the valuer himself whether he is to be bound by the price paid for the property or not. Either it is the intention of the Act and the Government that he should be bound or not bound by the price received on the sale of the property. But there are some circumstances under which he is to be bound and others under which he is not to be bound. In some way these circumstances should be set out in the circular. Assume that when the valuer comes to make his independent calculation the property has not varied in value at all, that it remains at the original gross value of £800, that the site value is £400, and that £1,000 has been received on the sale.

The site value and the gross value have not gone up, but still, at the same time, Increment Duty would be payable on £200. Payable on what? On the profit of the sale through the vendor receiving more than the property was worth for buildings and land together. Upon the face of this document it is made absolutely clear—I do not say it was intentional, but it is the fact—that the House has been misled, and the building trade has been misled, as to the effect of the Act. The last clause of the document says Increment Value Duty is to be collected in all cases where there has been either an increase in the value or site as compared with the original site value, which is what the House intended, and the only thing; and then there is put in the alternative which the House did not intend, following the Debates or the utterances of the Chancellor of the Exchequer, when the unit of valuation or the interest therein has actually been sold for more than it is worth at the time. That means to say that if as a result, not of a valuation, but what is called an independent calculation, not necessarily bound by the actual consideration paid, but some independent calculation, property has been sold for more than it is worth, then you have no Increment Duty charged on it. I submit to the right hon. Gentleman that he should alter these instructions so as to bring them into conformity with what the Chancellor of the Exchequer led the House to believe the Act meant, or that he will introduce some Amendment into the Act which will make it in conformity with these assurances.


The right hon. Gentleman who has just sat down has touched on a point which was referred to by the hon. and gallant Member for Essex. Both hon. Members rather wished the House to believe that the instructions to valuers had gone beyond the power conferred on the Government by the Act, and the hon. Member who just spoke referred particularly to the last part of these instructions. I think that if he looks at the Act and the instructions he will see that they do not in any way go beyond the letter of the Act, and that they in no way create any powers not provided by the Act itself, and that therefore the instructions, which have been drawn up after careful consideration by the Inland Revenue Department, are perfectly in order. What happens is this. The total value is ascertained. From that value is deducted the value of the buildings. The remainder must be the site. Any value, therefore, which attaches to the site is under the Act capable of being charged with duty and nothing beyond that is done by the instructions given to valuers.

I pass from that and come to the part passed earlier in the evening by the hon. Member for North-East Cork (Mr. T. M. Healy). He referred to the Treasury Return and pointed out to the House that in his judgment there had been an increase of two millions in the taxation imposed upon Ireland by the Budget of 1909–10.

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In support of that contention he referred the House to the figures shown upon page 5 of the Return, and compared the figure for 1910–11 with the figure for 1908–9, because, as he said, it would be unfair to refer to the figure for 1909–10. He suggested that the difference between ten millions which was collected in 1905–9 with the twelve and a quarter millions collected in 1910–11 represented the difference of the taxation raised in Ireland.


Subject to adjustment.


"Subject to adjustment" is practically the whole thing. It is not a mere trifle or incidental. It is the essence of the comparison which must be instituted to arrive at a proper figure at all. What should be done in the case of the revenue collected in Ireland is precisely the same as when collected in England. It is well known to the House that the revenue for 1909–10 was short for reasons I need not enter into, and that the revenue for 1910–11 was over-collected and that much of it had reference to the previous year. It is therefore necessary to add these figures together and to divide them by two, and if the hon. Member (Mr. Healy) will do that sum he will find that the total revenue collected in these two years is £20,800,000, and therefore the revenue which is to be assigned to either of these two years is about £10,400,000. If he will go back to the year to which he made reference—1908–9—the revenue collected in that year was £10,050,000, and the increase therefore in the taxation which has resulted from the Budget is not as he has put it to the House, from £2,000,000 to £2,500,000, but an increase of about £300,000 to £400,000. The hon. Gentleman the Member for East Mayo (Mr. Dillon) put it at £530,000. It is, of course, true that in respect of both these last years the whole of the revenues collected in the two years are subject to certain slight fluctuations which are not material to the case we are now considering.

But in confirmation of what I have said, if the hon. Member for Cork had referred to another Return, which was issued by myself on 28th April, 1910, he would have seen that the amount to be collected in excess from Ireland in a full year—that is when the Land Value Duties have reached their maximum—in respect of the new duties imposed by that Act will amount to £84,000, and in respect to the existing duties will amount to about £518,000, or somewhere thereabout. That is, of course, subject to adjustments to be made. But the total excess revenue to be collected from Ireland in a full year when all the duties have come to full fruition will be £600,000, or a very close approximation to to the figure named by the hon. Member for East Mayo. I hope the figures I have submitted to the House will enable the hon. Member for Cork to correct the opinion he arrived at. Now a great many questions have been put before the House but, as hon. Members have said, the hour is late. Most of the points raised are Committee points. That raised by the hon. Member for Ayr Burghs is clearly a Committee point. He represented that a hardship existed in the cases where a public-house business was intermingled with other business and in order to meet that case he said we ought to put down a definition. Therefore the Clause is an agreed Clause in respect that we are both endeavouring to arrive at the same conclusion. There may be some variation of the words the hon. Member may desire, but we are agreed as to the principle of the Clause.


Why have circumstances arisen to cause a change?


Certain circumstances have arisen to cause us to believe that certain changes should be made, not in the principle of the Bill, but in order to meet proved hardships. There was an observation made upon Clause 8 of the Bill in regard to the disposal of the surplus, but about which I do not think I need trouble the House at this point.. There is no waste or extravagance in making use of surpluses at present in our possession in order to replace expenditure which would otherwise have to be met by borrowing. I hope I may ask the House to come to a conclusion now.


There was one other point on which I think the right hon. Gentleman might have given some further information. I think it is a vital point.


Yes; I think I have the information at my disposal, but I am afraid I have not got it now. I hope I may ask the Committee to come to a conclusion. I have endeavoured to meet all the important points which have been raised, and I hope we may now arrive at a decision on the Second Reading.


I should be glad to accede to the request of the right hon. Gentleman, so far as I am concerned, if the circumstances were in any way normal. I do not want to waste the time of the House in any attempt to register a protest against these proceedings at this hour, but it seems to me that a very important part of this Finance Bill has been barely touched upon in one or two of the speeches in the course of this debate, from which three hours have been taken away by a Private Bill. I refer to Clause 2, dealing with the tax on cocoa and chocolate. You have in that a new departure. It provided that the Customs Duty of 2d. per pound on cocoa and chocolate shall cease. I am not going into the question of fiscal policy, but I think the matter deserves some answer and more information than we have yet received. It will be alleged, no doubt, that this great change is to be made at the instance, and for the benefit, of the great majority of those engaged in the cocoa and chocolate trade; but, on the contrary, hon. Members have to-day received a protest against this proposed change signed by thirty firms, out of the not very large number of those who are engaged as cocoa and chocolate manufacturers in this country.

I am quite aware that there is a sharp division in fiscal opinion among the cocoa trade. I am also aware that there are one or two large firms which are very closely allied with other things besides the cocoa industry. We had last year a speech from the hon. Member for York (Mr. Rowntree), which I do not wish to refer to in his absence, but I gave him notice that I would find it absolutely necessary to do so in order to go into the question. What is the real reason for this Clause 2 in the Finance Bill? I think everyone will agree that it is a general principle of the finance of both sides, and of both schools of thought, that if you are going to make a great change in the financial provisions affecting a particular trade, you ought to do it with a view, certainly not of injuring the trade and industry of the country. What do we find these thirty gentlemen representing firms who are engaged in the cocoa trade say? They say that a meeting of cocoa and chocolate manufacturers was held in London on 24th May, they give a list of the firms represented; there were thirty firms represented, most of whom are well known in the trade. They include Caley and Sons, Epps and Co., the Mazawattee Company, and many others. They say:— This meeting views with grave concern the proposed alterations in the duties on cocoa and chocolate imported into great Britain.


Read the first clause of that.


I will do so shortly. It is well to bear in mind that this is the statement of the majority of the chocolate makers. They say:— That this meeting views with grave concern the proposed alterations in the duties on cocoa and chocolate imported into Great Britain, which appear to have been framed without an opportunity having been given to the majority of the chocolate makers in this country to state the effects they must inevitably have upon that trade, as they will constitute a serious menace to the continued prosperity of the cocoa and chocolate industry, by increasing the foreign competition, without increasing the consumption of cocoa and chocolate, thereby endangering the employment and decreasing the wages of many workpeople and imperilling the large amount of capital invested in this industry, and trusts that the Right Hon. the Chancellor of the Exchequer may see his way to meet a deputation from the Trade, so that he may hear fully the gravity of the issues involved. I do not intend to make any charge against the Chancellor of the Exchequer for not having found an opportunity of meeting the members of the trade, but I think it would be an extraordinary thing if between May 24th and August 9th it was impossible for the Chancellor of the Exchequer to meet so large a body of people engaged in the trade which they allege is threatened by the change it is proposed to make by the Finance Bill. We know the Chancellor of the Exchequer has had other engagements and other interests to consider rather than those of the finance of the country, and matters to attend to requiring perhaps much more preparation than the Finance Bill of the year. The House is indebted to the fact that the Chancellor of the Exchequer did not see his way to see the deputation that we have got this information they have given us. There are two or three other points. They say:— Whether rightly or wrongly, the industry has developed under a certain amount of Protection. That is common to both sides of the House. That is admitted. And:— Whilst the abolition of such Protection may in theory be in accordance with the principles of Free Trade, the result must be that a large number of workers at present employed in the industry will lose their employment. The proposed reduction of duty, amounting in some cases to l½d. in the lb., will be an advantage to the foreign manufacturers, but will not benefit the actual consumer who buys by the ounce. I will not refer to this statement further, except, as the hon. Member opposite (Mr. J. Samuel) asked me, to the first clause of it, which says:— That this meeting welcomes the promise of the right hon. the Chancellor of the Exchequer, to grant a drawback on the cocoa in exported cocoa and chocolate, the absence of which has long constituted a serious burden on the export trade. That brings me to the speech of the hon. Member for York, to which I have already referred. What did he ask for last year. He said, "Give us Free Trade." But this is not what is in the Bill. It is not the total abolition of the duty on cocoa and chocolate altogether. The hon. Member pointed out in that speech that it was an injury to the trade in which he was specially interested, the cocoa trade, because there was no rebate granted. Hon. Members know that the duty on raw cocoa is 1d. per lb., and he found himself at a disadvantage, so far as the foreign trade is concerned. What was his conclusion? That there should be the abolition of the duty on raw cocoa. This year, on this side of the House, those who believe in Tariff Reform would be in entire agreement with that. We have never set up any justification for an Import Duty on raw material. What does the Chancellor of the Exchequer do? He does exactly the opposite. He removes the duty on the manufactured article, which duty, it is generally admitted, has done some kind of good, particularly to chocolate makers and makers of bon-bons and that sort of thing where the cocoa in the chocolate is a very small percentage. At 1½d. or 1¾d. on the lb. that is a very large amount of protection, perhaps 50 or 60 per cent., and a large industry has grown up.

I would give one example. Immediately after he made the speech last year, speaking for himself and other members of the trade, when he said, "Give us Free Trade," there was a protest, not the protest I have been describing, but another protest which was made immediately after his speech. In that protest they entirely disagreed with his view. That protest was not made to the Chancellor of the Exchequer. It was made to the Tariff Reform League. It was thought they would have some influence in bringing the case forward. Among those firms who objected there was a French firm, Messrs. Boisellier, of Watford and London, and I want to call the attention of the House to this, that under the operation of this admittedly protective tax on unmanufactured chocolate we have got a foreign firm coming over here to manufacture the highest class of finished goods, because it pays them better. How can the Chancellor of the Exchequer tell the country—and I fully agree with him—that under the Patents' Act he has done a great benefit to this country, and that the manufacture of such things as Sanatogen, which is a patented article made in Cornwall, and other things of the kind are introduced in this country under his own Patents Act, yet he deals with the Cocoa Duty in this way and instead of simply removing the duty on the raw material, which would save all trouble of drawbacks or anything of the kind, he proposes that which will require an enormous amount of money expended in revenue collecting.

It certainly will not be like the Supertax—one-half per cent. It will be a great deal more than that of what is left of the Cocoa tax, which altogether only brings in about £300,000. The right hon. Gentleman cuts this in half, and takes away the very half which does some good to some people in this country, leaving the half for which there is no justification whatever under any system of finance at all. I think we have to look a little deeper for the real reason of that. Last year the hon. Member for Tyneside in a speech he made gave us the real reason. I have the Hansard Report here. After referring to the amount of the duty, and remarking that the whole thing was a small matter, he said it was not a small matter for the honour and consistency of the Free Trade movement. Later on in his speech he said, "It places an extremely useful weapon in the hands of hon. Members opposite." Now I think in that we have the true reasons. Last night in the Debate in this House there was some reference to the question of the difficulty there might be in the future for Mr. Speaker to decide what is a measure the main governing principle of which is finance. I think there is no difficulty in deciding what is the main governing principle of Clause 2: it is to remove what is alleged to be a useful weapon to those who believe in the system of finance which we advocate, and in order to save the honour and consistency of the Free Trade movement. For that, and nothing else, the interests of thousands of workpeople in, this country are to be sacrificed. We are to go the longest possible way to give some advantage to foreign competition in order to remove, for the sake of the consistency and honour of the Free Trade movement, the one single piece of finance we have still got left as a relic from more sane and intelligible times.

I should have liked to go a little further into this question to point out that we shall suffer in the most highly manufactured goods in the two or three main branches of this trade. The cocoa trade always refers to these as the cocoa duties, although the main thing they affect is the manufactured chocolate industry. The hon. Member for York last year spoke of what he knew of his own trade, and he said one thing which was very remarkable with regard to the cocoa trade. He pointed out that it took practically two pounds of raw cocoa to manufacture a pound of the, I believe, excellent cocoa powder product which is produced by their firm, and he mentioned that there was another article called cocoa-butter which had a small measure of protection, but he never mentioned to this House that this small toy-product is ordinarily valued at a higher price per pound than the finished cocoa itself in Mincing Lane, and in many kinds of cocoa there is as much cocoa-butter as cocoa-powder, so that one can get a little idea of the enormous advantage even in the cocoa industry the incidence of the taxation we have had in the past has been. But when you go from that, which is a much smaller case, and in which this drawback will undoubtedly be of use, and you turn to the chocolate industry, the drawback put into this Bill, which is supposed to be an excuse for leaving the very part of the duty for which there is no excuse at all—the duty on the raw material—will be practially useless to the trade. I say so for this reason. In all the principal markets there are high protective duties against manufactured chocolate. That is so in the case of Spain, Italy, Russia, Germany, France, and the United States—in every country except this.

When you turn to the Colonies you have already the benefit of a very large measure of preference. I say, therefore, that this miserable little drawback of a penny per 1b. will not assist the exportation of a single cwt. of manufactured chocolate to protected countries at all. The effect on the chocolate trade—and that is why you have thirty signatures to that paper which reached hon. Members this morning—will be an enormous incursion of cheap foreign chocolate, though no

cheaper than that manufactured to-day in this country, but cheap foreign chocolate, instead of cheap English chocolate. That will be the sole difference. In Clause 2 we have got the very opposite of what ought to have been done with the desire and intention of removing a very useful weapon from the hands of Tariff Reformers, and for the honour and consistency of the Free Trade movement. I wish to repeat the protest that the employment of thousands of people in this country is jeopardised, if not entirely done away with. Beyond that, I say that if that is the intention, as I believe it is, hon. Members opposite will find that they are greatly mistaken in supposing they have removed an argument against the Free Trade movement. On the contrary, before twelve months are out, unless that Clause is entirely altered, they will have afforded an illustration, not only of the prosperity of a trade which is due to a measure of protection it has received in the past, but that the withdrawal of that protection involves the ruin of thousands of people in this country and of dozens of firms.

Mr. HOBHOUSE rose in his place, and claimed to move, "That the Question be now put."

Question put, "That the Question be now put."

The House divided: Ayes, 114; Noes, 21.

Division No. 318.] AYES. [1.30 a.m.
Acland, Francis Dyke Elverston, Sir Harold Lambert, George (Devon, Molton)
Adamson, William Esmonde, Or. John (Tipperary, N.) Lambert, Richard (Wilts, Cricklade)
Addison, Dr. C. Esslemont, George Birnie Law, Hugh A. (Donegal, West)
Allen, Charles Peter (Stroud) Falconer, James Lewis, John Herbert
Barton, William Ffrench, Peter Lundon, Thomas
Benn, W. (T. Hamlets, St. Geo.) Field, William Macnamara, Rt. Hon. Dr. T. J.
Bentham, G. J. Flavin, Michael Joseph MacVeagh, Jeremiah
Booth, Frederick Handel George, Rt. Hon. D. Lloyd Marks, Sir George Croydon
Boyle, Daniel (Mayo, North) Gibson, Sir James Puckering Marshall, Arthur Harold
Brace, William Glanville, H. J. Mason, David M. (Coventry)
Bryce, J. Annan Greig, Col. J. W. McGhee, Richard
Burns, Rt. Hon. John Guest, Hon. Frederick E. (Dorset, E.) Muldoon, John
Carr-Gomm, H. W. Gwynn, Stephen Lucius (Galway) Munro, Robert
Chapple, Dr. William Allen Hackett, John Murray, Captain Hon. Arthur C.
Clancy, John Joseph Harcourt, Robert V. (Montrose) Nolan, Joseph
Clough, William Harmsworth, Cecil (Luton, Beds.) Nuttall, Harry
Collins, Godfrey P. (Greenock) Harvey, A. G. C. (Rochdale) O'Connor, John (Kildare, N.)
Condon, Thomas Joseph Havelock-Allan, Sir Henry O'Connor, T. P. (Liverpool)
Cornwall, Sir Edwin A. Haworth, Sir Arthur A. O'Doherty, Philip
Crawshay-Williams, Eliot Hayden, John Patrick O'Dowd, John
Crumley, Patrick Higham, John Sharp O'Neill, Dr. Charles (Armagh, S.)
Cullinan, J. Hobhouse, Rt. Hon. Charles E. H. O'Shaughnessy, P. J.
Davies, Timothy (Lincs., Louth) Howard, Hon. Geoffrey O'Sullivan, Timothy
Davies, Sir W. Howell (Bristol, S.) Hughes, Spencer Leigh Parker, James (Halifax)
Dawes, J. A. Jones, H. Haydn (Merioneth) Pearce, Robert (Staffs., Leek)
Devlin, Joseph Jones, Leif Stratten (Notts, Rushcliffe) Price, C. E. (Edinburgh, Central)
Dillon, John Jones, William (Carnarvonshire) Rattan, Peter Wilson
Doris, William Jones, W S. Glyn- (T. H'mts., Stepney) Reddy, Michael
Duncan, C. (Barrow-in-Furness) Kelly, Edward Roberts, Charles H. (Lincoln)
Edwards, Clement (Glamorgan, E.) Kennedy, Vincent Paul Roberts, Sir J. H. (Denbighs)
Elibank, Rt. Hon. Master of Kilbride, Denis Robertson, John M. (Tyneside)
Robinson, Sidney Smith, Albert (Lancs., Clitheroe) Webb, H.
Samuel, Rt. Hon. H. L. (Cleveland) Smyth, Thomas F. (Leitrim, S.) White, Patrick (Meath, North)
Samuel, J. (Stockton) Strauss, Edward A. (Southwark, West) Whyte, A. F. (Perth)
Samuel, S. M. (Whitechapel) Sutton, John E. Wilson, Rt. Hon. J. W. (Worcs., N.)
Scanian, Thomas Thorne, G. R. (Wolverhampton) Wilson, W. T. (Westhoughton)
Scott, A. MacCallum (Glas., Bridgeton) Toulmin, Sir George
Seely, Colonel Rt. Hon. J. E. S. Verney, Sir Harry TELLERS FOR THE AYES.—Mr. Illingworth and Mr. Gulland.
Sheehy, David Ward, W. Dudley (Southampton)
Arkwright, John Stanhope Gilhooly, James Sanders, Robert Arthur
Bridgeman, W. Clive Guiney, P. Sanderson, Lancelot
Carlile, Sir Edward Hildred Healy, Maurice (Cork) Sheehan, Daniel Daniel
Chaloner, Col. R. G. W. Healy, Timothy Michael (Cork, East) Touche, George Alexander
Cooper, Richard Ashmole Hunt, Rowland Younger, Sir George
Courthope, George Loyd Mount, William Arthur
Crean, Eugene Neville, Reginald J. N. TELLERS FOR THE NOES.—Mr.
Eyres-Monsell, Bolton M. Newman, John R. P. Peto and Mr. Cassel.

Bill read a second time and committed to a Committee of the Whole House for to-morrow (Thursday).

ADJOURNMENT.—Resolved, that this House do now adjourn.—[Master of Elibank.]

Adjourned accordingly at Twenty-three minutes before Two a.m., Thursday, 10th August.