§ The scale set out in the First Schedule to this Act shall, in the case of persons dying after the fifteenth day of August, nineteen hundred and fourteen, be substituted for the scale of rates of Estate Duty set out in the Second Schedule to the Finance (1909–10) Act, 1910, as the scale of rates of Estate Duty.
§ Mr. J. M. HENDERSONI beg to move, at the end of Clause, to add the words:—
"Provided always that in no case shall the amount of the Estate Duty exigible in respect of the increased rate per cent. be more than the sum by which the principal value of the estate exceeds the amount which would have made a lower rate of duty exigible."
1728 The Committee will see, I hope, by the time I have finished my explanation, that what I propose is a very reasonable and desirable thing. The object of the Amendment is to afford a little relief in what is a very anomalous position in regard to the Death Duties. The whole grading of the Death Duties, in my humble opinion, is wrong, but I cannot hope, of course, to deal with that. So far, however, as this particular anomaly is concerned, I think that the Committee will be entirely with me in saying that it ought to be remedied. The Chancellor of the Exchequer himself is in no way responsible for this grading of the present Death Duties. It comes down from previous Governments, and I suppose the system is so ingrained in the officials that they cannot very well get out of it. But it is altogether wrong, and the right hon. Gentleman himself has shown in the present Super-tax how duties ought to be graded. The Committee will know that in connection with the Super-tax up to £2,000 there is no extra duty. On the next £500 after there is 5d., and on the next £1,000 7d., and so on. That is exactly what should be done in regard to the Death Duties. The anomaly about the Death Duty is this: take the case of a man who leaves £60,000. On that he pays 7 per cent. Perhaps he leaves £60,100. In this latter case, the man to whom the money is left might go to the Commissioners and say, "You can take the extra £100 and I will pay the tax upon the £60,000." The Commissioners will say to him, "Oh, no, no; we are going to annex that £100 and another £500 besides," so that the man who gets £60,100 is in a much worse position than the man who has had left to him the smaller amount, £60,000. In still larger sums the burden is yet more onerous. A man to whom £100,000 is left is subject to 9 per cent. duty, and if he is left with £100,100 he is subject to 10 per cent. That is to say, because the estate happens to be £100, or even £50, beyond one or other of the standard figures I have taken, the man is mulcted in a quite disproportionate tax.
The Committee will see at once how unfair this is. The difficulty, I know, is how to get over the anomaly. They get over it in New Zealand by saying that in the case of a grandchild, if the amount is £20,000, no Succession Duty shall be payable; if it is over £20,000 there is a duty of 2 per cent; but—and here is the point—"The duty payable shall not be 1729 greater than the amount paid in Succession Duty exceeds the £20,000." My Amendment is, in fact, that the duty shall be so arranged that it shall not be raised by more than the estate is raised. That is to say, taking the £60,000 I have mentioned, if the estate exceeds that by £500, and is £60,500, it shall not be taxed more than £500 in addition to the duty on £60,000, so that the man shall not be the loser, so to speak, by the fact of having been left a somewhat bigger estate—that he shall not be mulcted in another 1 per cent. duty. The answer, doubtless, that the Chancellor of the Exchequer will make to me—though I hope he will not make it—is that this will take money from him. I do not believe it, and I will show why. As it is, there is a constant struggle between executors and solicitors and the Inland Revenue authorities to bring estates just under in the one case, and just over in the other, so that they may save or get the additional 1 per cent. That will not be the case if executors know that the man to whom the money has been left will not be mulcted in an unfair way. They will not struggle so hard to keep the amount down, and the officials will be more satisfied. In any case, the amount lost will be, I think, a very small sum comparatively. I do not think anything will be lost. I do not know whether I should move along with this Amendment my next Amendment, which relates practically to the same thing—
§ The CHAIRMANThe next Amendment of the hon. Member seems to me to be quite a different point, and should be dealt with separately.
§ Mr. NEWMANI beg to second the Amendment.
I have an Amendment somewhat similar to that of the hon. Member for West Aberdeen, though I imagine it is rather a better one. I should like, therefore, to say a few words in support of the Amendment proposed. If the Government accept the Amendment I shall be pleased. The hon. Member opposite has alluded to the injustice and hardship of this particular practice. It is a hardship, and in some cases an injustice. You have to recollect that these hardships and injustices are of comparatively recent growth. If we turn to the Finance Act of 1896 we see that Section 17 provides:—
"Provided that where the principal value of an estate comprises a fraction 1730 of £100 in excess of £100, or of any multiple of £100 such fraction shall be excluded from the value of the estate for the purpose of determining both the rate and the amount of duty, except that where the principal value of the estate exceeds £100 and does not exceed £200 the duty shall be, £1."
4.0 P.M.
That meant, of course, taking an estate, say, of £1,089 that estate for the purpose of the duty was not considered to be worth £1,089, but to be worth £1,000 only. Well, to carry this matter further, in the year 1899 a Committee was appointed, of which the hon. and gallant Gentleman the Member for Chelmsford (Mr. Pretyman) was a Member, and they were asked, amongst other things, to investigate and advise upon the present practice of the Inland Revenue under Section 17 of the Finance Act of 1896, in connection with the allowances and margins for the assessment of estates. In 1900 they reported that the aggregation of separate properties to form one estate for the purposes of Estate Duty made the exact application of the margin unworkable. Each separate estate got the benefit of the £100 margin, and therefore there was grave loss to the revenue, and they recommended that this margin of £100 should be done away with. And the Report goes on:—
We would suggest that the margin of £100 allowed by Section 17 of the Finance Act, 1896, should be abolished, and that the duty should be charged on the exact amount of the property. At the same time we think that the Commissioners should be empowered by Statute to accept a simple statement in correction of an affidavit or account without putting the taxpayer to the trouble and expense of preparing and swearing to a corrective affidavit.In 1900 this particular £100 margin was swept away. Since 1900 we have travelled far, and we have in the last decade raised Estate and Death Duties on three different occasions, and therefore I suggest we should do something to mitigate the hardships that arise. There is bound to be some anomaly where you have gradation at all, and especially when you have gradation by £1. Someone is bound to feel aggrieved, but we should make the grievance as small as we can. The hon. Member for West Aberdeen made his suggestion, but I think, with due respect, it is a little complicated, and that perhaps my suggestion may be more acceptable to the Committee and the Chancellor of the Exchequer. At any rate, I think it will cause the revenue to 1731 lose less money. My suggestion is this: I will give the Committee an instance of what I mean, and how my suggestion would work out. Supposing an estate was worth £100,000, of course the duty at 9 per cent. would be £9,000. If it were £100,100, the duty would be 10 per cent., which would be £10,100—that is to say, for £1,000 of principal an increase of £1,100; that, of course, is a hardship which causes injustice. What would happen supposing my Amendment were accepted, is this: The estate would be assessed, not upon £101,000, but upon £100,000. It would pay £9,000, and then the difference between 9 per cent. and 10 per cent.—that is, £1,100—would be halved, and the total duty would be £9,000, plus £550—that is, £9,550, not £10,100. That is a substantial benefit to a man in that position, and it does not make any great loss to the revenue, and at the same time, which is more important, it is easy to understand and to assess. When you have gradation there must be a certain amount of injustice, and you should make the gradation as easy as possible; and if this Amendment is accepted, instead of there being a loss of £1,100, there would only be a loss of £550. However, I support the Amendment of the hon. Member opposite.
§ Mr. ROBERT HARCOURTI have a hereditary interest in these duties. With regard to this Amendment I desire to say with the utmost frankness having regard to the particular point of £60,000 and £80,000, I have, or may have some day a personal interest in the matter. Let us take any particular point in the Schedule. The hon. Gentleman opposite talked of £100,000 and my hon. Friend the Member for West Aberdeen talked of £60,000. Take it at £60,000. I worked it out this morning and on £60,000 the difference comes to £980 in duty on an increment of £100 on £60,000. I do not think this is a point which divides the two sides of the House. I think it is frankly a defect in the present scale. I think my right hon. Friend will be ready to admit in principle that the scale is rather of an arbitrary character, not based upon any particular principle of policy or of benefit received, or any of those points we argued on Second Beading, and, with great respect to the Schedule, I am inclined to think that the jumps are rather abrupt. I hope my right hon. Friend will accept the Amendment. I should like to throw out the suggestion 1732 in regard to Sir William Harcourt's scale, and when we are dealing with larger sums of money it might be a matter for consideration whether you should not have a Schedule of greater length than half a page in which the jumps should not be so abrupt. I think my hon. Friend has made out a case either for the New Zealand scale or something like it.
§ The CHANCELLOR of the EXCHEQUER (Mr. Lloyd George)I noted before I rose that the hon. Gentleman opposite (Mr. Newman) had a similar Amendment on the Paper, and I thought it better to hear him present his case, because although the wording of his Amendment is different, in substance it is identical with that of my hon. Friend. My hon. Friend behind me asked for sympathetic consideration for this Amendment. I agree that one bearing his name has a right to be heard on this matter. I think there is a good deal to be said for the proposal of my hon. Friend. I will come to the question of uniformity later on. I am now more concerned about the substance. The proposition is this: We have had a figure of £100,000 and a figure of £60,000. I will take £10,000. A man inheriting £10,000 pays £400. If he inherits £10,001 he pays £500, and my hon. Friend says that is not fair when a man is perfectly honest and puts in the extra £1. There is a very strong financial inducement to forget, I will say, some little item in the estate which, under certain circumstances, would have been known, and my hon. Friend says, first of all, it is unfair to a man who puts in the whole of the estate whether it be £10,001 or £10,005 that he should have to pay not £400 but £500, and, in the second place, he doubts very much whether the revenue will benefit. It may be that an estate would be so arranged as not to bear that burden if there was only £10 or £20 in excess of the £10,000. I agree with my hon. Friend; and when it comes to an estate of £50,000 and £100,000 the inducement is; still greater and the injustice is still greater. He suggests a method by which in the case of a man who is perfectly honest and returns £10,001 he should only pay £401 instead of £500 and that if he returns £10,020 he should pay only £420 and not be penalised to the extent of £100 by that process. I agree with my hon. Friend.
I have gone into this very carefully and I think it is a very much better arrange- 1733 ment of the duty. Of course I agree the difficulty in all those scales is that you come to a point of difference between one scale and another which is a very great one, and I am not at all sure that there is not something in his suggestion that the estate would be split up into decimal fractions. At any rate I agree that the leap should not be such a very considerable one between one scale and another. Up to the present we have all slavishly adhered to the traditions we have inherited for fifty years, and I think there is something to be said for an alleviation of the scale with the view to splitting it up into much smaller fractions. I am prepared at the moment to accept the principle of the Amendments moved by my hon. Friend and by the hon. Member opposite. I am advised by the draftsmen that this is not the form in which they would agree to see it inserted in the Finance Act. I would be prepared to accept it in this form with a view to its alteration on Report stage, but once you insert it in this form there is always the danger that in re-opening it you might relieve one person and put a certain burden on another, which would make the alteration a disorderly one on Report stage, and therefore if my hon. Friend and the hon. Gentleman opposite will accept the undertaking of the Government we will put down an Amendment on the Report stage which substantially carries this out.
§ Mr. NEWMANThe Government will?
§ Mr. LLOYD GEORGEYes, the Government will put down an Amendment which substantially carries out this alteration. As my hon. Friend will realise, there are little questions of adjustments to be made when the relief is to be granted to persons who benefit. Neither of these Amendments meet that point. They do not cover all the points, and the Estate Duty Office would like time to consider as between the various individuals who benefit by the relief. Therefore, if my hon. Friend will agree to withdraw the Amendment, and if the hon. Gentleman opposite will also assent, I will undertake that an Amendment carrying out the proposals made will be placed upon the Paper on Report stage.
§ Mr. JAMES HOPEI think the Committee will learn with satisfaction the announcement which the Chancellor of the Exchequer has made. I do not, however, 1734 understand why the hon. Member opposite has put in his Amendment the words, "in respect of the increased rate per cent." That only affects the large estates over £60,000. I imagine the Amendment was drafted in that way because had it been drafted otherwise the Chairman might have moved that it should come as a new Clause. The principle is exactly the same with regard to existing rates. Whether the sum is £10,000, £60,000, or £150,000 the principle is the same, and the right hon. Gentleman in granting the principle, I suppose, will cover existing rates as well as the new rates by his Amendment, and thereby relieve the injustice which perhaps applies as much in degree, but applies equally to the smaller as to the larger estates.
§ Mr. LLOYD GEORGEThe Government will not confine their adjustments merely to the increases proposed.
§ Mr. LEIF JONESI presume that the words "increased rate" means the higher rates in the scale. When my right hon. Friend is considering this Amendment I hope he will consider the form of the Amendment standing in the name of the hon. Member for Enfield (Mr. Newman), which I think is a better form. My hon. Friend proposes that he should take all the excess when you pass the £10,000 limit, but if I understand the Amendment of the hon. Member for Enfield, you only take half the excess. That Amendment, however, has this advantage, that the more a man saves the more he will have left after the tax.
§ Dr. CHAPPLEI want to suggest to my right hon. Friend that there is still another way of dealing with this question. The Amendment moved by the hon. Gentleman is a distinct improvement on the Bill, but there is still another method by which the right hon. Gentleman may get over the difficulty. The difficulty seems to me to be that the jumps are far too great, and there is a strong inducement for an estate to be recorded a few hundred pounds less in order to get a lower rate. It would therefore pay anyone to give away a small sum in order to save a great deal of the tax. I do not think that such an inducement ought to exist. The other difficulty is that there is no reason why you should stop the increment of increase at this limit, and there is a method by which you can arrive at a curve by interpolation. As 1735 a matter of fact, you can have a chart and no one in this House need worry himself with the figures, because that is for the officials to deal with. After you have constructed a chart you have only to glance at it and there you will find the rate for every £1,000. Once you have made out your chart there is no reason why it should not be printed on the back of every Income Tax form, and then everyone could see exactly what rate they would have to pay. I ask my right hon. Friend to consider the adoption of a scientific curve which can be worked out by an algebraical formula.
§ Sir A. MARKHAMMay I draw your attention, Mr. Chairman, to the fact that the scientific curve was on the Paper yesterday, and you passed it over? I would, therefore, like to know if the hon. Member is now in order in dealing with it.
§ The CHAIRMANI understand that the hon. Member has now got an entirely new curve.
§ Dr. CHAPPLEIt is exactly the same principle. Hon. Members opposite were anxious yesterday that I should have an opportunity of explaining this point, and I am glad that that opportunity has arrived to-day.
§ Sir A. MARKHAMMay I call your attention, Mr. Chairman, to the fact that the hon. Member now states that the curve is the same?
§ Dr. CHAPPLEI said the curve was the same in principle. It is only the figures that are different. The formula is the same. There is no reason whatever why a man who leaves £79,000 should not pay at a higher rate than a man who leaves £60,000. It is not fair for the man who leaves £60,000 to have to pay the same rate as a man who leaves £79,000. My hon. Friend has suggested that the Chancellor of the Exchequer will lose revenue if he adopts his Amendment. Certainly he will, but I may point out that he will gain if he adopts my suggestion.
§ The CHAIRMANI am afraid the suggestion of the hon. Member would involve a Resolution in Committee of Ways and Means.
§ Dr. CHAPPLEI am not moving this now, and I am only suggesting an alternative way. When my right hon. Friend 1736 comes to examine the proposition of the hon. Member for West Aberdeenshire, I hope he will also examine the alternative which I have suggested. If an estate of £60,000 has to pay so much, surely an estate of £65,000 ought to pay more, and they ought to go by easy steps to a higher rate. Under the Bill the jump goes up at right angles, and I want the rise to go up as a curve. I want the rate to ascend on an inclined plane instead of by a system of jumps. In the way suggested, the revenue would be increased on a fair basis, because a man leaving £79,000 would pay upon a higher scale than a man who left £78,000, and £78,000 would pay a higher rate than £77,000. Why should you not have a scientific scale? Why should you not have something that everyone can understand, instead of a thing which nobody can understand? Why should you not have a scale whereby everyone who has an estate to leave knows exactly what the duty would be? This Amendment is complex compared with the simplicity of the proposal which I have put before the Committee. A formula would give you all the intermediate figures. Then why should you stop at £1,000,000? Why should a poor man who dies worth £1,000,000 pay the same rate as a man who dies worth £12,000,000? That is distinctly unfair if the system of graduated taxation is right. The tax I suggest would get so high when you get up to £2,000,000 or £3,000,000 that it would tend to prevent people amassing these enormous sums. An algebraic interpolation is so simple that any schoolboy could workout the tax.
§ Mr. J. M. HENDERSONAfter the statement which has been made by the Chancellor of the Exchequer, I ask leave to withdraw my Amendment. I quite appreciate what the hon. Member for Stirlingshire (Dr. Chapple) has said, and I believe this scientific curve will have to come. I give the hon. Member full credit for the way in which he has tried to work out this problem, but when I tried to work it out I found that if a man had £250,000 a year income, his Income Tax would amount under that scale to £1 6s. in the £. I am content with this smaller thing, and the Chancellor of the Exchequer has said that he will bring in an Amendment. I am not wedded to the particular words on the Paper, and the right hon. Gentleman can alter the words as he chooses, so long as they effect my purpose.
§ Amendment, by leave, withdrawn.
1737§ Mr. J. M. HENDERSONI beg to move, at the end of the Clause, to add the words,
"Where the estate exceeds one thousand pounds the amount of Legacy or Succession Duty exigible shall not exceed the amount by which the estate exceeds one thousand pounds."
Under Section 16, if the amount of the estate is less than £1,000, Legacy and Succession Duty need not be paid. If the estate is less than £1,000 a person will not pay anything, but if it is £1,010 the estate would have to pay £50 in Legacy Duty. I think it is rather hard that the odd £10 should involve a person in that large additional sum. The difficulty will be that those who are dealing with estates of about £1,000, or a little over, will endeavour by some means to bring the estate down to a few pounds under £1,000, because that would mean a saving of £50. What I want to guard against is a person being penalised to the extent of another £40 in taxation because of the additional £10 over £1,000.
§ Mr. LLOYD GEORGEThis is not quite the same thing, but it is practically the same principle, being for the protection of very small estates. The facts of what would happen in that case are exactly as stated by my hon. Friend, and it does seem a hardship that there should be all that difference between the estate of £1,000 and the estate of £1,010. I therefore put this Amendment in exactly the same category as the last, and, if my hon. Friend will withdraw it, I will see that an Amendment is put down to cover both cases.
§ Mr. J. M. HENDERSONI am much obliged to the right hon. Gentleman, and I beg leave to withdraw my Amendment.
§ Mr. LEIF JONESCould the right hon. Gentleman say whether his Amendment will be in the form of a new Clause or not?
§ Mr. LLOYD GEORGEI should rather like to consider the matter before answering that question. I do not know whether it would be a new Clause or an Amendment to this Clause.
§ Mr. LLOYD GEORGEIt is very difficult to answer that question, but it is one 1738 of the first I naturally asked. Taking the two together, I think the loss would be about £40,000 a year. That is the estimate made by the Office, and they are extraordinarily accurate in their forecasts. I am prepared to face that possible loss, because I think it is a very just concession, and I therefore accept the principle of the Amendment.
§ Sir F. BANBURYI do not quite understand what the right hon. Gentleman is going to do. Do I understand that he accepts the principle of the Amendment and is going to bring up another Amendment on Report?
§ Mr. LLOYD GEORGEYes.
§ Mr. JAMES HOPE; Now this has been satisfactorily settled, may I ask how this Amendment is in order?
§ The CHAIRMAN (Mr. Whitley)When I was going through the Amendments, I had some doubt on the point myself, but, not being a draftsman, I took expert advice, and I was informed that it could come probably in this Clause, although my own opinion, apart from the legal aspect, was that it would have been better as a new Clause.
§ Amendment, by leave, withdrawn.
§ Question proposed, "That the Clause stand part of the Bill."
§ Mr. FELLThis is the substitution of a new Schedule of Estate Duties, and my first objection is to the Chancellor having made any change whatever. I should still object to the change, whether it were to reduce or to increase the duty. We object to any change whatever being made to this Schedule, which has only been in force for four years. The Estate Duties were enormously increased four years ago, and I object in principle to any change at the present time. It is an immense mistake and will create a great deal of trouble in the country. These Estate Duties have to be arranged for by all prudent people years beforehand. They make their arrangements to meet the Estate Duty payable at death. They are far heavier than any Income Tax or anything of that kind. They amount to 10 per cent., 15 per cent., and 20 per cent. of the whole of a man's fortune, and, when considering what you are leaving to your heirs or dependants, and what fortune you can give them, you must take 1739 the Estate Duties into account and see how you can provide for them. Worse, however, than the heaviness of them is the question whether there is certainty about the matter or not. They may be provided for by certain sums kept as liquid assets, or by insurance, or in other ways, but, if a man has provided for them, it is very hard to find that his provision is made of no avail by the changes the Chancellor of the Exchequer has made. It is most awkward and difficult for a firm when the senior partner dies and a large amount is taken out of the business, and under this proposal the amount payable on his death will amount to half as much again as he thought. It may have a great effect on the future of the firm. That is the first point I hope the Chancellor of the Exchequer will consider. These changes should be made at the longest dates apart possible. They must create an immense amount of difficulty when they are made, and, whether they are increased or reduced, it is a matter of great consideration whether some other way of providing the money could not be found.
I do not think the promise just made by the Chancellor of the Exchequer really alters the proposed scale, though it will slightly alter the sub-division. The scale which was adopted in the 1909–10 Budget is not altered with regard to estates up to £40,000, but from £40,000 the divisions and the amounts are altered. When you come to estates of £100,000 it is 1 per cent. more than it was. It is 10 per cent. now, and it was 9 per cent. It is 1 per cent. more than it was until you reach £300,000, when it becomes 2 per cent. more, being 13 per cent. instead of 11 per cent. At £350,000 it becomes 3 per cent. more, and it goes on increasing up to £1,000,000, when the 15 per cent. fixed by the 1909–10 Budget is increased to 20 per cent. After that it remains at the flat rate of 20 per cent. The right hon. Gentleman probably thought it was dangerous to go above that amount, fearing that a higher rate might produce a less income, as is the case and has often been proved to be the case with various taxes in this country. The new scale affects estates over £40,000 those over £100,000 very materially, and the estates of millionaires very much indeed. The largest number of estates are those between £1,000 and £5,000. In 1913, 15,000 of these came under Estate Duty, 3,500 estates between £5,000 and £10,000, and 2,000 estates between £10,000 1740 and £20,000. After £20,000 they decreased rapidly till there were only eleven estates of £1,000,000 and upwards. It is a little difficult to be accurate, but as far as I can find out, there are 11,500 Super-tax payers in this country, and about 700 or 750 of them die each year. Therefore, the Super-tax people will also contribute largely to these Death Duties.
I wish to call the attention of the right hon. Gentleman to the fact that the amount assessed for Estate Duties is not increasing. We have the figures from 1902 to this year. In 1902 the amount brought in for Estate Duties was £270,000,000, and in 1913 it was £279,000,000, or practically the same. That is a very remarkable thing, because the population has not been stationary. It may be said that last year was an exceptional year, but that is not so, because if you go right through those eleven years, you will find that the highest year was 1906, when the money which came to be valued for Estate Duty was £298,000,000. That shows that there is a very small change, and that practically the amount is stationary. I want to call attention to that because we are raising very much larger sums by Estate Duty than in 1902. We are raising very much more money, but the capital sum itself has remained stationary, and that is something which ought to give us thought. I have heard it said that the capital sum does not increase because there has been such a very large fall in the price of investment stocks, and, if they had remained at anything like the prices in 1902, there would have been a very large increase in the amount liable to Estate Duty. That is perfectly true, but you must set something else against that. There is now a much closer collection of Estate Duties than there was. It is much more carefully looked after by Somerset House than it was, probably, in 1902. It may be remembered that the Chancellor says, that the valuations under the Budget of 1909–10 would be useful, because they would enable him to collect very much larger Estate Duties. If that is so, how is it that the capital sum on which Estate Duty is levied remains stationary? Property belonging to persons who pay Estate Duty is not increasing at the present time, and has not increased for the past twelve years. That is a most serious factor, and one which no Chancellor of the Exchequer could contemplate without grave concern.
1741 When he talks of putting 20 or 30 per cent. more duty on this sum, which is a stationary sum, I say it is a grave question whether it can safely be done. It may take years to find out what the effect is, but I fear we shall discover that the money which is being taken away from the investments of the country is not being made up by the savings effected by the people. There are many ways in which this may be tested. There are many people who, although they have less capital, are getting a larger income than they had four years ago, but that is because they are able to get a higher rate of interest on their investments. When, however, it comes to the levying of the Death Duties then it is found that the estates have not increased in value. The figures which have been published show, indeed, that the value of the estates coining under the Estate Duties is not increasing in this country, although the population is increasing; wealth is increasing, and the spending of the people is increasing. This is an exceedingly serious matter, and when the Chancellor of the Exchequer, after three or four years' experience of high duties, finds that, as a result, the sum upon which he is making his assessments remains stationary, it should cause him to consider seriously before he decides to increase the present rates by 20 per cent.
Over £30,000,000 is to be extracted from the estates of persons who die in this country. That sum has to be raised by the sale of securities, and, in a great number of cases, the effect of the sale must be very marked, not only on those particular securities, but on the securities held by other people. The sale of £30,000,000 worth in any country must have a most depressing effect on the value of all securities, and I have heard it stated that the sale of this amount may reduce the capital value of these securities by ten times the amount—that is to say, the Government, in obtaining this £30,000,000 by means of these sales causes a loss to the community of £300,000,000 by the consequent fall in the values of the stock which are quoted. One may happen to be interested in a particular security and suddenly find it is going down; an inquiry reveals the fact that it is due to the throwing upon the market, through the death of the owner, of his holding in that particular company. If this occurs in one case, and if it is thus possible to estimate the extent of the depreciation in value, how much more serious does it become when you have a large number of capitalists dying, and the 1742 stocks they hold thrown on to the market. It must necessarily seriously depreciate values all round.
The hon. Member for Blackburn (Mr. Snowden) has frequently spoken of the case of a man owning £1,000,000, and has suggested that even if half a million were taken from his estate he would still have ample money left. In the same way he has suggested that it would be no hardship to call upon a man with an income of £10,000 a year to pay £5,000 in the form of Income Tax, as he would still have £5,000 to live upon. But when it comes to enforcing the sale of £1,000,000 worth of security the hon. Member for Blackburn would probably find that soon there would be no sums of £1,000,000 to dispose of, and that the whole business of the country would be seriously depressed. It would become impossible in that great international market of the world, which we have in the City of London, to sell these large holdings of stock, and the Government would have to take the stocks over and hold them until it was possible to realise. It is perfectly clear that the Government themselves consider that 20 per cent. is the maximum sum they dare levy upon any estate in this country. I do not know how long they will continue to hold that view. Four years ago their maximum was 15 per cent.; now they have screwed it up to 20 per cent., but it is apparent from the tables they have produced that they think it would be dangerous to attempt to levy at a higher rate, although suggestions have been made that if a man had £2,000,000 he should be called upon to pay 25 per cent. and 30 per cent. if he owns £3,000,000. But at present the Government, apparently, feel they dare not go higher than 20 per cent.
§ Mr. FELLI am objecting to the Budget proposals on two grounds: In the first place, I object to any change being made at all, and in the second place, I object to any increase being made, and I am merely stating that the Chancellor of the Exchequer is, apparently, afraid to go beyond 20 per cent., because he thinks that if he did he would realise a lesser amount than a lower rate of duty is calculated to bring in. I think it was the hon. Member for West Aberdeen (Mr. Henderson) who suggested a sliding scale, but it was not received with very much enthusiasm by the 1743 Chancellor of the Exchequer, who, in the Amendment which he is proposing to put down, does not, as I understand, intend to go beyond a rate of 20 per cent. One other point on which I should like to touch is the manner in which this Estate Duty presses upon ordinary income. Since the Budget was brought in people have been inundated with proposals from various insurance offices as to methods of providing for these Estates Duties at their death, and if the tables which are sent round are looked at it will be found that they all refer to comparatively young people who can insure their lives for very large sums and thus provide for payment of the Estate Duty. But, as a matter of fact, there are very few young people who are able to insure their lives for large sums; they may become rich men before they die, but it is practically impossible for them, when young, to insure for £10,000 or £20,000. The tables which have been sent round show that to provide for Income Tax and Estate Duty together the cost of insurance is about 3s. 2d. or 3s. 6d. in the £.
§ Mr. CHIOZZA MONEYThat is the highest rate.
§ Mr. FELLIt is the rate applicable to cases of men who get Cabinet Minister's salaries, or, it may be, incomes of £3,000 which render them liable to the Super-tax. In these cases the necessary provision can only be made at a cost of 3s. 2d. or 3s. 6d. in the £ on the year's income. If a man happens to be seventy years of age the cost is not under 5s., and if his age exceeds seventy I do not think the insurance companies would issue a policy to him at all. Men are thus placed in a very difficult position. A man has made his arrangements for the future so far as he can do. He has insured his life and provided for his children, but now he finds that the Chancellor of the Exchequer—only four years having elapsed since the last change—is largely increasing the Estate Duties, with the result that the provision which he has made will prove insufficient, and he will be compelled to effect an increased insurance, necessarily at an increased rate, because he is so many years older—in fact, he will probably have to pay something like 5s. in the £ on his income for the rest of his life. Incidentally I may say I have never heard of incomes in any country being levied upon to the extent of 5s. in the £. Of course if a man 1744 knows of it in time he may find it perfectly possible to live on the balance of 15s. in the £, but when for years he has been regulating his expenditure on the basis of a margin of 16s. or 17s. in the £ and is suddenly called upon to cut it down to 15s. in the £, it is a matter of the greatest difficulty, because it has to come out of the margin of expenses, the permanent fixed charges already absorbing the greater part of his income.
5.0 P.M.
It is a serious matter for the whole country to realise that the people who are going to pay this extra Income Tax, the extra Super-tax, and the increased Estate Duty, represent only about one in every 2,000, and this small number of people are to find the money for all the great benefits which this Budget is supposed to confer. It is an extraordinary position, which has never before been taken up, to fix upon a very small body of people and ask them to bear such a burden. What does it mean? You go along the street and you meet 499 people, all of them with plenty of money, but not one of them is being called upon to contribute one farthing towards the vast benefits which are going to be given by this Budget. But the five-hundreth man you stop and say, "You, and you alone of the 500, are to be called upon to pay the increased burden." All this money will come out of this small body of men who already have to pay Super-tax and insurance money. It is a very dangerous thing. In the old days the principle used to be that you should spread the burdens over the largest number. If you ask the big traders and great manufacturers of this country, the people who are making the big fortunes and who cater for the masses, they will tell you that it is the little sums which go to make these great fortunes. It used to be the idea that the broad shoulders of the masses were the best able to bear these burdens, but now the idea is that nothing more should be put upon them, and they are even grumbling at the duties which they still have to pay. It is possibly a dangerous thing that this excessive charge should be levied on such a small body as these 11,000 people.
§ Mr. CHIOZZA MONEYThe hon. Member who has just sat down gave us a very interesting speech, and we would all agree that the subject he has raised in its broadest aspect is of great importance. I feel, however, that he exaggerates when he asks the Committee to believe that the 1745 amount of wealth in this country is stationary merely because the amounts revealed by the tax gatherers every year have undoubtedly been almost stationary for some considerable period of years. He pointed out, quite justly, that the lump sum revealed during recent years for the purposes of Death Duties has approached £300,000,000, and has stuck at or about that sum in a very remarkable manner. Does that show that the amount of wealth in the country is stationary? The hon. Member fears and represents that the capital of the country has been stationary, and that it is therefore the duty of the Chancellor of the Exchequer to think twice before he imposes heavier Death Duties. I would point out to the hon. Member, as I did once before in this connection, that these figures do not show the actual amount of capital which would be revealed if there were no Death Duties and if one could have a revelation of the aggregate of estates made over independent of the Death Duties. As the Death Duties increase, you get the really remarkable fact—perhaps the most remarkable fact ever produced by taxation—namely, that rich men begin to give their property away during their lifetime. That is one of the chief things we have to consider in this connection, and it is one of the chief arguments the hon. Member might have used against the increase of the Death Duties. That main argument he did not use, although it seemed to be implicit in the facts he presented to the Committee.
Three years ago I pointed out on one of these occasions that there is undoubtedly the clearest proof that you get an increased evasion—it is hardly evasion, but an increased avoidance of the Death Duties as you increase the rate of those duties. The facts the hon. Member gave as to the effect of the Death Duties since 1906 very largely support that view. The point is, What is the effective maximum of Death Duties? If I have some sympathy with the proposal to omit Clause 9—which I say at once I shall not vote for in the Lobby, if it is pressed—it arises from the considerable doubt at present in my mind as to whether this further increase of the rate of the duties will really increase the revenue obtained from them. Some years ago I ventured to suggest, before these recent revisions were made, that the Death Duties might be increased. It has always been held that Death Duties are a very convenient instrument of taxation, be- 1746 cause the property is, as it were, between heaven and earth, and is not in the possession of one man or the other. But when I made that suggestion I did not myself venture to suggest that the Death. Duties should be as high as 20 per cent., not because I had that almost superstitious regard for the millionaire estates that seemed to be possessed by the hon. Member, but because of the question whether the higher duty would really produce a higher revenue. The hon. Member truly pointed out that there had been a certain fall in values. That is a partial explanation. Every one of us knows of actual cases in which the Death Duties have been evaded by gifts inter vivos. There was a conspicuous case only lately, which is present to most of our minds, in which a certain nobleman gave away property to his sons, but one of his sons unfortunately predeceased him, and the father had to pay the Death Duties on the property which had been given away in an attempt to evade the Death Duties.
On the point whether capital has been increasing or not, there is undoubtedly a number of statisticians of eminence who have taken the trouble to estimate what our investments have been in recent years. There is, fortunately, every reason to believe that there has never been more new investment than there has been in recent years. An hon. Member opposite shakes his head. If he contends that that is not the case, I shall listen to him with very great interest, but I see no reason, for not accepting the statements which have been made on very good evidence—for instance, that for last year there was a record investment in this country. I do not regard the character of that investment as by any means satisfactory. Certainly a great deal too much, in my opinion, was made abroad rather than in this country. That, however, does not affect the question of property possessed by persons in this country, and therefore subject to the Death Duties. There can be no doubt that the hon. Member's fears on that head are not justified. There is another point I should like to urge upon, the Government, namely, the capriciousness of the Death Duties. Some years ago, when I was endeavouring to form a true conception of how often on the average property passed from persons to their heirs, I took the trouble to investigate for a period of about two centuries how often titles had passed in various families. The degree of variation 1747 that was shown was extraordinary. You found one family where, during the period of two centuries, the title had passed every forty years, and you found another family where the title passed every seventeen years. What does that mean? That the estates, or a large part of the property, passed with those titles in all probability, and therefore, if you levy in a higher rate of duty, you would be taxing different families very unequally. That is a very strong argument as to the justice or injustice of the Death Duties. For that reason, and for the reason that I believe we have very nearly reached the point, if we have not already done so, at which the Death Duties cease to be effective as an instrument of revenue, I must confess I would rather have seen my right hon. Friend get his extra revenue from the Income Tax than from the Death Duties. I feel that very strongly.
We have no proof of the fact, but there is this possibility to consider, that if this further increase we are now voting were not made we might get more revenue during the next five years than if these actual alterations were made. It is not susceptible of proof, but there is a probability that it may be true that in screwing up the Death Duties we shall simply be screwing up the desire to evade payment of the Death Duties, with the consequence that there will be those who for a number of years will rise up to call my right hon. Friend blessed, a consideration which perhaps was not present to the mind of the hon. Gentleman who just addressed the Committee. I have heard it said that there is a good deal to be said for the Death Duties from that point of view as the distributors of property, but I am not one of those who believe that taxes ought to be imposed with what one of my hon. Friends called a "policy end" in view. [HON. MEMBERS: "Hear, hear!"] I am glad to hear those cheers from hon. and right hon. Gentlemen opposite on that point, because it also affects the policy with which they are concerned in other directions. There is an alternative way of taxing capital, which is practised in Prussia. I am afraid these references to Germany become rather boring after a time, but one cannot help turning one's eyes in the direction of a country which has been so eminently successful in governing itself. The Prussians graduate their Income Tax on a scale which has very fine steps, and they differentiate it by causing 1748 every man to declare the value of his capital and imposing a yearly tax upon the value of that capital. That is an alternative to the Death Duties, and it is an alternative which is perhaps worthy of consideration in this country, in view of the very great difficulty of avoiding the inter vivos passing of property. When a man to avoid Death Duties gives away a part of his property, you cannot really say that he has committed an immoral act. You cannot condemn him on moral grounds. It is not the ordinary case of a man evading taxation, and you cannot put it on the same footing. All of us feel the difficulty in meeting that point. That being the case, the question arises whether we ought not to cease advancing the Death Duties, and to seek other and more equitable means of raising the revenue we need. I am sorry I have been so long, but with these observations I do commend very seriously these matters to the attention of His Majesty's Government.
§ Mr. PRETYMANEveryone has listened with great interest to the speech of the hon. Member who has just sat down, and I think everyone realises that his speech was made with the real object, from a nonparty point of view, of improving our knowledge of taxation. We have all recognised on this side of the Committee that the hon. Member has approached this subject from that point of view with great knowledge and after great study. I wish to approach this question of the Death Duties mainly from the point of view of our agricultural industries. Before I deal with that, I would strongly endorse the remark of the hon. Gentleman who has just spoken as to the weak point of the Death Duties in the great inequality with which they fall upon different estates. What he did not point out, but what I am sure would be in the minds of the Committee, is that the inequality becomes more serious in proportion to the rate of the duty. There are many inequalities as regards taxation which you cannot afford to disregard when the rate of the duty is not very high, but when you come to such a rate of duty as is proposed in this Clause then the inequality is tremendous, and it may happen that one estate pays nothing during the period, while another estate of exactly similar value is practically wiped out of existence. That particularly applies to agricultural land. We on this side of the House, in opposing this Clause, stand this year on very much stronger ground than we have stood in 1749 similar Debates in the past, because the answer which is always given to any objection, to increasing taxation in this manner is—what alternative have we got to produce in order that the Chancellor of the Exchequer may find the money. We unanimously voted against the reduction of the Income Tax from 1s. 4d. to 1s. 3d., and I said at the time, and I think it was the general feeling on this side, that if extra money has to be raised it is far preferable to raise it by Income Tax than by raising the Death Duties to this wholly unconscionable figure. Therefore, it cannot be thrown in our teeth that we are not prepared with an alternative method of raising the money, and we axe entitled to object on the strongest grounds to this enormous increase of the Death Duties.
I do not think hon. Members opposite in the least understand what the effect of the Death Duties is upon agricultural estates. An agricultural estate is a partnership, and on every agricultural estate a certain amount of the capital for working it and getting the agricultural produce out of it, and for increasing its productive capacity, has to be found in partnership by the owner and by the tenant, who is the cultivator. When you impose duties upon that property in the form of Income Tax, that is recognised, and it is recognised that to take large sums out of that estate without the least regard to ability to pay is injurious to the partnership and injurious to the productivity of the estate. Yesterday we were discussing an Amendment to reduce the rate of assessment to Income Tax upon agricultural estates to somewhere near the figure which is actually received. Agricultural property in this country is now a very small proportion of the total wealth of the country, and a continually declining proportion. Nothing is more often the subject of debate, and I believe there is no more genuine desire on the part of hon. Members than to do something to improve agriculture. Hon. Members say and think that agriculture is sick, and that the House is to spend large sums of money in endeavouring to improve the conditions of agriculture, housing, wages, and so on, and yet, when that is one of the live questions considered by the Government, here comes the very Chancellor of the Exchequer who makes these proposals and asks the House to sanction a rate of Death Duties which is absolutely destructive of the productivity of any agricultural estate 1750 upon which it falls. Take an agricultural estate of a capital value of £100,000. Hon. Members perhaps think that an agricultural estate of a capital value of £100,000 must mean that the man has a very large income who owns it and is quite capable of paying the duty. We are now told that the Death Duties are to be based upon a valuation. I happen to have the valuation of a farm which will put these two things into their proper relations. It is a farm of 290 acres, and in twenty years the net income received from it averaged rather less than £120. It has only an agricultural value, and the valuation shows that. There is no addition whatever for building value. The total value is just over £8,000, the gross rent is £250, and the net rental which the owner has received for the period of twenty years is £118.
§ Mr. LEIF JONESmade an observation which was not heard in the Reporters' Gallery.
§ Mr. PRETYMANNot necessarily so. That is not very comforting to the owner if he is dead and has to pay the duty. I do not think that is a fair interruption.
§ Mr. LEIF JONESI did not mean it to be unfair. My point was that if the owner has been spending very heavily during the last twenty years, surely the average expenditure during the next twenty years would not be anything like the same. If the hon. Member wished to be perfectly fair he would take something more like what would be the average net rent than the rent of twenty very expensive years.
§ Mr. PRETYMANTwenty years is a pretty long time, and I think a fair time to take. As a matter of fact a considerable proportion of that money is an annual outgoing for the maintenance of a seawall, tithes, and so on, and I do not think it is very far from the average. If the productivity of the farm is to be increased, the expenditure will probably have to be continued at something like the same rate. If it belonged to a £100,000 estate the rate of duty will be 5 per cent., the Succession Duty 9 per cent., which is the new rate, and the Death Duty would be something over £1,100. So that the owner of the estate, out of an income of £120, has to find a duty of £1,100. Where is he to get it from? Is he to sell? That is the one remedy of hon. Members opposite. Why should he keep it? Why should he not sell it to someone else who has money? That is, I suppose, part of 1751 the process of taxing out of existence. It really is, from the point of view of agricultural owners, a scandal that the Chancellor of the Exchequer should have even suggested that any class in this country is to be taxed out of existence. But this is what it is doing as a result of that taxing out of existence. I have a letter which appeared in the "Times" only three or four days ago from a West Country farmer. I do not know him, but I have no doubt it is genuine. He writes to say:—
The land I occupy has been in the same family for over three generations and is probably some of the most productive in the country. I am well under forty years of age, have worked upon the land practically the whole of my life, and have not the slightest inclination to add to the population of the already overcrowded cities. But now the landlord, for good reasons, and as he has a perfect right to do, has decided to dispose of the property and I am under notice to leave. I have been able to make a living out of the farm and have saved a little money, but not sufficient to purchase, and do not care to overload myself with a mortgage (if I could) with its attendant expenses. What am I to do? I am writing under a nom de plume, so perhaps may be allowed to say that I believe myself to be a practical farmer, with a thorough knowledge of land, cattle grazing and dairying. I pay out in rent, labour, rates and taxes, considerably over £1,000 per annum, and my living expenses in any year have not exceeded £"200.He is going to the Colonies, not because he does not prefer to remain in England, but because there appears to be no opportunity open to him to make the best use of his experience and knowledge here. That is the man who suffers, and the tenant farmers of England—and I know I am speaking their views as a body—desire to be left alone under the owners of land in this country and under the same conditions as have obtained in the past. Of course, if the land is wanted for a public purpose, that is another matter altogether. The land may be taken, and properly taken, at its fair value for a public purpose, but to place burdens upon the land which force it into the market when the tenant cannot buy, and to force that tenant and his capital abroad, is to starve the land. In the case I have given nearly ten years of the entire available income is taken at one stroke in Death Duties, and that only on a moderate estate of the value of £100,000. What happens? I can tell the Committee my own experience. I have owned an agricultural estate for twenty-five years, and I have done what many owners have done: I have spent the income of the estate upon improvements, and the result of that has been not to increase my own income. The whole rateable value of the district has im- 1752 proved, the cultivation of it has improved, and the capital expended has given opportunities, not in this place only, but in many others, to many people to make a living; and further than that, the taxable capacity of the area has been increased and the State is legitimately getting an improved revenue out of it. Supposing at the time I succeeded to that estate these duties had been in existence, none of these things would have taken place. The owner could not have lived upon the property, the estate would have been starved, and the condition of the whole district would have been wholly inferior to what it is to-day. The whole life-blood would have been drawn out of the estate, and it is only because these duties were not enforced that the income has been available in order to improve the productivity of the estate. The effect of imposing duties upon agricultural property at this rate, and its being a pure gamble whether the duties fall upon the estate or do not, is that you come down upon particular agricultural areas and suck out the whole of their life-blood and leave them practically derelict for a term of years.The Chancellor of the Exchequer has shown in the Income Tax Amendment, which he put on the Paper himself yesterday, that he desires in the matter of Income Tax to treat agricultural property fairly. I am strongly of opinion that on general grounds the rate is too high on all kinds of property. But, putting that aside, what the Chancellor of the Exchequer must realise is that the taxing conditions which he applies to a great industrial community cannot be applied without variation to the small part of the capital of this country which is invested in the agricultural industry. It cannot be done without crushing and ruining that industry. Sir William Harcourt did recognise that, because he enacted, and it is the Chancellor of the Exchequer who has abolished that exemption, that on purely agricultural property no Death Duties should ever exceed a certain number of years' purchase of the income. All that the Chancellor of the Exchequer does is to remove that Clause and to deprive agriculture of the exemption, and so to put the whole burden of Death Duties, calculated for a great industrial country, upon the small amount of capital invested in agriculture. We have a return which was furnished by the Treasury at the request of Mr. Austen Chamberlain. Here we see 1753 a rate of Income Tax which is comparable to the different rates of Death Duty levied under this Clause. I put it to the Chancellor of the Exchequer whether it is not worth considering in the case of purely agricultural property, instead of having to pay this enormous burden of Death Duties, there might be charged some extra Income Tax. There would be no breach of principle there, and people paying Income Tax would get the benefit of the reduction in respect of useful and beneficial expenditure on estates. In connection with agricultural property, you can do this from the point of view of Income Tax.
I tell the Chancellor of the Exchequer that the rate of duty which he proposes to impose on agricultural property is absolutely destructive of the only chance which the owner of agricultural property has. The effect of the duty imposed on agricultural property is to make it fall in an absolutely crushing way, with the result that the owner cannot live on the estate. He goes to some other place and takes up some other work, instead of being able to maintain his touch and partnership with those who are partners in working the estate. He goes away and forms new ties and interests, and when the duty has been paid he is never able to take up the position he would have had there but for the duty. The one thing which is disliked by the whole population of an agricultural property is that the owner should be driven away, that someone else should come in to keep the place, and that the personal touch between the owner and those who live upon the property should be lost. If the Chancellor of the Exchequer desires—and Ave are led to suppose that he desires—to improve the condition of agriculture, I say that he is not only not improving it by imposing duties on this scale, but he is absolutely destroying the opportunities in connection with most agricultural estates. When these questions are being discussed the owners of agricultural property are talked of as if they were tyrants and men of great power and position, and it is thought that it is the weak outsiders who are endeavouring to get their little bit and to share the monopoly, and not the agricultural owners, who will go down. The exact contrary is the case. Agricultural owners are in a weak minority in this country, and all we ask for is justice. I desire to place it on record that if we go down owing to this super-taxa- 1754 tion of agricultural property, we go down, not because we deserve it, but because we are too weak to be able to fight and because our numbers are not sufficient. I do stand up solemnly to protest that if the House of Commons imposes Death Duties at this rate on agricultural property they are destroying the agricultural industry. The agricultural industry cannot bear this. It is too high; it is altogether excessive; and if the Chancellor of the Exchequer with that knowledge continues to impose that rate, then he will foe the man who has destroyed the agricultural interest in this country.
§ Mr. HICKS BEACHI wish the Chancellor of the Exchequer had been in the House when the hon. Member for East Northamptonshire (Mr. Chiozza Money) addressed the Committee. I listened to his speech, and it was apparent that having made a great study of the subject, he was directing his knowledge to the demerits of this particular course of taxation. He laid particular stress on the fact that this form of taxation really is beginning to be a failure rather than a success, and that you have within the last two years apparently reached the limit to which you can go from the Chancellor of the Exchequer's point of view in putting burdens upon capital. If we are to draw any inference at all from the results of the duty in the past two years, we are right in saying that in a year or two's time, instead of its bringing money to the Exchequer, it will bring less money in all probability than in the past two years. The hon. Member told us that the total value of estates brought into valuation for the Death Duties in 1902 amounted to £270,000,000, and that in 1913 the amount had increased to £279,000,000. I think everybody admits that during that particular period the general wealth of the country has very much increased, and though I have not got the actual figures with me showing the total amount assessed to Income Tax during the same period, I fancy that if the figures are worked out it will be found that the total amount assessed to Income Tax had enormously increased in 1913 as compared with 1902, while the total amount of estates brought in for the purpose of Estate Duty has only increased by the very small sum of £9,000,000. That is undoubtedly a very high amount on which these duties have been levied. When people talk of a maximum of 20 per cent. as only applying to millionaires, 1755 they forget that quite apart from Estate Duty there is also the duty called Legacy and Succession Duty, and that it may occur in the case of a large estate that the total amount of the duty is not 20 per cent. but 30 per cent. You have to add to the total Estate Duty the amount of the Legacy or Succession Duty, which varies from 1 per cent. up to 10 per cent. It is these high rates of duties which we, as a Committee, have to consider. We have to see what in the past few years has been the accumulative effect of these two rates. This form of taxation has undoubtedly proved a failure as a fiscal instrument. Quite apart from that, I maintain that this particular form of taxation has one very apparent vice, which I think, so far, has not been mentioned in the Debate this evening. It is that by putting so much taxation on capital you are really paying out of the capital of the country your annual expenditure. I do not think that anybody can hold out any promise of the Death Duties being abolished, but I think the time has come when the whole question of the Death Duties should be seriously gone into—the question of their effect, their amount, and the general incidence wants quite as much careful inquiry as the question of the Income Tax, into which the Prime Minister has already promised an inquiry.
I hope that the Chancellor of the Exchequer will tell us this afternoon that the same Committee which we believe is going to inquire next winter into the question of Income Tax will also make very careful inquiry indeed into the general question of Death Duties. We have to remember that though the Government are always talking about the amount of debt paid off during their term of office, they have also placed an enormous charge on capital during the time they have been in office. When they came into office in 1905–6, the total contribution of capital to the Exchequer was £13,000,000, and every year since then that amount has been gradually rising. Last year we found that it amounted to £27,000,000. It probably amounts now to no less than £28,750,000, which is simply a tax on part of the accumulated capital of the country, and, therefore, if they are paying off the debt of the country, it is only fair at the same time to mention that the Government are taking large additional 1756 sums from the ordinary capital of the country in order to pay off their regular liabilities.
The Death Duties are very unsatisfactory as a fiscal instrument from the point of view of their being so precarious and unequal in their incidence. As has been pointed out they affect different families in totally different ways. You get one man living in one part of the country, and he is lucky enough to escape payment of these Death Duties. On the other hand, if you take a neighbour living next door, you find for some mysterious reason that his family fall into an unfortunate cycle of short lives. An unfortunate example of that was brought before us quite recently. Sir William Anson, who died a few weeks ago, lost two brothers within twelve months, and his nephew lost his life about two weeks ago. That is only one example of the unequal incidence of the duties. On the other hand, they are not at all fair in the rates at which they are now levied. I would very much like to support the view of the hon. Member for the Montrose Burghs (Mr. R. Harcourt) when he said that the whole question should be carefully gone into and the rates revised. There is no doubt that the gaps are far too large, and that the tax would be very much diminished if it operated in ¼ or ½ per cents. instead of 1 per cent. as at present. My hon. and gallant Friend the Member for Chelmsford has alluded to the question of the incidence of the Death Duties on agricultural property. It is true that the effect on agricultural property is severer than on other forms of property. A deceased person who leaves estate in the form of personal property leaves a form of property which is very much more disposable than an estate composed of real property. There are a great many agricultural estates which have gradually accumulated and which are commonly called ring fence estates. That particular kind of estate is worked upon as economic a basis as possible, and it is most difficult to sell one part of the estate without doing considerable damage to the other parts. I for one believe it would be far better both in the case of agricultural property and personal property if this form of taxation of capital, if we are to have it at all, could be levied on a regular period of years rather than on the occasion of the death of the owner. This is a great hardship. The people who really suffer, as my hon. Friend pointed out, are those who are engaged in cultivating or working upon 1757 the property. I believe that the imposition of this additional burden in the form of Death Duties is a very great mistake from the Treasury point of view. I believe that it would be far sounder to pay our way as we go along by an increased rate of Income Tax rather than by raising the Death Duties to the extraordinarily high figure to which they have now got, and I believe that any attempt to raise them once more will entirely destroy this form of taxation.
§ Mr. C. E. PRICEThe hon. Member for Chelmsford has drawn a distinction between Death Duties on land and on other forms of property.
§ Mr. PRETYMANNot land alone. I said land used for purely agricultural purposes.
§ Mr. PRICEWhy should you draw a distinction between agricultural land and any other form of property? A man can make provisions in the case of agricultural land in precisely the same way as if he were engaged in business. He can insure his Death Duties. There is infinitely more embarrassment caused in business by the Death Duties than there is in the case of any form of land. If a partner in a business dies, it is a very serious source of embarrassment very often to find the necessary capital. Therefore, to say that a man owning agricultural land is in a worse position than a man with his money invested in business, is absolutely fallacious. Not only so, but the man who owns agricultural land can sell part of his land, while the man with money invested in business cannot sell part of his machinery or part of his property in order to meet the Death Duties. The only way that he can meet it is by increasing his insurance, and that is open to the man with agricultural land. Therefore, to put a man who has invested his money in agricultural land in a preferential position with regard to Death Duties, as compared with the man who has invested a similar amount of money in business, would be grossly unfair. In listening to the speech of the hon. Member I was reminded of speeches which I used to read of Cobden and Bright urging that money invested in land should be subjected to the same principles as money invested in any other kind of property, and the hon. Member who speaks in that manner at this time of day seems to be entirely out of date. I quite sympathise with men who have to pay these very heavy Death Duties. It would have 1758 been ten times better if this House had adopted the plea of so many corporations in the country who petitioned for the right to rate upon land values. To men owning property, whether their money is invested in machinery or anything else, these Death Duties are a very serious matter. The present position has all been brought about by the fact that this House has not listened to the appeal which has come from the corporations in order that they might rate upon land value. Instead of adopting that course, the House is now proceeding to increase Death Duties and Income Tax. That is not the best way to meet the situation, and it would have been ten times better to have acceded to the appeal of the corporations and given them the right to rate land values.
§ Sir ALEXANDER HENDERSONIn urging the Chancellor of the Exchequer to reconsider the Death Duties set up in the Schedule, I would make an appeal to him, basing the appeal upon the injury done to the commerce of the country by the existing rates, and the evidently greater injuries that will be done if these rates are increased. I know that from time to time experienced financiers have pointed out to him that the present scale of the Death Duties has necessitated the realisation of securities for raising the capital required, and the result has been a depreciation in price without parallel in the history of the country. The present Death Duties require a realisation of Stock Exchange securities to the extent of nearly £500,000 per week. That, as a rule, is a larger amount than the markets are able to absorb. The whole principle of the Death Duties is bad. A tax upon capital for revenue purposes must be unsound, and when Death Duties reach these high figures they become to my mind a scandal. Since the Death Duties were rearranged in the year 1894–5, I find that some £400,000,000 of the nation's capital has been absorbed by these various estate duties. A large proportion of that £400,000,000 has been gathered in during the past few years since the present Administration came into Office. The reduction of debt of which they are very proud should, at any rate, equal the amount of those Death Duties. It is only a question of opinion, but I think that it can be shown easily that the community is suffering greatly from this form of tax. The Chancellor of the Exchequer on the 4th May last gave a quotation from 1759 some authority to the effect that the increase in the National savings since 1909 has reached the enormous figure of £1,750,000,000. I can quite understand why the Chancellor did not comment on that quotation, but it was given with the obvious intention of convincing his followers that all was well with the country's finance. I would like to give a few figures which I think will dispose of this contention. Since the Government came into office in 1906, the value of nearly all Stock Exchange securities has declined by nearly 20 per cent., and I maintain that to a very considerable extent this decline is due to the realisation necessitated by the Death Duties. Consols in 1905 stood at 91. They are now at 75. This is a drop of 16 points, equivalent to 17¾ per cent. Securities in industrial undertakings have fallen in even greater proportion. The highest class of railway debenture preference stocks are fully 20 per cent. lower than in 1905, and in the case of stocks which are less secure the fall has been even greater. The "Banker's Magazine," which, I think, is generally recognised in financial circles as being an authority, gives a valuation of 327 representative securities. On the 20th October, 1909, the value of these securities was £3,732,000,000. On the 20th May this year the quotations gave a value of £3,385,000,000. That is a fall on these securities alone of no less than £347,000,000. These are representative securities, mainly securities in which the English investor is interested. From December, 1905, to October, 1909, the "Financial Times" finds that the decline had amounted to approximately the same figure, so that since the Government came into office we have the tremendous decline of £700,000,000 on 300 representative securities alone. There are over 4,000 securities which—
§ Sir A. HENDERSONA very large number, and a very large number of foreign securities are held by English investors. I should be very well within the mark in putting the total depreciation since 1905 at well over £1,000,000,000 sterling. I am only dealing now with Stock Exchange securities, but other property besides stocks and shares has declined greatly in value. It is not too much to assume that a great deal more of all the people's savings during the past few years 1760 has been swallowed up by depreciation. It is a bold statement to make, but I think that anyone who cares to examine the figures available must come to that conclusion. During the past nine years, you had a period of unexampled good trade in which the turnover has been enormous. The profits upon that turnover have not been enormous, but they have been considerable. But all the earnings and all the savings that have been made during the past nine years of unexampled prosperity have been lost by the depreciation which has taken place in the value of the securities and stocks and shares and property of various kinds. I feel sure that any authority will admit that a very large part of this depreciation is due to the incidence of the Death Duties.
If the savings of the people have been on the scale referred to by the Chancellor of the Exchequer, how comes it that there has been practically no growth in the amount which pays Death Duties? If the decline in value of securities which has amounted to £1,000,000,000 in the last five years should continue, how will the Revenue benefit by the higher Death Duties now imposed? I have a particular estate before me. It is a large estate and therefore would not I am afraid meet with very much sympathy from hon. Members on the other side. It is an estate composed of Consols, Indian 3 per cent. stock, Irish guaranteed stock, Canadian Government stock, London and North "Western Preference stock, Great Western Debenture stock—[HON. MEMBERS: "Speak up,"]—and some miscellaneous securities. The total value of the securities on the 1st January, 1906, when administration was obtained, was £1,000,000. They were reviewed on the 1st of this month, and the value then was £797,000. Taking the higher class of stocks, you have a depreciation on the whole of 20 per cent.
§ Dr. CHAPPLEWhat about the earning power?
§ 6.0 P.M.
§ Sir A. HENDERSONThe stocks are all about the same fixed rate of interest, with the exception of a certain amount in railway ordinary stock, the interest on which, as hon. Members know, has not been very much of late years, and it is less now than it was in 1905–6. My point in giving these figures is that 15 per cent. over the value in 1906 would have produced £150,000. If you get 20 per cent. it means a little more than £150,000, and in view of the dis- 1761 turbing or further disintegrating of securities, I ask whether it is worth while to raise these taxes. I hardly expect to have very much sympathy for those who have to pay duty on estates, but in a commercial nation it is often the big capitalists who keep the little ones going, and, cannot help hurting all. A man's business very largely depends on the amount of capital he has at his disposal, and anything which involves the withdrawal of 20 per cent. means the reduction by 20 per cent. of the business concern, and it means a considerable reduction of the credit that concern will be able to give to other and smaller undertakings. Economy in handling results comes from doing business on a large scale, and if you reduce the size of the transaction you increase the cost of every article. It has been proved over and over again that where the smaller merchant has from time to time been wiped out of existence, it has been, not because he has had a better business man competing against him, but because it has been individuals or a combination of individuals who have had larger capital, and who have undoubtedly been able to practically wipe him out of existence.
The failure of one large firm has on many occasions in the past demonstrated the fact that upon one pivot many important issues revolve, and that great ruin has frequently followed the overthrow of that pivot. Hon. Members must know that where there have been great failures in the City of London they have been attended with the most unexpected results all over the country. The support of wealth in connection with the commerce of a country such as ours is very far reaching. There can be no doubt at all that the lowering of the prices to which I have referred corresponds with what has occurred in other countries, but it should be remembered that some of the nations have greatly increased their indebtedness during the past decade, whilst it is claimed by the present Administration that ours has been reduced. While I admit that some part of the fall in prices has been due to the increased cost of living and to the additional Income Tax, I am quite sure that a large part is due to the incidence of the Death Duties, and this decline must continue if the system, which I call spoliation that is contemplated by the Clause, should become law. We have had a most unexampled period of prosperity, but there is every sign that that prosperity as waning, and during the next few years 1762 I am afraid that the outlook will not be very good. Is this then the period when these additional burdens should be pressed upon the shoulders of that class who have it in their power to make more money for the community? You cannot take away capital from the big firms without doing an immense amount of damage not only to the firm itself but to all those who have any connection with the business of the country.
§ Mr. BRUNNERI think that the hon. Baronet opposite in referring to the reduction in value of 385 securities, and who quoted figures from the "Bankers' Magazine" to show that the decrease was due to the Death Duties, has tried to prove a great deal too much. Those 385 securities are very largely foreign securities, and, in regard to these, the fall which has taken place all over the world in securities cannot be attributed to the British Death Duties which amount to about £27,000,000. I am sure that the hon. Baronet will realise that the world to-day is spending a great deal more on armaments than it did formerly, and we have to very largely attribute the decline in securities all over the world to that expenditure. I am aware that I am not entitled to go into that subject at the present moment, but I submit that the decline is due to the fact that we are spending to-day a great deal more on armaments than when the Government came into office, while the securities in other countries of the world have largely fallen by reason of similar expenditure. As a matter of fact, when we take into consideration the amount of money that we spend on our armaments, which is this year eighty-seven and a half millions, and, when you take into account that the men of the Army and Navy are taken from productive employment, we are wasting at least £150,000,000 a year. This is far more effective in reducing the price of securities than any amount of Death Duties now raised. [An HON. MEMBER: "Why?"] Because the money which is being spent on armaments is unproductive. If that money were not spent on armaments, the accumulated savings could be devoted to the furthering of the industries of the country. I agree that a great deal that has been said about the Death Duties is absolutely correct. Their unfairness arises from the fact that they are so unevenly distributed. You may have in one case an estate which passes only twice in a century from grandfather to son and grandson, while in the case of other families the estates may pass 1763 ten times in a century. I think it would be far better for the whole community if the Income Tax were raised and the Death Duties reduced.
Mr. BALFOURI hope that the right hon. Gentleman opposite has taken note of the general tenour of this Debate, which has been carried on, I hope, in no controversial spirit. Everybody who has spoken on either side of the House, differing though they may on many important political or economic questions, are agreed, in the first place, that this is a very unequal tax, and, in the second place, that it has diminished capital rather than income—that it does diminish capital, so far as it goes, rather than income, and it is largely paid, therefore, into the Exchequer as capital, instead of being paid into the Exchequer as income. I think both of those circumstances ought to give us pause. We have two things to consider in dealing with taxation—justice to the individual taxpayer, and, in the second place, the effect upon the general economic conditions of the community by the imposition of the tax. I am not, of course, going to discuss whether or not the very high graduation between Income Tax and Death Duties now imposed is a just graduation or an unjust graduation, or a dangerous graduation from the point of view of public morality, or one that we are right in undertaking. I have always been in favour, in principle, of some form of graduation. I have always felt, as everybody must feel, that graduation, however just, if properly applied, is very easily abused; but it is more and more easily abused when the number of people who pay is diminished in proportion to the number of people who vote; and, therefore, it is the bounden duty of every Government, and of every Minister responsible for the finance of the country, to watch jealously lest an equitable arrangement as between the different scales of incomes should decline into an inequitable scale, and to see that decline is not being pursued by the National Exchequer.
But that is not the point I want to deal with. I will assume that as between one given income and another the present system of graduation is just and equitable. I am assuming that for the sake of argument, and without prejudice. It is admitted, as regards the individual, that the taxation is harsh—that is to say, harsh and unjust as between different properties 1764 of the same size. Let us look for one moment and see whether it is good from the point of view of the general interests of the community. We have had two or three speeches dealing with the hardship of this particular tax on different kinds of property. There was a very powerful speech delivered by my hon. Friend near me on the increment of this taxation and the harshness of this taxation on purely agricultural land; and the hon. Gentleman opposite, the Member for Edinburgh, got up and stated that, while he agreed that the Death Duties were a very great hardship on certain kinds of property, he did not see why agricultural land suffered more from this particular practice than, let us say, some business corporation, some business other than that of an individual, some business controlled by a small body of individuals, or a large joint-stock company. Then my hon. Friend the Member for St. George's, Hanover Square, got up and pointed out that this tax affected the general level of the price of securities, and all that hangs on the price of securities, being maintained at a reasonable and fair value. I think that all those statements were correct, that all those charges against its effect were well founded, and that all the hardships and injuries which have been detailed are unfortunately realised. I entirely agree. I do not agree with the hon. Gentleman the Member for Edinburgh, who thinks that, after all, some form of Henry Georgeism might apply. I think that is a profound and possibly mischievous delusion.
§ Mr. PRICEI did not suggest that. My point was that, in the increase in Death Duties and Income Tax, a large amount was brought about by improvements, and that it would be infinitely better to allow local authorities to rate land values. I mentioned nothing about Henry George.
Mr. BALFOURIt was the phrase as to "rating values" which led me into the error. At all events let me not dwell on points on which I differ from the hon. Gentleman, but let us be in happy agreement. Whether this taxation falls on agricultural land or whether it falls on business, about which he spoke so feelingly and I think with so much truth, this tax really does touch the springs of industry. I remember when this tax was first approaching, distantly approaching, its present scale, and was first recommended by Sir William Harcourt, he was 1765 fond of dwelling on the fact that, after all, nobody paid this tax except the man who was so happy at succeeding to a fortune that he was quite ready to give anything to the Exchequer in view of the increased means of which he became the owner. That very argument shows that this is a tax paid out of capital and not out of income. It all depends on that. If every man who came into a property felt that he had to find an insurance so that when he died the property would suffer no diminution, he would have no ground for that satisfaction which Sir William Harcourt seemed to think everybody felt when they came into property. The fact is that the only recommendation of Death Duties at all from the point of view of the taxpayer is that his successors do pay out of capital, or, in other words, the man who has property which goes to his heir avoids insuring in his own life, and leaves the accumulated burden, of which he ought to have borne his share, to be borne by those who come after them. That means, and only can mean, and only does mean, that this tax, broadly speaking, is very largely paid out of capital.
Consider what the effects of that are. The hon. Gentleman the Member for East Northants (Mr. Chiozza Money) made what I thought was a most interesting speech earlier in the afternoon, and he took the view—though I am not sure that he laid it down dogmatically—that we had not diminished our savings. At all events, he thought that was negligible, because in his view there had been a great deal of saving even and certainly subsequent to the Finance Act of 1894, and subsequent to the increase of Death Duties which took place in 1909. I do not doubt that the hon. Gentleman is so far right, and that there has been national saving since that time, and very likely national saving on a big scale. It would be absolutely disastrous if it were otherwise. Could we face the future, I will not say with equanimity, but with anything short of actual panic, if the saving of this country had been brought to an end by Death Duties or any other means, and the accumulations of capital had ceased? No, Sir, I do not take so dark a view of the position of this country as would be implied in any theory of that kind. I am ready to go further, and say that you never can deal with any of these things in isolation, and it must always be a mistake to look at certain defects and try and find for them a single 1766 cause, and say that the whole defect is due to this cause or to that. If the House is prepared to agree with me so far, must it not also agree that you should not so arrange your taxation as to tempt men to spend out of capital, and not out of income? If you compel, say a family, to spend out of capital, or a succession of individuals in a firm or on an estate, or whatever it may be, and if you so arrange your taxation as to tempt people to spend money out of capital, and not out of income, you must be doing, and you are doing, injury. Nobody, I am confident, will deny, and I do not think the Chancellor of the Exchequer will deny, whatever be the merits or the demerits of the Death Duties, they are a deliberate and intentional, or, at any rate, a deliberate temptation, to a succession of individuals to spend out of capital and to enjoy income while they may.
Therefore I think the hon. Member for East Northants will probably agree, whatever you may think of the accumulations which have been going on in the country, they must have been, and have been diminished by the incidence of the Death Duties, except in so far as those Death Duties have been avoided by the transfer of the property between relations. That broad proposition I believe to be generally acceptable. Let me point out two corollaries, one relates to businesses, and the wage-earners who depend on businesses, and whether that business be landed estate or whether it be a manufacturing firm, it must be very bad. Let us take the example of the landed estate, and of the man who lives in a country house with the usual appurtenances. It cannot be good for the district in which that man lives that there should be a sudden change in the amount of employment given in that district at the moment of his death. It may be right, or it may be wrong, I do not argue the point, so to tax him that in fact he either cannot live in his place, or has to live on a greatly reduced scale. Whichever be the result in that case, you get equal employment in the district, but if you impose these enormous Death Duties constantly, that means in a large number of cases that on the death of the owner there is a sudden alteration in the whole scale of employment in the particular district where the estate is situated. That cannot be good. Take the case, which is of more interest to the hon. Member for Edinburgh, of a firm. He pointed out, and surely he pointed out 1767 with absolute truth, that if you take these vast masses of property out of a business you risk destroying the business absolutely. The destruction of a business, let the Committee remember, although I do not suppose they are disposed to forget it, means something very much more than the fact that a particular firm goes out of existence, and that a certain number of partners are either ruined or greatly reduced in circumstances. It means that the employment in that particular district undergoes a sudden revolution, and a revolution disastrous to the employés of the firm.
That cannot be good. If there was a steady Income Tax that would be part of the expenses of the firm. It might be more, and it might be a great burden to the particular industry. Taxation is a burden to industry, better accept the fact; but, at all events, it would be an equal burden evenly distributed. I cannot doubt it must be much better, not merely for the firm themselves, but for those whom the firm employ and for the industry connected with the firm, if instead of these arbitrary slices taken out of capital, the firm had to pay some steady and permanent burden in their place. Let me now turn to the point raised in the very able speech of my hon. Friend the Member for St. George's, Hanover Square. He dealt with the larger matters of finance. Suppose we grant, for the sake of argument, that the last speaker was right in saying that my hon. Friend went too far in attributing the whole form of securities to British Death Duties. It may be so. There may be other contributory causes, and for most great phenomena of this kind there are contributory causes. But will anyone deny; will the last speaker deny, or is he disposed to deny, that the fact that the Exchequer has got to liquidate half a million of securities, or, I ought to say, that half a million of securities are weekly liquidated at the instance of the Exchequer, and to meet the demand of the Exchequer, that that has, and must have, a most pernicious effect upon the strength of market securities. This is not merely a question of the prosperity or the normal wealth, or real wealth of the individual holders of securities. It is a matter of national concern. This country is happily not a borrower at the present moment, but a moment of emergency might arise, and in this uncertain world it might arise at any 1768 time, which would compel this country to borrow. In addition, therefore, to asking the Stock Exchange to absorb half a million of securities every week, the Government of the day in that emergency would have to go to the Stock Exchange, and say, "We want to borrow so many millions to meet a national emergency." They would find securities depreciated largely by the operation of these forced sales, and on a market so depreciated, they would at a time of national necessity make a demand which would still further depreciate it.
You therefore do really weaken the national position by making these compulsory sales of securities. That would not happen if you spread your taxes and if, instead of exacting taxes on property once in every ten years as sometimes happens, and once in every three years as sometimes happens, according to the arbitrary chances of life and death, you required people to pay their contributions to the Exchequer out of income. Those securities then would not be thrown on the market, and you would avoid that particular danger, that particular evil, and that particular weakness completely. Is there any man acquainted with finance, who has contemplated the high strain we may happen to throw on the market, and is there any man who watches the craze for borrowing which has gone over all Continental nations, and is there any man who foresees that in the future that borrowing is likely to increase instead of diminishing. Is there any man who has watched all those circumstances, who does not recognise that this forced weekly liquidation of half a million—that is £25,000,000 per year, which you get on the Death Duties, is almost equivalent to raising a loan every year of £25,000,000. I mean in its effect on the stock markets; and is there any man who doubts that that is really a great weakness, and maybe even a great national danger. There are other small points to which I will not allude, because the Debate has gone on a level of high national policy, so far on both sides of the House, so far as I have been able to judge, and I should desire to leave it there.
I hope the Chancellor of the Exchequer in his reply will indicate to us that though he has perpetuated the system and accentuated the evils in a manner which certainly Sir William Harcourt never contemplated, he will consider all that has been said on both sides. I hope he will consider 1769 in the first place that the tax appears to have become inelastic, that an increase in its rate does not increase its yield. I hope he will recognise that that fact does not mean that greatly raising the rate does not inflict great injury. It does not mean that. If you raise £25,000,000 this year at a higher rate than you raised £25,000,000 or whatever it was ten years ago, you do more injury by raising it now, because you are doing it at a higher rate. You inflict these spasmodic wounds on the capital invested in business, be it agriculture or be it any other, and these wounds are deeper because the rate is higher. So that although the Exchequer does not get more, the injury done by the tax is greater. I hope he will consider, in the second place, that the tax as it is now levied inflicts great, and indeed irremediable, injury upon certain families where the deaths are rapid. I know he is quite conscious of that, because he has admitted it. I hope he will realise also that the way in which the tax is levied must inflict injury upon the wage-earners in various districts by the inequalities introduced into the demand for labour. I need not recapitulate what I have just said about the injury done to the national credit by this monthly sale of £2,500,000 or thereabouts of securities. Taking all these things into account, I think the right hon. Gentleman will feel that if this great burden of differential taxation is to be raised on property, some more equitable and more expedient machinery must be devised for raising it than that which in this Budget he has, as I think unhappily, chosen to adopt.
§ Mr. LLOYD GEORGEWe have had an interesting speech from the right hon. Gentleman (Mr. Balfour); in fact, as he himself pointed out, we have had a very interesting Debate throughout the last two hours on the lines of a consideration of the policy of the Death Duties as a whole—a very proper question for the House of Commons to consider from time to time. There was one part of the speech of the right hon. Gentleman which gave me some comfort. It was that in which he dwelt upon the comparative moderation of Sir William Harcourt's proposals and the extreme character of mine. I remember the attacks that were made in 1894 upon Sir William Harcourt's original proposals. They were very largely on the lines of the present criticism, except that the language was much more violent in those days than it is to-day. I might even congratulate the right hon. Gentleman on 1770 the comparative moderation of his language to-day as compared with his language in 1894. It is a very important consideration whether this is the best method of raising a sum of money. For the purposes of this argument you must assume that it is necessary that the money should be raised. I could not enter into the question of the expenditure. When the right hon. Gentleman says that this touches the springs of industry, all taxation touches the springs of industry, and unnecessary taxation is very damaging to industry. But that is a consideration for Committee of Supply. I, as Chancellor of the Exchequer, have to take the Bill presented to me by the Committee of the House of Commons, and find the best method of raising that particular sum of money. That is the problem with which the Committee at the present moment is confronted, and that is the only question to which I can address myself in this Debate. Is this a better way of raising the money than either of the alternative suggestions which have been made? Only two alternative suggestions have been put forward. No one to-day has suggested indirect taxation. The first suggestion was that of an Income Tax which levied this sum of money annually. The other, which I think the hon. Member for Tewkesbury (Mr. Hicks Beach) first suggested, was the method of a periodical tax. The right hon. Gentleman I will not say gave the sanction of his authority to that, but he rather indicated that it was a method which he would like to see considered.
Mr. BALFOURI do not think I said that. I know the right hon. Gentleman does not wish to misrepresent me. He is so far right, that I emphasised very strongly the desirability of its being a regular and foreseeable tax.
§ Mr. LLOYD GEORGEI will take the suggestion that it should be a regular and foreseeable tax. It is substantially the same thing. It is either an annual tax or a quinquennial tax, or a tax for some other period. It is a periodical tax. I will try to follow the right hon. Gentleman's line of argument. He says that when you dump down £500,000 worth of securities every week you are bound to have a depreciation of securities. That is true; there is no doubt about that at all. But let us take the alternative. I will assume that the State wants—to take a round figure—£30,000,000. 1771 If you raise it by means of Death Duties you sell £500,000 worth of securities a week. What happens if you take it out of Income Tax? We are the greatest investing country in the world. Taking this country and outside, we invest at the rate of something like £300,000,000 a year. We have invested even this year about £166,000,000—that is, taking not merely this country, but abroad—every kind of investment. I will take any figure the hon. Baronet gives. I do not want to dispute about non-essentials. He will admit that we are the greatest investing country in the world. It is estimated by one who, I believe, is the greatest living authority on these questions since Sir Robert Giffin—Sir George Paish, who has been his successor in the statistical world—that our savings come to £350,000,000 a year. What would happen if, instead of taking this money out of Death Duties, you took it out of Income Tax? You would have £30,000,000 less to invest. It is exactly the same thing. [HON. MEMBERS: "No!"]
I should like to present my point of view. After all, all this money is invested out of savings. If you take more out of income, to that extent you have less to save and you have less to invest. Take this £500,000 of securities a week—who buys them? They are bought out of the savings of other people. If you save less by £30,000,000, to that extent you have less money with which to buy securities, and it is bound to affect the market. If the right hon. Gentleman says, "It is wrong; you ought not to raise that £30,000,000 at all," that is a different proposition. I do not think there is substantially any difference between raising the money by this method and raising it by an annual tax. The argument is in favour of the latter—within limits, I agree. When a tax is raised it is always assumed—in criticising the Government we use much the same sort of language—that the State is taking money away, and the usual phrase is "robbery," which means that you are taking money away and giving nothing in return. Let me put this to the hon. Baronet, who made such a very interesting speech earlier in the Debate. He says, "You are depreciating securities by means of taxation." I will assume for a moment that you did not spend the money. If you did not spend the money you would not require to raise it by this or any other method. Suppose you did not spend the money; that your defences were inade- 1772 quate; that your education was inferior to that of Germany, the United States, and other countries; that no technical instruction was given; that you did not equip your people to make them fit to take part in the struggle with other great industrial and commercial nations; suppose you neglected the public health, and that by these means you reduced your taxation; does the hon. Baronet think that he would keep up the price of securities by that method? Quite the reverse.
§ Sir A. HENDERSON made an observation which was inaudible in the Reporters' Gallery.
§ Mr. LLOYD GEORGEThat is not the point. That does not deal with the point which I am putting. My point is that, although raising large taxation must necessarily have a great effect on what the right hon. Gentleman very fairly called the springs of industry, still, if you spend an inadequate amount, an amount which is not adequate to our national needs, your securities will depreciate far more. Will the hon. Baronet deny that? Suppose you did not spend enough on the Navy. Suppose that whereas you ought to spend £50,000,000 you spent only £25,000,000, with the result that your Navy was inferior to the Navy of other Powers, you would be in a weak position—you could not defend yourself against a foreign Power. Does the hon. Baronet mean to say that, although you might save £15,000,000 in expenditure, the depreciation of securities would not be very much more? My hon. Friend said that was open to argument whether £50,000,000 was not too much. But for the purposes of this argument I must take the hon. Gentleman as assuming that we are not spending enough, whatever the figure is. Therefore, the real question, when you come to discuss the depreciation of securities, is whether the money has been properly and profitably spent for the benefit of the nation. If you are not spending enough, your securities will pretty soon depreciate—whether your spending is on education, public health, or on defence. I take one other point put by the hon. Baronet. The hon. Baronet said that there had been a considerable fall in securities during the time the present Administration had been in power. Was that a perfectly fair statement? He comes here as a financial authority. Is the hon. Baronet quite fair to the Committee of the House of Commons when he says, or rather suggests, 1773 that securities have fallen since the present Administration came into power. Is it fair?
I will give him figures. The average price—the middle price of Consols in 1905 was 89½. Consols now stand at about 75. That is a drop, I agree, of 14½ points. Was there no fall before 1905? I know the point put by the hon. Baronet, and he knows it is a false one. If a person knew that the rate of interest was going to be 2¾ per cent. for twenty years, I agree that that would make a difference to the price, but when it was known that the rate of interest was coming down in a year or two, that made a difference in the price. He knows that perfectly well. People knew that at a given date the price was to come down to 2½, and the hon. Baronet knew that when he raised the point. The hon. Baronet gives his reason for the fall during the time of the present Administration. His colleague the hon. Member for the City gives another reason for the fall during the previous period. I want to point out that the fall before the present Administration came into office was much greater than the fall which has occurred since. The hon. Baronet knows very well that the suggestion that was made was that the fall in securities has occurred since we came into office, and that it was largely due to our policy in regard to the Death Duties. I point out to him that the fall in securities was greater before we came into office than it has been since. Here is another point which the hon. Baronet has ignored altogether, and that is the fall in foreign securities. He knows very well that in some of our Colonies and in America the fall has been disastrous compared with the fall which has occurred to securities of the same kind in this country. I will give him another figure, and one which he cannot challenge.
Take France and Germany. Take German Three Per Cents. During the same period they have fallen 13½ points. In France—and French credit will not be challenged by the hon. Baronet or anybody else—the fall during the same period has been 15½ points, just one point heavier than the fall in our securities. What does that mean? Of course you can always explain away how it has been done. I am coming to that point. But I am just coming to the point that the method by which we raise the money is better than the method by which they raise the money abroad. We have endeavoured to face our liabilities 1774 year by year. It is perfectly true we have divided them between Death Duties and the Income Tax. Abroad they raise huge sums of money by loans, and the result undoubtedly has been disastrous to their securities. The hon. Baronet never pointed out, that you had a larger fall in French securities than in ours. French, securities stood in 1905 at 98½. They now stand at 83. That is a fall of 15½ points. In our case the middle price in 1905 was 89½. To-day it is 75; that is 14½ points.
§ Sir A. HENDERSONThe highest price is taken—[HON. MEMBERS: "Speak up,"]—of French Rentes, and the highest price should also be taken for Consols. That would give a drop of between 16 and 17 points.
§ Mr. LLOYD GEORGEI am loath to enter into a discussion with the hon. Baronet on a matter upon which he is undoubtedly an authority. But if he will look at the figures he will find that I am quoting the middle price in each case. He ignored the considerations I have stated, and I am sorry to say that criticism of the Administration always ignores them. Not a word has been said about depreciation in foreign securities which is sometimes equal to, and sometimes greater than, ours. Not a word is said about the reason which has accounted more than anything else for the fall in securities—the hon. Baronet glanced at it!—and that is the tremendous trade boom which has absorbed capital, and which enabled investors to get a higher rate of interest for their investments than they were getting for Consols. The hon. Baronet knows perfectly well that a rate which would satisfy people in 1899 would not satisfy them at the present time. That is why the question put by my hon. Friend the Member for Stirlingshire was a perfectly proper one. He asked, "What about the earning power of these securities?" The earning power of these securities is the same, but people will not invest at the same rate of interest as then. The hon. Baronet has given the weight of his authority to a prediction—and I am surprised at it—that there will be a still further fall in securities of these kinds. Is he quite sure of it? It is good trade that has very largely depreciated all securities. Is he quite sure if we have slack trade that there will be the same opportunities for investment? Is he quite sure that the price of these securities will not go up? It is a very serious thing for him to give the weight of his authority to that prediction.
§ Sir A. HENDERSON made a remark which was inaudible in the Reporters' Gallery.
§ Mr. LLOYD GEORGEI know, and that is why I was so surprised at the hon. Baronet. If he said it was possible—well, of course, anything is possible. But he says in his judgment it is probable. I am surprised to hear him say so.
§ Sir A. HENDERSONIt is quite probable.
§ Mr. LLOYD GEORGEThat is the position. It is a question of finding a certain sum of money. I think I have answered one or two points which have been made by the hon. Baronet, and I should like before I sit down—because I have only a moment or two left—to say one or two words upon the general consideration. If I may revert to it again, it is a very arguable question whether you ought to raise money by means of Death Duties or by means of Income Tax. Let me put this to the right hon. Gentleman opposite: Is he quite sure that the method he has suggested is an easier method of doing it? He has put two considerations which are taken into account when levying a tax. First of all, there is a question of justice, and, secondly, there is a question of its effect upon business. But surely there is a third consideration—and it is an axiomatic one—and that is the ease with which the subject can pay the particular tax. That surely ought to be brought into account! It is not quite the same thing as the first two. Let me give him a case of this kind: If you raise this £30,000,000 by means of the Income Tax, this document which has been issued shows that you increase the Income Tax by sums varying from 6d. to 3s. 4d. Does the right hon. Gentleman say that that will be an easier method for the subject? Take a case of this kind: What happens when a man inherits property? I am taking now not the case of the man who comes fortuitously into property which he did not expect. If you take the case of a man, say, who has come into half a million of money, if you take a few thousands or a few tens of thousands from him, he has still got a good slice of luck left. I am not taking that.
I am taking the case of a man who has a right, according to all the usages of civilisation, to expect that he will come into property. He may be a son, say, who is given an income of two or three 1776 thousand a year to live upon. He has expected to inherit property where the income will be, let us say, £20,000—I do not care what figures are taken—but where the income that he comes into by inheritance is trebled or quadrupled, and even more largely increased to what lie had had during the time he has been living upon the bounty, as it were, of his parents. Is it not very much easier for him, when he comes into his inheritance, to make a contribution to the State, and especially to make an increased contribution to the State—because that is a very important point—than after he has fixed his expenditure? Then if the State comes in and says, "I want so much, more," he has to go through the process of cutting down his expenses—a very difficult process for anybody. I should have thought that that was a much better opportunity for getting a contribution from the subject than if you were to tax him at an extra rate of 2s. 6d. during the whole period of his career. At any rate I think it is a fairly arguable proposition. The view the Government have taken is that, on the whole, you should take the bulk of the taxing income. That is what we have done.
We have taken more by means of taxing income than by means of Death Duties. In the present Budget that is the principle I have gone upon. The amount which I am raising by means of increased Income Tax is considerably more than the amount I am raising by means of Death Duties. I do say that, at any rate, that it is a case where you are entitled not to put the whole upon income—to put the bulk upon income, to put the larger proportion upon income—but at the same time to tax not merely fortuitous accessions of wealth, but even to tax those others where a man gains a great accession of income which, although he has a right to expect it, is none the less enjoyable when he does get it. That I think is a very fair answer to the right hon. Gentleman. I think he and his colleagues when they have to face the same problem will find that it will be very difficult for them to put the whole burden upon income without at the same time raising an additional sum out of capital in some shape or other. The German Empire has come to that conclusion. It is true they levy it during lifetime. They have got a capital tax—I am not now referring to the huge sum of about £60,000,000 they are raising. Every country in the world does it. We levy it at death. We think, on the whole, that 1777 is a much better opportunity or "occasion"—to use a technical term—for the purpose of raising the cash.
It being Seven of the clock, the CHAIRMAN proceeded, pursuant to the Order of the House of the 8th July, to put the
§ Question already proposed from the Chair.
§ Question put. "That the Clause stand part of the Bill."
§ The Committee divided: Ayes, 301; Noes, 207.
1781| Division No. 167.] | AYES. | [7.0 p.m. |
| Abraham, William (Dublin, Harbour) | Donelan, Captain A. | Kilbride, Denis |
| Acland, Francis Dyke | Doris, William | King, Joseph |
| Adamson, William | Duffy, William J. | Lambert, Richard (Wilts, Cricklade) |
| Addison, Dr. Christopher | Duncan, C. (Barrow-in-Furness) | Law, Hugh A. (Donegal, West |
| Adkins, Sir W. Ryland D. | Duncan, Sir J. Hastings (Yorks, Otley) | Lawson, Sir W. (Cumb'rld, Cockerm'th) |
| Agar-Robartes, Hon. T. C. R. | Edwards, Clement (Glamorgan, E.) | Leach, Charles |
| Ainsworth, John Stirling | Edwards, Sir Francis (Radnor) | Levy, Sir Maurice |
| Alden, Percy | Elverston, Sir Harold | Lewis, Rt. Hon. John Herbert |
| Allen, Arthur A. (Dumbartonshire) | Esmonde, Dr. John (Tipperary, N.) | Lough, Rt. Hon. Thomas |
| Allen, Rt. Hon. Charles P. (Stroud) | Esmonde, Sir Thomas (Wexford, N.) | Low, Sir Frederick (Norwich) |
| Armitage, Robert | Esslemont, George Birnie | Lundon, Thomas |
| Arnold, Sydney | Falconer, James | Lyell, Charles Henry |
| Baker, Harold T. (Accrington) | Farrell, James Patrick | Lynch, Arthur Alfred |
| Baker, Joseph Allen (Finsbury, E.) | Fenwick, Rt. Hon. Charles | Macdonald, J. Ramsay (Leicester) |
| Balfour, Sir Robert (Lanark) | Ffrench, Peter | Macdonald, John M. (Falkirk Burghs) |
| Baring, Sir Godfrey (Barnstaple) | Field, William | McGhee, Richard |
| Barlow, Sir John Emmott (Somerset) | Fiennes, Hon. Eustace Edward | Maclean, Donald |
| Barnes, George N. | Flavin, Michael Joseph | Macnamara, Rt. Hon. Dr. T. J. |
| Barran, Sir John N. (Hawick Burghs) | France, Gerald Ashburner | MacNeill, J. G. Swift (Donegal, South) |
| Barran, Rowland Hurst (Leeds, N.) | Furness, Sir Stephen Wilson | MacVeagh, Jeremiah |
| Scale, Sir William Phipson | Gelder, Sir W. A. | M'Callum, Sir John M. |
| Beauchamp, Sir Edward | George, Rt. Hon. D. Lloyd | McKenna, Rt. Hon. Reginald |
| Beck, Arthur Cecil | Ginnell, Laurence | M'Laren, Hon. H. D. (Leics.) |
| Benn, W. W. (T. Hamlets, St. George) | Gladstone, W. G. C. | Manfield, Harry |
| Bentham, G. J. | Glanville, Harold James | Markham, Sir Arthur Basil |
| Bethell, Sir J. H. | Goddard, Sir Daniel Ford | Marks, Sir George Croydon |
| Black, Arthur W. | Goldstone, Frank | Marshall, Arthur Harold |
| Boland, John Pius | Greenwood, Hamar (Sunderland) | Meagher, Michael |
| Booth, Frederick Handel | Greig, Colonel J. W. | Meehan, Francis E. (Leitrim, N.) |
| Bowerman, Charles W. | Grey, Rt. Hon. Sir Edward | Meehan, Patrick J. (Queen's Co. Leix) |
| Boyle, Daniel (Mayo, North) | Griffith, Rt. Hon. Ellis Jones | Millar, James Duncan |
| Brace, William | Gulland, John William | Molloy, Michael |
| Brady, Patrick Joseph | Gwynn, Stephen Lucius (Galway) | Molteno, Percy Alport |
| Brocklehurst, W. B. | Hackett, John | Mond, Rt. Hon. Sir Alfred |
| Brunner, John F. L. | Hancock, John George | Money, L. G. Chiozza |
| Bryce, J. Annan | Harcourt, Rt. Hon. Lewis (Rossendale) | Montagu, Hon. E. S. |
| Buckmaster, Sir Stanley O. | Harcourt, Robert V. (Montrose) | Mooney, John J. |
| Burt, Rt. Hon. Thomas | Harmsworth, Cecil B. (Luton, Beds) | Morgan, George Hay |
| Buxton, Noel | Harvey, A. G. C. (Rochdale) | Morrell, Philip |
| Byles, Sir William Pollard | Harvey, T. E. (Leeds, West) | Morison, Hector |
| Carr-Gomm, H. W. | Hayden, John Patrick | Morton, Alpheus Cleophas |
| Cawley, Sir Frederick (Prestwich) | Hayward, Evan | Muldoon, John |
| Cawley, Harold T. (Lancs., Heywood) | Helme, Sir Norval Watson | Munro, Rt. Hon. Robert |
| Chancellor, Henry George | Henderson, Arthur (Durham) | Murray, Captain Hon. Arthur C. |
| Chapple, Dr. William Allen | Henderson, John M. (Aberdeen, W.) | Needham, Christopher T. |
| Clancy, John Joseph | Hewart, Gordon | Nolan, Joseph |
| Clough, William | Higham, John Sharp | Norton, Captain Cecil W. |
| Clynes, John R. | Hinds, John | Nugent, Sir Walter Richard |
| Collins, Godfrey P. (Greenock) | Hobhouse, Rt. Hon. Charles E. H. | Nuttall, Harry |
| Collins, Sir Stephen (Lambeth) | Hodge, John | O'Brien, Patrick (Kilkenny) |
| Compton-Rickett, Rt. Hon. Sir J. | Hogge, James Myles | O'Connor, T. P. (Liverpool) |
| Cornwall, Sir Edwin A. | Holmes, Daniel Turner | O'Doherty, Philip |
| Cotton, William Francis | Holt, Richard Durning | O'Donnell, Thomas |
| Cowan, W. H. | Hope, John Deans (Haddington) | O'Dowd, John |
| Craig, Herbert J. (Tynemouth) | Hudson, Walter | O'Kelly, Edward P. (Wicklow, W.) |
| Crooks, William | Hughes, Spencer Leigh | O'Kelly, James (Roscommon, N.) |
| Crumley, Patrick | Illingworth, Percy H. | O'Malley, William |
| Cullinan, John | Jardine, Sir J. (Roxburgh) | O'Neill, Dr. Charles (Armagh, S.) |
| Dalziel, Rt. Hon. Sir J. H. (Kirkcaldy) | John, Edward Thomas | O'Shaughnessy, P. J. |
| Davies, David (Montgomery Co.) | Johnson, W. | O'Sullivan, Timothy |
| Davies, Ellis William (Eifion) | Jones, Rt. Hon. Sir D. Brynmor (Swansea) | Outhwaite, R. L. |
| Davies, Timothy (Lincs., Louth) | Jones, Edgar (Merthyr Tydvil) | Palmer, Godfrey Mark |
| Davies, Sir W. Howell (Bristol, S.) | Jones, H. Haydn (Merioneth) | Parker, James (Halifax) |
| Davies, M. Vaughan- (Cardiganshire) | Jones, J. Towyn (Carmarthen, East) | Parry, Thomas H. |
| Dawes, James Arthur | Jones, Leif (Notts, Rushcliffe) | Pearce, Robert (Staffs, Leek) |
| Da Forest, Baron | Jones, William (Carnarvonshire) | Pearce, William (Limehouse) |
| Delany, William | Joyce, Michael | Philipps, Colonel Ivor (Southampton) |
| Denman, Hon. Richard Douglas | Kellaway, Frederick George | Phillips, John (Longford, S.) |
| Dewar, Sir J. A. | Kelly, Edward | Pirie, Duncan V. |
| Dickinson, Rt. Hon. Willoughby H. | Kennedy, Vincent Paul | Pollard, Sir George H. |
| Dillon, John | Kenyon, Barnet | Ponsonby, Arthur A. W. H. |
| Pratt, J. W. | Samuel, Rt. Hon. H. L. (Cleveland) | Waring, Walter |
| Price, C. E. (Edinburgh, Central) | Scanlan, Thomas | Warner, Sir Thomas Courtenay T. |
| Price, Sir Robert J. (Norfolk, E.) | Seely, Rt. Hon. Colonel J. E. B. | Wason, Rt. Hon. E. (Clackmannan) |
| Priestley, Sir Arthur (Grantham) | Sheeny, David | Wason, John Cathcart (Orkney) |
| Priestley, Sir W. E. B. (Bradford, E.) | Sherwell, Arthur James | Watt, Henry A. |
| Primrose, Hon. Neil James | Simon, Rt. Hon. Sir John Allsebrook | Webb, H. |
| Pringle, William M. R. | Smith, Albert (Lancs., Clitheroe) | Wedgwood, Josiah C. |
| Radford, George Heynes | Smith, H. B. Lees (Northampton) | White, J. Dundas (Glasgow, Tradeston) |
| Raffan, Peter Wilson | Smyth, Thomas F. (Leitrim, S.) | White, Sir Luke (Yorks, E.R.) |
| Rea, Rt. Hon. Russell (South Shields) | Soames, Arthur Wellesley | White, Patrick (Meath, North) |
| Rea, Walter Russell (Scarborough) | Spicer, Rt. Hon. Sir Albert | Whitehouse, John Howard |
| Reddy, Michael | Strauss, Edward A. (Southwark, West) | Whittaker. Rt. Hon. Sir Thomas P. |
| Redmond, John E. (Waterford) | Sutherland, John E. | Whyte, Alexander F. (Perth) |
| Redmond, William (Clare, E.) | Sutton, John E. | Wiles, Thomas |
| Redmond, William Archer (Tyrone, E.) | Taylor, John W. (Durham) | Wilkie, Alexander |
| Rendall, Athelstan | Taylor, Theodore C. (Radcliffe) | Williams, Aneurin (Durham, N. W.) |
| Richardson, Albion (Peckham) | Taylor, Thomas (Bolton) | Williams, John (Glamorgan) |
| Richardson, Thomas (Whitehaven) | Tennant. Rt. Hon. Harold John | Williams, Penry (Middlesbrough) |
| Roberts, Charles H. (Lincoln) | Thomas, James H. | Williamson, Sir Archibald |
| Roberts, George H. (Norwich) | Thorne, G. R. (Wolverhampton) | Wilson, Rt. Hon. J. W. (Worcs., N.) |
| Roberts, Sir J. H. (Denbighs) | Thorne, William (West Ham) | Wilson, W. T. (Westhoughton) |
| Robertson, Sir G. Scott (Bradford) | Toulmin, Sir George | Winfrey, Sir Richard |
| Robertson, J. M. (Tyneside) | Trevelyan, Charles Philips | Wing, Thomas Edward |
| Robinson, Sidney | Verney, Sir Harry | Wood, Rt. Hon. T. McKinnon (Glasgow) |
| Roch, Walter F. (Pembroke) | Walsh, Stephen (Lancs., Ince) | Yeo, Alfred William |
| Roche, Augustine (Louth) | Walters, Sir John Tudor | Young, William (Perthshire, East) |
| Roe, Sir Thomas | Walton, Sir Joseph | Yoxall, Sir James Henry |
| Rowlands, James | Ward, John (Stoke-upon-Trent) | TELLERS FOR THE AYES.— |
| Rowntree, Arnold | Ward, W. Dudley (Southampton) | Mr. Geoffrey Howard and Captain Guest. |
| Runciman, Rt. Hon. Walter | Wardle, George J. | |
| Russell, Rt. Hon. Thomas W. | ||
| NOES. | ||
| Agg-Gardner, James Tynte | Croft, H. P. | Houston, Robert Paterson |
| Aitken, Sir William Max | Currie, George W. | Hume-Williams, William Ellis |
| Amery, L. C. M. S. | Dairymple, Viscount | Hunt, Rowland |
| Anstruther-Gray, Major William | Dalziel, Davison (Brixton) | Hunter, Sir Charles Rodk. |
| Archer-Shee, Major Martin | Denison-Pender, J. C. | Ingleby, Holcombe |
| Ashley, Wilfrid W. | Denniss, E. R. B. | Jardine, Ernest (Somerset, East) |
| Astor, Waldorf | Dickson, Rt. Hon. C. Scott | Jessel, Captain H. M. |
| Baird, John Lawrence | Duncannon, Viscount | Joynson-Hicks, William |
| Baker, Sir Randolf (Dorset, N.) | Du Pre, W. Baring | Kerry, Earl of |
| Baldwin, Stanley | Eyres-Monsell, Bolton M. | Keswick, Henry |
| Balfour, Rt. Hon. A. J. (City, London) | Faber, George Denison (Clapham) | Kinloch-Cooke, Sir Clement |
| Banbury, Sir Frederick George | Falle, Bertram Godfray | Lane-Fox, G. R. |
| Banner, Sir John S. Harmood- | Finlay, Rt. Hon. Sir Robert | Larmor, Sir J. |
| Barnston, Harry | Fisher, Rt. Hon. W. Hayes | Law, Rt. Hon. A. Bonar (Bootle) |
| Bathurst, Hon. A. B. (Glouc, E.) | Fletcher, John Samuel | Lawson, Hon. H. (T. H'mts, Mile End) |
| Bathurst, Charles (Wilts, Wilton) | Forster, Henry William | Lee, Arthur H. |
| Beckett, Hon. Gervase | Foster, Philip Staveley | Lloyd, George Ambrose (Stafford, W.) |
| Benn, Arthur Shirley (Plymouth) | Ganzoni, Francis John C. | Lloyd, George Butler (Shrewsbury) |
| Bennett-Goldney, Francis | Gardner, Ernest | Locker-Lampson, G. (Salisbury) |
| Bentinck, Lord H. Cavendish- | Gastrell, Major W. Houghton | Locker-Lampson, O. (Ramsey) |
| Bird, Alfred | Gibbs, G. A. | Lockwood, Rt. Hon. Lt.-Colonel A. R. |
| Blair, Reginald | Glazebrook, Captain Philip K | Lowe, Sir F. W. (Birm., Edgbaston) |
| Boyle, William (Norfolk, Mid) | Goldman, C. S. | Lyttelton, Hon. J. C. |
| Boyton, James | Goulding, Edward Alfred | MacCaw, Wm. J. MacGeagh |
| Brassey, H. Leonard Campbell | Grant, James Augustus | Mackinder, H. J. |
| Bridgeman, William Clive | Greene, Walter Raymond | Macmaster, Donald |
| Bull, Sir William James | Gretton, John | Magnus, Sir Philip |
| Burgoyne, A. H. | Guinness. Hon. Rupert (Essex, S. E.) | Malcolm, Ian |
| Burn, Colonel C. R. | Guinness, Hon. W. E. (Bury S. Edmunds | Mason, James F. (Windsor) |
| Butcher, John George | Gwynne, R. S. (Sussex, Eastbourne) | Middlemore, John Throgmorton |
| Campbell, Captain Duncan F. (Ayr, N.) | Haddock, George Bahr | Mills, Hon. Charles Thomas |
| Campion, W. R. | Hall, Frederick (Dulwich) | Morrison-Bell, Capt. E. F. (Ashburton) |
| Carlile, Sir Edward Hildred | Hall, Marshall (E. Toxteth) | Morrison-Bell, Major A. C. (Honiton) |
| Cassel, Felix | Hamilton. C. G. C. (Ches., Altrincham) | Mount, William Arthur |
| Castlereagh, Viscount | Hamilton, Lord C. J. (Kensington, S.) | Newdegate, F. A. |
| Cator, John | Hardy, Rt. Hon. Laurence | Newman, John R. P. |
| Cautley, H. S. | Harris, Henry Percy | Newton, Harry Kottingham |
| Cave, George | Harrison-Broadley, H. B. | Nicholson, William G. (Petersfield) |
| Cecil, Evelyn (Aston Manor) | Henderson, Major H. (Berks, Abingdon) | Nield, Herbert |
| Cecil, Lord Hugh (Oxford University) | Henderson. Sir A. (St. Geo., Han. Sq.) | Orde-Powlett, Hon. W. G. A. |
| Cecil, Lord R. (Herts, Hitchin) | Herbert, Hon. A. (Somerset, S.) | Ormsby-Gore, Hon. William |
| Chaloner, Colonel R. G. W. | Hewins, William Albert Samuel | Paget, Almeric Hugh |
| Clay, Captain H. H. Spender | Hibbert, Sir Henry F. | Parker, Sir Gilbert (Gravesend) |
| Clive, Captain Percy Archer | Hills, John Waller | Parkes, Ebenezer |
| Clyde, J. Avon | Hill-Wood. Samuel | Peel, Lieut.-Colonel R. F. |
| Coates, Major Sir Edward Feetham | Hoare, Samuel John Gurney | Perkins, Walter F. |
| Cooper, Sir Richard Ashmole | Hohler, Gerald Fitzroy | Peto, Basil Edward |
| Craig, Ernest (Cheshire, Crewe) | Hope, James Fitzalan (Sheffield) | Pollock, Ernest Murray |
| Craig, Norman (Kent, Thanet) | Hope, Major J. A. (Midlothian) | Pretyman, Ernest George |
| Craik, Sir Henry | Horne, Edgar (Surrey, Guildford) | Prothero, Rowland Edmund |
| Pryce-Jones, Colonel E. | Spear, Sir John Ward | Tryon, Captain George Clement |
| Randles, Sir John S. | Stanier, Beville | Valentia, Viscount |
| Rawlinson, John Frederick Peel | Stanley, Hon. Arthur (Ormskirk) | Ward, A. S. (Herts, Watford) |
| Rawson, Colonel R. H. | Stanley, Hon. G. F. (Preston) | Warde, Colonel C. E. (Kent, Mid) |
| Rees, Sir J. D. | Starkey, John R. | Watson, Hon. W. |
| Remnant, James Farquharson | Staveley-Hill, Henry | Weigall, Captain A. G. |
| Rolleston, Sir J. D. | Steel-Maitland, A. D. | Weston, Colonel J. W. |
| Ronaldshay, Earl of | Stewart, Gershom | Wheler, Granville C. H. |
| Rothschild, Lionel de | Strauss, Arthur (Paddington, North) | Williams, Colonel R. (Dorset, W.) |
| Royds, Edmund | Swift, Rigby | Willoughby, Major Hon. Claud |
| Rutherford, Watson (L'pool, W. Derby) | Sykes, Alan John (Ches., Knutsford) | Wilson, Captain Leslie O. (Reading) |
| Salter, Arthur Clavell | Sykes, Sir Mark (Hull, Central) | Wilson, Maj. Sir M.(Bethnal Green. S.W.) |
| Samuel, Sir Harry (Norwood) | Talbot, Lord Edmund | Wood, Hon. E. F. L. (Yorks, Ripon) |
| Samuel, Samuel (Wandsworth) | Terrell, George (Wilts, N.W.) | Worthington Evans, L. |
| Sanders, Robert Arthur | Thomas-Stanford, Charles | Wortley, Rt. Hon. C. B. Stuart- |
| Sanderson, Lancelot | Thomson, W. Mitchell- (Down, North) | Yate, Colonel Charles Edward |
| Sandys, G. J. | Thynne, Lord Alexander | Younger, Sir George |
| Sassoon, Sir Philip | Tickler, T. G. | TELLERS FOR THE NOES.— |
| Scott, Sir S. (Marylebone, W.) | Tobin, Alfred Aspinall | Mr. Fell and Mr. Hicks Beach. |
| Smith, Rt. Hon. F. E. (L'p'l, Walton) | Touche, George Alexander |