§ Order for Second Reading read.
§ Motion made, and Question proposed, "That the Bill be now read a second time."
§ Sir JOSEPH WALTON
I warmly congratulate my right hon. Friend the Chancellor of the Exchequer on the most able statement he made in his speech yesterday. One cannot but regard the whole scheme, which is of a most comprehensive character and which he, with such admirable lucidity, expounded to the House yesterday, as one which reflects the highest credit upon the Chancellor of the Exchequer, and not only upon him, but also upon his advisers, whether in the Treasury or out of the Treasury, who have assisted in placing before the country this most admirable scheme of finance. There is no question that the huge Loan which it is contemplated to raise under that scheme will very seriously depreciate the ordinary investor's securities, but, having regard to the financial needs of the country arising from the enormous expenditure which must necessarily be made in the prosecution of the War, the reduction in value of securities we must submit to with as good grace as possible. The terms of the new Loan are certainly 1066 generous, but in my judgment not too generous when we know that it is absolutely necessary that this huge sum of money should be raised. To give liberal terms in connection with this Loan is much better than to have had a forced Loan. The cost of the conversion of Consols and of the old War Loan into the new Loan means, of course, a substantial charge in the shape of extra interest paid by the National Exchequer, and that was estimated by the hon. Member for the City (Sir F. Banbury) yesterday, to amount to 3½ millions. Therefore, we must bear in mind that we are going to have to pay for the fresh money got for this Loan not 4½ per cent., but something nearer 5 per cent. But in my opinion it was necessary that this Loan should be placed on lines so as to give a higher return to investors than was given in the old War Loan, as otherwise there would clearly have been no inducement whatever to the holders of the old War Loan to double their subscription by taking an equal amount of the new War Loan.
I congratulate my right hon. Friend on the excellent facilities which he gives in connection with this great National Loan to small investors. I believe that those provisions will be much appreciated, and I trust that there will be an astonishingly good response on the part of small investors, and that they will in large numbers and to large amounts take advantage of the facilities offered for obtaining 4½ per cent. for their money instead of 2½ per cent. in the Post Office Savings Bank. Personally I feel that the Chancellor of the Exchequer has need to very seriously consider the question of raising more money from taxation. There is one sort of revenue which I hope he will not fail to tax to the very fullest extent. Personally I hold that no one in any trade or business in this Kingdom ought to make increased profits owing to the War—
§ Mr. SPEAKER
There is no question of taxation in this Loan, and the hon. Member must reserve his remarks till we get to the Finance Bill.
§ Sir J. WALTON
I apologise. I was misled by references on this subject in the course of yesterday's Debate which appeared to be admissible on the First Reading of the Bill.
§ Mr. SNOWDEN
Would it not be in order to point out that taxation would be a preferable way of meeting the deficit than the methods proposed in this Bill?
§ Mr. SPEAKER
It would be in order to point out that it is desirable to levy the money which is required by taxation rather than by borrowing; but it would not be in order to select particular subjects for taxation and say, "Why do you not tax this," or "Why do you not tax the other?" The proper time to do that is when we reach a taxing Bill.
§ Sir J. WALTON
I do not know whether I shall be in order in saying how much I appreciated the strong references made yesterday by the Chancellor of the Exchequer to the necessity for national economy and thrift. The whole country ought to turn its attention to the necessity of leading the simple life, of cutting down household expenditure, and of avoiding all waste in food and otherwise, in order to strengthen our financial resources and enable us to meet the enormous expenditure on the War.
§ Sir J. WALTON
I am glad to know that on the saving side I shall always be in order. I am never intentionally out of order. All that I can say in conclusion, as other questions are not admissible, is that we do congratulate the Chancellor of the Exchequer on his very strong references to the need of economy and thrift, and I trust that His Majesty's Government will continue to press that necessity strongly upon the attention of the country.
§ Mr. GODFREY COLLINS
We are asked this afternoon to discuss the terms of the new War Loan, and to consider whether those terms meet with the approval of the House. But in the daily Press this morning the terms of the Loan have already been made public, and the War Loan is now being offered to the public. Therefore, it seems to me unnecessary for this House to consider the terms of the Loan this afternoon. We are, however, asked to consider the terms of the War Loan. Personally, I should have preferred the Government to have brought in a Revenue Bill to increase the revenue, and then later to have brought in a War Loan Bill. By that time the country would have realised exactly what it would be required to pay in taxation, and then, perhaps, it might more readily have scrutinised the details of the War Loan. The Chancellor of the Exchequer argued yesterday afternoon that this War Loan would have a tendency—he did not put it higher than that—to reduce expenditure. 1068 I think it might well be argued that if men invest their money in this War Loan and get this high rate of interest it might be an inducement to them, not to economise, but to continue their expenditure on a high level. I desire to refer again to the powers to convert Consols and the War Loan issued in November last. I pointed out yesterday afternoon that every holder of £75 of Consols, if he subscribed £100 to the new War Loan, would get, instead of his £75 stock, £50 new War Loan Stock. In other words, if he puts down £100 tomorrow, the Government will pay the fortunate holder of Consols interest on that £100 not at the rate of 4½ per cent., which other persons will receive, but at the rate of £4 17s. 6d. per cent. Take, again, the case of a man who subscribed to the War Loan in November last. That Loan was issued at the rate of £95 at 3½ per cent. It was practically a 4 per cent. Loan. If a man who owns £100 of that stock puts down £100 for this new War Loan and an additional £5, the Government will hand him instead scrip to the value of £200 in the new War Loan. In other words, for the extra £105 which he is asked to find to-day, the Government will give him, in effect, interest at the rate of over 5 per cent. per annum.
If these figures are correct—and I shall be glad to be interrupted by the Chancellor of the Exchequer if I am wrong—it seems to me uncalled-for generosity by the State. The State borrows the money from men and comes under an obligation to pay them a yearly interest—nothing more, nothing less. When Consols stood at over £100 the State of that day did not step in and ask the fortunate holders of Consols to hand back to the Treasury the premium at which Consols then stood. These powers to convert the old stock are extremely favourable to the financial interest. But take the case of the small investor who invested, say, £500 in the War Loan last November—all his savings Unless he can find more money to-day he cannot get that stock converted. The Chancellor of the Exchequer stated yesterday that the policy of the Government was to remember the interest of the people who lent money in the past. I am bound to say, if my figures are correct, and I believe they are, that the Government by this War Loan are remembering the rich who lent money in other days and are able to lend money to-day, but they are forgetting the poor who lent money in November last and are unable to find 1069 further money to take up new stock to-day. Not only that, but by the issue of this Loan at 4½ per cent. the Government are depreciating the value of the stock held by these people. I can well imagine the intense opposition which, under different conditions in this House, would be raised to such a proposal if brought forward by the Government of the day. I wish to ask the Chancellor of the Exchequer two questions. The first is, Does he intend to raise the rate of interest allowed to depositors in the Post Office Savings Bank? They are getting only 2½ per cent. interest, and unless the rate is raised I think they will be very quick to take their money out of the Post Office Savings Bank and put it into the new War Loan. The other questions is, Docs he intend to take steps to restrict the present method of buying and selling Consols? Men who live in the North and many stockbrokers in Glasgow have often spoken to me on this subject. They have considerable difficulty under the present arrangement in buying and selling Consols. Does the right hon. Gentleman intend to take steps to remove those restrictions, and to put provincial centres on the same level as the London Stock Exchange.
§ Mr. RUSSELL REA
My hon. Friend who has just sat down, as well as many of those who spoke yesterday, criticised adversely the terms upon which this Loan is to be issued because of their generosity. They imagine that too much consideration has been shown to the lenders and too little to the public. I do not think that they have really adequately estimated the stupendous character of this transaction. It is absolutely unexampled. All our old maxims, and all our old rules fail to apply a guide to the issue of a Loan upon this scale. What would apply to a £50,000,000 Loan will not apply to a £500,000,000 Loan, and the difficulties of the Chancellor of the Exchequer are added to by the condition of the markets of the world. He is appealing, first of all, to an investment market already depleted. It has been drained and drained to a great extent by the former Loan, which was of no small dimensions. He is appealing to a depleted money market, which is a different market. It has been half-drained, at any rate, by the large issue of Treasury Bills. Of course, the Money Market is not the market to which he is appealing at present to any great extent. The Money Market is a market like any other market—the boot or the cotton market, say; it has a stock-in-trade; and the stock-in-trade of the 1070 Money Market is the loose, free money which the bankers, for the most part, control.
He has already taken in the form of Treasury Bills at least half of that portion of the stock of the Money Market which is usually employed in financing trade—that is, the trade of the world. The loans given to the London Stock Exchange must also be added. So that my right hon. Friend has a task of stupendous magnitude before him. The questions he has to ask himself are: Where is the money? Where does it exist? Who has got it? He cannot appeal to the accumulated wealth of the country—to the capital of, say, £15,000,000,000 or £18,000,000,000. People cannot bring houses, ships, mines, farms, mills, and fling them against the enemy. The capital of the country is almost useless for the purpose needed. People cannot sell and liquefy their assets. They cannot borrow. There are neither purchasers nor lenders in the world to-day, because all the markets are closed. [An HON. MEMBER: "The United States."] For this purpose the United States cannot be taken into very much consideration. There is only one way in which this money can be got in a liquid form, and in which it must be got, and that is out of the income of the country—I mean the actual year's income of this country. If you consider the War expenditure, it comes out of the year's production of this country. Everything which is expended for the War, the time of the men at the front, and the time of those working behind—it is this year's time; the munitions, the food, the transport, and everything else has, for the most part, to be produced this year, and it is only this year's resources which are available at once and in the first instance.
It follows, therefore, that if half the production of this year is to be absorbed by the War we have almost to live upon the other half. Instead of saving one-sixth of our annual income we shall have to save three-sixths, or near it, in one form or another, but it does not follow from what I say that capital should not in the end—though it cannot in the beginning—be made to pay. The burden can be made to fall upon it, but it can only be made to fall upon it later. The only liquid available sources for the Chancellor of the Exchequer to get his money from at first is as I have stated. For this reason I am rather averse to proposals to get too much by present taxation upon revenue, because it would be upon this year's income. It 1071 would be futile, it would be unfair, and I think it would be almost suicidal. But, after all, the question of raising the money by taxes or by loan is something of a bookkeeping question; indeed, very much of a book-keeping question. It is something like the question which comes before the limited company which has made a loss: whether they shall cut the loss and reduce their capital, or whether the capital shall remain as it is—for the most part watered. If the money is raised by loan instead of taxes, the expenses and the weight of that Loan may be made to fall upon the people upon whom it should fall. It may then be made to fall upon property and upon the owners of property, if this House and if the Government of the day think that is the proper form.
How must he tap the resources of this year? That is the great question for the Chancellor of the Exchequer. He has offered terms which are good, but not too good, to attract the thrifty—that is to say, the people who do save, who know how to save, are habituated to saving. Perhaps it will attract them to save more, to economise more. In my opinion, however, the right hon. Gentleman will have to go a little further. He must tap the resources of the incomes of the unthrifty, of the non-investing classes, of the people who never think of saving, but who always spend. Therefore, as taxation is always compulsory, and as the resources of taxation of the Chancellor of the Exchequer are limited, I think he will in the end have to make his thrift compulsory. People must be made to subscribe to the War Loan as they are made to pay their taxes. A week ago I ventured to foreshadow some little scheme, and made some little suggestion, with that object. I will not repeat them now. I am very glad to see in the proposals made by the Chancellor of the Exchequer that though he does not adopt either of the suggestions, or even the principle, he does not exclude them. In fact, I see with some satisfaction that his scheme admits of a perfectly convenient method of applying this principle of raising money in this great national emergency.
§ Mr. GOLDSTONE
I regret that I have again to trouble the House on this Bill. I But one or two points have been brought to my notice which I think are worthy of the attention of the Chancellor of the Exchequer. The first is a point which concerns the friendly societies. Some years 1072 ago the principal of them invested part of their funds in Consols. Some of the societies have also invested a part of their money in the old War Loan. When it comes to inviting these societies now to contribute additional sums they are faced immediately with a great difficulty. Take a society which has £10,000 invested in Consols. If I understand the Bill correctly, before that society can take advantage of the option to convert £100 of Consols it must find another £133⅓ in cash. The House will see the difficulty of the friendly societies and the trade unions, being unable at the moment to find so large a sum to convert from Consols. Therefore I want to suggest to the Chancellor of the Exchequer an easier way of converting Consols which would not create such a grave difficulty for friendly societies and similar bodies. The suggestion I have to make is that those holding Consols shall be allowed to bring, say, £100 of stock, to be counted as equivalent to £66⅔ in cash, and to find £33⅓, and then be allowed to take £100 of the new War Loan to the extent of £100 of Consols, and £33⅓ of cash. If in addition they were allowed a little longer time in which to exercise their option, they would be able, with the funds which are coming in by weekly and monthly instalments, to contribute a considerable amount to the War Loan which at present they are not in a position to do. That is the point of view of those who hold Consols, so far as some of the friendly societies are concerned. That is the point of view, too, of the small investor mentioned by the hon. Member for Windsor (Mr. James Mason). There I do think that the persons who invested in Consols to a small amount some time ago are not being treated in quite the same satisfactory way as the persons who are in a considerable position financially to convert their Consols.
Take the case of the person who by saving, through the Post Office it may be, has been able to accumulate a small amount of Consols by a display of thrift. He is not in the position at all of being able to find £100 or £200 immediately to take advantage of this option, and, therefore, I say that the people who will benefit under this scheme of option are the people in a large way of business; but the small investor, the person, who has used the Post Office, is absolutely put out of it altogether, and will not be—cannot be—in a position to take 1073 advantage of this option. Therefore, I think the point made by the hon. Member for Greenock (Mr. G. Collins) is altogether sound, that the larger financial interests are better served under this system of option than the small investor or the friendly societies or trade unions, who might be able to take advantage of conversion if given a little longer time, and if the terms were made a little more favourable.
There is one other point I want to bring to the attention of the Chancellor of the Exchequer. It is a difficulty with regard to some of the friendly societies who have the money of their members in the form of deposits. Some of them in their provident branches have deposits held on behalf of their members. The friendly society I have in my mind would be very glad to have the opportunity of putting £20,000 into this War Loan, but it is in the difficult position of not knowing, and it cannot know, until 31st October how many of its members will come along and take their small deposits, and thus deplete the available and liquid assets of the trade union for the moment, thus preventing them putting their money in the War Loan. 10th July is the last date on which they could take up a lump sum, but by 10th July they will not know, and they cannot know in many cases until towards the end of October, how much their funds are to be depleted by the withdrawal of the small amounts of their members.
§ Mr. GOLDSTONE
They will be able to buy in the market, it is true, but for the moment, at least, the Treasury will be in the difficulty of not knowing how much it will be able to get from the Loan, and the Treasury are shutting out the opportunity of easily getting lump sums from societies which have them in liquid form, because their members may be withdrawing small amounts of £5, £10, or £15 from their deposit accounts. I nope the Treasury will consider this point, and also whether it would not be possible to extend the date of 10th July, and whether, again, 31st October is absolutely the final date they have in mind for the conversion.
§ Sir THOMAS WHITTAKER
I should like to join in the congratulations to the Chancellor of the Exchequer for the bold scheme which he has put forward, and the fair manner in which it was introduced yesterday. There is one point to which 1074 reference has already been made, which I think should rather be pressed. That is the extent to which this House really has any control over a big transaction of this kind. This, I suppose, is the largest financial transaction the world has ever known. I do not say there is no precedent, but here is the simple fact that we were told yesterday what was going to be done, and before this House rose the prospectuses were issued in the City, and practically our discussion of it was a dry formality. We had no voice—no control whatever over what was being done. It may be customary, but it does seem to indicate to me that this Assembly, which desires to have, and io supposed to have, supreme and complete control of the financial proceedings of this country, has practically no voice whatever in the decision of the terms under which the largest transaction the world has ever known should be undertaken. It does seem to indicate somewhat a weak place. Sometimes, no doubt, it is desirable that an issue of this kind should be made immediately, but I do not think there is any immediate need, say, for two or three days, in this particuar instance. I do not think three or four days would have made any difference whatever to the reception of this Loan. I do not think there was any room for much speculation after the announcement was made, and, after the announcement of what was contemplated, without making it binding, I think it would have been an advantage if this House had had an opportunity of discussing the matter rather more fully.
I ventured yesterday to put to my right hon. Friend, as did also the hon. Member for Windsor, a question as to the Treasury Bills. I hope to-day he may be able to say something on that matter. I do think it would be an advantage to the nation to secure as much of that money as it could as a permanent Loan. These bills are payable six, nine, or twelve months from the time they were issued. Some are payable in October. Under the conditions which will prevail under this Loan the holders will desire to have that money back. So much of that money as belongs to the bankers and others, and is used in the Money Market, might not I think be used in the War Loan; but I do know as a matter of fact that very considerable sums of money have been put by for other people into Treasury Bills, and they would put that money into the War Loan if they could do so. It may be said they can buy the War Loan afterwards.
§ 4.0 P.M.
§ Sir T. WHITTAKER
That is so for a few months, but what would the Government get in return? They would get that money for at least ten years, and now they will have to pay it back. It may be said that when the bills run out the holders can invest their money in the War Loan, but the issue of the War Loan will have been closed, and they will only buy in the market from somebody else, and that will not be an addition to the War Loan. If you can get it in now it is additional money, and, therefore, I suggest that the Government should get as much as they can now. They must not ask them to double the subscription; if they do that, they cannot get the money. I suggest that they should accept these Treasury Bills on terms as subscriptions to the War Loan. With regard to the remarks which have been made about Consols, I cannot get the impression out of my mind that the transaction is rather too generous for the holders of Consols. We have committed ourselves, and it is all in the prospectus; but I hope it will not go any further than is absolutely necessary. At the time of the issue of this War Loan £100 of Consols were quoted at 66½, at 2½ per cent., and that meant a yield of £3 15s. per cent. They are to convert those and get £4 10s., and that means a gain of 15s. per cent. Those are better conditions than they are giving to the holders of what we call the old War Loan issued last year. The holders of that Loan have no such offer. They have a security, which, taking into account the redemption of the old War Loan, would yield them 4 per cent., and they now get 4½ per cent., which is a ½ per cent. more for ten years certain, but they have to pay £5 to get it, and £5 for ten years is just a ½ per cent.
§ Sir T. WHITTAKER
They are entitled to their £5 on redemption, but they are going to lose that. (HON. MEMBERS: "No!"] They were to get £5 as a bonus, so to speak, on redemption, and they are not going to get that now. I think the terms are better for the holders of Consols than to the holders of the old War Loan. I would like to suggest that the reason 1076 which is given for this transaction should not be that there is any moral obligation or moral right about it. It is suggested that the Government cannot leave British creditors in the lurch, but they are not doing that if they are paying them all the interest they have promised to pay. It was said that we must give the investor an opportunity to retrieve his position, but the opportunity of doing that is only given to the man who can double his investment, and that means that the weakest and the smaller people, to whom it was most necessary that they should have an opportunity of retrieving their position, are not able to do it. As a matter of fact they cannot do it, and therefore it must not be put on the ground of a moral obligation, because it is not being carried out with regard to those who cannot find the additional money. If it is to be put on the ground of moral obligation, and if it is suggested that if the Government did not give to the old holders of the bonds this privilege they would be leaving them in the lurch, that seems to me that it is a very far-reaching doctrine. If it is a moral obligation, it does not apply only to Governments. What about municipalities? They borrowed money at 2½ per cent. I know they have recently borrowed and have since had to pay a much higher rate, but is it to be a moral obligation on them that they are to put their old borrowings in the same position as the new ones? If not, why is it a moral obligation on the Government? This kind of thing will not end with the municipalities. Moral obligations apply to railway companies and to everybody else, and if this is to be the doctrine it means a complete revolution. Therefore I suggest that it should not be put on any ground suggestive of a moral obligation.
If it is done at all, it should be done on the grounds of expediency, and as a matter of business. That is the only ground, and not because you will not leave your creditors in the lurch. It is suggested (hat it is expedient to reduce your capital account, and that is a very substantial reason. By converting your Consols, you will reduce your capital account to one-third, and in years to come, when it will be easier to repay, you will have one-third less to repay, and that is a very substantial reason. A second substantial reason is that it will make it a condition that you are to subscribe for an equal amount of the Loan. You are going to get a very considerable amount of subscriptions that 1077 you would not otherwise have got, because you give them this inducement. You are also going to get the opportunity of paying all these Loans off at a much earlier date. Those are substantial businesslike reasons, although I am not so sure that they quite justify such generous terms. I think they are more generous than they need have been, but they justify some scheme of conversion, and they offer an inducement to convert. We should not admit, or even suggest, that there is any moral obligation about it. The right hon. Gentleman the Member for South Shields (Mr. Russell Rea) suggested that we can only provide this Loan out of the year's income, but he did not define what he meant by income. We could provide a good deal of it out of the year's production, if production is to be counted income, and that is getting nearer the mark. If the right hon. Gentleman means by income—wages, salaries, profits, and interests, it is not quite correct. We can provide some of this money out of the production of the year. Further, you can provide it by selling securities abroad.
§ Sir T. WHITTAKER
That does not matter, but securities can be sold abroad, and thereby you can get money out of capital in this country to put into the Loan.
§ Sir T. WHITTAKER
It is not coming out of income. Part of this Loan will be expended in paying for imports, and you can pay for some of those imports by the export of securities from this country, The United States are making large profits out of the business done in this War, and their willingness to invest will increase, and some part of this demand can be met out of capital. It was suggested that taxes and loans are practically merely a matter of book-keeping. That is not so, because you pay interest on loans and you do not pay interest on taxes, and that is a very substantial difference. When you raise money by taxes you have got it once and for all, and you have no more to pay for it; therefore it is somthing more than a mere matter of book-keeping. It is suggested that you may raise too much by taxes. That is quite true; but the point really is, what is too much? I am not sure that we have got to that point. It was suggested that thrift should be made compulsory, and that we should compel 1078 subscriptions to the War Loan. Possibly the time may come when it will be necessary to do that, but you will not be able to compel subscriptions to the War Loan from the same class of people that you could obtain money from by taxation. Taxation will compel thrift, because you are bound to save to pay the taxes. You not only compel thrift, but you get for the nation the money that is saved by taxation. You cannot otherwise compel subscriptions to loans, and you cannot compel people of the smaller class to subscribe to loans. It is not possible to get the money from them in that way, although you can get it by taxation. I think you will have to tax all classes of the community more. As the Chancellor of the Exchequer said yesterday, it will never do for us to borrow money to pay interest.
§ Sir F. BANBURY
The right hon. Gentleman who has just spoken began by saying that he regretted very much that this House had such little control over the financial affairs of the country. The right hon. Gentleman has, during the last few days, taken the opportunity of addressing us, sometimes from the Government side of the House and sometimes from the Opposition side. Now he has gone back again behind the Treasury Bench, and there he has discovered that this House at the present moment has very little control over the financial affairs of the country, and he wants to know what to do. I will give him a word of advice, and it is, trust the Government. The right hon. Gentleman went on to say that he saw no hurry for the issue of the prospectus, and he thought after the Resolution was passed it would have been better for the House to have considered for three or four days the actual terms of the prospectus. The right hon. Gentleman has had considerable experience in financial matters in the City, but I think, on reflection, he will see that in every Loan that I have ever heard of during the last forty years the terms have been discussed in private, and not in public until the day the prospectus has been issued. If that very wise principle is departed from, there would be tremendous speculation in the Loan, and it might be a failure, because all sorts of people would come up and discover little defects here and there, and all that would be discounted before the Loan would be issued.
It is evident, if you are going to have a Loan, you must allow a small number of experts to make up their mind what is the right thing, and then issue it to the public. 1079 If later on it turns out that it has been done in a bad way, then the right hon. Gentleman can come down and criticise the Minister. I think he will agree with me, on reflection, that he really must support the Government. The prospectus has been issued. I have spent twenty-three years in this House, generally in promoting discussion and opposing legislation. I am going to take a new rôle this afternoon. I want to ask the House what they think they really gain by discussing all sorts of small details and small points after the issue of a prospectus which cannot possibly be altered. I would venture to suggest, until we see what the actual result has been, that we all say that we trust the Government and that we pass the Second Reading of the Bill without any further delay. I am sure that is best in the interests of the nation which everybody on whatever side of the House he sits really desires.
§ Mr. HOGGE
I should have thought that the problem which the hon. Baronet (Sir F. Banbury) put to the right hon. Gentleman (Sir T. Whittaker) could have been solved in this way. We all of us sit on both sides of the House at the present time. [Laughter.] I do not mean at one and the same time, but every Member of the House is ubiquitous so far as sitting accommodation is concerned. I must confess that I have in my mind the same point as my right hon. Friend made with regard to the Loan. I could not understand personally what was the use of this House discussing these points which were beyond our control. I can understand the point made by the hon. Baronet opposite that we should not discuss the larger parts of the Loan, but surely there are small details on which the opinion of this House ought to be considered. I want to deal with the small investor and with the patriotic investor who put his money into the first War Loan. The right hon. Gentleman who sits for South Shields (Mr. Russell Rea) said that the Money Market was drained by the first Loan, and that we therefore required to offer better terms to get money now. I do not believe that. I do not believe that the Money Market was drained, and I do not believe that the facts bear out that conclusion. I believe that a great many people were waiting for better terms, and the proof of that is that the Chancellor of the Exchequer has put no limit to the amount of this Loan. He is going to take all the money he can get 1080 at 4½ per cent. in order possibly to try to prevent the necessity of coming again to the public and asking for money at a higher percentage. I do not agree with that point of view, and therefore, I think, that it is harder upon the poor investor and the patriotic investor who put in all the loose money he had into the first Loan, because mark what that investor has got to do now if he wants to secure equal terms with those investing in this new Loan. He has got to put up fresh money.
I want to ask the Chancellor of the Exchequer why the small investor who put all the loose money he had into the first Loan should be disentitled to the advantages of this new Loan unless he puts up sufficient capital. Why should he not get that advantage if he makes up the difference between his original subscription and the subscription required for this Loan? Take, for instance, a man who put in a few hundred pounds. That man would require to bring the equivalent of that subscription in order to get the benefits of the new Loan. Why should he not get the benefits of the nen Loan if he brings the marginal difference required to bring it up to that limit? Surely that is fair to a very large number of people who are not in the City. I believe I was guilty of the indiscretion myself of putting a small sum into the first Loan, and of being in the position now of not being able to put down any fresh cash for the new Loan. Why should I be put to a disability because I lent the State all the money I had?
§ Mr. HOGGE
I would point out that I must bring fresh capital before I can get the advantages. I am suggesting that the right hon. Gentleman ought to have entitled us to make up the difference in the subscription between the first Loan and the second Loan to get the advantages of the terms of the second Loan. My right hon. Friend the Member for Spen Valley (Sir T. Whittaker) shakes his head, but he shakes the head of a big insurance company. I am pleading now for the small investor, and this Loan has been so constructed as to reach the smallest investor. You want the patriotic help of every man who has money in the Kingdom, and I am suggesting a way in which you will help yourself to get the money.
I should like to hear further reasons why the principle is laid down that it is to be 1081 possible at any future time to convert holdings in Consols and Annuities and War Loan into fresh Loan at what may be a higher rate of interest. We are paying 4½ per cent. for the money for which we are now asking. I do not know what the success of the Loan will be, and I suppose that nobody knows how long the War may last. It is conceivable that some time the Chancellor of the Exchequer may have to offer better terms than 4½ per cent. If everybody is going to have the right to convert, that saddles the burden of providing the interest on the shoulders of the taxpayers of this country. It is throwing the whole burden upon the community to the advantage of the financial interests. That does not seem to me to be quite fair, and I should like to know the reasons of the Chancellor of the Exchequer for the step he has taken. Supposing the War stops very much sooner than any of us anticipate—every one of us would be very glad to see it—and supposing we complete the task we have set out upon and achieve victory before we have spent all this money, then you are saddling the community for the next thirty years with a fixed charge which I do not think you have any right to do. I do not think that it is fair to throw that burden upon the backs of the community.
Of course, I may be wrong—I am not a financial expert—but these things have occurred to me as an ordinary Member of the House, and an explanation of them would help one to understand why the Loan is put in this way. Does not this fixing of a rate of interest at 4½ per cent. penalise industrial capital in this country? I have been reading the financial papers—I read them very closely, but I do not know that I always understand them, though I try to do so—and I notice that our export trade is declining. So far as I can gather, the balance of trade in this country is putting us into the position of a debtor nation. It may not be serious at the present moment, but we are approaching the stage at which we are becoming a debtor nation. One thing that would prevent us becoming a debtor nation sooner than we otherwise might is surely the maintenance of our export trade and the maintenance of our industrial activity in this country, and the maintenance of our industrial activity depends upon the capital that can be attracted to industry. If capital can find a better return in Government Stock at 4½ per cent., it will not go to our industries, and our industries 1082 will be to that extent stopped. It seems to me that is a point worth considering, and I hope that my right hon. Friend will deal with it.
§ Mr. McKENNA
I would like to deal quite briefly with the objection which was taken by my right hon. Friend (Sir T. Wnittaker), that by this procedure of producing the Loan after the Resolution and before the Bill we are depriving the House of any opportunity of criticising the Bill itself. I would suggest to my right hon. Friend and to the House that white it is unavoidable, as was explained so admirably by the hon. Baronet opposite (Sir F. Banbury), in the case of the issue of a Loan that the prospectus should come out immediately after the announcement of the terms, yet, notwithstanding, the Debate in the House, subsequent enough it may be, is not wasted. I would remind my right hon. Friend of what has already taken place in the course of the last few months in this House with regard to a Loan. Last November my predecessor asked the consent of the House to a Loan which had been issued as soon as the terms were published, and the House debated it. What did the House complain of? What was the whole course of the Debate? I remember the hon. Baronet opposite objected to the issue of a Loan below par. He said that he thought 3½ per cent. at £95 would not take with the public as well as a 4 per cent. Loan at par. That was the general view of the House. What has happened? The new Loan is issued at par. The Debate was not wasted. It is quite true that it cannot take place in relation to this particular Loan, which must be issued as soon as the terms are published, but the Debate is not wasted.
There was one other topic which was very fully discussed, and great emphasis was laid upon it, on the occasion of the last Loan. It was that the next Loan should not be limited to the minimum, amount of £100, but that opportunity should be given to the small investor. What have we done? We have endeavoured to meet that point and give an opportunity to the small investor. If this Debate discloses any new principle on which a Loan should be issued to the public the House may be quite confident that in the next Loan we shall learn wisdom from the advice which we receive now. I cannot say more than that, because it is perfectly apparent to anyone who really 1083 considers the business proceedings that once the terms are published the Loan must be issued.
§ Mr. McKENNA
My right hon. Friend asks, What would it matter if you had two or three days' debate and deferred the issue? What does he mean by that? Does he mean that in the course of these two or three days' debate the terms may be varied and that the speculator is to watch the course of the Debate in the House of Commons and see whether A's arguments are more successful than B's and operate according to the success of a speech? My right hon. Friend knows that could not be, and he knows that once the terms are announced there can be no alteration. All that it would mean would be that we should be merely pretending, while the whole world would know that the terms were definite as soon as they were published. With regard to the actual issue last night, I would like to remind my right hon. Friend that no prospectus was issued until the Vote was taken in this House. It is true that the terms were announced by me before four o'clock, but the prospectus was not issued until the Resolution has been accepted by the House and the Bill had been introduced, and in following that procedure we were following the procedure which is time-honoured in the case of all taxes and loans. Questions have been put to me as to whether we are not treating rather hardly the investor who put up all the money he had in the old War Loan. Of course he is in exactly the same position as anyone else; he has to invest more money. He is neither better off nor worse off. Supposing a man has subscribed £100 of old War Loan, for which he paid £95. He must invest more money. My hon. Friend asks wiry not give him the benefit of conversion. Of course he can have it. He only has to sell half of his existing holding.
§ Mr. McKENNA
And with the proceeds of the sale he buys new stock, while the unsold portion is converted. The effect of the issue of this Loan has already been to send up the prices of the old War Loan Stock, and therefore, so far as selling a part of the stock is concerned, he is better off than before. With the money he gets 1084 from the sale of the War Stock he can apply for the new War Loan, and he can also convert the other half of his holding into new War Loan Stock. It is quite true at the end of the proceeding he will only have £100 of stock as before, but it will be in the new War Loan instead of the old War Loan. He will have had to pay an additional £5 in cash, because for every £100 of stock in the open market cash was subscribed, whereas for the old War Loan he only subscribed £95 for each £100. All he has to do is to sell a proportionate amount of Consols or War Loan Stock and to invest the amount in the new War loan, while the remainder of the stock can be converted as well.
§ Mr. McKENNA
I should think it would be well worth his while to write a letter—it would only take him three minutes—to someone who would do the whole business for him at a small remuneration, and then he will have the advantage of a 4½ per cent. stock, instead of 4 per cent. I do not think there is the slightest doubt about that. My right hon. Friend the Member for the Spen Valley thinks that in this conversion the holder of Consols is treated better than the holder of old War Loan Stock. It is impossible to do mental arithmetic standing at this box, to the satisfaction of those that are listening, but I can assure my right hon. Friend if he will take a pencil and piece of paper and work the figures out for himself he will find that the rate of interest which the holder of old War Loan Stock gets upon the money which he has put up for the purposes of conversion is precisely the same as the rate of interest which the holder of Consols has to pay for the purpose of converting a like amount. The advantages to the two classes of holders are identical. I do not think it will be found that the rate of interest varies a sixpence; at any rate, what difference there is merely arises from the difficulty of getting an exact sum. The intention has been to treat both holders, so far as advantage is concerned, in exactly the same way.
My right hon. Friend objected to the use by me of the phrase that the British Government would not leave its creditors in the lurch. He argued that I had implied there was a moral obligation on the part of the Government to convert all stock whenever a new issue is made. No 1085 such argument should be deduced from the words I used. There is no moral obligation on a debtor who wants to borrow a second time to renew the old Loan at the rate he has to pay for the new Loan. There is no moral obligation of any sort or kind. But I am now wanting to borrow money, and the State, in borrowing, has to offer terms which will be acceptable to the new creditor. There can be nothing so acceptable, either now or at any time, to a new creditor as the knowledge that the money advanced to the British Government will be money invested in a good security, and the knowledge that considerations of this kind are borne in mind has a very favourable effect when we have to go into the Money Market to borrow afresh. I do not put it any higher than that. Subscribers are much more likely to lend their money with the knowledge that they will not be left in the lurch. My hon. Friend the Member for East Edinburgh (Mr. Hogge) has put three questions to me. He said he did not like our proposal to exchange, in the event of any future Loan, the stock issued under this Loan at par for the new stock. He thinks that is a benefit which should not be offered to the investor. A little earlier in his speech—
§ Mr. McKENNA
There is the difference between us. My hon. Friend in the course of Debate scores a point, and when it is shown to him that he is inconsistent he shakes his head and says, "I was inconsistent." But suppose in the issue of the Loan the Government made a mistake. It is no good nodding its head and saying it has made a mistake. What we have to do is to get the money. What does my hon. Friend say? He says, "Think of the position of those War Loan holders who were so patriotic as to invest all their money, while other people waited to invest their money until there should be better terms." It is true a great many did so. But I want to tell people it is no good waiting; there are no better terms available. There never can be better terms. I want the money. My hon. Friend may make a mistake. It does not matter in his case; he does not want the money. The Government do. They want it, and must have it, and this is one of their ways of getting it. Then my hon. Friend asks, "Why not allow the holder to convert by merely putting up the stock? He paid £95 for £100; why not let him convert on payment of the other £5?" 1086 But we are not converting for the sake of converting. We are converting because we want to make the person who converts subscribe.
§ Mr. McKENNA
Of course not. But I look upon it as an asset that the British Government will consider its debtors. It is an asset that the people should know that when they lend to the British Government they are lending on a security which is very favourable. Now that we want more money we offer conversion terms which are favourable to both the holder of the old stock and of Consols. They are also favourable to us, because they cannot convert without subscribing more money. That is why we will not take the other £5 to make up the £100, or £33 in order to make up the Consols. If a man wants to convert his Consols he must pay up £100 for every £75. It is no good offering to pay £33 for every £66; we want much more than that, and the only terms on which conversion can be made is that we get a very large public subscription. If the hon. Gentleman thinks that on easier terms the money could be got, then we have made a mistake. It would always be a mistake to issue a loan on more favourable terms than you need issue it. If an hon. Member has sufficient confidence in his opinion to be satisfied that we could have raised the money at once—if he thinks so without having made much more inquiry—if he thinks we could have done it on less favourable terms as to interest, or without including the right of conversion, all I can say is that I congratulate him upon being able to form a competent opinion upon very little data. The amount that we require is very large. There is no experience to guide us. All we can do is to form the best opinion possible in the circumstances and to use such inducements as we have, I will not say to compel but, to drive people to invest all their available money in the new Loan.
My hon. Friend also asks whether we are not penalising industrial capital. How can we help it? If we are not to penalise what he describes as industrial capital, how can we get the money that we require? Of course, the issue of any large Loan at a higher rate of interest forces up the general rate of interest, and the question obviously is, could we get the money at a less rate of interest? As I said yesterday, the investor in old War Loan Stock 1087 gets 4¼ per cent. How could we hope to get a large new issue floated at a less rate of interest? Then my hon. Friend says, "Suppose the War ended sooner than appears to be probable, shall we not be saddling the interest of this huge debt upon the country for thirty years?" No, we shall be entitled to repay this Loan at the end of ten years. But there is no reasonable prospect of that. We have already incurred very heavy liabilities on Treasury Bills. We have other liabilities which I mentioned yesterday, and to-day the excess of expenditure over revenue is such that it cannot be a very long while before we exhaust this Loan. For these reasons I do not think we have taken any imprudent step.
I trust I have answered all the points put to me. I sympathise with the House. If I had been sitting opposite I should have felt very strongly, as the House must feel, that a Debate of this kind, so far as it affects this Loan, must be to a considerable extent barren. I personally welcome the opportunity of being able to answer any questions that may be put with regard to the issue I was asked about Treasury Bills, and whether they will be taken in exchange for the War Loan. The Bank of England will be prepared, if the holder cannot do better in the market, to rediscount Treasury Bills at 4½ per cent. for the purpose of paying up calls, or full subscriptions to the War Loan, and the holder of Treasury Bills will be put in the position of exchanging his Bills subject to that discount for the War Loan. He will get 4½ per cent. on the War Loan, and therefore he will have to pay 4½ per cent. discount on the Treasury Bill. Only for that purpose will the Bank of England be willing to discount the Bill.
§ Mr. MOLTENO
As I did not catch the eye of the Chairman yesterday, I should like to put one or two questions to the Chancellor of the Exchequer. I am very much indebted to the right hon. Gentleman for repudiating the suggestion that we should say nothing in this matter. I can quite understand the hon. Baronet the Member for the City of London (Sir F. Banbury) being desirous that little discussion should take place, on the principle of not looking a gift horse in the mouth because he, representing the City of London, no doubt represents some hundreds of millions of Consols, and as these Consol holders are to receive a free gift of 1088 £100,000,000, I can quite understand that he should not be anxious to discuss the matter fully or that it should be looked into too closely.
§ Sir F. BANBURY
I do not represent any Consols, I represent thirty thousand most intelligent people.
§ Mr. MOLTENO
They must include a large number of holders of Consols, because the Chancellor of the Exchequer told us that £400,000,000 Consols are held by Government Departments, therefore £400,000,000 are free, and no doubt the hon. Baronet represents a great portion of the £400,000,000 which is held in the City of London. I felt yesterday and feel today, that the Chancellor of the Exchequer has not made it quite clear why this provision has been extended to Consols holders. The right hon. Gentleman told us to-day that there was no moral obligation, but I do not understand the principle of selection. Consols, after all, were introduced many years ago, before most of us were born; but there are other obligations about which the same things might be said as are said about Consols and which have more or less a guarantee of the State, but which have not been selected. Some of them have been created in recent years. I refer in particular to Irish Land Stock. I cannot understand why Irish Land Stock is left out. If this is a great refunding measure, I do not see why Irish Land Stock, which has been issued since 1902–3, should not come within the purview of the same arrangement. Inasmuch as what is said to-day is going to be borne in mind in future, from that point of view I think it would be very dangerous if we are going to have other stocks included in this system of moral obligation. To what does it amount? Really to this: That the country is making a free gift of, or at any rate that the country will lose £100,000,000 on a transaction in regard to Consols. Let me make that perfectly clear. Every £75 of Consols may be exchanged for £50 of the new Loan. The revenue from that £50 of the new Loan will be 7s. 6d. more than from the old £75 of Consols; therefore, if we take £100 Consols, the revenue will be increased by 10s. by this transaction. If you capitalise this 10s. at twenty-five years, that is £12 10s., which is a free gift to the holders of Consols. There are £800,000,000 of Consols.
§ Mr. MOLTENO
Every Member can calculate the matter for himself. If my figures are correct there is a free gift of £100,000,000 to Consol holders.
§ Mr. McKENNA
I think my hon. Friend ought to correct one point. He must not take it that the gift is by the State. So far as the State is the holder of Consols it is only making a gift to itself. £300,000,000 is practically all that is left to convert.
§ Mr. MOLTENO
Whether the balance held by the Government is £300,000,000 or £400,000,000, as I said at the outset, it is a present which will cost the State £100,000,000. Let me make that good. Say, for the sake of simplicity, that the public holds half, and on that 12½ per cent. is paid. On that basis 12½ per cent. of £400,000,000 is £50,000,000. What about the rest? If the Government Departments do not convert the Consols which they hold, is the value of the Consols which they hold going to be what it is to-day—£66? Nothing of the kind. The value of the Consols is going to fall to something like £55, or from 10 to 12 per cent. There, again you have a loss of between £40,000,000 and £50,000,000, and if you add that to the £50,000,000 which is a present, you get the cost to the State of £100,000,000. I do not agree with the hon. Member for East Edinburgh (Mr. Hogge) that the Chancellor of the Exchequer should get no reward for his generosity. The hon. Member suggested that the amount might be made up and that you should get conversion by repaying the balance that is due. I do not agree with that at all. If the Chancellor is so generous he should get something for his generosity. But I do sympathise with the hon. Member when he suggests that he would like a subscriber to this Loan to get the benefit of this vast gift by the State. Had the Chancellor of the Exchequer not included Consols he would not have had to pay this vast sum of £100,000,000, and he could have used the £100,000,000 to make terms with the subscribers to the new Loan which would be more favourable than they are to-day. I may be mistaken, but that is the way the thing represents itself to me. It was quite wise for the hon. Baronet the Member for the City of London not to go too closely into details of a transaction of this kind. I may be mistaken. I was very anxious to put the point yesterday, but I had not the opportunity, and I put it now only because the 1090 Chancellor of the Exchequer has himself encouraged us to bring out points which may be of service in the future. I entirely agree with the hon. Gentleman the Member for the Spen Valley (Sir T. Whittaker) that there is no moral obligation whatever to make these payments, that the cost to the state of £100,000,000 is a very serious one, and that the £100,000,000 might have been used in making the terms to the present subscribers more favourable.
§ Sir A. MARKHAM
I desire to ask the Chancellor of the Exchequer one question. It is highly desirable that he should get all the industrial capital he can at the present time. There are many companies and corporations who will give him all the available cash they have for the purposes of this Loan. Can he give an assurance to those companies that they will not be called upon to subscribe to any forced Loan for at least twelvemonths if they subscribe a fixed proportion of their assets? The reason why I ask that question is that many of us have seen that the War is going to last a very considerable time and have accumulated large balances in the companies with which we are associated. We want to give the Chancellor of the Exchequer all those balances. If we give him all our money now, and if we are called upon at a later date to subscribe to a forced Loan, we shall have no money to meet the forced Loan.
§ Sir WILLIAM BYLES
We have had some very interesting speeches from highly qualified financial authorities this afternoon. I have no claim to follow them, but I would ask the House to listen for a few minutes to a view of the matter as it strikes an ordinary Member who knows little indeed about high finance. The first thing that occurs to my mind is that we are to appeal to the country to join in this Loan for patriotic reasons. I do not think it is a very patriotic thing to lend money on the very best security in the whole world at a good rate of interest. I do not want investors in this Loan pharisaically to lay credit to themselves for any undue patriotism. My right hon. Friend the Member for the Spen Valley (Sir T. Whittaker) made two or three points which impressed me a good deal. The Chancellor of the Exchequer has no doubt replied to them, but he has not satisfied me that there is nothing in the argument as to the Consols holder getting better terms than the old War Loan holder. However, I will leave that case. The 1091 other point made by my right hon. Friend the Member for Spen Valley was that the House of Commons has had nothing whatever to do with this Loan. We have not been consulted about it at all, and it was arranged over our heads. I know that that point was met by the Chancellor of the Exchequer, but it is nevertheless true that the whole thing has been done by the Government. The fact is that the ordinary Member of this House now might almost as well be eliminated. Everything is done by the Government. We have all the wisdom of both sides of the House now concentrated on the Treasury Bench, and the ordinary Member of the House of Commons has nothing to do with it. The Chancellor of the Exchequer said it could not be helped and that it was necessary. No doubt it is, but the fact is there all the same.
I was told that the moment this Loan came out all ordinary securities would fall. I do not know whether or not they have; probably they have. Therefore the Government, by its proposal, has actually had the opportunity of making us all poorer than before their proposals came out, and we have no possible chance of hindering them except by voting against the Second Reading of this Bill, which I, for one, shall not do. It is the growing habit of the Government—indeed, of all Governments—to push out the House of Commons and to let them have less and less control over what they are doing. If this were the proper time I could easily argue that the War itself has been brought about without any individual Member of the House of Commons having any influence whatever over it. The point as to whether taxation is preferable for us is one which I should like to hear discussed by competent people. It seems to me to have great advantages. I know that it is possible to overtax the community, and I am afraid we shall get pretty near the border line before we are very much older. But taxation is really shouldering the burden, and it brings home to the nation the gravity of the situation in which we find ourselves. What are we actually doing now? We are only imposing the duty of paying for this War upon unborn generations.
§ Sir W. BYLES
I meant by this Loan. I do not say there will be no new taxes. 1092 By this Loan we are really handing over the responsibility of paying millions of debt to posterity. I remember that the Prime Minister used to boast very justly that during the time of his Government they had paid off £100,000,000 of debt, and we were all very proud of the fact, but now we are going to put £1,000,000,000 on to the National Debt, and I dare say there will be more. I am wondering what posterity will say to us. I have seen it argued by a very eminent writer, one who used to be called an economist, that if the National Debt gets too big or too old the population may some day rise against it and say, "We had nothing to do with contracting this debt; it was done ages ago by people to whom we owe nothing—our very distant ancestors—and we repudiate it and decline to pay the interest." If you make the Debt big enough that is a likely enough thing to occur some day. [Laughter.] Oh, it is, indeed! So far as possible I want this generation to bear the burden which this generation has brought upon the nation.
§ 5.0 P.M.
§ Mr. OUTHWAITE
I wish to offer a few words of congratulation to the Chancellor of the Exchequer on the reception of his proposal. No doubt the statement yesterday relieved a great many heavy hearts and dispelled some very serious doubts. We are spending about £3,000,000 per day in defence of the broad acres of this country, its City gold-mines, its coal-mines, and all its natural wealth, and there was great fear that the Chancellor of the Exchequer might come to those who have these vast possessions and say, "As a matter of insurance I am going to tax you to the bone, so that the fate of those who have to go to the soup kitchen or the bread line in Belgium shall not be yours." He has dispelled that fear. He has found a better way. He is going to the man of great possessions and he says, "I am going to take nothing from him; I am going to borrow something, and every penny piece of what I borrow I am going to restore, and meanwhile I am going to pay you an unprecedented rate of interest for such a security. Out of the War you are going to make increased riches; you are going to suffer not at all." That is the position that the Chancellor of the Exchequer is putting before the man of wealth. He says, "I will not take your wealth by taxation in order to save it from possible taking by invasion. I am going to borrow your wealth and I am 1093 going to pay you an unprecedented rate of interest for it." That is the position which has been created by the proposals of the Chancellor of the Exchequer. I am going by way of loan, he says. He is taking not at all from the rich, but he is making the rich richer than before. He is giving by way of bonus to Consol holders, my hon. Friend (Mr. Molteno) says, £100,000,000 or £50,000,000, but I want to know the exact amount. A vast bonus is going in that direction, and for that reason I think the House should have had more opportunities to discuss this question, because it appears to me that if this huge bonus is going to the City and to Consol holders, the suspicion arises that the Consol holders in the City have blackmailed the Chancellor of the Exchequer in relation to this Loan. They are in a position to say, "If you do not give us this bonus we can make your Loan a failure." I want to know, further, whether it was good business. I cannot see where the good business comes in in the grant of this vast sum to placate Consol holders and induce them to re-subscribe. I merely make these few remarks in order to place on record my views of the significance of these Loan proposals in so far as they obviate as far as possible taxation when taxation should be paid.
§ Sir F. CAWLEY
I think my hon. Friend can hardly remember that rich men are paying 5s. Income Tax on every sovereign they receive. Rich men have been taxed to a very considerable extent so far. They are paying 5s. in the £, instead of 1s. 2d. I do not know of any great tax upon any article of consumption by which the poor are paying anything like that proportion of taxation. The hon. Member when he gets up to speak always says that the War expenditure is for the benefit of those people who have large estates and large property. The hon. Member, like other good Radicals, has always advocated One Man One Vote, the great argument for which was that the poor man has his all at stake and the rich man cannot have more, and the poor man has a stake in the country as much as the rich man. I have used the argument myself many a time. I think it is a good argument that the poor man has his all at stake and therefore ought to be called upon to pay a fair share of taxation for the benefit of the country. As far as the Loan itself is concerned, I have no data to go upon, but I think myself that with a 4½ per cent. Loan the right 1094 hon. Gentleman would have got all the money he required without any of these helps to Consol holders or those who took the old Loan up. The old Loan was issued on fair terms at the time, and I do not see that there is any obligation to help those people who subscribed to it. Most financial people, no doubt, would desire to lend money at a fair quid pro quo, and I think a plain and simple 4½ per cent. Loan without any conditions whatever would have been quite sufficient.
§ Question put, and agreed to.
§ Bill read a second time.
§ Resolved, "That the Bill be committed to a Committee of the Whole House."—[Mr. McKenna.]
§ Mr. SPEAKER
I do not wish to stand in the way of the Chancellor of the Exchequer, but he will remember that he had a special Motion yesterday to allow two stages of the Bill to be taken in one day.
§ Bill committed to a Committee of the Whole House for to-morrow (Wednesday).