§ Resolution reported,
§ 16. "That on and after the twenty-ninth day of September, nineteen hundred and fifteen, until the first day of August, nineteen hundred and sixteen, there shall be charged on any of the following articles imported into Great Britain or Ireland a Customs duty of an amount equal to thirty-three and one-third per cent, of the value of the article, that is to say:—
§ Motor cars, including motor bicycles and motor tricycles.
§ Accessories and component parts of motor cars, motor cycles, or motor tricycles."
§ Motion made, and Question again proposed, "That this House doth agree with the Committee in the said Resolution."
§ 7.0 P.M.
§ Mr. CHAPLIN
Whether we are to be judged, as we were warned not long ago, by what we say or what we do in this Debate, I am going to be bold enough to express the regret which I feel that this House, or, at any rate, some of its Members, should have been carried away into forgetting what is the real object of the Budget we are now considering. Tariff Reformer as I am, and always have been all my life, I can only say, with absolute and perfect sincerity, that if I had been placed in the same position as those who are Free Traders find themselves at the present moment—remembering what is the business we are really engaged in, and ought to be engaged in, and ought to be thinking about, and nothing else—nothing would have induced me to try to make a fight on this occasion for the principles which I have advocated, and which appear to me to be entirely out of place on such an occasion. Nor do I think it is fair to the Chancellor of the Exchequer. He has been placed in a position of great difficulty, and with a more enormous task to perform than any other Chancellor of the Exchequer has ever had to perform in this or any other country in the world. I was sorry, more sorry than I can say, to hear an hon. and gallant Gentleman (Lieut-Commander Wedgwood), for whom I have the utmost respect and admiration for the gallantry which he recently displayed himself at the front, say in a moment of heat what I do not think he would have 907 said if he had really considered what it meant, that if these taxes were to be enforced it would mean, so far as he was concerned, meetings and agitation all over the country against the Budget. That from a man who has been displaying such magnificent courage on the field was a statement which I did greatly regret, I honestly confess, because nothing could be more harmful, and nothing could be worse than that the feeling which is suggested by language like that should exist in the House of Commons at the present moment, when the one object and the only object which all of us ought to have before us, is to see how this War can best be prosecuted.
A tremendous task has been thrown upon the Chancellor of the Exchequer. He has discharged that task with enormous skill; nobody denies him that. Certainly his proposals have won practically universal admiration in all parts of the country. It has been left to a few speakers on this occasion to embark upon a controversy, which, if it was continued, I quite admit might lead to serious consequences, and might lead even to a split among both parties. It is only because I do feel this most earnestly, and because I thought that I saw feelings displayed in the House which might have a most serious effect if the display was continued, that I have ventured to rise and appeal, as I do most earnestly to Tariff Reformers and Free Traders alike, that, whatever views they may take upon this question, they should forget for the time being these old lines of party controversy, as to which the Chancellor of the Exchequer has told us all repeatedly to-night, the moment the War is over we shall be quite free again, so that neither he, nor any of those who think with him, will be bound in the slightest degree by the proposals which they have made to-night.
§ Mr. LEIF JONES
The appeal which the right hon. Gentleman has just made to the House will, I am sure, command the sympathetic consideration of every one of us. I have listened to the appeal of the Chancellor of the Exchequer, not to raise this controversy at the present moment, with a great deal of sympathy. I do not agree with my hon. and gallant Friend that if the Chancellor of the Exchequer persists in these taxes there will be a public agitation throughout the country, with the utmost earnestness and vigour and all the power which political parties 908 have at their command, as there would have been if we had been at peace. I do not think that that is possible at the present moment. It is not only undesirable, but it is impossible to do it. The country would not tolerate that politicians should engage in controversy, apart from the War. Still less, perhaps, a controversy connected with the War, at any rate on a matter of old controversy between the parties. The country would be very intolerant of anything like a strong fight against proposals put forward in the name of a united Government. But for that very reason I think that a greater responsibility rests upon the Government in this matter, because it is very difficult for Free Traders to sit still in this House while the Chancellor of the Exchequer proposes taxes which he says are not intended to have a protective effect, but which, in our conviction, can have no other than a protective effect. We cannot discard our opinions; we cannot put aside what we think to be our knowledge. Therefore, in viewing these taxes, they must realise that a new departure has suddenly been made by the Government of the country, and that controversy has been raised which we all wish to avoid.
§ Mr. L. JONES
That may happen, but it is not a desirable thing that it should happen, and the fact is that the whole of these Import Duties raise so small an amount of money that we are entitled to appeal to the Government as to whether it is a wise thing to raise these controversies in the minds of the people for the sake of this small amount. I feel confident that if the Government could have asked the House of Commons before introducing these Resolutions, or before introducing this Budget, whether they wished this controversy to be raised on the present Budget, they would have got from life-long Tariff Reformers, like the right hon. Gentleman, and from Free Traders alike, absolutely the same answer. They would have been told, "Do nothing in this Budget, which would disturb the harmony which exists at present between all parties in the House of Commons. Do not break the party truce. Do not introduce new proposals, or new taxes, which violate the principles of a large section of the House."
§ Mr. CHAPLIN
When the hon. Member speaks of these as new taxes, does he remember any great war approaching this which was not the occasion of taxes of the same sort being proposed?
§ Mr. L. JONES
The right hon. Gentleman does not quite follow me. I do not complain of the Government imposing taxes practically wherever they think there is revenue to be raised. That is the argument which is used by the right hon. Gentleman the Chancellor of the Exchequer in justification of the particular tax which we are now debating. But why does not he, as all Chancellors of the Exchequer in recent years have done, put on a corresponding Excise Duty for every one of these proposals? Had he done that he would have raised no controversy, but would have gone on the old-established lines. Free Trade has not yet been upset as the established policy of this country. It is the accepted policy of the last seventy years; it has never been upset by any Chancellor of the Exchequer during that period. One attempt was made to upset it, and the result was the election of 1906. I am quite aware that my Tariff Reform friends think that they were making progress in the country. I doubt it, but I do not go back on old controversies. It was quite easy for the Government to avoid anything like a fiscal controversy by the simple expedient of following the old Budgets of the last seventy years, and including an Excise Duty wherever they put on an Import Duty. I still appeal to the Government, and I think that we are entitled to appeal to them, to take this course. We do not want this controversy. Hon. Members opposite have told us that they do not want to pursue it. Nobody in this House wants this controversy. I think, therefore, that the Free Traders in the House are justified in appealing to the Government not to depart from the old-established principle, but to give us Excise Duties to correspond to the Import Duties which they are putting on, and then, whatever we may think of the particular tax, I do not think that there will be opposition in any quarter of the House.
What argument can the Chancellor of the Exchequer advance against this proposal? If his object is to raise money, then by putting on a corresponding Excise Duty he would raise more money. He tells us also that he wishes to discourage the consumption of luxuries. To do that he 910 must discourage the consumption of home luxuries, as well as the consumption of imported luxuries; and here, again, the argument for an Excise Duty must be considered a strong one. There are only three grounds on which my right hon. Friend has justified this tax. In the first place, he wants to raise money. In that case an Excise Duty will result in raising more money for him. Then he desires to diminish the consumption of luxuries. In that case also an Excise Duty will help him. In the next place, he wants to benefit the American exchange. On that point my argument is that I do not think that you are going to benefit the American exchange at all by your Import Duties. It is better for the exchange, in the ordinary course, for trade to take place between this country and America, for the very good reason that imports are paid for by exports, and freights upon imports do not enter into exchange, because they are paid by Englishmen to English shipowners, whereas freights upon exports are paid for by the foreigner to English shipowners, and therefore any trade that takes place tends to move the exchange in favour of this country.
I do not think that my right hon. Friend would dispute that very elementary proposition. In ordinary times any trade taking place between this country and America tends to make the exchange in our favour. That being so, my right hon. Friend is surely wrong in saying that the mere reduction of imports is going to benefit the exchange, unless he thinks that we can keep exports at the same figure, even when we do not receive these imports from America. I admit that if exports go on at the same figure, while the imports are reduced, obviously the exchange will benefit to that extent. But there is no proof that the exports will go on. The exports are sent to pay for these things which are imported. English merchants are not going to send them the money for things that are not necessary. I believe that there is no evidence to the contrary. It is impossible that the American exchange should not be heavily against us, so long as the Government is necessarily importing these enormous quantities of munitions and necessaries of life. Our power of exporting is not equal to paying for the imports at present received. There is no way of automatically getting the exchange back to a normal figure. The measures which the Government are taking in regard to the loan of £100,000,000 911 in America will, I imagine, produce a good effect. The American exchange has been moving upwards for some time. I have no doubt, now that the loan is an assured fact, that that process will continue. If my right hon. Friend does wish to reduce the consumption of luxuries he should do it all round. He should not confine himself to imported luxuries, but should put on Excise Duties to a corresponding amount. If he does not, then whatever we may do here, and however we may endeavour to avoid controversy, he will infallibly introduce unrest throughout the country.
I will give an instance of this. I represent a part of the country which is largely interested in the lace industry. The lace industry has suffered a great deal in recent years from foreign competition. Already I have had a communication from the Nottingham Chamber of Commerce asking that the Chancellor of the Exchequer, in whatever he may do to prevent the consumption of imported luxuries, should put an Import Duty upon foreign lace. I do not know why certain industries of this country are to be picked out for favour as compared with other industries. I have told the Nottingham Chamber of Commerce that I have always consistently opposed all Import Duties unless a corresponding Excise Duty was imposed, and I made that answer to the Nottingham people, but I added that I know of no reason why hats and plate glass should receive protection and Nottingham lace should not receive protection. This unnecessary departure from principle on the part of the Government is arousing fiscal controversy throughout the country, whether we wish it or not. I am not going to pursue the matter, and I agree that it ought not to be pursued at the present time, but, because it is not to be pursued, I say that the Government should not have violated their own principles on which they have hitherto acted by introducing these duties.
§ The SECRETARY of STATE for the COLONIES (Mr. Bonar Law)
Since I came into the House I have been told that my right hon. Friend the Chancellor of the Exchequer has been vigorously denounced, and I should like to occupy the time of the House for a very few moments in order to correct, if I can, some of the misapprehensions which may have arisen in connection with these duties. I am quite sure 912 that my hon. Friends behind me will accept my word for the statement that, in regard to the motives which caused the introduction of these duties, there is no intention such as that which has been imputed. There is an impression that they are due to the existence of a Coalition Cabinet, and that they are the result of pressure put by my hon. Friends and myself, who are Members of the Cabinet, upon our colleagues. That is a complete delusion. In the absence of the Chancellor of the Exchequer, I rather hesitate to say, but I feel that I am justified in saying it, that this particular duty was suggested by the right hon. Gentleman to the Cabinet, and none of us, so far as I know, had any previous conversation with him on the subject. Personally, I believe myself that these particular duties would have been imposed with equal certainty if there had not been Unionist Members of the Cabinet, and I believe, also, that in that case they would have gone through the House with much less opposition. [HON. MEMBERS: "No, no!"] At all events the House will recognise that they are not due to any pressure put by me.
I have made in this House as many fiscal speeches as others, but I can assure the House that the subject, personally speaking, does not interest me in the least at this moment, and, what is more, I can say for myself, and I believe for all my colleagues, that we would not have considered ourselves justified, but would have felt we were not "playing the game" as loyal Members of the Coalition Government if we had attempted in any way to use our influence in order to induce our colleagues to go back on principles for which they have fought so often in this House. The motives for which these duties are imposed are simply to carry out the campaign of economy, and of avoiding the import of goods which has been going on all through the country. I was invited to go to the Guildhall along with the Prime Minister to make a speech on this subject. I believe that a book has been published on the authority of the Government urging the country not to buy imported goods, because of the condition in which the country stands. I say, speaking for myself, that a Government which goes that length, which recommends people not to buy imported goods, and does not at the same time take the only step it can to make it more difficult and less likely that these goods should be imported, is stultifying itself, altogether apart from any fiscal 913 question. If I were merely to consider this question from the fiscal point of view, and if I were considering how it would help us when the War is over in carrying on the controversy in which we were so interested, I should say at once that these duties are the very last which I would impose myself, and that they are in a form which seems to me contrary to all the principles I laid down at the time I was advocating a change in our tariff. The duty is thirty-three and one-third per cent.
I remember over and over again, in this House and out of it, trying to prove to Free Traders, who say that importers always pay the duty, that they are wrong. I remember trying to convince them that if there were a moderate competition in the home market it would have the effect of making foreign imported goods sink to the level of the home prices. That was one of the strongest arguments, because obviously thirty-three and one-third per cent. does not meet the case. Obviously it is the very last that would be imposed by a Government really trying to introduce a fiscal change in this country. Let me say something more. The only ground on which I think I can see any question of opposition to these duties, from the point of view of the fiscal controversy, is the idea that they will lead to something else. Duties of this kind would never be continued under any circumstances when the War was over—I mean duties on this scale—and I think that if there is any real objection it is because the people who object have not as strong faith as they ought to have in the value of their own theories. The only possible objection from their point of view is that the imposition of these duties will give an object-lesson which will show, after the War is over, that they have not done harm, but may have done good. I recommend to my hon. Friends behind me the more robust faith of a colleague of mine, I think the President of the Board of Trade, who said, "I am glad to see these duties, for they will prove the fallacy of all your arguments." But I do seriously ask the House at a time like this not to believe that the Government, or that any section of the Government, is imposing these duties with the idea of helping the old controversy, even now or after the War is over. It is nothing of the kind.
These are sumptuary taxes, and you may perhaps object to them on the ground that it is not worth while making a change 914 for all that you get out of them either in the way of exchange or of revenue. It is quite true that these duties do not cover many articles, and I would like to have seen them cover a larger number. Other articles were discussed, for instance, that by my hon. Friend behind, and objections were made on technical grounds. Those objections may seem sufficient not to make it worth while to press them. As regards Excise, is it not really driving pedantry to the last extreme. When you impose duties of this kind on imports not for the sake of Protection, but for the purpose of helping us to carry out what we are teaching with regard to economy, to insist on putting up Excise Duties for six or nine months—I hope it will not be longer—is to carry pedantry to an extreme. Surely at a time like this we can forget past controversies of this kind, which come back to me as if they had occurred in a previous state of existence. They do not interest me in the least. What will have happened to Tariff Reform as to a great many other things in which we are interested, no man can say; but of this I am absolutely certain, that the step which the Chancellor of the Exchequer is asking the House to take will have no effect one way or the other in this controversy, and I do hope the House will not think it worth while to make a serious fuss about what, after all, after careful deliberation, the Chancellor of the Exchequer thought worth doing in connection with this great struggle in which we are engaged.
§ Sir ALFRED MOND
The right hon. Gentleman has certainly made a difficult position more difficult to understand than before. Many of us—I cannot say myself—and certainly a large section of the people outside the House, see in these duties which we are now discussing some concessions to Tariff Reform opinion in the country. I am not surprised that the right hon. Gentleman repudiates that suggestion, and I very gladly believe that it is the last way in the world that he or any intelligent Tariff Reformer would introduce this subject. When we are asked not to raise this controversy and not to continue this discussion, I would point out that we have not introduced any controversy whatever. We are not dealing with a question of theory; we claim that we are dealing with a question of fact. You are introducing in the Budget for the first time for many years protective duties—that is to say, duties on the import of goods which are also manu- 915 factured in this country—without corresponding Excise Duty. That is protective, and these duties are protective as far as they go, and no amount of reasoning why you are doing it will get over the fact that you are asking us to vote for a protective tariff on these articles. I admit that the Chancellor of the Exchequer might have made out a case of so overwhelming a character and of so grave national importance that even the most convinced Free Trader would have been ready to frankly admit it. The Chancellor of the Exchequer has done nothing of the kind; he cannot do anything of the kind.
What are the reasons he brings forward for these duties? The first argument is as to exchange; but I submit that the amount affected by the rate of exchange is not worth the consideration of a penny of taxation. The right hon. Gentleman took me to task the other day for comparing the amount of exports which I said would be excluded—£2,400,000 in six months—against the total imports of £429,000,000. He observed that I ought to have compared the total amount of imports which are excluded with the balance of trade for the six months. I cannot get the figure of the balance of trade for the simple reason that we are now importing Government goods in large quantities which are not recorded in the Board of Trade Reports. Why does not the Chancellor of the Exchequer tell us what that figure is, and what this £2,400,000 should be compared with? Surely the loan of £100,000,000 in the United States is, for the purposes of exchange, sufficient; and as to the exclusion of £2,400,000 worth of goods, they are. not all from America but from all parts of the world, and this tax on all the goods coming from America is not going to have an enormous effect on the exchange. Coming to the question of revenue, £2,000,000 is raised from these duties, when we are spending £5,000,000 a day on the War, of which this protective tariff will not pay for more than twelve hours.
Then there is the sumptuary argument. You want to prevent people from purchasing luxuries, and therefore you are going to tax that class of products which are not luxuries at all. That is what we cannot understand. Sixty-seven per cent. of motor cars are used for business purposes and the War, and the right hon. Gentleman has not told us whether motor cars used for war purposes are going to be excluded. A large number of foreign 916 motor cars are brought to this country and sent again to France for war purposes, and I saw the other day an appeal to send motor ambulance cars to Russia. I have very little doubt that probably some of those cars are American cars. We are supplying cars for ambulance purposes, but apparently we are to be stopped buying cars for ambulance purposes for our Allies on the plea that we must not admit luxuries. I have a large number of letters of protest from different industries. One does not want to awaken past controversies, but I am astounded how everything I prophesied about tariffs is coming so true. We have got now to occupy our minds with every industry and the details of every industry which is supposed to come under the tariff. We are asked questions, for instance, about rebate. Perhaps the Financial Secretary to the Treasury may be able to tell us, if an English motor-car manufacturer import parts necessary for him to make motor cars which he is going to export to other countries, whether he will be allowed rebate on those parts or not? I have a letter here from a representative firm, who did a large business in exporting cars all over the world, and they say unless they can get a rebate they must take this business out of this country to New York. How is that going to help the exchange?
You are going to put a heavy duty on watches, and on some of the remaining businesses which our French Allies have got. I have got letters of protest and of bitter complaint because the French Government had allowed the makers of French cars to keep up their connection in this country, and to make a small number of motor cars and bring them here, but you are putting on a duty that is going to knock the French car entirely out of existence. Is that fair? Does that help our exchanges? Surely it is as important for us to get our exchange with France more normal as to get our exchange with America more normal. It is surely injurious to the business of this country that the exchange with France should be bad, yet you are levying the duty in a most extraordinary way. I would like to give an example of how the way the Chancellor levies the duty affects French cars and American cars. An American Ford car will import parts for assembling valued at £42, on which the duty is £16. A medium-priced American car, complete with body, will be valued at, say, £120, with the duty of £40. On the other hand, a medium 917 French car will cost £225, with the duty of £70. On an expensive French car, like the Delaunay Belleville, the duty may be £220. The duty of £16 or £40 would not affect the American cars, but in the case of the high-priced cars it will completely kill the French and Italian trade, and further benefit the American manufacturers. Thus we are going to damage our exchange with Italy and with France. It is not a benefit to English trade that the Italian and the French exchanges should be so much in our favour. We could send more exports to those countries if the exchange was more normal. You are going to damage those exchanges and get no result in America, not because of the duty, but on account of the way you were going to levy it.
It would take too long to go into other methods, but just take the subject of tyres. The right hon. Gentleman affirms and believes that the duty has no protective intention, but he is giving a protection of 33¼ per cent, ad valorem duty to British tyre makers against our French Allies. I saw the other day that a large firm of tyre makers were putting up their price by 33¼. On what principle can you justify a protective tariff in favour of English tyres against the French. I understand that the right hon. Gentleman, in the case of motors, says that they are not being made here, but he cannot allege that in the case of tyres, which are manufactured, I think, to the value of half a million pounds per year. He has already taken a good deal out of these duties, and will he not take the tyres out, too? I did not press the right hon. Gentleman for an Excise Duty. I was perfectly well aware that the practical difficulties in his way make it impossible to do so. May I ask why he chose this moment to throw additional work on the Custom House Department. Those of us who are engaged in exporting goods know the difficulties of obtaining export licences at the Custom House, and yet this is the moment which the right hon. Gentleman chooses to start ad valorem duties with people who have no knowledge of valuations of the kind whatever. The right hon. Gentleman has never explained how the valuation is to be done or what Court of Appeal there is to be against any over valuation. I get numbers of letters asking what things are excluded and what are included. A tariff is a delicate and scientific thing, and cannot be introduced in this crude manner, and you will cause 918 endless disturbance and difficulties by your method of assessment. The right hon. Gentleman has never done anything—he-has been studying the subject. I am sure if the right hon. Gentleman the Member for West Birmingham (Mr. Chamberlain) had charge we would have had something very elegant. It does not make it any better for the poor people who are being taxed, and it does not do away with the damage you are doing to a considerable number of industries because you do it in this way.
I do hope we shall have, and I think we must have, some more accurate and better worked-out plan. The question of parts, for instance, is very important. I understand that some parts come largely, if not entirely, from other countries, and aroused on British cars. The British Government will tax those parts, which will then be used by British motor-car manufacturers, who in some cases will sell those cars to the War Office, so that the Government will pay with the one hand the duty which it is levying with the other. These are all little troubles connected with tariffs. I think we might try and avoid them. I was challenged the other day or, at least, I saw a statement, that in presenting figures from the Motor Trade Association, declaring that £16,000,000 of capital was employed and 30,000 men in the trade, that I had not much belief in those figures. I am sorry if I conveyed that impression. I have every reason to believe in those figures, and I understand that they can be absolutely proved. That is a very large amount, and it is a very serious question. Is this the right moment to go and impose this duty, or is there any reason for doing it? I can quite understand that the Cabinet, in the innocence of their heart, thought what a splendid thing it would be to stop people buying motor cars. May I point out that I know people who have big cars and who have actually bought American small cars in order to practise economy. It is very much cheaper to run a small car than a big car; therefore you discourage economy by compelling people to go round in big motor cars instead of buying the cheap cars. I saw the figures worked out the other day when I was being urged to do the same thing, which I did not do because I did not want to make the American exchange any worse.
The right hon. Gentleman (Mr. Bonar Law), of course, is in a difficult position, and I am afraid his attempts to white- 919 wash himself to-day, and the support he has received very ably from the Chancellor of the Exchequer, may satisfy him, but will not satisfy anybody else. He has got here a protective tariff. He may as well frankly admit it. What the result will be after the War I cannot say. The right hon. Gentleman the Colonial Minister thought it would have no effect, though some of the journals which support that policy think otherwise. Personally, I prefer not to prophesy as to what is going to happen to any of us after the War. I think the War is so absorbing, and the results of it are so incalculable, that there is not much use in discussing what is going to happen afterwards. I do think it is a great pity to introduce all this trouble at this time, and surely it is trouble. The Chancellor of the Exchequer by these duties has evoked a great deal of feeling inside and outside the House, and having already abandoned half the duties on motor cars this after noon—
§ Sir A. MOND
Having abandoned a third, can he not abandon the other two-thirds? Does he really want to put us in the position of being opposed to him at this moment, and of having to stir up a controversy at this moment on the details of all the various duties on the different stages of the Budget? I cannot imagine that he or his colleagues really think what they are going to get by way of advances is worth all the trouble and all the heartburning they are going to be subjected to, not only here, but outside. After all, the right hon. Gentleman perhaps no longer receives those communications which he used to get as secretary of the Free Trade Union. If he did he would see how many of those who formerly admired and adored him are to-day regarding his action with pain and horror. He would realise how we are asked to conduct campaigns which we do not wish to do. Is that really the temperate spirit which you wish to introduce at this moment? Have you not got one controversy on your hands which is quite sufficient for you? Do you wish to raise another? I cannot believe you seriously do, and I think the more the right hon. Gentleman will examine the details of his duty, the worse he will find 920 them to be and the greater the difficulties will appear. He will have, for instance, to make arrangements for bonded warehouses and complicated arrangements for rebates. Where, may I ask, does he intend that the valuation should take effect? Is it at the port of landing or at the port of shipment? That point has not been made clear, and I have been asked about it by several people, because it would make a considerable difference. If you take the duty at the port of landing, you arrive at the extremely curious result, in the case of motor cars, of a different rate of duty according to the port at which the car happens to be landed, since the freights to the various ports differ. On the other hand, I do not see how the right hon. Gentleman can charge this duty on the price on the other side of the Atlantic. I wonder whether we could have an answer to the question as to the rebate on goods coming here to be re-exported. That is a question of practical importance. Is the right hon. Gentleman going to establish bonded warehouses to which these goods will be taken, or will the tax be taken at once? All these practical points will have now to be dealt with, and I do not envy the right hon. Gentleman his task. I would still advise him as a friend to drop these duties. He reminds me of a story of some French troops who had been in the trenches for a long time. They got bored and evacuated the trenches, so that the Germans took them, and then there was great joy when the Frenchmen attacked and drove the Germans out again. The right hon. Gentleman is evacuating the trench, but I must warn him that the retaking of a trench once evacuated results in very heavy casualties, and you very often do not get back again to the same position.
§ Mr. MORRELL
I cannot help thinking that the right hon. Gentleman the Chancellor of the Exchequer deserves our sympathy. He finds himself attacked by all those with whom he has previously worked. He is attacked by every genuine Free Trader in the House and defended only by the right hon. Gentleman the Member for Wimbledon (Mr. Chaplin) and his colleague the Colonial Secretary (Mr. Bonar Law). After listening to the Debate on these duties I feel sure that the right hon. Gentleman must be asking himself whether it is really worth while to raise a controversy of this sort, and to cause all the trouble to which these duties must inevitably lead, for the paltry sum 921 which it is proposed to derive from them. We have been appealed to by the right hon. Gentleman the Member for Wimbledon, and by the Colonial Secretary, not to introduce domestic controversy at this time. Of course, we all feel that at a time when we are engaged in a struggle practically for national existence we ought at all costs to preserve the unity of the nation. But if there is controversy, on whom does the responsibility fall? Surely it falls upon those who for the first time for fifty years have thought it necessary to upset the system of free trade upon which the finances of this country have been based. It is the merest cant on the part of the Chancellor of the Exchequer to tell us that these are not protective duties. There duties mean Protection and nothing else. Some hon. Gentlemen opposite think Protection a good thing. I would ask those who believe in Protection whether this is a suitable moment at which to set up a protective tariff of this kind. I would put this case to the supporters of these duties. Supposing the Government had come down and said that in consequence of the War, and owing to the difficulties of the situation, they thought it necessary, while not for a moment desiring to raise the Home Rule controversy, to set up a Parliament in Dublin only for the duration of the War, and without in any way prejudicing the Home Rule question, what would the Ulster Members have said? They would have said that it was a breach of the honourable understanding that no subject of domestic controversy should be raised during the War. I say that this is just as much a breach of the honourable understanding between parties as the setting up of a Home Rule Parliament in Dublin would be.
The right hon. Gentleman made a very elaborate speech in which he endeavoured to show, first of all, that these duties would make bread cheaper; secondly, that it was desirable to diminish imports, and there were objections to prohibition; and thirdly, that it was desirable to diminish luxuries, and at the same time it was impossible to put on an Excise Duty. The right hon. Gentleman answered himself when, taking up the words of the right hon. Gentleman the Member for Islington, he said that every politician is judged a great deal more by what he does than by what he says. The right hon. Gentleman will be judged by the fact that he is the first Chancellor of the Exchequer in recent 922 years who has thought it necessary—not for the purpose of raising revenue which could not be raised in other ways, but for no good reason which can be shown at the present time—to depart from the Free Trade system. I suppose it is no use-making more appeals to the right hon. Gentleman. A great many appeals have been made to him already, but he appears, not to listen to any of them.
§ Mr. MORRELL
I withdraw the statement that he does not listen to any of them. He does not take the obvious step of saying that he will consider the desirability of putting on an Excise Duty which appears to me to be the only way in which he can make these taxes tolerable, or of dropping the proposals altogether. If he cannot adopt either of those courses, at any rate let him say that before he introduces another duty of this sort—and there are other duties to come on later—he will consult the feeling of Members of the House of Commons rather more than he has done, and that he will avoid if possible, while the War is on, prolonging what must inevitably be a bitter controversy for which he and not we will be responsible.
§ Mr. McKENNA
May I remind my hon. Friend that I was pressed to give up this tax because I had already given up such a large part of it. Yet my hon. Friend says that I am deaf to all appeal.
§ Mr. McKENNA
As regards the machinery of the tax, it will be exactly like the machinery in connection with any other imported article—manufactured tobacco, for instance. Arrangements will be made for a rebate just as in the case of any other article which already falls under our Customs law. I quite recognise, and had already recognised, the force of the argument in relation to tyres. The argument is entirely different from that on pleasure motor cars. I propose when we come to the Bill to exclude tyres from the ordinary definition of motor parts. As a matter of fact, in ordinary parlance it would not be regarded as a motor part, and it is only by a technical construction of the language that it is so included. I shall propose that it be excluded even from the technical language.
§ Sir HENRY NORMAN
I do not desire to say a word on the fiscal side of the 923 question, partly because Free Traders, at Any rate, will agree that my right hon. Friend (Sir A. Mond) in his very able and genial speech has completely smashed the case put forward by the Chancellor of the Exchequer. I desire only to touch on three matters. The first is one raised by the remarks of the Chancellor of the Exchequer, and which has been raised for some time past by letters in the Press. It is said to be unfair to the manufacturers of British cars that at a time when they are patriotically engaged in devoting their works to the manufacture of munitions, American car makers should come in and steal away their market. [An HON. MEMBER: "Hear, hear!" If that were the case, the argument would deserve the cheer which my hon. Friend bestows upon it. But I submit that it is not the case. The American car manufacturer supplies, at a price at which it has never been supplied before, an article which meets a want in this country, and he had taken that particular market from the manufacturers of British cars through the British manufacturers' own fault before the War began. Therefore, that appeal, ad misericordiam, has really very little weight indeed. The second matter is in regard to the building of car-bodies in England. A great many so-called cars from abroad are chassis only. The bodies are built in this country. That is very frequently the case with the higher class French and Italian cars. I have seen it stated that all American cars come over here with American bodies. That is not the case. A great many people who, for reasons of economy, desiring not to be luxurious, and for other good reasons, buy American cars, prefer to have an English body at a slightly increased cost, although the whole car costs very much less than a corresponding English car. A great many bodies of American cars are made in this country. If these duties are enforced, they will at once throw out of work a great many persons engaged in building motor-car bodies in this country.
The third point is one which I have raised in a question addressed to my right hon. Friend, but which, perhaps, it would be more convenient to raise now. It is with regard to American cars which are used for ambulance or other Bed Cross work. A great many of these cheaper cars are used not only for ambulance work —they are so used in large and increasing numbers—but also for many other pur 924 poses which may be described generally as Bed Cross purposes. For instance, to almost every Y.M.C.A. unit on the Continent, a large number of whom are doing work of the utmost value, one or two cheap cars are necessarily attached to facilitate the work. Moreover, there are very few hospitals abroad which have not these cheap cars attached to them, and they are absolutely necessary. The hospital with which I am more closely connected has no fewer than four, which are running all the time. These cars do very hard work, and, like all cars on bad roads, they rapidly wear out, and we shall have to replace them. Many other people will be in the same position. Does my right hon. Friend mean that we should pay a tax of 33⅓ per cent, on cars coming into this country to be taken immediately over to France for hospital purposes?
§ Mr. McKENNA
They would not pay. There would be a rebate on export in any event. Even if they are not excluded specifically from the tax, they would get the drawback on export in any event.
§ Sir H. NORMAN
I am much obliged. What will be the position of cars of this kind introduced for hospital work in this country?
§ Sir H. NORMAN
Perhaps the Chancellor of the Exchequer would prefer not to answer that question at the moment. If these cars are to be excluded from the tax—and surely in justice they must be, because my right hon. Friend is right in saying that you cannot get British cars at the present moment—to have to pay a duty of 33⅓ per cent, on an imported foreign car for use as an ambulance in the service of sick and wounded men in this country, would be a very great injustice which I cannot for a moment think my right hon. Friend would contemplate. The Chancellor of the Exchequer has given way upon tyres—a very important item; if he again gives way on cars used for ambulance and Bed Cross work, how very little will there be left? Is it worth while troubling the waters to this extent—which really is a serious extent to many of the Free Traders in the country—for so little actual gain to the Exchequer?
§ 8.0 P.M.
§ Sir A. MARKHAM
I am in thorough agreement with the proposals that the Government have put forward in relation 925 to these taxes. Take the question of motor cars, which I shall deal with first. My right hon. Friend who has just sat down has referred to the importation of French and Italian motor cars. He knows perfectly well—or ought to know—that practically no cars whatever are coming to this country to-day either from France or Italy. If there are a few, they are practically a negligible quantity. That statement is perfectly correct, for in point of fact nearly every motor-car works in France is working on munitions. Practically also every motor company in this country are doing likewise. During a period when the British motor-car industry is turning its attention to the making of munitions it seems a perfect outrage to allow American cars to come in and displace the trade which in the ordinary course of events, had the War not taken place, would have gone to British manufacturers. It is all very well to say that the British manufacturers are getting the benefit of working on munitions. That is not the point.
The War will only be for a comparatively short period, and the manufacturer knows that after a car has once become established, and people like a certain car, which may have displaced his, it becomes very difficult to change that car for a car of an English type. I have always in my Constituency advocated it, and I have never met a working man in my life who was not in favour of the taxation of luxuries. I have had some experience of workmen, and they are in favour of the taxation of the luxuries which come into this country. Hon Members below the Gangway appear to me to come into contact with workmen who are in favour of allowing luxuries to come into this country. The hon. Member who spoke a while ago (Mr. Leif Jones) told us that the lace makers of Nottingham had petitioned him to urge upon the Government to place a tax upon imported lace. I have not the slightest hesitation in saying that I should vote for a tax on imported lace. But the right hon. Gentleman the Chancellor of the Exchequer would not thank me for saying that I am in favour of duties on imported goods. That is a view I have always advocated in my Constituency, and I have always said so in this House, so that I am not a heterodox Free Trader. Be that as it may, the Government are in the position of having, so far as they can, to regulate the exchanges. I do not say that these taxes are going to do very much in that direction. If they 926 assist at the present time they are, after all, helpful. On the general principle of protecting the manufacturers, at a time when their business is disturbed, and when you are going to hand over their trade to the Americans, they being engaged in the making of munitions, and being brought under the control of the Government, I support the Government. It is wholly unjust that you should not give to these manufacturers a reasonable protection in their trade for a period.
What are all these arguments of the hon. Member for Swansea? He suggests that this country is going to be brought to ruin because of this vicious principle of taxation. The right hon. Gentleman knows Germany, better perhaps than most people, and he knows perfectly well that the whole prosperity of Germany, in fact, the prosperity of the whole civilised world, with the exception of this country, has been built up on the very principle to which he suggests the ruin of this country may be due. As a business man the right hon. Gentleman knows, so far as the effect on the dislocation of the Customs goes, which he put forward, and which hon. Members below the Gangway received with loud acclamation, those arguments are merely debating points, which the House of Commons can discuss. During many years I have heard all these small debating points on the fiscal question advanced time after time. But these points ignored altogether certain aspects of the case. Business man that he is, the right hon. Gentleman knows that in point of fact these principles do not in many cases apply in practice.
I hope the Government are not going to give way about these taxes. I hope they are going to stick to what they have put in their Budget. If the right hon. Gentleman, or the Treasury, yields, he will not give satisfaction to many. He will not give satisfaction in my Constituency, where they are wholly in favour of taxation of luxuries, though they are wholly opposed to the taxation of the necessaries of life, or any other of the commodities which enter into the ordinary use of life. Representing, as I do, one of the largest industrial constituencies in this country, I have never yet known, or ever yet met, a single working-man—and I repeat what I said before—who was not in favour of the taxation of luxuries, and as these are taxes on luxuries I do urge the right hon. Gentleman to stick to his Budget and not to give way to these people who are raising 927 these questions. They are not discussing these matters merely on their merits, but on the point as to who is going to gain a little bit one way or another—Free Trader or Tariff Reformer! The merits of this question are not being discussed in the country. The people are not talking about motor-car taxes. Only the people who are interested in the trade are talking; others do not care twopence about the matter. To say that the country is boiling with indignation over some of these taxes, as the right hon. Gentleman the Member for Swansea wishes us to believe, is pure nonsense. There is no agitation in the country whatever against these taxes. The only tax in the Budget that I find people object to is the tax on sugar.
Mr. LLEWELYN WILLIAMS
I congratulate by hon. Friend who has just sat down on the frank honesty of his speech. He has told us in so many words that this is a Protectionist Budget. These, he said, were Protectionist proposals. He says frankly that every other country except our own has thriven on a Protectionist basis, and frankly that he is in favour of these taxes and of this Tariff Reform, because, I suppose, he wants to introduce into this country, amongst other Prussian institutions, a scientific tariff. I am glad that my hon. Friend has been frank, as he always is.
My hon. Friend went further. I understood him in so many words to say that the prosperity of Germany and other countries was based on their tariff systems. If that means anything—of course, my hon. Friend does not reason the same point very long—but if his words meant anything, they must have meant that the Protectionist system of trade in this country, in his opinion, was a better system than the Free Trade system.
§ Sir A. MARKHAM
May I interrupt my hon. Friend? What I said was, referring to the prophecy of the dire results from these taxes of the hon. Member for Swansea, that the right hon. Gentleman very well knew that the whole prosperity of the world, except this country, has been built up on a Protectionist basis.
My hon. Friend suggests his belief that if we adopted a Pro- 928 tectionist system in this country no dire results would follow?
That is just what I am endeavouring to say. On the other hand, we Free Traders have always held, and I hold strongly now, that Protection is a bad thing as a matter of business. It is not a question of mere theory. It is not a question of this fiscal theory or the other fiscal theory. It is a question of fact, and what is the best thing for the business of this country. What we have always been told, and what we have always believed during some scores of years now, was that this country has been prosperous, and it has become the wealthiest country in the world because of our Free Trade system. That is why we object very strongly, not to the question of these taxes so much—because that is a very small matter—but because the proposal introduces a principle which it will be very difficult for us unless we protest against it now, to oppose in future. I have no doubt that the speech of my hon. Friend will be used against him if he ever comes forward again as a Free Trader.
I confess I have heard my hon. Friend speak perhaps oftener than most of the other private Members of this House, and I will pay him this compliment: I never heard him make the same speech or use the same arguments in favour of any proposition for long together. He said that there were no French motor cars imported. I understood that only a short time ago the French Government gave effect to an arrangement to enable manufacturers of French motor cars to export them to this country, and so keep up the connection of that industry in this country. If that be so, what answer are we going to make to our Allies when they make representations to us? Are we to tell the French Government that they have been spending money in vain? They did not merely arrange this matter for a short period. That Government are not merely carrying on the War as my hon. Friend and some other Members in this House seem to think. The French Government are looking forward to what will happen afterwards. You will have to live after the War, and the French Government say, in order to carry out what 929 they are doing and to keep up this trade connection in England—which is a very valuable thing for their manufacturers—that it is worth while to keep trade alive during the War. The French Government are willing to spend public money in order to keep this trade connection alive during the War in order that when the War is over they may be able to enlarge their trade. If, however, this proposal of the Chancellor is carried out in its entirety, if there is no system of rebate or something of the sort to enable our French and Italian Allies to send their motor cars to this country, that connection must be jeopardised. All the Government is going to do is to help the American motor car industry, because we are told by many hon. Members that we are not producing any motor cars here. This imposition of 33⅓ per cent. ad valorem tax will stop the importation of motor cars from France and Italy. Therefore, all that it would mean would be that we should be importing all our motor cars from America at the expense of ourselves, at the expense of France, and at the expense of Italy. I do not think my right hon. Friend really means to do that, and I think it would be a very unfortunate result if that were to happen. And why? I have listened to my right hon. Friend in his new role of apologist for Protection. I have heard him on many occasions defend the Free Trade system when his acute mind was brought to bear on our fiscal system. My right hon. Friend convinced me so thoroughly as to the value of Free Trade principles in the past that this sudden conversion on his part to the advocacy of Protection has failed to convince me to the contrary. What are the arguments he has adduced in favour of these proposals? First of all, he says we want them for revenue purposes. Well, if revenue is going to be derived from them, there must be an importation, and there must be an importation on a very large scale. The revenue is so small I can hardly believe that that is my right hon. Friend's motive in introducing these strange taxes. Then the Colonial Secretary says that these are "sumptuary" taxes. Who are the people who purchase Ford motor cars? No rich man would be seen in a Ford motor car. My hon. Friend opposite (Mr. Houston) laughs. I should like to ask him if he has ever bought a Ford motor car for his own private use.
Mr. L. WILLIAMS
I am asking my hon. Friend opposite, and he has not dissented. I say the ordinary rich man in this country—and I put my hon. Friend (Sir A. Markham) on one side in a class by himself—never buys a Ford motor car. Who is it buys a Ford motor car? Professors in university colleges, doctors in country practice—those are among the people. These are not luxuries to them: they have become necessities. To small tradesmen in small villages and towns who have grown accustomed to carry on their business by means of these cheap cars, they are no longer luxuries, but are necessaries, and they cannot carry on their business without them. Those are the people who will be hit by this tax. The rich man will not care if he has to pay another 33⅓ per cent., but the people I have mentioned—people with small salaries, or whose income is limited—will care very much. They have done away with horses for years, and have been carrying on their business and their practice by means of these motor cars. I say it is unfair that those people, who are very badly hit already by other portions of the Budget, should be further hit by this Protectionist tariff.
It does seem to me there is great force in what the right hon. Gentleman the Member for Swansea pointed out, that when you consider the huge volume of our import trade from the United States, this question of two and a half millions really would not appreciably alter the rate of exchange. But my objection to this is much more profound than my objection to the practical side. This is a gratuitous introduction of a very acute controversy, which we had hoped had been laid during the War. What did the Prime Minister say when the Coalition Government was formed? What was the object he had in view? We on this side did not disguise the fact that we did not welcome the formation of the Coalition Government, but we accepted what the Prime Minister said in the spirit in which he said it. On 15th June he said that the object of the formation of this Coalition Government wasto obliterate all distinctions and to unite every personal and political, as well as every moral and material force in the prosecution of their cause.How can it be said that the introduction of this acute controversy is going to unite every personal and political, as well as every moral and material force? I say we are constantly on this side being asked to give up one cherished principle after an- 931 other, and if we protest, then we are told, "Ah, well, you are raising a controversy; you are raising a clatter and a racket which you ought not to do." I think it is high time that we who have been faithful and loyal followers of the old Government, and who have loyally supported the Coalition Government ever since it has been formed, who have never tried to embarrass the Government in any shape or form, should ask my right hon. Friend, who knows what I have said is true, not to ask us to continue giving up our principles, but to leave some of the old secular controversies aside, and not gratuitously to raise issues which we hoped had been laid in peace during the continuance of the War.
§ Sir RYLAND ADKINS
I think those of us who have had the pleasure of hearing the Debate this afternoon will have found, I will not say our minds made up, because possibly they were made up before, but the point of view from which we regard this controversy clearer than ever, and our resolution on the subject stronger. I have listened, as we all have, to the unparalleled clarity and ingenuity of the Chancellor of the Exchequer, and he really deals so delightfully with an impossible position, that one does not know whether to condole with him on the position, or to congratulate him on his achievement in it. It is no disrespect to him to say that the most interesting and most enlightening speech this afternoon was that of the Colonial Secretary. He told us, with a clearness of expression we all envied, that this had nothing to do with any pressure of the leaders of that great party which has been accustomed for so many years to sit on that side of the House. If it had been due to that, I think many of us would have been inclined, out of pity, to have looked upon this proposal with almost a favourable eye. All of us recognised that when these eminent Gentlemen found the opportunity come, or made the opportunity, or in any other way we do not know, took their share in the government of the country, it was bound to make a difference. Who among us, Free Traders though we be, could have grudged them some anodyne for the unsuccessful agonies of years? Therefore, if the Colonial Secretary had said that this was put in the Budget in order to meet the conscientious view of a very large and important section of the Government, we should have felt the 932 weight of that argument, however unpleasant it was for us to listen to it. He told us quite another story, and he says that he has nothing to do with it. He says that, so far as he knows, his party have no special responsibility for it, and that the suggestion of this tax came from the Chancellor of the Exchequer.
§ Mr. McKENNA
I think my hon. Friend must have misunderstood the Colonial Secretary. I do not think he suggested that these taxes came from me. I think he referred to the Motor Car Tax. I do not want any misconception of anything that was said, because the Colonial Secretary's observation only applied to the Motor Car Tax.
§ Sir R. ADKINS
I refrain from asking who was the person who suggested the taxation on foreign motor cars, and I doubt whether it is a wholesome thing that we should know it. What remains is that the Cabinet are responsible for it, and we are told by the Colonial Secretary that he and his Friends were not responsible for it. We understand that it came from the Chancellor of the Exchequer before any of the leaders of the great party to which I have not the honour to belong had even conversed with him about it. If that is so, whoever heard accents more persuasive than those of the Colonial Secretary. If that be true, surely one of the greatest arguments for these taxes has absolutely disappeared. We were prepared to pay a considerable price for what are supposed to be the unspeakable benefits of a Coalition Government, but now we must look at the result from the duller, more ordinary, and less interesting point of view as to how it will effect the financial welfare of the country. If it be true, as the Colonial Secretary suggests, that the Chancellor of the Exchequer is the only parent of this tax, then all I can say is, that when my right hon. Friend turns his Free Trade principles out to grass in this way, he reminds me of the great magnate once turned out to grass, of whom the poet wrote:—He murmured as he mouthed the unwonted food, It may be needful, but it is not good.We cannot believe that we are hurting his feelings, however much we differ from his judgment, when we say that we do not see our way to follow him in regard to this, which is the only great blot on one of the best Budgets ever presented to this House. Why do we call it a blot? Why do we express the same attitude of mind? Not because we think these particular taxes 933 are going to do a great deal of harm, but we do it because we think they are going to create a state of mind in the country of criticism which it is not in the interest of the country to have created when it is in the most critical part of a great war. I spent the last week-end in Lancashire, not discussing fiscal matters, but in trying to promote recruiting, and I hope I am not doing wrong in saying here that I was very much impressed by the strength of the feeling and the vigour of the judgment of persons with whom I had been in the habit of acting for years, and on whose intelligence and bona fides I could place absolute trust with regard to these taxes, which are awakening very strong feelings and very strong disappointment and regret.
What do we find? We find that they are now whittled down to very little indeed, because one concession after another has been made. I am not one of those who take concessions for the purpose of criticising in a hostile spirit, but these concessions have really whittled down this tax to next to nothing. If it is for the benefit of the country to have sumptuary taxes—and I am trying to agree with my hon. Friend that it is a good thing—let us have sumptuary taxes that press all round and are substantial. If you have a sumptuary tax which keeps out foreign articles of luxury, let us also have an Excise which deals with home-made articles of luxury, and let us do it thoroughly and well. We are not now dealing with a tax of 33¼ per cent. on imported motor cars, but with a fragment of that tax, and if we conscientiously feel obliged to withhold our support for the full tax, can we be expected to go into enthusiastic delight over the ghost of that tax which is left? If it be necessary to raise taxation in this way, surely a great deal ought to be raised. My right hon. Friend knows the lines—Virtue, I grant you, is an empty boast,But shall the dignity of vice be lost.If the principles of Free Trade are to be broken, let us have them broken for an adequate result. If the country is in a position which demands the putting aside of ordinary rules, methods, and principles, let us at any rate get in return great help from such taxation and great and severe discipline and stimulus towards economy. But this tax and its allied ones do not effect that purpose. They do not have such an effect as would counteract the breaking down or the violation of this theory, and would not counteract the serious state of feelings which the introduction of this tax 934 has brought about. Now that we know from the Colonial Secretary that he has no special sympathy with them, and that if he had had to do them he would have done them differently, surely no one will be heartbroken if my right hon. Friend, after full consideration, thinks that the state of feeling and opinion in the country is such that the withdrawal of these taxes would be in the long run wiser than the insistence upon them. That is all I wish to intrude upon the House at the present moment, and I should not have done that if I had not felt that the indirect effect of these proposals is greater and more harmful than any benefit which is likely to result from them.
§ Mr. J. M. HENDERSON
As I listened to the Chancellor of the Exchequer to night he reminded me very much of a strong man struggling with adversity, because the groundwork of his arguments were mutually contradictory. First of all he said that he wanted revenue, and then that he wanted to prohibit luxuries. Then he said he wanted this tax to put right exchange. The Chancellor of the Exchequer is an old Free Trade orator, and he knows perfectly well the dilemma in which you put the Tariff Reformer when you tell him that you cannot get revenue by his proposal. If you keep out motor cars by this tax you cannot get the revenue, and therefore you must either have the revenue and the luxury or no luxury and no revenue When he came to speak of the exchange I really thought that it was the weakest argument I had ever heard. The American exchange cannot be affected by this to any extent. It is quite a drop in the ocean. The American exchange will right itself only in one or two ways. You must either increase your exports beyond your imports or Americans must buy up their own stock from this country. They are doing that very largely now. American railway stock is being bought up largely in America by the money which they are receiving in exchange for munitions. It will right itself in that way to a very large extent, because there is very little buying of American railway stock in this country. I see from the American exchange that American railway stocks are almost up to the pre-war figures. Then there is this loan of over £100,000,000. You will relieve the exchange to that extent. You want to keep these things out, and, that being so, the amount that you would possibly get after the deductions which you have very reasonably 935 made would be infinitesimal. If it is a million or a couple of million, it is very little good, except pro tanto.
§ Mr. McKENNA
The imports for eight months are over £5,000,000. The estimate made for the year is something like £8,000,000. We estimate that the effect will be to reduce the imports by half, and the reduction of £4,000,000 worth of imports will make a very great difference in the exchange. With regard to the balance of £4,000,000, that is quite an item worth taking into account.
§ Mr. HENDERSON
Do not let us jump from revenue to exchange. You say you are going to reduce the imports by £4,000,000. Then you are going to reduce that amount further by your concessions in respect of lorries, and so forth. That brings you down to £2,000,000. A third of that amount is £666,000, and that is not worth troubling about. My right hon. Friend says that this is not Protection. All Free Traders that I know are of quite a different opinion. The paper that has largely fought for this for years—I refer to the "Morning Post"—rejoices in it as a first step, and it is idle to say that people do not think it is. All the protestations of my right hon. Friend will never convince us that this it not an injurious step which he is taking. We were under the impression that this was a tax which had been rather forced upon my right hon. Friend from the fact that there were Tariff Re-formers in the Cabinet, but we have the head and front of the Tariff Reform movement coming into the House and saying, "These are not the taxes I would have imposed." "I do not want them," he says in effect. "You can take them off." If he did not say so, at any rate he led the House to understand that it would not offend him very much if the whole thing were taken away. My right hon. Friend was not here, and I assure him that I am not likely to misrepresent what the right hon. Gentleman said. That was the impression the right hon. Gentleman left upon the House. It will only make it 936 easier for my right hon. Friend to withdraw them. If by withdrawing them he does not offend any Tariff Reform member of his Cabinet, then for Heaven's sake withdraw them. The Liberal party throughout the country will look upon this as a first step towards Protection. You may set aside motor cars as something rather particular as an element of luxury, but you cannot say the same as regards glass, hats, and the rest of it.
§ Mr. HENDERSON
This is clearly protective, and we could not go forward at the next election, when all parties get back on to their old platforms, and say, "We will have nothing to do with this thing. We cannot agree with it." We should be taxed at once: "You agreed to these things. You agreed to similar taxes." It would be no use saying it was under certain circumstances. That is the fault of those who bring these matters forward. The bedrock of the stability of the Liberal party, and the fundamental part of our success, was our strong and inveterate objection to anything in the shape of a tariff. We came here in 1906 on that ground, and we have steadfastly and strongly supported Free Trade all through. We have never deviated from that policy. My right hon. Friend said that he did not want to be judged by words, but by deeds. It is a very good thing that he does not want to be judged by words, because we could quote to him speeches that would make him blush at the present time. I will go behind him, and quote the Prime Minister himself. The Prime Minister, in his great speech at the Albert Hall in November, 1909, said:What we are concerned to prove is that while protection was injurious in the days of our grandfathers, a revival of protection in any shape or form to-day would be not only most injurious but fatal to the productiveness of this country, to the wealth and comfort of the people, and to our competitive capacity in the markets of the world.That is where we stand to-day, and I for one will not have it said of me, nor should I like it to be said of the Liberal party, that we allowed ourselves to be associated with this insidious inception of that against which we have all along preached.
§ Mr. DENMAN
I do not want to repeat the arguments which have been already so admirably put from both sides of this House urging the Chancellor of the Exchequer not to proceed with the duties referred to in this Resolution. I would only 937 express my agreement with three arguments that have been adduced. Firstly, that as a sumptuary tax this particular tax is exceedingly badly devised. I should personally support the Chancellor of the Exchequer most heartily in the imposition of any vigorous tax that would really lessen the use of motor cars for private purposes at the present time. But this tax will not have that effect even in a very slight degree. The people who at present own cars will be in no way hindered from using them to their utmost capacity by the tax now proposed to be imposed. Secondly, I agree entirely with those who urge that the game is not worth the candle. Surely this is not the time to introduce controversial taxes to produce so very small an amount of money. Finally, I agree with the general argument that the cars that will be given up as a result of this tax are precisely those which, on sumptuary grounds, ought to be allowed. Everyone must see that the useful cheap American cars are for people who cannot possibly afford the more expensive cars of English make, and to choose this moment to prohibit the use, as in many cases this tax will do, of the cheaper car and leave the field open to the more expensive car, does not appear to me to be a sound method of procedure.
My real object in rising was to put a specific question to the right hon. Gentleman. I want to ask at what date he proposes to start the levying of this tax? As he said in his speech, it would be very convenient if a good deal of the discussion on the details of these taxes were postponed to a later stage of the Bill, provided, of course, that the collection of any duties under this Resolution is also postponed. I agree entirely it would be a most convenient method of procedure. But it is important that the Chancellor of the Exchequer should realise, which no doubt he does, that he will have no legal authority to collect the taxes on the date mentioned in the Resolution even if we pass this Resolution to-night. Earlier this afternoon I raised the same point in connection with another tax. It would perhaps be superfluous to suppose that the Chancellor of the Exchequer would encourage any illegal act on the part of his subordinates. At an earlier stage he assured me he was not collecting the new duty on glucose manufactured in this country, for which he has no statutory authority, but if he will inquire of the manufacturers of glucose he will discover 938 that since last week duty has been levied at the rate mentioned in the new Resolution, although that Resolution has no statutory effect. Therefore, I do urge the Chancellor of the Exchequer very strongly to state most definitely to the House that he will not proceed to levy these duties until the moment comes when he is legally entitled to do so. That moment will be when the Finance Act receives the sanction of His Majesty. If he will give us that assurance, I hope the House in general will agree that the Debate has served a very useful purpose, and that it can be resumed at a later stage; but if the right hon. Gentleman were to propose to commit the illegal act of levying the tax to-day, as the Resolution would seem to anticipate, and to-morrow and onwards, then I think there are many of us who would feel that we ought to take our opposition as far as the Rules of the House will permit.
Mr. DUNDAS WHITE
I desire, in a few words, to add my voice to the appeal which has been made to the Chancellor of the Exchequer regarding the imposition of this tax at such a time as this, engaged as we are in a great war. It does seem a thousand pities that an apple of discord should be thrown down here to create divisions among ourselves for the sake of an amount of revenue which, compared with the new revenue to be raised, is absolutely trifling. I admit I had thought there might be considerable difficulty in the way of any recall of this tax, on the ground that it had been inserted in order to meet the views of those Members of the Cabinet who are associated with the Protectionist movement. No one recognises more fully than I do the importance of not doing anything that may cause a split in the Government. But after the speech of the Secretary of State for the Colonies we see there is no danger to be feared from that quarter, and I think I am fairly interpreting what the right hon. Gentleman said when I state that he disavowed the parentage of this tax and any parental affection for it. Therefore, the withdrawal of this tax will not cause any split in the Coalition Cabinet.
I was much surprised at many things in the speech of the Chancellor of the Exchequer. There was one point which appeared at first sight to carry some weight, and that was that, after all, this was not the time to discuss the principle of this tax and that the particular proposal should only be discussed on its merits. That is an argument which I have very often 939 heard from those who have never even called themselves Free Traders. After all in a country and in a Parliament like this, which to a great extent determines not only the system of taxation for this country, but the system of taxation for India and the Crown Colonies, it is as well, when you are departing from fundamental principles, to consider the principle itself. It is no answer to say that this is only a small tax or only a temporary tax. The fact is, when you make such a departure you raise the whole question of principle, and those who differ from you are entitled to have that question of principle settled after free debate in which it can be fully discussed.
There was another proposition made on which also I should like to say a word. The right hon. Gentleman said more than once, "We only ask for this tax just now. Next year if the question comes up again you will have your hands perfectly free to vote as you like." But the facts do not bear that out. If you make a new departure you create a precedent. If you set up a system of taxation, if you protect certain home industries by a tariff of 33⅓ per cent., you will find that under that protection vested interests grow up, and when you have to face the question next year you are not dealing with matter de novo as now, but you find those interests which have grown up under that protection come to you and say, "We will be ruined if you remove the duty. When it was put on we understood it would remain, as many of its supporters desired. We have embarked our money in it; we are putting capital into these industries. You will ruin us if you withdraw the duty." We have had that argument used from these benches to-day in the case of tobacco.
§ Mr. McKENNA
Does my hon. Friend seriously say that capital is now being embarked in this country in the motor car industry? Does he seriously suggest that?
I suggest this, that if for the time mentioned in this Resolution, you once impose a duty of 33⅓ per cent., or any other protective duty, then under that protective duty, vested interests will arise, and that those vested interests will form an abiding difficulty if at a future stage you attempt to remove that duty. You can find it stated much more clearly and completely than I can hope to do in many a Free Trade 940 pamphlet issued by the Free Trade Union, that vested interests is one of the greatest dangers. If it had not been for the appeal of my right hon. Friend that questions of detail should not be asked, there are certainly two questions of detail I should like to put to him. Without pressing him for an answer, I suggest that these are only a few of many other questions which arise, and I know various others have already been put. Let me put these two. How are you going to distinguish at the stage of importation whether the chassis is to be used for Red Cross work in France, or for Red Cross work in this country? How do you know what kind of body is going to put upon it, or how it is to be used? What are you going to do? Is a car to be kept in bond, or is every car to be labelled or marked in some way so that you can trace it? I wonder if that question has been thought out.
There is another question. This is a tax upon accessories, not only of motor cars, but of motor bicycles and of motor tricycles. It is common knowledge that a great many of the accessories, including nuts, bolts, brakes, lamps, and a number of detailed accessories of motor bicycles and motor tricycles are the same as those used on ordinary bicycles and tricycles. When these things come into the country how will you know for what they are intended? Are they to be taxed, and is a rebate to be allowed if they prove to be non-taxable articles? Such a system will involve an enormous amount of labour, a great deal of friction, and a great deal of waste. There is one other consideration, and the House is entitled to an answer to this question. We are now engaged in a great War, fighting on terms of the closest intimacy with our Allies in the Entente. There is no question about it that before the War we were receiving from France and Italy a considerable number of these chassis and cars it is now proposed to tax. Questions have been raised as to what extent they will come into the country. As to that, I cannot say, but there will be no doubt about it after the War is over, that they will begin to come in again. Is it wise, when we are so desirous on being on the best of terms with our gallant Allies, that we should put a tax on things of that class, which under normal conditions they manufacture, and which we hope they will soon be manufacturing again? I really suggest to the Chancellor of the Exchequer that there should 941 be a special exemption for cars and accessories which may come from our Allies. I wonder if the Chancellor of the Exchequer would add that to the other concessions he has made. I suggest to him that it is worthy of consideration. It is to me very disappointing that this question has been raised. It seems to me it has been raised most unnecessarily, and for no adequate purpose. We have just embarked in another great discussion, which happily has been stilled for the moment. I could wish that this discussion was stilled by the removal of the cause of the discord, and to remove the cause of discord the proper course is to withdraw these proposals.
§ Mr. J. M. ROBERTSON
In joining in the appeal that has been made from various parts of the House to my right hon. Friend, I feel bound to dissociate myself from some of the arguments that have been brought in support of it, not from those brought by my hon. Friend who has just spoken, because the considerations he urged seemed to me extremely powerful. I have difficulty in seeing how my right hon. Friend can resist the arguments that he has put, and, indeed, some other arguments also. On the other hand, I listened with certainly a good deal of entertainment to the brilliant speech of my right hon. Friend the Member for Swansea (Sir A. Mond) and with some astonishment to some of the arguments of a serious kind that he employed. The ground of his case at the commencement against the setting up of what he called a tariff on this question mainly rested on the fact that a tariff in operation, even to this extent, is a difficult thing to work. That the argument of mere difficulty should be used in War time, especially by my right hon. Friend, who is prepared to face some difficulties in administration on another question did, I confess, astonish me. We are to decide which of all the workers in the country are to fight, and which are to stay at home; which industries should go on, and which should be stopped. When my hon. Friend is prepared to face such difficulties as that it is a little astonishing that he should think the mere difficulty of a tariff is a ground for opposing it. As to the painful character of the controversy that he said was aroused, pain is notoriously a thing difficult to measure, but my right hon. Friend has been so ready to inflict pain and controversy in other directions, that 942 I am unable to attach any serious weight to his deprecation of these fiscal proposals on that score.
I am myself, I suppose, a good deal of a Free Trader, yet in War time the mere consideration of the fact that we are making a technical breach in Free Trade practice would not in the least deter me from assenting to a set of taxes if I thought they were of fiscal use. In war time all other considerations go, and that is the reason why I view with perfect tolerance my right hon. Friend's proposals. If you tell us that you need to get revenue in this way, or need in this way to do something which is of economic importance towards the maintenance and the carrying on of the War, I should not ask seriously whether this is the thin end of the wedge. If you could not drive out that thin end afterwards I should not have much confidence in our power of resisting its re-introduction. I should never ground an objection to these taxes at all on that score, if they had the validity or any of the virtue that my right hon. Friend seemed to impute to them in making his proposals in his very admirable and lucid Budget speech. But if I understand him aright the only motive for these taxes on imports was sumptuary, and that he wanted to restrict useless and luxurious consumption. That is an obviously right motive in war time. The waste that still goes on in a hundred different forms is deplorable, and i£ the waste can be effectively checked by fiscal measures, well, let fiscal measures be employed! I am prepared even to go to this extent: I see the waste of butcher meat that goes on in this country among the masses of the people, who are the most wasteful in consumption of butcher meat of all people in Europe, that if we should come to the pitch at which it was seriously necessary to restrain that, I should theoretically be prepared to contemplate even a duty on meat, putting it solely on these grounds. I do not think my right hon. Friend sees any possibility of action of that kind, but if I could contemplate theoretically such a measure as that I could contemplate theoretically the imposition of a tax on certain other forms of imports.
But as my right hon. Friend has pointed out, this tax is going to be the most un-economical method possible of checking it. The machinery for the collection of it will itself be economically wasteful, and I know that my right hon. Friend, who is an economist through and through, realizes 943 the inexpediency of fiscal measures which in themselves mean a waste of effort, a waste of staff, and a waste of money. That is one of the grounds on which I deprecate his taxes altogether. I have been unable from the start, strongly disposed as I am to take a sympathetic view of any finance he proposes, to see that these taxes are worth putting on. May I put what seems to me the real criticism of his suggestion that we must put a sumptuary check on wasteful consumption. The true way to restrain wasteful consumption in the running of motor cars is deliberately to limit the licences issued for motor cars, and I seriously think we may have to come to that. In the first place, while there is a great deal of talk of the number of men of military age who might be available for the Army, there can be no doubt that a large number of men of that age are being employed as chauffeurs for a purpose which cannot be called economic. In the conduct of such a serious War as this it would be a perfectly reasonable and just measure, both towards the releasing of men of military age and towards the limiting of wasteful consumption, to make a register of all the motor cars of the country. I do not think that was done in the Government's Registration Bill, which was looking into the nation's resources in the matter of persons of both sexes and all ages. If the Government would make a register of all the cars in the country and set up a machinery to take a decision as to which of those cars need be in use, in that way you could restrain the wasteful use of petrol and at the same time release a number of men of military age. A restriction was placed in Germany, I believe, very soon after the outbreak of the War on the use of motor cars, and that is a measure which could be absolutely justified even without contemplating any of the measures of compulsory Conscription which have been put before us. At all events it is a perfectly fair and economic way of doing what is wanted. If too much petrol is being consumed merely in the luxurious use of motor cars, strike at it directly by calling in all licences and reissuing only the licences that it is in the public interest to have in use. That is a just mode of control. It is really a more conscientious mode of control than any kind of indirect limitation you can make by merely making motor cars more expensive, and in doing that it seems to me you will at once secure your end in a way that 944 involves none of the hundred and one very serious difficulties which have been indicated in the criticism put by a number of my hon. Friends.
As to some of the other taxes, I have never been able to form any serious opinion why they were proposed at all. I presume the reason for the tax on headgear was the sumptuary motive. In that case also I desire to check luxurious, wasteful expenditure, but the total amount of expenditure involved was so trifling in comparison with the amount of expenditure on other forms of gear of all kinds that it was difficult to see why in this momentous Budget, this historic Budget, dealing with the greatest masses of revenue and expenditure that any Chancellor has ever dealt with, I am afraid the greatest which will ever be dealt with, that trifling item of headgear is introduced into the taxation at all. I do not know that there will be any such difficultes in that case as were shown to be involved by various speakers in the case of the duty on motor cars and parts of motor cars. There will be no difficulties, but the thing was really not worth doing; and when we come to musical instruments, I think if you have to give up as much as you have given up on motor cars, and if you realise, as I think this House realises, that hats were not worth touching, I do not think there is any serious case to be made out for the taxation of imported musical instruments. After all, if there is any form of luxurious expenditure involved about which you need have less scruple, it might be in regard to music. I do not mean to say that the instruments imported as a rule make much for higher musical culture. The imports of articles which I have heard spoken of as coming under the operation of the proposed taxes I frankly confess are not things that I myself want very much to admit. There again you affect instruments of all kinds. There are none coming now from Germany, and you affect imports of musical instruments from some of the Dominions.
§ Mr. DEPUTY-SPEAKER (Mr. Whitley)
I am afraid other hon. Members will want to follow the right hon. Gentleman. He is travelling over a number of Resolutions. He must keep to one at a time.
§ Mr. ROBERTSON
I conclude by saying I earnestly trust that if all the arguments I have brought before my right hon. Friend have not been relevant, he will at least recognise their total force.
§ Mr. McKENNA
With the leave of the House I should like to make one or two observations in reply to the speech of my right hon. Friend, which I am sure we shall all have listened to with very great pleasure. He recognised, as I have endeavoured to recognise from the first, that we are not discussing this proposal as a tariff measure under ordinary peace conditions, but that the circumstances of war, which are quite exceptional, give an aspect to the tax which it would not and could not bear in peace. The criticism against the tax was directed to the merits of the proposal itself quite independently of any fiscal theory. No one will doubt the loyalty of my right hon. Friend to the principle of Free Trade, and I hope no one will doubt mine. My hon. Friend (Mr. Denman) raised the point that we do not in this Resolution give the usual words taken from the Provisional Collection of Taxes Act, 1913.
§ Mr. DENMAN
I did not raise precisely that point. I said my right hon. Friend had no power at all. I quite agree that you cannot put these words in and give yourself power.
§ Mr. McKENNA
That is the point I am coming to. My hon. Friend drew attention to the fact that these words are not in this Resolution, and argued from that that we have therefore no power to collect the tax until it is embodied in a Statute. I do not agree with him. We could not have inserted these words under the Provisional Collection of Taxes Act, because that Act only applies to Resolutions providing for the variation of existing taxes, or for the renewal for a further period of any tax enforced, or imposed, or proposed during the previous financial year, and as this is a new tax it does not come within the purview of the Act of 1913.
§ Mr. DENMAN
The right hon. Gentleman will recollect that when the Government introduced the Provisional Collection of Taxes Bill there were words that made it apply to new taxes. An Amendment was proposed omitting the words applying the Bill to new taxes, on the ground that it was exceedingly undesirable that the Committee should have power to give statutory effect at all to new taxes. This Amendment, proposed by the hon. Member for Falkirk Burghs (Mr. J. Macdonald), was accepted by the present Chancellor of the Exchequer on behalf of the Government. I have here his own words.
§ Mr. DENMAN
I will quote only the concluding words:—I agree with him that we have to look in this case beyond the possible loss and the possible inconvenience to the public, to the much larger question as to whether a tax which has not yet received the sanction of Parliament should become operative as a tax until such sanction has been given."—[OFFICIAL, REPORT, 14th April, 1913, col. 1713.]That is to say, the right hon. Gentleman was convinced that it was not desirable in the case of new taxes that a mere Resolution of the House should give that statutory sanction which was given by the Bill under discussion to existing taxes, and he concludes:—On behalf of the Chancellor of the Exchequer I propose, therefore, to accept the Amendment.The statute, as he says, relates merely to existing taxes.
§ Mr. McKENNA
The hon. Member is perfectly right in his recollection of what took place, and the quotation which he has given is quite in point. Nevertheless, that does not deprive this Government or any Government or Parliament of the powers which in fact exist. It is quite true that under the former practice it was customary to levy the taxes upon a Resolution of the House, and it was believed that the practice had given the equivalent of statutory effect to the Resolution of the House. That is quite true. It is quite true that the power to levy the tax remains now what it was before. Whether there is authority behind the power now, it is no more possible to say now than it was possible to say then. Whatever authority there was then, which was assumed to exist then, and which had been assumed for a great many years, exists still.
§ Mr. DENMAN
The right hon. Gentleman will remember that the whole of the Debate on that occasion was to define very clearly what the powers should be hereafter, and the whole point of the Amendment, whereby words were omitted, was to exclude new taxes from the operation of this Bill that gave the Committee power to give statutory authority for the collection of taxes before it was passed.
§ Mr. McKENNA
The hon. Member is perfectly right. That is under the Provisional Collection of Taxes Act. I am not claiming powers under that Act. The hon. Member is also perfectly right if he says that suppose to-morrow the Customs, 947 under this power, choose to collect the tax, and any person chooses to resist them, we cannot enforce the payment of the tax. It will probably be found, however, convenient, both for the Customs and for the individual, that he should pay the tax. It would be a voluntary act. If we get this Resolution we shall then take the power to collect the tax as from that date, and it will be convenient for the merchant to pay at once. But if the merchant declines to pay he will be within his right in declining to pay, in accordance with the opinion I have expressed in the House. I express that opinion again. In my judgment he will be within his rights in refusing. I would not, however, recommend him to do so,. because he will be adding to his own trouble. If he says, "I will not pay the tax," and he has to have it collected hereafter, there will be a certain amount of trouble, and there will have to be inquiry into the number of cars he has imported and so on. On the whole, he will be well advised to pay the tax for his own convenience, as well as the convenience of the Treasury. But that is really a point which does not touch the substance of this discussion.
I am going to make an appeal to the House. We have had what I might call a Second Reading Debate at considerable length on this question, and I think that probably we have all of us made up our minds as to whether we do or do not regard it as a breach of fiscal propriety. I put this tax forward on behalf of the Government, not on any fiscal grounds, but on economic grounds. We do obtain revenue from it; we shall very materially limit the import of a very expensive article coming from abroad, and we shall restrict in this country expenditure which, for the time being, must largely be regarded as useless. These three conditions are satisfied by this tax, and it is upon "those grounds that I introduce it. I do not think we shall get any better result by continuing to debate general principles. I would, therefore, ask the House to let me have this Resolution now, and I will not ask them to go further to-night. There are other considerations which apply to the later taxes of a similar kind on the Paper, and it might be better that we should consider during to-night and tomorrow the arguments that have been put forward on either side in relation to this and other taxes. I would suggest that the 948 formal Resolution be given now, and that we renew the discussion on the further taxes to-morrow.
§ Mr. OUTHWAITE
I would respond to the appeal made by the Chancellor of the Exchequer, except for the fact that I expect there will be a Division on this Resolution, and I should like to express the reason why, if a Division takes place, I shall go into the Lobby against the Government. This is not a question of such limited importance as the Chancellor of the Exchequer desires us to believe. I am afraid that I expressed by way of interjection some disbelief in the enthusiasm of the right hon. Gentleman for this proposed tax arising from fiscal conviction. I can assure him, if I did so, I really was paying the highest possible tribute to his great attainments in the sphere of political economy. I would like to put this question to him. Supposing there had been no Tariff Reformers in the Cabinet, would he, as Chancellor of the Exchequer in a Liberal Government, have proposed this tax?
§ Mr. McKENNA
Yes; I would certainly have proposed this tax in any Government under these circumstances. I desire, as far as in my power lies, to limit the unnecessary use of motor cars, the expenditure of money upon them, and the payment of money abroad for their import.
§ Mr. OUTHWAITE
Then we reach this point, that in order to limit the sale of motor cars in this country you are prepared to scrap the Free Trade system and to involve this country in controversy. [HON. MEMBERS: "No, no!"] Hon. Members opposite say "No, no!" There will be no controversy so far as they are concerned because they are getting what they have desired. I think the Colonial Secretary professed too much when he intervened a short while ago and said that he would not have made any such proposals as these. But these are the proposals that his Tariff Reform League have been making in the constituencies for years past. The tax upon motor cars has been a chief point in their propaganda. They have gone down into the villages and have said to the agricultural labourers, "Here you are working hard for 13s. or 14s. a week, and paying taxes on your tea, sugar, and so on, while the rich man is importing his motor car free. We will put a tax upon imported motor cars, and relieve you of the tax on tea and sugar." There is no use in the Chancellor of the Exchequer objecting to 949 our stating that in this matter he is raising the fiscal issue. To-night we are under Free Trade. To-morrow we are under Protection. To-night, if we allow this Resolution to go through, we make a breach in the Free Trade system. We allow the enemy within our gates. And what an hour it is to do this to begin the destruction of the work of Cobden and Bright!
Why have we this finance measure before us? Why are we raising this enormous taxation? It is in part because all the bankrupt Tariff Reform countries virtually are coming to us and asking us to finance their share of the War. If Tariff Reform creates the maximum amount of wealth and is the best fiscal system under which to live, as has been suggested from these benches, why is it that we have to lend £400,000,000 to our Allies to finance the War? Is it not because we are the richest country in the world that we have been able to bear, not only our share of this gigantic burden, but we have been able to help Tariff Reform countries as well? Yet it is at this hour, when the magnitude and beneficence of the Free Trade policy is most demonstrated, that a Free Trade Chancellor of the Exchequer comes down and asks us to make a beginning of the destruction of that policy; for what you begin now you will continue to do. We have to remember this, that these taxes upon imports are the sole sources of new revenue to which the Chancellor of the Exchequer has gone, and he warned us in his Budget speech that a further increase of taxation will be necessary, and consequently it is undoubted that it is to an extension of these Import Duties that he will go. If we lose the principle tonight, how can we in any way prevent or oppose the extension of the principle? We tax hats to-night. Why should we not tax boots to-morrow? We tax one form of conveyance now. Why not tax another? To-night we levy these taxes to reduce consumption in one direction. To-morrow we proceed in another direction.
Once you have gone on those lines, before this War is over you will have a tariff established over the bulk of the imports of this country. The maintenance of peace has been allied with the maintenance of Free Trade. War is ever the mother of Tariff Reform and Protection. To-night we have heard the argument used that the country is not interested in this matter, and that the country is thinking of other things. Therefore I 950 think it is scandalous that, in such conditions, a great change in our fiscal policy should be effected. The fact that the country is thinking of the War is the very reason why you have no right to introduce a policy which, when the country was thinking of it, was rejected at three General Elections. I appeal to the Chancellor of the Exchequer to realise that in raising this issue he is raising one that will provoke controversy. It is wrong to ask us to scrap our principles. All he can suggest in favour of this course is that by doing this we will alter the exchange to the amount of a few million pounds. He could do it in other ways. When this question has been up before, we have been told from the Front Bench that that result could be achieved by the sale of our securities in America. The Chancellor of the Exchequer, if he likes, could so alter the taxation under the Income Tax as to compel the holders in this country of securities in America to part with their securities, and to part with those gigantic areas of land, for instance, which they hold on the continent of America. It could be done in other ways also. So there is nothing in the Chancellor's statement which will in any way alter my determination to vote against this Resolution if, as I hope it will be, it is put to the test of a vote.
§ Mr. J. S. FLETCHER
The House will acknowledge that I very seldom trespass upon its time, and I would not have risen but for the extraordinary argument used by the hon. Member who has just sat down—that we are a Free Trade country, and are obliged to support Tariff Reform countries. How, then, does he explain that we have actually sent our Lord Chief Justice, who ought to be employed at home, to America to implore Protectionist Americans—he must know that the head of every party in America are known Protectionists—to lend us £100,000,000? Therefore, that part of his argument falls to pieces. The leaders of the party to which I belong are dumb. They have joined the Coalition Government. I do not wish to impugn their motives in so doing, but, as no Tariff Reformer has yet risen in this Debate, I wish to say that I personally disapprove thoroughly of these taxes which the Chancellor of the Exchequer has brought forward, because the sound doctrine of Tariff Reform, which I have been brought up to believe, is that small Import Duties spread over a number of objects are not felt by the country and are a legitimate or a de- 951 sirable mode of taxation. That was the view held by Sir Robert Giffen, in many points a Free Trader, and expounded by him very shortly before he died in a very powerful article, I think in the "Edinburgh Review." Therefore I am in principle against these additions to the Budget, and, if I go into the Lobby in support of the Government, it is quite for other reasons. And if it was not for the crisis in which we are at present, I should certainly support the hon. Member who has just sat down, though I differ from him as to the, reasons, because these taxes are not Tariff Reform additions to the Budget, but are heavy forms of taxation which would never have been resorted to had the Conservatives been in power.
§ Mr. LOUGH
I have already made an appeal to my right hon. Friend. I understand that he has said that if he got this Resolution he would not ask for any of the further Resolutions to-night, but he sees the great difficulty in which we shall be placed by taking this one Resolution. I think that we might come to a further arrangement as to this. The whole thing for which we are contending will be given away if my right hon. Friend imposes these duties. As he has met us in the most kindly spirit with regard to the rest, and as this has been greatly whittled away in the Debate, I venture respectfully to suggest that he should go one little step further and allow us to adjourn this question now and think it all over. I greatly deprecate the criticism which was urged against my right hon. Friend, and against the concessions which he made to us. I never saw a Minister in a strong Debate like this make greater efforts to meet the views which I am sure he felt were conscientiously expressed, and expressed with great reluctance, against these proposals. We all want to help. Therefore if he would go this little step further and let us adjourn at this stage, so that we may think over what has taken place, I feel certain that the Government would find with the assistance of the right hon. Gentleman on the left (Mr. Bonar Law), who has helped already in the Debate, a way out by tomorrow. He is really asking us in passing this Resolution to reverse our policy since 1842, which is a bit thin. Though I admit the force of the arguments on both sides, I would appeal to my right hon. Friend to go this little step further and adjourn now. Though I 952 understand that I cannot move the Adjournment, as I have already spoken, yet if the right hon. Gentleman would give me some indication that this course would be acceptable perhaps one of my hon. Friends would move the Adjournment.
§ Mr. McKENNA
I should have been glad if possible to fall in with the suggestion of my right hon. Friend, but I do not think that the course which he recommends would help us. The matter would come on for decision to-morrow by a different House which had not heard the Debate, and the decision would then be come to, which I beg the House to come to now. I have, with the exception of a few minutes when I was called away, attended the whole of this Debate. I have endeavoured to impose this tax on its merits. I have heard all the arguments which have been put forward, and wherever there has been an argument which appeared to me to be justified, I have met it by a concession. But on the rest of the arguments I confess I am absolutely unconvinced. I am told that I am protecting trades, yet a Tariff Reformer opposite gets up and tells me that I do not know my business. I agree with him —I do not. It is not Tariff Reform.
§ Mr. McKENNA
What is left? Some millions expended on imported motor cars, which in the present War we will be much better without. I think there are no elements of controversy that ought not to be satisfied. I do not think it is reasonable to ask me to go further. I cannot give up hundreds of thousands of revenue which can be readily obtained. I cannot give up the saving of expenditure on these articles of luxury, and there is no trade in existence that could be alleged to be protected by these taxes. The whole arguments having been thrashed out, I beg the House to come to a decision and let us have the tax to-night, and then proceed with the discussion of other matters, and deal with them on their merits.
Mr. T. C. TAYLOR
In a matter of this very great importance I think the Chancellor of the Exchequer might give us a few hours more to-morrow, when we might have some suggestions to make. 953 For example, we might ask him to declare that these taxes will continue only during the War, and if they are to continue only during the War why not say so now? If the Government will tell us that, it will ease the minds of many of us. There are many suggestions that might be made if opportunity were afforded to us, and I do put it to the Government that with us this is a matter of principle. The late Leader of the Opposition, the present Minister for the Colonies, told us to-night, and I believe one of his supporters said the same, that he really did not think that he would have proposed these duties. They said they would not, and I believe they would not. The way to Protection is to give a little at a time. You have hats and caps and other articles, you will get to shoes and other things, and once you get these vested interests in 33⅓ per cent. you get the real difficulty which Free Traders have had to fight. In the United States you have what is called "special interests" of individuals against the interests of the community. I do not want to prolong this controversy, but I do wish to put this question solemnly and seriously.
Supposing a Tariff Reform Government bad been in power, with the Minister of the Colonies at its head, and suppose that a policy of Protection had been carried out for years—the more years the better for the purpose of my argument—and then the Free Trade opposition, who had joined with them as a Coalition Government, proposed to them that they should forego their own principles and give way to Free Traders in matters which had been carried out upon principles acknowledged by the country for years, what would they have felt like? Would not they feel that their case had been given away? That is how we feel to-night. I do not counsel my Friends to go into the Division Lobby. I generally find that I get more by treacle than by vinegar from the Government. I find that I get more from the Government by sweet reasonableness than by denouncing them in public. We are all patriots, and I hate these controversies. I assure my hon. Friends on the other side that nothing but the most certain and deep convictions, based on a life-long study of this question has caused me to beg the Chancellor of the Exchequer to take these few hours more to consider this matter. I do not think that any advantage of it will be taken to-morrow by prolonging the Debate unnecessarily, but we do ask for this further time, and outsiders, in 954 view of what is contemplated, might be allowed to see what the newspapers have to say. [HON. MEMBERS: "Oh, oh!"] Newspapers help to make opinion in this country I wish they did not, and I wish that men thought more for themselves. I beg the Government to take some notice of the arguments which have been put forward by some of its most faithful supporters, who are no worse Englishmen for being Free Traders.
§ Mr. McKENNA
This is not the last occasion on which this question can be discussed and divided upon, and there is no reason whatever to regard this particular moment as the critical moment of the tax. This tax will not be law unless it is included in a Statute, and this Resolution has no other value except for the collection of the tax. If we adjourn this discussion the controversy would begin all over to-morrow again. I have listened to the whole of the Debate, and I feel quite confident that this is not a protective tax in the ordinary sense of the word. I feel satisfied that the present conditions are not those in which the motor-car industry could be protected, when no motor cars are at present being manufactured in this country. Do hon. Members think that the motor-car industry could establish a vested interest in the making of motor cars under a protective tariff between now and the 1st of August, 1916? The next Budget will be introduced long before the 1st of August, 1916, and it will probably be introduced in six months from now. All these arguments and speculations have no point. This tax will have to be renewed in the next Budget. The time for considering after the War will be on the next Budget, when the tax will have to be renewed in order to carry us over the 1st of August. I put this tax to the House, not as Free Trade or a Tariff Reform Tax, but simply on its merits, to secure the objects I have named. I would ask the House to come to a decision now on this tax, and then I will ask the House not to consider the rest of the Resolutions to-night, in order that we may have the opportunity of clearing our minds, on both sides, with regard to the individual taxes on their merits.
§ Mr. PRINGLE
I do not desire to delay the House from coming to a decision. I wish also to acknowledge the very handsome way in which the Chancellor of the Exchequer has, during the course of this Debate, met the critics of the new taxes. At the same time I do not think that my 955 right hon. Friend quite appreciates the position. It is true he himself very strongly and sincerely believes that there is no protective element in the new taxation, but he cannot conceal from himself that a very large section of the House hold, with equal strength and with equal sincerity, that there is a protective element in them, and that a Division upon this question is for them a Division upon a question of principle. I myself have no desire to divide against the Government. I have already divided against them on several occasions, but on this particular question I should not desire to divide against them. I think that my right hon. Friend should see, from the course of the Debate, that if there were a Division to-night, and if it were taken under normal conditions, that there would be a strong likelihood that the Division would reflect the general course of the Debate, and that the Government proposals would be beaten. I have followed the Debate very closely, and I have also followed the trend of opinion among those who sit upon this side of the House, and I have come to the conclusion that there is a strong probability that the proposal would be beaten. Surely, it is not fair or right that the Government, relying upon the present condition of affairs, should snatch a decision from the House which it would not have taken were the House in a position to give vent to its opinions in the ordinary way. That is the first point I make, but there is another aspect of the case.
The taxes are coming into immediate operation, and those of us who have been opposing this particular tax feel that the discussion has shown how absolutely poor is the case in favour of this form of taxation. My right hon. Friend has made a number of concessions, it is quite true. He has, I believe, withdrawn commercial vehicles and withdrawn tyres and, I believe, accessories, and has, I understand, signified his willingness to withdraw vehicles for ambulance purposes and those vehicles intended for the use of doctors. Under those circumstances he must have reduced to almost one-half the revenue which can possibly be obtained from this tax. That is not the only aspect in which we ought to regard the matter. The cost of collection of the reduced amount of taxation will be as great as the cost of collection of the whole tax in its orignial form. He will have his whole machinery of valuation and of bonding and of re- 956 bates, and those will be in reference to the few hundred thousand pounds which are going into the revenue. Surely, in view of all these facts, the net gain to the revenue is going to be so extremely small as not to justify the imposition of the tax at all. Under the circumstances we are justified in enforcing and impressing this point on him so far as we can. I have purposely not entered upon the fundamental question, which bulks so largely in theory, but I would remind my right Friends. I know that the Chancellor of the Exchequer does not believe that the principle is raised at all. He does not believe that he has given anything away in theory, but I would remind my right hon. Friend that even although he thinks he has given nothing away in theory, he has given away a great many quotations that will be useful in times of future controversy. I have heard my right hon. Friend demonstrating with great force and great eloquence the absurdity of achieving two objects by means of protective taxation, and that they are irreconcilable, namely, the obtaining of revenue and the exclusion of the articles taxed. But in this tax he goes one better than the Protectionists whom he formerly denounced. Having demonstrated that it is impossible to achieve two objects, he sought in his Budget speech to prove that he can achieve three.
§ Mr. McKENNA
My hon. Friend is quite mistaken in thinking that I have never said you could not at one and the same time exclude half of the import and allow the other half to come in, and so obtain revenue. You cannot exclude the whole and get revenue, of course; I have always said that.
§ Mr. PRINGLE
I am sorry that my right hon. Friend should have been tempted by my argument into other unfortunate admissions. If he goes on at this rate, he will not have a shred of fiscal orthodoxy left to cover his economic nakedness, and he will soon be proving that by reducing the tax by a third we will be rectifying the exchange. He is going to get about £600,000 from this tax, and the fraction by which the exchange will be improved is going to be extremely small, and the amount of luxury which is going to be restricted is going to be absolutely insignficant. I was glad to hear the Colonial Secretary say that these taxes were intended to be sumptuary in their object. I think it would be far better, if you had a sumptuary aim, to do it directly. 957 We have already machinery of graduation in regard to motor cars, according to horse-power, and why not stiffen your graduation and increase the taxation on the higher-power car? That is a very good sumptuary tax, and a perfectly direct tax, and one that would achieve its object without the slightest doubt. It would also relieve some of those gentlemen whom our Conscriptionist Friends state are slackers, and would enable those gentlemen probably to go to the front. I think under all these circumstances a case on the merits, apart altogether from the theory, has been demonstrated against these taxes. I have listened to many fiscal Debates, and to many Debates on taxation, but I have seldom listened to a Debate in which the argument has been so one-sided as on the present occasion. We have had the Chancellor of the Exchequer himself, who is no mean controversialist, and who can in most controversies look after himself very well. He has not been single handed. He has been in alliance with the Colonial Secretary, who has long made a reputation as one of the most skilful debaters in the House of Commons.
§ Mr. PRINGLE
I understood that my right hon. Friend was arguing for the tax on sumptuary grounds. Apparently he admits that it was intended to be an argument on sumptuary grounds. So far as it was an argument on sumptuary grounds I think I have completely demolished it, because I have shown that you can obtain the sumptuary effect in a far better way, absolutely directly, and without costly machinery, by using the existing fiscal machinery with regard to motor cars, and the existing machinery with regard to men-servants. There is still another way; you could alter the duty on petrol for pleasure cars. We have a differentiation in regard to the Petrol Duty at the present time. You only require to increase the duty so far as pleasure vehicles are concerned to secure the sumptuary effect which we are told is the only effect the Cabinet had in view. I quite agree that there is some doubt as to the exact object of the Cabinet, because unfortunately the Chancellor of the Exchequer was not in the House when the Colonial Secretary spoke, and after the Colonial Secretary had left my right hon. Friend gave a different interpretation of the Colonial Secretary's speech.
§ Mr. PRINGLE
At the solicitation of the Colonel Secretary, which I cannot resist, I will endeavour to develop it. My recollection is that the Colonial Secretary told us that neither he nor his Tariff Reform colleagues—I do not use the term in any invidious sense—had anything to do with the genesis of these taxes.
§ Mr. BONAR LAW
(indistinctly heard): As a matter of fact, we were discussing one Resolution only. Perhaps even then I ought not to have gone so far as I did.
§ Mr. PRINGLE
Then he agrees with my interpretation, or with the interpretation which the House put upon his speech—that he had nothing to do with the initiation of these duties. There was a conflict of opinion. I find now that the Colonial Secretary agrees with the original interpretation of his speech, and that the Chancellor of the Exchequer, who limited the matter to the particular tax, was not quite accurate.
§ Mr. McKENNA
My hon. Friend must not charge me with inaccuracy when he has not the slightest ground for so doing. If he wishes to charge me with inaccuracy in any statement, I shall be glad if he will say specifically wherein I was inaccurate.
§ 10.0 P.M.
§ Mr. PRINGLE
I am prepared to leave the matter to the OFFICIAL REPORT. When we are dealing with these matters as we hear them in the course of Debate, it is quite possible for either the speaker or the hearer, or both, to be under an erroneous impression as to what was said. I certainly have no desire to misrepresent the right hon. Gentleman. I will return very shortly to the main point. This matter has undoubtedly aroused very deep feeling among hon. Members on this side, who, if they were acting under ordinary conditions, would express their feelings by going into the Division Lobby. [An HON. MEMBER: "We are going to divide."] There are some who intend to do so. I regret it. If there is a Division, my right hon. Friend may be perfectly sure that the number in the Lobby will not in any way represent the number of those who are 959 opposed to the tax. Under these circumstances, it is surely unwise for the Government to take advantage of what I may call the self-sacrifice of those who decline to go into the Lobby, in order to press proposals which would otherwise run considerable risk of being defeated.
§ Mr. PRINGLE
My hon. Friend asks why I do not vote against them. I think I have sufficiently explained that, and it is unnecessary to deal with the point further. Apart altogether from fiscal theory and from the controversies in which we were formerly engaged—which I think have figured too largely in the course of the Debate—on the practical merits from any point of view, either in respect of producing revenue or in respect of setting right the exchanges, or in respect of diminishing luxuries, the tax has been proved to be absolutely illusory. In these circumstances I submit that those who have taken part in the discussion are entitled to ask the Government to withdraw the proposal.
§ Mr. J. SAMUEL
I understood from the speech of the Colonial Secretary, which we all very much appreciated, that these taxes on motor cars, musical instruments, clocks, watches, hats, and plate glass all hung together. He described them practically as sumptuary taxes. The Chancellor of the Exchequer stated that between now and to-morrow the Government would consider in the light of to-night's Debate what they would do with regard to the remaining taxes. [HON. MEMBERS: "No!"] I understood him to say so. I see the hon. Member for Oldham (Mr. Denniss) present. He is going to show that the tax on hats is not a sumptuary tax.
I am not going to object to the tax at all. I am only going to ask the Chancellor of the Exchequer to postpone the date, so that the articles called hats may be defined.
§ Mr. J. SAMUEL
I understood that the hon. Member was going to show that it was not a sumptuary tax. There will be strong opposition to the plate glass tax. Nobody can describe that as a sumptuary tax, as plate glass is an absolute necessity to the trading community. The tax on glass, I may say, takes us back to the year 1845—practically to Protectionist days. That tax was not so heavy then as it will foe under this Bill. I am speaking of glass 960 as a whole, because it is only proposed to tax plate glass, and the Plate Glass Tax was abolished in 1853. I am not, however, going to discuss that matter now. I am putting it to the Chancellor of the Exchequer and asking him if the taxes upon these various articles which I have enumerated are dropped does he propose after that to continue this tax upon motor cars that are left? That is the point I want to put to him. Is he likely to decide to-morrow to drop this sumptuary tax now that it has been whittled down to so very, very small a point?
I should like to make this further point. The imports of motor cars in a particular year, say 1913, was a little over £7,000,000. In the same year we exported between £4,000,000 and £5,000,000 worth of motor cars. That export was growing. If you look back to the year 1906 we only exported £800,000 worth of motor cars and parts thereof. Our trade is a growing one, and I would point out that if you decrease imports for the sake of the exchanges you are bound also to decrease your exports. I should like to see a Return from the Chancellor of the Exchequer by which we would get details as to the amount that will be saved from this tax in the form of trade rallies, tyres, and other things. If that were examined, and the reductions which have been allowed are taken into account, there will be found very little left to make the tax effective!
§ Mr. McKENNA
By leave of the House I will answer. [HON. MEMBERS: "Why?"] The hon. Member only wants me to answer his first question. In reply I would say that I propose to ask the House to continue this tax whatever happens to the other taxes. From the first I have asked the House—I may be right or I may be wrong—to be so good as to consider each tax on its merits, for I do not see any connection between them. That is only seen, by those who see fiscal theory behind them.
§ Mr. RADFORD
I beg to move, "That the Debate be now adjourned."
I rise to make an earnest appeal on this very important matter, to ask my right hon. Friend to consent to the adjournment of this Debate. I have listened to a very great part of this Debate with great interest, great anxiety, and an earnest desire not under present circumstances to vote, on this occasion, against the Government. But I confess that up to the 961 present I find myself quite unconvinced, and the course of this Debate has developed a suspicion which was in my mind at the start, namely, that this proposed tax upon motor cars is really a protective measure. This is the measure of the Chancellor of the Exchequer on behalf of the Coalition Government. When Free Traders and Protectionists coalesce I had hoped that the issue—that is to say, the Budget—would be something of a mongrel type. On the contrary, I find on examination that this is pure Protection. I have had some difficulty in following the several speeches of the Chancellor. I do not in the least impugn the financial Free Trade integrity of my right hon. Friend, but I say this, that two years hence he may be standing at that desk—as I hope he will be —and telling us that he is still the same Free Trader that he was years ago. But I would remind him that two years is a sufficient time in which, under the shelter of a protectionist duty of 33⅓ per cent. a very strong industry may be built up. That being so, it appears to me that we have taken a step in connection with Protection that we may all of us live to regret. For this reason I should very much like the Chancellor to see his way to accept the Motion that the Debate be adjourned so that a further opportunity should be afforded to consider the matter before a Division is forced upon us. If it comes I shall feel it my duty very reluctantly to go into what my right hon. Friend would call the wrong Lobby.
§ Sir NORVAL HELME
I beg to second the Motion for the Adjournment of the Debate. I do so with the sincere desire to facilitate a particular settlement of what is a very difficult question. As sturdy Free Traders we feel very keenly giving away the principle of Free Trade; but we recognise, as individual Members of Parliament, the situation in which the country is placed, and the necessity for supporting the Government. I think if the right hon. Gentleman would recognise the difficulty in which the House stands at present, we might meet tomorrow and, without loss of time, possibly be able to come to a decision; whereas if a Division is forced to-night, we would vote in favour of the Government, and I should do so on the ground of national expediency, in order to support the Government and prevent anything being done really to weaken the Government in the face of the enemy. We do desire, above all things, to maintain Free Trade. If for the moment, on the 962 ground of fiscal requirements, without yielding the principle for one moment, we can have such an assurance from the Government that this matter may be left purely as a question of revenue raising, on the clear understanding, as my right hon. Friend put it, that that should only be for the duration of the War, this matter might go to a vote. I hope the right hon. Gentleman will meet the general wish of the House. [HON. MEMBERS: "No!" and "Yes!"]
§ Question put, "That the Debate be now adjourned."
§ Sir T. WHITTAKER
I understand from the Chancellor of the Exchequer that he intends that the remaining taxes of this nature should be considered to-morrow by the Government. I want to suggest to him that he should consider this Motor Tax with the rest of them, for this reason: I have felt that the only substantial argument in favour of these taxes was the influence they would have upon our foreign exchanges. All the rest I regard as rubbish. The effect upon our foreign exchanges was a substantial argument for them. But today the Chancellor of the Exchequer has given away at least half of these somewhat large taxes, and, therefore, in my judgment, he has knocked the bottom out of the argument for the taxes on the ground of the influence which they would have upon the foreign exchanges. Now, I should be inclined to support the tax upon motor cars and cinema films on the ground of the influence it would have on the foreign exchanges, and I would not mind making the tax bigger even to the extent of keeping them out altogether on that ground. But the right hon. Gentleman, in my judgment, has practically knocked the value out of these taxes from that point of view. I do suggest, therefore, that the Government should reconsider the whole matter, and to do so they should consent to the Adjournment.
§ Mr. McKENNA
I really hope my hon. Friends will not press their Motion. Do let me repeat as simply as I can what the situation is. The decision which is taken to-night has no operative effect one way or the other. If we adjourn now and resume the discussion to-morrow, we are no further forward. I really should be deceiving the House if I were to agree to the Adjournment and give the impression that to-morrow I should ask the House not to go on with the taxes. I should still ask the House to go on with these taxes 963 to-morrow. My right hon. Friend who has just spoken, with whose speech, excepting the matter of estimates, I entirely agree, has put his objection to going on with the tax that it is not worth while on the ground of exchange, but that depends on his estimate and my estimate of the total amount that has been given away. It is worth while going on. The value of the cars imported now is about £8,000,000 a year. I put it to the House whether this House would not be right in making a protest against the import of £8,000,000 worth of motor cars in war time. We assume that we shall keep out about half of that, even with these concessions. Now £4,000,000 is a very serious item in the exchange. At any rate, supposing my estimates are wrong, the question can be raised again on the Bill. It would be misleading the House to adjourn it now with the expectation that to-morrow we are coming down to abandon the tax. We should not, and we should begin all over again and be no further on than to-night. Therefore, I beg my hon. Friends, who have debated this subject for hours, and presented every point of view with regard to it, to let us have the Resolution at this stage of the taxes.
§ Mr. LOUGH
I do not think I ever heard so good a case made out in support of the Motion now before the House as we have had to-night. I think it is quite clear to the House that my right hon. Friend is not so confident about his position as he would make us think. We are here reversing a policy which has prevailed in this country since 1842. [HON. MEMBERS: "Oh!"] I am not going into the merits; I have said all I want to say on that point. I am only saying now that we ought not to do this hastily. Would two days be too long for this question Some hon. Members on this side think any time is too long; they do everything in a hurry. I am sure that hon. Members opposite, who have given great attention to the Debate, and all who have been speaking against the Government with a profound sense of reluctance, feel, I am sure, that they want a little more time for consideration. It is not unreasonable we should ask it, and I appeal to the Government to be a little more reasonable in the matter, and at least give way to this Motion.
§ Mr. ANEURIN WILLIAMS
I think it must be very evident to the Chancellor of the Exchequer that this proposal is very much disliked on this side of the House. 964 I hope, therefore, he will not use his power to force it through to-night, simply relying on the fact that we should be loath to go into the Division Lobby against the Government at a time of national crisis of this sort. I think that is only fair to those who have given so much loyal support to the Government throughout this painful time. We shall feel that we are very badly treated if this is forced through against us to-night. By to-morrow the right hon. Gentleman will have had an opportunity of considering many of the suggestions which have been made in this Debate. The Chancellor of the Exchequer has put forward three reasons for these taxes. The first is for revenue the second for checking luxuries, and the third for exchange. Many other suggestions have been made by which we believe those objects can be much better obtained than by the proposals now before us, and therefore the least the right hon. Gentleman can do is to take a little more time to consider those suggestions, and see whether he cannot meet the strong objections held on this side. There is the suggestion of an Excise Duty to safeguard the question of principle. The right hon. Gentleman said an Excise Duty would be cumbrous and would not work, and he also said that no English motor industry now existed to be protected by the Customs Duty he is proposing. I would like to ask how can the Excise Duty cause trouble if no cars are going to be made? I strongly appeal to the right hon. Gentleman to allow us to adjourn this Debate, and not force this proposal through to-night.
§ Sir A. MOND
We have been told that we are not acquainted with the figures as to the amount of motor cars imported into this country. May I point out that the total amount of cars, chassis, and parts imported into this country for six months amount to £3,991,424, and if you double that you get nearly £8,000,000; £500,000 of that is for tyres, and that has gone. The right hon. Gentleman himself estimates the amount of commercial cars at one-third, and that takes away another £900,000. Consequently, you are left with £1,700,000, and if you double that you get £3,400,000. The right hon. Gentleman said that he is now going to exclude £4,000,000, and he seems to me to be adopting Tariff Reform arithmetic. I think, in fairness to the House and to himself, the right hon. Gentleman might consent to an adjournment, so that these figures can be gone into.
§ Mr. McKENNA
Those seem to be the same figures which the right hon. Baronet presented to the House before. We have been told that the figures for the first eight months amount to £5,300,000, and if that is correct a rapid mental calculation will show that it is at the rate of about £8,000,000 a year. That disposes of the first point in the right hon. Gentleman's calculation. Recent figures indicate that motor cars are coming in faster, and the total is at the rate of £8,000,000 a year. His second point is to assume, when we estimate for a reduction of the imports by one-half, that half reduction will be equally distributed over trade cars and over pleasure cars. We do not assume that; nor do I think on reflection he would do so. He would assume that pleasure cars would be kept out in far greater proportion than trade cars. Consequently, his calculation is entirely a fallacious one.
§ Lieut. - Commander WEDGWOOD
It seems to me, if the right hon. Gentleman relies upon the figures given either by the hon. Member for Islington (Mr. Lough) or by the hon. Member for Swansea (Sir A. Mond), that he might very well be mistaken in taking either of them. Surely it would be far more satisfactory if he got his figures from his own Treasury officials, who can supply the actual and correct figures on which this new tax is to be based. He might also at the same time find out from the same officials what proportion of these cars imported from America are for Government purposes. I happen to be associated with a branch of the Navy which consumes a considerable number of these cars, and I think that a very large proportion must be used either for hospitals or for military purposes in France. We do not want particularly to exclude them. They are just as important as munitions. I am sorry the right hon. Gentleman is unwilling to concede to us this adjournment of the Debate. I do not think that he can realise all the exemptions to this tax which he has already granted to-day. Before the tax is to be collected you want to have a very clear line drawn to show what are commercial vehicles and what are not commercial vehicles. He indicated to the hon. Member for Blackburn (Sir Henry Norman) that he might also omit cars imported for hospitals and for doctors. After that he talked about motor lorries, but lorries are not the only commercial vehicle by any means. Then there is the question of parts. You cannot collect the tax 966 to-morrow without some clear line drawn to show what parts are to be allowed in free and what parts are not to be allowed in free. I understand that parts required for commercial vehicles will come in free and that those coming in for pleasure vehicles will be taxed. It will require enormous ingenuity on the part of the collecting authorities before they can start collecting a tax which is so very ill-defined as this tax we are proposing to pass tonight. I think for these reasons it is certainly desirable that this Debate should be adjourned, so that we may have a clear indication what is to be taxed and what is not to be taxed, and also what the revenue is likely to be, because the original estimate must have entirely gone by the War.
Surely the Chancellor of the Exchequer and the Secretary of State for India (Mr. Chamberlain) must know that it would be with the greatest possible reluctance we should divide in this House and give anybody, however ignorant, the idea that there was any want of confidence in His Majesty's Government so far as the conduct of the War is concerned. It is really not putting their supporters in a fair position. We have been told to-day by the Secretary of State for the Colonies (Mr. Bonar Law), "who was an ardent Tariff Reformer, that this tax was not, as we commonly imagined, forced upon the Government by the Conservative section of the Cabinet, but that it was the suggestion of the Chancellor of the Exchequer himself. Anybody who knows anything of the Conservative Members of the Cabinet will be assured that they would sacrifice their pet theories rather than produce a division in the country. I honestly believe that. If, then, we are clear that these are not their pet theories—and we know that no Tariff Reformer would propose a duty of 33⅓ per cent.—if they did not originate this idea and if this tax is to bring in such a minute revenue as this revised tax will do, then surely this Cabinet can reconsider the question with an open mind, provided there is no Division. If the Resolution is passed, then the tax will begin to be collected, and once that occurs the Government is placed in a very difficult position, and they might have to climb down as they did in the case of the Whisky Tax six months ago. If the right hon. Gentleman consents to the adjournment, I am sure the Government will put everything right tomorrow. They had not appreciated how strongly we feel on this subject. I hope 967 the Chancellor of the Exchequer will continue to secure unanimity. We have not the slightest grievance against him. We might perhaps have made a better fight with him as a traitor to Free Trade, but we are convinced he is as sound a Free Trader as ever, and it is merely the pride of paternity in this particular tax that has induced him to take up his present attitude. The rate of exchange is not likely to be affected by this duty, and the sumptuary effect could be far more easily produced by increasing the tax on motor cars. The figures ought certainly to be again worked out by the Department before the House is asked to vote on this question.
§ Mr. McKENNA
I am afraid there is some misunderstanding. This tax is now being collected, and whether we adjourn or not we shall be in precisely the same position in that regard to-morrow as we are at this moment.
§ Mr. MOLTENO
I desire to join in the appeal, and inasmuch as it will not make the slightest difference in the matter of the collection whether we adjourn or not, surely the right hon. Gentleman can see his way to make this small concession to his supporters, patricularly in view of the extraordinary uncertainty with regard to the figures involved in this question. I understand he has suggested that of the imported cars only one-third are used for business purposes. But the information given me by men particularly concerned in this business, who have made special inquiries, is that business cars represent 77 per cent. of the cars imported from America since the beginning of the War. That puts a very different complexion on the matter, and we ought to have more accurate figures than we are in possession of. I imagine it is quite true that two-thirds of the motor cars imported since the War began are in use for business purposes. An immense amount of labour is now being saved by tradesmen who purchase these cheap American cars and deliver their groceries, meat and bread to their customers.
§ Mr. MOLTENO
I will not pursue that any further. I would make one further appeal to the right hon. Gentleman. When the formation of the Coalition Ministry was announced in this House by the Prime 968 Minister he said that the formation of that Ministry did not mean that he gave up any of the causes to which he had devoted his political life, that equally those Gentlemen who had joined from the other side were not going to give up any of the principles to which they had devoted their political lives, and that there would be a truce on all matters of controversy. I appeal to the right hon. Gentleman to preserve that spirit and that intention. He has told us he does not think that he is departing from that assurance in what he is proposing.
§ Mr. SPEAKER
The hon. Gentleman is not addressing himself to the question now before the House, which is the question of the adjournment of the Debate. He is discussing the question as a whole.
§ Mr. MOLTENO
I was just venturing to suggest a further consideration to the right hon. Gentleman for giving a little more time, and asking that that consideration should be taken into account.
§ Mr. L. JONES
The right hon. Gentleman says that it will make no difference to the tax or to the situation whether we adjourn the Debate now or not. I venture to say that to adjourn will give ah opportunity to the Government to meet to-morrow and consider it. In view of the very strong feeling evinced in the House I do not think we are asking too much in inviting the Government to hold a meeting of the Cabinet to-morrow morning, at which to consider the Debate that has taken place to-day, and to come to a decision whether, in view of what has taken place, it is worth while proceeding with this Tax.
§ Mr. GOLDSTONE
The Chancellor of the Exchequer says it will make no difference. I venture to disagree. Every time this House registers a decision it makes it more difficult to go back upon a thing, so from that point of view he might give way probably to a greater extent than he would otherwise do if he were to defer it for a day. The matter can be put before a meeting of the Cabinet, and the sense of this side of the House, in the strong terms in which it has been expressed, can be conveyed to the Prime Minister and his colleagues. The spirit in which the Debate has been conducted has been admirable. I venture to assert that, if this matter is forced upon the House to-night that spirit may not be maintained. There will be such an offence committed. The sense of 969 the House, so far as this side of it is concerned, will have been outraged. The appeal has been unanimous and strong from men who will with great reluctance support the Government, and from those who, if there is a Division, will vote against them. The feelings of the House, or of a very considerable portion of the House, ought not to be overridden in this way. Hence I associate myself whole-heartedly with the appeal now made that the matter should be deferred.
§ Mr. J. M. HENDERSON
I have been in this House for ten years, and I have never yet experienced a case where so large an appeal from their own supporters to the Government to adjourn was not granted at once. It must be evident to my right hon. Friend that the feeling on this side of the House is unanimous against the proposals or unanimous in favour of an Adjournment in order to consider them. That is one unanswerable reason why the Adjournment should take place. Certain Amendments have been foreshadowed. You are not in a position now to tell us your exact estimate of what this tax will bring in, and the Chancellor of the Exchequer ought not in a case of this kind, when there is so much feeling, to impose a tax the amount of which he cannot tell us. He should be able to give us something a little more definite before he asks us to put our decision on record. He says it makes no difference. It makes this difference, that if he gets this he can put it in his Finance Bill, and if he does not get the Resolution he cannot. I appeal to him, and the whole of his supporters on this side appeal to him to adjourn and consider the matter a little more, and not be quite so officially obstinate as he appears to be.
§ Mr. MORRELL
I desire to support the appeal which has been made. Everyone agrees, whatever his views may be upon the question, that the occasion is an important one. It is the first occasion on which the House has ever been asked to take a step of this kind at such short notice. During the whole of the Debate, so far as I am aware, neither the Prime Minister nor any leading Member of the Cabinet, except the Chancellor of the Exchequer and one or two others, has been present. The Prime Minister himself certainly has not been present during the whole Debate. He is not aware of the strong feeling which this proposal has excited. Would it not be worth my right 970 hon. Friend's while to consult with his colleagues upon the point before forcing the House to take a Division which we do not want to have to take. He suggested earlier that when I said he was making no concession I was speaking unfairly to him, but this is a point on which he might well make a concession considering the appeal which has been made to him. It is not much to ask that he should consent to the Adjournment of the Debate.
§ Sir W. BYLES
I have the greatest possible dislike to the proposal or to anything which even smells of Protection, but I have an equally strong, if not even stronger, aversion to taking any step which would appear to be in opposition to those Gentlemen who have the conduct of the War in hand, and I ask my right hon. Friend not to ask me to choose between the two. I cannot believe it would pass the wit of man, certainly not this man, my right hon. friend, to arrive at some via media, some modification of the proposal which would get at any rate the acquiescence of every Member of the House.
§ Mr. HIGHAM
I wish to associate myself with the appeal that has been made to the Chancellor of the Exchequer. I should hate to vote against the Government, even on the question of the Adjournment. I do not desire to have to vote against this tax. I recognise the strength of the appeal that the right hon. Gentleman has made to us, and if he defers the matter till to-morrow he may be able to find some way which will allay the strong feeling which exists on this side of the House. I am a sturdy supporter of the Government as it now stands. I want no dissension in face of the great War in which we are engaged, and if the right hon. Gentleman would take till to-morrow to think the matter over he would find a way of meeting our wishes in some way or of convincing us to support him in the proposal he would then place before us.
§ Mr. McKENNA
I really think that my hon. Friends are not in this matter doing their own cause justice. If I agree to the Adjournment of the Debate upon this Resolution, having asked the House to take the Resolution on the understanding that I would adjourn consideration of the other Resolutions, they are asking me to treat all the Resolutions as being part and parcel of a single policy. I have tried, as far as any human being can make himself clear, not to commit myself or the Government to this tax as being part and parcel 971 of any policy. I cannot agree to the interpretation which has been put upon our action. The Committee in its wisdom may reject any one of these taxes entirely; they do not hang together; they are not intended to be part and parcel either of a Free Trade or a Tariff Reform policy. I beg the House to take each individual tax upon its own merits. That is the first point. The second point relates to the suggestion of official obstinacy on my part. It is nothing but a sincere desire on my part not to have any misunderstanding with my hon. Friends. If I agree to the Adjournment of the Debate now it would be implied that I was asking the House to adjourn with the intention of asking the House to reconsider the Resolution tomorrow. I will make a bargain with my hon. Friends.
§ HON. MEMBERS indicated dissent.
§ Mr. McKENNA
If after consideration to-night they agree to give me this Resolution to-morrow without discussion—
§ Mr. McKENNA
If they will give me the Resolution to-morrow without discussion, it is perfectly immaterial to me or anybody else whether we have the vote now or at the beginning of the business tomorrow.
§ Mr. McKENNA
No, Sir, New Excise Duties are impossible. The machinery is absolutely impossible to set up. If it is an understood bargain, I would be quite willing to agree to the Adjournment now.
§ Mr. McKENNA
It is ten minutes to eleven o'clock. It would be a reasonable bargain to make that if we take this Resolution to-morrow, we take it without discussion.
§ Mr. LOUGH
By leave of the House I appeal to my hon. Friends to accept this offer—this very liberal offer which the Chancellor of the Exchequer has made. I understand it to be this, that to-morrow, if the Government think it right to proceed with this Resolution, we divide, if we wish to divide, without any Debate. We either divide, or we agree to the Resolution without debate. I think it is a very fair compromise, and I think we ought to accept it gratefully from the Chancellor of the Exchequer.
§ Motion made, and Question proposed, "That the Debate be now adjourned."
§ Question put, and agreed to.
§ Debate to be resumed to-morrow (Thursday).
§ Subsequent Resolutions to be further considered To-morrow
§ The remaining Orders were read, and postponed.