Commons Sitting of 30 September 1915

Preamble
The House met at a Quarter before Three of the clock, Mr. SPEAKER in the Chair.
NATIONAL HEALTH INSURANCE COMMISSION (WALES) (REGULATIONS).
Copy presented of Regulations, dated 28th September, 1915, made by the Welsh Insurance Commissioners, entitled the National Health Insurance (Navy and Army) Regulations (Wales) (No. 1), 1915 [by Act]; to lie upon the Table, and to be printed. [No. 360.]
ORAL ANSWERS TO QUESTIONS.
  WAR.

    DARDANELLES (FIRST ATTACK).
    Mr. OUTHWAITEasked the Secretary of State for Foreign Affairs whether, in view of the statement made recently by the British Ambassador at Petrograd, to the effect that the first attack on the Dardanelles was in part due to a request made by the Russian Government that this operation should be undertaken for the purpose of drawing Turkish forces from the Caucasus, he can make any statement on the subject?
    The UNDER-SECRETARY of STATE for FOREIGN AFFAIRS (Lord Robert Cecil): I have no doubt it is the case that the operations against the Dardanelles have diverted Turkish troops from the Russian and Egyptian frontiers. But to make a fuller statement as to the strategic objects of military and naval operations which are still in progress does not seem to me expedient, nor could I make it in dependently of the military and naval authorities.
    Mr. OUTHWAITE: Can the right hon. Gentleman not give us information which has been given to the Russian people, and which has got into the hands of the Germans?

    GERMAN MANUFACTURERS (ACCESS TO FOREIGN MARKETS).
    Mr. WINGasked whether Ger man manufacturers are being allowed free access to foreign markets provided that the goods were ordered previous to 1st March; and (2) is there any limit to the output from Germany to foreign countries, provided that a statement is made that goods were ordered before 1st March?
    Lord ROBERT CECIL: No concessions are being, or have been, granted to German manufacturers. In stopping German exports our object is not to injure neutrals, but to diminish German resources. Where, therefore, goods of German origin were both ordered and paid for by a neutral purchaser before 1st March, their delivery is not interfered with. So, too, goods of enemy origin shipped from neutral ports are not interferred with where it is proved to our satisfaction that the goods were genuinely ordered by, or for, the account of subjects of neutral States before the 1st March, 1915, and that by the terms of the contract under which they were ordered the purchaser is bound to take delivery of the goods on or before shipment, and is, therefore, bound to pay for them, whether they reach the hands of the purchaser or not.
    In such cases it is obvious that to stop the export of the goods imposes no disadvantage on Germany and inflicts hardship and injury on the neutral purchaser. It thus fails entirely to effect the object we have in view and succeeds only in doing what we wish to avoid.
    Sir HENRY DALZIEL: Can the Noble Lord say whether this means that goods manufactured in Germany since the out-break of War are allowed to go to neutral countries?
    Lord ROBERT CECIL: It means exactly what I have said—that, under the circumstances which I have described it will not interfere with goods that are the subject of the contracts which I have already mentioned.
    Mr. RAWLINSON: In addition to the goods referred to, are not a considerable quantity allowed to be exported which have not been paid for?
    Lord ROBERT CECIL: Not except under the conditions which I have already described in my answer.
    Mr. WING: Does the right hon. Gentleman not think that the financial interests

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    of German manufacturers and American banks which are under German control are able to bring about a set of circumstances that can evade the conditions laid down?
    Lord ROBERT CECIL: No, Sir, I do not think any evasion is possible, because it must all have happened before the 1st of March.

    AMERICAN COTTON.
    Mr. THEODORE TAYLORasked whether any and, if so, what undertaking has been given by the British Government to buy American cotton?
    Lord ROBERT CECIL: At the time that cotton was declared contraband His Majesty's Government stated that they contemplated the initiation of measures to relieve, as far as possible, any abnormal depression which might temporarily disturb market conditions. No further undertaking was given, and no abnormal depression has occurred. The intentions of His Majesty's Government were published in the Press on the 23rd August.

  MUNITIONS.

    BELGIAN SUBJECTS EMPLOYED.
    Lieut.-Commander WEDGWOODasked the Minister of Munitions whether he can give the number of Belgian subjects, men and women, who are at present engaged in making munitions in either controlled or Government factories; whether any factory is specially set apart for Belgian workers; and, if not, whether this has been considered?
    The PARLIAMENTARY SECRETARY to the MUNITIONS DEPARTMENT (Dr. Addison): My right hon. Friend does not think that it is desirable to publish information with regard to the number of Belgian subjects at present engaged in making munitions. In several instances Belgian workmen are employed separately under Belgian control. The desirability of extending such arrangements is now under the consideration of the Ministry of Munitions.

    RELEASE CERTIFICATES.
    Mr. PRATTasked the Minister of Munitions whether his attention has been called to the action of Messrs. Armstrong, Whitworth and Company, Manchester, in dismissing 151 of their employés without notice and refusing to grant them
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    release certificates, thus making it impossible for them to obtain employment elsewhere; whether the workmen appealed to the Ministry of Munitions for redress; and what action, if any, has been taken in the matter?
    Dr. ADDISON: My right hon. Friend's attention has been called to the dismissal of the men in question. The firm stated that the ground of the dismissal was that there was no further work for the men, and that no notice is customarily given on this class of work. The firm, however, on representations from the union, allowed such men as had not already found employment elsewhere, to return for one week. Communications took place between the Ministry of Munitions and the company, and the question formed the subject of arbitration before the Chief Industrial Commissioner. Ultimately the company allowed pay up to a month to any men who remained out of employment for so long—a payment in excess of the recommendations of the arbitrator. As regards the general question of the issue of release certificates, I may point out that it is always open to a workman to whom a certificate is refused to appeal to a munitions tribunal. My right hon. Friend has, however, also called the attention of all employers to the importance of giving release certificates in all cases in which they dismiss men.
    Mr. TYSON WILSON: Can the hon. Gentleman give instructions to the employers that they must grant these release certificates to discharged men? Surely this is penalising a man.
    Dr. ADDISON: I think what my right hon. Friend has done will meet the case in future.

    VICTIMISATION OF WORKERS.
    Mr. SHERWELLasked the Minister of Munitions if he will state the number of cases reported to his Department of victimisation by employers of workers who had volunteered for munitions work, the number of such cases inquired into, and the number of cases, if any, in which proceedings against employers have been instituted?
    Dr. ADDISON: About thirty alleged cases of the nature alluded to have been reported to the Department. Inquiries have been and are being made into every case. In some cases the men have been reinstated; in others, the complaints on investigation were shown to be without foundation. Legal advice has been taken

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    with a view to instituting proceedings in other cases, but up to the present it has not been found possible to take proceedings with any prospect of success.
    Mr. SHERWELL: Does that answer cover the special case of a firm in Cardiff where the offence was proved up to the hilt?
    Dr. ADDISON: I am afraid that I must have notice of that question.

    SULPHURIC ACID PURCHASES (AMERICA).
    Mr. ANNAN BRYCEasked the Minister of Munitions (1) whether he will inform the House what firm has been concerned in the purchase of sulphuric acid from America; how much has been paid to the owners of vessels for the damage due to their ships to leakage of the iron drums in which the acid has been shipped; and whether the loss has fallen upon the Government agents or upon the Treasury; and (2) whether quantities of sulphuric acid, essential to the production of high explosives, have been purchased in America; whether, owing to defective methods of shipment, there has been loss and delay; what were the terms of purchase; and what the nature of the specification?
    Dr. ADDISON: I will assume that by "sulphuric acid" he means oleum or fuming sulphuric acid. Certain quantities of oleum, which is an ingredient of high explosives, have been purchased from America through Messrs. C. Tennant Sons, Messrs. Baring Brothers, and Messrs. C. T. Bowring and Company. In the case of the earliest shipments there was a certain amount of loss due to the type of iron drums used. I may say that iron drums had always been used in this country, in America and elsewhere for the carriage of oleum both by land and sea, and the particular type used had been passed for the purpose by the American Inter-State Commission. Oleum, however, had never previously been transported across the Atlantic in quantity, so that no experience of the best type of drum to use for that purpose was available when the earliest shipments were made. The defects in the drums used in these earliest shipments have long ago been remedied. In the case of one shipment some delay was caused owing to instructions being sent to unstow the cargo of oleum and redrum it in stouter drums, but the supplies of oleum on hand in this country at the time being adequate, largely due to the earlier shipments, this
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    delay was in no way prejudicial to the supply of munitions of war. Nothing has been paid to owners of vessels for damage to their ships, but a claim has been lodged for damage, and two ships which had been damaged through leakage of oleum were purchased by His Majesty's Government on advantageous terms. My right hon. Friend does not consider it expedient in the public interest to give particulars as to the terms of purchase of oleum or as to the specification, but can assure the House that the statements that have recently been made in a certain newspaper are both inaccurate in detail and misleading in effect.
    Sir H. DALZIEL: Can the hon. Gentleman give any idea approximately of the amount of the loss?
    Dr. ADDISON: I might be able to do that on notice.
    Sir H. DALZIEL: I beg to give notice that I will put down a question.
    Mr. BRYCE: May I ask whether the drums to which the hon. Gentleman referred are cast iron or wrought iron drums?
    Dr. ADDISON: I do not know. They would be the drums ordinarily used for that purpose, but I will inquire into the matter.

    TECHNICAL SCHOOLS (INSURANCE).
    Sir PHILIP MAGNUSasked the President of the Board of Trade whether he is aware that many of our technical schools are utilising, at the request of the Government, their workshops in assisting in the manufacture of shells; and whether he can arrange that such schools, which for that reason only are required to pay the higher factory rate for insurance against damage by aircraft, shall be able to insure at the ordinary 2s. rate?
    The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Captain Pretyman): The case of these technical schools has already been considered, and I am afraid it would not be possible to make a special exception, or vary the insurance classification or rates, in their favour.
    Sir P. MAGNUS: Does not the hon. Gentleman consider it very unfair, when the schools are working for the Government, that they should be charged an extra rate?
    Captain PRETYMAN: My hon. Friend must not ask me my personal opinion on the point.

    UNSKILLED WORKERS.
    Mr. CHARLES PRICEasked the Minister of Munitions, with reference to his recent speech at Bristol and to the recent official statement that large additional numbers of unskilled men and women are required for munitions, where persons desirous of such employment should apply; and when they are likely to be wanted?
    Dr. ADDISON: It was pointed out in the speech referred to by my hon. Friend that the immediate need is for skilled men; there is no dearth of unskilled labour at the moment. Further steps are being taken with a view to securing the skilled labour required, and as soon as this becomes available, and especially when the new munitions factories at present in course of construction are completed, a large additional number of un skilled men and women will be required. In the meanwhile applicants for such employment, whether men or women, should record their names at the nearest Labour Exchange where special arrangements have been made for the purpose between the Ministry of Munitions and the Board of Trade.

    ROYAL FUSILIERS (EMPIRE BATTALION).
    Mr. HOGGEasked the Attorney-General whether he has now examined the evidence given before the Military Court of Inquiry into the affairs of the Empire Battalion; and whether he proposes to take any action?
    The ATTORNEY GENERAL (Sir E. Carson): I understand from the Public Prosecutor that the evidence and proceedings before the Military Court of Inquiry referred to are now before him. They have not been referred to me, and I have not seen them.

    LOCAL AUTHORITIES (ECONOMIES).
    Mr. PERCY HARRISasked the President of the Local Government Board whether the reports asked for by his circular letter of the 4th of August, 1915, as to the nature and extent of any savings which local authorities have been able to effect, are being regularly received from such authorities throughout the country; whether he is able to state that substantial economies have been or are being made by such authorities; and whether he
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    will take steps to make the information contained in the above-mentioned reports available to the local authorities in order to assist them in making savings?
    The PRESIDENT of the LOCAL GOVERNMENT BOARD (Mr. Long): A great many reports have been received showing savings which local authorities have been able to effect. Some of these are substantial and involve a material reduction of rates. The reports are not usually in a form which would be of much assistance to other local authorities in their consideration of economies, and my own view is that the best results are obtained by careful study of details in connection with the particular circumstances of each authority. I have, however, taken steps to give publicity through the Press to any information received which seems likely to be useful to local authorities in general.

    LOCAL AUTHORITIES (ELECTIONS).
    Mr. TYSON WILSONasked the President of the Local Government Board whether he will issue a circular to all local authorities pointing out that in carrying out the present policy of co-option of members to fill vacancies the political and party ties of the persons co-opted should correspond with those of the previous members?
    Mr. LONG: I do not think it is desirable that I should issue such a circular as suggested. In the Debate on the Elections and Registration Bill I made it clear what line should, in my opinion, be adopted in filling casual vacancies occurring at the present time. I feel confident that local authorities will follow the principle which has been adopted in regard to Parliamentary Elections.
    Mr. BOOTH: Is my right hon. Friend aware that sometimes men may be of the same political persuasion but totally opposed to each other on those points of local administration about which there are contests?
    Mr. LONG: Yes, Sir, I am aware of the fact, and it is one of the reasons why I do not propose to issue a circular.
    Mr. W. THORNE: May I ask the right hon. Gentleman whether he will be prepared to send his answer to that question to all the local authorities?
    Mr. LONG: I should like to know, first of all, whether the local authorities are

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    anxious that I should do so. There are a great many of them, and, unless I had some indication that they desired suggestions from me on the subject, I do not think that I could send them any such circular.

    BRITISH SUBMARINE IN BALTIC.
    Mr. MIDDLEMOREasked the First Lord of the Admiralty whether he is able to confirm the statements made officially in Petrograd and to furnish any details regarding the torpedoing of a large German cruiser in the Baltic by a British submarine during the week ending 22nd August last?
    The FIRST LORD of the ADMIRALTY (Mr. Balfour): My hon. Friend will probably have seen from an answer given on Tuesday last by my right hon. Friend the Financial Secretary that we feel precluded from giving information about the proceedings of the Russian Fleet beyond that which the Russian Government may think it expedient to publish in the Press. He will realise that the British submarines which have done such excellent service in the Baltic are not an independent force, but are acting under the command of the Russian admiral.

  GERMAN SUBMARINE LOSSES.

    MR. BALFOUR'S REPLY.
    Mr. MIDDLEMOREasked the First Lord of the Admiralty whether, in view of the fact that the loss of a submarine must be known to the German naval authorities after she has been absent from her base or unheard of for a certain period, he can communicate to the House the number of enemy vessels of this type captured or destroyed down to the date when, in the opinion of the Board, the most recent must have been given up by the enemy as lost?
    Mr. BALFOUR: I understand and sympathise with the desire expressed by my hon. Friend, and I entirely agree that the mere statement that a German submarine has been destroyed need not convey valuable information to the enemy. The difficulty I feel in satisfying my hon. Friend's curiosity has a different origin. It arises from the inevitable margin of doubt which attaches to any attempt to estimate the numbers of enemy submarines destroyed, and the consequent impossibility of giving accurate statistics. A submarine, it must be remembered, is not like an ordinary vessel. If the latter sinks it sinks for ever.
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    There can be no error as to its fate. With a submarine this is not necessarily true; and we have every gradation, from absolute certainty through practical assurance down to faint possibility.
    Facts like these are not fitted for statistical statement. Were the Admiralty to confine itself to enumerating cases of absolute certainty, we should undoubtedly be understating the truth. If we were to include all the cases of reasonable possibility, we might be exaggerating the truth; and no defensible line can be drawn between these two extremes.

  BUDGET PROPOSALS.

    HALFPENNY POSTAGE.
    Mr. MACMASTERasked the Postmaster-General how much revenue was received from the halfpenny postage on postcards during the year ending 31st March last?
    The POSTMASTER-GENERAL (Mr. Herbert Samuel): Owing to the disturbance caused by the War, the amount of revenue received from halfpenny postage on postcards during the year ended 31st March last can only be conjectural. It was probably about £1,600,000. In the year 1913–4 it was £1,712,000.
    Mr. HAYDN JONESasked the Postmaster-General whether he will furnish statistics to show the effect of the introduction of the halfpenny rate upon the revenue received from postage?
    Mr. SAMUEL: I am sorry to say that no statistics are available which give a reliable estimate of the effect of reductions of rates apart from other influences operating at the same time.
    Mr. BUTCHERasked the Chancellor of the Exchequer whether his attention has been drawn to the fact that many millions of printed papers, such as notices, summonses to meetings, and insurance cards have to be sent to members of friendly societies every year in connection with their voluntary and insurance sections, that such papers are at present sent through the halfpenny post, and that the charge of a penny rate for these papers would involve a great increase in cost and a heavy burden on the management funds of these societies; and whether, in view of the injury to these and other interests which will be caused by the abolition of the halfpenny post, he will reconsider such proposed abolition?
    The CHANCELLOR of the EXCHEQUER (Mr. McKenna): The answer to the first part of the question is in the affirmative. As regards the last part, I would ask the hon. and learned Member to await this afternoon's Debate.

    EXCESS PROFITS TAX.
    Mr. GEORGE TERRELLasked the Chancellor of the Exchequer what extent the new tax on war profits will increase the price of every article which the War Office purchases from Home manufacturers; and if he has considered that any increase in the Home price will result in an increase in the price which the Government may have to pay for munitions purchased from America and other foreign countries?
    Mr. McKENNA: I do not agree that the Excess Profits Tax will necessarily cause a rise in the price of articles purchased by the War Office. The second part of the question does not, therefore, arise.
    Mr. TERRELLasked the Chancellor of the Exchequer if, in connection with the increased Income and War Profits Taxes, full depreciation will now be allowed for all wearing-out and wasting assets; and, if so, whether he can state the basis upon which it will be calculated?
    Mr. McKENNA: The question of depreciation of wasting assets is eminently one for examination by the Committee to be appointed at the end of the War to inquire into the Income Tax, and at the present time I am not prepared to prejudge the matter.
    Mr. GRANTasked the Chancellor of the Exchequer whether, as agriculture is to be exempted from the operation of the Excess Profits Tax, all produce of the earth, such as rubber, oil, metals, and sugar, are included in the term "agriculture"; and, if not, why this is not to be done?
    Mr. McKENNA: I presume the hon. Member is referring to the case of companies engaged in tropical agriculture. As stated in my reply of the 28th instant to my hon. Friend the Member for Dumbartonshire, companies engaged in carrying on business abroad and liable to British Income Tax will come within the scope of the Excess Profits Tax.
    Mr. LOUGH: Will my right hon. Friend say on what theory he justifies the exemption of agricultural products?
    Mr. SPEAKER: That is a matter for argument.
    Sir C. KINLOCH-COOKEasked the Chancellor of the Exchequer whether, in cases where profits in any business were made but not capable of realisation owing to the outbreak of War, he will make such arrangements as will suspend these profits, which, in fact, are merely book profits, from the operation of the Income Tax; and, if it be necessary to set up any machinery to deal with cases of this kind, will he consider appointing a Committee, under the Treasury control, having power similar to the tribunal which it is contemplated to bring into being in connection with the taxation of war profits?
    Mr. McKENNA: I would refer the hon. Member to the answers given by my predecessor on the 10th and 15th February last, to my hon. Friend the Member for Tynemouth, copies of which I am sending to the hon. Member.
    Mr. BUTCHERasked the Chancellor of the Exchequer whether the Budget proposals, in reference to the taxation of war profits, apply to the controlled establishments whose profits are already taxed under the Munitions of War Act; and, if not, whether he will state why the war profits of other trades and businesses should be taxed at a lower rate than the war profits of such controlled establishments?
    Mr. McKENNA: The year in respect of which a taxable excess may arise in connection with the present Budget will be the ordinary business year of account ending on any date from 1st September, 1914, to 30th June, 1915, irrespective of whether a business has subsequently become a controlled establishment under the Munitions Act. The assumption that the Excess Profits Tax will invariably or necessarily constitute a smaller levy than that taken under the Munitions Act is not correct.
    Mr. HORNERasked the Chancellor of the Exchequer if the profits of most traders and manufacturers in Ireland were considerably lowered by trade disputes and other exceptional circumstances in at least one of the three years on which the assessment of the 1914–5 Income Tax was based, and consequently the effect will be to lower the datum line from which the Excess Profits Tax will be calculated in their cases; and will he take steps to legally empower the independent tribunal which is to fix the datum line to deal equitably with these

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    traders and manufacturers by taking in each case the last three years of normal profits?
    Mr. TICKLERasked the Chancellor of the Exchequer if co-operative societies have recently made heavy clearances of tea, sugar, and other articles subject to increased duty, by reason of which they are making profit out of the public; and if he will introduce a Clause into his Budget whereby the excess war profits of these societies may be taxed and placed upon an equality with other traders, with whom they are competing for the supplies to canteens and His Majesty's Navy?
    Mr. McKENNA: I would ask the hon. Members to await the terms of the Finance Bill.
    Mr. HORNER: Can the right hon. Gentleman give us any assurance that this question will be dealt with in the Finance Bill?
    Mr. McKENNA: Well, Sir, I shall be very glad to hear representations upon any subject connected with the Finance Bill in the course of next week, when, as the hon. Gentleman knows, the House will not be sitting.

    INCOME TAX.
    Lord CLAUD HAMILTONasked the Chancellor of the Exchequer on what principle the large profits made by co-operative societies have not hitherto been assessed for Income Tax; and whether he will take the opportunity of the present Budget to put an end to this exemption?
    Mr. MACMASTERalso inquired whether, under the new Budget, it is proposed to assess for Income Tax co-operative trading societies which compete against ordinary traders?
    Mr. McKENNA: With the permission of the House, I will answer together this question and Question No. 40. In so far as co-operative societies make a profit through their trading operations with non-members, such profit is already assessable to Income Tax in the hands of the recipient. The ordinary transactions of these societies resulting in a return to members of any excess purchase price that may have proved to have been paid by the members is, in fact, a mere discount on purchases and not a profit.
    Mr. MACMASTER: Is there any sound ground why the profits should not be taxed at the source in the case of these co-operative societies?
    Mr. McKENNA: I think my hon. Friend and I are rather at difference as to what is profit. I am not sure I can answer his question precisely in the form he puts it.
    Mr. MACMASTER: Assuming that a co-operative society, or a corporate body, has a certain amount of money to carry to the credit of the profit and loss account, as any other limited corporation may do, is there any ground why the tax should not be assessed with reference to that particular profit, as it is in the case of other incorporated societies?
    Mr. McKENNA: It is a question mainly of facilitating the work of the Inland Revenue authorities. If the result of distributing these profits only means that the same profit will be recovered by repayment, on the ground that the persons to whom the profit belongs are under the limit of assessment, the only result would be to greatly increase the work of the Inland Revenue authorities.
    Mr. DENMAN: May I ask whether co-operative societies will be subject to the Excess Profits Tax?
    Mr. McKENNA: Yes, Sir, the same as anybody else.
    Sir C. KINLOCH-COOKEasked the Chancellor of the Exchequer whether he can see his way to extend the same relief to limited liability companies in respect to Income Tax as it is proposed to extend to individuals in the event of their proving that their actual income from all sources for the year is less by one-fifth than the income on which the tax has been paid?
    Mr. McKENNA: I am unable to adopt the hon. Member's suggestion. The relief referred to is intended to benefit individuals whose total actual income is less than the total income on which they have borne tax. The same considerations do not apply to the case of a company's profits.
    Sir C. KINLOCH-COOKE: If the right hon. Gentleman finds that they do apply, will he be ready to reconsider his decision?
    Mr. McKENNA: If the hon. Member will tell me that they do apply, I will certainly reconsider the matter.
    Mr. BUTCHERasked the Chancellor of the Exchequer whether the number of persons of small means deriving the whole or the greater part of their income from the rent of houses or land is considerable, and that it would be a hardship on such

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    persons to pay the whole of the increased Income Tax for the year assessed in respect of such rent in one instalment; whether the effect of the Budget proposals is to allow such persons to pay the Income Tax so assessed by instalments on 1st January and 1st July; and, if not, whether he will consider the propriety of allowing them to pay by such instalments?
    Mr. McKENNA: I would refer the hon. and learned Member to the reply which I gave on the 28th instant to my hon. Friend the Member for the Bridgeton Division of Glasgow.
    Sir JOHN SPEARasked the Chancellor of the Exchequer if he is aware that, in order for farmers to elect to be assessed for Income Tax on Schedule D rather than on Schedule B, they must give notice to the Surveyor of Taxes of their intention before 1st October; and whether he will therefore, for this year, extend the time for giving such notice to 1st December so as to give time for farmers to consider the matter?
    Mr. McKENNA: Farmers who elect to be assessed under Schedule D in lieu of Schedule B are required to give notice to the Surveyor of Taxes on or before the 5th June in each year. The question of an extended time limit for the current year is under consideration.

    TAXABLE COMMODITIES (INCREASE IN PRICES).
    Mr. SHERWELLasked the Chancellor of the Exchequer what steps he proposes to take to protect consumers of taxable commodities from disproportionate and extortionate increases in prices as the result of the proposed new taxes?
    Mr. McKENNA: I am not aware that any such increases of price have as yet taken place, but I shall be glad to receive any information which my hon. Friend may have to this effect.
    Mr. SHERWELL: Is not the right hon. Gentleman aware that practically every café and restaurant in London has increased the price of coffee and tea per cup? [HON. MEMBERS: "So has the House of Commons."]
    Mr. McKENNA: I believe that is rather a different question from the one my hon. Friend has put upon the Paper. Some additional charge has to be made and, if anything, it must be a penny. [HON. MEMBERS: "No, a halfpenny."]

    SOLICITORS' CERTIFICATES.
    Mr. WATTasked the Chancellor of the Exchequer whether his attention has been called to the blow which has been dealt by the War to the solicitors' branch of the legal profession; whether he is aware that £9 per annum is charged by his Department to each member of that branch and not to the other, the barristers' or advocates' branch; and whether, in view of the fact that many of the solicitors are not earning much more than office expenses, he can see his way to remit or modify the annual charge at least to those who can show they are earning only a small sum yearly?
    Mr. McKENNA: I am afraid I see no sufficient reason for waiving the duty payable by practising solicitors on their annual certificates.

    IMPORT DUTIES.
    Sir ALFRED MONDasked the Chancellor of the Exchequer whether importers of goods coming under the new tariff schedule will be allowed a rebate of the duties on re-exporting them; and, if so, what the amount of the rebate will be?
    Mr. McKENNA: Drawbacks will be allowed in suitable cases, provided that the goods can be identified on exportation. The matter will be dealt with in the Finance Bill.
    Sir A. MONDasked the Chancellor of the Exchequer whether he intends to provide bonded warehouse facilities for dutiable goods under the new tariff schedule; and, if so, at what ports the bonded warehouses will be established?
    Mr. McKENNA: Bonded accommodation will be allowed in suitable cases. The question is under consideration.
    Sir A. MONDasked the Chancellor of the Exchequer whether the proposed new scale of duties is to apply to goods imported from our Dominions; and, if so, whether he will establish a preferential tariff for such goods?
    Mr. McKENNA: The answer to the first part of the question is in the affirmative, and to the second in the negative.
    Sir A. MONDasked the Chancellor of the Exchequer whether the importers of goods under the new tariff schedule

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    will be allowed to appeal against classification and valuation; and, if so, what tribunals he proposes to set up to hear such appeals?
    Mr. McKENNA: I am considering the question of making provision for appeal on questions of value, and propose to deal with the matter in the Finance Bill, which I hope shortly to introduce.
    Sir A. MONDasked the Chancellor of the Exchequer whether he can state what he estimates the cost of collection of the proposed new tariff duties will be in the course of the remainder of the financial year?
    Mr. McKENNA: I regret that I am not in a position at the present time to give the desired information.

    TARIFF SCHEDULE.
    Mr. LOUGHasked the Chancellor of the Exchequer whether the Government have considered the question of the proposed tariff on imported articles in view of the discussion in the House last night, and can see their way to withdraw the proposal; and, if not, whether he can so amend the Resolution with regard to motor cars as to make it correspond with the great alterations submitted to the House for acceptance without discussion as arranged?
    Mr. McKENNA: The Resolution does not require amendment, as the changes proposed do not increase but diminish the charge upon the subject.
    Mr. LOUGH: Are the Government going on with this?
    Mr. McKENNA: My right hon. Friend must address that question to the Prime Minister.

    NATIONAL HEALTH INSURANCE (POSTAL CHARGES).
    Mr. PRINGLEasked the Comptroller of the Household, as representing the National Health Insurance Commission, whether, in view of the proposed increase of postal charges, the allowance to approved societies for administration expenses will be increased?
    The COMPTROLLER of the HOUSEHOLD (Mr. Charles Roberts): The change referred to in the first part of the question can only take effect after the passage of the Finance Bill, and any statement in
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    regard to the second part would, therefore, be premature at this stage.
    Mr. PRINGLE: Has not the hon. Gentleman considered the probable effect of this proposed change?
    Mr. C. ROBERTS: We have them in mind.
    Mr. BOOTH: May I ask my hon. Friend whether he does not realise that these societies are not working for profit, and that if this additional charge is put on them it must reduce the sickness benefit? Will he not feel it his duty to make strong representations to the Chancellor of the Exchequer on behalf of the approved societies, who look to him for protection?
    Mr. C. ROBERTS: I am quite certain the Chancellor of the Exchequer is weighing that consideration.
    Mr. TYSON WILSON: Is the hon Gentleman aware that the charge for sending insurance cards, if this proposed alteration is agreed to, will be increased by over 300 per cent.?
    Mr. PRINGLE: And will the hon. Gentleman, on behalf of the Insurance Commissioners, make representations to the Chancellor of the Exchequer as to the probable effect of the proposals?
    Mr. C. ROBERTS: I am pretty sure these representations are reaching the Chancellor of the Exchequer at the present time.
    Mr. BOOTH: But are they reaching him from my hon. Friend?
    Mr. C. ROBERTS: I am aware that the Chancellor of the Exchequer is receiving these representations in very considerable numbers.

    SCHEDULE B (NEW ASSESSMENT) (IRELAND).
    Mr. CLANCYasked the Chancellor of the Exchequer whether he is now prepared to state how the new assessment under Schedule B will affect Ireland?
    Mr. McKENNA: In cases where there is a judicial rent or a purchase annuity lower than the Poor Law valuation, the judicial rent or the purchase annuity will be taken as the basis of assessment.
    Mr. CLANCY: I presume this will necessitate an alteration in the Resolution?
    Mr. McKENNA: I will consider that point.

    NORTHUMBERLAND COAL MINES (SUPPLY OF TIMBER).
    Mr. FENWICKasked the Home Secretary whether he is aware that three or four pits in Northumberland have been laid idle for want of a proper supply of timber to secure the safe working of such mines; if so, can he state whether the failure to provide the necessary timber was due to any neglect on the part of the managers at the collieries or some other cause; and whether any steps are being taken to remedy this state of things and to prevent any further reduction of the output of coal?
    The PARLIAMENTARY SECRETARY to the HOME DEPARTMENT (Mr. Brace): I understand that at the pits of one colliery company last week the men stayed away for one or two days in consequence of the shortage of timber. I am not yet in possession of the facts as to the cause of the shortage, but have called for a full report. The question of the supply of timber generally is being carefully watched by the inspectors and the Home Office, and I am in communication with the Board of Trade on the subject.
    Mr. FENWICK: Having regard to the gravity of the situation, will the Home Office see that this inquiry is made without undue delay?
    Mr. BRACE: Yes, Sir, most certainly.

    MOTOR CABS (WOMEN DRIVERS).
    Mr AGG-GARDNERasked the Home Secretary whether applications by women for licences to drive motor cabs plying for hire have been refused by the Metropolitan Police; and, if so, on what grounds the refusal has been based?
    The SECRETARY of STATE for the HOME DEPARTMENT (Sir John Simon): I am informed by the Commissioners that a few such applications have been received, but there is no shortage of licensed drivers. Some months ago the secretaries of the National and Provincial Union of Vehicle Workers who were requested by the War Office to secure the enlistment of as many public carriage drivers as possible for transport work at the front, informed the Commissioner of Police that they could not carry out their task satisfactorily unless they were authorised by him to inform the drivers that there Would,
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    as far as possible, be no alteration in licensing conditions during the absence of the men at the front, so that on return they might not find themselves displaced. The Commissioner informed the secretaries that so far as he was concerned they could give the men this assurance.

    PRESS CENSORSHIP.
    Mr. WILLIAM YOUNGasked the Home Secretary whether the principle laid down for the conduct of the censorship by his predecessor, namely, that no information should be withheld from the public which would not be of service to the enemy, has been strictly adhered to?
    Sir J. SIMON: The principle stated by me in this House on 30th June and 22nd September—that the object of the censorship is to prevent the publication of information that might be useful to the enemy—is strongly maintained; but it has to be carried out to some extent by means of general rules. It would, for instance, be impossible for the Bureau to go through all the statements that might be submitted to it on the subject of the Zeppelin raids and eliminate all details that might be directly or indirectly useful to the enemy, and the Press have, therefore, been asked not to publish any information on this subject except the official communications.
    Mr. W. YOUNGasked the Home Secretary whether, on the Saturday following the recent air raid on the London district, a descriptive account of the equanimity with which the populace regarded the bombardment appeared in the Paris "Figaro"; whether, after the issue of the paper containing it had reached this country and, therefore, in all probability Germany, at least one news agency in London was refused permission to circulate it; whether this article contained any more information than was conveyed in the descriptive article issued to the British Press nine or ten days after the raid; and if he can say why such matter was withheld from the public for such a period?
    Sir J. SIMON: The reply to the first part of the question is in the affirmative. The publication in the Paris "Figaro" was refused reproduction by a British press agency because it went beyond the official account and gave details the publication of which had been refused to our own Press. The descriptive article issued

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    to the British Press at a later date was drawn up with the approval of the Admiralty and myself, and it may be possible to issue, after a lapse of time, particulars which it would be inadvisable to publish immediately after the event.

  WAR LOAN.

    PARISH COUNCIL INTESTMENTS BY PARISH (SCOTLAND).
    Mr. CURRIEasked the Chancellor of the Exchequer whether his attention had been drawn to the fact that the parish council of a parish in Scotland purchased through the Post Office a small holding of the New War Loan, and had no difficulty in obtaining a certificate registered in the name of the chairman and clerk for the time being, but that when the parish minister of the adjoining parish endeavoured to invest a small sum belonging to a parish trust in the name of the parish minister for the time being, the Bank of England declined to issue a certificate so registered; whether there is any reason for the Bank of England declining to do as the Post Office does; and, if so, what the reason is; and whether trustees in Scotland are to understand that they can freely purchase War Loan through the Post Office in Scotland and have the trust registered, as is the practice in Scotland.
    Mr. McKENNA: A parish council in Scotland, as in England, is a body corporate and accordingly stock may be inscribed in the name of a parish council as in that of any other corporation. The Bank of England cannot register stock in the name of "the parish minister for the time being" for the reason that a parish minister is not in Scotland a corporation sole and that the Bank, following the practice which prevails universally in England and Ireland, takes no cognisance of trusts and therefore cannot accept an account in a form implying notice of a trust. In the case of a trust the Post Office in inscribing War Stock follows the practice of the Bank of England, and registers the stock in the names of trustees without recognising the trust.

    SCOTTISH ESTATES (CONFIRMATIONS).
    Mr. CURRIEasked the Chancellor of the Exchequer whether he can indicate when legislation will be introduced dealing with the formality of resealing in the
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    English Probate Court confirmations of Scottish estates, including Consols, War Loans, etc., and with other matters mentioned in a recent memorial submitted to him by the Faculty of Advocates and other bodies representing legal, financial, and commercial opinion in Scotland?
    Mr. McKENNA: I hope to introduce legislation dealing with various matters affecting War Loan, etc., shortly.

    FIVE SHILLING SCRIP VOUCHEES.
    Sir EDWIN CORNWALLasked the Chancellor of the Exchequer if he can give the exact amount subscribed to date by the purchase of the five shilling War Stock; whether the demand for this stock still continues; and for how long these facilities for popular investment will remain available?
    Mr. McKENNA: The sales of 5s. scrip vouchers up to the end of August amounted to approximately £244,000. The returns for September by which the progress of demand can be gauged are not yet available. I am not yet in a position to make a statement as to the last part of the question.

    AGRICULTURAL LAND (ESTATE DUTY).
    Mr. ELLIS DAVIESasked the Chancellor of the Exchequer whether the increase, equal to three years' purchase, in the value of agricultural land for Estate Duty purposes between 1908 and 1913 disclosed in the Report of the Commissioners of Inland Revenue, 1914, is attributable to a corresponding increase in the market price of land or to greater accuracy in the valuations made for the Department?
    Mr. McKENNA: The increase in question is attributable partly to greater thoroughness in valuation, but chiefly to the removal by Section 60 of the Finance (1909–10) Act, 1910, of the artificial maximum placed upon the value of agricultural property for Estate Duty purposes by Section 7 (5) of the Finance Act, 1894.
    Mr. DAVIES: Are we to understand that in 1908 agricultural land was under-valued for the purpose of the Estate Duty?
    Mr. McKENNA: That implies it was under-valued in accordance with the law. It was correctly valued in accordance with the law.

    ARMY RECRUITING.
    Mr. LLEWELYN WILLIAMSasked the Prime Minister whether, having regard to the recruiting rally conducted by the War Office on Saturday, 2nd October, the Government will now state what number of men are still required for the Army and by what date they are required?
    The PRIME MINISTER (Mr. Asquith): I cannot anticipate the full statement which I shall make in due course.

    DAMAGE BY AIR RAIDS.
    Mr. SHIRLEY BENNasked the Prime Minister if he will consider the advisability of introducing legislation to enable the Public Trustee to pay out of moneys belonging to German citizens all damages done as a result of air raids to private property of British citizens situated in unfortified places?
    The PRIME MINISTER: The Statute under which the Public Trustee holds German assets declares that the object is to preserve them with a view to arrangements to be made at the conclusion of peace, and the Government is not prepared to vary this announcement.
    Mr. BENN: May I ask if the right hon. Gentleman has considered the personnel of some of the companies whose money is in the hands of the Public Trustee, and the effect which the suggestion might have?
    The PRIME MINISTER: I am afraid I know nothing about that. Perhaps the hon. Gentleman will put a question down.

    COMPULSORY SERVICE.
    Mr. COWANasked the Prime Minister whether his attention has been called to a resolution passed by the executive of the Scottish Advisory Council of the National Labour Party declaring that that body views with grave apprehension an agitation now being carried on in favour of militarism under the name of National Service, and calls upon organised labour to put an end to it by preparing to declare a general strike in the event of the Government giving way to the present agitation, which is declared by the council to be unscrupulous and unnecessary; and what steps, if any, he proposes to take in view of the contingency contemplated in the resolution referred to?
    The PRIME MINISTER: I have no reason to apprehend that the contingency contemplated is likely to arise.

    WAR LOANS.
    Sir E. CORNWALLasked the Chancellor of the Exchequer when, as fore-shadowed in his Budget, he contemplates further loan operations in this country?
    Mr. McKENNA: I am unable at present to add to the statement which I made on the 21st instant.

    SOLDIERS' LEAVE.
    Lieut.-Commander WEDGWOODasked the Under-Secretary of State for War whether anything can be done to secure short leave in England for those men at the front particularly married men, who have been continuously with the Army in France for six months or more?
    The UNDER-SECRETARY of STATE for WAR (Mr. Tennant): I would refer my hon. and gallant Friend to the answer I gave to the hon. Member for the Houghton-le-Spring Division on the 28th September and to the earlier answer I gave on the same subject on the 16th September.

    HOME BATTALIONS (TRANSFER OF OFFICERS AND MEN).
    Lieut.-Commander WEDGWOODasked the Under-Secretary of State for War whether any steps can be taken to draft into the New Armies still in this country officers and men who have been wounded and who may desire to transfer either in their own rank or in a higher grade according to length of service at the front?
    Mr. TENNANT: This matter must, of course, be regulated primarily by the necessities of the Service rather than according to the desires for transfer of individuals. Officers and men who have been wounded and have recovered are normally sent out again to their unit as soon as they are fit, but what my hon. and gallant Friend suggests is also done in many cases where it is considered battalions of the New Armies will benefit from an infusion of soldiers who have already seen service at the front.
    Lieut.-Commander WEDGWOOD: Is it not always the case that battalions of the New Army will benefit from the infusion of soldiers from the front?
    Mr. TENNANT: I should think, as a general proposition, that is true. It is done wherever it is possible.

    ROYAL FUSILIERS (20TH BATTALION).
    Lord ALEXANDER THYNNEasked the Under-Secretary of State for War whether it is contemplated using the 20th Battalion of the Royal Fusiliers as an Officers' Training Corps?
    Mr. TENNANT: No, Sir; what the Noble Lord mentions is not contemplated, and, if he will allow me, I will explain to him privately the reasons.

    YEOMANRY SQUADRONS (DRAFTS).
    Lord A. THYNNEasked the Under-Secretary of State for War whether no drafts to fill up wastage have yet reached Yeomanry squadrons at the front which have been on active service since the spring; and whether he can undertake that such drafts, which have been repeatedly applied for and are urgently needed, will be sent out at an early date?
    Mr. TENNANT: I have looked carefully into this, and the information at my disposal does not support the statement made by the Noble Lord.
    Lord A. THYNNE: Would the right hon. Gentleman look into the case of the Yeomanry regiments who are acting as additional Cavalry in Flanders at the present moment?
    Mr. TENNANT: The demands which have been made have almost invariably been met. The numbers it is not desirable to state in the House, but I will inform the Noble Lord of them privately. They are very small.

    SCOTTISH TERRITORIAL REGIMENTS.
    Mr. DUNDAS WHITEasked the Under-Secretary of State for War whether it has been proposed to send the third battalions of some Scottish Territorial regiments to England for the winter; whether the authorities recognise that the transference of these third battalions
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    from their districts will materially injure their chances of recruiting; and whether, in view of that and of the strong feeling against the proposal in those parts of Scotland which would be affected by it, he can give an assurance that no such transference will take place?
    Mr. TENNANT: Yes, Sir, it is under consideration to locate certain third line Scottish Territorial Force units in England during the winter, and in this connection the considerations mentioned in the second part of the question have been carefully weighed. There are, however, other important considerations. To retain these troops in Scotland where there is no available accommodation would involve expense for billeting and waste of money owing to existing hutments in England remaining empty. Moreover, both training and discipline suffer appreciably when men are in billets. I think, when the importance of these considerations are realised, we may look with confidence to local effort and enterprise to prevent any such falling off in the number of recruits as my hon. Friend fears may result.

    DISCHARGED AND REJECTED SOLDIERS (BADGES).
    Sir CHARLES HENRYasked the Under-Secretary of State for War, if soldiers who since the beginning of the War have been or may be discharged from the Army on account of results of wounds or through having contracted illnesses may be allotted a badge to indicate that they have been discharged after active service abroad?
    Mr. MONTAGUE BARLOWasked the Under-Secretary of State for War whether, in view of the number of men who have come forward to serve the country but been rejected as medically unfit, he will arrange for a badge which can be worn by those who have been so rejected and who are anxious to show that they have done their duty and shown their willingness to serve?
    Mr. TENNANT: The introduction of a badge for both the categories of men referred to was fully considered, but it was not found practicable to proceed with the matter. The hon. Gentleman's own experience will suggest to them some of the difficulties and possible sources of abuse in connection with the wearing of badges. I may, however, say in regard

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    to the case of the men who have been rejected as medically unfit that each actually has in his possession a paper on which an entry is made saying that he has not been accepted and he can produce this paper in any circumstances or an any occasion where he may think that course desirable.

    HAY PURCHASES.
    Mr. PATRICK WHITEasked the Under-Secretary of State for War whether a letter, dated 12th instant, was issued from 64, Whitehall Court, over the name of H. Godfrey Morgan, colonel, stating that no requisitioning or commandeering of hay of any kind has yet been resorted to in Ireland, and that all purchases had been optional sales; if he is aware that numerous farmers complain that the hay which they required for their own use has been taken at a price arbitrarily fixed and considerably below its market value; and who is responsible for this action?
    The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Forster): I am informed that no hay has been acquired from a farmer, so far as can be ascertained, which he needed for his own use, either arbitrarily or otherwise. If, however, the hon. Member will furnish me with details of any specific case, I will have inquiry made.
    Mr. WHITEasked the Under-Secretary of State for War, what price has been paid in England for hay purchased by the Government; and whether any has been requisitioned or taken at a price not acceptable to the vendor?
    Mr. FORSTER: Hay is being bought at varying prices, after quality, condition and freight have been taken into account. The prices are based upon those fixed by the various Farmers' County Committees after approval by the Forage Committee. Some hay has been requisitioned, but in the great majority of cases the price has been acceptable to the vendor, and in a small percentage of cases only has he exercised his right of assessment by a County Court judge.
    Mr. WHITE: Will the hon. Gentleman tell me the minimum and the maximum prices?
    Mr FORSTER: No, Sir, I am afraid I cannot.
    Mr. WHITE: Will he find out?
    Mr. FORSTER: Yes, Sir, certainly.
    Mr. WHITEasked the Under-Secretary of State for War by whose authority a small quantity of hay was taken for Government purposes from John Henry, of Brews Hill, Navan, all of which he required for his own use, and at a price considerably below its market value; if he will state who is responsible for the fixing of the price; and whether he is aware of the dissatisfaction felt through the whole of county Meath at the conduct of the agent of the Government?
    Mr. FORSTER: I am informed that no hay has been taken from the gentleman named by the hon. Member. I understand that there is some dissatisfaction in the county of Meath with the Government scheme of purchase, but it appears to be due to interested parties who, not unnaturally object to direct purchase from the farmers.
    Mr. WHITE: Is the hon. Gentleman aware that it is the farmers themselves who complain and not interested parties? I will produce evidence to that effect.
    Mr. FORSTER: No, Sir, I have not had any intimation of complaints from the farmers themselves.
    Mr. WHITE: I will show him the correspondence.

    COLONIAL FORCES (RATES OF PAY).
    Mr. OUTHWAITEasked the Under-Secretary of State for War whether he can state the rates of pay for the non-commissioned officers and privates of the Forces raised for the War by Australia, New Zealand, and Canada?
    Mr. FORSTER: I regret that I am not in possession of this information.
    Mr. OUTHWAITE: Will the hon. Gentleman secure that information, which has been asked for in the course of the last twelve months?
    Sir A. MARKHAM: Is it not a fact that the whole of the pay and expenses of the Canadians, from the time they left Canada, are paid for by the Canadian Government?
    Mr. FORSTER: That is true of some of the Colonials.

    GALLIPOLI (HOSPITAL SHIPS).
    Sir HENRY CRAIKasked the Under-Secretary of State for War whether the arrangements for dealing with the sick and wounded at Gallipoli are entirely under the charge of the authorities of the Royal Army Medical Corps; and whether they have an adequate supply of properly equipped hospital ships for the purpose?
    Mr. TENNANT: The medical arrangements on land are entirely in the hands of the Royal Army Medical Corps. The transport of the sick and wounded, of course, involves the co-operation of the naval authorities, who have the control over the working of the ships, which is exercised through a naval hospital transport officer. There are fifty ships regularly engaged on this service, which is hoped will prove an adequate number, but as an emergency measure other transports can be utilised in addition.
    Sir H. CRAIK: Are these fifty ships ordinary transports?
    Mr. TENNANT: I think I am correct in saying that forty-nine of them are hospital ships.
    Sir C. KINLOCH-COOKE: Was there an adequate supply of properly equipped hospital ships for the landing of troops at Suvla Bay?
    Mr. TENNANT: I must ask for notice of that question.
    Mr. MACMASTER: Is it a fact that the steamship "Arragon" conveyed 1,200 men from Gallipoli to Alexandria, a journey of five days, with only two surgeons on board?
    Mr. TENNANT: I really should like notice of a question like that.

    CLERKS AND WRITERS, DEVONPORT (WAR BONUS).
    Sir C. KINLOCH-COOKEasked the Financial Secretary to the War Office whether he is aware that the clerks and writers employed under the War Department at Devonport, namely, at His Majesty's Gunwharf, Royal Engineer offices, Royal Artillery offices, and the headquarter offices, Mount Wise, have not yet received the war bonus; and whether, in view of the fact that the clerks and writers at Woolwich are already in receipt of a war bonus amounting, it is
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    said, to 4s. a week, and that foremen and assistant foremen, tradesmen, and skilled labourers employed under the War Office have received a war bonus since 28th March, he can see his way to extend the same privileges to the clerks and writers employed under the War Department at Devenport?
    Mr. FORSTER: The question of additional pay for clerks and writers in War Department employ is receiving consideration. I am not aware that a war bonus has already been granted to those at Woolwich.

    COAL PRICES.
    Mr. ROWLANDSasked the President of the Board of Trade whether he has received any replies from the local authorities in answer to his circular calling their attention to the importance of making arrangements with coal merchants to secure a supply of coal at a reasonable price to small consumers; and, if so, can he say how many replies he has received, what is the nature of the replies, and from what local authorities?
    Captain PRETYMAN: The Board of Trade have so far only received definite replies from seven of the 2,000 authorities to whom the circular was sent. Four of these reported that they had made arrangements with the local coal merchants. I shall be happy to communicate with my hon. Friend at a later date when more complete information is available.
    Mr. ROWLANDS: Will the hon. and gallant Gentleman take some action to hurry up these local authorities so that the recommendations of the Departmental Committee may be put in force?

    WAR OFFICE CERTIFICATES OF DEATH.
    Mr. CURRIEasked the President of the Board of Trade whether his attention has been drawn to the fact that companies under the supervision of his Department are freely accepting as conclusive evidence of death the certificate of death issued by the War Office in respect of those killed in action, although the Bank of England declines to do so; whether such certificates are regarded by the Board of Trade as final or provisional intimation and certificate of death; whether they merely certify

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    that death appears from the records to have taken place; and whether he can take steps to render limited companies and trustees secure in accepting a certificate so worded as equivalent to a Somerset House or local registrar's certificate in ordinary form?
    Captain PRETYMAN: I understand from the information which the hon. Member has been good enough to lay before me that, in practice, companies are accepting as evidence of death the certificate issued by the War Office in respect of those killed in action, while the Bank of England requires the production of a grant of probate or of letters of administration. As at present advised, I doubt the expediency of introducing special legislation to give additional validity to the War Office certificates.
    Mr. CURRIE: Will the hon. and gallant Gentleman say a little more definitely, if possible, whether the ordinary limited companies are really safe in accepting these certificates, or would it be wiser not to do so at present?
    Captain PRETYMAN: It is rather early at present to give a definite answer to that question. I prefer not to answer it. I cannot take the responsibility of doing so at present.

    PACIFIC STEAM NAVIGATION COMPANY (GERMAN AGENTS).
    Mr. MONTAGUE BARLOWasked the President of the Board of Trade whether the agents for the Pacific Steam Navigation Company at Punta Arenas, in the Straits of Magellan, South America, are a German firm, Stubenrauch and Company; whether Stubenrauch is also the German Consul; whether, in his capacity as agent to the Pacific Steam Navigation Company, he has access to information as to the movement of ships which it may be desirable should not be communicated to the enemy; and whether at other ports in South America the agents of the Pacific Steam Navigation Company are also Germans?
    Captain PRETYMAN: I am informed by the company in question that their agent at Punta Arenas is an Englishman, Mr. Ernest Hobbs by name. Mr. Hobbs, the
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    company state, was formerly a partner of Messrs. Stubenrauch and Company but, since the War, has severed all connection with that firm. The company further state that they have no agents of German nationality at any port on the West Coast of South America at present served by their steamers.

    STRIKE AT SOUTHAMPTON.
    Mr. W. THORNEasked the President of the Board of Trade whether he is aware that about 1,500 boiler makers are out on strike at Thornycroft's Shipyard, Woolston, Southampton; and if he is aware that in consequence some hundreds of labourers are affected and thrown out of work; and that the firm in question have refused to give the men temporary certificates so as to enable them to find work elsewhere in the docks and other places at Southampton; and if he can see his way to authorise temporary clearance certificates to be given to the labourers?
    Dr. ADDISON: My right hon. Friend is aware of this strike, and proceedings under the Munitions Act are being taken by his directions against the workmen concerned. He has every sympathy with the labourers who, through no fault of their own, are thrown out of work temporarily by the unfortunate action of the boiler makers. He has, however, no power to grant them certificates as suggested. If, in their opinion, such certificates are unreasonably withheld by the employer their course is to apply to the local Munitions Tribunal. I hope, however, that the proceedings now being taken will result in a speedy resumption of work.
    Sir F. BANBURY: Is the union paying these men strike pay?

    Old Age Pensions (Ireland).
    Mr. FFRENCHasked the Chief Secretary for Ireland if he is aware that the Bridgetown pension committee granted an old age pension to Elizabeth Walsh, and that their decision was set aside by the Irish Local Government Board, notwithstanding the fact that the secretary of the said committee testified that the applicant was some years his senior and that he him-

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    self only wanted a few months of seventy years of age; and will he order an inquiry into the matter?
    The CHIEF SECRETARY for IRELAND (Mr. Birrell): The facts are as stated in the question. The Local Government Board did not, however, consider that the secretary's opinion of the claimant's age could be taken as sufficiently conclusive in the total absence of any other evidence. If the claimant has fresh evidence to submit it is open to her to make a further application.

    Quarter Sessions (Philipstown).
    Mr. GRAHAMasked whether any decision has as yet been come to in respect of the holding of the quarter sessions in Philipstown; and whether he is aware that the discontinuance of the quarter sessions at Philipstown imposes expense and inconvenience to a large section of the people of North King's County, who are now obliged, in many instances, to travel twenty-five miles by car to Tullamore and stay over-night from their homes for the transaction of trivial legal business?
    Mr. BIRRELL: The petitions of certain inhabitants of Edenderry and Philipstown praying that the Order in Council abolishing quarter sessions at the latter town should be rescinded were considered by a Committee of the Privy Council in May last, and the Committee's recommendation that the application should not be complied with was confirmed by the Council on the 30th June. In arriving at their decision, which was duly communicated to the petitioners, the Council had regard to all relevant considerations, including those set forth in the question.

    Veterinary Dispensaries (Wexford).
    Mr. FFRENCHasked the Vice-President of the Department of Agriculture (Ireland) whether he is aware that the Wexford Committee of Agriculture passed a resolution requesting the Department to promote legislation with a view to having a scheme of veterinary dispensaries legally included in county schemes; and will he say what he proposes to do in the matter?
    Mr. BIRRELL: The Department have received copy of a resolution passed by the County Wexford Committee of Agriculture asking that legislation be promoted with a view to the establishment of veterinary dispensaries. In view of the state of public business, it is not possible at present to entertain this suggestion.

    Bank of England (Scottish Transactions).
    Mr. CURRIEasked the Chancellor of the Exchequer (1) whether the expected communication from the Society of Solicitors before the Supreme Courts in Scotland as to the position of Mr. Horatius Stuart, Edinburgh, has now been received; if so, whether it is regarded as satisfactory; whether, failing this, any understanding has been arrived at with the society as to a definite date by which the communication will be forthcoming; whether the Bank of England, in connection with its employment by the Government in the issue of loans, keeps a register of the names of brokers, bankers, firms, etc., suitable and qualified for inclusion therein; and whether Mr. Stuart's name has for some time appeared and still appears on such list; and (2) whether he is aware that the practice of the Bank of England in connection with the payment of dividends on Consols due to persons in Scotland disabled by bodily weakness from signing their names is to demand delivery of an illegally executed document and, failing delivery of such document, to retain the money in its own coffers in definitely; whether the Bank of England accounts to the Treasury for interest in respect of money so retained or simply keeps this interest, or the equivalent use of the money, for its private advantage; whether he can take steps to render secure notaries in Scotland who are parties to the execution of documents in Scotland under pressure from the Government's English bankers; whether, in view of the desirability of rendering investment in the public stocks of the United Kingdom as simple and convenient for Scottish investors as possible, he will have this practice brought to an end; whether the chief accountant of the Bank of England has any authority to give advice and instructions to Scottish notaries concerning the execution of documents in Scotland and, if so, whence it is derived; if so, whether he has at his disposal the guidance of a solicitor in Scotland and, if so, of what solicitor; and whether this solicitor is responsible for the action of the Bank of England in the case under notice?
    Mr. McKENNA: I am making inquiries with regard to the points raised, and will communicate further with the hon. Member on receipt of the necessary information.

ORDERS OF THE DAY
  BUSINESS OF THE HOUSE.

    FINANCE BILL.
    Mr. CHAPLIN: May I ask the Prime Minister what business he proposes to take when the House resumes after the Adjournment, on the 12th of October, and up to the end of that week?
    The PRIME MINISTER: On the 12th October we hope to take the Second Reading of the Finance Bill. On that day I will announce the business for the other days.
    Mr. KING: Can the Prime Minister say whether an early opportunity will be given to this House to discuss the Loan which is now being floated in America? Has he observed that in the official statements about that Loan it is said that this will require Parliamentary sanction? In what form will that Parliamentary sanction be asked for?
    Mr. LOUGH: In regard to the announcement about business, can the Prime Minister say when the Finance Bill will be circulated? Having regard to the important proposals, will he give us a little more time to consider the Bill before Second Reading?
    The PRIME MINISTER: I will consider the matter raised by the hon. Member for North Somerset. In regard to the Finance Bill, it will be circulated at the earliest moment; some time in the course of next week.
    Mr. LOUGH: May I press my right hon. Friend to consider the tremendous importance of the proposals, and will he give us a little longer time before the Second Reading? It is evident the Government are not clear when the Bill will be circulated.
    Mr. McKENNA: Next week I shall be very glad if hon. Members who wish to bring particular cases to the notice of the Treasury would communicate with me either in person, or by letter. I propose to devote the whole week to seeing different interests and parties concerned in the Budget. I want, therefore, to delay the final printing of the Bill as long as possible. I am sure in the long run that we shall gain advantage by this arrangement.
    Mr. LOUGH: May I say that I desire to facilitate my right hon. Friend entirely in keeping back the Bill, but I do ask him to give us a little time to consider this Bill, which is the most tremendous Finance Bill we have ever seen, before the Second Reading is taken. I would ask the Prime Minister, who has great experience in these matters, whether that is not a reasonable suggestion?
    The PRIME MINISTER: I hope the Bill will be circulated in plenty of time. If not we shall certainly extend the time.
    Mr. BOOTH: May I ask the Chancellor of the Exchequer whether his invitation to various people to see him, includes the approved insurance societies, who wish to make representations about the postal matters as well as those in his own province.
    Mr. McKENNA: Yes, most certainly.
    Mr. KING: Is not the Prime Minister aware that we often have Bills sent out with a first and second edition, the second edition being marked to be substituted for the Bill previously circulated. Might not that suggestion be adopted in connection with the Finance Bill?
    The PRIME MINISTER: We do not want to encourage that sort of thing.
    Mr. BRYCE: If the Chancellor of the Exchequer is going to take the whole of next week for meeting people and talking about the business of the Finance Bill, how will it be possible to have the Bill in the hands of the House before Tuesday, the 12th October, which day is fixed for the Second Reading.
    Mr. McKENNA: The major part of the Bill is ready now. It is only the individual controversial points of the Bill, about which we wish to have as much time as possible, and to hear as many arguments as possible, which are not ready. It would be quite possible to have the Bill finally in print sometime in the course of next week. I think probably towards the end of next, week.
    Ordered, That the proceedings on Government Business, if under discussion at eleven o'clock this night, be not interrupted under the Standing Order (Sittings of the House) and may be entered upon at any hour, though opposed.—[The Prime Minister.]

  WAYS AND MEANS [21ST SEPTEMBER].
    BUDGET RESOLUTIONS.
    Order read for resuming adjourned Debate on Question proposed [29th September], "That this House doth agree with the Committee in the Sixteenth Resolution"—
    BUDGET RESOLUTIONS.

      MOTOR CARS, ETC.
      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 care, motor bicycles, or motor tricycles."

      Question again proposed. Debate resumed.
      The PRIME MINISTER: I understand that a compact was come to last night between my right hon. Friend the Chancellor of the Exchequer and those who were criticising this particular Resolution, that, if the Adjournment of the Debate was agreed to, a decision on the Resolution would be come to to-day without further discussion. If, therefore, I interpose by leave of the House, it is not with any intention to violate that compact, but because it will be for the convenience of the House, before they decide upon this particular question and some other questions which are to follow, if I state—and I do so without, I hope, trespassing upon the time of the House—the view of the Government. I gather from what I have read and heard that there was a good deal last evening of what, in another sphere, is sometimes called "liveliness"—liveliness of spirit, animation of interest. I am very anxious, if I may say so, to appeal to the House in all quarters to realise precisely the situation in which, in regard to this matter, we stand.
      The Budget which was introduced by my right hon. Friend represents the unanimous judgment of a united Cabinet, and I think it is only fair—and I say this with-
      1030
      out directing my remarks to any quarter of the House in particular—that in its consideration it should be regarded by the House of Commons as a whole. I strongly deprecate any attempt to upset the balance, whether upon the one side or upon the other. I do not know whether I am under suspicion—[HON. MEMBERS: "No, no!"]—in regard to what I may call my Free Trade record. St. Paul said, in a moment of perhaps excessive modesty, that he was the least of all the Apostles. Not quite in the same breath, but in another moment of perhaps undue exaltation, he said and boasted that he was in labours more abundant and in journeyings more frequent than any of the others. Perhaps I may say of myself—though I do not presume to cite the analogy as in any degree parallel, or perhaps even becoming—that both as regards labours and journeyings I have perhaps done as much—as many of my Friends here would think with pernicious results—in the cause of Free Trade. If I thought that any proposal in this Budget, or in any other measure put forward by the Government of which I have the honour to be the head, was directed, remotely or immediately, against the cause of Free Trade, I should be the last person to subscribe to it, or to commend it to the House of Commons. I do not say, in regard to that, "Let the dead bury their dead," because this controversy between Free Trade and the principles opposed to Free Trade is a perennial one; but I do say, let these controversies, which are in a state of suspended animation, continue during the War in a state of suspense. And the practical moral in regard to this particular matter which I draw from these considerations is this: Each of these taxes has been considered, and proposed after weighing its individual merits. The notion, which I observe prevails in some quarters, that these taxes—of which the imported Motor Tax is the first in point of order and perhaps in point of importance—were suggested, or initiated, in the Government by those who have recently joined us, among whom, of course, are some of the most eminent apostles and propagandists of Tariff Reform, is entirely without foundation. I am not a Tariff Reformer. I do not think that I ever shall be. But if ever I were, I certainly should not have begun the construction of what used to be called a "scientific tariff" by selecting these particular duties, or by imposing this particular percentage of levy. I cannot imagine a tariff started under more un-

      1031
      favourable conditions, and less likely to conciliate popular support, or to attain the purpose which Tariff Reform has in view. I wish the House clearly to understand that, be these taxes good or bad, that is not their source, and that is not their intention. The intention and object with which these taxes are put forward are of a very different kind, and entirely without prejudice to the general question between Free Trade and what is called "Fiscal Reform." The object, and a very important object, is, on the one hand, to diminish or discourage the consumption of superfluous or unnecessary commodities of a luxurious kind, but still more—and this to my mind is the really important point—to discourage unnecessary importation.
      In the conditions under which we now live, everything that comes into this country from abroad which is not absolutely needed for the sustenance or carrying on of the industry of our population, involving as it does a corresponding obligation on us to export, tends still further to disturb and depress the exchanges, and, therefore, to embarrass the conduct of the War and the provision of the financial resources which are absolutely necessary for its successful prosecution. These are small matters I agree. In the aggregate they do not amount to very much, but they amount to something, something indeed quite substantial, and, in the opinion of the Government—I speak for my Free Trade colleagues just as much as for those of my colleagues who are supporters of Tariff Reform, without any regard to what I may call the general issue as between those two sets of principles—these taxes, limited in amount, temporary in their duration, experimental in their character, will be and are calculated to have the effect—which I believe everybody in this House desires, that taxation should, as far as it can, produce—of limiting unnecessary importation, and to that extent of facilitating the financial prosecution of the War.
      4.0 P.M.
      Do not let it be supposed that I, or the Government, are attempting in any way to curtail the freedom of discussion in the House of Commons. Nothing is further from our thoughts. Take what I may call the other side of the Budget, that side which deals with direct taxation—the Income Tax. We are quite ready, as my right hon. Friend has shown, to receive, and indeed to act upon, practical suggestions for the improvement of this or that
      1032
      proposal. And so in regard to these taxes, when we come to discuss one after another, any practical suggestions which are made for their improvement, or any practical objections which are put forward in regard to this or that particular item, that the trade or social interests of the country would be injuriously affected—they are, of course, entitled to be put forward—these suggestions and objections will, of course, be respectfully considered by the Government. We do not intend in any way to override the power of free discussion which, especially in matters of finance, is the peculiar province and prerogative of this House. But I must make it quite clear—I hope that I shall have the assent of my hon. Friends behind me, who are as keen Free Traders as I am—that the Government do regard these taxes, as a whole, subject to criticism and discussion, as an integral part of the Budget, and they will ask the House of Commons above all to remember that we are not now dealing with normal conditions. We are not proposing—who would suggest?—a Budget like this under any other conditions than conditions of war. If I may make an appeal to the House, we must carry on the discussion in that atmosphere, and with those considerations always in view; and nothing that is done that is proposed or that is assented to under conditions such as these can, or ought ever, to be regarded as a precedent or an example of the kind of taxation which we should impose in times of peace and in normal conditions. That is the governing fact in the case. Now that this tax, which is the most productive, and in regard to which my right hon. Friend the Chancellor of the Exchequer has shown very great willingness to remove practically every objection, is, I hope, going to be assented to by the House, I trust that the succeeding Resolutions will be considered individually upon their merits—I mean the merits of the particular taxes—and that those larger and more general considerations, which would be most appropriate if we were engaged in peace times in discussing tariff matters, will, by universal consent, be put on one side, and that the House will remember that the primary, indeed the ultimate, purposes of any Budget proposal, under the circumstances of the day, are, first and foremost, to produce revenue, and, next, and hardly less important, to attain other objects—the diminution of unnecessary consumption and the checking of superfluous im-

      1033
      ports—without which the financial future before us would be far more formidable than it is naturally. I am sorry to have said so much, but I wanted to make the position of the Government perfectly clear. The Budget is proposed on the joint and collective responsibility of the united Cabinet, and, with a full sense of that responsibility, they ask the House of Commons to accept it.
      Mr. BOOTH: I want to ask the Prime Minister a question on one point. While we give general assistance and support to this Government in relation to the War, I wish to know if those who disapprove of some of these smaller points, possibly involving some sixty or one-hundred thousand which cannot play a part in the
      provision of funds for the War, are allowed to carry their disapproval to the Division Lobby to mark their difference of view in regard to that taxation, and would that be regarded as a matter on which the Government would resign?
      The PRIME MINISTER: I cannot prevent or check in any way the action of individual Members; they must follow their own conscience. I do, speaking on behalf of the Government, very strongly press the inexpediency of such a course.
      Question put, "That this House doth agree with the Committee in the said Resolution."
      The House divided. Ayes, 174; Noes, 10.

      Division No. 9.

      AYES.

      [4.4 p.m.

      Acland, Rt. Hon. Francis Dyke

      Grey, Rt. Hon. Sir Edward

      Nield, Herbert

      Agg-Gardner, James Tynte

      Griffith, Rt. Hon. Ellis Jones

      Nolan, Joseph

      Amery, L. C. M. S.

      Guest, Hon. Frederick E. (Dorset, E.)

      O'Brien, Patrick (Kilkenny)

      Asquith, Rt. Hon. Herbert Henry

      Guinness, Hon. Rupert (Essex, S.E.)

      O'Connor, John (Kildare, N.)

      Baldwin, Stanley

      Hall, D. B. (Isle of Wight)

      Paget, Almeric Hugh

      Banbury, Sir Frederick George

      Hall, Marshall (E. Toxteth)

      Partington, Oswald

      Barlow, Sir John Emmott (Somerset)

      Hamilton, C. G. C. (Ches., Altrincham)

      Pearce, Sir William (Limehouse)

      Barnes, George N.

      Hamilton, Lord C. J. (Kensington, S.)

      Pease, Herbert Pike (Darlington)

      Barran, Sir John N. (Hawick Burghs)

      Harcourt, Rt. Hon. Lewis (Rossendale)

      Pennefather, De Fonblanque

      Barrie, H. T.

      Hardy, Rt. Hon. Laurence

      Perkins, Walter F.

      Beck, Arthur Cecil

      Harmsworth, R. L. (Caithness-shire)

      Peto, Basil Edward

      Benn, Arthur Shirley (Plymouth)

      Harris, Henry Percy (Paddington, S.)

      Pretyman, Ernest George

      Bentham, George Jackson

      Haslam, Lewis

      Price, Sir Robert J. (Norfolk, E.)

      Bigland, Alfred

      Helme, Sir Norval Watson

      Prothero, Roland Edmund

      Birrell, Rt. Hon. Augustine

      Henderson, Rt. Hon. Arthur (Durham)

      Rawlinson, John Frederick Peel

      Boyton, James

      Henderson, Sir A. (St. Geo., Han. Sq.)

      Rea, Walter Russell (Scarborough)

      Brace, William

      Henry, Sir Charles

      Redmond, John E. (Waterford)

      Bridgeman, William Clive

      Hewins, William Albert Samuel

      Rees, G. C. (Carnarvonshire, Arfon)

      Broughton, Urban Hanlon

      Hohler, Gerald Fitzroy

      Rees, Sir J. D. (Nottingham, E.)

      Bull, Sir William James

      Holmes, Daniel Turner

      Roberts, Charles H. (Lincoln)

      Burt, Rt. Hon. Thomas

      Hope, James Fitzalan (Sheffield)

      Roberts, Sir J. H. (Denbighs)

      Carlile, Sir Edward Hildred

      Horner, Andrew Long

      Robinson, Sidney

      Carson, Rt. Hon. Sir Edward H.

      Houston, Robert Paterson

      Rolleston, Sir John

      Cecil, Evelyn (Aston Manor)

      Ingleby, Holcombe

      Rothschild, Lionel de

      Cecil, Rt. Hon. Lord Robert (Herts, Hitchin)

      Jardine, Sir J. (Roxburgh)

      Runciman, Rt. Hon. Walter (Dewsbury)

      Chamberlain, Rt. Hon. J. A.

      Jones, William S. Glyn- (Stepney)

      Runciman, Sir Walter (Hartlepool)

      Chaplin, Rt. Hon. Henry

      Keating, Matthew

      Rutherford, John (Lancs, Darwen)

      Clancy, John Joseph

      Kellaway, Frederick George

      Rutherford, Watson (L'pool, W. Derby)

      Collins, Sir Stephen (Lambeth)

      King, Joseph

      Samuel, Sir Harry (Norwood)

      Condon, Thomas Joseph

      Kinloch-Cooke, Sir Clement

      Samuel, Rt. Hon. H. L. (Cleveland)

      Cowan, W. H.

      Larmor, Sir J.

      Samuel, J. (Stockton-on-Tees)

      Craig, Ernest (Cheshire, Crewe)

      Law, Rt. Hon. A. Bonar (Bootle)

      Samuel, Samuel (Wandsworth)

      Craik, Sir Henry

      Leach, Charles

      Simon, Rt. Hon. Sir John Alisebrook

      Crooks, William

      Levy, Sir Maurice

      Smith, Rt. Hon. Sir F. E. (Walton)

      Currie, George W.

      Lewis, Rt. Hon. John Herbert

      Smith, Sir Swire (Keighley, Yorks)

      Davies, Timothy (Lincs., Louth)

      Lloyd, George Butler (Shrewsbury)

      Soames, Arthur Wellesley

      Davies, M. Vaughan- (Cardiganshire)

      Long, Rt. Hon. Walter

      Spear, Sir John Ward

      Denniss, E. R. B.

      Lonsdale, Sir John Brownlee

      Spicer, Rt. Hon. Sir Albert

      Dougherty, Rt. Hon. Sir J. B.

      Mackinder, Halford J.

      Swift, Rigby

      Duncan, C. (Barrow-in-Furness)

      Macleod, John Mackintosh

      Tennant, Rt. Hon. Harold John

      Edwards, Sir Francis (Radnor)

      Macmaster, Donald

      Thomas-Stanford, Charles

      Esmonde, Sir Thomas (Wexford, N.)

      Macnamara, Rt. Hon. Dr. T. J.

      Thompson, Robert (Belfast, North)

      Fell, Arthur

      MacVeagh, Jeremiah

      Thorne, G. R. (Wolverhampton)

      Field, William

      McKenna. Rt. Hon. Reginald

      Thorne, William (West Ham)

      Fisher, Rt. Hon. W. Hayes

      Magnus, Sir Philip

      Thynne, Lord Alexander

      Flannery, Sir J. Fortescue

      Markham, Sir Arthur Basil

      Tickler, T. G.

      Flavin, Michael Joseph

      Mason, James F. (Windsor)

      Touche, George Alexander

      Fletcher, John Samuel

      Money, Sir L. G. Chiozza

      Tryon, Captain George Clement

      Forster, Henry William

      Montagu, Rt. Hon. E. S.

      Walton, Sir Joseph

      Gardner, Ernest

      Mooney, John J.

      Warner, Sir Thomas Courtenay T.

      Geddard, Sir Daniel Ford

      Morgan, George Hay

      Wason, John Cathcart (Orkney)

      Gordon, John (Londonderry, South)

      Morton, Alpheus Cleophas

      Watt, Henry A.

      Goulding, Edward Alfred

      Mount, William Arthur

      White, Patrick (Meath, North)

      Grant, J. A.

      Munro, Rt. Hon. Robert

      Whittaker, Rt. Hon. Sir Thomas P.

      Greig, Colonel J. W.

      Nicholson, William G. (Petersfield)

      Wilkie, Alexander

      Williams, Col. Sir Robert (Dorset, W.)

      Worthington Evans, L.

      TELLERS FOR THE AYES.—Lord E. Talbot and Mr. Gulland.

      Wing, Thomas Edward

      Yate, Colonel Charles Edward

      Wood, Rt. Hon. T McKinnon (Glasgow)

      Yerburgh, Robert A.

      NOES.

      Clough, William

      Lambert, Richard (Wilts, Cricklade)

      Galbraith, Samuel

      Outhwaite, R. L.

      TELLERS FOR THE NOES.—Lieut.-Commander Wedgwood and Mr. Lough.

      Healy, Maurice (Cork)

      Pringle, William M. R.

      Hinds, John

      Sherwell, Arthur James

      John, Edward Thomas

      Trevelyan, Charles Philips

      Question put, and agreed to.

      POSTAL PACKETS AND TELEGRAMS—MR. SPEAKER'S RULING.
      Mr. EVELYN CECIL: On a point of Order. I should like to ask you, Sir—and I think it will be convenient to many Members of this House who are interested, as I am, in this question of postal charges—whether it is either necessary or the practice for changes in postal rates to be introduced in a Resolution of this House?
      Mr. SPEAKER: Perhaps it is a little irregular to deal with the Thirty-first Resolution before we proceed with the Seventeenth. Still, I understand that it is for the general convenience of the House, and, therefore, I am glad to be able to give my decision upon the point at this moment. In my opinion there is no necessity for this Resolution at all. As to the Thirty-first Resolution, so far as the recent precedents go, no Postal Bill or Telegraph Bill has been of late years introduced on Resolution. The Bills can be introduced without Resolution, for the simple reason that postal charges are not a tax—they are a payment for services rendered; and I would go further and say that, since the Parliament Act was passed I think that probably the insertion of any Clause dealing with postal packets and telegrams might vitiate the position of a Finance Bill, as a "Money Bill," within the meaning of the Parliament Act. Of course, it is a matter for the Government in these cases to decide; but I think it only fair to say that, in my judgment, so far as I have seen the proposals contained in the Resolutions, the insertion of them in it might probably imperil the position of the Finance Bill as a Money Bill. Therefore, primâ facie, it would be undesirable to introduce them. But I am quite clear also that the Resolution is not required, as it does not impose a charge.
      Order read for further consideration of Seventeenth and subsequent Resolutions.

      MUSICAL INSTRUMENTS, ETC.
      Resolution reported,
      17. "That on and after the twenty-ninth day of September, nineteen hundred and
      1036
      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:—

      Musical instruments, including gramophones, pianolas, and other similar instruments.

      Accessories and component parts of musical instruments, and records and other means of reproducing music."

      Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
      Mr. PETO: I only rise, carrying out the Prime Minister's invitation, to ask the Chancellor of the Exchequer to consider one particular point with regard to this Resolution, and that is as to the effect of the imposition of the duty on parts of musical instruments which are necessary for the completion of those instruments in this country. They should, I suggest, be regarded from a different point of view from the imports of completed instruments. If we pass this Resolution imposing a duty on musical instruments coming to this country we shall make them more expensive in accordance with the policy which was so clearly laid down by the Prime Minister, but there is a certain hardship imposed upon those people in this country who have to pay exactly the same Import Duty on parts of musical instruments, which parts are necessary to complete the instrument. I believe that in answer to the right hon. Gentleman the Member for Swansea Town (Sir A. Mond) the Chancellor intimated that there would be a rebate granted upon imports which were subsequently exported. So far, that is in the interests of the trade of the country, and encourages exports, but in the interests of those people who are engaged in the industry in this country I would ask him to consider whether he might not charge upon

      1037
      parts of instruments which are completed in this country a lower rate than the rate charged on the fully completed article. I am quite aware that there are corresponding disadvantages in any discrimination between one part and another, and I fully appreciate, particularly in the case of these taxes, the advantage of simplicity and uniformity. But I would ask, before the Finance Bill assumes its final form, that the case put forward by the makers of musical instruments should be considered.
      Sir JOSEPH WALTON: As a strong Free Trader, I desire to take this opportunity of stating why I conceive it to be my duty to support the Import Tax now under consideration. In times of peace I consider that Import Duties would be, as a paper stated this morning, incurably vicious, but at present, with the conditions with which we are confronted in time of war, when it is absolutely imperative that we should largely check the amount of imports into this country in order to do something to lessen the enormous balance of trade against us, our economic fiscal theories ought, I think, to be put on one side. What is the financial position that we have to face, and which makes this course proposed by the Government absolutely necessary and justifiable? We have a balance of trade against us in the current year of more than 500 millions sterling. It is perfectly true that we are going to get a little relief by the raising of this Franco-British loan of 100 millions sterling in America. But that will only be as a drop in the bucket. I dare say that the greater part of that amount is already owing to people in America for munitions of war and other goods supplied. Look at the high rate of interest that even to-day we have to pay.
      Mr. SPEAKER: This is not a suitable opportunity for discussing the American loan. The Resolution deals with musical instruments.
      Sir J. WALTON: I apologise. I had in mind the intention of showing that it was necessary to adopt this expedient of Import Duties in order to lessen imports into this country, and so as to lessen the huge balance of trade against us. We have to face that huge balance of trade, not only this year, but possibly next year and possibly even the year alter. Unless drastic steps are taken by the Government by the imposition of imported duties to lessen imports into this country, we may be in
      1038
      danger of drifting headlong to financial ruin. The question has been considered by His Majesty's Government, and they have made a small beginning, too small a beginning I think, because prohibitive taxation should have been imposed on all imports other than food supplies, raw material, and possibly certain other absolutely necessary articles which are required for maintaining the volume of trade as high as we possibly can during this war time. With regard to the tax specially under consideration, we have a working model of Protection, and if for no other reason than that the proposals of the Government will secure us a working model of the effect of protective duties on imports, I welcome their inclusion in the Budget. The piano manufacturers held a meeting at the Midland Hotel, Manchester, yesterday, I believe, or the day before, and they decided to raise their prices—not the importers but the manufacturers—in order to meet a tax which does not fall upon them. I have no doubt that others who have a similar opportunity are likely to take a similar course. That is an object lesson of the greatest possible value to the consumers in this country, because it will show the consequences which fall upon them by the imposition of Import Taxes.
      Those Members who last evening spoke so eloquently in defence of the principles of Free Trade, in my opinion, misjudged the situation. These proposals and these taxes which we are about to impose will, so far from destroying and undermining the principles of Free Trade to which so many of us are attached, strengthen the position of the Free Traders of the future enormously in this country, and will secure that our fiscal system when time of peace arrives will not be on Tariff Reform lines. I, therefore, have no hesitation whatever, as a strong Free Trader, in supporting the imposition of these Import Taxes, and the other Import Taxes which the Government propose. I only regret that they have not extended them much further, not so much with the view of gaining revenue, but for the purpose of stopping imports. The people of this country, this nation as a. whole, have lived in a prodigal and extravagant manner so far this year, and having regard to an annual expenditure of two thousand millions, and the possible prolongation of the War, I say that everyone who wishes that we may be able to surmount the financial difficulties ahead of us will welcome in every possible way

      1039
      the limitation of the consumption of imported articles by the imposition of duties. I hope that those will be extended, and in the next Budget, so that we shall compel, by drastic measures, the lessening of the expenditure of this nation in order to have out of our annual income a larger sum towards defraying the cost of this terrible War.
      Mr. LOUGH: I think my right hon. Friend the Chancellor of the Exchequer must often have said when my hon. Friend behind him was speaking, "Preserve me from my friends." There could not have been a more extraordinary illustration of the evils of this taxation which we tried to set before the House last night than the astounding speech to which the House has just listened. My hon. Friend was going to show that imports could be seriously restricted if these taxes were imposed, and in order to do so one would have thought that he would have quoted some figures or told us what the total imports were, and would have gone into the question of the great saving to the nation if these taxes had been imposed, but not a single figure had he at his disposal. He went on and plunged into the American loan till you, Mr. Speaker, mercifully saved the House from any more of it. His second point was that a meeting of manufacturers somewhere in the North had resolved, although they are not touched by the duty, to put up their prices corresponding to the duty, and that is his contribution to this Debate. If that is the sort of thing which is urged in support of these taxes, the Government may well ask to be preserved from such speeches.
      I desire seriously to call attention to the tax on musical instruments. If it is possible to obtain a better illustration of the harmfulness of this taxation than was afforded by motor cars, I think you have it in musical instruments. You would think that there was a vast import, whereas in truth there is on balance no import at all. The exports are greater than the imports. Secondly, you would think the imports were going up. That is what my right hon. Friend said about these taxes. But he gave no justification, and he put forward no arguments appropriate to this particular tax. He said, "Go and look in your Votes." I have done so, and I find that the imports of these articles have fallen tremendously during the last year or two. Taking the first eight months in each year, the imports
      1040
      were, in 1913, the year before the War, £691,925; in 1914, £641,000; and in 1915, £169,000. The imports are almost gone. [An HON. MEMBER: "Good!"] Then there is no necessity for bringing in this tax. A large number of people in this country who are trying to maintain their trade in most difficult circumstances do not cry out "Good!" Are there not sufficient taxpayers in this country the greater part of whose business is already destroyed by the cruel incidence of the War, without the Government coming in with a fresh duty to destroy the remainder? On the other hand, we have considerable exports, and they will assuredly be injured, if not ruined, if the imports are stopped. There is no truer law—one would have thought my right hon. Friend would be acquainted with such elementary principles—than that you cannot maintain exports if you shut off imports. Here is a case in which the imports are to be shut off, although they come to only such a small amount, and yet our exports are £271,000. Apart from the requirements of the people of this country, a large export trade has to be supported, and I submit that it cannot be supported if the imports are cut off.
      An immense amount of the imports are parts of musical instruments. That means that the manufacturers of musical instruments in this country, possibly those very manufacturers who passed the resolution to which my hon. Friend referred, will have their businesses seriously injured, and our home demand will not be able to be maintained if these parts are excluded. Of the £169,000 of imports, no less than £113,000 are parts. So that really there is only £56,000 spent on the imports of musical instruments, and that amount is spent largely with France and other countries with which we are in alliance. These facts show absolutely that if my right hon. Friend had gone through the whole table of our imports and exports he could not have hit upon an article which it would have been more discreet for the Government to let alone. I must protest against the way in which we are being treated in the House and the difficulties under which we have to debate this question, which is of such vital national interest. [An HON. MEMBER: "You were one of eight in the Division!"] It is not the first time that I have taken part in a Division with eight Members. The other occasion was in 1895, when I told with Mr. Bowles against the Government of the day's borrowing for purposes of annual expenditure. Although

      1041
      both Governments kept on doing it for ten years, we finally brought the wicked system to an end. Similarly the total of eight in to-day's Division is a good augury. The time will come when those eight will be able once again to speak in the name of a majority of this House.
      At any rate, I respectfully protest against the way in which we have been treated by the Prime Minister to-day. I thought that a short announcement might be made at Question Time as to the course the Government intended to take, so that the compact entered into last night should not be broken. Instead of that the Prime Minister made a partisan speech, repeating the weak arguments that were put forward a hundred times last night, adding nothing new to the Debate, but using his great authority to put those of us who are fighting in such difficult circumstances in an even greater predicament than we were in before. What was the doctrine laid down by the Prime Minister? It was all bound up in one point, namely, that there was a united Cabinet—Heaven knows we all wish to support whatever Cabinet there is, in order that we may come successfully through the War—and that because the Cabinet had considered the tax the House of Commons ought to accept it. I protest against that doctrine. [An HON. MEMBER: "The Prime Minister never said that."] That was the whole argument of the Prime Minister. I say with great respect—I know I am speaking against a high authority—that that doctrine would be fatal to the liberties of the English people. It is no part of the business of the Cabinet to legislate. Their business is to administer. It is the business of the House of Commons to legislate. It is our duty, humble as we are, and knowing little as compared with the great men on the Treasury Bench, to use the intelligence we have, and to bring it to bear on every legislative proposal the Government bring forward. We have promised our constituents to do that, especially in all matters connected with taxation. If the Government wish to avoid these Debates—and I can imagine a hundred reasons why they should, especially the Prime Mnister—they ought not to bring forward these contentious proposals. If they bring them forward, we have to do our duty as Members of the House of Commons. When without any figures being given, without any case being made out, or attempted to be made out, a cruel blow is struck at a vast industry, we would be worse than
      1042
      traitors to our constituents if we did not examine the proposals and prononnce our opinion upon them.
      After giving the matter full consideration, I can see no benefit in this tax whatever. £169,000 will not help our imports in any way. We are not a very musical people. That is one of the charges the Germans bring against us. Certainly they have this much to justify that argument, that we used to buy nearly a million pounds' worth of musical instruments from them. I think we can get just as good instruments from other parts. If this tax is imposed, there ought to be a corresponding Excise Duty, so that all the money raised would come into the Treasury and not go into the pockets of private manufacturers. The case for this tax on the figures I have given—and no case has been made out by the Government—is infinitely worse than the case for the tax on motor cars. Although, having made our protest, I do not see that it is much use our carrying our opposition further, yet if hon. Gentlemen opposite think well to go to a Division, I shall be glad to divide with them. I do not see why any restriction should be put on our taking divisions. What is the good of our coming here if we do not make our statements and put forward our arguments? I submit that this is a most vicious tax, contrary to every pledge of the Free Trade Members of the Government, and that the present is a most inopportune moment to bring it forward.
      Mr. PRINGLE: I agree with nearly everything said by my right hon. Friend opposite. We have been invited by the Prime Minister to examine all these taxes on their merits. Up to the present none of the merits of this particular tax have been revealed to the House. Indeed, there has never been any tax proposed which would more merit the description of a comic opera tax. There is an ascending scale of absurdity in this delightful schedule of import duties. I propose to deal exclusively with musical instruments. We have had a defence of the musical instruments tax from the hon. Member for Barnsley (Sir J. Walton), and a most extraordinary defence it was. He admitted that it was a protective tax, but he believed that it was going to readjust the foreign exchange. I should have thought the hon. Gentleman would have taken the trouble to look at the records of our imports and our exports with those countries where the exchange is adverse

      1043
      to us, and that he would have shown that by excluding articles under this duty something would be done to readjust the value. So far as I know, hardly anything that would be affected by this tax comes from America—except a few gramophones and a few gramophone records. The main countries that will be affected are countries in alliance with us. Many parts of musical instruments are imported from France. I had a letter this morning from a firm engaged in the musical instruments industry, pointing out that this tax would affect the importation of catgut, which is required for violins. I am told that apart from this importation it is impossible to manufacture good violins in this country, and that the only countries from which we can get the catgut are France and Italy. Apparently the hon. Member for Barnsley is going to set right the balance of exchange by keeping out catgut. My hon. Friend the Member for Pontefract (Mr. Booth), who knows the local conditions in Yorkshire, informs me that they have only brass bands in Barnsley, consequently they have no interest whatever in catgut. The hon. Member for Barnsley is, therefore, quite willing to set right the adverse exchange by excluding catgut from France.
      Sir J. WALTON: How very clever!
      Mr. PRINGLE: I am glad the hon. Member appreciates the absurdity of his position. I have no doubt that before we have done with the discussion of these points he will be in the Lobby with his old Friends who still adhere to their former convictions. The most extraordinary of the hon. Member's contentions was that during a war was the best time to expose fiscal absurdities in practice. He said that it was impossible in times of peace to make experiments in Tariff Reform, but that when we are at war, when our attention is engrossed by this tremendous struggle, it is the time to make fiscal experiments, to expose the fiscal fallacies of our old political opponents, and to discredit in advance the proposals which they may possibly make in time of peace. Here, he said, we see the iniquities of Protection revealed in all their nakedness. Already yesterday in the Midland Grand Hotel at Manchester—an appropriate place—the piano manufacturers have met, and have agreed to raise the price of pianos by an amount exactly equal to the tax. They are going to put into their pockets the extra price,
      1044
      and the money, as far as they are concerned, will not go into the Treasury. The right hon. Gentleman is going to make a present to the piano manufacturers in the interests of the future fiscal policy of this country. Surely the main object, and the only object, of the Government at this time is to get in revenue. If the object is to get in revenue by means of the imposition of taxes upon pianos and other musical instruments, surely it is the duty of the Government in regard to taxes of this kind to see that there is a corresponding Excise. Obviously the manufacture in this country is far more important than the imports. In the old days before the War our main competitors were Germany—I think the figures will show that—for the imports from Germany ran into millions, whereas the imports from other countries only ran into hundreds of thousands. Consequently, the only people who are now really substantially interested in the trade are the home manufacturers.
      The imposition of these taxes is going to give nothing to the Treasury, but is going to make a present to the piano manufacturers. I suppose my right hon. Friend will expect 50 per cent. from them in the way of taxes on war profits. It would be better to take it direct; to take the whole 100 per cent. by means of an Excise Duty. I know that these taxes are defended as sumptuary taxes. The Colonial Secretary yesterday, and the Prime Minister to-day, were equally eloquent in putting forward the sumptuary objects of these taxes. They spoke of the importance of restricting imports and imposing economy upon the people of this country. Surely it is better, if you are going to have this sumptuary object, not to allow any private interests in the country to make a profit out of your sumptuary legislation! My right hon. Friend is bound, I think, if he proceeds with these taxes, to insist on an Excise Duty accompanying the Import Duty. Unless we get some assurance that at least in these taxes there is to be an Excise, it will be necessary to vote against these taxes also. We were told that we were to discuss these matters on their merits. Apparently all these discussions have to be absolutely barren and sterile. We may go on discussing them for hours, riddling the case and exposing all its absurdities, and at the end of the time the Government expect us to allow their duties to be imposed without a Division. Under these

      1045
      conditions, obviously, the most absurd taxes can be imposed by the Government without any regard to the result of the discussion. Yesterday there was no case on its merits. The whole case was blown into the air by the right hon. Gentleman the Member for Swansea and the right hon. Gentleman the Member for Islington. No defence was made by the Chancellor of the Exchequer. To-day we are hearing nothing. We have only heard from the Back Benches of a matter raised by my hon. Friend the Member for Mansfield, who described himself as "an eccentric Free Trader"—a description with which I dare say the whole House will agree. Today we have had the hon. Member for Barnsley, whose Free Trade principles are equally eccentric, but whose sense of humour is not equally strong—
      Sir J. WALTON: What about Scotland?
      Mr. PRINGLE: The fact that the hon. Member is so benighted as to believe that Scotland is destitute of humour shows how short he is himself in that respect. In the discussion which we have already had it has been shown that the imports of musical instruments are negligible, and consequently that if revenue is to be derived from taxes on musical instruments it can only be obtained by having an Excise along with the Import Duty. We, in these circumstances, are entitled to ask from the Government one of two things, either the abandonment of the duty or a pledge that this duty, when it is imposed, will be accompanied by a corresponding Excise Duty.
      Mr. W. THORNE: I was very much amused during the discussion upon this particular principle yesterday. To-day we had a very animated discussion upon sacrifice of principle because of the tax upon motor cars and musical instruments which are about to be considered. So far as I, a Socialist, am concerned, we have never pinned our faith either to Free Trade or to Protection. I am not pledged either to a tax upon musical instruments or upon motor cars, or anything else. But the Debate of yesterday, I think, will be an object lesson to the Labour party, and I shall do my level best to urge upon the Labour party to have some Divisions before the Finance Bill gets through. It all seems to me to be rather strange, when we have passed millions of taxation in extra taxes upon tea and sugar, and there was hardly a protest from any side of the House.
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      Burdens amounting to about £22,000,000 are going to fall upon the wage earners of the country. They have gone through without anyone having the courage to call for a Division, either against the Tea Tax or the Sugar Tax. The reason why the Labour party did not vote against the Tea Tax or the Sugar Tax is because we have thought that the Budget was a fair and equal distribution of the taxes. So far as I am concerned, and so far as the Labour party is concerned, if we had done our duty we ought to have challenged two Divisions and urged upon the Chancellor of the Exchequer to raise the money required by direct taxation upon incomes and by an augmented Super-tax. I hope the Labour party will take some action of the sort and then we will begin to hear the squealing.
      It is rather amusing to me to hear Members talking as they have done concerning this particular tax, simply because the piano manufacturers met yesterday and decided to raise the price of pianos in view of the fact that there is going to be a tax upon imported pianos. The matter has nothing to do with either Free Trade or Tariff Reform. I should like to know how many Free Traders in this House have been bleeding the country all through this War? Both Free Trade coal dealers and Free Trade chemical manufacturers have done this. The Member for Swansea is very bitter against taxes on motor cars and taxes upon imported goods. As a matter of fact, his company has been bleeding the country all the way through this particular War. [An HON. MEMBER: "Oh!"] Not only his firm but many other firms. I understand this Debate has devolved upon the question of principle. Free Traders talk about Free Trade principles, built up over a great many years. It means, they say, that we shall have to sacrifice these principles that we have been carrying out for so long. Might I ask the House who has made a greater sacrifice in this War than the trade unions? We have sacrificed our principles. We have relaxed all our rules and regulations in regard to overtime, apprentices, and many other things. Never let it be said that there are Members in this House who talk about the sacrifice of principle without remembering this. No body of workmen in this country have made greater sacrifices than those connected with the trade unions. Therefore, I am going to vote for these taxes with both hands. If you like to challenge a Division I will back up the Government every time,

      1047
      and I believe the majority of our party will back them up too. If hon. Members want Divisions they can have them.
      I understood that during the continuance of this War we were all to be a happy family; that there was going to be very little division. But if hon. Members are going to start to play their own game and have Divisions, then we, too, shall call for Divisions. As the Finance Bill goes along some hon. Members will have to explain their opinions. I am very much afraid that some will have very great difficulty to explain away what they have already done, because they have allowed millions of indirect taxation to go through, such as the taxes on tea and sugar, while when it comes to taxing motor cars, which presupposes a certain amount of money before a man can possess one, then of course the House is up against principle! I do not think there is any principle at all involved. As I said before, the principle we stand for is to raise money by direct taxation, and I hope our party will take this matter into consideration when the Finance Bill comes along. If we set our minds to it you will have a busy time when the Finance Bill comes along. If we take up the attitude we ought to take up, that the extra money to be raised by the taxes upon tea and sugar should be taken off and placed in the way of taxes on what I should call the idle rich, then we will soon see where principles are, for I am very much afraid various hon. Members will be found in the Opposition Lobby! That has been my experience in this House. I have no apology to make either to my Constituents, or to anybody else, for voting as I have done in this matter.
      Mr. OUTHWAITE: I find it rather difficult to follow, in his last argument, the hon. Member who has just sat down. He appears as a Socialist, and then when he is confronted with the fact that by imposition of a Protectionist tariff certain of our manufacturers of pianos have been able to increase their prices under a tariff some 33 1–3 per cent., so being able to take full advantage of it, he is quite delighted with that which enables them to do so and to plunder the consumer who very largely he represents.
      Mr. THORNE: Free Traders do it as well.
      Mr. OUTHWAITE: No doubt he would suggest under the circumstances going to the greater extent and excluding actual
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      imports. The hon. Baronet the Member for Swansea has been bleeding the public, he says.
      Mr. THORNE: And others!
      Mr. OUTHWAITE: What the hon. Member ought to do is to give the hon. Baronet the Member for Swansea a heavy duty to enable him to further bleed the public by excluding imports. Consequently I find it rather difficult to follow the hon. Member, especially when he tells us what he thinks the Labour party ought to do. I have spoken in the House in opposition to the Sugar Tax. I would have gone to a Division on the subject. I do not remember seeing one Member of the Labour party present.
      Mr. THORNE: I beg your pardon, I was in my seat.
      Mr. OUTHWAITE: The hon. Member did not challenge the Division. Why not vote against all these taxes? What now is the position of the Chancellor of the Exchequer? Yesterday, when I pointed out that the Motor-car Duty was Protectionist in its incidence and that he was scrapping Free Trade policy, the right hon. Gentleman got up, and, with his hands on his heart, vowed that this was not against Free Trade principles, and that he would be the very last to introduce any duty which was protective in its incidence. There was, he said, no manufacture of motor cars in this country, and then he went on to speak of the manufacture of pianos—
      Sir J. D. REES: On a point of Order, Mr. Speaker. May I ask whether the rule regarding repetition avails in respect of the repetition of the general arguments for and against Free Trade and Protection in respect of each particular Resolution upon the Paper?
      Mr. SPEAKER: I think the hon. Member must in each case leave it to me to say whether an hon. Member is getting tedious or irrelevant. It is impossible for me to intervene on every occasion when an argument is repeated.
      5.0 P.M.
      Mr. OUTHWAITE: It is rather hard to hear the suggestion coming from any hon. Member that one is either tedious or irrelevant. But to hear that from the hon. Member who has just put the point of Order is perhaps the last straw. My argument, though it may be exceedingly

      1049
      tedious to the hon. Member and the Chancellor of the Exchequer, is certainly relevant. I was pointing out that yesterday the right hon. Gentleman met the opposition of the Free Traders to this Import Duty by saying it was not protective in its incidence because no motor cars were being manufactured here. Now we have another duty levied upon pianos, and we do know that pianos are being manufactured here, and that already the manufacturers of our pianos have taken advantage of the Imposition of this tariff to proceed to raise their prices to the purchasers of pianos. Therefore, what is the position we are met with? The greater part probably of the revenue raised from the public by the imposition of this duty is not going, and will not go, to the Treasury. It will go into the pockets of protective manufacturers. The hon. Member for Barnsley said, at a time of war, of course, we scrap all principles. It seems to suggest that when we have scrapped the Commandment "Thou shalt not kill," we should proceed to scrap the Commandment "Thou shalt not steal." We are now going to allow certain individuals in this country to plunder the public under the law and steal under the law. I do not care what the Prime Minister has said, seeing that he did not take the trouble to come down and listen to the arguments of his former Free Trade Friends. He is probably too occupied to do so, and, therefore, I think his intervention at a particular juncture of the Debate is a little unfair to his supporters. But no matter what the Prime Minister or the Chancellor of the Exchequer may say, you cannot get over the fact that in this matter the Chancellor of the Exchequer is setting up a protective tariff, and he cannot meet our opposition to these tariffs, because they are protective, by denying the fact, at any rate so far as this duty is concerned. We are, as regards this matter, scrapping the Free Trade policy of this country to adjust the exchanges, as I understand, to the extent of £56,000. I think the Free Trade policy is worth more than that, and consequently I hope there will be another Division, and that I shall have the opportunity of opposing.
      Sir ALFRED MOND: I regret I was not in the House when the hon. Member for West Ham (Mr. W. Thorne) made some personal reflections on me and on the firm with which I am connected regarding prices which we are charging during the War.
      Mr. THORNE: I said that you and your firm were bleeding the public by the prices you were charging during the War as chemical manufacturers.
      Sir A. MOND: The hon. Member has repeated in my presence an absolute lie.
      Mr. SPEAKER: However grave the provocation may be, the right hon. Gentleman is not entitled to make use of that expression.
      Mr. THORNE: It does not matter to me.
      Sir A. MOND: Naturally I withdraw the expression and substitute, if I may, that the hon. Member is entirely misinformed.
      Mr. THORNE: We will see later on.
      Sir A. MOND: The hon. Gentleman may see later on or not, but he has no right to make a statement of that kind. I only wish he would make it outside the House, so as to give me an opportunity of dealing with it.
      Mr. THORNE: I may.
      Sir A. MOND: I have no wish to intrude any personal matter in this House, but I think it only fair to say that the firm with which I am connected have not raised the price of a single article since the War broke out. If the hon. Member refers to any work we have undertaken for the Government, I can only say that we have undertaken that work, as I think any fair-minded person would say, at a very moderate profit indeed, and at the urgent request of the Chairman of the Explosives Committee at great inconvenience, and at the cost of a great deal of labour to the people engaged on that work. I am sorry to have troubled the House on a personal matter of this kind, but I do think it is unfair for an hon. Member to break into this Debate with a personal charge in regard to a subject about which he has no information.
      Mr. THORNE: Coal owners, and not only you.
      Sir A. MOND: I am not concerned with the coal owners; I only deal with myself. So far as the duty here is concerned, I do not intend to go into the general question. We have discussed that before, and I do not wish to open it out again on this particular item. I rise more to ask the Chancellor of the Exchequer a few questions which have been submitted to me in regard to the matter. The Chancellor of the Exchequer was kind enough to say last night,

      1051
      and he repeated it in an answer he gave to me to-day, that rebate would be allowed on imported parts where they could be sufficiently identified. That, of course, removes a good many objections we made to the taxation of parts which are being used by manufacturers here in articles which are re-exported. The only point that is troubling me is how you can provide for this method of identification on the parts, say, of pianos and other musical instruments. For instance, I am told that practically all our cat-gut for violins and other musical instruments comes from France. Somebody buys that cat-gut and puts it in violins made in this country, and then exports them, say, to Australia. In what way will the revenue authorities demand that the identification shall be proved? The same applies, of course, to a number of other goods of a similar character.
      There is another question I would like to raise. Does the right hon. Gentleman propose, in introducing the Finance Bill, to make any kind of exemption for musical instruments coming from our Dominions? I have had a very strong appeal made to me by a large firm of musical instrument makers in Canada, who want to know what the Dominions have done during this War that a prohibited duty should be levied upon them, or whether any exemption is going to be made for them. I would suggest to the right hon. Gentleman that there is a point well worthy of his attention. It is not unnatural that those who are coming over here to fight for us, spending their lives and treasure in the service of the British Empire, should find it rather strange that we should exclude their goods from this country for the benefit of home manufacturers. A further point has been raised by large firms who deal in band instruments and in similar musical instruments. They point out that wood-wind instruments are made both in France and Belgium, and are not luxuries but necessaries, and they are to some extent, I imagine, useful when utilised by instrumental bands for regimental purposes. Could not some exemption be made, at any rate, for instruments being used for recruiting troops under our voluntary system? It seems very hard that you should levy a duty on instruments fulfilling such a patriotic duty, and that those who form bands playing round London for patriotic purposes should have to pay a
      1052
      higher price for instruments, which, in this case, are clearly a necessary and not a luxury.
      The amount which this duty will bring in, I think the right hon. Gentleman will concede, is little enough. So far as I can understand—I mention these figures with great diffidence, because the right hon. Gentleman is always accusing me of using figures unfairly—musical instruments imported for the last eight months amount to £56,000, and instruments in parts to £113,000, the whole amount being £169,000. It does not seem a very large amount to rectify our exchange, nor does it seem to provide a large amount of revenue; but, since the collective wisdom of the Cabinet decided after long consultation that it is entirely necessary for us to pass these duties, however much we may dislike them, I will not offer any further financial criticism on them. I bow to the collective wisdom of the Cabinet—[An HON. MEMBER: "United Cabinet!"]—united Cabinet. But I hope the right hon. Gentleman will see his way to give an answer on some of the points which I have put before him, and also to explain the particular merit of these taxes. The right hon. Gentleman is always asking us to deal with these taxes in detail, but he does not do so himself. He has never told us, for instance, how much the British consumer will have to pay for home-made instruments in excess of what he would pay without this tax, and if it is a deliberate policy. If he wanted to diminish luxuries, I can understand his putting an indirect Excise Duty on musical instruments. Whatever his policy, it is worth while stating it. The hon. Member for West Ham and the people he represents are interested, I should have thought, in this question, and will want to know why they should pay 33 1–3 per cent. more for the benefit of the home manufacturer. Now the right hon. Gentleman might have explained to us why he has taken this particular item of musical instruments, more than a large number of other items. Silk is a large import, and I should have thought it is much more of a luxury, and a better subject from the revenue point of view.
      With regard to gramophones, the right hon. Gentleman throws out some hope that he will make some exemption for gramophones, say, sent to France for the enjoyment of our troops. I am sure many would be glad to hear about it. I am not saying this because I want to score a point, but really I am serious about it. The number

      1053
      of appeals for gramophones from various camps is very large, and many of us have gladly responded by sending them; but, of course, everybody's money is limited, and with the heavier taxation coming everybody is certain to have less money to give. Naturally, therefore, the increase of one-third applied to gramophones would curtail one of the few things which really gives great enjoyment to our soldiers at the depots, camps, and training centres, and if something could be devised by which a gramophone that is certified for military purposes would be exempt from this taxation, the right hon. Gentleman, I think, would be really meeting a practical point.
      Mr. GLYN-JONES: As one of those who would in any case support the Government in this matter, though in doing so I shall be appearing to act against views which I formerly expressed, and which I still hold, I would make an appeal to the Chancellor of the Exchequer to help those of us who are in this position by explaining why he has not put on corresponding Excise Duties. I also rise to say—I hope without presumption as a young Member of this House—what my position is in regard to these votes which are taking place. We have just had a Division, and I have sat here and heard threats of other Divisions on this subject. My own position was that, after the speech from the Prime Minister, whatever I thought on the immediate question, I had no right to go into the Lobby against the Government unless I was prepared to see this Government resign and some other Government take its place. I think it is a perfectly cheap way of obtaining notoriety to divide at this time against this Government, relying on other Members to save those who go into the Lobby against the consequences of their votes. The position, as I understand it, is that this Government brings forward these Budget proposals, and we are told that we are in a time of truce, and that we ought to regard them from the two points of view, namely, that of revenue and of preventing a larger amount of importation than can be avoided. I do not understand all the fuss that has been made about this matter, although, in normal times, they might be prepared to carry their objection to any length, such as resigning seats and fighting an election; but I do not quite understand the attitude they are taking now. If a Division taken at this time is meant to be an expression of the view of the British House of Commons on the subject voted upon, it is a
      1054
      perfect farce. Who will say that the numbers in such a Division represent the view of the Members of the House of Commons on that or any other subject? We are asking that the General Election should be postponed because a large number of the electors are in France, and if we are to decide this matter by Vote, then all the Members on service ought to be here.
      Mr. OUTHWAITE: Close up the House.
      Mr. GLYN-JONES: I see no reason for closing up the House. The Government up to now have been prepared to listen to argument, and my own view is that under the conditions of the War we should simply express our view and our arguments in support of it, but we should not carry our opposition to the extent of dividing the House, which, at a time like this, does a great deal to discredit the House of Commons.
      Lieut.-Commander WEDGWOOD: I was pleased to hear the hon. Member for Stepney (Mr. Glyn-Jones) express his opinion upon the propriety of dividing the House of Commons. The hon. Member has been here some time, and he has always been a member of that party who did what the Front Bench told them. It is the habit of those hon. Members who sit on the benches behind the Government to adopt this attitude and then go to the Government offices during the day to get their friends jobs and concessions.
      Mr. GLYN-JONES: I do not know whether the hon. Gentleman means to apply that to me, if so, I should be glad if he would give particulars of anything in that respect.
      Lieut.-Commander WEDGWOOD: You said that those hon. Members who wanted a Division on this question were seeking notoriety.
      Mr. SPEAKER: I think it would be better to come to the subject of harmony.
      Lieut.-Commander WEDGWOOD: The hon. Gentleman belongs to the goody-goody Members who always vote with the Government, lecturing the wild ducks and saying their conduct is endangering the country. We all want to win the War more than anything else. We put the winning of the War first, and our objection is that these taxes are not calculated to help us to win the War. That is perfectly plain and it is not a matter of

      1055
      principle. When you put a tax on musical instruments you enable the manufacturers here to tax the community on the kind of instruments they make. Already here they have decided to raise the price of pianos by 33⅓ per cent. in order that they may tax the people, which this proposal gives them the right to do. To do that is not the best way to ensure the prosperity of the country, or secure a sense of justice amongst the taxpayers who are being extremely hardly hit by the Budget.
      You raise the price of gramophones and pianos and anybody who spends money on those things has less to spend on useful articles of production, consequently you produce a scarcity of money for the War and for keeping up the general stamina of the people. There are fewer exports and less money spent on home trades, and you have all the difficulties coming from increased prices. Whenever you find prices increase all round the trade is worse, and it is far more difficult to carry on your export trade. We do not want to put on a tax which is going to increase the price to the public, because they will have less to spend on other things. We do not want to pass a tax which will give a sense of injustice of that kind, and which will put money into private pockets instead of into the public purse. We are told that these imports amount to £160,000. If the Chancellor of the Exchequer really expects to reduce imports by putting a tax on musical instruments which can only effect £160,000 a year, I say he is trifling with the time of the House. The hon. Member for Barnsley (Sir J. Walton) said this tax was put on as an example of how stupid protection was, and to show the ridiculous result it would bring about. A time of war is not the time to try ridiculous experiments; you should try such experiments in time of peace if you must try them, but do not make the excuse for these taxes that they are imposed merely to show the country what a rotten system of taxation Protection is. I only rose because the hon. Member for Stepney seemed to charge us with trifling with the time of the House and not obeying the Prime Minister's will. I shall continue to act as my conscience directs me, irrespective of any jeremiads which may be thrown at us.
      Mr. THEODORE C. TAYLOR: One argument in favour of this proposal is that it will regulate exchange. I thought it might interest the Chancellor of the Exchequer and the House to be shown a
      1056
      better way of regulating exchange, because this proposal will not affect it very much. I am most amenable to the arguments which have been put forward. Somebody said on the Free Trade side, it is quite true that as a rule exports and imports pay for each other, but the object of the Government in endeavouring to check imports is a legitimate one. As the Chancellor of the Exchequer said a good many of our imports come from the United States, and the munitions which are the largest part are compulsory imports. I would like to tell the Chancellor of the Exchequer and the House of the kind of import that is going on, and it is not compulsory. With British money we are paying for imports of our Allies into France—I am speaking with first-hand knowledge—and we are importing cotton textile goods made in America because the War Trade Department or the War Office prevents the Allies who are buying these goods with our own money having permission to buy them in our own country. This is an actual fact.
      Mr. SPEAKER: I do not think that is relevant to this discussion, although it may be a very proper subject to bring before the House upon some other occasion.
      Mr. TAYLOR: The hon. Member for Devizes (Mr. Peto) desires that this tariff should be made more scientific, and so do I. I think we ought to have some regard to the Colonies. I do not think the Chancellor of the Exchequer has given sufficient attention to making this tariff as scientific as it ought to be made, and I think he might give this matter a little more attention before this Bill comes on in order to make its operation more scientific. That would be acknowledging what the hon. Member for Devizes forsees: that this is a Protectionist tariff and that it will assist industry, If you hit a man on the side of the head very hard, it does not matter what you intend, it hurts his head. If you establish a tariff against the interests of art or music which will have the effect of excluding musical instruments not only for the rich but for the poor, it will not be any advantage. We are not protesting against the intention of the Government; all we are protesting against is the natural effect of what they are now about to do.
      The CHANCELLOR of the EXCHEQUER (Mr. McKenna): I hope we may be allowed to come to a Division on this

      1057
      Vote. I have been charged with being unwilling to consider each case upon its merits, but I do not think that charge is justified. This is the second tax we have had to discuss. On the first, relating to motor cars I considered every business representation that was made, but with regard to this tax no single business ground has been put forward. I admit that there are taxes coming later, notably the Plate Glass Tax and the Hat Tax, with regard to which I know from outside information there are serious business objections to be raised against them.
      Lieut.-Commander WEDGWOOD: Surely the right hon. Gentleman is not going to consider only vested interests?
      Mr. McKENNA: The hon. Member knows that I would not consider any vested interests. We ought not, however, to put on taxes which are going to interfere unnecessarily with business and restrict unnecessarily trade which is good trade and not merely for this purpose, luxury trade. As regards musical instruments, I think in the midst of the War we are bound to regard them as luxuries. I do not wish to hamper trade; but when my hon. Friend charges me with having only a crude system I would answer that if this were a permanent and scientific system of Tariff Reform it would not be introduced by me and it would not be like this. This is a tax intended for present conditions, and it has for its object the restriction of imports and limiting expenditure on luxuries, and I think those two objects are satisfied.
      Mr. OUTHWAITE: Why do you not levy an Excise Duty?
      Mr. McKENNA: Because I cannot. Not only my hon. Friend, but others have repeated this argument again and again, and have asked why I do not impose an Excise Duty. I have not the machinery to do so, and I cannot. It would be ridiculous to set up the great machinery of an Excise for a ten months' tax. It would hardly be at work. I should not be able to engage the officials and train them for their work before the time for the renewal of the tax came. [An HON. MEMBER: "There are the difficulties of the export trade of musical instruments in parts."] I do not think that there really are difficulties. The export trade of musical instruments in parts offers no more difficulty than the export trade in sugar goods. I hope that this tax will be allowed to pass in order that we may get
      1058
      on to the other taxes, to which I admit there are more serious objections to be raised.
      Mr. R. LAMBERT: I want to ask the Chancellor of the Exchequer whether he can see his way to make some concession to the violin industry. I understand that violins are principally made at Mirecourt, in the Vosges. They come to this country, and are the exports of one of our Allies. It would be a very hard thing indeed if at this moment we hit a blow at our gallant Allies by taxing an industry of a part of France which has been very sorely tried during this War. I want to add a word in support of what has been said about strings. The raw gut is exported from this country to Rome and Verona in Italy, to Barcelona, Lyons, and other towns in France, and it is there made up into harmonic strings and sent back to this country. Again, it is very hard that we should tax an industry of one of our Allies, and in doing so we are bound to hit the export trade of our own people in raw gut. If the Chancellor of the Exchequer could see his way to make some concession with regard to the string instruments and to the strings, I am quite sure he would be doing good service.
      Mr. YEO: Do I understand that the trade has in no way approached the right hon. Gentleman in regard to this tax? What attitude does he intend to adopt with regard to those makers who are putting on 33⅓ without the tax affecting them in any way. I speak from thirty years' experience in the trade, and there are London-made instruments by the thousand, no parts being imported at all. Are these manufacturers to take this extra tax? After all, it is coming back upon the public, because when they come into our shops they will have to pay in addition to that 33⅓ an extra profit on that money. Cannot something be done to prevent the manufacturer putting on a tax that has never been put on him? Surely this is Protection in its deepest essence. We are allowing the manufacturer to set up his own factory, make his own piano through and through, except possibly for the growing of the wood, and he is going to charge in addition to the present price, which goodness knows is exorbitant enough—
      Mr. WATSON RUTHERFORD: Nine pounds ten shillings.
      Mr. YEO: I will buy as many as you like at that price. I can give you the name of

      1059
      a firm who will buy a million of them if you produce them at £9 10s. each. There is an order for you. They make them here, and put them on the market. The tax does not affect them, and yet they are going to charge us who are merchants the 33⅓ extra on the ordinary price, and we shall have to charge the people that and a little bit more besides. This is going to cripple the export trade of the piano industry. It is going to cripple the import trade of Germany. I will tell the House something from my own business experience. I have been thirty years in the trade, and I have not had twenty German pianos in my shop. I am a Free Trader, but I would not have them, because I do not believe in them. The Chancellor of the Exchequer is out for taxing extra war profits. Is he going for the piano manufacturers? Is he going to get this extra 33⅓ into the Treasury? If he is, then I shall not object to the tax, but, if he is not, I shall want to know why some step is not taken to prevent these people putting on that which they have never been charged. This is very far from being British business or honest business. I speak quite freely, and I say to the Chancellor of the Exchequer that I have in my hand a protest from the trade and a request that I should support a petition against this tax. Good heavens, they have never had to pay it, and they have never been charged it! Yet if I want a piano I have got to pay 33⅓ extra. It is not playing the game. This is the way of all patriotic employers. Yes, they pay the tax willingly and gladly—with other people's money. They make it out of the people. I am about sick and tired of taxes of this kind which do not deal with the thing direct.
      I shall not rest content if I find that this tax goes through this afternoon. I do not wish to hamper the Government or to go into the Lobby against it. I wish to support them to get this Budget through, and, with other Members of this House, I desire to see this War prosecuted to a successful conclusion, but how can you expect business men who have the utmost difficulty in life in paying their way to pay the taxes that are put upon them when, on the other hand, manufacturers take out of them that to which they have no right? Look at it from any standpoint you like. I do not care from what standpoint you look at it. I may not be polished in my language, but I speak from my heart. It is utterly im-
      1060
      possible to be cool when we find it hard to support the Government and pay our way. I speak very little in this House, but I think I am as loyal a supporter of the Government as they have got behind them, or anywhere else. This is almost breaking one's loyalty to their principles and to the Government, and it is high time that this House woke up to the fact. Take it off hats. Good gracious, how much will that affect industry? I am surprised that men are fools enough to come into this House and take up the cudgels of an industry which has always been protected and which, when a tax is put upon it, wants somebody to take up its case. Twelve months ago we could sell London-made instruments on the English market for eighteen guineas. To-day we cannot retail one at an ordinary profit of 10 per cent. under thirty guineas. Now, on the top of that, we have got to add something extra. I make no excuse for repeating it. I represent a working-class constituency, and the working-classes have as much right to music as the upper classes. It is one of the things which helps to pass winter evenings and to bring harmony into the home. It is one of those things which when friends get together often keeps them out of a public-house, and helps them to spend happy evenings in their homes. I have said enough about the piano. I shall keep my eye on the Chancellor of the Exchequer, and I shall want to know whether he is not going to keep his eye on this 33⅓. It is an injustice to this House and to the nation for any manufacturer to put a tax of 33⅓ per cent. on any article on when he has never been compelled to pay it by the Government.
      There are gramophones, nine parts out of ten of which are to-day made in this country. They have British cases, British sound arms, British boxes, and British horns. Of many gramophones only the motor is a manufactured article, and that is made in Switzerland. What are you going to do with the gramophones? I have been ordered to sign an agreement before manufacturers will send their goods to me. Is this business? I have another letter from a firm which has always made everything that it sells in this country in another department, and the Chancellor of the Exchequer can see it, telling me that I must sign the agreement by the 1st of October, which is to-morrow, if I want my goods to come in at 33⅓ advance. You can dismiss the tax for what you are going to get out of it. The revenue it is going to bring to this country will be outshone

      1061
      and outdone by the harm it will do to industry and trade within our own borders. The Board of Trade have asked this country to put its best effort forward and to try and catch German trade. The Chancellor of the Exchequer is bringing in things which are going to prevent us doing anything of the sort.
      What will happen when this War is over? The manufacturers in this House who may be importers and exporters will go back to Germany if they can buy the article cheaper there than they can buy it in their own country. We have very little consistency, any of us, except when it touches our own pocket. I am not afraid to admit it, and hon. Members can make what reply they like, but they cannot say that Tariff Reform is a good thing when it makes the people of this country pay that which they have no right to pay, and that which has never been put on by the Government. No Tariff Reformer can say it is a right thing that pianos, organs, gramophones, and other instruments which are manufactured in this country, should have a tax of 33⅓ per cent. put upon them when the Government has never put it on for the purposes of the War. I apologise if I have been heated, or vulgar or rude, but business will never come to this country unless we adopt business methods, and if you call it business to put a tax upon those things which are manufactured in this country which have advanced 45 per cent. to 55 per cent. since the War began, I call it business of an insane kind, and it is unworthy of the business men of the British nation. I appeal to the Chancellor of the Exchequer with all the warmth I can in regard to this tax, and I assure him it will do no good and it will injure trade. I know one firm that has invested over £500,000 in this particular branch of industry which employs 800 men and which has given 300 men to the War, and it would, if this tax were removed, be able to increase its output and give a larger supply to the British market at the old prices, and would be able to create a bigger export trade than it has ever had before. But you are going to tie them up and throttle them. If the Chancellor of the Exchequer gets anything out of this tax he will be a lucky man.

      CLOCKS, WATCHES, ETC.
      Resolution reported,
      18. "That on and after the twenty-ninth day of September, nineteen hundred
      1062
      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:—
      Clocks, watches, and the component parts of clocks and watches."
      Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
      Mr. LOUGH: My right hon. Friend has invited us to discuss the features of these particular taxes. The complaint that we make against him is this: Suddenly a Resolution is read out at the Table. It falls like a bombshell in the House. We do not know why clocks and watches are chosen. There has been no justification put forward for this tax. The Chancellor of the Exchequer said, in reply to my right hon. Friend (Sir A. Mond), that he had justified the tax. I ask the House has any justification for the selection of these articles been given? Nothing of the kind. Probably my right hon. Friend would say he has given a general justification, which was that it is necessary to stop imports. Then we ask why do you not take imports which are increasing—very large imports? He seems to have selected imports which are rapidly diminishing, and he is giving nearly a final blow to trades which are already suffering very much. With regard to clocks and parts thereof, the import is rapidly diminishing as it is. The figures are, for the first eight months of the year 1913, £294,000; 1914, £278,000; and 1915, £174,000. So the thing has gone down nearly 50 per cent. before the tariff was introduced at all. The imports of watches for the some periods were £1,100,000 in 1913; in 1914, £875,000; and in 1915, £782,000. So that there again the imports are rapidly diminishing. We are told these things are luxuries. What kind of clocks are these which are imported? Wooden clocks; the cheapest clocks that you see in the houses of the poor. What kind of watches? Waterbury watches; the watches of the working man at 5s. or 10s. apiece. What will happen? You say that watches of the same kind, of British manufacture, will be sold. Let the House bear in mind the speech to which we have just listened. The 10s. watch in this country will be increased to 13s. 4d., although no tax is put upon it at all. The cheap

      1063
      watch will be shut out, and the other watch will be increased to 13s. 4d. The Chancellor of the Exchequer will get £250,000 out of the tax, but the nation will pay at least £500,000, perhaps £750,000, and instead of that large sum coming into the Treasury he will only get that small share of it that goes on foreign watches.
      My right hon. Friend said one thing on the last tax that I rather resent. He said no business arguments were presented, and he urged his good character. I admit that he has obtained recognition from us all of his consideration, and I was going to say his honesty, but that might be wrongly interpreted, with regard to motors. He has met us largely with regard to motors, but he made no concession with regard to musical instruments, the gramophone, or the jew's harp, or the piano, or any instrument of the poor. I want him to consider this point of omitting parts of watches and clocks. The imports of clock parts has hardly diminished at all, showing that our people, to keep up the manufacture, want the parts. The imports of the parts were £313,000 in 1913, in 1914 £232,000, and in 1915 £197,000, so they have only gone down very little, and it shows that the parts are very much wanted. Our manufacture in this country will be greatly embarrassed, and our export, which we want to increase, will be greatly diminished if these facilities for manufacture are removed. I present these two arguments, and I would ask my right hon. Friend respectfully to answer them. In both cases the import is rapidly diminishing as it is, and the people in these trades are suffering very much. I will not go into the general argument again, which has been put so often, about the compensating Excise Duty, but trade which is to pay our taxes and carry us through the War is suffering very much. My second point is that the parts might very well be omitted. In fact, a word stuck into all these taxes without sufficient consideration will give more trouble than anything else, because the parts are often useful for other things. I do not say that of clocks and watches, but many motor parts are used for other things. I suggest, therefore, that my right hon. Friend would do well to consider this point in this tax, and we should be greatly indebted to him if he could give some lucid explanation of the reason why he has selected these things in which the import
      1064
      is diminishing so rapidly, and which are not luxuries of the rich but necessities of the poor.
      Mr. McKENNA: It is quite true that the import of these articles has diminished, as compared with the pre-war period. I think the right hon. Gentleman will agree with me that in the midst of war the import of these articles is still excessive. We have really not got the power to produce goods for export in order to balance our trade. We have neither the capital nor the labour available, having regard to the claims upon both owing to the necessity for war construction. In view therefore of the limitation of our possible exports, it seems to be only rational and proper that we should seek by measures such as these, in some degree at least, to limit our imports. The particular articles which we have chosen have been chosen, as I have endeavoured to explain so unsuccessfully, primarily upon the ground that their consumption is not required in this country; secondly, upon the ground of improving our fallen exchange, and thirdly, upon the ground that, in satisfying these two objects, we shall still obtain a certain degree of revenue. I quite admit the force of all the objections which are raised to these taxes. I only propose them during the War. They are limited in time to 1st August next. They will have to be renewed, therefore, in the next Budget in order to go on for the suceeding year, and in the absence of any direct argument touching the actual business concerned, I would appeal to the House to accept these taxes. I think there is great force in the speech made by my hon. Friend (Mr. Yeo). I will certainly do my best to explain to the manufacturers the folly of putting up their prices 33⅓ per cent. They will certainly have to raise their wages, and they will find it very difficult to get those wages down again when the tax comes off. I will certainly do my best to explain those elementary facts to them. But we have to look at larger considerations, and looking at those objects, I think this is a tax which the House might be asked in the circumstances to accept.
      Mr. LOUGH: What about parts?
      Mr. McKENNA: If we excepted parts the tax would become absolutely nugatory. All the goods would be brought in in parts, ready to be put together again, and the whole tax would be rendered inoperative. When we come to the next two taxes I

      1065
      shall have something in the opposite sense to say, in view of the business representations which have been made to me with regard to the trades.
      Sir A. MOND: I really cannot quite follow my right hon. Friend in his defence of this particular duty. I could understand if the bulk of these watches and clocks were imported from America, in which the exchange is unfavourable to us, there might be some slight point in it; but a very large proportion of the trade, I am informed on authority which cannot be denied, comes from Switzerland; particularly the better class of watch, and not the very cheap watch. It has been represented to me that whereas 33⅓ per cent. on a very cheap watch may not much diminish the sale of that watch, 33⅓ per cent. on a better and more expensive watch is practically prohibitive, and the question put to me is why we select this in order to very much damage a considerable Swiss industry, in view of the fact that Switzerland already is in an unhappy condition owing to the position in which she is placed through the War. I will not put it any higher than that. It seems rather an unfortunate thing to do, because the Swiss exchange, after all, is fairly normal, and I do not see that you are going to benefit the exchange by taxing Swiss watches or clocks.
      6.0 P.M.
      There is another business point I should like to present. I have a letter from a very large wholesale firm dealing in watches, chiefly of Swiss manufacture. They say the immediate result of the announcement of the duty is to cause a rush of people anxious to buy at low prices. For a short time their returns will be abnormally increased, and likewise their profits. In the endeavour to continue business they must replenish their stock. A slump in trade will follow as a matter of course, and if on 31st July next these experimental duties are discontinued, as indicated, they will lose at once 25 per cent. of their capital, which is represented by the stock they are at all times compelled to hold. They will have no option but to face a loss, and many firms will be severely crippled. It will, of course, be open to any speculator to come to England and to supply their customers at greatly reduced prices, and they will have to face their loss, while at the same time those people will benefit who contributed nothing in the way of taxes to the upkeep of the country. I should like to point out to the right hon. Gentleman
      1066
      that there is a business objection which does not seem so far to have been considered—that is, the temporary nature of these duties. The right hon. Gentleman said that he is going to point out to the rapacious manufacturer who is raising prices the fact that the duties may come off next July, and that it is very foolish of him now to take temporary advantage of the duties. But has he considered that if people have imported goods and have paid the duty, if the duty comes off they will be left with a large amount of stock on hand?
      It is one of the inherent difficulties and vices of this protective form of duty that you cannot get away from, whatever motive you have, that if you keep altering and tampering with it you must inflict a very grievous disturbance of business on a large number of people. Therefore, what is the result? When that time comes you will be faced, as sure as I am standing here to-day, with an insistent demand that these duties shall be kept on. When the right hon. Gentleman says, "These duties shall be taken off," there will be an insistent agitation that the right hon. Gentleman shall not be permitted to take them off. The right hon. Gentleman stands there, as every Chancellor of the Exchequer has done in these circumstances in the middle of a war, and says, "I will reduce these duties and I promise to take them off." I challenge the right hon. Gentleman to produce a single instance where duties which have been imposed in the time of war have ever been taken off. If he will produce a single precedent in favour of this argument, it will be an interesting historical event.
      There is not much to be said for these duties. I cannot see why he should argue that people should not be allowed to buy a watch during the War. I have pointed out before, and may have to point out again, that a very large number of these watches are bought by men and very largely by officers who are going to the front. The possession of a watch is not a luxury but a necessity. All the illuminated watches which officers have to wear in the trenches are not luxuries but absolute necessaries. They form part of their equipment. Yet the right hon. Gentleman says that we do not want anybody to buy a watch during the War. You must know what the time is. That is a daily necessity. People do not buy watches for the fun of the thing, but because they want them, and it is not an extravagance. I know

      1067
      that none of the arguments of this or any other character are likely to affect the result of what we are doing this afternoon, but I do regret that the right hon. Gentleman has not seen his way to introduce some kind of graduation into the schedule. It is a bare 33⅓ per cent. on all forms of watches. If the right hon. Gentleman said we want to exclude the very expensive gold watches I could understand having a schedule to exclude them, but why must he have the same schedule for every kind of watch? The schedule bears much harder upon the lower priced article than on the higher priced article.
      The right hon. Gentleman will answer that this is a simple way of doing it, that these taxes are not going to be permanent, and that it is not necessary now to go into the question of graduation of a tariff schedule. The fact that he will inflict unfair hardship, and the question of the English watchmakers, is not considered at all. I understand that the services of many people who make watches are earnestly in demand for certain fine work in making munitions. Why does the right hon. Gentleman want to encourage people here not to do munitions work, but to make watches? Why does he want to make it still more difficult for the Munitions Department to get the people they want by creating a greater demand for English watches? These questions want looking at as a whole, and not so much as if they were in water-tight compartments. The right hon. Gentleman is taking exactly the same thing as the Minister of Munitions wants from his point of view. That is a very serious consideration. It is better that we should make less watches if we can liberate our watchmakers for munitions work. You cannot liberate the watch makers in Switzerland for making munitions. The tax the right hon. Gentleman is going to get is small. I am sorry he has no cheering news to give to us on this tax the same as he has held out to us in regard to some of the later taxes.

      HATS, ETC.
      Resolution reported,
      19. "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 hats (including all forms of headgear) imported into Great Britain or
      1068
      Ireland a Customs duty of an amount equal to thirty-three and one-third per cent. of the value of the article."
      Resolution read a second time.
      Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
      Mr. DENNISS: I think that possibly I may be able to bring a cheering message to the Chancellor of the Exchequer in regard to this tax, because a deputation of the trade which met me yesterday at the London Chamber of Commerce asked me to tell him that the trade do not object to the tax at all. All they want is that it should be clearly ascertained and defined what a hat is. There is no such definition of it as there is of the other articles which are taxed in the other Resolutions. For instance, various kinds of tobacco are all set out in detail, and the same thing applies to the case of cinema films, but in the case of hats there is a generic term "headgear," that is all. The Chancellor of the Exchequer will be interested to hear that the same deputation interviewed the Customs officers, and that the Customs officers are just as much puzzled as themselves. All I want the right hon. Gentleman to do to-day is to give sufficient time for the Customs officials and the trade together to arrange what the particular article is that is to be taxed. There is a statistical definition of hats contained in the Customs blue books and regulations. Those statistics provide the people of this country with information as to the extent of imports and exports of hats. They classify hats in this way:—
      "Straw hats, felt hats, and hats of other materials."
      As a matter of fact, they include under straw hats pieces of straw manufactured in the shape of a bath mat, which are of the sort of consistency of which a great many of the straw hats for ladies and men are made. They also include plaited straw of various shapes, of forms which no human being would dream of calling a hat or attempt to use for that purpose. The same with felt. Pieces of felt, more or less circular, sometimes concave, sometimes convex, are all classified as hats, so far as regards imports. If this Resolution is passed the trade will be obliged to pay this 33⅓ per cent. tax upon that which is practically raw material from which the hats are made. It is just as much raw material for the hatter as the leather which is imported is the raw material of the boot-maker. The Customs say that they are willing that it should be said that this

      1069
      appeal to the right hon. Gentleman has their sympathy, because it is ludicrous to suppose that they should be obliged to tax as a hat that which under no possible circumstance could be called a hat or anything like it. Both of them are agreed that if the right hon. Gentleman will alter this Resolution by inserting, instead of 29th September the 1st November, by that time they would probably have agreed upon a schedule and upon what is a hat. That is the appeal I make to the right hon. Gentleman. If he will agree to that I shall have nothing more to say. I might further say that these raw materials come, as to more than half of them, from our Allies, from Prance, Italy, and Japan. That being so, it seems objectionable to tax them as the raw materials of a particular industry here, and it is not quite wise to tax them when they come from our Allies. I have also been asked to say that there is a good deal of re-exportation of hats, and that the right hon. Gentleman should arrange in some way that these re-exports should have the tax rebated so that exports may be encouraged. I hope the right hon. Gentleman will carry through this Resolution—on behalf of the trade I ask it—and that he will grant me the Amendment of the date for which I ask.
      Mr. CECIL HARMSWORTH: I am afraid I have not quite so cheering a message to convey to the Chancellor of the Exchequer as the last speaker. I happen to represent what is undoubtedly a most important hat manufacturing district, and my Constituents are very much divided on this question. Whatever their political or whatever their economic views may be, I find that if they are manufacturers they reconcile themselves to a tariff on completely manufactured hats coming from abroad. It happens, however, that by far the largest proportion of the import is in connection with what, in other trades, would be described as raw material. I will not trouble the House with technical terms which, though well understood in Luton, might not perhaps be comprehended here. I am informed on very good authority that if this tax is imposed it will fall as to its incidence on an import, 75 per cent. of which is raw material. There are in this trade half, quarter, and one-eighth manufactured goods, and there are a great variety of named forms. I say that these goods, in the hat industry as I know it, are as much raw material as a bar
      1070
      of steel is raw material when associated with the manufacture of cycles.
      I do not want to argue this question from the point of view of political economy. I am sure my right hon. Friend, with whom I have worked in close association, will not mind my saying—and I desire to put it on record for my own purposes—that I regard this schedule of taxes on so-called manufactured goods with positive dismay and apprehension. I am, as I know my right hon. Friend is, a shameless and inveterate Free Trader, but on this occasion I really wish to support the representations of my hon. Friend the Member for Oldham. I do not wish to go any further than that—in asking my right hon. Friend if he will be kind enough at least to postpone the operation of this tax until the trade can adjust itself to the changed conditions, and until, what is more important, the Commissioners of Customs and Excise have arrived at something approaching a scientific description of what is a hat.
      Sir J. D. REES: My complaint against the Resolution is that it does not make it as clear as it might, and as I hope it will do eventually, that headgear includes trimmings. My hon. Friend has asked for a definition of hats. He said it was wanting in the Resolution, but I beg to point out that "hat" is described as "including all forms of headgear." That reminds me of the Parliamentary definition of an archdeacon as an ecclesiastical officer who performs archidiaconal functions. I should like to know what definition of a woman's hat can be given. It costs a great deal more money and is far more effective than a man's hat. I submit that the hat is practically the trimming. A hat is nothing without trimming, and this brings me to my point, and that is the trimmings of women's hats are mostly silk and cotton lace. This Resolution might with great advantage be amended so as to make it perfectly clear that silk and cotton lace, and also embroidery, so far as it is imposed on the net beneath, should be subject to this taxation.
      I will not venture to say a word to justify the reproach levied at me by an hon. Member opposite on the general fiscal question. I really was under the impression that a repetition of the general argument was out of order, and I express my regret for having troubled the House on that point. I do suggest that this is of the utmost importance to a trade in

      1071
      which everybody must be interested. The hat is a luxury. The silk and cotton lace upon it is imported from abroad. I would be the last to suggest that this tax should be imposed in order to give preference to a home industry. I thoroughly understand from the speeches we have had to-night what a disastrous thing that would be, and I have no reason to make any such suggestion to an evidently hostile row of benches. But, after all, the silk and cotton lace and embroidery imported into this country represented, in August last, £110,000. There is really money in this, and there is no consideration of greater importance than that at the present moment. Money is the one and only thing that is of importance just now. I venture to submit to the House that so-called Swiss lace embroidery which comes into this country is generally of Austrian or German manufacture, and that is one of the reasons why I want this Resolution amended. Perhaps the Chancellor of the Exchequer will admit that it does cover silk and cotton lace, and if so I shall be satisfied. But if the Resolution is to be amended I beg the right hon. Gentleman to consider whether he cannot alter it in the direction of preventing this country from in future providing the Germans in any way with powder and shot for the shooting of our soldiers. If I may have the attention of the Chancellor of the Exchequer—I am sorry to say I had not on cocoa—I would ask him, during the week that is coming—a week which I am sure he will spend to the greatest advantage in studying this question—to consider this point and also to receive a deputation from certain friends of mine in Nottingham.
      Mr. TAYLOR: The Chancellor of the Exchequer must, I am sure, have been delighted with the speech of the hon. Member for Oldham (Mr. Denniss). The hon. Member asked him in the coming Bill to define a hat. It is a very difficult thing to define headgear, a task, I think, which might take the right hon. Gentleman a year or two, and I would suggest that the London Chamber of Commerce, or that section of it which deals with headgear, might be asked to decide what hats are. I quite agree with the hon. Member for Nottingham (Sir J. D. Rees) that this is a very important question. I wonder if any man here, except possibly some in the drapery trade who know more about it than I do, has the remotest idea how many things go to the making of ladies' hats. It
      1072
      is not merely straw plaits. There are a multitude of other things. As a woollen manufacturer I am at present making woollen velvet, which we sell to customers who use part of it for making hats, and the remainder for making up into garments for women and children. Hats are composed of the same kinds of material as go into the make up of articles of dress of every kind, ribbons and laces, and leather lining and silk lining, both of which, with felt, enter largely into the composition of men's hats. I venture to say it passes the wit of mortal man to say what does not go into the make-up of a woman's hat.
      This is a question of headgear as defined by the Chancellor of the Exchequer. We asked the right hon. Gentleman during his Budget speech, "Does this include women's hats?" and he replied, "All forms of headgear." We now have those words in the Resolution before us—"all forms of headgear." I want to know if headgear does or does not include wigs. I want to know if it includes nightcaps. Have we a Free Trade Chancellor of the Exchequer taxing nightcaps made of wool, and not taxing nightcaps of a very different kind which might well have been taxed? I want to know whether it includes respirators. I do not see why it should not. Those used in mines cover the head, and are very much akin to the so-called helmets used in the Alps. Hats are made out of all varieties of raw material. I want to know if the Chancellor of the Exchequer intends to include, as I assume he does, all the materials which go towards the making of hats—say, for instance, as leather lining. The same leather is used for making gloves and for a hundred other purposes. Take silk; that, too, can be used for many purposes. It is utterly impossible to include with the hat all the materials of which hats are made—all the component parts.
      Mr. DENNISS: There is nothing about material in the Resolution.
      Mr. TAYLOR: Is it the intention of the Chancellor of the Exchequer to include, not only finished ladies hats, but partly finished, and even hats with no artificial flowers?
      Mr. DENNISS: No.
      Mr. TAYLOR: The hon. Gentleman says "No!" But I want to be told by the Chancellor of the Exchequer whether by his proposal he is taxing the complete article or the semi-manufactured article,

      1073
      or the raw material. It is a very important question, and I venture to say no proposal is so likely to get him into a serbonian bog as this. I defy the Chamber of Commerce to make a sensible definition of headgear, as to what are the component parts, and I defy anyone to secure, by any Customs or Excise regulation whatever, that when you import these things you can control the use of them. Take the case of imports of silk and ribbon. We know that ribbon is used for the trimming of hats very much in some fashions, and not so much in other fashions. That is to say, if you take a piece of ribbon, one part of it may be used for hats and another for trimming dresses. The same piece of ribbon may be used partly for trimming a hat and partly for trimming a little baby's garment. It is utterly impossible to make any sense of this tax on headgear, and I do not wonder that the London Chamber of Commerce have asked for more time to make a definition of what is a hat. The difficulty is great, more particularly when you come to say what is headgear. Is a widow's bonnet, a widow's toque, a widow's or a servant's cap, headgear? Certainly these constitute headgear. There are two main difficulties in dealing with this matter. The first is to find out what a hat is, and the other is, and I am perfectly certain it is an insuperable one, to tax the material, or rather the trimmings.
      An HON. MEMBER: He does not propose that.
      Mr. TAYLOR: Then let us go on the assumption that he does not propose that, and that this is a proposal to protect the industry of trimming hats, manufacturing hats, or what you may please to term it. The British hat industry, which is a large industry, does not need that protection.
      Mr. McKENNA: There is no question of Protection.
      Mr. TAYLOR: No question of Protection! Well, at any rate, it operates in that way. Whatever it may be in the matter of intention it operates in that way.
      Mr. HINDS: The hon. Member for Oldham (Mr. Denniss), when he commenced his speech, said he came with a cheering message to the Chancellor of the Exchequer, and that the Chamber of Commerce of London did not want this tax taken away. I know something of the Chamber of Commerce of London—I was to be one of a deputation last week—but
      1074
      I am not of the same opinion as the chamber of commerce in this matter. I am going to ask the Chancellor of the Exchequer to take this tax away. I cannot for the life of me understand why he has put hats in at all. Why put hats in for taxation and not boots or many other things one can think of? I am heartily sorry for the Chancellor of the Exchequer, because I admire him very much. I admire a good many of the things he has done in this House; in fact, all the things he has done in this House have met with my complete approval, but in the last few days I have been heartily sorry for him. His heart is not in these taxes. He does not believe in wandering away from the Free Trade principles which he has preached for many years. If this is not Protection, taxing hats in this way, I do not know what is Protection. If we cannot get this protection taken away, I join with the hon. Member for Oldham in asking that time shall be given to reconsider this question. It is a matter of great importance to define exactly what is meant by headgear. Manufacturers have been getting their hats from Italy, France, and Japan. Those are the three principal places that these hats have been coming from. It is very difficult to classify what is headgear. If you saw the explanation of what is comprised in the classification of headgear at the Customs House you would be astonished at the different things that come in under the classification of hats. You may get a piece of straw, 18 inches square, not exactly straw, and it is made into headgear when it comes into here; it is not classified until it comes in.
      There are thousands of other things which enter into this complex question. As the people I saw this week said to me, "How is it that the Chancellor of the Exchequer is going to tax the raw material of the hat in this manner? Why not tax silk and everything else? A hat is made of buckram, on which is built up a good deal of ribbon, silks, and plumage. The Chamber of Trade do not want any of this raw material to be taxed, but they informed me that they would raise no objection to the imposition of the proposed tax on finished hats, whether trimmed or untrimmed. I go a great deal further, and I ask the Chancellor of the Exchequer, in view of his Free Trade principles in the past, not to impose this tax on the trade at the present time. It will be hitting these allied countries very hard. We used to import into this country a good deal of

      1075
      hats from Austria and Germany, but at the present time we are importing from France, Italy, and Japan, and these allied countries are doing their level best, and doing it successfully in spite of the War, to build up an industry in this direction. I do not wish to say anything further in regard to classification, but I do say that the effect of this tax on the trade will be really bad. Some of us wear the soft trilby hat. A Luton manufacturer said to me the other day, "Look at this piece of felt. It comes into this country, and it costs 1s. 3d., and the labour that is put into it at Luton puts the value up to 4s." That represents 2s. 9d. for labour and I suppose a little bit of profit for the manufacturer himself. It may seem a very small matter, but there is a great deal of labour in this country which will be hit if these taxes are put on. I think no case whatever has been made out for singling out hats any more than anything else. If the Chancellor of the Exchequer wishes to bring in a real Tariff Reform Budget let him do so. I object to these Import Taxes. I do not say anything now about the Motor Tax because that has been passed, but to all business men a motor is a necessity. I would rather pay a double licence than be taxed in this manner. All these things are bad and insidious, and we ought to stop them. As a Free Trader I object to hats being taxed, not that I am unwilling to pay my fair share of taxation, but on the principle that this form of taxation is bad for the country and bad for trade in general.
      Mr. RUTHERFORD: I believe that not many years ago there was a tax on hats imported into this country. Therefore it ought not to be so exceedingly difficult, from one point of view, to resuscitate that tax. During the last fifty years, however, the composition of hats, especially ladies' hats, has very largely altered, and I confess that I do see some very serious difficulties which the Chancellor of the Exchequer will have to face in connection with the taxation of hats to-day. The hat, of course, as most lay people know, consists of two things, the foundation and the trimmings. Some hats consist of very little foundation but a vast quantity of trimming. Other hats practically consist of the foundation. I have seen skilled people dealing with that class of material, and I have seen some material that nobody would dream of calling a hat, or
      1076
      could possibly have anticipated, if they did not know, that it was capable of being made into a hat; I have seen that same material in the hands of a skilled person turned into a hat in less than five minutes. The point I wish to put to the Chancellor of the Exchequer is this: How is it possible, between one piece of leather and another, to say whether that piece of leather is going into a hat or whether it is going to be used for a boot? How is it possible, between one piece of felt and another, to say that that piece of felt is going to be used for a certain purpose or that it is going to be used to be made into a hat? I confess that I see endless difficulties. If any of those hon. Members who have ever taken any interest in this business were to go into a first-class ladies' hat manufactory to-day they would see that the transformation into a hat of materials which nobody could recognise as having anything to do with a hat is so simple, so short, and so complete, that it seems to me to pass the wit of man to say how the taxation is going to be levied so as to be really a tax upon hats. How the Chancellor of the Exchequer is going to solve that problem I do not know.
      Mr. TIMOTHY DAVIES: I do not see any difficulties in collecting this tax, but I do not see that the Chancellor of the Exchequer will get very much money from it. Hon. Members have been explaining what the hat is made of. I wish to know from the Chancellor of the Exchequer whether he intends to tax the article or whether he intends to tax the raw material before it is made up into the article. There will not be much difficulty in saying what a hat is. Anybody who knows anything about it, knows that there is no difficulty in that. You may go down to the Custom House and see a lot of material; if that material is to be made into a hat, without any further labour, everybody who understands the trade will see that it is intended for a hat. Hitherto we have only been speaking of ladies' hats, but I understand that this tax was introduced not only against the importation of ladies' hats, but primarily against men's hats, which come, not from France, not from Italy, not from Japan, but from another country from which we are very anxious that we should not have more stuff than we do at the present time. If anyone will take the trouble to look at the Board of Trade returns for the last

      1077
      eight months, he will find that the importation has diminished to a very small amount in regard to felt hats, the majority of which are men's hats, and, as I have already pointed out, do not come from France, Italy, or Japan. It appears from the return that for eight months of last year some £440,000 worth were imported, and this year only £61,000 worth. In regard to straw hats, the reduction is not quite so much.
      I do not think the retail trade, so far as I know, except one or two special houses in London, have any objection to the imposition of this tax if it is required, although as Free Traders we object to a tax of this kind. There is another objection to the tax besides that of principle, and it is that the Chancellor of the Exchequer will get very little from the tax. From the point of view of revenue, I would ask him is it worth his while to impose this tax? Has he thoroughly considered the very little revenue he will get from this tax? I do not think that the imposition of 33⅓ tax on the original value of ladies' hats coming into this country will keep a single hat out, when they are wanted. It is not the question of price, but it is the question of what a woman will have in regard to hats. From that point of view, this tax will not keep these hats out, and to that extent it will add a little revenue to the Treasury. But I want to put this question to the Chancellor of the Exchequer: Is it his intention to fall into line with the hon. Member for Nottingham, and to tax every kind of material which can be used to make up a hat or the trimmng of a hat? If he intends to do that, he will find a very big job before him. Is it his intention to tax the more than half-finished hat, or to tax everything that goes to make up a hat, either for a man or for a woman? At the present time, with the exception of the extreme French hats, there is very little trimming on the hats which are worn. There is less in the last year or two than there has ever been in the history of the country, so that there is very little material used on them. The chief point is, Does he think it worth his while? Speaking for a good many people whom I know who are dealing in this article, if he thinks it worth his while to impose this tax, they have no great objection. I am quite sure that the importers of the country will do their best to fall in with his proposal if he puts on the tax, but if he sees his way not to impose it they will be just as well pleased.
      Mr. J. SAMUEL: I hope that, as a result of the discussion which we have had, the Chancellor of the Exchequer will abandon this idea of placing a tax upon hats, because it is evident from the speeches which we have heard, including that of the last hon. Member, who is engaged in the manufacture of hats I think—[An HON. MEMBER: "Selling them!"]—that this is a protective tax pure and simple. After the speech of the hon. Member for Oldham (Mr. Denniss), it is quite evident that those who are engaged in the hat trade are anxious that this tax should be put on. [HON. MEMBERS: "No!"] That is the inference, and I would like to point out that it is not only the rich woman who buys these hats, but also the poor woman who has to buy these hats. The hon. Member for Liverpool pointed out that it is a very long time since this tax upon hats was imposed. The Hat Tax was abolished in 1861, and in those days they had a scientific tax. It is quite evident that the tax of the present Chancellor of the Exchequer cannot be scientific in the sense in which it was in the old days, and for this reason: Every one of the articles mentioned as raw material by the last two experts, and by the hon. Member for Nottingham, was taxed in the days when the tax was upon hats. I looked up a very important point with regard to that. We have to go back to the sixties to find these resolutions bearing upon indirect taxation. We have now thirty-one Resolutions, and we are growing. But in the time of Pitt, going back to 1787, 7th and 29th March, when the taxes were simplified, there were no fewer than 2,615 separate Resolutions passed in this House upon which the Budget of those days was based. Anyone who has traced, as I have taken the opportunity of tracing, the taxes upon goods will find that in certain years there was a very thick volume of all these separate taxes, and they dwindled until they came from 6d. down to nothing. The tax in those days was a very simple one. It did not bear upon the poor in the same ratio as this tax will bear upon them, as well as upon the rich. We are going to charge 33⅓ per cent. upon the poor woman as well as upon the rich woman. In the days when the Hat Tax was in vogue it was a very simple matter. In those days I believe that they tested the wealth and position of a lady by the size of her hat. The poor used to wear the small hats, and the large hats, no doubt, were worn by the richer ladies, because we have this indication that hats

      1079
      not exceeding 22 inches in diameter had a tax of £l per dozen imposed upon them, and, in the case of hats exceeding 22 inches in diameter, a tax of £2 per dozen was paid. That went on until 1845, when these taxes were reduced to 10s. and 15s. In reference to straw hats, I am informed that my hon. Friend who represents Luton, who I thought was rather anxious in the interests of the trade that there should be a tax upon straw hats—
      Mr. C. HARMSWORTH: No. I would desire to put no tax on anything.
      Mr. SAMUEL: He rather indicated that he agreed with the hon. Member for Oldham. Straw hats not exceeding 22 inches in diameter paid no less than £3 8s. per dozen. That was a very heavy tax. It was a very simple matter in those days to tax these, because all the material incident to the making of hats was also taxed by the State at that period. If we come to the other hats we find that there was a difference between the silk hat and the beaver hat, and it was a very simple form of taxation. Every hat made of felt or beaver which was imported paid a tax of 2s. 6d. In the case of silk hats there was 3s. 6d. paid on each hat. That was an indication that the rich man paid more than the poor man. That went on until 1853, when it was reduced to 1s. on each. In 1860 it was reduced to 6d. on the beaver hats and 1s. on the silk hats, and it was taken off altogether in the following year. Seeing that the Chancellor of the Exchequer is not able to tax all the material that goes to make up a hat it is very difficult for him to place a tax upon these hats, and I quite understand the position of the London Chamber of Commerce, who want to know whether all these materials leading up to the making of a hat are going to be taxed. They want that definition, for if you were to tax the whole of the material, as shown by the hon. Member sitting below, and the other practical men who have spoken, you would have to get a very wide schedule of taxes far beyond what is contained in this Resolution. Upon those grounds, and upon the ground that the hon. Member for Oldham pleaded that in a sense this would be a protective tax, we appeal that in this case, as in the next case, the Chancellor will not proceed with the tax.
      Mr. McKENNA: I have listened with great interest to this Debate, and I may be allowed to congratulate the House upon confining the discussion to this purely business aspect of this tax. I confess that the arguments advanced have the very greatest weight. I congratulate the hon. Member for Oldham upon the skill with which, while asking that the tax should be maintained, he suggested a postponement, and supported his suggestion by arguments that appeared to me to be directly hostile to the whole tax. He recited with great skill the real difficulties which had been represented to him with regard to this matter. Then my hon. Friend the Member for Luton also explained how the tax would affect injuriously individual traders as between each other—that is to say, it would operate favourably for one section of the trade and very unfavourably for another section of the trade. I thought that all those were very good business arguments directed to this particular tax. There is no intention to introduce Protection, nor in the cir-circumstances could it be done. A tax imposed for such a short period would not bring capital and labour into the trade. But I do not propose to go into that. There does seem to me to be, with regard to the duty on hats, a very great difficulty in the way of definition. It is almost impossible to say at what point the articles which go to make up a hat becomes a hat, and consequently the tax might operate to give an immense advantage to one trader in competition with another trader carrying on practically identically the same trade. I listened to the whole of the Debate with the greatest care and interest, and for the reasons which I have mentioned, I hesitated at the beginning of the Debate as to whether I would agree to the postponement of the date of the operation of the tax, or whether it would be really ever practicable to define the article in such a way as to render the tax reasonable for the purpose which we have had in view. I came to the conclusion that obviously it would be so easily evaded that we should probably do little more than harass the trade of our Allies, Italy, France, and Japan, who are the countries chiefly concerned in the export of hats, and I have therefore come to the conclusion in all the circumstances of the case that I ought not to ask the House to proceed with this Resolution. I beg my hon. Friends, when I fall in with their views in reference to a particular tax of this kind, not to make

      1081
      that the jumping off ground for a new set of arguments against other taxes, but that they will treat each case on its merits.
      Sir H. DALZIEL: I am sure that the House has heard with great satisfaction the statement of the right hon. Gentleman. I heartily congratulate him upon it. I only rise to point out that after all the House of Commons has some useful function left. We heard to-day from the Prime Minister that all these taxes were to be considered practically as one proposal, that the Cabinet had weighed and considered them and given their ripe judgment on them, and submitted them to the House practically as one definite proposal. I am glad that considerations were put forward by the House of Commons which were evidently not present to the mind of the Cabinet. Therefore, I think that the House may congratulate itself on the information which it has supplied to the Chancellor of the Exchequer and on the general result of our proceedings. Personally I do not want to make any capital out of the concession which the right hon. Gentleman has made. I think that it would be wrong to do so. As a Member of the House, I heartily thank him for keeping his mind open to arguments that may be put forward, and I only hope that he will adopt the same attitude with regard to the other proposals contained in this Budget.
      Question put, and negatived.

      PLATE GLASS.
      Resolution reported,
      20. "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 all plate glass imported into Great Britain or Ireland a Customs duty of nine shillings and sixpence per cwt., and so in proportion for any less quantity."
      Resolution read a second time.
      Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
      7.0 P.M.
      Mr. J. SAMUEL: In the discussion on the last Resolution we were able to persuade the Chancellor of the Exchequer of the injustice of that tax. If it is unfair to place a tax on hats, it is a much greater injustice, in my opinion, to place a tax on the free importation of plate glass. I am given to understand, and I am speaking on good authority, that we have in this
      1082
      country only one manufacturer of plate glass, who at the present time has a complete monopoly in this article, which is one of great service to the commercial community. This is not?—recalling the Colonial Secretary's description last night—a sumptuary tax; it is an absolute necessity. The old tax upon plate glass was abolished as far back as 1853 and we have not had any reimposition of this tax until now. I appeal to the Chancellor of the Exchequer not to exact this tax from the community. I am given to understand that our imports of plate glass come principally from Belgium. In 1913 our imports of plate glass amounted to £299,000; in 1914 they were reduced to £206,000; and in 1915 they are down to £128,000. The effect of the reduced imports of plate glass, has led to a very considerable rise in the price since the War broke out.
      If you take sheet glass, which is not supposed to be touched by this Resolution, it has gone up, I believe, by 100 per cen. Those of us who have been engaged in business, and who live in towns, know that all the shopkeepers, in the interests of their business, use plate glass for their windows, and in some cases they have almost a quarter of a mile of plate glass put into their premises. If a smash should occur, through air raids, such as we have had in London, an enormous cost is involved in the case of business men, especially when they have to pay the increased price for plate glass, which is due to the outbreak of the War. I know it may be argued that the plate glass is insured; but if tradesmen are to be compelled to pay this tax, which it is sought to impose, they will be bound, in addition, to also pay the increased cost of insurance, because the loss to the insurance companies, in my opinion, must be enormous. Upon these grounds I do hope that the Chancellor of the Exchequer will follow the example which he set in regard to the last Resolution, on which he met the appeal which was made to him from all parts of the House, and that he will not press this tax.
      Sir WILLIAM PEARCE: I hope the Chancellor of the Exchequer will listen to what is said in this Debate, because in many instances plate glass is really a raw material. I am told by manufacturers concerned that, if the duty is put on, there will not be sufficient plate glass in this country to meet full requirements. They are extremely anxious about this matter, because they say their businesses will be greatly disturbed. They pointed out that in the

      1083
      furniture trade particularly a good deal of plate glass and bevelled glass is used; and they further point out that furniture made in Germany is largely exported to South America and other countries, and they are afraid that this tax might do serious injury to the furniture trade of this country. I hope the right hon. Gentleman may see fit to make a concession in regard to this particular duty.
      Sir CHARLES HENRY: I am at a loss to understand why the right hon. Gentleman has included plate glass in his Budget. The only reason that I can conceive is that he thought plate glass was an article which would be difficult to smuggle and so evade the Customs officers. I am convinced that the arguments which have been advanced by my hon. Friends must weigh with the Chancellor of the Exchequer, and I would point out that the recent air raids, and which are likely to be repeated, may lead to plate glass being required in far larger quantities than hitherto. I submit that there is ample evidence why this tax should not be imposed.
      Mr. McKENNA: The effect of this tax has been forcibly brought to my mind both by what hon. Members have said here on this occasion and by the representations of the gentleman who is described as a monopolist in this trade. I think he was formerly a Member of this House, and is well known as a Tariff Reformer. He, however, so little regards this tax as a tariff tax, that, as a supposed monopolist, he is opposed to it. He has given precisely the same business reasons that have been brought to my attention to-day. In these circumstances, when I find that these objections to the tax, pure business objections, are made both by the only manufacturer in this country and by hon. Members who are looking at the trade from the outside, I feel that it is a case in which it is my duty to recommend to the House to disagree with the Resolution.
      Question put, and negatived.

      CINEMATOGRAPH FILMS.
      Resolution reported,
      21. "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 all films imported into Great Britain or Ireland for the purpose of the exhibition of pictures or other optical effects by means of a cinematograph or
      1084
      other similar apparatus, the following Customs Duties, namely:—

      Per linear foot.

      s.

      d.

      Blank film, on which no picture has been impressed, known as as raw film or stock

      0

      0½

      Positives, i.e., films containing a picture and ready for exhibition

      0

      1

      Negatives, i.e., films containing a photograph from which positives can be printed

      0

      8

      SPIRIT (TABLES FOR ASCERTAINING WEIGHT OR STRENGTH).
      Resolution reported,
      22. "That amended tables for ascertaining the weight or strength of spirits shall be substituted for the tables now in use for that purpose."

      INCOME TAX (GENERAL).
      Resolution reported,
      23. "That—

      (1) For the last six months of the current Income Tax year the rate of Income Tax shall be forty per cent. higher than the rate fixed by the Finance Act, 1915 (namely, three shillings and six pence instead of two shillings and six pence), and the rates of the amounts payable in respect of earned income and in respect of small incomes under Section six of the Finance Act, 1914, as amended by Section ten of the Finance Act, 1915, shall also be increased by forty per cent. for that period.

      (2) Effect shall be given to the said increase of tax as follows:—

      (a) By making such deductions in the case of dividends, interest, or other annual sums due or payable after the fifth day of October, nineteen hundred and fifteen, as will make the total amount deducted in respect of Income Tax for the year equal to that which would have been deducted if Income Tax for the year had been at the rate of three shillings;

      (b) By treating the amount payable in respect of any assessments already made of tax chargeable

      1085
      otherwise than by way of deduction as increased by twenty per cent.;

      (c) By increasing any such assessments not already made by twenty per cent.; and

      (d) Where the amount of any exemption, relief, or abatement under the Income Tax Acts is to be determined by reference to the amount of Income Tax on any sum, by calculating the amount of the tax at three shillings.

      (3) It is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

      Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
      Colonel YATE: I would like to ask the Chancellor of the Exchequer a question in regard to this Income Tax. In the case of warrant officers and non-commissioned officers of the Army, their pay has been hitherto under the Income Tax limit, but the limit has been changed from £160 to £130. Warrant officers and non-commissioned officers have £2 or so a week, and what I want to know is whether they will be liable to pay Income Tax, because, where they are married, a separation allowance is given to the wife and family living in some other part of the country. As the Chancellor of the Exchequer knows, one of the greatest injustices under the Income Tax Act is that the income of the married woman living with her husband is deemed to be his income; but here is a case of warrant officers and non-commissioned officers who are not liable to Income Tax, but who, if the separation allowance to wife and family is to be included in their income, would bring the total income up to a limit which would render it liable to Income Tax. This is not a case of a married woman living with her husband, but of a married woman who by the law of the land, and the rules of the Army, has to live separately from her husband. I trust, in these circumstances, the Chancellor of the Exchequer will be able to give the assurance that, in the case of warrant officers and non-commissioned officers who are married, the separation allowance to wife and family will not count against them under the present Income Tax proposals.
      1086
      Secondly, I should like to draw the right hon. Gentleman's attention to the special case of officers now serving in the Army, especially the young officers, whose wives get no separation allowance. The lot of the officers now fighting our battles is even harder than that of warrant officers and non-commissioned officers. Officers and young officers living on their pay have not only to provide for themselves, but have also to provide for their wives and families at home, and I ask whether those officers, who are risking their lives on our behalf, ought to have the same taxation imposed upon them as persons who have nothing to do with the War. I cannot see why these officers should pay extra Income Tax for a war which they are actually waging on our behalf. I would remind the Chancellor that his predecessor has given Members of this House a certain exception in their pay. I do ask him to consider how is it possible to put this taxation on officers who are fighting at the front and give no exemption. I trust that the case of the officers, especially the younger officers, will receive favourable consideration. The third point I wish to mention is as to the very peculiar position of Indian and Colonial officers now serving in the Army. I have here a letter from an Australian officer, who is now serving in England, and he says relative to the Australian Income Tax their position is as set forth here below, namely, the Commonwealth 5s. tax in the £ and the double rate if absent for over six months. The letter proceeds:—
      "The State Tax in Victoria, I believe, has been raised to 3s. and donble rate for absentees. Then comes the English Income Tax of 5s. in the £ on money from Australia which is already taxed. I am at home not on a pleasure trip but to attempt to do my duty."
      Any money that is remitted to the Australian, Canadian, or Indian officers is taxed from where it is sent, and has to pay double taxes. The case of the Indian officers is particularly hard, since they have to provide for wives and families and the larger expenses connected with them. I trust that the right hon. Gentleman will be able to take the case of these officers into special consideration.
      Sir A. MARKHAM: I desire to ask a question as to the Income Tax. It is probably within the right hon. Gentleman's knowledge that numbers of limited liability companies take powers under their articles of association to contribute to charitable objects. In the past they have made large contributions to hospitals, and those contributions have not

      1087
      been charged with Income Tax, but have been included under working expenses. Those companies have now made large contributions, in many cases, towards hospitals for the relief of the wounded in the War, and have thereby relieved the Government of the obligation they were clearly under, to provide hospital accommodation. I desire to know whether it is the intention to charge those contributions with Income Tax, or whether they will be allowed to be regarded part of the general working expenses as they have done before the War.
      Mr. LAURENCE HARDY: I desire to support what has just been said by my hon. and gallant Friend (Colonel Yate) in reference to the case of officers. In addition to the arguments he advanced, I would ask the right hon. Gentleman to remember that a very great number of officers of our New Army gave up very valuable positions and large incomes in order to join the Army. They have great difficulty in supporting their homes, and under those circumstances any additional charge of Income Tax on the extremely small amount they are receiving while fighting for us seems to me to be an extra burden which ought if possible to be avoided. I would especially urge the case from the point of view of the officers of the New Army.
      Mr. McKENNA: I desire to deal with the question relating to officers serving at the front. I hope the House will agree with me that this is a matter which ought to come forward on the Army Estimates. If an officer, having regard to all the taxation, is paid insufficiently, we ought not to give relief by way of Income Tax, but it ought to be relief graded right through the Army, taking into consideration all ranks and the burdens upon them. To give relief, particularly in the form of Income Tax, would be to give relief on a larger scale to those who are best off, and I am sure my hon. and gallant Friend has not that object in view. His representations ought really to be made to the War Office. If he considers, having regard to the taxation, that the officers are insufficiently paid, the representation ought to come to the Treasury from the Department concerned. I do not wish for a moment to criticise his arguments. I do not think they are really appropriate to a Debate on Income Tax. He raised the question also of the position of the Aus-
      1088
      tralian and Indian officers who are over here on duty. We have that case under review now, and I hope to be in a position to make a statement later, when we get to the Bill, as to what relief we hope we shall be able to give. Our view is that the officer should not be worse off by reason of his being over here on duty than he would be if he were pleasing himself at home. As to the other point about a separation allowance and whether its addition to a husband's income will make him liable to Income Tax it is quite new to me, and I am not sufficiently skilled in the law to be able to answer it. At a later stage I will be very happy to give the hon. Gentleman an answer on the point. It is not really relevant to this particular stage, when we are dealing with the Resolution covering the whole of the tax.
      Colonel YATE: When will the right hon. Gentleman give an answer?
      Mr. McKENNA: On the Clause of the Bill imposing the tax. This is only the Resolution on which the Bill is founded. When we get to the Finance Bill itself on the Clause I shall then have made the necessary inquiries and shall be able to give an answer. My hon. Friend the Member for Mansfield (Sir A. Markham) asked a question which I think would entail a change in the law—is that not so? Some companies at present under their articles of association contribute to charities, and the hon. Gentleman, I understand, wishes the power of exemption of those contributions from Income Tax extended to all companies.
      Sir A. MARKHAM: That is not my point. I was referring to companies whose articles of association permit them now to contribute to hospitals, and I asked whether the amounts given during the War will be charged with Income Tax or not, or regarded as working expenses the same as they were before the War?
      Mr. McKENNA: There is no change in the law, and in any case in which a contribution has been treated as working expenses it will continue to be so treated. I rather assumed that the hon. Gentleman wished for a change in the law to enable the same rule to be extended to all companies.
      Sir A. MARKHAM: No.
      Mr. McKENNA: Then I think I have been able to give him a satisfactory answer.
      Mr. PETO: I regret the reply of the Chancellor of the Exchequer to my hon. Friend the Member for Melton (Colonel Yate). He has given the same reply before, namely, that the proper way to raise this question is by asking for an increase in Army pay. When we raised the question on the Report stage of the last Finance Bill, the Chancellor then told us that the effect of a Clause which I put down, and which proposed to render officers' pay not subject to the increased Income Tax put on for War purposes, would cost the Treasury £375,000. The Income Tax has since been raised, and I calculate on the figure then given that the amount now would be about £500,000. The Chancellor of the Exchequer now tells us that the answer to this question is to raise the officers' pay in all grades right through the Army and not to raise the question on the Income Tax. I venture with all humility to entirely differ from that conclusion. The question is not a question of increased pay. It is quite a simple question as it appears to people outside this House, and it is as follows: In time of peace, before this War commenced, a certain scale of pay was considered appropriate to officers of the various grades. We have since become engaged in war, and a vast number of additional officers have taken on military duties. With regard to those who are officers in the Regular Army, the net effect of the whole thing is that whereas certain pay was considered appropriate in peace time duty, they are now required to pay Income Tax for the privilege of fighting for their country in amounts varying from 2s. to 3s. 6d. in the £. I do not think that is met by asking for increased pay. The Chancellor of the Exchequer told me on a recent occasion what would be the effect of any exoneration from this War Income Tax. We are only asking that the extra taxation should be borne by the civil population, and that we should not ask officers to bear a share of the special taxation raised for war purposes.
      The question has now become a wider one than it was on the last Finance Bill, and for two reasons. The first is that the tax has been raised, and, secondly, the exemption has been lowered, so that now it includes the pay of all warrant officers in the Navy, a very large number of men
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      who are not officers in the same sense as those we were dealing with on the last Finance Act. With regard to the minor question which my hon. and gallant Friend raised, I was sorry not to have the opportunity of calling the right hon. Gentleman's attention to another small point, namely, the question of officers in the pay of the War Office who are serving in such places as West Africa and other Colonial centres. I am informed, if they are paid through the War Office they have to pay Income Tax, but if they are paid on the Colonial Estimates the Income Tax is not deducted, and the Income Tax is not deducted in the case of civil servants in the employment of the Colonial Office. I think there is an obvious injustice there. We should treat all these people alike, and it seems to me, as they are serving for a long while away, they cannot be supposed to benefit from the expenditure in this country. I believe ordinary members of the civilian population who are living entirely outside this country are not subject to Income Tax, while in the case of our officers commanding and of various grades in regiments which for a long while are quartered in such places as West Africa, though they have no benefit from the expenditure of taxation in this country, yet they have to contribute out of their pay towards it.
      I hope that the Chancellor of the Exchequer is not going to think that the answer he gave my hon. and gallant Friend is going to satisfy us for a moment. I wished to raise this question on this Resolution because I thought it would have come in a much more graceful and appropriate manner from the Government themselves by adding a provision to the Bill relieving officers and warrant officers from the payment of these special war taxes. I hope that the Government will still reconsider this question, but if not I can assure them that it is one which will be raised in a very strenuous manner when the Finance Bill comes before the House. There is a very strong feeling outside among the whole civil population that it is utterly unjust to expect men who are serving their country, and in danger, and who are able to take that part of the burden, to bear also the burden of special war taxation which is required to meet the expenditure of the country at this particular time. The matter will be pressed until the Government have to give way to popular opinion. I invite them not to give rise to another question which will be taken up in the Press and in the country to such an extent

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      that they will be forced finally and ungracefully to give way to agitation. The reply which we have had over and over again is not really a true reply. I do not say that in any offensive sense. We are not asking for an increase of pay. We are asking simply that officers in war time should at least be paid what they were paid in times of peace.
      Captain AMERY: I should like to support very strongly the request that the Government should take into consideration our appeal that officers now serving and during the War should not have to pay the extra Income Tax. The alternative suggestion made by the Chancellor of the Exchequer is unsatisfactory. If the scale of pay were raised all round it would be very difficult to reduce it afterwards. I am by no means sure that the pay of officers is for ordinary peace time so unduly low. It may not be a satisfactory position, but the majority of officers are men with some small means of their own. I am not on this occasion complaining either of the pay of officers or of the normal peace taxation which they have to bear. But at this moment an enormous number of men have taken commissions—some have risen from the ranks, others have left occupations and businesses—who have families to maintain on a certain scale, and to whom this extra Income Tax is a severe hardship. It would be far simpler and fairer to take the War as an abnormal state of affairs—as indeed it is—and during that abnormal state of affairs to consider the special circumstances of officers, many of whom have given up a great deal, and others of whom have, as a reward for their gallantry, been raised nominally, but really put in a worse financial position. As everybody knows, a man who has risen from the ranks is in many cases, taking into the account the separation allowances and so on, in a worse position as an officer than he was in as a non-commissioned officer. After the War is over we shall have entirely new military problems to consider—what class of officers we shall have, what career the Army shall give to officers and men, and so on—and it would not be a desirable thing to alter the whole scale of officers' pay at the present time. But it is not fair to put upon officers who have taken commissions upon a certain scale this additional burden. It is much fairer that it should be added to the burden of those
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      who cannot go to the front, while those who go to the front, whatever pay they get, do their best with their lives.
      Mr. RUTHERFORD: I do not think it is in consonance with the feeling of the House that we should question the amount to which it is proposed to raise the Income Tax, but there is a most important subject going to the root of the whole question, to which I should like to direct attention. We have been promised from time to time a consolidation of the different regulations concerning Income Tax. I know a man at present who is assessed to a very large Incame Tax and Super-tax, but who for the last five years has not had a shilling of real income. It sounds very stupid and almost incredible, but, as a commercial man, I assure the Government that there are thousands of people who are not paying anything like the Income Tax they ought to pay, and thousands who are paying a great deal more than they ought to pay having regard to their actual income. That arises from the vast number of Acts of Parliament, alterations in Finance Acts, regulations, some of which are exceedingly stupid and inconsistent, and supposed guiding principles which have been laid down. We have been promised over and over again that the matter should receive attention, and I believe it has received attention in the Department. Now that the tax is being raised to such an extent it is very important that the incidence should be made more just and equitable. I would, therefore, ask the Financial Secretary to represent to the Chancellor of the Exchequer what I believe to be a very strong feeling indeed, particularly in the City of London, that the regulations and methods connected with the assessment to Income Tax should be carefully investigated and formulated, a large number of anomalies removed, and the whole question put upon a better footing, instead of its depending upon Acts of Parliament which go back sixty-five years and have been altered over and over again until it is impossible to say what the solution of any question concerning the Income Tax is without looking up a variety of decisions, rules and regulations.
      Mr. R. PEARCE: I wish to put a point to the Chancellor of the Exchequer which I hope he will deal with on the same principle as that which he has suggested in regard to the exemption of officers' pay from Income Tax. He said that that was not the right way to deal with the question

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      —that it should be dealt with as an increase of pay, and not by way of exemption from Income Tax. I wish him to say that the method of exemption is not the proper way of dealing with the matter I am about to put before him. There is a total income of about £15,000,000 a year which by reason of statutory exemptions is wholly free from Income Tax. I refer to the income applied to charitable purposes throughout England. I suggest that the Chancellor of the Exchequer should abolish the exemption in this case. The effect would be to bring all that property under charge, and the result would probably amount to the yield of a penny on the Income Tax. If there is any case in which it is reasonable that there should be a contribution from the Consolidated Fund for such charitable purposes, it could be taken into account and dealt with in the proper way by a grant from the Treasury, which could be discussed on the proper occasion. Another reason why this exemption should be abolished is that the amount grows every year. A comparatively few years ago, when the Income Tax was much lower, the amount was very small. The question was raised in the House of Commons by the late Mr. Gladstone, who in a speech of two hours' duration gave reasons why the exemption of charitable money from Income Tax should be done away with. The matter has now grown to the dimensions which I have mentioned. In order to carry out the exemption, every charity in the country has to make a claim for the return of Income Tax actually paid, and those claims are investigated at Somerset House by the skilful gentlemen there who occupy their time in receiving Income Tax and handing it back again to these institutions. I think that is a great mistake, and that if at a time when the pressure is so great, the Chancellor of the Exchequer abolished the exemption he would do a service to the State.
      Sir J. HARMOOD-BANNER: I desire to ask the Chancellor of the Exchequer whether he intends the Income Tax to apply to co-operative societies, or whether the present exemption is to continue. That is a far more important matter than the exemption just referred to, because the co-operative societies compete, not only in retail but in wholesale, with the trading classes of the community. If the right hon. Gentleman will look at the report in the "Manchester Guardian" of a week ago, he will see that these co-operative societies deal not in tens or hundreds of
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      thousands, but in millions, and their profits are immense. Therefore, one cannot understand why, in these times of pressure, they should ask for exemption, or why they should not come forward, as I hope the whole nation does, ready to say, "We will pay to the Exchequer what is due for the purposes of the War." There was something to be said formerly for dealing with the matter in this way. The exemption limit then stood at £160. Now that the exemption limit is reduced to £130, there will not be nearly so many people applying for the return of their Income Tax, so that there would not be involved the same amount of labour to the Exchequer. You have small shopkeepers who are now obliged to pay. When you find big shopkeepers, colliery owners, sawmills, and establishments for soap boiling, with every appliance that science has brought about, paying, and you have co-operative societies trading in competition with the ordinary trader and paying no Income Tax, I can assure my right hon. Friend of a very great feeling amongst the nation that we are not all equally taxed. I ask him to look into the matter and tell us what he is going to do. If he is going to exempt them he will find that there is a very strong feeling that he is dealing unjustly with the taxpayers of the country.
      Mr. MACMASTER: I think there is fair ground for complaint as to the manner in which taxation is applied in relation to co-operative societies. After all, a co-operative society is a trading company, and a trading company is simply an individual in the eye of the law. It does not matter whether the trade is carried on by an individual, by a partnership, or by a trading company, the profits made by the concern should be equally subjected to taxation in the public interest. As we are told, those who join co-operative societies do so for the purposes of profit and advantage which they get. Certainly a co-operative society is a corporation which makes a certain profit, and, making that certain profit, I am unable to discover any sound reason why it should not be subjected to taxation of that profit at the source. I understand that in ordinary business companies the rule is to tax at the source the profits which are made by the company. An hon. Member to-day asked a question with regard to this matter, and I myself also asked one. The answer that I received was this:
      "Such profit as is made by a co-operative body is already assessable to Income Tax in the hands of the recipient."

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      That is to say, in the hands of the shareholders. But that is a reversion of the ordinary principle which applies with regard to the taxation of profits that are made by an ordinary company. All I suggest to the Chancellor of the Exchequer is that the rule in this respect among traders, whether co-operative societies or individual trading concerns, should be on one and an equal basis.
      I desire to associate myself with the question raised by my hon. Friend on my left in regard to the case of officers and petty officers on service during the War. I cannot understand why there should not be a readjustment in regard to officers' salaries. It has been truly pointed out that when the question of the increase of salaries comes up you will have to take into account the whole Civil Service. But so far as officers and petty officers are concerned, it seems to me that the rate at which they are to be paid ought not to be lost sight of; certainly not less in time of war than in time of peace. The result of subjecting them to increased taxes, as proposed under this measure, is to diminish substantially in time of war, when probably they need it most, the very limited income to which they are entitled under the law.
      There is another consideration in that connection which I pointed out on a previous occasion. It must be remembered that these men are continuously engaged in the most dangerous occupation with which they could possibly be occupied—that they are living practically in the constant and imminent presence of death, seeing they are engaged in a war of the character in which we are now engaged. In the event of the unhappy contingency of death their estates—such of them as have estates—immediately become subject to very onerous Death Duties. Therefore they are affected not merely by the certainty of this increased taxation, but their families also are faced with the contingency that their lives, by reason of their occupation, may be shortened, and the estates supporting those dependent upon them will become further limited by the additional taxation of the State. These contingencies should be taken into account.
      I should also like to associate myself with the hon. Member for Liverpool, who suggested that there should be a codification—he did not use that word—of the laws in regard to taxation in this country. It is a well-known fact that the
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      laws of taxation with which we are affected go back as far as 1842. The leading Statute of 1842 has to-day to be consulted in connection with a succession of Statutes from that date until the present time. It is impossible for any civilian to make out the obligations to which he is subjected in the way of taxation under the laws of this country. For myself, though I am familiar with the examination of Statutes and have been for many years, I have found it most difficult, not merely in my case, but in the case of professional clients, to discover what is the real law applicable in a variety of cases under the Statutes which exist. I think the suggestion of the hon. Member most timely; there should be some sort of consolidation, some simpler way for the civilian as well as the lawyer to find out what are his obligations in this matter.
      Sir C. HENRY: I join in the view of the hon. and learned Gentleman who has just sat down that some steps should be taken in respect to setting up a Committee—which I believe was promised by the Prime Minister previous to the War—to investigate the anomalies of the Income Tax. What the hon. Member for Chertsey (Mr. Macmaster) has said cannot be contradicted. It is becoming more and more impossible for the ordinary layman to understand the intricacies of the law in connection with the Income Tax, and the effect of it is that a great many individuals have to call in an accountant in order that they may return their Income Tax upon an equitable basis. I have never heard a stranger request made to the Chancellor of the Exchequer than that of my other hon. Friend at this critical moment. Charitable institutions are in dire distress and find it difficult to find the necessary sums to carry on their work, and the Chancellor comes with the proposal that they should no longer receive the rebate in connection with Income Tax. I am afraid my right hon. Friend does not know the conditions of charitable institutions; otherwise he would not have made such a suggestion. I am going to make a suggestion by which some relief may be given to charitable institutions, and it is this that, in making their return for Income Tax, hospitals and kindred institutions where vouchers have been produced should be allowed to deduct the subscriptions and donations. I should like subscriptions and donations treated in the same manner as premiums for insurance, which are now allowed to be deducted.

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      I feel sure my right hon. Friend will recognise that, not only on account of the War, but on account of the great necessity on the part of hospitals and other institutions to obtain adequate support, something of the kind is needed. On account of the Income Tax a good many subscriptions are gradually but surely being withdrawn, and although I would be the last to urge at this particular time that any abatement of any importance should be made from the Income Tax, I do urge upon him, under the conditions that are now existing, that he should take into consideration whether these donations and subscriptions for hospitals might be taken into account and deducted when they are making their returns for Income Tax.
      Mr. BARNES: I desire to say a word or two in regard to what was said on the other side in relation to co-operative societies. An appeal has been made to the right hon. Gentleman the Chancellor of the Exchequer to tax the profits of co-operative societies at the source, the same as is done with other trading and manufacturing companies. I want to ask him to turn a deaf ear to that appeal. I want to suggest to hon. Gentlemen opposite that they have not got the "hang" of the thing, so to speak, or otherwise they would not have put forward their plea. So far as I understand the principle of the Income Tax, it is that the person who pays Income Tax has up till now paid on £160 per year and above, and that that limit is now reduced to £130. There is absolutely no difference between a member of a co-operative society and anybody else in the community. If a member of a co-operative society has now £130 per year and upwards he is liable to Income Tax. There is no exemption.
      Mr. MACMASTER: What about trading companies?
      Mr. BARNES: I am coming to that. Supposing you were to tax the ordinary co-operative society as you do the ordinary trading company? All that would happen would be that inasmuch as possibly 95 per cent. of the members of a co-operative society are entitled to exemption because their income is not up to the tax-earning mark, you would have your Government Departments flooded with that 95 per cent. of, say, 3,100,000 and odd members of co-operative societies throughout the length and breadth of the
      1098
      country, claiming a return of the money that had been taxed at the source. To the hon. Gentleman who raised this question I would suggest that it is not worth while. It might be said that the other 5 per cent. would be reached, but that 5 per cent. are taxable now. I do not know how these things are managed, but I suppose if the authorities have the slightest doubt as to whether or not a man is taxable they send him a form, and from that form they find out whether or not he is in receipt of money from a co-operative society in respect of an investment there. If he is, and it is part of his income, he is taxed upon it. Therefore, I do not think there is anything at all in this matter. If the suggestion is persisted in, the Government authorities might possibly get a small amount, but for that small amount you very likely would pay more in dealing with the claims for exemption. Therefore, I again suggest that it is not worth while
      8.0 P.M.
      I want to identify myself with the claim that has been put forward for more generous treatment for the men at the front. I heard a statement made the other day that there have been 80,000 officers made during the War; at all events, there has been a large number. I suppose that a large number of those officers are now for the first time in their lives in receipt of an income which makes them liable to Income Tax. I think it would be a mean thing on the part of the country, having regard to the fact of the dangers, privations, and risks that these men are running on behalf of the country, to come down upon them and tax their incomes now. Therefore I heartily associate myself with the appeal that has been made for the exemption of these men. Might I also repeat the plea—if this be the right place—on behalf of men with low incomes. I do think you are putting it on to these men very stiff. I refer to the man with £200 a year or thereabouts. Hitherto he has paid on £40. If the Government's proposal be carried, he will have to pay not only upon £80, but will have to pay upon that an increasd amount. Instead of £40 at 1s. 6d. in the pound, it will be £80 at 2s. 1d. Having regard to the fact that these men as a rule live up nearly to the top of their income, and having regard to the importance of these men in keeping things going, I think they might be more generously dealt with. I do not know whether we shall have a chance—though I suppose we shall on the

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      Finance Bill the week after next—of raising this matter, but I say to the right hon. Gentleman that I feel so strongly about that particular class of people that I would not mind putting an Amendment down and having the matter discussed, and following what course should be considered necessary. I hope, however, some concession will be made, and therefore there will be no need to put any Amendment down. The last point upon which I desire to offer a word or two of comment is in regard to this extraordinary plea put forward by the hon. Member below me. I think that this is, perhaps, the most extraordinary time that such an extraordinary thing should be put forward. I suppose hospitals and all sorts of institutions which are run on voluntary principles are just now finding themselves in the greatest quandary they have ever experienced. Money is being collected from the people in taxes, and, of course, the more taxes are imposed by the State the less people have to give away; and these institutions are just now being put at their wits' ends to make things go along. Therefore, I think that, if any change is to be made at all, it should be in the direction of encouraging rather than hindering them in their good work. But the plea of my hon. Friend would not only affect hospitals and institutions of that sort that are being maintained by voluntary contributions coming along intermittently; it would also affect organisations, I take it, such as friendly societies, and even the trade unions on their friendly society side. For instance, I was secretary of the Engineers' Society for a good many years until they kicked me out, and we had a good deal to do with money subscribed by the members to provide old age pensions. We maintained something like 6,000 to 7,000 of our old members, and started to give them pensions a long time before they reached the pensionable age entitling them to a State pension. The net result is that these men, when they reach seventy, will be in receipt of an income exceeding 13s. a week, so that they are not entitled to a State pension, and, therefore, the fact that they contributed in their working life to funds which are dealt out to them when they reach sixty or sixty-five years of age relieves the State of a great responsibility. These 6,000 or 7,000 men, or a large proportion of them, were it not for the money they subscribed to this particular society—I am only speaking for one society, and there are many
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      societies—entitling them to old age pensions, a large number of them would be in receipt of 5s. per week State pension. Now we are exempt from Income Tax in consideration of the fact that these moneys are—I will not say for charitable purposes, because that is not the proper word, but devoted to the purpose of providing for old age. We pay, and then we keep a record of the payments, and on a certain date in the year we send the particulars to Somerset House, and we get the money back. When I was in office, it reached a few hundred pounds a year. If the plea put forward by my hon. Friend were accepted by the Chancellor of the Exchequer, we should be short of, perhaps, £600 or £700 a year, and it does seem to me that would be a very unjust proceeding. I therefore put in a plea that the Chancellor of the Exchequer, at all events, will not consider that particular proposal, and I think it is particularly ill-timed just now.
      While I am on my feet I would just say a word or two with regard to the rather unpleasant incident that happened this afternoon when an hon. Friend of mine made certain charges of a personal character. I was extremely sorry to hear those charges made, and the more so as they were made unwittingly, and were not intended to be applied personally, though it might be taken that they applied personally to a right hon. Gentleman in this House, who, I am told, is a very generous subscriber to many funds, and who I know is a model employer of labour. I am sorry that charge was made, and I do not associate myself with it at all. My general attitude with regard to this Budget was fairly enough stated by my hon. Friend the Member for West Ham this afternoon. Speaking generally, we are going to support the Government. We have not gone into this matter light-heartedly. We have discussed the Budget in all its details, and, while we are against some of the taxes, and if they were taken by themselves, and on their merits alone, we should not vote in favour of them—
      Mr. SPEAKER: This is not the opportunity to discuss the Budget as a whole. That will come when we reach the Second Reading of the Bill. We are now confined to the Income Tax.
      Mr. BARNES: I bow to your ruling, Mr. Speaker, but the thing has been discussed this afternoon on a previous Resolution. I have said all I want to say on this particular Resolution, which appertains to Income Tax alone. I hope the right hon.

      1101
      Gentleman will have regard to what I have said as to those charitable or other funds which I have indicated, and also to the argument, which I think is a fair one, that I have put forward with regard to co-operative societies. The co-operative society member pays now. We do not ask any privilege for him, but it is a matter merely of expediency, a matter of administration. If you proceed to tax co-operative societies at the base, you will simply land yourself in an amount of work that will cost you more than any money you might get thereby.
      Mr. RAWLINSON: I do not wish to follow the hon. Member in the arguments he has just used. I think there is a possible answer. I imagine what my hon. Friend meant was to tax the co-operative society as a separate entity. For instance, if there is a trading company in London such as the London and North-Western, or Spiers and Pond, with whom a large number of people deal, and who may be poor or may be rich, they may have to return their respective incomes for Income Tax, but the point is that the body which owns the concern, and carries on the trade, should be looked upon as a separate entity and pay Income Tax quite irrespective of the people who may trade there. The hon. Member who has just spoken is absolutely right legally, but the point that was made was, that this was a narrow legal point. The broad basis which ought to be the law is that the society should be taxed as an entity just in the same way as any other trading concern. The purpose for which I rose, however, was to join in the appeal of the hon. Member for Liverpool for greater clearness with regard to the Income Tax Acts. It is really little less than a scandal that any lawyer who wants to understand any simple point has to turn up three or four Statutes. I know the right hon. Gentleman is not responsible for it, but I do hope now that so much of the Income Tax has been altered, he will help to remedy the matter. It is extremely difficult for anyone to answer any question of the Income Tax, and even a Consolidation Bill purely would be one step in the right direction, if that were possible at the present time. A Consolidation Bill is very largely a matter of printing, and I think that possibly might be done at the present time. That the Income Tax should be made plainer to the layman is, I think, a crying necessity.
      The only other point on which I wish to trouble the right hon. Gentleman is as
      1102
      regards unearned incomes of, say, £200 or £300 a year. They are, of course, very severely taxed by the present alteration in taxation. A person with an unearned income of £200 a year at the present time is paying, we know, a comparatively small amount—some £4 every year. Under the proposed legislation it will be £11 odd. A person who is retired, or it may be a married couple, living on savings of about £200 a year, are people who are not like persons earning an income, and who may possibly earn a little more. They are unable to earn any income other than that which they have got at the present time, and they are very likely to be hit by any kind of taxation. What I suggest to the right hon. Gentleman is that he might give some relief to that class. It might be done in one of two ways—by classing all incomes under a certain minimum, say £300 or £400, as being earned income, because really a person who has under £300 a year can hardly be looked upon as a rich person; or else, possibly, some relief might be given to married couples by treating their incomes as being separate incomes. I am not referring in any way to the amount of the tax, but I hope the right hon. Gentleman before next week will look into the hard case of those with unearned incomes of something like £300 a year.
      The FINANCIAL SECRETARY to the TREASURY (Mr. Montagu): I am sure the hon. Member for Wiltshire and the hon. Member for Birmingham will acquit me of any discourtesy if I do not give an answer to the question they raised, because I have answered the hon. Member for Wiltshire again and again. He regards my answers as perfunctory; they make him very angry, and I am sorry to say what he said this afternoon, reinforced as it has been by the hon. Member for Birmingham and the hon. Member for Blackfriars, has not convinced me that to exempt officers at the Front from Income Tax would not be, as I have said before, a very poor way—a very insignificant way—of acknowledging the incalculable debt of gratitude we owe them. I do not think still that the right way to treat taxation is to apply it to, or to exempt from it, particular classes of individuals. I do not see how it can be possible to defend the claim of officers at the front, rather than any number of other people who have made great sacrifices for their country in this time of stress. We have made concessions with regard to men in the Army both as

      1103
      regards Death Duties and as regards Income Tax, because the conditions of life make it impossible for them to earn the income upon which they were assessed, or because of the special risks to which they are put. But I do still submit that, just as we have again and again refused to increase the pay of other Government servants simply because of the rise in the taxation, or the increase of prices, so I think we ought to consider rates of pay at the appropriate time, and not consider them merely because of extra taxation or because of the special work which the taxed person is doing for the country. I entirely agree with what my hon. Friend the Member for Cambridge University (Mr. Rawlinson) has said on the question of Income Tax law. Not only is it quite impossible for the layman ever to understand Income Tax laws, but I have sometimes seen very distinguished lawyers at sea with regard to them. There never was anything to be compared with Income Tax laws, except, perhaps, the laws of the Government of India, which have just been consolidated. I may say that the Government at the end of the War is already pledged to institute a Committee to examine into the inequalities and inconveniences of the Income Tax law. I am happy to say that the consolidation of the Income Tax law is now proceeding. The Department are already at work, and their preliminary work will be reviewed, with a view to presentation to Parliament, by a Committee on which this great profession will be very largely represented, and it will be under the charge of the Attorney-General, who has interested himself very much in this most important work.
      With regard to many of the points raised this evening, I think it will be for the Committee which works on the Consolidated Income Tax Act to deal with many of these suggestions, which I think would be better dealt with when we have money to give away rather than at a time when we want every penny we can get. Inequalities of the law as it stands ought to be treated when the Income Tax laws are treated as a whole, and not now. I do not say anything about co-operative societies, because I endorse every word that has been said by my hon. Friend the Member for Blackfriars. It is largely a question of expediency. We do not want all the trouble of deducting Income Tax which we shall have to give back
      1104
      again. With regard to what the hon. Member for Blackfrairs (Mr. Barnes) said about the lower scale of Income Tax, I will content myself by saying that his arguments on this point, and those used by the hon. and learned Member for Cambridge University, should be addressed to the next Resolution, because the hardship which is alleged arises from the operation of the exemption and abatement of the Income Tax. I think it would be more in order for me not to answer those arguments now, and I will simply say that I have made a careful note of them for the guidance of the Government when the proper time comes.

      INCOME TAX (EXEMPTION AND ABATEMENT).
      Resolution reported,
      24. "That—

      (a) The exemption from Income Tax now granted to persons whose income does not exceed one hundred and sixty pounds shall be limited so as to extend only to persons whose income does not exceed one hundred and thirty pounds; and

      (b) The abatement of tax allowed under Section thirty-four of the Finance Act, 1894, and Section eight of the Finance Act, 1898, shall be reduced so as not to exceed—

      (i) in the case of persons whose incomes do not exceed four hundred pounds, the tax upon one hundred and twenty pounds;

      (ii) in the case of persons whose incomes exceed four hundred pounds but do not exceed six hundred pounds, the tax on one hundred pounds;

      and any Acts relating to Income Tax shall have effect accordingly.

      It is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
      Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
      Captain AMERY:I should like to appeal to the Chancellor of the Exchequer to consider the case of the small Income Tax payer with a large family. I know it is impossible to attain absolute fairness in the distribution of this burden. I submit, however, that with the rate of Income Tax

      1105
      as it now is, and with the rate of exemption lower, the position of the Income Tax payer with £200 a year and a family is very hard, and very much harder than that of the man with only £100 a year who is a bachelor. I know in this respect the Chancellor of the Exchequer's predecessor introduced a most beneficent innovation, namely, an abatement of £20 for each child. What I would like to urge upon the right hon. Gentleman is whether, before he brings his Finance Bill to its final form, he could not see his way to increase that abatement of £20 to £30 or even £40 or £50, and make good the extra money required by increasing the Income Tax in its general rate, or lowering the exemption limit still further. I submit that the man earning £2 a week, or £104 a year, is in a very good position compared with the man earning £3 or £4 a week with four or five children. [An HON. MEMBER: "He would not have to pay anything!"] At any rate, in the case of small Income Tax payers with families I think we ought to consider whether that £20 should not be further increased.
      There is another small point in that connection I wish to allude to. As the thing stands, I believe at present only children, and not dependants, come in for the abatement. There are cases in which a man undertakes the bringing up of orphan children, and I know a case of a man bringing up five orphan children upon a small income. I think it would be worth while considering whether we could not assimilate dependent children to that of a man's own children. There is another exemption on which I should like to ask a question, I understand a Loan is being raised in America, free of Income Tax, and I would like to ask what would be the position of an English taxpayer who invests in that Loan, because that Loan yielding £5 16s. per cent. is equal to a 7 per cent. investment. Is there not a real danger of that Loan passing into the hands of English taxpayers to the detriment both of the Income Tax and also incidentally to the detriment of any future loans the right hon. Gentleman may raise? I only ask this question for information, and I dare say the Chancellor of the Exchequer has fully considered it.
      Mr. PENNEFATHER: Representing as I do a large Constituency, consisting almost entirely of people whose means come within the narrow limits which have been referred to by the hon. Member for South Birmingham (Mr. Amery), I wish to
      1106
      support the appeal which he has made to the Chancellor of the Exchequer to take into his very careful consideration this question, and to do what he can to make the Income Tax press less heavily upon such cases as have been mentioned, where people bring up a large number of children and who have dependants to support. Personally, I should be very glad to see this concession made to the poorer classes, even if the amount of the Income Tax is increased upon the richer classes.
      Mr. BARNES: I should like once more to put in a word or two in support of the plea that has been made on behalf of Income Tax payers on the lower level. I may be wrong, but I do not think that it requires any alteration of the law. Under the Income Tax laws now, a man who is paying an annuity to a dependant—I believe it has to be in some legal form—is entitled to claim abatement. I myself—I hope the House will excuse me giving a personal instance, but it illustrates the matter—had occasion in times gone by to discuss this matter with the surveyors, and, although I have been subject to a charge amounting to over £20 for many years, quite voluntarily, I cannot get any exemption, because I have not put it in some legal form. Why not exempt the man and take his statement, with some proof if you like, that he has actually paid the money? It does not matter whether he is compelled to pay it or not if he has paid an annuity to maintain or help to maintain a mother, or the children of a diseased brother, or as in some cases I know an aunt, or somebody who cannot work and earn their own living. There are innumerable such cases. I suppose that those who are not conversant with that particular class of people do not realise the burdens which fall upon them. In many cases a man with £200 a year has not only got to maintain his wife and family, but also some poor relation. I know that he may be compelled to subscribe a certain amount towards the support of his mother or father, but it is very small, amounting to one or two shillings a week, and I have in mind those cases which involve an expenditure, quite voluntarily, of four or five times that amount. I would suggest that the Chancellor of the Exchequer should make some provision in the Finance Act whereby if, as a matter of fact, a man subscribes to some poor relative for a number of years he should on that amount be exempt from Income Tax, especially now that it has been so largely increased.
      Mr. McKENNA: The point raised by my hon. Friend is a very interesting one, and I am sure everyone will agree that some relaxation might be valuable if it were found to be practicable. As I understand the law now, if a person binds himself to pay an annuity, then he is entitled to that reduction; but if it is only a voluntary gift which he can withdraw at any moment, it is really impracticable to allow him a reduction for Income Tax. I think my hon. Friend will see that in some cases it would open the door to fraud. It must really be a binding arrangement to pay the annuity. The hon. Member for Birmingham (Captain Amery) put a question to me with regard to the Income Tax on the American loan. A British holder of the loan will be subject to Income Tax.
      Captain AMERY: Yes, if he brings his income here.
      Mr. McKENNA Mr. McKENNA Oh, no! Wherever he holds it and whether he brings it home or not. If he holds it in America, and whether he brings the income here or not, he will be subject to Income Tax. Under the existing law a British subject is liable to Income Tax in respect of property wherever held, whether he brings the income home or not. That is a change in the law which I think was made two years ago. Consequently, although this stock, unlike any Government Stock, will not be subject to Income Tax in the hands of a foreign holder, it will, like all other securities, be subject to Income Tax in the hands of British subjects. There is consequently no such danger as that suggested by my hon. Friend to be feared. May I also observe, in passing, that I think his calculation of £5 16s. per cent. interest to the holder is a little generous. If he examines the figures more closely he will see that it works out at just under £5 10s. per cent.
      Captain AMERY: Does that allow for the advantage of the option of obtaining 4½ per cent. bonds afterwards, which is worth something?
      Mr. McKENNA: No, I think that option could hardly be calculated, inasmuch as it is an option to carry 4½ per cent. interest afterwards. I do not think it can be said to work out the interest beyond £5 10s. per cent. to £5 16s. per cent. The hon. Member for Liverpool (Colonel Pennefather) referred to the case of the man earning £3 or £4 a week with children. It was pointed out that if the children were numerous enough, and
      1108
      the responsibility is great enough, he would be relieved of all Income Tax.
      Mr. PENNEFATHER: I referred to the case of a man with dependants other than his own children.
      Mr. McKENNA: Dependants would not be subject to the same relief. The case of dependants is really an answer to the argument put forward by the hon. Member for Birmingham. He spoke of the bachelor earning £2 per week. In my experience in nearly all such cases the bachelor has someone depending upon him. Even when the working man gets married he very often retains a liability, not a legal liability, but a liability of filial affection, to contribute to the support of those at home. It would, I think, be a proper subject for consideration by this House at a later stage of the Bill whether, in view of the amount of the abatement and the increase in the tax, some further consideration might not be shown for children. That is a matter which we should be quite ready to discuss in Committee, and to ascertain the general sense of the House at the proper time. On the general subject of lowering the abatement, I hope that the House will agree to the present rates. I can assure my hon. Friends that they have been the subject of very careful examination, and, after taking into account the usual charges upon a man earning £3, £4, and £5 per week, what he would pay generally for the consumption of taxed commodities, and comparing his condition with that of persons in life slightly better than himself, the proposal now put forward is a genuine effort to get a fair scale. We will do the best we can to deal with individual cases when we discuss the Bill in Committee, but I hope that the House will accept these rates as on the whole fair and reasonable.
      Mr. RAWLINSON: May I ask the right hon. Gentleman whether he will consider the case of people, like pensioners and so forth, who have small incomes, or, say, £200 a year? Such a person at present pays £4 on an income of £200, but under the new scale he will pay over £11. That is a very serious rise, and I should have thought that it would have been possible to have given some consideration to that class by placing them on the same basis as earned income.
      Mr. McKENNA: I will consider the point without making any promise. There are great technical difficulties.

      CHARGE OF INCOME TAX ON PERSONS EMPLOYED.
      Resolution reported,
      25. "That provision may be made for charging employed individuals, or any class of employed individuals, with Income Tax on their actual income, and for the application of the Income Tax Acts to such cases, when required, as if for the purpose of assessment, charge, payment, and relief, the tax was charged for each quarter of a year instead of for the whole year, and for requiring employers to make returns for the purpose of any such provision.
      It is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

      CHARGE OF SCHEDULE B TAX.
      Resolution reported,
      26. "That Income Tax under Schedule B shall be charged for the current year (and for any succeeding year for which Income Tax is charged) in respect of the occupation of lands, tenements, hereditaments, and heritages chargeable under that Schedule for every twenty shillings of the annual value thereof instead of for every twenty shillings of one-third of the annual value thereof; and the Acts relating to Income Tax (including any enactments relating to relief from tax) shall have effect accordingly.
      It is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
      Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
      Mr. HARDY: I want to ask the right hon. Gentleman a question with regard to the wording of the Resolution. I rather gather from it that he desires to make this a permanent part of Income Tax law, and not merely a War tax. Is that his intention, or not? The farmers throughout the country are believing it is only intended as a War tax, and I think it is rather a serious matter that an old distinction which has existed ever since Income Tax came into force should be suddenly abolished in connection with a question of War taxation. I should also like to make a
      1110
      very strong appeal in reference to the class of persons who have just been alluded to. Farmers certainly, under this new law—the small farmer particularly—will suffer severely. I have a case where a man who, under the ordinary duty, would have been paying nothing, but who will now be called upon to pay 18 guineas; and that is proportionately a larger increase in the Income Tax than is being imposed on the man in receipt of an income of £3,000 a year. It is, in fact, the largest increase to any person under this new taxation, and, therefore, I do think the lower ranges of smaller farmers deserve that their case should have a little attention at the hands of the right hon. Gentleman in connection with this very large increase of taxation. He is well aware that, although they may come under Schedule D, it will be a matter of considerable difficulty for the smaller farmers to produce the accounts which are necessary to enable them to transfer to that Schedule. In passing, may I say that I hope the right hon. Gentleman may be able to see his way to give time to farmers to take up the question of Schedule D, as it would be rather unfair they should be precluded from having that resource this year, owing to the fact that the date has already passed at which they can legally obtain relief.
      There is another special point under Schedule B to which I should like to call the right hon. Gentleman's attention. It is in regard to woodland. The right hon. Gentleman said in his speech the other day that Schedule B could be taken without affecting the right of a person to claim to be brought under Schedule D; but he knows it is impossible to come under Schedule D so far as woodland is concerned, because it is held not to be husbandry, and, therefore, there is no possibility of getting relief by proceeding under Schedule D. It is also impossible to come under Schedule A for relief as in farming. The Woodland Taxes are not in an altogether fair condition, and I shall be glad if the right hon. Gentleman will consider the question of woodland separately. Woodland has been the special object of government recently in order to give it encouragement in this country, and not long ago there was a circular issued by a Government Department urging that the rates on woodland should be reduced. At some places that was done, but in others it is still subject to the full rates. Again, woodland did not get relief under the Agricultural Rating Act. It is subject

      1111
      under Schedule A and under Schedule B, and now the tax will be trebled, and there is no means of getting out of all this taxation. It does seem to be a case for special consideration. It is a very small relief that would have to be given. It is everybody's desire to encourage the creation of woodland, and surely the industry is one which should not be specially penalised at this moment. In many cases woodland is a dead loss. The taxation is heavy, and, in the case of large owners, it affects not only the ordinary Income Tax, but also the Super-tax. I hope the right hon. Gentleman will give this matter consideration before we come to further deal with this Bill. It has often been said that this taxation on woodland is necessary because large shooting rights are concerned. I know that in Kent that is the fact, and assessment committees have refused to reduce the standard of rating on woodland because the shooting rights are very valuable. But at this moment those rights are valueless. Persons are giving up shooting, and therefore, although the tax is really upon the shooting, it is now really falling on the woodland itself. It is a complicated question, but I think the right hon. Gentleman may well consider the desirability of giving relief to a class of persons who are certainly very heavily hit by this new Budget.
      Mr. MONTAGU: The first question which the right hon. Gentleman put was as to the drafting of this Resolution. Of course, it will be open to any hon. or right hon. Member at the close of the War to ask for a review of the circumstances which led to this increase. The Resolution deals not with a new tax but with the method of imposing it. It is generally conceded that the new method, whatever the result may be, is fairer than the old method, and it has been brought in in a permanent way unless the House of Commons in its wisdom chooses to alter it when the War comes to a close. It should be remembered that while the farmers are assessed on rents, in a very large number of cases their profits during the War are represented by a far greater sum, and those profits are excluded from the proposals of my right hon. Friend with regard to excess profits taxation. If this new method is to be regarded as temporary, then I think it will be necessary to include farmers in the Excess Profits Tax, which is not now suggested.
      1112
      I would point out further that although it is absolutely fair in my judgment to alter the methods of assessment of agriculture in this country, there is one thing which becomes more difficult to defend, that is the unjust and unfair incidence of local taxation. Both parties in the State, all Governments, nearly every Chancellor of the Exchequer, nearly every Prime Minister, and nearly every Leader of the Opposition are pledged to a revision of local taxation. It would have come last year if it had not been for the very regrettable action of those responsible for the government of Germany. It is therefore only delayed till the end of the War. One of the arguments urged against the revision of local taxation has always been that the farmer does not pay his fair share of the Income Tax. For those who favour a revision of local taxation the alteration of the assessment to Income Tax will be a very useful weapon. With regard to woodlands, I should like to ask the right hon. Gentleman to allow me to promise him very careful consideration before the Finance Bill is introduced. As at present advised, it seems to me that on a permanent basis the Schedule B alteration is not unfair. Woodland is either for pleasure or for business. If it is for pleasure, it surely ought not to differ from any other occupation of land. If it is for business, then by taking the new Schedule B value, the rateable value, it is probably rated at its prairie value, and therefore escapes as little as it is possible for it to escape. I think, if I may say so, that the right hon. Gentleman has made a new argument in his suggestion that, at any rate during the War, the sporting rights of woodlands are not very valuable, and if he will leave the matter at that I would be prepared to say something further when the Clause comes up in Committee.
      Mr. HARDY: It is impossible under Schedule D to get at the exact profits.
      Mr. MONTAGU: I would add that the Chancellor of the Exchequer has already promised a concession on this matter by an extension of time to farmers under Schedule D. He promised that at Question Time this afternoon.
      Mr. J. M. HENDERSON: I should like to say a word on what the right hon. Gentleman opposite (Mr. Hardy) has said. I am glad the Chancellor of the Exchequer will take this matter into consideration. Apart from sporting rights, there is another

      1113
      element in woodlands. There are woodlands and woodlands. One of the difficulties which stands in the way of that which we all desire, namely, a larger afforestation, lies in the fact that rent is fixed upon these woodlands, and that no return is received from them until the trees have matured. A man will not like to put his land under timber for that very reason. Until the woodlands and forests are put upon a much more equitable basis of taxation than they are at the present time, I do not believe he will do so in future. That is worthy of consideration, in view of the fact that it rather stands in the way just now of people giving up their land for afforestation. The moment it is put under timber it is taxed as if it were like other farm land. The man can get no revenue until the trees are matured. I hope by next year this matter will be seriously considered by the Chancellor of the Exchequer, with a view to amelioration.

      SUPER-TAX (EXTENSION OF SCALE).
      Resolution reported,
      27. "That the rate at which Super-tax is charged for the current year (and for any succeeding year for which Super-tax is charged) shall be altered so as to charge every pound of the excess charged under Section three of the Finance Act, 1914, as amended or applied by any subsequent Act—

      s.

      d.

      Which is over £8,000 and does not exceed £9,000, at the rate of

      2

      10

      Which is over £9,000 and does not exceed £10,000, at the rate of

      3

      2

      Which is over £10,000, at the rate of

      3

      6

      It is declared that it is expedient in the public interest that the Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

      ASSESSMENT OF BANKERS IN RESPECT OF INTEREST CREDITED TO CUSTOMERS.
      Resolution reported,
      28. "That in estimating for assessment under Schedule D of the Income Tax Acts the amount of the profits and gains of any banker no deduction shall be allowed from the profits or gains of any year of any interest paid or credited to any customer
      1114
      or other person, but the banker shall be allowed to deduct and retain out of any interest so paid or credited the amount of Income Tax on such interest."
      Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
      Mr. J. M. HENDERSON: I understand that my right hon. Friend is considering this question. There is a great deal of difficulty about it. In the first place, I should like to point out that it is really necessary to make this mandatory, otherwise difficulties will be created in that certain banks, discount houses and others would offer to abate the interest. It must apply to discount houses and all other people. I think my right hon. Friend has this matter under consideration, so, leaving it for discussion when it comes up under the Finance Bill, I will say no more about it now.
      Mr. BUTLER LLOYD: In regard to this tax upon deposits at banks, I should like to ask the Chancellor of the Exchequer if he could not reduce to a smaller amount the amount which is taxable as profits. In the country, at any rate, there are many cases where a small man puts in £100 or some such sum for a few weeks, or it may be a month or two. In that case it would cause the bank considerable trouble and an amount of clerical work in calculating the Income Tax. When the man tried to get the Income Tax deducted he would have a great deal of trouble in getting it returned. I would venture to suggest that the amount the bank charge upon it should, at least, be not more than that which the savings banks are allowed to charge. At the present moment savings banks are exempt from such a tax, and it would, at least, be fair to the great joint stock banks that their deposits should be free to the same extent. I think the Chancellor of the Exchequer will agree with me that the joint stock banks have done well. They have subscribed something like £260,000,000 of this big Loan lately. They should have the privilege of not being mulcted on their profits, and the small amounts should be exempt from this tax.
      Mr. McKENNA: No one recognises more fully than I do the great, public-spirited effort which the banks have made to assist the country by very large subscriptions to the War Loan, and I should be most ungrateful if I did not listen to all their representations upon a subject of this kind. I

      1115
      have been in negotiation with representatives of the bankers upon this subject, and it is my desire, as I am sure it would be the desire of the whole House, that in any arrangement that we make we ought to be careful that we do not unduly obstruct business and add to the difficulties of the Inland Revenue for no sufficient purpose. I am not yet in a position to say what the final proposal will be that I shall have to make to the House, but I shall be very glad in the meanwhile if this Resolution could be carried, so that some scheme may be founded upon it later. If the final scheme which we have to propose would not be covered by the present Resolution I should, of course, have to ask the House at a later stage to sanction a different one.
      Sir ARCHIBALD WILLIAMSON: I would ask my right hon. Friend to consider the case of a business firm having several banking accounts in one of which there might be a balance on the credit side, when the bank might owe a customer interest, and in the other there was a large debit, and consequently the firm has a net debit. Will it be entitled to recover as against the debit the interest which the credit balance is charged?
      Mr. McKENNA: The debit would be an expense in the business, and in the ordinary return made by a large business firm would be deducted from the total profits, and consequently no Income Tax would be paid upon it. The business firm of which my hon. Friend speaks would in the ordinary course of events pay Income Tax on the deposit account, because it would be an honourable firm which would act in accordance with the law, and would pay such tax as it is now bound to do. This is merely collecting at the source what should be paid under the existing law.
      Sir A. WILLIAMSON: I have not made myself quite clear. The business firm has a debit balance and deducts that interest paid as a charge on the business, but in arriving at that charge it has to take into account, surely, the amount it has paid on its credit balance at the other bank. It must charge only the total net and not pay on the one side, and only deduct a portion.
      Mr. McKENNA: No, I do not think there will be any change. This proposal would make no difference whatever to the firm my hon. Friend has in mind. The firm he has in mind now pays in upon the profit side the interest it receives from the bank
      1116
      and charges on the business the interest which it pays to the bank. In that case the firm pays Income Tax on the net. What will happen now will be that it will not credit on the profit side the interest which it receives because the interest will have already paid Income Tax. It will still continue, of course, to deduct as an expense the charge for Income Tax payable.

      DEDUCTIONS IN RESPECT OF SCHEDULE A TAX IN SCOTLAND.
      Resolution reported,
      29. "That deductions in respect of Income Tax under Schedule A on lands and heritages in Scotland made from any rent, interest, or payment due for a period ending on 15th May shall be made at the rate in force at the commencement of that period."

      TAX ON INCREASE OF TRADE INCOMES, ETC., DURING THE WAR.
      Resolution reported,
      30. "That there shall be charged on any sum, by which the profits or gains arising from any trade, manufacture, concern in the nature of trade, or business (including agencies) in any period of account which includes any time after the commencement of the present War exceed the pre-war standard of profits or gains, a tax of fifty per cent. of that sum."
      Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
      9.0 P.M.
      Mr. HOUSTON: I was very pleased indeed to hear the Chancellor of the Exchequer to-day state that he intended devoting next week to the consideration of suggestions in connection with this Budget, and, therefore, if he can give me an assurance that he will either receive a deputation of shipowners or, if that is inconvenient, one or two shipowners, such as myself, for instance, and allow a little time to consider the far-reaching effect of this tax, I shall then curtail my remarks very considerably. He was kind enough to promise me an appointment last Tuesday week which, if he was unable to keep, I entirely acquit him of any discourtesy or want of consideration, for I know he was engaged on possibly very much more important business; but I should like him, in the event of his not being able on this

      1117
      occasion to carry out his promise, as he unfortunately was on the previous occasion, to consider one or two important points. He has told us that he has exempted agriculture from this tax. I am not going to ask him to exempt shipping from the tax, but shipping is really of more vital importance to the country in time of War than even agriculture, for we are dependent on our mercantile marine for foodstuffs, the Navy is dependent on the mercantile marine for being able to keep the high seas, by reason of colliers, trawl vessels and that sort of thing, and the Army is dependent upon the mercantile marine for the transport of troops, etc. I do not blame the right hon. Gentleman for drafting this tax, nor for the effects it will have, but it is very crude in its wording and very far-reaching in its effects.
      Something over fifty years ago America was one of the greatest shipowning nations in the world, and recently became one of the smallest. That was entirely due to legislation, and the effects of this tax upon shipping might be pretty much the same upon the mercantile marine, for the simple reason that it is really a tax on capital quite as much as a tax on profit, and at present, whilst we are engaged in war, our neutral friends have been busily engaged capturing our trade from us and making very large profits indeed. They are subject to no taxation such as this whilst the British shipowner is, with the result that they will have capital at the end of the War to employ in new tonnage, and the British shipowner will not, with very disastrous results to the mercantile marine. The anomaly of the tax is this: It is really paradoxical that, owing to the requisitioning of vessels by the Admiralty, the man who has done most to help the country will suffer the most. I shall be able to explain that by giving figures next week. I ask the right hon. Gentleman, before he drafts his Clause and inserts it in the Bill, to give shipowners the opportunity of pointing out the extreme dangers of the Bill, and the effect it may have upon the shipping trade of the country. I am not objecting to paying my full share of the taxation for this War. I have not said a word about Income Tax nor Super-tax, nor do I object to the taxation of profits, but I want to warn the right hon. Gentleman against the effect this taxation may have upon the shipping industry of this country. It is not a per-
      1118
      sonal matter with me, but a national question. It might have the effect really of crippling the shipping industry of Great Britain, and if that is the case it would be a very serious thing for this nation and the Empire. I shall take an opportunity of making an appointment with him.
      Mr. SHERWELL: I, in common with every Member of the House, am in cordial agreement with the principle that underlies this particular tax. So far as I am concerned, I should have been well content if the principle had been carried somewhat further than the right hon. Gentleman has carried it. Without discus sing the matter in detail to-night, I would like to call the attention of the Chancellor of the Exchequer to one, at least, of the broad effects which the application of the principle which he proposes in this Resolution is likely to have. We have welcomed the tax, as a tax broadly on war profits, but the effect of the tax, if it be imposed in the form in which this Resolution is drawn, will be to subject to special taxation certain profits, or sources of income, which are in no sense war profits or war income. For instance, under the proposal in its present form a business whose financial year ends on 30th September is liable to pay a special war tax on ten months pre-war profits. I shall be in a position to give the Chancellor of the Exchequer certain instances where the operation of the proposal would have that effect. Of course, the Chancellor of the Exchequer in his speeches has carefully safeguarded himself against calling this a war profits tax. He very explicitly told the House that it really is, in effect, a tax upon prosperity. If it be a tax upon prosperity, and therefore may legitimately be imposed upon pre-war profits, it seems to me that the case of the Chancellor of the Exchequer disappears against the suggestion that he should apply it as a tax upon prosperity all round—a tax upon individual incomes, and not a tax upon a particular class of business. I certainly hope that in the course of the next week the Chancellor of the Exchequer will realise that the real principle of the tax may be violated, if he proposes it in such a form as to make it bear hardly upon prewar profits that are in no way due to circumstances attendant upon the War.
      Mr. J. M. HENDERSON: I am told that this is a very popular tax. I have often found that the most popular taxes are those that you have not got to pay, but

      1119
      which someone else pays. I understand that my right hon. Friend and those who are advising him will seriously consider the drafting of the Bill to carry out this object. In doing so I hope he will take into consideration a very great number of cases of difficulty in arriving at what he really wants. I will mention just a few. There is the case mentioned by my hon. Friend (Mr. Sherwell) of a business whose financial year ends in September, and which represents ten months pre-war and two months war. Some provision must be made to meet that case; there must be some distinction made as regards that. Then there is the case of shipping referred to by the hon. Member (Mr. Houston). I have no doubt that the hon. Member will make a case there. You have got to take care to provide for the different circumstances that arise. For instance, a great many ships have been lost to some companies, and they cannot be replaced at anything like their original capital value. There must be provision for that, and there must be some provision for the loss of ordinary trade, which has been snatched by someone else. Then there are cases where, previous to the War, business was carried on at a loss for years. I will mention one case where, ever since the South African war, they paid no dividends, they wrote off £57,000, and their 20s. shares were reduced to 1s. To-day they are making some profit. Their average prior to the War was nil.
      Then there is the question of gradually growing businesses, where, for instance, the profit is £8,000 in 1910, £10,000 in 1911, and so on. This year they will show perhaps a profit of £16,000. The average on that will, of course, be such a sum as would annex for the Exchequer a great deal more than anything that might be attributed to the War. There is another case that I would urge upon the attention of the Chancellor of the Exchequer, and that is the case of the electric lighting companies: the public utility companies. A great many of these are in the large towns, and the local authorities have the right to take them over and buy them out at the then value at the end of a certain period. For instance, the London County Council can take over the London companies in, I think, 1931, so that they have only fifteen years to run. These profits have been growing slowly; by the extension of the mains and in consequence of
      1120
      the growing population they are gradually increasing. They were meant to increase when the Act was granted because this is the only way, by increased dividends, in which they can recoup that part of the capital which at the end of the period, being a wasted asset, they would be almost certain to lose to a large extent. Then there are cases where a greater profit has been made by putting down expensive machinery, which will have to be dealt with, and which will be redundant for the ordinary business of the firm after the War is over. There is another class of case where difficulty arises. A case of this kind came to my knowledge the other day. As the right hon. Gentleman knows, last year they granted a concession whereby if a man had any particular loss by the War instead of taking the three previous years as an average, he would be entitled to bring in the bad year. This turns out to have been a benefit last year, but it will turn out quite the reverse with some firms that I know. It appears that their ordinary business having gone, they turned themselves out to help the Government, and directed their efforts into manufacturing for the Government, with the result that this year shows a profit perhaps a little more than normal. Mark what happens. Last year the business, owing to debts in Germany, and owing to the stock they made for Germany and Austria having to be wiped off, showed an absolute loss. Therefore, the three years' average would be practically less than the two years' average.
      Mr. McKENNA Mr. McKENNA indicated dissent.
      Mr. HENDERSON: My right hon. Friend shakes his head. However, I mention that matter for what it is worth. In such a case you ought to take a normal year, a normal period, and not a period which has been less than the normal for a series of years past. The three years ought to be three normal years, so that you do not take 50 per cent. of the profit, part of which may have been based upon a loss. There is also the question of patents and advertising. People spend a great deal of money, and the business is gradually growing. That increase has nothing to do with the War, no relation to the War. For the first time, say, the business has become profitable. According to this tax the whole of the business profit will go. A firm spends a great deal of money in advertisement. We know that an advertisement takes a good many years to

      1121
      mature. Now, those advertisements are maturing, and the results have no relation to the War. All these matters must be considered. One point which I would like to urge on my right hon. Friend is the great differentiation made between the cases in which the tax is 50 per cent and those in which it is 80 per cent. Why people who have made money through their ordinary business without great expense or great extra exertion should only pay 50 per cent., and—
      Mr. HOUSTON: The Chancellor has already agreed to 60.
      Mr. HENDERSON: No. I understood from the example he gave that of £100 extra profit £50 would be taxation, and Income Tax would be paid on the other £50 in the ordinary way. But there is an extraordinary difference between the 50 and the 80. You have a man who is supplying goods in his own line of business in the ordinary way, and he is only charged 50 per cent. But if the Government go to an engineer and say to him, "Stop your ordinary business and devote your machinery to the making of munitions—shells, shrapnel, tubes, and so on—and then we will impose this tax on you," that is absolutely wrong. In the first case, where you charge 50 per cent., the man has not lessened the security of his position. He has rather augmented it. In the other case, where the whole place is devoted to making munitions, he has, when the War is over, to pick up again his business which has been picked up by other people. Yet you say to this man who has patriotically dropped his business, and worked late and early in order to help you, "We are going to give you 20 per cent., while the other gentleman is going to get 50 per cent." If anyone had mentioned such a proposal to me in cold blood, I should have said to him, "Adam Smith has said that a man would fight for his country and lay down his life for his country, but he would equally fight to the death against what he considers unjust taxation." I should have said to him, "Here is the whole business. Take the place. Give me a rifle and I will go and fight." To say to a man, "I am going to take all your business away from you, and leave you to pick it up afterwards, if you are able to do so. You are going to do all this work for me, and you are going to get 20 per cent."—
      Mr. DEPUTY-SPEAKER(Mr. Whitley): The hon. Member is either discussing past
      1122
      legislation, or he is proposing to increase a tax up to 80 per cent. Either of these things is out of order.
      Mr. HENDERSON: I dare say that I am out of order, but if I am I accept your ruling. I mention these cases to show how necessary it is that the whole of this question should be studied on a just and equitable basis. Failing that, points of the greatest interest and the greatest bearing upon the case may be neglected, and it is with a view of preventing that, and of enabling the tax to work smoothly that I offer these suggestions to my right hon. Friend.
      Mr. PENNEFATHER: I do not want to criticise this tax, but I want to remind the House of some very wise words which fell from the Chancellor of the Exchequer last Thursday. He said:—
      "Nothing is more easy than to make a mistake in new taxes, and we must have careful consideration of every detail of this tax before we can be satisfied that it is fair, just and effective."
      I suppose that I cannot go wrong if I follow the Chancellor on that line of argument. Mistakes in this case may very easily occur, as he so frankly acknowledged, because in the case of this particular tax we have no experience whatever to guide us. This is, I believe, an absolutely novel tax. It has certainly never been applied in this country before. I do not believe that it has ever been applied in any country in the world. When we are dealing with other fiscal questions, we have had our own experience or the experience of other countries to guide us. But in dealing with this particular tax, I cordially agree with the Chancellor of the Exchequer that we must be extremely careful that we do not make mistakes, and therefore from that point of view only I am going to venture to suggest to the House some matters which he might take into consideration. Before we can intelligently discuss this tax, I think it is necessary that we should all be agreed as to what this tax really is. There is a very great deal of loose talking going on in the country about it, and even in this House.
      There was a question on the Paper today which I think made reference to war profits. This tax is called throughout the country the "War Profits Tax." I believe that the reason of that was that the original idea was that there were certain culprits in this country—I think an hon. Member sitting there a few nights ago referred to them as felons: I prefer the

      1123
      milder word "culprits"—who were blackmailing the Government and the public, taking undue and unfair advantage of the War, in order to secure for themselves unreasonable, unwarranted, and one might almost say dishonest, profits, and the country was unanimous in saying that those people ought to be taxed. That is what was meant originally by war profits. Then it came somewhat as a surprise to a great many people in the country—and there are many people who do not realise it yet—that this was not to be a tax of that nature upon culprits, that it was not to be a tax upon war profits, strictly speaking, but that it was to be a tax on all excess profits, whether they were made guiltily, innocently, or usefully—whether they were made by the rich man or the poor man. As the Chancellor said the other day, "In dealing with this matter we never think of anything less than £100,000." But this tax is going to affect the man who has made £200 extra profit as much in proportion as, or more than, the man who has made £200,000. The effect of this tax is going to be like the gentle dew which falls alike upon the just and the unjust. I do not at all agree with the view expressed by the hon. Member for Hexham (Mr. Holt) the other night, when he said that this was a highwayman's tax.
      I am not here to-night to defend any man in any position in any trade or business, who has taken an undue advantage of the country in its hour of need, and who has made profits which he ought not to have made. So far as those culprits are concerned, I will go as far as the most extreme men in this House, or further; I would say that if they had improperly and unpatriotically taken advantage of the country to blackmail the Government or the public, I would take 100 per cent. from them. Why not? If they have done wrong, penalise them. I will, however, leave that subject, which is rather unsavoury. I would ask the House to remember that I have made my position perfectly clear in regard to those culprits about whom I have not hesitated to speak out, and that anything I am going to say, from now on, does not refer to those people at all, but refers to entirely other people. Therefore, I would beg any hon. Member not to imagine that anything I am now going to say relates to those culprits with whom I have been dealing. I am now going to point out again that there has been no discrimination whatever between
      1124
      those culprits and the people who, passively or more or less innocently, perhaps accidentally, not with intention, but in the ordinary rough-and-tumble of commercial life, have happened to make some little excess profits. And then I am going to draw attention to the third class, by which I mean the people who have not been culprits, who have not been passive or innocent, or what you may merely call lucky, but those who have actually assisted in helping this country by bringing into it the sinews of war, the silver bullets, without which we cannot carry on the struggle.
      I am going to submit that there is a great distinction between the three classes. I confessed that I would willingly see the culprit taxed 100 per cent., but I am now dealing with men whom I have spoken of as more or less innocent, more or less passive, who have done nothing wrong, but who have been simply lucky. I have no hesitation in saying that so far as these people are concerned, I quite think that the Chancellor of the Exchequer is entitled to go to them and simply put it to them on the ground, "Here you have been lucky, and out of your luck we ask you to contribute to the upkeep of the Army and Navy, without whose assistance you could not have carried on your peaceful avocations." I am going to raise no objection to that principle, because I fully realise that any pecuniary sacrifice of that kind which the lucky man makes is nothing in comparison with the sacrifice which is made by the man who goes out and lays down his life for the country. But then comes the question, that if this tax is a fair tax—we are dealing with the question whether the tax is fair and just—it must be fair between man and man; it must not press more heavily upon the unlucky man than upon the lucky man. That would obviously be the reverse of just, and, if we do not take care, it is extremely easy for such to be the result. I would like to point out one other little matter which has not been mentioned. One reason which the Chancellor of the Exchequer gave the other night for confining this tax simply to those engaged in some kind of business, was that in business the element of price came into account. I admit it. If a man has made his excess profits through the article in which he deals having advanced in price, there is some presumption that he has benefited by that advance. But I would respectfully point out to my right hon. Friend that there are many businesses in this country in which the articles

      1125
      in which they deal have not risen in price. In some cases they have gone down. Therefore, if the right hon. Gentleman bases it on the question of price, and says there is a distinction between the trader and the professional man, because price does not enter into the case of the professional man, then I would also venture to remind him that there are cases of businesses where price does not enter into the matter either.
      What I am going to suggest is that the equity of this whole tax—and it is a very important thing—between man and man depends upon the equity of the datum figure which is fixed. If it is an inequitable datum figure it may lead to very grave injustice, and the right hon. Gentleman should take into very careful consideration the appointment of some tribunal, or make some arrangements, whereby exception ally hard cases might be provided for, because such hard cases will undoubtedly arise, and will create grave injustice between man and man in this country. Particularly I would refer now to the question of the pre-war profits. So far from this being a war profit tax, it goes back possibly to ten or eleven months trading before the War. I am not sure whether I am in order in mentioning this, but it was mentioned by the Chancellor of the Exchequer in dealing with this Resolution. He stated, in explaining it—and I believe it is stated in the Resolution—that this Tax applies to all profits earned in any period of accounts ending after the 1st September, 1914. What follows? Purely according to accident a man closes his books on the 31st August, on the 30th September, or on the 31st October. It is a pure matter of accident; it has nothing to do with the War, and it may have nothing to do with his having that excess profit. It may or it may not. As a matter of fact, he may have made a good deal of money in excess profits in the ten months previous to the War, and lost a portion of that excess profit in the months since the War broke out. But according to the scheme now before us, that man would be asked to pay 50 per cent. on excess profits gained before the War, and not one penny of which, or an insignificant portion of which, has been earned since the War.
      I will try not to carry that too far, but I would point out that the datum assessment as at present suggested is a very narrow one. It is simply the Income Tax assessment which happened to be put in
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      last January or last March—that is to say, the assessment for 1914–15, which was based, naturally, upon the profits of the previous three years, that is, on the years 1911, 1912, and 1913. I want to point out, with all respect to the Chancellor, how very severely and unfairly that might act in some instances. In the case of a man who is fortunate, that is, the lucky man who has consistently been making a large income for the last five years, it does not affect him at all, as he has got a high basis, but the man who is going to be affected by it is the unlucky man who made during those three years below his real normal profits. Take the simple concrete case of a man who in one of those three years made an exceptionally heavy loss, perhaps, say, through a fraudulent bad debt. If a man lost in one of those years, through a fraudulent bad debt, or any other commercial misfortune, say a sum of £6,000, that would reduce his assessment for 1914 by £2,000; and comparing that assessment with the normal profits which this man made last year, and which he may make this year and next year, it would mean that he would be penalised £1,000, not because he had made an excess over his annual normal earnings, but because his Income Tax assessment for 1914 had been reduced through that bad debt or commercial misfortune. He would thus pay a penalty of £1,000, not for making war profits, but for having made a bad debt of £6,000, and he would be called upon to repeat that payment of £1,000 for so long as the War lasts and this tax lasts. The man lost that £6,000, not through any fault of his own, but through some fraud, some accident, some defalcation, or, even if you like, through some unlucky speculation. And because of that and the consequent reduction of his assessment, he is now to be asked to contribute £1,000 for last year and £1,000 for this year, and perhaps £1,000 for next year and the year after. Thus, that man's original bad debt of £6,000 is going to cost him £10,000, unless the right hon. Gentleman will take some steps to redress this exceptional case, where it is obviously reasonable for him to do so.
      I am merely dealing with the case of a man who has recovered from a period of depression caused by some exceptional misfortune, and who is now earing his true normal income, which is not shown in the assessment figure. We can raise the matter further in Committee, and I have no doubt the right hon. Gentleman will

      1127
      perhaps consider it in the meantime. I dare say the right hon. Gentleman or somebody else may get up and say that they have provided for that case by allowing for 6 per cent. if a man makes a return of nil or a total loss. I am not talking now of the big trading companies, and up to now everybody seems to have been thinking of those companies with hundreds of thousands of pounds profit. I am talking of the average merchant, and more particularly of the private firm, and I will quote this case: You have a man such as I say who had a bad time and who makes a nil return in 1914–15. According to the present proposal he will be allowed 6 per cent. on the capital engaged in his business as a jumping off point for the datum line. The man may have had his capital swept away by misfortune and he may be working through the credit of friends under guarantees, and his books may show no capital or very, very little. Surely a case like that should be provided for. I do not think I need labour the point. I can give instances and have had concrete cases brought to my notice of men who have been working with no capital and building themselves up after misfortune. Private traders, say a firm of three partners with £10,000, and whose normal income would very likely be from £5,000 to £6,000 per year, would be allowed under the present proposal £600 per year as the starting point. There are many men in the City of London and in Liverpool and in every big city who, by their personal individuality, make very large incomes with very small capital. To such men to offer an allowance of 6 per cent. on their capital would be really a mockery.
      I come to the next question: Would this tax be effective? That, I think, perhaps is the most important question of all, as I think the right hon. Gentleman will admit. What do we mean when we ask, in the present circumstances, would the tax be effective? My interpretation of it would be not merely would it be effective in raising a certain sum of money, but would it be effective in helping us to win the War against Germany? That, I maintain, is the real question at issue to-day in regard to anything as to whether it is effective or not. Is it going to be effective in assisting us in our staying power in case the War is protracted? Looking at the matter from that point of view, I would
      1128
      ask the attention of the House to a few considerations. I am not going to dog-matise, but simply to suggest a few possibilities. In this case I am going to drop entirely talking about individuals or the interests of individuals, or the interests of any particular trade or of any particular class. I would like to take this from the broad national point of view of what is to the interest of this country. I would like to ask the House to consider whether it really will help us to win the War if we discourage those men who go out into foreign countries and by their activities bring into this country new money—silver bullets, as the right hon. Gentleman's predecessor called them. I am not speaking of our investments or anything of that kind, or our income from old investments. I am talking of the business men of this country. I am not referring to shipping. There are other Gentlemen here much more competent than I am to deal with that question. I am referring to the thousand and one men that we have in our commercial community in this country who do trade in foreign countries with foreign countries and between foreign countries. Those men do earn money and they bring that money, new money, every year to this country, and that new money I respectfully submit adds to our fighting strength and helps us to subscribe to the New War Loan. If we bring it here in some form or other it can, if the last desperate necessity arises, be commandeered. If it is a good thing to bring that money here, is it wise to discourage the bringing of it? Will it not discourage people from these risky activities in foreign countries if you put before them the proposition that if they make a loss it is to be all their loss, while if they make an excess profit over possibly a low datum line they will have to pay to the Government certainly one half of it, or, if the suggestion of some hon. Gentleman is accepted, 60, 80 or 100 per cent.? I am afraid that in the minds of the business community these suggestions will cause much uneasiness and do very much to discourage people from going into the world and making new money with which to help us to fight the enemy.
      The Chancellor of the Exchequer is extremely and properly anxious to do everything possible to increase exports. Is it going to encourage exporters if you tell them that if they can get more money out of the Chinaman than they ever got

      1129
      before they are going to be severely penalised? I do not see how it can. If you discourage your exports, if you discourage the men who are bringing in the new money, what effect will it have upon the rate of exchange? It cannot improve it. It may widen the gap between exports and imports. It may easily reduce the rate of exchange very materially. I speak with all deference as a man who has had over thirty years' practical experience in the very kind of thing about which I am speaking. If it reduces the rate of exchange it will put up the price of food and of all raw materials in this country. These are very serious considerations. I am sorry to detain the House. I do so only because I feel it to be a national duty for every man who has special knowledge on any particular point to throw that knowledge into the common stock. I am not putting any extreme cases. I am not vamping up anything. I ask the House to consider from a broad, national point of view whether the discouragement of the people to whom I am referring is likely to add to the strength of the nation, or whether it is not more likely, not as a matter of economics, but as a matter of common sense, prejudicially to affect the exchange and therefore increase the cost of everything coming into this country.
      It may also result in transferring a great deal of our trade to neutral countries. What is going to be the effect on Anglo-American houses? There are plenty of firms in England which have also branches in America. Perhaps to-day the head office is in England earning money and bringing it into England. The American branch may be a mere agency. If the American branch can trade without paying any Excess Profits Tax, while the English branch has to pay 50 per cent., what will they do if they think they are going to have a good time? They will make the American branch the head branch, and the agency will be in England. You can only tax the commission of the agency, and they will take care to keep that down to the smallest point. With the best intentions in the world we may do an infinity of harm if we do not consider this matter from a broad, national point of view in the light of commercial experience. It has been said very often in this House that the co-operation of business men is desired and even invited. Surely this is a question for business men to consider, because there are points involved which
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      would not readily occur to others. What will be the effect on labour? I am sorry there is nobody on the Labour Benches. Can it be good for labour in England if we do something which checks exports and possibly transfers large sections of our trade to other countries? I thank the House for the patience with which they have listened to me. I have not been pleading with the object of defeating the Excess Profits Tax. I am perfectly willing that it should be levied on the culprit and on the innocent passive man, but I beg the House to think not only once or twice, but thrice, before they put it on the men who are bringing new money into this country, the men who are exporting from this country, and before in that way they weaken our arms in the great conflict that lies before us.
      Mr. McKENNA: The very interesting speech to which we have just listened has certainly convinced me of the wisdom and propriety of calling this tax an Excess Profits Tax, and not a war tax. I am not sure that I was able to follow the whole of the hon. Gentleman's argument. It was extremely lucid and very fairly stated, but I am not sure that it would lead me to precisely the conclusion to which it led him. He would divide traders into three classes, according to their moral qualities. The culprit he would charge 100 per cent. on his excess profits; the lucky man he would charge 50 per cent.; but the enterprising trader—
      Mr. PENNEFATHER: The beneficial trader.
      Mr. McKENNA: The enterprising beneficial trader he would charge nothing.
      Mr. PENNEFATHER: I did not say that.
      Mr. McKENNA: Except the normal Income Tax.
      Mr. PENNEFATHER: I did not suggest any figure. I suggested that his case should be considered.
      Mr. McKENNA: At any rate the three were to be differentiated according to their moral qualities. I would point out to the hon. Member that the bad effects which he thinks would ensue from this tax would ensue no matter what were the moral qualities of the man who made the money. If it is going to check exports, or ruin our exchange, or have any of the other evil effects to which the hon. Member alluded,

      1131
      those effects would follow in the case of the culprit, and the effect would be far stronger if we took 100 per cent. from the culprit.
      Mr. PENNEFATHER: My suggestion was that the man who benefited the country could not possibly be a culprit. The culprit was a totally different man from the man who benefited the country. I do not see how a man can be both a benefactor of the country and a culprit.
      Mr. McKENNA: Whether or not he is a culprit depends on the moral nature of the man who made the money. If he made the money out of the necessities of the country, if he sold wheat at the best price he could get, and not as cheaply as before war broke out, I assume from the hon. Member's argument he would be a culprit. I gather from the hon. Gentleman's argument that he would have taken advantage of the necessities of his countrymen, who happened to be short of wheat.
      Mr. PENNEFATHER: I do not think I mentioned imports; I referred to exports.
      Mr. McKENNA: I am not sure I have followed the hon. Member's argument. If he will forgive me for saying so, I have tried with very great labour to follow him, and I was only raising the illustrations I have to suggest the extraordinary difficulty of discussing taxes of this kind in Debate. If the hon. Gentleman will be so good, in the course of the next week, to see me at the Treasury, and give me particulars of the businesses which he feels would be unfairly dealt with, I would be very glad to consider the cases. We have listened to the speech of the hon. Gentlemen. I endeavoured to follow it, and to be perfectly fair to his argument, but it would appear that I have completely misunderstood him.
      Mr. PENNEFATHER: Perhaps that is my fault. [HON. MEMBERS: "No, no!"]
      Mr. McKENNA: It shows the difficulty of going into details here. I venture to impress upon the House the desirability of not endeavouring to follow misleading arguments in a Debate of this kind, where speaker and listener are not really thinking about the same subject-matter. Let me have the opportunity any time next week at the Treasury—I shall be there all day and every day—and I am only too anxious to consider the difficulties which these taxes seems to raise. We have
      1132
      promised an independent tribunal, and a point which we have been considering is what shall be the subjects which might come before that tribunal. These points raised could only be determined, not on general principles, but on an examination of details. Take the case of a man who puts his money in a rubber plantation. He expects to get nothing for five years. It would be very hard to allow him only the datum line of 6 per cent. in the seventh or the eighth year. If he only got that, it would never repay him for the five years in which he got nothing from the plantation. That is the case of a particular business, which it is so much better to deal with across the Table than on the floor of this House. I would, therefore, beg my hon. Friends, if they would be so good, to defer criticism of this tax, unless they object in principle. I have nothing to say to that, but I have not understood that there is any objection in principle to it. If, however, it is a question of details I ask that they will be so good as to give me a private opportunity of going into the details in question, and then if they are not satisfied they can bring their criticisms before the House when we get to the Bill. It will be observed that the Resolution itself is drawn in the very widest terms. I could explain to the hon. Member several particulars which he related to the House in which he has taken quite too gloomy a view. But I am most anxious, and the whole Government are most anxious to be absolutely fair in this tax. We think it good in principle, and personally I am most anxious that it should work properly. It ought to be effective for the sake of the public, and the public are morally entitled to obtain revenue from this source. At the same time, the individual is entitled to be considered; and I think that can only be done by attention to the matter personally in detail. I would beg, therefore, the hon. Member to allow me to have this Resolution, and to bring their cases before me in the course of next week.
      10.0 P.M.
      Mr. MACMASTER: I desire to limit my remarks in view of what the Chancellor of the Exchequer has said to the matter of principle, and not to go at all into the matter of details. This tax, understood to be a tax on war profits, having really assumed a wider scope, affects all profits which are made in business. Ostensibly, I suppose the Resolution requires 50 per cent. of the excess profits of business made during the War. In reality, if we take the

      1133
      explanation of the Chancellor of the Exchequer in his first and second speeches, we see that it means something very different from that. Therefore it is a matter of principle. It is not for me to say whether 50 per cent. of the profits is a proper amount or an improper amount. That is a matter for the House and the country and for general appreciation. But whatever it is, whatever is the portion taken from the profits, it is not really a tax; it is an appropriation of a portion of the profits that are made by money investments of the business man, and by the application of his intelligence and his energy. Therefore, clearly stated, it is a case in which the proposal is to take, from the rewards of investment, money gained by enterprise and intelligence. It is not really a tax. It is an appropriation of the large earnings of the man who has money, enterprise, and intelligence.
      An HON. MEMBER: Is not that a tax?
      Mr. MACMASTER: In the ordinary sense a tax is a percentage taken upon one's total earnings. But here, again, observe that the Chancellor says: "I shall take a half of your excess earnings, but I will not share your losses." Let it be so. That is perfectly fair. Whether it be 20 per cent., or 40 per cent., or 50 per cent., or 80 per cent.—as one of the representatives of the Labour party suggested it might be—whatever it is, take that absolutely and keep it; but it is most unfair, and unreasonable, as well as illogical, that, in addition to taking that portion of the earnings of enterprise, you should impose a tax upon that in addition. Impose your tax, if you will, on what is left; but the very moment that you commence to impose a tax, as the right hon. Gentleman proposes in this instance, upon the portion you take from the business man, you have not only taken a portion of his profits and earnings, but you tax him upon the swag you have taken from him. As a matter of principle, that is an unfair and an unjust tax.
      I do not doubt for a moment that we have a right to say that we shall take 50 per cent. or 60 per cent.; but, if you are going to take 50 per cent. or 60 per cent., let it be that, and do not by a circuitous route arrive at a calculation by imposing a tax upon the swag that in reality makes it 62½ per cent. or 67 per cent. The Chancellor of the Exchequer gave us illustrations in his first and second speeches, and it is just as clear as the sun at mid-day
      1134
      what he means to do is to take, not what is stated in this Resolution, but 50 per cent., and a tax upon the portion that he takes, which makes the tax about 67½ per cent. Having heard the admirable suggestions of my hon. Friend beside me, that the effect of excessive taxation might be to drive capital out of the country, and induce people to go abroad and make investments, and draw profits, I say that the danger is greatly enhanced by the character of the imposition in this instance. In the first place, whatever we take, let us take it absolutely clearly, and deal with the balance upon the ordinary rules of taxation, and not impose a tax upon that portion of the profits that we exact from the business man.
      Sir ALEXANDER HENDERSON: I do not desire to prolong this Debate, and I have nothing whatever to say against the Excess Profits Tax, but the Chancellor of the Exchequer has spoken this evening, and previously, about the tribunal that he proposes to set up which is to have in its charge the special administration of this tax. All I want is an assurance that that tribunal will have very wide powers, so that special circumstances calling for special treatment may be considered by it. I have had brought to my notice a number of cases where, under ordinary circumstances only, this tax might work very unfairly. I am going to give two of them, and I think when they are considered the necessity for wide powers being given to this tribunal will be apparent. Case No. 1 is this: A largish concern in the steel industry has put on one side all its ordinary orders with a view of rolling shell steel. The ordinary orders were at the prices current at the time the War broke out. Prices advanced very considerably and a very considerable profit has been made. In the meantime wages, material, and everything that is consumed by this undertaking have advanced in price. The result is that while profit during the past year has been earned to a considerable amount, old orders have had to be set on one side at the figures current prior to the War. Now the Income Tax Commissioners, when they come to deal with the profits of the undertaking during the past year, will not allow a reserve to be made to meet these contracts at old prices, but they will assess the profits upon the contracts that have been completed, and at comparatively high prices. The result will be that you may

      1135
      have an undertaking making a considerable profit during the past year, considerably in excess of that at which they were assessed for Income Tax in the year 1913–14, and half that profit will be demanded under this Excess Profits Tax. Nothing will be put on one side to meet the old obligations contracted before the War, which must inevitably result in a very large loss when they come to be executed.
      Mr. McKENNA: That will be allowed for.
      Sir A. HENDERSON: The Income Tax Commissioners will not have the point before them, and that is where I come to the question of this tribunal.
      Mr. McKENNA: This is another illustration of the difficulty of going into particular cases across the floor of the House. I can explain to the hon. Gentleman that the matter to which he has referred is already provided for. It is proposed that all the orders shall be brought into hotchpotch so that if there is a gain in one year and a loss in the next the subject will be entitled to repayment in respect of the loss.
      Sir A. HENDERSON: I am very much obliged to the right hon. Gentleman for his explanation, but I would say this: That this tax is to be continued during the period of the War. These losses will be realised when the War is over, and therefore, unless we can get the losses back after the War period, it really does not meet the situation as far as we are concerned. That is Case No. 1. May I give Case No. 2, which is a stronger one? A company has contracted with the Government, and considerable profits in connection with the Government contracts have been realised. Less than one-fifth of the business in the particular commodity subject to the contract has been supplied by this company. The other four-fifths have been supplied by agencies of foreign companies. The foreign companies pay no Income Tax or Super-tax, and no Excess Profits Tax. The English Company will have to part with one half of the profit it has made. The profit that is made during this War period will probably enable it to fight or to hold its own against its foreign opponents. It will be a kind of fighting fund which it will be able to build up to fight the foreigner. If you take away half of its profits you leave it only sufficient just to pay a
      1136
      moderate dividend, and the fighting fund, as far as they are concerned, will cease to exist. What is the result when the War is over? That concern will be undoubtedly wiped out, because its foreign opponents will have a large fund with which to fight, while the English concern will have nothing left. My only object in rising and giving these two instances—I could give many more—is to ask that the constitution of this special tribunal which the Chancellor of the Exchequer proposes to set up shall be well considered. If it is to be composed of the ordinary Income Tax Commissioners, or persons of that type, it will not be any assistance to the merchants, but if you will put upon it some thoroughly experienced business men, then we have no doubt that the considerations I have ventured to advance will be taken fully into view, and the result no doubt will be justice to the undertakings I have mentioned and to those similarly placed. As I say, I do not wish to elaborate the instances I could give, but I think I have advanced reasons why the constitution of the tribunal should have the most serious consideration of the Chancellor of the Exchequer.
      Mr. RUTHERFORD: When we first heard of this tax it received almost universal approval, because it struck the imagination of the people that there were a number of trades and firms which had been decidedly benefited by the War, and were making exceptional profits, and almost everybody thought it would be a good thing if they were made to part with one half of those excess profits to the Government in its financial emergency. But in proposing a tax like this in general terms it is found almost at once that it is capable of doing an immense quantity of harm in certain directions. Now it must not be forgotten that London is the home of a vast number of cosmopolitan companies and undertakings which carry on their business in all parts of the world, and which might be registered in any of the States of the United States or in any neutral or foreign country or colony, and if we impose a tax of this kind I am afraid the very first result will be that England will lose—for as long at all events as this tax is to be in operation—being the habitat, the centre and the distributing medium. I can give a case very shortly—just as shortly here as I could across the table, and I am sure the Chancellor of the Ex-

      1137
      chequer will have a very busy week next week if he is going to see all of us—a case that will lead to an immediate dissolution of a company here. Take the case of a goldmining company in Alaska, with its office in London. It has been hard at work for five or six years developing that property and bringing it to fruition. Last year it earned a little money. This year it has earned £200,000 in the period that has just finished—the 30th June. What is going to happen to that company? Some of the people would say, "Show the £200,000 profit; you are allowed £60,000, and there is £140,000 difference. Give the Chancellor of the Exchequer £70,000." Some others would say, "When we have been at it five years, 6 per cent. is no compensation to us—in fact, it is ridiculous, because now is the time we were expecting to get some money." Instead of having the annual meeting here within the next few weeks and becoming liable for that amount, the company would be dissolved here and registered in Alaska. They would pay their Income Tax and excess money here. That would not be cheating the revenue, but simply preventing the harvest which these people have been working for over four or five years from incurring this tax which would ruin the company. Practically with regard to the whole class of concerns which have been labouring for years to a point of success, which has just now been reached, and made profits not in consequence of the War, but in spite of it, in places which have nothing to do with England at all, but which is merely housed here, because a large portion of the capital is subscribed in England, that class of concern is going to be driven out of the country. I have listened to several speeches by the Chancellor of the Exchequer, but I have not heard of the slightest provision which would prevent this difficulty arising. I am sure the Chancellor of the Exchequer cannot complain of us spending a few minutes upon each of these complicated taxes. Some of them are exceedingly complicated, very difficult and intricate. I have been impressed with this class of cases, and I feel that unless very careful consideration is given to them and some provision made, we shall be creating a difficulty which will be out of all proportion to the sum of money that might be raised.
      Mr. SAMUEL SAMUEL: I do not wish to repeat the numerous cases we have heard of showing hardship. The Chancellor of the Exchequer has kindly and
      1138
      generously consented to listen to those hon. Members who may trouble him. There is, however, one point that I think has been overlooked in regard to the coming into force of this Resolution, and that is the date. Apparently the Chancellor of the Exchequer is not aware that the majority of commercial companies make up their accounts to the 31st of December. The dividends are paid probably from March to June. What is to be the position of companies, no matter how wealthy they are, who have distributed the whole of the dividends for 1914 and who have actually paid interim dividends for 1915? Is the company to get back from the individual shareholders any excess profits that they have received in those dividends, or is the company to be compelled to find out of their 1915 profits the money to pay for any excess profit made in 1914. The position is very complicated and may cause enormous hardships to hundreds of thousands of small shareholders. If the shareholders have to pay, well some shareholders may have sold out, and it will be impossible for the company to get hold of those who have sold their shares. You cannot ask the new shareholders, as in the case of the Income Tax last year, to pay. They had to pay Income Tax last year because they had been criminal enough to buy shares during the period for which we were not aware that the Income Tax was going to be increased.
      Consequently, if you go to the company to pay these excess profits, it will mean that those shareholders who received their interim dividends in July will receive probably a very small final dividend, or no dividend at all, at the end of the year. It will impoverish the company if they have to pay it out of their reserve fund; it will take away the reserves which are necessary for the further development and increase of the business. There are many cases of great hardship which will arise, but making this retrospective is one of the greatest hardships that will fall upon small people who have in many instances devoted their surplus income to such institutions as the Red Cross Society. They have spent the money. It does not exist to-day, and I do not see how you are going to get it back except by inflicting great hardships on those people. Some of them are exceedingly poor. I would ask the Chancellor of the Exchequer whether he cannot see his way to

      1139
      defer the operation of the tax. If it is known that any company during the three months of last year that the War was in force has done anything wrong in the way of excess profits I should be the first to say, "Get it back from them if you can possibly do it," but I think it is a very great hardship to treat hundreds of thousands of shareholders as criminals, and to take them before the magistrate and fine them for something which they have mot done, because that is what it really amounts to when you make these measures retrospective.
      Mr. PETO: I only want to bring before the notice of the Chancellor of the Exchequer two or three broad considerations. My hon. Friend the Member for the Kirkdale Division of Liverpool (Colonel Pennefather) spoke more especially of the volatile businesses in this country which are not firmly rooted or anchored here. He was speaking generally with regard to the merchant businesses of the country. I want to ask the Chancellor of the Exchequer if he will not consider that really there is a broad distinction to be drawn as between merchant businesses and manufacturing businesses in this country, for two reasons. Firstly, the manufacturing business is a great employer of labour, and we know that the genesis of this tax was a very strong feeling on the part of labour throughout the country that by their special exertions during the War they were merely enriching their employers. That applies to one class of business only—the manufacturing business. The second is the point the hon. Baronet the Member for St. George's, Hanover Square, brought specially forward as to particular cases which had been the subject of several questions to the Chancellor of the Exchequer and particularly one from the hon. Member for Warrington, who asked whether, in regard to businesses that were trading entirely between neutral countries, there would be any remission of this Excess Profits Tax. The Chancellor of the Exchequer replied in the negative. That brings me to this consideration, and I want the Chancellor of the Exchequer to seriously consider it before we have the Bill in its final form: What special provision is he going to make to prevent those companies which have no particular reason for having their habitat in this country, whose business is practically international, who employ no labour in this country and
      1140
      therefore do not excite feeling on the part of labour as to the profit made by it—what provision is he going to make to prevent his losing, not only the Excess Profits Tax, but a very large proportion of the Income Tax and other indirect benefit to the country, besides any question of our trade, our invisible exports, and the profit from foreign trade? All these are benefits which he is out to increase. How is he going to make quite sure he is not, by imposing this tax on a uniform grade, both on manufacturing and other businesses, going to lose the goose that lays the golden egg? That is one particular consideration he will have to bear in mind.
      The second consideration is this: I notice in all the speeches that have been made on this subject that hon. Members, and particularly the Chancellor of the Exchequer, have got in mind a certain picture of a solitary individual raking in an enormous number of sovereigns. The other day the Chancellor of the Exchequer said he did not notice that anyone viewed this excess profit as a smaller figure than £100,000, and the happy recipient of that would contribute £50,000 to the tax. That is the picture which the Chancellor of the Exchequer drew. It seems, on the face of it, a crude and simple proposition, and so obviously just that everyone will say it is quite fair. But that is not how it will work out, and I ask the Chancellor of the Exchequer to bear in mind those other cases where a business capable of showing anything approaching an excess profit of £100,000, is a limited liability company, with an infinity of shareholders, many of them very small people. In some cases the recipients have quite a number of small investments, and they will find that on an income of £300 or £400 at least 25 per cent. or 30 per cent. will have run off because of investments made in companies paying no dividend at all. They may have one solitary investment in one of these companies making an excess profit to which they look to absolutely provide the daily bread and butter. Therefore it is not the case of a millionaire who has earned £100,000 additional profit, but it is the case of the small investor who is mulcted of a very large part of his small income. I only put that forward with the plea that the Chancellor of the Exchequer will not have in mind simply the point of view of the millionaire who has been making a somewhat illegitimate profit. From that point of view there is nothing to be said against this tax.

      1141
      There is one other broad consideration. The tribunal for which the hon. Baronet the Member for St. George's, Hanover Square, was pleading is going to have nearly as busy a time as the Chancellor of the Exchequer will have next week. I am anxious that, if possible, it shall not be in almost every case an exceptional case that is to be brought before the tribunal. I have already asked the right hon. Gentleman to consider the question of making a particular differentiation between the two great branches of business carried on in this country. I also asked him a question with regard to a question which will be constantly occurring, which will crop up in almost every instance—the question of additional capital having been put into the business. He said something about that in his speech, and said that in the ordinary case 6 per cent. would be allowed on additional capital, and that special cases could be brought to the tribunal. I venture to say they will all be special cases. I do not think that 6 per cent. is a reasonable allowance for additional capital brought in for special purposes during the War or for carrying on a special line of business which is probably, or which we all hope is, only going to last a year or two.
      May I not suggest that the basis of the tax is not really excess profits at all? It is excess profit either on turnover or on the capital employed. There are two ways of assessing the profits of a business. Either one or the other may be the better. I do not wish to argue which. But I do wish to say, broadly and simply, that because a business has earned so many pounds more in one year than in the average of the three years which are assessable for Income Tax that that is not an excess profit. That is not the right way of stating the case. The proper way of stating the case is to say, if a business has earned a larger percentage on its turn over or its capital, that it is doing a more profitable business and ought to pay the Excess Profits Tax. If you adopt such a system as that you will take away all those special cases which will have to come before this tribunal which will be so terribly overworked, and take away a great deal of the work that would otherwise be put before them.
      There is another branch of the same question—the question of depreciation of special machinery put down. There, again, the Chancellor of the Exchequer indicated that 6 per cent. would be taken as the normal depreciation, but that
      1142
      special cases could be stated to the tribunal. Would it not very much simplify the very heavy work that these gentlemen will have to do if the Chancellor of the Exchequer would say that the anticipated useful life of the machines, taking into consideration all the circumstances, is the measure of the depreciation that ought to be allowed and not any arbitrary figure of 6 or any other per cent., and then everything else should be a special case. I will only say one word on the question raised by my hon. Friend (Mr. S. Samuel) of this tax being retrospective. I ask the Chancellor of the Exchequer to consider very seriously, as he is not making it a War Tax at all—the genesis of the tax and the raison d'être of the tax was a tax on war profits—whether it is not perfectly obviously a tax that may be charged for eleven months of peace and one month of war, or it may be one month of peace and eleven months of war. It all depends when you make up your books as to whether it is one or the other. That being the case, I ask him seriously to consider whether in many cases, not extreme cases, but ordinary cases stated by my hon. Friend, which is a very common thing, of businesses which end their financial year on 31st December, is he sure that it is possible to collect this tax at all? Two things may have happened to the profits. No doubt there are other cases, but, broadly speaking, two things may have happened. One is that they may have been divided practically up to the hilt in the form of dividends to the shareholders. If so, I maintain they have gone beyond recall, and I do not see how the Chancellor of the Exchequer is going to get them back, unless he is going to throw the whole burden of the two years' excess profit, or 100 per cent. of the profits, on the next year's business, which is almost an impossible proposition to distribute over the whole of the businesses of the country. The other contingency is that a part, perhaps a moderate part, may have been distributed in the form of a final dividend some months ago, and the major part may have been reinvested in the business, in additional capital, fixed capital in the form of machinery or buildings, or further extension in order to carry on perhaps the special Government work with which the business is entrusted. It has ceased to be fluid capital and has become fixed capital. I ask the Chancellor of the Exchequer seriously to consider whether he can now go back to a period

      1143
      which dates as far back as 1st September, 1913, with regard to the period he is now taxing when the profits which were made in time of peace, months before we ever dreamt of being at war, have already been handed over to the shareholders or very possibly been invested in the fixed capital of the business.
      Mr. FELL: My remarks will be more in the form of a question to the Chancellor of the Exchequer, whether this Resolution is broad enough to meet all cases which are likely to arise? We have discussed this almost entirely as a question of great companies or firms which have made larger profits since the War began than previously. What about the private individual who in many cases has made large profits, who was making no profits before the War? There have been some very big commissions made since the War by various individuals. They have no business, and I doubt if they made any profit before, and therefore they would not under this be called upon to declare this as in any form profits, or increased profits, which they have made since the War. That they have made very large profits in many cases, I believe, there is no doubt. Some of these cases have already come before the public in questions which have arisen in the Courts with regard to big commissions which have been earned. Some very big commissions have been made with regard to the sale of motor cars by people who would not be called agents in the ordinary form in any way—perfectly private individuals who by some means have influenced contracts and have got very large commissions. I believe there have been cases in connection with horse buying where very large profits have been made, and I believe there have been and will be very large further profits earned. I do not know whether these will come under the words here, "trade or business, including agencies." They might come under the word "agencies," but I am not sure. I do not think these people would say they were commission agents. They have no offices, no businesses and no clerks, yet they have earned very large profits. If there is any one case in which we should desire that profits should to a large extent go to the Exchequer it is this. They have had no expenses, they have run no risk whatever as a commercial man does, and have simply earned money in the form of commission, and I sincerely trust the
      1144
      Chancellor of the Exchequer in drafting the Finance Bill will make it broad enough to include these cases.
      Sir A. WILLIAMSON: I wish to ask the Chancellor of the Exchequer if it is intended to alter the law in any respect with regard to the definition of "agency." I understand representations have been made to him with regard to foreign grain dealers who have made large profits out of the Government, selling here through an agent, and the desire is expressed that the profits of the foreigner who made the sale and made the real profits should be reached. If it is intended in any way to touch the definition or the legal position of the agent, I would ask the Chancellor of the Exchequer to remember that there are agents for the sale of foreign goods, but there are also agents for the purchase of our manufactures here. You may have a big Australian shopkeeper who has an agent here and buys goods, and it would be very undesirable to attempt to reach the profit of the shopkeeper in Australia, and thereby drive him to appoint his agent in New York instead of London, where he would escape the tax. I only ask this question because I think the case of the grain dealer is so very desirable to reach, for it is possible that the Government, thinking only of that case, if they touch the matter at all, may forget the case of the agent here who buys our manufactures and is really more important to us than the agent who perhaps sells for foreign governments.
      Sir A. MARKHAM(indistinctly heard): I think this discussion must have shown the Chancellor of the Exchequer how unwise the Government have been in not dealing with this matter at an earlier stage of the War. Innumerable cases of hardship are going to arise owing to the failure of the Treasury to take action when they were pressed in this House, and outside, to obviate the circumstances which the House now has to deal with. We hear a great deal about illegitimate profits. What are illegitimate profits? Profits which arose in the main owing to the supply not being equal to the demand. Consequently, the prices of commodities rose, and the people, having no lead from the Government, took from day to day the prices caused by the shortness of supply, with the result that enormous profits, which the Chancellor of the Exchequer has estimated at many million pounds, have

      1145
      been taken out of the pockets of the taxpayers. Now the Chancellor of the Exchequer comes to the House and says they must pay that excess profit back, and very properly so. Owing to the failure of the Government to say at an earlier stage that such excess profits would be taxed, and very heavily taxed, the Chancellor of the Exchequer seems to me to have very many difficult problems to face.
      I will put the case of preference shareholders who have not had dividends for many years, but who, owing to large profits having been made, have received from this excess not only their dividend for this year, but dividends for many years before the War. How is the Chancellor of the Exchequer going to get at that? The companies will not be able to pay; in some cases I know they cannot. Will the Bill provide that a claim be made against these preference shareholders for the repayment of this money? This is a question of principle. I want to raise a point to which one or two speakers have incidentally referred: it is a matter of very great importance, and I rather change the view which I expressed when the first Resolution was moved. It does seem to me unreasonable, having regard to the whole circumstances, to levy these taxes haphazard from the 1st September as the business date. It should be perfectly easy to arrive at what the profits have been since the outbreak of the War. There should be no difficulty in arriving at that, whether the accounts are made up in June, March, or any other period, because the two half-year accounts have now been struck. One of the companies with which I am associated made their accounts up to June, but recently they changed to December. In point of fact, it does not affect me, because the business with which I am associated shows very little war profit for 1914. But you may have many companies paying tax for part of the year 1913, months before the War broke out, while other companies, owing to the accident of having their accounts made up to June, pay no tax at all for any period of 1913, and for only a very few weeks prior to the War. It is perfectly right what the Chancellor of the Exchequer says, that during the months of August and September, 1914, very large profits were made by some people, and he is right in trying to get hold of the excess profits made in August and September after the War broke out. I have no doubt it is for that reason that he has adopted
      1146
      the principle of taking the business year in September. But if the business year goes back in effect ten months before the War, that is not fair, because it all depends on the circumstances. It is just by chance that a company happens to have made up its accounts in that way. My right hon. Friend cannot say that when the War is over a company which has been taxed as it has been taxed will average itself.
      Mr. McKENNA: This only shows the disadvantage of dealing with questions of this kind as if we were in Committee. My hon. Friend raises half a dozen points, none of them arising on this Resolution as it stands. We are only on the Report stage of a Resolution, which is absolutely general in its terms. I could answer my hon. Friend on every single point in Committee, but I cannot do so at this stage.
      Sir A. MARKHAM: I think that this is a question of main principle. It is a question of taking a period. The country as a whole thinks that war profits should be taxed. The country does not understand for a moment that if by fortune or accident accounts are made up to September or any other period one man should pay for a longer period than another man. Still I will not pursue that question, as the right hon. Gentleman says that it can be dealt with in Committee. The hon. Baronet the Member for Hanover Square gave the case of a company on which there was no assessment last year because the business had failed. I do not understand whether the company is to go back in that case and take an average of some years?
      Mr. McKENNA: It was assumed that the company makes a profit in the first year of assessment, the first year of business during the War, from the 1st October to the 30th of September. During the second year it makes a profit, again from the 1st of October to the 30th of September. Assuming that the War goes on for the next year, in the third year it comes into assessment. Suppose that in that year it loses, the company is entitled then to take the whole three years together and to recover from the Exchequer the amount due in respect of the loss, on the average. The hon. Member opposite took the particular case of a company which may lose after the War, and he contended that that company should get relief. All these are points which clearly cannot be

      1147
      dealt with until hon. Members see the terms of the Bill. Therefore, I beg the House to wait until the Bill is printed.
      Sir A. MARKHAM: A good many of us are going away, and we shall not have the opportunity of coming up to see the right hon. Gentleman.
      Mr. McKENNA: Hon. Members should wait until the Bill is printed.
      Sir A. MARKHAM: The right hon. Gentleman has invited hon. Members who are staying in town to come and see him, and if they do so I think that he will have a very busy time. But perhaps I may ask a question which I would have asked if I had availed myself of the right hon. Gentleman's invitation. Take the case in which we are told that a company, owing to special circumstances, can pay 6 per cent. I could give the right hon. Gentleman numerous cases in my own business in which companies have been working new undertakings, very deep mines, where they have not begun to make a profit for the first eight years. Therefore we have got to look at our capital not at its face value, because if we allow ordinary compound interest 6 per cent. will only give 4 per cent. on the capital, and the owner of the colliery will keep the capital account as small as possible. I can give the case of a company of my own, with a capital of £100, paying many thousands of pounds in wages annually. No dividend has been paid. All my profits have gone. No capital is employed in the business at all. All the capital which I have in the business is £100. Like others, I trade with other people's money, and in this case it is all paid off, so that I have only £100 in the business, and of that £100 the right hon. Gentleman will have to hand me over £6.
      Mr. McKENNA: If my hon. Friend will only wait until he sees the Bill, he will find that all these cases raise no point at all.
      Sir A. MARKHAM: I am fully in favour of the tax, and I have pressed my right hon. Friend time after time to introduce it—indeed, I think there has been negligence in not introducing the tax at an earlier date. I am in no way hostile to it, but friendly to it. When the House gets into Committee on the Bill there will be some difficult cases to deal with, and the Chancellor of the Exchequer in making exemptions will have to be very careful
      1148
      about what he is doing. There will be numerous cases of hardship, try how the right hon. Gentleman may to avoid them, and the only way to deal with them would be to set up a tribunal that you can trust to act fairly and equitably between the State and the community at large, and where there are cases of hardship the tribunal, under proper direction, should be able to deal with them in an equitable manner.

      POSTAL PACKETS AND TELEGRAMS.
      Resolution reported,
      31. "(1) That it is expedient to make such amendments in the enactments relating to the rates of postage and other sums to be charged in respect of postal packets as will enable the rate of postage—

      (i) for an inland postcard to be increased from ½d. to 1d. or, if it is a reply postcard, from 1d. to 2d.;

      (ii) for an inland book packet the weight of which does not exceed two ounces to be increased from ½d to 1d.;

      (iii) for an inland registered newspaper to be increased from ½d. to 1d.

      (2) That it is expedient to make such amendments in the enactments relating to the charges for the transmission of telegrams as will enable—

      (i) the charges for the transmission of written telegrams throughout the United Kingdom to be fixed at a rate not exceeding 9d. for each telegram of 12 words, or for each telegram of less than 12 words, and ½d. for each additional word; and

      (ii) the charges for Press telegrams to be fixed at rates not exceeding 2s. 6d. for every 100 words transmitted between the hours of 6 p.m. and 9 a.m., and 2s. 6d. for every 75 words transmitted between the hours of 9 a.m. and 6 p.m., to a single address, with an additional charge of 8d. for every 100 words or for every 75 words, as the case may be, of the same telegraphic communication transmitted to every additional address."

      Resolution read a second time.
      Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
      Mr. McKENNA: I beg to move, "That further consideration of the said Resolution be now adjourned."
      Sir C. HENRY: Before the adjournment of the Resolution, can the right hon. Gentleman give some indication as to whether the rates are going to be observed? There are several trades which would be hampered by those increased rates.
      Mr. SPEAKER: That is a reason for moving the adjournment of the Resolution.
      Mr. RAWLINSON: Is it intended to insert those proposals in the Finance Bill? If they are not to be included, a public announcement to that effect would save many constituents a great deal of trouble.
      Mr. McKENNA: No, Sir; it is proposed to introduce these changes in the postal rates, or other changes, into a separate Bill. It will not come into the Finance Bill at all.
      Resolution to be further considered upon Tuesday, 12th October.

  WAYS AND MEANS [23RD SEPTEMBER].
  Resolutions reported,
  WAYS AND MEANS [23RD SEPTEMBER].
    AMENDMENT OF LAW.
    1. "That it is expedient to amend the Law relating to the National Debt, Customs, and Inland Revenue (including Excise), and to make further provision in connection with finance."

    REPEAL OF 2 AND 3 GEO. 5, c. 8, s. 2.
    2. "That section two of the Finance Act, 1912 (which relates to the distribution of payments on account of liquor licence duties in certain cases) shall cease to have effect, without prejudice to the validity of any payments already made in pursuance of that section."
    Bill ordered to be brought in upon the said Resolutions and upon the Resolutions reported from the Committee of Ways and Means of 21st September, and agreed to upon the 29th September, and this day by the Chairman of Ways and Means, Mr. McKenna, and Mr. Montagu.
    Finance (No. 3),"To grant certain duties of Customs and Inland Revenue (including Excise), to alter other duties, and to amend the Law relating to Customs and Inland Revenue (including Excise) and the
    1150
    National Debt, and to make further provision in connection with Finance"; presented accordingly, and read the first time; to be read a second time upon Tuesday, 12th October, and to be printed [145].

  SITTINGS OF THE HOUSE.

    INOCULATION OF TROOPS.
    Motion made, and Question proposed, "That this House, at its rising this day, do adjourn until Tuesday, 12th October"—[The Chancellor of the Fxchequer.]
    11.0 P.M.
    Mr. CHANCELLOR: I wish to raise one or two points which I regard as important. The two points are, first the credibility of information given to this House through the mouth of Ministers, and the other is the treatment of certain of our soldiers who have volunteered to serve their country in the ranks of the Army. I should not have raised this point now but for the nature of the reply given to me last week in answer to a question which, after having written to the right hon. Gentleman and asked for his investigation into certain facts and, failing to get a reply, I found it necessary to put publicly in the House. The facts were that at a certain hospital in Manchester two soldiers have been punished, one of them for refusing to parade for inoculation and the other confined to barracks for twenty-one days, not for refusing to parade, but for refusing to be vaccinated. They were Territorials, and as the right hon. Gentleman knows, Territorials are not obliged to undergo that very objectionable medical practice. I put the facts in relation to one of these matters into the question I asked the Under-Secretary of State for War—
    "whether he is aware that, on 25th August, Private Gillies, Territorial, was awarded twenty-one days' confinement for refusing to be vaccinated: whether this punishment for the exercise of a legal right is authorized; if not, whether the officer commanding the Second Western General Hospital, Manchester, who awarded it, has been reprimanded; and what steps will be taken to recompense this soldier for the wrong he has suffered, and to protect other soldiers from similar conduct at the hands of their officers?"
    The right hon. Gentleman replied:—
    "Private Gillies' offence for which he was awarded twenty-one days' confinement to barracks was not refusing to be vaccinated, but refusing to obey a military order to parade and inciting other men to refuse to parade or to be vaccinated."—[OFFICIAL REPORT, 21st September, 1915, col. 302.]
    What are the facts? I have a copy of the order here. The publication of that answer caused some correspondence. First of all, my informant, who was not the private referred to, was written to by me and asked how

    1151
    he dared to give me information which was not reliable. I was very indignant at having put into a question anything not absolutely reliable. Subsequently I got from Private Gillies a letter indicating the kind of treatment to which soldiers who stand out for rights which have been assured to them by the right hon. Gentleman are liable. The Order says:
    "No. 494, Private Gillies, was awarded 21 days C.B. (confinement to barracks) for disobedience of an order, section 18, par. (3), Army Act—for refusing to be vaccinated."
    I turn to the Section of the Army Act and I read this:—
    "Every soldier who commits any of the following offences, that is to say,. … (3) is willfully guilty of any misconduct, or wilfully disobeys, whether in hospital or otherwise, any orders, by means of which misconduct or disobedience he produces or aggravates disease or infirmity, or delays its cure."
    Here was a perfectly healthy man, simply refusing to obey an order which his officer had no right to give him, to be artificially diseased by vaccination. He was jeopardising nobody's life; he was doing that which he had a perfect right to do—a right which had been guaranteed to him by assurance after assurance by the Government, by the Prime Minister, by the right hon. Gentleman himself, and by the law of the land. The order definitely states what I put in my question, that it was for refusing to be vaccinated. The right hon. Gentleman can have a copy of the order if he likes. If that be the fact, the statement made by the right hon. Gentleman, furnished to him, no doubt, by the officials, but for which he has to be responsible, was untrue. The letter which I received from this private expresses considerable indignation at having had put upon him a crime of which he had never been guilty. He says:—
    "I must clear my character. I ask the hon. Member again to ask on what date I refused to parade, and the names of the men I incited to refuse to parade or to be vaccinated. There were only three parades … and at every one, when it came my turn, I asked the non-commissioned officer to report to the medical officer that I wished to be exempt. …"
    Then he gives me a list of ten men who were on duty at the time who will substantiate his statement. If these are the facts you have one or two rather important matters that I think ought to be ventilated here. First of all, you have an officer abusing his position by using forms of the law to break the law by inflicting punishment that he had no right to inflict. Then you have the facts misstated here, and therefore misleading to the House. I do not blame the right hon. Gentleman for that. It is not the first,
    1152
    or the second, or the tenth time that I have had cause to make a similar complaint. For many months I have been making these complaints, trying to get at the facts, and finding some one trying to prevent me getting at them; and in addition inflicting a wrong upon an individual soldier, who is slandered in this House, and a crime put upon him which will be a mark upon his character so long as he remains in the Army. That is a great injustice. I ask the right hon. Gentleman to look into it, and put it right, unless this Order which I have in my hand misstates the facts of the case.
    I said I wanted to raise the question of the credibility of the answers we get in reply to questions in this House. During the past few months, when I have been endeavouring to take the part of soldiers who were only exercising their legitimate rights, and when I have tried to get at the facts by questions, where they have mostly been wronged, such as questions of inoculation and vaccination, I have found it extremely difficult to get at the facts. Any hon. Member who takes the trouble to deal with questions of this sort runs the risk of being called a crank—a risk which must be taken by every man who takes up a special question, and desires to get at the facts of the case. In such circumstances we are entitled, as Members of Parliament, to ask that the officials behind the Minister shall not use their ingenuity for the purpose of preventing us getting at the facts, and that we shall have straightforward answers in reply to straightforward questions. In illustration of this point I put a question months ago. During the intervening period the same thing has occurred. My question in November was about Corporal Nichols. I asked if it was a fact that death had been certified to be due to inoculation. The right hon. Gentleman, on the strength of a telegram that had been sent, informed me that death was due to pneumonia, practically denying the fact that I had in my mind having seen the death certificate a few minutes before I put the question. As a result I assured the right hon. Gentleman that his information was incorrect. He made further inquiries. Inquiries have been set on foot, and Sir Wm. Ostler, the eminent bacteriologist, was asked to investigate the matter. Sir William's report some time later said that the death of this man, certified by the doctor who attended him as having been killed by this process, was not due in any sense to that fact. He said that Corporal

    1153
    Nichols had been sent, within twenty-four hours of inoculation, on an eight mile march. I have no doubt the right hon. Gentleman thought the doctor was perfectly informed, and he told me, in replying to my question, that I was not. I have here extracts from letters which I myself have seen written by the widow of this man, stating that the inoculation took place on a Saturday, that the man did not go on a march until the following Tuesday, and that before he went on the march he was certified as fit for the undertaking that day. What I ask is that the Department dealing with these matters should endeavour when these questions are raised in the House to see, at least, that we do have facts, and are not misled by misstatements. I have given two illustrations of what I believe to be absolute misstatements of fact, contrary to statements I have put in questions to the House with a view of getting facts of public importance before the community. I do not want to say anything about the question of the merits of inoculation, but I do say that when legal rights have been conferred on our soldiers who are fighting for the liberties of their country, it is grossly wrong either for officers to bully soldiers into surrendering those rights, or for officers to inflict illegal penalties, as I contend this order proves were inflicted in this case.
    The UNDER-SECRETARY of STATE for WAR (Mr. Tennant): I am obliged to my hon. Friend for having given me notice that he was about to raise these questions, and I wish at the outset to say that I know that he would be the first to be indignant, as he himself has stated, at receiving information from anyone which he ultimately found was unreliable. I should like to associate myself, if I may, with a similar point of view, that I indeed should be equally indignant if I were to receive information which I found to be unreliable. I will deal with the two points raised by my hon. Friend in the order in which he has raised them. When the question was put to me with regard to Private Gillies I naturally wrote down to the command to ascertain what the position actually was, and the information came to me from the General Officer Commanding-in-Chief, Western Command, which I will take the liberty of reading to the House. The General Officer replied:—
    "Private Gillies refused to parade or to be vaccinated, and incited other men to refuse. He was accordingly brought before his Commanding Officer and awarded the punishment as has been said."
    1154
    In the light of that information, derived from the General Officer Commanding the District, what could I do? I could not tell my hon. Friend that Private Gillies had been guilty of any other offence. That was the offence for which he was tried and convicted, and I am sure my hon. Friend, if he will put himself in my position, will see that I could inform the House of no other cause.
    Mr. CHANCELLOR: I have not accused my right hon. Friend at all. He is the victim of others. He is the mere mouthpiece or channel for other people's information.
    Mr. TENNANT: I realise that my hon. Friend has other information, but what I want to tell him is this: when you are dealing with a great machine like the Army, it is impossible for me to go behind the hierarchy of the Army. I must, of course, go to the General Officer Commanding and ask him what is the actual offence of which this private soldier has been guilty, for which he has been awarded this punishment, and must inform my hon. Friend and the House of the report which I received from the General Officer Commanding in that district, and I have done so. Of course, another point arises by the information now conveyed by my hon. Friend: that is, that the General Officer Commanding is wrong. That is his contention.
    Mr. CHANCELLOR: The private asserts that he actually attended the three parades which you say he did not attend.
    Mr. TENNANT: Of course, that is a direct conflict of the statements as between the private soldier and the General Officer. That is a very difficult thing to investigate. I do not say it is impossible to investigate, but if my hon. Friend knows the Army at all, he will realise it is extremely difficult to substantiate a case where the authorities are, as I say, convinced of the truth of the statements they have made. If the hon. Member will hand to me the names of the witnesses, I will undertake to make a further inquiry. I do not think my hon. Friend dwelt upon the other case of Private Robinson, and therefore I do not need to labour that. The next case is that of the unfortunate man, Lance-Corporal Nicholls, who died. Inasmuch as it was stated that this unfortunate man died from the effects of inoculation, I have a report from the Director

    1155
    of the Medical Service saying that there was a case of pneumonia following on inoculation. There were other cases, including that of Lance-Corporal Nicholls. So far as I can ascertain, in all these cases there was exposure afterwards. In the case of Nicholls it was the eight miles' march that did the damage, and not the inoculation. I think we must recognise that. In the first inoculation the resistance is considerably lower, and I am glad to hear that there are now orders not to allow men with fever to do any work.
    Mr. CHANCELLOR: Was the statement made that this march took place within twenty-four hours? If so it is not true. It was three days.
    Mr. TENNANT: I am not able to say, and I cannot now go through the whole of the reports which I have received. It was suggested that this corporal did undertake the eight-mile march, and whether it was three days, twenty-four hours, or even a week, really does not seriously affect the situation.
    Mr. CHANCELLOR: My whole point is that we do not get true information. Very often we are misled by the information given to us from the Treasury Bench, not owing to the right hon. Gentleman, but to his informants, who want to make out a case.
    Mr. TENNANT: I regret my hon. Friend should make that accusation. I do not think responsible people concerned with the health of the Army would have recourse to such subterfuges as he suggests. I think that is a misconception. He is good enough to acquit me of any such action, and I certainly should not make myself a party to anything of that kind. I honestly believe that the authorities it is my duty to consult do, within such knowledge as they possess, convey that knowledge accurately and properly to me in the way in which it should be conveyed. They do not make any embroidery upon the facts in the manner which my hon. Friend seems to think. He speaks about being misled in this House, and says that he does not get the facts. I can assure him that we do all in our power to get the facts and to bring them to the knowledge of the House. It is quite true, when a soldier or a man is inoculated against his will, that it may
    1156
    produce a fever which is temporary, and during that period it is quite undesirable that he should undergo any serious and severe work such as an eight-mile march. It is almost a criminal thing to ask him to undergo it, and it may be some commanding officers do not sufficiently realise that a soldier who has been so recently inoculated is liable to these after-effects of severe exercise, and that they ought not to ask him to undergo it. It is largely due, I think, in the case of Nicholls, to an imperfect appreciation of the fact that he had been recently inoculated that his death occurred, and to say that his death was due to inoculation I really think is a mistake. If you tell a man to take precautions against a particular form of disease which require vaccination or inoculation, it is imperative to treat him in the manner in which he should be treated in the few days afterwards, and to give him rest and all the care which he requires during that period. My hon. Friend, of course, does not admit, in the first place, that if you inoculate the Army you make it less liable to this dreadful disease of enteric fever. I should have thought the facts were sufficiently palpable. Any man who has historic knowledge of previous campaigns must admit that in the past in any of the campaigns that can be cited sickness and illness, principally enteric fever, have devastated the Armies.
    Mr. CHANCELLOR: They never had any sanitation.
    Mr. TENNANT: They had not sanitation I am quite free to admit. I do not wish at all to be uncompromising about this subject, but I do think that a free mind brought to bear upon the conditions, of this particular campaign and of past campaigns, cannot help admitting that this campaign has been extraordinarily free from those terrible diseases, and that must in large measure, not altogether, be put down to the advance of science and particularly to inoculation.
    Mr. CHANCELLOR: That is not because they have been inoculated—
    Mr. DEPUTY-SPEAKER: The hon. Member has made several speeches, and he is not entitled to interrupt.
    Mr. TENNANT: When I say that, I think it establishes the verdict of the Army as well as the opinion of the vast

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    majority of my countrymen. I would ask my hon. Friend to be a little elastic in his views upon this subject. I dare say he thinks I am singularly inelastic in mine. I can assure him that I respect his views, although I cannot bring myself to share them, because I think the evidence is very strong against them. But I do respect his views, and I do desire, so far as in me lies, to bring to the Army that degree of pure voluntaryism which ought to exist, and which, as he says, we have enunciated from time to time. I do desire to recognise his case. It cannot be said that it is purely voluntary for a man to be inoculated under some degree of pressure. That is not consistent with voluntaryism.
    Mr. CHANCELLOR: That is the point.
    Mr. TENNANT: What is my answer to that? It is that the bulk of the evidence, certainly in the Army, goes to show that inoculation is a preventive against enteric fever, and that a man who refuses to be inoculated is a danger, not only to himself, but to his companions. My hon. Friend may laugh, but that is a view which is held very strongly. The view is that men who do not undergo inoculation are a danger to their fellows. If you believe that, how can you blame an officer who uses all the powers at his disposal to have his whole battalion inoculated? I say of the Secretary of State, whom I represent in this House, and of myself, how can we have constant supervision over each commanding officer, and each battalion in an Army of the size we have to-day? Clearly we cannot have it, and that being so I can only say that where undue pressure is used, pressure which means absolute compulsion, we regret it. We do not excuse it, but we understand it, because we understand that the man who is in command of a great fighting force like a battalion of British Infantry wishes to keep that battalion in every sense ready to undertake all the hardships, perils, discomforts, and dangers of war. Nothing would damage it so much as the terrible devastations of disease, and one cannot say that a man is doing what is wholly undesirable when he takes measures—which perhaps individuals may not think proper—to see that the whole of his men are inoculated against this terrible enemy which may be so devastating to the men under his command. I do not know that I can say more. I should not like to sit down without my
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    hon. Friends thinking and believing that while we believe that inoculation is a really desirable thing we do not wish to screen or in any way condone action which ought not to have been taken.
    Mr. CHANCELLOR: Will the right hon. Gentleman deal with the point I raised? Is this man to suffer this injustice if on investigation the right hon. Gentleman finds that the facts are as I stated, and will any disciplinary measures be taken against the officer who inflicted the illegal punishment?
    Mr. TENNANT: I believe my hon. Friend is dealing with the case of Gillies.
    Mr. CHANCELLOR: Yes.
    Mr. TENNANT: Of course, I am not going to defend any illegality. I do not for a moment do that. My hon. Friend may be assured of that. But I say that the man did refuse to parade, and to parade is not to be inoculated.
    Mr. CHANCELLORrose—
    Mr. TENNANT: Perhaps my hon. Friend will allow me to finish. It is perfectly possible for a man who holds what he calls conscientious convictions against inoculation to go upon parade which is called for inoculation and then to say, "No. I decline to be inoculated." But he declined to go upon parade.
    Mr. CHANCELLOR: The right hon. Gentleman is quite wrong.
    Mr. DEPUTY-SPEAKER: The hon. Member is not entitled to make continuous speeches. He made his statements in his speech, and he must take the answer he receives. Of course, upon another occasion, if he is not satisfied, he can raise the question again.
    Mr. TENNANT: I am sorry my hon. Friend thinks I am quite wrong. I am only stating what the General Officer Commanding-in-Chief has informed me.
    Mr. CHANCELLOR: Here is the Order.
    Mr. TENNANT(reading):
    "Private Gillies was awarded twenty-one days' confinement to barracks for disobedience of an order, Section 18, para. (3), Army Act, for refusing to be vaccinated."

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    I agree, if that is so, that it is a different statement from the one which has been furnished to the Secretary of State. There is no statement here that he incited others to refuse. I am informed that he did incite others to refuse.
    Mr. CHANCELLOR: He denies that.
    Mr. TENNANT: I said in my earlier remarks that I would cause an inquiry to be made into these facts, and with that I trust that my hon. Friend will be satisfied.
    Resolved, "That this House, at its rising this day, do adjourn until Tuesday, 12th October."—[The Chancellor of the Exchequer.]
    It being after half-past Eleven of the clock, Mr. DEPUTY-SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.
    Adjourned at Twenty-seven minutes before Twelve o'clock, till Tuesday, 12th October, pursuant to the Resolution of the House of this day.