§ 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. DENNISSI 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 HARMSWORTHI 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. REESMy 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. TAYLORThe 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. TAYLORIs 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. TAYLORThe 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.
Mr. TAYLORThen 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. McKENNAThere is no question of Protection.
Mr. TAYLORNo 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. HINDSThe 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. RUTHERFORDI 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 DAVIESI 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. SAMUELI 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. HARMSWORTHNo. I would desire to put no tax on anything.
§ Mr. SAMUELHe 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. McKENNAI 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. DALZIELI 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.