Commons Sitting of 22 April 1918

Preamble
The House met at a Quarter before Three of the clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.
Brixham Gas Bill [Lords],
Read a second time, and committed.
Land Drainage (Lotting Fen) Provisional Order Bill,
Read the third time, and passed.
Local Government Provisional Orders (No. 1) Bill,
As amended, considered; to be read the third time To-morrow.

MINISTRY OF PENSIONS.
Copy presented of Royal Warrant for the Pensions of Soldiers disabled and of the Widows of Soldiers deceased in consequence of former Wars [by Command]; to lie upon the Table.
Copy presented of Royal Warrant for the Pensions of Soldiers disabled and of the Families and Dependants of Soldiers deceased in consequence of the present War [by Command]; to lie upon the Table.

BOARD OF EDUCATION.
Copy presented of Regulations under which Supplementary Grant will be paid to Local Education Authorities for Elementary Education [by Command]; to lie upon the Table.
BIRTHS, DEATHS, AND MARRIAGES (SCOTLAND).
Copy presented of Sixty-second Annual Report of the Registrar-General on the Births, Deaths, and Marriage? in Scotland for 1916 [by Command]; to lie upon the Table.
MILITARY SERVICE ACT, 1918, AND MILITARY SERVICE (No. 2) ACT, 1918.
Copy presented of Royal Proclamation, dated 20th April, 1918, withdrawing certain Certificates of Exemption from Military Service [by Act]; to lie upon the Table.

SHOPS ACT, 1912.
Copy presented of Order made by the Council of the undermentioned local authority, and confirmed, with Amendment, by the Secretary for Scotland:
City of Perth
[by Act]; to lie upon the Table.

MINISTRY OF FOOD.
Copy presented of Flour and Bread (Registration) Order, 1918, and Horses (Rationing) Order, 1918, made by the Food Controller under the Defence of the Realm Regulations [by Command]; to lie upon the Table.
ALIENS (NATURALISATION).
Return presented relative thereto [Address 10th April; Mr. Brace]; to lie upon the Table, and to be printed. [No. 47.]
POST OFFICE SAVINGS BANKS (REGULATIONS).
Copy presented of the Post Office Savings Bank Amendment (No. 3) Regulations, 1918 [by Act]; to lie upon the Table.
SECOND CHAMBER CONFERENCE.
Copy presented of Letter from Viscount Bryce to the Prime Minister relative to the Conference on the Reform of the Second Chamber [by Command]: to lie upon the Table.

FINANCIAL STATEMENT (1918–19).
Copy ordered "of Statement of Revenue and Expenditure as laid before the House by the Chancellor of the Exchequer when opening the Budget."—[Mr. Baldwin.]
Copy presented accordingly; to lie upon the Table, and to be printed. [No. 46.]

ORAL ANSWERS TO QUESTIONS.
  WAR.

    LIGHTING, HEATING, AND POWER ORDER.
    Mr. ROWLANDSasked the President of the Board of Trade whether he is aware that many people have been economising in the use of gas and electricity since the beginning of 1916; and, in those cases, will he arrange for the year 1915 to be taken, as the year for comparison?
    The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Mr. Wardle): I would refer my hon. Friend to the answer which was given to a question by the hon. Member for the Wimbledon Division on the 12th instant. In allowing consumers to take the year 1916 or 1917 as the basis for comparison, the Order goes as far as is practicable to meet the cases referred to, having regard to the exigencies of the situation.
    Mr. ROWLANDS: Do I understand that they can take the year 1915 in cases of hardship?
    Mr. WARDLE: No.
    Mr. ROWLANDS: If I supply my hon. Friend with the information, he will see the hardship that is done.
    Mr. WARDLE: The answer is "No; the consumer may take the corresponding quarter either of 1916 or 1917." If my hon. Friend will read the answer to which I have referred him, he will find the reply.
    Mr. GILBERTasked the President of the Board of Trade whether he is aware that certain gas companies in London, with a view of reducing consumption of gas, are suggesting to consumers with slot meters that they shall be limited to 1s. worth of gas per week; and, as this kind of consumer are largely tenement occupiers in working class districts in London, and use gas both for lighting and cooking purposes, and that this quantity is quite inadequate for such household use, whether he can see his way to instruct the gas companies to allow a larger amount per week to all holders of slot gas-meters?
    Mr. WARDLE: My right hon. Friend regrets that he does not see his way, owing
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    to the necessity which he has already explained to the House, of a substantial reduction in the consumption of gas, to-modify the minimum allowance specified in the Schedule to the Lighting, Heating, and Power Order, 1918.
    Mr. ROWLANDS: Is the hon. Gentleman aware, in the case of a number of persons who have had gas stoves put in, that the restriction makes it quite impossible for them to cook their food, that they will have to resort to an extra supply of coal, that they are out of an adequate supply of coal, and that they cannot get supplies?
    Mr. WARDLE: If my hon. Friend will let me have a case I will have inquiries made.

    PAPER SHORTAGE.
    Major NEWMANasked the President of the Board of Trade whether the Paper Controller has considered the saving of paper that can be effected by allowing the printing of new posters on the backs of old ones; and, if so, will he issue an Order authorising the printing of new posters upon the backs of old posters without limit of size?
    Mr. WARDLE: It has been decided by the Paper Controller to exercise the powers given under Clause 22 of the Paper Restriction (Posters and Circulars) Order, 1918, with a view to permitting the use of stock posters in the manner suggested by the hon. and gallant Member.
    Major NEWMAN: Does that mean only as to size?
    Mr. WARDLE: I think my hon. and gallant Friend had better wait.

    INDIA (WAR MEASURES).
    Sir J. D. REESasked the Secretary of State for India whether he can make any statement regarding war measures taken and to be taken in India upon the telegram sent by the Prime Minister to the Viceroy?
    The PRESIDENT of the BOARD of EDUCATION (Mr. Herbert Fisher): The Secretary of State for India is not in a position at present to make a statement on the subject, but the hon. Member may rest assured that it is engaging the

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    closest attention of the Government of India in communication with His Majesty's Government.
    Sir J. D. REES: Is it true that Nizam has given £100,000?
    Mr. FISHER: I have no information.

    AFGHANISTAN.
    Sir J. D. REESasked the Secretary of State for India whether he knows any thing of a person described in the German Press as the Indian Prince Mahendra Prato, who is said to have represented himself as an agent of the King of Afghanistan?
    Mr. FISHER: The person described as an "Indian Price" is doubtless Mohendranath Pratap, the individual mentioned by my right hon. Friend the late Secretary of State for India, in a statement made to the House on the 29th November, 1916, as having been sent to Afghanistan by the German Government. This individual has no claim whatever to the title of "Prince," being merely a small landowner from a British district in the United Provinces. His estates were attached by the Government of India in 1916.

    RUSSIAN INTERESTS (UNITED KINGDOM).
    Sir J. HARMOOD-BANNERasked (1) the Secretary of State for Foreign Affairs whether he proposes to take any steps for the formation of a Committee jointly with the Board of Trade for the protection of Russian interests held in this country; whether he has any evidence of the total value of such interest; whether he will consider the advisability of appointing a Government Committee to obtain such reports and records of investments by British subjects in Russian securities and properties as may be sufficient evidence of existence and tenure in case of difficulties arising in future events; and whether any proposals have been made up to date by the Board of Trade, and what steps have been taken upon them; and (2) the President of the Board of Trade what steps the Board of Trade have taken up to the present in the protection of the interests in Russian bonds, securities, deeds, and property held in this country, the value of which exceeds 150 millions; and whether
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    he proposes to appoint any Government Committee to obtain evidence of the existence of such securities so as to avoid the results which would follow upon the destruction of records of property by Bolsheviks in Russia?
    The SECRETARY of STATE for FOREIGN AFFAIRS (Mr. Balfour): The question is under consideration.
    Sir J. HARWOOD-BANNER: Will it be done quickly—it is no good without?
    Mr. BALFOUR: There will be no unnecessary delay.

  SCANDINAVIAN COUNTRIES.

    BRITISH CONSULS AND VICE-CONSULS.
    Sir RICHARD COOPERasked the Secretary of State for Foreign Affairs how many British Consuls and Vice-Consuls there are respectively in Sweden, Norway, Holland, and Denmark; and how many in each of these countries are British by birth?
    Mr. BALFOUR: The number are at present as follows:
    Sweden: Salaried officers, 11, including one Consul-General; unsalaried officers, 22 (of whom 20 are foreigners).
    Norway: Salaried officers, 34; unsalaried officers, 22 (of whom 21 are foreigners).
    Holland: Salaried officers, 11, including one Consul-General; unsalaried officers, 13 (of whom 10 are foreigners).
    Denmark: Nine salaried officers; 18 unsalaried officers (of whom 16 are foreigners).
    All the salaried officers are British by birth. Eight of the unsalaried officers, namely, two in Sweden, one in Norway, three in Holland and two in Denmark, are also British by birth.
    Sir R. COOPER: May I ask if it is a fact that His Majesty's Government are determined, as opportunity affords, to replace Consuls, Vice-Consuls, and principal members of staffs who are of foreign birth by people who are of British birth?
    Mr. BALFOUR: I think the whole tendency is in that direction. I would not like to pledge myself that we should never appoint a foreigner, though I think in many cases it is quite unnecessary.
    Sir C. HENRY: May I ask whether most of the foreigners are Scandinavians?
    Mr. BALFOUR: I am afraid that I have given all the information in my power. I should imagine that they are.
    Colonel W. THORNE: Could the right hon. Gentleman say whether any of the gentlemen mentioned are of German nationality?
    Mr. BALFOUR: So far as I am aware, none.

  FOOD SUPPLIES.

    GRASS LANDS (INCREASED CULTIVATION).
    Sir FRANCIS BLAKEasked the President of the Board of Agriculture whether landlords and tenant farmers have, generally speaking, willingly carried out the decisions of the county executive committees regarding the ploughing of grass lands; and what percentage of the whole new acreage brought under cultivation during the last six months is due to the use of Government tractors or other Government aid?
    The PARLIAMENTARY SECRETARY to the BOARD of AGRICULTURE (Sir Richard Winfrey): The answer to the first part of the question is in the affirmative. Speaking generally, landowners and farmers have responded admirably to the appeals of the executive committees. In reply to the second part, it is not possible at present to distinguish the proportions in which the increased cultivation is due to Government tractors or other forms of Government aid.
    Mr. WATT: Is the hon. Gentleman aware that there is a general feeling that the large landowners are not doing their proportion of the ploughing up?
    Mr. SPEAKER: The hon. Gentleman has just answered that question.

    GERMAN PRISONERS, ISLE OF MAN.
    Captain BARNETTasked the Undersecretary for War whether German prisoners interned in the Isle of Man have been receiving one pound of butter each per week with the privilege of buying a further pound if they so desire; and, if 80, whether he will take steps to bring the ration into conformity with that enforced upon our own soldiers and the civil population?
    The SECRETARY of STATE for the HOME DEPARTMENT (Sir George Cave): My hon. Friend has asked me to reply to this question. The answer to the first part is in the negative. No butter is issued to prisoners interned in the Isle of Man nor are they allowed to buy any. The second part of the question, therefore, does not arise.

    TIREE COTTARS (ILLEGAL CULTIVATION).
    Mr. DUNDAS WHITEasked the Secretary for Scotland on what date the Board of Agriculture for Scotland first became aware of the desire of persons in the island of Tiree to use the derelict sheep-run on the farm of Balephetrish for the purpose of food cultivation; what was the number of sheep on that sheep-run at that time, and what is the maximum number that have since been on it at any one time; and whether the cottars who were sentenced to imprisonment for taking possession of it for the purposes of food cultivation are still in prison?
    The SOLICITOR-GENERAL for SCOTLAND (Mr. Morison): The Board of Agriculture for Scotland has been aware since 1912 that there is a desire for small holdings in Tiree. In 1913 they prepared a scheme for new holdings and enlargements on part of the farm of Balephetrish, which was approved by the Land Court. The tenant of the farm elected to have his compensation determined by arbitration, and the amount awarded by the arbiter was so large that the Board had no option but to abandon the scheme. In November last an application was made to the Board to provide land for cultivation under the powers contained in the Defence of the Realm Regulations, and the Board were about to proceed on these lines when in the month of December the land was seized by certain of the cottars. There is no derelict sheep-run on the farm of Balephetrish, which is fully stocked and well farmed. The number of sheep on the farm, or any part of it, necessarily varies from time to time, and I am unable to give the figures for which my hon. and learned Friend asks. The cottars who were imprisoned for breach of interdict have been liberated in ordinary course. My right hon. Friend is informed that none of the cottars are in distress for food and there is no risk of their suffering any privations through want of land. He understands that during 1917 the farmer offered them plots for potato growing,

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    but these offers were declined by some of the cottars, who wished the farm broken up into small holdings.
    Mr. WHITE: Is the Board of Agriculture now proposing to put this scheme through under the powers of the Defence of the Realm Act?
    Mr. MORISON:I should require notice of that question.

  VOTERS' LISTS.
  Mr. BOWERMANasked the Minister of Munitions whether arrangements have been completed whereby printing firms throughout the country may be enabled to produce the voters' lists?
  The PARLIAMENTARY SECRETARY to the MINISTRY of MUNITIONS (Mr. Kellaway): The quantity of lead required for printers' metal for the production of the voters' lists has already been released to the manufacturers.
  Mr. BOWERMANasked the Minister of National Service whether arrangements have been made to ensure a sufficient supply of labour for the preparation and printing of the voters' lists?
  The PRESIDENT of the LOCAL GOVERNMENT BOARD (Mr. Hayes Fisher): My right hon. Friend has asked me to reply to this question. As regards the preparation of the voters' lists, I am hopeful that a sufficient supply of labour will be forthcoming, although I am fully alive to the difficulties under which the Registration Officers are working. As regards the printing of the lists, I understand that my hon. Friend, the Secretary to the Treasury, will deal with this in reply to the right hon. Member's question, No. 25 in the Paper.
  Mr. DENMAN: Does the right hon. Gentleman suppose that the printing will take longer than was originally expected?
  Mr. FISHER: We rather suppose that everything will take longer than was expected.
  Mr. BOWERMANasked the Secretary to the Treasury whether the Stationery Office authorities are satisfied that sufficient labour and metal will be available for the production of the voters' lists; and whether, in the event of either proving insufficient, printing firms con-
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  tracting for such work will be allowed an extension of time in which to complete the lists without incurring penalties for delay?
  Mr. BALDWIN (Joint Parliamentary Secretary to the Treasury): The answer to the first part of the question is in the; affirmative; the second, therefore, docs not arise.

  OIL IMPORTS.
  Mr. WATTasked the Minister of Munitions whether the Director of Petroleum Munitions Supplies has set up a Committee to deal with the import of oil into this country; whether this Committee has on it two representatives of large American oil producers and has only one Scotsman representing the oil trade of that country; whether this Committee has arranged for an allotted space for oil imports in the vessels arriving in this country; that this allotted space is systematically given to the larger importers of oil, namely, those who in 1915 imported 100 barrels and upwards per month; that these large importers are practically the Committee themselves and their immediate friends, resulting: in the allotted space being given to fifty importers while 350 are entirely excluded, not being allowed any space at all; and whether he will see that a fair method is adopted whereby all importers will he, treated proportionately?
  Mr. KELLAWAY: The Committee referred to was set up in March, 1916, by the then Minister of Munitions, and has satisfactorily discharged the task committed to it. The Committee consists of eleven members, who were chosen at a general meeting of the whole of the lubricating oil importers of the country. The Ministry had nothing to do with the selection of the members. The suggestion that the importation of lubricating oils is practically confined to the members of the Committee and their immediate friends is without foundation. It was decided on the 12th instant to hold a meeting next month, when the constitution of the Committee will be open to discussion.

  CENTRAL CONTROL BOARD (LIQUOR TRAFFIC).
  Mr. GULLANDasked the Minister of Munitions (1) whether the Central Control Board (Liquor Traffic), in

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  making recent extensive alterations on their premises at Annan, asked the permission of the Dean of Guild Court; if not, will he explain why this course was not adopted; (2) whether he is aware of the unanimous resolution passed by the town council of Annan calling attention to the uncalled for and unnecessary expenditure of the Central Control Board (Liquor Traffic) in that burgh; and whether, when private citizens are requested to economise in every way, he can restrain this board from reckless extravagance?
  Mr. KELLAWAY: I will answer these two questions together. I have seen the resolution to which my right hon. Friend refers. It gives no particulars of any item of expenditure to which exception is taken. If reference is intended to certain alterations, the permission of the Dean of Guild Court was not necessary. The local advisory committee, on which the town council is. well represented, considered the plans of the proposed improvements and strongly approved of the scheme. If reference is intended to the board's capital expenditure, the amount of this expenditure was settled, not by the board, but by the Scottish Division of the Defence of the Realm Losses (Licensed Trade Claims) Royal Commission.

  MILITARY SERVICE.

    PROTECTED OCCUPATIONS.
    Captain BARNETTasked the Minister of National Service if he will state what steps, if any, he is taking to secure the revision of protection certificates issued under the Schedules of Protected Occupations, and more particularly the certificates issued under the Munitions Area Recruiting Scheme, and known as Forms 3,476A, 3,476B, and 3,476 W.M.V.?
    The PARLIAMENTARY SECRETARY to the MINISTRY of NATIONAL SERVICE (Mr. Beck): The Schedule of Protected Occupations was revised at the beginning of this year with the object of releasing for service a large number of fit men. The revised Schedule came into operation on 1st February, 1918, and a large number of certificates have already been withdrawn under it.
    The Government have also given directions that with the exception of men en-
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    gaged in an occupation for which an age limit of nineteen is fixed in the Schedule, Grade I. men born in 1898 and 1899 are not to be retained in Admiralty, War Office, or Munitions firms after the 17th of May, and Grade I. men born in 1895, 1896, or 1897 so employed are not to be retained after the 17th of June.
    If it is found that the temporary retention of any men covered by these directions is absolutely essential to the output of munitions which are immediately required, such cases are to be referred to a Committee representing the Ministry of National Service, the War Office, and the Admiralty, or Ministry of Munitions, as the case may be.
    The occupations for which nineteen age limit is fixed arc shipbuilding and repairing, Section A, and oil shale mining and shale oil works, Section B.
    Captain BARNETT: Are we to understand that there is no review of these protection certificates in the case of men over twenty-three years of age?
    Mr. BECK: Yes; I think that is so. But the whole matter is a clean-cut operation and does not affect the other machinery for obtaining men.

    ONE-MAN BUSINESSES.
    Mr. TYSON WILSONasked the Minister of National Service if he will state whether he proposes to call up all single-man-business men or whether they will be called up to a certain age; and whether he can say what are the conditions under which these men will be called up?
    Mr. BECK: The legal position of one-man business men is unchanged by the recent Military Service Act, except as regards the extension of the age to fifty. It is not proposed to withdraw the instructions concerning this class of man which were issued in December last to tribunals by the Local Government Board. So far as the national emergency permits, every attempt will be made by the Ministry of National Service to pursue its policy of safeguarding the interests of these men.
    Colonel Sir ALAN SYKES: Arising out of that reply, will these men be sent into the Volunteers, as that seems a suitable position for them?
    Mr. SPEAKER: That requires notice.

    LIABILITY OF MEN OF FORTY-SEVEN YEARS.
    Major Sir EDWARD COATESasked the Minister of National Service whether his attention has been drawn to a suggestion made by the chairman of the London Appeal Tribunal, on Thursday last, that an intimation should be given that men of forty-seven years of age and upwards liable for military service should not be called up until October next, except in the event of such a national emergency as is contemplated in Section 3 of the recent Military Service Act?
    Sir GEORGE YOUNGER and Mr. HUDSONhad questions on the Paper in identical terms.
    Mr. BECK: I have seen the reports of the suggestion made by the Chairman of the London Appeal Tribunal (Sir Donald Maclean) and also heard his speech during the Committee stage of the Military Service Act, 1918 (2). As was explained by my right hon. Friend the Minister of National Service, the age of fifty was adopted after most careful consideration, and having in mind not only the reinforcement of the fighting services, but the maintenance so far as possible of the commercial fabric of the nation. It was also considered that the fixing of the age at fifty would assist in alleviating the inevitable personal hardships caused by the present grave crisis.
    I regret, therefore, that it is not possible for the Government to depart from its considered policy, which was endorsed by both Houses of Parliament.

    SCHOOLMASTERS.
    Mr. GILBERTasked the Minister of National Service whether he will state if it is proposed to call up under the new Bill head and assistant schoolmasters over the age of forty-one, in view of the present depleted state of the teaching profession?
    Mr. BECK: The cases of schoolmasters who are liable for military service are the subject of administrative arrangements which have already been current for a long time. Instructions have been issued from time to time by the Minister of National Service, after consultation with the Board of Education and the Scottish Education Department, affording protection from recruitment to schoolmasters within certain limits as to age and medical
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    grade. These instructions apply to men whose liability for military service arises under the new Act, and it is not intended to modify them without previous reference to the Departments above referred to.

    FIRE BRIGADES.
    Mr. MALCOLMasked the Minister of National Service if ho will say what steps he proposes to take under the Military Service Act to protect the fire brigades from further depletion of officers and men, especially in the war zones, where fire brigades are now working at the lowest strength compatible with the public safety?
    Mr. BECK: Men in public fire brigades are in a certified occupation, and no change is contemplated which would endanger the efficiency of this important public service.

    EX-SOLDIERS (RE-ENLISTMENT).
    Mr. WATTasked the Minister of National Service whether he is aware that there are men in this country of forty-two to forty-five years of age who have served for twenty to twenty-three years in the Army, who are physically fit yet for service, who have been offering themselves month after month to the War Office for further service, and who have been persistently refused by many officials of that Department; and will he say whether such men will be utilised in the present great demand for men?
    Mr. BECK: I am not aware of any cases in which men referred to by my hon. Friend who are fit for service in the Army have been refused; and can assure him that no man within the ages stated who offers himself for re-enlistment will be refused by the Ministry of National Service, provided that he is physically fit for service and is not engaged in an occupation which makes his retention in civil life clearly desirable in the national interest.
    Mr. WATT: With regard to that assurance, will the soldiers get the same rank that they last held, or will officers be asked to join the ranks?
    Mr. BECK: I think my hon. Friend had better ask the War Office about that matter, which I am sure they have under their consideration.
    Mr. WATT: Is the hon. Gentleman aware that the War Office has been refusing such men?

    OLDER RECRUITS (MEDICAL EXAMINATION).
    Mr. GULLANDasked the Minister of National Service whether, in view of the necessity of more careful inquiry as to the health of the elder men to be called up under the new Military Service Act, he will arrange that the opinion of the private medical attendants of called-up men shall be taken more fully into consideration?
    Mr. BECK: Under the Instructions issued to medical boards, M.N.S.R. 24, which have already been published, the boards are directed to give full consideration to medical certificates given by general practitioners or consultants, and I have every reason to believe that this Instruction is being fully carried out. The Instructions also provide that where necessary reference may be made to the man's usual medical attendant. It is intended to issue further special Instructions dealing with the medical examination and grading of the older men.

  INCOME TAX ASSESSMENTS.
  Mr. CHANCELLORasked the Secretary to the Treasury whether he can state, with reference to the taxation of the companies forming the Beef Trust, the amount lost to the Revenue through irregular demands being repeatedly made on the Hammond Company after a decision in the Courts in favour of the Crown; the amount lost through delays in making demands on the Armour Company; whether similar losses have been made in respect of other companies; and whether the parties responsible for these irregularities and delays are still dealing with the taxation of these companies?
  Mr. BALDWIN: I understand from the Board of Inland Revenue that they have no knowledge of any judicial decision in the case referred to. The Board are precluded by law from furnishing information relative to the Income Tax assessments upon particular taxpayers.

  ELECTORAL REGISTRATION.
  Sir WILLOUGHBY DICKINSONasked the President of the Local Government Board whether forms are now being delivered by registration officers requiring householders to return the names of
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  persons in their houses for purposes of registrations as electors; what instructions have been given with regard to the collection of these forms; whether the collectors have been instructed to check the correctness of the returns; what check there will be as to the forms that are returned by post; and what measures will be taken to ensure that such an inquiry will be made as will secure that no person entitled to be registered shall be omitted from the lists through mistake or neglect on the part of the householder in making his return?
  Mr. HAYES FISHER: The answer to the first part of the question is in the affirmative. It will rest with the registration officer who is responsible for the compilation of the lists to make arrangements for such verification as may be necessary of the information contained in the form referred to, whether they are collected or returned by post. I may say, however, that in the memorandum of Instructions which I have issued I have expressed the view that a house-to-house inquiry will be necessary in practically every registration area. I will send my right hon. Friend a copy of these Instructions.

  AIR-RAID SHELTERS (COST).
  Sir W. DICKINSONasked the President of the Local Government Board whether the Metropolitan borough councils are being invited by the Commissioner of Police to construct protections for shelters against bombs during air raids; whether this will involve considerable expenditure; whether it has been represented to His Majesty's Government that the cost should fall upon the national Exchequer and not upon local rates; and whether he will advise the Treasury to make the necessary Grants for this purpose?
  Sir G. CAVE: My right hon. Friend has asked me to reply to this question. The Commissioner of Police has recommended the local authorities in London to strengthen their air-raid shelters with sandbags, and the Government has undertaken to supply sandbags free of cost. This is the chief item of expenditure, and I think the remainder of the cost may well be borne by local funds in the Metropolis as it is in the rest of the country.
  Colonel Sir F. HALL: Arising out of that answer, may I ask if the chief ex-

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  pense will not be labour, and whether in view of the national importance of the work the Government will pay out of the Treasury the amount expended on labour.
  Sir G. CAVE: I cannot recommend that.
  Mr. BILLING: Can the right hon. Gentleman consider the advisability of employing German prisoners on this kind of work?
  Sir G. CAVE: I do not think that is either necessary or desirable.

  ROYAL AIR SERVICE.

    AIRCRAFT ACCEPTANCE PARK (LANCASHIRE).
    Major DAVID DAVIESasked the Under-Secretary of State to the Air Ministry whether he can state the total amount of money which has been spent upon an aircraft acceptance park in Lancashire; whether this park is still being used; and, if not, whether he can state the reasons for which it has been closed?
    The UNDER-SECRETARY Of STATE to the AIR MINISTRY (Major Baird): The total amount spent on this acceptance park, the name of which the hon. Member has been good enough to communicate to me privately, is about £15,000. It was formerly used both for the erection and storage of aeroplanes. It has not been closed, but is at present only used for storage. It is, however, intended to use it again at an early date for the erection of machines.

    AIR MINISTRY (GLASGOW HOTEL).
    Mr. WATTasked the Under-Secretary of State to the Air Ministry whether his Department has last week commandeered another hotel in Glasgow, notwithstanding the statement by the Air Minister' that hotels are unsuitable buildings for conducting the business of Government Departments; if so, is he aware of the lack of hotel accommodation in that city for commercial men, and for inspectors and the like sent by Government Departments; does he know that large terrace houses can be got there uninhabited and in large numbers; and will he, in these circumstances, reconsider this matter?
    Major BAIRD: No final decision has been arrived at as regards the taking over of this hotel, and it is hoped that it may be possible to find suitable accommodation elsewhere.
    Mr. WATT: Is the hon. and gallant Gentleman aware that the Minister for Air made the statement that hotels were unsuitable buildings for the work?
    Major BAIRD: I do not recall that. I have no doubt the hon. Member's memory is better than mine.

    RESIGNATIONS OF SIR D. HENDERSON AND SIR H. TRENCHARD.
    Commander BELLAIRSasked the Prime Minister whether his attention has been drawn to the anxiety created by the resignations of the two officers of greatest experience in the Air Service from the Air Council; and whether he will give a day for discussion, in order that an adequate statement can be made on the administration of the Air Council and, if necessary, discussed?
    The CHANCELLOR of the EXCHEQUER (Mr. Bonar Law): If there is a general desire, the Government will be glad to afford an opportunity for this discussion, which probably would most conveniently take place on the Vote of the Salary for the Secretary of State for the Air Ministry.
    Major Sir J. SIMON: Can the right hon. Gentleman say whether the War Cabinet ever saw General Trenchard about his difficulties before the Government dispensed with his services?
    Mr. BONAR LAW: I do not think that arises.
    Sir E. CARSON: Can the right hon. Gentleman say when the date will be for this discussion, because we do not want it to be postponed?
    Lord HUGH CECIL: May I express the hope that it will be before next Monday?
    Mr. BONAR LAW: That would be hardly possible. It will have to be a Supply day, and the Supply days for this week are already allocated. It might, perhaps, be arranged for some day before Thursday of next week. I will consult my right hon. Friend.
    Mr. PRINGLE: Is it not possible to postpone the Munitions Vote and substitute the Air Ministry Vote?
    Mr. McKENNA: There will be no objection on this side of the House to the postponement of the Munitions Vote.
    Mr. BONAR LAW: I will see, then, if it is possible to arrange it for Thursday of this week.

  BRITISH PRISONERS OF WAR.
  Mr. PENNEFATHERasked the hon. Member for Sheffield (Central Division) if his attention has been called to the case of Private J. Barry, 2nd Scots Guards, who was a prisoner of war in Germany for three and a half years and is reported to have been killed by his guard on the 18th January, 1918; and, if so, will he state what action it is; proposed to take?
  The UNDER-SECRETARY of STATE for WAR (Mr. Macpherson): The evidence received from British sources has been only hearsay. No action has yet been taken, as it is hoped that direct evidence will shortly be available. This will, it is thought, allow of a complete refutation of the statement on the subject received from the German Government.

  INCREASE OF RENT, ETC. (RESTRICTIONS), BILL.
  Sir ALFRED YEOasked the Minister of Reconstruction whether the Committee to inquire into the working of the Increase of Rent and Mortgage Interest (War Restrictions) Act, 1915, has been appointed yet; and what provision has been made for the representation of the tenants' interests thereon?
  Mr. ROWLANDSasked the Prime Minister whether he is aware that on the Committee recently set up to inquire into the working of the Rent, etc., Act of 1915, and rents after the War, a representative of the property owners' organisation has been appointed, but no representative of the tenants' organisation has been appointed; and if he will see that this distinction is remedied by the appointment of a representative of the tenants?
  The MINISTER of RECONSTRUCTION (Dr. Addison): The Terms of Reference and the names of the members of this Committee were published in the Press a few days ago. The members of the Committee were selected on the basis not of the representation of particular interests but of their knowledge and experience of the problems to be inquired into, and I think my hon. Friend may rest assured that the Committee will lack neither knowledge of the tenants' interests nor sympathy with their difficulties.
  Sir A. YEO: Is the right hon. Gentleman not aware that whilst property owners are represented the people who pay the rents have not a representative on the Committee at all?
  Mr. ADDISON: The Vice-Chairman of the London County Council Housing Committee, who is probably the gentleman referred to, was chosen because of his experience there. I think the interests of the tenants are fully safeguarded in the presence of the right hon. Member for Woolwich and other members of the Committee.
  Mr. ROWLANDS: is my right hon. Friend not aware that the gentleman who is a member of the London County Council is also the representative of the Property Owners' Association, and does he not think if a Committee is set up to get fair opinion the interests of the tenants can only be looked after by those who are well informed through having the organisation of the tenants at their disposal?
  Dr. ADDISON: I did my best to appoint a Committee of people who will fairly represent the interests on both sides. I never expected to get a Committee which would please everyone.
  Mr. ROWLANDS: Is it not usual, when you set up a Committee, to see that all the interests are represented if parties and interests are to be upon it at all?
  Dr. ADDISON: There are no partisan interests. I am sure Mr. Rowntree, Mr. Crooks, and Mr. Neville will adequately represent the interests of the tenants.
  Mr. ROWLANDS: Is my right hon. Friend not aware that one gentleman on that Committee is the representative of the property owners, and negotiated with the Local Government Board on that side during the whole of the communications in connection with the Rent Act?
  Dr. ADDISON: I was not aware of that.
  Mr. PENNEFATHER: Having learnt that fact, will the right hon. Gentleman now take steps to have a representative of the tenants upon the Committee?
  Dr. ADDISON: No; I cannot undertake to do that. This gentleman was not appointed because of that. I was not aware that he had done that work, and I have declined altogether at all times to appoint people on these Committees, because they represent particular interests.
  Mr. BILLING: Will the gentleman now be called upon to resign his position?
  Mr. P. A. HARRIS: Would it not have been better in getting a representative of the London County Council to choose the Chairman of the Housing Committee instead of the Vice-Chairman?

  SITTINGS OF THE HOUSE (ELEVEN O'CLOCK RULE).
  Colonel THORNEasked the Prime Minister if he is aware that a good number of the late trains have been cut off, and, in consequence, whether he can see his way clear to alter the Eleven o'Clock Rule to Ten o'Clock, with a view to meeting the convenience of a large number of the Members of the House?
  Mr. BONAR LAW: As I said, in answer to a previous question, I hardly think that there would be any general desire in the House to make the proposed change.
  Colonel THORNE: Is the right hon. Gentleman aware that the Board of Trade is advising people to cut down gas and electric light, and would not this be a means of cutting down the supply of this House? Should not we set an example to other people?
  Mr. BONAR LAW: Of course, in a matter of this kind, the Government would desire, as far as it could, to meet the wishes of the House, but we have to get through business. I have made inquiries of the President of the Board of Trade, and he tells me there has been no diminution of the means of locomotion around London which would necessitate such n change.
  Colonel THORNE: Would it not be possible to meet earlier in the day?
  Admiral of the Fleet Sir H. MEUX: Could we not make a Rule during the War that speeches should be shorter?
  Mr. BONAR LAW: I think it would be a good thing if there was such a Rule, but I should hardly like to suggest it.
  Colonel THORNE: Is the right hon. Gentleman prepared to consult all Members of the House as to whether we should or should not cut down the hour at night?
  Mr. BONAR LAW: I cannot say more than I have said. We certainly desire to meet the wishes of the House, but I think
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  the additional hour would be required for business. To meet earlier would obviously have many disadvantages. It would be very disadvantageous to members of the Government to have an hour less in the morning for their business, and I think it would be disadvantageous to Members of the House.
  Colonel THORNE: A lot of windy talk goes on always.

  NAVAL AND MILITARY PENSIONS AND GRANTS.
  Major DAVIESasked the Pensions Minister whether the issue of allowances to discharged men whilst they are waiting training is contemplated; and, if so, whether he will state the conditions upon which such allowances will be issued?
  The MINISTER of PENSIONS (Mr. Hodge): As I stated in reply to the question put to me by the hon. and learned Member for South Salford on the 21st March, the payment of allowances to men awaiting training has been sanctioned. I am sending the hon. and gallant Member a copy of the circular issued to local committees, in which the conditions governing the allowances are explained.
  Major DAVIESasked the Pensions Minister whether he is aware that Mr. V. H. Harris, late No. T.R. 3/29240, 70th Training Reserve Battalion, has been informed by the Superintendent, Pension Issue Office, Baker Street, W. 1, that for the period from 20th July, 1017, to 21st March, 1918, an overpayment of £24 10s. has been made to him in consequence of the concurrent issue of special temporary allowance and pensions; that this over payment vas due to his being incorrectly described in the notification authorising the issue to him of special temporary allowance; that a refund of the £24 10s. is now claimed; and whether, in view of the fact that overpayment was due to no neglect on the part of this discharged soldier and that he is only able to work irregularly, he will lake steps to have the claim cancelled?
  Mr. HODGE: The facts are as stated. Mr. Harris was, however, informed when the special temporary allowance was sent to him that this allowance was payable until his claim for pension had been decided. He still continued to receive the allowance after his pension was awarded,

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  although he should have been aware that he was not entitled to receive both allowance and pension at the same time. Recovery of the over-issue is now being made from current pension at the rate of Is. 6d. per week, and I see no reason for interfering with this arrangement.

  REPATRIATION AGREEMENT (MERCANTILE MARINE OFFICERS).
  Mr. PETOasked the hon. Member for Sheffield (Central Division) whether he can say if the difference of opinion with the German Government as to the status of all officers of the mercantile marine interned in this country and in Germany has now been settled; whether there are still fifty-four officers of the British mercantile marine still interned in Ruhleben over forty-five years of age who are entitled to repatriation under the agreement arrived at on the 2nd January, 1917; whether ho can state how many German officers of the German mercantile marine are still interned in this country awaiting repatriation under the same agreement; and when he anticipates this exchange will be completed?
  Mr. JAMES HOPE (Lord of the Treasury): I regret to have to state that the difference of opinion with the German Government has not yet been settled. Approximately, 100 ships' officers over the age of forty-five are still interned at Ruhleben, including engineers and officers of trawlers and fishing vessels. I understand that between eighty and ninety German ships' officers of the like age are interned in civilian camps here who were captured before November, 1916. The figures of those captured after that date are, unfortunately, not at present available. The repatriation of the above-mentioned officers is proceeding, and I have no reason to suppose that they will not be sent home as fast as the claims of other classes of prisoners and shipping facilities admit.

  SECRETARY OF STATE FOR WAR.

    LORD MILKER'S APPOINTMENT.
    Sir R. COOPERasked the Prime Minister if he will afford the House an early opportunity of discussing the appointment of Lord Milner as Secretary of State for War?
    Mr. BONAR LAW: As I stated on Thursday last, the Government are willing to meet the convenience of the House, and if a general desire is expressed no doubt an arrangement can be made to take this Vote.
    Sir R. COOPER: Can the right hon. Gentleman say how the convenience of the House can be ascertained?
    Mr. BONAR LAW: With regard to Supply, the rule has been that the Vote is chosen practically by the Opposition.
    Mr. MACMASTER: Would it not be in the public interest before a discussion of this kind is taken if there could be some announcement on the part of the Government as to the changes made in the Government?
    Mr. BILLING: Will the right hon. Gentleman say who are the Opposition?
    Mr. BONAR LAW: I think the House is as able to judge that as I am.

  HOME RULE BILL.
  Major NEWMANasked the Prime Minister (1) whether he is aware that upwards of 900 farmers from the three southern provinces, most of them comprising the new landowning class in Ireland, have already signed a protest against the introduction of Home Rule, in. view of the existing situation in Ireland; have the Government taken into consideration the position in which the many thousands of newly-created small landowners will be placed if authority for the maintenance of law and order is transferred from an Imperial to a Home Rule Executive; (2) whether ho has received, and read, a protest from many thousands of residents in the southern provinces of Ireland against the application of any measure of Home Rule to Ireland, in view of the present state of lawlessness and disloyalty of the part of the country in which they reside; and has he been able to state, in reply, that the Imperial Parliament will make a grant of any measure of self-government to Ireland contingent on the restoration of law and order?
  Mr. BONAR LAW: I can add nothing to what has already been said on this subject.
  Major NEWMAN: Has the Prime Minister received a protest, and, if so, has he read it?
  Mr. BONAR LAW: I am afraid I must ask my right hon. Friend the specific question as to whether he has read it. I have no doubt the has received it.
  Mr. ARGHDALE: Has the right hon. Gentleman read the statement which the hon. and gallant Member for Galway made to his constituents yesterday, that the establishment of Home Rule will be a permanent safeguard against Conscription?
  Sir ALFRED YEOasked the Prime Minister if he will, as promised, bring in immediately the Home Rule Bill with a view to its speedily becoming law, and, if so, at what date?
  Mr. BONAR LAW: The answer to the first part of the question is in the affirmative. I regret that i am not yet in a position to name a date.
  Colonel Sir F. HALL: Can the right hon. Gentleman say whether it is the intention of the Government not to conscript Irishmen until the Home Rule Bill has passed its various stages?

  CONTRACTS (TREASURY COMMITTEE).
  Colonel GODFREY COLLINSasked the Chancellor of the Exchequer if he will publish, on or before 24th April, the Report of the Treasury Committee on Contracts, presided over by Lord Inchcape?
  Mr. BONAR LAW: In order to enable the Government to decide on the Committee's recommendations, I have sought and am awaiting expressions of the views of Departments concerned. Meantime I am not prepared to adopt the suggestion of the hon. and gallant Member.

  GOLD OUTPUT.
  Sir J. D. REESasked the Chancellor of the Exchequer whether he is aware that several companies producing gold from low-grade ore, which in pre-war time could be worked at a profit, are now compelled to close down, while others are threatened with the like fate; and, if so, whether His Majesty's Government proposes by way of bonus per ounce or by recoupment of excess cost of working expenses, or in such other manner as may appear feasible or
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  desirable, to prevent any reduction in the production of gold at a time when such production is of national importance, and to compensate companies which produce under the present circumstances of increased charges for labour and materials, and consequently of ever-increasing cost of production, so that they may be placed in the same position as the producers of all other commodities, who receive higher prices, while gold alone, as the standard of value, obtains no apprecation in this respect?
  Mr. BONAR LAW: The question raised by my hon. Friend is receiving careful consideration, but I am not at present in a position to make any statement on the subject.

  DENTAL SERVICE (EGYPT AND SALONIKA).
  Mr. PENNEFATHERasked the Under-Secretary for War if his attention has been drawn to a certain rest camp largely used by soldiers operating in Egypt and Salonika which has accommodation for 20,000 men, and where the floating military population varies from 9,000 to 15,000; and, if so, will he say whether the services of more than one fully-qualified dental surgeon are available for the dental needs of this number of men?
  Mr. MACPHERSON: I am inquiring by telegraph into this matter, and will communicate with my hon. Friend as soon as possible.

  WEARING OF EMBLEMS.
  General Sir IVOR PHILIPPSasked the Under-Secretary for War whether the Army Council will issue an Order authorising all English soldiers to wear the rose or a small St. George's flag on St. George's Day and all Welsh soldiers to wear the leek or daffodil on St. David's Day, whatever unit they may be serving in and irrespective of whether the commanding officer of the unit has or has not applied to the Army Council for such permission; and whether he is aware that a similar concession to that now asked for has been granted to all Irish soldiers by the Army Council and to all English sailors by the Lords Commissioners of the Admiralty?
  Mr. MACPHERSON: I would refer my hon. and gallant Friend to my reply, on

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  the 16th instant, to a written question by ray hon and gallant Friend the Member for Maidstone, from which he will see that Instructions of the nature suggested in the question have already been issued.

  APPEAL TRIBUNAL FOR OFFICERS.
  Major DAVIESasked the Under-secretary for War whether he is prepared to institute an Appeal Tribunal consisting of three experienced officers, who will be prepared to hear appeals from officers who are condemned to forfeit their commissions; and whether these appeals can be heard and reported upon before a definite decision is taken by the Secretary of State for War?
  Mr. MACPHERSON: This question will arise on the Report stage of the Army (Annual) Bill this afternoon. Perhaps my hon. and gallant Friend will wait till then.

  ARMY COMMISSIONS.
  Major DAVIESasked the present procedure for the granting of commissions in His Majesty's Army; whether any restrictions have been placed upon the entry of cadets to officers' training corps; and what facilities are available to young officers undergoing training of commanding units and handling bodies of men?
  Mr. MACPHERSON: The Regulations for granting commissions in His Majesty's Army through the Royal Military Academy and Royal Military College are published from time to time in Army Orders. During the present War temporary commissions are granted, after a period of training in officer cadet units, under conditions which vary according to the exigencies of the Service. No restrictions have been placed during the War on the entry to senior and junior contingents of the officers' training corps. Everything possible is done to give young officers an opportunity of commanding platoons at training.
  General McCALMONT: Can the hon. Gentleman say whether any steps have been taken to bring the training of these corps under modern requirements in the way of military training?
  Mr. MACPHERSON: Yes; I believe that is being done.
  Major DAVIESasked the Under secretary for War whether commissions are now being granted to non-commissioned officers who are not recommended by their commanding officers; whether instructions have been sent to the commanding officers to the effect that they must forward the names of at least two non-commissioned officers for commissions irrespective of their fitness to hold such positions; and, if so, whether he is pre pared to modify this arrangement to avoid giving commissions to unsuitable candidates?
  Mr. MACPHERSON: The reply to the first part of my hon. and gallant Friend's question is in the negative. I am not aware of such instructions having been sent to commanding officers, and every step is being taken to prevent commissions being granted to unsuitable candidates.

  COLONEL REPINGTON.
  Major DAVIESasked the Under secretary for War whether he is aware that, during recent Police Court proceedings, Colonel A'Court Repington, who is a retired officer, appeared in the uniform of a military officer; whether Police Court proceedings are regarded as military ceremonial; and whether, in view of the present uncertainty in the minds of re tired officers, he will give a definition of the term "military ceremonial"?
  Mr. MACPHERSON: With regard to the first part of my hon, and gallant-Friend's question, my attention has not, so far as I can recollect, previously been drawn to the matter. As regards the latter part of the question, Police Court proceedings are not, of course, regarded as military ceremonial, but I think my hon. and gallant Friend is under a misapprehension in stating that uncertainty exists in the minds of retired officers on the subject. Any function carried out under military arrangements at which it is incumbent upon officers on the active list to appear in uniform is a military ceremonial.
  Colonel BURN: Is it not the case that Colonel Repington is a member of a military tribunal?
  Mr. MACPHERSON: I do not know. If the hon. and gallant Member will put down a question, I will ask.

  RETIRED OFFICERS (OUTFIT ALLOWANCE ON RECALL).
  Major DAVIESasked the Under secretary of State for War if he is aware that, at the outbreak of the present War and up to the 4th December, 1914, retired officers recalled to duty were granted an outfit allowance of £100 under paragraph 671, Allowance Regulations, 1914, and that those retired officers who were recalled to duty after 4th December, 1914, were granted an outfit allowance of £50 only; and whether he will state the reason of this inequality?
  The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Forster): The facts are as stated. It was found that £50 was a sufficient grant towards the cost of uniform as required for this War.

  GAS CASES (OZONE TREATMENT).
  Sir GEORGE GREENWOODasked the Under-Secretary for War whether his attention has now been called to the treatment of cases of gassing by inhalations of ozone generated from atmospheric air as distinct from the treatment by the use of pure oxygen, and as employed by Major George Stoker, C.M.G., Royal Army Medical Corps, and described by him; whether he is aware that this treatment has produced excellent results; and whether he will take steps in order that it may be extensively used?
  Mr. MACPHERSON: This method of treatment has been under trial for some time, but the results so far have not been such as to justify its general adoption. It is still under trial, and, if the results indicate the advisability of doing so, its use will be adopted, but up to date its efficacy is not proved.
  Sir G. GREENWOOD: In the answer which the hon. Gentleman gave last week he said the officers at the War Office at that time had never heard of the treatment of gas cases in this way.
  Mr. MACPHERSON: I am afraid the fault may have been mine, because I left out certain words. We had heard of it.
  Sir G. GREENWOOD: You suggested that I meant the opposite.
  Mr. MACPHERSON: If the hon. Member will see me after questions, I will explain.

ORDERS OF THE DAY.

  WAYS AND MEANS.
  Considered in Committee.
  [Mr. WHITLEY in the Chair.]

  FINANCIAL STATEMENT.
  The CHANCELLOR of the EXCHEQUER (Mr. Bonar Law): in submitting to the House of Commons a financial statement on a scale far exceeding any that has ever been known at any time or in any country, my one desire is to present the position as clearly and as briefly as I can. There is, however, so much to explain that I fear I must on this occasion make a greater demand not only on the indulgence but on the time of the House than I have made before.
  FINANCIAL STATEMENT.
    EXPENDITURE 1917–18.
    The essential figures of last year's position are in the Blue Paper which is now in the hands of Members. From that statement it will be seen that the total expenditure has exceeded the Estimate by £403,000,000, while the Votes of Credit have exceeded the Estimate by £427,000,000. The difference between the two figures is caused almost entirely by saving on the Debt charge. That was owing in the main to the fact that Treasury Bills were sold at a lower rate than was anticipated. As regards the excess on the Estimate for the Votes of Credit, I have so often explained, or endeavoured to explain, this to the House that I shall not occupy time in regard to it now beyond pointing out that, of the total excess, £200,000,000 represents dead-weight charge, and the remainder is expenditure which ought to be recoverable. As regards the dead-weight charge of this year, £155,000,000 is represented by the Army Estimates. As regards the other item, £139,000,000 is represented in the main by foodstuffs and other commodities which will conic back when the accounts are settled. The balance consists of an excess in the advances to the Allies of nearly £89,000,000.

    ADVANCES BY UNITED STATES.
    The House will perhaps remember that, when I presented the Budget Statement a year ago, I pointed out that America had just entered the War, and that it would not be possible to make any adequate forecast as to what our advances to the Allies
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    would be. I said then that I was certain that the Government of the United States would assist the Allies financially to the full extent of their ability, and I am glad to say that that expectation has been realised to the full. In spite of the assistance of the United States, our advances to the Allies last year amounted to £505,000,000 sterling. That is taking the face value of the obligations, and not the cash advanced. In addition to this the United States have advanced to the Allies no less a sum during the year than £950,000,000 sterling. Of this amount approximately £500,000,000 were advanced to us, and £450,000,000 to the Allies. The House will see, therefore, that whereas this year we advanced to the Allies approximately the same as last year—£505,000,000, as against £540,000,000—the United States advanced, in addition, £450,000,000—that is to say, the total advances to the Allies by us and by the Government of the United States were £955,000,000, as against £540,000,000 advanced by us alone last year. This will show the Committee how enormously the financial needs of the Allies have increased, and how timely, and indeed necessary, was the financial assistance which has come from the United States. But the Committee will have noticed, on the figures I have given, that our advances to the Allies were in the year approximately of the same amount as the advances made to us by the Government of the United States. This is satisfactory. It means that it is only necessary for us to lean on the United States to the extent that the other Allies lean upon us. In other words, after nearly four years of the War, we are self-supporting. This is important from another point of view also, as showing that, in spite of these advances, the net amount of indebtedness outside these Islands has practically not increased.
    But there is something anomalous in this arrangement. It is almost, in a sense, absurd that we should be borrowing with one hand, while we are lending with the other. The result of that is that our accounts are inflated apparently—that, in fact, to that extent our credit is weakened. I have, therefore, been in communication with Mr. McAdoo, the Financial Minister of the United States, on this subject, and Mr. Crosby, the head of the Financial Mission of the United States to Europe, is on the point of returning to Washington to consult his Government,

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    and I am making to him certain suggestions as regards advances to the Allies, which, if adopted, will have the effect of lessening to a certain extent our burdens, while in no way increasing the total obligations of the United States. From the way in which not only the United States Government, but Mr. McAdoo himself, has shown every desire to co-operate both with us and the other Allied Governments, I am sure that he will give these suggestions most sympathetic consideration.

    REVENUE 1917–18.
    Now I come to the Revenue side of our account for last year. The House will see from the Blue Paper that there has been an excess under every head of taxation. There has been an excess in the amount received from the Excess Profits Duty of £20.000.000. and I may add that, of the total receipts from that duly, upwards of £30,000,000 came from the controlled firms. The other excesses of large amount have come from the Income Tax and the Super-tax, which together showed an excess of £15,500,000. I shall not go over the other items, which will all be detailed in a White Paper, some copies of which will be available in the Library as soon as I have finished, while copies will be in the hands of every Member to-morrow morning. I may say, in passing, that the Entertainments Tax has yielded £5,000,000 sterling, or nearly £500,000 more than the Estimate, in spite of the fact that the increased duty was put in force three months later than was intended, and that some reduction was made in the scale when the Finance Bill was passing through the House. I should also like to call attention to another item of Revenue, and I do this because of something I shall have to say in a later portion of my speech. The revenue from tobacco shows a virtual increase over the Estimate of last year of no less than £1,700.000. Perhaps the Committee may notice, in looking at the Blue Paper, that there is an excess in miscellaneous items of £25,000,000. That is accounted for entirely by the fact that the Government of India undertook to provide, as a war contribution, by loan or obligation, £100,000.000. It was estimated that only something like £10,000,000 could be raised in India by loan, whereas, as a matter of fact, the large sum of £35,000,000 was raised in India. It is gratifying to find that there has been
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    this excess in revenue—an excess which has characterised every Budget Estimate since the beginning of the War. It is, of course, satisfactory as showing the prosperity for the time being of our trade and industry, but I do not wish the House to attach too much importance to it, for I have said more than once in this House that so long as money is being raised by borrowing, to whatever extent it may be, there must be at least apparent prosperity, and the real test of our financial position will come when this borrowing ceases and we have to fall back on ordinary methods.

    CANADA.
    Before leaving last year, there is one subject connected with Canadian finance which I think it will interest the House to hear. We have obtained from the Canadian Government credit in dollars for purchases which we made in Canada; on the other hand, we have supplied to the Canadian Government sterling credit for purchases made by them in Europe. So far, these items have been treated separately; that is to say, they have both appeared in our accounts—our purchases in Canada, and the sterling advanced by us for the purchases of the Canadian Government in Europe—as off-sets. It seems to me this is not the right method. It is really a question of exchange, and the right way is to bring only the excess between the two countries into our accounts. I communicated with the Canadian Finance Minister in this sense, and I have received a telegram from him, through the Governor-General, in which he agrees with the alteration I propose. The effect of this will be apparent to the Committee. Up to the present the total amount treated in this way is at least £80.000,000. When I he adjustments are made, the effect will be that both the nominal amount of our debt and the debt of the Canadian Government will be diminished to that extent. It is not possible, with an arrangement so recently agreed to to include it in the accounts I submit to-day. Of course, it is a question of book-keeping, and makes no difference in the net results that I shall present to the Committee.
    I should like to take this opportunity of expressing the appreciation of the Government, which I am sure will be shared by the House of Commons, of the hearty spirit of co-operation which has been shown by the Canadian Government, not

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    only in this, but in every other question connected with finance. I may say, also, that, whereas in the early stages of the War our loans to the Dominion Government exceeded what they lent to us, now, thanks to the exertions which they have recently made, the balance is the other way.

    BALANCE SHEET 1917–18.
    In connection with last year's finance, there is only one other topic to which I should like to refer. My right hon. Friend, who preceded me as Chancellor of the Exchequer (Mr. McKenna), laid down the rule which ought to guide our financial arrangements, and which I adopted and tried to carry out last year. That rule, stated simply, was this, that in presenting every Budget the Chancellor of the Exchequer should aim to produce such a result that, on the assumption that the War came to an end at the close of the year for which the financial statement was made, there would be a sufficient revenue without new borrowing or new taxation to make sure that not only the expenditure left after the War, but the Debt charge could be met. My Budget last year was designed to obtain that result. During the year, as the House may remember, suggestions were made that, in view of the excess of expenditure over my Estimate, my object could not be realised. In October, after going thoroughly into the matter, and forming the best estimate I could as to what the revenue from taxation would be, I stated in the House I was satisfied that the Estimate made at the beginning of the year would be realised. I shall not now go into this subject, which is more important from the point of view of the financial statement for the current year, but I may state briefly to the Committee at once that the Estimate I gave in October has been realised. Owing to the increased expenditure our Debt charge has increased to the extent of £13,500,000. On the other hand, the excess of permanent revenue last year, as compared with the Estimate, was £20,500,000, so that on balance the position is better by £7,000,000 than I estimated at the beginning of the present year. The total balance sheet for last year is given in the Blue Paper. Perhaps I ought to state what the particulars are. The issues last year were £2,696,221,000; the Revenue, £707,235,000, leaving a balance to be borrowed of £1,988,986,000.

    EXPENDITURE 1918–19.
    I come now to the current year. As regards the expenditure, all the items are in the Blue Paper with the exception of the amounts of the Votes of Credit and the Debt charge. As regards the Votes of Credit, I should like to call attention to this fact, or what seems to me to be the fact. A suggestion is sometimes made, or implied, that the soundness with which our finances are conducted is to be judged by the nearness, or the reverse, with which results correspond to the Estimate. That, I think, under present conditions, is an entire fallacy, and if any hon. Member had the duty, which has fallen upon me, of estimating for the coming year, he would say, I am sure, that in this view I am right. In ordinary times the Estimates are based on specific demands which can be dealt with, but in time of war, not only are the demands varied by the exigencies of the War, but in reality the demands of the fighting forces arc limited only by the possible supplies, and that is a factor which no foresight can tell in advance. With this preface, I come now to the Estimate of the Vote of Credit for next year. I may say, however, that while I think it would be almost impossible, indeed absurd, for the Chancellor of the Exchequer to alter the Estimates given by the fighting forces, there are some general considerations which ought to be taken into account, and, though this is making a prophesy which the event may very likely falsify, I have myself come to the conclusion that, as we have nearly reached the possible limits of supply in this country, the probability is that the Estimates this year will not be greatly exceeded. The Estimate for Votes of Credit for next year is £2,550,000,000, as against an actual expenditure last year of £2,403,000,000. It is at the rate of £6,986,000 per day, as against a daily average expenditure last, year of £6,583,000. All the details which can properly be given will be contained in the White Paper relating to the Vote. I shall give only the amounts for the Army, Navy, Munitions, and Air Services which are put down. The Estimate for next year is £1,861,000,000, against an expenditure last year of, approximately, £1,560,000,000. Another item, of which we have to make an Estimate, is the advances to the Allies. For the reason I have already given—the possibility of an alteration in the system of advances between the United States and ourselves—this Estimate can be only

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    a guess, but we put it down at £300,000,000, whereas the amount which we allow for advances to the Dominions is £50,000,000. I should like to remind the Committee how small throughout the War this amount has kept, showing how great has been the desire and how great the success, not only of Canada, to which I have already referred, but of all the other Dominions to meet their own War expenditure out of their own resources.
    The only other item of expenditure not included in the Blue Paper is the Debt charge. This amount is put at £315,000,000, of which £53,000,000 is estimated as being required, to meet obligations to be incurred during the coming year.

    BALANCE SHEET 1918x2013;19.
    I shall now give the balance sheet for the present year. In the ordinary course, the logical way of presenting this balance sheet would be to give, first, the new taxation proposed, and, after it had been stated, to make up the Estimate in that way. I am not, however, going to adopt that course. New taxation is the natural peroration of a Budget speech, because it is the part in which the Committee and the country take the greatest interest, and, though in ordinary speeches I never bother about perorations, yet here I think I must adopt the course of giving the new taxation last. I shall, therefore, in making up this balance sheet, give the total amount which I estimate to receive from new taxation, without going into details. With this explanation let me give the figures.
    The total expenditure we estimate at £2,972,197,000. The Revenue on the existing basis of taxation will be £774,250,000, or an excess over last year of £67,000,000. I may add, as it will interest the Committee, that the Estimate for next year of the Excess Profits Duty is no less a sum than £300,000,000 sterling. The new taxation which I propose will, for the coming year it is estimated, amount to £67,800,000. That will make the total Revenue for the year £842,050,000, leaving a balance to be covered by borrowing of £2,130,147,000.

    POST-WAR POSITION.
    I desire to discuss now what seems to me the most important feature in a Budget statement at the present time—that is what our position will be at the end of the year on a peace basis, following the rule which was originally introduced by my predecessor. That rule, as I have said, implies that at the end of
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    the Budget year we shall have Revenue sufficient to meet all normal expenditure and the Debt charge without new taxation or new borrowing. I venture to say that, whatever difference of opinion there may be on other aspects of finance, no one will doubt that, as long as it is humanly possible for the country to live up to that standard, it is our absolute duty to see that it is carried out. Starting on this basis, this is the calculation: Our pre-war expenditure was £173,000,000 sterling, excluding service of Debt, but it is evident that, apart from Debt charge, we must add a large item to that amount. There is the amount required for pensions, which at the end of the year cannot fall far short of £50,000,000. There is the addition which the House has already sanctioned for education. There is the normal growth which has taken place, even during the War, owing to a variety of causes due to the War, and there must be other expenses for which some allowance ought to be, made. I have, therefore, added to the pre-war expenditure a total sum for these purposes of £97,000,000, which seems to me adequate in this calculation. That will make our expenditure, apart from the Debt charge, £270,000,000 per annum.

    NATIONAL DEBT.
    4.0 P.M.
    I now come to the Debt. The National Debt, from the Estimates I have submitted to the Committee will, at the end of the present year—31st March, 1919—amount to £7,980,000,000, Previously, in counting our liabilities, I have deducted altogether the advances to the Allies and to the Dominions. I do not propose to take that course to-day. We cannot ignore what has happened in Russia, though even now I do not admit, and do not believe, that we should regard the debt of Russia as a bad debt, because sooner or later, in spite of what is happening now, and whether Russia should or should not be divided, there will be an ordered Government in that country. The natural resources of Russia are great. Those resources can only be exploited with the aid of capital, and, whenever there is a Government, foreign capital will be required, and they will realise that it will be unobtainable unless previous debts are paid. It is very necessary, I think, in dealing with the national accounts, to treat them in the same way as a business firm would treat its own accounts, and for the time being we must make allowance not only for what is happening in Russia, but for the

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    possibility that at the time the War ends we may not be able to rely on receiving immediately the interest due to us by all our Allies. In making this calculation, therefore, I propose to take off half the debt of the Allies as if that were our liability. At the end of next year the total debt due by the Allies to us will be £1,632.000,000. I propose to deduct half of that, namely, £816,000,000. I deduct also the debt due by the Dominions in full, £244,000,000, and the obligation of India in full, £64,000,000, making a total of £1,124,000,000. That would make on this basis a Debt for which we would be liable of £6,856,000,000, and I will say in passing—I have not mentioned it before—the gross amount of our National Debt at the end of last year was approximately £5,850,000,000, or, taking it in the same way, £4,926,000,000 net liability. The amount of our liability at 31st March next will be, as I have said, on this basis, £6,856l,000,G00. Take 5½ per cent. on this amount as the rate of Interest and Sinking-Fund, the total comes in round figures to £380,000,000. This, added to the normal expenditure, makes a total amount to be paid out of Revenue of £650,000,000.
    How is that to be met? Taking the existing taxation alone, my advisers have given me as an estimate £540,000,000. They have made that estimate carefully, but, of course, it does include a. recovery from the absence of war conditions. It includes recovery of Customs and Excise and some increase in Inland Revenue. As regards the latter, the income on our gross debt itself adds to the revenue we receive, but, however conservative that estimate may be, it is obvious that mistake is possible, though, as I have said, it has been made with the utmost care, and on the whole on a conservative basis. Taking this estimate, there remains a deficiency to be met, if we arc to fulfil the conditions which I have laid down, by new taxation on the full year of £110,000,000. We become so used to these enormous figures that, possibly we can hardly realise what this means; but the Committee will realise, when I remind them that this addition to taxation which I propose this year is something well over 60 per cent. of the total tax revenue in the last year before the War. To make good this deficit of £110,000,000, I shall propose new taxation which in a full year will bring in
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    £114,000,000, without taking account of another tax for which I have made no estimate, and to which I shall refer later.

    NATIONAL ASSETS.
    Now that is the position on that basis. I think the House will recognise that it is a fair estimate, but our position is really better even than these figures show. In the first place, the Inland Revenue, in their estimate of the. result of existing taxation, took no account whatever of the Excess Profits Duty, but, that duty, as I have pointed out, is expected to yield next year £300,000,000. On the assumption, which may last for half an hour, of the Income Tax remaining at 5s., the Income Tax on what is now charged to Excess Profits Duty would represent £75,000,000. Of course, that must be problematical. It depends on the state or trade and credit, but I think I am quite safe in assuming that that amount which was left out of their estimate is more than sufficient to counterbalance any possible error they have made in the estimate of existing taxation. But there are. other items. I stated on one of the recent Votes of Credit that, before the Budget came on, I should endeavour to obtain a clear list of undoubted assets of the nation to-day. I have done it. They are divided into three categories. The first category consists of balances with our financial agents, of debts due by our Allies and Dominions—not Loans, but in respect of goods or services which we have supplied to them, and where the amount is regulated as soon as the accounts can be completed—and, in addition, commodities, including foodsuffs and things of that kind which are bought to be resold. The total amount under this category is no less than. £375,000,000, and it is not taken at cost. This amount is arrived at after careful calculation as to what could reasonably be expected would be obtained from it. I think the House can safely take that as an asset upon which we can absolutely rely.
    The second category of assets consists of land securities, buildings, and ships. Here, again, the calculation given to me is not at cost. It is an estimate of the amount which can reasonably be expected to be realised on sale. The estimate is a conservative one, and again I think this amount can be taken at its face value. It is £97,000,000. Then there is a third category, made up of stores of all kinds, chiefly in the Munitions Department. It

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    includes, however, war materials, the selling value of which is doubtful. This item is taken at cost, and the figure given to me is £325,000,000. It is obvious that the Belling value under this category is very uncertain, but I think I am safe in assuming that it will be worth at least £100,000,000. That brings the total amount of assets to £572,000,000. But this calculation was made only to the end of last year. This kind of piling up of assets will be going on during the year, and estimates are made for it in the Budget. I am safe, therefore, in assuming that there will be at least an additional £100,000,000 at the end of the current year. That will mean a total of assets of this kind amounting to £672,000,000.
    But there is another and a bigger item. When the Excess Profits Duty comes to an end—this calculation is made on the assumption, which I am sure will prove correct, whatever Government or House of Commons is then existing, that the duty will be allowed to go on until the end of the accounting period after peace is declared—on this assumption the total amount of income due from the Excess Profits Duty, if the War ends at the end of the current year, would be in the following and subsequent years no less than £560,000,000. But, as the Committee knows, this tax has always been treated, both by my predecessor and by myself, as one which should be adjusted, to some extent, over the whole period. It is possible, therefore, that deductions might be. necessary from that amount, but I think I am safe in assuming that we can count on additional revenue from this source of £500,000,000. This makes a total of these assets, including arrears of taxation, £1,172,000.000, or between £300,000,000 and £400.000.000 more than the total amount for which we have taken credit in the obligations of our Allies to us.

    WAR EXPENDITURE AND REVENUE.
    There is one other fact intermixed with the accounts which, I think, will interest the Committee, and that is the proportion of our expenditure which has been borne out of Revenue. So far up to the end of last year, 31st March, 1918 (four years), the proportion of total expenditure borne out of Revenue was 26.3 per cent., and for the year 1917–18, alone, it was practically the same figure. For 1918–19, on the Estimates which I am now submitting to the House, the proportion of total expenditure met out of Revenue will be 28.3 per
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    cent., and the proportion calculated over the whole period to the end of the current year (five years) will be 26.9. But perhaps some hon. Members will recollect that last year a distinction was drawn between the proportion of total expenditure and the proportion of war expenditure. The calculation was made on the basis of deducting on each side £200,000,000 as representing the normal expenditure and Revenue and leaving out the advances to the Allies and Dominions. I shall give the figures calculated in this way, though, as a matter of fact, I think the proportion of total expenditure is the more natural and more important way of looking at it. Taking that method of calculation, the proportion of war expenditure, met out of war revenue, up to 31st March, 1918—that is, four years—was 21.7 per cent. For the year 1917-–18 alone it was 25.3 per cent. For the current year it will be 26.5 per cent., or, for the whole period up to the end of the current year (five years), it will be 23.3 per cent.
    I shall conclude this section by stating the total amount which has been raised by war revenue. The total war revenue raised up to the end of last year was £1,044,000,000. On the basis of the Estimates now before the House, by the end of the current year it will have reached £1,686,000,000.
    This concludes my examination of the financial figures for the current year. I have tried to put them to the House exactly as they are—to put the situation without making it too favourable. The calculations have all been made on a basis against us rather than in our favour. I am inclined to say this, and I think the House will agree with me, that, looking at these figures, looking at what the figures will be at the end of the year, the financial strength of this country, after five years of war, will be far greater than anyone could have expected in advance. These results are, I think, an amazing testimony to the financial stability of this country.

    GERMAN FINANCE.
    Perhaps—although it is not absolutely necessary, for it does not come into the financial statement—the House would like me to make a contrast, so far as I am able to do so, between our financial position and that of Germany. If is not easy to to make this calculation. Our figures throughout have been presented with the object of showing quite clearly what is our financial position. That has not been

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    the object of German financial statements. It is, therefore, difficult to make an exact statement, but in what I am going to say to the House I am taking the German Estimates at their face value—taking, that is to say, the statements of the German Finance Ministers themselves.
    The first point is as regards the increase of expenditure. We have all been alarmed, and justly so, at the rate at which our expenditure has steadily grown. It is true also of Germany. Up to June, 1916, as we were told by the German Finance Minister, their monthly expenditure was at the rate of £100,000,000. It has now, by their own statement, risen to upwards of £187,000,000. That means that their daily expenditure is £6,250,000—almost the same as ours—although our expenditure includes such items, for instance, as separation allowances and other matters of that kind borne by the States and municipalities in Germany, and which are not taken into account in the German figures.
    The second point of German finance, to which I wish to direct the attention of the House, is their war debt. Their last Vote of Credit, which was estimated to carry them on to June or July, brings the total amount of all their Votes of Credit to £6,200,000,000, and, as I shall show, it is at least certain that that amount has been added to their war debt. That is certain, because their taxation has not covered peace expenditure, and in addition, their debt charge. Up to 1916 they imposed no new taxation. In 1916 they imposed a War Increment Tax, taking something in the nature of a capital levy, which is stated to have brought in £275,000,000. They added also that year £25,000,000, nominally, to their permanent revenue. In 1917 they added, in addition, £40,000,000 to their permanent revenue. Assuming, therefore, that their estimates were realised, the total amount of new taxation levied by them since the beginning of the War comes to £365,000,000, as against our £1,044,000,000. This £365,000,000 is not enough to pay the interest upon the war debt which had been accumulated up to the end of the year.
    Look at the third consideration in regard to their finance. Consider what their balance sheet will be a year hence on the same basis on which I have put ours. Their war debt at that time will be not less than £8,000,000,000. The interest
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    on that will be at least £400,000,000; sinking fund at ½ per cent. will be £40,000,000; their pension engagements, which, of course, must be much higher than ours, have been estimated at various amounts. Some give it as high as £200,000,000. I am sure I am within the mark in saying that by the end of the year that amount will be at least £150,000,000. Their normal pre-war expenditure was £130,000,000. That makes a total expenditure of £720,000,000. Their pre-war revenue was £150,000,000. They have announced their intention of this year raising additional permanent Imperial revenue amounting to £120,000,000. From the nature of the taxes it seems very difficult to believe that this amount will be realised, but, assuming that it is, it will make their total additional revenue £185,000,000. That, added to the pre-war revenue, gives a total of £335,000,000, showing a deficit at the end of this year, comparing the revenue with the expenditure, of £385,000,000 at least. If that were our position, I should certainly think that bankruptcy was not far from the British Government.
    But there is something else in connection with their taxation worthy of note. With the exception of the Increment War Tax, to which I have referred, scarcely any of the additional revenue has been obtained from the wealthier classes in Germany. Taxation has been indirect, and on commodities which are paid for by the masses of the people. The lesson to be drawn from these facts is not difficult to see. The rulers of Germany, in spite of their hopes of an indemnity, must recognise that financial stability is one of the elements of national strength. They have not added to their financial stability. The reason, I think, is largely psychological. It is, in the first place, because they do not care to add to the discontent by increased taxation all over the country; but it is still more due to this, that in Germany the classes which have any influence on or control of the Government are the wealthier classes, and the Government have been absolutely afraid to force taxation upon them.

    NEW TAXATION.
    I now come to the peroration of the Budget, speech new taxation. There are different views as to the method which should be adopted, as to the general principles which ought to guide us in levying taxation. In effect, however, I

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    think every sensible man will agree with this principle, that it is our duty to levy as much taxation, now, to make us bear as much of the current expenditure of the War, as can be borne by the nation without weakening us in the conduct of it. That, I think, is the principle—though there will be different opinions as to the application of it. I, for one, am strongly of opinion—and have throughout acted upon it—that we could hardly make a greater mistake than to forget that the War has to be financed to-day, that we must not only think of the position afterwards, and that, therefore, it is absolutely essential that we should not levy taxation on such a scale as to cripple every industry and every financial institution in this country, with the result that it would be impossible to obtain by voluntary means the money it is necessary to borrow to carry on the War. It might easily be impossible to obtain it by any means which would not shake to the bottom the whole foundation of our national stability.
    There is another consideration. Up bill now, in imposing taxation, I think everyone has been struck with the readiness with which all classes in the country have been prepared to pay. Nothing could be worse than to put taxation on any class on a scale which seems to them in excess of the needs of the situation. For that reason we really must be moderate in the amount which we raise by taxation. There is, however, another thing. Even from the point of view of borrowing it is necessary that the lender should have reason to believe that the security is good. For that purpose it is essential that we should show, by the amount of taxation which we raise, that the country is in a position to bear the burden of additional loans. It is on that principle, as I have said, that I have tried to act.
    There is something else I should like to say. Last year I found—and I am sure my predecessor also found it—that on the whole the House of Commons recognised the need for drastic taxation, and was prepared to support the Government in their proposals to a greater extent, I think, than was ever the case in times of peace. I hope, and I expect, that the House of Commons will take the same view this year. But that lays a special obligation on the Government, and on the Chancellor of the Exchquer, to make sure—or at least as sure as it is in their power to make that the proposals are in themselves just and fair.
    Not only I myself, but all those who have assisted me, including my hon. Friend at my side (Mr. Baldwin), have the conviction that the proposals I shall submit are proposals which, after examination—in connection with which we have spared no trouble—are the most equitable that it is in our power to propose to the House of Commons. I shall not take up the time of the House by describing the different forms of taxation which we have considered and rejected. I will, however, say a word about one. It has been proposed in many quarters—and, indeed, has been urged in many quarters—that we should increase the amount of the Excess Profits Duty.
    Colonel W. THORNE: Hear, hear!
    Mr. BONAR LAW: I have carefully considered that. I do not think it necessary for me to give the House the reasons—they are many—which have induced me to leave that source of revenue untouched. I will state one reason which I think is adequate. My advisers have told me, after examination, that it is their deliberate opinion that, if the rate were raised still more, we could not possibly get more, and the result would very likely be less revenue. There is, however, one thing in connection with the Excess Profits Duty which I propose to do, and that is to stop a leakage which was not intended in the Act. It has been found that in some cases goods which, if sold in the ordinary course, would be liable to the Excess Profits Tax, have been sold either by selling the whole business or in winding it up, and have so escaped. I have looked into that matter carefully, and I consider that that should stop, and, if my proposals are adopted, a Resolution will be carried which will put an end to that from to-day. I dare say there are many hon. Members of the House who would have liked me to have made this proposal retrospective. I have considered that, and I have decided against it [HON. MEMBERS: "Hear, hear!"] That course may be more popular, but there is the strongest objection, unless there is actual need, to making taxation of this kind retrospective. I have looked into it, and taking into account the extent of it, and also the extreme difficulty of getting at the right people and doing it at the right time, I have come to the conclusion that it would not be wise to make it retrospective.

    POST OFFICE RATES.
    The first item, not of taxation, but which yields additional revenue, I propose to the House of Commons is an increase in the Post Office rates. The House will remember that this was recommended by a Committee in 1915. It was considered then, and the Government did not adopt it. But our need then was very different from what it is now; and there is this fact also, that the change has been made in nearly all the great countries of the world. We propose, therefore, that the rate upon letters both at home and to the United States and our Dominions should be 1½d., and that the rate on postcards should be 1d. From this source of revenue we expect to derive in the present year £3,400,000, and in a full year £4,000,000 per annum. [An HON. MEMBER: "For the same weight?"] I do not think the House wishes me to go into details. They will all be contained in a White Paper, which will be available to-morrow morning.
    The next item, in comparison with the figures I have been dealing with, brings in a very small amount, but it has this advantage, that it can be collected without any trouble or expense. I propose that the stamp on a cheque in the future should be 2d. instead of 1d. The House will remember that this was proposed by Sir Michael Hicks Beach at the time of the Boer War. It was rejected then by the House of Commons, but again the need now is much greater. I have been in consultation in connection with this tax, as I have been with all other taxes, with those who I think are the best people to advise me, and I have reason to believe that this change can be made without any serious inconvenience at all. It will have the advantage possibly, though I doubt if it will be much—it will only happen if the total number of cheques are reduced—it will have an advantage from the point of view of the banks, whose starts have been so much reduced. They would be glad, no doubt, to see some diminution in the number of cheques used. We estimate that we shall get £750,000 from that, and in a full year £1,000,000 sterling.

    INCOME TAX.
    I now come to an item of much greater amount, the Income Tax. Every Chancellor of the Exchequer, and I think almost everyone, is inclined to be tempted
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    by the facility with which revenue can be raised by this tax. It is only a case of taking a decision, and immense sums come in. I do not think it is right to be too much influenced by that consideration. I think the House of Commons, and hon. Members in every quarter of it, should take into account seriously what is the effect of an Income Tax on anything like this scale, not only on the individuals who have to pay it, but on the whole trade and industry of this country. I should have been glad if it had been possible to leave it at 5s., but that is impossible, and I propose to increase the rate of Income Tax by one shilling and make it 6s. in the £l. [HON. MEMBERS: "Hear, hear!" and "Not enough!"] I hope the exclamations I have just heard reflect the general view of Income Tax payers. This proposal will bring in this year £11,250,000, and in a full year it will bring in £41,400,000. The difference is accounted for by the permission to pay by instalments.
    As regards the Income Tax, I do not propose to make any change in the existing rates of incomes up to £500. On the whole, looking at the question from the point of view of ability to pay, which ought to be the test, I think this is fair. I may say to the House of Commons that I have looked upon my taxation proposals as a whole, and I should not have felt justified in relieving this class altogether from this form of taxation if I had not seen my way to make additions to indirect taxation, by which they will pay their share. There will be no alteration up to £500. There will be no change in the Income Tax rate on the service pay of soldiers and sailors.
    As regards the double Income Tax within the Empire, I propose to adopt the same principle which was adopted by my predecessor—that is to say, this extra 1s. will not be paid where the combined tax in other parts of the Empire and here amounts to as much as 6s., and the tax will remain 3s. 6d. in the £. I propose to make the children allowance apply to a wife also, and so far, much to my surprise, I have had no representations from any women's suffrage societies suggesting the impropriety of proceeding on that basis. I also propose, and I have already promised this, to extend a similar allowance to real dependants who are incapacitated. The only other change in this respect is that these allowances which I have just mentioned, together with the allowance to children up to sixteen years of age, will

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    apply in case of incomes up to £800, instead of £700 as at present. The reason for that change is that without this alteration the sharpness of the gradation at this point would have been so marked as to act almost unfairly.
    Mr. WING: Have you raised the limit?
    Mr. BONAR LAW: I said the rate would be 63.
    Mr. WING: I mean between £130 and £160?
    Mr. BONAR LAW: No; that remains as before. Indeed, that would be the last thing we should be inclined to consider when we are raising money, and our need is greater than it has ever been before.

    SUPER-TAX.
    Now I come to the Super-tax. I propose to make the maximum rate 4s. 6d. in the £, instead of 3s. 6d. as at present, and beginning at incomes of £2,500, instead of £3,000 as at present. From this source it is estimated that we shall derive £9,200,000 in the current year and £14,150,000 in a full year. The particulars of the scale are all contained in the White Paper, but perhaps it may interest the House if I give one or two examples of what the effect of the Income Tax and Super-tax combined is upon a given income. Upon an income of £3,000 a combination of these two taxes will make an actual tax of 6s. 5d. in the £; on an income of £5,000 it will be 7s. 2d.; on £7,000 it will be 7s. 9d.; on £10,000 it will be 8s. 4d.; and on £20,000 it will be 9s. 5d. in the £.

    FARMERS' INCOME TAX.
    The next tax has given me more trouble, and has been more difficult to decide, than any other, and that is the treatment of farmers in this Budget. There is no doubt a widespread feeling that farmers are making large profits. It has been made plain to me not only in the House of Commons by such cheers as I have just listened to, but by deputations which I have received in connection with the Budget—and this would, I think, be admitted by the farmers themselves—that they are not bearing a fair share of the burden of taxation caused by the War. It is necessary, therefore, to make some change. Obviously the change which one would like to make—and it would be fair in every sense of the word—would be to put them like other people under Schedule D,
    710
    and make them pay on profits. There are many advantages in taking this course, and, in a sense, the present would be a suitable time to take it, because undoubtedly they could bear the change more easily now than would be the case at other periods. It would be a great advantage—and here I am expressing not only my own views, but those of my right hon. Friend the President of the Board of Agriculture, whom I have closely consulted in regard to this proposal—it would be an immense advantage to the fanners themselves, because undoubtedly correct finance and the keeping of accurate accounts is the beginning of all sound business undertakings. I should have liked to take this course, but I am not going to-take it, and I will tell the House why. My advisers tell me that it would not only be difficult, but that it would be impossible to carry out, and, after going into it most carefully myself and with the assistance of my advisers at the Treasury, I have come to the conclusion that they are right.
    I will try to make the House understand why. The great bulk of the farmers—I am told more than 90 per cent.—much more than 90 per cent.—keep no accounts. That ought not to be a reason for excluding them from the tax, but I am dealing not with what is just, but with what is practicable. The farmers themselves would find it very difficult, their time being more usefully occupied in the national interest, to set to work framing their accounts. But that is not what makes it impossible; it is the difficulty of having the accounts checked by the tax-surveying staff. I want the House of Commons to try and realise—I certainly did not do so myself until I went closely into it—what an immense effect the withdrawal of so many of the men engaged in tax collecting has had upon the collection of our taxes. The numbers who have been withdrawn—and I am sure my right hon. Friend opposite will agree with me—are very great, while the total amount of taxation to be collected has increased many times, and there have been so many new taxes, especially the Excess Profits Tax, that the additional burden thrown upon what is left of the staff has become almost intolerable. I am prepared to say I do not believe there is any class of the community which has rendered better service during the War than what remains of the Inland Revenue staff in the collection of taxes. This has had another effect.

    711
    It has always been the pride of the British Government in regard to taxation that evasion should not be permitted. Many suggestions for new taxes in the past, and some to-day made to myself, have been rejected because they lent themselves easily to evasion. As a matter of fact, with our depleted staff, and with the immense amount of extra work, there is no doubt whatever that a certain amount of revenue, which in other circumstances would come in, has escaped. For that reason, and rightly, the heads of the Inland Revenue Department have given instructions that the work of the staff should be concentrated on the sources from which large revenue is derived, and I think the House will agree that that is a right course.
    Consider that from the point of view of this proposed tax. The farmers have never been accustomed to it, and they would, therefore, bother the life out of the tax collector as to how to make up their accounts, and, when the accounts were made up, the tax surveyor would have no means of checking them. The real effect, stated by my advisers and accepted by myself, was that, if we were to adopt this course, the result would be that, in trying to get this form of revenue, we should lose many times over in other sources the amount of revenue we should collect by these means. For that reason I have rejected this proposal, and I propose, instead of making the assumption which is made low that the farmer's profits are equivalent to his rent, that we should take twice the rent as the equivalent of the profits and assess the farmer on that. That may be regarded in some quarters as inadequate, but there is this to be borne in mind: There is an immense difference in the profits on different kinds of crops. I have gone into this fully with the Board of Agriculture and with my right hon. Friend. I think it would have been possible to make a fairer adjustment by assessing a certain number of the higher-rented farms under Schedule D, for the reason that profits depend not so much on the size of the farm as on the kind of farming. I am told in able farms which produce corn make profits very small indeed in comparison with those of much smaller farms which produce potatoes. It is true that this arrangement which I am making is unequal as between one farmer and another. That is obvious, but I do not see
    712
    how it is to be avoided. On the other hand, it is not unfair to the farmers who have to pay on the double rent, for this reason, that everyone will have the option, if they prefer, of giving accounts under Schedule D, so as to be certain that they shall not in any circumstances pay more than any other section of the community.
    I ask the House of Commons to keep in view what has been in my mind, that food production is much more important to the nation than any additional revenue we may get in this way, and it is essential that any proposals of this kind which I make to-day should not work unfairly on those on whom we rely for the production of food. They do not. My right hon. Friend the President of the Board of Agriculture agrees with me that the number of farmers who will not be in a position to pay on this scale will be small, and we all know, especially in the case of those who are unaccustomed to accounts—although I am told that farmers look at both sides of a penny as carefully as any other person—that sometimes they pay what they are asked to pay, without knowing exactly on what basis they are paying. I have, therefore, made arrangements with my right hon. Friend the President of the Board of Agriculture—and this will apply to the Agricultural Departments for Ireland and Scotland—I hope they will take the same course—that they shall, through their district committees and other local agents, give farmers every facility when they are satisfied that they are being asked to pay too much—to give them what help they can in making up their accounts. I am sure the House of Commons will feel unanimously that in making this change I am not acting unfairly towards the farmers. From this source the amount of increased revenue this year will be £2,500,000, and in a full year £5,300,000.

    SPIRIT AND BEER DUTIES.
    Now I come to another source of revenue, with regard to which also there has been great difficulty in coming to a decision. The House will not be surprised to learn that I propose to get additional revenue out of the spirit and beer trade. The trade, as everyone knows, is in a position which is entirely artificial. On the one hand, the commodity is so scarce and the desire for it is so great—I know in some quarters they do not desire it—but the desire is so great that sellers, if left to themselves,

    713
    could obtain practically any price. It is, therefore, a monopoly. On the other hand, the condition is artificial, because prices are regulated by the Food Controller. As regards spirits, the present duty is 14s. 9d. per proof gallon. I propose to make that duty in the future 30s., or an addition of 15s. 3d. per proof gallon. That will bring in during the present year £10,500,000, and in a full year £11,150,000. I have, in coming to this decision, not only examined the figures most carefully, but I have consulted many of those connected with the industry, whose advice is worth having, and I have no doubt whatever that the trade, at the prices fixed by the Food Controller, which will be announced tomorrow, can pay this additional duty and still make reasonable profits.
    Now I come to beer. If spirits interest a large section of the House, beer, I think, will interest a still larger section. What I propose to do in the case of beer is to double the present duty, which is 25s. per standard barrel, and to make it 50s. This will bring in £9,700,000 this year and £15,700,000 in a full year, on the present output. The prices of beer have been fixed by the Food Controller, in consultation with my self, at figures, which justify us in believing that the duty can be paid, while still leaving fair profits for those engaged in the trade. I have no doubt, from observations which have been made at different times in the House of Commons, that many Members of the House have in their minds the big profits that have been made in this trade during the past year.
    Mr. LEIF JONES: I prophesied it!
    Mr. BONAR LAW: I am afraid I must take anything my right hon. Friend says with a certain amount of discount.
    Mr. JONES: Not after this!
    5.0 P.M.
    Mr. BONAR LAW: At all events, if I had foreseen what has happened, there would have been a change in the duties a year ago. I do wish the House of Commons now to look at this question as I am looking at it, simply from the point of view of revenue, and, in any discussions which take place, to leave absolutely out of their minds whether they are for or against particular trades. This was the position on which I had to decide. I had to decide whether this duty could be borne, 'while still leaving fair profits to those engaged
    714
    in the industry. There was a difficulty about that. There is a great variety in the nature of the businesses of different brewers; there is a great difference between those who were free brewers, who have not tied houses, and those who have; there is great difference in the methods in which they carry on their trades; and I was satisfied at the outset that it was quite impossible to hit on any figure which would be exactly equal as between all the people engaged in the trade. I had, therefore, to take a figure which seemed to me fair to the trade as a whole, and which would not inflict undue hardship on any members of that trade who were conducting it properly.
    I believe that this figure which I have chosen fulfils that condition, but I would like to point out one advantage which the Excess Profits Duty gives in regard to these trades. Take either spirits or beer, and the firms which have paid excess profits. Under the conditions of that duty, if in a particular year a firm which has paid the duty does not make the prewar standard, it is entitled to recover from the Treasury 80 per cent. of the deficiency. I would have imposed this with more hesitation, but for that fact. Let the House consider what that means, and consider to what extent it is a protection to those engaged in the trade. Supposing a firm had made before the War £15,000; if under this duty it is only able to make £10,000, it would get back out of the Excess Profits Tax paid rather more than £4,000, or 80 per cent.—that is to say, in respect of £15,000, that firm would, be certain of receiving £14,000, and I think it is £150 more. Now I would ask the House to bear that in mind and consider that, after all, an arrangement, which gives this trade a certainty of making almost its pre-war profits, is not an unfair arrangement to make in the stress of taxation in which we are placed
    Mr. PRINGLE: Why not treat them like the ship owners?
    Mr. BONAR LAW: There is another point with regard to the excess profits. I said there was great variety in the way in which these businesses are carried on, and consequently in their profits. But the Excess Profits Duty protects the Treasury as well as the trade. If the duty, which I am now proposing, does not get as large a revenue from these firms as might in ordinary course be expected,

    715
    then we will take 80 per cent. of the excess profits which they make over and above their pre-war profits. On the whole, therefore, I hope the House will consider that these two taxes in all the circumstances are not unfair, and not inequitable to those whom they affect.

    TOBACCO.
    The next item is tobacco. I propose to raise the duty on tobacco from 6s. 5d., at which it now stands., to 8s. 2d., or a rise of 1s. 9d. per pound. The House will remember that I proposed an increase of duty on tobacco last year, part of which, in the course of discussion, was taken off. I do not like to put these heavy taxes on tobacco or anything else, but what we have to consider is that the money must be got, and what are the sources from which it can most fairly be obtained. Judging tobacco from the standpoint which has always applied in the past, as to whether or not it can stand additional taxation, that is, how the consumption is going on, we certainly can stand this additional taxation, for the amount consumed in the United Kingdom in the year before the War has been greatly exceeded. It is now three or four million pounds more, in spite of the high duty. Tobacco prices, as the House knows, are in the hands of a Tobacco Controller, and I think the result has been advantageous to the consumer, and not unfair to those who are engaged in the trade. Representations were made to the Tobacco Controller that, owing to the increased cost of production, it was necessary in any case to raise the price of tobacco by a Id. per ounce. The duty, which has been decided upon, has been fixed after consultation with the Controller, and the whole result will be that the price will be raised by 2d. per ounce, but the House will see that the whole of that is not borne by the consumer, because there would have been Id. advance in any case, and the duty is raised by about l ⅓ d. per ounce. This means that something like one-third of a penny is borne by those who are dealing in it, under the prices arranged. The increase proposed is large, but I am told by the Control Board that there will be no difficulty whatever in getting the higher price, provided we do not irritate the consumer, as we have done in the case of beer, by not only charging him a higher price, but not enabling him to get the article when he is willing to
    716
    pay for it. He said that whether the taxation could be got without discontent depended on whether or not these supplies can be kept up.
    The House will readily understand that at a. time like this, when we have to restrict imports in every direction, tobacco, not being, as some think, a necessity of life, is one of those where restriction would naturally come. But I thought it right, as Chancellor of the Exchequer, to point out to the Cabinet Committee which was considering the matter, that in importing tobacco we are almost importing money, and that that was something which ought to be taken into account, especially as the total tonnage required was not largo. The House will realise to what extent that is true when I say that, under the new scale of duties proposed, an import of 6,000 tons of tobacco will give to the Treasury a revenue of £5,500,000 sterling. That is rather a double-barrelled observation. It shows on the one hand—and that was my reason for making it—the advantage from the point of view of the State of bringing in tobacco, and, on the other, shows how largo is the proportion of the price of tobacco which the consumer gives to the state. On the whole, therefore, looking, as I have done, in every direction for taxation, I think this is as fair a source as any which is open to us. The increased yield of this tax will be in the present year £7,500,000. and in a full year £8,000,000.

    MATCHES.
    The next tax to which I will call the attention of the Committee is a very small one. It is an addition to the duty on matches. That addition would not be made for the sake of revenue; the reason for it is a simple one, which I am sure will commend itself to the Committee. Matches, like nearly everything else, are under a Controller. The price is fixed—for those who can get them. It was fixed in regard to the box which is in most common use at ¾ d. The producers have satisfied the Controller that it was necessary for them to get a higher price. You can only make an addition of |d., and to make this addition without raising the duty would have given an excessive profit to the manufacturer. Therefore, by arrangement with the manufacturers, I am proposing an additional duty of 50 per cent., which will enable the matches to be sold

    717
    at the same price that they would have been sold in any case, and the gain to the Revenue is £600,000 per annum.

    SUGAR.
    I come now to the last of the sources of Revenue which are included in the £114,000,000 I mentioned to the House. I propose an additional tax on sugar of 11s. 8d. per cwt. That will bring in during the current year £12,400,000, and in a full year £13,200,000. I wish, if I can, to justify this on the same grounds as the other taxes can be justified. The price of sugar is fixed. At present it averages 5 ¾ d. per lb., and with this addition the cost will be 7d. per lb. I ask the Committee to consider the extent of that burden upon the individual. The ration of sugar is ½ lb. per week; the duty is l ¼ d. per lb. Therefore, the burden upon each consumer is l ¼ d. per fortnight. I may point out also that, considering the price of other commodities, sugar will still be sold at a not unreasonable price.
    I would put this finally to the Committee. It really was absolutely necessary to have additions to indirect taxation. If anyone in the House feels inclined to consider that any particular tax is too hard on some persons, they should try to find out from what other sources the Revenue can be obtained. I should like to add this. In considering the amount of this indirect taxation, it ought not to be left out of account—it is very important that it should be remembered—that a subsidy is now paid on the loaf. It is really relieving those, who would naturally pay this indirect taxation, and this subsidy amounts to more than the total of the additional indirect taxation which I am now placing before the Committee. I am not going to argue the question, on which I know there is a difference of opinion, as to whether or not it was wise to make that subsidy, but, from the point of view of the effect upon the poorer classes of the country, I have no hesitation whatever in saying that the indirect taxation which I propose is more than counterbalanced by the subsidy which was given on the cost of the loaf. That makes the total amount of new taxation which I mentioned.

    LUXURY TAX.
    There is, however, one other tax to which I invite the approval of the House. It is impossible, as the House will see in a minute, to give any accurate estimate
    718
    of it, arid, though I rely upon receiving considerable Revenue from it, I wish ii to be regarded as something extra, over and above the calculations which I have made. It is what is called a Luxury Tax. Last year I desired to introduce such a tax. I had it examined as closely as I could, and I came to the conclusion—I was advised—that the difficulties were so great that it was not worth proceeding with. I am not sure whether that was a wise decision, but at all events there has been an additional year of war, there have been an additional year of expenditure, and there is greater need than there has ever been before. There is also, the fact that the tax has actually been imposed in France. In January I saw M. Klotz, the French Financial Minister, and discussed the tax with him at length. I gained from him all the particulars which he had available, and carefully studied them. The tax in France was not put on at once. The Chamber sanctioned it and left the details to be arranged by a Commission. It was subsequently put on, and it came into operation at the beginning of this month. just before it came into operation I sent a representative of the Treasury to France to study on the spot the methods by which they proposed to collect the tax. I have come to the conclusion that the right way is to adopt, as the guiding principle, the course which has been taken in France. Their tax is composed of three varieties. There is, first of all, a tax on articles which are essentially articles of luxury, apart altogether from price, such, for instance, as jewellery. There is, in addition, a tax on all articles, or on a great variety of articles which, in the opinion of the French Government and the French Chamber, become articles of luxury above a certain price, and should, therefore, be subject to the tax. There is, in addition, a tax on luxury establishments, hotels, and restaurants, which is also included in the Luxury Tax. It would have been very easy to have made a list of the first class, and to have denned a certain number of articles, and to have said, "We will have a duty on them," but the amount of revenue which in any case could have been got from them would have been small, and it would not have had the effect which such a tax is desired to secure. I have put it on mainly for revenue, but I do not think that there is anyone in the House or out of it who will doubt that at a time like this if it can be arranged, it is a good thing in

    719
    the national interest to make it more difficult, apart from revenue, for people to spend money on articles of pure luxury. I think that view will be taken. If the tax were only on particular articles, the result would be to a large extent that those articles would be avoided, and the extravagant expenditure would continue on other articles which were not subject to the tax.
    I propose, therefore, to adopt, as I have said, the general principle adopted by the French Government. In arranging schedules, they appointed a Commission, consisting of Government officials and representatives of traders. I am going, if the House sanctions it, to adopt a different principle. I am going to ask the House of Commons to set up a Select Committee to prepare these schedules. Of course, they will have either to co-opt traders, or, in their discretion; take advice from them as they think best. I have been encouraged to take this course, because of the advantage which the Government have already received—and I hope it will be greater—from the Select Committee set up on expenditure; last year. It may be said that, as a matter of fact, I am leaving the most difficult part of the Budget to be dealt with by the House of Commons. That is true, but I do it partly for this reason, that this kind of tax is novel and it may be found very objectionable by those through whom it will be collected, and I desire, if possible, to get the additional sanction which will be given to the proposal by a Committee of the House of Commons.
    With regard to the amount of the tax, the French rate of the tax is 10 per cent., but they have in addition a tax on retail turnover irrespective of whether the article is a luxury or not. I do not ask the House of Commons to adopt that tax. I propose, therefore, a purely Luxury Tax on rather a higher scale of duty than was taken by the French Government. The rate which I propose—and the House, especially those who are in favour of the decimal systems, will be shocked by the method by which I propose that it should be calculated—is two pence in the shilling, or one-sixth of the amount. I am told that will be a much more workable arrangement than to take a percentage, 10 or 15 per cent. The method by which this tax has to be collected must, I think, be by stamp duty. In that way the stamp is put on the bill, and the customer himself will to a certain extent
    720
    check the transaction, though, of course, there must be inspection by Government officials as well. I believe, if, as I hope, the -Select Committee of the House of Commons will try to ass-1st in this matter, that it will do extremely useful work, and will elaborate a form of taxation which will give a large revenue. The amount which the French Government have calculated to get from their Luxury Tax is-£24,000,000. Our rate is, as I have said, higher What the amount will be must depend, of course, on the nature of the schedules which are prepared, but I shall be disappointed if, as a result of this tax, a very considerable addition is not secured to the Revenue of the country.
    I have now come to the end of my statement. I am sorry to have occupied so much time of the Committee, but I hardly see what I could have left out. I recognise as fully as any Member of the House how very heavy is the burden which I am asking the country to bear. I can only say to the House of Commons that, in considering the proposals of the Budget, I hope they will try to look upon it as a whole and to realise that I have attempted at least to balance fairly the taxation between the different classes who are called upon to bear it. I am convinced that the House of Commons will begin the examination of these proposals with a full realisation of the necessity of the additional taxation, and with the desire to support the Government in the methods which they have taken to secure it. I am perfectly certain that the country as a whole will boar this heavy additional burden in the same spirit in which they have submitted to sacrifices far more heavy than anything measurer! by mere money value.

    CONTINUATION OF DUTIES (CUSTOMS).
    Motion made, and Question proposed, (1) That the following Duties of Customs imposed by Part I. of the Finance (No. 2) Act, 1915, and continued by Section one of (he Finance Act, 1917, until the first day of August, nineteen hundred and eighteen, shall continue to be charged as from that date until the first day of August, nineteen hundred and nineteen (that is to say):

    Duty.

    Section of Finance (No. 2) Act, 1915

    Increased Duty on Tea

    …

    1

    Additional Duties on Dried Fruit.

    …

    8

    Additional Duty on Motor Spirit

    …

    10(1)

    New Import Duties

    …

    12

    And 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.—[Mr. Sonar Law.]
    Mr. DEN MAN: Could the right hon. Gentleman say what Resolutions he proposes to take this evening?
    Mr. BONAR LAW: I hope, as usual, to get all the Resolutions except that relating to Amendment of Law, on which a general discussion can take place to-morrow.
    Mr. McKENNA: I am sure that I shall meet with the approval of the Committee when I say that that part of the task of the right hon. Gentleman which consisted in making a clear Budget statement he has most completely fulfilled.
    It was, if I may say so, not only extremely lucid but very interesting. If I turn for a few moments to the last part of his speech first, perhaps I shall be addressing myself to the subject which is most interesting to the Committee. My right hon. Friend proposes to raise from new sources of revenue £114,000,000. For my part, I am disposed to think that he will get £110,000,000 out of his £114,000,000 with the greatest ease, but that his two smallest taxes—those which produce the least Revenue—will probably give him the greatest trouble. I do not refer to the Match Tax, which is not a new tax at all, but a mere readjustment; but apart from that, his smallest tax is the Cheque Tax, which produces £1,000,000, and his next smallest is the additional Postal Rate, which brings in £4,000,000. Those; two taxes together, bringing in a total of £5,000,000, will, I fear, give him more trouble than the whole of the rest of his £110,000,000. My right hon. Friend starts with the principle, which the Committee has accepted again and again, that we should not borrow money unless we have first made provision by taxation for Interest and Sinking Fund on the amount borrowed. He has fulfilled the condition; he is raising sufficient money to meet the whole of his after-war expenditure, including Interest and Sinking Fund on the Debt. I think he will agree with me when I say that to fulfil that principle is the minimum duty of the Chancellor of the Exchequer. The Committee could not concede for a moment that we should not raise enough money to provide Interest and Sinking Fund on our Debt. We have always been willing, and the
    722
    figures which my right hon. Friend submitted to-day show that he has always been willing, to go beyond this and to raise in taxation a sufficient Revenue to give us a margin for a decrease in taxation when peace comes. I am sure this House and the, country will be willing to meet any burden of taxation which may be imposed upon it during the War, provided there is a reasonable hope that after the War the burden may be reduced.
    My right hon. Friend says quite truly that taxation must not cripple industry. But in the War, while nearly every major industry in the country is controlled, how can taxation injure industry? It is quite true that if you take beyond a certain amount in the way of Income Tax from the annual profits of a business, you prevent those profits being put to reserves and new capital being built up. With that limitation the taxation which is taken by way of Income Tax is taxation which is withdrawn from means of expenditure by the people, and is not injurious to business in time of war, but is most helpful to the country itself by preventing wasteful expenditure. For that reason, while I gladly recognise that my right hon. Friend has made a really-great effort in the fourth year of War in proposing to raise additional taxation to the amount of £114,000,000, for my part, as a mere war measure, I should have been quite willing to see a further addition made to the Income Tax and the Super-tax. I would not however, put that forward as a permanent measure, for I am entirely in agreement with him in thinking that when peace comes we may do far more harm than good by crippling the development of our industry by putting our Income Tax and Super-tax at too high a level.
    My right hon. Friend, in opening, referred to the advances which we make to the Allies, and the advances which the United States make to us and to the other Allies also. He told us that we advanced last year to the Allies just over £500,000,000, while the United States advanced to us almost exactly the same sum. I think I have mentioned before in this House—I have certainly endeavoured to get the principle accepted else where £that it would be a most advantageous thing if a new arrangement could be made in regard to the advances between ourselves and the United States. The United States, as I understand, now

    723
    advance to us and to the Allies the whole value of the goods which the Allies purchase in the United States, and, in addition to that, the United States advance to us in particular all the money which is necessary in order to maintain the sterling exchange in America. I would suggest for the consideration of my right hon. Friend whether the true system of advance between us and the Allies and the United States ought not to be of this nature: That we advance to our Allies all sums necessary to pay for goods purchased by the Allies in our country; that the United States advance to all the Allies, including ourselves, all sums necessary to pay for the goods purchased by us and the other Allies in the United States; but that for all other goods purchased, whether by us or by the other Allies, in other foreign countries, the United States should make the advances to us and the other Allies direct. The United States Government-make the advances to the same amount now, because they not only advance all the money necessary to pay for goods purchased in the United States, but they also advance, through Great Britain, all the money necessary to pay for goods purchased by the Allies other than Great Britain in foreign countries other than the United States. The effect of that is as follows: That while the money required by the Allies to pay for goods purchased in countries other than Great Britain and the United States originally comes from the United States, it is not lent direct to the Allies. It is lent first to us, and being lent first to us, we then pass it on to the Allies. As this country undertook at the beginning of the War the whole burden of financing the Allies and have continued to bear that burden from the start, so we might quite reasonably ask the United States to take over that burden from us to-day. We will go on financing ourselves from first to last, but we may reasonably ask that.
    Mr. BONAR LAW: My right hon. Friend understands that that was the kind of arrangement which we contemplated.
    Mr. McKENNA: I am only too delighted to hear it from my right hon. Friend, because it is the kind of arrangement which, I have reason to believe, the United States were not unwilling to
    724
    accept. They have shown themselves most generous in their desires and in their actions in financing us, and I am sure that an arrangement of that kind will be certain to meet with their acceptance. One word further as to the last tax mentioned by the right hon. Gentle man the Luxury Tax. The French system, as I understand it, is that the tax is paid by the purchaser and is collected by the seller of the luxury. It is collected by the seller, not by means o affixing a stamp to the article sold, by the seller keeps special books in which he enters all sales of taxable articles, understand that my right hon. Friend is not proposing to adopt the French system and that he is going to charge the tax immediately upon the sale of the article over the counter by affixing a stamp, wish my right hon. Friend all success in levying this tax. To secure the affixing o a stamp on every sale over the counter dealing with such articles as, for instance a pair of gloves or a pocket-handkerchief, and rising to old masters which may be sold by the picture dealers—to secure the affixing of a stamp in every case will be a very difficult task. If my right hon. Friend can succeed, I am quite sure we shall all welcome the millions of money raised out of what we all agree in calling wasteful expenditure. But I am not sure, if he is going to make—
    Mr. PRINGLE: Is a pocket-handkerchief a luxury?
    Mr. McKENNA: It all depends on the price. I have here the schedule of the French articles. I see, for instance, that a smoking jacket, a frock coat or a morning coat is not a luxury if it costs £5, but if it costs over £5 it becomes a luxury and is taxed 10 per cent. Let me take another case. In regard to cutler and scissors, each article is not a luxury if it costs 10 francs, but if it costs more than 10 francs it becomes a luxury. A small piece of china-ware is not a luxury if it costs two francs, but it becomes s luxury if it costs more than two francs. I believe there is no precise definition of what is a small piece of china-ware. I have paid some small attention to the French tax, and I am bound to say it left me convinced that, if it were my duty to impose the tax and to collect it, I should break down hopelessly, but I have such confidence in my right hon. Friend's greater abilities that I am quite sure he will succeed in devising a scheme—
    Mr. BONAR LAW: It is for the House of Commons to do that.
    Mr. McKENNA: My right hon. Friend has already retired from the task, and is going to invite some of us to devise a scheme by which you will be able to raise this tax and obtain a revenue. For my part, I am sure we are all agreed that we should like to see the Revenue raised. Whether it is practicable or not is an entirely different matter.
    The total revenue that my right hon. Friend proposes to raise in the present year is £842,000,000, and the taxes would, in a full year, bring in no less than £900,000,000. It is a gigantic revenue and the Estimates upon which it is founded will, I am sure, prove not to be an overstatement. My right hon. Friend referred, with admiration, to the work done by the Inland Revenue. There is no Department in the State which has carried out its duties with greater ability and public spirit than the tax gatherers, with an almost infinitesimal total increase of their staff, and while their old experienced staff has been greatly reduced they have been able to collect these huge sums, and on the whole have gathered them in with a minimum of inconvenience to the tax-paying public. Therefore, I am quite satisfied that; the Estimate which they bring before the Chancellor of the Exchequer will not be an overstatement, but I cannot help thinking that we must be cautious in assuming that our post-war revenue is going to be anything like upon the scale of figures which we are now contemplating. In framing an Estimate of the Inland Revenue receipts we consider, of course, the profits winch have been made during the last three years. We can always be quite sure, therefore, that when we have had one or two good years of trade the Income Tax receipts are bound to remain high because the profits from the good years will come into assessment for three years running. We have had in the past three very great years of profits and we may be quite sure, consequently, that our Income Tax revenue in 1918 and 1919 will be very high. In 1918 we get, for our three years' assessment, three good years, and even if the current year is not a good year we shall still in 1919 bring in the three years 1916, 1917 and 1918, and as 1916 and 1917 were bumper years the Income Tax for 1919 cannot fail to bring in a very large amount. Consequently, my right hon. Friend is absolutely safe in all
    726
    his Estimates for this year and for next year, but just as, when the tide is rising, you get all the advantage in your Income Tax returns from your improving trade because a good year takes the place of a bad year three years before, so, when the tide begins to ebb, you do not feel it at first, but when you have lost the last of your good years you will have to meet a very great drop. Therefore I feel a little anxious about the future and about the estimates which we should form on calculations based upon the abnormal profits of 1016 and 1917. I do not know whether my right hon. Friend would be willing to say at. this moment that he anticipates that profits will be as high in the current year as they were last year. Undoubtedly in many trades they cannot be as high. Prices have been limited and sales have been restricted, and consequently it is inevitable that in many trades profits will be considerably reduced. In other trades, however, profits arc higher than ever, and it is difficult so early in the year to say whether on the whole 1918 will be worse, as good or better than 1917. There is cetrainly no similar upward tendency any longer as there has been in the last couple of years, consequently we must be cautious in the predictions we make as to our future Revenue.
    My right hon. Friend did not say anything £it is quite right he should not—about the changes which he would make in the measures which he is adopting to meet our expenditure otherwise than from Revenue. Loans, of course, do not come in under the Budget, but I think it will be relevant to ask a question regarding loans. As he has raised the Income Tax from 5s. to 6s. it is obvious that there is' now a differential rate arising between the 5 per Cent. tax-paying Loan and the 4 per Cent. tax-free Loan. He is issuing War Bonds at par paying 5 per cent., or War Bonds at par tax-free paying 4 per cent. That was quite a proper adjustment between the two when the tax was 5s. in the £but I should like to ask whether he proposes any alteration in his issue of War Bonds now that he has raised the Income Tax to 6s. in the £
    Mr. BONAR LAW: I am afraid, in spite of what the right hon. Gentleman has said, that I ought to have mentioned it because I am taking action upon it at once. The principle on which the tax-free Loan was based was that those who chose ' to take that form of loan must pay a little

    727
    for what they regarded as additional security. That is to say, their yield was rather less than the yield of the 5 per Cent. Loan on the ordinary basis. The reason of that, of course, was that it was obviously against the interests of the Government that a very large sum should be tax-free in future. What I propose to do, therefore—and I am giving instructions to-day—is to withdraw the tax-free Loan after to-day, but not to deprive those who are willing to invest in that form of an opportunity of doing so. I am continuing to issue the 4 per Cent. Bonds, but at 101 ½. The effect of that is that the tax-free buyers will still get a slightly lower yield on the basis of the 6s. Income Tax than those who are buying Loan and paying Income Tax. Of course, it is a gamble. It is over ten years, and if the rate is lower in any part of the period the State will gain, but on the whole I do not think it would have been right at the moment to give a preference to those who buy tax-free Loan, because obviously that class must be composed largely of those who are rich.
    Mr. McKENNA: I congratulate the holders of 4 per Cent. Loan. Those who like to gamble on the War lasting at least another year will be safe in buying 4 per Cent. Bonds at l ½ premium, because if the War should last another year I assume Income Tax would be raised again. In my view, in raising an additional £110,000,000, my right hon. Friend has fairly and fully met the principle with which he started, namely, that he would raise enough Revenue during the year to meet the whole charge for interest and Sinking Fund on the additional debt which ho is about to raise.
    6.0. P.M.
    Mr. J. H. THOMAS: I join with my right hon. Friend in congratulating the Chancellor of the Exchequer on his very lucid statement, but I cannot congratulate him on the boldness of his Budget, because, after all, in these matters we have not only a duty to ourselves, but we have a duty to the soldier as well, and I can conceive of nothing more disastrous, nothing that is so likely to discourage those who are risking so much for us, than the knowledge that whilst they are fighting, on an all too meagre pittance, we are piling up a debt of which, when they return, they will have to bear a very large burden. Therefore, I most certainly
    728
    feel that the right hon. Gentleman might have been much bolder in his proposals. I want first to deal with his minor taxes. So fax as letters and postcards are concerned, I question very much whether it will be worth it. I was a member of the Committee that considered and recommended these proposals, but there are many points to consider. First, take the special hardship, or, in other words, the tax, that you will put upon the correspondence to the soldier at the front. I do not know what the figures would show but every week there are very many millions of letters and postcards sent from home to our soldiers at the front. While it is true that you do not tax the man writing home, I ask you to remember with what interest and pleasure he looks forward to letters from home, and, therefore, if you are going, as you will in this way, to tax those who correspond with soldiers at the front, if it does tend, as I believe it will, very seriously to diminish their correspondence, that is at least undesirable. But apply it to some Government Departments. Let me take the National Insurance Act. The first result, unless some alteration be contemplated, must be that all the approved societies will make a demand straight away for a higher administration allowance, because they could not possibly pay the excess tax on the basis of the money at present allowed. The right hon. Gentleman anticipates it by saying it is got over in that way. If that is got over, I can conceive of many other anomalies which must of necessity arise, but I do not think if is likely to be a profitable, certainly not a desirable, tax, for the reasons I have mentioned. I deeply regret that the right hon. Gentleman has not seen his way to alter the present abatement, which he lowered last year from £160 to £130. I submit that whilst the working classes of this country have already shown their willingness to bear that burden, you should examine this question in the light of experience prewar and to-day. It is recognised that the spending power of the sovereign is to-day equivalent to 10s. My hon. Friend (Mr. J. M. Henderson) disputes that. At all events, the Board of Trade figures show it. The Board of Trade figures may be wrong, but at all events they are the only accepted figures in the field to-day. Apart from the Board of Trade figures, experience in the spending of a working man's

    729
    money shows clearly that you can only get 10s. worth of goods to-day for a sovereign as compared with the pre-war conditions. That, when you are dealing with Income Tax, means that you are today, in addition to the indirect taxation, levying an Income Tax on what is equivalent to £65. The £130 earnings of the ordinary working man is only equivalent to £65 to-day, and I submit that we are at least entitled to say that the prewar standard ought to be the basis upon which Income Tax is levied at this moment. I am delighted to know that the Chancellor of the Exchequer proposes to make some allowance in regard to wives, and I believe he said invalid dependants. That is a very necessary and wise provision, but I would like to ask whether that includes provision in respect of a housekeeper? Otherwise you are going to have this anomaly, that a man is to have an allowance in respect of his wife, but if he is left a widower he is to be placed at a great disadvantage. He will have to employ and pay a housekeeper, and experience shows the difficulty and expense of that. Therefore, I would ask the Chancellor of the Exchequer whether, in further considering the question, he will have some regard to the special hardship of widowers, and make the same allowance which he is making in respect of a wife to apply to a housekeeper?
    I hardly know how he is going to meet the situation with regard to the Tobacco Tax. I understand that Is. 9d. per lb. is the amount levied, which is to be apportioned on the basis of 3d. per ounce. Whilst I know full well who is going to pay the 2d., I would like to know where the difference is going. I do not know whether the Chancellor of the Exchequer is aware that it has been practically impossible to get tobacco for at least a week. The right hon. Gentleman shakos his head.
    Mr. BONAR LAW: I have got it.
    Mr. THOMAS: Probably they knew you and therefore they did not interfere. I would ask the right hon. Gentleman to recognise that it has been a real difficulty during the past week in different parts of London and the provinces to get tobacco, and people have complained. I think that dealers are simply holding up their stock, and probably at this moment if you went outside this House you would find that the tax had already been put on.
    730
    [AN HON. MEMBER: "There is a con trolled price!"] Yes, but the controlled price will make no difference, because the controlled price includes the tax.
    Mr. BONAR LAW: It has always been the case that we stop withdrawals for a short time before the Budget statement.
    Mr. THOMAS: In that case it means that someone is to get the balance of the stocks in hand. There is that difficulty, and I know it is difficult to regulate it. The tax of 1s. 9d. in the lb. not being equal, it means that either the manufacturers or the shopkeepers, or someone, are getting the difference between the 1s. 9d. and the 2d. per ounce which the consumer has to pay. I also want to enter my objection to the increase in the Sugar Tax. It is not sufficient for the Chancellor of the Exchequer to say that this only means 2s. 4d. per head under the present rationing scheme. The fact remains that where there is a large family it is far heavier than that. When you combine the whole of these indirect taxes with the others I have mentioned, it shows the justification that I have originally urged for the present Income Tax level being made higher than it is at the present moment. I think the Chancellor of the Exchequer might have tackled the Death Duties. He might have seriously considered whether, having regard to the circumstances of this War, it would not be a fruitful source of Revenue to increase the Death Duties. Whilst one appreciates the lucid statement he has made, and that we are faced with the unfortunate fact that money must be obtained, I do think he might have obtained it in the direction I have indicated with far more justice to all concerned, and he would not have interfered either with industry or business, which appear to me to be the primary considerations.
    Sir J. WALTON: I want to add my warmest congratulations to the Chancellor of the Exchequer for the exceedingly lucid and interesting financial statement with which he has favoured us to-day. I congratulate him on the fact that he realised last year national Revenue amounting to 707,000,000; but we must remember that there are still practically £2,000,000,000 of the expenditure up to 31st March last that must be raised by loans. I understand from the Chancellor of the Exchequer that the total Debt, including advances to

    731
    Allies and Dominions, at the end of the current year will be no less than £8,000,000,000 in round figures. I do not think it is wise to exclude loans to Allies and Dominions because we have had to finance them, and we shall have to do so in the future. Therefore, the soundest position to take up is to total all together and see how we stand in regard to the National Debt and national obligations. At the end of the current financial year I understand that the total Debt will reach the gigantic and unheard-of figure in the history of the world of £8,000,000,000. With regard to the Estimates, when we remember that the Estimates for last year were exceeded in expenditure by £406,000,000, I think we should not be wise in depending too much upon the Estimates for the current year. At any rate, they are of such enormous proportions that the Chancellor of the Exchequer considers it necessary to call upon the taxpayers of this country to provide in Revenue for the current year no less a sure than £841,000,000 to be brought up when the new taxation applies to the whole year to a total of £900,000,000.
    I believe that the Chancellor of the Exchequer has taken a wise course in making this enormous increase in taxation, because in the current year he tells us that after raising by taxation £841,000,000 we shall still have £2,130,000,000 to borrow. Therefore, if we are sound financiers, to cover the obligations of the current year he could not have done less than impose what in a whole year would amount to £114,000,000 of additional taxation. In asking the country to pay this enormous sum and I believe the taxpayers are prepared to find whatever amount is really necessary to prosecute this War to a successful issue—I think we have a right to ask that the Treasury shall resume over each of the spending Departments of the State proper supervision and control, which it is its duty to exercise in order that the taxpayers of the country may get something approaching value for their money, and so that the huge waste of public money which is taking place in connection with many of the great spending Departments of the State will be arrested. No one in this House has a deeper appreciation of the splendid services which the Chancellor of the Exchequer has rendered to the country during this War in the work he has done. We need no more efficient Chancellor of the Exchequer; but
    732
    I submit that no superman in the world can efficiently supervise the expenditure of £2,800,000,000 a year, which means thirteen or fourteen times the pre-war expenditure, and at the same time be Leader of the House of Commons and a member of the War Cabinet. My honest opinion is that if the right hon. Member for West Birmingham could have been brought back to the Treasury, in order to set my right hon. Friend free in other d reactions, so that we might have some chance of proper supervision over expenditure, and some chance of saving public money—
    The DEPUTY-CHAIRMAN (Sir D. Maclean): The constitution of the War Cabinet is not relevant to this Debate.
    Sir J. WALTON: I apologise for that passing reference. I intended to dwell on the question of the supervision of the expenditure of the taxpayers' money by the Treasury, which has been allowed to fall into abeyance. We are to have a discussion on Thursday, I believe, on the question of the Auditor-General's Report in regard to the> gross waste of money in the Ministry of Munitions, in regard to which I understand that practically no Treasury supervision whatever has take a place. We ought to know who were responsible for such widespread negligence and almost criminal waste of the resources of the country to the tune of untold millions, and what steps have been taken to discharge them from the public service and to prevent this enormous waste of money continuing. The Report of the Auditor-General is the most amazing Auditor-General's Report which has ever been submitted to the country. It is true that the expenditure to-day is fourteen times what it was in pre-war days, but whereas in 1914 the administrative staff of the right hon. Gentleman was perfectly free to supervise expenditure, it is now really—
    The DEPUTY-CHAIRMAN: This is not relevant to Ways and Means. It is going beyond the purely general references which are permissible. The hon. Baronet has not taken to heart my previous intimation to this effect.
    Sir J. WALTON: I intended only to make a passing remark.
    The DEPUTY-CHAIRMAN: It is just as well to make the matter clear. The subject is one on which the greatest pos-

    733
    sible interest is taken, but details are not relevant to Ways and Means. If I allowed the hon. Member to deal with this topic I could not prevent others from doing so.
    Mr. LOUGH: Surely it is not out of order, without going into details, to refer generally to the possibility of diminishing the burdens placed on the taxpayer by the exercise of judicious economy which would diminish expenditure?
    The DEPUTY-CHAIRMAN: If the right hon. Gentleman had done me the honour of following what I have said he would have observed that I did not exclude general references, but that I was excluding the detailed references which obviously must follow if the hon. Baronet were allowed to continue his remarks.
    Sir J. WALTON: I had no intention of introducing matters which were out of place in this Debate, but I am surprised that the Chancellor of the Exchequer did not utter a single word of assurance to the taxpayers that he would use all his powers and all the powers of the Treasury to secure better value and to stop the waste that has been going on. We have a right to have some sign from him that he is making every effort to prevent the gross waste of public money that has been going on. As to our general financial position, when we are considering how solvent we are, we must remember that imports are still exceeding exports. In the month of March the excess was £71,000,000, apart from Government imports. Therefore in all questions of increasing taxation, or raising loans, or considering how to bring about economy after the War, we must not lose sight of the fact that, if this year continues like the month of March, the imports will exceed the exports in the current year by no less than £1,000,000,000. That is a most serious question to consider in connection with our whole financial position. The country has shown marvellous ability to finance the War, and when we have to contemplate the capital that will be needed, say, to replace our loss of shipping after the War, and develop our industries so as to bring about a rapid economic recovery of prosperity to this country, we must secure also that we do not deplete our financial resources by taxation that will leave us without the necessary financial resources to secure this result.
    With regard to the proposed taxes, I am disposed to think that on the whole they
    734
    are a fair and equitable distribution of taxation. One of my Friends was not satisfied that the 80 per cent. Excess Profits Duty was not increased. I might tell him that in many cases I am compelled to pay 95 per cent. Excess Profits Duty, and therefore there would not be much more to be got out of my collieries by an increase of that tax. There is no doubt that the Excess Profits Duty will sooner or later show a falling off. The coal trade, the shipping trade, and some other trades, will require in the current year considerable repayment from the Treasury by reason of the largely reduced profits in these industries owing mainly to Government interference, and this should not be lost sight of when the Chancellor of the Exchequer is estimating that the Excess Profits Duty in the third year will yield no less than £300,000,000. The Excess Profits Duty and the Income Tax yielded in the last financial year £460,000,000, or an increase of £115,000,000. Therefore in the increased revenue of £134,000,000 only £19,000,000 was got from sources other than Income Tax and Excess Profits Duty. Therefore it is vital in the future, when more than half of the £900,000,000 current income is to come from those two sources, that we do not kill the goose that lays the golden egg. We shall get a rude awakening in the final result of Government interference with the trade and industry of this country, and in the majority of cases even in the middle of war it has been a mistaken policy.
    I was glad to see that a Luxury Tax is to be levied. The ex-Chancellor of the Exchequer seemed to think that it was difficult to arrange. The French are imposing- a 10 per cent. Luxury Tax, and expect to get £24,000,000 per year from it. If the French can arrange for it, why not we? We have again the farmers let off. They are making huge profits, yet up to now they have only had to pay Income Tax on their rent. I know one case in which a man was making, according to his own returns, £1,500 a year on his farm, who admitted that in the year 1915 ho made £5,000 profit, yet he only paid Income Tax on his £900 a year rent, and no Income Tax on profits, no Excess Profits Duty, and no Super-tax. That position of things is wholly inequitable and untenable. To-day the Chancellor makes just the paltry proposals that the farmer should pay Income Tax on double his rent. That does not meet the case at all. Personally, I was very much dis-

    735
    appointed that the Chancellor had not taken the bull by the horns and simply subjected the farmers' industry in this country to the same taxation as other industries. There is no doubt that the Chancellor will receive every support from the people of this country. They will pay all these additional taxes, but I am certain that there is a general feeling, especially after the disclosures of the Auditor General, that greater efforts should be made to secure that the money is properly spent.
    Sir F. BANBURY: I do not intend to speak at any length on the very drastic taxation which is being imposed on this country. The vast majority of people are perfectly prepared to pay whatever is necessary to carry on the War, but there cannot be any doubt that the amount proposed, especially the Income Tax and the Super-tax, is very heavy, and in many cases it comes to very nearly half a man's income. It must not be forgotten that in many cases manufacturers will be working half the time for the State and only half the time for themselves. The working classes are in a far better position now than before the War. When the right hon. Member for Derby talks about the cost of living—and he has taken his figures from the Board of Trade, though they will not bear investigation and have been contradicted by the Food Controller himself—he is forgetting altogether the enormous increases in wages that have been given. While I think that everyone is desirous of doing all he can to finance the War and while I reserve any criticisms as to the special method in which this is being done, I must say that when we are asked to make the great sacrifices which we are being asked to make at the present moment we should have some guarantee that the money is going to be properly spent. I am not going into the question as to how the money is being spent in various ways by various Government Departments, but we have a right to ask, if we are to be taxed in this way, that the money shall be spent in as economic a manner as possible. That has not been done up to the present. Anybody who has read or will read the Auditor-General's Report will see that the money has been wasted in the most extravagant manner. I am sorry that the Chancellor of the Exchequer did not allude to that. He should have given some assurance, when he comes down to the House to ask the country to
    736
    make these great sacrifices, that the taxpayers' money shall be- safeguarded. As the amount of money dealt with is so large it is wholly impossible to offer serious criticism at the present moment, and I only rose because I think it most important, especially when it looks as if the War is going to continue, that economy should be exercised, because it is a vital necessity at the present moment.
    Mr. WILSON-FOX: I should like to reinforce the reference which was made by the right hon. Baronet, because I think many of the members of the Select Committee on National Expenditure must have been impressed in the course of their labours by the necessity of constant vigilance on the part of the Government in the matter of expenditure. I do not think it necessary to go into the details, but there was undoubtedly, in the recent Report of the Comptroller and Auditor-General, reference to much wasteful expenditure which, as I said, speaking on this subject comparatively recently, is a matter on which there has been very considerable improvement. But that improvement has certainly not been carried far enough, and I hope that the vigilance of the Cabinet and of all Ministers will never be relaxed, so that the public may rest assured that in paying the taxes they are called upon to bear, at any rate so far as the Government can achieve it, their sacrifices of money shall not be wasted. As regards the proposals made this afternoon by the Chancellor of the Exchequer, I think the opinion of this House and of the people outside will be that on the whole the Chancellor of the Exchequer has dealt with a very difficult business in an extremely competent and able way. That, I think, will be the general verdict on this Budget. But that does not mean that there are not many points to which criticism should be directed, and also, that there are not matters of policy on which it would be advantageous to concentrate our minds to some extent. It always strikes my mind that one blot in our national finance is that we do not look sufficiently to the future. The present Chancellor of the Exchequer, and the ex-Chancellor of the Exchequer, quite rightly laid down the rule that in each year we should provide enough income, so that when peace is restored, which is always a peace in the next year, ordinary taxation shall be sufficient to meet the ordinary expenditure of the Government, plus charges on the Debt. I think the Govern-

    737
    ment should look further at this matter, and I hope that one of the results of the action of the Select Committee on National Expenditure will be that some form of national accounts will be devised which will lend itself, more than the present accounts do, to running our financial accounts on more business lines. This system of cash accounts from year to year does not cover the ground, and covers it still less Now that our revenue and expenditure arc attaining greater and greater proportions, and must necessarily be dealt with in a more classified manner in point of payments and of time 'and in point of the nature of the expenditure.
    The question of direct taxation has been very fully gone into, and has been very fully and fairly stated by the Chancellor of the Exchequer. I do not think the Income Tax payers of the country are going to complain of the burden that is going to be imposed upon them, but they are bearing a very high proportion of the total burden. The working classes of this country have had their income raised enormously during the War, and I think that in bearing the burdens imposed upon them there will be the same lack of grumbling and the same spirit of self-sacrifice which has been shown by the direct taxpayers of the country. I hope that opinion will be reflected in the course of this Debate. There is one matter, a matter of policy, to which I would like to direct the attention of the Committee, and that is the necessity—now that we have attained to such enormous figures—so far as we can, to build up other sources of Government, revenue. We have taxation, direct and indirect, and I think in the year preceding the War ended March, 1914, the total tax revenue was £163,000,000, out of a total revenue of £198,000,000, and that the balance was made up by £32,900,000 received from various sources of non-tax revenue, to which the Post Office and telephones contributed £30,000,000, certain Crown lands £530,000, and an important item was £1,079,000 derived from the Suez Canal shares, and other interest. The non-tax revenue of the Government at that time amounted to 17 per cent. of the total revenue of the country. I think it was my hon. Friend the Member for Oxford who pointed out recently in this House that in 1841 the proportion of the total revenue derived from direct taxation was 27 per cent., and that direct taxation had risen last year to the very large figure of 82
    738
    per cent. The figures given to-day show that the proportion of total taxation borne by all classes who pay direct taxation will exceed 82 per cent. That increase in this method of raising revenue has taken place during the long period from 1841 to 1918.
    I am convinced that ii attention is paid to this subject, if it becomes part of the Government programme to build up this non-tax or commercial revenue, that within twenty or forty years they should be able to build it up from 17 per cent. to at least 50 per cent. I am convinced that it. is time to begin now. It should be part of the Government programme to look into this matter and to endeavour from the small beginnings already made for this is no new principle which I suggest—to increase largely the income derived in this manner. If this should be done, I should like to point out to my friends on the Labour Benches that it would be far easier to expend the vast sums for social improvement, which arc so glibly talked about, and which are so hard to come by. If income is augmented in the way I suggest we shall have money to spend, money which does not come directly out of the pockets of the people. I think that what I thus suggest should be accepted as part of the policy of the Government, and that every endeavour should be made to increase this port-ion of our Revenue. It must be remembered that money is always the determining factor as to whether social reforms can be brought about. My excuse for alluding to the subject to-day is that, as the House will remember, the Chancellor of the Exchequer in the Debate which Look place recently on the work of the Select Committee on National Expenditure referred to the subject of conscription of wealth. Personally, I am not afraid of the conscription of wealth. I do not think it is practicable to do very much in that direction. I think it is ones of the cries of which we have hoard a good deal, but from which there will be no practical result. The Chancellor of the Exchequer on that occasion made remarks the gist of which was that, the conscription of wealth had been put forward as one of the means of raising fresh money, and that another alternative had boon put forward by a certain Committee which was investigating the resources of the Empire, and in what way to utilise them so as to make money for the State. That Committee is known as "The Empire, Resources Committee," and it is one with which I am

    739
    actively associated. It has been studying this problem for the last eighteen months and is prepared to make a number of suggestions to the Government, if the Government is willing to give them consideration and go into this matter in order to see what is practicable and what is not.
    I would remind the House that in many directions we are at the parting of the ways. The Government must consider soon the Reports issued lately in regard to the reconstitution of the power supply of this country the subjects of railways and canals, the relations of the Government to the fishing industries, and to see what can be made of the vast chemical and other establishments which have been created with capital provided by the Government during the War. There can be no question that these matters must come under consideration, and I venture to urge upon this House that it should see that one of the elements in dealing with the whole problem connected with these matters, should be the consideration in what form, by what means, and to what extent these undertakings should contribute, by way of participation, or by way of partnership, or in some other form, to the Revenue of the State. That is what I am specially concerned to urge to-day, and I hope that this question will not be neglected, but that it may be gone in to soon; for the charges on this country are becoming heavier and heavier, and it is not the time to throw away any chance of securing revenue after the War, at the earliest possible date, from sources other than taxation. That is all I wish to say upon that subject, except this, that one of the objections taken to the policy is that it will involve an expenditure of large sums of capital. On that, I may say that I was very glad to find, from the lucid statement- of the Chancellor of the Exchequer, that he has a big nest-egg in various forms of capital, and that he proposes to apply some of it to relief of taxation. But I hope that some of these large sums—I think I am correct in stating that they amount to about £1,100,000,000—will be reserved for work of the kind I have described, namely, that of developing the resources and opportunities of the Empire at home and overseas, so that this work can be gone into at once, and without involving a new charge upon the taxpayers of the country. Above all, this subject should be gone into
    740
    and examined in no polemical spirit. Such success as we have attained in this War has been arrived at by all ranks-uniting together in the cause of the Empire, and I hope that when the time comes to examine into this very important subject, we may equally prove capable, as a nation, of being as united upon it as we have proved ourselves to be in support of the War.
    Mr. LOUGH: Everyone who has spoken has congratulated my right hon. Friend. We never had a Budget like this before; we never had a Budget so vast in amount, and which introduces so many fresh taxes, nor a Chancellor who, with an absence of rhetoric and the devices of Parliamentary oratory, gave us a more simple or interesting statement, without a word being wasted. We shall all remember his Budget, which will stand out in our recollections. The Committee may look for a. moment at the interesting digression into German finance. This is a most difficult subject, and I am always trying to understand it myself—I fear unsuccessfully. Owing to, perhaps I may say the rudimental, the simple way in which the right hon. Gentleman told us about, it, we see at once the great difficulties into which that Empire is drifting, and I do not think there will be much sympathy with them in this House. Those remarks, which were thoroughly well deserved, will not prevent me—and I am sure my right hon. Friend will not mind it—looking in detail, and perhaps a little critically, at one or two of his proposals, because he has already had the compliments and, what is much more important to him, the support of my right hon. Friend who was his predecessor, whilst we poor, independent, working creatures in this House are placed in a great difficulty during the War by the fact that whatever the Government does on that bench the official Opposition here supports, and sometimes. I fear, they drift into difficulties on that head which they afterwards regret. Speaking hastily, as we do to-night after the right hon. Gentleman's proposals. I hope he will be willing to look into one or two matters a little. even at the request of a humble individual like myself. Take the first proposal, with regard to the increase of postage. I want-to suggest to the Chancellor that tins must be looked at from the point of view of getting revenue. He may easily raise the charge, and get loss money than he did before, if such a charge is added to a huge revenue like that from penny stamps

    741
    and halfpenny post-cards, and which depends on the low and almost nominal price which has been fixed. While I cannot presume to speak with any authority on that, I would give the Chancellor of the Exchequer a warning that it ought to be very carefully considered, by those who are more acquainted with it than stray individuals in this House, whether his own intentions will not be defeated, and the total of the great revenue now derived from the Post Office diminished. I want to ask a question about that. The right hon. Gentleman omitted to state something to the Committee which I find in the White Paper. I am surprised, if it is true, that 'lie did not state it, and I congratulate him if it is correct. I see if I am right, arid perhaps he will correct me if I am wrong—that the increase in the charge for letters of 1 oz. is largely balanced by a large diminution in the charge for letters of from 1 oz. to 2 ozs. and from 2 ozs. to 4 ozs.
    Mr. BONAR LAWnodded assent.
    Mr. LOUGH: The right hon. Gentleman nods. I am glad, but why was it not mentioned before?
    Mr. BONAR LAW: I said the details were all in the White Paper.
    Mr. LOUGH: This is a matter which the country will be glad to know, and which the Committee will accept with a great deal of satisfaction as a set-off to the raising of the price to lid. At present we can only send an ounce letter for Id., and the charge for that is to be raised to 1 ½ d I see by the scale, however, that letters from 1 oz. to 4 ozs. can also be sent for l ½d. We have a reduction of ½ d. on I oz. to ozs., and of Id. on 2 ozs. to 4 ozs. I am very glad that is intended, and it will be same amelioration of a burden which, I am afraid, will press very heavily on the business class. On the other hand, we go no way to meet the ordinary poor people sending a letter for Id.
    I come to a matter on which I really think the Committee will be bound to take serious action, namely, the proposed increased charge on cheques. A cheque which is now 1d. is increased to 2d. The Chancellor of the Exchequer alluded to the experience of a distinguished predecessor of his over this waiter, and I think, Mr. Whitley, you will remember very well the Debates which took place. I do not want to make any invidious comparison, but I do say this, that Lord
    742
    St. Aldwyn—Sir Michael Hicks-Beach as he then was—had just as stiff an upper lip with regard to this proposal as any Chancellor of the Exchequer I have ever seen on those benches. He had to meet very nearly as great an emergency at that time—at least he had as great an inducement to get revenue—as the present Chancellor of the Exchequer had when he proposed to raise' the charge from Id. to 2d. How did we defeat the proposal? The minute the experience of the business community was obtained on the question, the Chancellor found that, instead of getting a larger revenue, the foundations of the whole splendid revenue which we were getting from cheques would fall away and would tend to disappear. I am sorry that we did not hear what the revenue from the Id. Stamp Tax is estimated at at present. I believe it is about £4,000,000.
    Mr. BONAR LAW: I have not got it.
    Mr. LOUGH: The right hon. Gentleman has not got the figure, but in this House, at any rate, at that time, we were able to bring up distinct cases of business. I believe we found one where 1,500 cheques were issued. Cheques were issued almost like £l or 10s. notes, and because of the penny they were used to a tremendous extent. That use will diminish and dwindle away to an extent of which the Chancellor has no idea when the charge is raised to 2d. Payments now made every week will be made every fortnight, and those every month will be made every three months. One cheque will take the place of six, and the business community will begin to look at the 2d. and the easy way in which it multiplies with a care which they did not at all apply to the penny. I think, if my right hon. Friend will look back at those Debates even now, he will find that the Treasury recognised, on the single ground of getting revenue, that that was a proposal which must be abandoned. I want to mention another tax which, even in the emergency of a war, I must say is a very bad and doubtful one, and especially as my right lion. Friend made a slight mistake in his statement with regard to it. I refer to the tax on sugar. A penny-farthing addition is to be put on sugar. That is a very striking example of how this House slides from one thing into another when it tolerates the imposition of a heavy burden on a great article of food like this. We had; ¼d. a pound on sugar before the War; then it was multiplied by six and became

    743
    l½d. Now, without a word of criticism, we have another lid. When the right hon. Gentleman described the effect on poor households he told us it would apply to only 26 lbs. of sugar in a year, because the ration of sugar was ½ a lb. a week, or 26 lbs. a year He said that would only mean 3s. a year additional to the working man.
    Sir R. COOPER: Per head.
    Mr. LOUGH: Yes, per head. That was a great slip on the part of the- right hon. Gentleman. The consumption of sugar in this country every day is not at all that ½lb. which is allowed to every member of a household weekly. It is 80 lbs. per head per annum, and during the War the consumption has remained at from 78 lbs. to 80 lbs.
    Mr. HOGGE: Does the right hon. Gentleman moan that now, with the ration, we arc consuming that amount per head?
    Mr. LOUGH: I believe title consumption has not diminished. Certainly it had not in 1910–17. In fact, it has greatly increased. At any rate, I am open to correction. The yearly consumption is something like 76 lbs. or 78 lbs. per head. The Committee will see the matter explained when it remembers that a large quantity of sugar is used in commodities winch are consumed by every family, so I think the Committee may take the figures I am giving as correct. Supposing the consumption is 80 lbs. per head, the tax at present which is to be raised makes every individual pay Id. per lb., which is 6s. 8d. With the tax at 2¾d., it will be nearly 18s. or 19s. per head. Take a working man's family of six, lie will be paying nearly 6 for his family in tax on sugar. 'That is a, very serious thing. Sugar—as I have explained to the House in past days, when one was allowed to speak of the importance of these great commodities, but which one does with fear and trembling now—stands next to corn as a popular article of food in this country. To put so heavy a burden on it seems a very risky proposal, and I hope the Chancellor of the Exchequer will be willing to listen to representations on that point later on.
    There is one other aspect of the Budget to which I should like to draw his attention. I mean the heavy way on which it will rest on Ireland. I mention this all the
    744
    more because the Irish Benches arc empty. I do think there has been a rather unequal burden of indirect taxation laid on Ireland. Ireland is a community I which is twice as much hit by indirect taxation as by direct taxation. The situation as between Ireland and Great Britain is reversed. Ireland is an agricultural country, which pays most of its contributions in indirect taxation, and the taxes I with which the right hon. Gentleman deals are those on which the Irish people pay the largest amount. Think what they are. There is the land tax. Ireland is three-quarters a country where men get their living by farming, and by land, as compared with Great Britain, where only a quarter of the population get their livelihood in that way. Therefore, the increased burden in direct Income Tax, and especially the increase on the farmers, will fall for more heavily on Ireland than here. Then, the tax on beer and spirits will fall exceedingly heavily on the people of Ireland. I do not Know whether my right hon. Friend has remembered the experience we had, in very recent years, with exactly or nearly the same proposal as he has made to-day. I do not know whether or not he has taken those two proposals about beer and spirits from the Prime Minister, but I believe they are the very figures which were introduced in the Budget of 1914. The Beer Taxes were doubled, making the price 45s. or 50s., and the Whisky Tax, I think, was only to be raised to 25s. Sugar is another of the heaviest taxes in Ireland, and tobacco, probably, is the worst of all, from the Irish point of view. Tobacco is not merely a luxury, but a necessity for most of the poor in Ireland, such as hardly obtains in this country. I do think the many heavy burdens which these proposals contain will raise a very difficult question which will have to be considered at a later stage.
    7.0 P.M.
    There is one other point about which, I think, legitimate regret may be expressed here. We had a right to expect that the right hon. Gentleman would mention to us, when he was stating the revenue which he had received during the year, the amount which has been raised from the great trading operations of the Government during the last twelve months. Our place in the House of commons, especially on Budget nights, is to consider the burdens placed on the backs of the people, and, if we are not able to do anything to alleviate those burdens, we ought at least to have a clear statement

    745
    made as to what they are. I am sorry the Chancellor of the Exchequer entirely forgot that great question of the trading operations of the Government, and whether there was a profit or a loss sustained. If there is a profit, how much will it amount to in the last year? Some people think it is a vast revenue. I have heard £35,000,000 stated as the profit accumulated to the Food Controller for some of his experiments. That food and meat, which he buys at 6½d. a lb. and which is delivered here at that price, is sold wholesale by him at Is. Id. All around we are led to believe, by people who know the operations of this market, that very great profit is being realised. The House ought to ask, and ought to know, if this profit is being made. I noticed a remarkable speech made the other day by a member of the other House, who was once a distinguished Member of this House—I mean Lord Beaverbrook. He was speaking on this point, and he said that the Government had taken over oils and fats one day and made them buy them back the next at a profit of £95,000. Where is that £95,000? The Secretary of the Treasury smiles, but is it not a business question? The same thing has been done in tea. Tea was taken over from firms at 8d. and 9d. a lb. and immediately sold back to those firms at 2s. 4d., including the duty, or Is. 4d. without the duty. Is there a profit being made on these things, and, if so, what is the profit? I do think we might have heard from the Chancellor of the Exchequer the result of some of the great trading Commissions we have set up. Turning again to the speech of Lord Leverhulme, he said that his own ships were taken over, and after they were taken over he was ordered to manage them, and he was managing them the same to-day as a year before; but whereas a year before the freight for palm oil from West Africa was 52s. 6d., to-day the Government were charging him 140s., although it was carried in his. own ship and managed by himself. Ground nuts which were 44s. are now 240s. I only mention those figures to ask, Is there a profit being-made? This would look to business men as if a huge profit were being realised. Where is it? There must be a profit or a loss, and we ought to hear to what extent it is a profit or a loss. We have a number of these great Commissions set up the Wheat Commission, the Commission dealing with ships, the Sugar Commission.
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    We never had a Report of the Sugar Commission. Without going into details with regard to any of them, we ought to have had a statement as to the financial results of the trading.
    We had one most remarkable statement in regard to the matter. The Chancellor of the Exchequer told us there was something like £375,000,000 worth of commodities, as I understood him, which remained to be realised, and lie believed that they would all be realised in full. I quite believe it. He includes in that huge stock every kind of commodity to which I have referred. The trade has been going on day by day, and I do think the finances of the country are drifting into a strange way owing to this fact. The Chancellor of the Exchequer himself said that nearly everything is controlled. Is it being controlled at a profit or a loss, and what sort of a figure is being realised? I do think on an occasion like this, when we go into niggling taxes of £600,000, like the tax on watches, we might in these great matters, which, owing to the rise of prices that always accompany Government control, are placing heavy burdens on the people, have some explanation given with regard to the actual result.
    The only other matter I wish to mention has been already anticipated. I do think more attention ought to be given to this grave matter of economy. We have had some strange examples of the different forms in which the extravagance of the Government appears. The presence of the under-Secretary of State for War reminds me that he made a most gay—I might say—and buoyant speech when introducing the Army Estimates, and in that speech he mentioned one fact which appealed to me, and which has been running in my mind ever since. He was speaking of what the War Office is. I think it ought to be a fighting establishment to-day. He said it was a great trading concern—the greatest trading concern in wool in the world. We want it to be a war machine to defeat the Germans. After alluding to wool and one or two other things, the Under-Secretary said he had bought 84,000,000 lbs. of tea. It never occurred to him to ask what that was wanted for. Supposing there were 6,000,000 men in the Army, they only wanted 36,000,000 lbs. Why buy twice as much of every commodity as is necessary? I do think the Chancellor of the Exchequer ought to pay attention to the plea from every side of the House to exercise economy. I believe there are a

    747
    good many business men in this country who believe that 20 per cent. could be saved on national expenditure by economy. If the expenditure is something like £2,500,000,000, that in itself would mean £500,000,000.
    In America, our great Ally, to whom the Chancellor of the Exchequer paid a very well-deserved tribute for the help they have given us, pursues an entirely different method from what our Government does. They have set up a great business Requirements Board, and every commodity they want, whether for the Army, the Navy, or any other Department, is, in the most economical way, handled through this Board. That is a contrast to our system of turning all the various administrative Departments into great trading concerns, and I believe the Americans have set such an example in this matter that, even at this stage of the War, it would be well for us to follow, and to put a competent business man at the head of the Department, instead of having various Departments competing one with another and putting up prices. I am sure the Chancellor of the Exchequer will take these criticisms in good part, and the details to which I have alluded can be very well opened up in Committee. I think perhaps there will be a general feeling of relief that his proposals are not worse than they are, and that he is letting the country off so easily. There certainly will a great feeling of rejoicing that the country, as shown by the figures he has given, is so well able to bear the burdens placed upon it.
    Mr. PETO: During the last month the country has, on the military side, passed through many days of anxiety. This House last week was engaged on the serious question of manpower, and throughout the month we have had to weigh the various factors which go towards the conduct of the War. Although the Chancellor of the Exchequer has received several congratulations already to-day on the manner and the matter of his Budget Statement, no one who has addressed the Committee, I think, has yet quite realised the value of that statement. I regard it. at any rate, as a very big War asset that we have been able to hear from the Chancellor of the Exchequer, without any revolutionary proposal at all, without any doubt having been cast upon his statement from any quarter of the House, that we
    748
    are not only financially sound to-day, but with a small additional taxation—because it is small in relation to the huge issues that are involved—he can see his way, and the country can rest assured, that our finances are not only perfectly safe, but that they are perfectly sound for the whole of the coming year if the War lasts till the end of it. I think that, in spite of all our anxieties on the question of men, and minor anxieties in the matter of munitions of war, it must be an enormous advantage to the country as a whole to feel that in this time of stress, at any rate, on the money question—which I do not know even comes second to men, because you cannot have men without the money—all provisions are made to carry on the War for a further year. Not only that, but we can see quite clearly from the nature of the increased taxation that if it comes to dealing with the War another year we shall still be sound and still be able to carry on the War. I think that the contrast which the Chancellor of the Exchequer gave us with the financial arrangements—if you can call them financial arrangements at all—that are being made by our principal enemy, the German Government, to carry on the War from their side, give us an additional reason for confidence and will go a great way to hearten our people right through the War. I do not agree with the right hon. Gentleman the Member for Derby (Mr. Thomas) in his view that the proportion of the cost of the War that is being borne by direct taxation is not adequate. I think it is a marvellous testimony to the financial ability of the country to-day that, without any grumbling on any side whatever, we are able, in dealing with these huge figures of war expenditure, to meet by current revenue in tan present year over 28 per cent. of the total estimated cost of the War, and taking the War right through the percentage will be almost 27 per cent. I think that an amazingly satisfactory figure and one upon which not only the Chancellor of the Exchequer has to I e congratulated, but the country as a whole and the taxpayers in particular.
    May I just allude to one or two of the new taxes? I should like to say a word from quite a different point of view with regard to the farmer's tax. I waited with anxiety to hear the Chancellor of the Exchequer tell us whether or not the present option to be taxed under Schedule D was to be continued. I think, without that option, the proposal suddenly

    749
    to double the Income Tax to which farmers would be liable would certainly have produced consternation if not any stronger feeling. The hon. Member for Barnsley said this question of farmers' Income Tax was not yet adequately dealt with, but, after all, before the War, I think, one-third of the rental was accepted as equivalent profits on a farm. Recently it has been put up to the equivalent of the rent, and now, at a stroke of the pen, it doubled. I think the saving provision is that farmers can still be assessed under Schedule D if they keep proper accounts, and, therefore, provided they keep proper accounts, they cannot be called upon to pay more than anybody else who is taxed on profits actually made. Therefore, there is that indirect advantage of the present proposal of the Chancellor of the Exchequer. I believe it will tend very rapidly to spread sound accountancy and sound business principles throughout the agricultural community. That alone will go a very long way to compensating individual farmers for the increased taxation they are called upon to bear. When I was farming before the War, and before the days of high prices, I found, as an amateur, or gentleman farmer, even with a very competent bailiff, that for seven years in succession I never succeeded in making a profit. I always, however, exercised my option—at that the farmer only liable to pay Income Tax upon one-third of the rent—I always exercised my option to be assessed under Schedule D, and I always produced satisfactory accounts to the Surveyor of Taxes, showing that I had made no profit at all. Therefore, under present conditions, I must say that I hope that a great many other farmers will follow the one thing which I think sound in my method, which was that, whatever loss I had, I knew exactly what the loss was, and why, having proper accounts.
    I was very pleased to hoar towards the end of the statement of the Chancellor of the Exchequer what he said in regard to the luxury taxes. It has exercised many people a good deal during the past year to consider certain expenditure. It is patent to everybody that there is, and has been, a vast amount of wholly unnecessary expenditure, not confined to only one class, not expenditure in the main by people who before the War were in receipt of large incomes—because we must be just-I believe in the main that the people who have been in the habit of spending fairly
    750
    large incomes have deliberately cut down their expenditure in the vast majority of cases to the very minimum of articles of luxury during the War. We know there is an old proverb which says something to the effect, "Easy won, easy spent." I dare say a good deal of the money that is earned under war conditions has to be worked for very hard. But in a great many cases—I am not now speaking of fathers of large families, or people of that sort—but of young people—wages are being earned which were in pre-war days beyond the reach of fathers of families with great responsibilities, and bigger than in any other period in our history. Naturally, those who find themselves possessed of such a large amount of money may often spend it in various sorts of wholly unnecessary expenditure. We have "turned down" the question of Premium Bonds, which, I believe, would have brought a good deal of that money from the luxury trades into the pocket of the Chancellor of the Exchequer. However, I am glad to hear the right hon. Gentleman is going to deal with the luxury trades. The ex-Chancellor of the Exchequer was rather gloomy in his remarks on this tax. He said he felt certain that he would never have made other than a complete failure of it if he himself had imposed the tax. There was, I thought, a soupcon of sarcasm in his manner when he said that the Chancellor of the Exchequer was doubtless very much cleverer, and would doubtless be able to carry the matter through. Personally, I do not believe it is at all impossible to do what the Chancellor suggests. I should like, however, to be quite clear as to his method of collecting this tax. Is it to be-a sort of ad valorem receipt stamp?
    Mr. BONAR LAWwas understood to indicate assent.
    Mr. PETO: I am glad that the right hon. Gentleman nods assent, because he did not say that a stamp was to be put upon the article purchased. The late Chancellor, I noticed, made some play upon the proposal of putting a stamp upon the article. Obviously if it is a receipt stamp, and if a transaction is not valid unless it has a proper stamp, so that the books can be inspected, I do not believe-there is any insuperable difficulty, not only in imposing the tax, but in collecting it, or at any rate an enormous percentage, probably 90 per cent., of what the Treasury will be entitled to receive. The thing will take time to work out. There

    751
    is the question of whether the tax should be imposed upon a proportion of the gross amount of the purchases, or upon the gross amount of purchases, or upon the individual article. All these questions will have to be considered, but I am certain that they can be worked out.
    That brings me to the next question. Can the right hon. Gentleman tell us when he expects to have this Order ready to be brought into force? Although the question is not quite one like increasing the duty on tobacco, or a commodity of that kind, action, I think, should be instantaneous, for, since the matter has been ventilated here. and the country knows what the Chancellor is going to do, the quicker he puts his scheme into operation the better, eke there will be a positive rush for the remaining stocks of furs and furbelows that are dear to the feminine heart, and the things will be cleared out before the Chancellor of the Exchequer gets there to get his 2d. in the Is. or his 3s. 4d. in the £. I trust that his Commission will sit night, and day with wet towels round their heads, with the Chancellor of the Exchequer behind them, insisting on them bringing in their report—good, bad, or indifferent—as early as possible, so that his officials may get to work in the shortest possible space of time.
    I want to make one allusion to what was said by the right hon. Gentleman the Member for Monmouth. He gave us a somewhat rather gloomy foreboding, at the end of his speech, of the impossibility that we should have anything like our present field of revenue in post-war conditions. He used the Income Tax average of three years, and inquired if you could always be sure that there would be anything like the same conditions for any length of time, even after the tide has turned. I do not for a moment share his views. To my mind, the Chancellor of the Exchequer made an absolutely sound point that these huge figures of revenue, as well as other things, are largely due to what he termed the inflation of prices. That is undoubted. But will the present inflation of prices disappear suddenly the moment the War is at an end? I do not think anybody holds that view. We shall have a gradual diminution. We hope, indeed, that prices of all sorts of things, which are now excessive, and due to want of production, and to a greater part of the civilised world having
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    their manhood and many of their women engaged in various branches of the War, will fall Against that, however, do let us consider, before we give way to any gloomy forebodings as to the field of revenue for taxation in the future, what are the conditions under which we receive this huge revenue to-day.
    As to imports, to which the late Chancellor, the right hon. Member for Mon-mouth, referred, the marvel is that we import anything, considering the difficulty to get things carried here—or export anything, seeing how much of our shipping and transport generally is engaged upon War work. Consider the enormous demand that we know there will be for every kind of production, as well as for the business of the country generally, when those concerned are at liberty to turn their minds and energies to it! I believe after the War we shall have a gradual diminution in prices in many directions, and that in that- way we shall get a diminution in the figures with which we have to deal; but I believe also that a sound and solid basis for the collection of revenue will be the lot of the post-war Chancellor, who will be in a much more enviable position than that enjoyed by the hon. Gentleman to-day. May I just congratulate the Chancellor upon the lucidity of his statement? We are having difficult times in many respects. The right hon. Gentleman has, however, made a statement to-day that, I feel certain, will bring confidence to every friend of Great Britain and the Empire, and I trust, when they read his contrast of our finances with theirs, something like consternation to the hearts of our opponents in Germany.
    Colonel W. THORNE: Like the hon. Gentleman who has preceded me: I should like to be permitted to congratulate the Chancellor of the Exchequer on the clear statement he has made this afternoon. Every Member of the House, I think, will feel satisfied with the clear way he has put forward his proposals. Many of as no doubt will criticise the methods in which he proposes to raise the money, but I am one of those who believe that-any of us, placed in the position of thy right hon. Gentleman, would find himself having a difficult job to raise the huge sums of money required. We all have to remember that during the past twelve months Members on both sides of the House have been making demands on the

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    Chancellor for increased separation allowances for soldiers and sailors; demands also for more generous pensions to those who have taken part in the colossal struggle in which we are engaged, it is perfectly certain that if we make these demands on the Exchequer that when the time arrives some of us will have to pay the piper. I have not had the privilege of reading the detailed statement to which my right hon. Friend the Member for Islington referred a few minutes ago. I have no doubt it is obtainable, but, unfortunately, I have not been in a position to obtain one; therefore, I have not been in a position to follow in more detail the statement made by the Chancellor of the Exchequer. I hope, however, that the Chancellor has made provision in one direction that is, in the direction of allowing a good sum of money to be placed at the disposal of the Education Department, when the President brings forward, shortly, I hope, his proposals. I want to give the President warning that, in my representative capacity, we in West Ham will have to make a big demand upon the Treasury. Whether or not we shall be successful in piercing open the doors of the Treasury and obtaining what we require remains to be seen, but our burden is becoming intolerable. For West Ham the figure is 3s. 6d. in the £. Therefore, we shall have to demand some financial assistance from the Chancellor of the Exchequer.
    A little while ago an hon. Member on my left, and latterly the hon. Gentleman who has just sat down, was talking about the huge wages some wage earners are receiving in different parts of the country. I want to remind both hon. Gentlemen that the extra wages the working classes are receiving during the War—no doubt the State has to bear a somewhat heavier burden—is not more than 20s. over and above pre-war rates. There are thousands upon thousands of the working classes in this country who have not received it. It is quite true to say that where the workers are on piecework high wages are being paid. That, however, is a benefit to the State. I do not see how anybody should complain in that direction. The Chancellor of the Exchequer probably knows the reason why I have got on my feet this afternoon. It is because I am not altogether satisfied with his statement in respect of the imposition of the War Profits Excess Tax. I am perfectly convinced that
    754
    when the wage earners in all parts of the country to-morrow read the Budget statement of the right hon. Gentleman, and find that the Excess Profits Duties are going to remain exactly the same as for the year 1917–18, that they will be very much disappointed. I am quite sure it will cause a great deal of discontent. When this tax was first put on I think the then Chancellor of the Exchequer budgetted for something like £80,000,000. In the result he realised, I think, £120,000,000. The percentage then was 60 per cert. The Chancellor of the Exchequer budgetted for £200,000,000,. with a percentage of 80. He realised £220,000,000. For 15)18–19 the right hon. Gentleman anticipates that he is going to obtain something like £300,000,000. As my calculations go, I make out that 1 per cent. will bring in something like £3,000,000. Therefore, if the Chancellor is going U. obtain £300,000,000 by having an 80 per cent. Excess Profits Tax it simply means that in the other 20 per cent. he is putting into the pockets of those who should pay-it something like £90,000,000 or £70,000,000 over and above their pre-war profits. I think that is absolutely wrong. The position I have taken up during the whole of this War—and I think I have done my little bit in trying to help the Government in every direction, both by obtaining men and in other ways—is that I do not think any employer ought to be in a position to make more profits than in pre-war days, and everybody should be satisfied with obtaining the profits they got in the old days without being in a position to make huge profits, which no doubt they arc making at the present time. If the Chancellor of the Exchequer had increased the Excess Profits Tax from 80 to 90 per cent. he would have obtained another £12,000,000, and then he might have taken off one or two paltry taxes like the Match Tax, which is very objectionable. I am certain that in consequence of the Government not increasing the Excess Profits Tax it will give great dissatisfaction in all parts of the country.
    One or two deputations have waited upon the Chancellor of the Exchequer from the Miners' Federation and the Parliamentary Committee of the Trades Union Congress asking him to conscript wealth. As you are conscripting everybody under the Man-Power Bill, there will be a greater demand now to conscript wealth, which will mean taking over the whole of the profits made by employers, and it will only

    755
    increase the difficulties not to take a higher percentage of the excess profits. I notice that it has been proposed to raise more Revenue by indirect taxation, and in this way you are only inflicting a very heavy burden on the consumer. In the case of the Income Tax, I do not think anybody can put that upon the shoulders of the consumer, but indirect methods of taxation always come back upon the consumer. You are going to take by taxation on sugar £13,000,000 extra, The tax is something like 200 per cent. already, and by the increase which you are now proposing it will make a tax of 300 per cent. on this article. No other article of consumption has been increased by such a percentage. Then there is the Tobacco Tax. The Chancellor of the Exchequer may think that the working classes will take these things very lightly, but what will happen in consequence of paying more taxation upon sugar and tobacco? There will be a universal demand for higher wages to enable the people to pay this increase in direct taxation.
    Then there is the Spirit and Beer Tax, which amounts to something like £27,000,000. I know in this case what the Chancellor of the Exchequer is aiming at is to make the brewers and the distillers pay, but they will find means of passing it on to the consumer, whatever extra amount they have to pay owing to the Chancellor of the Exchequer. Then there is the extra postage. Many men will not complain at all, but it will be a great hardship upon the wives of soldiers and sailors, and there may be a possibility of helping them by making an arrangement between the Post Office and the wives of soldiers and sailors to have one letter per week franked, and this would relieve them in that particular, although I admit that there may be some difficulties in the way. There is one tax on which we are all agreed, and in regard to which there is no difficulty in gaining money from it, and that is a tax upon luxuries. As soon as the Chancellor of the Exchequer can fix up what is a luxury, then the rest is easy. It ought to be quite easy to fix what a luxury is, and when you have agreed upon that, the method of putting a stamp of 2d. oils, or so upon the article will not cost much in collection, because the shopkeeper will be able to go to the Post Office and obtain these stamps in the same way as employers get insurance stamps. They
    756
    get their stamps, and on they go when the goods are purchased, and people who do not observe this rule must be penalized very heavily.
    I regret that there is not going to be an increase on the Death Duties. I am quite sure thousands of people, in view of the heavy burdens we are bearing now, and the huge revenue that has to be obtained, anticipated that the Death Duties were going to be increased. I think that is one of the best methods of raising revenue, because it is a tax one does not feel. No doubt a person will feel aggrieved if he does not receive the full amount, but you cannot complain of not having what you never got. You cannot complain of a tax being put on in that direction, because you do not feel it in the same way as if you had the property actually in your possession. In the case of property left you would receive it that much less through the Death Duties, and that would raise a few million pounds. There is another method, although it may be very unpopular. Suppose the Chancellor of the Exchequer was to take 1 per cent. on all War Loans—
    Mr. J. HENDERSON: That would not be an honourable thing to do.
    Colonel THORNE: It was done when Mr. Goschen was Chancellor of the Exchequer.
    Mr. HENDERSON: But the interest was reduced.
    Colonel THORNE: It might not be a popular method—
    Mr. PETO: It might be popular, but it would be very immoral.
    Colonel THORNE: It is no more immoral than making huge profits; and if you reduce your expenditure in this way it is equivalent to raising revenue. By this means the people who have these huge incomes would be hit harder than the rank and file of the working classes. When this War is over something of that kind will have to be done, and I should not be surprised if some future Chancellor of the Exchequer, when considering the question of expenditure, will have to adopt that method. I am firmly convinced that some of the taxes in this Budget will be very unpopular. I am very sorry the Chancellor of the Exchequer could not see his way to put 10 per cent. more on the Excess Profits Tax. The working classes will say, "You are taxing us more, and you ore allowing

    757
    these other wealthy people to go without taking any more of their excess profits." I know you are raising the Income Tax, the Super-tax, and the ordinary Income Tax. I know also that efforts have been made to increase the limit allowed for small incomes. In face of the huge amount of money which the Chancellor of the Exchequer has to obtain, I do not think the working classes can be expected to receive further relief in that direction. Those of us who have to go about in our constituencies will be sure to be tackled by the working classes with regard to the sugar and the Tobacco Tax, and they will want to know what attitude we take up. My attitude will be the same as the one I have taken up during the last four years. I have made up my mind to help the Government in every possible way, and I do not care who is on the Treasury Bench, I am going to do my best to help them in the great struggle with which they are faced.
    Sir J. D. REES: The Chancellor of the Exchequer is to be congratulated not only on the equal distribution of taxation, but upon having resisted the clamour to which he has been exposed to increase taxation and to raise more by taxes and less by debt. Those who blame him in this respect have, perhaps, unwittingly entirely misrepresented what happened in the Napoleonic Wars. The real fact is that it took twenty years before a rise in taxation relative to the then revenue was imposed equal to the relative increase imposed now in five years, in point of fact, there has never been any precedent for such a rapid increase in tax revenue as has been afforded now in this country. I congratulate the right hon. Gentleman on his Budget as a whole, but in the distribution of burdens he has been very unfair—I am afraid severe—upon one fluid, namely, beer. That popular and health-giving fluid will have to be very much stronger than it is now before it can bear the burden the right hon. Gentleman is placing upon it. With that single exception, I heartily congratulate the right hon. Gentleman, and I think he was right in resisting the temptation to which he has been exposed by the right hon. Member for Derby (Air. Thomas) and the hon. and gallant Member (Colonel Thorne) who preceded me.
    With regard to the Death Duties, they are so severe that a prudent man can only by postponing his decease until he can
    758
    die with less disastrous results to his his family. To increase the present duty would be to pile Pelion on Ossa, and totally unfair to a class which is bled pretty white by taxation as it is. The Chancellor of the Exchequer has, in not resorting to the conventional practice of raising the whole extra revenue by taking it from the Income Taxpayer, treated that much-abused individual as if he were one of God's creatures entitled to some consideration. For my part I think the extra Is. placed on the Income Tax and Super tax is fair enough. Everybody must try and pay to the utmost. Nevertheless, it is quite as much as these payers should be asked to pay. With regard to the remarks of the last speaker on the Death Duties, I do not know whether he forgot at the moment that these duties are a tax upon capital of the worst possible kind, and that they go far to destroy the capital of the country, and particularly that part of the capital on which the people for whom the hon. and gallant Member usually speaks arc dependent for their wage fund. I thank the Chancellor of the Exchequer for letting tea alone. I think that there he exercised a wise discretion. I raise no objection to the increase on postage, as it may reduce the number of letters received by a particularly overburdened section of the community, which I need not particularise, but members of which I see all around me. I would ask the Chancellor of the Exchequer, since he has shown some bowels of compassion for the Income Tax payer, whether he will not go a step further and arrange that the Super tax shall be paid on the net and not on the gross? It certainly is adding, I will not say insult to injury, but it is severely trying to the man who pays the tax, when he has made up the list of his actual receipts for the past year, upon which he is going to be taxed in the current year, he is not allowed to deduct the Income Tax which he has paid, but actually has to pay Super-tax upon it. I think that is an injustice, and I beg the right hon. Gentleman to consider the point.
    There is also the question of allowing in taxation for the redemption of mining capital. It has been held by the Income Tax authorities that, in regard to excess profits, allowance should be made for amortisation of capital, and if that principle is good in regard to the Excess Profits Tax, surely it is equally good in respect of Income Tax. I have still to learn in what respect you can dif-

    759
    ferentiate between them in dealing with a wasting asset like a mine. This is a question of the utmost importance, and I venture to urge it upon the light lion. Gentleman's attention. I thank him for what he said in favour of those who pay double Income Tax. What he said was equitable and just, and it shows a proper appreciation of the very great hardships under which those who pay this double Income Tax labour. I want to ask him if he will consider whether that cannot be done in respect of this double Income Tax which has been done in respect of excess profits under like circumstances. Cannot it be arranged that it shall be collected by the country which charges the highest rate, the allocation between the two countries concerned being subsequently made? I can tell the right hon. Gentleman there are companies still closing down in this country and retreating to the Continent or to the Colonies because of the incidence of this tax which, in certain cases, comes to as much as 16s. in the £. This one cannot call taxation; a mild description of it is confiscation. I can quite realise the difficulty of relinquishing anything that brings in money at this moment, but the right hon. Gentleman has to consider those who are poor and have no comforter, and I do ask him to place the payer of the double Income Tax in the category of those, and even, at the eleventh hour, to do something to mitigate their lot.
    I am aware that, in accordance with salutary custom, it is not usual on the day of the introduction of the Budget to descend into any detail, but I hope I may be forgiven for asking the Chancellor of the Exchequer if he will consider the extreme importance of altering the incidence of the tax on entertainments, particularly as it concerns cinematographs. In the last few months circumstances have placed me in a position to visit a great, many cinema theatres and to see something of the working of that business which day by day is increasing in popularity and importance in this country. I never saw anywhere anything to which anybody could object either in England, Scotland, or Ireland. I found everywhere that these businesses were well managed and popular, and I felt that they were doing a valuable educational work. They are very hard hit indeed, not by the amount of the tax, but by its incidence. They are about, I believe, to interview
    760
    the Chancellor of the Exchequer asking: him so to arrange the incidence as to allow them to fit it in with their industry, and while giving him no less than he now gets, but probably more, yet providing against the necessity for closing some of the less prosperous of those valuable institutions which otherwise may be the result. I may perhaps be allowed to go so far as to say that the commodities which are required for carrying on these entertainments have increased in cost from 25 to 200 per cent. All they want is a different gradation. I will not weary the Committee at this stage with details, and so I simply take this, the first opportunity that offers, to urge the Chancellor of the Exchequer, not to lose any money, but to assist a most valuable educational industry which provides entertainment for soldiers from the front, who are enormously interested in it. When the deputation reaches the right hon. Gentleman, I hope he will take into his kindly consideration the question of altering the incidence in the manner they will indicate to him. I am almost an expert in this subject now, and I can assure the right hon. Gentleman it is worth doing, and if he will meet the wishes of those who have been authorised to represent this trade by a deputation he will not lose but gain more money, and will thus be rewarded for his action.
    I only mentioned in passing the tax i upon beer and spirits. I must say I think it is excessive. The revolution in Russia and the evils which have followed in its train, and are still multiplying, were due, I believe, quite as much—as is known to those who have studied the question, and I have spent some time in Russia—quite as much to the prohibition of the spirit traffic, which was far more (instrumental in producing the Russian revolution, than the faults of the Romanoffs, who were not half so had as is generally supposed. In France it is admitted that the national light wine is a great advantage to the consumer. It is supplied by the State, and there is no suggestion that the traffic in it is immoral and it is admitted it is good for the troops. Why, at a time like this, are we going to put such a tax on beer, our national drink, in itself a good drink, as must raise the already tremendously high price, so that those accustomed to have beer, and who are better for having it, will be unable to get it. I think this is a

    761
    question which should be reconsidered. The tax upon both spirits and beer has been doubled.
    The Chancellor of the Exchequer rather apologised for introducing the Match Tax. It is only to produce £600,000; but I think this £600,000 is very important. Chancellors of the Exchequer in general are too apt to neglect small sources of revenue. I have ventured to suggest one tax which could be very easily collected, and which at the same time would bring in a large sum of money. Right along the South Coast, along from Bournemouth to Brighton, and in other parts of England, there ate long rows of symmetrical houses, each having in addition to a number some special name. Why should not the occupants pay for that name? They would gladly pay a tax, surely? The vanity which makes them desire a special name for their house should also be a sufficient incentive to induce them to pay a tax. Look at the comfort of addressing a letter from "Chatsworth," the splendour of writing from "Sandringham." Is it not worth while paying for? Or look at the pleasure of addressing a letter to "Mon Abri" or "Mon Répos?" What an advantage it is to call one's house a chalet when it is in the middle of a dusty street? Surely people arc willing to pay for that privilege! This is a War Session. War dwarfs all other subjects, and it ought to. I ask the Chancellor of the Exchequer to consider whether it will not conduce to the raising of revenue, and tend to peace and contentment, if the business of the Session is con fined to the provision of men and money for the War, and if all other subjects are excluded, especially as such subjects nearly always involve increased expenditure? Let those other subjects be withdrawn from the attention of Parliament at a time when every man and woman in the country has only one object in view, and that is to raise men and money (o defeat our enemy and to bring about peace.
    8.0 P.M.
    Mr. DUNDAS WHITE: The Chancellor of the Exchequer is to be congratulated, not only on his statement, but on the fact that he has been able to put before the Committee a financial and economic statement of the condition of things in this country which I feel sure will hearten the people throughout the country, which will hearten our gallant Allies, and which will correspondingly discourage our enemies. As one who listened with great care to the
    762
    statement, I should like, if I may, to join in the general expressions which have been used congratulating the right hon. Gentleman on the extremely clear and lucid way In which lie set forth a Budget dealing with these unprecedented times, a Budget which in itself may be regarded as absolutely a record Budget. When, apart from the manner of the Budget, we come to the matter of the Budget, before I say a few words about various taxes I hope I may be allowed, as several hon. Friends of mine have suggested taxes which might have been imposed but which have not been imposed, to express the regret which some of my colleagues and I feel that the Chancellor has not been able to make a new departure, based on the principle that those who hold the land of this country ought to be called upon to make a special contribution to its defence. That is a principle which we have put forward from time to time, and we base that principle on economic grounds, because the peculiar characteristic of the land is that it is not the result of any person's industry, but that it has been placed there by nature, and the value which should be the basis of the taxation is the value which results not from the industry of any particular person, but from the presence and activity and competitive demands of the community as a whole. That, therefore, in our view, is a communal value, and it ought to be singled out as a special subject for taxation, particularly in a time like this, when we are defending our land at such great cost of life and finance. Nor are there now the difficulties in the way of this which there would have been some time back. We have had a valuation of the land of Great Britain at least practically completed under the Finance Act, 1910-11, which was brought in by the present Prime Minister. This valuation has been completed, but unfortunately the figures which we would like to have—the aggregate figures—arc not available. Certain figures are available. We have the aggregate figures for what is called the total value of the land, but the total value of the land is a highly technical expression which does not cover the full value of a property as it stands, but the full value of that property, less fixed charges, including rent charges, and in Scotland feu duties, and various other things. However, it appears from Reports of the Inland Revenue Commissioners that up to the

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    31st of March, 1916, the aggregate of the total values exceeded £5,000,000,000, a very large sum indeed, 'What we really want to get at, and what there are the present data for, although they never seem to have been added up, are two things—first, what are the gross, values of the properties in the United Kingdom; and, second, what is termed their full site values. From the figures to which I have referred one may be inclined to suggest that the gross values are probably somewhere in the neighbourhood of £7,000,000,000, and the full site values probably in the neighbourhood of £3,000,000,000. Those are very large sums indeed, but, as the Chancellor knows, these values do not include mineral values, and it is rather difficult to find what the mineral values are. From an examination of the census of production, and various other figures, however, I am inclined on the whole- to think that if the value of the mineral rights—speaking generally, whether the minerals are being worked or not—were added, we should add to these figures something like one-third. In other words, I think the value of the land alone would be found to come to considerably over £4,000,000,000. There is a very large source of revenue which might be taxed, and which I believe will have to be taxed before very long.
    I was surprised, in view of these figures, that the Chancellor of the Exchequer, in answer to a question by my lion. Friend the Member for Hanley (Mr. Outhwaite), suggested that there was no hope of getting money by that means, and that his view was due to a lack of belief that money can be got from that source. I venture to think that money can be got from that source, and that it is highly expedient that we should get it. One reason particularly why I would like to sec money got from that source is that all these-various taxes which arc now being proposed are in some sense or another taxes on industry, and as such they inns! necessarily do something to hamper production and industry in this country. A tax of this nature would not have that effect. Far from hampering industry, it would rather help industry, and in particular it would help production. If you take the case of land that is not being properly used, there is abundant evidence that a great deal is not being properly used by the very fact that both under the Defence of the Realm Act and under various other
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    measures. Departments have taken power to enter compulsorily on land and insist that it shall be put to a better use than that to which it is being put. These powers have been powers of compulsory interference. They have taken a great deal of machinery, and are unsatisfactory because naturally selection is made. One is taken and another left. That result would be very much better accomplished by general economic pressure, if those who have the land, and particularly those who have it and are not using it, had to pay according to its true value whether they were using it or not If they had to do that there would be much less need for these special measures to which I have referred, and it is particularly important that this economic pressure should be brought to bear because of the growing importance every day of promoting the development of the cultivation of food in this country as it has never been cultivated before. Of course, I know that proposals of this kind make the cry go forth that you may discourage the farmers. We do not want to discourage the farmers. The people we want particularly to deal with are those who are playing the dog-in-the-manger policy, and so long as this taxation is limited lo the value, of the land alone there is no fear of discouraging industry. After all, people sow in order that they may reap, they build in order that they may have houses, and what we want to do, and what we require to do, is to secure them in the results of their industry.
    I myself welcome these proposals which the Chancellor has made with reference to the taxation of farmers. I think there was a very great deal in what he said about the desirability on grounds of principle of bringing all farmers under Schedule D, and so requiring them to keep accounts. I think there would not have, been so much difficulty as ho suggested, because, after all, the officials of the Inland Revenue—as they do in many other cases—could have put the figures at what they thought right, and then left the farmer to appeal. At the same time, perhaps this is the Course of least resistance he has taken, to say that in paying on his rent under Schedule B a farmer shall pay on double that Schedule while retaining his option of stating his accounts under Schedule D and being charged upon that. There is. however, one matter which the Chancellor did not mention in connection with that which I

    765
    think is worthy of notice. It is of particular importance in view of the fact that the Super-tax is now to be lowered to £2,000 a year. I think there are a good many farmers who under that new condition would be paying Super-tax if they were being taxed under Schedule D, whore as by being taxed under the double of Schedule B they may still escape. That is a matter that relates not merely to Income Tax, but to Super-tax also, and I hope the right hon. Gentleman will bear that in mind. Before I pass to another tax, there is a further matter in this connection which I think ought to be mentioned. There ought to have been some provision to tax some of the profits which are made by landlords who arc selling their land under the present high prices, and who have in that way reaped what may fairly be called an excess profit due to war conditions. There can be no question about it that the increased price of food and the guarantees under the Corn Production Bill have sent up the selling value of land very considerably, and that very considerable sums have been realised from that. It therefore seems to me that some arrangement ought to have been made, whereby some of these profits are caught for the public Exchequer.
    There is another matter in which, without imposing any fresh taxation, the Chancellor of the Exchequer could obtain—and in my opinion ought to obtain—rather more than £1,500,000 a year, namely, by declining to renew the Agricultural Rates Act. I would remind my hon. Friend the Secretary to the Treasury that that Act was passed in 1806, an Act under which for practical purposes the taxpayers of this country pay half the rates on agricultural land. The year 1893 was the last year for which annual prices were available. In the year 1895 the average price of wheat per quarter was 23s. Id. In 1917—that is, last year—the average price of wheat per quarter was 75s. 9d. That is an enormous advance. The price has risen to something like three times what it was before, and the cost of production has not gone up anything like correspondingly. That may be taken as an instance of the way in which the profits of agriculture have increased since this Act was passed, and particularly have increased during the War, and, seeing that the farming community have never been better off than they are now, I think it high time that we ceased to continue the doles under this
    766
    Agricultural Rates Act and left the agricultural community to pay the rates on agricultural land. If we were to do that we would get rather more than £1,500,000 a year to relieve the burden on the over pressed taxpayers who incidentally are making up the profits of the agricultural community by the higher prices that they are paying for food. Closely connected with that is another matter, which I mention now because I see from the "Times" and other papers that a good deal is being said by various correspondents about tithe rent charge. Three years after the agricultural rates were imposed, the Tithe Rent Charge Rates Act was imposed in 1899 to do the same thing for the owners of tithe attached to a benefice as had been done for agricultural land. That proposition rested on absolutely no principle, because there was no economic ground for distinguishing tithe rent charge attached to a benefice from any other tithe rent charge. In any case, it was unjustified, because that Act did nothing to relieve industry. It might plausibly be argued, though I think wrongly, that the Agricultural Rates Act did help the farmer to produce. The tithe owner does nothing whatever to assist production. He is simply a charge upon the land and a charge upon the produce of other people's industry, and to ask the taxpayer to pay any part of his rates on tithe was altogether wrong. There is a new reason against it, which has arisen from war conditions. In the year the Act was passed the value of £100 tithe rent charge was under £69. Now, with the gradual rise in agricultural prices, the value is more than £109. In other words, tithe rent charge, simply due to war conditions and to the higher prices of produce, has increased by something like two-thirds. Surely this is a clear case in which this dole ought to be discontinued, and the owner of tithe rent charge, even if it be attached to a benefice, ought to pay his own rates in full.
    My hon. Friend opposite (Sir J D Rees) suggested that a tax should be placed upon the use of fancy names for houses. I do not know whether or not that would be a satisfactory tax, but I would like to suggest to the Post Office that they should place an obligation upon every householder throughout the whole of the country, whether he uses the name of his house or not, to put up the number of his house in a very plain way. There are many places where the ordinary person

    767
    going about has great difficulty in finding the number. That difficulty must be very great from the postal point of view, and I am sure that the labour of the postal servants who are doing such excellent work during this War would be lightened if the Post Office, were to give out that thorn might be delay in the delivery of letters if the number of the road or street were not clearly put up. It would be found, I think, to be a considerable service in lightening their burdens.
    I am inclined to think that the increased taxation on cheques is a very undesirable proposal. After all, they are a most important part of the mechanism of exchange, and I should rather like to see cheques relieved from taxation. It has been pointed out that with the duty on cheques increased to 2d. people probably will not make payments so often and that the cheques will be for larger amounts; but I would also point out that any interference with the cheque system interferes to a very considerable extent with the mechanism of exchange. During this War we have suffered from the difficulties of the mechanism of exchange, and I think the Chancellor of the Exchequer was, perhaps, taking a mistaken view when he spoke of the lightening of the labours of the banks. It might possibly lighten their labours if you were to reduce tits quantity of cheques by one-fourth, but the benefit would be more than counterbalanced by the disadvantages in other respects. It is of the utmost importance to a community like ours that we should have the best and readiest methods for the giving and exchanging of credit. One effect of this proposal will probably be to increase the demand for Treasury notes. One of the effects of the development of Treasury notes, which are not subject to Stamp Duty, has been that to sonic extent they have taken the place of £1 postal orders, which are subject by poundage charges. It the tax on cheques is raised to 2d., we shall probably find that it will mean a greater demand for Treasury notes. Those currency notes are national credit, and certain reserves will have to be held against them. Therefore, I think it is most desirable, from the financial point of view, that every opportunity should be given for the direct clearing of obligations by way of cheques, which can be set off against one another, instead of increasing the demand for currency notes and the demand for the reserves which must be held
    768
    against them. What I say seems to me to obtain additional strength from the consideration that this country is to a very large extent the monetary centre of the world. London not only deals with exchange, but cheques also are very largely drawn upon London, and I think the Chancellor of the Exchequer would be well advised if lie would take some further advice with reference to this increase in the taxation on cheques, because I believe its effect, indirect as well as direct, will be to do considerably more harm than good.
    The amount of our annual expenditure and the necessity for this enormous taxation to meet it are beginning to open the eyes of the people to certain fundamental questions as to whether our taxation is on as sound a basis as it ought to be. those questions are now receiving far more careful attention, not only from those who are regarded or who regard themselves as financial experts, but by the masses of the people than they have yet done, and I believe that will be all to the good. Those taxes arc by no means ideal. We all appreciate the difficulties in which the Chancellor of the Exchequer is placed and I for one, while I have offered certain criticisms of the taxes, and while I have suggested a mode of taxation which appears to me to be of the very first importance in this country, can assure him that, as in other matters, the Government will receive my general support in the proposals which have been set forth to-day.
    Sir R. COOPER: so far as the proposals of the Chancellor of the Exchequer go having regard to the circumstances under which they have been brought forward, I am sure that they will be received with general approval through out the country, and I feel that the right hon. Gentleman has discharged a very unenviable task in an extremely able manner. I want to submit to the Joint Financial Secretary to the Treasury one or two points with regard to the position of British industry and the incidence of taxation. The Chancellor of the Exchequer this afternoon spoke very emphatically of the necessity of the Government at all times having regard to the future position in which British industry will stand when the War is over. There are two matters to which I would ask the Treasury to pay particular attention, because within my own experience there is growing up at the present

    769
    time a very difficult situation, particularly with regard to firms which are engaged in making materials which are not war materials. Those are really the businesses upon which, when the War comes to a conclusion, this country will have to rely first and foremost for securing a large share of the overseas trade in the scramble that is bound to arise when peace has been declared. The Chancellor of the Exchequer further said this afternoon that, supposing the War terminated at the end of the present financial year, so far as he could calculate the country would require a Budget of somewhere about £650,000,000 a year, and that when the War is over and the whole of the circumstances have changed it will come on the older industries and not on those engaged particularly with war materials. It is generally upon the production of goods which are not war goods, and which will be wanted at home and abroad when the War is over, that the Chancellor of the Exchequer and the country will mainly, if not entirely, depend for raising the enormous Budgets which I suppose we have to face for the rest of our natural lives.
    The, first point I desire to put is this: The whole basis of British taxation is that you should tax people according to their ability to pay. I do not for a moment suggest that, as a broad line, that is not generally followed by His Majesty's Government, but when taxes were comparatively low it was more true than it is to-day. Now that taxes are getting comparatively very heavy, the ability of one set of people in this country to pay the taxes is entirely altered. If I may, by way of illustration, make the point clear to my hon. Friend, I would take the extreme case, but a simple one, of two people, each of whom has an income of £20,000 a year. If the first person derives that income from gilt-edged securities, and if the Government takes by way of Super-tax and Income Tax 19s. in the£it still leaves that man with £l,000, which is a not inconsiderable amount upon which a person and his family can exist. If you go to the second man, who also has an income of £20,000, but in his case it is derived entirely from industry and from no other source, a tax of only 7s. 6d. in the £or thereabouts may be sufficient, under the difficult circumstances which exist to-day, to drive him into a state of bankruptcy. My hon. Friend will recognise that those industries which are not
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    producing war material had to raise last year by loans or additional capital an amount equal to about one-fourth of their total capital in order to keep going at all. With the heavy taxation they have to pay, even assuming that they have been able to keep up their profits, they have had to go to their banks in order to get the money wherewith to capitalise their businesses. The whole income of such people—there are very many of them in this country—is derived from industry. They have to pay their capital expenses during the War, and loans from bankers have to be repaid—they are temporary mortgages—out of income. The Treasury must have regard to-day and in the future—they have not been under the necessity of doing it in the past—to the great strain under which these industries are carried on, owing to difficulties in regard to capital, the heavy taxation, and other burdens which so many of these people have to bear.
    I happen to have had the opportunity of looking into the figures of the second class of case, which is a very interesting one, and which I know represents the true state of affairs. There is quite a considerable number of people in this country—there are two or three in this House, to my knowledge—who are deriving income partly from business in this country and partly from business in the United States. As my hon. Friend probably knows, the United States has put on a considerable number of taxes, some of them very heavy indeed, and at the present time the total taxation of an average business there works out at something over 5s. in the £. The people in this country who are also carrying on an industry in the United States, whose income, at any rate as to one-half, comes from the United States, are actually being taxed, and will be taxed under the present Budget, to the extent of half their incomes, making altogether about 15s. or 16s. in the £The subject of double Income Tax was referred to by the Chancellor of the Exchequer. I think I am correct in saying that it applies only to taxes which are levied in the Colonies and in this country. I am a great believer in Colonial Preference in every possible direction, and from that point of view I am always ready to see a greater degree of licence given in these matters where the interests of the Colonies are concerned. But in view of the very heavy taxes that are being borne I want the

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    Treasury to examine whether, in the cases to which I have referred, it is in the interests of this country, if you are looking forward to the time when the War is over, to levy double taxation, amounting to 15s. or 16s. in the £, where the income is derived partly from the United States.
    I mention this with a particular object. My hon. Friend can see that, if you lay aside, for the sake of argument, the patriotism of the British people, those people who are placed in that position when the War is over will consider it is the easiest thing in the world for them to move the whole of their industry to the United States, and thereby avoid the whole of the taxation which they are paying to-day to the British Government. Having regard to that fact, and also to the fact that the majority of the people of this country are human, although we hope that they are all patriotic, is it in the interests of the country when the War is over to make it so much worth the while of a large number of industrial people in this country to remove their interests to the United States, not merely in order to escape the enormous burden of taxation, but because, as in the case I am referring to, and which I know for a fact, there are people to-day who are almost bordering on a state of insolvency owing to these double taxes? They may only be able to save themselves by removing their interests to the United States. That is a practical point which is operating in quite a large number of important industries in this country, and I hope that my hon. Friend will direct the attention of some of his officials to the matter in order that they may consider whether, looking ahead to the period which follows the War, it is not in the best interests of this country that firms who are in difficulties, or who have even been driven to a state of insolvency, should not be fairly and properly assisted in order to keep those industrial interests in this country.
    There arc one or two small points to which I should like to refer, because I have asked several questions in this House concerning them. In the first place, I am disappointed that there is not a very considerable increase in dog licences. Not that it would bring in a very large amount of money, but I understand that there are to-day far more dogs than there were before the War,
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    and to my own knowledge there is one military camp in the Midlands where, in a short period, I believe about four months, certainly under six months, 20,000 tons of food refuse went to feeding dogs which would have been, available for feedings pigs and increasing the food supply of the country. Whilst you might with every advantage to the country have very considerably increased the dog licences, you would incidentally, under conditions of war, have been doing something very considerable towards improving the food supplies of the country. The hon. and gallant Gentleman the Member for West Ham (Colonel Thorne) spoke very strongly about the Excess Profits Tax. I have a not inconsiderable experience with a very large number of firms, and I know how this tax operates. Very many people throughout the country are labouring under a great misapprehension, and I suggest that the Treasury should take an early and effective means of explaining clearly why they have not raised the 80 per cent. Excess Profits Tax to 100 per cent. It would have been one of the worst things in real practice. I was originally a wholehearted advocate of the tax, but I can state from actual knowledge of Government work that one of the worst things the Government could have done from the point of view of getting through the War, and getting at the meant of carrying on, would have been to raise that tax up to 100 per cent. I beg my hon. Friend to see that an explanation is given to the country, because the country does not understand it. Then I am disappointed that the Treasury has not yet thought it right to extend the Excess Profits Tax to farmers, doctors, and other professional men. To my own knowledge, in the case of farmers and doctors, there is as great a reason why they should pay the tax as any business man or any other individual in the country. It would be only right and equitable that they, should be brought in.
    I am extremely glad that the Chancellor of the Exchequer has determined that he is going to broaden the basis of taxation, at any rate in so far as placing roughly a 16 per cent. tax on luxuries. I did not know when I came to the House whether or not he was actually going to levy such a tax. But I think it is desirable to draw the attention to the Government to a journal published this month which deals with clothing, boots, and machinery for

    773
    making them, all articles of luxury, or the bulk of them. It is full of the most beautiful three-coloured work. It weighs 11b. 10 ozs., and costs 5d. to send by post. That is not the way you are going to win the War, by enormous expenditure on paper and printing for articles of luxury. I myself at present not only have difficulty but do not yet see how I can get certain simple printed matter done which I regard as work of national importance for the national benefit. Yet, under our system of control, there is this extraordinary document, weighing 1 lb. 10 ozs. per copy, appearing month by month—
    The DEPUTY-CHAIRMAN: Details are irrelevant, as I think the hon. Baronet must have heard me say at previous stages in the Committee to-day.
    Sir R. COOPER: I think it is in order to suggest that the Treasury might consider the advantages or otherwise of putting a tax on advertisements, at any rate during the period of the War.
    If one looks at what is known as the fiscal policy only from the point of view of taking care of our key industries when the War is over—I believe there is a large body of opinion in favour of duties to that extent—I regret that the Chancellor of the Exchequer has not taken this opportunity of making an attempt to initiate that system of taxation. Even taking that step would be a complete reversal of the policy of this country for many years past, and I am so afraid that any Government—I do not mind whether it may be a Liberal or a Unionist or any other—when the War is over and peace is being made and nations have again taken hand, will tell us, "Now, when we have the War over, and have made friends and are trying to settle down happily in the world, is not a propitious time for this country to impose taxes for fear of upsetting other countries and creating great difficulties." To-day it is perfectly easy to make a start in that direction which can be followed up just as Governments may think fit when the War is over. I am very satisfied with the line that has been taken by the Treasury. It is a very bold and courageous line, and on the whole I think they have done the right thing under the circumstances, although there are directions in which they might, to the national advantage, have extended the basis of the taxes they are levying.
    Mr. OUTHWAITE: I wish to address my remarks to the statement of the Chancellor of the Exchequer that the taxes he
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    was imposing in this Budget would give confidence to the lender that he had good security for the loan and a surety for the payment of interest. To my mind there does not seem, in the nature of the taxes, to be justification for that view, for the class of taxes which would give assurance to the lender on the vast loans we are raising would be taxes which are permanent in their nature. The lender wants to look beyond the War, and he gets no assurance out of taxes which will disappear as soon as the War is over. Consequently, I should have supposed, if that was the object of the Chancellor of the Exchequer, that he would have sought forms of taxation which would have been permanent in their nature. What is the position that we have before us represented by this Budget? In the first place, we are told by the Chancellor of the Exchequer that the National Debt at the end of this year will be approximately £8,000,000,000. That is gigantic enough in itself, but we have to take into consideration the fact that there is no guarantee, seeing the position of the Government in regard to the pursuance of the War, that the War will be over at the end of this year. That should be taken into consideration in the imposition of taxation for the purpose of making the taxes of such a permanent character that they will continue when the War is over. We may well suppose that the future debt of this country at the close of the War will be in the neighbourhood of £10,000,000,000, for we have already been told that at the end of this financial year it will be £8,000,000,000. Therefore, we shall have to raise at least £600,000,000 a year for the purpose of the service of that debt. The Chancellor of the Exchequer mentioned the pension requirements of the German Government, but I think, so far as we are concerned, we shall have to estimate for somewhere about £100,000,000 a year in that respect. We shall, therefore, have to raise as a result of the War in fresh taxation £700,000,000 per year, apart from our other requirements of £200,000,000, so that we shall have to look forward to an annual Revenue requirement of somewhere about £1,000,000,000 a year.
    I mention this in relation to the statement made by the Chancellor of the Exchequer that this Budget gives assurance to the lenders of money. What is the position which confronts us with regard

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    to this matter? He proposes to raise £850,000,000 this year, which is less than we shall have to raise after the War, but of that £850,000,000, £300,000,000 are represented by Excess Profits Taxes, which will disappear after the War. There is no assurance to the lender as to the imposition of that tax; there is only assurance during the course of the War. It would be an absolute fallacy to consider the Excess Profits Tax as a direct tax. It is nothing of the kind. It stands in the same category as the taxes of the French Revolution when they farmed out the revenue and gave to certain individuals the right to tax the community, so long as they handed over to the State a percentage of the taxes raised. We are doing the same thing. We say to those who have goods to sell, "Get as much as you can, tax the community as high as you can, and then hand over 80 per cent. of the excess profits to us, and keep 20 per cent. of the plunder for yourself." That is not direct taxation but indirect taxation of the most vicious character, and it will disappear at the end of the War. There will go £300,000,000 of your revenue, which is to give assurance to the lender that he will get his interest paid. Then there is the enormous amount raised by Income Tax. Gigantic incomes are being made out of the War. You are spending £7,000,000 a day, vast profits are being made, and the State takes levy upon this income; but when the War is over these incomes made out of the War will disappear. There will be a slump, and a considerable part of your revenue will go. Therefore, so far as the returns from the Income Tax attributable to war expenditure are concerned, they will disappear after the War, and will not be available to give assurance to the lender that his interest will be paid. That will mean that £300,000,000 of revenue from Excess Profits Tax and the large amount obtainable from Income Tax due to war expenditure will disappear. By this disappearance you will lose, perhaps, half of the revenue of £850,000,000 which you are raising. In future you may have to raise £1,000,000,000 in Revenue. Where is the security for the payment of interest on a debt of £10,000,000,000 or of £8,000,000,000 at the end of this year? There is no security. The security will disappear. Therefore, it is entirely fallacious for the Chancellor of the Exchequer to make such a statement.
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    The only security is to levy taxation on something which will remain after the War. This Budget does not give security to the lender, and it is a pity that, in this time of war enthusiasm, when people are ready to accept forms of taxation which they would not have accepted under other conditions, that we should not adopt forms of taxation which would give security against bankruptcy and repudiation. There is only one way to do that. The Chancellor of the Exchequer has exhausted all the trumpery methods of taxation and the whole stock-in-trade of pettyfogging finance, and the only way in which he can give the lender security for the payment of his interest on £10,000,000,000 is to bring into the national balance-sheet the national assets of the country—land, coal, and iron. These will remain after the War, and so long as the population remains their value remains. The Chancellor of the Exchequer told me, in reply to a question I put that there was no revenue to be got out of land. If that be so, and the Chancellor of the Exchequer in this Budget has exhausted all the possibilities of taxation and can only raise £850,000,000. about £400,000,000 of which will disappear after the War, when we shall have to raise at least £850,000,000 in revenue, possibly £1,000,000,000, then if there is no revenue to be got out of land, there is no possibility of paying interest on a National Debt of £8,000,000,000 or £10,000,000,000. I do not accept his view. I believe that if you get the owner's valuation of land, coal, and iron, as is done in Australia, for instance, you will find a taxable value of £5,000,000,000 or £6,000,000,000. We should let the lender see the possibility of his interest being paid in future by bringing these assets into the national balance-sheet. It is better to do it now, because if the view I expressed is correct—and I can see no flaw in the argument—and there is a falling away of revenue amounting to perhaps £400,000,000 after the War, and you can only in this way provide the interest on the gigantic National Debt you are building up, you will have a condition arising amounting to bankruptcy and chaos, you will have this question fought out in turmoil and industrial depression, and you will have your millions of unemployed. Are you going to wait for conditions of economic revolution? It is better that it should be done now than that in the economic revolution

    777
    you should have conditions at the same time of industrial chaos, such as there will be when you have your disbanded millions from your Armies and from your munition works in the streets of every industrial centre in the Kingdom.
    It is no use urging the Chancellor of the Exchequer to do this. We know the reason he does not do it. We know there is one interest in this country which renders no service in the War, and that is the landowning interest. There is one class in the community which, as a class, renders no service of value, but whoso power to levy tribute on the community has remained and has increased, and as regards agricultural land has enormously increased. The value of agricultural land has gone up from 50 to 100 per cent., as the sales show. This class, which reaps the benefits in a way in which it is absolutely secured, renders no service. It levies tribute on 48,000,000 people, and to secure this profit the War is being waged by men, defending what they call their country, which is really the landowners' country, at 1s. or 1s. 6d. a day. We know that this one interest is so powerful that the Chancellor of the Ex-chequer dare not touch it. He will search the very gutters of finance and pick up a penny here and a shilling there rather than levy a tax which would bring into the Treasury tens of millions a year by levying a tax on the land of the Kingdom. There is no use in urging the Chancellor of the Exchequer to do this, but I wish to place on the records of this House my warning that by failing to do this the Government of the future will have to face a time of turmoil in which there will be raised the outcry in this House that they must cither tax the value of the land of the United Kingdom or repudiate the National Debt.
    Mr. WATT: I desire to join other Members who have spoken in congratulating the right hon. Gentleman on the clearness which has characterised him in explaining his method of dealing with the stupendous task of finding £114,000,000 fresh taxation. But this task will, perhaps, convince him of the unwisdom of his occupying the threefold position of Chancellor of the Exchequer, Leader of the House, and a member of the War Cabinet. As the hon. Baronet (Sir J. Walton) pointed out, each of these jobs is quite sufficient for any man in these very strenuous days, and I hope that the work
    778
    which he has had in framing this Budget, and the task which he will have in carrying it through this House, will lead him to the view, which is generally held in the country, that no single man should hold all these very important jobs.
    9.0 P.M.
    Turning to the taxes, the right hon. Gentleman referred to the taxation of the Post Office, which really means raising the price of postage of the ordinary letter to l½d., and of the postcard to 1d. He also referred to the charge on cheques, which is to be raised to 2d. As the late Chancellor of the Exchequer said, these two taxes, which are the smallest of taxes with the exception of the Match Tax, which have been instituted by the Chancellor of the Exchequer, are the most unwise. They are also those which will cause most irritation in the country and will disturb the mechanism of the country in a manner which I think the income from them does not warrant, it may be that the Chancellor of the Exchequer has wisely put forward these two taxes with a view to withdrawing them under pressure, and it would be the duty of the commercial community to bring the necessary pressure to bear on him and have them withdrawn. Efforts have been made in the past to institute such taxes, but have been withdrawn. The cheque charge, which by the way might have been raised to 1½d. if it was to be raised, and which is to bring in the comparatively small sum of £1,000,000 is a particularly irritating tax to the commercial community, and I feel certain that there will be great pressure brought to bear to have it withdrawn.
    What I really rose for was to congratulate the right hon. Gentleman on the move which he has made in connection with the Luxuries Tax. I do not congratulate him for initiating the tax because it is not new. Man servants, and many other things in the past which might be considered luxuries, have been taxed, but the right hon. Gentleman has been brought to a climax by the example of France, which recently has proposed a tax of this kind which will bring in £24,000,000. What I desire to congratulate him on is that he proposes to institute a Committee of this House to assist him in the taxation of this country. That is a great principle. I hope that it is the beginning of a great principle whereby

    779
    Chancellors of the Exchequer will seek the assistance of Members of this House in thinking out and framing the principles of the various matters of taxation. There is in this House, as everyone knows, a great deal of latent talent in all branches of finance, and that talent is not utilised by the Governments of the day. Committees are constantly set up by Governments. In selecting these Committees, satisfactory as they seem to be, they persist in appointing all sorts of men outside the House while the talent is at their very door among hon. Members. In this instance the Chancellor has started a new system by getting the assistance of a Committee of this House to advise him, and I hope that that will be carried to a further extent by future Chancellors and will become a permanent system in this House.
    My hon. Friend the Member for Trades-ton (Mr. J. D. White) was not satisfied with the proposed taxation of farmers although the Income Tax of these men has been increased six times during the War. At the beginning of the War it was on one-third of their rent, then it was on the whole rent, and now it is to be on twice the rent. But there is a grievance under which farmers labour which I wish to bring before the right hon. Gentleman. The Chancellor proposes, though taxing them on twice the rent, to allow them to go under Schedule D, if they so choose. That is a great advantage for a man who is not making much money, and I think that that applies to the majority of farmers, notwithstanding the popular delusion to the contrary. But in the first instance the State demands that they pay under B, and, having paid under B, which is on twice the rent, they have to make a statement claiming to go under Schedule D, and, having satisfied the authorities, they then get the money repaid on the hypothesis that they have not made sufficient money to pay on the other basis. Let me take the case of a farmer whose rent, say, is £100 a year. He is called upon to pay 6s. in the £l, or 60 per cent. down. He then makes his choice to be taxed under Schedule D. He makes up his statement, and he gets a rebate if his property is not worth the payment of £60. In the case of farmers, their position is one usually of hard-upness, and it is in view of this fact that these men are called upon to find £60, and at some later date, perhaps some months after, to get some part of that £60 given back to them. I suggest
    780
    to the Chancellor of the Exchequer and his colleagues that the earlier option should be given to the farmers, and that before they are charged under Schedule B, that is, on twice the rent, they should have the opportunity to indicate their profits under Schedule D in the first instance, and thereafter be allowed the rebate. I do not know whether I have made that clear to the hon. Gentleman the Joint Financial Secretary to the Treasury, but if I have I hope that he and the Chancellor of the Exchequer will consider that point.
    Mr. GLYN-JONES: I wish to urge on the Chancellor of the Exchequer the importance of making the very earliest announcement possible as to the effect of the increased Spirit Duly upon medicinal preparations. In 1915, under the Finance Act, the Government proposed an additional duty of Is. 6d. per gallon. The very next morning the manufacturers and the trade generally advanced the price of their medicinal preparations containing spirit. After some time the Government decided to do what they afterwards did in the Finance Act, namely, to grant an equivalent rebate to the amount of the additional duty upon all medicinal compounds which contained any spirit, and they granted an exemption from Customs Duty on the same preparations imported into this country. To-day, the proposal is not to increase the Duty by 1s. 6d., but by 15s. 3d., and to-morrow one will find, unless something is said, that the trade will immediately run up the price of their medicines by at least the amount of the Duty, though it may be that the Government are going, in fact, to apply the same provision to this big increase of Duty as that which they applied under the Finance Act of 1915 in regard to the 1s. 6d. Duty imposed in that year. I think the Chancellor of the Exchequer will agree that it is of the utmost importance that his decision should be announced at once, even if it cannot take effect until the Finance Act is passed, in order that the public should not be called upon to pay to-morrow an advanced price which the Chancellor of the Exchequer does not intend as between the trade and the country. It is possible, by means of credit notes, to make allowances, but once the public are charged there is no possibility of their being recouped, and I hope that the Chancellor of the Exchequer will reply that he will make some provision in this case, and will make the very

    781
    earliest announcement on this matter, so that pharmacists and manufacturers of these medicines should know where they stand.
    Mr. J. MASON: I should like to be allowed to congratulate my right hon. Friend, not only on the lucidity of his statement, but on his extraordinary capacity for marshalling figures for two hours, as he did, without having any notes. I may say at once as regards his proposals that personally I have nothing but general satisfaction to express, especially with regard to the general range over which he goes in his proposals, and the proportions that he apparently adopts as regards direct compared with indirect taxation. On the subject of double taxes within the Empire, the right hon. Gentleman proposes to continue the allowance that was made last year as regards the Income Tax on Dominion incomes. I would point out that this seems impossible to an Income Tax payer deriving income from Australia, who has already to pay, with that allowance, something like 14s. 6d. in the £Income Tax. The figures in the case of Excess Profits show that the burden is really still heavier, for it appears that in Australia under the Schedule there is 75 per cent. Excess Profits Duty, so that the owner living in this country with property there, after paying there, is charged again Excess Profits Duty here, leaving him with practically nothing. That is calculated, undoubtedly, to induce companies operating in the Dominions to change their domicile from, this country and take it to the Dominions themselves. In regard to the Luxury Taxes, it seems to me that they are undoubtedly desirable, with a view to stopping unnecessary and wasteful expenditure. I think we all of us have had numerous instances brought to our personal notice of the way in which people are not saving as much as they might for the purposes of fighting the War. As regards the difficulties which I hear suggested in various quarters as to this tax, I must say that I myself do not agree that the difficulties are very great. It is true that it is hard to define what is a luxury, but out of the number of articles which will be suggested to the Committee set up to deal with this matter, of course a very large number are indisputably luxuries, while a very large number are not, but the difficulty will only arise on a number of articles which are in a doubtful position between the two. Even if far the
    782
    greater part of these articles were left out of the operation of the tax, those which are indisputably luxuries would still yield a revenue well worth collecting, apart from the advantages of stopping wasteful expenditure. The suggestion of collection by means of a tax appears to be by far the simpler way of collecting the revenue, provided there is a penalty imposed for the payment of money without a receipt being given, and that, of course, is one of the points which will have to be very decidedly and adequately provided for.
    The principal object I had in rising to night was to discuss for a moment the right hon. Gentleman's figures as regards the anticipated receipts from the taxes and his anticipated expenditure, not only now, but on a post-war basis. Supposing the War were to come to an end during the financial year in question. I understand, from the figures given this afternoon, that the revenue on the existing basis, with the existing taxes, was calculated to yield £774,000,000, against the £707,000,000 which it yielded during last year. As regards that £707,000,000 I am not at all sure that it is the full yield which the year might have produced, because it was admitted a short time ago by my right hon. Friend in answer to a question that something like 10 per cent. of the Income Tax and Super-tax last January was not even collected at the end of March. Of course, 10 per cent. on the amount of Income Tax and Super-tax would mean that that £707,000,000 might have been swollen by another £24,000,000 or £25,000,000. But I will take the figure which the right hon. Gentleman gave us this afternoon, as being the revenue from the existing taxes on the existing basis—£774,000,000. He anticipates that in a full year he will derive from the new taxes £114,000,000. That is to say, roughly, the old taxes and the new are calculated to yield something like £900,000,000 in a full year. But of this £900,000,000, £300,000,000 is due to the Excess Profits Tax, which is only imposed for the period of the War, so that, as permanent revenue you can only count on £600,000,000 from the existing sources of taxation. The question is, what would be the post-war expenditure if the War came to an end during the financial year? The right hon. Gentleman, this afternoon, told us that he made that post-war expenditure something like £650,000,000, in the following way. He anticipated that the net debt, on which Interest and Sinking Fund would

    783
    have to be paid, would be £6,856,000,000, the yearly cost of that being £380,000,000. I accept that figure entirely, but he told us that the remainder of the expenditure would amount to £270,000,000, made up, first of all, of pre-war expenditure £173,000,000; pensions, £50,000,000; and education, the rise in prices, and other things, £47,000,000, making a total of £270,000,000. I think that figure is an underestimate of at least £50,000,000. In order to suggest how that can be made up, I have worked out certain figures, which show that these items will come to at least £325,000,000. First of all, there are the other than Debt services on the Consolidated Fund Bill, amounting to £15,000,000—that is to say, things like local taxation accounts, local development, and so forth. Then, there is the military item, which, before the War, was £70,000,000, for the Army and Navy, and so forth. If you were to take the enhanced prices, that would add on £20,000,000, and the right hon. Gentleman does not appear to me to have made enough allowance for the larger military establishment which we shall obviously have to keep up, either permanently or for a long time after the War, due to the fact that probably a larger Army will be necessary. Apart from that, there is a totally new Air Service, which obviously must be maintained; and this increased pay of labour, both of soldiers and sailors, which, of course, is a permanent charge. I think we shall have to take that military item of £70,000,000 as being at least double for a long period after the War. The right hon. Gentleman mentioned £50,000,000 for pensions. Last year, I believe, he mentioned £30,000,000, and I think if he takes pensions and education together he will arrive at at least £60,000,000 as the permanent charge. Then there? are a number of other services. Before the War, I believe those called miscellaneous services were principally made up of Post Office and old age pensions, which cost £64,000,000. In recent times we have set up, to begin with, six new Ministries, some of which will undoubtedly be permanent, and others, even if not permanent, will last for some little time. We have got Ministries of Pensions, Labour, Health, Food, Shipping, and so on which, although they may be reduced after the War, will, as I say, not be entirely abolished summarily. In addition to that, we have got an increase in the old age pension, which I do not think we
    784
    can look upon as temporary. We have got war pensions in all directions, which I should very much doubt are of a temporary character; at any rate, a large proportion of them will last for a considerable time. There is the loaf subsidy, which I very much doubt we shall see removed suddenly after the War. Then there is the enormous problem of housing, which, at any rate, has got to be faced. I do not think these services will add less than a very considerable amount, which I am told might be estimated at something like £45,000,000. If so, the total of these amounts will bring the post-war expenditure, if the War comes to an end by the end of this financial year, to something like £700,000,000, and, of course, every year the War lasts adds to the service of the Debt alone something like £100,000,000. The point is that, apart from the purpose of this year, it looks as if the balance of total Revenue cannot be put higher than £600,000,000, and as, according to my estimate, the expenditure after the War will approach something like £700,000,000, there would still be obviously something like £100,000,000 to be made good. Although I am perfectly satisfied with what is proposed this year, I believe it would be as well if some consideration were taken with a view to seeing in future Budgets what other sources of revenue are open.
    I will just touch upon a subject which has been suggested a good many times by a number of people, namely, that the Empire itself has very large natural resources which might be developed. Some of my Friends have gone into that subject, and I shall not dwell on it in detail. Their suggestion is that if these resources are developed with a view to benefiting the Empire, a considerable revenue might be derived from it. But there is another source of revenue which, I think, requires very careful attention. The Excess Profits Tax has been put forward as a temporary tax during the War. To my mind, in some form or other—it is true on a different basis, and it is also true it must be to a lesser degree—some similar tax must be found to replace to some extent the Excess Profits Tax. Obviously, that tax has got to be withdrawn, but I am perfectly convinced that the industries of the country as a whole could very well support some similar tax permanently established if the State were willing, in return for that tax, to give some support to the industries. It is quite obvious that if the State can help the industries, it is perfectly entitled to

    785
    take a portion of the profits which are derived from that help. I think everybody will agree that the position that Germany held before the War, and the competition which came from Germany with our industries, cannot be perpetuated, and that, consequently, in some form or other, the industries of this country have got to be protected from certain kinds of foreign competition.
    I think that will be generally admitted, but if any kind of protection is given to industries, whether against Germany or the world at large, the State would be entitled to claim some part of the benefits of the protection—in other words, to take some share of the profits. Supposing in the return to some form of Protection the State were to take a proportion of the excess profits of the industries, that would go a long way to get over the usual argument advanced against Protection, namely, that Protection, if it is effective, gives no revenue to the State, and that, if it gives revenue to the State, it is not Protection. In his case, the Customs arising out of the Protection might be productive, and, at the same time, in so far as the Protection was effective for the industries, the State would also get revenue from that side as well, and, consequently, the State would derive from the share of the excess profits which, it took, as well as the Customs, a benefit in those directions. Of course, it is obvious that the present basis of the Excess Profits Tax—that is to say, the pre-war, standard period—is impossible permanently, and also it is obvious that anything like 80 per cent. of the profits would not allow a sufficient margin for the replacing of obsolescence and capital. But, taking the basis probably of a percentage of the capital employed, and taking a moderate figure for the amount of the tax, I think it would give a very large yield from the industries of the country, at the same time taking care that the provision for future capital was not interfered with. It may be said, and very likely will be said, that this proposal is one for after the War, and that is can only be applied after the War when the Excess Profits Tax comes to an end. That, to a certain extent, is true, but my object in bringing it forward now is that if such a scheme were feasible, and if it can be accepted as a basis of a tax which was ultimately to replace the Excess Profits Tax, then it would enable us, in making calculations as to post-war Budgets, to bring a certain proportion of the excess
    786
    profits yield into consideration, and to assume that when that tax came to an end we were going to replace it by another which would yield at least a proportional revenue. I merely put that forward as what appears to me to be a scheme of future organisation which it would be well worth while to consider before another year, with a view to seeing whether in that way some credit could not be taken for a portion of the Excess Profits Tax which is to come to an end at the conclusion of the War.
    Mr. D. MASON: I should like to offer my congratulations, with those of others, to the Chancellor of the Exchequer for his very interesting speech. While he said that he disclaimed any inclination on any occasion to indulge in perorations, he has certainly the faculty of stimulating thought. The hon. Gentleman who has just sat down, in common with the Chancellor of the Exchequer, has expressed himself in favour of what is called a Luxury Tax. I confess I agree rather with the Chancellor of the Exchequer that he will have, as he evidently felt he would have, great difficulty in carrying out this tax. We are all agreed, and I yield to no one, in support of economy and in the pursuit of economy. But, as the right hon. Gentleman himself evidently felt, the difficulty is to apply this tax. We are all in favour of reducing expenditure on luxuries. But I think the right hon. Gentleman has shown his inability to submit a scheme from the fact that he proposes to hand this matter over to a Select Committee of this House. Of course, if a Select Committee can draw up some feasible scheme, certainly I should be the last to offer any criticisms until that scheme is produced. It seems to me the greatest luxury of all in these times is a largo income, and we know that in Income Tax and Super-tax we have a form of taxation that will get at people in possession of large incomes, who are, as a rule, the greatest culprits in the purchaes of luxuries. The best way, it seems to me, to diminish expenditure on luxuries is by increasing the Income Tax and Super-tax. I quite fail to see how the right hon. Gentleman will be able to make this a feasible scheme. He proposes to have some form of stamps, and to have some body of inspectors who are to go to the shops and to criticise, and apparently inspect, various purchases. Just imagine for a moment the irritation that will be

    787
    brought about by this tax. In the first place, I doubt whether the revenue to be collected from it will be anything like commensurate with the irritation and disturbance to trade which the proposal will involve. I believe it to be unsound because it will mean so much expense in its collection, and it will be, as he says, a new method of taxation. It does not, therefore, commend itself to my mind as a feasible tax or one which is likely to add to the revenue.
    The right hon. Gentleman, in defending his proposal for an increase in the tax on sugar, said that the working classes should remember the considerable subsidy which has been voted to enable them to obtain a cheap loaf. There, again, I think many of us in this House were by no means enamoured of that proposal. While we are very anxious certainly that the working classes should not suffer unduly, we do not think the best method of securing that is by the left-handed way of a subsidy, which is economically unsound. It seems to me much better, again, to increase your direct taxation, and produce your revenue by that means, than artificially to create a cheaper loaf and increase the cost of living in other directions. So that I do not think that is any excuse at all for the proposal to increase the price of sugar. When one listens to many remarks that are made sometimes by the Chancellor of the Exchequer that the working classes should bear their share along with other classes, I think we forget that the working classes are bearing their share. If we consider the enormous increase in the cost of living, brought about, as I submit, by the right hon. Gentleman's method of excessive borrowing and inflation, the working classes to-day are bearing more than their proportion of taxation in the increased cost of living.
    The right hon. Gentleman spoke of his proposals in regard to the increase of the Beer and Spirit Duties, and said that he himself had not anticipated that there would have been these enormous profits realised, and that there was no criticism made a year ago when he proposed to reduce the duty upon the spirit licences, with the exception, perhaps, of a protest from my right hon. Friend the Member for the Rushcliffe Division. I should like to correct him with regard to that. I myself, along with others, raised a pro-
    788
    test against what amounted really to the present of nearly £1,000,000—£900,000—by way of rebate that he then carried in his-Finance Bill. Some of us then said that there was no justification for that. We said that although there had been some legislation to curtail the hours of the liquor trade our belief was that the returns would show quite the contrary to what was anticipated by the right hon. Gentleman. I think the right hon. Gentleman the Member for the Lincoln Division pointed out, by statistics, the enormous profits that the brewers were then enjoying, and showed, by the Amendment which he proposed to make to the Licence Duties based upon the profits, rather, than as was suggested by the Finance Bill, that this proposed reduction of the Licence Duties meant the Treasury were then presenting to the brewers and the spirit sellers that which amounted to something like a subsidy of £1,000,000. That, he suggested, might be saved by the Treasury by an increased rather than by a decreased duty. We got no response from the Treasury. That provision was passed in the then: Finance Bill. We all know now when it is too late that the profits of those engaged in the selling of spirits and beer during the past year have been beyond even, as he himself confesses, the right hon. Gentleman's own anticipation. We have had three and a half years' of war. Now the right hon. Gentleman awakens to the fact that it is time for him to increase these duties. I submit, when he states there was no criticism, that he has forgotten that there was some criticism a year ago which, I think, more or less forestalled what is now taking place.
    It was suggested by the right hon. Gentleman the ex-Chancellor of the Exchequer, who confirmed what had been originally proposed by the Chancellor of the Exchequer himself, that it would be a very good proposal if we could get the United States, instead of lending money and making advances through us to our various Allies, to make them direct to our Allies. I certainly entirely endorse that proposal, but I do not quite follow the right hon. Gentleman when he says that he thinks the United States might not be agreeable to that proposal. I do not wish in any way to reflect upon the credit of our Allies. We do believe that British credit is to-day supreme. But there is a difference between the United States first lending to the British Government and then the British Government lending to

    789
    the Allies, for the debt originally contracted by the United States is with the British Treasury, and this, of course, is a much superior asset than lending the same money to our Allies. Without any reflection upon the credit of our Allies, they do not enjoy the same measure of credit as we enjoy. If, however, the right hon. Gentleman is able to persuade the United States Government to lend direct to these other debtors certainly I, for one, will congratulate him upon his achievement.
    I should like to offer a few observations upon the statement of the right hon. Gentleman in respect of his rather sanguine estimate of what he anticipates will be the position of this country after the War is over. His most interesting venture, if I may say so, in regard to German finance, was, I think a thing that a good many of us listened to with added interest. It was a most valuable addition to our Debate. But it seemed to me as I listened to him—though I entirely agree with what he said as to German finance—that the more he was able to show that the failure of German finance, owing to the lack of courage of those in command in bolstering up their position by incurring taxation as they proceed in the War—showing, as it did, the parlous position to which Germany is reduced from a financial point of view—the more it is necessary that we should remember that prior to the War Germany was one of our best customers. That, therefore, seems to me to cut away the foundation upon which the Chancellor bases his post-war Budget, because if Germany—while at war, and an enemy, we rejoice in heart in the position to which she is reduced, either in a military or a financial sense—if she is so reduced to an impoverished position—in common with probably all of us—the result surely follows that this in a sense cuts away the basis upon which the Chancellor seems to build his post-war Budget. Of our customers Germany was one of our best. If she is reduced to poverty I think the right hon. Gentleman should not have taken so sanguine a view of either his Revenue, or based his future Budgets, after the War is over, on the hypotheses he did. It seems to me, everything goes to prove that the position which at present we enjoy is largely an artificial one, and is based upon the results of our capital expenditure.
    One would have liked to hear much more from the right hon. Gentleman as to what
    790
    the prospects are for trade when this enormous capital expenditure of something like £2,000,000,000 per annum is withdrawn: when we visualise a time of peace, a time when we shall be compelled to trust, not to a swollen Revenue based upon a huge capital expenditure like the present—which is largely, as to three-fourths, say, borrowed capital—but a Revenue which is dependent on our own exertions, our own hard toil, and our merchants and our workers obtaining their share of the trade of the world. That is the real position we have to face, and not the artificial position of to-day, largely, as I say, based upon a Revenue derived from borrowed money. I should have liked to see the right hon. Gentleman give us some indication that he really appreciated that position, largely inflated all over the world to-day. Even the extraordinary Trade Returns of the United States—indeed, all the belligerents—are very largely brought about by excessive capital expenditure, and are not at all due really to trade, or to the natural currents of trade one has in normal times. I said if the right hon. Gentleman desires to enforce economy here, there is only one method by which he can do it, and that is by a much larger increase in the Income Tax and the Super-tax. The other taxes, such as the increased stamp on cheques and the increase in the postage rates bring very little in the shape of revenue, and do a great deal to interfere with trade and commerce. While anxious to increase our revenue, we should do everything we can to oil the wheels of industry and facilitate trade and commerce, and increase our production rather than place checks on industry which only irritate the trader and curtail facilities for exchange, and thus reduce production. Our aim should be to ease the position from a producing point of view, and tax rather the results than the agencies which create those results. I hope those taxes will be reconsidered, and that we shall not lightly pass this increase in the cheque stamps, which only brings in a trifling sum.
    I should like to offer some few observations upon the general position, which the right hon. Gentleman has not touched upon. Surely in drawing up a Budget we have to consider not only the financial position here, but among our Allies, and throughout the whole world. If we really consider for one moment the economic position in which we are placed in the fourth year of the War, whatever our

    791
    views may be, all sane men who realise the position must regard the state of affairs in which we are placed as mast grave. I believe the War has been, largely financed by credit, which as long as you can continue to borrow will enable you, at the expense of a general rise in the price of commodities, to carry on the War for some time yet. Let me offer a few figures to show the enormous inflation which has been going on all over the world. With regard to the way in which the War is being financed the proportion from revenue amounts to 26.5 per cent., and that means that about 75 per cent. is being derived from the inflation of prices and from loans. These loans are largely made up by bank credits and the over issue of paper money by the various belligerents. This is not confined to this country or to the Entente, but it is the case with all the belligerents.
    I got out figures the other day, and the inflation that has been practised by all the belligerents and the increase in the paper currency since 1914, combined, including the United States amounts to £4,413,600,000. Think of that. This sum has been increased by five-fold in the aggregate from £935,700,000 to £5,348,900,000. Of this increase £895,000,000 came in Germany and Austria, and £2,914,600,000 in the European States and America. Russia contributed £1,360,000,000 to the increase. This is one of the primary causes of the revolution in Russia, because this continuous issue of paper money brought things to such a pass that the peasantry refused to take any more paper, and under these circumstances you are very near a revolution. I do not suggest that we are near that, but when you are framing a Budget it is nonsense to say that, the working classes are not being penalised by this method of finance because they have to pay more of their share having fixed incomes, and they have to pay more through the increased cost of living. Bankers may ask what have you in the shape of gold reserves to meet the enormous increases.
    I got the ratio the other day of the gold reserves of the various belligerents. The ratio of gold reserve to outstanding paper currency of all the European countries, both neutral and belligerent, amounted to 62½ per cent. at the end of 1913. In October, 1917, the ratio was 20¼ per cent. In England, including the "currency notes," the ratio fell from 117¾ per cent.
    792
    at the end of 1914 to 37⅝ last autumn; in Germany, including the "loan bureau notes," from 35⅝ per cent. to a trifle under 15. That gives some idea, and when you have this continuous issue with an ever-decreasing gold ratio, whatever your views are you must admit that you are approaching a very grave position, indeed. I do not suggest that you can carry on this great War without an emergency circulation, but I submit that these figures arc worthy of consideration. I have taken some pains to collect them from what I believe to be a reliable quarter, and I do think they are worthy of consideration by all hon. Members who will take the trouble to read what I have said.
    I submit that this inflation is not confined by any means to Europe. When we get across the Atlantic we find that Federal Reserve Notes in the United States have increased from £51,000,000 to £222,000,000. These Federal Reserve Notes issued in America are really similar to our currency; they are an obligation of the United States Government; they are issued to various banks and are receivable at National and other banks for taxes, Customs, and so on. They are merely another method of inflation, and, of course, the United States Government banks should maintain a proper gold reserve against them, in the same way as we ought to maintain here in England, and throughout the Allied countries, a gold reserve. The effect of this enormous increase of paper is to still further accentuate the rise in prices of commodities. There again, I will, if I may, submit proof. I find that the index number which indicates the rise in the price of commodities was 2565 at the time the War broke out; a year later it was 3281, two years later 4204, and at the end of last month it was 5379. The effect of this enormous rise in prices is to stimulate imports to an enormous degree. We find that last year there was £1,000,000,000 imports and only £500,000,000 exports, and according to the figures just published the position is still further accentuated—we have an excess of imports in the first three months of this year amounting to £189,000,000, and if that proportion is carried on during the rest of the year the excess of imports over exports will be £756,000,000. This is the position, and yet we have a Bill brought in for the purpose of withdrawing men from productive industries who are doing something to maintain your

    793
    export trade. In addition you have this inflation of bank credits, and one begins to despair of any financial measure being promoted by this or any other Government to alleviate the position.
    These figures are sufficient to show that if this policy is continued for any length of time it will have a bad effect upon the working classes throughout the country. The other day I came across a passage showing the effect which this excessive amount of paper produced in France in 1789. M. Senior, a famous French writer, said that those dependent on fixed money payments were reduced to beggary, distress and starvation resulted, and every morning were found on the shores of the Seine the bodies of those who preferred death by suicide to death by hunger. He added that the state of the labouring classes was scarcely more tolerable—an increase in the rate of wages was never contemporary, even under the most favourable circumstances, with a forced depreciation of money. If that happened in 1789, when France was pursuing the policy which we are pursuing to-day in the excessive issue of paper money, what may we expect? I wish to emphasise this, that if this policy is pursued, while it may be a simple and easy method of financing the War, so long as we are able to get people to accept these credits, well and good. But I venture to again utter this warning, that this excessive increase in the cost of living, which will be accentuated even if you get peace, because you will not be able rapidly to reduce these enormous prices, even though you have a sterile victory, you cannot hope to continue the policy. While people are willing to give men and money to carry on what they believe to be a just and honourable war, still we do look to the Government to appreciate the fact that no honourable opportunity ought to be lost of bringing this great tragedy to an end.
    10.0 P.M.
    Sir G. TOULMIN: I do not propose to follow the last speaker in his criticisms of the right hon. Gentleman, because he has not entered into a philosophic inquiry into the economic situation at home and abroad, when he has such a tremendous statement of his own to lay before the House. He has been criticised because of the absence from his speech of lip-service to economy, but I think any such remarks on his part would have been rather ironical, seeing that he was present-
    794
    ing the very largest Budget ever presented to any assembly since the foundation, of the world. I am perfectly willing to join, with anyone in very strongly encouraging the right hon. Gentleman if he can find any means of Treasury control which will not be an obstacle to speed and efficiency in the war circumstances in which we find ourselves, and I am quite sure that if he can do that the House will very strongly support him. But there is just one item in the Budget upon which I feel most critical. Most of the increases of taxation, I think, are what the nation expected, and they will be very generally approved, but I think we ought to examine very carefully the grounds on which, the right hon. Gentleman has charged a very large number of millions upon, sugar. This is a tax which falls unequally, it falls heaviest on the poorest and on the young. Every orphanage, every board of guardians, almost every public authority will have to pay a part of this tax, and in an ordinary time of peace we should have looked with amazement at a proposal for extracting thirteen millions of money from them for public purposes. The position is not relatively better; it is relatively worse—much worse than it was in the time of peace, of the very large number of people whose income has not been increased by what has increased in. an my other directions both wages and profits. Their household expenses have very greatly increased, and it is no answer, in my opinion, to say that there is a subsidy being given to them which decreases what would have been the price of the loaf. The price of the loaf is still higher alter the subsidy has been given, and really you ought to compare the position before the War, of sugar at its price then and bread at its price then, with what those prices are now, with an income that has not grown and with expenses which have very largely grown. Among the smaller reforms which are most acceptable is the one which includes the wife as a child. That, in my opinion, is rather small justice. It is the very smallest allowance which could be made to meet what I have always looked upon as an inequality in the incidence of the Income Tax. I think the least the mother of the family ought to be called is two children, and the allowance in her case ought to be doubled. It must be remembered that the incomes of husband and of wife are calculated together, and their position is much worse than

    795
    when there are three or four in a family, brothers and sisters, or father and sons and daughters, bringing into the household several incomes, which are treated separately. The position of that family is much superior to that of the husband and wife.
    The greatest amount of curiosity was excited in regard to this Budget by the suggestion that we were to have a Luxury Tax. The Chancellor of the Exchequer has left us wondering in regard to a number of the details of that tax. I think some such device was necessary as a proper consideration due to those who are not sharing in the increases of wages and profits which the expenditure of the vast amount of borrowed money is bringing to some people. There are many points of difficulty which the Committee it is proposed to set up will have to consider—the point at which luxury comes in, and where utility and necessity develops into luxury. Costly furs and jewels, and things of that kind, everyone, I think, admits, but there must be a border-line which is very difficult to define. The payment of such a tax by stamps seems rather easy on the face of it, but I think it will have to be considered that a great many shopkeepers have very much depleted staffs. They have much smaller staffs, and some of them find difficulty in carrying on as things exist at present. The imposition of a tax at that particular point of the transaction must cause, I will not say exactly a great complication, but an increase of accounts. It will be another process to be gone through in the sale of an article, and I think it will be necessary to consider what the great shopkeepers, and the small shopkeepers too, have to say about this. The Chancellor has indicated the method of assessment at 2d. in the 1s. Probably the Treasury has gone carefully into these matters, but it seems to me that this tax will scarcely be just unless there is some method of graduation. There are some articles which are much more articles of luxury than others, and on which I should not object to the full 2d., or even more, being put. Of course, the Treasury has a great accumulation of wisdom in regard to taxation, we have a little experience from France, and I dare say the Treasury will be able to guide the Committee in regard to that respect. I am quite sure the House will view with profound interest the development of the discussions in that Committee.
    796
    I should just like to make another remark in regard to the Excess Profits Duty. I am inclined to think that the Chancellor of the Exchequer has shown undue optimism as to the amount of arrears after the end of the War. No doubt the Treasury have a large amount of figures as to pending Excess Profits Duty, and it is perhaps showing great temerity for one to question anything that they say on this point, but I think it will have to be remembered, in discussing such an estimate, that the greatest profits in industry are in those industries which have profited most from the War. Those industries will come to a sudden end. One will, I presume, immediately stop a great many of those which are producing direct munitions, and so on and then will come a period when these concerns will make no profit. There will be a large amount of repayment. That is with regard to the places where munitions almost entirely are being made. Then there are those concerns which are usually making some of the ordinary articles of commerce. With those there will have to be a period of refitment, when they are turning back again from the making of munitions to the making of those things which they made before the War. During that period it is probable that not merely will they not make excess profits, but it is quite questionable whether they will make any profits at all, and during that period—which will probably be part of the excess profits period—they will be a charge, and possibly a great charge, on the Exchequer rather than a source of income. The profits will be small, and the Exchequer will have to make them repayments.
    That, I think, quite justifies the caution of the Chancellor of the Exchequer in interfering with the amount of the tax at the present moment. The hon. Member for Windsor (Mr. J. Mason) looked forward to the continuation of that tax, or some tax similar to it, after the War. I cannot follow him at all in that respect. I consider that the Excess Profits Tax, except as a War tax, is absolutely unjust. It penalises the successful manufacturer and the growing industry. It appears to me to involve him in a Protectionist maze, because what is suggested is that if the State should give protection to industries, they will produce excess profits, and that the payment to the State for producing those excess profits is that they shall share the plunder. I would point out the old argument that it is the consumer

    797
    who has to pay both, and he will not be reconciled to giving certain people excess profits by the consideration that a certain part of them is taken in taxes. The consumer will have to pay for it. I have another reason for accepting the decision of the Chancellor of the Exchequer not to deal with the Excess Profits Tax, although there might be some justification for increasing it. It is this. As it is at present levied it causes exceptional hardship to certain firms who have been unfortunate in the standard period, and I do not think you could have increased its incidence without having to deal very carefully with the basis on which that standard period was arrived at. Considering the amount of trouble it has been to the accountants, to every member of the accounting staff of the firms, to arrive at that standard basis, T do not wonder that those connected with the imposition of this tax should be shrinking from dealing with the basis, and should be choosing rather to leave it at its present height than to deal with the basis of the tax. I think the Committee will probably meet the right hon. Gentleman with a very favourable sentiment in regard to this immense and unparalleled demand which he has made upon the finances of the country, a demand which can only be justified, but which is justified in the eyes of the country, by the great emergency in which the nation finds itself.
    Mr. HOGGE: We have listened this afternoon to a very interesting speech, but it has had the effect of emptying the House from the moment that it was delivered until now. I do not know whether that is an illustration of cause and effect, but at any rate it is the fact that as soon as Members were told what they are to expect and what they are to pay within the next few months they incontinently left the House. I notice that the Chancellor of the Exchequer has also left the House, probably for the reason that he does not feel equal to facing the Members of the House after having imposed upon them such enormous new burdens. There are some criticisms which it is necessary to offer before we proceed to pass the Resolutions on the Budget. I was present earlier in the afternoon at an assembly of business men who assured me that the last thing that the Chancellor of the Exchequer would do would be to increase the tax on sugar. I agreed with
    798
    them, and I cannot help wondering what they thought of me when they read their evening paper and saw that the Sugar Tax was going to be increased. While it is quite true that there are certain matters upon which we can raise taxation, we ought to bear in mind the effect that taxation is going to have upon the physique of the community. There is one class of the community, especially in view of the fact that we are losing so many valuable lives in the War, namely, the children who are growing up, to whom sugar is an essential food, and if you increase the tax upon sugar it means not only that the ration of sugar which people are now allowed under the system which is in vogue will be increased in price, but that other articles of diet which are necessary to the humble domestic table, such as jam or marmalade, will also be increased in price, with the result that, children will find it much more difficult to obtain nourishment and sustenance than before. I wonder whether the Chancellor of the Exchequer has kept in his mind the physical future of the country as well as the present necessity of raising revenue. I notice that he has put no extra taxation upon tea, which children do not drink, and which is not necessary for children, nor upon wine, although he has put increased taxation upon the native products of Scotland, England, and Ireland. He has put increased taxation upon whisky and upon beer. Our children do not drink wine nor tea to any large extent, and I suggest to the Financial Secretary to the Treasury (Mr. Baldwin), who has a much more intimate acquaintance with the domestic side of the Budget than his Chief, that ho should consider those matters in the reply that he proposes to give to this Debate.
    There is the question of the increase in the postage. We have already had in previous Budgets a decrease in the weight which you can send under a 1d. stamp. Now, without any decrease in the weight, we have an increase in the postage, especially on the 1d. basis. I wish the Chancellor of the Exchequer, when he was making these changes, had attacked one item of postage which all of us, including himself, would be very glad to get rid of, namely, the alarming and increasing number of circulars, in spite of the Regulations with regard to the waste of paper, that every Member of Parliament and every business man gets every morning in his post. If the Chan-

    799
    cellor of the Exchequer, while allowing legitimate correspondence to go at the average rate of a 1d. for the half-ounce, which exists now had increased the postage on circular material, he would have been conferring on the community so great a benefit that he would have been entitled to a statue entirely to himself It is an irritating tax to have an extra ½d put on the ordinary letter. While the Chancellor of the Exchequer, in reply to an interruption with regard to soldiers' letters from the front, said that such letters would be franked as usual to this side, he ought to bear in mind that the wives, dependants, sweethearts, and friends of our men in the Navy and Army, now numbering some 5,000,000 to 6,000,000 men, will be taxed by the addition he is making to the Id. postage. The Chancellor of the Exchequer is, after all, a wise man, and I understand he has included in his Budget certain points upon which he intends to give way in order to make concessions to the Committee. I hope that this question of the 1d. postage is one on which he will give way. I do not mind how much is added to the postage of matter beyond that which is the ordinary channel of communication between people in this country, but that ought to stand at a 1d. Apart from the revenue he will raise, he ought and I think he does remember that a great deal of the business, trade, and commerce of the country depends upon cheap postage, and if it is raised to l½d. it will create that kind of irritation which is not the best thing in the rattled state of the community at the present moment. The same remarks apply to the question of cheques I do not draw so many cheques myself that it matters whether there is a 1d. or 2d. stamp on the cheque, but the business community again feel these things very much more than the raising of the Income Tax from 5s. to 6s. It is one of the curiosities of human nature that it hates the small limitations while it is quite willing to put up with broad general impositions, such as the raising of the Income Tax from 5s. to 6s.
    I got up mainly to bring forward two points which have not yet been raised in the discussion. As the Chancellor of the Exchequer knows, there is an old question which has been raised before, namely, that of the sailors and soldiers who have served in this War and in other wars, who are drawing a pension from
    800
    the State, and who have to include those pensions in their earned income for the purpose of assessment for Income Tax. I would ask the Chancellor of the Exchequer if he has considered this point in view of the present Budget, and whether, between now and the time it finally leaves, the House, he would care to look into the figures to see how far the Revenue would be affected if he considered all pensions as payment for services rendered as free from Income Tax? Personally, I do not see why they should not be. When a man is wounded or disabled in war he receives a pension, which is a compensation for services which he has rendered to the State. Surely no one can argue that the disability which that man is suffering from is one which ho has earned. No man set out to-earn it. What the man set out to do was to serve the State. If as the result of his service he has been incapacitated from earning the livelihood that he previously earned it is monstrous to ask him to include his pension as part of his earnings, which is the practice that obtains at present. If one buys an article in the way of ordinary business one pays for it and there is an end of the transaction, but if a man serves the State and in the service of the State is disabled he has cancelled the bargain that he made with the State, and I think he is entitled legitimately to deduct that from any assessment of his income. I would ask the Chancellor of the Exchequer if he would look into the question. I should fancy he has access to the figures which will enable him to say whether allowing that to go tax-free would mean a diminution of many thousands in a year. Certainly the bulk of hon. Members will agree, from the conversations and letters that we have had from soldier and sailor friends, that there is a strong feeling among these men that it is adding insult to injury to ask them to include the pensions they have earned for disability in the assessment to Income Tax. The right hon. Gentleman usually looks at these matters from a sympathetic point of view. Cannot he look at this from the point of view I am putting, and say whether or not he can afford to make this concession?
    There is another question that has not been raised. One of the novelties of the earlier Budgets was the imposition of the Entertainments Duty. From its first imposition until now various adjustments have been made. Nothing has been said by the Chancellor of the Exchequer about

    801
    it, except the very gratifying statement that he gets more money out of it than ho had expected. It is probably the best thing a Chancellor of the Exchequer enjoys, to get more money out of a thing than he budgetted for. But the members of the entertainments trade throughout the country have had difficulties to face in the imposition of the tax. A memorial has been submitted to the Chancellor of the Exchequer by the trade which, in my view, is a reasonable suggestion to make. The gradation of taxation on the prices of entertainments is such that the charges to the public are broken, instead of even amounts. The public are charged, say, 5d., 8d., 1s. 2d., and prices of that kind, instead of prices such as 3d., 6d., 9d., and 1s. The memorial suggests that for the forthcoming financial year, when the payment for admission docs not exceed 2½d, the duty should be ½d., making an even price of 3d.; where it exceeds 2½d. but does not exceed 5d. the tax shall be 1d., making an even price of 6d.; where it exceeds 5d. but does not exceed 10d. the tax shall be 2d., making an even price of Is., and so on. Has the right hon. Gentleman gone into the change this would wake in the matter of revenue? Possibly he would lose a small amount of revenue, but if he made the change it would be a matter of great convenience to a large body of men who are engaged in this legitimate occupation. It would enable them to do what they have not been able to do yet, and what everybody who have taxation imposed upon them do, and that is, to transfer it to the public in the least harmful kind of way. I would ask the right hon. Gentleman whether between now and the time when this Budget leaves the House he will look into the matter and see whether or not he can make this adjustment. I shall put these points down as Amendments to the Finance Bill in the ordinary way, but I always think it is useful to raise the questions which are likely to be discussed by way of Amendment. If the right hon. Gentleman could give me some assurance about these two points, as to whether or not he could see his way to make any concession in regard to pensions not being counted as earned income for Income Tax, and whether he could see his way to make an adjustment in the Entertainments Duty so as to make an even price for admission, it would enable one to see whether or not to press the Amend-
    802
    ments. Otherwise I congratulate him on the speech he made. Some people complain that it occupied two hours, but if he had taken another half-hour to elaborate some of the figures he gave us briefly, he would have improved the very able speech he made. All of us agree that in the three posts he now occupies he manages to give a very considerable amount of ability to each, and to impress upon the House the honesty and sincerity with which he addresses himself to all public questions.
    Question put, and agreed to.

    CONTINUATION OF DUTIES (EXCISE).
    Resolved,
    2. That the following duties of Excise imposed by Part I, of the Finance (No. 2) Act, 1915, and continued by Section two of the Finance Act, 1917, until the first day of August, nineteen hundred and eighteen, shall continue to be charged until the first day of August, nineteen hundred and nineteen, that is to say:—

    Duty.

    Section of Finance (No. 2) Act, 1915.

    Additional Duty on Motor Spirit

    10 (2)

    Additional Medicine Duties.

    11

    And 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.

    SUGAR (CUSTOMS).
    Resolved,
    3. That in lies of the duties of Customs now payable on sugar imported into Great Britain or Ire and there shall, on and after the twenty-third day of April nineteen hundred and eighteen, be charged the following duties:—

    £

    s.

    d.

    Sugar of a polarisation exceeding 98 degrees

    the cwt.

    1

    5

    8

    Sugar of a polarisation not exceeding 76 degrees

    the cwt.

    0

    12

    4

    and intermediate duties varying between 25s. 8d. and l2s. 4d. on sugar of a polarisation not exceeding 98 and exceeding 76 degrees.

    Molasses (including all sugar and extracts from sugar which cannot be tested by polariscope):—

    if containing 70 per cent. or more of sweetening matter

    the cwt.

    0

    16

    3

    if containing leas than 70 percent. and more than 50 per cent. of sweetening matter

    the cwt.

    0

    11

    8

    if containing not more than 50 per cent. of sweetening matter

    the cwt.

    0

    5

    8½

    £

    s.

    d.

    Glucose:—

    Solid

    the cwt.

    0

    16

    3

    Liquid

    the cwt.

    0

    11

    8

    Saccharin (including substances of a like nature or use)

    the oz.

    0

    8

    3

    and so on in proportion for any less quantity
    And 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.

    SUGAR (EXCISE).
    Resolved,
    4. That in lieu of the duties of Excise now payable on sugar made in Great Britain or Ireland there shall, on and after the twenty-third day of April nineteen hundred and eighteen, be charged the following duties:—

    Sugar of a polarisation exceeding 98 degrees

    the cwt.

    1

    3

    4

    Sugar of a polarisation not exceeding 76 degrees

    the cwt.

    0

    11

    2

    and intermediate duties varying between 23s. 4d. and 11s. 2d. on sugar of a polarisation not exceeding 98 and exceeding 76 degrees.

    Molasses (including all sugar and extracts from sugar which cannot be tested by the polariscope):—

    if containing 70 per cent. or more sweetening matter

    the cwt.

    0

    13

    6

    if containing less than 70 per cent. and more than 50 per cent. of sweetening matter

    the cwt.

    0

    9

    8

    if containing not more than 50 Per cent. of sweetening matter

    the cwt.

    0

    4

    9½

    Glucose:—

    Solid

    the cwt.

    0

    16

    3

    Liquid

    the cwt.

    0

    11

    8

    Saccharin (including substances of a like nature or use)

    the oz.

    0

    8

    3

    and so in proportion for any less quantity.
    And 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.

    SPIRITS (CUSTOMS).
    Resolved,
    5. That, in addition to the duties of Customs now payable on spirits imported into Great Britain or Ireland, there shall, on and after the twenty-third day of April nineteen hundred and eighteen, be charged the following duties (that is to say):—

    For every gallon computed at proof of spirits of any description except perfumed spirits

    0

    15

    3

    For every gallon of perfumed spirits

    1

    4

    3

    For every gallon of liqueurs, cordials, mixtures, and other preparations entered in such a manner as to indicate that the strength is not to be tested

    1

    0

    6

    and the duties of Customs on the articles hereafter mentioned, being articles in which spirit is contained, or in the manufacture of which spirit is used, shall be proportionately increased, and shall be as follows:—

    Chloral hydrate

    …

    the pound

    0

    3

    6

    Chloroform

    …

    the pound

    0

    8

    8

    Collodion

    …

    the gallon

    3

    10

    0

    £

    s.

    d.

    Ether, acetic

    …

    the pound

    0

    5

    2

    Ether, butyric

    …

    the gallon

    2

    3

    9

    Ether, sulphuric

    …

    the gallon

    3

    13

    2

    Ethyl. iodide of

    …

    the gallon

    1

    18

    1

    Ethyl bromide

    …

    the pound

    0

    2

    10

    Ethyl chloride

    …

    the gallon

    2

    3

    9

    And 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.

    SPIRITS (EXCISE).
    Resolved,
    6. That in addition to the duty of Excise now payable for every gallon computed at proof of spirits distilled in the United Kingdom there shall, on and after the twenty-third day of April nineteen hundred and eighteen, be charged the following; duty (that is to say):—

    For every gallon of spirits computed at proof

    0

    15

    3

    and so on in proportion for any less quantity.
    And 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,

    BEER (CUSTOMS).
    Resolved,
    7. That in addition to the duties of Customs now payable on beer imported into Great Britain or Ireland, there shall on and after the twenty-third day of April nineteen hundred and eighteen, be charged the following duties (that is to say):—
    In the case of beer called or similar to mum, spruce, or black beer, or Berlin white beer or other preparations, whether fermented or not fermented, of a similar character:—

    For every thirty-six gallons where the worts thereof are or were before fermentation of a specific gravity—

    Not exceeding one thousand two hundred and fifteen degrees, a duty of

    5

    0

    0

    Exceeding one thousand two hundred and fifteen degrees, a duty of

    5

    17

    2

    In the case of every description of beer other than that above specified:—

    For every thirty-six gallons where the worts thereof were before fermentation of a specific gravity of one thousand and fifty-five degrees, a duty of

    1

    5

    0

    and so in proportion for any difference in gravity.
    And 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.

    BEER (EXCISE).
    Resolved,
    8. That in addition to the duty of Excise now payable in respect of beer brewed in the United Kingdom, there shall on and after the twenty-third day of April nineteen hundred and eighteen, be charged the following duty (that is to say):—

    £

    s.

    d.

    For every thirty-six gallons of worts of a specific gravity of one thousand and fifty-five degrees, a duty of

    1

    5

    0

    and so on in proportion for any difference in quality or gravity.
    And 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.

    MATCHES (CUSTOMS).
    Resolved,
    9. That in addition to the duties of Customs now payable on matches imported into Great Britain or Ireland there shall on and after the twenty-third day of April nineteen hundred and eighteen, be charged the following duty (that is to say):—

    For every ten thousand matches a duty of

    0

    1

    8

    and so in proportion for any less quantity.
    And 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.

    MATCHES (EXCISE).
    Resolved,
    10. That in addition to the duties of Excise payable on matches made in Great Britain or Ireland there shall on and after the twenty-third day of April nineteen hundred and eighteen, be charged the following duty (that is to say):—

    For every ten thousand matches a duty of

    0

    1

    8

    and so in proportion for any less quantity
    And 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.

    TOBACCO (CUSTOMS).
    Resolved,
    11. That in lieu of the duties of customs now payable on tobacco imported into Great Britain or Ireland there shall on and after the twenty-third day of April nineteen hundred and eighteen, be charged the following duties (that is to say).—
    Upon tobacco unmanufactured, viz:—

    Containing 10 lbs. or more of moisture in every 100 lbs. weight thereof—

    Unstripped

    the pound

    0

    8

    2

    Stripped

    the pound

    0

    8

    2½

    Containing less than 10 lbs. of moisture in every 100 lbs. weight thereof—

    Unstripped

    the pound

    0

    9

    0½

    Stripped

    the pound

    0

    9

    1

    Upon tobacco manufactured, viz:—

    Cigars

    the pound

    0

    15

    7

    Cigarettes

    the pound

    0

    12

    7

    Cavendish or Negrohead

    the pound

    0

    11

    10½

    Cavendish or Negrohead manufactured in bond

    the pound

    0

    10

    4½

    Other manufactured tobacco

    the pound

    0

    10

    4½

    Snuff containing more than 13 lbs. of moisture in every 100 lbs. weight thereof

    the pound

    0

    9

    9½

    Snuff not containing more than 13 lbs of moisture in every 100 lbs. weight thereof

    the pound

    0

    11

    10½

    And 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.

    TOBACCO (EXCISE).
    Resolved,
    12. That in lieu of the duties of Excise payable on tobacco grown in Great Britain or Ire-land there shall on and after the twenty-third day of April nineteen hundred an eighteen, be charged the following duties (that is to sat):—

    £

    s.

    d.

    Upon tobacco unmanufactured, viz:

    0

    8

    0½

    Tobacco containing 10 lbs. or more of moisture in every 100 lbs. weight thereof

    the pound

    Tobacco containing less than 10 lbs. of moisture in every100 lbs. weight thereof

    the pound

    0

    8

    10½

    Upon tobacco manufactured, viz:—

    Cavendish or Negrohead manufactured in bond

    the pound

    0

    10

    4½

    and so in proportion for any less quantity.
    And 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.

    LUXURY DUTY.
    Resolved,
    13. That there shall be charged on all payments made in respect of the purchase or supply of articles sold or supplied in Great Britain or Ireland (excluding articles sold wholesale, unless sold by auction), which shall be declared by Resolution of the Committee of Ways and Means of this House to be articles of luxury, and on all payments made in respect of goods sold or supplied, accommodation supplied, or ser vices rendered, at any place in Great Britain or Ireland which shall be declared by Resolution of the Committee of Ways and Means of this House to be a place of luxury, an Excise, Duty of an amount equal to one-sixth part of the payment.

    INCOME TAX.
    Resolved,
    14. That—

    (a) Income Tax shall be charged for the year beginning the sixth day of April nineteen hundred and eighteen, at the rate of six shillings in the pound, and the same additional Income Tax on the income from certain securities shall be charged for that year as was charged for the year beginning the sixth day of April nineteen hundred and seventeen;

    (b) the like provisions shall have effect with respect to the Income Tax so charged (including the said additional Income Tax) and the annual value of property as had effect with respect to the income Tax charged for the year beginning the sixth day of April nineteen hundred and seventeen, and the value of property during that year; and

    (c) 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.

    INCOME TAX (EARNED INCOME).
    Resolved,
    15. That the relief given in respect of earned income shall be modified so as to allow relief only as follows, namely, relief by way of the reduction of the rate of the tax to:—

    2s. 3d. if the total income does not exceed five hundred pounds;

    3s. 0d. if the total income exceeds five hundred pounds and does not exceed one thousand pounds;

    3s. 9d. if the total income exceeds one thousand pounds and docs not exceed one thousand five hundred pounds;

    4s. 6d. if the total income exceeds one thousand five hundred pounds and does not exceed two thousand pounds;

    5s. 3d. if the total income exceeds two thousand pounds and does not exceed two thousand five hundred pounds.

    And 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.

    INCOME TAX (UNEARNED INCOME).
    Resolved,
    16. That the relief given to an individual in respect of unearned income shall be modified so is to be such as will reduce the rate of tax on his unearned income to—

    3s. if the total income does not exceed £500.

    3s. 9d. if the total income exceeds £500 but does not exceed £1,000.

    4s. 6d. if the total income exceeds £1,000, but does not exceed £1,500.

    5s. 3d. if the total income exceeds £1,500, but does not exceed £2,000.

    And 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.

    INCOME TAX (SUPER-TAX).
    Resolved,
    17. That—
    (a) the additional duty of Income Tax (called Super Tax) shall be charged, in respect of incomes which exceed £2,500, as follows:—
    in respect of the first

    £2,000 of the income

    Nil.

    in respect of the excess over £2,000—

    for every pound of the first £500 of the excess

    one shilling.

    for every pound of the nest £500 of the excess

    one shilling and sixpence.

    for every pound the next £1,000 of the excess

    two shillings.

    for every pound of the next £1,000 of the excess

    two shillings and sixpence.

    for every pound of the next £1,000 of the excess

    three shillings.

    for every pound of the next £2,000 of the excess

    three shillings and sixpence.

    for every pound of the next £2,000 of the excess

    four shillings

    for every pound of the remainder of the excess

    four shillings, and sixpence.

    and
    (b) the like provisions shall have effect with respect to the Super Tax as so charged as had effect with respect to the Super Tax charged for the year beginning the sixth day of April nineteen hundred and seventeen; and
    (c) it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provision of the Provisional Collection of Taxes Act, 1913.

    INCOME TAX (CHARGE ON SCHEDULE B TAX).
    Resolved,
    18. 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 an amount equal to twice the annual value thereof instead of for every twenty shillings of the annual value thereof, and the Acts relating to Income Tax (including any enactments relating to relief from tax) shall have effect accordingly.
    And it is hereby declined 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.

    INCOME TAX (DEDUCTION ON ACCOUNT OF LAND ABROAD NOT TO BE ALLOWED).
    Resolved,
    19. That in estimating the amount of annual profits or gains arising or accruing from any profession, trade, employment, or vocation and chargeable to Income Tax under Schedule D., no deduction shall be made on account of the annual value of any premises used or occupied for the purpose of that profession, trade, employment, or vocation if the premises are situated outside the United Kingdom.
    And it is hereby declared that it is expedient in the public interest that this Resolute on shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

    EXCESS PROFITS DUTY.
    Resolved,
    20. That Excess Profit Duty under Part III. of the Finance (No. 2) Act, 1915, as amended or extended by any subsequent enactment, shall, unless Parliament otherwise determine, be charged for any accounting period ending on or after the first day of August nineteen hundred and eighteen, and before the first day of August nineteen hundred and nineteen.

    EXCESS PROFITS DUTY (TRADING STOCKS).
    Resolved,
    21. That for the purpose of Excess Profits Duty profits arising from the sale of trading stock otherwise than in the ordinary course of trade, at any time after the twenty-second day of April nineteen hundred and eighteen, shall be deemed

    809
    to be profits arising from a trade or business, and where any such sale takes place after a trade or business has ceased the trade or business shall for the purpose aforesaid be deemed to have been carried on up to and including the date on which the sale takes place and where any trading stock is disposed of otherwise than by way of sale it shall for the purpose aforesaid be treated as having been sold.

    STAMP DUTY (BILLS OF EXCHANGE).
    Resolved,
    22. That twopence shall be substituted for one penny as the Stamp Duty on all bills of exchange and promissory notes now chargeable with duty at the rate of one penny.
    Resolutions to be Reported to-morrow; Committee to sit again To-morrow.

  ARMY (ANNUAL) BILL.
  As amended, considered.
  The following new Clause stood on the Paper in the name of Mr. MACPHERSON:
  At the end of Sub-section (1) of Section fifty-two of the Army Act the following proviso shall be inserted:—
  Provided that the oath to be administered to the President shall be in the above form but with the addition after the words "you do further swear that" where those words firstly occur of the words "except so far as may be permitted by instructions of the Army Council for the purpose communicating the sentence to the accused.
  The UNDER-SECRETARY of STATE for WAR (Mr. Macpherson): In response to representations which were made to me in various quarters of the House on the Committee stage of this Bill, I promised that, either in another place or here on the Report stage, a new Clause would be put down dealing with the question as to whether the sentence passed upon any accused person at a court-martial where the death penalty might be enacted would be divulged to him by the Court at the time of the trial. I put down a new Clause on the Paper to-day, but I would like to substitute, if I may, another Clause which I think will convey better the representation which was made to me. It has got exactly the same meaning, and will allow any member of a Court to divulge the sentence which has been passed upon the accused person. As the House will remember, I suggested it might be proper to vest that power in the president, but during the course of the trial anything might happen to the president, and, accordingly, I thought it advisable and wise to put the now Clause in the form I now propose.

  ARMY (ANNUAL) BILL.

    NEW CLAUSE.—Amendment of s. 52 of Army Act.
    In Subsection (1) of Section fifty-two of the Army Act which prescribes the oath to be administered by members of courts-martial, the following words shall be inserted after the words "you do further swear that," "except so far as may be permitted by instructions of the Army Council for the purpose of communicating the (Sentence to the accused."—[Mr. Macpherson.]
    Brought up, and read the first time.
    Mr. MACPHERSON: I beg to move,
    "That the Clause be read a second time."
    Mr. PRINGLE: I wish to thank my hon. Friend for putting this Clause on the Paper, and, further, for the alteration in the form in which ho has now moved it. As the concession has been moved, it does not entirely meet the case which has been put by those who have been criticising the Bill in regard to courts-martial and the possibility of the appeal from the decisions of courts-martial. We, however, recognise that the power now given to communicate the sentence, when it has to do with the capital penalty, has this advantage: that in future the soldier or officer who is thus rendered liable to the capital penalty will have the opportunity of obtaining the evidence which has been placed before the Court and to make representations to the authorities. Many of us would have desired that there should have been set up a regular Appeal Tribunal in all these cases, so that there would have been an opportunity of revision such as there is in civilian trials in this country. We understand, of course, the difficulty, especially at the present time when there has been a change in the Secretary of State, in obtaining such a revolutionary change in procedure. We also recognise, in making this concession, that the hon. Gentleman has made a concession which is in the interests of men who may be in this unfortunate position. As we understand it at present, if a man is under trial on the capital charge the sentence is not divulged to him until it is going to be carried out.
    Mr. MACPHERSON: Until it is con firmed.
    Mr. PRINGLE: He knows, of course, that he has been found guilty of the charge, but he does not know whether he has been found guilty on the capital charge. The result is that he has no opportunity, first of all, of obtaining a note of the evidence taken at the trial, or of

    811
    making representations by way of securing a revocation of the penalty. The concession now made will enable the men to know first of all that this sentence is going to be pronounced upon him, and, secondly, The will be able to obtain the evidence upon which the Court has acted. Having that evidence, he will also be able to make any representations which he thinks are necessary, or may be useful, to the authority which may confirm the sentence. The concession that has just been made is a substantial improvement in respect to the administration of this matter.
    Mr. HUME-WILLIAMS: I do not in the least object to the Clause as the Undersecretary read it. The only objection I have to it is that it does not go far enough. I am sure, too, by an oversight, and misapprehension on the part of the hon. Member, it does not quite carry out what we, at any rate, understood the Undersecretary to say he would do. The hon. Gentleman will, I am sure, remember that the discussion was devoted mainly to two subjects. The first was, it was suggested that officers who were going to be dealt with the authorities should be allowed an interview before sentence was passed; and, secondly, the discussion turned upon the question of Courts of Inquiry, when I suggested, as strongly as I could, that there should either be some Court of Appeal from the Court of Inquiry or else the officer, before conviction by the Court of Inquiry, should be given the option of being tried by court-martial. In the discussion the hon. Gentleman said he would do his best at once to make representations to his colleagues and advisers; he also conveyed the impression to the House of undertaking to give an interview to the soldier or officer. "It may be possible," he said, "to bring in a rule which I can place on the Table of the House.
    Mr. MACPHERSON: I am coming to that?
    Mr. HUME-WILLIAMS: The hon. Member for East Edinburgh raised the question that the Committee stage ought not to be allowed to go on unless the hon. Gentleman produced the words on the Report stage, and the Under-Secretary for War replied, "I am quite willing to agree to- that." I came down in-day hoping that the Clause on the Paper
    812
    would cover as well the other two questions which were the subject of debate. I hope the hon. Gentleman will not think that I am asking for the slightest departure from what he promised, but I think that there has been some oversight.
    Mr. MACPHERSON: I know perfectly well what the undertakings were, and I said that I would keep my promise of a bargain, and I hope I have. Under the Army Act there is no provision to allow any officer who has been asked to resign his commission to appear by a personal interview before any individual member of the Army Council. That is the point which the Member for East Edinburgh pressed upon me, and I said that I would see that my part of the bargain was fulfilled. At the present moment officers serving either at home or on leave from abroad have the right to see the Military Secretary upon any personal questions arising, whether of promotion or anything else, and I do not think anybody would wish for a better Military Secretary than General Sir Francis Davies, who is only too anxious to see every officer, and does see those who care to call to see him, and they can come without having previously made an appointment in writing. After consultation with my legal and military advisers, I find that the best possible thing is to frame a new King's Regulation upon the analogy of the Regulation which governs these interviews with Military Secretary. This is the Regulation:
    "Officers of all ranks on the active list, whether serving at home or on leave from abroad, may interview the Military Secretary on personal questions relating to appointments, promotions, etc. In such cases no written permission is necessary."
    I propose to issue an Army Order amending the King's Regulations which would give any officer, who had been asked to resign, the right to appear before any individual member of the Army Council for a personal interview to state his case. My promise was that any officer or soldier who felt himself aggrieved should have this right of personal interview. That was the only pledge I gave. With regard to the remaining point raised by the hon. and learned Member that there should be an appeal from the Court of Inquiry, I have been looking into that question. I did not make any explicit pledge, but what I said was that I would look carefully into the point and see if I could do anything to meet the hon. Member. I have not been able to do anything, and I

    813
    will tell the House why. In my judgment the name "Court of Inquiry" is a misnomer. There is no evidence taken, and there is no finding. The Court of Inquiry is a collection of officers instructed to ascertain certain facts, and they report to the authority which constituted them. They are not governed by rules of evidence as is a court-martial. I call it a misnomer. [An HON. MEMBER: "A fraud!"] I do not go so far as that. I know of many such Courts that have done their work in an admirable manner, and have well fulfilled the purpose for which they were constituted.
    Mr. HUME-WILLIAMS: It is poor consolation to officers to be told the Court is not governed by rules of evidence. Evidence is taken, and as a result a report is made upon it.
    Mr. MACPHERSON: The Court of Inquiry merely reports: it does rot make a finding. It investigates certain facts and reports, but it does not follow that any action is taken on the report. I do not see how we could constitute a Court of Appeal from a Court of Inquiry.
    Mr. ROCH: But the report is often acted upon. What I suggest is that if the title is a misnomer, at any rate before its report is acted upon, there should be a veal trial before a Court which is not a misnomer.
    Mr. HUME-WILLIAMS: That is the suggestion which I made, and which I understood the hon. Gentleman to accept. I should have put an Amendment down to that effect but for what I thought to be the undertaking given by the hon. Gentleman. My suggestion was that where an adverse opinion was given in the report it should be communicated to the officer and that he should be given the right of trial by court-martial. That is the only Court of Appeal I ask for.
    Mr. MACPHERSON: As I have said, I have carefully looked into the matter. If the report which has been submitted has been considered by the superior authority which has constituted the Court, and they have come to the conclusion that on the report of that Court of Inquiry the officer should be called on to resign, I, personally, do not see why that officer should not have the same right as in the other case, namely, to a personal interview with one of the members of
    814
    the Army Council. I think that will meet the case which has been put by my hon. and learned Friend. But no officer is entitled to a court-martial as a matter of right. Everybody knows that, and I cannot promise here that in every individual case that is raised if an officer feels himself aggrieved he shall by the mere asking be entitled to a court-martial. I will not go as far as that, but I do think I can go as far as saying that if upon the finding of a Court of Inquiry the officer's conduct has been considered to be misconduct before he is called on to resign he should, if he so wishes it, have the opportunity of appearing before an individual member of the Army Council.
    Brigadier-General McCALMONT: I desire to say a word or two in support of my hon. Friend (Mr. Macpherson) on the subject of a Court of Inquiry. I think it is much more a Committee than a Court. At the same time, I am bound to say that I can see absolutely no object in the new Clause which is now before the House. I do not see that it is going to benefit anybody, least of all the accused. The accused man is now, as I understand it, when condemned to death going to be brought before the Court. I garner that for the purposes of this Act he shall, for the time being, be released from arrest. He will be in the Court-room with members of the Court only—which is not always a pleasant situation for the Court—and will be told by the Court that he has been sentenced to death. There are many cases in my mind in which men have been sentenced to death by Courts, and the man has never been told he was sentenced to death, for the very good reason that the sentence has been quashed by the revising authority. Therefore, a lot of unnecessary anxiety and pain is going to be put on the man by telling him he has been sentenced to death when the sentence may never be carried out at all. I am sorry I was not able to take part in the Committee stage of this Bill, because having had experience, not only as a prosecuting but as a confirming officer, I know how many of these sentences have never materialised.
    I know that hon. Members are under the impression that they will benefit these people, but they are really doing the reverse. If there were going to be a Court of Appeal, it would be a different matter, because it would be necessary to tell the accused the sentence; but I do not see

    815
    why you should tell him now until the sentence has been confirmed. I regret that my hon. Friend has been pressed by public opinion in this House to bring in an Amendment of the Army Act which I am sure will be quite misunderstood in the Army, and which is not of any practical value, except in so far as it salves the consciences of hon. Members of this House and makes them imagine that they are benefiting the unfortunate private soldier. I think it is an unfortunate thing. It has been done in a great hurry and does not benefit anybody.
    One other word about the Court of Inquiry. It seems to be forgotten that the Court of Inquiry is merely a Court set up by the senior officer to assist him to come to a conclusion. If any man's conduct is called in question he is entitled to be present throughout the time during which evidence is being given against him, and this proposal, under which I understand such officers having held an adverse verdict from a Court of Inquiry are to be allowed to see a member of the Army Council, will, it seems to me, add a good deal to the labours of the Army Council. I do not know whether their numbers arc to be added to for this purpose, but I can imagine thousands wanting to see them, and it will be useless to see a member of the Army Council unless the officer can bring his evidence with him. If everybody concerned in every case is going to be brought home, plus all the evidence of the various senior officers concerned, it will add very much to the labours of the Army Council without in any way adding to the efficiency of the investigations.
    Mr. SHERWELL: I am inclined to concur in what the hon. and learned Member (Mr. Hume-Williams) has said, that the statement of the Under-Secretary does not, at least in my estimation, carry out the whole of the scope of the assurance as understood by those of us who took part in the Debate last week. My hon. Friend the Under-Secretary just now argued from the point of some appeal for a further inquiry than the Court of Inquiry. He will remember, if he recalls the Debate, that the point which was taken with great emphasis by some of those who took part in the discussion was the case of the officer who may be degraded in connection with a charge upon which he himself has never been heard.
    Mr. MACPHERSON: There is no charge in a Court of Inquiry at all.
    Mr. SHERWELL: That only confirms the impression that I was just now expressing. We raised cases of officers who had been degraded, say, on charges of cowardice without the least opportunity from first to last of presenting their evidence or giving their version of the facts. It is within the recollection of my hon. Friend the Under-Secretary that in certain of such cases the decision had to be reversed on a subsequent occasion after the man himself had been practically dismissed. What I am certain other members of the House contended for in the course of the discussion last week, was that there should be some security that the officer or man should not be made the victim of a capricious judgment, where there was no securing that full evidence of the facts of the case had been presented before the authority pronouncing judgment. I have in mind cases where there is no Court of Inquiry or court-martial from first to last. What I and other hon. Members contended for was that there should be some opportunity of having the man's own case presented before judgment was pronounced, and so long as you have no security in the Army under the Regulations that the man shall not be condemned before he has had the opportunity of presenting his evidence, there is injustice in any pronouncement of sentence. The Under-Secretary to-night has dealt entirely with the case of the officer. In the discussion last week very great emphasis was laid upon the case of the private. The case of the private becomes of extreme importance under the conditions which obtain to-day, when you have virtually a civilian Army composed of classes of men who were not formerly enlisted in the establishment of the Army of this country. I am bound to express my disappointment that so little has come from the understanding that we thought was arrived at in the Debate last week.
    Mr. HOGGE: I raised this question originally and got the promise from my hon. Friend, and, although he has done literally what he said he would do by granting an interview to each of the applicants, I would submit that he has not really carried out what we imagined he would do, namely, put down a new Clause similar to that which was proposed by the for and gallant Member for Southampton (General Sir Ivor Philipps).

    817
    The Clause attempted to erect a new Court which my hon. Friend said he could not accept; and out of the discussion there arose the other point which my hon. Friend has dealt with, namely, that each man, if he desired, should have access to one or other of the members of the Army Council so that he could raise his case. That is something gained. The reason why I think that is that the Army Council will find, as a result of making this concession, that they will not be able to cope with a situation they have created for themselves and they will be bound to give a real Court of Appeal. There will be so many cases of men who will want to see one or other of the members of the Army Council, that the members of the Army Council will require, for the purposes of self-protection, to go further and create a Court of Appeal. I look at this concession from the point of view that, after all, we have got our foot in the door, and that the door cannot be shut now on the real Court of Appeal that we want, because there are so many men who will seek access that, as a matter of fact, the Army Council will seek self-protection. It is monstrous that so many men should be turned down. They are chiefly lieutenants. They have been dismissed, or have dismissed themselves from the Army, because they have had so much spirit that they preferred to be dismissed rather than send in their resignations. I know many of these men. It is monstrous that they should be turned out of the Army without any opportunity of stating their case. That is never given to them from first to last. Whether or not this concession will achieve the purpose, I do not know. At any rate it will enable them to get access to some member of the Army Council and put their point of view. While I should have liked that the spirit of the suggestion made by the hon. and learned Gentleman (Mr. Hume-Williams) should have been put on the Paper, we have moved a considerable way towards putting the Army Council in such a position that, in I order to protect themselves, they will have to create finally, and very shortly, what we have suggested.
    Major HUNT: While the Undersecretary has said that he is going to make things a little better for officers in future, he is doing nothing at all for the very large number of officers who have practically been kicked out of the Army in the past. In future, officers are to have some chance, but he will not give any chance at all to
    818
    those who during this War have been kicked out, and who have had no trial and no chance of defending themselves. They have had nothing approaching the chance possessed by the ordinary civilian who has murdered his wife. I put the case of Colonel Monteagle-Browne to the hon. Gentleman some time ago and I had no answer from him. The War Office has not a ghost of a case; they had to go back to an alleged case of cribbing 18 years ago as one of the reasons for turning a distinguished officer out of the Army. Something should be done for the officers who have already been turned out, at all events during this War, as well as for the officers who may be told to resign in future. It is very unfair that during the same war some officers should have some sort of chance, which the hon. Member appears to be going to give them, while other officers who have served what we hope will prove to be the greater part of the War will have no chance at all. They have absolutely no chance of putting chair case before anything approaching a fair tribunal. They are to have no trial; they are just kicked out at the will of the commanding officer. There have been a great many such eases in the past and there is a very great deal of feeling about it in the Army. There ought to be something done in this matter for the officers before this time as well as after it, and I hope the hon. Gentleman will ask the Army Council whether something cannot be done. The feeling among the officers in France about Colonel Browne's case is very strong indeed, and really are you 80 very full of even colonels, who have admittedly done very good service, that you can afford to continue to keep out of the Service a man who is anxious to fight for his country? Is it not possible that you maybe able to give another chance to a man who has admittedly proved himself to be a good fighting officer?
    Colonel LESLIE WILSON: I desire to associate myself very strongly with the remarks which have fallen from my hon. and gallant Friend opposite with regard to the insertion of this Clause. I consider it a very serious matter indeed that power should be given to members of a Court to divulge the sentence to the accused until it has received confirmation. I have had a considerable experience of courts-martial, and in the days before the War it was very seldom indeed that any convictions were quashed. That was from the knowledge the officers naturally had. which they have not to-day, of military law. While

    819
    justice is meted out just as well to-day as in those days before the War, it is undoubtedly the fact that the number of convictions which are quashed in France is very large indeed. There is a very high percentage.
    Mr. MACPHERSON: Ninety per cent. are commuted.
    Colonel LESLIE WILSON: Ninety per cent. of the accused who formally receive sentences which are never going to be carried out. That is a very strong argument for the non-retention of the Section. The reason is that the Judge-Advocate-General, having a larger number of officers at present who have not had an opportunity of being well versed in military law is very careful in examining every case which comes up before him. The whole reason why this Court of Appeal is asked for is with regard to certain cases which have come to the notice of this House and which this Clause will not meet in the very least. The principal case which Members had in view was one in which an officer was informed at 7 o'clock one evening that he was going to be shot at 7 o'clock next morning. Even if this Clause were brought into operation it would not meet a case such as that, and I really think it is very dangerous in the interests of the men and of discipline in the Service, that this Clause should be inserted.
    Major DAVIES: I raised this question of a military Court of Appeal, and I desire to thank the Under-Secretary for the slight concession he has made. When this matter was discussed on the Committee stage appeals were made to the hon. Gentleman from all parts of the House to set up a military Court of Appeal, and we hoped that when we came down to-day we should find a Clause on the Paper carrying out the proposals which were made to him. He said he would consider the matter in conjunction with his military advisers, and that he would get some proposal to put before us when we came to the Report stage. Has he put the case to the Judge Advocate-General? As he told us, there was a feeling in the country that there might be something wrong, and I am sure there is no one who is more anxious to put it right than the Under-Secretary. I appeal to him when the Bill comes to another place whether he cannot find, with the advice of his
    820
    learned adviser the Judge Advocate-General, some Clause whereby he might meet the very general desire on the part of the House to have a provision inserted which will allow officers who are dismissed from the Army to make an appeal and to explain their cases before a properly constituted tribunal. Personally I have not much faith in the appeal to the members of the Army Council, because they are all at present overworked, and I do not think they have the time at their disposal to give proper attention to the many cases which must necessarily come before them. I join with the hon. and gallant Member (Major Hunt) in the appeal to the hon. Gentleman to make this Clause retrospective. We all know that from time to time Members of Parliament are appealed to by-officers who think they have been, aggrieved to bring their cases before the notice of the War Office and this House. A most invidious task is imposed upon us to bring these personal cases of hardship to the notice of this House or before the War Office. It would be better if the War Office would take their courage in both hands and set up a tribunal to give these officers the hearing denied to them. I am not at all satisfied with the concession which my hon. Friend has made, and I hope the War Office will go further and set up a properly constituted tribunal to deal with this work.
    Sir G. TOULMIN: I have no experience either of Courts of Inquiry or of courts-martial, but I can imagine no greater condemnation of the system than that which has been exposed by the hon. and gallant Member (Colonel L. Wilson). A system under which 90 per cent. of what he calls sentences are quashed—
    Colonel WILSON: Not confirmed.
    Sir G. TOULMIN—seems to me to be a very peculiar one.
    Mr. MACPHERSON: That is not so.
    Sir G. TOULMIN: The civilian Members of the House can only take a view of these methods by what is laid before them by the Service members, and it seems to me that that statement of the hon. and gallant Member is an extremely serious one, and does condemn the system.
    Mr. MACPHERSON: It is not right to say "quashed." There is a misunderstanding. The fact is that 90 per cent. of

    821
    the recommendations for mercy by the courts-martial were assented to by the Field-Marshal Commanding-in-Chief.
    Sir G. TOULMIN: I do not think I was responsible for the use of the word "quashed." It was used by the hon. and gallant Gentleman. If they are recommendations to mercy, that puts a different complexion upon it. But these Courts of Inquiry are not Courts; the charges are not charges; the decisions are not verdicts; the sentences are not sentences.
    Mr. MACPHERSON: These are courts-martial. Courts-martial only try men for culpable offences. The courts-martial alone make recommendations to mercy.
    Sir G. TOULMIN: The courts-martial deliver the sentence, but the sentence has to be confirmed by high authority?
    Mr. MACPHERSON Mr. MACPHERSON indicated assent.
    Sir G. TOULMIN: Am I to understand that in these cases there is a definite charge, and a definite sentence delivered, which the accused is allowed to know?
    Mr. MACPHERSON: Certainly!
    Sir G. TOULMIN: Allowed to know at once?
    Mr. MACPHERSON: No.
    Sir G. TOULMIN: He is not allowed to know it at once. Then it appears to me that the Under-Secretary has done the very least he could in the concession which he has made. I do not see how there can be any justice to a man unless there is a full hearing where there is a definite charge, and a verdict and sentence.
    Mr. MACPHERSON: There is a definite charge stated at every court-martial.
    Sir G. TOULMIN: There are also Courts of Inquiry when there are no charges, and there is an extraordinary case in reference to what I am not allowed to call an offence, seeing that the man is not charged with an offence. In all these cases I think that officers and men are entitled to know that upon which they are likely to be condemned, whether they are condemned by a sentence or by a decision.
    Major WARING: It is a little unfortunate that this House is discussing two totally different things upon this simple Clause. We are discussing a Court of Appeal not against a sentence, but against a decision. With regard to officers who are
    822
    not court-martialled at all, and with regard to officers who do not even appear before Courts of Inquiry, an appeal against decisions of that kind I think is required, and I hope that the Undersecretary will some time or other be able to do something with regard to these grievances which officers have. But the Clause which we are discussing is a different one. The idea is to give some kind of appeal to a soldier when he has been court-martialled and condemned to death. What happens at the court-martial is this: Three officers form the Court. The soldier is brought in, evidence is taken, there is cross-examination and so forth, and then the Court is closed and the finding is come to; and if the soldier is found guilty the Court is reopened, and he is brought before the Court, and certain evidence is taken with regard to character, etc. The Court is closed again, and the sentence is considered, but the soldier is not again brought before the Court.
    The reason why the sentence is not declared to him is that it has to go for confirmation to a superior military authority. That confirmation itself forms a kind of appeal. There is, at all events, a revision by officers of great military experience, assisted, of course, by the Judge Advocate-General, and, as has just been said, 90 per cent. of the courts-martial in France apparently have not been confirmed. Therefore, as the hon. and gallant Gentleman has said just now, it is surely better that the soldier should never know that he was condemned to death at all. He does not know it at the present time. Surely this is better than that the Court should consider its finding and sentence and then send for the soldier and say, "You are condemned to death, but you have got to wait a week to see whether that sentence is confirmed or not." I do not see what advantage the soldier would get out of that. I think this is a very dangerous Clause to pass, and I sincerely hope that the House will consider very seriously whether it will not divide against it. It is certainly not going to be of any advantage to the soldier. If you set up a Court of Appeal against the sentence after informing the superior military authority, then I will support it. I think there should be such an appeal. I think where a man is condemned to death you ought to give him a Court of Appeal, just as you have a Court of Criminal Appeal in civil law. What you suggest now is not only of no

    823
    value, but would, I think, be an additional hardship on the soldier who had been condemned by court-martial.
    Mr. HUME-WILLIAMS: I know I cannot again speak without leave, and I ask you, Sir, whether I can again address the House or reserve my remarks to the Third Reading?
    Mr. SPEAKER: That is not a question for me, but for the House.
    Mr. HUME-WILLIAMS: With the leave of the House, I would state that I am very sorry that the hon. Gentleman has not seen his way to carry out the assurance he gave on the last occasion to bring this before the Army Council and do his best in the matter.
    Mr. MACPHERSON: I did.
    Mr. HUME-WILLIAMS: Of course, we know that a Court of Inquiry is not in any sense a court-martial. It may be a misnomer to call it a Court of Inquiry. It sits and takes evidence, it considers the question affecting the soldier, it makes its report, and the report is acted upon. What is the distinction between a Court of Inquiry and a court-martial? I can say from personal experience that a court martial is admirably conducted. The ordinary rules of evidence obtain, the Judge Advocate-General sits on the right hand of the President, and the evidence is given on oath. The accused has the right, of being represented; he gets a fair trial, and I have never in the course of my experience heard a single complaint from any man as to the decision given against him by a court-martial. A Court of Inquiry is altogether different. It is not a Court with any experience of trials, and the rules of evidence do not prevail. I have a letter from a high officer of the War Office, in which he says:
    "I think probably you may be under the impression that the laws of evidence govern the Court of Inquiry; such, however, is not the case."
    The laws of evidence are the concentrated essence of common sense, and are for the protection of the accused. What is the result? They take written statements by people who are not parties to the proceedings, whose evidence you cannot test, and that you do not see. There was a case during a recent Court of Inquiry where a letter was put in and handed to the President of the Court, and was read by
    824
    him. It dealt with the opinion given by Major F.—I do not want to give his exact name—on the subject of the inquiry. It so happened that a little later Major F. was called, and the letter was put to him. This is what he said:
    "Oh, I cannot accept that as a statement of mine. I know what that might be. When I went to the Embassy, 'and so on,' I saw one of the officers there. He asked me a question. That is not my own written statement. That seems possibly someone else's idea of what I said."
    Yet, if this gentleman had not been called and that explained, probably that letter would have been acted upon. My hon. Friend knows of many cases where a Court of Inquiry, which has been assembled informally, has paid no attention to the rules of evidence. The reputation of an officer depends on their decision—one case that I know of was that of a commanding officer of a regiment—comes into question. He is not told before he goes there what it is that is going to be inquired into. The Court adjourns, it does not meet again, a report is sent in, and he is deprived of his position in the Army. His whole life has been spent in the Army, and there is no other career open to him but that. There is no redress, and what consolation is it to tell him, "It was not a Court at all j it was only a sort of informal means of inquiry, and the report which has been made in respect of you is partly what was ascertained at the Court of Inquiry and partly some other private information which will not be communicated" The only redress is under Section 42 of the Army Act, an appeal to the King, which goes back to the Army Council, to whom the report has been sent, and who have acted upon it. This is very unsatisfactory. I do not speak as a lawyer, although one's training rebels against procedure of this kind, which does not seem to be consonant with the ordinary principles of English justice. If you are going to have a trial, let it be a fair trial. If a man is not going to have a fair trial then act without one. but do not set up Courts of Inquiry and let them proceed on principles of this kind. The remedy is this. If you are going to proceed against a man, give him the option—safeguard it if you like—of having a trial by court-martial, where he will have a proper and fair hearing.
    Question put, and agreed to.
    Clause read a second time, and added to the Bill.

    NEW CLAUSE.—(Amendment of s. 140 of Army Act.)
    Section one hundred and forty of the Army Act (which relates to deductions from ordinary pay) shall be amended as follows: The word "whether" and also the words "or partly in one day and partly in another "where they occur in Sub-section (2) thereof shall be left out. — [Major Hayward.]
    Brought up, and read the first time.
    Major HAYWARD: I beg to move,
    "That the Clause be read a second time."
    It may not appear to be a vital point, but it is an Amendment of real substance so far as the soldiers are concerned. Section 138 of the Army Act provides for the deduction from the pay of a soldier for any absence without leave. It lays down that ho is to forfeit one day's pay for every day's absence. Section 140 explains the way in which the day is to be reckoned. It states that
    "no time shall be so reckoned as a day unless the absence or imprisonment or detention has lasted for six hours or upwards, whether wholly in one day or partly in one day and partly in another."
    It follows from that that the clear intention of Parliament was that if a man were not away during the whole of these hours they could not be reckoned as a day against him in this forfeiture of pay. But, in the Manual of Military Law, in a note to the Section, there is an explanation of the Clause in the Act. I propose to read it to the House:
    "Thus, a soldier forfeits one day's pay for any period of six clear hours continuous absence without leave. Where the absence extends for twelve hours he forfeits one day's pay in respect of any day reckoned from midnight to midnight dining any portion of which he was absent."
    I submit that that note does not carry out what was the clear intention of Parliament in passing Clause 140, and in practice this is the note which governs commanding officers in construing the Clause. The consequence is this: Supposing a man were away from twelve midnight one night to twelve midnight on the next the case is quite clear—he forfeits one day's pay. But I will take an extreme case. Supposing he is away from five minutes to twelve midnight, say, on the Monday night, and is away the whole of the Tuesday, and he comes back at five minutes past twelve on the Wednesday morning—that is, he is absent twenty-four and ten minutes. In that case, under the note in this Manual of Military Law, the man forfeits three days' pay. I
    826
    think it is obvious that that note does not carry out what was the clear intention of Parliament, and may I point out that this deduction from pay is not a punishment at all? It is an automatic deduction on the principle that, if a soldier is not present doing his work he is not going to get paid for it. Absence without leave is an offence against the Army Act for which a man, in addition to this deduction of pay, may be punished, and generally is punished as well, and that punishment generally takes the form of a fine. I submit it is essential in this respect, the Statute should at least be construed in favour of the soldier, and not against him. It is in order to carry out what I believe was the clear intention of Parliament at the time that I put down this new Clause.
    Colonel L. WILSON: I beg to second the Motion.
    The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Forster): There is not mush—at least there is very little difference of opinion between the military authorities and my hon. and gallant Friend. I think the practice of deducting three days' pay in respect of twenty-four hours and ten minutes absence is wrong, and I propose to accept broadly the view which my hon. and gallant Friend has put before the House. But I am afraid I cannot accept the Clause in the form in which ho has moved it. If we were to accept the Clause he has moved, it would give the soldier freedom to absent himself without leave for almost twelve hours. If you say he is to have six hours absence without leave in any one day, giving him the opportunity of absenting himself for very nearly six hours before midnight and very nearly six hours after midnight, he would have a night off without leave, and I do not think that would do. But I am quite willing to protect the essential point my hon and gallant Friend has in mind, and, if I may, I will move to amend the Clause which he has proposed so that it will run like this:
    Section one hundred and forty of the Army Act (which relates to deductions from ordinary pay) shall be amended as follows:
    In Sub-section (2) the following shall be substituted for the words from "so, however, that" to the end of the Sub-section, "so, however, that (a) no person shall be treated as absent, imprisoned or detained for the purpose aforesaid, unless the absence, imprisonment or detention has lasted six hours or

    827
    upwards, except where the absence prevented the absentee from fulfilling any military duty which was thereby thrown on some other person; (b) a period of absence, imprisonment or detention which commences before and ends after midnight may be reckoned us a day; (c) the number of days shall be reckoned as from the time when the absence, imprisonment or detention commences; and (d) no period of less than twenty-four hours shall be reckoned as more than one day.
    The effect of this Amendment, I think, is such that it meets the object of my hon. and gallant Friend, and makes clear in the Act what is the intention of Parliament. I think it certainly will be an Improvement.
    Question put, and agreed to
    Clause read a second time.
    Amendment made: Leave out the words,
    "The word 'whether' and also the words 'or partly in one day and partly in another' where they occur in Sub-section (2) thereof shall he left out,"
    and insert instead thereof the words,
    "In Sub-section (2) the following shall be substituted for the words from 'so, however, that,' to the end of the Sub-section, "so, however, that (a) no person shall be treated as absent, imprisoned or detained for the purpose aforesaid, unless the absence, imprisonment or detention has lasted six hours or upwards, except where such absence prevented the absentee from fulfilling any military duty which was thereby thrown on some other person; (b) a period of absence, imprisonment or detention which commences before and ends after midnight may be reckoned as a day; (c) the number of days shall be reckoned as from the time when the absence, imprisonment or detention commences; and (d) no period of less than twenty-four hours shall be reckoned as more than one day."—[Mr. Forster.]
    Clause, as amended, added to the Bill.
    Question, "That the Ball be now read the third time," put, and agreed to.
    Bill read the third time, and passed.

  GAS UNDERTAKINGS (STATUTORY PRICES).
  Ordered, That a Select Committee be appointed to consider and Report whether it is expedient that some provision should be made for the temporary modification of statutory requirements with regard to price and dividend in the case of gas undertakings whose financial circumstances have been injuriously affected by causes arising out of the War; and, if so, on what terms and conditions and whether by Private Bill or general legislation.
  The Committee was accordingly nominated of: Mr. Acland Allen, Mr. Anderson, Mr. Allen Baker, Mr. Field, Mr. Fletcher, Mr. Macmaster, Sir William Middlebrook, Mr. Robinson and Mr. Stewart.
  Ordered, That the Committee have leave to hear Counsel upon the matters referred to them so far as they think fit.
  Ordered, That the Committee have power to send for persons, papers and records.
  Ordered, That Three be the quorum.—[Lord Edmund Talbot.]
  The remaining Orders were read, and postponed.
  And, it being after half-past Eleven of the clock, Mr. Speaker adjourned the House, without Question put, pursuant to the Standing Order.
  Adjourned at Twelve o'clock.