Commons Sitting of 4 June 1918

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

PRIVATE BUSINESS.
Private Bills [Lords] (Standing Orders not previously inquired into complied with), — Mr. Speaker laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That, in the case of the following Bills, originating in the Lords, and referred on the First Reading thereof, the Standing Orders not previously inquired into, and which are applicable thereto, have been complied with, namely:
St. Olave's Church, Southwark, Bill [Lords].
West Sussex County Council (Bridges) Bill [Lords].
West Bromwich Corporation Bill [Lords].
Harrods Stores Bill [Lords].
Ordered, That the Bills be read a second time.
Provisional Order Bills (Standing Orders applicable thereto complied with),—Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That, in the case of the following Bills, referred on the First Reading thereof, the Standing Orders which are applicable thereto have been complied with, namely:
Local Government Provisional Orders (No. 4) Bill.
Local Government Provisional Order (No. 5) Bill.
Local Government Provisional Order (No. 6) Bill.
Ordered, That the Bills be read a second time To-morrow.
Provisional Order Bills (no Standing Orders applicable),—Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That, in the case of the following Bills,
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referred on the First Reading thereof, no Standing Orders are applicable, namely:
Local Government (Ireland) Provisional Orders (No. 2) Bill.
Local Government Provisional Orders (No. 3) Bill.
Land Drainage (Woodwalton) Provisional Order Bill.
Ordered, That the Bills be read a second time To-morrow.

NEW WRIT.
For the County of Cavan (East Cavan Division), in the room of Samuel Young, Esquire, deceased. — [Mr. Cream.]
PRISONS (SCOTLAND) ACT, 1877.
Copy presented of Annual Report of the Prison Commissioners for 1917 [by Command]; to lie upon the Table.

UNIVERSITY OF ABERDEEN.
Copy presented of Annual Report on the state of the Finances of the University for the year 1916– 17 [by Act]; to lie upon the Table.
Copy presented of Annual Statistical Report by the University Court to the Secretary for Scotland for the year 1916–17 [by Act]; to lie upon the Table.

MILITARY SERVICE ACTS, 1916 to 1918.
Copy presented of Royal Proclamation, dated 4th June, 1918, under Section 3 (1) of the Military Service. (No. 2) Act, 1918, withdrawing certain Certificates of Exemption from Military Service [by Act]; to lie upon the Table.
UNIVERSITIES OF OXFORD AND CAMBRIDGE ACT, 1877 (OXFORD).
Copy presented of Statute made by the Governing Body of New College, Oxford, on 16th January, 1918, and sealed on 14th February, 1918, amending Statute 3 (19) of the College Statutes [by Act]; to lie upon the Table.
ORAL ANSWERS TO QUESTIONS
  WAR.

    RUSSIA.
    Mr. KINGasked the Secretary of State for Foreign Affairs whether, in order to make relations with the Russian Government more easy and cordial, he will give an undertaking that there is no intention to ask the present Russian Government to refund the various amounts advanced by the British Government to Mr. Nabokoff and to other officials of the deposed Czar's Government, and that the advances made to the Russian Committee of the Commission Internationale de Ravitaillement will not be demanded from Russia by this country?
    The MINISTER of BLOCKADE (Lord Robert Cecil): I see no advantage, at the present stage, in discussing the details of any financial settlement which may ultimately be made between this country and Russia.

  AGRICULTURE.

    EMPLOYMENT OF SOLDIERS.
    Mr. ANDERSONasked the Under-Secretary of State for War (1) whether men lent by the Army to farmers for purposes of agricultural work are free to address complaints or grievances to Members of Parliament; whether he is aware that an Order has been issued to the 345th Agricultural Company, Chester, forbidding such action; (2) whether he can state the position of soldiers engaged on agricultural work in regard to associations of a trade union character; whether, if they were members of an agricultural labourers' union before joining the Colours, they can continue such membership and pay subscriptions whilst engaged on land work; and whether they can attend trade union meetings?
    The UNDERSECRETARY of STATE for WAR (Mr. Macpherson): Men in agricultural companies are serving soldiers, and consequently subject to the Army Act. The methods under which their complaints
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    and grievances should be dealt with are indicated in Section 43 of the Army Act and paragraph 439 the King's Regulations. I am not aware of the Order stated to have been issued to the 345th Agricultural Company, but in this connection I would refer my hon. Friend to the answer which I gave on the 30th October last to my hon. Friends the Member for the Mid-Division of Lanarkshire and the Member for the Elland Division. In an answer on the 11th March last to my right hon. Friend the Member for Derby, I explained the position of soldiers in regard to trade union meetings.

    WOMEN'S ARMY AUXILIARY CORPS.
    Mr. ANDERSONasked the Undersecretary of State for War whether Section 4 of the new Army Bill applies Subsection 108 a (7) of the Army Act to the Women's Auxiliary Corps, which has hitherto been required to obey commands only within its own organisation; if so, why it has been necessary to require from it obedience to officers in the Army; whether the billeting powers required could not have been provided by the Defence of the Realm Act; and whether women enrolled by the Army Council are now subject to military law, as defined in Section 176 (10) of the Army Act?
    Mr. MACPHERSON: With reference to the first part of the question, Section 108 a (7) of the Army Act is applicable to members of Queen Mary's Auxiliary Army Corps, though it is not intended in fact to apply it in their case. The statement in. this part of the question that that corps has hitherto been required to obey commands only within, its own organisation is-not correct. As the corps is employed by the Army Council, it has always been required to obey orders of the Army Council. Its liability in this respect is not affected by the Army (Annual) Act, 1918. With regard to the second part of the question, it was considered that the best course was to utilise the existing machinery and provisions under the Army Act. With regard to the third part of the question, women enrolled by the Army Council are now, and were already prior to the Army (Annual) Act, 1918, subject to military law under Section 176 (9) or (10) of

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    the Army Act when employed by or in the service of His Majesty's troops when employed on active service, and when followers of or accompanying His Majesty's troops or any portion thereof on active service. Their liability in this respect is not affected by the new Act.

  MILITARY SERVICE.

    DISCHARGES (SURPLUS TO MILITARY REQUIREMENTS).
    Mr. PENNEFATHERasked the Under-Secretary of State for War what is the meaning of the phrase "discharged as surplus to military requirements"; how many men have been so discharged; what was the reason for their discharge; and what was their medical category?
    Mr. MACPHERSON: The term "surplus to military requirements" means that a soldier is surplus for the time being to the needs of the Army for men in a low medical category or that on account of trade qualifications a soldier would be of greater use to the nation in civil life than in the Army. I regret that it is not desirable in the public interest to furnish the figures asked for by my hon. Friend.

    VOLUNTARY ENLISTMENT (IRELAND).
    Colonel SHARMAN-CRAWFORDasked the Under-Secretary of State for War whether Irishmen offering themselves voluntarily as recruits for the 36th (Ulster) or 16th (Irish) Divisions will be accepted for such service, subject to the exigencies of the campaign; and whether such recruits will be posted for training to the special reserve battalions of the regiments which supply drafts to those divisions?
    Mr. MACPHERSON: Irishmen who enlist voluntarily for Irish regiments are posted to the regiments of their choice, provided there are vacancies in such units and that they fulfil the physical conditions laid down.
    Colonel SHARMAN-CRAWFORD: The right hon. Gentleman has not answered the last part of my question. As he is aware, no doubt, there are no reserve battalions of Irish regiments left in Ireland at the present day. I want to in-
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    clude the 10th Division in this, as well as the others, and what I want is that men from Belfast, Dublin, or Cork, should be sent over to their reserve battalions and allowed to join the battalions they wish to join.
    Mr. MACPHERSON: That is a question of military administration which I should not like to answer straight off, but I think I meet the point raised in the question when I say that as far as possible we do try to send Irish troops to Irish regiments.
    Mr. KINGasked what steps have been taken in connection with the new voluntary recruiting campaign for Ireland announced in the Proclamation; how many recruits have been forthcoming; how many is it expected will be obtained; and whether the Government is so far satisfied with the results of its new Irish recruiting policy?
    The CHIEF SECRETARY for IRELAND (Mr. Shortt): As regards the first part of the question, I would refer the hon. Member to the Proclamation issued by the Lord Lieutenant, and published in the Press this morning. It is not possible to make any statement at present as to the other matters mentioned in the question.
    Mr. KING: Was that Proclamation issued this morning because this question was put down last Friday?
    Mr. SHORTT: Certainly not!
    Mr. PRINGLE: Are we to understand that the Government have now abandoned the policy of coercion and adopted a policy of bribery?
    Mr. SHORTT: No, Sir; not at all!

    GRANTS OF LAND TO IRISH SOLDIERS.
    Colonel Sir J. CRAIGasked the Chief Secretary for Ireland whether paragraph 5 of the Proclamation of the Lord Lieutenant which was issued yesterday, calling for recruits in Ireland, states that men who come forward to fight for their Motherland will be rewarded by a grant of land, and whether, in order to prevent misunderstanding and disappointment, he will take immediate steps to define explicitly the area in which such land is available, the number of acres to which each recruit is entitled, and the tenure proposed?
    Mr. SHORTT: The necessary measures are under consideration at present, and a definite statement will be made as soon as possible.
    Sir J. CRAIG: Will the right hon. Gentleman take particular precaution from the very outset that there is no misleading temptation held out to any man in this regard, and also take steps to see that any proposals that are made are retrospective?
    Mr. SHORTT: That will be borne in mind.
    Mr. H. SAMUEL: Is it proposed to introduce legislation on this subject?
    Mr. SHORTT: Yes. The Bill has for some little time been in course of drafting.
    Mr. HARRIS: How can land be guaranteed if it is necessary to pass legislation to provide land— the Bill might not go through this House or the other House?
    Mr. PENNEFATHER: Will a preference be given to Irishmen over Englishmen, Scotsmen, or Welshmen who have volunteered?
    Mr. SHORTT: I am responsible only for the Irish Office.
    Mr. PRI NGLE: Will similar facilities be given to British soldiers who have been conscripted as are being granted to Irishmen who are being bribed?

    CONSCIENTIOUS OBJECTORS.
    Mr. SNOWDENasked the Home Secretary why A. Miles, No. 33113, who was released from Wandsworth Prison on the 21st ult., on the expiration of his term of imprisonment as a conscientious objector, is being detained in solitary confinement in the police station, Stafford Road, Wallington; and why this man is not sent back to his unit but retained in civil custody?
    The UNDER-SECRETARY Of STATE for the HOME DEPARTMENT (Mr. Brace): This man is detained pending his trial by court-martial, under orders given by the military authority. He has proper open-air exercise, and has been visited by his friends of both sexes; and, so far as the police are aware, he has made no complaint.
    Mr. SNOWDEN: Will the right hon. Gentleman explain why he should be confined in a civil prison or police station for seven weeks awaiting court-martial?
    Mr. BRACE: I really could not say.
    Mr. SNOWDEN: Is the right hon. Gentleman aware that the information he has just given me is very belated, and that this man has already had his court-martial?
    Mr. BRACE: That would not surprise me.
    Mr. SNOWDENasked the Home Secretary if H. Walker, a conscientious objector in Newcastle Gaol, has been forcibly fed and if inquiry will be made into the allegations of barbarous treatment by the prison medical officer; whether Walker was forced to the cell floor, held down by several officers, and a feeding-tube forced through his nose in such a violent manner as to cause intense suffering and bleeding, meanwhile the doctor sitting laughing at him and taunting him by imitating his moans and cries; and whether the man is still in a state of extreme weakness as a consequence of this treatment?
    Mr. BRACE: These allegations have been investigated by the visiting committee of the prison, who find that the prisoner's refusal to take food made it necessary to administer food artificially; that the prisoner violently resisted; that no more force was used by the prison officials than was required to overcome his violence; that the medical officer behaved in a kindly and considerate manner throughout, and that the prisoner is not in a state of weakness owing to his treatment, and has since then taken food voluntarily.

    ARBORICULTURE (SKILLED MEN).
    Major LANE-FOXasked the President of the Board of Agriculture whether he will give a definite assurance that the few skilled men employed in the sowing of tree seeds and the preparation of seedlings by nurserymen and estates shall be exempted, in view of the possible scarcity of seedlings for replanting after the War, and in conformity with his promise of rendering every possible help to forestry?
    The PARLIAMENTARY SECRETARY to the BOARD of AGRICULTURE (Sir R. Winfrey): Under instructions already in the possession of agricultural executive committees, provision is made for the pro-

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    tection at present from military service of men occupied in the forest-tree nursery industry as seed experts. These committees will now have authority to issue vouchers to such men as they regard as essential, and they will be exempted.

    BOXING EXHIBITIONS.
    Mr. KINGasked the Minister of National Service whether he has considered the boxing exhibitions given at the Home of Boxing in Blackfriars Road, and is he aware that on 25th May many contests were arranged between picked men, and that such displays are frequent; whether these contests are between men of military age exempted from service; and what action he proposes to take?
    Mr. PRATT (Lord of the Treasury): My right hon. Friend has no information regarding the exhibiitons to which the hon. Member refers. In so far, however, as any men taking part in them were civilians of military age, they must have been men who held some authorised form of exemption or protection from military service. Exemptions are being constantly reviewed, with a view to the release for military service of all men whose retention in civil life does not appear to be warranted. It need hardly be stated that no man holds an exemption from military service on the ground of possessing athletic ability.

    ARMY HORSES (RATIONS).
    Sir JOHN BARRANasked the Undersecretary of State for War whether he will say what is the present oats ration for Army horses; whether he is aware that certain classes of Army horses are receiving a ration far beyond their needs, and even capacity for consumption, while horses in civilian employ doing harder work are being underfed from want of oats; and whether he will investigate the matter with a view to further action?
    The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Forster): I will circulate in the Official Report the scale of grain ration issued to Army horses in this country. It is not considered advisable to reduce the ration further. I would add that in the case of horses in veterinary hospitals, the ration has been reduced considerably below this scale, and any further reduction is impracticable.
    The fllowng is the scale referred to:

    GRAIN ISSUED TO HORSES AT HOME.

    —

    Rations in permanent or temporary stables.

    Rations in camp.

    Oats.

    Maize.

    Oats.

    Maize.

    Heavy draught horses

    11 lbs.

    4 lbs.

    11 lbs.

    4 lbs.

    Officers' chargers and all riding horses of 15 hands 1½ inclusive and
    upwards

    10 lbs.

    —

    10 lbs.

    —

    Riding horses (other than officers' chargers) under 15 hands 1½, and pack horses

    9 lbs.

    —

    10 lbs.

    —

    Light draught horses

    7 lbs.

    3. lbs

    8lbs.

    3 lbs.

    Heavy draught mules

    —

    12 lbs.

    —

    13 lbs.

    Light draught mules

    —

    10lbs.

    —

    10lbs.

    Pack mules

    —

    6 lbs.

    —

    7 lbs.

    Sir J. BARRAN: Has the right hon. Gentleman inquired as to whether in point of fact there are not certain classes of horses doing certain kinds of work for which the ration is really bigger than the horse can possibly consume; and if I send him particulars will he look further into the matter?
    Mr. FORSTER: Yes, certainly. I have inquired, and am told that it is not the case; but if the hon. Gentleman has any instances and will bring them to my notice I will willingly look into them.

    SOLDIERS' LETTERS.
    Mr. RAMSAY MACDONALDasked the Under-Secretary of State for War whether his attention has been drawn to the ease of Bombardier F. Ballard, who was put under arrest for writing in a letter to his late employer in this country that the sooner we get international law the better, then the British Tommy will have a chance to speak; and whether he has made any representations to the officer responsible, and with what results?
    Mr. MACPHERSON: It would be quite in order for a soldier to be placed under

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    arrest for having made certain statements in a letter, but without seeing the letter written by Bombardier Ballard I am afraid that it is impossible to form an opinion whether the action taken in this case was correct or otherwise.
    Mr. MACDONALD: Have I not sent the right hon. Gentleman the exact words used by Bombardier Ballard?
    Mr. MACPHERSON:No; my hon. Friend has sent a letter, but it was not the letter for which Bombardier Ballard was arrested. It was a subsequent letter, containing only one sentence, only part of the sentence, of the original letter.

    COAL AND COKE.
    Sir C. SEELYasked the Secretary of State for the Home Department the total output of coal in the United Kingdom in the year 1917 and the export of coal and coke for the same year?
    Mr. BRACE: The total output of coal in the United Kingdom in the year 1917 was 248,499,240 tons, and 34,995,787 tons of coal and 1,278,646 tons of coke were exported in that year.

    MINES INSPECTORS' REPORTS, 1917.
    Sir C. SEELYasked the Home Secretary when the Reports of the inspectors of mines for the year 1917 will be presented to the House?
    Mr. BRACE: The Reports of the divisional inspectors for 1917 will be ready, I hope, for presentation to Parliament about the beginning of next month.

    NAVAL AND MILITARY PENSIONS AND GRANTS.
    Mr. ANDERSONasked the Minister of Pensions whether, in the case of a soldier temporarily lent from the Army to work in shipyards and who loses his life by drowning whilst at work, his widow and children are entitled to a pension; and, if so, to what amount?
    The PARLIAMENTARY SECRETARY to the MINISTRY Of PENSIONS (Sir A. Griffith-Boscawen): A soldier temporarily released for civilian employment, pro-
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    vided he is not transferred to the reserve for this purpose, would, while following such employment, retain for himself, his family, and their dependants all their rights and privileges in regard to pensions under the Royal Warrant as though he had contined to serve as a soldier. The employer is, however, liable to pay any compensation due under the terms of the Workmen's Compensation Act, the Employers' Liability Act, or at Common Law. Where, therefore, the benefits due under the Royal Warrant are in excess of the compensation due from the employer, the Ministry of Pensions will make good the deficiency.
    Mr. ADAMSONasked the Financial Secretary to the War Office whether, as complementary to the new Royal Warrant for pensions, he will favourably consider making representations to the Treasury for an increase in the scale of separation allowances to the wives and children of soldiers?
    Mr. FORSTER: I would ask my right hon. Friend to await the answer which the Chancellor of the Exchequer is about to give to the hon. Member for the Harborough Division.
    Mr. P. A. HARRISasked the Prime Minister whether he is aware that there is a feeling throughout the country, especally in big centres of population where high rents prevail, that the present rates for separation allowances for soldiers are inadequate owing to the increase in the price of commodities; whether he is aware that this feeling is accentuated by the war bonus being paid to men not in the Army; whether the Government will again consider the possibility of giving some equivalent bonus so that the position of the wives and families of serving soldiers shall be brought more into line with the position: of wives of men in civil occupation; and, if the Government is not prepared to take immediate action, whether they will appoint a Select Committee of this House, or, failing that, a Departmental Committee, to inquire into and report on the whole subject?
    The CHANCELLOR Of the EXCHEQUER (Mr. Bonar Law): Complete arrangements already exist for meeting the extra cost of rent in different localities, and other local and individual circumstances. I do not think that the Government would be justified either in increasing the existing flat rate or in holding any further inquiry.
    Mr. HARRIS: Is the right hon. Gentleman aware that the local committees are allowed to consider rents, but are precluded by the Regulations from considering the increased cost of living?
    Mr. BONAR LAW: I think they are allowed to consider special cases of hardship.
    Mr. HARRIS: Is the right hon. Gentleman aware that instructions have been sent out that they cannot consider at all increased prices, but only increased rents?
    Mr. BONAR LAW: I think the hon. Member is mistaken. They cannot, I believe, consider increased cost as in itself a reason, but they can consider particularly bard cases from whatever cause.
    Mr. HARRIS: Is the right hon. Gentleman aware that there is a very strong feeling that the same rate should be paid to the wives of soldiers who are living as to the widows of men who have fallen in the War?
    Mr. BONAR LAW: I am sure the hon. Member knows that a desire was felt very strongly by the House and also by the Government, but there must be a limit to the amount that we can give in these cases.
    Mr. R. MACDONALD: Does the right hon. Gentleman know that these personal and special applications are regarded as something equivalent to charity and that a great many women decline to do it? Will the right hon. Gentleman keep his mind open and consider it, as it is a very important case?
    Mr. BONAR LAW: It is not a case of keeping one's mind open. One would like to do everything that is possible in this case. I am informed that the taint of charity to which the hon. Member refers is not felt at all.
    Mr. RAFFAN: If the Government cannot adopt a flat rate, will they consider whether instructions could be given to the committees?

    SCOTTISH FRESHWATER FISHERIES COMMITTEE.
    Sir J. BARRANasked the Secretary for Scotland how many weeks it is since the Report of the Special Committee on Fisheries was presented to him; what is the reason for the delay in announcing
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    action taken on this Report and in the publication of it; whether he is aware that, in view of the advancing of the season both for fishing and for netting, anxiety and even impatience is growing; and how promptly he can now act in the matter?
    The SECRETARY for SCOTLAND (Mr. Munro): I assume that my hon. Friend refers to the second interim Report of the Scottish Freshwater Fisheries Committee. The Report reached me in the end of March, and has since been the subject of considerable discussion and correspondence. I am now in communication with the Treasury in regard to the proposals of the Committee. The Report will shortly be issued. I trust that some useful experimenal work may be carried out during the current season.
    Sir J. BARRAN: Will the right hon. Gentleman undertake to push forward the results of this Report as quickly as he possibly can?
    Mr. MUNRO: I can assure my hon. Friend that the matter is proceeding with the utmost expedition.

  FOOD SUPPLIES.

    BASIC SLAG.
    Mr. J. MASONasked the President of the Board of Agriculture whether the price of basic slag is based on a flat rate for carriage of 12s. 6d. a ton, and is therefore the same whether delivered in Ireland or at a station near the works of production; and whether the result of this arrangement is that English consumers pay more by 5s. to 10s. a ton than if they paid the actual cost of transport, whilst Irish consumers receive a corresponding subsidy?
    Sir R. WINFREY: The price of basic slag includes delivery in Great Britain or to a port in Ireland, but Irish consumers pay, in addition, the cost of delivery in Ireland from the Irish port.
    Mr. MASON: Is it considered to be in the national interest that English farmers should be penalised for the benefit of Irish farmers?
    Sir R. WINFREY: I do not think that the answer I have given conveys that. The Irish farmer always has to pay an additional sum for carriage from the port in Ireland to his land, wherever it may be.
    Mr. ANDERSONasked the Parliamentary Secretary to the Ministry of Food the grounds on which the Ministry refused to register the Barry and District Co operative and Industrial Society, Limited, as retailers of fish; whether the local food control committee unanimously recognised the need for a well-equipped fish shop in Barrry and recommended to the Ministry of Food that the registration certificate be granted to this society; and whether steps will be taken to revise the previous decision of the Ministry?
    The PARLIAMENTARY SECRETARY to the MINISTRY of FOOD (Mr. Clynes): The refusal of this certificate of registration is being reconsidered. It was refused in the first instance because the Ministry were not satisfied that the existing channels of distribution were insufficient for the needs of the district, now that the supply of fish has been so much reduced under war conditions. Further inquiry is being made through the Divisional Food Commissioner.

    MILK.
    Major LANE-FOXasked the Parliamentary Secretary to the Ministry of Food whether the general dissatisfaction existing among milk producers in York shire at the summer prices fixed for milk by the Ministry of Food is beginning to cause the reduction of dairy herds, and that local committees of inquiry set up by the Ministry have recommended a general raising of the price of milk; and whether some immediate decision will be published in the matter to prevent the further reduction of the milk supply?
    Mr. CLYNES: The announcement as to increased prices has been delayed until the results of the various inquiries had been received. But it is hoped that the revised prices will be published in the course of a few days.
    Major LANE-FOX: Will the right hon. Gentleman do his utmost to get the announcement made as soon as possible, in view of the daily danger of a reduction in the milk supply?
    Mr. CLYNES: Yes. I have been working on the matter this morning, and a large conference is to discuss it this afternoon. By this time I hope that the question of prices will have been concluded.

    TEA.
    Mr. PETOasked the Parliamentary Secretary to the Ministry of Food whether an additional allocation of tea of 50 per cent. Above the distribution agreed on the basis of the datum period, i.e., the year extending from the 1st July, 1915, to the 30th June, 1916, has been made to the wholesale co-operative societies for distribution through their retail societies;: and, if so, whether he can state the reason for this discrimination against the retail traders of the country, who pay their full contribution in the form of Income Tax?
    Mr. CLYNES: I would refer the hon. Member to the reply given on this subject to the right hon. Gentleman the Member for West Islington, on the 13th May.
    Mr. PETO: Is it proposed to do away with the datum line existing and to adopt the system which is adopted in the case of meat and other commodities, namely, of registering consumers with retailers and retailers with wholesalers, so that all wholesalers may have an equal and adequate supply?
    Mr. CLYNES: Yes. Substantially the changes contemplated would mean placing meat and tea on the same basis, in the sense that the quantity supplied would correspond to the number of customers registered.

    BAD MEAT.
    Mr. WILLIAM NICHOLSONasked the Parliamentary Secretary to the Ministry of Food whether the meat recently dispatched to Petersfield by the London Meat Distribution Committee, and seized by the sanitary inspector as unfit for human consumption, had been in cold storage since 10th August, 1914; and whether meat which has been as long in cold storage is now being issued to the public or whether the meat in question had been overlooked owing to mismanagement on the part of the Department?
    Mr. CLYNES: The statement made to the hon. Member on 27th May to the effect that some meat recently dispatched to Petersfield had been in cold storage since 10th August, 1914, appears to have been based on insufficient evidence. I am now informed that the meat in question only reached this country in March, 1918, and that no imported meat is now being issued to the public which arrived before the

    1395
    beginning of the year. I may add that every effort is being made to improve the quality of imported meat, which has certainly been Found to be inferior in several recent instances.
    Mr. NICHOLSONasked the Parliamentary Secretary to the Ministry of Food whether, in view of the complaints of bad meat from cold storage being issued in rural districts, he will consider the advisability of allowing the meat produced in the neighbourhood to be used in those districts instead of taking the meat for distribution to other centres and, in return, supplying them with refrigerated meat from London, and at the same time reduce the cost and transport by railway?
    Mr. CLYNES: The principle followed by the Food Controller in organising the present system of meat distribution has been to avoid unnecessary transport by arranging that home-killed meat shall be consumed in the district in which it is produced, as far as is consistent with the reasonable claims of non-producing areas. It is still necessary, however, at the present time to make up any deficiencies in rural districts by supplying frozen meat, in order that the live stock may put on more meat during a further period of grazing.
    Mr. NICHOLSONasked the President of the Local Government Board whether the attention of the Board's medical advisers has been called to the fact that meat issued by the Food Controller in the Petersfield district had been in cold storage for more than three and a half years; whether they are aware that the meat in question was seized by the sanitary inspector as not fit for human consumption; and whether he can state if, in their opinion, there is any danger to the public in issuing for human consumption meat that has been in cold storage for so long a period?
    The PARLIAMENTARY SECRETARY to the LOCAL GOVERNMENT BOARD (Mr. Stephen Walsh): I would refer my hon. Friend to the reply already given to him by my right hon. Friend the Parliamentary Secretary of the Ministry of Food. I am advised that preservation of meat by cold storage, even for prolonged periods, when carried out under proper conditions, does not in itself render the meat unwholesome.

    CORN PRODUCTION ACT.
    Mr. CHARLES DUNCANasked the President of the Board of Agriculture whether he has made any appointments in connection with the administration of Section. 6 of the Corn Production Act; if so, what is the nature and number of these appointments; the salaries attaching thereto, and the qualifications for appointment; whether he has considered the representations made by the Customs and Excise Federation on behalf of the outdoor officers of Customs and Excise; and, if so, whether he is now prepared to offer them a limited number of these posts?
    Sir R. WINFREY: The question no doubt refers to the investigation of complaints and the taking of preceedings under Section 7 of the Corn Production Act. No definite appointments of officers for these duties have yet been made, and it is difficult as yet to estimate the number which may be required. It is proposed that any such officers should at present be appointed on a temporary basis and consequently the transfer of permanent Civil servants is not advisable, even if they could be spared by the Department now employing them. A letter was addressed by the Customs and Excise Federation to the President of the Local Government Board in August last and was forwarded by him to the Board of Agriculture. The federation was then informed that there did not appear to be any opportunity of employing officers of the Customs and Excise Department in connection with the administration of the Corn Production Act. Should such an opportunity arise the Board will be glad to consider the representations of the federation and to communicate with the Commissioners of Customs and Excise on the subject.

    MILITARY LABOUR (DUBLIN).
    Mr. ANDERSONasked the Financial Secretary to the War Office whether, in respect of the loading and unloading of ships at the ports, it is the policy of the War Office that available civilian labour should be utilised before military labour is employed; if so, why military labour is being used by the authorities at the North Wall, Dublin, to the detriment and unemployment of civilian labour; whether it is the intention of the military to send over to Dublin a further battalion of soldier

    1397
    dockers unless the workmen there are prepared to accept a wage less than the standard wage; and what action it is proposed to take in this matter?
    Mr. FORSTER: I understand that the Ministry of Shipping is responsible for the loading and unloading of ships. In answer to the hon. Member, on the 25th April last, I explained the necessity for the use of military labour in Dublin. I am not aware of any intention to send soldier dockers to Dublin from this country.

  SEPARATION ALLOWANCES.

    SOLDIERS ON LAND.
    Mr. J. MASONasked the Financial Secretary to the War Office whether men of low medical grading who have been taken into the Army and shortly after have been returned for work on the land are still receiving full agricultural pay while living with their wives and families, who continue to draw full separation allowances; whether the pay and allowances of such men are often double the pay of other men working alongside them; and whether, in view of the dissatisfaction caused thereby in agricultural districts, he proposes to take any action in the matter?
    Mr. FORSTER: Separation allowance will in future not be issued in respect of soldiers returned to work on the land who live at home and earn full civilian wages.
    Mr. MASON: Does the right hon. Gentleman mean that in the cases of men already receiving separation allowance it will be stopped?
    Mr. FORSTER: Yes, Sir.

    ROYAL NAVY AND ROYAL MARINES.
    Mr. ADAMSONasked the Secretary to the Admiralty whether, as complementary to the new Royal Warrant for pensions, he will favourably consider making representations to the Treasury for an increase in the scale of separation allowances to the wives and children of men in the Royal Navy?
    The PARLIAMENTARY SECRETARY to the ADMIRALTY (Dr. Macnamara): As my right hon. Friend is no doubt aware, increases have been made in the rates since separation allowance was instituted for the Navy. A recent change was that decided upon by the Cabinet in
    1398
    October last, when a complementary allowance such as my right hon. Friend refers to was granted in the form of an allotment concession, that is to say, a portion of the allotment is now paid from Government funds, instead of teeing charged against the sailor's pay. Further, as the answer to the next question will show, endeavour has been made to increase the income of the wives or other dependants of the lowest ratings.
    Sir J. BUTCHERasked the Secretary to the Admiralty whether he is now in a position to state the decision of the Government with reference to the equalisation of the separation allowances for men of the Royal Navy and Royal Marines with those for the men of the Army?
    Dr. MACNAMARA: The decision of His Majesty's Government shortly is that i£ an ordinary or able seaman, a private of Marines or any equivalent rating or rank allots to his wife or other dependant the amount by which his wages exceed 10s. 6d. a week when they are more than 12s. a week, or if he allots not less than 1s. 6d. when they are 12s. a week or less, the Admiralty shall make good, by the grant of a supplementary separation allowance, any deficiency in the Navy allowance and allotment as compared with the payments that would be received if the man were a private in the Army. The scheme took effect from 16th May, and the supplementary allowances will be paid by the Admiralty, not by the local war pensions committees.

  PRISONERS OF WAR.

    BRITISH OFFICERS AND MEN (PAY).
    Mr. GILBERTasked the Financial Secretary to the War Office what is the practice of his Department as regards the pay of officers and men who have been taken prisoner; are their accounts credited with full pay during the whole time they are detained; and can any prisoner, either officer or private, allot or pay over any part of such pay credited to his wife or family in this country?
    Mr. FORSTER: Officers and men who are prisoners of war are credited with full pay, less, in the case of the officer, the amounts paid direct to them by the enemy. They are at liberty to deal as they wish with the whole of their credit. In the case

    1399
    of a man making a regular allotment, the amount of the allotment must not exceed three-fourths of his daily rate of pay.

    BRITISH MERCANTILE MARINE.
    Mr. PETOasked the hon. Member for Sheffield (Central Division) whether any advance has been made in the negotiations for the return of civilians interned in Turkey, particularly officers and crews of merchant vessels interned at the outbreak of war, to this country; and when any definite action will be expected?
    Mr. JAMES HOPE (Lord of the Treasury): I would refer my hon. Friend to the Agreement with the Turkish Government, the text of which has been laid before Parliament in White Paper, Miscellaneous No. 10 of this year. From Article 10 of that Agreement he will see the arrangements provided for the repatriation of members of the British mercantile marine in Turkey. As the Turkish Government have not yet given notice of the date when the first British prisoners will be ready for embarkation, it is not, I fear, probable that the repatriations can begin for some time.
    Mr. PETO: I am asking what are the steps which the Government propose to take to get this agreement carried out?
    Mr. HOPE: All that they can do at the moment is to use all the pressure they can until the Netherlands representative gets to Constantinople, and that has been done.

    SECOND GRADE PENSIONER CLERKS.
    Mr. C. DUNCANasked the First Lord of the Admiralty whether an Order granting establishment to second grade pensioner clerks was issued by the Admiralty on 15th February, 1918, and, if so, can he state on what date the Order in question is to take effect?
    Dr. MACNAMARA: This Order was issued as stated in my hon. Friend's question, and there only remains the actual issue of the necessary Civil Service certificates by the Civil Service Commissioners. The actual establishment will take effect from the date of the Civil Service certificates, the issue of which has been hastened.

    SHIPPING LOSSES.
    Sir ARCHIBALD WILLIAMSONasked the First Lord of the Admiralty whether the figures published monthly by the Admiralty of shipping losses are those of the net registered tonnage lost; and whether, seeing that in the statements as to the amount of tonnage being built in the United States the figure of dead-weight tonnage are generally used and it takes 2 dead-weight tons to equal 1 ton net register, he will take steps to prevent a comparison being misleading?
    Dr. MACNAMARA: The figures published by the Admiralty of shipping losses and tonnage built— whether in the United Kingdom, United States of America, or elsewhere— are gross registered tons and not net registered tons. This is clearly shown in the heading of each published statement. Every effort has been made to avoid misleading comparisons between American and British output.
    Sir A. WILLIAMSON: Is it not the fact that the newspaper reports of tonnage launched in the United States shows the gross dead-weight of tonnage and not gross registered tonnage, and the one is much larger than the other, and therefore the country is misled as to the amount of tonnage which is being replaced?
    Dr. MACNAMARA: That is the fact. The American figures are dead-weight and ours are gross registered tonnage, but we have pointed out the difference in order to avoid misleading the public.

  RAILWAY SEASON TICKETS.

    TRAINING DISCHARGED SOLDIERS.
    Mr. PENNEFATHERasked the President of the Board of Trade whether he is aware that in some cases local war pensions committees have to arrange for the training of discharged soldiers for lengthy periods at considerable distances from their homes; and will he arrange that all such men may have season tickets issued to them at the usual rates?
    The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Mr. Wardle): It is not the intention that men discharged from the forces shall be precluded from obtaining season tickets to enable them to attend courses of training arranged for them by war pensions committees. I fear

    1401
    it is not possible, however, to arrange for their exemption from the increases in the price of season tickets.

    SOLDIEES BILLETED AT HOME.
    Mr. T. WILSONasked the President of the Board of Trade whether he is aware that there are a number of soldiers engaged on duties in London who are billeted at home and who have to travel to town every day; that these men are allowed a maximum travelling allowance of 6d. per day; that Colonial soldiers engaged in record offices in London and billeted in the suburbs can obtain season tickets at reduced rates; and whether he will take into consideration the possibility of extending the same privilege to men in the Home Forces or, at all events, providing them with season tickets at the old rates?
    Mr. WARDLE: I am not aware of the conditions under which the Colonial soldiers referred to are granted season tickets, but I am having inquiries made, and will communicate with the hon. Gentleman on the point raised in his question as soon as these are completed.

    HOUSE FOOD MIXTUEE.
    Mr. PENNEFATHERasked the President of the Board of Trade if his attention has been drawn to an analysis, made on behalf of the National Equine Defence League, of an alleged horse food mixture to the effect that the sample submitted was absolutely useless and would be a starvation diet for horses; and what steps can be taken to ensure that the rations for heavy equine workers shall be not only adequate in quantity but also in quality?
    Mr. WARDLE: The Order of the Ministry of Food, dated 17th November, 1917, provides that the composition of horse chaff mixtures shall contain not less than a fixed proportion of grain, seed, pulse, locust beans, and products thereof, and, in view of complaints recently received, special steps are at present being taken by the Ministry of Food to ensure that the terms of the Order are being complied with.
    Sir J. BUTCHER: Has the hon. Gentleman any inspectors who are appointed to
    1402
    secure that these horse mixtures are of proper quality and that the penalty for their not being so is enforceable?
    Mr. WARDLE: I must have notice of that question.

    BARON SCHROEDER (COALCONSIGNMENTS).
    Mr. TURTONasked the President of the Board of Trade whether he is aware that a German baron called Schroeder, naturalised since the commencement of the War, has for the past three years been in the habit of receiving immense consignments of coal for his house and gardens at Englefield Green, a large portion being consigned in the name of his gardener, Shill, prior to the War called Schiller; whether, in April of this year, Baron Schroeder received at Egham Station 120 tons of anthracite coal from Swansea and 7 tons of household coal from the Brodsworth Collieries, near Doncaster; whether the total consignments so received from April, 1917, to April, 1918, amounted to not less than 520 tons of anthracite coal and 105 tons of household coal; and, if so, whether, having regard to the coal shortage and the difficulty of railway transport, he will direct the Coal Controller that this German baron shall not be given undue preference over loyal and patriotic Englishmen?
    Mr. WARDLE: The facts are substantially as stated by the hon. Member, but it may be added that the quantity of household coal constitues the supply for two large houses and eleven cottages, and that as Englefield Green is outside the area covered by the coal rationing scheme information on this subject was not brought to the notice of the Coal Controller until recently. As soon as the information was received the case was investigated, and all supplies of coal were suspended some weeks ago.
    Mr. TURTON: Are not the eleven cottages the hon. Gentleman refers to gardeners' cottages inhabited by gardeners in the employ of this German baron, and are they not strictly rationed to less than 1 ton per annum?
    Mr. WARDLE: I cannot answer that.
    General Sir IVOR PHILIPPS: Have steps been taken to remove the excess coal of this German coal hoarder, and, if not, what steps do the Government propose to take in the matter?
    Mr. WARDLE: Steps have been taken not to supply any more until it is absolutely necessary.
    Sir I. PHILIPPS: But not to remove the coal already there?
    Mr. WARDLE: I will make inquiries.
    Sir I. PHILIPPS: And to prosecute him?
    Mr. TURTON: Is it not a fact that 200 tons of anthracite are still hoarded on this German baron's estate?
    Mr. WARDLE: The hon. Member seems to possess all this information. I do not know anything about it except what is in the question. I will make inquiries.
    Sir I. PHILIPPS: Has not the hon. Gentleman power to prosecute this German baron for hoarding coal?
    Mr. WARDLE: I do not think so, because the coal ration did not apply to this particular district.
    Sir J. BUTCHER: Will the hon. Gentleman consult the Law Officers in order to ensure a prosecution, if it be possible, in what seems to be a very gross case?
    Mr. WARDLE: I will certainly do that.

    NEWSPAPERS UNSOLD.
    Mr. RAMSAY MACDONALDasked the President of the Board of Trade whether, before deciding to issue an Order prohibiting newsagents returning unsold papers, he consulted the newsagents as well as the publishers; and whether, in view of the effect that such an Order would have upon the newsagents' living, he will see that it is accompanied by one fixing prices on such a scale as will not be oppressive to the agents?
    Mr. WARDLE: The answer to the first part of the question is in the affirmative. As regards the second part, the matter appears to be one for settlement between the newspaper proprietors and the retailers, but in cases of alleged hardship which have been brought to the attention of the Paper Controller he is endeavouring to promote a satisfactory settlement.
    Mr. SNOWDEN: Are we to understand from the first part of the reply that the newsagents were consulted?
    Mr. WARDLE: The representatives of the newsagents, yes.
    Mr. RAFFAN: Did the Paper Controller endeavour to initiate a conference between all the parties interested, and has that broken down?
    Mr. WARDLE: Arrangements were undoubtedly made in that direction. I do not know whether they have broken down.

    TRADING WITH THE ENEMY ACT.
    Sir J. BUTCHERasked the President of the Board of Trade whether his attention has been called to the facts concerning the firm of Ettlinger and Company, which are stated in the Report of the Committee appointed to advise the Board of Trade on matters arising under the Trading With the Enemy (Amendment), Act, 1916, and in particular to the statement that it is a case in which the Committee would recommend winding up without hesitation if it falls within the Act, and that if it does not fall within the Act further legislation is desirable to enable them to deal with it; whether he will state the grounds on which the Committee consider that this case did not fall within the Act; and whether, in view of the disclosures as to the nature of this firm, he will forthwith introduce legislation to enable the Committee to deal with this-firm and similar cases?
    Mr. WARDLE: The partners in the firm of Ettlinger and Company are naturalised British subjects of German origin, and the Advisory Committee considered that, as. an agreement between the firm and Beer Sondheimer and Company came to an end at the outbreak of war, the business is not carried on wholly or mainly for the benefit of or under the control of enemy subjects. As at present advised, I doubt the expediency of so widely extending Section 1 of the Trading With the Enemy (Amendment) Act, 1916, as to make it apply to all classes of such businesses, but, as my hon. Friend is aware, the Non-Ferrous Metals Act recently passed covers such businesses in so far as they carry on certain essential industries.
    Sir J. BUTCHER: Will the hon. Gentleman give due weight to the recommendations of the Committee that legislation is. desirable in this case?
    Mr. WARDLE: Certainly.

  AIR SERVICE.

    AERODROMES (CHINESE LABOUR).
    Mr. T. WILSONasked the Under secretary of State to the Air Ministry if he is aware that a number of Chinese labourers are being employed by certain contractors who are constructing aerodromes for his Department, that the employment of those men is causing unrest among the British workmen on those jobs, and that it is likely to lead to serious labour trouble; and will he state who is responsible for the importation of these Chinamen?
    The UNDER-SECRETARY Of STATE to the AIR MINISTRY (Major Baird): A certain number of these labourers are at present employed on aerodrome construction. These have not been imported for the purpose, but have been recruited entirely from Chinese seamen who have come to this country as crews or part of crews of ships engaged in the importation of food and stores.

    GOVERNMENT OF IRELAND BILL.
    Mr. HOLTasked the Prime Minister if the Government still proposes to introduce and pass into law a measure of Irish self-government as the price for enabling this country to emerge triumphantly out of this War; and, if so, whether he will state what arrangements the Government are making to pay this price before it is too late?
    Mr. BONAR LAW: I can add nothing to the previous replies on this subject.
    Mr. PRINGLE: Is it still the view of the Government that this is the price of the successful conclusion of the War?
    Mr. BONAR LAW: I do not know what the hon. Member means.
    Mr. PRINGLE: It is a quotation from the Prime Minister.
    Mr. HOLT: Can the right hon. Gentleman say whether he still agrees with the Prime Minister that Irish Home Rule is an essential measure in order that we may emerge successfully from the War?
    Mr. BONAR LAW: I do not recall the particular speech referred to, but of course I am in agreement with the policy that was explained by the Prime Minister.
    Mr. KING: Are the Government open to change their policy frequently?

    CHURCH OF ENGLAND (BENEFICES).
    Captain CARR-GOMMasked the Prime Minister how long the deanery of Durham, the canonry of Worcester, and the incumbency of St. Mary Woolnoth have been vacant; when new appointments are to be made; and to whom the revenues are being paid in the meantime?
    Mr. BONAR LAW: The deanery of Durham has been vacant five and the canonry of Worcester four months. They are both under offer, and I therefore can make no further statement. As regards the incumbency of St. Mary Woolnoth, complicated negotiations have been proceeding for some time with a view to a reduction of the stipend, but I am informed that it is expected that an appointment will shortly be made. The accumulated revenues will be paid to the person appointed in each case.

    IRISH PRISONERS.
    Mr. KINGasked the Chief Secretary for Ireland whether the hon. Member for North Westmeath is still imprisoned in Mount joy Prison; whether on admission he went on hunger-strike; what was the object of his hunger-strike, whether he has been granted conditions at first refused to him and has now ceased his hunger-strike; and, if so, why the conditions of his imprisonment were at first such as to necessitate this protest on his part before they were ameliorated?
    Mr. SHORTT: The answer to the first and second parts of the question is in the affirmative. I am informed that the hon. Member for North Westmeath announced his intention of going on hunger-strike in. order to shame the Irish Government, and not because of the conditions under which he was detained. Ameliorations of prison treatment have been granted in this case, though the prisoner was not entitled to them.
    Mr. KING: Then it was successful?
    Mr. KINGasked whether any per sons arrested on or since the 16th May in Ireland have gone on hunger-strike; if so, who are they; and what is their pre sent position?
    Mr. BRACE: My right hon. Friend has asked me to reply to this question. If the hon. Member refers to Irish prisoners interned in England, no such case has arisen.
    Mr. KINGasked the Chief Secretary for Ireland whether he is aware that under an Order signed by himself on the 17th May Constance Marckiewicz and M. Gonne M'Bride were arrested in order to be interned at Frongoch, and that, contrary to the terms of the Order, they are held prisoners in Holloway; and whether, seeing that the express direction and intention of the Order have been disregarded, he will withdraw the Order, or order them to be released?
    Mr. SHORTT: The answer to the first part of the question is in the affirmative, but, by subsequent Orders, the prisoners mentioned in the question were transferred to their present place of detention.

    PRESS CENSOR (IRELAND).
    Mr. KINGasked who is the present Press Censor in Ireland; how long has he held the position; what are his qualifications for the work; how many persons are included in his staff; what is the estimated amount of the public charges to be incurred in this financial year for censorship in Ireland; is this sum to be found in the Estimates; if so, under what head; and whether the Press censorship extends to political criticism of the Government or only to such information of a military nature as if disclosed would assist the enemy?
    Mr. SHORTT: Lieutenant-Colonel Lord Decies has held the position of Chief Press Censor for Ireland since June, 1916. I am not aware of the particular qualifications the hon. Member refers to, but Lord Decies possesses in marked degree the tact, temperament, and character necessary to discharge the duties of this responsible office. The Irish Press Censor is at present assisted by a staff of eleven persons, of whom three hold military rank, and are paid, like the Press Censor, from Army funds. The remuneration of the remainder of the staff is borne by funds provided out of the Vote of Credit, and the total expenditure so incurred in the financial year amounted to £850. The Press censorship extends to statements
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    and information calculated to assist the enemy or to lead to a breach of the peace, but not to legitimate criticism.
    Mr. KING: Is the reason why Lord Decies was appointed that he is a popular gentleman and a good sportsman?
    Mr. SHORTT: He was appointed because it was thought he would make a good Press Censor.

    WOOL.
    Captain Sir BEVILLE STANIERasked the Under-Secretary for War by what Statute the requisitioning of wool not required for Government purposes, and therefore resold to the trade, has been authorised; whether, in the case of Colonial wool purchased by the War Office, a moiety of the profits on wool resold to the trade is returned to the Colonial growers; if so, whether a similar return will be made to wool growers in the British Isles; and, if not, will he say why this is not done?
    Mr. FORSTER: The action of the Department is taken under the Defence of the Realm Acts. It is the intention that half of any profit realised by the sale of Dominion wool for civilian purposes shall be returned to the Dominion Governments. This and the price paid for the wool in the first instance are parts of the same bargain. In the arrangements relating to the home grower there is no profit-sharing element, but this has been borne in mind in fixing the prices paid to him.

    NEW MEMBER SWORN.
    Robert Mason, Esquire, for the County of Northumberland (Wansbeck Division).

    LAND DRAINAGE BILL.
    Bill reported, with Amendments, from Standing Committee B.
    Report to lie upon the Table, and to be printed. ([No. 69.]
    Minutes of the Proceedings of the Standing Committee to be printed. [No. 69.]
    Bill, as amended (in Standing Committee), to be taken into consideration upon Monday next, and to be printed. [Bill 44].

    SELECTION (STANDING COMMITTEES).
    Sir DANIEL GODDARD reported from the Committee of Selection; That they had added the following Thirteen Members to Standing Committee B (in respect of the Emigration Bill): Mr. Anderson, Mr. Bird, Mr. Denniss, Colonel Hamersley, Mr. Cecil Harms worth, Mr. He wins, Mr. Holt, Mr. Houston, Mr. Leif Jones, Mr. Long, Mr. Outhwaite, the Solicitor-General, and Mr. Dundas White.
    Report to lie upon the Table.

ORDERS OF THE DAY.

  BUSINESS OF THE HOUSE.
  Mr. HERBERT SAMUEL: Can the right hon. Gentleman say what Supply will be taken on Thursday?
  Mr. BONAR LAW: We propose to take the Ministry of Food Vote.
  Colonel WEDGWOOD: When is the Indian Budget likely to be taken?
  Mr. BONAR LAW: I cannot at present say.
  Mr. KING: Will it be taken at all? It has not been taken since the War. May we have it as a variety?
  Mr. BONAR LAW: I should think, if it has not been taken since the War began, that that is probably a reason for not taking it now.
  Mr. PRINGLE: When will the Scottish Education Bill be taken?
  Mr. BONAR LAW: I am sorry that I cannot make a statement at present respecting that Bill.
  Colonel WEDGWOOD: Is the right hon. Gentleman aware that the Secretary of State for India stated yesterday in this House that there would be an opportunity for discussing the proposed reforms in India?
  Mr. BONAR LAW: I am not aware of that.
  Mr. H. SAMUEL: Will the House sit on Friday?
  Mr. BONAR LAW: I think that it will be necessary, but I cannot say yet.

  FINANCE BILL
  Considered in Committee. — [Progress, 3rd June.]
  [Mr. WHITLEY in the Chair.]
  Clause 28. — (Extension of Relief in Respect of Children and Grant of Relief in Respect of Wife and Dependent Relatives. 10 Edw. 7. c. 8. 6 & 7 Geo. 5. c. 24.)
  (1) Section sixty-eight of the Finance (1909–10) Act, 1910 (which as amended by Section thirty-three of the Finance Act, 1916, gives to individuals whose total income does not exceed seven hundred pounds releif from Income Tax in
  1418
  respect of children), as amended by any subsequent enactments, and Section thirteen of the Finance Act, 1917, shall have effect as if eight hundred pounds were substituted as the limit of income for seven hundred pounds.
  (2) If any individual, who has been assessed or charged to Income Tax or has paid Income Tax either by deduction or otherwise, claims and proves in manner prescribed by the Income Tax Acts that his total income from all sources, although it exceeds one hundred and thirty pounds, does not exceed eight hundred pounds, and that for the year for which the Income Tax is charged he has a wife living with him, or maintains at his own expense any person (other than a child in respect of whom relief is given under Section sixty-eight of the Finance (1909–10)Act, 1910, as amended by any other enactment or under Section thirteen of the Finance Act, 1917), being a relative of his or of his wife who is incapacitated by old age or infirmity from maintaining himself, and whose income from all sources does not exceed twenty-five pounds a year, he shall be entitled in respect of his wife and in respect of every such person as aforesaid whom he so maintains to relief from Income Tax equal to the amount of Income Tax on twenty-five pounds.
  In this Section the expression "relative" includes any person of whom the individual in question had the custody and whom he maintained at his own expense while that person was under the age of sixteen years.
  The provisions of Sub-sections (2) and (3) of Section sixty-eight of the Finance (1909– 10) Act, 1910, as amended by any subsequent enactments, shall apply to the relief given by this Sub-section, to the manner of claiming such relief, and to the proof to be given with respect thereto, as if they were herein re-enacted and in terms made applicable to this Sub-section.
  Mr. PETO: I beg to move, at end of Sub-section (l), to insert the words "and any individual whose income exceeds eight hundred pounds but does not exceed one thousand pounds shall be entitled to the like abatement on each child above the númber of two."
  It will not be necessary to argue in favour of this Amendment. It is a very small extension of the principle of a graduated amount for children. It has the additional merit of being some encouragement to have a reasonable British family of a more old-fashioned kind than those which are so commonly prevalent at the present time.
  Mr. BONAR LAW: I have decided that it is possible to accept this Amendment in principle. The Committee will understand that I desire, when the abatement ends at a particular figure, if possible, to make the change as gradual as it can be made, and this particular form of Amendment is one which commends itself to me partly for the reason given by my

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  hon. Friend, and I hope that it will commend itself to the Committee also. I would ask my hon. Friend to withdraw his Amendment now on the understanding that what he aims at will be put in on the Report stage.
  Amendment, by leave, withdrawn.
  The following Amendment stood on the Paper in the name of Sir S. COATS:
  In Sub-section (2) to leave out the words "eight hundred" and to insert instead thereof the words "one thousand."
  The CHAIRMAN: This Amendment would not come in here, as the words "eight hundred" in the place referred to are, I think, only consequential on the words "eight hundred" in the first Subsection.
  Sir S. COATS: Shall I have an opportunity of moving it later on?
  The CHAIRMAN: I am afraid that we have passed the point, which is the point indicated in the Amendment of the hon. Member for Cambridge University (Mr. Rawlinson).
  Captain SMITH: I beg to move, in Sub-section (2), after the word "him" ["living with him"], to insert the words, "or, failing a wife living with him, a person acting as his housekeeper or guardian for his children."
  I congratulate the Chancellor of the Exchequer. I think that he has met the case fairly well, but, like all good things, it will give rise to some peculiar forms of hardship. It provides relief in respect of a wife, but if unfortunately the wife happens to be dead and a man has to have a woman as housekeeper, it does not appear that he will get any abatement in respect of her. If a man has young children, in the circumstances contemplated by the Amendment, it is a very common thing to engage a woman to look after them. I think the Chancellor of the Exchequer might very well extend his generosity in this direction.
  Sir J. SPEAR: May I ask the right hon. Gentleman whether, under this Clause, abatement will be allowed in respect of a child above sixteen years, who is in an asylum?
  The CHAIRMAN: That does not arise on this Amendment, which deals with the question of a housekeeper.
  Mr. BONAR LAW: I think, in regard to this Amendment and the previous Amendment, it will be thought, if I make any concession, that I am ready to give away money. But that is not so, though I am not sure that there is not justification on this further Amendment. I think, where a man has young children and his wife has ceased to be with the family, or to be of use to it, and he has to employ a housekeeper, his position is much the same in. regard to deduction. The acceptance of the Amendment, however, might lead to very undesirable things, and, therefore, I do not accept it, but I will consider whether some form of words can be framed by which to ensure the object which the hon. Member has in view, while guarding against the evils that might otherwise arise. If my hon. Friend will withdraw his Amendment, I promise to consider the matter.
  Mr. HOLT: I think the Chancellor of the Exchequer ought to be very careful indeed about making abatements in respect of this or that person, who may be living in a man's house, because, before very long he would be carried a little further than he expects. Supposing a man's wife was very ill, and no longer of service in the household, he might have to hire a nurse to look after her, and not only that, but a housekeeper to take care of the children. That would surely be a strong case, and you would have representations as to the suffering, and a very great burden imposed upon a man in that position. He would not only have to keep his wife, but he would have to engage a woman to look after her, and another woman to look after the children. I am certain if this Amendment were accepted something of that kind would happen, and abatements of this kind would be made the jumping-off ground for others. The words of the Amendment are "failing a wife living with him," and it seems to me undesirable that a man whose wife does not live with him, should be able to get an allowance in respect of the housekeeper who did live with him. I do not suppose that is what is intended, but I can imagine what might be the effect of such a proposal.
  Mr. BONAR LAW: I have not accepted the Amendment, and all I promised was to give it consideration. I made no definite promise, but I said I would see if I could find suitable words and deal with the matter on Report. I would like to say,

  1421
  in reply to the hon. Member opposite, that I quite realise the danger of concessions of this kind, where there are circumstances of peculiar hardship. That is one of the things we have to take into account in dealing with instances of exceptional hardship.
  Captain SMITH: The Amendment which stands in the name of my right hon. Friend (Mr. Adamson) really is aimed at helping the man who has really lost the services of his wife, and has to engage someone to look after his young children. After what has been said by the right hon. Gentleman the Chancellor of the Exchequer, however, I ask leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  Mr. PETO: I beg to move, in Sub-section (2), after the word "expense" ["maintains at his own expense"], to insert the words "adopted child or."
  I may be thought presumptuous in offering a, suggestion by way of Amendment on a question of drafting. Sub-section (1) of the Clause deals with children, and Sub-section (2) with dependants, but among the dependants may be voluntarily adopted children. By a further Amendment I propose to leave out the words ("other than a child in respect of whom relief is given under Section 68 of the Finance Act (1909– 10), as amended by any other enactment or under Section 13 of the Finance Act, 1917"). The omission of this reference to the Act of 1917 and the previous Acts, and the insertion of the words "adopted child or," would help people who want to know what, under this Sub-section of the present Bill, they are entitled to expect in regard to persons dependent upon them.
  Sir J. D. REES: Is not this rather an extension?
  The CHAIRMAN: This is purely a drafting Amendment.
  Mr. BONAR LAW: I ask my hon. Friend not to press this Amendment. It is simply a question of improved drafting. I have consulted the expert this morning, and perhaps the hon. Member's drafting is the better, but I do not think it worth while to make any change.
  Amendment, by leave, withdrawn.
  Motion made, and Question proposed,
  "That the Clause stand part of the Bill."
  Sir J. SPEAR: May I ask the right hon. Gentleman if Sub-section (2)would include or secure abatement in the case of a child above sixteen years of age which is maintained in an asylum? It is a case which is extremely distressing, and it would seem exceedingly desirable if, in these circumstances, a deduction could be made from Income Tax.
  Mr. BONAR LAW: That case is included, and is made certain.
  Question put, and agreed to.
  CLAUSE 29.—(Payment of Interest on War Securities in Certain Cases without Deduction of Income Tax.)
  The Treasury may direct that any securities issued under the War Loan Acts, 1914 to 1917, or any Act amending those Acts, shall be issued or shall be deemed to have been issued subject to the condition that the interest on those securities shall be paid without deduction of Income Tax, and the interest shall be so paid accordingly, but any such interest shall be accounted for and charged to Income Tax under the third case of Schedule D, subject, however, to any provisions of the Income Tax Acts with respect to exemptions or abatements.
  Sir ARCHIBALD WILLIAMSON: I beg to move, at the end of the Clause, to add the words,
  "Provided that in cases where it is proved to the satisfaction of the Commissioners making the assessment that such securities are held for the purpose of the trade or business of the person receiving the interest the interest on such securities may be merged with the ordinary business profits and assessed under the first case of Schedule D."
  The Amendment is conceived with the object of placing financial concerns, companies, and firms in the same position as that occupied by bankers with regard to the assessment of their profits to Income Tax so far as those profits are derived from interest on War Loan. It is well known to the Committee that bill discounters and merchant bankers and financiers, and, indeed, other classes of the community, have gone out of their way to take larger amounts of War Loan than in an ordinary condition of things would be considered prudent. They have done so, of course, with the patriotic object of helping the nation in this time of trial. Now bill discounters and others of that class have often for Income Tax purposes an average statutory loss, which means that they pay Income Tax by deductions to a greater amount than their average profits. If, therefore, you assess War Loan interest separately under Case 3, as is proposed by this Clause, you are doing

  1423
  away with the intended difference between War Loan and other securities. I conceive that when this War Loan was issued without deduction of Income Tax this very great difference was made between it and other securities with the deliberate object of facilitating the investment of moneys which would otherwise have been put into commercial bills of exchange and other temporary securities of that kind. Now this Clause goes a long way to remove any advantage which was intended by making this difference, and all that I desire to secure by this Amendment is that we should put bill discounters and financial houses, merchant bankers, and financiers in the same position as that which bankers occupy in regard to the payment of Income Tax so far as their income comes from the interest on War Loan. It is quite true that my Amendment does not specify these particular classes of the community, and that the word "person" is perhaps wider than the classes to which I have referred. I do not know whether the Government think it too wide. If the Government desire, as I suppose they do, that others than, bankers who are in a strong financial position shall strain as far as possible to take the largest amounts of War Loan, there is no reason why this Amendment should not be accepted.
  Mr. BALDWIN (Joint Financial Secretary to the Treasury): I do not think there is any necessity for my right hon. Friend's Amendment, because what he desires to effect by it is consonant with the existing practice. I do not know exactly how far he proposes to go, but in the case of persons whose business it is to traffic in money, and whose ordinary trading receipts regularly include interest on money, it is the established practice under the existing law to assess the Income Tax liability on the whole of the profits, including interest not taxed by the Government under Case 1 of Schedule D. This includes bankers and bill brokers, discount houses, and what you might call strictly kindred businesses to those, but it does not go beyond those. I do not know whether that meets the case. [An HON. MEMBER: "We cannot hear!"] I beg the hon. Member's pardon. It includes bankers, bill discounters, discount houses, and any business that might be strictly analogous, but which perhaps might not be included in those exact terms. It is, broadly speaking, confined to our financial houses, and if that be the only assurance that my right hon. Friend
  1424
  desires, he has it. But if he wishes to press the application of the principle and make it general, then we could not accept it.
  Sir A. WILLIAMSON: In those circumstances I should like to withdraw the Amendment, but I should like to say that this is an important declaration, because it has been quite misunderstood up to now, and this is quite a new light on the subject. If we may accept this with confidence, as I am sure we may, as being the custom, it is all right.
  Amendment, by leave, withdrawn.
  Clause ordered to stand part of the Bill.
  Clauses 30 (Payment of Schedule A Income Tax by Instalments) and 31 (Excess Profits Duty Charged in Respect of Profits Arising from the Sale of Trading Stock Not to be Allowed as a Deduction) ordered to stand part of the Bill.
  CLAUSE 32. — (Exemption from Income Tax of Certain Funds under the National Insurance (Health) Acts, 1911 to 1918.)
  (1)An insurance committee established under Part I. of the National Insurance Act, 1911, shall in respect of income derived from any funds or credits of the committee under the National Insurance (Health) Acts, 1911 to 1918, to any investment thereof, and the trustees of the special fund constituted by Sub-section (6) of Section forty-eight of the National Insurance Act, 1911, as amended by the National Health Insurance Act, 1918, shall in respect of income derived from that fund, be entitled to exemption from Income Tax, and the National Health Insurance Joint Committee shall be entitled to a similar exemption in respect of any income derived from any funds held by that Committee or under the control or management of that Committee under or for the purpose of the National Insurance (Health) Acts, 1911 to 1918.
  (2)Any exemption granted under this Section shall be claimed and allowed in the same manner as in the ease of income applicable and applied to charitable purposes and shall be in addition to and not in derogation of any other exemption under any other Act.
  Motion made, and Question proposed, "That the Clause stand part of the Bill."
  Mr. BOOTH: I should like to ask whether the Secretary to the Treasury can say what is the loss to the Exchequer and the gain to the Insurance Fund under this Clause?
  Mr. BALDWIN: If my hon. Friend will be good enough to put a question down, I should be glad to get an answer, but I have not the information now.
  Question put, and agreed to.
  Clause 33 (Effect of s. 97 of Taxes Management Act, 1880) ordered to stand part of the Bill.
  CLAUSE 34. — (Continuation of Excess Profits Duty.)
  The Finance (No. 2) Act, 1915 (in this Part of this Act referred to as "the principal Act"), as amended or extended by any subsequent enactment, shall, so far as it relates to Excess Profits Duty, apply, unless Parliament otherwise determines, to 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, as it applies to accounting periods ended after the fourth day of August, nineteen hundred and fourteen, and before the first day of August, nineteen hundred and eighteen.
  Motion made, and Question proposed. "That the Clause stand part of the Bill."
  Mr. HOLT: I wish to reiterate the protest I have made on previous occasions against the Excess Profits Duty. I venture to say, as I have said before, that it is one of the very worst taxes that has ever been proposed by any Government or enacted by any party. It has never been defended at any time on sound financial principles. When my right hon. Friend the late Chancellor of the Exchequer introduced this tax to the House he defended it expressly on the highwayman's ground that the Chancellor of the Exchequer wanted money and that he was obliged to go to those persons who had got money in order to take it from them. There is, of course, a certain amount of force in that defence; you can only tax people who have money, but in itself there is no worse tax in this country. One of the reasons why this tax was originally put forward was that it was necessary in order to quieten the disturbance to labour, and that labour could not tolerate the idea that while they got nothing out of the War a certain number of employers and business people were making large fortunes. We have seen for ourselves that the tax has had no such effect. Since the tax was put into operation, so far from the wage-earning classes being satisfied and appeased by discovering that the employing classes were not making any more fortunes out of the War, they have indulged in an orgy of increased demands for wages, the like of which has never been seen before. It has not had, and no sensible person supposed it would have, the effect which it was supposed to have in that direction; but I want to speak very strongly about the general injury to trade which this tax has brought about. If it
  1426
  had been the object of the Government to do the greatest possible amount of harm to the trading interests of this country, this is the tax they would have proposed. It has had the most disastrous and damaging effect upon British trade of almost any tax— almost as damaging as a great many of the Government's restrictive Regulations.
  4.0 P.M.
  This tax, more than anything else, is encouraging the most gross extravagance. As everybody knows, when once you have-got above a certain limit—and, as a matter of fact, a large number of traders have got above that limit—when once people-know the Government is going to pay 80 per cent. Excess Profits Duty and 6 per cent. Income Tax, anybody who has had practical experience of business knows perfectly well that is in the mind of everybody. People are saying on every occasion, "What does it matter? The Government are going to pay 86 per cent. for this, that, and the other thing." You develop an atmosphere of extravagance in connection with every business in consequence of this tax, which it will take generations to get over; whereas, on the other hand, people ought to be trying to see how to economise and produce the best possible result at the minimum expense. The Government have said, "It does not matter how much you economise or how successful you carry on your business; if you get above a certain limit, you will get no advantage out of it yourself." I am rather surprised that the Chancellor of the Exchequer, who, I understand, was once a business man himself, so entirely forgets what he must have experienced in business, as to countenance a tax which, from the point of view of trade and commerce, is very unfortunate. Moreover, it leads people into doing absolutely unsound things. For instance, if you have property and" realise your property for a price considerably greater than it originally cost you, that is an increase of capital value, and it is not taxable, but the insuring of that property, causing increased value, is a disbursement. That is paid for, or may be paid for, out of Excess Profits Duty. People are therefore put in this position, that they can insure to enhance the value of their property by paying 14 per cent. of the premium. That is inducing people to insure property they ought not to insure. If you have a benevolent Government announcing that they

  1427
  will pay 86 per cent. of the insurance premium, that is a very bad thing, and it is the inevitable result of this tax.
  It has another bad effect. The effect of this tax is to penalise all the efficient firms. In the competition between one firm and another those persons who are most efficient, who conduct their business in such a manner as to make the greatest profits, get less, because when they get to a certain line, 86per cent.is taken from them. On the other hand, the person who has never been able to conduct his business to produce more than 6 per cent. only pays ordinary Income Tax; so that you are really giving a preference to those who are inefficient in a trade as compared with those who are efficient. Then, see how that is going to affect you in the competition with foreigners, which is likely to ensue after the War. During the whole of the War the more efficient traders have been penalised by this tax, while the less efficient traders have not been penalised, with the result that you are exposed to foreign competition with the more efficient foreign firms, which have got large financial resources accumulated during the War, whereas the more efficient British firms have not got those resources. In other words, the more efficient British firms will be, as compared with the more efficient foreign firms, in a much worse position than ever before, whilst the less efficient British firms will find that their opportunities for competing are not materially damaged. For these reasons, I venture to say, this tax is a thoroughly bad tax, which ought to be removed. I believe it has always been a wrong tax. There ought to have been no distinction made in the amount of Income Tax which a person is called upon to pay by reason of the fact that his income before the War was or was not below a certain figure. I have not the slightest objection to a graduation of Income Tax, but to say to a person that, because three or four years ago his income was a certain figure, it has now never to get above that figure, at all events for the duration of the War is, I think, to strike a very serious and grave blow at the prosperity of the country.
  Mr. CURRIE: I do not wish to follow the argument of my hon. Friend who has just sat down, but, looking to the amount of money which the Chancellor expects to reap from the Excess Profits Duty in the
  1428
  coming year, it must be plain to the whole country that there are people in our midst, possibly without any evil intention— I attribute no motives— who are becoming rich as a result of the War. It may be inevitable— I do not wish to make any remarks to inflame feeling against people of that kind— but at the same time the speech to which we have listened is merely a recital of the grievance of those who have made a considerable amount of money out of the War, and would like to live in peace and quietness so as to make a good deal more. That appears to me to be really what the hon. Gentleman's speech amounts to. He says he has no objection to a graduated Income Tax. I think there can be little doubt the country would very strongly object to the abandonment of the Excess Profits Duty, and the substitution of an Income Tax of 11s.,12s. or 13s. That is the plain fact of the matter, and I do not think the country or House is in the least likely to go back on the policy of this Excess Profits Duty.
  I would like, however, to address one or two questions to the Chancellor, simply for information. On previous occasions I have called attention to what appears to me to be a great anomaly, and that is that about one-third of our revenue next year will be raised in taxes of a certain kind, and, so far as we know, the Exchequer tells us that it itself does not know from what sources, what trades, these moneys are derived. It does appear unreasonable to the last degree that, year after year, we should go on levying taxes of this kind and be content to remain in total ignorance as to the sources from which this money is derived. I would like to hear from the Chancellor of the Exchequer whether any attempt is being made at the Exchequer to arrive at this information. The second point on which I think the Chancellor might very usefully make a statement is as to the future of this tax— that is, as to whether it is the settled policy of the Government to remit this tax altogether as soon as the period of actual fighting comes to an end. I do not want to repeat what I said in this House only three weeks ago on this point, but it does seem that it would be much more satisfactory if the Treasury were to say quite frankly, if it can do so, that it now sees that this Excess Profits Duty cannot be entirely remitted on the very day, or in the very year, that the fighting comes to an end, but that it intends to

  1429
  adopt some other policy. I think there are some practical difficulties, and if there is any question I think it is better that the mercantile community should be told where it really stands.
  Another point on which I should like to repeat a protest I made last year and the year before is as to the exemption of professional men from the payment of Excess Profits Duty. I know representations have been made to the Chancellor that the exemption enjoyed by professional men is utterly unfair, and the explanation of the Treasury, I understand, is that they themselves are satisfied that the cost of obtaining information and collecting a comparatively small sum of money would not be worth the expenditure of energy. It may be, of course, that few professional men are making excess profits at all, but it is common knowledge that a good many professional men are making them on what is a considerable scale for them. I think it would be just to professional classes that the Chancellor should once more give an assurance that the exemption which professional men continue to enjoy is not to be taken as at their request, but entirely as a matter of Treasury policy. The one remaining point on which I should like to address a question to the Chancellor arises out of Section 49 of the Finance Act, 1916:
  "Where the pre-war standard of profits is taken to be the percentage standard, or is calculated by reference to the statutory percentage in the case of any trade or business owned or carried on by a company or other body corporate whose directors have a controlling interest, the Commissioners of Inland Revenue may, if they think fit—"
  That is where my point comes in—
  "as respects any accounting period, including a past accounting period, for the purpose of the provisions relating to the statutory percentage and for the purpose of the determination and computation of profits under Part I. of the Fourth Schedule to the principal Act, treat the company or body corporate as if it were a firm and not a company or body corporate."
  Of course that Clause was passed in order to prevent companies placed in a certain position from adopting a dodge of some kind to the prejudice of the Exchequer, and one has no objection to that; but my query arises, Is the option given to the taxing authority absolutely retrospective? Does it empower the taxing authority to reach back to an unlimited extent? I understand the question has arisen and is causing trouble just now, and it may be my query is rather in the nature of a legal conundrum, and the Chancellor may
  1430
  not be able to answer it offhand. But it is raising trouble, and I think it would be convenient to many firms that might be affected to know whether the taxing authority is under any limitation as to any process of reaching back, or whether it is bound to commit itself on the first occasion when the accounts of such a firm pass under its notice.
  Mr. PENNEFATHER: I merely wish to point out that the speech which has been made by the hon. Member for Hexham (Mr. Holt) may express his own personal view, but does not express the view of the business men of this country as a whole. I have had the honour of waiting on the Chancellor of the Exchequer during the last two or three years with many deputations from the Chambers of Commerce and other deputations of that kind, and at none of those meetings— I think the Chancellor will bear me out— have the views expressed by the hon. Member for Hexham had any echo. There have never been any objections to the principles of this Excess Profits Tax. It is true, we have protested against points of detail, against matters of administration. We have made suggestions as to how it might be changed so as to fall with greater fairness upon some, and with less unfairness upon others, but on the broad question of principle, I venture to say without contradiction in any quarter, that the great commercial bodies of this country have taken a wider view than the hon. Member, and a less selfish and more patriotic view realising that if less is taken from those who pay excess profits, more must be taken from the less fortunate who have not made excess profits. I thought it my duty, connected as I am with the Association of Chambers of Commerce, just to enter that protest against the speech the hon. Member has made, and to make it quite clear that that is a personal expression of opinion, and does not express the opinion of the great business organisations of the country as a whole.
  Mr. BONAR LAW: I am sure it is not the desire of the House that there should be any lengthy discussion of this matter, and I would rather hesitate to say anything except there ought, as a matter of courtesy, to be some reply. The hon. Member for Leith Burghs (Mr. Currie) asked me several questions, some of which I can answer, and some of which I

  1431
  cannot answer. He said the last one was rather in the nature of a legal question. To this I cannot at present give any answer. As regards the continuance of the Excess Profits Duty after the War, it was said by my right hon. Friend when he introduced the tax— and I have adopted his view— that it could not be regarded as a permanent tax, though obviously it cannot come to an end the moment the War ends. As regards the speech of the hon. Member for Hexham (Mr. Holt), I can at least pay him the compliment of saying that he is not afraid to express views that are not held by anybody else. That is something to his credit. I entirely disagree from him, and in one or two sentences I will tell him why. First of all, he said he was surprised that I, as a business man, or who once used to be considered a business man, should ever have approved of this tax. I can explain that to him on two grounds.
  I was once discussing political affairs with a lady who is connected with a well-known statesman, and in the course of conversation she dwelt very strongly on the view— it was a very long time ago, and it has no reference to present conditions— that business men were no use in politics. After a while she suddenly realised that I was a manufacturer, and not having any desire to be rude she exclaimed, "Oh, I always understood you were not prominent in business." That is one explanation. The other explanation is that I am a Scotsman. If I cannot get 100 per cent. of the excess profits, I do the best I can to get as much of the 20 per cent. that is left; there is still the incentive to get as much as I can out of the business. The real explanation of the Excess Profits Taxis a very simple one. First of all, take it on the ground of merit. The idea underlying it is not, of course, that the excess profits are all made out of the War. The idea is that if anyone gets a bigger income now than before the War he is not, from the point of view of fairness, badly off. But there is also the other aspect, that, speaking broadly, a large part of the excess profits are directly due to the War, and that nothing could be more fair than that they should pay an unusual part of the expenses of the War. Another reason is this: We are this year going to get out of the Excess Profits Duty £ 300,000,000. My right hon. Friend
  1432
  who proposed this tax has good reason, I think, to be proud of the result. When I tell the Committee that if we were raising that money, say, by Income Tax, it would mean something like 8s. in the £l. I do not think there are many people who believe other than that this is a good tax.
  Sir W. PEARCE: There was one point put by the hon. Member for Hexham to which I should like to bring back the attention of the House, and that is the condition of the country after the War in the matter of its industries. The German chemical manufacturers, including those in the dyeing industry, have made very heavy profits during the War. These have not been taken away from them except in a little degree, but they have not been allowed to spend them; they have been obliged to capitalise them with the avowed object of putting these firms into a supreme position as soon as the War is ended. It is obvious, I think, in taking very large amounts of excess profits, that points of this sort should not be lost sight of. It may be inevitable, but it is no good losing sight of the fact that this policy is going to make this country pay pretty dearly in some respects after the War. To that extent the hon. Member for Hexham, in raising the point, has really done a service. We are obliged to have this heavy taxation. We are obliged to get a large sum of money out of it. But it is no good shutting our eyes to the fact that it is going to impair the industrial possibilities and industrial extensions of this country, and to that extent it is a bad tax. It is only through the dire misfortune of War that we can endure it.
  Mr. J. MASON: The right hon. Gentleman just now took credit for the fact that this tax is going to yield more than any other single tax in the country. It is, however, very important that the House should bear in mind where the money comes from that goes into the Exchequer. Practically the whole of the expenditure of the War now, or the greater part of the expenditure from which this tax is derived, is coming from Government expenditure. It is entirely a question of the prices that the Government pay for goods as to how much this tax will yield. The higher the prices, the more careless the contracts are made, the more this tax is likely to yield, inasmuch as it is merely taking money out of one pocket of the Government and

  1433
  putting it into another. Inasmuch as this tax only yields 80 per cent. of the total expenditure it is not good business for the Government to pay high prices, if they can avoid it. What I mean to say is that we would be infinitely better off if the Government were to be very careful in all possible ways in making very close prices, and cutting down profits as much as possible, because every saving in that direction means putting into the Exchequer, not 80 per cent., but the whole 100 per cent. Cutting down, and making close prices, is very largely a matter of careful costing and working out the actual cost that should be paid for things. We know that in the earlier days of the War very extravagant prices were paid in a great many directions. We know that there has been a good deal of care exercised since. I cannot, however, help thinking that the Government might go a little further, and, if they did, the inevitable result would be to reduce the yield from this tax. In so far as that yield was reduced, it would be a good sign, and a real saving to the country, much greater than the yield of the tax.
  Credit was taken by the Chancellor of the Exchequer for the fact that the tax is a very successful tax. Something has been said as to the question of this tax being continued after the War. I do not want to pursue that, but I do want to say that I believe that when this tax comes to an end— and pledges have been given in this direction— it will be essential to find some substitute in the shape of a profits tax, but, of course, on a different basis from the present case. It will be desirable to find a tax which will be much more justifiable than this, and one which would not be levied only on one class or in one direction, but one that would be levied oh the general expenditure and the consumption of the whole country. Some sort of substitute of that character will have to be found. It is quite obvious that if any measures of protection are taken— and they are likely to be taken against our enemies for other than fiscal reasons— that these measures of protection can very justifiably he accompanied by a provision that there must be some portion—
  The CHAIRMAN: May I draw the hon. Member's attention to the fact that we are now discussing only one year's expenditure?
  Mr. MASON: I will not pursue that aspect of the case any further, Mr. Whitley; there will be many opportunities before the end of the War to review this subject. I should like merely to express the view that it is not altogether a matter of congratulation to this House that this tax should keep on yielding such enormous figures, when, by a closer administration and closer cutting of prices, the yield might be a much greater one, although not obviously so great.
  Sir F. BANBURY: I think the remarks of my hon. Friend behind me (Mr. J. Mason) deserve the serious consideration of the Committee. It is undoubtedly true that one of the reasons for a very large yield from this particular tax is the fact that a large portion of it comes from Government expenditure, and Government expenditure has been in the past extremely extravagant. I have had the honour of sitting upon the Select Committee on National Expenditure, and though I agree with him, so far as we can ascertain at present, the costing is not so great as it was. There are still, however, plenty of directions in which economy might be advantageously pursued. I do hope— and I said this on the Second Reading of the Finance Bill— that with this enormous taxation attempts will really be made to lighten it by reducing the expenditure, which is really the most essential thing to do at the present time. The hon. Member below the Gangway (Sir W. Pearce) drew the attention of the Committee— and it is perfectly true— to the fact that when there is so much which should be put by in sayings being taken at the present time for the War, the manufacturers will not have that reserve they would like to fall back upon. I do not see how that is going to be avoided, unless the whole policy of the Government is altered, and the necessary money is found by loan instead of being found to the extent it is by taxation. I quite admit the difficulty. It is really a very serious thing. I fancy the Chancellor of the Exchequer thoroughly appreciates the point, and has had it in his mind.
  With regard to the speech of the hon. Member for Hexham, my recollection certainly bears out what he said that one of the reasons, if not after all the chief reason, given for the imposition of this tax was the fact that the working classes and especially the trade unions, objected to the employers making large sums of

  1435
  money, and tried to excuse themselves for demanding increased wages by stating they only did it because the employers were making large sums of money. I remember an hon. Member representing one of the coal districts saying that the colliers would never have asked for any increase in wages if there had been a limit put to the price of coal. There has been a limit put. That has not in any way affected the demand of the colliers for shorter hours or higher wages. Ever since this Excess Profits Duty was introduced, instead of having the effect which it was supposed to have by the leaders of the working classes, they have continually urged that they should have higher wages, and not be subjected to the Excess Profits Tax themselves. The Chancellor of the Exchequer said that he thought it was clear that anyone who was making a larger income now than before the War ought to give some of it to the State. That does not apply to the very large number of the working classes who are making very much larger incomes than they did before the War.S5CV0106P0I0721.jpg
  Mr. O'GRADY: They are spending it in foodstuffs.
  An HON. MEMBER: So are other people!
  Sir F. BANBURY: Is it contended that the man who is making £ 3 or £4 per week now, when before the War he was only making 30s. or a couple of pounds, is spending the whole of the extra in food stuffs?
  Mr. O'GRADY: Yes.
  Sir F. BANBURY: How can he? You cannot spend as much in foodstuffs as before the War, because you are rationed. In the evidence before the Select Committee it came out that the actual amount a man can spend is possibly about 50 per cent. more than he did prior to the War. Of course prior to the War no man unless he was receiving very small wages ever spent the whole of his money in foodstuffs, or anything like it, and certainly not where he was making £ 5, £ 6 or £ 7 per week. All these matters are now being brought into consideration. I do not quite share the view that the tax is entirely a bad one, because a certain amount of revenue must be produced. I hold the view that people who are making larger incomes really ought to pay something in consideration of that fact. The
  1436
  only objection I have to this tax is, as I think the Chancellor of the Exchequer has admitted, that it does not wholly fall upon the people who are making the increased incomes out of the War; but that it does-fall, to a certain extent at least, on people who, while they are making increased incomes, are not making them out of the War. That is the unjust part of it. With that exception I do not think any part of the tax is really unfair.
  Mr. J. HENDERSON: When the late Chancellor of the Exchequer introduced this proposal he was the first to admit that in ordinary times it would not be supported. There are, however, one or two dangers I should like to point out which have been referred to by the hon. Member for Hexham (Mr. Holt). One very unfair thing about the tax is that there are a great many firms who had a good pre-war standard, and they have been able to keep up to that standard and have not gone beyond it, and they have paid nothing for Excess Profits Duty. It is supposed that people make a great deal more money who pay excess profits, but an extraordinary case came under my own purview where they paid £ 15,000 in excess profits the first year and did the same last year. This particular company used to pay its dividends free of Income Tax, but the result this last year is that the dividend is 2½per cent. less than it was in the pre-war year, so that they are not making any more profit. There is want of fresh capital, although foreign companies are allowed to put these moneys by for reinvestment and the extension of their works for larger output after the War.
  A great many of our companies are not really able to do this unless they realise their stock and plant on account of the excess profits which are charged. I know a case where £ 150,000 excess profits are payable, and how can they pay that amount unless they have time to do it. That will be a burden for them after the War, and they cannot extend their business and go ahead as they ought to do. People are afraid to put money now into a prosperous concern, or what seems likely to become prosperous. I have frequently been consulted by people who are prepared to put up money for certain purposes, but they have said to me, "We know we have a good thing, but we have no pre-war standard, and we want to-know what we shall have to pay in excess

  1437
  profits, assuming we make so much profit." After going into the figures they have turned down such investments, and this cannot be helped under the circumstances, because the Chancellor of the Exchequer must have the money. Then there is the inequality of people starting with a fine pre-war standard on a fortunate year, and they are still doing very well, but there is the danger of the heavy costs that are being put upon them by wages and all sorts of things, and they cannot compete with these heavy charges. There is no doubt that the great virtue of this proposal is that it brings in money. As the late Chancellor of the Exchequer said, it would be perfectly inexcusable to continue this a day longer than is necessary, and we take it that as soon as the War ends this particular form of taxation will cease, because it does not treat everybody fairly; and then, if necessary, some other form of taxation which will hit everybody will be substituted in its place.
  Question put, and agreed to.
  CLAUSE 35. — (Profits Arising from Sale of Trading Stock.)
  (1)For the purposes of Excess Profits Duty the profits arising from the sale at any time after the twenty-second day of April, nineteen hundred and eighteen, otherwise than in the ordinary course of trade of the trading stock or part of the trading stock belonging or formerly belonging to any trade or business, shall be deemed 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 be deemed to have been carried on up to and including the date on which the sale takes place, and the accounting period shall be taken to be such as the Commissioners of Inland Revenue may deter mine.
  (2)Where a trade or business has ceased but is deemed for the purposes of this Section to have been carried on for any period—

  (a) the person by whom or by whose authority any trading stock is sold whether as owner, agent, liquidator, trustee, or receiver or other person acting in a similar capacity shall be deemed to be the person carrying on the trade or business and Excess Profits Duty shall be assessed on and recoverable from that person and nothing in Sub-section (2) of Section forty-five of the principal Act shall operate so as to impose any liability to duty on the purchaser of the trading stock; and

  (b) the appointment of any such liquidator, trustee or receiver, or other person shall not be treated as a change of ownership of the trade or business, and Sub-section (3) of Section thirty-eight of the principal Act and paragraph seven of Part I. of the Fourth Schedule to that Act as amended by any subsequent enactment shall have effect as if the profits arising
  1438
  from the sale of the trading stock had been made by the owner of the business immediately before the appointment of the liquidator, trustee, receiver, or other person, and as if the duty were payable by him.

  (3) Where any trading stock is sold together with other assets of the trade or business, the part of the consideration attributable to the trading stock shall, subject to appeal in manner provided by Sub-section (5) of Section forty-five of the principal Act, be determined by the Commissioners of Inland Revenue, and the part of the consideration so determined shall be deemed to be the price paid for the trading stock by the purchaser.
  (4) For the purpose of this Section any trading stock which has been disposed of otherwise than by way of sale shall be deemed to have been sold, and any such trading stock so disposed of, and any trading stock which has been sold for a consideration other than cash, not being a consideration the value of which can be easily ascertained, shall be deemed to have realised the market price of the day on which it was so disposed of or sold.
  No person shall at any time after the fourteenth day of May, nineteen hundred and eighteen, dispose otherwise than by way of sale of any trading stock unless he has previously made provision to the satisfaction of the Commissioners of Inland Revenue for securing the payment of any Excess Profits Duty which may be chargeable by virtue of the provisions of this Section, and if any person attempts to dispose of any trading stock in contravention of this provision the disposal shall be void and of no effect.
  (5) In this Section the expression "trading stock" includes—

  (a) any goods such as are sold in the ordinary course of a trade or business whether in a finished condition or not; and

  (b) any raw or other materials used in the manufacture or preparation of any such goods,

  and references to disposal of trading stock do not include disposal by way of testimentary disposition.
  The following Amendment stood on the Paper in the name of Mr. J. HENDERSON:
  At the end of the Clause to insert the words "but nothing in this Section shall be held to relieve the vendor who has sold his business prior to the twenty-second day of April, nineteen hundred and eighteen, from accounting for the profits made in trading during the period between the date of his last accounting period and the date of such sale."
  The CHAIRMAN: I want to ask the hon. Member for West Aberdeenshire a question. Does he consider the words put on the Paper as merely defining the effect of the Clause as it stands? Are his words intended as a pure definition, or do they charge somebody who is otherwise exempted?
  Mr. HENDERSON: I quite see the difficulty, but my contention is that my proposal defines what is meant by this article, and I hope to draw from the Chancellor of the Exchequer an expression of opinion that that is what is intended. These men whom I propose shall not escape are already charged, but I want to be assured that this Section shall not excuse them from that duty to which they are at present liable. If that is so, I want to have it clearly defined, because no one would think reading this proposal that it could be held to relieve the vendor who has sold his business prior to the 22nd day of April, 1918.
  Mr. BONAR LAW: I do not quite follow what the hon. Member means. If he means that we should make this proposal retrospective, I am not prepared to do that.
  Mr. HENDERSON: I do not want to make it retrospective. May I give an illustration of what I mean? A firm's last accounting period is June, 1917, and they have accounted for that period. The months up to December intervene and in the following January they sell. What I want defined is whether in regard to the profits in the intervening months for which I hold they are liable, they are to be assessed for that period?
  The CHAIRMAN: Now I am certain that the hon. Member's point is clearly superfluous. He is dealing with trading profits which do not come under this Section. This is profits made on the sale of the business, and therefore the proposed Amendment is in the first place irrelevant to this Clause, and if it were relevant it would be superfluous. To me that is quite clear. I cannot accept an Amendment which is both irrelevant and superfluous. With regard to the next Amendment standing in the name of the same hon. Member proposing to insert the words "prior to as well as subsequent to twenty-second April, 1918," that would be a charge upon the subject, and cannot be brought in without a special Resolution.
  Mr. PENNEFATHER: I beg to move, at the end of Sub-section (1), to insert the words "provided always that this Section shall not apply to sales by executors of the trading stock, or part of the tracing stock of the business, or the sales of such stock made by proprietors in consequence of fire or other accidental occurrence."
  1440
  My object in moving this Amendment is to provide for the case of sales made force majeure by executors owing to the death of a proprietor and sales caused by fire or collapse of a building, because such things happen as the result of bombs. I do not expect the Chancellor of the Exchequer to accept this Amendment at this particular moment, and I have no doubt he will require time to consider it, but I hope the right hon. Gentleman will promise to consider the matter between now and Report stage.
  Mr. BONAR LAW: My hon. Friend has already said that he hardly expects me to accept this proposal. I will promise to consider it, but I do not think on the face of it that it seems one on which I can give any pledge.
  Mr. CURRIE: Will the right hon. Gentleman clear up the meaning of the words at the end of the Clause "and references to disposal of trading stock do not include disposal by way of testamentary disposition." If a man dies and leaves his stock, that is a passing of property, and I have been under the impression that the real meaning of those words were a trust disposition contained in instructions to executors as to what they were to do at a later date. There is a distinction between what is done under the instructions of a will and what is done by a will itself. My hon. Friend who moved the Amendment seemed to take the other view, and I think it is important that the Chancellor of the Exchequer should explain the point.
  Amendment negatived.
  Motion made, and question proposed,
  "That the Clause stand part of the Bill."
  Mr. HENDERSON: Is it intended that there is to be no accounting prior to this particular date?
  Mr. BALDWIN: I am not quite clear what it is that the hon. Member wishes to get at. This Clause deals with the sale of stock in bulk. Does my hon. Friend want to know if there is any means of getting at a man who sells his stock in bulk and makes a sale at some date prior to the 22nd. April, 1918? With regard to the period of the ordinary run of excess profits, that goes on as under the ordinary law, but there are certain conditions attaching to a man who makes a sale in bulk. We have already discussed whether it would be possible to bring up and include in this Clause transactions that had taken place

  1441
  at an earlier date. It might have been possible satisfactorily to have included some of them, but it was made clear to us that we could not include all of them. Therefore we fixed this date, 22nd April, before which we will not bring them within the ambit of the tax.
  Mr. HENDERSON: I mean the profits made by a man by the sale of his goods during the intervening period.
  Mr. BONAR LAW: That is perfectly clear, and I am sorry that neither my hon. Friend nor myself understood what was the object of my hon. Friend's question. I now understand it to be this: Supposing the business had been going on up to 1st April in the ordinary way, and had made excess profits, does the fact that it was sold after 22nd April save them from paying excess profits? The answer is, "No; they will pay excess profits."
  Question put, and agreed to.
  CLAUSE 36.—(Increase of Stamp Duty on Certain Bills of Exchange.)
  (1) Twopence shall be substituted for one penny as the Stamp Duty on all bills of exchange and promissory notes chargeable under the First Schedule to the Stamp Act, 1891, with duty at the rate of one penny and drawn on or after the first day of September, nineteen hundred and eighteen, and two pence shall accordingly be substituted for one penny in Sections thirty-four and thirty-eight of the Stamp Act, 1891.
  (2)The provisions of Sub-section (2) of Section thirty-eight of the Stamp Act, 1891, shall apply so as to enable an adhesive penny stamp to be fixed on any such bills of exchange as are mentioned in that Sub-section which are liable to a duty of twopence under this Section and are stamped only with a penny stamp, as they apply with respect to the fixing of a stamp on an unstamped bill.
  (3)Sub-section (1) of Section thirty-eight of the Stamp Act, 1891, shall not operate so as to render any bill of exchange which is liable to a duty of two pence under this Section and is stamped with a penny stamp invalid for any purpose until the first day of December, nine teen hundred and eighteen, if the person who takes or receives the bill fixes thereto an adhesive stamp of one penny and cancels the stamp.
  The CHAIRMAN: The Amendment—in Sub-section (1) to leave out the word "Twopence" ["Twopence shall be substituted"], and to insert instead thereof the words "One penny"—standing in the name of the hon. Member for Coventry (Mr. D. Mason)—does, I am afraid, not make good sense. It would hardly do to say that "One penny shall be substituted for one penny."
  Mr. D. MASON: Might I put this to you?
  The CHAIRMAN: No; the point does not need any argument.
  Amendments made: In Sub-section (2) leave out the word "such" ["such bilk of exchange"].
  Leave out the words "as are mentioned in that Sub-section," and insert instead thereof the words "to which that Subsection applies being bills."—[Mr. Bonar Law.]
  Motion made, and Question proposed,
  "That the Clause, as amended, stand part of the Bill."
  Mr. NEEDHAM: I think we ought to look into this question a little more closely. We have already had two discussions on the subject, but I would just like to refer to one or two points that have been made. My main point is the probable effect of the increased Cheque Tax upon banking in this country, and particularly upon small accounts, which, I. believe, in the main constitute the credit accounts in this country. This 2d. tax is a retrograde one, because it is going to interfere with the further development of our banking system. I was very interested indeed to see the reports of two French banks in the papers of the last day or so. I have here an extract from a report which appeared yesterday regarding the Comptoir National d'Escompte, and in the concluding part of that report it says that they are doing all they can to further the use of cheques in France. The report of the Credit Lyonnais refers with great satisfaction to the immense growth in Paris of clearances by cheque. The figures may appear great in Paris, but bearing in mind the enormous figures in. London, they do not appear great here. There passed through the clearing banks in Paris in 1916 £28,000,000 in cheques, and in 1917 there passed £182,000,000 in cheques. Everyone knows that during the last few years in this country there has been a great growth of small cheques. It has become a very convenient method of clearing transactions. It is one of the striking features of the economic use of money and of credit in this country, and in my judgment it ought to be encouraged. The Chancellor of the Exchequer, in one of his speeches, said that he did not pay very much attention to the argument that the growth of currency notes increased inflation. I do not know

  1443
  quite to what extent I agree with him, but I would like to put this to him. If an increased use of currency notes does not carry with it inflation, then he ought to be content to see all our transactions carried on by currency notes. I cannot imagine that is in his mind at all, and, if that is not his argument, he is bound to believe that there is some inflation as a consequence of the way in which we are using currency notes at the present time. If currency notes are so good their use ought to be extended, but none of us like them from the point of view of the credit of this country. We would prefer that currency notes should be backed by gold reserves, just as in the main Bank of England notes are backed by gold reserves. If they were so backed, I for one would not mind the use of currency notes being extended, but they are not backed by gold in this country to any considerable extent. We have about £28,000,000 gold ear-marked against currency notes, which are very rapidly mounting up to £300,000,000. The Chancellor of the Exchequer might really give a little more consideration to the inflation argument.
  May I draw the attention of the right hon. Gentleman to another point. He expects to make £1,000,000 out of a full year's revenue from the 2d. Cheque Tax. Supposing that is so, there are two things which follow. In the first place, he is budgeting for a diminished use of cheques. That is clear, and to that extent it is very unfortunate, because he himself gives point to our plea that the 2d. cheque stamp does mean a diminished use of cheques. There is another point. The whole of this £1,000,000 is not pure credit to the Revenue, because if this £1,000,000 does not go in the buying of the extra penny stamp it will go to the credit of the Profit and Loss Account, and the Chancellor of the Exchequer will get Inland Revenue as Income Tax to a very considerable amount. I do not put the whole £1,000.000 as bearing Income Tax, because a considerable number of cheques are used by people who come within the £130 exemption, or who, owing to allowances, do not pay Income Tax, but a very large proportion of the £1,000,000 which he expects to get would be credited to the Profit and Loss Account and would, therefore, be subject to Income Tax. Therefore, as a pure matter of accounting, he is not to that extent going to receive £1,000,000 from his increased cheque stamp, because other-
  1444
  wise he would have a considerable portion, of it added to his Inland Revenue as Income Tax. Therefore, what he would gain on the one hand he is losing on the other, and he is at the same time doing an injury to the credit facilities of this country which ought not to be done at the present time. The Chancellor of the Exchequer himself has seen a great many of the difficulties, because he contemplates that he may have to create 5s. notes and that he may have to coin more silver. These things would follow as a matter of course. People would have to carry more currency notes. We should swell the use of currency notes, and that in itself would be a very bad thing. I suggest to the Chancellor of the Exchequer that it is not in his interests as custodian of the commercial welfare of this country that he should impose this 2d. cheque stamp for the sake of the extra money which he may get. The disadvantages are so very considerable and the possible advantages in the way of revenue are so very slight that on the balance I think he ought not to pursue the increased tax which he has proposed.
  No one objects to finding the money for the War. I do not suppose that the Chancellor of the Exchequer thinks that those who have objected to this tax are seeking to escape some sort of liability. I am quite sure that is not in his mind. All of us are perfectly willing to find all the money that is required, but we want to have it found in an economic way, and we want to do it so that the trade of the country will not in any way suffer. I started by saying that my main point was the ill-effect on the small credit accounts in the banks of this country. I close with that point. It is a matter of surprise to very large numbers of people that the great credit banking business which is done is built up out of innumerable small accounts. The more we cultivate small accounts, the wider the basis of our stability. The more we cultivate the small accounts, the more credits there are in the bank; and the more credits there are in the bank, the more are the trading facilities of the banks, the more they can lend to traders, and the more they can offer facilities for financial operations for the purposes of the War. The instrument is a very important one in the financial structure of this country, and anything which will in any way impair it or make it more difficult to extend the growth of small credit accounts is something which ought

  1445
  not to be done, particularly at this moment. I hope that the Chancellor of the Exchequer will see his way to withdraw this tax. We miss to-day the powerful plea of the late Member for Clapham, who made his last speech in this House on this subject. He said that a relative of his opposed this tax when it was proposed by Sir Michael Hicks-Beach, and that he was rather successful in his opposition, but he had been transmitted to another place. The late Member for Clapham has had the same fate, and we miss his help to-day. I hope the parallel will continue, and that, as the opposition of the relative of the late Member for Clapham to the tax as proposed by Sir Michael Hicks-Beach was successful, so will be the opposition of the late Member for Clapham to the tax as proposed by the present Chancellor of the Exchequer.
  5.0 P.M.
  Sir C. HENRY: After the speech of my hon. Friend little can be added to induce the Chancellor of the Exchequer to withdraw this extra Cheque Tax. Those who oppose this tax do so not with any desire to evade liability, but in order that the financial position of this country shall not be in any way jeopardised. The Chancellor of the Exchequer expects to get £1,000,000 extra from this increased tax. The right hon. Gentleman has to take into consideration that from that £1,000,000 sterling his Income Tax receipts will suffer to the extent of £100.000 or £200,000. In estimating that £1,000,000 sterling he has calculated on a reduction in the number of cheques used, and I see in to-day's papers, in answer to a question by the right hon. Gentleman the Member for Cleveland (Mr. H. Samuel),it is estimated that last year 321,000,000 odd cheques were put into circulation. Consequently 321,000,000 pennies fell into the revenue. Those pennies represent a total sum of £1,300,000 and consequently the right hon. Gentleman expects the revenue from the cheques, although the duty is doubled and should produce £2,600,000, will only now reach £2,300,000. My strong objection to the tax is that it must lead to an increase in the use of currency notes. The Chancellor of the Exchequer would be the last man to insist on this tax if he thought it would have that effect. There are enough of these notes already. There may be some advantage in their use to the Treasury, because they enable the Chancellor of the Exchequer to obtain
  1446
  money without interest having to be paid for it. But notwithstanding that, I am certain the system is one he would be the last to advocate. The cheque system, as has been pointed out, is of incalculable advantage to this country, and, indeed, to any country which adopts it to the extent we have done. I feel it would be very unwise, very injudicious, and a thing which could not be justified, to have a larger number of these notes out, and even if the revenue would thereby be increased by £2,000,000, £3,000,000, or £5,000,000 sterling, any proposal which would in the end have that effect would have to be looked at hesitatingly before we gave consent to a scheme involving an increase of currency notes and a consequent restriction or curtailment of the cheque system.
  My right hon. Friend will find that not only in this House, but in financial circles generally there is a real opposition to this proposed tax. We know that opinion amongst bankers in the City is divided, but I think I am right in saying that in the aggregate the opinion of bankers and men in business firms is against this proposal. [Mr. BONAR LAW dissented.] Of course it is difficult to get at the facts definitely, but, at any rate, I am justified in saying that opinion is very divided. I have been at some trouble to get the views in the City of bankers and managers of banks and those connected with finance, and I find that the opposition to this proposal is a growing opposition. I hope, therefore, my right hon. Friend will not be obstinate, but will listen to those who are urging him to reconsider his decision, not because of the amount involved, but in the best interests of finance and of this country. Now that the cheque system has become so firmly established, to do anything to hamper it would not only be unjustifiable, but it would also be detrimental.
  Mr. HERBERT SAMUEL: I sincerely hope my right hon. Friend the Chancellor of the Exchequer will listen to the friendly representations made to him, and will not insist on the inclusion of this new tax in his Budget. I ventured to express that view on the day after the Budget was introduced, and since then the opposition to this particular tax has greatly developed. My right hon. Friend has been kind enough to respond to a request I made, and to give me a list of the various commercial bodies which have approached him in opposition to the new

  1447
  Cheque Duty, and perhaps the Committee will be interested to hear their names. Those who have passed resolutions against the additional 1d. stamp include the London Stock Exchange, the Associated Chambers of Commerce, the Chambers of Commerce of London, Leeds, Liverpool, Manchester, Birmingham, Dublin, Blackburn, Wolverhampton, and Falmouth, the Association of Trade Protection Societies, the National Chamber of Trade, the Scottish Bank General Managers, and a considerable number of local bodies with whose names I need not trouble the Committee. The objections to this new tax have been already stated by the two hon. Gentlemen who preceded me. In the first place, the cheque system is the most civilised and, indeed, most sensible way of transmitting money. At first there was a system of barter, one class of goods being exchanged for another; then came a currency system, involving the issue of coins, gold and silver, and sometimes taking the form of tobacco, rice, or other commodities in common use in the different localities. Then came a system of exchange, and later we had the bank-note, which was an immense improvement on the ordinary currency, come into general use in civilised countries. Finally we had the cheque, which, as in this country, has been developed into the ordinary means of making payments of even quite small amounts. Last year, we have been told, no fewer than 321,000,000 of cheques passed from hand to hand in this country. Now every action of the State which checks that form of the transmission of money—in so far as it tends to discourage it—and personally I would like to see no Stamp Duty on cheques at all, for that is an ideal at which we should aim, although I am not quite sure that bankers would greatly welcome that consummation—but every action of the State which tends to discourage that method of transmitting money is thoroughly reactionary, in so far as it interposes additional obstacles to the use of cheques for the transmission of money for commercial purposes. That is the chief objection I have to this proposal. The cheque ought to be made the normal means of transmitting money of every amount down to £1 and even smaller sums, instead of using metal; it should be a simple means of paying, not merely the small salaries, but even the
  1448
  larger amounts of wages, and perhaps in times to come you will not have the handing over of coins involving long delay—a primitive method of dealing with the matter—but you will simply have an entry of a sum of money into a man's banking account.
  My second objection to this proposal is that undoubtedly it must lead to an increase in the number of currency notes in circulation. A simple calculation shows that my right hon. Friend, in estimating the extra yield at only £1,000,000, as a result of doubling a tax, which at present produces £1,300,000, is anticipating that the number of cheques will be decreased. I believe he must have calculated that the diminution in the number will amount to 50,000,000. It is not a simple calculation, of course, for you have to take into account the present revenue and to allow certain deductions, but the calculation which I have made, and which I think is substantially correct, is that there will be 50,000,000 fewer cheques used next year than were used last year. How are the transactions represented by these 50,000,000 cheques to be carried out? In some cases, no doubt, money or postal orders will be substituted for cheques, but in a very large number of cases I am convinced people will make their payments in coin, and particularly in currency notes. In future a man who draws a cheque and sends it by post will have to pay to the Government 3½d. on each transaction—that is to say, 2d. for the cheque (instead of 1d. as at present) and 1½d. for the postage stamp (instead of 1d. as now). Small traders, and, indeed, all persons with small means who have to make a transaction involving this charge of 3½d., will naturally look at it twice; they will try to economise, and the result will be a considerable increase in the use of currency notes. Whether that would have any effect on prices I do not feel quite sure. I have consulted some classical economists on the subject, but I have found exceedingly little guidance on this point in their volumes. It may be said that by substituting notes for cheques you are not inflating credit or enlarging the purchasing power, and consequently it will not have any effect upon prices. But whether that is so or not an increase in the number of currency notes in circulation will, it seems to me, be very disadvantageous, chiefly for this reason, that the currency note is really a Government security which bears

  1449
  no interest. While it is very convenient for the Government to get securities of that kind into circulation because they get cash in exchange for them and pay no interest on them, in effect, when the War is over, when trade contracts, when prices fall, as we hope they will, when all war business comes to an end, when commerce generally is on a smaller scale, you will have the reflex action of what is now going on. The currency notes will come in again, they will flow into the banks as they now flow out, because of the expansion of business and the rise in prices, and when business contracts owing to the cessation of munition work, and when prices fall, these notes will flow back into the bank; the bankers will not wish to keep them, and so they will go back to the Treasury, and shortly after the War is over scores of millions, perhaps hundreds of millions, of currency notes will return to the Treasury, and the Treasury will be required to redeem them. That will cause very considerable embarrassment in all probability to our after-war finance. The claim must be met; it is a primary obligation on the Treasury which it must fulfil, and the more currency notes you have at large now the greater will be the inconvenience and embarrassment which will be experienced when the War is over. Consequently I have come to this conclusion, that by lessening our cheque circulation by 50,000,000 and by increasing largely our currency circulation the Government is exposing itself to grave embarrassment after the War, even if the effect is not at the present time to raise prices by having a large amount of money in circulation.
  To conclude, this tax is calculated to yield the Exchequer only £1,000,000. My right hon. Friend has budgeted for a revenue of £842,000,000. To surrender this proposal, therefore, is not to give up a serious item in his Budget. Whether he raised £841,000,000 or whether he raised £842,000,000 is not a matter of profound importance. Of course, if one were to use that argument with respect to each tax in turn, you might at the end come to an accumulation of concessions which would have a serious effect, but it has not been so. The right hon. Gentleman's Budget has got through unscathed, his concessions are exceedingly few, and in point of money are quite negligible. We are now almost at the last stage of the Budget, and this is the last tax likely to be seriously challenged. There may be other points, and I do not know whether
  1450
  he is making any concession, but in effect he is being asked by such Members of the House as support this Motion to surrender £1,000,000, and that alone, apart from some very small details, out of a Budget calculated to yield a revenue of £842,000,000. I think he might do that little to meet the feeling outside the House and in it, land might congratulate himself on a very remarkable achievement in having piloted through so vast a financial proposition with so very small a concession. He has declared himself, with the open-mindedness which has always characterised him, ready to follow the guidance of the Committee. My hon. Friend the Financial Secretary said yesterday, in connection with another proposition, that he felt he had not a single friend in the House with regard to it. The Government of the day, of course, always has many friends in other parts of the House, and they, not having heard the persuasive speeches such as I trust those of my hon. Friends and myself are in this matter, can be relied on to support with whole-heartedness the Government of the day, and I suggest as a sound Parliamentary maxim that "absent friends are safest." The right hon. Gentleman, however, does not rely on that. He is ready to listen to us. I hope, therefore, the arguments used will have convinced hon. Members, and will lead others to express the same view, and that as a result the Chancellor of the Exchequer will not proceed with this particular tax, as I believe, to the general satisfaction of the majority in this country.
  Mr. MARRIOTT: I have not up to this point taken any part in the discussion of this particular part of the Finance Bill at any stage, but since this proposal was first made by the Chancellor of the Exchequer there has poured into me such an accumulation of testimony from all sides with regard to the unpopularity and undesirability of this particular tax that I hope I may be allowed to say a few words in support of the appeal made to the Chancellor of the Exchequer that he will very seriously reconsider this part of his proposal. I suppose that the Chancellor has recommended to the Committee this particular tax upon two main grounds. In the first place, that it is a tax of very great convenience in the sense that it is very easy to collect. That convenience I very frankly admit. I think you cannot possibly controvert the view that it is easy to collect. On the other hand, he has

  1451
  recommended it to the Committee on the ground that although it is not a very important item, as the right hon. Member for Cleveland (Mr. H. Samuel) has just said, in a Budget of this magnitude, yet this tax is, and is likely to be, on a modest scale, reasonably productive of revenue. I should like to say on that latter point that although I object to the tax, yet if the Committee do decide to impose it I very much hope that in this respect the Chancellor's forecast will not only be realised but exceeded. I very much hope that he will get his million, and more than a million, from this tax. Why do I express that somewhat paradoxical hope? It is because if the tax does not produce the revenue, it must mean, as hon. Members one after another have pointed out, a diminution in the use of this most valuable medium of our currency: the bank cheque.
  Either then the Chancellor will get his tax or he will reduce, and very seriously reduce, this valuable medium of currency. That is a dilemma from which it seems to me quite impossible to escape, and I sincerely hope that that latter result will not in any event be brought about. I hope so for this reason, that it seems to me a matter—and it is a matter to which I have given rather serious attention— of the very highest possible importance that the largest amount of money should be not in circulation but on deposit. The smallest amount possible you should have in circulation, and the largest amount should be in the coffers of your banks. I do not know whether the Chancellor of the Exchequer will be inclined to dispute that proposition. It is a general proposition, and perhaps he will not desire to commit himself to any general proposition. He will probably be a wise man if he does not; but, if he admits the proposition, is it not perfectly clear that the step which he is now proposing to take will be a deterrent to the banking system, and, therefore, an incentive to currency? I think it would be safe to say, if we had only the testimony offered by the Debates which have taken place in this House, that in business circles there is an almost universal agreement that this tax may mean to a large extent, and must mean to some extent, the substitution of Treasury notes for cheques. I suppose—I can only assume—that the point of the Chancellor of the Exchequer is that it does not very
  1452
  much matter whether it does or not. I very much hope that we shall hear from him, in the course of his reply this afternoon, what is his opinion on this matter— whether he thinks that this is or is not a matter of capital importance. I want to know from him, for my own guidance, whether he thinks it is or is not a matter of importance whether I pay a bill of £5 by cheque or by Treasury notes. I must say that it seems to me that it matters very much indeed which of these two methods of payment I select. Of course, there is a sense in which cheques are currency. That, I think, has been admitted by all who have given any consideration to this rather delicate question, but they are not currency in the same sense or to the same degree as notes or coins. They are what is technically known, I believe—though I am not at all an expert on the subject—as representative currency. The peculiar characteristic of this representative currency is that it gets home pretty quickly to roost. What I mean by that is that it tends very quickly to get back into the bank's hands. I understand that the export advice which is at the command of the Treasury has advised the Treasury and the Government that they are not really in a position, whatever they may do, to check the increase in the issue of the notes, that their hands are tied in the matter, that they are an issuing house, and that they cannot affect the issue of notes. What is the result?
  I am aware that as to the effects, as the right hon. Member for Cleveland has already admitted, of this issue of notes doctors disagree, and where doctors disagree it is not for me to step in. I do, however, believe that there is an immense balance of opinion, both expert and economic opinion and good business opinion, in favour of the view that there has been and there is what is technically known as an over-issue of notes, and that the result of that over-issue is, as more than one hon. Member has pointed out this afternoon, that the notes are virtually inconvertible. We have had one terrible illustration in this country of the evil effect on commerce of the inconvertibility of our notes. We had it in our last great war, and nobody who is familiar with the results of that experiment would desire to repeat it; but if the notes are inconvertible, then it means a real depreciation, and a real depreciation must mean a rise in prices. In another connec-

  1453
  tion it was pointed out this afternoon by my horn. Friend the Member for Windsor (Mr. J. Mason) that the Government itself is peculiarly interested in this question, not as the issuer of the notes, but as the consumer of commodities. Anything in the nature of a depreciation of the currency, of a rise in prices, bad as it is for the private consumer, is worse for the Government, which is the largest consumer the country has at the present time. They are the largest purchasers of commodities, and therefore the greatest sufferers by the increase of prices. The State is the greatest sufferer. My right hon. Friend the Member for Cleveland pointed out at an earlier stage of this discussion that we have had an increase in expenditure in the last eighteen months, amounting, I think he said, to something like 50 per cent., and for my own part I cannot resist the conviction that some part of that increase— I should be a very bold man if I were to attempt to say how much—is due to currency inflation, and that inflation, I submit, you will still further exaggerate by any restriction in the use of cheques. I have long thought that it was a very great pity—the hint has been thrown out in one or two quarters this afternoon—not to make an attempt to pay the higher-paid wage-earners by means of this form of currency, the cheque. I have never been able to understand why the attempt has not been made to do so on a much larger scale. In the first place, you would accustom the wage-earners to the use of banking accounts—in itself a very great advantage; and, in the second place, it would certainly tend to some increase in habits of personal economy. Therefore on every ground I very greatly regret that this proposal should have been included in his Budget by the Chancellor of the Exchequer, and I very respectfully express the hope that he will listen to the representations which have been made to him from so many sides to reconsider the proposal.
  Mr. DUNDAS WHITE: I should like to reinforce the appeal made to the Chancellor of the Exchequer on this subject. I do so the more readily because of the very conciliatory words he spoke on the Second Reading, when he said that he knew that, in the present circumstances, the House would give a Chancellor of the Exchequer almost anything he asked, and that the Chancellor of the Exchequer him-
  1454
  self was under what he called a corrective obligation to the House. Reference has been made by the hon. Member who opened this Debate to what has been done in France. I would remind the Committee of what was done in this country also at the very outset of the War. The Chancellor of the Exchequer referred to his being a Scotsman, and to certain Scottish associations. I would like to remind him and the Committee generally of a Notice which was issued very largely by the Scottish banks in the critical days of August, 1914. It is printed in the "Bankers' and Insurance Managers' and Agents' Magazine" for September, 1914, and it was brought to my knowledge by a friend of mine who is a banker. The first Clause of this Notice runs as follows:
  "Customers of the Bank are reminded that only small sums of cash are actually required for ordinary purposes. Cheques should therefore be used for making payments to the utmost extent possible."
  That appeal was very widely circulated in the critical days of 1914, and it was made in harmony with an appeal which had been made by the then Chancellor of the Exchequer to economise money as much as we possibly could. In fact, of all the speeches which have been made during the War, perhaps that appeal of the then Chancellor of the Exchequer, who is now the Prime Minister, to economise money, and pointing out that economy of money was of the greatest advantage to our country in the great struggle, is one of those speeches which will last. It is really an economic model. That appeal would have gained much in force and effect if it could have been accompanied by the repeal of the Cheque Duty—at any rate on cheques for small amounts. I suggested something of the sort in a little book I wrote about fifteen years ago. I do not suggest that my right hon. Friend the Member for Cleveland (Mr. H. Samuel) has read that book, but I welcome very much the announcement he made that he thought it would be a great gain to the country, if the financial conditions allowed, to repeal the tax on cheques altogether. I doubt whether there could be the repeal of a tax which would be of greater advantage to the country as a whole, because it would give freedom to the essential mechanism of commerce. That, of course, may be a counsel of perfection. It may not be practical politics to-day. I do not think it is practical politics to-day, but what we who object

  1455
  to this tax are out against is a reactionary-measure which, in effect, instead of easing the wheels of commerce at the very time they should be eased, would rather have the effect of putting sand into the machine.
  The cheque system is the most important mechanism of exchange that we have. It has been steadily increasing in recent years. When Sir Michael Hicks-Beach made a similar proposal, he spoke of this as having become the paper currency of the country. It is much more the paper currency of the country now, because it has developed enormously since the year 1902. It is the very cheapest way of paying debts. It involves no coin; it involves no Governmental credit. These cheques are drawn by individuals. They go, for all practical purposes, straight into the bank, where they are written off one against another by the banks or clearing houses. They are the most perfect mechanism of exchange the wit of man has ever yet devised. At the risk of possibly mentioning one or two things which have been stated already, I would ask the Committee to follow what will happen to some extent—the question of extent is another matter with which I will deal in a moment—if an extra duty is put on these cheques. One effect was foreshadowed by the Chancellor of the Exchequer when he made the proposal originally. I think it was on that occasion he suggested that the cheques would be fewer and for rather larger amounts. What does that mean? It means that instead of drawing cheques for small amounts, people will draw cheques on their banks for larger amounts. It has been asked, How can you pay more conveniently than by cheque? It has been suggested, as an alternative, that you might get a postal order, but if you sent someone round to pay all these, it would be most costly. There is one alternative which would commonly be adopted which has not yet been mentioned— namely, that when a person gets a thing he will pay for it. That is an alternative which will be adopted very readily. Instead of drawing cheques, people will draw larger sums from their banks.
  Sir W. RUTHERFORD: No.
  Mr. WHITE: Oh, yes they will. To some extent they certainly would, if you take the case of small household cheques, drawn in respect of a number of bills round about £2 or £3, which are paid all
  1456
  over the country by cheque in the ordinary way by middle-class people. In many cases it will be a question, "Shall we pay for this when we get it, or take the account and send a cheque?" In the individual ease it might not matter very much, but when you are dealing with thousands and tens of thousands of cases all over the country, the accumulated amount is considerable. You would have a very much larger amount of actual money in use. Not only so, but where customers pay more in cash, it is necessary that the shops and warehouses where they deal should have more till money. There, again, comes a greater demand for actual money in the ordinary sense of the word. Something has been said about the convenience of bankers. I suggest that in this case bankers are not the only judges. They may know what may be most convenient for the banks. I quite agree that they do know, but it is a far larger question than a question merely for bankers. We have to consider it from the broader point of view. It might possibly be more convenient for the bankers. I do not know whether or not it would. The question is whether it is financially sound for the nation as a whole. A good deal has been said about the increased demand for currency notes. The possibility of such a thing was shown by the fact that the Chancellor of the Exchequer in a previous speech on the subject foreshadowed the possibility—I do not put it higher than that—of currency notes for even 5s. That at least showed the danger. I would remind the Committee that it is not merely a question of currency notes. One of the great advantages of the cheque is that you can give it for the precise amount of the debt. There are numbers of debts for odd amounts—say £2 8s. 6d. You cannot pay that amount in currency notes only. You need currency notes, and you need also coin. There would not only be an increased demand for currency notes, but also a considerably increased demand for coin. Although it is not a demand for gold bullion, still the demand for silver is to some extent on the same level. We want to avoid at all cost the locking up of bullion in an unnecessary or useless form if it can be utilised for general purposes.
  This brings me to one incidental result, a very serious result, referred to by a previous speaker. If you pay by cheque, the cheque has the advantage that you do not make the payment until it is abso-

  1457
  lutely necessary to make it. You do not make it until you get the thing. On the other hand, if you pay by money, you have to draw the money out beforehand. When that is done on a large scale all over the country, the result is that balances at banks are more depleted than they would be otherwise. The importance of that will be obvious at a time like this, when all bank values should be made to do their full duty in the present stringency, and when we should mobilise money as much as possible. When the proposal made by Sir Michael Hicks-Beach was withdrawn in 1902, he said:
  "It was withdrawn because I had reason to believe that it would seriously affect small traders throughout the country, and, further, that there would be a serious diminution in the number of cheques used in consequence, largely affecting the Revenue from it."
  That consideration should also be borne in mind at the present juncture. There is the further point that we have not only to consider that the bank balances may be reduced, but that this extra tax on cheques, by increasing the cost of getting money out, would prevent the starting of new deposit accounts. That point was made by a gentleman who had great banking experience, in a letter to the "Times" some time back. It is very important that we should encourage people to make as many deposits in the bank as they possibly can. I feel sure that every tax on the cheques that they draw tends to make them use the money straightaway or to keep the money, instead of depositing it with the banks, which would really be to the good of the country. I had down an Amendment proposing that the duty should still remain at 1d. in the case of smaller cheques, but I did not move it, because it seemed more desirable that the issue should take place on the larger question. I hope that with the expression of opinion which has been heard from various parts of the Committee on this subject the Chancellor of the Exchequer may see fit to reconsider the matter, and that he will not press this Cheque Tax on the Committee. My own view is that it would be a service to the country if the Cheque Duty were left simply as it is.
  Sir W. RUTHERFORD: It would be impossible not to sympathise with the general trend of the speeches we have heard in opposition if one really thought, that a large number of these very terrible consequences which have been suggested were really likely to arise. It is always a very popular thing to oppose a tax. You
  1458
  get the support and sympathy of a lot of people who do not want to pay it. It is not a very cheerful thing for anyone to say even a few words in support or in mitigation of the idea of a new imposition, but I am convinced that none of these evils which have been held up before us is at all likely to arise. The right hon. Gentleman (Mr. Samuel) introduced two features in his speech. One was a disquisition on the earlier history of exchange, which was very interesting but does not seem to affect the point to-day, and the other was that he told us that if this tax was imposed he looked forward to the day when it would bring hundreds of millions of Treasury notes back to roost—
  Mr. SAMUEL: No; I did not say that.
  Sir W. RUTHERFORD: —that is what I gathered—and he rather frightened the Committee by suggesting that payment would be required very suddenly, and the Treasury would not be in a position to pay them, and all that was going to arise at some date after the War in consequence of this extra 1d. being put on cheques. [HON. MEMBERS: "No!"] Anything more pictorial or more likely to be unfulfilled in actual practice than that I have never heard. There are, as I understand it, every year about 320,000,000 cheques. I do not know whether the Treasury can give us any particulars as to what is the average amount of those cheques. You have really to look at this subject from the point of view of the business that is conducted in the City and also from the point of view of your home and in each department of life where to-day cheques are commonly made use of. In my limited experience in the City the average amount of a cheque is about £50. This is taken from looking at a large number of cheques over a period of two or three years. Can it be imagined for a moment that the extra tax of 1d. is going to prevent any merchant, manufacturer, or broker in the City from paying an account by cheque? Where are these 50,000,000 fewer cheques which hon. Members have held up to us coming in?
  Then I made inquiries at home, and it turns out that about eight cheques are given to various tradesmen every week. You would have thought if there was a point where this tax was going to be an inconvenience and injustice it would be in respect of these small cheques. I am contributing, say, 6d. or 8d. per week in putting a 1d. stamp on each of these

  1459
  cheques in order to save myself the trouble of collecting actual coin and going round to see each of these tradesmen myself or sending someone to do it. If this tax is retained I shall have to pay an extra 8d. Hon. Members have suggested that in order to save that 8d. one would have in future to send round and have each of these accounts paid separately. Are you going to hire a boy for 5s., and send him round to pay these separate accounts and get receipts to save 8d.? Or are you going round yourself in your motor car, when you cannot get petrol, and pay your small accounts at different shops? All these suggestions, to my mind, are unfounded. It is ridiculous to suggest that there is going to be a falling off of 50,000,000 cheques because of the imposition of this extra tax. I do not suggest that there is going to be any advantage to the public or to the payer or payee of any of these cheques with the extra 1d. stamp on. That is absurd, and there is no doubt it is a tax and an inconvenience, and it will to some extent undoubtedly inconvenience a number of people, but if it is going to give us £1,000,000 without any difficulty and is not going to diminish the cheque circulation, and if all these pictures of terrible financial catastrophes are absolutely unfounded, which I believe they are, we ought to take this opportunity of welcoming this little contribution of £1,000,000 from another source. We are very hard up at present for different methods of getting a little more money in order to relieve the terrible taxation which we are paying, and which will I am afraid get worse, and I welcomed this tax, not because I liked it or wanted to pay another penny on every cheque, but as showing that the Chancellor was looking in more directions than one, two or three, and was going to get a substantial sum of money. I hope the right hon. Gentleman and the Committee will not be frightened by these terrible pictures of financial catastrophe, but will stick to the tax. I am sure he will get his £1,000,000 and a great deal more, because I do not believe it will diminish the number of cheques or the circulation of cheques to any appreciable extent.
  Sir F. BANBURY: I think my hon. Friend has rather misunderstood the objection to the tax. I have a list of the various associations which oppose it, and their objections, and those of hon. Members who oppose it, are not that they
  1460
  object to paying an extra penny or to contributing a further £1,000,000 to the Revenue, but that, generally speaking, the result of the tax will be bad for the commerce of the country. We must not judge its effects from what happens in our own case. My hon. Friend says he pays his bills by cheque, and he is not going to hire a boy at 5s. a day to go round in a motor-car, if he can get one, to pay these bills. But there is a very large number of people who are not in such a very prosperous position as my hon. Friend, and who will look with considerable hesitation upon any increased demand on their small means. The wives even of a great many prosperous people, certainly the wives of persons whose pecuniary position is not very prosperous, go round themselves to the shops, and they like doing it. I have never understood the extraordinary attraction that there is for women in going to a shop and buying something. The female mind is much more prone to regard economy in small matters than the male mind, unless it may possibly be a Scotsman. The result of this will be that a cheque for, say £10, will be drawn, currency notes will be kept in a box or in a purse, and then the lady of the house will go round and will pay the bills herself out of the money which she has drawn, which is the product of one cheque. The result will be to increase the demand for currency notes and to diminish the demand for cheques.
  6.0 P.M.
  The people who have sent resolutions to the Chancellor of the Exchequer against this tax can hardly be described as people who have shown any desire to avoid paying increased taxation themselves. There are the Associated Chambers of Commerce, the London Stock Exchange, the Chambers of Commerce of London, Leeds, Liverpool, Manchester, Birmingham, Dublin, Blackburn, Wolverhampton and Falmouth, the Halifax Chamber of Trade, the Faculty of Procurators, Glasgow, the Association of Trade Protection Societies and a large number of others. I do not think the City of London has shown any disposition to cavil at any burdens which have been placed on the country through its members or by itself. If it was a large amount which was going to be collected it might be said the real reason was that they objected to paying it, but when they are objecting to what is a very small point it is evident that there must be some good reason at the back of their objec-

  1461
  tion. The Chancellor of the Exchequer said he had consulted some of the prominent bankers, and they were of opinion that the tax would do no harm. As far as I know, opinion among bankers differs. It is like everything else. It is very difficult to get amongst a body of men an agreed opinion upon a particular matter, and though I understand some of the leading bankers have expressed the opinion that this tax will not do any harm there is a considerable number of others who have expressed the contrary view. A very prominent bank manager wrote a letter to the newspapers expressing the opinion that the tax should not proceed. Of course, it is impossible to ascertain what the exact feeling of the banks and the City itself is on the matter. We can only ascertain it by looking at the list of people who have protested against this tax, and that list I have already read out. I think it is evident that a check is certain to be put on the expansion of cheques. When I was a young man it was not supposed to be the correct thing for any customer of a bank to draw a cheque for less than £3. I am not at all sure that the sum was not higher. Up to a comparatively recent period it was thought, especially in the days of private banks, that a cheque could not be drawn for very small amounts, because it entailed a considerable amount of trouble upon the banker and his clerks. With the great increase, of joint stock banks that policy was changed The policy of the joint stock banks was to encourage customers with very small accounts, and the result of that has been a large increase in the number of cheques drawn, and in the number of cheques drawn for small amounts. I had a letter from a well-known firm in the City who paid a very large amount of money in cashing coupons in small cheques. They say that very often they have amounts of7s., 8s., 9s., 10s., and 11s., and that they will not pay those amounts in future in cheques, but will keep a certain amount of cash in the office and pay the amounts in cash. I think that is certain to occur. The right hon. Member for Cleveland alluded to the small shopkeeper, who was absent from the mind of the hon. Member for Liverpool (Sir. W. Rutherford). The small shopkeeper will think twice before he uses what will cost him 3½d., namely, 2d. for the cheque and l½d. for the letter, if
  1462
  it can be done in any other way. Therefore, the result must be to diminish the use of small cheques.
  I do not want to enlarge upon the question of currency notes, but I think the hon. Member for Liverpool very much misrepresented the right hon. Member for Cleveland when he said that he had stated that the result of this tax would be to cause great trouble when the currency notes came to be redeemed. I do not think he said that. What he intended to say was, and certainly what I believe will be the effect, that this tax will be certain to encourage an increase of currency notes, and that anything that increases the currency notes is a mistake. In the opinion of a great number of people who are well qualified to form opinions on this matter the amount of currency notes is already for too large. It must not be forgotten that when the currency notes were started the amount of gold kept in reserve against them was £28,000,000, and the currency notes issued were £50,000,000 or £75,000,000. Now the currency notes represent something like £275,000,000, while the reserve of gold remains the same, £28,000,000. Therefore anything that tends to increase the amount of currency notes ought to be abolished, and anything which tends to facilitate the payment of accounts by other means ought to be encouraged. It is for that reason that many of us object to this tax. I am sorry that the hon. Member for Liverpool has gone, because he asked what seemed to me a very foolish question and made a very foolish request, which he does not often do. He suggested that the Treasury should be asked what was the average amount of cheques. What would be the use of that? Supposing there are ten cheques for £100,000 and 100,000 cheques for £1. What is the use of obtaining an average? It would not give any indication of the number of small cheques or the number of cheques likely to be affected by this tax.
  The Chancellor of the Exchequer has been asked whether, in view of the fact that he has obtained his Budget without any alterations of taxation, he cannot accede to this request. I think there has been no alteration with the exception of an alteration in the differentiation of woodlands in the farmer's Income Tax. I do not call that an alteration, because I do not think it was ever intended; I think it slipped into the Bill without

  1463
  being intended. It is a very unusual thing that a big Budget of this sort, imposing tremendously additional large taxation, should go through without any alteration. If there is a very strong opposition to a particular tax—and there is a very strong opposition to this tax—amongst the very people who have contributed most to the additional taxation, it would be gracious on the part of the Chancellor of the Exchequer if he complied with their request, which is not made because the tax is going to hurt them, but with a sincere belief that the tax will do injury to the credit of the country and to the method of carrying on business. Under the circumstances, I think he might kindly consent to withdraw the tax.
  Mr. J. MASON: The right hon. Gentleman does not pay a very fair compliment to the women of this country when he suggests that, instead of hiring a boy at 6s. a day, we should employ our wives running about to pay small bills.
  Sir F. BANBURY: I did not mean that quite the reverse. What I said was that the wives are of a more economical turn of mind than their husbands, and they will say that they are not going to have these cheques written, but that they will go round and pay in cash.
  Mr. MASON: I do not think I need labour the point as to whether the ladies should be forced to do this or whether they should do it voluntarily. The right hon. Gentleman bases his arguments on the assumption which has been the basis of a good many speeches, that the effect of this tax will be a very material reduction in the number of cheques. What is the difference in the actual cost in the use of cheques, even with the extra 1d., compared with other methods? It has been a rule that when a cheque is sent by post the receipt comes back by post. Under the new postal regulations which came into force yesterday, if a cheque is sent by post and the receipt comes back, the cost already, with the 1d. on the cheque, is 4d., so that the increased tax of 1d. on the cheque will only mean an increase from 4d. to 5d., or an increase of only 25 per cent. on paying a bill by cheque. What are the alternative suggestions? One hon. Member said it will lead to the payment of bills by Treasury notes. If you send Treasury notes you have to pay quite as much, and if you
  1464
  use postal orders we all know what the trouble is, as well as the cost. I do not think that anyone can seriously suggest that the method of paying the bills yourself, or sending boys or ladies to pay them, will be very largely adopted, and I cannot believe that people will abandon an easy method to which they are accustomed of paying their small bills by cheque simply because of an increase of 1d. I hope that the Chancellor of the Exchequer will not, for the sake of what seems to me to be a very exaggerated objection, give up a source of revenue, which, although it will only produce £1,000,000, can be got with very little trouble.
  Mr. BONAR LAW: I have waited for a long time in order that the full views of the Committee might be given on this matter, and I am going to ask the Committee to support the Government in imposing this tax. I quite admit that there is a great deal to be said from the other point of view, and I can assure the Committee of this that it would be a much easier course for me simply to say that I will accede to the views which have been expressed by so many Members, and that I will drop the tax. That would certainly be a much easier course, but I am going to tell the Committee why I do not propose to take that course. It is perfectly true that I have received representations from a number of commercial bodies opposed to this tax, from the chambers of commerce in a number of towns, and the Associated Chambers of Commerce. I should be the last to undervalue the opinions of bodies of that kind, but what I wish the Committee to realise—and they must always do that in matters of this kind—is that it is the business of these bodies, in considering questions of taxaton, to look at the defects of the tax, and it is not their business to find a substitute. I have had deputations from bodies of this kind over and over again. I quite admit that there is not one of them influenced by any feeling that they wish to deprive the Government of money which is necessary to carry on the War; but they make all kinds of representations in regard to all kinds of taxes which have to be imposed, and the point of view which they look at is invariably the evil of the tax. I have to start from the point of view that all taxation is evil. I have to judge, taking everything as broadly as I can into account, whether the particular tax proposed is or is not one which is right in

  1465
  the conditions in which we are placed. Let us look at it from this point of view. T can assure my right hon. Friend the Member for Cleveland that there is no obstinacy in this matter, and there is no question of amour propre.
  Mr. H. SAMUEL: I did not say so.
  Mr. BONAR LAW: My right hon. Friend did not say so. I am saying this on my own account. I propose to ask the Committee to support this tax on two grounds. First of all, a great deal has been said about inflation. I was very glad to find that my right hon. Friend had taken the trouble, for which he deserves a great deal of credit, of examining the classic economists in order to arrive at a proper view of that subject. It is not the kind of reading which anyone would select for leisure moments. The feeling that I have experienced in making the same efforts in the past is that one is inclined to repeat the saying of Carlyle,
  "What a man sees and cannot see over is as good as infinite."
  It is not easy to find exactly the clear lines we want from a study of those views. In this case there is not the smallest doubt, so far as I can judge, that the question of inflation does not arise in any way whatever in connection with this tax. I tried to prove that in the previous discussion on the tax but I happened to see a letter addressed to a friend by Professor Pigou which put the argument, that I have put much more crudely, so concisely, that perhaps the Committee will allow me to read the letter:
  "In current discussion the probable effect of an increased duty on cheques has led to a good deal of contention. The main point in practice is whether the use of cheques is not likely to be diminished to any appreciable extent, and it is asked what kind of effect would follow if the use of cheques was seriously discouraged. The correct answer is perfectly simple; if the use of cheques is discouraged it means in the first instance that more currency notes will be drawn out into circulation to take the place of cheques. This means that the notes held in the tills and in reserve in the banks as a whole will be diminished. The normal result of this would be to force up the rate of discount and thereby directly to lessen bank loans and indirectly to lower prices."
  He goes on to say that of course the normal effect would be prevented by the artificial means which the Government take of keeping rates down and that the effect on inflation would be absolutely nil. Even if all the prophecies, which were put before us, were realised, at all
  1466
  events in my view—and the letter which I have read takes the same view—there would be no danger whatever of inflation.
  I quite agree that there is another point of view to consider, and if I believed that the effect would be to diminish seriously the number of cheques used I would not think it worth while to proceed with the tax. But I do not believe that that will be the result, and I do not see how it can be the result. It is perfectly true that in the estimate which is given by the Inland Revenue authorities an allowance is made for a smaller revenue than we should have on the assumption that we had the same number of cheques as we have had. That is always done. They have got to make an estimate of some kind, but they are no more able to arrive at a correct estimate of this kind, which is psychological, than any other Member of this House. The real test of the question is, in what other way can anyone do the work which is now done by cheque more economically than by paying the increased tax? There is really no way whatever. If you desire to send the money by notes, as my hon. Friend has pointed out, even assuming that the amount falls into figures suitable for currency notes, you have either got to insure them or run the risk of their being stolen. On the other hand, if you wish to send the money by postal order, the saving is almost nil, and in some cases it is less than nil, and you have got to go to the post office to get the postal order. Does anyone believe that people who are accustomed to the use of cheques, are going to revert to the old custom of walking round themselves or sending somebody else round to pay their accounts rather than pay the extra duty? It has been said that people may revert to the custom, which was in vogue when I entered business, of having cash days, but that would not be done now. It would not pay. The desire not to pay the extra 1d. would not induce people to take that course.
  It is all very well to say that this tax represents only £1,000,000, part of which we may never get. As my right hon. Friend has pointed out, if you carry that argument right along, it would apply to every tax that there is anything strong to be said against. We must not neglect the million, if it is a million, which can be got without inconveniencing the people of this country. In considering taxation a Chancellor of the Exchequer has to take into account the facility with which it can be collected, as well as other things. It is

  1467
  perfectly true that I should never have dreamt of putting on this additional tax if it meant an increase of cost or increased difficulty in collection. It means nothing of the kind. Suppose the worst happens, it does not mean inflation. It does mean inconvenience to a certain number of people, but there is something to be remembered in connection with that. Unfortunately—andthis is not in the least due entirely to currency notes or anything of that kind—inflation exists, and as the result of that there are higher prices. Money has not the same value as it had before the War. We find that in other directions. We find, for instance, that newspapers which used to be sold for 1d. are now sold for 2d. I took the trouble to ask some of those interested in them as to what has happened, and they told me that at first there a falling off, but that now the circulation was just back where it was, and that people pay the 2d. precisely as if they paid the 1d. I believe that that will happen here, and, if I believe that, am I not right in asking the House of Commons to support the Government in getting this additional revenue?
  I would not feel justified in sticking to this if I found anything like the unanimity of hostility to it which existed to the tax which was proposed toy Sir Michael Hicks-Beach. But that is not the case now. The Committee ought to remember that the natural inclination of everyone who is accustomed to doing business is against the change. Therefore to my mind the fact that so large a number—I put it no higher than that—of the class which defeated Sir Michael Hicks-Beach's proposal, now offer no opposition and think that on the whole this is not a bad source of revenue is, in my opinion, much more important than the view of those who naturally take the line that this is going to be inconvenient and that they would far rather not see it done. If I seem to be obstinate in the matter, it is only because I am absolutely convinced that all these exaggerated descriptions of the evils that are going to happen will not be realised, that there will be no serious diminution of cheques, and that the Government will get the additional £1,000,000 of revenue. After all, I have a responsibility. I have got to be convinced either that it is not a proper source of raising revenue or I have got to ask the House of Commons to support me in this proposal. I have heard the Debates, and I have listened to every
  1468
  representation that has been made to me from outside, and I remain convinced that the views which have been expressed are entirely exaggerated, that after we have a year's experience of this tax we shall find that the use of cheques will go on as before, and that the Treasury will get the additional benefit.
  Mr. LEIF JONES: There are some additional things to be said in justice to those who have opposed this tax and remain opposed to it. The right hon. Gentleman has shown that he has has not met with the unanimity of opposition to this tax which was shown when the change was proposed by Sir Michael Hicks-Beach. But the right hon. Gentleman forgets that he is proposing a Budget in the middle of a war, and when all of us are very unwilling to oppose any tax whatsoever which the Chancellor of the Exchequer may think desirable, in order to raise revenue, and I put it to him whether, if we were getting the unbiassed opinion of the business world, apart from the question of the necessity of this great revenue, he would have found similar unanimous opinion against this tax to-day as was expressed when it was proposed by Sir Michael Hicks-Beach. My hon. Friend the Member for Windsor said that he did not believe that any diminution in the use of cheques-would follow, and he attributed that argument to those who are opposing this tax. I do hold the view that this tax must tend to diminish the use of cheques, but the right hon. Gentleman must admit, in reference to what he said about the experts' opinion, that that estimate means, if it was realised, that there will be from 40,000,000 to 50,000,000 fewer cheques used in the coming year than were used last year. That is on the basis of his own figures. Therefore it must not be said that we who are opposing the tax have invented that argument.
  It is not a small diminution which is estimated by the Inland Revenue experts; it is a reduction of 40,000,000 out of 320,000,000 cheques, or 12½ per cent. of the total number of cheques used. This is not a very small matter, but one which will produce a considerable effect on our business world. I do think that this tax is a reactionary tax. The whole tendency has been to substitute cheques for other forms of paying accounts, and my right hon. Friend the Member for Cleveland was thoroughly justified in saying that

  1469
  the cheque system is the most civilised system of dealing with accounts that has ever been devised. I think it a pity that for so small an amount the Chancellor of the Exchequer is going to set back the movement in the direction of small cheques, because it must have that effect. I have watched the growth of the small cheques. I remember quite well when many people would not draw cheques for less than £10; I remember that certain banks in this country looked very much askance at you if you drew a cheque for less than £3 or £4; and I remember the establishment of a cheque bank in order to provide cheques for small sums like 1s. 10d. and 2s. 1d. That cheque bank was set up, and found very useful by many people who did not like to draw for small sums on their own banks. When the cheque bank ceased I wrote to the manager of my bank to know what I ought to do about these small amounts, and he wrote back to say that he would be happy to cash my cheque for as small an amount as I chose. From that time I have drawn cheques for sums very often not exceeding 2s., and I find that a much more convenient principle. The majority of cheques drawn nowadays, I think, are for sums under £10. It is very difficult to get a figure, and, of course, an average would be useless, but the number of small amounts paid by cheque has been steadily increasing.
  I greatly regret that the Chancellor of the Exchequer has not seen his way to yield to the almost unanimous wish of the Committee, so far as it has expressed itself, that this tax should not be adhered to. I will not go into the question, which has been fully dealt with, of the inflation of the currency, if it takes place, as the result of more currency notes. But my
  right hon. Friend must surely realise how serious a matter these currency notes will be when peace comes and they come back to the Treasury, as they will; and anything which tends to increase them must in itself be an evil. I had hoped, up to the very last moment, that this Cheque Tax had only been put into the Budget in order that the Chancellor of the Exchequer might yield it up under pressure. It is not often that a great Budget goes through, without their being revision. The right hon. Gentleman is very skilful in his management of the Committee on this Budget, and I congratulate him in all sincerity. He has been perfectly open and straight. He has told us thoroughly the meaning and, as far as he knew, the effect of every tax, and he has dealt with the Committee with great straightness and with great skill. I regret that the Chancellor of the Exchequer has not seen his way to deal with what I feel sure is the wish of the great majority of the Committee. I do not grudge him the money, but he will forgive me for thinking that the matter is one of importance, and if it goes to a Division I shall feel constrained to go into the Lobby against the Motion.
  Sir C. HENRY: May I ask my hon. Friend the Member for Manchester whether he cannot now see his way to withdraw his opposition, after the statement of the Chancellor of the Exchequer, though I do not altogether agree with the right hon. Gentleman. [HON. MEMBERS: "No!"]
  Question put, "That the Clause, as amended, stand part of the Bill."
  The Committee divided: Ayes, 205; Noes, 40.

  Division No. 48.]

  AYES.

  [6.34 p. m.

  Acland, Rt. Hon. Francis Dyke

  Bigland, Alfred

  Compton-Rickett, Rt. Hon. Sir J

  Addison, Rt. Hon. Dr. Christopher

  Blake, Sir Francis Douglas

  Cornwall, Sir Edwin A.

  Adkins, Sir W. Ryland D.

  Boles, Lieut.-Col. Dennis Fortescue

  Craig, Colonel Sir J. (Down, E.)

  Agg-Gardner, Sir James Tynte

  Booth, Frederick Handel

  Craik, Rt. Hon. Sir Henry

  Allen, Arthur A. (Dumbartonshire)

  Boscawen, Sir Arthur S. T. Griffith-

  Currie, George W.

  Baird, John Lawrence

  Bowerman, Rt. Hon. C. W.

  Dairymple, Hon. H. H.

  Baker, Rt. Hon. H. T. (Accrington)

  Boyton, Sir James

  Dalziel, Davison (Brixton)

  Baker, Maj. Sir Randolf L. (Dorset, N.)

  Brace, Rt. Hon. William

  Davies, David (Montgomery Co.)

  Baldwin, Stanley

  Brassey, H. L. C.

  Davies, Ellis William (Eiflon)

  Balfour, Sir Robert (Lanark)

  Bridgeman, William Clive

  Davies, Sir W. Howell (Bristol, S.)

  Barnes, Rt. Hon. George N.

  Brunner, John F. L.

  Denman, Hon. Richard Douglas

  Barnett, Capt. R. W.

  Carew, Charles R. S. (Tiverton)

  Denniss, E. R. B.

  Barnston, Major Harry

  Carr-Gomm, H. W.

  Dickinson, Rt. Hon. Sir W. H.

  Barran, Sir Row. Hirst (Leeds. North)

  Cator, John

  Dixon, C. H.

  Barton, Sir William

  Cautley, H. S.

  Dougherty, Rt. Hon. Sir J. B.

  Bathurst, Col. Hon. A. B. (Glouc., E.)

  Cecil, Rt. Hon. Evelyn (Aston Manor)

  Duncan, C. (Barrow-in-Furness)

  Beauchamp, Sir Edward

  Clyde, James Avon

  Du Pre, Major W. Baring

  Beck, Arthur Cecil

  Clynes, John R.

  Falle, Sir Bertram Godfray

  Beckett, Hon. Gervase

  Coats, Sir Stuart A. (Wimbledon)

  Fell, Sir Arthur

  Bentham, George Jackson

  Cochrane, Cecil Algernon

  Ferens Rt. Hon. Thomas Robinson

  Fisher, Rt. Hon. H. A. L. (Hallam)

  Lindsay, William Arthur

  Sanders, Col. Robert Arthur

  Fisher, Rt. Hon. W. Hayes (Fulham)

  Lloyd, George Butler (Shrewsbury)

  Scott, Leslie (Liverpool, Exchange)

  Fitzroy, Hon. Edward A.

  Lonsdale, James R.

  Sharman-Crawford, Colonel R. G.

  Fletcher, John Samuel

  Lowe, Sir F. W. (Birm., Edgbaston)

  Shaw, Hon. A.

  Foster, Philip Staveley

  Loyd, Archie Kirkman

  Smallwood, Edward

  Gardner, Ernest

  MacCaw, William J. MacGeagh

  Smith, Capt. Albert (Lanes., Clitheree)

  Gelder, Sir William Alfred

  McMicking, Major Gilbert

  Somervell, William Henry

  Gibbs, Col. George Abraham

  McNeill, Ronald (Kent, St. Augustine's)

  Spear, Sir John Ward

  Gilbert, J. D.

  Maden, Sir John Henry

  Stanier, Captain Sir Beville

  Gilmour, Lieut.-Col. John

  Mallalieu, Frederick William

  Stewart, Gershom

  Glanville, Harold James

  Manfield, Harry

  Stirling, Lieut-Col. Archibald

  Goulding, Sir Edward Alfred

  Money, Sir L. G. Chiozza

  Strauss, Edward A. (Southwark, West)

  Greenwood, Sir G. G. (Peterborough)

  Morton, Sir Alpheus Cleophas

  Sutton, John E.

  Greenwood, Sir Hamar (Sunderland)

  Mount, William Arthur

  Taylor, John W. (Durham)

  Greig, Col. J. W.

  Munro, Rt. Hon. Robert

  Terrell, George (Wilts, N.W.)

  Gretton, Col. John

  Neville, Reginald J. N.

  Terrell, Major-Henry (Gloucester)

  Gwynne, R. S. (Sussex, Eastbourne)

  Newman, Sir Robert (Exeter)

  Thomas-Stanford, Charles

  Hambro, Angus Valdemar

  Nicholson, William G. (Petersfield)

  Tickler, T. G.

  Hamersley, Lt.-Col. Alfred St. George

  Nuttall, Harry

  Toulmin, Sir George

  Hamilton, Rt. Hon. Lord C. J. (Kens.)

  O'Grady, James

  Turton, Edmund Russborough

  Hanson, Charles Augustin

  Orde-Powlett, Hon. W. G. A.

  Walker, Col. William Hall

  Harcourt, Robert V. (Montrose)

  Palmer, Godfrey Mark

  Walsh, Stephen (Lanes., Ince)

  Hardy, Rt. Hon. Laurence

  Parker, James (Halifax)

  Wardle, George J.

  Harmood-Banner, Sir J. S.

  Parkes, Sir Edward E.

  Wason, Rt. Hon. E (Clackmannan)

  Harmsworth, Cecil (Luton, Beds.)

  Parrott, Sir James Edward

  Weston, J. W.

  Harris, percy A. (Leicester, s.)

  Pearce, Sir Robert (Staffs, Leek)

  Wheler, Major Granville C. H.

  Henry, Denis S. (Londonderry, S.)

  Pearce, Sir William (Limehouse)

  Whiteley, Sir H. J.

  Hewart, Rt. Hon. Sir Gordon

  Pease, Rt. Hon. Hrbt. Pike (Darlington)

  Whyte, Alexander F. (Perth)

  Hewins, William Albert Samuel

  Peel, Major Hon. G. (Spalding)

  Williams, Aneurin (Durham, N. W.)

  Hickman, Brig.-Gen. Thomas E.

  Perkins, Walter Frank

  Williams, Penry (Middlesbrough)

  Hills, John Waller

  Peto, Basil Edward

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

  Hodge, Rt. Hon. John

  Philipps, Maj.-Gen. Sir Ivor (S'ampton)

  Williams, Thomas J. (Swansea)

  Hohler, Gerald Fitzroy

  Philipps, Capt. Sir Owen (Chester)

  Willoughby, Lieut.-Col. Hon. Claud

  Holmes, Daniel Turner

  Pollock, Sir Ernest Murray

  Wilson, Rt. Hon. J. W. (Worcs., N.)

  Hope, James Fitzalan (Sheffield)

  Pratt, J. W.

  Wilson, W. T (Westhoughton)

  Hope, Lt.-Col. J. A. (Edin., Midlothian)

  Pretyman, Rt. Hon. Ernest George

  Wilson Fox, Henry (Tamworth)

  Hughes, Spencer Leigh

  Price, C. E. (Edinburgh, Central)

  Winfrey, Sir Richard

  Illingworth, Rt. Hon. Albert H.

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

  Wing, Thomas Edward

  Ingleby, Holcombe

  Pryce-Jones, Col. E.

  Winterton, Captain Earl

  Jackson, Lieut.-Col. Hon. F. S. (York)

  Rees, G. C. (Carnarvonshire, Arfon)

  Wood, Hon. E F L. (Yorks, Ripon)

  Jacobsen, Thomas Owen

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

  Wood, Sir John (Stalybridge)

  Jones, H. Haydn (Merioneth)

  Roberts, Rt. Hon. George H. (Norwich)

  Wright, Captain Henry Fitzherbert

  Jones, J. Towyn (Carmarthen, East)

  Roberts, Sir S. (Sheffield, Ecclesall)

  Yeo, Sir Alfred William

  Jones, W. Kennedy (Hornsey)

  Robinson, Sidney

  Young, William (Perthshire, East)

  Kellaway, Frederick George

  Royds, Major Edmund

  Younger, Sir George

  Kinloch-Cooke, Sir Clement

  Runciman, Sir Walter (Hartlepool)

  Yoxall, Sir James Henry

  Lane-Fox, Major G. R.

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

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

  Samuel, Samuel (Wandsworth)

  TELLERS FOR THE AYES.—Lord E.

  Levy, Sir Maurice

  Samuels, Arthur W. (Dublin, U.)

  Talbot and Mr. Dudley Ward.

  Lewis, Rt. Hon. John Herbert

  NOES.

  Baker, Joseph Allen (Finsbury, E.)

  Jardine, Ernest (Somerset, East)

  Rowlands, James

  Barlow, Sir John Emmott (Somerset)

  Jones, Rt. Hon. Leif (Notts, Rushcliffe)

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

  Bathurst, Capt. Sir C. (Wilts., Wilton)

  King, J.

  Smith, H. B. Lees (Northampton)

  Bryce, John Annan

  Lambert, Richard (Wilts, Cricklade)

  Spicer, Rt. Hon. Sir Albert

  Chancellor, Henry George

  M'Callum, Sir John M.

  Taylor, Theodore C. Radcliffe)

  Cowan, Sir W. H.

  Macdonald, J. Ramsay (Leicester)

  Tootill, Robert

  Duncan, Sir J. Hastings (Yorks, Otley)

  Mason, David M. (Coventry

  Trevelyan, Charles Philips

  Essex, Sir Richard Walter

  Middlebrook, Sir William

  White, J. Dundas (Glasgow, Tradeston)

  Fleming, Sir J. (Aberdeen, S.)

  Needham, Christopher T.

  Whitehouse, John Howard

  Henderson, Rt. Hon. A. (Durham)

  Outhwaite, R. L.

  Wiles, Rt. Hon. Thomas

  Henderson, John M. (Aberdeen, W.)

  Pringle, Wiliam M. R.

  Wood, Rt. Hon. T. McKinnon (Glasgow)

  Hogge, James Myles

  Richardson, Albion (Peckham)

  Holt, Richard Durning

  Richardson, Thomas (Whitehaven)

  TELLERS FOR THE NOES.—Sir F.

  Horne, Edgar

  Robertson, Rt. Hon. John M.

  Banbury and Mr. Lough.

  Hudson, Walter

  Question put, and agreed to.

  Clause 37 (Suspension of New Sinking Fund 50 &51 Vict., c. 16); Clause 38 (Amendment of s. 35 of 7 & 8 Geo. 5, c. 31); and Clause 39 (Amendment of s. 42 of 6 & 7 Geo. 5, c. 24), ordered to stand part of the Bill.
  CLAUSE 40.—(Power to Extend Currency of War Saving Certificates.)
  Notwithstanding anything in the War Loan Acts, 1914 to 1917, or in any Regulations made with respect to, or in any conditions relating
  1472
  to the issue of, war saving certificates, any such certificates issued under those Acts shall not, if the Treasury so direct, and subject to such conditions with respect to interest and otherwise, as they may impose, be required to be repaid or redeemed within five years after the date on which it was issued, in any case in which the holder of the certificate is at the date on which the certificate becomes repayable the holder of other war saving certificates which do not become repayable till a later date, and Section forty-two of the said Act shall apply with respect to any interest payable in respect of

  1473
  the certificate for the period after the expiration of five years from the date on which it was issued up to the date on which it is repaid or redeemed as it applies to the accumulated interest mentioned in that Section:
  Provided that nothing in this Section shall prejudice any right of the holder of any War Savings Certificate, if he so desires, to have the amount payable under the certificate paid to him on or before the expiration of five years after the date on which the certificate was issued.
  Amendment made: Leave out the words "said Act" ["said Act shall apply"], and insert instead thereof the words "Finance Act, 1916."—[Mr. Bonar Law.]
  Clause, as amended, ordered to stand part of the Bill.
  Clause 41 (Provision for Enabling the Post Office to Exercise Powers in Relation to Insurance Stamps) ordered to stand part of the Bill.
  CLAUSE 42.—(Construction and Short Title.)
  (l) Part I. of this Act so far as relates to duties of customs shall be construed as one with the Customs (Consolidation) Act, 1876, and any enactment amending that Act, and so far as it relates to duties of excise shall be construed together with the Acts relating to duties of excise and the management of those duties.
  Part II. of this Act shall be construed with the Income Tax Acts, 1842 to 1853, and any other enactments relating to Income Tax, and those enactments and Part II. of this Act are in this Act referred to as the Income Tax Acts.
  Part III. of this Act shall be construed with the Finance (No. 2) Act, 1915.
  (2) The Acts specified in the Fourth Schedule to this Act are hereby repealed to the extent specified in the third column of that Schedule:
  Provided that, notwithstanding the repeal by this Act of any enactment, the sum which under Sub-section (2) of Section seventeen of the Finance Act, 1907, would have been paid into any local taxation account in respect of the local taxation (customs and excise) duties if this Act had not passed, shall continue to be so paid.
  (3) This Act may be cited as the Finance Act, 1918.
  Amendment made: Leave out the words,
  "Provided that, notwithstanding the repeal by this Act of any enactment, the sum which under Sub-section (2) of Section seventeen of the Finance Act, 1907, would have been paid into any local taxation account in respect of the local taxation (Customs and Excise) duties if this Act had not passed, shall continue to be so paid."—[Mr. Bonar Law.]
  Clause, as amended, ordered to stand part of the Bill.
  NEW CLAUSE.—(Reduction in Certain Cases of Entertainment Tax.)
  On and after the first day of October, nineteen hundred and eighteen, Section one of The
  1474
  Finance (New Duties) Act, 1916, as amended by Section three of The Finance Act, 1917, shall have effect as if for the words—

  "does not exceed 2d

  …

  ½d.

  exceeds 2d. and does not exceed

  4d.

  ld.

  exceeds 4d. and does not exceed

  6d.

  2d.

  exceeds 6d. and does not exceed 1s

  0d.

  3d.,"

  there were substituted the words—

  "does not exceed 2½d.

  …

  ½d.

  exceeds 2½d. and does not exceed

  4d.

  1d.

  exceeds 4d. and does not exceed

  7d.

  2d.

  exceeds 7d. and does not exceed 1s

  0d.

  3d."

  —[Mr. Bonar Law.]

  Brought up, and read the first time.
  Motion made, and Question proposed,
  "That the Clause be read a second time."
  Sir J. D. REES: I understand—in fact I see from the new Clause of the Chancellor of the Exchequer—that it will be unnecessary for myself and others to put forward our Amendments or to proceed any further with them. The ½d. tax of the Chancellor of the Exchequer covers the 2½d. seats and the 2d. tax covers the 7d. seats. By so doing he not only meets the wishes of the cinema trade, but he is entitled to their gratitude for the courteous hearing which he gave to their deputation, and for the arrangements he has now made. He has also earned the gratitude of those who frequent these exhibitions in their thousands. The concession not only improves the position of the weak theatres, but it is also greatly valued as a recognition of the educational and propagandist work of the cinema, and is a most useful counter-blast to the strictures of clerical and other bigots who seem to think that in anything amusing there must lurk something improper. The fact is that this form of entertainment provides most welcome rest to the weary, and the House will understand what it is to be in a place where no one need pretend to listen, where no one is allowed to speak, and where no one is allowed to seek, or at any rate ought not to try, to catch anybody else's eye. I hope the Chancellor of the Exchequer will understand that my attitude is one of gratitude, and I am only venturing to ask him this: It is a fact that the Amendments on the Paper all ask him to make this concession from the 1st October? That date arose in this way, that when the tax was newly introduced the postponement to the 1st October was a concession, but now that the Chancellor of the Exchequer is making a concession to-day I would ask whether it will not fall within the spirit of the arrangement

  1475
  made, and also suit him equally well, if the concession takes effect from the commencement of the Act instead of waiting until the 1st October. There is one practical way in which all of us interested in the cinema industry can show our gratitude to the Chancellor, and that is by not delaying him for one moment that can be avoided in getting through a Budget of which we all approve in general, and which I particularly approve in this respect. But will the Chancellor of the Exchequer very kindly let us know whether under the circumstances he can make his welcome concession thrice welcome by allowing it to take effect from the commencement of the Act?
  Mr. O'GRADY: I also want to thank the Chancellor of the Exchequer for the concession he has made. I had the great privilege and honour of leading the deputation to the Chancellor on this point, and the case was made out to him by the trade itself. My only interest in the matter is the fact that the concession does not limit the amenities of our own people particularly in the munitions area. I want to thank the right hon. Gentleman for what he has done, and at the same time to appeal with my hon. Friend that he should make the concession more gracious still by altering the date from the 1st October to June. Having stated that, I want finally to thank the Chancellor of the Exchequer for what he has done in the matter.
  Mr. BONAR LAW: This is one of the opportunities which a Chancellor of the Exchequer is glad to have. I received a deputation representing the cinema people; they put their views to me with great moderation and with strong arguments, and in the end they were able to convince me that I could make a concession which would be of value to them, and which would at the same time cost the Revenue very little. That is precisely the kind of concession one likes to make. As regards the time at which it should come into operation, it was, I believe, arranged by the experts of the Department that it should be on the 1st October, but that is no part of the arrangement made by me. I made a promise to do this, and I had not in mind at what time it should take effect. I shall be quite ready, therefore, to make it earlier than the 1st October, although I cannot fix the date now. I will consider
  1476
  it before the Report stage, and then put in some date a little earlier than the 1st October.
  Clause accordingly read a second time, and added to the Bill.
  NEW CLAUSE.—(Amendment of s. 34 of 7 and 8 Geo. 5, c. 31.)
  Section thirty-four of the Finance Act, 1917, shall have effect as though there were inserted therein after the words "price of issue," in Sub-section (3) and Sub-section (4) thereof, the words "or such other price as was specified in the conditions subject to which the stock or bonds were issued as the price at which the stock or bonds were to be valued for the purposes of this Section."—[Mr. Bonar Law.]
  Brought up and read the first and second time, and added to the Bill.
  NEW CLAUSE.—(Cessation of Land Value Duties.)
  Increment Value Duty, Undeveloped Land Duty, and Reverion Duty imposed by Part I. of The Finance (1909–10) Act, 1910, shall not be charged, assessed, or collected after the passing of this Act.—[Colonel Royds.]
  Brought up, and read the first time.
  Colonel ROYDS: I beg to move, "That the Clause be read a second time."
  I think it will be generally admitted that anticipations have not been realised with respect to the scheme of land taxation of which these three taxes dealt with in my Clause form a part. The scheme has has not been a fiscal success, and it has not facilitated, but has rather retarded the development of building land and the provision of houses, and in particular of workmen's houses. We are now confronting a very serious housing problem, and it is with the sole object of removing the difficulties in front of us in the solution of that problem that I move this Clause. I think I had better prove as shortly as I can the two propositions which I have made, the first of which is that this land taxation is not a fiscal instrument at all. The scheme has now been in operation, including the estimate for 1918, for nine years, and the total proceeds of these three taxes, including £135,000 estimated for the current year, amount to £1,092,000. That is an average of £120,000 a year, and that is all. The cost of the valuation, including the estimated cost for the current year, amounts in the nine years, to £4,200,000, or an average of about £465,000 a year—about four times the amount which the taxes have yielded. These are the plain figures, and they were elicited by question and answer from the Chancellor of the Ex-

  1477
  chequer a little while ago. I do not want to make the worst of the figures at all, and I am ready to admit that the War must have affected them considerably. For instance, from the Undeveloped Land Duty there is now no estimated yield at all, and we know that neither the Increment Duty nor the Reversion Duty has been collected to the full extent, but I have given the figures showing what has been collected and estimated for, and the net result is that the produce of the taxes is about one-fourth of the cost of valuation.
  7.0 P.M.
  I know that the Inland Revenue authorities at Somerset House think—and perhaps rightly think so—that the Estate Duty receipts and those from Death Duties have to some extent increased by reason of the existence of the valuation, and there is no doubt that is so. But that question is not affected by my Clause, because I am not suggesting that the valuation should be dealt with at all. If these taxes are abolished in the way I propose there will be a very large reduction in the cost of the valuation, which largely consists in making an inquiry for valuation on every "occasion," so-called, on a lease of over fourteen years on transfer or on a death taking place, and there must be some hundreds of thousands of such "occasions" each year. If there is no need for making these valuations, it will be seen what a large saving there will be. Besides that, it sets men all over the country free for national work on which they will be very much better employed in times like these than in assessing or attempting to assess and collect these duties. I would call to mind the words of the right hon. Gentleman the Member for East Fife (Mr. Asquith) on the 10th August, 1909, when these taxes were under discussion here. He said:
  "I defend this tax and all the taxes contained in this Finance Bill as fiscal instruments, and if anyone can demonstrate to me that they are not, I shall agree they ought to be excised from the Bill. I shall agree that they should be excised if anyone can show that they will not be useful, profitable, and fruit-bearing for fiscal purposes."—[OFFICIAL REPORT, 10th August, 1909, cols. 318 and 319, Vol. 9.]
  Nine years' experience has shown us amply and abundantly that they are not useful, profitable, or fruit-bearing for fiscal purposes at all. The next point I made, and the one to which I attach the most importance, is in reference to the housing question, and it is on this ground solely that I move this Clause now,
  1478
  because I should not refer to land taxes in war-time unless it were necessary to do so for war purposes. But this building scheme is really the first problem of the reconstruction measures which we shall have to take after the War. It cannot be satisfactorily dealt with or disposed of until this difficulty of these land taxes is out of the way, and it is on this ground alone that I approach the matter. I feel that as the building question is coming on and is so acute I must ask the House to consider this matter most seriously. I said just now that the effect of these taxes was that building was retarded instead of being helped. It does not much matter what I think about that or what hon. Members of this House think, or, indeed, what the Government think. What we have got to ask is the opinion of those who build houses and those who will build them in the future. I may think these taxes are a bar to building and other hon. Members may think I exaggerate. Possibly I do, but our opinion is worth nothing whatever unless it is founded on the opinion of those experts and persons to whom we looked to build houses in the past and who we expect to build them in the future. I wish to give the House the opinion of those people. It is a little odd, I must admit, that with such a low produce from the taxes builders and land developers should be so frightened at what is apparently such a small tax, and I can quite understand hon. Members thinking that their alarm could possibly be disposed of. But I can assure hon. Members that this fear has existed ever since the scheme was evolved. It is the uncertainty, the irritation, the unfairness, as they think, of this method of taxation, and the utter inability to procure money for building purposes, and also the great fear that these taxes may be largely increased, and I should say that the amount of the yield has only been kept down to the present small total by litigation at very great cost on the part of private individuals, and if anybody thinks he can get money to put into a scheme in which there is certain to be early litigation, he cannot have very much experience of business transactions. This whole scheme is beset with difficulties, and no one understands them. All they know is that every move they make a valuation has to be made, which they do not understand, and a claim may or may not be made. As it has been shown that

  1479
  this is not a fiscal instrument, cannot we accept, on this point, the opinion of those people to whom we have to look to provide houses in the future—that they cannot get the money, and they cannot build until these obstacles are removed? It seems to me that we are bound to act on their opinion. You may ask me for some evidence as to who holds this opinion. I have here a list of resolutions passed by practically everybody in the country connected with building and land development, including the Surveyors' Institute, the Auctioneers, National Housing Conference, National Federation of Building Trades Employers—consisting of 6,000 members —Houseowners' Association, Association of Trade Protection Societies, Edinburgh Merchant Company, Ratepayers' Associations practically throughout the country, Auctioneers' and Estate Agents' Institute; numerous resolutions by corporations and rural and urban councils —fifty of them; and I have letters from 500 private builders, whose opinion I asked, and who have replied practically unanimously. Some say that these taxes are the sole cause; others say they are the main contributory cause; but they all agree they are very important, and that they contribute to the shortage of houses.
  I believe the evidence given before the Building Committees set up by the President of the Local Government Board is absolutely overwhelming. Witness after witness testifies to the same effect that private enterprise cannot start, and will not start, simply because they cannot get the money, because of these taxes, which, they say, hit the credit and security of land; and, if credit is not there, capital is not available, and, of course, land and the value of land, is a very small affair in connection with the cost of building. The whole point in connection with houses is, can you get the capital, and at what rate can you get it? If credit is hit, of course that is not forthcoming. I think we ought to consider who has provided the houses in the past, because the Government have now a very considerable proposal for the provision of houses by municipal authorities. It is to be hoped that a satisfactory scheme may be evolved, because the municipal authorities would certainly have to take part in the solution of the housing problem. In the past private enterprise has housed 97 per cent. of the population. The right hon. Member for Battersea (Mr. Burns), when President
  1480
  of the Local Government Board in 1914–15, calculated that out of 5,528,000 dwelling-houses in England and Wales, as shown in the Return of Inhabited House Duty, not more than 15,000 had been erected by local authorities under the Housing Act of 1890. That means that private enterprise had built5,500,000 of the houses in the country at that time, and the local authorities had only built 15,000, with all the Acts passed and all the assistance given to them.
  What I want to ask the Government is this: Here are those persons who built those 5,500,000houses, or those representing them, one and all telling the Government that they cannot build houses in the future unless the credit of land is restored by the repeal of these land taxes. On the other hand, the Government are setting up a scheme for the erection of houses by municipal authorities, who, in the past, notwithstanding all the assistance they have had, have only built 15,000 houses. The right hon. Gentleman the Member for Battersea went on to say:
  "We recognise that in England and Wales private enterprise has always been, and, so far as can be foreseen, will continue to be, the main source of the provision of houses for the working classes."
  Every Member representing a constituency must know what the views of the builders in his constituency are, and not only the builders, but the local authority, district council, and so forth. Opinion, I think, is practically unanimous that if private enterprise is to be encouraged, this step ought to be taken. I think I may say confidently that I do not believe there is a single Member in this House who will get up and say that he has not gained that experience in his own constituency. I only want to impress upon the Government the seriousness of the situation, and how absolutely necessary it is that they should understand that these people are anxious to go forward. It is quite true this is not the only cause of the failure. But they say it is the main contributory cause, and if there are other causes, is not that all the more reason why we should remove the main cause? [An HON. MEMBER: "The main cause is the rates!"] They do not think so. I have no doubt rates have a good deal to do with it, but every builder in the country is of opinion either that these are the main contributory causes or that they have a very detrimental effect on credit and the provision of capital.

  1481
  I rather gather the Government, for some reason I do not understand, are not prepared to accede to this proposal. I cannot help thinking it would meet with general acceptance in the Committee. I should like to know from what body of Members any opposition can come to a proposal of this sort to repeal a tax which produces nothing, which costs a great deal, and which is preventing people from getting houses! I am utterly at a loss to understand it. I may be exceedingly ignorant and stupid, and out of touch with the House, but it never occurred to me for a moment when I put down this Clause that it would not meet with the general acceptance of the Committee. I put it down in sheer honesty, and, I suppose, stupidity, as it seems. In any case, the matter is so exceedingly serious that if the Government do not see their way to accept this Clause now, I would ask the right hon. Gentleman the Chancellor of the Exchequer to tell me why the Clause cannot be accepted now, and whether he could give me some definite assurance, on which I could rely, to satisfy these people more or less that the matter will be dealt with shortly, that it will receive the careful consideration of the Government, that they are alive to the situation, and that we may hope that the matter will be satisfactorily dealt with? I am sure a statement of that sort from the Chancellor of the Exchequer would give general satisfaction.
  Mr. C. PRICE: I listened to the speech of the hon. and gallant Member with a considerable amount of interest, because it so happens that since the War began this subject has been raised several times in this House. Though a party truce has existed since the War began, the right hon. Member for the City of London put down a Clause on a former Finance Bill asking for this tax to be suspended. The Chancellor of the Exchequer said he would not press landlords engaged in the War to make these returns, with the result that this Act has been a dead letter in many respects. Further, the Act has been fought in courts of law. The hon. and gallant Member who has just spoken has spoken more or less as a Simple Simon, but, if I remember aright, he has raised this before, and therefore when he comes with such an air of simplicity—
  Colonel ROYDS: I fought this tax tooth and nail before the War.
  Mr. PRICE: Yes, but the hon. and gallant Member has also raised it since the War.
  Colonel ROYDS: I deny it. I make a statement which is absolutely and strictly true, that I made no reference whatever to this Land Tax in or out of this House since the War began.
  Mr. PRICE: I think my point is perfectly clear, which is, that when he now says he is raising this question he has been a very old fighter against this tax from the very beginning, and, therefore, inasmuch as we agreed at the beginning of the War that no question of party difference of opinion should be raised in this House, I say it is scarcely fair that he should raise it at this time—[An HON. MEMBER: "What about Home Rule?"]— more particularly as he was an opponent at the early stages. The right hon. Member for the City of London, of course, raised it very shortly after the War began, and a pledge, which I very much regret, was given by the present Prime Minister, who was then Chancellor of the Exchequer, that, inasmuch as many landlords or proprietors were engaged in the War, they should not be called upon to make a return. Accordingly the House of Commons and the country have never had the full benefit of the Act which was passed. The hon. Member has given us some figures showing the cost of valuation. He said that we had only raised one-fourth of the cost of valuation. None of us ever expected that the cost of this valuation would be repaid immediately or within a few years of the passing of this Act. As has been pointed out, the Chancellor of the Exchequer has derived enormous benefit from this valuation through the Death Duties. [HON. MEMBERS: "Oh!"] Oh yes, he has. I will give hon. Members a case if they like. I know one estate where the Government valuers returned the value of the estate at 7,100,000 odd pounds. The agent of the estate returned it at 5,800,000 and odd pounds. There was a difference—I am speaking from memory—in the amount claimed by the Chancellor of the Exchequer of something like £38,000. The men who returned the valuation for the Government had been discharged, and so the Government had nobody to go into the Court of Law and defend their own valuation.
  There has been—and I am speaking with authority—an enormous increase in the amount which the Chancellor of the

  1483
  Exchequer has derived from Death Duties entirely as a result of the passing of this Act. Therefore, it is scarcely fair to say, in view of the fact of the War, that the amount which has been yielded to the Chancellor of the Exchequer from the most important of these duties is a fair test of what it would have been had the War not intervened. My main contention, however, is this: Inasmuch as this valuation which was in the Budget of 1909–10, and which caused the greatest amount of acute difference of opinion in the country, which led to the great conflict with the House of Lords—to bring up this just now and to reopen this controversy at this time would, in my judgment, be a gross breach of the truce which was entered into at that time. It would be grossly unfair. I accordingly sincerely trust that the Chancellor of the Exchequer will in no sense listen to this proposal, and that the Government, at all events, will have clean hands in this matter.
  Mr. BONAR LAW: Now that the Committee has had the advantage of listening to the protagonists on both sides, I hope they will not think it necessary for any lengthy discussion on this subject to take place. Listening, as I did again, to my hon. and gallant Friend on this subject, it is very difficult for me to realise that I used to hear his speeches on the same lines before the War, and supported him as well as I could at that time—it is, I say, very difficult to realise that far three years, or nearly, I have been the colleague of the right hon. Gentleman, who was then Chancellor of the Exchequer, and who is responsible for these dirties. The hon. Gentleman behind me spoke of my hon. and gallant Friend opposite as a Simple Simon; of one who was trying to make out he was not so simple as he looked—[Laughter]—I beg my hon. and gallant Friend's pardon, not so simple as his speech would seem to imply. I can assure my hon. Friend he is doing my hon. and gallant Friend an injustice. My hon. and gallant Friend came to see me on this subject two or three days ago. It was with the greatest difficulty I was able to persuade him that it was not possible for me to take the view that it was my duty immediately to have these taxes repealed. That really was his view. He has asked me now to say why I am acting in that spirit. It is rather difficult for me to say this. I took part in the Debates on these
  1484
  taxes at the time. I do not think that my views have in any way changed. Though I have a memorandum prepared in the Department on these taxes, I do not think the arguments are very strong, and in any case I should not be prepared to use them. The Committee will feel, therefore, that in refusing to have any part in upsetting these taxes now it is not from any love of them, ox from any feeling, speaking generally, that I am now really in a position to defend them. I am not. But I do think that a subject which aroused such active controversy, which has not altogether died down in spite of the appeal of my hon. Friend—really, it would not be possible at this crisis in the War even to contemplate upsetting this arrangement in the House of Commons. At all events, I could not do it. At the same time, I am sure that even my hon. and gallant Friend opposite will hesitate to say other than that, as housing is to be one of the very first problems of reconstruction which will have to be undertaken by the Government when the War is over, that as in any case it will be extremely difficult—whether my hon. and gallant Friend's views as to the effect of these taxes be correct or not—that this, as I think, is one of the questions which should seriously, and must be seriously— whatever Government is in power—be taken into review in connection with these war problems when we begin to deal with them. I hope I am not saying or doing anything on behalf of the Government that I should not, or against the view of my right hon. Friend the Prime Minister. I do not think I am. But I am sure that he, and, I believe, every Member of the House, will feel that, though these old controversies have left memories, though in many respects we still retain the same views, yet the War had made this difference, that many of the problems with which we have to deal will have to be dealt with apart altogether from the old lines. First of all, what we have to do is to consider such problems as that of housing on its merits, and without any regard to old controversies.
  Mr. D. WHITE: I paid considerable attention to what fell from the lips of my hon. and gallant Friend on this side, but it seemed to me that he failed to make out even a primâ facie case. He referred to certain Resolutions, and to some who have taken certain action. I fancy, from what I know of workers in certain societies, that probably they did so because

  1485
  they were moved thereto. That certain papers were put before them conveys very little conviction to the mind of anyone. My hon. and gallant Friend has not attempted to make his points or to prove his allegations that these taxes have a bad effect upon building. As a matter of fact, and if he will recollect, if he goes back to the state of things before these taxes were introduced, building was at that time in a very bad state In fact, the President of the Local Government Board had expressed the opinion that building practically was at an end. The conditions have been made very much worse by the enormous difficulty of obtaining money for building, or, indeed, for any other purpose. He could have made out his case if he had shown that these taxes were taxes on houses. They are not. They are taxes on land pure and simple, and that was the part he omitted to deal with. As to the cost of collection, my hon. Friend the Member for Central Edinburgh has pointed out that the cost and the revenue are set off one against the other. We ought also to take into account the indirect advantage in getting a truer valuation for purposes of the Death Duties and other things. After all, however, the main answer to the objection that was taken by the Mover of this Clause is that the expenditure on the valuation is an expenditure in the nature of a capital character, whereas the revenue is a revenue of an annual character. That accounts for a very great deal. The question of housing is, of course, one of the most important that we have to face. There are two fundamental difficulties in solving this problem. They are, first, the difficulty of getting land to build upon at anything like a fair price; and, secondly, the fact that when houses are put up they are rated and taxed. If my hon. and gallant Friend wants really to attract capital to building, and will put forward any proposition which will lead to the untaxing and un-rating of houses, I should be perfectly prepared to consider it on its merits, and he will probably have my support. One of the great advantages of these taxes is that they have shown us something as to what is really the nature and the value of the land.
  I have said that one of the great difficulties of housing is to get land on fair terms. Take the case of Glasgow, which I know well. We have found a great deal of land which is required for building.
  1486
  That land is being rated at about 35s. or 40s. per acre on its agricultural value. If, however, you want to build houses for a needy population who, being overcrowded, require houses, you have to pay, not something like 35s. a year Feu Duty, but something like £35 a year Feu Duty. There was one matter of reconstruction to which my hon. and gallant Friend did not refer. Again I take the case of Scotland. Let me show one of the uses of this valuation which he wants to scrap. Turn to the Report of the Royal Commission on Housing in Scotland—a Report only a few months old. What do we find? We find that the Commissioners recognised the difficulty of obtaining land for building on anything like fair terms. Their proposition is that where the authorities require land for public purposes they should be entitled to purchase on a basis of the Finance Act valuation—the very valuation that my hon. and gallant Friend wants to scrap. The whole of his attack was because these taxes were not producing revenue to the Government. I maintain that this Report of the Royal Commission on Housing in Scotland shows the need for having something like a true valuation of the land where the land is to be obtained for public purposes. That matter does not stand alone.
  We have had other Reports of Committees of this House. We have a Report of one of the Sub-committees of the Reconstruction Committee itself, which has shown to the public in a way that they had possibly never realised before how the public are "done" over land purchase. Those difficulties will never be fairly met until we have a true valuation of land. The great good of these taxes is not merely what they themselves have brought in. That to my mind is a secondary matter as compared with the fact that they set on foot a valuation which some of us hope to see still further developed. The Chancellor of the Exchequer suggested that we were not enamoured of these particular taxes. Those of my colleagues whose views I have the honour to share are not particularly enamoured of these taxes. We look on them as affording a valuation. That was the great thing they did. They had certain merits in themselves. But what we wanted—we said it all along—was that there should be taxes on the value of land payable whether the land was used or not. We maintain that that is what is wanted to-day. My hon. and gallant Friend is

  1487
  for going back. We are for going forward. We want to develop these things along that line. What we maintain is that we shall never have land obtainable at fair prices and at fair rents until the present land monopoly is broken down, and that the way to break down that monopoly is to tax those who hold the land according to the value of the land they hold, whether they use it or whether they do not. The hon. Member spoke of these taxes diminishing the credit and security of the land, but they cannot do that. They do to a certain extent diminish the credit and security of landlordism, and that is why those who are interested in land are against them. If these valuations were developed and made the basis of direct taxation land monopoly would suffer very severely, and the land would be open to I the people on far more satisfactory terms than it is now. Although the valuations were carried out at the expense of the tax payers, the results in the aggregate have. I not been disclosed, and I want them disclosed. Take the Section which deals with definitions. I will take three out of the. four. There is a full site value which we have in view, and there is the gross value which includes the improvements
  Colonel ROYDS: My new Clause only deals with taxes, and it leaves the valuation as it was before. Is the hon. Member in order in dealing with valuations which are not touched at all?
  Mr. WHITE: The hon. Member's Clause deals with charging and assessment; and what about the staff for valuation? It is all very well for the hon. and learned Member to throw up his hands, but his whole argument was that those connected with the valuation should be released to fight in the War. That is what he said, and he cannot now turn round and say that he did not mean to touch the question of valuation.
  Colonel ROYDS: I said that the valuation had to be made on each occasion when these taxes were assessed.
  Mr. WHITE: These occasional valuations are necessary to keep it up to date. The only value of which we get the aggregate figure in the Reports of the Commissioners of Inland Revenue is what is called the total value of the land. That, broadly speaking, according to the Finance Act definition, is the gross value, less rent charges, few duties, and various other deductions which amount to a very consider-
  1488
  able sum. Making all these deductions, the aggregate total value amounts to more than £5,000,000,000. That figure is to be found in the Report of the Commissioners for Inland Revenue for 1916, and the last Report for March 1917, did not contain any similar figures. I understand that the reason was war economy. My right hon. Friend the Chancellor of the Exchequer was asked if there was any further information, and he said for practical purposes these valuations had been completed, and there was no substantial addition to the figures given to the report of the previous year. If we take that £5,000,000,000, what I would like to get at is what is the aggregate amount for Great Britain of the gross value of land, and also of the full site values. We have not had these figures. The materials are all available, because the valuations have been made, and I appeal to the Chancellor of the Exchequer to have these figures brought out as soon as they can be.
  Judging from all the surrounding circumstances, and taking the aggregated amount at £5,000,000,000 full site value of land in Great Britain, there is reason to believe that the gross value amounts to something like £7,000,000, and the full site value to something like £3,000,000. Those are enormous figures, with enormous possibilities of taxation. These are some of the values we want to get at. Those valuations, in our opinion, do not go far enough. There is a special provision in Clause 25 of the Finance Act that mineral rights are not to be included. The value of minerals is excluded from these valuations with few exceptions, and in some cases it actually happens that land having minerals below it leads to it being valued lower because of the possibility of the minerals being worked and depreciating the value of the surface.
  The CHAIRMAN: The hon. Member is now going a little wider, and he had better confine himself to the question raised in the Clause as proposed.
  Mr. WHITE: I shall not pursue those points any further. I want to impress upon the Committee that we have it on the authority of the Inland Revenue Commissioners themselves that in the United Kingdom alone the aggregate total value of land, exclusive of mineral rights, amounts to more than £5,000,000,000. We hear a good deal of what the Colonies are doing as precedents for what we should do.

  1489
  What have the Colonies done in this respect? You have there the very kind of tax that we want these valuations to lead up to, namely, a tax on the full site value, or, as they call it in Australia and New Zealand and various other places, a tax on the unimproved value of the land. Before the War they had taxes on the unimproved value of the land in Australia. During the War those taxes have been increased, and they have been increased with the assent of practically the whole Australian population, and this, I believe I am right in saying, is the most popular tax in Australia, and it was originally settled by Mr. Hughes so far as the Federal tax in Australia is concerned. Take New Zealand. In the year 1916, which are the latest figures available, the amount raised by taxation on the unimproved value of land was rather more than £1,000,000, and as the population is rather more than 1,000,000 persons it was equivalent to about £l per head on the unimproved value. It was made up of two taxes— a uniform tax and a graduated tax.
  So well has this system been found to work that last year, by an Act of 1917, they have consolidated these two taxes into one; they have made no reduction, and so far as any change has taken place it has been in the direction of grading upwards; and in addition to this consolidation they have put on an additional War Tax of 50 per cent. as a special war-time tax, because they wanted to get more revenue from that source and to make the land more available for the people. I take that precedent from New Zealand, and I suggest it to my hon. Friends who are interested in what the Colonies have been doing in taxation. Our present Land Value Taxes are not all that we want, but we should go forward. I can assure my hon. and gallant Friend that those taxes deal not with land, but with the value that attaches to the land owing to the demand of the community for land. That is the subject of taxation in these taxes. They do not press upon houses or any other improvements. We want to make the land more available to the people and to stop all the taxes on houses and improvements, so as to encourage capital to building. There is no use in attempting to attract capital to building unless land can be got on fair terms, and that is only to be done here by the same methods as are adopted in Australia, New Zealand, and various other parts of the Dominions.
  Colonel ROYDS: I ask leave to withdraw my Motion.
  Motion and Clause, by leave, withdrawn.
  NEW CLAUSE.—(Agents not Liable for Income Tax on N on-Resident's Profits.)
  A broker, general commission agent, or agent, not being an authorised agent carrying on a. non-resident's regular agency, shall not be liable for Income Tax on any profits made by the non-resident.—[Sir F. Banbury.]
  Brought up, and read the first time.
  Sir F. BANBURY: I beg to move, "That the Clause be read a second time."
  About three years ago an alteration was made in the incidence of taxation on manufacturers resident abroad. There was considerable discussion upon it, and the then Chancellor of the Exchequer (Mr. McKenna) stated that bonâ-fide agents would not be liable for Income Tax on profits which were presumed to be made outside the United Kingdom, and he undertook that if the Clause did not carry out that intention to insert words later on to ensure that that should be the effect of the Clause. I am informed that the Inland Revenue have taken a different view of the Clause to what the right hon. Gentleman took, and to what I understand the then Chancellor of the Exchequer took at that time, and that they have made demands upon bonâ-fide agents that they shall return the amount on which they considered their principle ought to be assessed, and they have made assessments and charged the agents upon that basis. I have had communications from the Manufacturers' Agents' Association, and I should be very much obliged if my hon. Friend would tell me whether there is any foundation for this and whether the Inland Revenue will be careful to administer the law as we always understood that it would be administered when this Clause was passed. I understand that there are legal proceedings going on at the present moment, and perhaps the Financial Secretary will give me some information upon the matter.
  Mr. BALDWIN: I quite appreciate the point that the right hon. Baronet has raised, and I have been at some pains to ascertain the exact position of the law in this respect. I can assure the right hon. Baronet that the law as it stands is quite sufficient to protect the class of men which he desires to protect, and that there is no necessity for him to press his Clause

  1491
  further. I would remind him that Section 31 of the Finance Act, 1915, was passed to strengthen the machinery dealing with the non-resident traders and certain collusive arrangements made between them and other persons in this country by which they were able to evade taxation. He will find that Sub-section (6), which is intended to meet the point that he has in mind, provides against a non-resident person being chargeable to Income Tax (these are the words of the Sub-section):
  "in the name of a broker or general commission agent or in the name of an agent, not being an authorised person carrying on the non-resident's regular agency or a person chargeable as if he were an agent in pursuance of this Section, in respect of profits or gains arising from sales Or transactions carried out through such a broker or agent."
  I am sure my right hon. Friend will recognise the necessity for keeping some hold over the non-resident trader, and that hold is kept over him through the medium of the regular agent; but under that Sub-section it is not possible for Income Tax purposes to get at any broker, agent, commission agent, or agent who is not an authorised agent. I do not believe for one moment that the officials of the Board of Inland Revenue would strain an Act any further than it ought to be strained, and I hope that with that brief explanation the right hon. Baronet will be satisfied and will not press the Clause.
  Sir F. BANBURY: I understand that the only cases where the Inland Revenue officials press is where the agent is a regular authorised agent, and that the Treasury would not in any kind of way waive it, but would insist upon the provision remaining.
  Mr. BALDWINassented.
  Sir F. BANBURY: I understand that representations will be made by my hon. Friend to the officials of the Inland Revenue that they are loyally to carry out the provision.
  Mr. BALDWINindicated assent.
  Motion and Clause, by leave, with drawn.
  NEW CLAUSE.—(Amendment of s. 5 of Finance Act, 1897, and s. 32 of Finance Act, 1916, in Certain Cases.)
  In cases where a husband and wife, or one of them, would be entitled to claim the benefit of separate assessment under Section five of The Finance Act, 1897, if their joint income did
  1492
  not exceed five hundred pounds, and their joint income does not in fact exceed six hundred pounds, the amount of Income Tax payable in respect of such joint income under Section thirty-two of The Finance Act, 1916, shall be further reduced (if necessary) so as not to exceed the amount which would have been payable if they were assessed separately, together with Income Tax on the excess of the joint income over five hundred pounds at the standard rate for the year."—[Mr. Currie.]
  Brought up, and read the first time.
  Mr. CURRIE: I beg to move, "That the Clause be read a second time."
  My object is to draw the attention of the Chancellor of the Exchequer to the fact that there is a small stretch of Income Tax territory where rather hard treatment is meted out to married women who endeavour to add to the joint family income. As matters stand, if the husband earns £400 and the wife £100, the joint assessment comes to £28 odd, but if the woman earns £40 extra it comes to £33 more. I think that is rather hard treatment. If the figure were carried past the £600 point, the injustice would disappear. On the other hand, if the husband earned the extra £40, the hardship would not arise. I admit, like many things, this Clause would cut both ways. If the whole question of the treatment of women under the Income Tax is raised, they must be prepared to have the question of their treatment under the Death Duties reopened. On the whole, I think the woman who works herself in these times and adds to the joint income, which at the best is small, is rather hardly dealt with, and, if the Chancellor of the Exchequer cannot see his way to accept the Clause, I would be glad to hear whether, when he comes to prepare his next Budget, he would make an attempt to deal with this class of married woman rather more leniently.
  Mr. BONAR LAW: I have looked into the Amendment, and my hon. Friend must recognise that we cannot contemplate dealing with it now. In all these cases there comes a line where there is hardship, but on the whole I do not think that married couples are badly treated compared with other people. My hon. Friend, I am sure, knows the provision that was made for them in the Act of 1916, and, though he can select a particular point at which there is hardship, on the whole I do not think they can feel that they are treated unfairly as compared with the man whose wife is not assisting

  1493
  him in adding to his income. At the same time I will look into the point and consider whether there is anything further that ought to be done in the matter.
  Motion and Clause, by leave, withdrawn.
  NEW CLAUSE.—(Valuation of Stocks.)
  At the end of each and every accounting period the stock of a manufacturer in any trade or business then on hand shall be brought into the accounts for such period as to any quantity not exceeding that brought into account at the commencement of the first accounting period ending after the fourth day of August, nineteen hundred and fourteen (hereinafter referred to as "normal stock"), at the same prices as those at which the latter was so brought into account. —[Sir B. Barran.]
  Brought up, and read the first time.
  Sir R. BARRAN: I beg to move, "That the Clause be read a second time."
  I have endeavoured to adopt a principle that has been enunciated by the Chancellor of the Exchequer and which will alone gain his assent. He has told us that he has adopted a proposal because it was put before him in moderation and with sound argument.
  Mr. BONAR LAW: Especially because of the sound argument.
  8.0 P.M.
  Sir R. BARRAN: I shall deal with this in moderation, because I appreciate the willingness of the Chancellor of the Exchequer to meet the great manufacturing industries of this country on some of these very difficult problems that have arisen since the beginning of the War in a very fair spirit and with a desire to leave behind some of the old red-tape and give them terms which will be an encouragement of trade. Appreciating that, I will use the argument of the Chancellor of the Exchequer himself. In dealing with the Budget a year ago the right hon. Gentleman issued a White Paper as to the valuation of what are described as base stocks. In that White Paper it was stated:
  "Certain classes of industry require to keep stocks of raw or semi-manufactured goods for the purpose of manufacturing processes, and these goods are frequently of such an imperishable character that a minimum quantity required for a business could be held untouched for a long period. Accordingly, in any class of trade—

  (a) which requires for its manufacturing processes to keep such stocks; and

  (b) in which a recognised practice has obtained of taking a constant quantity at a constant price, the Government are prepared to accept the practice."

  1494
  This is merely the application of that sound argument of the Chancellor of the Exchequer over rather a wider area. There is a very wide interest in this question throughout the whole of the manufacturing trades of this country. Practically every large industry that you can think of in the country has by means of its association dealt with this question of the valuation of the stock at the beginning of the period and the valuation at which the stock has to be taken during the period and at the end of the period. It does not matter whether it is taken during the period or at the end. Every industry has dealt with this question, and in one way or another has communicated to the Government their view that something ought to be done in the interests of the manufacturing industries of this country to alter the position on the lines of what has been done for the trades where they have admitted a base stock. The whole of these industries have taken the same view There is a very remarkable consensus of opinion. I want to ask the Chancellor of the Exchequer whether he cannot apply this principle, to which he has already agreed in the case of certain trades, very much more widely? Last night, speaking on another Amendment in which I was interested, the Chancellor of the Exchequer rather complained that the manufacturing industries of this country and Members who represent them were not treating him very fairly when they made the concessions that he had made merely the basis for asking for further concessions. I do not think, on reflection, he will consider that is altogether a fair way of putting it. The manufacturers of the country asked him originally to go a great deal further than he has seen his way to go. They asked him to adopt certain sound principles. He has not seen his way to go very far. He has done something, and if the short distance that he has travelled has been successful, surely there is nothing unreasonable in asking him to follow the same lines and to give us the whole of those alterations which were originally put before him and which the manufacturing industries of this country have tried to prove, and I think have succeeded in proving, to him were sound! There is going to be a very wide difference between the base price of stocks at the beginning and at the end of this period. The alteration in this price has

  1495
  been paid for during the period of the Excess Profits Tax —80 per cent. of the increase in the value has been paid in excess profits. That is all past. When you come to the end of the excess profits period, there will be a series of years in which these prices will gradually fall. It is quite certain they will not fall as rapidly, immediately after the War at any rate, as was at first supposed, and, therefore, the concession which the Chancellor of the Exchequer made last year to give some advantage as against the fall in these prices in the first two years will be of very little value. It amounts to this, that while the Exchequer has taken 80 per cent. of the increased value of these stocks, the manufacturers will have to bear in the years after the War is over the whole brunt of the gradual decrease in these prices. I think the right hon. Gentleman should admit that to the manufacturing business it is absolutely essential to hold large stocks. I would remind him of a speech made by Sir Henry Holden, in which he advised the manufacturers to buy and hold all stocks of raw materials, or semi-manufactured materials they can secure regardless of the price, because at the end of the War it will be to the interest of the country that its manufacturers should hold the largest amount of stock in the world. I believe the commercial world has approved this advice from the banking world. I want to draw attention, however, to the expense of holding stocks at such high value, and at the high rate of interest which has to be paid at the present time. In my opinion the Government should facilitate manufacturers in every possible way and not penalise them. They should facilitate them in holding, for manufacturing purposes, the largest stocks they can hold, under the circumstances, from now to the end of the War.
  I know of one reply which the right hon. Gentleman may be expected to make to any proposition of this kind. He will tell us that it would cost him a very large amount of revenue. May I point out, first of all, it is only current revenue, and that he will only lose the revenue on the difference between the base price and the final price? He can only lose it once, and it is spread over all the years during which the Excess Profits Tax has been
  1496
  charged. I would point out further that the stocks will necessarily be very much lighter at the end of this period than, they were at the beginning. The Clause proposes to limit the amount of stock held to that which was held in the first year, but as a matter of fact the stock that will be held at the end will be very much lighter, and therefore the amount the right hon. Gentleman will lose in revenue will not be nearly as serious as it might have been one or two years ago. These are circumstances which the Chancellor of the Exchequer ought to take into consideration. He ought not to deal with this matter purely from the point of view of loss of revenue. It is a much more important thing that the Government should endeavour to put the traders of this country in the best position they can possibly be put in to deal with the markets of the world after the War. The difficulties that will arise from the shortage of capital will be considerable, and by doing this the right hon. Gentleman could materially facilitate our regaining our hold on the export trade of this country. If he can see his way to assist the manufacturing interest of this country by some limitation of the Finance Act at the present time we shall be very glad.
  I do not think the right hon. Gentleman is on sound ground when he thus distinguishes between those people who have been accustomed to have base stocks, and to whom, therefore, he has granted this concession, and those who have not. He has excluded from this concession the rest of the trading community because it has not been the custom of the trade, or he has excluded individuals who, because co-traders have not followed the custom, have adopted the same course. I hope the right hon. Gentleman will consider very carefully whether he cannot meet us in this and take a view which will be equally fair and equally advantageous to all the manufacturing industries of the country. There are a good many other point I might mention. I have only touched on the principal ones, and I do not want to delay the Committee too long. The right hon. Gentleman is aware, for he has had this matter put before him by a deputation from important trade combination, of the deep interest which manufacturers take in he question which the Committee had before it last night. The Division taken last night was an indication of the deep and strong interest which the manufacturing industries of this country are taking

  1497
  in certain questions raised by the Finance Act, and with regard to which they feel the Government might be of material assistance to them. We do not want to raise a long Debate, or to press this matter to a Division to-night. If the right hon. Gentleman can see his way to give us some assurance that between now and the Report stage this matter shall have his consideration, if he is willing to hear something further, not necessarily in the House but outside, of the arguments we have to put before him, and if he will give us his promise to consider whether he cannot do, not perhaps all that we ask for, but something on the lines laid down in this Clause, in order to facilitate the work of the manufacturing industries of this country at the end of the War, then there will be no need to press this matter to a Division.
  Mr. CURRIE: The manufacturing interest of this country is of course very important, but there are other interests to be considered, and I think the general taxpayer would have a grievance against the Chancellor of the Exchequer if he gave the assurance which the hon. Baronet has asked for. I have listened very closely to the arguments which have been advanced, and I am bound to say that, while sympathising with the difficulty with which the manufacturers are undoubtedly faced, there are two fallacies underlying those arguments. The mover of the Clause appeared to take it for granted that when peace arrives the values of all stocks will fall. Very likely the values of some stocks will fall, but I do not think the conclusion that all will probably fall is really warranted, and I see no reason why the Chancellor of the Exchequer should give away his position on that point just now. If subsequently any fall takes place, then the matter can be reconsidered, but I do protest against its being taken for granted that the movement in stock values will only be in one direction.
  Sir R. BARRAN: Does the hon. Member doubt that raw material or semi-manufactured goods which are now standing at five or six times their original value are certain to fall within four or five years after the War?
  Mr. CURRIE: I am not prepared to take it for granted that without exception all forms of trading stock will fall. My hon. Friend asked the Chancellor of the Exchequer to commit himself wholesale to
  1498
  the suggestion that the movement in values must be in one direction, and I see no reason why the right hon. Gentleman should adopt any position of that kind just now. He may do it later on, but I protest against its being done now, and I protest because it would be unfair to the general body of taxpayers. Then the second fallacy which rather takes away from the value of the argument submitted by the hon. Baronet is this. The hon. Gentleman said that manufacturers must hold stocks. We all agree that it is partly the business of manufacturers to hold stocks. The process of holding stocks involves, of course, a certain amount of risk, and I think that we who are not manufacturers are entitled to say that while the manufacturer takes all the profits of the trade, he must take all the risks. I do not speak as one who has no sympathy with the difficulties of the manufacturer. They are great, but I do not think that the Treasury would be warranted in saying that this principle is to apply to nothing else than the manufacturer's risks in regard to certain movements in stock values. The whole question ought not to be settled now. It would not be fair to the ordinary taxpayer to foreclose the matter at the present stage.
  Sir J. HARMOOD-BANNER: This question was discussed pretty fully last year, and during the intervening period there has been a great deal of consideration given, not only by the Chancellor of the Exchequer, but also by hon. Members of this House, to this question of the value of stocks. I am sure I would be the last man to withhold any need of praise from Somerset House for the excellent manner in which they have taken this point up. It is a very big matter indeed. I am told it means £100,000,000 to the Chancellor of the Exchequer, but if it is a question of an unjust tax, I do not think even £100,000,000 would be sufficient to justify the Chancellor of this Exchequer or Somerset House in attempting to enforce it. It is a very important question, and the manufacturers want to minimise it as much as possible. They really want the base stock referred to to be merely the stock demanded by the absolute necessities of the case, and they do not want the matter treated as if they were attempting in any way to defraud the Revenue. Many of the points on the question of the basis stock have been settled already by Somerset House,

  1499
  but there are a great many still outstanding, and they are giving their very best consideration to them. The points are extremely difficult, but if the Chancellor of the Exchequer considers the question between now and Report, and with his officials sees if, by any suggestions that are made, a settlement of this matter of the basis stock can be brought about, I am sure it would be doing a good deal both to facilitate the action of his collectors of taxes—because there is a vast sum of money outstanding on account of this which would be brought into the Exchequer—and to meet the wants of the manufacturers, who only desire to do the fair thing.
  Mr. BALDWIN: I shall follow the example of my hon. Friends who have spoken before me, and be as brief as I can on this subject, bearing in mind at what length it was discussed last year, and knowing that the arguments are as familiar to my hon. Friends as they are to myself. I think I may say at once that it is quite impossible for us to accept this Clause, and I do not know whether my hon. Friend (Sir R. Barran) expected us to do so. The hon. Member for Liverpool (Sir J. Harmood-Banner) who spoke last alluded to the enormous sum of revenue that was involved. It is perfectly clear that we cannot afford to run any risks of losing that. He said that we might be prepared to face the loss of it if the revenue in itself were immoral in its origin, but my contention is that it is not. I will just remind the Committee and my hon. Friend in a word or two what the position really is in regard to these stocks as we left it last year. We left a period at the conclusion of the War of two years, during which time manufacturers would have the liberty of writing back any losses that might be made on their stocks, and during that same time they would be at liberty in case the value of their stocks rose, to keep the profits themselves. It was an arrangement very favourable to them on the whole, and, as I tried to show last year, and as I myself am firmly convinced, it is a period ample in time in nearly every industry in this country to realise any stocks that may be in the firm's possession at the expiration of the War. The hon. Member for Leeds (Sir R. Barran) spoke about the inevitable losses which face the manufacturers when prices fall—assuming, indeed, that they do fall—
  1500
  after the War. I never can see myself the necessity for that. My own experience has always convinced me that in the long run, and over a long term of years, the man who is temperamentally a "bear"— I use the word in its technical sense—will make a steadier and more assured income than the man who is temperamentally a "bull." And I must say again that in my own experience I think it is an easier matter in manufacturing to make sure of a profit when raw materials are falling than when raw materials are rising, because there is no constant ratio between the price of raw materials and the price of the finished article. There is nothing that is so upsetting, when you are trying to sell and nothing so liable to catch you out when you are trying to buy, as sudden and unexpected jumps in the price of your raw materials.
  Here I would come for one moment to a very fair point which was raised by my hon. and learned Friend the Member for Leith (Mr. Currie), and I would point out this to my hon. Friend the Member for Leeds. Even if it were thought desirable to make any concession in this matter, the present is not the time for it. It is quite impossible for us to see what the position will be at the end of the War, as we cannot possibly judge now what the trend of prices may be then. If this matter is to be looked into by the Government that is in power, with a view to doing anything, the time for that examination will be at the end of the period and not at present. As far as we can see to it, we believe that we have amply and fully met me particular classes of difficulty that will arise and to which my hon. Friend has alluded.
  I would like to make one remark on what my hon. Friend said, and on a subject which was referred to by my hon. Friend the Member for Lime-house (Sir W. Pearce) earlier in the day. There is a cry we very often hear—we see it in letters to the Press, and sometimes in newspapers—to this effect, "What a terrible mistake we are committing in taxing industry in this country to the extent we are taxing it, because when the War is over, our manufacturers will be in a much worse position to compete with manufacturers abroad." My hon. Friend the Member for Limehouse gave an illustration of the position of certain German firms of whom he spoke, who, he said, were massing enormous

  1501
  reserves, and would be in a most favourable position for competition after the War. I would say two things in reference to that, and I hope hon. Members will take the same comfort in them that I do. In the first place, in my opinion, the competitive strength of any particular industry in the country is no greater than the financial strength of that country, and when the War is over I do not think our financial strength will be worse than that of Germany. If we win the War, it will be incomparably greater. If we lose the War, the happiest industries will be those which have the least money. Therefore, from that point of view, I do not think anyone has any cause to complain. But when my hon. Friend the Member for Limehouse speaks as he did of the enormous reserves that German manufacturing firms are piling up, I want to point out two things.
  It is impossible by a sight of a balance-sheet in this country to discover what the incidence of taxation is on the balance-sheet at which you are looking. If that be the case, as it is, it is still more impossible to discover the incidence of taxation in a foreign balance-sheet. If a firm in Germany has large reserves, we know actually where those reserves are. They are in German war loan, and when the war is over I would like to ask my hon. Friend the Member for Limehouse, or my hon. Friend the Member for Leeds, whether he would rather have such assets as our taxation may leave him, or a larger reserve locked up in German war loan? I do not think any danger will arise there to our industries. The one danger, and the one danger that cannot be avoided, incidental to all belligerents, is that a belligerent must at the close of the War be in a financially inferior position to that of a neutral, and nothing that we can do can avoid that. It is no use pretending that a country can endure a long war, struggle through it, and be in the same position in regard to industry at the end of the war as it was at the beginning. I do not wish to say anything more on this subject at present. I have no doubt that it will be raised again, but I must ask my hon. Friends to accept my assurance that this year at any rate we are not prepared to go any further in this matter of the question of stocks than we went last year. We believe that we met the question fairly, that what we did, as far as we are at
  1502
  present advised, will meet the most urgent difficulties of the situation at the close of the War, and we can go no further.
  Question put, and negatived.
  NEW CLAUSE.—(Allowance for Non-user of Machinery or Plant.)
  The deduction authorised by Section twelve of The Customs and Inland Revenue Act, 1878, as amended by Section twenty-six of The Finance Act, 1907, shall be extended to cover a deduction representing the diminished value' by reason of non-user during the year of any machinery or plant as well as diminished value by reason of wear and tear thereof."—[Colonel Gretton]
  Brought up, and read the first time.
  Colonel GRETTON: I bog to move, "That the Clause be read a second time."
  The Customs and Inland Revenue Act and various Finance Acts already deal with deterioration through wear and tear. There is another case which has been accentuated during the War; that is the deterioration of plant owing to non-user and obsolescence. Many classes of machinery and plant lose in value more from want of use than they would lose in the ordinary course if they were worked in a normal business. A notorious and very obvious case is that of wooden vessels. Such vessels, used in connection with liquids, have their normal wear and tear which, distributed over a period of years, proves a proper ratio of deterioration, but when these vessels are thrown out of use and become dry they shrink, the wood tears off, the materials are wrenched and give way, and, so far from their being available for ordinary wear and tear, they often require entire renewal as the result of being out of use for a considerable period. That applies to casks and wooden vessels which are largely used for liquids. It also applies very largely to certain classes of machinery. Normally there should be some allowance made in assessing the deterioration of plant of that kind in addition to the ordinary allowance for wear and tear. It cannot be contended that the allowance for fair wear and tear will meet the case. That explains the Clause I have put before the Chancellor of the Exchequer. I understand he is not altogether unsympathetic towards the arguments in its favour. I should be very glad to pursue the matter and advance further arguments, but an intimation has been given to me that, though the Clause as drafted is not acceptable to the Government, the substance of it is recognised to be of great

  1503
  importance, and they will provide their own words. I therefore formally move this Motion in order to give the right hon. Gentleman an opportunity of replying.
  Mr. BONAR LAW: I have gone into this matter carefully with my advisers, and I think there is some case to be met. The ground on which I am inclined to think that something of this kind ought to be done is that the non-user of this material is sometimes caused directly by the Government. That creates a new set of circumstances which would make it right for us to reconsider the basis on which the allowance is made. I cannot accept exactly my hon. and gallant Friend's words, but I am prepared to accept the principle of the new Clause, and I shall have other words drafted. I therefore hope that my hon. and gallant Friend will withdraw his proposal. I may add that we have examined with equal care the next two Clauses standing in his name, and it is impossible for us to accept them. I therefore hope he will not move them.
  Sir C. KINLOCH-COOKE: The Chancellor of the Exchequer will remember that I moved an Amendment last night and withdrew it on the understanding that a new Clause would be moved by the hon. and gallant Member (Colonel Gretton), and that the point I raised would be included in the new Clause. The Chancellor of the Exchequer said that could be done. Do I understand that the answer he has given to the hon. and gallant Member is equally an answer to my own Amendment?
  Mr. BONAR LAW: Yes.
  Mr. THEODORE TAYLOR: The Chancellor of the Exchequer qualified what he said by saying that in many cases this disuse arose in consequence of Government action. May I point out to him that the effect on the value of the asset is just the same whether it is ordinary trade disuse or Government disuse, so that I hope he will not confine it to Government disuse. I know that in another branch of trade, dyeing, wooden plant does depreciate much more readily when standing than running. It is really a wasting asset and should be so regarded.
  Mr. BOOTH: There is a danger of lawful Revenue escaping. A good deal of machinery does not deteriorate very much
  1504
  by standing still. It is quite true that where wood enters largely into the composition it does, but there is a good deal of machinery standing still, which, if well oiled, would keep in good condition. Directly the War is over, and these firms are able to resume normal business, they may have their plant fully going. Although a number of firms have allowed their plant to become obsolete at the request of the Government, in many cases it has suited their own ends as well. It is very often convenient to manufacturers— I am speaking in this respect somewhat against the interests of my pocket—to give certain portions of the plant a complete rest. If it is perpetually moving, there is no chance of overhauling it, and it deteriorates fairly quickly. Many firms have been only too glad to allow a portion of their machinery to lie quiet, in order to turn it to a very profitable form of investment at the request of the Government, and that has also suited them. The last speaker was quite right when he said that where wood enters largely into the composition of plant or machinery, disuse is a very serious matter, and it is hopeless to expect in those cases that at the end of the War they will be worth much more than scrap.
  Colonel GRETTON: Inconsequence of the statement of the Chancellor of the Exchequer, for which I thank him, I ask leave to withdraw the Motion. I know that he is always most reasonable when any proper criticism is offered. I accept his undertaking in the spirit in which it is made.
  Motion and Clause, by leave, withdrawn.
  NEW CLAUSE.—(Deduction for Postponed Repairs or Alterations.)
  Notwithstanding Rule 3 of Class 1 of Section one hundred of The Income Tax Act, 1842, where repairs of premises or supply, or repairs or alterations of implements, utensils, or articles occupied or employed for the purpose of a trade manufacture, adventure, or concern, have been postponed or suspended as a consequence of the War, the amount actually expended thereon subsequently shall be allowed as a deduction from profits or gains in the year in which such sum is so expended, although such sum may exceed the sum usually expended for such purposes according to the average of the three preceding years.—[Colonel Gretton.]
  Brought up, and read the first time.
  Colonel GRETTON: I beg to move, "That the Clause be read a second time."

  1505
  With all respect to the Chancellor of the Exchequer, I must make a short statement on this Clause. The allowance for postponed repairs is made under a rule. Unfortunately, I have not a copy of the entire rule in my hands, but I have a quotation from a part of it, and it appears to be to this effect: that no deductions shall be made from the profits which are charged to Income Tax on account of repairs to premises or supply, or repairs or alterations of implements, beyond the sum usually expended for such purposes according to the average for the three years preceding the year of assessment. That is a very different thing from allowing the sum which has been spent on the three years' average to be carried forward from year to year to accumulate against the postponed repairs.
  It means in practice, as many of us have found out, that during this war time labour has not been available, and it has not been possible in many cases to carry out repairs, and there has been a distinct deterioration of premises and postponement of the ordinary repairs and upkeep. In practice we have been allowed in these cases to deduct from the profits chargeable for Income Tax or Excess Profits Duty the amount actually expended. Apparently it is thought in some cases, though it is not carried out so in practice, that the amount which has been expended on the average of three years may be deducted from year to year. That is not done, and therefore there is no such accumulation of a reserve fund as is apparently thought in some quarters. But even if that were allowed it would really not meet the case. Repairs and upkeep now are a very much more expensive business than they were in the years preceding the War. If we were allowed to deduct a sum on the three years' average a larger proportion of it would be spent than in normal years in keeping up the premises and the repairs which are actually carried out, and the amount carried forward would therefore be less and less adequate to carry out the balance of repairs which were not carried out but postponed until a later period. The Clause asks that an allowance, not extravagant or improper, but an adequate allowance should be made for the pontponement of repairs having some regard to the increased price of the real charge which has been postponed. In practice we do not get the sum on a three years' average, which
  1506
  even so would be a diminishing sum from year to year as the War proceeds, but we get an allowance only for repairs which have been carried out and nothing for the postponement of repairs.
  Mr. BONAR LAW: I am sorry I cannot accept the Clause. I think my hon. Friend's fears are due to an erroneous understanding as to how it works. After the War the three years' average will be allowed just the same, and the difficulty which he anticipates will not arise at all. That, at all events, is the advice I am given.
  Colonel GRETTON: If the Government cannot meet me, I cannot pursue the matter any further in a House of this size, nor do I wish to take action which would be futile, but I am afraid my right hon. Friend's answer does not meet the case. Owing to the difficulty of getting work done, the amount spent on repairs is a steadily diminishing quantity in almost every case during the period of the War. So that the amount spent on repairs before the War was a larger amount in the three years' average than has been spent actually during the War on a three years' average.
  Mr. BONAR LAW: It will right itself.
  Colonel GRETTON: It cannot right itself, because at the end of the War postponed repairs will have to be done at a much higher cost, and we shall only be allowed the three years' average on the diminished expenditure for the period of the War.
  Mr. BONAR LAW: You will get the whole cost in the long run.
  Colonel GRETTON: That will be an amount which we shall have to postpone for years, and until we get another three years' average at a much higher rate. Meanwhile the Government have the tax in their pocket, and the unfortunate business will be mulcted in money which really belongs to the owner, because the Government has anticipated the taxation and taken moneys out of the taxpayer's pocket years before it was due to the Government. However, I cannot pursue the matter further at this stage, but I think my right hon. Friend will see that it requires a little more attention, and I shall probably have to put the Clause down again for reconsideration on Report stage.
  Motion and Clause, by leave, withdrawn.
  NEW CLAUSE.—(Profits on Goods Compulsorily Acquired by the Crown.)
  Where any goods of a taxpayer, the profit on sale of which, if sold in the ordinary course of business, would form an addition to the gross profits of such taxpayer, are compulsorily acquired by the Crown the sum paid by the Crown there for to the taxpayer shall not be treated as an addition to his profits for the purpose of computing Excess Profits Duty beyond the sum which would have been so paid if the Crown had only acquired goods of each class of a quantity equal to the average quantity of each class of such goods sold by such taxpayer during the previous three years calculated on the basis of the price paid by the Crown for such goods.—[Colonel Gretton.]
  Brought up, and read the first time,
  Colonel GRETTON: I beg to move, "That the Clause be read a second time."
  This is the case of stocks of goods in possession of the manufacturer taken over by the Government. Stocks which may represent two or three years' business are taken over at one operation. They are valued and paid for by the Government. I am not raising a question of the price which the Government pay. That has nothing to do with it. But the profit on these goods, though they may represent two or three years' normal trading, is all brought into the tax for one year, and the trader is then taxed on excess profits on the culmulative profit of Ms business for one and a half, two, or three years, or even more. That, clearly, is not a just proceeding. The Government, for the purposes of the War and the benefit of the nation, take over certain goods which would have been realised, and would have yielded their profit in the normal course in three years. If the trader is a company they pay him a three years' dividend, or two years, or one and a half, at one operation, and that amount is brought into Excess Profits Tax, and he pays it, so that there is no possibility of spreading the dividend over three years, because the Government has taken the larger part of the revenue of the company in Excess Profits Tax. In many cases these businesses are not able to renew their stocks. They cannot import the materials, and they are prevented from manufacturing them. Therefore, the whole business is brought to a standstill, and the unfortunate owner, whether he be a trader or a company, is mulcted in this Excess Profits Tax, and has no power whatever to equalise his profit, to spread his dividends, or to make any operation of that kind. Clearly, this is not a just proceeding, and it is one which ought to receive attention.
  1508
  I believe the Government is afraid that if it meets this case it will open the door much wider than is intended by the Clause. If the words go too far, I do not want to stand by the words. They are immaterial. Justice is the substance of my case, and that is all I care for. To cite a particular case, an ordinary trader cannot use his stocks of rum. The Government has taken over a great deal of this rum, practically all of it, in many cases stocks representing several years supply, and the trader is charged Excess Profits Tax on the price which the Government is paying for these three years' stocks of rum. That clearly is a case which cannot be supported on the justice or merits of the case. I ask the Exchequer to give further consideration to this matter and put in such safeguards as they think fit to meet the substance of the Clause which I now move.
  Mr. BONAR LAW: I am sorry the Government cannot accept this Amendment. My hon. Friend said, quite correctly, that he was afraid it would introduce a principle the end of which we cannot see. So it would. The question of Excess Profits Duty in relation to Income Tax must be dealt with upon the basis of what are the profits. You cannot begin to ask, "Are they caused by the Government taking possession of something or are they not?" The question is, Are they profits If a hardship is caused such as the hon. Member suggests, then the price to be paid should be sufficient to meet a case of that kind. My hon. Friend must see that there are many others in the same position. Businesses are stopped as the result of Government action, and if we once admit the principle that you are to judge, not on what the profits are, but on the principle laid down by the hon. Member, there would be no end of difficulties with which the Government would be faced.
  Colonel GRETTON: I am afraid the right hon. Gentleman has not met my argument. The case I have put is limited simply to the case of goods which may be acquired by the Government. I did not deal with any other case.
  Mr. BONAR LAW: I quite understand that. My hon. Friend put it on those grounds, but people who had had their business taken by the direct action of the Government would have, in my opinion, precisely the same claim.
  Colonel GRETTON: I must not delay the Committee longer. I am afraid I shall have to raise this question at a later stage of the Bill. On this occasion I beg leave to withdraw.
  Motion and Clause, by leave, withdrawn.
  NEW CLAUSE.—(Amendment of 4 and 5 Geo. 5, c. 76, s. 1, to Include Collaterals.)
  Section one of The Death Duties (Killed in War) Act, 1914, shall apply to property passing to collaterals as well as to lineal ancestors or lineal descendants, and shall be read as if the words "or collaterals" were inserted therein after the words "lineal ancestors" wherever the said words occur in the said Section, and the same shall be construed accordingly.—[Sir E. Pollock.]
  Brought up, and read the first time.
  Sir E. POLLOCK: I beg to move, "That the Clause be read a second time."
  This is an Amendment for the purpose of enlarging the scope of the Death Duties (Killed in War) Act, 1914. When the War broke out we passed an Act very early to give relief from Death Duties in certain cases. We adopted the principle which was enshrined in the Finance Act of 1900, which was passed during the Boer War. The Act which was passed in 1914 received the Royal Assent on the 3lst August, 1914, thereby indicating the general feeling that relief from Death Duties ought to be granted in respect of those who had given their lives for the country and who probably, if they had not been killed in war, would not have had their lives shortened in the manner caused by their patriotism. My attention has been called to the narrow effect of this Act by the circumstances of a case which I referred to on the Second Reading of the Bill. It so happens that Lord Clive, eldest son of Lord Powys, received wounds in the Battle of the Somme in 1916 and died in hospital on 13th October of that year. Before he went out to the War he had taken the precaution to enter into a disentailing assurance which was necessary for the safeguarding of the interests of members of his family if it should happen that he was detained a long time in the War, or even if he succeeded to the property of which he was heir as the eldest son of Lord Powys. As a matter of fact he died from wounds without ever succeeding to any property, and without this disentailing assurance being of any specific value to those who were primarily concerned. He dealt in that deed with property which would be his in reversion if it should have hap-
  1510
  pened that he had succeeded. He did not succeed, and in the circumstances, therefore, no relief was obtainable under the Killed in War Act, because it only refers to the case of lineal ancestors or lineal descendants. The Act, which gives relief in quick succession, does not apply in this case because there was no succession, but inasmuch as under the Death Duties Act there was a certain interest in reversion passing under this deed his estate became liable to pay Death Duties to the amount of £37,000. Therefore, in addition to the sorrow caused to the family by the loss of the heir, the estate was asked to pay £37,000, although no property had passed to the deceased, who had inherited nothing and who had succeeded to nothing. All that he had done was to enter into a deed for safeguarding certain interests, if the event had happened that the succession had taken place. I have only to state these facts to indicate that this is a hard case.
  I do not desire to say more because the Treasury have to collect the duties in accordance with the state of the law as they find it. When one looks round to see whether there is any relief granted by any Acts I came across the point to which my Clause is directed, namely, that relief given under the Act of 1914 is closely confined to lineal ancestors or lineal descendants. The effect of this deed would be that it would become operative if and when Lord Clive's brother, who now becomes the heir, succeeds to the property. But the brother is not a lineal ancestor or a lineal descendant; he is a collateral. There may be other eases of a similar nature which arise, and without dwelling upon the particular circumstances of the case which brought the matter to my attention I desire to move the Clause for the purpose of enlarging the scope of this Act, as it seems to me quite impossible to leave the relief given to the narrow lineal succession indicated in the Act of 1914. it would be right and proper that a larger scope should be given in order to cover a number of cases which must occur, more particularly as one finds in regard to those who have suffered through the War that in a number of cases where the families are extremely small—very often it is the case of an only son—there must be succession not by any direct passing, but by the property passing to collaterals. My Clause does not adopt a new principle, and it does-not make any direct alteration in the law except so far as to widen the scope in

  1511
  order that the Act at present in force may apply to the larger number of cases, which I am sure hon. Members could illustrate. There are cases which deserve clemency from the Treasury and which ought to be given, because they are quite as deserving of relief as those at present included in the Act, which was passed perhaps too hurriedly in the early stages of the War.
  Mr. BONAR LAW: This is a case where I think a concession might be rightly given. In such a case as the hon. and learned Member has described I am sure the same feelings of sympathy go out as was originally felt in regard to the original enactment in the Act of 1914. I am not sure that the hon. Member's Clause does not go too far. While one has that sympathy as regards a brother, I am not sure that it would apply regarding some more distant relation. What I propose is to put down a Clause showing the extent to which we will go on the Export stage. and perhaps the hon. and learned Member will now withdraw his Clause.
  Sir E. POLLOCK: I accept the assurance of the Chancellor of the Exchequer, for which I thank him, and beg to withdraw the Clause.
  Motion and Clause, by leave, withdrawn.
  The following new Clause stood on the Paper in the name of Mr. ADAMSON:
  NEW CLAUSE.—(Increase of Exemption from Income Tax.)
  Section twenty-one, Sub-section (1), of The Finance (No. 2) Act, 1915, is hereby repealed.
  The DEPUTY-CHAIRMAN (Sir Donald Maclean): I think that this matter was discussed on Clause 20 and a decision arrived at, and if that is so we cannot have it. discussed again.
  Mr. ADAMSON: The Amendment which I moved on Clause 20 provided for a lower rate of Income Tax for small wage earners. It dealt with a particular phase of this question, but this is a new Clause which deals with a larger matter.
  The DEPUTY-CHAIRMAN: If the right hon. Gentleman desires to move it I cannot prevent him, but I am sure that he will not desire to make a speech on it because it has already been covered in the previous Debate.
  Clause brought up, and read the first time.
  Mr. ADAMSON: I beg to move, "That the Clause be read a second time."
  1512
  My object is to restore the old Income Tax limit of £160. In making this proposal I am perfectly well aware that the Chancellor of the Exchequer has provided a certain amount of relief to persons earning small incomes. I am also well aware that he protested against the pressure that has been applied in the Debate last night, notwithstanding the relief which he had granted in certain points, and, but for the fact that I feel very strongly as to the position of the people who would be assisted by the new Clause, I would not take up the time of the House in moving it. I do feel strongly that persons earning less than £160 a year are not able to meet the present high cost of living and provide the necessaries of life, and this can at least be said for the pressure which I am putting on the Chancellor, that those on whose behalf it is exercised include the poorest section of the people, though he complains of it as coming from those who could well afford to pay, and for that reason I will continue to exercise pressure in this House with a view to getting this abatement, and I hope that the matter will receive the sympathetic consideration of the Chancellor.
  Colonel Sir C. SEELY: I would press on the Chancellor to consider this matter as sympathetically as possible, as the old £160 which is proposed in this Clause is really now only the equivalent of the £120 to which it was reduced when the reduction was made.
  9.0 P.M.
  Mr. BONAR LAW: What my hon. Friend said is true. But we have to take all the factors into account. What my right hon. Friend who moves the Amendment really asks is that we should remove existing taxation which affects only the bachelor, without children, and no one else. The position is that a man is not taxed until he earns above £130. Then he is only taxed on what is above £120. Even if he has no children, a married man is not taxed until his income is above £145. If he has one child he does not pay anything until it is above £170, and if he has a wife and two children he pays nothing practically until he reaches £200. I think that my right hon. Friend would do great service, when this subject is discussed amongst those who are affected by it, if he would make them realise that, apart from the rise in the cost of living, they are in a better position than they were before the War, because the sum given

  1513
  for children originally was only £10 and it is now £25; and, in addition, we have given an allowance for the wife and also for dependent relatives, so that, so far as this Government and the last Government are concerned, we have gone a very long way to meet the cases of those who have the greatest claim for relief.
  Motion and Clause negatived.
  NEW CLAUSE.—(Income Tax Assessment on Married Persons.)
  Any individual who claims and proves in manner provided by this Act that he is married shall be entitled to be assessed for Income Tax purposes under this Act in the following manner:

  (1)if such individual is living with his wife and with his children who may be under the age of twenty-one years at the date of the passing of this Act, then his income shall be divided into equal shares, each share being deemed to be the income of the husband, wife, or child;

  (2)if such individual is living apart from his wife then the party having the custody of the children as aforesaid, and who is liable for their maintenance, shall be entitled to have his income treated for the purposes of assessment to Income Tax, as set out in Sub section one of this Section;

  and the amount of Income Tax payable shall be arrived at as though such incomes were separately assessed for the purposes of this Act, and the amount payable by the said individual shall be assessed accordingly.

  The provisions of this Section shall apply to a widower or widow with children dependant as aforesaid.—[Colonel Sir H. Greenwood.]

  Brought up, and read the first time.
  Colonel Sir H. GREENWOOD: I beg to move, "That the Clause be read a second time."
  I believe I am in order in moving this new Clause, which should have been moved a little earlier in the Debate. I am sure that the Leader of the House would be the last Member of this House to curtail the rights of private Members. Further, I must apologise to the Committee and to the Chair for not being in my place when the Clause was called. But the Bill was got through with such rapidity, which is the greatest compliment which could be paid to the Leader of the House, that I am sure the Committee will not deny me the privilege of explaining in a very short speech what I consider one of the most important Clauses on the Paper. This Clause continues logically the principle already admitted by the Chancellor of the Exchequer, that is the giving of a
  1514
  preference to married persons as against bachelors and spinsters in the assessment of Income Tax. The Clause standing in my name, if adopted, would mean that if there were father, mother, and three children in a family, making five units, and the total income of that household was £1,000, under the Clause the assessment would be per capita £200 for each member of the family, instead of £1,000 as it is now. This would be a direct encouragement to the family man, and the family man is unquestionably the man who has maintained the race, and who, above all, in my mind, should have preference in the levying of Income Tax. Let me give a case or two that have happened. First of all, remember that the underlying principle of the Clause I am now moving is that it is an endeavour to assess the Income Tax according to ability of the Income Tax payers to pay. It deals with those who pay Income Tax, and these taxpayers now include a large percentage of energetic, thrifty, and ambitious persons of all classes and of both sexes. It is vital that they should be encouraged to marry and have children. As the law stands at present, there is a direct discouragement of marriage and of parenthood, and a direct encouragement to bachelordom and spinsterhood. I have a case which I should like to bring to the attention of the Committee, a case sent to me a couple of days ago. In. a certain community where there are six doctors, one doctor has eight children, and the other doctors are childless or bachelors. This doctor's income is about equal to the average. One of his boys has gone to the front and has been killed, another is in an officers' training corps; and a third (seventeen) will certainly be in this War. The other five children are youngsters.
  I put it to the Committee whether a man in this position should pay Income Tax at the same rate as his fellow-practitioners in the same locality. You put this burden upon one member of the profession in that community who has done his duty by the State, who has supplied one soldier, and is giving two others from his family, while preference is given to bachelors and childless men as against the family man. I might remind the Committee that this is not the first time this question has been raised. It was a favourite topic of discussion in ancient days, both in Sparta and in Rome. I will

  1515
  merely give a quotation, that may impress the Chancellor of the Exchequer, from the "Daily Telegraph":
  "Males in the ancient city of Sparta who remained unmarried, after a certain age, were regarded as poor citizens, and various penalties were inflicted upon them. While they were still young they were debarred from watching the games of the maidens; and they had periodically to march in the depth of winter, with the scantiest of clothing or none at all, round the market place, chanting a song directed against themselves, and confessing the justice of their punishment."
  I should have all those men who are unmarried go through exactly a similar punishment unless they are serving in the Navy or Army. As the law stands now, and I wish to emphasise this, you are discouraging the continuance of the race. I admit that there would be a loss of revenue if there were not a readjustment of the Income Tax in regard to the bachelor and the spinster, and that it is but justice that what you lose by this per capita system of taxing the family should be made up by increased taxation of the bachelor and spinster. The Chancellor of the Exchequer could increase his revenue by lightening the unfair burden which is now on fathers and mothers, and replacing the deficit by taxing bachelors and spinsters. The present system of Income Tax undoubtedly makes for restriction of families. There is no use denying the fact that constant economic pressure is leading to a decline of the birth-rate, and drying up the sources of the race to which we belong. The Income Tax system particularly affects all classes, who fix a high standard of education for their children, and who deny themselves of everything, work hard, and make every sacrifice for the well-being of their boys and girls. The present burden of Income Tax hits them hard, because they want their children to be well educated and well started in life. I will not for a moment say anything against the bachelor and the spinster, who in many cases are to be commiserated; certainly I am not one to condemn them, but they do not maintain the race, for the family is essential to the progress of civilised races. The greater the burden and the difficulty in bringing up a family, the heavier the penalty on the father and mother. Not only do families suffer through Income Tax assessment as at present levied, but
  1516
  they also suffer through the payment of indirect taxes by every member of the family. The family constantly acts as a drag downwards in economic life as it grows larger, unless the income is very great indeed. The frightful havoc of the War has compelled every person, every thoughtful person, to think of the future of our race. This Clause is a practical suggestion of a way to encourage marriage and parenthood. At present the Income Tax is a heavy penalty on parenthood. It is really cruel to think that the birth of an innocent babe is at present treated by the State as an economic crime in tens of thousands of houses. The future of our race is in the cradle. It is the first duty of the Government to encourage healthy men and women to marry and multiply. The adoption of this Clause would have that effect, and would also relieve parents of the present day of an unjust burden. I commend the Clause to the sympathetic consideration of the Chancellor of the Exchequer, and of the Committee.
  Mr. BONAR LAW: I have great sympathy with this Amendment, but I cannot hold out any hope of being able to accept it now. One effect of it would be that a man with an income of £1,000, and a wife and six children, would pay nothing.
  Sir H. GREENWOOD: Quite right!
  Mr. BONAR LAW: He will realise what a serious blow that would be to taxation. As Chancellor of the Exchequer I have great sympathy with the object which the hon. and gallant Gentleman has in view, but I am inclined for this year to recommend the adoption of the other method suggested, namely, that in Sparta. It would cost the Treasury less, and might have a better effect. As it is, I quite admit that this is one of the aspects of taxation that ought to be considered. We have begun that already, but what we are doing is done in a haphazard manner, but I do quite realise that it is one of the elements in the consideration of putting the Income Tax on a proper basis. I hope that with this expression of sympathy my hon. and gallant Friend will be satisfied.
  Motion and Clause, by leave, withdrawn.

  FIRST SCHEDULE.
  Part I.—Ordinary Customs Duties on Spirits.

  —

  In Cask.

  In Bottle.

  £

  s.

  d.

  £

  s.

  d.

  For every gallon computed at proof of spirits of any description (except perfumed spirits. brandy, or rum), including naphtha and methylic alcohol purified so as to be potable and mixtures and preparations containing spirits

  1

  10

  5

  1

  11

  5

  For every gallon of computed at proof of brandy or rum

  1

  10

  4

  1

  11

  4

  For every gallon of perfumed spirits

  2

  8

  4

  2

  9

  4

  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

  £

  s.

  d.

  2

  1

  11

  Amendments made: Leave out the words "or rum" ["perfumed spirits, brandy, or rum"], and insert instead thereof the words "rum, or the spirits next hereinafter mentioned."
  After first paragraph, insert,

  "For every gallon computed at proof of all unsweetenc spirits, other than brandy, rum (including imitation rum), and geneva

  £

  s.

  d.

  £

  s.

  d.

  1

  10

  5

  1

  10

  5"

  After the word "preparations," insert the words "in bottle.—[Mr. Bonar Law.]
  Schedule, as amended, ordered to stand part of the Bill.

SECOND SCHEDULE.

  TOBACCO.
  Part III.—Rates of Drawback.

  £

  s.

  d.

  Cigars

  the lb

  0

  9

  3½

  Cigarettes

  the lb.

  0

  9

  1

  Cut, roll, cake or other manufactured tobacco

  the lb.

  0

  8

  10

  Snuff (not being offal snuff)

  the lb.

  0

  8

  7

  Stalks, shorts, or other refuse of tobacco (including offal snuff)

  the lb.

  0

  8

  4¼

  Amendment made: Leave out "8s. 4 ¼d.," and insert instead thereof "8s. 4 ½d."— [Mr. Bonar Law.]
  Schedule, as amended, ordered to stand part of the Bill.

THIRD SCHEDULE.

  SUGAR, ETC.
  Part II.—Drawbacks and Allowances.

  (2) EXCISE DRAWBACKS.

  £

  s.

  d.

  C.—Drawback is to be allowed in any other case on articles liable to the Excise Duty exported or shipped for use as stores, if it is shown to the Commissioners of Customs and Excise that the Excise Duty has been duly paid

  According to the amount of Duty paid

  Amendment made, leave out the word "is" [" drawback is "].—[Mr. Bonar Law.]
  Schedule, as amended, ordered to stand part of the Bill.

FOURTH SCHEDULE.

  ENACTMENTS REPEALED.
  Session and Chapter.

  Short Title.

  Extent of Repeal.

  52 & 53 Viet, c. 7

  The Customs and Inland Revenue Act, 1889

  Section three

  Amendment made: Leave out paragraph 52 and 53 Vict. c. 7.—[Mr. Bonar Law.]
  Schedule, as amended, ordered to stand part of the Bill.
  Bill reported: As amended, to be considered upon Monday next, and to be printed. [Bill 45.]

  SMALL HOLDING COLONIES (AMENDMENT) BILL.
  Considered in Committee, and reported without Amendment.
  Motion made, and Question proposed,
  "That the Bill be now read the third time."
  Sir H. GREENWOOD: As one who takes the keenest interest in the settlement of the country and the system of small holdings or holdings large enough to contain a family, I want to make a protest against this belated act of the Government in introducing a Bill which, to my mind, is farcical, first, in the area of the land which it contemplates to deal with, and, secondly, in the fact that it is not intended to

  1519
  purchase the land, but the Department of Agriculture will be restricted entirely to leasing. From what one knows of the United Kingdom it is very difficult to lease land on terms that will give the settlement of small colonies the slightest prospect of real success. I deplore that now, nearly four years after the War started, the Government has not been able to provide for the settlement on the land of the country of discharged sailors and soldiers, now numbering about half a million, to a greater extent than they have done. We had it from the Vice-President of the Board of Agriculture the other day that only twenty-six discharged sailors and soldiers have yet been settled on the land of Great Britain, and yet in this morning's paper we have a Proclamation of the Viceroy and Commander-in-Chief of Ireland in which he says that Irishmen who have joined the forces since the outbreak of War—I am paraphrasing his Proclamation—and who will join it will be given land in Ireland, and by a grant of land I presume it meant a freehold grant of land. The point I want to put to the President of the Board of Agriculture is this: Why this discrimination in favour of Irishmen who, in the fourth year of the War, must be coaxed to do what everybody admits is the paramount duty on the part of every citizen of the United Kingdom and of the Empire? What of the millions of gallant Welshmen, Englishmen, and Scotsmen who have been soldiering since the early days of the War, and who will continue to the bitter end? I know of no apple of discord that could be thrown into the Armies and Navies of Great Britain that is more apt to cause grave discontent among fighting men than this most inept and, I think, futile Proclamation of the Viceroy of Ireland. Here we have a single sheet of Parliamentary Paper with the smallest and most inadequate Bill in reference to land that has been introduced since the War in any Parliament of the British Empire. Every Parliament has dealt with the settlement of the land. In Canada, which is as generous towards its soldiers as its soldiers are brave—but no braver than the gallant lads from this country— there is given to every discharged soldier, and there will be given to every demobilised soldier, 160 acres of freehold land, with an advance of £500 at 5 per cent. to start on, and the Imperial Gov-
  1520
  ernment offers to the millions of her sons this shabby sheet with this miserable Bill promising to lease, which they know they cannot do, a few thousand acres of land for the resettlement of millions of men who have fought and been mutilated, and who will fight and be mutilated by the hundreds of thousands before this War is over, for the very land that is denied them. There is not a soldier now fighting who can say, in the trenches on any front, "I am going to get one single rood of my native country." An Irishman will be able to say it if he has the pluck and patriotism to join up under Lord French's Proclamation, but the soldiers and sailors of the United Kingdom cannot feel, and the Government is to be condemned for that fact, that they are literally fighting for their native land. I feel very strongly on this question, and I certainly hope that the Government will rise to their great responsibilities and not treat British soldiers and sailors worse than Irish soldiers and sailors, and worse than they are treated by any part of His Majesty's Dominions.
  Mr. P. A. HARRIS: I think we ought to be thankful for small mercies, for, although this Bill does not by any means sufficiently grasp this big problem, it is an experiment in the right direction. I do not think the Government can go away with the idea that they have fulfilled their duty in dealing with the provision of land for our soldiers who have been fighting. This is purely an administrative Bill, an extension of an Act already passed, just giving them the power to acquire a larger acreage of land. What, however, makes us a little suspicious of this measure is the failure to take adequate advantage of their old powers under the Act, of which this Bill is an Amendment. I asked a question before this Bill was introduced about the number of soldiers who had been already provided for, and the House was astonished to find that only twenty-six men had at present been settled on the land. Now, I am afraid, quite apart from what the hon. and gallant Baronet has just said, that the Board has not put such enthusiasm into acquiring land and encouraging facilities to soldiers as they might have done. If this Bill is in any way effectively to deal with the subject with which it sets out to grapple, greater publicity must be given to soldiers in the Army and soldiers who have left the Army, to the fact that the Government

  1521
  desires to give every facility for soldiers to acquire land. I think if it is going to be a success, it is necessary to get the active co-operation of the local authorities in all the counties. The Small Holdings Committee, which exists in every county, should be asked by the Board of Agriculture to take an active part, first, in finding what land is available, and, secondly, in finding if there are any discharged soldiers who are land-hungry. If the Small Holdings Committees, by experience, do not prove a competent authority, then the Board of Agriculture should ask the new agricultural commit tees, which are in every county, and have a very intimate knowledge of the suitable land, because they had to survey the agricultural condition of the whole country, to report on the whole subject, and when they come across land which has not been properly cultivated by existing holders, they might very well put up suggestions to the Board as to the acquisition of that land.
  I understand the Board intends rather to depart from its previous policy, and to go in for smaller holdings, and acquire not only in a particular area three or four estates, as in the past, but to acquire a great number, and I certainly think they should aim at having some kind of estate in every county throughout the country which should be a model of how small holdings should be run, which should be the centre of co-operation, and it should, if possible, provide in a dairy county for a co-operative dairy, and be a centre of agricultural experiment for the area. There is one thing, I think, the Board of Agriculture should do. It should arrange both with the local pension authority and with the War Office that every soldier should be asked if he desires to go on the land. There is a very general idea that these facilities are largely to be provided for townsmen. I think that is a very secondary matter. What we want to do is to get the agricultural labourere who has gone into the Army back to the land, and he is not going back to the land merely to become an ordinary labourer at a very narrow wage. The Army will have broadened his vision, and if he does not see one or two things —a prospect of getting greater independence and higher wages, or, alternately, the possibility of acquiring land— he is almost certain to emigrate to the Colonies, where they are offering him such great prospects and so many oppor-
  1522
  tunities of acquiring land. So that I would say to the Board of Agriculture, they should try to get the active cooperation of the military authority, and the pension authority, as men are discharged, to make clear to them the opportunities the Board are prepared to give, and they should be supplied with an application form to state whether they are prepared to go on the land. This becomes all the more important, because, when the War is over, we shall be faced with the difficulty of absorbing the industrial population. There will be shortage of capital, shortage of raw material, and the ordinary normal industries will be dislocated, but if, in the meantime, we have drawn back a large part of the men in the Army who came originally from the land, who are agricultural labourers, by the prospect of acquiring land on reasonable conditions, you will have done a considerable thing towards assisting the problem of reconstruction and solving the industrial problem.
  Mr. C. HARMSWORTH: I, like my hon. Friend, who has just resumed his seat, am disposed to be thankful for small mercies, and all the more so because this particular mercy is at least ten times as great as that bestowed two years ago. During the passage of the original Bill, I was one of those who very frequently criticised it, on the ground that it was absurdly inadequate to the purpose that this House at that time had in view. I am not prepared to say that the multiplication of the acreage then provided for by ten goes any considerable distance to meet what I regard as a great national need, but it is a greater provision, and for that we may be thankful, and I think we must remember that if you are going to experiment in small-holding colonies you had best not provide too great an area of land for the purpose. I have said on many occasions in this House that I do not know why my right hon. Friend and his colleague, the Secretary for Scotland, had embarked on this series of experiments. Small holdings are not in the experimental stage, although it may be true to say that small holdings, especially if largely created for soldiers and sailors, have many experimental features about them, but I should like to think that, concurrently with the operation of this Bill, when it becomes law, my right hon. Friend would be able to revive the now dormant powers of the county councils under the

  1523
  Act of 1908. I am aware, of course, of the great financial difficulties of this time, but we must not forget that this Act alone, as I work it out, will cost the Treasury some £3,000,000, if not more, and I should have preferred myself, although I am not opposed to the acquisition of land be the Board of Agriculture and Fisheries, to see that money put at the disposal of the county councils for the purpose of continuing their very useful activities in the direction of providing small holdings. The House is well aware that many counties have done extremely well under the powers of the Act of 1908. In particular this applies to Cambridge, Norfolk, and Devon, and—having regard to its size—the county of Bedfordshire, a portion of which I have the honour to represent here. I hope that even under this Bill, and even if my right hon. Friend finds it impossible to revive the dormant powers of the county councils, that he will yet find it possible, as the last speaker has suggested, to place these colonies, or, I would prefer to call them, groups, in the counties, and to give them a particularly and special county character.
  I should like to think that under this Bill there would be a Devonshire colony, or rather several groups of small holdings called the Devonshire and the Bedfordshire groups, and so in the other counties; because we must not forget that a great number, perhaps by far the larger number of men, who return to the land will be men who will want to go back to the neighbourhood and the locality which they know and with which they have been associated. I have reason to suppose that already in connection with the one or more colonies that have so far been established, one or two, at least, of the men have already begun to feel that they are in a countryside they do not know or understand, and they wish they could be given facilities in their own county. I have no wish to criticise this Bill. I welcome it. But I would take this occasion, as I have taken others, to impress on the Treasury Bench the importance of taking a much larger view of this whole question. I am told that those of our men at the front who have any disposition to go on the land are coming back to us expecting to find the land provided for them. I think that they will make their voices heard in a very emphatic way about that. It will be much more gracious, I think,
  1524
  and would exhibit better our gratitude, if we made generous and ample provision for them before they return from the front. Since all transactions connected with the land are of necessity slow and laborious, we cannot afford to lose any time. I will only say that I welcome this Bill as a very small instalment of the discharge of our duty, and I trust my right hon. Friend and his colleagues will remit no effort, and will bring every kind of pressure to bear upon the Government, to see that this great question is settled in a national way.
  The PARLIAMENTARY SECRETARY to the BOARD of AGRICULTURE (Sir R. Winfrey): I am grateful to the two last speakers for their helpful criticisms. The last speaker said we could not afford to lose any time. That is the reason for this Bill. Whilst the Government are thinking out a much larger scheme—really a national scheme—we have thought it advisable to bring in this little Bill in order to have something to be going on with. I am glad to have it welcomed in that spirit. I quite agree in regard to giving the county council back its powers under the Small Holdings Act of 1908. The Board of Agriculture have pressed that point more than once on the Treasury. I still hope that ere long we shall be successful in persuading the Treasury to allow the county councils to resume their borrowing powers under that Act of Parliament. Until they do so this Bill, at any rate, is something to be going on with. In regard to the criticisms and suggestions of the hon. Gentleman (Mr. Harmsworth) as to giving facilities, we have already, I may say, taken steps to approach both the Pensions Committees and the War Office, and we are having leaflets printed which will be placed in the hands of every discharged soldier, and also in the hands of pensioners. This, of course, is only an enabling Bill, enabling the Board of Agriculture to lease land and to establish these colonies. We seek also the co-operation of owners who are willing to lease land and to let us have it on a rent charge. I am very hopeful we shall find such landowners up and down the country. At any rate, the Crown authorities, and probably the Ecclesiastical Commissioners, will lease us land and help us to continue our work. I should like to add, with regard to the fact that we have only at the present time twenty-six men upon the land, that it must be remembered that the Bill passed two

  1525
  years ago only provided for four colonies, two of which we have not yet got possession of. When we get buildings erected and more men there we believe they will be successful, and that the men will show what they are able to do on these small holdings I can assure the House that we will use our best endeavours to put this enabling Bill into operation as speedily and as satisfactorily as possible.
  Mr. HOLT: I must say that I think this class of legislation is entirely wrong. It is a very great pity that the Government should take up the time of the House and spend a great deal of public money in messing about things which they had much better leave alone. We shall have every need after the War to bestir ourselves in every possible way to restore our economic prosperity, and there cannot really be any doubt that every man who is worth anything, and is capable and willing of doing any useful work, will get as much employment as he likes without interference from the Government. I believe the only thing that will happen, as the result of this class of legislation is, first of all, a certain number of persons will get salaries from the State for acting as members of a Government Department; and, secondly, a considerable number of persons will, at great public expense, be employed in doing something exceedingly badly. We shall find men put on the land who are quite incapable of making profit out of it. They will be doing that at a time when it is the more necessary at any other time in the national history that men should be engaged to the full economic advantage. The object of this legislation—nobody can possibly imagine other in the case of legislation of this kind—should be that the persons intended to be put on the land are those most likely to produce the best economic results. If that were the case those who paid the greatest rent would get the land, and the whole problem would solve itself. As long as I have the honour to be a Member of this House I shall go on protesting against all this false and wrong political economy. It stands to reason that it is wrong. There seems now to be a desire to set up Government Departments in order that Ministers may say, "See what I have done!" They make grand speeches, and people listen to them with amazement and pleasure, and then it turns out a few years later that they have done nothing but dissipate a large amount of public money. I protest against this
  1526
  measure, and whenever any similar measures are brought forward I shall do my best to oppose them.
  Mr. D. MASON: I often find myself in agreement with the hon. Member who has just spoken, but on this occasion I do not agree with the speech he has just delivered. The hon. Member did not offer any direct criticism of this particular measure. I have no delusions as to the wealth-producing qualities of those settling on the land. I will examine some of the statements made by the hon. Member for Hexham (Mr. Holt). He said that after the War there would be a vast number of people who would find any amount of opportunities for employment, and he argued that to take people from a profitable industry and put them to unprofitable work would be an unsound procedure. Does anybody think that when this War is over you are going to have a great demand for labour? Does he not believe that after the War you will have a vast mass of people thrown upon the labour market seeking employment in every direction when the Army has been demobilised. Does he suggest that all these people will be provided with jobs here, there, and everywhere, and that there will be a tremendous demand for them? History gives the lie to such a conclusion. If the hon. Member studies the history of the great wars of the past he will surely find that after any war of this character you have a shortage of capital and a great surplus age of labour.
  Mr. HOLT: Surely the hon. Member will admit that during the years immediately after a war there has usually been a good state of employment, and that there will be a great demand for labour after this War to make good the material damage of the War, and in this country, where we all know structural work is falling into disrepair, it will be necessary to make good the wear and tear.
  Mr. MASON: There may be a considerable demand for labour for a time, but those who study the history of past wars invariably find, after a war of great impoverishment which the war entails, a great depression and a surplus of unemployed labour. The hon. Member for Hexham is far too good a political economist not to agree with that conclusion; in fact, it is a conclusion that any student of ordinary history would arrive at. I think the Government are to be congratulated upon

  1527
  this Bill, for it is a measure to meet a condition of affairs which is likely to arise. The hon. Member for Sunderland criticised adversely this measure, and he drew an analogy between this country and Canada. Everybody knows that there is no analogy to be drawn between those two countries. This Bill is merely an instalment of a greater measure, and we ought to welcome it as the foundation of something to meet a state of things that is likely to arise after the War, when you must find some outlet for the energies of the great number of men who will necessarily be unemployed, and who will not find that multiplicity of occupations which the hon. Member seems to think will be presented.
  I think we, as the trustees of these people, should do something to enable them to obtain an honest and a useful living. One hon. Member quoted the Canadian analogy, and he said that the Canadian Government, in addition to providing opportunities for settlement on the land, also provided them with a certain amount of capital. I think we ought to bear that fact in mind, either by establishing agricultural banks or making advances upon easy terms. It is no use giving men land without a certain amount of capital to develop and work it, and in the measure which we have been promised for placing a greater number of people on the land, I hope some provision will be made for advances at such a rate of interest as will enable those who are placed upon the land to have a fair chance of making it remunerative. In making that suggestion, which I hope will be considered favourably, I congratulate the Government on this measure, and so far as I can render any assistance I shall do so. I welcome this measure and I offer it my hearty support.
  Mr. WING: The Bill before the House reminds one of the difficulties the Government have to face in the variety of speeches which have been made. The hon. Member for Sunderland commenced the Debate by pointing out that this was an inefficient sort of measure, while others commended it, and the hon. Member for Hexham thinks the Bill is entirely superfluous. This only shows that the Government must strike out on lines for themselves, and determine whether something is needed or not. I have not much faith in the policy of
  1528
  allowing things to take their own course, for we have had far too much of that kind of thing in the past. I commend the Government for taking the line they have done, and I regret that they have not done more.
  I think the suggestion that the Ministry should enlarge the powers and responsibilities of county councils, so as to arouse that county patriotism in which there would be a healthy rivalry between one county and another, and in which you would carry out that local feeling which ought to be promoted, is worthy of consideration. I hope that the Government will see that this is done. In relation to the management of these estates, it is suggested by the hon. Member for Coventry (Mr. Mason) that capital should be provided. On this subject I have every faith in the Minister for Agriculture, who is an authority, and he is assisted by other agricultural experts, and I think they will realise all the various necessities of Government aid and they will be equal to the occasion. I congratulate the Government upon this measure, and I hope that some of these small colonies will come towards the county of Durham, where we have a number of very willing workers.
  Captain Sir C. BATHURST: I do not feel justified in opposing the Third Reading of this Bill, although I cannot help feeling that the Government are moving along the wrong lines, if they mean to settle a large number of our ex-soldiers on the Motherland with the greatest satisfaction to themselves and the most economical expenditure. I cannot imagine myself opposing the principle of such a Bill, because, undoubtedly, we ought to afford every facility to enable those who are really properly equipped to cultivate a portion of their motherland. I say that with all the more emphasis because there has recently passed through this House the Emigration Bill, which affords facilities to men who are prepared to cultivate agricultural land to go abroad in order to do so, thereby removing from this country at a time when we require those men more than ever we did before a very important element in the body politic. [HON. MEMBERS: "It is not passed yet!"] I am. adopting the attitude which the hon. Member opposite would have us adopt, that it is almost unpatriotic to oppose any Bill which the Government puts forward with a patriotic motive. I do deprecate this attempt to centralise the administra-

  1529
  tion of small holdings. We have already, all over the country, a large number of bodies who are amassing a vast amount of experience in the acquisition, cultivation, and equipment of agricultural land, and who know the conditions better than any Government Department can possibly know them. I am sure that the inclination of the bulk of these men will be to settle in the neighbourhood of their own homes, if only facilities are afforded to them to do so. I understand that the President of the Board has been making and is making appeals to the Treasury to revive the powers of the local authorities. I hope that he may be successful. I should like to remind him of one great handicap from which he suffers and from which they do not suffer. Under certain circumstances, they have very considerable powers of compulsion in the matter of the acquisition and cultivation of land. I know from experience that the great difficulty that has faced and will face the Board of Agriculture is this very lack of the power of compulsion in order to acquire the land which they want now in a much larger quantity than at any time previously. That power of compulsion can be exercised and is exercised with far less feeling of grievance by county councils than it can be exercised by the Board of Agriculture.
  I am bound to say that the farmers did not show themselves any too ready to be dispossessed of the land which was taken under the original scheme. Now the area is to be multiplied by ten. I cannot conceive how you are going to persuade farmers in these days, when the equipment of their farms represents a far larger amount of capital than it did two years ago, to leave these farms to be re-occupied by another body of men altogether without throwing an enormous charge by way of compensation upon public funds. I rather hope that it may yet be possible to induce our fellow legislators in another place to introduce an Amendment which will, at any rate, enable local authorities to act as the agents of the Board of Agriculture in carrying out these duties not only of the acquisition but also of the equipment of land, and more particularly of the settlement of men of whom they have full local knowledge upon land where they would be most likely to be settled. There is only one other observation that I want to make. The Government to-day have the opportunity to remove a serious blot from the face of this country, with great economic advan-
  1530
  tage to the country, and without at the same time disturbing any sitting tenants. I refer to the reclamation of the very large area of land which is open to be reclaimed, which can be reclaimed with the help of German and other labour, and which can be made commercially remunerative as the result of such reclamation. Had I been in my place earlier I should have liked to have moved an Amendment in favour of the Government proceeding along the lines of reclamation rather than the disturbances of sitting tenants in carrying out this enlarged scheme. I think the House ought to pass this Bill, but I hope, in passing it, it will agree that the power of the county councils ought to be revived concurrently, and, if possible, that they should be made the agents of the Government in carrying out this further effort of land settlement for our ex-soldiers.
  10.0 P.M.
  Mr. BOOTH: I rise to make a somewhat more modest point, to which I made reference on the Second Reading. I regret that the Minister in charge of the Bill did not give us an opportunity of putting our points before he rose. It is true that he gave me some information not reported in the OFFICIAL REPORT and unfortunately not in the records. As far as I read the Bill, it says nothing at all about soldiers and sailors, and I think the hon. and gallant Member for Sunderland (Sir H. Greenwood) went astray and rather misconceived the Bill as an attempt to cope with the after-effects of this War, whereas the President of the Board of Agriculture gave us to understand that it is a modest beginning, by the way, and that when the Government deals with the replacement of those who have fought at the front we may expect a more ambitious measure. I do not see any mention whatever of soldiers and sailors, and therefore I put forward my plea on behalf of those who are under the charge of the Sanatorium Committees under the Insurance Act. It does seem to me that it would be very convenient to use this Bill for establishing at any rate one colony in order to cope with that terrible evil. I do not ask that it should be the dominant thing. I am only pleading that a beginning should be made with those who suffer from this terrible scourge. It may be that a beginning will be made with returned soldiers, but I hope that will not mean entirely those who have been to the front, because it

  1531
  is well known that many men have developed the disease of tuberculosis during training, and have been returned broken to civilian life to come upon the funds of the approved societies. If it is interpreted in that larger sense, I have no objection, and I do not think the approved societies would have any objection, to the experiment being made with men who have left the Colours, though I do not see why, as it is a general Bill and as the general taxpayers will have to support it, it should be made a necessary qualification for a tenant upon these colonies that he should have been in the Army. It is not merely that there is additional tuberculosis in the country through the operation of the War, but many of the people who have gone into the factories and munition shops and are working longer hours will in a short time decide—some of them have already decided—that the land is a much healthier place for them to work, and there will be an increasing number of them looking forward to an establishment such as this Bill sets up.
  A great deal of the money now expended is wasted; the men who get the treatment, even more than the women, have no resources; they are not well educated, they have no taste for reading, and they lack occupation. If they had some responsibility, some actual work to do, it would largely assist in their recovery. The hon. Member for Coventry (Mr. D. Mason) mentioned the necessity of having a little capital, and suggested that unless the Government were prepared to do something in that direction probably a large part of this scheme would prove inoperative. There is a good deal to be said for that. But in the cases of which I am speaking many men have a small capital. I have cases before me of men who have been through the sanatoria under the National Health Insurance Act; they are a superior kind of working men, superior, that is to say, in the sense of wage-earning; they have saved money and got a little bit of property, and they would be willing to provide a couple of hundred pounds, it may be, in order to get a place in one of these colonies where they could have decent neighbours and batter chances of recovery. They could have, for instance, their families with them, and they certainly would be doing better living in the open-air than if they were in smoky surroundings. I am not suggesting that the whole of the colonies should be de-
  1532
  voted to this purpose; I am only pleading that a start should be made with one of them. I understand there is already one man in one of the colonies who was a tuberculous patient. All I am asking is that you should set apart for this work one colony, where thirty or forty people could be treated. By doing so you would contribute a great deal to the solution of the health problem which sooner or later we shall have to face in this House, because this disease is becoming a. terrible scourge. Further than that, it would be possible to secure better medical attention for these patients if they were all congregated in one colony they would be a help to each other, there would be co-operation, and, from inquiries I have made, I am assured that it would be possible to secure the right kind of individual. Surely the working man is entitled to the same chances of recovery as the rich man gets; but, unfortunately, the cures in these cases are nearly all confined to rich men. It is proved beyond question that the bulk of the money spent on the working classes does not result in cures. I am confident Members of the Labour party will realise that they have an obligation not merely to their members while at work but to those who are broken down in health. I merely ask for a small experiment to be tried, and I press upon the Government the desirability of enabling the Board of Agriculture to add one more laurel to those which it has already earned by endeavouring to help these people.
  Sir G. NEWMAN: The Minister who-has spoken on this subject expressed a hope that the time would come when the county councils would exercise 'their powers to borrow money in order to increase the number of small holdings. Speaking as a member of the Devonshire County Council, with an experience of some years, I want to point to a defect in the powers possessed by county councils at the present time, and to suggest that the Government should if possible, by legislation, provide a remedy for that defect. Under the present system county councils have power only to lease the land and the result is that the small holder who takes a holding under the county council has to pay the purchase money for the land and then at the end of so many years when the land has been bought, instead of it becoming the property of the smallholder it becomes the property of the county council although the tenant has had to pay to the sinking fund all the

  1533
  time. That seems manifestly unfair. Surely the man who has found the money for the sinking fund ought either personally or by his successors to enjoy possession of the land. I hope that any concession that may be made in the future will be in the direction of enabling these small men to become possessors of the land in due course.
  Sir C. SEELY: I rise to support what was said by the hon. Member for Wiltshire (Sir C. Bathurst) with regard to this Bill. With him I hope that, in its administration the Board of Agriculture will not interfere with the very valuable work done by the county councils with regard to small holdings. I speak with a certain amount of uncertainty because on the face of it the Bill gives one very little information indeed, as to what are the intentions of the Department, what are the objects with which the land is going to be obtained, and in what manner the Bill is to be carried into operation. I take the value of small holdings to be that they are stepping stones by means of which a man who is already an agricultural labourer can rise to the position, first, of a small farmer, and then go on to the larger farm and to those other positions which are open to those engaged in agriculture. That object is provided for by the Small Holdings Act, for which the county councils are responsible, but I am a little afraid from the use of the word that these "colonies," as they are called, will not meet the same purpose. I trust that the Department will see that in carrying out this Bill it interferes as little as possible with the work of county councils in providing small holdings. I say it emphatically, because however much they may wish not to do so in practice, when a large Government Department starts a work of that kind they are apt, according to my experience, whether they wish for it or not, and whether outside people wish for it or not, to gather up to themselves the whole of the work and to interfere very seriously indeed with the activities of all other persons. The only other subject I should wish to mention with regard to it is that one of the several Members who have spoken has referred to the question of those who have fought for us and who are returning home, and finding work for them. I really do hope that the Government and the Board of Agriculture will not think that anything that can be done in that way will be at all adequate or
  1534
  valuable for our soldiers when they come home. As a matter of fact, I do not think that you will require any great Government provision on the ground of want of employment. Nearly all the men who went away went away from an actual job in which they were engaged, and when men are back I am afraid we shall find that the men who do not come back for their jobs will be more in number than the number of jobs which have vanished in the course of the War. Therefore I do not foresee any great want of employment or any necessity for any great interference or action by the Government to deal with that question.
  There is, however, a question on which, I think, there may be very considerable desire and feeling on the part of the men, and where the Government might help them. That is this: There axe many men who have gone away from the towns, who, after they have lived in the open for three or four years, will not wish to go back to town life. There are many men who will want to lead a freer and more open life than they have done. The proper thing for those men to do, and the thing which it is worth their while to do, is to go out into the great open lands of the Empire and to help and assist our old Colonies and found new Colonies, as their fathers have done before them. They are not the men who want to lead the life of the small holder who is climbing up a Ladder, from the bottom of which he started as a boy. The life of the small farmer in England is hard compared to that of the townsman. It has not the amusement of the townsman It has not the recreation or the companionship which the man in the town has been accustomed to, and when a man gives all that up and goes out into the country he wants to have what he has in the Colonies and America, and the great open countries of the world, the prospect that if he leads a rather hard, troublesome, and lonely life for some years he has a chance of leaving to his family in the future a really valuable property—a chance of great gain and advantage, and of raising himself and his family to a totally different position from that which is his chance in the older and more crowded countries.
  That is the real object we should lay before ourselves when we talk of our soldiers who wish to go on the land, and to give up town life and go into country life. That seems to me, not only front

  1535
  their own point of view, but from the point of view of the Empire as a whole, the really valuable work the Government might do, and I do hope when we see this Bill taken that it is not going to be used in order to try and induce men who would do good work for themselves by farming in Canada, or Australia, or places like that, who have been townsmen and want to go on to the land, to refrain from doing it, and the Government not to assist them in doing what might give them a great opening in life and be of value to the Empire, but instead to come here living on a little small holding, for which there are plenty of capable people who have not the energy, the youth, or the knowledge which the others have gained by an open life during the four years, and which will enable them to make a success of work in a foreign land. For that reason, although I welcome this Bill for what it is worth, and I hope the Department will listen to the two suggestions that have been made to them—one by the hon. Member for Wiltshire, that they should devote themselves largely to reclamation, and the other by the hon. Member opposite (Mr. Booth), whose advice, I think, was valuable in view of the fact that those people who suffer from tuberculosis and ought to go on the land have undoubtedly, in certain classes, great difficulty in doing it—and that for purposes of that kind, small modified purposes, I think it may be valuable. To think that anything of this kind can be of any really great value seems to be very misleading, and I am a little afraid it may draw the Government and the country off from what I feel sure is one of the great prospects of the future— that is, a great increase in our Colonies and a large and valuable number of men who will make a great future out there in consequence of the knowledge of open life which they have acquired in this War, whenever it shall happily end.
  Mr. PRICE: I do not intend to follow the last speaker into the question whether or not after the War there will be many unemployed persons. He appeared to lose sight of the fact that at present we have 1,500,000 women employed in this country, and a big problem will arise when peace is declared. I am not so sure that there will not be a great amount of unemployment. I am glad to see the Secretary for Scotland here, because I want to suggest to him that it is not a
  1536
  wise policy to have these large colonies established in different parts of the country. It would be far better to set up these men in small farms all over the country, instead of placing them in colonies. Many of these men will be suffering from physical disabilities. In Scotland, I understand, three estates have been purchased. It would be wiser if a lease of a large farm falls in, to make some, arrangement to secure that farm and split it up into two or three small farms, because the neighbours would be only too glad to help these wounded soldiers in carrying on their farms. In many cases the men would be wounded or disabled, and it would be less difficult for them to obtain assistance in such areas than it would be if they were scattered all over the country in large colonies. What we have done in this direction so far has been a lamentable failure. It is nothing short of a scandal that, after we have been engaged in the War for four years, so little provision has been made for the men returned from the War. The suggestion I make is an administrative one, and if it is carried out it will go a long way to secure the object the Government have in view.
  Major DAVIES: There is one matter in regard to this Bill to which I ventured to draw the attention of my right hon. Friend on a previous occasion, namely, that the Board of Agriculture should get into touch with other Departments of the State which are also interested in the matter. The Ministry of Pensions has also elaborated a scheme for the training and treatment of discharged soldiers, and the Insurance Commission and the Local Government Board are interested in the treatment of discharged men suffering from tuberculosis. They should collaborate with other Departments and endeavour to find out how far this scheme which they have foreshadowed in this Bill can be fitted in with the activities of the Minister of Pensions, and possibly other Departments which are interested. It is proposed to train discharged men in these training centres, it follows that it will be very difficult to persuade them to undergo all this training unless the. State is also prepared in some way to guarantee that they will be planted out on small holdings afterwards, and will be provided, either by the formation of credit banks or in other ways with the necessary capital. I know something of schemes which have

  1537
  been already started in endeavouring to provide training in market gardening and other occupations for discharged men, and the difficulty is that they will not go to these centres unless they have some security that, after they have gone to the trouble of leaving these trades and occupations small holdings or market gardens and stock and plant will be available for them.
  With regard to the question of tuberculous soldiers, hundreds and even thou sands of men have already been discharged who ought never to have been admitted, and the number is increasing day by day and month by month, and when public money is going to be spent, at least one scheme should be provided to deal with this class of case. There is a great advantage in segregating the tubercular populace as far as possible securing that a tubercular man who leaves the Army may not become a source of infection to his wife and family. That can only be safe guarded by making provision for his training in one of these training centres, which should be in as close proximity as possible to a sanatorium, so that medical advice, assistance, and supervision will always be forthcoming, and having received training there should be suitable occupations for these men, because the incidence of the disease follows very largely the kind of occupation in which these men are engaged, and a great deal of money is undoubtedly frittered away at present because the patients go back to their old occupations and their old environment instead of being provided with healthy homes to live in and healthy occupations which are suitable to the kind of disease from which they are suffering. Therefore, from a purely business point of view, and the point of view of the State, it is in the interest of the Board of Agriculture, the Government, the Insurance Commissioners, and the Local Government Board to put their heads together and produce a complete and comprehensive scheme which will pro vide not only for the treatment but also for the training and eventually for the actual work and industry in which these people are engaged, and capital so that they may be able to make the most of the remainder of their years. I ask my right hon. Friend to consider this question in that light and, so far as possible, collaborate with other Departments of the State which are also interested in it
  Sir F. BAN BURY: I do not want to discuss the question whether this Bill is going to do any good; I rather doubt it. I want to know what is the actual meaning of the words:
  "Provided that where land which is to be acquired for the purposes of the said Section one could not, if this Act had not been passed, have been acquired for that purpose without making the total area of the land for the time being so acquired exceed the amount authorised to be so acquired, the land shall not be acquired otherwise than by taking the same on lease or by purchasing it on the terms that payment shall be made there for by way of a rent charge or other annual payment."
  This seems to be extremely confused. I do not gather what is meant. I see the hon. Member for Wiltshire (Sir O. Bathurst) is a little amused. Perhaps he can explain the Clause. The only meaning that I can see is that the Board of Agriculture will be authorised to acquire any amount of land, provided they rent it instead of purchasing it. I do not know whether that is so.
  Sir R. WINFREY: The principal Act gives us power to purchase as well as to lease. This Bill only gives us power to lease and not to purchase. That is the legal way in which it is put.
  Sir F. BANBURY: I think that this Bill gives the power to increase the acreage from 4,500 to 45,000, from 2,000 to 20,000, and from 6,000 to 60,000. Is that to purchase?
  Sir R. WINFREY: To acquire.
  Sir F. BANBURY: You do not propose to acquire without payment?
  Sir R.WINFREY: No.
  Sir F. BANBURY: Then that is purchase. Apparently you are able to lease an unlimited quantity of land. Is that so? It is very confused. We are fortunate in having the presence of the Scottish Law Officer (Mr. Munro). Will he give his opinion upon this Clause? I should be prepared to accept his opinion in regard to English law.
  The SECRETARY for SCOTLAND (Mr. Munro): It so happens that I am not the Scottish Law Officer. I happen to be Secretary for Scotland, not Lord Advocate. The right hon. Baronet has confused the office I now hold with the office which I formerly held. I quite confirm what was said by my right hon. Friend beside me, and I have nothing to add.
  Bill accordingly read the third time, and passed.

  EMIGRATION [EXPENSES].
  Considered in Committee.—[Progress, 3rd June.]
  [Sir D. MACLEAN, Deputy-Chairman, in the Chair.]
  Adjourned Debate resumed on Amendment to Question (3rd June),
  "That it is expedient to authorise the payment, out of moneys to be provided by Parliament, of all Expenses of the Central Emigration Authority constituted under any Act of the present Session to provide for the establishment and powers of a Central Emigration Authority, and for other purposes relative thereto."—[Mr. Hewins.]
  Which Amendment was, at the end of the Question, to add the words "not exceeding two thousand pounds in any year."—[Mr. Holt.]
  Question again proposed, "That those words be there added."
  Mr. BOOTH: When the Debate was adjourned last evening I was about to point out that the Leader of the House had admitted the principle that in these Resolutions there should be a limit where possible. On the occasion in question the right hon. Gentleman was dealing with the expenses of local authorities, and it was not practicable to put in a limit, but he said that where practicable it should be inserted, and we have done so again and again. Therefore, I would appeal to the hon. Gentleman in charge of the Bill whether he cannot suggest a sufficient amount. I am not at all clear that the £2,000 suggested by the hon. Member for Hexham is sufficient. I quite think that there is no idea of spending any huge sum, but the Minister in charge is quite capable of naming a sum which is quite safe. This is more than a formal stage. This is the chance which the House has of saying whether the money will be spent or not. It would be quite feasible to accomplish the bulk of the objects of the Bill without spending money. If it were done by a Department of the Board of Trade, which could act as a sort of information bureau, the bulk of what is aimed at in the Bill could be accomplished without expenditure. The practice in Government offices is that
  1540
  officials disagree about these things until one or two salaries are put in, and this has a wonderful effect in getting the thing agreed to by the permanent officials. If the Minister says that two officials are necessary for his scheme, surely some computation of what is required could be made. A reasonable sum might be £20,000 or £25,000 in any one year. I am not prepared to go to a Division on £2,000 a year, but I am prepared to divide the Committee unless the Minister explains why it is impossible to put in a limit or— which is a more straightforward course-suggests a limit inside which he could work. Subject to that qualification, I support the Amendment.
  Mr. KING: I quite agree with the view that there should be a limit in resolutions of this kind. We are always creating new changes. New Ministers, new Departments, new authorities, and we are always passing money resolutions for them without any limit whatsoever. I have already put down some Amendments to-the text of this Bill, and on the money question I suggested that the Bill ought to be worked for £5,000 a year. I have no doubt that the Under-Secretary for the Colonies has already perused my Amendments, and he will be able to arrive at an opinion as to the cost of working this Bill and as to the reasonableness of my limit. I hope that he will give his attention to this and that he himself wilt consider the amount of money that it is necessary to spend to work the Bill. I suppose this proposal has been before the Treasury and has been considered by that Department from the point of view of national finance, and some sort of estimate of the limit formed. Some Departments do try to do their duty on these lines, and I believe the Treasury is one of them. Though our confidence in a great many things is shaken, yet I have every confidence in the Treasury, and believe that they do examine things before they pass judgment. If that is so, the Treasury, I presume, has been in communication with the Under-Secretary, and there is no reason, I conceive, why he should not make a clean breast of any transaction between himself and the Treasury, and tell us what the Colonial Office proposed in the first instance, what was the Treasury's reply on the first suggestion, what was the second, and what was the Treasury's rejoinder to that, and how long the battledore and shuttlecock

  1541
  between the two Departments continued, and what was the result. It will not take very long, and there is a quarter of an hour in which to give a full account. I must press upon my hon. Friend to inform us what will be the charge to the public exchequer during the first year. If he limits this Resolution to that amount, it will be in the interests of true economy, and with economy always goes efficiency. I therefore greatly hope that this Amendment will be adopted in spirit, and if £2,000 is not enough I shall be glad to support £5,000, the estimate at which I, on independent lines, have myself arrived. I can assure the hon. Member for Pontefract (Mr. Booth) that if he wants a teller on behalf of our joint principles of economy and efficiency, I am quite ready to act with him.
  Mr. RAFFAN: I think we are entitled to a reply from the Minister in charge I have not always supported the last speaker in his crusades for putting a limit to these money Resolutions, because I have recognised that in many cases it is impossible to form an accurate estimate; but surely that cannot be the case here. Surely it is not unreasonable that we should be told whether an estimate has been formed, and, if so, what it is; and I think in this particular case the Minister would be well advised in yielding to the pressure brought to bear upon him. The Bill has met with an immense amount of adverse criticism, both inside and outside this House, and he stated in reply that the object of the Bill had been misconceived and that it was much more moderate than the object which its critics alleged it to have. If that be so, criticism will best be stilled if the hon. Gentleman is able to fix a reasonable amount and say he will be able to carry on in the next twelve months with that sum. I should hesitate to go to a Division on a proposal to limit it to £2,000, and I hope if a Division is to be taken it will be for some larger amount. I should be perfectly willing myself to support any reasonable figure that should be prepared to support a figure even considerably in excess of £5,000 if we were met, but I think some limit should be put in the Resolution.
  The UNDER-SECRETARY of STATE for the COLONIES (Mr. Hewins): I am very willing to give any explanations which are possible. I have often taken part in stopping Financial Resolutions myself, and I quite sympathise with the
  1542
  motives which actuate hon. Members in these circumstances, but it would be extremely unreasonable to ask me to give an estimate of the cost of working this measure in the first year. To form such an estimate, you would have to take account of normal circumstances, and if hon. Members would recall the Debate on Friday they would remember that one of the reasons for this Bill being brought forward at all is that it should deal with the abnormal conditions arising out of the War. We do not know how long the War will last, and we do not know the factors of which we should have to take account, but I can assure my hon. Friends that, as I said on the Second Reading, this Bill has been thoroughly examined by several Departments, and I do not know any one of them which is at all interested in increasing expenditure. Certainly the Colonial Office is not. We have a smaller staff there than when the War broke out, and we are doing a much larger amount of work, and I do not think that, looking at the facts of the case, it is reasonable to expect that there would be any large expenditure under this Bill during the period mentioned by my hon. Friends. My honest opinion of this Bill is that it will lead to economy of expenditure—that the simplification of machinery will save money. It is really a business measure— not a political measure—in which we are anxious to come to the best possible arrangement to suit the people involved, and I earnestly hope my hon. Friend will withdraw opposition to this measure and let us get on with it.
  Mr. LEIF JONES: I am very 10th to refuse the hon. Member's request to get on with this Bill, but he must realise that in asking for a sum without any limit at all he is putting forward a strong request to the Committee. We had a very interesting but a very unexpected Debate on Friday, and in the course of that discussion the hon. Gentleman found there was a great deal of what he called misapprehension as to the Bill, but he himself will admit that he did not tell us what was the exact method in which the very extended powers of the Bill were going to be used. He said that in the nature of the case he really did not know.
  Mr. HEWINS: My hon. Friend is mistaken. I said we cannot give on estimate of the money when we are dealing with all these uncertain factors; but, looking at the cost which is proposed, and the way

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  in which it has been worked out by the Departments, I can assure the Committee that the object of the Bill is to simplify things.
  Mr. JONES: If it has been worked out by the delegates, then my hon. Friend ought the more easily to be able to give some limit to the expenditure intended, and it is no consolation to those who are a little suspicious both as to the objects of the Bill and the expenditure when he tells us
  Mr. HEWINS: One hon. Member has mentioned £50,000 a year as the cost. There is not the slightest intention or expectation or desire to go anywhere near that, and if the expenditure in the first year runs into £10,000 it would be greatly in excess of what is considered likely.
  Mr. JONES: Will the hon. Gentleman put that amount into the Resolution? I must press the point that after the consultation of seven Departments it makes us extremely anxious. Government Departments are not economical in these days. The hon. Gentleman has not told us what the seven Departments are, but seven Departments point to expenditure seven times magnified, and that is a prospect from which I think the Committee might well shrink. I think we have a right to press the hon. Gentleman. We do not know the purpose of the Government. The words of the Bill are "to advise and assist." "Assist" might cover a great deal of expenditure on passages and settlement.
  Mr. HEWINS: No.
  Mr. JONES: The hon. Gentleman did not say "No" on Friday, but he kept it vague, and to the end of the Debate I did not know—and I took some pains to find out—what was going to be done under the Bill. I do say that with a vague Bill in general terms and a new Department to be set up, it is rather unreasonable for the hon. Member to come forward and say he will not put in an upper limit to the expenditure. If an emergency arose and there was need for extra expenditure it would be quite easy to come to Parliament for power. There is no reason why we should part with Parliamentary control in this matter, or give a free hand to the working Departments in this new Bill. The hon. Gentleman says that he does not intend to spend more than £10,000 in the year.
  1544
  I should be perfectly ready to let him have that amount, but we are entitled before passing the Bill to have some idea as to how it is to be worked. This House has been complaining for a long time of the expenditure of Government Departments. Here is a new Department which is being set up. It is suggested that the work of the Emigrants' Information Bureau will be destroyed—work which has been very successful. The hon. Gentleman tells us on another occasion that this is part of the Government's man-power policy, and suggests that it is a great development of the Imperial part of their programme. Some of the newspapers, in dealing with the matter since Friday, have pointed out that this is the first action of the Government in carrying out their great Imperial policy.
  Mr. HEWINS Mr. HEWINS dissented.
  Mr. JONES: My hon. Friend says "no." He says he is merely getting this Department into shape. He says they do not propose to spend more than £10,000. It is he who is unreasonable in refusing to put that £10,000 in his Resolution. It is not we who are asking for that limit. We are in the dark. We do not know what he intends to do. If the hon. Gentleman will accept the £10,000 limit which we suggest he will meet our views, and the views, I think, of most of us who at present oppose. If he will not I think he must expect us to continue our protest against the action of the Government in this matter. I may tell him that the Government, of which he is a member, has not earned the confidence of the House in the matter of expenditure.
  It has continued to set up new Departments and to go into expenditure on new Departments during the War. It has been my duty during the last six months to sit on a Committee to go into this kind of expenditure of new Departments which have been spending money in all directions. This expenditure is very extravagant, most lavish, and on a most experimental scale. Large sums of money, mililons, have been spent in the making of experiments. I do not know of what experiments the hon. Gentleman is thinking. But we will give him £10.000 to play with. If he will take that, that will be a reasonable sum. It is not reasonable to ask us to make an unlimited grant of money for the unknown purposes of this Bill. I, for one, under these circumstances, still continue to oppose it.
  Mr. TYSON WILSON: Since Friday last I have received letters from two very big trade unions asking whether the Emigration Bill interferes with the liberty of the members of their associations. I have not been able to answer this question on the information which has been given to the House, because that has not been sufficient to enable me to decide whether it interferes with their liberty or not. I am surprised at the innocence of the hon. Member for North Somerset (Mr. King), when he says that we should put our trust in the Treasury, because the Treasury is always helpless—and hopeless—in regard to controlling the national expenditure. In reference to the establishment of one of the new Ministries, the House was led to believe that the expenditure would be some £50,000 or £60,000 per year. We found that three or four months after this Department was spending £1,250,000 a year, and if the hon. Gentleman in charge of this Bill is not prepared to give an estimate of what they propose to spend, I think the House would be well advised to refuse this measure. I think this Bill is entirely unnecessary. Anyone who looks through it will find that we have all the powers that are required at the present moment without passing another Act of Parlia-
  1546
  ment. This Bill will enable the Colonial Office to expend money extravagantly and lavishly.
  It being Eleven of the Clock, the Deputy-Chairman left the Chair to make his Report to the House.
  Committee report Progress; to sit again To-morrow.
  The remaining Orders were read, and postponed.
  Whereupon Mr. SPEAKER, pursuant to the Order of the House of the 13th February, proposed the Question, "That this House do now adjourn."
  Mr. ANDERSON:May I ask the Patronage Secretary whether he can give any information as to the course of business on Friday, and can he indicate the business to toe taken?
  Lord EDMUND TALBOT (Joint Parliamentary Secretary to the Treasury): The business will be the Trade Boards Bill.
  Adjourned accordingly at One minute after Eleven o'clock.