CLAUSE 24.—(Continuance of Excess Profits Duty at Decreased Rate.)

HC Deb 15 July 1919 vol 118 cc245-85

(1)The Finance (No. 2) Act, 1915 (in this Part of this Act referred to as "the principal Act"), 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 nineteen, and before the fifth day of August, nineteen hundred and twenty, 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 nineteen.

(2)Section thirty-eight of the principal Act shall as respects Excess Profits arising in any accounting period commencing on or alter the first day of January, nineteen hundred and nineteen, have effect as if forty per cent. of the excess were substituted as the rate of duty for eighty per cent. of the excess, or, in the case of an accounting period which commenced before that date but ends after that date, as if forty per cent. were substituted for eighty per cent, as respects so much of the excess as may be apportioned under this Part of this Act to the part commencing on that date.

In calculating any repayment or set off under Sub-section (3)of Section thirty-eight of the principal Act any amount to be repaid or set off on account of a deficiency or loss arising in any accounting period commencing on or after the first day of January, nineteen hundred and nineteen, or, in the case of an accounting period which has commenced before that date but sends after that date, on account of so much of the deficiency or loss as may be apportioned under this Part of this Act to the part commencing on that date, shall be calculated by reference to duty at the rate of forty per cent.

The CHAIRMAN

There are on the Paper a number of Amendments to this Clause proposing to increase the amount of the duty. They cannot be proposed in the absence of a Ways and Means Resolution, as they would impose a charge beyond that authorised by the Committee of Ways and Means. That disposes of the first five Amendments.

Mr. LOCKER-LAMPSON

I beg to move, at the end, to insert the words Provided that if it is proved that during the period from the fourth day of August, nineteen hundred and fourteen, to the end of the last accounting period no excess profits as defined by the principal Act, and as amended, have been made the whole of the duty paid in respect of past accounting periods shall be repaid. This Amendment is a very much more important one than the last two which I have moved. I may say that I have absolutely no interest in the Excess Profits question. I do not happen to be in business myself, and am unfortunately in possession only of a fixed income, which does not vary at all, so far as I know, in connection with any business. I am merely moving this Amendment because I believe that there does exist a considerable injustice in the machinery of raising the Excess Profits Duty at the present time. I have nothing to say against the principle of the Excess Profits Duty, but there is no doubt that sometimes it works most unfairly. One of the injustices is that cases may arise in which, although no excess profits have been made over a series of years, the taxpayer is legally liable to pay a considerable amount in Excess Profits Duty. I should like to give the House an illustration of what I mean. They will remember that the Excess Profits Duty is founded on the best two-years out of three—what is called the "pre-war standard"—and to that the taxpayer is allowed to add £200. Take the-case of a business where the pre-war standard, with the £200 added, comes to £2,000. The taxpayer is in that case allowed to treat the £2,000 as non-dutiable. Over and above that £2,000 he has to calculate his profits on which duty is payable. Suppose the first accounting period to be up to the 31st of October, 1914—that is to say, the year in which the War began — and suppose that his profits then were £2,000. In that case he would pay no duty at all. The second accounting period would be up to the 31st of October, 1915. If during that period his profits were £3,000, he would pay duty on £1,000, and the amount would be £600. If for the next accounting period, up to the 31st of October, 1916, his profits were only £1,000, he would be able-to recover the tax to the amount of £600. If during the next period, up to the 31st of October, 1917, his profits were £2,500, he would pay duty on £500, amounting to £383; and if in 1918 his profits were £3,500, he would pay duty on £1,500, amounting to £l,200. Then let us suppose that to the end of last year his profits were nothing at all; that would mean that he would show a deficiency of £2,000, and recover £933 in duty. The result of all that, over these six years, is that he has paid a duty of £2,183 and he has only recovered £l,533; that is to say, he has paid £650 net in duty. But this particular gentleman in this particular business has made no excess profits at all over the six years. During those six accounting periods his profits altogether have been £12,000, which, divided by six, is £2,000, or the exact pre-war standard upon which he is not liable to pay any duty at all. Yet, although he has made no excess profits during those six years, he has to pay a tax of £650. Surely that is very unfair. As I have said, I have personally no interest in these matters, but I put down this Amendment because my attention was drawn to the fact that such cases did occur continually, and I am sure the Chancellor of the Exchequer will agree that the taxpayer, if he has made no excess profits, ought not to be liable to pay any Excess Profits Tax. In a case of that sort—and I could give various other instances—it is quite clear that, although no excess profits are made, yet a heavy tax is demanded by the State. I very much hope that my right hon. Friend will meet me in some respect in this matter.

I may mention that there are on the Paper two other Amendments in the name of my hon. Friend the Member for Chippenham (Mr. G. Terrell). He is not here, and he has asked me to move them in his name. I do not want to weary the House by moving both my hon. Friend's Amendments, but will content myself with moving my own Amendment. I think I have made out a case in favour of it, and I hope the Chancellor of the Exchequer will meet me in some sort of way.

Mr. CHAMBERLAIN

The hon. Member has put very clearly a certain case in which it might be found, where the Excess Profits Duty comes to an end, that duty has been paid although in fact, over the whole period of the duration of the tax no excess profits have been made. That arises from the varying rates at which the Excess Profits Duty has been charged at different times for the different years during which it has been in force. When we wind it up, that point must be attended to by the Chancellor of the Exchequer of the day. It is, of course, not a point which has been discovered by my hon. Friend for the first time. I hope my hon. Friend is not unreasonable. It is certainly not the proper time. The only time when this point can be satisfactorily settled is when the tax is finally wound up. The Amendment of my hon. Friend will really not fully meet the case. As far as I am concerned I recognise it is a question which must engage the attention of the Government and the Committee when the tax is brought to an end—not, I hope, at a very distant time—and I hope under the circumstances my hon. Friend will not press the Amendment now. I do not think it would be settled satisfactorily just now.

Mr. LOCKER-LAMPSON

Do I understand that the Chancellor of the Exchequer will do his best to make it retrospective so that if a taxpayer has paid a tax, although he has made no excess profits at all—do I understand that the Chancellor of the Exchequer will take the period as a whole and try to equalise matters?

Mr. CHAMBERLAIN

I cannot tell as to what will be done when the tax is wound up, but the Government will have discretion to deal with the matter. My view is that whatever we do we have to look at the tax period as a whole, and to consider the point equitably in regard to it.

Amendment, by leave, withdrawn.

Mr. LOCKER-LAMPSON

On behalf of my hon. Friend (Mr. G. Terrell) I beg formally to move, at the end, to add the words Except that no apportionment shall be made where it is proved that at the end of the last accounting period stock was taken at cost or market price and consequent on the cessation of hostilities the market price fell prior to the first day of January, nineteen hundred and nineteen, when the repayment or set off arising there from shall be calculated at the rate of eighty per cent, even though the accounting period ends after the thirty-first day of December, nineteen hundred and eighteen.

Sir F. BANBURY

This is an Amendment to winch I had intended to speak. The position is that people who purchased the goods before the cessation of hostilities, and then, owing to the cessation, were met with a large loss on the goods, as a rule, paid. I think it is only fair, when a loss is made, that some consideration should be given for that loss.

Mr. CHAMBERLAIN

The question as to the valuation of stocks has been on many occasions before the House of Commons and has been brought prominently before my notice recently. In 1917 the Government gave an undertaking on the White Paper that A period will be allowed after the termination of the War in which to ascertain by actual realisation the value of the stock appearing in the account at the end of the last accounting period, and an allowance made from the profit of that period for any difference between the valuation and the sum realised. The period proposed is a fixed period of a year from the termination of the War, for all businesses. Subsequently the Committee on Financial Risks made an alternative proposal. I expect my Friend is familiar with their Report. In substance they said that if a taxpayer shows that, owing to falling prices, his profits have during the period of five years after the War fallen below the level of his Excess Profits Duty percentage standard, he should be entitled, they suggested, to a special allowance. The maximum allowance which the Report proposes to admit was the sum equivalent to 20 per cent. of the taxpayer's average excess profit in the last two years of the duty. Subject to this maximum limit, the allowance was proposed to be taken in each case as 80 per cent. of the net deficiency of the profit below the percentage standard during the period of five years after the War. The Committee proposed that taxpayers should have the option of choosing, when making their return for the last Excess Profits Duty period, whether they will come under this concession or under the concession granted in the White Paper. Since this Committee reported, the position has changed to some extent, owing to the continuation of the Excess Profits Duty at 40 per cent., and some consequential modification of their recommendation would no doubt be necessary. Subject to this, however, I have always felt, so far as I am concerned, that it would be right to give effect to this recommendation when the time comes to make arrangements for the termination of the duty. There are two questions which in my opinion might profitably be explored in the immediate future. First of all, the general character of the practical arrangements which ought to be made in order to secure that taxpayers may be able as readily as possible to prove their titles, to this contemplated relief; and, secondly, the character of any consequential alterations in the recommendation of the Committee which would follow from the lowering of the rate to 40 per cent. I understand that representatives of industry would be ready to confer with the Board of Inland Revenue on this subject, and I have asked the Board to make arrangements for conferences of this kind. The matter is a difficult and technical one, and I hope the Committee will not press me.

Sir F. BANBURY

The object of the Amendment is the taking of steps to ascertain the best course, but we will have an opportunity later of consulting with the Treasury and the Inland Revenue and arranging the best way of meeting the-difficulty.

Amendment, by leave, withdrawn.

Motion made, and Question proposed, That the Clause stand part of the Bill.

Sir DONALD MACLEAN

I stated my own position on a previous occasion. I thought then the Excess Profits Tax was a tax which should be strictly confined to the War period. I think it is a tax which is not conducive to the proper development of industry. It leads to great extravagance in expenditure. 1 myself know of several instances which have come to my personal knowledge where payment has been made by business firms which would be strongly objected to by them and has simply been allowed to go because it comes out of the Excess Profits Tax. I have knowledge of gratuities given to junior members of staffs of offices—large sums simply given away because it comes-out of the Excess Profits Tax. This is conducive therefore to extravagant expenditure in business. Regarding the question of the Excess Profits Tax I hope it is in order on the question, "That the Clause stand part," that whatever may be the merits or demerits of the Excess Profits Tax there is what I think I may call a unanimous feeling throughout the country that war profits should bear adequate war tax, and while the Excess Profits Tax is disappearing—the Chancellor of the Exchequer had already indicated that he hopes at no distant, date the tax will altogether disappear—I believe that there should be real economy and proper development in business. A tax of this kind undoubtedly hits initiative very hard. At the same time I must point out that the people of the country are looking to something being done towards getting a proper share of the gains of profiteers. During the War this has been a rough and ready method of getting something off. Is there any chance of our really getting off that? While this Excess Profits Tax is beginning its process of vanishing I hope that the Chancellor of the Exchequer will bear in mind for his next Budget the deep feelings of the country on the question of taxing the war profits and getting back into the national exchequer its adequate share of what has been obtained by individuals in that way. It is a difficult thing, but of the feeling in the country on the point there can be no doubt at all.

With regard to the last Amendment moved, there again I wish to utter a word of warning to the Chancellor of the Exchequer. Such Amendments are full of pitfalls for the Exchequer. Over a long period of years there will undoubtedly be some of the very best brains of the country at the service of very powerful commercial undertakings, trying to get back, so to speak, on the Government in connection with the recoupment of what they may think to be an unfair share of what they have made in excess profits. I hope the Chancellor of the Exchequer will watch with a very jealous eye such proposals as receive the support of my right hon. Friend the Junior Member for the City of London (Sir F. Banbury). I know he is almost a purist in these matters of taxation, and I think the House has often been guided into better and more economic paths by some of his comments, but he will forgive me for pointing out that that kind of proposal wants very careful watching in the interests of the Exchequer, and I do hope that the Chancellor of the Exchequer, and the very able Department over which he presides, will bear in mind what I have said, and what I am sure everybody feels, that something ought to be done to get back from individuals who have grossly profiteered during the War a share, at any rate, for the national Exchequer.

Mr. J. DAVISON

I desire, on the part of the Labour party, to oppose the Clause as it stands. When the Chancellor of the Exchequer announced a reduction of 50 per cent. in the Excess Profits Duty it was received with acclamation by all those people engaged in commerce and industry in this country. One can imagine their pleasurable feelings when they knew the Excess Profits Duty was going to be reduced to that extent, although let me remind the Committee that not a single individual engaged in trade in this country anticipated for a moment that there was going to be that reduction. May I call attention to the course of events during the first two years of the War? In the first two years of the War little or no control was exercised by the Government with regard to payment of what was then in own as the War Munitions Levy. Little or no control was exercised by the Government with regard to food prices. The total amount paid by the controlled firms in this country during those two years amounted to nil. The total amount paid by the uncontrolled firms amounted to. £3,000,000. I want members to observe what was taking place so far as the workers of the country were concerned during the course of those two years. Food prices advanced by 65 per cent. and wages were advanced by the employers by the magnificent sum of 17½ per cent to meet that increase in household necessities I heard in the Debate yesterday appeals both from the Members of these benches and from Members opposite for co-operation between the forces of capital and labour. Let me say quite frankly that it is sheer, canting hypocrisy to talk about co-operation between capital and labour. Capital is making at the expense, and through the necessities, of the nation enormous profits. During those two years the Government were compelled to pay almost any price for the material which was required for the carrying on of the War. When I said a few weeks ago that the income of these people had risen by leaps and bounds, I think I made no exaggerated statement.

During the years 1916 and 1917, according to figures supplied by the Chancellor of the Exchequer, the non-controlled firms in the country paid £153,000,000; the controlled firms paid £3,000,000. During 1917 and 1918 the non-controlled firms paid £224,000,000, and the controlled firms paid £65,000,000. In the first half of 1918 the non-controlled firms paid £167,000,000, and the controlled establishments £67,000,000. It was estimated by the Financial Secretary to the Treasury that on the 1st January, 1919, £80,000,000 was then outstanding as part of the assessment to the Excess Profits Duty for the periods I have named. If you take the total amounts that have been paid, or that were assessed to Excess Profits Duty, during the whole period of the War, you will find that they amount to no less than £1,252,000,000. I ask hon. Members opposite if, as the men are getting to know, and as I consider it my duty to tell them in the country, that these profits have been made during the War, you can expect them to indulge in that cordial co-operation in rebuilding the shattered fabric of commerce and industry so far as this country is concerned, in response to the appeals that have been. made to them. The Chancellor of the Exchequer this afternoon referred to the Financial Risks Committee, but he did not tell the House that the Financial Risks Committee made a further recommendation to the Government which was not accepted. The Financial Risks Committee advocated a reduction of the Excess Profits Duty from 80 per cent. to 65 per cent., but they also made it a qualification of the reduction that the 15 per cent. should be retained in the business, in order to rebuild the business under post-war conditions. The Chancellor of the Exchequer has made a very generous concession to those people who are engaged in commerce and industry, by presenting them with a 50 per cent. reduction, and placing upon it no qualification with regard to the retention of a percentage of that which remains to them, in order that they may rebuild their businesses, and I very respectfully submit that that is not the way to obtain the cordial co-operation in the near future for which you have appealed to the workmen

I want also to say that the arguments that were adduced by those people who went to the Chancellor of the Exchequer and persuaded him to reduce the Excess Profits Duty by 50 per cent. will not bear the slightest investigation, in view of the fact that they have repeatedly told the workers of this country that it was owing to a ca' canny policy that we were not able to produce to the full limits of our capacity and energy what we ought to produce in the interests of the nation. Yet to-day you have employers going to the Chancellor of the Exchequer and using as one of their main arguments for a reduction of the Excess Profits Duty that it creates a spirit of extravagance and wastefulness in their businesses. Was there ever a more damaging indictment against the patriotism of people engaged in business when they say that if you retain the Excess Profits Duty at 80 per cent. it will provide no incentive to their labours? That is exactly what you have been telling the workers of the country, that they have been adopting a ca' canny policy, and here you have employers of labour not only adopting it, but practising it to the fullest possible extent. I do not believe a single Member of the Government to-day knows exactly the tremendous amount of profit that has been made during the War, because many people have evaded by the most unscrupulous methods the payment of the Excess Profits Duty. If anyone doubts that statement, let me draw his attention to the "Accountants' Journal," and he will find there that prosecutions have been taking place for the recovery of the Excess Profits Duty. May I also remind the Committee that President Wilson—and I am told that the United States is the country above all others we will have to fear in competition now the War is over —has already decided in favour of the Excess Profits Duty as a permanent system of taxation in that country. If it can be carried out in America, surely it can be carried out in this country.

May I respectfully suggest to the Chancellor of the Exchequer, at a time when he is needing all the financial assistance he can secure, that he should turn to the whole of the people—for I do not exempt the Labour party from the operation of the suggestion I am going to make, because I know that many have made very large wages during the War—that, instead of reducing taxation to that extent, although I know it is claimed that it would injure industry, he should take the banking account of all people in the United Kingdom prior to the War, and since the War, and tax them upon the difference existing in their banking account. If he would do that, I venture to suggest that he would secure the whole of the finances he requires with which to carry on the various schemes of social and industrial reform that are necessary in this country. I, therefore, oppose the Clause as it stands.

Mr. HOGGE

I hope the Committee will divide against this Clause, because, in my view, it is iniquitous that the Chancellor of the Exchequer should be asking us to reduce the Excess Profits Duty by 50 per cent., from 80 per cent. to 40 per cent., while at the same time a colleague of his in the same Government, and the Government as a whole, are continuing the conscription of life for a longer period than this conscription of money. This House has passed an Act of Parliament by which it demands the service of the men of this country until at least April, 1920. In that case the State takes everything that the man can give. In this proposal in the Budget, on the very first possible opportunity, capital is salved of a great many of its responsibilities. Personally—and here I differ from my right hon. Friend who leads us on this bench—I am radically opposed to this thing, and shall go into the Division Lobby against it, as, I hope, a great many others will do when this Clause is challenged. I do not see any defence which my hon. Friend the Chancellor of the Exchequer can put up against continuing, at any rate for the same period as the State continues the conscription of life, the conscription of property. After all, during the War only 80 per cent. of the excess profits were taken. In my view, 100 per cent. ought to have been taken throughout the War. If as a State you, on the one hand, ask a man to give up his occupation, his ability to make more capital, to leave his wife and family, you have the right to demand from wealth or capital the same kind of contribution.

I regret to see, on the threshold of the Peace arrangements, that the very first thing that is relieved, even before the men are relieved from the Army of Occupation on the Rhine, or on any of the fronts in far distant parts of the world, to come back home to make a wage for the support for the wives and families, the first thing relieved is the Excess Profits Tax, which was levied upon capital. My right hon. Friend made one suggestion with which I am in cordial agreement. That is on the question of war profiteering in particular. My hon. Friend who has just sat down also made a suggestion which he offered to the Chancellor of the Exchequer. He will excuse me if I think that, however valuable his suggestion was, it was not nearly complete enough as a tax on war profiteering. He does not go far enough, because if he took the bank book of everyone, as he suggested, and noted the accounts prior to the War and after the War, and taxed all on the difference, a great many people would escape taxation on the profits they have made out of the War. But, if it were possible, there would be no tax levied with greater unanimity throughout the length and breadth of the Kingdom than a specific tax on what we understand are the profits made out of the War. There is no doubt about this—let us realise the facts ! —that any number of people during the War made money who could not have made it but for the fact of the War. Everybody, too, I think, will agree on this point, that a profit made specifically because men were fighting and serving, should not remain the personal private property of any one person; it should be obtained for the State.

On the question of the tax proper the right hon. Gentleman is reducing the tax by 50 per cent. I presume the House will carry the Clause as it stands, and my right hon. Friend will therefore get his way. I should like, however, to suggest to him, if that is so, there is one thing he ought to take into consideration. It is this that the incidence of the Excess Profits Tax is one of its great defects, and that new businesses in particular have been very heavily handicapped by its operation. I am putting on one side for the moment all the arguments I have used in considering the question of new and old businesses. A new business started during the war was allowed to earn a certain percentage of profit before any Excess Profits Tax was levied, and after that the Excess Profits Tax was levied in the ordinary way. In comparison, as my right hon. Friend says, with old-established businesses in their ability to choose a very much better datum line, new businesses and new enterprises have been enormously handicapped. I think it is well worth the attention of the Chancellor, if he is going to adhere to the excision of this Excess Profits Tax to one-half, at any rate, to consider whether he might make some further concession to new businesses. The old-established business can very much better afford to carry the 40 per cent. Excess Profits Tax than can the new business. I do not know whether my right hon. Friend can even now, or at a later stage of the Bill, in view of the fact that he is going to adhere to the 50 per cent reduction, see whether he could not make some further concession in the case of businesses started after 4th August, 1914. If he will look into that question he will find, over and over again, men have risked very considerable capital and got very little return for their risk because of this enormous Excess Profits Tax. On the general question, I am quite clear in my own mind that this is not the Budget in which you ought to reduce the Excess Profits Tax, and that my right hon. Friend ought to have waited until the Budget of next year before he started to make any reduction. He would then have synchronised any reduction he was going to make with the policy of the Government in regard to the conscription of life, and it would then have been much more acceptable. I shall certainly vote against the Clause.

Mr. CHAMBERLAIN

First, as to the caution that my right hon. Friend opposite addressed to me, I quite agree that in considering the provision necessary to wind. up the tax great caution will be necessary.

It is my misfortune, or it will be if I continue to hold office, and have to discharge the task of winding-up the tax, to remember that on every earlier occasion when my predecessors imposed, altered, or modified the tax we were confronted with various of these difficult and delicate problems, explained so persuasively to the House, and accepted by it with the explanation that these were matters that could not be dealt with at that moment, but would all be made important points to consider whenever the tax was finally brought to a conclusion. That is rather a heavy load of obligation for the Chancellor of the Exchequer of the future to carry. I can only say that these points, such as we have been discussing, recognised by my predecessor as points requiring consideration, are so recognised by me. The last point, the question of stocks, I have been considering, and I think we may usefully consider between now and next year what should be the proper method of dealing with the question. I must reserve my own opinion, for I have no power to pledge future action or forestall future action by the House, if for one moment I were inclined to do so.

I come to the tax itself. The hon. and right hon. Gentlemen who so affectionately sit side by side (Sir D. Maclean and Mr. Hogge) hold diametrically opposite views. If I fail to carry with me the sympathy and support of the hon. Member for East Edinburgh, I am reinforced by his right hon. colleague the Member for Peebles. This is because the right hon. Gentleman the Member for Peebles and I approach this question from one point of view, and the hon. Member for East Edinburgh and the other hon. Member who spoke approached it from an entirely different point of view. What hon. Members have in their mind's eye, as it would appear exclusively, is what profits has anybody made during the War, how much of these profits were taken, and how much more can we take? That is not the point of view from which I approach the consideration of what to do with the tax. I do not think it is the point of view from which my right hon. Friend approaches it. He and I, if I rightly interpret his view, ask ourselves: What affect is this tax having upon industry under present conditions? Is the tax harmful—from the point of view of industrial revival? Is it one of those factors which in critical times, when it is all important to get industry to work under new postwar conditions, is it an obstacle to that resumption of industry, and an impediment in the way of enterprise, causing people to hesitate and hold back from what, from the point of view of the State, and every individual in the State—to whatever class he belongs—is the most important thing, namely, to get industry and production into full blast, and so secure the greatest possible output? If hon. Members, putting to one side passion and prejudice, examine the matter from the right angle, having regard to all the circumstances of trade and commerce, and the change from war to peace conditions, I do not think there is any Member who could answer differently from what we do —that a tax at that rate is a serious obstacle to the revival of industry. That is why I propose to reduce it.

Mr. DAVISON

May I remind the right hon. Gentleman that the Expert Committee set up by the Minister of Reconstruction considered this for a matter of eight months? They heard witnesses from all the industries in the United Kingdom. Not a single witness came before the Committee and suggested that there should be a reduction of 50 per cent. on the Excess Profits Duty.

Mr. CHAMBERLAIN

I do not think they suggested that we should bring it to an end. They said it was very desirable to bring it down from 80 per cent., and they pointed out the special inconveniences— which remains for us to remedy—which come from a tax that has been raised to so high a point as 80 per cent., and which, deliberately in some cases, was crippling the power of industry to make provision during the War for that changed condition for which they ought to have been prepared. Let me say a word or two more about the tax as a whole. It is not a tax which the House of Commons would be prepared to adopt but for the duration of the War. The hon. Gentleman who is going to vote against this Clause himself admits that the tax is inherently unjust, and particularly so to all new industries.

Mr. HOGGE

dissented.

Mr. CHAMBERLAIN

I was not referring to the interjected approving cheer, but to the speech of the hon. Gentleman. He said, not very logically, that if he had his way he would keep the tax on everybody at 80 per cent., but as I propose to reduce it 40 per cent., why could I not reduce it further on all new businesses? He said the incidence of the tax was inherently unfair, and that is so as between business and business. It does penalise the new business. Now I come to the particular businesses mentioned by my hon. Friend opposite, that is those started during the War. Is it quite consistent with his own view as to the sacrifices which capital should be asked to make that these businesses should have special relief?

5.0 P.M.

Mr. HOGGE

That is a clear debating point, but my original position was that I would take the lot—that is 100 per cent. If my right hon. Friend is going to get his Clause, as he no doubt will, I asked would he give relief to new businesses?

Mr. CHAMBERLAIN

I know my hon. Friend would tax everybody 100 per cent. of their excess profits during the War, and he would continue to do that as long as a single soldier was serving under Conscription, but because I am not willing to go further than any of my predecessors were prepared to go during the stress of the War, he says if you will not take 100 per cent. do not take 40 per cent. off the new businesses which started during the War. Personally, I think the new businesses were very lucky to be able to start at all during the War, but the real point is as to whether I shall keep the tax on or not. If you try to keep on this tax permanently, and if you regard it as a proper instrument of taxation for peace time, you perpetuate the distinction between the new business and the old-established business which had a high pre-war standard of profit, and you strengthen the position of superiority which the old-established business has naturally acquired without the aid of taxation by reason of its being old-established. I do not believe that that is a suitable way of taxing profits as a permanent part of our system.

For my part, I continue this tax reluctantly for another year even at the reduced rate. I should like to have made other proposals, but whatever share of these profits you are going to take, or whatever share of the income, I do not believe that this particular tax is fair as between citizen and citizen as a permanent part of our system, and I do not believe it is conducive to the prosperity and development of industry. I know my hon. Friend opposite (Mr. Hogge) is not above a debating point himself, and I think sometimes that he strays a little from the narrow path of accuracy in search of a debating point, and we are all liable to that, some of us more than others. My hon. Friend the Member for East Edinburgh talked as if there had been no release of men from the fighting services. He spoke of a reduction of taxation on capital and conscription of wealth before any release has taken place of a single man in the field of Conscription for military purposes. He knows that is not so, and when he repeats his speech, as no doubt he will do on countless platforms, perhaps he will correct the inaccuracy into which he has fallen. Apart from this tax, and this very strong desire to get at war profiteers, when the Minister proposes to get at the war profiteer he will have to define or somebody else will, what is a war profiteer, and then it will not be found to be quite so easy. It will be found that we use this word rather loosely without a clear idea of what is meant or where it would be possible to draw a limit. The hon. Member (Mr. Davison) who spoke on behalf of the Labour party said he did not wish to exclude the working classes from any proposal for taxation of wealth due to the War to which the increased income of others might be subjected, and he said he would take the income of every man before the War and during the War and tax him on the difference.

Mr. DAVISON

I would take banking accounts prior to the War.

Mr. CHAMBERLAIN

What about those who had not a banking account?

Mr. DAVISON

They would be exempt from taxation, and I should be among that number.

Mr. CHAMBERLAIN

Is he aware that some of our greatest profiteers would escape for the same reason because they had no banking account before the War? I have seen cases of shocking profits in regard to those who started with nothing almost, and who had not got a banking account at the commencement of the War. What I take note of is that the hon. Member meant this to apply equally, but that was not his real meaning, which was to choose a test of equality which will excuse-everybody who had not a banking account. Let us consider this point. The object of the tax was to tax war profits as they were made, and the House of Commons decided from year to year to take such a proportion of those war profits as it thought right to take. This may have been too much from the point of view of the smooth resumption of peace after the War closed, or it may have been too little from the point of view of justice. You may argue either one way or the other, but at any rate the House of Commons year by year fixed what the tax was to be. During the period of my re-election after the acceptance of my office, a small matter came before the House when I was not present to explain relating to an Order in regard to new issues. There was an outburst from every quarter against retrospective legislation, but retrospective taxation is surely more contrary to equality and justice than retrospective legislation, and it is incomparably more difficult. If you try to find out to-morrow what is the capital of every person in the country, you will not be able to do it with certainty or equity as between one individual and another. You could not carry out such a gigantic valuation as that. It is incomparably difficult to carry out two capital valuations, one of which is to date back five years. How impossible it is to ascertain what is in fact the income or profits of everybody in this country five years ago, and to ascertain what effect the War has produced upon it!

Sir D. MACLEAN

The Income Tax returns will show it.

Mr. CHAMBERLAIN

I beg my right hon. Friend's pardon, but they show nothing of the kind. I will give two instances. Suppose a man has an income to-day of £500 or £5,000 greater than he had in July, 1914. Are you going to tax him on that as war profit? Perhaps he has inherited it from a relative, and you have to go into the question of the source. The right hon. Gentleman says the returns will show it, but for war profits we have not gone into banking accounts, still less into investments producing income. They have gone into other things, and you cannot judge by the income, because if you do you tax a man who saves in that form; you will not tax the man who puts his money in such things as diamonds, pearls, old furniture, or other articles which realise such fantastic prices. As to the man who simply squandered his money recklessly, he goes scot-free. He has had the same income and has wasted it when it was his duty to guard it, and because he has wasted it he is to go scot-free of this taxation.

It is really an incomparably difficult problem when we are told to go back over the past five years and ascertain what profits are due to the War which are left after the imposition of the Income Tax, the Super-tax, and the Excess Profits Tax, and then take the whole or part of what is left. None of us wish to defend war profiteers. Most people have made profits during the War, but by the profiteer we mean someone who has made excessive and greedy profits, and to put proposals against this into a Statute and frame machinery to carry it out is very difficult, and I think my right hon. Friend opposite, who is a responsible man, and who may be called upon to hold office and to carry out this scheme, ought to consider this question very carefully before he raises expectations that measures of this kind could be carried out with any real measure of fairness as between the taxpayer and the State or between one taxpayer and another, and he should be more cautious.

In any case, whatever you may say on that matter, I repeat that I do not propose a reduction of this tax out of any tenderness to profiteers or any tenderness to high, extravagant profits in business. I do it because I feel that the tax at the rate which was then in force was a direct preventive of the results of industry, that, as my right hon. Friend opposite said, it was leading to extravagance, and that it was almost inevitably itself one of the factors in the rise of prices of which we are complaining to-day. It works with cumulative effect. It is charged by the State on manufactures, first on this business and then on that, being levied three, four, five or six times between the arrival of the raw material and the final sale of the finished product to the consumer. It is, therefore, not in the interests of any class, or of capital, or of workmen, but in the interests of trade and industry, and of the nation, as well as of all classes and all individuals, that I think the Committee would be wise to sanction at least a reduction of the tax to the figure of 40 per cent. as proposed in this Bill.

Mr. GRIFFITHS

I want to oppose this Clause on behalf of the Labour party. The right hon. Gentleman the Member for Peebles (Sir D. Maclean) said he welcomed the reduction of the tax down to 40 per cent. But if the right hon. Gentleman had been a trade union leader, as I have been for the last twenty years, he would have held quite a different opinion. I assisted the country as much as I possibly could during the period of the War, and when I attended trade union branch meetings two of the questions which caused more discontent among working men than anything else I know of were the increase in the cost of living and the Excess Profits Tax. Let us examine and see what has taken place during the War, and then it may be possible for hon. Members to realise the feeling of the working classes in the country in regard to the Excess Profits Duty. At the beginning of the War an appeal was made to the trade union leaders of the country at the meeting held in London, and they were asked to go back to their members and appeal to them not to apply to employers for an increase of wages, because, as the Prime Minister put it at that time, silver bullets were going to win the War. While this was going on, while trade union leaders were trying to keep their members quiet, the cost of living increased to a considerable extent, with the result that the compact we entered into with the Government, as far as increased wages were concerned, broke down and then we had unrest in practically every industry in the country.

I am talking more particularly about South Wales than of any other part of the country, and I want to speak as one who knows what is taking place in South Wales at the present time. The society which I represent claims that it has been able to maintain discipline over its members for the last twenty years, and especially during the War period. But at this very time in the tinplate trade in South Wales unofficial meetings are being held with regard to a settlement which I made in the Industrial Council about a fortnight ago, and I see by the South Wales Press yesterday that the men are going to take an unofficial ballot with regard to repudiating the settlement arrived at in the tinplate trade a fortnight ago. I have had to meet these men, and when I have had to put propositions before them I have tried to understand not only their point of view but also the employer's point of view as well, because it is useless paying wages to men unless you can get trade—you must have trade first of all before you can pay wages. I pointed out the serious position the tinplate trade was in, and I may add this, that so far as American competition is concerned the Americans have captured our markets during the War, and they are now producing tin plates far cheaper than we can. I pointed out to the men this was not a time for them to go forward and ask for an increase in wages, and that what we wanted was more production at a reduced cost in order to try and recapture the trade.

But in face of all that, their argument was this. The employers had made fabulous profits during the War and yet the Government are coming forward with a proposal to reduce the Excess Profits Duty to 40 per cent. I was asked what I had to say to that? I had no reply. It was put to me in the branch meetings and it is up to Labour Leaders to give replies to the men on these questions. They say: "Here are employers who have been making enormous profits and have been protected during the War." I am sure the Chancellor of the Exchequer knows the arrangement that was made under which during the War the employers were paid profits on the basis of two or three years, and, for instance, in the steel trade, or in the tin-plate trade if a firm had been making anything from 10 to 30 per cent. profit the Ministry of Munitions agreed to pay it that profit during the time the industry was controlled, and on the top of that they were charged for the first twelve months only 60 per cent. Excess Profits Duty and, later on, 80 per cent. Thus firms, on the top of their 30 per cent. were still pocketing another 20 per cent. of excess profits. This is a very serious thing for labour leaders who have to lead the men.

Mr. CHAMBERLAIN

1 hope the hon. Member understands—I must say his speech appears to be a little doubtful on the point—that I am not lowering the tax with retrospective effect.

Mr. GRIFFITHS

I understand that, and I am coming to that point presently. The men know the profits that have been made by their employers. They know what excess profits they have had to pay. These industries have now been decontrolled and employers are able to fix their own prices. I am not sure whether the right hon. Gentleman is aware of the fact, but the price of steel is still going up. The returns we have had for the sliding scale within the last week or two in Monmouthshire give the men another advance, and, therefore, the price of steel must be going up; the workmen have better wages to-day than during the Armistice or during the War. The men say that although they are getting high wages the employers are bound to be making bigger profits than during the War. [HON. MBMBERS "No, no."] Yes, it is the fact. Tine chief point made by the Chancellor of the Exchequer was that what is required is that the trade of the country should revive. Does he think that reducing the Excess Profits Duty to 40 per cent. is going to help trade to revive? That is an economic fallacy. Take the position of the tin plate trade to-day. We have only about 300 mills working out of 526. Bring the boys back from the Rhine and start the remaining mills in the tin plate trade; give them a chance to earn money and to produce useful commodities; then they will come into the national pool and while they will be producing commodities they will be able to buy other commodities such as are produced in the coal mines which are idle, in the cotton mills which are standing still, and in the shoe factories which are also idle. There you have a sound economic basis to work upon. You start one industry, you give the men a chance to produce useful commodities, and they thereby get money wherewith to purchase commodities from other industries which can also be re-started. You do not want extra capital in the tin plate trade to-day. You have the mills, as you have the coalmines and machines standing idle. You do not want extra capital to assist employers to restart them. You only want to got the men back in order to restart them. I for one would tax employers 100 per cent. Hon. Members may laugh, but let them remember we have to deal with the men. I know the position in South Wales. There used to be an old saying that what Lancashire says to-day England will say to-morrow. I would read it in this way that what Wales says to-day England will say to-morrow. When you have serious trouble in South Wales you cannot draw a chalk line. You do not know where it is going to end, once you kindle the fire. I want to give a warning note in time in case something may happen, and it is for that reason that I oppose this particular Clause of the Bill.

Mr. BRIGGS

I hesitate rather to address the House for the first time on a matter which lends itself to so many different opinions, but as a business man I feel I must take this opportunity to show the fallacy of some of the reasoning we have heard from the other side. One hon. Member said that he would tax business men on their banking account. I can assure him that a very large proportion of business men in this country would be glad to be taxed on their banking account. Another hon. Member said that he would tax employers to the extent of 100 per cent. I wonder if that hon. Gentleman appreciates what would be the result, not of taxing them to the extent of 100 per cent., but of continuing the imposition of 80 per cent. for another three years. I can speak on behalf of business men, warehousemen, manufacturers, and traders of all kinds who have been established for a very long period of years. I am not referring to the very big undertakings which have opportunities of securing new capital. I refer more particularly to businesses with a capital of from £10,000 to £150,000. That capital has only been arrived at from the savings of the man who started the business. He had no other source from which he could obtain it. How is he, under these schemes of reconstruction that we are now talking so much about, to extend his business when it will require as least twice the amount of capital it required before the War? He has only two sources of supply for it. One is his own supply, secured by economy and non-distribution of profits, and the other, on which he cannot rely to the same extent, is his banker. Business to-day is extremely difficult. Most businesses are heavily overdrawn at their bankers. An old business of which I have some knowledge before the War was making £15,000 a year gross profits. During the War it made excess profits, and was taxed. I am in full agreement with the taxation of every cent of excess profits made during the four years of the War. That is a just tax, and one which businesses could stand. But now businesses want their money and cannot afford to have this tax on their profits. These businesses are already in debt to their bankers right up to the neck, because they have more money employed in the business in the way of goods and credit to their customers, and they have in a few days' or weeks' time to meet the very heavy Excess Profits Tax. Where are they going to find the money? They have not got it. They cannot realise any assets. They have only one source of supply, their banker, and if he fails them they are in the soup. Bankers are certainly behaving very well towards business men, but if the tax was continued for two or three years more it is almost certain that it would ruin a large number of old-established businesses.

Mr. MACQUISTEN

I have listened with interest to what the Chancellor of the Exchequer has said in regard to the commercial incidence of this Excess Profits Tax. It may have been perfectly right during the War, but it should have stopped practically from the day of the Armistice, at least as applied to all new businesses. It was very unjust in its incidence, especially as applied to limited companies, because the shareholders might be persons who had lost a great deal in the War, and they suffered very heavily because many of them were just coming into fruition after years of capital expenditure. It was very much on the lines of the Psalmist, I think it was, who said, "To him that hath shall be given." [Laughter.] I forget who it was, but this is a very unjust tax. At the same time 1 cannot altogether agree with what the right hon. Gentleman said in regard to war profiteers. He suggested that it would be a very dangerous thing to go back four years. That is what is done in regard to Income Tax where there has been an understatement of income or anything of that kind. It is a great misfortune that nothing can be done in regard to the taxaton of the people who have made very large fortunes in war conditions. It may be true that the commercial and practical difficulties of valuation are too great, but it is a very great calamity, because it creates a great feeling of unrest. A single man in a district who has blossomed out from a man of no account to a man of immense means causes a feeling of indignation throughout the whole countryside. It is an immense evil, and it is a great hardship, that out of this War there should have emerged a new commercial aristocracy of war profiteers, who are buying the land of England, and are hoping in the course of one or two generations to become country gentlemen. I should have been glad to see the tax applied to capital appreciation, because there has been enormous capital appreciation, and a good number of people escaped the Excess Profits Tax by the simple practice of going out of business. It was attempted in the Budget of 1917 to stop that, but by that time the horse was stolen. I know men who had large stores of commodities who sold out at the top of the market in 1916, realised all their assets, and went out of business. Possibly some of them started again. There were a great many ways of escaping the tax by capital realisation, and it seems a pity that there should not be some way of getting a declaration from them of what their total estate was at the beginning of the War. That should have been done at the beginning of the War, but it ought to be possible to get a declaration now and test it in some way. But who is it who has prevented anything of that kind being done? It is the hon. Members (Mr. Hogge and Mr. Arnold) who suggested a general levy on capital, which would be not only impracticable, but most unjust, because the majority of people who had money before the War have not profited during the War, but have lost very heavily. I cannot help being struck by the fact that a leading London Liberal daily, at the beginning of the War, advocated that Great Britain should stand aside and should trade with the combatants and make money, and a great many readers of that paper did the same thing, and have now come along, when they saw this suggestion of taxing war profiteers and making a levy upon them, and said: "This will never do. We must propose a general tax on all capital. That will make it wholly impracticable, and, even if it comes to pass, it will fall more lightly on our friends than it would have done if only they had been selected for taxation."

They were the Gentlemen who prevented this being seriously considered, because even the Chancellor of the Exchequer admits that, if this tremendous burden of taxation is falling on the shoulders of all of us, it would be more just and more equitable that those who had profited very largely during the War should be the first to feel it. I personally know several of them who have spent large sums of the money they have made in all sorts of schemes for the benefit of soldiers and for charitable purposes, and have dissipated their profits in the most liberal fashion. Of course, they would always get credit for anything of that sort, but my view is that the majority of these men did not make their war profits consciously. They could not help themselves. It was forced upon them. Before control was imposed on shipping, before it occurred to Mr. Runciman to establish shipping control and the regulation of freights after the ship-owners had made enormous profits, although it occurred to nearly everyone prior to that, I knew a considerable number of ship-owners, and in one or two cases they actually complained to me that they could not lower freights because they would only be making a present to someone else, but that they trusted they would all be called to account for it at the end of the day. I am not blaming these war profiteers. They could not help it in the majority of cases. It was the course of the market that made their profits. One man had the generosity to pay a large subscription into the Treasury, and others may follow suit, but that is not a just and equitable way. I wish the Chancellor of the Exchequer would put out of his mind any support there may be in the country for a general levy. That is an unfair proposal, because it is the people who have the capital who are liable for the war debt. The people who have not capital cannot be liable, because they have nothing to pay. It is all very well for the right hon. Gentleman to say he will not tax a man who has saved and has been thrifty and he will tax the man who squanders his money. You never can tax a man who has squandered his money, because he has not got any. If you could get some means of making some sort of equitable levy on these gentlemen who, consciously or unconsciously, have made great increases, it would lighten the burden of the taxation on all the rest of us who have no capital, and that is what we want to do. But by this suggestion which has been made from the other side, of a general capital levy, you have driven the ordinary man, who is the opposite of a war profiteer—who has lost money—into the arms of the war profiteer, and the two will stand together because of the unfairness of the suggestion. Therefore I wish the Chancellor of the Exchequer would apply his mind between now and the next Budget, or even take consultation with the officials of the Inland Revenue, and see if there is some way by which we can abate this scandal and get at the increment of those who have had undue appreciation of their whole estate. The hon. Members opposite have done more harm to any suggestion of this kind by their proposal of a general capital levy than anyone else. If a scheme of that kind is adopted, we shall be able to get quit of this Excess Profits Tax, and the sooner it is out of the way the better. It is an enormous hindrance to the industry, a cause of great extravagance in conducting business, and it is a great disheartenment for men who are starting life again, and will do great injury to the business and prosperity of the country.

Mr. SEXTON

I am not a financier, and I do not think that I can be accused of being a bloated capitalist, but I subscribe to the theory of the Chancellor of the Exchequer that anything that penalises industry ought not to be insisted upon. Unfortunately, the Chancellor of the Exchequer only dealt with one phase of the financial aspect of industry, and that was the man who makes excess profits. I am not going into the figures, because there very probably I should land into a bog, but I want to remind the right hon. Gentleman that there are other persons in industry besides those who make excess profits and upon whom the industry of, this country depends. As we are on the question of profit, and as the right hon. Gentleman is in a generous mood towards those who make excess profits, may 1 be allowed to direct his attention to the bottom dog who is supposed to have made profits and whom he is taxing more than 100 per cent.? My idea of profit is the margin over and above the cost of running an industry, capital charges, administration charges, etc. The surplus leftover for personal use is looked upon as profit. If that principle applies to the employer, it ought to apply equally to the workman, I want to call the attention of the Chancellor to the hardship he is applying to men who are the backbone of the industry of this country, who have made it possible for excess profits co exist, and without whose industry there would be no profit at all. I heard a statement that a levy on capital was a dangerous thing, and that 100 per cent. would be monstrous and would practically make industry impossible. The point I want to make is this, that I represent the bottom dog of industry, who to-day is being absolutely robbed of what ever advance in wages he gets by the system introduced by the right hon. Gentleman of endeavouring to collect tax from men who are only employed casually one or two days in the week.

The DEPUTY-CHAIRMAN (Sir E. Cornwall)

We are dealing with excess profits. The question now raised by the hon. Member is not before the Committee at the present time.

Mr. CHAMBERLAIN

I think the hon. Member's point arises on the new Income Tax Clause in the name of the right hon. Member (Mr. Adamson) for raising the exemption from income tax up to £250.

Mr. SEXTON

Shall I have an opportunity of raising this question on that Clause?

The DEPUTY-CHAIRMAN

The hon. Gentleman will have an opportunity of speaking when that Clause is under consideration.

Mr. MACKINDER

I want to refer to an aspect of this question which has hardly been dealt with. I doubt whether those who have spoken on behalf of the Labour party have realised the effect of the fall in the value of money. Roughly speaking, money has now only half the purchasing power that it had before. For that reason wages have been advanced. Where they have been advanced to the extent that they are now double what they were before, the real wages, that is, the wages measured in purchasing power, are the equal of what they were before. There are some wages that have been advanced to a greater extent than that. Let us speak broadly, and let us assume that wages have been doubled, and that those wages, therefore, have now the same purchasing power that they had before. If you are to measure profits with any justice, with any sense of purchasing power, with any sense of reality and not merely on the figures in account books, then if you are to have profits on the same scale as wages, those profits would have to be doubled as measured in money in order that you may have the same proportion of profits to wages as you had before the War. That is not the case at the present moment. There are some firms which have paid increased dividends, but if you take the dividends paid in the country at large I doubt very much whether you will to any appreciable extent, taking one firm with another, get beyond the pre-war standard of dividends as measured in percentages. Therefore, as measured in purchasing power, if you look at the money as distributed to the shareholders in the case of a firm which only pays the same dividend that it did before the War, you have in fact halved the dividend. I am not going to quarrel very greatly even with that fact, but I do want to point out what is the result in the case of that portion of the profits which is not distributed in dividends. It is out of that portion that you get your working capital.

At the present time every firm, speaking on the average, requires twice the working capital that it required before the War. If it employs the same number of workpeople it has to pay twice the wages. Therefore, at the end of the week when it comes to pay time the firm must have twice the balance available in the bank for the purpose of paying its wages. From what source can that additional working capital be obtained? As things stand, only out of undistributed profits. Therefore, if you are to obtain the working capital which is necessary not only to set the industry going, but even to maintain the industry in its war conditions, you require to take out of your profits an additional sum equal to your previous working capital. In other words, merely to keep things going as they were before the War you require a very much larger profit to be made by the business. [An hon. member: "You have to buy your raw material."] You have to buy your raw material and everything else, and it all comes to the same thing that you have wages rolling up once more. You have to pay for the transport of your goods, and the greater part of the cost of transporting your goods, of course, goes in wages. Again and again the whole question comes to this, that we have all along the line half values as measured in money to-day. You must not speak merely of wages in half values, but of everything else in half values. My quarrel with the Chancellor of the Exchequer is that he has not removed the whole of this tax instead of one-half of it. [AN HON. MEMBER: "He should have doubled it!"] Doubled 80 per cent.? I cannot follow the hon. Member's mathematics. I do not know how he is going to make that inroad on capital. An hon. Member who spoke from the Front Opposition Bench referred to the difficulty he had in dealing with his own followers in his own trade union. I put it to the Labour leaders that at this moment they have not simply to voice what I would call the current ignorance in regard to these matters. It is up to them to acquaint themselves with the real position and to put it to their people, and to have some regard for realities that are not obvious. It is for them to look into the things that are not obvious. A working man, busy in his daily work, has not time to look into those things, and it is for their leaders to look at them and study the finance of them. They may one day be responsible for the finances of this country. If that be so, let us feel that we are in safe hands, and that they are attempting to realise facts.

We want to get industry started again. We want to get all our men employed. How are they to get employment unless we allow the working capital to be accumulated which is to give them employ- merit? Where are you to get that working capital from? I have just come back from speaking through the country on behalf of the Chancellor of the Exchequer with a view to getting subscriptions to the Victory Loan. I have bad an opportunity of meeting a large number of people who were doing their utmost to subscribe to that Loan, because they felt it was essential in order that we might place not only the finance but the currency of this nation on a safer footing. Again and again I have realised the fact that the huge sums of money which have been subscribed is really capital and not profit. Men have taken the title deeds of their property, they have taken their securities in stocks and shares and have borrowed at the bank, and on that borrowing they have been able to make these considerable subscriptions to the Loan. They were utilising the capital resources of the country. One hon. Member who spoke just now referred to what I know is the absolute truth in regard to large portions of this country, that industry has been set going again by utilising the whole wealth of the business and not merely out of profit, but by going to the bank and borrowing. What is the effect of that? You are at the present moment utilising your banking system up to the extreme limit of safety. You are locking up the resources of the banks at a time when we want to keep them as liquid as we possibly can. How are you to avoid that? You can avoid that by leaving to the businesses, as far as possible, the profits which they make, in order that they may utilise those profits for the purpose of the expansion of trade, which will give employment, instead of borrowing from the bank. There is possibly something to be said for limiting the amount of profits distributed in dividends, and if some scheme had been devised for that purpose in order that we might secure that the largest proportion possible of the profits made in business were retained as working capital and utilised for the expansion of the business, I think we should have been going on safe lines.

6.0 P.M.

The effect of this tax is to drive commercial and industrial institutions to the bank in order to borrow the money which has been taken from them by the Chancellor of the Exchequer. And in regard to the higher profits, may I point out that the greater part of the Excess Profits Tax has been due to the fall in the value of money. The profits may be larger, but in purchasing power they are not larger. You have sold goods to the Govenment, perhaps, you have had to sell them, at higher prices. You made apparently larger profits, you required larger profits in order to have larger working capital for the purchase of raw material and to pay for wages; but that larger profit, though it is a real increase in profit, is not an increase in profit as measured in purchasing powers. It is only an increase as measured in counters, in coins, in figures in your bank books, and of that vast sum of £300,000,000 that has been gathered in by the Chancellor of the Exchequer, a very large portion—probably the whole, if we take the country as a whole and take one firm with another, has been due to a rise in profits inevitably due to a rise in wages, which rise in profits is really essential now that you have come to a Peace time settlement, for the purpose of increased working capital. You obtain that working capital by a roundabout system: The Chancellor of the Exchequer has taken the money from the profits, and you have, therefore, to finance your industries, to go to the banks and borrow on the capital. For that reason I feel very strongly, especially now that the War has lasted five years, now that we have got new industries started in all directions, that at least we ought to be sure that we are going to relieve this unfair tax, whatever, tax is substituted at the end of the year, and I appeal to Labour members to explain to their people the effect in the change of the value of money, and the need for working capital, in order to give employment to the millions of people who are coming back from the Army at the present time.

Mr. W. R. SMITH

I am bound to say, speaking as a member of the Labour party, that the statement of the Chancellor of the Exchequer in regard to this matter and all the speeches that have been made since, have in no way removed from our mind the necessity of pressing this point on the Committee. The Chancellor of the Exchequer emphasised the fact that there were great defects in the method of levying this taxation. No one would deny that it has some defects. Almost every one of our war-time proposals, naturally and necessarily perhaps conceived in a hurried manner, contained some defects which, if the matter had been subjected to-full consideration at the time, might have been avoided. But it is possible to remove the defects of this war tax without dealing with it in the manner which the Chancellor himself has suggested. One of the principal defects that have been emphasised has been its effect on new businesses; but the new proposals do not give any special relief to new businesses. In so far as the relative position of the old standing concerns are concerned, they still have no pre-war basis. They still are taxed on the same point as they were when the 80 per cent. was in force. Therefore, apart from the fact that they do get a reduction from 80 to 40 per cent., they are not relieved. They are relieved to that extent, but so are the other businesses; but the relative positions of the two concerns are exactly on the same basis as they were when the full 80 per cent. was levied.

I suppose it is true to say that we have not the same experience in this quarter of the House so far as business is concerned as some of the hon. and right hon. Members who sit on other benches, but our work and our experience do bring us into touch with business people, and in reference to that phase of the situation we have yet to find any business in this country that has been seriously handicapped in its development in the imposition of this Excess Profits Duty. I know quite a number of concerns in the industry with which I am associated, that have paid very substantial profits after the Excess Profits Duty was paid, and are already in a position to meet new construction for the extension of works, notwithstanding the fact that they have been taxed in this direction. But it is said that this is a war measure, and that we have now passed away from war conditions, and that this necessitates the modification which is proposed, but I wish to suggest to the Committee that we have not yet passed away from that phase of war conditions which necessitated taxation of this character being imposed. One of the reasons why it was imposed was to restrict the profiteering that was going on. Can it be suggested to-day that the profiteering has ceased? Have we not been informed from the Front Bench that the Cabinet are giving this matter their careful consideration, Having regard to the great dissatisfaction that exists in the country because of the high price and the profiteering that prevail? So far as one can judge from the prices profiteering exists as much to-day as it has ever done during the War, and while that continues how can it be unfair to urge at this juncture that a tax that had for its purpose the taking for public purposes of money made in this manner should not be continued during the current year as it has been during the years that have just passed by?

There is another aspect of the case which is worth emphasising. We have not passed away from war conditions in the sense that we are able to meet current expenditure without borrowing, we have still to borrow in the peace Budget in order to meet current expenditure. I would suggest that it is most unwise from the point of view of finance that we should, during the time we have to borrow to meet current expenditure, reduce a duty of this description. It has been pointed out that there is no Member of this House who has anything to say in favour of the man who is making abnormal profits, but that is the only kind of man we wish to touch. If it is decided to give consideration to the people in business, who after all are only doing a legitimate trade, then that can be done by some adjustment of the tax apart from the method of taking off 50 per cent. of the taxation previously imposed. It will be easy to introduce some Clause or paragraph giving consideration to the new business, whereby those who are engaged in it should not be so unfairly handicapped compared with older businesses as they have been. All these phases of the situation can be met and the full 80 percent retained, which would have enabled us to get a very substantial amount from those who undoubtedly at the moment are indulging in profiteering, which is just as rife and as brutal to-day as anything that has taken place in the War time. I have here a Press cutting of a circular issued by a Cardiff firm of ship-owners who are seeking to raise capital to buy a vessel of just over 5,000 tons dead weight which a short time ago was purchased for £100,000. Is there anybody in this Committee who purports to suggest that that £30,000 extra should not be subject to the tax of 80 per cent. seeing that that price is only possible because of the abnormal conditions which exist at the present moment; and in the circular it is stated, as an inducement for people to invest their money, with the reduction in the Excess Profits Duty we look for a very good return in the shape of dividends and a rise in the market value of the shares before long. This reduction in the Excess Profits Duty is the direct inducement to these people, and they are taking the advantage of it so far as these new ventures are concerned.

But it is said that if we continue this 80 per cent. we shall be seriously handicapping the industry in this country, and that the money is wanted in order to increase the capital of the concerns themselves. How can that be, to any great extent, when we read every day of firms increasing their capital holdings without a single extra penny being put into the concern by inflating their stock? We are continually being reminded of things of that description taking place, and if the firms are really in difficulty from the point of view of working capital, how is it possible to develop the concerns on the lines suggested? It seems to me, from the point of view of really sound finance, that the 80 per cent. tax should have been retained; if we allow those who have been making huge profits— and it can be adjusted to meet the circumstances of those who are not making undue profits with full regard to those who are handicapped by the defects of the system in the past—to receive this reduction of 50 per cent. on the previous level we are simply making them a present of that amount, and then permitting them to invest it in War Loan, on which the nation will be called to pay interest in the future. That is not sound finance. It is not good for the future of this country, and we ought to insist on the full 80 per cent. being taken, ending the Clause in such a fashion as to give relief to those on whom it pressed unfairly and harshly, as far as new businesses are concerned. Speaking on behalf of the Labour party, we cannot withdraw our opposition to this proposal. We think it essential in the best interests of the country that the Excess Profits Duty should be continued at 80 per cent. for some time longer. We recognise that some other proposal would have to be forthcoming sooner or later, because it is a war measure, and peace must be subject to some adjustment. But the time of adjustment is not yet, especially having regard to the fact that we are still borrowing money in order to meet our current expenditure at the moment.

Mr. FRANCE

Yesterday in one of those rare moments when we find the House facing the serious realities of things there was general agreement that the most important consideration with regard to the industrial life of the country was to get down to the work of manufacture and production and to stimulate it as far as we possibly could. I take it that the Chancellor of the Exchequer, in reducing this tax from 80 to 40 per cent. has no feeling or sentiment whatever of preference or desire to let off anyone with regard to taxation itself. He desires to do something which he believes will encourage businesses to be conducted on more efficient and less wasteful lines, and that the money which is made in those businesses should be put into their development for the future advantage of the country, and I do wish that those who speak from the Labour benches, fund my hon. Friend who spoke from the Front Bench this afternoon in opposition to this Clause, would apply their minds rather more to those who are the real criminals, if I may use the word, in regard to profiteering than simply to be asking that the whole of the excess profits from these businesses should be taken. There are two classes of profiteers who have not been touched by the Excess Profits Tax. Those individuals, journalists and the like—and I think my hon. Friend on the Front Bench who has been busily, and I hope lucratively employed during the War in journalistic enterprises to the great advantage- of his own income, is not one of those who had to pay the Excess Profits Tax—are one class of individuals who made large sums out of the War, by writing about the War. They have been let off altogether. But there is another class referred to by an hon. and learned Friend, one of the Members for Glasgow, who showed a lamentable ignorance—for Scotland—of what is contained in the Psalms. I am sorry that the Chancellor of the Exchequer was not in his place at the time. There is one class of men which has perhaps been more responsible for profiteering than any other in this country. They are men who have escaped almost altogether Income Tax and Excess Profits Tax.

They are represented by the type of man who goes outside his business, makes no return from the point of view of income, speculates in something that is outside his business, and is allowed to escape under the plea that it is an increment in the value of capital. Men have gone into a business of which they have had no previous knowledge, have tainted that business with their own excesses, and finally have escaped taxation. In the food trade it has been done over and over again. Men have got to know that there is almost certainly to be a rise in the price of an essential Commodity. They have plunged into the markets, bought shipments of goods, and sold them at a profit. The goods have been sold a second time at a profit, and all the time the price has been sent up. I have not the slightest doubt that many of them have escaped Income Tax. They have, in fact, escaped both Income Tax and Excess Profits Tax. I wish the Chancellor of the Exchequer could devise some means of tackling this kind of profits. There is the case of shipowners who have sold ships. I know of one case in particular, where the person concerned was boasting that he had sold ships at five times the sum he paid for them. If these ships were lost in the course of the War, and had to be replaced, I can quite understand it being necessary to regard the ships as something worth very much more than they cost to build. But many of these people have gone out of the shipping trade, have sold their ships, and have gained for themselves and distributed to their shareholders increment value in their shares, none of which has been liable to Income Tax, and on none of which Excess Profits Tax has been paid. If there were a general combinaiton of effort on the part of the Labour party and everyone else in this House to back and assist the Chancellor of the Exchequer in reaching such men, we should do some real service to the country and to taxation. But the making of a general statement, particularly by those who do not know very much about business, who look upon it simply from a theoretical or political standpoint, and advocate profits being taxed up to the hilt regardless of much-needed developments, seems to me to miss the mark, and their suggestions are not of much value either to the Chancellor of the Exchequer or the nation. I urge very strongly that there is this loophole with regard both to Income Tax and excess profits, that there are men selling goods not in their own ordinary line of business, thereby escaping both Income Tax and Excess Profits Tax, and that upon them the Chancellor of the Exchequer ought not only to have his eye but to put his hand.

Major E. WOOD

I want to make only a few remarks before we divide on this Clause. I shall regret it if the Labour party carry out their express decision of voting against the Clause. I and a great many others will feel that if they do that they will be acting on what is, if I may say so without offence, a false issue. Nobody could have listened to this Debate, which has been both valuable and instructive, without having recognised that there- were two main lines of argument running through it. One was consideration of the value of the Excess Profits Tax as what I may call an engine of taxation, and the other was the consideration of the whole question of profiteering. If I at all correctly interpret the view held by the great majority in the Committee, including many on the Labour Benches, I think it would not be inaccurate to say that Excess Profits Tax is a bad engine of taxation, but at the same time in all parts of the House there has been expressed a most determined and strong feeling on the subject of profiteering. Therefore, when hon. Members vote against this Clause, they will be voting on what a great many of them know to be a bad engine of taxation, because of something else that they, as-well as the rest of us, would like to tackle by the best methods possible. I do not think it is foreign to this discussion to bear in mind, and to have always before our mind, the strength of the feeling that exists up and down the country on the question of profiteering. I heard an hon. Member speaking from the Labour Benches just now express the view that in a short time the saying, "What Lancashire thinks to-day England will think to-morrow," will be revised in favour of a new edition, "What South Wales thinks to-day England will think to-morrow." We have a saying in Yorkshire, "What Yorkshire thinks this morning, England thinks this afternoon." I can only say for the West Hiding of Yorkshire that it is impossible to go to a single public meeting or to meet anyone in that industrial part of England without having profiteering thrown at your head in and out of season. Let us clear our minds as to what we mean by profiteering. I have been told by a friend of mine that he knew a shipowner— I shall not give any names—who, when he had his friends to dine with him, as a great privilege unlocked a safe in his room, and as soon as the safe door was open the floor was covered with Treasury notes that he had hoarded up for fear of having to pay Excess Profits Duty.

Mr. CHAMBERLAIN

Can my hon. Friend give me that gentleman's name? It is a case for investigation by the legal advisers of the Department.

Major WOOD

I will certainly place my right hon. Friend, in confidence, in communication with my informant, and he will then be able to take whatever action he may think fit. I would say in passing to the Labour Members that they should not lose sight. of the fact that under this Budget, by virtue of Income Tax and Death Duties, even the profiteer is by no means escaping without a very heavy mulct on the profits he has made. Apart from that, I would like to press on the Chancellor of the Exchequer that I believe the right course is the course that he is pursuing in this Clause. I agree with an hon. Friend of mine who represents one of the Divisions of Glasgow, in thinking that the whole system of Excess Profits is bad and should be removed, but I would couple that statement with the taking of such steps as would make it clear to the country that the Government and the Chancellor of the Exchequer are determined by every means in their power to reach the real profiteer. I do not know how to define the real profiteer, but I am convinced it can be done. I hope it will not be left to the Income Tax Commission to deal with this question, but that it is one of the matters to be brought within the purview of the Select Committee, in order that they may consider whether this tax, or any other edition of it, may not be suitably included as a remedy for the evils of which we all complain. I most earnestly press my right hon. Friend to bear in mind that he has to consider something more than the finance and the economics of it. He is up against what is nothing less than a psychological problem. There is a suspicion and a belief that a great deal of this profiteering is going on. Let us at the earliest moment get at the facts, but let us not vote on what, I say again, is a false issue, in favour of what I believe to be a wholly vicious form of taxation.

Mr. CHAMBERLAIN

My hon. and gallant Friend has put very clearly and very temperately what has been in the minds of many hon. Members—the fact, not that we want to tax any portion of the kind of profits of which my hon. Friend speaks, but that these are profits which ought not to be made at all. They are profiteerings of an illegitimate kind, with a consequent rise in prices and a general rise in the cost of living such as it is the wish of all of us to stop. I would gladly receive any suggestion from the Committee on profiteering. Both I and my colleague will be glad of any help that the House or the Select Committee can give us in showing how that illegitimate profiteering can be made to cease. I would add for myself that in the midst of the many difficult problems of taxation that confront us I shall not be ungrateful for practicable suggestions as to methods of raising additional revenue. There is one word I wish to say to hon. Gentlemen opposite who have announced their intention of voting against this Clause. Do they understand the effect of their vote? [HON. MEMBERS:" Of course we do!"] Perhaps other Members may not, and they will pardon me for telling the rest of the House. They are going to vote for the termination of the Excess Profits Duty.

Captain W. BENN

The right hon. Gentleman has put a dilemma which is very common indeed. I am not going to vote against the Clause at all, because I am in favour of the Excess Profits Duty in this form, but I would point out to those who intend, for reasons which seem to them good, to vote against the Clause, that they are being compelled to vote for an absurdity, or shall I say a paradox, in order to give emphasis to opinions which they hold. Really, the point which the Chancellor of the Exchequer has sought to make against them is not really a point at all. The hon. Member for Holderness (Captain Stanley Wilson) is an old Parliamentary hand, and he knows that that sort of dilemma frequently faces us. The Chancellor of the Exchequer tried, I think, to elude the point generally made this afternoon by saying that where a man made illicit profits he hoped to check that by all means.

Mr. CHAMBERLAIN

Illegitimate.

Captain BENN

not know that there is any difference in this matter between illegitimate and illicit. Every speaker from the other side of the House pointed out that during the War large sums of money have been accumulated and which the Chancellor is not proposing to tax. That accumulation is, I venture to say, an affront to the good feeling of this country. Very great sacrifices have been made and willingly by all classes, and the thought that while others have been making the ultimate sacrifice some have been, consciously or unconsciously, accumulating vast wealth is an affront to the best opinion of the country. Although the Chancellor's motives are no doubt excellent in attempting to relieve industry for the future by reducing the Excess Profits Tax he has in his own speech confessed that the Government is quite unable, no doubt for excellent reasons, to take toll, and it should be a big toll, of the profits accumulated.

Mr. HOGGE

The Chancellor, in his reply, wanted the House clearly to understand what we were doing in dividing on this Clause. I also want to put my side of the matter. Nearly everybody who has spoken is against the Excess Profits Duty. If they come into the Lobby with us they will get rid of the tax.

Question put, "That the Clause stand part of the Bill."

The Committee divided: Ayes, 294; Noes, 37,

Division No. 69.]	AYES.	[6.30 p.m.
Adkins, Sir W. Ryland D.	Coats, Sir Stuart	Hickman, Brig-General Thomas E.
Agg-Gardner, Sir James Tynte	Cockerill, Brigadier-General G. K.	Hilder, Lieut.-Colonel F.
Allen, Colonel William James	Colfox, Major W. P.	Hoare, Lt.-Col. Sir Samuel J. G.
Archdale, Edward M.	Colvin, Brigadier-General R. B.	Hohler, Gerald Fitzroy
Armitage, Robert	Coote, Colin R. (Isle of Ely)	Hood, Joseph
Ashley, Col. Wilfred W.	Coote, William (Tyrone, S.)	Hope, Harry (Stirling)
Astor, Major Hon. Waldorf	Cope, Major W. (Glamorgan)	Hope, James Fitzalan (Sheffield)
Austin, Sir H.	Cory, Sir Clifford John (St. Ives)	Hopkins, J. W. W.
Baldwin, Stanley	Cory, Sir James Herbert (Cardiff	Hopkinson, Austin (Mossley)
Balfour, George (Hampstead)	Courthope, Major George Loyd	Horne, Edgar (Guildford)
Balfour, Sir Robert (Partick)	Craig, Captain Charles C. (Antrim)	Horne, Sir Robert (Hillhead)
Banbury, Rt. Hon. Sir F. G.	Craig, Col. Sir James (Down, Mid.)	Howard, Major S. G.
Banner, Sir J. S. Harmood-	Craik, Right Hon. Sir Henry	Hughes, Spencer Leigh
Barlow, Sir Montague (Salford, S.)	Croft, Brig.-General Henry Page	Hunter, Gen. Sir A. (Lancaster)
Barnes, Rt. Hon. G. N. (Gorbals)	Davidson, Major-Gen. Sir John H.	Hunter-Weston, Lieut.-Gen. Sir A. G.
Barnes, Major H. (Newcastle, E.)	Davies, M. Vaughan- (Cardigan)	Hurd, P. A.
Barnett, Captain Richard W.	Davison, Sir W. H. (Kensington)	Jackson, Lieut.-Col. Hon. F. S. (York)
Barnston, Major Harry	Dawes, J. A.	Jephcott, A. R.
Barton, Sir William (Oldham)	Denison-Pender, John C.	Jesson, C.
Beckett, Hon. Gervase	Dennis, J. W.	Jodrell, N. P.
Bell, Lieut.-Col. W. C. H. (Devizes)	Dewhurst, Lieut.-Com. K.	Johnstone, J.
Bellairs, Com. Carlyon W.	Doyle, N. Grattan	Jones, Sir Edgar R. (Merthyr Tydvil)
Benn, Sir Arthur S. (Plymouth)	Du Pre, Colonel W. B.	Jones, J. Towyn (Carmarthen)
Benn, Com. Ian Hamilton (Greenwich)	Edgar, Clifford	Joynson-Hicks, William
Bennett, T. J.	Eyres-Monsell, Commander	Kellaway, Frederick George
Bethell, Sir John Henry	Falle, Major Sir Bertram Godfray	Kelly, Major Fred (Rotherham)
Birchall, Major J. D.	Farquharson, Major A. C.	Kerr-Smiley, Major P.
Bird, Alfred	Fell, Sir Arthur	King, Commander Douglas.
Blades, Sir George R.	Fisher, Rt. Hon. Herbert A. L.	Kinloch-Cooke, Sir Clement
Blair, Major Reginald	FitzRoy, Capt. Hon. Edward A.	Knight, Captain E. A.
Blake, Sir Francis Douglas	Flannery, Sir J. Fortescue	Lane-Fox, Major G. R.
Borwick, Major G. O.	Forestier-Walker, L.	Law, A. J. (Rochdale)
Bowles, Col. H. F.	Foxcroft, Captain C.	Law, Right Hon. A. Bonar (Glasgow)
Bowyer, Captain G. W. E.	France, Gerald Ashburner	Lister, Sir R. Ashton
Boyd-Carpenter, Major A.	Fraser, Major Sir Keith	Lloyd, George Butler
Bramsden, Sir T.	Gange, E. S.	Locker-Lampson G. (Wood Green)
Brassey, H. L. C.	Ganzoni, Captain F. C.	Locker-Lampson, Com. O. (Hunt'don)
Breese, Major C. E.	Gardiner, J. (Perth)	Lorden, John William
Bridgeman, William Clive	Gardner, E. (Berks, Windsor)	Lort-Williams, J.
Briggs, Harold	Gibbs, Colonel George Abraham	Lowther, Major C. (Cumberland, N.)
Brittain, Sir Harry E.	Gilmour, Lieut.-Colonel John	Lyle, C. E. Leonard (Stratford)
Broad, Thomas Tucker	Glanville, Harold James	M'Donald, Dr. B. F. P. (Wallasey)
Brown, Captain D. C. (Hexham)	Glyn, Major R.	Mackinder, Halford J.
Buchanan, Lieut.-Colonel A. L. H.	Goulding, Rt. Hon. Sir E. A.	M'Laren, R. (Lanark, N.)
Bull, Right Hon. Sir William James	Gray, Major E.	McMicking, Major Gilbert
Burdon, Colonel Rowland	Greame, Major P. Lloyd	Macquisten, F. A.
Burn. Colonel C. R. (Torquay)	Green, J. F. (Leicester)	Maddocks, Henry
Butcher, Sir J. G.	Greene, Lt.-Col. W. (Hackney, N.)	Magnus, Sir Philip
Campbell, J. G. D.	Gregory, Holman	Mallaby-Deeley, Harry
Carew, Charles R. S. (Tiverton)	Gretton, Col. John	Mallalieu, Frederick William
Carr, W. T.	Griggs, Sir Peter	Malone, Col. C. L (Leyton, E.)
Carter, R. A. D. (Manchester)	Gritten, W. G. Howard	Malone, Major P. (Tottenham, S.)
Casey, T. W.	Guest, Maj. Hon. O. (Leic, Loughboro')	Marks, Sir George Croydon
Cautley, Henry Strother	Guinness, Capt. Hon. R. (Southend)	Marriott, John Arthur R.
Cayzer, Major H. R.	Guinness, Lt.-Col. Hon. W.E. (B. St. E.)	Martin, A. E.
Cecil, Rt. Hon. Evelyn (Aston Manor)	Hall, Lieut.-Col. Sir Fred. (Dulwich)	Mildmay, Col. Rt. Hon. Francis B.
Cecil, Rt. Hon. Lord Hugh (Oxford U.)	Hallas, E.	Mitchell, William Lane-
Cecil, Rt. Hon. Lord R. (Hitchin)	Hamilton, Major C. G. C. (Altrincham)	Molson, Major John Elsdale
Chamberlain, Rt. Hon. J. A. (Birm., W.)	Hancock, John George	Mond, Rt. Hon. Sir Alfred Moritz
Chamberlain, N. (Birm., Ladywood)	Haslam, Lewis	Moreing, Captain Algernon H.
Cheyne, Sir William Watson	Henderson, Major V. L.	Morrison, H. (Salisbury)
Child, Brig.-General Sir Hill	Henry, Denis S. (Londonderry, S.)	Morrison-Bell. Major A. C.
Clay, Capt. H. H. Spender	Herbert, Denniss (Hertford)	Mosley, Oswald
Mount, William Arthur	Rendall, Atheistan	Turton, Edmund Russborough
Murchison, C. K.	Roberts, Sir S. (Sheffield, Ecclesall)	Waddington, R.
Murray, Lt.-Col. Hon. A. C. (Aberdeen)	Robinson, S. (Brecon and Radnor)	Walker, Colonel William Hall
Murray, Hon. G. (St. Rollox)	Robinson, T. (Stretford, Lanes.)	Ward. Colonel L. (Kingston-upon-Hull)
Murray, William (Dumfries)	Rodger, A. K.	Ward, W Dudley (Southampton)
Nail, Major Joseph	Rogers, Sir Hallewell	Wardie, George J.
Neal, Arthur	Roundell, Lieut.-Colonel R. F.	Warner, Sir T. Courtenay T.
Newman, Major J. (Finchley, Mddx.)	Rowlands, James	Watson, Captain John Bertrand
Newman, Sir R. H. S. D. (Exeter)	Royds, Lt.-Col. Edmund	Westen, Colonel John W.
Nicholl, Com. Sir Edward	Samuel, A. M. (Farnham, Surrey)	Wheler, Colonel Granville C. H.
Nield, Sir Herbert	Samuel, Rt. Hon. Sir H. (Norwood)	White, Col. G. D. (Southport)
Norman, Major Rt. Hon. Sir Henry	Samuel, S. (Wandsworth, Putney)	Whitla, Sir William
Norris, colonel Sir Henry G.	Sanders, Colonel Robert Arthur	Whittaker, Rt. Hon. Sir Thomas P.
Norton-Griffiths, Lt.-Col. Sir J.	Scott, Leslie (Liverpool, Exchange)	Williams, Lt.-Com. C. (Tavistock)
Oman, C. W. C.	Scott, Sir S. (Marylebone)	Williams, Col. Sir R. (Dorset, W.)
O'Neill, Capt. Hon. Robert W. H.	Seager, Sir William	Williamson, Rt. Hon. Sir Archibald
Ormsby-Gore, Hon. William	Seddon, J. A.	Willoughby, Lt.-Col. Hon. Claud
Palmer, Major G. M. (Jarrow)	Shaw, Hon. A. (Kilmarnock)	Wills, Lt.-Col. Sir Gilbert Alan H.
Palmer, Brig.-Gen. G. (Westbury)	Shaw, Captain W. T. (Forfar)	Wilson, Capt. A. Stanley (Hold'ness)
Parker, James	Shortt, Rt. Hon. E. (N'castle-on-T., W.)	Wilson, Col. M. (Richmond, Yorks.)
Parry, Major Thomas Henry	Smithers, Alfred W.	Wilson-Fox, Henry
Pearce, Sir William	Sprot, Colonel Sir Alexander	Wolmer, Viscount
Peel, Lt.-Col. R. F. (Woodbridge)	Stanier, Captain Sir Beville	Wood, Major Hon. E. (Ripon)
Pennefather, De Fonblanque	Stanley, Colonel Hon. G. F. (Preston)	Wood, Sir J. (Stalybridge and Hyde)
Perkins, Walter Frank	Starkey, Capt. John Ralph	Wood, Major S. Hill- (High Peak)
Perring, William George	Steel, Major S. Strang	Woolcock, W. J. U.
Philipps, Sir O. C. (Chester)	Stephenson, Colonel H. K	Worsfold, T. Cato
Pilditch, Sir Philip	Stewart, Gershom	Worthington Evans, Rt. Hon. Sir L
Prescott, Major W. H.	Strauss, Edward Anthony	Yeo, Sir Alfred William
Pulley, Charles Thornton	Sugden, W. H.	Young, Sir F. W. (Swindon)
Purchase, H. G.	Sykes, Col. Sir A. J. (Knutsford)	Young, William (Perth and Kinross)
Ramsden, G. T.	Sykes, Sir C. (Huddersfield)	Younger, Sir George
Ratcliffe, Henry Butler	Talbot, G. A. (Hemel Hempstead)
Raw, Lieutenant-Colonel Dr. N.	Terrell, Capt. R. (Henley, Oxford)	TELLERS FOR THE AYES.ߞ Lord
Rawlinson, John Frederick Peel	Thomas-Stanford, Charles	Talbot and Captain F. Guest
Rees, Sir J. D. (Nottingham. E.)	Townley, Maximilan G.
Reid, D. D.	Tryon, Major George Clement
NOES.
Adamson, Rt. Hon. William	Graham, W. (Edinburgh)	Sitch, C. H.
Arnold, Sydney	Griffiths, T. (Pontypool)	Smith, W. (Wellingborough)
Bell, James (Ormskirk)	Grundy, T. W.	Spoor, B. G
Bowerman, Right Hon. C. W.	Guest, J. (Hemsworth, York)	Swan, J. E. C.
Bromfield, W.	Hall, F. (Yorks, Normanton)	Thomas, Brig.-Gen. Sir O. (Anglesey)
Cairns, John	Lunn, William	Tootill, Robert
Carter, W. (Mansfield)	Newbould, A. E.	Wignall, James
Crooks, Rt. Hon. William	Richardson, R. (Houghton)	Williams, J. (Gower, Glam.)
Davies, Alfred (Clitheroe)	Roberts, F. O. (W. Bromwich)	Young, Robert (Newton, Lanes.)
Davison, J. E. (Smethwick)	Sexton, James
Devlin, Joseph	Shaw, Tom (Preston)	TELLERS FOR THE NOES.—Mr.
Galbraith, Samuel	Short, A. (Wednesbury)	T. Wilson and Mr. Hogge.