HC Deb 23 July 1919 vol 118 cc1488-526

(2) Section thirty-eight of the principal Act shall, as respects excess profits arising in any accounting period commencing on or after the first day of January, nineteen hundred and nineteen, have effect as if forty percent. of the excess were substituted as the rate of duty for eighty percent. of the excess or, in the case of an accounting period which commenced before that date but ends after that date, as if forty percent. were substituted for eighty percent. 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 ends 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 percent.


I beg to move, at the end of Sub-section (2), 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 late of eighty percent. even though the accounting period ends after the thirty-first day of December, nineteen hundred and eighteen. There is one point in regard to this Amendment, that it is quite possible my hon. Friend can set my mind at ease and make the position clear. This Amendment deals with cases where there has been a loss on the stocks before the 31st of December, and by this Amendment we seek to get the allowance of extra profits at the rate of 80 percent., and not 40 percent., which comes into operation after the 31st of December. Where the loss has clearly occurred in the 80 percent. period, we suggest that the allowance should be at the 80 percent., and not 40 per cent. When the matter was before the House the Chancellor of the Exchequer stated that representatives of the various industries would be allowed to confer with the Inland Revenue authorities, and he said the matter was difficult and technical, and he hoped the Committee would not press him on that point. The difficulty is to establish that the loss occurred before the 31st of December, but if it can be clearly established I do ask my hon. Friend to agree that the allowance should be at the rate of 80 percent., and not 40 percent. One word will settle the point, and it is not necessary for me to press the House further.


I beg to second the Amendment.


I quite agree this is a very technical subject, but I will be as brief as I can in stating why we cannot accept this Amendment. My hon. Friend did not give us any indication of the evi- dence he had that there had been any particular shrinkage in stocks at the time named. It may be that in individual cases there has been a drop in values that can be traced to the time of the Armistice, or it may have occurred between that date and the end of the year. I have had no evidence of it, and my hon. Friend says it would be difficult to ascertain the facts. I submit that it would not only be difficulty but it would be absolutely impossible. It would mean, first of all, that the businesses whose accounts you were investigating must have taken stock on Armistice Day, and I do not think many businesses in this country did that. If that process had not been undertaken, it would be quite impossible to get an accurate estimate of the amount of stock on which depreciation had occurred.

Then there is another point. In the accounts of a year, or whatever period may have been adopted for any purpose of accurate accounting, you could only take into consideration the stock that stood in the books of that business or company at the day of the last accounting period, and if this Clause had been got rid of and stocks had been acquired subsequently which suffered this unparalleled depreciation on Armistice Day there would be no means of tracing them. I have every sympathy with my hon. Friend and anybody else who gets into trouble over his stocks, for they are, indeed, troublesome things. Gladly as I would meet this point, I cannot do so on this occasion, because I believe the proposal to be entirely impracticable even if we were shown that there was any need for special consideration to be given to the particular point which the hon. Member has raised.


Does the hon. Gentleman mean to go back on what the Chancellor of the Exchequer stated on the Committee stage, that there would be some further conference on this subject, and is he not now going back absolutely upon what the Chancellor of the Exchequer promised?


I never go back on the right hon. Gentleman's promises. I did not hear the promise, but, assuming he made such a promise, and it is a fact, the question of accepting the Amendment has nothing to do with it. If the Chancellor of the Exchequer gave an undertaking of that nature, I have no doubt he will keep his promise.

Amendment negatived.

The following Amendment stood on the Paper in the name of Captain W. BENN:

In the Second Schedule [Preferential Rates], to leave out the words

Articles chargeable with the new Import Duties imposed by s. 12 of the Finance (No. 2) Act, 1915 Two-thirds of the full rate.

Captain BENN

During the course of the Debate on this Bill, the period over which the new Import Duties have been imposed has been changed by an Amendment. As this Amendment raises the question of the application of the principle of Preference to these duties, am I not in order in moving my Amendment?

Mr. DEPUTY-SPEAKER (Mr. Whitley)

We have already come to a decision on this point.

Motion made, and Question proposed, That the Bill be now read the third time.


I desire again to call attention to the inadequate provision by the Government in the Finance Bill for the real financial requirements of the year 1919 –20, and to their neglect to reduce expenditure by insisting on rigid economy in all the great spending Departments of the State. Perhaps I may be allowed to say what are the real financial requirements of the year and the provision that the Government have made to meet them in the Finance Bill. The Government's Estimate for 1919 –20, as contained in the final balance-sheet in the White Paper, is £1,435,000,000, but that was only arrived at after Appropriations-in-Aid to the, amount of £254,000,000 had been credited to the different Departments. That £254,000,000 was derived from the sale of war material, which was really the realisation of capital expenditure in previous years and not in the year 1919 –20. I submit that these Appropriations-in-Aid ought not to have been deducted from the expenditure of 1919 –20, but ought rather to have been applied in reduction of the floating dept up to 31st March last. If that sum is added to the expenditure of the year, the total is £1,689,000,000. The Government, on the other hand, estimate the revenue at £1,201,000,000. There, again, they include a sum of £200,000,000 that has been derived by the sale of war materials In the year 1919 –20. Surely the sale of war materials bought by expenditure in previous years is not revenue in the proper sense for the year 1919 –20, and that along with the - £254,000.000 previously drawn from the same source should have been properly applied to the reduction of floating debt. We do not stop at an expenditure of £1,689,000,000, because already, though the Budget was not introduced till the end of April, we have had a Supplemental Estimate of £26,400,000 for coal.


This is not the occasion for discussing that subject. We are only concerned with the taxes that the Finance Bill raises. The discussion which the hon. Member is now raising is a matter for the Committee of Supply.

9.0 p.m.


Am I not entitled to draw attention, for instance, to the Supplemental Estimate of £75,000,000 introduced on the 3rd June, in addition to the Estimates on Budget day, increasing as it does the expenditure of the year 1919–20, and necessitating, as it naturally must, the provision of greater revenue?


That would come up, of course, in Supply on the Estimate to which the hon. Member refers. Of course, he is entitled to say that the present taxes are inadequate, but he is not. entitled to review other matters which will come before the House later.


The only reason why I say that the taxes are inadequate was because I was going to show the actual deficit for the year 1919–20, as at present disclosed by the Supplemental Estimates, by the falling exchange with America, for instance, which increases our obligations to the United States by £100,000,000, is nearly £900,000,000, and not £333,000,000. It was on that ground that I was going to urge that the revenue provided was inadequate to meet the financial requirements of the year. Perhaps I may be in order in congratulating the Chancellor of the Exchequer on the success of the Victory Loan to reduce the floating debt. Everyone rejoiced in the fact that £539,000,000 were contributed, including Treasury Bills and diversions, and that that included £450,000,000 of new money. One singular tiling in connection with the Loan was that the applications for Funding Loan were equally as great as for Victory Loan. That would seem to indicate that the premium offered by the drawing system under which certain people would receive £100 for £85 hardly drew that inflow of money from the general body of working people in the country that we have been told premium bonds would secure. A disap- pointing feature of the Loan is the fact that the Post Office amount was only £20,000,000. The Chancellor of the Exchequer laid great stress on the fact that Victory Bonds costing £85 could be used to discharge Death Duties to the extent of £100, and yet the singular fact is that the applications for these Victory Bonds were only sufficient to cover the Death Duty privilege of £40,000,000 a year for eight years, because the Victory Bonds, including £64,000,000 of diversion, were only taken up to the extent of £329,000,000. My contention is that inadequate revenue is being raised to meet our enormous expenditure. We rejoiced over the Victory Loan, but what is our position to-day? We raised so much by taxation, but what have we to-day in the way of short-dated obligations still to be met which is not met by long-dated loans or by revenue raised by taxation. On the 19th July Treasury Bills were still outstanding to the tune of £670,000,000.


This really is not the occasion for this discussion. It is not relevant to the Third Reading of the Finance Bill.


I apologise. It is entirely by inadvertence that I have transgressed, but I thought I was entitled to refer to the huge amount of short-dated obligations still existing to-day after the Victory Loan has been got in, and after the revenue by taxation had been provided for. It really places the country in a very serious financial position, and will necessitate two further Loans to clear off our short-dated obligations on the 31st of March next.


There will be mother occasion in a very few days which will be quite appropriate.


I am glad to be corrected. I assure you, Sir, I had no intention of transgressing the proper limits of debate on the Third Reading of the Finance Bill, but may I ask whether I am entitled to refer to the question of subsidies which have grown so enormously recently?


Not at all on this occasion. That will come up on a proper occasion. We are only dealing now with what is contained in this Bill.


May I refer to the question of exchange? May I deal with currency matters now?




Certainly, I am most unfortunate. Having been a Member of the House for twenty-two years I suppose I really ought to have known better. 1 ought to have been aware that so many subjects are out of place on the Third Reading of the Finance Bill. This will be my last inquiry. Am I in order in considering the additions we are going to have to pay on our imported food supplies?


That is not a subject contained in the Bill. The question is, that the Bill be read the third time, and the matters discussed here can only be matters contained in the Bill. These other questions are all questions which will probably come up on the Appropriation Bill.


Then I will reserve my observations on them until we have the Appropriation Bill before us. But I do hope the Government will realise, as they have never done before, the necessity for rigid economy not only on the part of the Government but also by the nation, and the fact that increased industry and increased production in all trades and industries, and not merely the coal mines, constitute the only way, in my judgment, of saving our present serious situation and preventing national bankruptcy.

Captain W. BENN

I beg to move, to leave out from the word "That" to the end of the Question, and to add instead thereof the words this House declines to give a Third Heading to a Bill which for the first time introduces Protection into the fiscal system of this country and initiates a system of Colonial Preference which must ultimately lead to the taxation of imports of food and raw material. I hope I may succeed in keeping more closely within the rules of debate than the hon. Gentleman who last spoke. I rise to take the somewhat unusual course of moving a reasoned Amendment on which those Friends who are associated with me intend to divide the House. I make no apology for taking a course which is not usual on the Finance Bill, because this Finance Bill is quite unusual, and because, also, the Government themselves, of their own motion earlier in the day, accepted a new precedent for peace-time in taking two stages of an important Finance Kill during one sitting of the House. I will deal with the points of my Amendment in the order in which they appear in it. First, there is the element of Protection which appears for the first time in a Budget proposed by a Chancellor of the Exchequer in this House. The element of Protection is suggested in many Clauses, but there is one case of direct Protection. I refer, of course, to the fact that the Excise Duty on saccharine has been increased without any corresponding reduction of the Customs Duty. That is a small thing. But the Chancellor of the Exchequer will remember the case of stripped tobacco. When this was a Free Trade country the Budget was actually amended to get rid of a protective element which had been introduced in it. As regards saccharine, the proposal of the Chancellor of the Exchequer is purely protective, because we discovered by the Board of Trade Returns that there is no saccharine produced in the Colonies nor is there any hope of it being produced there. Therefore, what is known as the Excise rebate—merely giving the home manufacturer what would be given to the Colonial manufacturer by Preference—does not apply in the case of saccharine. Here we have an absolute case not denied even by the Chancellor of the Exchequer, where, for the first time in a Clause in the Budget, there is definite protection of home-manufactured saccharine under the protection of a tariff wall.

Some rather extraordinary defences have been put forward for this proposal. One hon. Member said that, inasmuch as it was the Germans who used to produce the saccharine, it is a very good thing to give Protection. I do not follow the logic that if the Germans are enabled to produce that which other countries produce we are justified in damaging "our own industry. It may be a small matter, but still it is important because several industries in this country depend upon saccharine as a constituent element of their manufacture—mineral water manufacturers, confectioners, and so on. This is a moment when we should stimulate our exports and do everything in our power to get other trades going in order that we may make up the. colossal losses of the War. But the right hon. Gentleman in introducing his protective system is raising prices. This is a complete case of Protecton. It has nothing to do with the Coalition agreement. It has nothing to do with the Joint manifesto. But that, of course, is not the main burden of our complaint. What we mainly complain about is the continuance in peace time of a series of Import Duties imposed by Mr. McKenna in 1915 for certain specific war purposes—duties on motor cars, musical instruments, cinematograph films, clocks and watches. I do not wish to reiterate all that has been said on former occasions as to the reason why these duties were imposed. I will, however, refer the House again to a statement made by the Leader of the House relating to these matters when the duties were proposed. At that time the House of Commons was certainly a Free Trade House, and it looked with some suspicion on these proposals, fearing, very likely, that the counsels of Protection would prevail in the Coalition. In order to allay those suspicions the Leader of the House made many statements, but I will quote only one: The only ground on which I think I can see any question of opposition to the proposals from the point of view of fiscal controversy is the idea that they will lead to something else. But duties of this kind would never be continued under any circumstances when the War is over. That is as specific, clear and definite a statement as any man could possibly make. Yet we find that these duties are to be continued after the War is over, and with the assent and support of the right hon. Gentleman who made that statement and his colleagues in the Government They are continued also with the support of some hon. Members whose minds seem to have been somewhat changed by the election last December, although they still protest that their belief in Free Trade is as strong as ever It was. It has been repeatedly asked whether it would not be possible for the Financial Secretary to induce my right hon. Friend (Sir A. Mond) to present an appearance in our Debates. It is not without a certain sense of sadness that we shall part with this Bill without having induced him to give us the benefit of his very cogent powers of argument. When Mr. McKenna proposed these duties my right hon. Friend used these words: The articles are ridiculous, the results are absurd, and the proposal will not achieve what is wanted. If my right hon. Friend thought that in 1915, it seems to be very lamentable that his almost too close attention to his official duties should stand in the way of casual attendance at our Debates, when he might have explained what has caused him to alter his opinion. These duties have been defended by the Government on the ground that the reasons which caused their imposition still persist. It is said they were imposed to check expenditure, to correct the exchanges and to minimise tonnage, and the reasons which were given in time of war are good in these times of peace. Therefore, yet a little while we shall let them stand—a year more. My hon. and learned Friend (Sir R. Adkins) showed a very keen desire that the duties should be permitted for a short time longer, and I think he was very pleased because he obtained from the Chancellor of the Exchequer an alteration in the date at which these duties should cease to be imposed. The hon. and learned Gentleman, perhaps with the keenness of a convert, defends these duties to-day with a passion which he never exhibited when they were first imposed by Mr. McKenna.


They did not then meet with the opposition of my hon. and gallant Friend.

Captain BENN

I am very gratified that my hon. and learned Friend should make so complimentary a remark, but it does not affect this argument, that then when he was perhaps a freer agent he opposed the duties in his speeches. He did not appear in the Lobby as supporting them. Now, when the reasons must be less strong than they were during the War, he defends these duties, and I have not the least doubt will oppose my Motion. In regard to these import Duties we should consider some things which have emerged in our Debates. The duties on motor-cars, for example, are defended because it is said—this is one of the grounds—if people want to buy an American motor-car they should pay more for it. The hon. and gallant Gentleman, who protests that he is as strong a Free Trader as he ever was, and perhaps he is, used that argument, and when I pointed out that he was conceding the very point which Protectionists never will concede, namely, that the consumer pays the duty, he said, "Yes, of course, he does, and it is a good thing too. If he wants to import an expensive motor car he ought to pay for it." This concession is worth noting, and no doubt will be remembered when we discuss the more full-blooded Protectionist Budget which, I 'have no doubt, will follow in years to come.

I want to speak of another reason which is always alleged in defence of the Import Duties, and that is the correction of the exchanges. This is a deep and difficult subject, but we have never had the advantage, either from the Chancellor of the Exchequer or the President of the Board of Trade, of a really clear statement of what the Government policy is in the matter of this correction of the exchanges. It is half opening the box. The box is kept locked. When anyone asks, "Why are you doing this?" the answer varies. Sometimes the Parliamentary Secretary answers and sometimes the President of the Board of Trade. One day the answer is, "It is to shield our industries against competition until they get going after the War." The next day the answer is, "If you will look at the exchanges you will see the necessity for something of the kind." Far be it from me to attempt to explore fully this very deep and difficult question of the exchanges, but I think we are entitled, if we do not pretend to understand the thing fully, to ask the Chancellor of the Exchequer to explain what he means by it, because we are only critics, and he is a constructor, and he must know and understand the principles on which he is acting. There are two sides to this policy. There is the Chancellor of the Exchequer, who imposes a tariff in order to correct the exchange, and there is the President of the Board of Trade, who issues or refuses to issue a licence, also in order to correct the exchange. Here is a curious thing. The exchange with America is adverse. We want to sell to America. We do not want to import. But the exchange with Franco is favourable. Unless we can get exports to France, moreover, we shall never be able to stimulate the flow of exports and get our trade going as it should. But the Chancellor of the Exchequer, by the same instrument with which he is checking imports from America, is checking exports to France. The same system operates in both cases. When you ask him "is it possible so to adjust your instrument that it only operates against the country with which the exchange is adverse," he says, "Of course it is not. That is against the law of the land." But if you can only have a device which operates all round and not merely in the direction in which it is needed, surely it is a very dangerous device to employ to attempt to correct the exchanges. I think we shall all agree that what is required is an increase of our exports. We must have it. The Chancellor of the Exchequer, or the President of the Board of Trade much more so says, "I will take charge of British trade. I will watch what is required for export, and I will stop what is not required for export and I will admit what is required, and under my tutelage British trade will revive." If he were omniscient it might be so, but no Government is omniscient. There are half a dozen Departments unrelated, with no Cabinet co-ordination, all attempting to benefit British trade, or the particular corner of it which they see. So we find that the President of the Board of Trade, with the same benevolent object as the Chancellor of the Exchequer, is doing all sorts of things which are really going to check our exports and make the renascence of British trade impossible.

The Lord Privy Seal said, in answer to a question put by me, that nothing we were doing to-day would compromise the future policy of the Government. I venture to think that that is not so. We are to-day passing a Bill which commits us to protective duties and to Preference. We have the Board of Trade operating in a way which is setting up shelters for. various trades and industries, so that when the 1st September comes—I think that is the date—and the box is opened, we shall find that, whatever is in the box, we are committed in certain directions already by the action that is being taken. I need only point out, for instance, that the import of agricultural machinery is prohibited except by licence, and if anyone takes the trouble to read the "Board of Trade Gazette" Supplement he will be able to find half-a-dozen things which may appear to one manufacturer as manufactured products, but which other manufacturers will tell you are essential elements in their own manufacture. Consequently the checking of the import of such goods is merely discouraging and destroying our export trade. That is all I will say on the question of these Import Duties and their effect on the exchange. However partial our view may be, we are entitled at least to ask that the Chancellor of the Exchequer, when he replies in this Debate, shall lay before us quite clearly what is the Government policy and how it is related between the Exchequer and the Board of Trade in correcting the exchanges by means of these somewhat out of-date devices.

I will make just one further allusion to these Import Duties. My hon. and learned Friend the Member for Middleton (Sir R. Adkins) and his associates were proud of the fact that they had got the date of the operation of these duties altered, so that, instead of falling to be imposed during the whole of the fiscal year, they would be terminated, I think, on the 1st May next year. The first thing I would point out to my hon. and learned Friend is that long before those duties fall not to be imposed, long before they lapse, the Chancellor of. the Exchequer may have brought in another Budget, in which case my hon. and learned Friend's victory is nil, because the Chancellor, if he has the power and can get support in this House, will merely put in a Clause continuing the duties as from the 1st May. If it is true, as my hon. and learned Friend no doubt thinks that by any Amendment which he has persuaded the Government to adopt these duties are definitely stamped as a temporary part of our machinery, as a thing that will be discarded immediately the conditions of war have passed away, I do say that the Government have no right to use those temporary duties as an opportunity for a preferential rate. Surely nothing could be more cruel to the Colonial manufacturers than to give them a preference on certain duties which, by the determination of the House and the Government, are doomed to be withdrawn after a few months. I shall have something to say about Preference in a, moment, but I think that surely that would be the negation of the spiritual unity of which the Chancellor of the Exchequer spoke—namely, to hold out a hope only to disappoint it when it became valid. I want to pass for a moment to this question of Preference. I will not go over again what is our view as to the real bond of union in the Empire. We hold, of course, that to assume this cash nexus is really to misunderstand the whole of the spirit of unity in the Empire. But inasmuch as it is an advantage to some people to have the tariff adjusted in their favour, we think that these duties, instead of creating a good feeling, will be much more likely to create irritation by reason of their unequal incidence. I have quotations here, for example, from various Canadian papers, which point out that the Preference is of very small value indeed. The "Manitoba. Free Press" says: Preference has no direct interest for Canada, and it goes on to elaborate that point. The "Montreal Gazette" says: Many of the million who volunteered for the defence of the Empire did not think about tariffs when making up their minds where then duty lay. They will not worry about it if the Parliament of the United Kingdom, in view of the great financial needs which it has to provide for, holds that the time is not ripe for the-revolutionary policy submitted. That is not the opinion of hide-bound free traders in this country, but the opinion expressed by responsible Canadian organs. So also may Australian opinion be found supporting the same view, and, moreover. Australia determining that she would become as far as possible closed in for manufacturing her own raw materials. We think that what will happen will be that as soon as these Preferences get into operation other Preferences will be asked for. Those Preferences we shall not be able to grant—at any rate, free traders will not; and the Government will not be able to grant them, unless indeed, they impose a tax on food and raw material. And the fact that you have conceded the Preference, and yet are bound to deny any tariff on the products of one of the countries competing with the products of the Colonies, will simply result in irritation, and elements leading to dissolution.

I want to speak at this moment of the effect of this Preference on foreign countries. When we say that it irritates foreign countries when we put hostile rates against them as compared with the products of the Dominions, we are always told that we are entitled to treat the members of our own family better than strangers. We do not deny that we have a much warmer feeling for the Dominions than for any foreign country, but we are anxious to avoid causes of offence with any country, and we think that this moment, when what we are seeking is friendship with all, is an unfortunate moment to select to impose a preferential rate against those who have been, and still are, allied with us. An hon. and gallant Friend of mine made great play with some references that I made in a previous discussion in regard to China. He scoffed at the idea. He seemed to think it was a. really humorous suggestion that we should consider the opinion of China. I venture to think that that is a very short-sighted view. I should be out of order if I dealt fully with the effect of the Peace Treaty on China, but I think it is a very serious thing that 400,000,000 of peace-loving people, who steadily refused for centuries to arm, who submitted without reply to robbery after robbery by every country in Europe—I think it is a very unfortunate thing that, whether in the Peace Treaty or in our tariffs, we should cause them to look to other things than the justice of their cause for self-defence. I venture to say that, although perhaps it may not be in our time, the time will come when the movement which already exists in China in the direction of relying upon armed force for her defence will result in effects which will be lamentable for Western civilistion.

Before I pass from the question of Preference there is the question of tea, which is surely of importance to China. As my hon. Friend the Member for Kilmarnock (Mr. A. Shaw) stated earlier in the Debate with reference to another Amendment, London is a very important entrepot for the tea trade. When I made this point on the Second Reading the Chancellor of the Exchequer corrected me on a purely technical ground, saying, of course, that goods had been imported in bond and withdrawn without the Import Duty being paid. I know that, but the point is that by the action of differentiation against the other countries he is driving not only the entrepot but the blending trade from this country to Amsterdam. Instead of having the effect of stimulating British industries as he hoped it is having the effect of destroying British industries, as must always result when people who are not sufficiently informed attempt to mould trade policy by some preconceived notions of their own instead of on the lines on which they naturally run. The idea of a Preference was, I believe, that it would in some way bind India to this country, but I see that the chairman of a large tea company, which would benefit by a Preference, says This measure would merely tend to direct foreign products to other markets to compete with our teas there instead of here; and in markets which the growers in India and Ceylon have created and fostered at very considerable expense. So instead of benefiting the tea growers of India and Ceylon and so binding those countries to the Empire, it is simply diverting foreign products into other markets.

There is one other point on which I wish to speak. When the German Colonies were taken away from Germany, in accordance with a very high ideal, the principle was introduced of commending them to the greater countries of the world as trustees. We were to be the trustee for those backward countries. It is recited in the Covenant of the League in very noble words, and we were to administer them, not in our own interests but in the interests of the people themselves. That was to be their happy fate, after having been ground under the heel of the selfish policy of the German Empire. Now, much to our surprise, and I think anger is the word, we find that the Government intend to incorporate these mandated territories in the fiscal system of the Empire. I know the answer of the Chancellor will be that he is merely taking power here to give a Preference, if he wishes, to the products of those territories, but the fact is he is arming himself with the necessary powers at this moment to make those territories an integral part of the fiscal system of the Empire. Far be it from me to use hard words, but I think that is not a thing that can be properly done by a person in a position of trustee. In the past the world has looked, without jealousy, on extensions of British territory. It has felt that if the British flag flew the benefits of British administration—incorruptibility, capacity, honesty, efficiency—would be extended to those territories for the good of all the world, and I think it can be said that it would have been impossible for us to have built up a world-wide Empire un less we had had the goodwill of the world, which was largely dependent on our policy of Free Trade. Great accretions have come to the Empire; enormous territories, some of them really having been taken by annexation. You can say that, as regards the Colonies taken by Australia and South Africa, there is very little to distinguish from actual annexation. But take the case of the Hedjaz, the richest part of Arabia. Who is to be the trustee, or in Mesopotamia, a country of enormous incalculable potential wealth? Is it right to say that we will make such fiscal arrangements as will direct the flow of trade from us to them to the detriment of our Allies? Is it right? It is wise? The answer to both these questions is "No." It is a surprising action on the part of the Government, which will do more than anything else to shake the confidence in the world in the purity of the motives for which we fought the War. Not a word of this was mentioned when the Finance Bill was introduced, but an Amendment was hurriedly introduced by the Chancellor and incorporated into the Bill. I cannot think of this action being taken without a deep sense of shame. It is a very discreditable thing, indeed, that when we take over the trusteeship of these territories we should be found making arrangements that might conduce to our own benefit.


Might I ask whether New Guinea, which has been taken over by the Australians, is to enjoy the same preference as Australia?

Captain BENN

I mentioned New Guinea and South-West Africa, and I said there was little to distinguish the arrangements with regard to their taking over from sheer annexation. Personally, I have no objection to annexation in these cases. An Amendment I have down which was not called on, exempted those districts, and made them special cases. I think some measure of annexation is justified. But when you come to Mesopotamia, Arabia, and other places, this is a thing which should not he, and it will be an affront to the best feeling and the highest instincts of the people of this country. We have to remember, too, that what we do others can do. I do not know —it is impossible to say—whether the United States will take mandatory territories, hut presumably France and Italy may take them. There is the market in Turkey, for example, which we have been accustomed to enjoy, and where we haw trade privileges. What will our traders think, supposing that the other mandatories, the other trustees, do what we have done, and seize that territory and incorporate it behind a fiscal wall, perhaps even higher and more insurmountable than that proposed by the Government. I leave this matter. I think when the country really understands what has been done they will fool that the Government have made a blunder of judgment, and have done a thing which cannot be done to the credit of this country.

I wish to say, generally, of the Bill these few words in conclusion: We who oppose the preferential policy of the Government are always told, "Have not you learned the lessons of the War?" Well, I quite confess that that statement, which I have heard repeatedly used as an argument, takes me aback. I do not understand it. I have been away for five years trying to learn the lessons of the War. I have fought with Arabs, Frenchmen, Italians, Australians, and New Zealanders. They have all been at the War. They have had no lessons of this kind, and can it be that the only people who have learned the lessons of the War are the people who did not go to the War? The War, instead of shaking what political convictions I had, greatly deepened and strengthened them. I went to the War certainly a Radical in sympathies, but I came back much more strongly a Radical in sympathies, and I do not understand the people who say "Have you not learned the lessons of the War?"

What are the lessons of the War? The first lesson is that this Free Trade Empire was able to finance the War. The Chancellor himself, when he was commending his Victory Loan to the people, explained that we had been in the strongest financial position up to the entry of America. Free Trade! The second lesson of the War was that, despite the submarine, we were able to transport freely our troops and our supplies into all parts of the world. To what was that due? To the Mercantile Marine. We had the strongest Mercantile Marine, as well as the bravest, in the world. What is the basis of the supremacy of our shipping. Free Trade! Is not that a lesson of the War? Is not that the lesson of the War? In the last great war in which we were engaged in the Napoleonic era hon. Gentlemen having the same fiscal bias as the Government introduced a system of navigation laws which very nearly destroyed our shipping supremacy. So there are two definite lessons of the War. One is that Free Trade financed the greatest war in the history of the planet, and the second is that it supplied us with a Mercantile Marine without which the Empire never could have been held together. There is another lesson of the War, and I am sorry that my hon. and gallant Friend the leader of a considerable party is not here this evening. He asked during the War—why is Germany so strong? And the answer was, "Protection." Another lesson of the War is: that a country based on the principles which the Government is introducing here fell before a Free Trade country, [An HON. MEMBER: "What about America?"] I should diverge from the strict lines of this Bill if I referred to America. But I suppose that the hon. Gentleman does not suggest that the natural resources of our country are in the same undeveloped condition as the natural resources of America?


What about the natural resources of the Empire?

Captain BENN

That is what I am saying. We were able to finance the War and the Empire as a Free Trade country, and finance the very portions of the Empire to which the hon. Gentleman referred. There is another lesson of the War. Fifteen years ago the distinguished follower of the Chancellor of the Exchequer suggested that the Empire would not hold together unless you put a tax on food and raw materials. [HON. MEMBERS: "No!"] I could give many quotations to show that people said, "Unless you establish a cash nexus, the thing will disappear." I never heard any of the Colonial troops with whom I fought suggest that there was any money in the alliance that bound us together. The Empire was united without Imperial Preference. That is another lesson of the War. Another lesson of the War was that we had the good will of the world, which will not stand the test of preferential treatment and the exploitation of native territories. There is another lesson of the War. We had Protection during the War provided for us by the German submarines, and the people of this country have learned very well that shutting out foreign goods puts up prices. That is another lesson of the War. Another lesson of the War is that we must have increased production all over the world—in Japan and everywhere else. The more that is produced the sooner we shall get out of the financial crisis in which we are to-day, and the only way to do that is to put everybody to the job which he is best capable of performing, and to have the jobs done at the places where the raw materials are available, and at the cheapest possible rate, so that we can increase the world's production and enable us to emerge from the present economic crisis.

Hon. Gentlemen seem to imagine that the lesson of the War is that we should become more narrow in our sympathies, more distrustful of strangers, baiting aliens in the way we see done day by day by question and answer in this House. That is not the lesson of the War. The people who were at the War become more sympathetic to strangers and more anxious to become friendly with the other countries of the world. They also realise that the safety of the world depends on friendship with America, and after that friendship with all other countries. They see nothing in this Budget which will fortify the bonds between this country and America, but rather the reverse. No, the lessons people have learned in the War are, that what we must get rid of is every- thing that makes for war. The people of this country are determined that they will destroy everything, whether it be armaments production, tariffs, or anything that makes for friction and enmity between the nations of the world. And not the least objection to this Budget is that it sets up a system of Protection and tends to destroy the free interchange of the products of all nations of the world, which in itself is not an unimportant bond of friendship.


I beg to second the Amendment.

I am quite sure that every hon. Member who followed carefully the Debates on this Bill must have been impressed by the partial and discriminating manner in which the Chancellor of the Exchequer has applied the principles that are supposed to underlie the Bill. One of those principles was that where he found a tax he retained it, and certainly did not reduce it unless he found very important national interests to the contrary. By a very happy chance for him he found the new Import Duties, and his case for retaining them was that he found them and was entitled to retain them. He found another duty, the Excess Mineral Rights Duty, and it certainly was not in the national interests to reduce that duty, which was the case for reducing the Excess Profits Duty. But the Chancellor applied an entirely different principle and reduced the Excess Mineral Eights Duty. Another principle underlying the Bill was that something was to be done to consolidate the Empire. Something was to be done for what the Undersecretary of State for the Colonies called building up the moral unity of the Empire, and what the Chancellor of the Exchequer himself, I believe, called the spiritual unity of the Empire. So something was done with regard to these Preference proposals. The Chancellor told us that these Preference proposals were asked for again and again at the Imperial Conference and particularly at the Imperial Conference of 1917. There was another subject affecting the Colonies which was very materially before that Conference, that was the question of double Income Tax within the Empire.

Here the Chancellor of the Exchequer had a, great opportunity of doing something that the Colonies really wanted and were really anxious to have—that is, to deal with the question of double Income Tax. But the Chancellor applies a different principle on this occasion and leaves it alone. If hon. Members read extracts from the Minutes of Proceedings in the papers laid before us as to the Imperial Conference on that occasion, they will find that the Imperial representatives were more insistent upon this question of double Income Tax than upon any other question whatever; in fact, the advocates of dealing with this question seem to have got quite heated. They demanded action from the Chancellor, and many of the representatives considered that the unity of this Empire was materially jeopardised by the retention of the double Income Tax. Here was another opportunity of doing something which they insisted on. They did not even want to wait until the War was over, but the Chancellor, instead of dealing with it as he has done with Preference in this Bill, leaves it to be dealt with by the Commission which is now sitting to inquire into the Income Tax. The Chancellor of the Exchequer was present on that occasion and he took part in the discussion. Hon. Members will remember that not so long ago in. this House the Chancellor of the Exchequer treated with a good deal of contempt the argument of my hon. and gallant Friend below (Captain Benn), when he asked that foreigners should be considered in this matter. The question of China was mentioned—China which, after all, is one of the greatest potential markets in the world.

What did the right. hon. Gentleman say in dealing with this question of Income Tax? He was a little more susceptible to the opinions of foreigners then. He said: What you do in this case will bring you up at once against questions of the most serious consequence with other countries. I am sure that anyone who thinks about it will see that that is so. So the Chancellor of the Exchequer was then quite ready, when dealing with the question of double Income Tax, zealously to regard the interests and susceptibilities of the foreigner, although he is not prepared to do so when considering the question of Preference. For ten years previous to 1913 our proportion of imports into the Colonies steadily decreased, while the proportion of imports from the Colonies into this country steadily increased. I am not so foolish as to suggest that the proportion of British imports into the Colonies decreased because they gave us a preference, nor am I going to suggest that the proportion of the Colonial imports into this country increased because we had not yet given them one. The fact is that in this important matter of inter-Imperial trade there are great and grave problems involved which this question of Preference does not touch at all. Let me refer to one of them. I will take some figures from the Report for 1916 of our Commissioner in Canada. He refers to the relative yearly investments of British, United States, and Canadian capital in Canadian Government, municipal, revenue, and corporation bonds during the period 1909 to 1916, and he gives the proportions. In 1909, of the capital in such investments which was invested in Canada, the United Kingdom supplied 74 percent. of the whole, the United Slates supplied 3.9 percent., and the remaining 22.1 percent was provided by the Dominion of Canada itself. In 1916 the position was completely reversed. While we supplied only 1.5 percent. of the capital, the United States supplied 61.9 percent. and the remaining 33.6 percent, was provided by the Dominion itself. Our Commissioner says in a Note: During the period 1909 to 1914 no great effort appears to have been made by the manufacturers of the United Kingdom to improve their trade with the Dominions, as a direct consequence or as a condition of these immense investments. With the financiers of the United States it was different. In the majority of cases it was made a condition of the contract that the funds so advanced should be expended on plant, machinery, and goods purchased in the United States, and to this end the manufacturers of the adjoining republic have confined their efforts. 10.0 P.M

In view of the great problems of that kind which confront us, it is really only lulling the House and the country into a false sense of security to suggest that any improvement can be made by Preference proposals; It is diverting the attention of the country from the things which ought to be tackled. Committees and Commissions have sat from time to time to consider these great questions. There are volumes of their Reports in the Library. Practically all the suggestions they contain—and some suggestions are common to every Report—are either forgotten or ignored, and the only one which must be carried out at once is this proposal for Preference. All I have to say in conclusion is that it is a very good thing that the moral and spiritual unity of this great Empire in the past has really depended on a very much more cohesive cement than these Preference proposals.


Previous speakers have dealt very fully with the two chief points of the Amendment, and it is not my purpose to delay the House by covering the same ground. Believing as I do most strongly in the League of Nations and in the system of mandatories, I recognise the wisdom of the councillors in Paris in avoiding as far as possible all contentions and quarrels between the Allies in respect of the German colonies. I feel that the whole system is based upon the future administration of the different mandatory States, and I think that, above all the Allies, we and our statesmen should have been particularly careful to anticipate no decisions as to the conditions under which those States are taken over. I confess that I was aghast at the Amendment which appeared on the Paper in the name of the Chancellor of the Exchequer on the Committee stage, whereby he sought, and was enabled, to include any mandatory State taken over as though from a fiscal point of view it was a Colony to all intents and purposes. Members on this side of the House felt so strongly upon this that they put down a very careful Amendment, which Members will find on the Paper to-day. It takes out certain words to which I have already referred, and defines the territory alluded to in the words which in the terms of a mandate of the League of Nations is administered under the laws of the Government of any part of His Mejesty's Dominions as an integral part of its territory. That meets the objection raised by two hon. Members with regard to the territories which are practically annexed, and it expressly reserves judgment, and this is my point, with regard to any large and detached State which this country may be called on to administer, such as Mesopotamia, Arabia, and many other districts I need not enumerate. Why is. that advisable? In my opinion, it is because we do not know the conditions of apportionment and where the different German colonies are going to be distributed under the mandate. I feel that this country stands, even from a commercial point of view, to lose more than it gains if, by reason of this action, which may seem small at present though there is a great principle behind it, we introduce any fiscal system which will be so pronounced as to upset our Allies or neutral countries, or to produce retaliatory measures. We cannot hide from our eyes the fact that many of our Allies, both in Europe and America, have an entirely different policy from our own. If we are going by this small precedent to give them an excuse and a reason and justification for the setting up of high walls of tariffs almost meaning the prohibition of many articles in countries which have been confided to them for administration, that is a premature action. I do not say it may not be justified eventually or that it may not be resorted to eventually, but I do say it is premature in the present case when we do not know what the League of Nations is going to decide in regard to the fiscal policy that is to be administered in these mandatory States. I confess it would be very undignified if this House of Commons had to modify the Finance Act of 1919 at the dictate of the League of Nations because it had laid down certain conditions to apply to a mandatory State and found that those were contrary to the conditions that the League laid down. It may be said that this can only be administered by Order in Council. That is true, and the Government may be able to avoid that difficulty and avoid such a predicament, I would almost say, by caution in that respect. But if so, why bring it in now, and why not leave it to a later Act of this Parliament, when we see how this system of Preference is going to work? It seems to me it is giving the case away, and it is taking the argument from under the feet of our negotiators and statesmen and administrators in any future negotiations with regard to the mandatory States.

I would appeal to the right hon. Gentleman whether even at this eleventh hour the Government would not be wise, when we are unable to debate this Clause on the Report stage, to recommit the Bill in respect of a modification of these few lines in this particular Clause. It would be quite in order in many cases to say that the matter had not been discussed and that there might be something that the Cabinet would like to consult about and to undertake that the matter would be adjusted in another House. But in this respect there is no other House on a Finance Bill, and this is the last occasion when any modification can be made in any of the Clauses or by this Bill. Therefore we cannot leave it to another House, and we must take the entire responsibility here. I would respectfully suggest to the Chancellor to consider whether he could not recommit the Bill in this respect. I do not know whether that would meet the views of the drawers of the Amendment, but it certainly would meet the views of many Members who feel strongly on the subject, and might lead to a unanimous passing of the Finance Bill, which otherwise might not be the case. If he cannot do that, perhaps he will give an undertaking that this proposal shall practically be a dead letter, and that the Order in Council will not ha administered.


I will deal first with the speech of my right hon. Friend who has just spoken, and I am not without hope that I can convince him that the course we have taken is not open to the objection which he makes. Let mo deal with two minor matters, or comparatively so, of which the hon. and gallant Gentleman who moved and my right hon. Friend complained, namely, that the inclusion of mandatory territory in the possible scope of Preference took the Committee by surprise and was inadequately considered by them. It is quite true my Amendment only appeared on the Paper on the day on which it came on for discussion as a starred Amendment, but the hon. and gallant Gentleman and his Friends had an Amendment down drawn upon the assumption that the Bill already did that which my Amendment did.

Captain BENN

No, Sir. The right hon. Gentleman knows that we were under the impression that the Government had not made up their mind in the sense the right hon. Gentleman says, and we were anxious it should be put explicitly in the Bill, and that was the purpose of my Amendment.


That is quite sufficient for my purpose. The hon. and gallant Member knows his own intentions, and I do not, and I only infer from appearances. The Amendment was drawn on the assumption that the Government had not made up its mind, and to prevent it milking up its mind in the direction embodied in my Amendment. Accordingly the House had full notice by the Amendment in my name and by the Amendment in the name of the hon. and gallant Member and his Friends that this issue would be raised. It was raised, and there was a very full discussion and at least three speeches were made from this bench upon it, so that I do not think it can be suggested that the Committee was taken by surprise, or came to a decision without knowing what the subject was. The second point of my right hon. Friend is that at this stage and in anticipation we should not be committed. We are not. The right hon. Gentleman himself stated that, and I repeat what he said, and if it gives him greater pleasure to hear it coming from my lips than from his own I am very glad.

But do not let the right hon. Gentleman misunderstand me. No doubt the intention of the Government to apply Preference to a mandated territory, provided that that is compatible with the mandate, is indicated by this Amendment, but the House is not committed, and nothing is done. There is no question of our being forced to repeal this Bill because of action by the League of Nations. This Bill merely seeks to give power to His Majesty by Order in Council to extend the preference to a territory mandated to him or to one of his Dominions if he thinks fit, and it is farther provided that that Order in Council, before being presented to His Majesty for approval, shall be submitted to Parliament. and if either House of Parliament carries a Resolution against it the Order in Council would not be submitted for His Majesty's approval. Accordingly, our liberty as a nation is complete, and the liberty of the House of Commons is complete, to judge each case on its merits when they know what territories are mandated, and on what conditions they are mandated, and I need not say that it is not the intention of His Majesty's present advisers, if they are responsible, to advise I his House or His Majesty to act in any way in a mandated territory contrary to the mandate under which that territory is confided to us.


But it is an indication of what is in the Government's mind.


So it is, and I will meet the right hon. Gentleman on that ground. It is the intention of His Majesty's Government that we should extend the Preference to territories mandated, undoubtedly, and I have no reason to think, as I speak now, that there is likely to be anything in any mandate which would render that either improper or impossible.


That is not the point.


Then in that case my right hon. Friend need not fear that we shall have to revoke this action hereafter in consequence of remonstrances from the League of Nations, because if there is nothing contrary to the intentions of the authors of the League of Nations and those who give the mandate, and nothing contrary to the mandate, why should we be asked to withdraw this provision?


I mentioned that as an alternative, but I made it quite clear that my main argument was that there was an example, and that we should not be able to protest against other nations doing worse.


But I cannot answer all my right hon. Friend's arguments at the same time; he must allow me to follow him from one stage to another. It is always embarrassing, when you controvert successfully one argument—

Captain BENN

Not successfully !


It certainly sounded immodest to say so, and therefore I was going to yield to my hon. and gallant Friend, but the moment that I controvert the argument of my right hon. Friend on that point he says that is only a minor point, and that I have not dealt with the major point. I am coming to the major point if he will allow me to proceed. His next argument is that a different view is taken by our Allies and America. America has given a Preference to its overseas colonies. But America has done more. It has had in operation for some years a preferential arrangement with Cuba, not merely on goods entering America from Cuba, but on goods entering Cuba from America, and it has maintained throughout what was the old British doctrine, which we have since abandoned, that that was perfectly compatible with the Most-Favoured-Nation Clause. They accordingly have a Preference in force, not merely with their own possessions or dependencies, but with independent territories. Cuba is not part of the United States. I really think that as we are following slowly, longo intervallo, both in time and extent, after America. we should not be accused by my right hon. Friend of setting them a bad example. If you give a preference to one foreign country all my right hon. Friend's objections fall. His objection is to giving a preference to a territory specially connected with you. My right hon. Friend's objection is that our action will encourage our Allies and America to set up tariffs in countries which may be mandated to them. How does my right hon. Friend arrive at that conclusion? This is no suggestion that we should set up in a mandated country a customs tariff more favourable to us than to any of our competitors. I think that would be incompatible with the terms of any mandate which is likely to be given to any country. But that is not our proposal. My right hon. Friend is arguing against something which is not proposed here, which is not contemplated by anybody, and his argument really passes over, and is outside, anything which is within the Bill we are now discussing. What is the suggestion? It is that in respect of a particular territory—because under a mandate of the League of Nations this territory is put into our care and we are given special charge of its development, with special responsibilities, not that we should take for ourselves in that country any advantage which is not open to every other member of the League of Nations—but in respect of that relationship with us, we should give to them in our market something which we do not give to the whole world outside. That is a wholly different proposition, and so stated it is not open to any of the objections which my right hon. Friend put. I will give further proof if ho needs any further proof.


I am not convinced it is not fiscal annexation.


If you say that the goods of that country entering here, in so far as they are dutiable, should enter on more favoured terms than those of a country with which we have no connection, that is fiscal annexation! The right hon. Gentleman and I were for many years neighbours in the representation of East Worcestershire. We were always good friends—but we do not speak the same language! Let me guard myself, I do not want to obscure the position by entering into minor complications; therefore, for the moment, I am not talking of German South-West Africa, which may be embodied in the Union of South Africa, or belong to the general administration of the Union of South Africa in respect to Customs laws. I am talking of the class of case which my right hon. Friend has in mind, of West Africa, East Africa, and Mesopotamia. What we contemplate is favouring the import into this country of the goods of the territory mandated. There is nothing to prevent any Ally, like us, saying in respect of its own Customs Duties that the territories mandated under the League of Nations to us shall enjoy the same preference in France, or America, or Italy, or elsewhere, as we propose to give here in England—nothing! If we proposed, with our authority as a mandatory Power, to give our exports a preferential position in the mandated places, that is a thing which other countries could not do. But every country in the world is admittedly entitled to give the same preference to our mandated territory that we give, whether by way of rebate on customs or by shipping facilities or in many other ways. I venture to hope that that explanation will show whether or not I have convinced my right hon. Friend that, at any rate, we are not doing what he supposed we were doing, that we are not doing anything contrary to the spirit of the League of Nations or the spirit of the mandate which is contemplated by the League of Nations; that we are not seeking any selfish advantages for ourselves in the markets of the mandated country. We are not dong in our own country for the products of the mandated country anything which any other nation may not introduce in its own markets if it so pleases. I have gone at some little length, but I hope not unduly, into the subject, because the discussion here, if it leaves any misapprehension, may cause a repercussion of a similar misapprehension and may lead the Councils of the great Powers that are now dealing with this matter into exactly the same misapprehension as the right hon. Gentleman, namely, to confuse what we are doing, which is giving some advantage in our own country to the products of mandated countries over foreign territories—to confuse that which is, at any rate, not a selfish aim with a selfish aim, namely, with favouring ourselves in respect of privileges in the country which is mandated to us under the authority of the League. With that I leave this particular point. I come to the Amendment my hon. Friend has moved.

There are two propositions in the Amendment. The first is a manifest historical fallacy, and the second is a prophecy about as good as any modern prophecy since prophets have ceased to be honoured. The first statement is, that this Budget introduces Protection for the first time into the fiscal history of this country. Good gracious! My hon. and gallant Friend's party exists solely on the fact that they are the heroes who have, after a long struggle, eliminated Protection from our fiscal system, and yet the House is asked to declare that there never has been Protection in our system.

Captain BENN

Is the right hon. Gentleman reverting to the policy of 1840?


No, I am not. I am merely commenting on historical facts of which I do not believe the hon. and gallant Gentleman is ignorant. We are told that this Budget introduces a system of Colonial Preference, which must ultimately lead to the taxation of food and raw materials. That is prophecy which proceeds upon the assumption that there have not been any duties on food. That was not the line taken by hon. Gentleman opposite during the Committee stage when we were dealing with sugar and tea, which are essential foods, and the party opposite had no intention when they sat on this bench of removing those duties. [An HON. MEMBER: "We reduced them!"] Yes, we have all reduced them, and I have reduced them when I could; but when those representing the party opposite sat here they never contemplated the possibility of abolishing the Sugar or the Tea Duty. The hon. and gallant Member proceeds on the assumption that there are none of these duties, and prophecies that if you have Preference you must have duties on food, by which I suppose he means new and additional duties on food and raw materials.

The principle on which His Majesty's Government proceeds has been stated again and again. It is the principle on which every Dominion proceeds in the matter of Preference. It is not that we should put on duties for the purpose of Preference, but that if there are any purposes for which we find it advisable to put on duties we give a preference. It is for this House and the country to decide what duties they will have. I do not prophesy so hastily as the hon. and gallant Member what the country will do or I will not do, but when he says as he did in the course of his speech that Preference once introduced would be permanent, then on that rare and happy occasion I am in hearty agreement with him. I believe the principle we establish that where there is a duty there is to be a Preference will be a permanent feature of our fiscal policy. I repeat what I said when I opened this Debate: that if this Budget is referred to in the future with any words of praise or commendation, it will be because, for the first time, it established that principle by a legislative Act.


I will deal briefly with a few of the points raised by the right hon. Gentleman. First, with regard to the mandatory territories, our case is this: the object of Dominion Preference is to foster trade within the Empire. Clearly, therefore, the intention of the Amendment introduced into the Bill by the Government is to foster the trade of the mandatory territories within the British Empire. Whatever may be the merits or demerits of that, that is not the way to treat the mandatory territory of which you start by being the trustees. You ought to have left that proposal until the trust was solemnly handed over to you—until you knew the conditions of the trust to be administered. That would be the time to come to Parliament and ask for authority to apply to those mandatory territories a proposal which, whatever its merits, is the subject of most acute controversy here and in the country.

I want to take this opportunity of saying, on behalf of my Friends, how much we appreciate the courtesy with which the Chancellor of the Exchequer has treated us throughout these Debates. We have fought with great keenness but with complete good temper. We are much indebted to him for all that he has done to contribute to that very desirable end and for the concession ho has made on the various points as they have been raised. Where he has been able to meet anybody, he has done it in no grudging spirit, but with a courtesy which we all admire and very much appreciate. With regard to the manuscript Amendment, and the use of the words "for the first time," he knows that such Amendments have always the defects of their hasty manufacture. I was the draftsman, and I take all the discredit. Of course, we have enjoyed such good times under Free Trade that we view with horror a system of Protection now to be restarted. To come to a more substantial point in regard to the Amendment and our point that we object to the taxation of food. He said that we have acquiesced in the taxation of tea and sugar, and how it reminded him of what his distinguished father said in connection with this very proposal which we are now fighting, "If you are to give a preference to the Colonies, you must put a tax upon food." And it was in that sense that we inserted those words in the Amendment. In those days, of course, there were taxes on sugar and also upon tea. Our point is that it is and must be the inevitable consequence, if this is allowed to go on, that the full system must come into operation. My right hon. Friend, with his customary frankness, has said so quite definitely.

Let us get all mistiness out of our minds. It is said by some that it is only a temporary proposal which can be readjusted at a later date. It is nothing of the sort. It has been reiterated by the only person whose opinions on this occasion count for very much—that is to say, the spokesman of the Government. It is what is said officially that counts, and that has been said officially, and very honestly. It is admirable to know where we are. We can fight on a clear issue. You are on the first stages of your long fight. It is on the Statute Book that we are here and now setting up a system of Preference to the Dominions which must inevitably lead to taxes on corn, on meat, on hides, on the whole range of our raw materials. And our Dominions have never made any suggestion that that is a condition of their loyalty or their service to us or to the Empire at large. They say, "We are delighted to have them, but if you think that by means of these duties you are going to impose the least burden upon your poor, keep them away from us; we do not want them." That is straight and splendid of them. We give it to them. "By all means," they say, "we take it." We may be wrong, but that is the old issue which we are going to fight on, not only in this House, but elsewhere. We are going to say with all the sincerity of conviction, and, as we believe, of the experience of the past, that if you put taxes on commodities you raise their price to the consumer, and if you put, as you must and will, in giving preferences to our Dominions, taxes on your corn or meat or raw materials, you will raise the cost of living to the general mass of the people of this country. Our Labour Friends are solid with us in that. Whatever may be suggested about us, it cannot be suggested that they, at any rate, do not know what their people want and think. They do know. Time and time again their non-party representative bodies have passed resolutions with complete unanimity. This House thinks they are wrong; the majority have the right to say they are wrong, and you have legislatively said they are wrong. Let us have no more humbug about it. There it is.

With regard to Protection there was an Amendment moved by an hon. and learned Friend of mine who said, "If we are going to carry these things on for a little longer along that path let us carry them along till 1st September." I thought, in my innocence, that if that was not accepted in its entirety perhaps my right hon. Friend in his genial way would say, "Go a little further and I will take it to 31st December," but he found him so willing to follow him that he went a long way further, and they actually carried these duties a month into the new financial year. There they are landed right into it. They carry the whole thing on. You have not to start de novo at all. It was delightful to hear a burst of candour from a Back Bench one night. An hon. Member said something like this, "I am rather tired about Free Trade. I am not very much bothering about Tariff Reform. But what about motor cars?" He knows perfectly well what it all meant. He wanted Protection for motor cars. You are landed right into it. I congratulate the Chancellor of the Exchequer. He has done very well. We have fought it with our eyes wide open and so has he. I hope those who were partially blinded in those early days of the Debate now see what it really means. It is perfectly clear. We are bound to vote for the Amendment as the only opportunity we have had of having a Division on our strong conviction and belief in regard to that. Although technically it looks like a vote against the whole Bill it is not so intended, but simply to have an opportunity of expressing our opinion on the last stage of the Budget at what we believe the consequences will be.


I wish to say a few words in reference to the actual deficit with which we are faced. 1 do not know how many hon. Members can say what it is. I am certain very few people outside have the faintest idea what it is. When I say the deficit, apart from the sale of assets, amounts to £690,000,000, I think many hon. Members will be inclined to say the figure is overstated, but it is not, and we must realise that we have to make good this deficit somehow or other next year. We shall have to find the money either by reducing our expenditure or by increasing taxa- tion. We all hope we shall reduce expenditure. It is just as well that the House should be brought back to see how these figures are arrived at. In his speech on the Second Reading, speaking of the revenue, the Chancellor of the Exchequer said: Cash we hope will be paid into the Exchequer over and above the very considerable amounts from sources which are appropriated by Votes in Aid. I will give the figures of the Appropriation in Aid: In aid of the Ministry of Munitions, £140,000,000; in aid of the Ministry of Shipping, £50,103,000; in aid of the War Office. £50,000.000; in aid of the Admiralty, £14,000,000; making £254,000,000 in all. That is made up in this way from sales of the stores or other matters that can be salved. But then he had to take into account a further £250,000,000. I ventured. to put down a question to get the exact. figure he expected to raise in the current year, and he said the figure was practically that shown in his Budget speech of £200,000,000. Turning to the balance-sheet for the current year, there is at first a sum of £233,000,000 which came openly into the accounts. That totalled up to no less than £689,000,000. I only make this protest. I think we should have raised very much more from the Super-tax or Income. Tax, however hard it might have been, as the only method whereby we could curb the reckless expenditure which is going on in the country at the present time, and which, I am sorry to say, is also going on in some Departments of the Government itself. This country came up to realities when the question of 6s. per ton more on coal had to be faced. Then the country began to understand it. So, bitter as it would have been, I think the Chancellor of the Exchequer would have been well advised, and it would have been in the. interests of the community at large, if he had dealt with this matter and faced this deficit in a very much bolder way. Though he has made a Budget popular in the City and in the country, I do not believe it is sound and in the best interests of the country.


I had not the slightest idea of speaking but for one or two remarks which fell from the Leader of the official Liberal party. He said "Let us have no dubiety or humbug." I listened to the speech of the hon. and gallant Gentleman who moved the Amendment, and it appears to me that his right hon. Friend the Member for Peebles has taken the occasion of that Amendment to echo the sentiments of his exiled leader from this House, and to prepare for another engagement similar to the ones we used to have in pre-war days. The last right hon. Gentleman said, in one of those oft-heard perorations, that if you give a preference it follows that you must place a tax on food—corn, beef, and all the other requisites. But does he forget that Mr. Asquith set up a Commission to inquire into the food supply of this country, and that the responsible Government entered into a bargain with the agriculturists that if they would do so-an-so, to save the life of the community in face of the submarine menace, then the Government would solemnly enter into a bargain for the next five years with the farming community, which would be protected against undue competition? Surely, if there is so much vitality and so much truth in the principles of Cobden, there should be at least as much truth and honesty in the pledge of the Government to a great industry like the agricultural industry !

Is statesmanship so bankrupt in this country that you cannot conceive something, instead of taxing the food of the people? could you not make arrangements with the farming community whereby they may continue in their prosperity? I would view the position with concern if the agricultural people were deceived by the Government, because the pledge given by the Government has led them to increase the wages of their labourers. It was a bargain. I was a member of the Milner Commission. I said, "If you are going to give a guarantee of prices, you must by the same token give a minimum wage to the agricultural workers." That minimum has gone up through the pressure of organisation, and it must be admitted that to-day both the farmer and the labourer are in a better position than they have occupied for the last sixty or eighty years. Is not agriculture as important as shipping? Surely it is as important as any industry in the country! We know that, apart from its fiscal side, a nation without an agricultural population is doomed to be a failure sooner or later. I say it is good business for the Government of the country to see that everything possible is done to secure that we have a well-paid, virile, agricultural population. I want to throw out a suggestion to those who believe that Cobden said the last word as to the financial arrangements of the country, Cannot you arrange to keep the agricultural labourers' wages up? Is the right hon. Gentleman the Leader of the Liberal Opposition going to the country to tell the agricultural labourer that the miners have got their natural protection in the coal, but as to the labourer and the farmer, having served the country in its hour of need, we have no further use for them, and they must go back to the conditions which existed for them before the War?


Does the hon. Member suggest that agricultural workers' wages would both be raised had the pledge not been given? It is nonsense.


I am not going to enter into that speculation. At that time the greater number of agriculturists were not living in luxury. Many, indeed, were in a very precarious position, and had there been an attempt to force wages up to 30s. or 40s. it would have brought disaster to agriculture.


The wages have been raised by the pressure of the men's organisation.


I want the prosperity of agriculture to be maintained. I want the wages to be kept up, and I can conceive a scheme whereby the Government can keep them up, by becoming a modern Joseph, by buying up the wheat production of the whole country and giving the farmers sufficient for their crops to enable them to pay their men decent wages and to secure themselves at the same time; and buy the crops of the world, and so mix the two purchases together that there will be very little, if any, increase in the cost of the food of the people, and we should have attained this by the solemn pledge which the Government gave to the farmer and which, I hope, will never be broken.


In reply to what was stated by the last speaker, so far as the Labour party are concerned, we are just as anxious to maintain the wages of the

agricultural labourer as any other hon. Member—[HON. MEMBERS: "More so!"] —though we may not agree with the particular policy which he was outlining for maintaining their wages. But I do not rise to deal with this particular point. I rise to say a few words, first, of appreciation of the manner in which the Chancellor has met a considerable number of the Amendments that have been moved by the party for whom I speak. We do not underestimate the value of the concessions that have been given on this occasion. At the same time, it would simply be deluding the Chancellor and the Government if I did not make it clear that there are still in this Finance Bill matters of fundamental difference between our party and the Government. With us it is not only a question of Imperial Preference, or Free Trade versus Protection. We do not believe that the close, keen dividing line of the future will be limited so much as it has been in the past between the various political parties in this country to Free Trade and Protection. We disagree profoundly with that part of the Budget which provides for continued borrowing while at the same time war profits are allowed to escape; and not only have war profits been allowed to escape, but in the same Budget, which provides for a reduction of 50 percent. in the Excess Profits Tax we have also had the question whether it will be necessary for the people of this country to face in the very near future a levy on capital by way of relieving the necessity for continuing year in and year out to keep taxation at its present high level or even to increase it. These are questions that constitute a fundamental difference between the Chancellor and ourselves, and if I had not taken the opportunity of saying these few words our party might have been misunderstood, and so I thought it better not to give a silent vote.

Question put, "That the words proposed to be left out stand part of the Question."

The House divided, Ayes, 219;Noes, 48.

Division No. 79.] AYES. 11.7 p.m.
Agg-Gardner, Sir James Tynte Austin, Sir H. Bell, Lieut.-col. W. C. H. (Devizes)
Ainsworth, Captain C. Baird, John Lawrence Benn, Sir Arthur S. (Plymouth)
Allen, Col. William James Baldwin, Stanley Betterton, H. B.
Amery, Lieut.-Colonel L. C. M. S. Balfour, George (Hampstead) Bigland, Alfred
Archdale, Edward M. Banner, Sir J. S. Harmood- Birchall, Major). D.
Archer-Shee, Lieut.-Colonel Martin Barlow, Sir Montague (Salford, S.) Blades, Sir George R.
Armitage, Robert Barnes, Major H. (Newcastle, E.) Borwick, Major G. O.
Astbury, Lt.-Com. F. W. Sarnett, Captain Richard W. Bowles, Col. H. F.
Astor, Major Hon. Waldorf Barnston, Major Harry Boyd-Carpenter, Major A.
Atkey, A. R. Beck, Arthur Cecil Brackenbury, Col. H. L.
Breese, Major C. E. Hinds, John Rees, Captain J. Tudor (Barnstaple)
Brittain, Sir Harry E. Hood, Joseph Reid, D. D.
Brown, Captain D. C. (Hexham) Hope, James Fitzalan (Sheffield) Remer, J. B.
Buchanan, Lieut-Colonel A. L. H. Hope, Lt.-Col. Sir J. (Midlothian) Rendall, Athelstan
Burdon, Colonel Rowland Hopkins, J. W. W. Renwick, G.
Burn, Colonel C. R. (Torquay) Hopkinson, Austin (Mossley) Richardson, Sir Albion (Peckham)
Burn, T. H. (Belfast) Hughes, Spencer Leigh Robinson, S. (Brecon and Radnor)
Campbell, J. G. D. Hunter, Gen. Sir A. (Lancaster) Robinson, T. (Stretford, Lancs.)
Carew, Charles R. S, (Tiverton) Hunter-Weston, Lieut.-Gen. Sir A. G. Rodger, A. K.
Carr, W. T. Hurd, P. A. Roundell, Lieutenant-Colonel R. F.
Casey, T. W. Jackson, Lieut.-Col. Hon. F. S. (York) Rutherford, Sir W. W. (Edge Hill)
Cautley, Henry Strother Jameson, Major J. G. Samuel, S. (Wandsworth, Putney)
Chadwick, R. Burton Jesson, C. Sanders, Colonel Robert Arthur
Chamberlain, Rt. Hon. J. A. (Birm., W.) Jodrell, N. P. Sassoon, Sir Philip A. G. D.
Chamberlain, N. (Birm., Ladywood) Johnson, L. S. Scott, A. M. (Glas., Bridgeton)
Chilcott, Lieut-Com. H. W. S. Jones, G. W. H. (Stoke Newington) Seager, Sir William
Clay, Captain H. H. Spender Jones, J. Towyn (Carmarthen) Seddon, J. A.
Clough, R. Jones, Wm. Kennedy (Hornsey) Shaw, Captain W. T. (Forfar)
Coats, Sir Stuart Kidd, James Shortt, Rt. Hon. E. (N'castle-on-T., W.)
Cobb, Sir Cyril King, Com. Douglas Simm, Colonel M. T.
Cockerill, Brigadier-General G. K. Knight, Capt. E. A. Smith, Harold (Warrington)
Colvin, Brigadier-General R. B. Knights, Capt. H. Sprot, Colonel Sir Alexander
Cope, Major W. (Glamorgan) Law, A. J. (Rochdale) Stanier, Capt Sir Beviile
Courthope, Major George Loyd Law, Right Hon. A. Bonar (Glasgow) Stanley, Colonel Hon. G. F. (Preston)
Craig, Captain Charles C. (Antrim) Lewis, Rt. Hon. J, H. (Univ. Wales) Stanton, Charles Butt
Craig, Col. Sir James (Down, Mid.) Lewis, T. A. (Pontypridd, Glam.) Steel, Major s. Strung
Craik, Rt. Hon. Sir Henry Lister, Sir R. Ashton Stephenson, Colonel H. K.
Croft, Brig.-Gen. Henry Page Lloyd, George Butler Strauss, Edward Anthony
Davidson, Major-Gen. Sir John H. Locker-Lampson, Com. o. (Hunt'don) Sturrock, J. Leng.
Davies, Alfred Thomas (Lincoln) Long, Rt. Hon. Walter Surlees, Brig.-Gen. H. C.
Davies, T. (Cirencester) Loseby, Captain C. E. Sutherland, Sir William
Denison Pender, John C. Lowther, Col. Claude (Lancs., Lons) Sykes, Sir C. (Huddersfield)
Dewhurst, Lieut.-Com. H. Lyle, C. E. Leonard (Stratford) Talbot, G. A. (Hemel Hempstead)
Dockrell, Sir M. M'Guffin, Samuel Terrell, G. (Chippenham, Wilts)
Doyle, N. Grattan Mackinder, Halford J. Thomas-Stanford, Charles
Edwards, A. Clement (East Ham, S.) M'Laren, R. (Lanark, N.) Thomson, F. C. (Aberdeen, S.)
Eyres-Monsell, Commander Malone, Major P. (Tottenham, S.) Townley, Maximilan G.
Falcon, Captain M. Marriott, John Arthur R. Tryon, Major George Clement
Farquharson, Major A. C. Meysey-Thompson, Lt.-Col. E. C. Waddington, R.
Fell, Sir Arthur Molson, Major John Elsdale Walker, Colonel William Hall
Forestier-Walker, L. Moore-Brabazon, Lieut.-Col. J. T. C. Walton, Sir Joseph (Barnsley)
Fraser, Major Sir Keith Morison, T. B. (Inverness) Ward-Jackson, Major C. L.
Ganzoni, captain F. C. Morrison-Bell, Major A. C. Ward, Colonel L. (Kingston-upon-Hull)
Gibbs, Colonel George Abraham Murray, Major C. D. (Edinburgh, S.) Ward, W. Dudley (Southampton)
Gilbert, James Daniel Murray, Hon. G. (St. Rollox) Waring, Major Walter
Gilmour, Lt.-Col. John Nail, Major Joseph Watson, Captain John Bertrand
Glyn, Major R. Newman, Sir R. H. S. D. (Exeter) Weston, Colonel John W.
Green, J. F. (Leicester) Nicholson, R. (Doncaster) Wheler, Colonel Granville C. H.
Greene, Lt.-Col. W. (Hackney, N.) Nicholson, W. (Petersfield) White, Col. G. D. (Southport)
Gregory, Holman Palmer, Brig.-Gen. G. (Westbury) Whitla, Sir William
Gretton, Col. John Parker, James Wigan, Brig.-Gen. John Tyson
Griggs, Sir Peter Parry, Major Thomas Henry Wild, Sir Ernest Edward
Gritten, W. G. Howard Peel, Lt.-Col. R. F. (Woodbridge) Williams, Lt.-Com. C. (Tavistock)
Guest, Maj. Hon. O. (Leic, Loughbore') Perkins, Walter Frank Wills, Lt.-Col. Sir Gilbert Alan H.
Hacking, Captain D. H. Pollock, Sir Ernest Murray Wilson, Colonel Leslie (Reading)
Hailwood, A. Pownall, Lieut.-Colonel Assheton Winterton, Major Earl
Hall, Lieut.-Col. Sir Fred. (Dulwich) Pratt, John William Wood, Sir J. (Stalybridge and Hyde)
Hamilton, Major C. G. C. (Altrincham) Prescott, Major W. H. Worsfold, T. Cato
Hancock, John George Purchase, H. G. Worthington-Evans, Rt. Hon. Sir L.
Henderson, Major V. L. Rae, H. Norman Young, William (Perth and Kinross)
Hennessy, Major G. Raeburn, Sir William Younger, Sir George
Henry, Dennis S. (Londonderry, S.) Randles, Sir John Scurrah
Herbert, Denniss (Hertford) Ratcliffe, Henry Butler TELLERS FOR THE AYES.—Lord E.
Hilder, Lieut.-Colonel F. Raw, Lieut-Colonel Dr. N. Talbot and Captain F. Guest.
Acland, Rt. Hon Francis Dyke Hirst, G. H. Sexton, James
Adamson, Rt. Hon. William Holmes, J. S. Shaw, Tom (Preston)
Bell, James (Ormskirk) Johnstone, J. Short, A. (Wednesbury)
Benn, Capt. W. (Leith) Jones, J. (Silvertown) Sitch, C. H.
Bowerman, Right Hon. C. W. Kenworthy, Lieut-Commander Smith, Capt. A. (Nelson and Colne)
Brace, Rt. Hon. William Kiley, James Daniel Smith, W. (Wellingborough)
Briant, F. Maclean, Neil (Glasgow, Govan) Spencer, George A.
Cape, Tom Maclean, Rt. Hon. Sir D. (Midlothian) Tootill, Robert
Carter, W. (Mansfield) Murray, Dr. D. (Western Isles) Williams, A. (Conset, Durham)
Davies, Alfred (Clitheroe) Newbould, A. E. Williams, Col. P. (Middlesbrough)
Davison, J. E. (Smethwick) O'Grady, James Wilson, Rt. Hon. J. W. (Stourbridge)
Edwards, C. (Bedwellty) Onions, Alfred Wilson, W. T. (Westhoughton)
Griffiths, T. (Pontypool) Parkinson, John Allen (Wigan) Wood, Major Mackenzie (Aberdeen, C.)
Grundy, T. W. Richards, Rt. Hon. Thomas Young, Robert (Newton, Lancs.)
Guest, J. (Hemsworth, York) Richardson, R. (Houghton)
Hartshorn, V. Roberts, F. O. (W. Bromwich) TELLERS FOR THE NOES.—Mr.Hogne and Mr. G. Thorne
Hayward, Major Evan Rose, Frank H.

Bill read the third time, and passed