Commons Sitting of 20 May 1919

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

PRIVATE BUSINESS.
Provisional Order Bills (Standing Orders applicable thereto complied with),—Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That, in the case of the following Bills, referred on the first Reading thereof, the Standing Orders which are applicable thereto have been complied with, namely:—
Gas and Water Provisional Orders Bill.
Electric Lighting Provisional Order Bill.
Ordered, That the Bills be read a second time To-morrow.
Private Bill Petitions (Standing Orders not complied with),—Mr. SPEAKER laid upon the Table Reports from one of the Examiners of Petitions for Private Bills, That, in the case of the Petitions for the following Bills, the Standing Orders have not been complied with, namely:—
London County Council (Tramways and Improvements).
Cannock Urban District Council.
Ordered, That the Reports be referred to the Select Committee on Standing Orders.
Milford Docks Bill,
Read the third time, and passed.

ORAL ANSWERS TO QUESTIONS.
  POLAND.

    MASSACRE OF JEWS.
    Colonel WEDGWOODasked the Secretary of State for Foreign Affairs whether he has received any information as to the massacre of fifty-six Polish Jews
    166
    at Pinsk by Polish soldiers on 5th April; and whether His Majesty's Government have yet made representations to the Polish Government that these pogroms must cease or all British assistance to Poland will come to an end?
    The UNDER-SECRETARY of STATE for FOREIGN AFFAIRS (Mr. Cecil Harmsworth): The answer to the first part of the question is that His Majesty's Government have received information of the shooting of thirty-four persons believed to be Jews at the place and on the date mentioned by my hon. and gallant Friend. According to information furnished by the Polish authorities these persons are stated to have been implicated in a plot to seize, disarm, and kill a small Polish outpost stationed on the Polish Eastern frontier.
    As regards the second part of the question I would refer my hon. and gallant Friend to the reply returned to the hon. Member for Whitechapel (Mr. Kiley) on the 15th instant, but as to the alleged pogrom at Vilna, His Majesty's Minister at Warsaw has just reported that he has no information in regard to any incident of the kind.
    Colonel WEDGWOOD: Is the hon. Gentleman aware that these Jews who were shot at Pinsk were attending a meeting in the town of Pinsk, considering the question of Red Cross administration, when they were fallen upon by these Poles; that the major who was in command of the Polish detachment who did the murdering was reprimanded by the Polish authorities, but that nothing further came of it? In these circumstances will the hon. Gentleman see that representations are made to the Polish Government by the British Government stating that this country views with extreme regret the present action of the Poles in instigating the murder of Jews?
    Mr. A. SHAW: Is the hon. Gentleman aware that all the Scottish Members of Parliament have to-day received a telegram alleging among other things that thousands of Jewish men, women and children have been done to death by Turkish soldiers under the auspices of the present Turkish Government?
    Mr. HARMSWORTH: No, Sir. That information is quite new to me. I shall be glad if the hon. Gentleman will give me particulars

  MILITARY MEDALS.
  Lieut.-Colonel GUINNESSasked the Secretary of State for War what persons are eligible to present military medals; and whether any alteration of the existing Regulations is intended?
  Captain GUEST (Joint Parliamentary Secretary to the Treasury): Medals awarded for gallant conduct or meritorious service may be presented to the soldier concerned by the municipal and other local authorities and societies at the discretion of the General Officer Commanding-in-Chief of the Command, or may be presented at military parades. Presentations to next-of-kin of deceased soldiers may only be made by General Officers Commanding at parades of troops. There is no present intention of altering this procedure.

  DEMOBILISATION.

    FURLOUGH (DISTANT THEATRES OF OPERATION;
    Colonel ASHLEYasked the Secretary for War whether he is aware that many men sent home for demobilisation from distant theatres of operations have been unable to obtain the full twenty-eight days' demobilisation furlough owing to the fact that their time has expired during their journey home; and whether, in such cases, he will sanction the payment of the full twenty-eight days' pay and the ration allowance in lieu of the leave?
    The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Forster): I am not clear to what cases my hon. and gallant Friend refers, as in the case of soldiers coming home from distant theatres of operations their twenty-eight days' furlough commences from the day following that on which they leave the dispersal station in the United Kingdom to proceed to their homes, irrespective of whether their terms of engagement have already expired or not.
    Colonel ASHLEY: May I send the right hon. Gentleman cases?
    Mr. FORSTER: Yes.

    ELIGIBLE MEN RETAINED.
    Lieut.-Colonel BUCKLEYasked the Secretary of State for War if he is aware that a large number of men who are
    168
    eligible for demobilisation are being retained in the Army on cadres of units, in the military foot police, and in other capacities; and if he will have immediate inquiry made into all such cases with a view to their early demobilisation?
    Captain GUEST: Cadres are being brought home as rapidly as possible in order that the demobilisable personnel may be released. With regard to the military foot police and other administrative branches of the Service, the personnel of these corps, though eligible for demobilisation, are liable to be temporarily retained as part of the military machinery for demobilisation, until their services can be spared or they can be replaced. Men so retained who are eligible for demobilisation are being replaced as rapidly as possible by those who are not eligible.

    TERRITORIAL MEDICAL SERVICE.
    Major MOLSONasked the Secretary of State for War whether he is aware of the discontent in the Territorial medical service at the want of consideration shown to them, many of whom had patriotically served years before the War and immediately on the outbreak of War had volunteered for foreign service though beyond the ordinary military age for service abroad, and were still retained abroad, to the detriment of their professional prospects, while many junior temporary medical officers had already returned home; and can he take any steps to rectify these irregularities?
    Captain GUEST: Since the Armistice medical officers of the Territorial Force and Special Reserve, as well as those holding temporary commissions in the Royal Army Medical Corps, have been demobilised with due regard to length of service, age, personal hardships and other considerations. It is not always possible, however, to release an individual officer, even though he may have such claims for consideration, as either his special medical qualifications, or the duties he is performing, may necessitate his retention.

    LOSS OF BUSINESS (COMPENSATION).
    Major CAYZERasked whether the Government intends to take any action, and, if so, what, to compensate those men who, having had to join the forces, have on their return found that their business has been ruined and have not the necessary capital to restart their business?
    The MINISTER Of LABOUR (Sir R. Home): I have been asked to reply to this question. In cases of serious hardship arising from military service the Civil Liabilities Department is authorised to provide financial assistance for the purpose of enabling demobilised officers and men to restart businesses which have been closed while the owners have been serving with His Majesty's Forces. For a fuller account of the Civil Liabilities Scheme, I would refer the hon. and gallant Member to the answer given on the 13th March last to a question by the hon. Member for West Woolwich.

    INTERPRETERS.
    Major M'KENZIE WOODasked the Secretary of State for War whether he is aware that there is considerable dissatisfaction among soldiers who are acting as interpreters in Germany, many of whom could have successfully applied for demobilisation; and whether, in view of the fact that their demobilisation is now refused on account of their indispensability, their services will be recognised by the grant of commissions or special rates of pay to all interpreters?
    Mr. FORSTER: I am not aware that men who are eligible for demobilisation are being retained as interpreters in Germany, but if my hon. and gallant Friend has any special case in mind, and he will supply full particulars, I will have inquiry made. The question of a grant of extra pay for these interpreters is under consideration.
    Major E. WOOD: Will extra pay be granted to officers acting as interpreters?
    Mr. FORSTER: I should like to have notice of that.

    ANTI-AIRCRAFT STATIONS.
    Captain COOTEasked the Secretary of State for War whether he is aware that a number of officers and men eligible for release are being compulsorily retained in anti-aircraft stations in this country; what reason exists for the maintenance of such units; and when the personnel may expect their release?
    Captain GUEST: Orders have been issued that all demobilisable personnel of the anti-aircraft companies in this country are to be demobilised with the least possible delay.

    BUILDING TRADE.
    Mr. MARRIOTTasked the Secretary of State for War whether his attention has been called to the fact that men indispensable to the building trade at home are being retained in the Army, with the result that important building schemes are being held up or retarded; and whether he will give orders for the immediate release of such men?
    Captain GUEST: I regret that I have nothing to add to the answer given to my hon. Friend the Member for Elland on the 8th instant to the effect that Army Order 55, of 1919, governs the eligibility of all men for demobilisation, and that it is regretted that, at the present time, no special steps can be taken to release men engaged in the building trade who are not eligible for demobilisation under that Army Order.
    Mr. MARRIOTT: Then it is the case that these people are being retained?
    Captain GUEST: This trade has not been singled out to be retained as against any other trade. The same Regulations govern all sections of the community.

    NORTH RUSSIA EXPEDITIONARY FORCE.
    Lieut.-Commander KENWORTHYasked the Secretary of State for War if voluntary recruiting for the North Russian relief force has been satisfactory; if so, when the demobilisation of the 1914 and 1915 men in North Russia will be proceeded with; and if he can give an undertaking that these 1914 and 1915 men will not be used for offensive operations against Russian troops, but only volunteers used for this purpose if necessary?
    Captain GUEST: The answer to the first part of the question is in the affirmative. As regards the latter part, all demobilisable men will be released as soon as their places can be taken by the Relief Force, part of which is now en route.
    Lieut.-Colonel Lord H. CAVENDISH-BENTINCK: Will an assurance be given that the one-eyed men of very low category, of whom there are very large numbers in the Russian Expeditionary Force, will be relieved at once?
    Captain GUEST: Of course, we shall be guided in that matter by the medical authority in charge of that district.
    Mr. MOSLEYasked the Secretary of State for War whether the Under-

    171
    Secretary's statement on 5th May to the effect that men serving in Russia volunteer to go there implies that the only men who are retained in Russia by compulsion, in addition to men who enlisted specifically for service in that country since the Armistice, are those who volunteered for general service in the early stages of the War, and whether the effect of this ruling is to place these men who enlisted voluntarily at a disadvanage with conscripts, in that they can be retained with the Russian Expeditionary Force by compulsion while conscripts are ineligible for this form of service?
    Captain GUEST: No, Sir; men of all categories of service are being retained pending relief, as is explained in my reply to the next question. The second part of my hon. Friend's question does not therefore arise.
    Mr. MOSLEYasked the Secretary of State for War whether he is aware that men over thirty-seven years of age, who enlisted in the early stages of the War, and were ordered to Russia in the summer of 1918, are still retained with the Russian Expeditionary Force by compulsion; whether he will order the demobilisation of these men and the substitution of younger men as transport facilities permit, and whether he will consider the application of the same standard of eligibility for demobilisation from the Russian Ex-peditionory Force as that which applies to His Majesty's Forces in France and Germany, with a view to preserving a sense of equable and impartial treatment throughout the Army?
    Captain GUEST: I am aware that there are men who are eligible for demobilisation compulsorily retained with the North Russian Expeditionary Force at the present time. It has not been possible hitherto to relieve these men. Two forces have been organised for the relief of this personnel, and one has already been dispatched on 12th May, and the other will follow shortly. These two relief forces are sufficient to admit of all demobilisable personnel being relieved. Men in North Russia are governed by exactly the same conditions as regards eligibility for demobilisation as those serving elsewhere, but their relief has hitherto been delayed through climatic and other difficulties in connection with transportation to the United Kingdom. I would refer my hon.
    172
    Friend to the full answer given on 5th May to my hon. and gallant Friend the Member for Portsmouth, North. I am sending my hon. Friend a copy,

  NAVAL AND MILITARY PENSIONS AND GRANTS.

    MERITORIOUS SERVICE MEDAL ANNUITIES.
    Colonel ASHLEYasked the Secretary of State for War whether, in view of the fact that the sum of £7,500, which is allocated each year to be distributed in annuities to recipients of the Meritorious Service Medal, is no longer adequate, in view of the great number of men who have received this medal during the War, he will consider an increase of this amount, so as to obviate the great delay which now exists before a candidate for the medal receives his gratuity?
    Mr. FORSTER: This question will not be lost sight of in the general review now in progress.
    Colonel ASHLEY: Will the Government bear in mind, in view of the great number of meritorious medals now in existence, there is a very poor chance of anyone getting one?
    Mr. FORSTER: That will be kept in view.

    GRATUITY FOR WIDOWS-AND DEPENDANTS.
    Major ENTWISTLEasked the Secretary for War whether ho is aware of the delays in the settlement of accounts and the remittance of war gratuity for widows and dependants, and that in many cases they are in urgent need of the money, and whether adequate measures are being taken to speed up the administration and so remove this source of grievance?
    Mr. FORSTER: As I have stated on several occasions, the war gratuity forms part of a deceased soldier's estate and is not necessarily payable to his widow or dependants. Every case has to be inquired into, and as this means the re-opening of some 700,000 estates, the distribution must in any event take a considerable time. The possibility of hastening the issue is at present engaging my earnest attention. Cases are, as far as possible, being taken in order of date of death, and those concerned will be communicated with in due course.
    Mr. HOGGE: Will the right hon. Gentleman say how far his office has got in the payment of gratuity? Have they got past 1915?
    Mr. FORSTER: I cannot say without notice. Perhaps the hon. Gentleman will put a question down.

    QUEEN MARY'S ARMY AUXILIARY CORPS.
    Major LLOYD-GREAMEasked the Secretary of State for War whether he has considered the desirability of granting a gratuity on demobilisation to members of the Queen Mary's Army Auxiliary Corps; whether such a gratuity will be granted; and, if so, on what terms?
    Mr. FORSTER: Provision has already been made for the grant on demobilisation of two months' pay and allowances to officials and of twenty-eight days' furlough on full pay to members of this corps who enrolled on a mobile basis. Members other than officials also get special provision in respect of out-of-work donation.
    Major LLOYD-GREAME: In view of the answer given to question 25, can the right hon. Gentleman say whether there is any real reason for differentiation in payment against women who have done the same work in uniform as men?
    Mr. FORSTER: These people are serving on a totally different contract of ser vice. I cannot see why the terms of the contract of service should not be observed.

    DEMOBILISED OFFICERS (GRATUITIES).
    Mr. MOSLEYasked the Secretary of State for War whether he is aware that certain officers who were demobilised in January last have not yet received their gratuities; whether he can state the reasons for this delay; and whether interest on the money will be paid to compensate these officers for the loss of its use during this period?
    Mr. FORSTER: These gratuities are issued by the Army agents who have experienced the greatest difficulty in securing sufficient trained staff to meet the sudden increase of work due to demobilisation. Special efforts are now being made to deal with arrears, and it is hoped that by the end of the month they will have been cleared. As regards payment of interest I would refer my hon. Friend to the reply given yesterday to my hon. and gallant Friend the Member for Moss Side.
    Colonel ASHLEYasked the Financial Secretary to the War Office if he is aware that as the gratuity to officers of the New Army is based on daily pay, and as the pay of lieutenants was not raised until the 1st October, 1917, a conscripted officer receives a gratuity at a higher rate than one who joined voluntarily in the early days of the War and became non-effective before the date specified; and whether, under the circumstances, he will arrange that the gratuity shall be issued at a higher rate to all concerned?
    Mr. FORSTER: The gratuity is based on the pay which the officer drew while in the Service. I will consider the point raised by my hon. and gallant Friend.

    PENSIONERS AS MESSENGERS.
    Mr. CAIRNSasked the Financial Secretary to the War Office whether the various Government Departments have been instructed that only those in receipt of full naval or military pensions are to be employed as messengers, and not men in receipt of temporary pensions; if so, can he state the reason for this discrimination; and whether, in view of the possibility of this practice leading to a calculation of a man's pension in deciding upon the wages to be paid, he will take steps to withdraw this instruction?
    Mr. FORSTER: No such instructions have been given.

    DISTINGUISHED CONDUCT MEDALLISTS.
    Lieut.-Colonel ARCHER- SHEEasked the Financial Secretary to the War Office whether he will extend to non-pensioner Distinguished Conduct Medallists the option which is enjoyed by pensioner Distinguished Conduct Medallists of drawing 6d. a day pension for life in lieu of the £20 gratuity?
    Mr. FORSTER: No, Sir. While an addition of 6d. a day to an existing pension may be of value I am not prepared to institute pensions of that amount.

    TIME-EXPIRED OFFICERS (WAR GRATUITY).
    Lieut.-Colonel ARCHER- SHEEasked the Financial Secretary to the War Office whether he is aware that, although Article 497(b) of the Royal Warrant permits a time-expired officer who has been re- employed without retired pay to receive a gratuity of 124 days' pay for the first year of service and sixty-two days' pay for each subsequent year of service, many officers

    175
    are being paid only the lesser gratuity of thirty-one days' pay for every year of service or part of a year under Article 497(a), as a consequence of the Army Order No. 85 of March last; and whether, in view of the hardship caused, he will consider an amendment to the Army Order quoted so as to give these officers the benefit of the Warrant which was in operation when they rejoined for service?
    Mr. FORSTER: Army Order 85 of March last deals with the war gratuity for Regular officers on the active list, and I do not understand how it can have the effect stated in the question. If my hon. and gallant Friend will furnish me with a specific case I will have it looked into.

    PENSIONS (COMMUTATION).
    Colonel ASHLEYasked the Pensions Minister whether he is prepared to extend the principle of commutation of pensions to dependants who can prove that a lump sum would be of more advantage to them to enable them to set up in business or emigrate?
    The PARLIAMENTARY SECRETARY to the MINISTRY of PENSIONS (Colonel Sir James Craig): My right hon. Friend is not prepared to adopt this suggestion. Apart from questions of principle, commutation would be impracticable, as the pension of a widow or female dependant ceases upon marriage or remarriage. Widows desirous of emigrating or setting up in business may apply for a grant from the King's Fund. Arrangements can also be made for a three-months' advance of pension in emigration cases.

    DISABLEMENT PENSIONS (WAR BONUS).
    Lieut. - Colonel ARCHER - SHEEasked the Pensions Minister whether he is aware that men with fourteen years' service who have been discharged disabled and have elected to receive a small permanent pension under Article 1163 of the Royal Warrant in lieu of a gratuity are not being paid the 20 per cent. war bonus on that pension; and whether, in view of the fact that these pensions have been granted as much for disablement as for service, he will consider the grant to them forthwith of the bonus aforementioned?
    Sir J. CRAIG: The answer to the first part of the question is in the affirmative. The principal factor in the award of pen-
    176
    sions under Article 1163 is length of service, and in substance the pension is to be regarded as a service pension.
    Lieut.-Colonel ARCHER-SHEE: As the hon. and gallant Gentleman admits that this pension was granted partly for disablement, cannot he reconsider the question?
    Sir J. CRAIG: My hon. and gallant Friend will understand that the pension in respect of fourteen years' service or more is not eligible for bonus, nor is a special grant which is given in lieu of pension subject to the 20 per cent. bonus, and therefore in computing the two and making a like pension it is only natural that the same conditions must be observed.
    Lieut.-Colonel ARCHER-SHEE: In this case this pension is granted partly for disablement, and surely that requires more generous treatment?
    Sir J. CRAIG: But on the question of disablement, where only a grant was given in lieu of pension, the grant does not carry a bonus, and in this particular case it was a combination of two grants, neither of which carries a bonus.

    DISABILITY ASSESSMENT.
    Mr. HURDasked the Pensions Minister whether steps will be taken to expedite the work of the medical boards in regard to changes in disability assessment, so as not to keep disabled soldiers in suspense and in some cases throw them upon parish relief?
    Sir J. CRAIG: The hon. Member in presumably referring to cases where the man applies to be re-boarded on the ground that his disability has become worse, or has been under-assessed. In such cases, if his claim is supported by the medical referee, he is brought before a medical board as expeditiously as possibly, and, in the meantime, to avoid hardship, he can be given advances by his local committee in accordance with the finding of the medical referee.
    Mr. HURD: Is it not possible to expedite the work of these medical boards? In one case it took six weeks, which seems a long period.
    Sir J. CRAIG: I can only say that I am extremely sorry if there has been that delay. The pressure is very great. Demobilisation means a heavy burden on the

    177
    medical boards throughout the country, but I will inquire into the case raised by my hon. Friend
    Mr. HOGGE: Can the hon. and gallant Gentleman say how the work of the medical boards is increased on account of demobilisation, seeing that all men to be demobilised are assessed in the Army?
    Sir J. CRAIG: My hon. Friend is misinformed. Those who are out of the Army can come back on pensions under Article 9, and, under the system of demobilisation, Form Z 22, it is not necessary that a man should have declared his disability on demobilisation, and large numbers have come before committees after having declared themselves under Form Z 22.

    WAR GRATUITY (POST OFFICE TELEGRAPHISTS).
    Sir PETER GRIGGSasked the Postmaster-General whether in 1914 Post Office telegraphists were forbidden to enlist in any other unit than the Royal Engineers, they at the same time being offered full civil pay and all emoluments; and why the special war gratuity is now withheld from them?
    The POSTMASTER-GENERAL (Mr. Illingworth): The answer to the first part of the question is in the affirmative. With regard to the second part, I must refer the hon. Member to the reply given by the Financial Secretary to the War Office to questions on the subject on the 10th of April.

    WAR GRATUITY (DELAY).
    Major ENTWISTLEasked the Post- master-General whether he is aware of the delay caused at the Post Office Savings Bank in London in forwarding to discharged and demobilised sailors and soldiers their war gratuity; and what measures are being taken to remedy the same?
    Mr. ILLINGWORTH: I may refer the hon. Member to the answer which I gave to a similar question by the hon. Member for Salford (South) on the 8th of this month.
    Mr. HOGGE: Is my right hon. Friend aware that there are still very many complaints with regard to this delay? Has he investigated the matter, and can he assure the House that something really is being done?
    Mr. ILLINGWORTH: Yes, there has been an investigation. Where there is delay now is on account of either illegible writing, which is very frequent, or also wrong addresses, or confusion of names which are very much the same. At one time we were about half a million behind, and now we are only something over 30,000.

  SOLDIERS' GRAVES.
  Lieut. - Commander KENWORTHYasked whether free travelling passes will be granted to poor people wishing to visit the graves of near relatives in France and Flanders; and, if so, when this boon may be expected?
  Mr. FORSTER: I regret that, having regard to the expense involved, which would possibly amount to over £2,000,000, it is not considered practicable to issue free travelling passes to relatives to visit the graves of deceased soldiers in France and Belgium.
  Lieut. -Commander KENWORTHY: Will the Secretary of State for War have an inquiry made as to the number of people who want to go, and if it is not too great, will he consider allowing these poor people this opportunity?
  Mr. FORSTER: I am afraid I cannot undertake that.

  TUBERCULOSIS (SANATORIUM TREATMENT).
  Mr. MANVILLEasked the Secretary for War if he is a ware that a woman officer in Queen Mary's Women's Army Auxiliary Corps who contracted tuberculosis as a result of exposure in France whilst carrying out her duties in France has to pay for medical treatment at the Midhurst Sanatorium, whilst officers of His Majesty's Army undergoing the same treatment for the same cause are treated free of charge; and whether he will take steps to rectify this inequality of treatment?
  Mr. FORSTER: These officials are civilians, and do not come within the scope of the Warrants under which military officers are treated. They are dealt with under the Injuries in War (Compensation) Act, and receive sick pay for the full period of treatment in sanatorium where

  179
  the disease is specifically attributable to service overseas. The grant of free treatment in sanatorium depends on whether the official is an insured person.

  BRITISH PRISONERS OF WAR.

    UNTRACED SOLDIERS.
    Mr. LYLEasked the Secretary of State for War if he can now state what reply, if any, has been received from the German authorities to our requests for information touching the fate of the untraced British prisoners who are known to have fallen into their hands and then disappeared?
    Captain GUEST: The German authorities have made no direct reply to the demand for information as to the fate of the untraced British prisoners of war, but the German official lists of deaths, which were sent periodically from Berlin during the War, are still being received and a number of reports relating to the previously untraced prisoners have appeared in them. The British Military Mission in Berlin has also been able to collect from the German records a considerable number of definite reports of deaths which had not previously been sent to this country and evidence has been obtained from other sources. The information received in various ways since the list was presented to the German authorities has enabled the number of outstanding cases to be reduced to considerably less than half, 1,763 cases having been settled, while 1,299 remain at present unsettled.
    Mr. LYLE: Failing an immediate satisfactory reply, does the right hon. Gentleman not consider that steps should at once be taken against the governors of the districts in which our prisoners disappeared?
    Captain GUEST: The machinery, which is working now very successfully, has in a short time reduced the number of untraced men by more than one-half.
    Major ENTWISTLE: In view of the great number of cases of this sort can he tell us if there is any hope that any of these missing men are still alive, because we nave to answer these questions, and it would be of great importance if the Government could give some assurance on the matter?
    Captain GUEST: I think, on the whole, it would be very unwise to hold out much hope.

    TURKISH GOVERNMENT (" BLACK LISTS ")
    Major Earl WINTERTONasked the Secretary for War if he is aware that some discontent is being caused among officers and other ranks of British prisoners of war returned from Turkey at the slowness in bringing to justice the Turkish officers and civilians who were responsible for gross brutality to British prisoners in Turkey; and if he can make a statement on the subject?
    Captain GUEST: I am not in a position to make a statement at present, but I may say that certain "black lists" have been presented to the Turkish Government, and a further communication on the matter is now awaited from the military authorities in Constantinople.

  ARAB NON-COMBATANTS (MURDERS BY TURKISH SOLDIERS).
  Earl WINTERTONasked the Secretary of State for War if any investigation, has been, or is being, made into the de liberate murder by Turkish soldiers of the Arab non-combatant inhabitants and women and children of the village of Tafite, near Deraa on or about 26th September, 1918; and if he is aware that, when the forces of the King of Hedjaz ac companied by a British officer entered Tafite, they found children of two years, and upwards had been bayonetted by the Turkish forces?
  Captain GUEST: During their retreat the Turks are believed to have murdered women and children at Tell Arar, near Deraa. This is presumed to be the massacre referred to by my hon. and gallant Friend. It was not, however, reported officially to General Headquarters,. Egypt, by the British officer accompanying, the Arab forces who witnessed the affair. According to an unofficial account of the latter given later by the British officer, the Arab forces in question dealt suitably with the Turks implicated on the spot.
  Earl WINTERTON: Is the right hon. Gentleman aware that a great number of women and children were bayonetted at this place, that I was myself in the vicinity and heard evidence, and that the

  181
  people who were responsible were German officers of high degree who subsequently escaped?
  Captain GUEST: I will have this further looked into.

  HALTON GAMP, AYLESBURY.
  Colonel WEDGWOODasked the amount expended to date by the Government at Halton Camp, near Aylesbury; and whether he will explain the reason for the large provision of buildings and sheds and the equally large development of the ground to be covered by the camp and its suburbs, in view of the existence of Government camps and factories, as well as Woolwich Arsenal, that probably could be used for the purposes for which Halton Camp is intended?
  Mr. TYSON WILSONasked the Under-Secretary of State to the Air Ministry whether it is intended to complete the aircraft works at Wendover, Bucks; and, if so, will he explain why the contractors are not supplied with the plans necessary for carrying on the work?
  The UNDER-SECRETARY Of STATE to the AIR MINISTRY (Major-General Seeley): The approximate expenditure to date on the purchase of land and the provision of buildings at Halton is £560,000. The camp was taken over from the War Office in 1917 and has since been used as a technical training centre for men and boys of the Air Service. During this period a large quantity of machinery and plant has been installed, the dismantlement and removal of which would involve heavy expenditure and interruption to training. Under the peace organisation of the Royal Air Force it is proposed to utilise Halton as the staff college, a recruiting depot, a training centre and a record office.
  Colonel WEDGWOOD: Are we to understand that the expenditure on Halton Camp will be completed, and can the right hon. Gentleman say how much money will be spent on the completion of this establishment?
  Major-General SEELEY: I was there on Saturday and I have no doubt that this is the best place for the various purposes which I have referred to. I do not carry in my mind the exact amount that will be required to complete it, but it is a very
  182
  much less sum than that we have already spent. I think it would be economical to-complete it.
  Mr. HOGGE: Has this site been determined with any fixed idea of the size of the Air Force in view of the fact that the Estimates which have been submitted to this House are only temporary?
  Major-General SEELY: Whatever the size of the Air Force—and it does not appear to me to be likely that any very great reduction will be made in view of our commitments ail over the world—and apart from any question of European needs, the camp will be a suitable place for a staff college, which we must have, and a training centre, which we must have, and especially for the training of boys as mechanics, since we have already got the most elaborate machinery installed there.
  Mr. HOGGE: What does the right hon. and gallant Gentleman mean by committments all over the world?
  An HON MEMBER: The League of Nations.
  Major-General SEELY: It is a very large question to answer, and I cannot deal with it by question and answer, but it is quite apparent that we must have an Air Force in view of our commitments not in any controversial sense, but that in view of air patrolling we must have a suitable Air Force, and we must have a place for a staff college and for training mechanics.
  Colonel WEDGWOOD: What is—
  Mr. SPEAKER: We are not now discussing the Air Estimates.

  ARMY PROMOTION.
  Captain LOSEBYasked the Secretary of State for War if he will consider the advisability of so amending the present system of promotion in the Army, more particularly in the case of officers, that in the Army of the future promotion is based upon merit alone?
  Captain GUEST: It is not considered advisable to change the present system of promotion. Under the present rules no-officer may be promoted unless he is qualified in every way for the duties of the higher rank, and where several are equally qualified it is only fair that length of service should be taken into considera-

  183
  tion. Promotion by merit alone during the War, involving frequent transfers of officers from one unit to another, brought to light the fact that the system is not altogether satisfactory, as it is practically impossible to compare the merits of officers who are not reported on by the same authority.

  RECRUITING CAMPAIGN.
  Captain LOSEBYasked the Secretary of State for War if he will consider the advisability of initiating at an early date a recruiting campaign upon a grand scale for the Regular and Territorial Armies in order that advantage may be taken of the high patriotic spirit of the country, and in order that it may be clearly demonstrated that strenuous efforts are being made to place the voluntary Armies of the country upon such a basis that within a reasonable period of time they can be expected to completely undertake the duties necessary for the defence of the realm?
  Captain GUEST: This is already being considered, and I hope it will be possible to launch such a campaign at an early date.

  PEACE CELEBRATIONS.

    TRIUMPHAL PROCESSIONS.
    Lieut.-Colonel ROYDSasked, with reference to the War Office letter of 10th April with regard to triumphal processions of County and Territorial troops, whether free railway warrants will be given to men taking part in such processions to travel to and from their homes; and whether an allowance will be made for the cost of motor and other conveyance in cases where railway facilities do not exist?
    Mr. FORSTER: I cannot at present add anything to the answer given on the 15th May to the hon. Member for Newcastle-on-Tyne.

    COMMEMORATIVE PEACE COIN.
    Mr. CHARLES OMANasked the Chancellor of the Exchequer whether, in view of changed conditions, he can now reconsider his decision of 3rd February and direct that some one of the denominations of the national currency should be
    184
    struck as a commemorative Peace coin for 1919 with the type and inscription suggested to him in the joint petition of the Royal Historical and Royal Numismatic Societies?
    The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): No, Sir; I am afraid there has been no such change in circumstances as would enable me to alter my previous decision.

  GERMAN POST OFFICES (OCCUPIED AREA).
  Mr. EVELYN CECILasked the Secretary of State for War (1) whether he is now in a position to say what control, if any, has been taken over German civilian post offices in the territory under British military occupation in respect of letters destined for the occupied territory itself, Germany, and other enemy countries, Great Britain or countries allied with her, and neutral countries; (2) whether a decision has now been arrived at as to establishing a British administration of German post offices in the occupied territory under which postage stamps would be surcharged G.R.I., postal salaries would be paid by the British Government, and profits would be received by the British Government as contributory to the German indemnity?
  Captain GUEST: I understand that the extent of the control established in the occupied territory is such as to enable the various censorship regulations to be efficiently carried out. No British personnel has actually been introduced into any part of the Administration, but the Oberpost-director of the Postal Province of Cologne acts under the orders of the Military Governor's staff. British Army Mails are carried by the British Field Post Office. All other mails originating in, addressed to, or passing in transit through the occupied territories, are carried by the German Post Office, which defrays the cost of the service, and arranges routes, means of transport, etc., subject to the general requirements of the British Military authorities.
  It is not proposed to establish a British Administration of German Post Offices in the occupied territories. Such a proceeding, besides introducing a policy at variance with that obtaining in other occupied areas, and laid down by the authority of

  185
  Marshal Foch, would involve a complete change in the present administration, and as such is inadmissible, under the Armistice conditions of the 11th November, 1918. As the expenditure in the Cologne Postal Province considerably exceeds the receipts, the question of the disposal of profits does not arise.

  ARMY SCHOOLMASTERS (COMMISSIONS).
  Major M'KENZIE WOODasked the Secretary of State for War whether he will consider the advisability of giving commissions to all Army schoolmasters?
  Captain GUEST: The whole question of the status, training and pay of Army schoolmasters is at present under consideration. Obviously, however, the question cannot be dissociated entirely from the larger one of the future of educational training in the Army, in regard to which a definite decision has not yet been arrived at.

  TILBURY ORDNANCE DEPOT.
  Mr. WIGNALLasked the Secretary of State for War whether it is intended to make permanent the Tilbury Ordnance Depot; whether he is aware that the men employed at the depot are paid as else where on the dock, and that the working week totals forty-four hours; and whether endeavour is being made to secure men to work for £2 8s. 6d. per week of forty-eight hours?
  Mr. FORSTER: The Royal Army Ordnance Corps Depot at Tilbury Docks is not to be permanent and there is no intention of altering the present arrangements by which the wages and working hours of workmen casually employed there follow those of other employ és at these docks.
  Mr. WIGNALL: May we assume that a stop will be put to advertisements to work for longers hours and for less wages than provided for in the agreement to which the Government were a party?
  Mr. FORSTER: Yes. I think that that would be a fair assumption.

  SIGNAL OFFICES.
  Mr. WIGNALLasked the Secretary of State for War whether a general Regi-
  186
  mental Order No. 6,128 laid it down that, in order to economise in signal personnel, all signal offices, below divisional corps, would be closed entirely between 22.00 hours and 08.00 hours daily; whether on. the night of the 5th –6th instant, owing to pressure between the Paris Bourse and London, certain military telegraphists were compelled to staff the baudot for ordinary press traffic beyond 22.00 hours; whether this work represents revenue-producing traffic, the charges for which are collected by the Post Office in France and England; and whether he will arrange for this civilian work to be performed by non-military telegraphists at the ordinary; trade union rate?
  Captain GUEST: I am informed that the statements contained in the first three parts of the hon. Member's question are correct. The matter has already been taken up with the General Post Office wit ha view to the discontinuance of the employment of military personnel on such, work in future.

  SERVICE GRATUITIES.
  Lieut.-Colonel Sir F. HALLasked the Secretary of State for War whether Service gratuities are granted to officers who have received their commissions while serving in a civilian capacity in Government Departments and have never carried out any military duties, peaceful or other wise, on the same scale as in the case of officers who have been on active service and who, in a large proportion of cases, have been subjected to risk and hardship over a long period; and, if so, whether he will consider the possibility of drawing some distinction between these two classes of soldiers?
  Mr. FORSTER: This question has already been very fully and carefully considered. While the existence of a broad contrast of the kind indicated in the question is recognised, it is found impossible without intolerable complication to make a monetary distinction applicable to all the intermediate classes and cases.

  CONSCIENTIOUS OBJECTORS (EGYPT).
  Colonel WEDGWOODasked the Secretary of State for War whether he is aware that the thirteen men who were imprisoned in Egypt for refusing to accept

  187
  transference from the Royal Army Medical Corps to combatant units joined the Royal Army Medical Corps voluntarily, and for several years performed useful and dangerous work, whether he is aware that, in spite of the War Office pledge, these men were taken away from this work and imprisoned in Egypt under the harshest conditions for nearly twelve months; and whether it is now proposed to make them finish their sentences in England?
  Captain GUEST: The urgent demand for men of Category A for service in fighting" units at the period in question necessitated the transfer to the Infantry under the Army Transfers Act, 1915, of a considerable number of men who originally enlisted in the Royal Army Medical Corps. The men could claim exemption from the transfer if they held conscientious objection to combatant service, all such claims being carefully investigated before the transfer took place by the General Officer Commanding-in-Chief of the Expeditionary Force with which they were serving, and no man who could show sufficient proof of conscientious objections was transferred. As regards the thirteen men referred to, as I informed my hon. and gallant Friend on the 12th May, they have now been ordered home to complete their terms of imprisonment in English prisons. The general lines on which it is intended to deal with such cases were indicated in a reply given to the hon. and gallant Member for Plaistow on the 3rd April.
  Colonel WEDGWOOD: Seeing that these men preferred to go to prison rather than be transferred to combatant units, is not that alone a proof of their conscientious principles?
  Captain GUEST: No. I do not think that that is a fair inference.
  Earl WINTERTON: Is there any foundation for the statement that these men were treated in any harsh way? Is my hon. and gallant Friend aware that they were treated very leniently?
  Colonel WEDGWOOD: Some of them were dying in prison.

  AIR MINISTRY (MOTOR- CARS).
  Lieut.-Colonel W. GUINNESSasked the Secretary of State for War how many motor cars are being used by the Air Ministry?
  Major-General SEELY: The number of cars used by the Air Ministry is forty-two. This includes cars used by branches of the Ministry housed in London but not in the Hotel Cecil
  Lieut.-Colonel GUINNESS: Can the figure be given for those used by the Hotel Cecil?
  Major-General SEELY: I think it is either six or eight at the outside—about that. Besides that there would be about thirty. That will be thirty-six about, for the staff of the Air Ministry housed at the Hotel Cecil.
  Colonel ASHLEY: Could they not go by trains like other people?
  Major-General SEELY: Thirty-six seems a large number, but if you consider the number of officers which must be at the Hotel Cecil—I forget how many hundreds there are—it is evident that the vast majority of them go about like other people.
  Colonel WEDGWOOD: Is my right hon. Friend aware that it was given in evidence before us that they required motor-cars because if they walked up and down the Strand they would be jostled by soldiers who would not salute them?
  Major-General SEELY: I am sure that cannot be given as a serious reason. But the whole question is being considered by the Committee of my right hon. Friend the Member for the City of London. Every reduction possible will be made, but I must not be taken as assuming that it is desirable that cars be taken from officers of the Royal Air Force who have to administer large districts.
  An HON. MEMBER: Will the right hon. Gentleman inquire into the large number of cars used by civilian officials of the Air Ministry?
  Major-General SEELY: I am inquiring into that; as far as I can make out we have now come nearly to a minimum.
  Lieut.-Colonel GUINNESS: Can the right hon. Gentleman say how many cars are used by the civilian members?
  Major-General SEELY: I must have notice of that.
  Major E. WOOD: Can the right hon. Gentleman say whether there is any truth in the statement frequently made that these cars are used to carry ladies about?
  Major-General SEELY: No, Sir; I cannot believe that ever happens.

  EDUCATIONAL PREMISES (MILITARY OCCUPATION).
  Mr. F. C. THOMSONasked the Secretary of State for War whether he is aware that prejudice is being caused to the interests of education by the retention of schools for military purposes; and whether he can accelerate the release of such schools?
  Captain GUEST: The release of educational premises is already being expedited as much as is possible, and the desirability of their early surrender has been frequently impressed upon the local military authorities, who have from the first been instructed to give priority to such establishments. My hon. Friend may take it for granted that where educational establishments (which are used as military hospitals) are being retained for the moment, the reason for the retention is, that in these hospitals there are being treated sick and wounded soldiers whose condition would not permit of their immediate removal without serious suffering, and even danger.
  Mr. THOMSONasked the Secretary of State for War whether, considering that dissatisfaction is being caused by the failure of the military authorities, after they had given up the use of school buildings for hospitals, to remove within a reasonable period the furniture and surplus equipment from the buildings which have been so used, and by their refusal on that account to give entry to the educational authorities, he will see that arrangements are made in such cases for the prompt removal or disposal of such equipment, as the delays which are at present taking place are causing prejudice to educational interests?
  Captain GUEST: Instructions to this effect have been issued to all the commands.

  SOLDIERS' LEAVE.
  Captain R. TERRELLasked the Secretary of State for War whether, in view of the fact that the granting of leave to soldiers employed in distant theatres of war is left to the officers commanding, he will state the general instructions which are laid down upon the subject of leave: and whether the soldier with thirty to
  190
  thirty-six months' continuous service can bring his rejected application for leave before any supreme tribunal?
  Captain GUEST: The grant of leave to soldiers employed in distant theatres of war is in the hands of the General Officer Commanding-in-Chief the Expeditionary Force concerned. It is open to any soldier who wishes to bring his rejected application for leave before higher authority to lodge a complaint in the manner provided in Section 43 of the Army Act and paragraph 439 of the King's Regulations.

  ARMY OF OCCUPATION.

    MUSKETRY INSTRUCTOR'S BURIAL.
    Mr. BOTTOMLEYasked the Secretary of State for War whether he is aware that Private Nicholl, a musketry instructor, the Army of the Rhine, was accidentally shot dead whilst instructing a class, and that his body was buried, rolled in a blanket, without any coffin, being borne to the grave on a stretcher before the eyes of many German civilians; and whether he will take steps to prevent a repetition of such treatment of British soldiers?
    Captain GUEST: I am obtaining a report as to the accuracy of the statements contained in this question, and will communicate with the hon. Member as soon as I am in a position to give an answer.

  HOLWELL GUN-PROOF RANGE.
  Colonel YATEasked the Financial Secretary to the War Office whether the claim for compensation in the case of the Holwell gun-proof range has now been decided; and, if not, when the decision will be arrived at?
  Mr. FORSTER: I understand there are two claims for compensation in this case, one by the dispossessed tenant and the other by the owner. The tenant's claim has been before the Defence of the Realm Losses Commission, who, pending a hearing, have sanctioned a substantial payment on account. The owner's claim is before the Commission as an agreed case, requiring only their sanction to the provisional settlement arrived at.

  PEACE TERMS.

    PUNISHMENT OF GERMANS.
    Mr. LYLEasked the Prime Minister (1) what steps have been, or are being, taken to secure from the German authorities those camp commandants against whom inhuman treatment of our prisoners of war is alleged, so that they may be formally placed on their trial; (2) whether under the Peace Treaty or otherwise the Allies propose to take any punitive action against the ex-Crown Prince of Germany?
    Mr. BONAR LAW (Leader of the House): The ex-Crown Prince and the others mentioned in this question would under the terms of the Treaty be liable to trial in the same way as other enemy persons connected with the War.
    Mr. LYLE: Has my right hon. Friend had his attention drawn to a report which has been issued by one of the large Press agencies, in which it is stated that the ex-Crown Prince is reported to have said that if his extradition was demanded he would commit suicide? That being so, would it not be in the interests of all concerned to demand his extradition?
    Mr. BONAR LAW: That is a case in which His Majesty's Government should take no action.
    Lieut.-Commander KENWORTHY: May I ask if Admiral von Tirpitz is amongst those on the list?
    Mr. BONAR LAW: I did not mention any names, and I think the House will readily understand that when a Committee have been examining evidence it would be a very unwise thing to mention names if there was any desire to punish the people concerned.
    Lieut.-Colonel C. LOWTHER: In view of the fact that the Crown Prince has given that sacred pledge, will the right hon. Gentleman see that he has the very fullest trial?
    Brigadier-General CROFT: May I ask are we to take it for granted that all these commandants who are guilty of these crimes against civilisation can be recovered by the Allies by such time as is necessary?
    Mr. BONAR LAW: It is part of the terms of the Treaty as mentioned in the summary that the German Government are to hand over the people who are demanded for trial by the Allies.
    Mr. LYLE: Are we to understand that the British Government must wait until an Allied Commission has reported before we can demand that the people who maltreated our prisoners are to be handed over to us; and is it not the fact that the longer we wait the more difficult it will be to get them?
    Mr. BONAR LAW: If the hon. Gentleman will look at the summary, I think he-will see that each of the Allies is entitled to demand the persons against whom there is a charge of having committed atrocities in connection with any one of the Allies.

    CONVENTIONS AND TREATIES.
    Colonel GRETTONasked the Prime Minister if a White Paper will be laid setting out, for the information of Parliament, the terms of the Conventions and Treaties between His Majesty's Government and the Governments of France, Italy, Japan, and Roumania, by which the British Government is bound in settling the terms of Peace?
    Mr. HARMSWORTH: It would not be desirable to lay the Treaties and Conventions at the present time. Nor, indeed, could it be done without obtaining the consent of all the signatory parties.

    BRITISH EMPIRE (MONETARY CLAIM).
    Lieut.-Colonel LOWTHERasked the Prime Minister whether the British dele gates have formulated our claims in full against the enemy countries; and if he is in a position to state the sum total of the enemies' monetary indebtedness to the British Empire?
    Mr. BONAR LAW: I cannot add anything to what has already been said on this subject.
    Lieut.-Colonel LOWTHER: Has the Leader of the House any valid reason for giving evasive answers? [HON. MEMBERS: "Order, order!"]
    MR. SPEAKER: That is not a proper form in which to put a question.

    INDEMNITIES.
    Mr. BOTTOMLEYasked the Prime Minister whether he can now give an undertaking that the House shall have an opportunity of discussing the question of indemnities before the Peace Treaty is signed?
    Mr. BONAR LAW: I can add nothing to the reply which I gave to a similar question by my hon. and learned Friend the Member for Chertsey yesterday.
    Mr. BOTTOMLEY: Then may I ask whether the position of this House, so far as any control of the Treaty is concerned, is this: when it comes forward for ratification we must take it or leave it, and we shall have no power to amend it in any respect?
    Mr. BONAR LAW: That, in my opinion, exactly represents the position, and I do no see in what other way any Treaty could ever be arranged.

    GERMANY (FOOD SUPPLY PAYMENT).
    Lieut.-Commander KENWORTHYasked the Chancellor of the Exchequer if he will state how and in what form payments are being made by the German Government for food supplied to them?
    Mr. CHAMBERLAIN: Payments have up to the present been made partly in gold and partly in neutral currency. I am unable to say what form they will take in future.

  NATIONAL SHIPYARDS.
  Mr. WILKIEasked the Prime Minister whether, in view of the number of vessels, other than warships, required to attend on the ships of the Navy during the War, and the apparent necessity for the safety of the country to still maintain an efficient fleet, and in view of the sums expended on the national shipyards and the views of the trade union representatives of the National Industrial Conference of the 27thFebruary last in favour of the development of national resources under public ownership, he will consider the advisability of the Government retaining these yards for the purpose at least of constructing these auxiliary vessels required and which need not compete with the ordinary yards, seeing that in the case of trawlers and drifters in ordinary times they could be utilised to reap the harvest of the seas and the fish so caught used to supply the needs of the men of the Navy and Army?
  Mr. BONAR LAW: All the points raised in the question were carefully considered by the Government, and we are not pre pared to reopen the question.

  CANADA (WASHINGTON REPRESENTATIVE).
  Lieut.-Colonel A. MURRAYasked the Prime Minister whether he has any official cognisance of an announcement made in the Dominion House of Commons by the President of the Privy Council to the effect that a permanent Canadian representative at Washington is shortly to be appointed; whether any communications on this matter have passed between His Majesty's Government and the Canadian Government during the last two weeks; and, if so, will he state the nature of such communications?
  The UNDER-SECRETARY of STATE for the COLONIES (Lieut.-Colonel Amery): The statement in the Canadian House of Commons to which my hon. and gallant Friend refers was to the effect that the Canadian Government intended to maintain a permanent representative in succession to the present Canadian War Mission at Washington, that the exact form which that permanent representation should take should be a matter of consultation between the Prime Minister of Canada and the Imperial Government, and that the present Mission should continue in existence meanwhile. His Majesty's Government will no doubt receive the views of the Canadian Government on the subject in due course.

  GOVERNMENT OFFICES (HOTELS).
  Sir RICHARD COOPERasked the Prime Minister if he will appoint a small Committee of Members of this House to inspect the hotels of London now occupied by the Government and to report to Parliament on the use to which these buildings are at present put?
  The FIRST COMMISSIONER of WORKS (Sir Alfred Mond): As the War Cabinet Committee on Accommodation and the newly appointed War Cabinet Committee on Government Staffs, formed by Sir Auckland Geddes, are now dealing with the subject of the question and as inspections of the hotels are already being made almost daily, I think the hon. Member will agree that it would be a work of supererogation for hon. Members of this House also to devote their time to the matter.
  Sir R. COOPER: Is the right hon. Gentleman aware that a large number of the Members of this House do net in the least agree with the policy at present adopted by His Majesty's Government in occupying so many of these hotels at the present time?
  Sir F. HALL: Will the right hon. Gentleman give the names of the Members who are going to sit on that Committee to inquire into this matter?
  Sir A. MOND: If my hon. Friend will put down a question, I will be very pleased to do so.
  Major WOOD: Will the right hon. Gentleman submit the Report of that Committee to this House and give the House an opportunity to consider it?
  Sir A. MOND: That is not a matter for me, but for the Leader of the House.
  General CROFT: Is it not more important even than the reduction of hotels to reduce all these stags by 50 per cent, at once?

  FOOD SUPPLIES.

    BEER SHORTAGE.
    Mr. SEDDONasked the Prime Minister whether he is aware that the discontent among the industrial workers arising out of the shortage of the beer supply is being aggravated by the widespread opinion that the causes that lead to the reduction of output do not now exist; and whether, in view of the danger to industrial peace arising out of the beer shortage, he will inform the House whether the present cereal supply warrants a resumption of the pre-war beer supply?
    The MINISTER for FOOD (Mr. Roberts): This subject was very carefully considered by the Cabinet, and the increase recently announced was the decision of the Government. As a matter of fact, the available supplies would not at present justify the resumption of brewing on the pre-war basis.
    Mr. J. F. GREEN: On behalf of my hon. Friend (Mr. Seddon), I beg to give notice that he will call attention to this matter on the Adjournment.

  ROAD BOARD (CONSTRUCTIONAL WORK).
  Major PRESCOTTasked the Chancellor of the Exchequer whether he can give the total cost of the road constructional work carried out under the direct supervision of the Road Board officials since the outbreak of war and up to March, 1919, for the Air Ministry, Ministry of Munitions, Office of Works, Admiralty, Board of Trade (Timber Supply Department), and the War Office Departments?
  Mr. BALDWIN (Joint Financial Secretary to the Treasury): With the hon. Member's permision, I propose to circulate the answer in the OFFICIAL REPORT.
  The following is the Answer referred to:
  The total cost of work carried out by, or under the supervision of, the Road board for the Departments named up to 31st October, 1918, including expenditure for reinstatement of roads damaged by extraordinary traffic was £4,699,762, made up as follows:

  £

  War Department

  3,143,392

  Admiralty

  116,262

  Ministry of Munitions

  478,870

  Board of Trade (Timber Supply Department

  87,475

  Air Ministry

  870,818

  Office of Works

  2,945

  Since the 31st October, 1918, the work in question has been carried out by the Joint Roads Committee appointed by the War Office, so perhaps the hon. Member will be good enough to ask that Department for the figures from that date until March, 1919.

  WAR COST (UNITED KINGDOM).
  Mr. LAMBERTasked the Chancellor of the Exchequer if he can state the total cost of the War to the United Kingdom up to the 31st March last?
  Mr. CHAMBERLAIN: It would perhaps have been possible to answer the right hon. Member's question with more confidence had he indicated in his question the assumptions on which he wished the calculation to be based. As it is I give the answer with all reserves.
  After making the allowance usually taken for normal peace expenditure on the one hand and for debts due from the Dominions and Allies on the other hand,

  197
  and after taking account of other Vote of Credit assets, the net cost of the War to the Exchequer of the United Kingdom up to the 31st March last, on the basis of Exchequer issues during the five years ending the 31st March last, may be estimated in round figures at £6,700,000,000. These figures are, of course, exclusive of liabilities in respect of the War, accruing after the 31st March last, and of losses to private citizens, localities, and trades in so far as these losses have not been made good out of the Exchequer.
  Lieut.-Colonel LOWTHER: Do these figures include loans to Allies?
  Mr. CHAMBERLAIN: I said after making the allowance usually made for loans to the Dominions and Allies, that is really taking credit for half of the amount of the loans.
  General CROFT: Is that the bill which has been presented to our enemies?
  Mr. CHAMBERLAIN: That is not the question on the Paper.

  UNEMPLOYMENT BENEFIT AND BREAD SUBSIDY.
  Mr. LAMBERTasked the Chancellor of the Exchequer what is the estimated cost of the subsidy from the Exchequer for the year 1919–20 to the railways for unemployment benefit and for the bread subsidy?
  Mr. CHAMBERLAIN: I would refer the right hon. Member to the reply which I gave to my hon. and gallant Friend the Member for Central Wandsworth on the 8th April.

  INCOME TAX (COST OF COLLECTION).
  Mr. ARNOLDasked the Chancellor of the Exchequer whether he will state the estimated total cost of collection of the Income Tax on incomes below £250 and above £250, respectively, including in both cases all consequent expenses in connection with abatements; whether he will state approximately the estimated number of persons who are liable for Income Tax on incomes below £250 and above £250, respectively; and whether he will state the estimated revenue to be obtained from the Income Tax during the current year from incomes below £250 and above £250, respectively?
  Mr. CHAMBERLAIN: The machinery of assessment and collection of the Income Tax constitutes an organised whole, and I am advised that it is almost impossible to identify any part of the total cost with any particular class of taxpayer.
  It is calculated that for the year 1918–19 the total cost of the collection and assessment of the Income Tax (and Super-tax) is approximately £3,000,000, including the cost of the services rendered by Departments other than the Inland Revenue. From such data as are available, it is roughly estimated that of this amount some £600,000 may be attributed to taxpayers in receipt of incomes under £250. This sum works out as 7½per cent, of the estimated amount paid last year by this class of taxpayer in Income Tax, which was roughly £8,000,000. As I informed the hon. Member on the 8th instant, it is anticipated that a like amount will be collected from the same class in the current financial year.
  As regards the rest of the question, I would refer the hon. Member to the answer I gave to the hon. and gallant Member for West Ham on 13th instant, of which I am sending him a copy. The hon. Member will no doubt see that it would not be correct to infer that because it is estimated that taxpayers below £250 will pay £8,000,000 in the current year, taxpayers over £250 will pay £312,000,000 (the Income Tax estimate), less £8,000.000, namely, £304,000,000. This would leave out of account the tax borne by companies, corporations, etc., on undistributed profits, as well as tax paid by non-residents.
  Mr. ARNOLD: Is it not the fact that the cost of collecting this £8,000,000 revenue on incomes below £250 a year amounts to more than the cost of collection of any other similar amount of revenue?
  Mr. CHAMBERLAIN: Of course, the collection of the tax in small amounts from people of small means is more costly than the collection of the tax in large amounts from people of large incomes, and if the whole of the Income Tax could be paid by one individual, of course the cost of collection would be reduced to nothing, but there is a difference between the 7½per cent, which is the nearest estimate my advisers can make, and the 70 per cent, which adorned the hon. Member's speech the other day.
  Mr. ARNOLD: May I ask the right hon. Gentleman whether he is aware that the

  199
  70 per cent. was an official figure quoted in this House by one of his predecessors as given by the Inland Revenue authorities in certain cases?
  Mr. CHAMBERLAIN: The Inland. Revenue authorities are unable to trace any estimate of 70 per cent, ever made by them.
  Mr. ARNOLD: Is he aware that that estimate is given in the OFFICIAL RBPOET in November, 1914, on the authority of the late Chancellor of the Exchequer?
  Mr. CHAMBERLAIN: Of course, I cannot explain what happened, but I think there must be a misprint in the Report. Whether 7 per cent, was mentioned and turned into 70 per cent, in the Report, or what happened I cannot say, but there is no foundation for it.

  SPECIAL CONSTABLES.
  Sir P. GRIGGSasked the Secretary of State for the Home Department whether he is aware that many ex-special constables who have had recently to resign for business reasons, after serving in some cases over four years, are very anxious to be able to take part in the review to be held by His Majesty the King, and if lie can make arrangements for them to do so?
  The UNDER-SECRETARY Of STATE for the HOME DEPARTMENT (Colonel Sir Hamar Greenwood): The Commissioner of Police informs me that in view of the large number involved, it will only be possible for serving special constables to participate in the review. It is hoped, however, to allot to ex-special constables some special spot on the line of route.
  Captain LOSEBYasked the Home Secretary if he can say what steps have been taken to recognise the services rendered by those men who voluntarily undertook the duties of special constables during the period of the War?
  Sir H. GREENWOOD: The subject is under consideration, but no final conclusion has been arrived at yet with regard to it.

  SERVICE MEN (MAINTENANCE CASES).
  Major ENTWISTLEasked the Home j Secretary whether he is aware of the hard-
  200
  ship imposed on poor women who are compelled to take proceedings against soldiers or sailors for the maintenance of themselves or children, in having to bear the cost of the railway fares and expenses of soldiers and sailors to enable them to attend the hearing of cases as provided by the Army Act, 1881, and the Naval Discipline (No. 2) Act, 1915; and whether he proposes to take steps to remedy this grievance?
  Sir H. GREENWOOD: My right hon. Friend is aware of the hardship which-sometimes arises, but it is a matter of much difficulty to find a satisfactory remedy. He is arranging to have the matter further considered by the Departments concerned—the Admiralty, the War Office, and the Air Ministry.

  DISABLED MUNITION WORKERS (EMPLOYMENT).
  Captain LOSEBYasked the Home Secretary if he will consider the advisability of issuing instructions that men and women disabled by accidents in the course of their employment of making munitions-of war, should receive special consideration when vacancies occur in Civil Service Departments?
  Mr. BALDWIN: I am afraid that it is not possible to arrange that the classes of person referred to in the question should have special opportunities of entering the Civil Service.

  ALIENS.
  Sir J. BUTCHERasked the Home Secretary whether he will state the country of origin and the date, if any, of the naturalisation of each of the following persons who are mentioned in Cmd. 107 as being ineligible Government contractors, and who were convicted of offences during the War, namely, David Assetsohn, 31, St. Bride Street, E.O.; Bernard Albert Kufferberg, managing director of Engines, Limited, Willesden; David Gestetner, Neo-Cyclostyle Works, Tottenham Hale; George Edward Heyl, Kingsway, W.C.; and Barnet Rabinowitz, Schlater Street, Bethnal Green; and whether any proceedings have been, or will be, taken to revoke the certificates of naturalisation of any of these persons?
  Sir H. GREENWOOD: Of the persons-referred to in the question, Bernard A.

  201
  Kufferberg is a natural-born British subject; David Assetsohn and Barnet Rabinowitz are men of Russian origin naturalised in 1901 and 1902; David Gestetner is a man of Hungarian origin naturalised in 1886, and G. E. Heyl is a man of German origin naturalised in 1899. The cases of Heyl, Rabinowitz and Gestetner have been carefully examined, but they do not present facts on which proceedings for revocation of the naturalisation certificates could be based. In the case of Assetsohn my right hon. Friend proposes to institute such proceedings.
  Mr. BOTTOMLEY: On what evidence can certificates of naturalisation be revoked in these cases?
  Sir H. GREENWOOD: Certificates of naturalisation can only be revoked on the Statutory grounds set out in the Aliens Act of 1918.
  Mr. JOYNSON-HICKS: Will he accept an Amendment in the new Bill to make it easier to get these men denaturalised?
  Mr. SPEAKER: That is rather far from the question on the Paper.
  Sir J. BUTCHERasked the Home Secretary whether he can state the number of aliens now employed at hotels in London, especially the large West End hotels; whether he has any information to show that ex-Service men are being discharged from these hotels in order that their places may be filled by aliens; and whether he is prepared to introduce an Amendment in the Aliens Restriction Bill prohibiting the employment of aliens in London hotels without the licence of the Home Secretary?
  Sir H. GREENWOOD: The figures asked for in the first part of the question arc not available; and I have no information to the effect suggested in the second part. I think that a provision by Order in Council somewhat to the effect of Article 22 B of the existing Aliens Restriction Order would be preferable to the suggestion in the last part of the question. The question of continuing that Article in effect is now under examination by the Ministry of Labour.

  CAPITAL PUNISHMENT.
  Major CHRISTOPHER LOWTHERasked the Home Secretary if he will state what steps are taken by his Department,
  202
  after conviction for murder, to ascertain what circumstances there may be which might make it desirable to advise commutation of the sentence; and what persons are consulted other than the judge who presided at the trial?
  Sir H. GREENWOOD: The facts of each ease and any representations received on the prisoner's behalf are very carefully considered and all inquiries are made which might assist in arriving at a just conclusion; but the circumstances vary so much that it is impossible for me to describe in detail the steps that are taken.

  LONDON TRAFFIC FACILITIES.

    TAXI-CABS.
    Mr. GILBERTasked the Home Secretary if he will state the number of taxi-cabs licensed by the Chief Commissioner of Police for the Metropolitan area for the present year; and how many of these cabs are in public use at the present time?
    Sir H. GREENWOOD: The number licensed for the year ended 30th April, 1919, was 4,742. So far as is known, the whole of these are available for use, except such as may be temporarily withdrawn on account of defects, etc.

    MOTOR OMNIBUSES.
    Mr. GILBERTasked the Home Secretary if the Chief Commissioner of Police is requiring a new type and standard of motor omnibus for the Metropolitan area before he will licence same; and in what manner the new standard varies from the existing type licensed as to weight, build, passenger - carrying capacity, and other important features?
    Sir H. GREENWOOD: In 1917 the Commissioner sent out circulars to manufacturers and others concerned with motor omnibuses urging the desirability of designing a lighter type of omnibus, or alternatively of improving the springing. The circulars did not suggest any variation as to existing dimensions or as to the number of passengers, but dwelt chiefly on an improvement in weight and springing and in the form of power transmission. I will send copies of these circulars to the hon. Member.
    Mr. GILBERTasked the Home Secretary if he will state the number of motor omnibuses licensed by the Chief

    203
    Commissioner of Police for the Metropolitan area for the present year; and how many of such vehicles are in public use at the present time?
    Sir H. GREENWOOD: The total number of motor omnibuses licensed to ply for hire in London during the year ended 30th April, 1919, was 2,602. With the exception of those temporarily disabled, all these are available for service.

  AGRICULTURAL LABOURERS' UNION.
  Mr. W. R. SMITHasked the Home Secretary whether it is upon his instructions that police officers are attending branch meetings of the Winterslow, Salisbury, branch of the Agricultural Labourers' Union; if so, can he give the reason for such action, and, if not, will he make inquiries as to why this is being done?
  Sir H. GREENWOOD: I have made inquiry, and I am informed by the Chief Constable that the meetings in question have never been attended by police officers.

  OLD AGE PENSIONS.
  Mr. WILKIEasked the Pensions Minister whether, having in view the recognised increase in the cost of living and the consequent difficulty for old people entitled to the old age pension to subsist on the present rate of pension, which ranges from 5s. per week where the income is under £21 per annum to 1s. per week where the income is between £28 17s. 6d. and £31 10s. per annum, together with an additional war allowance of 2s. 6d. per week to all old age pensioners, the Government will consider the desirability of doubling the present existing payments; and, considering that difficulty is often experienced in verifying the ages of applicants for old age pensions through no fault on the part of the applicants, whether the Government will allow payment of the pension to commence from the date when the applicant lodges his claim, and not, as at present, payable on the first Friday after the pension has been passed by the local pension committee, which in some cases represents an interval of several Weeks and even months?
  Mr. BALDWIN: I would refer the hon. Member to the reply I gave on this subject to the hon. and gallant Member for East Bradford (Captain Loseby) on the 15th inst.
  An HON. MEMBER: May I ask if the hon. and gallant Gentleman is aware that aged people under seventy receiving Poor Law relief often have their incomes actually reduced by receiving old age pensions?

  DOGS (REGULATIONS).
  Sir SAMUEL SCOTTasked the Parliamentary Secretary to the Board of Agriculture whether he is aware that the Regulations prohibiting the removal of dogs from one area to another inflict great hardship upon serving soldiers who own dogs, as when ordered to move their stations they are unable to take their dogs, and have no place to leave them; and what action he proposes to take?
  The PARLIAMENTARY SECRETARY to the BOARD of AGRICULTURE (Sir Arthur Boscawen): The Board are aware of the circumstances to which my hon. Friend draws attention, but they regret that they have no alternative but must submit soldiers to the same restrictions as effect other members of the public.

  EIGHT HOURS' DAY (STEAM-PLOUGHING).
  Captain R. TERRELLasked the Parliamentary Secretary to the Board of Agriculture whether his Department is considering the effect of the pro posed eight-hours' day on steam-ploughing; and whether he is aware that if the proposal is introduced it would mean that owing to the reduced output the cost of steam-ploughing would have to be in creased something like 45 to 50 per cent., which would be fatal to the trade and a serious blow to corn production?
  Sir A. BOSCAWEN: The Board recognise the serious difficulty which would arise in attempting to apply compulsorily, a limitation of hours in steam-ploughing. The hon. Member should wait for the introduction of the Bill now being prepared to give effect to the recommenda-

  205
  tions of the Industrial Conference, which recognised that exceptions to any general rate may be necessary in special cases.

  ALLOTMENTS, WANSTEAD FLATS.
  Sir KINGSLEY WOODasked the Parliamentary Secretary to the Board of Agriculture whether he is aware that the Epping Forest Commissioners have given notice to the Leyton Urban District Council that the tenancy of the allotments on Wanstead Flats is to cease at31st December next; that the acreage of Wan-stead Flats is, approximately, 1,500 and the space devoted to allotments only 30 acres; that this is the first year many of the holders have had the allotments, none have had them more than two years, and that if the tenancy is determined at the end of this year these allotment-holders cannot be adequately recompensed for their work and expenditure of time and money by producing food at a critical time for the country; that the Leyton Urban District Council desire the retention of these allotments for at least two years from the end of the War; and whether he will take steps to secure these holders in their tenure for the period stated?
  Sir A. BOSCAWEN: I have at present nothing to add to the answer I gave to the question addressed to me on the 12th instant by the hon. Member for Silver-town.
  Sir K. WOOD: Has my hon. Friend communicated with the Commissioners on this matter?
  Sir A. BOSCAWEN: Yes, Sir; I said 80 in reply to that question.

  MARYLEBONE TOWN HALL (RELEASE).
  Sir SAMUEL SCOTTasked the First Commissioner of Works whether he can now state the approximate date upon which the St. Marylebone Borough Council will regain possession of their new town hall?
  Sir A. MOND: I hope to be able to release the Marylebone Town Hall within the next six months.
  Sir S. SCOTT: Does the right hon. Gentleman appreciate the great difficulty this borough council now has in carrying on its work?
  Sir A. MOND: I regret very much the difficulty, but I can only release this town hall when I have other premises to house the staff.

  POST OFFICE ENGINEERING DEPARTMENT (SUBSISTENCE ALLOWANCES).
  Sir ALFRED YEOasked the Postmaster-General if he is aware of the fact that, although the subsistence allowances payable to travelling officers in the Post Office engineering department have not been increased during the War, the Regulations governing such allowances are interpreted in an illiberal manner by the officers who check the claims, to the further detriment of the travelling officers concerned; and if this policy, which is causing dissatisfaction, is followed with his knowledge and sanction?
  Mr. ILLINGWORTH: I am not aware of any such cases, but if the hon. Member will be good enough to forward me particulars, I will have inquiry made.

  HAWKER—GRIEVE ATLANTIC FLIGHT.

    ADMIRALTY PRECAUTIONS FOR SAFETY.
    Lieut.-Commander KENWORTHY(by Private Notice) asked the First Lord of the Admiralty what Naval Vessels were available on the South-West Coast of Ireland before Mr. Hawker started to fly from America: what steps were taken in case of an accident: and how many vessels are now searching for the missing machine?
    The PARLIAMENTARY SECRETARY to the ADMIRALTY (Dr. Macnamara): As regards the first part of the question, the vessels stationed on the south-West Coast of Ireland are as follows:—One flotilla leader, two destroyers, one sloop, all with reduced crews; two sloops on ferry service (one under refit, another at Portsmouth); sixteen motor launches, one patrol boat, four paddle vessels, ten trawlers, and five drifters. I may add that the motor launches are only suitable for inshore work, and the paddle vessels, the trawlers, and the drifters are continuously employed in clearing the sea of mines.

    207
    As regards the second part of the question, no steps were taken before the commencement of the flight to deal with the situation which might have arisen any time during the past few weeks. As a matter of fact, however, during yesterday eleven trawlers were at sea off the West Coast of Ireland, and at 7 o'clock p.m. were carrying out a sweep to the southward from the vicinity of Blacksod Bay.
    Further, when information reached us that the flight had actually commenced, we took such steps as were possible on the assumption that Mr.Hawker might be approaching this side. Yesterday afternoon orders were given for all available vessels in the Irish Command to proceed to sea as a precautionary measure, in consequence of which the following vessels proceeded to sea and were subsequently employed searching the sea: from Queenstown two destroyers, one sloop, and one patrol boat (the leader, I may say, was at Kingstown); from Berehaven three paddle vessels, from Galway one tug, from Eagle Island one tug. The motor launches were unable to proceed to sea on account of the state of the weather. All these vessels are still at sea searching that area off the West Coast of Ireland which lies between the main shipping routes to the North and South of Ireland.
    I think, perhaps, I may add an explanation of the circumstances which led to the report that Mr. Hawker had fallen into the sea somewhere about forty miles off Loop Head. The Admiral, Queenstown, received a wireless message that a Sopwith machine was down from the Castletown Wireless Station. Castle-town received it from a French Station, and the presumption is that the French Station in question had intercepted, in fragmentary form, and misconstrued, the orders of the Admiral, Queenstown, to his ships carrying out the instructions from the Admiralty to which I have already referred.
    Lieut.-Commander KENWORTHY: In view of the considerable time that seaplanes sometimes remain afloat, will the right hon. Gentleman consider the sending of a flotilla of fast vessels—not trawlers or sloops, hut destroyers—at the earliest possible moment to search the area in which this gentleman may be down.
    Dr. MACNAMARA: I will put that to the naval authorities.
    Mr. BOTTOMLEY: May we take it there is no news so far of this gallant airman?
    Dr. MACNAMARA: So far as I am concerned, an hour ago when I left the office there was no news.
    Major-General SEELY: There was no news ten minutes ago when I left the War Office.

  BRITISH TROOPS IN EGYPT.
  Major Earl WINTERTON(by Private Notice) asked whether any action has been taken against any person or persons resident in the Imperial Hotel, who have been issuing circulars, on behalf of an organisation calling itself the Egyptian Association, reflecting on the honour of our troops in Egypt?
  Captain GUEST: In consequence of the circulation of documents containing a number of mendacious statements concerning the conduct of British troops in Egypt, search was made yesterday afternoon by the police at the Imperial Hotel in a room rented by an Egyptian. Copies of a number of such documents were seized, and are now being considered by the Director of Public Prosecutions.
  Mr. JOYNSON-HICKS: Was anybody found there—any Egyptian?
  Captain GUEST: No arrests were made.

  BUSINESS,OF THE HOUSE.
  Mr. DEVLIN: Can the right hon. Gentleman tell us when the Committee stage of the Housing (Ireland) Bill will be taken?
  Mr. BONAR LAW: It is impossible to say at present.
  Mr. DEVLIN: Will the right hon. Gentleman let us know very soon, and at the same time whether the Bill will be taken on the floor of the House or in a Standing Committee upstairs?
  Mr. BONAR LAW: I will ask the Noble Lord (Lord Edmund Talbot) to let the hon. Member know as soon as possible.

  PRIVATE BILLS (GROUP A).
  Sir HARRY SAMUEL reported from the Committee on Group A of Private Bills; That, at the meeting of the Committee this day, a letter was received from Mr. Frederick Hall, one of the members of the said Committee, stating that he was unable, on account of illness, to attend the Committee this day and To-morrow.
  Report to lie upon the Table.

ORDERS OF THE DAY.

  FINANCE BILL
  Order for Second Reading read.
  Motion made, and Question proposed,
  "That the Bill be now read a Second time."
  Sir DONALD MACLEAN: The Bill which is now before the Committee asks for new powers of taxation. I submit that before the House gives that new power hon. Members should be satisfied that the Treasury, through the Chancellor of the Exchequer and those associated with him, have exercised to the full the power of control which certainly before the War they fully possessed—I refer to the checking and controlling of the expenditure by the public Departments of the fruits of the taxes which have already been levied under the powers granted by this House in the last Finance Act and those Acts preceding it. It is common knowledge that that control has not been exercised in a way which has given satisfaction to the House during the War. Indeed, the lack of that control has given very grave consideration to the Chancellor himself. In the Debate which we have already had on the Resolution, one of the main grounds of the appeal of the right hon. Gentleman was that his hands should be strengthened. One or two instances may be quoted of this serious state of affairs, of which hon. Members are, in a very general sense, pretty well aware.
  For instance, take the three Departments where no very exceptional pressure like that at the War Office and the Admiralty has been felt during the War. Great pressure, it is true, has been felt, but not in the same disruptive manner as applies to the fighting Departments. The Home Office, far instance, in 1914, cost £255,000. It has reached, according to the last available figure, £352,000. Take the Friendly Societies Registry. In 1914 the demand on the Treasury was £18,000. In the last, year of which I have been able to get figures it was £34,074. My right hon. Friend the First Commissioner of Works—and I am taking his own statement to the House two or three days ago—told us that he had hoped that by this time very considerable reductions would have been made. That has not happened. On the whole the total of the different Departments has very
  232
  little diminished. A very significant statement was made at the Inquiry now sitting in regard to the motor depot at Slough. I am not, of course, going into the merits of that matter. I am just taking what was said by one of the witnesses who is a personal friend of my own, Sir Benjamin Johnson. I do not know in the whole circle of my friends a more upright and zealous man than Sir Benjamin Johnson. What did he say? It was most extraordinary. He was asked how he proposed to deal with that great undertaking. I am quoting from the "Times" report, and his reply was:
  "They could not carry through a scheme of that kind if they were to meet with difficulties from any Government Department, from the Treasury downwards. He had been in the Government service in an honorary capacity for some years and he had found that one could generally get round the fences. There were more ways of killing a dog than by choking it with butter."
  What does that really mean? It means quite clearly that Treasury control in the real sense is non-existent. Those who have been at the Treasury—my right hon. Friend had previous experience before war-time and will, I am sure, confirm this—know that the Treasury put a very small tooth-comb through every proposal which was placed before them. Every Minister, no matter how great the merits of his proposal, always puts the Treasury before us, and blames it, as the one obstacle which he has really to get over before he can fulfil the object he has in mind. We require a real serious check upon national expenditure. When the War was going on we really, I think, agreed to let that check lapse, but it is true to say that year by year as the War went on Treasury control became less and less. The Armistice came into force on 11th November. It is now getting on to the last week in May. Still, if we are to judge by the daily expenditure, which is, I think, somewhere about four millions, we see that this stream of public money still flows on. The point I want to make in this Bill is that before these powers are granted we should know, and not only we in this House, but the country, whether the Treasury has already taken steps to reassert its old-time authority, and, if not, why not? I am quite certain that if it were possible to put a Motion down and a day given for discussion by my right hon. Friend, without such a Motion being taken as a Vote of Censure on the Government, stating that, "in the opinion of the House, it was a most urgent matter that complete

  233
  Treasury control should be forthwith reestablished," there would be a single vote against it.
  The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): There would hardly be a Member who would support the Treasury in the exercise of its power.
  4.0 P.M.
  Sir D. MACLEAN: That is lamentable. But my right hon. Friend has one achievement to his credit. If, however, he takes his courage in both hands he would find, like many leaders of forlorn hopes, that a great many men would rally to his standard. Let him raise that. My right hon. Friend is the guardian, and the trusted guardian, of the public purse, and if he took that step and said, "I am a member of the War Cabinet, and I am going to insist that Treasury control shall be reestablished," he might not get the support of hon. Members opposite and he might have to resign, but he would not be out of office very long, because ho would obtain support throughout this country, and this would be reflected in the House, and he would become master of the position, as Chancellors of the Exchequer were before the War. I contend that there is a real concrete agreement throughout the House and throughout the country that Treasury control should be re-established. After all," old things are very good things very often, and experience teaches us that what has worked well in the past will work well in the future. There is nothing to take the place of the Treasury, and that is the only way. I will give the House a quotation from one of the most famous Chancellors of the Exchequer, Mr. Gladstone. In the old days when to talk of a £60,000,000 or £100,000,000 Budget was absolutely staggering, Mr. Gladstone said:
  "All excess in the public expenditure beyond the legitimate wants of the country is not only a pecuniary waste, but a great political and, above all, a great moral evil. It is characteristic of the mischiefs that arise from financial prodigality that they creep onwards with a noiseless and stealthy step; that they commonly remain unseen and unfelt until they have reached a magnitude absolutely overwhelming."
  I want to make two other points. One of them is with regard to the financial position with which the Treasury is faced in the coming year. It is perfectly clear that the taxes which my right hon. Friend proposes to levy in the powers he now seeks
  234
  and the powers he already has will leave a very large deficit next year, because his proposals for taxation this year were based upon a normal year, an imaginary year, which one was so glad to hear was something approaching reality. What my right hon. Friend ought to do is to say that the next year's Budget shall be a £1,000,000,000 Budget and no more. Suppose he said that, and suppose the circumstances did not justify that demand which he made. What is there to prevent him bringing in another Budget if he wants more money in any great national crisis which might arise! When the War started the Government asked for fresh powers, and I am sure under those circumstances the House would back the right hon. Gentleman up in any eventuality which might arise. He is face to face now with a very big deficit, and how is he going to meet it? I think the right hon. Gentleman was quite right in his proposed reduction in regard to the Excess Profits Tax, and there are certain economic reasons for it. That revenue is going to disappear and sooner or later lie is going to be left with £300,000,000 less. How is he going to make it up?
  There is only one way and that is by increasing the Income Tax, and if you are going to meet a Budget of £800,000,000 or £900,000,000 then you are face to face with an Income Tax which on the very large incomes will not be anything less than 14s. or 15s. in the £, and on the higher incomes it already touches 10s. 6d. Taking the lower incomes of £2,000 and £3,000, they have nothing less now than an 8s. Income Tax, and therefore the thing resolves itself into a hopeless position and something has got to be done. There is only one concrete proposal at present before the House and the country, and that is the proposal known as a capital levy. I want to say a word or two with regard to that. [HON. MEMBERS: "Hear, hear!"] I do not know whether my hon. Friends who are cheering me now will be quite as pleased with me when I have finished. It is a concrete proposal, and the only one so far as I know which has been put forward for dealing effectively with a great danger which threatens us. Let mo say that in the opinion of those very well qualified to judge, and the Leader of the House is one of the best qualified to judge upon this question, that this question is not one of principle at all. It is a question of expediency and practicability. I would like to remind the House of one

  235
  or two things which the Leader of the House has said on this point. He said on 14th November, 1917:
  "The question whether or not there should be conscription of wealth, then, is entirely a matter of expediency, and I think it is a matter which concerns mainly, not the working classes, but the people who have money. In my opinion it is simply a question whether it will pay them best, and pay the country best, to have a general capital levy and reduce the National Debt as far as you can, or have it continued for fifty years as a constant burden of taxation. Perhaps I have not thought enough about this to justify me in saying it, but my own feeling is that it would be better, both for the wealthy c'asses and the country, to have this levy of capital and reduce the burden of the National Debt. That is my own feeling."
  Later on, when the right hon. Gentleman certainly had from 14th November, 1917, to 20th January, 1918, to think it over, he said:
  "He did not in the least wish to have the subject treated as if it were a practical question now. All he did claim was that there was nothing confiscatory about it, if the thing were good otherwise. The War Debt had behind it not only the revenue but the assets of the country, therefore if the thing were wise there was nothing confiscatory about it, no more than about the present system of taxation."
  Some right hon. and hon. Friends of mine have on the Paper a reasoned Amendment dealing with this as well as other points, and I do not wish, as far as I am concerned, to give an unqualified approval of this proposal at the present time. It is clear that before it could come into practical operation the views of men of high financial repute and wide business experience should be heard, and their views for and against carefully sifted and weighed. For my own part, I urge that the right hon. Gentleman should set up a Commission immediately, or, failing that, why not make use of the existing Committee now sitting on the general question of the Income Tax, and charge them at once with the duty of hearing evidence from all available responsible quarters, with a view to reporting to him as quickly as possible on this really important matter?
  As far as I am concerned, and I express my own view, I do not see how you can have a capital levy under war conditions. As long as the existing conditions prevail, I do not see how it can be done. I may be wrong. I do think, however, that this special inquiry should be held and a report obtained before the autumn, so that whoever is responsible, and I hope my right hon. Friend opposite will be for the next Budget, he will have
  236
  material upon which to found his decision for or against such a proposal. I very much deplore a question of this kind being turned into a party cry, because, after all, it is a mere question of meeting a grave emergency by an emergency measure. If this is a sound thing it ought to be tried. If it is unsound do not let us try it, but you can only find out from the judgment of others whether it is sound or unsound by hearing what the men who know have to say for or against it. If that is done I think we shall have made a step towards clearing up a proposal which is rapidly gaining a large amount of support and adherence in very unexpected quarters. It is being seriously debated on all sides. A grave emergency exists. This is admittedly an emergency proposal, and let us find out by an inquiry at once whether the men competent to express an opinion think it is a sound or an unsound proposal.
  Brigadier-General CROFT: The speech which the right hon. Gentleman has just delivered is very interesting, more on account of its omission than on account of what he has said. There are one or two points which I would like to call attention to. I should like to say how cordially I agree with him with regard to what he said concerning Treasury control. The financial stress of this country, as we all know, is very great, and this House is encouraging the nation to think that we can go on with our wild expenditure for the period of the War. I hope that everyone who feels the extreme danger of our present position will assist the Chancellor of the Exchequer who undoubtedly has a most difficult task, because he is assailed from every quarter of the House with fresh reforms and expenditure, and we have to try and bring the nation to its senses. Although the right hon. Gentleman may have to spend a great deal of money upon industrial reforms in the hope of bringing about industrial peace, that is all going to react against this country if we get our finances into a bad condition, and then the last stage is going to be worse than the first. The Treasury, as the right hon. Gentleman has just said, have apparently, owing to the War, lost all control over the Departments in this country, and have no power to call a halt. Most business men will agree that the Departments are employing almost twice as great staffs as are necessary. It is almost inconceivable to believe that the work in these new Minis-

  237
  tries could not be carried out just as efficiently with very much smaller staffs, but apparently the Departments do not consider the question, and the Treasury is not in a position to act. The House of Commons will only see this extravagance ended if we can persuade the Cabinet to give definite orders on specific dates to cut down the staffs of these Departments, say, by 10 per cent, one month, and by 20 per cent, the next month. Only in this manner are we going to get rid of this host of officials, clerks, and typists that are at present in Government employ.
  The financial stress of this country, however, does not warrant us in departing from the traditions of our financial past and indulging in immorality in various forms in our Finance Bill. I have taken some interest in the question of the double Income Tax, and I have each year received an assurance from the Chancellor of the Exchequer that it must end directly the War is over. The House will bear me out that it was generally understood that the moment the actual fighting was over and our Dominion statesmen could be gathered together for consultation, we were going to have an end put to this matter. May I remind some hon. Gentlemen who were not in the House on previous occasions when this matter was discussed that all through this War the Dominions have been paying double Income Tax, paying for the whole of the upkeep of their own military forces, and various expenses in connection with the War, and those who happen to have money invested in this country paying for the Imperial Army and forces. It has become a serious burden, and, remembering the traditions in which the right hon. Gentleman was brought up, I hope he will do something on the earliest possible occasion to see that this great wrong is put right. It is not fair that any citizen who has contributed in Australia or Canada should also contribute in the Mother Country, and be deprived by Imperial, Dominion, and State taxation of something like 17s. in the £.
  I want to say something with regard to the Death Duties. It is not a popular question, because one may appear to be advocating something in favour of the Members of this House. Consequently, all my hon. Friends who are wealthy men naturally hesitate to speak on it, but I can do so much more easily. We have passed the realm of reason in this matter of Death Duties. Everybody admitted
  238
  that they were high before the War, and now the War seems to be an excuse to deal with them in an extremely unfair manner. The duties have now become confiscatory in character and are absolutely disastrous in their ultimate effects to the Exchequer itself. Why are the Death Duties at this height immoral? You are taxing men engaged in big businesses and making fortunes over 50 per cent. on their incomes, and the House generally approves of that form of taxation under the stress of present circumstances. The estates of those very men who are yielding over 50 per cent. of their incomes, if they have made a real success of their lives, will be confiscated, according to the latest proposal of the Chancellor of the Exchequer, 30 per cent. or 40 per cent. How can the right hon. Gentleman justify it! This kind of Bolshevism is quite a new line for him to take, and I can only imagine that he has come under the influence of some of his new friends who have persuaded him that this is a good thing. For £10,000,000 sterling he is indulging in this iniquity. When we examine this matter from the point of view of revenue, we see that it cannot be justified. It can only be justified from the point of view of an ulterior motive, namely, the splitting up of the estates of this country which the present Prime Minister failed to achieve by his notorious Budget. The Chancellor of the Exchequer will agree, broadly speaking, that the whole of his new Death Duties are going to come from the men with very large incomes. The largest contributors will be the largest estates.
  Mr. CHAMBERLAIN: The bulk of the money will not come from the large estates.
  General CROFT: When I speak of large estates, I mean estates of £50,000 and upwards. These are the estates of the very men who are at present paying, let us say, an average of 8s. in the £Income Tax and Super tax. I hope my hon. Friends on the Labour Benches will note the facts. That is the wealth which the Chancellor of the Exchequer is confiscating, and, if hon. Members work it out, it is very easy to see that ten or eleven years hence the country will be worse off, because the £10,000,000 per year that the right hon. Gentleman is confiscating would have yielded £4,000,000 a year. That is clear to the meanest intelligence. These kinds of ideas are floating

  239
  round the world, and we know where they end. The Chancellor of the Exchequer, I am certain, would regard with abhorrence the ideas prevailing in Russia, and he would say that Lenin and Trotsky are thieves and scoundrels because they arc collaring 100 per cent. of a man's possessions, but he himself is getting on pretty rapidly when we find him taking 30 per cent. and 40 per cent. of large estates. The Death Duties have passed all idea of fairness, because they penalise the man who has been thrifty, and the man who has made no use of his life and is a mere waster gets off scot-free. If a man has been contributing to the success of the country and, as the right hon. Gentleman has been advocating recently, has been saving his money, then the Chancellor of the Exchequer comes down on him like a cartload of bricks and tries to smash him completely.
  The same argument applies to the question of a levy on capital, which is to be raised later by an Amendment. I confess, when the right hon. Gentleman (Sir D. Maclean) sat down, I wondered whether he was in favour of that Amendment or not, but I would remind him that, although the Leader of the House on one occasion expressed himself ready to consider the question, Mr. Asquith very soon afterwards, finding that there was something of a panic in regard to our national security, made a very recent speech, showing that he had somewhat different views. If you want to destroy confidence, then depart from your old methods of taxation and go in for confiscation. That is what hon. Gentlemen behind me have demanded year after year.
  Mr. ARNOLD: No.
  General CROFT: The hon. Member thinks that I mean that he has advocated new confiscation year after year. What I mean is that we have, year after year, heard the hon. Member make his admirable speeches on this subject. I am, in a small way, a business man, and three-quarters of my capital is in bricks and mortar. It is not nearly sufficient to carry on my trading concern all the year, and I have to borrow money as working capital. How do hon. Members who favour this Amendment propose to deal with that question? I presume they are going and come along and take a quarter of a building here, and some tiles off a roof there, and so on, but if you work it out
  240
  you will sec it is absolutely impossible. You will only cripple your industries if you are going to extract the capital of particular industries at particular times. So much for that speech, which I am glad to see the right hon. Gentleman does not take seriously. He says it is a thing which ought to be discussed, and which we ought to ask business men to consult upon with us. I quite agree it ought not to be taken as a serious proposal.
  Sir D. MACLEAN: On the contrary, it is a very serious proposal.
  General CROFT: The right hon. Gentleman did not take it seriously. He is quite prepared to have it inquired into, to see whether it is an advisable policy, but it certainly is not a policy with which he or his great leader, Mr. Asquith, would associate themselves at this moment. May I say one word as to other gathering thunder clouds with respect to Imperial Preference. When I listened to the right hon. Gentleman introducing his scheme I understood for the first time how it was that the consciences of the Coalition were satisfied; I saw then how it was that the right hon. Gentleman the Secretary for War could join a Coalition with Free Traders, and how it was that the Unionist Party could feel that something was going to be done in the direction of Tariff Reform. But surely the complaint with regard to the right hon. Gentleman's proposal on Imperial Preference is not on the side of the hon. Gentlemen on these benches, who hold that you have no right to treat the Empire differently from the rest of the world. Surely the complaint should be with us who think that something more robust should have been attempted. I hope the right hon. Gentleman will not imagine for one moment that I do not appreciate the fact that he has established a principle. But it is a little one—a very anæmic affair, and I hope that as years go on he will gather courage and establish something of more lasting importance to the British Empire as a whole.
  But what is the effect of the opposition to such proposals as these? After all, are we not in a different position now to what we were at the beginning of the War? Let me read what Mr. Asquith said in 1916—and here may I say that I am referring to the Mr. Asquith—speaking with his full responsibility as Prime Minister of the country, and not to the Mr. Asquith who speaks now in the country and whose

  241
  speeches, I gather, are not so often read. Mr. Asquith said, in 1916, that it was difficult, and indeed impossible, to believe that Germany would not continue to be animated by the same spirit and policy when the War was over. We were then discussing the fiscal situation. The right hon. Gentleman said he might be reproached with the fact that the Paris Resolutions were a departure from Free Trade, but no one can possibly be blind to the fact that this War must and ought to suggest to us new problems or possibly modifications in the solution of old ones. He continued that it would be deliberate blindness to the teaching of experience if they had learnt nothing and forgotten nothing from a war like this. He urged the House
  "to take part in securing for the future not only protection against a possibility of military domination, but also true well-grounded and lasting economic independence."
  It is a pitiful thing to see the betrayal of that great leader of the Liberal platoon, who, I understand, still leads it, although he is outside the trenches. Hon. Gentlemen before they go into the Lobby on a question like this this evening will, I hope, think there is something greater than mere Party considerations, which should move them at this present moment. You have only to go down Victoria Street and you will pass hundreds of gallant men who have come 7,000, 12,000, and even 13,000 miles to fight for our common cause, who have given the very Power of their race, who have died beside our men in the trenches, and have established a comradeship of one family for the British Empire. And when the right hon. Gentleman comes along with a proposal not for increasing duties, but for reducing existing duties in order to favour our Dominions, are you going to let these men go back and say there is a small party, it may be only a few Scots, on the Front Bench, reinforced by a champion heavy-weight boxer in a recent by-election behind them—surely you are not going to allow it to be said there is even a small negligible group in this House who are prepared to fight against that principle and thus show that these brave soldiers who have come from overseas are still outside the family of the British race?
  I cannot believe that they will take this step. I hope that the warnings they have uttered may be taken in good part as meaning simply that they do not want the Chancellor of the Exchequer to go
  242
  further, that they do not want him to go in for real protection—the paternal protection of the industries of this country in days to come. Although they may find little support for that among some of their friends in the country, I hope they will not press the question at this moment, when we are trying to show we really desire this to be a true Government of the Dominions, Crown Colonies, and Protectorates, because it is immensely valued by them, and it will not be valued in the same degree if it should go forth that even one party only is not in favour of it. I hope the right hon. Gentleman will take into consideration the questions of double Income Tax and Death Duties which I have asked him to look into. If he works them out, I think he will find that they are both war policies. I hope he will also feel, in regard to the other question to which I have referred, that this House is doing one of the greatest things in its history by proving to the Dominions that at long last we are determined to regard them as of more account to us than anyone who is without our gates.
  Mr. ACLAND: 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 Second Beading to a Bill which makes inadequate provision out of revenue for the expenditure of the country, which fails to deal with the War Debt by means of a capital levy, which reduces the taxes payable by the recipients of business profits without lessening the burdens borne by those whose labour contributes to the creation of the profits, and which initiates a system of preferential and protective tariffs."
  I hope I shall be able to imitate the two speeches we have just listened to, both in the matter of general good temper and of avoiding excessive length. I think I am certain on the latter point, because since I was informed yesterday I was going to have the honour of being called upon to move this Amendment, I have had to spend five hours on the business of the Public Accounts Committee and another two hours on another Government Committee to-day. Therefore, I cannot attempt anything like a complete covering of the ground of the Amendment which I have the honour to move. The first point I have to deal with is that the Bill before us makes inadequate provision out of Revenue to meet the expenditure for the year. The general feature that one took away of the

  243
  Budget statement was this, that we bad to face an expenditure for the year of about £.1,450,000,000, and that there was a provided Revenue of £1,200,000,000, leaving £250.000,000 to be raised by borrowing. That made us feel as if we were doing a virtuous thing, as we seemed to be raising about six-sevenths of-the total sum needed for the expenditure of the year. We appeared to be raising, in fact, £1,200,000,000 out of the £1,450,000,000 needed. But really I want to suggest that that final picture of the Budget was not a justifiable one to leave with us. It was attained simply by the expedient of treating the amount to be gained from salvage of war stores and things of that kind as proper to be included in the income for the year.
  I remember thinking things were bad enough when we had to listen to the Secretary for War almost proving to us at one point that the War Office was an organisation for conferring wealth on the country, because they were getting so much from the disposal of their surplus stores. But I was horrified when the Chancellor of the Exchequer seemed to take up the same line and to appropriate the sum of £200,000,000 which was to be gained from salvage towards the Revenue of the year. That really ought to have gone straight to the reduction of the Debt. These, surely, were simply surplus borrowings which, when they were found not to be necessary, should have gone back to the lender. The argument, of course, is easy, and the path is tempting. Here you had a body of stores and other things which you did not need. You got them nearly all out of borrowed money. If you could have foreseen, which, of course, you could not have done, that you would have no need for these things, you would not have borrowed the money. But you had bought all these things—all these surplus requirements—mostly out of borrowed money, and the. proceeds of their sale should have gone to wards extinguishing the debt that had been raised in order to buy them. It should not have been taken to the credit of the income of the year. You borrow the money to buy material; you find you do not want it; you sell the material for what you can get for it, and you pay the proceeds to income, and then you say, "Look how well we are paying our way!" That is not sound finance, whether it be carried on by a nation, as in this case, or by an individual. If an individual were to do it, things might go swimmingly for
  244
  a time, until someone took the trouble to ask as to the basis of the trade upon which the loans were raised; then that individual would go smash.
  Had the proceeds of these sales gone in payment of the loan, then we should have had practically this position. We have to raise something like £1,500,000,000 to meet the expenditure of the year. We propose to raise by taxation about £1,000,000,000, and not £1,200,000,000, leaving a deficiency of from £450,000,000 to £500,000,000, and not a deficiency of £250,000,000. We should then have come away from the Budget statement feeling that a proposal had been made that in this year we should only raise by taxation two-thirds of what we need, instead of practically six-sevenths, which was the result of the proposal actually made, and that would have brought the Houst of Commons and the nation up with a round turn. We should have realised that we ought to find more money out of Revenue, and that it was not justifiable to find only £1,000,000,000, which is what is actually proposed. The proposal to use this salvage money in the ordinary Revenue of the year has, in fact, produced a false picture of our real financial position, and it has produced a false picture not only at home but abroad.
  I was certainly surprised to hear—and more experienced Members than I am must have been almost horrified to hear—the Chancellor of the Exchequer suggesting, as if it were almost the most natural thing in the world, that he had had to advance to our Allies since the Estimates were framed a sum of £28,000,000. One does not want to be lacking in generosity to the Allies side by side with whom we have fought all through the War. But we seem to be drifting into the state of thinking that we are the nation which can indefinitely supply the financial needs of all our friends. I think some of us must have been very much discouraged by the very doleful tone in which the Chancellor of the Exchequer spoke with regard to our prospects of repayment of these large advances. Ho spoke of the possible relief we might get later on from repayment. He used very guarded words about it, saying that ultimately and gradually that relief will, we hope, mature. One does not know what has been done in the negotiations with the Allied Governments, but I think that the fact that we have not yet started to receive, as I gather, any payment at all of interest on the £1,600,000,000 that w have advanced to our Allies and

  245
  that we even to-day are making further advances to them, or that, at any rate, £28,000,000 has been advanced since the Estimates were framed must have put our Allies to some extent under the idea that our finances are in a misleadingly favourable position. We seem to have got into this state steadily of not expecting them to pay interest on the £1,600,000,000. I suggest we are in danger of something worse in allowing ourselves to drift into the position of being the paymasters and finders of money for them even when we settle down in a time of peace, as we were during the war period.
  The only other point I want to make in this matter is this, that this Budget seems to me not only almost entirely a War Budget so far as our expenditure is concerned, but to some extent a Peace Budget so far as Revenue is concerned. When one sees how finances depend upon military policy, it is. I think, clear that the Exchequer is still practically bound to the chariot wheels of military, naval, and air expenditure. I think that is to some extent the prevailing mood of the country, and of this Parliament. I do not suggest that the Chancellor of the Exchequer would not stand up against it. I have heard people rejoicing, for instance, in the Estimates of the Air Ministry, until they realised that the £66,000,000 therein asked for were equivalent to an Income Tax of 1s. 3d. in the £. Although perhaps the Chancellor of the Exchequer could not have avoided in this year of transition—we hope it will be the only year of transition—having to foot these enormous Estimates for our fighting services, yet he could have made a stand and said, "Though I have to pay emergency special Votes to the great spending Departments, at any rate I will go on with very special emergency systems of raising the money to provide for very swollen Estimates." It would have made the country more conscious of the very serious position of our national finance if he had insisted that, if he was to find these huge sums of money, they should be found out of income, and not by renewed borrowing to the extent to which we are now committed. He has not been able to make both ends meet out of the proper income of the year, and has not been able to find any fresh or new financial expedient which will strike people's imagination with the seriousness of the position in which we are at present existing. On the contrary, his Budget has given the general impression that the worst is over
  246
  and that we may hope that taxation will be lighter in the future. Yet I believe that everybody who has looked into his estimate of the probable cost of national finances next year and the year after, must believe that he has been unduly optimistic. He has not made in that estimate sufficient allowance for the inevitable, right, and proper developments of social reform, and I very much doubt whether he has made anything like an adequate allowance for the naval, military, and air expenditure with which we shall be faced. It would be generally a disappointment and a surprise to the nation if, as I and my Friends greatly fear, we find that next year, after having a time of riotous living and the almost unbridled extravagance that we see going on all around us, we have to have fresh taxation put on at a time when it was expected there would be relief.
  Let me come to the question of the capital levy. We are greatly chaffed for going separate ways on this matter. The position I and my Friends take up is perfectly simple. The matter is, of course, complicated and very difficult. If the Government had promised to subject it to thorough investigation and inquiry at once or at some date previous to the present, we should not have thought it necessary to press for its adoption in this Budget. But the proposal was dismissed in a column and a half of the OFFICIAL REPORT in the Budget statement. So far as we know, there is no intention of giving it that real investigation which we think it deserves. Some of us who have studied it rather carefully are convinced that it is a fair and practicable proposal. That being so, in the absence of any apparent intention to give the matter that serious attention which we think it deserves, we are left with no option whatever but to urge it in the Amendment to the Finance Bill we are asking the House to consider. I have seen it suggested that in doing so we are advocating some system of spoliation and robbery. If the enormous abstractions from annual earnings which are likely to take place indefinitely under the Income Tax are perfectly legitimate, a levy on capital for the special and sole purpose of reducing our War Debt and making a great reduction in the Income Tax cannot be regarded as robbery. If the enormous levies on capital at the time of death which are now made and which will be bigger when the Finance Bill is passed are fair, there cannot be anything monstrous in the special

  247
  proposal we are advocating, that a sum of capital shall be provided from the living for the purpose of dealing with our appalling load of debt. As the Leader of the House said—we have already been reminded of it once this afternoon—it is simply a question of expediency. If that is so, we have simply to consider whether it can be done justly to the different cases concerned. I would remind the House that it is not a new proposal put forward by a band of doctrinaire Radicals or Members of the Labour party. It has a great deal of backing in important, financial, and business quarters, and it has a most respectable past. Ricardo, over one hundred years ago, at the close of the Napoleonic Wars, dealt with the matter, and I should like to inflict on the House a short quotation from what he said:
  "A country which has accumulated a large debt is placed in a most artificial situation. It is the interest of every contributor to withdraw his shoulder from the burden and to shift this payment from himself to another, and the temptation to remove himself and his capital to another country where he will be exempted from such burdens becomes at last irresistible."
  HON. MEMBERS: Hear, hear!
  Mr. ACLAND: Quite so. Therefore the question of a capital levy ought to be carefully considered. He goes on to say:
  "A country which has involved itself in the difficulties attending this artificial system would act wisely by ransoming itself from them at the sacrifice of any portion of its property which might be necessary to redeem its debt. "
  That is a respectable and honoured source of opinion of over 100 years ago. Where Ricardo 100 years ago led the way, even Radicals like myself need not be ashamed to follow. The House knows one thing about a capital levy, that it takes long speeches to discuss it. I am not going to attempt anything of the kind this afternoon, nor am I going over old ground. But it is justifiable for me to say why I agree with the view expressed by the Leader of the House which has been quoted, that it would be better both for the wealthy classes and for the country to have this levy on capital and to reduce the burden of the National Debt. Take the question of the benefit to the country at first, and the benefit to the wealthy classes afterwards, because the country is even more important. First, we have to realise that the proposal is for one purpose only—to pay off, say, £6,000,000,000 of our Debt. No question whatever is involved of reducing the
  248
  liquid capital of the country by a single farthing. Therefore, one has to consider, at least I have gained some light by considering, what would be the effect of this proposal in the case of the average man holding, as most men do, a certain amount of War Loan, and having to pay, as a great many men have to pay, some share of the Income Tax. You could find out what the average man holds of War Loan, and what the average man in that position would normally have to pay annually for Income Tax. Of course, from that man's point of view, as even the strongest critics of the proposal will realise, there is no sort of injustice whatever in carrying through the proposal of a capital levy. You ask that man, say, to provide £10,000 by a levy on his capital to extinguish £10,000 worth of his War Loan. If you do that, you cease to pay him interest on his loan, and you cease to charge him the Income Tax which was required to provide that interest. He ceases to have his War Loan and to get his 5 per cent. interest, but he has his £10,000, which he can invest or use for any other purpose he likes. [HON. MEMBERS: "No!"] It shows a misunderstanding of the proposal if anyone denies that the average man who pays average Income Tax and who has an average holding in War Loan is in one farthing the worse position if a capital levy is imposed for the purpose of cancelling a capital contribution raised from him, that is the War Loan which he holds. If that is denied, it must be argued that the proposal of a capital levy is for the purpose of some destruction of national or personal capital. [HON. MEMBERS:" Hear, hear! "] That is not so. I willingly leave that point to be made by the opponents of the suggestion.
  If the average man whom I have imagined is exactly in the same position afterwards as he was before, we have only to see if the proposal would be of advantage to the nation. My suggestion is that, although that man cannot in any way lose, the transaction is of advantage to the country. We are now at a time of inflated currency and of inflated prices. That inflation is by far the most serious of the financial problems we have to face. In the course of years it will have to be dealt with unless we are to come to an extremely difficult financial position. Presumably, prices will have to come down, and the value of money, measured in commodities will rise. Therefore, under a proposal which is the only alternative to a capital

  249
  levy which is now before the country, that of a continuing high Income Tax with a small Sinking Fund, we shall gradually, as that Sinking Fund is made operative, be dooming ourselves to pay at a time when our money is worth more, instead of now, when our money is worth less. That is a very simple statement of the gain to the State. The State will have a chance of paying back when the money is something like the value it was when it was borrowed, instead of paying back when money is worth a great deal more than it was at the time it was borrowed. If, therefore, the proposal is fair to the average man I have imagined, and if it is advantageous to the State, I cannot believe that the task of trying, after very careful inquiry, research, and investigation to adjust the levy to the abnormal case of the man whose position differs, either because he is not holding any War Loan and is paying high Income Tax or because he has a large amount of War Loan and very little Income Tax, will be insuperable. I cannot believe that the practical question that will arise in making this proposal fair to the different types of persons in the community can be insuperable. At any rate, I claim that it ought to be so carefully considered, and that not until it has received that careful consideration and been turned down as a result of it, should we be justified in refraining from pressing it at every available opportunity.
  5.0 P.M.
  The second point the Leader of the House made was that this levy was to the advantage of the wealthy classes. If I were a capitalist—a really rich man—I should feel that the greatest danger we had to face lay not in a capital levy which, applied as a single and special financial expedient, I should feel pretty sure of getting it so carried out as to be fair and tolerable to the different interests concerned, but in the country getting permanently accustomed to a high level of Income Tax. Persons judge the rate of Income Tax not so much by amount as by proportion. When the Income Tax was, say, at a 1s. or so, an increase of 1d. seemed a great matter Even I, as quite a young politician, can remember the time when before the Budget Statement the great and absorbing matter for speculation was whether the Income Tax would go up from 1s. 2d. to 1s. 3d., or something of that kind. Now we never mention pennies at all. We talk in shillings, and very soon, if we go on with
  250
  an Income Tax at the 6s. rate, people will get into the way of thinking that no increase of less than 6d. or 1s. is really worth while, and especially if, as the hon. Member who discussed this matter gave us good reason to think, the Income Tax is almost bound to go up to 8s. in the £l, we shall find it going steadily up by sixpence or so annually, and everyone will think that the most natural thing in the world. The only way to get these people back to thinking of pennies in the Income Tax as being a serious matter, as I believe them to toe, is to get the Income Tax back into the realm of 2s. or 3s. in the £, which the discharge of £6.000,000,000 or so of your War debt would, of course, enable you to reduce it to. I make this serious suggestion from the point of view of the wealthier classes, that there is infinitely more danger to them in the continuation of a 6s. or 8s. Income Tax, and in people believing that an extra 6d. or 1s. is no greater matter than the proposal of a capital levy to be carried through once and for all as a great expedient for dealing with an emergency and a return to the comparatively modest level of Income Tax which that would enable to be done.
  Do not let us prejudice the matter by vain imaginings. It is difficult of course. All great financial expedients are difficult. But it does not seem to be more difficult than the proposal of the Income Tax or the Death Duties must have seemed before they were initiated. All great financial expedients have their difficulties and the only thing is to try to face them. But do not let us be put off by the idea that if the principle of the capital levy were to be used for a legitimate purpose, namely, dealing very specially once for all with the great body of our War Debt, it would lead to its being used again for illegitimate purposes. You can substantiate any argument you please if you ignore that general sense of justice which the British people always have towards matters which are fairly and squarely put before them. I do not believe, if the capital levy was worked out for this one special purpose, there would be any danger of its passing into an ordinary part of our financial machinery. First of all, of course, it is not suitable for that sort of thing at all. It is admittedly a complicated, difficult, and really heroic financial expedient. If at any time say £200,000,000 or £300,000,000 were wanted for some scheme of social reform or anything of that kind it would be far simpler to raise it by the ordinary

  251
  machinery of taxation than by having recourse to a capital levy. And I believe this is true. If some party or some combination of interests obtained powers in this House and make up their minds on some predatory course of action towards capital they will not be deterred from that by the fact that we at this time have not had resort to a capital levy for the purpose of nullifying off a large amount of our debt. You will not avoid a resort to this instrument by postponing the time when you will face it and consider it seriously. We ought to look at the thing simply on its merits, without imagining what might happen. Let us realise that it is a choice between a capital levy and doing nothing. It is a choice between a capital levy and the continuance indefinitely—because that is really what it comes to with the very small, amount suggested for Sinking Fund—of the tremendous level of Income Tax which is really facing us. It seems to me that will be a crushing burden on us for many generations, and the least the Chancellor of the Exchequer can do is to appoint a strong committee to investigate it from every point of view, and unless and until he can consent to it my Friends and I think it right to press this proposal upon him as a practical proposition for dealing with the terrible financial crisis which the country now finds itself in.
  I should also like to comment on the fact that there is a considerable reduction of the burden on the business community without any corresponding decrease of the burden on the less well-to-do classes. There seems to be almost a general chorus of agreement that the Excess Profits Duty had to be modified. I agree with that. I think it did act as a deterrent to real economy and real development. But we deplore that in modifying it no further proposal has been substituted, a duty of a like nature falling on the same sources of wealth. I think the working classes have a legitimate grievance that whereas the reduction of the Excess Profits Duty has been undertaken this year to a very considerable extent, there is nothing like a corresponding reduction of what they have to pay
  The last point in the Amendment is the question of preferential and protective duties. I was asked to-day by an hon. Friend belonging to the same party as myself, but generally sitting opposite, how I could show that any of the duties now pro-
  252
  posed were protective except those to which he said he was committed when he gave a general agreement to the Coalition that he would permit of Preference being given on existing duties. Of course it is recognised universally that the existing duties on motor cars, films, watches and clocks, and so on, are definitely protective, but he said, "Is there any other really protective element in the Budget than that to which I hold myself committed? "There is. I have not made a very thorough study of it, but the duties on such matters as saccharine and chicory are now so arranged as to be definitely protective. None of these things come from the Dominions at all. I believe the rate of Excise has been fixed on the basis that the rate of duty on such articles will be the same as if they were to come from the Dominions. Therefore, although the duty is exactly the same as it was before, the corresponding Excise has been reduced by one-sixth. To that extent that is, of course, direct protection to British manufacturers and growers. At any rate, it is a fair inference that there is a definite and deliberately protective intention in some of the duties which have been introduced. My hon. Friend said to me, "If you can show that there is a definitely protective element in these duties quite apart from anything we pledged ourselves to with regard to Preference, possibly I shall vote with you." I hope he will.
  I pass from that to the question of Preference, on which I shall try, although it is rather difficult at this time of day, to break fresh ground to some extent. I will not, of course, amplify the four points which were made by Mr. Asquith a few days ago, first, that there is involved an illegitimate abandonment of revenue; secondly, that it is illegitimate to use the taxes put on for one purpose, purely temporary, as a vehicle for introducing a preferential system; thirdly, that the duties really are a sham because they practically do no good to the Dominions; and fourthly, that they are intended to be the precursors of a fully-planned system of Preference and Protection. It is rather an obvious argument, and we shall all hear more of it before we have done with the subject. When I used to take part in fiscal controversies before the War, I was struck more than anything else by this, that British trade is an extremely complicated and delicately balanced affair, and that if you blunder into it with some doctrinaire interference, as is now being

  253
  done, you cannot tell what the effect will be, and with the very best intentions in the world you will often find that you are doing a perfectly different thing from what you intended. I should like to consider whether that is not so in the case of tea, which, of course, is by far the most important question with which these preferential duties are concerned. That accounts for well over £2,000,000 of the total estimated loss of revenue of something like £3,000,000. Some of us assumed—I did until I studied some of the trade reports this morning—that with regard to tea all we were doing amounted practically to a reduction of 2d. in the 1b. on all ordinary tea consumed by ordinary people, and there would simply be an extra duty of 2d. against China tea, which is rather a special case and is generally sold at a higher price, which it was argued people who liked China could very well afford to pay. That is not so. This is the result of such examination on the subject as I have been able to give. I think about 13 per cent, of the tea we generally get comes from foreign countries. Roughly two-thirds of that come from Java and one-third from China—say 9 per cent, from Java and 5 per cent, from China. All the Java tea and two-thirds of the China tea is not of the type that we usually associate in our minds when we refer to China tea. It is, on the contrary, amongst the cheapest tea we get. It is bought very considerably for mixing with some of the blends which are sold at the cheapest rate and consumed by those who are less able to afford high prices for tea. It is to that type of tea, except in the case of a comparatively small amount, that these duties will apply. Putting it in a different way, of the 37,000,000 pounds of tea which were imported from abroad, I think only about 5,000,000pounds w as what is called China tea proper, which has a certain flavour, and which may be considered a luxury, while 32,000,000 pounds were brought in because of their cheapness and because they helped in the blending of cheap tea for which there was demand, especially by the poorest people. What is going to happen? The prices for this Java and ordinary China tea were cut pretty fine. A question of a penny or the fraction of a penny makes all the difference, and it seems to be definitely admitted that with the extra 2d. duty it will not pay to bring in the Java and cheap China tea at all.
  254
  Therefore, there will not be the same material available for making these cheap blends of tea which some of our people have got accustomed to, and which a great many of our traders have definitely relied upon and tried to get hold of.
  But that is not the main point. This tea which will not be taken by us from Java or China will find a fresh outlet somewhere else. These teas will be pushed vigorously in competition with our own. teas, not in our own market, which is a. comparatively stable and limited market, but in foreign markets that are capable of great expansion. Those are the markets where we definitely have to compete with these teas, which are of the greatest value in many cases to our growers and traders. They are far more expansionable than, ours, and there is far more to be done in competition there than there is at home. That being so, we are going to be handicapped in these expansionable valuable foreign markets where great development is still possible by having the Java and China tea which we used to take ourselves pushed forward in competition with us there. So much is that realised by the trading associations representing India and Ceylon that I do not believe, although there is going apparently to be more help to the Dominions in this matter of tea than in anything else in the Budget, the right hon. Gentleman can get a majority resolution of any association of persons interested in Ceylon or China tea to approve the proposals which he is now putting before the House. He has probably received dispatches or telegrams from the Governments in India or the Government of Ceylon on this subject, and I would suggest to him that if that is so, and if, as of course he does, he believes in the real benefit that these proposals are going to offer to India and Ceylon, he should lay those telegrams or dispatches on the Table or tell us what is contained in them. If I am wrong, and those Governments have really approved, I should be the first to retract the suggestion that I now quite deliberately make, which is that these tea proposals, which are the most important proposals so far as Preference is concerned, are really not welcome at all, but that, on the contrary, they are considerably criticised and viewed with considerable fear by those who are most closely concerned.
  The Chancellor of the Exchequer said the other day that the duties against imported manufactured goods were intended

  255
  to be sumptuary. I made a brief intervention then which my right hon. Friend was not able to listen to. I do suggest that it is really almost an insult to the intelligence of the House to suggest that these duties against watches and motor cars are meant to check extravagant expenditure, because that, I take it, is the meaning of the adjective "sumptuary" when applied to them. We are quite well aware that the great bulk of watches and clocks that we import from abroad are cheap Waterbury watches, and that sort of thing, and a very large proportion of the motor cars imported from abroad are Ford cars, which are amongst the cheapest cars, if not the cheapest, cars that people can get. To suggest to the House that he really intends to check luxurious and excessive expenditure by keeping on duties against these cheap articles, consumed by people of limited means, when he is doing nothing at all to check extravagant expenditure on jewellery, Rolls-Royce and other cars which the people at home purchase, is not an argument which we can really treat seriously. If he wanted to check some of the sumptuary expenditure, there was a weapon to his hand. I do not suggest that the Luxury Duty was free from difficulty. It was difficult; but, at any rate, the late Chancellor of the Exchequer thought so well of it that this House appointed a Select Committee, and the late Chancellor of the Exchequer gave me an undertaking that if he remained in his office as Chancellor of the Exchequer he would have included the Luxury Duty in the Budget which is now before us. That shows, at any rate, that he thought very seriously of our work, and considered that the result of it was thoroughly worthy of serious consideration by the Government. That was swept aside in one phrase by the present Chancellor of the Exchequer. I am not criticising him, but the Luxury Duty not having been considered seriously, lie cannot now seriously say that the real purpose and intention in this Budget is to check luxurious expenditure by these duties against manufactured goods.
  I think the House knows the breeding of these proposals well enough. They are not expounded to the right hon. Gentleman by the Inland Revenue Department as a means of checking luxurious expenditure. They are not by Frugality out of the Inland Revenue Department, but they are by Filial Piety out of the Board of Trade. They are part of the regular proposals of
  256
  the Board of Trade for assisting industries here, and cannot be regarded as sumptuary in any sense of the term at all. I have tried to reason out the subjects I have dealt with, and I can assure the right hon. Gentleman and the House that I only move the Amendment that I now have the honour to move because I feel that this Budget has not risen to the very serious emergency with which we in this country are confronted, and that we are in danger of drifting into a very serious financial position unless we can deal more drastically with the present situation.
  Mr. CHAMBERLAIN: Before I address myself more particularly to the different Clauses of the Amendment I hope I may be permitted to refer to one or two of the more general subjects which have naturally arisen in the Debate, though they are not specifically mentioned in the Amendment. The right hon. Gentleman who opened the Debate, for example, said that before the House consented to grant the Second Reading of the Finance Bill they had a right to reasonable assurance that the money was being well spent, and that efficient control was being exercised over expenditure. That is a very natural and very proper claim to make, and I hasten to re-assure my right hon. Friend as far as I can. Treasury control has been restored as completely in the time that we could restore it, since the signature of the Armistice. Our object is to make the Treasury control in its nature and its spirit comparable "with what it was at the best times before the War. The right hon. Gentleman, who, I think, was a Member of the Government which preceded the War for many years, appears to think that Treasury control was preserved intact during the years when Mr. Asquith was Prime Minister. That is not, if I may venture to say so, the view which anyone gets who goes to the Treasury. The officials of the Treasury are impartial people, and they view the succeeding Governments without fear or favour. Indeed, one very distinguished ex-member of the service said to me, "In my long experience I find that all Governments are pretty much alike with a tendency, however, on the part of the last to be the worst." I think the Treasury tradition would be that the last great Chancellor of the Exchequer, from the point of view of this financial control, was not the Chancellor of the Exchequer in more recent years, but we should have to go back

  257
  to Sir William Harcourt, who carried out in their full measure the old traditions of what I suppose I might call Gladstonian control, I think that control was sometimes exaggerated. It was sometimes irritating in its particularity and in the absence of knowledge to inform it, and it sometimes, I think, took graver risks than we were entitled to run in the realm of defence, because it thought more of economy than of safety.
  I quite agree that control had been largely relaxed—and the right hon. Gentleman must permit me who was a critic and not a supporter of the Government before the War, to add the words" unwisely relaxed"—in the years before the War, and it is our business now to re-establish efficient control. I yield to no-one my respect for the House of Commons in which I have passed more than twenty-five years of my life, and it is with no disrespect to the House that I say that it is not an efficient body for checking expenditure, and that it does not help the Chancellor of the Exchequer of the day, be he whom he may, to exercise control over expenditure. It is quite true that, one section of Members calls for economy here and another section of Members calls for economy there, and so on over the whole sphere, but at any given point there is always a majority for spending more, not less. Each man economises on those services for which he does not care, and calls for more expenditure on those for which he does care. So long as that is the corporate attitude of the House, it does not help the Chancellor of the Exchequer to promote economy. The Chancellor of the Exchequer and the Treasury must shoulder their own burden, fight their own fight, and come out as successfully as they can. I will tell the House frankly that my endeavour is not and will not be to fight my colleagues. On the contrary, my endeavour is and will be to secure their co-operation in their own Departments, because, if it be true that Treasury control is an essential of efficiency, yet to make Treasury control really effective, to make it produce the results that it might secure, the help of the Departments themselves and the Ministers who administer them is essential to the Treasury itself.
  The right hon. Gentleman spoke of the large growth of Estimates for Departments not specially affected by the War. There is no Department which has not been affected by the War. I have obtained information as to the particular cases which
  258
  he gave. Take friendly societies registrars. There was an increase of £16,000. War bonus alone accounts for over £8,000. Take the Home Office increase. I am not certain what it is, but war bonus there accounts for £15,000; the maintenance of conscientious objectors, £15,000; Press Bureaus, £6,500; salaries in connection with alien administration and travelling expenses, £24,000. Those figures are an illustration of the way in which the War has penetrated and affected all the offices and added to their work enormously. I know nothing dearer to the heart of the House than that we should reduce the swollen staffs of public Departments. I can assure hon. Members that nothing is dearer to the heart of the Government, and we are doing our utmost to secure that desirable end. But do hon. Members ever consider, when they put questions to my colleagues at Question Time, what the effect of the question is, either on expenditure or on staff? I sit here and listen to question after question inviting this colleague or that to put pressure on the Chancellor of the Exchequer to add one, two, or twenty million pounds to a Vote, and then I hear hon. Gentlemen getting up impatiently and saying that there is intolerable delay in replying to a letter or dealing with a case. But that all means more staff.
  Mr. LAMBERT: A more efficient staff.
  Mr. CHAMBERLAIN: It means more staff. Take a Department like the Pensions Department in which to deal with new problems you have to set up a new staff, in which the Regulations dealing with pensions have been changed again and again, Regulations which have to be administered by hundreds of committees all over the country. Do you wonder that there are mistakes, and that the staff is not always efficient and is it not necessary that there should be a little forbearance by Members of Parliament if they want these reductions of staff to take place? The case of the Pensions Department applies to one Department after another. The time is shortly coming when a great deal of stall will be dispensed with. We might close down accounts in which there is practically no money recoverable, but that in years to come every public official who has dealt with the matter is to be taken before the Public Accounts Committee and cross-examined as to why a voucher is not correct to 1d. or 2d., or why there is no voucher for this

  259
  small payment or that, and then you must spend thousands in order to protect the honour of your public service without having any chance of getting any money back in return. I hope that I have not spoken with any disproportion on this subject, but I do want to bring home to the House the fact that we share the desire to reduce the expenditure and to get down these staffs. I want to bring home to the House some of the difficulties under which we labour in attaining this object.
  I come now to the Amendment. It is a very interesting production. I think that it is sponsored by six gentlemen. They have almost produced a Clause apiece in its composition. What interests me most of all is that though the Whips of the party opposite have both put their names to this Amendment the Leader of the party opposite is not in agreement with them, and I am very glad to think that if and when we do go into the Division Lobby I shall have the support of my right hon. Friend. I am sure he would never vote for what he does not approve of and that he would not take that unmeaning and futile course of merely walking out of the House without voting at all. What are the two propositions from which the right hon. Gentleman dissents? The Amendment before the House condemns me for reducing the Excess Profits Tax. The right hon. Gentleman expressly stated that he thought I was right in doing so.
  Mr. ACLAND: Not without lessening the burden on other persons.
  Mr. CHAMBERLAIN: The right hon. Gentleman expressly states he thinks I am right in reducing the Excess Profits Duty, because the tax, avowedly, was not considered by those who introduced it to be suitable for normal conditions—it was recommended only for the exceptional circumstances of the War—and because it was having a bad effect on the restoration of industry. The right hon. Gentleman the Member for Camborne (Mr. Acland) adds to that that I should not have reduced it without reducing other taxes at the same time. How does that square with the first paragraph of the Amendment? A moment ago it was the two right hon. Gentlemen who were not in accord. Now it is a single Gentleman who cannot agree with himself. The first sentence of the Amendment is,
  260
  "that the House declines to give a Second Reading to a Bill which makes inadequate provision out of revenue for the expenditure of the country,"
  and he proceeds to explain that I have reduced a tax unduly, that it would be all right if only I had reduced other taxes as well. Now I come to the charge of having made an inadequate provision out of the revenue for the expenditure of the year. If I understand the argument, it is that I am wrong in using, to meet the expenditure for the year, the £200,000,000 expected to be brought into the Exchequer on the realisation of the Vote of Credit assets. In his opinion, I ought to have raised the sum by taxation instead. Will he go a step further? If he reads my Budget Speech again he will see that the £200,000,000 which comes into the Exchequer is not the only sum derived from the realisation of Vote of Credit assets which I have taken in aid of the expenditure of the year. There is another £250,000,000 appropriated in aid of particular Votes, and on his principle it is not £200,000,000 but £450,000,000 additional taxation which I ought to raise this year. Would he do it if he were Chancellor of the Exchequer? Would he contemplate it for a moment? Would anyone consider that it was wise?
  We are not talking at this moment about capital levy. Capital levy would not be appropriate for that purpose, as he himself would admit. The question between him and me is whether it is right in the circumstances of this year to appropriate the money coming from the sale of these assets in aid of the expenditure of the year. He says that it is wrong, that the money should be provided for in taxation. The first plank of the Liberal party is £450,000,000 additional taxation this year. How it is to be got we do not know. What about the Luxury Tax? He did not say a word about that. I should be very sorry if he thought, in consequence of my dismissing it so briefly in my Budget Speech, that that argues any disrespect to or want of appreciation of the work done by the Committee over which he presided and the Sub-committees which assisted. It was very valuable work, and I do not dismiss the results of it lightly. On the contrary, what they did was to examine the whole problem, and, assuming you wanted a tax of that character, to frame the best scheme for it, subject to minor alterations. Suppose I had been willing to proceed with it, I could not simply have taken

  261
  their schedules, because their schedules overlapped. I could have pointed out on information "from my advisers in consequential features that the Committee would certainly correct if they had had the knowledge before them.
  I do not say if the War had been still going on that one might not have confronted that or any other difficulty, but consider what it was. It was called a Luxury Tax. You had to measure your luxury by money value. You had to do that at a time when values were changing, or, to put it another way, you measured it by the price of commodities, and you had to do that at a time when prices were abnormal and were changing, and if the figures fixed by the light hon. Gentleman's Committees were right when they were fixed they would all be wrong now, and would have to be recast, and they might be made equally wrong six months hence by some further change in the price either up or down. But more than that. Is price any measure of luxuries? When you came to have those proposals on the floor of the House, and to debate them here, what figure would the Government have cut even with the aid of the right hon. Gentleman? Imagine my right hon. Friend discussing exactly where a child's bodice or lady's underwear ceased to be necessaries and became luxuries. What is the answer to the question, Which is the more wasteful expenditure—to buy one good article and use it for a long time or to buy a lot of cheaper articles and throw them away the moment they show any signs of wear? I think that a tax based on that principle is vicious at its source. I think it is a tax which you might be driven to in the stress of war, but I will undertake to say that we should have a long Session if I tried, to force through an elaborate Schedule such as this of the right hon. Gentleman's Committee, defining exactly the prices at which each article or class of articles ceased to be a necessity and become a luxury, and then imposing a tax above that line. That is the only suggestion for meeting the deficit of £450,000,000 by taxation, which the right hon. Gentleman gave In the course of his speech. I differ from him.
  In the circumstances of this year where the expenditure is very largely abnormal, where from the same causes that produce the abnormal expenditure there are abnormal receipts, it seems to me legitimate, and not merely legitimate but the right
  262
  thing to do, to use these abnormal receipts towards meeting the abnormal expenditure and so to reduce the borrowing which would otherwise be done. I quite agree that if we had got back to normal times, to use these receipts, which come out of the sale of goods procured by borrowed money, for anything but the reduction of debt, would be a wrong thing to do. This year I would use them not in reduction of debt. That would merely force me to borrow more; while I paid off debt on the one hand I would have to borrow more with the other. Then the right hon. Gentleman looked forward to next year. I said in my Budget that next year would be an abnormal year. My fore casts were made as carefully as I could make them. They were expressed, as lie rightly, says, with great caution, and above all with full information as to the basis upon which they were made, so that hon. Members may judge for themselves whether I was over-sanguine or not, and as time went on might test the trustworthiness of my forecast by the actual march of events. Next year will be an abnormal year. It will be abnormal in expenditure, and again it will be abnormal in receipts. There will be overlapping of the Excess Profits Duties at the old rate of something like £100,000,000. There will be another £350,000,000 probably—I hope so—of assets to be realised, before next year or in the course of it. Between now and the end of next year I hope that the Allies will be in a position to begin to shoulder the burden of their debt towards us, and I hope our late enemies will have at any rate made part of that contribution which they owe us on account of the losses and sacrifices to which we have been put by the War which they forced on Europe. But as long as you have these obnormal circumstances, greatly swelling your expenditure on the one side and equally swelling your receipts on the other, I do not think it would be reasonable to ask the country to find the whole of the expenditure of the year out of the revenue of the year—the whole of the expenditure normal and abnormal out of the revenue of the year, and yet to deprive the country of the use, for meeting that expenditure, of the abnormal receipts which come in on the other side of the account.
  I suppose I must say a few more words about Preference. The right hon. Gentleman who spoke on the subject here, endeavoured to break, as he said, new ground, but incidentally and in a passing

  263
  phrase he adopted all Mr. Asquith's criticisms delivered at Newcastle the other day. Mr. Asquith was very free of criticism. He posed as an expert and a purist in financial matters, but I think his memory betrayed him. He thinks I am making insufficient provision out of Revenue. He thinks I ought to be doing more to reduce debt. He was Chancellor of the Exchequer in happier years, when he inherited a surplus from his predecessor, when he had two years each with a surplus. Did he add a penny to the Sinking Fund? He added £500,000 one year, only to take it out of the Sinking Fund next year for a purpose for which the Sinking Fund was never intended. What was the last and final achievement of: this purist in economic and financial method? What was his last Budget, immediately after the presentation of which he transferred the office to his successor and himself became Prime Minister? He introduced old age pensions. He introduced them, estimating the cost at £6,000,000, which was a ludicrous and careless under-estimate; and he made provision for only £1,250,000 in that year. He had a surplus. He did not reserve it to meet the coming cost of old age pensions in the next year, but proceeded to distribute it at once in relief of taxation, and he invited his successor to raid the Sinking Fund in order to help to pay for old age pensions.
  Sir D. MACLEAN: Having previously reduced the National Debt by £110,000,000.
  Mr. CHAMBERLAIN: That was the figure at which his predecessors had fixed the Sinking Fund. What was the result? He handed on to his successor a deficit in the year for which he had been responsible and the prospect of a deficit of 15¾millions in the year succeeding, for which his successor had to make provision. I think any Gentleman who has that record should not throw stones quite so freely at other people's glasshouses. I turn from these general observations. I cannot turn from them yet, because I must express my disappointment that he never completed, or so imperfectly completed, the intention which he expressed in his speech. Like the right hon. Gentleman opposite, he dwelt on the formidable situation with which we were confronted. He said that" There are only three ways out of it—increased taxation, additions to
  264
  borrowing, or reduction of expenditure. No human ingenuity can suggest any fourth. If the Chancellor of the Exchequer proposes to meet it by some increased taxation "—which I do—to which Mr. Asquith says, "in principle I see no objection"—"or by borrowing to some extent on the £250,000,000 "—which I do—on that point he said, "I must pause before I come to what I consider is the true solution of the financial difficulty." He paused to consider Preference. I read on, not very much perturbed by his denunciations of Preference, but in eager expectation of the great remedy which was to come when he got over this little diversion. What was it?" What is our remedy?" says the right hon. Gentleman." Let us return to Cabinet government." I venture to permit myself one observation. I hope to see a return to normal Cabinet government before very long, but I hope never to see a return to that form of Cabinet government which was practised under Mr. Asquith—an assembly of twenty-one or twenty-two gentlemen held publicly responsible by the Prime Minister for matters which they could not discuss, and which it would have been injurious that they should discuss—a machine which would not work well in peace, and which broke down under the stress of war. If that is really the great secret for- all our troubles, if it is the only contribution the Leader of the Liberal party can make, I do not think he will help us very far on our road. If he does not help us, the right hon. Gentleman opposite can criticise us very freely. The right hon. Gentleman adopted the phraseology of Mr. Asquith. He complained that it was a trumpery affair. I do not pretend that the Preference on duties embodied in this Budget is a very large one. I think it is a big question. There I agree with my critics opposite. It is not in itself a very large affair, but it is part of a larger policy. In view of the present Government Preference is not to be confined merely to Customs Duties. It is to inform: our whole policy. Take a particular case. The other day I issued new instructions for the guidance of the New Issues Committee. In those instructions I directed that, other things being equal, preference was to be given to cases where the capital was to be expended in one of His Majesty's Dominions. Was I wrong? Does anybody criticise me? That is part of the policy of Preference. Take another case. The Government decided three years ago that pur-

  265
  chasing on behalf of His Majesty's Government when not made in this country should be made in the Dominions or in the British Empire overseas, rather than from other countries. This year on 10th March we issued from the Treasury a letter to the different Departments in consequence of a decision by the Government:
  "It is the desire of His Majesty's Government that the preference in Government contracts here spoken of should be effective, and whilst they think it undesirable to lay down any exact percentage they desire that both in regard to opportunities to tender and in regard to prices the Dominions, Colonies and Protectorates should have the full advantage of their decision."
  Major-General Sir N. MOORE: It was not carried out.
  6.0 P.M
  Mr. CHAMBERLAIN: I hope it will be carried out. It is our intention that it should be. I say that the policy of Preference informs our whole policy, and is not to be confined to the mere Preference in these Customs Duties. What is the complaint about that? The right hon. Gentleman adopted Mr. Asquith's complaint that we were sacrificing revenue, or, as Mr. Asquith put it, throwing away three millions of money for nothing. Is that the view of the Liberal party? Is that their attitude towards a decision of His Majesty's Government, small as it may be, which is hailed with enthusiasm in the West Indies and with approval, I believe, in every Dominion of the British Crown? I have seen no adverse comment upon it, except that they would have liked it to have been more. I have seen favourable resolutions from the West Indies as to it, and the friendly and favourable references of the High Commissioner of Canada in London, and Press telegrams describing the gratitude and hopes of the people of South Africa who saw the opportunity for the development of their industries.
  Mr. ACLAND: What about India and Ceylon?
  Mr. CHAMBERLAIN: Perhaps the right hon. Gentleman would address that question to the Secretary of State for India and the Secretary of State for the Colonies. I am not authorised to speak in their names, but I know this, that there were Indian representatives sent to the Imperial War Cabinet and to the Conference, which was held in 1917. I am quite certain that the Indian and Ceylon Governments would not have pressed us to create a Preference in tea against our will,
  266
  but I cannot believe that the people of India or of Ceylon or the Governments of India or Ceylon would have liked their products to be the single exception, from the opening of Preference to the products of all the other parts of the Empire. Is it nothing to respond to a desire, a wish, a hope, expressed at every Colonial and Imperial Conference for fifteen or twenty years by the Dominions? Is it nothing that we should at last fall into line with the policy which was pressed on us, and then embraced by men of other races, and by the great French Prime Minister' of Canada (Sir Wilfrid Laurier), and after being accepted by all of them, has been put in practice by all of them, as to British products entering those countries. Do the Liberal party propose, when they come into power, to instruct their Colonial Secretary to press the then Prime Minister of Canada—and I hope Sir Robert Borden will still be Prime Minister, though his career must, in those circumstances, be long—will they propose to address a dispatch to him to say that, in giving a Preference of 33⅓ per cent. on British goods entering Canada he is throwing away money for nothing, and that we, the British Government, invite him to cease that policy. Members of the Liberal party must surely know that the Preference that has been given to us in the Dominions has been of great advantage and is what is of great advantage when we meet it in the Dominions, of no advantage to the Dominions and Protectorates and Colonies when they meet it here?
  The right hon. Gentleman said quite truly that trade is a very intricate affair. He is very much afraid that we are doing no good to Indian or Ceylon teas by reducing the duty on their products, and he is enormously concerned lest we should do them injury by spreading the consumption of Java and Chinese teas elsewhere. He said that those Java and Chinese teas were largely teas of a very cheap and poor quality, used either by themselves or more frequently blended to produce a very cheap tea. I remember an hon. Member who sat on one of the Benches opposite and who was a colleague in a Government of which the right hon. Gentleman was a member, once observing in this House that it was a great mistake for poor people to drink cheap tea, and lie said that cheap tea was bought by mean rich people for their servants, and that cheap tea was not an economic article. However that may be, let me try and follow the right hon. Gen-

  267
  tleman's argument. He says that with the extra 2d. it will not pay to bring in Java and Chinese teas. The extra 2d.! You would suppose that I had raised the tax on Java and Chinese teas. I have not. There is no extra 2d., but there is 2d. reduction on Indian and Ceylon teas. What will happen? If it does not pay to bring in Java tea—that is to say, if there is not 2d. difference between Java and Indian teas, the poor people in this country will get the better Indian tea at the same price as that which they used to pay for the poor Java tea. That must be so. Mr. Asquith said that in the case of tea the Preference is obviously nugatory, and a sham, and that it is equivalent to reducing the duty on tea. I said in the Budget Speech that it was equivalent to reducing the Budget duty on tea. What are the advantages to be derived from it? The British consumer gets his tea cheaper, and, paying less for it, he buys more of it, and, therefore, there is a greater demand in this market for Indian and Ceylon tea. The right hon. Gentleman said also that the growers would be driven out of foreign markets by the competition of Java and Chinese teas, which had hitherto been sold here. What is the logical outcome of that argument? If we pursue his argument to its logical conclusion, we should protect our markets not against, but in favour of the foreigner, so that he would be induced to send his products here, in order that we may not suffer from his competition elsewhere. Have you ever known Free Trade argument reduced to such an absurdity?
  I agree that trade is complicated, and that traders are apt to be nervous, but I think they prefer to go on in their own way, without otherwise being disturbed in their course. Then we were told that in the case of tea they were afraid they should lose the entrepÔ t trade by competition in foreign markets; but they have lost that trade, and if they had lost it before the War, and if my Preference had begun before they lost it, they would have said they lost it because of that. Now that they have lost it, not because of Preference, what is said is that Preference may prevent them regaining the entrepÔ t trade which they have lost. I think those are rather idle speculations, about which we need not concern ourselves. Then there was a reference to certain taxes which I described as sumptuary taxes, and we are told that I have applied
  268
  a Preference to them also. I did not intend them for the purpose of creating a Preference, or of giving Protection. They were put on during the War by an orthodox Free Trader, for two purposes only, which Free Traders sometimes say, cannot be combined. They were put on with the object of stopping imports at a time when we could not well afford to pay for them, and, secondly, of securing, if we could not entirely stop the imports when we could not afford to pay for them, and were not manufacturing them ourselves, because of the absence of our men at the War, to secure revenue at a time when revenue was very necessary. But trade has not got back to normal conditions, and things are very far from normal, and it is very undesirable that we should buy great quantities of articles, which are not necessary, from countries like the United States, where all our recources in dollars ought to be conserved for two purposes, paying our way and paying our debts. If, in spite of these duties, the articles do come in, I think there is as much need of revenue now as there was when Mr. McKenna imposed the duties. Therefore, for all those reasons, I should have retained them, Preference or no Preference, for the present.
  Let me say here again, for myself as well as for the Government, that neither, in respect of these duties nor as to any others, is the fact of there being a Preference on them a guarantee by the Government that the duties will be maintained at their present rates or that they will be maintained at all. There is, for instance, a Preference on spirits, but that will not impose upon this country the necessity for having the duties on spirits continued if it wants to give them up for other reasons. The principle on which we proceed is that each part of the Empire settles its own duties for itself, and according to its own wishes and its own interests. Where we part company from the right hon. Gentleman is that when, for our own purposes we have established duties, we will give a Preference to the British Empire over the countries outside. That is the offence which cannot be forgiven, that you should treat kinsmen better than the stranger, and that you should recognise within the fiscal sphere the unity of the British Empire, and thus embody in its commercial relations something of that-high spirit of united endea-

  269
  your which carried us through the great struggle of the War. That is the real offence which hon. and right hon. Gentlemen opposite allege against us. I shall be very happy to see how many, I will not say of their small party they carry with them in the Lobby to-night, but how many of their countrymen they carry with them in the country in so narrow and mean a view of the duties and responsibilities and opportunities of Empire.
  I suppose I must say a word or two about the capital levy. This Motion invites the House to refuse to proceed with a Budget which does not provide for a capital levy. The right hon. Gentleman the Leader of the Liberal party in this House will not commit himself by speech to a capital levy, and I presume he will not by vote. Mr. Asquith would not commit himself by speech to a capital levy. The right hon. Gentleman who moved the Amendment explained that he did not know whether a capital levy was a good thing or a bad thing. [AN HON. MEMBER: "What about the Leader of the House!"] But my right hon. Friend the Leader of the House is not going to vote for it until he has found out whether it is a good thing or a bad thing. That is the difference, and, on the, whole, it seems to me that the course pursued by my right hon. Friend is wiser than that of the right hon. Gentleman opposite, who first wants to decide to have a capital levy in the Budget and then will decide whether or not it is a good thing. I have given some study to the question. I have no doubt in my own mind, and even if you have a doubt, which I do not share, even if people are prepared to take the responsibility for this proposal at some time, which I am not, I suggest to them that this is not the moment for launching into an inquiry of this kind. I do not think they would countenance it if they had my responsibility. My task is going to be difficult enough under any circumstances, but it would be rendered infinitely more difficult if you started inquiries which would cause insecurity and fear, which would disturb the minds of the men to whom you have to appeal in order to help you to put the finance of the country in a sound condition. I can only say that my views are unchanged. I am not attempting to argue the question again. My views are unchanged. They were not formed without consideration, and the more I study it and the more I listen to speeches which are made in support of it, the more difficult
  270
  does the proposition appear to me to become. [AN HON. MEMBER:" What are your arguments?"] The hon. Member asks me to argue it out, and I will take a couple of points.
  The right hon. Gentleman who moved the Amendment was insistent that it should be done once only and for only one purpose—that was, to get the Income Tax down by paying off debt. if he goes into the Lobby with a Motion in favour of a capital levy, the majority of the supporters he takes with him will not accept either of his propositions. He obtains their votes but they will not accept his meaning. They will take his Amendment, but they will put their own interpretation on it. They do not mean a single levy, they mean a repeated levy. They do not mean to use it merely for paying off debt, they mean to use it for other social purposes. They do not intend that it should be used to reduce the Income Tax, unless it be the income Tax of people with less than £250. What security is the right hon. Gentleman going to give to those to whom he comes and says, "Better than pay this high Income Tax for the term of your natural life, sacrifice a quarter of your capital; have done with it once for all, and you are free of this great annual burden? "What security has he got? None. The majority of those who vote in his favour mean to repeat the operation and continue the Income Tax at the high rate. That answers one of the arguments of the hon. Gentleman opposite (Mr. Arnold). The moment you try to work the thing you will find you cannot take a slice out of everyone's capital. There must be exceptions, and there must be a limited option to contract for paying by instalments. I am asked what security has the taxpayer who makes the sacrifice that his Income Tax will be reduced, but I would ask what security the State will have that when having forced one man to pay on the spot it allows another to defer payment, it is ever going to see the other payment. I think the hon. Member for South Hackney (Mr. Bottomley) answered my hon. Friend himself when he inquired what he would do with the gentleman whose property consisted of some shares in a not very nourishing newspaper and a few racehorses. There are many conundrums of that kind.
  I will suggest one more subject for inquiry to the hon. Member when he next deals with this question, because I think

  271
  it is an aspect of it he has never touched upon. How is he going to deal with all the life interests and contingent interests and remainders which enter very largely into our British social system, I am told much more largely in this country than in any other, and which affect the estates of a very considerable portion of the populatio of the country and of a much higher proportion of the wealthy? That is a problem which he has never touched upon, so far as I know, and I think he will find that it is a very difficult one when he comes to work it out. I venture to make one other remark. If you have got a tax which is admittedly very difficult to assess fairly, very difficult to adjust to our complicated social conditions, if it is resented, if it is considered unjust by a large part of your population, you will create a great social evil which may lead to resistance to the law. I do not mean violent, open resistance, but you do not carry their good will. It is one of the first canons of taxation, that as far as may be you should do everything you can to carry the good will of the taxpayer with you. It works for a smooth, efficient, and accurate collection of taxation, it helps you to guard against evasion and fraud, and it is of enormous importance to the Revenue authorities that they should have that kind of general public assent behind them when they have to go into the Courts and plead before the judges or their fellow countrymen in revenue cases. For my part, I can only say that the more I study the matter the more difficult it becomes, and the less do I find that those who have propounded it can claim to have considered the greater dangers and difficulties of embarking on such a course at a time like this, when we have a vast floating debt which we are anxious to fund as soon as we can, and which it is essential that we should provide for within a limited time in order that we may be free from anxiety. At such a time to start an inquiry into a tax of this kind, never tried anywhere else, so far as I know [AN HON. MEMBER: "Russia!"] I am not talking of societies in revolution. I am not talking of the methods of King John.
  Lieut.-Commander KENWORTHY: What about the French scheme?
  Mr. CHAMBERLAIN: Has it been tried in France?
  An HON. MEMBER: The scheme has been prepared.
  Another HON. MEMBER: It was done in Germany before the War.
  Mr. CHAMBERLAIN: Has the hon. Gentleman ever looked at what the tax there was? Let me tell the House. The tax was a tax spread over five years. It was graduated according to the wealth of the possessor. I speak from memory, but at the highest point of this scale, and that applied only to the last slice of the wealth of the wealthiest man, it amounted to l½ per cent. of his capital, and payment of it was spread over five years. It did not get as much money as our Income Tax. It got under fifty millions in five years, and that, and a suggestion of a tax in France, which has not yet made its appearance, are the models of practical experience which hon. Members opposite invite us to proceed upon. I think no country in the world has such a fiscal engine as our Income Tax. The French Income Tax is not to be compared with it; the German Income Tax is not to be compared with it. I do not know what the future of capital levies may be in France. I doubt very much whether the French Minister of Finance intended a capital levy in the sense in which it is spoken of here. I rather read him as intending a small annual tax on capital, but at any rate its reception by the French Chamber was not so encouraging that the tax has yet seen the light. It therefore gives us no experience to go upon. I have been led further than I meant to go. I think I have dealt with most of the points raised in the discussion, and I can only say that I am grateful to hon. Members for the kindness with which they have treated me personally throughout these discussions, and I am gratified also by the general reception which the Budget has had. It was at least an honest attempt to unfold a plain story to the country as to its position both now and in the near future, as far as I could gauge it, and an honest attempt to meet the necessities of such a situation. To propose in this year such an increase of taxation as will, if these expectations are realised, balance income and expenditure in a normal year is, I think, the largest sacrifice I ought under present circumstances to ask the country to make.
  Mr. CLYNES: The House will notice on the Order Paper the names of some hon. Members on this side of the House attached to an Amendment substantially

  273
  similar to the one which is now being considered, and I want to say a few things in relation to some three or four points covered in the Amendment to which I have referred and the Finance Bill itself. I may begin where the right hon. Gentleman left off with a reference to the capital levy. I suggest to the House that the number of questions put to the House by the right hon. Gentleman himself on the great difficulties surrounding this question, its uncertainties, how it will apply in practice—those questions show the necessity for the Commission of Inquiry which he has definitely refused. We have certainly not reached a point at which the Chancellor of the Exchequer can close the door upon any extraordinary methods of meeting an extraordinary financial difficulty. Wu are still spending very largely, despite the fact that we are told the War is over, and probably for some time very heavy expenditure will have to be incurred. The levy on capital is not rejected on moral grounds even by the Leader of the House. The main objection appears to be grounds of expediency, though the Chancellor of the Exchequer has just put to us the view that we ought to carry with us the good will of sections of the community towards. the taxation imposed upon them. Has the right hon. Gentleman got the good will of the miners in respect of the tax which was put upon them, and upon other wage-earners, as a war measure when the Income Tax level was lowered? Probably he has seen or heard, and if not, I am sure he soon will, of resolutions passed within the past few days by great bodies of miners declaring that they will not pay the tax, and they are asking their very large federation to take effective action on their behalf. I trust no workman will think of going to the length of refusing to obey the law so long as it is the law, though I observe that a workman has already been in Court for having refused to pay Income Tax, and he decided to go to gaol, because be said, it was unfair to compel him to pay this tax upon comparatively low earnings at the moment when the Government was paying out weekly, large sums of money to other people for doing nothing at all. So that the argument that you must get the good will, and almost the consent, of the people who are taxed to any taxation you impose does not carry us far.
  I do not say for myself that if, for the purpose of reducing, if not altogether ter-
  274
  minating, the enormous burden of debt, which we now have to carry, the device of a capital levy were resorted to, that that necessarily would mean a continuance of such a policy year by year for any purposes of national revenue. I quite agree with all the right hon. Gentleman said as to the virtues of our Income Tax system, but I can assure the Chancellor of the Exchequer that this subject of a tax upon capital as an emergency measure to meet extraordinary financial difficulties, is arousing very great interest in the country, and creating very serious discussion, and, therefore, such a Commission of Inquiry as has been suggested might well be appointed in order to explore the difficulties, and probably to suggest the best means for applying it with equity and with justice to those who might be affected by it. The right hon. Gentleman in his earlier speech upon this question adduced only two arguments against the imposition of a capital levy. One was that it would discourage saving, and the other was that it would discourage enterprise and production. If it be true that anything of the kind would discourage enterprise and production, how can hon. Gentlemen in any part of the House criticise or condemn those who, in a more humble sphere of activity, are charged with a policy of ca' canny in pursuance of their interest. The argument that it might discourage trading is answered by the fact that the heavier the taxation has been in the past, the greater the saving has been. The fact that men have to bear burdens does not in practice diminish in any way their effort to maintain or improve their general position. The immense burden which the War has thrown upon us cannot be carried year by year by the ordinary processes of taxation to which we might resort, nor even by such an increase in the Income Tax as would at all be tolerable to the general body of taxpayers. And I would suggest that it is not only the manual wage-earners who are looking for the use of some such expedient as that which we suggest. There is a very considerable number of the lower middle-classes, brain workers, men and women alike, giving service of great value to the community, but yet receiving only very meagre salaries or wages, who feel very heavily indeed the burdens of taxation which the right hon. Gentleman has not in the slightest degree diminished in any part of this Budget.

  275
  It is a commonplace to say that expenditure follows policy, but we need to remind ourselves that, although the War has long been over, the rate of expenditure in which the War involved us is almost now being continued. If we are to judge by the expenditure itself, one may say the War is still on. If it be true that Britain dominates what is being done in this Island on behalf of the Allies in relation to what had to follow the War in the settlement of peace terms, it cannot be said that the job is being done well. It is being done certainly at a great cost. We are still paying immense sums for the Army and for the Navy. Under that first head of policy there is no ground for the Government to congratulate itself, and certainly little has yet been done to diminish the enormous charges of those two great Services, which properly had to be made for the purpose of war while the War had to be continued. And, under another head, I think there is good ground for criticism of the action of the Government, namely, its failure effectively to take in hand any of those great branches of the work of reconstruction which would have saved at least some part if not all of the £1,000,000 a week still being paid out to people who have no opportunity of employment at all. The Budget, in the mind of the ordinary workman, i3 viewed in this way: It borrows an additional sum of about £3,000,000. It leaves to the capitalist an additional sum of about £50,000,000 a year, and it gives to Colonial traders some £2,250,000 for doing business with us. That is not a Budget which a House such as this, having after-war conditions to consider and decide, can find any cause whatever for congratulation. Under what head is there any prospect whatever of reducing the colossal borrowings which are continued even in this Budget? We could, I believe, even while the War was on, have found a larger sum for the payment of war expenses and of war debts than we did find out of the wealth still possessed by the community, for this fact remains, that, in spite of the taxation, saving amongst a large section of the community has been continued. Taxation, heavy as it has been, has not broken the back of that more favoured and fortunate class which, in spite of its extravagance, is able to save, and add even to its former store. The important point of leaving a large part of the gain derived in excess profits has in
  276
  no way been Justified by the Chancellor of the Exchequer this afternoon. The only argument which one can recall as being used by him on a former occasion was that the objection to the Excess Profits Tax was that it was imposed on the principle of a flat rate upon all. Yet that same principle is maintained. The 40 per cent. is to be continued regardless of any of those reasons or arguments that have been adduced by those who have previously taken part in the discussion of this subject.
  I will allude only to two other points. There is the question of the Beer and the Spirit Duties, and their consequences, and the question of Imperial Preference. The Government is making a great mistake indeed in treating lightly the supplies of adequate quantities of wholesome beer, not merely for the working people—though I think it can be said mainly for them—but for the masses of the community, and no matter how much I might incur the displeasure of so-called advocates of temperance in this country, I want again to bring before the notice of the House the working-class opinion on this matter, without, I hope, doing any damage whatever to the cause of true temperance reform. All that the Budget has done under this head has been to take an additional £31,000,000 from the sale of beer and spirits, and yet leave a shortage of beer supplies of 16,000,000 barrels as compared with the quantities that were supplied before the War. Through some other machinery—I believe that of the Liquor Control Boavd—workmen have been mocked by being told that the public-houses can be opened half an hour later at night, whereas the fact is that many are closing half an hour earlier than before for this very reason of shortage to which I have called attention. There is no such ground as existed while the War was on for the beer shortage that was then caused. There is no such question now as a choice between bread and beer.
  I think that the present shortage of these necessary refreshments ought not to be maintained, as obviously it is being maintained, in order that in some later Budget even heavier charges may be imposed upon the refreshments in exchange for belated concessions which probably will be made some twelve months hence. There is a very serious and growing outcry amongst the working classes as to what is being done by the Government in the curtailment of their liberties and the refusal of a supply of adequate quantities

  277
  of beer and refreshments. These protests cannot be kept within reasonable bounds as soon as the Peace terms are signed. Many things to which citizens would submit, and have submitted, during the period of the War, and until that period is at least technically if not completely terminated by the signing of Peace, will not be submitted to by them when Peace is actually concluded. I hope, therefore, that even during the discussions on this Finance Bill the Government and the right hon. Gentleman will take occasion to revise this part of this measure and meet these real grievances which can be redressed with out the loss of any good cause and without loss to the revenue of the country.
  In closing let me say a word or two on the question of Preference, to which I am provoked by the very eloquent appeals made to our emotions, our nationalism, and our patriotism in the speeches of the right hon. Gentleman. All that very fine language about bringing our kinsmen nearer to the Mother Country really does not make the relations any better at all. You are not going to give a reward to the men in any part of the Empire for what they did for the Mother Country in the great War by putting into the pockets of certain Colonial traders larger sums for business. We know what was the real cause that prompted these great communities to come forward and help us to maintain the forces in this country it a level of great strength while the War was on. These actions were prompted by qualities of human nature high above any such mercenary purchase as the right bon. Gentleman opposite suggests by means of these trading bribes. If we could imagine that the consumer would benefit from this, or that the individual purchaser of these commodities was to gain, something might be said for the transaction. All practice is against reaching any such conclusion. I think we will find here, when this matter is further considered, that that actually is the experience we shall have, and that neither friendship nor finance is in any way improved by a fiscal device of this character. So far, therefore, as I can express the worker's view it is this: That the Finance Bill now before the country is giving no relief whatever in regard to any one of the very serious burdens which the workers are bearing to-day in the matter of revenue. Their food has in no way cheapened. Their disappointment is felt in the continuance of all these heavy
  278
  charges for which they did properly look for relief as soon as the War was over. There has been no process of cheapening. There has been no relief of any kind. There has been no lesening of the burdens, which are very heavy indeed, for the few million people who work but whose earnings still keep them at the same subsistence level. No relief of any kind is offered by this Bill to these. So deep is the disappointment of the workers at the proposals submitted by the right hon. Gentleman that I trust that in a few respects at least, in regard To that level of taxation which affects their wages, low as they are, and in respect of their personal liberty and their humble enjoyment to which I have referred, while the Bill is going through its Committee stages the right hon. Gentleman will see his way fairly and reasonably to consider some of these points and make amendments.
  Major TRYON: I think it is an extra ordinarily unfortunate thing that when this House is about to come to a decision on the great Imperial question of Preference that the right hon. Gentleman who has just spoken for the Labour party should, have used in this House, and in the presence of us all, terms which to my mind are almost insulting to the Colonies—
  HON. MEMBERS: No, no.
  Major TRYON: The right hon. Gentleman has spoken—[HON. MEMBERS:" Oh!"]—Well, if hon. Members opposite will listen they will hear what I have to say. The right hon. Gentleman has described this policy as one of mercenary purchase. That is his description of Imperial Preference. Who put this policy forward? Hon. Members should, indeed, know perfectly well that for thirty-three years the Dominions have been putting this proposal before this country. They know it was put forward by a Dutchman in South Africa. The Labour party practice it in Australia. Does the right hon. Gentleman who talks of mercenary purchase consider the policy of the Labour party in Australia a mercenary one? It has been tried and it has succeeded. It is a policy which has extended all over the world amongst our Dominions. To-night we are to give a great, and I think what will be an historical decision. To-night we shall have to decide—I hope by an overwhelming majority—whether in these great economic questions the Empire is one or whether we alone stand out of

  279
  the arrangement which all the other Dominions have put into practice with each other.
  We are discussing great questions of Reconstruction—housing, for instance. Before people put forward schemes of housing they consider what is the area over which they can spread their scheme. I think when we come to the great economic reconstruction of the Empire, after this War, we must try to build the economic future of this country, not on the narrow basis of these islands, but on the much wider and surer foundations of the whole British Empire. That is what this policy means. We have been told that the tendency is one towards Protection. As a matter of fact the whole movement is towards freer trade within the Empire. This is a reduction of duties within the Empire, and it is the whole Empire moving in the direction, with present duties and present arrangements, of gradually lowering the tariffs within, the Empire. I think all this will be found a much nearer approach to Free Trade than anything else we are likely to get. It has been suggested that the Customs will disappear altogether. The right hon. Gentleman the Secretary for War, some time ago, in one of his most eloquent moments, told us that he
  "looked forward to the day when Custom House officers and those engaged on purposes of war-like preparations will have followed the mammoth into deserved extinction."
  We are not going to get rid of Custom House officers. I think the right hon. Gentleman himself, as a matter of fact, has been engaged in war-like preparations. The Customs are going to remain. We hope whatever Customs there are put on for our own purposes shall, at all events, be favourable to the Dominions of our own Empire. We have really got to consider what the world is that we are living in.
  We have heard a lot of theoretical speeches from the other side. But what is the world in which we are? If the world is going away from Protection and is going to adopt Free Trade, I do not think this country is likely to be one to set up any tariff walls when other countries are pulling down their tariffs. I ask, however," What is the world in which we find ourselves?" The greatest country outside our own Empire at the present moment is the United States. There are there two parties—the Republican party, which is the party of a high tariff, and the Demo-
  280
  cratic party, which is the party of a low tariff. President Wilson told us when standing at his Presidential election that" there is no fear of the Free Trade bugaboo." I am not aware of the exact meaning of that singularly beautiful expression, but the meaning of it is, I think, fairly clear, because President Wilson went on to say, "The Democrats do not propose to revise the tariff in any other way than will conserve the real interests of the country." "Neither I nor the Democratic party, "he said," stand for Free Trade. "That is pretty plain speaking on the part of the President of the United State. Next comes France. We find a definite Protectionist policy has for years been the national policy of that great Republic. In the case of Ireland and India it is, I think, obvious that the grant of self-government in fiscal matters would be followed at once by the abandonment of Free Trade and the adoption of tariffs. I am not rejoicing at these things, nor am I condemning them. I only desire to consider the whole world in which we are, to deal with realities, and not with the old theories of seventy years ago. I believe the world will remain Protectionist. Naturally, therefore, we have to consider our policy. I hope we shall face the difficulties, and will endeavour to work with our Dominions. That is what we hope to achieve by our present proposal. There are in facing this economic situation two classes of people. There are people whom I might term the "economic militarists," and there are those who may be termed the "economic pacifists." There are people who are very military and aggressive in their economic policy, and, on the other hand, people who do not mind what happens to us, and who will suffer anything. Let me examine the case first of the economic militarists. One of the speakers—I will give his name in a moment—said:
  "So far as commerce is concerned Germany is a beaten nation. It is our business to take good care that she does not get her head up to the same extent after the War."
  I do not know whether hon. Members opposite will agree with that, but those are the words of Mr. Runciman. On the other hand, we have people who do not mind what happens to us economically. For instance, if we have clay in this country and a foreign country puts a duty on china we stop sending out china and send out only the clay. If a duty is put on something else we alter the course of that trade or trades. We immediately change

  281
  them to suit the new situation. I call that by the name of economic foolishness. In this question it is time that, as a nation, as an Empire, we resume control. We have had quotations from Mr. Ricardo. I will give one from Mr. Cobden. He said:
  "I doubt the wisdom—and I certainly doubt the prudence—of a great body of industrial people allowing themselves continually to live in independence on foreign countries for their supplies of food and raw material."
  That is a very sound doctrine. If we cannot get the free Trade we desire within the Empire we ought to try to get it more free than in the past, because, as some of us contend, we have within our own Empire essential supplies, and if we follow the course suggested we shall not be so liable for our trade to be interfered with and cut off by foreign Powers. We have just had a speech from the Labour Benches. I know that some hon. Members opposite regard tariffs as something in the nature of economic war. They would not regard the withholding of the ordinary supplies from the community in order to influence the policy of this country by a foreign Power as an act of war. But only the other day at the Labour Congress there was a threatened withholding of coal from the community in order to influence the decision of this House. That surely was economic war. A resolution was passed to this effect, and at the same time the Congress passed a resolution favouring the League of Nations and a peaceful settlement of disputes between nations?
  Mr. CLYNES: I would like to ask the hon. and gallant Gentleman whether he is referring to some one speaker at that Conference who made a suggestion of that kind, or does he mean that a Resolution was passed at the Conference advocating that policy?
  7.0 P.M.
  Major TRYON: I refer to the Congress at which two resolutions were passed at the time of the miners' dispute, the first in favour of a League of Nations, and the second resolution threatening a strike if the Government did not withdraw their Bill with reference to Conscription. Now I come to a point put forward by Mr. Asquith. He said:
  "If this policy of Imperial Preference had been put forward five years ago the whole Liberal party would have voted against it."
  I am sure they would, but I think those who are going to vote for this proposal, and I hope many Liberals will vote for the
  282
  Government, are entitled to answer Mr. Asquith in his own words. He says that five years ago they would have voted against Imperial Preference, but since then he has said:
  "The War has opened our eyes to the meaning and manifold implications of the German system of economic federation, and commercial and financial control are a vitally important interest."
  I think the War has opened our eyes, and it has so opened them that I hope the whole country will work with our Dominions in co-operation for the economic development of our great resources. There is one argument that has been put forward which it is a little difficult to take seriously. We were told during the Debates upon tea that we must not introduce the policy of Imperial Preference which for thirty years has been proposed by our own Dominions because the people of the Chinese Empire would not like it. Those, however, are not the real Chinamen, because the industrious people in China are not complaining of Imperial Preferential duties, but they are complaining that they were compelled to adopt Free Trade by the bombardment of their ports, and they have been held by treaties ever since to practise Free Trade, although they want to give it up I wonder if the Chinaman who forbids us to introduce Imperial Preference is going to be transferred to the election posters during the election campaign? I met this Chinaman in 1906, and I suppose ha did render a very valuable service to a certain party during the 1906 Election. Apparently Labour Members are most anxious that the Chinese should be in no way impeded in competing with labour in supplying commodities to this country. There is another curious tiling which recalls our old disputes, but I think we can discuss it without any bitterness. I am told that one of the great sources of success in the new Budget is to be found in cocoa. It is something peculiarly interesting to me, remembering the political history of cocoa, to think that in cocoa we should discover the most successful application of Imperial Preference. No doubt the writers in Free Trade journals will find their cocoa all the sweeter since it has been grown in the British Empire.
  I now come to the very serious question of the League of Nations. It has been suggested from the benches opposite that those within this Empire are not to do as

  283
  they please within our own Dominions, because the League of Nations forbids us introducing Imperial Preference. This view was put forward from the Front Bench opposite; but we have a higher. authority in the Liberal party on the question of the League of Nations than anyone sitting on the Front Bench opposite, because Viscount Grey, better known as Sir Edward Grey, speaking of the League of Nations said:
  "I understand that President Wilson con-templates leaving each individual member of the League of Nations, each Empire, each State and each Republic free within the League to settle its own fiscal questions for itself."
  That is the opinion of Viscount Grey. He says that each Empire can settle its own fiscal questions for itself, and how could it be otherwise? Earlier in our Debates it was suggested that we were not introducing this scheme in accordance with the principles of the League of Nations. May I point out that within the United States are now included distant countries and islands, some of them obtained by conquest, and all of them contained within the fiscal area of the United States? Under. these circumstances, how can anybody suggest that President Wilson would go to the League of Nations and stop the British from introducing Imperial Preference. The French Republic have extended their fiscal boundaries in their own areas to include not only the North of Africa, but even such distant places as Madagascar, and if the French may give Preference there under the League of Nations I cannot understand why we should not have equal liberty to do as we please in our own Dominions within the Empire.
  I have one more word to say with reference to Labour. The Labour party—and I saw an unhappy instance of it in the speech we have just listened to—think they can settle this question by raising prejudices against capital and denouncing profits. If ever the Labour party should come into power, they will not get rid of this question by denouncing capital. No matter whether our products come from State factories or from privately-owned enterprises, they have to go out to the markets of the world. The products of a Labour Government in State factories would still have to go to Canada. Are they going to say that they do not want the Canadians to give us a Preference? They would have to decide these questions if they are in power next summer, and I hope and trust they will not be. I will
  284
  give a sound reason for this, and it is because next year there is going to be a great Imperial Conference, and when the Colonies meet us after the War, and if you have a Labour party in power, are you going to say to them, "We intend to treat you exactly the same as we treat the Chinaman and the German. We are going to give you no Preference, because we think everybody should be treated equally"? I hope long before that Conference meets this question will have been decided. I congratulate the Chancellor of the Exchequer on the method by which this question is going to be decided. It is going to be settled by the vote of a responsible Government, and by the votes of the Members of the House of Commons, and it is not going to be referred to a Royal Commission. He might have appointed a Commission of people like Sir Leo Chiozza Money. But this policy is going to be decided by the votes of elected Members, and not by the votes of rejected candidates, and I hope it will be decided by a vast majority.
  I apologise to the House for having detained it so long, but this is a subject upon which I have fought four elections, and I put it in my election address. It is a thing which I believe to be the beginning of a great policy of Imperial reconstruction for the future development on a wider basis of the Empire. It is the policy, I believe, which the great man who went out and fought in this country for the policy of Imperial Preference worked for, and it is a cause which I am sure many hon. Members opposite also have at heart. This great man worked not necessarily for a tariff, and not merely for a change, but for the great principle of Imperial union, and when hon. Members tell us, as they did in their speeches this afternoon, that this is a thing which does not make for unity, I cannot help remembering that the United States of America were federated under a great scheme by one of the greatest men that has ever lived. When you look at that you will find that it is the principle of economic union that is the foundation. If you look at the Australian Commonwealth, the Union of South Africa or the United States, or in the old days of a separated Germany, you will find that in all these cases economic unity has made for and helped, and in some cases has created, Imperial unity, and it is for that reason that I support the Government's proposal.
  The FIRST COMMISSIONER of WORKS (Sir Alfred Mond): I should not have occupied the time of the House at all in this Debate but for a remark which has been made to the effect that no Liberal member of the Government could justify in any way the position he will take up in the Division Lobby to-night. As one who for many years was one of the leading protagonists in the fiscal controversy, and as one who has fought that battle without stint and with sincerity and strength, I am now charged with changing my faith because in the Finance Bill there is a movement for freer trade between us and the different parts of the Empire. The hon. and gallant Member who has just spoken, with whom I would never have thought I would have been in agreement on this subject, made a statement that a few years ago all Liberal Free Traders would have opposed Imperial Preference. That is an entire misunderstanding of the Liberal Free Trade position. We were fighting to decide as far as I was concerned not the question of Preference, but a proposal to impose duties on the importation of food-stuffs into this country, a policy which we considered, and which I still consider, harmful to the country, to the community, and to the Empire. That, however, is not the proposal on which we are asked to vote to-night, and which is concerned in the Finance Bill.
  How anyone can contend that a reduction of existing duties can be an infringement of the principle of Free Trade quite passes my comprehension, because it is obviously a movement towards Free Trade and a very strong movement. [HON. MEMBERS: "Oh, oh!"] Hon. Members opposite seem to be astonished at that statement, but if you abolish all the duties existing in all the Dominions and in this country, then you will have absolute Free Trade, and obviously a reduction of duties must be a movement towards Free Trade. I think hon. Members opposite must credit me with possessing as much knowledge on this subject as they have, and therefore the kind of denunciation which is showered upon those who are going to vote without the slightest hesitation and fear and without detriment to the purity of our Free Trade morals absolutely passes my comprehension. I have heard the speeches made in this House and I have read the speech made by Mr. Asquith the other day, and I must confess that it seems to me extraordinary that the late Prime
  286
  Minister, who was responsible for the Paris Resolutions, a subject which was thoroughly investigated and debated for nearly two years, and which involved not a reduction of duties but a system of tariffs, should allow his Government to accept Resolutions of this character and should at this moment gibe at the proposals in the Finance Bill to-day.
  Sir D. MACLEAN: Those Resolutions were governed by the Preamble, as my right hon. Friend knows.
  Sir A. MOND: I know, and we were going to depart from every fiscal principle that we had hitherto advocated. We are not now asking anybody to depart from any fiscal principle. I ask in all seriousness, What arc we asking the House to do? Are we to say of the Liberal party that, like the Bourbons, they have learned nothing and forgotten nothing, that all the great events that have happened, all the triumphant feelings that we have had individually and collectively, all the extraordinary rallying round this country by our kinsmen from all over the seas and the Dominions is to be forgotten in a moment, and no effort is to be made to meet the wishes and desires of all the representatives of these men at the Imperial War Cabinet? Is that the policy that the Liberal party, or such of it as remains outside the Coalition, deliberately want us to adopt? Is it a policy which they think will be of any value either to them or to those they represent? I can imagine nothing more disastrous. The right hon. Gentleman the Member for the Platting Division of Manchester (Mr. Clynes), who spoke for the Labour party, referred to a mercenary bond. I am sorry that he used that term. He said that trade did not create patriotism. Nobody ever claimed that it did. Nobody ever imagined that the men who dropped their tools in the mines of Australia, the men who left their farms in British Columbia, and the men who came from the ranches of the West, and in thousands of cases ruined themselves, were thinking of trade. They were thinking of their duty, and wonderfully they performed it. To refuse the elected Premiers of those peoples their unanimous request, not that we should put any burden upon our own people for their benefit, but that in relation to duties that already exist we should treat them better than anybody else, would be one of the greatest and gravest blunders that this House could make. It is not a question of business; it

  287
  is a question of sentiment. Anyone who has visited the Dominions, as I have, knows how very much they have felt the fact that we will not treat them better than we treat others. You can argue that the amount is trifling, that the benefits are small, and that the results are inadequate—I admit all that—but it does not make the slightest difference to what we are asked to do to-day. We are able to do something to benefit all of them, and to reject the proposal on purely theoretical, and unsound theoretical, grounds would be a greater disaster, and for the Liberal party to endeavour to associate themselves with this opposition seems to me to be driving a nail into the coffin of the party to which I still belong and always hope to belong. It is a great and foolish responsibility to take, because there is no principle which any Free Trader in this House or in the country violates if he votes for this Bill to-night.
  The right hon. Gentleman the Member for the Platting Division of Manchester made a few general observations on a subject on which I should like to say a few words. He laid down a general principle which it would be rather dangerous to let pass. He laid down the general principle that no amount of taxation, however great, could ever possibly discourage enterprise. The right hon. Gentleman will not find that the history of taxation in any way bears out that theory. There is a very definite limit beyond which the burden of taxation not only discourages but absolutely destroys enterprise. I do not say that the camel of the taxpayer is not a very patient animal and will not carry a heavy burden before he lies down, but I do say that there is a limit after which the camel collapses and goes no further, and to try and lay down a general doctrine that however heavy you make taxation the camel will still struggle on is very dangerous. The right hon. Gentleman rather attacked the Finance Bill on the ground that there were no increases of duties for the wealthy and no decreases of duties for those who belong to the manual classes. He seems to have overlooked two facts. There is a heavy increase in the Death Duties, so heavy indeed that the hon. and gallant Member for Bournemouth (Brigadier-General Croft) raised a violent protest against the policy of my right hon. Friend, and the only duty that is reduced
  288
  is the Tea Duty, and the reduction there of £3,000,000 is a direct benefit to those people for whom the right hon. Gentleman was speaking. Might I also point out to him that part of the heavy taxation is directly due to large expenditure for the benefit of those whom he so ably represents? A large amount of money is spent on the bread subsidy, on the unemployment benefit, and on other matters of that kind. It seems to me a little ungenerous of the right hon. Gentleman on the one hand to accept large sums of expenditure and on the other hand to say," We are groaning under heavy taxation. Why do not you take it off and put more on other people's shoulders?" Lt is obvious that consideration must be taken of this very heavy expenditure—I do not say it is wrong expenditure—which exists and for which money has to be found.
  I do not propose to enter the somewhat fascinating subject of a capital levy, but I must confess that I have listened to very remarkable arguments on the subject this afternoon, and I would like to say one general word on the question. Practical experience shows that in business nothing is sooner forgotten than either increases or reductions of capital. Both are forgotten in a very few years. If at the same time that you made your capital levy you reduced the Income Tax, you might make people happy, but you would have merely camouflaged the, matter, and you would have made people more extravagant, because you would have deluded them with the idea that by transferring private capital to the State you had in some mysterious way increased the wealth or diminished the debt of the community. That is a practical and very considerable danger. It is very much as if a man who owned a considerable sum of money sold out a lot of his capital to pay his debts and then started again on another course of extravagance. If, on the other hand, he had to pay off his debts over a large number of years he would be much more likely to live quietly until he had paid them. At first sight a capital levy may seem a brilliant surgical operation, but, as a matter of fact, it is really a book-keeping transaction rather than a wealth-producing transaction. At any rate, I think the Chancellor of the Exchequer was well advised when he said that this was scarcely the moment, when you are still a borrower in the market, to come forward with a scheme, part of which seems to be to con-

  289
  fiscate in a very short time that which you are now asking individuals to lend. I certainly think, when you are no longer a borrower but are actually in a position to reduce expenditure would be a better time to inquire into the subject. May I also suggest that when you are paying a very high rate of interest and cannot say definitely what your debt burden is going to be is not a time when you can usefully arrive at any conclusion. I do not suppose anybody imagines that eventually the State will pay 5 per cent, on its debt The time must arrive when you can convert it into either 4 or 3½per cent. By that time you will be able to get at a more just estimate of your debt burden. I doubt, however, whether data exists or will exist for some time either as regards our indebtedness or our income to enable us to form a sound balance-sheet. In these circumstances, I am surprised that my right hon. Friend (Mr. Clynes) should actually propose that my right ho-n. Friend (Mr. Chamberlain) should have introduced in this very Finance Bill, without inquiry or investigation, this capital levy which is so difficult that the greatest economists that I have ever studied cannot explain it, which is so untimely, as far as the financial position is concerned, and which if introduced in that kind of way would merely spell disaster, check enterprise, increase unemployment, already too great in this country, and add to that terrible uncertainty in commerce which is paralysing our position in the affairs of the world at the present time.
  Mr. DOYLE: I ask the indulgence of the House in addressing it for the first time. I shall say a few words on the question of the Amendment as far as it affects Imperial Preference, and I could not wish for a more appropriate subject for my maiden speech, because it is the question which brought me into political life. When Mr. Chamberlain, sixteen years ago, left the Cabinet and went out into the wilderness to preach this gospel, he made one life-long disciple. I believed then, and I have believed since, that this was the most important subject that had ever been brought to the notice and consideration of the people of this country. My part was a small one in the North of England where the seeds of Cobdenism had struck rather deeply and where the soil was none too fertile. I endeavoured there to do my small part in bringing about the success of this policy.
  290
  If I may be allowed to say so, it is to me personally a matter of great satisfaction that after all these weary years we have arrived at one end of the journey and we are within sight of the other. We have reached the time when the majority of the Members of this House and the overwhelming majority of the people of this country have come to regard this as a practical proposition, and my satisfaction is only tempered by the fact that that great protagonist, that great statesman who taught his countrymen to think imperially, did not live to see the success of his policy. The right hon. Gentleman the Leader of the Liberal party has issued a trumpet call to every Liberal in this House to rally round the cause of Free Trade as against Imperial Preference. This has been described by the" Westminster Gazette" as the acid test. But may I suggest that there is another test, which I will venture to apply, and that is the test of consistency.
  I would like to apply that test to the position of the Liberal party on this question of Preference. In the first place, there is the question of the Paris Resolutions which have already been alluded to. The Paris Resolutions were drafted by Mr. Runciman. They received the blessing of Mr. Asquith, and they were adopted by the Government of which he was the head. The Paris Resolutions provided, amongst other things, that our Allies should have preferential treatment in the British markets. If that principle is agreed to, it is difficult to understand by what process of reasoning, or logic or common sense, it can be denied to our Colonies. Then there is the question of the Report of the Balfour of Burleigh Committee, a Committee which was composed of Free Traders and Tariff Reformers, a Committee amongst the members of which were eminent and well-known Free Traders, who reported in favour of Preference. This Report was adopted by the War Cabinet, and became the accepted policy, not only of the Government, but I believe of every individual Member of this House. I would apply the test of consistency there. Then there is the question of the food duties—the taxes on food. Has there ever been a Liberal Government which has not taxed food? Has there ever been a suggestion by a Liberal Government that the food taxes should be taken away altogether or that they should be reduced? The only practical opportunity

  291
  for obtaining cheap food in this country was lost. That was the opportunity when Mr. Chamberlain proposed a revision of the taxes on food, by the transfer of duties on certain articles of food to certain other products within the Empire, and within this country. That was the time when the loaf cost 5½d. or 6d. The proposal was rejected because the cry was raised, "Hands off food of the people." That is a cry that has done duty during three successive elections. I think it has been proved to demonstration that that revision of duties would only have involved an increase of 1d. or 2d. in the average working man's budget per week. That was when the loaf was at 5½d. or 6d. Now when the loaf is 9d., when the margin is so narrow that our safety depended upon it, when anything from £50,000,000 to £80,000,000 is paid to keep the loaf at that price, we do not hear any protest or any expostulations from any of the hon. Members who were so eager and so anxious to raise the cry of Free Trade in those days, yet of these many millions, the amount of the subsidy, a very large proportion will come out, and does come out, of the pockets of the workers.
  Applying the test of consistency to the Coalition Liberals, I notice that Mr. Asquith, a few days ago in Newcastle, expressed his regret that only seventeen of them voted against the Preference Resolution. I thought there were more. But what is the position of the Members of Parliament who accepted the position of Preference as laid down in the agreement between the Prime Minister and the Leader of the House, and who were returned to this House? I am not referring particularly or solely to the Coalition Unionists, or to the Coalition Liberal Members. I am including in these remarks Liberal Members who are followers of Mr. Asquith, some of whom sit on these benches, who accepted the policy of Imperial Preference during the election, and who were returned to this House. All those who were returned as Coalition Liberals accepted in principle the duties that existed and afterwards to be imposed. That was the principle accepted. What were those duties? They were clearly defined. There were duties on certain articles, such as motor cars and so on, which existed then, and which in the ordinary process would be renewed. Every member of the Coalition party who accepted these proposals and fought under the banner of them, must have known, be-
  292
  cause the terms were clearly expressed, that they were duties which would be continued and renewed. There could be no mistake about that. There could be no risk, no error of interpretation. They accepted that policy—the 400 and the 100—they are in this House in consequence, and it will be for them to explain to their constituents—I do not think any of them have explained in this Houses—their attitude on this policy.
  I referred, a moment or two ago, to the Liberals who were not Coalition Liberals, but who were returned to this House after having accepted the full policy of the Coalition at the time they went to the country. Mr. Asquith, the other day in Newcastle, made a trumpet-call to his followers, both inside and outside the House, to rally round the cause of Free Trade, and to oppose the policy of Imperial Preference. My opponent in the last election was and is chairman of the National Liberal Federation. He took the chair at one of the two meetings held in Newcastle last week. He listened to this denunciation of Imperial Preference, and the only observation I will make on that is that my Liberal opponent, who is chairman of the National Liberal Federation and second in power and in authority only to the leader of the party, accepted the full policy of the Coalition Government, including Imperial Preference. He described himself as a Coalition Liberal candidate—it was Sir George Lunn—and in order to leave no doubt that he was a real supporter of the Government policy, he issued, during the last few days of the election, a poster which stated that a vote for "Lunn, George, 'was a" vote for Lloyd George." If the chairman of the National Liberal Federation went out of his way not only to accept the policy but to make it apparent that he accepted it in its entirety, there are probably a great many other Liberal Members in this House and certainly a great many defeated Liberal candidates who also accept this policy. I notice that the Leader of the Opposition (Mr. Adamson) objected to this policy of Imperial Preference because it meant the thin edge of the wedge in regard to the raising of a tariff wall. That was not the first opportunity the right hon. Gentleman had of observing the thin edge of the wedge, because he was present at the annual Trade Union Congress held in Birmingham in1916, at which a resolution was passed against the free importation of goods, at least it was against dumping.

  293
  unfair conditions, and Free Trade. That was not merely the thin end of the wedge, tout the whole wedge itself. It might be interesting to the House to refer to the proceedings of that Trade Union Congress held in 1916. A fiscal policy manifesto was proposed by Mr. Bramley, of the Furbishing Trades, which read as follows:
  "In view of the attempt now being made to capture the support of the trade union movement for a change in our fiscal policy, with Protection as the main objective, the Parliamentary Committee be instructed to prepare and circulate a manifesto demonstrating that, in our opinion, the industrial, economic, and social interests of this country can best be preserved by—"
  Four means, which are given. The one relating to the economic part was this:
  "the abolition of sweating in all industries, trades and employments, and the maintenance of an industrial system under which the physical and mental efficiency of the worker shall not be sacrificed to the profit of the employer."
  That was the resolution proposed. There was an amendment proposed by a Mr. Stokes, of the Glassblowers, to add this sentence:
  "And as one means to this end, methods should be adopted which will restrict or prevent the importation of cheap manufactured goods, which have been produced at lower rates of wages or worse labour conditions than those prevailing in this country."
  The issue was clearly joined, and it gave rise to a very interesting debate. The amendment was carried on a card vote by 1,642,000 to 619,000, a majority of 1,023,000, and, when put as a substantive resolution, it was carried by 1,739,000 against 500,000, a majority of 1,239,000. The resolution as it stands is an informing one, but it is not more interesting than some of the speeches made in support of it. I do not see my hon. Friend the Member for Silvertown (Mr. J. Jones) here. He made the most interesting speech in support of that amendment. He said:
  "As representing the National General Workers, it is rather unfortunate that our old friend, Tariff Reform, has been introduced into this discussion, because you will see from the agenda that nearly every trade is asking the State to interfere to protect them against competition with sweated labour. We want to see to it that we are protected against all forms of unfair competition. If it is right to ask that the sweater inside Great Britain shall be muzzled, it is equally right to ask he shall be muzzled outside the State by the exercise of our national powers. … How are you going to get rid of sweating? If it is wrong to sweat inside, it is wrong to allow the products of the sweater from outside to come into this country without let or hindrance."
  He went on further to say:
  "Are we going to say at after the War we shall allow our rians and the Ger-
  294
  mans to come along with their articles, and cause us to lose all we have gained by bringing them into unfair competition with our own, and then, because we have maintained our conditions, we shall lose our wages? That is not good enough for some of us."
  I am sorry the hon. Member is not in his place, because I believe this would be the first time he and I would go into the same Lobby if the question was pressed to a Division. I should like to make one quotation from the speech of the Gentleman who proposed the Amendment which was carried by this large majority. He said:
  "Ever since the establishment of the principle of Free Trade in this country—which is to buy in the cheapest and sell in the dearest market—have not the Free Traders been trying to capture the trade union movement? In the early days the Free Traders did their best to destroy trade unionism because they were afraid of it. …Must Labour always be tied to one or other of the political parties on the question of fiscal policy? What is the use of your program me of reforms unless you are going to advocate a distinct line with regard to fiscal policy? That is the point I want to deal with. It is not only going to be a question of the sweated trades bringing their products here, or of sweated articles manufactured at home. This fiscal policy is one of a very broad character. It will affect neutrals as well as belligerents, and it will affect those neutrals whose standard of living cannot be touched by any European country, however low it may be. India, Japan, and China have all entered into the production of manufactured goods with the highest form of modern machinery. Their goods are going to Continental markets, and if you are going to protect yourselves by your trade unions in this country you must recognise that producers are consumers as well, and that they have the right to decide whether their industries shall be destroyed, or their means of living taken from them by the lowest forms of manufactured products being imported."
  8.0 P.M.
  That is a very suggestive report of that Conference. I would suggest to the right hon. Gentleman and his Friends that a workman joins a trade union because he wants to protect himself. He wants to protect the only asset, the only commodity he has to sell—his labour. He joins a trade union to protect himself against unfair conditions of labour, against the grinding employer, against sweating, against low-paid labour, and against any unfair conditions that tend to lower his standard. That is justifiable. I have always been an advocate of the scientific development and organisation of trade unions in this country. I place no restriction upon it. The position of some of the Leaders of the Labour party or of the trade union movement to-day is that they claim to be entitled to higher wages, shorter hours, and yet at the last confer-

  295
  ence they demanded unrestricted free imports. That is a wholly illogical position. I ask the right hon. Gentleman by what system of logic or legerdemain or conjuring is he going to reconcile those two mutually antagonistic and destructive propositions? Under the trade union system, if a British workman goes into a shop to work, if lie is foot-sore tired and weary, if he is hungry himself and has a sick wife at home and starving children, if he is a skilled workman he is not allowed to vitiate any of the established conditions, to take one penny an hour less in wages, or to get employment in any circumstances different from those established in the particular industry. The laws of the trade union are inexorable. They crush him. If an Asiatic comes So this country and is willing to work for one-tenth, one-fifth or one-half, or at any price he can get, if he goes into the shop as a skilled man, the trade unionist will not work beside him. Why? Because by doing so, if it is a penny an hour less, it lowers the standard. They will protest, and in the last resort there will be a justifiable strike. The Asiatic goes back to his own country, a skilled man, with up-to-date machinery, and works for 2d., 3d., 6d. a day, and he makes pianos, flat-irons, engines, cotton blouses, and works woollen and leather goods up into manufactured articles and sends them to be sold in this country. At the present moment the only declared policy, as far as I understand, of the official Labour party is that that condition of things is not only allowed but is welcomed. I do not know how that condition is to be met and I do not know what is the position of the leaders of the trade union movement and of the Labour party.
  What we want is world trade. We are faced with a load of debt and enormous responsibilities. We are faced with conditions which may lead to unemployment on such a scale as we have never had before. The gaunt spectre of unemployment has always stalked in our time. It looms in the future. What we want is world trade, more production, new markets, and the best way to obtain world trade is by developing our own estate. We have within the Empire every soil, every climate, and every advantage. We have a world of our own, a world in which we can trade and do business. But we have the outside world as well, and the best
  296
  way to obtain new markets, to obtain a grip in trade and commerce in the other world is to develop our own and to use it as a lever. We have raw material; we have every condition suitable for enterprise, for the employment of capital and of labour. Take Canada alone. Canada has an area larger than the United States of America. You could drop thirty United Kingdoms into it and there would be some still lapping over. Canada has more than one-half of the total fresh water area of the world. She has. 500,000,000 of acres of timber, more than one-half of which is marketable. She has 400,000,000 acres of cultivable land of which only 12 per cent. was cultivated last year, and that 12 per cent. produced in crop value over $1,000,000. What will it be when it is cultivated twenty-five, thirty, fifty, seventy-five per cent.? We have one-third of the whole silver product of the world, copper in abundance, coal to an illimitable extent. The same applies to other parts of the Empire. What we want to do is to develop that magnificent estate and co-ordinate and organise it to work together. A tariff preference will do much, but there are other forms of preference than a tariff. There is the preference of a common race, common blood, common ideals and common sentiment. As we have fought together, let us trade-together—the co-ordination of the different parts of the Empire. The beginnings may be small, but the possibilities-are great. I look forward to a time in our lifetime, within a measurable number of years, when we shall see a self-contained Empire inhabited by a hundred millions of people of the British race, united in sentiment and in trade and standing together as one unit against any menace which may arise.
  Mr. ARNOLD: I support the Amendment whole-heartedly, but propose to confine my remarks to that part of it which relates to the subject of the levy on capital. The Chancellor of the Exchequer told us he would not argue about the matter and that his mind was made up. I cannot help thinking it would be very interesting to those of us whose minds are also made up in favour of it if he had told us a little more in detail the considerations which have closed his mind against it. This is a big question and it has to be argued all round. It is not sufficient for the Chancellor of the Exchequer in a few perfunctory remarks to mention some of the dis-

  297
  advantages and difficulties in the way of carrying it out. These difficulties have to be balanced against what are, in my opinion, the much greater difficulties of the alternative, which is the high Income Tax scheme. That really is the problem before the House. The critics of the capital levy will not face facts. Apparently they will not recognise that there is no easy way of dealing with the very serious financial position in which the country finds itself. Either course will be difficult. What has to be decided is which of the two courses on balance is it the best for the country to adopt? It really is misleading for the Chancellor to ignore, as he has done, not only to-day but also when he introduced the Budget, the stupendous difficulties in the way of the high Income Tax scheme, which will be necessary if the country does not adopt the capital levy. Let me take one in detail.
  He referred to-day, as he did in the Budget Debate, to the fact that in his opinion the capital levy would be a great discouragement to saving. One would imagine in listening to him that on the other hand the Income Tax was a most ingeniously devised instrument to encourage saving. As a matter of fact, the very high Income Tax which will be necessary if the country does not have a capital levy will have precisely the opposite effect. It is bound to discourage saving. Many people will say," It is not worth while saving because for long years to come I shall have to hand over nearly a half of the interest on my savings to the Government." In the Budget Debate the right hon. Gentleman dwelt upon what he regarded as the iniquity of having a levy on capital so soon after you have asked people to save during the War. He said:
  "It is a bad time to propose such a tax when for the past five years yon have been begging people to save and when you are still obliged to ask them to save and to give you their savings. It is a bad time to tax those who have responded to your appeal by reducing their expenditure and making economies and to let those go free who disregarded your instructions and who spent their money in ways which were not in the interests of the State."
  The whole fallacy of that argument put in that way lies here—that under the alternative scheme, even as far as it has gone, under the Income Tax of this year, you are taxing those who have saved during the War. In my view, Income Tax will have to be raised to 8s., or, with a fall in prices, 10s., and you may be taking half the interest of the people who have saved during
  298
  the War. Under the scheme which I have laid before the House you could get at people who have not saved in a way you cannot under the alternative scheme, because where there was found to be a great disproportion between income and capital, where a man had a large income for a long series of years and then was found to have only a small capital, you could levy a special Income Tax, and that man would not be allowed to have the advantage of the deduction from Income Tax which would come about in the ordinary case. Surely the point about this matter of saving is that the Government has undertaken to pay 5 per cent. interest on War Stock. But that interest has to be paid, substantially speaking, out of taxation, and can and will be paid, substantially speaking, in no other way. That is the crux of the whole matter, and those War Stock holders who have responded to the right hon. Gentleman's appeal and have saved during the War will not receive 5 per cent. interest. Six shillings in the £ at present, and in the case of those who pay Super-tax 8s., and from very wealthy men 10s. in the £, is taken in Income Tax. Therefore, what becomes of the Chancellor of the Exchequer's argument about the unfairness of a capital levy on those who have responded to his appeal, and saved during the War? If a capital levy is unfair, so is a high Income Tax unfair. What is to be the reward of those people who have regarded his instructions and saved money? Nearly half, or perhaps before long more than half, of the 5 per cent, interest which was promised to them will be taken away in Income Tax. The right hon. Gentleman may say that this capital levy will have a psychological effect in discouraging saving. That may be true, but the Income Tax does in practice work in the same way. It is said, however, that people will fear a capital levy more than a high Income Tax. If you are going into psychological considerations, which, by the way, are of questionable soundness, there is one overwhelming reply, and that is that, unless there is a levy on capital, as years go on, the workers and the returned soldiers will think, and they will be right in thinking, that they are helping to pay this enormous amount of interest, and they will ask again and again, To whom is all this money going? The reply can only be that most of the money is going to older men who did not fight, and many of whom made profits out of the

  299
  War. Tile Chancellor of the Exchequer talked about good will. In coming years will the returning soldiers think that this payment is fair, more particularly in view of the inflated nature of the debt? He did not say a word about that, which is a very vital consideration.
  The money has been borrowed at a time of high prices, and as time goes on, and prices fall, the money of the War Stock holders will have greater and greater purchasing power, and in time you may have to repay a sum which in real value represents twice the sum you have borrowed. The Chancellor of the Exchequer always ignores that argument. Consider what that means. It means, as time goes on, the increasing purchasing power of money will represent huge unearned increments for the War Stock holders. I ask the Chancellor of the Exchequer whether, in these circumstances, he thinks that a situation of that kind can be maintained over a long series of years. Take the question of the interest you pay. The First Commissioner of Works spoke about the rate of interest being 5 per cent. He hoped that that would be reduced and that that would go far to solve the Chancellor of the Exchequer's difficulty; but with regard to the big War Loan, 1929 to 1947, you cannot in any circumstances reduce your 5 per cent. on that until 1929, which is eleven years hence. What are you going to do in the meantime? You may be able, to some extent, to reduce the interest on your short date loans as they fall in, and effect a small saving there, but it will not make a very material difference. Because of inflation this debt is £8,000,000,000, and if there had been no material rise in prices it would only be £5,000,000,000 at the most, and the interest ought really to have been only 3 per cent. as it was in the South African War. If those conditions had prevailed in this War the charge against this Budget on this debt would have been £150,000,000 instead of £400,000,000, and the charge for sinking fund would have been less.
  The Chancellor the Exchequer has not referred to the inequalities and incidence of the high Income Tax. There will be inequalities and there will be a great difficulty in assessing Income Tax fairly, which is very vital, when the Income Tax is high. When the Income Tax is low it does not matter so much, but at the
  300
  present time it is a very serious matter. If a business man is to make a correct return he can only do so by employing an accountant. The Income Tax is so complicated that it is practically necessary to employ expensive professional assistance. Nobody wants to pay too much, and people have to employ assistance, and that will go on for perhaps the best part of half a century. Surely the expense and labour involved there should be put against the expense and labour involved in a valuation for the purpose of a capital levy, which would be one operation, carried out for the purpose of a quite abnormal problem. The Chancellor of the Exchequer has not referred to the enormous, burden on industry and consequently on enterprise of the high Income Tax. I regret that the Leader of the House is not still the Chancellor of the Exchequer. If he were, we should not have had the talk about a capital levy which we have had from the Treasury Bench to-day, and which we had a few days ago. The Leader of the House, in the words which have been quoted to-day, pointed out that there was a case for consideration, and suggested it would be better to wipe off a large part of the war debt from existing capital, rather than to leave this heavy burden as a charge upon future earnings. As an economic point, I have no doubt whatever that the balance of advantage there does lie in a levy on capital. The Chancellor of the Exchequer never refers to the fact that under the high Income Tax scheme more and more the cost of the War, as time goes on, will fall upon men who have done the actual fighting. The older man will pass away and the men who have done the fighting will grow up and they will have to bear more and more the cost of the War. I think that is most unfair.
  Whenever difficulties in regard to Income Tax are raised, the Chancellor of the Exchequer takes refuge in the fact that the Government has appointed an Income Tax Commission. The appointment of this Committee is a perfect godsend to the Government, because it enables the Chancellor of the Exchequer to avoid all sorts of awkward questions. Whatever the findings of this Income Tax Commission maybe, they cannot really alter the essential difficulties of the problem. You may appoint Income Tax Commissioners until you are black in the face and until they are black in the face, but it will not alter the fact that you will have to raise by

  301
  Income Tax and current taxation an enormous amount of revenue year by year. Your tax system cannot bear such a heavy strain and it will break down, particularly as prices fall, as they are likely to do, and profits fall at the same time. I have seen many scales of Income Tax, but I have never seen for such a high Income Tax as 8s. in the £, or thereabouts, a scientifically graduated scale which is equitable and fair and economically sound. If the Income Tax is reasonably low, you may secure those conditions, but if it is high in practice it is bound to break down. The Chancellor of the Exchequer said he had thought this matter out carefully, and that his mind was fully made up, but I cannot help thinking that he has not worked it out carefully, and there are many points about a levy on capital which he has not clearly apprehended. A few days ago he said that since very few people would have money lying idle sufficient to pay their obligations under the tax it would mean immense disturbance of capital; everyone would be seeking to sell securities of one sort or another, and when all were sellers, who would be the buyers? He asked who shall measure the loss to the country by the depreciation of security, and who shall measure the loss to the individual through the same cause? Under the scheme which has been put before the House nothing of that sort will occur. Difficulties of realisation are avoided, because payment can be made either in war stock or in securities which can be exchanged for war stock. That does not mean that the war stock owners would be penalised or be in a worse position than anybody else. As a matter of fact, they would be in a somewhat better position. It would not be necessary to have large amounts of money lying idle in order to meet the tax. By the operation of the scheme which has been put before the House that necessity would be avoided. A scheme has been outlined in regard to men who have money locked up in private firms. The hon. and gallant Member for Christchurch (Brigadier-General Croft) evidently does not seem to know what would be done. The point is that where a man has no war stock, but all his money is locked up in a private business, and he has no security outside that business—these cases are most exceptional—the Death Duties returns show that the total amount of the capital of the country locked up in private firms is only 5 per
  302
  cent., and moreover nearly all these people have some war stock outside their business, or should have in view of the fact that most of them have been making money for the last few years. But where you have a man with his money locked up in private firms, and no securities outside, he should be allowed to pay out of income over a long series of years. The Chancellor of the Exchequer asks, what security have you got that he will go on paying? You have just as much security as you have under your Income Tax scheme. If ho goes bankrupt under this levy he will go bankrupt under the Income Tax levy. What security is there for the payment of deferred Death Duties? This is merely the same thing, but slightly more extended.
  The point is in effect—these men are a most exceptional case—the man would be allowed to fall out of the levy and to go on paying the higher Income Tax. If he was going bankrupt he would go bankrupt anyhow. The question was asked, how about a man who had racehorses, and all his money locked up in newspapers, which might be good or bad, according to the view one took. That does not cause me any embarrassment. If a man keeps racehorses he certainly ought to have some War Stock, with which to pay a part of the levy, because a man who keeps racehorses and has not taken War Stock certainly has not been doing his duty by the country. But assuming that he has no War Stock, and lie has got his shares locked up in a newspaper company, it depends on the character of the newspaper, and it would depend probably upon whether the shares were preference or debenture shares. If they were ordinary shares in a newspaper I do not think that they would be accepted by the Treasury in part payment of the levy in a ease like that. But these cases would be very exceptional. It would be a matter for commissions to determine what should be done. Doubtful and difficult cases should be submitted to commissions, who would adjudicate upon them, and if this particular person could not meet a levy in any other way he again would be allowed to pay out of income over a long series of years. The number of these persons is really very small, very much smaller than is commonly supposed. The First Commissioner of Works said this afternoon that he thought, in some mysterious way which I did not understand, that a capital levy would lead to extravagance so far as

  303
  the individual was concerned. I am prepared to put this argument, that the absence of the capital levy makes many people believe that they are a great deal better off than they really are, and they will not face facts. A man who was worth £100,000 before the War is not worth £100,000 now, assuming that all his securities remain of just the same value now and that he has not sold any. That man in effect is only worth about £60,000, because of the Income Tax, which really means that so much of his capital is mortgaged. But in his own mind he still thinks that he is worth £100,000. I submit that it is much better both for the individual and the State to face the facts and to come down to bedrock and let people see where they are.
  I would like, in conclusion, to refer very briefly to some other matters. The Chancellor of the Exchequer said to-day," If you once have a levy it will come again and again." I am not going to argue that out at length now. I mention only one general point. Hon. Members opposite live in constant fear of some future Government which will do, or attempt to do, all kinds of things of which they disapprove. This future Government is a perfect nightmare to them. There may be a Government in future years which will do things of which they disapprove, and personally I should prefer any Government to the present Government, because, in my view, it is the worst possible Government. But has it ever occurred to hon. Gentlemen who support the present Administration that, even when there is a future Government which will do all kinds of things of which they disapprove, that future Government would do them whether you do have or do not have a levy on capital now? There will indeed, be much less chance of extreme courses being resorted to and of unrest in the country and a much better chance of a stable position in the country if the present Government would deal boldly with the present problem, particularly with that of the debt. If they will get that out of the way, that is the best way to avoid extreme courses in the future. Lower taxation would put the country's finances on a sound basis. That can only be done by a levy on the capital.
  The choice is between a levy on capital and a high Income Tax, and this whole problem deserves very much more serious
  304
  consideration and more serious argument than the Chancellor of the Exchequer has given it this afternoon. The question is, which, on balance, is the better of these two courses for the country to adopt? My contention is that the balance of late advantage lies with the capital levy. The Chancellor of the Exchequer says that it has never been done before. But the Government of France has prepared a scheme, and it is quite clear that in the view of some of the ablest men of France a levy on capital is both practicable and not nearly so disastrous as hon. and right hon. Gentlemen seek to make out. The Chancellor of the Exchequer was referred to the fact that there has been a levy on capital in Germany, and he immediately rejoined that that was a very small affair. That is not the point. It is not a question of degree but a question of principle. It shows that the thing has been done. What I contend is that this is practicable. There have been taxes of this kind also in other countries. I will not go into that now. I may also add that in Germany there has been a great deal of discussion on the point and the German Government has prepared for the last year or two for a big levy, which shows again that in the opinion of some of the ablest men in Germany a capital levy can be carried through. Therefore, there is no good in saying that it is impracticable and cannot be done because it has been done, and these schemes which have been prepared show that some very eminent men abroad think that it can be done. To my own knowledge the scheme of a levy on capital is being viewed with favour by a large and increasing number of business men and of rich men. The industrial and business community is afraid, as well it may be, of the appalling burden of taxation, mounting ever higher and higher, which is strangling industry, discouraging enterprise, and having a most disastrous effect upon the whole condition of the country and the working classes. A large and increasing number of people is beginning to see that there is a way out, and that a levy on capital would be practicable and equitable, and an economiclly sound method of getting rid of this awful burden of a thousand million pounds of dead money, which otherwise will cripple us and weigh us down for the best part of a century.
  Mr. SIMM: I will not detain the House long in making my protest against the idea of a levy on capital. The idea is a new one so far as the Labour movement is

  305
  concerned. The hon. Member for Penistone has made two long speeches, and I question very much whether he has convinced anyone who was not convinced before. I fee sure that he will not have made the least possible impression upon his opponents. To begin with, I fancy he is labouring under a mistake. In a speech in this House about a fortnight ago I think he laid it down that by a levy of 20 per cent. he would secure £6,000,000,000, and reduce the War Debt to that degree. He leaves out a levy on persons with £1,000 and under. Therefore he bases his calculations on the assumption that leaving out municipal capital, leaving out all persons with less than £1,000, there are still £30,000,000,000 of capital left in this country. I should like to know where his figures come from. I fancy he is making a gross over-estimate. If there were that much money it surely means that in this country we have a capital value of £50,000,000,000—an un-dreamed of sum. I have never seen a statistician who has indicated that there is such an amount of wealth. Apart from that, no tax could be devised which would be more mischievous in its influence than a tax of this kind, or one which would cause more dissatisfaction. Take any street, take any man carrying on industry. The Chancellor of the Exchequer has some doubts as to his power in collecting the money. In any street we might have a draper with £20,000 of capital in his fixtures and stock. You may call on him for £4,000; you may call on all drapers to yield one-fifth of their value. What is to transpire? There will be a large number of sales in that town, and things will be going cheap. Above the draper upstairs you may have a man who is a lawyer. The draper may with his £20,000 worth of stock make £2,000 a year. The lawyer may make £20,000 a year. What is his capital? He may have a roll top desk and a typewriter and a clerk or two, but his capital is in his head and he may shift it very easily, and the Chancellor of the Exchequer could not chase his securities, and the Member for Penistone could not catch up with him. Next to the lawyer you may have a bookmaker, who may even make, sometimes, £4,000 a day. His capital consists mostly of the gullibility of those who back horses. I want to know how the Chancellor of the Exchequer is going to chase and catch up with the elusive bookmaker. There is no stock to be laid hold of. He would welsh you. Go further than that. Let us take
  306
  a street anywhere you like. You may have a person, assume a widow, who has been left £5,000 by her husband, and she has had it invested at 5 per cent., which brings in £250 a year. Next door to the widow you have a man who has a yearly income of £2,000, and he spends the lot. The widow you can get at. The Member for Penistone would go along and take £l,000 for a fine. The man who lives next door with £2,000 would get away; you cannot get anything. And so the widow would be called on to hand over her money to pay the taxes of someone else. Take street by street and road by road. Could you imagine a system which would cause more friction than that? When the Member for Penistone charges the Chancellor of the Exchequer with not having weighed it all up, it is possible that the Member for Penistone himself has not weighed it all up. Go further. Mark you, the Labour party at its last Conference passed a Resolution in favour of a levy of 25 per cent., to be followed by a further 25 per cent, and even 100 per cent. What would be the effect I Take a large town. If you take 25 per cent. of its value out you reduce its assessable value by 25 per cent.: you cannot take it out and leave it there.
  Mr. GRIFFITHS: Produce your facts now.
  Mr. SIMM: The Labour party Conference was in favour of the conscription of wealth, to begin with 25 per cent.—even up to 100 per cent. Take the suggestion of 25 per cent. You may have a town with a rateable value of £2,000,000 and a municipal debt of £3,500,000. What is going to happen to this municipal debt? If you take away the assets of that town you reduce the value of that town: you jeopardise the money of the people who have invested in the municipal debt. Who are these people? The trade unions, of course, are large investors in municipal loans, so are friendly societies, whose, investments are rightly restricted by the Registrar-General. These societies are going to be destroyed if this principle is carried through. The proposal is not even a Socialist proposal. It is an anarchist proposition and born of evil times. It was never thought of until two years ago—at the time of the passing of the Military Service Acts, when the conscientious objectors and others said: "They have conscripted our bodies, let us now conscript their wealth." The proposal was born of spite. They said: "We will try to get our

  307
  own back." If this were carried through, whatever influence it might have upon taxation, there is not the slightest doubt that there could be no more evil influence brought to play to upset our country. I believe that if we are to improve our condition, to lessen the burden of taxation, it will not be by taking capital here or there, but by fuller employment and increased production, whereby the wheels of industry will not be restricted but will go round more rapidly, and the output of wealth will be made greater.
  Mr. W. GRAHAM: So much advice and so large an amount of abuse have been hurled at the Labour movement from time to time that one almost hesitates to say anything in defence. I might assure the last speaker that we did not embark in this case for any campaign of wholesale burglary of wealth, or of taking the property of the nation. We founded our movement on its financial side by a quite scientific process, and perhaps we are not so destitute of political or public morality as he seems to think. One has very great difficulty in approaching a problem of this kind because the issues raised on any Budget statement are so vast. I would like to assure hon. Members opposite that we in this movement have not failed during the course of the War to apply our minds very seriously to the grave financial considerations as they confronted the country. More particularly we have been appalled by the enormous growth of the indebtedness of this country from £650,000,000 in pre-war times to £7,000,000,000 or £B,000,000,000 at present. During the War we felt very strongly as one of the plain principles of finance that we should raise as much as was required for war purposes by way of taxation and as little as we possibly could, consistent with maintaining the standard of life in the community, by way of borrowing or mortgaging the future. While we candidly and frankly admit that in that respect our country had an almost marvellous record compared with other countries throughout the world, we still feel that more might have been done by Way of taxation during the War, mainly from the point of view of curtailing great expenditure on luxuries during the war period, and secondly, from the-point of view of reducing the burden passed on to succeeding generations. We
  308
  find ourselves at this hour faced with the enormous indebtedness to which my hon. Friend the Member for Penistone (Mr. Arnold) has referred. This Budget falls properly into four divisions by way of meeting those obligations. There is, first of all, our attitude to the Income Tax, and more particularly our attitude to the-level at which it is imposed. We on these benches have no desire whatever to urge that any class in the community, and least of all the workers, should shirk their obligations as far as the national exchequer is concerned, but we do contend in the strongest possible terms that before any Income Tax is levied or imposed in this country, or in any country, it is our plain duty to have full regard to the manner in which that taxation is going to-bear on the lives, the homes, and elementary comforts of the people. In the preliminary Debate on the- Budget, the right hon. Member for Spen Valley (Sir T. Whittaker) made very great play of the fact that the wages of the masses of the-people had greatly increased during the War, and that when they were called upon to pay Income Tax they squealed more loudly—I think those were his words—than any other section in the community. It is quite true that in many of the industries wages were artificially raised. It is also true, on the other side, that a very large section of the workers of this country were unduly penalised during the War period and more particularly that section of the workers who had one or more members of the household on active service. On that problem our contention is broadly this, that it is wrong to pay regard to the great and very largely artificial rise in incomes, and not to look deeper and more closely at the problem, as we ought to do, and seek to ascertain how the real position of the people has been affected. I agree at once when we get into the realm of prices and wages, we embark on very complicated economic and other doctrines.
  One of the most popular documents, and I think in many respects one of the most admirable, which was issued within recent times, was the Report of the Committee which inquired into the cost of living during the War. Broadly stated, the conclusion of that Committee was that for the three grades of unskilled, semiskilled, and skilled workmen, the increase-in the cost of living had been round about 80 per cent., that is including what may be called the more urgent necessaries of life, and excluding what many of us would

  309
  without much hesitation regard as almost necessary if conditions were to be tolerable at all. If those items are included the increase in the cost of living was from 100 per cent. to 120 per cent. Before we get what the masses of the people of this country have gained on balance, compared with pre-war conditions, we have got to ask ourselves the further question as to whether the rise in wages, generally speaking over that wide field, has been such as to make good that increase in the cost of living, ranging from 80 per cent. to 120 per cent. or more. In some industries the gain has been undeniably great, but in other industries there has been relatively little advance even during the great shortage of labour throughout the War. Taking the masses of the people as a whole a recent conclusion, which was based on very strict investigation, expressed grave doubt as to whether their real position, that is measured in terms of purchasing power, had been improved since 1914. The very fact that this question admits of doubt must make us pause on this question and problem of the Income Tax. We agree that with the concessions which are made to men with families you have a higher limit than £130, but even keeping the higher limit, with all the concessions in view, it remains true to say that the Income Tax falls to-day in such a manner on a very large number of the homes of this country as seriously to endanger a real healthy standard of life, or what is more popularly called a minimum in this important matter. May I suggest with all respect to the Chancellor of the Exchequer that at this hour in our history it is not good business in this country to wait for the conclusions of the Royal Commission on the Income Tax on such a matter. I have no desire to give away any of our doings up to this stage in that important Commission, but I think I am at liberty to say that the evidence we have already taken points to the urgent need of far-reaching changes in the administrative side of the Income Tax and certainly far-reaching changes in its economic significance. If the Income Tax of the country is levied in such a way as to impose unnecessary and avoidable hardships on a very large section of the people, then there is no gain to the Exchequer by the collection of the tax on such a basis, because we find that as we bring down the Income Tax level up goes the demand for all manner of public ser-
  310
  vices, and the increased burden on the Exchequer more than wipes out any gain which is achieved by reducing the Incomes Tax to such a very low level. That is our first criticism of the Budget statement. In the second place, we greatly regret that, while the Chancellor has not seen his way to make any immediate improvement in the Income Tax system such, as would have tided us over the year until the Royal Commission reports, he has seen his way to reduce the Excess Profits. Duty on the other side by 50 per cent. I want to be perfectly candid and fair with the right hon. Gentleman. My own private view, for what it is worth, of the Excess Profits Duty system is that it is radically bad. It patches up an evil after you have allowed that evil to grow to tremendous strength and significance. The real remedy probably during the War period was to have instituted from the very commencement an effective system of control, and it might even have been of ownership, in the great things which were urgently necessary if we were to come through the crisis with success, but as these prices were not regulated from the start, and as we had to depend upon a system of industry and commerce in this, country which was rapidly advancing towards great monopolistic concerns, these huge profits emerged undeniably due to-war needs and war conditions. One of the theories behind the Excess Profits Duty was that it was right and proper and just on the part of the State to take from the men who had made these vast profits some portion—in the long run I agree a quite considerable portion—of the money which they had made out of the acute crisis and difficulties of their fellow men. During the time that the Excess Profits Duty was levied, it brought in £8,000,000 or £10,000,000 per week, and I think sometimes more, but at all events a careful and a considered estimate of the probable sum that would be yielded by that tax, keeping in view the reduction of 50 per cent. in the existing rate of duty, was that it would produce in the long run in this country something like £1,000,000,000. That is a very striking commentary on the system of industry and commerce which obtained in Great Britain during the War period, and there is something very seriously wrong with the management of any economic system which in the midst of war allows £1,000,000,000 of Excess Profits Duty to emerge, having regard to

  311
  the sorrow and suffering and sacrifice of such a very large proportion of our people. But the evil having emerged, it is our business to try to put it right, and the argument was that this is an emergency measure, and we are entitled because of the tremendous pressure of war conditions to take 60 and ultimately 80 per cent. of these excess profits after allowing a margin based on pre-war returns, but the War being over there is no longer justification, so the argument runs, for a device of that kind, which" will hamper industry, will restrict speculation, and may have an adverse affect upon employment. My contention in reply to that point is simply this, that it is altogether wrong, and foreign to plain, obvious facts in this country, to say that the crisis is past at all. All economists have argued strenuously that the crisis of the first few years of the reconstruction will be not less than the crisis of the concluding years of the War, and that being so, and keeping in mind the fact that we have still to depend upon large concerns in this country which have been considerably trustified, if I may use a popular expression, within recent times, there is to-day the very strongest case, especially as we are still borrowing money, why you should continue to take the proportion you were taking during the last years of the War, and why you should continue to appropriate for the community what obviously belongs to the community, having regard to the crisis and difficulty through which it continues to go.
  9.0 P.M.
  I had intended to say a word on the capital levy, but I will leave that to later speakers, because I want to close with a brief examination of the fiscal proposals of the Budget. We on these benches are very often charged with being bigoted and narrow-minded Free Traders, but I think most members of the Labour movement in this country who have analysed their case have agreed that in the long run Tariff Reform or Free Trade, separately and as individual items, do not mean a very great deal to us on any final analysis of the system under which we work. We have been free traders for the most part because we believed that that was consistent with a world ideal, an ideal of universal Free Trade, and because, in the second place, as applied to this country, we thought that on the balance it was prob-
  312
  ably the better proposition for us as an island community. I am not going to rake up that past, but as far as this Budget is concerned it has been argued very strongly, and I think not incorrectly, that the proposals which have been made are such as could offend only the doctrinaire Free Traders. If that is true on the one side it must be equally true that they are only such as can satisfy the doctrinaire Tariff Reformers, and I gather that that is the confession and the attitude of the right hon. Gentleman in his speech this afternoon. He indicated that the proposals were moderate and modest beyond description. We agree that they may have very little significance or practical meaning or real application as far as the Colonies are concerned, but the point we do want to emphasise in this Debate to-night is that while the immediate proposals are relatively trifling and unimportant, the ultimate or the future significance of them is worthy of the very serious consideration of this Chamber. This is regarded as an instalment, as a beginning, as something which is calculated not to give offence. It maybe some minor, feeble, initial step to put into practice the policy embodied in the Paris Resolutions, if they still hold the field. Going back to those Resolutions, and trying to ascertain the attitude of the public towards them at the present time, one can only say this, that they outline a form of tariff which would occasion very serious unrest and very serious uneasiness in all minds in this country that had really full regard to the course of world trade.
  I remember seeing one scheme worked out, I think, in five departments, which gave one grade of Preference, probably that now embodied in this Budget, to the Colonies, which gave another grade of Preference to the Allies who have been associated with us in the War, which had a fourth and fifth class, consisting of the neutrals during the great campaign since 1914, and then, in the last, in a ring of apparently utter exclusion, they had the enemy Powers. They were going to try to work out a tariff system which was going to fall into compartments of that kind, and which was to be based so far on the War conditions obtaining since 1914. I do not know how far that policy holds the field in the minds of the Government, but I know, from time to time to-night in this discussion, it has been represented, consciously or unconsciously, in the speeches of

  313
  numerous Members who have spoken, and I do say we should think twice and thrice before we embark in a Budget on any principle, however trifling, which is going to be made the basis or starting-point of a policy of that nature. I say it is not enough to offer merely negative or destructive criticism on this Budget. I would be the first, as a Labour Member, frankly and freely to admit that we would have ro claim as a party to represent the workers of this country, or to speak from a world-point of view as regards Labour, unless we had thought out a policy of international relationships in these affairs. I am prepared to see, rather than the policy embodied in these Resolutions, rather than any trifling step taken towards that end in this Budget, a strong, compact, and determined economic policy under the shadow and protection of an equally strong League of Nations. That is to say, we would desire to see the League of Nations built up on its political side, but, added to that political side, we would desire to see an economic policy which would be consistent with a broad justice to all peoples, wherever found, and which would build up, through the pacific enterprise of industry and commerce, a state of affairs which would render a recurrence of world war impossible.
  Mr. PRETYMAN: I have listened, and I think the whole House has listened, with very great interest to the speech which has just been delivered from the Labour Benches, and I, for one, would agree very largely with many of the sentiments expressed. With regard to the last subject which the hon. Member discussed, there is one consideration which enters my mind which has hitherto not been mentioned. I do not propose to argue the fiscal question here now, but we were the only nation among the great commercial nations of the world who, consistently, over a long period, followed a Free Trade policy. It has often occurred to me—of course these underlying causes are extremely obscure—that one of the reasons for adopting a Free Trade policy—in fact, the main underlying reason—was that we were the great creditor nation of the world, and we were receiving goods in payment of our debts from all parts of the world, and therefore it paid us as a creditor to have a Free Trade policy. America vas a debtor nation to us, and she followed a protectionist or tariff policy, and I shall be lather curious to know whether, now the position is reversed, there will be a tendency in
  314
  America to become more free trade, and a tendency in this country to adopt measures to protect ourselves where we find our flank exposed through the fact that we are now debtors where we were creditors. I think that is a consideration which will eventually weigh very much with us in forming this policy.
  I agree entirely with the last speaker, that this question of Fiscal policy and Preference is not one upon which we can dogmatise, or upon which we can make a party issue in this House at all. Really we have now reached the point when, either on that question or on the question so much debated of Income Tax versus capital levy, and the raising of this enormous revenue, we can no longer afford to treat these matters as academic questions. They are really matters of life and death to us. Our financial position is a really serious one, and what interests me most particularly in considering this Finance Bill is not so much its actual provisions, or to argue whether the Income Tax is a little too high, or whether at this moment a capital tax would be better than an Income Tax. What interests me in it is to look to see whether it points the way to a return to future stability. We are now in a transition stage, and we are passing back to the day, which must come upon us very shortly, when we shall have to live upon our incomes and to pay our way. When we get back to that position, the question which has got to be decided is, Can we bear the burden which is placed upon us, and will each succeding year as it comes find us a little better able than the previous year to bear the burden? If so, we shall be on the right road. If, on the other hand, the burden is so distributed that each successive year finds us more difficult to bear it, and that our production is hampered and our wealth is decreasing instead of increasing, then it is a very bad outlook for the country, and I am of opinion that, at this transition period to-day, it is quite impossible, and quite premature, to lay down a definite preference and a final decision for this House, as between the various forms of direct taxation which are being advocated here to-day. We do not yet really know where we are. We do not really know what our final debt is going to be. We hope we may be going to get, at any rate, some considerable contribution to it from those who were the authors of this War.

  315
  There is another factor in it. Hon. Gentlemen opposite who represent the Labour party have referred frequently to the effect of taxation upon small incomes and the altered value of money, and to the fact that money only represents to-day, something like half what it represented in pre-war days. But surely that consideration applies all up the line. It applies to all our financial problems, and I find it most difficult—and I think the Debates of the House show that we all find it most difficult—to adjust our minds to that new value of money and appreciate what it really means. I do not like to dogmatise upon that, but does it really mean that the debt of £8,000,000,000 is only equivalent to what a debt of £4,000,000,000 would have teen in pre-war conditions? It may be so. Certainly it applies all the way up the line to the Income Tax, and if it is the fact—as it is the fact—that the purchasing power of an income of £250 to-day, as put for ward from the Labour benches, is no greater than the purchasing power of £130 in pre-war days, it absolutely follows as a certainty that that same consideration goes all up the line, and a man who is taxed to-day at 6s. in the £ on an income of £2,000 a year is in exactly the same position as a pre-war Income Tax payer who was paying 6s. in the £ on £1,000 a year. The purchasing power of money is reduced just as much to a man with £2,000 a year as it is to a man with £250 a year, and that means that with the same rate of tax "being applied to him to-day as was being applied before the War, he is really paying a rate of tax double in proportion to the purchasing power of his income. From that there is no possible escape. When you look at that you see that the rate of In come Tax is really very high. I entirely agree with what the hon. Member for Penistone said, that this enormous high rate of Income Tax tends to obstruct trade. I do not think—
  Mr. R. RICHARDSON: Surely the hon. and gallant Gentleman opposite ought to know that the Income Tax on £l,000 is only 3s. in the £l and not 6s.!
  Mr. PRETYMAN: I am sorry my hon. Friend did not appreciate my point.
  Mr. RICHARDSON: I quite saw the point of the hon. Member, but he ought not to have taken the higher figure.
  Mr. PRETYMAN: No, no, no ! What I said was—and I think I said it correctly
  316
  and I am glad to have the opportunity of explaining it again to the hon. Gentleman—that the tax on £2,000 a year was actually 6s. That is a fact. Between £2,000 and £2,500 the tax is actually 6s., but the purchasing power of that £2,000 to-day—I agree with the statements of hon. Members opposite on this—is no more than the pre-war purchasing power of £l,000. Therefore, when compared with pre-war taxation the sum to-day on £1,000 is on a basis of 6s.
  An HON. MEMBER: Well, a man would not starve on that!
  Mr. PRETYMAN: I never said he would starve. I do not think that a working- class family would starve on £250 a year. The hon. Member opposite opened his remarks by saying that in respect to sacrifice there must be evidence that all classes in the country are willing to stand together and bear their share of the burden. I agree with that. That is the real issue arising out of this. I am perfectly certain that by merely shifting this almost in tolerable burden about and by squabbling amongst ourselves as to which class is to bear it we shall never get through. That is the point. The hon. Member for Penistone suggested that we should have a capital levy in order to avoid placing on the younger generation who have shed their blood the burden of this heavy tax. I would suggest to the hon. Member for Penistone that we can do much better than that by laying our heads together and increasing production and prosperity to the best of our ability, so that whatever the tax may be we shall have increased the ability to bear it. That is not only shifting this burden about, and each class trying to put it upon the other. That is not the way to enable the country to pay off the debt. The only way in which this burden can be met is by constant and increased effort, increased sacrifice, increased unity, and increased production. That is how we got through the War. Hon. Members opposite, both in their individual and collective capacity, as Leaders of the Labour party, put their hands to the plough and did their best to increase the output of munitions and to get the best out of every man. The whole country stood together during the War. Whether capitalists, employers, or wealthy men, or whatever they might have been called, each who had to bear these tremendously heavy burdens of taxation did so willingly. For this because of

  317
  the feeling of patriotism and unity, because every man was doing his bit, and every organisation upon which he depended for advice was advising him to get the very best increase of output to help in the War. If that spirit is carried out in the crisis of reconstruction before us, I am more hopeful of the result. But tin thing is more difficult.
  If it is not carried out, then I do not think winning the War will do much to bring us individual prosperity or make the place fit for heroes, which we all wish to see. I would respectfully ask hon. Members who represent the Labour party—I have just acknowledged the attitude they adopted during the War, and I will continue to acknowledge the efforts of thousands and hundreds of thousands of workers who are doing their best in their labour to increase production—whether they have continued in this course the same as during the War? Can they point to any collective act or any act by organised labour since the peace to promote increased production in the country? Have they done anything in this matter? I do not think that any Resolution has been passed at any Trade Union Congress. I do not think that any policy has been officially announced by the Trade Union Congress. I and other hon. Members in this House do not forget the very straight words which we have heard from the right hon. Gentleman (Mr. Clynes). He has spoken as forcibly as any man could speak in this House on the necessity for increased production, but he has done that in his private capacity. He has not done it as a leader of Labour, and speaking officially for the Labour organisations. I do think, if I may respectfully say so, that the Labour organisations and those who represent Labour would stand on a very great deal firmer ground in the country if they, instead of devoting all their time to prove how much less taxation people ought to bear and how much less other people are bearing than they should, were really prepared to ask their own class to bend to their own share of work to increase the production of the country. I assure them that that is likely to be the best way to reconcile the Income Tax payer to the high rate of Income Tax—perhaps more than anything else. There is a feeling of unrest at the threat that has been held out that it is the object of the Labour party, and their hope and desire, to conscript wealth. In face of this, the rate of taxation being as high as it is, it
  318
  clearly tends to extravagant spending and the purchasing of luxuries or of articles which can be kept rather than investing money in industry.
  There are only two purposes, so far as I am aware, to which capital can be applied. One is investment to yield interest in some reproductive form of enterprise. The other is to spend it upon something which will give pleasure or will satisfy some need of the moment. Surely one of the most important aspects of the financial policy of this country ought to be the encouragement to invest money in the employment of reproductive labour, and in producing that return, rather than in encouraging its expenditure on some transitory pleasure. I am afraid the latter is the effect of what is happening now. If a man puts money into his business and receives £1,000 interest, a very large proportion of that is taken in taxes. That really largely accounts for, I believe, the enormous prices which are obtained when articles such as pearls, jewellery, objects of art, and things which have a permanent and usually an increasing value are put up for auction. People are unsettled and will not invest their money in business. People will put their money into these objects of art upon which they have to pay no Income Tax at all. This, to my mind, is a very undesirable state of affairs. I do not see how it is to be remedied. It certainly would not be remedied by a capital levy. You might in some cases getsomething out of people who have spent their money in that way, but its difficulties make it really impracticable. One difficulty was mentioned by the Chancellor of the Exchequer when he introduced his Budget. I cannot see how you are going to value all the property, movable and immovable, from one end of the country to the other, and obtain a fair valuation of it. It is really impracticable, and after all it seems to me that all these heavy direct taxes, whether in the form of Income Tax or capital levies or Death Duties are really all one and you cannot differentiate between them. There is no dividing line between capital and income. When income is saved it becomes capital. When a man has considerable means and he is liable to be taxed upon that means it does not matter to him whether the tax is nominally upon income or capital, because if it is a tax upon income he can pay it out of capital; if it is upon capital then if he is a prudent man he will do all lie can to pay it out of income. I think what-

  319
  ever heavy direct tax is imposed upon the wealth of the country may be regarded as & single unit, and it will be felt by the community which pays it in its cumulative effect.
  When the Death Duties were introduced by Sir William Harcourt he justified them as a deferred graduated Income Tax, and it was recognised from the very first that the Death Duties bore the most intimate relation to the Income Tax. When a man has to pay a large income and also a heavy Death Duty the two are really the same. The Death Duties have been steepened and heavily increased and they have been levied on income and capital values which represent only half their nominal value on a- pre-war basis, and that makes them all the more heavy to bear. Take the case of a man who has an income of £4,000 a year, representing a capital value which will pass at his death of £100,000. He would pay on his £4,000 about 7s. in the £ Income Tax and Super-tax, and that would be £l,400 out of his £4,000, leaving £2,600 actual income. The £100,000 which would be charged on his death would have to pay 14 per cent. The only way he can meet that to the advantage of the country is to insure against the Death Duties, and that would probably cost a man of average age something like £300 or £400 a year. When he died of course there is the insurance money, which he has never had any right to, and it is money which his successors will never see, because the whole of it will be taken by the State. That is not a reasonable method of taxation. It is not a question of hardship, but a matter of conserving the wealth of the country, and letting the people believe that the State has some interest in trying to conserve wealth out of which the taxes are to be paid. That wealth is being sensibly reduced in many ways, and any measure which can show some desire to conserve wealth will have a very good effect in the country.
  There is another way in which our revenue is being reduced, and that is by the statutory minimum wages which are being imposed in the interests of labour. We have now high statutory minimum wages in the mining industry, the railways, and the agricultural industry, and what does that mean? It means the transfer of vast sums from profits to wages. As long as it is being received as profits a large proportion goes to the
  320
  revenue, but when it passes as wages hardly any of it goes to the revenue, and in the case of the agricultural industry none at all, and even in the case of the railways and the mines probably only a very small proportion. Therefore, that is a direct loss of revenue. I am not putting this as a question of right or wrong. I know that our debts have to be paid to those who have lent us money, and to those who have lent us their lives and limbs in the War, but our revenue has to be maintained. I believe we are within measurable distance of arriving at a rate of direct taxation when we shall pass the milestone when, if you increase the tax, you will no longer increase the revenue, and once you pass that I do not know what the next step will be
  The present high rate of taxation and some of the policies put forward in this House and outside distinctly tend to induce people to spend their money rather than to conserve it. If a man has got £2,000 in War Loan he received £100 a year nominally, but the State, if he has Super-tax to pay, takes half, and you may look upon it that the State is taking one-half and him the other. People should recognise that it is not a mere question of hardship, but a matter of maintaining-the revenue and the producing power of the country, and also maintaining the desire to increase production. I do feel very strongly that we are at this very moment at a very critical state of our national progress, and I repeat that unless we can secure unity of effort and sacrifice, and a feeling that both workers and capitalists are prepared to make the necessary sacrifice, and stand together to increase production, I look with the gravest anxiety on the results which are to follow. I think nothing more encouraging could have been heard than the speech of the hon. Member who preceded me. He no doubt realises that both he and I wish that others would make those views more widely known and use their influence in Labour organisations so that there may be some evidence to those who have to pay heavy taxes and to employers of labour that there really is the same feeling, and I am sure it must be there. It would be very desirable if we could have some assurance that organised labour does desire to increase production, and for the workers of the country to take their fair share of the sacrifices after the War as they took their fair share of the sacrifices during the War. It would be the greatest

  321
  possible factor in the financial future of this country and in its return to that material prosperity which we all hope to see reached.
  Sir A. WILLIAMSON: There is a great deal that is attractive to a business man in any proposal to face a debt and to pay it off at once and be done with, but there are many undertakings in the world which, while desirous of being in that happy position, are unable to do so without causing great evil and, perhaps, ruin to their enterprise. We may hope, if the peace terms are such that we expect them to be, that a state will be brought about in this country and in the world in which we may well look to posterity to help us to bear some of the cost of the War. If we can bring about the League of Nations and thereby avoid piling up this great expenditure on armaments, we shall confer a benefit upon posterity, and can reasonably and properly look to posterity to pay some portion of the debt in return for the benefit which it will receive. Some of the speeches which have been made this afternoon seem to have been conceived with the idea that capital is in the form of money in the bank, or in War Loan, or in stocks and shares, but men who are in business know full well that it is very often in a different form. Capital is sometimes invested in machinery or in a factory. A man may put practically his whole capital into his factory, and even borrow money in order to complete it and equip it with machinery, lie may carry on his undertaking entirely or almost entirely on borrowed money, having mortgaged his factory to give security for the advances. Even if we were all united as to the desirability of this matter, there would, therefore, be very great practical difficulty in such a case in carrying out such a levy as is proposed. The dislocation of values that would ensue would certainly bring in its train a dislocation of business, and it might very well bring ruin to a great many businesses.
  There is also a great deal of unfairness in the position that a company would occupy as compared with the position of an individual under the proposal, because, as I understand it, the levy is to be put upon the individual and not upon the company. If two persons started rival businesses, say two mills, and one started with his own capital and the credit that he could obtain and the other formed a company, then although 95 per cent. of the stock might be held by one individual,
  322
  there would be no capital levy on the company at all The only capital levy would be upon the shareholders as individuals. The other mill, owned by the individual, however, would have to face the capital levy. What would that mean? It would mean that the one concern would be able to continue to trade with its credit at the local bank unimpaired while the other individual's credit would be gone. It is thought that this levy would only affect people who have a considerable amount of capital, but, as I understand the proposal, it would apply to everyone in the country who had £1,000 capital. It would affect very seriously a great many people who cannot be classed among the wealthy, people who own small shops and businesses throughout the country. There is no class that would feel it more than the man with small capital. The man with a very big capital would perhaps feel it less, but the man struggling along with a capital of £1,000—and usually in such a case he has borrowed up to the hilt in addition—would feel it most, and very many such men would be ruined. We must not forget that a great deal of British capital is invested in foreign countries. Take a man who invests money in a sugar mill in the Filippines—his whole money in that undertaking and probably he owes in addition a great deal to the bank. How can the Government possibly ascertain the value and make a levy? Even if a mortgage is given and is spread over a number of years, it will only be a second charge, because the bank probably has a first charge. The position is different as between a company and an individual owning a mill. I know of such a case in the Filippines. One mill is owned by a company and another by a private individual. In the one case the credit of the company would be unimpaired with the local banks, but the credit of the other concern owned by the individual would be ruined owing to the operations of such a levy, and he would be unable to continue operations. I only give these instances to show that it is not a practical proposal, but would cause great dislocation of values and great ruin. At the same time it is attractive to face an obligation that is hanging over you if it is possible to do so, but I do not think it is possible in the way proposed by a capital levy.
  I would like to say a word with respect to the objection to a system of preferential tariffs. I occupy the position of having

  323
  always been a free trader and of having always supported Free Trade, but I have never regarded Free Trade as a fetish. I take a practical view. I do not think that there is anything morally wrong in Protection or tariffs or in Free Trade. It is merely a question of practical politics what is best for us. Here we are in these islands not producing the raw material that we use. We are entirely differently situated from the United States or from the position which Germany occupied before the War. In both of those countries there are certain natural advantages that we do not possess. The United States produces cotton, wool, timber, and oil, and a great many raw materials which we do not produce in this country. We have to bring them overseas. We have to manufacture the raw material and send it abroad again for sale to other countries. That is practically how this country makes its money, and, that being so, it is clear that we, as a nation, should set ourselves to the task of producing as cheaply as we can. We ought not to hamper our production by anything we can avoid in the way of hindrance or expense. I have always held that in our circumstances Free Trade suits us best.
  I now come to the concrete proposals with regard to Preference for the Colonies. I certainly must oppose any tax for motor cars and things of that sort, which I judge to be protective taxes. But when you come to the taxes on tea, coffee and cocoa, they are not protective taxes, and while I look at the proposal with some hesitation as to giving the Colonies Preference, if you bear in mind that the Colonies have asked for this Preference, if you bear in mind, also, what they have done for us, and that they and we desire to be linked together, then I say, if they ask it, let us give them this Preference on taxes which are non-protective. It may be said that it is unfair as between one colony and another. It benefits some Colonies not at all and others it benefits but slightly. But there are many gifts in this world that are useless when you have given them. They may not be of great value, but what is of value is the spirit in which they are given, and if the Colonies look to us in this matter, and would appreciate the gift of Preference in connection with tea, coffee, cocoa and sugar, then, these things being non-protective, I am prepared to go that length. But I wish to make my posi-
  324
  tion perfectly clear as a supporter of the Coalition, that I am not prepared to support taxes of a protective character. I am ready to admit that these taxes were put on by a Liberal Chancellor of the Exchequer to begin with. It has been said that they are no longer only of a temporary nature. I supported them as war taxes of a temporary nature. The War, perhaps not officially but in fact, is over, and I am very much afraid that these taxes are not now regarded as temporary war taxes, but are looked upon as the beginning of a system of taxation. If that be the case if we are going to have protective taxes, if they are going to increase, partly I suppose with the idea of giving Preference to the Colonies, then I cannot follow the Government as far as that. I am only prepared to go as far as giving Preference to the Colonies in non-protective taxes, and I cannot support this suggested system because in my experience of international trade I think that Free Trade is the best policy for an island situated as we are.
  Sir E. WILD: With regard to this omnibus Amendment I must congratulate the political economist who compounded the various concoctions that go to its ingredients. It seems to me that it is based on both parochial and predatory ingredients. I only propose to deal with two of those ingredients—one of them of a predatory nature, and the other of a parochial nature. First, there is this levy on capital, and it is very interesting to try to realise the origin of this extraordinary proposal. It has not the hallmark of Newcastle, because it was carefully omitted from Mr. Asquith's speech there, and when one considers that the late Prime Minister's speech was mainly devoted to the question of public extravagance, we cannot be surprised there was no mention of a capital levy. When one tries to realise what was the genesis of this proposal, I think we may describe it as the offspring of an unhallowed union of the doctrinaire political economist who comes from Penistone and that audacious political strategist who represents East Edinburgh. The whole object of including capital levy in this Amendmet was in order to go one better than the Labour party, because I notice that in the Amendment of the Labour party there is no mention of the capital levy. My right hon. Friend the Member for Peebles (Sir D. Maclean) and my right hon. Friend who

  325
  proposed the Amendment (Mr. Acland)—to whose speech I listened with the greatest pleasure, and I am very sorry, as all the Members on this side were, that he should have met with any unmannerly interruptions—told us that all that was wanted was an inquiry, but if the House will look at the terms of the Amendment, they will see there is no mention whatever of an inquiry. The terms of the Amendment are these:
  "That this House declines to give a Second Reading to a Bill which makes inadequate provision out of revenue for the expenditure of the country, which fails to deal with the War Debt by means of a capital levy."
  That is supposed to be the considered Amendment of a body of responsible statesmen. But when they come to present it to the House, it is no longer a question on their part of proposing a capital levy. All they say is that they want an inquiry. It is not right that responsible statesmen should propose an Amendment which in definite terms states that the Budget should be rejected because it fails to deal with the War Debt by means of a capital levy, and then, v/hen they come to argue the matter before the House, say that all that is wanted is an inquiry. My objections to a capital levy are only four in number, and I can state them in about four sentences. I object to it—first, because it is dishonest; secondly, because it is impracticable; thirdly, because it is improvident; and finally because it is blackmailing. Beyond that, I know nothing whatever against it. It is dishonest because you are proposing to take, I think it is, a quarter of the capital not only of what you call the richer classes, but of those capitalists of whom my right hon. Friend spoke, and of whom the right hon. Gentleman one of the leaders of the Labour party spoke as "that more favoured and more fortunate class." It is one of the profoundest mistakes—and the great tragedy of it is that it is made by men who ought to know better—to represent capitalists as all very wealthy—as the dukes have been insulted by Mr. Smillie—and as if they had a monopoly of capital. The capitalists are the small men, the middle classes, who, perhaps, are the most responsible classes in the whole community—people who are not represented, who have no cohesion, who pay a large amount of taxation and who have laid aside a reasonable amount of capital. These are the people whom you are proposing to
  326
  mulct of one-quarter of their capital. You have gone to them for the last five years and said: "Save! Give us of your savings invest your money in War Bonds." Having done that and having got them, upon the representations and upon the honour of the British Government that their in vestment is a safe one, you then go to them and say: "Now we are going to take a quarter of your capital." I call that dishonest. A capital levy is impracticable for the simple reason that valuation is impossible. Capital cannot be valued without a vast and intricate machinery which would tax the resources of the State in order to arrive at the real value of capital. It is improvident because it disturbs credit. When you disturb credit you promote unemployment. It is quite easy for my hon. Friends the members of the Labour party, who have got to learn their politics—
  Mr. J. JONES: Have you?
  Sir E. WILD: We are quite accustomed to being shouted down, but, fortunately, in this Chamber stentorian lungs do not amount to argument.
  Mr. JONES: And criminal lawyers are not debaters.
  Sir E. WILD: I am not so sure of that. They can go on to their platforms and denounce capital.
  Mr. JONES: And denounce you.
  10.0p.m
  Sir E. WILD: That is a very easy cry to catch the ears of the voters. I suggest that the credit of this country is the wealth of this country, and that if you once disturb that credit capital will fly elsewhere.—to use the words quoted by the right hon. Gentleman (Mr. Acland) from Ricardo, one of the political economists whom we read with respect and one of those theoretical economists who say, "Lest capital should fly elsewhere, go and get what you can of it." That is a fair epitome of what Ricardo said. That brings me to my fourth argument against a capital levy, which is that it is blackmail. It is all very well and there is something attractive about it if, as the right hon. Gentleman says—I honestly accept his statement that it is his view—you can make your levy on capital once and for all. If you can say, '' There has been a big war; let us take a certain proportion of your capital and start afresh with a, small Income Tax," there is something very attractive about the proposal. But

  327
  you cannot do it. You are simply putting a weapon into the hands of the political blackmailer. If it is done to-day, it will be done in ten years' time, then in five years' time, then in five years years' time. Consequently, whenever you get into a difficulty and you have, perhaps, a Labour Chancellor of the Exchequer—if the country is ever so ill-advised as to put its affairs into the hands of a mere class government, because that would be the only class government—you will find that the capital levy is the familiar weapon of the uninstructed Labour Chancellor of the Exchequer. Therefore, I submit to the House that a capital levy is not a doctrine that ought to be accepted. May I say a few words upon the parochial part of this Amendment, that is, the question of Imperial Preference. Anti-Imperial Preference is no new doctrine. It is a very old doctrine. It dates, at all events, from the year 1842, for writing on the 12th April of that year the apostle of free imports, Mr. Richard Cobden, said this:
  "The Colonial system, with all its dazzling appeals to the passions of the people, can never be got rid of except by the indirect process of Free Trade, which will gradually and imperceptibly loose the bonds which unite our Colonies to us by a mistaken, notion of self-interest."
  That is the origin of the free imports doctrine. Then came the War. I do not desire to indulge in rhetorical periods with regard to what the men of the Dominions did for us in the War. We know it and we all recognise it. At all events, it stultified the boast of Mr. Richard Cobden that the Colonial system wanted getting rid of. They came over here, they fought for us, bled with us and showed themselves an integral part of the Empire. That being so, who are the Jingoes? The Jingoes are people who wave flags and shout Imperial sentiments.
  Lieut.-Commander KENWORTHY: And "Hang the Kaiser!"
  Sir E. WILD: The Jingoes are on the benches opposite. Those are the gentlemen, perfectly honest gentlemen, that wave the flags. [An HON. MEMBER: "You are beating the drum!"] They are quite content to accept what the Colonies have done for us. They are quite content that certain Orders of Merit should be given to their leaders. They are quite content that there should be these demonstrations through the streets, and that we should cheer them. They are the Jingoes. We are the practical
  328
  people who say, "You ask for something. It is not much. Not only have you asked for something, but you have given something all these years." [Laughter.] It is not a matter for ribald jest,
  Mr. RAFFAN: They have never asked for this.
  Sir E. WILD: With all respect, they have asked for it at Colonial Conference after Colonial Conference, and the hon. Gentleman ought to know it. They asked for it at the Imperial Cabinet. They have given us a Preference, and they have said to us, "Give us something in exchange." Although it may be a very small matter, it is a question of principle, and, speaking with all humility and earnestness, I say that the Mother Country cannot do better than answer the call of her kith and kin. who have done so much for her. I am not presuming to argue with hon. Gentlemen opposite. I am quite convinced that they are impervious to any argument—[An HON. MEMBER: "From you! "]—from me or anybody else. They are the only people who have learned nothing whatever from the lessons of the War—[HON. MEMBERS: "Hear, hear! "]—and they agree.
  Mr. J. JONESmade an observation which was not heard in the Reporters' Gallery.
  Mr. SPEAKER: I must ask the hon. Member not to keep up a running commentary. He is not interrupted when he speaks himself, and he might extend the same courtesy to others. He is not asked to agree with everything he hears.
  Sir E. WILD: I wish to address a word to members of the Coalition Government and its supporters. The electorate, rightly of wrongly, has given the Government of the country for the next five years to the Coalition Government, under the Prime Minister and the Leader of the House, and it becomes an important question to us as to what we are going to do with the great charge which has been submitted to us. The foundation of the Coalition was a letter addressed by the Prime Minister to the Leader of the House, in which he said:
  "I have already accepted the policy of Imperial Preference as defined in the resolution of the Imperial Conference to the effect that a preference will be given on existing duties and on any duties which may subsequently be imposed."
  He went, on to point out that it did not include a tax on food except in so far as there were existing duties. He dealt with

  329
  the question of key industries, and said he would be no party to the dumping of cheap foreign goods into this country. He said:
  "Without regard to pre-war views or to prewar speeches, without any regard to theoretical opinions about Tariff Reform or Free Trade—"
  and upon that basis we Coalition candidates fought the election. That was, I hope, not a scrap of paper. It was a considered agreement between the leaders whom we elected to support, and without whose support many of us would not be Members at all. There is one thing which hon. Members opposite cannot realise. It was an attempt of patriotic candidates riot to try to play to discontent, as was done at Hull, not to try to play down to the masses, not to try to make capital out of the natural reaction and recrudescence that comes with war. I quite understand that people who cannot learn from the war will not believe in political honour. At all events it was an attempt, and an honest attempt I believe on the part of most of us, to bury the hatchet of mere parochial partisan differences and to say "cannot we, in God's name, begin our political career on 4th August, 1914." In these circumstances what is the duty of the two wings of the Coalition? There is a duty on my wing not to regard this proposal as a triumph for Tariff Reform. We ought not to say ''this is a splendid idea that a Radical Prime Minister should introduce Prefer-once proposals. "That is not the view that I take, and that I believe a great majority of my party take. At the same time the Liberal Coalitionists have the rather elderly siren singing to them on the rocks of Newcastle in these words:
  "I am speaking now to all Liberals, not only in Newcastle, but throughout the length and breadth of the. country, to all Liberals and to all Free Traders, that they will reject to the utmost and by every means in their power the proposals for what is called, as I think with very little reason, Imperial Preference from the point of view of principle."
  They have got to choose. There is the Odysseus of the Liberal Coalitionist. It is the old choice between Circe and Penelope. Make the choice. A man who, with that clear understanding put upon paper and put to the electorate chooses to vote against Imperial Preference, the sooner he goes over to follow the red shirt of Garibaldi the better.
  There has been mention in the Press of the so-called Centre Party. A number of now Members have formed themselves to-
  330
  gether for the purpose not of formulating a policy, not of political advancement, not for the purpose of making a cave or a group, but because, being new Members and, therefore, somewhat unsophisticated, they have believed the things they said at the election. I know it is perfectly ridiculous to old Members to say it, but we believe that this War has made a profound difference in the political point of view, and that we have for the first time got a great and a unique opportunity of burying the hatchet of parochial differences and coming together to face these questions de novo. Let me ask any honest man to put this question to himself. Supposing there had never been a Richard Cobden, a Newcastle program me, or a Newcastle speech, and you were asked now, for the first time, "You have a duty on tea of Is., will you give the Colonies, who have done so much for you a 2d. advantage? You have a. duty on sugar of which 7 per cent. comes from the Colonies. Will you improve their trade and give them a better opportunity by giving them a one-sixth preference? "The same with tobacco. You would do it in a moment. In these circumstances we, at all events, are banded together for this purpose, not to lead, but to be led, and to tell the leaders of the Coalition Government, whether they be Liberals or Conservatives, we are prepared to support a policy of Colonial Preference or any other matter that makes for Imperialism of social reform.
  Mr. HOLMES: The Chancellor of the Exchequer made a most lucid statement in his Budget speech on the country's indebtedness, the estimated expenditure for the current year, and the means by which he proposed to raise the necessary revenue. But having built the structure of his Budget, he turned himself into a camouflage-artist and proceeded to paint it with the gaudy colours of Colonial Preference and Protection, with the result that most people only see the outside colours and regard the Budget merely as one that will introduce Colonial Preference into this country. I want to take the House back to the Budget itself, and to remind them that the Budget is a means of raising revenue, and to ask them to discuss other things besides Colonial Preference. Before the War this country occupied a unique position. We had a. small Army and an invincible Navy. The workers were badly paid, but we were preparing to pay them better. We were lightly taxed, we had cheap food, and the

  331
  other requisites of comfort were all cheap. We had a huge trade and a small debt. To-day we find ourselves with a net debt, after deducting the amounts due to us from foreign countries and our Allies, of £6,000,000,000. Our trade is restricted, food is dear, and other requisites of life are at prohibitive prices. The workers are really no better off, because the cost of living has in most cases gone up in the same ratio as the increase of wages, end in many cases they are relatively worse off. Our taxes are a burden- We have a large conscript Army, but still, thank God! an invincible Navy. It is a disappointment that under these circumstances, with this huge debt, with enormous expenditure, and with industrial unrest such as the country has never known, the Chancellor of the Exchequer did not seize the opportunity of lending a hand in trying to allay the industrial unrest which prevails in our midst, and endeavour to provide for getting rid of this enormous debt which is round our necks.
  I would like to show how the Chancellor of the Exchequer in his Budget might have assisted in getting rid of the industrial discontent. The discontent is not confined to trades where strikes have taken place or have been threatened. The unrest is throughout every trade, business and industry in the country. Men and women can see huge profits being made in many businesses and they feel that the employers are getting more than their fair share of the fruits of industry. They feel that to a certain extent their labour is being exploited and that they themselves are not receiving their fair share of the reward. This feeling is uppermost in the minds of the working people of the country at a time when the greatest need of the country is an enormous output. We are going to wage another war, happily one in which no lives will be lost and no blood will be shed, but a great commercial war in which all nations will be against us, both Allied, neutral and enemy. We must have, if we are to wage this commercial war successfully, increased output of the raw materials we possess and of the manufactured articles we create, for two reasons: In the first place, because the nation which produces little prospers little, while the nation which produces most will recover the soonest from the ravages of war; and in the second place, because wages must be kept at the war level. It
  332
  would be a most dangerous doctrine if it was popularly held that wages were higher in times of war than in times of peace. If we pay higher wages and merely maintain the same output the cost of all our manufactured goods will be greater than before and we shall have difficulty in meeting competition in foreign markets. The prosperity of this Kingdom in the future as in the past depends upon our foreign trade. We are a small island with a high ratio of population to the acre. Our home trade really counts for little. The increase of output that we require cannot be obtained while you have the great majority of the people of the country seething with discontent. To wage a successful commercial war we must be united. We can only reach unity—I want to submit this to the House as a basis of taxation—if we lay down as a first principle that every man shall receive a fair share of reward according to the risks, responsibility, ability, and industry which he puts into his job, and that no man should receive more than a fair share.
  There was a moment during the War when there was more discontent in this country than at any other time. The discontent was with regard to food. Women were standing outside the shops in queues, and there was a general feeling throughout the whole nation that there was profiteering in the necessities of life. At that moment the late Lord Rhondda became Food Controller, and with the assistance of the right hon. Gentleman the Member for the Platting Division of Manchester (Mr. Clynes), he succeeded in a few months in getting rid of the discontent. He did it in two ways: First, by laying down the rule that we should share and share alike—whether you lived in a castle or a cottage you had the same amount of meat; second, by seeing that no man who dealt in the necessities of life should make more than a fair profit. As soon as those two things were established the public realised that the fair thing was being done, and discontent vanished like a morning mist. I would suggest that the present discontent in the industrial world would, to a large extent, disappear, and the increased output which we require would result if we could convince the industrial workers that profits were apportioned on the principle which I have suggested. This could be done in two ways. It could be done by a complete system of profit-sharing, but that would require great consideration and

  333
  great discussion, and it would not be proper to discuss it here to-night. The other way is by means of taxation. The Chancellor of the Exchequer has had a great opportunity and great power to do as I say, and to allay industrial unrest. He could have devised a scheme by which taxes would approximately fall on every man so that the amount of income which would remain to him would be very nearly the amount that he should have in accordance with the proportion of the services which he has rendered to the trade of the nation. But instead of that the Chancellor of the Exchequer has reduced the Excess Profits Duty without any alleviation or abatement to the people who have small incomes, with the result that instead of assisting to allay industrial unrest, he has done something to add to it. I know that there are various side issues with regard to the Excess Profits Duty, but substantially that is true.
  I wish to say something about Excess Profits Duty. For the last three years I have spent most of my time in settling on behalf of companies and firms the amount of Excess Profits Duty which they should pay to the Inland Revenue. It amounted, on the average, to about £100,000 a week for over throe years. This has given me an opportunity of seeing something of the effect it has had on trading concerns, and it has also brought me into personal contact with many of the officials of the Inland Revenue. I would like to take this opportunity of paying a tribute to the manner in which the Inland Revenue officials, from the higher officials of Somerset House, to the youngest surveyor, have carried out the tremendous task. With increasing work and a decreasing staff, with new-duties being constantly thrust upon them, they have, by common sense, industry, and tact, succeeded in collecting a revenue for successive Chancellors of the Exchequer, and they deserve a warm tribute of praise from this House. Excess Profits Duty may have been a ready means of raising revenue during a difficult period like the War. Excess Profits Duty is a thoroughly bad tax, and for three reasons. The first reason is that it has caused great extravagance. A business was called upon to make some expenditure. The argument everywhere was, ''When the Government pays 60 or 80 per cent. of it, why worry about it?" In the second place, it has encouraged profiteering. When the Excess Profits Duty was 80 per cent., men have seen that if they wanted to earn £1 for
  334
  themselves they had to put £5 on the price, and at a time when the demand was always greater than the supply there has been no hesitation about doing so. A great deal of the high prices from which we have suffered during the past two years in this country has been due to the operation of Excess Profits Duty. In the third place, Excess Profits Duty acts as a check on new businesses. By the arrangement of a profits standard it gives the established business a great pull over any new business. At a time like this we want to encourage men to start new businesses, but they will not do it because of this duty. The difficulty has been to a certain extent alleviated by the reduction to 40 per cent., but the old-established business has still a great pull, and this particularly applies with regard to the men who have given up three or four of the best years of their lives to the service of the nation as soldiers—men who are now desirous of starting in business and find they are handicapped from the very outset because their rivals have a profits standard and they have to start with none, in advocating the abolition of the Excess Profits Duty it may appear that I am differing from some of my Friends on my right. But there is really no difference between us. They have no desire—in fact, the hon. Member for Wednesbury said so—that Excess Profits Duty as such should remain. What they desire is that if the 80 per cent, to 40 per cent, reduction is to take place, presumably putting additional profits into the pockets of the shareholders and wealthy men, there should be a corresponding concession to those at the other end of the scale. I submit that Excess Profits Duty should be abolished altogether, because it promotes extravagance, assists profiteering, creates monopolies, and discourages the opening of new businesses, and that the Chancellor of the Exchequer should submit a new system of taxation by which each man should be rewarded according to the services he renders.
  It is necessary for us to build up a big trade. Those who have capital or labour to give should devote either or both to the service of the nation, but we are all human and must have an incentive. All manners of new businesses are required, capital must be risked and men of brains must be encouraged to indulge in enterprises. You cannot get that done unless you give them an incantive, and the

  335
  capitalists ought to be rewarded according to the risk which they run, and the organisers and supervisors of labour should be rewarded in accordance with the services which they render. Do not let us forget, notwithstanding the capital which is provided and the brains which enter into the organisation and supervision of these things, the ultimate result will depend upon, the co-operation of those who give their labour to whatever concern it may be. Those who toil and carry out the plans of others will only do their best if they are convinced that the man who provides the capital land the man who provides the labour are getting their fair share for what each has don and not more than their fair share. Therefore, I submit that instead of reducing the Excess Profits Duty the Chancellor should have substituted a Profits Tax by which capital would have been rewarded according to the risk which it runs and brains would be rewarded according to the way in which they developed the business, and they would have been encouraged to go on developing the business and profiteering would be entirely done away with; and if taxation were so enacted that surplus profits would come to the State and to the common good, then I suggest that much of the prevailing discontent would disappear.
  I desire to say a few words in regard to the capital levy. [HON. MEMBERS: "Divide! "] I hope one may say on the Finance Bill what one thinks, as this is the only opportunity of expressing our views on matters of taxation. If the Government only give one day, while in the past they gave four, five, six, or even ten days—[HON. MEMBERS: "No!"]—one surely must be allowed to say what one has to say. I frankly confess that at the General Election I refused to submit to the question of a capital levy, but the more I think about it the more I feel that it is, at any rate, a subject worthy of the most serious consideration. I hope hon. Gentlemen will not dismiss it without full thought and inquiry. I found in discussion lately that very many business men are in favour of it if, and this applies entirely to my own view, the capital levy is a clean cut and will not recur. [HON. MEMBERS: "Oh, oh !"] It is all very well to jeer, but we may as well discuss this thing. It is not put forward as a means of taking from certain people by those who have not. The reason why busi-
  336
  ness men favour it is because in their own businesses, if they have a heavy debt they try to get rid of it as soon as possible, and they feel that it should be the same with the nation, and if we have got a heavy debt let us get rid of it if we possibly can. What are the objections to it? One chief objection put forward several times to-day has been that it would be confiscation and repudiation of the National Debt. That argument surely ignores the elementary relationship between the individual citizen and the State. What is the net wealth of any nation? It is the possessions which belongs to the State—its land and buildings, Suez Canal shares, etc., the value of the property which belongs to the municipalities less the debs which they owe, together with the individual fortunes of the citizens of the country, from which must be deducted the net National Debt. If I may be allowed to ignore what belongs to the State and the municipalities, the net wealth of the nation is the combined fortune of every individual, less the National Debt, and therefore, if a man thinks that, because he has property and securities of £100,000, he is worth £100,000, he is surely making a mistake, because he is liable for his proportion of the National Debt, and if the combined fortunes of the individuals of the nation are £24,000,000.000 and the National Debt is £6,000,000,000, surely every man whose fortune goes to make up the £24,000,000,000 is liable for one quarter of the National Debt! It is the same in the case of a company or firm. If a firm has liabilities, the partners are liable in accordance with their capital in the business, and in the same way in the nation each separate individual is liable for his portion of the National Debt. Then a capital levy would simply mean that he would be dealing off the mortgage which always exists upon his own fortune straight away.
  I am going to give three reasons in favour of a capital levy. [Cries of "Divide!"]The first is that we borrowed our money when prices were high, and if we wait until prices have fallen and things get normal we shall repay far more money than we borrowed. The second point is that we should save at least two or three hundred millions a year interest on the National Debt, and be able to reduce the Income Tax to 3s. in the £; so that if anyone who has earned income as well as unearned income will work it out

  337
  for himself he will find that if one-fifth of his capital was taken from him, but that for the future he only paid 3s. in the £ Income Tax instead of 6s., he would have more retainable income every year than he had got before the capital levy. The third reason, and it is my last. [Cries of "Divide!"]
  Lieut.-Commander KENWORTHY: Parliament is on its trial. [Interruption] Parliament is on its last trial!
  Mr. SPEAKER: I must ask the hon. and gallant Member for Hull not to keep making interjections.
  Mr. HOLMES: The third reason I want to give in favour of a capital levy is that it would stop extravagance. At the present moment we are living in a false atmosphere of prosperity. Everybody is spending. If a man were asked to pay one-fifth of his capital straight away, it would immediately make him economise. It would certainly make him tell his wife to economise. The result would be that, if a man with £50,000 had to pay £10,000 over to the nation, leaving him with £40,000, it would alter his whole view of expenditure and his mode of living. He would immediately save and take other steps to get back to his £50,000 position as soon as possible. I suggest to the Government that the best way to correct the extravagant idea of spending and not saving is to impose a capital levy. It has been suggested by some hon. Members that this suggestion of a capital levy is merely made by people who have nothing to lose, in order to take from those who have something to lose, but you will find that many men with large possessions and
  large incomes are perfectly prepared to face the clean cut to get rid of our national debt. I hope hon. Members, instead of dismissing it with a laugh, will consider it fully. I hope the right hon. Gentleman, after possibly he has finished his borrowing, so far as the War is concerned, will have an inquiry, because I believe that if we did it then, if we did get rid of the National Debt, if we did get our Income Tax down to a reasonable limit, if we grappled bravely with this great problem, coming generations would recognise the unselfishness of our" action.
  Mr. CHAMBERLAIN: May I interpose with a suggestion as to the course of Debate to meet the convenience of the House generally? The House is aware that this Bill is not subject to the Eleven o' Clock Rule, and the Government might ask the House to sit after that hour, but I see many Members want to speak upon the Second Reading, and I am unwilling to press the House to sit late. I suggest, therefore, that we should take a Division on the Amendment now, and that we should resume the discussion on the Motion for the Second Reading tomorrow, with the understanding that we come to a decision upon it about seven o'clock. I believe that that would meet the general convenience of the House, and I hope it will be accepted by the House.
  Sir D. MACLEAN: As far as we are concerned, that arrangement is one which we will gladly fall in with.
  Question put,
  "That the words proposed to be left out stand part of the question."
  The House divided: Ayes, 317; Noes, 72.

  Division No. 32.]

  AYES.

  [10.45 p.m.

  Adair, Rear-Admiral

  Bellairs, Com. Carlyon W.

  Buckley, Lieutenant-Colonel A.

  Adkins, Sir W. Ryland D.

  Bennett, T. J.

  Bull, Rt. Hon. Sir William James

  Ainsworth, Capt. C.

  Bentinck, Lt.-Col. Lord H. Cavendish-

  Bunion, Col. Rowland

  Allen, Col. William James

  Betterton, H. B.

  Burgoyne, Lt.-Col. Alan Hughes

  Archdale, Edward M.

  Big land, Alfred

  Burn, Col. C. R. (Torquay)

  Armitage, Robert

  Birchall, Major J. D

  Butcher, Sir J. G.

  Ashley, Col. Wilfred W.

  Blades, Sir George R.

  Campbell, J. G. D.

  Astbury, Lt.-Com. F. W.

  Blair, Major Reginald

  Campion, Col. W. R.

  Astor, Major Hon. Waldorf

  Blake, Sir Francis Douglas

  Carlile, Sir Edward Hildred

  Bagley, Captain E. A.

  Blane, T. A.

  Carter, R. A. D. (Manchester)

  Baird, John Lawrence

  Boles, Lieut.-Col. D. F.

  Cautley, Henry Strother

  Baldwin, Stanley

  Borwick, Major G. O.

  Cayzer, Major H. R.

  Balfour, George (Hampstead)

  Boscawen, Sir Arthur Griffith'

  Cecil, Rt. Hon. Evelyn (Aston Manor)

  Banbury, Rt. Hon. Sir F. G.

  Bottomley, Horatio

  Cecil, Rt. Hon. Lord H. (Oxford Univ.)

  Banner, Sir J. S. Harmood

  Bowyer, Capt. G. W. E.

  Chamberlain, Rt. Hon. J. A. (Birm.,W.)

  Barker, Major R.

  Boyd-Carpenter, Major A.

  Cheyne, Sir William Watson

  Barlow, Sir Montague (Salford, S.)

  Brassey, H. L. C.

  Child, Brig.-Gen. Sir Hill

  Barnston, Major Harry

  Breese, Major C. E.

  Clay, Capt. H. H. Spender

  Barrand, A. R.

  Bridgeman, William Clive

  Clough, R.

  Barrie, H. T. (Londonderry, N.)

  Brittain, Sir Harry E.

  Coates, Major Sir Edward F.

  Beck, Arthur Cecil

  Britton, G. B.

  Coats, Sir Stuart

  Beckett, Hon. Gervase

  Brown, Captain D. C. (Hexham)

  Cobb, Sir Cyril

  Bell, Lieut.--Col. W. C. H. (Devizes)

  Buchanan, Lieut.-Col. A. L. H.

  Cockerill, Brigadier-General G. K.

  Colvin, Brigadier-General R. B.

  Kidd, James

  Raw, Lt.-Col. Dr. N.

  Compton-Rickett, Rt. Hon. Sir J.

  King, Com. Douglas

  Rawlinson, John Frederick Peel

  Conway, Sir W. Martin

  Kinloch-Cooke, Sir Clement

  Reid, D. D.

  Coote, Colin R. (Isle of Ely)

  Knight, Capt. E. A.

  Remer, J. B.

  Cope, Major W. (Glamorgan)

  Lane-Fox, Major G. R.

  Rendall, Athelstan

  Cory, J. H. (Cardiff)

  Larmor, Sir J.

  Richardson, Albion (Peckham)

  Craig, Col. Sir James (Down, Mid.)

  Law, A. J. (Rochdale)

  Richardson, Alexander (Gravesend)

  Craig, Lt-Com. N. (Isle of Thanet)

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

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

  Craik, Right Hon. Sir Henry

  Lewis, Rt. Hon. J. H. (Univ. Wales)

  Robinson, T. (Stretford, Lancs.)

  Croft, Brig.-Gen. Henry Page

  Lewis, T. A. (Pontypridd, Glam.)

  Roundell, Lt.-Col. R. F.

  Curzon, Commander Viscount

  Lindsay, William Arthur

  Rowlands, James

  Davies, Major David (Montgomery Co.)

  Lister, Sir R. Ashton

  Royden, Sir Thomas

  Davis, T. (Cirencester)

  Lloyd, George Butler

  Samuel, A. M. (Farnham, Surrey)

  Dean, Com. P. T.

  Locker-Lampson G. (Wood Green)

  Samuel, Rt. Hon. Sir H. (Norwood)

  Denison-Pender, John C.

  Locker-Lampson, Com. O. (Hunt'don)

  Samuel, S. (Wandsworth, Putney)

  Dennis, J. W.

  Lorden, John William

  Sanders, Colonel Robert Arthur

  Dewhurst, Lieut.-Com. H.

  Lort-Williams, J.

  Sassoon, Sir Philip A. G. D.

  Doyle, N. Grattan

  Loseby, Captain C. E.

  Scott, A. M. (Glas., Bridgeton)

  Duncannon, Viscount

  Lowther, Major C. (Cumberland, N.)

  Seager, Sir William

  Du Pre, Colonel W. B.

  Lyle, C. E. Leonard (Stratford)

  Seddon, J. A.

  Elliott, Lt.-Col. Sir G. (Islington, W.)

  Lynn, R. J.

  Seely, Maj.-Gen. Right Hon. John

  Elliot, Capt. W. E. (Lanark)

  Lyon, L.

  Shaw, Capt. W. T. (Forfar)

  Eyres-Monsell, Com.

  M'Curdy, Charles Albert

  Simm, Col. M. T.

  Falcon, Captain M.

  M'Donald, D. H. (Bothwell, Lanark)

  Smithers, Alfred W.

  Falle, Major Sir Bertram Godfray

  Mackinder, Halford J.

  Sprot, Col. Sir Alexander

  Farquharson, Major A. C.

  M'Laren, Hon. H. D. (Bosworth)

  Stanier, Capt. Sir Beville

  Fell, Sir Arthur

  M'Laren, R. (Lanark, N.)

  Stanley, Col. Hon. G. F. (Preston)

  FitzRoy, Capt. Hon. Edward A.

  M'Lean, Lt.-Col. C. W. W. (Brigg)

  Stanton, Charles Butt

  Foreman, H

  Macmaster, Donald

  Starkey, Capt. John Ralph

  Forestier-Walker, L.

  McMicking, Major Gilbert

  Steel, Major S. Strang

  Forster, Rt. Hon. H. W.

  McNeill, Ronald (Canterbury)

  Strauss, Edward Anthony

  Foxcroft, Capt. Charles Talbot

  Maddocks, Henry

  Sturrock, J. Leng-

  Geddes, Rt. Hon. Sir A. C. (Basingstoke)

  Magnus, Sir Philip

  Surtees, Brig. Gen. H. C.

  Geddes, Rt. Hon. Sir E. (Cambridge)

  Malone, Major P. (Tottenham, S.)

  Sutherland, Sir William

  Gibbs, Colonel George Abraham

  Manville, Edward

  Sykes, Col. Sir A. J. (Knutsford)

  Gilbert, James Daniel

  Marks, Sir George Croydon

  Sykes, Sir C. (Huddersfield)

  Gilmour, Lt.-Col. John

  Marriott, John Arthur R.

  Talbot, G. A. (Hemel Hempstead)

  Goff, Sir R. Park

  Mason, Robert

  Taylor, J. (Dumbarton)

  Grant, James Augustus

  Mitchell, William Lane-

  Terrell, G. (Chippenham, Wilts.)

  Greame, Major P. Lloyd

  Mond, Rt. Hon. Sir Alfred Moritz

  Thomson, F. C. (Aberdeen, S.)

  Green, A. (Derby)

  Moore, Maj.-Gen. Sir Newton J.

  Tickler, Thomas George

  Green, J. F. (Leicester)

  Moore-Brabazon, Lieut.-Col. J. T. C.

  Townley, Maximillian G.

  Greene, Lt.-Col. W. (Hackney, N.)

  Moreing, Captain Algernon H.

  Tryon, Major George Clement

  Greer, Harry

  Morris, Richard

  Turton, Edmund Russborough

  Gregory, Holman

  Morrison, H. (Salisbury)

  Vickers, D.

  Greig, Colonel James William

  Morrison-Bell, Major A. C.

  Walker, Col. William Hall

  Gretton, Col. John

  Mosley, Oswald

  Walters, Sir John Tudor

  Griggs, Sir Peter

  Mount, William Arthur

  Walton, J. (York, Don Valley)

  Guinness, Capt. Hon. R. (Southend)

  Murray, Hon. G. (St. Rollox)

  Ward-Jackson, Major C. L.

  Guinness, Lt-Col. Hon. W. E. (B. St. E.)

  Murray, John (Leeds, W.)

  Ward, Col. L. (Kingston-upon-Hull)

  Hacking, Captain D. H.

  Neal, Arthur

  Wardle, George J.

  Hailwood, A.

  Nelson, R. F. W. R.

  Warner, Sir T. Courtenay T.

  Hall, Lieut.-Col. Sir Fred (Dulwich)

  Newman, Sir R. H. S. D. (Exeter)

  Watson, Captain John Bertrand

  Hambro, Angus Valdemar

  Nicholl, Com. Sir Edward

  Weston, Col. John W.

  Hamilton, Major C. G. C. (Altrincham)

  Nicholson, R (Doncaster)

  Wheler, Col. Granville C. H.

  Hancock, John George

  Norman, Major Rt. Hon. Sir Henry

  White, Col. G. D. (Southport)

  Harmsworth, Cecil B. (Luton, Beds.)

  Norris, Colonel Sir Henry G.

  Whitla, Sir William

  Harris, Sir Henry P. (Paddington, S.)

  Oman, C. W. C.

  Whittaker, Rt. Hon. Sir Thomas P.

  Herbert, Dennis (Hertford)

  Palmer, Major G. M. (Jarrow)

  Wigan, Brig.-Gen. John Tyson

  Hewart, Rt. Hon. Sir Gordon

  Palmer, Brig.-Gen. G. (Westbury)

  Wild, Sir Ernest Edward

  Hilder, Lieutenant-Colonel F.

  Parker, James

  Willey, Lt.-Col. F. V.

  Hohler, Gerald Fitzroy

  Pearce, Sir William

  Williams, Lt.-Com. C. (Tavistock)

  Hood, Joseph

  Pease, Rt. Hon. Herbert Pike

  Williamson, Rt. Hon. Sir Archibald

  Hope, James Fitzalan (Sheffield)

  Peel, Lt.-Col. R. F. (Woodbridge)

  Willoughby, Lt.-Col. Hon. Claud

  Hope, John Deans (Berwick)

  Pennefather, De Fonblanque

  Wills, Lt.-Col. Sir Gilbert Alan H.

  Hopkins, J. W. W.

  Percy, Charles

  Wilson, Capt. A. Stanley (Hold'ness)

  Horne, Edgar (Guildford)

  Perkins, Walter Frank

  Wilson, Col. Leslie (Reading)

  Horne, Sir Robert (Hillhead)

  Perring, William George

  Wilson, Lt.-Col. Sir M. (Bethnal Gn.)

  Howard, Major S. G.

  Philipps, Gen. Sir I. (Southampton)

  Wilson. Col. M. (Richmond, Yorks.)

  Hughes, Spencer Leigh

  Philipps, Sir O. C. (Chester)

  Winterton, Major Earl

  Hunter, Gen. Sir A. (Lancaster)

  Pickering, Col. Emil W.

  Wood. Major Hon. E. (Ripon)

  Hunter-Weston, Lieut.-Gen. Sir A. G.

  Pilditch, Sir Philip

  Wood, Sir H. K. (Woolwich, W.)

  Hurd, P. A.

  Pinkham, Lieutenant-Colonel Charles

  Wood, Sir J. (Stalybridge and Hyde)

  Illingworth, Rt. Hon. Albert H.

  Pollock, Sir Ernest Murray

  Wood, Major S. Hill- (High Peak)

  Inskip, T. W. H.

  Pratt, John William

  Worsfold, T. Cato

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

  Preston, W. R.

  Worthington-Evans, Rt. Hon. Sir L.

  Jameson, Major J. G.

  Prescott, Major W. H.

  Yate, Col. Charles Edward

  Jesson, C.

  Pretyman, Rt. Hon. Ernest G.

  Yeo, Sir Alfred William

  Jodrell, Neville Paul

  pulley, Charles Thornton

  Young, Sir F. W. (Swindon)

  Johnson, L. S.

  Purchase, H. G.

  Younger, Sir George

  Jones, Sir Edgar R. (Merthyr Tydvil)

  Raeburn, Sir William

  Jones, Sir Evan (Pembroke)

  Ramsden, G. T

  TELLERS FOR THE AYES.—Lord E

  Jones, G. W. H. (Stoke Newington)

  Rankin, Capt. James S.

  Talbot and Captain Guest.

  Jones, J. Towyn (Carmarthen)

  Ratcliffe, Henry Butler

  340

  341

  NOES.

  Acland, Rt. Hon. Francis Dyke

  Griffiths, T. (Pontypool)

  Roberts, F. O. (W. Bromwich)

  Adamson, Right Hon. William

  Grundy, T. W.

  Rose, Frank H.

  Barnes, Major H. (Newcastle, E.)

  Harbison, T. J. S.

  Sexton, James

  Bell, James (Ormskirk)

  Hartshern, V.

  Shaw, Tom (Preston)

  Benn, Capt. W. (Leith)

  Hayday, A.

  Short, A. (Wednesbury)

  Bowerman, Rt. Hon. C. W.

  Hayward, Major Evan

  Sitch, C. H.

  Brace, Rt. Hon. William

  Hirst, G. H.

  Smith, Capt. A. (Nelson and Colne)

  Bramsdon, Sir T.

  Holmes, J. S.

  Smith, W. (Wellingborough)

  Briant, F.

  Irving, Dan

  Spoor, B. G

  Bromfield, W.

  Jones, Henry Haydn (Merioneth)

  Swan, J. E. C.

  Brown, J. (Ayr and Bute)

  Jones, J. (Silvertown)

  Taylor, J. W. (Chester-le-Street)

  Cairns, John

  Kenworthy, Lieut.-Commander

  Thorne, G. R. (Wolverhampton, E.)

  Cape, Tom

  Lunn, William

  Thorne, Col. W. (Plaistow)

  Carter, W. (Mansfield)

  M'Callum, Sir John M.

  Walsh, S. (Ince, Lanes.)

  Davies, Alfred (Clitheroe)

  M'Lean, Neil (Glasgow, Govan)

  Waterson, A. E.

  Davison, J. E. (Smethwick)

  Maclean, Rt. Hon. Sir D. (Midlothian)

  White, Charles F. (Derby, W.)

  Devlin, Joseph

  Morgan, Major O. Watts

  Wignall, James

  Donnelly, P.

  Murray, Dr. D. (Western Isles)

  Williams, A. (Consett, Durham)

  Edwards, C. (Bedwellty)

  Newbould, A. E.

  Wilson, W. T. (Westhoughton)

  Edwards, Major J. (Aberavon)

  O'Connor, T. P.

  Wood, Major Mackenzie (Aberdeen, C.)

  Entwistle, Major C. F.

  O'Grady, James

  Young, Robert (Newton, Lanes.)

  Finney, Samuel

  Rattan, Peter Wilson

  Glanville, Harold James

  Redmond, Captain William A.

  TELLERS FOR THE NOES.—Mr.

  Graham, D. M. (Hamilton)

  Pees, Captain J. Tudor (Barnstaple)

  Hogge and Mr. An old.

  Graham, W. (Edinburgh)

  Richardson, R. (Houghton)

  Question put, and agreed to.

  Main Question again proposed.
  Mr. HOGGE: I beg to move,
  "That the Debate be now adjourned."
  Debate to be resumed To-morrow.

  GOVERNMENT WAR OBLIGATIONS.
  Order read for resuming adjourned Debate on Question [14 th May],
  "That this House doth agree with the Committee in the Resolution 'That it is expedient to authorise the payment, out of moneys provided by Parliament, and, if those moneys are insufficient, out of the Consolidated Fund, of such sums as may be required for giving effect to obligations incurred for the purposes of the present war or in connection therewith, by or on behalf of His Majesty's Government, and for other purposes in relation thereto.' "
  Question again proposed.
  Sir F. BAN BURY: I think it is advisable to postpone the consideration of this Resolution, as I understand that there has been no discussion upon it.
  Mr. BALDWIN (Joint Financial Secretary to the Treasury): I made a very full statement when the Resolution was introduced.
  Sir F. BANBURY: If that be so—and of course I am quite willing to accept the statement of my hon. Friend—I will not object.
  Sir D. MACLEAN: There is one question I want to put to the Secretary to the Treasury, and that is whether the Bill will be so drawn as to admit of wide discus-
  342
  sion on the question of expenditure? My hon. Friend, when I raised the point on the last occasion, said ho would consult the Leader of the House and let me know.
  Mr. BALDWIN: I did speak to the Leader of the House about it. The Bill will be drawn precisely as it was last year, and whatever Debate may take place will be under the guidance of Mr. Speaker. I looked to see if I could find any undertaking given on the last occasion, but was not successful. I noticed that on the Second Reading the question was raised by an hon. Member, but I think what I have said will be quite sufficient for my right hon. Friend.
  Colonel GRETTON: I think we ought to have some financial statement on a Resolution of this kind, or, in the absence of some estimate of the expenditure involved in the Bill, we ought to have reasons given us why the estimate cannot be presented. There is nothing in this Resolution which explains that point, and I would ask the hon. Gentleman if he cannot give us some information in regard to it,
  Mr. BALDWIN: My hon. Friend was probably not in the House when the Committee stage of this Resolution was taken, but I then gave figures concerning the new obligations. Perhaps my hon. Friend will take his mind back to the occasion of the last Financial Resolution—in July of last year, I believe it was—when the same point was raised by Mr. Handel Booth, the then Member for Pontefract, and by Mr. Watt, the then Member for one of the Divisions of Glasgow. They were both

  343
  satisfied with the explanation I then gave, that it was impossible to give any figures to insert in the Resolution, but I gave an undertaking on the Committee stage of this Resolution last week that on the Second Reading I would give a statement of the present position of our existing war obligations.
  Bill ordered to be brought in upon the said Resolution by Mr. Chamberlain, Sir E. Pollock, and Mr. Baldwin.
  GOVERNMENT WAR OBLIGATIONS BILL,—
  "to make provision with respect to Obligations incurred by or on behalf of His Majesty's Government for the purpose of the present War or in connection therewith," presented accordingly, and read the first time; to be read a second time upon Monday next, and to be printed. [Bill 82.]
  The remaining Orders were read, and postponed.

  HAWKER-GRIEVE ATLANTIC FLIGHT.
  Motion made, and Question proposed,
  "That this House do now adjourn."—[Mr. Pratt.]
  Captain WEDGWOOD BENN: I should like to take this opportunity of asking the Under-Secretary to the Air Ministry whether he has any news of Major Hawker; and secondly, can he give the House some account of what assistance was rendered to Major Hawker by the Air Ministry? Personally, I am sure that the Air Ministry showed itself very helpful in this matter, but we should like to know what assistance was rendered in the way of information as to weather and winds, and more particularly as to facilities for the reception of wireless messages which Major Hawker might have sent, and for sending which his machine was equipped. The next point—an important point, and more urgent—is to ask the Under-Secretary whether he will tell us what steps the Air Ministry, in conjunction with the Admiralty, has taken since the presumed disaster to Major Hawker, to assist in the rescue of this very gallant airman?
  The UNDER-SECRETARY of STATE for AIR (Major-General Seely): I deeply regret to say that, up to a late hour, we have had no news of Major Hawker and Commander Grieves, who made this most gallant attempt to cross the Atlantic. There is always a possibility that they may have been picked up by some passing vessel not fitted with wireless. Therefore, there is still some hope, but to a few minutes ago there was no news. With regard to the question as to what steps we took beforehand, as soon as we knew that any competitors were ready—although this, of course, was in no sense a Government enterprise, as I stated in this House—the Air Ministry took the view that they should enjoin caution upon all concerned rather than in any way encourage them to this most gallant and hazardous enterprise—we appointed' an officer to be on duty night and day to apprise the necessary persons the moment the flight was commenced. In accordance with' the plans we had made, yesterday the officer apprised the Admiralty, who, I would like to say, throughout this business have given every assistance in their power. Short of stringing boats across the Atlantic, which, with its 2,000 miles of northern sea, would have been an almost impossible venture—the ships are not available—the Admiralty did everything in their power to make this hazardous enterprise less dangerous. We informed the Marconi Company and also the Admiralty. The wireless stations sent messages to every ship on the route, giving the time of departure, the name of the aircraft that had started and the code word previously arranged, and urged upon all ships to look out for wireless messages and also to look out for the airmen. The preliminary steps taken, about which my hon. and gallant Friend asked me particulars, were to furnish every possible information with regard to the weather and all meteorological information that was available, and to furnish all assistance with regard to instruments. Whatever instruments they wanted for the purpose we enabled them to secure. We warned beforehand all vessels to be on the look out for this prearranged signal.
  Captain BENN: Was not a wireless communication made by Major Hawker, and, if so, by whom was it received?
  Major-General SEELY: I was saying that we made all the arrangements we could beforehand. My hon. and gallant

  345
  Friend and the House will be much more interested to know that I think we took every possible step in co-operation with the Admiralty, short of putting a large proportion of the Fleet on the millions of square miles of sea involved in an enterprise of this kind. My hon. and gallant Friend wants to know if any message was received. No message, so far as we can ascertain, I have been in consultation with the First Sea Lord quite recently. It is quite possible that in dropping the under-carriage Major Hawker and Commander Grieves may have injured their wireless installation. That is one explanation why no message of any kind has been received. The explanation given by the Parliamentary Secretary to the Admiralty this afternoon is probably the reason why a message was received last night purporting to show that these gal-Lint men had fallen into the sea not far from the Coast of Ireland.
  My hon. and gallant Friend asked me what steps had been taken since it was known that a start had been made and there was reason for anxiety. Yesterday afternoon the available vessels at Queens-town and others from the North of Ireland started out to explore the sea. Since then more vessels have been sent, and although this is not a Government enterprise, and we cannot undertake, with the manifold obligations which the Fleet has to fulfil and the small number of vessels which are therefore available to quarter the sea. As a general rule, every ship of a swift nature has been sent during the last few hours On the chance of finding this most gallant man, who for the first time has dared to attempt to cross the Atlantic.
  Captain BENN: Were any aircraft sent?
  Major-General SEELY: I am glad my hon. and gallant Friend has asked me that question, because last night, when I heard the news, which unfortunately proved to be erroneous, that Major Hawker had fallen into the sea, I went at once to see the First Sea Lord, and Heard from him what measures bad been taken, and, in consultation with him, I directed the available aeroplane squadrons, which of com so were all ready, to place themselves under the orders of the Admiralty at Queenstown, with a view to quartering the sea, in order to see if they could catch sight of the airmen. They tried to start last night, but there was a gale of wind
  346
  and rain and fog, and they were unable to get away. Some tried, but could not see at all. Early this morning some of them started and flew over the sea in most desperately bad weather. They did their utmost but without result. I think one may say everything possible has been done to get trace of these brave men but so far without result. We can only express our tribute of admiration to the astonishing courage of these brave countrymen of ours who have made this first attempt.
  Mr. SEDDON: In view of this very important question that exercises the deepest concern of all Members of the House, I give notice that I will refer to this question of the beer supply to-morrow night.
  Lieut.-Commander KENWORTHY: From what my right hon. Friend has told us, I think the House will agree that energetic steps have been taken since the suspicion was aroused that Major Hawker and the gallant man who accompanied him had come to grief, but I do not think we are quite satisfied that sufficient steps were taken of a precautionary nature before the flight commenced. In answer to a question I put to the First Lord of the Admiralty this afternoon, we were informed that on the Irish coast there was one flotilla leader which was at Queenstown and two destroyers with reduced crews. There was also a number of motor launches and trawlers. The only vessels that were at all suitable for succouring or searching for aircraft that might have fallen into the sea are the flotilla leader and destroyers. Trawlers have very inefficient wireless, and the outlook from them is very small. Usually they are commanded by very gallant men, but they are fishermen and are not used to operations of this character. They are a perfectly novel thing. This attempt to fly the Atlantic is an historical event. Certainly it was undertaken by a private individual, but nevertheless it is a matter affecting the esprit de corps of the whole Empire. It is most desirable that the first man to cross the Atlantic should be a. British subject. Under the circumstances, the least that we could have done would have been to have taken some steps to assist him. We have in the Navy nearly 300 torpedo-boat destroyers, and I cannot accept the explanation that we had not more vessels available than two destroyers at Queens-

  347
  town and one flotilla leader at Kingstown. Moreover, it is common knowledge now that we have installed in Ireland and in America a system—I think it is common knowledge now—which can fix the position of aircraft or any other surface vessel by cross-bearings and directional wireless, and it should have been possible for Mr. Hawker or any other airman attempting this perilous voyage to have made at intervals a spark which could have been taken in by directional wireless. We could then have had a plot of his direction across the Atlantic. This was done by the Germans in giving positions to the Zeppelins that were coming over to attack us, and we might have organised our wireless here in order to supply this assistance. That would have been of value to the airman, and it would have kept us advised of his whereabouts during the voyage. I think that as regards wireless organisation and as regards the vessels to effect a rescue if required, or to guide him to land, we have been remiss, and I hope that the next time this flight is attempted, as I hope it will be attempted again and successfully carried out by an Englishman, that every possible assistance that we can give will be provided by both the Air Ministry and the Admiralty.
  Captain ELLIOT: May I ask if the Air Minister can see his way to prohibit any further attempts to fly the Atlantic in the desperately hazardous conditions which exist at present? It is not fair that any gallant airmen should be lured to their death by the glamour of this great enterprise, with its desperate dangers, as, unfortunately, this trial has proved.
  Major-General SEELY: No, Sir. I do not think the Government would do right to take that step. I have given it, and I need hardly say personally, the most careful thought, and so have the Government, and it seemed to us not right to say that our fellow-countrymen should not take these daring steps, which, as it turns out on this occasion—I hope it may not be—has not been a success. Other feats which have seemed impossible of achievement have been done by men of our race. It is not, I think, the function of the Government to say to men whom we do not control and who are not in our service, "You shall not take these risks." I hope the House will endorse that view. Of course,
  348
  I appreciate the feelings of the hon. and gallant Gentleman who has made this suggestion.
  Colonel PENRY WILLIAMS: Can the right hon. Gentleman tell us what steps the American Government took to protect their airmen when flying from St. John's to the Azores? Had they a line of destroyers out which signalled from time to time the progress of the flight? I understand that that is so, and if it is so I really think we ought to know why our Admiralty did not do something of the same sort. It seems to me that unless our Government took every means in their power to protect these gallant airmen during this flight, which they knew was coming, they have been very remiss.
  Major-General SEELY: I am glad that question has been asked. Not only is the American Fleet freer to act than our own, not being so actively engaged, but, quite apart from that, the conditions of the flights were very different. These gallant distinguished airmen attempted a flight by direct route from America to Europe. The American enterprise, on which we intended to embark during the War as a test flight, was a very much simpler thing. They were flying over more southerly seas to the Azores, a comparatively short flight, little more than half the distance, where the weather at this time of the year is much more certain and the flight could be begun in daylight. It was, therefore, possible to have ships within sight to assist the man, and to enable him to see his way. That course was impossible in the case of the northern flight. In order to reduce the distance to the 1,860 miles you have to fly a great circle, which takes you in the north up amongst the icebergs. To have a string of ships across the Atlantic along the great circle from St. John's to Ireland would involve a tremendous undertaking—keeping the ships up amongst the icebergs waiting seven weeks for an opportunity until the conditions were favourable—which this House would never have endorsed and would have involved an expenditure amounting to millions of money. It had been intended, if the Board had continued under the direction of Lord Weir, that we should do the same thing with the Porte flying boat that the Americans attempted, but it was not considered wise to do it now and I think that

  349
  that was a right decision. But the problem is entirely different here. There was a shorter flight of 1,300 miles, which was done in daylight. The other was done across the great circle and a good deal of the flight from west to east had to be done at night, so that the course suggested could only have been adopted by an immense expenditure, and this is not
  350
  so much a question of money but of the mechanical difficulties, and I have no doubt that the Government were right in saying that for this enterprise they could not ask the State to undertake this tremendous risk.
  Adjourned accordingly at Twenty-two minutes after Eleven o'clock