DUTY OX CORN SPIRITS. (Hansard, 29 April 1830)

The Earl of Malmesbury rose

to present a Petition from a most respectable body of individuals connected with the trade of the country,—he meant the Distillers of the United Kingdom,—to which he entreated, generally, the attention of the House, but more particularly that of the noble Viscount opposite (Lord Goderich), who had been Chancellor of the Exchequer in the year 1825. These petitioners would not have trespassed upon the Legislature were it not for the late circumstance which had come to their knowledge, that it was intended to abrogate a solemn agreement which had been made with them, and to levy an additional duty of 1s. per gallon upon the Spirits they manufactured, without imposing an equal tax upon Rum. The noble Lord then read the following petition:—They state, "That when the respective Duties of 7s. per gallon on Corn Spirits, and 8s. 6d. per gallon on Rum, were imposed, the difference of 1s. 6d.per gallon was, after the most mature considerations on the part of Government, considered as a necessary protection to the manufacture of Corn Spirits in England. That Rum and Corn Spirits being distilled from different materials, are not alike applicable to every purpose. Rum may easily be converted into Gin (an article, in the manufacture of which almost all the Corn Spirits made for consumption in England are used); but Corn Spirits can by no process yet discovered be converted into Rum, consequently it is the preferable Spirit of the two, and it may be produced by the Colonies in any quantity. That Rum not 218 only enjoys the free scope of the home-market, and with the difference of the duty above-mentioned is permitted to be rectified and compounded, but has the exclusive supply of the Army and Navy services requiring 400,000 gallons annually. That Rum, as imported from the Colonies, is already prepared for consumption, and requires no further process; whereas Corn Spirits, after the payment of 7s. per gallon, is unsaleable in England unless it be at a considerable expense rectified and compounded. That in the enjoyment of these advantages, and since the duty has been reduced to 8s. 6d. per gallon, on the average of the last four years the consumption of Rum has increased about fifty per cent. They further submit to your Lordships that the Corn Spirits pay the duty upon the Malt used in their manufacture, and that they are sometimes made from Malt alone; this duty the distiller has to pay in addition to the Spirit duty of 7s. per gallon. That as long as a protecting duty is imposed on Corn for securing the interest of the landholder, the Corn distillery pays nearly double the price at which, without the payment of any duty, he could import his Corn from the Continent. That this duty at present amounts to nearly 1s. per gallon on the cost of his Spirits. That the Corn distiller suffers great disadvantages from the Legislative restraints imposed on his process of manufacture; for securing the Revenue he is subjected to a mode of work accompanied by restrictions unknown in the West Indies, and which to him are daily and constantly the source of much injury, vexation, and expense. That in order to comply with these restrictions, and in consequence of the new and important changes made in the Distillery laws of 1825, the distillers, in altering and remodelling their premises, have been compelled, without any corresponding advantage to themselves, to expend more than half a million; to uphold which their annual charge for waste and capital, and wear and tear have been greatly augmented and which, if the trade were to be overthrown, would prove nearly a total loss. They state that this alone, which cannot be met by any corresponding disadvantage on the part of the Colonies would entitle them to the protection of your Lordships. That by the trade of the Corn distillers alone the consumption of Corn in the United Kingdom has arrived at 1,400,000 quar- 219 ters annually, thereby affording a ready and sure market for all descriptions of inferior or damaged Grain which is unfit for malting. During the present season Barley of this description, to the extent of many hundred thousand quarters, has found a vent through this channel, which, under other circumstances, must have been left useless in the hands of the grower, the quantity of damaged Bailey this year being more than could have been consumed through the usual channels in which such a description of Corn is sold. They therefore urge if the proposed increase of 1 s. per gallon on Corn Spirits should be made without a corresponding increase on Rum, the consumption of Corn Spirits in England will be completely superseded by the introduction of Rum." His Lordship then proceeded to say, that in the year 1825 the noble Lord opposite, after taking considerable pains to obtain an accurate knowledge of every fact connected with the manufacture of Rum and Corn Spirits, had adopted what he believed was an equitable principle of dealing with each commodity. The noble Viscount reduced all the old duties, and settled the sum of 1s. 6d. per gallon as the proportion of preference which Corn Spirits ought to have over Rum in the payment of duty. Now the first question to be asked was, whether any thing had since occurred to take away two-thirds of the allowance which had been deliberately, and, he repeated, after the most just and mature consideration, allowed to British Corn Spirits. The petitioners, after enumerating the advantages which Rum had, from the manner in which it could be compounded and rectified, and from its general use in the navy, stated with truth that Rum was imported already in a perfect state, and prepared for prompt use, while British Spirits must be rectified and compounded before their use. This they estimated as equal to a tax upon them of 6d.—some say 10d.—a gallon; but, at all events, 8d. was a fair medium. They were likewise subject,—and this to him appeared a most important ingredient in the consideration of their case—to the operation of the Corn-laws. The distillers could not buy foreign corn without paying the high duties which were imposed upon the article for the protection of home agriculture; this, at least, affected them to the amount of 1s. a gallon, making 1s. 8d. in these two branches alone. The English distiller was likewise obliged to 220 use in his manufacture a considerable quantity of malt on which he had to pay duty; while in Scotland a malt drawback was allowed. 9,000,000 of gallons, or something more, was the quantity of Spirits distilled in Scotland, a portion of which (for it could not all be consumed there) must find its way into England. Reverting to the arrangement of 1825, it was important to consider that upon the faith of its permanency the distillers had expended above 250,000l. upon alterations which were imposed upon them by the arrangements then made. Some idea might be formed of the degree to which they were exposed to restrictions from this simple fact,—that the Acts of 1825 was accompanied with sixty-two folio pages of regulations, exposing the distiller at every step to the risk of heavy penalties, from which no man's memory or care could enable him constantly to protect himself; and from all these the manufacturer of Rum was free. The respectable individuals who had petitioned would be most willing to compound for a payment of 6d. a gallon to get rid of these irritating and dangerous, as well as unnecessary restrictions. The items he had alluded to made the advantages in favour of the manufacturer of Rum equal to 2s. 1d., but to be quite within the mark he would say 2s. After glancing at these details, he would beg leave to impress upon their Lordships his own general view of the subject. The distillers were of great importance to the British agriculturist, inasmuch as they were consumers of Corn, to an extent of 1,400,000 quarters, and this, too, of a quality for which no other market presented itself, and not adapted for any other use. There had been, not long since, two bad seasons, and the agriculturist derived great advantage from the sale of that kind of corn to the distiller which would have been otherwise useless; and more especially as they were shut out from the purchase of the article of foreign growth. He felt much for the distress of the West-India interest, and would do all in his power to alleviate it; but if that interest turned round, and said they had no protection like the Corn-laws, he should be compelled to reply, that these colonial interests were not without restrictions upon rivals in trade; they had restrictions for their coffee, and against the East Indian sugars. If he were in the confidence of the West-Indian interests, he should not 221 be disposed to recommend them to take the additional duty upon Corn Spirits as a boon for their relief: it would be found in practice quite inadequate, and when in a year or two they next appealed to the Treasury for some more solid protection, they would be told they had received it already, and would be referred to the present intended measure. Instead, then, of having relief doled out to them in this inadequate way, he would recommend them to call for the more substantial assistance of some advantages for their sugars, by means of which they would get them cheaper into the market. The price of the article was 23s. per cwt., the duly was 27s., and not an ad valorem one, but the same on every description of sugars, high and low; and as tea was now a necessary of life used by the poor, while its flavour required sugar, the cheapness of the latter would greatly increase the consumption, and be received as a great boon by these classes of society, who had, he regretted to say, little to spare. Then, again, sec the effect of tampering with Spirits instead of sugar; smuggling would probably be revived by the increase of 14 per cent on the article; it might just amount to a sum sufficient to turn the scale for the smuggler. He (Lord Malmesbury) lived in a part of the country once much troubled in this way, but now happily improved by the establishment of the Preventive Service. If, however, now 50l. or 60l. could be made upon the smuggling of 1,000 gallons of Spirits, the illegal trade would revive, and bring back with it all its dreadful demoralizing attendants which were formerly so revolting. He ought to say, that the distillers would not object to the additional duty, provided it were equally laid upon Rum: he, for his own part, wished the duty was levied on both, for then there would be a chance of diminishing the consumption of ardent Spirits, which was, he knew, a great evil to the community. At all events, he trusted that a change so important to the petitioners, and involving consequences so serious to agriculture, would not be imposed without a previous investigation into the whole circumstances of the case.

Lord Goderich

said, that he was ready to give every information in his power, not only to the petitioners, who were most interested, but with reference to the general principles of policy which were involved in the topics which had been touched upon. 222 In order to explain the principle upon which he had, while in office, acted, when he proposed the alteration of the law respecting these duties, he would state, that in the origin it became necessary to endeavour to take some very decided step to put an end to illicit distillation in Ireland and Scotland, the mischievous consequences of which could only be adequately known to persons residing in the neighbourhood, and to others whose attention was especially called to such occurrences. In Ireland, at the time, it produced something like a civil war between the King's troops and the people, in consequence of the attempts to detect and seize those who were engaged in the illicit trade. In the hope of mitigating that state of things, the duties had been changed twenty times, and the most severe, oppressive, and unconstitutional laws were enacted to abate the evil. All these proved unsuccessful, and the only policy which remained to be tried was that of a great reduction of duty to an amount, that, by withdrawing the obvious motive of the smuggler, would put an end to his traffic, and the train of misery which it upheld. The duty on Corn Spirits was, at the time, he believed, 5s. or 6s. a gallon; in 1823 it was reduced to 2s. 10d. This reduction had its inevitable result of putting an end to the practice of smuggling. But it was then equally clear that a reduction of the duties on British Spirits became necessary, or there would infallibly arise a smuggling of Spirits from Ireland and Scotland, where the duties had been lowered, into England, where they remained at the same rate. The great difficulty was, to ascertain upon what principle the great reduction of duties should be governed. The subject was surrounded with intricacy, and beset with conflicting difficulties; in the two countries there were not only different duties, but a totally different system of managing them. Irish or Scotch Spirits were totally prohibited in the British market; they could not be drunk without an utter violation of the law, the consequence of which was, that when the subject underwent consideration as a whole, it became absolutely necessary to alter the whole frame of the English distillery laws. In the year 1824, the West-India interests were represented, and he believed truly, to be labouring under great difficulties; one great cause was stated to be the inadequately remunerating market they had 223 for Rum, and it was represented that if they could obtain access to the English market, they might then, with the sale of their Rum, make up for the undoubted loss they sustained upon their sugars. The duty on Rum was then 1s. 8d. or 2s. more than the nominal duty on British Spirits. In 1824, he had, while a Member of the other House of Parliament, proposed an alteration of the scale of these Spirit duties. He proceeded then on the principle that the subjects of his Majesty's Colonies were entitled to the same considerate protection as those at home; but it was not till the year 1825 that he was enabled to consolidate the system now sought to be altered; and he thought he had done so upon fair and equitable principles. Two rates of duties were proposed to his consideration, one of 2s. by the English distillers, and one of 1s. by the West-India interest, who said it was all they could well bear. Under those circumstances he conceived he adopted a fair rate when he fixed on 1s. 6d., which was what he might call a split between them. This reduction, as he need not inform their Lordships, was not well received by some parties, who supposed—as he thought at the time, and still thought—quite erroneously, that their interests would be affected by it. It was said that the Revenue, for example, would be injured. Now he at the time expressed his opinion, that the increase of consumption consequent upon a reduced duty would prevent the Revenue suffering to the extent contemplated by some noble Lords in that House, and by other high authorities elsewhere, and he found that he was more than borne out in the sequel. The falling-off in the Revenue, consequent upon the reduction of duty, had been estimated at 600,000l., but he contended that the increased consumption would prevent its being more than half that; and what was the result? Why, more favourable than even he, whose sanguine views had been animadverted upon, had ventured to predict. The falling-off of the Revenue was not, in 1828, more than 200,000l., and last year it was still less, so that no censure, in fairness, could be attributed to his arrangement, so far at least as loss to the Revenue was concerned. No doubt he stated at the time, that if it appeared that the rate which he had fixed upon was objectionable, and that circumstances recommended its being changed, 224 he would not oppose a change, but it was not shown to be objectionable, and therefore he contended there was no ground for departing from his arrangement. Then, with respect to what had fallen from his noble friend respecting a different rate of duty in England and the sister countries, he agreed that too great a difference would only act as a stimulus to the ingenuity of smugglers—a stimulus which, by the way, was by no means necessary, as he might easily convince their Lordships, were he to state to them the sometimes ludicrous stratagems by which those gentlemen endeavoured to elude the law. But though a difference of duty operated thus in encouraging smuggling, he could not readily believe that an increased duty of 6d. on Spirits in Scotland and Ireland would have that effect. He could not, however, speak positively on this point, for want of sufficient data; but it was his opinion, and almost his conviction. If the arrangement against which his noble friend's petition and his accompanying remarks were directed, was intended as a benefit to the West-India interest, he must say, that he could not anticipate much benefit to that body from it, at the same time that he could not admit, with his noble friend, that it would be of no advantage at all to the dealers in Rum. He conceived that a certain quantity of British Spirits would be displaced by the increased consumption of Rum that would be occasioned by the intended change in the rate of duty, and by the amount of that increase would the West-India interest be benefitted. While he stated this, he begged leave to say, however, that he agreed with his noble friend, that a far greater benefit would arise, both to the West-India interest and to the public, from a change in the duty on another staple production of the West Indies—Sugar. His noble friend, when arguing against the reduction of the duty on Rum, assumed it too readily that the difference would go into the West-India proprietors' pocket. This could not be the case: if it Were so, he need not say that the public would be no gainers by the change; and the West-India body would have neither more nor less than a bonus or bounty on their commodities. The fact, however, was, that so far as the consumption of Rum would be increased, would that interest be benefitted, and no further. A great benefit, however, would arise from a 225 reduction—a considerable reduction—of the duty on Sugar, and from equalizing the duties on that from the East as well as from our West India Colonies. By such an arrangement, both interests would be benefitted, the revenue not injured, and the public would be considerable gainers.