HL Deb 14 July 1885 vol 299 cc610-34

My Lords, as certain charges have been made in "another place" by the Chancellor of the Exchequer against the administration of the Vote of Credit for Naval and Military Operations by the Admiralty, I am sure your Lordships will indulge me while I state the facts of the case, and show that, in my opinion, none of those charges have any foundation in fact.

I wish to make one preliminary observation. The Chancellor of the Exchequer spoke of the time that he had spent in examining into this question Your Lordships will be surprised to hear that he has, nevertheless, entirely avoided asking for any information on the subject from the only person who was capable of affording him a full explanation as to the administration of that Vote of Credit. Your Lordships know that Votes of Credit differ very much from ordinary Estimates. An ordinary Estimate is divided under different beads of expenditure; so much is allowed for one branch and so much for another; and the Heads of Departments at the War Office, or at the Admiralty, are responsible that the grants under each head are not exceeded. A Vote of Credit is essentially and entirely different from an ordinary Estimate; it gives a lump sum for a certain purpose, and is not divided under different heads. The reason of the difference is that a Vote of Credit is only conceded by Parliament when the requirements are uncertain and an Estimate cannot be pro-pared. Therefore, it is framed in the general way I have described. It seems to me that, in these circumstances, the responsibility for the administration of a Vote of Credit must rest, and can only rest, with the responsible Heads of the Departments concerned. I happened at the time to fill the Office of First Lord of the Admiralty, and I was the responsible Head of that Department, and responsible for the administration of a part of the Vote of Credit. At that time the probability of war was great, and that was the only justification for a Vote of Credit. Your Lordships will readily understand what the administration of such a Vote for the Navy involved. Care must be taken that the expenditure is right and necessary. There must be care taken that orders are given promptly, and it is necessary in many cases that the orders should be secret. It is essential, moreover, in the administration of such a Vote that the Minister responsible should be a Member of the Government, in order that he may be aware of all those political considerations? which may greatly affect the course of the expenditure. In fact, anyone who will think for a moment on the subject will see that the Head of the Admiralty alone can be responsible for the administration of a Naval Vote of Credit in all its varied aspects. The responsibility, therefore, rested with myself alone. Any information which I received from the different branches of the Admiralty, and from the Accountant General's weekly Reports, which I directed to be furnished to me, was entirely subordinated to the more general knowledge I alone could have of the whole administration of the Vote. In these cir-cumstanoes I say I was the only person who could give the Chancellor of the Exchequer the full information he required. No information was reliable unless communicated by me, or by my instructions. Any demi-official communications between subordinate officers must necessarily have been imperfect. When I heard the statements of the Chancellor of the Exchequer in the House of Commons, I was astonished how it could have happened that he had not asked me for any information on the subject, as I am convinced that an hour or two's conversation between us would have enabled him to avoid the mistakes into which he has fallen. Not only did he not ask me for information, but I received no fair Notice from him that such an attack was to be made in the House of Commons, so that it was impossible for me to ask anyone in the House to answer the attack. Nothing can exceed the courtesy with which my noble Friend (Lord George Hamilton), the present First Lord of the Admiralty, has treated me in this matter. He at once afforded me every facility for seeing the Papers in the case, so that I might make this statement.

What, then, is the charge made? The Chancellor of the Exchequer has ascertained that there may be an excess of expenditure of £850,000 over the Vote of Credit which was laid before Parliament on the 21st of April last; and he has attributed that excess partly to the uncertainty of affairs, but mainly to certain "blunders" which he asserted had been committed.

I must first state the facts of the case. The Vote of Credit was prepared in April, and some expenditure had taken place before that time. It was thought at the time that there was an immediate probability of war. That Vote included, under the head "Remaining Charges in the Soudan and Upper Egypt,"£500,000 for transport—I am alluding only to the naval part of the Vote—and under the head. "Special Naval and Military Preparations,"£2,500,000. Out of that £2,500,000 I arranged with the Secretary of State for War that £200,000 would be at the disposal of the War Office for the provision of mining defences for certain coaling stations and commercial ports at home, leaving at the disposal of the Admiralty £2,300,000. There is no division of that £2,300,000 in the Estimate. I had calculated that out of that sum £500,000 would be spent by the Transport Department of the Admiralty in the hire of merchant ships to be used as cruisers. To show the inaccuracy that pervades the whole statement of the Chancellor of the Exchequer, I may say he has misstated even the foundation of the Vote. He said— Out of the Estimate of £2,800,000, £1,000,000 was allowed for transports, besides a further sum for vessels taken up for ocean cruisers. This was not the case. He continued— Subsequently £80,000 was added to this before the defeat of the late Government. Where the Chancellor of the Exchequer found that piece of information I am quite ignorant. I am unable to explain it, because no such piece of information has ever come to my knowledge. The Chancellor of the Exchequer has, therefore, given an inaccurate statement of the foundation of the Vote.

I wish, as far as the responsibility which rests upon the Admiralty, to distinguish between that part of the Vote which is for transport in the Soudan and Upper Egypt, and that part of the Vote which is for Naval and Military Preparations, because the whole responsibility for the latter part of the Vote rests upon the Admiralty; but as regards the Vote for Transport that is not entirely the case. As your Lordships are probably aware, it is convenient that the Transport Department of the Admiralty should take up ships for the transport requirements of the Army. As respects the cost of taking up those ships and the economical administration of the work of the Transport Department, the Admiralty are responsible; it is their duty to see that the freight paid is at the lowest rate practicable under the circumstances. Further than that the Admiralty cannot be held responsible; moreover, the Admiralty cannot exercise any control over expenditure for transport incurred in India by the Government of India, which, nevertheless, for purposes of account, is charged against the Navy Vote for Transport.

Such was the basis of the Vote of Credit when, in May last, there was reason to believe that our difficulties with Russia might be immediately settled; and Mr. Childers, who was then Chancellor of the Exchequer, asked me to toll him what saving might be effected if peace was assured. From the Reports I received and my own knowledge, I came to the conclusion, in the middle of May, that there might be a saving of £150,000 out of the money allotted to the Navy. But your Lordships know that the negotiations dragged on, and every day's delay in the orders to arrest preparations diminished the amount of the possible savings. On the 28th of May I instructed the Accountant General of the Navy to acquaint Sir Reginald Welby at the Treasury, who had been placed in communication with him by Mr. Childers for the purpose, in the following terms:— You can tell Sir Reginald Welby that it would not be safe to calculate upon any saving upon the Vote of Credit for the Navy. Possible credits"—I omit the particulars as it might not he desirable even now to mention them—"might prevent an excess; but I am by no means assured of this. The delay of the negotiations with Russia has hampered us. When I said some weeks ago that we might save £150,000, it was under the impression that peace was assured and our preparations might cease at once. This, unfortunately, has not been the case. Now, my Lords, I have brought the matter down to the 28th of May, a few days before Mr. Childers made his statement, which was on June 5. I wish to state the figures which were before me at that time. They show that there were incurred at that time liabilities of about £350,000 beyond the Vote of Credit. I had engaged more cruisers than I had expected; and there was another liability, to which I shall have again to allude—namely, the providing of torpedo gear for certain boats. It was my opinion that, if peace was assured, I might save this sum of £350,000; and I believe I might have done so by taking vigorous and immediate action. In the figures before me the pay and victuals for 1,000 men were taken for the whole year, and some of the stores for which Estimates had been made had not been ordered. It was at that time possible to make considerable savings in respect of the chartering of the mercantile cruisers, colliers, and transports; besides other assets which I cannot mention in detail. Thus I came to the conclusion that the liability of £350,000 in excess of the Vote of Credit might have been saved if peace had been assured. That was the basis of the information I gave to Mr. Childers, on which he made his statement to the House of Commons. No one who reads the Papers presented to Parliament can doubt that Mr. Childers was justified in making his calculations on the assumption that peace might be assured; because, at that time, the settlement with Russia might have taken place at any hour.

Such being the facts of the case, I now come to the statements made by the present Chancellor of the Exchequer, the correctness of which I impugn. The first is couched in the following language:— The grave fact which I have to bring before the Committee is that we have now discovered that the Estimate of £2,800,000 presented to the late Government at the time I have stated (the 5th of June) by the Admiralty did not include all the liabilities that had been incurred. So far as I have yet ascertained the error was no less that £500,000' I asked the First Lord to be good enough to furnish mo with the information given to the Chancellor of the Exchequer from the Admiralty. I am unable to find from that information any justification for the statement made by the Chancellor of the Exchequer, and I can assure your Lordships that no such Estimate as mentioned by him was ever furnished by mo or by my authority to the Government. The only statements that were furnished to the Government on my authority were the statement I have read to your Lordships, and a verbal statement to the same effect made by me at a meeting with some of my Colleagues; and this would have been at once explained to him if the Chancellor of the Exchequer had been good enough to speak to me on the subject. I assert that I can imagine no reason for the allegation that at that time the liabilities of the Admiralty were under-estimated by £500,000. I have explained to your Lordships that I calculated we had £350,000 of liabilities beyond the Vote of Credit, but that I expected to save that sum if peace was assured.

Failing to see how the Chancellor of the Exchequer could have made such a statement, it is to my mind still more extraordinary that he could have gone on to speak as he did when he said— and this is the second statement made by him which I have to notice— I hope it will not be supposed that I blame the late Government collectively for this. One right hon. Gentleman in particular did his best to prevent it. In spite of the many and urgent affairs that must have distracted his attention at that moment, the late Prime Minister found time to put his finger on this very blot, and to represent to the Admiralty the urgent necessity for checking an expenditure which, I must say, so far as I have yet been able to investigate the circumstances, appears to me to have been incurred with an absence of method and supervision, to say the least, which is far from creditable to such a Department as the Admiralty. Certainly it is one of the most remarkable characteristics of Mr. Gladstone that he is able to attend to large political questions, and at the same time to master financial details; and it is quite true that Mr. Gladstone instructed Sir Reginald Welby to communicate with the Accountant General of the Navy as to what saving could take place on the Vote of Credit, assuming peace to be assured, and that he noticed especially the possibility of saving money by paying off ships which had been contracted for, but would not in the altered circumstances be wanted. Mr. Gladstone was quite right. If peace had been then assured, we could have reduced our liabilities for cruisers and transports, and so have effected the saving which he suggested; but other liabilities had already been incurred which absorbed this contingent saving. The Chancellor of the Exchequer has, by some confusion of ideas, turned this inquiry by the Prime Minister into a contrast of his economy as compared with assumed Admiralty extravagance. There was no question then of actually reducing any expenditure. The only question was as to the best calculation which could be made of the possible reductions of expenditure if peace had been assured. Peace, as I have said before, was not assured; and the Chancellor of the Exchequer had no right to assume that when the time came I should not have acted as vigorously as Mr. Gladstone could have wished in the direction of economy.

The third accusation made against me by the Chancellor of the Exchequer is still more extraordinary. It is this— I am sorry to add that this is not all…I said the Admiralty had exceeded their Estimate of £2,800,000 by no less than £850,000. This is not all due to the increased cost of transport. It is also due to the fact—although, I think, quite rightly—provision was made in this £2,800,000 for building or purchasing 40 torpedo boats, the Admiralty actually omitted from that Estimate any provision whatever for furnishing these boats with torpedo gear. That was naturally received with a considerable amount of laughter in the House; and the Press have, of course, taken the impression that there has been gross mismanagement by the Admiralty. For instance, The Globe, the next day, said that the Admiralty— Mismanaged in a manner as absurd as it was gross the public service to which the money was applicable. It reads like a passage from a burlesque, that the late Government lavished a huge sum on the construction of torpedo boats, but made no provision for furnishing them with torpedoes. Well, my Lords, this is one of the most extraordinary mares' nests I ever came across. I will explain in a few minutes how this ridiculous mistake occurred. When preparations were being made, it was found desirable that we should get a considerable number of very fast boats to carry quick-firing guns, being armed with which these boats could attack and destroy any of the enemy's torpedo boats which might attack our fleets. I should not like to do any harm to the Chancellor of the Exchequer in retaliation for his attack upon. us; but I should rather like to put him on board a boat armed with torpedoes, in the position of a lieutenant of the Navy, and let one of my gallant friends, who were likely to command our squadrons, order him to attack and destroy a Russian torpedo boat. What would the right hon. Gentleman have done, I wonder? A torpedo runs eight feet below the water, and a torpedo boat draws only six feet of water; and consequently he could not have possibly done any harm with his torpedoes to the torpedo boats which he would have been sent to attack. It was intended that these boats should be used for the purpose of attacking the enemy's boats with quick-firing guns; but they were ordered of such a class that, if peace was assured, they might be utilized as torpedo boats, and it will then be necessary to have torpedo gear for them. That is how the Chancellor of the Exchequer has fallen into his error. Then the Chancellor of the Exchequer says that no provision was made for the torpedo gear in our Estimates. I should like to know how the right hon. Gentleman knows that. If he had asked me, I should have told him that that was one of the liabilities which were before me at the very time I calculated the charges upon the Vote of Credit at the end of May, and when I made the calculation which I communicated to Mr. Childers. Fortunately, I have documentary evidence here, for in the letter from the Accountant General to me, on receipt of which my calculations were made, he informed me that £162,000 more might have to be spent for the provision of this torpedo gear. The Chancellor of the Exchequer has doubtless fallen into this error innocently, because he may have taken Departmental Estimates which did not, and indeed could not, contain the whole of the facts before me. Such a fuss has been made about this torpedo gear question that I wish to make it quite clear. The Chancellor of the Exchequer might ask me why the sum required was not put down in the later Estimates among the other liabilities. The reason was that, being of a frugal turn of mind, before settling what kind of torpedo gear should be bought for these boats, I thought it desirable that a trial should be made, and only after the description of the gear had been settled could a reliable Estimate have been prepared.

I have now answered the three allegations of the Chancellor of the Exchequer, and, I hope, explained exactly how matters stood respecting the Vote of Credit for Military and Naval Preparations when I made my calculations at the end of May. What has been the state of things since that time? Would it have been right for mo to have put any check upon the naval preparations which were actually going on? I do not think I need ask your Lordships to answer that question. If it would have been right for me to make any change in that expenditure, how does it happen that last night Her Majesty's Government asked for a Vote for the whole of the 35,000 men which the late Government intended to ask for when the question between this country and Russia was in its most critical state? Expenditure, of course, went on, and every day rendered it more and more impossible to effect any economy. Therefore, when the end of the month of Juno came, I was not surprised to hear that the whole power of economizing was gone, and that, in all probability, expenditure would have to be incurred in excess of the Vote of Credit. By the courtesy of Lord George Hamilton, I have seen Papers which give me some idea of the state of the liabilities at the present time, and I believe that the excess expenditure on the Vote of Credit for Naval and Military Preparations may be about 400,000. I should think, my Lords, it will probably be more, because of the expenses in regard to cruisers which have been manned and fitted abroad. That is a source of increased expenditure which will probably swell that sum of £400,000, and which would have been almost entirely stopped if peace had been assured at the end of May last. My Lords, if preparations for war continue during more than three months—a condition of things which places extraordinary responsibility upon the Admiralty, upon which Department the main work would have fallen if war had broken out, with the serious duty of protecting our enormous Mercantile Marine—it must be expected that Estimates made three months ago under the expectation that the condition of uncertainty would have shortly ceased will be exceeded.

Having dealt with that part of the Vote of Credit allotted to Naval and Military Preparations, I come to the Vote of £500,000 for Transport Charges in the Soudan and Upper Egypt. The Chancellor of the Exchequer admitted that some excesses of expenditure were to be expected in consequence of the unsettled state of foreign affairs, for which no one could be blamed, and I presume that he meant to refer to these charges for transport. According to the statement which I have received from Lord George Hamilton, I believe there is expected to be a further charge of either £200,000 or £300,000 in respect of the Transport Vote. I have already explained the degree of responsibility which rests upon the Admiralty in respect to it, and I understand part of this excess has been caused by the expenditure in India for the transport of the Indian Contingent, with which the Admiralty have nothing to do, having been larger than was expected. I have only to observe, generally, that in May last I had no reason to suppose that the Vote of £500,000 would be exceeded. I will also say that I believe there is no Government Office which has done its work better than the Transport Department of the Admiralty, which was for many years under the direction of a distinguished officer, Sir William Mends, who was worthily succeeded by Sir Francis Sullivan. These officers have been assisted by a valuable public servant, Mr. Baughan. In the Egyptian Campaign of 1882 and the Soudan Expedition of 1884 that Department did its duty in such a way as to elicit the highest commendation from the Naval and Military Commanders-in-Chief. Where I find that a Department is well conducted, it is my habit to repose complete confidence in it; and this is especially necessary in respect to the engagement of freight, where promptitude in dealing with tenders is very necessary, both for efficiency and economy. On a recent occasion some attacks that were made upon the Department were triumphantly disposed of in the House of Commons, and I have every confidence that the Department has done its work well on the present occasion.

The excess upon the Vote for the Soudan and Upper Egypt and upon that for Naval and Military Preparations accounts, as far as I can calculate, for £700,000 out of the £850,000 which the Chancellor of the Exchequer said was the whole estimated excess upon the Vote of Credit. With regard to the £150,000 difference between those sums, your Lordships will be surprised when I explain that I believe it to consist of an Estimate, I do not know how framed, up to March, 1886, for the maintenance of a larger Force than that which was calculated would be kept in Egypt when the ordinary Estimates for the year were prepared. That Estimate may, or may not, be correct; because it is very difficult to say what Force may or may not be required in Egypt during the rest of the year. If it be true that the Mahdi is no longer alive, that may, of course, make a great difference as to the number of British troops to be kept on the Frontier. But, however this may be, I cannot understand how the Chancellor of the Exchequer could suppose that this charge could properly be put against the Vote of Credit, which can be used for two purposes only—namely —I am quoting the words of the Vote— first, "for Remaining Charges in the Soudan and Upper Egypt," and, second, "for Special Naval and Military Preparations."

My Lords, I have finished what I have to say upon these details; but I beg to impress upon your Lordships that the real question is, whether the expenditure incurred by the Admiralty under the powers given to us by the Vote of Credit has been rightly or wrongly incurred; whether the country will have, or would have had, if war had taken place, the money's worth for the outlay; whether I, as the responsible Minister, have taken such pains as I could, under the circumstances of the case, to order what was necessary, and what was necessary only; or, whether I have improperly administered the Vote of Credit, and misused the responsibility which Parliament has placed upon my shoulders? I beg to express my thanks to the First Lord of the Admiralty for having announced that Her Majesty's Government had deferred their decision whether any, and, if any, what kind of inquiry should take place until after my statement of to-night. I have to say, then, that in my opinion this is not a Departmental question at all. The person responsible is the First Lord of the Admiralty; and if the Chancellor of the Exchequer and Her Majesty's Government are not satisfied with the explanation I have given, let them formulate their charges against me—let the Government appoint a Committee of the best and most impartial men, who are qualified to judge of the question, and who are accustomed to the management of large affairs. There are men, both in this and the other House of Parliament, who have filled the same Office which I have just left, and are quite unconnected with the late Government; and I shall be ready, and even desirous and anxious, to offer to such a Committee any explanation in my power. I do not for a moment say that, in dealing with the various pressing matters which arose day by day and demanded immediate decision, affecting, as they did, the protection of our enormous commerce in the event of war, I may not have acted hastily, or that I may not have made mistakes; but I repeat that, with regard to any such cases, I am ready to give every explanation in my power, and I am willing to abide by the opinion of those who are qualified to judge of the validity of such charges.

My Lords, I have now concluded the observations I have to make upon the statements of the Chancellor of the Exchequer which refer to the naval portion of the Vote of Credit. But I am obliged to allude to a remark which he has made, touching the Army portion of the Vote. The Chancellor of the Exchequer said— The War Office share"—of the Vote of Credit—"was to include £200,000, to be expended in the defence of coaling stations and commercial harbours; an item for which, in spite of its great importance and in spite of the pledges given to Parliament last December by the First Lord and the Secretary to the Admiralty, no provision had been made in the Army Estimates. My Lords, I heard this remark with astonishment, for I was under the impression that, in accordance with the assurances given to Parliament by me in December last, and the programme which had been approved, and, I believe, laid before Parliament, a considerable sum had been taken in the ordinary Army Estimates of the year for the defences of coaling stations. In order to satisfy-my mind upon the matter I inquired at the War Office, and received the information which I will read—

ESTIMATES, 1885–6.
Coaling stations abroad. Provided in Vote 12 (normal). Guns, &c. £134,600
Submarine Mining and Stores and Ships. 20,000 £154,600
In Vote 13, Works 43,750
Total £198,350
So that, so far from no provision having been made, a sum of nearly £200,000 has been provided in the ordinary Army Estimates for the defence of coaling stations abroad. The additional sum which was to be applied from the Vote of Credit was, I understood, to be for the purpose of such additional provision as might be desirable in the immediate prospect of war. As regards the defence of commercial harbours, I have only to observe that I gave no pledge in the statement I made in your Lordships' House last December—my only observation on the subject was that it was under the consideration of the several Departments concerned, and that if the main responsibility of protecting those harbours should be placed upon the Navy I might have to propose an addition to the Naval Estimates for that purpose.

My Lords, when I gave Notice, on Friday last, of the remarks which I should have to submit to your Lordships to-night, I did not expect that I should have to trouble you with any observations, excepting those which I have now concluded, upon the statements made by the Chancellor of the Exchequer; but my noble Friend the noble Duke (the Duke of Argyll), in his eloquent speech on that evening, made certain remarks as to the naval policy of the late Government upon which, out of respect for him, I am bound to offer some observations. I know that my noble Friend's remarks were not made in any spirit other than friendly towards myself personally. I cannot suppose that he is really a hostile critic of his old Colleagues generally; and therefore I trust he will be glad to receive an assurance from mo that there is no real foundation for his impression that the statement I made in your Lordships' House last December, explaining the additions which the late Government proposed to make in this year's Estimates for Shipbuilding, indicated that there had been any differences of opinion among us upon the maintenance of the naval supremacy of Great Britain. I am glad of this opportunity of stating that there was no difference of opinion between myself and Mr. Childers, the late Chancellor of the Exchequer, with respect to the Navy. Indeed, I have been in constant communication with him during the past five years, and we are quite in accord on the subject, and I can also assure my noble Friend that there never was any such disagreement between Mr. Gladstone and myself. On no occasion during the five years I was First Lord of the Admiralty has Mr. Gladstone declined to accede to the proposals which I considered it my duty to make on the subject of increased expenditure upon the Navy. In fact, it is quite a mistake to suppose that there was any disagreement between the Members of the late Government upon this question.

As my connection with the Navy has come to an end, I can speak to-night with greater freedom than I have been able to do heretofore with regard to the policy of the late Government and of the late Board of Admiralty as to the building of ships. In 1880, when the late Government came into Office, we found the naval supremacy of this country in respect to ships perfectly secure for the present; but we also found that, with regard to the future, matters were not so satisfactory, because our powerful friend and neighbour France, in the exercise of her undoubted right, and for every good reasons, was building a great many armour-plated ships, and their number was greater than that of those we were building ourselves. We found, moreover, that France was superior to us in respect, not to the number or the armament, but to the speed of their cruisers. I do not say this with a desire to throw any blame upon the Board of Admiralty which preceded ours. It is impossible for me to say that they would not have pursued, if they had remained in Office, exactly the same policy which we have pursued and with equal success, and therefore I have no reason to blame them. I am simply stating facts. This having been the state of the ease, I might have come to Parliament with a story of the neglected state of the Navy under our Predecessors, have been praised to the skies by all the military papers, and have spent a large sum of money in ordering at once a great number of ships. I deliberately abstained from doing this. I did not wish to throw any blame on our Predecessors, as I have said before; but I had another and a stronger reason for not stating the case publicly then. I did not want to proclaim our condition to the world, for if I had done so we might have been placed in an awkward position as regards our future supremacy at sea; for it would have been quite competent for our friends on the other side of the Channel to say—"We now know in what state the English Navy is, and we have only to increase our expenditure to keep up our strength to theirs." That would have defeated the object I had in view.

In order that your Lordships may feel satisfied that this description of our policy is not an afterthought, or invented for the occasion, I may mention that in 1881, when I was asked by the Royal Commission upon the Defences of the Colonies and Trade to appear before them, I gave my opinion respecting the general condition of the Navy, and I stated then frankly the circumstances of the case, and explained that the policy of the Admiralty was to increase very considerably the number of armour-plated ships and of fast cruisers. My Lords, that has been done steadily and gradually since. Year by year, as Members of the other House know very well, the money spent upon shipbuilding has been increased, and year by year we have laid down more armour-plated ships and more fast cruisers; and when public opinion was roused upon this subject, I am bound to say long after the Board of Admiralty were aware of the facts and were engaged in dealing practically with them, we gladly took advantage of the feeling for the purpose of adding considerably to the rate of expenditure. As I was satisfied, by carefully watching the progress made in the construction of ships of war abroad, that there was no immediate risk, I believe we were right in moving gradually and in accordance with public opinion. In my view, in a country where the Government depends upon the support of the House of Parliament elected by the people, it is not safe for any Administration to undertake large expenditure in advance of the general feeling of the people.

That has been our policy, and now I ask your Lordships to consider what the result has been. The result has been what whereas five years ago the number of armour-plated ships and fast cruisers building was very limited, that number has largely increased. At the end of 1880 there were seven armour-plated ships under construction, all in Government Dockyards. At the present time, there are building 10 armour-plated ships, and to these may be added five belted cruisers, which should be included, because they are fully equal to many foreign iron-clads. Therefore, there are 15 armour-plated ships building, eight by contract and seven in the Dockyards, as against seven in the year 1880. I may just mention that during the period of which I am speaking France has commenced only five armour-plated ships, and not one of these is advanced so far as those we laid down at the same time. As regards fast cruisers, in 188.0 there were only three being built. At the present time we have 13, without including two armed despatch vessels. Very few ships of the same class are being built in France. Those are a few important facts showing the policy of the Admiralty and the condition in which we now stand, which is very different from our position of five years ago. I hope these remarks will satisfy my noble Friend that our policy has been consistent throughout. We have done quietly, without talking about it, what we intended to do five years ago, and we only took advantage of public opinion to increase the rate of our progress.

When the discussions in the Press to which the noble Duke alluded were going on last autumn I happened to be abroad, on a mission which I did not seek myself, and my acceptance of which I regret. I do not think I should have advised that the special statement, which it became my duty to make to this House last December, should have been made in that manner, and at that time. I am ready to admit that it may have given the impression that there was a change of policy—an impression which might not have been given if some other manner of putting our ease before the public had been adopted. I was away, as I have said, at that time, and I was not personally responsible for this; but it made no difference as to the real facts of the case.

As respects the class of ships we have built, I will just say that we have avoided building such very large ships as have been built, for example, by the Italian Government. I will also say a word about the record of naval construction. Some years ago I read that our lunatic asylums were largely filled by persons whose minds had been absorbed by questions of religion and of currency. I almost think we are not unlikely to have shortly to add another dangerous subject to those two—namely, the calculation of tonnage as a test of progress in the construction of ships; for there is almost as much to be said about the question, "What is a ton?" as about the question, "What is a pound?" I will only observe now that I am well aware of the objections to our present system of calculation, and I have only abstained from altering it because, in doing so, I should have laid myself open to the imputation of casting blame upon my Predecessors in Office—for the result would have given the impression that they had done less than was supposed in the building of ships. My Lords, my practical conclusion is, that whether we take the returns of tons, which has been our system, or of percentages of progress, which is the French system—they do not really help us much. There are three stages in the building of a ship which cannot mislead anyone — first, when a ship is laid down; next, when a ship is launched, which shows she must have made considerable progress; and, lastly, when she is ready for sea. These are the points to which my attention has been mainly directed with respect to the rate of progress of our own and of foreign ships.

My Lords, I wish to say a word or two as to the Fleet now manoeuvring under the command of Sir Geoffrey Hornby, for I have heard some remarks passed on its constitution. The Board of Admiralty never for a moment imagined that it could be supposed that the constitution of that Fleet was the constitution our Squadrons would assume in the event of war. Sir Geoffrey Hornby is one of the best and most capable officers in the Service to conduct the important experiments we desired to make; and it was for that special purpose that the ships of all classes were collected and placed under the command of Sir Geoffrey Hornby, leaving to him full discretion to distribute them as he pleased for experimental purposes.

In what I have said, my Lords, with regard to the policy of the Board of Admiralty, I should not do justice to my own feelings if I were not to put aside all claim to personal merit in the matter. I had the advantage of the assistance of my noble and gallant Friend (Lord Alcester) and other naval officers of great ability and devotion to the Public Service. I am glad to have this opportunity of testifying in the highest terms to the eminent qualities of Sir Cooper Key, who during the five years I was in Office filled the important position of Senior Naval Lord of the Admiralty to the great advantage of the Public Service. I have seen it asked in the newspapers, and I believe the same thing has been said at the Military Clubs—"Why on earth do you naval officers stop at the Admiralty, when you know that the Navy is managed in a way you do not like? Why do you not give your opinions and leave the civilians to their own devices? I think what I have said will be an answer to those observations. During my administration the Naval Lords supported the First Lord of the Admiralty with the utmost loyalty, and with the most perfect freedom from political or personal bias; and I am sure I am not misinterpreting their feelings when I say that they have done so because they knew that I was determined, in general accordance with their views, to insure the naval supremacy of this country. I challenge a comparison at the present time of the position of Great Britain in respect of ships ready for service and building with the position in which this country has stood in recent times. Your Lordships know very well that many years ago England had a large preponderance in the old sailing line-of-battle ships. The introduction of steam equalized matters, and again all nations were put upon an equality for a time when armour-plating was introduced; but I will venture to say that the naval supremacy of this country is more firmly established now than it has been at any former time since the introduction of steam into shipbuilding. In saying this as to the strength of the Navy in ships, I hope your Lordships will not suppose that, in my opinion, the ships of the British Navy form its real and its greatest strength. It is not in ships, but in officers and men, that the real strength of our magnificent Navy consists. I venture to assert that never in the history of England have our officers and men been more thoroughly instructed, animated by a higher spirit of discipline, or better able to maintain the honour of the British Flag whenever they may be called upon to do so in any part of the world.


My Lords, on the part of Her Majesty's Government I wish at once to express my regret, and that of my Colleagues, that the noble Earl opposite (the Earl of Northbrook) should think that the Chancellor of the Exchequer had intended to make a personal attack upon him with regard to this large question affecting the Admiralty. It is the very last thing we should do, and after being in Office so very short a time it would be impossible to assail in a hasty and rash manner the reputation and character of the noble Earl, who has rendered such distinguished services to the country, and who is justly entitled to the respect of every man in it, by reason of the high character which he holds. I think that the tone and intention of the speech of Sir Michael Hicks-Beach has been very much misunderstood by the noble Earl, and that there was no such intention on the part of the Chancellor of the Exchequer as the noble Earl imputes to him. I am sure that my right hon. Friend did not make any personal attack either upon the noble Earl or upon any one of his Colleagues. He expressly said—"I cannot say at present who is to blame." I hope that the noble Earl will receive my assurance that at the present time no Member of Her Majesty's Government wishes to assail him, or any officers of his late Department. My right hon. Friend said that Her Majesty's Government reserved their opinion on this serious and grave question for the present, and that they neither attacked nor assailed any single individual. I am not so very much surprised at the tone the noble Earl adopted, when I see that he puts the issue on. such false and mistaken grounds as he has done. He says that the expenditure in excess of the Vote of Credit was right and proper, and he maintains that that is the question. That is not the question in the slightest degree raised by my right hon. Friend in his Budget Speech in the House of Commons. The question is a perfectly different one. We do not give any opinion whatever on the subject of the expenditure, and we neither say that it was right or wrong, nor excessive or deficient. We do not go into that question, or enter into the subject of the administration of the Vote at all. The question we do raise is one of great gravity—namely, whether the financial control and the accounting arrangements in the Board of Admiralty have been efficient or not. That is the point raised by the Chancellor of the Exchequer, and I will remind the noble Earl that my right hon. Friend did not rake up this matter for the purpose of making any attack upon anyone, either upon him or his Government; but it was forced upon his notice by his being compelled to bring forward a Budget on behalf of the new Government. The fact came under the notice of the Chancellor of the Exchequer when composing his Budget. Mr. Childers, the late Chancellor of the Exchequer, in his speech on the Budget, observed of the Vote of Credit for £11,000,000 that only £9,000,000 would be wanting, and that there was a surplus of £2,000,000. Of that £9,000,000, £3,000,000 were devoted to the Navy. From that it was necessary to deduct £200,000 allotted to the Army for coaling stations and commercial harbours, and the remaining £2,800,000 was allotted to the Navy. That was the statement made by Mr. Childers in his Budget Speech. The new Government received their (Seals on the 24th of June; but, by a curious legal arrangement, the First Lord of the Admiralty was unable to execute any legal functions of his Department until July 3 —a very inconvenient arrangement. As soon as that inconvenience was got over, Lord George Hamilton took possession of the Admiralty, and began to inquire into the administration of the Vote of Credit in connection with the Chancellor of the Exchequer. What did he find? When he made inquiries, he was assured that all the liabilities under the Vote of Credit amounted to £2,874,000. That was much the same as stated by Mr. Childers, with the exception of being £74,000 more. It must be borne in mind that the whole finance of both Governments, both Liberal and Conservative, was based upon the accu- racy of those figures, as to what remained to the good of this Vote of Credit. Both the Liberal and the Conservative Chancellors of the Exchequer consulted the Admiralty as to the consumption of the Vote of Credit, and both were assured that only £2,800,000 would be required. When Lord George Hamilton found that there would be an excess of £74,000, he communicated the fact to the Chancellor of the Exchequer. Lord George Hamilton thought that it would be better to inquire still more closely into the matter, and he was then told that there was a further liability of £350,000. That induced him to push his inquiries further, and in another week's time he was able to ascertain that that £350,000 had risen to £700,000. A few days more showed that, instead of the sum of £2,800,000 announced by the late Chancellor of the Exchequer to have been expended by the Admiralty out of the Vote of Credit, no less than £952,000 more, or nearly another £1,000,000, had been spent. I have studied these details of gradation in order to show the extreme difficulty which my noble Friend had in ascertaining the real financial position of the Admiralty; and I venture to say it is somewhat strange that the Admiralty was not left in a position to afford that full information which the noble Earl the late First Lord states that he had in his breast with regard to these financial matters. I cannot help thinking that the revelations which have been made point to a very loose arrangement and great defects in the Department. It does seem extraordinary that it should take three weeks' pressing before the Head of a great Department can find out that the Department was under a liability of nearly £1,000,000 more than had been publicly stated. After the speech of the noble Earl opposite, I think I ought to give in a few words the exact statement now made to my noble Friend at the head of the Admiralty as to this deficit of £952,000. First of all, as to the excess which was reported to him on his assumption of Office—


asked where did the noble Lord (Lord George Hamilton) obtain the information?


This Paper has been officially given to the First Lord.


By whom?


I do not know, therefore I cannot give the noble Earl the name; but, no doubt, my noble Friend will be happy to supply the name to the noble Earl. I will give four sets of figures to your Lordships. The first excess which was reported to my noble Friend was that of £74,991 for further liabilities contingent and unavoidable. I may say that this excess is totally unprovided for in the Estimate or in the Vote of Credit, and falls due within the financial year. My first figure of items of excess ascertained is £16,000 for special gratuities to seamen and Marines—as promised to the Army —for their work in Egypt and their services in the Soudan. My second figure is £25,000, and that excess is duo to the balance still owing on the contract for the purchase of the submarine cable for the Baltic, and is in addition to the sum of £190,000 provided for in Mr. Guilders' Estimate. My third figure of excess is £127,000, being the cost of arming the 40 torpedo boats ordered by the late Government. The excess is in addition to a sum of £500,000 provided for the torpedo boats themselves in Mr. Childers' Estimate. I ought to state that the Naval Members of the present Board of Admiralty all agree that torpedo boats are almost useless without torpedo fittings; and, as far as we are able to ascertain, that was the opinion of the professional Members of the late Board. The fourth set of figures which I give is that of £710,000, in addition to £1,000,000 taken in Mr. Childers' Estimate, for the liabilities actually incurred upon transport; or, rather, I should say that £510,000 represents the liabilities actually incurred for transport before the present Government took Office, and £200,000 the amount which will probably be required in order to bring home the troops from Egypt, in consequence of the action of the late Government. This £710,000, I repeat, is in addition to the £1,000,000, which was stated in Mr. Childers' speech. The total excess, therefore, over the Vote of Credit assigned to the Navy comes to the figure of £952,991. I will say, however, that the First Lord of the Admiralty hopes to reduce that sum by, probably, £100,000, by selling submarine cables and other such matters. I ought also to say, while upon this subject, that my noble Friend the First Lord of the Admiralty has had great satisfaction in being able to reduce the expenditure on transports by about £281,000 monthly, with regard to some he is able to discharge. Otherwise the bill would have been larger still. That is a short statement of the accounts that have been placed in the hands of the present Government, and I think your Lordships will feel that it was a serious picture that was laid before the present Government. We blame no one; we do not go into the question of how these errors in the administration of that Vote of Credit was made. We do not go into the merits and demerits of the expenditure of the Vote of Credit; but being face to face with these extraordinary disclosures, for such I am bound to call them, we think it absolutely necessary that there should be some Parliamentary inquiry into the subject. If they can be explained away satisfactorily, no one will rejoice more than Her Majesty's present Ministers; but it is absolutely essential that the absence of financial control which has resulted in the relation of the First Lord of the Admiralty with his Department, with liabilities amounting to £950,000 over and above what they were represented by his Predecessor—that this state of things should be thoroughly examined into by Parliament. My Lords, I will not trouble you with any longer statement. All I will venture to say is, that Her Majesty's Government feel that economy is most necessary in the present time of severe distress and industrial suffering. We feel that economy is one of our first duties; but, as men of business, we feel that it is hopeless to expect to secure economy in our great Departments unless there be a thoroughly good system of accounts in those Departments. It, therefore, becomes for us a very, very solemn duty to see that a perfectly good system of accounts is established in this great Department, if it is true that it does not exist. I confess, my Lords, that the statement of facts I have laid before you leads me to think that there must have been some slackness somewhere. Either the system is faulty, or the supervision of it is faulty, or the system is not worked out properly— where the screw may be loose I cannot say; but, in the face of the statements I have made, I think your Lordships will agree with me we are right in having settled that Parliamentary inquiry in the interests of all Parties ought to be made; and I confess my own opinion upon this has been still further strengthened by hearing the statement of my noble Friend opposite, which shows a great number of discrepancies from the statement which we have received and which is now before the House. We have dealt with this question with a total absence of anything like personal feeling, and simply with a desire to do what is right, honourable, and best in a grave and very serious state of things.


said the noble Earl opposite (the Earl of Northbrook) was very candid, now that he was no longer hampered by official harness. He had broken loose, and he had told them that he had not been altogether satisfied with the condition of things at the Admiralty for a long time. If that were so, why had the noble Earl not attempted to mend them during his five years of Office? He (the Earl of Ravensworth) concurred with the Government in the necessity of Parliamentary inquiry into the matter. Votes of Credit were naturally, as a rule, asked for in times of emergency, and were granted with a little want of care as to how they were to be spent. He would point out that an audit did not interfere with the action of a Department at a time of emergency, but was merely a history, compiled afterwards, of that action. What he wanted to know was, what steps were taken by the Admiralty to satisfy the country that the Vote had been properly expended, and with a due regard to its interests? One great source of expenditure was labour in the Dockyards, and the system of checking the hill for labour by the Admiralty left a great deal to be desired. Unless the Admiralty were determined to weed obsolete ships out of the Channel Squadron, we should continue liable to the charge of being content with a paper Fleet. The Committee on which he served last year could not help seeing that there was room for still further inquiry as to the constitution of the Admiralty, and the administration of the Dockyards. The country certainly ought to be satisfied that steamers taken up for transport had been obtained on reasonable terms, in a favourable market, and that money's worth had been obtained for the money expended.

Motion agreed to.