HL Deb 06 July 1903 vol 124 cc1359-67

My Lords, I rise to ask the Lord President of the Council whether the Government in the course of their inquiries into the results of free trade will collect information as to the administration of preferential and retaliatory duties under the system of protection which reigned up to 1842, and as to any difficulties or disadvantages to trade which attended that administration, and, if so, whether they will have the information reduced to a form in which it can be laid before the public. In offering a few remarks I wish to avoid any controversial aspects of the question and to confine myself entirely to the business view, but I think you will admit that my Question has a very important bearing upon the fiscal policy that has been brought before the country. The fact is that no country, or very few countries, have had such long experience of preferential and retaliatory duties as those under which this country was governed between 1815 and 1842. Of course, the system of protection existed a long time before 1815; but the period between 1815 and 1842 was one of complete peace, and during that time the country was entirely subject to preferential and retaliatory tariffs. That being so, and seeing that a great revolution in our fiscal system is about to be instituted, it would be a breach of duty if the Government does not avail itself of the information which may be gathered in order to utilise it when this great subject is under our consideration. The information, no doubt, is somewhat difficult to get. A long time has elapsed since the reign of preferential duties. All the people who were connected with the administration of those duties have long since passed away, but, at the same time, information on the subject can be obtained by Government, which is the only authority to properly obtain it. I have some recollection of these matters. When I first entered the Treasury between forty and fifty years ago, the reign of protection was not entirely over. A very large number of duties were still in force which were of a protective nature. I was the private secretary to the Financial Secretary of the Treasury during the preparation of the Budget of 1860 and the discussion which followed, and have the most vivid recollection of the labours which my chief had at that time. I heard much of the complaints and remonstrances from the protected interests from which protection was being swept away. The result left on my mind from that recollection, and also from what I learnt from my seniors in office, has been the extreme difficulty that was experienced in the administration of preferential and retaliatory duties while they were in full swing, the anomalies of the system, the injury protection duties caused to large trading interests, and the unjust preference they gave to a small class of traders.

Protection ruled from 1815 to 1842, and I want to draw the attention of the Government to the point on which I think useful information can be collected. From 1815 to 1860, there were three periods of relaxation from or abolition of protective duties. The first was under Huskisson from 1824 to 1826, the second was in the time of Sir Robert Peel from 1842 to 1846, and finally there were the Budgets, 1853 to 1860. I want to suggest to His Majesty's Government that a Return should be prepared of all the preferential and retaliatory duties that were relaxed or abolished at that time. This Return should state the amount of preferential duties accorded to the colonies, and the amount of retaliatory duties imposed on foreign countries. It should also give the receipts under those duties and the quantities of articles protected which had been imported some years before the change and some years after the change. I think if a Return of that kind were presented it would cover practically the field of the inquiry which is now being instituted, and it would also cover the whole field which lies before the Government and the country when they have to choose—if it be the decision of the Government — what preferential duties should be imposed in the future. But that would only be the first part of the Return. The second part should include a careful research into the number of Committees that sat from 1820 to 1840. They are not a very large number but I am sure that in their proceedings the Government would be able to find a great deal of information from the witnesses that appeared, bearing upon the results of the administration of preferential duties, and the difficulties and anomalies they produced. There is one particular Committee, the Report of which I should like to see republished and circulated, i.e., the Committee on Import Duties which sat in 1840. The Report that that Committee returned to the House of Commons is one of the most interesting documents bearing upon this question. There was also the Committee on Silk Duties, and that which sat on Timber Duties, and no doubt there are others to which reference might with advantage be made. In nearly every one of these Committees there was examined one of the most accomplished and able civil servants ever in the service of the Crown, i.e., Mr. James Deacon Hume, the mentor of Huskisson, the adviser of Sir Robert Peel on commercial questions. Of course, in addition, a large amount of information may be gathered from the speeches of Ministers who proposed reductions in tariffs, and the information so obtained may very effectively be put in the form of a Memorandum and attached to the Return for which I ask.

Now, to show why I think such information would be very useful, I venture to refer your Lordships to one or two instances of the anomalies and difficulties that have arisen in the administration of these preferential duties and retaliatory tariffs. First of all, I will refer to the Return attached to the Committee on Imports. There is a Paper of all duties which involved protection. It classifies them in three heads. Those duties applied to nearly every object necessary to the existence and comfort of the community, That, I think, would show the field over which the preferential and retaliatory tariffs of those days ranged. I will further call attention to one or two instances, and will first take the duty on coffee. In those days the coffee duty was 6d. in the lb. in the case of colonial coffee, 1s. 3d. in the lb. on foreign coffee, and an intermediate duty of 9d. if the coffee came from the Cape of Good Hope and from East of the Cape. The result of the working of that duty was that it actually paid the importers from Hamburg and the Continent to send the coffee to the Cape of Good Hope in order to bring it back and land it here at a duty of 9d. per lb. It was reckoned that the extra charges of freight of that junketing journey were 1½d. per lb., which had to be added to the intermediate duty of 9d. I ask your Lordships to consider what an absurdity that administration was reduced to. In addition to the duty which the Legislature thought desirable to impose upon coffee, it was found profitable and legal to send coffee several thousands of miles across the sea, with all the loss of the interest on the money concerned, and bearing the numerous charges of freight insurance and shipment in order to sell it here in London. Another very important case which the Government will have to consider, if effect is given to the policy suggested, is that of wool. In 1841 the duty was 1d. per lb. on foreign wool, and in that year we consumed 42,000,000 lbs. of foreign wool, 15,000,000 lbs. of colonial wool, and 92,000,000 lbs. of our own. It was calculated by Mr. James Wilson, the eminent economist who conducted the Economist newspaper, afterwards one of the most able Secretaries of the Treasury, that the extra charge on the raw material by this system of duty amounted to between £500,000 and £600,000, the value of our exported woollen goods being between £5,000,000 and £6,000,000, so that the duty amounted to a duty of 10 per cent. on the raw material as compared with the finished article. Truly, for a Legislature trying to safeguard the interests of trade and promote manufacture, a stranger method of effecting that object could not have been resorted to. Passing to the duties on silk, it had been the intention of Parliament to give all round a general protection of 30 per cent. on silk. Ministers in Parliament, when the duties were subsequently reduced, had to confess that in the carrying out of the administration of those reduced duties, by blunder or by intention, instead of protection ranging around 30 per cent., it ranged from 30 to 250 per cent.

I will pass on to the case of timber, and the singular history of the timber duty may not be known to your Lordships. In 1810, when Napoleon was organising the Northern Federation, there were great fears in England that the whole of the timber trade would be put an end to—our chief source of supply being Northern Europe. In order to secure a supply of timber, very strong encouragement was given to ships to bring timber from Canada by levying a duty of 55s. a load upon foreign timber. In 1815, when the war came to an end, that duty also should have come to an end, but it did not, and in 1820 a Committee of the House of Commons, which sat to inquire into the question, reported that no pledge had been given as to the continuance of this duty. A Government witness said he could not see why timber in this country should be made dearer for all time to the consumer because of the Copenhagen Expedition. But it did last for a very long time, and timber consumers for a very long time were condemned to pay larger prices in consequence of that expedition. Before the Committee which sat in 1835 a calculation was made that at that time we imported 1,000,000 loads of timber; 600,000 loads came from our own colonies, and 400,000 came from foreign countries. The result of that was that the duty received from timber was £1,400,000, but the price of timber, which was one of the main articles of our manufacture and trade, was raised not by £1,400,000 but by £2,750,000, the difference of £1,350,000 going into the pockets of the colonial timber producer. And perhaps in connection with that, as an instance of the way in which those duties were administered, I may refer to a speech made by Sir Robert Peel in 1842. He said that for a long time mahogany, being foreign wood, had been taxed 55s. a load, and if brought into England the cost and duty were so high that it did not pay English furniture makers to use mahogany. It was then exported under drawback to the Continent and made up in furniture shops of France, Belgium, and Germany and then brought back into this country, the unfortunate consumer paying 20 per cent. duty on it. Thus a wise legislature kept all furniture making from mahogany out of the country when it might have usefully employed a number of furniture makers here. Then again, take the case of foreign copper. It was allowed to be brought into England and to be smelted here, but it was not allowed to be made into bolts. Our shipbuilders had to send it to foreign parts to be made into bolts and we had to get the bolts from the foreigner unless we could obtain the supply in our own country. Take another instance. Mr. James Wilson calculated in 1844 that the sugar and wheat duties took out of the pockets of the consuming classes in England £18,000,000 in addition to the amount of the duty. Comment was made at that time that the sum taken out of the pockets of the consumer in addition to the duty would have paid once and a half over, the whole taxation of the country.

I have said enough to show how necessary it is there should be some inquiry into the history of these preferential tariffs from which I have only culled a few instances. There can be very little doubt indeed that the Legislature of that date never contemplated such absurdities as these to which I have called attention. The Ministers and their officials did not understand the questions with which they were dealing, and these anomalies were in essence the results of legislative blunders. Unluckily those blunders had a habit of remaining a long time on the Statute-book and were only removed when some greater man of the day had his attention called to them and swept the whole system away. But if we are going to undertake again such a system of preferential or retaliatory duties what guarantee have we that some of the blunders will not recur? In those days the Ministers and officials were as able as our men of to-day, but they fell into these errors, and is there any security whatever that when we enter upon this dangerous course the blunders will not be repeated? Only in the case of the corn duty the Prime Minister said recently that he had not realised its effect upon the stuffs brought in for cattle food. The Chancellor of the Exchequer has stated that in the negotiations of the Treasury with the millers protection was afforded which was not intended to be afforded. Therefore, I venture to point out that already we have seen that there may be mistakes in dealing with this one duty, and I cannot help thinking there is a danger of greater mistakes being made if and whenever a general scheme of preferential duties is enacted. The instances I have given you are only instances, but they are nearly all founded upon responsible authority. I do not ask your Lordships to accept them as infallible, but I say they do show what very dangerous ground we are treading upon, and I venture to impress upon your Lordships that it is the duty of the Government and of Parliament to see that full information on these duties is obtained, that the Government make it clear that they really understand what it is they are about, and further I venture to hope that no mandate will be asked from the electors until such information has been put before them, so as to make it perfectly clear that they understand the new policy which they are asked to substitute for the old.


My Lords, I quite agree with the noble Lord that it is extremely desirable that some information should be laid before Parliament, and through Parliament before the country, as to the history of our own experience of preferential and retaliatory tariffs. I am quite sure that there is no one who is more qualified than the noble Lord himself to indicate the sources from which such information can be best obtained. The noble Lord has indicated the nature of the Return, which he would like to ask for; and if he will either move for that Return or communicate privately either with myself or, as perhaps would be better, with the Treasury, we will endeavour to see whether the information he asks for could not be prepared. I suspect there is one part of the Return indicated by the noble Lord which might be regarded as forming a new and perhaps rather inconvenient precedent. I could not very well hear the noble Lord, but I think he said that speeches in Parliament which would throw a great deal of light on the subject might be summarised. I am afraid some objection might be taken to the production of a condensed summary, even of debates which had taken place so many as fifty years ago. We might have some difficulty in supplying that part of the Return. But any information as to the nature of the duties, which then obtained, and as to correspondence which related to those duties we shall be happy, I am sure, to produce as far as we can. I may mention that I have already communicated with the Treasury on this subject and they have expressed their willingness to provide information as far as they can, and have also suggested that a great deal of information on the subject would be found in the Report of Mr. Joseph Hume's Select Committee in 1840 on Import Duties, a Report with which I think the noble Lord is familiar. If he will communicate with the Government—either through myself or the Treasury—we shall be happy to give what information we can.


I beg to thank the noble Duke for his answer. I never intended that a summary of the speeches of the statesmen to whom I alluded should be prepared, but in most of those speeches there are illustrations of these effects and anomalies to which I have called attention, and I think these might with great advantage be selected from their speeches and collected as evidence. That would not take very long and this evidence, coming as it does from Chancellors of the Exchequer and other responsible Ministers of the Crown, would be evidence upon which the Government and the country might rely.

House adjourned at ten minutes past Seven o'clock, till To-morrow, half-past Ten o'clock.