Lords Sitting of 23 November 1909

FINANCE BILL.
Petitions against; of persons signing (64);—the Incorporated Association for the Protection of Property Owners, Limited;—the Scottish Licensed Trade Defence Association;—the Moray and Nairn Wine, Spirit, and Beer Trade Defence Association;—the Harrow Division of Middlesex Central Conservative Association;—Read, and ordered to lie on the Table:
Petition for amendment of; of the Yorkshire Branch of the Central Land Association; read, and ordered to lie on the Table.

FINANCE BILL.
Debate on the Amendment moved by the Marquess of Lansdowne to the Motion that the Bill be now read 2a resumed (according to order).
THE EARL OF CROMER: My Lords, in the brief observations which I am about to address to your Lordships, I do not propose any more than in the case of other speakers who have preceded me, to examine the present Budget in any sort of detail. The question we have to decide is eminently one of principle and not of detail. Moreover, the real point at issue is not whether, collectively or individually, we think this Budget good, bad, or indifferent, but whether we are justified in taking the very grave step of insisting that the matter should be referred to the decision of the nation. Nevertheless, my Lords, I should like to make a very few remarks on the financial proposals of His Majesty's Government, considered on their own merits. There are some good points in those proposals, and I cannot help thinking that the idea is rather exaggerated to hold that black ruin stares in the face of those on whom the burthen of the new taxation will more especially fall.
For my own part I have nothing to say against the principle involved in the Income Tax proposals, and I do not entertain any objections to them, although I think the Super Tax will be extremely difficult to collect, and will probably be evaded by
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many of those whom the Chancellor of the Exchequer most wishes to reach. Moreover, in spite of the explanations which have been given on this subject, I cannot help looking with some apprehension on the inroad which will be made on the main fiscal reserve on which we are accustomed to rely in time of war. Nevertheless, the principle involved in this part of the Budget is, in my opinion, sound enough. It is that the burthen of taxation is to be placed on the shoulders of those most capable of bearing it, and whatever theoretical arguments may be urged against the adoption of this principle, it is a practical fact that a man with £5,000 a year can well afford to bear a higher proportionate rate of taxation than a man with £500 or £1,000.
But, in spite of this and some other points to which I do not think serious exception can be taken, I must say that the general financial policy of the Government inspires me with no confidence whatsoever. In the first place, my Lords, I should like to point out that the Budget in the form in which it was originally brought forward in the other House bore the evident marks of a light-hearted want of care and foresight, which is simply amazing, considering the gravity of the interests concerned. A good deal of the Chancellor of the Exchequer's cargo had to be thrown overboard in order to lighten the ship during its passage through the other House. How, I would ask, could any serious financier think that any assembly of thinking men would ever agree to a man being taxed on the off-chance of his possessing minerals of questionable existence and of unknown value at an unknown depth in the bowels of the earth, or that Parliament would ever agree to allow the old Sinking Fund to be diverted from its proper and legitimate object—that is to say, the reduction of the National Debt? Then, my Lords, as regards the Revenue Estimates. I was at first inclined to share the opinion that I think was very commonly held that the revenue had been very greatly under-estimated. Now we are told that such is not the case. One thing, however, is clear, and that is that the original Estimates were very faulty. Why is this? Experts will, I do not doubt, be able to give explanations under each separate head of account, but I cannot help thinking that there is one general explanation winch applies in a greater or less degree, in every case. That explanation is that by drifting into a position which necessitates casting

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the whole fiscal system of the country into the melting pot, and also by bringing forward proposals which, even if they are assumed to be innocuous in themselves, are supported by rancorous language evidently calculated to alarm all those classes on whom the national wealth, and, therefore, the national revenue mainly depends, the Chancellor of the Exchequer got himself into a position which has rendered the task of framing any trustworthy Estimates well-nigh impossible. Then, my Lords, I justify my want of confidence in the financial policy of the Government on the further ground that although they came into office pledged as a matter of fact to retrenchment they have thrown economy to the winds. Former Liberal Governments were economical because they were Free Traders, and I ought also to add they were able to be Free Traders because they were economical. They fully recognised that these two subjects—economy in expenditure and Free Trade—hung together. The present Government has endeavoured to be spendthrift and Free Traders, and the two characters do not harmonise.
I know how useless it is to preach on this subject. I know and fully admit the urgency of social reform—that is to say, reasonable social reform. I know that a great wave of extravagance is now passing over this country, which can only be arrested when bitter experience has shown that a nation, like an individual, must cut its coat according to its cloth. At the same time, I cannot allow this occasion to pass without uttering an old-fashioned protest against what appears to me to be the recklessness with which the finances of the State are now administered. Whether a resort be had to direct or to indirect taxation, no nation, however prosperous it may be, can with impunity go on living for long as we have been living for the last few years, without landing itself in great embarrassments, and this remark applies quite as much to local as to Imperial finance. Whatever may be the objects on which it is proposed to spend the money, I contend that it is unsound finance to incur heavy liabilities without having any idea as to how those liabilities are to be met, as was done last year, and at the same time to reduce taxation, as was done in the case of the Sugar Duties, which, although possibly open to some objections, did not constitute a serious burthen on the country or weigh very materially upon the taxpayers. The result
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naturally is a recourse to desperate expedients, such as the heavy Death Duties which, at the proposed rates, as has been frequently pointed out in the course of this debate, simply mean that the country will, to a great extent, be living on its capital.
I now turn to another point—namely, the land clauses. We have been reminded in the course of the debate that your Lordships' House is often accused of being an assembly of landowners. You may therefore like to hear the opinion of one of your members who does not possess, and is never likely to possess, a single acre of land in this or in any other country. The only tax in the Budget which affects me personally is the increased Income Tax, which I have already said meets with my cordial approval because it is based on the principle that the man who is relatively rich should pay more than the man who is relatively poor. I contend, as was contended by the noble Marquess last night, that as regards the land clauses they are a flagrant violation of that very sound principle. It is not proposed to tax a man according to his wealth, I but according to the special form in which, I whether he be rich or poor, his wealth is invested. I think, my Lords, that this principle is thoroughly unsound. Neither would any modification of the details reconcile me to its adoption. I do not doubt that the laws regulating the tenure of land in this country are far from perfect, and are capable of being amended. Notably, I should be glad to see something done to strengthen the position of leaseholders in towns against ground landlords. But if this is to be done, let it be done in the ordinary way, that is to say, by introducing a Bill which both Houses of Parliament will be free to examine both in principle and in detail. Whatever may be the constitutional practice or precepts on this subject, I cannot help thinking that to bring forward a measure of this sort in the garb of a Finance Bill, and thus endeavour to stifle the opinions of those who are not only most interested, but best informed on all matters connected with the land system, is a very great abuse of power.
What, however, is to be said of a procedure of this nature when it is recognised that the proposals of the Government under this head will do little, if anything, to solve the financial difficulties of the moment?

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The fact is, that it is a mere abuse of terms to speak of the land clauses in the Bill as genuine financial measures. With the evidence now before us, it is impossible not to conclude that the primary object in introducing them is not to obtain revenue, but to pave the way for the introduction of profound changes of a Socialistic character in the system under which landed property is held in this country. This is all I have to say upon the Budget considered on its own merits. I now pass to the Amendment of the noble Marquess.
My Lords, if we arrive at a faulty conclusion on this subject, it will certainly not be from want of advice. For months past we have been bombarded from all quarters with advice, not infrequently taking the form of menaces, which I agree with other speakers should be entirely disregarded. On the one hand, we have been told that those who, like myself, demur to the total rejection of this Budget are wanting in moral courage—an argument to which I attach but slight importance; and we are also told that by the adoption of this view we should abdicate the special functions for which a Second Chamber is created—an argument which, I fully admit, is of great weight and potency. On the other hand, the very unworthy insinuation is made that those of your Lordships who conscientiously hold a different opinion are animated by some motives of personal interest, and they are warned that if they insist on this view the time-honoured institution to which we belong will fall at the blast of the Limehouse and Newcastle trumpet. In view of the extreme gravity of this question and of the fact that it certainly rises in importances far above that of ordinary Party issues, I have—like, I do not doubt, others of your Lordships—endeavoured as an independent member to form a calm, dispassionate and independent judgment on this subject, unswayed by outside influences, and the result of my deliberations, which I state with great and unfeigned regret, is that in spite of the cogency of the arguments advanced by the noble Marquess, I am unable on this occasion to follow him into the Lobby. On the other hand, inasmuch as a vote adverse to the proposal of the noble Marquess might be construed into approval of a measure of which I wholly disapprove, I am reluctantly constrained to abstain from voting at all.
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The main consideration which has led me to this conclusion is one to which I do not think adequate attention has been paid in the course of the recent discussions. Although at this moment all European nations, including ourselves, are fortunately at peace, I cannot say that the general state of Europe is such as to render it possible to regard without some apprehension the inauguration of a state of things which, by producing acute and prolonged dissentions in this country, may not improbably cripple us to a certain extent in the event of any great national emergency arising. And, my Lords, it cannot, I think, be doubted that the result of throwing out this Bill will be to produce acute and prolonged dissensions, for it will almost oblige even the most moderate members of the Liberal Party to engage in a ceaseless agitation in order to secure a material alteration, not merely in the composition, but the functions of the Second Chamber. I consider that the first and greatest national necessity at this moment is to provide, both from a naval and military point of view, for the adequate defence of this country, and I should more especially view with a feeling little short of dismay anything calculated to risk a break in the continuity of that naval policy as to the main principles of which both Parties in the State are now agreed. I may be right or wrong in pushing this view to the extent to which I push it, and I am quite free to admit that I hold this opinion so strongly that it colours my views on all other political matters, and makes them subordinate to that one great consideration. I am, of course, perfectly aware that I shall be told that if it actually came to a case of war, the voice of faction would be hushed, and that all Parties in the country would be united. I hope, and believe, that will be the case, but that is not what I fear. What I do fear is that in the presence of distracted counsels, and of the great temptation which will be presented on both sides to influence and conciliate the mass of the electors by incurring not reasonable but extravagant expenditure on social reforms, the main duty of the nation, which is to render its own existence secure, will be rather lost sight of in the constitutional struggle which must ensue; and pray bear in mind, my Lords, that any lapse, even any temporary lapse, from a state of preparedness for war will, of itself, increase the probability that war will occur.

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On the whole, therefore, I have come to the conclusion that, objectionable as this Budget is, we cannot reject it without incurring other and more formidable risks than would be involved in its acceptance. Let me add that I have come to this conclusion in my own mind quite irrespective of the question of Free Trade versus Tariff Reform. Important though that issue is, it appears to me almost to sink into insignificance by the side of the further and very important issues which will now be raised.
Before I sit down, I trust it will not be thought irrelevent to the present discussion if I allude briefly to the position of Unionist Free Traders in respect to this Budget, and also generally with regard to the contest which now awaits us. That position is, I fully admit, one of some difficulty. Let me preface my remarks by saying that I do not in any way profess to represent the views of Unionist Free Traders generally. Although I happen, as President of the Unionist Free Trade Club, to be the very unworthy successor of the late Duke of Devonshire, whose wise counsels and statesmanlike voice were assuredly never more missed than on the present occasion, I have no sort of mandate to represent the members of that club. I wish it, therefore, to be very clearly understood that I am only giving my opinion as an individual Unionist Free Trader for what it is worth. My individual opinion is that in the coming General Election a Unionist Free Trade voter who, in the absence of a candidate who fully represents his own views, votes for a Tariff Reform candidate, as I should certainly do if I had a vote, need not abandon one iota of his Free Trade principles any more than I abandon mine. I wish, my Lords, to make my own attitude in connection with this matter quite clear.
I do not doubt that it will be necessary to impose indirect taxes for revenue purposes—a necessity to which, although he may regret it, no Free Trader can take any exception on Free Trade principles. But I hold just as strongly as ever that Protection is not the proper weapon by which Socialism can be combated. I scout now, as much as ever, the idea that the unemployment problem can be solved by the adoption of a Protectionist policy.
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I still maintain that Colonial preference is not merely objectionable on fiscal grounds, but that it is an error to suppose that it will do anything towards cementing the different parts of the Empire any more than was the case when it was tried sixty years ago. I still entertain the strongest objection against taxes on food or raw material, and I still hold as strongly as ever that the adoption of a Protective policy is calculated to demoralise public life in this country, as it has demoralised that of the United States. As to Retaliation, I have not the least objection, provided that there is a reasonable prospect held out to us that, by the adoption of such a measure, we shall not do ourselves more harm than good, and provided also that we maintain a Navy of over-powering strength, a consideration which, if a retaliatory policy is pursued, will become one even of more vital importance than it is at present. Personally, I do not take nearly so gloomy a view of the prospects of Free Trade as that held by some other Free Traders. I cannot in the least accept the view that there is no other alternative than either the acceptance of the present Budget or the adoption of anything like an extreme Tariff Reform policy, and it is an extreme Tariff Reform policy to which I and others object, not so much to a moderate policy of Tariff Reform. It is absurd to suppose that any such policy can be carried out, involving as it does something like a fiscal revolution, without a much more decisive expression of public opinion in its favour than has yet been obtained, or is at all likely to be obtained. I repeat that in my view Unionist Free Traders who are in the position, as they often must be, that they must either abstain from voting or else vote for a Tariff Reformer, need not, in choosing the latter alternative, abandon any one of their essential principles, but may well adopt the latter course with a perfectly clear conscience. Voting for a Tariff Reformer is by no means the same thing as voting for Tariff Reform. It will merely imply that the Unionist Free Trader is prepared to proclaim a truce, and will lay aside his special ideas in order to subserve other, and, as I consider, even more important ends.
And what are those ends? The first and perhaps most important of all, is to ensure the continued existence of the effective Second Chamber The second

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is to maintain the union with Ireland and thus prevent the disruption of the Empire. The two issues, that of the Second Chamber and the maintenance of the Empire, are intimately connected. This has been fully recognised by the leaders of the Irish Nationalist Party. A third end is to ensure the existence of the Established Church and to prevent the secularisation of education; and a fourth end is to combat Socialism. My Lords, I wish I could share the optimist view that is often expressed that Socialism in this country is a bugbear, but I am afraid that I am unable to do so. We have been living for the last half century and more relying on the very comfortable assurance that the good sense of the British nation and the free-play of our time-honoured institutions will always conjure any Socialistic dangers. I hope that may be the case. I cannot, however, forget that the main apostle and creator of Socialism, Earl Marx, who was a man of great ability and foresight, writing more than half a century ago, looked on Great Britain as a far more hopeful field for the development of his most pernicious theories than any Continental country. I cannot forget that many of the older economists, looking more especially to the unequal distribution of property in this country, shared this view, although they disagreed with Karl Marx on every other point.
I cannot blind myself to the fact that Socialism has made enormous strides in this country during the last few years. I do not mean revolutionary Socialism, of which I have little fear—indeed, I should be rather glad if we had a few more Victor Graysons in this country because they prove very useful danger signals—but rather the advance of those plausible and insiduous methods for making the worse appear the better cause, which have converted thousands of excellent and well-intentioned people to Socialism who would warmly resent the idea of being called Socialists. There are a very large number of people in this country who are Socialists without in the least knowing it, and I fear their number is increasing daily. I know that Unionist Free Traders are told that they should support the present Government, as the defenders of free imports, and because the Tariff Reformers are themselves tainted with Socialist ideas. I venture to express a hope that Unionist Free Traders will not be led away by this
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very fallacious argument. I am perfectly well aware that from time immemorial there has always been a distinct connection between Protection and Socialism, but I would ask Unionist Free Traders to consider on which side the main danger really lies.
On the one hand you have a Party who are certainly not Socialists, but advocates of social reform, and every reasonable man and practical politician must admit that the extreme individualism of some fifty or sixty years ago has to be abandoned, and you also have a body of men as to whom I still cherish a hope that they may eventually bring forward some fiscal proposals to which no reasonable Free Trader can take any serious or reasonable exception. On the other hand, you have a Government which by its acts has done more to imperil the cause of Free Trade than all the arguments of the Tariff Reformers put together, and which, although it may have preserved free imports has, in my opinion, run counter to many of the leading principles of that economic system of which free imports merely constitute a part. When we see, not merely the rank and file, but even some of the leading members of the Radical Party coquetting with such questions as land and railway nationalisation, I say it is impossible to doubt on which side the main danger lies.
These, my Lords, broadly speaking, are, in my opinion, the main considerations which should be present to the mind of the Unionist Free Trader during the coming struggle. But let me add that they have, I venture to think, a right to ask for some amount of reciprocity. We Unionist Free Traders, holding, as we do, to opinions which it must be borne in mind were but yesterday those of the entire nation, think that we have at times not been treated with much fairness or consideration by some sections of the Unionist Party, and if I do not dwell on these grievances any more it is because I think that the present is a moment to assuage rather than to aggravate differences in the ranks of the Unionist Party. The struggle in which the Unionist Party is about to be engaged will be arduous, probably more so than any of years past. It appears to me that the chances of success will be enormously diminished by anything approaching to disunion. The Unionist Party will require,

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not only every vote, but every voice it can obtain. The importance of this question is not to be measured by the loss or gain of some two or three seats. It is much more far-reaching. There are a good many Free Trade Unionists—far more, I believe, than is generally supposed—scattered about the constituencies. There are also a great many moderate men who, without being avowed Free Traders, are by no means ardent Tariff Reformers, and who, I have every reason to believe, in common with many Unionist Free Traders, are inclined to deeply resent the somewhat shortsighted, and, as I think, vindictive policy which has been adopted towards Unionist Free Traders by a few extreme sections of the Tariff Reform Party. I would ask, my Lords, is it wise, is it politic, just, or generous at the bidding of a few, who, without wishing to be discourteous, I really must call fanatics, to cast out from the Unionist Party such men as Lord Robert Cecil, Lord Hugh Cecil, Mr. Bowles, and others, who have done yeoman service in the cause of the Unionist Party in Parliament, and whose only fault is that they have had the courage of their opinions and are not prepared to bow to the iron tyranny of the caucus? I cannot think that is wise, and inasmuch as I, and I think some other Unionist Free Traders, are prepared to use whatever influence we possess in the sense of promoting unity of action, I appeal confidently to those of your Lordships and others outside this House who do not share our views on the fiscal question, to reciprocate in the sense of doing whatever is possible to ensure that union which will, in itself, be an earnest of success. In any case, I wish to make it quite clear that, albeit I fully maintain my allegiance to Free Trade principles, I cannot, in the struggle which is now about to take place, in any way associate myself with measures calculated to embarrass the action of the noble Marquess behind me and his friends, and I earnestly hope that other Unionist Free Traders will follow my example.
THE DUKE OF MARLBOROUGH: My Lords, I will not attempt to follow the noble Earl into the political views which he has expressed this afternoon. Suffice it for me to say that we always listen to the noble Earl in this House with profound respect. We recognise that his financial knowledge and experience are vast and profound, and
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consequently I for my part was glad to hear that the noble Earl after mature consideration, found that he was not in favour of the financial proposals which are before us. I will not detain your Lordships in the remarks that I venture to make more than a brief space of time. I will, in the first place, examine the proposals of His Majesty's Government in the light of their effect on the finances of the country, and then I will examine them in the light of their effect on the position of your Lordships' House.
The financial proposals before us affect three classes of His Majesty's, subjects—the taxpayer, the labourer, and the financier. Closely connected with the interests of the taxpayer is the question of the relation between direct and indirect taxation. Let us bear in mind that at the beginning of the nineteenth century indirect taxation largely exceeded direct taxation. It was the aim of Liberal Statesmen and financiers to try and reduce that inequality, and Mr. Gladstone in 1861 spoke of the importance of preserving a just balance. He could not think, he said, of direct and indirect taxation without comparing them to two attractive sisters who had been introduced into the gay world of London each with an ample fortune and differing only in the respect that one was of a light and another of a dark complexion, or in some variety of manner, one being open and the other shy, retiring, and insinuating, and Mr. Gladstone went on to say that as Chancellor of the Exchequer, if not as a member of Parliament, he always thought it not only allowable but even an act of duty to pay his addresses to both. Later on Mr. Gladstone's example was followed by the noble Viscount, Lord St. Aldwyn, who, during the South African war, increased the Income Tax and at the same time imposed a duty on sugar, and up to this present time the Government have faithfully followed the traditions of their predecessors. So that to-day the relation between direct and indirect taxation is about equal.
But, my Lords, when we come to examine the proposals which are before us, and which we are called upon to pass, what are the facts which present themselves to our notice? They are that whereas the ratio between direct and indirect taxation, was about equal, the acceptance of the present I proposals would create a ratio of fifty-seven for direct taxation to forty-three for indirect taxation. No doubt it wall be claimed

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by noble Lords opposite that this is sound finance. It is what they term "placing the burden on the broadest shoulders," making those taxpayers pay whom they consider most capable of bearing the taxes. Let us examine this contention a little more closely. If a citizen is called upon to pay increased contributions under the heading of direct taxation, surely he retrenches by reducing his expenditure on those simple luxuries such as wine, whisky, and tobacco which form the basis of indirect taxation; the result, therefore, is that excessive direct taxation tends to lower the yield of indirect taxation. Your Lordships will notice that the Government propose to get over this difficulty by increasing the Death Duties, raising the Income Tax, and imposing a Super Tax; so that they intend to increase the disparity and not in any way to restore the balance. In other words, the fiscal disease is to be cured by accentuating its cause.
Let me examine the effect of this inequality between direct and indirect taxation on the economic welfare of the country. Let me deal first of all with the Income Tax payer. The consideration of the Income Tax reminds me that we enjoy in this country 110 or 120 millions of money the result of income derived from foreign investments. It is calculated, I believe, that out of that sum eighty millions come to Great Britain and are taxed at the banks and thus brought within the area of the taxation of the Exchequer. But what would be the effect of those proposals for graduating and increasing the Income Tax as is specified in Clauses 65 and 66 of this Bill. The average citizen will think twice before he allows his income to be brought under the jurisdiction of the Chancellor of the Exchequer, and he may resort to perfectly legal methods to evade his national contributions to the State. There are many methods which have been suggested, some of them even by those who are supporters of noble Lords opposite. Income can be brought into this country, I believe in the shape of bullion or of pictures, or in the form of works of art, or of commodities, and then re-sold, and so far as I am aware that is a perfectly legitimate method and would defy detection. Again, if moneys the result of interest on foreign securities are reinvested abroad, only for quite a short period, only a year, is it not possible to bring those moneys back again into this country in the shape of capital, and consequently they would not come under the
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system of taxation proposed by the Chancellor of the Exchequer. So much for income tax.
What are the Death Duties as amended in Clause 54, Schedule 2, of this Bill? Do not the same considerations apply equally to the accumulation of capital at the death of an individual? Moneys, for instance, which have been accumulated by an individual and which remain in a foreign bank under the account of two joint individuals, at the death of one of them, it seems to me, would not come under the area of the jurisdiction of the Chancellor of the Exchequer. Even the Government themselves have betrayed their anxiety in this matter. Is it not the fact that they have invited the co-operation of foreign Governments to disclose the private affairs of the citizens of their respective countries, and that these proposals on the part of His Majesty's Government have not been accepted by foreign Powers except in the case of France? I do not doubt it will be urged that it is unpatriotic on the part of any citizen to attempt to evade his proper contributions to the State. I am not hereto defend that proposition. We are not moralists here, we are legislators and the considerations before us are simply these, that opportunities do exist for the evasion of one particular form of tax by a certain section of His Majesty's subjects who are in possession of fluid and fugitive capital, while another section of the community who are in the enjoyment of revenue which by virtue of its immobility cannot escape but must bear the full force and weight of the tax. I leave the discussion of this particular tax with this final observation, that it is impossible to view a tax as equitable when it is clear that its imposition might be followed by a whole series of legal evasions on the part of those citizens upon whom it is designed to fall. The point is a pertinent one because it is supported by the collective wisdom of His Majesty's Government themselves. Clause 95 of this Bill displays an official fear of evasion, for it lays down that a penalty of imprisonment is to be enforced upon those citizens who, being less astute than their neighbours, fail to invoke the law sufficiently to their aid.
I now come to the case of the labourer, the wage-earner who is dependent upon capital. I do not think that it can be a source of anxiety to us if capital should leave these shores if we are assured that this country has got as much capital as it requires, and that it cannot reasonably

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absorb any more. That point was most lucidly brought out last night by the noble Lord who spoke from the Back Benches, but when we hear the Prime Minister rejoicing at the departure of capital, surely we may ask whether its emigration is due to the fact that capital can no longer find suitable investment in this country, owing to its abundance here already. The answer seems pretty clear. The high rate of interest upon Consolidated Stock, combined with the exceptionally high percentage of skilled artisans who are out of employment—7·7—clearly and conclusively proves that that is not the case. My Lords, I have always understood that the citizen would much sooner invest his money at home where it is under his immediate control and supervision. The facts which I venture to bring to your Lordships' notice place it beyond doubt that there is a field for investment in this country.
Why, then, is capital going abroad? It is going abroad because it is safer abroad. But why is it more secure abroad? The inroads upon capital under the terms of Part III and Part IV of this Finance Bill are so severe relative to the demands made upon capital by Exchequers in other parts of the world, that it is no exaggeration to say that His Majesty's Government have by their financial proposals succeeded in displacing the centre of financial security. I would not have ventured to deal with this subject of capital, in which no doubt we are considered to be peculiarly and personally interested, were it not that the relations between capital and labour are so closely interwoven. It cannot be a matter of indifference to the citizen of this country if the interest on foreign investments alone is spent in Great Britain, or whether the capital itself is invested in this country, and if it be true that capital and labour are inseparably bound up together, if it be true that they are mutually interdependent, then if one party to the bargain goes away to different lands and takes his money with him, the other party—the wage-earner—must either be left at home to starve or emigrate. The latter alternative seems the more probable one to be adopted; but, surely, my Lords, the international position of our country is not such that we can contemplate to-day a stationary population with equanimity.
My Lords, I pass to the final consideration,
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that of the financier, and I only allude to it in order to show your Lordships that the attack of the Government on capital is complete. Lord Revelstoke pointed out last night the position of the foreign market, and I believe it is a fact to-day that the American stock market has gained a prominence verging on predominance in South America, and, indeed, even in the Far East. In these distant fields it is becoming more difficult every day for Great Britain to maintain a strong position. The imposition of new and heavy Stamp Duties under Clauses 73 to 79 of this Bill may suffice to turn the issue definitely against us. I believe that these fears are shared by many; they certainly were shared by Lord Revelstoke last night, and it is a significant fact that the opposition to these particular proposals of the Finance Bill has been strongly endorsed by the majority of those, irrespective of Party, whose names rightly represent the collective wisdom of the City.
Let me pass quite briefly over the second aspect of the case. The first fifty-four clauses of this Finance Bill, tending as they do to single out two classes of the community for exceptional financial treatment, are brought forward with intent to undermine the political power of your Lordships' House. It is within your Lordships' recollection that the Licensing Bill of last year sought to reduce by its proposals one-third of the existing licences within fourteen years, and that at the end of eighteen or twenty years all licences should revert absolutely to the State. On that measure being rejected by this House we believe that the country supported us, and we still have every ground for belief that that action was in harmony with popular wishes. But under the proposals in Clauses 43 and 44 of this Bill, if they were allowed to come into operation, the position of the brewer would be absolutely crippled, and certainly one-third of the licences in the period of years contemplated under the Bill would be reduced. You will therefore notice that the end aimed at in the proposals which were rejected by your Lordships last year are now to be attained under the guise and under the supposed safe conduct of a Finance Bill. The Government are trying to make your Lordships stultify your decision of last year. Either in order to penalise a class or to gain a Party end, Ministers have called to their aid a constitutional weapon such as no previous Administration have ventured to employ.

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But the spirit of Party vindictiveness failed to find full expression in an attack upon a single class. It was only by an attack upon the licensed trade together with a campaign against the landed interest that the Government could insure that whatever the decision of your Lordships with regard to this Finance Bill was, they could claim that that decision was based on selfish considerations.
My Lords, we are to be placed in a political dilemma. If we accept the financial proposals before us we shall be told that we have sacrificed those whom noble Lords opposite call our political allies in obedience to an instinct of self-preservation. If, on the other hand, we reject these proposals we shall be told that we have done so out of selfish and egotistical considerations, and not with a view to the welfare and prosperity of the community as a whole. My Lords, for fear of being denounced as an egoist, and one deeply interested in land monopoly, I will not discuss the details of the land clauses. They were fully dealt with last night by the noble Marquess. It is sufficient for me to say this, that involving as they do the maximum of expenditure by the State for a minimum return to the Exchequer, they seem to me to be the most curious financial proposals ever submitted to your Lordships' House. The only other comment I make upon them is that they have been supported by language of peculiar vindictiveness and remarkable abuse unparalleled, so far as I am aware, in our public and our political controversies. These sections of the community, the land interest and the licensed trade, have been singled out to bear a special degree of increased taxation without one single sober piece of evidence having been produced throughout the whole of this debate to show that the increased burdens imposed on these two sections of the community would in the long run be of benefit to the country at large. I have ventured to point out that the character of these proposals, destroying as they do the balance between direct and indirect taxation, is injurious alike to the capitalists and to the wage-earning classes, and that it threatens the position of the British money market. I have ventured to show, too, that the motive which inspires those actions is not a single-minded pursuit of the national welfare, but is tainted by a desire to strike at those whose existence is a bar to the dominion of the demagogue; and I say,
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both by virtue of their character and their motives, that these proposals should not pass into law until they have been submitted to the judgment of the people of this country.
Will your Lordships permit me to go one step further? These financial proposals, tested by a standard by which the Government themselves would claim to be judged, mark a breach in our financial traditions. The canons of taxation laid down by Adam Smith are always accepted by noble Lords opposite and by all Free-Traders as a direct economic revelation. Adam Smith said that taxation should be equal. This Budget discriminates against classes. Adam Smith said that taxation should be certain. The sudden imposition of a Super Tax is arbitrary. Adam Smith said that taxes should be levied at a convenient moment. The increased Death Duties would fall at a time of inevitable financial disorganisation. Adam Smith said that taxation should be cheap to collect. The land taxes are dear to collect. Surely, my Lords, when the Government bring forward financial proposals which, as this debate has shown, have not received the mead of approval from the majority of your Lordships, and in addition it is clear that these proposals violate the financial doctrines which they themselves were elected to uphold, surely the Government need a special degree of assurance that the people of England are in agreement with them? But in spite of the special need of such an assurance His Majesty's Ministers steadfastly refuse to refer to the country, except, of course, in their perorations. The question, therefore, is whether we have the right to step in and claim that the people should be consulted.
Last night the noble and learned Lord on the Woolsack dealt at great length with matters referring to the Paper Duties Bill of 1860, and I must ask your Lordships to kindly permit me to read one or two extracts which are very pertinent to the consideration of this matter. In moving the Second Reading of that Bill in 1860, Lord Granville, the Government spokesman, said—
"The legal technical right of rejecting I do not deny. The very preamble of the Bill shows it. The question being put four times to your Lordships' House shows it."
The constitutional aspect of this question was examined with great erudition by Lord

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Lyndhurst, one of the most honourable and venerable members of your Lordships' House, in a speech delivered on his eighty-ninth birthday. "I take leave to say," declared Lord Lyndhurst—
"that there is not an instance to be found in which the House of Commons has controverted our right to reject Money Bills."
Lord Lyndhurst propounded a doctrine which will be endorsed by every noble Lord in this House who proposes to vote for the Amendment. "We exercise those rights," he said "not for ourselves, but for the people." The Bill was rejected, and in the following July the Prime Minister, Lord Palmerston, moved three Resolutions in the House of Commons, the second of which explicitly lays down and admits your Lordships' right to reject Money Bills, though it goes on to observe that the exercise of this right has always been viewed with peculiar jealousy by the House of Commons. I must confess, when I listened to the noble and learned Lord on the Woolsack last night and he reminded your Lordships of those Resolutions, that I was anxious to hear the noble and learned Lord read that second Resolution, and I felt when he quoted the Resolutions in their general form that his researches had been of too discriminating a character. My Lords, the Prime Minister's words on this occasion were emphatic. He said—
"It is well known that the Bills so prepared and framed by us cannot pass into law without the assent of the Lords; and it is clear that an authority whose assent is necessary to give a proposal the force of law must, by the very nature of things, be at liberty to dissent and refuse its sanction. To take from the Lords the power of dissenting to a Bill to which their assent is now required you would need an Act of Parliament to which they must themselves be a party, or you must by a revolutionary proceeding subvert our existing Constitution."
There are to-day some who, anxious to turn constitutional theory to their own ends, are willing to assert that it is your Lordships' House which now intends by a revolutionary proceeding to subvert our existing Constitution. The debate on the Resolutions led to a speech from Mr. Disraeli, which was of special interest because he considered the method of combining all the Tax Bills into a single Finance Bill, which was actually adopted in the following year. He said—
"We do not—at least I, for one, and the Prime Minister, for another, do not—question the right of the House of Lords to reject such a Bill."
Mr. Disraeli went on to foreshadow a
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Budget which it would be absurd to deny the rights of your Lordships' House to reject, and his description of that Budget was very similar to that of the Budget now before the House. In the following year the various separate proposals were combined into a single measure, and this was the comment on the manœuvre offered by Lord Robert Cecil, the father of the noble Marquess sitting behind me—
"Nothing can be more vain and more futile than the device by which the Chancellor of the Exchequer attempts to fetter the action of the House of Lords for future years. Why, Sir, if the occasion should again happen—which I pray may not be the case—that the House of Commons should act so madly and improperly as it acted last year, and that it should call down upon itself the condemnation of the public, the House of Lords will not be fettered by this or any other form from taking its legitimate operation."
I cannot help feeling that the views which Mr. Disraeli expressed in 1860 on the constitutional position of your Lordships' House are indeed different from those laid down by the noble and learned Lord last night. When that Bill came back to your Lordships' House in 1861, the Duke of Rutland moved its rejection, and although it was not pressed to a Division the constitutional legality of that action was accepted by men like Lord Granville, Lord Derby, the Duke of Argyll and Lord Grey. The cumulative effect of the views expressed in 1860 and 1861 are, to my mind, overwhelming, and I venture to say your Lordships will not find a right more definitely established by law, more absolutely justified by custom, practice and tradition, or more conclusively endorsed by leading statesmen of both Parties in either House than the right of your Lordships to reject a Money Bill.
Taking this point as proved, the question which now arises for your Lordships is whether this occasion is one on which we should exercise the right which we possess, but which, like all rights, should be used, as the noble Marquess reminded us last night, with circumspection and with extreme discretion. My Lords, we have had occasion in previous debates to notice the growing power of the bureaucracy. It is now urged that our political activities should be suspended, our political functions interrupted, and our political rights abrogated, because their exercise is in conflict with the convenience of the bureaucracy. The Government, together with the bureaucracy, claim to override the sentiments

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of your Lordships' House, forgetting that the assertion of such a claim is to ignore the fact that ultimate sovereignty resides—I use a constitutional phrase—not with the King in Council but with the King in Parliament. My Lords, if such a doctrine were allowed to prevail, it would profoundly affect the position of your Lordships' House. For what is the position you find yourselves in to-day? The relations of this House with the lower House, which the Government propose to disturb, are in themselves a monument to the political sagacity of the British people. Their adjustment has been perfected by the genius of great men. That subtle and delicate equipoise has been preserved practically unchanged during centuries by the statecraft of leading men in either House, so that to-day it bears something of that mysterious sanctity which time alone can give. It is as with the Abbey within whose shadow we deliberate. Inspired architects planned its noble outline, its solid walls, its flowing buttresses, and its dominating towers. Zealous masons laboured to transmute the architectural vision into the reality of solid stone. But not all the splendour of the initial conception nor the patient services of its builders could have sufficed to win for the Abbey the place which it holds in our hearts to-day. Time has touched it with his finger, and to his ineffable touch it owes its ultimate consecration. So I say it is with the relations between the two Houses of Parliament in the vital matter of finance. They, too, are the result of a noble political inspiration. They, too, have been slowly upreared in the passage of the centuries. They, too, have been hallowed by tradition. Yet to-day the Government, acting through the Lower House, are prepared to lay rude and irreverent hands upon a political fabric which has won the admiration of the civilised world. This magnificent monument, this unique expression of the temperament of our people is to be shattered at the bidding of a demagogue from Wales, and may I respectfully add, by the threat of the noble and learned Lord on the Woolsack.
THE LORD CHANCELLOR: I made no threat.
THE DUKE OF MARLBOROUGH: Neither the words of the noble and learned Lord on the Woolsack, nor the silence of the noble Earl, Lord Crewe—a self-constituted
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mute at the obsequies of the British Constitution—non the remarks of the noble Earl on the Cross Benches have in any way shaken my confidence that the Amendment moved by the noble Marquess, Lord Lansdowne, ought to receive our united and unanimous support.
THE SECRETARY FOR SCOTLAND (LORD PENTLAND): My Lords, in the peroration which he has addressed to the House, the noble Duke who has just sat down made two mistakes which it seems to me to fall to my duty to correct. By his characterisation of my right hon. friend the Chancellor of the Exchequer, who so far as his own personal responsibility in this matter is concerned is well able to defend himself, the noble Duke implied that this measure came up to your Lordships' House at the bidding of my right hon. friend and of him alone. Let me disabuse the noble Duke, if I can, of any such notion. This Budget has behind it the united and unanimous support of His Majesty's Government, and it is with the support, and the overwhelming support, of the House of Commons, that it comes to your Lordships' House. Another notion, which I seem to detect in the peroration of the noble Duke was this, that in his view we, the Government, are the aggressors, and the challengers in this quarrel. That is not our view, and I shall endeavour to show why it is not our view in the course of the observations which I shall ask leave to address, to your Lordships.
The noble Duke travelled over a somewhat wide field. He condemned the the alteration in the balance between direct and indirect taxation which has been brought about by this Budget, and he seemed to think that because a certain percentage of the national revenue was collected in indirect taxation, and a certain percentage in direct taxation, that that ended the matter. My Lords, we have to see on whose shoulders these burdens are laid. It is a fact that four-fifths of the indirect taxation of this country is paid by the working classes, and if your Lordships wish to inquire what additional burden is laid upon the working classes as compared with the rich, I will give you one figure by which you can test it. The extra burden laid upon the working man with a wage of 30 s. per week is 2d. in the pound. In the case of a person with an income of £5,000 a year, the extra taxation

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which he is called upon to bear is 5d. in the pound. Is there any one of your Lordships who will deny that the man with £5,000 a year is far better able to bear the additional burden laid upon him, although it is more than double that which is laid upon the working man, than the man with 30 s. a week? In the one case it is some slight subtraction from the margin of income which is spent on luxury, or in whatever way you like. Would any of your Lordships maintain that the man with £5,000 a year must suffer in the necessaries of life because 5d. in the pound is taken from him as an additional sum in taxation? But, my Lords, in the case of the working man, it is very different. Take 2d. in the pound from the working man, and you touch possibly his house accommodation, his food, his education for his children; you cripple that man's expenditure, and when you look at the burden of direct and indirect taxation—I do not wish to trouble further with regard to this matter on this occasion, but the noble Duke alluded to it—you must look upon whose shoulders you place the burden before you can determine whether the burden is a just one or not.
Then the noble Duke went on to characterise our proposals as an attack upon capital. The noble Marquess last night gave some figures with regard to the public issues of capital for home undertakings, which I confess I was not able to follow or to understand. He said that while in the year 1908 fifty-five millions was the total of public issues for home undertakings, in the first ten months of 1909 that fifty-five millions was represented by a sum of twenty millions. I have done my best to verify those figures. I cannot understand where they came from, but I have ascertained this, that so far as public issues are concerned—and that does not represent the measure of industrial enterprise at all—they have not varied very greatly during the last six years for home undertakings. But if we must be particular, if your Lordships will look at the figures you will find that in spite of a high bank rate, and in spite of the American financial catastrophe of two years ago, the public issues for home undertakings during the last three years are considerably greater in amount than they were during the previous three years, which, be it noted, were the last three years of the late Unionist Administration. But, my Lords, if the noble Marquess's figures are right, what
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do they mean? They mean probably—I am hazarding the view—that the proportion between the money raised publicly for home industrial undertakings and that raised privately has varied. The figures afford no proof whatever that there has been a reduction in the amount of money raised for home undertakings, for, as your Lordships are well aware, not all industrial undertakings come to London for their money, and not all of those undertakings raise their money publicly; they are subscribed for privately, and their figures are therefore not obtainable and consequently not comparable.
The noble Lord, Lord Revelstoke, said last night that he was bound to protest, and to point out to your Lordships that Consols had fallen from eighty-nine to eighty-three. I should have liked to ask the noble Lord whether he would have protested equally strongly when some years ago Consols fell from 113 or 114 to eighty-nine, a much greater fall and the cause of which is much more easily traced than the cause of the fall at present. Then it has been hinted in this debate, and it has been widely alleged outside, that the fact that British capital goes abroad is a bad sign. Surely it is the other way. The fact that there is British capital floating into foreign undertakings is an index of the prosperity and the financial welfare of this country, and so long as industrial undertakings in this country can borrow for their purposes at a lower rate than the German Empire can upon its public credit, I do not think that there is much wrong with the financial position of this country. The corollary, of course, of the implication in this statement with regard to British capital is that this country is not a desirable country for men of great wealth to live in. I ask your Lordships to think in what other country there is the same security, the same protection, as there is in this country for men of large wealth and great means to live in. There is one cause, and it is a temporary cause, of disturbance of the business interests of this country at this moment, and that is the fear of a General Election. A disturbance and interruption of the trade of the country has been unexpectedly thrust upon the people; let me add, not by the action of the Government, but by those who are its critics.
I think I have said enough to indicate that I share the opinion of the noble Earl

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who opened the debate this afternoon, and I think I may quote what he said in support of what I have now urged upon your Lordships' attention when he used the words "that he was not of opinion that black ruin stared us in the face in this country." But I confess, if there has been too much emphasis in my humble judgment laid on this aspect of the case, there has in other respects been no adequate recognition of the gravity of the case which we are now arguing. The question whether your Lordships' House can, as the noble Marquess put it, legally reject this or any other Money Bill, does not seem to me to be much more than a purely academic one. That is admitted on all hands; but when we go on to discuss the further question whether your Lordships ought, as the noble Marquess puts it, to reject this Bill, it is perhaps permissible to point out that the noble Marquess could not quote one single instance nor one single authority in support of what he urged upon your Lordships, for the very good reason that what you propose has never been done before. Parliament has never, in all its history, at the bidding of the House of Lords refused Supplies to the Crown. There have been various changes in the form of procedure in regard to Money Bills, but during all the centuries through which this ancient and honourable House has lived, it has never taken the step which your Lordships propose to take at the suggestion of the noble Marquess.
The noble Marquess said that there would be "a little chaos." He suggested that with the co-operation of the Government that chaos could be avoided. The noble Marquess must know very well that to anything which savours of tampering with the privileges of the House of Commons the Government can be no party. The relations between the two Houses of Parliament have for years subsisted on the principle of give and take. The noble Marquess seems to think that some Budget might be patched up—some accommodation, I believe is the financial term, some temporary accommodation might be provided—and he seemed to indicate that there the trouble and the difficulty would end. My Lords, if you take this step, it is an irrevocable one. Things can never be again what they once were. In the first instance, you destroy the authority which has hitherto attached to Resolutions of the House of Commons in the matter of
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raising taxation. You destroy the control of the House of Commons—the exclusive control which the House of Commons has hitherto exercised over expenditure. You paralyse the Executive. You may have financial chaos; you will certainly have what I may call constitutional chaos; for you propose to abrogate the cardinal constitutional convention which has hitherto regulated the relations between the two Houses. And if you once take that step you bring things to a deadlock from which there is no escape but by some revolutionary change. The Constitution of this country is surely devised so that we may ascertain the will of the people through the elected House of Parliament. That, I take it, is the meaning of living under representative Government.
The Resolution which the noble Marquess has moved plausibly seeks to identify his purpose with that which is the purpose, of our Constitution. The same plea might be urged about any Bill. The same plea might be urged every session about every Bill until you come to not Government by representation but Government by plebiscite. Added to that, it is surely doubtful whether any General Election gives an utterly decisive vote on any particular issue. You have financial confusion, and you have constitutional confusion, and you have what I may call parliamentary confusion by this step.
Now, the noble Marquess in his speech, if I may turn to that for a moment, made a skilful appeal to all your Lordships who may be inclined to follow him. I have heard of an Omnibus Bill and an Omnibus Resolution. The noble Marquess's speech was certainly an Omnibus Speech. He tried in the case of those who had objections to any of the proposals contained in the Finance Bill, to attract them all to his standard. He mentioned first the Death Duties; called them odious and capricious. My Lords, the principle of the Death Duties is the same now as it was fifteen years ago when they were first enacted, and during twelve of those fifteen years the Party which noble Lords opposite support has been in power. They have had their own opportunity of altering or modifying the Death Duties. But let me remind noble Lords opposite that there are others besides the noble Marquess who will have something to say to these proposals. It is common

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knowledge that the Leader in the House of Commons, whatever might be thought by your Lordships here, while he has strenuously objected to the land proposals and the licensing proposals has certainly thrown his ægis over the Super Tax proposals, the Income Tax proposals, and possibly over the Death Duties.
We have heard of dishing the Whigs, but it occurs to me that some of your Lordships may possibly in years to come, if the event should fall out other than we hope and expect, find yourselves whatever occurs in the dilemma of being asked by your own leaders to support what may not differ except possibly in degree from the proposals which are now before you for additional Income Tax and Super Tax and Death Duty. So that really, if we come to look at it, the objection to the Budget, if we are obliged to discuss merits, centres in the land and licensing proposals. Let me say a word about them. Your Lordships will remember the Land Valuation Bill which came before your Lordships' House a couple of years ago. What was the criticism levelled at that Bill? The criticism was, "This is taxation in disguise; this taxation is for no purpose unless it is for the purpose of levying taxation; we will not pass this Bill; it does not disclose your whole plan; we want to see your whole scheme, and then we will consider it."
Now, my Lords, you have before you the whole scheme. There is a tax which is proposed to be levied and that tax finds its place, as all taxes do, in the Finance Bill of the year. But now, forsooth, your objection is that valuation, which your Lordships know is a necessary concomitant of any such tax, is attached to this tax, and, on so slender a foundation as that, some critics of the Budget found the accusation that what is called "tacking" is a part of this Budget. Let me say a word about these valuation proposals. It cannot be said that they are new to the country. On four separate occasions before the last General Election they were discussed and divided on in the House of Commons during the time of the late Unionist Administration. On the two latest of these occasions they were carried by majorities in the House of Commons, and on one occasion the seconder of the Motion, that the Bill be read a second time, was a member of the Unionist Party. It is well known that all great municipalities favour these proposals. Do
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your Lordships think that you have a very strong case in resisting these proposals, a case that will be considered when it is referred to the country by those whose judgment you seek? Will you be able to make out that this is a novel proposal? Will you be able to maintain that it was not before the country at the last Election? I confess I should like a stronger foundation for a great constitutional change such as you now propose.
Now, let me say a word about the other land taxes which excite great animosity. I cannot myself believe that your Lordships have realised the import and the scope of these taxes. Certain lands are taxed, but the values accruing to this present hour are all exempt. The value of no land to the date upon which the Bill comes into operation is touched. There is nothing whatever to shake the security of any investments of any property held in land, whether it be held by high or low, from one end of the country to the other. There is another exemption. All improvements which are due to the expenditure of the owner are exempt. Urban land which is built upon and fully developed is exempt. Not a penny more is placed upon urban land by this Budget so long as it is fully developed and built upon. What is proposed is this, and this alone. Starting from the present accrued value and excluding all future value I due to his own outlay, in the case of land which might be developed or is withheld, for whatever reason, from the market, it is proposed that one halfpenny in the pound on capital value shall be the owner's contribution to public funds in respect of that land, and that when he realises it, twenty per cent. of the increment which he then receives shall be contributed to the public funds. Those and those alone are the limits of what is proposed in this Budget in regard to land. "Ah," noble Lords will say—and this was implied by the speech of the noble Marquess last night—" but you will ruin agriculture." The noble Marquess said, "You have singled out for taxation a form of wealth derived from an enterprise in which the profits are relatively small and uncertain," and from the context, which I have read carefully more than once, because I would be the last to misinterpret the noble Marquess's words, I have no doubt he means agricultural land. My Lords, all agricultural land is exempt from these new burdens. There is not a penny placed upon agricultural land by the Budget, as my

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noble friend Lord Ribblesdale pointed out last night. What is more, this Budget, as he also pointed out, is the vehicle of great benefits to the agricultural interest and to the owners of land. The allowance under the Income Tax Schedule for maintenance and repairs which has hitherto stood at the limit of twelve and a-half per cent. is now to be increased to a limit of twenty-five per cent., and in the Development proposals, and in the Road proposals which are linked to this Finance Bill, agriculturists outside this House have recognised this Budget as conveying great benefits to the agricultural industry and to the owners of land.
Then, my Lords, there are other objections which your Lordships take to this Budget, namely, with regard to the Licensing proposals. I say the case is equally strong with regard to the Licensing proposals as it is in regard to land. It is absolutely impossible to my mind to obtain a secure foundation for so great a constitutional change as is suggested from these Licensing proposals. For twenty-five years, I think the noble Lord on the Woolsack said last night, the question of licensing has been before the public of this country; and however strong the objections of noble Lords, or those otherwise interested in these proposals may be, it would surely have been possible for them to have accepted the proposals as they are, and to have modified them if experience had shown that they were unduly hard, but they are certainly not novel. My Lords, that is the case which the noble Marquess put forward last night for what he has proposed to your Lordships.
I should like to be permitted to make two observations upon the situation which is disclosed. In my opinion, the electorate will be right if they take the view which I have already expressed, that the Opposition are the aggressors in this matter. There is in this country a strong sense of fairplay, and I doubt whether your Lordships quite recognise the position of any Liberal Government under the present situation. It has been put before your Lordships in language and with power and force, which I cannot pretend to exercise, by noble Lords who are present on this occasion, that you will never get the people of this country—and it will be a sad day for this country if you ever were to get them—to fail to recognise the essential unfairness of the position (which we were reminded last night is only
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of comparatively recent date) under which there is a permanent and overwhelming majority in this House opposed to the Liberal Party. The essential unfairness of the position is that in a system which affects to be just to both Parties, we should go through all the turmoil and expense and labour of a General Election, and in the case of a Conservative victory we should meet with no check and no opposition from your Lordships' House, while in the case of a Liberal victory we should meet with nothing but opposition, as we have met with during the last four years from the same House. I believe it is true that since the year 1864 only one Bill reaching your Lordships from a Government with which you sympathised has been substantially altered. It is certainly otherwise with Liberal administrations. These two subjects which I have mentioned, Land and Licensing, and I might mention many others, have already been the subject of consideration by your Lordships at the instance of this Government, and your Lordships have rejected proposals made immediately after the fresh sense of the country had been taken upon them, and with all the impulse behind them of a new Parliament with an overwhelming majority in support of the Government. In my view, I maintain that the action of your Lordships is a gratuitous attack upon the present situation, a gratuitous extension of what is considered to be the privilege of this House in the Constitution of this country, and an unprovoked attack upon the position of the other House in the Constitution of the country.
The second point I would like to mention is this, that once this has been broached, we are done for ever with the old state of things. By refraining from the exercise of the full legal rights of this House, by custom, by convention, by tolerance, by forbearance, by the exercise of sagacity and true public spirit, subordinating in the end, on some occasions not without pressure, other interests, the relations of the two Houses have been left as they are at this moment. The character of this House may alter. Nobody can be blind to the fact that, whereas we have heard little of it in this House, there is a raging, tearing propaganda throughout the country in favour of Tariff Reform. We know enough of Tariff Reform, or of Protection, which is its real name and its operations in other countries, to be apprehensive that if any such system

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should ever be established in this country, it would inevitably profoundly alter the character of the constitution of your Lordships' House. There is no elected element in this House, and as I say the difficulties between the two Houses have been got over in the past by mutual forbearance. Whatever may be the outcome of this conflict, I cannot believe that permanently the forty-two millions of the people of this country will allow 600 or more of your Lordships to assume control over the finance and the taxation which they have to bear. A noble Lord last night quarrelled with my noble and learned friend on the Woolsack for saying that any future Liberal Government must secure itself against future dangers which he anticipated. He was rebuked by one of your Lordships for so saying. Your Lordships know perfectly well that no Liberal Government will ever be placed in power in this country, unless it is ready to take such steps as will secure itself in future from the harassing opposition to which the present Government has been subjected. The relations of these Houses—if the Constitution is to be thrown into the melting pot—must be modified. How and when remains to be seen, but modified they certainly must be. Noble Lords do not contradict that statement.
You have a choice of two ways. You have the old way, the traditional way, in consonance with the history of this country, which shows the gradual broadening of the liberties of the people; or you have the violent unconstitutional revolution which you now seek to provoke. My Lords, I prefer the former way. I urge your Lordships to reject this Amendment not because as a member of the Liberal Government I am not ready to take up the challenge—I am as ready as any man here, and as strong a Party man as any man here—but I do see that in this step there is a grave departure, the consequences of which no man in this House can at present foresee. The noble Earl who opened the debate this afternoon alleged as one of his reasons for withdrawing his support from the noble Marquess that he considered that there might be grave embarrassment to this country in time of war if it were involved in a prolonged and severe constitutional struggle. America, we all know, lost its shipping during the Civil War; and it is common knowledge that we ourselves are still severely handicapped industrially and financially by the leeway which we lost during the South African war.
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And it may be only too true what the noble Earl urged upon your Lordships' attention that the existence of a long constitutional struggle might seriously prejudice this country in time of war if that should come. But there are other interests and there are other developments besides the incidents of war. Two or three years ago only this country was ringing from end to end with criticisms of our educational inefficiency, of the backwardness of this country in regard to education. Your Lordships heard last night from the right rev. Prelate his view of the social condition of the people, and there is no doubt much to be done for the development of the full strength of this country physically as well as mentally. Do you believe you will ever get the attention of this country to self-improvement and to self-development if, for the next five or more years, we are engaged in a prolonged constitutional struggle? My Lords, I believe that the gravity of the issues which we are debating is hidden from us because we do not know what the future may unfold, but I would appeal to your Lordships to consider whether you must take this irrevocable step, not only whether the case is a slender one on which to base what you propose, but whether the penalty may not be one altogether disproportionate to the offence.
THE EARL OF CAMPERDOWN: My Lords, it is with very considerable trepidation and perturbation that I rise to address your Lordships after the terrible philippic which has just been delivered to us. I do not know whether I shall be even able to leave this House in safety. I came here believing that what we were going to discuss was as to whether this Budget was fair to certain classes of persons who are to be taxed under it; but if we are to be guided by the noble Lord, it appears to be that the issue is not fairplay to any taxpayers, but fairplay to any possible Liberal Government. My Lords, if your Lordships dare vote for this Amendment which has been laid before you to-night you have done for ever with the old state of things. What is to follow? The noble Lord does not tell us. He says that such steps will be taken as are necessary. Pray, what steps? Because it would be interesting to know. He said that your Lordships ignore the force of a Resolution of the House of Commons. Pray, what force has a Resolution of the House of Commons over this House? My Lords, when this

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matter is taken up in the sense in which the noble Lord proposes it shall be taken up, he will find that what will be required will be an Act of Parliament, and not a mere Resolution of the House of Commons.
I do not know that your Lordships will expect me to go at any great length into the speech which we have just listened to. It began by depicting to the House a delightful economic state of things in this country at the present time. The noble Lord, if I remember right, contrasted the public financial issues of the last three years with the public financial issues of the last three years of the administration of the preceding Government. I do not know where he got his figures from, and therefore I am not able to check them, but he said to this side of the House "Remember this, that Consols which stood at 113 fell to eighty-nine." Does not the noble Lord remember that when they were at 113 the interest was two and three-quarters per cent., and with regard to the state of financial affairs at the present time, I must confess that if it ever fell to me to require financial advice, I think I should prefer to consult Lord Revelstoke before I took the opinion of the noble Lord opposite on such matters. But, my Lords, I leave that.
The noble Lord made a statement, and said we could contradict it. The question, it seems to me, is if I were going to contradict the noble Lord's statements I do not know which I should begin by contradicting first. What I should like to do would be to have the noble Lord in Committee on the clauses of this Bill, because the language that he used with regard to this Bill I can only say was not consistent with the way in which I have read it. I will just give him a single instance. He said that on land which might be developed a duty of ½d. in the pound was to be imposed. It is on all undeveloped land, and undeveloped land is stated in the Bill to mean all land which is not covered with buildings. The noble Lord shakes his head. I should be glad if he would correct me if I am wrong.
LORD PENTLAND: Land which has nothing but a purely agricultural value has no taxation upon it. It is only when the land has a prospective building value, and, therefore, in my language, might be developed, that it is subject to this tax.
THE EARL OF CAMPERDOWN: I did not know that the noble Lord was speaking
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of agricultural land only, and moreover, I do not think that la; was. What he was speaking of was the tax on undeveloped land, and undeveloped land, as I said just now, is the land which under the Bill is not covered with buildings. But, as I say, we are not in Committee. I very much wish that we were. The noble Lord and I have had some conversations before, and I daresay we may have some more, but at the present time I am dealing with this Bill, and perhaps the only further objection that I would take to the noble Lord himself is to the statement he made that he was afraid your Lordships do not realise the responsibility which attaches to you for the course that you may take with regard to this Bill. My Lords, I can only say for myself, that having been for a very long time a member of your Lordships' House I have never entered on the consideration of any question with more responsibility. I do not think I have ever entered on the consideration of any question with so deep a sense of responsibility as I have with regard to this matter. Undoubtedly this Bill is a most important Bill. This debate is a most important debate, and I am ready to confess to your Lordships that for a long time after this subject was before the other House of Parliament up to a very recent date, which may be measured only by three or four weeks, I have been anxious to pass the Bill, because I am so well aware of the gravity of the circumstances which must arise if we differ on this point from the House of Commons. I regret to say that after considering every circumstance of the case, after reading, I believe, every debate that took place on it in the House of Commons, I have been reluctantly driven to the conclusion that there is no other course possible except to adopt that which is indicated in this Amendment.
This Amendment exactly expresses—and I thank the noble Marquess for it personally—the attitude of my mind towards this question. I should be sorry to see a word taken from the Amendment or a word added to it. There are no theatrical epithets in it. There is nothing in it which anyone, however malignant his intentions may be, can say contains any threat, veiled or direct, to the House of Commons. It simply expresses the opinion of your Lordships that, you would not be justified in passing this Bill without its being laid before the people. I confess

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that I was considerably confirmed in my opinion after very carefully listening to the noble and learned Lord on the Woolsack last night. What did he say? He admitted that your Lordships have a perfect right to reject this Bill or to dispose of it by means of an Amendment, but what he said was that it would not be constitutional for your Lordships to do it. If that is the only argument that can be brought against the conduct of the Opposition in this matter, there is very little to be said, I am convinced, in favour of that contention. It eases my mind very much indeed. The noble Lord said that there is no precedent for action of this kind on the part of the House of Lords. If there is no parallel and if there is no precedent for the action of the House of Lords in this matter, is there any parallel or is there any precedent for the action of the House of Commons in putting forward such a Budget? This Budget is not a mere statement of the money which is required for the financial conditions of the year. It is rather a Liberal programme. It is a statement of a new policy. It is a policy which would necessarily occupy several years to develop. There are objections to it, and the first I will take to it is—I do not know whether this will be grateful to noble Lords opposite—that the first and the greatest objection to the Bill is that it is a distinct advance and a long step in the direction of Socialism. I do not make that statement on my own authority. I make it on the authority of the Socialist members of the House of Commons. Here is one. This is what Mr. Barnes said a few days ago in Scarborough:—
"Five years ago the idea of a Liberal Government introducing such a measure as the present Finance Bill would have been deemed outside practical politics. It occurs to me that having regard to the fact that we have got a Budget which does give us a chunk of Socialism we, as consistent Socialists, ought to vote for the Party which is pledged to it."
Mr. Keir Hardie said on September 20:—
"We are supporting this Budget well knowing that it is the first step towards the ideal which we have in view—the absorption by the community for the use of the community of unearned incomes whether derived from land or from other sources."
This Bill, no doubt, only deals with land. "Other sources" will follow. And Mr. Barnes, speaking on this occasion in the House of Commons, said:—
"This new tax on land, I agree, is to insert the thin end of the wedge. We have the thin end of the wedge driven in this year, and we shall be able to drive that wedge home in future."
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I could go on quoting to your Lordships. I have many more of those statements here, I think, however, I have quoted enough. But it is not merely the Socialist members who consider that this Budget is of a Socialist character. It is considered Socialistic by members of Parliament, and by no less a person—I do not see him present—than one of the newly-made Peers in your Lordships' House. What did Lord Joicey say of this Bill? He said—
"In my judgment the Budget violates many I principles which I have always considered necessary to sound finance and is a complete surrender to Socialism. It sacrifices principles to popularity. It asserts that it is almost criminal to accumulate in order to provide for one's family. It deprives the industrious of the fruits of their industry largely for the benefit of the thriftless and idle. It encourages reckless expenditure by all bodies spending the public money. It will render life to certain individuals almost intolerable by the constant inquisitorial interference of officials."
Is not that true? I suppose that Lord Joicey is already tainted with that original sin, which, in the opinion of some of your Lordships—I do not know whether it includes the noble Lord who has just spoken—appertains to this House. Make as many Liberal Peers as you like, but as soon as they come here, they begin to recover their senses ! Liberal Governments have made many more Peers in the last fifty years than Conservative Governments, and what is the result? That when you introduce some new measure which the people are unable to swallow, they go over to the other side of the House. I very much question, even at this moment, if we could only remove from the House all the noble Lords who sit on this side, and if we could leave the fate of this Budget to be decided by ballot, I am by no means sure that this Budget would pass.
There are plenty to be found in the other House of Parliament who do not like this Budget, yet who voted for it. I will be responsible for saying that there are many sitting on that side of the House whom I see before me, who are not enamoured of it. But it is not merely in this House that this Budget is thought Socialistic. Take Sir Robert Perks, whom I suppose noble Lords opposite will deem still a Liberal. How long he may continue to be so it is impossible to say. But listen to what he says:—
"I do not approve of the recent financial proposals of the Government, and as you are aware I did not vote for the Finance Bill. Still less do I

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approve of the policy foreshadowed in the recent speeches made by the Chancellor of the Exchequer and she President of the Board of Trade."
Those two speakers are the most important speakers on behalf of the Government, and I say that for this reason, that it is their policy which is always carried out; it is their policy which is embodied in this Bill.
Coming to the President of the Board of Trade; it is very difficult to say which members of the Government express the opinions of the Government and which do not. We have tried on one occasion to find out. Your Lordships will remember when the noble Earl the Leader of the House was asked what he thought of the Lord Advocate's opinions that he preserved a discreet silence. I am afraid if I were to ask the noble Earl what he thought of Mr. Lloyd-George's speech at Limehouse, or Mr. Churchill's speech at Leicester, I should not be any more fortunate; and therefore I do not propose to put the question to him. But if Mr. Churchill is to be taken as in any way expounding the views of the Government, he has said, "It is not your money that we are taxing. It is the source it comes from." The question used to be, "How much money have you got?" But the question now is, "How did you get it?" Further than that, he has announced in the other House of Parliament that the policy of His Majesty's Government is to do away with indirect taxation altogether in the end, and to place the whole charge upon capital.
Let me say a word or two on this Budget. I do not propose to go into it in detail, but the noble and learned Lord on the Woolsack last night said, "There are some taxes on capital and there are some taxes on income." I propose to add further words to that. I propose to say that there are taxes both on capital and on income. Let us take the particular case of undeveloped land. You propose to place upon undeveloped land a duty of ½d. in the pound. A copper it is called. A copper! My Lords, it sounds the sort of thing that is only fit to give to a crossing-sweeper; but examine that copper in the sense in which it will be applied to land after it has been valued by the valuers, who, I may term, will be the Government's £300 to £500 a year men. If, unfortunately, they happen to take it into their heads that land which is only used for agricultural purposes possesses a
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potential value hereafter for building purposes, they may place upon the land a capital selling value of say £300, and that means 300 halfpennies, or 150 pennies. If you put a Government tax of 150 pence upon land which is very likely let at £2 an acre, then it constitutes a very serious additional burden upon capital which is incapable of realisation at the time at which the charge is imposed. That is the way you place upon land the capital tax up to the time it is finally developed, and what do you say then? Why, on that portion of the land which is developed, you immediately impose an income tax upon the whole created value of the land, and therefore, while you have been taxing the man out of his capital value—and mind, if that land is not developed for a considerable number of years, you have taken a considerable portion of the capital value of the land in the form of the tax—as soon as it is built upon, you turn upon him and tax him upon the whole realised income. The absurdity and the injustice of a tax of this sort your Lordships have demonstrated in regard to this Budget.
There was a similar tax upon undeveloped minerals. What has become of that tax? It has been taken away because it has been found to be so impossible and so unjust. The noble Lord also spoke of duties with regard to licensing, and he said that these additional duties which it is proposed to impose upon that trade were amply justified; and he said that, after all, it was in your Lordships' power to modify those proposals after a year or two. The objection to that statement is that it is not in your Lordships' power to modify those proposals; and moreover, it is a declining trade. It has been stated by the Chancellor of the Exchequer himself that it is a declining trade, and yet he imposes upon it large additional burdens. That trade is very heavily taxed at the present time, and this Bill proposes to place upon it such burdens that within two years time, it may be even in six months time, many of those engaged in that trade will be ruined.
The noble Lords who support this Bill say, "We do not in any way interfere with trade." Don't you? I appeal to the noble Earl the President of the Board of Agriculture, and I know it is an appeal which meets with sympathy, I believe that he prides himself greatly on Free Trade. May I ask him, what does he

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think of doubling the Stamp Duty on every transaction connected with land, either for sale or for lease? How does he think—or does he think?—that it will assist his favourite policy of small holdings? The Government say that they do nothing to interfere with trade. Pray, how about the building trade? The building trade exists almost entirely upon borrowed capital, and upon land which will be described in future as undeveloped land. Do you suppose that men will, in future, lend builders capital at the same rates at which they have lent capital before when they have the prospect of Mr. Lloyd-George before their eyes? And do you suppose that a builder is so likely to build houses when he knows perfectly well that if he makes a profit, twenty per cent. of it will have to go into the Exchequer, and if he makes a loss, that the burden will fall upon his own shoulders? The fact is that if he has two transactions, one of which is a gain and the other is a loss, he is not to be permitted to put one against the other. At all events, if that is the opinion of the noble Lord, it is not the opinion of auctioneers and surveyors and valuers or of any professional men of that description. And remember what is to be the cost of the proposed Government valuation—two millions! Is there anyone who really has any professional knowledge or experience who will tell you that it can be done for two million pounds? Depend upon it, you will find, in the first place, that it will take a much longer time than you expect; and in the next place the cost will be much nearer twenty millions than two millions.
But before I leave this part of the Budget, there is one thing to which I would like to call your Lordships' attention. It is a very important matter because it conveys to my mind an impression of what I may term the levity of the Chancellor of the Exchequer in dealing with these matters. When the Budget was introduced, Mr. Lloyd-George proposed to divert the old Sinking Fund from the purpose to which it is at present applied, namely, that of paying off debt, and to hand it over to a Development Fund. That proposition met with such universal disapproval, that even in the House of Commons nothing more was heard of it. Lord Welby, who was speaking last night, spoke of his experience of different Chancellors of the Exchequer. There were five or six of them, and he said who they were. I should like
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to know whether any one of those five or six Chancellors of the Exchequer, in pro-posing their Budgets, introduced a proposal so momentous, and dropped it so quickly as has been done in the case of this old Sinking Fund? I have studied the utterances of the present Chancellor of the Exchequer and his writings and his speeches in the House of Commons, and I very much question whether anyone who will follow that same course, will come to a conclusion different from that to which I have been driven, which is, that the present I Chancellor of the Exchequer's powers of vituperation largely exceed his fitness and his power to deal with finance, and that he finds himself more at home on some country platform than in dealing in the House of Commons with important statements relating to finance.
Your Lordships will not have forgotten I all that was said about economy when this Government entered into office. Where I have their professions gone? What is their expenditure at the present time? Is it not much larger than that incurred by their predecessors whose extravagance they reviled? And for what are they making these large demands upon the individual? Have they so far changed the whole of their Liberal opinions that they have arrived at the conclusion that the State can take money out of an individual's pocket and spend it for him on a social programme much better than he could spend that money for himself? Noble Lords opposite ask us to pass this Budget now. The noble and learned Lord on the Woolsack addressed us on that question last night. He said there were only two years more, and that, after all, it is very easy to reverse anything that may be done now. Yes; but if you pass the Second Reading of this Bill, you will have accepted the principle, and will it not be always I thrown in your teeth for all time to come that you had accepted the principle and that therefore it is impossible and unreasonable that you should object to the further development?
When one is in a difficulty there are two ways of facing it. You may meet it at once, or you may postpone it. I believe that when trouble is before you, by far the best and decidedly by far the most courageous plan, is to face it at once. We have been told that our future prospects are uncertain. If the popularity of this

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Budget is such as has been claimed for it by the last speaker, then the people will say that they wish the Budget to pass, and the Budget will be passed by this House, however bad we may believe it to be. Then the responsibility will rest upon the people. It is the people who will have done it, but when the noble and learned Lord says, "We are the representatives of the people," I should like to ask him, does he believe that the majority in the country in favour of this Budget is as large as the majority who voted in favour of this Budget in the House of Commons.
With regard to what fell from the Lord Chancellor last night respecting the consequences which may fall upon your Lordships in case you vote for this Amendment, I believe the Lord Chancellor well understands and appreciates this House. I believe I may also say, without presumption, that this House understands and appreciates the Lord Chancellor; but at the same time I do think that last night—I know he meant it well—but last night in asking your Lordships whether you had fully measured the consequences of this Amendment, and whether your Lordships were prepared to take the responsibility which would be cast upon you, he addressed an argument to your Lordships which is not an argument at all. At least, it is not an argument which I should have addressed to your Lordships if I were endeavouring to dissuade you from a course which you were likely to take. This House has nothing to do with consequences. Let consequences take care of themselves. The pride of this House is that we are entrusted with a public duty; and in such a case as this it seems to me that our course is so simple and so plain that anyone who runs may understand it. I believe it has been the practice ever since I have been in this House, and I hope and believe it will be always the practice in this House in such cases as the present, to thoroughly consider all the circumstances, to recognise the gravity of such a position as this, to consider what is your public duty as members of the Second Chamber; and then when you have thoroughly made up your minds, to do your duty according to your lights, without any regard to what may thereafter follow.
EARL RUSSELL: My Lords, the noble Lord who has just sat down accused us on these Benches of being composed partly of
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faint hearts, and as to at least half the remainder, of being hypocrites. The noble Lord said we should not vote for this Bill if we were not voting in the light of day with our votes recorded. I think I need not trouble to deal with that charge, but it is true undoubtedly that a certain amount of corruption seems to be exercised by the atmosphere of your Lordships' House upon Liberal Peers. I can only hope that I may have succeeded in developing some sort of protective inoculation which will secure me against that corruption. The noble Lord concluded his address by saying that he conceived that the course he was going to take was so clear and plain that anyone who ran might read. I find it hard to reconcile that with an earlier statement in the noble Lord's speech, to the effect that this had given him much anxious consideration, and that until three weeks ago he had not been able to come to a plain conclusion on the matter. At the end of his remarks the noble Lord also referred to the great increase in expenditure, and if I may deal for a moment with this Bill as if it were a Bill which we are able to discuss and deal with effectively—although I suggest it is not—may I say that I stand perhaps almost alone in objecting to two of the largest items of expenditure, namely, the expenditure upon the Army and the expenditure upon the Navy? The Chancellor of the Exchequer in the other House said that everybody on both sides wanted this expenditure, but was not willing to pay for it. It is perfectly true that there was a great clamour for largely increased expenditure on the Navy, and principally by those who are now reluctant to pay for it. I feel that that may be carried too far, that it is possible to spend upon what is called national defence a larger sum than it is necessary to expend. I think that the fact that these large sums are always available, almost without criticism, and that anyone who criticises them is regarded as failing in his duty as a patriot, tends to extravagance in both these services.
Looking at the statement made by the Chancellor of the Exchequer, the expenditure on the Army this year was twenty-seven and a-half millions, and on the Navy thirty-five millions, while last year the figures were twenty-seven millions for the Army and thirty-two millions for the Navy. That represents a very considerable increase and that increase in the expenditure on those two services has been going on continuously

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and unchecked for many years. It is alleged that it is very easy for anyone to say that you should reduce expenditure on armaments, but that it is impossible to do it. If it is impossible to do it, I think it is a reflection upon the civilisation of the present day. There is to my mind nothing reasonable in nations behaving themselves as if they were two armed desperadoes sitting on a bench, each waiting to see which would make the first move. Surely we can devise a better system than that. But all this expenditure is unproductive, and it tends in some cases to produce, or is likely to produce, the very conflicts which it is said to be designed to avoid. These opinions, I know, are not popular, but I think this is a matter to which some more regard should be had than that lip service which is rendered to it constantly at Hague Conferences and such places. No such objection applies to expenditure on social progress and social amelioration. That expenditure is productive of economy, not only of a direct and tangible character, as is the case with Old Age Pensions, which reduces the amount chargeable to the Poor Bate, but it is still more productive in indirect methods, and in the improvement of the opportunities which the population has of earning money and of being productive. A portion of the large amount which has been spent upon education in this country has been saved in the expenditure upon prisons and lunatic asylums. This directly productive expenditure makes for the benefit of the people, and for the health and the advantage of the nation as a whole. But the expenditure being there, it becomes the duty of another House to provide the money and to find a revenue.
The right rev. Prelate who spoke last night said he did regard this Budget, which was intended to provide for that expenditure, which in itself was not seriously objected to by anyone, as an oppressive and revolutionary Budget. Is that so? It is oppressive in the sense, of course, that it is always unpleasant to have to pay additional taxes. Neither your Lordships nor the public like it, but the money has to be raised. I have not heard any of the items of expenditure pointed to as items which might be reduced in order to enable less money to be raised, and the method of raising it consists to a very large extent in increasing the yield of already existing taxes, the principle of which is already admitted. That yield has to be increased
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to provide for these services. There are, of course, limits beyond which taxation may easily become oppressive. I think those limits have been reached to some extent in foreign countries, where taxation does actually harass and hamper industry and trade by its oppressive character. I think no one can honestly say in this country that we are not still very far from those limits. The Stamp Duties have been increased, and one noble Lord asked whether it was consistent with a desire to cheapen the transfer of land to double the duty upon every conveyance. That is a part of the cost of transferring land, but my own experience, and I think the experience of most of your Lordships, will be that the Stamp Duty is the least portion of the cost of transferring land in this country, and that it does not add a very large percentage to the total cost which any person who deals in land has to pay.
It is said that the Death Duties are oppressive, and I confess, speaking entirely for myself, that the Death Duties at their lower scale may possibly involve some hardships, but I must say that I contemplate the Death Duties for a millionaire with great satisfaction. Personally, I am very willing to extract from a millionaire a very large sum of money, and when we hear about these duties interfering with people providing for their families, there is some difference between providing for them in the sense of keeping them but of the workhouse and leaving them a million diminished by fifteen per cent. The same observations apply to the Super Tax. The Super Tax is a tax which I do not doubt is unpleasant for those who have to bear it. It adds a very considerable proportion to their burdens but it has not been suggested even, as I understand, in another place, that that tax is in itself an unjust tax, and that it is not a fair thing that those who have larger incomes should contribute a larger sum. I listened with a great deal of interest to the speech which opened your Lordships' debate this afternoon by the noble Earl who sits on the Cross Benches, Lord Cromer, who danced a careful sword dance, as it were, amongst these taxes, and ended his observations with a bow to the Tariff Reform Party, offering them his vote in one hand, and a treaty of peace in the other. I did not hear that the noble Lord objected to any of these taxes in themselves, and I heard him deal with the taxes one after the other; but I was somewhat startled to hear him say at

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the end of his speech that he would support the Motion before your Lordships' House.
SEVERAL NOBLE LORDS: No, no.
EARL RUSSELL: Well, he said he would abstain from voting, but I did not quite gather why he was unable to support the Budget. The noble Lord concluded by saying that he regarded this Budget as a dangerous one, and that he could not support it. I was not able; either to follow the argument which he addressed—although it is a matter rather for other people's concern than ourselves—that a vote given to a Tariff Reformer was not a vote given to Tariff Reform. It is true, if I may take another illustration, that a vote given to a drunkard is not a vote given to drink, but a vote given to a man in the liquor interest, who stood in the liquor interest and was going to defend it, I should have thought was a vote given to the liquor interest. If you give a vote to a man who is supporting Tariff Reform and who says he is going to support and stand for it, that constitutes a vote for Tariff Reform. That is a matter, no doubt, which the noble Earl and those who agree with him will settle for themselves. The position of the unfortunate people in the opposite Party who find themselves Free Traders is already so unpleasant that one would not wish to aggravate it.
Then I take another of the taxes. We have an increase in the Licence Duties, and on that you are told that those taxes are not to be imposed upon the trade, partly because they are oppressive, but partly because more or less similar proposals have been presented to you before in the form of a Licensing Bill. Your Lordships refused to agree with that Licensing Bill, and you complain now that you find the same taxes in the Budget. Why you should think that it is not a fair thing to increase existing taxes which are imposed upon the liquor trade I do not understand. You may think that your Lordships' House is being jockeyed out of its rights by haying this matter inserted in the Finance Bill, but I do not think anyone has gone so far as to say that the Licence Duties in the Finance Bill constitute tacking. That would be an impossible charge. I admit I am not qualified to discuss with any degree of fairness the taxes upon liquor. I regard the liquor trade as being the curse of the country.
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I regard the sellers of drink as being the licensed sellers of poison, and on that matter I confess I am a fanatic, and I am not able to discuss it with any degree of fairness. It seems to me that no restrictions that could be put upon them would be too great, and that the existing system of tied houses, by which persons are forced to drink more than they want to in the interests of the landlord, is a system that ought to be put an end to, confiscation or not, at the earliest possible moment. These are views which even the corrupting I influence of your Lordships' House has not succeeding in removing, but rather in strengthening and accentuating.
Then we are told by a great many speakers that, apart from the taxes altogether, the objection to the Budget as a whole is that it is a, Socialistic Budget, and that it constitutes the beginning of Socialism. The noble Earl who last spoke, Lord Camperdown, quoted several remarks from Socialistic leaders to show that they accepted it as only an instalment of Socialism. For a great many years I have always indignantly denied that I was a Socialist, but quite recently I received some literature and an invitation to join the Anti-Socialist Union. I confess that after I had read that literature, I conceived that I must be a Socialist, for I was entirely unable to agree with any of their propositions, and therefore if the Budget is Socialistic in that sense, then I am a Socialist and support the Budget on that ground. The Liberal Party is not Socialistic. There is no question, I think, about that. The Liberal Party is still the support of individualism and of individualism in property, but the State as a whole and both Parties in the State are obviously, to any fair-minded observer, becoming more Socialistic in this sense, that things are being done now by the community which were before left to private enterprise, and we have common action in a great many things in which we did not have it before. I think both Parties have taken to that course. These social services, as the right rev. Prelate said last night, cost money, and in the course of finding money for these objects there will undoubtedly be hardships upon individuals, and complaints from those who have property, and who find it much more heavily taxed than it used to be. I am afraid that that is an almost necessary incident in anything in the nature of the

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sort of transition state which I venture to I think we are now in. No great Party in the State has adopted the communal ideal at present, but both have done things which savour of Socialism and Communism, and in the transition a great many social services are being put on the rates and taxes which before were left to private enterprise, and which necessarily increase individual burdens.
In this Finance Bill the Chancellor of the Exchequer has endeavoured to put in the form of legislation a large number of ideals, many of them ideals of social progress with which few of your Lordships would be willing to express your disagreement. There is an inherent difficulty in translating social ideals into legislation, and putting them into the text of a Finance Bill. It is said that the Bill has shown signs of hasty draftsmanship. It is true that it has been much amended, but it is a vast and complex Bill, and we all know from the ordinary sources of public information that it received great consideration before it was introduced, and we certainly know that it has received very great and very careful consideration since it was introduced. In the face of that, and in the face of the majority by which it passed the other House, are you not taking rather a strong course in saying when it comes here that it is hasty and ill-considered legislation, and that you are not justified in passing it until the country has been consulted?
Can your Lordships provide an alternative? None has been put forward officially in this debate. None is before your Lordships' House, and I have not yet seen a constructive alternative with which you are going to the country to raise this money. One of the ideals which the Chancellor of the Exchequer has set before him, and which I believe has been realised in this Bill, I will quote to you in his own words. I will quote it from the Limehouse speech. It is not the portion which has attracted most attention possibly, but it is a portion which I think is, perhaps, even more important. The right hon. gentleman said that when he took charge of the National Exchequer at a time of great difficulty he made up his mind, in framing the Budget, that at any rate no cupboard should be the barer, and that no lot would be harder for his Budget. Is that not the principle that has been kept in view in this Budget—that the taxes shall be nut upon
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those shoulders that are best able to bear them?
We had yesterday a very interesting speech from the noble Lord, Lord Revel-stoke, than whom nobody could give us a better picture from the financial point of view. The noble Lord need not in the least have been afraid that he did not make himself perfectly clear to your Lordships. He gave us a picture from the City point of view which was perfectly clear and perfectly intelligible. He told us how capital was doing this and that, how people who had money to invest were asking this and that, how capital was leaving the country, and how there was a feeling of insecurity. The noble Lord showed us all the columns of the Temple of Mammon—totus teres atque rotundus—with its swept courts, its strong walls and protecting fences, and asked whether it was right that anything should be done to disturb the security of this temple. Are you justified, he asked, in doing this by your Budget? That explained to me more fully than I have ever understood before why it is that the City as a whole is always found in the rear of social progress and advance, because although the view was clear cut, it was a view which was obviously a narrow and a limited one. It was cut off at one point. It by no means embraced the country or the inhabitants of this country as a whole.
To some of us, hypocrites though the noble Lord may think us, there also arose a vision, not only of these slightly-disturbed financiers, of these unfortunate people who make a quarter per cent. less on their money, and whose securities have fallen by so much per cent., but of those people who are to be seen homeless every night on the Embankment, of those who are unemployed up and down the country, of those who are starving, of those who are being sweated and are unable to compete on fair terms for a livelihood in the labour market of the world; and some of us felt that a slight disturbance in the temples of high finance is worth while if something is done to alleviate the lot of those unfortunate people, and to bring stability and enjoyment of life to a larger portion of the population of this country. The noble Lord ventured to doubt whether the Chancellor of the Exchequer understood the meaning of the word credit. May I venture to doubt whether the spirit of the City which was there expounded quite understands what some of us mean by

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social service and social improvement? There is as much to be learned on one side as on the other.
I must pass over entirely some of the taxes in this Bill which I should like to speak upon, because I do not agree with the noble Earl on the Cross Benches, Lord Cromer, in saying that our object is to discuss the fairness of the Budget. I think that is exactly what is not our object. Our object is rather to discuss whether your Lordships' House is justified or is right in the course which it is now proposed to take. There is no precedent for such a course. Your Lordships have been told that the course is not illegal. And no more it is. You have been told that it is unconstitutional. Well, we have no written Constitution, but we have a Constitution which is limited and guarded by custom, and which has hitherto proved sufficient to meet the strains which have been put upon it. I am no friend of written Constitutions. In America, where they have a written Constitution, you find it is being constantly interpreted there by the letter of the law. The spirit dies and the letter remains, and it is so interpreted, and there is a constant series of evasions. In this country, the greater part of our government rests upon understandings and conventions and customs, which have almost a greater force than any written Statute which has ever been placed on the Statute Book. Those conventions and customs are being disregarded by the Amendment which is now before the House. Your Lordships are seeking to destroy, and assuming the right to destroy, the work of an arduous year, and the work of the large majority in the elected and representative House, which has admittedly the right to deal with finance; and it seems to me from some of the speeches to which I have listened, that you are destroying it very lightheartedly, and without having fully considered the consequences.
You say you are not afraid of the consequences. Well, I should hope not. The aristocrats in the Reign of Terror were not afraid of the guillotine, but the knife fell none the less, and the action which your Lordships are now taking is, I think, the beginning of the end of these understandings in our Constitution and between both Houses. Your Lordships have inaugurated a revolution. You have put an end to these understandings and made them impossible. Can any of us doubt, whichever
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side succeeds at the next election, that sooner or later there will come a readjustment which will leave this House powerless, as we on this side of the House think, for evil? Personally, I do not regret it. From my point of view this House has always been in favour of reaction. Its history stands out as a constant barrier to progress. It is represented sometimes as a deliberative and revising Chamber which provides a very useful check upon measures that come from another place, and licks them into shape or defers them. But this House has done much more than that. It has delayed measures of reform of every character, and dealing with every kind of subject. It has delayed and destroyed them again and again. Its history is a record of interference with the course of progress. It is said that progress may be too rapid without the check of this House. That may be so. Too rapid, no doubt, for some of the faint hearts to whom the noble Lord opposite referred. Too rapid, perhaps, for some even on this side of the House, but we live nominally, and your Lordships will find we live really, under the control of the democracy of this country, and I think your Lordships will find that that democracy intends to govern itself, and intends to have the expression of its will obeyed and observed.
In the action which it is now proposed to take, I say you are putting an end to all possibility of these understandings subsisting in future, and all possibility of any useful check being exercised by this House. If any useful check has been exercised in the past, your Lordships will not have the chance of exercising it again. You are introducing a new era; you are, in fact playing into the hands of those whom you say you are afraid of—the democracy, and giving it the opportunity which it has long wanted. This conflict has threatened for some time, and few of us on this side of the House will regret that the conflict should come, and that it should be at an end. People in the country do not know, and even in the course of the election will not learn, how constantly the influence of your House has been exercised against progress Not merely have Bills of first class rank, to which attention has been called, been thrown out, but it is in the consideration that has to be given to meet your Lordships' views and in other ways that the country is unaware of how constantly legislation has been cheeked. I shall rejoice to see the veto of this House swept away. To my

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mind that is the only good thing we can hope for from the Amendment which has been put before us. Your Lordships have inaugurated a course of events of which you cannot foresee the exact termination. I welcome it because I believe its ultimate effect will be to make for progress, but your Lordships who have initiated it will not all be pleased with the ultimate result.
THE EARL OF LYTTON: My Lords, the noble Earl who has just spoken accused noble Lords on this side of the House of having asked for expenditure that they were not willing to pay for, and towards the conclusion of his speech the noble Earl implied that the opponents of this Budget had no conception of the meaning of the words "social service" and "social reform." I entirely repudiate both those assertions. This argument has been used frequently outside this House, but it has not yet been used within these walls. I do not think a single speech has been made on this side of the House which could in any way justify either of those assertions. I do not yield to the noble Earl either in the knowledge of the meaning of the words "social service," or in an appreciation of the meaning of those words, and in the only part of this Bill to which I shall refer at all closely, I hope I shall be able to show him that if we attack the proposals which it contains, it is only because we believe that there are alternative methods of meeting this necessary expenditure. There is another theory which has been constantly used outside this House, but which I do not think has been used in the course of this debate so far, and that is the suggestion that this House cannot be trusted to discuss fairly or impartially those portions of the Finance Bill which refer to land, or liquor licences, and that any criticisms which might be offered upon either of those two sections of the Bill must be biassed by self-interest. I should like to ask why in politics it should be considered fair and legitimate to attack certain interests against which you are known to have political prejudices, and why it should be so improper and so wrong for the interests which are so attacked to defend themselves. No one, I think, doubts that the Government have a political prejudice against those who are engaged in the liquor trade, and also against those who are owners of land. They do not deny it themselves.
The Chancellor of the Exchequer, in his
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" half-pantaloon and half-highwayman's style," as Lord Ribblesdale called it, in defending this Budget spoke about land-owners as "blackmailers," and declared that his Budget and his policy were going to provide "a day of reckoning" for brewers and capitalists et hoc genus omne. If labour legislation is introduced into the House of Commons, it is not considered improper for the representatives of that class who are going to benefit by that legislation to speak upon it, and even to propose Amendments which will increase the benefits which they are going to receive from it. And if those interests were attacked by any Government in power, do you suppose that they would not take the opportunity to defend themselves? The fact is that those who seek to prejudice the actions and opinions of opponents of the Finance Bill by accusations of self-interest, are really advancing one of two theories—either that legislation which benefits any particular class or interest may be discussed by the class or interest so benefited, but that legislation which has an injurious effect may not be discussed by the class which is going to suffer; the other theory is that what is proper for one class is highly improper for another. What is permissible for a Trade Unionist to do, say, in the case of labour legislation is not permissible for a landlord, and what is right and proper for Nonconformists is altogether wrong and improper for the Established Church.
Against both those theories I protest most emphatically, and I assert, whether the action this House is going to take is right or wrong, wise or unwise, it is, at any rate, dictated by just as strong a regard for the public interest as that which animates either the Government or the House of Commons. If this House is critical of this Bill, it is not merely because it is going to affect the pockets of noble Lords. It is not only upon ground of self-interest. It is true—I am not prepared to deny it—that the Land Clauses and the Licensing Clauses in this Bill do arouse a degree of hostility which is not created by any other clauses in the Bill; but it is not because the effect of those taxes is going to fall upon members of this House. We shall bear the burdens of the Income Tax and the Death Duties and other portions of the Finance Bill, but there is something inherent in these two sections of the Bill which roused greater hostility

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than the other sections, and I think I might say, without fear of contradiction, that if those two sets of clauses had not been included in the Bill, the Amendment of the noble Marquess would never have been put on the Paper. But if it be true, why is it? It is because those clauses more than any other parts of the Bill bear unmistakable evidence of having been actuated by political rather than by financial reasons. I look to the speeches by which these sections in particular are defended, and the "envy, hatred, malice, and all uncharitableness" shown in the speeches in defence of these clauses bear unmistakable proof that they have been drafted, not for financial needs, but in order to secure political objects at the expense of certain interests against which the Government has a political prejudice. There is another feature which is common to these clauses, and it is that in both cases, in order to raise these taxes, you are going to set up a costly system of valuation which will eat up all the revenue that will be derived from them for some years to come.
The noble Marquess, in moving his Amendment last night, showed very clearly how this would happen with regard to the land taxes. I want to say one word in proof of the same thing, and in regard to the same clauses which deal with the imposition of the Licence Duties. The duties imposed in the First Schedule of the Bill amount to fifty per cent. of the annual value of the licence, and at the present moment, so far as this year is concerned, the annual value of the licence bears no relation to the alcoholic trade which is done in a particular house, and therefore, the result is that these proposals will fall with great severity upon all public houses which have costly and commodious premises, and will leave practically untouched premises which are poor, although the trade in the latter may be great. I could make it clear by a great many instances.
I shall only quote two as an illustration of the argument I am advancing. They are both taken from facts within my own knowledge. There is a working man's public-house which does a trade in alcoholics amounting to £2,900 a year. The duty imposed upon that house under this Bill would be only £24, or 2d. in the pound on the sales. On the other hand, a country
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inn in the same county which does a large non-alcoholic trade, and in which non-alcoholic articles are of more importance than the trade in alcohols, will pay a duty of 2s. 1d. in the pound. This instance which I will give to the House is even more striking. It is that of a house in which the premises are very poor indeed, but it I is situated in a district which enables it to earn annually no less than £6,000 from the sale of alcoholic liquor. The duty on that house would be only £25 a year, while a commercial hotel in the same district, which cost many thousands of pounds to build, and where the alcoholic trade only amounts to £450 a year, would pay a duty of £150. In one case the duty would be equivalent to a tax of about 1½d. in the pound, and the other equivalent to a tax of 6s. 8d. in the pound. That policy is altogether indefensible. What is the good of talking about the shoulders best able to bear it, and the only alternative being to tax poverty? I am objecting to these taxes, not because they are placed upon the liquor trade, for I think when a largo sum of money has to be raised that trade might quite fairly be expected to pay I its proper share. But I am objecting to the system under which these taxes are to be imposed, and I say, so far as this Bill is concerned, these taxes are illogical, they are unjust in their incidence, they are bad finance and bad temperance reform. They are indefensible, and the Government themselves have not attempted to defend them. I know I shall be told that this is only a temporary measure, and that the whole assessment will be altered in the course of next year. I should like to ask why a system so utterly indefensible from any point of view, should be established for twelve or six months, or even for any time.
Let me deal with the proposal which is to take place under Clause 44. Under that clause a new system of valuation is to be set up, according to which the annual value of the licence is to be calculated on the basis which was adopted in the Act of 1904, for the purpose of assessing value for compensation, and the effect will be to make the annual value of the house bear some relation to the trade carried on in the premises, and will consequently remove the objections which I have just made. But that system is open to the same objection as was made by the noble Marquess last night when speaking of the land valuation proposals of the Government. It will be extremely

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costly. It will lead to no end of controversy and friction, and it will take many years to carry out. Anybody who has had experience of the process of assessing compensation under the Act of 1904: will know that it is a matter which bristles with difficulties and controversies and complexities. But the Government proposed to do this, not for one particular house at a time, in a particular district, where all the circumstances are known, but for all the public-houses in the country at one given moment. This will involve an examination of the conditions of tenure, locality, trade and so forth of 90,000 public-houses. The valuation of these public-houses will cost considerably over a million of money, and will take a great many years to carry out. No Government which was actuated simply by financial considerations would ever have dreamt of putting forward such a proposal. Even from their own standpoint—even if they desire to raise a sum out of the liquor trade, this costly valuation is altogether unnecessary.
The imposition of a simple poundage duty upon the liquor purchases which are made in the premises where liquor is sold, whether clubs or public-houses, would yield the Government all the revenue which it requires. It would save friction and controversy; and, above all things, it would save considerable expense. I gather that the Government estimate they will receive £4,000,000 from their licence duties, and a duty of 1s. in the pound on all purchases of beer and spirits alone would yield £3,850,000 or £150,000 short of the sum they are expecting to raise, without touching wine at all. That is a perfectly practical proposal. It has been adopted by the Government in Clause 48 of the Bill in dealing with clubs, and the only reasons why this system of duties is not applied to public-houses are political and not financial reasons. I am amazed that a Government which came into office pledged to check the extravagant expenditure of its predecessors, should go out of its way, when it is in financial difficulties, and has a large sum of money to raise, to incur an extra liability of at least £3,000,000, and probably a great deal more, to set up this unnecessary system of valuation both in regard to licences and the land taxes. I repeat that these clauses of the Bill which refer to land and licences are not bona fide financial propositions at all, and I presume that that is the reason why we are asked
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to take this unusual and unprecedented step of referring this Bill to the will of the people.
I think I have said enough to show why I am not prepared to vote for this Bill If it were an ordinary legislative measure, I should have no hesitation in voting for the Amendment of the noble Marquess, but it is not such an ordinary legislative measure. In my opinion the difference between the action which this House proposes to take in the case of an ordinary measure of legislation and the Finance Bill is so great that I hardly feel prepared to follow the course which has been recommended to this House. In my view the action which we are asked to take, to reject a Finance Bill, and thereby to refuse Supplies to the Government of the day, and bring about an immediate Dissolution—such a course as that is so unusual and so serious that in my opinion it could only be justified by one condition, and that condition is, that there should be unmistakable proof that the country will have nothing to do with the Bill. Now, my Lords, in the present case I do not find that that proof is forthcoming, or that that condition is fulfilled. On the contrary, I believe that the Budget of the year has found more favour with the electors of this country than any other proposals which the Government has put forward since it came into office. Considering the misleading manner in which this Bill has been defended, both by Liberal speakers and by the Liberal Press, that does not seem very surprising. If the people are in favour of this Budget, it is because they are constantly told that the only alternative is between a Government on the one hand anxious to tax the superfluities of the rich, and the Opposition on the other hand dying to tax the necessities of the poor. I consider that last statement a gross perversion of the truth, but so long as that fiction is going about, it is idle to suppose that this Finance Bill is odious to the people of this country, or that the demand for its rejection is emphatic or widespread.
I say nothing about the financial difficulty which will be created. The noble Marquess said last night in regard to the financial situation which would be created by the adoption of his Amendment that he preferred the temporary chaos and confusion to the permanent confusion and chaos that would

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follow if this Bill were allowed to puss into law. I agree with him, but is it certain that we are taking the best course to prevent that permanent evil which the noble Marquess desires to avoid? If I were convinced that the rejection of this Bill was demanded by the people of this country, and that the result of the election which will follow from the action of this House would put an end to this Bill, then I should be ready to follow the course which we are asked to adopt by the noble Marquess. But it is because I feet grave doubts on that point, and because, on the contrary, I feel that we are taking the very worst possible course in the circumstances, that I prefer to follow the line of action recommended by the noble Earl on the Cross Benches, Lord Cromer.
I do not want to dwell upon my difference with noble Lords who sit on this side of the House, because I consider that any such difference of opinion is completely overshadowed by the far larger issues which lie in the background. Like the noble Earl, Lord Cromer, I have little faith in the alternative proposal recommended by noble Lords on this side of the House, but I am glad that the noble Earl made a strong appeal in the course of his speech to Unionist Free Traders throughout the country. Whether the action which this House is going to take is wise or unwise, there can be no difference of opinion as to what will be the consequences. We are faced now with a struggle which may be long or short, but which, while it lasts, will overshadow all other considerations. We have against us a Government which openly avows its intention of destroying the constitutional position of this House. In such a struggle as that, there is only room for two sides, and therefore, I say I welcome the words spoken by the noble Earl. He was taken to task by Earl Russell for saying that a vote given to a Tariff Reformer was not necessarily a vote given to Tariff Reform. Earl Russell said he could not understand what was meant by such words. I understood those words perfectly well; and what they meant, I believe, was that, whatever our views might be upon the questions of Free Trade or Tariff Reform, when face to face with a great constitutional struggle such as this, it was, in his view, necessary to sink all minor differences of opinion on fiscal or other matters, and take our stand in the fighting line in defence of the Constitution. I feel every one who is
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not prepared to establish permanently what the noble Marquess referred to last night as described by Oliver Cromwell "the horridest arbitrariness that ever existed in the world" must come forward and step into the fighting line at the present moment.
The noble Earl, Lord Russell, said he did not regret this struggle. He welcomed it, and said he was glad of it. I do not agree with him. I regret, infinitely regret, the struggle upon which we are now entering. I see that it is bound to stand in the way, for a great many years to come, of a great deal of very useful work, even if it has not the effect of possibly embarrassing us in our relations abroad. I regret that this struggle should have come; but I disclaim all responsibility for having brought that struggle about. The noble Lord who spoke from the Government Benches just now, declared that that struggle was directly sought by noble Lords on this side of the House. He seems to forget that this struggle was threatened. He seems to forget that the change in the constitutional position of this House was embarked upon by the present Government long before the financial proposals of the year were introduced. As I say, I disclaim all responsibility for that struggle. I regret that it should have come about, but since we are face to face with it at the present moment, I hope that all those who since the death of the late Duke of Devonshire have looked to the noble Earl on the Cross Benches to lead them in their opinions, will bear in mind the words which he addressed to them to-night, and irrespective of their opinions on fiscal or other matters, and whatever their differences may be in other directions, will, in the course of the struggle upon which we are now embarking, come forward and fight in defence of the Constitution of this country.
[The sitting was suspended at eight o'clock and resumed at nine o'clock.]
THE MARQUESS OF LONDONDERRY: My Lords, I confess that to any one who had not had as long an experience as I have, I regret to say, of your Lordships House, it would be a great difficulty to I address a House so empty as this. Therefore it might be well in future if your Lordships allowed a little longer adjournment for the dinner hour. Being an old habitué of the House I do not feel that cold chill that runs through a young

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member in addressing a House with empty Benches. I need hardly say that I rise to endorse with all the force I have at command the Amendment which has been moved by my noble friend the Leader of the Opposition. He stated in a most statesmanlike manner, if I may use the expression, the reasons why your Lordships should not allow the Finance Bill that has come up to your Lordships' House to be passed without consulting the people of the country as to what their views and ideas are upon the subject. It has been stated very frequently both before this debate was inaugurated and since, that the action of my noble friend Lord Lansdowne was absolutely without precedent in proposing that the Budget Bill should be submitted to the judgment of the country before it was passed by your Lordships' House. Whether that is without precedent or not I raise no argument. We believe it absolutely without precedent that such a Bill should be submitted to your Lordships' House. This I do say, that the Bill which has been sent up from the House of Commons is absolutely without precedent. Your Lordships have never been asked before to pass a Budget Bill based on principles so absolutely contrary to the Constitution and the desire of the country on this subject.
I venture to think that the introduction of this Finance Bill is, in the first place, absolutely unconstitutional. I have looked up, as I dare say many of your Lordships have, various precedents, and I have never yet been able to find that a Budget introduced into the House of Commons and sent to your Lordships' House has been of a character such as that which is now submitted for your Lordships' consideration. I venture to say, therefore, that the Bill now before us is absolutely unconstitutional. The Budget Bill, or the Finance Bill, whichever you like to call it, when it comes up to your Lordships' House has always been founded on the principle that money is required for the time, and the time only, to meet the requirements of the expenditure of the country, and never has it gone beyond that.
This is an unconstitutional Bill because there have been "tacked on" a number of Bills which your Lordships have considered in this House and which you have rejected. So far as we can gather, whenever an opportunity has been given to the country to
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speak on this subject the rejection of those Bills has not been unpopular. On the contrary the rejection of those Bills has been approved as shown at by-elections which have taken place, and it has been proved that your Lordships in rejecting those Bills have been far more in touch with the feeling of the country than are the members of His Majesty's Government. I have always understood that when the Budget has been introduced into the House of Commons and sent up to your Lordships' House it is for the purpose of obtaining revenue and revenue only. I do not think any noble Lord opposite will contradict me when I say that this Bill is not a Bill really for the purpose of obtaining revenue for the expenditure of the country, which I know is large. But this Bill had tacked on to it those Bills to which I have alluded. Consequently I say the procedure is absolutely unconstitutional, and being unconstitutional it is not a question as to whether your Lordships reject or accept the Budget, but, in the words of my noble friend the Leader of the Opposition, it is a question for the country to decide whether the Budget should be accepted or rejected. Now the Budget Bill as it comes up to your Lordships' House contains a certain number of Bills which your Lordships have already rejected, and I maintain that that is absolutely unconstitutional. In addition to that we find there is also in the Budget a system of taxation which is to be imposed, as my noble friend Lord Lytton, who spoke last, said, on a certain class of the community whom the Government at the present day regard as hostile to themselves and antagonistic to their political views. Now the noble Earl, Lord Lytton, has alluded, as a great number of those who addressed your Lordships have alluded, to the manner in which this Budget Bill was introduced to attack certain owners of property, who as I have stated are hostile to the views of His Majesty's Government.
First of all I wish to deal, I hope not at too great length, with the question of the Land Tax. Land has been taxed in a manner that I think all unprejudiced people will say is entirely out of proportion to the amount the owners of land should be taxed. Why is that? The noble Lord told us. It is because the owners of land are supposed to be not altogether friendly but hostile to the views of the Government. In the few moments I propose to devote to the question I will deal with that part of it. In the

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Budget Bill sent up to us we find that taxation is imposed on the increasing value of land, and land has been singled out by the Government for this increase. I would like to ask the noble Lord who follows me why has land been singled out for this increased taxation? That it has been singled out I do not think anybody will deny; but why has it been singled out when we think of the enormous amount of property unconnected with land which it is not proposed by this Budget Bill to tax? We know full well that a great amount of money is invested which brings in dividends on shares. Why has this not been selected to be taxed equally? I do not think any member of His Majesty's Government can show me that the increment of land is so far above the increment earned by other investments. But land is selected, and land only; and undoubtedly whatever the revenue may be it will, as has been shown by speakers who have preceded me, be swallowed up in the collection and valuation expenses.
Therefore, I venture to say the object of this Budget is not only unconstitutional but it is unjust, and, if I may use the expression, it is vindictive towards a certain class of the community who are hostile to His Majesty's Government. I know there are some who hold optimistic views supporters of the Government who declare that it is possible out of this taxation of land to produce the amount of money which it is hoped will accrue. I shall be glad to hear from those who will follow me whether that optimistic view is absolutely correct. I should like to hear whether the permanent officials of the Treasury, who are naturally reticent with regard to the views they hold, believe that the large amount of money which is required to meet this extra expenditure is to be made out of the taxation of land. I cannot help thinking that His Majesty's Government do not for one moment expect to make a large amount of revenue out of the taxation of land. I think, on the contrary, that they believe that by taxing undeveloped land they will bring into the market a large amount of land which at the present moment is what is called "held up," or is not open to the public for purchase. If that is the case the whole argument for its inclusion in the Budget falls to the ground. A Budget to my mind, is not supposed to bring into the market land, but only to produce from that land the amount of money that is required to meet the exigencies of the moment. Therefore, I say if that is the
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case the Government by taxing land are not endeavouring to bring in revenue, but they are endeavouring, contrary to every principle on which a Budget should be brought in, to force land into the market to be sold at a price and to be developed. If that be the case, and I maintain it is, it must be obvious that the tax can only carry out the intention of the Government as long as the yield of that land is small. If a large revenue is derived from that land which I maintain the object of the Government is to force into the market then the purpose of the Government entirely fails, because the land that is to be taxed, being incapable of development, is taxed beyond its value. If that land is developed to avoid the tax then I say the revenue under the Land Tax cannot possibly be large. I hope I have made myself clear. I should like whoever follows me to explain that to us.
What is the reason for taxing landowners? The answer to that question, to my mind, is very simple. It is that at the present moment the Government have but one idea in their minds. It is not to collect revenue from the tax they propose to impose upon land, but simply for the purpose of nationalising the land in future. And they desire, as far as I can gather from the Budget proposals, to have the owner of land replaced by the State. If that is the case, I should like to have an answer to it when I sit down. If that is what they want then the Budget, as at the present moment before your Lordships' House, is the first step in that direction, because the Government have insisted that there should be a valuation of all land, whether those lands come under taxation or whether they are exempted from taxation by Statute. As far as I can gather, the main principle of the Budget Bill with regard to land is that there should be a valuation and a valuation only. Valuation is their first principle. Revenue for the purpose of meeting the expenses of the country is a very secondary one. Therefore I cannot but think that this question of the valuation of all classes of land, whether it comes under the Budget or is exempted by Statute, is not really for revenue but merely the paving of the way for the nationalisation of land. I may be asked why I make that statement. I make it because I have read an article by the Chancellor of the Exchequer which appeared in the Nation, a few weeks ago. There the Chancellor of the Exchequer states:—

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"The Budget campaign must be the beginning and not the end of the Liberal effort in land reform. The new State valuation must be the basis of all plans of communal purchase. On this basis municipalities ought to buy the land which is essential to the development of their towns; and the State could also buy up land necessary to the policy of re-creating rural life in Britain."
Well, that to my mind, is simply making the position of the owner of land an impossible one. They propose under this Bill virtually to place on owners a tax of, I may say, a ruinous character, so that eventually, if we read aright the words of the Chancellor of the Exchequer, the owner of land will be so over-taxed, out-taxed out of possession of his property, that be will be glad then to go to the State and ask the State to buy him out on any terms they choose to offer. That is the policy of His Majesty's Government as I read it in their Budget at the present moment.
But, my Lords, that is not a new policy. It was the policy introduced by Mr. Henry George many years ago, and it has never been accepted or taken up by the people of this country. Consequently when we hear that it is proposed to extract money for revenue purposes, and revenue purposes only, out of land, I venture to ask how do the Government reconcile the question of revenue from land with these proposals, which are nothing more or less than the proposals of Mr. Henry George many years ago? The Bill, we are told, is only a Finance Bill. To my mind the Land Clauses of this Finance Bill are, in effect, simply this: "How can we get rid of the landowners?" And if we want anything more to prove that, we have only got to read the speeches of the Chancellor of the Exchequer at Limehouse and Newcastle. I do not know whether the noble Earl opposite who is taking notes will endorse those speeches, but we must realise that the one idea of this Budget Bill is to carry out the proposals made by Mr. Henry George some years ago, proposals which have never been confirmed or assented to by the people of this country. Therefore I say with regard to the question of land the Finance Bill is merely a matter of form. It is not really a Finance Bill. What the Government are considering is how they can get rid of the landowners and how they can nationalise the land.
I pass on to another proposal which I
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think is unjust, as I think the Land Clauses are vindictive. I mean the proposals in the Budget Bill with regard to what are called the Licensing Taxes. I say at once that I think the Licensing Taxes are not only unjust but absolutely vindictive. In all probability noble Lords opposite and their supporters will deny that statement and declare that they are only introduced for the purposes of revenue. But I should like to ask them how they reconcile that view with the statements made by some of their leading colleagues in another place. I find Mr. McKenna, speaking at Manchester on December 4, said: "Our hearts are filled with rage at the loss of the Licensing Bill." I find Mr. Pease, the Chief Whip of the Party opposite, said "He imagined the people would expect that Mr. Lloyd-George would cause the abolition of redundant licences by placing taxation on them so that the people might get back their own." It seems to me it is the Government who appear to be getting back their own on the publicans for their refusal to be ruined by the Licensing Bill which your Lordships rejected in this House. Is it possible, after reading those speeches and carefully considering them, that His Majesty's Government fancy that the people of this country can be so fooled and beguiled as not to realise that within a very short time—comparatively a few weeks—of these, as I call them, vindictive speeches being made there is introduced into the Budget Bill clauses to deal, as they had told us they would do, vindictively with those people who opposed them with regard to the Licensing Bill?
I cannot for a moment believe that the people of this country, who have endorsed, whenever the opportunity has arisen, the action of your Lordships' House in rejecting the Licensing Bill, will agree that the object of His Majesty's Ministers in introducing these clauses in a fresh Bill—after the vindictive statements made—was merely in the interests of reducing drunkenness and promoting temperance, and not because they are vindictive to a particular class of persons hostile to them. The Licensing Bill, as it came up to your Lordships' House, gave a certain amount of compensation to licence holders. That Bill was rejected. What do the Government now propose to do? They propose to tax the property of these licence holders and give them no compensation whatever.

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Therefore, I say it is absolutely unconstitutional to tack on to the Budget Bill another Bill which has been rejected by your Lordships, whose action was endorsed by the country. So far as I can see, the Government deal more harshly with these people in the Budget than they did in their original Licensing Bill. That Bill we rejected in this House. We may have rejected rightly or wrongly; but I believe that we rejected it absolutely rightly, and if your Lordships choose to look at the opinions given by the country whenever the opportunity has been presented, I think you will not deny that we had the weight of the country at our back in the course we took. I know that it is said, "The Trade," as they are called, must pay their share. I do not hesitate to say there is no member of your Lordships' House, or of any trade, who is not perfectly willing and anxious to pay his fair share of the taxes imposed upon him, according to his ability; but to ask people to pay as their share a tax put upon them, as I say vindictively, is not, to my mind, an act of which any Government should feel proud.
To go back to what I was saying about the trade paying their share, I think the licensing trade do pay their share to a very great extent, an enormous extent. I will not give your Lordships my own views on the subject. Naturally I have not experience on the subject; but I should like to bring under your Lordships' notice what the trade do pay so as to show that they are bearing their fair share of the taxation. The trade, as a matter of fact, already bear a very heavy share of the taxation of the country. The State now takes from the trade thirty-seven and a-half million pounds in the shape of taxation. And yet the Government talk about the necessity of making it pay a fair share ! I would like to remind your Lordships, too, that extra taxes were put on the trade in 1900. They were then told distinctly that they were war taxes, but Mr. Asquith has made them permanent. They have also to bear the annual charge of over £1,000,000 for the Compensation Fund under the Act of 1904. Therefore, I say from the standpoint of justice, it is impossible to defend these taxes. Is it easier to defend them from a financial point of view? The reason members of this trade are so heavily taxed is, to my mind, because they are obnoxious to the
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Party opposite and because they ventured to object to their property being attacked. Consequently they are supporters of the Party behind me. I venture to say the taxes proposed in the Budget on land and licensing are unjust and very vindictive, and consequently I support the proposal of my noble friend behind me that this matter should be entrusted to the verdict of the country. I maintain that the Land Taxes are merely proposed for the purpose of bringing about the nationalisation of the land, while the Licensing Taxes are vindictive and unjust to a body who are supposed to be opposed to the Government.
I now cut myself adrift from the taxes, which I have said are unjust and vindictive, and I turn to another side of the question introduced into the Budget Bill. That is the taxation of minerals. I speak with a certain amount of diffidence and at the same time confidence, on this subject because I am myself very closely associated with the coal trade of the North of England. I hope your Lordships will forgive me if, on that account, I deal with this question at greater length than I ordinarily should. The Budget Bill, as at first introduced, proposed to put a tax on Ungotten Minerals. I can only tell your Lordships that when that proposal was recognised and realised by people who either owned or did not own "ungotten minerals," it could hardly be believed that such a proposal could emanate from any one who had any knowledge of any sort or kind whatever in connection with minerals. Look what might have happened ! An agricultural landowner might be told that there were minerals under his land. That unfortunate landowner would be only too pleased to have his minerals worked, but he has not the capital to work them and no company would possibly work them. And yet that unfortunate man was to be taxed for those ungotten minerals because it was supposed—only supposed—that there were minerals underlying his land. When you think that over, your Lordships must realise that it was a proposal too ridiculous to be considered by any practical man.
It was ridiculed out of court, and the Chancellor of the Exchequer naturally seeing how ridiculous were his proposals cast about to see what he could do to obtain from another source the revenue he had hoped to get from minerals. He

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then turned round and taxed royalties and wayleaves, exactly the contrary to what he had proposed in his original Bill. First, he proposed to tax owners who had "ungotten minerals" in the hope of making the unfortunate people pay who could not work them themselves or get any one else to work those minerals, and he now taxes the royalty owners and leaves untaxed those mineral owners who do not or cannot or will not work their own minerals. There never was such a change of front, I should think, in the annals of any Chancellor of the Exchequer ! Even that staunch supporter of the Government, Mr. Hemmerde, said in the House of Commons, "He was unable to understand how a tax on mining royalties could take the place of a tax on ' ungotten minerals ' consistently with the principles of the Bill. One of the great principles that ran all through the Bill was that whether a man was working his land or not, he should pay a tax upon its value. What the Government now proposed to do was to tax those who were working their mining land even more than they were originally going to tax those who were not working it. That was a startling theory." I should like to hear from the noble Lord who will answer me how he reconciles this extraordinary change of front, and how he reconciles the statement of Mr. Hemmerde with the proposals in the Budget Bill at the present moment.
Then again, supporters of noble. Lords opposite declare that royalty owners pay next to nothing; that they derive an enormous amount of benefit from the minerals worked underneath their land to which they have contributed nothing. Here I will quote the words of Mr. John Wilson. I am bound to say he is a Liberal Unionist, but he is a very great and important authority on all matters connected with the working of coal in Scotland. In reply to the query, "What does the royalty owner do?" he says, "He pays Income Tax just as any other form of income does, and in Scotland the exact amount of all royalties received by the proprietor is entered on the valuation roll, and local rates, poor, education and sanitary, &c, are paid on every farthing thereof by him to the extent of one half of the burden, the mineral lessee only paying the other half." I think that that entirely disposes of the statement that the royalty owner pays nothing towards the taxes of the country owing to the minerals being worked under his own land.
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Now I go a step further, and I will deal for a few moments with the result which will accrue from the tax that is put upon mining royalties. There can be no doubt whatever that this tax on royalties must raise the price of coal, and if your Lordships carefully consider the matter you must realise that almost all our great industries are dependent to a very great extent on coal. If the price of coal is increased the cost of production in all those industries to which I have alluded must necessarily be increased. Not only that, but it places all those industries which are dependent on coal upon unfair terms as regards the competition of foreign countries. What a higher price of coal means to the poor people of this country I am sure will appeal to your Lordships' sympathy. You must see that if the cost of production of coal is increased the price of coal must increase, and naturally it will reflect on the poorer classes. There are a great number of important industries that depend on coal. One of the most important in this country is the steel trade. That trade will be especially affected if the, price of coal is raised, owing to the increased cost of production. The steel trade will have to bear an additional burden in respect of paying a higher price for the coal they have to buy, and in addition to that they will have to suffer the disability of having to pay an increased price for ore. Ore is absolutely essential to the steel industry, and consequently if you increase the cost of production of that most important branch of industry in this country it must naturally raise its price. I should like again to quote an authority better than myself—I quote authorities always if I can do so, preferably of gentlemen opposed to me in politics. I find that Mr. Wedgwood, who is a member of Parliament and a supporter of noble Lords opposite and an enthusiastic Land Tax reformer, made a speech in which he dealt with the proposal to substitute a tax on mining royalties for the duty on ungotten minerals. He said:—
"The proposed change is that the tax shall be levied only on minerals which are worked, thereby penalising production, and in the long run transferring the tax to the consumer. Directly you arrange your tax so that the price of coal will be enhanced, you will be inflicting a most serious blow on the industries of this country."
That, to my mind, is a most serious state of affairs, and I really think the Government should look into it before they ask your Lordships to pass the Bill.
Now I go on to another point as to what

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is the amount of revenue to be derived from this tax on these royalties, and I am sure the noble Earl who leads your Lordships' House will forgive me when I say there seems to me the most absolute confusion in the minds of the Government, their advisers and everybody else as to what this tax on royalties will bring in. I should like to have a definite answer from whoever replies to me as to what the Government imagine will be the amount of revenue brought in by these royalties. It is a very important question because so far as I can gather, at the present moment the Government seem to be in a state of utter confusion as to what that revenue is to be. I do hope I shall get an answer on this point. Mr. Lloyd-George, speaking at Limehouse, said the landlords received £8,000,000 a year from royalties. The September number of the Liberal Monthly, the organ of the Liberal Federation, informed a correspondent that the latest available figures as to the royalties and wayleaves in the United Kingdom are those given in the Mining Royalties Commission Report of 1903. Those figures show a total of £4,873,000 from royalties and wayleaves on coal, ironstone, iron ore and other metals. That is one statement. I then turn to the official handbook to the Budget issued by the Budget League. On every ton of iron ore the royalty is said to be 2s. 6d. and on every ton of coal 9d. Since 268,000,000 tons of coal and about 10,000,000 tons of iron were obtained from British mines in 1907 the royalties in that year on those two minerals alone must have totalled £11,300,000. Finally, we may note that Mr. Asquith, the Prime Minister, estimated to get £325,000 from a five per cent. tax on royalties which points to about £6,500,000 of royalties. What I want to ask is, which of those estimates is correct? The official return says £4,873,000; Mr. Asquith says £6,500,000; Mr. Lloyd-George says £8,000,000; and the Budget League says £11,300,000. I will give those figures to the noble Earl, Lord Beauchamp, and I will ask him to answer me because I think we ought to have something definite as to the amount that will be derived from the proposed taxes on royalties.
Now I turn to another point, that of capital leaving this country. My noble friend Lord Revelstoke, whom I congratulate on the masterly speech he made last night, dealt with the question of capital flying from this country so that I hardly need do more than touch upon it. But I do not think that those who have submitted
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this Budget to your Lordships' House are realising the great danger they are risking by forcing and driving capital out of this country. I do not think they realise how the industry of this country depends entirely on the flow of capital being spent in this country. I know that the supporters of His Majesty's Government declare that if only wealth is taxed it is wealth, and wealth only, which will pay. I have other views on this subject, and Mr. Harold Cox holds the same views as I do. Mr. Harold Cox says:—
"Many people seem to imagine that if a tax is paid only by the rich it is the rich alone who feel it. That is not so. So far as the question of employment is concerned, the effect of a tax is the same, whether it is paid by rich or poor. If a rich man has to pay an extra £50 a year for income tax, he has £50 less to spend on the multifarious industries that minister directly or indirectly to his comfort. The, people he was employing are thrown out of work."
That was stated by Mr. Harold Cox in a pamphlet issued by the Liberal Publication Department in 1905. I do not wish to eulogise capitalists. I suppose I shall be told I am a capitalist myself. I hope I and those who have gone before me have so spent our capital as to have produced an enormous amount of work and labour for the working-classes in the districts in which we have lived. But I am not singular in this. I suppose a vast number of your Lordships and your predecessors have done exactly the same. But let me point out to your Lordships that if capital is reduced there must be less work, there must be less wages, and there must be more unemployment.
What is the position in regard to unemployment at the present moment? I live in the North of England, near the Tyne, the Tees and the Wear, and unemployment is rife in all those districts. Are you justified in driving capital out of the country? It might mean giving employment to those people. As capital goes out of the country the ranks of the unemployed must be swelled weekly and almost hourly. I know that in the North of England, in the district in which I live, there are hundreds of men anxious to get employment. But how can they get employment if capital is not expended? How are the factories to be maintained? How is the machinery to be maintained? How are even the tools to be maintained to give work to those men if capital is flying out of the country? Let me remind your Lordships that the State has never been, and is not, responsible for the

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great centres which at the present moment give employment to so many people. Look at your coal mines, iron works, telegraphs, telephones, and any other industries you may choose to select. Have they been developed by the State? Not at all. They have been developed by private enterprise, by the outlay of capital, and if once that capital begins to fly, and continues to fly, naturally all those great industries must languish. Why? Because there is no money to be invested in them and to give employment to those who naturally depend upon them. I read the other day a speech by Mr. Hobhouse, with whom no one will accuse me of being a sympathiser; he is a colleague of noble Lords opposite. What did Mr. Hobhouse say? He said:—
"There were some people, equally unwise, who thought you could put capital on one side and labour on the other. In his judgment, there was the closest possible relation between capital and labour, and each lived by the other; and if we were to do anything which would drive capital, permanently or temporarily, from this country, we should undoubtedly inflict a lasting blow on all who laboured by hand or brain."
Therefore are you justified, either by your previous policy or by your policy as shown in the Budget at the present moment, in driving capital out of this country?
I should like to hear from noble Lords who will follow me whether they deny the statement that capital is flying from this country. I know full well that the Prime Minister stated that he did not seem to mind if capital were flying from this country. I thought it an extraordinary remark for a man in his position to make. Then I read also a speech by Mr. Winston Churchill in which he denied that capital was flying from this country. The ways of the present Cabinet are somewhat difficult to understand. Who represents the Cabinet at the present moment? Whether it is Mr. Asquith or Mr. Churchill seems to us outsiders a difficult point to decide. At any rate, I think it is a little difficult to reconcile the two statements of those very eminent members of His Majesty's Government. But that capital is flying out of the country I do not think anybody will deny. I had brought under my notice the other day a statement by no less an authority than the Chairman of Parr's Bank who, on January 28, of this year, said—
"A feature of the year had been the small proportion of British capital which had been invested in home industries. Out of a total of £203,000,000 no less than £148,000,000 had gone abroad into foreign or Colonial investments."
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In view of that statement, from a man in that position, surely we are justified in saying that if capital is leaving the country at this extraordinary rate, it is not altogether to be wondered at that the condition of unemployment is what it is at the present moment.
Therefore I say that this Budget should be referred to the people of this country to let them really recognise for themselves what the policy of the present Government is and to say whether it is to be continued in the future as it has been in the past. There is only one word I need to say as to the reasons why I support the Amendment of the noble Marquess referring this matter to the country. One reason is that I think these proposals are based on Socialistic grounds. I know full well that I shall be told by noble Lords opposite and by their colleagues in another place that they repudiate Socialism entirely. I need only say that much as I respect them I prefer to take the word of the leading Socialist, Mr. Snowden. He informed us in a speech that a number of the measures that are introduced into this Budget were proposed by him to Mr. Lloyd-George. I do not think any noble Lord will contradict me when I say that Mr. Snowden has been really more or less responsible for this Socialistic Budget. I feel I shall be endorsed by Mr. Snowden's own words. These are his words—
"The Chancellor of the Exchequer last year said that the suggestions I had put forward might be useful for some future Chancellor of the Exchequer. I want to congratulate him upon being a great and apt pupil, and for not having waited to allow a future Chancellor of the Exchequer to begin to put those suggestions into practice."
If after that I call the Budget a Socialistic Budget I am endorsed by Mr. Snowden's own words.
Again I say I cordially, and to the best of my ability, endorse the Amendment of the noble Marquess. I object to this Budget because I consider it is unconstitutional, it is unjust, and it is vindictive. On those grounds I think the noble Marquess, in the interests constitutionally of your Lordships' House, was bound to move the Amendment he has submitted. But I think he has done more and wisely done more. He has taken this Budget out of the hands of your Lordships. It cannot be said that your Lordships have rejected this measure. I know there are a great many of your Lordships who would have liked to have seen it rejected. Whether they are right or wrong, I offer no opinion;

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but the noble Marquess has taken the line of appealing to the country. He would appeal to the people, in whom he has confidence. The position of your Lordships' House has always been a great one in the minds of the people of this country because you have never refused to accept any measure when the people had an opportunity of speaking and have spoken in its favour. Now the people will decide whether this Budget: should become the law of the land or whether it should not. I cordially endorse the Amendment of the noble Marquess, firmly believing that whatever the decision of the people is your Lordships will most loyally and heartily abide by it.
LORD AVEBURY: My Lords, I am one of those who would have preferred to amend the Finance Bill, retaining the existing taxes and some of those now pro-posed; but after the repeated declarations made by the Government that they would admit no amendment, however reasonable, I can well understand that the noble Marquess the Leader of the Opposition thinks that this would be a waste of time. I hold in my hand quotations from Mr. Gladstone in which he took the view that your Lordships had exactly the same power of amendment as you have of rejection, but in existing circumstances I will not trouble you with those quotations in view of the repeated declarations of the Government to which I have referred. The extreme violence of the speeches in which your Lordships have been attacked for months past has fallen very flat. They will not hurt your Lordships, and I think the country will draw the obvious conclusion that it is impossible to find arguments in defence of the Budget. Moreover, we have not only just right to protest against speeches of extreme violence, tending to set class against class, but also against statements either very much exaggerated, or in some cases altogether without foundation. Even my noble friend Lord Welby, who is generally so cautious, has actually told the Westminster Gazette that in adopting Lord Lansdowne's Amendment "the Lords in one day will add between £40,000,000 and £50,000,000 to the national liabilities." But in his interesting speech last night my noble friend did not adhere to this statement. I do not think that he will contradict me when I say that the Resolution will not add a penny to the national liabilities. What my noble friend, I think,
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meant to say was that it would affect that amount of taxation. But he knows very well that, even that is only technically correct, and if there should be any chaos in the finances of the country it could only be by the action of His Majesty's Government.
But first of all, my Lords, I should like to point out that—as it seems to me at least—the Bill does not come to us with any moral force. Ever since its introduction elections have been going against the Government. Moreover, look at the majorities by which the several clauses of the Finance Bill have been carried in the House of Commons. The system under which the House of Commons is elected is by no means satisfactory. Twice in recent elections a minority in the country has secured a majority in the House of Commons. At the last General Election, on the contrary, it so happened that the majority in the country obtained a far larger proportional majority in the House. In 1906, according to the poll-book issued by the Liberal Publication Department, the Radicals polled 3,044,000 votes and secured 428 representatives, while the Unionists polled 2,400,000 and only obtained 139 representatives. "If," says the Report, "the Government only held as many seats as this vote majority entitled it to proportionately, this seat majority would be ninety-four. As a fact it is 354." That is to say the Government have 260 more votes in the House of Commons than they are entitled to by the votes given in the country. But their majorities in the Divisions on the Budget clauses have never reached to anything like this figure. They have ranged up to 180 and fallen below forty. If, then, the Government had only a majority in the House of Commons corresponding to their majority in the country, they would have been unable to pass the Bill. So far as arithmetic goes, we are entitled to say that the country is against the Bill.
The Bill is so far-reaching that it is impossible to deal with all the problems raised, and I will not refer to the additional taxes on alcohol and tobacco, except to guard myself against being supposed to approve them, though some increase may be desirable. Nor will I follow Lord Lansdowne into his remarks about Tariff Reform except to say that while any general imposition of duties

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would lead to the evils pointed out in the excellent Report of the Committee on Direct and Indirect Taxation of 1840; additional Customs Duties will clearly bring in more if they are supplemented by Excise Duties and in that case, would involve no abandonment of Free Trade.
I now come to the proportion between direct and indirect taxation. The Prime Minister in his speech at Sheffield in May took the produce of the new indirect taxes at £6,100,000 and of direct taxes at £6,850,000. This he considered was a fair proportion. But it will be observed that this figure is only that for the present year, and as Lord George Hamilton has shown, the real amount from direct taxes will be over £25,000,000, which by the showing of the Prime Minister himself is most unfair. Sir Robert Giffen, who certainly will be admitted to be one of the highest authorities, in a recent article on the Budget has expressed the same opinion. He said—
"The indirect taxes are obviously too low in proportion to the Income Tax and Death Duties."
Moreover, the fact that they are too heavy is not, as Sir Robert has also pointed out, the only objection to the Income Tax and Death Duties. In the first place the Income Tax is in many cases a tax not really on income, but on capital. This is the case as regards all incomes from wasting securities. So far as the present tax is concerned, of course the Government are not responsible. The injustice has always been admitted, and so far no remedy has been found. It has always been admitted to be a strong reason for keeping the tax low; but the Government are now raising it heavily without making the slightest effort to remove the injustice. The second reason for keeping the tax low is that it is a reserve in times of difficulty and in case of war, but the Government now are raising it in a time of peace almost as high as, and indeed in some cases higher than, it has ever before been in a time of war.
Now, my Lords, I am not going into the question of the land taxes, because that has been dealt with by speakers more able to speak with authority on the subject than I am; but I should like to say a few words on the question of graduation. I fear that I shall not carry all of your Lordships, even on this side of the House, with me in objecting to the principle of graduation. No doubt Government are not open
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to the charge of introducing the system. They are, however, seriously aggravating the injustice commenced by their predecessors. But that is precisely the danger of graduation. It has always been objected to by the highest authorities because if you once begin there is no logical reason why you should stop. This is the second graduation of Income Tax, and the third of the Death Duties. Moreover, several members of the Government have warned us that if they have their will, others are in store. John Stuart Mill, himself a strong Radical, lays it down as an axiom that—
"to tax the larger income at a higher percentage than the smaller is to levy a tax on industry and economy, to impose a penalty on people for having worked harder and saved more than their neighbours. It is a partial taxation, which is a mild form of robbery … A just and wise administration would abstain from holding out motives for dissipating rather than saving the earnings of honest exertion."
Another high authority, Mr. Lecky, in his work on Democracy, says that—
"it is obvious that a graduated tax is a direct penalty imposed on saving and industry, a direct premium offered to idleness and extravagance. It discourages the very habits and qualities which it is most in the interest of the Stale to foster … It is at the same time perfectly arbitrary … . Highly graduated taxation realises most completely the supreme danger of democracy, creating a state of things in which one class imposes on another burdens which it is not asked to share, and compels the State into vast schemes of extravagance, under the belief that the whole cost will be thrown upon others … . Yet no truth of political economy is more certain than that a heavy taxation of capital will fall most severely on the poor."
I should like again to quote Sir Robert Giffen, who, in a recent article in the Quarterly, lays it down that—
"all graduation is an interference with individual right which it is one of the main functions of the State to support."
Every step taken in this direction makes it more difficult to resist the next. If you agree to the proposals in this Budget you will have no logical basis for objecting to a further step in the same direction. Graduation not only takes an unfair part of a man's property, but lowers the value of the rest, because it strikes a blow at all security of possession. It necessarily creates a want of confidence and a feeling of insecurity. The idea is that you are going to remedy an injustice. How is that done? At present the figures are £5,000 and 6d. Why are these figures taken? Perhaps the Government will explain. I can only suggest that as there are said to be only from 10,000 to

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12,000 persons with over £5,000 a year—a number which seems to me to be below the mark—the Government consider that it is safe to tax—might I not have said "rob"?—them. I do not think the Government will find it possible to give any logical reason for the figures they have chosen. But no doubt they will tell us that I graduation places the burden on the shoulders best able to bear it. How do they know that? They assume that a man with £5,000 a year is richer than one with £4,000 a year. But this is to fall into the fundamental error of looking at one side only of the account. They take the incoming and ignore the outgoing. They look only at the assets and ignore the liabilities. A bachelor with £4,000 a year is better off—I mean, of course, only financially—than a man, with a wife and family, who has £5,000. And yet the man who is really the richer of the two will pay Jess Income Tax. The man with £4,000 a year may support the Government proposals now, and deem himself fortunate in escaping the Super Tax which the man with £5,000 has to pay. But how long will he escape? His turn will inevitably come; then that of the man with £3,000, and so on.
Then I come to the Death Duties, and I will take the case of three men each inherit-lug £20,000. One is an only son whose father left £20,000, and he will have paid £1,000. The second is one of five children whose father leaves £100,000; they also will each receive £20,000, but they will each have paid £1,600. The third is one of ten children whose father leaves £200,000; they also will each get £20,000 but they will each have paid £2,000! I should have said, what can be more absurd and ridiculous, if it were not so serious. But what can be more unfair and unjust? If you are to graduate at all it should obviously be on the sum a man inherits, not on the size of the estate from which it is derived. Graduation, therefore, not only leads logically to Socialism, but creates many cases of hardship and injustice—as many as, and perhaps even more than, it redresses.
The Government, I believe, consider that the Budget will, first, provide for the immense addition to our expenditure for which they are responsible with as little disturbance as possible to business—to our manufacturing and commercial interests; secondly, that it will promote building, and tend to improve
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the dwellings of the poor; and, thirdly, that it will throw the burden of taxation on the rich and spare the poor. These are excellent intentions; if I thought they would be fulfilled I would unquestionably vote for the Bill. But before sitting down I will endeavour to show that, in the opinion of those best qualified to judge, the provisions of the Bill will have the very opposite effect.
We are told that the House of Lords has never before thrown out a Finance Bill, But the House has never before had such a Bill to consider. The bankers and merchants of London have never before denounced a Budget. We are divided in political opinions and have never before as a body taken such a step. But they felt so strongly that the present Budget would be disastrous to our commerce that they drew up a remonstrance to the Government in which among other arguments against the Budget they say—
"The great increase and graduation of the Death Duties—already materially raised but two years ago—and of the income tax coupled with the super tax, will, we are confident, prove seriously injurious to the commerce and industries of the country."
That was signed by representatives of every bank in London and almost all the great-mercantile houses. It was no political demonstration; it was signed by the late Liberal candidate for the City and the Chairman of the City Liberal Association. Not content with that, a great meeting in the City was called. They invited no great Statesman. It was purely a business and City meeting. But the great hall at Cannon-street was crowded. Lord Rothschild presided, and was supported by the leading bankers, merchants, and others intimately associated with the trade and commerce of London. Almost every important City house and institution was represented. Representatives of every great bank and insurance office were present, and the following resolution was unanimously passed—
"That this meeting, while recognising the necessity for increased taxation, is of opinion that the cumulative effect of the proposed heavy charges on both capital and income will be to discourage enterprise and thrift, and will prove seriously injurious to the commerce and industries of the country."
No doubt a subsequent meeting was held to support the Budget, but with one or two exceptions, easy to account for, those responsible for the trade and commerce of the country were conspicuous by their absence.

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I believe, for instance, that not a single chairman of a bank, of an insurance company, or, indeed, of any great commercial institution attended to support the Prime Minister.
We maintain that the policy of the Governmen has lowered the value of every one's property. While the securities of almost every foreign Government have risen Consols have fallen, so that every new loan—those for Irish Land purchase, for instance—will have to be raised on more onerous terms. Municipal securities have fallen, partly, no doubt, on account of increased expenditure, but partly from want of confidence. Members of the Stock Exchange may not be great authorities on political economy, but they are petty good judges as to prices, and they are certainly of opinion that the policy of the Government has lowered prices and that they would rise if the Government went out. It cannot be denied that the Budget has created a general feeling of unrest and insecurity, and this cannot be good for the country. There is, moreover, a general consensus of opinion that capital is leaving the country. The Government have evidently not considered what this means. The Prime Minister has made two contradictory statements in one speech. First he ridiculed the idea, and asked with an air of triumph, Where is it going to? He, however, gave the answer himself a few sentences later. "It is a fact," he said, "that we have sent millions of British capital into the uttermost corners of the earth." I will ask the House to consider the effect of this in a few moments. But I must point out that it is not a question of British capital only. Hitherto, much foreign capital has been invested here to the great advantage of the country. The Budget is putting an end to that satisfactory state of things. The noble Earl, Lord Crewe, may say that the commercial community do not understand their own business, but he cannot deny that an overwhelming majority of those concerned believe that the Budget will deal a heavy blow to the trade and commerce of the country.
I come now to the second object, a very excellent object, which the Government have in view—to encourage building and thus improve the dwellings of the working classes. Here, again, I submit that expert opinion is almost unanimous against the land proposals in the Budget. The Law Society appointed
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a committee to examine and report upon the Bill. The Committee have made a valuable report criticising the Bill severely. They say that—
"They regard them [i.e., the land clauses] as unjust in principle, in that they are specially directed against owners or a particular class of property, and one which already bears its fair share of Imperial and local burdens, as unnecessary from a purely financial point of view, as seeking to bring about under the pretext of taxation results which, if deemed desirable, should be openly pursued by substantive legislation, and as calculated to cause dislocation of business and to augment unemployment."
And again—
"A change of such importance ought not to be brought forward as part of a financial measure. If for purposes of public policy the owners of land are to be deprived of part of their property, it should be upon terms of payment of a reasonable price, and not by taking the property without compensation and calling the process taxation."
The Law Society of Ireland have expressed very similar opinions, and they add that I some of the proposals "will weigh with special severity on the tenant farmers of Ireland." The Land Agents' Society have issued a Memorandum in which they point out that the "so-called unearned increment" does not, and is never likely to, exist, except in the shape of accumulated interest on locked up capital; that "the Ministerial estimate of £2,000,000 as the cost of the valuation of the land … is wholly inadequate." They believe—
"that the view is held in some quarters that the increased burdens imposed upon the land by the Bill will affect large landowners only. Nothing, in their opinion, could be further from the truth. On the contrary, in many respects—such as, for instance, valuation—the cost to a small owner must necessarily be relatively very much greater than to a large owner. In the opinion of the Committee no landlord, however small, will be able in prudence to dispense with the services of a skilled valuer."
The Society of Auctioneers, which was founded more than a hundred years ago, express the opinion that—
"The cost both to the nation and private owners will be enormous, and altogether out of proportion to the revenue obtained. The valuations will be very complicated, and in many cases there will be conflicting interests in connection with the same property. The effect of the Bill will be to create distrust and uncertainty with regard to the tenure of land, and will lead capitalists and others to abandon land as a subject for investment."
The Surveyors' Association have issued a statement, in which they point out that—
"At the present time, owing to the great decrease in the value of property, the margin on

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many mortgages lifts boon reduced below the statutory one-third, and the imposition of the proposed duties will cause a still further reduction, so that trustees and others who have hitherto regarded mortgages as one of the soundest forms of investment will he compelled to call in their capital and invest it in other securities; the result being great hardship on, and expense to, the owners of property, and restriction of the capital available for investment of land."
The Valuers' Association sent out a circular to all their members, and received 421 replies. Of these 411 condemn the land clauses and only ten support them. They say that the Finance Bill has already had a deterrent effect on the letting of building land, and some of the signatories have experienced instances where contracts which were on the eve of completion have been annulled on account of the cumulative taxes proposed, and the cancelling of these agreements will cause an enormous amount of unemployment in the building and allied trades.
I have the honour to be, and to have been for twenty-five years, president of the Building Societies Association. The societies of which it is composed have over £70,000,000 sterling invested in such securities, and they will also be very adversely affected. For instance, the secretaries and surveyors of the Bradford Equitable, in their Report to the Society, point out that—
"The Budget suggestions for Land taxation are so complicated and apparently unworkable that there appears to be no possibility of making any useful suggestion for their amendment, and the probability of further legislation on similar lines, increasing the amount of the taxes, will for a considerable time seriously unsettle the property market and reduce the selling value of all real estate far beyond the amount of the proposed taxes. This state will certainly continue until buyers can estimate with a fair amount of accuracy the full effect of such legislation."
The Government proposals were put forward with the view of encouraging the building trade. But what has been the result? The London builders have issued a manifesto in which after saying that they have had a long experience and employ many thousands of workmen, they add that their business has been paralysed by the Budget—
"Since the Budget proposals have been placed before the public no one of us has taken up any land for building purposes. The reason for this is that while we, as traders, are as desirous as ever we were to do business, we are unable to entertain proposals which would result in nothing but a serious loss. The increment duty of twenty per cent. and the 100 per cent. increase in Stamp Duties are, perhaps, the direct causes of the paralysis of our industries and the demoralisation
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of those who have been accustomed to invest their money in building. Beyond this, the little man who builds a house, frequently paying for it in instalments, will no longer dream of investing his savings or committing himself financially by dealing in house property, The actual result is that with an immediately diminishing number of workers we are merely completing existing contracts; and seeing that not one of us has bought a single estate since the Budget was introduced, the outlook for the winter months, so far as the worker is concerned, is grave beyond any possibility of exaggeration. We are anxious to continue business; we are wishful of finding further work for our men, some of whom have been with us many years; but this is impossible; and we give this warning of the general collapse in the building trade in the hope that something may yet be done to avert what cannot but prove to be a terrible industrial calamity."
There is, in fact, a most remarkable consensus of opinion amongst those best qualified to judge, that the effects of the proposals will be disastrous. Those who have issued these protests against the land clauses are not millionaires or large landowners, but hard-headed men of business speaking of what is within their own knowledge.
I now come to the last point. The Government maintain that the Bill will benefit the poor at the expense of the rich. When members of the Government at public meetings can spare a few moments from the abuse of their opponents to the defence of their Bill, they generally sum up their remarks by declaring, without showing how, that it is a "poor man's Budget." My Lords, it is nothing of the kind. The Chancellor of the Exchequer seems to think that to diminish wealth is to diminish poverty. It would be truer to say that if you diminish wealth, you increase poverty. The Government may, and will, ruin many of those who now consider themselves well off, but it is not in the power of any Government permanently to alter the incidence of taxation. The effect is being constantly modified by change in wages, in hours of work, by special allowances, and in other ways. But though it is not in the power of Government to affect permanently the incidence of taxation, it is in their power to affect for good or evil the prosperity of the country. It can hardly be denied that, in the opinion of those best qualified to judge, the effect of the Budget on trade and commerce of the country will be disastrous. So far from encouraging building, the Budget, in the opinion of builders, is doing and will do the very reverse. It has paralysed their business and would throw thousands out of employment.

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So far as land is concerned, I have shown that in the opinion, not of great landowners, but in that of those practically concerned in land management, the Bill will be disastrous. Moreover, it is entirely an error to suppose that it will affect large landowners only. On the contrary, the cost to small owners will be proportionally more heavy, and the general effect more injurious. Building, again, has been seriously checked. So far as London is concerned, little land has lately been taken up for building; if the Bill passes, we shall have to face a general collapse of the business and thousands will be thrown out of employment. That, again, is not merely my own opinion, which would be of little importance, but is that of the highest authorities in the City. They said in their weighty remonstrance—
"In conclusion, we would point out that, though the taxes to which we have taken exception will, in the first instance, fall with excessive severity on capital, they will also in our opinion tend to discourage private enterprise and thrift, thus in the long run diminishing employment and reducing wages."
Of course, they may be quite mistaken, but that is their opinion. Again, the Budget is a discouragement to thrift and industry. As men advance in life they naturally begin to consider when they should retire from work, whether what they expect to make will repay the effort. But if Government are going to take a shilling and eightpence per cent. for income tax, naturally men will retire earlier. The whole nation will be the poorer, and in this way again the employment of artisans will be diminshed.
The attempt to delude the working classes into the idea that these taxes fall exclusively on the rich will have another unfortunate effect. It will tend to promote extravagance and discourage economy. We have seen the malign influence of the compound householder on municipal expenditure, and are paying heavier rates because so many electors are under the impression that they have no interest in economy. In the same way, if Parliamentary electors are persuaded that it is in the power of Government to throw taxation on the rich, it will become even more difficult to resist excessive national expenditure. I do not for a moment question the desire of the Government to benefit the poor, but am persuaded that they are going the wrong way to work. Real charity is that which makes the recipients more independent; unwise charity makes them more dependent.
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The tendency of legislation under the present Government is to make our poor more dependent—less independent.
Lastly, more capital in the country means more employment. If capital comes into the country it is spent in paying for labour, and wages tend to rise; when capital leaves the country there is less demand for labour, and wages fall. My Lords, when we find that the effect of this Bill, in the opinion of those best qualified to judge, must necessarily be to drive capital out of the country, to create a feeling of insecurity and want of confidence, to lower the value of property, check industry and discourage thrift, diminish employment and lower wages, we cannot surely, in the interests of the whole community, take the responsibility of passing the Bill as it stands. Since the Government tell us that under no circumstances will they accept any amendment, we are not only entitled, but bound, to submit these facts and arguments for the consideration of our countrymen, and to secure for them the opportunity of deciding for themselves.
THE LORD STEWARD (EARL BEAUCHAMP): With the permission of your Lordships I should like, as my first duty, to express regret at the absence of the noble Marquess the Leader of the Opposition, and for the cause of it. The noble Marquess's gallant effort yesterday afternoon to overcome the obvious physical discomfort from which he was suffering, was as much admired on the Government side of the House as on the other. Even in the midst of this controversy we may all join in the hope that he will not be long incapacitated from joining in debates in the House. My second duty is to answer some observations which were addressed to me earlier in the evening by Lord Londonderry, one of which I will answer at once by handing to him the financial statement which has been issued as a White Paper by another place, which is numbered 116, and which contains the information he asked for in the paper which he handed to me across the Table.
Now it seems to me that there is on this subject—it is common to both sides of the House—a vast quantity of theory. There is also a vast quantity of fact as to which there can be no dispute, and I hope your Lordships will forgive me if I try to confine myself first to that part of the subject which deals with hard dry facts rather than with large constitutional theories. An admission was made, I think, by the noble Marquess

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the Leader of the Oppostion, and it was re-echoed by other speakers on that side of the House, that the Amendment we are now discussing is without; precedent. But it was also contended that the provisions of the Budget are also without precedent; that they are revolutionary and Socialistic. That being the noble Lord's contention, I hope I may be allowed to go into the matter in some detail and to ask your Lordships where there is anything revolutionary or where the Government have taken any improper step.
We know there is a deficit, almost unexampled in time of peace, of £16,000,000. We know it is due in part to Old Age Pensions and in part to the increased requirements of the Navy. Noble Lords on both sides of the House have agreed to it, and I think there is no large body of opinion on either side of the House which is opposed to this increased expenditure. The Government propose to meet that deficit by reducing the Sinking Fund and by imposing various duties on stamps partly, and on motor cars, and increased duties on tobacco. Then we come to the more important duties. In the first place, there are the Death Duties, and in the course of this debate I have been sorry to see that no noble Lord opposite has made any reference to the fact that there has been some concession made in the direction of works of art, in the shape of a deduction proposed in the Finance Bill. I think, if I may say so, a very proper deduction in regard to works of art which are not the subject of a settlement has been made in this Budget, and that has not been acknowledged by noble Lords, who have found every objection they could to it.
The Death Duties, though increased in amount, introduce no new principle, and cannot, therefore, be called revolutionary. Then when we come to the Income Tax and the Super Tax there are the allowances to the extent of twenty-five per cent. for the management of landed property. The noble Lord who has just sat down objected to the Super Tax and Graduated Income Tax. His arguments might properly have been addressed to noble Lords on the Front Bench opposite, for I do not understand that they have any serious objection to the one or the other. The noble Lord said that it was impossible for the tax collector to be sure that a man with £5,000 a year is better off than another man with £4,000 a year. That is quite true. I do not know that Mr. Rockefeller is any better off than I am
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myself, but I have a shrewd suspicion that he is, and I have a shrewd suspicion that a man with £5,000 a year is better off than a man with £4,000.
With regard to the Licence Duties, I do not intend now to follow the noble Lord on the Cross Benches who spoke just before dinner, but I desire to give a few figures in regard to these duties. These taxes are complained of, I think, by Lord Londonderry, who said that we had in the Finance Bill included the provisions of the Licensing Bill, and that these should have been in a separate measure. I am quite unable to understand arguments which are addressed to the House on those lines. The headings of the Licensing Bill included statutory deductions, local option as to prohibition, grant of licences, time limit, discretion of local licensing justices, schemes for statutory reduction, and reduction of amount of compensation, &c. If there is anything from the Licensing Bill tacked on to the Finance Bill I would like to know the line and clause of the Finance Bill which contains it. The main principle which has actuated the Government in the revised scheme of licence duties is that the bigger houses should pay more than at present, and on a scale similar to that of the smaller houses. Under the scale proposed five per cent. of the public-houses will actually have their Licence Duty reduced, twenty-eight per cent. will have an increased duty of from 5s. to 10 s. per annum, eight and a-half per cent. will have an increased duty of from £1 to £2 10 s., while in the case of another six per cent. the amount of the average increase will range from £3 to £7. In the case of a further twenty-three and a-half per cent. the average increases range from £9 to £12 10 s. a year; so that, in other words, no less than seven-tenths of the public-houses would have their Licence Duties reduced or they would have imposed upon them an average increase not exceeding £12 10 s. a year. Setting aside some smaller licences which came between that figure and the next, thirteen per cent. would have their licences increased by an average sum of £45 per annum. These figures represent altogether eighty-four per cent. of the total number of the public-houses in the country. The heavily taxed houses are therefore relatively few, but these taxes are designed and meant to hit the immense new hotels which are a feature of modern life, which did not exist at the

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time when Licence Duties were first introduced, and which, being new features in our modern life, have not been provided for in legislation in times gone by. Houses of that kind are obviously a very proper object of taxation on a higher scale, as compared with the taxation put upon smaller houses. In any case this extra taxation of big houses is after all no matter of new principle. Under those circumstances I think we are thrown back upon the last item in the Budget to find why it is that noble Lords opposite consider the Finance Bill revolutionary and Socialistic.
Now we come to the Land Taxes. It is with very great surprise that I heard the Leader of the Opposition last night speak of these taxes as falling really upon an enterprise which fills relatively a much smaller place in the wealth of the country than it did forty or fifty years ago. The values which the Government propose to tax hardly existed forty or fifty years ago. This taxation of land values is not a taxation of agricultural land values, nor of the land throughout the country; it is the taxation of urban land values. Indeed, every Amendment which was suggested by the friends of noble Lords opposite designed to protect agriculture was, as far as possible, accepted by the Chancellor of the Exchequer.
Clause 7, dealing with increment value, gives an exemption to agricultural land; Clause 14 (the reversion duty) and Clause 17 (undeveloped land duty) also exempt agricultural land. There is, therefore, here no question of the taxation of agricultural values. We are dealing with urban values, and what the Government propose to do is to ask that this vast wealth should contribute its fair share to the taxation of the country. This wealth, which was hardly known forty or fifty years ago, has grown, to the knowledge of every member of this House, almost beyond the dreams of avarice. Hardly any form of wealth in this country is so immense as the possession of land in urban areas. It has escaped up to the present moment not only its fair share towards the taxation of the country, but also towards rating. Here in the Finance Bill of this year is the attempt on the part of His Majesty's Government to ask owners of urban land values for the first time to pay some small portion of their immense wealth to the common stock of the country, and that is
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the proposal that is an offence to noble Lords opposite.
Now let me turn to these various land taxes and give some examples of how our old land system has operated in the past, and how it is not unjust that these taxes should really force these landowners to pay something more towards the taxation of the country. To guard myself against any misconception, I hope that your Lordships will allow me to say that in any instance given I do not desire or intend to attack any individual. It is the system that makes it possible, and it is against that system, quite apart from any individual, that this taxation is proposed. These land taxes are four in number. In the first place, there is the Increment Value Duty which exempts agricultural land. Then His Majesty's Government propose to value the land of the country, and its value to-day will be stated. When on any future occasion property changes hands and it appears that it has increased in value, then, subject to certain deductions, the Government propose that twenty per cent. of that increase should be a contribution to the National Exchequer. There is no confiscation; no taking away of anything that now belongs to any landlord in the country. The only part which is made subject to taxation is any future increase that may happen. We are not dealing with present values or prairie value. We take a percentage of the future profit which is not due to any expenditure on the part of the landlord himself.
Let me give one or two instances. Thirty years ago on the failure of a prominent financier in the City of London his business premises in Lombard Street were sold for about £37 per foot; rather an extravagant price for that day. Now, so far as can be judged from sales in the City, land in that neighbourhood is being sold at no less than £50 per foot. Considering the fact that the landlord has made no contribution to increase the value of that land, that seems to us to be a proper subject for taxation. Then there is another instance. In 1865 a piece of land on the foreshore of the Thames near the Temple changed hands for £8,250. In 1870, at the cost of the ratepayers, the Victoria Embankment was built. A year afterwards the London School Board bought that same piece of land and had to pay no less than £26,420. We say, and who can

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deny? that that vast increase in five years was a proper subject for taxation.
But this question does not affect only London. Let us take Manchester. In 1780 land at the corner of Piccadilly and Mosley Street was sold for a little under 1s. 6d. a yard. Six years ago that same land was sold at the rate of from £59 to £70 a yard. There was some land in Cross-street which was sold in 1881 at the rate of £60 a yard. In May, 1900, it was sold at the rate of £120 a yard. There was also another case in which, I think, in a short period the amount which was given for a piece of land in. Manchester was even larger. I quote these increases as examples of what in the opinion of His Majesty's Government are proper subjects of taxation.
Now, let us turn to the Reversion Duty, a duty on leases, in which again there are exemptions for agricultural property and certain other exemptions to which I need not now refer. On the determination of any lease ten per cent. is payable upon the increased value. Here again, let us take the provinces. In South-street and Broad-street, Sheffield, a gentleman held land at a ground rent of £5 1s. per annum. For the renewal of that lease a sum of no less than £150 was paid. There is no question here of what the gentleman in possession may have been paying to middlemen. That will not become subject to taxation. What will be subject to taxation is the difference between the £5 and the £150, upon which, in our opinion, it is only fair the ground landlord should pay ten per cent. In Birmingham four years ago there were some premises in New-street, the ground rent of which was £975, which was fourteen times more than had been paid before. In Broad-street there was a public-house of which the ground rent had been £40 per annum. It was put up to auction and no less than £840 per annum was given for that lease.
Then we come to the Undeveloped Land Duty, and I cannot help thinking from what has been said chiefly by Lord Camperdown that it is this duty against which most of the objections of noble Lords opposite are directed. This is a duty of one halfpenny on the site value. Here, again, there are exemptions in favour of agricultural land. I do not know that there is a tax in the whole programme of His Majesty's Government which has been more urgently demanded
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by municipalities throughout the country than this tax on undeveloped land. I will show shortly why it is that this is asked for. There was a debate in the House of Commons some years ago upon a Bill for the taxation of these values, and Sir Albert Rollit, then the Conservative member for South Islington, spoke in favour of the Bill and quoted the following resolution, which had been unanimously adopted by the Association of Municipal Corporations:—" That it is urgent to provide some means by which owners of land, whether occupied or vacant, shall contribute directly to local rates." I hope your Lordships will bear with me while I give one or two illustrations as to the way in which it will work. At Felixstowe a certain plot of one and a-half acres of undeveloped land paid only a few shillings in rates and taxes. That land was wanted for the site of an hotel, and the terms of purchase were that £2,000 should be paid for the land and £500 more when the magistrates granted a licence for the building. In that case the plot was wanted for the development of the town, and the land was worth apparently not less than £1,400 an acre. It was withheld, and paid only a few shillings in rates and taxes. Is it an extreme or revolutionary proposal that the landlord should pay in proportion to the value of the land? The taxation proposed in the Budget would have amounted to only £5 a year in that case.
The demand for this tax comes from all parts of the country. The demand which has come specially under my notice is that from watering places, which suffer considerably when the owners of land outside the towns refuse to allow that land to be built upon. As a result the rates in the towns are heavier than they need be. The land is held up until a very large sum—often a fancy price—is paid for it. We do not object to a fancy price being obtained, but we say that until the owners get those fancy prices they ought to pay their proportion towards the rates which their neighbours have to bear.
I shall now read to your Lordships a rather long quotation from the Report of the Royal Commission on the Housing of the Working Classes, which reported in favour of the rating of undeveloped land in 1885—
"At present, land available for building in the neighbourhood of our populous centres, though its capital value is very great, is probably producing

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a small yearly return until it is let for building. The owners of this land are rated, not in relation to the real value, but to the actual annual income. They can thus afford to keep their land out of the market, and to part with only small quantities, so as to raise the price beyond the actual monopoly price which the land would command by its advantages of position. Meantime, the general expenditure of the town on improvements is increasing the value of their property, If this land were rated at, say, four per cent. on its selling value, the owners would have a more direct incentive to part with it to those who are desirous of building, and a two-fold advantage would result to the community. First, all the valuable property would contribute to the rates, and thus the burden on the occupiers would be diminished by the increase in the rateable property. Secondly, the owners of the building land would he forced to offer their land for sale, and thus their competition with one another would bring down the price of building land, and so diminish the tax in the shape of ground rent, or price paid for land which is now levied on urban enterprise by the adjacent land owners, a tax, be it remembered, which is no recompense for any industry or expenditure on their part, but is the natural result of the industry and activity of the townspeople themselves. Your Majesty's Commissioners would recommend that these matters should be included in legislation when the law of rating comes to be dealt with by Parliament."
With regard to wayleaves, there is an almost classic example of their value and it is the only example I shall inflict on your Lordships. It is a case in Monmouthshire in which it is stated that the landlord receives no less than £12,300 per annum in respect of the tolls levied on coal carried on a railway through his park. Five per cent. is not a revolutionary amount to take from such wealth.
Now we come to the question of Land Valuation which, as I understand when the matter is generally considered, is the only part of the attack which is seriously alleged against the Government. Now with regard to that, it is perfectly obvious that you cannot possibly raise the money on these various Land Taxes unless you begin by valuing the land. Then where is the "tacking?" In the course of the debate noble Lords sitting opposite have charged the Government with tacking. Will they explain exactly to what section of the Finance Bill they refer and what portions of the Bill could possibly have been left out in view of the demand there is this year for increased revenue? The fact of the matter is that what we need most of all in regard to land is a new standard—that we should have the same standard of value when the landlord pays to the community as when the community pays to the landlord. At the present moment the two amounts are
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flagrantly different. There was a meeting of the Glasgow Town Council in 1908 at which a resolution was adopted by thirty to fourteen in favour of the principle of the taxation of land values. It is no wonder they should do that in Glasgow, which suffers so largely from most of the evils of overcrowding and of slums to which our large towns are so subject.
In London one-fifth of the land within the boundaries of the County is vacant land. Let us think of the result of that on the rates of London. That land escapes paying on its real value towards the rates of the County of London. It is not surprising that eminent financiers and economists should desire that these people should pay according to the actual value of their land. Complaints come from every part of the County. I will take an example from Oxted. Land is there rated at 13 s. 7d. per acre; the landlord when he was going to sell it asked £600 per acre and made various demands and restrictions with regard to its use. That is an example of the different standard adopted by the landlord when he is asking the community to pay him money and when it is a question of paying rates for the benefit of the community. That is an inconsistency which the Government would be very glad in some measure to see altered. We have this demand from the municipalities of the country. The system is not uncommon either abroad or in the Colonies. I regret to notice among the absences from the Front Bench opposite that of Viscount St. Aldwyn. It is easier to praise him in his absence than in his presence, but I may say he is an almost unrivalled authority on matters of finance. We regret the noble Viscount's absence because he never speaks without commanding respect on both sides of the House. He has expressed himself in times gone by as not wholly opposed to this system of taxation or some attempt to secure some part of the value for the benefit of the community. May I give one or two instances how this tax proposed by the Government will work in actual practice?
I have taken the practical effects of the Budget upon an agricultural estate within my own acquaintance. It is an agricultural estate which comprises some small amount of land near towns. At the present moment the Income Tax payable upon that estate, which has a gross rental of £22,900, is £897. Now, in the future the tax on that with the Super Tax added to it will amount

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to £1,170—an increase of only £273. That, really considering the large deficit and the demands that are being made upon every section of the community, does not seem to me to be a very large demand to make upon agriculture even in its present depressed condition. There are some small parts of the estate near towns, some thirty or forty acres, or at the utmost a total of fifty-six acres. These fifty-six acres are worth £10,000 for the purposes of Undeveloped Land Duty, and upon them the total duty payable, comes to £20 16 s. 8d. I should like to point out, in this connection, that it is always possible for a landowner who finds himself in the position of being expected to pay Undeveloped Land Duty to rid himself of that painful necessity either by developing the land or by selling it to somebody else.
A NOBLE LORD: Find someone to buy it.
EARL BEAUCHAMP: If no one buys it, it has not a market value and therefore the owner does not have to pay any Undeveloped Land Duty. [Cries of dissent.] I begin to understand the hostility of noble Lords opposite to this duty, but I do not think the colleagues of the noble Lords in another place imagine that if land is not worth the money, taxes are payable. The valuers to be appointed are going to treat it subject to the various rights of appeal which are given, and if the noble Lord wall turn to Section 16, subsection 2, of the Act, he will see that land which is not developed and which cannot be developed by the erection of dwelling-houses and buildings for trade and industry other than agriculture, will not be liable to this Undeveloped Land Duty. I have no doubt that noble Lords opposite will take the opportunity to-morrow to consult their friends as to whether this is accurate or not. I have a Return here which was made to your Lordships on the subject of Scottish estates; but I will not deal with that at this late hour of the night. I will make the briefest reference to the Return moved for by Mr. Walter Long and which is to be found on "White Paper 225." It deals with the amount of public charges falling on owners of property worth £100, £1,000, £10,000 and £100,000, or if invested in Consols and Ordinary Shares of an Industrial Company yielding five per cent.
This is a very instructive Return and I hope your Lordships will interest yourselves
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in it because the information it contains will go far to allay the fears which undoubtedly exist as to the operation of the Budget. But there is one set of figures in my possession which are not the subject of a Parliamentary Return. They are important because they deal with the comparative annual burdens imposed by the Budget proposals this year and last year in respect of Income Tax, Super Tax, and Death Duties on estates of the capital value of £50,000, £100,000, £250,000, £500,000 and £1,000,000. Each of these estates, for the purposes of comparison, has been taken as yielding an average return of three per cent., and, in order to bring in the Death Duties, the owner is taken as insuring himself against Death Duties on a 3 per cent. basis with an assumed expectation of life at twenty years, and leaving the net capital value unaltered after payment of the Death Duties. Take, first of all, the capital value of £50,000. Last year that would have paid in Income Tax and an insurance against Death Duties, £168 2s. Under the proposals of the Government that same estate will now pay £240 1s. On an estate of £100,000 the previous year's charge was £375 3s.; under our proposals it will be £567 7s. On an estate of £250,000 the tax payable last year was £1,144; this year it will be £1,714. On an estate of half a million the burden last year would have been £2,498, while now it will be £3,746; and on an estate of the value of one million the Income Tax and insurance against Death Duties together last year would have been £5,472, whilst under the present proposals it will be £9,096 7s. We fully realise, especially when we come to larger amounts, that there is a much larger burden put upon these estates, but, in our opinion, it is on those larger estates that the larger amounts ought to be paid. And really, taking into consideration the total value of an estate of not less than one million, I do not know that the annual charge of £9,096 can be described as excessive. We admit quite freely and frankly that we intend and wish to see that wealth shall pay its share towards the general taxation of the country.
Let me answer one or two questions which were put by the noble Marquess, Lord Londonderry. He made a special point about the Budget proposals being unpopular in the country. I have not discovered that. Certainly the by-elections since the Budget proposals have been before the country do

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not show anything of the sort. Whatever may have been the result as between the two wings of the progressive forces, it is clear that in Bermondsey, the High Peak, Cleveland, and the Mid Division of Derbyshire there have been majorities in favour of the Budget proposals. The noble Marquess spoke of the amount of unemployment in the Wear District. Employment in the shipbuilding districts generally is better than it was a year ago in spite of the Budget. The percentage of unemployment in the Wear district at the end of October, 1909, was thirty-two per cent. whilst at the end of October, 1908, it was fifty per cent. It follows that unemployment there has considerably diminished since a year ago in spite of the Budget proposals. A special reference was made to the building trade; but here again we find that although employment in October last was slack it was rather better than it was a year ago.
Now, I may perhaps be excused if, even in his absence, I make one reference to the speech of the noble Marquess the Leader of the Opposition in this House. He told us that if any speech had been made by the Leader of the House he would have expected to have been asked the question as to what alternative plan would be suggested by the Opposition. It would not have occurred to me to put such a question. I should not have expected to find in the noble Marquess or in his noble colleagues who sit beside him, a new Chancellor of the Exchequer available for the next Conservative Administration. We seem to be writing our new constitutional history rather quickly. Last week we had this unprecedented Amendment put down, and this week we have the financial proposals of the Conservative Party outlined in the House of Lords. The noble Marquess the Leader of the Opposition has told us, quite frankly, that he is in favour of a tax upon imports. His alternative to a tax upon Urban Land Values is a tax upon manufactured goods, and his alternative for the Budget taxes is a tax upon food. Well, if that is the cry with which the next Chancellor of the Exchequer in a Conservative Administration is going to the country, noble Lords on this side of the House have no reason to quarrel with the programme which he has put forward. But it seems to me that noble Lords opposite have made very light of the chaos that will ensue from the adoption of this Amendment. They have offered their
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assistance in order to help the Government to reduce the chaos to the least possible amount; but I do not think noble Lords opposite exactly realise what that offer involves.
Do they really suppose that the Commons of England will appear at the Bar of of the House of Lords next week, on bended knee and with cap in hand, and ask your Lordships to be good enough to pass a Budget which will commend itself to your Lordships—a Budget which will include the tobacco tax, because it seems you do not object to that, but which, apparently with the exception of the duties on stamps, petrol, and motor cars, will cut out every other financial provision suggested by the Government? Do noble Lords see that such an action will be to make this House supreme in financial affairs, and to give the House of Lords the power of the purse? Is it likely, at the beginning of the twentieth century that to this House—a non-elective and non-representative House—the Commons of the Realm will surrender the power of the purse? No, it is quite certain that whatever their action may be, it will not be on those lines. I do not hesitate to say that no more momentous or far-reaching step has been taken in the history of this country since Charles I raised his standard at Nottingham. Noble Lords opposite said, and said quite rightly, that they cared for no threats. None have yet been made. We do not wish to offer any threat. We content ourselves with a perfectly plain I statement of facts. And it is this. In the opinion of the Liberal Party—I believe the unanimous opinion—this House with its past record, with its present constitution, and with its powers as they exist at present, is unworthy and incapable of guiding the destinies of a great and mighty Empire.
THE EARL OF DONOUGHMORE: My Lords, the noble Earl began his speech by telling us that there had been no gratitude shown for the concession in the Budget made by the Government in regard to works of art. I always sympathise with a good man with a genuine grievance, and I am ready to extend to him my fullest gratitude; but I do not think it was a reasonable grievance, because this concession does not very much affect the main principles of the Budget, and it is to that main principle that the debate has been chiefly confined. The noble Earl commenced his speech with that good-natured grievance,

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but he finished with a not too good-natured sneer at the state of affairs which neither the Leader of the Opposition nor noble Lords on this side of the House ever pictured to themselves as a desirable state of affairs. I do not know why the noble Earl has drawn a picture of the House of Commons kneeling at the Bar of the House in complete submission to your Lordships. I only hope it is not his desire that the picture shall be reproduced in posters during the forthcoming General Election.
I hope your Lordships will excuse me from following the noble Earl in his discussion on the series of taxes to which he has addressed himself. I quite admit that it is possible to minimise the effect of this Budget by taking the taxes singly. In some cases the effect of the tax is not very great, but in others it is very great, while the cumulative effect of all the taxes is stupendous. That is the case of the Opposition in both Houses, and it is one to which no answer has yet been attempted in this debate. The noble Earl spoke a great deal on the subject of urban land, and his excuse for placing the tax upon it is that hitherto this land has escaped its fair share of taxation. I am not an unfortunate owner of urban land, but I felt considerable surprise at the statement of the noble Earl. It is not true that urban land has hitherto escaped its fair share of taxation. Have profits on urban land paid no Income Tax? Have sales of urban land entailed no Stamp Duty? Have no Estate Duties, Succession Duties, or Death Duties been paid on urban land? Surely urban land has paid exactly the same proportionate contribution to the Revenue as other kinds of property, and therein lies the injustice of the additional taxation. Our case is that you are putting more than one extra tax on urban land, and again I say therein lies the injustice of your proposals. The noble Earl, Lord Beauchamp, quoted one or two cases and it was difficult to follow the figures, but I could not help feeling that in his Lombard-street case he gave us no reason why the increase in value of 1s. even should have been met by a fine to the Imperial Treasury. There may have been reasons, but the noble Earl did not tell us of them. The noble Earl quoted these cases as cases of a kind which the municipal authorities have desired to have power to deal with for years. My impression is that wherever in former years
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municipal authorities have desired to inflict the fine in a case such as that stated by the noble Earl, their desire was to obtain that power in order to relieve the local rates in the particular locality; but that is not in the least the desire of the Government in this Budget.
I do not desire to enter into details on the constitutional question, but I feel I am entitled at this period of the debate to call your Lordships' attention to one important matter to which the noble Marquess the Leader of the Opposition drew attention yesterday. The noble Marquess cited two passages from the speeches of former Leaders of this House—Earl Spencer and the late Marquess of Ripon—laying it down conclusively that the Lords had a right to reject a Money Bill. That right was disputed by the noble and learned Lord, the Lord Chancellor, but although we have since had speeches from three members of the Government, not once has there been any attempt to prove that those former Leaders did not know their business, and until that has been proved those quotations hold the field and prove our right to reject this or any other Finance Bill. I admit the astuteness with which that has been avoided, and also the astuteness of the noble Lord, Lord Sheffield, who was inclined to argue that it was even beyond our powers to discuss these Duties.
LORD SHEFFIELD: I said that we had a legal right, but I did not think we had a constitutional right.
THE EARL OF DONOUGHMORE: Whatever may be our disabilities the noble Lord pushed them to the extreme, because he even refused to argue the details of this Bill. This seems to me to be a pushing of the privilege of another place to a farcical extreme. My Lords, an attempt has been made to persuade as that there is no "tacking" in this Budget, and Lord Beauchamp went so far as to maintain that the valuation question was the only one even in the view of the Opposition which involved tacking. I say that it is not so; there has been tacking in the valuation proposals and there has also been tacking in the licensing proposals of the Budget. The noble Earl argued this question somewhat in detail and challenged us to prove in any way that there was "tacking" in the licensing proposals

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No one on this side of the House is in the Cabinet secrets, but I think I can supply a little evidence which bears most forcibly on this point. Your Lordships will remember the circumstances attending the Licensing Bill of last year. The Prime Minister stated that he intended to "stand or fall" by it. He did not fall, and I am not assuming too much in saying therefore that he stood by it. Some of his colleagues went farther, and actually threatened your Lordships and the brewers that if the Licensing Bill was not passed last year it would be included in a future Budget. The President of the Board of Trade, speaking in London in June, 1908, said that their brewing friends should remember that Budgets were beyond the control of the Lords, and that if the licensing trade refused the just and considerate provisions of this great temperance measure they would surely find that they had leapt from the frying pan into the fire. That was not an isolated statement. The First Lord of the Admiralty and other members of the Government made similar statements. It may be that these considerations were not in the least in the minds of Ministers when they drafted this part of the Finance Bill, but if that is so we have the right to ask at what particular date it was decided to throw over these declarations of policy by Cabinet Ministers of last year, and when it was definitely decided, in the words of the Lord Chancellor, that these duties were nothing but "pure finance."
I desire very briefly to deal with the special way in which Ireland is affected by this Budget. I hope to show that I am not confining myself solely to Irish interests, but to throw a side light on the way in which it affects not only Ireland but other parts of the United Kingdom. There is no question whatever that this Budget is unpopular in Ireland. It is quite true that the Nationalist Members abstained from the Division on the Third Beading, but since then a great deal has happened, and a very large number of public authorities in Ireland have not only passed resolutions against the Budget, but have written letters to members of your Lordships' House who are strongly opposed to them in politics, beseeching them to do all they could to throw out this Budget. I have here a Nationalist paper, published in County Kilkenny and dated Saturday, Nov. 20, in which there are reports of meetings of six public bodies, all calling on the House of Lords to reject this
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measure because of its injustice to Ireland. I do not wish to exaggerate the importance of these resolutions. Those of us who live in Ireland are more accustomed to see ourselves condemned than called on to take action, but it is fair to argue from these resolutions that there is very considerable dissatisfaction with this Budget in Ireland. This is rather peculiar because, as a matter of fact, as regards one particular tax, we ought to be very grateful, for under its licensing clauses we have been given very favourable special terms.
On page 83 of the Bill you will find Scale 3, which is the scale of minimum licences to be paid both in the cases of publicans' licences and beerhouse licences. In Great Britain the minimum duty is £5 in non-urban areas and urban areas up to a population of 2,000, while in Ireland the £5 minimum extends to urban areas up to a population of 10,000. In Great Britain the minimum scale advances by degrees to £35; but in Ireland it never goes beyond £7 10 s. With regard to beerhouse licences in Great Britain, the minimum duty fluctuates from £3 to £23; in Ireland it begins at £3, and never goes above £4. Your Lordships will see what a considerable concession this means to Ireland. Taking the three representative towns of Clonmel, with 11,000 inhabitants, of Cork, with 76,000, and of Dublin, with 290,000, the minimum publican's licence in all these cases will not go beyond £7 10 s., whereas in similar towns in England it will be £20, £30 and £35; while the minimum beerhouse licences in Ireland will in all cases be £4, and in England £13, £20, and £23 10 s. I can assure those of your Lordships who do not live in Ireland that there is no reason why we should be given this preferential treatment unless it be the fact that His Majesty's Government have always been very tender of Nationalist criticism in another place. But in spite of this concession, curiously enough the Budget is unpopular in Ireland, because it is realised that these duties are very high and are going to be very severe. Ireland is being punished by heavier duties because of the fact that the Licensing Bill was thrown out by your Lordships last year—a Licensing Bill, by the way, that did not apply to Ireland. That is an eloquent reason for the unpopularity shown towards the Budget in Ireland.
One effect of this Budget cannot have been realised by the Government, and though it

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is not very important, perhaps one may be I forgiven for mentioning it as a sidelight upon the ignorance of the Government as regards their own proposals. One effect of the Budget has been to send up the price of milk. It is difficult to realise how that happened, but it appears that in Drogheda, where there is a consider-able brewing industry, the refuse from the mash-tun of the brewery provided the chief food for the cattle. The effect of these duties has been to very considerably decrease the output and, therefore to decrease the refuse from the mash-tun. The result has been that the cow-keepers have had to advance the price of milk by ½d. per gallon. Your Lordships will remember that this is temperance legislation; this is driving people to drink water with a vengeance. Another point which concerns Ireland to which I wish to draw attention is the effect of the mineral duties. The provision in this Budget relating to these duties amounts to a breach of faith with which I beg to charge the Government. In the Land Act of 1903 provision was made that minerals, in the case of the sale of an estate, were to be reserved to the Land Commission, and it was further provided that, where these minerals were subsequently worked, if there was a profit the Land Commission were to take seventy-five per cent. and the original vendor was to get the remaining twenty-five per cent. The effect of the Government's Royalty Tax will be to reduce that twenty-five per cent., which was guaranteed to the vendor as the result of a Parliamentary bargain in 1903 by one and a-quarter per cent. It may be desirable that this reduction should be made, but it should not have been altered sub silentio, and without a single reference to the fact being made, so far as I am aware, by any member of the Government.
I want now to draw attention to some very remarkable figures brought forward by the Secretary for Scotland this afternoon. He was comparing the effect of the Budget upon the poor man and upon the rich man, and he said that the poor man earning 30 s. a week would pay 2d. in the pound in extra taxation while a rich man with £5,000 a year would only have to pay an extra 5d. in the pound. Why should the noble Lord select £5,000 and not £5,001? Was it because £5,000 just escaped the Super Tax, and £5,001 would have come within it? If we had been given £5,001 as well as £5,000 it would have
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helped us to make a comparison, and the proportion of taxation would have been very different. The noble Earl, Lord Beauchamp, has given us some other figures, and I hope they will be presented to Parliament, because unless they are before us in print it is difficult to follow them. It appears that the amount to be contributed by the owner of £1,000,000 will be £9,096. That seems to me a fairly high proportion of an income of £30,000 to go in taxes, and it must have an effect upon his spending and his employing power.
The noble Earl told us that the Government were determined that wealth should pay its proportion of taxation. I noticed that there was no cheer to that statement from several of the very rich members of your Lordships' House who were sitting behind him at the time. It may not appear that 5d. in the pound is a very heavy increase for a rich man to bear, but Sir Felix Schuster, in an article in the Nineteenth Century, has cited figures which give a very different impression from that given by the Secretary for Scotland. Sir Felix calculates that the Income Tax and provision for Death Duties alone upon an industry with a capital of half a million will swallow up £65,000 of that capital, or thirteen per cent. of it. That is only one figure of a great many that he has given. I desire to make this caveat, and to point out that there are figures in existence which give the impression that the effect of the new taxation is very much more severe than your Lordships would judge from the figures of the Secretary for Scotland.
A great deal has been made by the Government of the point that this Budget puts no-new taxation on agricultural land. I shall be able to show that it puts very severe taxation on the occupiers of agricultural land in Ireland, and I think you will find comparable cases on this side of the water. Your Lordships are aware that there is a special form of ownership known in Ireland as tenant right. The Courts have told us that it was not the intention of Sir William Harcourt in 1894 that this tenant right should pay Death Duty. It was believed in Ireland at the time that this property was not to pay the duty, but the Commissioners merrily collected it until a test case—the Attorney-General v. Robinson—was tried in 1900, when it was laid down that this property was not liable for Death.

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Duty. This Budget reverses that decision, with the result that five millions worth of agricultural property in Ireland will be liable for Death Duty annually. I have a concrete case which appeared in the Dublin papers, on the authority of a well-known solicitor practising in Sackville-street. It shows that in Ireland the pressure of this Budget is going to be very severe. The father of a family died prior to the introduction of the Budget, leaving to his son a farm of ninety acres—a nice farm, but by no means exceptional in that country. The Poor Law valuation of the farm was £199 15 s. and the judicial rent was £176 8s. 6d. For the purposes of duty before the introduction of the Budget the value was £583 2s. 6d., and that sum was taken on the basis of a twenty-five years purchase at £23 6s. 6d., the difference between the Poor Law valuation and the judicial rent. The Estate Duty on that sum worked out at £11 11 s. 7d. and the Legacy and Succession Duties were nil, so that the total duty payable was only £11 11 s. 7d. The son then agreed to purchase his holding, and obtained a twenty per cent. reduction—a not unusual figure. The son died since the introduction of the Budget leaving the farm to his sister. In this case the duty, instead of being £11 11 s. 7d., is as follows. Under the Budget the Inland Revenue authorities say that the value of the tenant right is £1,500, and it will be noted that hitherto that was not assessed at all. The Estate Duty of three per cent. on £1,500 will be £45, and the Succession Duty at five per cent. on the same amount will be £75, so that the duty to be paid by the sister will be £120 in place of the £11 11 s. 7d. that was paid previously, or an increase of ten times the original amount. Yet the Government say that this Budget places no further burden on agricultural land !
Let us carry it farther. It is possible that as the daughter is a married woman she may desire to transfer the farm to her husband. This kind of thing is frequently
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done in Ireland for family convenience, and hitherto it has been done under the authority of a 10 s. stamp, but the charge will now be in this case £56 10 s. 0d. under this Budget, which the Government contend puts no further duties on agricultural land. Perhaps not, but it puts very severe duties on the people whose sole livelihood is derived from agricultural land. Let us sum up the whole situation. There are these new Stamp Duties, which will apply, I take it, to agricultural land in England, Scotland and Wales just as much as to Ireland, and at the same time you have 125 millions worth of property, taking the average time at which a particular property pays Estate, Succession, and Death Duties as once in every twenty-five years, which has been brought into the taxable area and which has never been in it before. A struggling industry like the Irish land industry, emerging as it is now from thirty years of depression and dissatisfaction, largely due to British legislation, is to have this further burden put upon it just at the moment when it is finding its feet. We in Ireland have been reminded very much lately of the generosity of the British Exchequer in financing the Land Act, but we cannot help noticing that the British Exchequer is doing its best to get something back at the very same moment. I regret to have troubled your Lordships at this late hour of the night, but I did not feel justified in giving a silent vote on this question under the special circumstances of the case bearing upon Ireland. Many people in that country who are not politically and naturally favourable to your Lordships' House are now appealing to your Lordships to at any rate give them a chance to make some declaration on the policy of this Budget—a Budget which they believe to be very inimical to their best interests and to the welfare of the country.
Debate again adjourned till To-morrow.
House adjourned at ten minutes past Twelve o'clock a.m., till a quarter past Four o'clock p.m.