Lords Sitting of 27 May 1925

Preamble
The House met at a quarter before four of the clock, The LORD CHANCELLOR on the Woolsack.
STOCKTON-ON-TEES CORPORATION BILL.
Read 2a.
LONDON COUNTY COUNCIL (GENERAL POWERS) BILL.
Read 2a.
PONTYPRIDD AND RHONDDA JOINT WATER BOARD BILL. [H.L.]
Read 3a, and passed, and sent to the Commons.

INDUSTRIAL AND FINANCIAL SITUATION.
LORD ARNOLD LORD ARNOLD had the following Notice on the Paper:—
To call attention to the industrial and financial situation of the country, and particularly to the inconsiderable relief which can be afforded to industry by any reductions of taxation in the near future; and to move for Papers.
The noble Lord said: My Lords, this Motion will, I trust, lead to a discussion of various problems of importance. First, I will refer to the industrial position of the country, and then proceed to consider certain questions in connection with the financial situation. Perhaps I may be allowed to say that I think there is a degree of misconception in some quarters regarding the financial functions which were left to be performed by your Lordships' House under the Parliament Act. I have even heard it suggested that this House has no power to discuss financial matters. But that, of course, is not so. Not very long ago the noble Earl, Lord Beauchamp, pointed out that at the time the Parliament Act was passed—and he was a member of the Government which passed it—it was made clear that, although this House was not in future to have the power of rejecting Finance Bills, it was definitely intended that it should have the power and the function of dis-

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cussing them. The noble Earl went on to say that he felt that such debates in your Lordships' House would perform much service in educating public opinion.
However, in the first place, I wish to say a word or two about the industrial situation. My task in this respect can be reduced to very small proportions, because, since this Motion was put down upon the Paper, a debate has taken place in your Lordships' House upon the gold standard, and in the course of that debate a good deal was said about the present position and prospects of British trade. I need not, therefore, repeat what was said on that occasion, though much of what I have to say will have a certain bearing upon these matters. It was pointed out in the course of that debate upon the Gold Standard Bill that, unfortunately, the outlook for our industries is anything but good. I cannot, however, discuss the industrial policy of the Government, for the simple reason that they have not got one. They are, happily as I think, debarred from introducing a system of Tariffs and that is the method of dealing with our industrial ills which they most believe in, or at any rate which most of them believe in. Apart from Tariffs the Government really has no industrial policy at all.
It is true that they claim that benefit—I think I may say substantial benefit—will accrue to industry because of the remissions, which have been made in the Budget this year, in the standard rate of the Income Tax and in the Super-Tax. I think I am putting it fairly. In fact, the noble Marquess himself (the Marquess of Salisbury) on Monday used words to that effect, for he certainly said that those remissions would ease the wheels of industry, and the Chancellor of the Exchequer, speaking in another place, claimed that these remissions were the best way of giving a stimulus to the trade and productive energies of the country. I do not think that those claims can stand at all well the test of close analysis and investigation. We have heard a great deal in the last two or three years of these theories about the benefit to industry which was to come from the remissions in the Income Tax which have been made and, with your Lordships' permission, I propose to occupy a few moments in considering some of these matters.
The first argument I will take is this. It is said that a reduction in the Income Tax will operate as a stimulus to the activities of those persons who are engaged in industry and commerce. My reply to that contention is not that it is wholly untrue—I do not say that—but that it is very greatly exaggerated. I think I can prove it. I quite admit that on the face of it the proposition might seem reasonable enough, but when the matter is gone into minutely I venture to assert that a different conclusion emerges. The central point in the matter is this—and it is really very singular how this is constantly overlooked—that the great bulk of the Income Tax is coming from persons whose activities will not be stimulated by a reduction in the rate of the tax. It is surely obvious that a reduction in the rate of the Income Tax will not stimulate the activities of persons who are receiving their income from, for instance, War Loan interest, or from mortgages, or from rent, or from salary, or debenture interest, or preference shares or ordinary shares. About 80 or 90 per cent. of the industrial and commercial capital of the country is invested in limited companies and the work of those limited companies is, for the most part, performed by paid officials and employees, who go on carrying out, their duties and conducting the business much the same whatever the rate of Income Tax may be. Then, when the time comes for the dividends to be paid, if there are any dividends, the Income Tax is deducted from them before they are posted.
On the other hand, it is true that a reduction in the standard rate of Income Tax might, if it were appreciable, operate as some stimulus to those persons who are engaged in business for themselves. I am not now speaking of limited companies. It might operate as some stimulus to those persons, because, obviously, if the Income Tax is reduced, they will get a bigger share of the profits for themselves. But, looking at industry and commerce on the whole, the number of persons who are engaged in business for themselves is a comparatively small proportion. As a matter of fact, if the Income Tax returns are closely analysed and everything is taken into account, it will be seen—and I make this statement on the authority of no less eminent a person than Sir Josiah Stamp—that only somewhere about one-tenth of the whole amount assessed will

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respond to the stimulus given by a lower rate of tax. One-tenth is a small proportion. Therefore, I maintain that I am right in describing this stimulus, in the way in which I have so far been discussing it, as very greatly exaggerated. I am quite prepared to admit that there may be more substance in the argument that the effect, especially the psychological effect, of a reduction of the Income Tax might be to act as a stimulus as regards new enterprises and the investing of money in new businesses. But for that factor to operate to any considerable degree, the reduction in the Income Tax would, of course, have to be much greater than 6d. in the £ If, for instance, the Income Tax could be halved, the psychological effect and the stimulus as regards new enterprises and investments in new companies might be appreciable, but there can be little foundation for the proposition that a reduction of 6d. in Income Tax is going to cause persons to undertake new enterprises which, otherwise, they would not undertake.
These considerations are also a reply to a somewhat similar argument constantly used, an argument which appeals, I know, to Lord Hunsdon, because he used it in your Lordships' House only two or three weeks ago. Unfortunately, he cannot be here to-day. The contention is that, owing to the high rate of the Income Tax, business men and investors are indisposed to take risks, because if the venture succeeds the Government will take 4s. in the £ for Income Tax, quite apart from the Super-Tax. All I say about that is this, that it would be very interesting to know how many people there are—perhaps I should say how few people there are—in whose minds this reduction of 6d. in the Income Tax and the reduction in the Super-Tax is going to make all the difference between taking an industrial and commercial risk and not doing so. I submit that it is perfectly obvious, when this matter is analysed, that there is very little in the point for practical purposes.
The next argument I would desire to consider is one which was, in effect, used by the noble Marquess the Leader of the House in his speech on Monday. It is an argument used over and over again; in fact, the Prime Minister used words in this sense in another place. It is said that there ought to be a reduction in the
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Income Tax so that savings and capital may be increased. It is desirable that savings and capital should be increased, but a reduction in the Income Tax is not the best way of achieving that end. I think I can prove that. In the first place, it is quite certain that nothing like the whole of the remitted Income Tax is saved. In these days of high prices there is no doubt that a considerable proportion—how much I will not say, but everyone knows that a proportion of remitted Income Tax and Super-Tax is not saved at all, but is spent. There is no doubt about that. Still, it is constantly urged that the Income Tax and Super-Tax must be reduced, so that savings and capital may be increased, especially because of the necessity of keeping our industrial concerns up to date and of the necessity of finding money for new machinery, plant extensions, new ventures and so forth.
Let me look at this point, and in doing so let me again emphasise that between 80 and 90 per cert. of the industrial and commercial capital of the country is invested in limited companies and that so far as they are concerned a reduction of the Income Tax does not mean more capital to them for their businesses; it means more in dividends for the shareholders. It does not mean more capital for individual limited companies. There is one qualification I must make to that statement. It is not a qualification which is material to the argument, but as I wish to be scrupulously fair and to cover nearly all the ground in putting the case before your Lordships, I must refer to it. It is this. Limited companies have to pay Income Tax on the amount they put to reserve and, therefore, if the Income Tax is reduced, the amount they put to the reserve fund is to that extent increased. What is the extent, the size, of this benefit which limited companies are going to get through this reduction of 6d. in the Income Tax? It does not amount to very much. As a matter of fact, the amount which will accrue to all the limited companies of the country, owing to the increased amount which will be theirs to put to the reserve fund owing to the fact that the Income Tax has been reduced, will only be about £5,000,000 a year. That, of course, is worth having, but it is a small sum, having regard to the fact that the capital of all the limited companies in the country certainly amounts

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to £4,000,000,000 and probably now amounts to £5,000,000,000. So much for the limited companies.
Now I come to persons who are in business for themselves, though it follows that, as between 80 and 90 per cent. of the industrial and commercial capital of the country is invested in limited companies, the amount of capital owned by persons in business for themselves is a comparatively small proportion. Let us see, however, how far the holders of this small proportion of capital stand in need of a reduction of the Income Tax in order to provide them with more capital for their businesses. I think I can prove beyond possibility of doubt or argument that the great majority of persons who are in private businesses for themselves in any substantial way are not in need of a reduction of the Income Tax in order to provide them with mere capital, because they have already, in the majority of cases, got more capital, far more capital, than they are using in their businesses.
I want to give one or two statistics furnished by the Inland Revenue officials before the War Wealth Committee in 1920, and if these figures were brought up-to-date the result would probably be more favourable to the point of view I am advancing. I should like to have your Lordships' close attention to these figures, because I conceive them to be truly astonishing. They prove what a large degree of misconception there is in the minds of most people in regard to the position of persons who are in business for themselves in respect of their capital account. The Inland Revenue statistics given before the War Wealth Committee show that in the case of persons worth more than £15,000, who are in business for themselves, the average amount of their capital which they have invested in their business is only about 20 per cent., leaving somewhere about 80 per cent. of their capital invested outside their business, and free. If that is so, and these are the Inland Revenue conclusions, it is perfectly obvious that these persons are not in need of a reduction of the Income Tax at all in order to provide them with more capital, because they have 80 per cent. of their reserves invested outside their businesses.
If I pursued the matter further I could give very similar figures relating to persons who are in business on
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their own account in the form of private limited companies, but if you take persons who are worth less than £15,000 it is quite true that, on the average, the proportion of their capital invested in their businesses will be decidedly greater than in the case of the wealthier people. One would naturally expect that, though certain statistics would seem to suggest that many of these persons are decidedly better situated as regards capital than is commonly supposed. Moreover, persons worth less than £15,000, generally speaking, are not making a large income, and in the vast majority of cases all that they will get by this reduction will be a sum of less than £50 and in many cases less than £30. It cannot be said with any degree of assurance that sums like that are of any importance whatever in regard to the capital development of a business.
I now leave these points regarding Income Tax. I do not want to press them, but I think I have said enough to show that when they are analysed they do not stand the test very well and that under existing conditions these theories about the benefit to industry which will accrue from a reduction of the Income Tax are not well based. As regards the last point which I have been making—namely, the reduction of the Income Tax in order that capital may be increased—a much better policy for increasing the capital of the country is, instead of reducing the Income Tax, to pay off more Debt by increasing the Sinking Fund. It is practically certain that the whole of the money devoted to Debt reduction will go to increase the capital of the country. Debt holders, whether limited companies or individuals, will regard as capital money which is paid to them or their concerns for Debt redemption; the money will go to increase capital and will not be spent.
There are other reasons which make it highly desirable that the Sinking Fund should be increased. At the present moment the Sinking Fund amounts to £50,000,000 a year on a National Debt of, broadly speaking, £7.500,000,000. That is two-thirds of one per cent. It is a flat Sinking Fund, not a cumulative Sinking Fund, and a Sinking Fund of £50,000,000 to clear off a National Debt of £7,500,000,000 is not sufficient, because it will take 150 years to pay off the National

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Debt even if the Sinking Fund is not raided by some hard pressed Chancellor of the Exchequer. As your Lordships know very well, as time goes on the Sinking Fund—I am now speaking of the Sinking Fund of the National Debt—always is raided, sooner or later, for one reason or another, generally on account of a war. Take what happened to the Sinking Fund of the Napoleonic Wars. The National Debt was then £880,000,000. In 1914, a hundred years later, the Sinking Fund had been reduced only to £660,000,000. That is to say, in a hundred years the National Debt had been, on balance, reduced by a quarter. At that rate it will take us 400 years to pay off the present National Debt.
Before the War, the Sinking Fund amounted to more than one per cent., and if we were to increase the present Sinking Fund to one per cent., if we were to add £25,000,000 and make it £75,000,000, I think it would be a wise thing to do. To use some of the money which has been remitted to payers of Income Tax and super-Tax in this way would he better for industry, because, in the first place, it would improve the credit of the country and, in the second place, practically the whole of the money would go to increase the capital of the country.
Before I pass from the National Debt, I wish to refer to the widely prevalent idea that the burden of our Debt could be in a large degree obliterated, or at least mitigated, by conversion schemes. We are told again and again that the burden of the Debt would be materially reduced by converting the Debt to a lower rate of interest before very long—say, in the next ten years or so. Unfortunately, these anticipations entirely overlook one very important fact. It is this. If you analyse the various stocks which make up the National Debt, it will be found that somewhere about £3,000,000,000 of them are long-dated stocks, which could not be converted for a very long time to come, or are stocks which already bear only a low rate of interest.
The total Debt amounts, to be precise, to £7,646,000,000, and if I assume that of that amount some £4,500,000,000 comes within what I might call the conversion area, I think it is making a pretty liberal assumption. Let me assume that the
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average rate of interest on that £4,500,000,000 is somewhere about 5 per cent. Let me further assume that in the next ten years or so the interest on that £4,500,000,000 at 5 per cent. can, by conversion, be reduced to 4 per cent. Of course, there is no certainty that this can be done. A good many very high authorities do not think that there is any probability of it whatever. Lately the rate of interest has been rising and not falling. But if I assume that one per cent. could he saved, the gross saving would be £45,000,000—that is one per cent. of £4,500,000,000.
But that is by no means the end of the story. This saving in interest involves a loss to the Exchequer in Income Tax and Super-Tax, because at the present time Income Tax and Super-Tax are being paid on the basis of interest being 5 per cent. If the interest is reduced to 4 per cent., obviously there would be a loss to the Exchequer—a loss, in fact, with an Income Tax of 4s. in the £ on an amount of £45,000,000, amounting to £9,000,000. If you and the loss which will also accrue on account of Super-Tax, that £9,000,000 will probably be increased to at least £11,000,000. Consequently, from this £45,000,000 you have to deduct, from the point of view of the. Exchequer, £11,000,000, bringing the amount down to £34,000,000. But that is not all. In 1932 the interest on the American Debt rises by one-half per cent. That will cost another £5,000,000 a year, limier the agreement made, and that amount also has to come off, so that this £34,000,000 is reduced to £29,000,000.
Consequently these conversion schemes, which arouse such great expectation in many quarters, are not likely, even if they can be achieved, to produce a saving of more than £29,000,000 a year. I am not suggesting for a moment that £29,000,000 is not an appreciable sum. Of course it is, and it is very well worth having, but—and this is my point—it really does very little to solve the Debt problem, which remains materially unchanged. The charge for the National Debt in this year's Budget is £355,000,000. Of this sum £29,000,000 is only about one-twelfth, and therefore all that you will have done, if this conversion scheme can be carried through—which, as I have pointed out, is doubtful—is to reduce the burden of the Debt by about one-twelfth.

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I think that these considerations reinforce that which I have said regarding Sinking Fund.
There are other uses that could well be made of the money which has been remitted to payers of Income Tax and Super-Tax. I want to say a word or two about the new insurance scheme. In my opinion that scheme should be made noncontributory. It is no use saying that it cannot be done. The noble Lord, Lord Banbury of Southam, asked how it could be made non-contributory. If he were here I would tell him. It can be made non-contributory out of the money which is being given away this year to the Income Tax and Super-Tax payers. It is no use saying that, it cannot he made non-contributory when, in one and the same Budget, you are giving away this large sum. Quite apart from the burden on the workers of this scheme, added to the already heavy burdens of existing insurance and taxation, I do not think it is fair—and a great many supporters of the Government hold the same view, and have said so—that this burden should he put upon industry at the present time of all times, when many industrial concerns are struggling with such great difficulties. Surely it would be much more equitable all round to place the burden on the Exchequer, so that the rentier class may bear their fair share in carrying this new insurance scheme. These remissions of Income Tax and Super-Tax go in no small degree—in fact, in a considerable degree—to the rentier class. They amount, as I have said, to £42,000,000 a year, and £42,000,000 a year would nearly suffice not only to find £25,000,000 for the Sinking Fund, but to make the insurance scheme non-contributory. So it can be done, and a noncontributory scheme would be fairer to the workers, and much better adapted and adjusted to the special needs of industry and trade. It can he done, and it ought to be done, and these remissions of Income Tax and Super-Tax ought not to be given.
In conclusion, I should like to say a few words about that matter. When I say that these remissions ought not to be given, I am not overlooking the fact that Income Tax and direct taxation generally were greatly increased during the War. That is quite true, but the increase in indirect taxation owing to
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the War was also much greater than many people seem to think. As a matter of fact, direct taxation will now be yielding about £125,000,000 a year more than indirect taxation, as compared with pre-War days, but it is vitally important in this matter to look also at the other side of the account and see what is happening on the Expenditure side, because there is going back into the pockets of the direct taxpayers somewhere about £300,000,000 a year in War Loan interest and Sinking Fund payments on War Debt. Looking at the matter in this way it means that the whole of the Income Tax and nearly the whole of the Super-Tax are going back again into the pockets of the persons who pay those taxes. Of course, I am not speaking of individuals, but of the class. I do not think that that is sufficiently realised, and I maintain that in order to get a true perspective it is necessary to look at both sides, and to take note of the changes wrought by the War.
It is not sufficient to say that direct taxation has greatly increased because of the War, and that therefore direct taxation must be reduced and these remissions given in Super-Tax and Income Tax. There is a great deal more to be said than that. We must look at both sides, and it is on the Expenditure side that the wealthier class are so much better placed than before the War. They are faring so much better because of the War Loan interest. It is quite true that the poorer classes are also getting increased benefit on the Expenditure side, as compared with before the War. I wish to be perfectly fair. Old Age Pensions have increased, the cost of education has increased, housing has increased, and there is a big item for War Pensions, but a proportion of that goes to the better-to-do classes in respect of officers' casualties. The increased share of national Expenditure going to the poorer classes is, however, much less than the increased share of national Expenditure going to the wealthier class. As a matter of fact, when everything is taken into account, and all proper allowances have been made, it will be found that although the richer class are paying a bigger proportion of national Revenue than before the War, they are receiving so much more from the Expenditure side of the account that, looking at the Budget as a whole, they are in pretty much the same position as the poorer

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classes as compared with pre-War days, and in saying that I have left out of account all questions of the shifting and final incidence of the Income Tax. In doing that I am obviously omitting a consideration which would operate to the benefit of the richer class in these calculations.
I submit that what I have been saying ought to be taken into account when we are told that the wealthier class are overburdened with taxation. I do not believe that such a claim can be made good, having regard to the relative position of the poorer classes. I think I have also shown that these theories with regard to the reduction of Income Tax, and the benefit which those reductions are going to have upon industry, are almost equally difficult to substantiate. Also they will not stand the test of experience. The Income Tax was reduced by a. shilling in 1922, and by a further sixpence in 1923. I suppose it will be agreed—I do not think it can be contested—that in spite of those reductions, amounting to no less than 25 per cent., the state of industry is as bad as at any time since the War. What is the good, then, of saying that the great thing to benefit industry is these reductions of Income Tax? The Chancellor of the Exchequer, speaking in another place on Monday, said, in effect, "We will prove our case. In the first place, we will support our theory by continuous argument"—he has not done that yet—and secondly, that after the Government had been in office three or four years he will confront those who doubt his view with the proved results of his theory.
It is very unfortunate, from the Government point of view, that they cannot confront us with proved results so far, with regard to the benefits conferred upon industry by the remissions made in 1922 and 1923. There is no such proved result of those remissions. The only proved result is the benefit to the Income Tax payers. In trying to get the true perspective of this matter, I submit that the state of industry depends upon a large number of factors, some of them world-wide economic causes and forces, and that of the total number of all those factors the present rate of taxation in this country must be accounted one of the lesser important. Not only so, but under existing conditions all that can be done with this factor of lesser importance is
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in a minor degree to improve the position by a small reduction of Income Tax. I submit it is perfectly clear that so far as the state of industry is concerned the effect of slightly improving one of the less important of the many factors which have to be taken into account must he inconsiderable upon the whole situation. That, in a few words, represents my view of what the true perspective of this matter is. I beg to move.
LORD EMMOTT: My Lords, I do not intend to follow the noble Lord in detail through many of the arguments which he has used to-day, or to discuss the figures which he has laid before this House, because I want, if I may, sheltering myself behind the extraordinarily wide terms of the Notice of Motion, to take the whole question upon somewhat broader grounds than the noble Lord has occupied. Perhaps, however, I may draw attention to one extraordinary fallacy into which he fell in reference to one of the arguments he used. He stated, on the authority of some Inland Revenue officials, that of the estates paying Estate Duty, belonging to people who were in business on their own account, only some 20 per cent. of the capital which those people owned was invested in the businesses which were accounted for in these Estate Duties. It seems to me that that has very little to do with the point which the noble Lord was trying to prove, because, unless I am gravely mistaken, people who own that 20 per cent. were merely investing some little portion of their funds in some minor enterprises of relatively small importance to them, whereas probably the great bulk of their possessions were invested in shares in joint stock companies, perhaps old family companies of their own, and were therefore, for all practical purposes, used by themselves in business.
But I want to take this question on a wider basis, if I may. There is no doubt that the financial and industrial position of this country is serious. Comparing it with our position before the War, the decrease in volume of our overseas trade, the increase in unemployment in this country, and the tone which many of the extremists of the Labour Party use in regard to industrial affairs do constitute an anxious position, and one which may even be called gloomy and menacing. But if one takes a wider view of affairs, and goes back a hundred

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years, there is a good deal of consolation, and even hope, to be derived from the enormous improvement in the position of the working classes during that longer period. Then, as now, the country was suffering from the aftermath of a great war. No doubt, the exhaustion following the Napoleonic Wars was very great, but, after all, the effort which this country made in the Napoleonic Wars was small compared to the tremendous effort which it put out in the War that was still raging seven years ago, and there would be little to be wondered at if the exhaustion of the country to-day is greater than it was then.
Even then the depression in trade lasted almost for a generation. Historians tell us that the acute period of that depression lasted from 1816 to 1836, but, as a matter of fact, it ran well into the early 'forties. Many records remain of those times, but I think the records that would occur to most of your Lordships at once would he the speeches and writings of three men of genius, and the particular works and speeches that would occur to one, I think, would be Disraeli's "Sybil" "Carlyle's "Past and Present," and the speeches of Mr. Cobden during the 'forties, the speeches that converted the country, and eventually converted Peel, to the impolicy of the then practice of food taxes.
If we look at the differences between that time and this, they are very great. A hundred years ago the franchise was very restricted. The Combination Laws were only repealed, I think, in the year 1825, and the trade unions did not obtain real power to use their funds until 1869. There was no uncovenanted unemployment benefit at that time—what we now call "the dole." And the Poor Law was a thoroughly had Poor Law. There were no Old Age Pensions, which give so much relief to some of our aged poor to-day. There was no workmen's compensation; or nothing worthy of the name. There was no health insurance, no unemployment insurance, there was practically no factory regulation, and the condition of education was such that I believe the majority of our children were illiterate. Children were sent to work at seven years of age, and even as young as five. There are stories of babies being put down the mines and placed by their fathers' food in order that they might do something to
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scare away the rats. And many of your Lordships will remember Elizabeth Barrett Browning's poem:
"Do you hear the children weeping, O my brothers
Ere the sorrow comes with years?"
Carlyle tells a horrible story of a man and wife who were brought up at the Stockport Assizes for killing three of their children in order that they might obtain the benefit from a burial society. He says the thing itself may not have been important, it may have been the act of a madman, but the point was that there was an effort to get over the thing as quickly as possible, not to probe too deeply, for fear of the result it might have on people's feelings.
Then look at the condition of women at that time. Women worked twelve or sixteen hours down the mines, dragging the lorries about in chains, through water; and the condition of those who did not go down the mines is given in that well-known poem of Hood's, "The Song of the Shirt." And, remember, the population then was less than half what it is to-day. Carlyle speaks of 2,000,000 people sitting in the workhouses, and 5,000,000 existing on potatoes, that is, never having meat from week-end to week-end. And Cobden, in 1842, talking of depression in trade, says the stocking frames of Nottingham were as idle as the looms of Stockport, and speaks of the depression there was among the glovers of Yeovil, the glass-cutters of Stourbridge, the miners of Staffordshire and the potters of the Stoke district.
Things are bad enough now, but they are a great deal better than they were then. The death rate must have been halved during the century. The consumption of tea, sugar, meat, and tobacco, which were relatively luxuries then, has enormously increased on the part of the great body of the people. And as to wages, although prices were somewhat lower then than they are to-day, perhaps in 1825 about one-third lower than they are to-day, wages have enormously increased. The wages of skilled mechanics and of miners, which were relatively—I only say relatively—high then, and are relatively extremely low now, have not increased as much as some of the others, but the wages of agricultural labourers, though they are

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low enough to-day, are two and a-half or three times what they were then. The weavers of Lancashire were earning on the average about 10 s. 8d. a week then, and they are earning from 35 s. to 45 s. a week now. The so-called minders were earning 27 s. or 28 s. a week then, and they are earning from 67 s. 6d. to 95 s. to-day, and some of the other classes of labour are earning very much more. The "big piecers," who were then earning 7s. a week, now earn 28 s. to 33 s. 6d., and the "little piecers," who were then earning 4s. 7d. are now earning from 20 s. 3d. to 24 s. 6d. a week.
There has been an enormous improvement in the condition of the people, compared with the period of savage repression and of inhuman conditions which existed in this country a hundred years ago. And I may venture to remind Socialists, who are apt to idealise the rural conditions existing before the industrial revolution, that they really talk a great deal of nonsense, if not cant, about this question. God forbid that I should defend the system of things then, the factory system or any other system, but it was the higher wages given by the industrial revolution which induced the people to emancipate themselves from the rural conditions of the time. The women weavers of Lancashire at that time earned over 10 s. a week, and that was a higher wage than was paid to the agricultural labourers through two-thirds or three-quarters of England. If the point is that the inventions that led to the industrial revolution have not increased the happiness of mankind, I should hardly care to contest it, but I am afraid an inquiry of that kind would be no more useful than an inquiry whether the invention of Dreadnoughts or submarines, or aeroplanes or poison gases, is going to add to the happines of our grandchildren in the future. I have said enough to show that the industrial and financial situation of this country is much better than it was a hundred years ago, and I do think there is some consolation to be derived from that fact.
I would now like to draw attention to the other part of the noble Lord's Notice in which he speaks of the inconsiderable relief that can be afforded to industry by taxation in the near future. If by the "near future" he means the next two or three years, I do not in the least cavil at the phrase; but if he means, as I think
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his argument goes to show that he does, that minor economies are of no use, I entirely differ from him. The noble Lord was a stockbroker during his active business life and he must have had some experience of businesses which had been slackly managed and which, falling into better hands, very much improved their position. In fact, in such a case as that, nobody could go into a business firm and put his finger on this, that, or the other on which so much was saved. At any rate, he could not make a complete story of it. The point is the whole tone that better management brings, and if only the people of this country would turn their minds towards economy, if only more anxiety was shown in another place in pressing economy upon the Government, I have no doubt that very considerable savings could be made.
What the noble Lord really wants, although I do not think he said so in actual words to-day, is a Capital Levy. I have always wished that there could have been a Capital Levy made on profiteers during the War. I am not sure that it could not have been done; but that time has gone by. A Capital Levy now would have a strangling and paralysing effect upon business The noble Lord seems to think that any effect it might have concerns only the rich. That is not the case. In concerns the poor more than it concerns the rich. To the noble Lord, or to myself, whose small fortune is invested in a good many things, it would make very little difference if there was a Capital Levy, provided there was a satisfactory reduction in Income Tax, which is very doubtful. It would not matter much to us; but it would be a calamity to Great Britain. I put upon one side the question whether it would not be a breach of faith owing to the terms on which the loans were made during the War—the terms of the prospectus, so to speak. I put also upon one side the question of the blow it would be to our financial prestige, because, undoubtedly, other countries would say that our "number was up" if we resorted to any such heroic remedy as that.
The real objection to a Capital Levy is that it would hit hardest the most useful business man that we have, tire man whose all is in business to-day, who spends his day in looking after his busi-

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ness, in effecting economies, in improving methods of work, and who spends his night in pondering over these things, and whose every penny goes back into his business. To ask that man to realise, at a disadvantage to himself, some 10, 15 or 20 per cent. of his capital, on which he is making a considerable profit by his own ability, thrift and energy, and to hand it over to the Government so that the Government may save 4½ per cent. upon it, seems to me to be an utterly insane idea. It could only emanate, I think, from people who really do not understand how the business of this country has been built up.
Socialists always talk of capital as if it were a thing apart from income. I wish the calculation of the capital a country owns could be prohibited by law, but, of course, it cannot be. The greater part of capital, as everybody knows, is merely a calculation of so many years' purchase of income. No large part of capital can ever be realised, and handed over from nation to nation, as those concerned in Reparations have at length found out. Nor can it be handed over from individuals in a State to the State without enormously depreciating the national income, and that is what Russia has found out. A Capital Levy now would intensify all our troubles. We are suffering from the reduction in the volume of our overseas trade, due partly to the poverty of our customers and partly to the raising of Tariffs against us. I am sorry that this raising of Tariffs against us has not been entirely by foreign countries, but has occurred also in some of our own Dominions and Possessions. It is due also to high taxation, for our taxation is the highest of any country in Europe, and to the fact of wages being so much lower in Europe than they are here, relatively to what they were before the War.
Another reason is the shortage of capital owing to the decrease of savings. I have never met any Socialist, I have never read any article or book by a Socialist—and I have read a good many hundreds of their works—who appeared to understand the importance of saving. They always talk as if there was an inexhaustible fund of capital and income in this country. Capital being merely so many years' purchase of income and unrealisable in great quantities at any one
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time, income is obviously the thing that matters, and the researches of statisticians, such as Sir Josiah Stamp and Professor Rowley, have shown how almost infinitesimal an addition would be made to the income of the workers if the whole of the surplus of individuals receiving over some £160 a year was parcelled out amongst the entire population, Owing to the high taxation, income now—and here I altogether traverse what the noble Lord has said—is not adequate to provide savings. Contrast our pre-War position in this respect with the present position.
Professor Bowley estimated that in 1911 the income of Income Tax payers was about £900,000,000 per annum. Of that amount some £400,000,000 was saved mostly by Income Tax payers. I think at that time £350,000,000 or more of savings must have been made by Income Tax payers. Those funds were used—I wish the noble Lord, Lord Arnold, understood this—to provide new manufactures, in finding work for the increasing population of the country, and, in part also, for investment abroad to bring us food and raw material from overseas, and had incidentally the effect of providing us with customers there for our cottons, or woollens, and many other manufactures. Now that Income Tax, Super-Tax and Death Duties together have been running to over £400,000,000 per annum and even now approach very nearly to that sum, that saving fund is depleted. I do not believe this country to-day is saving £100,000,000. If it is, it is certainly saving very little more.
LORD ARNOLD: Will the noble Lord say what is his authority for the statement that we are not saving more than £100,000,000?
LORD EMMOTT: The matter has been discussed in this House. I do not, at the moment, remember the authority for the statement, but I have said that I am expressing my own opinion. If the noble Lord can prove me to be wrong I shall be only too delighted, because it is my chief anxiety about the present situation. The noble Lord said that people will not be stimulated to save by a reduction in the Income Tax. All I can say is that under pre-War conditions we were saving some £400,000,000 per annum and that we are not now saving any-

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think like that sum. If 6d. on the Income Tax does not do much, it is at any rate something. Let us be thankful for it and let us hope and believe, as I am sure is the case, that a good deal of that will go towards an increase in saving and will do something to improve the position of the rich, if you like, but much more the position of the poor who are employed.
This question of taxation would not interest me very much if it were simply a question of the rich; but it is not. If it is found that saving now is greatly depleted, that specially alarms me, because, obviously, there is no adequate fund for our increasing population in the future. We shall get no good from this will-o'-the-wisp of the Capital Levy. If I find no wisdom in that, I find even less wisdom in the silly parrot-cry, so common in some quarters to-day, that Capitalism is played out. Capitalism has many faults. Capitalism is capable of very great improvement, but, as to being played out, what are you going to put in its place? I presume the nationalisation of industry, the only panacea that Socialists have to bring forward. It has been tried in Russia, and has been a huge failure. Nationalisation of industry has been tried elsewhere on a much smaller scale, and has never, I think, yet been a partial success.
I really cannot understand the mental processes of men who, comparing America (which is essentially the capitalist country of to-day) with Russia, can repeat that parrot cry that Capitalism is played out. To the working man America is relatively a paradise; to the working man Russia is relatively—I do not know what other phrase to use except hell upon earth. Capitalism practically banished famine from Occidental Europe and from the New World before the War. Socialism has reintroduced something like chronic famine into Russia once more. In America Capitalism goes on all the time with a. constantly increasing production per head. In Russia Socialism reduced the production per head to one-fifth of its pre-War level, and that amount has only been increased by the introduction of a certain amount of private enterprise, which has saved the country from collapse.
If Capitalism is a failure, why are working men's wages in America ten times
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what they are in Russia to-day? Why do so many hundreds of thousands, nay, even millions, of them go to work in their own motor cars? And why, if Socialism is to take the place of Capitalism, are wages in Russia reduced in gold value by 33 per cent., and in real value by over 50 percent. compared with the pre-War standard? Russia has had a Capital Levy with a vengeance. Russia is a byword for misery and inefficiency. America, which would not touch a Capital Levy with the end of a poker, is in the heyday of working class prosperity. I wish the Girondins on the Front Opposition Bench no harm, but I would be glad to send some of the Ponsonbys and Wheatleys and Purcells, and some of the other members of the Mountain, for five years to experience what labour conditions are, and what Socialism in practice means, under the Soviet. Socialism is not a science. It has been well said that it is a religion, and I think that Professor Keynes was right when he said that Socialism, in so far as it is a science, is an application of the economics of seventy years ago, which no one credits to-day, to the conditions of a hundred years ago, which have now passed away. As to the main Socialist panaceas with which I have dealt, I think they must be met with a non possumus.
If I am not wearying your Lordships, I should like to say a word on the positive side of this question, for hitherto I have been negative. I do not value so lightly, in the first place, the effects of rigid economy. If the rate of interest can be lowered, if we can get a proportion of the Reparations that are promised us by the Dawes scheme, if the indebtedness of some other countries to us can be met by some few shillings in the £ of what they owe us, if the exchanges of other countries remain more stabilised and this constant drop in exchange that affects their competition with us, is stopped—if these things happen, and if, in our own industries standing charges are not increased, very soon we shall be in a better position, and our power of competition will, I think, be improved. Although I do not quarrel with the figures of the noble Lord about a reduction in interest on the National Debt, I would point out that if we were to reduce the interest on the National Debt by one half per cent. that, of itself, would mean sixpence in the Income Tax.

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But the main point to-day is the relations of Capital and Labour; how we can lower our costs without lowering the wages of our artisans. To do that Capital and Labour must work together, must co-operate, or I am afraid we shall never meet the danger. We have to face a feeling of dissatisfaction on the part of the workers. I have shown how enormously the labour position has improved during the last hundred years. I have shown how real wages have risen. I have not mentioned before, but I mention now, how enormously hours of labour have been reduced from something like ten and twelve a hundred years ago to eight to-day. I may mention also that the workers have far more control of industry than they ever had before, through their trades unions and in other ways. I may also mention the enormous improvement in the conditions of work, owing to factory legislation and inspection. The term "wage slaves," which some of them are so fond of applying to themselves, is really a farce. Yet, undoubtedly, the workers are increasingly dissatisfied. Their standard, to-day, is enormously higher than it was, and yet the unrest, to-day, seems greater than it has been in the past.
The Labour Party—and I suppose I may conclude that noble Lords on the Front Opposition Bench agree with them—demand Socialism. Some ex-Ministers—and here I hope noble Lords who represent the Labour Party in this House do not agree—talk of bloody revolution. Others talk of the inevitability of gradualness. But for Socialism we need a profound psychological change if it is ever to work, and nothing has been done to prepare people for that change. Russia has shown how trade unionists, trained to fight Capitalism, do less work when industries are handed over to the State instead of more work, and after 100 years of extracting from Capital all that Labour can obtain, what chance is there of a better production from our workers when the State becomes Capitalist and employer? I regret to say I see none.
Labour wants two things. It wants an improved share of the profits of industry and a larger measure of control, and, to judge by what many Socialists say, they care more about the larger measure of control than they do about the larger share of the proceeds of industry. Wiser
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Socialists know perfectly well that the selection of managers by workers is an impossible procedure. Nobody has written more trenchantly against it than Mr. Sidney Webb himself. I may say that was the first item in the Socialist Government of Russia that broke down hopelessly within the very first few months of its being tried. The only cases of success of the introduction of workers into the directorate of companies have been in cases like the famous experiment in Familistère, in France, and in such cases as the South Metropolitan Gas Company in this country. But directors are only introduced there after a course of training in profit-sharing and co-partnership, which has really instilled into them, whether they know it or not, what might be called bourgeois ideas of capital. I know no plan that meets the workers' case, except profit-sharing and co-partnership, yet all the batteries of the trade unions are brought against profit-sharing and co-partnership, which are referred to by them as "piffling palliatives". That is one of the mildest terms they use.
It is that kind of attitude on the part of Labour at the present time which makes me so discouraged. It may be that Labour will never be satisfied until its quack remedy has been tried and proved a failure. If so I pray that the country may not be ruined by the experiment. If I may say so with great reverence, I pray God I may not be here to see it, and I still hope, on the whole, for a better mind on the part of Labour. Undoubtedly, there are signs of self-restraint and wisdom on the part of some of the trade unions, and all I can say is that capitalists were never more anxious in the history of this country to meet their workers half way and. in particular, to see a state of things brought about in which the skilled artisan may not be receiving less wages, as he is in so many cases to-day, than the municipal scavenger. If our financial affairs are managed with rigorous economy, and Capital and Labour can really co-operate and face and overcome the undoubted dangers that we are confronted with, I have some hope. I have none if we resort to quack remedies.
THE LORD PRIVY SEAL (THE MARQUESS OF SALISBURY): My Lords, I think your Lordships will be grateful to the

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noble Lord who has just spoken for the contrast he drew of the conditions which prevail at the present day as compared with those that prevailed after the French Wars. He showed in detail, and in a manner which I certainly cannot attempt to emulate, the immense improvement in the conditions which prevail now as compared with those which prevailed 100 years ago. I think that a reasonable optimism is a most valuable consideration to set against the sort of talk which sometimes prevails at the present time. Serious though the industrial situation undoubtedly is, extended though the condition of unemployment is, and bad as are some other symptoms, we have undoubtedly immensely improved, as the noble Lord so properly showed.
The noble Lord then proceeded to cope with the noble Lord who opened the debate. He evidently thought that the noble Lord in opening this debate would have indulged in a defence of the Capital Levy; and nothing was more remarkable in the speech of the noble Lord opposite than the careful way in which, for the most part, he avoided all the Socialistic remedies in the prescriptions he submitted to us. We did not hear anything of the Capital Levy, we did not hear anything of the nationalisation of industry, and I am afraid that the noble Lord, if he does not take care, will develop into an orthodox Liberal. I have observed the same symptoms in some of his colleagues in another place. No doubt it is one of the results of the months of official responsibility through which he passed. As he proceeded to examine the theories with which he entered office in the light of the experience he gained when he was in office, he found that the theories did not fit the practice, and a great modification has come over his views. Consequently, we heard very little of the ordinary Socialistic nostrums for the remedying of the present state of things.
I do not want, therefore, to dwell upon matters with which he did not deal, but as Lord Emmott referred to the Capital Levy I should like to point out to your Lordships, in addition to what he said, and said so much better than I can hope to say it, how futile a Capital Levy would be from a Revenue point of view. It is perfectly true that you could impose a Capital Levy, and, making every assumption in your favour, you might draw a
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very large figure from it. Supposing you did draw this huge figure—it has been estimated at £3,000,000,000—you would, of course, diminish the source from which ordinary taxation could be levied and your ordinary Tax Revenue would fall by about two-thirds of any saving on Debt interest because of the fact of the Capital Levy. It would have to pay for itself to that enormous extent, and the balance that would be left, though no doubt a considerable figure, would not be at all larger than the amount which you can gain by ordinary tax reduction and which we have gained by ordinary tax reduction in recent years. I have not the precise figures of the reduction at hand, but let us say that some £200,000,000 is the amount, of the reduction one way and another made by the last four Budgets. That is a far larger amount than you would get out of a Capital Levy even if you were lucky, because you have to take into account the amount by which the source of your Revenue would be reduced. So much for the Capital Levy.
I turn now to the actual speech of the noble Lord who introduced the subject—not to what he did not say, but to what he did say. So far as I could make out, his prescription was the old prescription which orthodox economists have always favoured—namely, Debt reduction. He said that you do not get anything out of a reduction of taxation, but that what would succeed would be to reduce the Debt. He seemed to think that we have not been reducing Debt. We have reduced it enormously since the War. Let me consider for a moment the figures. We have cancelled £736,000,000 of Debt since the War, and we have reduced the interest upon it by £70,000,000 a year. The noble Lord is well aware that the Prime Minister when he was Chancellor of the Exchequer increased the statutory Sinking Fund until it stood at the figure at which it stands to-day. All these are evidences that not merely this Government but successive Governments have followed the orthodox prescription of reducing Debt, and to speak, as the noble Lord did, of the remedy of Debt reduction as something new which he was pressing upon the attention of the Government, was really grotesque. It is the remedy we are pursuing and which every Government is pursuing. But if we also believe in the reduction of taxation, it does not

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mean that we ignore the value of the reduction of Debt. The two work one into the other; and we believe in them both.
Then the noble Lord said that he did not believe that the reduction of the Income Tax would act as any stimulus on industry; or that it would do very little in that direction. He used great ingenuity, which I admired but which I certainly could not imitate myself, in cutting down, first on one side and then on the other, the value to the taxpayer and to industry of the reductions which have been made and which are proposed to be made in the present Budget. He spoke of taxpayers as a whole; of Income Tax payers as a whole. There is a great danger in these generalisations. Unfortunately, the individual taxpayer does not consider the matter from the point of view of the taxpayer as a whole. He considers it from his own point of view. Take, for example, the point of view of the landowners of this country and the taxation which they pay. The noble Lord seemed to think that we were not being very heavily taxed. It is, I think, no exaggeration to say that, out of every sovereign which is supposed to come into the pockets of the landowner, more than three-quarters—I am understating it—goes in paying public burdens.
THE EARL OF BALFOUR: Direct taxation in one form or another.
THE MARQUESS OF SALISBURY: As my noble friend says, this is direct taxation in one form or another. That is what they have to bear—and the noble Lord says that landowners, as a whole, are not heavily taxed! I wish that he were a landowner—at least, I do not wish that he were a landowner, for I have too great a regard for him, but, if he were a landowner, I am sure that he would use language of a much more moderate description. I really traverse the whole of the noble Lord's contention, even when lie takes it on the average. I believe that tax reduction is of the greatest value. He said that a good many taxpayers who were engaged in industry would not pay into the industry the savings which they made through the reduction of taxation. He did not make an absolute statement; he did not say that they would pay nothing, but he said that it would be only a portion that would go back into industry.
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But the savings go somewhere. Where do they go? They go into the accumulated capital of this country, they go into banks. Banks must do something with their balances, and all this money is invested ultimately in one enterprise or another. To consider, because a man does not pay money actually into his own industry, that it does not go into industry or enterprise of some sort or another is, as I believe, wholly to misconceive the working of the financial system of this country. Depend upon it, the more taxation you remit the better it is for enterprise. Even in the case of the limited companies of which he spoke, they pay Income Tax, they will get the remission and, no doubt, they will increase the dividends, as the noble Lord said, but they will also put so much more to reserve and to the development of their businesses.
I should like to take the question a step further. The remission of Income Tax is, in fact, 1s. and not 6d., as is generally said. When you take into account the remission of Super Tax, the various advantages given to earned income, and so on—I am only quoting my right hon. friend the Chancellor of the Exchequer—it comes, on an average, to 1s. in the £. The effect of that remission is, first of all, direct; that is to say, there is so much money the more in the taxpayer's pocket. But it is also psychological. It gives him hope. The noble Lord invited us just now to look at the history of The country since the War and suggested that, though there have been remissions in taxation, there has not been a revival of industry. I am bound to say that I do not think that the history of the politics of this country since the War has been an encouragement to confidence. If I may say so, without desiring to be offensive, the presence of a Socialist Government in this country for a year was not likely to increase confidence. People did not anticipate that the salutary lessons of office would he so soon learnt by a Socialist Government. They thought that when a Socialist Government came into power the various theories that the Socialist leaders have put forward on platforms would he put into practice, and they were naturally terrified. If they had heard the noble Lord to-night, no doubt they would have been reassured, but at that time they

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were terrified. They did not think that the noble Lord and some of his friends would develop into a rather poor copy of the Liberal Party, and they therefore, no doubt, were unduly alarmed at the prospect.
I say, therefore, that you must not look at these remittances of taxation by themselves. In our opinion, at any rate, they are to be regarded as an example and a symptom of the way in which we are going to treat these subjects. We restore, I believe, to the industry of this country a measure of hope. People will be able to look forward. Why should it be supposed that the remissions of taxation which are in the present Budget are all the remissions of taxation that we are going to make? I earnestly hope that this may not be so. We say to those who are engaged in the industry of this country that they may hope for better days, that they may look forward to progressive economy, progressive prosperity, progressive reduction of taxation and, in fact, progressive confidence.
This particular Budget is to be taker only as one step in that process, and that is why it is so valuable for the purpose which we have in view. Indeed, the reduction in taxation is not more, than one element in the process. There is also the general political attitude of which the present Budget is an example, an attitude, that is to say, which takes into account, the necessary provisions, on the one side for restoring a sense of hope to the people by increasing their security and mitigating their hardships and, on the other hand, for restoring hope to the capitalist by reducing his taxation and promising him a policy which will redound to his confidence and credit. That is the real point, and it is because the Budget is an example of that policy that we defend it and that we are not dismayed by the gloomy prophecies of the noble Lord. We believe that in time, as his process of conversion proceeds, he himself will one day be the first to repudiate them.
LORD ARNOLD: My Lords, I should like to have an opportunity of saying a few words in reply to the two speeches that have been made. First, I would take the very last words of the noble Marquess, in which he referred to my "gloomy prophecies" As a matter of fact, I did not make any prophecies at all. I did
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not really refer to the future of industry—in fact, I very carefully guarded against doing so. All I said was that the present position is not good, and I do not think that anybody will dissent from that statement. In so far as I discussed the National Debt, I pointed out that little could be done by conversion, and so forth. But that was not really prophecy; it was merely an analysis of the position, and I think there must be some misconception in the mind of the noble Marquess with regard to the words which I actually used.
I come now to the speech of the noble Lord, Lord Emmott, and then I will return to the noble Marquess. Lord Emmott began his speech in what seemed to be a very extraordinary vein. I made a statement, on the authority of Inland Revenue officials, about the proportion of the capital of persons worth more than £15,000 in all, which they have invested in private businesses, where those persons were engaged in private business. I said that the Inland Revenue made an investigation and, on the basis of that investigation, came to the conclusion that these persons engaged in private business had 20 per cent. invested inside and 80 per cent. invested outside. The noble Lord then gets up and says that "This is an extraordinary fallacy, it does not mean that at all, because they have a lot of money in private companies" If he had been good enough to follow me closely he would have seen that I dealt with that in my speech. What I said was perfectly correct. If you take individuals on this investigation by the Inland Revenue worth more than£15,000, engaged in private business, the average of capital is 20 per cent in the business and 80 per cent outside, and in the case of persons engaged in business in private limited companies the proportions are still 23 per cent and 77 per cent. Therefore I think the noble Lord might have taken a little more care to have studied these figures before contradicting me.
LORD EMMOTT: If I used the word "private limited companies" I did not mean to. Take the business controlled by the late Lord Leverhulme which was a public limited company.
LORD ARNOLD: Lord Leverhulme was in a public limited company. The noble Lord does not appreciate the point. I

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would ask the noble Lord to look at the Blue-book and see exactly what the figures were. His next criticism was that I was not in favour of minor economies. I have never said so, and he will find that I said on Monday last that I was strongly in favour of economies, so far as they could be accomplished. Then the noble Lord referred to the Capital Levy. I did not discuss the Capital Levy to-day and I do not intend to do so. I have been a member of this House long enough to know that it is a most unwise thing to make an incomplete statement about anything, and if I were to discuss the Capital Levy it would take a very long time. I can, however, assure the noble Lord that I am quite prepared to discuss that question at any time if he will put a Motion down upon the Paper. I was, however, surprised that the noble Lord should refer to the proposal as utterly insane. I do not think that language of that sort contributes anything to discussions in this House. Here is a proposal which, in one form or another, has been carried out in a great many countries. Mr. Bonar Law assented to it in principle at any rate; Sir Josiah Stamp has written about it in a measured way—I do not say he is in favour of it, though he would not dream of calling it utterly insane; and though Mr. Keynes is not now in favour of it he holds it in reserve, so to speak, as the best thing to do in certain circumstances. It is quite clear from what the noble Lord said about the Capital Levy that he has not acquainted himself with the scheme, or with the various provisions in the scheme to obviate the difficulties about which he spoke. That is one of our difficulties—that people will not take the trouble to go into the scheme and find oat what it means.
The next thing to which the noble Lord referred was the question of the savings of the country. He said that he did not think the amount was as much as £100,000,000. I do not know what the savings are, but I took some trouble to find out last year and according to the best information I could get—and one of my authorities is probably one of the greatest living statisticians—the savings of the country are decidedly more than £100,000,000. I myself found that there is a good deal of ground for believing that they are more than twice that sum, and I think it is an extraordinary thing for
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the noble Lord to get up and say that he does not think they are so much as £100,000,000 and then, when challenged as to his authority, to admit that he has none.
Then as to the question of conversion. It seems clear to me that the noble Lord has not followed this point. He says that if we could save a half per cent, on the National Debt it would take sixpence off the Income Tax. That is not true. First of all, I pointed out that about £3,000,000,000 of the National Debt is in the form of long-dated stocks, which could not be converted for a very long time, or of stocks on which the interest is already low. Therefore it is impossible, within any reasonable distance of time, to convert the whole of the National Debt. If, however, it could be done, how would it work out? One-half per cent. on £7,500,000,000 is £37,500,000. With 25 per cent deduction for Super-Tax and Income Tax the amount is reduced to about £28,500,000. That is only about 5d. on the Income Tax. What, therefore, is the good of saying that if we could save one-half per cent on the total National Debt we could take sixpence off the Income Tax? Such statements do not contribute anything to the discussion.
Then I come to the noble Marquess, who, if I may say so, dealt with these matters in a very much more measured way, but first of all he said I had avoided Socialist remedies. I do not object to that. It is the kind of observation which is quite permissible in debate, but surely he does not expect me, in discussing the financial position under the present Government, to take up the time of the House in discussing Socialist remedies If I did so, I should expect him to say that I was out of order in discussing what had nothing to do with the Motion. If it is desired that we should put forward these remedies let us then have a regular debate upon these matters. We, on this side, are not afraid of discussing Socialist remedies or the Capital Levy, hut we cannot discuss everything all at once. The strongest language that the noble Marquess used about the Capital Levy was that it was futile. I cannot discuss that to-day, but it is clear that there is a great deal about the Capital Levy that the noble Marquess has not properly appreciated. He also said that we had reduced Debt to a very large extent. That is quite true, but much

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the greater proportion of that has not come from taxation at all but from the realisation of capital assets—War stores, and so forth—and we cannot count upon that in the future. Therefore, it was not quite a good point to put before the House, because very much the major proportion of that Debt reduction came from the realisation of capital assets.
THE MARQUESS OF SALISBURY: The Capital Levy would be a capital asset.
LORD ARNOLD: I am dealing now with the reduction of Debt made since the War, and very much the larger proportion of that has not come from taxation at all, but from the realisation of War assets. The noble Marquess said we were paying off Debt, but my point is that, in comparison with the reduction of Income Tax, to pay off War Debt was the wiser policy. I did not say that direct taxpayers were not heavily taxed, but I said that having regard to the relative position of poorer taxpayers it could not be contended that they were, overburdened. We are all heavily taxed, rich and poor. When the noble Marquess talks about the burden on direct taxpayers he never makes the smallest reference to the £300,000,000 of War Loan interest going back to the direct taxpayer. I say you must take that into account.
Then he says that savings are going somewhere. Of course they are going somewhere. That was my whole point, but he did not quite realise the position. It is not the case that the reduction of Income Tax benefits individual limited companies, except in a minor degree, chiefly with regard to reserve fund, which I explained. My point is that some of it is saved, but a good deal of it is spent by individual taxpayers, who get the money, and that does not increase the savings or capital of the country. The noble Marquess also says that if you take all that the Government are doing they are remitting a shilling on the Income Tax. That is not correct. A shilling off the Income Tax would take £64,000,000. Sixpence off the Income Tax absorbs £32,000,000; then the Government is taking £10,000,000 off the Super-Tax, making together £42,000,000, and there is also the increased allowance on earned incomes of £7,500,000, and all these bring the figure up to about
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£50,000,000, or £14,000,000 short of your £64,000,000. Therefore I do not understand that figure of a shilling.
THE MARQUESS OF SALISBURY: I have not the figures, but it was explained by the Chancellor of the Exchequer.
LORD ARNOLD: As I pointed out on Monday last, the Chancellor of the Exchequer is not always very lucid, and I cannot see how that figure of a shilling is arrived at. The noble Marquess concluded with a little badinage about the Socialist Government, and said that no doubt the country had suffered because a Socialist Government had been in office, but as a matter of fact when, the Socialist Government went out of office last October the trade and industrial outlook was very much better than it is to-day. Nobody will deny that. There were expectations then, even with regard to the iron and steel trade. I remember very well, on the night before we went out of office, talking to a man who has very wide knowledge of these things, and he said: "At last I think things are going to improve" They have not improved. I certainly do not lay all the blame on the Government, although I lay some of the blame on the Government. But I hope I have said sufficient to show that this suggestion that I am relapsing into Liberalism really has no foundation whatever, because I should be quite prepared to adhere to the whole Socialist faith, if this were the occasion. However, I appreciate the very full reply which the noble Marquess has given me and, in the circumstances, I do not propose to press for Papers. I beg leave to withdraw the Motion.
Motion, by leave, withdrawn.

FOOT-AND-MOUTH DISEASE.
LORD STRACHIE LORD STRACHIE rose to call attention to the Report of the Departmental Committee on the outbreak of foot-and-mouth disease which occurred in 1923–24; and to move for Papers. The noble Lord said: My Lords, I think it is very desirable that agriculturists should know what attitude my noble friend who speaks for the Ministry of Agriculture is going to take on this question. I cannot help thinking that the general feeling of agriculturists in this country is that this Report is very feeble and indecisive, and

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very inadequate for dealing with this great question. I should like my noble friend, first of all, to consider some remarks that I shall make as regards the summary of conclusions. One of the difficulties of considering this Report is that, for some reason best known to the Ministry, though I suppose they will say it is a question of expense, none of the evidence of the witnesses, which would be very valuable indeed, is available to the ordinary public or to any member of your Lordships' House. It has not been printed. In this case I think it might have been a. very good thing if it had been printed. The cost would not have been very heavy. It is not as if in all cases the printing of witnesses' evidence had been abandoned since the War, and I think this is one of the cases where it was very desirable that we should have it before us. So one can only refer to the summary of the evidence given, and the summary of the Committee's general conclusions.
I would first of all draw attention to Paragraph 128. The Committee there say that there are three possible courses to adopt when a landing place is within a restricted district, and the decision adopted with regard to one of these alternatives must rest with the Ministry I think it would have been very much better if this Committee, which had heard evidence and was composed of men who were more or less experts, had taken their courage in their hands and recommended to the Ministry what they should do in this particular matter, because the precautions to be taken as regards animals which have been landed are of very great importance indeed. There is very little doubt that in many cases infection has been spread from the port where the landing has taken place. I hope, therefore, that my noble friend may give some indication of what is the intention of the Government, because indecision is very harmful indeed.
The three alternative proposals put before the Government in Paragraph 128 are these:—

"(a) to allow no stock to be landed whilst the district is subject to any form of restriction;

"(b) to allow the use of the landing place only so far as such use is consistent with the restrictions;

"(c) to treat the landing place as a corridor, and to allow animals to be landed,
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and to be passed on to clean areas, in the same way as they could be passed through a restricted area by rail provided they are not untrucked in transit."

I think the safest way would be to allow no stock to be landed while the district is subject to any form of restriction. I think that is more likely to be efficacious, and I hope that the Ministry will adopt that course.
I should also like to know what the Ministry mean to do with regard to Paragraph 134, in which the Committee say that they are unable to recommend the general prohibition of the importation of hay and straw used at the time of importation for packing merchandise. I have raised this question time after time in this House at the request of the agricultural committee of Somerset, and I believe there is a very strong feeling generally among agriculturists that it would be very desirable that some restriction should be made with regard to the burning of all straw coming to this country from infected areas. There was a particular case in which an outbreak of foot-and-mouth disease was clearly traced to straw packing. We have been told that such a prohibition would interfere with the importation of manufactured articles, but that is rebutted by the fact that it is well known that wood fibre is very largely used now as a substitute for straw in packing, and there is no difficulty about the use of wood fibre if the Ministry would only prohibit the importation of straw.
Then I am rather surprised at Paragraph 152, in which the Committee say:—
"the detention of all animals after exposure in a market or sale, is desirable, but reflection will show that under the conditions under which the livestock trade is carried on, it would be very difficult of enforcement"
It seems a very curious thing for the Committee to say that a thing is very desirable indeed, and then to add that it is very difficult to enforce it. There may be cases where it is absolutely necessary to enforce such Regulations, however difficult it may be, if we are to put an end to the outbreaks of foot-and-mouth disease, and I do not think my noble friend would deny that we suffer very terribly from outbreaks of that disease, which cause an immense amount of distress and inconvenience to the agriculturists. Certainly we ought not to be

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afraid of a little inconvenience in trying to stop these outbreaks, as the Committee seem to be.
Then there is a, very curious paragraph. Paragraph 171, in which they say that the recommendation of the Committee of 1922, that the Regulations under the Foot-and-Mouth Disease Order should be made only under a joint committee, must he abandoned. They give no reason, except the very futile one that it would be very difficult to get the local authorities to work together. I am rather surprised that the gentlemen who signed this Report, especially Captain Pretyman, who is a great landowner and has taken part in public work, should think this impossible. My own experience is that it is every easy, if there is good will on both sides, for the local authorities to work together for any particular purpose of this sort, and it seems to me that it is very desirable Resolutions have been passed by agricultural bodies, such as the Royal Agricultural Society and the Central Chamber of Agriculture, asking the Ministry to introduce co-ordination of the local authorities within the geographical area of the county. I am glad to know that the Ministry apparently do not think the views put forward by this Committee are of very great value, because they have issued a draft Bill, with suggestions, to be sent out to the local authorities, for forming a joint committee in the geographical area of the county for carrying this out. I feel certain that if you have a joint committee you will get men of common sense meeting together, and there would be no difficulty in administering the orders for the prevention and restriction of foot-and-mouth disease whenever an outbreak took place.
I should like also to know what is the view of the Ministry as regards Paragraph 172, in which it is said that it is desirable that the veterinary inspectors of local authorities should, if possible, be free from the attachments of private practice. I know that may be very difficult to deal with, but if it could be done there is no doubt it would be a great advantage, because there is danger of a man in private practice going from infected herds to herds in his private practice which are not infected and carrying the infection. This has undoubtedly happened in certain cases.
Further, I would like to know what is being done generally in the way of taking precautions to disinfect railway trucks and wharves when cattle are landed from abroad. It seems to me to be desirable that something should be done in that way. I notice that in Paragraph 125 the Committee recommend—
"that the Ministry should consider the practicability of requiring the disinfection of sacks which have contained imported feeding stuffs, before they are permitted to circulate in the ordinary course of home trade"
There is no doubt that a great deal of suspicion has attached to feeding stuffs brought into this country in ships which had previously carried diseased cattle, and I hope the Ministry will give your Lordships an assurance that they are dealing with this matter in such a way as to make it impossible in the future that infected ships, or sacking used in ships in which there has been infection shall be the means of bringing that infection to this country. I am certain that every possible means should be taken to close any and every loophole through which infection may enter the country.
There is one matter which came to my knowledge in regard to which there appeared to be a certain amount of neglect on the part of officers of the Ministry. We had to prosecute a man in my country for bringing cattle from Bristol landing stage into the County without a licence. When I remonstrated with the Ministry about it, I was told that the gentleman who was in charge at Bristol had been taken away, and that his substitute had not been informed of the regulation of the County of Somerset which prohibited cattle being brought from Bristol into that County without the knowledge of the local authority. I think it was most unfortunate that such a thing should have happened. However, we were very much on the alert, the cattle were stopped and the man was fined for attempting to take them into the County.
That is a case which came to my personal knowledge and there may be other such cases. I hope, therefore, that the Ministry will be most careful to see that there is no similar neglect on the part of their inspectors, because, as my noble friend is aware, there has been a good deal of complaint, certainly in Cheshire, of carelessness on the part of

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inspectors in regard to the issue of licences and as to their not having been active in this matter. I will not go further into details because I understand that my noble friend has another engagement and is hoping, no doubt, that the debate will come to a speedy conclusion. I will content myself with moving the Motion standing in my name on the Paper.
THE PARLIAMENTARY SECRETARY OF THE MINISTRY OF AGRICULTURE AND FISHERIES (LORD BLEDISLOE): My Lords, the noble Lord, Lord Strachie, as your Lordships know, is the most assiduous custodian of agricultural interests in your Lordships' House and I, for my part and on behalf of the Ministry of Agriculture, certainly take no exception whatever to his bringing forward this afternoon this very serious question as to the best way of dealing with this insidious disease with a view to its suppression. Your Lordships will agree, I think, that under the very abnormal conditions which arose last year and the year before in regard to contagious animal diseases—conditions unprecedented in our national history, so far as we are aware—a very severe strain was put, not only upon the nation's resources, but upon the available staff of the Ministry of Agriculture, which rendered effective administration in the circumstances extremely difficult.
The noble Lord has referred this afternoon to what is generally known as the Pretyman Report of 1924, and I should like to take this opportunity of expressing, on behalf of the Ministry of Agriculture, our grateful thanks to Captain Pretyman and his Committee for the immense amount of trouble which they took in order to assist the Ministry of Agriculture in their administration in regard to animal diseases in the future. But when the noble Lord asks us what action we intend to take in regard to this Report, it is only fair to tell him that the Report was issued during the last two or three months. It is a very voluminous Report and is now under the most careful consideration, in all its details, of the Ministry I represent. Not only are we very much impressed with the value of many of the recommendations made in that Report, but I can assure the noble Lord that there is every chance that many
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of those recommendations will be accepted by the Department and put into effective operation.
In reference to printing the detailed evidence which came before this Committee, after all we have to be reasonably economical in these days when national burdens are very serious, and I doubt whether many of your Lordships would support the noble Lord's suggestion that a large amount of public money should be expended upon printing verbatim the very voluminous evidence which was submitted to this Committee. A valuable summary of the evidence has been published, and the Treasury have expressed a strong objection to printing anything further in this connection.
The second point which the noble Lord brought to your Lordships' attention was that in Paragraph 128 of their Report the Committee suggested three alternative "courses to adopt when a landing place is within a restricted district" When my noble friend Lord Strachie suggests that for the better guidance of the Department the Committee ought to have selected one of the three alternatives, after all that is a matter for the Committee and not for the Ministry of Agriculture. But we are obliged to the noble Lord for his suggestion in relation to the particular alternative which he thinks most desirable. It is one which we are exploring and which possibly may be adopted.
He then referred to Paragraph 135, which deals with the importation of hay and straw used for packing merchandise The difficulty about adopting this suggestion, as the noble Lord must realise, is that it is calculated—and the Pretyman Committee fully realised this—to embarrass very seriously the trade of this country. The noble Lord did not read the latter portion of the paragraph, but what the Committee said in this connection was—
"In our view, to impose a prohibition or to require the destruction at the port of imported packing material would involve an interference with our overseas trade in the many articles habitually packed in hay and straw of such a far-reaching character as could only be justified by an overwhelming case. We are aware that, action on these lines has already been taken by other countries, but we do not think the conditions and volume of trade involved are comparable."

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I think we are bound to pay respectful attention to the Committee when they point out to us the difficulty of carrying this suggestion into practice without serious dislocation of the trade of the country. But it is being considered to what extent this packing material can be rendered less noxious and less harmful in its possibility of spreading disease. We fully realise the danger, and we have in existence Orders, of which the noble Lord is aware, which enable us to take useful action of an administrative character in this connection.
When the noble Lord, in referring to Paragraph 152, complains of the Committee recommending a certain course of action, and deprecates its adoption as being difficult to carry out, of course I am not here to defend either the mentality, or indeed the recommendations, of the Pretyman Committee. We shall give our best consideration to this and to other paragraphs, and take upon ourselves the responsibility of considering whether any action in this connection is practicable or not.
I was glad to notice that the noble Lord referred to Paragraph 169 and following paragraphs, dealing with the very serious and important question of efficient administration within an area in which more than one local authority is operating. I am bound to confess that we were ourselves a little surprised to note the somewhat different conclusion at which this Committee arrived when reporting in 1922 and when reporting in 1924 respectively, and we certainly are so much impressed by the importance of having one geographical unit only, or, rather, having the county as a geographical unit of administration, that we already have in draft a Bill, which is now being considered by the County Councils Association and the Association of Municipal Corporations, and which provides that the county authorities and the county borough authorities shall alone have jurisdiction in these matters—that is ruling out all the borough council authorities for this purpose—and that there shall in fact be set up a joint committee of the two remaining authorities, the county councils and the county borough councils, who shall be able to act jointly, so that there will be one body only which will deal with foot-and-mouth disease and other serious contagious
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diseases within the county geographical area.
The noble Lord referred to the employment as veterinary inspectors of veterinary surgeons in private practice. The difficulty in this connection, of course, is that if you are going to employ for Departmental purposes, under such conditions as were prevailing during the last two years, especially in Cheshire where these outbreaks were so serious, persons whose sole duty shall be to attend to these matters—I do not know what my noble friend Lord Banbury of Southam would say if he were here—it would mean a whole army of officials, whose appointment, I am sure, many of your Lordships would very much deprecate. In this connection I can reassure the noble Lord, because we fully realise that we had not a sufficient inspectorate during the Cheshire outbreaks of 1923 and 1924, and we have persuaded the Treasury to authorise the appointment of twenty more inspectors than were previously employed, whose specific duty it will be to attend to these matters—that is to say, the inspectorate, in fact, has been raised from eighty to one hundred—thus rendering it less necessary to employ private practitioners for this purpose.
As regards the disinfection of railway trucks and wharves, this is a matter about which the Ministry has been in close consultation with the railway authorities, and there is no doubt that a better system of disinfection is likely to be carried out in future. Various disinfectants have been tried. Some of the disinfectants previously employed have not proved to be beyond criticism. Considerable pressure has been put upon the railway companies, and there is every prospect of more drastic measures being taken thoroughly to disinfect both railway trucks and wharves in the future. I think the noble Lord referred also to the dangers arising from the importation of foodstuffs in sacks on the same ships as cattle. So far as that is concerned, it is a matter which is under the careful consideration of the Ministry, and we are at the present moment considering how far we can take measures to prevent this risk (which we admit) without seriously interfering with the ordinary trade practice of the country.
Finally, the noble Lord referred to what is known as the Bristol case. I

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quite frankly admit that our veterinary inspector went beyond his legitimate authority in deciding in this case that animals within the infected area should be removed to some fields outside that area, without the approval or authority of the county council, and directions have since been given to all the Ministry's inspectors that animals must not be moved on their initiative out of infected areas, but that in every case, if a hardship is thought to be involved by the retention of them in loco, reference shall at once be made to the Ministry, which, of course, would then obtain the consent of the county council to such movement before granting the licence. In this case there is no doubt, as the noble Lord is aware, that there were certain animals, in the month of April last year, for which it was found very difficult to provide proper food, winter food having run very short in that particular district. The owner made a strong protest against the retention of the animals where they were, within the infected area, and the veterinary inspector, out of feelings of humanity, took upon himself to move them to some fields outside the area. I do not think, if I remember aright, that the Somerset County Council traversed in any way the justice or the fairness of such action in the circumstances, but the Somerset County Council objected to such action being taken without their being consulted, and in that we entirely supported them. We shall take care that such an incident shall not occur in future.
I think it would be some relief to your Lordships if I told you that there is a reasonable prospect at the present time, after the very serious experiences through which we have passed, of reverting to what I may call the normal condition of foot-and-mouth disease prevalence in this country. Whereas, at the end of the month of April last year, there were 63 outbreaks, with 1,456 cattle. 1,690 sheep and 724 pigs slaughtered, for the same month in this year there were only two outbreaks, with 69 cattle and 45 sheep slaughtered. No pigs were included in the number of slaughtered animals. When one comes to consider the prevalence of this extremely infectious disease in several countries of Europe ever since the War, I think we have a great deal to congratulate ourselves upon that we are now getting this dangerous
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disease well in hand, and are not suffering the terrible losses which are being experienced in Germany, France, Holland and elsewhere. As your Lordships know, when the disease was at its worst in Cheshire, many suggestions were made that the time had come to drop the policy of slaughter. We are very thankful that overwhelming pressure was not put upon the Ministry at the time which might have resulted in the abandonment of a policy which has given us a much better record during the last thirty or forty years, in the matter of serious contagious animal diseases, than any other country in Europe, or most other countries in the world, possess.
Before I sit down your Lordships might like to know what has happened in the matter of research into this disease. Your Lordships are, of course, aware that foot-and-mouth disease is not a serious disease except in the sense that it is highly infectious, probably the most infectious disease known to animals or man in the world. But it is not a serious disease, and no more than 5 or 7 per cent, of the animals actually die from the disease in those countries where slaughter does not take place. But the difficulty about any research work, with the view of finding some preventive, is that this particular microbe is ultramicroscopic, and is filterable; that is to say, you cannot catch it. When we were told a year ago that certain professors, Professor Frosch and Professor Dahmen, in Germany had actually cultivated the virus of foot-and-mouth disease, we were all impressed with the possibility of successful protective inoculation being available in the near future. It is not for me to ask what has happened in connection with this research work in Germany, but we have reason to believe that the claims made by these gentlemen have not been substantiated, and we are, I am sorry to say, much where we were a year ago. A Departmental Committee which has been set up in this country, composed of distinguished scientists, is examining this matter and we expect an interim Report from them in the course of the next few weeks. At this late hour of the evening I am sure your Lordships would not wish me to go further into the whole difficult problem of eradicating this contagious animal disease, but I hope

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I have said sufficient to satisfy my noble friend opposite.
LORD STRACHIE: My Lords, in asking leave to withdraw my Motion, should like to say how much obliged I am to my noble friend for the full statement he has made. I assure him that we agriculturists feel every confidence that he will do everything he can, by a more strict investigation in all these cases, by screwing up the administration and adopting some of the valuable Reports we have received, to ensure that we shall not get one of these dreadful outbreaks again.
Motion, by leave, withdrawn.

HOUSE OF LORDS OFFICES.
Order of the Day read for the consideration of the Second Report from the Select Committee on House of Lords Offices.
The Committee reported inter alia:—
1.REFRESHMENT DEPARTMENT.
The Lord Great Chamberlain, as Chairman of the Sub-Committee on the Refreshment Department, made a satisfactory report from the Sub-Committee.
The Committee authorised the sending of a circular letter to Peers asking for contributions, similar to that sent last year.
2. ACOUSTIC INSTRUMENTS IN THE HOUSE.
The Report of the Sub-Committee on Acoustic Instruments in the House (see Appendix I) was submitted and considered.
The Committee adopted the Report.
3. CUSTODY OF RECORDS IN THE VICTORIA TOWER.
The Report of the Sub-Committee on the Custody of Records in the Victoria Tower (see Appendix II) was submitted and considered.
The Committee adopted the Report.
5. REASSESSMENT OF (BALANCE OF) CIVIL PAY OF CERTAIN CIVIL SERVANTS WHO SERVED WITH H.M. FORCES DURING THE GREAT WAR.
The Clerk of the Parliaments submitted a petition from certain Doorkeepers of the House for the payment of bonus as part of their civil pay during the war. Other members of the staff are in the same position, but have not made any claim.
The Committee at their last meeting recommended that no action should be taken in this matter, and so reported. The Committee's decision was then mainly based on the fact that members of the House of Lords serving during the war received exceptionally generous treatment.
The Committee are, however, of opinion that the matter of the petition now presented should be examined with a view to ascertaining whether the claim put forward has any legal validity, and have appointed a Sub-Committee, consisting of the Lord Chairman, Lord Dunedin and another Law Lord, to consider and report on the legal questions raised in the petition.
6. PORTRAIT OF QUEEN VICTORIA PRESENTED BY THE PRINCE OF WALES.
The Lord Chamberlain reported to the Committee that a portrait of Queen Victoria had been presented by His Royal Highness the Prince of Wales. The Committee received the announcement of this gracious act with much pleasure.
7. ESTIMATE.
The Estimate for the House of Lords Offices for the year ending March, 1926, was laid before the Committee by the Clerk of the Parliaments and approved.
APPENDIX I.
Report by the Sub-Committee of the House of Lords Offices Committee appointed to consider the installation of Acoustic Instruments in the House.
Ordered to Report:—
1. That the Sub-committee was appointed to consider a proposal to place in convenient positions in the House acoustic instruments for the use of Peers who may have difficulty in hearing the proceedings.
2. The Sub-Committee have investigated the practicability of the proposal.
They are satisfied that it would be possible to place a receiving instrument on each side of the Table without inconvenience or unsightly effect.
Models of two such receiving instruments have in fact been placed on the Table as an experiment, and have been there for a considerable period without any objection being raised.
The Committee have had the advantage of the advice of Sir Frank Baines, Director of Works, who has informed them that similar instruments can be linked up by underground wires to ear-pieces, similar to those used for telephones, in any part of the Chamber that may be desired.
3. These receiving instruments would only transmit the speeches of Peers who address the House at the Table. For the apparatus to be effective it is necessary for the speaker to be in close proximity to the instrument, and short of a multiplicity of instruments in various parts of the House, which would be difficult to arrange, there is no method of transmitting the speeches of Peers who speak elsewhere than at the Table.
4. The Sub-Committee, however, consider that a considerable advantage would be achieved by the limited use of the appliances which they have indicated.
At a later date, if it were the pleasure of the House, it would always be possible to consider the extension of the scheme.
5. They recommend that sanction should be given to the permanent installation of two instruments upon the Table, and that these should be connected up to ear-pieces at the following points, viz:—

(i) Six ear-pieces at intervals on the third bench in the House, behind the front Government bench;

(ii) Six ear-pieces at intervals on the third bench in the House, behind the front Opposition bench;

(iii) Three ear-pieces in the Press Gallery.

6. They recommend that the selection of appliances and the method of installation should be left to the discretion of the Office of Works, and that a request to give effect to these proposals should be submitted to the Commissioner of Works
APPENDIX II.
Report of the Sub-Committee appointed by the Select Committee on the House of Lords Offices to consider the Custody of Records in the Victoria Tower.
Your Sub-Committee report as follows:—
They have inspected the Victoria Tower, and found that the Records in the Tower are, as far as possible in the circumstances, well looked after and in good condition.
They are of opinion, however, that, having regard to the importance and practical value of the Records, further provision is required both for their preservation and for such cataloguing and calendaring as may be necessary to make them readily available when reference to them is required.
They have ascertained that reference to these Records is much more constantly required than is generally supposed, both for the purposes of historical research and for a purpose which is equally, if not more, important—the settlement of legal questions, especially questions of title. In this latter connection, inspection of the plans deposited with old Private Bills is constantly required.
A.—Preservation.
1. The Sub-Committee found that the bound volumes show signs of suffering due to aspergillus in various forms. It is believed that the only mode of absolutely preventing the ravages of this fungus would be the warming of the rooms in which the books are kept. They realise, however, that this is, in the circumstances, impracticable, but the books should be cleaned and wiped as often as possible, and thymol, which is recommended as a partial preventative, should be used in the rooms which are liable to attack from this fungus.
2. On the floor known as the well of the Tower, which is not divided, as the floors above it are, into separate rooms, there are a great many surplus copies of the Journals, Rolls of Parliament and other volumes, which are more or less stacked anyhow on the floor and serve only as a means for accumulating a great quantity of dust and dirt.
Steps should be taken to get rid of these surplus documents by offering them to public libraries or other institutions, reserving, of course, a sufficient number to replace any wastage which may occur of the sets in use in the House of Lords. From the public point of view it would be of advantage so to dispose of these surplus copies as, in case of accident to the Records in the Tower, the copies which have been disposed of would be still in existence. Any of these documents which are not so disposed of should, instead of being stored as they are now in the well of the Tower, be removed to any separate rooms which may be available on the higher floors.
3. Apart from the well room, the Records are kept in separate locked-up rooms built round the Tower, with a staircase and landing in the middle of each floor. There are eight rooms on each floor fitted with shelves and racks with wooden battens. Altogether there are at present over 50 rooms used for documents of various sorts.
Each of these rooms should be thoroughly cleaned out and the documents in them dusted, if possible, once a year. Documents such as old Acts of Parliament, plans, etc., which are in roll form would not be undone. It would be sufficient to dust the outside and the inside of the roll without unrolling the document. As a matter of practice, it is found that the inside of these documents which are rolled up is well preserved, and the unrolling of each of them would be a matter of endless labour and probably do more harm than good.
The rooms are more or less uniform in size, and it may be found possible, by using the rooms in rotation, to have one room always empty and clean into which the documents of the room which is being cleaned could, after they are dusted, be immediately removed. The room from which the documents are removed would then in its turn be thoroughly cleaned and become the empty and clean room.
4. In connection with this subject it has been brought to our notice that the plans deposited with Private Bills are of considerable practical importance, as they are constantly being referred to on questions of title. These plans have in late years been printed on very perishable paper, and agents should be required to have one copy of the plans printed on material which will not perish for the purposes of record. These plans are in roll form, and there should be a sufficient margin to allow of the plans themselves not being spoiled by the dust which accumulates on the outside of the roll.
B.—Verification, Cataloguing and Calendaring.
A great deal of work is required under these heads in order to give the Records their full value from the public point of view.
5. The older documents have been calendared up to 1710, but there is no separate cataloguing of the documents which bear date before 1693. Of these there are a good many, and, of course, they are of con-

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siderable value. In connection with these older documents two things are wanted. First of all a catalogue should be compiled from the entries in the Reports of the Historical Manuscripts Commission of the documents which ought to be in the Victoria Tower; and secondly, the older documents which actually are in the Victoria Tower should be examined with a view (a) of snaking certain that the documents which ought to be there are there, and (b) with a view to finding out what documents tire in the victoria Tower which do not appear in the Historical Manuscripts Commission entries.
6. As regards documents after 1710, calendaring should be continued, but in the first place the documents should be roughly examined and a sort of class catalogue should be made in order that persons who come to inquire for certain documents may be told whether they are likely to be found in the Victoria Tower or not.
C.—Expenditure.
7. A sum of £200 has been included in this year's estimates for the purpose of cleaning, and the Clerk of the Parliaments suggests that the messengers and others in his office should be employed during the vacation under the superintendence of the head messenger, who is well acquainted with the Tower, in carrying out cleaning work. At the end of the year it will be possible to tell how much cleaning can be done in the year with the staff and money available, and the experience of the year would make it possible to make effective arrangements for future years.
8. Formerly a vote of £360 a year for calendaring was annually included in the estimates, but from motives of economy this vote was dropped in 1922. The money is urgently required for making these Records properly available to the public.
9. We understand that a sum of £100, which was available from last year's estimate for cleaning is being spent in cleaning the older bundles of manuscripts, and that the opportunity is being taken at the same time of making a catalogue of the manuscripts which are actually found in the bundles.
The Committee make the following recommendations:—

(1) That in the public interest it is necessary to incur such expenditure as is required for preserving the Records in the Victoria Tower and making them properly available to the public.

(2) That steps should be taken, as suggested, for stopping the ravages of aspergillus.

(3) That steps should be taken, as suggested, to clean the well room of the Tower.

(4) That the money available this year for cleaning should be spent as suggested, and experience will thus be gained as to the necessity of taking further steps in the future.

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(5) That the arrangements for the furnishing of more durable copies of plans, which it is believed have already been made, should be carried out.

(6) That the work of verification of the documents in the Tower should be proceeded with.

(7) That a vote should in each year be included in the estimates for calendaring.

THE CHAIRMAN OF COMMITTEES (THE EARL OF DONOUGHMORE): My Lords, I beg to move that this Report be now considered and adopted.
Moved accordingly, and, on Question, Motion agreed to.

AIR MINISTRY (CROYDON AERODROME EXTENSION) BILL.
House in Committee (according to Order) on re-commitment of the Bill: Bill reported without amendment.
POOR LAW EMERGENCY PROVISIONS CONTINUANCE (SCOTLAND) BILL.
House in Committee (according to Order): Bill reported without amendment.

INTERPRETATION MEASURE, 1924.
THE LORD ARCHBISHOP OF CANTERBURY: My Lords, I beg to move, That in accordance with the Church of England Assembly (Powers) Act, 1919, this House do direct that the Interpretation Measure, 1924, be presented to His Majesty for the Royal Assent. I need not trouble your Lordships with an account of what this Measure contains. It is really a technical matter and simply facilitates business in regard to the terminology of certain definitions. What it does is to simplify the drafting of Ecclesiastical Measures by arranging that for all Measures, not for each one, certain definitions should be adopted. The matter is entirely uncontroversial. The proposal now before your Lordships has been passed through the Assembly and submitted by the Assembly to its Legislative Committee. The Ecclesiastical Committee of the Houses of Parliament has reported entirely in its favour, and I ask

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your Lordships, in accordance with that Report, to say that the Measure shall be submitted to His Majesty for Royal Assent.
Moved, That in accordance with the Church of England Assembly (Powers) Act, 1919, this House do direct that the Interpretation Measure, 1924, be presented to His Majesty for the Royal Assent.—(The Lord Archbishop of Canterbury.)
On Question, Motion agreed to.

MOTOR RACES (AUTHORISATION AND REGULATION) BILL. [H.L.]
LORD MONTAGU OF BEAULIEU: My Lords, I beg leave to introduce a Bill to provide for the authorisation and regulation of races with motor cars, and to move that it he read a first time.
Moved, That the Bill be now read 1a.—(Lord Montague of Beaulieu.)
On Question, Bill read 1a; and to be printed.

MINISTRY OF HEALTH PROVISIONAL ORDERS CONFIRMATION (No. 8) BILL. [H.L.]
THE MARQUESS OF SALISBURY: My Lords, I beg leave to introduce a Bill to confirm certain Provisional Orders of the Minister of Health relating to Adwick-le-Street, Bournemouth, Gloucester, Keighley, Lyme Regis, Peterborough and Southport, and to move that it be read a first time.
Moved, That the Bill be now read 1a.—(The Marquess of Salisbury.)
On Question, Bill read 1a and to be printed.

MINISTRY OF HEALTH PROVISIONAL ORDERS CONFIRMATION (No. 9) BILL. [H.L.]
THE MARQUESS OF SALISBURY: My Lords, I beg leave to introduce a Bill to confirm certain Provisional Orders of the Minister of Health relating to Abingdon Joint Hospital District, Earsdon Joint Hospital District, Flint, Sheffield, South Chilterns Joint Smallpox Hospital District, West Hartlepool, and Weymouth and Melcombe Regis, and to move that it be read a first time.
Moved, That the Bill be now read 1a.—(The Marquess of Salisbury.)
On Question, Bill read 1a; and to be printed.

BUSINESS OF THE HOUSE.
THE MARQUESS OF SALISBURY: My Lords, before the House adjourns I should like to take the opportunity of stating that your Lordships will be asked to meet at half past two to-morrow with the view of taking the Royal Commission at three o'clock. There are certain formal stages in connection with two Bills to be got through and a little time must be given for them.
House adjourned at a quarter past six o'clock.