Sitting of 21 April 1904

Preamble
The House met at Two of the Clock.
UNOPPOSED PRIVATE BILL BUSINESS.

  PRIVATE BILL PETITIONS [LORDS] (STANDING ORDERS NOT COMPLIED WITH).
  Mr. SPEAKER Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That, in the case of the Petition for the following

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  Bill, originating in the Lords, the Standing Orders have not been complied with, viz.:—Richard Jaeger's Patent. Ordered, That the Report be referred to the Select Committee on Standing Orders.

  PROVISIONAL ORDER BILLS (STANDING ORDERS APPLICABLE THERETO COMPLIED WITH).
  Mr. SPEAKER Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That, in the case of the following Bill, referred on the First Reading thereof, the Standing Orders which are applicable thereto have been complied with, viz.:—Local Government Provisional Orders (No. 2) Bill. Ordered, That the Bill be read a second time To-morrow.
  Lancashire and Yorkshire Railway (Various Powers) Bill. Ordered, That the Minutes of Evidence taken before the Committee on the Lancashire and Yorkshire Railway (Various Powers) Bill, of session 1902, be referred to the Committee on the Lancashire and Yorkshire Railway (Various Powers) Bill of this session.—(The Chairman of Ways and Means.)
  Cheshire Electricity and Power Gas Bill. Reported [Preamble not proved]; Report to lie upon the Table.

  MESSAGE FROM THE LORDS.
  That they have passed a Bill, intituled, "An Act to empower the Corporation of Barrow-in-Furness to construct an opening bridge across Walney Channel; to make certain street works; to lay down additional tramways, and to execute works in connection with their water undertaking; and for other purposes."[Barrow-in-Furness Corporation Bill [Lords].
  And, also, a Bill, intituled, "An Act to extend the time for taking certain lands and for the construction of certain authorised works by the Southport and Lytham Tramroad Company, and the Mayor, Aldermen, and Burgesses of the borough of Southport, to authorise the raising of further capital; and for other purposes." [Southport and Lytham Tramroad (Extension of Time) Bill [Lords].
  Barrow-in-Furness Corporation Bill [Lords]; Southport and Lytham Tram-road (Extension of Time) Bill [Lords]. Read the first time; and referred to the Examiners of Petitions for Private Bills.

PETITIONS.
  EDUCATION (SCOTLAND) BILL.
  Petitions for alteration: from Orkney; Callander; and Breadalbane; to lie upon the Table.
  INCOME-TAX AND INHABITED HOUSE DUTY.
  Petition from Croydon, for alteration of Law; to lie upon the Table.
  LICENCES (RENEWAL).
  Petitions against alteration of Law: from Middlesborough; Hirnant; Creiglwyn; Cefn-canol; Llawrycwm; Birmingham; Machynlleth; Siloh; Cyrnybwch; Esgairgertieg; Horeb; Leeds; Llangyniew; Saron; Somersham; Ton-bridge; Welling; Kennington; Ilford; Dumfries; Chipping Norton; Tunbridge Wells; Denbigh; Woolwich; North Kent; Llangadfan (two); Manchester; Goshen; Meifod; Llanidloes; Neuadd; Llanbrynmair; Ysgangciliog; Llangad-van; Elim; Maengwynedd; Guilden Morden; Neyland; Pembroke; Denbigh; Sketty; Glasgow; Watford; Slough; Aldershot; and Colnbrook; to lie upon the Table.
  LICENSED PREMISES (HOURS OF CLOSING).
  Petition from Islington, for alteration of Law; to lie upon the Table.
  LOCAL GOVERNMENT (SCOTLAND) ACT (1894) AMENDMENT BILL.
  Petition of the Scottish Poor Law Medical Officers' Association, in favour; to lie upon the Table.
  RATING OF MACHINERY BILL.
  Petition from Middlesborough, against; to lie upon the Table.
  RE-VACCINATION BILL.
  Petition from Kensington, in favour; to lie upon the Table.
  SALE OF BUTTER BILL.
  Petitions against: from Burton-on-Trent; and Woking; to lie upon the Table.
  SALE OF BUTTER BILL.
  Petition from Kensington, for alteration; to lie upon the Table.
  TRANSVAAL (CHINESE LABOUR ORDINANCE).
  Petition from Poplar, for withdrawal; to lie upon the Table.
RETURNS, REPORTS, ETC.
  BOARD OF EDUCATION.
  Copy presented, of Report of a Public Inquiry held under Sections 16 and 23 of The Education Act, 1902, and Section 73 of The Elementary Education Act, 1870, by A. T. Laurence, Esq., K.C., at Carmarthen on the 24th and 25th March, 1904 [by Command]; to lie upon the Table.
  TRADE REPORTS (ANNUAL SERIES).
  Copies presented, of Diplomatic and Consular Reports, Annual Series, Nos. 3140 and 3141 [by Command]; to lie upon the Table.
  Mr. SPEAKER laid upon the Table, Manual of Procedure in the Public Business of the House of Commons, 1904.
QUESTIONS AND ANSWERS CIRCULATED WITH THE VOTES.

  New Voluntary School at Haywards Heath.
  MR. JAMES HOPE: To ask the Secretary to the Board of Education whether he can state on what grounds the Board have declined, in opposition to the wishes of the district council and a majority of the local ratepayers, to assent to the provision of a new voluntary school at Haywards Heath.
  (Answered by Sir William Anson.) I am not prepared to give to the hon. Member more information than is com-
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  municated to the County Council of East Sussex. A copy of the report of the public inquiry will, in due course, be deposited with the local education authority for inspection. A notice of such deposit will be published.

  Inquiry into Education Act at Carmarthen.
  COLONEL LOCKWOOD: To ask the Secretary to the. Board of Education whether he will lay upon the Table of the House the report of the public inquiry held, under the Education Act, 1902, at Carmarthen on the 24th and 25th of March.
  (Answered by Sir William Anson.) In view of the special public interest attaching to this report, I am laying it upon the Table of the House to-day.

  Boarded out Children in England and Wales.
  SIR WALTER FOSTER: To ask the President of the Local Government Board if he will state the number of children at present boarded out in England and Wales, distinguishing between those boarded out within and those beyond the union.
  (Answered by Mr. Walter Long.) The number of children boarded out in England and Wales on the 1st January last was 8,372. Of these 6,581 were boarded within the union, and 1,791 beyond the union.

  Tea Imports.
  SIR EDWARD SASSOON: To ask Mr. Chancellor of the Exchequer if he would state the quantity and value of all grades of tea imported in 1902–3, and the quantity and value of teas imported from our possessions and dependencies.
  {Answered by Mr. Austen Chamberlain.) The imports of tea of all grades in the financial year 1902–3 amounted to 280,062,365 lbs., valued at £8,316,544. Of this 252,400,539 lbs., valued at £7,513,431, represented imports from British possessions and dependencies.

  Exchequer Deficit
  MR.MCCRAE: To ask Mr. Chancellor of the Exchequer if he can state whether the realised deficit of £5,415,000

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  for the year 1903–4 has been met by a draft on Exchequer balances in which were included £2,880,000 raised by way of loans and £3,000,000 received out of the proceeds of the Transvaal Loan.
  (Answered by Mr. Austen Chamberlain.) The realised deficit of a past year must always be met in the first instance out of the Exchequer balance until Parliament is able to make other provision for it. In the present case, having to deal with a realised deficit of £5,415,000 for the year 1903–4, I propose to provide for it as follows:—I. To the extent of £2,880,000 it will be permanently withdrawn from the balance, that being the amount by which the balance was abnormally swollen in previous years by borrowings in excess of our requirements at the moment. This £2,880,000 having been raised to meet war charges, it appears proper to employ it to meet the war charges for 1903–4. The money will thus be utilised for the purpose for which it was raised. 2. A sum of £1,000,000 will be provided from the unclaimed dividend account. 3. There then remains a further sum of £1,500,000, which will be replaced from surplus revenue. It is with this object that it is proposed to provide so large a

  1903–4.

  1904–5. (Details estimated.)

  Portion representing repayment of capital.

  Portion representing interest and management.

  Total.

  Portion representing repayment of capital.

  Portion representing interest and management.

  Total.

  £

  £

  £

  £

  £

  £

  1. Interest of Funded Debt

  —

  16,390,445

  16,390,445

  —

  15,949,000

  15,949,000

  2. Terminable Annuities.

  5,045,845

  1,492,169

  6,538,014

  5,203,000

  1,318,000

  6,521,000

  3. Interest of Unfunded Debt

  —

  2,422,435

  2,422,435

  —

  2,427,000

  2,427,000

  4. Management of the Debt

  —

  185,019

  185.019

  —

  186,000

  186,000

  5. New Sinking Fund.

  1,464,087

  —

  1,464,087

  1,917,000

  —

  1,917,000

  Total

  6,509,932

  20,490,068

  27,000,000

  7,120,000

  19,880,000

  27,000,000

  surplus of estimated revenue over estimated expenditure in the current year. The £3,000,000 received from the Transvaal, as described in the Question, was orginally advanced from the Exchequer balance, and was therefore, when received, paid back into the balance. This transaction is complete in itself. It does not in any way affect last year's deficit of £5,415,000, which is provided for as explained above.

  National Debt.
  MR. GIBSON BOWLES: To ask Mr. Chancellor of the Exchequer what amount of the fixed charge for the Debt of £27,000,000 was, in the year ending 31st March. 1904, applied respectively to interest on the Funded Debt. interest on the Unfunded Debt, charges for terminable annuities, management of the Debt, and New Sinking Fund; what are the corresponding estimated figures for 1904–5; what was the total amount applied in reduction of the capital of the Debt in 1903–4; and what is the total amount estimated to be so applied in 1904–5.
  (Answered by Mr. Austen Chamberlain). Permanent Charge of the Debt—

  Income of Average Working Class Family,
  MR. HERBERT SAMUEL: To ask the President of the Board of Trade if he will state what is the estimate of the Labour Department of the approximate average income per annum of an average working class family containing one adult male wage earner.
  (Answered by Mr. Gerald Balfour.) The average annual earnings of the adult male wage earners employed in the principal industrial and agricultural occupations in the United Kingdom in a year of average employment may be estimated approximate at £70 per head. The average income of a working-class family would no doubt considerably exceed this figure, but there are no materials available for making a trustworthy estimate on the basis stated in the Question.

  Post Office Night Messengers in Scotland.
  MR. PATRICK O'BRIEN: To ask the Postmaster-General if he will give the number of adult night messengers employed at each office in Scotland, with the number of hours they are on duty each week, the amount of their weekly wages, if they are paid for overtime and Sunday duty; will he state the number of messengers at each office against whom no report has been recorded during the past four years; and would he consider the advisability, by the bestowal of an occasional appointment as sub-office postman, award of good conduct stripes, or a small increase in wages, of encouraging only those night messengers whose character and conduct are reported as being thoroughly satisfactory by their respective postmasters.
  (Answered by Lord Stanley.) I am having inquiry made and will communicate the result to the hon. Member.

  Indian Coinage
  MR. SCHWANN: To ask the Secretary of State for India if he
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  will state what was the total of Government of India rupees coined by the Indian Government during each financial year from 1893, when the Indian mints were closed to the public, up to 31st March of the present year; the amount of net profit which the Government of India has received during each financial year from the coinage of the said rupees; does this profit consist chiefly of the appreciation of the rupee in India, as compared with their intrinsic value, consequent on the artificial scarcity of those produced by the prolonged closing of the mints against coinage by the public; what is the amount of deficit or surplus, as the case may be, which has been shown in each year in the financial statement of the Government of India during each of the years above specified; have the net profits on the coinage of Government of India rupees been taken credit for in the Indian financial statement as revenue receipts, and have they consequently been applied to the diminishment of the annual deficits or the increase of the annual surpluses during the period in question; if these profits on coinage have been so taken credit for, what would be the amounts of the deficits or surpluses of the Indian Government for each of the years since 1893 if the said profits on the rupee coinage were deducted.
  (Answered by Mr. Secretary Brodrick.) (1) Rupees coined by the Government of India:—1893–94, 4,14,11,170 Rs.; 1894–95, Nil; 1895–96, Nil; 1896–97, Nil; 1897–8, 48,64,720 Rs.; 1898–99, 41,79,600 Rs.; 1899–1900,1.30,18,080 Rs.; 1900–01, 17,14,79,318 Rs.; 1901–02, 4,95,20,460 Rs.; 1902–03,11,27,22,680 Rs.; 1903–04 (first eleven months) about 14,00,00,000 Rs.; (2) the net profit on the rupee coinage from the 1st April, 1893, to the 31st March, 1900, is not shown separately in the accounts. The net profit on the coinage of new rupees since the 1st April, 1900, has been:—1900–01, £3,031,294; 1901–02, £415,100; 1902–3, £264,028; 1903–4, £2,465,700 (Estimated). (3) The profit consists of the

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  difference between the cost price of rupees and the value (Is. 4d.) at which they circulate. (4) Surpluses and deficits from 1893–4:—

  Surplus.

  Deficit.

  £

  £

  1893–94

  —

  1,031,332

  1894–95

  462,073

  —

  1895–96

  1,202,666

  —

  1896–97

  —

  1,136,681

  1897–98

  —

  3,572,807

  1898–99

  2,640,873

  —

  1899–1900

  2,774,623

  —

  1900–01

  1,670,204

  —

  1901–02

  4,950,243

  —

  1902–03

  3,069,549

  —

  1903–04

  2,711,200

  —

  (Estimated)

  (5) From the 1st April. 189:5, to the 31st March, 1900, the net profits on the rupee coinage were regarded as revenue receipts and contributed therefore to increase the surplus or diminish the deficit of the year. From the 1st April, 1900, the net profits on the coinage have been transferred to the Gold Reserve Fund, and no longer affect the surplus or deficit of the year.

  Indian Police Commission—Publication of Report
  SIR SEYMOUR KING: To ask the Secretary of State for India whether his attention has been called to a statement made officially on 15th February last by Sir Denzil Ibbetson at a meeting of the Viceroy's Council, to the effect that the issues involved in the recommendations of the Indian Police Commission were then before the Secretary of State for India, and that the publication of the Report depended on his consideration of the question; and whether he can explain the delay in the consideration of the question.
  (Answered by Mr. Secretary Brodrick.) I have not seen any report of a statement by Sir D. Ibbetson that the recommendations of the Police Commission were before me for consideration, nor would such a statement have been correct. Rut he appears to have said, quite accurately, that the publication of the
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  Report was deferred under my orders and those of my predecessor, until the consideration of the issues involved should be further advanced. As I have already explained on more than one occasion, and as the Viceroy has also stated in the speech which he delivered on the Budget on 30th March, the Report had to be laid before Local Governments for their opinions; and until those opinions have been obtained orders cannot be passed upon the recommendations of the Commission. So far as I am aware, there has been no avoidable delay in the consideration of the subject, and I have pressed the Government of India to expedite their recommendations so far as they are able.

  New Army Scheme—Cost of Staffs.
  MR. CHARLES HOBHOUSE: To ask the Secretary of State for War if he will state what will be the total cost of the staffs for the eight administrative districts in the Esher scheme, including general officers in chief, major generals' and brigadiers' staff, besides the officers of the general staff.
  (Answered by Mr. Secretary Arnold-Forster.) A Committee is at present considering the division of the United Kingdom into commands and administrative districts, and for the decentralisation of duties to those commands and districts, and for the provision of the personnel necessary for those duties. Until the Report of this Committee has been received, I am unable to answer the Question of the hon. and gallant Member.

  Promotion to the Rank of Colonel and Major General.
  SIR CARNE RASCH: To ask the Secretary of State for War if his attention has been called to the reply of the late Mr. Stanhope, when Secretary of State for War, given to the late General Sir C. Fraser on 1st December, 1890, and afterwards promulgated in successive Royal Warrants, that promotion by selection to fill an appointment from the ranks of colonel and major-general would not be brought into force until the number of general officers was reduced to 100; and to the fact that a Royal Warrant was issued on 5th November, 1899, in contravention of this

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  undertaking; and will ho take steps for giving consideration to those officers whose prospects of promotion and pension were thus destroyed.
  (Answered by Mr. Secretary Arnold Forster.) My attention has been drawn to this matter It must be pointed out that for many years prior to 1901, it had been open to the Commander-in-Chief to specially recommend that any vacancy in the rank of major-general should be filled by selection to the exclusion of all the senior colonels, promotion by seniority being thus practically abolished. Under these circumstances it cannot be admitted that the prospects of the officers referred to were such as would justify their cases being specially dealt with, and it is regretted that it is not possible to extend any exceptional treatment to them.

  Import Duties on Agricultural Implements in West Africa.
  MR. HERBERT SAMUEL: To ask the Secretary of State for the Colonies what are the rates of import duty on agricultural implements and industrial machines in Gambia, the Cold Coast, Sierra Leone, and Lagos, respectively.
  (Answered by Mr. Secretary Lyttelton.) Agricultural implements and industrial machinery are exempt from duty in the Gambia, the Gold Coast, and Sierra Leone. In Lagos an Ordinance has been passed exempting agricultural implements and machinery from the JO per cent. ad valorem duty which has hitherto existed, and steps are being taken to extend to all industrial machinery the exemption from the same duty which has hitherto been granted only in the case of mining and sawing machinery.

  Boer War Compensation
  MR. BRYN ROBERTS: To ask the Secretary of State for the Colonies whether he will lay upon the Table a detailed statement of the moneys expended in repatriation of the Boers after the war, and in compensation for losses sustained by them in or in consequence of the war, and stating the name and address of every person who received any such moneys and on what account the same was received.
  844
  (Answered by Mr. Secretary Lyttdton.) I regret that I do not consider that I. should be justified in undertaking to have this statement prepared, the compilation of which would involve a great expenditure of time and money.

  Birmingham and Southwark Bishoprics Bill—Second Reading.
  SIR J. FRRGUSSON: To ask the First Lord of the Treasury whether he will endeavour to find a day before Whitsuntide for the Second Reading of the Birmingham and Southwark Bishoprics Bill.
  (Answered by Mr. A. J. Balfour.) Without giving any pledge, I may say that I certainly hope this Bill may be read a second time before Whitsuntide.
  MR. CHARLES McARTHUR: To ask the First Lord of the Treasury whether, having regard to the notices of opposition to the Bishoprics of South wark and Birmingham Bill which appear on the Paper, he will give a few days' notice before moving the Second Reading of this Bill.
  (Answered by Mr. A.J. Balfour.) I am always anxious to give ample notice of business which is to be brought before the House; but this Bill is in the second rank of Government measures, and I must not be understood as obliged to give long notice.

QUESTIONS IN THE HOUSE.

  6th V.B. The King s Liverpool Regiment, Lieutenant Creen's Case.
  MR. REA: I beg to ask the Secretary of State for War whether, in connection with the court of inquiry held on the 5th December, 1903. to consider the case of Lieutenant R. Creen of the 6th V.B. The King's Liverpool Regiment, he will give particulars of the information given to Lieutenant Creen, before the holding of the inquiry, as to its scope and the nature of the charges he would have to answer; what were the particulars of the charges which were made against Lieutenant Creen at the inquiry; what is the name of the officer stated

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  to have been called as a witness by Lieutenant Creen on his behalf; and whether officers of Volunteer battalions have a right to see the accounts of the expenditure of officers' subscriptions; and, if so, what procedure is open to them if such information is refused.
  THE SECRETARY OF STATE FOR WAR (Mr. ARNOLD-FORSTER,): Lieutenant Creen having submitted copies of correspondence on his case to the General Officer Commanding, who in turn submitted them to the War Office, the Secretary of State ordered a court of inquiry to investigate the subject of this correspondence. The actual instructions to the court were "To inquire into the circumstances which led to the Officer Commanding the 8th Regimental District having called on Lieutenant Creen to resign his commission, and to report thereon." From this it is clear that Lieutenant Creen did not require any special information. The officer called as a witness by him was Lieutenant Radford. In accordance with the rules of the corps, a balance sheet of the accounts, other than those dealing with public funds, and which include, among many items, officers' subscriptions, is prepared annually, audited by the finance committee, and posted in the orderly room; but there does not appear to be any rule under which individual officers can demand an inspection of the details of this account.
  MR. REAput a further Question, but Mr. ARXOLH-FORSTER said he knew nothing of the details. The case had been adjudicated upon by a competent court.

  Railway Couplings
  MR. BELL: I beg to ask the President of the Board of Trade if he is aware that the reports of the Interstate of Commerce Commissioners of the United States of America show that accidents from coupling and uncoupling vehicles on the railroads in the United States since the compulsory adoption of automatic couplings in 1893 have resulted in an aggregate reduction of 62,419 such accidents; and, if so, whether, in view of the fact that similar accidents in this country in the same period have increased
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  by over 2,000, he will use the power given to the Board of Trade by the Act of 1900, and make experiments with improved couplings with a view to selecting a suitable appliance to be adopted on the British railways which will diminish these accidents.
  THE PRESIDENT OF THE BOARD OF TRADE (Mr. GERALD BALFOUR,): In the suggested comparison between this country and the United States of America the hon. Member appears to overlook the fact that the couplings formerly in use in the United States of America were such as to oblige shunters to go between trucks for the purpose of attaching or detaching them, and did not allow a shunting pole to be used from outside as is the practice in this country. The apparent increase of accidents in the United Kingdom is, in the main, due to the change in the instructions for reporting accidents which was made by the Board of Trade in 1896; the number of fatal accidents from the cause referred to does not show an increase over a series of years, despite the large increase of traffic. It cannot, I think, be denied that railway service is less dangerous in this country than in the United States of America. The Department carefully watches the progress of invention of new methods of coupling, and the Inspecting Officers of Railways inspect, and are always ready to inspect, any promising invention. The railway companies have also made practical experiments with couplers and will continue to do so. I gather, however, that no invention has yet been submitted which promises to be suitable for general adoption; and I do not think the time has come when the Board of Trade could with advantage take the task of experimenting and selecting into its own hands.

  Irish Land Act Finance
  MR. CHARLES CRAIG: I beg to ask the Secretary to the Treasury whether, in view of the fact that when an advance is sanctioned under the Land Act of 1903. the only bank in which the amount advanced can be placed on deposit receipt, pending the Land Commissioners being satisfied with the title to the purchase-money, is the Bank of Ireland; that this bank has refused to give

  847
  a special rate for such deposits, and that the rate of interest allowed to depositors by the Bank of Ireland is one-half per cent, less than that given by the other great banks in England and Ireland, he will, by legislation or otherwise, abolish this monopoly of the Bank of Ireland, and give facilities for such lodgments being made with other banks.
  THE FINANCIAL SECRETARY TO THE TREASURY (Mr. VICTOR CAVENDISH,): The purchase-money paid into the Bank of Ireland pending distribution is not in the first instance placed there on deposit receipt; it must be invested after fourteen days in accordance with rules made by the Land Commission unless the parties themselves ask to have it placed in the Bank of Ireland on deposit receipt. Under the rules of the Supreme' Court of Judicature, Ireland, the deposit-receipts of banks other than the Bank of Ireland are not authorised securities for such a purpose. I am not aware that the Bank of Ireland allows a lower rate of interest to depositors generally than the other Irish banks do, though the other Irish banks appear to allow preferential rates in some eases while the Bank of Ireland does not. It would be highly inconvenient that the purchase-money should be paid into a different bank from that which keeps the accounts of the Land Commission and of the National Debt Commissioners; and I cannot undertake to propose any change in the law or practice governing the matter.

  Number of people engaged in Agriculture in Scotland.
  MR. EUGENE WASON: I beg to ask the hon. Member for North Huntingdonshire, as representing the President of the Board of Agriculture, if he will state what is the total number of persons engaged in the cultivation of the soil in Scotland.
  MR. AILWYN FELLOWES: The number of persons over ten years of age returned as occupied in agriculture in Scotland at the census of 1901, was 209,711, of whom 169.130 were males, and 40,581 were females.

  Board of Agriculture Assistant Inspectors.
  DR. FARQUHARSON: I beg to ask the hon. Member for North Huntingdonshire, as representing the President of the Board of Agriculture, whether it is intended to subject the assistant inspectors of the Board, who are graduates of a University, ex-officers in the Army and Navy, or who hold a diploma from one of the leading agricultural colleges, to a preliminary examination in dictation, writing, arithmetic, and English composition; and whether he will consider the advisability in the case of the assistant inspectors already appointed, who are either ex-officers, graduates, or the holders of a diploma, of testing their efficiency by examining them in the existing Acts and Orders of the Board of Agriculture which they have to administer.
  MR. AILWYN FELLOWES: It rests solely with the Civil Service Commissioners to decide whether, in view of the possession of qualifications such as those to which the hon. Gentleman refers, they will, in any case, dispense with any further literary examination as a condition precedent to the grant of their certificate. Full particulars regarding any such qualifications will be placed before the Commissioners in each instance.

  Shop Hours Bill.
  MR. JAMES REID: I beg to ask the Secretary of State for the Home Department when he expects to introduce the measure for dealing with shop hours.
  THE SECRETARY OF STATE FOR THE HOME DEPARTMENT (Mr. AKERS-DOUGLAS,): As my right hon. friend the Prime Minister said in answer to a similar Question yesterday,† the Bill is ready and it is hoped that there will be no long delay in introducing it; but I am unable to mention a date.

  Experiments on Dogs.
  MR. LOGAN: I beg to ask the Secretary of State for the Home Department whether
  See page 692.

  849
  his attention has been directed to Professor Sheäfer's experiments on dogs; and whether, seeing that 109 doctors entered a protest against the experiments as being cruel and useless, he proposes to take any action in the matter.
  MR. AKERS-DOUGLAS: Yes, Sir; the memorial to which the hon. Member refers has received my most careful consideration, together with all the circumstances of the case; but for reasons which I explained in answer to Questions last year I did not feel justified in disallowing the experiments.

  Nursing in Workhouses
  MR. SCHWANN: I beg to ask the President of the Local Government Board if he will state the cause of the delay in issuing the new Order relating to nursing in workhouses.
  THE SECRETARY TO THE LOCAL GOVERNMENT BOARD (Mr. GRANT LAWSON,): Since the Report of the Departmental Committee on this subject was made my right hon. friend has received a considerable number of representations on points relating to their recommendations. These representations have now been considered by the Committee, and he hopes shortly to be in a position to deal with the matter by a General Order.

  Congo Free State—Trade Regulations.
  MR. HERBERT SAMUEL: I beg to ask the Under-Secretary of State for Foreign Affairs whether he is aware that Mr. Alidina Visram, the leading British Indian merchant in Uganda, has been stopped by the officials of the Congo Free State from exporting a consignment of goods which he had purchased in that State; and, seeing that such action is a violation of the provisions of the Berlin General Act requiring freedom of trade in the Congo Free State, what steps the Government propose to take in the matter.
  THE UNDER-SECRETARY OF STATE FOR FOREIGN AFFAIRS (Earl PERCY,): No information on the subject has reached the Foreign Office.
  MR. HERBERT SAMUEL: Will the noble Lord make inquiries?
  EARL PERCY: I should have thought the person who complained would have communicated with the Foreign Office.

  Bonamargy Ruins.
  MR. SLOANI beg to ask the Chief Secretary to the Lord-Lieutenant of Ireland whether he is aware that the Ballycastle Rural District Council are desirous of handing over the custody of certain ruins at Bonamargy to the Board of Works; and whether, in accordance with the Ancient Monuments Protection Act of 1892, he will see this offer is accepted.
  THE CHIEF SECRETARY FOR IRELAND (Mr. WYNDHAM,): An application to this effect was made by the district council. Section 19 of the Local Government (Ireland) Act, 1898, enables a county council to become the guardians of a class of ancient monuments or structures, of which the ruins in question appear to be one. It appears to me that the district council should vest these ruins in the county council for preservation under the provisions of the enactment mentioned.
  MR. SLOAN: Will the right hon. Gentleman make representations to the county council to do this?
  MR. WYNDHAM: Yes, if the matter comes before me officially: but application to the county council should be made in the first instance by the district-council.

  Ballinasloe Lunatic Asylum—Charge against an Attendant.
  MR. SLOAN: I beg to ask the Chief Secretary to the Lord-Lieutenant of Ireland whether he is aware that an attendant named Kenny, of the Ballinasloe Lunatic Asylum, indicted injuries upon an inmate under his charge; and if, in view of the fact that the acting medical superintendent dismissed Kenny, who has since been fined by a magistrate in £5, he can say for what reason have the asylum committee reinstated Kenny.
  MR. WYNDHAM: The facts are as stated. Kenny was ordered to pay a

  851
  fine of £5 or, in default, to undergo two months imprisonment with hard labour. The appointment and dismissal of asylum attendants are vested in the committee without power of intervention on the part of the Executive. The committee, I understand, considered that the fine of £5, together with a caution which it administered to Kenny, was sufficient punishment. Should the committee insist on retaining the services of Kenny the Government will consider how far its action is consistent with the conditions upon which the Capitation Grant in aid of the maintenance of the insane is payable under Section 58 (2) of the Local Government Act, 1898.

  Ballinasloe Lunatic Asylum—Resident Medical Superintendent.
  MR. SLOAN: I beg to ask the Chief Secretary to the Lord-Lieutenant of Ireland if he can explain under what circumstances the committee of the Ballinasloe District Lunatic Asylum has appointed the junior medical assistant to be resident medical superintendent and refused the appointment to the acting medical superintendent: if he can say what were the superior qualifications of the junior medical assistant that the acting medical superintendent did not possess; and will he take steps that the appointment be not sanctioned until the merits of each case have been duly considered.
  MR. WYNDHAM: The appointment of resident medical superintendent of the asylum is vested by law in the asylum committee, but subject to the concurrence of the Lord-Lieutenant. The papers connected with the appointment in the present case are now before the Lord-Lieutenant.
  MR. SLOAN: May I ask whether, in view of the fact that this gentleman had been acting as superintendent of this asylum and was fully qualified, he will consider the advisability of making some representations in his favour to the asylum authorities so that he may not be refused the appointment because he acted injudiciously in the case mentioned in dismissing the attendant.
  MR. WYNDHAM: The power of appointment is vested in the asylum
  852
  committee, not in the Government. There is a certain power in the Government to veto the appointment, but only in connection with matters of qualification.
  MR. SLOAN: Will this case be considered by the Lord-Lieutenant?
  MR. WYNDHAM: Yes, on the grounds that I have indicated.

  Down County Court Judge and the Newcastle Voting Register.
  MR. CHARLES CRAIG: I beg to ask the Chief Secretary to the Lord-Lieutenant of Ireland whether his attention has been directed to the observations of the County Court Judge of Down at the last revision Court on the manner in which the officials had made up the Local Government register of voters for the town of Newcastle, in the county of Down, whereby numbers of the highest ratepayers have been disfranchised; and, if so, whether the Local Government Board will provide that the proposed changes in the local government of the town shall not come into effect until the 1st of January next, when a new register will come into force.
  MR. WYNDHAM: The observations of the Judge have not been brought to my notice, but I am endeavouring to obtain a report of them. I would point out, however, that an opportunity was afforded at the revision sessions to remedy any imperfections in the voters' lists. I am afraid the Local Government Board could not properly postpone the proposed constitution of Newcastle as a municipal town in view of the reasons urged by my hon. friend, but I will make inquiry.
  MR. T. W. RUSSELLinquired whether the proposed changes had been submitted to the ordinary rules, whether the opinion of the ratepayers had been taken, and whether the inquiry had been held by the Local Government Board.
  MR. WYNDHAM: I cannot answer that Question without notice.

  Sunday Hurling Matches in Ireland.
  MR. CHARLES CRAIG: I beg to ask the Chief Secretary to the Lord-Lieutenant of Ireland the following Question,

  853
  of which I have given him private notice: Whether he will take steps to prevent the playing of hurling matches at Blaris, near Lisburn, on Sundays, as Blaris is the centre of a strongly Protestant district where the playing of these matches on Sundays deeply offends the religious feelings of the inhabitants, and on what district, if any, the cost of the extra police drafted into Lisburn on Sunday last will be levied?
  MR. WYNDHAM: Whilst members of the Hurling Club are within their legal rights in playing near Lisburn on Sunday or inviting other clubs to Lisburn for the bonâ fide purpose of joining in the game, even though by so doing they should offend the religious susceptibilities of the majority of the inhabitants of the district, yet it is greatly to be regretted that some reasonable and amicable arrangement cannot be arrived at whereby the games might be played in a locality, and under conditions, less calculated to arouse opposition than those which exist in this particular instance. And I am not without hope that by the exercise of a little mutual forbearance, and by the intervention of the leaders of opinion on both sides, good feeling may be restored and the peace of the community maintained. At the same time, it must be distinctly understood that it is the bounden duty of the Executive Government to protect minorities in this as in every other part of Ireland in the legitimate exercise of their constitutional rights, even though such exercise should in this case, as in the case of street preaching, Party processions, and such like, arouse the hostility of the majority of the residents of the district. J ought, however, to add that should the attempt of minorities to exercise these rights be accompanied by a display of force, or by such other circumstances as are calculated to excite terror and alarm, or to endanger the peace and tranquillity of the neighbourhood, they thereby become members of an unlawful assembly and may be dealt with as such. The question of imposing the cost of extra police will receive further consideration. My desire is that all parties should co-operate to end the regrettable events which have, so far as I know, for the first time led to breaches of the peace in Lisburn The Government will
  854
  seek to avoid any action which might render it harder for either side to refrain from giving or taking offence. I have just received a telegram, and I am glad to say that the magistrates have passed the following resolution. "It is with great gratification that we learn that the club have resolve I not to have any further games on Sundays in this district. We regard this decision as deserving of commendation, and believe that their action will lead to the preservation of the peace." It is a matter of general congratulation, and I may say I join in that hope of the magistrates that their decision should not be regarded as a matter of triumph to anyone, but as a matter of general congratulation that they should waive their undoubted right in deference to views which they do not share.

  Defence Committee of the Cabinet.
  SIR CHARLES DILKE: I beg to ask the First Lord of the Treasury whether he continues to entertain the intention to propose a Vote for the Secret try or Staff of the Defence Committee of the Cabinet for which the First Lord of the Treasury is to answer and on which matters concerning both Army and Navy may be discussed; and, if so, when he expects to be able to give notice of such a Vote.
  THE PRIME MINISTER AND FIRST LORD OF THE TREASURY (Mr. A. J. BALFOUR,): Yes, Sir, I hope there will be an Estimate put down on this subject to enable a discussion to take place, but I cannot at present inform the right hon. Baronet when the date will be.
  SIR JOHN COLOMB: I beg to ask the First Lord of the Treasury whether any decision has yet been arrived at as to the formation of the small secretariat for the Defence Committee, as recommended in Part I. of the War Office (Reconstitution) Committee's Report and further referred to in the covering letter of Part III. in the statement that Part I. contained the principles of the changes advocated, and that the whole of these, with the exception of the formation of the small

  855
  secretariat for the Defence Committee, had already become operative.
  MR. A. J. BALFOUR: I think I have already by implication answered this Question. It is proposed there shall be a small permanent secretariat.

  Birmingham and Southwark Bishopric Bill.
  SIR J. FERGUSSONasked the Prime Minister a Question of which he had given private notice—whether he would endeavour to give a day before Whitsuntide for the Birmingham and Southwark Bishopric Bill.
  MR. A. J. BALFOUR: Yes. I noticed my right hon. friend had a Question on this subject among the unstarred Questions in to-day's Paper. I may at once say I shall certainly hope that the Second Reading of the Rill will be passed long before Whitsuntide, and I shall be greatly disappointed if it is not.

BUSINESS OF THE HOUSE.
SIR H. CAMPBELL-BANNERMAN: May I ask the right hon. Gentleman whether he has any information to give me with reference to the business for next week?
MR. A. J. BALFOUR: Yes, Sir. I left it a doubtful point yesterday whether the Second Reading of the Aliens Bill would be taken on Monday or Tuesday, it being an open question which of the two days should be devoted to the Budget debate. I am now in a position to announce that I propose to take the Second Reading of the Aliens Bill on Monday, and we shall proceed with the Budget debate on Tuesday.

PUBLIC ACCOUNTS COMMITTEE.
Ordered, That a Message be sent to the Lords to request that their Lordships will be pleased to give leave to Sir Henry Graham, K.C.B., the Clerk of the Parliaments, to attend to be examined as a Witness before the Committee of Public Accounts.—(Sir Brampton Gurdon.)

SELECTION (STANDING COMMITTEES).
Mr. HALSEY reported from the Committee of Selection, That they had discharged the following Member from the Standing Committee on Trade (including Agriculture and Fishing), Shipping, and Manufactures, in respect of the Savings Banks Acts Amendment Bill: Mr. Broadhurst; and had appointed in substitution: Mr. Batty Langley.
Report to lie upon the Table.

NEW BILL.
  CHARTERED SOCIETIES BILL.
  "To provide for the further protection of Chartered Societies," presented by Sir John Rolleston; supported by Mr. Fletcher Moulton, Sir James Woodhouse Mr. Alban Gibbs, Sir Francis Evans, and Mr. Hunter Craig; to be read a second time upon Thursday, 5th May, and to be printed. [Bill 160.]
BUSINESS OF THE HOUSE (SUPPLY).
Ordered, That the Committee of Ways and Means have precedence this day of the Business of Supply.—(Mr. A. J. Balfour.)

WAYS AND MEANS.
Considered in Committee.
(In the Committee.)
[Mr. J. W. LOWTHER (Cumberland, Penrith) in the chair.]

WAYS AND MEANS.

  INCOME-TAX.
  Motion made, and Question proposed, "That income-tax shall be charged for the year beginning the 6th day of April, 1904. at the rate of one shilling."—(Mr. Chancellor of the Exchequer.)
  MR. SYDNEY BUXTON: On a point of order, Sir, I understand that there was an agreement come to last night that there should be a general discussion on this

  857
  Resolution with regard to the Budget. May we take it that that is so?
  THE CHAIRMAN: Yes; I also understand there was a general agreement come to, and my assent was not withheld. Therefore, I presume that the discussion on the Income-Tax Resolution will be permitted to range over the whole subject of the Budget.
  MR. SYDNEY BUXTONsaid it seemed to him that there were three points in connection with the Budget, one of which was satisfactory, and the other two, he thought, were unsatisfactory. The satisfactory point was that the Chancellor of the Exchequer had announced his intention of maintaining the Sinking Fund. The unsatisfactory points were, the enormous expenditure for which the Budget provided and the methods by which the right hon. Gentleman proposed to meet the deficiency. Hon. Members particularly objected to the manner in which indirect taxation was being added to, and especially to the proposal to put an additional tax on tea. In making his arrangements for the coming year the Chancellor of the Exchequer had practically two deficiencies to provide for. He had to provide first for a realised deficiency of something like £5,500,000, and he also had to provide for an estimated deficiency in the coming year of £3,500,000, giving together a total deficiency of £9,000,000 for which he had to make provision in the coming year. He proposed to divide the deficiency into two parts. He practically borrowed the whole of the realised deficiency of last year, and he proposed further to meet the expenditure of the coming year by increased taxation. That was perhaps, a matter on which he might be congratulated. He (the speaker) confessed he was not exactly disappointed in finding that the Chancellor of the Exchequer did not intend to provide in any way, or, at any rate, only provided to a very small extent, for the realised deficiency of last year. As a matter of fact, the whole of that deficiency of over £5,000,000 had practically been taken from borrowings, and to that extent, of course, it had been added to the Debt, because the balances
  858
  were reduced. He confessed it was a serious matter that, in a year in which there was a remission of taxation to the extent of £10,500,000, they should have to go back and borrow a sum of nearly £5,500,000. It was also a serious matter that in the first year in which the Sinking Fund had practically been reconstituted and put on a peace footing they should have to borrow a sum of £5,500,000. That certainly was not a good start for the new Sinking Fund. The right hon. Gentleman, he admitted, proposed to provide for a small portion of the deficiency by carrying over a somewhat larger estimated surplus than was usual. The customary surplus had been exceeded in this case by some £300,000 or £400,000, but he was bound to confess that he thought that in this case the right hon. Gentleman had shown himself somewhat sanguine. He had based his proposal on the supposition that the estimates of revenue for the year would certainly be realised, and he had also acted as though there were not likely to be any Supplementary Estimates during the coming year. The right hon. Gentleman, with the sanguineness of youth, pointed out in his speech several items of our financial and trade position which made them feel that he had put his estimates as high as they ought to be, and at the same time they were driven to the conclusion that he would not obtain the revenue which he had estimated. As regarded the Supplementary Estimates, undoubtedly the right hon. Gentleman had been over-sanguine, because during the last ten years there had not been a single year in which there had not been presented a Supplementary Estimate, and unfortunately these Supplementary Estimates had increased in proportion year by year. The last two years had been productive of the, largest Supplementary Estimates ever known, and he feared that the right hon. Gentleman the Chancellor of the Exchequer would find that his idea that there would be no Supplementary Estimates this year would come to grief. But they were interested more especially in the coming year than in the finances of the past, and he thought it must have come to the country at large as rather a shock that, after two years of peace, and when they might have fairly hoped for a considerable reduction of expenditure, it

  859
  had been found necessary for the Chancellor of the Exchequer to come down to the House and ask for additional taxes to the extent of £5,000,000. That proved that our financial position was not so sound as it ought to be.
  They would, of course, congratulate the Chancellor of the Exchequer on the fact that he had the courage, at all events, to propose sufficient taxation during the coining year to cover his estimated deficit. But then the question arose as to the proportions which should be obtained from direct and indirect taxation respectively. He approved of the proposal in regard to the income-tax, indeed he rather regretted that the right hon. Gentleman had not gone further in that direction. He had, too, no particular objection to the in creased taxation to be placed upon tobacco, but he was bound to say that they would have to consider very carefully in the course of the forthcoming debates one point in regard to that increase, because the additional duty on foreign cigarettes carried with it a certain whiff of protection. The part of the Chancellor of the Exchequer's proposals, however, to which he most strongly objected was that which related to indirect taxation—the proposal to place an additional duty on tea. His objection was that there was too large; a proportion of new indirect taxation as compared with new direct taxation, and that the indirect taxation was likely to prove excessively burdensome in the case of the poorest of the poor. In regard to the income-tax they had the remission of last year for which no one was particularly grateful and which had proved a mistake. Indeed, the right hon. Gentleman the Member for Croydon had himself admitted that he would not have taken 4d. off the income-tax had he anticipated that there would have been a fall in the revenue. He took off, in fact, a penny too much, and had that penny not been taken off he did not think it was likely that the smaller deficiency which would then have arisen would have been provided for by an addition to the duty on tea. Another point which was rather remarkable in connection with the income-tax was that in spite of the addition of a penny to the tax in the current year the burden on the income-tax payer was estimated by the Chancellor of the Exchequer at
  860
  less for the coming year than it was for the past year. The Chancellor of the Exchequer last year received £30.800,000 from income-tax, and the amount estimated to be received this year from the income-tax payer was only £30,000,000, despite the fact that a penny was to be added to the tax. In regard to the tea duty the right hon. Gentleman had admitted that practically the whole burden would fall upon the consumer, and bearing in mind the fact that wages at the present moment were falling, that employment was scarcer, and that the general outlook was far from satisfactory, he did not think it was an auspicious time to put additional burdens upon the working classes in this way. He hoped that the Departmental Committee which was sitting in regard to the income-tax would enable those who were entitled to abatements to obtain them with greater facility than now, and that it would lead to an extension of the present system of graduation. With reference to the burden of indirect and direct taxation he had no hesitation in saying that he would have preferred to have seen an extra penny put on the income-tax rather than the additional duty of twopence upon tea. He was bound to say that he did not think the Chancellor of the Exchequer in his presentproposals was fairly apportioning the burden between direct and indirect taxation. Last year the duty on corn, representing £2,500,000, was taken off, while a remission of income-tax was made representing £10,500,000, and therefore he thought that indirect taxation this year should centainly have had the lesser addition made to it. Taking the figures for some years past he found that the gross annual burden of indirect taxation had been £61,000,000, while that of direct taxation had been only £57,250,000. The figures for the current year brought up the direct taxation to £59,750,000 and the indirect taxation to £63,500,000. These figures again proved that any change of taxation should have been in the direction of putting the addition on the direct taxation rather than the indirect.
  He now came to another aspect of the financial question, and that was the present position of the National Debt and of the Sinking Fund. The

  861
  Chancellor of the Exchequer had taken some credit to himself for maintaining the Sinking Fund during the present year, but he confessed that he did not himself see that the right hon. Gentleman had any alternative to doing that. It would have been a monstrous thing to have interfered with the Sinking Fund at the present moment when it had only just been restarted. During last year the reduction of the National Debt by the action of the Sinking Fund had not been so satisfactory as had been anticipated. The right hon. Gentleman the Member for Croydon, in introducing his Budget, said he anticipated that in the course of the twelve months the Debt would be reduced by £26,500,000—that was £6,500,000 through the operation of the Sinking Fund, £14,000,000 from the Transvaal, and £6,000,000 from the China Indemnity. Uufortunately, however, that anticipation had entirely failed. The Debt had been reduced by £8,000,000 only and of that sum £3,000,000 had come from the Transvaal and £5,000,000 from the Sinking Fund. He feared that at the present rate of progress the sanguine anticipations of the late Chancellor of the Exchequer with respect to the reduction of the National Debt would not be realised. All this showed that the question of the Sinking Fund required reconsideration. They could not expect the Chancellor of the Exchequer, in a year when indirect taxation bore £5,000,000 more of the burden than direct taxation, to reduce the Debt; but. taking into consideration the foundation on which the right hon. Gentleman the Member for Croydon based his £27,000,000 when Chancellor of the Exchequer, he (Mr. Buxton) thought that when the time arrived when there was a surplus, and reduction could take place, the reduction of the National Debt should have a prominent place in the right hon. Gentleman's consideration. The question of the reduction of the National Debt was very important indeed. The National Debt, before the war, amounted to something like £630,000,000, according to the Chancellor of the Exchequer it now, owing to the borrowings for war and other purposes, amounted to £798,000,000, showing an increase now of £168,000,000.
  We had also increased our annual capital expenditure from £4,000,000 at the beginning of the war to £10,000,000
  862
  now, and the unfortunate thing about that expenditure was that it was not only the first step that cost. One programme involved another, and it was quite clear that more money would have to be borrowed to carry out the new programme. This added to the capital expenditure every year. It might be necessary expenditure, but it was certainly not remunerative, and he was surprised that the right hon. Gentleman on a previous occasion should have rather turned upon the local authorities and their borrowings. Corporations might make the old reply. "What faults you find in me try to shun." Of the whole of this £10,000,000 there was only £800,000 which could be called remunerative. Then there came a year when the Sinking Fund could not amount to more than £6,000,000, and the Government were going to borrow no less a sum than £10,000,000, so that at the end of the year we should be £4,000,000 to the bad. A good deal had been said about the weakness of Consols, and what the Sinking Fund was going to do to raise the price of them, but he failed to see what £6,000,000 would do if they were going to put £10,000,000 on the market in order to obtain it. He did not expect the right hon. Gentleman to do anything towards reducing the Debt charges in the present year, but he submitted that it was a matter for the consideration of the Committee. It was a very discreditable thing that we should have these enormous annual borrowings for capital expenditure. In the old days the ordinary increase and elasticity of the revenue was sufficient for the ordinary expenditure. Since 1895 there had been an extraordinary elasticity of revenue, something like £26,000,000 a year, and yet that was not sufficient to meet the expenditure of the year. Not only had that amount been taken from revenue, but a sum of £168,000,000 added to the Debt. He was rather sceptical as to whether there would be any saving on the Navy Votes, though that might be the ease with regard to the War Office. He was one of those who thought there ought to be a reduction in the current year's Estimates.
  There was one other serious point with regard to the expenditure. For the first time for many years a Chancellor of the Exchequer had risen in this House and

  863
  made certain suggestions without saying a single word as to economy. Much as he marvelled at the speech of the right hon. Gentleman the other night, he did expect to hear something about economy, but not a single observation did the right hon. Gentleman make with regard to it. The efforts made last year in that direction weren ot great, but such as they were they did tend to reduce the National Debt.
  SIR JOHN GORSTsaid that he had heard the Budget statement of the Chancellor of the Exchequer with grave concern. The right hon. Gentleman had admitted a realised deficiency of £5,500,000 and a prospective deficiency of nearly £4,000,000, and yet he had ventured to propose new taxation only to the extent of £4,500,000. Of last year's deficiency £1,500,000 was left entirely unprovided for. But that was not all. In the Sinking Fund we had an unostentatious means of paying off debt, but in that ingenious device represented by the Army and Navy Works Acts, we had a surreptitious means of putting on debt and of increasing the nation's liabilities without the attention of Parliament being specifically drawn to the fact. In spite of the fact that the Sinking Fund was not to be touched, at the end of the year the country would be deeper in debt than it was now. Would the Chancellor of the Exchequer say how much debt would be paid off under the operation of the Sinking Fund, and how much fresh debt would be incurred under the Naval and Military Works Acts? The House ought to seek some prompt, real, and earnest remedy for the very grave and serious position in which the finances of the country now were. What expedient had the Government for making the national income and expenditure balance? He was glad that the Chancellor of the Exchequer had not gone through the commonplace form of urging general economy. Year after year for forty years he had heard speeches recommending generally public economy, but he had never known any of those speeches to do the slightest good. It was no use recommending economy without pointing to some specific part of the public service in which economy might be effected. He would
  864
  therefore refrain from any general recommendation of economy, and endeavour to direct attention to a particular branch of the public service where he believed economy was possible.
  No great reduction could be made in any department of the Civil Service. Small economies could doubtless be effected, but nothing could there be done which would really affect the financial position of the country. The only branch of the Civil Service in which there was a large sum to operate upon was the Education Department, and although he had always said that a great deal of the money voted for education was wasted, what was wanted was not that the amount should be curtailed, but that it should be expended in a more efficient and useful manner. The only branches remaining were the Navy and the Army. Naval expenditure had always been popular, and he did not believe it was practical politics to attempt any great reduction therein. Possibly the Naval Department had been corrupted to some extent by the large expenditure on the Army during the late war, and in consequence had been more than ordinarily extravagant, so that the Chancellor of the Exchequer, by putting pressure on the Naval Department, might be able to secure a reduction of a million or two. But it would be nothing substantial. The one Department of the State in which a real reduction could be made was the Army. We maintained a very extravagant force on a very extravagant scale. We had a volunteer professional Army, and we carried on the citizen defensive Army on the same expensive scale. As compared with other European nations we enjoyed a singular advantage in the matter of preparation for war, in that we had a great British Army kept in India, and a large number of professional soldiers maintained in this country to replace those in India, all at the expense of the Indian revenue. Those men in case of emergency could be diverted from India to any other part of the world. Why should not they be treated as our striking force, and the civilian defensive Army be organised on a cheaper and more economical system? By that means a really substantial reduction in Army expenditure might be secured. By such

  865
  a revolution in the kind of Army we maintained several millions of money might be saved and the finances of the country brought into a condition of solvency. The time had come when whatever Government was in power must seriously address itself to this question. Expenditure had gone up by leaps and bounds. The burdens imposed were as great as the people could conveniently bear. The increased tea duty would weigh very heavily on many poor people. The income-tax to some meant only the reduction of luxuries, but to a great number the extra penny would touch the actual necessaries of life. The Committee ought not, with a light heart, to impose these taxes, which could be borne only by the exercise of much patriotism and patience, without, as representatives of the people, setting themselves earnestly to work for the purpose of ascertaining the particular branches in which great reductions could be made. The Government could confidently rely on the support of all sections of the House in any attempt to lessen the expenditure of the country.
  MR. RITCHIE: I am sure everyone will agree with my right hon. friend as to the desirability of the Government directing their attention to the reduction of our enormously swollen Estimates. But the hon. Member for Poplar made an extraordinary observation. He upbraided the Chancellor of the Exchequer for not having indulged in the usual sermon on the subject of economy. I should be sorry if it became the practice for Chancellors of the Exchequer, in placing their estimates before the country, to refrain from expressing their own views as to the character and amount of the expenditure, because, although it may not have any immediate effect, I cannot help thinking that a forcible expression of opinion of that kind must have some influence upon those who are responsible for the Estimates. But what the hon. Member said was that it was the interest of the right hon. Gentleman to maintain expenditure. I have my own opinion as to some of the views held by my right hon. friend, but I should be attributing to him very unworthy motives if I suggested that he had any idea of bringing those
  866
  views into practice by means of unnecessary increases of expenditure.
  MR. SYDNEY BUXTONsaid he did not intend to cast any reflection in that sense, and he was sorry if his remarks had been so understood.
  THE CHANCELLOR OF THE EXCHEQUER (Mr. AUSTEN CHAMBERLAIN,): My interest in preventing waste is quite as great as that not only of any other Chancellor of the Exchequer, but of any Member in this House.
  MR. RITCHIE: I am sure any such declaration on the part of my right hon. friend is quite unnecessary. He would be unworthy of his high position if it were otherwise. Whatever views he may have on fiscal reform, I am satisfied that the main object of the Chancellor of the Exchequer is to reduce as far as he reasonably and properly can the burdens of the country. When my right hon. friend the Member for Cambridge University promised to point out a certain direction in which economy might be effected, I expected something novel, but I was disappointed. He simply stated what is obvious to all viz., that the main branch of expenditure in which economy ought to and can be effected is that connected with the Army. The economies in other Departments are extremely small as compared with what can be obtained in the expenditure upon the Army. We are obliged at a time of war to increase our forces, but somehow or other it seems impossible, after the emergency is over, to reduce the number of our Army to what it was before. No one expects that this reduction can take place immediately, but I have great hopes, from what has been said on the Front Ministerial Bench, that hon. Members will not be disappointed in the hope and expectation that reductions will be made, and speedily made, in the expenditure upon the Army.
  The hon. Member for Poplar made some criticisms, which I have no doubt he will expect me to deal with. He has spoken about the inadequacy of the Sinking Fund. I justify the proposals which I made, as I justified them on more than one occasion last year, when

  867
  I said that if my expectations were realised, not only would there be a large and substantial Sinking Fund at the end of the last financial year, but in the course of about five years we should have a Sinking Fund enormously greater than ever we did before in proportion to the Debt. As far as my expectation on the 31st of March last is concerned, I do not think it has failed of realisation. The amount I anticipated was £6.600,000, and it actually stands at £6,510,000. [An HON. MEMBER: What about fresh borrowings?] I am not talking about borrowings. The hon. Member opposite was talking about what my expectations were; and the particular point that I take up is the fact that my estimate on the 31st of March has been realised, with the exception of £90,000. That difference is accounted for by the fact that we did not obtain our first contribution from the Transvaal Loan. Is there an hon. Member who would suggest, or attempt to justify the launching of a £10,000,000 loan in the existing state of the money market? We have got something more than the mere obtaining of this money to consider. We have to consider, also, the position which the Transvaal would have occupied in the money market by endeavouring to borrow under the state of things which existed up to quite recently. It would have been most unfortunate if we had been compelled, in order to obtain this money, to go to the market and obtain upon very bad terms the first loan of the Transvaal. That would have been a very bad commencement for the new colony of the Transvaal. Remember what took place between my Budget estimate and the beginning of this year. Consols, which at the time of my Budget were 90, in January last had fallen to 86 and have fallen lower since, although they are much better now. It would have been simply monstrous and ruinous on our part to have attempted to obtain the first contribution from the Transvaal, having regard to the unfortunate change in the money market. It is a mere question of deferring, and I hope, having regard to the greatly improved state of the money market, that the time is not far distant when that loan will be raised, and we shall receive
  868
  payment. It is a mere question of a few months here or there, and although the result is that we have been deprived of a certain small amount of interest, I am satisfied that all those who understand finance will agree that it would have been folly to put pressure upon the Transvaal to issue that loan. The hon. Member said we had obtained only £3,000,000 instead of the £4,000,000 from the Transvaal which I anticipated. I hope my right hon. friend the Chancellor of the Exchequer will not lose sight of that extra million, but bring pressure to bear upon the Transvaal Government to secure it. With regard to future prospects, it is true that I said if my proposals for the Sinking Fund were adopted and maintained they were sufficient to pay off the National Debt in fifty years, but I never said that the Debt would be paid off. I never anticipated any such millennium. While we are bound to maintain a very large Sinking Fund in proper proportion to the amount of the Debt, we ought not, at a time of high taxation, to make undue calls on the taxpayer in order to obtain an unnecessarily large Sinking Fund. Let us maintain the Sinking Fund at a proportion sufficiently large. The proportion which would be secured on my plan is much greater than any Sinking Fund has attained before, and I have no doubt that the provision I have made is one which is ample.
  The hon. Member opposite was very severe upon us in regard to indirect taxation, and asserted in strong and definite language that the indirect taxpayer was being called upon for larger contributions than he ought to make to the taxation, and a much larger contribution than he had made before the war. Let us see how that is. I have no doubt that the hon. Gentleman has added the coal tax to indirect taxation.
  MR. SYDNEY BUXTON: Certainly.
  MR. RITCHIE: I maintain that he ought not to have done anything of the kind. If the coal tax has had any effect at all upon the price of coal it has lowered it to the consumer in this country, because if the coal tax reduced our

  869
  exports the home supply would be proportionately increased. Therefore if the coal tax has had any effect upon the taxpayer it is not the effect which the hon. Gentleman has stated. [An HON. MEMBER: It is indirect taxation.] Are we to understand that the hon. Gentleman does not mean the burden of indirect taxation upon the consumer? The whole argument has been the effect upon the indirect taxpayer and therefore I exclude the coal tax. I assert that it has always been the case that in regard to expenditure for war purposes the burden falls more heavily upon direct taxation. The income-tax is the first tax which is increased and drawn upon for war expenditure, and it has always been considered as a reserve; for war purposes. It is indeed, and has always been so considered, a special implement of war. It has been argued that the indirect taxpayer should not be left in a worse position then he was before the war. Let us compare the Budget estimates on this question rather than the produce of the estimates. I will compare the Budget estimates of 1899–1900 with 1903–4, which include the Budget estimates before the war and after. In 1899–1900 the amount of indirect taxation was £52,597,000, being 52·1 per cent.; the amount of direct taxation in the same year being £48,366,000, or equal to 47·9 per cent. In 1903–4 indirect taxation was £66,090,000, or 50·9 per cent., and direct taxation £63,730,000, or 49·1 per cent. Therefore the direct taxpayer before the war paid 47·9 per cent. and after the war 49·1 per cent., being 1·2 per cent more after the war than before the war. Now let us see how the indirect taxpayer stands. Before the war he paid 52·1, and after the war he has to pay 50·9 per cent., being 1·2 per cent. less. The total yield within the war period of indirect taxation was £14,000,000 less, and the direct taxation yielded a like sum more than in the period of the 1899–1900 Budget. The figures, therefore, of 1902–3 indicate that on direct taxation the taxpayer is entitled to special relief to a very considerable extent yet in order to bring it down to the level at which the proportionate relief of direct and indirect taxation ought to begin to operate. So far
  870
  as the criticisms of the hon. Gentleman opposite is concerned, I think he will find, if he examines into the figures, that they were hardly justified by what had taken place, and that the indirect taxpayer is now in a more favourable position compared with the direct taxpayer than he was before the war.
  Some rather severe criticisms were made on the estimates for last year, and I think it is only due to those who advised me in the matter of the estimates which they submitted to me, and which I submitted to the House, to say that they were based on thoroughly sound and careful considerations. I hope the Committee will pardon me if I, for a few moments, detain them on that particular subject. It is only fair to those who have always been so extremely careful, and, as a rule, so very correct, that I should make the statement I have now to make. The Customs estimates for the year, as everyone knows, are based first of all on the payments into the Exchequer of the previous year. In 1902–3 there were certain circumstances which greatly affected our calculations for the following year. The revenue for 1902–3 was affected by anticipations and back-wardisations to the extent, it was estimated, of no less than £1,600,000, and there was also an allowance which had to be made for pre-Budget contracts for coal amounting to £100,000. The natural growth of the Customs revenue, instead of being taken for the year 1903–4 at the percentage of growth at which it was usually taken, 2½ per cent., was only taken at the moderate percentage of 1½ per cent. And so with regard to the Excise. The revenue from spirits came in very freely up to 31st December, 1902. It was adversely affected in the March quarter by delay in the clearances in the hope that the war 6d. might be taken off, and this, in the opinion of the Excise authorities, justified an increase in the spirit duty of £450,000. Beer had shown an increase for 1901–2 in three out of the four quarters of the year. It was only deficient in the September quarter, and that was attributed to the cold summer of 1902. This justified an increase of £150,000. The estimate for the death duties last year was £555,000 less than for the year 1902–3, and the reason for the reduction in the estimate was that

  871
  there had been a special effort made in 1902–3 to get in outstanding duties. The death duties would unquestionably have realised the sum anticipated if it had not been for the very large fall in Consols, which dropped from 90 to 85–6, and in other securities. Stamps were estimated for at a small increase of £200.000. In my opinion that estimate was absolutely justified. We hoped there would be some revival in trade, but that hope was not realised. So that a consideration of all the circumstances, most of which took place in the last half of the financial year rather than throughout the whole of the year, could not have been foreseen and allowed for in the estimates. I said, on my responsibility, that I do not think either the Customs or the Inland Revenue authorities, on whose advice the Chancellor of the Exchequer must mainly depend, are to blame for being too sanguine. The after effects of the war might have had more allowance made for thorn, but it is very easy for us to be wise after the event. I am sure that, in bearing testimony to the extraordinary correctness, as a rule, of the estimates which are made by both the Customs and Excise authorities, I am only saying that with which every one who has any knowledge of the manner in which these estimates are framed will agree, that it is not wonderful that occasionally a miscalculation is made and that it is quite extraordinary that the calculations are so good as they are, as a rule. I am sure the Chancellor of the Exchequer, in presenting to the Committee the proposals he has made, ha6 acted upon sound and wise principles.
  SIR BRAMPTON GURDONsaid he had on previous occasions urged the Chancellor of the Exchequer to place an additional tax on cigars, and he welcomed the proposal now made to tax cigarettes. He sincerely wished, however, that the right hon. Gentleman had not confined the tax to foreign cigarettes, not only on account of the flavour of protection which was thus given to it, but because the whole House wished to stop the pernicious practice of small boys smoking cheap cigarettes. The Chancellor of the Exchequer had suggested that these cigarettes already paid duty on the
  872
  tobacco. He himself had very great doubt whether cigarettes which were sold at ten a penny paid any duty on tobacco at all. He did not believe that they: were made of proper tobacco, but of cigar ends which were picked up in the streets. He hoped the Chancellor of the Exchequer would remember that the tobacco revenue was a very delicate one, and that there was a point at which smuggling began. He could not make any objection to the extra penny on income-tax, because he was one of those who last year thought that the Chancellor of the Exchequer's estimates were over-sanguine and that the-penny ought never to have been taken off. He very much regretted that an additional duty had been laid on tea. As he believed tea was almost invariably sold in bond, he could not conceive that it passed the wit of the Inland Revenue to devise some means by which an ad valorem duty might be placed on this commodity. That would do away with one of the great objections to the tax. He commended the suggestion to the consideration of the Chancellor of the Exchequer. He thanked the right hon. Gentleman for having included in his statement a reference to the expenditure in connection with loans for works. He believed that system was initiated in the time of Lord Palmerston and that it was a very evil form of finance. They had already been told that what had been paid off the Sinking Fund had been counterbalanced by large loans. He hoped the Public Accounts Committee would have an opportunity of calling attention to this matter, and that the House would give it careful consideration, because he thought these loans were dealt with in a way which was altogether illusory, and that they deceived themselves as to paying off debt while they deceived the country as to the total expenditure of the nation. He believed the proper way to pay off debt was to take for that purpose the surpluses over expenditure. When he was a young man at the Treasury the Chancellor of the Exchequer always estimated income at the minimum, and, that being so, he generally got a surplus, which was applied to the reduction of debt.
  The right hon. Gentleman the Member for Croydon had said with reference to

  873
  the Transvaal payment that it was a mere question of deferring it. He could not allow for a moment that it was a matter of deferring it. If the Transvaal had paid it this year they would have been able to use it very advantageously in paying off debt. This was a question of taking money out of our pocket and putting it in to the pocket of the Transvaal, but as he never expected that we should receive a halfpenny of that money it did not make much difference one way or the other. It had always been said that if there were a great European war we would come out of it all right, because we held the purse. But that no longer held true. He found that since the year 1900 rates and taxes together had increased 50 per cent. He knew that country people were taxed and rated so high that they had hardly any income left. It followed that while it was impossible to raise more from taxation, more money could not be raised by way of loan except on almost impossible terms. It was no use for hon. Members to talk of economy in the abstract, while each was, on almost every subject, in favour of more expenditure affecting his own constituency. Hon. Members insisted that public servants should have £1 a week wages, while probably they were paying their own men only 15s. a week. He hoped that if the reaction in favour of economy spoken of by the right hon. Member for West Bristol were to come, it would come early.
  MR. ELLIOTsaid they had all listened the other day to a singularly lucid statement from the Chancellor of the Exchequer—nothing could have been more lucid. Yet most credit was due to the right hon. Gentleman, he thought, not for the financial genius he showed, but for the morality. He praised the right hon. Gentleman's morals even more highly than he praised his financial genius; for after all, when the income-tax stood at 11d. there was no great difficulty in adding a 1d. and making it 1s., and when the tea duty stood at 6d., it required no singular ingenuity to add 2d. and ask the House of Commons to agree to an 8d. tax. Nothing could be simpler, and he was one of those who thought the Budget was all the better for
  874
  being simple. What they wanted was not so much ingenuity as simple, straightforward honesty. The right hon. Gentleman had no doubt a difficult situation to deal with, and it was his duty to explain why it was the bill the country had to pay was such a heavy one, and why the revenue was so much smaller than was anticipated. The right hon. Gentleman did his best, but he felt that the speech was remarkable not alone for what it contained but for what it omitted. In the Budget Bill they found the collective fiscal mind of the Government at the present moment, and it had been usual for the Chancellor of the Exchequer, when he introduced a Budget Bill, to give some sort of oration as to the fiscal position in which the country found itself and as to remedies—to advise the country, in fact, as to the position in which it stood, and as to the direction in which the country ought to look to better its position. He found nothing of the kind either in the Bill or in the speech of the Chancellor of the Exchequer. In the Bill they had the right to look for the fiscal conclusions of the Government, and in the introductory speech they had the right to look for the reasons upon which those conclusions were based. Well, the Bill was a good free-trade Bill; it resembled in that respect the Bill of last year. The hon. Gentleman opposite had said, not inappropriately, that with regard to the tobacco duties there was a certain whiff of protection, but that ' whiff was so slight that the sternest of them could hardly be excited, it was a very small thin edge of the wedge. But was it right, when they considered the fiscal proposals of the Government and the Chancellor of the Exchequer, to exclude altogether from their attention views which had been put before the country of another kind?
  There was the corn tax, for instance. There was a reference to that tax in the right hon. Gentleman's speech, but it was a very passing allusion. That tax had been advocated lately, and had been made the basis of a great agitation throughout the country it had been supported by one statesman of pre-eminent power and standing; it had had the most cordial and hearty support of the hon. Member for Sleaford; and it was notorious that the policy of

  875
  renewing the corn tax had been adopted by Conservative caucus after caucus, and by a large number of Members on that side of the House. Well, the Chancellor of the Exchequer said nothing about the corn duty, and the Resolutions which were to be the foundation of the Budget Hill said nothing. The corn duty had gone and it had gone for ever, Whatever might have been thought possible when it was suggested as a mere registration duty, and fixed at a low sum which should not be altered—and he thought something was to be said for it then—it now occupied a new position in the eyes of the country, because it was the acknowledged first step which was to lead to a system of barefaced protection. His right hon. friend the Member for Sleaford, who was a keen and zealous supporter of the views which had been pressed forward in the country, and which supporters of the Government had professed their willingness to support, would, he hoped, frankly state the disappointment he and his friends must feel at the fact that neither in the speech of the Chancellor of the Exchequer, nor in the Resolutions, was there an atom of support given to the proposals which had been advocated so powerfully throughout the country. The position was a most extraordinary one. That House, after all, was the place where fscal proposals were best understood, considered, and debated, and it was the proper arena, if protectionism was to be resorted to, to increase the profits of our home producers.
  He marked with interest that the Chancellor of the Exchequer, in tracing the causes of the diminished revenue, while he rightly referred to unfortunate seasons and to the depression in the City and its effect on stamps, death duties, and so forth, did not refer to that cause which in the country had been advanced as one of the principal causes of our sufferings—namely, the unlimited extent to which commodities had been poured into this country untaxed, which, it was said was ruining our native industries. Again, in that respect the free-traders had scored. It seemed that to arguments which were used in the country over and over again, although repeatedly shown up, the atmosphere of the House of Commons was somewhat uncongenial. Indeed, it
  876
  was not an atmosphere, apparently, in which a protectionist found it very easy to breathe. The atmosphere was not likely to be any different six months or a year hence. The country was looking into these questions for itself, the different classes were looking into them, including the great working class. It was easy to understand that particular industries or trades might thrive by the exclusion of competition, but that was only the first and superficial view which struck the mind, and the public mind had now got beyond that. They were looking to the question how far, not this or that employment, but the community as a whole would be injured or benefited by these proposals to tax our imports. These arguments had been used again and again in this country, and that being so, he would like to hear these views expounded in the House of Commons.
  THE CHAIRMAN: The hon. Gentleman is not now discussing any of the matters contained in any of the Resolutions before the Committee. He is dealing with proposals that may or may not be contained in the Budget a year or two years hence. That opens up a very wide question, and I do not know how I am to restrict debate to the present general financial position of the country if the hon. Gentleman is going to roam at large over the possible fiscal system of the future.
  MR. ELLIOTsaid the introduction of the Budget had always been an occasion on which the Chancellor of the Exchequer not only took stock of the existing financial position of the country, but looked forward into the future. That was why he ventured to deal with the fiscal question. He thought, therefore, the Budget and the Budget speech were most important because they disclosed what was in truth the fiscal mind of His Majesty's Government. The Chancellor of the Exchequer had done well in very difficult circumstances, and had taken the right course in making his Budget simple and straightforward. Nothing was to be gained by making general complaint of extravagance. There was a good deal of language used

  877
  in the House which seemed to indicate that a man felt he was a true economist by complaining when the time came for him to pay the bill. Years ago economy had real and staunch allies in the House of Commons. But his experience at the Treasury, short as it had been, strongly enforced the opinion which he had already held that the House of Commons was itself the cause of extravagance. Members who talked most about the necessity for economy were the very men who proposed or supported popular schemes for increasing the wages of Government servants or feeding school children out of public funds. These were admirable objects, and had a great deal to recommend them, but the continual enforcing of claims of this kind did not tend to economy. It seemed to be generally agreed that there should be a reduction in Army expenditure. That expenditure was undoubtedly very large, and he should be delighted if a sufficient and efficient Army were to be obtained at a decreased cost. But it was not so long ago since we had found that our Army was not at all too large or too powerful, and as he was not one of those economists who when the boot pinched said that the dangers of the South African War were unexampled and were not likely to arise again, he hoped that if what was called the standing strength of the Army were reduced it would still remain an Army capable of a rapid and wide increase of strength in times of emergency. He congratulated the Government mainly upon this, that at a period of great trouble, when fiscal doubts and difficulties were seething among politicians, they had come forward with an honest, straightforward free-trade Budget.
  MR. BUOADHURST: said he was simply astonished that afternoon to hear the statement of the right hon. Gentleman the Member for Croydon as to the proportion of the remission of taxation between the direct taxpayer and the indirect taxpayer. The right hon. Gentleman made a speech at Croydon recently, in which he showed the direct opposite, and urged that the indirect taxpayer, by the remission, was something like £7,000,000 to the bad as against the direct taxpayer. With regard to the Committee appointed to deal
  878
  with further adjustments and exemptions from income-tax, the ex-Chancellor made a promise last year that there should be a Committee appointed to inquire amongst other things as to further abatements of taxation on incomes under £400, £500, and £700. When the Chancellor of the Exchequer was making his speech the other day, he understood that that would be a part of the reference to the Committee which he was about to appoint. But the ex-Chancellor of the Exchequer also made a further remark of great importance to that class of the community who paid income-tax on their little incomes in the form of dividend deduction, made before the money reached them. People with an income of £10 or £20 a year from that source had sums deducted from their cheques, and they had no ready and direct means of obtaining the repayment.
  MR. AUSTEN CHAMBERLAINsaid this matter was mentioned by him the other day as one of the points included in the reference made to the Committee.
  MR. BROADHURSTwas very pleased that this was so. As a further suggestion he said he would like to see some scheme initiated by which any person who was clearly entitled to that restitution should be able to obtain a form at the nearest post office, which would be easily intelligible to the meanest understanding, and to swear before the nearest magistrates the truth of his declaration, and post it in a supplied envelope direct to the Inland Revenue Commissioners, and thus get the money back speedily, and without much trouble. The present system was most cumbrous and technical, and there were very few but professional people who could really master the difficulties of filling in the forms before the regular declaration could be made for the return of the money. He understood the Chancellor to state that there was no precautionary measure against the issue of loans applied for by a local authority. On inquiry the right hon. Gentleman would find that precautions in this respect did exist. The Local Government Board made special inquiries and ascertained the feeling of the ratepayers of the locality before they gave their sanction. But he could not see why large places, such as Manchester. Glasgow

  879
  and Birmingham were to be exempt from the suggested precautions.
  MR. AUSTEN CHAMBERLAIN: I said I was considering whether the granting of loans by the Public Works Loan Board that was using the credit of the State might not be further restricted—not restricted to the big towns, but to the smaller places which had less means of their own to secure credit.
  MR. BROADHURSTconsidered the large authorities were in as much danger in this matter as the smaller authorities. Birmingham, Manchester, and Glasgow, could go into the open market and raise their own loans.
  MR. AUSTEN CHAMBERLAIN: That is what I want them to do.
  MR. BROADHURSTsaid it was impossible for a town of 25,000 people to go into the market and raise a loan, and yet these small places stood as much in need of aid from the Public Works Loan Commissioners as large places. The money these small places spent generally went in procuring a better water supply and open spaces, and this was for the welfare and betterment of the State because it improved the health of the people and increased their wage-earning capacity. He thought he read in the Chancellor's warning, an indirect attack upon municipal trading, which was such a bugbear to a certain class of professional people. If municipal trading was to be attacked let it be done openly, and let it apply in equal proportion to all communities, whether large or small. He thought the taxation on cigars and cigarettes would be received with considerable favour. He presented a petition some time since to the Chancellor asking him to deal with cigars as he had done. He did not endorse the prayer of the petition, but it was signed largely and influentially, and he certainly could not undertake to vote against the Chancellor's proposals. But he doubted whether the tax on stripped leaf tobacco was wise. He had received a telegram from an expert in the tobacco trade in Leicester pointing out that the sixpenny Havanna cigar paid only 15 per cent. duty on its cost, whereas shag tobacco paid 600 per cent. Obviously,
  880
  this was unjust to the labourer who smoked shag tobacco. Some years ago The hon. Member for West Bristol promised to consider some scheme for taxing tobacco and tea ad valorem and certainly it was an unjust tax when levied on weight, as it was now. The argument that applied to the taxation of the better class of tobacco equally applied to tea. Although the case presented by the Irish representatives might be quite true, he doubted whether there were not thousands of agricultural labourers in this country and casual workers in our streets who relied upon tea as an article of consumption and an encouragement to appetite, as did the Irish labourers. Tea and tobacco should be taxed according to their value, and if that were done, a considerable cause of justifiable complaint with regard to those two taxes would be removed. He hoped that the Chancellor of the Exchequer, after this Budget had been passed, would go thoroughly into these subjects, and that next year he would bring his genius and originality to bear upon them.
  MR. GIBSON BOWLESas an earnest student of finance, congratulated the Chancellor of the Exchequer both on the manner and on the matter of his speech. The Budget had the great merit of being simple—probably the old man who smoked, and the old woman who drank tea, would say it was not only simple but brutal. BUT it was simple, and also orthodox. There was no trace of scientific taxation about it, for the little matter of the tobacco stem was so trifling as to be unworthy of attention. The right hon. Gentleman had had a difficult task to perform, for he had a realised deficit to meet from last year. He might remind his right hon. friend the Member for Croydon that last year he warned him that he was overestimating his revenue. So it had turned out. though it might be urged in excuse that it was becoming increasingly difficult to estimate revenue with the accuracy of former years—in the first place because the revenue was larger and the margin of error therefore greater, and, in the second place, because there were certain dangerously high taxes which in case of a fall in consumption

  881
  or in price of securities meant very large differences. The difficulties of the Chancellor of the Exchequer had been further added to by the practice of introducing large Supplementary Estimates in which this Government had been a great and regular offender. Those Supplementary Estimates for the expired year were no less than £7,800,000, although by good luck they had been relieved to the extent of £3,500,000—relieved, not really but only as regards the nominal sum voted by the accidental excess of the Appropriations in aid. There was no way by which a realised deficit could be dealt with, except that of taking it out of the balances or of adding it to Debt. The right hon. Gentleman appeared to have adopted both methods. As far as he understood the position, there was a balance from overborrowing for the late war of £2,888,000, which enabled the Chancellor of the Exchequer to advance £3,000,000 to the Transvaal and the Orange River Colony. But that was borrowed money, and when repaid by the colonies it still remained borrowed money, and being overborrowed should find its way back to the Debt. The right hon. Gentleman further proposed to replete his balances by £1,000,000 derived from unclaimed dividends. With regard to the remaining £1,500,000 of deficit, the Chancellor of the Exchequer expected to get £730,000 surplus on his Budget, and the remaining £770,000 he left unprovided for. Now the £3,000,000 was admittedly Debt money, and he contended that so also was the £1,000,000 from unclaimed dividends. The nature of the Funded Debt was that the State bound itself to pay nothing except the interest; they were not bound to return the principal to the creditor; all they undertook was to pay him a perpetual annuity of a certain amount. Therefore, if by negligence or death the Exchequer were relieved from the payments of interest, that relief was a relief of, and should go as part of, the Debt. He submitted therefore, that if £1,000,000 were taken from unclaimed dividends—a perfectly fair thing to do—a corresponding amount of debt should be extinguished; the Exchequer had no right to treat that money as revenue. As to whether or not the whole of the diminution in Treasury balances was debt he was not so sure.
  882
  In a sense, if one's balance at the bank increased one's debt diminished, because there was a larger asset against it, and vice versa. But only in a sense. A Treasury balance was a most strange, evanescent, and uncertain thing; it had no certain foundation; it received additions from the most diverse sources; it was depleted for the most diverse purposes; it was always varying; and sometimes, quite accidentally, and, so to speak, momentarily, as at this moment, it was £1.000,000 or £2,000,000 short of what it should be. Therefore, he thought. it was hardly sound finance to say that every addition to the balance represented a diminution of the debt, or that every diminution of the balance meant an increase of the debt. It could not be denied, however, that £4,000,000 of the £5,500,000 of realised deficit were provided for by intercepting moneys due to the Debt, and therefore by what was practically an increase of the Debt, that £730 000 of it was provided for by expectation of the present year's revenue, and that a sum of £770,000 was left unprovided for in any way whatever. Moreover, he would remind the right hon. Gentleman that the balances were really too low at present. In 1898 they amounted to £10,900,000. in 1899 to £9,000,000, in 1900 to £3,500,000, in 1901 to £5,500,000, in 1902 to £8,500,000, and in 1903 to £6,600,000, but now they were only £4,200,000. Therefore, considering the large increase of revenue and expenditure and the consequent larger area over which the balances had to be used, the amount was too low.
  Then there was the prospective deficit. The Exchequer expenditure of £142,800,000, with which the Chancellor naturally dealt, was not the whole of the expenditure. There was in addition the expenditure for local taxation intercepted and not paid into the Exchequer, or out of it. amounting to £10,000,000, and another £10,000,000 for Appropriations in aid, both of which items were really expenditure. The real total expenditure was therefore in all £162,800,000. But he would take the right hon. Gentleman's figure of £142,800,000. That left him with an estimated deficit for 1904–5 of £3,800,000. He congratulated the Chancellor of the Exchequer on

  883
  having resisted the temptation to suspend the Sinking Fund, though he held that that was not enough, and that it ought to be increased. And now as to the new taxes. The addition of a penny to the income-tax was one for which almost everybody must have been prepared. The income-tax payer was a patient, burden-bearing creature, who would not say anything, so there would be no trouble on that score. It was true that he, wrote letters, but they need not be answered. He had mentioned the income-tax mainly for the purpose of protesting against a shocking doctrine and fallacy suggested by the right hon. Gentleman the Member for West Bristol, who had suggested that the income-tax might be graduated. Graduation was impossible, and both the right hon. Gentleman and the Chancellor of the, Exchequer knew it. One enormous advantage of the tax was that, with regard to the greater part of it, it practically levied itself, because it was deducted from all dividends before they were paid. But a graduated income-tax could not be so levied. For that would involve different rates for different incomes instead of all deductions being made at one rate as at present. It would be impossible to continue the present system of deduction if before the tax was levied the income of the investor had to be ascertained. He was prepared, moreover, to contend that it would be grossly unjust to graduate the income-tax, if for no other reason than this, that the estate, duties were professedly and avowedly put on because of the impracticability of such a proposal. The graduation was brought in at the man's death, because it could not be arranged during his life. Further, such graduation would be contrary to public policy. In his opinion the income-tax should be generalised, and it could then be reduced. At present, in consequence of exemptions and abatements, less than one-half of the incomes of the country were rated. If all were taxed the income-tax rate might be halved and produce the same revenue. The exemption for, or abatement on, some incomes meant shifting the burden on to the others. He did not believe any taxpayers in the country wished that; he believed the poor as well as the rich were ready to pay their fair share. It was merely a
  884
  question of devising a convenient method of levy to reconcile all to it. Moreover, a generalised income-tax would enable us to relieve those who paid it of other and far heavier burdens. For the income-tax cost very little to levy, whereas other taxes cost a great deal, and the cost of levy had to be added to the tax and paid by the taxpayer. The increase of 30 per cent. on the tea duty brought that duty up to over 100 per cent. ad valorem, and that, would no doubt fall hardly on the old woman who drank tea. He thought tobacco was a more risky venture on the part of the Chancellor of the Exchequer, and he was not sure that before he had done with this Budget he might not find it advisable to modify the proposals he had made with regard to it. He must here ask a question as to a matter which seemed to have escaped attention. The Resolution proposed dealt only with the permanent duty imposed by the Act of 1898, but there were temporary duties imposed by the Finance Act of 1900. Did the right hon. Gentleman intend to leave the additional duties he had imposed as temporary and annual duties, or did he propose to make them permanent. If he intended to make them permanent he should object, because he had the strongest objections to putting in the hands of the Government as permanent duties those duties which had hitherto been only temporary. The average value of cigars per lb. brought into this country was 11½d., and a duty of 6s. on that amounted to 600 per cent. Therefore, whenever an average man smoked an average cigar, he would in future have practically to give six cigars to the Chancellor of the Exchequer. That was dangerously high, and must act as an encouragement to the smuggler. Smuggling was still regarded by many as a sport, and to this day many called it by its old smuggling name of free trade. After a political meeting in the New Forest near the Beaulieu River, an ancient labourer said to him. "I'm glad you are for free trade, sir. I have been for free trade all my life—many's the cargo of tubs of French brandy I've run up this very river."
  And now as to the Debt and the Sinking Fund. The right hon. Gentleman the

  885
  Member for Croydon said truly that the whole of the amount by which the Debt was reduced this year was £6,500,000, which very nearly approached to his estimate of £6,600,000, but he forgot that the only part he was responsible for, or could claim any merit for, was that which was represented by the new Sinking Fund, and that was less than £1,500,000. That was the only part in which the right hon. Gentleman the Member for Croydon had had any share. The present fixed charge was £27,000,000, which meant about 3½ per cent. of the dead weight debt of £760,000,000, but that was not enough, and it should be at least 3¾ per cent., or £28,500,000, or even 4 per cent., which would make the fixed charge over £30,000,000. Out of this fixed charge they had to pay, before they got their new Sinking Fund, out of the fixed charge of £27,000,000, the interest on the permanent debt, the floating debt, the terminable annuities and the management of the Debt, and that left but little for the new Sinking Fund. The. Debt was so increased, and was so much increasing, and the expenditure and liabilities of the State were also increasing so fast, that he earnestly pressed upon the Committee the necessity of reconsidering the fixed charge which was originally £28,000,000, out which had been pared down by successive Chancellors of the Exchequer to £27,000,000. He hoped they would shortly increase that charge to at least £28,000,000.
  Then there were what were called charges on capital account, but really there was no such thing as capital account. These so-called capital charges were debt-unfunded or floating debt and hiving their own sinking fund, but still debt. It meant that whenever they wanted to buy telephones or telegraphs, to set up a railway in Uganda, new railway works, or even to build a land registry office they set up a new debt. In 1895 that debt only amounted to £3,000,000, but last year it had increased to £32,000,000. This year another £10,000,000 was to be added, and it would now reach £42,000,000. That was an enormous sum practically added to the National Debt, added, he admitted, under more favourable circumstances which
  886
  would extinguish this portion in a comparatively short period, but nevertheless it was a very serious addition to the public Debt. He was sorry the Chancellor of the Exchequer had to avow-that he intended to make so large an addition as £10,000,000 to what he considered was a particularly obnoxious form of debt. It pledged them to the particular works for which it was raised. It was true that there was a statement put before them every year, but if they once agreed to the Bills which embodied these £42,000,000 they could not touch the subject again or reduce the expenditure, or even get proper accounts, and that was why he said that this was a most obnoxious form of debt.
  Now he came to the moral, and he urged the Committee not to agree to any more of these Bills. When the House ance sanctioned expenditure, either by these Bills or by voting Estimates, the mischief was done. After that, complaint was idle. It was no use blaming the Chancellor of the Exchequer, who was only the victim, who must find the money. All they could then do was to criticise his method of dealing with the Sinking Fund or his method of raising the money, but it was absurd to complain as though the right hon. Gentleman himself was responsible. The Prime Minister was responsible, his policy was responsible, above all, the House itself was responsible. Their financial position was gradually becoming more serious. There was the public Debt, and this other debt of £42,000,000, and there were other liabilities coming upon them in the near future, besides the local debt. All this meant increased taxation, and increased local rates which were becoming almost unbearable. He sympathised with his hon. friend who said it was useless to make speeches on financial purity, and then when the Estimates came up to vote for them. There was only one way in which the House could assert itself, and that was by voting against Loans for Works, by voting against Vote A for the Army, which was the Vote for the men, and by voting against the men for the Navy and the shipbuilding programme when the House thought this course was justifiable. If the House

  887
  did not think that this course was justifiable, it was useless to complain of the Chancellor of the Exchequer when he called upon them to pay the bills. This House had largely lost control of the Estimates through the new Rules, the effect of which was that the Government did not mind how long they took over a set of Estimates, because they knew that what were left undiscussed would be voted automatically under the guillotine. The result was that there was no longer that wholesome method by which he used to make secret bargains with the Chancellor of the Excheqer to let him have certain Votes if he would grant him certain privileges. They were now bound hand and foot to the Government of the day, and very often under the guillotine some Votes which urgently required discussion and the control of the House were closured.
  He had made certain suggestions with a view in some degree to restore the control of the House over the Estimates, and which would be, he thought, of public advantage. One of those suggestions was that there should be an Estimates Committee; another, that a day should be appointed for discussion of the Public Accounts Committee Report. Something was needed. The most audacious schemes were afoot. It had been seriously suggested that there should be placed at the disposal of the Government of the day, whoever they might be, £10,000,000 for the Army, and £10,000,000 for the Navy, to be spent without any reference whatever to Parliament. A more revolutionary proposal he had never heard of, nor one more certain to lead in the direction of a military despotism. His right hon. friend below the Gangway had given the House some extremely good advice with regard to the Estimates on which reductions could be made. The right hon. Gentleman thought that the expenditure on the Army might be reduced. He himself was convinced from conversations he had had with experts that many millions might be saved on the Army. He was thoroughly convinced that £2,000,000 could be saved on the Navy, and he would be very much surprised if a similar amount could not be saved on the Civil Service. He asked the Committee to be prepared to go into these
  888
  details, to attend when the Estimates were being discussed, and not to leave the discussion of them to a few in an almost empty House. If they thought a case was made out against any particular expenditure they should not be afraid to vote for a reduction. Strict, detailed, jealous economy was necessary. Parsimony had now become a duty, Magnum est vectigal parsimonia. Some Members of the Committee might think that to reduce Estimates presented by the Government was to vote a want of confidence in the Government. No doubt there had been squeamish Governments, who. if their Estimates were reduced by the Committee, would take that as implying want of confidence, and would resign. But this Government were not so tender as that. They accepted a reduction of £100 on a Vote the other day, and if other reductions were carried he had no doubt they would accept them. Whether or not, the time had come when the House should begin to redeem its own faults. The departmental representatives seemed to get more extravagant as they went along, and the only way to check expenditure was for Members to come to the House, examine the Estimates, debate them, move reductions, and carry them if they were justified. Once that course was taken it would be a warning to the Government to keep down the Estimates—and they would do it.
  MR. RUNCIMANsaid he was sure that if the Government carried out the recommendations of the previous speaker there would be in many Departments of State great reductions. The hon. Member particularly called their attention to the Works Acts of which he complained. During the last few sessions those Works Acts had been introduced so late in the session that it was impossible to have full discussions on them. The Chancellor of the Exchequer had been commended because in his Budget speech he did not preach economy. Well, the objection they took on the Opposition side of the House was that the Government neither preached nor practised economy. The only solution suggested was that they should broaden the basis of taxation, and not that they should adopt greater economy. Only a few days before the Chancellor asked what they were prepared to give

  889
  up on the Army? The Government had already given up much on the Army, and he hoped it would give up a great deal more. By giving up the Army Corps hon. Members hoped they were giving up much on the Army. Then the Chancellor of the Exchequer remarked, "Think of reducing the naval expenditure !" Everyone knew that what, on the Opposition side, they had complained of was that the Admiralty had not given them a definite statement as to the standard to which they were working. The expenditure must be relative, just as naval strength was relative: but that seemed to be lost sight of by these who had brought forward the Estimates. If they had dropped one battleship out of the Estimates it would have diminished the expenditure next year, and the year following, not only as to the cost of the battleship but of the additional expenses which must cluster around all additions to the Fleet. He thought this year's programme should not have been greater than that of last year, but that the pace should have been slackened rather than hastened.
  He would turn to the Budget itself. The hon. Member for King's Lynn in explaining the way in which the deficit of last year had been disposed of had, he thought, misapprehended the way in which the £5,500,000 had been met. His reading of the case was that the £5,500,000 had been met first by £2,880,000 from previously issued loans, and also by the £3,000,000 returned from South Africa. He would turn particularly to the extent to which the Chancellor of the Exchequer stated that the Budget Debt and Funded Debt had been wiped off during last year. He said in his statement that £5,449,000 had been wiped off during the past twelve months; but the amount spent on capital works was £7,300,000. They found that so far from having reduced the total Debt by £5,000,000 they were somethinglike£1,000,000 to the bad. They must make allowances for the amount wiped off in the Annuities. He thought they mightassume roughly that the amount wiped off, in respect of the Works Acts on capital account, amounted to something like £1,000,000. So, on the whole, so far as the total debt of the country
  890
  went, they were at least £1,000,000 to the bad. Various calculations were made in Committee from time to time with regard to our total debt, and the Chancellor of the Exchequer naturally put the best construction on the position But would he kindly clear up a point on which there was some obscurity. He stated in the course of his speech that our liability in respect of sums borrowed for works of permanent improvement had increased in the course of the year by £4,298,000. He desired to ask him whether that was an increase over and above the net amount arrived at after the deduction had been made for capital returned in respect of the Works Acts?
  MR. AUSTEN CHAMBERLAIN: That is the net amount by which the liability has been reduced. Perhaps the hon. Member will put a Question.
  MR. RUNCIMANsaid he would put two Questions now. By how much did the right hon. Gentleman expect the total Debt to decrease in the coming year, excluding the operation of the special Acts? By how much did he expert that the operations of these Acts would in crease OUT liabilities during the coming year? It was only by getting clear answers to these questions that they would be likely to arrive at any accurate estimate as to what the liabilities would be in 1904–5 One could not review the financial position of the country without seeing that at present the Sinking Fund was entirely Illusory. We were now in a little worse position than last year. The right hon. Gentleman the Member for Croydon had given his version of the anticipations of last year in dealing with the Sinking Fund, which certainly explained, although it did not excuse the estimates then made. The right hon. Gentleman looked forward with pleasure to the time when £9,000,000 would be our Sinking Fund. We were nominally £1,500,000 short of that still, and he was afraid that we should be still that amount short of it five years hence. The £10,000,000, which the Chancellor of the Exchequer expected from the mine-owners, and which was to save us £300,000 a year, had not yet arrived, and no man knew when the two further instalments of £10,000,000 each would be received. By the time the £30,000,000 were repaid.

  891
  we should have a Sinking Fund of close on £9,000,000, which, he Took it, was the standard up ot which we ought to work. In the period 1883–1887 the national income was £1,400,000,000 per annum. In the period 1898–1902 it was just under £2,000,000,000. Rut the national expenditure had increased by 40 per cent. not over a period of twenty years, but of eight years. The total expenditure in 1903–4 was £146,961,000. To that had to be added expenditure under the Works Act £7,305,000, less £1,100,000, repayment of capital charged in Votes—or in all £6,205,000, giving the actual total expenditure for the year £153,166,000. Of that amount, only £141,266,000 was paid for by taxation, and something approaching £12,000,000 of last year's expenditure was paid for by loans. With regard to direct and indirect taxation, what he would like to see would be a system of taxation which would press less hardly upon those of smaller incomes, whether they came within the purview of the Income-Tax Commissioners or not. That was certainly a principle which was not borne out by the new taxation. As to tea, the taxation on that commodity had already shown a very marked effect on its consumption. The consumption per head of the population in 1900 was 6·07 lbs.; in 1901, 6·16 lbs.; in 1902, 6·06 lbs.; and in this last year 602 lbs.; and if the tendency to diminution continued, the new taxation would largely reduce [the productiveness of the duty. Remembering that the national income had increased in twenty years by just under 40 per cent., and the national expenditure had increased by 40 per cent., not over a period of twenty years, but of eight years, no one who considered the enormous amount which was taken out of the national income at the present time could view the great increase in taxation with anything but alarm. The only one cure for this state of things was not any broadening of the basis of taxation or attempting to adopt illusory methods of tapping the foreigner, but the reduction of an expenditure which at present passed the bounds of prudence.
  MR. AUSTEN CHAMBERLAIN: The discussion in which we have been engaged has roamed over a large number of points, but has been mainly confined to the
  892
  broader aspects of national finance. It is true that some hon. Members have alluded in passing to individual proposals in connection with taxation, just as the hon. Member who has resumed his seat spoke about the tea duty. I will only say in passing, in reference to the tea duty, that I cannot imagine a more deceptive method of dealing with statistics, or one more fatal to the truth, than to take the clearances of a dutiable article like tea in an individual year such as those which we have just gone through, when there have been great disturbances owing to anticipations of an increased duty or of a decreased duty and treat them as if they were the measure of the actual consumption of tea.
  MR. RUNCIMANsaid that what he alluded to was the general tendency to decline since the new taxation was placed on tea.
  MR. AUSTEN CHAMBERLAIN: And what I was alluding to was the figures which the hon. Gentleman used in order to prove that. I do not wish to go into that at the present time. I think it would be more desirable that we should discuss that when we come to the tea duty rather than to interpolate details into a general discussion. I only venture to say that the method he has employed is extremely deceptive, and that if he will take the averages over a series of years he will find that it does not accurately represent the gross consumption of tea. The hon. Member for Poplar, who opened the discussion, joined issue at once with the proposals which I have laid before the House, and was frank enough to state to the Committee what he would have done if he had been in my place. What was the hon. Gentleman's proposal? It was that all the deficit was to be put on the income-tax payer, except the tobacco duty, to which the hon. Member was good enough to promise his support. Let me say a word or two on this question of direct and indirect taxation. The hon. Gentleman who has just sat down was perfectly right in saying that there is no scientific basis for the division of our taxation into exactly such and such a percentage of direct and such and such a percentage of indirect taxation. We have been accustomed to compare the

  893
  growth of direct and indirect taxation. Upon the whole they have grown hand in hand, though direct taxation has steadily increased over a series of years at a faster rate than indirect taxation. The hon. Member for Poplar would have me this year place the whole burden of the new taxation upon the direct taxpayer. How hard it is for any of us to be consistent on fiscal questions. Let me remind the Committee of what the hon. Gentleman himself said only a year ago. "We are all agreed on this side of the House," he said, "that, when you have a war expenditure of this sort, and more especially an increased peace expenditure, we must extend and alter our system of taxation, and must raise a certain proportion of that taxation not only from direct, but from indirect taxation." It would not be consistent with that very sound declaration to place the whole of this burden on the income-tax payer.
  MR. SYDNEY BUXTONsaid he entirely agreed with what the right hon. Gentleman said, that they must put the burden on both; but his argument was that, when remissions took place, there had been too great a relief given to direct as compared with indirect taxation.
  MR. AUSTEN CHAMBERLAIN: I do not follow the hon. Member's calculation. What are the proper proportions between direct and indirect taxation? The actual percentage, I have calculated, if and after my proposals for this year are approved by the House, will be 48·2 for direct taxation and 51·8 for indirect taxation. That is for the whole of the taxation.
  MR. MCCRAB: Does that include the coal duty?
  MR. AUSTEN CHAMBERLAIN: Coal is not included; it never has been in these calculations, for reasons which must be obvious to the hon. Gentleman. Now, it is a curious coincidence, and I frankly admit that it is nothing more, that those are the exact proportions which prevailed in the year before the war broke out. Instead, therefore, of having altered the incidence of taxation to the detriment of the indirect taxpayer, we stand now
  894
  exactly where we did in the year before the war broke out. I say frankly it is a pure coincidence. I did not first work out the percentages for 1898–99 and then devise taxation so as exactly to produce those percentages; I took the taxes which I thought were most suitable for raising money, and for raising it most fairly and with the least inconvenience to the public, and it so happens that I have produced exactly the same result as we had in 1898–99.
  MR. HERBERT SAMUEL: Does that include the Post Office?
  MR. AUSTEN CHAMBERLAIN: Does the hon. Gentleman call Post Office revenue direct or indirect taxation? It may be interesting to the Committee to go one step further and see how this taxation is raised. Of our total tax revenue, including the local taxation revenue, but excluding the coal tax, we raised from taxes on transactions i.e., stamps, Post Office services, and licences—21·5 per cent.; we raised from taxes on alcohol and tobacco 34·5 per cent.; we raised from taxes on other articles of consumption, such as sugar and tea, 10·4 per cent.; and we raised from the direct taxes, estate duty, house duty, land tax, and income-tax, 33·6 per cent. If you look at those articles of consumption which can alone be called absolute necessaries of life—that is to say, excluding alcohol and tobacco—it will be seen that the proportion of our revenue raised from them is only 10·4 of the whole, and that is the whole of the taxation which necessarily falls upon consumers, to which consumers of the poorer class necessarily contribute. Of course many of them contribute both to the beer or spirit duties and to the tobacco duties, but that is a contribution which they can make greater or less by the sacrifice of comforts or luxuries; it is not a contribution which they are unable to avoid except by the sacrifice of something in the nature of a necessity. The total taxation when divided works out for direct taxes at £1 9s. per head of the population, and for indirect taxes £1 11s. 2d., a sum which is made up of £1 3s. 11d. for alcohol and tobacco and 7s. 3d. for all other indirect taxes. The increase

  895
  both of direct and indirect taxation in the year is exactly 5s.4d. per head. Of course this is a very large expenditure to have to provide for, and I have been criticised in some quarters for not having indulged in what I may almost call the usual warnings to the Committee about the magnitude of our expenditure. Well, I think I am sufficiently excused for not doing that by those hon. Gentlemen on both sides of the House who have pointed to the fact that these warnings addressed by Chancellors of the Exchequer to the House have generally been accompanied by a great increase in their demands. I shall certainly study economy; but I do not think I shall advance economy by a general lecture to the House upon the subject. But, after all, I would venture to urge the Committee, even at the risk of incurring the censure of the hon. Member for Poplar, who is prompt to see underground motives in regard to my conduct, not to magnify unreasonably the burden which we have to bear. It is a very heavy burden; we are raising a huge sum; but, after all, as the hon. Gentleman who has just sat down very truly said, what you have to consider is not merely the increase in the burden, but how much stronger our shoulders have grown to bear it.
  Let me compare the expenditure now with the expenditure of forty years ago, in the halcyon days of the early sixties, when there were no fiscal heresies, when economy was in the ascendant, when Estimates were modest, and armaments had not reached the huge figures to which they have since mounted. Our expenditure has been more than doubled since that time—I am dealing with the expenditure as given in the Return which is known to the House as Sir Henry Fowler's Return, and the population has increased by about 45 per cent. What has happened in the meantime to the national income? The national income has about doubled also, and the ratio of expenditure to national income is therefore no higher now than it was forty years ago. Of course calculations of income are to some extent a matter of guesswork, and are open to a great deal of criticism. I have roughly calculated it, as a good many inquirers have done before, from Income-Tax Re-
  896
  turns. I have excluded from the income-tax the revenue from Government securities, partly because, in the first place, that is not an increase of the total national wealth—it would be to take from one pocket and put into another—and partly because by so doing I have excluded, at any rate, a very large proportion of capital which is owned abroad, and the income of which goes abroad, and does not enter into our national wealth. In 1864–5 the gross assessment to income-tax was £338,000,000, and the calculation of the national wealth has been reckoned as probably somewhere about twice the amount of property assessed to income-tax, so that the national income would then have been about £700,000,000. The gross assessment of income-tax now, after the deduction which I have already explained, is £870,000,000, and taking roughly double that figure I may put the total income of the country at £1,750,000,000. If those figures are, as I believe, roughly approximate to the truth, then our wealth has increased something like 150 per cent., while our expenditure has increased in the same period about 125 per cent. The increase of our wealth has therefore been greater than the increase of our expenditure. In 1864–5 our expenditure was 8·6 of the aggregate income of the country, while in the present year I calculate it at 7·8 of the aggregate income of the country. And it must be remembered that, while we have a larger population from which to draw our revenue, we have more people to care for, a larger Empire to protect, and that many of the objects to which the resources of the Government are necessarily devoted are far more costly to-day than they were forty years ago. Ships, guns, the matériel of war are far more expensive now than in those days, wages are also far more expensive now; and though this may be a very cheap country to live in, as is often alleged, it is not a cheap country to govern. If the cost of living grows less the cost of the government which the country desires grows greater.
  After all, do we stand alone in the matter of increased expenditure? Turn to the Budgets of foreign countries and you will find the growth

  897
  almost universal. It is, of course, extremely difficult to compare the expenditure of different States, because they divide their expenditure differently, what is local expenditure in one country being central expenditure in another, and vice versa. But it is a well-known fact that the expenditure of all the Great Powers has enormously increased for very much the same reason that our expenditure has increased. It is notorious that in private life it is difficult to reduce your expenses if those among whom you reside live at a higher or faster rate. It is the same with nations. We cannot indulge in economy when other nations are spending more and more on their armies. And, after all, our Army expenditure has not been so great. In 1864–65 it was 3·4 per cent. of our gross income. To-day it is only 3·7 per cent. There are increases in othernational expenditure which are much more remarkable. The expenditure on education, for instance, in 1864–65 was £942,000. This year it is £14,577,000. an increase of 1,500 per cent. [OPPOSITION cheers.] I do not suggest that it is not money well spent; but I do say it is a little illogical that hon. Gentlemen who applaud this increase, who possibly would double it to-morrow, should complain of the increase in our national expenditure without allowing for the fact that if we spend more now than we spent in 1864–65 it is because we have larger ideals and because in 1864–65 national interests were grossly neglected. Again, we spend a great deal more in relief of local burdens. In 1864–65 we contributed from the Imperial Exchequer £1,745,000 for this purpose. Now we contribute £14,440,000. Hon. Gentlemen are in favour of restricting expenditure in the abstract, but they have no sympathy with economy in a Chancellor of the Exchequer when they want relief from local taxation that appeals to their interest or support. We have to look, not merely to the growth of expenditure but to the nature of the expenditure, to the services on which it is employed, and to the relative growth of expenditure in other countries, and, let me add, in private commercial concerns also. Is not railway management a great deal more expensive now than it was forty years ago? And, of course, all the causes which have raised the
  898
  cost of railway work in this country have also affected us, who are the greatest employers of labour. Another thing I would point out is that if you set against our increased burden of taxation our increased capacity to bear it, you will find that, heavy as we feel that burden now to be, it is relatively no greater than the burden of those who lived in the halcyon days of the sixties, when hon. Gentlemen opposite seem to think all things went well.
  Questions have been asked me with regard to the deficit of last year and with regard to the National Debt. If, in considering the question of the deficit of last year hon. Gentlemen opposite had put out of their minds the £3,000,000 that was a loan to the Transvaal, and that was repaid by the Transvaal, they would have saved themselves from the confusion which was apparent in their speeches. That transaction was complete in itself. It does not affect the deficit of last year, or the way in which I propose to deal with it. The deficit was £5,400,000, It so happened that the Exchequer balances were abnormally swollen by a sum of £2,288,000, which was raised by loan during the war for the purposes of the war up to 31st March of last year. The money was not required for the purposes of the war, and so it lay in the balances and helped to swell those balances. In the course of last year we had to meet considerable war charges: those war charges formed part of the deficit, and to meet them I propose to use the balances to the extent of £2.288,000, or, in other words, I propose to apply that sum to the purposes of the war, for which it was originally raised. I propose to provide for another £1,000,000 from unclaimed dividends account. There remains a sum of £1,500.000. To meet it, I budget for a surplus in the current year in excess of anything that should have been if there had not been that realised deficit. I estimate the surplus at £730,000, and after having provided for such contingencies as may arise in the course of the year, I hope to make further provision for the restoration of the balances out of the resources of the year.
  MR. RUNCIMANasked whether the surplus estimated by the right hon.

  899
  Gentleman allowed for Supplementary Estimates.
  MR. AUSTEN CHAMBERLAIN: Of course, out of the surplus any contingencies not provided for in the original Estimates must be met. I now come to the Sinking Fund. The hon. Member for Poplar estimated the Sinking Fund for the current year at £6,000,000. I do not know how ho got that figure. I estimate it at £7,119,000. The question has been raised as to whether that is a sufficient provision to make for the Sinking Fund. Undoubtedly, there is a great deal to be said for making a better provision if we were in more affluent circumstances. But I do not think anyone will contend that in a time like the present I should further increase taxation in order to add to the Sinking Fund, and, assuming I get nothing in the course of the year from the Transvaal, if the Sinking Fund realises my anticipation it will be 92 per cent. of the National Debt. Now let me quote the figures of the highest years in recent times. In 1877–78 it was ·64, in 1888–89 it was ·71, in 1898–99 it was 1T9. It will be seen that the provision we are now making is higher than in any of those years except one, when it reached the very high figure of 1·19. I think that is certainly not an unfair provision to make in a year like the present, and I do not think we are open to severe strictures for not having increased it. It is perfectly true that besides this Sinking Fund, which is devoted to the repayment of the "dead-weight" debt, we have another debt, raised by terminable annuities, for military and naval works, public buildings, telephones, and so on. My right hon. friend the Member for Cambridge University said that if we were a company we should be in an insolvent condition. I think that a company which tried to provide the whole of its capital expenditure on works out of revenue would very soon find itself unable to carry out its intentions. It seems to me to be a reasonable and proper thing, when we are making expenditure which has a capital value and will have a value for many years to come, that we should not necessarily burden the current year with the whole of the charge, but should spread it over a
  900
  period of years, provided that the period is reasonable and that we take care to have such a sinking fund as will redeem the debt well within the life of the works for which it has been incurred. That is what we do. To speak of that debt as being on all fours with the "deadweight" debt is really misleading. It is a debt for which we have something tangible; which carries its own sinking fund with it, and which, within the limited period Parliament has laid down, will be redeemed by the action of its own sinking fund—which is in addition to, and wholly outside, the fixed Debt charge of the ordinary Sinking Fund. I have not given the specific figures for which the hon. Member for Dewsbury asked. I interrupted his speech to suggest that he should place a Question on the Paper. I think he misunderstood my intention. I intended no discourtesy, but I have not the exact figures which he wants. If he will put a Question on the Paper I should be happy to supply the information at the earliest moment. I think that is all I need say at the present stage of the discussion. I will reserve for subsequent stages the consideration of the individual duties, and I hope that on this particular Resolution, as to which there is very little disagreement, the Committee will come to a decision before adjournment for dinner.
  MR. CHANNINGsaid that so far as the income-tax was concerned, the Committee could, undoubtedly, meet the view just expressed by the Chancellor of the Exchequer, but inasmuch as the general policy of the Budget was by agreement open for discussion on this Resolution, it was only appropriate that the debate should be continued. The right hon. Gentleman appeared as though he, too, had been on the "illimitable veldt," for there was hardly any limit to the conceptions he had formed of the enormous increase of the national wealth and income during the last forty years. Again and again, in the course of the last few months, they had been told the doleful tale of national depression and ruin, and now the Chancellor of the Exchequer came forward with this magnificent picture of inexhaustible national resources which could be ladled out by

  901
  the hundred millions for extravagant naval and military expenditure. At any rate he congratulated the right hon. Gentleman on having emancipated himself from the gloomy, heartbreaking visions put forward at Glasgow, Cardiff, and other places during therecess. In one of his ablest and most interesting speeches, the right hon. Gentleman the Member for West Bristol in 1898 went back for a period of twenty years, analysing the main sources of revenue and their natural growth, and showed that while the natural increment of those national resources amounted to from 15to 19per cent., the increase in national expenditure was no less than 68 per cent. He was inclined to place more reliance on the investigations of that right hon. Gentleman than on the illimitable visions of the growth of national prosperity put forward by the Chancellor of the Exchequer.
  The chief interest of the present discussion was not so much in canvassing the comparatively unimportant details of the various expedients by which a bad national balance sheet was made to look like a good one, as in analysing the motives of the policy underlying the Budget as a whole. The essential point was that we were now in the second year of peace, but were farther off than ever from getting either expenditure or revenue placed on a peace footing. Last year the right hon. Gentleman the Member for Croydon, who would not be the last free - trade conservative Chancellor to keep up the traditions of Peel and Northcote, made an honest attempt to follow the example set after the Crimean War by alleviating to some extent the burdens of the people. Why was all hope of a continuation of that policy denied? Why was increased taxation imposed? It was obviously because of the deliberate intention of the Government to continue the expansion of naval and military expenditure on an unexampled scale. Practical schemes of economy and retrenchment had been put forward in this House and in The Times newspaper, but the Government had continued in their policy of measureless extravagance. Another cause was that the extravagant and illusory dreams of the right hon. Gentleman the Member for
  902
  West Birmingham of the enormous prosperity to be developed in the Transvaal had been exposed, revealing the sordid reality of a wrecked and ruined South Africa, where Englishmen had no future as farmers or miners, and were not even welcomed to share in such labour as was available. There had also been the withdrawal of the £30,000,000 solemnly promised by the Johannesburg ring of financiers towards the war charges. The right hon. Gentleman said that he was not responsible for the increase of expenditure and he confined his responsibility to the purchase of the Chilian warships. The Chancellor of the Exchequer, however, must be treated not as an individual but as part of the Government, because in accepting office he accepted responsibility for the policy of the Government. The right hon. Gentleman had in his speeches avowed in the most unmistakable terms his approval of this policy of enormous and continuous expenditure in this country.
  He had listened with some surprise to the comments applied to this Budget as a free-trade Budget, but he thought they were light-hearted and somewhat feather-headed compliments to the Government. This Budget was a protectionist Budget ! both in spirit and intention, because the ! whole policy on which it was based was ! to move towards protection. The tactics were the same as the protectionist policy in the United States of America. This Budget in some of its details was frankly protectionist—he referred more particularly to the tobacco duties. The Government had increased the duties on imported cigars and cigarettes, and why had they not placed an equivalent Excise duty on cigars and cigarettes manufactured in this country? Such a duty ought to have been imposed if only upon social and physiological grounds, because there was no greater evil at the present time than the growth of the habit of cigarette-smoking amongst schoolboys and in the street everywhere. The right hon. Gentleman might have kept in mind the searching and sagacious words of Lord Salisbury in which he said—
  "The real cause of the increased protective duties is the establishment of those gigantic military forces which constitute a permanent' drain on the resources of industry, a permanent

  903
  danger to the interests of commerce, and which impose upon Governments the necessity of finding money in some way which shall not too heavily goad the interests and susceptibilities of their peoples."
  Some interesting questions had occupied the public mind during the last few months, and some people had begun to wonder whether there really was the astuteness and strategy behind the proceedings of the Tariff Reform League which some of their friends claimed. It was not, in his opinion, attributing to them a very high degree of sagacity or astuteness if he thought they could not be so simple as not to have learned a few lessons from the great trusts in America. The tactics of the engineers of Protection in America had always been to make it more and more difficult to cut down expenditure and to make it more and more inevitable that expenditure should expand in geometric proportion. And their second string was to make the ordinary orthodox measures of taxation in the attempt to fill the ravening, insatiable maw of new demands more and more odious and detestable, so that at last the taxpayer and the consumer might be deluded into giving themselves over to those who in the aspect of friends, said. "Give us protective duties and all your burdens will disappear." He regarded the whole of this policy of a wanton increase of expenditure in the second year of peace as pointing towards a policy of protection in the future. Some people had been declaring that a general election might take place shortly, and that a free-trade Ministry would come into power. If there was a Liberal Ministry in power he would take no share in either putting or keeping them there if they attempted to meet this question of national expenditure in a spirit of flabby temporising with the great issue now before the country. No Liberal Ministry was worth putting into power which would not fearlessly lay the axe of retrenchment at the root of this up as tree of wanton expenditure which was dragging the country to ruin without hesitation and fear of temporary unpopularity. They had to show the fearless courage of the surgeon whe went right to the root of the malady and did not shrink from any operation which he considered absolutely necessary.
  904
  There were some other comments he should like to make upon this Budget beyond the broad issue which he had challenged. He had heard with deep regret the statement of the right hon. Gentleman that he thought the only remedy for the sufferings of the poorer class of income-tax payers was to wait till the rate of the income-tax could be reduced, and that he could not consider, as other Chancellors had considered, the question of further abatements and exemptions. During a portion of this debate he had heard the right hon. Gentleman the Member for Croydon say, to his great surprise, that he thought the indirect taxpayer was better off now than he was before the war. He ventured to say that the history of Conservative and Unionist finance, ever since the Unionst Party came into power, had been a record of the progressive transfer of burdens from the rich to the poor and from direct to indirect taxation. The right hon. Gentleman the Member for West Bristol talked about widening the basis of taxation, "and he did not forget that phrase until last year when the corn duty had become so unpopular that it was thought advisable to remove it. The blot on last year's Budget was that the relief given went to direct taxation and wholly inadequate relief was given to indirect taxation. He would only say now that he was quite ready to contend and demonstrate that the position of the indirect taxpayer before the war was relatively much worse than that of the direct taxpayer. Assuming that the contention of the right hon. Gentleman the Member for Croydon was true, what was the position? The income-tax payer had a war tax of 7d. in the £. To find the results of the indirect war taxes on the workers he had obtained a very large number of budgets from families in his own Division by the help of co-operators and others, and taking seventy of those budgets he found that the war taxes imposed upon those people by the corn tax, the extra tea duty, and the sugar duty in 1902 amounted to from 6½d. to 9d. in the £. If they went back to the Board of Trade figures in the returns of working men's expenditure in 1889, they would find that the burden of those taxes upon the family budgets given in that return represented over 8d. in the £. The great blot in the

  905
  Budget of last year was that while 4d. I was taken off the rich man's income-tax, the wage earner was relieved only of his corn tax, which meant from about 1d., on the artisan with 30s., up to 2½d. in the £ on the poorest agricultural labourer. Those were figures which could not be challenged, and which anybody could verify. The present Budget placed on the rich 1d. on the income-tax, but the burdens which it added to the poor were over 3d. in the £. They took off last year, practically, four times more of the burdens from the rich than they took from the poor, and this year they placed three times the burden on the poor that they placed on the rich, in order to meet this policy of extravagance. In conclusion he wished to say that this policy of transferring burdens from the rich to the poor and from direct to indirect taxation was the motive and the very essence of a protectionist policy. A very serious responsibility rested upon the present Government for continuing this vast expenditure in time of peace which had brought upon them so many additional burdens. This policy was a discredit to the Government, and he for one unhesitatingly declared that this policy was being pursued for the purpose of those who favoured protection in this country.
  MR. J. F. HOPEsaid he noticed that there was an assumption which ran through all the speeches of hon. Gentlemen opposite that if they had a deficiency in one year they ought to make it good out of the revenue of the next year. He did not under-stand how that doctrine was to be maintained. It was quite opposed to the practice of hon. Members in their private affairs. He was rather surprised at the moderation of his right hon. friend, and why he had not taken more off borrowed money. There should not be very much objection to doing that so long as the right hon. Gentleman took precautions for new revenue, or for economy in the future. The Chancellor of the Exchequer had done both. He fully admitted that there was every need for vigilance, but at the same time he did protest against the unduly pessimistic view taken of the financial position of the country by some hon. Members. The hon. Gentleman the
  906
  Member for Exeter in his speech two days ago, said with regard to our credit that it was worse now than it had been for twenty years. That really was not the fact. Just before the conversion of Consols in 1837 the highest point they touched was 103⅝. They were then 3 per cents. Having been converted to 2i per cents the equivalent price was about eighty-six. If they studied the Funds they would find that Consols were higher now, and presumably our credit was better than it had been at any time up to the conversion of Consols by Lord Goschen. He was rather surprised at the argument used by his hon. friend the Member for Exeter when he said that our credit was relatively worse than that of foreign nations. Some hon. Members had pointed with apprehension to the growth of the general prosperity of foreign nations, which had come about very largely at our expense, but they had been told that this was only natural and inevitable and that we should not grudge them their increased prosperity. It was said that foreign countries started from a lower level and that we must not expect to maintain our relative superiority. If that was true of trade in general it was equally true of credit, and he took the argument as one which came strangely from the hon. Member for Exeter, who held such orthodox views on the question of fiscal policy. He thought the hon. and learned Mem for Haddingtonshire in referring to our credit made some very misleading comparisons. It could not be denied that Consols had fallen from 114 in 1897 to 86, which was lately their price, but surely the right hon. and learned Gentleman did not regard the price of Consols in 1897 as in any way normal. He himself would say that it was not desirable that Consols should stand at such a price as in 1897. Consols at such a price made the establishment of the Sinking Fund absolutely mischievous, and interfered greatly with the working of the Post Office Savings Bank, causing an actual loss on the working of that institution. Then when they talked of the credit of the country they must also look at it from the point of view of trustees and beneficiaries. Let them take the case of a man who made his will in 1870. Suppose he died and his

  907
  estate had to be realised and divided in 1897. The position was infinitely worse of those who had to invest under the new conditions than the testator could possibly have imagined. The price the hon. and learned Gentleman took represented an absolutely abnormal position which never occurred before, and he did not think it was ever likely to occur again. The hon. and learned Gentleman in referring to the great growth of national income and expenditure instanced the year 1874. Here, again, he was not making a fair comparison, because undoubtedly the circumstances in that year were quite abnormal, and could not be expected to recur. The greats tatistician. Sir Robert Giffen, maintained that that was a period when armaments in this and other countries were much lighter and when trade and commerce were buoyant. It was not a true comparison to compare our present position with the very unusual conditions which then prevailed. Sir Robert Giffen went on to say—
  "Hence, it follows that the old way of discussion about national expenditure must be changed. Having been placed by good fortune outside the pale of common humanity for many years, we have now come inside the pale and can no longer play tricks and neglect the Army and Navy if we please. The question, what Army and Navy we should have, must be discussed on its merits, and other branches of Government expenditure in a like manner yet nothing is contrary to the ways and habits of our politicians. The recent increase of expenditure is submitted to with an accompaniment of groans, merely because it has increased, and without any reference at all to the reasons for it."
  In another letter, written two years ago, he expressed the conviction that it was necessary for national purposes to spend, roughly speaking, even in these times, not less than £40,000,000 for the Army and Navy. That might be an extravagant assumption, but Sir Robert went on to prove that even that expenditure would not be greater in proportion than our expenditure forty years ago. He was exceedingly glad that the general preaching of economy of which they heard so much two days ago was not repeated to the same degree to day. It was perfectly useless to talk about economy unless they could point to some items on which they could make economies. He listened with great interest to the speech of the right hon.
  908
  Gentleman the Member for Cambridge University, but if his proposal was to come about, it was necessarily bound up with compulsion for home service, and he was afraid Cambridge University was one of the few constituencies to which no Member would go to advocate that as a serious part of his political programme. It was easy to quote examples of the inconsistency of hon Members. If the Shipowners' Light Due Bill which was before the House last session had been passed it would have cost the country £500,000 per annum. He did not find on that occasion that any of the great exponents of economy took the trouble to come and vote against that Bill. There was a proposal made by some hon. Members that the cost of training colleges should be put entirely on the National Exchequer. Except in the one concrete proposal of the right hon. Gentleman the Member for Cambridge University, he had not yet found any statement of what they could safely economise upon. He admitted that there had possibly been undue expenditure on the military and naval services from the fact that the exact function of each in the defence of the Empire had not been assigned, and that the two services had not been properly correlated. That, he hoped, would be put right by the labours of the Committee of National Defence, and he also hoped, as a result of these services working more harmoniously together, to see some reduction in each without any loss of efficiency.
  In regard to the question of the naval works and the military works which were objected to as obscuring the simplicity of our Budgets, the Chancellor of the Exchequer had said that obviously we could not put these on one year; and one reason was the antiquated and pedantic system of surrender of balances. He wished that that system of surrender of balances could be done away with altogether, and then we should see from year to year how we stood; and the objections taken to the military and naval works as obscuring the Budget would be removed. This was actually done in Germany. He confessed he did not like the new tea duty. He had voted for it with the greatest reluctance, but he saw that in the present situation

  909
  of the country and with the present fiscal system there was no help for it. He regarded this tea duty as the reductio ad ahsurdum of the present fiscal system. Here was an article of practically universal consumption and we taxed it 100 per cent. and we were thought by financial purists like the late Chancellor of the Exchequer to be doing nothing wrong from the fiscal point of view. But if one took some other article which was made at home and put 7½ per cent. on it, one was denounced as a fiscal heretic. He wished the income-tax could be graduated, but he gathered that it was impossible to do that, because we must take the income at its source. But if we could not do that, he thought we might, and ought, to have a further graduation in the death duties. He thought they ought to be increased [MINISTERIAL cries of "Oh," and OPPOSITION cheers], but not upon realty. He would not relieve realty, but he would graduate the death duties severely against large accumulations of personalty. It might be that in practice because of evasions we could not do this, but as a matter of principle, he did think that the millionaire estate got off very cheaply by paying 8 per cent.; and that a larger sum ought to be surrendered to the State in return for the protection in which that millionaire had basked.
  There was another source of taxation which he thought undoubtedly ought to be tapped. It would be a very easy tiling, without hitting the consumer or increasing the cost of the necessities of life, to raise £8,000,000 or £10,000,000 a year by very low duties on imported goods coming into this country, and he was quite sure something of this kind must follow, because the means of raising revenue under the present system was becoming archaic. As to the income-tax, he did not believe that people who had got over £5,000 a year cared much whether it was 9d. or a shilling—[Cries of "Oh, oh"!] But undoubtedly it was a very hard and heavy burden upon small taxpayers, and he was convinced we could not make it press much more heavily upon them. He had said two years ago that a change in our fiscal system was desirable from the point of view of trade and revenue, and that the latter point should come first. He was
  910
  of the same opinion to-day, and he hoped, before another two years had passed, to see a larger revenue drawn from foreign services, which would add greatly to the wealth and strength of the country and would impose no burden on our poorer consumers.
  MR. JOSEPH WALTONsaid that the increase of the national expenditure last year compared to the previous year had been computed at £9,000,000, and now it was found that that had been underestimated by £3,000,000. An alarming financial condition had therefore arisen. The expenditure for the next financial year was only going to be reduced by £1,500,000. In a time of peace the normal national expenditure was to be £10,500,000 more than two years ago. The Chancellor of the Exchequer made light of the burdens which were seriously hindering the commercial development of the country. They were told that we were bearing these burdens without any strain. Bat the right hon. Gentleman had forgotten that Consols—the premier security of the world—had gone down in recent years from 112 to 85. That showed conclusively that the creation of £160,000,000 of additional Consols had had its effect on the market; and that the financial resources of the country were by no means inexhaustible. Last year the expenditure was underestimated by £3,000,000; and the revenue overestimated by £2,750,000. Last year he ventured, during the debate on the Budget, to express the fear that the then Chancellor of the Exchequer had been much too sanguine in his estimate? of revenue from Customs and Excise; and he was only too sorry that, having regard to that time and the evidence which was before those who were engaged in commerce that we had a cycle of depression before us, his prophesy had been too well-founded, and that the revenue was £2,750,000 less than the estimate. The Chancellor of the Exchequer had very properly drawn attention to the large increase of expenditure and outstanding liabilities in the matter of local indebtedness. The Imperial expenditure during the next year, including grants in aid, and capital expenditure for military and naval

  911
  works, was£164,000,000; but in addition to that they were confronted with £110,000,000 of local expenditure, or a gigantic total of nearly £275,000,000.
  And, it being half-past Seven of the clock, the Chairman left the Chair to make his Report to the House.
  Committee report Progress; to sit again this evening.

EVENING SITTING.

  WAYS AND MEANS.
  Considered in Committee.
  (In the Committee.)
  [Mr. J. W. LOWTHER (Cumberland, Penrith) in the Chair.]

  INCOME-TAX.
  Motion made, and Question proposed, "That Income-Tax shall be charged for the year beginning the 6th day of April, 1904, at the rate of one shilling."—(Mr. Chancellor of the Exchequer.)
  MR. JOSEPH WALTON,continuing his speech, said the Imperial and Local expenditure of this country had risen in recent years to £275,000,000, and it must necessarily constitute a most serious strain on our financial resources. The expenditure for 1903–4 amounted to nearly £147,000,000. The revenue, in spite of an income-tax of 11d. in the £ in a time of peace, in spite of the great addition that had been made to taxation otherwise by the increased taxation on sugar and tea, etc.,—in spite of all the increase in taxation, there was a deficit in that year of no less than £5,500,000. The right hon. Gentleman the Chancellor of the Exchequer had appropriated the repaid temporary Tansvaal loan of £3,000,000 and £1,000,000 from the unclaimed dividends which reduced the deficit to £1,500,000; but they must take into consideration the deficit of that year in conjunction with the estimated deficit for the year following, 1904–5, which together would amount to £9,200,000, although £4,000,000 had been
  912
  provided for; that left a balance of £1,500,000 for the year 1903–4 unprovided for. In the financial statement, which had recently been issued, the Exchequer balances on the 31st of March, 1903, were stated to be £6,637,000, but they had been reduced this year to £4,264,000. He would point out that they would have been reduced to £2,264,000 but for the fact of the temporary borrowing of £2,000,000 on the credit of ways and means. The expenditure for the year 1904–5 was estimated at £132,880,000, while the revenue was estimated at £129,060,000, leaving a deficit of £3,820,000.
  Whilst they had had a most interesting statement from the right hon. Gentleman on the question of direct and indirect taxation, he thought some further defence was needed as to the way in which the right hon. Gentleman proposed to provide for this deficit. The Committee could not forget that in the year 1902 the then Chancellor of the Exchequer had stated that the fifteenth penny was added to the income-tax to balance direct and indirect taxation. Owing to the extraordinary financial needs of the country during the course of the unfortunate South African War, additional taxation to an enormous amount was imposed, half of which was direct and half indirect taxation. Last year out of £45,000,000 of additional taxation, £10,500,000 was in the hands of the Chancellor of the Exchequer to give in remission of taxation, when instead of giving relief of taxation on the same basis as it had been imposed, four-fifths was given for the relief of the direct taxpayers, while only one-fifth was given for the benefit of the indirect tax-payers by the abolition of the corn tax. The question of the equitable incidence of taxation was a most complex one, but it was one which demanded, more than ever, the attention of the House and the nation. They must not overlook, in the interest of Imperial taxation, the incidence of local taxation. Out of 6s. or 7s. a week that a working-man paid for his rooms, one-third went for rates. If the man earned 30s. a week all the year round, 10 per cent. went for local rates. He also contributed to Imperial taxation in the form of indirect taxation another

  913
  10 per cent., making his contribution to Imperial and local taxation 20 per cent. of his entire income. That was a very heavy burden. He had paid his contribution towards the war in the increased price of his tea and his sugar, which were essentially war taxes, and when the war was over, the expenditure of the country ought to have resumed its normal condition. The working-man had a right to expect that these war taxes would be remitted, instead of which he had to face a Budget showing an additional tax of 2d. in the lb. on tea. The tobacco tax was not called into question on the Liberal side of the House, except so far as it was regarded as a protective tax. With regard to the tax on tea, he held very strongly, that it ought not to have been imposed, inasmuch as only one-fifth of the remission of taxation last year was given to the indirect taxpayers. He hoped that the additional tax upon tea had not been given in order to secure an extra amount with which to bargain in the future in any matter of the rearrangement of our fiscal system. He personally entirely disbelieved any insinuation of that kind which might be made against the right hon. Gentleman, but inasmuch as they had heard of proposals to remit taxation on tea in exchange for the imposition of taxation on bread and meat, it naturally occurred to him that the greater the tax on tea the larger would be the amount in hand with which to bargain if the other policy prevailed.
  Speaking of the question of expenditure, and the urgent necessity that existed for retrenchment, he would like to point out that the total expenditure on the Army and Navy in 1891 was £33,000,000, for the year 1904–5, the estimated total expenditure was £66,000,000—double the expenditure of 1891. It had swollen until it amounted to £1 12s. per head of the population of this country. That was a most alarming increase, and it was the duty of the Committee to examine closely into this expenditure and consider whether this enormous strain should be placed on the resources of the country, and also to see that the country got value for its money. The Estimates for 1904–5 for the Army were £29,000,000.
  914
  The right hon. Gentleman the Member for West Bristol in 1902, speaking at Bristol, said—
  "The money we spend on our Army might be reduced if the War Office laid out the money it got to the best possible advantage, which nobody outside the War Office believes it does."
  The declarations coming from a Gentleman of the experience, knowledge, and standing of the right hon. Gentleman the Member for West Bristol that a very large reduction in the expenditure of the Army might take place without impairing its efficiency carried great weight. The Army Estimates this year showed a reduction of £5,000,000, the Navy Estimates an increase of £2,400,000. We ought not to shut our eyes to the experiences which were now being gained in the Far East, and for his part he believed it was a huge mistake to spend millions of money on enormous battleships when the experience of the present war showed that by a skilfully laid mine or torpedo—or perhaps in the not distant future a submarine—a battleship could be sent to the bottom in five minutes with all its crew. He asked, would it not be better rather than spend this enormous amount on huge battleships to be content with smaller vessels with heavy guns and heavily armoured which we could produce more quickly at a very much less cost. Every man in this House was convinced of the necessity of retaining the command of the sea, but the experience of the war in the Far East seemed to him to indicate that we were at the present moment proceeding on unnecessarily expensive lines, and that a more effective defence would be provided in the way in which he indicated at a very much less cost to the taxpayers. The enormous expenditure of £66,000,000 for the Army and Navy was, he pointed out, for the defence of the British Empire. Outside the United Kingdom, what contribution was made by the other parts of the Empire? The 5,000,000 of population of Canada enjoyed all the benefit of this huge expenditure, and it contributed nothing towards it. Some steps should be taken by the Government to come to some equitable arrangement, not only with Canada, but with the other self-governing Colonies, so that we might obtain from them—in the not remote

  915
  future—some reasonable contribution to the enormous cost of Imperial Defence. Of the contribution of the Transvaal of £30,000,000 towards the cost of the war, the first instalment of £10,000,000 was considerably in arrear, and the Committee was entitled to some information as to the position of that contribution of South Africa. He did not believe for a moment that the Transvaal could not find this money, having regard to the price of the shares of some of the mines, which were many times their face value, and taking into consideration the immense fortunes which had been made out there in connection with transport during the war. He had never been able to understand why Natal and Cape Colony should not also have contributed to the cost of the war, which was undertaken, in fact, to repel the invasion by the Boers of those colonies. He certainly thought they should contribute a reasonable portion of the cost.
  With regard to our National Debt we had not only now to consider the question of our Imperial debt, but also our local debt. Our indebtedness to-day on Imperial account amounted to £794,500,000, and upon local account to £412,000,000. £35,000,000 went to South Africa, and our responsibilities in connection with Irish land might amount to £100,000,000. These items totalled up brought our national responsibilities to no less than £1,350,000,000. A figure perfectly appalling. The Chancellor of the Exchequer was well advised to draw attention to the question of local expenditure, but he would point out that local expenditure was largely reproductive. Local expenditure amounted to £412,000,000, and, as he had said, that was largely reproductive. Let them compare that with the £230,000,000 wasted on the South African War. There was expenditure it was worth while to make, and there was expenditure that was only waste and folly. It was the unnecessary expenditure which the Committee had to restrict within the smallest possible limits. It was high time that we had a national balance-sheet showing the national assets on the one side, and the national responsibilities on the other, both Imperial and local. He saw with regret that the Select Committee for inquiring into the question of
  916
  the income-tax, which the right hon. Member for Croydon, when Chancellor of the Exchequer, promised to appoint, was now to be replaced by a Departmental Committee, whose decision would not command the same weight. He. however, thought there ought to be referred to that Committee the questions of the rearrangement of the whole machinery and management of the collection and administration of this tax and of the method of assessment. The present mode of assessment was absolutely antiquated. Some method should be adopted which should be of universal application, and there should also be a readier means of obtaining back money which had been paid in excess. He regretted there had been no announcement of the abolition of the coal tax. That was a question that could be raised on the Finance Bill. He hoped the right hon. Gentleman would include other important branches of the subject in the departmental inquiry, not excluding a graduated system of income-tax.
  MR. SEYMOUR ORMSBY-GOREcongratulated the Chancellor of the Exchequer that he had seen his way to tread in the ordinary path of finance, and that he had not strayed in the more devious paths which had been indicated by the late autumn campaign. He was glad he had omitted, in introducing the new taxes, a tax on sugar. They had been told that owing to the stocks of sugar in hand the price had not been hitherto very much raised, but when the stocks were exhausted he felt perfectly certain that the cost of sugar in this country would be raised, at a cost to the people of this country every year of at least £12,000,000 to £15,000,000. Referring to the observation of the hon. Member for the Brightside Division of Sheffield that he would not object to seeing the death duties on personalty raised, he looked upon an increase of the duty on personalty more seriously than upon an increase of the duty on realty, because it would mean that the doctor, struggling all his life to provide for his family, and the lawyer, would have their hard-earned savings taxed, while the drone who lived in the mansion close by, and had never done a hard day's work in his life, would

  917
  look forward to seeing his property go down intact or without any increased duty. The least objectionable of the new taxes was the income-tax, but, nevertheless, a high income-tax, among other drawbacks, automatically reduced the stamp duty, because it narrowed the spending capacity of the community and contracted capital which had been taken towards self-reproduction. Mr. Gladstone, speaking of the income-tax in 1859 and with regard to indirect taxation, said—
  "I am deeply convinced that the facility of recurring to and maintaining income-tax has been the source of that extravagance in government which dates from the Russian War."
  That was the year Mr. Gladstone had prophesied the termination of the income-tax; it was then 4d. higher than it was in 1853. We were at a similar lapse alter the Boer war. and the income-tax was no higher now in proportion from what it was in 1859, and from what it was in 1855, in the ratio between before the late war and the present time.
  With regard to the national credit and the National Debt, Lord Goschen, when he propounded his scheme for the conversion of the National Debt, certainly achieved a great success for a great many years, but he doubted whether he achieved much for the national credit. Our borrowing powers were not the same as those which we had before the conversion. For while the ostensible rate at which we could borrow was 2¾ percent., that was not the actual rate, because there were compulsory powers exercised on certain people who had to buy Consols and could invest in no other security, and therefore that could not be looked upon as the actual standard of our national credit. The flotation of the late Irish loan yielded £3 3s. per cent., and the Transvaal loan £3 2s. per cent., and the actual credit of the nation was not exactly what it was in Lord Goschen's time.
  The long and short of it was that the sweet simplicity of the three per cents. had been exchanged for the vicarious irregularity of the two and a halves.
  The hon. and learned Gentleman the Member for Waterford told them the other day that the total contribution
  918
  by Ireland would be about £400,000, and out of that sum £300,000 would represent the tea duty. That would leave only £100,000 for the income-tax and the increase of the tobacco duty. Those figures showed that the income of Ireland, according to its taxable capacity, was a very small one, and it appeared as if that income would further decrease if the Land Act worked as well as they hoped it would work. The Chancellor of the Exchequer could not look in the future for a great revenue from the income-tax in Ireland. He (Mr. Ormsby-Gore) had never been able to ignore the fact that the financial relations between England and Ireland were very unsatisfactory. The Report of the Royal Commission by a large majority set forth that one-twentieth was the most Ireland could be expected to contribute to the Imperial revenue. At the present time taxes were levied in Ireland in a most unsatisfactory manner. Ireland obtained remissions in the dog tax, the carriage tax, the inhabited house duty, and armorial bearings. He would like to see a level struck in these four duties between England and Ireland and have Ireland taxed precisely the same as England. Probably the only tax that would weigh heavily in the event of such a change would be the dog tax, and, having regard to the horde of straggling curs that were usually to be found in Irish villages, an increase in the tax must prove very beneficial by clearing off some of those pests. He hoped no hardship would be inflicted on Ireland by this moderate Budget.
  MR. STUART SAMUELcongratulated the hon. Member for preferring a rise in the income-tax to one in the price of tea, as those opinions were very seldom expressed on that side of the House. It was somewhat significant of the manner in which finance was regarded that the Chancellor of the Exchequer had been the recipient of so many congratulations because he had not touched the Sinking Fund. Those congratulations reminded him of the young lady who was commended for being unaffected. But young ladies had no business to be affected nor had a Chancellor of the Exchequer any business to touch the Sinking Fund;

  919
  that was an operation that always tended to lower this country's credit in the eyes of the world. He was sorry not to hear the Chancellor of the Exchequer make some reference to economy. They always regarded the holder of that high office as a kind of watchdog and a guardian of the public purse, but he had sought in vain for any reference to economy in the right hon. Gentleman's speeches. They heard a great deal about widening the basis of taxation, but very little about nar rowing the scale of expenditure, and he certainly should have expected the right hon. Gentleman to have given them some hope or suggestion that he would be in favour of reducing the present gigantic expenditure. In these days it was only from ex-Chancellors of the Exchequer that they could expect to hear words of caution and advice with regard to the necessity for reducing expenditure. It was a remarkable thing that no sooner did a Chancellor of the Exchequer quit office than he became actuated by a desire for economy, and it was more disappointing to find a new-Chancellor of the Exchequer assuming office in times of enormous expenditure without expressing himself in favour of reducing it. Reference had been made to the low price of Consols. No doubt the price of our premier security was unduly low, but that was due to the policy of the Government during recent years in admitting a large number of colonial and other stocks to compete with Consols as securities, in which Trustees are allowed to invest the funds entrusted to them. He would suggest that the Government should modify their policy in that respect, and also that relating to the borrowing powers of Corporations of towns having under 100,000 inhabitants. The Chancellor of the Exchequer had given them some very interesting figures concerning the prosperity of the country. If these were evidences that the country was bleeding to death he would be sorry to see any interruption of the process. It appeared to his mind that what the Government had to beware of at the present time was interfering with that prosperity by imposing undue taxation. He alluded more particularly to the increased tax on tea, as, to his mind, that would greatly inter-
  920
  fere with the demand for that article and, speaking as representative of a working class constituency which was somewhat well known for its sobriety, he was afraid this increase would prove a great hardship. He sincerely hoped that when the Chancellor of the Exchequer came to consider the matter again he would raise the income-tax rather than impose further duties on the food of the poor.
  MR. HENRY HOBHOUSEsaid he quite admitted that upon the present occasion they had not heard very much in favour of economy, and that instead they had been favoured with the Chancellor of the Exchequer's rosy views concerning the prosperity and wealth of the country. He desired to give one or two reasons why he was an earnest supporter of the present Budget. He regarded it as an honest Budget, a free-trade Budget, and a Budget calculated to bring home to the mind of every taxpayer the necessity for economy in the expenditure on the Army and Navy. The heavy income-tax and the taxes on tobacco and tea might not be acceptable to the general public, but he thought that if any combination would prove effective in persuading electors that the expenditure of the country must be reduced, it was this combination. If they desired to enforce economy, this was the time for them to point a moral and adorn a tale. He regretted that the Chancellor of the Exchequer had not followed the example of his predecessors in commenting severely on the size of the expenditure, because he could not help thinking that it was to the Chancellor of the Exchequer they looked for such advice and admonitions. They all knew how perfectly helpless were the private Members of that House to secure economy of expenditure. It was true that private Members had some power of increasing the Estimates, but when it came to criticising the Estimates, they were very much at the mercy of Ministers. No Estimates could be criticised by hon. Members properly, unless they had far more information placed at their disposal than could be given in the course of a debate. They ought to be given a previous opportunity of examining

  921
  officials as to the details of the Estimates, which they were called upon to discuss and approve. It was for that reason that he much regretted that the practical proposals made by the Committee on National Expenditure were in danger of being set aside. However wealthy and prosperous the country might be, the increase of the aggregate expenditure shown during the last ten years was most serious. He would not say anything about the war expenditure, but apart from that the rise in the ordinary expenditure had been so enormous that no country could permanently stand it, and no method of reducing that expenditure to reasonable bounds ought to be neglected. He feared nothing would be done in that direction without more motive power from outside, and for that reason he welcomed the present Budget. A heavy income-tax alone was not sufficient to move public opinion in the direction of economy. The Opposition condemned the increase of indirect taxation, but if they desired to strengthen public opinion among the masses in favour of economy they ought not to oppose such an addition to indirect taxation as was needed to produce an honest Budget. This Budget was an honest one. It showed how burdensome our expenditure was, not only to the middle classes, but to the working classes, and it ought to have the support of those who desired to see expenditure kept within reasonable bounds.
  MR. BRYN ROBERTSsaid he quite agreed with the right hon. Gentleman who had just spoken that more motive power was required from the constituencies, but if that power were supplied the right hon. Gentleman and many of his friends would probably be removed from the House, because the unfortunate position in which the country now found itself was entirely due to the fact that nearly all the Members on the other side, and many of those on his own side of the House, committed the nation to an unjust, unnecessary, and extravagant war, of which the results were now being reaped. Expenditure depended upon policy, and a little cheese-paring here and there in the Estimates was useless as a means for replacing the country in the position it
  922
  formerly occupied. What was required was a return to the traditional policy of the Liberal Party; there would then be no ground for the constant cries for economy. The remarks of the right hon. Gentleman with reference to the extension of trustee securities to the loans of local authorities appeared to be based on an erroneous view of the duties of the State and of trustees. The investments of trustees ought to be governed, not by the interests of the State, but solely by the question of the security of the trust. Trust funds usually belonged to widows and orphans, and to prevent their being invested in lucrative securities in order that the price of Consols might be kept up was altogether unreasonable. Some further defence was required of the methods adopted by the Chancellor of the Exchequer for dealing with the deficit. The right hon. Gentleman had urged that the Transvaal Loan should not be taken into account at all. It was true that it had nothing to do with the deficit, but it had a great deal to do with the methods adopted for dealing with that deficit. Nobody would deny that it was a bad and vicious system to borrow money in times of peace to pay current expenditure, but that was what the Chancellor of the Exchequer was really doing. This money was first of all borrowed from the public, it found its way into the balances, it was loaned to the Transvaal, when repaid it was returned to the balances, and then, instead of going back to the pockets of the public, it was used for current expenditure. The defence of the use of the £2,288,000 from the balances was equally objectionable. That money was borrowed for the South African War, and if it was not used for that war it ought to have been returned to the lenders. There was no justification for using it in operations against the Mullah or the Dalai Lama without the consent of those from whom it was borrowed. The meaning of these expedients was really that in time of peace, two years after the conclusion of the war, the Chancellor of the Exchequer had borrowed £5,000,000 for the purposes of current expenditure.
  The present debate had been remarkable in two or three respects.

  923
  The late Chancellor of the Exchequer had committed himself to the view that there ought to be a graduation of the income-tax. That was a most significant and hopeful sign for the future. The hon. Member for King's Lynn had held graduation to be impossible. It was doubtless difficult, but there was considerable difference between a difficulty and an impossibility. As to deducting the tax from dividends before they were paid to investors, the practice would doubtless be to deduct the highest limit, leaving it to the investor to claim a return of the overcharge on the production of the necessary vouchers, just as was done in the case of the present abatements. The system would probably be a little complex and difficult, but the complexity and difficulty would not fall on the Legislature or the revenue authorities, and it was no argument against the adoption of the proposal. As to the contention that the principle of graduation was indirectly applied in the death duties, that might have been in the minds of certain Members when the scheme was put forward, but the present Committee were by no means bound by such a consideration; they had to judge of matters on their own merits in the light of the present day. If the principle of graduation which was formerly regarded as revolutionary did not now frighten even a Conservative ex-Chancellor of the Exchequer why should it not be extended to the income-tax? In the matter of the other duties, it was recognised that they were war duties, and that the industries concerned would have a right to expect their removal in time of peace. The only question was as to which class of taxpayer had the prior claim to consideration. The tea and sugar duties, if they had not an equal claim with the income-tax to reduction, at any rate had a right to expect that in time of war they would not be increased, and if the income-tax, which stood at 1s. 3d. during the war, was now to be reduced to 1s., on what principle of justice could the tea duty, which stood at fid during the war, be justified now at 8d.?
  He congratulated the Chancellor of the Exchequer on the earlier portion of his speech that afternoon. It was a sound, cogent, and effective free-trade
  924
  argument. It was not so intended, but it was all the stronger on that account, The right hon. Gentleman had pointed out that, although expenditure had almost doubled since the "sixties." yet so great had been the free-trade benefits enjoyed by the country that the national income had actually increased in greater ratio. That was as strong a free-trade argument as could be adduced. But it was not an equally strong argument for expenditure. The increase in income had been gradual and progressive throughout the whole of the period, whereas the increase in expenditure was confined practically to the last ten years. It did not necessarily follow that a man, because his income had increased, ought to spend more money. The more money a man made the more he ought to put by for the benefit of those dependent upon him. It was the same with the nation. Very little was heard nowadays about leaving money "to fructify in the pockets of the taxpayers." There was nothing to prevent the continuation of the policy which held the field up to 1893. It was because we had departed from the policy of non-interference with other countries, of minding our own business, and keeping our fingers from picking and stealing the territories of other nations, that we were in our present deplorable condition. Nobody could contend that the country was in a safer position than ten years age, notwithstanding the lavish expenditure which had been incurred. As a matter of fact, the position was more precarious than before, because the confidence of the world at large in the honour, integrity, and justice of Great Britain had been shaken, with the result that other nations felt bound to take measures to protect themselves against us.
  MR. MARTINexpressed the belief that if Mr. Goschen, when he had plenty of money in hand, and the credit of the country was rising, instead of reducing the interest on the National Debt from 3 per cent. to 2½ per cent., had increased the interest to 4 per cent., he would have done more to benefit future generations than was now the case. The duration of the loans would have been reduced to such an extent that a serious diminution

  925
  in the amount would now be apparent. Instead of having a perpetual 2½ per cent. annuity, we should have had an annuity limited in its duration, and the National Debt would have been reduced by possibly £200,000,000 or £300,000,000. A further obvious advantage was that the Sinking Fund would have been removed from the possibility of all interference on the part of the Chancellor of the Exchequer. He hoped the Chancellors of the Exchequer in future years, when they had more propitious Budgets to unfold and more money in hand, would bear these points in mind, and endeavour to reduce the amount of these perpetual annuities. It was ridiculous that the people of the twentieth century should be paying interest on loans incurred for wars and other events of 200 years ago. There ought surely to be some limit on the burdens placed on posterity, and he hoped the right hon. Gentleman would bear in mind the suggestions he had made.
  MAJOR JAMESONsaid he thought the Chancellor of the Exchequer deserved great credit for the manner in which he had placed his proposals before the House. He thought there was one item which might have been avoided, and that was the additional tax upon tea. Taxation upon tea must always come home very heavily to the working classes, and more particularly to the poor peasants in Ireland. The way in which the right hon. Gentleman proposed to levy the tobacco duties, so as to enable the workmen in (his country to be able to compete with the workmen in foreign countries, was a good proposal. He wished to point-out to the right hon. Gentleman a method of taxation which would have taken the bitter sting out of the tax upon tea. He very much regretted that the shilling duty upon corn had not been reimposed. Whether this was owing to the fact that the Government were afraid of the false cries raised against the re-imposition of the duty on corn he did not know, but he defied anybody to show that bread was not cheaper with the shilling duty on
  926
  corn than it was to-day. They had tried this shilling duty on corn, and it had not made the slightest difference in the price of bread. The Government ought to have had pluck enough to have put on that shilling duty again. Another suggestion he had to make was the imposition of a tax over and above the 4d. that now stood on German and other foreign spirits. He could not but wish that the right hon. Gentleman would do with a little less duty on tea and make up the sum by taxing the German solution of wood-shavings, sawdust, and sulphuric acid which was imported into this country. This stuff was supposed to be made into methylated spirits, but large quantities of it were made up either as Scotch or Irish whisky, which the unfortunate people drank. In this matter he was pleading the cause of the poorest people in a very poor country. He hoped the Chancellor of the Exchequer would give more consideration to what he had said about the great burden he was putting upon the Irish peasantry by this increase in the taxation upon tea. He wished the Committee to remember that 75 per cent. of the taxation of Ireland was indirect taxation and came out of the pockets and the stomachs of the people, and no taxation which was raised in that way could be considered satisfactory. The right hon. Gentleman had shown that as far as he dared he would protect the working-men, and he congratulated him. He believed the greater part of the House shared the right hon. Gentleman's opinions on the fiscal question. An enormous change of opinion had come over the country in the last six months. A few years ago if anyone had dared to say a word against free imports the roof would have been taken off his head in five minutes, yet now surprise was affected because the country had not been carried by storm in six months. He hoped the Chancellor of the Exchequer would do something to stop this nefarious trade in spirits, which was so detrimental to the agriculturists of England, Scotland, and Ireland.
  MR. AUSTEN CHAMBERLAIN: The hon. and gallant Member has, as it were, invited me to follow him on to some very controversial ground, and, like some other hon. Gentlemen, has been anxious, I think, to tempt me away from the Budget to the discussion of questions not now before the House. I have laid before the House proposals which ate in perfect harmony with the established fiscal system in this country. I have not concealed my views from the Committee, and I think they are pretty well known. The Committee know also what are the pledges of the Government, and that it is in the spirit of those pledges that I have framed my Budget proposals. I therefore respectfully decline to depart from the subject of the proposals which I have laid before the Committee into an abstract discussion of our fiscal policy, which is out of place in this debate, and would only prolong it, very much to the detriment of the business of the Committee, without usefully serving any of the ends desired on one side or the other. I earnestly appeal to the Committee to conclude the discussion of this Resolution; I shall not attempt to force the judgment of the Committee, but it is generally understood that the general discussion which has been provided by the Income-Tax Resolution shall be finished to-night. The hon. Member for Barnsley has asked me whether I can give any further information as to the issue of the Transvaal war contribution loan. I am not in a position to make any more definite statement on that subject than I have already made. The issue of that loan must be dependent on two circumstances. It must be dependent on the prosperity of the Transvaal and upon the state of the money market. Anybody in my position would,
  928
  I think, feel that it was absolutely impossible to go to the money market and attempt to raise a loan of this kind under the circumstances which prevailed both in the Transvaal and the money market here during the months which have elapsed this year, or until there was some improvement. How rapid the improvement may be I would not like to prophesy. All I can say is that until things have improved neither my right hon. friend the Colonial Secretary nor myself, for we must act together in the matter, can attempt the issue of that loan.
  MR. JOSEPH WALTON: The obligation of the guarantors is not in any way affected by the delay.
  MR. AUSTEN CHAMBERLAIN: The obligation of the guarantors to guarantee the first £10,000,000 is no way affected by the delay. Observations have been made on the subject of the large expenditure of the country, and it has been suggested that I am inclined to deal lightly with these heavy burdens, and that I am not as anxious for sound and wise economy as the Committee would desire. That is not so. I recognise that our burdens are heavy, and I do not wish to minimise them. Moreover, I am very anxious to reduce expenditure where reduction can be made with safety, but I do not think, as I have already said, that any admonitions from me would be any more effective than they were from my predecessors of far longer standing in this House and who spoke with greater authority than I can speak. All I have asked the Committee to do this afternoon is to bear in mind the facts of the case and not to exaggerate them. If one wants a cure, the first

  929
  thing to do is to ascertain exactly what the evil is, and one's case is not strengthened by representing the evil as much greater than it really is. My right hon. friend the Member for East Somerset has complained that the private Member has under the present Supply Rules no adequate opportunity of urging economy. I differ as to that altogether. I know that my experience in the House does not compare with his, but I sat in the House for some years before the new Supply Rules were passed, and I know how we took two or three Votes on Account in the course of a session. We wrangled for a day over each one and then we were closured at the end of the day. A Vote on Account was put down in the ordinary Vote of Supply, and the whole day was often spent discussing such matters as the Royal Palaces and the various works executed under the First Commissioner of Works. A more profitless discussion in Supply it would be impossible to imagine than the discussion in those days, and I do not think what happened upon those occasions produced a favourable impression upon any land of business people who happened to be in the public gallery of the House at the time. Whereas formerly much valuable time was wasted in profitless discussion on unimportant matters, now those Votes are put down which the Government find, after inquiry, the Opposition are most anxious to criticise. I think the discussion of Supply is now far more effective than it was when it was taken in a fagged and tired House in August, when most Members had gone away under the doctor's order or under some more serious necessity.
  Some criticisms have been made in regard to the comparative ineffec-
  930
  tiveness of the present opportunities afforded for criticism in Committee of Supply, but I think criticisms in regard to the extravagance of the House come rather oddly from my right hon. friend the Member for East Somerset. He did succeed in obtaining a private Member's evening before Easter for the discussion of a Motion, and what was the Resolution he chose? After listening to his speech one would have thought that he would have selected the growth of expenditure or the extravagance of some particular Department, or that he would have submitted a He-solution with a view to limiting the outgoings of the Exchequer and controlling our reckless expenditure. But not a bit of it. The Motion which my right hon. friend put down was a Motion calling upon the Government to find more money for the training of elementary school teachers out of Exchequer funds. We already find the largest proportion of the expenditure, and yet the right hon. Gentleman used his opportunity to urge that we should provide more. Such expenditure may or may not have been desirable, but I think it is a little hard that the right hon. Gentleman should come down here and criticise the growth of our expenditure in view of the fact that when he had a whole evening to do what he liked with he utilised it in urging increased expenditure upon the Government. Some hon. Members talk very dolefully about the fall in our credit. But our credit is now better than the credit of any other nation, and it is better than it was twenty years ago. In 1884 the yield of Consols was £2 9s. per cent.; this year on 31st March it was £2 17s. 9d. per cent., and since then it has risen. We have been in office for eighteen years

  931
  with a very small break, and we have been, according to the hon. Gentleman, extravagant, wasteful of the resources of the nation, and burdening its industry and commerce, and when the hon. Gentleman wants to prove that our credit is depressed, he takes the figure at which Consols stood four years ago, after fourteen years of reckless extravagance by this Government. He took a date when Consols stood higher than ever before. I thank the hon. Gentleman for recalling to me how great had been the rise in the value of Consols, and of the credit which is due to the Party of which I have the honour to belong as a Member.
  We have agreed to take the general discussion on this Resolution, which is the Income-Tax Resolution. The hon. Member for West Clare has raised a point of a very important but of a highly technical character, which will be dealt with more appropriately when the spirit duty comes up for consideration. In the course of the discussion a desire has been expressed in various quarters of the House, that both the differentiation and graduation of the income-tax should be referred for consideration to the proposed Committee. In my opinion neither is practicable, and neither is desirable; and, holding these views, the Government would be misleading the country if they referred the questions as open questions to the Committee. In 1853 Mr. Gladstone, in the course of his great speech on the income-tax, declared that the differentiation of the income-tax would mean the destruction of the country's greatest finance instrument. The right hon. Gentleman the Member for West Monmouth also gave the same opinion only a few years ago. A great deal is said about differentiating between fixed incomes and incomes
  932
  due to personal exertions. But how many prosperous concerns are there which have lost those who managed them and have not merely failed to return any income but have lost the capital of the undertaking? Take the case, however, of a man earning £10,000 a year due to his own exertions. He is to be assessed at a lower rate. But the widow, with a family of young children, with £500 a year is to be taxed at the full rate, subject to the ordinary abatements, because the income comes from investments. I think, on the other hand, that this is the person who is more deserving of further consideration, if possible, than the wealthy professiona man with his large income. It is also suggested that the tax should be graduated. I believe for myself—and I have strong authority for the opinion, which is not confined to this side of the House—that you cannot graduate the income-tax as long as you maintain what is the great safeguard of the income-tax—namely, the assessment of a large portion of the income at its source. If that is given up, the income-tax is ruined as a great engine for procuring revenue, and if you superimpose on an assessment at the source a further assessment in the case of wealthy people for the purpose of graduation, this will enormously increase the cost, will entail wholly new machinery, will become excessively inquisitorial, and will offend powerful interests. I do not think the House could devise a more ingenious way of making the income-tax unpopular, ultimately involving its total repeal. Suppose that there was an income-tax of 1s. in the £. Up to what amount would you graduate? Suppose you graduate up to 2s., and

  933
  that incomes above £5,000 should be subject to this further graduation. If you take a lower figure you will have to inquire into the incomes of so many persons that the difficulties of collection to which I have alluded would become absolutely insuperable and intolerable. Suppose, however, the maximum to be 2s. I have made some inquiries of the Inland Revenue, and the authorities there think that it is a fair assumption to make, that if you start with incomes of £5,000 and graduate the tax from 1s. up to 2s., the average tax on those higher incomes might be taken at Is. 6d. They put the total amount of income which would be subject to graduation at one-fifth of the total income subject to income-tax. The tax would then yield £3,000,000 in addition. On that they advise me that you must deduct £750,000, not for evasions, but for legitimate avoidance of duty on income which might be removed abroad, but which at present is subject, to income-tax in this country. That is sufficient to show what a very delicate matter you are touching when you attempt to put these exceptional taxes on particular classes of income-tax payers. Therefore, allowing nothing for deliberate evasion, nothing for the greater inducements to understate income, nothing for the general alarm which would certainly be caused by any such proposal, and nothing for the increased cost of collection, which would be heavy, the possible gain is reduced to £1,500,000. That will not allow you to give much relief to other classes. Examined in detail, so great are the practical difficulties of this scheme, and so small are the possible advantages, that the opinion of Mr. Gladstone, reaffirmed by the right hon. Gentleman the Member for West Monmouth and the right hon.
  934
  Gentleman the Member for West Bristol, must continue to hold the field. I think I have dealt with all the new points that have been raised since I last spoke—I hope not in an unnecessarily controversial spirit and not in a manner which will prolong discussion It has been a business-like discussion, and I would express the hope that it will not be carried beyond twelve o'clock to-night.
  MR. CAWLEYasked the right hon. Gentleman if he could give some idea when they were to have the £30,000,000 from the Transvaal. He suggested that the gentlemen who guaranteed the loan should issue it at once and underwrite it. At present we had a large deficit, and if they would guarantee the? per cent. loan as they had promised it would be of enormous benefit to this country to have the money, but if they waited until the country was very prosperous again they would be able to guarantee a 4 per cent. loan and make a large profit themselves, but it would not be of the same service to this country. The late Colonial Secretary spoke of the patriotism of those gentlemen but he did not think that would be very apparent to the ordinary individual. Supposing that Consols were in anything like the position they were in before, those gentlemen who were being extolled for their patriotism would really be putting money into their pockets by guaranteeing this transaction. His hon. friend was dissatisfied with the late Chancellor for taking off the shilling duty on corn. If anybody went to Chicago and bought corn he would pay the same price for it, whether there was a shilling duty here or not. Then who paid the duty? Of course the importer in the first instance, and eventually the consumer.

  935
  They could not properly compare the price of Consols now with the price eighteen years ago. They must take the time when the late Colonial Secretary was the predominant influence in the Government. It was during those years, and through that influence, that the credit of the country had so seriously fallen.
  MR. BONDsaid a question of great importance had been touched upon in the course of the debate, and he wished to refer to it because it had a bearing on the question of the housing of the working classes. The Chancellor of the Exchequer in his admirable speech referred to the increase in the indebtedness of local authorities, and suggested that it was the duty of Parliament to take steps to chock that growing indebtedness. The course which the right hon. Gentleman suggested for adoption was to raise the rate of interest on the money which was advanced by the Public Works Loans Commissioners from 3⅛ per cent. first to 3¼ and then to 3½ per cent. Such an increase would be a serious hindrance to the construction of dwellings for the working classes, whether by local authorities or private companies. He understood the Chancellor of the Exchequer intended to discriminate with regard to the purposes for which loans were asked, and he hoped that discrimination would be exercised in favour of loans for building purposes.
  MR. WHITLEYsaid he agreed that there were difficulties which made differentiation between earned and unearned incomes for the purpose of income-tax almost impossible, but he suggested that when the income-tax was
  936
  raised, as it had been in recent years, by 50 percent., there should be a proportionate increase of the death duties. That would put an addition to the burden on direct taxation upon inherited wealth, and to that extent would relieve the man whose income was derived from his own ability and industry. Taking last year and the current year together, the Chancellor of the Exchequer had had to I provide for a deficit of £10,000,000. Of that sum, £4,500,000 had been met by additional taxation, but, unless the right hon. Gentleman could show how he had met the remaining £5,500,000, he thought they must conclude that it had come out of borrowed money taken from the Exchequer balances. If that were the case, the right hon. Gentleman hardly deserved the compliments poured upon him for not touching the Sinking Fund, because he had done practically the same thing. This deficit of £10,000,000 exactly corresponded with the sum which the mine-owners of the Transvaal failed to produce in January last. If that £10,000,000 had been forthcoming, it would not have been necessary for the Chancellor of the Exchequer to call upon the consumers in this country to bear additional taxation.
  THE PRIME MINISTER AND FIRST LORD OF THE TREASURY (Mr. A. J. BALFOUR,)said he wished to appeal to the Committee to allow the general debate to close.
  MR. WEIRraised, as a new and novel point, the taxation of deer-stalking in Scotland.
  And, it being Midnight, the CHAIRMAN proceeded to interrupt the business,

  937
  Whereupon Sir FREDERICK BANBURY rose in his place, and claimed to move "That the Question be now put."
  Question put, "That the Question be now put."
  The Committee proceeded to a division, and the Chairman stated that he thought the Ayes had it; and, on his decision being challenged, it appeared to him that the division was frivolously claimed, and he accordingly called upon the Members who supported and who challenged his decision successively to rise in their places, and he declared the Ayes had it, six Members only who challenged his decision having stood up.
  MR. DALZIELremaining seated, and with his hat on, said he wished to call attention to the fact that when a division
  was taken on a new Question the House should be cleared and the bells rung.
  THE CHAIRMAN: I am putting the Question now.
  MR. DALZIELsaid that the previous Question had been put and decided, and a new Question was now being put from the Chair. Some hon. Members might have left in connection with the previous decision, and they would have received no intimation that a new Question was being put.
  THE CHAIRMANsaid he was about to clear the House of strangers, so that the bell might be rung, when the hon. Member interrupted him.
  Question put accordingly.
  The Committee divided:—Ayes, 214; Noes, 16. (Division List No. 90.)

  AYES.

  Agg-Gardner, James Tynte

  Cecil, Evelyn (Aston Manor)

  Faber, Edmund B. (Hants, W.)

  Agnew, Sir Andrew Noel

  Cecil, Lord Hugh (Greenwich)

  Faber, George Denison (York)

  Anson, Sir William Reynell

  Chamberlain, Rt. Hon. J. (Birm.

  Fielden, Edward Brocklehurst

  Arkwright, John Stanhope

  Chamberlain, Rt Hn. J. A. (Worc.

  Fitzroy, Hon. Edward Algernon

  Arnold-Forster, Rt. Hn. Hugh O.

  Clive, Captain Percy A.

  Forster, Henry William

  Arrol, Sir William

  Cochrane, Hon, Thos. H. A. E.

  Fyler, John Arthur

  Asher, Alexander

  Colomb, Rt. Hon. Sir John C. R.

  Galloway, William Johnson,

  Bain, Colonel James Robert

  Compton, Lord Alwyne

  Gardner, Ernest

  Balcarres, Lord

  Cook, Sir Frederick Lucas

  Gladstone, Rt. Hn. Herbert John

  Ralfour, Rt. Hon. A.J. (Manrh'r)

  Corbett, T. L. (Down, North)

  Godson, Sir Augustus Frederick

  Balfour, Rt Hn Gerald W. (Leeds

  Cox, Irwin Edward Bainbridge

  Gordon, Hn. J. E. (Elgin & Nairn)

  Banbury, Sir Frederick George

  Crossley, Rt. Hon. Sir Savile

  Gore, Hn G.R.C. Ormsby-(Salop

  Barran, Rowland Hirst

  Cubitt, Hon. Henry

  Gore, Hon. S. F. Ormsby-(Linc)

  Bhownaggree, Sir M. M.

  Cust, Henry John C.

  Graham, Henry Robert

  Bignold, Arthur

  Dalrymple, Sir Charles

  Greene, Henry D. (Shrewsbury)

  Black, Alexander William

  Davenport, William Bromley-

  Greene, W. Raymond-(Cambs.)

  Blundell, Colonel Henry

  Davies, Alfred (Carmarthen)

  Gretton, John

  Bond, Edward

  Davies, Sir Horatio D. (Chatham

  Groves, James Gamble

  Bowles, T. Gibson (King'sLynn

  Dickson, Charles Scott

  Hambro, Charles Eric

  Brassey, Albert

  Digby, John K. D. Wingfield-

  Hamilton, Marq. of, L'nd'nderry

  Brigg, John

  Disraeli, Coningsby Ralph

  Hardy, L. (Kent, Ashford)

  Brodrick, Rt. Hon. St. John

  Dobbie, Joseph

  Harmsworth, R. Leicester

  Brotherton, Edward Allen

  Dorington, Rt. Hon. Sir John E.

  Hay, Hon, Claude George

  Caldwell, James

  Douglas. Rt. Hon. A. Akers

  Heath, Arthur Howard (Hanley

  Campbell, J.H.M. (Dublin Univ.

  Doxford, Sir William Theodore

  Heath, Tames (Staffords., N.W)

  Carson, Rt. Hon. Sir Edw. H.

  Durning-Lawrence, Sir Edwin

  Heaton, John Henniker

  Cavendish, V. C.W.(Derbyshire

  Dyke, Rt. Hon. Sir William Hart

  Helder, Augustus

  Cawley, Frederick

  Egerton, Hon. A. de Tatton.

  Helme, Norval Watson

  Henderson, Sir A.(Stafford,W.)

  Milvain, Thomas

  Saunderson, Rt. Hn. Col. Ldw. J.

  Henderson, Arthur (Durham)

  Montagu, G. (Huntingdon)

  Seely, Charles Hilton (Lincoln)

  Hermon-Hodge, Sir Robert T.

  Montagu, Hon. J. Scott(Hants.)

  Seely, Maj. J.E.B. (Isle of Wight

  Hickman, Sir Alfred

  Morgan, David J. (Walthamstow

  Shackleton, David James

  Hoare, Sir Samuel

  Morpeth, Viscount

  Smith, Abel H. (Hertford, East)

  Hobhouse, Rt. Hn H. Somers't E

  Morrison, James Archibald

  Smith, James Parker (Lanarks.)

  Hogg, Lindsay

  Mount, William Arthur

  Smith, Hon. W. F.D. (Strand)

  Hope, J. F (Sheffield, Brightside

  Murray, Rt Hn. A. Graham (Bute

  Spear, John Ward

  Hope, John Deans (Fife, West)

  Murray, Charles J. (Coventry)

  Stanley, Rt. Hon. Lord (Lancs.)

  Horniman, Frederick John

  Nussey, Thomas Wilans

  Stewart, Sir Mark J.M' Taggart

  Hoult, Joseph

  O'Neill, Hon. Robert Torrens

  Stirling-Maxwell, Sir John M.

  Hozier, Hon. J. Henry Cecil

  Palmer, Walter (Salisbury)

  Stone, Sir Benjamin

  Jebb, Sir Richard Claverhouse

  Parkes, Ebenezer

  Talbot, Lord E. (Chichester)

  Jeffreys, Rt. Hon. Arthur Fred.

  Percy, Earl

  Talbot, Rt. Hn. J. G. (Oxf'd Univ

  Jessel, Captain Herbert Morton

  Pierpoint, Robert

  Thomas, David Alfred (Morthyr)

  Johnstone, Heywood (Sussex)

  Pilkington, Colonel Richard

  Thornton, Percy M.

  Kennaway, Rt. Hon. Sir John H.

  Pirie, Duncan V.

  Tomlinson, Sir Wm. Edw. M.

  Kenyon, Hon. Geo. T. (Denbigh)

  Platt-Higgins, Frederick

  Tuff, Charles

  Kerr, John

  Plummer, Walter R.

  Tuke, Sir John Batty

  Kimber, Henry

  Powell, Sir Francis Sharp

  Ure, Alexander

  Law, Andrew Bonar (Glasgow)

  Pretyman, Ernest George

  Valentia, Viscount

  Lawrence, Sir Joseph (Monm'th)

  Pryce-Jones, Lt.-Col. Edward

  Walker, Col. William Hall

  Lawrence, Wm. F. (Liverpool)

  Pym, C. Guy

  Walrond, Rt. Hn. Sir William H.

  Lawson, Jn. Grant (Yorks., N. R

  Randles, John S.

  Walton, Joseph (Barnsley)

  Layland-Barratt, Francis

  Rasch, Sir Frederic Carne

  Wason, John Cathcart(Orkney)

  Lee, Arthur H. (Hants., Fareham

  Reid, James (Greenock)

  Welby, Lt.-Col. A.C.E. (Taunton

  Lees, Sir Elliott (Birkenhead.)

  Remnant, James Farquharson

  Welby, Sir Charles G.E. (Notts)

  Legge, Col. Hon. Heneage

  Renwick, George.

  Wharton, Rt. Hon. John Lloyd

  Leigh Sir Joseph

  Ridley, Hon. M.W. (Stalybridge

  White, Luke (York, E. R.)

  Leveson-Gower, Frederick N.S

  Rigg, Richard

  Williams, Osmond (Merioneth)

  Long, Rt. Hn. W. (Bristol, S.)

  Ritchie, Rt. Hon. C'has. Thomson

  Willoughby de Eresby, Lord

  Lonsdale, John Brownlee

  Roberts, John Bryn (Eifion)

  Wilson, A. Stanley (York, E.R.

  Loyd, Archie Kirkman

  Roberts, Samuel (Sheffield)

  Wodehouse, Rt. Hn. E.R. (Bath)

  Lucas, Col. Francis (Lowestoft)

  Robertson, Herbert (Hackney)

  Wolff, Gustay Wilhelm

  Lucas, Reginald J. (Portsmouth)

  Rolleston, Sir John F. L.

  Woodhouse, Sir J T. (Huddersf'd

  Lyttelton, Rt. Hon. Alfred

  Ropner, Colonel Sir Robert

  Wortley, Rt. Hon. C. B. Stuart-

  Macdona, John Gumming

  Rose, Charles Day

  Wrightson, Sir Thomas

  M'Arthur, Charles (Liverpool)

  Rothschild, Hon. Lionel Walter

  Wylie, Alexander

  M'Crae, George

  Round, Rt. Hon. James

  Wyndham, Rt. Hon. George

  M'Iver, Sir Lewis (Edinburgh W.

  Royds, Clement Molyneux

  M'Killop, James (Stirlingshire)

  Rutherford, John (Lancashire)

  Markham, Arthur Basil

  Rutherford, W. W. (Liverpool)

  TELLERS FOR THE AYES—Sir Alexander Acland-Hood and Mr. Ailwyn Fellowes.

  Martin, Richard Biddulph

  Sackville, Col. S. G. Stopford-

  Meysey-Thompson, Sir H. W.

  Sadler, Col. Samuel Alexander

  Mildmay, Francis Bingham

  Samuel, Herbert L. (Cleveland)

  Milner, Rt. Hn. Sir Frederick G

  Samuel, S. M. (Whitechapel)

  NOES.

  Ainsworth, John Stirling

  Levy, Maurice

  Wilson, John (Falkirk)

  Allen, Charles P.

  M'Hugh, Patrick A.

  Young, Samuel

  Channing, Francis Allston

  Shaw, Thomas (Hawick B.)

  Edwards, Frank

  Taylor, Theodore C. (Radcliffe)

  TELLERS FOR THE NOES—Mr. Weir and Mr. Dalziel

  Evans, Samuel T. (Glamorgan)

  Toulmin, George

  Jones, William (Carnarvonshire

  Trevelyan, Charles Philips

  Lawson, Sir Wilfrid (Cornwall)

  Whitley. J. H. (Halifax)

  Whereupon the Chairman left the Chair to make his Report to the House.
  Resolution to be reported upon Monday next; Committee to sit again upon Monday next.
  Adjourned at twenty minutes after Twelve o'clock

The LORD HARTISMERE(L. Henniker) sat first in Parliament after the death of his father.

PRIVATE BILL BUSINESS.
The LORD CHANCELLOR The LORD CHANCELLOR acquainted the House, That the Clerk of the Parliaments had laid upon the Table the Certificates from the Examiners that the Standing Orders applicable to the following Bill have not been complied with:—Richard Jaeger's Patent.
And also the Certificates that the further Standing Orders applicable to the following Bills have not been complied with:—Chippenham Gas; Kirkby-in-Ashfield Urban District Gas; Sheppy Gas; Wellington (Somerset) Gas; North Staffordshire Railway; Norwich Water; Sutton Gas; Croydon Gas; Great Northern Railway; London, Tilbury, and Southend Railway; Ryde Gas. The same were ordered to lie on the Table.
Derbyshire and Nottinghamshire Electric Power Bill [H.L.]. The Lord BALFOUR informed the House that the opposition to the Bill was withdrawn. The orders made on the 22nd of February and the 22nd of March last discharged, and Bill committed.
Lothians Electric Power Bill [H.L.]. Report from the Select Committee, That the Committee had not proceeded with the consideration of the Bill, the opposition thereto having been withdrawn; read, and ordered to lie on the Table. The orders made on the 19th of February and the 22nd of March last discharged, and Bill committed.
Ulster Electric Power Bill [H.L.]. Report from the Select Committee, That the Committee had not proceeded with the consideration of the Bill, the opposition thereto having been withdrawn; read, and ordered to lie on the Table. The orders made on the 19th of
798
February and the 22nd of March last discharged, and Bill committed.
Bridlington Corporation Bill [H.L.]. Report from the Select Committee, That the Committee had not proceeded with the consideration of the Bill, no parties having appeared in opposition thereto; read, and ordered to lie on the Table. The orders made on the 19th of February and the 22nd of March last discharged, and Bill committed.
Gomersal Gas Bill; Bexhill Water and Gas Bill. Read 2a, and committed.
Torquay Tramways Bill. Read 2a, and committed. The Committee to be proposed by the Committee of Selection.
Great Eastern Railway Bill. Read 2a, and committed.
Barnard Castle Gas Bill [H.L.]. Read 3a, and passed, and sent to the Commons.
Preston and Blackburn Tramways Bill [H.L.]. Read 3a; Amendments made; Bill passed, and sent to the Commons.
Chesterfield Corporation (Tramways and Improvements Bill [H.L.]. Read 3a, and passed, and sent to the Commons.

HUTCHESONS' HOSPITAL AND HUTCHESONS' EDUCATIONAL TRUST BILL [H.L.]
[SECOND READING.]
Order of the Day for the Second Reading read.
LORD TWEEDMOUTH: My Lords, under ordinary circumstances I should move the Second Reading of this Bill in a couple of sentences, but as my noble friend Lord Camperdown intends to ask your Lordships to adopt the somewhat drastic treatment of refusing the Bill a hearing before a Committee of your Lordships' House, I must briefly state what the history and objects of Hutchesons' Hospital and Hutchesons' Educational Trust are, and also the proposals contained in this Bill. The Hutchesons' Hospital and Hutchesons' Educational Trust is the result of the endowment of certain worthy citizens of Glasgow of two centuries ago. I think there were five or six original endowers. There were

799
the brothers George and Thomas Hutcheson in 1640, there were James Blair and David Baxter in 1714 and 1776, and there was William Scott in 1818. All these citizens of Glasgow had the same object—namely, to benefit Glasgow men of their own class. It was not a charity for the benefit of Glasgow as a whole, but for the benefit of the burgesses of Glasgow; and the intention of the founders of the charity was to help their brother burgesses when in need, first by giving them pecuniary assistance, and secondly by giving education to their sons. The proportion in which these funds were to be distributed was, roughly, three-fifths for personal maintenance and two-fifths for the purpose of education. When the scheme first came into operation its method was this—the personal assistance was given to needy burgesses of Glasgow by putting them into a hospital—that is to say—they were lodged and maintained in a sort of glorified workhouse. The education was given by boarding out the boys in different parts of Glasgow. But this system was very soon changed. As early as 165- a school for the boys was established, and by 1780 the hospital system had fallen through, and, instead, pensions were given to the needy burgesses. So things went on, and in 1816 the present boys' school was built, and in 1876 a girls' school was also erected by means of which girls, for the first time, had the benefit of educational assistance under the charity. Then, in the year 1872, the Hutchesons' Hospital Act was passed which allocated the funds of the trust in the proportion of about half to pensions and half to education. In 1882 came the Scottish Educational Endowment Act, and, as a consequence of that, the Scottish Educational Endowment Commission, of which my noble friend Lord Balfour of Burleigh was President, in 1885 prepared a scheme for the administration of this trust, by which the charge of education was taken out of the hands of the old body which had complete control—namely, the patrons —and given to a new body called the governors. It was decided that two-fifths of the funds coming from the Hutcheson, Blair, and Baxter endowments should go to education, and three-fifths to pensions.
Let me now say a word as to the two bodies who manage the funds. First, there are the patrons. They consist of
800
the whole of the Corporation of Glasgow, some seventy-seven persons. Added to them are twenty-two outsiders, made up of the seven ministers of the Established Churches in the old city parishes of Glasgow, and certain persons appointed by outside bodies, of whom the most important are the Merchants House and the Trades House in Glasgow, making altogether a body of ninety-nine. It is due to this body of patrons that the funds have been so admirably managed that from an endowment, originally of a few thousand pounds, the annual income has grown to £19,000 a year. I may say that the patrons still have complete control of the pension part of the scheme, and also complete management of the general fund. The patrons are unanimously in favour of this Bill. I come now to the governors, who, under the scheme of 1885, were given the charge and the management of the educational part of this Trust. They, too, are a very representative body. They consist of twenty-one persons, eleven being nominated by the Corporation of the City of Glasgow, one by the University of the City of Glasgow, two by the city ministers of Glasgow, one by the Merchants House in Glasgow, one by the Trades House in Glasgow, three by the School Board of Glasgow, and two taken from ministers of other denominations than that of the Established Church, who have churches within the district affected. I think your Lordships will agree that that is a thoroughly representative body. Of the twenty-one gentlemen who form the body of governors, fourteen are in favour of the Bill as it stands. There are six against it, and there is one, a very distinguished member of the Glasgow School Board—Sir John Cuthbertson—who is neutral. You are, therefore, in this position. The patrons are unanimously in favour of this Bill, and the governors are in favour of it in a majority of more than two to one.
The first object of the Bill is to enable the governors to put an end to the schools that are now carried on under the Trust—the boys' school and the girls' school. That may seem, at first blush, rather a strong order, but I will show that it is not so. Since 1885 the whole circumstances of education in Glasgow have totally changed. You have had compulsory free education introduced, you have had

801
greatly increased grants for education, and there is also this other point, that the situation in which the present boys' school under this Trust is placed in Glasgow is one that has had a bad effect on the success of the school. Whereas in the year 1885 there were on the boys' side 1,825 fee-paying scholars, there are now only 164; and whereas in 1885 there were on the girls' side 562 fee-paying scholars, there are now only 216; and it is calculated that the average course of education of each of the scholars in these schools amounts to no less than £13 a year, as against £2 18s. 3½d. a head for the scholars in the elementary schools of the School Board of Glasgow, and £9 11s. 4d. for the scholars in the higher grade schools in Glasgow. From that it is very evident that the education given to the children in these schools is exceedingly expensive, and that the money that is now devoted to these schools could be much more usefully and profitably expended in some other direction for the purposes of education. That idea is borne out by the action of the School Board for Glasgow itself, for last year that Board accepted the propositions now made in the Bill, and consented to take over the schools of the Hutchesons' Hospital. Now they have resiled from that position, and say they will not take over the schools; but the reason they give for that is, that already in the public schools of Glasgow there is ample accommodation for all the scholars likely to be brought forward, and that they have already under their jurisdiction sufficient room for ail the scholars to be set free supposing these schools were closed. In that respect the action of the School Board itself is an argument in favour of the proposition of the governors.
As I have said, roughly speaking the proportion given to pensions and education in the past has been three-fifths to two-fifths. The proposal now made by the governors is, taking the annual income at the present moment at £19,000, to stereotype the sum of £7,000 for education, and they propose that the rest shall be given for pension purposes under the original Trust. But there is nothing final about the £7,000. If a Committee of your Lordships' House thought that a larger proportion should be given, or that the proportion should be smaller, it would
802
be perfectly open to the Committee to make any such alteration, and the promoters of the Bill would be perfectly willing to accept it. In consequence of the opposition of the School Board, a number of the clauses now in the Bill will have to be struck out, because there is no longer any reason for an arrangement between the two bodies as to the disposition of these schools. The Bill goes on to lay down the various objects to which this £7,000 a year is to be applied: but again I say there is nothing final in these proposals. They are proposals that a Committee of your Lordships' House could well investigate and upon which the Committee could well express an opinion. When my noble friend the Acting Chairman of Committees brought this Bill before the House the other day my noble friend Lord Camperdown took exception to it on two grounds—in the first place, because it was too soon after the 1885 settlement. I admit that it is soon after that settlement, but the change in the educational position of Glasgow since 1885 has been very goat, and what was suitable in that year, and what was the best course then, need not necessarily be, suitable or the best course to-day. Therefore I think that argument is not a sound one, and that it is a perfectly fair thing that a further revision of the situation should take place. The other point made by my noble friend was that it was inexpedient to deal with this question now because there was a Scottish Education Bill about to be introduced. That Bill has now been brought forward, and I have no doubt His Majesty's Government before the end of the session will have passed it, but I say that that very fact is an additional argument in favour of a new and final settlement of the position of this Trust.
The Scottish Education Bill in no way deals with educational endowments. The Secretary for Scotland, in introducing the Bill, especially disclaimed any intention of dealing with endowments in any way whatever. Undoubtedly the Bill will bring about a new state of affairs. The Glasgow School Board, under the Bill, is retained with a larger area. In the case of a fund like this, which must necessarily be a fluctuating fund, it seems to me that in the interests of education

803
itself it is desirable that a fixed sum should be applied year by year for the purpose of education in Glasgow. It must be remembered that you are departing, to some extent, from the intention of the endowers of this fund by applying any part of it to the education of children in Glasgow generally. The money will be applied for the benefit of the whole of the young people of Glasgow, and of a very much enlarged Glasgow. I argue, then, that it is not too soon to deal with this matter, and, indeed, that the introduction of the Scottish Education Bill is a good reason for a revision and a final settlement of this question, and for fixing a definite sum which shall, year by year, be applied for educational purposes to the best possible effect. I think it is desirable that the methods in which that money is to be applied should be fixed in some way and should be left to be managed and altered from time to time, as may be necessary, by the authorities controlling this particular Trust and the education authority of Glasgow itself. I ask your Lordships to read this Bill a second time and send it to a Committee. There will be several questions that will come before the Committee. The first question the Committee will have to decide will be, Is it desirable that the schools of the Hutchesons' Trust should be abolished and be merged in the general school system of Glasgow? The second question will be, Is it desirable that the sum to be applied annually from this Trust for education in Glasgow should be a fixed sum? The Bill proposes £7,000, and the Committee will have to decide whether it shall be that sum, or whether the amount shall be higher or lower. Finally, the Committee will have to decide whether the methods by which it is proposed to apply the funds are good ones, and, if not, in what way they can be amended. These are all subjects with which a Committee of your Lordships' House are well able to deal, and I trust you will give the Bill a Second Reading.
Moved, "That the Bill be now read 2a."—(The Lord Tweedmouth.)
THE EARL OF CAMPERDOWN: My noble friend Lord Tweedmouth has gone in some detail into the merits of the Bill,
804
as perhaps was necessary in view of the fact that I have given notice to move its rejection. I hope your Lordships will excuse me if I do not follow him into those details, but lay before your Lordships in a very few words the reasons for the Amendment which I have placed on the Paper. It is only necessary for me to go back as far as the year 1885. In that year the Commissioners, of whom I think Lord Balfour of Burleigh was Chairman, made a scheme for Hutchesons' Hospital under the Act of 1882; and, to put it shortly, the result was this: they decided that for the future two-thirds of the income of the hospital was to be applied to education and the remainder to pensions. A body of twenty-one governors was appointed to administer this Trust, and the majority of those governors—namely, I think, fourteen out of the twenty-one—are now approaching this House to secure an alteration of the Trust and the terms of the scheme which they were only appointed to administer. In reality the governors, as such, have nothing more to do with the constitution of the Trust under which they work than any other members of the community. My first objection to the Bill is this, that it is an attempt by a private Bill to alter a public Act of Parliament. I am not going to argue that question now, but it is one which is open to a great deal of argument. The next objection to the Bill is that it proposes to sell the schools of the Trust. Since the Bill was introduced it has been entirely altered. The Bill as presented to this House set out that they had made an agreement with the School Board for Glasgow to take over the schools. For reasons with which it is not necessary to trouble your Lordships, the, School Board for Glasgow have changed their mind, and, so far from assenting to this Bill, they are opposing it.
I own that when I first looked into the matter it appeared to me that if the governors wished to alter the Trust they ought to have adopted a course which was laid down in the Act of Parliament and have appealed to the Court of Session. The Court of Session is in Scotland; the majority and the minority of the governors are resident in the neighbourhood; and the matter might have been

805
inquired into by the Court of Session. But, on looking into the matter further, I must say it does appear that this is not an amendment or an alteration of the scheme, which could be dealt with in that way, but an absolutely new scheme, and therefore I do not think that the argument that they ought not to have applied to Parliament would fairly apply. But, at all events. I think your Lordships will be of opinion that if this Bill is to go to a Committee, the opinion of those governors who are opposed to it ought to be placed before the Committee quite as strongly and on the same terms as those of the governors who are in favour of it. As a matter of fact, so doubtful is the procedure which is proposed by this Bill that the governors have no right whatever to apply the funds of the Trust to the promotion of this Bill. I have looked at the Bill to see how it was proposed to provide for the costs. The Bill is promoted by fourteen of the governors, and they have inserted a clause empowering them to pay their own expenses out of the funds of the Trust, which they were really appointed only to administer, and which they have no special right, any more than anybody else, to propose to alter. If it is right that their views should be placed before the Committee and that their expenses should be paid, I hope the House will be of opinion that the views of those who are opposed to the Bill should also be placed before the Committee and that their expenses should be paid in a similar manner.
I know that your Lordships are always unwilling to give instructions to a Committee, but I think this is a matter which is really of very considerable importance, and in which an exception should be made. If the views of the minority are not placed before the Committee, I do not see how the Committee will be able to judge as to the merits of the opposition. In the Scottish Education Bill, which is now before Parliament, there is a clause dealing with the transfer of schools, under which this transfer might be carried out, provided that the School Board agreed to accept the schools. I do not, however, wish to go into that now. What I would suggest to the House is that the attention of the Committee should be called to this point. I am not aware that the minority
806
of governors have up to the present time petitioned against the Bill. I only know one of them, Professor Ramsey, and I do not know whether he and the other governors in the minority have or have not petitioned against the Bill, but I think it is very likely they will not be willing to incur personally the cost of opposing the Bill. The result will be that the Committee will not be placed in possession of their views. I suggest that if the costs of the majority of the governors are to be paid out of the funds of the Trust it is only fair that the costs of the minority should be so paid. I do not know what the opinion of my noble friend Lord Balfour of Burleigh may be with regard to a suggestion of that kind, but if he were in favour of its being in some way brought before the Committee then I think that in all the circumstances I should not be inclined to press my opposition to the Bill to the extent of refusing it a Second Reading. I formally move my Amendment until I hear what opinion may be expressed on this point.
Amendment moved—
"To leave out the word 'now,' and add at the end of the Motion the words 'this day six months.'"—(The Earl of Camperdown.)
THE EARL OF KINTORE: My Lords, perhaps it would be convenient that I should state in a word or two the view of His Majesty's Government with regard to this Bill. I hope I am justified in thinking, from the remarks that have just fallen from my noble friend, that it is not his intention to persist in his Amendment for the summary rejection of the Bill by refusing it a Second Reading. The Bill, no doubt, does offer several points for criticism, and it is not one to which it is possible to pledge the Government's support. At the same time, the Government do not wish to go so far as to support its rejection on Second Reading. They think that the better and more convenient course is not to oppose the Second Reading, but, reserving full freedom of action at later stages, to agree to the Second Reading, and send the Bill upstairs to a Committee.
THE ACTING CHAIRMAN OF COMMITTEES (Lord BALFOUR of BURLEIGH): My Lords, I think it is probable that, holding the position which I do at the present

807
time, the House will not unnaturally expect a few words of guidance on this matter from me. Perhaps I ought just to say a word as to the position in which I, personally, am placed, as both the noble Lord who moved the Second Reading of this Bill, and the noble Earl who moved its rejection, have stated that it is in fact a Bill for the alteration of a decision which was come to by a Commission some fifteen or twenty years ago, over which I had the honour to preside. It was, I may mention, the first Chairmanship which I had the pleasure of occupying, and it was given to mo by the noble Earl opposite, the Leader of the Opposition, under circumstances which he will, no doubt, very well recollect. When this Bill was presented last year at the Scottish Office in the form of an Order under the Private Bill (Scotland) Procedure Act, I agreed with my noble friend Lord Morley, the Chairman of Committees of your Lordships' House, that, owing to the circumstances in which I was placed, and the manner in which I had been identified with the previous decision, it would be Letter that it should not go forward under that Act, but should come to Parliament TO be decided here, and that the noble Lord the Chairman of Committees should exercise his discretion over the formal stages in regard to it. It is rather by an irony of circumstances, that the very-state of things, which I desired to avoid, has now come about, and I find myself, by the action which I then took, in the very position which I did not want to be in.
The noble Lord who moved the Second Reading of the Bill has so fairly and satisfactorily stated the circumstances that I do not think I need say a word about the narrative or the reasons for which this Bill comes before us. As has been stated, the object of the Bill is to effect certain very important changes in the destination of Hutchesons' Fund. It is to end the schools, to alter the division of the funds between the charitable and the educational sides of the Trust, and to alter the allocation of the funds, whatever they may be, which are hereafter to be devoted to educational purposes. The noble Lord who moved the rejection of the Bill seemed to suggest that this ought to have been
808
effected by an appeal to the Court for Session in Scotland.
THE EARL OF CAMPERDOWN: I beg the noble Lord's pardon. I said I at first thought that, but that on further consideration, owing to the revolutionary nature of the Bill, I could not urge that argument.
LORD BALFOUR OF BURLEIGH: That was exactly the point I was going to make. These changes are so revolutionary that I do not think the Court, under the powers given to it by the statute, would have consented to undertake such a revision. The noble Lord also said it was wrong that the schools should be sold, and seemed to animadvert upon the changes which have been made in the Bill. I do not think there is much in that point, because the School Board was the first to change its position. The School Board was, I think, perfectly justified in changing its position if it liked, because it is a different Board from the one which was in office when this proposal was first brought forward. With regard to the point which my noble friend. Lord Camper down, made as to the expenses of the minority, I think that is a perfectly fair subject for consideration by the Committee, and I have no doubt that it will be considered by them. I have made inquiry to-day, and I find that the minority of the trustees have presented a petition and will, therefore, be able to put their views before the Committee. I do not think this is the proper time to discuss the merits of this proposal, and I do not propose, therefore, to go into the advantages or disadvantages of it. If I have an opinion, I am bound to say that, at any rate as regards some of the changes, I think they go too far, and I think they are too revolutionary; but I cannot take up the position, after a lapse of nearly twenty years since the present arrangement was made, and after the changes which have been brought about in secondary and higher education in Scotland, that there is no case for some change. Personally, I should deprecate very much the changing of the proportion to be devoted to pensions and to education. But, although my opinion is in that direction, I am not prepared, as Chairman of Committees, to suggest to

809
Parliament that that is a matter so contrary to the procedure and practice of Parliament that it should not be discussed if the majority of the trustees wish to have discussion upon it. If I have any great regret, it is that a considerable portion of the funds of this charitable institution should be spent in a contest of this kind, and to that extent I regret the action of the majority of the patrons.
I am able to say that if your Lordships consent to give the Bill a Second Reading there is no fear whatever that the points at issue will not be fully discussed upstairs. Seven petitions have been presented against the Bill, and, in all the circumstances, I think we may rely upon it that the matter will be fully discussed before the tribunal to whom I hope your Lordships will send it. Perhaps I ought to say that I have received a paper to-day from the promoters of the Bill to the effect that it is intended to oppose the locus standi of some of the bodies who have petitioned against the Bill. I am satisfied that most, if not all, of these bodies are interested in effect in this matter, and I am bound to say that if it should turn out that, according to the Rules of Parliament, narrowly construed, material interests such as these are shut out from a hearing upstairs, my attitude towards the Bill would be very greatly changed. Undoubtedly, great changes are proposed, and it is only right that they should be fully discussed in the light of all the information and in the presence of, and by, those who will be most affected by the ultimate decision come to. On the whole, I think it would be wise not to interfere in this case with the ordinary practice of this House, but to send this Rill to a tribunal upstairs, where, in the light of full information, what I believe will be a just and a fair decision will be come to. On the whole, therefore, I support the Second Reading.
LORD TWEEDMOUTH: Would the noble Lord state his opinion with regard to help being given to the minority to bring their case forward?
LORD BALFOUR OF BURLEIGH: I think the usual practice is, that the matter should be brought before the Committee. If the Committee thought that a minority
810
had acted frivolously or without due cause, they would probably not order their expenses to be paid; but, if they think, as I think it is probable that in this ease they will, that substantial interests are affected, and that these highly-respectable and influential gentlemen have not acted frivolously, I should personally express the hope that consideration would be given to the point raised by Lord Camper down. That is a matter which can safely be left to the good sense of the Committee.
LORD TWEEDMOUTH: I am sure those who are supporting this Bill will agree with what has just been said by Lord Balfour, and I hope that, in the circumstances, my noble friend will withdraw his Amendment for the rejection of the Bill.
THE EARL OF CAMPERDOWN: In view of the statement that has been made that the minority will have an opportunity of stating their views, I beg to withdraw my Amendment.
Amendment, by leave of the House, withdrawn.
On Question, Bill read 2a, and committed: the Committee to be proposed by the Committee of Selection.

RETURNS, REPORTS, ETC.
  TRADE REPORTS (ANNUAL SERIES).
  No. 3138. Denmark (Iceland); No. 3139. Servia.
  JUDICIAL STATISTICS (ENGLAND AND WALES) 1902 (PART II. CIVIL JUDICIAL STATISTICS).
  Statistics relating to the Judical Committee of the Privy Council, the House of Lords, the Supreme Court of Judicature, County Courts and other Civil Courts, edited by Sir John Macdonell, C.B., LL.D., a Master of the Supreme Court,

  BOARD OF EDUCATION.
  Report of a public inquiry held under Sections 16 and 23 of the Education

  811
  Act, 1902, and Section 73 of the Elementary Education Act, 1870, by A. T. Lawrence, K.C., at Carmarthen, on the 24th and 25th of March, 1904.
  Presented (by Command), and ordered to lie on the Table.

  SEA FISHERIES BILL [H.L.]
  The Report of Amendments to be received To-morrow, and Bill to be printed as amended in Committee of the Whole House. (No. 45.)
  ARMY (ANNUAL) BILL.
  Brought from the Commons; read la; to be printed; and to be read 2a Tomorrow (The Viscount Hutchinson [E. Donoughmore.]) (No. 46.)

  OUTDOOR RELIEF (FRIENDLY SOCIETIES) BILL [H.L.]
  [SECOND READING.]
  Order of the day for the Second Reading read.
  LORD MONKSWELL: My Lords, in 1894 the Legislature legalised a practice already adopted by a great number of hoards of guardians of giving outdoor relief to applicants without taking into consideration money that they received from friendly societies. What this Bill proposes to do is to make that practice universal, but only as regards sick pay, and only as regards sick pay up to 5s. a week. This Bill is well known to many of your Lordships. It. has twice passed the House of Commons unopposed, and it has twice, I regret to say, been rejected by your Lordships; but last year it was only rejected by the very narrow majority of fifty-seven to fifty, and I think I am entitled to say that the opposition on that occasion was not either very fierce or very determined. On that occasion my noble and learned friend Lord James of Hereford was unfortunate enough to be opposed by Lord Northbrook, who led the opposition to this Bill, but he merely opposed the Bill on one point. He expressed the opinion that there was not sufficient information to hand as to the working of the Act of 1894. Lord James was unfortunately opposed also by the noble Earl the Leader of the
  812
  Opposition on the same ground, but I hope that the Bill will on this occasion be read a second time, as both these noble Earls will, I understand, explain to the House that they do not intend to continue their opposition to the measure.
  The attitude of the supporters of the Bill has always been that there is no necessity for more information than we have got. Since the year 1894 we have had experience of the working of the Act of that year, and our experience has been this, that although, no doubt, there have been some differences of opinion between boards of guardians, still, in the main, those boards have availed themselves of the option given them by the Act of 1894. Surely, as my noble and learned friend said last year, uniformity is desirable in the matter of the administration of Poor Law relief in regard to friendly societies. Under the present system, as my noble and learned friend explained, whether a man does, or does not, get any benefit from sick pay from a friendly society depends rather upon geography than upon the justice of his case. It does not only depend on the particular board of guardians that may have to settle this question, but, where the board is equally divided in opinion, it depends on whether or not certain guardians happen to be present at the particular meeting which settles the case. Therefore you may say that whether a man gets the advantage of his thrift in subscribing to a friendly society or not, depends not only on geography, but also on the chance presence or absence of a particular member of a board of guardians. That is to say, at present the matter is a mere lottery. What the friendly societies say is this, that there is no sufficient inducement for a man to subscribe to friendly societies in order that he may obtain sick pay. He does not know whether he will obtain any benefit. He may obtain a benefit, but he may not.
  The noble and learned Lord put the case last year of two men talking over the matter. One of them said, "I am going to pay into a friendly society and I shall get sick pay of 5s. a week if I am ill," and the other man replied, "I shall not pay

  813
  in, because when I'm ill the board of guardians may take into consideration the fact that I get 5s. a week from a friendly society and give me no more. That is to say, if you pay into the friendly society and I do not, we may both get exactly the same when we are ill." Certain objections have been taken to this Bill. It has been objected to on the ground that it, in point of fact, proposed a revolution in the principle of the Poor Law, and that it is inconsistent with the Statute of Elizabeth, which enacts that the only claim to outdoor relief is destitution. Whether this Bill is or is not consistent with the Act of Elizabeth does not seem to me to be before your Lord ships to-day, because, if it was wrong to say that thrift ought to be taken into consideration in granting outdoor relief, that wrong was done by the Act of 1894. Again, if it is said, as it is said, Why do you give special privileges to friendly societies over other forms of thirift? The answer to that is that that preference has already been given by the Act of 1894. Moreover, it appear to me that even on its merits there is a great deal to be said for special privileges being given to friendly societies, for they save an untold amount in the rates through the thrift they inculcate among the poor. If you pass this Bill more people will pay into these friendly societies, and consequently fewer of them will come upon the rates.
  I would again emphasise the fact that this is merely a Bill to deal with sick pay which stands on a totally different footing from any other kind of relief granted by the friendly societies. The difference was very well put by Sir Hugh Owen, when he was advising the Government to bring in the Bill of 1894. He said—
  "Sick pay is in some degree destined for the restoration of the health of the subscriber."
  That is a very special and important reason why you should be specially indulgent in the matter of sick pay. Boards of guardians can give what is necessary, but not more than is necessary, and the difference between what the board of guardians give and the 5s. that the man may get out of his friendly society is this, that the extra 5s. will be just about what he would have to pay for a nurse. The result is that a man who subscribes to a friendly society has
  814
  the advantage himself of getting better sooner and more completely, and that is an advantage which is shared not only by himself and his family but by the community generally. This Bill legalises nothing that was not legal before.
  In connection with this Bill I have two great grounds for regret. First of all, I regret very much that the Bill was not introduced again by my noble and learned friend opposite, and I regret still more that it was not made a Government measure, as it clearly ought to have been, because the Government have over and over again blessed the Bill. Last year, in the House of Commons, Mr. Walter Long, representing the Local Government Board, said—
  "The Bill has been considered by my Department, which is responsible for the Poor Law administration of the country. It has been carefully examined by experts and men of great experience in the administration of the Poor Law, and I have most carefully considered it myself. In addition to that the Bill was most carefully considered by the Cabinet as a whole, and it was decided that it was worthy of the support of this House, and one which we sincerely hope to see accepted, and placed upon the Statute-book."
  This year we have got further than the opinion even of the President of the Local Government Board. Speaking on 23rd March, the Prime Minister, referring to this measure, said—
  "The Government entirely approve of the Bill and will do all they can to further its progress."
  I am told that I have made an error in tactics in introducing this Bill first in the House of Lords. If I have committed that error I am not solely responsible, because I am acting according to the wishes of the friendly societies. And, my Lords, I think there is a good deal to be said for the point of view that the friendly societies take up. They are disappointed—deeply disappointed—that your Lordships should have twice refused to pass a Bill that had practically the unanimous assent of the House of Commons. Notwithstanding that disappointment they desire to treat your Lordships' House with the utmost respect and to be perfectly conciliatory in this matter, and they have deemed it more courteous not to press a Bill again upon your Lordships through the House of Commons. What good would that

  815
  do? Your Lordships know the opinion of the House of Commons upon it. It would add nothing to its authority to send it up again through the House of Commons, and the friendly societies think it better to ask your Lordships' House on its own initiative to give the Bill a Second Reading, They are confident that this House will give all the weight that ought to be attached to a Bill that comes up, as this Bill has come up, twice from the House of Commons. It is no use accentuating what your Lordships know perfectly well already. In conclusion, therefore, let me express my very earnest hope that at the third time of asking your Lordships will be pleased to give a Second Reading to this Bill, and will not again bitterly disappoint the hopes of 4,000,000 of the most thrifty and best-conducted working people of this country.
  Moved, "That the Bill be now read 2a—(Lord Monkswell.)
  THE EARL OF NORTHBROOK: My Lords, on two occasions I ventured to think it my duty to present to your Lordships certain reasons why I thought that further information was necessary before your Lordships agreed to the Bill, the Second Reading of which has just been moved, and I think perhaps it is right that I should state at once what course I propose to take on the present occasion. The noble Lord has indicated to your Lordships that the Prime Minister has distinctly stated in another place that it was his intention to use the whole power of the Government in order to support this Bill. That being so, it would be putting your Lordships' to unnecessary inconvenience if I were to bring forward a Motion for its rejection in this House. I know the power of the Government in your Lordships' House, and I think it would be wrong for me to take that course. But in arriving at that conclusion I am bound to say that nothing in the speech of the noble Lord has in any way altered the opinion which I have held regarding the Bill.
  I wish also to say a few words in defence of the conduct of your Lordships with regard to this Bill, because that
  816
  conduct has been partly impugned by the noble Lord who has just sat down, and it has been freely attacked outride this House. In the year 1894, as the noble Lord has said, a Bill was introduced into this House by a private Member to legalise the proceedings of boards of guardians in not taking into consideration, in awarding outdoor relief, the receipts of the applicants from friendly societies. That Bill gave a discretionary power to boards of guardians, and when it was introduced the noble Lord who was then Leader of the House—my noble friend the late Earl of Kimberley—said he thought the Bill was wrong in principle, but at the same time it was desirable to pass it in order to legalise a practice which had grown up. The noble Lord, the then Leader of the Opposition—the late Marquess of Salisbury—spoke still more strongly on the matter. Lord Salisbury said on that occasion that, in his opinion, the discretion given to boards of guardians should be absolute. Therefore the Act of 1894 passed your Lordships' House on the distinct understanding that the concession given in respect to members of friendly societies should be discretionary, and should be considered by the guardians when they came to deal with each individual case. That is the position of your Lordships in respect to the Act of 1894. That Act had only been passed one year when there was a very important Royal Commission on the Aged Poor, which made the following recommendation—
  "We are of opinion that it would be undesirable to interfere, either by statute or Order, with the discretion now vested in boards of guardians as to the manner in which relief should be given, since it is in our view of essential importance that guardians should have power to deal on its merits with each individual case."
  That was in 1895. Notwithstanding that, the Bill was passed on the distinct understanding that the power should be discretionary. Notwithstanding the, opinion of that Commission, from that day to this there has been a constant attempt on the part of the noble Lord and others with whom he has acted in this matter to change that principle, and to make it compulsory upon boards of guardians not to consider the friendly society sick pay of any applicant for outdoor relief.

  817
  The first compulsory Bill was introduced only two years after the discretionary Bill was passed. For several years those attempts were opposed by the Government.† Suddenly, however, a change took place. In 1901 there was a qualified support of the Bill on the part of the Local Government Board in the House of Commons, and when the Bill came up to this House the matter was considered to be an open question. Noble Lords were not to take it as a Party question, and it was intimated that Members could vote according to their lights. On that occasion there was a majority of two to one against the Bill—the same Bill as that which the noble Lord has now introduced. Last year the Bill again came up to this House and we decided that we would not attempt to throw it out. but we thought we had a right to receive some further information before being asked to pass a Bill of this importance.
  I do not think that any of your Lordships will deny that to pass an Act absolutely debarring boards of guardians from considering the merits of individual cases that come before them for relief is a great and substantial change in the principle of the Poor Law. That being so, we desired that a Select Committee might be appointed to hear the reasons that friendly societies had to give for introducing the Bill, and to see whether they could establish the ground they took—namely, that sufficient consideration was not given to members of friendly societies by the different boards of guardians. The division which took place last year on the Bill was considered to be a division on the question whether there should or should not be a Select Committee for that purpose. A small majority was in favour of a Committee, and it became my duty to ask your Lordships to agree to the appointment of a Committee. I regret to remind your Lordships that the friendly societies intimated, through my noble friend Lord Portsmouth, that they would decline to give any evidence before the Committee, even if your Lordships were to appoint it. In those circumstances, I considered that it would have
  † Parliamentary Debates [Fourth Series], page 1252.
  818
  been futile to ask your Lordships to agree to the appointment of a Committee. That is how the question stands in regard to your Lordships' House, and I do not think anyone can say that your Lordships have treated this question otherwise than with great calmness and with great consideration, and I assert that in no speech that has been made on this Bill, although we doubted its propriety, has a word been said against the great value of friendly societies. I have myself on several occasions in this House and elsewhere expressed myself in favour of those societies. As far as your Lordships' position in the matter is concerned, I think it would be exceedingly unjust to charge your Lordships with any hostility to friendly societies in consequence of the manner in which you have treated the Bill. The noble Lord who moved the Second Reading said that in his opinion it is right to give a preference to friendly societies. That is just one of the questions upon which inquiry is absolutely necessary. Your Lordships are aware of the mass of savings of the people of this country quite apart from friendly societies. I find that the sum of £322,000,000 represents the funds of provident societies and Post Office and other savings banks. If we take £30,000,000 from that for the money in the Post Office Savings Bank, which may be represented as invested by people of the better class, there is a sum of nearly £300,000,000 remaining. Would your Lordships be surprised to know that out of these savings there is only some £38,000,000 in the friendly societies? I doubt whether it is right or just, if this is a proper measure, that those who have savings of other kinds should not have exactly the same privilege as those with savings in the friendly societies.
  LORD MONKSWELL: My argument was that that preference had been already given in 1894, and that it was not given for the first time by this Bill.
  THE EARL OF NORTHBROOK: At any rate this measure raises a question of very great difficulty and importance, and one which in the opinion of those of us who supported the appointment of a Committee should be inquired into. The

  819
  capital of the friendly societies is probably not a fifth of the whole of the savings of the people of this country, and I say that it is a question for inquiry whether other savings should not be treated in a similar manner. But as the friendly societies declined to give evidence before this Committee we were precluded from receiving the information which, in my opinion, was absolutely necessary before such a measure should be passed. The noble Lord also gave as a reason for this Bill that there should be a uniform practice throughout the country. We have always asked the friendly societies to produce any evidence of cases in which boards of guardians have not given sufficient consideration, since the Act of 1894, to savings invested in friendly societies. Not a single case of hardship of that kind has been brought forward, and we thought that as they had not chosen to produce any such case there ought to be inquiry so that your Lordships might be satisfied that there was some justification for an alteration of such great importance in the administration of the Poor Law. The noble Lord said that friendly societies were of opinion that the present condition of the law deterred persons from becoming members of those societies. He stated that when a man joined a friendly society he wanted to know whether his sick pay would be considered supposing he had the misfortune to apply for parish relief. I have to say, in answer to that statement, that that is not the opinion of the friendly societies. The friendly societies, in their statement which was put before your Lordships last year, distinctly denied that anyone joined a friendly society with the view of coming on the parish for parochial relief. The reason a man joined a friendly society was, they said, that he should not come on the parish. These are the words of the friendly societies in the paper sent the your Lordships in defence of this Bill—
  "The persons chiefly affected joined the societies many years ago. The very object they had in joining was to avoid the necessity in their old age of applying to the hoard of guardians."
  they went on to say—
  "We are in a position to assert that those who join friendly societies at the present time are actuated by the same motives."
  820
  Therefore the idea put forward now, that the administration of the Act of 1894 by boards of guardians can be any deterrent to persons joining friendly societies, appears to be answered by the statement of the friendly societies themselves. I consider that thrift and support out of taxes or rates ought to be separate altogether one from the other, and that is another reason for the view we took last year that this matter should be inquired into. I should not have adduced any arguments against the Bill, it not being my intention to ask your Lordships to refuse it a Second Reading, had it not been for the speech of the noble Lord in introducing it. In one observation of the noble Lord I entirely concur. I refer to his statement that a Bill of this importance should have been introduced by His Majesty's Government and not by a private Member. I can conceive nothing worse than amending the Poor Law in very important parts by Bills brought in by private Members. I venture to submit to His Majesty's Government that this is a matter of great public importance, and one deserving of inquiry. It cannot stand where it is. It will be followed by other Bills of a similar kind. The whole question is one which should be looked into by His Majesty's Government, and while I protest again against the principle of the Bill, I venture to add to that protest an earnest appeal to His Majesty's Government not to leave this important question to private Members, but to deal boldly themselves with a question which vitally affects the interests of the people of this country.
  THE SECRETARY OF STATE FOR FOREIGN AFFAIRS (the Marquess of LANSDOWNE): My Lords, I will not take up the time of the House by repeating the arguments which have been already used this evening, but I wish to confirm what has already been said during the course of this discussion—namely, that in the view of His Majesty's Government it is desirable that this Bill should be read a second time. If any doubt arises in our minds on this occasion, that doubt is due not so much to the contents of the Bill as to the circumstances in which it has been introduced. I understand that two other Bills dealing

  821
  with the same subject, and presumably promoted from the same source, are before the other House of Parliament. The noble Lord who moved the Second Reading of this Bill gave us a very considerate explanation of the reason for which a third Bill was introduced to your Lordships' House this evening. Whether there are other more obscure reasons, possibly of a strategical character, which have led to the course which has been followed, I will not pause to inquire. The subject is perhaps not one into which it would be in accordance with the rules of order that I should enter. As to the Bill itself, it seems to us that the question of principle has been long ago disposed of—I mean by the Bill of 1894; and, indeed, before the date of that Act I understand that it was not unusual for Poor Law guardians to distribute outdoor relief to persons who were in receipt of pay from friendly societies. Under the Act of 1894 a person may receive pay of that description, and to an extent exceeding the amount of 5s. and it may be pay other than sick pay, and nevertheless he may, and, in fact does, receive outdoor relief from the guardians. In our opinion it is desirable that this practice should be regularised. We think it inconvenient that in one union such relief should be freely given and not in another union.
  The noble Earl who spoke last, and who has often addressed us with authority on this subject, suggested that the matter was one with which His Majesty's Government might them selves have dealt, and that a Government Bill upon the subject should have been placed before your Lordships. Well, my Lords, Parliament has already three Bills dealing with the matter, and I really think that we might well hesitate to add a fourth to their number; but, in any case, it is quite clear that it would be impossible for us to add to our programme of legislation for this session a Bill of this kind. The Bill is brought forward by private Members, and, believing as we do that its proposals are reasonable, knowing as we do that it is supported by the friendly societies, that it has been carefully examined by the Local Government Board and is approved by them and their advisers, and that it has twice passed the House of Commons virtually without
  822
  opposition—knowing all this, we consider it would be desirable that the Bill should be read a second time by your Lordships.
  EARL SPENCER: My Lords, as my vote and action last year have been referred to by my noble friend, I think I may be allowed to explain my present position with regard to the Bill. I have never been an uncompromising opponent of this measure. Last year was the first occasion on which I voted against its Second Reading, but I fully admit that I have always had very grave doubts whether the Bill was founded on true principles. I agree to a great extent with what my noble friend behind me has said, and with what has been said on former occasions by the late Lord Salisbury and by my respected friend, the late Lord Kimberley, and I should like to explain why it was I took the action I did last year. I came to the House having these doubts, but I had practically made up my mind to vote for the Second Reading. I believed that the Bill ought to have been brought in by His Majesty's Government, because it was a matter of very great principle, and I do not think that the noble Marquess has to-night given sufficient importance to the influence of the Government in this matter when he said that, as there were already three Bills in the hands of private Members, it was not necessary that the Government should introduce another. We all know that when the Government takes up a measure of this sort it has far greater influence in Parliament. I had other doubts on the subject. I felt that this Bill only touched the fringe of the question, that there were many other ways in which a thrifty man put by savings, and that to deal only with subscriptions to friendly societies would not be going far enough. I thought there was also considerable doubt as to how the various Poor Law guardians had dealt with the subject, and, therefore, when my noble friend Lord Northbrook proposed that there should be a Committee, I at once stated that I should support the reference of the Bill to a Committee, where I thought very important information would be gained, and great authority obtained either for or against the measure. That was my position last year, and I was very much

  823
  disappointed when Lord Portsmouth informed the House that the friendly societies would not give evidence before a Committee. That, of course, justified Lord Northbrook in not persevering in his proposition, but I was placed in the position of having voted against the Second Reading in the belief that it would be referred to a Committee. Now we come to the present session. It is quite true that two Bills have been proposed in another place. The national conference of friendly societies very clearly stated why they wished the Bill introduced in this House. They thought it was more polite and considerate to your Lordships' feelings not to have it again pressed upon you on the ground that it had been passed a third time in another place. I feel that if your Lordships reject this Bill you will be placed in a position of considerable embarrassment, and of opposition, not only to the unanimous wish, twice expressed, of the House of Commons, but also to the unanimous opinion of the enormous number of members who belong to the friendly societies. I. therefore, think it would be wrong on the part of your Lordships, even if you entertain, as I do, even now, considerable doubt as to the policy that is contained in the Bill, to oppose what appears to be the unanimous vote of the other House and the great desire of the friendly societies. I hope your Lordships will not divide on the Bill but give it a Second Reading unanimously.
  LORD JAMES OF HEREFORD: My Lords, after what has fallen from the noble Marquess the Leader of the House and from the noble Earl the Leader of the Opposition it may be thought unnecessary for me to add anything, especially as there is to be no division; but I feel that the arguments expressed by my noble friend Lord Northbrook ought not to pass unnoticed. It is quite true that the Act of 1894 only gave a discretionary power to boards of guardians in this matter, but I would point out that in every reform we must proceed progressively. If it is shown that a permissive power, after it has been tried for ten years, is unsatisfactory owing to the power being permissive, surely it is not unreasonable to ask that it should be
  824
  made compulsory. It has been asked over and over again in the debates in previous years, and my noble friend Lord North-brook has repeated the question to-night, Why do you only give this preference to friendly societies? Savings in the Post Office Savings Bank and in building societies and other institutions have been referred to, and it has been asked why they should not all be similarly treated. What I would say to that is, Do not let the best be the enemy of the good. If this privilege ought to be extended, then let it be the care of my noble friend Lord Northbrook and those who think with him to propose its extension and see how-far the principle can be applied.
  The principle of this Bill is that what friendly societies pay, up to 5s., shall not be taken into consideration by the guardians when outdoor relief is applied for. It must be remembered that the 5s. a week paid by friendly societies is paid weekly, and only in case of sickness, and, therefore, we have a safeguard which is absent in the case of savings banks and other forms of savings. The capital sum of such savings can be withdrawn and may be spent in riotous living, in which case, of course, a man ought not to receive contemporaneous relief from the ratepayers. There is no analogy between the two cases, but if my noble friend can point out, during the progress of the Bill, any condition of things that answers to a friendly society paving a member 5s. a week while sick. I am certain the promoters of the Bill would cheerfully extend the principle they seek to apply to friendly societies. The aim of the Bill is to aid men who wish to be thrifty and careful. Take the case of a labourer in a rural district. He can ill afford to save, and may be tempted to spend his money in drink or in other ways. He asks himself whether he should obtain that which would afford him satisfaction for the moment, or pay the 6d., or whatever it may be, into a friendly society. What is the argument that will be used? He will ask himself, If I pay this into a friendly society, shall I get it back in sick pay if I want it? In one sense he does, but he does not get it back in the full sense, for he is in no better position than his neighbour who does not contribute to the friendly society, because

  825
  his neighbour will also receive 5s. from the board of guardians. If your Lordships refuse the principle of this Bill, you will be saying distinctly that you think it just that a man who is thrifty and pays into a friendly society should not be one wit better off than the man who spends his money in the public house and does not make any provision for sickness Moreover, the advantage which the member of a friendly society would receive would be that he would have more than the bare necessities of life, which is all that the guardians can provide in outdoor relief, and he would therefore feel more self respect and would not regard himself as an absolute pauper. There is this other point, that by giving him this increased advantage in sickness his speedier return to health is secured, with the result that the ratepayers are the earlier relieved of paying outdoor relief. I am sure your Lordships will be doing well in holding out the hand of assistance to these men by accepting the Second Reading of this Bill.
  VISCOUNT GOSCHEN: My Lords, I had not intended to say a single word on this measure. I spoke upon it last year and suggested some objections to it, and I took part in the division by which it was thrown out. I agree in the main with what: Lord Northbrook has said, that it would be best that your Lordships should allow the Bill to puss without a division. I should have been silent but for the speech which has just been delivered by my noble and learned friend,a speech which requires an answer seems to me, because of the very eloquence and feeling which he threw into it. A great part of the noble and learned Lord's speech was in favour of thrift generally. It was not in favour of the friendly societies only, but of thrift generally, and so far as it was in favour of thrift I am sure every Member of your Lordships' House would agree with it. But the cardinal point of the Poor Law should be kept in mind—the relief of distress; and as soon as that distress is mitigated up to a certain point the action of the Poor Law ought to cease; and the best way is to leave the working classes to carry on their system of self-help which, with the assistance of friendly societies, will be most likely to promote their
  826
  welfare. The friendly societies have become one of the glories of our land by keeping themselves entirely free from the action of the Poor Law and Government action, and thereby they have been a manifestation of the power of the working classes to govern themselves. It is not a wise step to weaken one of the fundamental principles of the Poor Law in order to give to friendly societies privileges they do not need. Hut the speech of my noble and learned friend Lord James will be quoted by the working classes as a direct invitation to put friendly societies before all other forms of thrift.
  LORD JAMES OF HEREFORD: I did not say that.
  VISCOUNT GOSCHEN: But my noble and learned friend's whole argument was directed to show the superior advantages of friendly societies over every other form of investment, and it would be a serious thins for your Lordships to endorse any particular investment and indirectly to advise the working classes that this form of investment is superior to all others, Government savings banks included. My noble and learned friend pointed out that if a man spent his money in drink he would be as well off as if he invested it in a friendly society. But it is not necessary for him to spend it in drink if he does not invest it in a friendly society. There are many other forms of investment provided for the working classes of which they have availed themselves to the full extent. I entreat your Lordships, not in reference to this particular Bill, but to the whole of this class of Bills, to fasten upon the question how far this taking into consideration other forms of income when dealing with distress is to be carried. That is the real root of the question. This Bill is the triumph of an instrument often derided, but a most successful instrument—it is the triumph of that which we call the thin end of the wedge. In 1894, power was given to boards of guardians to exercise their discretion. That is sufficient, in the judgment of many, to lead up to the present Bill. My noble friend said we had not shown that it has failed or led to any abuse. On the other hand, we have no evidence

  827
  that it has done any good. That was one of the reasons why my noble friend pressed for information last year. My noble friend next pointed to the anomaly that it should depend on the discretion of guardians whether the sick pay received from friendly societies was taken into consideration or not. Surely my noble friend knows that the whole question of outdoor relief implies a large discretion left to the guardians. They do not always give the same amount to every person who applies. They have to act according to their discretion, and it would be as logical to say that every one given outdoor relief should have a fixed sum or otherwise the discretion of the guardians might produce injustice, as to say that, because there is a certain anomaly created by boards of guardians taking different views on this question, therefore it should be made compulsory. We have not seen the last of this question. Other questions of this kind will arise, and, though they may seem small in themselves, may by a wider and wider application weaken the whole structure of the Poor Law, which has cost so much to defend, and the administration of which has on the whole been a great success.
  LORD STANLEY OF ALDERLEY: My Lords, it may perhaps seem rather treating the House as a debating society to discuss a question on which there is to be no division, but I felt inclined to rise after hearing the speech of my noble and learned friend Lord James, and I wish to follow on one or two slightly different points the remarks of the noble Viscount opposite. I wish first of all to say that I do not believe for one minute that any little advantage derived from a more indulgent administration of the Poor Law-has the slightest influence in inducing thrifty people of the working classes to join friendly societies. The history of the growth of friendly societies shows that any benefit to be derived in this way has had absolutely no influence. What is the history of friendly societies? They grew from small beginnings in the eighteenth century; they developed in the nineteenth century; and all those people joined the friendly societies at a time when there was no Poor Law benefit to be derived whatever. No doubt since 1894 there
  828
  has been some advantage, though, as we are told, the advantage varies according to the disposition of boards of guardians; but will anyone say that the great societies have found the number of members joining in any way stimulated by this small hypothetical benefit? It is, of course, easy to understand why there is this practical unanimity in acquiescing in this legislation, for there are behind this movement these very powerful organisations with 4,000,000 adult members, mostly voters. But, apart from that, do noble Lords really believe that they are substantially stimulating the cause of thrift by this legislation? I feel perfectly sure that the best working men do not expect, and would be ashamed to be told that they did expect, to have recourse to the Poor Law. If the Poor Law is used as an engine for stimulating thrift there will be a tendency to drift into all the evils of the old Poor Law. If you are going to have a discriminating system of aid according to the meritorious character of the recipient and not according to his destitution, then it is perfectly clear that you cannot stop at selecting one particular form of thrift which you shall reward. Lord James said there was a marked difference between sick relief, paid week by week, and other forms of thrift represented by savings; but I would like to ask whether there does not come quite as serious a pinch from quite as unavoidable causes as sickness. Do not the great out-of-work benefits which the trades unions grant to their members represent quite as unavoidable a calamity? That money also is doled out week by week, and if it is meritorious to encourage men who make provision against, loss of employment by sickness surely it is quite as meritorious to favour men who make provision for loss of income by being thrown out of work. In this Bill you are only encouraging that class of the community who earn the best wages and are best able to take care of themselves. Practically no women are, in friendly societies, secured against illness. If there is a body of people who really make a noble effort to maintain themselves by their industry it is widows. Are you going by-and-by to give them some special facilities? I feel sure that it is by a rigorous keeping of the Poor

  829
  Law to its primary duty, which is the relief of destitution, that we shall best administer to the development of the self-respect, thrift, and energy of the working classes.
  On Question, Bill read 2a, and committed to a Committee of the Whole House.

  SALE OF INTOXICANTS TO CHILDREN BILL [H.L.]
  House in Committee (according to Order).
  Clause 1:—
  LORD DUNBOYNEmoved to omit Clause 1 and to insert a new clause. He said the Amendment had been framed to meet the objection of the noble and learned Karl on the Woolsack. The clause at present in the Bill made the holder of a licence liable for the act of his servants in selling intoxicating liquors to children, even against his instructions. He admitted that the clause went too far, and he now moved its omission in favour of a new Clause 1, which was not open to the same objections. The new clause would not impose any hardship on the licence-holder. On the contrary, it would be a protection to him, for a servant would be less likely to commit a breach of the law if he felt that he himself was thereby rendered liable to punishment.
  Amendment moved—
  "In page 1, line 7, to leave out, Clause 1 and to insert as a new clause 1 Every agent or servant of any licensed person who knowingly sells or delivers any intoxicating liquor to any person contrary to the provisions of the Intoxicating Liquors (Sale to Children) Act, 1901,shall be liable to the same penalties as are provided by the aforesaid Act in the ease of a similar offence committed by such licensed person.'"(Lord Dunboyne.)
  On Question, Amendment agreed to.
  Remaining clauses agreed to.
  Bill recommitted to the Standing Committee; and to be printed as amended. (No. 47.)

  NEW ZEALAND AND PREFERENCE.
  EARL BEAUCHAMP: My Lords, I beg to ask His Majesty's Government if they will communicate to the House the correspondence between the Colonial Office and the New Zealand Government with regard to the Preferential Trade Act. I may inform the noble Duke that in addition to this information a desire has been expressed that he should also let us have copies of Mr. Seddon's Bill as it was introduced and as it finally passed the New Zealand Parliament. I should also like to ask whether it would be at all possible that copies of the debate in the New Zealand Parliament should be circulated to Members of your Lordships' House.
  THE UNDER-SECRETARY OF STATE FOR THE COLONIES (The Duke of MARLBOROUGH): My Lords, in reply to the Question of the noble Earl I must remind him of the Conference of Colonial Ministers in the summer of 1902, at which the Ministers decided that they would recommend to their respective Governments that some system of preference should be granted to those trading from this country with our Colonies. In pursuance of that recommendation the New Zealand Government have passed this new measure under the title of the Preferential and Reciprocal Trade Act. The Colonial Office had had no correspondence upon this particular measure with the Governor in New Zealand. The first communication we received from Lord Ranfurly was on 21st November, two or three days after the measure was passed, in which he said that he had much pleasure in informing the Secretary of State that this Bill had been passed by the New Zealand Legislature. The noble Earl will remember that we discussed in your Lordships' House some six weeks ago the different matters and schedules in that Act, and I took the opportunity at that time to point out to the noble Earl that the preference granted to goods going from Great Britain and from our Colonial possessions into New Zealand was considerable compared to the duties on foreign goods entering that colony. Indeed, in the 3rd Schedule, if my memory serves me correctly, the foreigner has to pay 20 percent. while British goods go in entirely free. I think the noble Earl will not be surprised that in reply

  831
  to the telegram received from the Governor of New Zealand the Secretary of State telegraphed in the following terms—
  "His Majesty's Government have received with much satisfaction your telegram of 21st November reporting that the New Zealand Legislature have passed a Bill granting preferential rates of Customs duties to the united Kingdom. They regard this spontaneous con-cession as a further proof of the steadfast determination of the people of New Zealand to promote the strength and solidarity of the Empire."
  One or two other telegrams passed in connection with this Preferential and Reciprocal Trade Act, and a despatch of some length from the Governor, all of which I will cause to be printed and to be sent to any noble Lord who applies at the office of the House of Lords for them. With regard to the supplementary Question which the noble Earl has put to me, whether we can supply your Lordships with copies of the debates which took place on this measure in the New Zealand Legislature, I do not imagine that there will be any difficulty in getting a copy of those debates. I will do my best to carry out the noble Lord's wishes and see whether it will not be possible at the same time that these Papers are printed to supply also a copy of the debates.
  THE MARQUESS OF RIPON: There was one Question asked by my noble friend to which the noble Duke has omitted to make any reply. The noble Earl asked whether the Bill as introduced by Mr. Seddon, as well as the Act as actually passed, con be laid before the House. I hope there will be no objection to that.
  THE DUKE OF MARLBOROUGH: I will certainly make inquiry as to whether we have the exact Bill as it was introduced into the New Zealand Parliament by the Prime Minister, and will endeavour to comply with the noble Marquess's request.
  LORD TWEEDMOUTH: I think the noble Duke had better complete his concession to my noble friend and allow these Papers to be circulated. Papers that are placed in the office only to be had when asked for are hardly ever seen. I think the noble Duke should
  832
  allow the Papers to be circulated in the ordinary way.
  THE DUKE OF MARLBOROUGH: I will certainly consent to that if the noble Lord wishes it. I thought that only a few noble Lords were anxious to see these particular Papers and that it was hardly worth while circulating them to every Member. But I am perfectly prepared to fall in with the view of the noble Lord.
  THE ACTING CHAIRMAN OF COMMITTEES (Lord BALFOUR of BURLEIGH): I should like to ask the noble Duke whether it is not rather a new departure to circulate the debates of other Legislatures. I hope before the noble Duke does circulate these debates he will ascertain whether there is any precedent for such a course.
  THE MARQUESS OF RIPON: There is a very recent precedent for the proceeding which is proposed. His Majesty's Government have stated that they intended to treat the Transvaal on the footing of a self-governing colony as far as they possibly could, and they have recently laid before Parliament the whole of the debates on the Labour Ordinance. I hope that is a good enough precedent.
  House adjourned at twenty minutes before Seven o'clock, till To-morrow, half-past Ten o'clock.