Sitting of 17 May 1909

Preamble
Mr. SPEAKER Mr. SPEAKER took the chair at Fifteen minutes before Three of the clock.

PRIVATE BUSINESS.
Leyland and Farington Gas Bill,
Littlehampton Gas Bill,
Wandsworth Borough Council (Superannuation) Bill,
Lords' Amendments considered and agreed to.
Ammanford Gas Bill,
City of London (Street Traffic) Bill,
Read the third time and passed.
United Kingdom Temperance and General Provident Institution Bill [Lords],
Read the third time and passed.
North East London Railway Bill,
Stock Conversion and Investment Trust (North Eastern Railway Consols) Bill [Lords],
Worksop Water Bill [Lords],
Read the second time and committed.

PROVISIONAL ORDER BILL.
Local Government Provisional Order (Poor Law) Bill,
Read the third time and passed.

MOTOR CAR DRIVERS' AND CONDUCTORS' PETITION.
Mr. BOTTOMLEY: I beg to present a Petition signed by upwards of 2,000 motor car drivers and conductors in the employ of the London General Omnibus Company, pointing out that the additional petrol tax means an increase cost of upwards of 3s. per day for each car, the whole of which is to be placed upon them by their employers, who, at present, are earning no profits—according to the petition—and pointing out that they already pay considerable sums to the revenue by way of licence duty; and praying the House under these circumstances not to place this additional burden upon them.
Petition brought to the Table.

ORAL ANSWERS TO QUESTIONS.

  Army Service Corps (Gibraltar).
  Mr. ASHLEYasked the Secretary of State for War what duties on mobilisation are assigned to the officers and men of the Army Service Corps at Gibraltar?
  The SECRETARY of STATE for WAR (Mr. Haldane): The duties assigned to the Army Service Corps are supply and transport—but the General Officer Commanding-in-Chief has naturally full discretion to employ the various units in the garrison to the best advantage for purposes of defence.
  Mr. ASHLEY: Are we to understand that should the infantry of the garrison be insufficient the general officer has the right to use them to supplement the infantry?
  Mr. HALDANE: That is entirely dependent on circumstances. If the infantry were insufficient for some purposes they certainly would be used.
  Mr. ASHLEY: If they were used in that way who would do the ordinary duties of the Army Service Corps, such as the baking of bread?
  Mr. HALDANE: The general officer commanding would consider the circumstances.
  Mr. ANSTRUTHER-GRAY: Has not the garrison been very materially reduced?
  Mr. HALDANE: The number of units has been reduced.
  Mr. ANSTRUTHER-GRAY: Is there not a whole infantry battalion short?
  Mr. HALDANE: It is not short. The establishment has been readjusted and reduced under the new arrangement. The general policy of the Government is to keep more troops at home and fewer abroad.
  Mr. ANSTRUTHER-GRAY: The garrison has been reduced by one battalion?
  Mr. HALDANE: Certainly.

  Military Field Telephones.
  Mr. STAVELEY-HILLasked the Secretary of State for War how much had been expended on field telephones during the last three years, distinguishing the amounts paid for instruments of British and foreign manufacture?
  Mr. HALDANE: The figures for the period from 26th July, 1907, to date are as follow:?

  Wholly British manufacture

  £147

  13

  1

  Wholly Foreign manufacture

  1,565

  14

  0

  Partly British and partly foreign manufacture

  16

  4

  10½

  Total

  £1,729

  11

  11½

  As I pointed out to the hon. Member on the 6th instant, the telephones were all ordered from firms in the United Kingdom.

  Territorial Force (Reserve of Ammunition).
  Mr. STAVELEY-HILLasked the Secretary of State for War whether the brigades and divisions of the Territorial Army were now supplied with their full reserve of ammunition; and, if not, when
  4
  the completion of these reserves was to be expected?
  Mr. HALDANE: The full reserves of ammunition for the Territorial Force are available and are in Ordnance charge; they are not issued to brigades and divisions. Ammunition for the equipment of ammunition columns will be issued as soon as county associations have arranged for the storage.

  Territorial Force Expenses (Receiving Colours).
  Mr. STAVELEY-HILLasked the Secretary of State for War whether the detachments of Territorial regiments attending at Windsor to receive their colours were expected to do at their own expense; and, if so, having regard to the absence of private regimental funds to meet the cost, which would fall on the commanding officers, whether he would take steps to see that an allowance was made out of public money towards the travelling and other expenses of the detachments upon this occasion?
  Mr. HALDANE: While on general principles the expense of journeys of a voluntary character, and not made on service, ought not to fall on Army funds, the Government take the view that the unique ceremony of presentation for the first time to our new Territorial force of colours by His Majesty is an occasion of a special character. It has therefore been decided that under the exceptional circumstances the following grants should be made for the Colour party of two subalterns and three sergeants (one subaltern and three sergeants in the case of mounted units), and for a detachment of ten non-commissioned officers and men:—

  (a) Railway fares at Territorial Force rates.

  (b) Travelling allowances according to the time occupied on the journey on the following basis:—

  Officers.—Daily rate, 3s. 6d. or 6s., or nightly rate of 15s.
  Non-commissioned officers and men.—Daily rate, Is. or 1s. 6d., or nightly rate of 3s. 6d.

  Territorial Officers' Pay (Income Tax Deductions).
  Colonel LOCKWOODasked the Secretary of State for War if the pay of the Territorial officers in camp is taxed, and if income tax is deducted from the few shillings they receive when on staff rides?
  Mr. HALDANE: All pay issued from Army funds is taxable, and no exception is made in the case of pay issued to Territorial officers.
  Colonel LOCKWOOD: Is it not a fact that it costs more to the Exchequer to collect this tax than it would lose if it remitted it?

  Royal Engineers (Sheerness).
  Mr. ASHLEYasked the Secretary of State for War what is the nominal establishment of the company of Royal Engineers stationed at Sheerness; what is its actual strength; and whether an official intimation has been made to the effect that this company would always be 35 per cent. short of its establishment?
  Mr. HALDANE: The peace establishment of this company is 3 officers and 58 other ranks, and the strength on the 12th May was 3 officers and 48 other ranks. Prior to the estimate for the current year the recruits and men under instruction were not provided for in the establishments of the Depot Companies at Chatham, but in those of the units away from the depot, so that there was a corresponding shortage in the various units at home. Provision has been made in this year's estimates for the inclusion of a certain number of recruits in the Depot Companies' establishments which will admit of various units being more nearly kept up to the establishment in fully trained men.
  Mr. ASHLEY: Are we to understand that the increase of strength which I understand the right hon. Gentleman says will be made will enable the searchlights to be used fully, and not only 50 per cent. as at the present time?
  Mr. HALDANE: I do not know about that. The hon. Member must put down a question if he wants to know about that, but there has been an increase.

  Ravelin Battery (Sheerness).
  Mr. ASHLEYasked the Secretary of State for War when the mounting of the two 9.2-inch guns in the Ravelin Battery at Sheerness was completed; what was the total cost of the guns and their emplacements; for what object were they mounted; how many times have they been fired since the mounting was completed; and on what date the last firing took place?
  Mr. HALDANE: These guns were handed over in a completed state on 11th February, 1908, to the Royal Artillery. The total cost of guns, mountings, ammu-
  6
  nition, etc., and emplacements was £54,473. They were mounted for the protection of the approaches to the Medway and Chatham Dockyard. They have not been fired since they were handed over.
  Mr. ASHLEY: What is the reason these guns have not been fired, in order to enable the gunners to practice?
  Mr. HALDANE: They were fired before and they will be fired again in the summer.
  Mr. ASHLEY: Is not the right hon. Gentleman aware they cannot be fired owing to the foundations having sunk?
  Mr. HALDANE: I am not aware of anything of the sort. All that was put right some time ago; the hon. Member's information is out of date.

  Rifle Clubs (Supply of Ammunition).
  Sir BERKELEY SHEFFIELDasked the Secretary of State for War what arrangements have been made with rifle clubs as to the supply of ammunition at reduced prices?
  Mr. HALDANE: The question is still under consideration.

  Dirigible Balloons.
  Mr. FELLasked the Secretary of State if he can state the number of dirigible balloons constructed or in course of construction by Germany at the present time; and how much has been voted to be expended on them by the German Government?
  Mr. HALDANE: It is believed that seven dirigible balloons have been constructed and that five are under construction. £25,000 appears to have been allotted for airships in 1907, and £107,500 in 1908, but on this point it is not easy to obtain precise or complete information from the published estimates.
  Mr. FELL: When does the right hon. Gentleman propose to ask Parliament for some somewhat similar power to that demanded by the German Government to construct, at any rate, one of these large dirigibles similar to those in use in France and Germany?
  Mr. HALDANE: That question does not arise out of the question on the Paper. I shall be prepared to give full information when the time comes.
  Mr. MYER: Will the right hon. Gentleman, in any Report he may circulate, tell us about a certain dirigible supposed to be hovering about our coast?

  Territorial Force (Regimental Transport).
  Mr. STAVELEY-HILLasked the Secretary of State how many Territorial regiments have been provided with regimental transport; in how many cases regiments have been provided with having regard to the near approach of Whitsuntide camps, he can give any assurance that regiments going into camps at that time will be provided with the regimental transport which was now lacking?
  Mr. HALDANE: All regimental transport for all Territorial Force units, except Army Service Corps, is hired by county associations. Two service wagons out of the total required by an Army Service Corps Company are supplied from store. Orders concerning the issue of these two wagons per company with harness were given some time ago, and there is no reason to suppose that there will be any delay in supply.

  Territorial Force (Regimental Colours).
  Mr. STAVELEY-HILLasked the Secretary of State whether, having regard to the fact that regimental colours have to be provided by Territorial regiments out of their own funds, he will make a grant to regiments in aid of this object?
  Mr. HALDANE: The reply is in the negative. The provision of colours is voluntary and not obligatory on the Territorial Force.
  Mr. ASHLEYasked the Secretary of State for War if he will state on what grounds he had issued orders that if Territorial battalions wished for colours they must defray the cost out of their own funds?
  Mr. HALDANE: The provision of colours by Territorial battalions is purely optional, and no charge for such provision, therefore, should fall on public funds.
  Mr. ASHLEY: Is this irritating economy being made because the right hon. Gentleman disagrees with the flying of the flag?
  Mr. HALDANE: The hon. Gentleman does not appear to pay the smallest attention to the history of this question. In the first place only a proportion, and not a very large proportion, of the Territorial Force are entitled to use and receive colours. These are privileged, and it was long ago stated that it was very natural the colours should be presented to them
  8
  by the ladies of the various counties. I am glad to say that the patriotism of these ladies is such that every one which has a right has been supplied with colours.
  Mr. ASHLEY: Why should the patriotism of the ladies be appealed to in the case of the Territorials and not in the case of the line battalions?
  Mr. D. V. PIRIE: Are not all these questions of flying the flag calculated to make us ridiculous in the face of the whole world?
  Mr. ARTHUR LEE: Is there any precedent for these colours of regiments being paid for by the regiments themselves, and not out of public funds? And is it intended that these colours, which are to be presented at an early date at Windsor, are as a matter of fact to be paid for by the recipients?
  Mr. HALDANE: I am not aware there is any precedent for the Territorial Force; It is entirely new; we have had pages and pages written about the value of the patriotism of the public.

  Army Agency Business.
  Mr. HART-DAVIESasked the Secretary of State whether the Army agency business was distributed equally between the three firms, Messrs. Cox and Company, Messrs. Holt and Company, and Messrs. M`Gregor and Company; if not, in what proportion is it distributed; and whether any tenders were invited from any other joint stock or private banks before sanctioning the arrangement with the three above-mentioned firms?
  Mr. HALDANE: The Army Agency business 'is not distributed equally between the three firms mentioned. The distribution was originally made in accordance with the wishes of the regiments concerned, and the Army List shows who are agents for particular regiments. Tenders were not invited from any other firms. As I informed my hon. Friend on the 10th instant, the work has been extremely well done in the past, and for many years it has been done without any cost to the public, and I am not aware of any reason for altering the arrangements.
  Mr. HART-DAVIES: Is the right hon. Gentleman aware that there are firms of the highest standing who would be willing to pay a considerable sum for this monopoly?
  Mr. HALDANE: Yes, very likely.

  Territorial Force (Independent Cavalry).
  Lord BALCARRES (for Sir Samuel Scott)asked the Secretary of State for War which Yeomanry brigades he proposed to employ as the independent cavalry of the Territorial Army, and in what respects their duties will differ from those laid down in the cavalry training for the regular cavalry?
  Mr. HALDANE: The first part of the question is connected with the scheme of home defence, which is of a confidential nature. It is not in the interests of the service to specify the yeomanry brigades which would be employed as independent cavalry of the Territorial Force. The difference between the duties of the regular cavalry and yeomanry is explained in Appendix IV., Cavalry Training, 1907.

  Tea Duty (Method of Paying).
  Mr. REESasked the Chancellor of the Exchequer, whether he was aware that formerly buyers of tea were permitted to pay duty and leave their purchases afterwards in bond; that, in the last few years, the Customs authorities have insisted on actual delivery being made when the duty was paid; and that this regulation bears hardly on dealers and warehouse-keepers; and whether he would consider the propriety of reverting to the long-standing arrangement which in the last few years had been abandoned?
  The CHANCELLOR of the EXCHEQUER (Mr. Lloyd-George): The purpose for which a bonded warehouse is approved is the secure keeping of dutiable goods pending payment of duty or exportation. The action of the Customs in requiring the removal of the goods within a reasonable period after payment of duty is in accordance with the principles that underlie the bonding system, and I see no reason why it should be modified. The owner of goods in bond is entitled to pay duty on them whenever he chooses. If he wishes to retain the goods in warehouse he should delay payment of duty.

  Spirits for Commercial Purposes.
  Mr. ROBERT HARCOURTasked the Chancellor of the Exchequer if he can specify the articles in the chemical, medicine, and perfumery trade into the price of which the cost of spirit enters as a factor and which may be raised by the increased duty?
  Mr. LLOYD-GEORGE: I am unable to give the information asked for.
  Mr. ROBERT HARCOURTasked the Chancellor of the Exchequer if he has received representations from organised bodies of chemical or perfumery manufacturers or of wholesale or retail chemists protesting against the increased duty on spirit; if so, from what bodies; and, if so, what action he proposes to take?
  Mr. LLOYD-GEORGE: I have received some representations on this subject, including a communication from the Pharmaceutical Society of Great Britain. As regards the last part of the question, I cannot at present add anything to the replies which I have already given.
  Mr. ROBERT HARCOURTasked the Chancellor of the Exchequer if he can indicate the nature of the difficulties stated by him to stand in the way of granting a rebate of the increased duty on spirit used by chemists; and if he can say whether it was possible to surmount those difficulties
  Mr. LLOYD-GEORGE: It would be difficult to provide an effective check which would ensure that the spirit was used only for strictly chemical purposes and to prevent frauds which might involve serious loss to the Revenue. As at present advised, I am doubtful whether it will be possible to devise means for surmounting these difficulties.
  Lord ROBERT CECIL: Why is it more difficult to check fraud in the case of chemists than in the case of using spirits for manufacturing or commercial purposes?
  Mr. LLOYD-GEORGE: I can only act upon the advice given by my experts; they tell me it is much more difficult. I am not quite sure of the reason, but I will try and find out.
  Mr. HUGH LEA: Is it not a fact that spirits used for manufacturing purposes are rendered importable before being used?
  Mr. LLOYD-GEORGE: That is part of the regulations.
  Mr. AUSTEN CHAMBERLAIN: Seeing the concession made the other day by which it was rendered necessary that spirits used for industrial purposes should be rendered impotable on the very ground that it would check trade, perhaps the Chancellor would look into that?
  Mr. CHIOZZA MONEY: May I ask my right hon. Friend if his answer does not show how difficult it is to prevent taxes on materials injuring trade?

  Tax on Undeveloped Land.
  Sir BERKELEY SHEFFIELDasked the Chancellor of the Exchequer if he will state how much of the £175,000 to he received under the duty of in the £ on undeveloped land will be drawn from London?
  Mr. LLOYD-GEORGE: It is not possible to give a precise estimate on this point until the valuation has been made.

  Central Judicial Commission.
  Mr. LLEWELYN WILLIAMSasked the Secretary of State for War if the Central Judicial Commission at any time investigated the question as to whether the goods of Mr. Michaelson, of Pretoria, were requisitioned or purchased under contract; if so, when; and, if not, who, if any, decided the question?
  Mr. HALDANE: The Central Judicial Commission only dealt with cases or requisitions, and presumably satisfied itself that this was such a case.

  Super-tax on Foreigners.
  Mr. LEVERTON HARRIS: I wish to ask the right hon. Gentleman whether foreigners resident abroad whose income was known to exceed £5,000 a year would have to pay any super-tax upon such part of their income as may be derived from securities the interest upon which was payable in this country
  Mr. LLOYD-GEORGE: The super-tax, as I explained in my Budget speech, is a personal tax to be collected by direct assessment, and not by deduction from income at the source. The answer to the hon. Member's question is, therefore, in the negative.
  Mr. LEVERTON HARRIS: Supposing a foreigner resident abroad has an income which exceeds £5,000 a year, will he have to pay super-tax upon the portion of his income which may be derived from securities the interest upon which is payable in this country?
  Mr. LLOYD-GEORGE: That is the same question which the hon. Member has put on the paper.

  Taxation of Land (Method of Valuation).
  Mr. LEVERTON HARRISasked the Chancellor of the Exchequer whether, in view of the fact that the valuation of land for the purposes of taxation was to be identical with the valuation for death duties, clause 8, sub-section 12, of the Finance Act of 1894 would apply to the
  12
  former as well as the latter valuation, which clause provides that where it is proved that too much duty has been paid the excess shall Le repaid, and in cases where the over payment was due to over valuation by the Commissioners with interest at 3 per cent. per annum?
  Mr. LLOYD-GEORGE: I must ask the hon. Member to wait for this information until the Finance Bill is in the hands of the House.
  The HON. MEMBERalso asked whether, in valuing land for the purposes of ascertaining death duties, a deduction may in the future be made from the value of such land of the amount of any tax which may be payable for unearned increment?
  Mr. LLOYD-GEORGE: Again I must ask the hon. Member to wait for the text of the Finance Bill.

  Ungotten Minera1s.
  Mr. LEVERTON HARRIS: Will the right hon. Gentleman state whether the term ungotten minerals includes minerals which have been proved in developed mines but which are still unworked?
  Mr. LLOYD-GEORGE: The answer is in the affirmative, as I have already explained to the House in the course of the Debate.

  Petrol (Customs Definition).
  Mr. LONSDALEasked the Chancellor of the Exchequer whether he was aware that the Board of Customs had issued instructions defining the products which under the term petrol were chargeable with duty; and whether he would state when those instructions came into force, and lay a copy of them upon the Table?
  Mr. LLOYD-GEORGE: Confidential instructions notifying the effect of the Resolution passed on the 29th ultimo in regard to motor spirit have been issued by the Commissioners of Customs and Excise for the guidance of their officers. These instructions are of a tentative and provisional character, and are intended for Departmental use only. It would be contrary to precedent to lay them on the Table.

  Finance Bill.
  Mr. JAMES HOPE: Is the right hon. Gentleman prepared to reconsider his decision not to circulate the draft text of the Finance Bill as a White Paper?
  Mr. LLOYD-GEORGE: No, Sir.
  Mr. JAMES HOPE: May I ask the right hon. Gentleman if, since I first asked him this question, any change has taken place in the text of the draft?
  Mr. LLOYD-GEORGE: If the hon. Member will wait for a few days he will see the draft itself, and then he can form his own judgment. That will be the draft which he will see.
  Mr. JAMES HOPE: Will the right hon. Gentleman state if there has been any change

  Indian Civil and Military Officers (Pension Abatements).
  Mr. SMEATON: I wish to ask the Chancellor of the Exchequer whether it is his intention to continue to pensioned Indian civil and military officers resident abroad the abatements from income tax at present allowed on their pensions as earned income?
  Mr. LLOYD-GEORGE: The answer is in the negative.

  Petrol Duty.
  Mr. JOYNSON-HICKSasked the Chancellor of the Exchequer if he could state whether any petrol had yet paid duty on arrival in England since the tax was imposed; and, if so, when and to what amount?
  Mr. LLOYD-GEORGE: The only duty received on motor spirit up to the 15th instant was £1,200 collected at Barrow during last week.
  The HON. MEMBERalso asked the Chancellor of the Exchequer whether he had yet been able to form any estimate as to the amount of petrol used for propulsion in commercial vehicles; and, if so, what would be the amount of the tax thereon at the l½d. rate, bringing in £125,000.
  Mr. LLOYD-GEORGE: I have no materials for making an exact calculation on this point, but the estimate of the probable yield of the tax in a full year was based on the assumption that approximately 20,000,000 gallons would pay duty at the l½d. rate, bringing in £125,000.

  Whisky Tax (Scotland).
  Sir HENRY CRAIK: I desire to ask Mr. Chancellor of the Exchequer whether he has received any memorials from Scotland, or from hon. Members of this House who represent Scottish Constituencies, with respect to the heavy incidence on a Scottish industry of the additional tax on whisky, the average annual output during the last
  14
  three years in Scotland having been very nearly equal to that in England and Ireland combined, and the amount of the new tax falling on Scotland being about four and a-half millions out of a total of rather more than nine millions?
  Mr. LLOYD-GEORGE: Perhaps the hon. Member will put down his question again. I am afraid I have missed it.
  Mr. WATT: Is the right hon. Gentleman aware that whisky in Scotland is taxed four times as much as beer in England?
  Mr. SPEAKER: Order, order. The question relates only to whisky.

  Beer Duty
  Mr. SUTHERLAND: Will the right hon. Gentleman state what has been the average Excise duty on beer per barrel of 36 gallons during the last 10 years, calculating beer to be of standard gravity
  Mr. LLOYD-GEORGE: The Excise duty on beer per barrel of standard gravity was 6s. 9d. from 1st April, 1897, to 5th March, 1900, and 7s. 9d. from 6th March, 1900, onwards. On this basis the average duty for the last ten years is 7s. 7 4–5d.
  Mr. SUTHERLANDasked the Chancellor of the Exchequer what amount of proof spirit a barrel of beer of standard' gravity contains, and what is the average duty that has been paid per proof gallon on the alcohol contained in such a barrel of beer during the past 10 years up to the time of the Budget, as compared with the average duty for the same period paid per proof gallon on spirits or whisky?
  Mr. LLOYD-GEORGE: The amount of spirit in beer varies considerably, but a barrel of beer of standard gravity may be taken as containing about 3.2 gallons of proof spirit. The average duty paid during the past ten years per proof gallon on the spirit contained in such a barrel is between 2s. 4d. and 2s. 5d., as compared with 10s. 11d., the average duty paid for the same period per proof gallon of British spirits or whisky.
  The HON. MEMBERalso asked if the additional duty for brewers' licences increases the Excise duty on the barrel of beer of standard gravity from 7s. 9d. to 8s., and if the duty on spirits or whisky is increased from 11s. to 14s. 9d. per proof gallon; what duty is payable on the proof gallon of alcohol in such a barrel of beer as compared with the duty per proof gallon payable on spirits or whisky?
  Mr. LLOYD-GEORGE: On the basis of a duty on beer of 8s. per barrel, the duty payable in respect of the spirit in a barrel of beer, calculated on the average strength of beer, would be 2s. 6d. per proof gallon, as compared with 14s. 9d. duty payable on British spirits.

  Personal Explanation.
  Mr. AUSTEN CHAMBERLAINasked the Chancellor of the Exchequer whether, as he gave permission to the hon. Member for Woolwich to explain to his constituents the exact position with regard to the proposed new charges on premises licensed for the retail sale of wines and spirits that were used for other purposes, and also with regard to chemists, he will now give the same information to the House of Commons?
  Mr. LLOYD-GEORGE: I regret that I am unable to answer this question, as I do not even know what were the remarks of the hon. Member for Woolwich to which the right hon. Gentleman refers.
  Mr. AUSTEN CHAMBERLAIN: I desire to ask the Chancellor of the Exchequer whether he is aware that the hon. Member for Woolwich is reported to have stated that he had the permission of Mr. Lloyd-George to make known to his constituents the exact position with regard to the proposed new charges on premises licensed for the retail sale of wines and spirits that were used for other purposes, and also with regard to chemists; I wish also to know whether the right hon. Gentleman gave such permission to the hon. Member for Woolwich, and if he did so, will he now afford to the House the information which he has given to the hon. Member for Woolwich?
  Mr. WILLIAM CROOKS: I think what the right hon. Gentleman quoted is a fairly accurate report of what I said, with the exception of how they are to be assessed. I ask the right hon. Gentleman the Member for East Worcestershire and the Chancellor of the Exchequer whether they do not remember that on 10th May the Chancellor of the Exchequer made a speech in reply to this very point. I then said, "Do I understand that when the proper moment comes proper consideration will be given to grocers and chemists and that kind of tradesmen?" and the answer I received was "Yes." I then asked, "Have I your permission to say so?" and the Chancellor of the Exchequer replied, "Yes." I am only mentioning
  16
  this in confirmation of what I said in my speech.
  Mr. CHAMBERLAIN: I was depending upon the newspaper reports. I gather that the hon. Member for Woolwich was only repeating information given in this House.
  Mr. SWIFT MacNEILL: May I ask you, Mr. Speaker, whether it is in order for an hon. Member of this House to interrogate a Minister in reference to an outside speech delivered by an irresponsible Member of this House, to whom such a question, under the rules of this House, could not be addressed personally
  Mr. SPEAKER: I must decline to draw any line of distinction between responsible and irresponsible Members of this House.

  Charitable Institutions and the Budget.
  Mr. HENRY: Will the right hon. Gentleman say whether, in order that contributions to hospitals, institutions, associations and funds devoted exclusively to works of charity may not suffer by the Budget proposals as at present foreshadowed, he will consider providing that, in making returns for income tax, deductions may be made of amounts donated or subscribed to such objects, and for which vouchers can be produced?
  Mr. LLOYD-GEORGE: I doubt whether it would be possible to give effect to my hon. Friend's suggestion, but I shall be glad to consider the point.

  Liquor Taxation (Revenue per Head).
  Mr. MENZIESasked the Chancellor of the Exchequer how much revenue he expects to obtain per head of the population in respect of all new liquor taxation, including licence duties, under his present Budget proposals, from England, Scotland, and Ireland respectively?
  Mr. LLOYD-GEORGE: The contribution per head of population to the additional revenue expected to be derived from the increased duties upon spirits and liquor licences in 1909–10 is estimated as follows:—

  S.

  D.

  England and Wales

  1

  11½ per head.

  Scotland

  1

  10¼ per head.

  Ireland

  1

  2 per head.

  Transfers from Executors.
  Sir WILLIAM BULLasked the Chancellor of the Exchequer, inasmuch as many companies, such as banking companies, with uncalled capital, insist on

  17
  transfers from executors as such to themselves as individuals, is such a transfer inter viros within the meaning of the Budget speech?
  The same HON. MEMBERalso asked whether a transfer from surviving trustees to themselves and new trustees is a transfer inter vivos; and whether a transfer from trustees to the beneficiaries, ultimately entitled, is a transfer inter vivos?
  Mr. LLOYD-GEORGE: I will answer the three questions put by the hon. Member together. I must ask the hon. Member to wait, in regard to this and the two subsequent questions, for the text of the Finance Bill.

  Petrol and Motor Taxes.
  Sir WILLIAM BULL: Will the Chancellor of the Exchequer favourably consider, in the direction of making allowances for petrol and motor taxes, the case of civil servants, such as Local Government Board inspectors and auditors in England, Ireland, and Scotland, who were at present allowed tram fare and other expenses, and who use their private motors for the more speedy and efficient discharge of their public duties?
  Mr. LLOYD-GEORGE: I have nothing to add to the reply given to the hon. Member by my hon. Friend the Financial Secretary to the Treasury on the 13th inst.

  Sinking Fund.
  Mr. AUSTEN CHAMBERLAIN: Does the right hon. Gentleman adhere to the proposed method of dealing with the old Sinking Fund announced in his Budget statement, or whether he has decided to adopt the alternative method outlined by Lord Crewe at the county bankers' dinner last Wednesday; and, if so, would he now inform the House what that method is?
  Mr. LLOYD-GEORGE: There is no inconsistency between my proposals and those outlined by my right hon. Friend the Secretary of State for the Colonies, as will become apparent when the text of my proposals has been laid before the House.
  Mr. AUSTEN CHAMBERLAIN: May I ask whether in his Budget speech he stated that all unanticipated accretions and economies shall in future pass into the Development Fund; and whether Lord Crewe said it was not the Chancellor of the Exchequer's intention to propose, whatever the surplus might be, that it should go automatically to the new development grant? Are we to understand that it is
  18
  the intention, as stated in the Budget speech, that these accretions and economies will go automatically to the Development Fund?
  Mr. LLOYD-GEORGE: This shows the inconvenience of discussing these Questions now. If the right hon. Gentleman had taken the trouble to read what I did say he would find that I said exactly the same thing. If he extends his quotation to the end of my reference to this subject he will see that I said it would be under the direction of Parliament, and that is practically what Lord Crewe said.
  Mr. AUSTEN CHAMBERLAIN: I am sorry to have to press the right hon. Gentleman on this matter, but it is one of great importance. The right hon. Gentleman's speech in the quotation I have made, which I have verified again this morning, referred to the issues from the Development Fund, and he said that all these accretions and economies would pass into the Development Fund. [Cries of "Order, order."]
  Mr. SWIFT MacNEILL: Is the right hon. Gentleman in order in referring to what was stated in the House of Lords?
  Mr. AUSTEN CHAMBERLAIN: Lord Crewe gives another version.
  Mr. LLOYD-GEORGE: I think that the right hon. Gentleman is incorrect. What I said was that the whole thing would be under the direction of Parliament. That is what I meant to convey. I stated in the Debate when I had a fuller opportunity that it was intended that it should be under the control of Parliament.

  Welsh Church (Royal Commission).
  Mr. JOYNSON-HICKSasked the Prime Minister, when the taking of evidence by the Royal Commission on the Welsh Church was completed; when the same was put in the printers' hands; and why it is proposed to publish only two volumes, seeing that the third volume contains the diocesan evidence in support of the case of the Church?
  Mr. TALBOTasked the Home Secretary whether he is now able to give an assurance to the House that all the evidence taken before the Royal Commission on the Church in Wales shall be published simultaneously, so as to give a complete statement of the case of the supporters of the Church establishment as well as of its opponents; and whether he can now state when the Report and Evidence may be expected to be published?
  The UNDER-SECRETARY of the HOME OFFICE (Mr. Herbert Samuel): My right hon. Friends have asked me to answer these questions. I am informed by the Chairman of the Royal Commission that they concluded the taking of evidence on the 15th June, 1908, and that it was all in the printers' hands shortly afterwards. A Royal Commission regulates its own procedure, and until a Report or an Interim Report has been received for submission to His Majesty the Secretary of State has no official cognisance of its proceedings. No such Report has yet been received in this case.
  Mr. JOYNSON-HICKS: Would the Secretary of State make representations to the Royal Commission that they should publish the whole evidence or none?
  Mr. HERBERT SAMUEL: It is not the duty of the Secretary of State to make representations to a Royal Commission.
  Mr. JOYNSON-HICKS: Has the right hon. Gentleman ascertained that the third volume contains the case of the Church?
  Mr. HERBERT SAMUEL: I am informed that the first two volumes contain the evidence of a number of witnesses on behalf of the Church.
  Mr. JOYNSON-HICKS: Has the Secretary of State been informed that a great deal of evidence on behalf of the Church is included in the third volume?
  Mr. HERBERT SAMUEL: I cannot give information on that point.
  Lord ROBERT CECIL: Will the hon. Gentleman inquire of the Royal Commission whether it is the intention of the Royal Commission to publish all the evidence?
  Mr. HERBERT SAMUEL: The Secretary of State proposes to wait until he receives some official communication from the Royal Commission.

  Strangford Bar Buoy.
  Captain CRAIGasked the Prime Minister whether, if the Irish Lights Commissioners continue in their determination to moor Strangford Bar buoy 6½ miles out from the Bar mouth, against the opinion of every navigator of those waters, local shippers, pilots, and fishermen, in a position not only useless but actually dangerous to navigation, he will introduce legislation at an early date transferring the powers of the Commissioners to a body of practical men?
  The PRESIDENT of the BOARD of TRADE (Mr. Churchill): My right hon. Friend has requested me to reply to this question. The question of the beat position of the buoy referred to is, as the hon. Member is aware, now under reconsideration between the Irish Lights Commissioners and the Trinity House. Nothing that has occurred so far in connection with this case appears to me to justify the suggestion made by the hon. Member.
  Captain CRAIG: Is the right hon. Gentleman aware that the Under-Secretary stated, a few days ago, that this question had not yet been considered? The right hon. Gentleman now says that the question is under consideration.
  Mr. T. M. HEALY: Is the right hon. Gentleman aware that there is not a single Member of any Irish party, or any section of any Irish party, in favour of the continuance of this buoy in its present position?
  Mr. CHURCHILL: That may be so, but I cannot say. I do not know what kind of answer the hon. and learned Gentleman expects me to give.
  Captain CRAIG: I respectfully ask for an answer to my question. The Under-Secretary stated a few days ago that there was no correspondence between Trinity House and the Irish Lights Commissioners, and now he says that they are reconsidering the matter. Is he or the Under-Secretary correct?
  Mr. CHURCHILL: I am informed that the question is under reconsideration. I suppose that the information which my hon. Friend gave at the time was correct.

  Hops Bill.
  Sir BERKELEY SHEFFIELDasked the First Lord of the Treasury if it was the intention of the Government to reintroduce the Hops Bill?
  The PRIME MINISTER (Mr. Asquith): The Bill will be reintroduced shortly in the House of Lords.

  Secretary to Board of Agriculture Bill.
  Mr. STANIERasked the Prime Minister whether he can give a date when the Secretary to the Board of Agriculture Bill will be brought forward in the House?
  Mr. CARLILEasked a similar question.
  The PRIME MINISTER: I have nothing to add to the reply I gave to a similar question on May 13th.

  Aerial Navigation (Special Committee).
  Mr. LONSDALEasked the Prime Minister what amount is to be placed this year at the disposal, respectively, of a Special Committee on Aeronautics, the War Office, and the Admiralty for practical work in aerial navigation?
  The PRIME MINISTER: I cannot at the present moment state the precise sum, but it will be a very considerable one.

  Public Accounts Committee.
  Colonel WILLIAMSasked the Prime Minister if he has considered the Third Report of the Public Accounts Committee of this year; and, if so, what action he proposes to take thereon, or if he will give time for its discussion?
  The PRIME MINISTER: An important opinion has now been obtained from the law officers of the Crown bearing upon certain questions as to the construction to be placed on the provisions of the Old Age Pensions Act, relating to the finality of awards upon which the settlement of the question raised in the Report to which the hon. and gallant Member refers must to a large extent depend. I think that it will be convenient, before the matter is discussed by the House, that the Committee should have an opportunity of further considering it in the light of that opinion, and the Treasury, therefore, propose to lay a Minute upon the Report of the Committee before them at an early date.

  Appointment of Magistrates (Counties).
  Mr. HENRYasked the Prime Minister if he can state why a different course is pursued in the appointment of magistrates to the county benches to that adopted in the appointment of magistrates to the borough benches; and whether he will consider the advisability of taking the necessary steps in order that the manner in which appointments for both benches are made may be subject to revision, so that a uniform method be adopted in both instances?
  The PRIME MINISTER: The appointments are made in both cases on the sole responsibility of the Lord Chancellor.
  Mr. E. N BENNETT: In view of the grave dissatisfaction which exists on this subject, I wish to ask whether the right hon. Gentleman can see his way to appoint a Select Committee to deal with the whole question?
  The PRIME MINISTER: Perhaps the hon. Gentleman will give me notice of that question.
  Mr. HENRY: May I ask the right hon. Gentleman whether the object of the Act of 1906 was not to have a uniform class of magistrates?
  The PRIME MINISTER: The object of the Act was to admit to the county bench the same class of persons as were previously admitted to the borough bench.
  Mr. BENNETT: Do not the lords lieutenant make objection to the admission of the same class to the county bench?

  Additional Judges.
  Lord ROBERT CECILasked the Prime Minister whether his attention has been called to the resolution passed on 27th April at the annual general meeting of the Bar to the effect that there is an imperative necessity for the immediate appointment of additional judges; whether he is aware that the resolution was proposed by the right hon. Member for Dublin University and seconded by the hon. Member for Reading, and carried unanimously by a very largely attended meeting; and whether the Government intend to take any steps in the matter?
  The PRIME MINISTER: The matter is being carefully considered by the Government.

  Licensed Premises (Ireland).
  Mr. THOMAS O'DONNELLasked Mr. Chancellor of the Exchequer if he will grant the return standing in the name of the hon. Member for West Kerry [relating to licensed premises in Ireland]?
  Mr. LLOYD-GEORGE: I must refer the hon. Member to the reply which I gave to the hon. Member for North Fermanagh on the 6th inst. In the meantime I do not think it would be advisable that I should grant the Return to which he refers.

  Income Tax.
  Mr. BRIDGEMANasked Mr. Chancellor of the Exchequer whether, in the case of an estate having a gross annual income of over £5,000 and charged with annuities, not paid free of income tax, the surtax will be charged on the gross income of the estate or will be payable only by those annuitants who have an income of more than £5,000, thus placing such estates on a footing similar to that of joint stock companies?
  Mr. LLOYD-GEORGE: I must ask the hon. Member to wait for the text of the Finance Bill.
  Mr. H. H. MARKSasked Mr. Chancellor of the Exchequer what, under the new scheme of taxation, would be the rate applied, and the total income tax levied respectively on an earned income of £1,995 and on an income of £2,015 of which £1,995 was earned and £20 was unearned?
  Mr. LLOYD-GEORGE: The rate on an earned income of £1,995 would be 9d. in the £, and the amount of the tax would therefore be £74 16s. 3d. In the second instance cited by the hon. Member the rate would be 1s. in the £ on £1,995, and 1s. 2d. in the £ on £20, giving a total tax of £100 18s. 4d.

  Income Tax Comparisons.
  Mr. MENZIESasked the Secretary to the Treasury the latest estimate of the amount of aggregate wealth and average income per head of the population in Great Britain, United States, Germany, and France respectively; the gross amount of taxation for 1908 per head in these countries, having regard in his calculations in each case to imperial and local, direct and indirect, taxation, and reckoning import duties in all cases as indirect taxation; and the proportion per head according to wealth and income?
  The FINANCIAL SECRETARY to the TREASURY (Mr. Hobhouse): I regret that the necessary material for answering this question is not available.
  Mr. MENZIES: Cannot the hon. Gentleman give the figures in some form? Will he allow me to ask for a Return of the approximate figures
  Mr. HOBHOUSE: I cannot give the accurate figures, and I cannot conceive that the approximate figures would be of any use.

  Glasgow, Ardrossan and Belfast Mai1s.
  Mr. CARLILEasked the Secretary to the Treasury when it was proposed to take the Motion dealing with the contract for the conveyance of mails between Glasgow, Ardrossan, and Belfast?
  Mr. HOBHOUSE: At the first favourable opportunity.

  British Museum Library Room (Boy Attendants).
  Mr. PONSONBYasked the Secretary to the Treasury whether he is aware that a number of boy attendants at the British
  24
  Museum Reading Room are being employed in doing precisely the same work as the adult staff on boys' pay, and that these boys are often excluded from appointments on the adult staff which are filled by. candidates nominated by the trustees; and whether, seeing that these boys, after serving several years' apprenticeship, have a strong claim for promotion, some more equitable arrangement can be introduced which will not involve their dismissal?
  Mr. HOBHOUSE: The suggestions in the hon. Member's question are not in accordance with the facts. The boys are not employed on the same work as the adult staff. They cannot be said to serve an apprenticeship, seeing that they are engaged on the clearly understood condition that their service will cease at the age of 20. On the other hand, during the past four years, 17 out of the 20 vacancies for adult attendants have been filled by the appointment of ex-boy attendants. I am informed further that owing to the good clerical training received by boy attendants permanent outside employment is frequently obtained by them after a few years' service in the Museum. I see no reason, therefore, for reconsidering the existing arrangements, which appear to work satisfactorily.

  Captain Bacon's Letter.
  Mr. BELLAIRS: I have been requested to defer the question asking the First Lord of the Admiralty as to whether any other copies of letters from Captain Bacon, R.N., to the First Sea Lord were printed at the taxpayers' expense, in addition to the one officially admitted; and, if so, how many copies were printed in each case. As there are not in attendance any members of the Board of Admiralty, I wish to inquire if the question thus postponed can be put down specially early on Wednesday in order to ensure that they may be reached?
  Mr. SPEAKER: The order in which the questions are placed on the paper does not rest with me. It depends on the order in which they are handed in, and also on what Department they are addressed to.

  German Arrest of Steam Trawler "General."
  Sir GEORGE DOUGHTYasked the Secretary of State for Foreign Affairs, whether a German gunboat arrested the steam trawler "General" when on the high seas in discharge of her calling, boarded her, and took her to Cuxhaven, where the captain was tried by a respon-

  25
  sible German court for illegal fishing and was acquitted; whether this action resulted in the destruction of their valuable voyage of fish, damage to their ship, and loss to the captain and crew, and that under his instructions His Majesty's Ambassador at Berlin presented a claim for compensation to the German authorities, and that they decline to recognise it, giving as the reason that, although they failed to get a conviction in their own court, the evidence points to the probability that they were nevertheless guilty of unauthorised fishing; and whether it was his intention to require the German Government to pay compensation, or whether British fisher-men are to be insulted in this manner by being arrested, imprisoned, and robbed, without consideration and protection from their own Government?
  The UNDER-SECRETARY for FOREIGN AFFAIRS (Mr. McKinnon Wood): I am aware of the details of the case referred to by the hon. Member, and of the claims for losses alleged to have arisen from the action of the German authorities. The German Government are of opinion, on the evidence before them, that the circumstances of the arrest of the steam trawler "General" justified the action of the officer of the German gun-boat, and that they cannot entertain a claim on the ground that the arrest was illegal. As regards the other points in the claim, I understand that a sum, considered to be fair compensation, was paid by the German authorities for damage to the "General," and that the German witnesses deny the charge of having prevented the captain of the "General" from icing and disposing of his catch. In these circumstances there is nothing further to be gained by diplomatic correspondence, and there does not appear to be ground on which a case for arbitration could be founded, without which I cannot move further in the matter.
  Sir G. DOUGHTY: Is the right hon. Gentleman aware that this captain was tried in a German court and acquitted, and as damage was done to the ship and his cargo, does the hon. Gentleman consider the British Government ought to see he is compensated for his losses?
  Mr. McKINNON WOOD: It is quite true that the captain of the ship was tried in a German court and acquitted, but that does not in itself give claim for compensation, because the trawler may have been acting, as the German Government alleges, in a suspicious manner, and there may have
  26
  been justification for the arrest. Compensation was paid for the damage done to the ship. With regard to the other part of the claim, the allegations of the captain are denied by the first lieutenant, the boatswain, and the other sailors who took charge of the trawler. I have looked very carefully into this case, and am quite sure no further action should be taken.
  Sir GEORGE DOUGHTY: This case was tried by a German court and acquitted by the Germans themselves. Ought not the German Government to be amenable to their own court in this matter? I should like to ask the hon. Gentleman whether British fishermen are in future not to expect any protection from the Foreign Office?
  Mr. McKINNON WOOD: I would point out that the British Government do not admit that the mere fact that the captain had been arrested and acquitted was ground for compensation, if there were proper reasons for the arrest.
  Sir G. DOUGHTY: May I ask whether the Foreign Office did not ask for the claim, for compensation. did not pass it, and did not send it in to the German Government
  Mr. McKINNON WOOD: We did make representations, and we did do our best to, see that the claim of the captain of the ship was properly considered. We did not adopt the claim, as the hon. Member suggests, but we saw that a fair trial was, given to the case.

  Spirit Tax (Scottish Distilleries).
  Mr. H. C. LEAasked the Chancellor of the Exchequer whether the effect of the imposition of an additional duty of 3s. 9d. per gallon on spirits would be to close down or curtail the production of most of the malt distilleries in Scotland, and that the grain distillers would also suffer in competition with the importers of foreign, spirits, in consequence of the new distillers' licence to be imposed, thus decreasing the 5d. per gallon preference hitherto in existence; and whether he can promise any action to remedy this?
  Mr. LLOYD-GEORGE: The hon. Member raises points which can hardly be dealt with by way of an answer to a question. But I do not think that the new distillers' licence duty, which works out to something like one-tenth of a penny per gallon distilled, would justify any addition to the surtax on imported spirits.
  Mr. WATT: Is it a fact that foreign wines have a preference over Scotch whisky?

  Agricultural Lands and Estate Duty.
  Mr. MAURICE HEALYasked the Chancellor of the Exchequer if he can state the average number of years' purchase at which agricultural lands in England have been assessed for the purposes of estate duty, and the proportion of cases in which such land has been assessed at the maximum of 25 years' purchase?
  Mr. LLOYD-GEORGE: The average number of years' purchase at which agricultural land in England was assessed for purposes of estate duty in 1907–8 (the latest year for which figures are available) was, on the gross annual value, 18.75 years' purchase for freehold and 17.69 years' for other tenures. On the net annual value the average number of years' purchase was 23.21 for freehold and 21.11 for other tenures. There is no record of the proportion of cases in which such land has been assessed at the maximum of 25 years' purchase.
  Mr. MAURICE HEALY: Can the right hon. Gentleman give any case in which the land has been assessed?
  Mr. LLOYD-GEORGE: The Returns only show the aggregate. I am not sure there would be any case at all.
  Mr. MAURICE HEALY: Is it not the fact that the operation of the 25 years' purchase is intended solely for the benefit of Ireland?
  Mr. LLOYD-GEORGE: Quite the reverse, and I can assure the hon. Member there are many cases in Wales to which it would apply.
  Mr. MAURICE HEALY: Has the right hon. Gentleman seen the decision in the-case of the Attorney-General v. Robinson? Will he take the opinion of the law officers as to its bearing on this matter?
  Mr. LLOYD-GEORGE: I will consider that.

  Motor Car and Petrol Duties.
  Mr. FELLasked the Chancellor of the Exchequer if a Customs duty of 10 per cent. on the value of foreign motor cars and accessories imported will produce as much as the Customs duty of 33 per cent. now being levied on petrol imported into this country; and will the cost of collection of the former duty be much less than that of the latter, when regard was had to the difficulty which will be experienced in returning the overpaid duty on petrol: not used for motor cars?
  Mr. LLOYD-GEORGE: I cannot, in the absence of a corresponding Excise duty on similar articles of British manufacture, form any estimate of the probable effect on the importation of motor cars, etc., of the imposition of a tax such as that suggested by the hon. Member, or, consequently, of the yield of the tax, or of the cost of its collection.
  Mr. JOYNSON-HICKS: Can the right hon. Gentleman form any opinion as to whether this tax will increase or decrease employment? Will it not inevitably result in a decrease of employment?

  Dundee Sheriff Court.
  Mr. WATTasked the Lord Advocate whether in the Dundee Sheriff Court, in administering the Sheriff Courts (Scotland) and the Small Debt Acts, adjournments are made from time to time in cases where no defence is lodged, and that similar delays take place in cases where defenders do not dispute the claims; and whether, in view of the fact that these methods are in direct contravention of the procedure laid down in the statutes mentioned, he will take any action
  The LORD ADVOCATE (Mr. Ure): I am not aware that irregularities of the kind referred to in my hon. Friend's question have taken place in the Dundee Sheriff Court, but if he will inform me of any specific instances I shall make inquiry into them.

  Island of Harris (Footpaths).
  Sir JOHN DEWARasked the Lord Advocate why the Congested Districts Board have reduced their contribution towards the formation of footpaths in the island of Harris from 75 per cent. of the cost to 50 per cent., and have altogether refused to help in the formation of a much-needed road at the Bay of Harris?
  Mr. URE: The Congested Districts Board do not make grants for footpaths in any fixed or invariable proportion to the total cost, but deal with each application on its merits, making such a grant as seems justified by the circumstances. As regards the Bay of Harris road the Board have carefully considered the application, but so far they are not satisfied that a sufficient case for the grant which has been asked for has been made out.
  Sir JOHN DEWAR: Is the right hon. Gentleman aware that this is one of the most necessitous districts in the Highlands of Scotland?
  Mr. URE: Yes, Sir.
  Mr. YOUNGERasked as to the reason of the difficulty experienced by the Congested Districts Board in getting land?
  Mr. URE: I should like notice of that question.

  Island of Lewis (Congestion).
  Mr. WEIRsaid he wished to ask the Lord Advocate what steps the Congested Districts (Scotland) Board proposed to take to deal with and relieve the congestion existing in many of the townships of the island of Lewis; and would the Congested Districts Board confer with the proprietor of the island with a view to breaking up into small holdings some of the farms not under lease?
  Mr. URE: It is not possible to deal with the large and complex problem of congestion in the Island of Lewis within the limits of question and answer, but, as my hon. Friend has already been informed, the Congested Districts Board are at present in communication with the proprietor in regard to one case of this kind.
  Mr. WEIRasked whether in other parts-of the Island of Lewis there were lands not under lease, and would the Secretary for Scotland endeavour to make some arrangement for them to be looked at?
  Mr. URE: We will consider that.
  Mr. WEIR: Is the hon. Gentleman aware that the Secretary for Scotland has been considering it for four years

  Landless Cottars (Milton, South Uist).
  Mr. WEIRasked the Lord Advocate whether the Secretary for Scotland is aware that a number of landless cottars, descendants of the men who 60 years ago occupied the farm of Milton, South Uist, now part of the property of Lady Gordon Cathcart, having frequently petitioned for the breaking up of the farm into small holdings. without avail, have now taken forcible possession of the farm in the hope that as the present tenant's lease expires at Whit-Sunday some arrangement will be made for the creation of new holdings; and will he state whether any communication has passed between the Congested Districts Board and the proprietrix on the subject; and, if so, the nature of such communication?
  Mr. URE: I am aware that the cottars of some of the South Uist townships have from time to time expressed a wish for a portion of the farm of Milton, part of which was assigned in 1896 for the enlargement
  30
  of certain townships. So far as I am aware, it is not the fact that forcible possession has been taken of the farm; but I understand that at the end of last month a meeting of crofters, cottars and others was held on the farm, at which resolutions were have passed between the Congested Dispancy of the farm. No communications have passed between the Congested Districts Board and the proprietrix on the subject.

  United Free Church (Allocated Moneys).
  Mr. WATTasked the Lord Advocate whether he is aware that the Church Commission have allocated to the United Free Church all moneys which had belonged to the Jewish Committee of the Free Church; that these moneys, though allocated, are delayed payment month after month; and that meantime the United Free Church are forced to borrow money and pay interest thereon for the purposes of the above committee; and, if so, will he take steps to insist on speedy payment by the Commission of part at least of the allocated moneys?
  Mr. URE: I am aware that the funds belonging to the Jewish Committee have been allocated to the United Free Church, but these moneys, being included among the invested funds held by the general trustees, the formal Order of the Commission, which is necessary to complete the transfer of the securities, cannot in their case be issued until the general accounting between the churches has been brought to a conclusion. I am informed that, this accounting, which was placed in the hands of a specially qualified accountant, with the position of Assistant Commissioner, is now well advanced. I am also informed that several large payments to account have been made by the Free Church, the latest amounting to £100,000, thus anticipating to some extent the desire expressed by the hon. Member.

  Short Weight in Bread and Coal.
  Sir GEORGE SCOTT ROBERTSONasked the President of the Board of Trade whether, having regard to the numerous complaints of short weight in bread and coal, the discrepancies between the number of prosecutions in different inspectorial districts, as shown by the Board of Trade Report for 1908, and the uncertainty which exists in the public mind as to the administration of the Weights and Measures Acts and regulations, he will consider the advisability of appointing a permanent officer, whose duty it will be to

  31
  visit inspectorial districts throughout the country and report to the Board upon the manner in which the Acts and regulations are administered?
  Mr. CHURCHILL: The Board of Trade have no statutory power to appoint a permanent officer for the purpose mentioned in my hon. Friend's question, but under section 10 of the Weights and Measures Act, 1889, the Board may from time to time appoint an officer to hold a local inquiry with respect to the administration of the law relating to weights and measures within the jurisdiction of any local authority. I shall be glad to consider the question of making such an appointment under the section referred to if representations are made to me in any particular case.

  Inspectors of Ships' Provisions (Political Propaganda).
  Lord ROBERT CECILasked the President of the Board of Trade whether the whole-time officers in the South Wales district employed in the inspection of ships' provisions are allowed to take part in political propaganda or other political work?
  Mr. CHURCHILL: The instruction issued by the Board of Trade to their officers on this subject requires them to act discreetly in all matters in which their conduct may become the subject of public criticism, and forbids them to take a prominent part in party politics.
  Lord ROBERT CECIL: Is the right hon. Gentleman aware that one of the officers referred to is the Secretary of the Local Federation of Free Church Councils, and has taken a very active part in the propaganda of that body, travelling as much as 2,508 miles in their service?
  Mr. CHURCHILL: I cannot attempt to discuss any individual case without private notice beforehand and an opportunity of looking into the case.
  Lord ROBERT CECIL: Will the right hon. Gentleman make inquiry into the case? It is exciting a great deal of attention in South Wales.
  Mr. CHURCHILL: Any communication that I receive from the Noble Lord will, of course, be attended to.

  Electric Tramcar Drivers (Hours of Work).
  Mr. GWYNNasked the President of the Board of Trade if there are any regulations governing the number of hours that the
  32
  driver of an electric car may work on a stretch; and if such regulations are carefully observed by the London United Electric Tramways Company
  Mr. CHURCHILL: No such regulations have been issued by the Board of Trade.
  Mr. GWYNN: May I ask if the facts have not proved the necessity for such regulations being made?
  Mr. CHURCHILL: The powers of the Board of Trade in regard to these tramways are limited to intervention on grounds of public safety, but I am quite prepared to consider any information that is brought to my notice, and to act upon it so far as the statutory powers of the Board of Trade allow.
  Mr. GWYNN: Does not the right hon. Gentleman consider that public safety is involved when men are employed for excessive hours in the driving of electric cars?
  Mr. CHURCHILL: I certainly think that excessive strain upon persons in a position of that character would be calculated to involve public safety.
  Mr. GWYNN: I will communicate with my right hon. Friend.

BUSINESS OF THE HOUSE.
Mr. A. J. BALFOUR: It would be for-the convenience of the House if the Prime Minister could give us some sketch as to, the proposed business for the rest of the week, and, if possible, up to the Whitsuntide Recess.
The PRIME MINISTER: I am afraid I cannot go beyond the week. What we propose for the week is as follows: To-day, of course, is provided for.
To-morrow the remaining Budget Resolutions in Committee of Ways and Means, and we propose to ask the House to suspend the Eleven o'Clock Rule.
On Wednesday, at the morning sitting, the introduction of the Superannuation; Bill under the Ten Minutes Rule; the Lords' Amendments to the Indian Councils Bill; the Money Resolution of the Trade Boards Bill, which has been sent to. the Grand Committee, and which cannot be proceeded with until the Money Resolution is passed in Ways and Means; and the London Electrical Supply Bill, second" reading. These three Orders, I understand, are not likely to take more than a. very short time. My right hon. Friend" the President of the Board of Trade will

33
then introduce and explain the Labour Exchange Bill, and, if there is time, we hope also to secure one or two other Orders of a non-controversial character.
On Thursday we shall proceed with the Budget Resolutions, we hope, on the report stage, and I ought to acid, in order to secure that the Resolutions shall be reported and the introduction of the Finance Bill obtained before Whitsuntide, it is possible—though I hope not probable—that a sitting may be necessary on Saturday.
Mr. MURRAY MACDONALD: Will the discussion of sub-head B of the Treasury Vote be taken before the Whitsuntide holidays?
The PRIME MINISTER: No; not before Whitsuntide.

PRESENTATION OF BILL.
The following Bill was presented and read a first time:—
MR. JOHN O'CONNOR—Union Officers (Ireland)—Bill to amend the law as to the superannuation of certain workhouse officers in Ireland. (To be read a second time on Monday, May 24th.)

SUSPENSION OF ELEVEN O'CLOCK RULE.

  BUSINESS OF THE HOUSE (WAYS AND MEANS).
  Motion made and Question proposed: "That the proceedings of the Committee of Ways and Means, if under discussion at Eleven o'clock this night, be not interrupted under the Standing Order (Sittings of the House)."—[The Prime Minister.]
  The House divided: Ayes, 222; Noes, 84.

  Division No. 106.]

  AYES.

  3.50 p.m.

  Acland, Francis Dyke

  Crooks, William

  Illingworth, Percy H.

  Agnew, George William

  Crossley, William J.

  Jackson, R. S.

  Ainsworth, John Stirling

  Curran, Peter Francis

  Jenkins, J.

  Alden, Percy

  Davies, Ellis William (Eifion)

  Johnson, W. (Nuneaton)

  Asquith, Rt. Hon. Herbert Henry

  Davies, M. Vaughan-(Cardigan)

  Jowett, F. W.

  Atherley-Jones, L.

  Davies, Timothy (Fulham)

  Kekewich, Sir George

  Baker, Sir John (Portsmouth)

  Dewar, Sir J. A. (Inverness-sh.)

  King, Alfred John (Knutsford)

  Baring, Godfrey (Isle of Wight)

  Dickinson, W. H. (St. Pancras, N.)

  Laidlaw, Robert

  Barker, Sir John

  Dickson-Poynder, Sir John P.

  Lamb, Edmund G. (Leominster)

  Barlow, Sir John E. (Somerset)

  Dilke, Rt. Hon. Sir Charles

  Lamb, Ernest H. (Rochester)

  Barlow, Percy (Bedford)

  Dobson, Thomas W.

  Lamont, Norman

  Barnard, E. B.

  Duckworth, Sir James

  Lea, Hugh Cecil (St. Pancras, E.)

  Barnes, G. N.

  Duncan, C. (Barrow-in-Furness)

  Lehmann, R. C.

  Barry, Redmond J. (Tyrone, N.)

  Duncan, J. Hastings (York, Otley)

  Lewis, John Herbert

  Beale, W. P.

  Dunn, A. Edward (Camborne)

  Lloyd-George, Rt. Hon. David

  Beauchamp, E.

  Dunne, Major E Martin (Walsall)

  Luttrell, Hugh Fownes

  Beck, A. Cecil

  Ellis, Rt. Hon. John Edward

  Macdonald, J. R. (Leicester)

  Bellairs, Carlyon

  Erskine, David C

  Macdonald, J. M. (Falkirk Burghs)

  Belloc, Hilaire Joseph Peter R.

  Essex, R. W.

  Mackarness, Frederic C.

  Benn, W. (Tower Hamlets, St. Geo.)

  Esslemont, George Birnie

  M'Laren, Sir C. B. (Leicester)

  Bennett, E. N.

  Evans, Sir Samuel T.

  M'Laren, H. D. (Stafford, W.)

  Bethel], Sir J. H. (Essex, Rumford)

  Everett, R. Lacey

  M'Micking, Major G.

  Bethell, T. R. (Essex, Maldon)

  Falconer, J.

  Maddison, Frederick

  Birrell, Rt. Hon. Augustine

  Ferguson, R. C. Munro

  Mallet, Charles E.

  Bottomley, Horatio

  Findlay, Alexander

  Marnham, F. J.

  Boulton A. C. F.

  Foster, Rt. Hon. Sir Walter

  Massie, J.

  Bowerman, C. W.

  Fuller, John Michael F.

  Masterman, C. F. G.

  Branch, James

  Fullerton, Hugh

  Menzies, Walter

  Brocklehurst, W. B.

  Gibb, James (Harrow)

  Micklem, Nathaniel

  Brunner, J. F. L. (Lanes., Leigh)

  Glen-Coats, Sir T. (Renfrew, W.)

  Molteno, Percy Alport

  Bryce, J. Annan

  Goddard, Sir Daniel Ford

  Mond, A.

  Burns, Rt. Hon. John

  Gooch, George Peabody (Bath)

  Money, L. G. Chiozza

  Buxton, Rt. Hon. Sydney Charles

  Greenwood, G. (Peterborough)

  Montagu, Hon. E. S.

  Byres, William Pollard

  Guest, Hon. Ivor Churchill

  Morgan, G. Hay (Cornwall)

  Cameron, Robert

  Garland, John W.

  Murray, Capt. Hon. A. C. (Kincard.)

  Carr-Gomm, H. W.

  Haldane, Rt Hon. Richard B.

  Murray, James (Aberdeen, E.)

  Causton, Rt. Hon. Richard Knight

  Harcourt, Rt. Hon. L. (Rossendale)

  Myer, Horatio

  Channing, Sir Francis Allston

  Harcourt, Robert V. (Montrose)

  Nicholls, George

  Cherry, Rt. Hon. R. R.

  Hardie, J. Keir (Merthyr Tydvil)

  Nicholson, Charles N. (Doncaster)

  Churchill, Rt. Hon. Winston S.

  Hart-Davies, T.

  Norton, Captain Cecil William

  Cleland, J. W.

  Harwood, George

  Nussey, Thomas Willans

  Clough, William

  Hazel, Dr. A. E. W.

  Nuttall, Harry

  Clynes, J. R.

  Hedges, A. Paget

  O'Donnell, C. J. (Walworth)

  Cobbold, Felix Thornley

  Henry Charles S.

  O'Grady, J

  Collins, Stephen (Lambeth)

  Herbert, T. Arnold (Wycombe)

  Parker, James (Halifax)

  Collins, Sir Wm. J. (St. Pancras, W.)

  Higham, John Sharp

  Partington, Oswald

  Cooper, G. J.

  Hobart, Sir Robert

  Pearce, Robert (Staffs, Leek)

  Corbett, C. H. (Sussex, E. Grinstead)

  Hobhouse, Charles E. H.

  Pearce, William (Limehouse)

  Cornwall, Sir Edwin A.

  Holt, Richard Durning

  Philipps, Col, Ivor (Southampton)

  Cotton, Sir H. J. S.

  Horniman, Emslie John

  Pickersgill, Edward Hare

  Cox, Harold

  Hutton, Alfred Eddison

  Pirie, Duncan V.

  Craig, Herbert J (Tynemouth)

  Hyde, Clarendon G.

  Pollard, Dr. G. H.

  Ponsonby, Arthur A. W. H.

  Schwann, Sir C. E. (Manchester)

  Wardle, George J.

  Price, C. E. (Edinburgh, Central)

  Seely, Colonel

  Waring, Walter

  Price, Sir Robert J. (Norfolk, E.)

  Sherwell, Arthur James

  Warner, Thomas Courtenay T.

  Priestley, Arthur (Grantham)

  Smeaton, Donald Mackenzie

  Wason, Rt. Hon. E. (Clackmannan)

  Pullar, Sir Robert

  Soames, Arthur Wellesley

  Wason, John Cathcart (Orkney)

  Raphael, Herbert H.

  Soares, Ernest J.

  Waterlow, D. S.

  Rea, Russell (Gloucester)

  Spicer, Sir Albert

  Watt, Henry A.

  Rees, J. D.

  Stanger, H. Y.

  Weir, James Galloway

  Richards, T. F. (Wolverhampton, W.)

  Stanley, Albert (Staffs, N.W.)

  White, Sir George (Norfolk)

  Ridsdale, E. A.

  Steadman, W. C.

  White, J. Dundas (Dumbartonshire)

  Roberts, Charles H. (Lincoln)

  Stewart, Halley (Greenock)

  White, Sir Luke (York, E.R.)

  Roberts, G. H. (Norwich)

  Strachey, Sir Edward

  Whitley, John Henry (Halifax)

  Robertson, Sir G. Scott (Bradford)

  Straus, B. S. (Mile End)

  Williams, W. Llewelyn (Carmarthen)

  Robertson, J. M. (Tyneside)

  Sutherland, J. E.

  Williams, A. Osmond (Merioneth)

  Robinson, S.

  Tennant, H. J. (Berwickshire)

  Wilson, Hon. G. G. (Hull, W.)

  Robson, Sir William Snowdon

  Thomas, Abel (Carmarthen, E.)

  Wilson, J. W. (Worcestershire, N.)

  Roch, Walter F. (Pembroke)

  Thompson, J. W. H. (Somerset, E.)

  Wood, T. M'Kinnon

  Rogers, F. E. Newman

  Trevelyan, Charles Philips

  Young, Samuel

  Rose, Charles Day

  Ure, Rt. Hon. Alexander

  Yoxall, James Henry

  Rowlands, J.

  Verney, F. W.

  Russell, Rt. Hon. T. W.

  Vivian, Henry

  TELLERS FOR THE AYES.—Mr.

  Rutherford, V. H. (Brentford)

  Walton, Joseph

  Joseph Pease and the Master of Elibank.

  Samuel, Rt. Hon. H. L. (Cleveland)

  Ward, John (Stoke-upon-Trent)

  Schwann, C. Duncan (Hyde)

  NOES.

  Anson, Sir William Reynell

  Faber, George Denison (York)

  Oddy, John James

  Anstruther-Gray, Major

  Faber, Capt. W. V. (Hants W.)

  Parker, Sir Gilbert (Gravesend)

  Arkwright, John Stanhope

  Fell, Arthur

  Pease, Herbert Pike (Darlington)

  Ashley, W. W.

  Fetherstonhaugh, Godfrey

  Powell, Sir Francis Sharp

  Balcarres, Lord

  Forster Henry William

  Roberts, S. (Sheffield, Ecclesall)

  Baldwin, Stanley

  Foster, P. S

  Ronaldshay, Earl of

  Balfour, Rt. Hon. A. J. (City, Lond.)

  Gardner, Ernest

  Rutherford, W. W. (Liverpool)

  Banbury. Sir Frederick George

  Gibbs, G. A. (Bristol, West)

  Seddon, J.

  Barrie, H. T. (Londonderry, N.)

  Gooch, Henry Cubitt (Peckham)

  Sheffield, Sir Berkeley George D.

  Barry, E. (Cork, S.)

  Gordon, J.

  Sloan, Thomas Henry

  Beach, Hon. Michael Hugh Hicks

  Guinness, W. E. (Bury St. Edmunds)

  Smith, Abel H. (Hertford, East)

  Beckett, Hon. Gervase

  Harris, Frederick Leverton

  Smith, F. E. (Liverpool, Walton)

  Bignold, Sir Arthur

  Harrison-Broadley, H. B.

  Stanger, Bevilic

  Bull, Sir William James

  Healy, Maurice (Cork)

  Stanley, Hon. Arthur (Ormskirk)

  Carlile, E Mildred

  Healy, Timothy Michael

  Starkey, John R.

  Castlereagh, Viscount

  Heaton, John Henniker

  Staveley-H ill. Henry (Staffordshire)

  Cecil, Evelyn (Anon Manor)

  Hill, Sir Clement

  Talbot, Lord E. (Chichester)

  Cecil, Lord R. (Marylebone, E.)

  Hope, James Fitzalan (Sheffield)

  Talbot, Rt. Hon. J. G. (Oxford Univ.)

  Chamberlain, Rt. Hon. J. A. (Worc'r.)

  Joynson-Hicks, William

  Thornton, Percy M.

  Chaplin. Rt. Hon. Henry

  Kennedy, Vincent Paul

  Tuke, Sir John Batty

  Craig, Charles Curtis (Antrim, S.)

  Kerry, Earl of

  Walrond, Hon. Lionel

  Craig, Captain James (Down E.)

  Lardner, James Carrige Rushe

  Warde, Col. C. E. (Kent, Mid)

  Craik, Sir Henry

  Lockwood, Rt. Hon. Lt.-Col. A. R.

  Williams, Col. R. (Dorset, W.)

  Dalrymple, Viscount

  Marks, H. H. (Kent)

  Winterton, Earl

  Dixon-Hartland, Sir Fred. Dixon

  Mildmay, Francis Bingham

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

  Doughty, Sir George

  Moore, William

  Younger. George

  Douglas, Rt. Hon. A. Akers-

  Morpeth, Viscount

  TELLERS FOR THE NOES.—Sir

  Du Cros, Arthur

  MorrisonoBell, Captain

  A. Acland-Hood and Viscount

  Duffy, William J.

  Nicholson, Wm. G. (Petersfield)

  Valentia.

  WAYS AND MEANS.

    BUDGET RESOLUTIONS.
    CONSIDERED IN COMMITTEE.
    [Mr. EMMOTT in the chain]
    (IN THE COMMITTEE.)
    INCOME TAX.
    Question again proposed,
    "That income tax shall be charged for the year beginning the sixth day of April, nineteen hundred and nine, at the rate of one shilling and twopence in the pound, and that an additional duty of Income Tax at the rate of sixpence in the pound be charged in respect of incomes which exceed five thousand pounds on every pound of the amount by which the income exceeds
    36
    three thousand pounds."—[Mr. Lloyd-George.]
    Mr. EVELYN CECIL: We listened on Wednesday night to a very strange speech in defence of this Resolution from the Chancellor of the Exchequer, and it is one which we ought to lose no time in answering. I somewhat question whether he would have made use of some of the defences which he made that evening had certain events happened then which have happened since. But however that may be, I should like somewhat critically to-examine his remarks, which gave me a great deal of astonishment at the time. In the first place he objected that the Opposition desired some three weeks at least to discuss the first reading of this Bill, and he told us that this was his view with a certain amount of theatrical sur-

    37
    prise, not altogether unconnected, I suspect, with a readiness to use the closure. But is it surprising that we should wish to have three weeks to discuss the first reading? This is not one Bill. It is about half-a-dozen Bills, and anyone of them would deserve to have a considerable portion of any Session allotted to them. Why then should we not be allowed to have full time to discuss these entirely unprecedented proposals and to consider the far-reaching bearings which they have? Besides, I am rather surprised that the Chancellor of the Exchequer is so very anxious to hurry on these Resolutions. I should have thought from his own point of view that the longer they took the more time there was for Cabinet alterations in the Bill.
    It appears to ore that this Bill is not unlike a jelly not quite set, and whether it ever will be properly set still remains to be seen, but if rumour is to be trusted I gather that the 60 or more clauses of the Bill are still in a very jelly-like condition, and that the right hon. Gentleman is prepared to make material alterations on them during the time the Debates on the Resolutions go on. I should like just to look at the defences which the right hon. Gentleman brings forward for these remarkable resolutions. This income tax resolution is defended, so far as income tax strictly is concerned, by him on two grounds. I would note the fact at the outset that this is a fundamental change as regards the income tax, that we have never had such proposals in peace time to deal with before, and that it is starting altogether a new precedent. What are the right hon. Gentleman's defences? He told us in the first place that preparation for war was equally important with war itself. That was one of the reasons why it was necessary to have a high income tax in time of peace—at least that is how I interpret the remarks of the right hon. Gentleman—but from the financial point of view, surely this is entirely absurd. Does anybody suppose that the amount of money spent in preparation for war is ever the same as the amount spent when war is actually going on? Why the normal condition of every nation should be to spend an adequate amount for defence in peace time, and in preparation for war, and for that purpose a certain amount of taxation should be raised and cheerfully paid, but it is quite another thing to say that we should have to pay in peace time what we should have to pay in war time. There is no analogy between the two. I
    38
    do not understand why the Chancellor of the Exchequer should bring forward such a defence of this particular proposal. But his second defence was even more extraordinary. The Leader of the Opposition had said that after all you ought to leave the income tax as a kind of reserve for great emergency, and the Chancellor of the Exchequer replying to that said:—
    "Why should the income tax be treated as a reserve, as something Which is of a temporary character, while other taxes are regarded as permanent? Why should not the other taxes have their turn as temporary taxes, the taxes on the food of people, fur instance? Why should taxes on the necessaries of life be regarded as permanent, and the taxes on high incomes as purely temporary."
    I should think there was the best of reasons. I do not know whether the Chancellor of the Exchequer intends to suggest that taxes on the food of the people are suitable taxes to raise in time of national emergency. I should have thought it was never his desire to raise the taxes on the food of the people, and certainly, above all others, that we should not pile an enormous sum upon them when a national emergency occurred. If that is not the meaning of the right hon. Gentleman, I suppose he means that very often certain classes of the community ought not to be paying taxes at all, while other and more limited classes of the community ought to be paying them very considerably. But is that a just doctrine? Is it to be seriously alleged that a large proportion of the nation ought to be left out of taxation altogether? That savours to me very much more of the clap-trap of the demagogue than of the responsibility of the statesman. If that is a serious defence for proposing this increase of the income tax in the time of peace, I should like to answer the right hon. Gentleman out of the mouth of the Prime Minister himself. What did the Prime Minister say when he introduced the Budget in 1906? He said:—
    "In regard to the income tax, I do not hesitate to associate myself with the declarations of more than one of my predecessors, that an income tax of a uniform rate of Is. in the £ at a time of peace is impossible to justify. It is a burden on the trade of the country, which in the long run affects not only profits but wages. It presses with excessive and peculiar severity on that large class of the community with incomes from £700 to £2,000 a year, who pay in addition their full share of the taxation on articles of consumption. It tends to destroy. or at any rate to contract, a. most readily available reserve on which the State can draw n a sudden and unforeseen emergency."
    I agree with every word used by the Prime Minister, and it is perfectly astounding that the right hon. Gentleman now the head of the Government, after having given utterance to these wise opinions, should be raising the income tax to Is. 2d. in time of peace.
    The PRIME MINISTER: I adhere to them all.
    Mr. EVELYN CECIL: I am glad to hear that the right hon. Gentleman adheres to them all. I only wish he would carry them out in practice.
    Mr. W. P. BYLES: Did the right hon. Gentleman not reduce the income tax to 9d.?
    Mr. EVELYN CECIL: Not in all cases. I do not quite see the relevancy of the hon. Gentleman's interruption. There is another subject in regard to the income tax on which I want to make a few remarks, and that is the question of differentiation. We hear a great deal about differentiation between earned and unearned incomes, permanent or precarious incomes, or whatever you like to call them. I think, in the first place, that differentiation in this country is already a great deal too high, as appears from the evidence of the Inland Revenue Commissioners themselves. It is higher than in any other country in Europe, and if you attempt to define it you get yourself into a number of intricacies and injustices. I personally think it is very foolish to try to carry out differentiation of this kind at all. You have the obvious case of incomes derived from savings. Why should they be considered as unearned incomes? The pensions paid to civil servants have been allowed to be treated as earned incomes. That was a concession which was made two years ago, but what is the difference between pensions paid to civil servants and incomes derived from savings of worthy citizens? Both have done much for the country. No doubt the civil servants have served the country well, and deserve their pensions, but there are many people who are not civil servants who have served the country well in many commercial or other callings who deserve also to have the incomes from their savings treated as earned incomes if the pensions of civil servants are to be so treated. That kind of difficulty arises because you attempt to differentiate, and because you try to make some distinction with respect to subjects between which it is impossible to draw the line. These hardships are likely to take place, and I would earnestly advise the Chancellor of the Exchequer to reconsider some portions of his Budget from that point of view.
    Let me refer to the super-tax which is referred to in the latter portion of this Resolution. The Chancellor of the Ex-
    40
    chequer had three defences for that in his speech on Wednesday night. He told us that the City does not complain; he told us that he had no correspondence objecting to it; and he told us that he considered the super-tax perfectly fair. Let me take these three remarks seriatim. As regards the City not complaining I think the right hon. Gentleman will admit that he has spoken too soon. He no doubt by this time has digested the weighty letter from bankers, merchants, and business men two or three days ago which was addressed to the Prime Minister. Perhaps I may read one sentence, which contains the pith of the letter:—
    "The great, increase and graduation of the Death Duties —already materially raised hut two years ago—and of the income tax, coupled with the super-tax, will, we are confident, prove seriously injurious to the commerce and industries of the country."
    The commerce and industries of the country do get some solicitude from the Chancellor of the Exchequer, and if that is likely to be the effect, as assuredly it will, of his Budget proposals, I should have thought that he might have given some consideration to this letter. I thought that as a rule in financial matters it was the practice to seek for the advice of the City and not to flout it. The right hon. Gentleman now we learn evidently did not seek the advice of the leading members of the City and of persons there engaged in business, and he has decided to flout the advice which he now receives. Even Sir Felix Schuster, one of the gentlemen who stood for the representation of the City in the Liberal interest, has joined in this letter. It is quite a non-party letter. It is purely a practical letter from business men. [Indications of dissent.] Apparently hon. Gentlemen below the Gangway consider it of no consequence at all. I do not know whether their experience is equivalent to that of the signatories of the letter. I understand their attitude is that if any further money is required in time of emergency you should clap on more super-tax. You want old age pensions, which in many respects are being scattered about like doles to the unthrifty. It was only a day or two ago that I spoke to a working man who objected to pay 1½d. a week more for his tobacco in order to give doles to the unthrifty. Hon. Gentlemen below the Gangway consider the super-tax an engine for taking out money from an unlimited mine of gold. I can assure them that it is not the case. 'They are killing the goose that lays the golden eggs, and if they find hereafter that trade and commerce

    41
    do diminish, and that workmen are discharged, they cannot say, at any rate, that we have not warned them.
    Let me go on to the Chancellor of the Exchequer's second defence for this super-tax. He said he had no correspondence. This letter is quite sufficient to count for a great deal of influential correspondence, but I strongly suspect that the 10,000 or 12,000 people in the kingdom who are alleged to have more than £5,000 a year are not very likely to communicate with the Chancellor of the Exchequer when they remember that he holds office in a Government which intends that minorities should suffer. As to the third defence of the super-tax, that he considers it perfectly fair, I should like to make some comments also. It should be remembered that the super-tax does not stand alone. It is a tax which must be taken together with the death duties which were raised two years ago and the succession duties. If it was standing alone it might be considered to be a fair tax. But as it taxes the same people merely in a different way from the other taxes—death duties, legacy and succession duties, and so on—it is in its incidence and its amount I consider a very unfair tax, and it is not only we on the Opposition who consider it so. I suppose anyone who speaks from these benches will be considered merely a special pleader, but I should like to read to the House the remarks of Lord Milner on that subject, who at any rate is not a special pleader as we could be considered to be, and whose eminent services and great financial experience ought to have some weight with the Chancellor of the Exchequer. He said at Bristol on 4th May:—
    "I am absolutely convinced that these crude, repeated, direct attacks on the wealthy will defeat their own object. I am not one of the wealthy myself. I have no personal interest in the matter, but I have I hope sonic sense of justice, and I have had more than 20 years' experience of public finance in different parts of the world, and I say that the present raid is going to defeat itself."
    Those are very strong words, coming from Lord Milner, and I do not believe that they are a bit too strong.
    But who, again, is to judge of the fairness of this super-tax, so far as its practical administration is concerned? It is not the Chancellor of the Exchequer; it is not the Treasury; it is the people upon whom the taxes will fall; and you may be quite certain that if people consider that the tax is unfair they will take it upon themselves to evade it legally—lawful avoidance is the term used by the Committee in its Report—lawfully avoid it in every possible way.
    42
    And small blame to them from their point of view, because, after all, a tax which is considered grossly unfair and grossly unjust naturally tempts people to evasion, and they do not consider themselves, and I really do not know why they should consider themselves dishonest, if they attempt to do so in a legal way. But is that all? The tax itself is economically unsound. No political economist of repute and standing, I venture to think, would really seriously consider it otherwise. Sir Henry Primrose, who has a great knowledge of this subject, said in his evidence before the Income Tax Committee: "I am convinced that it would be beyond our powers effectively to levy a super-tax, even on persons with incomes in excess of £5,000 a year." That is a very strong argument from a Treasury official. If the super-tax does not work effectively it is simply a fraud penalising the scrupulous, and acting in its operation irregularly and with great uncertainty. If, on the other hand, it is going to work effectively, as the Chancellor of the Exchequer argues, what justification is there for incurring the expensive machinery of two income taxes, because it is practically a second tax? The Chancellor of the Exchequer, I suppose, intends to have one staff to collect the present income tax, and to have another staff, a different staff necessarily, for the collection of the new super-tax.
    Apart again from that, the Chancellor of the Exchequer is giving up the principle of collecting at the source so far as the super-taxes go, and I should have thought that anyone who read the evidence in the Blue Book would have come to the conclusion that the less you collect at the source the greater leakage there is in the amount of taxes which flows into the Treasury. I do not know whether there is any disposition to dispute that, but I saw in the main portion of the Committee's Report a very interesting piece of evidence which bears that out. The Report says: "It is interesting to recall the fact that 100 years ago we abandoned direct personal assessment, and collection at the source was substituted, with the result that the yield of the tax was almost doubled immediately. In 1803 an income tax of 5 per cent. collected at the source yielded within a very small amount as much as a tax of 10 per cent. did in 1801, when it was assessed and collected direct from each taxpayer." Nothing is more conclusive to my mind. Yet in the face of the evidence, and in face

    43
    of that statement in the report, the Chancellor of the Exchequer proposes to introduce all his machinery for the ineffective working of the super-tax. There is another remark to be made about the super-tax. It is very inquisitorial. Hitherto British statesmen have strongly objected to anything so inquisitorial into private affairs as the proposed machinery. Apparently this view is no longer going to be maintained, and it is not an answer to tell me that inquisition is already made into certain incomes. That is quite a different kind of thing. Inquisition there is made for the benefit of the person who pays the tax. An hon. Gentleman laughs. Of course it is made for his benefit; otherwise he would not get any abatement, and it is further a thing that is voluntary. The person who pays the tax need not make the Return stating exactly—?
    Mr. CHIOZZA MONEY: Is not the hon. Member aware that we actually go behind the back of the employee and compel the employer to divulge the employé income to the Government?
    Mr. EVELYN CECIL: Suppose I had an income of £630 a year and I did not choose to return it, though I could get an abatement as it was under £700, I am not compelled to do so. It is quite voluntary. The hon. Gentleman seems to forget that there are innumerable instances of that kind throughout the country, but I do consider that there is a very great difference between an inquisition which is to a great extent for the benefit of the taxpayer and an inquisition which is necessarily going to be to his prejudice. The two inquisitions are on a wholly different basis. The one, to my mind, is utterly hateful, while the other is voluntary, and is only made to secure an abatement for a lesser income. I am afraid the Chancellor of the Exchequer in all his proposals is an apt pupil of the hon. Member for Blackburn, that he is departing from the advice of Mr. Gladstone and Sir William Harcourt, and that now he is listening very attentively to the suggestions which come from hon. Members below the Gangway. I can only say that I fear his conversion forebodes national commercial disaster, and that the consequences of it will be that capital will go abroad, that wages will be reduced, that workmen will be discharged, and that unemployment will be rampant.
    Mr. CHIOZZA MONEY: I should be very happy if I can do anything to calm
    44
    the somewhat exaggerated fears of the hon. Gentleman who has just sat down. Regarding in the first place the financial stability of the United Kingdom, it seems to me, that he has forgotten the ratio between the amount of the new taxation which my right hon. Friend proposes to impose upon certain classes of this country and the income of those classes. For example, the whole income which my right hon. Friend stands to get both out of the increased income tax and the super-tax in addition to that increase is three and a half million pounds. Let us suppose for a moment that three and a half million pounds is a conservative estimate, as I suppose it ought to be under the present circumstances. Let us suppose that the yield will prove to be, as I think it will prove to be, at least £5,000,000. What is the ratio of that £5,000,000 to the income of the class taxed by his scheme? Is the hon. Gentleman aware that the total income of the taxpayers whose income exceeds £700 a year is certainly not less than £600,000,000 per annum? Can it truly be said, in view of that fact—and it is a figure which can easily be verified—that if you take £5,000,000 out of the pockets of the possessors of that extraordinary income you either impose an intolerable burden upon them or weaken the resources of this country, or in any way trench upon the war reserve of this country? Even if you believe the income tax to be a war reserve, which to my mind is not the proper light in which to regard it, what is the war reserve? What is the financial reserve of this country whether in time of peace or war'? Surely it consists in the entire taxable income of the country? The means by which we get at that income merely represents the tapping of the reservoir, the means by which you draw upon the reservoir. It matters not whether you call it income tax, super-tax or petrol tax, the effect is that you take a sum out of private pockets and transfer it into the public purse. What is the economic effect of the transfer? Does it necessarily weaken the country financially at all? Consider the effect of taking £5,000,000 from the pockets of persons who possess £600,000,000 a year and spending it on the building of war ships and the provision of old age pensions. What is the exact economic effect upon the nation? It is this: You reduce the spending power of a limited number of rich persons by £5,000,000, and they have £5,000,000 less to spend. Upon what? Investments? Does the hon. Gentleman suggest that to take

    45
    £5,000,000 out of that vast amount of income is really to reduce substantially the means of investment of these persons? Of course it is not. The proof of that is to be found in what happened during the South African War, when we were not only imposing a war income tax up to 1s. 4d. in the pound, but in addition we were floating big loans in the public market to meet a great part of the expense of the war. Was there at that time any decrease in luxurious expenditure of the upper classes of this country? On the contrary every indication was in the opposite direction. For example, hon. and right hon. Gentlemen opposite have referred to the imports of motor cars into this country. The imports of motor cars into this country during that period went up by leaps and bounds. The import of motor cars, at about £400 each, is a typical example of luxurious expenditure, and it went up by leaps and bounds during that period. Every other test during that period shows that so far from trenching upon capital investment we did not even touch the fringe of luxurious expenditure in the United Kingdom. The hon. Gentleman referred to the speech made in my own hearing by my right hon. Friend the Prime Minister about two years ago, in which a uniform rate of Is. in the pound was referred to by him. I really cannot see that the hon. Gentleman who has just sat down has strengthened his argument by referring to the tax of 1s. It was a distinctly uniform rate of taxation which my right hon. Friend referred to. What did my right hon. Friend do shortly afterwards? He reduced it in the case of persons who earned incomes between £700 and £2,000 a year from Is. to 9d. in the £—a reduction in the case of earned incomes of 25 per cent. The hon. Gentleman says that does not cover the whole of the cases of income between £700 and £2,000 a year. It is true that there are unearned incomes between those limits, and in their case the rate is not reduced; on the other hand, it is increased by the present Budget. Has the hon. Gentleman reflected, if we are to increase the taxes to meet the national expenditure, from whom we are to take that increased taxation? I ask the hon. Gentleman whether those with between £700 and £2,000 a year in this country, who do not follow trades or professions, are not the favoured few? They consist almost of the top layer, very nearly the top layer, of the rich of this country. If we are not to tax them, I should very much like to know whom we are to tax. I should like to
    46
    know the proposal of right hon. Gentlemen opposite with regard to the classes who should be taxed to meet this increased expenditure. Do they really suggest that they can get the money that is required for the 13 or 16 millions out of the taxation of foreign manufactured articles?
    The CHAIRMAN: I do not think the hon. Member can embark on that line of argument without opening up a general Debate on the Budget. We are now dealing with this one solitary Resolution.
    Mr. CHIOZZA MONEY: I bow at once to your ruling in the matter, but I do think that hon. Members opposite, who tell us that we ought not to tax those who possess wealth to raise the money required at this particular moment, ought to inform us, on the other hand, by what means they propose to raise the money. Otherwise we shall need a new definition of the word patriot: "Patriot: a person who won't pay." I think myself that the Debate we have had on the land tax has cleared the way for a discussion of this particular Resolution. May I remind the Committee what occurred when we discussed the land tax of my right hon. Friend? We were then told by hon. and right hon. Gentlemen opposite that there were many other forms of unearned increment besides the unearned increment which attaches to the land. I fully agreed with them. I did my best to cheer my hon. Friend the Member for Preston, the Leader of the Opposition, and the Noble Lord who spoke subsequently in the Debate, I cheered those hon. Members when they showed most conclusively that unearned increment, or social values as they are sometimes called, attach not only the land but to other forms of property. I am most thoroughly in agreement with the views given by hon. Members opposite on that subject. May I remind them what was said One hon. Member said:—
    "If thirty year ago £100,000 had been invested in land and 0100,000 in gas; lad water shares, made concurrently that the increase in the value of the shares which has taken place was quite independently of any effort or skill on the part of the owner, and, therefore, it may lie argued that this unearned increment—."
    Another hon. Gentleman said:—
    Mr. FELL: Will it be in order, Mr. Chairman, if we discuss the question of unearned increment?
    The CHAIRMAN: I must confess that I fail to see the relevance of the hon. Member's line of argument to the Resolution with which we have to deal. I was listening to the hon. Member to see whether his observations would really apply to it. So far I cannot see the relevance.
    Mr. CHIOZZA MONEY: I beg most respectfully to submit that I am in order in referring to unearned increment in order to develop the point that graduation differentiates the tax. Really the subject we are discussing in this particular Resolution, inherently involves the question of unearned incomes and unearned increment, and I say the discussion on the land values Resolution really cleared the way for this Resolution, and made very clear, out of the mouths of hon. Gentlemen opposite, the justice of the proposals of my right hon. Friend with regard to the graduation of income tax. I do not at all complain of the interruption. I was pointing out that another hon. Gentleman said:—
    "There is unearned increment, but asked would anyone deny that a big trader doing business is profiting enormously with the general advance of the community. In the matter of communications, for instance, he gets tremendous improvement owing to the fact of there being a cable or telegraph service. That is unearned increment to him, and that applies to almost every form of industry."
    The Leader of the Opposition also referred to cases of unearned increment in regard to railway companies and other enterprises. What does this lead to? It leads to this: I think the more we examine the sources of incomes the more we see that as incomes rise in the scale the more social values, if I may use the expression, attach to those incomes. In other words, the amount of an income, the degree of an income, is also a rough measure, not an exact measure, of the unearned increment which attaches to it by the growth and the activities of the community. It is upon that proposition, which I beg with all respect to submit, that I found my support of the Resolution which is now before the Committee. And I would say to hon. Gentlemen opposite who hold that land ought not to be taxed more heavily than any other form of property that in this Resolution they can find a corrective of the land tax which has already met with approval of the Committee. I do not disguise my own opinion from the Committee that I do not think property and land ought to be taxed more heavily than other forms of property. I find myself in agreement with hon. Gentlemen opposite on that point, but I am astonished to find that they adopt what I may call the academic Socialist view. When they come to discuss the question of graduated and differentiated income tax they find themselves rejecting the principle that other social values than land should be taxed. They reject altogether the principle that income should be
    48
    taxed progressively according to their degree. At any rate the right hon. Gentleman the Leader of the Opposition did not subscribe to that idea; he distinctly expressed disagreement with John Mills' idea. I really think when the right hon. Gentlemen opposite come to consider the matter a little more thoroughly they will accept this Resolution. I would point out that it is perfectly clear from the facts so far as social values attach to income—and I do not think anybody can deny that they do—those social values are certainly expressed to a greater degree in regard to interest than they are expressed in economic rent. I think that can be most easily proved from the statistics that are available. The facts show that the landowners' share, even when you have added an estimate of hypothetical income from un built sites, is only a, very small fraction of the income of the country. In other words, the unearned increment which attaches to property, to salaries, professional fees, and other forms of property is chiefly expressed not in economic rent, but in interest.
    From these considerations I repeat that as incomes rise in the scale they should be progressively taxed. The graduation of income really means a differentiation of the income tax, and when that is once seen, the way of the Finance Minister is largely cleared. He need no longer worry himself about differentiating between earned and unearned income. If he applies a practical scheme of graduation of Income tax he may be satisfied that he has also done his duty very largely to the principle of differentiation. I am in general agreement with the object of this Resolution. I wish I could say that I am as fully in agreement with the method expressed by this Resolution. I have so many times pleaded in this House for a plain scale of income tax that I feel almost reluctant to do it once more to-day. But the facts when they are examined bring to light so many anomalies, they show so many cases of injustice between one income and another, that I do think it is worth the while of the Committee just to look at the chief points for a moment. I will not go into detai1s. We have got the abatement system; we have got differentiation between earned and unearned income, and now we have got the super-tax. I do not suppose there is one man in ten thousand in this country who could take pen and paper and give a clear idea

    49
    of what the present system means. I say the tax ought not to be levied in that way. It ought to be levied in a way clear and understandable to the average man. I have suggested in this House on several occasions the plan of a graduated income tax. I suggest that there should be a plain scale, that you should collect at the source, say, one shilling in the £, that you should have, whether it is earned or unearned income, a personal declaration from the taxpayer, and that in cases where the amount payable is greater than the amount collected at the source, you should collect the balance from that person. I do submit to the Committee that in what my right hon. Friend is now doing he is carrying that system into effect, but only roughly. He does tax at the source; he does get a personal declaration; he does collect the balance which is called the super-tax after collecting the first income tax; but the effect of the theory, when it is worked out, is to create a very large number of cases of hardship. For example, the scale rises too rapidly in the early part. The graduation up to £700 is very rapid indeed, whether we take earned or unearned income. Suppose we take earned incomes; a man pays l¾d. on £100 a year, and 5½d. on £400. Take unearned incomes, and take the widow—we had better call her a widow—with £200 a year. She pays 2¾d. in the pound, while the widow with £400 pays 8½d. in the pound. Of course, the rise in the graduation there is much too rapid. Then after this rapid rise in values we come to a, sudden stop. If we take the case of unearned incomes the injustice is very apparent. £701 per year pays fourteen pence in the pound, and so does £5,000. The scale goes up for certain incomes, and then remains at a standstill. If you attempt the principle of graduation, why cannot we carry it out better than that, and if we give a lip-service to the principle, why not carry it out in practice? Then, of course, there are a large number of steps in the scale where the temptation to evasion must be very great indeed. It is scarcely equitable that while a man with £2,000 per year pays £75 per annum, a man with an income of £2,001 per year should pay £105, or £30 more. Exactly the same case arises when we come to the man with an income of £3,000. Thus, £3,000 pays £150 and £3,001 pays £180. Take the £5,000 income, where the super-tax comes in: the man with £5,000 income pays £291 and the man with £5,001 pays £350. I will not weary the Committee
    50
    with any more examples of the class of anomalies I refer to, and which my right hon. Friend could easily sweep away if he would construct a plain scale of income tax and carry out the same system on which he proposes to embark now, but basing it on a plainly graduated scale.
    I feel that my right hon. Friend in the Estimates of his Budget given to Parliament on such an occasion as this, when we. must have elastic revenue, should be more than usually conservative, but I think there is scarcely any excuse for putting as low as £500,000 the yield of this super-tax. I think it will be a very conservative estimate to anticipate a million and a half or two millions. I think, before the year is past, we shall see very clearly that, so far from the super-tax yielding only £500,000, it will yield several millions, and if not in this year then certainly next year. But even in the present year, unless the officers are more than usually inefficient, we shall get a much larger sum than is put down in the Budget. Something has been said by the hon. Gentleman with regard to inquisitorial methods. We have heard that before in the House, and I really think it has been disposed of. I do not think the hon. Gentleman attaches sufficient weight to the principle upon which we work in this matter. The abatement is not a gift to the middle class man. The abatement is simply to graduate the tax of the middle class man, and the middle class man's taxation is not the amount which he would pay if he did not declare, but it is the amount which is exacted from him after the declaration is made. That is the amount he is supposed to pay. He is not supposed to pay the other amount.
    The difference is not a gift to him; it is simply a recognition on the part of the State that he should not pay more than the lower of those two amounts. When, therefore, you go to him and make him declare his income before you tax him, you really impose a pecuniary penalty on him if he does not declare. It is a heavy penalty for not declaring. May I explain by a concrete case what I mean? If you imagine the case of a clerk or a manager with £400 per year—if he does not declare he has to pay £15 income tax. If he declares, he pays £9. The difference is £6, which is a. virtual fine. It is not a gift to him because he does declare, but it is a fine if he does not declare. What you do, in fact—whatever you like to call it in an Act of Parliament—is to fine him £6 if he does not declare. What we are doing now is to apply exactly the same principle to larger

    51
    incomes. I presume the right hon. Gentleman will exact a heavy penalty from a man of high income if he does not declare his income. If he does declare, he will only be doing what is done in the case of all the moderate incomes of the country.
    Mr. EVELYN CECIL: One is fined if he does not declare, the other if he does.
    Mr. CHIOZZA MONEY: It is fining him if he does not declare in both cases. I now pass to a more important point, and it is this: Need there be any apprehension at all that the amount of taxation raised by the increased income tax plus super-tax will diminish capital savings. I should be the first to agree that in our society, as now constituted, with an industrial system as it is now, you ought not to do anything to decrease or risk the decreasing of the amount devoted to capital savings. Whatever fine ideas any hon. Member may entertain as to collective enterprise, collective enterprise does not exist now. We have the individualistic system; employment of the masses depends upon the investment of capital by the few. As that is the case, you must not, of course, do anything to diminish the capital savings or capital investment. It remains to ask: Is there any probability that the amount which these taxes will raise will in any way seriously impair or even trench upon those capital savings? Professor Marshall said, I think it is worth repeating, that probably a hundred millions is wasted by the lower classes of this country every year, and that, probably, three hundred millions by the upper classes upon forms of expenditure, which are not or, at any rate, do not make for national advancement. If there is any truth in this statement, and I believe myself there is a good deal of truth in it, I do not think it is uttered lightly, then what is the ration between this amount of expenditure, this extra amount of expenditure, which we propose to raise and the amount which, according to such an authority as that, is wasted upon things which do not make for national advancement? The ratio obviously is as five to three hundred.
    If Professor Marshall's figure is not credited, may I refer the hon. Gentleman and those others, there appear to be many, who believe we are trenching on capital savings, may I repeat to them once more the extraordinary growth of assessed incomes in the last 10 years. Make what
    52
    allowance you will for increased stringency of collection, and I believe that has been quite exaggerated, especially in the ten years, but make an allowance for it, and what are the figures? During the period when our expenditure went up by leaps and bounds on account of the war, during the period when it rose from 118 millions to 162 millions, that is between 1899 and 1909, you find that the gross income reviewed by the Inland Revenue Officials rose from 763 millions to 1,040 millions, that is to say, that while national expenditure rose by 44 millions, the income of the classes, not of the masses, rose by 277 millions. The proportion of increase in the ten years is almost precisely the same in national expenditure on the one hand and in assessed income on the other. National expenditure rose by 37.2 per cent., and incomes rose by 36.3 per cent.
    As I pointed out previously the national expenditure of this country is exaggerated by the inclusion of the entire outgo of the Post Office. That is not true national expenditure, because it is balanced, and more than balanced, by the income of the Post Office with five millions profit over in relief of taxation. That exaggerates these figures of expenditure, and with the growth of the Post Office increasingly exaggerates them year by year. If allowance were made for that it would be found that the increase in assessed income has gone on at a greater rate than the increase in national expenditure. I venture to say in conclusion that that shows most clearly that in imposing an income tax plus super-tax, bringing in additional taxation of three and a half millions, possibly rising next year to five or six, we need not be under any apprehension whatever that we are trenching even upon the margin of the capital savings of the country.
    Sir FREDERICK BANBURY: I would like to draw the attention of the hon. Gentleman to two or three remarks which I understood him to make. I understood him to say that an income tax and a tax on tea, sugar, and suchlike are practically the same, that they all take money out of the people and give it to the nation. That is precisely what we have been saying, that if you impose taxation on high incomes and a super-tax that you were, taking it from the poor. We have always held that those taxes, wherever you take them from, recoil eventually on the poor. I am glad the hon. Gentleman is a disciple of that opinion. The hon. Gentleman also

    53
    said that he was going to support the Budget, and believed in the proposals of the Chancellor of the Exchequer with regard to the income tax. Then I gathered that we should hear a eulogy of the proposals with regard to the income tax of the right hon. Gentleman the Chancellor of the Exchequer. What was my astonishment when the hon. Gentleman said that in his opinion a simple method of collecting the income tax was right. He then read out, I think he said, three different forms of collection. I think I can give him five or six, and he read out a number of cases of hardship, during which all the right hon. Gentlemen on the Front Bench shut their eyes, every single one of them. I noticed that particularly. Having read out those instances of hardship, and having said it was not the way he would arrange the graduation, then he wound up by saying he is going to support that which he strongly disapproves.
    I do not congratulate either the Chancellor of the Exchequer or the Prime Minister on their supporters in this Debate. Over and over again hon. Gentlemen opposite have risen and said they are going to support the particular Resolution before the House, and over and over again, though they say in their speeches they are going to support, they disagree with it as heartily as we do on this side of the House. The hon. Gentleman told us that we ought not to do anything to deplete capital in this country. With that we agree, and we are glad he falls in with our views on that matter. He weft on to say that he did not think this tax would tend to operate in that direction, because during the war, when high income tax was imposed, the luxuriousness of the rich did not decrease, and a larger number of motor cars were imported. May I point out first of all that motor cars were new, and naturally people would buy them, because they had not got them before, therefore the motor cars increased. I would also point out, by his own confession, the result was not to encourage savings but to allow luxury to go on. Does the hon. Gentleman think that by these taxes luxury will be stopped and that people, instead of spending any money, will save it'? The exact opposite is likely to occur. People will say, Why should we save when, for all we know, a great portion of our capital may be taken away from us? The tendency is to spend, not to save. I have an apt quotation on this point from Mr. Lecky, which I will read later on, to show that all these taxes, and especially the super-tax, tend to dis-
    54
    courage thrift and industry, and penalise especially the thrifty and industrious for the benefit of the unthrifty and the lazy. The hon. Gentleman said also that while motor cars were bought, and the luxuriousness of the rich did not decrease, neither did investments decrease. May I ask where he thought the money came from? Apparently it comes froth nowhere. If you do not decrease either your luxuries or your savings, where on earth does the money come from? It must come from somewhere, either out of curtailing luxuries (which, after all, employ people) or out of savings. If it comes out of neither it can come from nowhere, and I suggest that the hon. Gentleman should study that problem a little more carefully.
    The Chancellor of the Exchequer stated on Wednesday that he had had no protests about the super-tax. The super-tax, by his own showing, will be paid by about 10,000 people, and those 10,000 people, who are in receipt of incomes of over £5,000 year, are not the class of people who go in for writing letters to Ministers, unless they happen to have the pleasure of their acquaintance. Therefore the fact that he has not received letters from this particular class of persons does not at all prove that-they do not regard the super-tax with dislike. On the contrary, every single person I have met, both in the City and elsewhere, has regarded the super-tax as a step in the wrong direction. The letter from the City which appeared in the papers on Saturday tends to show that the super-tax is regarded unfavourably by some of the greatest living financial authorities in the City, including the hon. Baronet who stood for the City of London at the last election as a Liberal, and who, when it suited them, was held up by hon. and right hon. Gentlemen opposite as one of the ablest financial authorities in the City. What attention are they going to pay to his opinion now? I should like to point out to the hon. Member for Paddington one serious objection to the super-tax. I do not know if it is a doctrine which will meet with commendation on the other side of the House, but it has always been held that a tax should be imposed for purposes of revenue. Possibly in a Protectionist country it might be imposed for the protection of the industries of the country, but that is abhorrent to hon. Gentlemen opposite. I have never heard any statesman who has said that a tax ought to be imposed as a punishment for any particular class. The danger to my mind of imposing the super-tax quite regardless of

    55
    whether or not it is just is this. Why 6d. 7 Why not Is.? [Cheers.] I am glad that hon. Gentlemen below the Gangway cheer that. May I suggest that they should not wear their hearts so much on their sleeves. They give their own case away. Why not 1s.? Hon. Members cheer. That is the next thing, because there is no reason why Is. should not be imposed just as well as 6d., if the object is to get money out of the pockets of a few rich people for your own advantage. As the hon. Member for Preston said the other day, Members below the Gangway desire to keep their cake and eat somebody else's. If they want to eat the cake of the rich, why stop at a little bit? Gradually they will go on and take the whole.
    It may be said that my argument applies to any income tax: Why not 1s. 1d. or 1s. 2d? But the great protection is that there are a large class of people who pay income tax, and if they find that they are unjustly treated they will turn against the Government and take steps to protect themselves. But with the super-tax is it possible for that to be done? I have here the statement of the Chancellor of the Exchequer that incomes of over £5,000 a year are enjoyed by 10,000 people, and it will be within the recollection of the House that the right hon. Gentleman said that he did not impose the super-tax upon incomes over £3,000 a year, because they were enjoyed by 20,000 people—a very naive confession I thought, and one which bears out the truth of my argument. The income of these 10,000 people, according to Sir Henry Primrose, is £121,000,000, and the income tax and death duties on that amount come to over £20,000,000, or one-sixth. But the total income of the country is between £1,600,000,000 and 21,700,000,000, and only contributes £25,000,000. Therefore, the danger is that this small number of people with a large amount of money may have such a tax put upon them which they will be unable to resist, because they have not much voting power, that their money will be taken from them, and the tendency to thrift, investment, and enterprise will be destroyed. The following is the quotation which I promised to read from Mr. Lecky's book on "Democracy and Liberty ":—
    "It is obvious that a graduated tax is a direct penalty imposed upon saving and industry, a direct premium offered to idleness and extravagance. It discourages the very habits and qualities which it is most in the interest of the State to foster. It is at the same time perfectly arbitrary. Highly graduated taxation realises most completely the supreme danger of
    56
    democracy, creating a state of things in which one class imposes on another burdens which it is not asked to share, and compels the State into vast schemes of extravagance—"
    I should like to draw particular attention to that—
    "compels the State into vast schemes of extravagance under the belief that the whole cost w ill be thrown upon others. Yet no truth of political economy is more certain than that heavy taxation of capital w ill fall most severely upon the poor"
    I do not know that I could have brought forward better arguments than those to justify my position.
    Let me say one word upon the question of income tax as a reserve. The Chancellor of the Exchequer told us on Wednesday that he did not approve of the income tax being treated as a reserve for time of war, and he asked why should not other taxes, such as those on tea and sugar, be treated as a reserve. That seemed to me to be a very peculiar statement to come from a Chancellor of the Exchequer, because the reason why the income tax has always been held to be a reserve in war, ever since 1798, when it was first imposed by Mr. Pitt, is that it is easily collected and requires no new machinery. Up to the present time it has always been collected at the source. If a war breaks out, it is easily collected without additional expenditure upon fresh machinery, and without pressing very heavily upon the people who have to pay it. In answer to the statement of the hon. Gentleman opposite about capitalists, I venture to say that the tax has been paid willingly whenever the necessity has arisen. But if you are going too impose taxes upon articles imported from abroad, such as tea, sugar, etc., they will press upon the poorer classes, as well as the richer classes, just at the wrong time—in time of war, when one does not want to put additional burdens upon the poor. Moreover, this sort of tax in war time would be extremely difficult to collect. It is obvious that if our shores were invaded, taxes upon imports would be difficult to collect. I was astonished that the Chancellor of the Exchequer should advance the doctrine that he should use what has hitherto been regarded as the only real reserve in time of war, and consoled himself with the fact that when war comes he may be able to put duties upon imported articles which in all probability the foreign fleet would see did not come to our shores. The right hon. Gentleman said that until 20 or 30 years ago no Chancellor of the Exchequer had used the income tax as a reserve in time of war. What is the history of the income tax? It was imposed in 1798,

    57
    when we were at war, taken off in 1801, reimposed in 1803, when we were again at war, and taken off again in 1816, when peace came. It is true, as the right hon. Gentleman told us, that between 1803 and 1816 it once touched 2s.—
    The PRIME MINISTER: The whole time.
    Sir F. BANBURY: It is very presumptuous for me to contradict the right hon. Gentleman, but—
    The PRIME MINISTER: It was 2s. when Lord Henry Petty was Chancellor of the Exchequer in 1806. From that time it remained at 2s. until the end of the war.
    Sir F. BANBURY: I think perhaps the right hon. Gentleman did not hear me. I said that it was imposed again in 1803, and it rose to 2s. in 1906, but it was not 2s. for the whole time. It is a very curious thing —I do not know whether the right hon. Gentleman can tell me why it was—that Scotland and Ireland paid less. In 1816 the tax was taken off. It was imposed during those years on all incomes above £60, without any graduation.
    The PRIME MINISTERdissented.
    Sir F. BANBURY: Except in the case of Scotland and Ireland, where there was a different scale.
    The PRIME MINISTER: The hon. Baronet is quite inaccurate. It is quite true that all incomes under £60 were exempt, but, speaking from memory, there were abatements up to £200, and there was differentiation between earned and unearned incomes.
    Sir F. BANBURY: I have looked the matter up, but "Whitaker" does not state those facts. From 1816 to 1842 there was no income tax at all. It was reimposed in 1842, when the corn duties were about to be abolished. ["No."] That is where the question of the corn duties arose. It was then levied upon incomes above £150. In 1863 the limit was reduced to £100, and it remained on all incomes of £100 and upwards until 1876, when the amount was raised. My point is that if the right hon. Gentleman had imposed an income tax of 2d. upon all incomes he would have received £6,000,000—I think the exact sum is £5,800,000—whereas he now proposes, with all his different graduations, to take only £5,500,000. Well, ultimately, and he said in his Budget speech, 5½ millions.
    An HON. MEMBER: This year.
    Sir F. BANBURY: This year. Well, but he could get £5,800,000 now if he had made it 2d., and saved a great deal of trouble, and very much unnecessary opposition.
    The right hon. Gentleman the Chancellor of the Exchequer also went on to tell us that there was income tax in foreign countries. I think the right hon. Gentleman the Member for the City alluded to the investment of capital abroad. The right hon. Gentleman the Chancellor of the Exchequer said: "Take Japan. There is an income tax of 5s. in Japan." There may be in certain instances, but as a matter of fact there is no income tax on the Japanese people or in any other country, with two exceptions, which I will tell the House later. There is no single country that I know of —I have looked it up here to-day—no single country in the world, with the exception of Italy and England, in which there is a tax of any sort upon their National Debt. Therefore, it is absurd for the right hon. Gentleman the Chancellor of the Exchequer to come down and say that there is an income tax of 5s. in Japan. There may be some sort of an income tax, but he does not tell the whole story. In order to make it clear you have to tell the whole story. There are two exceptions, Austria and Russia. Austria, in some of her earlier loans, does make a deduction as a tax, but it is only in her earlier loans—her silver loans of 1894. Russia in one or two of her loans does the same. But all Russian later loans have been on the prospectus described as being absolutely free from income tax that may be now or hereafter imposed in Russia. That is not limited to foreigners. There is no condition that the stock must be held by foreigners. Anyone can hold it, and in that case they get their interest free from income tax. Therefore, the statement of the right hon. Gentleman that it is income tax that is imposed is incorrect. The right hon. Gentleman is inaccurate in his belief.
    There are two or three other questions which I should like to mention. I am glad the Prime Minister is in his place. Perhaps he would give his attention for a moment or two. The Prime Minister will perhaps remember that some two years or so ago I asked him some questions in the Debate on the income tax about decaying businesses. Some two years ago, I think in 1907, the Prime Minister abolished the right of the income tax payer, if he found

    59
    that he had returned his income at a larger figure than it was, to go to the Commissioners and claim the difference between the sum actually earned and the sum which he had paid upon. The Prime Minister, when he was Chancellor of the Exchequer, abolished that. In answer to my request that he should reconsider that abolition, that he said that the three years' system of averages was in force, and that the people who might consider themselves aggrieved by the abolition of this right to claim back money paid in excess would find themselves righted later on. If they had a good year one year they would get it hack a little bit later; and the system of averages adjusted all these inequalities. That, no doubt, is quite correct. I agree with that statement. Then I put this question to the right hon. Gentleman: "What about a decaying business, a business which has been earning £20,000 a year, and is gradually on the downward line—it does not have an up-and-down scale; it is gradually going down and never gets better? "The right hon. Gentleman replied that there was some truth in my statement; he thought it was hard in that case, and he hoped that there were not very many instances of that sort; but that, of course, lie could not legislate for every hard case. I venture, however, that now, when you are going to increase the income tax to the extent which you are proposing, and when you are going to put on a super-tax on the top, the case of the decaying business, which may be a large one, though decaying, and liable to the super-tax, that the point I have made, or that I made two years ago, is one for consideration. Because it is evident that if it was a hardship then it is a greater hardship now, when the amount claimed is so very much larger.
    With regard to earned and unearned incomes, I have had a large number of people complaining about the hardships and anomalies which arise. It is extremely hard where a man has been working for 20 or 30 years, and has been earning, we will say, £700 or £800 a year, and has not spent that money, but has put away £300 or £400 per annum in order to provide for himself practically a pension when he is old, that he should be subjected to this extra impost. He has invested, say, safely and well, and he finds that after 30 years or more he is able to retire. What is his reward? He has to pay income tax on a higher scale because he has an unearned income. Take, on the other hand, the man
    60
    who has been earning £500 or £600 per year, and has spent everything upon himself. He has saved nothing. What is the reward of the State to him? Five shillings per week at the expense of the gentleman who has saved and has got a small capital set aside. I think that alone shows the hardship of this differentiation between unearned and earned incomes. Of course, the mere fact is that it sounded very well to say earned income ought not to be put in the same category as unearned; but when you come to look into the matter you find that it is extremely difficult to differentiate as to what is earned and what is unearned income. Take the case of a Civil servant who receives a pension. The Civil servant has to pay his income tax upon his pension if it is under two thousand pounds—9d.—and the man who has saved it has got it to pay too. There cannot be any possibility of justice in the matter. Any man who has saved has to pay. The Civil servant, whose income has always been assured to him so long as he did his duty, is different to the professional man or the tradesman, who is not sure whether he will be able to keep his business together, and who has to make his savings out of an uncertain income. The tradesman and professional man has to pay if he has been thrifty and industrious. That cannot be justified. The differentiation becomes doubly hard when the tax is increased in the manner in which it has been increased.
    Let me in conclusion draw the attention of the Committee to a small quotation of only a few lines which was brought to my notice the other day, and which I think very opposite to the present situation. It is from Indian prophecy concerning the last days of the Kali Yug, or present age, and is out of the Ruranas, a portion of Hindu Scripture, and dates from 1000 B.C. This is what it says:—
    "The man who owns most gold mid lavishly distributes it will gain dominion over Religion will consist in wasting alms at large, and self-willed women will seek for power. They who rule the State will rob the people and abstract the wealth of merchants on the plea of raising taxes. And in the world's last age the rights of man will be confused, no property be safe."
    The PRIME MINISTER: I do not know that I fairly apprehend the relevance of the hon. Baronet's peroration, or, indeed, a large part of his speech to the Resolution which is now before the Committee. I say that, as he will understand, with no sort of disrespect. We have-often crossed swords over the matter of the income tax. But when I venture humbly to

    61
    question the appositiveness of a considerable part, at any rate, of the remarks which he has just addressed to the Committee, it is simply upon this ground—though they were perfectly relevant to the general question—as to whether an income tax is or is not a desirable impost, and whether our system of levying and collecting in this country is or is not ideally just. His remarks do not appear to me to bear upon the particular subject before us, namely, whether the tax should be increased in the case of normal incomes from 1s. to 1s. 2d., and whether there should be added to it a super-tax on incomes of a larger amount. That is the point, I apprehend, and the only point. I am not going to intrude upon the Committee for more than a very few minutes, because the general consideration bearing upon the subject seemed to me to be exhaustively stated by the right hon. Gentleman the Chancellor of the Exchequer at our last sitting. Yet I should like, if I may, to make one or two criticisms upon some matters which have since emerged, and particularly I think it only respectful to take the first opportunity of referring to a document which has been already cited more than once in the course of this afternoon's discussion, but which I only received late on Friday night or early on Saturday morning, and which I found in the Press on the same day, and before I had the opportunity of replying to it. I mean the memorial signed by certain very eminent firms and individuals in the City of London. It is addressed personally to myself. I make no complaint either of the spirit or the terms of that memorial. It is couched in very moderate language. It purposely and advisedly refrains from passing any criticisms on the larger part of the proposals in the right hon. Gentleman's Budget. It confines itself—I am not saying that by way of reproach or even of criticism—confines itself, as the signatories to the memorial naturally regard themselves as in a special sense the custodians of the capital—to the two proposals of the Budget which in their view have special reference to the interests of capital, and in particular the capital of the City of London. One of them is the proposed rise in the scale of death duties, which would, of course, not be in order upon this Resolution to make any reference to, but in regard to the other—the language which is used is this:—
    "The great increase and graduation of the death duties and of the income tax, coupled with the super-tax, will, we are confident, prove seriously injurious to the commerce and industries of the country."
    62
    That, I am glad to see, is prefaced by a statement of the eminent persons that:—
    "We realise that the increased and increasing expenditure of the country necessitates additional taxation."
    And of this they are prepared to bear their full share. Well, if that be so, if you are to take it for granted, as you must for the purpose of this argument, that the 16 millions or the 13 millions, whichever you like to call it now, has to be provided for, the sums which we have allocated to indirect taxation—to liquor duties, to tobacco, and also sums allocated to land—are to be taken for granted, I want to ask in what other way can the capital which these Gentlemen rightly claim to represent be called upon to contribute its share to the necessities of the country than by such proposals as are now before the Committee. I am not going to travel outside the range of the Resolution now before us. I will not, therefore, ask whether you are going to supply the gap by some readjustment of your tariff. I will not ask whether it is to be filled up by duties not protective duties, but duties upon the necessaries of life, like tea and sugar. I will assume that capital recognises that it has a duty in this matter which it may rightly be called to discharge —a duty which it cannot shift on to the shoulders of the consumers of the country and the payers of indirect taxation, and if that be so I do not think anyone will allege that the share of the total which we are proposing to allocate to capital is excessive in proportion, having regard to the share which other classes of the community are required to pay. I leave out the death duties for the moment, and I repeat the question: Is there any other way than that proposed by my right hon. Friend which will be more equitable and less injurious to the trade and commerce of the country?
    The hon. Baronet who has just sat down has spoken in reply to some observations of the Chancellor of the Exchequer of the burdens imposed in the shape of income tax by the Legislatures of other countries. I will not go as far afield as Japan, because I do not profess to be intimately acquainted with the provisions of the Japanese law in that matter. I may say incidentally that I fail altogether to perceive any relevance in what the hon. Baronet said in regard to the taxation of the National Debt. Income tax has always been imposed on Consols in this country. Every buyer and seller of Consols, every person who has invested in our National Debt has done so upon the under-

    63
    standing that he will be called upon to pay income tax. I cannot conceive the hon. Baronet with his commercial and City experience even to suggest—
    Sir FREDERICK BANBURY: The reason I made that remark was this: The Chancellor said where will capital go? In Japan there is an income tax of 5s., and so on.
    The PRIME MINISTER: I do not think that that is very relevant to the subject now under discussion, but let me pursue the matter a little further with the hon. Baronet, not with regard to the incidence of the income tax on the National Debt, but with regard to its incidence on the general wealth of the country. The hon Baronet speaks as if the demand which my right hon. Friend is now about to ask Parliament to sanction was something abnormal and excessively burdensome, even unprecedented in amount such as, to use the language of the eminent signatories of this memorial, would tend to discourage the accumulation of capital in this country and promote its emigration into other quarters of the world. I think I am correctly construing the hon. Baronet's argument. I will not go through all the cases cited the other day. I will take two crucial cases. I will take two great European countries with which we are in the most acute commercial and industrial rivalry—France and Germany. How does this matter stand? In regard to France the eminent Finance Minister in that country, M. Caillaux, has passed his Bill through the Chamber of Deputies. I do not think it has yet passed the gauntlet of the Senate, but Senates as we know are difficult people to deal with. But. M. Caillaux has passed through the Chamber, with the assent of a large majority, his income tax law. What is the effect of that income tax law? Take an income of £4,000 a year—this is one of the class of incomes that most appeal to the hon. Baronet opposite; they appeal to him with a degree, I will not say of intimacy, but with a degree of sympathy—
    Sir F. BANBURY: I have not got so much.
    The PRIME MINISTER: Then, I must say the hon. Baronet is a most disinterested champion of the campaign against the super-tax. I am not speaking of him personally, but of those whom he represents and those whom it is only
    64
    natural, sitting here as the Member for the City of London, he feels called upon to protect. How is an income of £4,000 treated in France under the new income tax as compared with the predatory and oppressive proposals of my right hon. Friend the Chancellor of the Exchequer? An income of £4,000 in France will have to pay income tax of 1s. 5d. in the pound. An income of £4,000 here, under my right hon. Friend's proposal, will have to pay income tax of 1s. 2d., and if you go a step lower down in the scale and take an earned income of £3,000, it will only pay one shilling. When you come to the higher incomes, if you take an income of £20,000, in France it would pay 1s. 7d. income tax under the new law, which is practically the same sum as it would pay under my right hon. Friend's proposa1s. [An HON. MEMBER: "There is no death duty."] I am talking about the income tax. I am quite prepared, when we come to the death duties, to compare the scales of death duties. For the moment I am dealing with income tax, and I think I have conclusively shown, as regards France, at all events, that the larger class of incomes will be at least equally taxed under the proposals of the French Parliament as those of my right hon. Friend.
    Now let us come to Germany. Take Prussia, which is, after all, the premier State in Germany. In Prussia, on an income of £5,000, income tax is already payable at this moment to the State and the municipality amounting to 10 per cent., or 2s. in the pound, on an average in 30 of the most important cities. [An HON. MEMBER: "That is rates and taxes."] My right hon. Friend the Chancellor of the Exchequer has disposed of that matter about rates in his speech the other night. The income tax to which I have referred is 10 per cent., or 2s. in the pound, and further additions to this will be due under the finance law of the present year, and, in all probability, further additions will be made under the finance law of the Empire which is now under discussion. I do not think those well-to-do people with incomes of three, four, five, six, and up to twenty thousand, will find themselves better circumstanced if they emigrate to France or Germany, but will find themselves in much less advantageous circumstances than under the proposals of my right hon. Friend.
    Sir F. BANBURY: There is no duty on German stocks. I hold myself, and I know.
    The PRIME MINISTER: I am rather astonished to hear that—
    Sir F. BANBURY: I need not say I sold them after the right hon. Gentleman the Chancellor of the Exchequer had introduced this Budget.
    The PRIME MINISTER: I am bewildered to hear that. These German stocks, according to the hon. Baronet, do not pay income tax. What the hon. Baronet received from them here I assume he always returned.
    Sir F. BANBURY: That is English income tax.
    The PRIME MINISTER: Yes; the income tax here, I agree, is going to be raised twopence.
    Sir F. BANBURY:If I lived in Germany I should not pay it.
    The PRIME MINISTER: I hesitate to contemplate such a bereavement as the public life of this country would sustain; it would be with great reluctance I could even in imagination contemplate such a prospect. If the hon. Baronet migrated to Germany in order to escape an extra twopence he would find himself liable to a 2s. in Germany on every pound of income he enjoyed in that country. My impression is he would soon make tracks, and we should all be prepared to welcome him back, though I am afraid he would return with an impoverished pocket. Seriously, what is the argument, assuming the money has got to be found and assuming that capital has to bear its fair share and make its just contribution? What is the objection from the point of justice or equity to this particular proposal? The hon. Baronet gave us—he said we could glean it from the pages of "Whitaker's Almanack "—a singularly superficial and in many respects inaccurate account—an account of the income tax. The income tax was imposed by Mr. Pitt, it is perfectly true, in the first instance as a war tax, and it was imposed upon incomes which exceeded £60 a year. It was dropped at the peace of Amiens; and it was reimposed by Mr. Addington when the war broke out again, and it was placed, two or three years later, by Lord Henry Petty, Chancellor of the Exchequer, upon a footing on which it remained for the whole of the next ten years of the war. It was a tax of 2s. in the pound; the only persons exempt from it were persons whose incomes were less than £60; there was a small abatement up to £200, and differentiation in this sense, there was an abatement up to £200 with respect to earned
    66
    incomes. Everybody with unearned incomes exceeding £60 had to pay, and to pay for the whole of these ten years at a rate of 2s. in the pound. That was a war tax. There was an abatement for children, but I am not quite sure whether that was continued. That was a war tax imposed with great stringency upon everybody with incomes over £60. It remained in abeyance from 1816 to 1842, and it was then revived by Sir Robert Peel, not for the purposes of the repeal of the Corn Laws—Sir Robert Peel was a strong supporter of the Corn Laws at the time—it was revived by Sir Robert Peel, not for war purposes, but for the purpose of reconstructing the tariff. That is what in those days went by the name of Tariff Reform. At that time it meant taking away, but what passes by the name of Tariff Reform now means to put on. The fact remains that the income tax was revived by Sir Robert Peel not as a war tax at all. It was revived at, the rate of 7d. in the pound, which was a very high rate in those days, for the purpose of reconstructing the tariff, and it remained, and was retained by successive Chancellors of the Exchequer—some with honest and more or less cheerful acquiescence, some, like Mr. Gladstone, who was always an opponent of the income tax, and some with very great reluctance—from the time of Sir Robert Peel down to the present day. That is the explanation of the quotation from my speech which was made by the hon. Member for Aston earlier in the Debate. The effect of the income tax in those days having always been professedly and ostensibly regarded as a mere temporary instrument is that it can never be brought to anything like a position of absolute justice. I claim for myself that when I was Chancellor of the Exchequer, in defiance of the opinion of every great authority who preceded me, including the right hon. Gentleman the Member for East Worcestershire and almost every previous Chancellor of the Exchequer and the Commission presided over by the right hon. Baronet the Member for the Forest of Dean—I do not say we brought the income tax into anything like an ideal position, but at any rate we removed the most glaring of its inequalities and anomalies by establishing a distinction between earned and unearned income.
    I confess that I now look upon the income tax as a permanent part of the fiscal machinery of the country with an untroubled conscience. I quite agree, if I may say so incidentally, with what the hon.

    67
    Baronet said about the hardship inflicted. It might well be so, but it does not specially arise in regard to this particular income tax. There are a number of other matters which the Chancellor of the Exchequer has admitted with regard to the incidence of the income tax under schedule A, which undoubtedly call for readjustment and reconsideration. All these things are capable of being put right. I think we have removed by far the greatest injustice of the income tax, and I believe that by a proper system of legislative improvement and wise administration it can be made a tax which everybody wild regard as being on the whole the fairest of all taxes, and one which is capable still of very wide expansion in times of public emergency.
    There is another point with which I should like to deal. The hon. Member for Aston quoted some words of mine to the effect that the income tax is one which we ought to regard as our principal reserve for times of national emergency. I thought there was great force in what my hon. Friend said the other night when he stated that you must give a large definition to national emergency, and include not only the actual outbreak of war but also preparation for war. The latter is much cheaper, and I do not think it would be a wholly illegitimate expansion of the term "national emergency" to include in it the present requirements of social reform. But let us assume that the income tax is one which ought not to be raised even under such circumstances as now exist beyond the point which will admit of its further expansion in case of emergency. I want to ask the attention of the Committee to what are the actual facts. The income tax has been described as it stands at the present time as a tax upon incomes of 1s. in the £, but it is nothing of the kind. What is the average per pound for the year of income tax in the year that has just closed? It is 9.6d., or just over 91d. That is the actual tax which the 1,100,000 who are the only people who contribute to this tax, that is the average rate upon which they have been paying during the past 12 months.
    Mr. LEVERTON HARRIS: Is that calculated on the actual income of last year?
    The PRIME MINISTER: It is calculated upon the average. There are, of course, always ups and downs; but I am taking it on the average, and last year it
    68
    amounted to 9½d. in the pound. The question I am going to put is, How much will it be if the proposals of the Chancellor of the Exchequer are acceded to, and if it is raised as it is going to be raised from Is. to 1s. 2d., remembering at the same time the additional abatements which my right hon. Friend proposes in the case of incomes of £500 and under for children, and further that this extra tax is not to apply to incomes unless they exceed £3,000? I am only giving an estimate, but this is the best we can frame. The average, taking all these things into consideration at 1s. 2d., will be 10.8d., or rather more than 10d. That is my second figure. My third figure is taking into account the super-tax above the 1s. 2d. which is going to be imposed upon incomes over £5,000 a year to the extent to which they exceed £3,000 a year. If you take that into account, also the average rate of the tax-that is, of the 1s. 2d. plus the super-tax-in a full year is estimated to be 11d. in the £. I venture to say that that is an extremely moderate sum.
    Mr. PIKE PEASE: Can the right hon. Gentleman give us the figures?
    The PRIME MINISTER: No, Sir; but I can supply them to the hon. Member. The Committee, however, may assume that my figures are correct, because the estimate has been very carefully prepared, and the average is a little more than 1d. in the £.
    Mr. CHIOZZA MONEY: That is based upon revealed income?
    The PRIME MINISTER: Yes. One of the results of differentiation was to show that the previous disclosures by no means corresponded with the income which could be and actually was brought in. It is said, "You have got a 2s. income tax at present, and here under these iniquitous proposals you are going to drive capital away from the City of London." The total average of the income tax under the present Budget does not amount to 11½d., and I venture to hope that that fact when brought home to the eminent gentlemen who have signed this memorial may afford them some consolation. I do not know that I need say anything more, but there is one point to which I ought perhaps to refer, and it is what is called inquisition. I do not see myself that there is anything more inquisitorial in a super-tax than in the income tax levied in its present form. I notice the attention of the right hon. Gentleman

    69
    opposite is being drawn to a quotation, and I think that what the right hon. Gentleman is going to read refers to my Budget speech two years ago. Am I not right?
    Mr. AUSTEN CHAMBERLAIN: Yes.
    The PRIME MINISTER: I was then arguing in favour of differentiation, and I said that for a man to make a declaration-when he had the hope and expectation of obtaining an abatement was quite a different thing from making a declaration which might have the effect of increasing the charge upon him. That is absolutely true, but it does not really affect what I was going to say. It is not directed at the probable accuracy of the return, but the inquisitorial nature of the methods applied. Take, as my right hon. Friend pointed out, the case of an ordinary tradesman with £1,000 a year. He has got to be assessed. He makes a return in which he says he is earning £1,000, and he returns £1,000. He sends that return into the surveyor of taxes, who, observing that he is. a man living in apparently comfortable circumstances and of very good repute, suspects that he is making more than £1,000 a year. Now what is the procedure that is followed? Anything more inquisitorial could not be imagined. He is brought up before the commissioners of taxes, probably his own neighbours. He is required to give evidence, his books can be examined, and the whole machinery of his business can be overhauled and investigated in order to determine whether he has made an. accurate return or not. I agree that this is a great deterrent to those who would not be inclined to make honest returns, but at the same time it is an inquisitorial proceeding, and nothing more inquisitorial is provided in our proposals in regard to the super-tax. In fact, something much less offensive is provided than under the present system. What is it? Suppose he makes his declaration and the authorities at Somerset House believe that he has understated his income over £5,000, or suppose he says he has not got £5,000 a year when he has? The same process is gone through, with this difference: that instead of being haled before his own competitors and rivals in business, who probably are local men in the City of London or elsewhere, with whom he is every day brought into contact, the investigation is to be conducted by a special body of Commissioners without any chance of there being any revelation at all.
    70
    I claim both in regard to the principle of the tax itself and the method in which it is levied that there is no ground for saying that there is anything in the least degree oppressive to any class in the community. I am most anxious that the public outside should realise that we are proceeding in this matter in no spirit of levity, still less in any spirit of vindictiveness, but that we are acting with most equitable and considerate regard for all interests concerned.
    Mr. AUSTEN CHAMBERLAIN: I suppose that the speech of the Chancellor of the Exchequer is a. reply to the address of the bankers and financiers which has been presented to the Chancellor of the Exchequer. I must say that the remarks which he has made can hardly be accepted as an adequate reply to those representations. The Chancellor of the Exchequer sought to show, in the first place, that even if the proposed taxations were unfair the persons taxed would be no better off by going elsewhere. That is a matter on which those who presented the communication to the Chancellor of the Exchequer can express an opinion quite as valuable as that of the Prime Minister or that of the Chancellor of the Exchequer. The Chancellor of the Exchequer has shown by some argument that the proposals of the Government were not unfair. I will come to his argument later on, but I wish to make some reference to a speech which was made by the Chancellor of the Exchequer about 12 o'clock at night when the subject was under discussion. He has made a number of statements very light-heartedly, but he has made them on insufficient information, and on insufficient inquiries as to the real facts of the case. The right hon. Gentleman complained of the length of time which the Committee was occupying in the discussion of these Resolutions. He repeatedly said that these Resolutions are only a formal stage of our procedure and are intended as the basis of a Bill, and he seemed to expect us to do what our predecessors in opposition 'nave never done—still less what the right hon. Gentleman and his colleagues did when they were in opposition. He wants us to defer the discussion of these Resolutions until we get to the Bill. At this stage we have been discussing large principles, and our complaint has been that we cannot get information from the Chancellor of the Exchequer. Does he propose that our financial procedure is in many respects obsolete, and that it would be worth while to consider the procedure de novo? Does he

    71
    propose that the whole procedure should be confined to obtaining information from the Notice Paper? If he and the Government are prepared to move in the direction of the reform of our financial procedure they will not find me an irreconcilable foe to such a change. I have on more than one occasion pressed upon them to take the whole subject into consideration and bring forward a well-considered system of reform. As long as we have the present procedure we must do what our predecessors did, and we must discuss the Resolutions at this stage. We must attempt to elucidate points which the Chancellor of the Exchequer has left obscured in his statement. The right hon. Gentleman seems to think that he has done an unprecedented thing by putting the terms of the Resolution on the Paper. That procedure is not unprecedented. It has been customary to do it. It began in 1869, and it existed in 1896, and yet he says there is no precedent for it. A little later in his speech the right hon. Gentleman said that the Opposition was unreasonable in discussing these Resolutions at length, because the coal tax passed in a single night. That is a half truth. The whisky tax and the petrol tax were passed in one night because they were new duties, and their speedy passing was intended to prevent fraud, and they came into force at once. There were five Resolutions, and on the report stage they were discussed for three days. As regards my first Budget the right hon. Gentleman said that I kept the Committee sitting continuously from the meeting of the House until half-past four o'clock of the next day in order to get the Budget through, including the position of the coal tax. May I remind the right hon. Gentleman that the coal tax was not imposed by my Budget. It was already in force. [Here Mr. LLOYD-GEORGF shook his head.] It was not imposed by my Budget; I say that it was already in force. Surely my memory is as likely to be as good as anybody else's on the subject. It is perfectly true that we discussed the coal tax at nine o'clock in the morning, but what we were discussing was not a new tax but the repeal of an old tax. He also says that in any case I moved the closure six times during the evening. It is quite possible that we did so at that stage. After we had passed the Resolutions in Committee there came the introduction of the Bill, its second reading, and then the Committee Stage, and the Committee Stage lasted
    72
    two days. That was on a Budget which contained no new taxes of any kind, and with reference to which the real Opposition was concentrated on a single tax between stemmed and unstemmed tobacco. The Chancellor of the Exchequer says that the Opposition at that time gave me a great deal more latitude than we are giving to him. I wish to recall the attention of the Prime Minister to the tobacco duty. The Prime Minister speaks of a prolonged and bitter controversy, and he also refers not merely to days but to weeks. That was one Budget, but here we have half a dozen Budgets. It foreshadows not one Bill but a dozen Bills, some of which we have not seen, and some of which I am afraid we are not likely to see. On the very day that the Chancellor of the Exchequer closured the Debate he referred to our intentions. Yet at that time not a soul in the House or out of it had any conception of what the tax really was. He kept the elementary knowledge which we were entitled to have up his sleeve until the last moment. He really must not expect that we shall meet him in a more conciliatory way under these circumstances than we should a Chancellor of the Exchequer who might be more courteous to his opponents than he has been. Every previous Chancellor of the Exchequer proposing a new tax has sought to defend it, and to assure as many people as possible that they need not worry over it. But the right hon. Gentleman has pursued a policy which is exactly opposite. He seems to seek to keep as many people in suspense as possible. I do not think that is a good policy.
    Mr. CHIOZZA MONEY: I rise, Mr. Chairman, on a point of order. I wish to ask you, Sir, if the remarks of the right hon. Gentleman have anything to do with the Resolution under discussion
    The CHAIRMAN: The hon. Gentleman has put me the question whether the right hon. Gentleman is in order in the remarks which he has been making. I must say clearly he is absolutely out of order. The reason I allowed him latitude was because he is replying to remarks made the other night. Those remarks, made by the Leader of the Opposition and the Chancellor of the Exchequer, were out of order also, but I allowed them because I thought it was convenient to the Committee that I should do so. As I am now asked whether this is in order or not, I certainly think that it is out of order, and I hope that the right hon. Gentleman will not pursue the remarks which he is making.
    Mr. AUSTEN CHAMBERLAIN: I thought myself I was travelling perilously near the limits of order, but I had assumed that what was sauce for the goose was sauce for the gander.
    Mr. LLOYD-GEORGE: I was replying to the Leader of the Opposition.
    Mr. AUSTEN CHAMBERLAIN: Yes, and I was replying to the right hon. Gentleman. However, I will not finish what would have been my last sentence, and I will now deal with the merits of the particular proposals of the Government, and not with the merits of the methods by which they are conducting the Budget as a whole. What was the allegation made in the letter from the City of London to which the Prime Minister undertook to reply I It was:—
    "That the great increase and the graduation of the death duties, already materially, raised two years ago, and the income tax, coupled with the super-tax, will, we are confident, prove seriously injurious to the commerce and industry of the country."
    I want the Committee to consider how far the Prime Minister's reply was, or was not, an answer to that. The right hon. Gentleman said that there were higher taxes in force elsewhere. That may be so, but it is still no answer to the contention embodied in this letter. The fact that a higher tax exists elsewhere does not show that it is not injurious to industry or commerce there, and it does not show that it will not be injurious to industry and commerce here. To that point I will return in a moment. But let me first take a point raised by the right hon. Gentleman himself, that there is no objection to a high income tax of this kind, and that it leaves us with an unimpaired reserve for any great emergency. In the first place, the right hon. Gentleman should define "emergency." I think he has done so in a new way, for he has included in a national emergency for this purpose the need for social reform. I venture to say that that is to destroy the basis of his argument. It is, if I may use the word, to denature the argument which previous Chancellors of Exchequer have upheld on this subject. What they have contended was that the income tax was the most serviceable of all taxes for a sudden emergency. That is where it differs from other taxes. It is a tax which, for a temporary purpose and on a sadden emergency, you can most easily raise with least disturbance to trade or commerce. The President of the Board of Trade argues in exactly an opposite
    74
    sense to the Prime Minister and the Chancellor of the Exchequer, and perhaps I may be anticipating the speech which that right hon. Gentleman intends to deliver on some future occasion in regard to Tariff Reform, when he announced that Customs duties drag in your hands in times of great emergency, and that a direct tax like the income tax is the only tax on which a Chancellor of the Exchequer can count in a time of emergency. I think that is a good deal exaggerated, but it has some truth in it. It is true, whether for a small emergency or for a big one, if it be a temporary emergency, there is no tax so convenient or which causes so little disturbance to raise as the income tax. That is the great reason why every Chancellor of the Exchequer and every great master of finance in the past has held that we ought to keep the income tax low in time of peace, because it was the quickest, least disturbing, and most effective instrument we could have in reserve in times of war. Is the income tax high or not I My hon. Friend the Member for Aston Manor quoted from a speech by the Prime Minister when he was Chancellor of the Exchequer three years ago, and when he spoke of the inconvenience of a tax at the uniform rate of 1s. in the £, the Prime Minister, in reply to that, said he adhered to his former statement, but that the tax was no longer uniform at 1s. in the £. He laid a good deal of stress on the word "uniform," and he appeared to think that any other words in his argument had no important bearing at the present time. Let me ask him whether the same argument does not apply to a high tax, whether uniform or not. I hope he will not think I am quoting unfairly, because I propose to read what I consider is the only part necessary for my argument.
    The PRIME MINISTER: Will the right hon. Gentleman read the first sentence?
    Mr. AUSTEN CHAMBERLAIN: Yes: "In regard to income tax I do not hesitate to associate myself with the declaration of more than one predecessor that an income tax at a uniform rate of 1s. in the £ at a time of peace is impossible to justify and difficult to defend." The right hon. Gentleman attaches an enormous importance to the word "uniform." Was that observation intended to be limited to a tax which was uniform at 1s., or would subsequent alterations remove all force from that argument Then he goes on: "It is a burden upon the trade of the country,

    75
    which in the long run affects not only wages but profits." Is not that true also of a high income tax 2 Will anyone contend that the relief of earned incomes below £2,000 a year causes a tax no longer to press as a burden on profits and wages? Why should these words be applicable to a tax at a high figure, whether uniform or not? No one will contend that the major portion of the wages of the country are paid by people whose incomes come under the exemption of £2,000. Then he goes on to say: "That it is open to the same objections as the continuance at an abnormal figure of the floating debt, namely, that it tends to destroy, or at any rate to contract, the reserve on which tire State can draw on a sudden and unforeseen emergency." Is not that as true to-day as when the tax was at a uniform rate of 1s. in the £? Your tax may now be Is. Can you raise it without inflicting hardship or without doing injury to industry, because you have given some relief to earned incomes below £2,000 and less relief to earned incomes between £2,000 and £3,000? The very hardest cases get no benefit from the earned-increment relief There are plenty of small incomes above £750 not subject to abatement—incomes of a moderate amount and this is especially so in the cases of widows and daughters and of men who have retired from business either through ill-health or by reason of old age. There are plenty of small incomes which will be struck by the tax of 1s. 2d. in the and I am confident from the correspondence T have received that while the Prime Minister flatters himself he has removed a. sense of injustice from many minds, the great mass of income-tax payers will not have reason to think so. I am quite confident he has raised the bitterest sense of injustice among people who are certainly worse off and who get no relief whatever. I frankly say I think that the path on which the right hon. Gentleman has entered will lead him and his successors into interminable difficulties and that there is no solution on the lines he has laid down which will do even-handed justice all round. I say in the case of these small incomes, the income tax of I s. 2d. will press very hardly, and that by putting the tax at that point in time of peace he is destroying the elasticity of the tax, while he will also aggravate the sense of injustice which the distinction made by the right hon. Gentleman has already produced in the minds of the people. Above all, he is going to
    76
    charge a super-tax. I agree with the right hon. Gentleman the Leader of the Opposition that there is no inherent injustice in the idea of a super-tax, but such a surtax is of necessity an arbitrary tax. There is no ground why it should be fixed at 4d. or 6d., or even 8d.; it is a purely arbitrary figure which the Chancellor of the Exchequer of the day fixes in view of his present needs. The second objection is that it is extremely difficult to assess, that it requires costly and complicated machinery in order to collect it. It is quite certain you will have a great deal more trouble in the future, and you will produce an added sense of injury and injustice not alone in those taxpayers from whom you succeed in extracting it, but in a great number of other taxpayers from whom it is not due, but whom you will harry and worry in order to make them prove that it is not due. The Prime Minister says, as I understand, he does not anticipate that any difficulty will arise from evasion. I gather he does not think that capital will be taken away from the purview of the tax, and that that is a fantastic danger conjured up by the imagination of thoughtless people in the City, which will soon entirely disappear. I think a great deal of nonsense has been talked in this Debate about evasion, and for this reason, that hon. Members who use the word use it to cover entirely different things. May I split it up and discuss it under two different phases which will be familiar to gentlemen who sit on income tax committees. Let us take evasion to mean the illegitimate avoidance of the tax—a. breach of the obligation imposed by the law, an evasion of the tax where the tax is due. That is exactly on a par with smuggling. It defeats the moral obligation which rests upon every citizen to obey the law because it is the law. Many citizens have been largely encouraged by hon. and right.. hon. Gentlemen now in office to disobey the law because they choose to think it acts unjustly towards them. The Chancellor of the Exchequer may find that there are passive resisters in regard to income tax as well as in regard to education, and, indeed, passive resistance was a financial weapon, which is as applicable to taxes quite as much as it is to rates. But as soon as you have evasion, which is what I have defined, namely, the refusal of the citizen to discharge his obligations under the law as to a payment, then I say —though there is not one of us who defends it—you have got to take account of

    77
    what human nature is and of what income-tax-paying human nature is, and it is the opinion of everyone who has studied the income tax that there has been great evasion in the past, and you must expect to have evasion in the future, and you cannot expect that as you make the burden heavier the evasion will grow less. But I do not defend it and no-one defends it, and if you catch people who are guilty of evasion, let them suffer the penalty of the law. But that is a different thing from' what we are discussing here in the name of evasion, which is simply the avoidance of the tax; that is to say, the so handling your fortune that the tax never becomes due. There is no legal obligation on any taxpayer to pay more than the Statute says he shall, and there is no moral obligation on any man to pay more than the Statute says he shall, and, if the Statute allows him, provided he uses his income in one way more than another to escape, he is entitled to do so, just as we arc entitled to escape the whisky tax. You put a half-penny tax on whisky. Supposing I were a whisky drinker, and rather than pay that tax I give up whisky and take to French wines. Would you say I evaded that tax and was an unpatriotic and immoral person, or would you come down and rejoice that the consumption of whisky was declining and that temperance was making vast strides, and that if you did not get so much tax you bad promoted a reform in my domestic economy. If there is no obligation on the man to pay a whisky tax, there is no obligation on a man to pay the income tax if he can avoid it. I am now dealing with avoidance as distinguished from illegal evasion — legal avoidance — avoidance within the rights of any citizen. It is that kind of avoidance which I dread from the new tax which the right hon. Gentleman is putting on.
    He thinks there will be no sense of injustice, but I differ from him; I should differ with great hesitation, if I stood alone, but every witness connected with the revenue, who came before the Income Tax Committee, laid stress on that fact, and no one more so than the late chairman of the Board of Inland Revenue, Sir Henry Primrose, who had not only his long experience at the Board of Inland Revenue to guide him, but who had been Mr. Gladstone's private secretary while he was in office. Sir Henry Primrose said that you will find there will be great avoidance. The poor man who has only enough to cover his expenses and who lays by little, he cannot do
    78
    it, but the man who has a free income beyond his necessities, he can do it, and all these witnesses, one and all, said you will find great avoidance. You will lose not only the super-tax but the original shilling, which he might have paid, if he had paid the tax at all. In the hope of getting the shadow, you drop the bone, and I believe you will have a very great decrease of revenue in consequence; and how can the Government pretend that they take any other view? The Chancellor of the Exchequer says he has based his estimates on those of Sir Henry Primrose, but Sir Henry Primrose argued that there would be this avoidance. Has the Chancellor of the Exchequer reduced his estimates in consequence?
    Mr. LLOYD-GEORGE: What I said was that I based my estimates on what Sir Henry Primrose said about the £5,000 incomes.
    Mr. AUSTEN CHAMBERLAIN: Has the right lion. Gentleman allowed for any transfer of capital or not? Has he allowed for any transfer outside the purview of this tax or not?
    Mr. LLOYD-GEORGE: The Committee did not accept Sir Henry Primrose's view.
    Mr. AUSTEN CHAMBERLAIN: Then the right hon. Gentleman does not either? I am not pretending to pit my opinion against the right hon. Gentleman's; but it is he who pits his and the Government who pit theirs, not only against Sir Henry Primrose, but against that of the Senior Commissioner and I think every other witness connected with the collection of the revenue who came before that Committee.
    The PRIME MINISTER: All equally opposed to differentiation?
    Mr. AUSTEN CHAMBERLAIN: There were some, but for the reasons I have given I think they were more right than the right hon. Gentleman. The right hon. Gentleman based his assumption, he said, on the number of gentlemen with incomes over £5,000 a year given by Sir Henry Primrose. What figures did he get in regard to the particular tax which he is imposing, which is not a super-tax only on the portion of income above £5,000, but an income tax on the incomes of people between £3,000 and £5,000? Those will be of a very different character from the figures which Sir Henry Primrose has presented. I think he gives an estimate of all the people with incomes over £3,000 and an

    79
    estimate of all the people with incomes of over £5,000. What the Chancellor of the Exchequer has done is to bring in a tax which goes neither to one principle nor the other, but which is a combination of the two. What I want to know is, Whose estimate has he taken of what will be the result of that combination? I do not think that he will find that Sir Henry Primrose's affords him a figure for the estimate he has given to the Committee.
    Mr. LLOYD-GEORGE: Yes.
    Mr. AUSTEN CHAMBERLAIN: In that case perhaps the right hon. Gentleman will explain before the Debate concludes; we shall be very much obliged to him if he will. The question to what extent there will be avoidance is a very difficult one to determine at all, because it depends entirely upon the state of mind of the individual taxpayer who is affected by this tax and on his own financial position. "Why should they feel any injustice?" said the right hon. Gentleman. "We had an income tax of Is. 3d. in the pound in the late war and the income tax has been higher." I think we can rely upon the income-tax payer to respond well to meet any great and temporary emergency, but it is a very different thing if you are taxing not merely for a great emergency when the future of the country is at stake, or even for a temporary emergency. You are not taxing for that. You are permanently putting on differential rates and differential provisions to those affecting other citizens of the country, for all the ordinary expenditure of the country, with no hope or prospect of relief at any time, but with the certainty that in spite of this added burden, whenever the Government gets into an emergency again, further demands will be made. I therefore do not think the good response made to the 1s. 3d. is any guide to what will happen here, and let me say in this case that I think a more curious argument in support of this proposition than that adduced by the right hon. Gentleman at the head of the Government I have never heard in my life. The Prime Minister says, "We ask you to make a normal rate of 1s. 2d., we ask you in certain circumstances to put on a super-tax of 6d. on that, but how can anybody think that unfair when the average payment throughout the country is taken? "He says the average payment last year was 9½d., this year, without the super-tax 10¾d. and with the super-tax 11½d. What possible consolation
    80
    is that to the poor taxpayer with £800 who is charged at 1s. 2d., or to the man with just over £5,000 who is charged at Is. 8d., or something like that. It is exactly on a parallel with the contention of the Chancellor of the Exchequer the other day, which I think really emanates from the hon. Member for Paddington; he says: "How absurd of these income taxpayers to cry out! Why the total amount of income assessed to the income tax in the last five years—
    Mr. CHIOZZA MONEY: I said in the last 20 years.
    Mr. AUSTEN CHAMBERLAIN: The total amount of income, assessed to the income tax in the last 20 years, exceeds the addition which will have been placed upon the tax. What on earth has that to do with it? The tax increased by the increased number of taxpayers, but putting that aside, if every taxpayer increased his proportion, and if we could all share in the increase of double income, that would be an argument, but as we do not all have our share and some people's incomes remain stationary and others increase out of all proportion, you cannot draw an analogy in this way, or, if you do, that can have no possible bearing upon the justice or injustice of the tax. And with regard to these taxes, is there no ground for a sense of injustice, which undoubtedly is spreading amongst many of the people, who are subject to income-tax payment at the full rate, and I think he will find also amongst the owners of small incomes taxed at Is. 2d., because they are nominally not earned, although they may be the result of the savings of a lifetime, or a pension which a man has earned and worked for himself. What did the right hon. Gentleman say about another tax, the increment tax? He said that there were rich men with incomes of £5,000 a year, and did they really object to pay a halfpenny in the pound on the capital value of land in order that they might have "Dreadnoughts" and the poor people might have old age pensions? Is it a halfpenny in the pound that they are paying? I complain that neither the Chancellor of the Exchequer nor the Prime Minister will keep their taxes all present in their mind at the same time. The rules of the House are sometimes very convenient, even to Members of the Government. It is quite convenient for the Prime Minister to come down to-day and say, "I discuss income tax only; look at the income tax of Prussia and of France," and when my right hon.

    81
    Friend says, "The income tax in Prussia includes payment in lieu of rates," to say "that is totally outside our discussion; I am only discussing the income tax."
    The PRIME MINISTER: What I said was about the death duties.
    Mr. A. CHAMBERLAIN: Exactly. My right hon. Friend said the death duties, and the right hon. Gentleman said that is outside the scope of the income tax. Nothing is more relevant to the income tax than the death duties. Sir William Harcourt graduated the death duties because he would not graduate the income tax. He and others before him, Mr. Gladstone notably, used the death duties in order to correct the injustice of the income tax, and if you deal with these taxes in separate watertight compartments you do not get justice over the whole, but gross and growing injustice. I notice that these great city authorities say it is their experience that death duties are not treated as income tax, and that they are paid as a chunk out of the property. That was not the intention of Sir William Harcourt. He said the proper way to provide for them was by insurance, and providing for them by insurance is in fact charging yourself with an additional income tax every year of your life in order that the corpus of your property may not be diminished at your death. May I ask the Committee to consider, not in the interests of the individual taxpayer, but of the country at large, whether that is not a process which we ought to encourage rather than discourage. Is it our interest to have the corpus of the capital diminished at every death or to have it maintained and to induce the taxpayer to make sacrifices during his lifetime which will enable it to be maintained at his death and which will prevent the estate being broken up? My argument would not apply if you used the death duties to wipe out the National Debt. You might then fairly say at the death of every man "we take a chunk out of his estate, we by so much diminish the capital of the country, but we use this money to pay off debt, and therefore by so much we diminish the liabilities of the country. There is an entry on each side of the ledger, and the account is balanced."
    But we are not doing that. We take the death duties for the ordinary annual expenditure of the country and apply them to meet the annual outgoings. Unless the capital is replaced during the lifetime of the successor you are gradually diminishing the accumulated capital of the country
    82
    and destroying the resources to which future Parliaments have to look. I therefore submit that it is of the greatest importance that we should regard death duties in connection with income tax, that we should treat them as being in fact an additional income tax, and when we are considering what income tax is fair we should look at the effect of the two combined. I have not been able to make the calculations—I hope we may have them before we get much further—as to what will be the effect of the changes which the Chancellor of the Exchequer is proposing in the death duties in the present Budget. But I take from Stir Henry Primrose's evidence before the Income Tax Committee, a statement which will give the House some idea of what the weight of the total duties is when measured in this way.
    The CHAIRMAN: I really think this argument about the death duties should be left to the death duties Resolution. It only affects the question of the income tax in regard to the whole question of total taxation, or the total taxation on this class of individuals, and that is an argument more relative to the general discussion of the Budget. We cannot possibly discuss the death duties in this way.
    Mr. AUSTEN CHAMBERLAIN: I do not wish to discuss them. I have given you a wrong impression if I led you to think I wanted to discuss the death duties for a moment. I feel bound to raise the point if I may. My whole object is to discuss whether it is reasonable to have a is. 2d. income tax with a super-tax of 6d. I say you cannot consider that alone, and especially the 6d. super-tax, unless you consider what other obligations lie upon the payer of this super-tax, and that it is not fair to say as the Government do look at his income tax alone. Here is a man with an income of over £5,000 a year. All we ask him to pay is something over 1s. 8d. in the £ on income tax. I say what they are asking him to pay is not is. 8d., but far beyond that sum. I will put my point in a single sentence which I do not think you will think is out of order. Before any of the changes were made in the death duties—and the figure will have to be altered to include the Prime Minister's changes as well as the Chancellor of the Exchequer's—in income tax and estate duty alone without any other death duties, even an estate of £100,000 a year a man was paying income tax of 2s. 6d. in the £. What is it going to be now? The 2s. of Prussia will be as nothing compared with

    83
    the charges which the Prime Minister is making. I will not go further than that, but it will be disastrous for this Committee, and for the finances of the nation if each tax is to be treated so absolutely distinctly one from the other that we are never to see the accumulative effect of taxes which fall cumulatively upon the shoulders of the same man. The failure of the Government to correlate their different proposals is apparent throughout. The Chancellor of the Exchequer for the purpose of income tax, like all his predecessors, treats the income of husband and wife as one. I do not say he could do otherwise. I think it would give rise to a great deal of evasion, possibly illegitimate evasion, if he did. But is it not very hard to correlate two separate incomes for the purpose of income tax as long as a person is alive and the moment he dies to separate them and to raise the duty on the widow as the right hon. Gentleman proposes to do? In my opinion, in considering these Budget Resolutions, we have to take the Budget as a whole. It is not sufficient for the Chancellor of the Exchequer to present us with each Resolution in turn and to demand that we shall concentrate our whole attention upon that particular Resolution and think of nothing else. We must look at the Budget as a whole, as the City looks at it and as the taxpayers will look at it. In my opinion, taken as a whole, it is not a fair distribution of the burden. It is placing an undue proportion on the shoulders of certain portions of the taxpayers, and it will encourage that sense of injury and injustice which it should be the study of every Chancellor of the Exchequer to avoid.
    Sir CHARLES W. DILKE: The right hon. Gentleman who has just sat down made one tremendous point against us—not only a strong point, but one to which the greatest attention ought to be given, and it is only right that that point should be frankly met by all who have changed their minds on this question. As the Prime Minister put it, all the expert evidence, all the authority of the most distinguished statesmen in the past, may quite justly be claimed against this proposition of a super-tax as against the proposition of differentiation. There was a Member of this House who was highly respected, but whose weight in the House was not equal to that of Mr. Gladstone, Mr. Lowe, Sir Stafford Northcote, and all the great men
    84
    who sat there in his time—Mr. Hubbard, I mean—who year by year brought forward a Motion on the income tax which was generally supported only by himself. The most overwhelming authority was against him, and I for one, in common with almost every Member of the House accepted and followed that authority. It was very difficult to do anything else. I am still, to some extent, under the influence of it. But the authority in the case of differentiation pure and simple was greater than at any time has ever been the authority against graduation. Sir William Harcourt, for instance, was fiercely opposed, like Mr. Gladstone and Mr. Lowe and all his predecessors, to differentiation, which is now happily accomplished with universal assent. [An HON. MEMBER: "No."] Well, I think pretty universal. I am quite certain no one is ever going to propose in this House, even in a private Member's Resolution, to get rid of it, and if he did he would have the same amount of support that Mr. Hubbard used to have on the other side in days gone by. The weight of evidence against that change was overwhelming. The real fact is that on these, matters, as in a good many others in an old country we are taught from the same book, we are all taught by people who have been taught from the same book, and we get into the habit of reading masses of figures to support a preconceived opinion which, when we set to work and examine it for ourselves, as on both sides the country has recently examined certain questions which interest hon. Members opposite, breaks down, and the figures will not bear the test. That was the case notably upon the income tax.
    The effect produced on the minds of-those who read the evidence to which the right hon. Gentleman just now made so much reference will, T think, be discounted at all events next year. Sir Henry Primrose expressed the old view, and simply repeated views that Lord Milner had put before Sir William Harcourt. Sir William Harcourt ardently desired to graduate the income tax, and Lord Milner made such a report against it that he was unable to do it, and preferred to increase the death duties. Sir Henry Primrose repeated Lord Milner's well-known views, and all those who appeared as official witnesses before the Committee, backed by the whole strength of the official element on the Committee all expressed themselves in the same sense, but suspiciously using exactly the same arguments and adducing exactly

    85
    the same facts, which would not bear examination.
    The right hon. Gentleman to-night has repeated every single argument put by every single official witness before that Committee, and backed with the weight of every great name without exception. The first gleam of doubt, I think, in the minds of many was when we found that some statements, which were universally assumed as sound by everybody would not bear examination at all. For instance, the fact that everything is right, because everything is collected at the source. Of course it is not collected at the source. You only collect at the source what you cannot miss, and of all the people who opened our eyes by their evidence the hanker, who has been quoted so much tonight, and who was one of the signers of that City manifesto, and the most weighty I suppose, Sir Felix Schuster, was the witness who gave the case away. He went dead against the official view. The City attitude at this moment, should be criticised with some care. The City held a tremendous meeting a short time ago, and almost in the words which were adopted in this House on a former occasion declared their willingness to make every sacrifice that possibly could he asked of them to meet the particular expenditure which they desired to see incurred this year, and which is pointed to by the Government when they speak of a large increase in the Navy next year—a large portion of the expenditure which we are contemplating in the great surplus which we are piling up for next year's Budget. In passing that resolution it was a little id of course to attack this or any particular tax, but still the opposition which the City has always shown to all taxes of this description at every time, the opposition which they showed a great many years ago to a certain speech on ransom, and which included this proposal—that opposition of the City is an opposition to this tax, and one other especially, because they are supposed to be of this cumulative nature. I have looked through the leaflets which have been issued attacking this Budget, and I do not find a word in them about the imposition of cumulative taxes. Therefore it is just as well to examine the evidence which was given against it before the Committee by the experts, and also the evidence which was given in support of it.
    Take the evidence of Sir Felix Schuster. He made a most remarkable, and, I think,
    86
    perfectly sound criticism of our old income tax, which is supposed to be the peculiar glory of this country. Referring to the collection of income tax at its source, he pointed out that under the present system you cannot get a great deal of the tax which you are supposed to get by collection at the source. That was brought out to some extent by the earlier Committee, who sat in 1904, who, in their Report, stated that there are many kinds of income to which that method cannot be applied at all. The Committee gave specimens of that class of incomes, and among them were incomes derived from property abroad. The Committee said that there was abundant evidence to show that in that sphere there was a substantial amount of fraud and evasion. Sir Felix Schuster was a witness before both Committees, and it is important to quote what he actually said, as his authority has been claimed on the side of those who are against what is now proposed. I think if his evidence was not examined it would be thought that he shared the ordinary British official view on this point. I will take his evidence as it appeared after he had revised it. He desired, on reflection, to make certain alterations, and not to put certain statements so sharply as he did in the first instance. I will quote from his corrected evidence, as printed and in the hands of Members. I take question: 3,013. He goes out of his way to state that the, collection of the tax at the source may be carried to an extreme, and that he did not think it desirable to carry it to an extreme. He suggests that you lose an enormous amount of money by the very system which will be kept up by these proposals of collection at the source. That is not the principle on which income tax will have to rest in future. By the more general declarations you will get such a knowledge that you will be able to get a more scientific system, and to reform it in the way the Prime Minister has suggested this afternoon.
    Sir Felix Schuster has been referred to as a City man who objects to this tax. When before the Committee he was asked in regard to these declarations. Those of us who desire to see this experiment tried, and who have gradually come to believe that it will be a successful one which will bring in more money, attach above all importance to the declarations. All the experts were very much astonished when he said in cross-examination that he saw no difficulty in making a man give a return of his income, whether taxable or

    87
    not. When the witness was pressed again on the subject he was asked whether in saying that the difficulties involved had not escaped his attention, when he said there was no difficulty in asking a man to make such a return as he was thinking of. Sir Felix Schuster replied:—
    "I have tried to think out dl those difficulties. I confess that they have not struck me as insuperable."
    That is the opinion of the great banker who is appealed to as being against the inquisitorial nature of this declaration. He believes that now you are almost cruelly inquisitorial with small merchants who have to bring their books before the local Commissioners, but does not believe that the Somerset House appeal is inquisitorial torture to which the rich people of this country ought not to be subjected. Sir Felix Schuster went further and said that there is a good deal of evasion. He was told that there would be fraud under the declaration, and he replied that there would be a great deal less fraud under declarations than there is now. You will see from Question 3,030 that Sir Felix Schuster indicated the opinion that the right to inquire into questions of income was not enforced now to the degree it should be enforced. When he was told that a man living far beyond the amount at which he had returned his income might say that he was living on capital, and that you could not discover the truth of the reply, Sir Felix Schuster said: —
    "That might be, but it would very soon come to an end."
    The Committee also examined the official experts, who were against us to a man. Sir Felix Schuster was pressed in another portion of his evidence by several members of the Committee, and in answer to Question 2,976—and the income tax was high at that moment—he stated that London had capital coming from all portions of the world.
    An hon. Member said in the course of the last Debate that France has no income tax. That is not the case at the present moment. Sir Felix Schuster said that French capital comes in large quantities. That was at a time when the income tax was high, when the death duties were high, and when we are told that France has no income tax, I say these facts break down all that argument. Where is capital to go if it leave this country? Are not cases of evasion, possible under a super-tax, existent now? The combination of general declarations with the knowledge we are now getting from the death duties
    88
    being more accurately known is likely to bring in year by year more and more money which is escaping taxation at the present moment. We examined the experts on these points. Sir Felix Schuster, having described these foreign investments, we examined the gentlemen who remained after Sir Henry Primrose had gone, and who will have the enforcement of this super-tax—I mean the Special Commissioners. Does the late Chancellor of the Exchequer suggest for a moment that these gentlemen are unable to get through those administrative difficulties he has described to us? Does he think that the gentlemen who pointed out these difficulties in the past are not perfectly able to overcome them? Take the Senior Commissioner, who is the man, as I understand from the statement of the Chancellor of the Exchequer, who will have this work to do. As I understood the Chancellor of the Exchequer, Mr. Gyles, the Senior Commissioner at Somerset House, will be the man to carry out the work. Both he and his colleagues showed their leaning towards the declaration. They did not want the super-tax and they do not want a high income tax, but when you put it on they will have to get it, and they will get it. Naturally they want to get along easily and without friction, but they all want more power than they now possess, and especially in the case of large incomes. There was something-said by the hon. Member for Aston as to the present powers of the Commissioners to ascertain the amount of people's incomes. The Commissioners get at the incomes in a very disagreeable way. You can raise the financial status of a man arbitrarily, and then you have an inquisitorial proceeding—a sort of trial—directed against him for the purpose of ascertaining his actual income. That is a very different thing from what will occur in nine-tenths of the cases of those who will pay under the proposals of my, right hon. Friend. The Commissioners have all stated that their powers are insufficient. Mr. Gyles very distinctly asked for far greater powers than he has now, and he was examined very closely on the question of evasion and fraud which will come under the super-tax. He said that an enormous amount of evasion, or avoidance, to use the word of the late Chancellor of the Exchequer, and a large amount of fraud, exist now. There is an enormous amount of concealment of income and consequent loss of taxes under the present system which the Revenue

    89
    ought to get. That raises the taxation of those who honestly pay their share.
    Mr. Gyles was examined on that point, and stated that the majority of the cases of evasion and fraud are among individuals rather than among firms. He gave cases of firms, and he gave cases of individuals, and showed exactly how they occurred. We have been told by speakers here today that if you overtax people that they will "do" you, although they would be willing to pay honestly under a lower tax. He said:—
    "I have frequently heard that allegation made. and when investigated have found that the persons making that allegation were defrauding the Revenue."
    As regards evasion, as regards fraud, as regards avoidance of tax, there are cases well known to all who have gone into the matter, where it transpires now, and where it will continue, where under no system can you get tax which the country ought to get. We had well-known cases very closely before the Committee when the doors were shut. But as regards the overwhelming majority of cases I believe with a very gentle spurring by those who are skilled officials you will obtain, not a very large amount of tax the first year—it is rightly put low by my hon. Friend—but gradually a great deal of money behind this tax, more than my right hon. Friend has dared to put it at its highest point. I am not an expert, but that very comfortable belief is based on knowledge that owe have of the classes of property which do not pay income tax at the present time. The evidence before the Committee in 1905 gave five great classes of property which avoid tax. Those people who avoid it are all people living in this country, most of them living in this town, and most of them very rich people indeed. In all those cases, I believe in all classes except one, which are mentioned in those five classes in the 1905 evidence, you will get by the knowledge of declarations and of death duties a tax which honestly ought to be paid and is not paid, and the getting of which is a complete answer to the statement of the right hon. Gentleman that you will both fail to get your super-tax and fail to get your tax on money which I do not get now.
    The main point of the right hon. Member was that of the use of income tax for a sudden emergency which has been so ably dealt with by the Prime Minister, that it is not necesary to say another word with regard to it, for though the Prime Minister spoke before the right hon. Gentleman, I think he may be said to have
    90
    answered him in advance. But the right hon. Gentleman needs something of an answer, because hon. Members opposite evidently do not quite credit the facts as stated by the Prime Minister in reference to the amount of capital going, and going where? I saw a certain doubt pass over the minds of highly competent members on the other side when the Prime Minister, in dealing with France, spoke of taxes which are not now and which are to be in France. There are five taxes in France, sometimes called four and sometimes called live, which are of a complicated nature, which used to exist in. Belgium, and which used to exist in the Rhine provinces of Prussia, and the replacing of which in Holland has been a matter of extraordinary difficulty at last accomplished. These taxes are in the nature of income tax. They are patchy and uncertain; but the taxes which the Prime Minister rightly describes as being higher than ours, and which are proposed by the present Government in France, like the tax which was proposed by the previous Minister of Finance, are calculated only to yield the same amount as is yielded now by the other taxes that are to be abolished, the certain taxes in the natures of income tax. And when you remember that these large taxes, an average of 8½d. per cent. all round upon small incomes, as well as big ones, are required to replace the existing more direct taxes in France you can see how incorrect is the statement that there is now no income tax in France.
    Someone mentioned death duties, but it is out of order to deal with them just now. However, I may point out that the death duties in France, as I can show on another occasion, are higher than here, and the total amount relatively in France for the income-tax paying classes is far higher than here. It is much larger than is usually supposed in proportion to the general trading conditions of the country. Then it has been said that the money is to go, elsewhere. But the fact which is reflected in all these arguments is the fact which is essential, and known to all these gentlemen in the City, the fact that capital does not take these trifles into account. They are all trifles as compared with security, greater interest and other conditions; and every sort of instance can be chosen from all parts of the world to show that that is so. The question of the increase in investments of foreign capital is supposed to be, of course, all a matter of guesswork, but all those who guess at it, coming to it from all quite different modes

    91
    of making their guess, all come to certain general conclusions pretty much alike. The largest increase in the last 10 years is admitted to have been in Australia. We probably have four hundred million pounds of invested British capital in Australia. If taxation were to keep capital from investment, it is not to Australia that that capital would have gone. Direct taxation in Australia is very large; it is increasing very much, especially taxation against all the classes of property which are hit by this Budget, but on a much larger scale. There are accumulated taxes and greater taxes of every kind, and especially taxes-directed against Englishmen—absentees. Yet, in spite of all this, the investments of British capital in Australia are enormous, and rapidly increasing. In the Argentine, on the other hand, there is hardly any direct taxation, and there the investments are increasing too; but, of the two, they are increasing more rapidly in Australia; and you can draw no positive conclusion from the facts, so far as they are known, except that capital does not care about taxation, which is, to some extent, a relative measure of the security which different countries enjoy. If investments were governed by taxation, all the capital in this country ought to fly to Monaco for investment, because I know of no other State where there is no direct taxation. There used to be none in Jersey; I am afraid they have some now. But in Monaco there is none. Does anybody ever consider in discussing the question whether he should invest in Monaco or go and live there? Does he ever consider the question of direct taxation or the incidence of direct taxation? The conjuring up of this question of private capital going abroad because of what is done in every country now is, in fact, a bogey, and conceals a somewhat belated objection to the taxation of great fortunes, which, I believe, is regarded by a majority of the people of the country as fair and likely to be well regulated.
    Mr. SAMUEL ROBERTS: I listened with great interest to the speech of the hon. Baronet. We all know what great interest he took in the proceedings of the Committee as chairman, and although his Report was not accepted by the Committee, yet I am quite sure that what he stated had very great influence with the Committee. It is a sad commentary on the financial procedure of the Government that three years after their first Budget
    92
    they should have to come down to this Committee and ask for an increase of six millions more money from the income tax payers than they asked three years ago. At that time the present Prime Minister was Chancellor, and he commented in severe terms upon the extravagance of the late Government, and he added that a return to more economic methods was the first and paramount duty of the Government. Here is a return to more economic methods by asking the income tax payers of the country to pay six million pounds more in the coming year than they did three years ago. I deprecate this extravagance with regard to income tax for two reasons. First, the income tax payers were promised time after time by succeeding Chancellors that they should be the first to receive relief. My right hon. Friend, who is not here now, the Member for Worcestershire, who was Chancellor of the Exchequer when we had to increase the income tax to 1s., in the year 1904, said this: "In my opinion it is the income tax payers who will have the first claim to relief, and I hope the sacrifice I am now asking of them will not endure for long."
    The right hon. Gentleman who succeeded him was also of the same opinion, and I may allude once more to that statement, which has been quoted more than once this afternoon, when the right hon. Gentleman said that he did not approve of a uniform tax of 1s. because it was a burden on trade and affected profits and wages, and also because it entrenched upon the national reserve. The right hon. Gentleman has given us his explanation of that speech, and he said it only applied to a tax of is., which was not differentiated, and in the year 1907, that is the year after he made the speech, he did differentiate, and he calculated the result of differentiating the income tax on earned incomes would be that he would lose £1,250,000. The result of that was that he did lose £7,240,000; but what was the net result? The income tax brought in actually £780,000 more than it did before he differentiated. Can the right hon. Gentleman argue that an income tax which brings in more money, namely, £33,380,000, as against £32,600,000, was not a tax upon the trade and the industry of the country? It was a sum of money which entrenched upon the national reserve. It entrenched upon the national reserve because if there was a larger return from the income tax there would be less money to come in time of emergency. Take the Chancellor of the Exchequer's estimate for the coming year.

    93
    His estimate is £37,400,000, or an increase of £6,050,000 on what it was three years back. That burden upon the trade of the country, and that tax upon profits and wages, I maintain does entrench upon the important reserve of income tax. In 1873 Mr. Gladstone proposed to abolish the income tax altogether, and it was brought down from 3d. to 2d. in the £. Mr. Gladstone in his great speech in 1853 said:—
    "Much as may be said about the importance of an Army Reserve or a Navy Reserve, and of haying your armouries and your arsenals well stored, I say this fiscal reserve is no less important, for if it be used right, it is of engine to which yon may resort, and with which, judiciously employed, it unhappily necessity arise (which may God in his mercy avert), you may again if need he defy the world."
    I want to say a few words on the subject of the super-tax. It is an innovation in our financial system. It is a doubtful and dangerous policy to tax a few rich persons more in proportion than the rest of the community. The estimate has been given to the House that there are 10,000 people in this country with £5,000 a year and upwards. But take the higher figure of £10,000 and upwards, and you find the number is 4,000 persons. A little higher, and you come to incomes of £25,000, and the number falls to 1,250 persons. These figures were given before the Income Tax Committee. It has been said this afternoon by the right hon. Baronet opposite that he did not fear that the imposition of this s super-tax would have any effect upon capital going abroad. I doubt that very much. Does the right hon. Baronet know that last year, out of a total capital application raised in this country of £192,000,000, more than half, £118,000,000, went abroad, either to foreign countries or to our Colonies. That is the largest amount of money that has ever been sent abroad from this country. Mention has been made of legal evasion. I know that can be easily done. I can tell the Chancellor of the Exchequer several ways in which he could do it. It is known quite well that most foreign securities are to bearer, and that the coupons are transferable on delivery. None of the interest comes into this country. The rich man can instruct his banker or his broker to invest this interest abroad. The next year he may say to himself, "I want that interest." He sends to his banker or his broker to sell out. It becomes capital by means of this investment abroad, and the money can be returned to this country without any liability upon it in England. Sir Henry Primrose in his evidence before the Income Tax
    94
    Committee said he estimated that out of a total of £700,000,000 of income under review, as much as £100,000,000 came from abroad; and he indicated how the owners of that money could if they wished so divide their houses, partly in London and partly abroad, that this income would not be received in London; it would be received abroad, and unless it came into this country it would not be liable to taxation. Sir Henry also gave other instances. I am going, however, to allude to the evidence given before the Committee which the right hon. Baronet did not mention, namely, that of Sir Felix Schuster.
    Sir C. W. DILKE: I did not quote Sir Felix Schuster on the super-tax, because it was not so much on that that I was speaking, but on two specific matters mentioned by the right hon. Gentleman opposite. The principal one was the declaration.
    Mr. ROBERTS: Sir Felix pointed out to the Committee that any addition to the existing income tax would lead to a considerable diversion of capital from the country. Sir H. Primrose did the same, and what he thought were the disabilities and disadvantages with regard to administration, and he divided his objections under several heads. One was this, to discover the persons who were thought to be liable, and to do that he considered it would be necessary to send out 100,000 notices to those who might have incomes of over £5,000. In order to get that information it will involve a very great deal of trouble to a number of people who have to make out their income tax, but who may not be liable for this super-tax. It will also be a source of great difficulty, in my opinion, to those people whose income comes from various sources. Such people will have to be very careful to indicate the sources from which the money conies, because it will have to be the gross income, and, therefore, the income derived from various sources will have to be added together by the person making the return in order to make it a true statement. Sir Henry ended by saying that he thought it would cost perhaps £100,000 a year for additional staff. It has been said during this Debate more than once that a return could be easily sent in. I doubt it very much, because when people now make a return it is in order that they may get off taxation. Here, when a return is made, it will be in order that taxation may be put on. In fact, a man making a return will be practically,

    95
    as far as his income goes, signing his own death warrant as to the amount of tax which will be taken from him.
    With regard to people with small incomes, there are, as the Committee is aware, a great many of them who would be classed under earned income. It may have been earned in the past—probably it has been earned in the past by professional men and others, and that money has been invested. But it will not be entitled to any relief. Take a man with £500 a year. The deduction in his case will be £150, so that he would pay on £350. On unearned income it works out, I make it, 9.8d. in the pound on £500, and if it is earned income it works out at 6.3d. in the pound. I consider that even with the abatement it is a very heavy tax upon people with small incomes of this character, for it means nearly 10d. in the case of unearned income and 6,½d. in the case of earned income which has to be paid. The Chancellor of the Exchequer is not in the House at the present moment, but I do not wish to sit down without making a suggestion. The money has to be found; we admit that; but some of us think that the present occasion is an exceptional one. The Chancellor of the Exchequer is called upon suddenly to find an increased amount for naval construction. I do not think he has provided sufficient in this Budget. What I should like to suggest is that this exceptional occasion would justify the Government in borrowing the extra money that is required for naval construction. I believe if the Government would make up their mind to do this they would largely meet the necessities of the case.
    The CHAIRMAN: Order, order. The hon. Gentleman's observations are not relevant to the Resolution, and are more in the nature of general observations on the Budget.
    Mr. ROBERTS: I was going to suggest to the Chancellor of the Exchequer that he should withdraw this extra income tax, and in lieu of it create a loan for naval purposes. That was what I was going to suggest, but, of course, I will not pursue the point, as it is ruled out of order. But I do hope that the Chancellor of the Exchequer will consider the injustices and the hardships that I have put before him, and that he will also consider the very important question that to raise the income tax in time of peace to the amount of 1s. 2d. in the £ all round is a dangerous proceed-
    96
    ing from the point of view of national fiscal safety. Supposing in a few years' time we are called upon—I hope we shall not be—to defend our country, the Chancellor would have, on the top of the 1s. 2d. to put on such taxation that it would be a real grievance to the taxpayers, and you would have very great difficulty in getting in the whole of the money which he required. I trust the right hon. Gentleman will see his way to making the reduction which we suggest, and to meeting the objections which we have brought forward.
    Mr. P. F. CURRAN: In rising to occupy a few moments on this Resolution I think it is my duty in the first place to inform the Committee that the income tax as suggested in the Budget does not in any way affect me. No doubt some Members of the Committee will say that that is a great misfortune so far as I am concerned, and I feel disposed to share that opinion. I am somewhat amazed at the length of time taken up by hon. and right hon. Gentlemen above the Gangway in discussing the woes of the middle and upper classes in regard to this income tax. I took part in a bye-election not very long ago, since the Budget was introduced, and there were quite a number of gentlemen down from this House supporting the official Conservative candidate. I had the pleasure of listening to some of their speeches, and not one of them ever referred to the burden which was about to be imposed on the middle and upper classes. They all referred to and all unanimously deplored the poor man's tobacco and whisky being touched, but there was nothing said whatever about the unfortunate members of the middle and upper classes.
    The right hon. Gentleman the Member for Worcester repeated this afternoon what has been said both in this House, on public platforms, in the country, and through the Press, that the Labour party has converted the Chancellor of the Exchequer to their way of thinking. I am sorry to say that neither my colleagues nor myself can detect that revolutionary change in the political principle of the Chancellor of the Exchequer. It is something to be hoped for, but not yet realised. As far as we are concerned, and as far as I am personally concerned, I support the principle of this Budget and the Resolution before the Committee at present. The basis of the Resolution is, in my judgment, the allocation of the tax so that the people in the community who are best able to

    97
    bear will pay their proportionate share of that tag. I am about to make what may be termed a bold proposition in this House. I am bound to say, so far as I am aware, the working classes and the essentially distributing classes are the two classes in the community that both directly and indirectly pay all the taxation. What do I mean by that? I mean in the words of Adam Smith, who laid down this law in the wealth of nations labour applied to land is the source of all wealth, land being the gift of Nature to all her children, labour bringing the commodities out of it is the only method whereby wealth can be derived. Then may I point out that the proposal of a tax, the increasing of the income tax upon land values, the imposition of a super-tax upon high incomes is, in my judgment, a more just, a more logical, more moral and consistent method than endeavouring to tax the food of the poor.
    I want to make a reference to a statement made by the hon. Member for Paddington in his very able address. In the production of figures, at which he is an expert, he made one statement that economic rent was a mere fraction of the social value of the country. I cannot follow him in that statement. I do not want to misquote or misinterpret what he said, but possibly he did not imply that economic rents meant the entire ground rent of the United Kingdom. The entire ground rent of the United Kingdom is over 200 millions, and that cannot be called a mere fraction in the social value of the country. The people who receive that, and who will be taxed by the principles of the present Budget, those people in my judgment are much better able to bear the tax than any other class of the community. I want also to make a reference to one or two statements made by the hon. Baronet the Member for the City of London. He is evidently representing in this House the impoverished City merchant and the hard-up stock and share broker. They have not yet got to find their sleeping accommodation on the Thames Embankment as far as I am aware. He quoted the hon. Member for Preston, who said the other day that the Labour party wanted to eat other people's cake and keep their own. That is rather a risky statement for the hon. Member for the City of London to make. If labour is the source of all wealth, then the logical outcome of that position is that people who live upon rent and interest are eating other people's 'cakes and keeping their own.
    98
    Another point was referred to by the hon. Baronet and also by the hon. Member for Paddington, that in an individualist state of society it was or would be injurious to do anything by way of taxation which would cripple the investment of capital, inasmuch as it would tend towards limiting employment. Some of us, those of us on these benches at least, are hoping for the time when the wage worker, the wealth producer, will not be entirely dependent on the investor for his employment. There is a principle laid down in the Budget at least the elements of a principle that a certain amount of the taxes raised will be utilised for the purpose of finding employment. As far as we are concerned we are hoping that the time will come when a great deal more of the national revenue of the country will be put into operation to find useful employment upon the natural inheritance of the people of the country, namely, the land of the country. Of course, those of us who speak from these benches are not seriously affected from a pecuniary point of view by the imposition of the new taxes, or especially by the imposition of a super-tax, but at the same time it is the duty of the work people to uphold a good principle when it is laid before this House and the country. The non-producing element up to this moment. and even after the Finance Bill becomes an accomplished fact, the leisured classes and the non-producing classes will have shirked, and will be shirking, a great deal of responsibility to pay their quota towards this debt. I submit, therefore, that it is the duty of the worker to take a very keen interest in the various forms of taxation, especially that which is suggested by the Resolution before the Committee. I might say to the hon. and right hon. Gentlemen above the Gangway that prior to the introduction of the Budget those of them who spoke with weight and authority were clamouring for the expenditure of a tremendous sum of public money. Clamouring—why they were not satisfied with four "Dreadnoughts," they wanted eight. [An HON MEMBER: "And could not wait."] And could not afford to wait, the country was in danger. I read something of a mysterious aeroplane that was flying round somewhere about the south-east coast just now—
    The CHAIRMAN: The hon. Member is really very wide in almost the whole of his observations. I do hope he will confine himself to the Resolution.
    Mr. CURRAN: The interruptions, I am afraid, rather drove me on. At any rate, the money has to be found, and the question that presented that to me is this, is the money to be found by the propertied classes, by the upper and middle classes, and especially by the landed proprietors class, or is it to be found once more by placing taxes upon the breakfast table of the poor? It must be found either way, and, in my judgment, the general principles laid down in the Budget are the most fair, human, logical, and consistent principles for the purpose of finding the money.
    Sir WILLIAM BULL: I will not follow the last speaker in some of the ramifications of his speech, but I should like once again to point out to him that all wealth does not come from land. I should like in the first place to thank the Chancellor of the Exchequer very sincerely for the remission he has made in regard to children. That is a principle I have advocated for very many years past, and I am very glad to see that now a first step has been made to bring it into force. I had hoped that for children an allowance of £40 might have been made. He has started at £10, and I am grateful. I must press what I usually do in this Debate year after year, and that is the question with regard to married couples. I do feel very strongly indeed that the income tax presses very hardly upon married couples. In the first place the abatement was at the rate of £150 per year, but it was raised to £160 some years ago. It was stated by the then Chancellor of the Exchequer that that was a reasonable sum for one person to live upon. Nothing was said about keeping two persons. Since those days the price of every kind of commodity has gone up—rent, rates, taxes, food of all description have all gone up in price, and therefore on that account alone I would appeal to the Chancellor of the Exchequer that some consideration ought to be given to this matter. I would not pretend that the cost of living of two persons is double that of one. I do think it is one and a half times as much, and I would appeal for a reduction to be made of a sum of £240 upon every married couple, rather than £160 as at present. It might be asked whether this would cost much money. In my opinion it would not mean a very large sum. The hardship of the present arrangement falls very severely upon the possessors of small incomes; and it might easily lead to immorality, because a man and woman living
    100
    together both get reductions, whilst if they are married no reduction is made. It is estimated that there are about 1,000,000 married couples at present called upon to pay this tax, of whom one-half would be exempt, because of their incomes being under £160, one-fourth would not have to pay on £240, and the remaining one-fourth, say 25,000, would fairly represent the question we have now to deal with. I am informed, and I thoroughly believe, that the cost of this reform would not exceed £200,000, and I press very earnestly indeed that the Chancellor of the Exchequer should see if he cannot make this great and necessary reform.
    Then there are one or two questions I should like to ask as regards the Budget itself. There is one paragraph in the Chancellor of the Exchequer's statement which I cannot quite understand. He said:—
    "The yield of the super-tax in a full year is estimated at it £2,300,000, but as new machinery has to be set up, and as returns have to be obtained from taxpayers, examined, and assessments made upon them, I should be sanguine if I anticipated that more than a small proportion of the first year's income will reach the Exchequer before 31st March next. In these circumstances I have not felt justified in including more than £500,000 in my estimate for the current year."
    If the super-tax is going to realise £2,300,000, what is the Chancellor of the Exchequer going to do with the other £1,800,000? Is it all going in machinery, or what is to become of it? Further, what is it expected to yield in the second year? I know the right hon. Gentleman is not budgeting for the second year, but the House would be interested to learn what sum he expects then to realise from the super-tax and what the cost of machinery will be. It has been denied over and over again that there has been any more inquisition with regard to the income tax. All I can say is that, according to my experience, which is a fairly wide one, there has been a great deal more inquisition and more pressure all the way round. No one who has received income tax demand notes can deny that they have been delivered far earlier than usual, and that they have been of a far more pressing character. The usual polite notice has been altered for one still quite polite, but of a more urgent character, and many more questions have been raised. Persons have been suspected of having larger incomes than they have stated, and many inquiries have been going on. If we were able to get the information from the Treasury, I think it would be found that a very large sum has been recovered by these inquisitions. With regard to the super-tax, how is it to be collected? Is it still

    101
    to be under Somerset House? Are the special Commissioners at Somerset House to superintend the collection? Why is the collection of the super-tax different from the collection of the ordinary tax? We have been given no reason at all why the two taxes should be divided and put under different authorities. There is no doubt that the super-tax will lead to a good deal of evasion, and the result will inevitably be that when once people begin to learn how to evade the income tax, like dram-drinking, the practice will grow. The people will get more and more used to it, and the revenue will lose increasingly. Two or three days ago I was discussing this question of income tax with an hon. Member of great experience, and he agreed with me that there is more money at the present moment collected wrongfully by the revenue than there is taxation evaded. By that I mean that the forms are so complicated, and the difficulty of getting money back is so great, that many people—spinsters, widows, small tradesmen and others—rather than go through the trouble and mental difficulty of understanding the forms, allow themselves to be taxed when there is no reason why they should be. The super-tax is a great leap in the dark, and that the Chancellor of the Exchequer evidently feels this to be so is shown by the fact that out of an expected yield of £2,300,000 he only estimates to get in the first year £500,000. Again I ask: What does he expect is to become of the other £1,800,000?
    Mr. WALTER GUINNESS: The right hon. Baronet the Member for the Forest of Dean read out some of the evidence given by Sir Felix Schuster before the Select Committee on Income Tax, which pointed to the opinion that collection at a source was a failure. It is possible that some of his hearers may have judged from that quotation that Sir Felix Schuster was in favour of a super-tax.
    Sir CHARLES W. DILKE: That was not my point. I claimed him as a very powerful witness on two other points which have been raised in Debate.
    Mr. WALTER GUINNESS: I do not mean to suggest that the right hon. Baronet in any way misused the evidence, but I think it will be well to mention the evidence which Sir Felix Schuster afterwards gave very strongly against the super-tax. In the modification of his evidence he states that:—
    "…although there is a good deal to be said in favour of a return of a person's total income, the
    102
    practical objections are great, and it might defeat its own object. This would especially be so in the case of a super-tax being imposed, based on such returns … the existing tax is already considered very heavy, and any addition thereto would, in my opinion, lead to a considerable diversion of capital from the country, while an additional tax on larger incomes would also lead to a further tendency towards the division of estates in the lifetime of the owners, and to consequent loss to the revenue of that additional tax and of considerable amounts in death duties, a point which is of great importance in looking at the result as regards the revenue."
    It is quite obvious, therefore, that Sir Felix Schuster, who is rightly considered a weighty authority on this subject, is strongly against the particular proposals put forward by the Government.
    I do not think that at this period of the Debate it is worth going into small objections to the machinery of the super-tax. I will devote my observations to considering the proposal on general grounds. The right hon. Baronet the Member for the Forest of Dean pointed out that in many foreign countries there is very heavy taxation now, and that evasion of the super-tax would not at present be worth while, because people would avoid a tax in this country far smaller than the tax to which they would make themselves liable by putting their money abroad. I think the right hon. Baronet was right and that at the present figure evasion is hardly worth while. But I do not think that that is the only case we have to consider. We must look at the matter riot only from the point of view of revenue, but also from the point of view of its effect on the industries of the country. It is not only whether you are going to destroy revenue or investment, or decrease the yield of the income tax, but also whether you are going to divert into foreign channels the income which is now re-invested in British securities. At present the revenue is not losing to any considerable extent by evasion of the income tax. That is amply clear from the large growth in the figure of the incomes brought under review every year. At the same time it is probable, if one considers the figures contained in the Annual Report of the Commissioners for Inland Revenue, that British industries are losing very extensively by the turning away from home investment of those savings which otherwise would find their way into that very necessary form of national saving. In their last report the Commissioners draw attention to the very large increase of investments in foreign securities, and they give a very interesting table, from which it emerges that in the last two years-the absolute increase in income from foreign investments is greater than in the

    103
    previous 10 years. That is a very disquieting fact. It shows that the investor in this country is getting very nervous about British investments. If one looks into the figures and divides them under various heads they become even more disquieting. One finds that Indian Loans and Guaranteed Railways are stationary; the investor is not forsaking British Government and municipal securities. In the same way, the increase in the holdings of Colonial and foreign Government securities is also very slow. But in the case of Colonial and Foreign securities and coupons other than Government the increase in the years ending 1906 and 1907 was twice as great as in the previous ten years put together.
    The DEPUTY-CHAIRMAN (Mr. Caldwell): This has no hearing on the present resolution.
    Mr. WALTER GUINNESS: I immediately bow to your ruling. I was about to bring my remarks in order by saying that this great increase in investments abroad had taken place since the present Government came into office. I will not say another word on the point, except that this increase took place after the Government had appointed a Committee to inquire into the graduation of the income tax, and the increase has been going on steadily since. Well, I do not see that the revenue is losing directly from income tax at its present rate. The capital which is exported still supplies income to this country, but surely if the rate of investment abroad is to be very considerably increased our industry in this country must suffer. Labour will suffer even more, because capital after all is fluid, and can find investment abroad if this super-tax is so heavy as to frighten people from British investments. But labour is by no means so mobile, and the unemployment, which has lately become so disquieting a feature in our social position, is certain to increase very much if the income tax proposals of the Government cause greater alarm among investors, and increase the present noticeable tendency to forsake British industrial investments for investments of the same class abroad. We realise that at the present time the graduation proposals of the Government are comparatively reasonable. They are light. I do not think that comparison of our system with those of the majority of foreign countries which impose an income tax would induce anybody
    104
    in this country to attempt to evade the income tax which the Government are proposing. But the investor has to remember this of the super-tax: that it may not remain at the present figure. It will be a tremendous temptation to the Chancellor of the Exchequer in the future to raise this tax. It will have a great advantage over every other tax, because once he has got the information of the number of taxpayers of every given category, of those whose income is £10,000, £15,000, or £20,000, he will be able to calculate to a nicety the exact yield to be received from the graduation, and from another 6d. or 1s. As has been made perfectly clear in this Debate by hon. Members who sit below the Gangway, it is recognised that the chief object and advantage of this tax is that in future times, when the Chancellor of the Exchequer does want more money he will be able to put another turn of the screw on to the super-tax. We know, of course, that this Budget has been inspired by a very interesting little book which was recently published by the hon. Member for Blackburn, and which is entitled "The Socialist Budget." In that book it is proposed that the super-tax should not stop at 6d. in the £, but should go up to I think 6s. in the £. In addition to that there would be the income tax of say 1s., which would make the total 7s. in the £. Again, that is not the only tax, because if we accept the views of many Liberal statesmen that the death duties are only a form of deferred income tax, and if we may accept the probability that the right hon. Gentleman the Chancellor of the Exchequer will not forsake his present mentor, and will follow him to the extent of his proposed death duties to 50 per cent., or 10s. in the £, it is quite certain that the super-tax, and the direct taxes on saving will be enormously increased.
    Of course, one would imagine that any Chancellor of the Exchequer will realise the great danger of passing the point of diminishing returns; that he will realise that there is a limit to the amount of taxation which can profitably be imposed on any area of national income.
    The DEPUTY-CHAIRMAN: Order, order. The proposal before the Committee is the present and not the possible future increase of the super-tax.
    Mr. W. GUINNESS: I shall only point out that the proposed super-tax is in a form which lends itself easily to increase.
    The DEPUTY-CHAIRMAN: All taxes lend themselves to increase, but we are now discussing the probable effect of the present proposal, and not the effect of possible future increase of super-tax.
    Mr. W. GUINNESS: Of course I will not refer to that subject again, but I hope I have made myself clear that this particular tax will certainly present greater temptations to future Chancellors of the Exchequer than any form of indirect taxation, because once they get their machine they will be able to tell to a very exact figure what a rise in the tax will bring in. I think if we look at the figures of foreign investments, people have gauged this danger of a Radical finance, and are clearly preparing to remove securities if direct taxation is made too heavy for them in this country. The tendency now is to buy bearer bonds and other foreign securities, not that holders evade the income tax at the present time, but, because they believe they will be easily able to withdraw them in future.
    Let me quote the evidence on this point of Sir Henry Primrose before the Select Committee. He states that the super-tax such as proposed by the hon. Member for Blackburn would mean:—
    "The dissipation of a very large proportion of that lent of annual income Mild) at present can most easily be saved, and wind.' tine: seriously retard the accumulation of capital.' It would mean, too, that to the present risks attending the use of capital there would lie added not the risk. but the certainty, that the most successful employment of it would bring to the owner a greatly diminished reward. As a result the tax would render capital in this country scarce and dear, a situation not disagreeable to those who might hold such capital as existed, but eminently disadvantageous Lo the majority of the community who do not hold capital, and especially labour. For in the division of total product between capital: mil labour an increase in the share of capital must mean a diminution in the share of labour. unless the value of the product can be increased at the will of the producers."
    I think it is perfectly clear that with a heavy super-tax people will not be satisfied with an income of 3 or 4 per cent. from British investments. If they have to pay this proportionate amount to the State they will expect British industries to give them a far larger yield, and industries, to counterbalance this great disqualification, will have to tempt capital by paying far higher rates of interest than at present is possible. There is no doubt whatever that the, present income-tax proposals have done much to, keep down the price of money at the present time. What does it mean to-day? Money is unlendable in the City from 1 per cent. from day to day. It simply means—
    The DEPUTY-CHAIRMAN: Order, order. The hon. Member is travelling wide of the Resolution.
    Mr. JOYNSON-HICKS: On a point of order, Mr. Caldwell, may I call your attention to the fact that we are not merely discussing the question of super-tax, but the whole income tax Resolution, and I venture to submit to you that any point arising out of the income tax, past, present, or future, is perfectly admissible.
    The DEPUTY-CHAIRMAN: The Resolution contains both Resolutions, but the remarks are getting rather wide of the subject.
    Mr. W. GUINNESS: I think my remarks are applicable to the whole question of the income tax. I think there is no doubt that the cheapness of money is very largely due to the fact that people who are not bound to put their property into British investments will not do so while this heavy burden is hanging over their heads.
    They prefer to submit to a very low rate of interest; they have submitted to lend money on 1 per cent. or to leave it on deposit at the banks because they did not know what would happen to them if they put it into British industrial enterprise, from which probably they would not be able to get it out. As the Chancellor of the Exchequer is looking out for unearned increments, I should suggest he should turn his attention to those foreign issues which have enormously increased in value, entirely owing to the action of the Government, because the large prominence recently given by the City to issues of foreign Governments and foreign industrial enterprise is evidently due to the fact that the Budget proposals of the Government, and especially their income tax proposals, means so heavy a burden upon the savings of the people of this country that they do not like to invest their money in home industries, and an undeserved and unearned increment has therefore accrued to recent foreign issues.
    Mr. RIDSDALE: They will have to pay income tax upon these.
    Mr. WALTER GUINNESS: I quite agree. That is my point. At present they do not pay, but they know after they have invested in this class of security if the worst comes to pass they can quite easily take their savings to a foreign country; they can easily come to an arrangement with the register

    107
    of a company abroad so that their income earned by previous holdings in this country should be paid by a foreign bank; and because this class of investment can so easily be taken advantage of people prefer that class of investment, even though for the moment they are paying income tax upon it, to tying up their capital in this country in a way where probably they would not be able to realise it. We know the Chancellor of the Exchequer must now be beginning to realise that this super-tax and this increased income tax will undoubtedly lead to increased investments abroad, and a resulting stagnation in British security, and it will lead to this end not with a view to dishonest evasion, but simply so that people may place themselves in a position where, if this principle is carried further, they may be in a position to save whatever is left.
    Mr. SUMMERBELL: One almost feels sad sitting listening to the Debate in this House with regard to the present Budget. I am sure the hon. Member who has just sat down would lead one to believe that if the Budget is carried into effect England is going to be ruined, and that all the capital is going out of the country and into foreign investments, and that no investments whatever will be left at home. Now I ask lion. Members to try and take a more generous view in regard to the nation's welfare, so far as this country is concerned, because at the present we are face to face with a very big deficit, and we are asked how are we going to raise the necessary money to settle, as they should be settled, the nation's affairs. So far as the working classes are concerned, they have too much taxation to bear already; it is quite impossible to get anything further from the working classes. The Government and the country are faced with two alternatives: either to further tax the people's food or to place additional taxes upon the rich. I am glad the Chancellor has taken the latter course. I think it ought to have been taken long ago. We have been accustomed to tax tea and sugar and the food of the people. Now we are getting into the habit of taxing incomes, and the Gentlemen that have paid the least are saying the most about it. I said the working classes are paving too much, if anything, at the present moment, and you cannot look for anything additional from that source. In the year 1906 the working classes were paying 63½ millions. At all events, that sum was raised
    108
    from taxation on food. That is 30s. per head of the population, or £T 10s. per family of five. When heavy taxes of that kind are in force you cannot look to the working classes for any additional taxation.
    To tell us that labour will suffer if the Budget is carried through, because capital will go out of the country, is bad patriotism. Capital will certainly not go to Germany. I read in to-day's papers that Germany was so perplexed with her Budget that it was suggested her Parliament should adjourn fur a month to think over the matter and to try to arrive at some satisfactory conclusion. We have in that country suggested new taxes same as you have in this country. Hon. Members talk about death duties, and we find in Germany complaints against that form of tax just the same as there are here. There are claims for increasing the death duty, claims for an increased income tax, and claims for a super-tax. Then will our capital go to France? Taxation in France is heavier than in this country. Instead of complaining, hon. Gentlemen on the Opposition side of the House ought to feel pleased, and ought to be quite ready to come forward at a moment like this and show that they arc prepared to bear a little additional burden in order to help the nation out of the difficulties in which it is. Hon. Gentlemen want millions to spend upon the upkeep and on the security of this country, and, if so, they ought to come forward to help to raise the necessary money. The hon. Member who last spoke said that we on the Labour benches look forward to the time when the Chancellor of the Exchequer would have to put on another turn of the screw to get more revenue out of capital. Why not? I do not see that it can be hard for the man with £5,000 a year to have to pay an additional tax on the part of his income which is over £3,000. In fact, I think it is the proper way to raise the necessary revenue. An hon. Friend reminds that £3,000 a year is just about the poverty line.
    I hope to see the time when the Chancellor of the Exchequer will practically raise all revenue from incomes. It is the natural and proper source from which to raise the necessary revenue for this country. When you raise it from income you make all men pay their fair share according to their ability. To raise it from indirect taxation is to make the food of the people pay more and in greater proportion than that which is paid by the rich. I say,

    109
    then, by all means tax incomes. I hope hon. Gentlemen on the Opposition benches will not say because they are going to be called upon to pay a little extra on incomes of £5,000 that this nation is going to arrive at a point of stagnation, with all the capital flown out of the country. I would say to them, "Be manful, and come forward and say, 'We can bear our burden willingly in order that the necessary revenue may be raised for the country.'" So far as we on these benches are concerned, we hope the Government will adhere to this Budget, and particularly to that portion of it which we are discussing here tonight, viz., the increase of the income tax and the new super-tax. I hope all this sorrowful talk we hear in regard to what is going to take place will have no effect upon the Government, and that they will stick manfully to their Budget, and if they do in my view they are doing right to make the rich people of this country pay more in the future than they have paid in the past.
    Mr. JOYNSON-HICKS: With regard to the speech of the hon. Member who has just sat down, I would suggest that he should approach this question from its effect upon the country as a whole rather than upon any individual class. He said he hoped the Government would stick to their Budget, or at least that portion which did not affect him. The hon. Member suggested that all the taxation of the country should be put upon the income tax. I do not know whether his proposal is that everybody should pay income tax down to the smallest incomes. The people who decide questions of peace or not, and who have been crying out for "Dreadnoughts" are not the middle or the upper-classes, but that cry has come from those who have the votes, and every bye-election shows it. As one who represents a middle and upper-class constituency I associate myself with the speech of the hon. Baronet the Member for the City of London, and I approach this question from the point of view that an income tax of is. '2d. in the £, with a super-tax of 6d., is likely to have upon the prosperity of the country. I do not object to pay my share of taxation for additional "Dreadnoughts" and old age pensions, because we are just as responsible on these Benches for the passing of the Old Age Pensions Act as Ministers sitting opposite, and we are prepared to pay our share like men of the taxes that are necessary both for old age pensions and for the navy.
    110
    I want to consider whether the income tax at is 2d. in the £, with a super-tax of 6d., is one which will be for the benefit of all classes of the community. I am inclined to agree with the hon. Member for Sunderland that the working classes ultimately pay all taxation. I have held that doctrine for many years. Whatever tax you put on its effect is bound to come upon the wage-earning classes of the community. Those I represent in Manchester are just as much wage-earners as the hon. Member who made that statement. Upon these city merchants, the stockbrokers, the cotton lords, and the heads of our manufacturing firms depend, and must depend the very existence of an enormous number of the working class community, and if the income tax is put at such an amount that it affects the security of capital and the stability of finance it will act and react upon the merchant, and the cotton manufacturer, and every man who carries on a large business. It is bound to act and react upon the employment which those classes are able to provide for the working classes. Before I deal with the basis of the Budget, so far as it affects the income tax, I should like to mention two Amendments which are down in my name dealing with the super-tax which, I think, should have been charged on separate-in-conies in the first place, and in the second place on unearned incomes.
    I know the existing system of taxation is that husband and wife should be considered to have one income, and there is something to be said for it. I am bound to suggest, however, that a wife who has property of her own, unearned income if you like, is a separate entity, and under the provisions of the Married Women's Property Act women have the entire control of their own property, and it would be hard upon a wage earner getting £2,000,. £3,000, or £4,000 a year, merely because his wife has a certain amount of income, that he should be charged this super-tax upon the full amount of his own earnings. I hope the Chancellor of the Exchequer during the Committee stage, will consider the Amendment which I put down to separate the income of the husband and wife, at all events for super-tax purposes, and I suggest that the super-tax should apply to unearned incomes. The system that the professional man and brain worker should be differentiated from the receiver of unearned income has already been embodied in the financial system of the country. If a man earns £2,000 a year, he has a lower

    111
    rate of tax, but if he happens to be a surgeon flying up and down the country and a good part of the night to carry out an additional number of operations, that man's income should not be visited with this super-tax. This tax has been put on somewhat as a Socialist measure, but after all Socialism should not be applied to eminent surgeons, or to the present occupants of the Ministerial Bench and other law officers who earn by the power of their brain more than £5,000 a year.
    I should like to dwell for a few moments upon the basis on which the income tax is now being raised, in addition to which there is to be a super-tax. There are two canons upon which the Budget can be brought in. One of them is the rule laid down by all the great financiers of the past, and laid down by Mr. Gladstone and Sir Robert Peel that taxes should be levied without regard entirely to penalising any section of the community. Taxes should be put upon the community as a whole, and, in settling this form of taxation, the Chancellor of the Exchequer should have regard solely to the financial exigencies of the country, and should not attempt in any way to use the Budget to penalise any section of society. I am perfectly sure that you may read the whole of Mr. Glad-stone's speeches, and those delivered by Sir Robert Peel, or any of our great financiers, and you will not find even a suggestion that you are entitled to use the Budget as a means of correcting mistakes in legislation, which has undoubtedly been suggested by hon. Gentlemen opposite in regard to the late Licensing Bill, or as a means of carrying some kind of Socialistic legislation. The Government are now proposing to increase the income tax beyond the point at which all our great financiers have said it should not go in times of peace. I represent a middle-class Constituency, but it contains also a large number of wage earners, and I suggest that the income tax is really in their opinion a reserve tax. That is a point which has been referred to this afternoon. Mr. Gladstone often referred to it from that point of view, but I am afraid that Mr. Gladstone's name is no longer one to conjure with, for the Liberal party has changed its ideas on finance since the days of Mr. Gladstone. Mr. Gladstone was distinctly in favour of either abolishing the income tax or of not increasing it beyond 4d. or 5d., for he thought that beyond that rate it would bear unfairly on particular sections of the
    112
    communities; besides, he was of opinion that it would be financially wrong on the whole community to extend it in times of peace, for that extension would be required in times of war and emergency. I do not know where we are to get our extra taxes in times of war or emergencies.
    During the Boer war the right hon. Baronet the member for the Forest of Dean suggested that we could fly to our indirect taxes, but the right hon. Gentleman was answered by the Chancellor of the Exchequer in anticipation, and by so great an authority as the President of the Board of Trade, who said that in times of war and. emergency indirect taxes would dwindle away. It is beyond doubt that in the case of war, and particularly in the case of a naval war, they would dwindle away. If we had any difficulty in getting sugar or tea or corn we have the authority of the President of the Board of Trade for believing that in a time of war or in the case of emergency indirect taxation would dwindle away. It was once the opinion of the Chancellor of the Exchequer that the income tax should be held in reserve for times of war or emergency. That was also the view of the present Prime Minister until a short time ago. The Prime Minister has given us no answer to a speech that he made on the subject in 1906. The income tax to-day is 1s. in the £, and to-morrow it will be 1s. 2d. It is true that there are special concessions to a certain number of people, but the tax itself is 1s. in the £1, and to-morrow it will be 1s. 2d. It is idle for the Prime Minister to say that the income tax is only 9½d,d. in the £. It is 1s., with certain deductions, and when he made his speech in 1906 he said the tax was a burden on the country and was a burden not only on profit, but on wages. The present income tax abolishes the reserve fund of the country and affects both profits and wages. I have great respect for the clearness of the Prime Minister's statement, but I do not quite understand his position on the subject of graduation. He told us in 1907 that he foresaw difficulties in the way of a graduated income tax, and I am surprised that he has been converted so rapidly by the Chancellor of the Exchequer. Everyone conversant with the income tax must see enormous difficulties in the application of that principle. Both the Prime Minister and the Chancellor of the Exchequer in this Debate have relied upon the view of foreign countries with regard to income tax and super-tax.

    113
    We have heard of the income tax in Japan, and of the income tax in another country, and of the income tax in different foreign countries, and the experiences of these countries are used for the purpose of showing that we should adopt the super-tax. We have heard of a super-tax of 5s. in the £ in Japan, and the Prime Minister deals with a super-tax altogether apart from out investments abroad. In 1907 the Prime Minister said that the experience of foreign countries or even Colonial countries was not really relevant to our taxation. Foreign Government taxation in regard to the super-tax should not be binding on us, and it should not be an example which we should follow. Our old system of taxation is entirely different from that of foreign countries. I do not want to weary the House with quotations, but this question of income tax is of very great importance to my Constituency. I must therefore refer to a speech delivered four years ago by the President of the Board of Trade when, in 1904, he was on the borderland between this side of the House and that side of the House. In 1904 he said: "The income tax has always been looked upon as a great reserve for war, and when it stands at a shilling in the £ in times of peace it is inevitable that the whole elasticity of our finance is destroyed." Yes, the elasticity of the financial system of this country was to be destroyed in 1904 because of an income tax of a I s. What are we to think to-day of an income tax and a super-tax with reference to our financial system? There was an even greater authority than the President of the Board of Trade in 1904. I wonder nobody has found this speech which the present Chancellor of the Exchequer made on the proposal of the Conservative Government to institute an income tax of is in the £.
    I wish I could sneak as eloquently as the right hon. Gentleman, or even that I had been able to learn that speech off by heart and deliver it to-night as one of my own. It is extraordinary how it fits the present situation. "The strongest reason," said the hon. Gentleman, as he then was, "for this Amendment "—it was an Amendment which he was supporting against the Conservative party—" was the extravagantly high income tax proposed by the Government. The income-tax payer was very heavily pressed at the present moment, and wherever one went he heard complaints of the amount of the income tax." The
    114
    right hon. Gentleman told us the other night that he has had no complaints with regard to the super-tax. Well, it is hardly likely that a man who is going to suffer from the super-tax would write to the Chancellor of the Exchequer. A man who fears robbery does not write to the burglar he writes to the policeman. Shoals of people have written to me. My Constituency is one in which there are a large number of those who will be affected by the super-tax, and they naturally have written to me rather than to the right hon. Gentleman. [Mr. Lloyd-George here took his seat on the Ministerial Bench.] I am delighted to see my right hon. Friend come in. He is just in time to hear this useful quotation from the speech which he delivered in the year 1904 on the proposal of the Conservative Government to-impose the extravagantly high income tax of 1s, in the £. There was a Motion to reduce it, and Mr. Lloyd-George on that occasion, in supporting the Motion, gave some excellent advice to the then Chancellor of the Exchequer. He said that after all he ought to have some sense of responsibility with regard to checking extravagant expenditure. I hope that the right hon. Gentleman now appreciates that sense of responsibility. Yet the fact remains that in a time of profound peace he has brought forward the biggest Budget yet known in the history of Parliament.
    No wonder the Chancellor of the Exchequer got excited in the middle of his speech. He said that anyone who examined the expenditure of the last few years could characterise in no other way a 1s. income tax in time of peace as a war tax in time of peace. But in addition to that he is proposing a 1s. 2d. income tax with a 6d. super-tax. Is riot that a good deal more than a war tax in time of peace? The right hon. Gentleman went on to say they were reaching a point which it would be difficult for the public to tolerate. Then he dealt with the question of reserving the income tax for further taxation in time of war and emergency. He asked, as I have been asking to-night, "Supposing there was a great European complication. One never knew what might happen, especially if the present Government remained in power "—I entirely agree with the right hon. Gentleman, one never does know what may happen if the present Government remains in power—but he asked where could they plant another tax. He said they might put another penny or two pence on

    115
    the income tax, but all the financial authoties in the country realised the position; they saw there was no reserve. That is the very point which I have been making during the last few moments. Again, I say we see, and the country sees, there is no reserve. The right hon. Gentleman did not say they were on the road to bankruptcy, but he said their credit was badly damaged. o Again I concur. He concluded by saying there had been a fall in public credit outside. A fall there had been no doubt, but it was nothing to the fall of Government credit inside the House and nothing to the fall of Government credit on these Benches. Consols had gone down in the market and no one would touch them, and we were going to trade without credit and the public would have to pay the balance. I am going to suggest that that speech of the right hon. Gentleman—and again I say I wish I had been able to learn it off by heart and repeat it here as one of my own—puts clearly the position which I have been trying to lay down, a position where the credit must suffer.
    But why has the right hon. Gentleman changed his views so much between the years 1904 and 1909? I have here a small Red Book which, I think, is the source of the inspiration of the right hon. Gentleman. It has already been referred to tonight by the hon. Member for Bury St. Edmunds. It, entirely sets out the views on which the right hon. Gentleman has framed his Budget, the views not of taxing the country fairly for taxation, but of using the Budget as a means of dealing with other people's property.
    The hon. Member for Blackburn, at the beginning of his book, states that Socialism looks to the Budget as a means of not only raising revenue to meet unavoidable expense (which was the method of Mr. Gladstone and all other great financiers), but also as an instrument for redressing inequalities in the distribution of wealth. That I think is the basis upon which the right hon. Gentleman has based his Budget. There are two ways, said the hon. Member for Blackburn, of carrying out this object—one is pure unadulterated municipalisation and socialisation. I need not stay to deal with that. The second is by the method of taxation adopted by the Chancellor of the Exchequer. The hon. Member for Blackburn goes on to support exactly the taxes which are proposed in this Budget, namely, a higher income tax and a super-tax amounting up to as high
    116
    as 6s. in the pound, and he gives for that the reasons given by the right hon. Gentleman opposite in support of the super-tax. The hon. Member for Blackburn suggested the raising of the tax on incomes over £5,000, because it would be immeasurably popular except, of course, with the possessors of these incomes. Exactly; it is popular to tax other people apart altogether from the fairness of the taxation. It is popular to put on a tax which can only be felt by a very limited number.
    The hon. Member for Blackburn goes on to say that these limitations would be restricted to a very small number of individua1s. Is that the reason why the Chancellor of the Exchequer has put on this super-tax, which it is said will only affect some 10,000 persons? Apart from fairness apparently he has done so because there can be no widespread opposition to it, because there will be no Hyde Park meetings, because there will be no demonstrations. These 10,000 people who are to pay are more or less inarticulate, and whether they are or not the right hon. Gentleman will pay no attention to their views. I propose to conclude by referring to the speech of the hon. Member for Jarrow, who said that all taxation was bound to fall sooner or later on the shoulders of the working classes. If you compel any man to pay an extra £50 or £100 income tax it has to be found, and sooner or later it conies down to the shoulders of the working classes. May I read a final quotation?
    "Sooner rather than later it will come on shoulders of tile working classes, it will cripple, industry, and commerce.
    That I have from a very high authority. Many people imagine that taxes are paid by the rich alone. That is not so. As far as the question of employment is concerned the effect of taxation is the same whether it is paid by the rich or the poor. I am dealing only with the question of the ultimate effect upon the country— what will be the effect upon most of the middle-class men who have to pay the tax and the effect, through them, upon the country? The ultimate effect is the same whether it is paid by a rich or a poor man. If a man has to pay £50 for income tax, he has £50 less to spend in the multifarious industries which we carry on in this country, and the people who supply him with the things which he would otherwise buy are thrown out of work. That is stated in a book written by one who was until recently very orthodox in his views in regard to finance—the present Member for Preston. It was published not by him, but by

    117
    the Liberal Publication Department; it has the im primateur and the blessing of the late Sir H. Campbell-Bannerman, and, therefore, we may treat it as the orthodox expression of Liberal principles, three years ago, on the effect of a high income tax. It is the Liberal principles of three years ago, but I do not attempt to define them now. Those are the principles of three years ago, but those set out in the Budget speeches are those which are taken from the book of the hon. Member for Blackburn, the principles of Socialism pure and simple, and I can only thank the right hon. Gentleman for his moderation in not going to the whole extent of the hon. Member for Blackburn. I suppose it is, because he does not want more money to-day, but when the time comes he will become a pure and active Socialist, and use the Budget in a way in which it has never been used before, to cripple those classes who differ from him in politics.
    Mr. E. A. RIDSDALE: There was one remark which fell from an hon. Member which caused me considerable surprise. It was to the effect that my right hon. Friend the Chancellor of the Exchequer was insensible to City opinion. Now if there is one thing to which my right hon. Friend is not insensible it is to every shade of opinion that can be expressed. He is always willing to hear all sides of a question, and form his own opinion thereon, and to act accordingly. Indeed, it is only to-day that I happened to be in the City, and I heard the rumour current that a near relative of the right hon. Gentleman, the President of the Board of Trade, had been making investigations as to whether representations which had been made by the governors of a certain institution, really represented the main feelings of the members of that institution. It was I daresay without the right hon. Gentleman's cognisance or assent, but at any rate it only shows that opinion in the City is at any rate alive to the fact, that the right hon. Gentleman is anxious to ascertain what the true opinion of the City is.
    Mr. LLOYD-GEORGE: I should like to make it perfectly clear that, as far as I am concerned, I have no doubt that a very influential deputation which came to me represented the real opinion of that body.
    Mr. E. A. RIDSDALE: I never doubted that, I only explained that to show how entirely unfounded was the insinuation which was made by the hon. Member. Of course this Resolution divides itself
    118
    into two portions. One deals with the income tax, and the other with the extension of the income tax, on an entirely new principle—the super-tax. With regard to the income tax, for myself I do not intend to take up the time of the Committee. I am afraid I am in the position of thinking that an income tax of is. in a time of peace is indefensible. I am quite sure the money can be obtained in another way, but as the Government do not intend to raise it in another way I will not deal with the matter further. I come to the super-tax, and I congratulate the right hon. Gentleman on having had the courage to adopt this principle. I believe it is a sound principle, a good principle for the country, and an eminently fair one. It lays the burden of taxation upon those shoulders which are best able to bear it, and I contend that those difficulties of collection, grave though they may be, will prove not to be nearly so grave as was anticipated by those experts who gave evidence before the Royal Commission presided over by the right hon. Baronet the Member for the Forest of Dean. The hon. Baronet who sits for the City of London, who is no mean financial expert himself, if I may say so, gave the Committee the result of his investigations among financial experts, ranging from the Hindu Scriptures and from the late Mr. Lecky to Sir Felix Schuster, and as the result of those investigations he showed, as he thought conclusively, that the super-tax could do nothing but evil. My right hon. Friend the Member for the Forest of Dean dealt, and, I think, dealt very effectively, with his criticism, and as regards the Hindu Scriptures, I have no doubt that had the hon. Member had a knowledge of Sanscrit there might be found even in that great authority some moral precept which might be quoted in favour of taxing the rich rather than taxing the poor.
    But while saying this, and defending the super-tax in principle, and expressing my pleasure that the right hon. Gentleman has adopted it, I feel that he has not, perhaps, adopted the best method of applying it, or, at any rate, has not applied it in the manner in which I should wish. The super-tax is to be applied by having the whole 6d. put on at once. When this new tax is going to he applied it is going to comprehend in the area of its operation a class of people, among the ablest in the country, who are said by their spokesmen to be willing to evade the tax. It is therefore best not to make it too easy for them to evade, and not to make it too obvious that

    119
    it would give an advantage to them if they evaded it. If you place 6d., all at once, upon incomes over £5,000 and counting down to £3,000, it is obvious that the lowest tax that you would extract from any one pocket which becomes liable to super-tax at all is a round sum of £50 sterling. I suspect that anyone called upon to pay £50 suddenly in respect of a new tax is driven to look at it, and to say, "Is it necessary that I should pay this sum of £50 in respect of this one tax?" If the right hon. Gentleman had been able to graduate this tax, by small increments, so that first one person and then another person, and then a few more, were brought within the scale of its operation in a growing degree, I think there would not have been the same inclination to evade it that there might be if a man is brought up against a brick wall of a 6d. tax. I hope that when this measure goes into the Committee stage that my right hon. Friend may be able to reconsider the amount which he is going to impose all at once. It is quite clear, that; f this amount is going to be collected, it cannot be collected at the source. This amount has to be collected by declaration, and how is anybody going to make that declaration? The declaration will not usually be made by anybody who is earning the income, because the amount of money which anybody can earn in the space of a year is more or less limited. The greater number of these incomes which will be liable to the super-tax will be unearned incomes, interest on money placed out for use in various directions. That money, when it comes into the recipient's pocket, comes in the shape of dividends which have had their income tax deducted at its source, and the amounts which these gentlemen find on looking through their pass-books will not represent their real income but only 18s. 10d. in the pound of their income. My right hon. Friend, in the form of his Resolution, is really going to take the super-tax as an increase of the income tax, in other words, he is going to make it incumbent upon a person to find out what his gross income is before he returns it, and it is going to be a position of very great difficulty to ascertain what it is. We are not all mathematicians. Some people who will be called upon to pay in respect of these incomes of over £5,000 must be ladies, and anyone who wishes to make a true return of his income in order to ascertain whether it is accessible for the pr r-pose of the tax or not will have to enter-
    120
    into the most intricate calculations. They will have to take their bank-book page by page, and will have to think for themselves, "this represents 18s. 10d. on every sovereign I have, and, therefore, I have to add 1s. 2d. I have not to take 1s. 2d. out of every sovereign. I have to take is. 2d. out of every 18s. 10d. I have to take 7–113ths of the total and add it to the result of my pass book." That is a very complicated operation for anyone, and it is almost impossible for any lady or anyone without expert advice to undertake for themselves, and I think, as we no doubt shall have in the future law cases as to people having evaded income tax deliberately, it is very essential that we should make it absolutely clear and plain what the amount of income is which has to be declared, because if you are going to leave it to such an intricate calculation as that it will be quite open to anyone who is had up before the Law Courts to show cause why they have made an untrue declaration to say, "I am not the Astronomer Royal, and it did not occur to me that this kind of intricate calculation had to be gone into before the sum was arrived at."
    If these two points that I have adduced are not really met., I am afraid there will be an extraordinary percentage of incomes ranging between £4,800 and £4,995, and the right hon. Gentleman will find that extraordinarily few people will declare an income of anything between £5,000 and £5,100, more especially from the fact that if they have to pay the 6d. super-tax on the excess of their income over £3,000 a year. they may even have to pay more income tax than the amount of the excess over £5,000. In other words, supposing a man has £5,030 a year and he is super-taxed 6d. on the difference between £3,000 and £5,030, it is quite obvious that he will have to pay more than £50 in super-tax, and, therefore, it will pay him better not to return his income as £5,030 but as £4,995, so you will get cases in which a man who would really be liable to super-tax voluntarily says: "I forego that much of my income. I will not have it. You can take it back and keep your dividends," and he would actually save money by not receiving it. That is not a position which will add to the income of the Chancellor of the Exchequer, and it will not make this scheme appear in the best light. I hope he may see his way eventually to graduate the tax.
    There is another point which was just referred to by the hon. Member for North-West Manchester. In answer to a

    121
    question which I put on the paper I was informed that the incomes of husband and wife would, for the purpose of super-tax, count as one. What does that amount to? Let us take a concrete case in which husband and wife both have an income—the husband of £4,500 and the wife of £1,000 a year. Taken together they amount to £5,500, and, according to the scheme, £2,500 of that will be liable to super-tax. [n other words, £62 10s. would be paid into the Exchequer. Who is to pay that? Is the whole of it to come from the husband or is part to come from the wife? They may not even be living together. There is an abatement of £3,000 a year to be allowed to someone. Is the whole of it to be taken off the husband's income or is part to be taken from the wife? These are two very important questions, and if they are not thought out on the Committee stage they may really lead to a deadlock on the Bill.
    Let us take another case. Supposing the husband who has £4,500 a year is separated from his wife and has also to allow her £500 a year alimony, so reducing his income to £4,000 and making his wife's £1,500. In what proportion are you going to assess the super-tax? Are you going to make the husband pay the tax on the amount which he only holds for the time being? That £500 a year has been ordered by the Court to be paid to his wife. It is no part of his income. He only receives it in order to distribute it. The same sort of point will arise with regard to large incomes in which a man may have a jointure or charges on property. He will only receive the income, though it may be more than £5,000 a year, for the purpose of handing on certain parts to other people. I do not wish to elaborate the point unduly, but the hon. Member for Blackburn welcomed the Budget frankly as a Socialist Budget. I do not look upon it as a Socialist Budget and I do not look upon this super-tax particularly as a Socialist scheme, but unless my right hon. Friend is prepared to consider this point of the husband and wife's income ranking separately, I am really very much afraid that some pious people in the country may think he has gone over bag and baggage to the Socialists. As long as they are married and living together they pay £62 l0s. per annum for the privilege of enjoying the respectability of the marriage contract. That is a very large' increase in the cost of a marriage licence, and I am quite aware that it is not a new point. You have that same point in the matter of
    122
    abatements. if you had under the old scheme a man and his wife with a joint income under £700 a year they were both entitled to an abatement. But that is only a matter of a few shillings. You then had it developed in the Budget of last year when earned and unearned increments were differentiated and there was a possibility of a man and his wife being assessed as one and having to pay a few sovereigns for the privilege of being married, but it comes beyond a joke if the cost of a marriage licence is to become £62 10s. And really if any married couple ever possessed of property living together have an income the total of which exceeds £5,000, the minimum which they may be called upon to pay is £50 and the maximum is no less than £175. If you capitalise that money and see what can be obtained in the way of life assurance for a sum of that amount paid annually you will see that the amount may be from a minimum of £2,500 to a maximum of £8,000. I hope if my right hon. Friend is going to place this duty upon married couples he will at any rate consider the advisability of placing a corresponding Excise duty on divorce, otherwise he may find that people will go in deliberately for breaking the marriage contract in order to avoid paying the tax. I hope my right hon. Friend will give consideration to the points I have raised.
    Mr. HARMOOD-BANNER: I think there is very great advantage in having these discussions on the Resolutions before the Bill is brought forward, because it is a good thing to mention some of the grievances which arise in connection with the taxes, so that there may be something done to remedy them when the Bill is brought in. The other day I asked a question in regard to a matter which was raised by my right hon. Friend the Member for East Worcestershire, and the Chancellor of the Exchequer was good enough to say that the additional taxes on unearned increment from land would not apply to any municipal property. I want to ask—and I wish particular attention to this—a question as to whether this increased income tax is to apply to municipal property. The increased tax under schedules A and D of 2d. in the £ will weigh very heavily on the municipalities in respect of all those trading services which they carry on. For instance, there is gas, water, tramway profits, electric light profits, and all the numerous profits which come into consideration in the

    123
    receipts of municipalities. These are now taxed at 1s. in the £ under schedules A and D, and they will have this further burden placed upon them of 2d. in the £, that is to say, an addition of one-sixth of the present payment. [An HON. MEMBER: "And the super-tax?"] Well, I do not know how far that will apply to municipalities. I am now dealing with the addition of one-sixth of the present tax paid by municipalities under schedules A and D. Thus the rates will be put up in every county and town in England, Wales, Scotland, and Ireland. The Chancellor of the Exchequer expressed his gratitude to the municipalities for the improvements they have made which enable him now to exact this extra tax on undeveloped land and on leasehold and other property. But what is the reason; having been grateful to them for having made these improvements and got some benefits from municipalities, that he is going improperly, to my mind, to take the money received from that tax and to put it in the Imperial Exchequer instead of the municipal taxes? But that is not all. We in the municipalities—I have the honour to represent a municipal association—know that throughout the life of this present Government, and I think I might say throughout the life of the past Government, all sorts of duties and expenses have been added to the rates. The rates have gone up 1s. in the £ for education.
    The CHAIRMAN: I really do not see what that has to do with the Resolution now before the Committee.
    Mr. HARMOOD-BANNER:I bow to your ruling, but I would venture to say that the fact that the municipalities are now going to have an added tax to their burdens of increased rates is bound to aggravate the already heavy burdens which they have already had placed upon them. I shall only emphasise the fact that we are now to have on the municipalities increased rates in consequence of this Budget, unless the Chancellor of the Exchequer does something to remove this burden as regards the income tax. Now I come to the tax itself. Whilst I do not join with hon. Members below the Gangway in agreeing to their principles as regards the equity of these taxes, I do wish to join issue with them that it is a most important thing that here should be a capital sum for labour, and that with the taxation raised by this
    124
    increased income tax and the super-tax a labour reserve fund should be saved every year. The notion is as injurious to manufacturers and the Labour party as any course that could possibly be pursued. An hon. Member stated that he longed for the day when the wage earner should not be dependent on the investor for employment. I do not know whether that is the view of the Chancellor of the Exchequer, because if that is so, that would be a direct destruction of the income tax at once. If labour was to be paid by that means I do not know what would become of the promissory notes or cheques, or whatever he may call them. There would be nothing cut of which the Chancellor of the Exchequer would be able to collect his income tax. However far the Chancellor of the Exchequer may go in the direction of Socialism, I hope he will not go so far as to make the wage earner independent of the investor for employment. It is a matter of the greatest importance to keep a fund out of which labour can be paid. I really feel at some loss to know what is meant by "labour." Is it only the mechanic and the man who works with a spade who are to be regarded as contributing "labour?" Is the barrister, surveyor, solicitor, director, or anyone else who has nothing to do with manual labour to be excluded? That fund ought to be kept in such a way as to be available for improvements which ought to be carried on.
    We have heard a great many of these taunts that we on our side are not prepared to meet the expenditure which has been suggested in reference to the Navy. I reply to that that it is perfectly certain that if the income tax had been increased with the sole purpose of meeting that expenditure there would be no demur on this side of the House; but when it is now brought forward to be a permanent tax on the nation, not to be utilised solely for Imperial purposes, and then removed when that purpose is at an end, and to be used again when these purposes come forward once more, then I say that the tax is being misused by the increase, and the misuse of the increase is because it is to be created into a permanent tax always on the back of the man who places his money in any British security. But that tax is to be preserved for good and all, and with all due deference to the surveyor of taxes and the Exchequer authority, if the tax is to be permanent one would plead on behalf of the commercial community that it should be an honest tax. It is not an

    125
    honest tax at the present time. It is not honestly collected. The instructions to surveyors are so wide and general that one surveyor does one thing and one another in reference to the collection of the tax. One surveyor takes up the position of saying, "Depreciation is rife on your property. I will allow you provided you will give me "—what he has no legal right to obtain—"your accounts file to be put on one side and used for any purposes of reference that the Exchequer may require." Another surveyor takes this stand, and whenever there is an underwriting letter going out, says: "I want a list of the underwriters." He gets it. He assesses the man for his profit on underwriting, which is a capital profit, which is in no way an income profit, with the result that the man who underwrites—there must be many hon. Members who know the forms of business—may underwrite very often a mine which is absolutely worthless. The Chancellor of the Exchequer says: "Pay on your profits. You are underwriting a mining company." The reply is: "But I have lost; the shares have gone down from £1 to 10s.," and he is told, "Oh, that is a capital loss. I will take your profit in the way of underwriting. I will not allow you the loss in the case of a loss of your share."
    That has been the course of business which has perhaps added to that great increase of income tax on which the right hon. Gentleman congratulates himself. Another cause is that the income tax has to be collected with great avidity. A great number of poor men, men who are paid by wages, were brought in who were never brought in before, and a great many causes that promoted the prosperity of the country have added to the increase of income tax on which he so much congratulates himself. This tax, being permanent, ought to be fair and honest. I think the right hon. Gentleman will agree with me that a man's profits and his earnings are two very distinct things. A man makes a profit, but he has to provide depreciation. Depreciation is not allowed on many things now in trading because of judges' decisions, and therefore the income tax is assessed on profit, as to which a judge would say to directors, if they paid dividends on them, "You directors must he responsible for this dividend, which was not paid out of profit," and, on the other hand, the same judge says, "Those are profits, on which you must pay income tax." That is a question which has arisen with collieries and nitrate companies, mines, and all companies outside the King-
    126
    dom who have wasting assets. If they do not provide for the wasting assets, and pay dividends without providing proper depreciation they are fined, and the judges hold that they are liable, but when the income tax takes it the judges say it is profit when there is no real profit.
    Therefore, I distinctly say that now the tax is to be permanent let the tax be an honest tax, placed upon what a man really and truly has for his income out of the profits which he may make, and I think I might appeal to the Labour Members to support me in that, and not to ask for profits which are in excess of a man's real earnings. Commission or no commission, with all due deference to Sir Henry Primrose and all those who dealt with it, they seemed to think that a judge's decision overruled all common-sense and profit and loss account in estimating what a man ought to pay upon. I am not dealing with reserve funds or anything. I am dealing with the true and honest account in which a man makes up an account of his profit and loss, and on which he is perfectly prepared to pay his income tax. There were certain statements about capital going abroad. We must all admit that capital is going abroad. You have only got to look at the list and refer to the underwriters of whom I have already spoken as suffering from unjust taxation, and you will find that you may take Columbia, Venezuela, and any of those places, and people will send their money there. But has there been anything raised for money which will provide labour for the hon. Gentlemen below the Gangway'? Nothing of the sort. The result of his transaction is to send money abroad. It is quite true an hon. Member opposite stated that the Government, so long as the company is registered here, does get the income tax out of a limited company in reference to profits abroad, but it is also the fact that many companies are going elsewhere. Take Australia. If you take a company which paid in Australia and you chose to alter Australian investments you have to pay 1s. in the £ in Australia, and you have 1s. 2d. here. That is you pay 2s. 2d. If you send your money out to build a railway or a, tramway in Australia and give it to a limited company here in Victoria the income tax is 7d. with is. 2d.—that is 1s. 9d will be the tax. How can you expect Australians to send their money here for investment? How can you expect companies not to make arrangements as soon as possible to transfer their

    127
    business to the other side? If the tax becomes unreasonable they will transfer the capital to other countries. I have some experience of this matter. I know of companies in regard to which questions were asked in this House as to whether any relief could be obtained. It was found that no relief could be obtained, and some of those companies closed their offices in London and transferred their businesses to foreign places. They are now carrying on their business abroad, and that is undoubtedly an example of what will follow if this oppressive taxation is carried out to any great extent. There are many other questions in regard to income tax which require most careful scrutiny. An honest tax honestly conducted will be willingly and honestly paid, but a tax which is imposed in the oppressive form suggested, and unjustly collected, will undoubtedly be recognised as an injustice, and will not be paid. You may say that it is wrong that it should be so, but the injustice of the Chancellor of the Exchequer will filter down throughout the whole nation so as to cause injustice or wrong on the part of the taxpayers. As regards the super-tax, I think we will have to deal with a good many inequalitites which will exist under it. The right hon. Gentleman said this tax would be collected by special Commissioners, and I think he added that interest and commission and all expenses would be allowed out of it. That is not made very clear, however, and there are one or two questions which, I think, we ought to have answered with reference to the matter. In the first place the super-tax will operate very unjustly as between the individual who owns his own manufacturing premises — ironworks, collieries, breweries, and so forth—and the individual who owns shares and receives dividends. In the one case, that of the man who pays dividends, you will have the amount on which tax is to be paid. On the other hand, the colliery proprietor will come under schedule D for ordinary profits, and he will be assessed for the super-tax on the basis of profits which nobody can call profits, and, unless you make this clause very wide, he will have to pay the depreciation which he has to provide in order to make the super-tax a proper tax. It is quite possible, therefore, that we may have a man who receives dividends paying on a fixed sum, while a man who receives income as a shipowner has to provide for the depreciation of his ship and other things,
    128
    and the only amount he has available for himself is £7,000, though his profit and loss account would show he had made £15,000. The man who pays the dividend is protected; the man who receives income from his enterprises has to pay on the big and the wrong scale. If this super-tax applies to profits there are many shipowners, colliery owners, and owners of other works who will be placed in a very disadvantageous position. One year the owner of a factory may make a big profit; next year he may make an absolute loss. Are you going to impose the super-tax on the year in which a profit is made and allow nothing in respect of the year in which a loss is sustained? If a man loses £10,000 one year and makes £15,000 the next year, are you going to charge him on the £15,000 or is he to be allowed to bring forward the £10,000 which he has lost? As it stands he is not permitted to bring it forward. He may sustain a loss for three years and make a profit in the fourth year. He will be charged the super-tax on the profit which he has made in the fourth year, though on the whole four years together he may have sustained a loss. The scheme of the right hon. Gentleman bristles with injustice, and it is because it bristles with injustice that you may be quite certain there will be evasion.
    Undoubtedly we know that the Chancellor of the Exchequer has under-estimated —honestly under-estimated. He says there are 10,000 people with incomes of £5,000 a year, but there are far more in the country than 10,000 with £5,000 a year, and, therefore, the yield from the tax had been enormously under-estimated. But whether under-estimated or over-estimated, what we want is that the tax should be honestly imposed. If you borrow money from your banker you get your income back on the money borrowed, but if you borrow money from your stockbroker or any other outside individual you do not get it back. The right hon. Gentleman, in his Budget speech, said he intended to allow interest on mortgages alone, but I think if he consults the income tax authorities he will find that they do not allow it. The Commission which is to deal with this super-tax is most inefficient for the purpose of making the income tax an honest one, honestly conducted. You must lay down laws and rules for the surveyor, and they must be equally applied throughout the country. When you have done that your next step must be to take steps to get rid of this extra tax as quickly as you can.

    129
    You will want it in times to come. "Dreadnoughts" are not our only need; there are other wants which may come in the future for the preservation of this country, and therefore by imposing this super-tax you are depriving yourself of funds which should be solely available in case of difficulty arising with other nations. I do hope that the Chancellor of the Exchequer will give us an assurance that it is not only merely a temporary tax,
    but that it will be a tax honestly conducted and honestly collected from the taxpayers.
    Mr. LLOYD-GEORGE Mr. LLOYD-GEORGE rose in his place, and claimed to move: "That the Question be now put."
    Question put: "That the Question be now put."
    The Committee divided: Ayes, 260; Noes, 96.

    Division No. 107.]

    AYES.

    [9.55 p.m.

    Abraham, William (Rhondda)

    Duncan, J. Hastings (York, Otley)

    Lloyd-George, Rt. Hon. David

    Acland, Francis Dyke

    Dunne, Major E. Martin (Walsall)

    Lupton, Arnold

    Adkins, W. Ryland D.

    Ellis, Rt. Hon. John Edward

    Luttrell, Hugh Fownes

    Agnew, George William

    Erskine, David C.

    Macdonald J. R. (Leicester)

    Armstrong, W. C. Heaton

    Essex, R. W.

    Macdonald, J. M. (Falkirk Burghs)

    Astbury, John Meir

    Evans, Sir S. T.

    M'Laren, Sir C. B. (Leicester)

    Atherley-Jones, L.

    Everett, R. Lacey

    M'Laren, H. D. (Stafford, W.)

    Balfour, Robert (Lanark)

    Falconer, J.

    M'Micking, Major G.

    Baring, Godfrey (Isle of Wight)

    Fenwick, Charles

    Maddison, Frederick

    Barker, Sir John

    Findlay, Alexander

    Mallet, Charles E.

    Barlow, Sir John E. (Somerset)

    Foster, Rt. Hon. Sir Walter

    Manfield, Harry (Northants)

    Barlow, Percy (Bedford)

    Fuller, John Michael F.

    Marks, G. Croydon (Launceston)

    Barnard, E. B.

    Fullerton, Hagh

    Marnham, F. J.

    Barnes, G. N.

    Gibbs, James (Harrow)

    Massie, J.

    Barry, Redmond J. (Tyrone, N.)

    Glendinning, R. G.

    Menzies, Walter

    Beale, W. P

    Glover, Thomas

    Mlcklem, Nathaniel

    Beauchamp, E.

    Goddard, Sir Daniel Ford

    Mond, A.

    Beaumont, Hon. Hubert

    Gooch, George Peabody (Bath)

    Montagu, Hon. E. S.

    Bell, Richard

    Greenwood, G. (Peterborough)

    Morgan, G. Hay (Cornwall)

    Bellairs, Canyon

    Greenwood, Hamar (York)

    Morse, L. L.

    Bennett, E. N.

    Griffith, Ellis J.

    Morton, Alpheus Cleophas

    Bethel!, T. R. (Essex, Maldon)

    Gulland, John W.

    Murray, Capt. Hon. A. C. (Kincard.)

    Birrell, Rt. Hon. Augustine

    Harcourt, Rt. Hon. L. (Rossendale)

    Myer, Horatio

    Black, Arthur W.

    Harcourt, Robert V. (Montrose)

    Nicholls, George

    Boulton, A. C. F.

    Hart-Davies, T.

    Norman, Sir Henry

    Bramsdon, T A.

    Harvey, A. G. C. (Rochdale)

    Norton, Captain Cecil William

    Brigg, John

    Harvey, W. E. (Derbyshire, N.E.)

    Nussey, Thomas Wilians

    Brocklehurst, W. B.

    Harwood, George

    Nuttall, Harry

    Brodie, H. C.

    Hasiam, James (Derbyshire)

    O'Donnell, C. J. (Walworth)

    Brooke, Stopford

    Haworth, Arthur A.

    O'Grady, J.

    Brunner, Rt. Hon. Sir J. T. (Cheshire)

    Hedges, A. Paget

    Parker, James (Halifax)

    Bryce, J. Annan

    Helme, Norval Watson

    Pearce, Robert (Staffs, Leek)

    Buckmaster, Stanley O.

    Hemmerde, Edward George

    Pearce, William (Limehouse)

    Burt, Rt. Hon. Thomas

    Henderson, J. McD. (Aberdeen, W.)

    Philipps, Col. Ivor (Southampton)

    Byles, William Pollard

    Henry, Charles S

    Philipps, Owen C. (Pembroke)

    Cameron, Robert

    Herbert, T. Arnold (Wycomhe)

    Pickersgill, Edward Hare

    Carr-Gomm, H. W.

    Higham, John Sharp

    Pirie, Duncan V.

    Causton, Rt. Hon. Richard Knight

    Hobart, Sir Robert

    Pointer, J.

    Cawley, Sir Frederick

    Hobhouse, Charles E. H.

    Pollard, Dr. G. H.

    Channing, Sir Frederick Allston

    Holland, Sir William Henry

    Pensonby, Arthur A. W. H.

    Cheetham, John Frederick

    Holt, Richard Durning

    Price, C. E. (Edinburgh, Central)

    Cherry, Rt. Non. R. R.

    Hooper, A. G.

    Priestley, Arthur (Grantham)

    Cleland, J. W.

    Hope, W. H. B. (Somerset, N.)

    Radford, G. H.

    Clynes, J. R.

    Horniman, Emslie John

    Rainy, A. Rolland

    Cobbold, Felix Thornley

    Horridge, Thomas Gardner

    Raphael, Herbert H.

    Collins, Stephen (Lambeth)

    Hutton, Alfred Eddison

    Rea, Walter Russell (Scarborough)

    Collins, Sir Wm. J. (St. Pancras, W.)

    Hyde, Clarendon G.

    Rees, J. D.

    Corrpton-Rickett, Sir J.

    Illingworth, Percy H.

    Rendall, Athelstan

    Corbett, C. H. (Sussex, E. Grinstead)

    Isaacs, Rufus Daniel

    Richards, Thomas W. (Monmouth)

    Cornwall, Sir Edwin A.

    Jackson, R. S.

    Richards, T. F. (Wolverhampton, W.)

    Cotton, Sir H. J. S.

    Jardine, Sir J.

    Richardson, A.

    Craig, Herbert J. (Tynemouth)

    Jenkins, J.

    Roberts, Charles H. (Lincoln)

    Crooks, William

    Johnson, W. (Nuneaton)

    Roberts, G. H. (Norwich)

    Crosfield, A. H

    Jowett, F. W.

    Roberts, Sir J. H. (Denbighs)

    Crossley, William J.

    Kavanagh, Walter M.

    Robertson, Sir G. Scott (Bradford)

    Curran, Peter Francis

    Kearley, Sir Hudson E.

    Robertson, J. M. (Tyneside)

    Davies, David (Montgomery Co.)

    Laldlaw, Robert

    Robinson, S.

    Davies, Ellis William (Eifion)

    Lamb, Ernest H. (Rochester)

    Robson, Sir William Snowdon

    Davies, Timothy (Fulham)

    Lamont, Norman

    Roch, Waiter F. (Pembroke)

    Dewar, Sir J. A. (Inverness-sh.)

    Laylando-Barrett, Sir Francis

    Roe, Sir Thomas

    Dickinson, W. H. (St. Pancras, N.)

    Lehmann, R. C.

    Rose, Charles Day

    Dlike, Rt. Hon Sir Charles

    Lever, A. Levy (Essex, Harwich)

    Rowlands, J.

    Dobson, Thomas W.

    Lever, W. H. (Cheshire, Wirral)

    Russell, Rt. Hon. T. W.

    Duckworth, Sir James

    Levy, Sir Maurice

    Samuel, Rt. Hon. H. L. (Cleveland)

    Duncan, C. (Barrow-In-Furness)

    Lewis, John Herbert

    Samuel, S. M. (Whitechapel)

    Schwann, C. Duncan (Hyde)

    Thomas, Abel (Carmarthen, E.)

    White, J. Dundas (Dumbartonshire)

    Schwann, Sir C. E. (Manchester)

    Thomas, Sir A. (Glamorgan, E.)

    White, Sir Luke (York, E.R)

    Scott, A. H. (Ashton-under-Lyne)

    Thomasson, Franklin

    Whitehead, Rowland

    Sears, J. E.

    Thompson, J. W. H. (Somerset, E.)

    Whitley, John Henry (Halifax)

    Seaverns, J. H.

    Thorne, G. R. (Wolverhampton)

    Whittaker, Rt. Hon. Sir Thomas P.

    Seddon, J.

    Tomkinson, James

    Wiles, Thomas

    Seely, Colonel

    Ure, Rt. Hon. Alexander

    Wilkie, Alexander

    Sherwell, Arthur James

    Verney, F. W.

    Williams, J. (Glamorgan)

    Silcock, Thomas Ball

    Vivian, Henry

    Williams, A. Osmond (Merioneth)

    Smeaton, Donald Mackenzie

    Walsh, Stephen

    Williamson, A.

    Soames, Arthur Wellesley

    Walters, John Tudor

    Wilson, Hon. G. G. (Hull, W.)

    Soares, Ernest J

    Walton, Joseph

    Wilson, J. H. (Middlesbrough)

    Spicer, Sir Albert

    Ward, John (Stoke-upon-Trent)

    Wilson, J. W. (Worcestershire, N.)

    Stanley, Albert (Staffs, N.W.)

    Ward, W. Dudley (Southampton)

    Wilson, W. T. (Westhoughton)

    Steadman, W. C.

    Wardle, George J.

    Winfrey, R.

    Stewart-Smith, D. (Kendal)

    Waring, Walter

    Wood, T. M'Kinnon

    Strachey, Sir Edward

    Warner, Thomas Courtenay T.

    Young, Samuel

    Straus, B. S. (Mile End)

    Wgson, Rt. Hon. E. (Clackmannan)

    Yoxall, James Henry

    Summerbell, T.

    Wason, John Cathcart (Orkney)

    Sutherland, J. E.

    Waterlow, D. S.

    TELLERS FOR THE AYES.—Mr.

    Taylor, John W. (Durham)

    Watt, Henry A.

    Joseph Pease and the Master of Elibank.

    Tennant, Sir Edward (Salisbury)

    Weir, James Galloway

    Tennant, H. J. (Berwickshire)

    White, Sir George (Norfolk)

    NOES.

    Anson, Sir William Reynell

    Fletcher, J. S.

    Magnus, Sir Philip

    Arkwright, John Stanhope

    Forster, Henry William

    Morpeth, Viscount

    Ashley, W. W.

    Foster, P. S.

    Morrison-Bell, Captain

    Baldwin, Stanley

    Gardner, Ernest

    Nicholson, Wm G. (Petersfield)

    Banbury, Sir Frederick George

    Gibbs, G. A. (Bristol, West)

    Oddy, John James

    Banner, John S. Harmood-

    Gordon, J.

    Pease, Herbert Pike (Darlington)

    Barrie, H. T. (Londonderry, L.)

    Goulding, Edward Alfred

    Peel, Hon. W. Robert Wellesley

    Bigrold, Sir Arthur

    Guinness, Hon. R. (Haggerston)

    Percy, Earl

    Bull, Sir William James

    Guinness, W. E. (Bury St. Edmunds)

    Pretyman, E. G.

    Burdett-Coutts, W.

    Haddock, George B.

    Bandies, Sir John Scurrah

    Butcher, Samuel Henry

    Hamilton, Marquess of

    Rawlinson, John Frederick Peel

    Campbell, Rt. Hon. J. H. M.

    Harris, Frederick Leverton

    Renton, Leslie

    Carlile, E. Hildred

    Harrison-Broadley, H. B.

    Renwick, George

    Cave, George

    Heaton, John Henniker

    Roberts, S. (Sheffield, Ecclesall)

    Cecil, Evelyn (Aston Manor)

    Hermon-Lodge, Sir Robert

    Ronaldshay, Earl of

    Cecil, Lord R. (Marylebone, E.)

    Hope James Fitzalan (Sheffield)

    Rutherford, W. W. (Liverpool)

    Chamberlain, Rt. Hon. J. A. (Worc'r.)

    Houston, Robert Paterson

    Salter, Arthur Clavell

    Chaplin, Rt. Hon. Henry

    Joynson-Hicks, William

    Scott, Sir S. (Marylebone, W.)

    Clive, Percy Archer

    Kennedy, Vincent Paul

    Sheffield, Sir Berkeley George D.

    Coates, Major E. F. (Lewisham)

    Kerry, Earl of

    Stanier, Beville

    Cochrane, Hon. Thomas H. A. E.

    Keswick, William

    Starkey, John R.

    Craig, Captain James (Down, E.)

    Kimber, Sir Henry

    Staveley-Hill Henry(Staffordshire)

    Craik Sir Henry

    King, Sir Henry Seymour (Hull)

    Talbot Lord E. (Chichester)

    Dalrymple, Viscount

    Lane-Fox, G. R.

    Talbot. Rt. Hell. J. G. (Oxford Univ.)

    Doughty, Sir George

    Lardner, Jaynes Carrige Rushe

    Tuke, Sir John Batty

    Douglas, Rt. Hon. A. Akers-

    Law, Andrew Bonar (Dulwich)

    Valentia, Viscount

    Du Cros, Arthur

    Lockwood, Rt. Hon. Lt.-Col. A. R.

    Walker, Col. W. H. (Lancashire)

    Duffy, William J.

    Long, Col. Charles W. (Evesham)

    Walrond, Hon. Lionel

    Duncan, Robert (Lanark, Govan)

    Lonsdale, John Brownlee

    Wcrde, Col. C. E. (Kent, Mid)

    Faber, George Denison (York)

    Lowe, Sir Francis William

    Williams, Col. R. (Dorset, W.)

    Faber, Capt. W. V. (Hants, W.)

    MacCaw, Wm. J. McGeagh

    Fell, Arthur

    M'Arthur, Charles

    TELLERS FOR THE NOES.—Sir

    Fetherstonhaugh, Godfrey

    M'Calmont, Colonel James

    A. Acland-Hood and Lord Balcarres.

    Question put accordingly, The Committee divided: Ayes, 299; Noes, 96.

    Division No. 108.]

    AYES.

    [10. p.m.

    Abraham, W. (Cork, N.E.)

    Barry, Redmond J. (Tyrone, N.)

    Brunner, Rt. Hon. Sir J. T. (Cheshire)

    Abraham, William (Rhondda)

    Beale, W. P.

    Bryce, J. Annan

    Acland, Francis Dyke

    Beauchamp, E.

    Buckmaster, Stanley O.

    Adkins, W. Ryland D.

    Beaumont, Hon. Hubert

    Burns, Rt. Hon. John

    Agnew, George William

    Bell, Richard

    Burt, Rt. Hon. Thomas

    Allen, A. Acland (Christchurch)

    Bellairs, Carlyon

    Byles, William Pollard

    Armstrong, W. C. Heaton

    Bennett, E. N.

    Cameron, Robert

    Astbury, John Meir

    Bethell, T. R. (Essex, Malden)

    Carr-Gomm, H. W.

    Atherley-Jones, L.

    Birrell, Rt. Hon. Augustine

    Causton, Rt. Hon. Richard Knight

    Balfour, Robert (Lanark)

    Black, Arthur W.

    Cawley, Sir Frederick

    Baring, Godfrey (Isle of Wight)

    Boland, John

    Channing, Sir Francis Allston

    Barker, Sir John

    Boulton, A. C. F.

    Cheetham, John Frederick

    Barlow, Sir John E. (Somerset)

    Bramsdon, T. A.

    Cherry, Rt. Hon. R. R.

    Barlow, Percy (Bedford)

    Brigg, John

    Cleland, J. W.

    Barnard, E. B.

    Brocklehurst, W. B.

    Clough, William

    Barnes, G. N.

    Brodie, H. C.

    Clynes, J. R.

    Barry, E. (Cork, S.)

    Brooke, Stopford

    Cobbold, Felix Thornley

    132

    133

    Collins, Stephen (Lambeth)

    Jowett, F. W.

    Roberts, Sir J. H. (Denbighs)

    Collins, Sir Wm. J. (St. Pancras, W.)

    Joyce, Michael

    Robertson, Sir G. Scott (Bradford)

    Compton-Rickett, Sir J.

    Kavanagh, Walter M.

    Robertson, J. M. (Tyneside)

    Corbett, C. H. (Sussex, E. Grinstead)

    Kearley, Sir Hudson E.

    Robinson, S.

    Cornwall, Sir Edwin A.

    Kennedy, Vincent Paul

    Robson, Sir William Snowdon

    Cotton, Sir H J. S.

    Laidlaw, Robert

    Roch, Walter F. (Pembroke)

    Craig, Herbert J. (Tynemouth)

    Lamb, Ernest H. (Rochester)

    Roche, John (Galway, East)

    Crean, Eugene

    Lemont, Norman

    Roe, Sir Thomas

    Crooks, William

    Lardner, James Carrige Rushe

    Rose, Charles Day

    Crosfield, A. H.

    Law, Hugh A. (Donegal, W.)

    Rowlands, J.

    Crossley, William J.

    Layland-Barrett, Sir Francis

    Russell, Rt. Hon. T. W.

    Curran, Peter Francis

    Lehmann, R. C.

    Samuel, Rt Hon. H. L. (Cleveland)

    Davies, David (Montgomery Co.)

    Lever, A. Levy (Essex, Harwich)

    Samuel, S. M. (Whitechapel)

    Davies, Ellis William (Eifion)

    Lever, W. H. (Cheshire, Wirral)

    Schwann, C. Duncan (Hyde)

    Davies, Timothy (Fulham)

    Levy, Sir Maurice

    Schwann, Sir C. E. (Manchester)

    Delany, William

    Lewis, John Herbert

    Scott, A. N. (Ashton-under-Lyne)

    Dewar, Sir J. A. (Inverness-sh.)

    Lloyd-George, Rt. Hon. David

    Sears, J. E.

    Dickinson, W. H. (St. Pancras, N.)

    Lupton, Arnold

    Seaverns, J. H.

    Dilke, Rt. Hon. Sir Charles

    Luttrell, Hugh Fownes

    Seddon, J.

    Dillon, John

    Macdonald, J. R. (Leicester)

    Seely, Colonel

    Dobson, Thomas W.

    Macdonald, J. M. (Falkirk Burghs)

    Sheehan, Daniel Daniel

    Donelan, Captain A.

    MacNeill, John Gordon Swift

    Sherwell, Arthur James

    Duckworth, Sir James

    MacVeagh, Jeremiah (Down, S.)

    Silcock, Thomas Ball

    Duffy, William J.

    MacVeigh, Charles (Donegal, E.)

    Smeaton, Donald Mackenzie

    Duncan, C. (Barrow-in-Furness)

    M'Laren, Sir C. B. (Leicester)

    Smyth, Thomas F. (Leitrim, S.)

    Duncan, J. Hastings (York, Otley)

    M'Laren, H. D. (Stafford, W.)

    Soames, Arthur Wellesley

    Dunne, Major E. Martin (Walsall)

    M'Micking, Major G.

    Soares, Ernest J.

    Ellis, Rt. Hon. John Edward

    Maddisan, Frederick

    Spicer, Sir Albert

    Erskine, David C.

    Mallet, Charles E.

    Stanley, Albert (Staffs, N.W.)

    Essex, R. W.

    Manfield, Harry (Northants)

    Steadman, W. C.

    Esslemont, George Birnie

    Marks, G. Croydon (Launceston)

    Stewart-Smith, D. (Kendal)

    Evans, Sir S. T.

    Marnham, F. J.

    Strachey, Sir Edward

    Everett, R. Lacey

    Massie, J.

    Straus, B. S. (Mile End)

    Falconer, J.

    Meagher, Michael

    Summerbell, T.

    Fenwick, Charles

    Menzies, Walter

    Sutherland, J. E.

    Findlay, Alexander

    Micklem, Nathaniel

    Taylor, John W. (Durham)

    Flynn, James Christopher

    Molteno, Percy Alport

    Tennant, Sir Edward (Salisbury)

    Foster, Rt. Hon. Sir Walter

    Mond, A.

    Tennant, H. J. (Berwickshire)

    Fuller, John Michael F.

    Montagu, Hon. E. S.

    Thomas, Abel (Carmarthen, E.)

    Fullerton, Hugh

    Morgan, G. Hay (Cornwall)

    Thomas, Sir A. (Glamorgan, E.)

    Gibb, James (Harrow)

    Morse, L. L.

    Thomasson, Franklin

    Glendinning, R. G.

    Morton, Alpheus Cleophas

    Thompson, J. W. H. (Somerset, E.)

    Glover, Thomas

    Muldoon, John

    Thorne, G. R. (Wolverhampton)

    Goddard, Sir Daniel Ford

    Murray, Capt. Hon. A. C. (Kincard.)

    Tomkinson, James

    Gooch, George Peabody (Bath)

    Myer, Horatio

    Ure, Rt. Hon. Alexander

    Greenwood. G (Peterborough)

    Nicholls, George

    Verney, F. W.

    Greenwood, Hamar (York)

    Nicholson, Charles N. (Doncaster)

    Vivian, Henry

    Griffith, Ellis J.

    Nolan, Joseph

    Walsh, Stephen

    Gulland, John W.

    Norman, Sir Henry

    Walters, John Tudor

    Gwynn, Stephen Lucius

    Norton. Capt. Cecil William

    Walton, Joseph

    Harcourt, Rt. Hon. L. (Rossendale)

    Nussey, Thomas Willans

    Ward. John (Stoke-upon-Trent)

    Harcourt, Robert V. (Montrose)

    Nuttall, Harry

    Ward, W. Dudley (Southampton)

    Hart-Davies, T.

    O'Connor, John (Kildare, N.)

    Wardle, George J.

    Harvey, A. G. C. (Rochdale)

    O'Deherty, Philip

    Waring, Walter

    Harvey, W. E. (Derbyshire, N.E.)

    O'Donnell, C. J. (Walworth)

    Warner, Thomas Courtenay T.

    Harwood, George

    O'Grady, J.

    Wason, Rt. Hon. E. (Clackmannan)

    Haslam, James (Derbyshire)

    O'Kelly, James (Roscommon, N.)

    Wason, John Cathcart (Orkney)

    Haworth, Arthur A.

    O'Shaughnessy, P. J.

    Waterlow, D. S.

    Hayden, John Patrick

    Parker, James (Halifax)

    Watt, Henry A.

    Healy, Maurice (Cork)

    Pearce, Robert (Staffs, Leek)

    White, Sir George (Norfolk)

    Hedges, A. Paget

    Pearce, William (Limehouse)

    White, J. Dundas (Dumbartonshire)

    Helme, Norval Watson

    Pearson, W. H. M. (Suffolk, Eye)

    White, Sir Luke (York, E.R.)

    Hemmerde, Edward George

    Philipps, Col. Ivor (Southampton)

    White, Patrick (Meath, North)

    Henderson, J. McD. (Aberdeen, W.)

    Philipps, Owen C. (Pembroke)

    Whitehead, Rowland

    Henry, Charles S.

    Pickersgill, Edward Hart

    Whitley, John Henry (Halifax)

    Herbert, T. Arnold (Wycombe)

    Pixie, Duncan V.

    Whittaker, Rt. Hon. Sir Thomas P.

    Higham, John Sharp

    Pointer, J.

    Wiles, Thomas

    Hobart, Sir Robert

    Pollard, Dr. G. H.

    Wilkie, Alexander

    Hobhouse, Charles E. H.

    Ponsonby, Arthur A. W. H.

    Williams, J. (Glamorgan)

    Hogan, Michael

    Price, C. E. (Edinburgh, Central)

    Williams, A. Osmond (Merioneth)

    Holland, Sir William Henry

    Priestley, Arthur (Grantham)

    Williamson, A.

    Holt, Richard Doming

    Radford, G. H.

    Wilson, Hon. G. G. (Hull, W.)

    Hooper, A. G.

    Rainy, A. Rolland

    Wilson, J. H. (Middlesbrough)

    Hope, W. H. B. (Somerset, N.)

    Raphael, Herbert H.

    Wilson, J. W. (Worcestershire, N.)

    Horniman, Emslie John

    Rea, Walter Russell (Scarborough)

    Wilson, W. T. (Westhoughton)

    Horridge, Thomas Gardner

    Redmond, William (Clare)

    Winfrey, R.

    Hutton, Alfred Eddison

    Rees, J. D.

    Wood, T. M'Kinnon

    Hyde, Clarendon G.

    Randall, Athelstan

    Young, Samuel

    Illingworth, Percy H.

    Richards, Thomas (W. Monmouth)

    Yoxall, James Henry

    Isaacs, Rufus Daniel

    Richards, T. F. (Wolverhampton, W.)

    Jackson, R. S.

    Richardson, A.

    TELLERS FOR THE AYES.—Mr.

    Jardine, Sir J.

    Ridsdale, E. A.

    Joseph Pease and the Master of

    Jenkins, J.

    Roberts, Charles H. (Lincoln)

    Elibank.

    Johnson, W. (Nuneaton)

    Roberts, G. H. (Norwich)

    134

    135

    NOES.

    Arkwright, John Stanhope

    Foster, P. S.

    Nicholson, Wm. G. (Petersfield)

    Ashley, W. W.

    Gardner, Ernest

    Oddy, John James

    Balcarres, Lord

    Gibbs, G. A. (Bristol, West)

    Pease, Herbert Pike (Darlington)

    Baldwin, Stanley

    Gordon, J.

    Peel, Hon. W. R. W.

    Banbury, Sir Frederick George

    Goulding, Edward Alfred

    Percy, Earl

    Banner, John S. Harmood-

    Guinness, Hon. R. (Haggerston)

    Pretyman, E. G.

    Barrie, H. T (Londonderry, N.)

    Guinness, W. E. (Bury St. Edmunds)

    Randles, Sir John Scurrah

    Bignold, Sir Arthur

    Haddock, George B.

    Rawlinson, John Frederick Peel

    Bull, Sir William James

    Hamilton, Marquess of

    Renton, Leslie

    Burdett-Coutts, W.

    Harris, Frederick Leverton

    Renwick, George

    Butcher, Samuel Henry

    Harrison-Broadley, H. B.

    Roberts, S. (Sheffield, Ecclesall)

    Campbell, Rt. Hon. J H. M.

    Hermon-Hodge, Sir Robert

    Ronaldshay, Earl of

    Carlile, E. Hildred

    Hope, James Fitzalan (Sheffield)

    Rutherford, W. W. (Liverpool)

    Cave, George

    Houston, Robert Paterson

    Salter, Arthur Clavell

    Cecil, Evelyn (Aston Manor)

    Hunt, Rowland

    Scott, Sir S. (Marylebone, W.)

    Cecil,

    Joynson-Hicks, William

    Sheffield, Sir Berkeley George D.

    Chamberlain, Rt. Hon. J. A. (Worc'r.)

    Kerry, Earl of

    Stanier, Beville

    Chaplin, Rt. Hon. Henry

    Keswick, William

    Starkey, John R.

    Clive, Percy Archer

    Kimber, Sir Henry

    Staveley-Hill, Henry (Staffordshire)

    Coates, Major E. F. (Lewisham)

    King, Sir Henry Seymour (Hull)

    Talbot, Lord E. (Chichester)

    Cochrane, Hon. Thomas H. A. E.

    Lambton, Hon. Frederick Wm.

    Talbot, Rt. Hon J. G. (Oxford univ.)

    Craig, Captain James (Down, E.)

    Lane-Fox, G. R.

    Thornton, Percy M.

    Craik, Sir Henry

    Law, Andrew Bonar (Dulwich)

    Dalrymple, Viscount

    Lockwood, Rt. Hon. Lt.-Col. A. R.

    Tuke, Sir John Batty

    Doughty, Sir George

    Long, Col. Charles W. (Evesham)

    Walker, Col. W. H. (Lancashire)

    Douglas, Rt. Hon. A. Akers-

    Lonsdale, John Brownlee

    Walrond, Hon. Lionel

    Du Cros, Arthur

    Lowe, Sir Francis William

    Warde, Col. C. E. (Kent, Mid)

    Duncan, Robert (Lanark, Govan)

    MacCaw, Wm. J. MacGeagh

    Williams, Col. R. (Dorset, W.)

    Faber, George Denison (York)

    M'Arthur, Charles

    Younger, George

    Faber, Capt. W. V. (Hants, W.)

    M'Calmont, Colonel James

    Fell, Arthur

    Magnus, Sir Philip

    TELLERS FOR THE NOES.—Sir

    Fetherstoohaugh, Godfrey

    Markey H. H. (Kent)

    A. Acland-Hood and Viscount

    Fletcher, J. S.

    Morpeth, Viscount

    Valentia.

    Forster Henry William

    Morrison-Bell, Captain

    Motion made and Question proposed: "That no exemption, abatement, or relief under the Income Tax Acts shall be given to any person who is not ordinarily resident in the United Kingdom."—[Mr. Lloyd-George.]
    Mr. LEVERTON HARRIS: I would like to ask the Chancellor of the Exchequer one question by way of explanation. This Resolution seems to me to be an extraordinarily involved one. I think before we begin this discussion it will be just as well if we have it clearly defined as to what is to be meant by "Not ordinarily resident in the United Kingdom." What is the nature of "ordinarily resident?" Is it a person who lives three months in this country and nine months abroad, or is it one who lives nine mor Luis country and three months abroad? That is really a very important point, because there are many British subjects who enjoy small in, comes derivable from British securities who happen to be resident either in our Colonies or in the great dependencies of India or Canada. Are these people to be excluded from the benefits which they would have enjoyed if they had happened to live in this country?
    Then, again, reading this Resolution in connection with the last Resolution, this Resolution says that, "no exemption, abatement, or relief under the Income Tax Acts shall be given to any person who is
    136
    not ordinarily resident in the United Kingdom." But the last Resolution imposes an extra super-tax of 6d. in the £ in respect of incomes which exceed £5,000 on every £ of the amount by which the income exceeds £3,000. Are we to understand that a foreigner resident abroad is not to be chargeable on his income which he receives in this country if that income happens to exceed £5,000? The Chancellor of the Exchequer, in a reply which he gave this afternoon in answer to a question by me, said there would be no charge against a foreigner. The foreigner would not have to pay income tax even if his income, derivable from securities in this country, exceeded £5,000. That surely is in contradiction to this particular Resolution which is before us at the present time, and which states that no exemption, abatement or relief shall be given. It would be very useful before we enter into a discussion of this particular Resolution if the Chancellor of the Exchequer would clear away some of these obscurities which at present are: connected with these words.
    Mr. LLOYD-GEORGE: I think the hon. Member might have taken the trouble to realise what this Resolution is. It has nothing to do with super-tax. It purely relates to the ordinary abatement under the income tax, and it carries out the recommendations of a Committee appointed by the late Government that

    137
    foreigners should not be entitled to claim the ordinary abatements or exemptions which are given to residents in this country. The position is this: The foreigner, even if he is a millionaire, so long as his income in this country does not exceed, say, £160 per year, would claim exemption. Under £700 he would claim the usual abatement. I am simply proposing an Amendment which I should have thought would have been accepted without a word by hon. Members opposite. [An HON. MEMBER: "Why?"] I can give the reason, but really I would appeal to the Committee to allow us to get this Resolution without much discussion. [Cries of "Oh, oh."] I can give a good reason for that request. We have had a very long discussion upon the income tax generally. It was not really confined to the super-tax—it ranged over the whole question of the income tax. We had a very able speech from the Member for Liverpool, which covered the whole length of the income-tax proposals and its anomalies, and I trust, therefore, the House will allow us to get this Resolution without much Debate, seeing it is accepted in principle by all parties.
    Mr. AUSTEN CHAMBERLAIN: I will not enter into an examination of the discussion which has just concluded. I only venture to observe in that connection that although it is quite true that the anomalies and injustices inherent in the income tax have occupied a portion of that Debate, and it is only reasonable and fair, having regard to the fact that it is to increase the effect of the anomalies, and that they will become more unendurable, in the main that discussion, or the major portion of it, did turn upon the points in which the Chancellor of the Exchequer is making changes, namely, the addition of 2d. over a lar-.2,-ci portion of the tax, and the addition of 6d. over another portion of the tax. I will not go back upon that. I only think it fair to myself and to my Friends that we inst mention it. Now I come to the Resolution before the House. We have not had a word of discussion upon this Resolution. It was mentioned, and no more than mentioned. by the Chancellor of the Exchequer himself in introducing his Budget. I think he will find that in a single sentence, not a paragraph, but in a single sentence, he passed it by, and the House, or the Committee, I believe, up to this time have not in any quarter expressed any opinion whatever upon the subject. It is a much bigger matter, and a much more important
    138
    matter, than the Chancellor of the Exchequer himself appears to observe. He says it arises from the recommendation of the Committee appointed by the late Government—I think actually appointed by myself—and he then described that recommendation, which I have not got in my mind—and if I am inaccurate in my account of it, I must say I take that inaccuracy from him—but I have no doubt he is accurate, and he says that the recommendation was that this exemption should not be allowed to foreigners who could not claim to be British citizens resident in this country.
    Mr. LLOYD-GEORGE: It was made in 1905.
    Mr. AUSTEN CHAMBERLAIN: I was not sure whether it was my Committee or not, but it does not matter. That is the single sentence with which he dealt with this matter in his Budget speech. That was the view he gave to the House of Commons that there were foreigners resident abroad who derived a small income from this country, but who had large incomes on the whole, who derived the benefit of this exemption and abatement, because their incomes in this country were small, but who would not have been entitled to this exemption and abatement if they were British subjects, because their total incomes were large. I have great sympathy with the Chancellor of the Exchequer when he says, "I do not want to give the foreigner who cannot plead poverty or small means a privilege which is not granted to any British citizen," but that is a totally different thing to that which is now proposed. The Resolution is not confined to foreigners, but it applies also to every British citizen who has not ordinary residence in the United Kingdom. I do not know what the definition of "ordinary residence" may be, and probably the Solicitor-General will enlighten us upon that point. I presume that it is governed by decisions which have already been given in the Law Courts, and which he will no doubt be quite ready to explain to us. This Resolution proposes to withdraw the relief given by these exemptions and abatements from every citizen, whether British or foreign, who has not an habitual residence in this country. If the Chancellor of the Exchequer will transform his proposal from what it appears on the Paper to what he describes it in his speech I will raise no further objection to it, and I will agree to pass the Resolution at once as far as I am concerned.

    139
    I object to the Resolution as it stands upon the Paper, in the first place, because it applies not merely to the rich, but also to the poor; and, in the second place, because it makes an unfortunate discrimination between British subjects resident in the United Kingdom and elsewhere. Who are the British subjects resident elsewhere? Let me take for example those who are resident on the Continent. I am not speaking of the rich who, by reason of their total income, would not be entitled to exemption, but of those who would be entitled to this exemption if they were resident in this country. Some of them are serving His Majesty's Government abroad. I think it is very hard to tax them higher because their public duties force them to live out of the United Kingdom. Others live abroad not discharging any public duty, but in a semi-voluntary exile. It is not true to say that it is wholly involuntary, neither is it wholly voluntary, but they go abroad because, being very poor people, they can economise by so doing. Take the case of a widow who thinks the expense of the liberal education she wishes to give to her children is too great here, and therefore she goes to live in some Continental town where she finds that she can get the kind of education she requires more cheaply and where she can live at a less rate of expense. Is it not very hard to take such people as those, who are practically exiles because of their poverty, and tax them additionally because they are exiles? I have had such letters from ladies and gentlemen as well who live abroad, to their great regret, on account of ill-health because they cannot stand the climate of this country. Some of them are men who can afford to pay the tax who do not get these exemptions and abatements now, whose income is probably taxed in England. There are people who go away by reason of ill-health. They leave their business when other people are in the prime of their activity. They go away on the advice of their doctors to places where the conditions of climate prevent them from an early sentence of death. Is it not very hard that these voluntary exiles should not be entitled to relief because from ill-health they are driven out of this country?
    There is one other class to whom I wish to call attention. I received the other day from an agent who collected money for a large number of people resident in dominions over the sea. I have not his letter with me, but I was astonished at the
    140
    figures which he mentioned. I think it is regrettable that any proposal should be made likely to create an additional barrier between those abroad and those at home, and which creates distinction between different parts of a united Empire. I do not desire to criticise, or Oven to appear to criticise, the financial policies of the self-governing dominions. Their object, I take it, is to attract capital rather than to repel it. We propose to tax people because they are resident in the Colonies, and I venture to deprecate the proposals with reference to them. I think we have not adopted such a policy hitherto. I do not think that we have hitherto taxed residents in other dominions more than if they were residents here, and this is a very unfortunate precedent. I am speaking on behalf of those who have gone out from the mother country into new lands. The sons of such men remain in those new countries to carry on their fathers' businesses or to develop their fathers' farms. They are helping to build up the King's dominions. When the fathers die they are perhaps able to leave a little money, and the sons may be able to carry on their fathers' businesses, and accordingly they settle in the Colonies. Those people are to be refused the abatement to which they would be entitled if they were in this country. Is that wise or generous I do not think it is either the one or the other, and I earnestly hope that the Chancellor of the Exchequer will consent to remodel these proposa1s. He should confine his refusal of abatement, if not to the case of-foreigners, who have no right to abatement, at any rate to such people whether foreigners or British subjects, who are in receipt of incomes which do not entitle. them to abatement.
    Mr. LLOYD-GEORGE: I will make one or two observations in reply to the very important speech delivered by the right hon. Gentleman. I have simply to make one comment here—one which I have made on other Resolutions: that, of course, it is. the Bill the House must look to. Here you have simply two lines which authorise me to introduce the Bill. [A laugh.] Well, the hon. Member laughs. I do not know how soon he will be in this position, but when he is he will realise that is all that can be done. I may at once say that the exceptions which are claimed by the right hon. Gentleman are exceptions which have to be introduced in a Bill. Nobody would dream of putting them into a Resolution. It is not intended that these exemptions or

    141
    abatements shall be withdrawn from those who are serving abroad. I have made that perfectly clear in answers which I have given to questions in this House. We do not propose to withdraw exemptions in these cases, but that could not be put in a Resolution; it will be provided for in the Bill. There are two or three suggestions made by the right hon. Gentleman which I am quite willing to consider, but I would rather like to carefully consider them in view of the difficulty which may be experienced if you make exceptions in these circumstances. The right hon. Gentleman says if you merely withdraw the exemption from the foreigner who has property the income from which exceeds £700 a year you must withdraw from the poor foreigner as well. That is true, and it is the recommendation of the right hon. Gentleman's own Committee.
    Mr. AUSTEN CHAMBERLAIN: I am not bound by that.
    Mr. LLOYD-GEORGE: The matter was investigated very closely by the Committee of my right hon. Friend, and it came to the conclusion it was practically impossible to make this exemption. Suppose you have a foreigner in China, or Spain, or Italy, or any foreign country who claims exemption on the ground that his total income does not exceed £700. How are you to examine him? If such a claim is made in this country it can be examined into by the Revenue officials, who can inquire into all the circumstances, but you cannot do that in the case of a foreigner in Italy, Germany, Russia, or the Far East. It is practically impossible; these investigations are utterly impossible. You could not do it either in the case of claims from the Colonies. There is no reason why exemptions should not be extended to people who contribute to our revenue outside, and the right hon. Gentleman's own Committee states that relief can only be given to persons in receipt of small incomes where such persons contribute to the public revenue by means of indirect taxation in fair proportion to their taxable capacity. But you are not to discriminate in favour of the foreigner. So long as a person is resident in the United Kingdom you grant exemption to his income under £160, because he contributes by other means—tea, whisky, sugar, and tobacco. [An HON. MEMBER "What about the teetotalers? "] Well, I never heard of a teetotaler who neither smokes nor takes sugar nor drinks tea. [An HON. MEMBER: "What
    142
    about the Chief Secretary for Ireland? "] I think that right hon. Gentleman indulges in tobacco at any rate. I really do not think he would claim exemption in regard to his income tax. Those are really the reasons. It is not a question of giving preference to foreigners. It is a question of putting them on the same footing as the British subject. The British subject does not pay if his income is only £160, because it is generally regarded that his contributions to indirect taxation is quite as much as you could expect from him unless his income is over £160. But if you grant art extension to gentlemen outside who derive advantage from the United Kingdom they contribute nothing, and I trust the right hon. Gentleman will not raise the point of prejudice against the Colonial. That is not the point at all. I simply take the argument used by his own Committee, and put it purely on the ground that this was the only contribution they made to the taxation of the country. The right hon. Gentleman knows perfectly well that as a matter of fact it is very rarely that the Colonial or foreigner ever thinks of claiming abatement, and it has been started within the last few years by agents, who have made a business of it, and who make a very considerable percentage out of it. In one case they wrote to a British subject who went out to a Colony, and who never dreamed of making this claim for abatement, and they suggested that he should make a claim, and said that if he would leave the matter in their hands they would take care that he got 50 per cent. of abatement. It is purely a matter of business, and before these gentlemen started it was never thought of. Another point which I think it is well worth our while to consider is the case of a British subject who has been sent abroad on the ground of ill health. I am not so sure that he could not claim abatement, as he is simply sent abroad temporarily for the recovery of his health. I am very doubtful whether that would be a case where he could claim abatement, as he is not domiciled abroad in the ordinary sense of the term. I am quite ready to consider that point and I think there is a case for consideration, and that the contention deserves support in fair play and in humanity. With regard to the others, if we begin to make distinctions it will be quite impossible to examine claims which come from beyond the seas, and it is for that reason alone that I think it would be better to follow the recommendation of the Commit-

    143
    tee appointed by the right hon. Gentleman himself, and to lay down this general rule, simply making exceptions in favour of those who are serving the Crown abroad.
    Mr. WILLIAM PEEL: I do not think the right hon. Gentleman has answered the points which have been put to him by my hon. Friend on my right, because throughout the statement that he has just been making now he has been telling us that he does not want to exempt the foreigner. I have not the slightest desire to exempt the foreigner from any sort of taxation. On the contrary, I am very glad that they should bear taxation which apparently they ought to have borne before. But the point my hon. Friend put was this. He said, after all, what is residence abroad? Is it three months, six months, or ten months in the year? How long a period of residence in a foreign country o puts that man in a position of being able to claim exemptions and abatements? I do not think he has answered that question at all.
    Mr. LLOYD-GEORGE: I thought I had answered it. I think it is purely a question in these matters of domicile of whether a man has really taken his residence with a view to remaining abroad or is going temporarily.
    Mr. PEEL: Then may I put this further question? Does the right hon. Gentleman mean permanently going there, or does he mean that he goes there for two or three years for the purpose of educating his children or improving his health, because there is a very great difference between a situation of that kind and that of a man who is going abroad with the intention of living there for the whole of his life? There is another point on which I wish for further information. The right hon. Gentleman said he wishes to except those who are serving abroad. Here again he introduced a phrase of the greatest possible ambiguity.
    Mr. LLOYD-GEORGE: Serving the Crown.
    Mr. PEEL: That makes a very great difference. There are several cases which struck me first of all as being very hard. There are people who are not in the service of the Crown, but who are temporarily engaged in foreign countries. There are people who, without being in the service of the Crown, take service with
    144
    some foreign country. There are several people whom I know personally who take inspectorships with the Turkish Army and other armies. Are they to be considered persons resident abroad to whom none of these exceptions and abatements are to apply? Then, again, take companies. Take the number of people who have to reside abroad, not from any desire of their own, but simply because they are sent there as the representatives of firms who have branches there. In consequence of the systems prevailing in other countries a large number of great companies in this country set up branches of manufacturing businesses abroad. They are for obvious reasons sent there as managers and in other capacities, and they are persons who are obliged to reside there. They get salaries on a fixed basis. Are these men who in the course of business are sent out to foreign countries to be put on a penal level with the foreigner? I cannot help thinking if I may turn for a moment to the right hon. Gentleman's Budget speech that it is really foreigners and not these persons he is thinking of, because I see that at Page 509 of that speech he said: —
    "The income of a person resident abroad only cornea within the scope of the income tax in so far as it is derived from sources within the United Kingdom. Whatever may be his total actual o income, his total income from all sources within the meaning of the Income Tax Acts comprises only such receipts as accrue to him from sources in this country. A foreign millionaire, who draws anything between £160 and £400 from English investments, can obtain £8 from the Commissioners of Inland Revenue."
    I cannot help thinking that when he drafted the Resolution he was thinking of the foreign millionaire, and not necessarily of the millionaire, but of others of smaller means. But surely in this case he has not made provision for the numerous people, many of whom in following their business have to go and serve in foreign countries and lose the advantage of the exemption which they otherwise would have. There is a matter in regard to which I did not quite follow the right hon. Gentleman. I think he said that foreigners were not to be liable to the super-tax whatever the amount of money they might, have invested in this country.
    Mr. LLOYD-GEORGE: What I said was that the Resolution had absolutely nothing to do with the super-tax.
    Mr. PEEL: I think it was in answer, to a question at question time the right hon. Gentleman said the super-tax was not to apply to the incomes of foreigners from investments in this country.
    Mr. LLOYD-GEORGE: It has nothing to do with that.
    Mr. PEEL: There are a great number of persons, in addition to the class my right hon. Friend below me mentioned, who have to go abroad for various purposes. There are those unfortunates who do not get on well with their families, and who have to go to Boulogne and other places in the north of France. I do not wish to express any unnecessary sympathy with those persons who go abroad under these conditions, but I think it is rather hard to hit a man who is down already, and because he is unfortunately obliged to go to these watering places. If he has the intention of returning, whatever his friends may wish, I think it is rather hard that he should be penalised twice. But there is another class of men, I would like to refer to. I think those who have travelled in Canada know the class of men called "remittance men." People of this kind who draw from England a rather precarious income, and who are also sent to Canada because they do not get on very well in this country, are men I deeply regret should go to Canada at all, for in many cases they have brought on the British name an evil reputation, because Canadians are apt to form their idea of Englishmen from these remittance men, who drag out a miserable, and often a drunken, existence at the places where they reside. Are these men to be doubly penalised because they are in this unfortunate condition? There are a great many classes of men quite different from the millionaire foreigner whom we could plead. There is the case where a husband has to go abroad, perhaps because of health, and leaves his family at home, and perhaps earns his living by writing for newspapers in England. Here, again, you charge full tax, without any exemption or abatement, simply because the man's business or his health compels him to live abroad, and because for the sake of the family at home he tries to work on under uncomfortable and sometimes, perhaps, insanitary conditions abroad. Then there is the case of the British resident abroad who draws more than £5,000 a year from this country. In that case he would be liable to this super-tax, and he would be obliged to pay on that, of course.
    The SOLICITOR - GENERAL (Sir Samuel Evans): He certainly would not have the abatement.
    Mr. PEEL: He would not have the abatement, and in this case he does not enjoy those advantages of security which come from living in this country under a Liberal or any other Government. Therefore, I ask the Chancellor of the Exchequer to try to give us some explanation or definition of how he is going to exempt these unfortunate people; because he tells us all these arrangements will be explained in the Bill, and I feel as if this Bill was going to be like the Humbert safe, and that when it is opened we shall find nothing in it. I cannot think it possible that all these inquiries, all these explanations, and all these questions will be fully dealt with in this Bill. Therefore, if only to relieve the Chancellor of the Exchequer from the trouble of explaining all the details of his Bill, I hope that he will make clear to us now how he will give these exemptions to British subjects resident abroad, while at the same time he will lay the tax on the foreigner, which I am quite certain all on this side are anxious to see laid on without any exemption or abatement.
    Mr. D. M. SMEATON: I wish to say a few words in reference to Indian civil and military officers. I would like to point out that the funds from which they draw their income and live are for the most part funds saved from their salaries abroad in India. They are sent home to be invested in the best securities available in order, as a rule, to support their wives and families who are left at home. It is proposed by the Chancellor of the Exchequer to tax the income of these men which income has already paid income tax in India. The funds from which their income is derived are the savings from their income in India upon which income tax has already been paid, yet the Chancellor now proceeds to tax these funds. The reasons which the Chancellor of the Exchequer gave were four in number. One as that as a rule these abatements are realised by agencies which swallow 50 per cent. of the rebate. I am told, in the cases I am specifying, that the abatements are not those to which the right hon. Gentleman refers; they are not those in which 50 or 60 per cent. of the abatement is swallowed up by the agents. The cases to which I refer are dealt with by agents, who take 3 or 4 per cent. simply for a clerk who keeps the account and for out-of-pocket expenses. In regard to Indian servants, civil and military, the right hon. Gentleman does not meet the case at all.

    147
    Reference was made by the right hon. Gentleman to millionaires in India. There are not many millionaires in India, and there is very little chance of becoming a millionaire there. The Chancellor of the Exchequer then spoke of the amount being comparatively small. But let me tell him that the hardships would be exceedingly great. As a rule these officers are not highly paid men. I think the words of the Chancellor of the Exchequer were these:—
    "I am satisfied that the abolition of this concession will give rise to no appreciable hardship."
    I maintain, and there is good ground for maintaining—I think that I am supported by most men who know the circumstances —that there would be very great hardship indeed in the case of Indian servants, civil and military. Seven or eight pounds to a millionaire or a rich man is nothing, but to a man who has perhaps a small salary in India, and has to keep his family here on the merest pittance that amount possibly means a considerable part of his income. Then there is another blow inflicted by the right hon. Gentleman in the answer he gave me to-day in regard to the relief given by the Act of 1907—the relief which the late Chancellor of the Exchequer gave an earned income. On my own Motion the late Chancellor of the Exchequer inserted in the Bill of 1907 a clause providing that pensions were earned income, and he gave a relief of 3d. in the pound on those pensions as earned income. By the answer which the right hon. Gentleman gave me this morning he intends to deprive these pensioners of the abatement of 3d. in the £. The reason which he holds justifies him in this: Why should the pensioner live abroad at all? Why should he spend his money abroad? I would give him a reason. Very many of these men have suffered over 30 years' exposure in India. They come home under medical advice, and they are compelled, for reasons of health, to live abroad. Does the right hon. Gentleman tell this House that he will fine these men by depriving them of this relief because they are compelled to live abroad? I think, if that is his reason, he will not find very much support in this House, on whatever side it he. I hope the right hon. Gentleman will give favourable consideration to the plea I have put before him, and that in passing the Finance Bill, to which we have been so often referred, he will retain the relief as to the small savings of Indian officers and as to pensions being treated as earned income.
    Mr. BONAR LAW: We shall have many opportunities of discussing the Budget on matters of principle, and with regard to this particular question. When the right hon. Gentleman in his Budget speech mentioned this special question I was in entire sympathy with him. I am bound to say it seems to me that the right hon. Gentleman would be wise to meet what is, I am sure, the general wish of all parties in the House in regard to this Question. He himself has admitted, and I have seen a letter from a lady who is living abroad and educating her family in a Catholic convent; he has admitted in a case of that kind it is a hardship which he would like to meet. What reason is there for not putting in his Resolution that this is to apply to anyone who is not a British subject? There would be no difficulty in doing that.
    Mr. LLOYD-GEORGE: The case I promised favourable consideration of was a case of a totally different character. That is the case of a man ordered abroad for medical reasons, and that covers the case of my hon. friend the Member for Stirlingshire. I do not think the case of a British subject who lived abroad for reasons of economy is ail of the same category, and that he or she should escape taxation altogether.
    Mr. BONAR LAW: I accept what the right hon. Gentleman states that he did not express any sympathy with a case of the kind I have mentioned, but I do think that a majority of the Committee and of the people outside feel that there ought to be some privilege to every British subject. There is another reason. Even on the ground of expediency it seems to be extremely unwise to draw this distinction. We all know that unfortunately some of the best and most energetic of young men for various reasons go abroad to make a living. In the ordinary course, if there were a fair opportunity of investing their savings in this country, the natural tendency would be to send their savings here with a view eventually to coming and living in this country. To make a discrimination at the onset puts them at a disadvantage to people in this country, and will more and more make people inclined to invest their savings somewhere else rather than here. I am going to press this point a little more because of my own Colonial experience. It seems to me it is a good thing if it is possible to encourage investment, large or small, in this country wherever you have the

    149
    opportunity. What the right hon. Gentleman is doing is to discourage it in many small cases, which will give him very little revenue and where the amount of inconvenience or annoyance is out of all proportion to the additional revenue. In addition—I am not sure I am speaking accurately in what I now say—I understand, though, it is true—some of the Colonies make discriminations between those who reside in the Colonies and outside. I believe this is the first time in this country we have made a distinction between one British subject and another. As far as I know this is the first case. [HON MEMBERS: "No, no."] I would like to know of any other. There certainly is no other such case in the ordinary cognisance of ordinary men. I do say from every point of view, both expediency and fairness and of the general well-being of the Empire, it is a very great mistake to draw such a distinction when you are going to get very little out of it.
    Captain CRAIGmoved to insert after the word "person" the words "other than a British subject."
    I think that my Amendment would bring this important question to a vote, and I presume it would be in order afterwards to continue the discussion on the Resolution. The Chancellor of the Exchequer, all through these debates, and particularly on this Resolution, has asked us to wait for the Bill. Would it not be possible to introduce the words I propose, and still frame the' Bill in accordance with the spirit of the Resolution? The right hon. Gentleman lays down the rule that we should give him these Resolutions in order that he may prepare his Bill; and I ask whether he could not frame the Bill on the broad principle of exempting British subjects from this disability. The right hon. Gentleman's arguments have not shaken us on this side of the House in the slightest degree. There are two outstanding principles—first, that a foreign millionaire has a preference over a millionaire in this country, because he will not be charged the super-tax; and, secondly, that according to the Chancellor of the Exchequer, the super-tax does not come under the income Tax Acts. If that is so, this Resolution is a very harsh one, and loyal British subjects residing in one of our colonies, who give sums of money for charitable purposes in this country will be penalised. The right hon. Gentleman further says that people living abroad are not contributing to the local taxation of the
    150
    country. In many cases that is entirely erroneous. Men are sometimes obliged by their work to go abroad. Great engineering firms take out hundreds of British subjects every year to construct works which they have undertaken, and under this Resolution I understand that they would suffer the proposed disability, although their wives and families are being maintained at home and the houses in which they reside are taxed in the ordinary way.
    The thing appears to me to be an absolute absurdity. The intention of the Chancellor of the Exchequer is to tax foreigners investing in this country, and whose income is taxed at its source in this-country before they get it; but why, in his desire to hit the foreigner, he should also. hit every poor British subject who has gone abroad owing to the nature of his. work—sent by a large firm of contractors to erect a dam at Assuan—it is difficult to say. Everyone who accepts work in a British Colony, or in Egypt, as the case may be, will be penalised. Then he says-later on that if he makes any exemptions perhaps he would miss some taxation. What would he miss? Some trifling sum, perhaps. But far better miss the whole sum than cause the men to go abroad in the service of the country—either in the Army, Navy, or in industrial expeditions —to be followed by the Chancellor of the Exchequer, who, by his ill-advised Budget and other legislation, has driven, and is driving, these very people abroad. He will follow them up after creating unemployment here. So that you cannot escape him if you go to work in the Colonies. That is how the thing appears to me. My Amendment is a reasonable one. After all, we have to look at our own kith and kin at home before we look after the-foreigner.
    Another point. I would like to ask the opinion of the Committee upon this: What is the sum of money that is involved, and why is the Chancellor of the Exchequer so very much down on those who recover income tax for the poorer classes of this country? The income tax recovery agencies exist to do justice. The Chancellor of the Exchequer suggests that if it were not for these people he would be able to get a large sum of money that justly belongs to other people, simply because they cannot come home from Canada or Australia to claim £8 a year. That is the foundation on which this Budget is based. The Chancellor of the Exchequer has a very hard task before him to carry it through. He says these income tax

    151
    recovery agencies claim 50 per cent. Why should they not? Some people make money by stockbroking; others as lawyers. They all exact their charges. But it is not necessary to go to one man in preference to the other. I know myself that many and many an income tax recovery agency has charged 50 or 60 per cent. I assure the right hon. Gentleman that it would be better even to pay 40, 50, or 60 per cent, to such an agency to recover what, after all, is one's just due if you are living abroad, and entitled to it, than to come all the way home from one of our distant Colonies in order to get abatement. I ask any hon. Member of this Committee if he can get an abatement in any other way. No one can get his abatement unless he can get some one who is very well acquainted with the intricacies of the Inland Revenue Department to fight for him. It seems to me that the Chancellor of the Exchequer bases his defence of this Resolution on the flimliest possible pretext. I want to raise another point—and it is not the last one, for I think there are a great many points in this Budget that require thrashing out—I ask hon. Members if it is not a fact that on every point raised by right hon. Gentlemen on the front Opposition bench the Chancellor has had to get information, showing that the Chancellor of the Exchequer is not himself prepared to meet reasonable points brought forward without sending for volumes and references in previous Debates. So far as I am personally concerned, I would like to contest every point in the Budget that is made against a British subject with a view to having it remedied. This is undoubtedly an important matter. Some hon. Members opposite may not think so, but the country as a whole will want to know very fully whether in passing this Resolution we are doing our duty to the trade of this country and to the people who live in it. I ask all the members of the Committee who are interested in this country and not in the foreigner to support the Amendment I now move by going into the Division Lobby with me in support of it.
    Mr. LLOYD-GEORGE: I have not much to say about the speech of the hon. and gallant Member, except to remark that it had nothing to do with the Amendment. I think I should explain to him for the first time what the meaning of the Amendment is. He talked of the poor British subject resident abroad. If a millionaire left this
    152
    country—and the hon. and gallant Member is under the impression that there will be quite a regular emigration of millionaires—1 do not know any better argument in favour of my Amendment. What would happen if this great exodus of millionaires took place? If they went abroad taking their capital with them, but leaving a small investment in this country, they could claim exemption of Income Tax as if they were only poor people of £160 per year. That would be giving a preference to a British subject because he lived abroad. That is surely not the object of the hon. and gallant Member. If a Colonial millionaire had his money invested so as not to get more than £150 from investments in this country, if the Amendment of the hon. and gallant Member was carried, that millionaire would be exempt from any contribution to the revenue of this country. He could claim exemption as if he were a clerk earning only £150 a year. That is not the desire of the hon. and gallant Member, but I could only gather his desire from his speech. His speech has nothing to do with his Amendment, and I think it is a misfortune that the time he spent upon his speech was not given to considering his Amendment, because if he had given the ten minutes which he occupied in thinking out his proposal he would have produced a totally different one. This Amendment exempts altogether every British subject, whether Colonial or British, whatever the amount of his fortune and wherever resident. I know that is not what the hon. and gallant Member really wants, but that is what his Amendment amounts to.
    Mr. AUSTEN CHAMBERLAIN: 'think my hon. and learned Friend has succeeded in turning the tables on the Chancellor of the Exchequer.
    Mr. JEREMIAH MacVEAGH: He is not "learned."
    Mr. AUSTEN CHAMBERLAIN: I beg my hon. and gallant Friend's pardon. The Chancellor of the Exchequer has complained of this Amendment, because it does not carry out my hon. and gallant Friend's view. Perhaps I may be allowed to say that the resolutions put forward by the Chancellor of the Exchequer have the vaguest possible reference to what he claims for them. What is the next objection raised to this Amendment? It is that it will give relief to some people who are under no circumstances entitled to it, and whom my hon. and gallant Friend does not wish to relieve. What is our position with

    153
    regard to the Resolution before us? It is that it will tax a great many people who ought not to be taxed, and whom the right hon. Gentleman has no desire to tax. And why does the right hon. Gentleman tax them? Not because he thinks they ought to be taxed, he does not refuse them relief because he does not think they ought to have it, but because the administrative difficulties of ascertaining whether they are entitled to relief or not are insuperable. If that be the last word on the subject, if you must choose between making some people get relief who ought not to have it, or depriving a great many of relief who should have it, if the choice be between doing some injustice to the revenue and doing a great deal of injustice to poor individuals, I think it is better that the revenue should suffer what is a mere trifle than that the poor individual should suffer what is a very heavy injustice. Under these circumstances I doubt whether the right hon. Gentleman was wise to meddle with this question.
    The right hon. Gentleman defends himself by saying that this is the recommendation of what he calls my Committee. I appointed a Committee, with the late Lord Ritchie as chairman, upon which there sat the Postmaster-General and various other distinguished gentlemen from outside the House, as well as from inside, to consider various anomalies in the income tax, with a view to finding a remedy to these grievances. I appointed a Committee which no man can say was party or of a partial character, and they discharged their duties as they were meant to do—as thoroughly independent, non-partisan, and impartial persons. Under these circumstances the right hon. Gentleman should not talk about this Committee as if it were my child, guided and directed by me, and as if I ought in honour to accept every recommendation that Committee thought right to make. I was much disappointed that they did not make some recommendations which I thought were urgently required to relieve injustice under the Act. Had I remained in office, there were certain recommendations made by that Committee which I should have given careful attention to. I was not bound to accept their recommendations then, and I am not bound to accept them now, and if I am asked my candid opinion I think they were wrong. I think the right hon. Gentleman is landing himself in difficulties by the course he is pursuing, and be had far better drop the whole thing and leave us where we were before. I am in favour of
    154
    giving relief to very poor people, and I shall support my hon. and gallant Friend in his Amendment, which will give effect to the object.
    Lord ROBERT CECIL: The Chancellor of the Exchequer seems to me to have receded from everything that he has said in these discussions. He is dealing with the Amendment, and it appears to me from what he says that if any British subject should be entitled to exemption, then it will be left open in the Bill to say whether he is entitled to exemption or not. I cannot think that the Amendment meets the principal blot in the Resolution—namely, the words "not ordinarily resident." I should prefer the word "domiciled." Let me give the Chancellor of the Exchequer an illustration: The Chancellor of the Exchequer says, and I quite agree with him, that a British subject resident abroad and in the service of the Crown, ought to be entitled to exemption. Is he quite sure if he passes the Bill in its present form that he will be able to insert such exemptions in the Bill? If a person is ordinarily resident you cannot give him exemption. What is the effect of the Resolution? No exemption shall be granted to any person who is not ordinarily resident.
    Mr. LLOYD-GEORGE: The rule is that you cannot include any one who is not in the four corners of the Resolution
    Lord ROBERT CECIL: The right hon. Gentleman is a greater authority on this subject than I am; but I should think that you cannot insert in the Bill anything which is inconsistent with the Resolution. It is in the highest degree unbusinesslike that no person who is not ordinarily resident should be exempted. Then a Bill may be brought in founded upon that proposal. If it is in accordance with the rules of the House it is not in accordance with the rules of common sense. I doubt very much if there is any rule of this House which is not in accordance with common sense. [A laugh.] How Members opposite may laugh, but then they generally define common sense as something with which they agree. I do ask the attention of the Government to this point. The Solicitor-General is here. Is he quite sure that a person holding a five years' appointment in India—it may be a legal appointment—can fairly be described as ordinarily resident in this country; I quite agree that he is domiciled here. I will ask the hon. and learned Member for

    155
    Reading—would he advise that a person holding a prolonged appointment abroad is ordinarily resident in this country? I should think it would be better to use the word "domiciled" rather than o" ordinarily resident."
    May I say one word on the principal argument upon which the Chancellor of the Exchequer relies. He says the real reason for these exemptions is that the people who enjoy them already contribute to the revenue by means of indirect taxation. That is a perfectly sound Treasury view, but from the point of view of the taxpayer it is not the whole truth. The reason why a man with only £160 is exempted is because he finds it hard to pay the tax; it does not matter whether the other burdens he bears come to this country or any other country. But if you are to tax that income in spite of exemption, he appears to be just as hardly treated as the person who lives in this country, and who only has £160 a year. When you come to the case of a man living in one of the great dependencies of the Crown it appears to be an exceedingly narrow view to say that that gentleman is contributing nothing to taxation. It is true, no doubt, that he may contribute nothing to the taxation of this country, but there is the wider view that he contributes to the taxation of the Empire, although his contribution may go to the Government of India or to one of the self-governing Colonies. I think that these persons are as much entitled as anyone in this country to exemptions on incomes which do not exceed the taxable income. For my part, I should propose to move an Amendment by putting in the word "domiciled," if my hon. and gallant Friend will not do so.
    Mr. G. N. BARNES: I am not quite sure I understand the speeches which have just been delivered. I am going to vote against the Amendment because it seeks to discriminate in favour of the rich man as against the poor man. [Cries of "No. no."] The hon. and gallant Member for East Down spoke of the large number of workmen who go to Egypt and other countries, and one would think they are all liable to pay income tax. As a simple matter of fact, I do not suppose that one out of a hundred would be liable to it, nor does the privilege of English law cover them in Egypt or elsewhere. I am told that it is a general principle of. English law that it protects a man only
    156
    within the confines of the United Kingdom unless it specifies otherwise. Three years ago we passed a Compensation for Accidents Act, and some of us entertained the view, that we had made special provision, whereby the provisions of that Act would follow a man wherever he went. Nothing of the sort has taken place, as has been recently decided by the High Court. One of the very men mentioned by the hon. Member for East Down was injured recently in Malta—a British possession, which makes the case stronger from my point of view than if the accident had been in a foreign country—hut the High Court has decided that the man is not protected by English law. No compensation was therefore payable to the widow, and therefore the Compensation Act does not apply outside the United Kingdom at all. Having made inquiries during the last day or two I understand that that is the ordinary principle of the incidence of the English law, and therefore it seems to me that this Amendment in seeking to discriminate in favour of the rich man who goes abroad is trying to set up a discrimination in his favour as against the poor man. I venture to say, that not one man in a hundred who goes abroad under the conditions mentioned by the hon. Member for East Down, is liable to pay Income Tax, and I am in favour of reaching these people who have large incomes, who go abroad and who employ a large amount of labour in this country. I am in favour of reaching them, because it is obvious that they do not pay as the man living in this country does pay, by the consumption of goods. Therefore I am going to vote in favour of the Chancellor of the Exchequer arid against the Amendment.
    Sir F. BANBURY: The right hon. Gentleman said the Amendment of my hon. and gallant Friend did something which he did not intend, but he is mistaken. The Amendment simply does this, it provides that where a man is a British subject if his income is under £160 a year he can obtain that abatement which he would be entitled to if he lived in England. In order to obtain that abatement you have to make a declaration at Somerset House. The right hon. Gentleman knows perfectly well, that where a man has an income of £160 a year or less the whole tax is charged upon that income before he receives it, and he makes a claim to Somerset House for the abatement. I want to ask the right hon. Gentleman

    157
    where a British subject resident abroad makes a claim for abatement on the ground that his income is under £160 a year, what is to prevent him when he makes that claim from making a declaration that his income from all sources, whether here or abroad is under £160 a year. I see no reason to prevent that being done. What is in the right hon. Gentleman's mind, I expect, is this: that where a foreigner has made that claim for abatement, he has not been asked to make any declaration beyond this—that his income in England is not more than £160 a year. But if the Amendment is accepted there is nothing to prevent the right hon. Gentleman from putting in his Bill a statement to the effect that a British subject in making that claim for abatement must state that from all sources, whether here or abroad, his income is under £160 a year. I would rather that the Amendment had gone further.
    The right hon. Gentleman is quite correct in his statement about income tax associations advising people to claim abatements. I know of my own knowledge that that occurs. But I do not think he is right in the statement about 50 per cent. It is very rare. In my own business with foreigners I always refused to claim the abatement on the ground that the charge I should have to make would make it too great to make the abatement valuable to them. I recommended them to go to this particular association because their charge was so small. Six thousand pounds in Consols returns about £180 a year, and £5,000 in Irish Land Stock will do the same. An investment of £5,000 or £6,000 in Consols or Irish Land Stock is a largish investment. The right hon. Gentleman wants to get as many investors of that kind as he possibly can. He is face to face at present with large issues of Irish Land Stock.
    Mr. AINSWORTH: Is the hon. Baronet entitled to talk about Irish land?
    The CHAIRMAN: If the hon. Member had followed the hon. Baronet's argument he would not have thought it out of order.
    Sir F. BANBURY: These people attach very great importance to these exemptions. Is the right hon. Gentleman going, by refusing to give these people the abatement they have always had, to turn their money away at a time when we want it in order to keep up our national credit? He is going to turn it away in order to get the smallest possible benefit for the
    158
    Exchequer. I know this is a good point, from my knowledge of investments, extending over nearly 40 years, arid I assure the right hon. Gentleman that he does not know the harm that he is going to do his own cause. He will not be able to quote the rising stocks in favour of his Budget if this sort of thing is going to be brought in. He will drive away money which he wants, and which it is the interest of everyone to get in.
    Mr. PRETYMAN: I only want to appeal to the right hon. Gentleman on one ground. If there is one man who has done more to make the Empire and the country more than anyone else it is the young fellow who goes abroad, not necessarily in the service of the Crown but in a commercial company, in a tea company, in a great engineering works. Any young fellow who goes out to work as an engineer—not as a working man in the sense used by the hon. Member below the Gangway—is as much a working man in every sense of the word, and a man who has as much difficulty in keeping up his position as a man who is working with his muscles. If you look at the history of our country there is no man to whom we owe more than to those who have begun life in that fashion, and that we should penalise them when they are sending their small savings home, or when they are drawing a small allowance to eke out the small pay with which they begin in a foreign country, seems to me to pass the bounds of folly. I do appeal to the right hon. Gentleman that he should not in order to obtain some small sum for the Exchequer discourage young men from going out to do what for generations has always proved to be of the greatest advantage to themselves and to this country.
    Mr. JOYNSON-HICKS: I want to appeal to the right hon. Gentleman on behalf of the men to whom my hon. Friend has referred. Really, the kind of speech made by the hon. Member for the Black-friars Division of Glasgow makes one almost despair. When we are discussing a question of considerable importance, not in relation to rich or poor, but in regard to the remission of a small amount of income tax to those resident abroad, the hon. Member says he is going to vote with the Government because he thinks the question of favouring the foreigner is involved in the Amendment which has been proposed. He has dragged in a question in regard to compensation for accident. The hon. Member does not seem to see in

    159
    these matters anything beyond the interests of working men. He might join with us in discussing the question a little bit beyond the man who works with his hands. The prosperity of the country and of the Empire has been built up by men who have gone abroad, not merely to serve the country under the Crown, but to serve the commerce of the country. Young men have gone out under the test of business houses, and have founded businesses in India and in foreign countries. We should be careful to give to such men every possible assistance. Not merely are invalids who go out for the sake of their health entitled to consideration; far more consideration should be shown to the young men who in connection with industry and commerce go out to found houses abroad, and who send home a certain amount of money to be invested in English securities. I would ask the right hon. Gentleman to get up and say that he will extend this abatement to every British subject. Whether a young man goes to Hong Kong or Canada, so long as he is a British subject, he is entitled to the protection which the law of Great Britain gives him. A man is entitled to this abatement when serving for the welfare of the country in foreign quarters just as much as if he were doing that at home.
    Mr. J. F. MASON: It seems to me that we have not yet fully considered the question of the British subject who is not ordinarily a resident in the United Kingdom in the shape of the Colonial who is resident entirely in the Colony, and who has shares in an industry carried on in the Colony. There are many Colonials who own a large amount of property in English companies working in the Colonies. These Colonials are, of course, under this proposition, subject to pay income tax in this country I rather question whether this is within constitutional rights to tax these
    Colonials at all, but I think, at any rate, they will have a very serious grievance if they have to pay income tax in this country for purposes in which, beyond the Navy, they have no concern whatever. If the Colonials are to be taxed in this way that might raise the whole point which at one time led to the present condition of freedom in the United States of America. There are certainly very distinct instances of this. I know the case of a British Company working in New Zealand which remits to Colonial shareholders in New Zealand £100,000 a year in the shape of dividends, and I venture to think that these New Zealanders will have very just cause of complaint if they have to pay income tax on this money. Of course the obvious way of evading that difficulty would be for the company to be registered in New Zealand instead of in England. As things stand at present it is quite open to that company by a change of domicile—I do not say that the company desire to do any such thing—to escape this payment, and I do think that the Colonial shareholders have a very substantial grievance, which might very reasonably be met by exempting British citizens from paying income tax in this country, although they are not domiciled in this country. I think that these Colonia1s. should be exempted from income tax on incomes arising from industries carried on in their own countries, and that the tax should not be imposed merely because their company is registered in the United Kingdom.
    Mr. LLOYD-GEORGErose in his place and claimed to move: "That the Question be now put."
    Question put: "That the Question be now put."
    The Committee divided: Ayes, 215; Noes, 108.

    Division No. 109.]

    AYES.

    [11.58 p.m.

    Abraham, William (Rhondda)

    Bellairs, Carlyon

    Creston, Rt. Hon. Richard Knight

    Acland, Francis Dyke

    Bennett, E. N.

    Cewley, Sir Frederick

    Agnew, George William

    Birrell, Rt. Hon. Augustine

    Channing, Sir Francis Allston

    Ainsworth, John Stirling

    Black, Arthur W.

    Cherry, Rt. Han. R. R.

    Allen, A. Acland (Christchurch)

    Boulton, A. C. F.

    Clough, William

    Armitage, R.

    Bowerman, C. W.

    Clynes, J. R.

    Asquith, Rt. Hon. Herbert Henry

    Brace, William

    Cohbold, Felix Thornley

    Balfour, Robert (Lanark)

    Bramsdon, T. A.

    Collins, Stephen (Lambeth)

    Baring, Godfrey (Isle of Wight)

    Brocklehurst, W. B.

    Collins, Sir Wm. J. (St. Pancras, W.)

    Barlow, Percy (Bedford)

    Brodie, H. C.

    Cooper, G. J.

    Barnard, E. B.

    Brooke, Stopford

    Corbett, C. H. (Sussex, E. Grinstead)

    Barnes, G. N.

    Brunner, Rt. Hon. Sir J. T. (Cheshire)

    Cornwall, Sir Edwin A.

    Barry. E. (Cork, S.)

    Burns, Rt. Hon. John

    Cotton, Sir H. J. S

    Barry, Redmond J. (Tyrone, N.)

    Buxton, Rt. Hon. Sydney Charles

    Craig, Herbert J. (Tynemouth)

    Beauchamp, E.

    Byles, William Pollard

    Crooks, William

    Beaumont, Hon. Hubert

    Carr-Gomm, H. W.

    Crosfield, A. H.

    Crossley, William J.

    Lehmann, R. C.

    Robinson, S.

    Davies, David (Montgomery Co.)

    Lever, A. Levy (Essex, Harwich)

    Robson, Sir William Snowdon

    Dewar, Sir J. A. (Inverness-shire)

    Levy, Sir Maurice

    Roch, Walter F. (Pembroke)

    Buffy, William J.

    Lewis, John Herbert

    Roe, Sir Thomas

    Duncan, C. (Barrow-in-Furness)

    Lloyd-George, Rt. Hon. David

    Pese, Charles Day

    Duncan, J. Hastings (York, Otley)

    Luttrell, Hugh Fownes

    Rowlands, J.

    Dunn, A. Edward (Camborne)

    Macdonald, J. R. (Leicester)

    Russell, Rt. Hon. T. W.

    Dunne, Major E. Martin (Walsall)

    Macdonald, J. M. (Falkirk Burghs)

    Samuel, S. M. (Whitechapel)

    Essex, R. W.

    Mackarness, Frederic C.

    Scott, A. H. (Ashton-under-Lyne)

    Esslemont, George Birnie

    MacVeagh, Jeremiah (Down, S.)

    Seaverns, J. H.

    Evans, Sir Samuel T.

    M'Laren, H. D. (Stafford, W.)

    Seddon, J.

    Everett, R. Lacey

    M'Micking, Major G.

    Seely, Colonel

    Falconer, James

    Maddison, Frederick

    Silcock, Thomas Ball

    Fenwick, Charles

    Mallet, Charles E.

    Simon, John Allsebrook

    Ferguson, R. C. Munro

    Manfield, Harry (Northants)

    Soames, Arthur Wellesley

    Fiennes, Hon. Eustace

    Markham, Arthur Basil

    Soares, Ernest J.

    Fuller, John Michael F.

    Mason, A. E. W. (Coventry)

    Stewart-Smith, D. (Kendal)

    Fullerton, Hugh

    Massie, J.

    Strachey, Sir Edward

    Glendinning, R. G.

    Masterman, C. F. G.

    Strauss, E. A. (Abingdon)

    Goddard, Sir Daniel Ford

    Micklem, Nathaniel

    Summerbell, T.

    Gooch, George Peabody (Bath)

    Mond, A.

    Sutherland, J. E.

    Greenwood, G. (Peterborough)

    Morgan, G. Hay (Cornwall)

    Taylor, John W. (Durham)

    Greenwood, Hamar (York)

    Morrell, Philip

    Tennant, Sir Edward (Salisbury)

    Grey, Rt. Hon. Sir Edward

    Muldoon, John

    Tennant, H. J. (Berwickshire)

    Griffith, Ellis J.

    Nicholls, George

    Thomas, Abel (Carmarthen, E.)

    Gulland, John W.

    Norton, Captain Cecil William

    Thomas, Sir A. (Glamorgan, E.)

    Haldane, Rt. Hon. Richard B.

    Hussey, Thomas Willans

    Thomasson, Franklin

    Harcourt, Rt. Hon. L. (Rossendale)

    Nuttall, Harry

    Thompson, J. W. H. (Somerset, E.)

    Harcourt, Robert V. (Montrose)

    O'Donnell, C. J. (Walworth)

    Tomkinson, James

    Harvey, W. E. (Derbyshire, N.E.)

    O'Donnell, T. (Kerry, W.)

    Ure, Rt. Hon. Alexander

    Howorth, Arthur A.

    O'Grady, J

    Verney, F. W.

    Hedges, A. Paget

    Parker, James (Halifax)

    Vivian, Henry

    Hemmerde, Edward George

    Pearce, Robert (Staffs, Leek)

    Walsh, Stephen

    Henderson, Arthur (Durham)

    Pearson, W. H. M. (Suffolk, Eye)

    Ward, John (Stoke-upon-Trent)

    Henry, Charles S.

    Philipps, Col. Ivor (Southampton)

    Ward, W. Dudley (Southampton)

    Herbert, Col. Sir Ivor (Mon., S.)

    Philipps, Owen C. (Pembroke)

    Warner, Thomas Courtenay T.

    Higham, John Sharp

    Pickersgill, Edward Hare

    Wason, Rt. Hon. E. (Clackmannan)

    Hobart, Sir Robert

    Pixie, Duncan V.

    Wason, John Cathcart (Orkney)

    Hobhouse, Charles E. H.

    Pointer, J.

    Watt, Henry A.

    Hogan, Michael

    Pollard, Dr. G. H.

    White, Sir George (Norfolk)

    Holden, E. Hopkinson

    Price, C. E. (Edinburgh, Central)

    White, J. Dundas (Dumbartonshire)

    Holland, Sir William Henry

    Priestley, Arthur (Grantham)

    White, Sir Luke (York, E.R.)

    Holt, Richard Durning

    Priestley, W. E. B. (Bradford, E.)

    Whitley, John Henry (Halifax)

    Hope. W. H. B. (Somerset, N.)

    Radford, G. H.

    Wiles, Thomas

    Horniman, Elmslie John

    Rainy, A. Rolland

    Wilkie, Alexander

    Howard, Hon. Geoffrey

    Raphael. Herbert H.

    Williams, J. (Glamorgan)

    Hutton, Alfred Eddison

    Rea, Walter Russell (Scarborough)

    Williamson, A.

    Hyde Clarendon G.

    Pees, J. D.

    Wilson, Hon. G. G. (Hull, W.)

    Illingworth, Percy H.

    Randall, Athelstan

    Wilson, J. W. (Worcestershire, N.)

    Isaacs, Rufus Daniel

    Richards, T. F. (Wolverhampton, W.

    o Wilson, W. T. (Westhoughton)

    Jardine, Sir J.

    Richardson, A.

    Wood, T. M'Kinnon

    Jenkins, J.

    Ridsdale, E. A.

    Johnson, W. (Nuneaton)

    Roberts, Charles H. (Lincoln)

    Jones, Leif (Appleby)

    Roberts, G. H. (Norwich)

    TELLERS FOR THE AYES.—Mr.

    Jowett, F. W.

    Roberts, Sir J. H. (Denbighs)

    Joseph Pease and the Master of

    King, Alfred John (Knutsford)

    Robertson, Sir G. Scott (Bradford)

    Elibank.

    Lardner, James Carrige Rushe

    Robertson, J. M. (Tyneside)

    NOES

    Anson, Sir William Reynell

    Clive, Percy Archer

    Harris, Frederick Leverton

    Arkwright, John Stanhope

    Coates, Major E. F. (Lewisham)

    Harrison-Broadley, H. B.

    Ashley, W. W.

    Craig, Charles Curtis (Antrim, S.)

    Hay, Hon. Claude George

    Balcarres, Lord

    Craig, Captain James (Down, E.)

    Hill, Sir Clement

    Baldwin, Stanley

    Craik, Sic Henry

    HOpe, James Fitzalan (Sheffield)

    Balfour, Rt. Hon. A. J. (City, Lond.)

    Dalrymple, Viscount

    Hunt, Rowland

    Banbury, Sir Frederick George

    Doughty, Sir George

    Joyson-Hicks, William

    Banner, John S. Harmood-

    Douglas, Rt. Hon. A. Akers-

    Kennaway, Rt. Hon. Sir John H.

    Barrie, H. T. (Londonderry, N.)

    Du Cros, Arthur

    Kennedy Vincent Paul

    Beach, Hon. Michael Hugh Hicks

    Faber, George Denison (York)

    Kerry, Earl of

    Beckett, Hon. Gervase

    Faber, Capt. W. V. (Hants, W.)

    Keswick, William

    Bignold, Sir Arthur

    Fell, Arthur

    King, Sir Henry Seymour (Hull)

    Branch, James

    Fetherstonhaugh, Godfrey

    Lambton, Hon. Frederick Wm.

    Bull, Sir William James

    Fletcher, J. S.

    Lane-Fox, G. R

    Burdett-Coutts, W.

    Forster, Henry William

    Law, Andrew Banar (Dilwich)

    Campbell, Rt. Hon. J. H. M.

    Foster, P. S.

    Lockwood, Rt. Hon. Lt.-Col. A. R.

    Carlile, E. Mildred

    Gardner, Ernest

    Long, Col. Charles W. (Evesham)

    Carson, Rt. Hon. Sir Edward H.

    Gabs, G. A. (Bristol, West)

    Lonsdale, John Brownlee

    Castlereagh, Viscount

    Ger don, J.

    Lowe, Sir Francis William

    Cave, George

    Goulding, Edward

    MacCaw, Wm. J. MacGeagh

    Cecil. Evelyn (Aston Manor)

    Alfred Guinness, Hon. R. (Haggerston)

    Magnus, Sir Philip

    Cecil, Lord R. (Marylebone, E.)

    Guinness, W, E. (Bury St. Edmunds)

    Marks, H. H. (Kent)

    Chamberlain, Rt. Hon. J. A. (Worc'r.)

    Haddock, George B.

    Masan, James F. (Windsor)

    Chaplin, Rt. Hon. Henry

    Hamilton, Marquess of

    Meagher, Michael

    162

    163

    Mildmay, Francis Bingham

    Renwick, George

    Staveley-Hill, Henry (Staffordshire)

    Moore, William

    Roberts, S. (Sheffield, Ecclesall)

    Talbot, Lord E. (Chichester)

    Morpeth, Viscount

    Ronaldshay, Earl of

    Thornton, Percy M.

    Morrison-Bell, Captain

    Rutherford, John (Lancashire)

    Walker, Col. W. H. (Lancashire)

    Nicholson, Wm. G. (Petersfield)

    Rutherford, W. W. (Liverpool)

    Walrond, Hon. Lionel

    Oddy, John James

    Salter, Arthur Clavell

    Warde, Col. C. E. (Kent, Mid.)

    O'Doherty, Philip

    Scott, Sir S. (Marylebone, W.)

    Williams, Col. R. (Dorset, W.)

    Pease, Herbert Pike (Darlington)

    Sheffield, Sir Berkeley George D.

    Willoughby de Eresby, Lord

    Peel, Hon. W. Robert Wellesley

    Smeaton, Donald Mackenzie

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

    Pietyman, E. G.

    Smith, Abel H. (Hertford, E.)

    Younger, George

    Randles, Sir John Scurrah

    Smyth, Thomas F. (Leitrim, S.)

    Remnant, James Farquharson

    Stanier, Beville

    TELLERS FOR THE NOES—Sir A.

    Renton, Leslie

    Starkey, John R.

    Acland-Hood and Viscount Valentia.

    Question put accordingly: "That the words be there inserted."
    The Committee divided: Ayes, 106; Noes, 222.

    Division No. 110.]

    AYES.

    [12.50 a.m

    Acland-Hood, Rt. Hon. Sir Alex. F.

    Fletcher, J. S.

    Morrison-Bell, Captain

    Anson, Sir William Reynell

    Forster, Henry William

    Nicholson, Wm. G. (Petersfield)

    Arkwright, John Stanhope

    Foster, P. S.

    Oddy, John James

    Ashley, W. W.

    Gibbs, G. A. (Bristol, West)

    O'Donnell, C. J. (Walworth)

    Balcarres, Lord

    Gordon, J.

    Pease, Herbert Pike (Darlington)

    Baldwin, Stanley

    Goulding, Edward Alfred

    Peel, Hon. W. Robert Wellesley

    Balfour, Rt. Hon. A. J. (City Lond.)

    Guinness, Hon. R. (Haggerston)

    Pretyman, E. G.

    Banbury, Sir Frederick George

    Guinness, W. E. (Bury St. Edm'nds)

    Randles, Sir John Scurrah

    Banner, John, S. Harmood-

    Haddock, George B.

    Remnant, James Farquharson

    Barrie, H. T. (Londonderry, N.)

    Hamilton, Marquess of

    Renton, Leslie

    Beckett, Hon. Gervase

    Harris, Frederick Leverton

    Renwick, George

    Bignold, Sir Arthur

    Harrison-Broadley, H. B.

    Roberts, S. (Sheffield, Ecclesall)

    Bull, Sir William James

    Hay, Hon. Claude George

    Ronaldshay, Earl of

    Bradett-Coutts, W.

    Hermon-Hodge, Sir Robert

    Rutherford, John (Lancashire)

    Campbell, Rt. Hon. J. H. M.

    Hill, Sir Clement

    Rutherford, W. W. (Liverpool)

    Carlile, E. Hildred

    Hope, James Fitzalan (Sheffield)

    Salter, Arthur Clavell

    Carson, Rt. Han. Sir Edw. H.

    Hunt, Rowland

    Scott, Sir S. (Marylebone, W.)

    Castlereagh, Viscount

    Johnson-Hicks, William

    Sheffield, Sir Berkeley George D.

    Cave, George

    Kannaway, Rt. Hon. Sir John H.

    Smeaton, Donald Mackenzie

    Cecil, Evelyn (Aston Manor)

    Kerry, Earl of

    Smith, Abel H. (Hertford, E.)

    Cecil, Lord R. (Marylebone, E.)

    Keswick, William

    Stanier, Beville

    Chamberlain, Rt. Hon. J. A. (Worc'r.)

    King, Sir Henry Seymour (Hull)

    Starkey, John R.

    Chaplin, Rt. Hon. Henry

    Lambton, Hon. Frederick William

    Staveley-Hill, Henry (Staffs.)

    Clive, Percy Archer

    Lane-Fox, G. R.

    Talbot, Lord E. (Chichester)

    Coates, Major E. F. (Lewisham)

    Law, Andrew Bonar (Dulwich)

    Thornton, Percy M.

    Craig, Charles Curtis (Antrim, S.)

    Lockwood, Rt. Hon. Lt.-Col. A. R.

    Valentia, Viscount

    Craik, Sir Henry

    Long, Col. Charles W. (Evesham)

    Walker, Col. W. H. (Lancashire)

    Dalrymple, Viscount

    Lansdale, John Brownlee

    Walrond, Hon. Lionel

    Doughty Sir George

    Lowe, Sir Francis William

    Warde, Col. C. E. (Kent, Mid)

    Douglas, Rt. Hon. A. Akers-

    MacCaw, Wm J. MacGeagh

    Williams, Col. R. (Dorset, W.)

    Du Cros, Arthur

    Magnus, Sir Philip

    Willoughby de Eresby, Lord

    Duffy, William J.

    Marks, H. H. (Kent)

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

    Faber, George Denison (York)

    Mason, James F. (Windsor)

    Younger, George

    Faber, Captain W. V. (Hants, W.)

    Mildmay, Francis Bingham

    Fell, Arthur

    Moore, William

    TELLERS FOR THE AYES.—Captain

    Fetherstonhaugh, Godfrey

    Morpeth, Viscount

    Craig and Mr. Hicks-Beach.

    NOES.

    Abraham, W. (Cork, N.E.)

    Brace, William

    Craig, Herbert J. (Tynemouth)

    Abraham, William (Rhondda)

    Bramsdon, T. A.

    Crean, Eugene

    Acland, Francis Dyke

    Branch, James

    Crooks, William

    Agnew, George William

    Brocklehurst, W. B.

    Crosfield, A. H.

    Ainsworth, John Stirling

    Brodie, H. C.

    Crossley, William J.

    Allen, A. Acland (Christchurch)

    Brooke, Stopford

    Dewar, Sir J. A. (Inverness-shire)

    Armitage, R.

    Brunner, Rt. Hon. Sir J. T. (Cheshire)

    Duncan, C. (Barrow-in-Furness)

    Asquith, Rt. Hon. Herbert Henry

    Burns, Rt. Hon. John

    Duncan. J. Hastings (York, Otley)

    Balfour, Robert (Lanark)

    Buxton, Rt. Hon. Sydney Charles

    Dunn, A. Edward (Camborne)

    Baring, Godfrey (Isle of Wight)

    Byles, William Pollard

    Dunne, Major E. Martin (Walsall)

    Barlow, Percy (Bedford)

    Carr-Gomm, H. W.

    Essex, R. W.

    Barnard, E. B.

    Causton, Rt. Hon. Richard Knight

    Esslemont, George Birnie

    Barnes, G. N.

    Cawley, Sir Frederick

    Evans, Sir Samuel T.

    Barry, E. (Cork, S.)

    Channing, Sir Francis Allston

    Everett, R. Lacey

    Barry, Redmond J. (Tyrone, N.)

    Cherry, Rt Hon. R R.

    Falconer, James

    Beauchamp, E

    Clough, William

    Fenwick, Charles

    Beaumont, Hon. Hubert

    Clynes, J. R.

    Ferguson, R. C. Munro

    Bellairs, Carlyon

    Cobbold, Felix Thornley

    Fiennes, Hon. Eustace

    Bennett, E. N.

    Collins, Stephen (Lambeth)

    Fuller, John Michael F.

    Birrell, Rt. Hon. Augustine

    Collins, Sir Wm. J. (S. Pancras, W.)

    Fullerton, Hugh

    Black, Arthur W.

    Cooper, G J.

    Glendinning, R. G.

    Boland, John

    Corbett, C. H. (Sussex, E. Grinstead)

    Glover, Thomas

    Boulton, A.C.F.

    Cornwall, Sir Edwin A.

    Goddard, Sir Daniel Ford

    Bowerman, C.W.

    Cotton, Sir H. J. S.

    Gooch, George Peabody (Bath)

    Greenwood, G. (Peterborough)

    Manfield, Harry (Northants)

    Rowlands, J.

    Greenwood, Hamar (York)

    Markham, Arthur Basil

    Russell, Rt. Hon. T. W.

    Grey, Rt. Hon. Sir Edward

    Mason, A. E. W. (Coventry)

    Samuel, S. M. (Whitechapel)

    Griffith, Ellis J.

    Massie, J.

    Scott, A. H. (Ashton-under-Lyne)

    Gulland, John W.

    Masterman, C. F. G.

    Seaverns, J. H.

    Haldane, Rt. Hon. Richard B.

    Meagher, Michael

    Seddon, J.

    Harcourt, Rt. Hon. L. (Rossendale)

    Micklem, Nathaniel

    Seely, Colonel

    Harcourt, Robert V. (Montrose)

    Mond, A.

    Silcock, Thomas Ball

    Harvey, W. E. (Derbyshire, N.E.)

    Morgan, G. Hay (Cornwall)

    Simon, John Alisebrook

    Haworth, Arthur A.

    Morrell, Philip

    Smyth, Thomas F. (Leitrim, S.)

    Hedges, A. Paget

    Muldoon, John

    Soames, Arthur Wellesley

    Helme, Norval Watson

    Murray, Capt. Hon. A. C. (Kincard.)

    Soares, Ernest J.

    Hemmerde, Edward George

    Nicholls, George

    Stewart-Smith, D. (Kendal)

    Henderson, Arthur (Durham)

    Norton, Capt. Cecil William

    Strachey, Sir Edwara

    Henry, Charles S.

    Nussey, Thomas Willans

    Strauss, E. A. (Abingdon)

    Herbert, Col. Sir Ivor (Mon. S.)

    Nuttall, Harry

    Summerbell, T.

    Higham, John Sharp

    O'Brien, Patrick (Kilkenny)

    Sutherland, J. E.

    Hobart, Sir Robert

    O'Connor, John (Kildare, N.)

    Taylor, John W. (Durham)

    Hobhouse, Charles E. H.

    O'Doherty, Philip

    Tennant, Sir Edward (Salisbury)

    Hogan, Michael

    O'Donnell, T. (Kerry, W.)

    Tennant, H. J (Berwickshire)

    Holden, E. Hopkinson

    O'Grady, J.

    Thomas, Abel (Carmarthen, E.)

    Holland, Sir William Henry

    Parker, James (Halifax)

    Thomas, Sir A. (Glamorgan, E.)

    Holt, Richard Durning

    Pearce, Robert (Staffs, Leek)

    Thomasson, Franklin

    Horniman, Emslie John

    Pearson, W. H. M. (Suffolk, Eye)

    Thompson, J. W. H. (Somerset, E.)

    Howard, Hon. Geoffrey

    Philipps, Col. Ivor (Southampton)

    Tomkinson, James

    Hutton, Alfred Eddison

    Philipps, Owen, C. (Pembroke)

    Ure, Rt. Hon. Alexander

    Hyde, Clarendon G.

    Pickersg111, Edward Hare

    Verney, F. W.

    Illingworth, Percy H.

    Pirie, Duncan V.

    Vivian, Henry

    Walsh, Stephen

    Isaacs, Rufus Daniel

    Pointer, J.

    Ward, John (Stoke upon Trent)

    Jardine, Sir J.

    Pollard, Dr. G. H.

    Ward, W. Dudley (Southampton)

    Jenkins, J.

    Price, C. E. (Edinburgh, Central)

    Warner, Thomas Courtenay T.

    Johnson, W. (Nuneaton)

    Priestley, Arthur (Grantham)

    Wason, Rt. Hon. E. (Clackmannan)

    Jones, Leif (Appleby)

    Priestley, W. E. B. (Bradford, E.)

    Wason, John Cathcart (Orkney)

    Jowett, F. W.

    Radford, G. H.

    Watt Henry, A.

    Kennedy, Vincent Paul

    Rainy, A. Rolland

    White, Sir George (Norfolk)

    King, Alfred John (Knutsford)

    Raphael, Herbert N.

    White, J. Duadas (Dumbartonshire)

    Lardner, James Carrige Rushe

    Rea, Walter Russell (Scarborough)

    White, Sir Luke (York, E. R.)

    Lehmann, R. C.

    Rees, J. D.

    Whitley, Join Henry (Halifax)

    Lever, A. Levy (Essex, Harwich)

    Rendall, Atheistan

    Wiles, Thomas

    Levy, Sir Maurice

    Richards, T. F. (Wolverhampton, W.)

    Wilkie, Alexander

    Lewis, John Herbert

    Richardson, A.

    Williams, J. (Glamorgan)

    Lloyd-George, Rt. Hon. David

    Ridsdale, E. A.

    Williamson, A.

    Luttrell, Hugh Fownes

    Roberts, Charles H. (Lincoln)

    Wilson, Hon. G. G. (Hull, W.)

    Macdonald, J. R. (Leicester)

    Roberts, G. H. (Norwich)

    Wilson, J. W. (Worcestershire, N.)

    Macdonald, J. M. (Falkirk Burghs)

    Roberts, Sir J. H. (Denbighs.)

    Wilson, W. T. (Westhoughton)

    Mackarness, Frederick C.

    Robertson, Sir G. Scott (Bradford)

    Wood, T. M'Kinnon

    MacNeill, John Gordon Swift

    Robertson, J. M. (Tyneside)

    MacVeagh, Jeremiah (Down, S.)

    Robinson, S.

    TELLERS FOR THE NOES.—Mr.

    M'Laren, H. D. (Stafford, W.)

    Robson, Sir William Snowdon

    Joseph Pease and the Master of

    M'Micking, Major G.

    Roch, Walter F. (Pembroke)

    Elibank.

    Maddison, Frederick

    Roe, Sir Thomas

    Mallet, Charles E.

    Rose, Charles Day

    Mr. LLOYD-GEORGE claimed: "That the Main Question be now put."
    Main Question put accordingly.
    The Committee divided: Ayes, 224; Noes, 103.

    Division No. 111.]

    AYES.

    12.15 a.m.

    Abraham, W. (Cork, N.E.)

    Boulton, A. C. F.

    Cornwall, Sir Edwin A.

    Abraham, William (Rhondda)

    Bowerman, C. W.

    Cotton, Sir H. J. S.

    Acland, Francis Dyke

    Brace, William

    Craig, Herbert J. (Tynemouth)

    Agnew, George William

    Bramsdon, T. A.

    Crean, Eugene

    Ainsworth, John Stirling

    Brocklehurst, W. B.

    Crooks, William

    Allen, A. Acland (Christchurch)

    Brodie, H. C.

    Crosfield, A. H.

    Armitage, R.

    Brooke, Stopford

    Crossley, William J.

    Asquith, Rt. Hon. Herbert Henry

    Brunner, RI. Hon. Sir J. T. (Cheshire)

    Dewar, Sir J. A. (Inverness-sh.)

    Balfour, Robert (Lanark)

    Burns, Rt. Hon. John

    Duffy, William J.

    Baring, Godfrey (Isle of Wight)

    Buxton, Rt. Hon. Sydney Charles

    Duncan, C. (Barrow-in-Furness)

    Barlow, Percy (Bedford)

    Byles, William Pollard

    Duncan, J. Hastings (York, Otley)

    Barnard, E. B.

    Carr-Gomm, H. W.

    Dunn, A. Edward (Camborne)

    Barnes, G. N.

    Causton, Rt. Hon. Richard Knight

    Dunne, Major E. Martin (Walsall)

    Barry, E. (Cork, S.)

    Channlng, Sir Frederick Allston

    Essex, R. W.

    Barry, Redmond J. (Tyrone, N.)

    Cherry, Rt. Hon. R. R.

    Esslemont, George Birnie

    Beauchamp, E

    Clough, William

    Evans, Sir Samuel T.

    Beaumont, Hon. Hubert

    Clynes, J. R.

    Everett, R. Lacey

    Bellairs, Carlyon

    Cobbold, Felix Thornley

    Falconer, James

    Bennett, E. N.

    Collins, Stephen (Lambeth)

    Fenwick, Charles

    Birrell, Rt. Hon. Augustine

    Collins, Sir Wm. J. (S. Pancras, W.)

    Ferguson, R. C. Munro

    Black, Arthur W.

    Cooper, G. J.

    Fiennes, Hon. Eustace

    Boland, John

    Corbett, C. H. (Sussex, E. Grinstead)

    Fuller, John Michael F.

    Fullerton, Hugh

    M'Laren, H. D. (Stafford, W.)

    Roth, Walter F. (Pembroke)

    Glendinning, R. G.

    M'Micking, Major G.

    Roe, Sir Thomas

    Glover, Thomas

    Maddison, Frederick

    Rose, Charles Day

    Goddard, Sir Daniel Ford

    Mallet, Charles E.

    Rowlands, J.

    Gooch, George Peabody (Bath)

    Manfield, Harry (Northants)

    Russell, Rt. Hon. T. W.

    Greenwood, G. (Peterborough)

    Markham, Arthur Basil

    Samuel, S. M. (Whitechapel)

    Greenwood, Hamar (York)

    Mason, A. E. W. (Coventry)

    Scott, A. H. (Ashton-under-Lyne)

    Grey, Rt. Hon. Sir Edward

    Massie, J.

    Seaverns, J. H.

    Griffith, Ellis J.

    Masterman, C. F. G.

    Seddon, J.

    Gulland, John W.

    Meagher, Michael

    Seely, Colonel

    Haldane, Rt. Hon. Richard B.

    Micklem, Nathaniel

    Silcock, Thomas Ball

    Harcourt, Rt. Hon. L. (Rossendale)

    Mond, A.

    Simon, John Alisebrook

    Harcourt. Robert V. (Montrose)

    Morgan, G. Hay (Cornwall)

    Smyth, Thomas F. (Leitrim, S.)

    Harvey, W. E. (Derbyshire, N.E.)

    Morrell, Philip

    Soames, Arthur Wellesley

    Haworth, Arthur A.

    Muldoon, John

    Soares, Ernest J.

    Hayden, John Patrick

    Murray, Capt. Hn. A. C. (Klncard.)

    Stewart-Smith, D. (Kendal)

    Hedges, A. Paget

    Nicholls, George

    Strachey, Sir Edwara

    Helme, Norval Watson

    Norton, Capt. Cecil William

    Strauss, E. A. (Abingdon)

    Hemmerde, Edward George

    Nussey, Thomas Willans

    Summerbell, T.

    Henderson, Arthur (Durham)

    Nuttall, Harry

    Sutherland, J. E.

    Henry, Charles S.

    O'Brien, Patrick (Kilkenny)

    Taylor, John W. (Durham)

    Herbert, Col. Sir Ivor (Mon. S.)

    O'Connor, John (Kildare, N.)

    Tennant, Sir Edward (Salisbury)

    Higham, John Sharp

    O'Doherty, Philip

    Tennant, H. J (Berwickshire)

    Hobart, Sir Robert

    O'Donnell, T. (Kerry, W.)

    Thomas, Abel (Carmarthen, E.)

    Hobhouse, Charles E. H.

    O'Grady, J.

    Thomas, Sir A. (Glamorgan, E.)

    Hogan, Michael

    Parker, James (Halifax)

    Thomasson, Franklin

    Holden, E. Hopkinson

    Pearce, Robert (Staffs, Leek)

    Thompson, J. W. H. (Somerset, E.)

    Holland, Sir William Henry

    Pearson, W. H. M. (Suffolk, Eye)

    Tomkinson, James

    Halt, Richard Darning

    Philipps, Col. Ivor (Southampton)

    Ure, Rt. Hon. Alexander

    Horniman, Emslie John

    Philipps, Owen C. (Pembroke)

    Verney, F. W.

    Howard, Hon. Geoffrey

    Pickersgill, Edward Hare

    Vivian, Henry

    Hutton, Alfred Eddison

    Pirie, Duncan V.

    Walsh, Stephen

    Hyde, Clarendon G.

    Pointer, J.

    Ward, John (Stoke upon Trent)

    Illingworth, Percy H.

    Pollard, Dr. G. H.

    Ward, W. Dudley (Southampton)

    Isaacs, Rufus Daniel

    Price, C. E. (Edinburgh, Central)

    Warner, Thomas Courtenay T.

    Jardine, Sir J.

    Price, Sir Robert J. (Norfolk, E.)

    Wason, Rt. Hon. E. (Clackmannan)

    Jenkins, J.

    Priestley, Arthur (Grantham)

    Wason, John Cathcart (Orkney)

    Johnson, W. (Nuneaton)

    Priestley, W. E. B. (Bradford, E.)

    Watt Henry, A.

    Jones, Leif (Appleby)

    Radford, G. H.

    White, Sir George (Norfolk)

    Jowett, F. W.

    Rainy, A. Rolland

    White, J. Dundas (Dumbartonshire)

    Kennedy, Vincent Paul

    Raphael, Herbert H.

    White, Sir Luke (York, E. R.)

    Kilbride, Denis

    Rea, Walter Russell (Scarboro')

    Whitley, Join Henry (Halifax)

    King, Alfred John (Knutstord)

    Rees, J. D.

    Wiles, Thomas

    Lardner, James Carrige Rushe

    Rendall, Athelstan

    Wilkie, Alexander

    Lehmann, R. C.

    Richards, T. F. (Wolverhampton, W.)

    Williams, J. (Glamorgan)

    Lever, A. Levy (Essex, Harwich)

    Richardson, A.

    Williamson, A.

    Levy, Sir Maurice

    Ridsdale, E. A.

    Wilson, Hon. G. G. (Hull, W.)

    Lewis, John Herbert

    Roberts, Charles H. (Lincoln)

    Wilson, J. W. (Worcestershire, N.)

    Luttrell, Hugh Fownes

    Roberts, G. H. (Norwich)

    Wilson, W. T. (Westhoughton)

    Macdonald, J. R. (Leicester)

    Roberts, Sir J. H. (Denbighs.)

    Wood, T. M'Kinnon

    Macdonald, J. M. (Falkirk B'ghs)

    Robertson, Sir G. Scott (Bradford)

    Mackarness, Frederick C.

    Robertson, J. M. (Tyneside)

    TELLERS FOR THE AYES.—Mr.

    MacNeill, John Gordon Swift

    Robinson, S.

    Joseph Pease and the Master of

    MacVeagh, Jeremiah (Down, S.)

    Robson, Sir William Snowdon

    Elibank.

    NOES.

    Anson, Sir William Reynell

    Craig, Captain James (Down, E.)

    Hunt, Rowland

    Arkwright, John Stanhope

    Cralk, Sir Henry

    Joynson-Hicks, William

    Ashley, W. W.

    Dalrymple, Viscount

    Kennaway, Rt. Hon. Sir John H.

    Balcarres, Lord

    Doughty, Sir George

    Kerry, Earl of

    Baldwin, Stanley

    Douglas, Rt. Hon. A. Akers

    King, Sir Henry Seymour (Hull)

    Balfour, Rt. Hon. A. J. (City Lond.)

    Du Cros, Arthur

    Lambton. Hon Frederick Wm.

    Banbury, Sir Frederick George

    Faber, George Denison (York)

    Lane-Fox, G. R.

    Banner, John S. Harmood-

    Faber, Capt. W. V. (Hants, W.)

    Law, Andrew Bonar (Dulwich)

    Berrie, H. T. (Londonderry, N.)

    Fell, Arthur

    Lockwood, Rt. Hon. Lt.-Col. A. R.

    Beach, Hon. Michael Hugh Hicks

    Fetherstonhaugh, Godfrey

    Long, Col. Charles W. (Evesham)

    Beckett, Hon. Gervasa

    Forster. Henry William

    Lonsdale, John Brownlee

    Bignold, Sir Arthur

    Foster, P. S.

    Lowe, Sir Francis William

    Bull, Sir William James

    Gardner, Ernest

    MacCaw, Wm. J. MacGeagh

    Burdett-Coutts, W.

    Gibbs, G. A. (Bristol, West)

    Magnus, Sir Philip

    Campbell, Rt. Hon. J. H. M.

    Gordon, J.

    Marks, H. H. (Kent)

    Carlile, E. Hildred

    Goulding, Edward Alfred

    Mason, James F. (Windsor)

    Corson, Rt. Hon. Sir Edward H.

    Guinness, Hon. R. (Haggerston)

    Mildmay, Francis Bingham

    Castlereagh, Viscount

    Guinness, W. E. (Bury St. Edmunds)

    Moore, William

    Cave, George

    Haddock, George B.

    Morpeth, Viscount

    Cecil, Evelyn (Aston Manor)

    Hamilton, Marquess of

    Morrison-Bell, Captain

    Cecil, Lord R. (Marylebone, E.)

    Harris, Frederick Leverton

    Nicholson, Wm. G. (Petersfield)

    Chamberlain, Rt. Hon. J. A. (Worc'r.)

    Harrison-Broadley, H B.

    Oddy, John James

    Chaplin, Rt. Hon. Henry

    Hay, Hon. Claude George

    O'Donnell, C. J. (Walworth)

    Clive, Percy Archer

    Hermon-Hodge, Sir Robert

    Pease, Herbert Pike (Darlington)

    Coates, Major E. F. (Lewisham)

    Hill, Sir Clement

    Peel, Hon. W. Robert Wellesley

    Craig, Charles Curtis (Antrim, S.)

    Hope, James Fitzalan (Sheffield)

    Pretyman, E. G.

    168

    169

    Randles, Sir John Scurrah

    Sheffield, Sir Berkeley George D.

    Warde, Col. C. E. (Kent, Mid)

    Remnant, James Farquharson

    Smeaton, Donald Mackenzie

    Williams, Col. R. (Dorset, W.)

    Renton, Leslie

    Smith, Abel H. (Hertford, East)

    Willoughby de Eresby, Lord

    Renwick, George

    Stanier, Seville

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

    Roberts, S. (Sheffield, Ecclesall)

    Starkey, John R.

    Younger, George

    Ronaldshay, Earl of

    Staveley-HIII, Henry (Staffordshire)

    Rutherford, John (Lancashire)

    Talbot, Lord E. (Chichester)

    Rutherford, W. W. (Liverpool)

    Thornton, Percy M.

    TELLERS FOR THE NOES—Sir A.

    Salter, Arthur Clevell

    Walker, Col. W. H. (Lancashire)

    Acland-Hood and Viscount Valentia.

    Scott, Sir S. (Marylebone, W.)

    Walrond, Hon. Lionel

    STAMPS.
    Motion made and Question proposed: "That the stamp duties charged on conveyances or transfers on sale of property or leases shall be double those now chargeable."—[Mr. Lloyd-George.]
    Mr. AUSTEN CHAMBERLAIN: We have conducted our proceedings in a very good temper to-day, and I should be very sorry if our discussions should turn to a less favourable aspect. I think, however, that the Chancellor of the Exchequer will agree with me when I say it really is not reasonable to ask the House to begin at 12.30 the discussion of a series of Resolutions dealing with very important changes in the stamp duties which have aroused a considerable anxiety outside this House, and which we have had some evidence, have aroused great interest inside this House, in all parts of it. We are aware that the Chancellor of the Exchequer has been receiving a deputation in regard to some of these stamp duties. We do not know what has actually passed, but I understand the Chancellor of the Exchequer undertook to consider the points raised, and I rather gather that he has promised to remodel these proposals in some respects. He dealt with them in the briefest possible manner during his Budget speech, and I rather think there was a further six pages omitted from what he intended to tell us. At different periods of his speech the right hon. Gentleman put papers on one side, and I think he said he would omit something because his speech was becoming so lengthy. The right hon. Gentleman sketched his proposals in regard to stamps in the merest outline, and he did not argue them. I do not complain of this, but that is all the more reason why we should have a proper amount of time, and why we should discuss them during the ordinary working hours when our proceedings can be properly reported in the country. I beg to move that we now report progress, and I hope the Chancellor of the Exchequer will feel that my proposal is reasonable, and that he will be ready to accept it.
    Motion made and Question proposed: "That the Chairman do report Progress, and ask leave to sit again."
    Mr. LLOYD-GEORGE: I reciprocate the desire of the right hon. Gentleman that the good humour which has hitherto prevailed in these discussions should be continued, but I am afraid that I cannot consent to this Motion to report progress. The right hon. Gentleman will find that the attitude of the Government is a perfectly reasonable one. We have got two Resolutions, and that is all. Only two Resolutions from four o'clock this afternoon until half-past twelve o'clock—that is eight and a-half hours. Yet we have several other Resolutions to get. The general position is this: We have had eight and a-half hours' discussion. At the present rate it would be impossible to introduce any Finance Bill at all. If we discuss every Resolution in this way it will take two years to introduce the Bill. It is an impossible position for any Government to accept. We am discussing Resolutions whether I should be able to introduce a Bill or not. I admit that it is an important question which we are discussing on the Resolution. The offer which we have made to the Opposition is a fair one, and in their heart and conscience they know it. The proposal which I have made to the Leader of the Opposition is that we are willing to introduce the Bill before Whitsuntide—they can devote the time at their disposal in their own way—that is, they can discuss what they regard as the most important points just as they like. But they must let us introduce the Bill before Whitsuntide. It is not an unfair thing to claim that, after three weeks' discussion, we should obtain the first reading of the Bill. I remember the denunciation by the right hon. and learned Gentleman (Sir Edward Carson) of the Home Rule Bill, and in its way it was more violent than that what he is thinking of using now.
    Sir EDWARD CARSON Sir EDWARD CARSON, who was imperfectly heard in the Gallery, was understood to challenge the Chancellor of the Exchequer to quote the language of his I denunciation of the Home Rule Bill.
    Mr. LLOYD-GEORGE: I do not want to quarrel with the right hon. Gentleman; but the Home Rule Bill was regarded as revolutionary. Yet only three days was occupied in the discussion on its introduction; but now nine days have been occupied on these Resolutions. We are offering the Leader of the Opposition this week and next week for the discussion of these Resolutions. Hon. and right hon. Gentlemen opposite can divide the time in their own way. Some of the Resolutions they may like to have discussed at considerable length, whereas others probably will require but little debate. Really that is not an unfair offer to make to the Opposition—to give them three weeks for the preliminary stages to the introduction of the Bill.
    I am bound to say that the time when we disperse for the holidays must depend entirely on when we get the Resolutions through. If the right hon. Gentleman were on these benches, I feel certain—of course, I can only judge from my own experience —that he would not consent to the House dispersing for the holidays without getting the first reading of the Bill. I quite recognise that it is an important Budget: that it contains novel propositions. We realise that the House is entitled to a fair and full discussion of them, but I also say that in our opinion three weeks is a very fair time for such discussion. I trust that this Motion for progress may either be taken so as to enable us to go home with a full understanding as to getting the Resolutions through in the period I have suggested, or that we shall now be allowed to proceed to business.
    Mr. A. J. BALFOUR: The right hon. Gentleman has responded in a very good-humoured speech to the very good-humoured appeal made by my right hon. Friend behind me. He has appealed to history, to reason, and to the finer feelings on both sides of the House. With regard to history I am not quite in accord with the right hon. Gentleman. He says our practice when we were in a position to command a majority in this House was of a much more drastic character than that which we have been accustomed to under the iron rule of right hon. Gentlemen who sit on those beaches. I do not think that that is the fact. I will not go into the history of general legislation, but if the right hon. Gentleman will cast his mind back to a certain Budget he will find that he and his Friends insisted, even when there was no new departure in legislation with regard to fiscal matters, on having a far
    172
    larger period of time than they have been able to afford us. I have not gone over those old and musty records of ancient controversy, but I do remember our Debates on the Wednesday which the right hon. Gentleman has himself chosen as an example of the method employed in our time. The right hon. Gentleman actually mentioned the coal tax, and said it was got with other important war taxes in the course of a single night. But the coal and the other taxes were got on the first night, as is the necessary and invariable rule of the House when it deals with any taxes the postponement of the Resolutions on which would cause great loss to the Revenue. Therefore, no doubt, that tax was given on the very first night of the Budget, but when we come to the Report stage three days were given. I venture to say that these are more novel, more far-reaching proposals — proposals affecting more deeply great interests in the country than was the coal tax or any tax proposed by the late Government. Have we been allowed three days, not on Report, but on any stage of any Resolution? The right hon. Gentleman who has controlled our proceedings knows well enough that we have not only not been allowed three days, but we have not been allowed a day on any Resolution. Therefore, when you go further into the history of the past, I think the right hon. Gentleman must admit that taking the measure of the situation by the gauge which he himself proposed to us last week, the amount of time given at this stage of the proceedings to novel proposals was much greater under the late Government than has been given on the present occasion.
    When the right hon. Gentleman goes from his historical comparisons to an abstract discussion on the proprieties of Parliamentary Debates, and the possibilities of Parliamentary discussions, I find myself much more in accord with him. I am inclined to agree that you cannot on these preliminary proposals introductory to a Bill—you cannot spend, and ought not to spend, too large a fraction of the possible time of the Session. A Budget Bill, be it good or bad, must be passed in the Session. I quite agree that these preliminary proposals which are before the Bill is introduced cannot be allowed to spread themselves over the whole available time of the Session. In old days, even before I was in the House. and that is a good deal more than thirty years ago, these things were regarded, or very largely regarded, as formal stages,

    173
    but the peculiarity of the modern House of Commons is that it will not regard any theory as a formal stage, and directly you begin on what used to be a formal stage to discuss the merits, it really is very difficult to draw the line. I do not think any one will honestly say that there has been obstruction on these Resolutions. I think that may be admitted from all sides of the House. I do not say that there are no speeches which some of the hearers would wish had not been delivered, but on the whole I think it will be admitted that there has not been anything in the nature of obstruction at all. What discussion there has been has been inevitable, as the Budget excites great feelings, both of political economists and practical economists, and involves great interests of vast masses of the population. Therefore directly proposals are started and you begin to discuss them on their merits—and from the point of view of merits the discussion we have had is absolutely insignificant—they must be threshed out in a way in which it has been impossible to thresh them out so far.
    If I carry the House with me on both sides so far, now comes the practical point proposed by the right hon. Gentleman. I find it very difficult to bring into any kind of harmony the suggestion which he has made across the floor of the House, and the statement made by the Prime Minister at Question time with regard to the course of business between this and the Whitsuntide holidays. I listened to that statement with perfect amazement. We have four days and two half days before the day on which we commonly separate for the Whitsuntide holidays. How does the Prime Minister propose that they should be occupied? He says to-morrow, Budget; Wednesday, all sorts of small Bills, the names of which I do not carry in my mind. Then Thursday—that is to be Budget. I think the Government are perfectly right in postponing Supply. Friday is a private Members' day. Then the Government say, "We will sit on Saturday "—a procedure more disagreeable to the majority than to the minority, and the right hon. Gentleman, though he belongs to the majority, is in this particular case, I think, in a minority. Then on Monday, Tuesday, and Wednesday we are to take some business at present unspecified. The Prime Minister absolutely refused to give any sketch of the procedure of the House after Saturday. The plan of the Government at Question time was that we were to pass 13 Resolutions, and to get the Report of 24 or 25 on each of which a debate is in order, and
    174
    may be legitimate on which it may be necessary to move the closure, and on each of which there may be divisions. The Government suggested at Question time that it might be got through to-night, tomorrow, or on Saturday, Sunday, and Monday morning. The six or eight hours which have passed since that amazing programme was placed before us have produced a much more reasonable frame of mind in hon. Gentlemen opposite. I am not disposed to raise any serious objection to the proposal of the Chancellor of the Exchequer, provided it be understood that if these Resolutions are given before the Whitsuntide holidays, we shall have all the time before the holidays to discuss them. I am quite as anxious—I am not sure that I am not more anxious—as the Government to see this Bill in print, and I do not wish to defer that happy denouement longer than is inevitable, but I do say that the Budget now brought forward has this peculiarity over the Budgets to which the right hon. Gentleman looks forward so eagerly at some future time, that it embodies a great many disconnected principles. It is perfectly true that the number of propositions is not unlimited. It is not like Pitt's which had 272, or some large number. I really forget the number, but it was very large. There are quite different principles underlying the proposed taxes—those on land, the super-tax on incomes, and the rest of them. I think the right hon. Gentleman fully recognises that, and I do think that if the Government make an appeal to us to give them their Resolutions before the Whitsuntide holidays, so that the country may be able to consider the Bill during the holidays, and so that when we meet to discuss the second reading we shall have had time not only to give the principles private study, but to get some information from our constituencies as to the proposals—if they make that demand on us, then I think they ought to give us all the time available before the holidays. If they are prepared to accept that, as I think, very reasonable suggestion, I do not say that the possibilities of a bargain are entirely beyond the horizon of practical politics. Of course, it must be understood that when the happy moment arrives when these Resolutions have passed the Committee stage and the Report stage, we are not longing and languishing in anxiety for the Bill itself. It seems to me that if the Government are prepared to accept that suggestion, there is in it the element of some arrangement which might be come to.
    Mr. ASQUITH: I think the right hon. Gentleman made a reasonable proposition. What I would propose is that we should take to-morrow (Tuesday) the Budget Resolutions; on Wednesday the Lords' Amendments to the India Councils Bill; on Thursday, with the exception of ten minutes for the introduction of the Labour Exchanges Bill, and next week on Monday and Tuesday and a half day on Wednesday, the Budget Resolutions; and on Thursday the Motion for the adjournment of the House for the holidays. That means five full days and two half days for the business I have mentioned. I would only add that we should like to take tonight the Military Manœuvres Resolution.
    Motion, "That the Chairman do report Progress, and ask leave to sit again," put, and agreed to.
    Resolutions to be reported this day (18th May). Committee also report progress; to sit again this day.

    MILITARY MANCEUVRES ACT, 1897 (ORDER IN COUNCIL).
    Order read for resuming Adjourned Debate on Question [13th May]," That an humble Address be presented to His Majesty, praying His Majesty to make an Order in Council under the Military Manœuvres Act, 1897, a draft of which was presented to this House on the 16th day of February last."—[Mr. Acland.]
    Question again proposed. Debate resumed.
    Mr. E. H. CARLILE: I do not want to delay the right hon. Gentleman in getting his draft Order in Council, but there are one or two questions which I addressed to the right hon. Gentleman the other day to which I should be glad to get a reply. They had reference mainly to the mode proposed for dealing with compensation for damages to crops and hedges, the accidental firing of hedges, and things of that sort during the course of the manœuvres; and I also wished to learn something of the steps to be taken for the protection of life and limb from motor-car accidents within the area and during the progress of the manœuvres. It may be within the knowledge of the House that during the manœuvres messages are constantly carried from the general officers commanding the different divisions or units of troops that may be scattered over the line of country. These messages, in the old days, were carried by
    176
    mounted officers, and are now carried largely over the large areas in which the right hon. Gentleman proposes to operate in motor-cars. I know that in the old days we were never limited in speed except by the powers of the horses we were riding. We always carried these messages as fast as we could. The tendency will be for these motor-cars to do exactly the same. The temptation will be almost irresistible. Nevertheless, we have to remember that these messages will be carried by motorcars during the day time, when there will be a considerable amount of traffic along the roads in this very large area. Therefore it will be necessary to take efficient steps to secure some reasonable limit of speed—something approximating to the ordinary legal speed—along these roads during the manœuvres. Then with regard to billeting, I do not know whether it is proposed to have all the troops under canvas and the horses picketed, or whether it is proposed to billet the men to any extent, and, if so, has the right hon. Gentleman any intention of adopting the powers given to him with the Army (Annual) Bill in connection with billeting? I gather that the right hon. Gentleman does not propose to billet troops in private houses, so that if any billeting is done it will be done in licensed premises. I trust that the right hon. Gentleman will be able to answer these questions.
    The FINANCIAL SECRETARY to the WAR OFFICE (Mr. F. D. Acland): The reply to the hon. Member's questions is as follows. The object of having this Order in Council made under the Military Manœuvres Act is to set up the Military Manœuvres Commission, and that would be set up to-morrow but for the military manoeuvre adopted by the hon. Member on Thursday night. The draft Order in Council has to lie for thirty days in both Houses of Parliament, and not until that time is completed can we reach this stage.
    Mr. CARLILE: The hon. Gentleman will excuse me for interrupting him, but 1 should like to point out that the draft Order was introduced on 16th February, and surely if any attention had been given to the matter there would have been ample time for it to lie upon the Table of the House of Lords, and also upon our own Table.
    Mr. ACLAND: The thirty days in the House of Lords did not finish until Thursday in last week.
    Mr. CARLILE: Not since February 16?
    Mr. ACLAND: The hon. Member forgets that the House of Lords does not sit so often as this House. The draft Order was laid, notice had been given to every parish council, and no objection has been taken to the draft Order, and now we are asking the House to allow the draft Order to be made into a full order. That has unfortunately been postponed from the Council held to-day until the next Council. The replies to the points raised by the hon. Member are these: It is the duty of the Military Manœuvres Commission, when formed—as it will be when the Order is made—to go into the questions as to what roads may be used, as to what land may be used, as to what water supply may be used, and to map out the area into parts which may or may not be used for the purposes of the manœuvres. They will also have to go into the question of compensation as set out in clause 5 of the Military Manœvres Act. There is no intention of putting into force. the new powers with regard to billeting under the new Army (Annual) Act. Those powers were only conferred for the purpose of calling out the Territorial Force for training in the time of emergency. They will not be used in any way for these manœuvres for the Regular. troops. As regards motor-cars, the small experience I have had of such manœuvres shows that the difficulty with regard to them arises from the private cars which throng the scene of these manœuvres, and not from any cars which are being officially used by the officers in command. I can assure the hon. and gallant Gentleman that so far as those cars are concerned, which are used for sending messages and so on, they have to conform to the ordinary law of the land in exactly the same way as private cars. No exemption is claimed for or given to them under the Military Manœuvres Act or any other Act. Therefore, it is to be hoped that there will be no undue interference with the ordinary avocations of those who use the roads.
    Mr. CARLILE: There will be, unless you take efficient steps to prevent it.
    Mr. ACLAND: The hon. Member says there will be unless we take sufficient steps.
    Mr. CARLILE Mr. CARLILE I said efficient steps.
    Mr. ACLAND: There is no necessity for us to take special steps, because all motor cars are under exactly the same law—namely, the ordinary law, no special
    178
    exemption being claimed on their account at all.
    Sir ROBERT HOBART: I should like to ask the hon. Gentleman a question which, I think, is germane to this subject. He proposes to put into force the Military Manœuvres Act for the purposes of large manœuvres over a section of the country set out in the schedule to the Draft Order. Perhaps I may say here that I do not think any Member of this House has had a good opportunity of studying this Draft Order, because it was not printed—for what reason or reasons I do not know—but by means of the grace and favour of the Vote Office I have been able to possess myself of a copy. I see that these manœuvres are to go over a large part of the country. Several counties are mentioned—amongst others the county of Hampshire. I myself come from the county of Hampshire—that part of it which is called the New Forest. Now in the New Forest we are all full of patriotism, and most anxious to do anything we can to help the Military Forces, and my right hon. Friend the Secretary for War and my hon. Friend who has just spoken. At the same time, however, we are under particular conditions. Amongst other things under the Military Manœuvres Act the New Forest is specially mentioned, in order that if ever military manœuvres are held in that Forest they shall be held under that Act. I will not weary the House at this late hour with going into details, but it is within the recollection of the House that it was passed in 1887.
    Mr. ACLAND: 1897.
    Sir ROBERT HOBART: Yes, after very considerable discussion in this House and in Parliament generally on the subject. It is laid down most distinctly that if ever military manœuvres were to take place in the New Forest, special application was to be made to the Court of Verderers. Besides representing the New Forest in this House, I also have the honour of being Chairman of the Court of Verderers. Last year the right hon. Gentleman wished to have some large military manœuvres in the New Forest, and I believe that by some misadventure or some mistake, notice was not given to the Court of Verderers, nor was the proposal put in force. under the Military Manœuvres Act. Being full of patriotism we did our very best to get over that difficulty, and after interviewing my right hon. Friend, who acted most kindly, we accepted with the greatest possible

    179
    pleasure his proposal that the manœuvres should be held, not under the Military Manœuvres Act, because they could not then be held under that Act, there being no time to give the necessary notices, but under parallel conditions. The manœuvres took place, and I think I can challenge my right hon. Friend to say that everything possible was done by the Court of Verderers to meet the wishes of the Army Department. But I must tell the House that it was arranged that they would fulfil the conditions of the Military Manœuvres Act, and not come again to the New Forest for five years. That was plainly stated. What was our surprise to hear again this year that they were going to have military manœuvres again.
    The SECRETARY of STATE for WAR (Mr. Haldane): I think I can relieve my hon. Friend's mind. The manœuvring area we propose to take under this Order in Council and this Act has nothing to do with the New Forest. It touches a part of Hampshire altogether outside the New Forest, so that my hon. Friend may be quite easy in his mind.
    Sir ROBERT HOBART: That is exactly my point. The right hon. Gentleman, if he wants to come again, can come again. If he should have forgotten again to give six months' notice under the Military Manœuvres Act and said he wished to hold manœuvres, I can only assure this honourable House that the Court of Verderers would again have overlooked the mistake and allowed the military to take place, and for the second time have given the right hon. Gentleman—two years running—full opportunities for the manœuvres. Well, I have said that we tried to arrive at an agreement. I am sorry to say that this agreement has not come off. I can only now ask if the right hon. Gentleman or the hon. Gentleman can explain to the House why it was that during last autumn, at all events, they could not make up their minds, when they resolved to hold great manœuvres in the neighbourhood of the New Forest, to proceed to schedule the New Forest according to the Act of Parliament and according to the intentions of Parliament when it passed the Act?
    Resolved: "That an humble Address be presented to His Majesty, praying His Majesty to make an Order in Council under the Military Manœuvres Act, 1897, a draft of which was presented to this House on the 16th day of February last."
    To be presented by Privy Councillors and Members of His Majesty's Household.
    And, it being after half-past Eleven of the clock on Monday evening, Mr. Deputy-Speaker adjourned the House without Question put, in pursuance of the Standing Order.
    Adjourned at. Sixteen minutes after One o'clock.

  Electric Tramcar Drivers.
  Electric Tramcar Drivers.
  Metropolitan Stage Carriages.
  Metropolitan Stage Carriages.
  Property Lost in Public Vehicles.
  Property Lost in Public Vehicles.
  Small Holdings (Bromham).
  Small Holdings (Bromham).
  Theale Poultry Farm.
  Theale Poultry Farm.
  Trawling in Territorial Waters (Foreign Vessels).
  Trawling in Territorial Waters (Foreign Vessels).
  Old Age Pension Claims (Ireland).
  Old Age Pension Claims (Ireland).
  Old Age Pension Claims (County Meath).
  Old Age Pension Claims (County Meath).
  Sanitary Services (India).
  Sanitary Services (India).
  Madras University (Examiners).
  Madras University (Examiners).
  Medical Service (India).
  Medical Service (India).
  Indian Army (Promotion of Officers).
  Indian Army (Promotion of Officers).
  Wynne Estate, Ballaghameehan, County Leitrim.
  Wynne Estate, Ballaghameehan, County Leitrim.
  Evicted Tenants (Mr. Leigh's Estate).
  Evicted Tenants (Mr. Leigh's Estate).
  Royal Irish Constabulary.
  Royal Irish Constabulary.
  Purchase of Tenants' Interests (Ireland).
  Purchase of Tenants' Interests (Ireland).
  Lahiff Estate, New Inn (County Galway).
  Lahiff Estate, New Inn (County Galway).
  Hopkins Estate, Errill, Queen's County.
  Hopkins Estate, Errill, Queen's County.
  Royal Irish Constabulary (County Meath).
  Royal Irish Constabulary (County Meath).
  Purchase of Holdings (Ireland).
  Purchase of Holdings (Ireland).
  Development of Local Industries (Ireland).
  Development of Local Industries (Ireland).
  Roberts Estate, County Cork (Mrs. C. Gleasure).
  Roberts Estate, County Cork (Mrs. C. Gleasure).
  Board of National Education (Ireland).
  Board of National Education (Ireland).
  Union and District Councils (Athlone, County Meath).
  Union and District Councils (Athlone, County Meath).
  Douay Bible (Petty Sessions, Ireland).
  Douay Bible (Petty Sessions, Ireland).
  Irish Creameries (Surprise Butter Competitions).
  Irish Creameries (Surprise Butter Competitions).
  Winter Dairying in Ireland.
  Winter Dairying in Ireland.
  Wages Dispute (Tyne District).
  Wages Dispute (Tyne District).
  Sight Tests (Mercantile Marine).
  Sight Tests (Mercantile Marine).
  Railway Companies (Free Passes).
  Railway Companies (Free Passes).
  Income Tax, Temperance Society, Loughrea.
  Income Tax, Temperance Society, Loughrea.
  Income Tax.
  Income Tax.
  Medical Officers (Scotland).
  Medical Officers (Scotland).
  Northern Nigeria (Attack on Native Police).
  Northern Nigeria (Attack on Native Police).
  American Mails (Rosslare and Fishguard Route).
  American Mails (Rosslare and Fishguard Route).
  Empire Day Parades (Attendance of Postmen).
  Empire Day Parades (Attendance of Postmen).
  Post Office Night Messengers.
  Post Office Night Messengers.
  Bicester Post Office.
  Bicester Post Office.
  Sample Post to Cuba, Venezuela, and Ecuador.
  Sample Post to Cuba, Venezuela, and Ecuador.
  Post Office Committee.
  Post Office Committee.
  Vaccination Acts (New Cleethorpes).
  Vaccination Acts (New Cleethorpes).
  Local Government Board (Assistant Clerks).
  Local Government Board (Assistant Clerks).
  West Riding Rivers Board.
  West Riding Rivers Board.
  Mentally Defective Persons in Workhouses.
  Mentally Defective Persons in Workhouses.
  War Office Contract (Shorncliffe Camp).
  War Office Contract (Shorncliffe Camp).
LONDON UNITED TRAMWAYS BILL. [H.L.]
Report from the Select Committee that it is not expedient to proceed further with the Bill; read, and ordered to lie on the Table.
ALEXANDRA (NEWPORT AND SOUTH WALES) DOCKS AND RAILWAY BILL. [H.L.]
  RIO TINTO COMPANY BILL. [H.L.]
    SOUTH STAFFORDSHIRE WATER BILL. [H.L.]
      ALLIANCE AND DUBLIN CONSUMERS GAS BILL. [H.L.]
      Read 3a, and passed, and sent to the Commons.
NORTH METROPOLITAN ELECTRIC POWER SUPPLY BILL.
Read 3a, with the Amendments, and passed, and returned to the Commons.
NEWRY, KEADY AND TYNAN RAILWAY BILL.
  AMMANFORD GAS BILL.
    CITY OF LONDON (STREET TRAFFIC) BILL.
    Brought from the Commons; read la; and referred to the Examiners.
LEYLAND AND FARINGTON GAS BILL.
  LITTLEHAMPTON GAS BILL.
    WANDSWORTH BOROUGH COUNCIL (SUPERANNUATION) BILL.
    Returned from the Commons, with the Amendments, agreed to.
GAS AND WATER ORDERS CONFIRMATION BILL. [H.L.]
Read 2a (according to order).

NATIONAL DEFENCE.
THE EARL OF WEMYSSMy Lords, I rise to move to resolve, "That in the opinion of this House the Territorial Force as at present established totally fails to give practical effect to the Resolution unanimously agreed to by the Lords
898
on July 10,1905; and this House is further of opinion that immediate steps should be taken by the Government to render our land defences at all times such that, in the words of the said Resolution, 'no nation would ever attempt in any form a hostile landing on our shores.'"
I shall not, in submitting this Motion, occupy very much of your Lordships' time, as I do not feel up to making a speech. I wish, in the first place, to read to your Lordships the Resolution agreed to by this House four years ago, as it has a material bearing on the whole question of national defence. The Resolution was adopted on July 10, 1905, and runs as follows:—
"That it would be a danger to the realm and limit the power of the Navy as an offensive force in war to trust to it alone for home defence; and inasmuch as it is admitted that the Navy cannot guarantee us against so-called hostile 'raids,' it is the more needful that our land defences should at all times be such that no nation would ever attempt, in any form, a hostile landing on our shores."
I hold that to be a very valuable asset in our defensive policy. It was very valuable at the time, for your Lordships will recollect that the blue water was then in full flood. Even the Prime Minister plunged into it and told the nation, not only as Prime Minister, but also as head of the Defence Committee, that all that we need be afraid of were raids. The Navy, he said, could defend us against anything short of raids. Therefore the commonsense view of the matter is that it is wise to avoid the element of chance. But there is this other value in the Resolution, that both sides of the House agreed to it. It was accepted without a word of opposition by both Front Benches, and it therefore amounts to an I.O.U. on their part that they should do their best to bring about such a state of things that no nation would ever dream of a hostile landing on our shores.
Now what has been done by Government since this Resolution was adopted? They certainly have done a good deal, for they have revolutionised our whole system of national defence. The Militia has been abolished, and the Volunteers as such have ceased to exist. I know that the Secretary of State for War has said that we Volunteers did not take the matter seriously, that we looked upon it more as a club than anything else. He is welcome

899
to say that. At any rate, the Volunteers are gone. In the place of the Militia we now have the Special Reserve, and in place of the Volunteers we have the Territorial Force. How has this revolution been brought about? It has been brought about in the main by the combined action of the two Front Benches, but also through the colonels of Militia themselves not protesting against the Militia Force, whose name is written on nearly every page of British history, being swept away. If they had put their foot down the Government would have been obliged to let the force alone, and you would still have had the old historic Militia. But that was not done, and the Militia has disappeared.
Let us see what the country has secured in the place of the Militia. The Special Reserve differs toto cœlo from the old Militia. The old Militia was a force specially for home defence, and it served abroad voluntarily. The Special Reserve is not for home defence; it is for over-sea work. The Special Reservist is bound by the terms of his enlistment to serve abroad if required. There is an interesting passage in one of Mr. Haldane's thousand and one speeches—I do not know which—in which he refers to over-sea enlistment. This is what he says—
"An over-sea Army can only be got on a voluntary basis, and must be recruited from men moved by enthusiasm—men with the virgin mind from a military point of view—which is attracted by a sense of mystery, and would be somewhat damped by preliminary compulsory training."
What this exactly means I do not know.
I pass to the question of the Territorials, who, as I have said, stand in the place of the Volunteers. They are specially for home defence. On April 26 I asked the noble Lord the Under-Secretary of State for War some questions, with a view to this Motion, as to the state of the Territorial Force on April 1. Why Mr. Haldane chose April 1 for its birthday I never understood; but this is what the noble Lord the Under-Secretary stated was the condition of the Territorial Force on its natal clay. He said that they had 79 per cent. of the number of officers required, and 84 per cent. of the men; that 107,857 men had engaged to serve for one year only in 1908, and that on April 1 last 56,238 of them had re-engaged for one year or more. should be interesting to know how many
900
of the remaining men have signified their intention of re-engaging? The noble Lord also gave us on the same occasion the important information that out of the total number on the strength of the Territorial Force over 62,000 were under 20 years of age, and that the limit of age for men is 17 and for boys 14. That was the state of affairs when my noble friend spoke on April 26. The numbers may have increased since then. My noble friend will tell us.
I am willing, in dealing with this question, to assume that the 313,000 men have been obtained, that they are all 25 years of age or over, that each man can hit a bull's-eye at 2,000 yards, and that they are drilled as perfectly as any soldier on the Continent. Notwithstanding all that, I maintain that what I say in this Resolution is right, and that they would even then be of practically no avail. I mean that their number is wholly insufficient when it is considered what they would have to do. Read the Duke of Wellington's letter to Sir John Burgoyne written sixty years ago. What does he show? That of your force for home defence you require half in Ireland, that you require 10,000 in the Channel Islands, and 10,000 at every fortified naval base. How many will that leave of your 313,000 men? We have it on the high authority of Lord Roberts, in the patriotic and noble speech that he made in your Lordships' House in December last, that the Territorial Force is absolutely inadequate in numbers for the purposes which it professes to serve and that you require a force of at least 1,000,000.
I had hoped that the noble and gallant Field-Marshal would have been in his place this evening, but it is his golden wedding, and I am sure your Lordships and everyone in the country will agree in the hope that Lord and Lady Roberts may pass many more happy years together. I saw Lord Roberts last Saturday and I asked him, as he could not be present to-day, to embody his views in a letter; and my main object in speaking to-night is to read to the House the views on this subject of the greatest military authority in this country. Lord Roberts writes—
"I much regret I cannot be in the House of Lords on Monday next to speak in support of the Resolution you are bringing forward. I therefore write these few lines to tell you that I am entirely in accord with you as to the necessity for im-

901
mediate steps being taken to ensure the security of our land defences. The extraordinary apathy with which the momentous question of home defence is viewed by both Houses of Parliament, and, as a consequence, by the country generally, is not only lamentable but difficult to understand. If the lessons we learnt during the war in South Africa had been taken to heart, some attention would have been paid to the earnest recommendation of the Elgin Commission that in order to provide a sufficient Reserve for carrying on war 'certain powers of expansion' were needed 'outside the limit of the Regular Forces of the Crown.' We have, in addition, the important conclusion arrived at by the Norfolk Commission, 'that a home defence army, capable, in the absence of the whole of the greater portion of the Regular Forces, of protecting this country against invasion, can be raised and maintained only on the principle that it is the duty of every citizen of military age and sound physique to be trained for the national defence, and to take part in it should emergency arise.' It really would seem as if we, as a nation, imagine that we are a peculiar people, exempt from the possibility of war, its dangers, and its consequences; yet less than a year ago Lord Cromer stated in the House of Lords his conviction that there is a possibility of war, and a war of a serious character, at no very distant period. How are we prepared to meet such a crisis?"
Are you prepared to meet such a crisis? I know that you hive what is called organisation, but your organisation, excellent and perfect though it may be, is like Mrs. Glasse's recipe for hare soup. The first thing is to catch your hare. Have you got your hare? You have not a seventh part of the hare Lord Roberts says you ought to have. Lord Roberts proceeds—
"We have no Army to speak of, and we have no organisation by which we could replace the losses which must inevitably occur during the first few months of any war on a large scale. On July 10, 1905, the day on which the resolution was carried to which you propose to refer, I said that 'I have no hesitation in stating that our armed forces as a body are as absolutely unfitted and unprepared for war as they were in 1899–1900.' Close upon four years have passed since then, and I have no hesitation in reaffirming my conviction. Moreover, as your Motion deals mainly with the supremely important matter of home defence, I would add that if the expeditionary force, or even the first four divisions of that force, were sent abroad, our land forces are, in my judgment, in such a deplorable condition that we should be at the mercy of any invader who could land any number approaching to 100,000 men on these shores."
That is Lord Roberts's opinion, and I am confident that he is supported in that opinion by every one of his brother Field-Marshals and by every soldier of note in this country. Yet we remain in this state, and apparently do nothing. It was with a view of calling attention to this state of things that I placed my Motion on the
902
Paper. Lord Roberts's letter says all that is necessary to be said on the subject, and I will not trespass further on your Lordships' time.
What is the first duty of the Government to the State? It is to make the State safe, to make the Empire safe, and to make our hearths and homes safe. How are you performing that duty? Surely you do not suppose that all these Dreadnoughts in course of construction abroad are being built entirely for defence purposes? The question of invasion enters very largely into the foreign shipbuilding. As a very old man, who may never speak again in this House, I say it is the duty of the two Front Benches to put the safety of the Empire before every other consideration, and to act together to see what can be done. They laid their heads together destructively; I ask them to lay their heads together constructively. If you had the courage, the commonsense, and the justice to the country to do what ought to be done, which is to bring about such a state of things—never mind how it is done—that no nation would ever dream of a hostile landing upon these shores, what would be the first effect? The first effect would be that you would stop rival foreign shipbuilding. I beg to move the Resolution which stands in my name.
Moved, to resolve, "That in the opinion of this House the Territorial Force as at present established totally fails to give practical effect to the Resolution unanimously agreed to by the Lords on July 10, 1905; and this House is further of opinion that immediate steps should be taken by the Government to render our land defences at all times such that, in the words of the said Resolution, 'no nation would ever attempt in any form a hostile landing on our shores.'" —(The Earl of Wemyss.)
THE EARL OF ERROLLMy Lords, I wish to say a word or two in support of what has fallen from the noble Earl who has just sat down. I should like to point out in the first instance, that the whole problem, as I see it, of national defence has entirely altered since the speeches of the First Lord of the Admiralty and the Prime Minister on March 16 in another place. If those speeches did not come as a bombshell, which might seem an exaggerated form of speech, I venture to say that they came as a very unpleasant

903
surprise to all Englishmen. Prior to those speeches our defensive measures were based entirely on the assumption of our absolute supremacy at sea; but in consequence of the admissions of the Government that within the next three or four years the relative strength of the British and German navies would approach much more nearly to equality, I venture to say that the conditions of the defences of this country have entirely changed. Precautions which we considered sufficient as long as the two-Power standard was maintained are no longer, I contend, adequate; and I venture to think it has become essential that we should have a highly-trained and efficient land force as well as a highly-trained and efficient Navy.
The Territorial Force as now organised does not, I think, supply this want either in numbers, in training, or in organisation. They have no horses with which to mobilise, no stores, and no reserve ammunition. If they ever reached their number of 313,000, I venture to say they would be absolutely insufficient, as it would take 200,000 men, by a calculation which Lord Roberts, I think it was, gave us, to garrison the naval bases. With regard to horses, I would like to give as an illustration the case of the London Yeomanry. There are three regiments horsed by Mr. Tilling, and I believe it is one of his conditions that these regiments should not go out at the same time, because he has only enough horses ready to mount one regiment out of the three. What, my Lords, would the result be if, in the case of a sudden surprise, the Yeomanry were ordered quickly down to the coast for reconnaissance? One regiment would be able to ride; the second, I suppose, would go down in motors or taxi-cabs, and when they got there would have to do their scouting on foot; and the third regiment would probably have to walk all the way.
I am not saying this in any spirit of hostility to the Territorial Force. On the contrary, I have the highest admiration for the spirit in which the men have come forward voluntarily and cheerfully to do the work which should be incumbent on all men of suitable age and suitable physique. The Territorial Force, if they ever have to fight, will have to fight the very best picked troops of the Continent, and I do not think that anybody would maintain that as at present organised they are equal to the
904
task. As long as the Regulars are at home I admit that there is no fear of invasion, but when the Expeditionary Force goes out of the country I think that danger may arise. Your Lordships probably may remember that towards the close of the Boer War this country was very nearly entirely denuded of Regular troops. If my memory serves me, there were something like 17,000 troops only in this country, and most of those were recruits in the depôts. There were no guns at all, until we bought six batteries, I think, from Germany. I leave it to your Lordships to consider whether in the future that source of supply will be open to us. These conditions may recur in the future, but with this very important difference, that at that time we had the absolute command of the sea. Our position at sea at that time was so assured that it was absolutely unassailable and unchallenged.
In case of foreign complications, it seems to me that one of two things would happen. Either public opinion in this country would be so strong that the Expeditionary Force would not be allowed to go abroad, or, if it did go abroad, the country would be in great danger from the want of numbers and training of the troops that were left behind. We could not rely on the Army Reserve to be of any assistance, because it is impossible for the Expeditionary Force to mobilise without absorbing the whole of the Army Reserve. The question as it appears to me then is, When is an Expeditionary Force not an Expeditionary Force? and the answer seems to be, When the sense of insecurity in the country would not allow it to go on expeditions. India might be urgently needing troops, or a force might be wanted to act in conjunction with the Fleet and to carry a war into an enemy's country. That is the raison d'étre of an expeditionary force. I think that the suggestion of training the Territorial Force for six months after war has been declared is very dangerous. It means, in the first instance, keeping the Expeditionary Force at home when everything might depend on its being elsewhere. It must be remembered that when the Expeditionary Force had left the safety of the country would then be entrusted to the Territorial Force, who are 2,500 short in their officers, and many of whose officers have a very small amount of military experience. In addition, the noble Lord has told us that of the force 62,000 are under

905
twenty years of age. It is for these reasons that I venture to support the Motion of the noble Earl.
THE UNDER SECRETARY OF STATE FOR WAR (LORD LUCAS)My Lords, I am in some difficulty in replying to this Motion, for the reason that it reproduces the discussion which took place in your Lordships' House last session, inaugurated by Lord Roberts, whose absence to-day I should like to join in deploring, although the cause is one on which he is to be entirely congratulated. On that occasion my noble friend Lord Crewe dealt exhaustively with the proposals then put forward, and which, of course, had not come to his notice then for the first time; and he stated the views of the Government regarding the opinions as to the possibility of invasion which Lord Roberts then laid down. I do not think it is for me to repeat the views Lord Crewe then expressed. I do not propose, therefore, to take up your Lordships' time by discussing how far our preparations for home defence are adequate against invasion on the scale then suggested and repeated by the mover of the Motion now before the House and by the noble Earl who spoke last.
It is, of course, impossible for me to detail what the exact nature of our mobilisation plans is. It has been the invariable rule that mobilisation plans should never be disclosed in detail, and I do not propose to depart from that rule. But I would point out that this scheme was not produced by Mr. Haldane until he had been for a considerable time at the War Office. Mr. Haldane had at his disposal what no other Secretary of State for War in this country has ever had at his disposal—a General Staff to assist him in forming his plan. The fact that there was a General Staff, composed of some of the most capable officers in the British Army, enabled the Secretary of State to go into this plan in the most detailed manner, to consider it from every point of view, to consider the possibility of invasion and how far his plans would meet any possible invasion: and that was done in a far more minute and thoroughgoing manner than ever before in the history of the British Army. On that basis our schemes for home defence have been drawn up. They have satisfied, not only the General Staff and the Army Council, but they have also satisfied the Committee of Imperial Defence. It would be impos-
906
sible for me to reopen that whole question, and I do not propose to take up your Lordships' time by doing so.
There is, however, one direction in which the situation has considerably changed since the discussion of last autumn. I refer to the condition of the Territorial Force as it was then and its condition now. As your Lordships are doubtless aware, the Territorial Force has improved both in size and in efficiency at an astonishing rate. The numbers have increased very largely lately. Our latest return gives the number at 254,000 men, and, with officers, about 263,000. That makes it in numbers far more formidable than was the old Force, and owing to the extraordinarily keen way in which the men have undertaken their duties during the winter it has become a far more efficient Force. It is now emerging as a Force, quite up to the standard of efficiency that we expected of it. In fact, I may say that it is far more efficient than we ever had any reason to expect it would be. With regard to the number of one-year men—a question which was considered to be one of danger to the Territorial Force—I am glad to say that our returns show that we are in no danger of losing any considerable number of these men. They are re-engaging in very large numbers. April was, of course, the month during which the term of most of these one-year men expired, and we had reason to believe that the total strength of the Force would drop; but during the past month, I am glad to say, this has not been the case. So few one-year men have gone out that they have been roughly counterbalanced by the number of recruits who have come in. That shows that the danger of the Force being very much depleted by the loss of one-year men was exaggerated.
The noble Earl, Lord Erroll,spoke of the difficulty of mobilising the Territorial Force. Mobilisation is a difficult thing. It cannot be worked out in a hurry. We are engaged at the present moment working out the mobilisation requirements of the Territorial Force, and we hope that we shall be able to say before a very long time has elapsed that the Territorial Force is capable of being mobilised immediately. One of the most important things, as the noble Earl said, is the question of horses. The number of horses available for training purposes—that is to say, the number you can hire for 5l. for the fortnight—is one

907
thing, and the number of horses available in the country is another and a very different thing; and the fact that during peace time two or three different regiments of Yeomanry train with the same horses does not in the least imply that those regiments will be expected to ride the same horses or no horses at all on mobilisation.
LORD SALTOUNAn untrained horse for a cavalryman is absolutely useless.
LORD LUCASThe noble Lord knows what is done in the Yeomanry every year. The great majority of horses go into camp absolutely untrained, and if the men upon them know how to ride they learn their duties in a comparatively short space of time. An untrained horse for cavalry purposes is a less serious drawback than is supposed. We are making rapid progress with the horse census, which is being taken for the purpose of enabling us to lay our hands on all the required horses upon mobilisation. The census has only been taken in a certain number of counties up to the present, but we have good grounds for stating that there will be no difficulty when the time comes in securing sufficient horses for mobilising the whole of the Territorial Force, as well as the Regular Army.
As to the number of men under twenty, I do not think that is a consideration of the first importance when you remember that this is a question of home defence. The age of twenty was laid down as the age under which a soldier should not be sent to India because of the danger to his health, and it has been taken as the age below which a soldier should not be sent on foreign service in any dangerous climate. But there is nothing whatever to prevent a man being a perfectly efficient soldier for war in this country under the age of twenty. Therefore the fact that there are a large number of men in the Territorial Force under the age of twenty does not necessarily impair its efficiency.
THE EARL OF ERROLL: May I inform the noble Lord that in foreign Armies they take no one at all under twenty?
LORD LUCASIf your Lordships adopt the Resolution which has been moved by the noble Earl it will be inconsistent with the action of your Lordships' House two years ago in passing the Territorial and
908
Reserve Forces Act. On that occasion the whole of the schemes of the Government with regard to the Army were before your Lordships. Our proposals with regard to the Regular Army, the reductions that have taken place in the Regular Army, the proposal to convert the Militia into the Special Reserve, and the use we were going to make of it—all those matters, as well as the composition of the new Territorial Force, were before your Lordships; and, as far as we can tell at the present time, the reorganisations that have taken place have been carried out with success. The predictions of failure with regard to the Special Reserve and the Territorial Force have not been fulfilled. What we believed at the time would take place if our schemes were carried through has occurred; and therefore, having approved the reorganisation and having allowed the Territorial and Reserve Forces Bill to become law, it would be inconsistent on the part of your Lordships to adopt a Resolution such as that on the Paper.
LORD LOVATMy Lords, I rise to make two protests, one as a Member of your Lordships' House and the other as a member of the Territorial Force. I protest, in the first place, against the charge of inconsistency, on which we have been ridden off on several occasions already. Surely because this House passed the Territorial and Reserve Forces Act it is not responsible for all the follies committed in the name of that measure. The inconsistency is entirely on the other side. We were definitely promised certain things, but we have not got them. We were definitely promised that we should have our mobilisation arrangements immediately. I ask, What mobilisation scheme for the Territorial Force has yet been arranged? I think the greatest credit is due to Mr. Haldane for the work he has done in giving us a thorough organisation of the British Army. This is undoubtedly an advance on anything done before. But the point is that Mr. Haldane has not got sufficient men, nor men with adequate training, to face the duties that may have to be performed in the event of invasion. I protest against the idea that the new Territorials are so much better than the Auxiliaries used to be. Take the Yeomanry. The Yeomanry as units have not improved because the training in many commands has been reduced while the officers' schools have been abolished. This is a direct

909
violation of what is in the Territorial and Reserve Forces Act and of what we were promised. Then take the question of musketry. The new musketry regulations are such that a man has only to fire at a miniature target, or in a thirty-yards range, or on the open range on three occasions to figure in the Parliamentary sense as an efficient shot. This is in order to pretend that you have a larger number of efficient defenders of the country than you really have; and to state that these men are more efficient than the old Auxiliaries is to state a thing which is not necessarily true. The preliminary mobilisation arrangements are by no means completed. I do not say that we have not made an advance, but to say, as has been stated in the country by Mr. Haldane, that we have advanced to anything near thorough mobilisation, and that we are in any sense ready to take the field as a mobilised Army to-day, is to state what is not absolutely a matter of fact.
LORD RIBBLESDALEMy Lords, before my noble friend the Leader of the House replies I should like to say a word on the question of horses. If I heard the noble Lord the Under-Secretary aright, we must take it that he is perfectly satisfied that on mobilisation there would be plenty of horses available and sufficient to meet the wastage which would have to be provided for. I am also willing to take it from the noble Lord that it does not matter very much whether the horses are trained or untrained. The old exercises have been done away with, and where horses have only to do the duties of scouting, or to cover an advancing Army or things of that sort in an enclosed country where they must more or less stick to roads or by-roads, the soldier, it he can ride at all, can probably get along as well on a horse that had not been through the riding school as on one that had. But though horses need not be trained in any sense in the old idea, they must, at all events, be in condition. It is no us taking one-year old or two-year old horses, or horses off grass, to do cavalry work. The noble Lord told us that some sort of registration was taking place—I believe in compliance with an undertaking given in your Lordships' House at the instance of Lord Lovat—and that we should very soon know what number of horses were available. We are told that, by some law of the Medes and Persians, nothing is ever to be revealed concerning mobilisation. I do not know
910
whether that is right or not; but I should like to ask the noble Earl the Leader of the House whether the secrecy regarding mobilisation is to apply to the question of horse supply. I take some interest in the question of horses, and I was asked by the remount authorities to endeavour in my part of the country to open up a supply of Government horses, but if we are only to be told that when the time comes sufficient horses will be forthcoming the interest of people who are trying to do their best in the matter will disappear. I think we should be told what is the number of horses really available.
VISCOUNT MIDLETON: My Lords, as my noble friend Lord Lansdowne is unfortunately still unable to be present, perhaps I may be allowed to say a few words as to the feeling on this Bench regarding the noble Earl's Motion. I confess that many of us have felt sorry that it has been necessary at so early a moment to review the position since the passing of the Territorial and Reserve Forces Act. I believe there is hardly a man on this side of the House who has not done something to press forward the operation of the Act in his own county, and I hope we shall all continue to take that step. I feel that a premature condemnation of the Territorial Force is greatly to be deprecated; on the other hand, I confess that the attitude which the noble Lord the Under-Secretary feels himself constrained to take on these occasions makes it extremely difficult for us to give that blind confidence to the Government which he requires from us.
This is the second or even the third occasion on which the noble Lord has excused himself, I admit in the most courteous manner, from giving us information, for which it seems to us reasonable to ask, and he has done so on the ground that to give the information would be to divulge mobilisation plans. I hope I may be pardoned if, having had to deal with this question in different capacities for more than twelve years in another place, I ask your Lordships to consider for a moment whether the information which is refused is secret mobilisation information or whether it is not information which has been repeatedly given by successive Governments to successive Parliaments. Take, for instance, the question of numbers. The numbers are given in the Estimates.

911
All the strengths are known, and are given in answer to Questions. The organisation of the Field Force has been even laid down by Act of Parliament, I believe; at all events, it has been laid on the Table. We merely ask, after the Regular troops have gone abroad, what organised force will remain in this country. That is a fair question. The information has been repeatedly given before, even in We do not ask for any secret information as to where those forces are to be employed. We do not ask what Ireland will absorb, we do not ask what time it will take to mobilise them, we do not ask anything which has been understood hitherto to be secret information on mobilisation. But we do ask for plain facts.
I am loath to go further into this matter because to-morrow evening the Duke of Bedford has a Motion on the Paper which it is our desire to press seriously on the attention of His Majesty's Government. When the noble Lord asks us to place our whole faith and confidence in the ipse dixit of the Secretary of State, and when he tells us that all that has to do with mobilisation and with defence has been the subject of minute and thorough-going investigation and that the General Staff have satisfied themselves, and also, I think he said, have satisfied the Government, that they have a sufficient force to resist any possible invasion, I would remind him that two or three years ago the Secretary of State stated, I think in the House of Commons, that he desired a Territorial Force of 900,000 men.
LORD LUCASThat statement is not correct. What my right hon. friend said was this —that he was setting up machinery for a Territorial force which could, if necessary, provide 300,000 or 600,000 or 900,000 men, but he never said that we required in this country 900,000 men.
THE EARL OF WEMYSSHe prayed for them.
LORD LUCASNo.
VISCOUNT MIDLETONI accept the noble Lord's statement that the Secretary of State did not ask for 900,000 men, but we known that Lord Roberts has expressed a strong opinion that 1,000,000 were
necessary. I am not endorsing that or
912
criticising it, but we have yet to hear from the Government what their opinion is upon that statement by the first military authority in your Lordships' House. We have never heard from the Government since that opinion was given whether they have seen any necessity to revise their Estimates, and I cannot help pressing on the Government this point. When they ask us to accept military opinion, which they do not quote, in opposition to the strong military view which has been quoted here with all the authority of Lord Roberts, I cannot help pointing out that on half a dozen different occasions within the last three years we have been assured that the opinion of the military advisers of the Secretary of State was in one direction, yet that opinion has since been revised.
Take the question of the Artillery. In 1906 the Government announced that, contrary to all the opinion which had been given in and outside this House, they were going to reduce forty-two batteries of Royal Artillery and to substitute for them a Militia Artillery—persons trained, as the Secretary of State phrased it, on a Militia basis, who were to fill up the larger portion of those forty-two batteries. We protested by every means in our power against that change. Your Lordships were asked over and over again to discuss it, and, speaking in this House this time last year, I implored the Government to reconsider the position. The noble Lord met me by telling me that the military advisers of the Government we absolutely satisfied with these forty-two batteries on a Militia basis. We pressed and pressed again, and obtained a promise that the Artillerymen should not be disbanded until the men trained on a Militia basis were ready to succeed them; but we were told that it was unnecessary from a military standpoint to retain those batteries. Now, after this lapse of time, the Secretary of State comes forward this year and says he is satisfied that it is necessary to reverse that policy, and to keep the forty-two batteries on a Regular basis. We have yet to learn whether in that the Secretary of State was acting upon military opinion.
But what are we to the link of that nebulous body the Army Council, who gave such strong support to the Secretary of State in reference to this reduction, which we believed to be fatal and which was against

913
the opinion of Lord Roberts, Lord Wolseley, Sir Evelyn Wood, and every soldier who had been at the War Office—what are we to think of the Army Council if, having given that advice, they now come forward and say that it is necessary to overthrow the opinion they so confidently expressed for the space of three years? I have given that solitary instance, though I could give others, why I do feel that the Government are expecting your Lordships to exercise a degree of self-restraint and a degree of confidence which is unusual when they ask us to be content with the bare assurance that the General Staff are satisfied. I therefore feel that we are in a very grave difficulty in regard to the Motion of the noble Earl.
We feel most strongly that it is necessary that there should be further inquiry into this matter. We believe that the state of the Special Reserve and the want of officers should be the subject of further inquiry, and that it is impossible to allow the matter to rest where it is at present. We press that view on the Government. If they tell us that a Royal Commission would be unacceptable, as I believe is the case, we would not press for it. We would not even press for a public inquiry. There is at this moment a private inquiry by the Defence Committee going on into the condition of the new construction for the Navy. I urge the Government to consider whether they cannot in some way allay the doubt and uncertainty which exist on these Benches and throughout the country. I have no desire to impede the Secretary of State's efforts to improve the Territorial Force, but we want to know the military value of what would remain in this country after the Regular Army had been shipped to take part in operations abroad. The mere fact that the War Office say they are satisfied is not, I submit, a sufficient argument to advance. What I urge upon the Government is this, that they should allow some outside military opinion to be brought to bear. You have men in this country who may he past the age for service but who are not past the age to enable them to give a valuable opinion. You would not find the slightest difficulty in calling to the aid of the Secretary of State three men of the highest rank, who would tell you whether what is left behind is of military value and could be placed in the forefront in an engagement against picked Continental troops. Therefore we
914
wish to give the Government further time to consider the matter, and we would hope that the noble Earl would see his way not to divide the House on his Motion. I confess that, personally, I should feel great difficulty in going into the Lobby against him. On the other hand, I think it is a most serious thing for your Lordships to declare, as the noble Earl asks, that the Territorial Force as at present established fails to give practical effect to the Resolution of July 10, 1905—that is, in other words, to say that our position is absolutely unsafe.
THE EARL OF WEMYSSHear, hear.
VISCOUNT MIDLETONThat we should be unwilling to say so long as it is in the power of the Government to satisfy us on this absolutely vital matter by giving us an inquiry.
THE LORD PRIVY SEAL AND SECRETARY OF STATE FOR THE COLONIES (THE EARL OF CREWE)My Lords, it is not altogether an easy task to reply on this debate, because, as always seems to happen when the Army is under discussion, the criticism levelled at His Majesty's Government, although unusually animated, is also unusually elusive. Every noble Lord who has taken part in this debate has apparently spoken from a different standpoint, and if the secrets of their hearts could be revealed I think each wants something different. I am particularly sorry that my noble and gallant friend Lord Roberts, who, of course, speaks with such unrivalled authority, is not here to-night; and I desire to join in the congratulations which have been expressed towards him on the happy event of his golden wedding, for I think we are all moved and touched when we think of the happy domestic life of one who has given so many years to the service of the country.
I say that the criticism was elusive because the noble Earl who moved the Motion devoted himself to the shortcomings of the Territorial Army, whereas the noble Viscount who has just sat down said very little about the Territorial Army, but spoke almost entirely to the Motion of the noble Duke which is on the Paper for to-morrow. He asked for a military inquiry, saying, very truly, that there are many eminent men who might conduct an inquiry and

915
who are not beyond the age of criticism. With that I heartily concur, because nobody, I think, ever passes the age at which criticism is possible. But I do not propose to touch on that matter now, if the noble Viscount will excuse me, because it is really relevant to the Motion which appears on the Paper for debate to-morrow.
We have been told that the Territorial Force is insufficient. The noble Earl .said that, even though it reached its full complement of 315,000 men, and they were all active men of twenty-five years of age, yet he would not consider that the country was safe; and he quoted the opinion of the noble and gallant Field-Marshal, Lord Roberts, as to the necessity of there being 1,000,000 men. The noble Viscount has complained that we have never expressed any opinion as to the necessity of 1,000,000 men. We have never been told, when 1,000,000 is spoken of, what the 1,000,000 is to consist of. Is it to be an Army of 1,000,000 with a full complement of cavalry and guns? How many batteries of artillery go to an army of 1,000,000 men? I suppose something approaching 500 batteries. Is that what is intended? Or did Lord Roberts mean, what my impression is that he meant, that there should be at one time in the country 1,000,000 men who had undergone some form of military training in some period of their youth? Lord Roberts has always taken up the line that he is not in favour of any kind of compulsory service, but that he is in favour of compulsory military training—that is to say, I conclude, that at some period every man in the country, or, at any rate, a very large proportion of the men in the country, should have gone through some kind of training, always, I take it, purely infantry training, and that, therefore, there would be a very large reserve for any national emergency of men who had had some sort of training to arms.
VISCOUNT MIDLETONI do not like to interrupt my noble friend, but I think the opinion Lord Roberts expressed was that there should be 1,000,000 men with some kind of military organisation, not merely training—men who were capable of being used in the military organisation at the shortest notice.
THE EARL OF CREWEIf that is to include an Army of 1,000,000 men on the Continental model—I do not say neces-
916
sarily with the full Continental training, but an Army divisible into Army corps and divisions, with full proportions of cavalry, mounted infantry, and guns—if that is the programme, then you are embarking on a very large proposition indeed. What does that mean? If that is what you are to have, it means that we are the most unfortunately situated country, not merely in Europe, but in the world. We are bound by our insular position, which, under those circumstances, seems to be an unmitigated misfortune, to maintain a Navy upon a standard of the necessity of which we are, I understand, all agreed. In addition we are obliged to have what no other country, in the world has—a very highly-trained Expeditionary Army, more highly trained, I suppose, than any troops in the world; and then, in addition to that, we are to have all the youth of the country under arms to resist invasion. We have always believed until now that our insular position was an advantage to us. All the poets of past ages and all the politicians of past ages have dwelt with pride and also with great comfort to themselves upon our insular position; but now it appears to be, as I say, an almost unmitigated misfortune if it compels us to maintain a Navy on a scale which nobody else does, and at the same time to maintain an Army which is to be, at any rate to a very great extent, modelled on that of the great military Powers of Europe.
Does that really represent the position, and are we to understand that that is the position which noble Lords opposite take up? If it is so, I want to know what has happened within the last few years to create such a complete change of attitude and of policy from that which they followed when they were in office. We never had an inkling of anything of the kind. The party of noble Lords opposite went on with various schemes for remodelling and, as, of course, they believed, improving the Regular Forces. They never thought out, so far as I know, any special scheme of home defence. They did their best, no doubt, to maintain the efficiency of the Militia, the Yeomanry, and the Volunteers. But it is very hard to believe—I should be very unwilling to believe it of them myself —that they were so entirely devoid of foresight as not to have contemplated the possibility, supposing they believe it now to be necessary, of this stupendous change

917
in our system of national defence. Reference is made to 100,000 and even 300,000 men landing on these shores. I quite admit that our organisation is not based on the possibility of an invasion of that kind, and certainly not so when the Expeditionary Army is withdrawn. Therefore if that risk does exist—a risk which the noble Earl will admit we do not believe to be a real risk—it is certainly true that we are working on the wrong lines, and, whatever the sacrifice, we should have to go to something entirely different.
THE EARL OF WEMYSSHear, hear. The sooner you do it the better.
THE EARL of CREWEThen the noble Lord, Lord Lovat, and also the noble Viscount, Lord Midleton, spoke on the question of mobilisation. I am certain that it is not the desire of my right hon. friend or of my noble friend behind me to keep back from the House or from the country any facts and figures of a kind which have usually been publicly stated, and which can be so stated without detriment to the public interests. What my right hon. friend does not want to do is to give figures which, although they might seem harmless to give in themselves, would yet tell more than he thinks ought to be told in the public interest of his mobilisation schemes. I cannot help thinking that there must be some misunderstanding on this point between noble Lords opposite and my noble friend behind me, and I cannot help also thinking that if they would communicate with the Department which my noble friend represents here, they would have very good reasons given to them—satisfactory reasons—why certain information for which they ask cannot be given. I am sure that my noble friend will go as far as possible to meet them in giving such information as can properly be given.
My noble friend behind me asked about horses. He, if he will allow me to say so, put the matter very well when he pointed out that for the purposes of the Territorial Army horses if in reasonable good condition could be used without any very great amount of riding school or previous training. I remember very well when I was in the Yeomanry myself, and when practically the whole business consisted of parade movements, it was astonishing to see how, even within the compass of a week or
918
ten days, quite green horses would take their places in the line and become like seasoned troopers. But now that parade movements have given way to a more useful form of drill the lessons to be learned by horses are fewer. I am quite certain that my noble friend desires to make no mystery whatever of this question of horses, and I entirely agree that it is desirable, in order to keep up the public interest in the horse supply throughout the country, that the War Office should, as far as possible, take those in the country districts into their confidence as to the number of horses available and the number which will be required. I think that noble Lords opposite have been hardly fair to my right hon. friend on the question of mobilisation. So far as I know, up to the time that my right hon. friend went to the War Office there was no scheme of any kind to mobilise the Auxiliary Forces, or, if there was, it was of the—
VISCOUNT MIDLETONI beg the noble Earl's pardon for interrupting him. The noble Earl said just now that while we were in office there was no sort of scheme, he believed, for the defence of the country. I can assure the noble Earl that there was a scheme in which every regiment was placed in the division in which it was to fight. The scheme was well known and could have been put in force in twenty-four hours.
THE EARL OF CREWEI have no doubt that when the noble Viscount was at the War Office it was settled in his own mind and in that of his advisers where each regiment or battalion should be moved to; but as to whether any scheme was thought out by which all the Volunteers and Yeomanry could have been moved with full complements for all purposes of defence, I confess I am somewhat sceptical. On that I should like to say that I think noble Lords opposite pressed my right hon. friend rather unfairly in this matter of mobilisation. I believe that his schemes, which are necessarily of an elaborate character, have been very carefully worked out, and that as much progress has been made as could reasonably be expected to have been made by any Department within the limit of time which has been at the disposal of the Secretary of State for War. I am inclined to challenge contradiction on that point, although, of course, I am not personally acquainted with the details. After all,

919
these things cannot be carried out in a day. The noble Viscount opposite was going to re-organise the Army on a system of Army Corps with short service troops. Well, how long would it have taken to mature the scheme? It would have taken something like ten or twelve years to have brought the scheme into completion; and if, supposing the noble Viscount had had an opportunity of carrying out his scheme, somebody had jumped up in your Lordships' House twice every session and attempted to pull the plant up to see how it was growing and complained that the noble Viscount was neglecting the interests of the country by not having his scheme matured, he would have had some right to complain. Similarly I think my right hon. friend has also some right to complain. It is the advantage which the preponderating strength of noble Lords opposite gives them in this House that they are able, on subjects like this, to raise debates of which I do not wish to deny the importance. When noble Lords opposite sit on this side we are not in a position to do anything of the kind. Our forces are not large enough, and consequently, therefore, we must bear it as best we can. I confess that I do not think it of serious moment whether the noble Earl goes to a Division or not. If he does, we shall, of course, be compelled to vote against him.
THE EARL OF WEMYSSMy Lords, I do not know what my noble friend on this side of the House proposes to do in the event of my pressing my Motion. My noble friend proposes an inquiry. I shall vote against any inquiry. We have had inquiries enough. What we want is action, not inquiry. An inquiry could tell you nothing you do not know. I shall oppose an inquiry whenever it is proposed. Four years ago both sides in this House pledged themselves to what is contained in my Motion—namely, that this country should at all times be in that state of preparation on land, not that you could crush any enemy that came, but in that state of preparation that no enemy would dream of coming. That was the I.O.U. which Lord Crewe and my noble friends on this side of the House put their signatures to four years ago. To-day I present that I.O.U. in the interests of the country, and I ask noble Lords to fulfil the promises they then made. It is necessary to act immediately, so that in six months time the country could be in that state which this
920
House declared four years ago it should be in. I do not criticise in any way the quality of the Territorial Force. I pass that aside. My point is that in numbers it is quite useless as compared with the force required. Does the noble Earl the Leader of the House think that this force, if complete, will fulfil the condition contained in the Resolution of this House to which he agreed four years ago. I await an answer.
THE EARL OF CREWESo far as my opinion is worth anything, I say "Yes."
THE EARL OF WEMYSSI hope the rest of the House will say "No." The view of Lord Roberts, and every soldier in this House who has not an axe to grind backs Lord Roberts in that view, is that you require 1,000,000 men to put yourselves in the position referred to in the Resolution which your Lordships accepted four years ago. I desire to see whether your Lordships draw back from the action you then took or not, and if any noble Lord will support me I shall certainly divide the House.
EARL CAWDOR: My Lords, I hope the noble Earl will not divide the House on his Motion. I think your Lordships might be placed in an invidious position if a Division were taken upon it. We have had two distinct opinions expressed. The greatest military authority in your Lordships' House, who unfortunately is not present to-day, has given his opinion very clearly. On the other hand, we have the opinion of His Majesty's Government that they believe that this scheme, which has been passed through Parliament and has received the impress of Parliamentary authority, will be a success. We have many criticisms, and, I am afraid, many doubts, as to the success of the scheme, but we still wish that it should be a success, and we desire to do nothing which may hamper in the slightest degree the operations of His Majesty's Government and the work which the Secretary of State is endeavouring to do. The noble Earl the Leader of the House, in his speech to-night, has given us some ground for hoping that in the future we may get a little more information when questions of importance are asked than has been vouchsafed to us in the past. The noble Viscount behind me, Lord Hardinge, asked some questions the other day as to which he got no information at

921
all I think, however, from the statement by the noble Earl the Leader of the House, that we are entitled to hope that when these questions are again asked we shall certainly receive a little more information than we have had up to the present time. In those circumstances, and wishing to leave His Majesty's Government free,

CONTENTS.

Bedford, D.

Hood, V.

Penrhyn, L.

Saltoun, L.[Teller]

Bathurst, E.

Calthorpe, L.

Saltoun, L.

Cathcart, E.

Clinton, L.

Kilmorey, E.

Dunboyne, L.

Sinclair, L.

Leicester, E.

Faber, L.

Wemyss, L. (Barrington.)

Lovelace, E.

Kilmarnock, L. (E. Erroll.)

Kintore, L. (E. Kintore.)

Willoughby de Broke, L.

Falkland, V.

Muskerry, L.

Hampden, V.

Newton, L.

NON-CONTENTS.

Loreburn, L. (L. Chancellor.)

Hereford, L. Bp.

Lochee, L.

Wolverhampton, V.

Lucas, L.

(L. President.)

Airedale, L.

Mac Donnell, L.

Crewe, E. (L. Privy Seal.)

Allendale, L.

Marchamley, L.

Colebrooke, L. [Teller.]

Monkswell, L.

Eversley, L.

O'Hagan, L.

Buckinghamshire, E.

Glantawe, L.

Pentland, L.

Carrington, E.

Granard, L. (E. Granard.)

Ribblesdale, L.

Chichester, E.

Hamilton of Dalzell, L.

St. Davids, L.

Haversham, L.

Saye and Sele, L.

Portman, V.

Herschell, L. [Teller.]

Weardale, L.

Resolved in the negative.

SMALL HOLDINGS.
THE EARL of ONSLOWrose to call attention to the many difficulties experienced by county councils in the administration of the Small Holdings and Allotments Act, 1908; and to ask the President of the Board of Agriculture whether he would introduce a Bill to amend that Act so as to expedite the establishment of small holdings and the creation of a class of occupying owners of the land.
The noble Earl said: My Lords, I think that I shall not be guilty of any exaggeration if I venture to say that the Small Holdings Act which your Lordships passed three years ago is a comparative failure. I say "comparative," because I have no doubt that presently the noble Earl the President of the Board of Agriculture will produce a number of figures showing that a great many small holdings have been created —I say a failure by comparison with what the noble Earl led the
922
so far as we are concerned, from anything that may hamper them, I hope the noble Earl will not go to a Division.
On Question—

country to believe would be the result of the measure. We all of us admire the cheery optimism of the noble Earl. We also admire the way in which he has managed his own estates, and we know that upon those estates he has been more than usually successful in creating small holders. We also admire the noble Earl's zeal towards his party, and his desire to do everything that he can to advance what he believes to be the interests of the Liberal Party. But perhaps I may venture to point out to him that your Lordships and the party sitting upon this side of the House were no less desirous than the noble Earl himself to create small holdings in this country.
The result of the action of the noble Earl has been that a very large number of his friends, mostly Liberal Members for different constituencies, have gone about persuading people that all they had to do was to make an application to the county council for a particular piece of land and they would get it for rather less than was its value, and that if they did not get it

923
their remedy was to apply to the committee rooms of the Liberal Member. That is not the duty of anybody except the Board of Agriculture and the Commissioners appointed by the Board. I noticed only the other day that a gentleman, a son of a member of your Lordships' House, addressing a meeting in Dorsetshire, said that if application were made to the county council and no reply received a representation should be made to his father's estate office when a question would be asked in Parliament as to why the Commissioners were not down there seeing that the county council did their work. I deprecate very greatly any action of that kind.
We were told by the noble Earl not very long ago that 23,000 applicants had applied for 373,000 acres of land, as he expressed it equal to a strip of land a mile wide from the Channel to the Firth of Forth. These have now been inquired into, and the number of applicants has been reduced to 13,000. I think the reason for their falling off is that they find they cannot obtain just that little piece of land they require at a lower price than anybody else would be willing to give for it, and that even the agency of the Liberal committee rooms has not been able to supply a piece of land, the best in the farm, at the same rent as the average of the farm without throwing a burden upon the ratepayers of the locality. Of these 13,000 applicants only 2,200 have been provided with 30,000 acres, an average of about 13 acres each, leaving 10,800 to be provided for; and if the average is the same these will require not less than another 140,000 acres.
What is the cause of this comparatively slow progress in the administration of the Act? I dare say most people will expect that the answer will be the reluctance of the landlords in the country to part with their land. Anybody reading the provisions proposed in the Budget would imagine that the scorpions of the Chancellor of the Exchequer were to be applied to the loins of the landlords of this country because of their reluctance to carry out this measure; but, so far from that being the case, one Liberal Member after another has got up in his place and said that the landlords, whether Tory or Radical, have not been obstacles in the creation of small holdings, but that, on the contrary, they have done all they could to facilitate it. Is it, then,
924
the county councils? My noble friend gave very good testimony himself of the work which has been done by the county councils. He stated that their local knowledge had been of the greatest possible value, and that if they had not tackled the work the Board would have had to send one Commissioner into every county in England, whereas the Board had received every possible assistance and co-operation from the county councils. I think one of the most remarkable features of English life is the enormous amount of voluntary work performed in this country. I happen to be a member of the small holdings committee of my own county. The work that has been done by that body is very much the same as that of other county councils throughout the country. They have held innumerable. meetings; they have interviewed applicants; they have made applications for farms; and they have not hesitated to ask the Board of Agriculture to put the compulsory powers into operation. Therefore, I think your Lordships will agree that the fault does not lie with the county councils. Well, whose fault is it?
Their Lordships divided:—Contents, 24; Not-contents, 28.
The noble Earlopposite said some time ago that the lion in the path was the tenant farmer. It is not the landlords, it is not the county councils, but it is those who are now in occupation of the land who are the lions in the path. In 1906 the noble Earl opposite introduced a measure into your. Lordships' House called the Land Tenure Bill, and in his speech he said a great deal about the advantages of fixity of tenure and the iniquity of anybody trying to disturb his tenant. We were asked to put some words into that Act to provide for compensation in the event of loss being suffered by a tenant having to go from one farm to another. The noble Earl expressed the hope that your Lordships would not refuse to put these words in—and they were put in—because otherwise it would give the impression that—
"The House of Lords was driving a very hard bargain with the unfortunate devil who was being turned out of his farm."
Moreover, the noble Earl has upon several occasions protested that nothing of the sort could happen, and that the Act must be worked without doing injustice to the vested interests of the farmers. Well, that is the spirit in which the county councils have

925
acted. They have been unwilling to turn men out of the farms which they were occupying, and they have waited, wherever they possibly could, until the farm came out of occupation and they had an opportunity of making an application to the landlord to let it to them for small holdings.
About two years ago the President of the Board of Agriculture became one of three Commissioners who administer some 62,000 acres of Crown lands in fourteen different counties of England. Knowing the way in which he administers his own estates, no word was raised in this House or anywhere else against the appointment of the noble Earl as one of the Commissioners of Crown Lands. But I wish to draw your Lordships' attention to a case which I think was one of particular hardship and one which seems to go diametrically in the opposite direction to the professions which the noble Earl has made. The case is one which occurred on a Crown farm near a place called Welwick the East Riding of Yorkshire. A farmer named Clark occupied a farm of 376 acres. The East Riding County Council were of opinion that it was not specially suited for small holdings because the land was heavy, and it was some distance from a railway station; but the Board of Agriculture and the noble Earl thought otherwise and they not only urged but compelled the county council to take a lease of that farm, and, of course, as a preliminary, they had to evict the tenant. That tenant had been in possession of the farm for sixteen years. It is quite true that he occupied another farm and held two farms together; but I am informed that his son was a man approaching full age, and that his intention was to settle him on one or other of these two farms. The man himself was a good citizen, and would have commended himself to Lord Lucas and the Secretary of State for War, for he was an active member of the Yorkshire Yeomanry, had raised a troop himself, and as a shot was a prizewinner. I venture to say that, however much one may be desirous of increasing small holdings, it is, to say the least of it, an arbitrary act to evict a man solely for that purpose. So strongly did the Chairman of the East Riding County Council feel that he said that, while hoping small holdings would succeed, he thought they were in that county starting under very intolerable circumstances with regard to this particular farm. I hope the noble Earl will
926
be able to give us some explanation. It may be that he has been able to make compensation for the loss which that man has suffered.
I venture to think that one of the great blots upon the Small Holdings Act is that there is not sufficient provision in it for compensation for disturbance. All the time that the Land Tenure Bill was passing through Parliament the noble Earl, while he was very insistent on compensation being paid to a man who suffered loss through being turned out of his farm, always safeguarded that by saying that it should not be paid in cases where he was evicted for purposes of good estate management, and he was equally careful always to tell your Lordships that he considered the creation of small holdings good estate management. The noble Earl may say that the man had no claim—as, indeed, he has not—under the law as it stands. At the same time, I think your Lordships will agree with me that it is an exceptionally hard case and not one that you would seek to imitate on your own estates. There is a very considerable fund at the disposal of the noble Earl, a fund about which, I think, there has been a certain amount of misunderstanding. Some thought it was to be £100,000 a year, others £100,000 a quarter, but we now learn that the sum of £100,000 placed to the credit of the Small Holdings Account is to remain there until it is exhausted—that is to say, until the noble Earl has drawn upon it; and not until that takes place will application be made to the Treasury for a further sum to be paid to the credit of the Board of Agriculture. I venture to say that it would be a fair and equitable charge to put upon that fund that where a tenant is turned out of his farm for the purpose of cutting it up into small holdings, or where a portion is taken away for small holdings, he should be entitled to receive from it compensation, to be fixed by arbitration.
In many cases landlords who would willingly have given up land for this purpose have said to the county council, "No, I will not turn my tenant out. If you want that land you must use the compulsory powers which the law gives." I have done it myself. When the Act first came into operation I said I would not do anything to compel any one of my tenants to quit his farm. I stated that if any portion of the land was wanted for

927
small holdings and a written declaration was produced from the tenant that he was willing to give up that part, I would be willing to treat with the local authorities at once, but that I was not going to be a party to turning a man out of his farm. That, I said, was work which Parliament had placed upon the county councils, and if it had to be done it should be done by the county councils. My noble friend describes the county councils which have not been so forward as he would have wished as "lame ducks," and amongst those lame ducks he classed the County Council of Surrey, with which I am more closely connected, and the council of the adjoining county of Sussex. I do not think that that can be from any rooted Toryism in the composition of those two particular councils, because I find that in some of the Welsh counties—in Flintshire and in Cardiganshire, neither of which can be accused of want of sympathy with noble Lords opposite—there have been even fewer small holdings provided than in Surrey and Sussex.
The County Council of Surrey—I am bound to say a few words in its defence—has spent upon the acquisition of small holdings £730. The result so far has been one holding of thirteen acres, not a very great showing; but the small holdings committee has held sixty-one meetings, there have been twenty-five local inquiries, and 244 applications have been received, of which only 104 were approved. Out of that 104, fifty-four of the applicants wanted 550 acres in the immediate neighbourhood of Kingston, Reigate, and Woking. I venture to ask your Lordships whether you think it is easy near such populous places to buy land at a price which could be let to small holders at a rent that they could make it pay. And not more than ten per cent. of those who applied in Surrey have been willing to leave their immediate neighbourhood. They want land at their very doors; otherwise the county council would have had no difficulty in providing them with small holdings in other parts of the county. We were told by the representative of the Board of Agriculture in the other House that the average price which the county councils have paid for land for small holdings has been from twenty to thirty years purchase of the agricultural rent. There are very few acres in the county of rrey that you could buy at twenty or
928
thirty years purchase of the agricultural rent; and, therefore, if the noble Earl thinks the county of Surrey more backward than some of the other counties, may I tell him the reason is that we cannot get land at the price at which it would pay small holders to cultivate it.
The noble Earlhas said that if peaceful persuasion fails some more stringent measures will have to be adopted by the Board of Agriculture. In Surrey we have had a good deal of criticism within our own borders and we are inviting on our committee, as we are able to do under the Small Holdings Act, our most vigorous critics. We hope when they get there they will be able to show us how to do the business which apparently they think is so easy to I would say the same to the noble Earl. If the noble Earl thinks that the county of Surrey is not doing its duty, and that it ought to provide small holdings more rapidly, then he has the remedy in his hands. Let the Board of Agriculture step in and provide small holdings themselves. The County Council of Surrey will not be in the least annoyed with the action of the noble Earl, particularly if, as I would not doubt, he is willing to put upon the shoulders of the Treasury the loss which in all probability would accrue from the operation.
But what I think we really want to know from the noble Earl is what is the policy of the Board. Commissioners are being sent into every part of the country, and are reporting, I believe, to the Board. Does the Board want to create small holders who will live on their holdings, cultivate them, and live by them? If so, that is a policy upon which we are all agreed. But if it is their policy to provide a man with a tiny plot of land and build a house upon it, I say that is not a small holding policy but a housing policy, and one which it has been shown cannot be carried out without throwing a charge upon the rates. As your Lordships are perfectly well aware, in Wales most of the land is already held in small holdings, and where it is not held in small holdings in the technical sense of the word—that is, holdings of fifty acres or under—it is held in small farms. The cost of equipping the land with farmhouse and farm buildings on every 100 acres or so is necessarily very much greater than in putting up house and farm buildings on 1,000 acres, and therefore the Welsh county

929
councils are unable to provide land at a price which the small holders can afford to pay.
There are many other difficulties in the working of the Act which have been experienced by county councils. Some time ago I ventured to put a list of Questions on the Paper, but I was met with the observation that it occupied a good deal of space, and, therefore, I have contented myself on the present occasion with giving private notice to my noble friend the President of the Board of Agriculture upon the points on which we are desirous of the guidance of the Board. In the first place, I should like to ask the noble Earl how we are to deal with the question of compensation for the utilisation of the small holding as a market garden. It constantly happens that the small holder wishes to use the land for market gardening, and the land can be obtained by the county council from the landlord, who invariably guards himself against being compelled to compensate for the cost of planting fruit trees, bushes, and so forth; but the county council has to pay that compensation to the tenant, whereas it cannot recover it from the landlord, and consequently the burden falls upon the ratepayers.
Then, again, I should like to ask the noble Earl what is a county council to do when it applies to rent land which may become available some day for building purposes. If the council expend any money upon it all that they can do when the landlord calls upon them to give it up at twelve months notice for building purposes is to require compensation from the landlord for the expenditure so far as it is of value to the landlord. I need hardly say that pigstyes and cowsheds are not much use to building land, and the consequence is that the county con acids are left to meet the cost of equipping the land for small holdings. Then many councils have land which has been appropriated for other purposes, such as asylums and burial grounds, but the Board have decided, I understand, that they are not allowed under the Act to make use of those lands for the purpose of small holdings, nor may they acquire land in the rough and expend money in breaking it up for small holdings. There is also another difficulty which has confronted many county councils. County councils who have issued Stock are not allowed to borrow money for any subse-
930
quent purpose for more than five years, and consequently if a county council has issued county Stock it is in the peculiar position of being unable to borrow money and spread repayment over a period of thirty-five years or eighty years, as the case may be, for the purpose of purchasing and equipping land for small holdings.
Then there is a further difficulty which arises in connection with the provision of land for allotments. Allotments are to be provided only for the labouring population. It is very difficult to define labouring population. Small holdings may be provided for anybody who is willing himself to cultivate the land, and I suggest to the noble Earl, if he contemplates an amending Act, that the definition of those who may have land for allotments should be assimilated to that of those who may have land for small holdings. There are other difficulties, but these are the principal ones. One is in ascertaining whether the applicant for a small holding has sufficient capital. There has been much difficulty felt in the county of Worcester, in the neighbourhood of Birmingham, where a small holder who made a profit last year of £150 had to borrow money which, with the interest, amounted to £115. County councils are also bound to register the land which they purchase, and I would venture to appeal to the noble Earl the President of the Board of Agriculture whether registration of the land is not a charge which might properly be paid out of the Small Holdings Account. The Act provides that the land must be registered, although neither the county council nor anybody else wants to do it. I venture to suggest that it increases the cost of acquiring the land, and that the noble Earl might very well meet us with a grant out of the Small Holdings Fund.
One very great grievance is felt by those who become tenants of county councils—namely, that they are required not only to pay the rent, but also the proportion of sinking fund to repay the cost to the county council of the purchase of the land—in other words, tenants have not only to pay the rent but they have also to pay the capital value, and at the end of that time the land is not theirs, but is the property of the county council. I have gone somewhat carefully into the relative cost of purchase and of renting. I will give the

931
noble Earl the figures if he likes in greater detail than I would care to trouble your Lordships with, but I would give very briefly an example. Taking a farm of forty acres and dividing it into two portions, assuming the capital value to be £1,000, and the interest £40 a year, you sell one-half of it to A and let the other half to B. The annual charge to A, who will ultimately become the purchaser, will be £23 ls. 3d., and the annual charge to B, who will never acquire the freehold will be £22 12 s. 6d. If the Government had accepted the suggestion that was made in the Report of the Committee over which I had the honour to preside—namely, instead of requiring the small holder who wanted to purchase to pay down one-fifth only to require one-eighth, it would be possible for the small holder to pay a smaller sum annually than he now has to pay in rent and yet at the end of the period he would own the freehold of the land. If it were known that the land could be thus acquired for rather less than is now paid to the county council, the noble Earl would find that the disinclination to become purchasers of the land would very soon disappear. That was one of the recommendations made by the Committee over which I presided; and there was another one which the noble Earl did not think fit to embody in the Bill, but which, I venture to think, would have done more to accelerate the creation of small holdings than any of the provisions of the Act, and that is that loans should be made to landowners to put up buildings to equip small holdings on terms equally favourable to those on which they are advanced to the county council. I observe that Lord Harrowby is about to deal with that point. If the noble Earl really wishes to accelerate the creation of small holdings all over the country, I can assure him that the landlords are only too anxious to do it, but they cannot afford it at the present rates for loans to equip their holdings. If those rates were lower, I believe there would be a very great extension of small holdings throughout the country.
In conclusion, I can only say that I do hope the noble Earl will not press county councils to evict sitting tenants from their holdings, but that they will wait until there are changes of tenancies. If the noble Earl wants to further accelerate the creation of small holdings, he has it in his Power to provide proper compensation
932
where tenants are evicted from their holdings; and I think until they receive proper compensation neither landlords nor county councils will be prepared to sacrifice sitting tenants even for the purpose of creating small holdings.
THE EARL OF HARROWBYMy Lords, I rise to ask the President of the Board of Agriculture, whether he is aware that landowners providing cottages or equipment for small holdings, under the Lands Improvement Acts, are subjected to heavy preliminary expenses by way of commission for the negotiation of loans under those Acts, and of fees for visits of inspectors; and whether, with a view to facilitate such improvements being made, His Majesty's Government are prepared, in approved cases—(a) to remit the charges at present made for the visits of Government Inspectors in connection with advances or loans; and (b) to make advances or loans for the purposes mentioned to landowners direct on terms similar to those on which advances can be made to local authorities and co-operative societies; and whether, if necessary, His Majesty's Government will bring forward this session proposals for legislation with these objects.
The noble Earlhas kindly given me permission to put my Questions now. I put them down because I felt that the matter was of the greatest importance to the landowners and farmers of this country, and also affected the question of the development of small holdings and estates. I think the noble Earl will be the first to recognise that English landlords—I say English because I know nothing about Scotland—have been ready to do what they can to extend small holdings. I am not concerned this afternoon with the large landowners of the country, but I do want to make a plea for the small landowners. It may be said by the man in the street that the land is held largely by members of your Lordships' House. That may have been true thirty or forty years ago, but I do not think it is true to-day. Unfortunately I find that there is no Return of landowners in England. The last Return was, I think, made in 1860; but if a Return could be got out it would prove that the average holding of the landowners of this country only amounts to 2,000 or 3,000 acres. This class of landowner in England as a rule consists of men who live entirely by their rent. I am also not concerned with land-

933
owners who have private means, but only with those who look to their rents for their income, and we have been told recently in the Press that the landowners have a very small margin upon which to live. An excellent letter by Mr. Pretyman has opened, I hope, the eyes of the country to that fact; and I would ask your Lordships how the landowner who has a very small margin of profit to live upon can face the calls which will be made upon him in these days.
May I take the case of an owner of land who has succeeded to a property and has paid considerable death duties? His agents or tenants may ask him for a cowshed or a new set of buildings to cost £300 or £400. The landlord may say "I should like to do it, but I cannot." The farmer, if he has any grit in him, leaves, and that is the first deterioration of the farm. What happens next? The farm is let to an inferior tenant. It may be that the landlord spends £20 or £30 to patch up the buildings, but that does not meet the requirements of a good tenant. The second tenant takes what he can out of the land and leaves it. The third state of deterioration, as noble Lords will see, is that the farm is afterwards let as a sheep run, and you see all the fences tumbling down and the buildings going to rack and ruin. What is the position of the landlord who cannot put down the necessary capital to meet the requirements of the local authority? He lets the farm go at a lower rental for some other purpose.
Now I will paint the other side of the picture. The other day a landlord succeeded to a property where chaos reigned and where the tenants shot where they liked, grazed where they liked, and farmed as they liked, and paid when they liked. This landlord immediately discharged the tenants. He was not a very rich man, but he had access to capital. He cut up the large farms, created small holdings, and built cottages, and to-day the farm is a credit to the district, the landlord and the tenants. To-day there is no better set of tenants in the whole county than on that particular estate of about 5,000 or 6,000 acres. You must have noticed, travelling through the country by train, acre upon acre of land not properly cultivated, fields undrained, and bushes and thistles growing in them. The reason is that the landlord has not sufficient money to put
934
up the necessary buildings for good farming. What agriculture is suffering from to-day is the want of access to capital.
I should like to urge upon my noble friend that he should do something for English farmers as has been done for Irish farmers. I believe the Irish tenant has means, through his credit banks, of getting capital at a low rate of interest. That is not so in England, and I do feel that by the establishment of these credit banks a great deal might be done to meet the difficulty of want of capital. What is the position of the tenant who desires to develop his estate? He is driven to some land company, and there I quarrel with the terms which he has to pay. If a small landowner wishes to build a cottage on a few acres of land he has to pay in initial expenses no less than ten per cent. If a landlord is allowed to spread his borrowing over a term of years he cannot do so as advantageously as a county council; but the great drawback to my mind to owners of land is that if they go to these companies they are unable to repay. It has come to my notice that many owners are quite prepared to borrow money from the Government or a land company if they could repay by instalments. When they borrow from land companies they have to charge their estate from twenty-five to forty years. I feel convinced that if there were some means by which a landlord could spend £200 or £300 and repay by instalments you would find the appearance of the country different from what it is to-day with regard to buildings.
Let me quote figures showing the difference between county council borrowing powers and those of land companies. A county council can borrow at 3½ per cent. for fifty years on new buildings, which means £4 5s. 3d. per year for interest and redemption. The land company can only borrow for forty years and the annual sum amounts to £4 16s. 11d. It may be said that is a small difference, but when you are dealing with small landowners it is a considerable item. With regard to alterations of existing buildings the term is twenty-five years, both for county councils and land improvement companies, and the premiums are £61s. 4d. and £6 4s. respectively. In connection with these improvement companies I

935
should like to urge the noble Earl if he could see his way to allow them to lend money for the erection of village clubs. We all know what an important place village clubs occupy in our country life, and I know that several owners of land have applied to these companies for powers to borrow for this purpose, and they have been told that the Government would not allow it. What I ask the noble Earl to do is to create a department in the Board of Agriculture where landowners could go direct and borrow money on the same terms as county councils. If the noble Earl tells me he would require a special Act of Parliament, there is another way which I would like to suggest. I see several chairmen of county councils present this afternoon. I should like county councils to lend the money and charge one per cent. for the initial expenses as against six per cent. or seven per cent. at present charged. I think the security is good, as it would be a first charge on the property before all the mortgages. I am not asking the Government or the local authorities to run any risk in granting these loans. Failing these two plans I would ask the noble Earl if he could see his way to waive the fee of six guineas charged for inspection. It might very fairly, to my mind, come out of the £100,000 grant to the Board of Agriculture for the development of small holdings.
I think the advantages of my suggestion would be considerable to the country, because I have no doubt that if the noble Earl could see his way to carry out the suggestion a large number of small holdings would spring up all over the country. It is admitted that landowners can create these holdings much better, much cheaper, and much more satisfactorily than can county councils. I admit that the landowners of this country, or at any rate the great bulk of them, at present do not realise the possibilities of small holdings. I have always contended, in this House and outside, that small holdings can be created so as to pay the landlord, and I think the noble Earl will agree with me in that. Whom else would the adoption of my suggestion benefit? It would benefit a large number of men, principally labourers and small farmers, who want these small holdings but do not care to rent under a public body. Only to-day three or four men have told me that they would not rent under a public body but would much prefer to rent under a landlord.
936
In conclusion, I should like to say a word as to the administration of the Small Holdings Act by the noble Earl. It has worked well in some cases, but I do not like the ginger which is being administered to county councils. There is a danger of forcing county councils to buy and rent land where it is not necessary. A case came before me the other day in which a small holdings committee of a county council sitting round a table said "We must buy this farm although we think the price high; if we do not do something, the Board of Agriculture will come down upon us." What was the consequence? They bought this farm of 120 acres, turned off the tenant, and put two other families on the farm. For those two families they spent £6,000. Now, I do not think it was the intention of the noble Earl or of the Act that county councils should incur this enormous liability for the sake of creating small holdings. To my mind I think it ought to be left to landowners to create the small farms. What the county council should do is to buy land near towns in small quantities to meet the demand in the villages or outskirts of the town. I hope that the noble Earl will be able to give us a few words of encouragement in this direction.
THE PRESIDENT OF THE BOARD OF AGRICULTURE AND FISHERIES (EARL CARRINGTON)My Lords, I think it may be for the convenience of the House if I take the noble Earl's point first, and I wish to congratulate him on being one of the greatest friends that the small holdings movement has. As we all know, the noble Earl has more than 3,000 acres under small holdings, and all his tenants are happy and doing well. But he has rather sprung, if I may be permitted to say so, an important question on me at a moment's notice. These new proposals involve the most important financial consideration. So far as public money is concerned, of course it is a question for the Treasury; so far as county council money is concerned, it is a question for the Local Government Board; but, so far as my own Department is concerned, we are, of course, all in favour of economy and cheapness in the matter of agricultural development. If my noble friend would permit me, we might talk the matter over and see whether in any way we could remedy what I admit are some great difficulties that exist at present.

937
As regards the question which has been brought before the House by Lord Onslow, I must admit that I have nothing whatever with which to find fault, except perhaps that his speech was rather too much about Lord Carrington, and too little about small holdings. That is the only criticism I make of his speech, though I think he really honestly looked at the question through his pince-nez with rather too grey glasses, for he conjured up the most hideous obstacles in working the Small Holdings Act. I venture to submit that what appeared to him in some counties to be high and inaccessible mountains, in other counties are very small mole-hills indeed. In his own county—the great historical county of Surrey, in which he is so well known and highly respected—there are ten acres under small holdings. One holding I believe belongs to the noble Earl. I congratulate him sincerely upon being a great exception in Surrey in having one small holding. Look at Sussex—sleepy Sussex, as I believe it is called. There are two county councils in Sussex. One has been successful and I suppose they are very proud of it. They have two acres under small holdings. That is in East Sussex. In West Sussex they have done better because they have three acres. Compare Surrey and East and West Sussex with Cambridgeshire, which has got 1,595 acres, Northumberland 1,635, Somerset 1,757, and Norfolk 2,217. How is it that this is possible in one county, and impossible in another? I really think that in some counties there is, perhaps, a more hearty desire to carry out the Act, and, if I may say so without offence, perhaps a more reasonable amount of intelligence.
THE EARL OF ONSLOWCan the noble Earl tell us what is the average price paid for the land in the counties he has enumerated?
EARL CARRINGTONI will have them looked out and sent to the noble Earl. My noble friend said there was a great difference between Cambridgeshire and Surrey. No doubt there is, but there is not such a great difference between Surrey and Kent. Owing very much, I think, to the great work Lord Darnley has done in Kent, that county has got 718 acres, and the conditions are very much the same as in Surrey. Therefore I really do not see why Surrey should not, if I may use a vulgar expression, "buck up,"
938
and do a little better than it has done up to the present.
Then the noble Earl asked what is our policy. If he will kindly go down to our new colony in Norfolk he will see what the policy is. He will find there a colony of small holdings with allotments, a village hall, a fruit farm, and twelve or fourteen houses with fifty acres apiece, occupied by people not only able to pay their way but doing very well. That is our policy, and if the noble Earl will take the trouble to visit the colony I think he will be pleased with the result. With one of the noble Earl's contentions I quite agree. I quite recognise that very much could be done if county councils could let land to parish councils for allotments. As regards money spent on equipping small holdings which will be lost if land is resumed for building purposes, the whole of that question is a theoretical rather than a practical one, and I do not intend to detain the House on the point. Then as to the question of market gardens, and whether county councils will have to compensate their tenants but cannot recover from superior landlords. The Board have suggested a form of lease to safeguard county councils against loss in relation to market gardens. We have a form of lease of which I shall be happy to send the noble Earl a copy.
Then the noble Earlcame to the old question of the "magic of property." I am really not going to detain the House about that, because it is absolutely flogging a dead horse. The House will remember that the great Tory Act of 1892 was in force fifteen years, and at the end of that time there was the magnificent result that 800 acres of land were positively acquired. Last week under the present Act new schemes and orders embracing 1,256 acres of land were sent in, so that in six working days under our Act we secured fifty per cent. more land than the "magic of property" Act could obtain in fifteen years. Mr. Austen Chamberlain was good enough at Durham to make a speech on the subject, and he asked for £250,000 to support his pet subject. I do not think he is very likely to get that in this time of storm and stress. Then he wrote to The Times in February, but he was very neatly put on his back by Miss Jebb, and ever since we have not heard a word on the subject. I should like to point out that only one per cent. of the English applicants

939
have asked to purchase. In Cambridgeshire, which is one of the most go-ahead counties, only one man out of 1,013 applicants has asked to purchase his holding, and that man is an uncertificated bankrupt. As to the difficulty in regard to counties which have issued Stock, the Local Government Board are introducing a Bill to dispose of this difficulty.
That leaves me, mercifully, only two more questions to deal with. One is the difficulty, we are told, in obtaining land without eviction. What an extraordinary change has come over the spirit of the dream in two years! Two years ago the Benches opposite were filled with noble Lords who quoted the opinions of agricultural correspondents, chosen with much care, who told them that it was the most dishonest cry ever known; that there was plenty of land—more land, in fact, than applicants. We all remember the opprobrium that was hurled at the head of the late Sir Henry Campbell-Bannerman when he said that in some cases there was a blank denial given to the people who wanted land. Practically speaking, there is a difficulty, no doubt, but it is not a serious difficulty. We have the offer of a great many vacant farms, and we most gratefully acknowledge the help we have received and are receiving from landowners who were not very friendly to the Act. Three names come to my mind. There is the Duke of Northumberland, who was not very friendly to the Act during its passage through this House, but who has behaved extremely generously in giving three or four farms in splendid condition and not charging the county council for putting them into tiptop repair. The same thing can be said of the Duke of Portland, who was an antagonist of the Act. Then the Duke of Marlborough has set a most glorious example. He has gone further than anybody, and has taken away from his biggest farms without interfering with the farmers' livelihood. He has taken 600 acres of land from different parts of his great estate and offered it to the county council in the most generous way, and I commend, with great respect, the example of the Duke of Marlborough to my noble friend who said that nothing on earth would induce him to take any land under any circumstances from tenants on his estate. There may have been some difficulty, but where there is a difficulty in getting land we have the remedy in our
940
own hands. We can take it by compulsion, and the county councils are waking up to the necessity of that, as already fifty compulsory order schemes have been sent in to the Board of Agriculture.
I admit that some of the farmers are very sore on the subject. I allude to a meeting of the Farmers' League, a most worthy body of men without whose help I do not think I could have got the Land Tenure Bill through both Houses of Parliament. And what do they say? They say that Mr. Armstrong, of Selby, complained that several farmers had had notice to give up 20 or 30 acres of land for small holdings on large farms of 800 to 1,000 acres. I do not think that is a great demand to make, but Mr. Armstrong went on to say that this was a great injustice and that a more abominable Act was never passed through Parliament. In support of that the noble Earl brought forward a case of what he called particular hardship with regard to a certain Mr. Clark, of Welwick, who farms under the Crown. He told us that Mr. Clark had raised a troop of Yeomanry and was a very patriotic and excellent person I believe that is true in every particular, but I must say that the noble Earl did not do justice to his case. He did not even put the case as strongly as it has been put by a farmer's wife, who, in a letter to The Times, used language concerning myself and the Government which I think would hardly have been used by the most enthusiastic suffragette who ever hit a policeman. She went on to ask were our rulers children, idiots, or daft adults; and why should one raise troops to defend a country in which one had no stake. Now, that question ought properly to have been addressed to the Under-Secretary for War, and I think it would almost have puzzled my noble friend Lord Portsmouth in his best days. But Mr. Clark still has a stake in the country, and still has a stake in the Empire. He lives at Winstead on a farm of 367 acres.
Let me explain to the House the real story of the case with regard to Mr. Clark. The farm was bought in 1906, and Mr. Clark held the greater part of it under a yearly tenancy; another portion of the farm was under no agreement whatever, and as to another part the rent was regulated by the amount of stock which was kept. I ask, as a practical man, whether that was not an extraordinary arrangement. That sort of agreement, I admit, might have

941
been very useful for the sort of patriarchal management of the friends of the Duke of Montrose and Mr. Pretyman, M.P., who, we are told, invest 75 per cent. of the net income in fructifying improvements and in bricks, mortar, and wages so as to retain unimpaired the heritage which they hold in trust for their successors; but I venture to submit that is hardly a business arrangement. As there was a great demand for small holdings, Mr. Clark received notice in April, 1908, that the whole farm was required for small holdings. Mr. Clark had no legal right to compensation, as we all know, but the Crown receivers advised me to send to the Treasury for compensation. I have not had an answer from the Treasury, although I think that compensation, which is quite right under these circumstances, will be paid to Mr. Clark.
THE MARQUESS OF LONDONDERRYI should like to ask the noble Earl whether it has been the custom with regard to Crown lands in the past, when taken over for small holdings, for the Crown to take them over themselves; and why, in those circumstances, the county council was compelled to take these holdings from Mr. Clark, against, as I gather, the wish of the county council?
EARL CARRINGTONThat is one of those extraordinary stories that get about. There was never this compulsion upon the county council. If they did wrong they are particeps criminis with me. I can assure your Lordships that there has been no compulsion of any sort or description. To think that there has been is entirely a mistake.
THE MARQUESS OF LONDONDERRYMy Lords, I had hoped that the chairman of the county council, Lord Wenlock, would have been here to say something as to the attitude of that body. In his absence perhaps I may be allowed to observe in regard to the point in question, that the view of the county council does not appear to agree at all with the statement made by the noble Earl. I do not know if the noble Earl has read a report in the Yorkshire Herald of the meeting at which this subject was brought forward. If not, I hope he will allow me to draw his attention to it. Alderman Sticknell deprecated very much the action taken by the Board of Agriculture as against the county council. He said, with regard to the land
942
at Welwick, that the Government stepped in and insisted upon the small holdings committee taking over that farm. Then he went on to say—
"Considering the courtesy the committee had shown to the Board of Agriculture, he thought that Department wanting in courtesy to send down their inspectors in the way they did and give the committee no option in the matter."
He went on afterwards to say if that was the course which was going to be pursued by the Board of Agriculture he would advise the committee, of which he was one, to refuse to act in future. I think your Lordships will agree that that does not look as if the county council supported the action of the noble Earl.
EARL CARRINGTONI quite accept what the noble Marquess says; but, of course, I cannot be responsible for Alderman Sticknell's remarks. He says that the county council were not treated with courtesy by the Board of Agriculture. But what did Lord Wenlock, the chairman of the county council, say?
THE MARQUESS OF LONDONDERRYI have his speech here.
EARL CARRINGTONQuite so. He said every possible assistance had been given by the Commissioners to the county council. Some other members of the county council said that this unfortunate man, Mr. Clark, had been turned out of his home. There was, however, not a word of truth in that statement. He was never turned out of his home, and I really cannot, as your Lordships will see, be held responsible for statements made by independent members of the East Riding County Council.
I hope your Lordships will not think I am detaining you too long if I now say a few words on the question of compensation It is, as your Lordships will agree, an important question. I was twitted in the course of the debate about the Land Tenure Act, 1906. What really happened then was this. I thought that under the Compensation for Disturbance Clause we ought to bring in compensation under certain circumstances for farmers whose land was taken away for small holdings. I consulted the best opinion in England on the subject and asked, What had we better do? Shall we bring it into the clause or

943
not? My friend said "No," and he did so for two reasons. The House of Lords, he said, is dead against the compensation clause as it stands; it will be a wonderful thing if it is allowed to go through the House of Lords, and I do not think it will be should it be overloaded with compensation for farmers. That was one of the opinions expressed to me. The second reason given was that landlords would raise the rents of small holders to an impossible height in order to recoup themselves for the amount paid in compensation to the farmers. A provision to afford such compensation was not, therefore, put into the Land Tenure Bill.
When the Small Holdings Bill of 1907 was under consideration by a Standing Committee of the other House a proposal was made by a Liberal member, Mr. Soares, to give compensation for tenant farmers who had land taken from them to be converted into small holdings, and that proposal was backed up by the whole of the Unionist members. It was pointed out, however, that it would be impossible—it would not have been right and it could not have been justified—to compensate farmers out of the public purse when landlords had not been asked, and would probably have refused, to pay the same compensation out of their private purse. A Division was taken on the subject in Committee, but the Unionist members saw the force of that contention. The result was that the whole question of compensation was at the time dropped like a hot potato, and we heard nothing more about it.
Perhaps I may be permitted to say that, whatever are the equities of the case as between a private landlord and a tenant, there is great force in the argument that a tenant has special ground for compensation where land is acquired for small holdings by county councils under the Act. In furtherance of a great national policy, which we hope will keep the people on the land, machinery has been set up which must inevitably bring prematurely to an end tenancies which must otherwise have existed for years to the satisfaction of owner and occupier. It is said—and I will admit the truth of it—that we have introduced a new and disturbing element into rural life. I repeat that I believe that is perfectly true; but, at the same time, I am convinced that what we have done
944
will stir up the sluggish waters of rural life and convert them into living streams. This, of course, may entail changes and movements which may put farmers to some inconvenience and expense. It follows, therefore, that this class are the strongest critics of the Small Holdings Act. They are reluctant to see it put into force, not only on their own farms, but on the farms of their neighbours; and, naturally, they enlist the sympathy of the landlords, some of whom are unwilling to bring tenancies to an end for the sake of what they probably consider to be a problematic advantage to themselves and others.
I am glad to be able to say that this question has been raised in the Commons House of Parliament by Mr. Corrie Grant, a Liberal member, who was one of the great protagonists of the small holdings movement in days gone by. The Bill which he has introduced has been backed not only by Mr. Soares and other Liberal members, but by persons on all sides of the House. including the chairman of the Central Chamber of Agriculture. I think I may go so far as to say that the Government should approach the consideration of that Bill at any rate with sympathy, and with a full recognition of the strength of the case as it is presented to them. But, of course this must naturally be a question of degree, as it would obviously be ridiculous to compensate a man who has more land than he can manage, or the tenant of a large holding of which he is only asked to give up a few acres.
May I say that I honestly think the criticisms of the noble Earl, Lord Onslow, are not very damaging after all. The Small Holdings Act, as everybody knows, came into force sixteen months ago—that is, on January 1, 1908. The first six months, of course, was nothing more than a period of preparation and investigation. The county councils formed committees to work the Act, and they received in round figures 23,000 applications. Of that number 13,000 have been approved as suitable to be given small holdings, and up to the present 2,200 applicants have been provided for; 500 persons are in actual possession of 11,346 acres, besides which there are the small holdings provided by co-operative societies—about 200 on a thousand acres—and those provided by the landlords direct. The total amount of land

945
acquired voluntarily is 31,663 acres, and the compulsory orders applied for have reference to 4,853 acres. The total amount of land comprised in the schemes and orders submitted is, therefore, 36,516 acres. The value of the land the county councils have purchased is £370,000, and the estimated value of the leased land together with the purchased land is three-quarters of a million. The county councils, as is well known, have a right to renew a lease at the end of whatever term it runs for, subject to the decision of a valuer appointed by the Board of Agriculture.
All that I have stated to your Lordships regarding the present results of the operations of the Act has been accomplished in pratically ten months. I do not want to boast or to swagger in any way whatsoever, but I really do not think this a bad record for ten months work. The noble Earl who brought forward this matter should remember that if you throw this small holdings legislation into the melting pot again his amendments would not be the only ones that would have to be considered; but other amendments might be submitted to which possibly he would have the greatest objection. It now only remains for me to thank your Lordships for the kind way in which you have listened to—
THE DUKE OF MARLBOROUGHI hope the noble Earl will pardon my interrupting him, but I should be glad if, before he concludes his observations, he would deal with one point in which I think everybody is most interested. I refer to the relative amount of rent which the small holder is asked to pay as compared with the sitting tenant. Can the noble Earl give your Lordships his view as to what rent the small holder should pay for land on which he is being placed and which is being taken away from the sitting tenant? As I understand, in many cases, county councils charge 3s. or 4s. an acre for administration, and the landlord, I believe, in some cases is increasing his rent as well. Consequently it seems is to me you will get a whole series of small tenures throughout the country at a higher rate per acre than the sitting tenant has been paying.
EARL CARRINGTONA higher rent than the sitting farm tenants are paying?
THE DUKE OF MARLBOROUGHYes.
946
Can the noble Earl inform your Lordships what he thinks should be the relative position between the rent the sitting tenant now pays and the rent which the small holder will be asked to pay by the county council? I am sure we shall be glad to hear the noble Earl's views on the subject.
EARL CARRINGTONThat is a very difficult question to answer.
THE DUKE OF MARLBOROUGHIt is a most important one.
EARL CARRINGTONIt is a question which is almost impossible of answer off-hand, because—and nobody knows it better than the noble Duke—the value of land varies in different parts of the country. I must say, however, that while the world is as it is there is one law for the rich and one for the poor; and when a man has a small piece of land I am afraid we shall never be able to get the present condition of affairs altered, but the small holder will always have to pay more than the large holder.
THE DUKE OF MARLBOROUGHDoes the noble Earl think that fair?
EARL CARRINGTONI do not. I think it is extremely unfair. If a man has a small piece of land and wants a house you build him a house on that land, but you charge him four per cent. on the outlay. What, on the other hand, do you do with the farmer? You give him a house together with stiles, ditches, ponds, barns, and every possible convenience for carrying on the operations of his farm. You throw those things in, as it were. I think landowners may take this to themselves. If it is proved—and I think it will be able to be proved—that men can work small pieces of land and pay their way, and that they and their families can live while paying a rent for the house in addition to the cost of the land they till, then landlords might very well say to farmers, "What can be done in the green tree can be done in the dry "; and they could increase their rents by charging farmers what would be the proper letting value of the house in addition to the letting of the land, whereas at the present moment, as I have pointed out, the house is thrown in. I think there is a great deal in what the noble Duke says, but how any suitable adjustment is to be made in the conditions as between the

947
two classes of tenants I confess I am at the moment unable to say. Only one word more. I wish to thank your Lordships for having listened to me for half an hour on this subject, and to express the gratitude I feel to you. I do ask the noble Earl, Lord Onslow, most respectfully, not to try to throw this legislation into the melting pot again, but to allow us to go on with our work and endeavour, without undue haste, to try to satisfy the requirements of those who only ask to be allowed to make a living on the land of this country.
LORD ZOUCHE OF HARYNGWORTHMy Lords, I should like to endorse what fell from my noble friend Lord Harrowby with regard to the important question of loans to owners of property, and, through them, to occupiers of small holdings. One of the points on which everything turns is, I believe, the facilities which are available for obtaining money for improvements. I have had practical experience myself, as no doubt many of your Lordships have, of cases which show the great difficulty there is for a poor man who has no capital of his own to borrow money on anything like favourable terms. There is a great deal of trouble about it, a great deal of red-tape; and many charges are made on him which do not help the situation, but simply put money into the pockets of this or that official. I daresay this state of things is rather inevitable under the present system, but if the noble Earl could give the House some idea that he would assist in solving this important point it would be a matter of great satisfaction to a large number of people. If greater facilities for obtaining loans, such as exist in Ireland, were given in this country, I am sure that much of the difficulty now experienced by small holders would disappear.
THE MARQUESS OF SALISBURYMy Lords, I am quite sure that at this late hour your Lordships do not desire that this discussion should be prolonged; but there are a few words I should like to say on the subject. I wish to thank the noble Earl opposite for the very interesting speech he has made and to assure him that it was not one bit too long. On the contrary, there were several points which, if the discussion had come on at a more suitable period, we should have desired to have seen elaborated. I think I may respectfully complain of the closing remarks in
948
the noble Earl's speech when he took to task my noble friend Lord Onslow for what he described as "throwing into the melting pot" the whole of the small holdings question. I am quite certain that was not the intention of my noble friend, neither was it the effect of his observations. All he did was to ask for certain information on various specific points. I made a list of those points—I am not going to read it—and I am not quite sure whether the noble Earl opposite answered two or three of them. In fact, I believe he did not answer more than two of the questions put to him. I think that is a pity.
In my opinion it would have been far better had the noble Earl the President of the Board of Agriculture devoted his great knowledge of this subject to solving some of the very difficult points of administration to which my noble friend called attention. The truth of the matter is, they all resolve themselves into the financial difficulty. When the noble Earl opposite complains of some counties because they are not so forward as other counties, he ought, I think, in justice to those counties, to realise fully that the backward counties shrink from the great expense which would be thrown not only on the county councils themselves, but on the small holders as well, if they were to carry out the Act with any precipitancy. It is quite evident that a county like Surrey differs from a county like Norfolk, and, if I may say so, it is a waste of the noble Earl's breath to ask that as Norfolk is able to carry out a particular policy why does not Surrey do the same.
EARL CARRINGTON: I suggested Kent.
THE MARQUESS OF SALISBURYKent, no doubt, is a little better county to take as an illustration. The truth, however, is that when small holders ask, as they do, to have holdings in the near neighbourhood of towns, the financial difficulties are almost insuperable. I am a member of the small holdings committee of my own county, and I know that what I say is the case. Take the large rising urban community of Watford. The County Council of Hertfordshire are face to face with a great difficulty in respect to Watford because land in the neighbourhood of that town is extremely valuable. Even if land is not bought out and out in such a neighbourhood

949
as that, its occupation value is very high. It is land which is valuable for all sorts of purposes, and the fact that it is in the neighbourhood of a town necessarily raises its price. If the small holder is to be asked to pay a rent based on the value of land of that description, all I can say is that his enterprise, no matter how well he cultivates the land, cannot pay. That is the difficulty which meets us in all directions. I hope the noble Earl opposite will use his authority in the Department over which he presides in order to prevent any undue addition to the expenditure which is necessarily thrown upon county councils.
EARL CARRINGTONCertainly.
THE MARQUESS OF SALISBURYI am glad to hear that, because I saw a letter from the Board of Agriculture not long ago finding fault with some plans submitted to that Department on the ground that some of the houses were not sufficiently elaborate. A policy of that kind is fatal. If the Board of Agriculture are going to behave like other Government Departments and force unnecessary expenditure on the localities in respect of the buildings provided for the small holders they will make the experiment fail. The noble Earl just now quoted a very great authority on the subject, Miss Jebb. If he reads her book thoroughly he will see that in her opinion small holdings can only be made to pay if expenditure on buildings, and so forth, is cut down to the lowest possible figure. I hope he will see that this lady's advice in that respect is carried out, as it is in other matters, and will take care that his Department do not try to force county councils to spend more money than they ought to do.
There is one question I should like to put to the noble Earl opposite. My noble friend asked him what the policy of the Government was, but the noble Earl did not say much about it. I desire to ask him, for the guidance of county councils, what kind of persons he wishes to see established on the land in possession of small holdings. I think my noble friend put the question to him—it was one of the many questions which, if I may say so, he did not reply to—Are they to be persons who are really intending to make their living by agriculture, or is the acquisition of a small holding to be an additional enterprise for people engaged in other work
950
and whose income comes from sources other than the cultivation of the land—people, that is to say, to whom a small holding would be only a pleasureable addition to their lives, an amenity which they would not otherwise possess? I can assure the noble Earl that we have had difficulties of this kind in Hertfordshire. Persons have come before us saying that they want small holdings, and it has turned out that they belonged, if not to the upper class, at any rate to the higher middle class, to whom small holdings are not a means of gaining a livelihood, but merely an amenity to their lives.
I trust that a suitable opportunity will be found—perhaps to-night would not be thought a fitting occasion—for the noble Earl to state, for the guidance of county councils, whether the Government expect small holdings to be provided for persons of that kind, or whether they really intend them to be devoted to the use of people engaged in agriculture. Perhaps the noble Earl would like to say something on the subject now.
EARL CARRINGTONIf I am not wearying the House I will say a word on the subject. The answer, I think, is that of course the ideal people to be put in possession of small holdings would be persons absolutely and entirely connected with the land. Your Lordships will no doubt agree with me in that. But at the same time, while they would be the ideal small holders, you must not rule out a lot of other people to whom the possession of a piece of land would be the greatest possible convenience. I do not mean fashionable, upper-class people who are friends of the noble Marquess; but why should you rule out the village higgler, the village butcher, or the village baker? Why should the a village butcher's wife not have a place where she can rear a few fowls and keep a cow? The Act is a beneficial Act, and we ought to bring under its operation as far as we reasonably can all the people who want land. What is the object of refusing land? What would do more to make a man stay, say, in a country town and give him an interest in the place than to provide him with a little piece of land where he could grow flowers or vegetables? I wish to say very plainly that land ought not to be, and must not be, refused to people who live in the villages simply because they are not absolutely and

951
entirely connected with agricultural pursuits. It ought to be for everybody.
THE MARQUESS OF SALISBURYI quite agree with what the noble Earl has said as regards the village higgler, the butcher, and the baker, but I do not think the same rule should apply in the case, say, of a clerk—whose business is in London or in a large country town. Does the noble Earl say that a person of that description ought to have a small holding?
EARL CARRINGTONHe might not have an objection to keeping a horse or a pony.
THE MARQUESS OF SALISBURYProbably others of His Majesty's subjects would not object to doing so either; but the question is whether these drastic powers under an Act of Parliament ought to be put in force to secure land for a man of that class. The noble Earl has not only defended compulsion, but the eviction of tenant farmers. Can you be surprised if a tenant farmer who is evicted in order that a clerk in a country town may have a small holding resents it very much indeed? I venture to say to the noble Earl that if he goes about urging county councils to evict tenant farmers for purposes of that kind he will incur an amount of unpopularity which even his good humour will not be able to face.
For my own part I have always used my influence, such as I have, in my own county in the direction of reducing the application of the powers of compulsion to the smallest possible dimensions. I believe it is far better to wait a few months or even a year or two, in order to get the land by voluntary arrangement and in a good-natured manner than to apply the compulsory powers given under the Act. The dedication of the land which is so taken is of the highest importance. In that connection I repeat that to evict a tenant farmer who is really engaged in agriculture and is living by agriculture in order to put into a small holding a person who only looks on it as an addition or even an amenity to a life and career otherwise disposed of would create hardship and would be bitterly resented. I think my noble friend Lord Onslow will be satisfied with having raised the discussion; but I am sure —though I have no authority from him to say it—he would have been
952
better pleased if the noble Earl had answered his Questions.
LORD LUCASMy Lords, I should like to offer one observation, though, of course, not from an official standpoint, because I have no authority to speak for the Board of Agriculture. The noble Marquess has raised a very important point, but it is one which I suggest the county council itself ought to decide. The council has to satisfy itself, in the first place, that people who apply for the land are likely to farm it well and to a profit, and pay rent. I suppose that would rule out a great many of the poor of the urban class. It seems to me, however, that one ought to approach the matter not only from the standpoint of the man himself, but to realise that what we hope to see arising out of the movement is a new generation of small holders. I think one ought also to take into consideration not only whether a man himself will benefit the declining years of his life, or rather the later period of his life, but whether the result of his possession of a small holding will be to produce in his family a taste for the land, a knowledge of how to till it, and a desire to stay on it. If that effect is produced, and, after all, that is our object, I should have thought the county councils, having the possibility of such a result in mind, would use their discrimination wisely in letting, small holdings to the kind of people through whom that result was likely to be produced. I thank your Lordships for allowing me to say these few words.

THE NEW SPIRIT AND TOBACCO DUTIES.
LORD MUSKERRYMy Lords, I rise to ask His Majesty's Government if it is a fact that the Excise are charging all traders taking spirits and tobacco out of bond the proposed extra duties; if so, is it legal for the Excise to do so, and what authority have they for such action; and, if it is not legal, will the Government direct the extra duties to be refunded at once on application of the payees?
I hope to get from His Majesty's Government some information on a point of constitutional law. I have always understood, and I think most people would agree with me, that no tax could be levied on the people of this country except under the authority of an Act of Parliament; that

953
is to say, that the proposals for new taxes should come before both Houses of Parliament, should receive the Royal assent, and should be published in the Gazette before they took effect. I am informed, however, that the authority under which the Excise at the present moment are demanding the new duties proposed in the Budget, and now under discussion, is a Resolution of the House of Commons, and that immediately the Chancellor of the Exchequer introduces the Budget the new taxes which he proposes in that Budget come into effect. But surely, my Lords, no Resolution of either House of Parliament can override the constitutional law of the land. If I am right in that, then surely the Excise in demanding these duties are acting illegally. In Sir William Harcourt's Budget, which was defeated at a later period, the extra impost there proposed was refunded, but, of course, that refund was only made to those traders who had dealt direct with the Excise and paid the impost to them. The customer, the man in the street, who had to pay extra money for the things he required had no possible chance of ever being repaid. I am rather astonished if what I have stated is true, that it is only a Resolution that authorises this charge being made. The fact that such a Resolution has been passed should not be allowed to infringe the constitutional rights of the people of the country.
THE SECRETARY FOR SCOTLAND (LORD PENTLAND)My Lords, the Leader of the House has asked me to reply to the noble Lord. The noble Lord is quite right in assuming that the proposed new duties are being charged on all traders taking spirits and tobacco out of bond.
LORD MUSKERRYIt applies to some banking transactions also, I believe.
LORD PENTLANDSo be it. I assume it does. But all this is being done in accordance with an established practice by which the Treasury authorises the Commissioners of Customs and Excise to levy new duties from the date of the passing of the relative Resolution in Committee of the House of Commons. This is the information which I am authorised to convey to the noble Lord. I may refer him for further information to the note on page 589 of the 1906 edition of Sir Erskine May's Parliamentary Practice, where he will find fuller details on the point.
LORD MUSKERRYCan the noble Lord tell me whether these duties must be authorised by an Act of Parliament?
LORD PENTLANDThe new duty is subsequently legalised. This is the established practice by which all these duties are levied as from the date of the passing of the Resolution. As the noble Lord knows, the passing of the Resolution is a preliminary stage and is followed by the introduction into the House of Commons by the Chancellor of the Exchequer of the Finance Bill. The assent given by the House to the Finance Bill is the machinery by which the practice to which the noble Lord alludes is legalised.
House adjourned at five minutes before Eight o'clock, till Tomorrow, half-past Ten o'clock.