Sitting of 28 October 1909

Preamble
Mr. SPEAKER took the chair at a Quarter before Three of the clock.
PRIVATE BUSINESS.
Robert Gordon's Technical College and Aberdeen Endowments Trust Order Confirmation Bill,—read a second time; and ordered to be considered upon Monday next.
ORAL ANSWERS TO QUESTIONS.

  Arterial Drainage (Ireland).
  Mr. LONSDALEasked the Chief Secretary for Ireland whether, in the event of money being made available hereafter for the purposes of arterial drainage in Ireland under the provisions of the Development and Road Improvement Funds Bill now before Parliament, it is proposed to utilise any advances for such purposes without having recourse to the amending drainage legislation recommended by the Commission appointed in 1905 by the late Government?
  The CHIEF SECRETARY for IRELAND (Mr. Birrell): It would, in my opinion, be premature to enter on the consideration of the important question which the hon. Member has raised until the Development and Road Improvement Funds Bill now before Parliament has become law.
  Mr. LONSDALE: Has the Irish Government considered whether the Development Grant ought to be used to promote amending drainage legislation?
  Mr. BIRRELL: I agree with the hon. Member that amending drainage legislation is necessary. How far it will be possible for drainage schemes in Ireland to benefit by the provisions of the Development Bill now before Parliament I really think I ought not to be asked to say. I realise the importance of the question.
  Mr. LONSDALE: In the event of the Bill not going through, will the right hon. Gentleman consider this matter?
  Mr. BIRRELL: Oh, certainly.

  Modern Literary Course Exhibitions (Ireland).
  Mr. BOLANDasked the right hon. Gentleman can he now state what decision has been arrived at by the Intermediate Education Board with respect to the matters reserved for their special consideration at their meeting on the 22nd instant; and can he state what steps, if any, will be taken to change the rule governing the division of exhibitions in the modern literary course?
  Mr. BIRRELL: The matters to which the hon. Member refers are, I presume, the suggested reconsideration of the examination papers, the issue of the prize lists, and the revision of the existing rules. I have already informed the hon. Member for East Kerry that the Commissioners of Intermediate Education have declined to adopt the suggestion that the honour papers should be re-examined. This decision applies to French and German as well as to Irish. The prize lists have now been issued. They were reserved for consideration by a full meeting of the Board, because it was found that the award of prizes to all those eligible under the rules would involve a considerable inroad on the reserve funds of the Board. Having regard to the diminution of their income the Board inform me that it will be necessary in future to reduce the amount allocated to book prizes. I understand that the Board will shortly have their rules under consideration and will discuss any alterations which may be desirable.
  Mr. BOLAND: Do I understand that there is some possibility before the next meeting of the Board that some extra exhibitions will be given? Is that the effect of his answer?
  Mr. BIRRELL: No, I cannot hold out any definite promise on that subject, and I am really not authorised to do so. I have no control over the Board.

  India (Deaths from Fever).
  Dr. RUTHERFORDasked the Under-Secretary of State for India whether, in view of the Viceroy's statement on 12th October at Simla that the deaths from fever in India during the last 10 years averaged nearly 4½ millions, and that last year the deaths were one million over the average, and the increase was believed to be due to malaria, he can say how much money was allocated by the Government of India in 1898 and 1908, respectively, under the following heads, sanitation, irrigation, education, railway, and army?
  The MASTER of ELIBANK: The expenditure on sanitation is not recorded under one head in the accounts, as officers of various Departments are engaged in work intended to improve the health of the people. I have, therefore, grouped together, as representing expenditure of this nature, the outlay shown in the Government Accounts under the head "Medical," the outlay shown in the same Accounts under the head "Civil Works" for hospitals, dispensaries, drainage, waterworks, and similar objects, and that shown in the Accounts of Municipalities and other local bodies under the heads "Medical," "Conservancy," "Water Supply," and "Public Health and Convenience." The total expenditure under all these heads amounted to £2,915,000 in 1897–8 and £4,455,000 in 1907–8. I may add that with special permanent grant of £200,000 a year was made in 1908–9 by the Government of India to Provincial Governments to be used for additional expenditure on sanitary purposes. The capital expenditure on irrigation was £462,000 in 1897–8, and £846,000 in 1907–8; but the revenue accounts of irrigation works showed a net receipt of £281,000 in the former year and £646,000 in the latter. The expenditure on education by the Government of India and by local bodies (so far as I have been able to trace their outlay), including the cost of educational buildings, was £1,302,000 in 1697–8, and £2,644,000 in 1907–8. The capital outlay on railways by the State and by guaranteed companies was £6,235,000 in 1897–8, and £10 425,000 in 1907–8. The revenue account showed a net charge of £709,000 in the former year and a net receipt of £1,563,000 in the latter. The military expenditure in 1897–8 was £18,316,000 net. In 1907–8 it was £19,248,000 net.

  Wigton Cyclist Conviction.
  Mr. TYSON WILSON (on behalf of Mr. William Thorne)asked the Secretary of State for the Home Department if his attention has been called to a case tried at a special court, Wigton, Cumberland, on Wednesday, 13th October, where a farm labourer named Ernest William Wilson was charged with riding a bicycle without a light; if he is aware that on the previous day, when the case should have been heard, the prisoner sent a telegram to say that his employer would pay the fine, but it did not arrive until after the sitting of the court, whereupon a warrant was issued for his arrest; and whether,
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  seeing that the prisoner was fined 16s., including costs, or 14 days' hard labour, will he say if he intends taking action in the matter?
  The SECRETARY of STATE for the HOME DEPARTMENT (Mr. Herbert Gladstone): I have inquired into this case, and find that the defendant failed to appear to the summons issued against him, and a warrant was issued in the usual course to ensure his attendance. After the court had risen the police received a telegram from defendant's employer stating that defendant had missed a train. Neither this telegram nor the assurance given by defendant's employer that he would pay any fine that might be imposed relieved the police of their obligation to execute the warrant issued to them, but they arranged to execute the warrant and bring prisoner at once to the court on a day that would be most convenient to the parties concerned. I see no reason for action on my part.

  Fordyce School.
  Sir HENRY CRAIKasked the Lord Advocate if it may be assumed that, pending full inquiry into the circumstances regarding Fordyce School, no building operations will be sanctioned at Portsoy which would prejudice or in any way affect the ultimate decision as to the case?
  The LORD ADVOCATE (Mr. Ure): The reply to the question of the hon. Member is in the affirmative.

  British Warships (Missing Confidential Drawings).
  Mr. RENWICKasked the First Lord of the Admiralty whether certain confidential drawings supplied to the contractors for the building of one of the latest first-class warships, and which drawings should now be in the possession of the Admiralty, have disappeared; and, if so, whether the Admiralty expect to regain possession of them?
  The FIRST LORD of the ADMIRALTY (Mr. McKenna): The answer to the first part of the hon. Gentleman's question is in the affirmative, and to the last part in the negative. The ship has been in commission for some time, and the drawings have therefore lost much of their value.
  Mr. RENWICK: Am I right in concluding that certain drawings have been missing, are missing, and have not been recovered, and that the Admiralty do not deem it necessary to attempt to recover them?
  Mr. McKENNA: The hon. Member is quite right in regard to the first part of his question, but he is quite wrong in regard to the latter part.
  Mr. RENWICK: Are any of the drawings of the first-class cruiser "Indomitable" missing at the present time?
  Mr. McKENNA: Yes, I have already answered that question in the affirmative.
  Mr. RENWICK: Then they are missing still?
  Mr. McKENNA: Yes, they are missing.

  Submarine Disaster (Men's Effects).
  Mr. H. BOTTOMLEYasked the First Lord of the Admiralty whether, in the first instance, considerable deductions were made from the proceeds of the sale of the effects of the men who lost their lives in the disaster to Submarine C 11; whether, in one case, the amount due was stated to be 10s. 11d., and whether this sum was subsequently corrected to £3 5s. 6d., the discrepancy being attributed to a clerical error; and, if so, whether he can state how such error came to occur?
  Mr. McKENNA: The reply to the first part of the question is in the negative. As regards the case quoted, it is true that in the first instance, for the purpose of enabling a man's legal representatives to obtain letters of administration, the amount due was stated as 10s. 11d. This sum was stated before the man's accounts had been finally audited, and it is regretted that the provisional character of the amount was by inadvertence not made clear by the Department when communicating with the man's relatives. The accounts were not closed until the abandonment of the salvage of the boat. But at no time was it the wish of the Board of Admiralty to make any deduction from the proceeds of the sale of effects on account of overpayment of wages.

  Teachers' Superannuation Allowances.
  Mr. T. R. FERENS (for Mr. Guy Wilson)asked the President of the Board of Education what is the total amount of the superannuation allowance and annuity on which Mrs. J. F. Pitts, of the Park-road council school, Hull, has been retired; and at what age such retirement took place, and after what number of years as a certificated teacher in public elementary schools?
  The HON. MEMBERasked similar questions in regard to (1) Miss A. E. Somerscales, of Wawne-street council
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  school, Hull, and (2) Mr. C. W. Tunley, of the Chiltern-street council school, Hull?
  Viscount MORPETHput a like question in respect of Mr. George Holmes, of St. Barnabas Schools, Birmingham.
  Mr. RUNCIMAN (in reply to the four questions): I must refer to the answer which I gave to the hon. Member for the Oswestry Division of Shropshire on Tuesday last.
  Sir HENRY CRAIK (for Mr. Bridgeman)asked whether the case of teachers who entered the profession under the Minutes of 1846 was recognised by the grant of special pensions under subsequent codes for which they alone were eligible; and whether it is possible to continue such privileges to this class of teachers in addition to any rights under the Superannuation Act, which does not secure to them the rights which were given by the Minutes of 1846?
  Mr. RUNCIMAN: With reference to the first part of the hon. Member's question, the Committee of Council on Education provided by Minute that the limitation on the number of pensions subsequently imposed should not prejudice the interests of teachers who were employed before August, 1851. With reference to the second part of the question, teachers who have accepted the Superannuation Act cannot receive a Code pension unless they are able to prove to the satisfaction of the Board that they are unable to qualify for an allowance under the Superannuation Act. I may point out to the hon. Member that the Minute of 1846 did not confer any "rights" on teachers. That Minute provided that a retiring pension might be granted to a teacher subject to certain conditions as to service, and to reports from the inspector and from the trustees and managers of the schools as to the character and conduct of the applicant and his discharge of his duties. The amount of any pension so awarded was to be determined after consideration of these reports.
  Sir H. CRAIK: Is it not the case that those old teachers were formerly entitled to special consideration and privileges, but are now, under the Superannuation Act, reduced to the level of all ordinary teachers, and only get the superannuation to which they are entitled by their own contributions; and is it not competent to restore the privileges they had previously?
  Mr RUNCIMAN: The matter is so technical that I think I must ask for notice of those questions.

  Old Age Pensions Act (Administration in Ireland).
  Mr. PATRICK WHITEasked the Secretary to the Treasury whether he will state how many special pension officers were sent from this country to Ireland to inquire into the administration of the Old Age Pensions Act; what instructions they received; if any officers were sent into England or Scotland for a similar purpose; and whether he will also state their instructions?
  The FINANCIAL SECRETARY to the TREASURY (Mr. C. Hobhouse): Six inspectors were sent to Ireland in the early part of the year to inspect the work of the pension officers. The instructions given them were of a general character, namely to satisfy themselves as to whether proper care had been taken by the pension officers in investigating claims, and to give particular attention to the ages of claimants, in view of the statements then current that a large number of persons under the statutory ago had been granted pensions. In England and Scotland the inspection of the pension work has been performed in conjunction with the ordinary work of inspection, and is still going on. The special attention of the inspecting officers has not been drawn to the question of age in these countries. Owing to the fact that the Registration of Births Act was already in force in England and Scotland, there was not the same difficulty in obtaining documentary evidence of age. Such evidence was generally absent in regard to claimants in Ireland.
  Mr. PATRICK WHITEasked the Secretary to the Treasury whether, having regard to the respective populations of Great Britain and Ireland according to the Census of 1841 and to the number of the survivors of that period who are now in receipt of old age pensions in each country, he can state the approximate demand which will come upon the Exchequer from Great Britain and Ireland, respectively, calculated on each succeeding Census Return down to 1901, assuming the ratio of persons now in receipt of pensions in each country to remain the same as it now is to what the respective populations were in 1841?
  Mr. PATRICK WHITEalso asked the same right hon. Gentleman whether he will state the respective populations of
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  Great Britain and Ireland according to the Census of 1841; whether there are at present in Great Britain almost half a million persons in receipt of old age pensions, and what would be the proportionate number of persons to be in receipt of pensions in Ireland according to the respective populations of that period, and to the fact that it is only those persons enumerated in the Census of 1841 who are entitled to the pensions; and whether the proportionate number so calculated for Ireland is higher or lower than the number actually in receipt of pensions in that country at the present time?
  Mr. HOBHOUSE: The comparative numbers of persons eligible for old age pensions in Great Britain and Ireland respectively on any given date will clearly be affected by many other causes besides the comparative census population of the two countries 70 years previously, and any conclusions based exclusively on the data suggested in the questions would necessarily be misleading. The hon. Member can, if he wishes to do so, readily make the calculations he suggests from the published Returns. The hon. Member for Limerick (Mr. M. Joyce) asked me a question on this point about a month ago, and I think the facts the hon. Member asks for will be found in the answer I then gave.
  Mr. PATRICK WHITE: I asked what the populations of England and Ireland were in 1841. Only people living at that time are entitled to pensions. Having regard to the population of the two countries, what percentage should be granted in Ireland and Great Britain?
  Mr. HOBHOUSE: It is perfectly impossible to say.
  Mr. PATRICK WHITE: If it is impossible to say, how can you say Ireland is getting more than her fair share?
  Mr. HOBHOUSE: I did not say so.
  Mr. PATRICK WHITE: It was said by the right hon. Gentleman's colleagues.
  Mr. HUGH LAW: If no such allegation were made, why was this special Commission sent over to Ireland?
  Mr. HOBHOUSE: No Special Commission was sent over to Ireland.
  Mr. PATRICK WHITE: Why were special inspectors sent to Ireland unless to ascertain the number entitled to old age pensions?
  Mr. HOBHOUSE: The number of inspectors was not sufficient to do the work.
  Mr. SPEAKER: I think this conversation has been carried on long enough.

  Old Age Pension Appeals.
  Mr. PATRICK WHITEasked the Secretary to the Treasury whether he will state how many grants of old age pensions by local committees in England, Ireland, and Scotland have been appealed against in each country by pension officers, and with what result; and whether he will state the instructions given to the pension officers in the three countries?
  Mr. HOBHOUSE: I am not in a position to give the information asked for in the earlier part of the hon. Member's question. The instructions given to Pension Officers, which are uniform throughout the United Kingdom, indicate in general terms the steps which should be taken when they are dissatisfied with regard to the fulfilment by a pensioner of the statutory conditions.
  Mr. PATRICK WHITE: How many cases of appeal have there been in this country, and what have been the results?
  Mr. HOBHOUSE: No, Sir; I cannot give a reply to the first part of the question. I am not unwilling to do so, but I really cannot give a reply.

  Sale of Crown Land (Benton Road, Ilford).
  Viscount CASTLEREAGHasked the Secretary to the Treasury if he would state the acreage of the land in Benton Road, Ilford, conveyed to the Ilford Urban District Council by the Crown, on a contract dated 23rd January, 1906; to what purpose was the land applied; what was the amount of the purchase money; and what was the rateable value of the land conveyed?
  Mr. HOBHOUSE: The land contained nearly 1¾ acres, and was sold as a site for a higher elementary and ordinary school. The purchase money was £1,250. The land was not separately assessed, but the average assessment of the land sold is believed to have been about 30s. per acre.
  Viscount CASTLEREAGH: Can the right hon. Gentleman say how this price of £1,250 was arrived at?
  Mr. HOBHOUSE: No, not without notice.
  Viscount CASTLEREAGH: Can the right hon. Gentleman say whether this transaction carried out by the Crown comes within the category of transactions deprecated by the Chancellor of the Exchequer as not business, but blackmail?
  Mr. HOBHOUSE: I can hardly describe the circumstances connected with any case unless I know the particulars of it.

  FINANCE BILL.

    DUTY ON SPIRITS.
    Mr. PATRICK WHITEasked the Chancellor of the Exchequer what quantity of spirits was taken out of bond during the four months October, 1908, to January, 1909; and what quantity will require to be taken out in the same period, 1909–10, to produce revenue which, when added to the revenue derived from the duty on spirits in the preceding eight months of this year, will produce an amount equal to the yield in the previous corresponding 12 months plus the revised estimated increase of £800,000?
    Mr. HOBHOUSE: The quantity of spirits on which duty was paid in the four months—October, 1908, to January, 1909—was 14,309,000 gallons. The quantity which will require to be duty paid in the four months—October, 1909, to January, 1910—to produce revenue which, when added to the revenue derived from the duty on spirits in the preceding eight months of this year, will produce an amount equal to the yield in the twelve months—February, 1908, to January, 1909—plus the revised estimated increase of £800,000, is 12,958,000. I may point out that the year to which the hon. Member refers is neither a financial nor a calendar year.

  INCREMENT VALUE DUTY.
  Mr. NIELDasked the Chancellor of the Exchequer whether the Increment Tax under Clause 25 of the Finance Bill will be levied upon the increased value above 10 per cent., after deducting not only expenses from advertising but also the following expenses necessarily incidental to the acquisition of the increased value by the the person taxed, namely, surveyors' charges, solicitors' costs, estate agents' fees, and any bonus that may have been payable; and, if so, whether he will state where this is secured in the Bill, or whether he will insert words which will secure it?
  Mr. HOBHOUSE: Under Clause 25, Sub-section (4) (a), of the Finance Bill, deduction may be made from the total site value of any land of any part of that value which is proved to the Commissioners to be directly attributable to expenditure of a capital nature (including any expenses of advertisement) incurred bonâ fide for the purpose of improving the value of the land as building land. It is

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  hardly possible to say without further particulars whether charges of the kind mentioned by the hon. Member (other than costs of advertisements, which are specifically provided for) would come within the scope of this provision, as this would depend on the circumstances in which and the purposes for which the expenditure was in each case incurred.
  Mr. NIELD: Does the right hon. Gentleman mean that the cost of the original conveyance to the person charged with the Increment Duty shall not be deducted when a survey is necessary for this purpose?
  Mr. HOBHOUSE: Not necessarily; it depends on the circumstances.

  DUTY ON PROPERTY SUBJECT TO LOAN,
  Mr. PATRICK WHITEasked the Chancellor of the Exchequer whether, under Section 61 of the Finance Bill, in the event of a person dying leaving chattel property valued at £300 and land purchased under the Land Acts valued, under Sub-section 5 of Section 7 of the principal Act, subject to the loan, at £250, but the market value of which was estimated at £800, he will state if the duty would have to be paid on £550 or £1,100?
  Mr. HOBHOUSE: Upon the facts stated, the duty would be payable on £550.

  IMPORTS OF SPIRITS.
  Mr. PATRICK WHITEasked the Chancellor of the Exchequer what quantity of spirits was imported into Great Britain and Ireland during the five months May to September, 1908 and 1909, respectively?
  Mr. HOBHOUSE: The quantities of spirits imported into Great Britain and Ireland during the five months May to September, 1908, and 1909, respectively, were:

  May-September, 1908.

  May-September, 1909.

  Gallons.

  Gallons.

  Great Britain

  2,986,974

  3,383,991

  Ireland

  38,178

  26,862

  Cyclist Battalions (Examination for Officers).
  Mr. FERENS (on behalf of Mr. Guy Wilson)asked the Secretary of State for War whether he is aware that officers in cyclist battalions are being required to pass the examinations prescribed for infantry officers and not examined in their own branch of training, and that such officers have consequently to spend a great amount of time in learning infantry work, which they have no opportunity of practising,
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  and to the sacrifice of that for which they are specally organised; whether, the War Office will alter the system in this respect; and whether, pending fresh regulations, the present method will be discontinued?
  The SECRETARY of STATE for WAR (Mr. Haldane): Officers of cyclist battalions are required to pass the same examination for promotion as other infantry officers; in addition, a second lieutenant of cyclist battalions, before promotion to the rank of lieutenant, is required to pass an examination on parts of cyclist training. There is no infantry work which the cyclist may not be called upon to perform, and it is essential, therefore, that he should be as efficient in all infantry work as other infantrymen. It is not considered desirable to alter the present system of instruction.

  Royal Military College, Sandhurst.
  Mr. ARTHUR LEE (on behalf of Sir Samuel Scott)asked when the additions to the Royal Military College will be completed, and when they will be fit for occupation by the cadets?
  Mr. HALDANE: The contract date for completion of the six new cadet blocks at Sandhurst is June 20th, 1911. They will probably be fit for occupation in the autumn of that year.
  Mr. ARTHUR LEE: How many additional cadets will be accommodated?
  Mr. HALDANE: I should like notice of that question. I cannot answer off-hand.

  Lichfield Barracks (Painting Contract).
  Mr. GEORGE BARNES (on behalf of Mr. T. F. Richards)asked the Secretary for War whether he is aware that the firm of A. J. Bagnall and Company, contractors for painting at the barracks, Whittington, near Lichfield, are employing labourers to do painters' work at less than the painters' district rate of wages, and whether he will have the matter inquired into in order to secure the observance of the Fair Wage Clause?
  Mr. HALDANE: The matter is being investigated.

  Enteric Germ Carriers.
  Captain CLIVEasked the Secretary for War whether the supposed enteric germ-carriers are still being detained in military hospitals and subjected to experimental medical treatment; and when he proposes to publish a further report on the success, or want of success, of this treatment?
  Mr. HALDANE: The Army Council has decided that germ carriers shall be treated for three months in hospital on arrival in England, and if not cured at the end of that time will be given the option of remaining in hospital for further treatment. If they decline further treatment they will be discharged from the Service. Consequent on this decision the men now at Netley will be discharged from the Service if they decline further treatment. The second report on the carriers will shortly be published.
  Mr. A. LUPTON: Will not the right hon. Gentleman refer the whole question of germ-carrying to some unprejudiced authority for investigation?
  Mr. HALDANE: I think the Army Council is an unprejudiced authority. Nobody would desire to keep men unnecessarily in the hospital.
  Mr. LUPTON: Is there not a very large section of public opinion which thinks that the whole subject of germ-carrying as now dealt with is nonsense?
  Mr. HALDANE: This is a new branch of knowledge which is not so far advanced as I should like it to be.
  Mr. LUPTON: Can the right hon. Gentleman say whether it is a new branch of knowledge or only a new branch of darkest ignorance?

  Civil Servants and Politics.
  Mr. SNOWDENasked the Prime Minister whether, in the event of a Civil servant being invited to contest a constituency for Parliament, leave of absence, without pay, would be granted?
  The PRIME MINISTER (Mr. Asquith): The answer is in the negative.
  Mr. SNOWDENasked the Prime Minister whether he is prepared to make any statement as to the result of the Cabinet Committee's deliberations on the subject of political activities of Civil Servants; and would a Post Office servant be permitted to run as a candidate for the London County Council in March, 1910?
  The PRIME MINISTER: In accordance with my undertaking, the Government have carefully examined the question of the participation of Civil servants in politics. They regard the integrity and impartiality of the Civil Service in political matters as an essential feature of the British constitutional system; and it is, in their opinion, of the highest importance that no action should be taken that would
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  shake public confidence in this respect. They therefore consider it undesirable that Civil servants should take a prominent or active part in party politics. As regards the question of participation by Civil servants in local government, the Treasury Minute under which they are precluded from becoming candidates for county councils will be cancelled; and each Department will be left to make its own rules on the understanding that any duties involved shall not conflict with duties to the Department. I understand that, as regards the Post Office, no distinction will in future be drawn between county councils and other municipal bodies.
  Mr. SNOWDEN: Is it the intention of the Government to issue amended regulations with regard to the participation of Civil servants in politics?
  The PRIME MINISTER: Oh, no; as regards the general question, the existing system remains. The latter part of my answer was confined to participation in local government?
  Mr. SNOWDEN: Is the right hon. Gentleman aware that in a certain branch of the Civil Service, members are allowed to take part in national politics? Is he aware that in the Post Office, service organisations are affiliated to national political bodies with the cognisance of the Department?
  The PRIME MINISTER: That is another matter.
  Mr. E. A. GOULDING: With regard to the suggested alteration in regard to the Civil Service in reference to county council elections, how can the right hon. Gentleman hope Civil servants will keep their integrity if they are allowed to take part in county council elections in London, where both sides are really party organisations?
  The PRIME MINISTER: At present they take part in borough council elections, and I am not aware that there is any rigid line of demarcation between borough and county council elections.

  Royal Irish Constabulary.
  Mr. PATRICK O'BRIENasked the Chief Secretary for Ireland whether an appointment has yet been made to the vacancy in the depot command of the Royal Irish Constabulary; whether any effort was made to select a competent officer holding the Catholic religion for the position; if so, with what result; and

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  whether he wall give the name of the officer appointed, his nationality, and his religion?
  Mr. BIRRELL: An appointment has now been made to the post in question. As I have already informed the hon. Member, professional qualifications only are taken into consideration in filling such vacancies. The officer appointed is Mr. H. A. Coxwell Rogers; he was born in Gloucestershire 54 years ago, and has served for 32 years in the Royal Irish Constabulary. He is, I am told, a Protestant.
  Mr. PATRICK O'BRIEN: Can the right hon. Gentleman give the name of any subordinate in the Irish police who advised him that religious considerations are not taken into account? Can he say why it is that since the establishment of this force no Catholic has happened to be appointed to this particular position?
  Mr. BIRRELL: So far as I am myself concerned, in no appointment over which I have any authority—and this is one—have I allowed any religious considerations-to enter my mind. My sole object has been to secure the man best fitted to fill the place. If it be the fact that no Roman Catholic has ever filled this particular post, I am quite sure it is due to no incapacity on the part of Roman Catholics, but simply to the proper and ordinary competition between members of the force.
  Mr. PATRICK O'BRIEN: Were you ever advised by any of the superior officers in the force that this consideration should not enter into the appointment?
  Mr. BIRRELL: I do not know I ever received any such advice. I stand in no need of it.

  Motor Car Dangers (Dunton Green).
  Mr. CATHCART WASON (on behalf of Mr. Cox)asked the Secretary of State for the Home Department whether he has received a resolution from the Dunton Green Parish Council calling attention to the danger to life, limb, and property to which His Majesty's subjects in Dunton Green are daily exposed by the illegal and reckless driving of motor cars through the village, to the constant disregard of danger signals by motorists, and to the example set to all classes by these law breakers; and what steps he proposes to take in the matter?
  The SECRETARY of STATE for the HOME DEPARTMENT (Mr. Gladstone): I received the resolution a few days ago
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  and at once made inquiry of the chief constable. He informs me that he placed a police control on the road at Dunton Green on various occasions in 1908, and previous years, and that a number of convictions were obtained, with the result that there was a great improvement as regards careful driving and the observance of the speed limit. No complaints have been received by the police for some considerable time; but if the parish council believe that motor cars are driven through the village at a dangerous speed any representation by them to the chief constable will receive careful attention.
  Mr. H. W. FORSTER: Have no complaints been received by the local authorities?
  Mr. GLADSTONE: I know nothing about that.

  Suffragists in Strangeways Gaol (Use of Fire Hose).
  Mr. KEIR HARDIE: I wish to ask the Home Secretary a question of which I have given him private notice, whether he can say by whose authority a fire-hose pipe was played on one of the women suffragettes in Strangeways Gaol, Manchester; whether the lady was at the time weak from want of food; whether the water was played upon her for about an hour; and what action he has taken to punish those responsible for authorising and carrying out this assault upon a prisoner?
  Mr. GLADSTONE: I am sorry to say that the newspaper statement is true, though somewhat exaggerated. I need not say that the use of the fire hose was not authorised either by me or by the Prison Commissioners. It was employed, I understand, by order of the Visiting Committee, and as soon as the matter came to my notice I wrote to them for an explanation. Having not yet had any reply from them I have to-day sent one of the Prison Com missioners to Manchester with instructions to inquire fully into all the circumstances.
  Mr. KEIR HARDIE: May I ask whether meanwhile those responsible for this gross outrage will be suspended?
  Mr. GLADSTONE: I have already explained I know nothing more than I have already stated. I have sent down a Prison Commissioner in order to investigate and ascertain the facts. I may add that I have ordered the discharge of the prisoner in question.
  Mr. KEIR HARDIE: I shall repeat the question on Monday.

  PLATFORM SPEECHES.

    MR. SPEAKER'S RULING.
    Mr. W. P. BYLES: I rise to ask the Prime Minister a question of which I have given him private notice, whether his attention has been drawn to a recent speech of the Leader of the Opposition casting very grave reflections upon the honour and probity of a Member of the Government, and whether he proposes to take any action?
    Mr. SPEAKER: Questions of that sort have never been admitted in this House with reference to disputes between Members on political platforms, and I see no reason why a new departure should be made because the two protagonists happen to occupy important places in the ranks of their respective parties. If we once begin admitting questions with regard to speeches made on political platforms, I am afraid our time would be very fully occupied, and we should have no time for the business of the country.
    Mr. BYLES: Will, you, Sir, allow me to explain that I sent a copy of this question to you a day or two ago as well as to the Prime Minister, so that I hope I have acted with due respect to the Chair.
    Mr. SPEAKER: I was very much obliged to the hon. Member. I think I asked him to put it on the Paper, so that I might see the terms of it, and I have been watching for it to appear on the Paper ever since.

FINANCE BILL.
As amended in Committee of the whole House, further considered.
FINANCE BILL.

  CLAUSE 66.—(Super-tax on Incomes over £5,000.)
  (1) In addition to the Income Tax charged at the rate of one shilling and twopence under this Act, there shall be charged, levied, and paid for the year beginning on the sixth day of April nineteen hundred and nine, in respect of the income of any individual, the total of which from all sources exceeds five thousand pounds, an additional duty of Income Tax (in this Act referred to as a Super-tax) at the rate of sixpence for every pound of the amount by which the total income exceeds three thousand pounds.
  (2) For the purposes of the Super-tax, the total income of any individual from all sources shall be taken to be the total income of that individual from all sources for the previous year, estimated in the
  1182
  same manner as the total income from all sources is estimated for the purposes of exemptions or abatements under the Income Tax Acts; but, in estimating for the purpose of Super-tax the income in respect of any land on which Income Tax is charged upon the annual value estimated otherwise than in relation to profits, there shall be deducted (in addition to any other deduction) any sum by which the assessment is reduced for the purposes of collection under Section thirty-five of the Finance Act, 1894, or on which duty has been repaid under the provisions of this Act relating to the payment of duty in respect of the cost of maintenance, repairs, insurance, and management, and in estimating total income there shall be deducted the amount of any premiums in respect of which relief from Income Tax may be allowed under Section fifty-four of the Income Tax Act, 1853 (as extended by any subsequent enactment), and also in the case of a person in the service of the Crown abroad, any such sum as the Treasury may allow for expenses which in their opinion are necessarily incidental to the discharge of the functions of his office and for which an allowance has not already been made.
  Sir HENRY CRAIK Sir HENRY CRAIK moved to leave out the Clause.
  I do not apologise for asking the House to give their reconsideration to the important new principle involved in the Clause we have now come to. A few nights ago we were told in defence of a certain Clause of the Bill that it had been so changed in Committee by the alterations which had been introduced that it was absurd to reconsider the matter, but in this case the Clause has undergone no modification whatever in its provisions or form. It stands unmodified by any of the suggestions which have been made by hon. Members on both sides of the House. Several hon. Members proposed modifications which if they would not remove all the objections to it would have certainly very greatly modified them and reduced some of its worst features. The Clause comes before us unmodified without any suggestion of Amendment, and I think that we should at least hear some of the views of the supporters of the Government to enable us to understand the real purport of this Clause. I am well aware that I am speaking to a House, the vast majority of which is absolutely opposed to the views I hold, and I trust to the generosity of the House to give a hearing to one who

  1183
  at least is speaking under a strict sense of conscientious conviction in regard to this Clause. I am not quite sure that there are not on both sides of the House Members who have qualms of conscience with regard to this Clause, however difficult they may find it to utter them, and I am quite sure of this that whatever may be the case in this House that outside it there are an immense number of thinking men on both sides of politics, who regard this new and startling movement in our taxation with something very much akin to dismay. I know also that only a decade ago not a single responsible Finance Minister would have been heard in favour of this Clause.
  It was unknown in any Finance Bill in this country and had never been proposed by any responsible financial authority on either side of the House. That gives me some sort of consolation when I speak in a very feeble way in opposition to it. I know very well that in standing up to oppose this Clause I may be said to be speaking in favour of certain selfish individuals of whom we hear so much who are willing that the country should undertake any expenditure, but unwilling to put their hands into their own pockets. [HON. MEMBERS: "Hear, hear."] That is a point which to my mind has been too much reiterated, and I regret to still hear it cheered on the benches below the Gangway. It is a new rôle to appear in as the representative of the multi-millionaire, and it is a rôle which, for once in a way, is exhilarating. I feel like a man whose ordinary dress is an out-of-elbow coat, who finds himself transported into the sphere of princes, kings, and emperors, but I can only say, with regard to this: that, speaking as one to whom the Super-tax does not—and cannot by any possible contingency—apply, if I were called upon to pay it upon an income of £15,000 or £20,000 a year, I trust I should be as able to exercise the same courage of my opinions as I am to-day. It is, I recognise, a serious and difficult matter for rich men on either side of the House to oppose the tax. It requires greater courage on their part to have the suggestion made that they are speaking in their own interests. But surely these ideas of personal bias and interest might now be left aside. I claim for myself, and I credit to every other Member of the House, the absolute right to have it expected that he is speaking according to
  1184
  what he thinks is likely to promote the welfare of the whole community. It is in that sense that I oppose this tax.
  There is one thing that we are all agreed upon, that if it were possible to put the burden of taxation heavily upon the wealthy classes and to relieve the poor we would all alike join in any scheme which consistently with the general interests of the Commonwealth and consistently with sound financial principles, would lead to that end. I do not suppose there is a single one of us who would not be willing to tax the luxuries of the rich to the very utmost extent that they will bear. We are only restrained from increasing these taxes upon the rich, not by the fact that they hit them hard, and not by any wish to defend them, but simply because at a certain point we reach the limit beyond which the tax breaks down altogether, and that is the only limit I would propose of any tax that strikes solely at the luxuries of the rich. You are attempting here to do something completely different. You are attempting to attain that common object, taxing the rich and relieving the poor, but you are attempting it in a wrong direction. It is wrong in the first place, because it is financially wrong, and it is financially wrong in the first place because you are narrowing down unduly the basis of our national revenue. We are told on the authority of Sir Henry Primrose that the-estimate of the number of persons with incomes exceeding £5,000 is 10,000. We are making a large part of the revenue depend upon one-fortieth part of 1 per cent. of the population. Surely that, as a mere financial measure, goes against the whole principles of broad basing your taxation. Can there be any better illustration of the errors which are committed in this Budget in that direction than when the Chancellor of the Exchequer explained on Friday last that the breakdown of his financial estimate was comparatively moderate, and was only prevented from becoming a disastrous collapse by the fact that a single great millionaire was good enough to die at a convenient opportunity and place £1,300,000 in the hands of the Chancellor of the Exchequer. If this Budget has one fault more than another, from a purely financial point of view, it is that it bases more and more of our taxation upon small contingent elements in the life of the population, and upon a mere fraction of the people instead of upon the-whole people of the country—putting a

  1185
  burden ten times heavier upon that small class, but at the same time failing to yield any commensurate revenue to the State.
  The second fault, and I wish I could have the full and frank evidence of ome of the experts at Somerset House, is that this Super-tax will, in all probability, break down and put out of gear the whole of the machinery of your Income Tax collection, and cripple the tax for the future—that tax upon which at a great emergency of the national life we may have to rely. You are breaking down now what has been easy before, the taxation of revenue at the source, that which has made the Income Tax so easy to gather, so perfectly smooth in working, so comparatively inexpensive, and so little perplexing to the officials. You will have to introduce an immense number of appeals and precautions, of different times when the tax is to be paid and different means by which the extent of it is to be gauged, different machinery for drawing it out of the pocket of the taxpayer, and all this will, merely as a matter of machinery, throw this smooth, easy, well-oiled machinery, which has worked so well in the past, out of gear and make it more cumbrous and more difficult in its action in the future.
  But after all it is the general objection, economic and social, to the tax which constitutes my chief objection to it. Had it been modified as suggested by the hon. Members (Mr. Chiozza Money and Mr. Mond) it would not indeed have removed all the objections to it, but it would have made it more homogeneous with the rest of our graduations of Income Tax. It would have helped to adjust it more dexterously and more justly to the varying scales of income, and it would not have this hard-and-fast and crude form of drawing the line at particular strata of income and treating all above it on a totally different footing. But what you are doing here is to take a fixed limit of £5,000 and pronounce that any money above that is to be held on the lightest of all tenures, held merely on sufferance, and that it shall be subject to any burden which the State may from time to time put upon it on a different basis from the taxation laid on the incomes of any other portion of the community. In the first place, I would ask is it possible to take any such limit as this without looking at what the effect of the tax may be, and without considering how the burden bears upon those who are called upon to pay? Can anything be more absurd than to say that a man's power of bearing taxation is to be measured only by
  1186
  his nominal income or the amount he has at his bankers? Is it not possible that a bachelor without any great claim upon him, and who is in the enjoyment of £1,500 or £2,000 a year, may be better off than a man who, though enjoying greater income, has a large family, who may have children afflicted by ill-health, and who has daughters to provide for? The men who have £5,000, £6,000, or £7,000 a year are actually poorer men in some cases than bachelors with £2,000.
  There is nothing more ridiculous than to take an arbitrary limit as marking the capacity to bear the burdens which fall upon each member of the community. I do not mean to compare at length the case of bishops and judges, each of whom enjoys an income of, say, £5,000. In the view of some hon. Gentlemen opposite bishops are citizens who deserve no pity or consideration. Anyone knows that a bishop with £5,000 a year is a poor man who could scarcely keep up his position unless he had private means. On the other hand, a judge with the same income may live in chambers on £500 a year. It is absolutely useless to compare the capacity to bear taxation in the case of the bishop and the judge by simply taking into account the fact that each has the same income. Does the right hon. Gentleman think that £5,000 a year for one occupying the position of a Cabinet Minister is an income of overflowing wealth? I remember years ago reading an interesting report of evidence given by Lord John Russell upon the incomes of Ministers of the Crown. He told the Commission that the first time his affairs ever got into disorder and he found himself heavily in debt was after he had been several years Prime Minister of England. That shows how fallacious it is to trust merely to a fixed amount of income as a guide in estimating the burden of taxation. But, after all, what is your object in imposing this tax? You must have an object, and you must pursue it logically. You intend that your tax should equalise the burden upon different individuals—that it should make the burden bear equally upon the poor, the comparatively poor, and the rich. Well, where are you going to stop? If you have a man with £10,000 a year, you may put on a Supertax of 15s., and still leave him more able to bear the taxation than I and many others would be who have smaller incomes. If you are not going to carry out the principle of this tax to that length, it means that you are only going to hold out a fallacious bait to hon. Members below the

  1187
  Gangway and those whom they represent. You are going to pretend to do something in the way of making a difference between rich men. I should like to hear the opinion of the hon. Member for Blackburn (Mr. Snowden) on this proposal. He and I differ profoundly on almost all political questions, but I have the greatest respect for his sincerity and for the logical directness with which he is prepared to pursue his principles and convictions.
  If I were persuaded that this Super-tax was right, and that it was going to be the means of bringing about the aim and object which we all alike have at heart, I would not only agree to this proposal, but insist that the Super-tax should be a real and substantial equivalent of what it pretends to be. I should insist that it should not be merely sixpence, which is only, after all, a trifling and invidious distinction with respect to rich men, but that it should be something really effecting the relief of poor men and forming a substantial source of revenue. You cannot stop here. What are the two alternatives? You may carry it to its logical end and increase the Super-tax until you do what you say you wish to do, namely, level the incomes of all the citizens of the country. If you do that, I say you will cripple all individual effort, stunt the national resources, and drive all individual interest out of the great work of the country. But you may do another thing. You may not carry your scheme to its utmost logical result. You may keep on charging merely a small and inadequate addition to the rich man. What is the result of that? It is to transform your Budget into what I and others have before asserted, namely, a rich man's Budget and not a poor man's Budget. If you put this small, fictitious, delusive, and trifling extra tax on the rich man, you will transform him into a vastly more important member of the community. Look at what happens in other democracies. Look at America, where the rich man is more important as a source of taxation. Is it not the tendency of democracy—is it not the tendency of ordinary business to regard the rich man as important. Who are the customers who are treated with the greatest respect? Is not the great customer who is content to pay ten times the profit more sought after than the ordinary customer? Do not shop-keepers go hat in hand to him and show that he is prepared to treat him with greater deference. Exactly in the same
  1188
  way will the Chancellor of the Exchequer and the nation whose revenue depends upon the rich man look to the rich for that revenue. If you are going to make them pay, it should be a real payment. You should get something out of them which is worth collecting. Do not let us have a merely delusive bait held out to the poor by imposing a tax of sixpence extra on the rich. What does that mean to the African or South American millionaire? It merely gives him a little extra prestige and a little more importance. It segregates him a little more from the rank and file of men who have only a bare sustenance. At the same time while it does that it does not really get out of him a sum which would equalise his income with that of others. I will not drag forward again the opinions expressed by John Stuart Mill. I will quote the words of one who is no mean politician and economist. His opinions perhaps even hon. and right hon. Gentlemen sitting on the Treasury Bench will regard as possessing some weight. The words I am going to quote were written 30 years ago, and they have since been republished:—
  "The cardinal truth is that the improvement of the social organism can only be effected by a moral development, and never by any changes in mere political mechanism or any violence in the way of artificial redistribution of wealth."
  The fact that the writer of these words is Lord Morley of Blackburn makes plain that he is not to be found as one of the protagonists on the platform of this new and revolutionary Budget.
  Sir FREDERICK BANBURY: I do not apologise for seconding my hon. Friend, because I think that this is an extremely bad tax, introducing an extremely bad principle, and one which ought to be resented to the utmost extent. The Income Tax was originally introduced as a War Tax, and I can remember when the statement used to be made in financial circles that one of the great pillars of strength in this country in its time of need was the fact that there was an Income Tax to fall back upon, and that there was also the Sinking Fund, which could be used in time of need. The Chancellor of the Exchequer is using the Income Tax for a purpose for which it was never intended, and he is introducing into the collection of that tax a novel principle which, I believe I am correct in saying, has never been introduced before in any civilised country. As an argument in favour of the Super-tax, a general statement has been made that it is right to put the burden of taxation on

  1189
  the shoulders of those who can bear it. I believe that words of that kind, describing a general principle without going into detail, convey to the minds of a very large number of people the idea that the Income Tax is not equally shared by all classes of the community. That is not the fact. A man with an income of £10,000 pays £500 in Income Tax. A man with an income of £1,000 pays £50. The man with 10 times the income of the other pays 10 times the tax, but the Chancellor of the Exchequer proposes that he should pay 15 times the tax, or 50 per cent. more. Why 15 times? The moment you begin to say that because a man has got a certain figure he shall pay, not in the same proportion to the other members of the community, but at a rate to be decided by the Chancellor of the Exchequer, who is to get the money you leave the door open to an unscrupulous Chancellor of the Exchequer directed by hon. Members below the Gangway to say that, and shall not be 50 per cent. more, but 200 or 300 per cent. more. There is nothing to prevent the extra 6d. being turned into 5s. or 10s., or even into a larger amount, until you appropriate all the surplus over £5,000 a year, as is advocated by certain hon. Members below the Gangway, who, I am sorry to see, are not in their places to-day. It is very easy to talk on platforms about putting the burden of taxation on the shoulders of those who can bear it; but when you come to investigate that statement in a tribunal like the House of Commons I am not surprised that hon. Members below the Gangway do not stop to take part in the discussion.
  My hon. Friend has told us that the number of people whose incomes are over £5,000 a year is 10,000, or one-fortieth of 1 per cent. of the population of the country. Whatever the number it is a very small one, I believe, and it is a very dangerous principle, especially in a democratic country, to pick out a very small class and to say that you are going to put a very great part of the burden of bearing the responsibilities of Empire upon them. Everyone who has a vote ought to share in paying for the burdens and responsibilities incurred through the exercise by them of that vote. Those who have votes should not be allowed to use them in order to incur expenditure, and then put the burden of that expenditure upon a small class who are defenceless for the very reason that they
  1190
  have only the same power in the State as the man with £100 a year or £1 a week. Once that principle is introduced then good-bye to the commercial prosperity of this country. Why is £5,000 a year the line that has been chosen? I can see no reason except that it is the salary of a Cabinet Minister, and that the Cabinet Ministers will not be affected toy this tax.
  Mr. LLOYD-GEORGE: Yes, they are.
  Sir F. BANBURY: Not unless they have private means of their own.
  Mr. LLOYD-GEORGE: If they have even £5,001 in the year.
  4.0 P.M.
  Sir F. BANBURY: Does the right hon. Gentleman propose to pay on £5,001 in future? If so, I will withdraw my remark. I am not making any personal observation. It might be quite possible that a Cabinet Minister would have no means except his salary. But, leaving all that out of the question, why should a man with £5,001 a year pay £50 more than the man with £5,000? Are we to understand that £5,000 a year is a sufficient sum in the estimation of the right hon. Gentleman for anyone in this country, and that anything above £5,000 is a sum which is not necessary for the person who has it, and which can be appropriated by the State for the purposes of the State? If they say that, then why do they stop at 6d.? Why do not they take more? Unless there is some reason of that sort in the £5,000, what is the point of drawing the line at that sum? Again, why should £3,000 be deducted from that £5,000? That seems to me to be the most illogical proposition that was ever made by any Government introducing a tax of this sort. Why, because you have got £5,000 a year, should you deduct £3,000 a year before you become liable to the Super-tax? Does it mean that in the opinion of some Members of the Government £3,000 a year is all any man ought to have, and that this is the beginning of a principle on which later it will be said, "£3,000 is as much as a man ought to have. We think he can live comfortably on that, and anything above that can be taken by the State whenever they happen to be in a tight place"? There must be some reason in the mind of the Government for the deduction of £3,000, but certainly it is not apparent in the Bill, or, so far, in any of the speeches made either by right hon. Gentlemen or by the Government, or by any hon. Members below the Gangway who support them.

  1191
  An illustration has been given many times in the City of London which is very familiar to anyone who has ever considered the subject. We will take two men who are in partnership in the City of London, and whose business returns them a net profit of £11,000 a year. They divide that sum between them, each receiving £5,000. At the end of the year, before they divide the £11,000 between them, they determine to set aside £2,000 for the purpose of increasing their capital or extending their business, or something of that sort. They put that £2,000 aside, so that their income is £4,500 a year each, instead of £5,500. But the Income Tax collectors would say, "Your net profits are £11,000. You divide that equally amongst yourselves, and you are liable to a Super-tax." But suppose these two people turn themselves into a limited company, as I believe they can, though I am not quite certain about the law—I think, however, that I am right in saiyng that two people are allowed under the law to turn themselves into a limited company—what happens? They say, "Our net profits are £11,000, but we will put aside £2,000 as a reserve fund, or for extending the business, or for any other purpose connected with the company, and we will declare a dividend of £9,000." The two shareholders will, therefore, receive £4,500 a year—exactly the same sum as the two partners would have received; but the two shareholders will not be liable for the Supertax while the two partners will. I am sorry to see that there is not a Law Officer of the Crown here, but probably the right hon. Gentleman the Financial Secretary to the Treasury (Mr. Hobhouse) is as good as a Law Officer, and I challenge him to controvert that statement in any single detail. "What will the result be? The result, of course, will be that a large number of people will turn themselves into limited companies, a thing which I myself do not think at all good for the commercial prosperity of this country. I think those hon. Members who have been engaged in business will agree with me that it is not to the advantage of the country generally that everybody should turn themselves into limited liability concerns in order to escape the exactions of the State. I do not wish to go into the question of the difficulty of collecting the Super-tax. A Select Committee of this House sat three years ago upon the question of the Super-tax. They went very fully into the question, and the opinion of the majority
  1192
  of that Committee was against the imposition of such a tax. One of the ablest Civil servants of his day, I think I am right in saying, Sir Henry Primrose declared against the imposition of this tax.
  Let me for one moment deal with the financial aspect of the question. The Chancellor of the Exchequer is aware that he estimates the yield of this tax for this year at £500,000; for next year £2,250,000; and the third year at £2,500,000. Dealing entirely with the financial aspect of the question, I ask the Chancellor of the Exchequer why he did not put a penny on the income tax? That would have brought in something like £2,700,000 at once, a larger sum than he will secure according to his own calculation in two years from now. It would not have altered the incidence of the tax, and it would not have entailed a further burden upon the office, because the collection of this Super-tax must cost a great deal more than merely the imposition of an extra 1d. upon the existing Income Tax. Having done that, the right hon. Gentleman would have got his money far easier than he is doing now, and he would not, in my opinion, have opened the door to a very dangerous principle, which he may, perhaps, not desire to extend, but which, as certain as I am addressing you, Mr. Speaker, will be extended in years to come if hon. Members below the Gangway get greater power in this House than they have now. I feel very sincerely that this is an extremely bad tax, that the principle of it may go much further than anyone now contemplates, and that if it does it means our overthrow as a great commercial country. I believe that if you want to make this country prosperous you should encourage money and wealth to come over here and to remain here. I remember a speech made by my right hon. Friend the senior Member for the City of London (Mr. Balfour) in which he said what we were suffering from in this country at the present moment was not too few rich men but too many poor men. I thoroughly agree with him in that. I think the hon. Member for Preston opposite told us that we should all be in cages or up trees, or something of that sort, if, for the last thousand years, there had not been frugal men who had saved from their earnings and thus started the capital which is at the root of the prosperity of this country. I have always been led to think that it is meritorious to save and to work hard, and to hand down to one's children

  1193
  the business or fortune, or whatever it may be, that is to be inherited. The right hon. Gentleman has struck a blow at that. The right hon. Gentleman says to a man, "If you save money, if you become prosperous, I am going to take a large slice of it." He says, "If you do not exercise self-denial, if you do not work hard, if you choose to work only sufficiently hard to obtain what you want, and if you save nothing out of it, then you will be put in a favourable position; but the moment you begin to lay by for the future, the moment you wish to work as hard as you can, the moment you devote the whole of your energies to work and to save as much as you can as the result of your work, then," the right hon. Gentleman says, "you are not a credit to the country, you have got more than you ought to have, and I am going to take some of it to waste on the Labour Exchanges, or foolish ideas of that sort."
  I hope that the few remarks that I have made will sink into the ears of the right hon. Gentleman. I do not think I shall convert him, but I do hope that some hon. Members opposite, who, I believe, really share the sentiments to which I have given utterance, will quietly, behind Mr. Speaker's chair, seek to impress upon him that he must be a little careful in the way in which he is attacking the capital of the country. A tax of this sort may seem to the superficial observer not to amount to very much. It may be said: "What does it matter? The man who has got £5,000 a year under this tax has got to pay another £50." Yes, but it is not the £50; it is the fact that once this is introduced it is certain, as certain as I am speaking to you at the present moment, that it will be extended. That is the fact which causes me and many others to regard this tax with fear. If we could think that we were governed by, we will say, a great potentate, whose will was law, and if he were to say: "I am going to take from you"—as I believe was done in the days of the Stuarts, days to which we appear to be going back—"a certain amount for certain objects," if I thought that was going to be the end of it I do not know that I would have got up and made the speech which I have delivered to-day; but it is, I again repeat, because it is as certain as anything can be, that, once this pernicious principle is adopted, any Chancellor of the Exchequer who desires to be popular, or thinks it will be popular, will try
  1194
  to avail himself of this tax, which can only be resisted by an extremely small portion of the population. I have much pleasure in seconding the Amendment proposed by my hon. Friend. I do not know whether he is going to a Division; we are in such a small number here that it does not make very much difference whether we divided or not; but I could not allow this Motion to be made without doing what little is in my power to assist my hon. Friend.
  The CHANCELLOR of the EXCHEQUER (Mr. Lloyd-George): The hon. Baronet who has just sat down was in a most grave and solemn mood. He warned us that we were going back to the days of the Stuarts, and the real danger that a tyrant might arise in this country who would extend this vicious principle and bring about the downfall of the country.
  Sir F. BANBURY: He has arisen.
  Mr. LLOYD-GEORGE: The hon. Member is flattering some individual, whoever he is, very considerably. I do not think he need apprehend that I will tell him why. This very pernicious principle has been enshrined in our taxing laws for the last 50 or 60 years. It has been introduced not by wild, revolutionary politicians, but by one of the gravest statesmen who ever had to rule this country—Sir Robert Peel.
  It was introduced at a time when he was head of a powerful Conservative Ministry, and contained the very principle which we are extending now—that is, the principle of differentiation between the scale upon which you are to levy direct taxation according to the income of the individual. After all, I do not see any difference in principle between levying an Income Tax of 2½d. on a man who has got £200 per year, because I think it is barely that, and levying an Income Tax of 9d. on a man who has got £700 per year, and a still higher Income Tax on a man who has got £1,000 per year. All that principle is embodied in the Income Tax law, and it has been embodied and adopted by successive statesmen of Liberal and Conservative Administrations. Nobody has ever discovered, until the hon. Baronet to-day, that it was a principle of a most dangerous character, and that it may end in disaster for this country. His suggestion is that it penalises thrift, because, he says, the moment a man begins to save, and begins to enjoy a larger income than he otherwise would have, down comes the Income Tax Commissioner and says, "As long as

  1195
  you are unthrifty we only charge you 3d., but the moment you begin to save we charge you 6d., and if you save still more we charge you 9d., and if you are so thrifty and frugal in your habits that you can actually save £5,000 per year you will have to pay 1s. 4½d." Now the hon. Baronet says that that is discouraging thrift, but it has been part of the law of this country, and an essential part of the fiscal system, for 50 or 60 years, and on the whole I think we have done rather well. I do not know that thrift has been discouraged, and I am not sure that people have been persuaded from putting by out of their income and investing and piling up wealth. I am sure the hon. Baronet ought to know. I wonder whether he has ever been discouraged from frugal habits owing to the fact that merely because instead of earning £160 per year he is, we will say, above £700, and that because of that he will have to pay a little more Income Tax. These things are surely not sufficient to turn a man against thrift. If you were to say to a man, "If you are so foolish as to make this £6,000 per year you will have to pay actually 1½d. in the £ more for your Income Tax," I do not really think that because of that he would be frightened. Has the hon. Baronet ever tried the matter? Has he ever gone to a man and said, "Here, we will give you £6,000 more, but you will have to pay an extra lid. or 2d. in the £ Income Tax"? I really think the man would close with him if he made the offer.
  We had a couple of very solemn orations. The hon. Member for the University of Glasgow (Sir H. Craik) delivered a speech, and I am not quite sure what his objection is, because the first part of his speech or diatribe against the tax was not quite consistent with the second part. His first view was that a man with £7,000 per year was very much poorer than a man with less, that in fact the less a man had the richer he was. He said that the man with £7,000 per year might have a family, and the man with £2,000 a year might be a bachelor, and that the bachelor with £2,000 per year would be very much better off than the man with £7,000 per year. That applies to all the grades of the Income Tax. In fact, he was very sorry for the very very rich man, and said that the man with £10,000 per year might be very very badly off and exceedingly poor, while the man earning about £200 or £300 per year had generally something to spare, but that the moment such men went up to five or six or seven
  1196
  hundred they were rather badly off. As far as I can see, his arguments really amount to this, that the graduation is the wrong way, and that instead of charging 3d. to a man with £400 per year and 1s. 6d. to the man with £20,000 per year, you ought to put it the other way, and you ought to charge the £20,000 man 3d. and the man with £400 per year 1s. 6d., because he is better off, and if a man is so unfortunate as to be a millionaire, he ought to be exempted altogether. In fact, instead of having a limit of £160 you ought to have a sort of £50,000 per year limit, and a man coming within that unfortunate category ought to be exempted from taxation altogether.
  That was the first part of his speech, but there was such a distance in point of time between that and the end of his speech that the hon. Gentleman quite forgot to be consistent. When he came to the second part of his speech he said, "Here you are taxing a very small class, and that is very unfair; you should not tax a small class." "But," he said, "what is it you are taxing? A mere nothing." He said, "What is 6d. but a fraction," while in the first part of his speech he said it was crushing, and that the extra taxation we are putting on the man he could not bear at the present moment. But when he comes to the end of his speech he says, "What is 6d.?" His countrymen are not wont to regard 6d. with that measure of contempt which seems to be poured upon it by the hon. Member. I agree it is a very modest sum. We claim that the whole of the Budget is reasonable in its demands, and that really nobody can complain. I agree with the hon. Gentleman that 6d. is nothing to those very rich people, and I think he rather made out a case for the Budget in that respect. "Oh; but then," he said, "it is a very bad principle," and he quoted some very high authorities, for whom I certainly have as great a respect as the hon. Gentleman. No one could have more respect for Lord Morley, whom he quoted, but the quotation was quite irrelevant. It is instructive as long as you put it in the proper place, but it really had very little to do with the Super-tax. The hon. Member said we were going to tax a very small class, and that that was very dangerous. I think there is another part of the hon. Member's speech which shows how little dangerous it is. He says to put the burdens of taxation on a small class is a bad principle, and that it will end in disaster. I do not think he need fear disaster. He himself gave the best answer to that. He said,

  1197
  "Look at all those millionaires," and spoke of the Chancellor of the Exchequer going cap in hand to them, and that all the tradesmen deferred to them and take off their caps. After all what that means is that those men in great positions of wealth have a position which is out of proportion to their numbers. They will get absolute fair play, and a good deal more from everybody.
  When you come to the principle of this Super-tax, the hon. Baronet (Sir F. Banbury) said, where did you get your £5,000? I have got it from the Report of the Committee which sat on the matter, and I see that he has got a neighbour there who was a member of that Committee, and really I think he might have asked a few questions from his neighbour before he put some of those questions. I find that the hon. Member to whom I refer did not vote against the matter.
  Mr. G. D. FABER: I was a member of the Committee, but I did not coach the hon. Baronet. He does not want coaching.
  Mr. LLOYD-GEORGE: That is exactly what I say. I was complaining that the hon. Baronet before he got up had not asked a few questions of his neighbour who knew all about this, and who could have answered those questions.
  Mr. G. D. FABER: I am not his keeper.
  Mr. LLOYD-GEORGE: I think the hon. Baronet ought to congratulate himself on the fact that he is in very good charge. The hon. Baronet asked a question as to the £5,000. It was part of the Report of the Committee to which the hon. Member (Mr. G. D. Faber) was a member, and I find that he did not divide against the main conclusions at the end.
  Mr. G. D. FABER: One or two other Members present were also on that Committee, and we did take diverse views. The conclusion at which we arrived was not a unanimous conclusion, but we agreed to differ.
  Mr. LLOYD-GEORGE: I agree that there was a good deal of difference of opinion about methods, but what really strikes me, on carefully looking through the matter, is that there was no Division at all upon the main conclusions. There may have been differences about machinery and about methods and about amounts, but there was no challenge of the main conclusion, and there was no Division upon it. There were several Divisions in the course of the considerations of that
  1198
  Report, but there was no Division on the main propositions. One of the propositions is:
  "Graduation by Super-tax is practicable if it be desired to levy a much higher rate of tax on large incomes, of say, £5,000, than has hitherto been charged. A Super-tax on personal declaration would be a practice able method."
  The sum of £5,000 is mentioned there.
  Mr. G. D. FABER: May I say that the question before the Committee was practicability, not advisability.
  Mr. LLOYD-GEORGE: The passage which I have quoted indicates that it really is rather a matter of practicability, but the hon. Baronet wanted to know about the £5,000, and that seems to be the figure considered by the Committee and the figure which they evidently thought, if there was going to be a Super-tax, ought to be the dividing line. I am not going to dwell on what the hon. Member said about Cabinet Ministers, as I do not think he really meant it. I would not have referred to it if it had not been said outside, but I can tell him there is no Cabinet Minister who will not come within the Super-tax, and with that I will say nothing more about it. The hon. Baronet went on to say that he had an alternative. The hon. Member who moved the Amendment simply raved at large upon it. He did not suggest where we would find the money. The hon. Baronet did so. He is a practical man, and he knows you have to get it out of the taxes somewhere, if not from a Super-tax. He very courageously—because, after all, it concerns a good many of his constitutents—said that the way to do it was to raise a penny all round on the Income Tax. I agree that that is a practical alternative, and I do not mean to say that it is not one of the alternatives we had to consider, and on the whole I agree it is simple, much simpler, and that the setting up of the machinery for this Super-tax is a difficult matter, at any rate, in the beginning. At the same tame, I do not thank it is a method which will commend itself to the ordinary business man. I do not think on the whole that if you put it to half a dozen average business men, even if they were subjected to the Super-tax, that they would regard it as as much of an evil that you should charge a higher rate on the people who are earning £5,000 as that you should add a penny on people who are earning £900 or a £1,000 per year. After all, our Income Tax principles are based on the recognition of the fact that

  1199
  there is such a thing as a taxable surplus. It is our opinion that there is a certain proportion of a man's income which he must necessarily devote to the maintenance of himself and his family. You go a little higher in the scale, and there is a certain sum which he must spend in certain walks of life on what is called the preservation of gentility. There is, at any rate, a recognition that below a certain limit a man is not in a position to pay Income Tax at all. When he is a little above that limit, he is only in a position to pay on the surplus over and above that amount. The same thing applies when you run up beyond £3,000, £4,000, or £5,000. Men in that position are infinitely better able to pay a heavy Income Tax than men who are enjoying £900 or £1,000 a year. The Mover of the Amendment says that very often people in that position find it very difficult to maintain their position and to keep up what they regard as an absolutely necessary appearance. There I agree with him; but I have no sympathy with the man who is earning £5,000 who cannot spare 2d. or 3d. in the £ for the necessities of the State. For that reason I do not think I should be justified in detaining the House any longer in replying to this Amendment.
  Mr. A. J. BALFOUR: The ingenious parody which the Chancellor of the Exchequer gave of the speech of my hon. Friend who moved the Amendment (Sir H. Craik) would hardly carry conviction to those who heard both the speech of my hon. Friend and the answer of the right hon. Gentleman. Everybody must agree that there are more difficulties and dangers attaching to this tax than the Chancellor of the Exchequer is willing to admit. He has quoted the financial history of this country in respect of Income Tax, and he claims with a certain amount of justice that graduation has not been absent from the Income Tax. On the other hand, I think he must in justice admit that neither Sir Robert Peel nor any of Sir Robert Peel's great successors would have contemplated with equanimity the Super-tax which the Government now propose, or would have thought that that Super-tax could have been imposed without the State running some of those dangers to which my hon. Friend has clearly called attention. I think the tax is capable of abuse to a much greater extent than the Income Tax as established by Sir Robert Peel and his successors. It is a serious
  1200
  thing deliberately to say that out of a population of 42,000,000 or 43,000,000 you are going to put a not negligible part of your revenue upon a minority of 10,000. It lends itself very easily to excess. I also think that if you take the increased Death Duties and the Super-tax together, you do run some danger of interfering with the accumulations of useful capital in this country. I hope the House will understand that I am not using these arguments at all from the point of view of the payers of the tax. I use them from the point of view of the general public, from the point of view of the country, which, if it is not a great commercial and manufacturing country, is nothing. If you take this tax in combination with the Death Duties, are you not beginning, I will not say a raid, because in connection with this tax I have nothing against the morality of the Government, as I have in regard to some others of their proposals—in regard to the Licence Duties, for instance, which bear on a special section of the community, and some others which are taxes on individuals arbitrarily chosen irrespective of their means. This is not a tax on people irrespective of their means. It is not open to that charge. The question to my mind is not whether the people are willing and able to pay, because I think they are. It is not, to my mind, whether they are arbitrarily chosen, because I think they are not. I am not discussing the people near the line; I am dealing with the broader question. The theory of the tax, at any rate, is that the people are chosen in proportion to their means, and I do not call that an arbitrary distinction. It is quite different from the selection of a man who happens to hold a licence, or to manufacture beer, or to get money out of minerals. That seems to me to be arbitrary. I do not think this is arbitrary. Here you say that So-and-so is well able to afford to pay more than other men without undergoing any hardship. Although the tax may be inexpedient, and in many respects I think it is, I do not think it is arbitrary in the same sense that some other portions of this Budget to which I take objection are. But I am afraid that if you take this tax in connection with the Death Duties, it is a tax which every Chancellor of the Exchequer must deeply regret to have to impose. He must regret it, rot so much from the point of view of the individuals who have to pay it as from the point of view of the community whose resources are to some extent dependent

  1201
  upon, and whose employment is sustained by, the savings and the capital of the men upon whom you are putting this augmented taxation. My own inclinations are really more in favour of the Super-tax than of the increased Death Duties. I am speaking for myself, though possibly without sufficiently weighing the two alternatives, both of which I dislike. But, as I say, personally my own inclinations are more in favour of the Super-tax than of the increased Death Duties, because I think the Super-tax will be paid out of income, but I am quite confident that we have now reached a point in regard to the Death Duties which makes it absolutely impossible in many cases that they should be paid otherwise than out of capital. That, I think, is very regrettable. The danger in regard to the Super-tax is perhaps more that you will drive capital out of the country, and induce those who have capital to invest it under circumstances in which they will not come within the grasp of the Exchequer. You will increase very seriously the motive for avoidance, and I think avoidance is almost certain to ensue. That has two great disadvantages. In the first place, it diminishes the yield of the tax, and, in the second place, it puts people, otherwise exactly equally situated, but one of whom can and the other cannot avoid the tax, in quite different positions in regard to the Exchequer. I think that is a misfortune, and it is one which is almost certain to occur.
  I may add this fur their criticism. The Income Tax is a very disagreeable tax to pay, because a man knows that he is paying it. It is far more disagreeable than indirect taxes. There are many people who object to indirect taxes, because they think it ought to be very disagreeable to pay them, and that it is only by making them disagreeable that you get people to take a proper interest in the finance of the country. I do not think I admit that principle even in regard to the great mass of the population, and when you are dealing with only 10,000 persons that argument falls entirely to the ground. This tax, in the nature of the case, must be a disagreeable one, and if people think that it is a tax in excess of what they ought to be paying, that it is not a contribution which can be fairly demanded of them by the State, they will not break the law, but they will ask how, legally and properly, the law can be avoided.
  Human nature being what it is, that is almost certain. In these circumstances I think the amount of the tax is what really
  1202
  matters. But there is another argument in connection with the amount of the tax which directly springs from the argument of my hon. Friend (Sir H. Craik). He pointed out, what it undeniable, that the amount of taxable income is not an accurate measure of the burden of taxation. He also pointed out what everybody knows, that a man may have a large nominal income but very little to spare; while another man may have a small nominal income and a great deal to spare. That is an inequality which I do not think can possibly be avoided by any system of taxation. The Chancellor of the Exchequer cannot look into each man's circumstances and say "I quite recognise that you have to do this and that with your money. You do not spend it on yourself; you spend it on your children, or on matters which do not minister to your own individual enjoyment, and I make an allowance to you on that account." You cannot deal with all these matters. The Commissioners of Inland Revenue, omniscient as they are assumed to be in the rest of the Budget, certainly do not possess, and nobody will assume that they can ever possess, the degree of insight into the burdens of taxation that any attempt to adjust the Income Tax precisely to the position of affairs of the payer of the tax would require. That is quite impossible. But do notice that all these inequalities and injustices, which are inevitable in any Income Tax, become greatly augmented and aggravated with every augmentation and aggravation of the tax. An inequality or anomaly which is negligible when the tax is small assumes oppressive proportions when the tax is greatly increased. That is another reason why I personally deplore the weight of taxation which the Chancellor of the Exchequer has found it necessary to impose upon income and property. Therefore, while so far I entirely agree with my hon. Friend, and differ from the Chancellor of the Exchequer, there is this point to be kept in view. The money must be found. I suppose if there was a great war to-morrow, straining the resources of the country to the utmost, nobody could object to an increase of the Income Tax. We should deplore it, but we should admit that it had to be paid. If the Government come forward with a Budget in which some attempt is made to deal with the financial necessities of the country, I do not feel disposed at this late stage of our proceedings, when we have really to consider the proposals more or less as a whole, to raise my voice against

  1203
  a part of that Budget unless the Government are themselves prepared to propose an alternative. Their Land Taxes do not require an alternative. They bring in no money at all. The Licence Duties, I suppose, might be dropped without destroying the Budget. But if the Government are absolutely resolved, as they are, not to raise the money by taxing imports—I believe that is the way you ought to extend your basis of taxation——
  An HON. MEMBER: "How much could you raise?"
  Mr. BALFOUR: This tax is going to bring in half a million this year, and two and a-half millions in three years time. I take it that the most sceptical critic of Fiscal Reform will not deny the possibility of finding by means of Import Duties £500,000 a year, or if need be £2,500,000. But I do not wish to deal with that. I have explained why I do think, if the Government absolutely refuse to extend the basis of taxation, that this tax is not open to the kind of objection which I feel towards their other taxes, that is, that they are inflicted arbitrarily upon the particular classes of the community, quite irrespective of their means, their wealth, or their power to pay. If the Government come forward with a tax which is not open to that objection, be it a good tax or a bad tax—and I do not think it is good; be it a safe or dangerous tax—and I think it dangerous; it is at all events levied on some broad principle directed towards the capacity of the subject to pay. If that is the defence, and the only defence of this tax, I think it is inadequate. I dislike the whole scheme of taxation of which it is part. But we have the misfortune to have a Government in office who have cut themselves off from the many other sources of taxation. When they bring forward this particular form of taxation which I do not find open to the particular criticism which I have done my best to level against other portions of the Budget, then I say, at all events, so far as this Budget is concerned, that this tax, whatever its defects and dangers, really shines out as a model of justice and equity as compared with some of the proposals which have emanated from right hon. Gentlemen opposite.
  Mr. ARTHUR LYNCH: I do not propose to detain the House long, but I wish to touch upon one or two arguments which have been put forward by the Proposer of this Amendment. He said that if this principle were introduced there would be
  1204
  the danger, and that it might be continued so far as to produce all evils. He seemed to allow his imagination to conjure up something which would never be ascribed to the most revolutionary Member in this quarter of the House. A French economist, I believe it was Yves Guyot, said on one occasion that he could not understand the objection which people had to paying taxes, as from his point of view it ought to be regarded as a privilege, and almost a pleasure. That is not generally the way in which paying taxes is regarded. But I should be inclined to think that if there was one circumstance which would turn paying taxes from being something irksome to a privilege and pleasure it would be that the taxpayer had been liberally endowed with £5,000 a year. The Chancellor of the Exchequer is in this situation: he must find the money. No taxation is pleasant to the taxpayer, but the Chancellor must so adjust the burden so as to find his money from those who are most competent to pay, and whose duty it should be to pay. We on this side of the House have criticised the Finance Bill from various points of view. There are certain instances perhaps in which I believe it will act in a way unfairly in regard to Ireland. But, leaving aside that particular matter as to whether or not it weighs unfairly in regard to Ireland, I venture to say that I have never had the opportunity of reading any Finance Bill which has been better based than the present, and which would have had the approbation of the great Liberal thinkers of the past: of Adam Smith and of John Stuart Mill. The hon. Gentleman who proposed the Amendment said that too much had been heard of John Stuart Mill in this Debate. I think there has never been an occasion when the Chancellor of the Exchequer reed have been afraid of meeting any kind of quotation in connection with the Finance Bill from John Stuart Mill. The hon. Gentleman who seconded the Amendment brought forward a number of objections in which he seemed to imagine that the imposition of these taxes would lead to unheard-of injustice, and even, he suggested, to the overthrow of the country. He enunciated a doctrine which is absolutely at variance with Adam Smith, that the wealth of the country should be measured by its capital. Adam Smith said that the wealth of the country should be measured by its labour. As an alternative to this tax the hon. Gentleman suggested that an additional penny should

  1205
  be levied on taxation as it now stands. That is to say, in place of making the rich pay he would put additional taxation upon the poor. He has come down here to bring tears to our eyes for the woes of the poor millionaires, but he has no commiseration for those who are already struggling against terrible odds even to pay the taxation which is already levied upon them. He reminds me of the old Scriptural picture of Dives and Lazarus. That may have come to his mind, but whenever that illustration has been cited before it has never been to wring out our commiseration for Dives. The hon. Gentleman would not inflict any additional taxation upon Dives or take away any part of his luxuries. The right hon. Gentleman the Leader of the Opposition spoke with his usual acumen, and it was rather interesting to follow the in-genius arguments which he evolved to buttress a bad position. But I hardly gathered whether he was against this tax or in favour of it. He seemed to me to come to curse and remain to bless. I dare say, from the general trend of his arguments, that if he were in a similar position to the Chancellor of the Exchequer he would have little compunction in claiming similar taxation. Money must be got in some way, and if you look upon the two pictures, one of the rich man, such as we know in London—whose most extravagant luxuries cost more than the absolute subsistence of the poor toiling man—and you look on the other picture of the poor working populace, which has to face a life of incessant toil with no better prospect at the end than the workhouse; or if you think of the poor miserable tenant farmer in Ireland struggling all his days to find the merest subsistence for himself and for his family—I say that when the Chancellor of the Exchequer has to face the alternative as to which of these shall be made to pay, I think, of course, that he has chosen the right course. If there is any criticism on this Clause to be urged, it is that the Chancellor's touch, as usual, has been light rather than otherwise.
  5.0 P.M.
  Mr. SUMMERBELL: The hon. Baronet above the Gangway, in his usual goodhumored way, made some reference to nay colleagues, and chided them for their absence. He next prophesied what we would do when we came into power with regard to this particular tax. I desire to say to the hon. Baronet that he should not be so ready to make humorous remarks about the absence of Members from these
  1206
  benches, for one need not go very far back in the history of this Parliament to call to mind empty benches above the Gangway. Those who are absent from these benches are absent simply because it is not our interest to come to this House in order to plead the cause of the poor unfortunate individual who gets £5,000 a year. We are in entire accord with the Chancellor of the Exchequer in the tax which he is now proposing; therefore, our absence can be attributed to the fact, and the fact alone, that we are going to support this particular tax. Those who sit on these benches think that of all the taxes in this Budget this one is the most fair and just. We are against all indirect taxation, and would raise all the necessary revenue on the basis of the Income Tax, and the Income Tax alone. We say that to levy indirect taxes, as we do at present, is most unjust and unfair to the poor people of this country, and that the only fair method is to raise money by an Income Tax, and make each individual pay according to his ability to pay. Especially so when we take into consideration this very important fact: That it is estimated—or was estimated, at all events, a few years ago—that something like £63,500,000 was raised upon taxes upon food alone, this working out per family of five to something like £7 10s. per year, or £1 10s. per head. When you take also into account that in this country, too, there are something like eight millions of workers who receive a weekly wage of £1, we are, I think, right in saying in regard to indirect taxation that, so far as the poor are concerned, it is time that such taxation ceased. The right hon. Gentleman the Leader of the Opposition, in closing his remarks, said that he would rather raise the necessary revenue by a tax on imports. I know perfectly well that now is not the time to discuss a matter of that particular kind. All I would like to ask the right hon. Gentleman and his colleagues is: Are they aware of the important fact that in Germany to-day there is £25,000,000 deficit, and, of that, £20,000,000 has been directly placed upon the shoulders of the working classes? And will he just take into consideration the decision of the people in Germany in regard to the taxation that is being levied there at the present time?
  Mr. BALFOUR: The hon. Gentleman knows I did not mean to substitute Import Duty for Income Tax.
  Mr. SUMMERBELL: I am very glad to have that correction, and I readily accept it. I was going to say that certain elections in Germany indicate what the people, there think, so far as that question is concerned. We will support, whenever possible, the Income Tax, and we will support that tax being made higher and higher on the larger incomes. We hold that the time is not far distant when all taxes upon the food of the people should, and will, be abolished.
  Mr. F. MADDISON: I listened with a good deal of interest to the speech of the right hon. Gentleman, the Leader of the Opposition, and I confess I do not quite understand his intervention just now. He said he was not proposing to abolish the Income Tax. No, but as I understood him he would find the substitute in Import Duties for the Super-tax, which is the one thing we are immediately discussing, and therefore I think the point of my hon. Friend's argument holds good. In the course of this Debate—and it was emphasised by the right hon. Gentleman, the Leader of the Opposition—I have come to the conclusion how much easier it would be for a Finance Minister to tax the poor rather than the rich. It would have been a much easier method if the Chancellor of the Exchequer, instead of having to meet these great interests which he has had to face in these Debates, and which are dealt with in the present Clause, had substituted for them a large number of small taxes which, I believe, is the ideal of the right hon. Gentleman the Leader of the Opposition—taxes that, according to him, would hardly be felt; that is to say, there are a great many people who could be taxed easily because they hardly know that they are paying the taxes, while the rich man who is taxed knows he is paying the tax, and feels it. I, for one, do not wish to tax the rich because they are rich; but I say if these great burdens are to be borne the sort of people who come within this Clause ought to be very willing, considering all that is done for them in the country, to bear their fair share. I want property to be secured. I appreciate the value and the use of property and the responsibility of property; and I do not want to destroy what the right hon. Gentleman has always called the National capital. I would like to remind the right hon. Gentleman that I do think there is a great deal of confusion as to this waste of national capital. It is all very well to point to the millionaire or to the man who has £5,000 a year, and to
  1208
  say he will suffer and he will not be able to pay. But all that applies equally to the man whose food you tax. Take a man with a pound a week. You take from him 1s. in the way of food taxation for import duties. That 1s. is taken away in the form of necessaries which he is bound to have. I could wear my coat twice as long as it would look decent, but I cannot do without food. I must have food, and the labourer with his pound a week must have food to keep him in existence. And if he pays his 1s. on food taxes he is deprived of that shilling's worth of food or coal or other home comforts. There are 10,000 people who may have to pay this Super-tax, but there are 10 million people who would have to pay the food tax, and national capital is wasted quite as much in connection with the 10 million people who are poor as with the 10,000 who are rich.
  The next thing that struck me is, how much more difficult it is for a poor man to escape the taxation which the Parliament of this country imposes upon him than it is for the rich man. The right hon. Gentleman said that these people will take every legitimate means of evading these duties, and he felt quite sure it was already being done. That does not express a great deal of patriotism, by the way. You cannot have "Dreadnoughts" without paying for them. I quite agree, and I think it is one of the right hon. Gentleman's most fatal errors, that the small tax which he would impose upon a large number of people will not be felt in the same way. It is true a man who would pay a Super-tax would be able to evade the law much more easily than a man who pays a small tax. The man who is subject to a small tax pays—I do not know whether his patriotism is better or not than that of the rich man, but necessity makes him virtuous. But the right hon. Gentleman said that this tax shone out in all its brilliancy compared with the other taxes in the Budget. I am really surprised that this Amendment should have been moved, and I would just like to say one word in connection with it to hon. Members opposite. There is a great amount of misery in this country; there are a great many men struggling with adversity all over the country. In face of that misery do hon. Members opposite really think it enables some of us, not of their opinion, who are resisting, as we believe, the disastrous assumption of communism and State Socialism, that it will strengthen our hands for hon. Members opposite to get up in their places and

  1209
  endeavour to enable the rich man to get out of burdens which are as light as air when compared with those of the poor
  Mr. BALFOUR: As a matter of personal explanation, may I be allowed to say I did not express one word of sympathy for the people who are taxed by this Super-tax? And I do not feel any such sympathy. I neither expressed it nor do I feel at, and the whole lines of my speech were quite different.
  Mr. MADDISON: The right hon. Gentleman is a great master of tactics, and therefore I separated him from his more foolish following in this respect.
  Sir HENRY CRAIK: I expressly guarded myself from having any sympathy with the millionaires or people affected by this tax.
  Amendment negatived.
  Mr. WALTER GUINNESS: I beg to move, in Sub-section (2), to leave out the word "previous" ["from all sources for the previous year "].
  As the Clause stands it is proposed that the Super-tax assessment should be taken upon the income for the previous completed year. My Amendment would provide that the Super-tax should apply not to last year's income, but should start with the present year of charge. In many cases it will happen that a smaller income will be enjoyed this year than last year, and I think it is very hard to make the tax retrospective by levying it upon an income received, not this year, but received and probably spent last year. If the Government would accept this Amendment the Exchequer would not, in the aggregate, lose, because although they would get less from people whose incomes are falling, they would probably make it up from those incomes which are rising. A great many people, if assessed on last year's income, would pay less, perhaps would not pay at all, whereas if assessed on this year's income, they would come within the purview of the tax. I think the great objection to the proposal of the Government is that it is so severe on those who are in receipt of a falling income, and it puts a heavier burden upon those who, in any case, will have to aggregate their expenditure and who are in the least favourable position for bearing increased taxation. It is far better to put your taxes upon a man whose income is rising. Of course, if this Amendment is accepted, a consequential Amendment will be necessary to provide for Super-tax payers making an assessment
  1210
  during the current year of their total incomes, and it will also be necessary to provide where that estimate is too large, to enable the Inland Revenue authorities to repay the amount which has been wrongly claimed. Of course, this proposal would in no way affect those who are charged under Schedule D. They would still continue to pay Income Tax, and they would pay a Super-tax also on the three years' average. And therefore my Amendment would only apply to those whose incomes are derived from investments and those sources which are not liable to the average of the three years. In this Budget there are many cases of taxes being levied not upon what people receive, but upon imaginary valuation. But even in the Finance Bill I do not think there is any precedent for charging a tax upon money which has already been spent, and spent at a time when the owner could not possibly have expected that this increased burden would have been laid upon him. The acceptance of this Amendment would remove a very real and a very serious grievance.
  Mr. EVELYN CECIL: I desire to second the Amendment, which seems to me to be an obviously fair one. It applies, no doubt, to a few cases which would otherwise be very unfairly treated, more particularly professional men both in legal and medical, and possibly to men in the engineering profession and others. These men have no doubt calculated this year what is the sum coming in, and in cases of that kind it is a matter of common knowledge that the income is extremely variable. One year barristers may have enormous numbers of briefs; the next year the balance may be entirely upset. I think it is only right in these circumstances that a tax of this description should be charged upon the year where the heavy income comes in, and if you want to be scrupulously fair, as I imagine every Legislature does, you ought to adopt this Amendment and not put upon this particular class of people a tax in a different year from that in which the income is drawn.
  The FINANCIAL SECRETARY to the TREASURY (Mr. Hobhouse): Both the hon. Members who moved and seconded the Amendment used the same arguments. It is this. That if you proceed upon an income which is not the income of the year, but the income practically of the past year, plus the three previous years upon which the average is taken, you may cause hardship to persons whose income is smaller than the average works out at.
  Mr. WALTER GUINNESS: I did not argue the case of the average at all. It would not affect the average.
  Mr. HOBHOUSE: No, but that was the pith of the argument. I know the hon. Member did not mention it, but it was suggested——
  Mr. WALTER GUINNESS: No, no.
  Mr. HOBHOUSE: And that a person would be called upon to pay upon a falling income What is he called upon to do at the present time? He is called upon to pay on his average income of three yeans. In the first place, there is an administrative difficulty. Suppose the income were to be arrived at in the way suggested by the hon. Member. The Special Commissioners who have to arrive at the amount would not have for their guidance the decision of the District Commissioners. I think, taking the average upon the three years, you get a fair assessment to the taxpayer, and you also get a fair payment. I agree that there is the fourth year to be considered. In the case of the Super-tax, the income for the current year cannot be arrived at because it will not be complete until 31st December or 31st March, therefore you cannot take the income for the current year. I think I have shown that there is no real hardship when you take the average.
  Mr. AUSTEN CHAMBERLAIN: I have some difficulty in following the answer which the right hon. Gentleman has given. I think he has somewhat confused the matter by introducing the question of averages, which is neither here nor there for the purposes of this Amendment. It is, of course, true that for the purposes of Schedule B an average of three years is taken. That may or may not be the right thing. I think it is right in regard to the normal income. It does not, however, by any means follow that because it is right normally that it is the right thing for the Super-tax, which is assessed in a different way and collected in a different manner. Take a man who draws a portion of his revenue from investments of different kinds. Under the ordinary Income Tax his income is assessed at the source, and the Income Tax is paid out of the profits by the company deducting from the dividends or paying the dividend free of Income Tax. The company takes its three years' average and pays the tax, and the individual has nothing to do with it. But in the case of a Super-tax the company will have nothing to do with it, because the individual has
  1212
  to make the return, and it is the individual and not the company who will be assessed. Therefore, the question whether there shall be a Super-tax at all, and what the amount is to be, has no reference whatever to the profits made by the company as a whole, but merely refers to the income of the individual, whether derived from that company or from any other source. The two things stand wholly apart, and I should have thought it would have been better not to have introduced the three years' average into the Super-tax at all. I do not know what the right hon. Gentleman means by taking the fourth year.
  Mr. HOBHOUSE: There is no actual assessment in the fourth year. It ranges back to a period of four years previous, but it covers the period of four years.
  Mr. AUSTEN CHAMBERLAIN: The right hon. Gentleman has apparently forgotten the change in the law relating to averages made by the Prime Minister when he was Chancellor of the Exchequer, because he altered the law in the case of a falling income. If the three years' average proves to be higher than the income of the actual year in which the tax was assessed it would bring that fourth year in to correct the average. That met rather a hard case, but it met it with this disadvantage that, taken over the country as a whole, it acted unfairly to the revenue, because a bad year often appeared four times in the case of a fluctuating business, and a bad year appeared more often than a good year, and oftener than it ought to have appeared. That satisfied the revenue side of the case, but it left an injustice when there is a fall in revenue more acute than before, and that is the reason for now introducing the average for the purposes of this new Super-tax, which is an additional tax upon the top of a normal income. The Government had much better have left the average out altogether, and they only complicate this Clause and introduce an additional hardship by bringing in the average.
  There was another form of valuation upon which the right hon. Gentleman mainly relied for the Government proposal. He said, "It is true some men will pay too much, but it is equally true that other men will pay too little, but on the whole justice will be done, and by striking an average you get a very fair proposal." You cannot impose taxation in that way. Taxation is fair or unfair as it affects individual taxpayers in their particular circumstances, and the right hon. Gentleman

  1213
  gives away his case when he admits that the only answer he can give is that those who are paying more than they ought to do are perhaps paying the Super-tax when on the average income of the year they would not be liable to Super-tax in that year. He tells those people that although they are suffering, at any rate there are some other people better off who are obtaining an advantage. That does not seem to me to be a satisfactory defence of this proposal. I submit that the suggestion of my hon. Friend is a reasonable one, because you are putting on a new tax of this kind for the first time at a high figure, and you should adjust it to the circumstances of the taxpayer at the time, so that he can adjust himself to the tax. Instead of doing that, you work back for years over incomes that may have been spent, and it does seem to me that you are introducing an unnecessary element of hardship and difficulty in this tax. Then there is the administrative difficulty, to which the Financial Secretary appeared to attach the least importance.
  Mr. J. BERTRAM: The refusal of the Government to assent to any modification of this Clause which would enable the Commissioners to deal with hard cases appears to be due to their belief that all the people who will have to pay the Super-tax are earners of those incomes. I do not know what is the proportion of people who earn incomes above £5,000 a year to those who, having those incomes, do nothing to earn them. My own belief is that the vast majority of cases where the Super-tax attaches are not cases of earned incomes but of settled incomes where the person derives that income from stocks and shares, in which case the tax is deducted at the source. I remember, when this matter was in Committee, reference was made to a case of exceptional hardship with which I happened to be personally concerned as trustee, and I will very shortly state that case to the right hon. Gentleman, because these concrete cases enable one to judge the effect of the Government proposals. In this case the tenant for life will be assessed for Super-tax on the income of the year 1907–8. In that year the income of the person I allude to was £24,000. The sum of £8,000 had to be paid in interest on a loan. For the purposes of the Income Tax it made no difference what the tax was, because the person who received that £8,000 and paid it away was entitled to a receipt in full. Before paying, he deducted the tax
  1214
  from the £8,000. He received it less the tax, and paid it less the tax. Since that income of £24,000 was received, the trustees of the settlement have satisfied the capital obligation. They have sold stock which yielded £8,000 a year, and in the current year the income of that tenant for life will not be £24,000 a year but only £16,000. That is a case where, it seems to me, that the Commissioners ought to have power to charge the Super-tax upon the income of the current year, which, in this particular case, is £8,000, and will for ever remain £8,000 less than the income of 1907–8.
  Mr. JAMES MASON: I think the case we have just heard from the hon. Gentleman is almost unanswerable. He mentioned that the greater number of Super-tax payers would be the receivers of unearned income. That, of course, will probably be the case, and in the case of incomes derived from stocks and securities the variation will not, in the majority of instances, be very large, but there are a great many cases, especially of earned incomes, where the variation will be very large indeed. Take the case of people whose salaries are £5,000 a year and upwards and who lose them. The right hon. Gentlemen opposite may by the receipt of their salaries alone be liable to Super-tax, whereas on a future occasion they may no longer be in receipt of those salaries, and for that reason not be liable to any Super-tax at all. It would be fairer and better to calculate the tax on the actual receipts of the year, and not on the actual receipts of the previous year. I take it the defence for the proposal of the Bill is that you have already the results of the previous year, whereas you have not the results of the present year. I think that difficulty could probably be overcome. You propose to apply the Super-tax to the previous year when no Super-tax was in force, and you say that works out fairly in the end, because, basing the tax each year upon the previous year's income, makes no difference to the payer of the tax; but, as a matter of fact, it makes a very great deal of difference unless in the last year of his life you levy no Super-tax at all, and you are going to do so. I take it, if a man dies, Super-tax will be paid at the end of the year, just as much as if he were alive. This is, therefore, a retrospective proposal which I do not think is justified. I agree that in the actual working of the machinery in the collection of the tax you must use the previous year to a certain extent as

  1215
  the basis of your estimate. You would have to get an estimate from the payers of the Super-tax, and in most cases they would base their estimate on their previous year's income, making certain deductions which they knew or believed it would be necessary to make; but even if the basis of the calculation is the previous year's income, you ought in the end to rectify the calculation, and by repayment or further assessment finally make the actual money charged dependent upon the actual income of the year and not of the year before.
  Mr. HOBHOUSE: Perhaps, by the leave of the House, I may answer the case put
  by my hon. Friend (Mr. Bertram). The case he has put as a very hard case is, in fact, no hard case at all. Interest payable upon mortgage can by the existing exemptions, and will, under the Finance Bill, be deducted for the purpose of the Super-tax.
  Mr. BERTRAM: Will the right hon. Gentleman quote; I have never been able to get it.
  Mr. HOBHOUSE: Yes. Section 109, Rule 18, of the Act of 1842.
  Question put, "That the word 'previous' stand part of the Bill."
  The House divided: Ayes, 202; Noes, 66.

  Division No. 860.]

  AYES.

  [5.35 p.m.

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

  Everett, R. Lacey

  Lynch, H. B.

  Abraham, William (Rhondda)

  Falconer, J.

  Macdonald, J. M. (Falkirk Burghs)

  Acland, Francis Dyke

  Ferens, T. R.

  Maclean, Donald

  Ainsworth, John Stirling

  Fiennes, Hon. Eustace

  Macnamara, Dr. Thomas J.

  Alden, Percy

  Findlay, Alexander

  M'Callum, John M.

  Allen, A. Acland (Christchurch)

  Foster, Rt. Hon. Sir Walter

  McKenna, Rt. Hon. Reginald

  Allen, Charles P. (Stroud)

  Fuller, John Michael F.

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

  Balfour, Robert (Lanark)

  Fullerton, Hugh

  M'Micking, Major G.

  Baring, Godfrey (Isle of Wight)

  Ginnell, L.

  Maddison, Frederick

  Barker, Sir John

  Gladstone, Rt. Hon. Herbert John

  Mallet, Charles E.

  Barnard, E. B.

  Glendinning, R. G.

  Marks, G. Croydon (Launceston)

  Barnes, G. N.

  Glover, Thomas

  Marnham, F. J.

  Barran, Rowland Hirst

  Goddard, Sir Daniel Ford

  Micklem, Nathaniel

  Beauchamp, E.

  Greenwood, G. (Peterborough)

  Middlebrook, William

  Beck, A. Cecil

  Griffith, Ellis J.

  Molteno, Percy Alport

  Bell, Richard

  Gwynn, Stephen Lucius

  Mond, A.

  Benn, Sir J. Williams (Devonport)

  Haldane, Rt. Hon. Richard B.

  Mooney, J. J.

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

  Harcourt, Rt. Hon. L. (Rosendale)

  Morgan, G. Hay (Cornwall)

  Bennett, E. N.

  Harcourt, Robert V. (Montrose)

  Morgan, J. Llovd (Carmarthen)

  Bethell, Sir J. H. (Essex, Romford)

  Hardie, J. Keir (Merthyr Tydvil)

  Morrell, Philip

  Bethell, T. R. (Essex, Maldon)

  Hardy, George A. (Suffolk)

  Morton, Alpheus Cleophas

  Birrell, Rt. Hon. Augustine

  Harmsworth, Cecil B. (Worcester)

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

  Black, Arthur W.

  Hart-Davies, T.

  Myer, Horatio

  Brace, William

  Haslam, Lewis (Monmouth)

  Napier, T. B

  Brigg, John

  Haworth, Arthur A.

  Nolan, Joseph

  Brooke, Stopford

  Hazleton, Richard

  Nuttall, Harry

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

  Hedges, A. Paget

  O'Brien, Patrick (Kilkenny)

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

  Helme, Norval Watson

  O'Connor, John (Kildare, N.)

  Bryce, J. Annan

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

  O'Donnell, C. J. (Walworth)

  Burns, Rt. Hon. John

  Henry, Charles S.

  Parker, James (Halifax)

  Buxton, Rt. Hon. Sydney Charles

  Herbert, T. Arnold (Wycombe)

  Pearce, William (Limehouse)

  Byles, William Pollard

  Higham, John Sharp

  Philipps, Owen C. (Pembroke)

  Carr-Gomm, H. W.

  Hobart, Sir Robert

  Price, C. E. (Edinburgh, Central)

  Channing, Sir Francis Allston

  Hobhouse, Rt. Hon. Charles E. H.

  Raphael, Herbert H.

  Cheetham, John Frederick

  Hodge, John

  Rea, Rt. Hon. Russell (Gloucester)

  Churchill, Rt. Hon. Winston S.

  Hooper, A. G.

  Rendall, Athelstan

  Clough, William

  Horniman, Emslie John

  Richards, Thomas (W. Monmouth)

  Cobbold, Felix Thornley

  Howard, Hon. Geoffrey

  Richardson, A.

  Collins, Stephen (Lambeth)

  Hudson, Walter

  Ridsdale, E. A

  Compton-Rickett, Sir J.

  Hutton, Alfred Eddison

  Roberts, Charles H. (Lincoln)

  Corbett, A. Cameron (Glasgow)

  Idris, T. H. W.

  Robertson, Sir G Scott (Bradford)

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

  Illingworth, Percy H.

  Robinson, S.

  Cornwall, Sir Edwin A.

  Jackson, R. S.

  Roe, Sir Thomas

  Cotton, Sir H. J. S.

  Jardine, Sir J.

  Rogers, F. E. Newman

  Cox, Harold

  Johnson, John (Gateshead)

  Rose, Sir Charles Day

  Cross, Alexander

  Jones, Sir D. Brynmor (Swansea)

  Runciman, Rt. Hon. Walter

  Crossley, William J.

  Jones, William (Carnarvonshire)

  Rutherford, V. H. (Brentford)

  Davies, David (Montgomery Co.)

  King. Alfred John (Knutsford)

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

  Davies, Ellis William (Eifion)

  Laidlaw, Robert

  Schwann, Sir C. E. (Manchester)

  Dunne, Major E. Martin (Walsall)

  Lambert, George

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

  Edwards, Sir Francis (Radnor)

  Lament, Norman

  Sears, J. E.

  Elibank, Master of

  Layland-Barratt, Sir Francis

  Shipman, Dr. John G.

  Ellis, Rt. Hon. John Edward

  Lehmann, R. C.

  Silcock, Thomas Ball

  Erskine, David C.

  Levy, Sir Maurice

  Snowden, P.

  Essex, R. W.

  Lewis, John Herbert

  Soames, Arthur Wellesley

  Esslemont, George Birnie

  Lloyd-George, Rt. Hon. David

  Stanger, H. Y.

  Evans, Sir S. T.

  Lynch, A. (Clare, W.)

  Stanley, Hon. A. Lyulph (Cheshire)

  Steadman, W. C.

  Walsh, Stephen

  Williamson, Sir A.

  Strachey, Sir Edward

  Wardle, George J.

  Wills, Arthur Walters

  Summerbell, T.

  Waring, Walter

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

  Sutherland, J. E.

  Wason, John Cathcart (Orkney)

  Wilson, Henry J. (York, W. R.)

  Thomas, Abel (Carmarthen, E.)

  Waterlow, D. S.

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

  Thomas, Sir A. (Glamorgan, E.)

  Weir, James (Galloway)

  Wilson, W. T. (Westhoughton)

  Toulmin, George

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

  Wood, T. M'Kinnon

  Ure, Rt. Hon. Alexander

  Whitehead, Rowland

  Yoxall, Sir James Henry

  Verney, F. W.

  Whitley, John Henry (Halifax)

  Villiers, Ernest Amherst

  Wiles, Thomas

  TELLERS FOR THE AYES.—Mr. Joseph Pease and Captain Norton.

  Vivian, Henry

  Wilkie, Alexander

  Walker, H. de R. (Leicester)

  NOES.

  Balcarres, Lord

  Goulding, Edward Alfred

  Powell, Sir Francis Sharp

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

  Guinness, Hon. R. (Haggerston)

  Remnant, James Farquharson

  Banbury, Sir Frederick George

  Hamilton, Marquess of

  Renwick, George

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

  Hay, Hon. Claude George

  Roberts, S. (Sheffield, Ecclesall)

  Beckett, Hon. Gervase

  Heaton, John Henniker

  Rutherford, John (Lancashire)

  Bertram, Julius

  Hill, Sir Clement

  Sassoon, Sir Edward Albert

  Bignold, Sir Arthur

  Hills, J. W.

  Stanier, Beville

  Bowles, G. Stewart

  Hope, James Fitzalan (Sheffield)

  Stanley, Hon. Arthur (Ormskirk)

  Bull, Sir William James

  Hunt, Rowland

  Starkey, John R.

  Butcher, Samuel Henry

  Kennaway, Rt. Hon. Sir John H.

  Stone, Sir Benjamin

  Carlile, E. Hildred

  Kimber, Sir Henry

  Talbot, Lord E. (Chichester)

  Cave, George

  King, Sir Henry Seymour (Hull)

  Thornton, Percy M.

  Cecil, Lord R. (Marylebone, E.)

  Lambton, Hon. Frederick William

  Tuke, Sir John Batty

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

  Lowe, Sir Francis William

  Valentia, Viscount

  Chaplin, Rt. Hon. Henry

  MacCaw, William J. MacGeagh

  Walrond, Hon. Lionel

  Coates, Major E. F. (Lewisham)

  M'Arthur, Charles

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

  Courthope, G. Loyd

  Magnus, Sir Philip

  Willoughby de Eresby, Lord

  Craik, Sir Henry

  Mason, James F. (Windsor)

  Winterton, Earl

  Doughty, Sir George

  Morpeth, Viscount

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

  Faber, George Denison (York)

  Nicholson, Wm. G. (Petersfield)

  Fell, Arthur

  Pease, Herbert Pike (Darlington)

  TELLERS FOR THE NOES.—Mr. Walter Guinness and Mr. Evelyn

  Fletcher, J. S.

  Peel, Hon. W. R. W.

  Forster, Henry William

  Percy, Earl

  Gibbs, G. A. (Bristol, West)

  Drafting Amendments made.
  Mr. BERTRAM Mr. BERTRAM moved, in Sub-section (2) after the word "and" ["and also in the case of a person"] to insert the words "the amount of all premiums and other outgoings paid under any legal obligation."
  The right hon. Gentleman has entirely satisfied me that the £8,000 to which I referred in the illustration I quoted could have been made a proper deduction for the purpose of the Income Tax assessment. It never was made a deduction, because, although the £8,000 was received less tax, it was paid less tax, and the question never arose. I have here, however, a case—it is the same case—with regard to annual premiums which, I submit, ought to be deducted from the beneficial income where they are paid under any legal covenant or contract enforceable against the owner of the income. In the case to which I have referred there was an income of £24,000 a year. Then some stocks and shares were sold, a mortgage was paid off, and the income was reduced to £16,000 a year, the figure at which it now stands. The owner will be entitled to deduct, for the purpose of arriving at the amount of assessable tax, certain covenanted allowances under the Income Tax Act of 1842—
  1218
  covenanted allowances to children under a marriage settlement. There is also payable by this tenant for life a sum of £8,000 per year for life insurance premiums, that having been the only way in which the original loan could be obtained. These premiums of £8,000 a year were, until the mortgage was repaid, paid by the tenant for life for 15 or 16 years, but last year, as a result of an arrangement between the parties, the trustees were, by Act of Parliament, authorised to take over the securities and pay off the mortgages. This was done by a private Act of Parliament. The tenant for life has to pay this £8,000 per year out of an assessable income, not of £16,000, but of £11,000. The beneficial income is £3,000. The words of the Clause, as the Government Bill stands, perpetuate well-known allowances in respect of abatements of Income Tax on premiums up to one-sixth of the total assessable income. In this case, if the assessable income is allowed to be regarded as £16,000, the tenant for life will be allowed an abatement of £2,333, in spite of the fact that the actual amount payable under compulsion, without any choice on the part of the tenant for life, is £8,000. I therefore, relying on the very definite pledge which the Chancellor of the Exchequer gave

  1219
  when he made his Budget statement, that in regard to the Super-tax every deduction on account of any legal liability should be made from the assessable income—relying on that pledge I beg the Government to accept the additional words, "the amount of all premiums and other outgoings paid under any legal obligation." I beg to move an Amendment accordingly.
  Sir F. BANBURY Sir F. BANBURY seconded the Amendment.
  Mr. HOBHOUSE: If I understand the purport of my hon. Friend's Amendment aright, he proposes to make, in respect of the Super-tax, a deduction which is not permitted to be enforceable for the purposes of rebate under ordinary Income Tax law.
  Mr. BERTRAM: Will the right hon. Gentleman permit me to point out that I did draw a distinction between the allowance made now of one-sixth where the insured deliberately insures his life without any obligation to do so, and the case where there is an obligation upon a man to pay premiums which he cannot avoid.
  Mr. HOBHOUSE: That is so. My hon. Friend, however, proposes to permit, whether it be a legal obligation or not, a deduction for the purposes of the Super-tax which is not permitted to be made for the purposes of ordinary Income Tax. My hon. Friend has quoted a declaration by the Chancellor of the Exchequer in his Budget speech—a declaration which I am afraid I do not carry in my mind—to the effect that there should, in the case of Super-tax, be deducible anything which is deducible at the present time. At the present time this deduction would not be permissible for the purposes of abatement. It can be claimed in respect of Income Tax up to one-sixth of the income, but even in that case the abatement cannot be procured for the purpose of reducing the income to a point at which a lower rate of Income Tax would be payable. Take the case of a man with an income of £720 a year. He employs £50 of that for purposes of life insurance. He would not, under the Income Tax law as it stands, be able to claim a rebate in order to reduce his income below £700, so as to make it liable to a lower rate of Income Tax. My hon. Friend behind me wishes to apply that principle to the case of the Super-tax and to reduce the income for assessment purposes to the Super-tax by reason of such abatement to a point at
  1220
  which it will not be called upon to pay Super-tax. As I have said, that principle is not recognised in the Income Tax Acts-at the present moment, and the Government are not prepared to recognise it as regards the Super-tax.
  Mr AUSTEN CHAMBERLAIN: I have not the Chancellor of the Exchequer's Budget speech before me, and I do not carry in my mind what he said. Therefore I do not propose to offer any opinion on the issue of fact which has arisen between the hon. Member for the Hitchin Division of Herts (Mr. Bertram) and the Government as to what exactly the Chancellor of the Exchequer said and what was the extent of the pledge the right hon. Gentleman gave. I rise rather for the purpose of drawing the attention of the Government once again on this Amendment to the hardship which they are committing by attempting to apply to the collection and assessment for Super-tax regulations which are applicable and the law which is applicable to the collection of ordinary Income Tax. I think it is common ground between both sides of the House, even as regards ordinary Income Tax law, that it contains anomalies and even injustices which nobody defends on their merits. In particular it counts as income, for the purposes of assessment to the tax, something which is not income available to be spent by the individual who is taxed. That is admitted in regard to the land. The Chancellor of the Exchequer raised great hope that he was going to remove the anomaly in the case of the land-owners, but he has not seen his way to do that, although so struck was he with the injustice of the existing law that he has taken some steps to relieve and lessen that injustice, and to make the income on which a man pays under Schedule A something more nearly approaching to the income he actually receives and pays into his own private banking account.
  6.0 P.M.
  This question applies not only to land, but also to businesses and incomes, the operation of which are in effect the replacement of capital which has been vested in wasting securities. A typical case, rather familiar to the House, is the case of a man who is working a mine. If he be a provident man he cannot afford to regard the revenue that he gets from the mine in a year as income. He must regard a considerable portion of it as replacement of capital which is wasting as he develops the mine and works it out. Another illustration of the same kind is, of course, afforded by investments in leasehold

  1221
  property. A man may be drawing from leaseholds £1,000 a year, but £200, £300, or even £500, may represent, not income which is available to be spent, but a sinking fund to replace the capital by the time the leasehold interest expires. I think it is admitted, and it is clear, even for the purposes of the ordinary Income Tax, that the Government should not treat the whole of that as income. If they were now imposing Income Tax for the first time, with these facts fairly before them, I do not believe any Minister or any Government would propose to establish ordinary Income Tax law as we see it to-day. The difficulty is that, having come to count on obtaining revenue from these sources, no Chancellor of the Exchequer sees his way to sacrifice revenue which he and his predecessors have been accustomed to receive in order to remedy this grievance. But that does not justify the right hon. Gentleman in extending the grievance, and extending it in a tenfold harsher form, as he will do, when he applies exactly the same rule to the assessment and collection of Super-tax as he applies to the ordinary Income Tax. See what happens. Take the case of a person who has an apparent income of just over £5,000. Of that £5,000 £2,000, we will say, represents a sinking fund which will do no more than replace a wasting security by the time that security has gone—whether it be a mining lease or a leasehold. The actual expendable income is £3,000, but you tax this person on £5,000. You take 5,000 shillings from him, whereas if the property had been meritoriously invested you would only have taxed him on £3,000. However, as it happens to be invested in this particular form, you tax him on £5,000, and, on the top of that, you exact another 2,000 shillings, or whatever the amount may be, for Super-tax, of which not a penny would be due if you took a true view of the position—a view which every company director would be bound to take in regard to the property of his company, and which he would be brought to book, and even punished, in a court of law for disregarding. I think that that goes much further than the proposal of the hon. Member for the Hitchin Division. He based his argument on a particular case, which seems to have been a peculiar one, and to have required a private Act of Parliament to settle it. I do not care to argue on the particular facts of that case. I think what is more worth the consideration of the House is the broader and general issue I
  1222
  have raised. My right hon. Friend earlier in the evening defined for himself and for his colleagues their attitude towards this tax. But surely if one is to adopt such an attitude towards this tax it is incumbent to see that the moment it is imposed it is imposed really in proportion to the amount of income and that it is not imposed on a nominal income, which is not received or spendable, or real income at all, for no other purpose than a purely arbitrary defence of the revenue. What I want to get at is not really the protection of the amount of premium or any outgoing paid under a legal obligation on such security. Of course, it is too late to try and introduce words for this purpose at this time. In my opinion, the Government ought to have done it on the Committee stage, or should have been prepared upon Report to introduce words which would have made it clear that a man should pay according to his means and that particular people should not be made to pay when their spendable income does not come up to the taxing limit merely because their investments were in one particular form of property rather than in another. That is the result, and you have now put aside all considerations for or against the tax. The form you have given to the tax is vicious, inasmuch as it is going to tax, under the description of incomes of £5,000 a year and over, a great number of people who have no such income.
  Mr. BALFOUR: My right hon. Friend near me when he rose to speak had not the exact offer of the Chancellor of the Exchequer. It has now been brought to me. It will be found on page 508 of the OFFICIAL REPORT, Volume IV., on 29th April, in the Budget speech. What the Chancellor of the Exchequer then said was:—
  "Total income for the purposes of the tax will be ascertained in the manner prescribed by Statute for determining total income for the purposes of the present income tax exemptions and abatements, that is to say, deductions will be allowed for interest upon loans and mortgages and any other payments made under legal obligation."
  It does seem to me that those words are absolutely clear, unmistakeable, and specific in their meaning. If I understood the case put forward by the hon. Gentleman who moved the Amendment it was one of a particular individual who not only had to pay interest upon loans and mortgages, but had to pay them by Act of Parliament. He was therefore, so to speak, unmistakeably doubly qualified to fair treatment

  1223
  under this Income Tax, and I am utterly unable to see how that pledge is to be redeemed unless some consideration is given to the hon. Gentleman's Amendment. If I caught rightly the import of the speech of the Secretary to the Treasury, all he said was when you are making deductions for Income Tax you do not allow for this, or that, or the other. You do rot allow, for instance, these payments which my right hon. Friend has just shown to demonstration ought to be allowed for if you are going to make your tax an equitable one, but this pledge of the Chancellor of the Exchequer has not a loophole in it. At any rate, that loophole is not pointed out by the Secretary to the Treasury. I do not wish to press the matter too hard, but here the words are not stated as obiter dictum in the course of a Debate, but appear in the carefully prepared financial statement of the Chancellor of the Exchequer. I do not see that the words are open to any other construction than that put upon them by the Mover of the Amendment, and if I am right in my interpretation of these words, I think we do require from the Government a much more conclusive and elaborate defence of their refusal to listen to the hon. Member's proposal than the Secretary to the Treasury has given us.
  Mr. HOBHOUSE: If I may claim the leave of the House to make a statement, I should like to say I had not, as the right hon. Gentleman who has just sat down had, my attention directed to the words of my right hon. Friend. Now that I have had my attention directed to them, I would lay stress upon certain words which the right hon. Gentleman, from his point of view, rather left out in the cold. What
  are the exact words of my right hon. Friend?
  Mr. BALFOUR: I read the whole passage.
  Mr. HOBHOUSE: Yes; but it depends upon the stress laid upon particular words as to what interpretation is to be drawn from the whole passage:—
  "Total income for the purposes of the tax will be ascertained in the manner prescribed by Statute."
  We come to the question of what is prescribed by Statute; not what is going to be prescribed but what is prescribed at the time the right hon. Gentleman was speaking. The existing Income Tax Acts, as I pointed out in my remarks earlier in this Debate, allow for deductions up to one-sixth; they do not permit of an abatement. We apply the same principle, and that is carrying out the pledge that:—
  "Total income for the purposes of the tax will be ascertained in the manner prescribed by Statute,"
  and though it is quite true that my right hon. Friend goes on to say
  "that is to say deductions will be allowed for interest upon loans and mortgages,"
  and so forth. The whole of the passage is, in my opinion at all events, governed by the words
  "prescribed by Statute."
  If there had been any sort of feeling that a pledge had been given which had not been adhered to, I should be the first, on the part of my right hon. Friend, to accept an alteration, but looking at the actual words used, I do not think we can be said to have gone back from any pledge which was given at the time by the Chancellor of the Exchequer.
  Question put, "That those words be there inserted in the Bill."
  The House divided: Ayes, 71; Noes, 199.

  Division No. 861.]

  AYES.

  [6.10 p.m.

  Balcarres, Lord

  Doughty, Sir George

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

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

  Faber, George Denison (York)

  Lowe, Sir Francis William

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

  Fell, Arthur

  MacCaw, Wm. J. MacGeagh

  Beckett, Hon. Gervase

  Fletcher, J. S.

  M'Arthur, Charles

  Bignold, Sir Arthur

  Forster, Henry William

  Magnus, Sir Philip

  Bowles, G. Stewart

  Gibbs, G. A. (Bristol, West)

  Mason, James F. (Windsor)

  Bryce, J. Annan

  Goulding, Edward Alfred

  Morpeth, Viscount

  Bull, Sir William James

  Guinness, Hon. R. (Haggerston)

  Nicholson, Wm. G. (Petersfield)

  Butcher, Samuel Henry

  Guinness, Hon. W. E. (B'y St. Edm'ds.)

  Parkes, Ebenezer

  Carlile, E. Hildred

  Hamilton, Marquess of

  Pease, Herbert Pike (Darlington)

  Cave, George

  Hay, Hon. Claude George

  Peel, Hon. W. R. W.

  Cecil, Evelyn (Aston Manor)

  Heaton, John Henniker

  Percy, Earl

  Cecil, Lord R. (Marylebone, E.)

  Hill, Sir Clement

  Powell, Sir Francis Sharp

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

  Hills, J. W.

  Remnant, James Farquharson

  Channing, Sir Francis Allston

  Hope, James Fitzalan (Sheffield)

  Renwick, George

  Chaplin, Rt. Hon. Henry

  Hunt, Rowland

  Ridsdale, E. A

  Cheetham, John Frederick

  Kennaway, Rt. Hon. Sir John H.

  Roberts, S. (Sheffield, Ecclesall)

  Coates, Major E. F. (Lewisham)

  Kimber, Sir Henry

  Rutherford, John (Lancashire)

  Courthope, G. Loyd

  King, Sir Henry Seymour (Hull)

  Sassoon, Sir Edward Albert

  Craik, Sir Henry

  Lambton, Hon. Frederick William

  Smith, F. E. (Liverpool, Walton)

  Stanier, Beville

  Tuke, Sir John Batty

  Younger, George

  Starkey, John R.

  Valentia, Viscount

  Stone, Sir Benjamin

  Walrond, Hon. Lionel

  TELLERS FOR THE AYES.—Mr. Bertram and Sir F. Banbury.

  Talbot, Lord E. (Chichester)

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

  Thornton, Percy M.

  Willoughby de Eresby, Lord

  NOES.

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

  Greenwood, G. (Peterborough)

  O'Donnell, C. J. (Walworth)

  Abraham, William (Rhondda)

  Gwynn, Stephen Lucius

  O'Kelly, Conor (Mayo, N.)

  Acland, Francis Dyke

  Harcourt, Rt. Hon. L. (Rossendale)

  Parker, James (Halifax)

  Ainsworth, John Stirling

  Harcourt, Robert V. (Montrose)

  Pearce, William (Limehouse)

  Alden, Percy

  Hardie, J. Keir (Merthyr Tydvil)

  Philipps, Owen C. (Pembroke)

  Allen, A. Acland (Christchurch)

  Hardy, George A. (Suffolk)

  Pollard, Dr. G. H.

  Allen, Charles P. (Stroud)

  Harmsworth, Cecil B. (Worcester)

  Price, C. E. (Edinburgh, Central)

  Balfour, Robert (Lanark)

  Haslam, Lewis (Monmouth)

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

  Baring, Godfrey (Isle of Wight)

  Haworth, Arthur A.

  Raphael, Herbert H.

  Barker, Sir John

  Hedges, A. Paget

  Rea, Rt. Hon. Russell (Gloucester)

  Barnard, E. B.

  Helme, Norval Watson

  Rendall, Athelstan

  Barnes, G. N.

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

  Richards, Thomas (W. Monmouth)

  Barran, Rowland Hirst

  Henry, Charles S.

  Richardson, A.

  Beauchamp, E.

  Herbert, T. Arnold (Wycombe)

  Roberts, Charles H. (Lincoln)

  Beck, A. Cecil

  Higham, John Sharp

  Robertson, Sir G. Scott (Bradford)

  Bell, Richard

  Hobart, Sir Robert

  Robinson, S.

  Benn, Sir J. Williams (Devonport)

  Hobhouse, Rt. Hon. Charles E. H.

  Robson, Sir William Snowdon

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

  Hodge, John

  Roe, Sir Thomas

  Bennett, E. N.

  Hooper, A. G.

  Rogers, F. E. Newman

  Berridge, T. H. D.

  Horniman, Emslie John

  Pose, Sir Charles Day

  Bethell, Sir J. H. (Essex, Romford)

  Howard, Hon. Geoffrey

  Runciman, Rt. Hon. Walter

  Bethell, T. R. (Essex, Maldon)

  Hudson, Walter

  Rutherford, V. H. (Brentford)

  Birrell, Rt. Hon. Augustine

  Hutton, Alfred Eddison

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

  Black, Arthur W.

  Illingworth, Percy H.

  Schwann, Sir C. E. (Manchester)

  Boland, John

  Jackson, R. S.

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

  Bowerman, C. W.

  Jardine, Sir J.

  Sears, J. E.

  Brace, William

  Johnson, John (Gateshead)

  Sherwell, Arthur James

  Brigg, John

  Jones, Sir D. Brynmor (Swansea)

  Shipman, Dr. John G.

  Brooke, Stopford

  Jones, William (Carnarvonshire)

  Silcock, Thomas Ball

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

  Keating, M.

  Snowden, P.

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

  King, Alfred John (Knutsford)

  Soames, Arthur Wellesley

  Burns, Rt. Hon. John

  Laidlaw, Robert

  Stanger, H. Y.

  Buxton, Rt. Hon. Sydney Charles

  Lambert, George

  Stanley, Hon. A. Lyulph (Cheshire)

  Byles, William Pollard

  Lamont, Norman

  Steadman, W. C.

  Carr-Gomm, H. W.

  Layland-Barratt, Sir Francis

  Strachey, Sir Edward

  Clough, William

  Lehmann, R. C.

  Summerbell, T.

  Cobbold, Felix Thornley

  Levy, Sir Maurice

  Sutherland, J. E.

  Collins, Stephen (Lambeth)

  Lewis, John Herbert

  Thomas, Abel (Carmarthen, E.)

  Compton-Rickett, Sir J.

  Lloyd-George, Rt. Hon. David

  Thomas, Sir A. (Glamorgan, E.)

  Corbett, A. Cameron (Glasgow)

  Lynch, A. (Clare, W.)

  Toulmin, George

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

  Macdonald, J. M. (Falkirk Burghs)

  Ure, Rt. Hon. Alexander

  Cornwall, Sir Edwin A.

  Maclean, Donald

  Verney, F. W.

  Cotton, Sir H. J. S.

  Macnamara, Dr. Thomas J.

  Villiers, Ernest Amherst

  Crosfield, A. H.

  M'Callum, John M.

  Vivian, Henry

  Cross, Alexander

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

  Walker, H. de R. (Leicester)

  Davies, David (Montgomery Co.)

  M'Micking, Major G.

  Walsh, Stephen

  Davies, Ellis William (Eifion)

  Maddison, Frederick

  Wardle, George J.

  Dunne, Major E. Martin (Walsall)

  Mallet, Charles E.

  Waring, Walter

  Edwards, Sir Francis (Radnor)

  Marks, G. Croydon (Launceston)

  Wason, John Cathcart (Orkney)

  Elibank, Master of

  Marnham, F. J.

  Waterlow, D. S.

  Ellis, Rt. Hon. John Edward

  Massie, J.

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

  Erskine, David C.

  Micklem, Nathaniel

  Whitehead, Rowland

  Essex, R. W.

  Middlebrook, William

  Whitley, John Henry (Halifax)

  Esslemont, George Birnie

  Molteno, Percy Alport

  Wiles, Thomas

  Evans, Sir S. T.

  Mond, A.

  Wilkie, Alexander

  Everett, R. Lacey

  Montgomery, H. G.

  Williamson, Sir A.

  Falconer, J.

  Morgan, G. Hay (Cornwall)

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

  Ferens, T. R.

  Morgan, J. Lloyd (Carmarthen)

  Wilson, Henry J. (York, W. R.)

  Fiennes, Hon. Eustace

  Morrell, Philip

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

  Findlay, Alexander

  Morton, Alpheus Cleophas

  Wilson, P. W. (St. Pancras, S.)

  Foster, Rt. Hon. Sir Walter

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

  Wilson, W. T. (Westhoughton)

  Fuller, John Michael F.

  Myer, Horatio

  Wood, T. M'Kinnon

  Fullerton, Hugh

  Napier, T. B.

  Yoxall, Sir James Henry

  Ginnell, L.

  Nolan, Joseph

  Gladstone, Rt. Hon. Herbert John

  Norman, Sir Henry

  Glendinning, R. G.

  Nussey, Sir Willans

  TELLERS FOR THE NOES.—Mr. Joseph Pease and Captain Norton.

  Glover, Thomas

  Nuttall, Harry

  Goddard, Sir Daniel Ford

  O'Brien, Patrick (Kilkenny)

  Question, "That the word 'any' be there inserted in the Bill," put, and agreed to.

  Amendments made: To leave out the word "also" ["and also in the case of a person"], and to insert instead thereof the words "(c) There shall be deducted."
  At the end of the Clause to add: "(d) Any income which is chargeable with Income Tax by way of deduction shall be deemed to be income of the year in which it is

  1227
  receivable, and any deductions allowable on account of any annual sums paid out of the property or profits of the individual shall be allowed as deductions in respect of the year in which they are payable, notwithstanding that the income or the annual sums, as the case may be, accrued in whole or in part before that year."—[Mr. Lloyd-George.]
  Mr. A. A. HAWORTH Mr. A. A. HAWORTH had given notice of an Amendment, after the words last inserted, to add the words "and in the case of the income of any individual arising from the profits of any business (not carried on by a joint stock company) only the amount withdrawn shall be taken into account provided that one-half at least of the total profits shall be taxable."
  When I moved an Amendment similar to this in the Committee stage it did not occur to me that it might be necessary to say anything of a personal character, but owing to the politeness of a Unionist candidate in my own neighbourhood imputing personal motives to me, I wish to say that the acceptance or refusal of this Amendment does not make a penny-piece difference to me personally. At that time the Amendment was only in manuscript, and owing to an unfortunate misunderstanding the report of the deputation at Somerset House had not been given to the Chancellor of the Exchequer, and he was unable to consider the Amendment at that time. I am glad to say now that he has been good enough to admit that the point is a perfectly valid one, and that there is a discrimination in the assessment of Super-tax as between private firms and limited companies, but unfortunately the only way in which he could see his way to redress that discrepancy would not be admissible on the Report stage. I am glad to spy that in addition to the validity of the point he has given me a pledge that he will make a note of it at the Treasury, and should he be there another year he will undertake to remove the discrepancy, if possible. Therefore I do not move.

  CLAUSE 69.—(Extension of Belief from Income Tax under Schedule A.)
  (1) If the owner of any land or houses to which this Section applies shows that the cost to him of maintenance, repairs, insurance, and management, according to the average of the preceding five years, has exceeded, in the case of land, one-eighth part of the annual value of the land as adopted for the purpose of Income Tax under Schedule A, and in the case of
  1228
  houses one-sixth part of that value, he shall be entitled, in addition to any reduction of the assessment under Section thirty-five of the Finance Act, 1894, on making a claim for the purpose, to repayment of the amount of the duty on the excess, not exceeding in the case of land one-eighth part and in the case of houses one-twelfth part of the duty on an amount equal to the annual value.
  (2) This Section shall apply to any land (inclusive of farm-houses and other buildings, if any) the assessment on which is, for the purpose of collection, reduced under Section thirty-five of the Finance Act, 1894, and to any houses the annual value of which, as adopted for the purpose of Income Tax under Schedule A, does not exceed eight pounds, the assessment on which is so reduced.
  (3) In comparing the cost of maintenance, repairs, insurance, and management of any land or houses for the purpose of this Section with the annual value of the land or houses, the total cost of the maintenance, repairs, insurance, and management on any land managed as one estate, or of any houses on any such land, shall be compared with the total annual value of the land or houses as the case may be.
  (4) All the provisions of the Income Tax Acts which relate to claims for exemption, relief, or abatement, or the proof to be given with respect to those claims, shall apply to claims for repayment under this Section and the proof to be given with respect to those claims:
  Provided that if the owner of any land or house makes and delivers to the surveyor of taxes of any district in which the land or house is wholly or partly situate a declaration as to the cost to him of maintenance, repairs, insurance, and management, and the surveyor is satisfied as to the correctness of the declaration, the amount of the allowance to which the owner is entitled under this Section shall be certified by the surveyor, and repayment shall thereupon be made in accordance with his certificate.
  (5) In computing the five-year average for the purposes of this Section, the year shall be taken to be the year ending on the thirty-first day of March, or such other date as may be adopted by the owner of the land or houses with the consent of the surveyor of taxes of the district, and the five preceding years shall be taken to be those preceding the commencement of the year for which the duty in respect of which a claim for repayment is made is charged.
  Lord WILLOUGHBY de ERESBY Lord WILLOUGHBY de ERESBY moved, at the end of Sub-section (1), to add the words, "For the purposes of this Section the term 'maintenance' shall include the erection of new farm-houses, farm buildings, cottages, fences, and other works which are necessary to maintain the existing rent."
  This matter was discussed in Committee, but was not definitely decided upon. The object of the Amendment is that the maintenance of new buildings and new works should be included, but only, of course, in those cases where no extra rent or revenue is brought in by them. I have consulted some gentlemen well up in legal parlance, and they tell me, with I do not know how much truth, that the term "maintenance" does not cover any new works, or new buildings, and I cannot help thinking that in exempting new buildings the Chancellor of the Exchequer will be missing a great opportunity of doing something towards the improvement of cottages and farmhouses in this country. At present, unfortunately, there are undoubtedly a large number of cottages in the country which are not in that good, sanitary state that we should like. I am certain that in a great number of cases it would be far better that those cottages, or, in many cases, farmhouses, should be demolished than that we should go on the old system-of patching up a wall here, putting a little more thatch on there, and caulking up a chimney somewhere else, and trying to make the thing do for another year; very likely throwing away money, and at the same time never providing a sanitary and comfortable house for the inmates. In addition to that, I think this is a question of the rules made by the rural district councils chiefly, but there is also a great inducement at present for landlords not to erect new cottages and farmhouses, but rather to go on patching up the old dilapidated ones, owing to the fact that as long as you patch the old houses the sanitary authority and the rural district council are probably a great deal more lenient and give far less trouble than if you erect a new house. The moment you try to erect a new house you have to go into the whole question of the water supply, and furnish plans and have everything to the satisfaction of the authorities, or you are told you cannot build the house at all. I am afraid unless some such Amendment is placed in the Bill we shall go on with the old system, which is not a good system, and which the Chancellor himself does not desire.
  His answer may be that, of course, it is impossible for him to accept the Amendment, as it would mean that the revenue would gain less, and that there would be a further call upon the Exchequer; but I do not think that is the case, because there is only to be a limit up to 25 per cent., and the Chancellor of the Exchequer has laid by a certain sum of money to meet that expense; and if he is going to make a deduction of this description it would be far better to make it for those people who are trying to build new houses and cottages rather than for people who are patching up old places which are very likely insanitary, and which no power on earth could ever make good houses. There must be plenty of cases, too, where there is a butcher's shop and slaughterhouse in the middle of a village, where it would be far better to pull down the old slaughter-house and put up a new one at the back of the village. I do not think that could possibly come under the Clause, but it would all be to the benefit of the community and ought to be encouraged. In a great many parts of the country you see an old farmhouse standing in the middle of the village, with a crewyard against the house opening practically on to the village street, causing a good deal of smell and nuisance without any beauty arising therefrom. The whole place may be in a dilapidated condition, and yet under this Clause as it stands, so long as the landlord spends money in patching up the old farmhouse and putting up a few rails in the old tumbledown wooden fence round the crewyard, occasionally taking out a small drain, he will get exemption from Income Tax, but if he sets to work and sweeps the whole crewyard away and puts up a new farmhouse facing the street, with the crewyard at the back, though he gets no extra rent and gets no benefit from it, though it is a great advantage to the community, he will get no exemption whatever and will not be able to make any claim. I do not think the Amendment will lose any income to the Exchequer, because the right hon. Gentleman is only going to allow the 25 per cent., and that is made provision for. When he is doing what I consider an act of justice, which I am thankful to him for, as regards the treatment of agricultural land in this matter, I hope he will see the benefit of encouraging new and commodious cottages and farmhouses rather than bolstering up old insanitary dwellings which will never be satisfactory residences.
  Mr. A. FELL Mr. A. FELL seconded the Amendment.
  Mr. LLOYD-GEORGE: I have great sympathy with the object of the Amendment. I am strongly opposed to taxing landlords on expenditure in respect of improvements. On the contrary, it is just in itself, and it is desirable in the interests of the community that they should be exempted from taxation in respect of money they expend, not merely on necessary repairs, but on improvement to their property for agricultural purposes. It is distinctly desirable that they should be encouraged to spend money on improving their farm buildings and upon rendering sanitary cottages which are now uninhabitable, and generally on providing better housing accommodation for those who are labouring upon the soil. I have therefore always been strongly in favour of any readjustment of taxation which will encourage the land-owner who does anything of that kind. I quite agree that one of the most saddening spectacles in rural life is the way in which these old cottages are tumbling down. Therefore if the landlord spends part of his income upon improving or replacing these buildings he certainly ought not to be taxed upon that. If the builds cottages from which he draws additional rent, that is a different matter. When it is purely replacement and improvement I cannot conceive that it is in the interest of anyone to tax the landlord in respect of his expenditure on objects of that kind. I am not sure whether under the Amendment which I have had the pleasure of introducing with regard to Schedule A such expenditure would be covered I am told that this kind of expenditure would be covered by that Amendment, but I think the matter is so important that there should not be any doubt, and I am prepared to add words to make it absolutely clear that if the landlord does improve farm buildings, and generally spends money on capital improvements which do not add anything to his rent, he should be allowed a deduction. If the Noble Lord would withdraw this Amendment and move the insertion of the following words, I would accept the Amendment: "For the purpose of this Section the term 'maintenance' shall include the replacement of farmhouses, farm buildings, cottages, fences, and other works where the replacement is necessary to maintain the existing rent."
  Lord WILLOUGHBY de ERESBY:I am much obliged to the right hon. Gentleman. Would these words include the planting of a house on a different site?
  Mr. LLOYD-GEORGE: That is one of the points which have been considered. The Amendment would certainly cover a case of that kind.
  Lord WILLOUGHBY de ERESBY: I beg leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  Amendment made: To insert at the end of Sub-section (1) the words, "For the purposes of this Section the term 'maintenance' shall include the replacement of farmhouses, farm buildings, cottages, fences, and other works where the replacement is necessary to maintain the existing rent."—[Lord Willoughby de Eresby.]
  Mr. FELL: I beg to move, at the end of Sub-section (4), to leave out the words "repayment shall thereupon be made," and to insert instead thereof the words "the duty shall be reduced or repayment made (as the case may require)."
  This is a small Amendment in procedure. The relief to the owners of land and houses is to be given on a declaration as to the accuracy of which the surveyor is satisfied. That presupposes that the owner shall previously have paid his Income Tax. The suggestion made in this Amendment is that the duty shall be reduced before payment is made. There is no necessity for paying the Income Tax and getting it back. The procedure I suggest will save a great deal of trouble.
  Mr. G. D. FABER: I beg to second the Amendment.
  Mr. LLOYD-GEORGE: I trust the hon. Gentleman will withdraw this Amendment. It is an impossible Amendment from the point of view of machinery. If it were a fixed deduction of 12½ per cent., the Revenue officials could easily make it, but this relief involves a fluctuating deduction according to the expenditure by the landlord on repairs. For example, a landlord has to prove that he has spent 25 per cent. It may be that he has only spent 15 per cent. or 21 per cent. We proceed on the line of making the 12½, per cent. deduction, and then, if a further deduction is wanted, it should be in the form of a repayment. If the Amendment were accepted, you-would make the Schedule quite impossible. This is the only way in which it can be worked, at all events, for some time.
  Mr. FELL: Upon that explanation I beg leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.

  CLAUSE 71.—(Exemptions and Abatements in Case of Persons Not Resident in the United Kingdom.)
  (1) No exemption, abatement, or relief under the Income Tax Acts which depends wholly or partially on the total income of an individual from all sources shall be given to any person, unless the person claiming the exemption, abatement, or relief is resident in the United Kingdom:
  Provided that any person who is or has been employed in the service of the Crown abroad, and any person resident in the Isle of Man or Channel Islands and any person resident abroad who satisfies the Commissioners that he is so resident for the sake of health, shall be entitled to any relief, exemption, or abatement to which he would be entitled if he were resident in the United Kingdom, and if his total income from all sources were calculated as including any income in respect of which Income Tax may not be chargeable as well as income in respect of which Income Tax is chargeable.
  (2) Income Tax shall not be payable in respect of the interest or dividends of any securities of a foreign State or a British possession which are payable in the United Kingdom, where it is proved to the satisfaction of the Commissioners that the person owning the securities and entitled to the interest or dividends is not resident in the United Kingdom; but, save as provided by this or any other Act, no allowance shall be given or repayment made in respect of the Income Tax on the interest or dividends on the securities of any foreign State or any British possession which are payable in the United Kingdom.
  Relief from Income Tax under this Subsection may be given by the Commissioners either by way of allowance or repayment on a claim being made to them for the purpose within six months of the end of the year for which the Income Tax is charged.
  Sir H. CRAIK: I beg to move, in Subsection (1), after the word "Crown" ["employed in the service of the Crown"], to insert the words: "or in medical or scientific research, or in the service of any missionary society." I consider this Amendment is very important. I am grateful to the Chancellor of the Exchequer for a modification of the tax he has already made, but I think he might carry the concession a little further.
  Mr. LLOYD-GEORGE: I think the hon. Gentleman would find that if the words of
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  the Amendment were inserted, men going out on research work would be charged. I think missionaries who leave the country are not charged now, but they might be charged under the Amendment. I would suggest that the hon. Member should move the insertion of the words: "or who is employed in the service of any missionary society."
  Sir H. CRAIK: With the permission of the House, I shall withdraw my Amendment, and move it in the form suggested.
  Amendment, by leave, withdrawn.
  Amendment made: After the word "Crown," to insert the words: "or who is employed in the service of any missionary society."—[Sir Henry Craik.]
  Mr. EVELYN CECIL: I beg to move, after the word "abroad" ["employed in the service of the Crown abroad "], to insert the words: "or in the service of any of the native States of East India, or in Egypt, in the service of the Khedive."
  I moved this Amendment when the Bill was in Committee, and the Chancellor of the Exchequer said he would consider the matter. It seems to me quite reasonable not only that officials in the service of the British Crown abroad, but that officials who are nearly in the same category, should be entitled to the benefit of this Clause. They are so nearly in the same position; I think it would be very hard that they should not get the benefit of the exemption.
  Mr. LLOYD-GEORGE: I did not accept the Amendment in Committee because the-latter part of it would raise rather a difficult diplomatic question if you were to put Egypt in exactly the same category as a British Colony. I am told that there would be complications about that.
  Mr. EVELYN CECIL: Would you insert the words "native states"?
  Mr. LLOYD-GEORGE: I would not mind putting in "native states."
  Mr. EVELYN CECIL: I will move the-Amendment in that form if I cannot get anything better.
  Mr. AUSTEN CHAMBERLAIN: I think there are similar services arising in Africa. It is likely that similar cases might arise in Nigeria and other places. The officials there are in the service of the Crown.
  Mr. LLOYD-GEORGE: What words do you propose?
  Mr. AUSTEN CHAMBERLAIN: I am rather puzzled for words, and I wanted the Chancellor of the Exchequer to propose words. I want the words to be wide enough to cover the cases which the Chancellor of the Exchequer has in his mind. I am not suggesting that we should go beyond that. One other case has occurred to me. It is the case of officers lent for service in foreign parts.
  Mr. EVELYN CECIL: I beg leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  Amendment made: After the word "abroad" to insert the words "or in the service of any of the native states under the protectorate of the British Crown."—[Mr. Evelyn Cecil.]

  CLAUSE 72.—(Special Provisions as to Assessment of Super-tax.)
  (1) The Super-tax shall be assessed and charged by the Commissioners for the special purposes of the Acts relating to Income Tax (in this Act referred to as the Special Commissioners).
  (2) Every person upon whom notice is served in manner prescribed by regulations under this Section by the Special Commissioners requiring him to make a return of his total income from all sources or, in the case of a notice served upon any person who is chargeable with or lable to be assessed to Income Tax under Section forty-one of the Income Tax Act, 1842, or Section 24 of the Customs and Inland Revenue Act, 1890, as representing an incapacitated, non-resident, or deceased person, of the total income from all sources of the incapacitated, non-resident, or deceased person, shall, whether he is or is not chargeable with the Super-tax, make such a return in the form and within the time required by the notice.
  (3) It shall be the duty of every person chargeable with the Super-tax to give notice that he is chargeable to the Special Commissioners before the thirtieth day of September in the year for which the Super-tax is chargeable: Provided that for the purpose of this provision the thirty-first day of December shall, as respects the year beginning on the sixth day of April, nineteen hundred and nine, be substituted for the thirtieth day of September.
  (4) If any person without reasonable excuse fails to make any return or to give any notice required by this Section, he shall be liable to a penalty not exceeding
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  fifty pounds, and after judgment has been given for that penalty to a further penalty of the like amount for every day during which the failure continues.
  Any penalty under this provision shall be recoverable in the High Court, or in Scotland in the Court of Session.
  (5) If any person fails to make a return under this Section, or if the Special Commissioners are not satisfied with any return made under this Section, the Special Commissioners may make an assessment of the Super-tax according to the best of their judgment.
  (6) All provisions of the Income Tax Acts relating to persons who are to be chargeable with duty, assessments, and appeals against those assessments, and to the collection and recovery of duty, and to cases to be stated for the opinion of the High Court shall, so far as they are applicable, apply to the charge, assessment, collection, and recovery of duty under this Section, and the Special Commissioners shall, for the purpose of assessment, have any powers of an inspector or surveyor of taxes, and for the purpose of the representation of the Crown on any appeal before the Special Commissioners, any person nominated in that behalf by the Commissioners of Inland Revenue shall have the same powers at and upon the determination of the appeal as a surveyor of taxes has at and upon the determination of any appeal under the Income Tax Acts.
  (7) The Special Commissioners may amend any assessment made by them under this Section, or make an assessment or an additional assessment, during any time within the year of assessment, or within three years after the expiration thereof.
  (8) The Commissioners may make regulations for the purpose of carrying this Section into effect.
  Mr. WALTER GUINNESS Mr. WALTER GUINNESS moved to omit Sub-section (3).
  This Sub-section imposes the duty on anyone liable for the Super-tax of informing the Special Commissioners of the fact. Where people are liable for the ordinary tax there is no penalty if they do not inform the assessors of the fact. Under the Income Tax Act of 1842 the duty lies on the assessors to tax all those who are liable, and penalties are only recoverable where persons neglect to return the forms sent them or return them filled inaccurately. People have got accustomed to

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  these forms, and I can hardly imagine any man liable for the Super-tax who has not already enjoyed the attention of the assessors. It will cause a great deal of unnecessary trouble to all who are liable for the Super-tax if they have to send in this notice before they get the forms sent to them. This year there will be a delay in getting these forms. Probably, if the finance Bill passes, these forms cannot be got out before the end of December, and it will mean that everybody will have to send in this notice, and that a great many people will not be aware of this provision or will not know to what address to send this information. I object to the principle of this, because it seems to me that the House is rather too willing to create new offences. If one looks through the proceedings in the police-courts one continually finds cases of people sent to prison for merely technical breaches of some new Act passed by this Parliament. The prisons are full of persons who have committed no crime, but are unable to pay fines imposed upon them for quite artificial and newfangled offences. It is most objectionable to create these offences where there is no necessity for it. As people in any case will have to spend a great deal of time, and incur a lot of expense in filling up these returns, I think it will be quite enough to leave them subject to that inconvenience, and not impose on them this new obligation, for which there is absolutely no precedent in our Income Tax law.
  Mr. G. D. FABER: It seems to me that if you have Sub-section (3), Sub-section (2) is really not wanted, because Sub-section (3) says that it shall be the duty of every person chargeable with the Super-tax to give notice that he is chargeable, while Sub-section (2) has an elaborate provision about serving the notices upon every person who the Commissioners think has over £5,000 a year. I cannot see any necessity for having both. It seems to me better to have Sub-section 2 and not to have Sub-section 3. I remember, in a discussion before the Income Tax Committee, Sir Henry Primrose rather indicated the procedure laid down by Sub-section 2, namely, that the Commissioners of Income Tax would, if I may use a slang expression, make a shot at all the people over £5,000 a year. He saw some difficulty there, because, assuming as he did, something like 10,000 people with over £5,000 a year in this country, he came to the conclusion that the Income Tax Authorities
  1238
  would have to make something like 100,000 shots to bring those 10,000 birds into his bag. That is an intelligible procedure. But Sub-section 3 says that every one of the 10,000 hypothetical people have got to give notice to the authority that they are chargeable. What is the good of the Commissioners making the 100,000 shots if under Sub-section 3 the people affected have to give notice. I beg to second the Amendment?
  Mr. LLOYD-GEORGE: The hon. Member referred to this in the Committee stage, and I mentioned one or two very notorious cases of people who had very large incomes, the extent of which had never been discovered during their lifetime. There was one case of a man worth several millions of money, who I do not think contributed anything. He lived in a small room for which he paid 30s. a week, and it was only after his death it was discovered that his estate was worth over £10,000,000. Those cases are rare. The hon. Member talked of the 100,000 shots, but this is intended for the birds that take cover. We want to make sure of all our birds. Some of them are very fat. There was a case about a year or two ago of a man who died worth about £3,000,000. The Inland Revenue authorities had no reason to believe that he was worth that. He had never informed them of the fact, and they only discovered it after his death. There are cases of that kind which we wish to ascertain. The average Super-tax man is pretty well known, but this Subsection is intended to deal with the case of these exceptional people. The Inland Revenue will find out 99 per cent. of the cases, no doubt, of taxable incomes, but there will be these occasional cases of men living in a small way like poor men, who do not spend their incomes, and who might not inform the Inland Revenue of the amount of their income if there were not a special provision compelling them to do so.
  Mr. AUSTEN CHAMBERLAIN: I have no sympathy with the millionaire who lives in a room for which he pays 30s. a week, and who conceals all his wealth from the community. I did not know the gentleman who has been referred to, but I know that there are sometimes cases of the kind. I confess I am not surprised at the Inland Revenue knowing nothing about that gentleman. What does this proposal mean? The Chancellor of the Exchequer's

  1239
  idea that the threat of a £50 penalty will cause these gentlemen to come to the Inland Revenue begging them to assess them for Super-tax is a perfectly absurd hope to cherish. The kind of man who, according to the Chancellor already evades his legal obligations, and that on a very high scale indeed, will find the £50 penalty a very small risk to run and a much less penalty than he would have to pay under the present law, if the Inland Revenue do find out his case, and it is not likely to make him reveal his position. The Chancellor of the Exchequer says that where a man has a taxable income he ought to reveal it. That will carry the Chancellor of the Exchequer a great deal further than he has gone. That will apply not merely to people who are liable to the Super-tax, but to people who are liable to Income-tax at all. The Chancellor of the Exchequer, I observe, has hesitated to apply to them the obligation to serve notice on the Commissioners that they are liable for tax, and the liability to pay a £50 penalty if they do not send in their notice, I doubt whether this is really a very valuable provision. I do not feel myself very strongly about it one way or another, but I hold confidently that it is quite insufficient to cover the particular cases which the Chancellor of the Exchequer has in mind.
  7.0 P.M.
  Mr. ARTHUR FELL: It appears to me that in any case the order of these two Sub-sections is wrong, and that number 3 should be first, providing that it is the duty of everyone chargeable to send in notice, and then the Commissioners when they receive this notice would have the man served with the special forms to fill up. But at present they have to send out special forms to a special number. There are certain other people on the borderlines, and those would be the most frequent cases, and not the millionaires, who, I believe, are pretty well known. The persons who are liable to the Super-tax may, or may not, be served with these notices, but if they receive a paper from the Commissioners with their ordinary Income Tax papers to fill up, stating their income, they would not know how to send it in. I do not think that one of them in a hundred chargeable with this duty would know where to send it in to the Commissioner. I suppose they are to send it in a form of a letter, or some notice that they may or may not be liable, and then when they get their papers they
  1240
  will be able to see what they have to fill up. As it stands now, certain people are invidiously selected, and others are to be left to send in notices, though they are very doubtful what form to adopt, and, being in doubt, some of them may take the benefit of that doubt. I am quite sure that some better form might be used than that which the Treasury has now adopted.
  Mr. WALTER GUINNESS: I ask leave to withdraw my Amendment.
  Amendment, by leave, withdrawn.

  PART V.—STAMPS.

    CLAUSE 73.—(Stamp Duty on Conveyances or Transfers on Sale.)
    The Stamp Duties chargeable under the heading "Conveyance or Transfer on Sale of any Property" in the First Schedule to the Stamp Act, 1891 (in this part of this Act referred to as the principal Act) shall be double those specified in that Schedule: Provided that this Section shall not apply to the conveyance or transfer of any stock or marketable security as defined lay Section one hundred and twenty-two of that Act.
    Amendment made: To add, at the end of the Clause, the words "or to a conveyance or transfer where the amount or value of the consideration for the sale does not exceed five hundred pounds and the instrument contains a statement certifying that the transaction thereby effected does not form part of a larger transaction or of a series of transactions in respect of which the amount or value, or the aggregate amount or value, of the consideration exceeds five hundred pounds."—[Mr. Lloyd-George.]

    CLAUSE 74.—(Stamp Duty on Gifts inter vivos.)
    (1) Any conveyance or transfer operating as a voluntary disposition inter vivos shall be chargeable with the like Stamp Duty as if it were a conveyance or transfer on sale, with the substitution in each case of the value of the property conveyed or transferred for the amount or value of the consideration for the sale.
    (2) Notwithstanding anything in Section twelve of the principal Act, the Commissioners may be required to express their opinion under that Section on any conveyance or transfer operating as a voluntary disposition inter vivos, and no such conveyance or transfer shall be deemed to be duly

    1241
    stamped unless the Commissioners have expressed their opinion thereon in accordance with that Section.
    (3) Sub-section (2) of Section fifteen of the principal Act, which enables certain instruments to be stamped after execution, shall apply to conveyances or transfers operating as voluntary dispositions inter vivos as if those conveyances or transfers were specified in the first column of the table in paragraph (d) of that Sub-section, and the grantor or transferor were specified in the second column of that table.
    (4) Where any instrument is chargeable with duty both as a conveyance or transfer under this Section and as a settlement under the heading "Settlement" in the First Schedule to the principal Act, the instrument shall be charged with duty as a conveyance or transfer under this Section, but not as a settlement under the principal Act.
    (5) Any conveyance or transfer (not being a disposition made in favour of a purchaser or incumbrancer or other person in good faith and for valuable consideration) shall, for the purposes of this Section, be deemed to be a conveyance or transfer operating as a voluntary disposition inter vivos, and (except where marriage is the consideration) the consideration for any conveyance or transfer shall not for this purpose be deemed to be valuable consideration where the Commissioners are of opinion that by reason of the inadequacy of the sum paid as consideration or other circumstances the conveyance or transfer has been made with a view of conferring a substantial benefit on the person to whom the property is conveyed or transferred.
    (6) A conveyance or transfer made for effectuating the appointment of a new trustee or the retirement of a trustee, or under which no beneficial interest passes in the property conveyed or transferred, or a disentailing assurance not limiting a new estate, shall not be charged with duty under this Section.
    Sir JOHN JARDINE Sir JOHN JARDINE moved to add to Sub-section (1) the words: "Provided that this Section shall not apply to a conveyance or transfer operating as a voluntary disposition of property to a body of persons incorporated by a special Act if that body is by its Act precluded from dividing any profit among its members and the property conveyed is to be held for the purposes of an open space or for the purposes of its preservation for the benefit of the nation."
    I hope this Amendment will have the approval of the Chancellor of the Exchequer. I move it on the suggestion of the National Society for the Preservation of Historical Buildings and Places of National Beauty. The society is bound not to make a profit out of what it gets. It often receives gifts of open spaces, historic buildings, and beautiful places from generous persons throughout the country. It may be that the gift consists of an open space in Devonshire overlooking the sea, or of woodlands somewhere else, or of some historic building. It has been pointed out to me that in the case of one of these gifts, consisting of 70 acres of woods near Clifton Bridge, at Bristol, made by a worthy citizen of that city, the Stamp Duty at present is 10s., but under this Bill it would be £100, which some one would have to pay. This Society, which exists for the benefit of the nation, could hardly pay that sum, its whole income being only about £400 or £500 a year. It would be ungracious to ask the private owner to add to the amount he has already given, the purchase price in this particular instance being £10,000. My Amendment refers to three things—open spaces, historical places, where the valour of our ancestors is commemorated, and also places of national beauty.
    Mr. CECIL HARMSWORTH: I beg to second the Amendment.
    Drafting Amendments also made.
    Mr. EVELYN CECIL (for Mr. Cave)Mr. EVELYN CECIL (for Mr. Cave) moved, in Sub-section (6) to leave out "a" ["limiting a new estate"], and to insert instead thereof the word "any."
    There are two Amendments on the Paper in the name of my hon. and learned Friend. This, the first, is to exempt from duty any disentailing deed.
    Mr. FELL: I beg to second the Amendment.
    The SOLICITOR-GENERAL (Sir Samuel Evans): When in Committee I promised to exempt disentailing deeds, but I pointed out that we could not do so where the deed resettled the estate. The words of the second Amendment make it perfectly clear.
    Question, "That 'a' stand part of the Bill," put, and negatived.
    Further Amendment made: After the word "estate" ["not limiting a new estate"] to insert the words, "other than an estate in fee simple in the person disentailing the property."—[Mr. Evelyn Cecil.]

    CLAUSE 75.—(Amendment of s. 12 of the Stamp Act, 1891.)
    Sub-section (5) of Section twelve of the principal Act which relates to the assessment of duty by the Commissioners) shall have effect only so far as respects the duty in relation to which the opinion of the Commissioners has been required under that Section.
    Mr. LLOYD-GEORGE Mr. LLOYD-GEORGE moved to leave out the Clause.
    Sir F. BANBURY: Why is this Clause to be omitted?
    Mr. LLOYD-GEORGE: I should have thought that the hon. Baronet would not have objected to the omission of any Clause of this Bill.
    Sir F. BANBURY: I do not.
    Mr. LLOYD-GEORGE: The Clause has reference purely to the Increment Tax, and the Amendments which have been made render it now unnecessary.
    Question, "That the Clause stand part of the Bill," put, and negatived.

    CLAUSE 77.—(Stamp Duty on Marketable Securities.)
    The Stamp Duties chargeable on marketable securities (other than Colonial Government securities) under paragraphs (1) (c), (3), and (4) of the heading "Marketable Security" in the First Schedule to the principal Act, and the Stamp Duty chargeable on marketable securities, share warrants, or stock certificates to bearer under Sub-section (1) of Section four of the Finance Act, 1899, shall be double those specified in the said Schedule or charged by the said Section, as the case may be.
    Major COATES Major COATES moved, after the word "Government" ["other than Colonial Government securities"], to insert the words "or Colonial Municipal."
    I have reason to believe that the Chancellor of the Exchequer has been very kindly taking the matter into serious consideration
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    since the matter was debated in Committee, and I am very hopeful that, having had it under consideration, he will see his way to accept the Amendment now proposed.
    Mr. LLOYD-GEORGE: I accept the Amendment.
    Words proposed there inserted in the Bill.

    CLAUSE 82.—(Additional Customs and Excise Duties on Spirits.)
    (1) In addition to the duties of Customs payable on spirits imported into Great Britain or Ireland there shall as from the thirtieth day of April, nineteen hundred and nine be charged, levied, and paid, the duties specified in Part I. of the Third Schedule to this Act.
    (2) The duties of Customs on the articles mentioned in Part II. of the Third Schedule to this Act, being articles in which spirit is contained, or in the manufacture of which spirit is used, shall be proportionately increased, and there shall accordingly be charged, levied, and paid the duties specified in that Part of he Schedule.
    (3) In addition to the Excise Duty payable for every gallon computed at proof of spirits distilled in the United Kingdom there shall, as from the thirtieth day of April, nineteen hundred and nine, be-charged, levied, and paid an Excise Duty of three shillings and ninepence, and so on in proportion for any less quantity.
    Mr. GEORGE YOUNGER Mr. GEORGE YOUNGER moved, in Sub-section (3), to leave out the words "three shillings and ninepence," and to insert instead thereof the words "one shilling."
    I do not move the Amendment in the slightest hope that the Chancellor of the Exchequer will be likely to accept it, particularly after the revised estimate which he presented the other day. Still, I think it is necessary to make perfectly clear that the impolicy of this duty remains exactly the same. The right hon. Gentleman has entirely disregarded the ordinary view of great financiers on questions of taxation. He has taxed to death an article which was diminishing in demand, and I am afraid has aggravated the difficulties of the trade by reducing the consumption of this article to a much greater extent than he or anyone thought of. I believe if the right hon. Gentleman had confined himself to 1s. he would have got more money, and would

    1245
    not have so seriously injured the trade. In the ease of numbers of distilleries there are no orders, and in one district where the population largely depend upon the distilleries they are looking forward to the winter with apprehension. If the Treasury had been able to derive advantage from this tax, it might have been excused, but I doubt very much whether the right hon. Gentleman will even obtain the £800,000 which he hopes to get from this tax, because the stocks will be worked down to the very lowest possible point between now and 31st March in the hope that the experience of this year will induce the right hon. Gentleman, or his successor, to reduce the tax in the forthcoming financial year. There can be no forestalment of any kind on this account that no extra tax is ever likely to be put on, and if anything is likely to happen it is a reduction. Under those circumstances there will be from now to the end of the financial year the very lowest possible withdrawal from bond rather than forestalments, as usually happens, in nearly every year where the revenue is expected to be somewhat short, and with the apprehension that an increased tax would be placed on it. I do think, while it is hopeless to expect the Chancellor of the Exchequer to make a reduction this year, that he would be better off if he did, and I believe it would restore the balance of trade. I do not suppose he will agree with that. This Amendment is moved in order to express objection to the manner in which this tax penalises an important industry in Scotland. It is, I think, financially rather an act of stupidity on the part of the Government.
    Sir F. BANBURY: I have pleasure in seconding the Amendment, because I believe that this tax, supposing it is imposed for the purpose of revenue, will not carry out the object for which it is imposed. I propose to devote my arguments entirely to the revenue question. I do not see any hon. Members in the House who supported this tax for other objects, but I presume that the Chancellor of the Exchequer, in furtherance of the duties of his office, desires to impose this tax for financial reasons, and for financial reasons only. I admit that that is rather a large assumption, but for the purpose of my argument I propose to make it. The Chancellor of the Exchequer estimated at the beginning in his Budget statement that the yield of this tax would amount this year to an increase of £1,600,000. He did not make any estimate of what the tax would yield
    1246
    in the following year or the year after, although he did so in nearly every other case in the White Paper which he circulated, and which, if I may be allowed to say so, was a great convenience, and will, I hope, be followed in the future. He told us a few days ago that his estimate was wrong, and that the yield would only amount to £800,000. No doubt he had very excellent reason for making that statement, but, as he has made one mistaken statement, it does not follow that he has not made another. I admit my confidence is rather shaken in the ability of the officials to prophesy as to the result of the Spirit Duty, inasmuch as they have had two shots at it in six months, and the first shot was entirely wrong, so that I do not see any reason why the second shot should not be equally wrong.
    The Chancellor of the Exchequer would agree with me, I think, when I say that every Chancellor of the Exchequer, almost from time immemorial, has held that to propose a tax upon an article falling in consumption was not a proper way to bring about an increase of the revenue; but that, on the contrary, such a course would bring about a decrease. That has been shown to be a wise statement by the-fact that this increaes of 3s. 9d. has not brought about anything like the increase which the Chancellor of the Exchequer supposed it would. It must not be forgotten that the Chancellor told us that not only was he going to make out of this tax, but that the publicans and the distillers were also going to recoup themselves by the-increased price which they would put on the article. Of course they all assumed that there would be no reduction in the consumption, or very little. I believe the right hon. Gentleman did say he anticipated a certain amount of reduction, but he could not have anticipated what occurred or he would not have made that statement about the distillers and publicans recouping themselves. I presume he does not make that statement now.
    As far as I know I can only speak for one particular company with which I am connected which sells liquors in the hotels and refreshment-rooms of the Great Northern Railway, and we have found that our consumption decreased very much, and that though we have increased our prices we have got less of revenue and we are receiving less than last year, notwithstanding the fact that we have increased our prices. I presume that is going on all over the country. I think if the right hon. Gentleman wishes to increase his revenue the

    1247
    wisest thing he could do would be to reduce this sum to 1s., or something of that kind. If he retains the 3s. 9d. I do rot think he will get the £800,000. I observe the hon. Member for Lincoln (Mr. Charles Roberts) present, and I would like to know whether this tax is going to carry out the object he has in view, because if it is it is going to diminish the revenue, and therefore the Chancellor of the Exchequer would not get any increase out of it.
    Mr. LLOYD-GEORGE: I gather that the object of the hon. Member who moved this Amendment is rather to register a final protest than to initiate a Debate on this tax. We have already had five Debates on it, and, in addition, I have not the faintest doubt that we shall have another Debate to-morrow when we come to the question of the Sinking Fund. Many of the questions
    dealt with now must inevitably arise to-morrow, which makes it very difficult for me to enter on the questions which formed a good deal of the speeches which have been delivered on this. Amendment, and which have been directed rather to the estimates. I have no doubt I shall have to go into that matter at some length tomorrow, and if the House will permit me I would rather not enter into it to-night. I hope right hon. and hon. Gentlemen will not regard me as treating them with any discourtesy for not entering into it at the present moment. It is very difficult to dissociate the rest of the argument from this, and in that case I should prefer to deal with it to-morrow.
    Question put, "That the words 'three shillings and ninepence,' stand part of the Bill."
    The House divided: Ayes, 197; Noes, 59.

    Division No. 862.]

    AYES.

    [7.27 p.m.

    Abraham, William (Rhondda)

    Davies, Ellis William (Eifion)

    King, Alfred John (Knutsford)

    Acland, Francis Dyke

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

    Laidlaw, Robert

    Ainsworth, John Stirling

    Dunne, Major E. Martin (Walsall)

    Lambert, George

    Alden, Percy

    Edwards, Sir Francis (Radnor)

    Lamont, Norman

    Allen, A. Acland (Christchurch)

    Elibank, Master of

    Layland-Barratt, Sir Francis

    Allen, Charles P. (Stroud)

    Essex, R. W.

    Lehmann, R. C.

    Asquith Rt. Hon. Herbert Henry

    Esslemont, George Birnie

    Levy, Sir Maurice

    Astbury, John Meir

    Evans, Sir S. T.

    Lloyd-George, Rt. Hon. David

    Atherley-Jones, L.

    Everett, R. Lacey

    Lough, Rt. Hon. Thomas

    Balfour, Robert (Lanark)

    Falconer, J.

    Lynch, H. B.

    Baring, Godfrey (Isle of Wight)

    Ferens, T. R.

    Macdonald, J. M. (Falkirk Burghs)

    Barker, Sir John

    Fiennes, Hon. Eustace

    Macnamara, Dr. Thomas J.

    Barnard, E. B.

    Findlay, Alexander

    M'Callum, John M.

    Barnes, G. N.

    Foster, Rt. Hon. Sir Walter

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

    Barran, Rowland Hirst

    Fuller, John Michael F.

    Maddison, Frederick

    Beauchamp, E.

    Fullerton, Hugh

    Mallet, Charles E

    Beck, A. Cecil

    Gladstone, Rt. Hon. Herbert John

    Marks, G. Croydon (Launceston)

    Bell, Richard

    Glendinning, R. G.

    Marnham, F. J.

    Benn, Sir J. Williams (Devonport)

    Glover, Thomas

    Massie, J.

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

    Goddard, Sir Daniel Ford

    Middlebrook, William

    Bennett, E. N.

    Greenwood, G. (Peterborough)

    Mond, A.

    Berridge, T. H. D.

    Grey, Rt. Hon. Sir Edward

    Montgomery, H. G.

    Bethell, Sir J. H. (Essex, Romford)

    Haldane, Rt. Hon. Richard B.

    Morgan, G. Hay (Cornwall)

    Bethell, T. R. (Essex, Maldon)

    Harcourt, Rt. Hon. L. (Rossendale)

    Morgan, J. Lloyd (Carmarthen)

    Birrell, Rt. Hon. Augustine

    Harcourt, Robert V. (Montrose)

    Morrell, Philip

    Black, Arthur W.

    Hardie, J. Keir (Merthyr Tydvil)

    Morton, Alpheus Cleophas

    Bowerman, C. W.

    Hardy, George A. (Suffolk)

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

    Brace, William

    Harmsworth, Cecil B. (Worcester)

    Myer, Horatio

    Brigg, John

    Haslam, James (Derbyshire)

    Napier, T. B.

    Brooke, Stopford

    Haworth, Arthur A.

    Newnes, F. (Notts, Bassetlaw)

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

    Helme, Norval Watson

    Norman, Sir Henry

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

    Henry, Charles S.

    Nussey, Sir Willans

    Bryce, J. Annan

    Herbert T. Arnold (Wycombe)

    Nuttall, Harry

    Burns, Rt. Hon. John

    Higham, John Sharp

    O'Connor, John (Kildare, N.)

    Buxton, Rt. Hon. Sydney Charles

    Hobart, Sir Robert

    O'Donnell, C. J. (Walworth)

    Byles, William Pollard

    Hobhouse, Rt. Hon. Charles E. H.

    Parker, James (Halifax)

    Carr-Gomm, H. W.

    Hodge, John

    Pearce, William (Limehouse)

    Channing, Sir Francis Allston

    Hooper, A. G.

    Pollard, Dr. G. H.

    Cheetham, John Frederick

    Horniman, Emslie John

    Price, C. E. (Edinburgh, Central)

    Clough, William

    Howard, Hon. Geoffrey

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

    Cobbold, Felix Thornley

    Hudson, Walter

    Raphael, Herbert H.

    Collins, Stephen (Lambeth)

    Hutton, Alfred Eddison

    Rea, Rt. Hon. Russell (Gloucester)

    Compton-Rickett, Sir J.

    Hyde, Clarendon G.

    Rendall, Athelstan

    Corbett, A. Cameron (Glasgow)

    Illingworth, Percy H.

    Richards, Thomas (W. Monmouth)

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

    Isaacs, Rufus Daniel

    Richardson, A.

    Cornwall, Sir Edwin A.

    Jackson, R. S.

    Ridsdale, E. A.

    Cotton, Sir H. J. S.

    Jardine, Sir J.

    Roberts, Charles H. (Lincoln)

    Cox, Harold

    Johnson, John (Gateshead)

    Robinson, S.

    Cross, Alexander

    Jones, Sir D. Brynmor (Swansea)

    Robson, Sir William Snowdon

    Davies, David (Montgomery Co.)

    Jones, William (Carnarvonshire)

    Roe, Sir Thomas

    Rogers, F. E. Newman

    Stanley, Hon. A. Lyulph (Cheshire)

    Wason, John Cathcart (Orkney)

    Rose, Sir Charles Day

    Steadman, W. C.

    Waterlow, D. S.

    Runciman, Rt. Hon. Walter

    Summerbell, T.

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

    Rutherford, V. H. (Brentford)

    Sutherland, J. E.

    Whitehead, Rowland

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

    Taylor, Theodore C. (Radcliffe)

    Whitley, John Henry (Halifax)

    Samuel, S. M. (Whitechapel)

    Thomas, Abel (Carmarthen, E.)

    Wilkie, Alexander

    Schwann, Sir C. E. (Manchester)

    Thomas, Sir A. (Glamorgan, E.)

    Williamson, Sir A.

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

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

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

    Seely, Colonel

    Toulmin, George

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

    Shackleton, David James

    Ure, Rt. Hon. Alexander

    Wilson, P. W. (St. Pancras, S.)

    Sherwell, Arthur James

    Villiers, Ernest Amherst

    Wilson, W. T. (Westhoughton)

    Shipman, Dr. John G.

    Vivian, Henry

    Wood, T. McKinnon

    Silcock, Thomas Ball

    Wadsworth, J.

    Yoxall, Sir James Henry

    Simon, John Allsebrook

    Walker, H. de R. (Leicester)

    Snowden, P.

    Walsh, Stephen

    TELLERS FOR THE AYES.—Mr. Joseph Pease and Captain Norton.

    Soames, Arthur Wellesley

    Wardle, George J.

    Stanger, H. Y.

    Waring, Walter

    NOES.

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

    Ginnell, L.

    Pease, Herbert Pike (Darlington)

    Balcarres, Lord

    Goulding, Edward Alfred

    Percy, Earl

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

    Gretton, John

    Powell, Sir Francis Sharp

    Banbury, Sir Frederick George

    Gwynn, Stephen Lucius

    Rawlinson, John Frederick Peel

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

    Hamilton, Marquess of

    Renwick, George

    Bellairs, Carlyon

    Harrison-Broadley, H. B.

    Roberts, S. (Sheffield, Ecclesall)

    Bignold, Sir Arthur

    Hay, Hon. Claude George

    Rutherford, John (Lancashire)

    Bull, Sir William James

    Hills, J. W.

    Rutherford, Watson (Liverpool)

    Butcher, Samuel Henry

    Hope, James Fitzalan (Sheffield)

    Smith, F. E. (Liverpool, Walton)

    Carlile, E. Hildred

    Hunt, Rowland

    Stanier, Beville

    Cecil, Evelyn (Aston Manor)

    Kimber, Sir Henry

    Starkey, John R.

    Cecil, Lord R. (Marylebone, E.)

    Law, Hugh A. (Donegal, W.)

    Stone, Sir Benjamin

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

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

    Talbot, Lord E. (Chichester)

    Coates, Major E. F. (Lewisham)

    Lonsdale, John Brownlee

    Walrond, Hon. Lionel

    Craik, Sir Henry

    Lynch, A. (Clare, W.)

    White, Patrick (Meath, North)

    Dickson, Rt. Hon. C. Scott

    MacCaw, William J. MacGeagh

    Younger, George

    Doughty, Sir George

    M'Arthur, Charles

    Faber, George Denison (York)

    Mason, James F. (Windsor)

    Fell, Arthur

    Morpeth, Viscount

    TELLERS FOR THE NOES.—Viscount Valentia and Mr. H. W. Forster.

    Fletcher, J. S.

    Nolan, Joseph

    Gibbs, G. A. (Bristol, West)

    O'Brien, Patrick (Kilkenny)

    CLAUSE 84.—(Duties and Drawback on Tobacco.)
    (1) In lieu of the duties of Customs payable on tobacco there shall as from the thirtieth day of April nineteen hundred and nine, be charged, levied, and paid upon tobacco imported into Great Britain or Ireland the duties specified in Part I. of the Fourth Schedule to this Act.
    (2) In lieu of the Excise Duties payable on tobacco grown in Ireland there shall, as from the thirtieth day of April nineteen hundred and nine, be charged, levied, and paid on tobacco grown in Ireland the duties specified in Part II. of the Fourth Schedule to this Act, and on and after the first day of January nineteen hundred and ten Excise duties at the same rates shall be charged levied and paid on tobacco grown in England or Scotland, and there shall be charged on a licence to be taken out annually by every person growing, cultivating, or curing tobacco in England or Scotland an Excise Duty of five shillings.
    (3) Drawback allowed under Section one of the Manufactured Tobacco Act, 1863, as extended or amended by any subsequent Act, on tobacco exported from Great
    1250
    Britain or Ireland or deposited in a bonded or King's warehouse shall, as from the first day of June nineteen hundred and nine, be allowed at the rates set out in Part III. of the Fourth Schedule to this Act, instead of at the rates set out in the First Schedule to the Finance Act, 1906, but subject to the provisions affecting allowance of drawback contained in the Schedule to the Finance Act, 1904.
    (4) Section three of the Finance Act, 1908, shall apply with reference to the Excise Duties imposed by this Section as it applies with reference to the duties imposed by that Section, and Sub-sections (2) and (3) of that Section shall apply to tobacco grown in England and Scotland in the same manner as they apply to tobacco grown in Ireland.
    (5) So much of any Act as prohibits or restrains the growth, making, or curing of tobacco in England or Scotland shall, as from the first day of January nineteen hundred and ten, cease to have effect.
    Mr. CHARLES M'ARTHUR Mr. CHARLES M'ARTHUR moved to leave out Sub-section (1). My object is to give the House its first, and, I believe, also its last, opportunity of

    1251
    looking at the fresh taxation imposed on tobacco as a whole. The Chancellor of the Exchequer, speaking just now upon another matter, described a fit subject for taxation as a taxable animal. I thought that that expression had a special significance in regard to tobacco. Tobacco has been a taxable animal, a beast of burden, on which Chancellors of the Exchequer have from time to time imposed fresh burdens. The tobacco trade has borne those burdens patiently, though with an occasional grunt of dissatisfaction; but something more than that is required with respect to the proposals now before the House. It is well known, in fact it is almost a truism, that however you may tax an article of trade, however strong that article of trade may be, there comes a time when you tax that article beyond its power of enduring the taxation, with the result that its vitality is impaired, the yield of the tax falls off, and ultimately it ceases to be productive from the Exchequer point of view. My right hon. Friend the Member for East Worcestershire (Mr. A. Chamberlain), when Chancellor of the Exchequer in 1904, referred to a suggestion to impose fresh taxation on tobacco in these words:—
    "Tobacco has done well during the past year, but it is already heavily taxed, and I am advised that to attempt to raise the whole sum that I require from tobacco alone would involve so great an increase in the duty as seriously to check consumption and destroy the purpose for which it was imposed.
    That, I think, is a very sound point of view from which to regard this taxation. From the point of view of the trade, the point has now been reached when this taxation is absolutely insupportable. The Chancellor of the Exchequer, when referring to this subject on Friday last, said:—
    "Tobacco is getting on all right. We are likely to realise our estimates."
    It may be that the Chancellor of the Exchequer will realise his estimate. I am not quite sure of that. According to the latest calculation I have made, there has been, so far, a serious deficiency, and that if that goes on unchecked till the end of the year it will result in something like £450,000 to the bad. It may be that that will pull up. But what is good for the estimates is not necessarily good for tobacco or the tobacco trade. Estimates may be getting on all right, but tobacco may be getting on all wrong. It is a significant fact that in the five months which have elapsed since this Resolution came into effect the withdrawals
    1252
    of tobacco for consumption have decreased by 10 per cent. as compared with the corresponding five months of last year. The Chancellor of the Exchequer has said quite truly that in that you have to make allowance for withdrawals before the Resolution came into force, in anticipation of some possible increase of the tax. To allow for that I take off the first month, when no doubt there was a very serious fall—I think 24 per cent. Taking the other four months alone, the decrease amounts to 6½ per cent. That is not all. It must be remembered that before this fresh taxation was imposed for the last six years the consumption of tobacco had been steadily growing. It had grown at the rate of 2 per cent. per annum. This new taxation has had the effect, not only of causing an actual decrease of 6½ per cent., but of neutralising the increase of 2 per cent. to which I have referred, so that the real falling off is 8½ per cent. Whom is that good for? Certainly it is not good for the manufacturer. It injures the manufacturer in four ways. First, it decreases his turnover. I am told that the decrease of the turnover in tobacco for the five months is no less than 4,173,290 pounds. The second effect is that the manufacturer has to find an increased amount of capital equal to the amount of duty expected to be realised. Thirdly, the manufacturer sustains a loss in the collection of the duty. He has to pay an extra 8d. per pound. The consumer has to pay that 8d., but it does not find its way back to the manufacturer who paid it. It is subject to various trade commissions and deductions, so that the manufacturer gets only 6d. back, instead of 8d. The fourth effect is only a temporary one, but it is very serious as long as it lasts, namely, that the Revenue officials have been collecting the additional 8d. per pound duty on tobacco, but that the unfortunate manufacturer when getting his drawback can only get 6d. For some reason or other, what is sauce for the goose is not sauce for the gander. The Chancellor of the Exchequer gets 8d., but at present he will return only 6d., and the amount that the manufacturer is out of pocket on account of that 2d. is £118,473. Therefore it is very bad for the manufacturer. And it is not good for those whom he employs. Something like 2,000,000 people are employed in this trade, and, of course, if trade falls off a number of people are thrown out of employment. That result has already taken place in Germany, owing to the fresh taxation on tobacco there. I

    1253
    read that 1,100 employés have been sent away from the factories in Hamburg, that further dismissals are pending, and that the working men's associations are appealing to the Government to accelerate the payment of the £200,000 set aside in the Budget for the relief of unemployment caused by the Tobacco Tax. It seems that the Germans in these matters, as in some others, are more far-seeing than we are. They have foreseen that an increase of the Tobacco Duty must result in a decreased consumption, which will throw people out of employment, and they have provided a special fund for that. I think the least the Government could do would be to provide some special fund for the workmen who in all probability are going to be thrown out of employment.
    Then look at it from the point of view of the consumer. It cannot do the consumer any good. He has to pay so much more for his tobacco, or else he has to accept an inferior kind. And this democratic Budget has already had the effect of putting out one pipe in every 10 in the United Kingdom. Now, if it is not good for the manufacturer, or the workpeople, or the consumer, who is it good for? It is only good for the Exchequer, and even there the advantage seems to me to be very doubtful, because if for a temporary sum of money which is wanted for some special purpose you diminish permanently and impair the vitality of this trade which has been your great stay and source of supply for the finances of the country, then you are building upon a very bad foundation. Therefore I have—though possibly I do not feel much hope in appealing to the Chancellor of the Exchequer—tried to put the matter as it appears to me fair and right. It seems to me that the proper course is, in view of the great disadvantages which will accrue all round, either to reduce or modify the tax, or, better still, adhere to the present state of things.
    Mr. STEPHEN GWYNN: I rise to second this Amendment, and to identify myself with the proposal to repeal the general increase of the tax on tobacco, quite apart from the question that will come on later. I have two objections to this increase of taxation. The first is the question of the incidence of the tax. Broadly speaking, in this Budget you have to raise £16,000,000 by extra taxation. This Tobacco Tax raises a certain proportion of it. What I should like to point out to the Chancellor of the Exchequer or his representative is that there
    1254
    are certain classes of people in the community who do not contribute under this. Budget to that extra taxation at all, good or bad. On the other hand, the working man, as against the rather better-paid wage-earner, contributes more than his share, and contributes it largely in view of this Tobacco Tax. Take the case of the man who stands to gain most on this Budget—the man who has the best right to thank the Chancellor of the Exchequer for it, but who is not likely to vote for him—the ordinary clerk in a Government office, or some similar office; the man making an income of £150 to £700 a year. That man does not find his Income Tax raised. On the contrary, it is lower probably than two or three years ago he expected it would be. If that man does not happen to drink whisky I do not see how this extra taxation is going to reach him at all, except in the matter of tobacco. But, curiously enough, the man who uses the more expensive kinds of tobacco may quite possibly escape this extra tax altogether, for you will find in heaps of tobacconist's shops that the cigarettes that so many people nowadays smoke, which are 1s. per ounce, remain practically fixed in price, and with no perceptible difference in their quality, whilst the lower-price cigarettes have been raised to meet the extra taxation. So that men of the class who smoke these 1s. per ounce cigarettes, who happen to be teetotalers, escape totally, I maintain, from any contribution to this Budget.
    Take, on the other hand, the case of the working man. What does this tax mean to him? It means that in a general way he will pay three-halfpence a week more on his three ounces of tobacco, which is, apparently, so far as I can ascertain, about the average used. That, of course, in itself is not a big thing, but that extra tax hits the man who is getting 10s., 15s., and £1 a week just as certainly as it misses the man with the higher salary to whom I have referred. You are charging the working man in this Tobacco Tax from 3d. to 1½d. in the pound on his weekly earnings, whilst the man in the clerk or professional classes is being charged ¼. in the pound on his weekly earnings. These two classes, so far as I can see, are affected only under this Budget by the taxes on tobacco and whisky, and those that are teetotalers escape altogether under the latter head. In the matter of tobacco, however, the poor man is taxed at precisely the same rate as the rich man, but naturally the tax

    1255
    represents a very much larger percentage of his weekly or monthly earnings. That is why I object to the incidence of this tax that I think arises inevitably out of the scheme upon which the Government have gone in bringing in this Budget. Some time ago the Chancellor of the Exchequer gave us an account of his mental processes when he sat down to consider how the money he needed was to be got. There was to be a certain amount raised by indirect taxation. He said practically that there were only five possibilities that presented themselves to him in this connection. Tea, sugar, and beer he discarded for reasons which he gave—he had just taken taxes off the first two—and as for the beer it was not good, from his point of view, because a tax on the consumer would bring him in too much money. The result was that he was reduced by a logical process of exclusion to these taxes on whisky and tobacco. What is the effect of that decision? The effect of it is that you are going to deal with these articles from the point of view of the Government, in which they are not regarded so much commodities as the media of taxation. In the case of whisky the tax that is imposed is in relation to the value of whisky as four to one; in the case of tobacco it is as eight to one. Thus tobacco becomes something in the nature of a banknote, its value inflated by taxation, and being in value in like proportion as the face value of a banknote is to the paper itself—especially if you take as an illustration countries where you have really small-value banknotes. I maintain that that principle is thoroughly unsound, and that what it comes to is this: That you are really using this Tobacco Tax for a poll tax. It is an unfair poll tax. It does not hit all round. If you really want to make everybody pay—and I quite see there is a fair case for the working man paying for old age pensions for which he is going to receive the benefit—you should make them pay all round. I would infinitely prefer a system of direct taxation to this kind of indirect taxation, which is so unfair in its incidence.
    That is my first objection—the incidence of the tax. I come to another point, which I must develop fully later upon another amendment; that is its industrial effect. I hold that these huge taxes, like the taxes you are putting on whisky and tobacco, are uncertain, and therefore very bad from a revenue point of view. But if such taxes
    1256
    —assuming that you cannot be at all sure of them—may be disappointing from the point of view of revenue, from the industrial point of view they are dangerous. You may crush an industry, as you have yourself shown in the whisky trade and damage the revenue at the same time. This tax on tobacco has not been considered from this point of view up to the present time; nevertheless, we here from Ireland insist that it shall be so considered, because tobacco growing over there is not an academic matter. It is not a question whether it is possible for tobacco to be grown. It is a proved fact that you can grow tobacco in Ireland, and that you can grow it on a commercial basis. What I have to contend here is that in imposing a tax like this you make that industry almost impossible. You have got to deal with the grower. Every leaf of tobacco sells for 9d. wholesale. Of that 9d. 8d. is tax. But how is the grower to dispose of his damaged stuff—tobacco that does not come up to the mark? Damaged or sound it cannot sell for less than 8d., and the difference at which he will sell in disposing of his damaged stuff is only the difference between 8d. and 9d. You will never be able to develop the tobacco-growing industry in that country while you maintain a system of taxation in which the value of the tax and the value of the article is as 8 to 1. These are the two main objections. I would just like to speak a word as a candid friend—a looker-on—to the Liberal Government. If they are going to maintain the present system of taxation out of luxuries they cannot go on their present basis. They will have to widen their basis of taxation. The people will not stand it. You tax champagne at 6 per cent. of its value and whisky at 300 per cent. You tax the poor man's tobacco at 600 per cent. of its value and the rich man's at 50 per cent. If you put the Chancellor of the Exchequer to justify these taxes, and put up against him, say for preference, the hon. Member for Shropshire, telling him that the Government are letting off champagne and taxing whisky, and letting off cigarettes and taxing plug, the Chancellor will be beaten every time.
    Sir W. BULL: Having regard to the present state of the tobacco trade, I desire to make a last appeal to the Chancellor of the Exchequer. I have some right to speak. I have been hon. treasurer of the

    1257
    West London Federation of Tobacco Retailers—a very large federation, and I have seen a great many members of that society. I have also in my own Constituency two or three very large manufacturers.
    8.0 P.M.
    I have not very much hope that the Chancellor of the Exchequer will respond to my appeal, but I feel it my duty to speak, as hitherto we have not had a chance, owing to circumstances, to have a Debate upon this matter and to press upon him these views. However, I believe that like the Whisky Tax the Tobacco Tax will carry its own punishment to the Government, and that instead of gaining revenue they will lose it. I am certain that a first result of the unpopularity of this and the Whisky Tax will show itself about 10 o'clock this evening. What do these increased duties means? In the first case, with regard to the retail tobacconist, it means that he has to ask more, and he will get less profit. If he cannot find the extra capital which he will inevitably require if this tax goes through he must go bankrupt. A great many of them are now on the verge of bankruptcy. Therefore, the members of a very hard-worked trade, already very much overburdened and now acting as unpaid tax collectors for the nation, will not only lose their revenue, but will have to turn to some other source of living altogether. How does this affect the working man? He will have to pay more, and he either gets less tobacco or worse tobacco, and if he cannot pay for his tobacco he will have to go without. That is exactly the position the working man is in on this question. The tobacco trade is not a particularly united trade. There is the Imperial Trust at the one end, the small wholesale houses in the middle and the retailers at the other end. I do not think the Chancellor of the Exchequer has put the case as it ought to have been put, and the result is that he cannot be aware of the widespread distress which is now going on in this trade owing to its being overtaxed. The hon. Member who moved this Amendment quoted from the speech of the right hon. Gentleman the Member for East Worcester (Mr. Austen Chamberlain). I should like to go back a little further and to quote from the speech of Sir Michael Hicks-Beach, as he then was, in April, 1902. On that occasion Sir Michael Hicks-Beach said:—
    "Tobacco is not the growing revenue for what cause I cannot say, but it would be absolutely impossible in my humble judgment, and I can only give my opinion to the House, that any possible increases of tobacco duties would raise anything like a sum of £2,100,000."
    1258
    Again, in April, 1901, Sir Michael Hicks-Beach said:—
    "Twice in three years the tobacco duties had been changed. There is no trade more sensitive to a change in duty whether it be up or down, and I do not think it is at this moment wise to impose an additional tax upon tobacco."
    As regards the public this new tax on tobacco, if carried out, will increase the workman's tobacco by a halfpenny per ounce. It forces him to smoke less or else to use a commoner article, and it puts a prohibitive tax upon the poorer class of the community. I understand that in this way, while the rich man is taxed off one pound of Havanna cigars at the rate of 3s. 6d., the poor man's tobacco is taxed at the rate of 14s. 6d. per pound. I interrupted the hon. Member for Galway (Mr. Stephen Gwynn) when he was speaking a while ago, and I said that the tax was at the rate of 600 per cent. It was at that rate before the Budget, but it now works out at 820 per cent. over the cost of the article. The result has been a reduction of 4,500,000 lbs. since the introduction of the Budget. The Chancellor of the Exchequer has taken duty upon 27,000,000 lbs. at the rate of 3s. 8d., which means £5,000,000 of money up to the 1st September. Last year his predecessor took £4,500,000. Therefore the profit that the present Chancellor has made is £500,000, while he expects from the tax £1,750,000. Matters, however, are even worse than these figures suggest, for besides the expenditure of additional capital which is rquired, when prices are changed the trade waters are rushing over the weir instead of turning round.
    Mr. HOBHOUSE: Is that a quotation?
    Sir W. BULL: No, it is not a quotation. The manufacturers have endeavoured, as far as they could, to try to stop this rush by not raising the prices to the consumer. But that cannot go on much longer, and the result will be that there will be a still further diminution. I should like to refer to the serious case of the cigar makers. Mr. Frank J. D. Ellisdon, secretary of Messrs. Sydney Pullinger, Ltd., Birmingham, in which he says:—
    "Our experience of the Budget is as follows: It has greatly reduced the number of hands we usually employ at this time of the year—it has stopped contracts we had running—we hear of several manufacturers having to shut down, and others that are preparing to do so. The 8d. per pound on tobacco cannot be distributed over one hundred cigars, consequently the retailer or manufacturer would have to pay for it. Manufacturers know by experience that the proposed increase will not realise expectations, and therefore refuse to make stock. The Government are meanwhile taking the increased

    1259
    duty, but withholding the corresponding increase in drawback on stalk. The cigar business is meanwhile paralysed, and the ranks of the unemployed have been greatly increased. The consumption of cigars has decreased—the cigar smoker appearing to have been affected. The cost of labour entailed in cigar-making is enormously more than in the manufacture of tobacco and cigarettes, as machinery cannot be satisfactorily employed. Oigar-makers have to serve a very long apprenticeship."
    That is the experience of a large firm of cigar manufacturers in the Midlands. At the present moment there is a loss of 12½ per cent. on the manufacturers' turnover, and the manufacturers are complaining that they cannot get the additional capital necessary to carry on their business. Because by an extraordinary position created at the Treasury they cannot get their drawbacks. At the present moment there is a sum of £119,000 locked up in the Treasury. The Chancellor of the Exchequer explained that the moment the resolutions were passed the tax came into force, and became operative, and the money had to be collected, but when the manufacturers waited upon the Treasury and said "as you admitted in your Budget that there will be drawbacks let us get our money back." "Oh, no," says the Treasury, "by some mistake it has not appeared in the Resolution, and consequently we cannot give you the money back." On the one hand the Treasury takes the tax, but they refuse the drawback, and this money is accumulating in the hands of the Treasury, and no interest is being paid upon it. The manufacturers have to find fresh capital to carry on their business.
    To come back again to the cigar trade, there are usually 2,700 hands employed in Leicester and Nottingham in the cigar trade; 650 of these are to-day out of employment, and 1,200 are on short time. In this state of unemployment in this country, which all parties must view with the greatest anxiety, it seems a strange thing that the Chancellor of the Exchequer should hit upon a trade which undoubtedly will increase unemployment to a remarkable degree. I have heard that many tobacco factories have closed down altogether and discharged their hands. With this additional 8d. the trade is quite impossible, unremunerative, and absolutely unworkable. The Board of Trade figures already shows a reduction of nearly 25 per cent. in tobacco clearances as against last year, irrespective of any increased taxation. I would also like to draw the attention of the Treasury to the fact that very much fewer tobacco licences have been taken out this year. As a rule, there is a natural flow of applications to
    1260
    Somerset House for tobacco licences during the year. These have enormously fallen off since the Budget has been introduced. The manufacturers, the wholesale middleman, and the retailers are all now absolutely bound to find extra capital if they are to carry on their trade. The retailer pays the extra 8d., and personally is practically unable to make any profit. His turnover has not increased, his business is going down all round, his profits are diminishing, and he loses on all those articles into which competition forces him and the manufacturer to sell at low prices. The loss on a penny package, for which he pays 6d per thousand more, is apparent to anyone; he pays more and distributes at the same price as he had paid. The average lot of the retailer is far worse than that of the labourer at the present time. The retailer works seven days a week and 18 hours a day. He is getting less than 3d. an hour for his work, and that is what this Budget; has reduced these people to.
    Mr. HOBHOUSE: Both the hon. Gentleman who proposed and the hon. Gentleman who seconded this Amendment spoke of and gave figures about the reduction of consumption, and they estimated the result which would follow from the new duties. It is very important in a matter of this sort that the House should be in possession of the fullest possible information on this subject, because undoubtedly there has been a great deal of misconception and misinformation upon the point. I therefore propose, with the leave of the House, to give a few figures, both as to what the estimate would be of consumption, what would be the revenue, and what has been both the revenue and consumption up to to-day. The predictions of Lord St. Aldwyn when he was Chancellor of the Exchequer fortunately have been falsified. The taxation, which has from time to time been alternately increased and diminished, and ultimately increased again, instead of fulfilling the predictions of Lord St. Aldwyn that the consumption of tobacco would go down with the increase of taxation, shows a steady increase, almost constant, or about 2 per cent. of the consumption, and consequently in the revenue enjoyed from consumption. The yield therefore for last year was £13,800,000, and taking the estimate for this year that yield ought to be increased by £1,900,000. The receipts up to 23rd October are £8,930,000, as against £7,776,000 for the corresponding period of last year, which shows an increase of revenue for the first

    1261
    half of the year of £1,154,000. From that revenue, if we are to treat it as a net revenue, must be deducted the amount of drawback which will eventually have to be paid when the Bill becomes an Act in respect of the extra duty. That sum upon the first six months of the year and up to the 23rd October amounts, not to £100,000, but to £123,000. The estimated reduction in consumption which we expected to follow upon the increased duty was 4.5 per cent., and in addition to that you have to add the ordinary normal growth of 2 per cent., so that the falling off ought to have been 6½ per cent. upon the year. Instead of that, however, the figures I have quoted show a falling off, not of 6½ per cent., but of 4.3 per cent., so that from the point of view of revenue the returns have been thoroughly Satisfactory. For the corresponding period of last year the figures were 44,817,000 lbs. Reduce that by the estimated reduction of 4½ per cent., it comes to 42,800,000 lbs., which we ought to have got this year. Then there were forestalments in March and April to the extent of 2,118,000 lbs., and that brings down the estimated clearances which we ought to have got upon our estimate for the first six months of the year to 40,682,000 lbs. As a matter of fact, what we have in fact-cleared from 1st May to 24th October, 1909, is 42,900,000 lbs. In 1908 the amount was 44,817,000 lbs., showing that instead of a deficit of 4,000,000 lbs., which is the figure mentioned by the hon. Member of Liverpool there has been a reduction in consumption of 1,900,000 lbs.
    Mr. M'ARTHUR: My figures were taken from a reply given by the Chancellor of the Exchequer to a question in this House on the 18th of this month, and those figures show a falling off of 4,117,000 lbs., or 10 per cent.
    Mr. HOBHOUSE: The figures I have given are the latest available, and the House may rely upon their accuracy. Upon this question I claim to be able to speak not merely as the representative of a City which has probably a greater tobacco industry than any other city in this country, but I also speak on behalf of a very large number of working men, because out of the 20,000 voters I represent almost 99 per cent. are working men. I am, therefore, in a position to assure the three hon. Gentlemen who have spoken that amongst the many remonstrances which I have received from my Constituents in regard to various taxes, from no section, whether they agree or differ from me in politics, have I received
    1262
    any remonstrances upon the subject of the tobacco tax. I do not claim any particular virtue for my own Constituency in this respect, which is not shared by other constituencies, but if I may take that as a fair example of the opinion of the people of this country, and at all events they appear to regard with no disfavour the imposition of this increased duty upon tobacco.
    The hon. Gentleman who spoke last said that consequent upon the extra taxation on tobacco there had been a very considerable burden placed upon the trade, and he spoke in particular of a reduction of employment in the cigar trade. Anyone familiar with the conditions of the manufacture of British cigars in this country is well aware that that particular industry suffers from two disabilities. One is that public taste has turned from cigars to cigarettes, and the other is that there is unquestionably a far greater percentage of moisture in the tobacco used in the manufacture of cigars than in any other tobacco introduced into this country. They also labour under this further disadvantage: That whereas most forms of tobacco are placed upon the market in a moister condition than it is introduced into this country, the cigar makers import their tobacco in a more moist condition than they sell it to the public. They are handicapped by these two great difficulties, neither of which are of their own making, and they are unquestionably placed at a greater disadvantage in respect of this tax than those other people who are employed in the manufacture of tobacco.
    There is a third reason which operates as against all dealers and manufacturers in tobacco, and it is that owing to the increased consumption here and in other countries the diminished production has also to be taken into account. Undoubtedly the price of the raw material of tobacco has very considerably increased in the course of the last few years. But, notwithstanding that particular difficulty in the way of tobacco manufacture, the consumption in this country has very greatly increased. I will not weary the House with a great number of figures, but I wish to point out that 10 years ago the consumption of tobacco used in this country was 76,000,000 lbs. Seven years ago it was 80,000,000 lbs., and for the last completed year it was 90,000,000 lbs., showing that notwithstanding the increase of price that accompanied the tax there has been

    1263
    a continuous and progressive increase in the consumption of tobacco, mainly by the working classes of this country.
    Mr. AUSTEN CHAMBERLAIN: Can the right hon. Gentleman give the figures per capita?
    Mr. HOBHOUSE: In the year 1899 it was 1.88; in 1902 it was 1.92, and last year it was 2.02, so that not only the total consumption but the consumption per capita has also increased very considerably. The hon. Gentleman the Member for Hammersmith (Sir W. Bull) dealt with another point which he says has resulted from the imposition of this extra tax, and that is the additional capital required to conduct the business. I have had the advantage of meeting a great number of tobacco manufacturers, and they all, or nearly all, insisted upon the extraordinary burden and difficulty of finding the increased capital required. One gentleman went so far as to say he would have to increase the capital of his business by no less than 20 per cent. in order to finance the burdens placed upon him by the extra tax. When I pressed him upon that point, which is a very important point indeed, it really all came down to this: It is the custom of the trade to give about three months' credit, whether by the manufacturer to the wholesale dealer or by the wholesale dealer to the retailer; and it is clear that the sum of money required to finance this duty at the outset does not represent more than one-quarter of the sum which is paid in duty by any particular firm in the course of a whole year. The money which is paid in the course of the first quarter becomes available again towards the end of the second quarter, and so the money is turned over constantly. The whole sum which is required to pay the duty to the Customs for the importation of tobacco is a comparatively small sum, and you have only got to add to that the proportion which the additional tax bears to the original tax, that is, as 8d. is to 3s., so is the ratio of increased cost placed upon the firm. The House will see by a simple calculation that that is a very small sum indeed. It amounts not to 20 per cent. of the amount originally employed, but to something like 5 per cent. With regard to the diminished consumption of tobacco, which, as I have pointed out, amounts to about 1,900,000 pounds, I think it has got to be remembered that my right hon. Friend the Chancellor of the Duchy (Mr. Herbert Samuel)
    1264
    passed through the House a Bill last year which dealt with smoking by children under the age of 16. I have made inquiries upon that subject, and as to the result, and it is very satisfactory I think both for my right hon. Friend and the House which passed the Bill unanimously to learn that there has been a considerable falling off in the sale of cigarettes in consequence of that restriction. That has undoubtedly been responsible for a very respectable proportion of the diminished consumption.
    May I deal for one moment with the power given to the trade to collect the tax from the consumer? We are all agreed that it is only just and fair that, in imposing taxation, it should be so imposed that it is possible for the persons concerned in the trade to recover it from the consumer. There were always a certain number, perhaps the greater number, of those comprising the deputations which waited upon the Chancellor of the Exchequer and myself who represented that it was impossible to recover this increased taxation from the consumer, because all they were able to demand from the people was a halfpenny for every halfpenny they had to pay to the Customs. This statement is true within a measure, but it contains a fallacy, and the fallacy is this: Tobacco is imported with a percentage of moisture, which, speaking generally, may be said to be from 11 per cent. to 14 per cent., and it is passed on to the consumer with a maximum moisture of 32 per cent. I leave out altogether the case of cigars, which I have explained stands on a different footing. The grosser or the worse the tobacco the higher the rate of moisture at which it is sold, and the lower the rate of moisture at which it is imported. The better class of tobacco, on the other hand, instead of having an average entry percentage of moisture of 14, often runs up to 18 or 20, and, instead of being sold at a moisture of 32, it is sold at something like 28 per cent. It will therefore be clear that the trade recovers from the consumer, not the exact halfpenny it has paid to the Customs, but the halfpenny plus the amount of extra moisture they have introduced into the tobacco between the point of importation and the point of sale to the consumer. May I give a concrete example to the House? If a pound of raw tobacco with moisture at 14 per cent. was made up into shag or roll or something of that sort, and was sold with a moisture of 30 per cent., the extra duty which is payable is, not 8d., but 6½d., as near as possible, and that

    1265
    leaves a profit of about 1½d. on the duty itself, which recoups, or ought to recoup, and does, as a matter of fact, recoup, the trade for the payment to the Customs. I have made careful inquiry throughout both the country and London as to what, as a matter of fact, has been done by the Trade to recoup itself for the extra burden which has been placed upon it, and I find that cigarettes have been raised by ½d. the ounce packet of 10, representing something like the price of the duty; that tobacco has been raised ½d. per ounce on proprietory brands, that cigars sold in hundreds have been raised 6d. or 1s., and that cigars sold singly have been reduced in size. There is no question at all that, as a matter of fact, the trade has recouped itself, as I think it was entitled to recoup itself, and as it was intended to recoup itself, from the consumer. I venture to suggest, so far as my knowledge of the consumer is concerned, that in this matter without any respect to party the consumers who are mainly the working classes of the country have not objected to the imposition of this tax, whatever they may or may not have done in respect of the other taxes. They have recognised that in the burden which has been placed upon them they are contributing to two things which they regard as important to the country, namely, its external safety and the payment of those pensions to aged people which have been agreed to without any Division in this House. The hon. Member for Hammersmith complained that the drawback had not been paid in respect of the increased duty in the same way as the duty had been demanded from the importers. As I have explained, in answer to many questions, the Resolution of the House which imposed the duty did not, in accordance with precedent—and the precedents have always been the same—whether the duty has been lowered or raised—the Resolution did not deal with the question of the drawback. It is quite true that there is a sum of £127,000, which will be distributed as soon as this Bill becomes law. It is strictly in accordance with precedent thus to hold back the drawback, and it has been the long-continued practice of the Treasury, as no doubt the right hon. Gentleman is aware.
    Mr. AUSTEN CHAMBERLAIN: The right hon. Gentleman has made a very interesting speech, and has included in it a great deal of information, much of which is of value, and has been very clearly
    1266
    stated, but some of which, I confess, I have found great difficulty in understanding, having regard to the information which has reached us from other sources, and even the information which the Government themselves have supplied. I cannot help regretting that, after all our effort, in which I am bound to say the Chancellor of the Exchequer met us very fairly, to raise this important subject has come on in the middle of the dinner hour, when Members are thinking much more of the smoking of tobacco than of the taxing of it. I do not propose to follow the right hon. Gentleman into all the details with which he has dealt, almost necessarily at length, but I will confine my observations mainly to certain broad features of this taxation, and to its effect.
    Before I do so I wish to say a word upon the subject of the drawback. I am afraid the right hon. Gentleman gave me too much credit for knowledge of Treasury practice when he said I was familiar with the fact that what the Government had done in this case was exactly in accordance with precedent. I do not remember that that matter ever came before me. I am not surprised at the answer he has given, but I do not think it is a good answer. The Government are acting strictly according to precedent in what is an entirely unprecedented case, and I must say I think it is sacrificing convenience and justice to red tape and pedantry. The Government say: "We are authorised by Resolution to collect a new duty. We propose, as a natural and necessary corollary of that duty to pay an increased drawback on the offals which are surrendered, but, inasmuch as the increased dawback was not mentioned in the Resolution we cannot give you that until the Bill passes." What has that involved up to date? It has involved the locking up in the Treasury of £127,000, the capital of the manufacturers of this country. That is a most serious thing for anyone; it is a really intolerable state of things that £127,000, to which the Government have no right, and which they never intended to claim, should be locked up for so long a period and taken out of the trade in which it ought to be employed. The right hon. Gentleman says it is in accordance with precedent. If so, I think he ought to create a new precedent on this occasion, because, as I have already pointed out, the circumstances of the year are unprecedented in the first place, and have the rise in the duty is very great—indeed,

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    I do not recall any previous rise of 8d. in the pound. The highest I remember was 6d., and that was many years ago. In any case, whether there has previously been so great a rise or not, the present is a very-high one. In the second place—and this is equally important—the Budget, instead of being pressed forward and passed rapidly as was the custom in the days to which the right hon. Gentleman has referred, has on this occasion lasted right into the month of November. It is usually brought on at Easter, and it has usually been possible to get it through before the end of June. Of course there was some hardship, even under those circumstances, in regard to the holding back of the drawback, but the hardship is infinitely greater now that the proceedings on the Budget have, as in this instance, been prolonged by five or six months. I say that under these circumstances it is pure pedantry for the Government to base itself on precedent, and to say that, because the drawback was not mentioned in the Resolution it cannot be handed over. Why was it not put in the Resolution? The Resolution must cover the highest charge you wish to put on the subject. It need not, and indeed it never does, cover the exceptions, rebates, or drawbacks which you intend to allow. That is a necessity of our Parliamentary procedure. It is a necessity for the Government if they want to levy their taxes at all, but I think that where they are levying taxes only on a Resolution of the House, and not on an Act of Parliament, a practice which has nothing but custom to sanction it, but still a custom which, no doubt, would be sanctioned by a court of law—I say when they are relying on a custom of that kind they ought to strain a point in favour of the subject rather than in favour of the Treasury. It is a monstrous inconvenience and hardship for this trade, as it would be for any trade, to have these large sums locked up for so long a period, when, if the Treasury only showed a little courage and desire to meet the convenience of the trade, it could, with perfect confidence that Parliament would support it, have repaid this money as it became due to the subject.
    Having dealt with that point, on which, I am afraid, we cannot get any satisfaction at this stage from any Amendment we can possibly introduce into the Budget, I turn to what I have to say upon the tax itself. The Chancellor of the Exchequer has defended this tax and the Whisky Tax on a
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    ground which, if it applied to them, would be a sufficient one, namely, that when for purposes of national defence and old age pensions you have to find a large increased revenue, every individual in the community and all classes of the community ought to make some contribution to the cost. I agree with that statement. I agree that on a great national necessity arising—in the first place, out of national defence, which is equally the interest of every citizen of the country, and in the second place out of the establishment of old age pensions for the aged poor, which is especially to the advantage of the poorest class—that to a deficit arising under such circumstances it is not merely not unreasonable, but it is proper, that everyone should be asked to contribute according to his means. And the first objection I have to the Government proposal is that they do not carry out their own principle, but they select two articles of consumption—whisky and tobacco—which are not consumed by every individual, for their taxation. Moreover, they select these two articles, which have already borne very high taxation indeed, and impose a further large additional sum upon them, which they themselves admit they desire and hope to see recovered from the consumer; but this burden, intended to be imposed upon all, is not in fact shared equally by all, and is not contributed to by many who have better means and who are in a better position to make a contribution to our taxation than some of those, at any rate many of those, upon whom these taxes fall. The taxes are unequal in their incidence, though that does not matter if they form part of a large system of taxation, and if that particular failure of them is rectified and corrected by other proposals, but it is not so in relation to the Budget of the present year.
    Then my second objection is to making so high as these Tobacco Duties will stand, a tax upon any single article. I say that the heighth of the taxation, and the proportion which it bears to the value of the article, is, in itself, an objection to the addition which the Government are making. I do not think, although we have often mentioned the subject in the course of these discussions in relation to these taxes and other taxes of the Government scheme—I am afraid we have not brought home the fact, which surely must be evident to every reasonable and thinking man, that where a moderate taxation is tolerable or even desirable, the mere fact of raising taxes to an immoderate figure

    1269
    magnifies their objection, multiplies their hardship, increases to the point of rendering them intolerable their anomaly, and turns what in many cases as a moderate tax is a good tax into a very bad one indeed. I think the Government are doing that in regard to the Tobacco Tax. Having it already taxed many hundreds per cent., they now propose to raise the duty by 8d. on the existing 3s., and that is a course which is open to still stronger objection, as stated by the hon. Member for Galway (Mr. Gwynn), because the Government, following precedent, I admit, and for reasons which I readily understand have made no attempt to proportion the burden to the value of the article. It is, at any rate as the tax has existed hitherto, an inherent fault of the Tobacco Tax that the percentage paid in tax by the consumer who buys a packet of cheap tobacco is so much higher than the percentage paid in tax either by the consumer who buys an exceedingly higher quality of smoking mixture or still more if he buys high-class cigars.
    Mr. HOBHOUSE: The right hon. Gentleman will remember that in the case of the cigars there is what is called a distinct luxury tax put on, and he will notice in the Schedule of the Bill that that tax is increased in a greater measure by the proposal of the Government themselves to put on the higher-priced articles, namely, 1s.
    Mr. AUSTEN CHAMBERLAIN: I have not forgotten that. If I remember rightly, I myself increased that luxury tax. I have not forgotten it, but the fact remains, when all is said and done, that the tax bears no proportion to the cost of the article. One man pays several times the amount in taxes which he actually pays for tobacco, and another man, and he the richest, pays a much smaller proportion in tax and gets a larger value out of his total expenditure in tobacco. I know the reasons. I know all the reasons which are urged why you should not make these ad valorem taxes. I know how unpopular it would be, at any rate, among many traders if you attempted to do it, but I suppose, like every Chancellor of the Exchequer, and still more like those who have never had that responsibility upon them, I have a hankering, if we could see our way to do it without great inconvenience, to bring the amount of tobacco and the amount of tax in any particular purchase or in different puchases into some relation one with another. But I do not blame the Government for not having done that now,
    1270
    because I know that is a very big thing to do, and there are great objections and great difficulties in the way, and the objection has been applicable as far as it goes to the old tax. No Chancellor of the Exchequer has ever been willing to try that experiment. But why I mention this matter is, that it is just one of those points where the higher tax gives a greater anomaly and becomes a greater hardship. Such a matter would be always an anomaly, but the anomaly would be latent for all practical purposes if you were dealing with a low tax, but when you get the tax to these tremendous figures it really becomes a very serious objection to the tax—an objection which hon. Members below the Gangway are not slow to seize upon—and to which you have no real answer; and I think you are jeopardising a useful source of revenue when you make the anomaly of such magnitude as you are now doing.
    My next objection to the tax passing, away from its magnitude, is its effect upon the trade and the disturbance which it is creating. The right hon. Gentleman said that he represented a city in which tobacco manufacture is a very important industry, and which, indeed, holds quite the first place amongst our cities in regard to the tobacco industry. He further said that he had great numbers of workmen among his constituents, and neither from manufacturers nor workmen had he received any objection to this tax. I am sorry that his position in the Government appears to have protected him from correspondence which has reached a great number of other people. But though his constituency plays a very important part in the tobacco trade he is mistaken if he thinks that the interests of the Bristol trade are always the same as the interests of the trade as a whole. The right hon. Gentleman is associated in a representative capacity with the great tobacco trust in this country. I am not going to criticise them or speak ill of them in the least, but their interests are not always the interests of those who are outside the combine, and sometimes a change may suit them very well which may be very injurious to many of their smaller and less prosperous competitors, and I think in the case of this increased duty it is the smaller competitors in the trade who will find it most difficult to support their output, pay their duty, and put up with the inconvenience, and find the increased capital which the duty calls for from them. The tobacco trade has had very difficult

    1271
    times to go through. I ventured a very small alteration, in the tobacco trade when I was in office, and I learnt, as Lord St. Aldwyn warned me in the House when I sketched my proposal on the first night of my Budget, that if you touch tobacco you are very likely to get burnt. I cannot help expressing the opinion that whether I was right or wrong in the change I made the present Government were very foolish, for what was after all a purely pedantic objection, to disturb the settlement I had made within a year and cause a fresh disturbance in the trade, and, by so doing, to throw out of employment, as they undoubtedly did, a great number of people who, owing to the change I made, though not to an effect foreseen by me, had got employment through it.
    9.0 P.M.
    The tobacco trade has been disturbed pretty often, but I do not think it is a favourable moment for disturbing it again, at a time when there is this great combine within the trade against which smaller competitors have great difficulty in holding their own, at a time when not only has there been disturbance in the home market but there has been a difficulty about getting the supplies of the raw material, and when to meet the combination of the great manufacturing trusts in America and in this country there has sprung up amongst the growers a combination of their own in order to secure themselves, with the general effect that, I think, the smaller men have carried on their trade under much greater difficulties during the last few years than probably was the case at any time before then. Under all these circumstances I think this was an unhappy moment to raise this tax, and especially to raise it by so large an amount. Of the figures which the right hon. Gentleman has given us I shall say little, but I find it very difficult to reconcile them with a previous answer given by the Chancellor of the Exchequer and with the comparisons which I have seen of the clearances of tobacco this year and last year, even when you make all allowances for the forestalment which took place in the closing months of the last financial year, and which affected, of course, to the extent of this forestalment, the clearances in the early months of this year. I believe, if you had the money to do it, the Tobacco Tax is one of those taxes which would rapidly respond if you could make a substantial reduction, and I do not believe you can make a large increase of this kind and not
    1272
    seriously check your revenue. The right hon. Gentleman, if I understood him rightly, admitted that whereas there ought normally to have been a growth of 2 per cent. on the consumption there had actually been a fall of 4 per cent.
    Mr. HOBHOUSE: No, what we expected was that there would have been a fall of 4½ per cent. which would have had to be added to the 2 per cent. normal growth, making a total of 6½ per cent. When you have allowed for what ought to have been the normal growth, instead of being a loss of 6½ per cent., there was a loss of rather less than 4½ per cent.
    Mr. AUSTEN CHAMBERLAIN: That is a less serious drop than I had supposed from the figures I have seen, but it is, of course, a serious matter. It is not very good for the revenue—we like to see a growth instead of a fall—but it is much more serious for the trade, which, like all other trades, suffers not only the immediate loss of profit on that portion of their output which they cannot sell, but suffers also from the fact that their fixed costs go on just the same, and they now have to be distributed over a smaller output, and therefore absorb a larger portion of the price they receive for every pound of the article. But I myself believe there is room for a great extension in the consumption of tobacco. It has steadily grown, but, unless I am much mistaken, we are still small smokers compared with Continental nations. I know of no reason in the habits of our people except the very heavy revenue which we raise from the article, and the consequent restrictions we put upon the purchase of the article by raising its price. I do not think it was reasonable in a year of this kind to expect the Government to make any reduction in tobacco, though, I believe, had such a thing been possible, it would very quickly have recouped itself, and that is one additional reason for thinking that the Government made a bad choice when they selected tobacco as an article of common consumption from which they would raise a portion of their revenue this year. Holding the views that I do, I was anxious to, at any rate, make clear the position I take up in regard to this duty, and of course I shall support my hon. Friend if he goes to a Division.
    Mr. PHILIP SNOWDEN: I would like to associate myself with the opposition to the proposed increase of the Tobacco Duty. Apart from the reasons which have

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    been given as applying to this tax specially, I oppose it for the reason which I have put before the House on former occasions, namely, that I am opposed to all indirect taxation. This Tobacco Tax proposes to raise something like £2,000,000 a year, and we have learned from the figures which have just been given to the House by the Secretary to the Treasury that in the first six months of its operation it has brought in increased revenue of more than a million sterling. But the reason which has been given by the Government for the imposition of this tax, and also for the increased duty on spirits, is that which was stated by the right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain), namely, that it is advisable the increased taxation should be spread over every section of the community. I am prepared to accept that contention with certain qualifications. I do not object at all to increased taxation being apportioned fairly amongst those who are able to bear it, but my chief reason for objecting to this proposed increase of the Tobacco Duty is that it is going to fall very heavily upon a section of the community who are already grievously and oppressively over-taxed. The right hon. Gentleman, in the course of his speech, over and over again stated that it would be the working classes who would pay the greater part of this new impost. It might be urged in opposition to the point I am endeavouring to put forward that this is a tax not upon necessaries, but upon luxuries. But that does not affect at all the economic result. So far as its effect upon the economic conditions of the working classes goes, it does not matter in the least whether the tax is imposed upon a necessary or upon an article of luxury, provided that the tax is paid, because the working people during the last six months have had to pay £1,000,000 more for tobacco. That means that there must have been a corresponding reduction in their expenditure in other directions, because it is certain that there has not been in the last six months an increase in their wages and purchasing power. As a matter of fact, in the last six months the wages and purchasing power of the working people have been going down. The right hon. Gentleman made a point of what he stated to be a fact—and no doubt it is a fact—that he has received no remonstrance from his own constituents against the increase of the Tobacco Duty. That does not prove at all that the working people in his own constituency
    1274
    are in favour of the tax. May I tell him that working people are not in the habit of formulating in definite terms by resolution their opposition to proposed increases of taxation? At the time when Sir Michael Hicks Beach was Chancellor of the Exchequer I do not think that throughout the length and breadth of the land they passed formal resolutions against the proposed increases in the food taxes. The working people may not put their objections to this proposed increased of the Tobacco Duty in a formal manner, but, having addressed great meetings in all parts of the country during the past six months, I have found everywhere among working people very strong objection to this impost. Working people do not like to pay increased taxation any more than others. I shall vote against this increase, and I think my colleagues will vote against it, too, because we believe it is an unjust and unnecessary increase in the already disproportionate share of taxation which is paid by the working people of this country. At the same time that this extra impost is being levied, they are paying another £2,000,000 increase under the Whisky Duty, and as a matter of fact nearly half of the additional revenue proposed under this Budget will be paid by the working people. That is mainly why we are opposed to this increase of the Tobacco Duty.
    Mr. ROWLAND HUNT: The Secretary to the Treasury said that none of his constituents had made any complaint at all about the extra duty on tobacco. I can assure the right hon. Gentleman if he happens to come up my way working people will tell him about it. I have hardly met a working man at all who has not complained bitterly of it. When it is remembered that there are nearly £600,000,000 of untaxed foreign imports coming into this country every year, including among them many million pounds worth of luxuries of the rich, and of manufactured goods which the poor never buy, I really think that it is perfectly impossible to justify the imposition of a tax of about 600 per cent. on the tobacco of working men. May I say tobacco is just as much a raw material as wheat. Undoubtedly, as the hon. Member for Blackburn (Mr. Snowden) pointed out, working men spend money on tobacco which would otherwise be spent on food or drink, clothes or boots. When I say drink, my hon. Friends on the other side of the House will recognise that it need not necessarily be alcoholic drink. Tobacco

    1275
    taxation is particularly unfair and unjust to the working people, because they pay so much more than the rich. While this Budget increases the taxation on the poor man's tobacco 100 per cent., it hardly makes any difference at all on the rich man's cigars. I will give an example how it works out. When a poor man pays 4s. 8d. for a pound of tobacco he really pays more than 3s. 8d. duty, because the manufacturer has put a considerable amount of water in it. When the rich man spends the same amount on 8d. cigars he pays less than 6d. tax. The poor man pays in proportion seven times as much as the rich man. When the poor man buys an ounce of tobacco for 3½d., at least 2¾d. is paid in actual taxation, and the increase in this taxation is 100 per cent., because an extra ½d. is put on, and the absolute value of the tobacco is barely ½d. As for the tax on raw tobacco, I do not see how the Government can put forward any justification for it. The taxation on raw tobacco under a so-called system of Free Trade involves the necessity of putting an equally heavy Excise taxation on the home-grown tobacco, and; actually prevents us from growing tobacco either in this country or in Ireland. In 1831 Ireland produced a considerable proportion of the tobacco consumed in this country——
    Mr. DEPUTY-SPEAKER (Mr. Emmott): The hon. Member must confine himself to the Customs. We are not now dealing with Excise.
    Mr. HUNT: The same thing applies to beet. This extra taxation would be so heavy that we could not grow either tobacco or beet. Hon. Gentlemen will observe how very differently the Government treat their friends the tobacco manufacturers. The protection already given as regards cigarettes is increased under this Budget, although hon. Members opposite declared that the tobacco manufacturers were protected before. I have here a quotation from a speech by the late Chief Whip of the Liberal party on 22nd June, 1904. He said in the House of Commons, speaking against the increase of the duty on cigarettes, that the objection to it was that it was a protective tax, and he went on to add that the Committee would remember that when a duty was laid on cotton goods entering India with no corresponding Excise duty the Lancashire manufacturers in the House of Commons protested so strongly against the proposal that the Indian Government was compelled to levy
    1276
    a corresponding Excise duty on the Indian manufactured goods. How is it that the Free Trade Government does not put a corresponding Excise on cigarettes and cigars? The right hon. Member for West Islington (Mr. T. Lough) said that this tax on cigarettes was a protective tax, and one of a very bad kind.
    Mr. DEPUTY-SPEAKER: The hon. Member is not having regard to what I pointed out to him, that we are now only dealing with Customs. We are not dealing with Excise. He is dealing with both. He must confine himself to Customs.
    Mr. HUNT: The taxation on cheap tobacco, which is really a necessity of the working man, is a tax to the extent of 600 per cent., and it certainly cannot be justified by any means that I know of. It is to a great extent a tax on raw materials,-while millions of pounds worth of luxuries of the rich are allowed to come into this country without paying a single halfpenny. The hon. Gentleman will find when the working men really thoroughly understand the nature of this tax they will let the Government know their views in a way which Ministers are hardly likely to appreciate or guess.
    Mr. GEORGE RENWICK: I listened with the very greatest interest to the speech of the right hon. Gentleman the Secretary to the Treasury (Mr. Hobhouse). He asked the specific question whether we who oppose the tax represent our constituents. I certainly say that, in my opposition—and I strongly oppose this tax—I represent, I believe—and I have good reason for the belief—my Constituents. I agree generally with the hon. Member for Blackburn (Mr. Snowden) that, although the working classes have not demonstrated to a very large extent against the tax, they deeply resent it, and I venture to state that the right hon. Gentleman who represents the Government on the Treasury Bench at this moment, before another half hour is over will learn very emphatically what the working classes think of this particular tax. There was one other very noteworthy part of the Financial Secretary's speech to which I wish to refer. Not for the first time during these discussions in regard to the Budget have we noticed the solicitude of His Majesty's Government, not for the poor consumers, not for the middlemen, not for the little men, but for the monopolists and those who are well off. The right hon. Gentleman referred to the tobacco manufacturers. I

    1277
    would remind the House how the Government have gone out of their way to meet the views, not of the consumers, but of the manufacturers in the tobacco trade. One of the greatest and one of the most wealthy monopolies in the world is that of the Imperial Tobacco Company. It has its headquarters in Bristol, which city the right hon. Gentleman had the honour to represent. That enormous trust is composed of 18 of the largest tobacco manufacturing companies in the country. The House will be rather surprised to hear that last year its profits were about £1,500,000. It paid 10 per cent. dividend, and 2 per cent. bonus. Surely a monopoly of that wealth and that magnitude is not one which the Government need go out of its way to placate or in any way whatever to meet. That tobacco trust has obtained that enormous revenue undoubtedly out of the pockets principally of the working classes of this country, who, we all know, are the largest consumers of tobacco. The House will recognise that, in addition to the £1,600,000 extra taxation which the Government expected to get, there are these enormous profits I have already mentioned, and which also come out of the pockets of the working classes. I just want to call the attention of the right hon. Gentleman to one of his own speeches, when he received a deputation on 6th July, of the Tobacco Trade Section of the London Chamber of Commerce. What did he tell that deputation? He assured them that the Chancellor of the Exchequer had no intention of imposing any burden on the trade. That is all very well, but, at the same time, I think the country would have appreciated the fact if he had said that neither did he mean to impose any burden on the consumers of tobacco.
    That, I think, would have been the only proper way to meet the case. These millionaires engaged in the tobacco manufacturing trade are making colossal fortunes, I remember Sir Henry Fowler once said in this House that in no trade were more colossal fortunes made than in the tobacco trade. There I leave the point as to the Government's solicitude for the wealthy manufacturers in the tobacco trade, and I now come to the consumers' point of view. We have heard during the course of this Debate some rather telling points with regard to the hardship on the working classes caused by the burden they have to bear in connection with this particular duty. I remember in a speech which the
    1278
    Chancellor of the Exchequer delivered, he said that the bulk of the Tobacco Tax was paid by the 3d. per ounce man. To-day the 3d. per ounce man has to pay 3½d. I went to a tobacco shop in close proximity to the House, and asked for an ounce of tobacco usually used by the working classes, and they gave me a packet for which they charged me 3½d. I asked whether that tobacco was originally sold at 3d., and they replied that it was. I then bought three cigars at 8d. each, which, when weighed, were exactly half an ounce in weight. The House will remember that under this Finance Bill the tobacco is to be 3s. 8d. per pound. The tax upon cigars is to be 7s. Therefore, it is a matter of simple arithmetic that I paid only the same amount of duty for my three cigars, for which I paid 2s., as the working man pays on the ounce of tobacco for which he gives 3½d. Can the Chancellor of the Exchequer or the Secretary to the Treasury go before any working class audience in the country and defend an imposition of such an enormous character as this undoubtedly is? I agree with the right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberalin) that this extraordinary impost of 8d. per pound is to be imposed upon those who are already heavily taxed by this Bill. What is the history of that is more In 1898 the Tobacco Tax was 2s. 8d. per lb. In 1900, at the time of the South African war, when it was absolutely necessary to have money, it was raised by 4d. a lb. The Government, in a time of profound peace, are raising it by 8d. a pound. There was a significant speech on that occasion from an hon. Member on the Irish benches—the Member for North Cork, who protested against the increase of the Tobacco Duty. He reminded the House, and especially Irish Members, who on this occasion support the Opposition, that to the Irish working man tobacco had become almost a necessity, and he spent upon it a larger proportion of his earnings than was spent by the working man in the wealthier country of England. The hon. Member added that any hard-working Irish peasant or town artisan would rather go without his breakfast than forfeit his dearly loved pipe of tobacco. If that be so, and I believe it is so, what do we hear from the right hon. Gentleman to-night? He acknowledges that, having expected to get £1,600,000, he has already got £1,000,000. Rather than deprive himself of his tobacco the hardworking artisan, considering his tobacco a

    1279
    necessity, will pay the extra price for it. That is another argument, therefore, to show that this million is coming out of the pockets of the working classes. I do not remember a greater injustice having been inflicted upon the working classes of this country than that of this tax.
    I object to this tax for the reason that I object to any tax by which the manufacturer and the retailer can take out of the pockets of the consumers by adding moisture to the tobacco. It is a direct inducement to the retailer to add this moisture, and the Chancellor of the Exchequer acknowledges it. In his Budget speech he said:—
    "One pound of unmanufactured, as imported, produces after allowance has been made on the one hand for waste in manufacture, and on the other for the moisture which is added in preparing it for sale, nearly one-fifth pounds of the tobacco of the retail trade.…"
    And now mark the words:—
    "So that an addition of a halfpenny an ounce to the retail price leaves the tobacco trade with an ample margin to finance the increased duty."
    Mark the solicitude of the Members of the Government for the wealthy monopolists rather than for the consumer. The country objects to this duty, the working classes object to it, and I venture to say, as I have already said, that in the course, it may be of half an hour, the Chancellor of the Exchequer will receive an emphatic declaration of what the country thinks of this.
    Mr. STEPHEN COLLINS: I would not have risen if it had not been for the remarks of the hon. Member for Blackburn (Mr. Snowden). I do not pretend to have the wide knowledge and experience of the working men or working men audiences that he has, but I do not really think he was speaking from his heart when he was opposing this tax. We all know it is only a tax on a luxury. As to what the hon. Member (Mr. Renwick) said about force of habit, the fact that a man may get to like tobacco better than his breakfast does not show that it is better for him, any more than the same argument would apply in the case of the opium eater or the gin drinker. I have had a little experience lately, and have had the good fortune or misfortune to be in large audiences within the last few months; working-class audiences, some of them outdoor, and numbering from 200 to 2,000, and I can say truthfully that not 5 per cent. of the audiences I have been
    1280
    amongst have ever made a protest, not a feeble protest, against this tax. In fact, I think the matter is rather well put in a remark I heard in this House not long ago. A Member was giving some illustrations of the feeling of the people, and mentioned the case of an old man. Someone was speaking to the old man about paying his extra penny on two ounces of tobacco. He said:—
    "It is a penny more, but I have 4s. 11d. profit because I have an old age pension."
    Mr. JOHN GRETTON: I am inclined to ask the Government whether this is one of their measures of social reform, and I am encouraged to think there is some reason for that question by the speech we have just heard. Do I understand this is a social reform Budget, and is it intended to do certain things besides collecting revenue? Is this tax intended to diminish the consumption of tobacco as an evil which should be suppressed in this country, or, at any rate, discouraged? That appears to me to be a question the Government ought to answer, because undoubtedly it will diminish the consumption of tobacco, while the poorer classes of this country will be paying increased taxation which the Government pride themselves on collecting. I cannot consider that tobacco in the present age is altogether a luxury. It is more than a luxury It is a solace to many men who have little comfort and little solace in a hard existence. The hon. Member for Newcastle (Mr. Renwick) spoke for an industrial constituency, and I now speak for an agricultural constituency, where the majority of the voters work in the open, and spend their lives in cultivating the land. I can speak with the utmost confidence for the Constituency which I have the honour to represent that this tax is deeply resented by the majority of voters in that constituency. Most of them smoke, and find great solace in their tobacco, and they look upon it as a great hardship that they should be asked to pay this enormously increased taxation when that taxation is paid by them in exactly the same amount as upon the more luxurious forms of tobacco are paid for by those who can afford to spend comparatively large sums on their cigars.
    I complain bitterly of this tax because you cannot make the importer bear any share in the duty. Every advantage which is gained by any adjustment of this tax is gained by the middleman, the dealer, the man who makes up the tobacco for his customers. The Treasury think that by

    1281
    their regulations they are able to adjust this difference, but I have heard many Debates, and I remember the Government party when in opposition and showing with great force and much reason that in spite of all regulations and all adjustments there is some advantage always gained by the manufacturer in these alterations of taxation. My hon. Friend (Mr. Renwick) pointed out the advantage is always gained in these cases by the great trust which controls the tobacco trade in this country. This tax is not only a great hardship to the taxpayer, but goes deeper than that. I have had to pass more than once every week through the city of Nottingham, where there is a considerable tobacco industry. I am told by friends that there is great want of employment there, and that the tobacco factories are working on short time, and in many cases they have had to dismiss a proportion of their hands. This tax is leading directly to unemployment in the tobacco trade in my own experience and knowledge in that city. There was a small tobacco industry in Boston, and this tax has crushed it out of existence and thrown 150 people out of employment. The Government do not think of those things. They think that alcohol, tobacco, and all matters of that kind are luxuries, and that it is well to discourage them by their taxation. They proceed to tax those articles. This throws a considerable number of people out of employment, and puts a considerable number of others on short time. I do not think that that can be called a measure of social reform, and a Budget containing proposals of that kind certainly cannot be called a democratic measure. I look back to the time when the taxation on tobacco was 2s. 8d.; it was then increased to 3s. for war purposes, and I think that that is the absolute maximum justifiable. If the Government desired to raise any greater revenue from tobacco, they ought to have brought in an ad valorem duty, increasing the tax on a graduated scale, so that the consumer should pay in proportion to the quality and cost of the tobacco which he purchased. That would have been a justifiable expedient, and one which I at any rate could have supported. This tax is undoubtedly a great hardship upon the poorest portion of the population. It makes them pay unduly for one of the few luxuries which they can enjoy, and it ought to be resisted by every Member of this House representing a working-class population in a democratic constituency.
    Mr. J. F. REMNANT: In one or two sentences I wish to challenge the remarks of the hon. Member for Kennington (Mr. S. Collins). I also represent a London Constituency; but my experience of the working classes differs very materially from that of the hon. Member opposite. He says that he has addressed during recent weeks meetings ranging from 200 to 2,000 persons, and that he has not met with more than 5 per cent., if that, of opposition to the increased tax on tobacco. These wonderful meetings could not have been London meetings, nor meetings of working-class people dwelling in London.
    Mr. COLLINS: One meeting of nearly 2,000 people was in my own Constituency, and it was not a ticket meeting.
    Mr. REMNANT: If it was not a ticket meeting it must have been an exception to the meetings held by hon. Gentlemen opposite, and I am delighted to hear that a Member representing a London constituency feels sufficient confidence to allow his meetings to be non-ticket meetings.
    Mr. COLLINS: All our meetings are open meetings.
    Mr. REMNANT: I am delighted to hear it. I only hope the next time the hon. Member addresses a non-ticket meeting in London he will ask definitely whether the meeting is in favour of an increased tax upon the tobacco of the working classes, and leave it to the meeting and not to his judgment to decide.
    Mr. COLLINS: We do so at the meetings.
    Mr. REMNANT: Lambeth must be a very exceptional part of London. All I can say is that all parts of London, with the exception of the Division of Lambeth, represented by the hon. Member, strongly resent the increased taxation put upon the working man's tobacco by the present Budget, and we shall probably get a proof of that very shortly. I wonder that the hon. Member does not recommend the Chancellor of the Exchequer, for the sake of political votes, to add a little more to the Tobacco Tax which he thinks is so popular, and to take it off in other directions, which even he must admit are most unpopular. In the hon. Member's recommendation the Chancellor of the Exchequer would have an easy way out of some of the unpopularity which unfortunately attaches to his Budget. Representing, as I do, a London constituency, and being

    1283
    acquainted with other constituencies in London, I can assure the hon. Member that his experience is most exceptional, and that working men throughout London and the country would not agree with his assertion that this taxation is popular. A point which seems to be overlooked is the result of this extra taxation in the matter of employment. I have had many letters from those who can honestly speak on behalf of this great industry, one and all saying that the result of this extra taxation has been that employment in the tobacco trade has very considerably diminished, and that the unemployment is likely to increase in the near future. But we on this side of the House believe, and many Members opposite if left to exercise their own discretion would agree with us, that the great point nowadays is to increase, rather than diminish, employment. That is one of the great objects we have in advocating Tariff Reform. [Laughter.] Hon. Members opposite are always asking us for an alternative, and when we give it they laugh. But let those laugh who have no experience of business matters. Those who have such experience will agree that the great thing we have to aim at nowadays is to provide employment for our unemployed. If we support this increased taxation of tobacco we shall diminish employment and inflict upon the tobacco industry a burden which it ought not to have to bear
    Mr. FELL: I represent a constituency the people in which believe that they will suffer by being deprived of one of their few luxuries in life by being compelled to smoke less than they have done before. It is said that since this Budget was introduced there has been a diminution of upwards of 400,000,000 pipes of tobacco smoked in this country. Those figures seem almost impossible to believe, but the decrease in ounces of tobacco sold during the last six months bear them out. That decrease represents 10 pipes per head in the country, including men, women, and children. [HON. MEMBERS: "Hear, hear."] You may say "Hear, hear," but to these men to whom this is a solace and a comfort it is no "hear, hear" matter. It is one in which I sympathise with them, because I smoke myself. It is difficult to see why in discussing the subject of the poor man's tobacco the matter should be treated with laughter. I do not think that those Members who deride now would have treated the matter in that fashion if talking of it to their constituents before the
    1284
    election. It is perfectly true that it may be necessary to put on this duty for the sake of revenue. It might have been said, "We are very sorry that the needs of the nation require that this duty should be put on; tobacco is one of the things upon which we can best put it; we must have the money; you can pay your share like others." Of course it is an excessive duty. No one will deny that, there is no duty in the world so heavy as this tax on English tobacco, which is something like from five to eight times as much as the article is worth. This Tobacco Tax has already had the effect of reducing the consumption, and proportionately reducing the revenue which might have been anticipated to be derived from it.
    May I point out to the Chancellor of the Exchequer what was the result when the Tobacco Tax was reduced 6d. in the pound, about 12 years ago? It stood at 3s. 2d. and was reduced to 2s. 8d. That reduction resulted in an increase of consumption of eight million pounds in a year. It might have been thought from the rate on which it was being levied that there would have been a loss of revenue of £1,200,000. Instead of that the loss that the Exchequer sustained was only £400,000, or one-third of what had been anticipated. We see thus, on the one hand, how a great increase in price reduces consumption; and we see on the other hand how, in the halcyon days of the Liberal Government that had a Chancellor of the Exchequer who was able to reduce the taxation, instead of increasing the duty, that that reduced taxation, instead of meaning a loss to the revenue of over a million pounds only meant a loss of less than half a million. On this occasion we have to pay on a very heavy duty, an extra heavy duty. We shall see what the result will be.
    I fear that not only will the Chancellor of the Exchequer's expectations not be realised—though he says tobacco is going on well—but I fear still more that it will be a cause of hardship to those in poor circumstances in life, for there are other subjects which could have been selected for taxation a great deal better than tobacco.
    10.0 P.M.
    Mr. R. W. ESSEX: It would have been well if those who advocate Tariff Reform had dealt with this tax upon those lines. Practically every shred of tobacco consumed in this country comes from the foreigner. I should have been glad if hon. Members opposite had told us how they

    1285
    can justify the posters all over the country saying that the foreigner pays the tax. It would have been a very great deal better if that had been shown in the contribution made by the hon. Member for Yarmouth (Mr. Fell), who shed tears over the poor working man, and who, he now says, can only have less tobacco because of the high tax put upon it. You cannot have it both ways. Now is the time for those who clamour for taxation on the foreigner to show how it can be arranged. At the beginning of the year I, for one, offered to resign my seat if the president of a big Tariff Reform association in the West of England could show the Chancellor of the Exchequer how he could get, without greater injury still to his own countrymen, £10,000,000 out of the foreigner. If the hon. Member for Holborn and the right hon. Gentleman the Member for Worcester, or any of the bright and shining lights of the Tariff Reform League, can get up and tell us how this tax can be levied on the foreigner, I am prepared to go home and leave them to lay the tax on the foreigner. The whole pith and centre of their arguments to-night is that this is a burden upon the consumer. We admit that. What we say is that the poor consumer, by his
    pipesful, is paying it gladly, knowing that he is bearing his fair share of the burden. It is not the poor man who is squealing at this tax. I am saying in this House to-night what I said the night before last to a big meeting in the very centre of Birmingham. I asked that large meeting whether any of the working men present objected to paying this small added contribution to Imperial necessities. Not one man lifted his voice—even in Birmingham. [An HON. MEMBER: "Was it a ticket meeting?"] No, sir, it was an open meeting. We think we can leave that method of gathering audiences to our Friends opposite. I soberly and seriously invite hon. Members opposite to get up in this House, and with this wholly foreign-made product explain to the House categorically and in detail how they can lay a tax on the foreigner. I promise them that there are lots of hon. Members behind me who, if they can demonstrate that a foreigner can be made to pay, will follow me in voting for it.
    Question put, "That the words' in lieu of the duties payable on tobacco' stand part of the Bill."
    The House divided: Ayes, 172; Noes, 69.

    Division No. 863.]

    AYES.

    [10.5 p.m.

    Acland, Francis Dyke

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

    Hyde, Clarendon G.

    Ainsworth, John Stirling

    Dickson-Poynder, Sir John P.

    Illingworth, Percy H.

    Alden, Percy

    Dunne, Major E. Martin (Walsall)

    Isaacs, Rufus Daniel

    Allen, A. Acland (Christchurch)

    Edwards, A. Clement (Denbigh)

    Jackson, R. S.

    Allen, Charles P. (Stroud)

    Edwards, Sir Francis (Radnor)

    Jardine, Sir J.

    Astbury, John Meir

    Essex, R. W.

    Johnson, John (Gateshead)

    Atherley-Jones, L.

    Esslemont, George Birnie

    Jones, William (Carnarvonshire)

    Balfour, Robert (Lanark)

    Evans, Sir S. T.

    King, Alfred John (Knutsford)

    Baring, Godfrey (Isle of Wight)

    Everett, R. Lacey

    Laidlaw, Robert

    Barker, Sir John

    Ferens, T. R.

    Lamb, Ernest H (Rochester)

    Barnard, E. B.

    Fiennes, Hon. Eustace

    Lambert, George

    Barran, Rowland Hirst

    Findlay, Alexander

    Lamont, Norman

    Beauchamp, E.

    Fuller, John Michael F.

    Layland-Barratt, Sir Francis

    Bell, Richard

    Fullerton, Hugh

    Lehmann, R. C.

    Bennett, E. N.

    Glendinning, R. G.

    Levy, Sir Maurice

    Berridge, T. H. D.

    Goddard, Sir Daniel Ford

    Lewis, John Herbert

    Bethell, T. R. (Essex, Maldon)

    Greenwood, G. (Peterborough)

    Lloyd-George, Rt. Hon. David

    Bowerman, C. W.

    Greenwood, Hamar (York)

    Lupton, Arnold

    Brace, William

    Griffith, Ellis J.

    Macdonald, J. M. (Falkirk Burghs)

    Brigg, John

    Harcourt, Rt. Hon. L. (Rossendale)

    M'Callum, John M.

    Brooke, Stopford

    Harcourt, Robert V. (Montrose)

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

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

    Hardie, J. Keir (Merthyr Tydvil)

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

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

    Hardy, George A. (Suffolk)

    M'Micking, Major G.

    Bryce, J. Annan

    Harmsworth, Cecil B. (Worcester)

    Maddison, Frederick

    Burns, Rt. Hon. John

    Harmsworth, R. L. (Caithness-shire)

    Marks, G. Croydon (Launceston)

    Carr-Gomm, H. W.

    Haslam, James (Derbyshire)

    Marnham, F. J.

    Channing, Sir Francis Allston

    Haworth, Arthur A.

    Mason, A. E. W. (Coventry)

    Cheetham, John Frederick

    Helme, Norval Watson

    Middlebrook, William

    Clough, William

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

    Montgomery, H. G.

    Cobbold, Felix Thornley

    Henry, Charles S.

    Morgan, J. Lloyd (Carmarthen)

    Collins, Stephen (Lambeth)

    Herbert, T. Arnold (Wycombe)

    Morrell, Philip

    Compton-Rickett, Sir J.

    Higham, John Sharp

    Morton, Alpheus Cleophas

    Corbett, A. Cameron (Glasgow)

    Hobart, Sir Robert

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

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

    Hobhouse, Rt. Hon. Charles E. H.

    Myer, Horatio

    Cornwall, Sir Edwin A.

    Hodge, John

    Newnes, F. (Notts, Bassetlaw)

    Cotton, Sir H. J. S.

    Hooper, A. G.

    Norman, Sir Henry

    Davies, David (Montgomery Co.)

    Howard, Hon. Geoffrey

    Nussey, Sir Willans

    Davies, Ellis William (Eifion)

    Hudson, Walter

    Nuttall, Harry

    O'Donnell, C. J. (Walworth)

    Shackleton, David James

    Walker, H. De R. (Leicester)

    Pearce, William (Limehouse)

    Sherwell, Arthur James

    Wardle, George J.

    Philipps, Owen C. (Pembroke)

    Shipman, Dr. John G.

    Waring, Walter

    Pollard, Dr. G. H.

    Silcock, Thomas Ball

    Wason, John Cathcart (Orkney)

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

    Simon, John Allsebrook

    Waterlow, D. S.

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

    Soames, Arthur Wellesley

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

    Raphael, Herbert H.

    Stanger, H. Y.

    Whitehead, Rowland

    Rendall, Athelstan

    Stanley, Hon. A. Lyulph (Cheshire)

    Whitley, John Henry (Halifax)

    Richards, Thomas (W. Monmouth)

    Steadman, W. C.

    Wilkie, Alexander

    Ridsdale, E. A.

    Sutherland, J. E.

    Williamson, Sir A.

    Roberts, Charles H. (Lincoln)

    Taylor, Theodore C. (Radcliffe)

    Wills, Arthur Walters

    Robinson, S.

    Thomas, Abel (Carmarthen, E.)

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

    Roe, Sir Thomas

    Thomas, Sir A. (Glamorgan, E.)

    Wilson, Henry J. (York, W. R.)

    Rogers, F. E. Newman

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

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

    Rose, Sir Charles Day

    Toulmin, George

    Wilson, P. W. (St. Pancras, S.)

    Rutherford, V. H. (Brentford)

    Ure, Rt. Hon. Alexander

    Wood, T. M'Kinnon

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

    Verney, F. W.

    Yoxall, Sir James Henry

    Samuel, S. M. (Whitechapel)

    Villiers, Ernest Amherst

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

    Vivian, Henry

    TELLERS FOR THE AYES.—Mr. Joseph Pease and Captain Norton.

    Seely, Colonel

    Wadsworth, J.

    NOES.

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

    Glover, Thomas

    Powell, Sir Francis Sharp

    Balcarres, Lord

    Goulding, Edward Alfred

    Remnant, James Farquharson

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

    Gretton, John

    Renwick, George

    Banbury, Sir Frederick George

    Hamilton, Marquess of

    Roberts, S. (Sheffield, Ecclesall)

    Barnes, G. N.

    Harrison-Broadley, H. B.

    Rutherford, Watson (Liverpool)

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

    Hunt, Rowland

    Smith, F. E. (Liverpool, Walton)

    Beckett, Hon. Gervase

    Kennaway, Rt. Hon. Sir John H.

    Snowden, P.

    Bignold, Sir Arthur

    Kimber, Sir Henry

    Stanier, Beville

    Boland, John

    King, Sir Henry Seymour

    Stanley, Hon. Arthur (Ormskirk)

    Bull, Sir William James

    Law, Hugh A. (Donegal, West)

    Starkey, John R.

    Carlile, E. Hildred

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

    Summerbell, T.

    Cecil, Evelyn (Aston Manor)

    Lonsdale, John Brownlee

    Talbot, Lord E. (Chichester)

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

    Lynch, A. (Clare, W.)

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

    Coates, Major E. F. (Lewisham)

    MacCaw, William J. MacGeagh

    Valentia, Viscount

    Courthope, G. Loyd

    Magnus, Sir Philip

    Walrond, Hon. Lionel

    Craig, Charles Curtis (Antrim, S.)

    Mason, James F. (Windsor)

    Walsh, Stephen

    Dickson, Rt. Hon. C. Scott

    Mooney, J. J.

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

    Doughty, Sir George

    Morpeth, Viscount

    White, Patrick (Meath, North)

    Faber, George Denison (York)

    Nolan, Joseph

    Wilson, W. T. (Westhoughton)

    Fell, Arthur

    O'Brien, Patrick (Kilkenny)

    Younger, George

    Fletcher, J. S.

    O'Connor, John (Kildare, N.)

    Forster, Henry William

    Pease, Herbert Pike (Darlington)

    TELLERS FOR THE NOES.—Mr. C. M'Arthur and Mr. Gwynn.

    Gibbs, G. A. (Bristol, West)

    Percy, Earl

    Mr. HUNT Mr. HUNT moved, in Sub-section (1), to leave out the words "the duties specified in Part I. of the Fourth Schedule to this Act."
    Tobacco is grown in Holland and Germany, and there is no reason why it should not be grown in this country. It is only the idiotic system which hon. Members opposite call Free Trade that prevents us from growing tobacco here. It has been grown in Ireland, and up to 1821 she sent to us the bulk of the tobacco which we consumed in this country. If we had fair encouragement there is not the slightest reason why it should not be done again. Because of Free Trade we are not allowed to employ our own labour in growing this raw material. If we were, in all human probability it would have the effect of making tobacco cheaper than it is at the present time. The foreigner with whom we have now to compete would, under this proposal, have to pay half the duty. [An HON. MEMBER: "No."] I know that hon. Members opposite are not able to understand that. They frequently tell us that
    1288
    they are anxious to get people back to the land, and yet by opposing a proposal of this kind they are doing their best to stop them. The present system not only increases unemployment, but it directly decreases healthy employment. Tobacco could be grown to an enormous extent in the United Kingdom, and this might very well be made a very useful industry indeed. It would provide a very great deal of labour and food for man and cattle. The production of tobacco would be just as profitable as cocoa if it only had the same protection. Under the present system this is a tax on the employment of the people, and it helps to drive the people from the land into the slums of our great cities. I hope some day hon. Gentlemen opposite will see their way to give a little bit of protection to tobacco and also to beet sugar, because that would provide more regular employment for our people at better wages.
    Mr. HAY Mr. HAY seconded the Amendment.
    Mr. HOBHOUSE: The hon. Gentleman's Amendment would, if carried, have the effect, and I suppose that is his intention, of not merely giving protection to, but practically a bounty upon, tobacco grown in Ireland and this country. Tobacco-growing in England' and Scotland is of such a non-existant character that I need hardly deal with that point at all. The question concentrates itself, as the hon. Gentleman has concentrated his Amendment, upon tobacco grown in Ireland. I am really nappy to be able to say that the experiments in Ireland, which were very largely, if not entirely, initiated at the instance of the hon. Member for East Glare (Mr. W. Redmond), who secured the passage through this House of a Bill which is still known by his name, have been of a very successful character, without any of these adventitious aids suggested by the hon. Gentleman. The amount of tobacco grown in Ireland, which in 1905 was very little over 7,000 lbs., had gone up to 18,000 lbs. in 1906—or perhaps I ought to say the amount of tobacco on which duty was paid, which is, practically speaking, the same thing—and in the following year it went up to 60,000 lbs. Although there was a temporary drop last year of about 1,000 lbs., yet it is clear that the experiment has found favour with the consumers of tobacco, and that the considerable amount of capital which has been embarked in the industry is receiving appropriate and happy reward. This has been done without any of those strong measures to which hon. Gentlemen opposite would resort. It has been done under a system of Free Trade, upon which the hon. Gentleman has on this and many other occasions found it necessary to advert in the course of his speeches. I should like to point out to hon. Gentlemen opposite, who, I understand, are going to move an Amendment almost immediately on this subject, that we have by making a difference between the Customs and Excise Duty actually given considerable encouragement to the growers of tobacco in Ireland, and I have, no doubt, it has helped the experiment. The average quantity of tobacco grown in Ireland is 1,000 lbs. per acre cultivated, and in one case 1,900 lbs. were grown on one acre. Taking it at twopence per pound, the difference between the Customs and the Excise Duty, to say nothing of the grant in aid, comes to something like £8 6s. per acre—a very substantial sum paid for the first ten years in aid of the expenses incurred by those engaging
    1290
    in the enterprise. The Government has not been neglectful of this very interesting and what, I hope, will prove profitable enterprise, and I think it is quite unnecessary to resort to the means and expedients advocated by the hon. Gentleman.
    Mr AUSTEN CHAMBERLAIN: We are all indebted to my hon. Friend for moving this Amendment, if for no other reason than that it has produced the speech to which we have just listened. That speech is worthy of the attention of the House. The right hon. Gentleman said that my hon. Friend proposed for the tobacco-growing industry in this country, and especially in Ireland, not merely Protection but a bounty. Does he think one worse than the other? I presume he does. I assume that he thinks Protection is the lesser evil of the two, and we now know that bad as is Protection in any shape or form in the opinion of the right hon. Gentleman a bounty is even worse. Then he proceeded to say that he was glad to be able to inform the House that the tobacco-growing industry, which is in its infancy in Ireland, promises to be a very healthy one, that it is doing well so far, that from small beginnings it has grown rapidly, and, though it is still a very small matter, the growth has been quite remarkable. He goes on to say that all this has occurred under Free Trade without any of the adventitious aids which my hon. Friend and I think may be of advantage to British industries! I do not know how many Members of the House are acquainted with the facts of this case. The industry would never have been started in Ireland but for a concession which was made by Mr. Ritchie, and continued by me, because I wished to see the experiment given every chance of a successful trial. Neither could it have been started without the concession made by Mr. Ritchie, and continued by me without the sanction of law and in defiance of our practice and in contravention of every principle of Free Trade. What did Mr. Ritchie do? In the first place, he undertook to allow tobacco to be grown in Ireland, a thing which is prohibited by law. All honour to him for having done so. Earlier in the evening I spoke of the pedantry and red-tape which the Government had allowed to interfere with trade convenience in connection with another matter affecting the Tobacco Duty. In this case Mr. Ritchie took a broader view. He waved the legal prohibition, but he went further. He actually gave a preference to tobacco which was grown in

    1291
    Ireland. As at that time the growth of tobacco in the United Kingdom was prohibited, there naturally was no Excise Duty, but in order to allow this industry to be planted in Ireland Mr. Ritchie agreed not to charge the equivalent of the Customs Duty. This industry would never have got a start in Ireland at all had he not given it a preference by charging a lower Excise Duty than the Customs Duty which then prevailed. During his Chancellorship and during my Chancellorship, and until the present Government came into office, that continued. I cannot fix the date exactly when it ceased.
    Mr. HOBHOUSE: It was altered in 1907.
    Mr. AUSTEN CHAMBERLAIN: Well, during Mr. Ritchie's Chancellorship, during my short Chancellorship, and in 1906, when the present Prime Minister was Chancellor of the Exchequer, this preference was continued and tobacco was allowed to be experimentally grown in Ireland on a limited area. In 1907 his Free Trade conscience pricked him and he suddenly became aware that this was anathema, and something which was contrary to all his principles. What did he do? Abolish the attempt to favour an infant industry, leaving it to fend for itself in a world in which it would have no particular claim; impose upon it an Excise Duty exactly equal to the Customs Duty, and give it no advantage? That is what Free Trade requires. But that is not what he did. He said that the preference which Mr. Ritchie gave was Protection, and could not be tolerated; and what did he do? He gave a bounty instead. I am not certain that I am not doing an injustice to the Prime Minister, and the person whom I have in my mind is really the present Chancellor of the Exchequer; but let me say that my facts are correct, although my dates, which I take from the Government, may be wrong, and we are all speaking from memory. But whether I am right in attributing this to the Prime Minister, or whether it was the present Chancellor of the Exchequer who did it, my story of what was done is correct. The question of who ought to be accused and who ought not to be, depends upon the date at which it occurred; but whoever was responsible, what happened was, that they withdrew the preference and gave a grant in aid instead, and then the Financial Secretary comes down to the House, relying I really think on the short memories of Members, or upon their ignorance, and tells us that this particular progress
    1292
    of this Irish tobacco industry has been made under a system of Free Trade, without any exceptional assistance.
    That is the exact contrary of the fact. There never would have been the growth which we have seen if there had not been, first of all, Mr. Ritchie's provision, and subsequently, if under the present Government this industry had not been favoured. But it is forbidden by Free Trade principles to favour any industry. I do not blame the Government for having done on the sly what they were not willing to do openly. I am glad that it was done under any circumstances. I am glad that an industry which promises well for Ireland, and maybe for other parts of the United Kingdom, has been benefited. I declare that Ireland has a prospect of a new and prosperous industry, and I am glad to hear all that the Financial Secretary to the Treasury has to say as to these efforts, but the moral which is to be drawn from it is not the moral which he would draw, that it is our Free Trade system which produces these results. I was going to say that this is the single instance in which so-called Protection has been applied, but I should be wrong, because in the case of British manufacturers of tobacco and British manufacturers of cocoa also part of their success is attributable to that Protection, and particularly as regards the tobacco trade it was to the measure of protection embodied in the tobacco Duty that the success of the English manufacturers and those interested in the English tobacco trade in fighting the American Tobacco Trust was due, or else they would have succumbed, as many other trades have succumbed, to powerful foreign trusts. I do not say that the exact proportion of preference which my hon. Friend proposes is, or could be, established in a case of this kind, where there must be a corresponding Excise if you wish to get the full measure of your revenue out of the article. But the history of this experiment in Ireland goes to disprove, and not to prove, the claim which the right hon. Gentleman makes for our Free Trade system, and goes to establish the contention of my hon. Friend that, as you have created the beginning of a new industry in Ireland with every prospect of success by departing from our Free Trade system, and that an agricultural industry, so you might by similar encouragement to import industries of other kinds in the United Kingdom produce similar results upon a larger and an even more beneficial scale.
    Mr. LLOYD-GEORGE: I do not complain at all of the statements of fact of the right hon. Gentleman. They are substantially accurate, but I complain of the accentuation and the emphasis. The most important fact of all he mentioned, but did not dwell upon, and that is the fact that he justified the late Lord Ritchie, who was a strong Free Trader, and the present Government, in drawing a distinction between this particular industry and the other industries of the Kingdom. The reason why a special distinction was made in the case of the tobacco industry was that Parliament was responsible, not merely for discouraging it in Ireland, but, for absolutely prohibiting it. An Act of Parliament was passed to prevent tobacco from being cultivated in this country. For over 70 years you could not plant tobacco, you could not manufacture it, and you could not trade in British or Irish tobacco. Can the right hon. Gentleman point out a single industry which is comparable to that? If he can his analogy will have some value, otherwise it will not—not the slightest. If any industry that he could mention had actually been prohibited by Act of Parliament, and the foreigner allowed to go on selling it in this country, there would be some glimmering of reason in the case put forward by the Tariff Reformers. Otherwise there is absolutely nothing in common between this and other cases.
    The right hon. Gentleman has drawn a lesson from this. So will I. The actual figures contain a very valuable lesson. The present Government commuted the amount of protection which was given into actual cash, which is a frank and open way of doing it. Whether it is a right thing to do or not is a wholly different matter. What has it cost the country? £6,000 a year. What is the total amount produced? 51,000 lbs. of tobacco. To produce 51,000 lbs. of tobacco costs this country £6,000 a year. That is the great lesson. I quite agree that it is very significant, and I hope it will not be lost. That is the cost of a mere attempt to foster an industry in this country by artificial means, there being special grounds in this case why there should be expenditure of public money. Parliament had undertaken the responsibility for fiscal reasons of prohibiting the business, and therefore I think Parliament ought to give it an opportunity of making up for lest time. What did it cost to produce 51,000 pounds? [An HON. MEMBER: "Weight?"] Yes, weight, that is most important. It
    1294
    cost more than the whole value of the tobacco. And this is the great lesson.
    Mr. AUSTEN CHAMBERLAIN: That is due to the change which the Government introduced.
    Mr. LLOYD-GEORGE: Not at all. The change was absolutely stated in figures. The £6,000 represents the actual figure. There might be £500 added, but that was to meet the growth of this year. It was a simple computation of what it cost the Revenue before. That is what it means. If it cost 30s. to produce a pound's worth of tobacco, just think of all the thousands of millions worth of industries in this country under a protective system, and fostered' by something like £1,200,000,000.
    Mr. STEPHEN GWYNN: I do not altogether oppose this Amendment, but I should have preferred very much the Amendment on the Paper in my own name in regard to the Schedule. After all, I do not think it matters very much, because we are really discussing here a point which ought to be discussed on the Schedule. I want to discuss a practical business point and not the question of Free Trade as against Protection, which for the representatives of Ireland is an academic question. What is the meaning of the 2d. in the pound concession that is made at the present time off Irish tobacco? I take a totally different view from that taken by the right hon. Gentleman. I do not regard that as a bounty at all, and I am not prepared to admit the contentions put forward by the Chancellor of the Exchequer and the right hon. Gentleman the Member for East Worcestershire as to result of the existing experiment in Ireland. I contend that the 2d. per pound conceded to Irish tobacco growers is intended as an equivalent for the inconvenience and loss which your Excise system imposes upon them. In my opinion the concession is not adequate.
    The Financial Secretary made a speech on the last Amendment which showed an acquaintance with the conditions of the tobacco manufacture carried on in Great Britain, but I should like very much to know if his constituents or any experts on tobacco-growing had been consulted as to the Excise regulations put upon the tobacco trade in Ireland, where the tobacco is to be grown, because we contend that these regulations are such as to make tobacco-growing almost impossible. My contention simply is this: that there are many complex regulations imposed upon the Irish tobacco grower by the Excise.

    1295
    With reference to the concession of 2d. per pound, I understand that the Treasury view is that the Irish tobacco grower is hampered as compared with the American grower to the extent of 2d. per pound. My contention is that the difference in advantage which the American tobacco grower has over the Irish tobacco grower is more than would be represented by 2d. an the lb. We Irish Members do not argue this matter on a question of Protection at all. We do not even go into the historic question of what may be due for wrongs done to Ireland in the past. Dealing simply with the facts of the moment we say that in America the tobacco growers are working under a system so infinitely freer that they have an advantage over the Irish tobacco grower that is not adequately represented by a concession of 2d. in the lb. After all, growing tobacco is very much the same thing as growing cabbage, only that it is a little more complicated. The first of these regulations is that if the tobacco grower is also a re-handler as he is in many cases in Ireland. He is not allowed to plant his tobacco near the place where he manufactures it. The things must be kept separate by a zone. Then, again, he can only grow the tobacco in a place licensed by the Excise Commissioners. Every man in America may grow tobacco anywhere he pleases. In Ireland you have to specify the field, and you have to get the leave of the Excise Commissioners to grow tobacco there. Then you have in advance to say also what buildings will be used. You have to specify every shed that is going to be used for storing the tobacco. Anyone familiar with agriculture will realise what a demand it makes upon the farmer to say exactly what he is going to do with the crop as he carts it out of the field. If he leaves it to dry on a hedge, as he might do if the weather is suitable, he will be infringing the law unless he specifies the hedge as one of the places where he is going to store the tobacco. Even to put it in a temporary shed in the same way would be an infringement of the law. Or, again, before he begins to grow tobacco he has to give security in such a sum, and such a form as the Commissioners may require, and they are to observe all the regulations. That involves the farmer in a wholly new class of business. I press upon the right hon. Gentleman as one interested in the tobacco trade, that it is specified that all tobacco must be taken
    1296
    up for preliminary weighing by the Excise officer not later than 1st January, following the cutting or gathering of the tobacco. Assuming that the man is making up his tobacco for cigars, as has been done in several places in Ireland, at that time the cigar tobacco would be perfecting in bulk, and I need not say that it would be ruinous to break up the bulk for fermentation for the purpose of having it weighed. These regulations, if enforced, would render the industry impossible, so far as my information goes. The amount of duty which will be charged on the tobacco will be determined by the preliminary weighing, the Commissioners marking off what is to be allowed for shrinkage and loss of moisture.
    Mr. HOBHOUSE: Apart from the question of security, if these regulations, in regard to which we have received no complaint from the actual growers, are found to be injurious, the Treasury will be very glad to consider whether they can remove any regulation which bears hardly on the industry, and which can be dispensed with.
    Mr. GWYNN: I am quite sure that the Treasury will be glad to do it where they can, but how far will that go? Here is a regulation—every manufacturer of tobacco is bound to keep separate in his factory the parcels he receives from the different growers. The effect of that is that the Excise may check in the factory and set it against the grower's return. That is very proper and reasonable from the Excise point of view, but from the point of view of the grower and manufacturer how does it work. The manufacturer sorts his tobacco not according to the farms on which it grows, not according to its biography or pedigree, but according to its quality. In any consignment of tobacco there will be half a dozen, ten, or twenty different kinds, and the manufacturer will group his tobacco into different classes. But, according to your regulations, large amounts of tobacco, good, bad, and indifferent, will have to be kept in separate parcels. To conduct an industry under those conditions is practically impossible. It is ridiculous to compare the development of the Irish tobacco trade, hampered by these regulations, with the industry as carried on in America, where the planter grows his tobacco as a farmer grows cabbages here. The whole essential difficulty is that the tobacco leaf in Ireland is not treated as tobacco leaf but as an instrument of taxation. It is worth eight times for the purpose

    1297
    of taxation what it is for its simple value as tobacco, because those are all bills on the Excise that are lying in the man's field. I shall vote for the hon. Member's Motion, although I think it puts forward a reduction that is excessive and impracticable in a way. I do not think that there ever could be an agricultural industry of tobacco-growing in England, Scotland, or Ireland, so long as you maintain your present enormous duty, and so long as you apply the Excise regulations which compel a man to keep every leaf in the field, and so long as he cannot sell his damaged stuff at a lower price. Then the rebate which is necessary to protect the grower and put him on a level with the foreigners who are working without all those hindrances will not be adequately represented by 2d. in the pound. I have got an Amendment down to increase that to 4d., so that the Tobacco Duty for Ireland should be, not 3s. 6d. as the Government propose, but 3s. 4d. I appeal to the Chancellor of the Exchequer for that Amendment. I cannot address the appeal to the Chancellor of the Exchequer that would be addressed to him by my hon. Friend the Member for East Clare (Mr. W. Redmond), and I do wish most sincerely that the hon. Member for East Clare were here present to make one of his pathetic appeals to the Chancellor of the Exchequer, and ask him to increase the advantage that is given. It might, perhaps, be necessary to move the Amendment formally in order to get a reply, but for the moment I shall identify myself with the Amendment that is put forward.
    11.0 P.M.
    Mr. A. LYNCH: I feel that the best argument that I could possibly use, and without which no argument is of any account, is to secure the goodwill of the Chancellor of the Exchequer with regard to this tobacco industry. I happen to know from the words of my colleague the Member for East Clare (Mr. W. Redmond) that in the beginning of this industry in Ireland the Chancellor of the Exchequer was extremely helpful to it, and I hope that what has happened since has been of the nature to encourage that goodwill then expressed in the most practical way. This question of Irish tobacco is still in the experimental stage, because I believe that the total yield secured from the increased duty is extremely small. It is so small that although I got these figures from a book on the subject I am almost afraid to trust them, and I think there must be some mistake. I gather
    1298
    that that increase will amount to only £1,624. That is an extremely small amount to come to the Exchequer. I do not propose to go back to the era of the prohibition of the growing of tobacco in Ireland. I am one of those, and I hope the number will increase, who are in favour of letting bygones be bygones, turning our backs on the past, resolutely facing the future, and endeavouring to develop our country on the best lines. This is not a case of killing the goose that lays the golden eggs, but rather one of endeavouring by paternal care to nurture the goose that it may become strong enough to be profitable. Although the tobacco industry is at present so small, there are many things to encourage the belief that it has a great future in Ireland. One is that for many reasons tobacco is a good crop. It provides work not only for the breadwinner, but also for women and children, all the year round. Another point greatly valued in Ireland is that it grows upon poor land, and utilises acreage which is useless under prevailing conditions of agriculture. Moreover, Ireland at present imports 2,000,000 lbs. of unmanufactured tobacco, and over 10,000,000 lbs. of manufactured tobacco, representing a total expenditure of £720,000—and this in regard to an industry which might be so far cultivated in Ireland as to supply all the needs of the country. This question is far removed from any party considerations. The chief growers of tobacco in Ireland are connected with the party opposed to the bulk of Members representing Ireland. In no sense is it a party question. On the other hand, I am inclined to believe that the argument put forward by hon. Members above the Gangway on this side of the House that in the present state of our civilisation tobacco is not, and cannot now be, considered a luxury is true. It is a necessity for the poor man. The House seems a little disturbed at the present time—[By allusions to the result of Bermondsey election]—and I shall conclude, therefore, by renewing my appeal to the Chancellor of the Exchequer.
    Mr. JOHN BOLAND: I think perhaps the House may not have fully appreciated the point of my hon. Friend. I think if we had the figures it would help us to get on—[The Bermondsey election figures were handed to the hon. Member.]
    Mr. SPEAKER: I must ask the hon. Gentleman to discuss the matter now before the House. He can discuss other matters in the Lobby, which is open.
    Mr. BOLAND: I am wishful to continue my speech if able to do so. What my hon. Friend the Member for Galway is anxious to obtain is that permission should be granted to growers outside the allocated area in Ireland to undertake tobacco growing. A rebate of 2d. in the pound would not enable growers to take it up to any large extent. It is all very well for the Chancellor of the Exchequer to say that a rebate has been granted. It is quite true that it has been granted. But the Chancellor has now added an extra 8d., and we fail to see how a rebate of 2d. granted last year is going to encourage an industry if an extra 8d. is going to be put upon it this year. If the Chancellor of the Exchequer can see his way to meet the suggestion of the hon. Member for Galway I believe that a real successful effort will be made to make tobacco growing successful. As the restrictions have already been pointed out, it is hardly necessary to repeat them. But there was one restriction which my hon. Friend did not refer to. As I understand it, in addition to having the tobacco carefully marked and numbered every grower must give notice to the Excise officer to come and examine the tobacco that is undergoing the process of drying in the barns. It is required that 48 hours before the arrival of the Excise officer the barn cannot be open, and the process of the fermentation of the tobacco cannot be watched during that time, with the result that a proper supervision of the curing of tobacco under those regulations cannot be carried out. The Secretary to the Treasury said the Treasury would be ready to consider any of these regulations if they interfered with the carrying on of the industry. I bring this one to the attention of the right hon. Gentleman. If this industry of tobacco growing is to be extended beyond the 120 or 130 acres of restricted area, and if it is to be made an agricultural industry in all parts of Ireland, I do not think it could possibly be carried on with this small rebate. I press upon the Chancellor the advisability of altering the figure from 2d. to 4d. when we come to the Schedule.
    Mr. G. L. COURTHOPE: The Chancellor of the Exchequer told us just now that the reason the Government treated Irish tobacco-growing in a way that seemed strange to Free Traders was because the
    1300
    Legislature had for many generations been exceptionally hard upon tobacco grown in Ireland, and that, therefore, the present Government were under an obligation to give special attention and assistance to that Irish industry. If that is the truth, I should like to ask the Chancellor why, when English agricultural Members attempted to secure the assistance and advantage for English-grown tobacco as was given to Irish-grown tobacco they were resisted by the present Government. The right hon. Gentleman dissents, but when the Scotch Tobacco Bill was before the House a number of Amendments which were on the Paper to extend similar advantages to England were rejected.
    Mr. LLOYD-GEORGE: If similar experiments were tried either in England or Scotland as were in Ireland, as far as I am concerned I should certainly be prepared to extend the same financial treatment to them as was extended to Ireland.
    Mr. COURTHOPE: A number of Amendments were on the paper at that time with the object of getting the same facilities for England as were given to Ireland, and they were rejected by the present Government without discussion. As to the argument that the Legislature had been exceptionally hard on tobacco grown in Ireland, it was equally hard on tobacco grown in England. The Chancellor went on to explain that in 1907 the present Prime Minister thought that the preference given to Irish tobacco was abhorrent to Free Traders, and he abolished the preference but gave an exact equivalent in pounds, shillings, and pence. They gave £6,000 instead of the former preference. In other words, they did away with the preference and gave a bounty. That bounty was not an exact equivalent; I think the bounty ought to have been larger if it was to be an equivalent for the preference first given by Mr. Ritchie. I think it is very extraordinary that this kind of argument should be adduced as a justification of the action of the Chancellor of the Exchequer. The Financial Secretary has informed us that the situation of the Irish tobacco industry is most satisfactory under Free Trade, and ten minutes later we have the Chancellor of the Exchequer telling us that the situation of the Irish tobacco industry under Protection is most unsatisfactory, because £51,000 worth of tobacco was grown at a cost of £6,000 more than the value of the whole crop. The fact of the matter is that the tobacco industry in Ireland

    1301
    is only in its infancy, and has not yet been allowed to pass beyond the experimental stage. Under these circumstances it is perfectly futile for any Chancellor of the Exchequer to argue for or against any particular fiscal system from the figures of an industry which is admittedly only in the experimental stage, and which is precluded by Statute from going beyond that stage. If the right hon. Gentleman will allow the Irish, English, or Scotch tobacco industry to go beyond the experimental stage I do not think he will find it will give
    him much cause for congratulation from the point of view of a Free Trade Chancellor. I felt bound to intervene in this Debate in order to call attention to the extraordinary and inconsistent arguments of the Chancellor of the Exchequer, who, in the course of his speech, not only contradicted the Financial Secretary to the Treasury, but he also twice contradicted himself.
    Question put, "That the word 'half' be there inserted."
    The House divided: Ayes, 59; Noes, 168.

    Division No. 864.]

    AYES.

    [11.20 p.m.

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

    Guinness, Hon. W. E. (B. S. Edmunds)

    Peel, Hon W. R. W.

    Balcarres, Lord

    Hamilton, Marquess of

    Powell, Sir Francis Sharp

    Banbury, Sir Frederick George

    Harrison-Broadley, H. B.

    Remnant, James Farquharson

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

    Hay, Hon. Claude George

    Renwick, George

    Beckett, Hon. Gervase

    Keating, M.

    Roberts, S. (Sheffield, Ecclesall)

    Bignold, Sir Arthur

    Kennaway, Rt. Hon. Sir John H.

    Rutherford, Watson (Liverpool)

    Boland, John

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

    Smith, F. E. (Liverpool, Walton)

    Bull, Sir William James

    Lonsdale, John Brownlee

    Stanler, Beville

    Carlile, E. Hildred

    Lowe, Sir Francis William

    Stanley, Hon. Arthur (Ormskirk)

    Cecil, Evelyn (Aston Manor)

    Lynch, A. (Clare, W.)

    Starkey, John R.

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

    MacCaw, Wm. J. MacGeagh

    Talbot, Lord E. (Chichester)

    Coates, Major E. F. (Lewisham)

    M'Arthur, Charles

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

    Courthope, G. Loyd

    Mason, James F. (Windsor)

    Valentia, Viscount

    Doughty, Sir George

    Mooney, J. J.

    Walrond, Hon. Lionel

    Faber, George Denison (York)

    Morpeth, Viscount

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

    Fell, Arthur

    Nicholson, Wm. G. (Petersfield)

    Winterton, Earl

    Fletcher, J. S.

    Nolan, Joseph

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

    Forster, Henry William

    O'Brien, Patrick (Kilkenny)

    Gibbs, G. A. (Bristol, West)

    O'Connor, John (Kildare, N.)

    TELLERS FOR THE AYES.—Mr. Hunt and Mr. Gwynn.

    Gretton, John

    Pease, Herbert Pike (Darlington)

    Guinness, Hon. R. (Haggerston)

    NOES.

    Abraham, William (Rhondda)

    Dunne, Major E. Martin (Walsall)

    Johnson, John (Gateshead)

    Acland, Francis Dyke

    Edwards, A. Clement (Denbigh)

    Jones, William (Carnarvonshire)

    Allen, A. Acland (Christchurch)

    Edwards, Sir Francis (Radnor)

    King, Alfred John (Knutsford)

    Allen, Charles P. (Stroud)

    Essex, R. W.

    Laidlaw, Robert

    Atherley-Jones, L.

    Esslemont, George Birnie

    Lamb, Ernest H. (Rochester)

    Balfour, Robert (Lanark)

    Evans, Sir S. T.

    Lambert, George

    Baring, Godfrey (Isle of Wight)

    Everett, R. Lacey

    Lamont, Norman

    Barker, Sir John

    Falconer, James

    Layland-Barratt, Sir Francis

    Barnard, E. B.

    Ferens, T. R.

    Lehmann, R. C.

    Barnes, G. N.

    Fiennes, Hon. Eustace

    Levy, Sir Maurice

    Barran, Rowland Hirst

    Findlay, Alexander

    Lewis, John Herbert

    Beauchamp, E.

    Fuller, John Michael F.

    Lloyd-George, Rt. Hon. David

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

    Gladstone, Rt. Hon. Herbert John

    Lupton, Arnold

    Bennett, E. N.

    Glendinning, R. G.

    Macdonald, J. M. (Falkirk Burghs)

    Berridge, T. H. D.

    Glover, Thomas

    Maclean, Donald

    Bowerman, C. W.

    Goddard, Sir Daniel Ford

    M'Callum, John M.

    Brace, William

    Greenwood, G. (Peterborough)

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

    Brigg, John

    Harcourt, Rt. Hon. L. (Rossendale)

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

    Brodie, H. C.

    Harcourt, Robert V. (Montrose)

    M'Micking, Major G.

    Brooke, Stopford

    Hardie, J. Keir (Merthyr Tydvil)

    Maddison, Frederick

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

    Harmsworth, Cecil B. (Wocester)

    Marks, G. Croydon (Launceston)

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

    Harmsworth, R. L. (Caithness-shire)

    Marnham, F. J.

    Bryce, J. Annan

    Haworth, Arthur A.

    Mason, A. E. W. (Coventry)

    Burns, Rt. Hon. John

    Helme, Norval Watson

    Middlebrook, William

    Byles, William Pollard

    Henry, Charles S.

    Mond, A.

    Channing, Sir Francis Allston

    Herbert, T. Arnold (Wycombe)

    Morgan, G. Hay (Cornwall)

    Cheetham, John Frederick

    Higham, John Sharp

    Morrell, Philip

    Churchill, Rt. Hon. Winston S.

    Hobart, Sir Robert

    Morton, Alpheus Cleophas

    Clough, William

    Hobhouse, Rt. Hon. Charles E. H.

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

    Cobbold, Felix Thornley

    Hodge, John

    Myer, Horatio

    Collins, Stephen (Lambeth)

    Hooper, A. G.

    Newnes, F. (Notts, Bassetlaw)

    Corbett, A. Cameron (Glasgow)

    Horniman, Emslie John

    Norman, Sir Henry

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

    Howard, Hon. Geoffrey

    Nussey, Sir Willans

    Cornwall, Sir Edwin A.

    Hudson, Walter

    Nuttall, Harry

    Cotton, Sir H. J. S.

    Hyde, Clarendon G.

    O'Donnell, C. J. (Walworth)

    Davies, David (Montgomery Co.)

    Illingworth, Percy H.

    Parker, James (Halifax)

    Davies, Ellis William (Eifion)

    Isaacs, Rufus Daniel

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

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

    Jardine, Sir J.

    Philipps, Owen C (Pembroke)

    Pollard, Dr. G. H.

    Shipman, Dr. John G.

    Waring, Walter

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

    Silcock, Thomas Ball

    Wason, John Cathcart (Orkney)

    Raphael, Herbert H.

    Simon, John Allsebrook

    Waterlow, D. S.

    Rendall, Athelstan

    Snowden, P.

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

    Richards, Thomas (W. Monmouth)

    Stanley, Hon. A. Lyulph (Cheshire)

    Whitehead, Rowland

    Ridsdale, E. A.

    Steadman, W. C.

    Whitley, John Henry (Halifax)

    Roberts, Charles H. (Lincoln)

    Strachey, Sir Edward

    Wiles, Thomas

    Robinson, S.

    Summerbell, T.

    Wilkie, Alexander

    Robson, Sir William Snowdon

    Sutherland, J. E.

    Williamson, Sir A

    Roe, Sir Thomas

    Taylor, Theodore C. (Radcliffe)

    Wills, Arthur Waiters

    Rogers, F. E. Newman

    Thomas, Sir A. (Glamorgan, E.)

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

    Rose, Sir Charles Day

    Toulmin, George

    Wilson, Henry J. (York, W. R.)

    Rutherford, V. H. (Brentford)

    Ure, Rt. Hon. Alexander

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

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

    Verney, F. W.

    Wilson P. W. (St. Pancras, S.)

    Samuel, S. M. (Whitechapel)

    Villiers, Ernest Amherst

    Wilson, W. T. (Westhoughton)

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

    Wadsworth, J.

    Wood, T. M'Kinnon

    Seely, Colonel

    Walker, H. De R. (Leicester)

    Shackleton, David James

    Walsh, Stephen

    TELLERS FOR THE NOES.—Mr. Joseph Pease and Captain Norton.

    Sherwell, Arthur James

    Wardle, George J.

    Lords Amendment considered, and agreed to.

    Drafting Amendments made.
    Resolved—That further consideration of the Bill as Amended be now adjourned.—[Mr. Lloyd-George.]

EDUCATION (ADMINISTRATIVE PROVISIONS) BILL.— [Lords.]
Order for Second Reading read.
Motion made, and Question proposed, "That the Bill be now read a second time."
Mr. CLAUDE HAY: I do not know why the Minister for Education is not in his place, nor do I see the Parliamentary Secretary. Is there any Minister who can inform the House what the effect of this Bill is? It is, I gather, an attempt at legislation by reference, but it may or may not embody provisions of very considerable importance. I hope some Minister will tell the House what is its general purport. It appears to me to cover a wide area, and to deal with difficult subjects and complicated details. It may or may not be intended to smooth rough corners in existing Education Acts, and it may, on the other hand, conduce to very important changes in the law.
The PARLIAMENTARY SECRETARY to the TREASURY (Mr. Joseph Pease): I am sorry the Ministers responsible are not able to be in their place, but I may say I have explained the Bill to some of the official Members of the Opposition, and they agreed there was no reason why the second reading should not be proceeded with. The President of the Board of Education in the last Government has gone carefully through it, and assures me he has not the slightest objection to any of its provisions, which are really of a formal character. The object of the Bill is simply to make it quite certain that certain action being adopted in the country is
1304
absolutely legal. Since the passing of the Education Act, 1902, two or three measures have been carried giving the Education authorities certain powers—for instance, in connection with the inspection of children in the various elementary schools. Certain powers have also been given under the Act for providing meals for certain children and the object of the Clause is to enable these powers to be transferred to the various Education Committees constituted in regard to schools under the Act of 1902. It is not certain that these later powers which have been conferred upon the Educational authority can be transferred to the Education Committee, and with a view to make that legal it was thought advisable to introduce Clause 1. In regard to Clause 4, under the present state of the law, it is not quite certain whether minors can legally enter into an undertaking to repay a large sum of money to be fully trained in certain training colleges to give instruction in elementary schools, and the Clause is introduced in order to enable them to be bound by the undertaking which they give. I think I have stated enough of these provisions, which really are of a formal character, and I trust that the second reading may be given to-night. If the hon. Member or any other hon. Members desire further particulars there will be a further opportunity on a subsequent, stage, either to-morrow or Tuesday, when the representative of the Education Board will be present.
Resolved, "That the Bill be committed to a Committee of the whole House."—[Mr. Joseph Pease.]

DISEASES OF ANIMALS BILL.
Order for Second Reading read.
Motion made, and Question proposed, "That the Bill be now read a second time."
Mr. STANIER: This is a Bill about which I should rather like to have some short explanation. It has been very constantly brought before this House, and without making a speech I should like to ask the hon. Gentleman who is in charge of it if he can tell us what will be the cost of this Bill to the country; also will he say whether veterinary surgeons have in any way to act as detectives in these matters, or will they only receive a half-crown when they report a case of disease which they have found by having been called in to see the animals in question? A third question is, What is the position of the Board of Agriculture and the local authority in regard to the notification. I think that the local authorities should have full notification.
The TREASURER of the HOUSEHOLD (Sir Edward Strachey): The reason why this Bill provides for the local authority being notified is that it is the local authority which has to carry out the various regulations under which veterinary surgeons report. But the Bill only gives power to the Board of Agriculture to make an order, and that order can always be varied if it is found not to be working effectually in any direction. I do not see for myself that there will be any objection, provided that where the notifications are made to the local authority the Board of Agriculture at the same time shall be notified by the local authority of these cases of outbreak. Notification will only be made by a private practitioner when he is called in by the owner himself and discovers an outbreak, say, of anthrax. If I thought there would be an additional burden on the rates I should be the last person to ask the House to give power to the Board of Agriculture to make such an order. A calculation has been made by the Board that during the forty-two weeks of this year there have been 3,369 outbreaks, which is at the rate of 4,200 a year. If we assume that 50 per cent. of these outbreaks are notified by private practitioners, called in by the owner, it would only amount to £262 for the whole country, but the Board's calculation is that only 10 per cent. would be notified in this way. None the less, it is of great importance that the local veterinary surgeons should
1306
have an inducement to notify, and be under an obligation to notify, disease which they find, otherwise there might be concealment, it being no one's duty to report the case.
Mr. G. L. COURTHOPE: Are we to gather that this Bill does not in any way affect the case of a veterinary surgeon who is sent in by the local authority?
Sir E. STRACHEY: Not at all. He would not get the 2s. 6d. fee, but only the practitioner who had nothing to do with the local authority.
Mr. COURTHOPE: I am greatly relieved to hear that, and to hear how small the estimated additional burden on the rates is. I am sure any objection which may have been felt by Chambers of Agriculture will have been removed by the assurances which we have received.
Mr. J. J. MOONEY: Am I to understand that this Bill applies to Ireland?
Sir E. STRACHEY: No, it does not apply to Ireland.
Mr. MOONEY: The principal Act of 1903, relating to the diseases of animals, applies to Ireland, and the authority entrusted with its administration is the Board of Agriculture. It provides for certain notification being given in regard to the outbreak of disease. If a veterinary Burgeon who notifies is to receive a fee in England, I think that a veterinary surgeon in Ireland should also get a fee for the same service. Seeing that the principal Act applies to Ireland, I cannot understand why you did not put a Clause in this Bill making it apply to that country. It is only at the last moment that the Bill has been put into our hands. If the measure is necessary for the stamping out of disease in England, surely it is necessary to have the same law for Ireland. I would ask the hon. Gentleman to reconsider the question with the view to words being inserted in this Bill to make it apply to Ireland.
Mr. GRETTON: I think it is important that Ireland should get the benefit of this Bill. There is a large cattle trade between this country and Ireland, and it is very desirable that in Ireland as well as in England notification should be given of outbreaks of disease. It is absolutely in the interest of Irish cattle dealers that they should have the assistance which this Bill proposes to give.
Sir E. STRACHEY: I would remind the hon. Member for Newry (Mr. Mooney) that the procedure in Ireland in regard to swine fever is very different from that in England. I would suggest that the hon. Member should communicate with the Vice-President of the Board of Agriculture in Ireland on the subject. So far as we are concerned we shall have no objection to the Bill being extended to Ireland. This being entirely an English question, I do not think the hon. Member will expect me to know the practice in Ireland, or what are the desires of those connected with the cattle trade there.
Mr. MOONEY: All that I say is that this is not a new matter. It is a Bill extending an Act already in existence. Therefore, I thought that the same procedure should apply to Ireland as to England.
Sir E. STRACHEY: The practice of the two Boards in regard to the issue of orders is entirely different in England and Ireland.
Mr. GWYNN: We want to know if the two Board's act together, and, if not, why
Resolved, "That the Bill be committed to Committee of the Whole
not? So far as I understand, the English Board in this case has exercised a power which the Irish Board has not got. I would like to know whether the Government will accept an Amendment to include Ireland in this Bill if we move it in Committee? If we have an answer to that we shall know what to do now.
Mr. HAY: Surely the hon Gentleman can give an answer because he knows the situation, or he cannot give an answer because he is ignorant of the reply to give to the hon. Gentleman who has just sat down. Here we have a measure which refers to a powerful Act that applies to the whole United Kingdom. Why should we not give the same protection to Ireland, where agriculture is just as important to the country as it is in England and Scotland? If my hon. Friends go to a division I shall support them as a protest against the ignorance of the Government of their own Bill.
Question put, "That the Bill be now-read a second time."
The House divided: Ayes, 83; Noes, 7.

Division No. 865.]

AYES.

[11.50 p.m.

Acland, Francis Dyke

Gretton, John

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

Allen, A. Acland (Christchurch)

Harcourt, Robert V. (Montrose)

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

Allen, Charles P. (Stroud)

Hardie, J. Keir (Merthyr Tydvil)

Rendall, Athelstan

Balfour, Robert (Lanark)

Harmsworth, Cecil B. (Worcester)

Roberts, Charles H (Lincoln)

Baring, Godfrey (Isle of Wight)

Haworth, Arthur A.

Robinson, S.

Beaumont, Hon. Hubert

Higham, John Sharp

Roe, Sir Thomas

Bennett, E. N.

Hobart, Sir Robert

Samuel, S. M. (Whitechapel)

Bowerman, C. W.

Hooper, A. G.

Shackleton, David James

Brodie, H. C.

Horniman, Emslie John

Silcock, Thomas Ball

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

Howard, Hon. Geoffrey

Stanier, Beville

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

Illingworth, Percy H.

Stanley, Hon. A. Lyulph (Cheshire)

Bryce, J. Annan

Jardine, Sir J.

Strachey, Sir Edward

Burns, Rt. Hon. John

Lambert, George

Summerbell, T.

Byles, William Pollard

Levy, Sir Maurice

Sutherland, J. E.

Channing, Sir Francis Allston

Lewis, John Herbert

Taylor, Theodore C. (Radcliffe)

Clough, William

Lupton, Arnold

Toulmin, George

Coates, Major E. F. (Lewisham)

Macdonald, J. M. (Falkirk Burghs)

Ure, Rt. Hon. Alexander

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

Maclean, Donald

Wason, John Cathcart (Orkney)

Cornwall, Sir Edwin A.

Maddison, Frederick

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

Courthope, G. Loyd

Marks, G. Croydon (Launceston)

Whitley, John Henry (Halifax)

Davies, Ellis William (Eifion)

Marnham, F. J.

Wiles, Thomas

Dunne, Major E. Martin (Walsall)

Middlebrook, William

Williamson, Sir Archibald

Essex, R. W.

Mond, A.

Wilson, Henry J. (York, W. R.)

Esslemont, George Birnie

Morrell, Philip

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

Falconer, James

Newnes, F. (Notts, Bassetlaw)

Wilson, W. T. (Westhoughton)

Fiennes, Hon. Eustace

Norman, Sir Henry

Glendinning, R. G.

Norton, Capt. Cecil William

TELLERS FOR THE AYES.—Mr. Joseph Pease and Mr. Fuller.

Goddard, Sir Daniel Ford

Nuttall, Harry

Greenwood, G. (Peterborough)

Parker, James (Halifax)

NOES.

Abraham, William (Cork, N. E.)

O'Brien, Patrick (Kilkenny)

Hay, Hon. Claude George

Rutherford, Watson (Liverpool)

TELLERS FOR THE NOES.—Mr. Mooney and Mr. Gwynn.

Hunt, Rowland

White, Patrick (Meath, North)

Law, Hugh A. (Donegal, W.)

House for to-morrow (Friday)."—[Sir E. Strachey]
Whereupon Mr. Speaker, in pursuance of the Order of the House of 20th August, adjourned the House without Question put.
Adjourned at Five minutes before Twelve o'clock.

  Taxes (Cost of Collection).
  Taxes (Cost of Collection).
  Estimated Revenue and Expenditure (1909–1910).
  Estimated Revenue and Expenditure (1909–1910).
FINANCE BILL.
  INCREMENT VALUE DUTY.
  INCREMENT VALUE DUTY.
  Indian Peasants' Food.
  Indian Peasants' Food.
  Sanitary Improvements (India).
  Sanitary Improvements (India).
  Vaccination.
  Vaccination.
  Old Age Pensions (Poor Law Relief Disqualification).
  Old Age Pensions (Poor Law Relief Disqualification).
  Cleansing of Persons Act.
  Cleansing of Persons Act.
  Greenwich Hospital Age Pension.
  Greenwich Hospital Age Pension.
  London Postal Service (Supervising Officers).
  London Postal Service (Supervising Officers).
  Marlborough Street Training College.
  Marlborough Street Training College.
  Magistrate's Votes.
  Magistrate's Votes.
  Arbor Day (Ireland).
  Arbor Day (Ireland).
  Trout and Salmon Fishing (Lough Erne).
  Trout and Salmon Fishing (Lough Erne).
  Teachers' Superannuation.
  Teachers' Superannuation.